Exhibit 10.2(a)
EXECUTION COPY
BANK OF AMERICA, NATIONAL ASSOCIATION
PURCHASER
AND
OPTEUM FINANCIAL SERVICES, LLC
COMPANY
MORTGAGE LOAN SALE AND SERVICING AGREEMENT
DATED AS SEPTEMBER 1, 2006
RESIDENTIAL MORTGAGE LOANS
TABLE OF CONTENTS
ARTICLE I DEFINITIONS ..................................................... 1
ARTICLE II AGREEMENT TO PURCHASE; PURCHASE PRICE; CONVEYANCE OF
MORTGAGE LOANS; POSSESSION OF MORTGAGE FILES; MAINTENANCE OF
SERVICING FILES; BOOKS AND RECORDS; CUSTODIAL AGREEMENT;
DELIVERY OF DOCUMENTS; CLOSING CONDITIONS ...................... 15
Section 2.01 Agreement to Purchase; Purchase Price..................... 15
Section 2.02 Books and Records; Transfers of Mortgage Loans............ 16
Section 2.03 Custodial Agreement; Delivery of Documents................ 17
Section 2.04 Quality Control Procedures................................ 19
Section 2.05 Closing Conditions........................................ 19
ARTICLE III REPRESENTATIONS AND WARRANTIES REMEDIES AND BREACH............. 20
Section 3.01 Company Representations and Warranties.................... 20
Section 3.02 Representations and Warranties Regarding Individual
Mortgage Loans............................................ 24
Section 3.03 Repurchase................................................ 32
Section 3.04 Repurchase of Mortgage Loans With Early Payment
Defaults.................................................. 34
Section 3.05 Purchase Price Protection................................. 34
Section 3.06 Representations and Warranties of the Purchaser........... 34
ARTICLE IV ADMINISTRATION AND SERVICING OF MORTGAGE LOANS.................. 36
Section 4.01 Company to Act as Servicer................................ 36
Section 4.02 Liquidation of Mortgage Loans............................. 37
Section 4.03 Collection of Mortgage Loan Payments...................... 38
Section 4.04 Establishment of and Deposits to Custodial Account........ 39
Section 4.05 Permitted Withdrawals From Custodial Account.............. 40
Section 4.06 Establishment of and Deposits to Escrow Account........... 41
Section 4.07 Permitted Withdrawals From Escrow Account................. 42
Section 4.08 Payment of Taxes, Insurance and Other Charges............. 43
Section 4.09 Transfer of Accounts...................................... 43
Section 4.10 Maintenance of Hazard Insurance........................... 43
Section 4.11 Maintenance of Mortgage Impairment Insurance.............. 45
Section 4.12 Maintenance of Fidelity Bond and Errors and Omissions
Insurance................................................. 45
Section 4.13 Inspections............................................... 46
Section 4.14 Restoration of Mortgaged Property......................... 46
Section 4.15 Maintenance of PMI Policy; Claims......................... 47
Section 4.16 Title, Management and Disposition of REO Property......... 48
Section 4.17 Real Estate Owned Reports................................. 49
i
Section 4.18 Liquidation Reports....................................... 49
Section 4.19 Reports of Foreclosures and Abandonments of Mortgaged
Property.................................................. 49
Section 4.20 Application of Buydown Funds.............................. 50
Section 4.21 Notification of Adjustments............................... 50
Section 4.22 Modifications, Waivers, Amendments and Consents........... 51
Section 4.23 Disaster Recovery/Business Continuity Plan................ 52
Section 4.24 Fair Credit Reporting Act................................. 52
ARTICLE V PAYMENTS TO PURCHASER............................................ 53
Section 5.01 Remittances............................................... 53
Section 5.02 Automated Servicing Systems and Statements to Purchaser... 53
Section 5.03 Monthly Advances by Company............................... 54
ARTICLE VI GENERAL SERVICING PROCEDURES.................................... 54
Section 6.01 Due-on-Sale Provision and Assumptions..................... 54
Section 6.02 Satisfaction of Mortgages and Release of Mortgage Files... 55
Section 6.03 Servicing Compensation.................................... 56
Section 6.04 Annual Statement as to Compliance......................... 56
Section 6.05 Annual Independent Public Accountants' Servicing Report... 56
Section 6.06 Right to Examine Company Records.......................... 56
Section 6.07 Compliance with REMIC Provisions.......................... 56
ARTICLE VII COMPANY TO COOPERATE........................................... 57
Section 7.01 Provision of Information.................................. 57
Section 7.02 Financial Statements; Servicing Facility.................. 57
ARTICLE VIII THE COMPANY................................................... 58
Section 8.01 Indemnification; Third Party Claims....................... 58
Section 8.02 Merger or Consolidation of the Company.................... 58
Section 8.03 Limitation on Liability of Company and Others............. 59
Section 8.04 Limitation on Resignation and Assignment by Company....... 59
ARTICLE IX WHOLE LOAN TRANSFERS AND SECURITIZATIONS........................ 60
Section 9.01 Removal of Mortgage Loans from Inclusion Under this
Agreement Upon the Pass-Through........................... 60
ARTICLE X DEFAULT ......................................................... 62
Section 10.01 Events of Default......................................... 62
Section 10.02 Waiver of Defaults........................................ 63
ii
ARTICLE XI TERMINATION..................................................... 63
Section 11.01 Termination............................................... 63
ARTICLE XII MISCELLANEOUS PROVISIONS....................................... 64
Section 12.01 Successor to Company...................................... 64
Section 12.02 Amendment................................................. 65
Section 12.03 Governing Law............................................. 65
Section 12.04 [Reserved]................................................ 66
Section 12.05 Duration of Agreement..................................... 66
Section 12.06 Notices................................................... 66
Section 12.07 Severability of Provisions................................ 66
Section 12.08 Relationship of Parties................................... 67
Section 12.09 Execution; Successors and Assigns......................... 67
Section 12.10 Recordation of Assignments of Mortgage.................... 67
Section 12.11 Assignment by Purchaser................................... 67
Section 12.12 Solicitation of Mortgagor................................. 67
Section 12.13 Further Agreements........................................ 68
Section 12.14 Confidential Information.................................. 68
Section 12.15 Counterparts.............................................. 68
Section 12.16 Exhibits.................................................. 68
Section 12.17 General Interpretive Principles........................... 69
Section 12.18 Reproduction of Documents................................. 69
Section 12.19 Purchase Price and Terms Letter........................... 69
EXHIBITS
Exhibit A Form of Mortgage Loan Schedule
Exhibit B Contents of Each Mortgage File
Exhibit C Form of Custodial Agreement
Exhibit D Form of Assignment, Assumption and Recognition Agreement
Exhibit E [Reserved]
Exhibit F [Reserved]
Exhibit G [Reserved]
Exhibit H [Reserved]
Exhibit I Form of Memorandum of Sale
Exhibit J Servicer Requirements
Exhibit K [Reserved]
Addendum I Regulation AB Compliance Addendum to Mortgage Loan Sale and
Servicing Agreement
iii
This is a Mortgage Loan Sale and Servicing Agreement for adjustable and
fixed rate residential first mortgage loans, dated and effective as of September
1, 2006, and is executed between Bank of America, National Association, as
purchaser (the "Purchaser"), Opteum Financial Services, LLC, as seller and
servicer (the "Company").
WITNESSETH
WHEREAS, the Purchaser has agreed to purchase from time to time from the
Company and the Company has agreed to sell from time to time to the Purchaser
first lien fixed- and adjustable-rate mortgage loans;
WHEREAS, the Mortgage Loans will be sold by the Company and purchased by
the Purchaser as pools or groups of whole loans, servicing retained (each, a
"Mortgage Loan Package") on the various Closing Dates as provided herein; and
WHEREAS, each of the Mortgage Loans will be secured by a mortgage, deed of
trust or other security instrument creating a first lien on a residential
dwelling located in the jurisdiction indicated on the related Mortgage Loan
Schedule for the related Mortgage Loan Package, which will be annexed to a
Memorandum of Sale (as defined herein) on the related Closing Date; and
WHEREAS, the Purchaser and the Company wish to prescribe the manner of
purchase of the Mortgage Loans and the conveyance, servicing and control of the
Mortgage Loans; and
WHEREAS, following any purchase of the Mortgage Loans from the Company, the
Purchaser may desire to sell some or all of the Mortgage Loans to one or more
purchasers as a whole loan transfer, agency transfer or a public or private,
rated or unrated mortgage pass-through transaction;
NOW, THEREFORE, in consideration of the mutual agreements hereinafter set
forth, and for other good and valuable consideration, the receipt and adequacy
of which is hereby acknowledged, the Purchaser and the Company agree as follows:
ARTICLE I
DEFINITIONS
Whenever used herein, the following words and phrases, unless the content
otherwise requires, shall have the following meanings:
Accepted Servicing Practices: With respect to any Mortgage Loan, procedures
(including collection procedures) that comply with applicable federal, state and
local law and that the Company customarily employs and exercises through a
subservicer in servicing and administering mortgage loans for its own account
and that are in accordance with the accepted mortgage servicing practices of
prudent mortgage lending institutions which service mortgage loans of the same
type as the Mortgage Loans in the jurisdiction where the related Mortgaged
Property is located.
Adjustable Rate Mortgage Loan: A Mortgage Loan that contains a provision
pursuant to which the Mortgage Interest Rate is adjusted periodically.
Adjustment Date: As to each Adjustable Rate Mortgage Loan, the date on
which the Mortgage Interest Rate is adjusted in accordance with the terms of the
related Mortgage Note and Mortgage.
Agreement: This Mortgage Loan Sale and Servicing Agreement and all
amendments hereof and supplements hereto.
ALTA: The American Land Title Association or any successor thereto.
Appraisal: A written appraisal of a Mortgaged Property made by a Qualified
Appraiser, which appraisal must be written, in form and substance, to Xxxxxx Xxx
and Xxxxxxx Mac standards, and satisfy the requirements of Title XI of the
Financial Institution, Reform, Recovery and Enforcement Act of 1989 and the
regulations promulgated thereunder, in effect as of the date of the appraisal.
Appraised Value: With respect to any Mortgage Loan, the lesser of (i) the
value set forth on the Appraisal made in connection with the origination of the
related Mortgage Loan, or (ii) the purchase price paid for the Mortgaged
Property; provided, however, that in the case of a refinanced Mortgage Loan,
such value shall be based solely on the Appraisal made in connection with the
origination of such Mortgage Loan.
Approved Flood Policy Insurer: An insurer that meets the guidelines of the
Federal Insurance Administration.
Assignment, Assumption and Recognition Agreement: The agreement
substantially in the form of Exhibit D attached hereto.
Assignment of Mortgage: With respect to each Mortgage Loan which is not a
MERS Mortgage Loan, an assignment of the Mortgage, notice of transfer or
equivalent instrument in recordable form, sufficient under the laws of the
jurisdiction wherein the related Mortgaged Property is located to reflect the
sale of the Mortgage to the Purchaser.
BIF: The Bank Insurance Fund, or any successor thereto.
Business Day: Any day other than (i) a Saturday or Sunday, or (ii) a day on
which banking and savings and loan institutions in the State of New York or the
state in which the Company's servicing operations are located are authorized or
obligated by law or executive order to be closed.
Buydown Agreement: An agreement between the Company and a Mortgagor, or an
agreement among the Company, a Mortgagor and a seller of a Mortgaged Property or
a third party with respect to a Mortgage Loan which provides for the application
of Buydown Funds.
Buydown Funds: In respect of any Buydown Mortgage Loan, any amount
contributed by the seller of a Mortgaged Property subject to a Buydown Mortgage
Loan, the buyer of such
2
property, the Company or any other source, plus interest earned thereon, in
order to enable the Mortgagor to reduce the payments required to be made from
the mortgagor's funds in the early years of a Mortgage Loan.
Buydown Mortgage Loan: Any Mortgage Loan in respect of which, pursuant to a
Buydown Agreement, (i) the Mortgagor pays less than the full monthly payments
specified in the Mortgage Note for a specified period, and (ii) the difference
between the payments required under such Buydown Agreement and the Mortgage Note
is provided from Buydown Funds.
Buydown Period: The period of time when a Buydown Agreement is in effect
with respect to a related Buydown Mortgage Loan.
Closing Date: With respect to a Mortgage Loan Package, the date or dates,
set forth in the related Memorandum of Sale, on which the Purchaser will
purchase and the Company will sell the Mortgage Loans identified therein.
Code: The Internal Revenue Code of 1986, as it may be amended from time to
time or any successor statute thereto, and applicable U.S. Department of the
Treasury regulations issued pursuant thereto.
Company: Opteum Financial Services, LLC, or its successor in interest or
assigns, or any successor to the Company under this Agreement appointed as
herein provided.
Company Employees: As defined in Section 4.13.
Compensating Interest: With respect to each Remittance Date and any
Principal Prepayment occurring during the portion of the Principal Prepayment
Period occurring the month preceding such Remittance date, an amount equal to
the lesser of (a) the aggregate Prepayment Interest Shortfall on the Mortgage
Loans for the related Principal Prepayment Period and (b) the sum of (i) the
Servicing Fee paid to, or retained by, the Servicer in respect of such
Remittance Date and (ii) any Prepayment Interest Excess in respect of such
Remittance Date.
Condemnation Proceeds: All awards or settlements in respect of a Mortgaged
Property, whether permanent or temporary, partial or entire, by exercise of the
power of eminent domain or condemnation, to the extent not required to be
released to a Mortgagor in accordance with the terms of the related Mortgage
Loan Documents.
Consumer Information: Any personally identifiable information in any form
(written or electronic) relating to a Mortgagor, including, but not limited to:
a Mortgagor's name, address, telephone number, Mortgage Loan number, Mortgage
Loan payment history, delinquency status, or payment information; the fact that
the Mortgagor has a relationship with the Company or the originator of the
related Mortgage Loan; and any other non-public personally identifiable
information.
Co-op Shares: Shares issued by private non-profit housing corporations.
Custodial Account: The separate account or accounts created and maintained
pursuant to Section 4.04.
3
Custodial Agreement: The agreement governing the retention of the originals
of each Mortgage Note, Mortgage, Assignment of Mortgage and other Mortgage Loan
Documents, a form of which is annexed hereto as Exhibit C.
Custodian: The custodian under the Custodial Agreement, or its successor in
interest or assigns, or any successor to the Custodian under the Custodial
Agreement as provided therein.
Cut-off Date: With respect to each Mortgage Loan, the first day of the
month of the related Closing Date as set forth in the related Purchase Price and
Terms Letter.
Deleted Mortgage Loan: A Mortgage Loan which is repurchased by the Company
in accordance with the terms of this Agreement and which is, in the case of a
substitution pursuant to Section 3.03, replaced or to be replaced with a
Qualified Substitute Mortgage Loan.
Depositor: The depositor, as such term is defined in Regulation AB, with
respect to any Securitization Transaction.
Determination Date: The eighteenth calendar day of each month (or if such
eighteenth day is not a Business Day, the next immediately preceding Business
Day).
Due Date: The first day of the month on which the Monthly Payment is due on
a Mortgage Loan, exclusive of any days of grace.
Due Period: With respect to each Remittance Date, the period commencing on
the second day of the month preceding the month of the Remittance Date and
ending on the first day of the month of the Remittance Date.
Errors and Omissions Insurance Policy: An errors and omissions insurance
policy to be maintained by the Company pursuant to Section 4.12.
Escrow Account: The separate account or accounts created and maintained
pursuant to Section 4.06.
Escrow Payments: With respect to any Mortgage Loan, the amounts
constituting ground rents, taxes, assessments, water rates, sewer rents,
municipal charges, mortgage insurance premiums, fire and hazard insurance
premiums, condominium charges, and any other payments required to be escrowed by
the Mortgagor with the mortgagee pursuant to the Mortgage or any other related
document.
Event of Default: Any one of the conditions or circumstances enumerated in
Section 10.01.
Exchange Act: The Securities Exchange Act of 1934, as amended.
Xxxxxx Xxx: The entity formerly known as Federal National Mortgage
Association (FNMA), or any successor thereto.
FDIC: The Federal Deposit Insurance Corporation, or any successor thereto.
4
Fidelity Bond: A fidelity bond to be maintained by the Company pursuant to
Section 4.12.
First Remittance Date: October 19, 2006.
Xxxxxxx Mac: The entity formerly known as the Federal Home Loan Mortgage
Corporation (FHLMC), or any successor thereto.
GAAP: Generally accepted accounting procedures, consistently applied.
Gross Margin: With respect to each Adjustable Rate Mortgage Loan, the fixed
percentage amount set forth in the related Mortgage Note which is added to the
Index in order to determine the related Mortgage Interest Rate, as set forth in
the Mortgage Loan Schedule.
Index: With respect to any Adjustable Rate Mortgage Loan, the index
identified on the Mortgage Loan Schedule and set forth in the related Mortgage
Note for the purpose of calculating interest therein.
Insurance Proceeds: With respect to each Mortgage Loan, proceeds of
insurance policies insuring the Mortgage Loan or the related Mortgaged Property.
Interim Funder: With respect to each MERS Designated Mortgage Loan, the
Person named on the MERS System as the interim funder pursuant to the MERS
Procedures Manual.
Investor: With respect to each MERS Designated Mortgage Loan, the Person
named on the MERS System as the investor pursuant to the MERS Procedures Manual.
Liquidation Proceeds: Cash received in connection with the liquidation of a
defaulted Mortgage Loan, whether through the sale or assignment of such Mortgage
Loan, trustee's sale, foreclosure sale or otherwise, or the sale of the related
Mortgaged Property if the Mortgaged Property is acquired in satisfaction of the
Mortgage Loan.
Loan-to-Value Ratio or LTV: With respect to any Mortgage Loan, the ratio of
the original loan amount of the Mortgage Loan at its origination (unless
otherwise indicated) to the Appraised Value of the Mortgaged Property.
LPMI Policy: A lender paid policy of mortgage guaranty insurance issued by
a Qualified Insurer, with respect to certain Mortgage Loans.
Manufactured Home: A single family residential unit that is constructed in
a factory in sections in accordance with the Federal Manufactured Home
Construction and Safety Standards adopted on July 15, 1976, by the Department of
Housing and Urban Development ("HUD Code"), as amended in 2000, which preempts
state and local building codes. Each unit is identified by the presence of a HUD
Plate/Compliance Certificate label. The sections are then transported to the
site and joined together and affixed to a pre-built permanent foundation (which
satisfies the manufacturer's requirements and all state, county, and local
building codes and regulations). The manufactured home is built on a
non-removable, permanent frame chassis that supports the complete unit of walls,
floors, and roof. The underneath part of the home may have
5
running gear (wheels, axles, and brakes) that enable it to be transported to the
permanent site. The wheels and hitch are removed prior to anchoring the unit to
the permanent foundation. The manufactured home must be classified as real
estate and taxed accordingly. The permanent foundation may be on land owned by
the mortgager or may be on leased land.
Master Servicer: With respect to any Securitization Transaction, the
"master servicer," if any, identified in the related transaction documents.
Memorandum of Sale: With respect to each Mortgage Loan and the Mortgage
Loan Package, the memorandum of sale, substantially in the form of Exhibit I
attached hereto, confirming the sale by Company and the purchase by Purchaser of
the Mortgage Loan Package on the related Closing Date.
MERS: MERSCORP, Inc., its successors and assigns.
MERS Designated Mortgage Loan: A Mortgage Loan for which (a) the Company
has designated or will designate MERS as, and has taken or will take such action
as is necessary to cause MERS to be, the mortgagee of record, as nominee for the
Company, in accordance with MERS Procedures Manual and (b) the Company has
designated or will designate the Custodian as the Investor on the MERS System.
MERS Procedures Manual: The MERS Procedures Manual, as it may be amended,
supplemented or otherwise modified from time to time.
MERS Report: The report from the MERS System listing MERS Designated
Mortgage Loans and other information.
MERS System: MERS mortgage electronic registry system, as more particularly
described in the MERS Procedures Manual.
Monthly Advance: The portion of each Monthly Payment that is delinquent
with respect to each Mortgage Loan at the close of business on the Determination
Date required to be advanced by the Company pursuant to Section 5.03 on the
Business Day immediately preceding the Remittance Date of the related month.
Monthly Payment: The scheduled monthly payment of principal and interest
and, in the case of an interest only Mortgage Loan, interest on a Mortgage Loan.
Moody's: Xxxxx'x Investors Service, Inc.
Mortgage: The mortgage, deed of trust or other instrument securing a
Mortgage Note, which creates a first lien on an unsubordinated estate in fee
simple or leasehold estate in real property securing the Mortgage Note.
Mortgage File: The items pertaining to a particular Mortgage Loan referred
to in Exhibit B annexed hereto, and any additional documents required to be
added to the Mortgage File pursuant to this Agreement.
6
Mortgage Impairment Insurance Policy: A mortgage impairment or blanket
hazard insurance policy as described in Section 4.11.
Mortgage Interest Rate: The annual rate of interest borne on a Mortgage
Note in accordance with the provisions of the Mortgage Note.
Mortgage Loan: An individual Mortgage Loan which is the subject of this
Agreement, each Mortgage Loan originally sold and subject to this Agreement
being identified on the Mortgage Loan Schedule annexed to the related Memorandum
of Sale, which Mortgage Loan includes without limitation the Mortgage File, the
Monthly Payments, Principal Prepayments, Liquidation Proceeds, Condemnation
Proceeds, Insurance Proceeds, REO Disposition Proceeds and all other rights,
benefits, proceeds and obligations arising from or in connection with such
Mortgage Loan.
Mortgage Loan Documents: The documents referred to in Exhibit B as items 1
through 11.
Mortgage Loan Package: The pool or group of whole loans purchased on a
Closing Date, as described in the Mortgage Loan Schedule annexed to the related
Memorandum of Sale.
Mortgage Loan Remittance Rate: With respect to each Mortgage Loan, the
annual rate of interest remitted to the Purchaser, which shall be equal to the
related Mortgage Interest Rate minus the Servicing Fee Rate and the applicable
premium rate on the LPMI Policy, if applicable.
Mortgage Loan Schedule: With respect to each Mortgage Loan Package, the
schedule of Mortgage Loans substantially in the form attached as Exhibit A
hereto and annexed to the related Memorandum of Sale (and delivered in
electronic format to the Purchaser), such schedule setting forth the following
information with respect to each Mortgage Loan in the related Mortgage Loan
Package:
(1) the Company's Mortgage Loan number;
(2) Mortgagor's name (including any co-mortgagors);
(3) the full xxxxxx xxxxxxx, xxxx, xxxxx and zip code of the Mortgaged
Property;
(4) the Mortgagor's FICO score;
(5) a code indicating whether the loan was originated through a
correspondent, retail, or wholesale channel;
(6) a code identifying the related Underwriting Guidelines used in
connection with the origination of the related Mortgage Loan;
(7) the number of units for all Mortgaged Properties;
7
(8) a code indicating whether the Mortgaged Property is a single
family residence, two-family residence, three-family residence, four-family
residence, PUD, townhouse or condominium or secured by Co-op Shares;
(9) the Mortgage Interest Rate as of the Cut-off Date;
(10) the initial Mortgage Interest Rate;
(11) the current Mortgage Loan Remittance Rate;
(12) the initial Monthly Payment;
(13) the Monthly Payment as of the Cut-off Date;
(14) the date the Mortgage Loan was originated or acquired by the
Company;
(15) the principal balance of the Mortgage Loan as of the Cut-off Date
after deduction of payments of principal due on or before the Cut-off Date
whether or not collected;
(16) the date on which the first Monthly Payment was due;
(17) the last payment date on which a payment was applied;
(18) the original term to maturity or the remaining months to maturity
from the related Cut-off Date, in any case based on the original
amortization schedule, and if different, the maturity expressed in the same
manner but based on the actual amortization schedule;
(19) the scheduled maturity date;
(20) the Loan-to-Value Ratio;
(21) a code indicating the type of Adjustable Rate Mortgage Loan (i.e.
3/1, 5/1, 7/1, etc.);
(22) the Gross Margin;
(23) the Index;
(24) Adjustment Dates and the next Adjustment Date;
(25) the lifetime Mortgage Interest Rate cap and Periodic Caps;
(26) a code indicating the name of the issuer of the LPMI/PMI Policy,
if any, and the applicable premium rate on any LPMI Policy;
(27) a code indicating whether the Mortgage Loan is a Buydown Mortgage
Loan;
8
(28) a code indicating whether such Mortgage Loan provides for a
Prepayment Penalty and, if applicable, the Prepayment Penalty period for
such loan;
(29) a code indicating whether the Mortgaged Property is
owner-occupied or investor property;
(30) a code reflecting the documentation type;
(31) loan purpose;
(32) the Appraised Value; and
(33) the applicable Servicing Fee Rate.
With respect to the Mortgage Loans in the aggregate in the related
Mortgage Loan Package, the respective Mortgage Loan Schedule shall set
forth the following information, as of the Cut-Off Date:
(i) the number of Mortgage Loans;
(ii) the current aggregate outstanding principal balance of the
Mortgage Loans;
(iii) the weighted average Mortgage Interest Rate of the Mortgage
Loans; and
(iv) the weighted average months to maturity of the Mortgage Loans.
Mortgage Note: The note or other evidence of the indebtedness of a
Mortgagor secured by a Mortgage.
Mortgaged Property: The real property, including any improvements, securing
repayment of the debt evidenced by a Mortgage Note.
Mortgagor: The obligor on a Mortgage Note.
Negative Amortization: A gradual increase in the mortgage debt that occurs
when the monthly fixed installment is not sufficient for full application to
both principal and interest. The interest shortage is added to the unpaid
principal balance to create "negative" amortization.
Nonrecoverable Advance: Any Monthly Advance previously made or proposed to
be made in respect of a Mortgage Loan by the Company which, in the good faith
judgment of the Company, will not or, in the case of a proposed Monthly Advance
or Servicing Advance would not, be ultimately recoverable by the Company from
the related Mortgagor, Liquidation Proceeds, Condemnation Proceeds, Insurance
Proceeds, REO Disposition Proceeds or otherwise. The determination by the
Company that it has made a Nonrecoverable Advance shall be evidenced by a
certificate signed by two officers of the Company and delivered to the
Purchaser.
OCC: The Office of the Comptroller of the Currency.
9
Officer's Certificate: A certificate signed by the Chairman of the Board or
the Vice Chairman of the Board or the President, a Senior Vice President, a
First Vice President, a Vice President or an Assistant Vice President and by the
Treasurer or the Secretary or one of the Assistant Treasurers or Assistant
Secretaries of the Company, and delivered to the Purchaser as required by this
Agreement.
Opinion of Counsel: A written opinion of counsel, who may be an employee of
the Company, reasonably acceptable to the Purchaser.
Originator: With respect to any Mortgage Loan, the entity that (i) took the
Mortgagor's loan application (ii) processed the Mortgagor's loan application, or
(iii) closed and/or funded the Mortgagor's Mortgage Loan.
Periodic Interest Rate Cap: As to each Adjustable Rate Mortgage Loan, the
maximum increase or decrease in the Mortgage Interest Rate on any Adjustment
Date pursuant to the terms of the Mortgage Note.
Person: Any individual, corporation, partnership, joint venture, limited
liability company, association, joint-stock company, trust, unincorporated
organization, government or any agency or political subdivision thereof.
PMI Policy: A policy of primary mortgage guaranty insurance issued by a
Qualified Insurer, as required by this Agreement with respect to certain
Mortgage Loans.
Prepayment Interest Excess: With respect to each Remittance Date and each
Mortgage Loan that was subject of a Principal Prepayment during the portion of
the related Principal Prepayment Period beginning on the first day of the
calendar month in which such Remittance Date occurs through the end of the
Principal Prepayment Period relating to such Remittance Date, an amount equal to
interest (to the extent received) at the applicable Mortgage Loan Remittance
Rate on the amount of such Principal Prepayment for the number of days
commencing on the first day of the calendar month in which such Remittance Date
occurs and ending on the date on which such Principal Prepayment is so applied.
The Company shall be entitled to retain any Prepayment Interest Excess not
required to cover Compensating Interest Payments.
Prepayment Interest Shortfall: With respect to any Remittance Date, for
each Mortgage Loan that was the subject of a Principal Prepayment during the
portion of the related Principal Prepayment Period occurring between the first
day of the related Principal Prepayment Period and the last day of the calendar
month preceding the month in which such Remittance Date occurs, an amount equal
to interest at the applicable Mortgage Loan Remittance Rate on the amount of
such Principal Prepayment for the number of days commencing on the date on which
the prepayment is applied and ending on the last day of the calendar month
preceding such Remittance Date.
Prepayment Premium: Payments received on a Mortgage Loan as a result of a
Principal Prepayment hereon, not otherwise due thereon in respect of principal
or interest, which are intended to be a disincentive to prepayment.
10
Prepayment Premium Loan: A Mortgage Loan with respect to which the
Mortgagor must pay a Prepayment Premium in connection with a Principal
Prepayment.
Prime Rate: The prime rate announced to be in effect from time to time, as
published as the average rate in The Wall Street Journal.
Principal Prepayment: Any payment or other recovery of principal on a
Mortgage Loan which is received in advance of its scheduled Due Date, including
any Prepayment Premium, if applicable, thereon and which is not accompanied by
an amount of interest representing scheduled interest due on any date or dates
in any month or months subsequent to the month of prepayment.
Principal Prepayment Period: With respect to each Remittance Date, the
period that commences on and includes the 14th day of the month immediately
preceding the month in which such Remittance Date occurs (or from the Cut-off
Date, in the case of the first Principal Prepayment Period) and ends on and
includes the 13th day of the month in which such Remittance Date occurs.
Purchase Price: The price paid on the Closing Date by the Purchaser to the
Company for the Mortgage Loans, as calculated as set forth in the related
Purchase Price and Terms Letter.
Purchase Price and Terms Letter: The letter agreement between the Company
and the Purchaser entered into prior to the related Closing Date relating to the
sale of one or more Mortgage Loan Packages.
Purchaser: Bank of America, National Association, or its successor in
interest or any successor or assignee to the Purchaser under this Agreement as
herein provided.
Qualified Appraiser: An appraiser 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 the Financial Institution Reform, Recovery, and
Enforcement Act and the regulations promulgated thereunder, all as in effect on
the date the Mortgage Loan was originated.
Qualified Depository: Either (i) an account or accounts maintained with a
federal or state chartered depository institution or trust company the
short-term unsecured debt obligations of which (or, in the case of a depository
institution or trust company that is the principal subsidiary of a holding
company, the debt obligations of such holding company) have the highest
short-term ratings of each Rating Agency at the time any amounts are held on
deposit therein, or (ii) a trust account or accounts maintained with the trust
department of a federal or state chartered depository institution or trust
company, acting in its fiduciary capacity.
Qualified Insurer: A mortgage guaranty insurance company duly authorized
and licensed where required by law to transact mortgage guaranty insurance
business and approved as an insurer by Xxxxxx Xxx and Xxxxxxx Mac.
11
Qualified Substitute Mortgage Loan: A mortgage loan eligible to be
substituted by the Company for a Deleted Mortgage Loan which must, on the date
of such substitution be approved by the Purchaser and (i) have an outstanding
principal balance, after deduction of all scheduled payments due in the month of
substitution (or in the case of a substitution of more than one mortgage loan
for a Deleted Mortgage Loan, an aggregate principal balance), not in excess of
the Stated Principal Balance of the Deleted Mortgage Loan; (ii) have a Mortgage
Loan Remittance Rate not less than, and not more than 2% greater than, the
Mortgage Loan Remittance Rate of the Deleted Mortgage Loan; (iii) have a
remaining term to maturity not greater than and not more than one year less than
that of the Deleted Mortgage Loan; (iv) comply with each representation and
warranty set forth in Sections 3.01 and 3.02; (v) be of the same type as the
Deleted Mortgage Loan; (vi) have a Gross Margin not less than that of the
Deleted Mortgage Loan; (vii) have the same Index as the Deleted Mortgage Loan;
(viii) will have a FICO score not less than that of the Deleted Mortgage Loan;
(ix) have an LTV not greater than that of the Deleted Mortgage Loan; (x) have a
Prepayment Premium with a term and an amount at least equal to the Prepayment
Premium of the Deleted Mortgage Loan; (xi) be a first lien Mortgage Loan, and
(xii) have a Company credit grade not lower in quality than that of the Deleted
Mortgage Loan.
Rating Agency: Each of Fitch Ratings, Xxxxx'x and S&P, or any successor
thereto.
Reconstitution Agreement: The agreement or agreements entered into by the
Company and the Purchaser and/or certain third parties on the Reconstitution
Date or Dates with respect to any or all of the Mortgage Loans serviced
hereunder, in connection with a Whole Loan Transfer or Securitization.
Reconstitution Date: The date prior to the end of the three (3) month
period following the related Closing Date on which any or all of the Mortgage
Loans serviced under this Agreement shall be removed from this Agreement and
reconstituted as part of a Securitization or Whole Loan Transfer pursuant to
Section 9.01 hereof. The Reconstitution Date shall be such date prior to the end
of the three (3) month period following the related Closing Date on which the
Purchaser and the subsequent purchaser or transferee of the related Mortgage
Loans shall designate.
Record Date: The close of business of the last Business Day of the month
preceding the month of the related Remittance Date.
Regulation AB Compliance Addendum: Addendum I attached hereto and
incorporated herein by reference thereto.
REMIC: A "real estate mortgage investment conduit" within the meaning of
Section 860D of the Code.
REMIC Provisions: Provisions of the federal income tax law relating to a
REMIC, which appear at Section 860A through 860G of Subchapter M of Chapter 1,
Subtitle A of the Code, and related provisions, and regulations, rulings or
pronouncements promulgated thereunder, as the foregoing may be in effect from
time to time.
12
Remittance Date: The 19th day (or if such 19th day is not a Business Day,
the first Business Day immediately preceding such 19th day) of any month,
beginning with the First Remittance Date.
REO Disposition: The final sale by the Company of any REO Property.
REO Disposition Proceeds: All amounts received with respect to an REO
Disposition pursuant to Section 4.16.
REO Property: A Mortgaged Property acquired by the Company on behalf of the
Purchaser through foreclosure or by deed in lieu of foreclosure, as described in
Section 4.16.
Repurchase Price: With respect to any Mortgage Loan, a price equal to (i)
(A) prior to the date which is twelve (12) months following the Closing Date,
the product of the Stated Principal Balance of such Mortgage Loan times the
greater of (x) the Purchase Price Percentage reduced by an amount equal to the
purchase price premium in excess of par paid by the Purchaser multiplied by a
fraction, the numerator of which is equal to the number of months that have
passed since the related Closing Date and the denominator of which is equal to
twelve (12), or (y) 100%, and (B) thereafter, the Stated Principal Balance of
the Mortgage Loan plus (ii) interest on such Stated Principal Balance at the
Mortgage Loan Interest Rate from the date on which interest has last been paid
and distributed to the Purchaser to the last day of the month in which such
repurchase occurs, less amounts received or advanced in respect of such
repurchased Mortgage Loan which are being held in the Custodial Account for
distribution in the month of repurchase plus the amount of any advances owed to
any servicer, plus all costs and expenses incurred by the Purchaser or any
servicer arising out of or based upon such breach, including without limitation,
costs and expenses incurred in the enforcement of the Company's repurchase
obligation hereunder plus (iii) with respect to any Mortgage Loan subject to a
Securitization, any costs and damages incurred by the related trust in
connection with any violation by such Mortgage Loan of any predatory or abusive
lending law.
RESPA: The Real Estate Settlement Procedures Act, as amended.
SAIF: The Savings Association Insurance Fund, or any successor thereto.
S&P: Standard & Poor's Ratings Services, a division of The XxXxxx-Xxxx
Companies, Inc., or any successor thereto.
Securities Act: The Securities Act of 1933, as amended.
Securitization: Any transaction involving either (1) a sale or other
transfer of some or all of the Mortgage Loans directly or indirectly by the
Purchaser 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.
Servicing Advances: All customary, reasonable and necessary "out of pocket"
costs and expenses (including reasonable attorney's fees and disbursements)
other than Monthly Advances
13
incurred in the performance by the Company of its servicing obligations,
including, but not limited to, the cost of (a) the preservation, restoration and
protection of the Mortgaged Property, (b) any enforcement or judicial
proceedings, including foreclosures, (c) the management and liquidation of any
REO Property and (d) compliance with the obligations under Section 4.08.
Servicing Fee: With respect to each Mortgage Loan, the amount of the annual
fee the Purchaser shall pay to the Company, which shall, for a period of one
full month, be equal to one-twelfth of the product of (a) the applicable
Servicing Fee Rate and (b) the outstanding principal balance of such Mortgage
Loan. Such fee shall be payable monthly, computed on the basis of the same
principal amount and period respecting which any related interest payment on a
Mortgage Loan is computed. The obligation of the Purchaser to pay the Servicing
Fee is limited to, and the Servicing Fee is payable solely from, the interest
portion (including recoveries with respect to interest from Liquidation
Proceeds, Condemnation Proceeds and Insurance Proceeds to the extent permitted
by Section 4.05) of such Monthly Payment collected by the Company, or as
otherwise provided under Section 4.05.
Servicing Fee Rate: With respect to each Mortgage Loan, the per annum rate
specified for such Mortgage Loan set forth on the Mortgage Loan Schedule or if
not specified thereon, in the Purchase Price and Terms Letter.
Servicing File: With respect to each Mortgage Loan, the file retained by
the Company consisting of originals or copies, which may be imaged copies, of
all documents in the Mortgage File which are not delivered to the Custodian and
copies of the Mortgage Loan Documents listed in the Custodial Agreement the
originals of which are delivered to the Custodian pursuant to Section 2.03.
Servicing Officer: Any officer of the Company involved in or responsible
for the administration and servicing of the Mortgage Loans whose name appears on
a list of servicing officers furnished by the Company to the Purchaser upon
request, as such list may from time to time be amended.
Stated Principal Balance: As to each Mortgage Loan, (i) the principal
balance of the Mortgage Loan as of the first day of the month for which such
calculation is being made after giving effect to payments of principal due on or
before such date, whether or not received, minus (ii) all amounts previously
distributed to the Purchaser with respect to the related Mortgage Loan
representing payments or recoveries of principal or advances in lieu thereof.
Subservicer: Any Person with which the Company has entered into a
Subservicing Agreement and which 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 Company under
this Agreement or any Reconstitution Agreement that are identified in Item
1122(d) of Regulation AB, provided that such Person is a Xxxxxx Xxx or Xxxxxxx
Mac approved seller/servicer in good standing and no event has occurred,
including but not limited to a change in insurance coverage, that would make it
unable to comply with the eligibility for seller/servicers imposed by Xxxxxx Mae
or Xxxxxxx Mac.
14
Subservicing Agreement: Any subservicing agreement (which, in the event the
Subservicer is an affiliate of the Company, need not be in writing) between the
Company and any Subservicer relating to servicing and/or administration of
certain Mortgage Loans as provided in Section 3.01(b).
Underwriting Guidelines: The written underwriting guidelines of the Company
or the applicable correspondent seller provided by the Company to the Purchaser,
in each case with respect to the mortgage loans similar to the Mortgage Loans,
as the same shall be updated from time to time.
Whole Loan Transfer: Any sale or transfer of some or all of the Mortgage
Loans by the Purchaser to a third party which sale or transfer is not a
Securitization.
ARTICLE II
AGREEMENT TO PURCHASE; PURCHASE PRICE; CONVEYANCE OF MORTGAGE LOANS; POSSESSION
OF MORTGAGE FILES; MAINTENANCE OF SERVICING FILES; BOOKS AND RECORDS; CUSTODIAL
AGREEMENT; DELIVERY OF DOCUMENTS; CLOSING CONDITIONS
Section 2.01 Agreement to Purchase; Purchase Price.
(A) Agreement to Purchase
In exchange for the payment of the Purchase Price to the Company on the
related Closing Date, the Company agrees to sell and the Purchaser agrees to
purchase, without recourse but subject to the terms of this Agreement, on a
servicing retained basis, all the right, title and interest of the Company in
and to the Mortgage Loans in a Mortgage Loan Package having an aggregate Stated
Principal Balance on the related Cut-off Date in an amount as set forth in the
related Purchase Price and Terms Letter, or in such other amount as agreed by
the Purchaser and the Company as evidenced by the aggregate Stated Principal
Balance of the Mortgage Loan Package accepted by the Purchaser on the related
Closing Date. The Company shall deliver the Mortgage Loan Schedule for the
Mortgage Loan Package to be purchased on the related Closing Date to the
Purchaser at least three (3) Business Days prior to such Closing Date.
(B) Purchase Price
The Purchase Price for each Mortgage Loan Package shall be the percentage
of par as stated in or as otherwise calculated pursuant to the related Purchase
Price and Terms Letter (subject to adjustment as provided therein), plus accrued
interest on the aggregate Stated Principal Balance of the Mortgage Loan Package
at the weighted average Mortgage Loan Remittance Rate from the related Cut-off
Date through the day prior to the related Closing Date, inclusive. The initial
principal amount of the Mortgage Loans shall be the aggregate Stated Principal
Balance of the Mortgage Loans, so computed as of the related Cut-off Date, after
application of scheduled payments of principal due on or before the related
Cut-off Date, whether or not collected. Such payments shall be made to the
account designated by the Company by wire transfer in immediately available
funds.
15
The Purchaser shall be entitled to (1) all scheduled principal due after
the related Cut-off Date, (2) all other recoveries of principal collected on or
after the related Cut-off Date (provided, however, that all scheduled payments
of principal due on or before the related Cut-off Date and collected by the
Company or any successor servicer after the related Cut-off Date shall belong to
the Company), (3) all payments of interest on the Mortgage Loans at the Mortgage
Loan Remittance Rate (minus that portion of any such payment that is allocable
to the period prior to the related Cut-off Date) and (4) all Prepayment
Premiums. The Stated Principal Balance of each Mortgage Loan as of the related
Cut-off Date is determined after application of payments of principal due on or
before the related Cut-off Date whether or not collected together with any
unscheduled principal prepayments collected prior to the related Cut-off Date,
provided, however, that 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 (minus interest at the Servicing
Fee Rate) shall be the property of the Purchaser. The Company shall deposit any
such prepaid amounts into the Custodial Account for the benefit of the
Purchaser.
(C) Possession of Mortgage Files; Maintenance of Servicing Files
The contents of each Servicing File are and shall be held in trust by the
Company for the benefit of the Purchaser as the owner thereof. Possession of
each Servicing File by the Company is at the will of the Purchaser for the sole
purpose of servicing the related Mortgage Loan, and such retention and
possession by the Company is in a custodial capacity only. Upon the sale of the
Mortgage Loans the ownership of each Mortgage Note, the related Mortgage and the
related Mortgage File and Servicing File shall vest immediately in the
Purchaser, and the ownership of all records and documents with respect to the
related Mortgage Loan prepared by or which come into the possession of the
Company shall vest immediately in the Purchaser and shall be retained and
maintained by the Company, in trust, at the will of the Purchaser and only in
such custodial capacity. The Company shall release its custody of the contents
of any Servicing File only in accordance with written instructions from the
Purchaser, unless such release is required as incidental to the Company's
servicing of the Mortgage Loans or is in connection with a repurchase of any
Mortgage Loan pursuant to Section 3.03 or 6.02.
Section 2.02 Books and Records; Transfers of Mortgage Loans.
From and after the sale of the Mortgage Loans to the Purchaser all rights
arising out of the Mortgage Loans, including, but not limited to, all funds
received on or in connection with the Mortgage Loans, shall be received and held
by the Company in trust for the benefit of the Purchaser as owner of the
Mortgage Loans, and the Company, if applicable, shall retain record title to the
related Mortgages for the sole purpose of facilitating the servicing and the
supervision of the servicing of the Mortgage Loans.
The sale of each Mortgage Loan shall be reflected on the Company's balance
sheet and other financial statements, tax returns and business records as a sale
of assets by the Company. The Company shall be responsible for maintaining, and
shall maintain, a complete set of books and records for each Mortgage Loan,
which shall be marked clearly to reflect the ownership of each Mortgage Loan by
the Purchaser. In particular, the Company shall maintain in its possession, and
shall deliver to the Purchaser within ten (10) Business Days of demand, evidence
16
of compliance with all federal, state and local laws, rules and regulations. To
the extent that original documents are not required for purposes of realization
of Liquidation Proceeds or Insurance Proceeds, documents maintained by the
Company may be in the form of microfilm or microfiche or such other reliable
means of recreating original documents, including but not limited to, optical
imagery techniques that conform to Accepted Servicing Practices.
The Company shall maintain with respect to each Mortgage Loan and shall
make available for inspection by the Purchaser or its designee the related
Servicing File during the time the Purchaser retains ownership of a Mortgage
Loan and thereafter in accordance with applicable laws and regulations.
The Company shall keep at its servicing office books and records in which,
subject to such reasonable regulations as it may prescribe, the Company shall
note transfers of Mortgage Loans. No transfer of a Mortgage Loan may be made
unless such transfer is in compliance with the terms hereof. For the purposes of
this Agreement, the Company shall be under no obligation to deal with any person
with respect to this Agreement or the Mortgage Loans unless the books and
records show such person as the owner of the Mortgage Loan. The Purchaser may,
subject to the terms of this Agreement, sell and transfer one or more of the
Mortgage Loans. The Purchaser shall advise the Company of any such transfer.
Upon receipt of notice of the transfer, the Company shall xxxx its books and
records to reflect the ownership of the Mortgage Loans of such assignee, and
shall release the previous Purchaser from its obligations hereunder with respect
to the Mortgage Loans sold or transferred. If the Company receives notification
of a transfer less than ten (10) Business Days before the last calendar day of
the month, the Company's duties to remit and report as required by Article V
shall begin with the next Due Period. The Company acknowledges it has been
notified with respect to the first transfer after the initial Closing Date.
Section 2.03 Custodial Agreement; Delivery of Documents.
Pursuant to the related Custodial Agreement the Company will, with respect
to each Mortgage Loan, deliver and release the Mortgage Loan Documents to the
Custodian at least ten (10) Business Days prior to the related Closing Date. In
addition, in connection with the assignment of any MERS Designated Mortgage
Loan, the Company agrees that on or prior to each Closing Date it may cause, at
its own expense, the MERS System to indicate that the related Mortgage Loans
have been assigned by the Company to the Purchaser in accordance with this
Agreement by entering in the MERS System the information required by the MERS
System to identify the Purchaser as owner of such Mortgage Loans. The Company
further agrees that it will not alter the information referenced in this
paragraph with respect to any Mortgage Loan during the term of this Agreement
unless and until such Mortgage Loan is repurchased in accordance with the terms
of this Agreement.
The Custodian shall be required to certify its receipt of the Mortgage Loan
Documents required to be delivered pursuant to the Custodial Agreement prior to
the related Closing Date, as evidenced by the initial certification of the
Custodian in the form annexed to the Custodial Agreement. The Company shall be
responsible for recording the Assignments of Mortgage, if necessary, in
accordance with Accepted Servicing Practices and this Agreement. The Purchaser
shall be responsible for the initial and on-going fees and expenses of the
Custodian.
17
All recording fees and other costs associated with the recording of
Assignments of Mortgage and other relevant documents to the Purchaser or its
designee will be borne by the Company. For Mortgage Loans not registered under
the MERS System, if the Purchaser requests that the related Assignments of
Mortgage be recorded, the Company shall cause such Assignments of Mortgage which
were delivered in blank to be completed and to be recorded. The Company shall be
required to deliver such Assignments of Mortgage for recording within thirty
(30) days of the date on which the Company is notified that recording will be
required pursuant to this Section 2.03. The Company shall furnish the Custodian
with a copy of each Assignment of Mortgage submitted for recording. In the event
that any such Assignment is lost or returned unrecorded because of a defect
therein, the Company shall promptly have a substitute Assignment of Mortgage
prepared or have such defect cured, as the case may be, and thereafter cause
such Assignment of Mortgage to be duly recorded.
Except as otherwise provided in this Section 2.03, upon discovery or
receipt of notice of any materially defective Mortgage Loan Document, or that a
Mortgage Loan Document is missing, the Company shall have ninety (90) days to
cure such defect or deliver such missing document to the Custodian. Any Mortgage
that is not executed as required or does not strictly comply with all legal
requirements shall be deemed to be materially defective. If the Company does not
cure such defect or deliver such missing document within such time period, the
Company shall either repurchase or substitute for such Mortgage Loan in
accordance with Section 3.03.
The Company shall forward to the Custodian original documents evidencing an
assumption, modification, consolidation or extension of any Mortgage Loan
entered into in accordance with Section 4.01 or 6.01 within one week of their
execution, provided, however, that the Company shall provide the Custodian with
a certified true copy of any such document submitted for recordation within ten
(10) Business Days of its execution, and shall provide the original of any
document submitted for recordation or a copy of such document certified by the
appropriate public recording office to be a true and complete copy of the
original within ninety (90) days of its submission for recordation.
If the original or a copy certified by the appropriate recording office of
any document submitted for recordation to the appropriate public recording
office is not so delivered to the Custodian 240 days following the related
Closing Date, and if the Company does not cure such failure within ninety (90)
days after receipt of written notification of such failure from the Purchaser,
the related Mortgage Loan shall, upon the request of the Purchaser, be
repurchased by the Company at a price and in the manner specified in Section
3.03.
In the event the public recording office is delayed in returning any
original document, the Company shall deliver to the Custodian within 240 days of
its submission for recordation, a copy of such document and an Officer's
Certificate, which shall (i) identify the recorded document; (ii) state that the
recorded document has not been delivered to the Custodian due solely to a delay
by the public recording office, (iii) state the amount of time generally
required by the applicable recording office to record and return a document
submitted for recordation, and (iv) specify the date the applicable recorded
document will be delivered to the Custodian. The Company will be required to
deliver the document to the Custodian by the date specified in (iv) above. An
extension of the date specified in (iv) above may be requested from the
Purchaser, which consent
18
shall not be unreasonably withheld. However, if the Company cannot deliver such
original or clerk-certified copy of any document submitted for recordation to
the appropriate public recording office within the specified time for any
reason, within sixty (60) days after receipt of written notification of such
failure from the Purchaser, the Company shall repurchase the related Mortgage
Loan at the price and in the manner specified in Section 3.03.
In addition to any rights granted to the Purchaser hereunder to underwrite
the Mortgage Loans and review the Mortgage Loan Documents prior to the Closing
Date, the Purchaser shall be entitled to conduct a due diligence review of the
Mortgage Files in accordance with the timetable and any additional terms and
conditions set forth in the Purchase Price and Terms Letter. Such underwriting
by the Purchaser or its designee shall not impair or diminish the rights of the
Purchaser or any of its successors under this Agreement with respect to a breach
of the representations and warranties contained in this Agreement. The fact that
the Purchaser or its designee has conducted or has failed to conduct any partial
or complete examination of the Mortgage Files shall not affect the Purchaser's
or any of its successors' rights to demand repurchase or other relief or remedy
provided for in this Agreement.
Section 2.04 Quality Control Procedures.
The Company shall have an internal quality control program that verifies,
on a regular basis, the existence and accuracy of the legal documents, credit
documents, property appraisals, and underwriting decisions. The program shall
include evaluating and monitoring the overall quality of the Company's loan
production and the servicing activities of the Company. The Company shall make
available upon request of the Purchaser information regarding its quality
control program.
Section 2.05 Closing Conditions.
The closing for the purchase and sale of each Mortgage Loan Package shall
take place on the respective Closing Date. The closing shall be either by
telephone, confirmed by letter or wire as the parties shall agree, or conducted
in person, at such place as the parties may agree.
The closing for each Mortgage Loan Package shall be subject to the
satisfaction of each of the following conditions:
(a) with respect to the Purchaser's obligations to close:
(i) the Company shall have delivered to the Purchaser and the
Custodian the related Mortgage Loan Schedule and an electronic data file
containing information on a loan-level basis;
(ii) all of the representations and warranties of the Company under
this Agreement shall be true and correct as of the related Closing Date
(or, with respect to Section 3.02, such other date specified therein) in
all material respects and no default shall have occurred hereunder which,
with notice or the passage of time or both, would constitute an Event of
Default hereunder;
19
(iii) the Purchaser shall have received from the Custodian an initial
certification with respect to its receipt of the Mortgage Loan Documents
for the related Mortgage Loans;
(iv) the Purchaser shall have received executed copies of the related
Memorandum of Sale, the related Purchase Price and Terms Letter and a
funding memorandum setting forth the Purchase Price(s), and the accrued
interest thereon, for the Mortgage Loan Package, in each case executed on
behalf of the Company; and
(v) all other terms and conditions of this Agreement, the related
Memorandum of Sale and the related Purchase Price and Terms Letter to be
satisfied by the Company shall have been complied with in all material
respects; and
(b) with respect to the Company's obligations to close:
(i) the Company shall have received a copy of the initial
certification of the Custodian with respect to its receipt of the Mortgage
Loan Documents for the related Mortgage Loans;
(ii) the Company has received executed copies of the related
Memorandum of Sale, the related Purchase Price and Terms Letter and a
funding memorandum setting forth the Purchase Price(s), and accrued
interest thereon, for the Mortgage Loan Package, in each case executed on
behalf of the Purchaser; and
(iii) all terms and conditions of this Agreement, the related
Memorandum of Sale and the related Purchase Price and Terms Letter to be
satisfied by the Purchaser shall have been materially complied with.
Upon satisfaction of the foregoing conditions, the Purchaser shall pay to
the Company on such Closing Date the Purchase Price for the related Mortgage
Loan Package, including accrued interest pursuant to Section 2.01 of this
Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES REMEDIES AND BREACH
Section 3.01 Company Representations and Warranties.
The Company hereby represents and warrants to the Purchaser that, as of the
related Closing Date:
(a) Due Organization and Authority.
The Company is a limited liability company duly organized, validly
existing and in good standing under the laws of the State of Delaware
and has all licenses necessary to carry on its business as now being
conducted and is in good standing in each state where a Mortgaged
Property is located and, in any event, the Company is in compliance
with the laws of any such state to the extent necessary
20
to ensure the enforceability of the related Mortgage Loan in
accordance with the terms of this Agreement; the Company has the full
power and authority to execute and deliver this Agreement and to
perform in accordance herewith; the execution, delivery and
performance of this Agreement (including all instruments of transfer
to be delivered pursuant to this Agreement) by the Company and the
consummation of the transactions contemplated hereby have been duly
and validly authorized; this Agreement evidences the valid, binding
and enforceable obligation of the Company; and all requisite action
has been taken by the Company to make this Agreement valid and binding
upon the Company in accordance with its terms;
(b) Ordinary Course of Business.
The consummation of the transactions contemplated by this Agreement
are in the ordinary course of business of the Company, who is in the
business of selling loans, and the transfer, assignment and conveyance
of the Mortgage Notes and the Mortgages by the Company pursuant to
this Agreement are not subject to the bulk transfer or any similar
statutory provisions in effect in any applicable jurisdiction;
(c) No Conflicts.
Neither the execution and delivery of this Agreement, the acquisition
of the Mortgage Loans by the Company, the sale of the Mortgage Loans
to the Purchaser or the transactions contemplated hereby, nor the
fulfillment of or compliance with the terms and conditions of this
Agreement will conflict with or result in a breach of any of the
organizational documents of the Company or any legal restriction or
any agreement or instrument to which the Company is now a party or by
which it is bound, or constitute a default or result in the violation
of any law, rule, regulation, order, judgment or decree to which the
Company or its property is subject, or impair the ability of the
Purchaser to realize on the Mortgage Loans, or impair the value of the
Mortgage Loans;
(d) Ability to Service.
The Company or its Subservicer is an approved seller/servicer of
conventional residential mortgage loans for Xxxxxx Xxx or Xxxxxxx Mac,
with the facilities, procedures, and experienced personnel necessary
for the sound servicing of mortgage loans of the same type as the
Mortgage Loans. The Company is a HUD approved mortgagee pursuant to
Section 203 of the National Housing Act and is in good standing to
sell mortgage loans to and service mortgage loans for Xxxxxx Mae or
Xxxxxxx Mac;
(e) Reasonable Servicing Fee; Fair Consideration.
The Company 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 Company, for accounting
and tax purposes, as compensation for the servicing and administration
of the Mortgage Loans
21
pursuant to this Agreement. The consideration received by the Company
upon the sale of the Mortgage Loans under this Agreement shall
constitute fair consideration and reasonably equivalent value for the
Mortgage Loans;
(f) Ability to Perform; Solvency.
The Company does not believe, nor does it have any reason or cause to
believe, that it cannot perform each and every covenant contained in
this Agreement. The Company is solvent and the sale of the Mortgage
Loans will not cause the Company to become insolvent. The sale of the
Mortgage Loans is not undertaken to hinder, delay or defraud any of
the Company's creditors;
(g) No Litigation Pending.
There is no action, suit, proceeding or investigation pending or to
its knowledge threatened against the Company which, either in any one
instance or in the aggregate, may result in any material adverse
change in the business, operations, financial condition, properties or
assets of the Company, or in any material impairment of the right or
ability of the Company to carry on its business substantially as now
conducted, or in any material liability on the part of the Company, or
which would draw into question the validity of this Agreement or the
Mortgage Loans or of any action taken or to be contemplated herein, or
which would be likely to impair materially the ability of the Company
to perform under the terms of this Agreement;
(h) No Consent Required.
No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery
and performance by the Company of or compliance by the Company with
this Agreement or the sale of the Mortgage Loans as evidenced by the
consummation of the transactions contemplated by this Agreement, or if
required, such consent, approval, authorization or order has been
obtained prior to the related Closing Date;
(i) Selection Process.
The Mortgage Loans will be selected on such Closing Date from among
the outstanding fixed and adjustable rate one- to four-family mortgage
loans in the Company's portfolio at such Closing Date as to which the
representations and warranties set forth in Section 3.02 could be made
and such selection will not be made in a manner so as to affect
adversely the interests of the Purchaser;
(j) No Untrue Information.
Neither this Agreement nor any written report furnished by the Company
pursuant to this Agreement or in connection with the transactions
contemplated hereby contains any untrue material statement of fact or
omits to state a material fact necessary to make the statements
contained therein not misleading;
22
(k) Sale Treatment.
The Company has determined that the disposition of the Mortgage Loans
pursuant to this Agreement will be afforded sale treatment for
accounting and tax purposes;
(l) No Material Change.
There has been no material adverse change in the business, operations
or financial condition of the Company since the date of the Company's
most recent financial statements;
(m) No Brokers' Fees.
The Company has not dealt with any broker, investment banker, agent or
other Person, other than the Purchaser and its affiliates, that may be
entitled to any commission or compensation in the connection with the
sale of the Mortgage Loans;
(n) Anti-Money Laundering Law and OFAC Compliance.
The Company has complied with all applicable anti-money laundering
laws and regulations, including without limitation the USA Patriot Act
of 2001 (collectively, the "Anti-Money Laundering Laws"); the Company
has established an anti-money laundering compliance program as
required by the Anti-Money Laundering Laws, has conducted the
requisite due diligence in connection with the origination of each
Mortgage Loan for purposes of the Anti-Money Laundering Laws,
including with respect to the legitimacy of the applicable Mortgagor
and the origin of the assets used by the said Mortgagor to purchase
the property in question, and maintains, and will maintain, sufficient
information to identify the applicable Mortgagor for purposes of the
Anti-Money Laundering Laws. No Mortgage Loan is subject to
nullification pursuant to Executive Order 13224 (the "Executive
Order") or the regulations promulgated by the Office of Foreign Assets
Control of the United States Department of the Treasury (the "OFAC
Regulations") or in violation of the Executive Order or the OFAC
Regulations, and no Mortgagor is subject to the provisions of such
Executive Order or the OFAC Regulations nor listed as a "blocked
person" for purposes of the OFAC Regulations;
(o) Securities Law Compliance.
Neither the Company nor anyone acting on its behalf has offered,
transferred, pledged, sold or otherwise disposed of any Mortgage
Loans, any interest in any Mortgage Loans or any other similar
security to, or solicited any offer to buy or accept a transfer,
pledge or other disposition of any Mortgage Loans, any interest in any
Mortgage Loans or any other similar security from, or otherwise
approached or negotiated with respect to any Mortgage Loans, any
interest in any Mortgage Loans or any other similar security with, any
person in any manner, or made any general solicitation by means of
general advertising or in any other
23
manner, or taken any other action which would constitute a
distribution of the Mortgage Loans under the Securities Act or which
would render the disposition of any Mortgage Loans a violation of
Section 5 of the Securities Act or require registration pursuant
thereto, nor will it act, nor has it authorized or will it authorize
any person to act, in such manner with respect to the Mortgage Loans;
(p) MERS.
The Company is 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 Designated Mortgage Loans. On or within ten (10)
Business Days following the related Closing Date, the Company has
provided the Custodian and the Purchaser with a MERS Report reflecting
the Purchaser as the Investor on the MERS System with respect to each
MERS Designated Mortgage Loan and no Person as Interim Funder for each
MERS Designated Mortgage Loan; and
(q) Compliance with the FACT Act.
As of the Closing Date, the sale or transfer of each Mortgage Loan by
the Company complies with all applicable federal, state and local
laws, rules and regulations governing such sale or transfer, including
without limitation, the Fair and Accurate Transactions Act (the "FACT
Act") and the Fair Credit Reporting Act, each as may be amended from
time to time, and the Company has not received any actual or
constructive notice of any identity theft in connection with such
Mortgage Loan.
Section 3.02 Representations and Warranties Regarding Individual Mortgage Loans.
As to each Mortgage Loan, the Company hereby represents and warrants to the
Purchaser that as of the related Closing Date:
(a) the information set forth in the Mortgage Loan Schedule hereto is true
and correct in all material respects; provided, however, that the Company makes
no representation with respect to any field in the related Mortgage Loan
Schedule regarding the occupancy of the property other than to confirm that the
stated occupancy was made by the related Mortgagor in the related loan
application;
(b) immediately prior to the transfer to the Purchaser, the Company was the
sole owner of beneficial title and holder of, and had good title to, each
Mortgage and Mortgage Note relating to the Mortgage Loans and is conveying the
same free and clear of any and all liens, claims, encumbrances, participation
interests, equities, pledges, charges or security interests of any nature and
the Company has full right and authority to sell or assign the same pursuant to
this Agreement;
(c) no selection procedure reasonably believed by the Company to be adverse
to the interests of the Purchaser was utilized in selecting the Mortgage Loans;
24
(d) each Mortgage Loan constitutes a "qualified mortgage" under Section
860G(a)(3)(A) of the Code and Treasury Regulation Section 1.860G-2(a)(1);
(e) as of the Cut-off Date, no Mortgage Loan is 30 or more days past due.
The Company has not advanced funds, or induced, solicited or knowingly received
any advance of funds from a party other than the owner of the related Mortgaged
Property, directly or indirectly, for the payment of any amount required by the
Mortgage Note or Mortgage;
(f) there are no delinquent taxes or assessment liens against the related
Mortgaged Property;
(g) no default, breach, violation or waiver exists under the mortgage
documents, and no modifications to the mortgage documents have been made that
have not been reflected in the Mortgage Loan Schedule;
(h) all buildings upon, or comprising part of, the Mortgaged Property are
insured by an insurer acceptable to Xxxxxx Mae and Xxxxxxx Mac against loss by
fire, hazards of extended coverage and such other hazards as are customary in
the area where the Mortgaged Property is located, and such insurer is licensed
to do business in the state where the Mortgaged Property is located. All such
insurance policies contain a standard mortgagee clause naming the originator,
its successors and assigns as mortgagee and Company has received no notice that
all premiums thereon have not been paid. The amount of the Mortgage Loan covered
by these insurance policies is in accordance with the standards of Xxxxxx Mae or
Xxxxxxx Mac. If upon origination of the Mortgage Loan, the Mortgaged Property
was, or was subsequently deemed to be, in an area identified in the Federal
Register by the Federal Emergency Management Agency as having special flood
hazards (and such flood insurance has been made available), which require under
applicable law that a flood insurance policy meeting the requirements of the
current guidelines of the Federal Insurance Administration (or any successor
thereto) be obtained, such flood insurance policy is in effect which policy is
with a generally acceptable carrier in an amount representing coverage not less
than the least of (A) the principal balance of the related Mortgage Loan, (B)
the minimum amount required to compensate for damage or loss on a replacement
cost basis, or (C) the maximum amount of insurance that is available under the
Flood Disaster Protection Act of 1973. The Mortgage obligates the Mortgagor
thereunder to maintain all such insurance at Mortgagor's cost and expense and,
on the Mortgagor's failure to do so, authorizes the holder of the Mortgage to
maintain such insurance at Mortgagor's cost and expense and to obtain
reimbursement therefor from the Mortgagor. Each such insurance policy is the
valid and binding obligation of the insurer and is in full force and effect.;
(i) 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) in compliance with any and
all applicable licensing requirements of the laws of the state wherein the
Mortgaged Property is located.;
(j) as of the Closing Date, there is no mechanics' lien or claim for work,
labor or material affecting the Mortgaged Property except those which are
insured against by the title insurance policy;
25
(k) as of the Closing Date, there is no valid offset, defense or
counterclaim to any Mortgage Note or Mortgage, and, to the best of the Company's
knowledge or the knowledge of the related servicer, no such offset, defense or
counterclaim has been asserted with respect thereto;
(l) as of the Closing Date, the physical property subject to any Mortgage
is free of material damage and is in good repair and there is no proceeding for
the total or partial condemnation thereof;
(m) all improvements which were considered in determining the appraised
value of the related 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;
(n) as of the date the Mortgage Loan was either originated or acquired by
the Company, no improvement located on or being part of the Mortgaged Property
was in violation of any applicable zoning and subdivision laws or ordinances;
(o) to the best of the Company's knowledge, 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, have been made or
obtained from the appropriate authorities;
(p) with respect to each Mortgage Loan, the related Mortgaged Property is
lawfully permitted to be occupied under applicable law;
(q) each Mortgage Loan was underwritten in accordance with the applicable
Underwriting Guidelines and policies of the related Originator (subject to
approved variances and exceptions in connection with compensating factors
consistent with customary practices and policies of the Company). The Company
has no knowledge of any fact that should have led it to expect at the time of
the initial creation of an interest in the Mortgage Loan that such Mortgage Loan
would not be paid in full when due;
(r) each original Mortgage has been recorded or is in the process of being
recorded in the appropriate jurisdictions wherein such recordation is required
to perfect the lien thereof for the benefit of the Purchaser;
(s) if an Assignment of Mortgage is included in the Mortgage File, such
Assignment of Mortgage is in recordable form and is acceptable for recording
under the laws of the jurisdiction in which the Mortgaged Property is located;
(t) the related Mortgage File contains each of the documents and
instruments specified;
(u) the Mortgage Loans are being serviced in accordance with Accepted
Servicing Practices and the Mortgage Note and all escrow deposits and Escrow
Payments, if any, are in the possession of, or under the control of, the Company
or its Subservicer and have been collected and handled in full compliance with
RESPA and other state and federal laws.;
26
(v) the Mortgage Note and the Mortgage have not been altered or modified in
any material respect, except by a written instrument which has been recorded,
and the substance of any such alteration or modification has been approved by
the title insurer, to the extent required by the related policy. No instrument
of alteration or modification has been executed by the Company or any other
person in the chain of title from the Company, and no Mortgagor has been
released, in whole or in part, except in connection with an assumption agreement
approved by the title insurer;
(w) the Mortgage has not been satisfied, subordinated, rescinded or
canceled, 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 satisfaction, subordination, rescission,
cancellation or release;
(x) the Mortgage Loan is covered by an ALTA lender's title insurance
policy, acceptable to Xxxxxx Xxx or Xxxxxxx Mac, or other generally acceptable
form of policy of insurance acceptable to Xxxxxx Mae or Xxxxxxx Mac, issued by a
title insurer acceptable to Xxxxxx Mae or Xxxxxxx Mac, insuring the Company, its
successors and assigns, as to the first priority lien of the Mortgage in the
original principal amount of the Mortgage Loan. The Company, its successors and
assigns, are the sole insureds of such lender's title insurance policy for each
Mortgage Loan, and such lender's title insurance policy is valid and remains in
full force and effect and will be in full force and effect upon the sale of the
Mortgage Loan to the Purchaser. Such lender's title insurance policy is valid
and remains in full force and effect;
(y) the Mortgaged Property consists of a contiguous parcel of real property
with single-family residence erected thereon, or a two- to four- family
dwelling, or an individual condominium unit, or an individual unit in a planned
unit development or a de minimis planned unit development. The Mortgaged
Property does not consist of any of the following property types: (a)
co-operative units, (b) mobile homes and (c) manufactured homes (as defined in
the Xxxxxx Mae Originator-Servicer's Guide), except when the appraisal indicates
that the home is of comparable construction to a stick or beam construction
home, is readily marketable, has been permanently affixed to the site and is not
in a mobile home "park." The Mortgaged Property is either a fee simple estate or
a residential lease. If any of the Mortgage Loans are secured by a leasehold
interest, with respect to each leasehold interest: the use of leasehold estates
for residential properties is an accepted practice in the area where the related
Mortgaged Property is located; residential property in such area consisting of
leasehold estates is readily marketable; the lease is recorded and no party is
in any way in breach of any provision of such lease; the leasehold is in full
force and effect and is not subject to any prior lien or encumbrance by which
the leasehold could be terminated or subject to any charge or penalty; and the
remaining term of the lease does not terminate less than ten years after the
maturity date of such Mortgage Loan;
(z) the Mortgage File contains an appraisal of the related Mortgaged
Property which satisfied the standards of Xxxxxx Xxx and Xxxxxxx Mac and was
made and signed, prior to the approval of the Mortgage Loan application, by a
qualified appraiser, duly appointed by the Company, who had no interest, direct
or indirect in the Mortgaged Property or in any loan made on the security
thereof, whose compensation is not affected by the approval or disapproval of
the Mortgage Loan and who met the minimum qualifications of Xxxxxx Mae and
Xxxxxxx Mac. Each
27
appraisal of the Mortgage Loan was made in accordance with the relevant
provisions of the Financial Institutions Reform, Recovery, and Enforcement Act
of 1989;
(aa) in the event the Mortgage constitutes a deed of trust, a trustee, duly
qualified under applicable law to serve as such, has been properly designated
and currently so serves and is named in the Mortgage, and no fees or expenses
are or will become payable by the Purchaser to the trustee under the deed of
trust, except in connection with a trustee's sale after default by the
Mortgagor;
(bb) [Reserved]
(cc) the Mortgage is a legal, valid, existing and enforceable first lien on
the Mortgaged Property, including all improvements on the Mortgaged Property, if
any, subject only to (1) the lien of current real property taxes and assessments
not yet due and payable, (2) covenants, conditions and restrictions, rights of
way, easements and other matters of the public record as of the date of
recording being acceptable to mortgage lending institutions generally and
specifically referred to in the lender's title insurance policy delivered to the
originator of the Mortgage Loan and which do not materially and adversely affect
the Appraised Value of the Mortgaged Property and (3) other matters to which
like properties are commonly subject which do not materially and adversely
affect the benefits of the security intended to be provided by the Mortgage. The
Company has full right to sell and assign the Mortgage to the Purchaser;
(dd) each Mortgagor who is a party to the Mortgage Note is a natural person
or a living trust;
(ee) all requirements of any federal, state or local law (including usury,
truth in lending, real estate settlement procedures, consumer credit protection,
equal credit opportunity, disclosure or recording, predatory and abusive lending
laws) applicable to the acquisition, origination and servicing of such Mortgage
Loan have been complied with in all material respects;
(ff) none of the Mortgage Loans are (a) loans subject to 12 CFR Part
226.31, 12 CFR Part 226.32 or 12 CFR Part 226.34 of Regulation Z, the regulation
implementing TILA, which implements the Home Ownership and Equity Protection Act
of 1994, as amended ("HOEPA"), (b) loans subject to, or in violation of, any
applicable state or local law, ordinance or regulation similar to HOEPA or (c)
classified and/or defined as a "high cost home loan" under any federal, state or
local law; the Company has implemented and conducted compliance procedures to
determine if each Mortgage Loan is "high-cost" home loan under the applicable
laws;
(gg) none of the Mortgage Loans secured by Mortgaged Property in the States
of Georgia, New York, Arkansas, Kentucky and Florida is a "high cost home loan"
as defined in the Georgia Fair Lending Act, as amended (the "Georgia Act"), the
Arkansas Home Loan Protection Act, as amended (the "Arkansas Act"), Kentucky
Revised Statutes Section 360.100, as amended (the "Kentucky Act"), the Florida
Home Loan Protection Act Section 494.007 (the "Florida Act"), and the New York
Predatory Lending Law, codified as N.Y. Banking Law Section 6-I, N.Y. Gen. Bus.
Law Section 771-a, and N.Y. Real Prop. Acts Law Section 1302 (together, the "New
York Act"), respectively;
28
(hh) none of the Mortgage Loans are subject to the New York Act; none of
the Mortgage Loans secured by Mortgaged Property in the District of Columbia is
a "covered loan" as defined in the District of Columbia Home Loan Protection Act
Section 26-1151.01 (the "D.C. Act"); none of the Mortgage Loans secured by
Mortgaged Property in Maine is a "high-rate, high-fee mortgage" as defined in
Maine Consumer Credit Code -- Truth In Lending Section 8-103 (the "Maine Act");
none of the Mortgage Loans secured by Mortgaged Property in Nevada is a "home
loan" as defined in Nevada Revised Statutes title 52, as amended by Assembly
Xxxx No. 284, 72nd Session (Nevada 2003) (the "Nevada Act"); and all the
Mortgage Loans that are subject to the Georgia Act, the New York Act, the
Arkansas Act, the Kentucky Act, the Florida Act, the D.C. Act, the Maine Act and
the Nevada Act comply with the requirements of each such legislation;
(ii) each Prepayment Premium is enforceable and was originated in
compliance with all applicable federal, state, and local laws;
(jj) each Mortgage Loan was originated by a savings and loan association,
savings bank, commercial bank, credit union, insurance company, or similar
institution which is supervised and examined by a federal or state authority, or
by a mortgagee approved by the Secretary of Housing and Urban Development
pursuant to sections 203 and 211 of the National Housing Act, all within the
meaning of Section 3(a)(41) of the Securities Exchange Act of 1934, as amended.
(kk) no Mortgage Loan is a High Cost Loan or Covered Loan, as applicable
(as such terms are defined in the then current Standard & Poor's LEVELS(R)
Glossary, which is now Version 5.7, Appendix E) and no Mortgage Loan originated
on or after October 1, 2002 through March 7, 2003 is governed by the "Georgia
Fair Lending Act";
(ll) to the best of the Company's knowledge, there is no breach, default,
violation or event of acceleration existing under the Mortgage or the Mortgage
Note and no event which, with the passage of time or with notice and the
expiration of any grace or cure period, would constitute a default, breach,
violation or event of acceleration. Neither the Company nor its predecessors
have waived any default, breach, violation or event of acceleration;
(mm) the related Mortgage Note and Mortgage are genuine and each is the
legal, valid and binding obligation of the maker thereof, enforceable 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 equity principles
(regardless of whether such enforcement is considered in a proceeding in equity
or at law). To the best of Company's knowledge, all parties to the Mortgage Note
and Mortgage had legal capacity to execute the Mortgage Note and Mortgage and
each Mortgage Note and Mortgage have been duly and properly executed by such
parties;
(nn) the proceeds of each Mortgage Loan have been fully disbursed, and
except with respect to any escrow holdbacks as approved by the related
originator, there is no requirement for future advances thereunder and any and
all requirements as to completion of any on-site or off-site improvements and as
to disbursement from any escrow funds therefore 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, except with respect to Buydown
Mortgage
29
Loans, the Mortgagor is not entitled to any refund of any amounts paid or due
under the Mortgage Note or Mortgage;
(oo) the related Mortgage contains customary and enforceable provisions
which render the rights and remedies of the holder thereof adequate for the
realization against the Mortgaged Property of the benefits of the security,
including (1) in the case of Mortgage designated as a deed of trust, by
trustee's sale, and (2) otherwise by judicial foreclosure. To the best of the
Company's knowledge, there is no homestead or other exemption (other than under
the Servicemembers Civil Relief Act) 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;
(pp) 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, except as may be limited by applicable law;
(qq) with respect to each adjustable-rate Mortgage Loan, all adjustments to
the Mortgage Interest Rate and monthly payment have been done in accordance with
the terms of the related Mortgage Note;
(rr) the information set forth in the Mortgage Loan Schedule with respect
to the Prepayment Premiums is true and correct in all material respects;
(ss) no foreclosure proceedings are pending against the Mortgaged Property
and the Mortgage Loan is not subject to any pending bankruptcy or insolvency
proceeding, and to the best of the Company's knowledge or the knowledge of the
related servicer, no material litigation or lawsuit relating to the Mortgage
Loan is pending;
(tt) all payments required to be made prior to the related Cut-off Date for
the Mortgage Loan under the terms of the Mortgage Note have been made and
credited. No payment under any Mortgage Loan has ever been 30 days or more
delinquent.
(uu) [Reserved];
(vv) to the best of the Company's knowledge, no fraud, with respect to a
Mortgage Loan has taken place on the part of the Company or its employees in
connection with the origination of such Mortgage Loan or the sale of such
Mortgage Loan to the Purchaser;
(ww) to the best of the Company's knowledge, the Mortgage Note is not and
has not been secured by any collateral, pledged account or other security except
the lien of the corresponding Mortgage;
(xx) to the best of the Company's knowledge, the Mortgagor has not notified
the Company or its servicer, and neither the Company nor its servicer has
knowledge of any relief requested by or provided to the Mortgagor under the
Servicemembers Civil Relief Act, as amended, or any similar state law;
30
(yy) with respect to any Mortgage Loan which is identified on the Mortgage
Loan Schedule as a balloon mortgage loan (each, a "Balloon Mortgage Loan"), the
Mortgage Note is payable in Monthly Payments based on a thirty (30) or forty
(40) year amortization schedule with a final Monthly Payment substantially
greater than the preceding Monthly Payment which is sufficient to amortize the
remaining principal balance of the Balloon Mortgage Loan and such final Monthly
Payment shall not be due prior to 180 months following the first Monthly Payment
of the Balloon Mortgage Loan;
(zz) no Mortgage Loans was made in connection with the construction of a
Mortgaged Property;
(aaa) the Mortgage Loan Documents for the related Mortgage Loans have been
delivered to the Custodian. The Company is in possession of a complete Mortgage
File for each Mortgage Loan in compliance with Exhibit B, except for such
documents the originals of which have been delivered to the Custodian. All
documents required to be included in the Mortgage File shall be complete,
executed as required and in compliance with applicable law. With respect to each
Mortgage Loan for which a lost note affidavit has been delivered to the
Custodian in place of the original Mortgage Note, the related Mortgage Note is
no longer in existence, and, if such Mortgage Loan is subsequently in default,
the enforcement of such Mortgage Loan or of the related Mortgage by or on behalf
of the Purchaser will not be affected by the absence of the original Mortgage
Note;
(bbb) the Mortgaged Property is free from any and all toxic or hazardous
substances and there exists no violation of any local, state or federal
environmental law, rule or regulation;
(ccc) each Mortgage Loan originated in the state of Texas pursuant to
Article XVI, Section 50(a)(6) of the Texas Constitution has been originated in
compliance with the provisions of Article XVI, Section 50(a)(6) of the Texas
Constitution, Texas Civil Statutes and the Texas Finance Code. If the Mortgage
Loan was originated in Texas, it is not a cash-out refinancing;
(ddd) no Adjustable Rate Mortgage Loan contains a provision permitting or
requiring conversion to a fixed interest rate Mortgage Loan;
(eee) all of the terms of the related Mortgage Note pertaining to interest
adjustments, payment adjustments and adjustments of the outstanding principal
balance, if any, are enforceable and such adjustments on such Mortgage Loan have
been made properly and in accordance with the provisions of such Mortgage Loan,
including any required notices, and such adjustments do not and will not affect
the priority of the Mortgage lien;
(fff) interest on each Mortgage Loan is calculated on the basis of a
360-day year consisting of twelve 30-day months; and
(ggg) the Mortgage Loans have an original term to maturity of not more than
30 years, with interest payable in arrears on the Due Date set forth on the
related Mortgage Loan Schedule. As to each Adjustable Rate Mortgage Loan on each
applicable Adjustment Date, the Mortgage Interest Rate has been or will be
adjusted to equal the sum of the Index plus the applicable Gross Margin, rounded
up or down to the nearest multiple of 0.125% indicated by the Mortgage Note;
provided that the Mortgage Interest Rate has not increased or decreased and will
not increase or
31
decrease by more than the Periodic Interest Rate Cap on any Adjustment Date, and
has not, nor will it in any event, exceed the maximum Mortgage Interest Rate or
be lower than the minimum Mortgage Interest Rate listed on the Mortgage Loan
Schedule for such Mortgage Loan. As to each Adjustable Rate Mortgage Loan, if
the related Mortgage Interest Rate changes on an Adjustment Date, the then
outstanding principal balance will be reamortized over the remaining life of
such Mortgage Loan. No Mortgage Loan contains terms or provisions which would
result in Negative Amortization.
Section 3.03 Repurchase.
It is understood and agreed that the representations and warranties set
forth in Sections 3.01 and 3.02 shall survive the sale of the Mortgage Loans to
the Purchaser and the delivery of the Mortgage Loan Documents to the Custodian
and shall inure to the benefit of the Purchaser, notwithstanding any restrictive
or qualified endorsement on any Mortgage Note or Assignment of Mortgage or the
examination or failure to examine any Mortgage File. Upon discovery by either
the Company or the Purchaser of any materially defective or missing Mortgage
Loan Document ("Defective Document") or a breach of any of the foregoing
representations and warranties that materially and adversely affects the value
of a Mortgage Loan or the interest of the Purchaser in the related Mortgage
Loan, the party discovering such Defective Document or a breach shall give
prompt written notice to the other.
Within ninety (90) days of the earlier of either discovery by or notice to
the Company of any Defective Document or a breach of a representation or
warranty which materially and adversely affects the value of a Mortgage Loan or
the interest of the Purchaser therein, the Company shall use its best efforts
promptly to cure such breach in all material respects and, if such Defective
Document or breach cannot be cured, the Company shall, at the Purchaser's
option, repurchase such Mortgage Loan at the Repurchase Price. In the event that
a breach shall involve any representation or warranty set forth in Section 3.01,
and such breach cannot be cured within ninety (90) days of the earlier of either
discovery by or notice to the Company of such breach, all of the Mortgage Loans
shall, at the Purchaser's option, be repurchased by the Company at the
Repurchase Price. However, if the breach or Defective Document shall involve a
representation or warranty set forth in Section 3.02 and the Company discovers
or receives notice of any such breach within ninety (90) days of the related
Closing Date, the Company shall, if the breach or Defective Document cannot be
cured, at the Purchaser's option and provided that the Company has a Qualified
Substitute Mortgage Loan, rather than repurchase the Mortgage Loan as provided
above, remove such Mortgage Loan (a "Deleted Mortgage Loan") and substitute in
its place a Qualified Substitute Mortgage Loan or Loans, provided that any such
substitution shall be effected not later than one hundred twenty (120) days
after the related Closing Date. Notwithstanding any of the foregoing, if a
breach or Defective Document would cause the Mortgage Loan to be other than a
"qualified mortgage," as defined in Section 860G(a)(3) of the Code, any such
repurchase or substitution must occur within forty-five (45) days from the date
the breach or Defective Document was discovered unless such breach is cured
during such period. In addition, for purposes of this Section 3.03, any document
required to be included in a Mortgage File that is not executed as required or
does not strictly comply with all legal requirements shall be deemed to
materially and adversely affect the interests of the Purchaser.
32
If the Company has no Qualified Substitute Mortgage Loan, it shall
repurchase the deficient Mortgage Loan within ninety (90) days after the written
notice of the breach or Defective Document. Any repurchase of a Mortgage Loan or
Loans pursuant to the foregoing provisions of this Section 3.03 shall occur on a
date designated by the Purchaser and shall be accomplished by deposit in the
Custodial Account of the amount of the Repurchase Price for distribution to the
Purchaser on the next scheduled Remittance Date, after deducting therefrom any
amount received in respect of such repurchased Mortgage Loan or Loans and being
held in the Custodial Account for future distribution.
At the time of repurchase or substitution, the Purchaser and the Company
shall arrange for the reassignment of the Deleted Mortgage Loan to the Company
and the delivery to the Company of any documents held by the Custodian relating
to the Deleted Mortgage Loan. In the event of a repurchase or substitution, the
Company shall, simultaneously with such reassignment, give written notice to the
Purchaser that such repurchase or substitution has taken place, amend the
related Mortgage Loan Schedule to reflect the withdrawal of the Deleted Mortgage
Loan from this Agreement, and, in the case of substitution, identify a Qualified
Substitute Mortgage Loan and amend the related Mortgage Loan Schedule to reflect
the addition of such Qualified Substitute Mortgage Loan to this Agreement. In
connection with any such substitution, the Company shall be deemed to have made
as to such Qualified Substitute Mortgage Loan the representations and warranties
set forth in Sections 3.01 and 3.02 except that all such representations and
warranties set forth in this Agreement shall be deemed made as of the date of
such substitution. The Company shall effect such substitution by delivering to
the Custodian for such Qualified Substitute Mortgage Loan the documents required
by Section 2.03, with the Mortgage Note endorsed as required by Section 2.03. No
substitution will be made in any calendar month after the Determination Date for
such month. The Company shall deposit in the Custodial Account the Monthly
Payment less the Servicing Fee due on such Qualified Substitute Mortgage Loan or
Loans in the month following the date of such substitution. Monthly Payments due
with respect to Qualified Substitute Mortgage Loans in the month of substitution
shall be retained by the Company. With respect to any Deleted Mortgage Loan,
distributions to the Purchaser shall include the Monthly Payment due on any
Deleted Mortgage Loan in the month of substitution, and the Company shall
thereafter be entitled to retain all amounts subsequently received by the
Company in respect of such Deleted Mortgage Loan.
For any month in which the Company substitutes one or more Qualified
Substitute Mortgage Loans for one or more Deleted Mortgage Loans, the amount (if
any) by which the aggregate principal balance of all such Qualified Substitute
Mortgage Loans as of the date of substitution is less than the aggregate Stated
Principal Balance of all such Deleted Mortgage Loans (after application of the
principal portion of the Monthly Payments due in the month of substitution) (the
"Substitution Adjustment Amount") shall be deposited into the Custodial Account
by the Company on or before the Remittance Date in the month succeeding the
calendar month during which the related Mortgage Loan is required to be
purchased or replaced hereunder.
In addition to such repurchase or substitution obligation, the Company
shall indemnify the Purchaser and hold it harmless against any losses, damages,
penalties, fines, forfeitures, reasonable and necessary legal fees and related
costs, judgments, and other costs and expenses resulting from any claim, demand,
defense or assertion based on or grounded upon, or resulting
33
from, a breach of the representations and warranties of the Company contained in
this Agreement. It is understood and agreed that the obligations of the Company
set forth in this Section 3.03 to cure, substitute for or repurchase a defective
Mortgage Loan and to indemnify the Purchaser as provided in this Section 3.03
constitute the sole remedies of the Purchaser respecting a breach of the
foregoing representations and warranties.
The Purchaser shall indemnify the Company and hold it harmless against any
losses, damages, penalties, fines, forfeitures, reasonable and necessary legal
fees and related costs, judgments, and other costs and expenses resulting from
any claim, demand, defense or assertion based on or grounded upon, or resulting
from, a breach of the representations and warranties of the Purchaser contained
in Section 3.06 of this Agreement.
Any cause of action against the Company relating to or arising out of the
breach of any representations and warranties made in Sections 3.01 and 3.02
shall accrue as to any Mortgage Loan upon (i) discovery of such breach by the
Purchaser or notice thereof by the Company to the Purchaser, (ii) failure by the
Company to cure such breach or repurchase such Mortgage Loan as specified above,
and (iii) demand upon the Company by the Purchaser for compliance with this
Agreement.
Section 3.04 Repurchase of Mortgage Loans With Early Payment Defaults.
If the related Mortgagor is thirty (30) days or more delinquent with
respect to the first two (2) Monthly Payments under a Mortgage Loan due after
the related Closing Date, the Company shall, at the Purchaser's option and
repurchase such Mortgage Loan from the Purchaser within thirty (30) calendar
days following receipt of notice by the Company at the Repurchase Price.
Section 3.05 Purchase Price Protection.
With respect to any Mortgage Loan that prepays in full within the first
thirty (30) days following the related Closing Date, then (a) with respect to
any such Mortgage Loan that does not provide for a Prepayment Premium, the
Company will pay to the Purchaser the premium paid by the Purchaser in excess of
par as set forth in the related Purchase Price and Terms Letter (the "Purchase
Premium") and (b) with respect to any such Mortgage Loan that provides for a
Prepayment Premium, the Company shall pay to the Purchaser such Prepayment
Premium, plus the amount, if any, by which the Purchase Premium exceeds the
amount of such Prepayment Premium. The Company shall remit the amounts payable
under clauses (a) and (b) above, for the benefit of the Purchaser or any
assignee of the Purchaser, by wire transfer of immediately available funds on
the Remittance Date following the Prepayment Period in which the prepayment was
received by the Company.
Section 3.06 Representations and Warranties of the Purchaser
(a) Due Organization and Authority.
The Purchaser is a national banking association duly organized,
validly existing and in good standing under the laws of the United
States and has all licenses necessary to carry on its business as now
being conducted; the Purchaser has the
34
full power and authority to execute and deliver this Agreement and to
perform in accordance herewith; the execution, delivery and
performance of this Agreement (including all instruments of transfer
to be delivered pursuant to this Agreement) by the Purchaser and the
consummation of the transactions contemplated hereby have been duly
and validly authorized; this Agreement evidences the valid, binding
and enforceable obligation of the Purchaser; and all requisite action
has been taken by the Purchaser to make this Agreement valid and
binding upon the Purchaser in accordance with its terms;
(b) Ordinary Course of Business.
The consummation of the transactions contemplated by this Agreement
are in the ordinary course of business of the Purchaser;
(c) No Conflicts.
Neither the execution and delivery of this Agreement, the acquisition
of the Mortgage Loans by the Purchaser or the transactions
contemplated hereby, nor the fulfillment of or compliance with the
terms and conditions of this Agreement will conflict with or result in
a breach of any of the organizational documents of the Purchaser 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 the violation of any law, rule, regulation,
order, judgment or decree to which the Purchaser or its property is
subject;
(d) 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;
(e) No Litigation Pending.
There is no action, suit, proceeding or investigation pending or to
its knowledge threatened against the Purchaser 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 Purchaser, or in any material impairment of the right or
ability of the Purchaser to carry on its business substantially as now
conducted, or in any material liability on the part of the Purchaser,
or which would draw into question the validity of this Agreement or of
any action taken or to be contemplated herein, or which would be
likely to impair materially the ability of the Purchaser to perform
under the terms of this Agreement; and
(f) 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 or the purchase of the
35
Mortgage Loans as evidenced by the consummation of the transactions
contemplated by this Agreement, or if required, such consent,
approval, authorization or order has been obtained prior to the
Closing Date.
ARTICLE IV
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 4.01 Company to Act as Servicer.
(a) The Company shall service and administer the Mortgage Loans through its
Subservicer, Cenlar FSB, all in accordance with the terms of this Agreement,
Accepted Servicing Practices, applicable law and the terms of the Mortgage Notes
and Mortgages. All references to the Company as servicer contained herein shall,
for the avoidance of doubt, mean the Company or its Subservicer. In connection
with such servicing and administration, the Company shall have full power and
authority, acting alone or through Subservicers, to do or cause to be done any
and all things in connection with such servicing and administration which the
Company may deem necessary or desirable, including, without limitation, the
power and authority (1) to execute and deliver, on behalf of the Purchaser,
customary consents or waivers and other instruments and documents, (2) to
consent, with respect to the Mortgage Loans it services, to transfers of any
Mortgaged Property and assumptions of the Mortgage Notes and related Mortgages
(but only in the manner provided in this Agreement), (3) to collect any
Insurance Proceeds and other Liquidation Proceeds relating to the Mortgage Loans
it services, and (4) to effectuate foreclosure or other conversion of the
ownership of the Mortgaged Property securing any Mortgage Loan it services. The
Company shall represent and protect the interests of the Purchaser in the same
manner as it protects its own interests in mortgage loans in its own portfolio
in any claim, proceeding or litigation regarding a Mortgage Loan and shall not
make or permit any modification, waiver or amendment of any term of any Mortgage
Loan, except as provided pursuant to Section 4.22. Without limiting the
generality of the foregoing, the Company shall continue, and is hereby
authorized and empowered, to execute and deliver on behalf of itself and the
Purchaser, all instruments of satisfaction or cancellation, or of partial or
full release, discharge and all other comparable instruments, with respect to
the Mortgage Loans and with respect to the Mortgaged Properties. If reasonably
required by the Company, the Purchaser shall furnish the Company with any powers
of attorney and other documents necessary or appropriate to enable the Company
and its Subservicer to carry out its servicing and administrative duties under
this Agreement.
(b) The Company may arrange for the subservicing of any Mortgage Loan it
services by a Subservicer pursuant to a Subservicing Agreement; provided,
however, that such subservicing arrangement and the terms of the related
Subservicing Agreement must provide for the servicing of such Mortgage Loan in a
manner consistent with the servicing arrangements contemplated hereunder. The
Company shall be solely liable for all fees owed to the Subservicer under the
Subservicing Agreement. Notwithstanding the provisions of any Subservicing
Agreement, any of the provisions of this Agreement relating to agreements or
arrangements between the Company and a Subservicer or reference to actions taken
through a Subservicer or otherwise, the Company shall remain obligated and
liable to the Purchaser for the servicing and administration of the Mortgage
Loans it services in accordance with the provisions of this
36
Agreement without diminution of such obligation or liability by virtue of such
Subservicing Agreements or arrangements or by virtue of indemnification from the
Subservicer and to the same extent and under the same terms and conditions as if
the Company alone were servicing and administering those Mortgage Loans. All
actions of each Subservicer performed pursuant to the related Subservicing
Agreement shall be performed as agent of the Company with the same force and
effect as if performed directly by the Company. For purposes of this Agreement,
the Company shall be deemed to have received any collections, recoveries or
payments with respect to the Mortgage Loans it services that are received by a
Subservicer regardless of whether such payments are remitted by the Subservicer
to the Company. Any Subservicing Agreement entered into by the Company shall
provide that it may be assumed or terminated by the Purchaser, if the Purchaser
has assumed the duties of the Company, or by any successor servicer, at the
Purchaser's or successor servicer's option, as applicable, without cost or
obligation to the assuming or terminating party or its assigns. Any Subservicing
Agreement, and any other transactions or services relating to the Mortgage Loans
involving a Subservicer, shall be deemed to be between the Company and such
Subservicer alone, and the Purchaser shall not be deemed parties thereto and
shall have no claims or rights of action against, rights, obligations, duties or
liabilities to or with respect to the Subservicer or its officers, directors or
employees, except as set forth in Section 4.01(a).
Section 4.02 Liquidation of Mortgage Loans.
In the event that any payment due under any Mortgage Loan and not postponed
pursuant to Section 4.01 is not paid when the same becomes due and payable, or
in the event the Mortgagor fails to perform any other covenant or obligation
under the Mortgage Loan and such failure continues beyond any applicable grace
period, the Company shall take such action as (1) the Company would take under
similar circumstances with respect to a similar mortgage loan held for its own
account for investment, (2) shall be consistent with Accepted Servicing
Practices, (3) the Company shall determine prudently to be in the best interest
of the Purchaser, and (4) is consistent with any related PMI Policy. Foreclosure
or comparable proceedings shall be initiated within one hundred twenty (120)
days of default for Mortgaged Properties for which no satisfactory arrangements
can be made for collection of delinquent payments unless prevented by statutory
limitations or states whose bankruptcy laws prohibit such actions within such
timeframe. The Company shall use its best efforts to realize upon defaulted
Mortgage Loans in such manner as will maximize the receipt of principal and
interest by the Purchaser, taking into account, among other things, the timing
of foreclosure proceedings. In such connection, the Company shall from its own
funds make all necessary and proper Servicing Advances, provided, however, that
the Company shall not be required to expend its own funds in connection with any
foreclosure or towards the restoration or preservation of any Mortgaged
Property, unless it shall determine (a) that such preservation, restoration
and/or foreclosure will increase the proceeds of liquidation of the Mortgage
Loan to Purchaser after reimbursement to itself for such expenses and (b) that
such expenses will be recoverable by it either through Liquidation Proceeds
(respecting which it shall have priority for purposes of withdrawals from the
Custodial Account pursuant to Section 4.05) or through Insurance Proceeds
(respecting which it shall have similar priority).
Notwithstanding anything to the contrary contained herein, in connection
with a foreclosure or acceptance of a deed in lieu of foreclosure, in the event
the Company has
37
reasonable cause to believe that a Mortgaged Property is contaminated by
hazardous or toxic substances or wastes, or if the Purchaser otherwise requests
an environmental inspection or review of such Mortgaged Property, such an
inspection or review is to be conducted by a qualified inspector. The cost for
such inspection or review shall be borne by the Purchaser. Upon completion of
the inspection or review, the Company shall promptly provide the Purchaser with
a written report of the environmental inspection.
After reviewing the environmental inspection report, the Purchaser shall
determine how the Company shall proceed with respect to the Mortgaged Property.
In the event (a) the environmental inspection report indicates that the
Mortgaged Property is contaminated by hazardous or toxic substances or wastes
and (b) the Purchaser directs the Company to proceed with foreclosure or
acceptance of a deed in lieu of foreclosure, the Company shall be reimbursed for
all reasonable costs associated with such foreclosure or acceptance of a deed in
lieu of foreclosure and any related environmental clean up costs, as applicable,
from the related Liquidation Proceeds, and/or Insurance Proceeds, or if the
Liquidation Proceeds and/or Insurance Proceeds are insufficient to fully
reimburse the Company, the Company shall be entitled to be reimbursed from
amounts in the Custodial Account pursuant to Section 4.05 hereof. In the event
the Purchaser directs the Company not to proceed with foreclosure or acceptance
of a deed in lieu of foreclosure, the Company shall be reimbursed for all
Servicing Advances made with respect to the related Mortgaged Property from the
Custodial Account pursuant to Section 4.05 hereof.
Section 4.03 Collection of Mortgage Loan Payments.
Continuously from the date hereof until the principal and interest on all
Mortgage Loans are paid in full, in accordance with this Agreement and Accepted
Servicing Standards, the Company through its subservicer shall proceed
diligently to collect all payments due under each of the Mortgage Loans when the
same shall become due and payable and shall take special care in ascertaining
and estimating Escrow Payments and all other charges that will become due and
payable with respect to the Mortgage Loan and the Mortgaged Property, to the end
that the installments payable by the Mortgagors will be sufficient to pay such
charges as and when they become due and payable.
Consistent with the foregoing, the Company may in its discretion (i) waive
any late payment charge with respect to a Mortgage Loan it services and (ii)
extend the due dates for payments due on a Mortgage Note for a period not
greater than 120 days; provided, however, that the Company cannot extend the
maturity of any such Mortgage Loan past the date on which the final payment is
due on the latest maturing Mortgage Loan as of the related Cut-off Date. In the
event of any such arrangement, the Company shall make Monthly Advances on the
related Mortgage Loan in accordance with the provisions of Section 5.03 during
the scheduled period in accordance with the amortization schedule of such
Mortgage Loan without modification thereof by reason of such arrangements. The
Company shall not be required to institute or join in litigation with respect to
collection of any payment (whether under a Mortgage, Mortgage Note or otherwise
or against any public or governmental authority with respect to a taking or
condemnation) if it reasonably believes that enforcing the provision of the
Mortgage or other instrument pursuant to which such payment is required is
prohibited by applicable law.
38
Section 4.04 Establishment of and Deposits to Custodial Account.
The Company shall segregate and hold all funds collected and received
pursuant to a Mortgage Loan separate and apart from any of its own funds and
general assets and shall establish and maintain for each Purchaser or assignee
one or more Custodial Accounts, in the form of time deposit or demand accounts,
titled "Opteum Financial Services, LLC, in trust for Bank of America, National
Association and/or subsequent purchasers of Mortgage Loans, and various
Mortgagors - P & I." The Custodial Account shall be established with a Qualified
Depository. Upon request of the Purchaser and within ten (10) days thereof, the
Company shall provide the Purchaser with written confirmation of the existence
of such Custodial Account. Any funds deposited in the Custodial Account shall at
all times be insured to the fullest extent allowed by applicable law. Funds
deposited in the Custodial Account may be drawn on by the Company in accordance
with Section 4.05.
The Company shall deposit in the Custodial Account within two Business Days
of Company's receipt, and retain therein, the following collections received by
the Company and payments made by the Company after the related Cut-off Date,
other than payments of principal and interest due on or before the related
Cut-off Date, or received by the Company prior to the related Cut-off Date but
allocable to a period subsequent thereto:
(i) all payments on account of principal on the Mortgage Loans,
including all Principal Prepayments (including Prepayment Premiums
paid by the Mortgagor or the Company pursuant to Section 4.22 of this
Agreement);
(ii) all payments on account of interest on the Mortgage Loans
adjusted to the Mortgage Loan Remittance Rate;
(iii) all Liquidation Proceeds;
(iv) all Insurance Proceeds, including amounts required to be
deposited pursuant to Section 4.10 (other than proceeds to be held in
the Escrow Account and applied to the restoration or repair of the
Mortgaged Property or released to the Mortgagor in accordance with
Section 4.14), Section 4.11 and Section 4.15;
(v) all Condemnation Proceeds which are not applied to the
restoration or repair of the Mortgaged Property or released to the
Mortgagor in accordance with Section 4.14;
(vi) any amounts required to be deposited in the Custodial
Account pursuant to Section 4.01, 5.01, 5.03, 6.01 or 6.02;
(vii) any amounts payable in connection with the repurchase of or
substitution for any Mortgage Loan pursuant to Section 3.03;
(viii) with respect to Principal Prepayments and any Prepayment
Interest Shortfalls relating to such Prepayment Period, the applicable
Compensating Interest payment (to be paid by the Company out of its
own funds);
39
(ix) any amounts required to be deposited by the Company pursuant
to Section 4.10 in connection with the deductible clause in any
blanket hazard insurance policy; and
(x) any amounts received with respect to or related to any REO
Property and all REO Disposition Proceeds pursuant to Section 4.16.
The foregoing requirements for deposit into the Custodial Account shall be
exclusive, it being understood and agreed that, without limiting the generality
of the foregoing, payments in the nature of late payment charges, assumption
fees and other ancillary income (other than Prepayment Premiums), to the extent
permitted by Section 6.01, need not be deposited by the Company into the
Custodial Account. Any interest paid on funds deposited in the Custodial Account
by the depository institution shall accrue to the benefit of the Company and the
Company shall be entitled to retain and withdraw such interest from the
Custodial Account pursuant to Section 4.05. Prior to changing the location of
the Custodial Account, the Company shall give notice to the Purchaser of such
change, which notice shall set forth the new location of the Custodial Account
when established. The Company shall maintain adequate records with respect to
all deposits and withdrawals made pursuant to this Section 4.04 and Section
4.05. All funds required to be deposited in the Custodial Account shall be held
in trust for the Purchaser until withdrawn in accordance with Section 4.05.
Section 4.05 Permitted Withdrawals From Custodial Account.
The Company shall, from time to time, withdraw funds from the Custodial
Account for the following purposes:
(i) to make payments to the Purchaser in the amounts and in the
manner provided for in Section 5.01;
(ii) to reimburse itself for Monthly Advances of the Company's
funds made pursuant to Section 5.03, the Company's right to reimburse
itself pursuant to this subclause (ii) being limited to amounts
received on the related Mortgage Loan which represent late payments of
principal and/or interest respecting which any such advance was made,
it being understood that, in the case of any such reimbursement, the
Company's right thereto shall be prior to the rights of Purchaser,
except that, where the Company is required to repurchase a Mortgage
Loan pursuant to Section 3.03 or 6.02, the Company's right to such
reimbursement shall be subsequent to the payment to the Purchaser of
the Repurchase Price pursuant to such sections and all other amounts
required to be paid to the Purchaser with respect to such Mortgage
Loan;
(iii) to reimburse itself for unreimbursed Servicing Advances,
and for any unpaid Servicing Fees, the Company's right to reimburse
itself pursuant to this subclause (iii) with respect to any Mortgage
Loan being limited to related Liquidation Proceeds, Condemnation
Proceeds, Insurance Proceeds and such other amounts as may be
collected by the Company from the Mortgagor or otherwise relating to
the Mortgage Loan, it being understood that, in the case of
40
any such reimbursement, the Company's right thereto shall be prior to
the rights of Purchaser, except that where the Company is required to
repurchase a Mortgage Loan pursuant to Section 3.03, 3.04 or 6.02, in
which case the Company's right to such reimbursement shall be
subsequent to the payment to the Purchaser of the Repurchase Price
pursuant to such sections and all other amounts required to be paid to
the Purchaser with respect to such Mortgage Loan;
(iv) to reimburse itself for previously unreimbursed Monthly
Advances or Servicing Advances that it determines are Nonrecoverable
Advances;
(v) to pay itself as part of its servicing compensation interest
on funds deposited in the Custodial Account;
(vi) to reimburse itself for expenses incurred and reimbursable
to it pursuant to Section 8.01;
(vii) to pay any amount required to be paid pursuant to Section
4.16 related to any REO Property, it being understood that, in the
case of any such expenditure or withdrawal related to a particular REO
Property, the amount of such expenditure or withdrawal from the
Custodial Account shall be limited to amounts on deposit in the
Custodial Account with respect to the related REO Property;
(viii) to remove funds inadvertently placed in the Custodial
Account by the Company;
(ix) to transfer funds to another Qualified Depository;
(x) to reimburse itself any Prepayment Interest Excess to the
extent not otherwise retained; and
(xi) to clear and terminate the Custodial Account upon the
termination of this Agreement.
In the event that the Custodial Account is interest bearing, on each
Remittance Date, the Company shall withdraw all funds from the Custodial Account
except for those amounts which, pursuant to Section 5.01, the Company is not
obligated to remit on such Remittance Date. The Company may use such withdrawn
funds only for the purposes described in this Section 4.05.
The Company shall keep and maintain separate accounting, on a Mortgage Loan
by Mortgage Loan basis, for the purpose of justifying any withdrawal from the
Custodial Account.
Section 4.06 Establishment of and Deposits to Escrow Account.
The Company shall segregate and hold all funds collected and received
pursuant to a Mortgage Loan constituting Escrow Payments separate and apart from
any of its own funds and general assets and shall establish and maintain for
each Purchaser or assignee one or more Escrow Accounts, in the form of time
deposit or demand accounts, titled, "Opteum Financial
41
Services, LLC, in trust for Bank of America, National Association and/or
subsequent purchasers of Residential Mortgage Loans, and various Mortgagors - T
& I." The Escrow Accounts shall be established with a Qualified Depository, in a
manner which shall provide maximum available insurance thereunder. Upon request
of the Purchaser and within ten (10) days thereof, the Company shall provide the
Purchaser with written confirmation of the existence of such Escrow Account.
Funds deposited in the Escrow Account may be drawn on by the Company in
accordance with Section 4.07.
The Company shall deposit in the Escrow Account or Accounts within two (2)
Business Days of Company's receipt, and retain therein:
(i) all Escrow Payments collected on account of the Mortgage
Loans, for the purpose of effecting timely payment of any such items
as required under the terms of this Agreement; and
(ii) all amounts representing Insurance Proceeds or Condemnation
Proceeds which are to be applied to the restoration or repair of any
Mortgaged Property.
The Company shall be entitled to retain any interest paid on funds
deposited in the Escrow Account by the depository institution, other than
interest on escrowed funds required by law to be paid to the Mortgagor. To the
extent required by law, the Company shall pay interest on escrowed funds to the
Mortgagor notwithstanding that the Escrow Account may be non-interest bearing or
that interest paid thereon is insufficient for such purposes.
Section 4.07 Permitted Withdrawals From Escrow Account.
The Company shall make withdrawals from the Escrow Account only to effect
such payments as are required under this Agreement, as set forth in this Section
4.07.
Withdrawals from the Escrow Account or Accounts may be made by the Company
only:
(i) to effect timely payments of ground rents, taxes,
assessments, water rates, mortgage insurance premiums, condominium
charges, fire and hazard insurance premiums or other items
constituting Escrow Payments for the related Mortgage;
(ii) to reimburse the Company for any Servicing Advances made by
the Company pursuant to Section 4.08 with respect to a related
Mortgage Loan, but only from amounts received on the related Mortgage
Loan which represent late collections of Escrow Payments thereunder;
(iii) to refund to any Mortgagor any funds found to be in excess
of the amounts required under the terms of the related Mortgage Loan;
(iv) for transfer to the Custodial Account for application to
reduce the principal balance of the Mortgage Loan in accordance with
the terms of the related Mortgage and Mortgage Note;
42
(v) for application to the restoration or repair of the Mortgaged
Property in accordance with the procedures outlined in Section 4.14;
(vi) to pay to the Company, or any Mortgagor to the extent
required by law, any interest paid on the funds deposited in the
Escrow Account;
(vii) to remove funds inadvertently placed in the Escrow Account
by the Company;
(viii) to remit to the Purchaser payments on account of Buydown
Funds, as applicable; and
(ix) to clear and terminate the Escrow Account on the termination
of this Agreement.
Section 4.08 Payment of Taxes, Insurance and Other Charges.
With respect to each Mortgage Loan, the Company shall maintain
accurate records reflecting the status of ground rents, taxes, assessments,
water rates, sewer rents, and other charges which are or may become a lien
upon the Mortgaged Property and the status of PMI Policy premiums and fire
and hazard insurance coverage and shall obtain, from time to time, all
bills for the payment of such charges (including renewal premiums) and
shall effect payment thereof prior to the applicable penalty or termination
date, employing for such purpose deposits of the Mortgagor in the Escrow
Account which shall have been estimated and accumulated by the Company in
amounts sufficient for such purposes, as allowed under the terms of the
Mortgage. The Company assumes full responsibility for the timely payment of
all such bills and shall effect timely payment of all such charges
irrespective of each Mortgagor's faithful performance in the payment of
same of the making of the Escrow Payments, and the Company shall make
advances from its own funds to effect such payments, which advances shall
constitute Servicing Advances hereunder; provided that the Company shall be
required to so advance only to the extent that the Company, in its good
faith judgment, believes the Servicing Advance to be recoverable from
Insurance Proceeds or Liquidation Proceeds or otherwise. The costs incurred
by the Company, if any, in effecting the timely payments of taxes and
assessments on the Mortgaged Properties and related insurance premiums
shall not be added to the Stated Principal Balances of the related Mortgage
Loans, notwithstanding that the terms of such Mortgage Loans so permit.
Section 4.09 Transfer of Accounts.
The Company may transfer the Custodial Account or the Escrow Account to a
different Qualified Depository from time to time; provided that the Company
shall give written notice to the Purchaser of any proposed change of the
location of either Account not later than the date of any change thereof.
Section 4.10 Maintenance of Hazard Insurance.
The Company shall cause to be maintained for each Mortgage Loan hazard
insurance such that all buildings upon the Mortgaged Property are insured by an
insurer acceptable to
43
Xxxxxx Xxx or Xxxxxxx Mac against loss by fire, hazards of extended coverage and
such other hazards as are customary or required by law in the area where the
Mortgaged Property is located, in an amount which is at least equal to the
lesser of (i) the maximum insurable value of the improvements securing such
Mortgage Loan and (ii) the greater of (a) the outstanding principal balance of
the Mortgage Loan and (b) an amount such that the proceeds thereof shall be
sufficient to prevent the Mortgagor or the loss payee from becoming a
co-insurer. In the event a hazard insurance policy shall be in danger of being
terminated, or in the event the insurer shall cease to be acceptable to Xxxxxx
Mae or Xxxxxxx Mac, the Company 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 4.11 hereof.
If the related Mortgaged Property is located in an area identified by the
Flood Emergency Management Agency as having special flood hazards (and such
flood insurance has been made available), the Company will cause to be
maintained a flood insurance policy meeting the requirements of the current
guidelines of the Federal Insurance Administration is in effect with a generally
acceptable insurance carrier acceptable to Xxxxxx Mae or Xxxxxxx Mac in an
amount representing coverage equal to the lesser of (i) the minimum amount
required, under the terms of coverage, to compensate for any damage or loss on a
replacement cost basis (or the unpaid balance of the mortgage if replacement
cost coverage is not available for the type of building insured) and (ii) the
maximum amount of insurance which is available under the Flood Disaster
Protection Act of 1973, as amended. If at any time during the term of the
Mortgage Loan, the Company determines in accordance with applicable law and
pursuant to the FEMA Guides that a Mortgaged Property is located in a special
flood hazard area and is not covered by flood insurance or is covered in an
amount less than the amount required by the Flood Disaster Protection Act of
1973, as amended, the Company shall notify the related Mortgagor to 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 Company shall immediately force place the required flood insurance on the
Mortgagor's behalf. Any out-of-pocket expenses or advance made by the Company on
such force placed flood insurance coverage shall be deemed a Servicing Advance.
If a Mortgage is secured by a unit in a condominium project, the Company
shall verify that the insurance coverage required of the owner's association is
being maintained in accordance with then current Xxxxxx Mae or Xxxxxxx Mac
requirements, and secure from the owner's association its agreement to notify
the Company promptly of any change in the insurance coverage or of any
condemnation or casualty loss that may have a material effect on the value of
the Mortgaged Property as security.
In the event that the Purchaser or the Company shall determine that the
Mortgaged Property should be insured against loss or damage by hazards and risks
not covered by the insurance required to be maintained by the Mortgagor pursuant
to the terms of the Mortgage, the Company shall communicate and consult with the
Mortgagor with respect to the need for such insurance and bring to the
Mortgagor's attention the desirability of protection of the Mortgaged Property.
44
All policies required hereunder shall name the Company as loss payee and
shall be endorsed with standard mortgagee clauses, without contribution, which
shall provide for prior written notice of any cancellation, reduction in amount
or material change in coverage.
The Company shall not interfere with the Mortgagor's freedom of choice in
selecting either an insurance carrier or agent, provided, however, that the
Company shall not accept any such insurance policies from insurance companies
unless such companies are acceptable to Xxxxxx Mae or Xxxxxxx Mac and are
licensed to do business in the jurisdiction in which the Mortgaged Property is
located. The Company shall determine that such policies provide sufficient risk
coverage and amounts, that they insure the property owner, and that they
properly describe the property address. The Company shall furnish to the
Mortgagor a formal notice of expiration of any such insurance in sufficient time
for the Mortgagor to arrange for renewal coverage by the expiration date.
Pursuant to Section 4.04, any amounts collected by the Company under any
such policies (other than amounts to be deposited in the Escrow Account and
applied to the restoration or repair of the related Mortgaged Property, or
property acquired in liquidation of the Mortgage Loan, or to be released to the
Mortgagor, in accordance with the Company's normal servicing procedures as
specified in Section 4.14) shall be deposited in the Custodial Account subject
to withdrawal pursuant to Section 4.05.
Section 4.11 Maintenance of Mortgage Impairment Insurance.
In the event that the Company shall obtain and maintain a blanket policy
insuring against losses arising from fire and hazards covered under extended
coverage on all of the Mortgage Loans, then, to the extent such policy (1) names
the Company as loss payee, (2) provides coverage in an amount equal to the
amount required pursuant to Section 4.10 without coinsurance, and (3) otherwise
complies with Accepted Servicing Practices and all other requirements of Section
4.10, it shall conclusively be deemed to have satisfied its obligations as set
forth in Section 4.10. The Company shall prepare and make any claims on the
blanket policy as deemed necessary by the Company in accordance with prudent
servicing practices. Any amounts collected by the Company under any such policy
relating to a Mortgage Loan shall be deposited in the Custodial Account subject
to withdrawal pursuant to Section 4.05. Such policy may contain a deductible
clause, in which case, in the event that there shall not have been maintained on
the related Mortgaged Property a policy complying with Section 4.10, and there
shall have been a loss which would have been covered by such policy, the Company
shall deposit in the Custodial Account at the time of such loss the amount not
otherwise payable under the blanket policy because of such deductible clause,
such amount to be deposited from the Company's funds, without reimbursement
therefor. Upon request of the Purchaser, the Company 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 thirty (30) days' prior written notice to the
Purchaser.
Section 4.12 Maintenance of Fidelity Bond and Errors and Omissions Insurance.
The Company shall maintain with responsible companies, at its own expense,
a blanket Fidelity Bond and an Errors and Omissions Insurance Policy, with broad
coverage on all officers,
45
employees or other persons acting in any capacity requiring such persons to
handle funds, money, documents or papers relating to the Mortgage Loans
("Company Employees"). Any such Fidelity Bond and Errors and Omissions Insurance
Policy shall be in the form of the Mortgage Banker's Blanket Bond and shall
protect and insure the Company against losses, including forgery, theft,
embezzlement, fraud, errors and omissions and negligent acts of such Company
Employees. Such Fidelity Bond and Errors and Omissions Insurance Policy also
shall protect and insure the Company against losses in connection with the
release or satisfaction of a Mortgage Loan without having obtained payment in
full of the indebtedness secured thereby. No provision of this Section 4.12
requiring such Fidelity Bond and Errors and Omissions Insurance Policy shall
diminish or relieve the Company from its duties and obligations as set forth in
this Agreement. The minimum coverage under any such Fidelity Bond and Errors and
Omissions Insurance Policy shall be at least equal to the amounts acceptable to
Xxxxxx Mae or Xxxxxxx Mac. Upon the request of the Purchaser, the Company shall
cause to be delivered to the Purchaser a certificate of insurance for such
Fidelity Bond and Errors and Omissions Insurance Policy and a statement from the
surety and the insurer that such Fidelity Bond and Errors and Omissions
Insurance Policy shall in no event be terminated or materially modified without
30 days' prior written notice to the Purchaser.
Section 4.13 Inspections.
If any Mortgage Loan is more than sixty (60) days delinquent, the Company
immediately shall inspect the Mortgaged Property and shall conduct subsequent
inspections in accordance with Accepted Servicing Practices or as may be
required by the primary mortgage guaranty insurer. The Company shall keep a
written report of each such inspection.
Section 4.14 Restoration of Mortgaged Property.
The Company need not obtain the approval of the Purchaser prior to
releasing any Insurance Proceeds or Condemnation Proceeds to the Mortgagor to be
applied to the restoration or repair of the Mortgaged Property if such release
is in accordance with Accepted Servicing Practices. For claims greater than
$20,000, at a minimum the Company shall comply with the following conditions in
connection with any such release of Insurance Proceeds or Condemnation Proceeds:
(i) the Company shall receive satisfactory independent
verification of completion of repairs and issuance of any required
approvals with respect thereto;
(ii) the Company shall take all steps necessary to preserve the
priority of the lien of the Mortgage, including, but not limited to
requiring waivers with respect to mechanics' and materialmen's liens;
(iii) the Company shall verify that the Mortgage Loan is not in
default; and
(iv) pending repairs or restoration, the Company shall place the
Insurance Proceeds or Condemnation Proceeds in the Escrow Account.
46
If the Purchaser is named as an additional loss payee, the Company is
hereby empowered to endorse any loss draft issued in respect of such a claim in
the name of the Purchaser.
Section 4.15 Maintenance of PMI Policy; Claims.
(a) With respect to each Mortgage Loan with a LTV in excess of 80% required
to have a PMI Policy as reflected on the related Mortgage Loan Schedule, the
Company shall, in accordance with state and federal laws and without any cost to
the Purchaser, maintain or cause the Mortgagor to maintain in full force and
effect a PMI Policy insuring that portion of the Mortgage Loan in excess of 80%
(or such other percentage as stated in the related Purchase Price and Term
Letter) of value, and shall pay or shall cause the Mortgagor to pay the premium
thereon on a timely basis, until terminated pursuant to the Homeowners
Protection Act of 1998, 12 USC Section 4901, et seq. In the event that such PMI
Policy shall be terminated, the Company shall obtain from another Qualified
Insurer a comparable replacement policy, with a total coverage equal to the
remaining coverage of such terminated PMI Policy. If the insurer shall cease to
be a Qualified Insurer, the Company shall determine whether recoveries under the
PMI Policy are jeopardized for reasons related to the financial condition of
such insurer, it being understood that the Company shall in no event have any
responsibility or liability for any failure to recover under the PMI Policy for
such reason. If the Company determines that recoveries are so jeopardized, it
shall notify the Purchaser and the Mortgagor, if required, and obtain from
another Qualified Insurer a replacement insurance policy. The Company shall not
take any action which would result in noncoverage under any applicable PMI
Policy of any loss which, but for the actions of the Company would have been
covered thereunder. In connection with any assumption or substitution agreement
entered into or to be entered into pursuant to Section 6.01, the Company shall
promptly notify the insurer under the related PMI Policy, if any, of such
assumption or substitution of liability in accordance with the terms of such PMI
Policy and shall take all actions which may be required by such insurer as a
condition to the continuation of coverage under such PMI Policy. If such PMI
Policy is terminated as a result of such assumption or substitution of
liability, the Company shall obtain a replacement PMI Policy as provided above.
(b) In connection with its activities as servicer, the Company agrees to
prepare and present, on behalf of itself and the Purchaser, claims to the
insurer under any PMI Policy in a timely fashion in accordance with the terms of
such PMI Policy and, in this regard, to take such action as shall be necessary
to permit recovery under any PMI Policy respecting a defaulted Mortgage Loan.
Pursuant to Section 4.04, any amounts collected by the Company under any PMI
Policy shall be deposited in the Custodial Account, subject to withdrawal
pursuant to Section 4.05.
(c) Purchaser, in its sole discretion, at any time, may (i) either obtain
an additional PMI Policy on any Mortgage Loan which already has a PMI Policy in
place, or (ii) obtain a PMI Policy for any Mortgage Loan which does not already
have a PMI Policy in place. In any event, the Company agrees to administer such
PMI Policies in accordance with the provisions of this Agreement or any
agreement related to a Pass Through Transfer or Whole Loan Transfer.
47
Section 4.16 Title, Management and Disposition of REO Property.
In the event that title to any Mortgaged Property is acquired in
foreclosure or by deed in lieu of foreclosure, the deed or certificate of sale
shall be taken in the name of the Purchaser, or in the event the Purchaser is
not authorized or permitted to hold title to real property in the state where
the REO Property is located, or would be adversely affected under the "doing
business" or tax laws of such state by so holding title, the deed or certificate
of sale shall be taken in the name of such Person or Persons as shall be
consistent with an Opinion of Counsel obtained by the Company from any attorney
duly licensed to practice law in the state where the REO Property is located.
The Person or Persons holding such title other than the Purchaser shall
acknowledge in writing that such title is being held as nominee for the
Purchaser.
The Company shall manage, conserve, protect and operate each REO Property
for the Purchaser solely for the purpose of its prompt disposition and sale.
However, the Purchaser shall have the option to manage and operate the REO
Property provided the Purchaser gives written notice of its intention to do so
within sixty (60) days after such REO Property is acquired in foreclosure or by
deed in lieu of foreclosure. The election by the Purchaser to manage the REO
Property shall not constitute a termination of any rights of the Company
pursuant to Section 11.02.
If the Purchaser does not elect to manage and operate the REO Property, the
Company shall manage, conserve, protect and operate each REO Property for the
Purchaser solely for the purpose of its prompt disposition and sale. The
Company, either itself or through an agent selected by the Company, shall
manage, conserve, protect and operate the REO Property in the same manner that
it manages, conserves, protects and operates other foreclosed property for its
own account, and in the same manner that similar property in the same locality
as the REO Property is managed. The Company shall attempt to sell the same (and
may temporarily rent the same for a period not greater than one year, except as
otherwise provided below) on such terms and conditions as the Company deems to
be in the best interest of the Purchaser.
The Company shall use its best efforts to dispose of the REO Property as
soon as possible and shall sell such REO Property in any event within one year
after title has been taken to such REO Property, unless (i) a REMIC election has
not been made with respect to the arrangement under which the Mortgage Loans and
the REO Property are held, and (ii) the Company determines, and gives an
appropriate notice to the Purchaser to such effect, that a longer period is
necessary for the orderly liquidation of such REO Property. If a period longer
than one year is permitted under the foregoing sentence and is necessary to sell
any REO Property, (i) the Company shall report monthly to the Purchaser as to
the progress being made in selling such REO Property and (ii) if, with the
written consent of the Purchaser, a purchase money mortgage is taken in
connection with such sale, such purchase money mortgage shall name the Company
as mortgagee, and such purchase money mortgage shall not be held pursuant to
this Agreement, but instead a separate participation agreement among the Company
and Purchaser shall be entered into with respect to such purchase money
mortgage.
The Company shall also maintain on each REO Property fire and hazard
insurance with extended coverage in amount which is at least equal to the
maximum insurable value of the improvements which are a part of such property,
liability insurance and, to the extent required
48
and available under the Flood Disaster Protection Act of 1973, as amended, flood
insurance in the amount required above.
The disposition of REO Property shall be carried out by the Company at such
price, and upon such terms and conditions, as the Company deems to be in the
best interests of the Purchaser. The proceeds of sale of the REO Property shall
be promptly deposited in the Custodial Account. As soon as practical thereafter
the expenses of such sale shall be paid and the Company shall reimburse itself
for any related unreimbursed Servicing Advances, unpaid Servicing Fees and
unreimbursed advances made pursuant to Section 5.03. On the Remittance Date
immediately following the Principal Prepayment Period in which such sale
proceeds are received the net cash proceeds of such sale remaining in the
Custodial Account shall be distributed to the Purchaser.
The Company shall withdraw from the Custodial Account funds necessary for
the proper operation management and maintenance of the REO Property, including
the cost of maintaining any hazard insurance pursuant to Section 4.11. The
Company shall make monthly distributions on each Remittance Date to the
Purchaser of the net cash flow from the REO Property (which shall equal the
revenues from such REO Property net of the expenses described in this Section
4.16 and of any reserves reasonably required from time to time to be maintained
to satisfy anticipated liabilities for such expenses).
Section 4.17 Real Estate Owned Reports.
Together with the statement furnished pursuant to Section 5.02, the Company
shall furnish to the Purchaser on or before the Remittance Date each month a
statement with respect to any REO Property covering the operation of such REO
Property for the previous month and the Company's efforts in connection with the
sale of such REO Property and any rental of such REO Property incidental to the
sale thereof for the previous month. That statement shall be accompanied by such
other information as the Purchaser shall reasonably request.
Section 4.18 Liquidation Reports.
Upon the foreclosure sale of any Mortgaged Property or the acquisition
thereof by the Company pursuant to a deed in lieu of foreclosure, the Company
shall submit to the Purchaser a liquidation report with respect to such
Mortgaged Property.
Section 4.19 Reports of Foreclosures and Abandonments of Mortgaged Property.
Following the foreclosure sale or abandonment of any Mortgaged Property,
the Company shall report such foreclosure or abandonment as required pursuant to
Section 6050J of the Code. The Company shall file information reports with
respect to the receipt of mortgage interest received in a trade or business,
reports of foreclosures and abandonments of any Mortgaged Property and
information returns relating to cancellation of indebtedness income with respect
to any Mortgaged Property as required by the Code. Such reports shall be in form
and substance sufficient to meet the reporting requirements imposed by the Code.
49
Section 4.20 Application of Buydown Funds.
With respect to each Buydown Mortgage Loan, the Company shall have
deposited into the Escrow Account, no later than the last day of the month,
Buydown Funds in an amount equal to the aggregate undiscounted amount of
payments that, when added to the amount the Mortgagor on such Mortgage Loan is
obligated to pay on all Due Dates in accordance with the terms of the Buydown
Agreement, is equal to the full scheduled Monthly Payments which are required to
be paid by the Mortgagor under the terms of the related Mortgage Note (without
regard to the related Buydown Agreement as if the Mortgage Loan were not subject
to the terms of the Buydown Agreement). With respect to each Buydown Mortgage
Loan, the Company will distribute to the Purchaser on each Remittance Date an
amount of Buydown Funds equal to the amount that, when added to the amount
required to be paid on such date by the related Mortgagor, pursuant to and in
accordance with the related Buydown Agreement, equals the full Monthly Payment
that would otherwise be required to be paid on such Mortgage Loan by the related
Mortgagor under the terms of the related Mortgage Note (as if the Mortgage Loan
were not a Buydown Mortgage Loan and without regard to the related Buydown
Agreement).
If the Mortgagor on a Buydown Mortgage Loan defaults on such Mortgage Loan
during the Buydown Period and the Mortgaged Property securing such Buydown
Mortgage Loan is sold in the liquidation thereof (either by the Company or the
insurer under any related Primary Insurance Policy) the Company shall, on the
Remittance Date following the date upon which Liquidation Proceeds or REO
Disposition proceeds are received with respect to any such Buydown Mortgage
Loan, distribute to the Purchaser all remaining Buydown Funds for such Mortgage
Loan then remaining in the Escrow Account (net of amounts reimbursable to the
Company with respect to such Mortgage Loan pursuant to this Agreement). Pursuant
to the terms of each Buydown Agreement, any amounts distributed to the Purchaser
in accordance with the preceding sentence will be applied to reduce the
outstanding principal balance of the related Buydown Mortgage Loan. If a
Mortgagor on a Buydown Mortgage Loan prepays such Mortgage Loan in it entirety
during the related Buydown Period, the Company shall be required to withdraw
from the Escrow Account any Buydown Funds remaining in the Escrow Account with
respect to such Buydown Mortgage Loan in accordance with the related Buydown
Agreement. If a principal prepayment by a Mortgagor on a Buydown Mortgage Loan
during the related Buydown Period, together with any Buydown Funds then
remaining in the Escrow Account related to such Buydown Mortgage Loan, would
result in a principal prepayment of the entire unpaid principal balance of the
Buydown Mortgage Loan, the Company shall distribute to the Purchaser on the
Remittance Date occurring in the month immediately succeeding the month in which
such Principal Prepayment is received, all Buydown Funds related to such
Mortgage Loan so remaining in the Escrow Account, together with any amounts
required to be deposited into the Custodial Account.
Section 4.21 Notification of Adjustments.
With respect to each Mortgage Loan, the Company shall adjust the Mortgage
Interest Rate on the related Adjustment Date in compliance with the requirements
of applicable law and the related Mortgage and Mortgage Note. The Company shall
execute and deliver any and all necessary notices required under applicable law
and the terms of the related Mortgage Note and Mortgage regarding the Mortgage
Interest Rate adjustments. The Company shall promptly, upon
50
written request, deliver to the Purchaser such notifications along with
information regarding the applicable date of such adjustments and the methods
used to calculate and implement such adjustments. Upon the discovery by the
Company or the receipt of notice from the Purchaser that the Company has failed
to adjust a Mortgage Interest Rate in accordance with the terms of the related
Mortgage Note, the Company shall immediately deposit in the Custodial Account
from its own funds the amount of any interest loss or deferral caused the
Purchaser thereby.
Section 4.22 Modifications, Waivers, Amendments and Consents.
(a) Subject to this Section 4.22, the Company may agree to any
modification, waiver, forbearance, or amendment of any term of any Mortgage Loan
without the consent of the Purchaser. All modifications, waivers, forbearances
or amendments of any Mortgage Loan shall be in writing and shall be consistent
with Accepted Servicing Practices.
(b) The Company shall not agree to enter into, and shall not enter into,
any modification, waiver, forbearance or amendment of any term of any Mortgage
Loan if such modification, waiver, forbearance, or amendment would:
(i) affect the amount or timing of any related payment of principal,
interest or other amount payable thereunder;
(ii) in the Company's judgment, materially impair the security for
such Mortgage Loan or reduce the likelihood of timely payment of amounts
due thereon; or
(iii) otherwise constitutes a "significant modification" within the
meaning of Treasury Regulations Section 1.860G-2(b);
unless, in each case, (A) such Mortgage Loan is 90 days or more past due or (B)
the Company delivers to the Purchaser an Opinion of Counsel to the effect that
such modification, waiver, forbearance or amendment would not affect the REMIC
status of the Trust Estate and, in either case, such modification, waiver,
forbearance or amendment is reasonably likely to produce a greater recovery with
respect to such Mortgage Loan than would liquidation. Subject to Accepted
Servicing Practices, the Company may permit a forbearance for a Mortgage Loan
which, in the Company's judgment, is subject to imminent default.
(c) Any payment of interest, which is deferred pursuant to any
modification, waiver, forbearance or amendment permitted hereunder, shall not,
for purposes hereof, be added to the unpaid principal balance of the related
Mortgage Loan, notwithstanding that the terms of such Mortgage Loan or such
modification, waiver or amendment so permit.
(d) The Company may, as a condition to granting any request by a Mortgagor
for consent, modification, waiver, forbearance or amendment, the granting of
which is within the Company's discretion pursuant to the Mortgage Loan and is
permitted by the terms of this Agreement, require that such Mortgagor pay to the
Company, as additional servicing compensation, a reasonable or customary fee for
the additional services performed in connection with such request, together with
any related costs and expenses incurred by the Company, which amount shall be
retained by the Company as additional servicing compensation.
51
(e) The Company shall notify the Purchaser, in writing, of any
modification, waiver, forbearance or amendment of any term of any Mortgage Loan
and the date thereof, and shall deliver to the Purchaser (or, at the direction
of the Purchaser, the Custodian) for deposit in the related Mortgage File, an
original counterpart of the agreement relating to such modification, waiver,
forbearance or amendment, promptly (and in any event within ten Business Days)
following the execution thereof; provided, however, that if any such
modification, waiver, forbearance or amendment is required by applicable law to
be recorded, the Company (i) shall deliver to the Purchaser a copy thereof and
(ii) shall deliver to the Purchaser such document, with evidence of notification
upon receipt thereof from the public recording office.
(f) The Company may waive (or permit a Subservicer to waive) a Prepayment
Premium only under the following circumstances: (i) the related prepayment is
not the result of a refinancing by the Company or its designee, (ii) such waiver
relates to a defaulted Mortgage Loan or a reasonably foreseeable default, (iii)
such waiver is standard and customary in servicing similar mortgage loans to the
Mortgage Loans, and (iv) such waiver in the reasonable judgment of the Company,
would maximize recovery of total proceeds from the Mortgage Loan, taking into
account the amount of such Prepayment Premium and the related Mortgage Loan.
The Company shall pay the amount of any Prepayment Premium (to the extent
not collected and remitted to the Purchaser) to the Purchaser or its assignees
if (1) the representation in Section 3.02(ii) or (rr) is breached and such
breach materially and adversely affects the interests of the Purchaser or its
assigns or (2) the Company or its designee waives any Prepayment Premium other
than as permitted under this Section 4.22(f). The Company shall pay the amount
of such Prepayment Premium, for the benefit of the Purchaser or any assignee of
the Purchaser, by remitting such amount to the Purchaser or any assignee of the
Purchaser, by wire transfer of immediately available funds on the Remittance
Date following the Prepayment Period in which the prepayment is received by the
Company.
Section 4.23 Disaster Recovery/Business Continuity Plan.
The Company shall establish and maintain contingency plans, recovery plans
and proper risk controls to ensure Company's continued performance under this
Agreement. The plans must be in place within thirty (30) calendar days after the
date of this Agreement and shall include, but not be limited to, testing,
control functions, accountability and corrective actions to be immediately
implemented, if necessary. The Company agrees to make copies or summaries of the
plans available to the Purchaser or its regulators upon request.
Section 4.24 Fair Credit Reporting Act.
(a) The Company shall furnish, in accordance with the Fair Credit Reporting
Act and its implementing regulations, accurate and complete information (i.e.,
favorable and unfavorable) on each Mortgagor's credit files to Equifax,
Experian, and Trans Union Credit Information Company (three of the credit
repositories), on a monthly basis.
(b) The Company agrees to transmit full-file credit reporting data for each
Mortgage Loan pursuant to Xxxxxx Xxx Guide Announcement 95-19 and for each
Mortgage Loan, the
52
Company shall report one of the following statuses each month: new origination,
current, delinquent (30-, 60-, 90-days, etc.), foreclosed or charged-off.
(c) The Company shall comply with Title V of the Gramn-Xxxxx-Xxxxxx Act of
1999 and all applicable regulations promulgated thereunder, relating to the
Mortgage Loans and the related Mortgagors and shall provide all required notices
thereunder.
ARTICLE V
PAYMENTS TO PURCHASER
Section 5.01 Remittances.
On each Remittance Date the Company shall remit by wire transfer of
immediately available funds to the Purchaser (a) all amounts deposited in the
Custodial Account as of the close of business on the Determination Date (net of
charges against or withdrawals from the Custodial Account pursuant to Section
4.05) together with the applicable Compensating Interest payment deposited in
the Custodial Account in accordance with Section 4.04(viii), plus (b) all
Monthly Advances, if any, which the Company is obligated to remit pursuant to
Section 5.03, minus (c) any amounts attributable to Principal Prepayments
received after the applicable Principal Prepayment Period which amounts shall be
remitted on the following Remittance Date; and, minus (d) any amounts
attributable to Monthly Payments collected but due on a Due Date or Dates
subsequent to the first day of the month of the Remittance Date, which amounts
shall be remitted on the Remittance Date next succeeding the Due Period for such
amounts.
With respect to any remittance received by the Purchaser after the
Remittance Date on which such payment was due, the Company shall pay to the
Purchaser interest on any such late payment at an annual rate equal to the Prime
Rate, adjusted as of the date of each change, plus three percentage points, but
in no event greater than the maximum amount permitted by applicable law. Such
interest shall be deposited in the Custodial Account by the Company on the date
such late payment is made and shall cover the period commencing with the day
following 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 the distribution payable on the next succeeding
Remittance Date. The payment by the Company of any such interest shall not be
deemed an extension of time for payment or a waiver of any Event of Default by
the Company.
Section 5.02 Automated Servicing Systems and Statements to Purchaser.
The Company shall setup, format, maintain and transmit to the Purchaser the
Company's servicing date and other electronic data storage and transmission
systems related to the Mortgage Loans (collectively, the "Servicing Systems") in
accordance with the guidelines and requirements set forth in Exhibit J attached
hereto (the "Servicer Requirements"), and the Company shall cooperate with the
Purchaser to receive data fields from the Purchaser that are to be incorporated
in the Servicing Systems in accordance with the Servicer Requirements.
Not later than the first (1st) Business Day of each month, the Company
shall furnish to the Purchaser, with respect to the preceding month, a monthly
collection report, a monthly paid
53
in full report that summarizes Mortgage Loans paid in full during the Due Period
and a monthly trial balance report that provides a trial balance as of the last
day of the month preceding such Remittance Date in electronic format agreed upon
by the Company and the Purchaser.
Not later than the fifth (5th) Business Day of each month, the Company
shall furnish to the Purchaser a delinquency report and a monthly remittance
advice, including the information set forth in Exhibit J, in both a physical
form and a mutually agreeable electronic format as to the remittance on such
Remittance Date and as to the period ending on the last day of the month
preceding such Remittance Date.
Section 5.03 Monthly Advances by Company.
No later than the close of business on the Business Day preceding each
Remittance Date, the Company shall deposit in the Custodial Account from its own
funds or from amounts held for future distribution an amount equal to all
Monthly Payments (with interest adjusted to the Mortgage Loan Remittance Rate)
which were due on the Mortgage Loans during the applicable Due Period and which
were delinquent at the close of business on the related Determination Date or
which were deferred pursuant to Section 4.01. Any amounts held for future
distribution and so used shall be replaced by the Company by deposit in the
Custodial Account on or before any future Remittance Date if funds in the
Custodial Account on such Remittance Date shall be less than payments to the
Purchaser required to be made on such Remittance Date. The Company's obligation
to make such Monthly Advances as to any Mortgage Loan will continue through the
last Monthly Payment due prior to the payment in full of the Mortgage Loan, or
through the date on which cash is received in connection with the liquidation of
REO Property; provided, however, that any such obligation under this Section
5.03 shall cease if the Company determines, in its sole reasonable opinion, that
such advances would constitute Nonrecoverable Advances. In the event that the
Company determines that any such advances would constitute Nonrecoverable
Advances, the Company shall provide the Purchaser with a certificate signed by
two officers of the Company evidencing such determination.
ARTICLE VI
GENERAL SERVICING PROCEDURES
Section 6.01 Due-on-Sale Provision and Assumptions.
The Company shall use its best efforts to enforce any "due-on-sale"
provision contained in any Mortgage or Mortgage Note and to deny assumption by
the person to whom the Mortgaged Property has been or is about to be sold
whether by absolute conveyance or by contract of sale, and whether or not the
Mortgagor remains liable on the Mortgage and the Mortgage Note. When the
Mortgaged Property has been conveyed by the Mortgagor, the Company shall, to the
extent it has knowledge of such conveyance, exercise its rights to accelerate
the maturity of such Mortgage Loan under the "due-on-sale" clause applicable
thereto, provided, however, that the Company shall not exercise such rights if
prohibited by law from doing so or if the exercise of such rights would impair
or threaten to impair any recovery under the related PMI Policy, if any.
54
If the Company reasonably believes it is unable under applicable law to
enforce such "due-on-sale" clause or that either a decision not to exercise the
"due-on-sale" provision or a decision to permit an assumption of the Mortgage
Loan is in the best interest of the Purchaser, the Company shall enter into (i)
an assumption and modification agreement with the person to whom such property
has been conveyed, pursuant to which such person becomes liable under the
Mortgage Note and the original Mortgagor remains liable thereon or (ii) in the
event the Company is unable under applicable law to require that the original
Mortgagor remain liable under the Mortgage Note and the Company has the prior
consent of the primary mortgage guaranty insurer, a substitution of liability
agreement with the purchaser of the Mortgaged Property pursuant to which the
original Mortgagor is released from liability and the purchaser of the Mortgaged
Property is substituted as Mortgagor and becomes liable under the Mortgage Note.
The Company 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 Mortgage File and shall, for all
purposes, be considered a part of such Mortgage File to the same extent as all
other documents and instruments constituting a part thereof. If an assumption
fee is collected by the Company for entering into an assumption agreement such
fee will be retained by the Company as additional servicing compensation. In
connection with any such assumption, neither the Mortgage Interest Rate borne by
the related Mortgage Note, the term of the Mortgage Loan, the outstanding
principal amount of the Mortgage Loan nor any other material terms shall be
changed without Purchaser's consent.
To the extent that any Mortgage Loan is assumable, the Company shall
inquire diligently into the credit-worthiness of the proposed transferee, and
shall use the underwriting criteria for approving the credit of the proposed
transferee which are used by Xxxxxx Xxx with respect to underwriting mortgage
loans of the same type as the Mortgage Loans. If the credit-worthiness of the
proposed transferee does not meet such underwriting criteria, the Company
diligently shall, to the extent permitted by the Mortgage or the Mortgage Note
and by applicable law, accelerate the maturity of the Mortgage Loan.
Section 6.02 Satisfaction of Mortgages and Release of Mortgage Files.
Upon the payment in full of any Mortgage Loan, or the receipt by the
Company of a notification that payment in full will be escrowed in a manner
customary for such purposes, the Company immediately shall notify the Purchaser
and shall request the release of any Mortgage Loan Documents.
If the Company satisfies or releases a Mortgage without first having
obtained payment in full of the indebtedness secured by the Mortgage or should
the Company otherwise prejudice any rights the Purchaser may have under the
mortgage instruments, upon written demand of the Purchaser, the Company shall
repurchase the related Mortgage Loan at the Repurchase Price, plus any
prepayment penalty or premium provided for in the terms of the Mortgage Note, if
applicable, by deposit thereof in the Custodial Account within one Business Day
of receipt of such demand by the Purchaser. The Company shall maintain the
Fidelity Bond and Errors and Omissions Insurance Policy as provided for in
Section 4.12 insuring the Company against any loss it may sustain with respect
to any Mortgage Loan not satisfied in accordance with the procedures set forth
herein.
55
Section 6.03 Servicing Compensation.
As compensation for its services hereunder, the Company shall be entitled
to withdraw from the Custodial Account the amount of its Servicing Fee. The
Servicing Fee shall be payable monthly and shall be computed on the basis of the
same unpaid scheduled principal balance and for the period respecting which any
related interest payment on a Mortgage Loan is computed. The obligation of the
Purchaser to pay the Servicing Fee is limited to, and payable solely from, the
interest portion of such Monthly Payments. Notwithstanding the foregoing, with
respect to the payment of the Servicing Fee for any month, the aggregate
Servicing Fee shall be reduced (but not below zero) by an amount equal to the
Compensating Interest Payment for the related Principal Prepayment Period.
Additional servicing compensation in the form of Prepayment Interest
Excess, assumption fees, to the extent provided in Section 6.01, late payment
charges and other ancillary income (other than Prepayment Premiums) shall be
retained by the Company to the extent not required to be deposited in the
Custodial Account. The Company shall be required to pay all expenses incurred by
it in connection with its servicing activities hereunder and shall not be
entitled to reimbursement thereof except as specifically provided for herein.
Section 6.04 Annual Statement as to Compliance.
On or before March 15 of each year, beginning March 15, 2007, the Company,
at its expense, shall furnish to the Purchaser or the Purchaser's designee, each
of the items described in Section 2.04 of the Regulation AB Compliance Addendum.
Section 6.05 Annual Independent Public Accountants' Servicing Report.
On or before March 15 of each year, beginning March 15, 2007, the Company,
at its expense, shall furnish to the Purchaser or the Purchaser's designee, each
of the items described in Section 2.05 of the Regulation AB Compliance Addendum.
Section 6.06 Right to Examine Company Records.
The Purchaser, or its designee, shall have the right to examine and audit
any and all of the related books, records, or other information of the Company,
whether held by the Company or by another on its behalf, with respect to or
concerning this Agreement or the Mortgage Loans, during business hours or at
such other times as may be reasonable under applicable circumstances, upon seven
(7) calendar days advance notice. The Purchaser shall pay its own travel
expenses associated with such examination.
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 Company 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
56
the tax on "contributions" to a REMIC set forth in Section 860(d) of the Code)
unless the Company has received an Opinion of Counsel (at the expense of the
party seeking to take such action) to the effect that the contemplated action
will not endanger such REMIC status or result in the imposition of any such tax.
ARTICLE VII
COMPANY TO COOPERATE
Section 7.01 Provision of Information.
During the term of this Agreement, the Company shall furnish to the
Purchaser such periodic, special, or other reports or information, and copies or
originals of any documents contained in the Servicing File for each Mortgage
Loan provided for herein. All other special reports or information not provided
for herein as shall be necessary, reasonable, or appropriate with respect to the
Purchaser or any regulatory agency will be provided at the Purchaser's expense.
All such reports, documents or information shall be provided by and in
accordance with all reasonable instructions and directions which the Purchaser
may give. Upon request from the Purchaser, the Company shall deliver no later
than sixty (60) days after such request any Servicing File or document therein,
or copies thereof, to the Purchaser at the direction of the Purchaser. The
Purchaser shall return any original Servicing File or document therein delivered
pursuant to this Section no later than 15 days after receipt thereof. In the
event that the Company fails to make delivery of the requested Servicing File or
document therein, or copies thereof, as required under this Section, the Company
shall repurchase, pursuant to Section 3.03 of this Agreement, the related
Mortgage Loan within thirty (30) days of a request to do so by the Purchaser.
In addition, during the term of this Agreement, the Company shall provide
to the OCC and to comparable regulatory authorities supervising the Purchaser or
any of Purchaser's assigns (including beneficial owners of securities issued in
Securitizations backed by the Mortgage Loans) and the examiners and supervisory
agents of the OCC and such other authorities, access to the documentation
required by applicable regulations of the OCC and other authorities supervising
the Purchaser or any of its assigns with respect to the Mortgage Loans. Such
access shall be afforded without charge, but only upon reasonable and prior
written request and during normal business hours at the offices designated by
the Company.
The Company shall execute and deliver all such instruments and take all
such action as the Purchaser may reasonably request from time to time, in order
to effectuate the purposes and to carry out the terms of this Agreement.
Section 7.02 Financial Statements; Servicing Facility.
In connection with marketing the Mortgage Loans, the Purchaser may make
available to a prospective purchaser the audited financial statements of the
Company, which shall include information relating to the Company, for the most
recently completed two fiscal years for which such financial statements are
available, as well as a Consolidated Statement of Condition at the end of the
last two fiscal years covered by such Consolidated Statement of Operations. The
57
Company also shall make available any comparable interim statements to the
extent any such statements have been prepared by or on behalf of the Company
(and are available upon request to members or stockholders of the Company or to
the public at large).
The Company also shall make available to the Purchaser or prospective
purchaser a knowledgeable financial or accounting officer for the purpose of
answering questions respecting recent developments affecting the Company or the
financial statements of the Company, and to permit any prospective purchaser to
inspect the Company's servicing facilities for the purpose of satisfying such
prospective purchaser that the Company has the ability to service the Mortgage
Loans as provided in this Agreement.
ARTICLE VIII
THE COMPANY
Section 8.01 Indemnification; Third Party Claims.
(a) The Company shall indemnify the Purchaser, its directors, officers,
agents and employees (each, a "Purchaser 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 the Purchaser Indemnified Party may
actually incur in any way related to the failure of the Company to perform its
duties under this Agreement. The Company shall promptly notify the Purchaser if
a claim is made by a third party with respect to this Agreement or the Mortgage
Loans, assume (with the prior written consent of the Purchaser) the defense of
any such claim and pay all expenses in connection therewith, including counsel
fees, and promptly pay, discharge and satisfy any judgment or decree which may
be entered against it or the Purchaser in respect of such claim. The Company
shall follow any written instructions received from the Purchaser in connection
with such claim. The Purchaser promptly shall reimburse the Company for all
amounts advanced by it pursuant to the preceding sentence except when the claim
is in any way related to the Company's indemnification pursuant to Section 3.03,
or the failure of the Company to service and administer the Mortgage Loans in
strict compliance with the terms of this Agreement. The provisions of this
Section 8.01(a) shall survive termination of this Agreement.
(b) The Purchaser shall indemnify the Company 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 the Company may actually incur in any way related to the
failure of the Purchaser to perform its duties in compliance with the terms of
this Agreement. The provisions of this Section 8.01(b) shall survive termination
of this Agreement.
Section 8.02 Merger or Consolidation of the Company.
The Company shall keep in full effect its existence, rights and franchises
as a limited liability company, and shall obtain and preserve its qualification
to do business as a foreign limited liability company in each jurisdiction in
which such qualification is or shall be necessary
58
to protect the validity and enforceability of this Agreement or any of the
Mortgage Loans and to perform its duties under this Agreement.
Any person into which the Company may be merged or consolidated, or any
corporation resulting from any merger, conversion or consolidation to which the
Company shall be a party, or any Person succeeding to the business of the
Company, shall be the successor of the Company hereunder, without the execution
or filing of any paper or any further act on the part of any of the parties
hereto, anything herein to the contrary notwithstanding, provided, however, that
the successor or surviving Person shall be an institution (i) having a GAAP net
worth of not less than $25,000,000, (ii) the deposits of which are insured by
the FDIC, SAIF and/or BIF, and (iii) who is either a Xxxxxx Xxx or Xxxxxxx
Mac-approved company in good standing. Furthermore, in the event the Company
transfers or otherwise disposes of all or substantially all of its assets to an
affiliate of the Company, such affiliate shall satisfy the condition above, and
shall also be fully liable to the Purchaser for all of the Company's obligations
and liabilities hereunder.
Section 8.03 Limitation on Liability of Company and Others.
Neither the Company nor any of the directors, officers, employees or agents
of the Company shall be under any liability to the Purchaser for any action
taken or for refraining from the taking of any action in good faith pursuant to
this Agreement, or for errors in judgment, provided, however, that this
provision shall not protect the Company or any such person against any breach of
its warranties or representations made herein, or failure to perform its
obligations in strict compliance with any standard of care set forth in this
Agreement or any other liability which would otherwise be imposed under this
Agreement. The Company and any director, officer, employee or agent of the
Company may rely in good faith on any document of any kind prima facie properly
executed and submitted by any Person respecting any matters arising hereunder.
The Company shall not be under any obligation to appear in, prosecute or defend
any legal action which is not incidental to its duties to service the Mortgage
Loans in accordance with this Agreement and which in its opinion may involve it
in any expense or liability, provided, however, that the Company may, with the
consent of the Purchaser, undertake any such action which it may deem necessary
or desirable in respect to this Agreement and the rights and duties of the
parties hereto. In such event, the Company shall be entitled to reimbursement
from the Purchaser of the reasonable legal expenses and costs of such action,
unless any such costs result from a breach of the Company's representations and
warranties made herein or its failure to perform its obligations in compliance
with this Agreement.
Section 8.04 Limitation on Resignation and Assignment by Company.
The Purchaser has entered into this Agreement with the Company and
subsequent purchasers will purchase the Mortgage Loans in reliance upon the
independent status of the Company, and the representations as to the adequacy of
its servicing facilities, personnel, records and procedures, its integrity,
reputation and financial standing, and the continuance thereof. Therefore,
except as otherwise permitted under this Agreement, the Company shall neither
assign this Agreement or the servicing hereunder or delegate its rights or
duties hereunder or any portion hereof or sell or otherwise dispose of all of
its property or assets without the prior written consent of the Purchaser, which
consent shall not be unreasonably withheld.
59
Except to the extent provided in Sections 4.01 and 8.02, the Company shall
not resign from the obligations and duties hereby imposed on it except by mutual
consent of the Company and the Purchaser or upon the determination that its
duties hereunder are no longer permissible under applicable law and such
incapacity cannot be cured by the Company. Any such determination permitting the
resignation of the Company shall be evidenced by an Opinion of Counsel to such
effect delivered to the Purchaser which Opinion of Counsel shall be in form and
substance acceptable to the Purchaser. No such resignation shall become
effective until a successor shall have assumed the Company's responsibilities
and obligations hereunder in the manner provided in Section 12.01.
Without in any way limiting the generality of this Section 8.04, in the
event that the Company either shall assign this Agreement or the servicing
responsibilities hereunder or delegate its duties hereunder or any portion
thereof or sell or otherwise dispose of all or substantially all of its property
or assets, without the prior written consent of the Purchaser, then the
Purchaser shall have the right to terminate this Agreement upon notice given as
set forth in Section 10.01, without any payment of any penalty or damages and
without any liability whatsoever to the Company or any third party.
ARTICLE IX
WHOLE LOAN TRANSFERS AND SECURITIZATIONS
Section 9.01 Removal of Mortgage Loans from Inclusion Under this Agreement Upon
the Pass-Through.
The Purchaser and the Company agree that with respect to some or all of the
Mortgage Loans, the Purchaser, at its sole option, may effect one or more Whole
Loan Transfers or Securitizations, retaining the Company or its subservicer as
the servicer thereof or subservicer if a master servicer is employed, or as
applicable the "seller/servicer." On the Reconstitution Date, the Mortgage Loans
transferred shall cease to be serviced by the Company pursuant to this Agreement
as provided in this Section 9.01; provided, however, that, in the event that any
Mortgage Loan transferred pursuant to this Section 9.01 is rejected by the
transferee, the Company shall continue to service such rejected Mortgage Loan on
behalf of the Purchaser in accordance with the terms and provisions of this
Agreement.
The Company shall cooperate with the Purchaser in connection with each
Whole Loan Transfer or Securitization in accordance with this Section 9.01. In
connection therewith the Company shall:
(a) make all representations and warranties made herein with respect to the
Mortgage Loans as of the related Closing Date and with respect to the Company
itself as of the closing date of each Whole Loan Transfer or Securitization;
(b) execute an Assignment, Assumption and Recognition Agreement or at the
option of the Purchaser, negotiate in good faith and execute any pooling and
servicing agreement or similar agreements necessary to effectuate the foregoing
provided such agreements create no
60
greater obligation or cost on the part of the Company than otherwise set forth
in this Agreement or do not materially and adversely alter the Company's rights
hereunder;
(c) make representations and warranties (1) that the Company has serviced
the Mortgage Loans in accordance with the terms of this Agreement, provided
accurate statements to the Purchaser pursuant to Section 5.02 of this Agreement,
and otherwise complied with all covenants and obligations hereunder and (2) that
the Company has taken no action 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, and (3) regarding the accuracy of the
information provided to the Purchaser by the Company on or before the closing
date of the applicable Whole Loan Transfer; and
(d) provide as applicable:
(i) any and all information and appropriate verification of
information which may be reasonably available to the Company, including
information regarding the Company's foreclosure, delinquency and loss
experience and the Company's underwriting standards, whether through
letters of its auditors and counsel or otherwise, as the Purchaser shall
request; and
(ii) such additional customary corporate opinions of counsel and
certificates of public officials or officers of the Company as are
reasonably believed necessary by the trustee, any rating agency or any
credit enhancement provider, as the case may be, in connection with
Whole-Loan Transfers or Securitizations.
In order to facilitate compliance with Regulation AB promulgated under the
Securities Act, the Company, the Servicer and the Purchaser agree to comply with
the provisions of the Regulation AB Compliance Addendum attached hereto as
Addendum I. In the event the Purchaser has elected to have the Company hold
record title to the Mortgages, prior to the Reconstitution Date the Company
shall prepare an Assignment of Mortgage in blank or to the trustee from the
Company acceptable to the Purchaser or the trustee for each Mortgage Loan that
is part of the Whole Loan Transfers or Securitizations. The Company shall pay
all preparation and recording costs associated therewith if the Assignments of
Mortgage have not been previously prepared and recorded in Purchaser's name. The
Company shall execute each Assignment of Mortgage, track such Assignments of
Mortgage to ensure they have been recorded and deliver them as required by the
Purchaser or the trustee upon the Company's receipt thereof. Additionally, the
Company shall prepare and execute, at the direction of the Purchaser, any note
endorsements in connection with any pooling and servicing agreements.
All Mortgage Loans not sold or transferred pursuant to Whole Loan Transfers
or Securitizations shall remain subject to this Agreement and shall continue to
be serviced in accordance with the terms of this Agreement and with respect
thereto this Agreement shall remain in full force and effect.
61
ARTICLE X
DEFAULT
Section 10.01 Events of Default.
Each of the following shall constitute an Event of Default on the part of
the Company:
(i) any failure by the Company to remit to the Purchaser any
payment required to be made under the terms of this Agreement which
continues unremedied for a period of one (1) Business Day after the
date upon which written notice of such failure, requiring the same to
be remedied, shall have been given to the Company by the Purchaser; or
(ii) failure by the Company duly to observe or perform in any
material respect any other of the covenants or agreements on the part
of the Company set forth in this Agreement, including but not limited
to breach by the Company of any one or more of the representations,
warranties and covenants of the Company as set forth in Section 3.01
of this Agreement which continues unremedied for a period of
forty-five (45) days after the date on which written notice of such
failure, requiring the same to be remedied, shall have been given to
the Company by the Purchaser or by the Custodian; or
(iii) failure by the Company or, if the Company's subservicer
services the Mortgage Loans, failure by such subservicer to maintain
its license to do business in any jurisdiction where the Mortgaged
Property is located if such license is required, which failure
continues unremedied for a period of thirty (30) days; or
(iv) a decree or order of a court or agency or supervisory
authority having jurisdiction for the appointment of a conservator or
receiver or liquidator in any insolvency, readjustment of debt,
including bankruptcy, marshaling of assets and liabilities or similar
proceedings, or for the winding-up or liquidation of its affairs,
shall have been entered against the Company and such decree or order
shall have remained in force undischarged or unstayed for a period of
60 days; or
(v) the Company shall consent to the appointment of a conservator
or receiver or liquidator in any insolvency, readjustment of debt,
marshaling of assets and liabilities or similar proceedings of or
relating to the Company or of or relating to all or substantially all
of its assets; or
(vi) the Company shall admit in writing its inability to pay its
debts generally as they become due, file a petition to take advantage
of any applicable insolvency, bankruptcy or reorganization statute,
make an assignment for the benefit of its creditors, voluntarily
suspend payment of its obligations or cease its normal business
operations for three Business Days; or
62
(vii) the Company or, if the Company's subservicer services the
Mortgage Loans, such subservicer, ceases to meet the servicer
eligibility qualifications of Xxxxxx Xxx or Xxxxxxx Mac; or
(viii) the Company fails to comply with the requirements of
Sections 6.04 and 6.05.
If the Company obtains knowledge of an Event of Default, the Company shall
promptly notify the Purchaser. In each and every such case, so long as an Event
of Default shall not have been remedied, in addition to whatever rights the
Purchaser may have at law or equity to damages, including injunctive relief and
specific performance, the Purchaser, by notice in writing to the Company, may
terminate all the rights and obligations of the Company under this Agreement and
in and to the Mortgage Loans and the proceeds thereof.
Upon receipt by the Company of such written notice, all authority and power
of the Company under this Agreement, whether with respect to the Mortgage Loans
or otherwise, shall pass to and be vested in the successor appointed pursuant to
Section 12.01. Upon written request from the Purchaser, the Company shall, at
its expense, prepare, execute and deliver to the successor entity designated by
the Purchaser any and all documents and other instruments, place in such
successor's possession all Mortgage Files, and do or cause to be done all other
acts or things necessary or appropriate to effect the purposes of such notice of
termination, including but not limited to the transfer and endorsement or
assignment of the Mortgage Loans and related documents, at the Company's sole
expense. The Company shall cooperate with the Purchaser and such successor in
effecting the termination of the Company's responsibilities and rights
hereunder, including without limitation, the transfer to such successor for
administration by it of all cash amounts which shall at the time be credited by
the Company to the Custodial Account or Escrow Account or thereafter received
with respect to the Mortgage Loans.
Section 10.02 Waiver of Defaults.
By a written notice, the Purchaser may waive any default by the Company in
the performance of its obligations hereunder and its consequences. Upon any
waiver of a past default, such default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been remedied for every
purpose of this Agreement. No such waiver shall extend to any subsequent or
other default or impair any right consequent thereon except to the extent
expressly so waived.
ARTICLE XI
TERMINATION
Section 11.01 Termination.
This Agreement shall terminate upon either: (i) the later of the final
payment or other liquidation (or any advance with respect thereto) of the last
Mortgage Loan or the disposition of any REO Property with respect to the last
Mortgage Loan and the remittance of all funds due hereunder; or (ii) mutual
consent of the Company and the Purchaser in writing. The
63
representations and warranties and indemnification provisions contained herein
shall survive the termination of this Agreement.
Upon written request from the Purchaser in connection with any such
termination, the Company shall prepare, execute and deliver, any and all
documents and other instruments, place in the Purchaser's possession all
Mortgage Files, and do or accomplish all other acts or things necessary or
appropriate to effect the purposes of such notice of termination, whether to
complete the transfer and endorsement or assignment of the Mortgage Loans and
related documents, or otherwise, at the Company's sole expense. The Company
agrees to cooperate with the Purchaser and such successor in effecting the
termination of the Company's responsibilities and rights hereunder as servicer,
including, without limitation, the transfer to such successor for administration
by it of all cash amounts which shall at the time be credited by the Company to
the Custodial Account or Escrow Account or thereafter received with respect to
the Mortgage Loans.
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.01 Successor to Company.
Prior to termination of the Company's responsibilities and duties under
this Agreement pursuant to Sections 8.04, 10.01, 11.01(ii) or pursuant to
Section 11.02, the Purchaser shall, (i) succeed to and assume all of the
Company's responsibilities, rights, duties and obligations under this Agreement,
or (ii) appoint a successor having the characteristics set forth in Section 8.02
and which shall succeed to all rights and assume all of the responsibilities,
duties and liabilities of the Company under this Agreement prior to the
termination of Company's responsibilities, duties and liabilities under this
Agreement. In connection with such appointment and assumption, the Purchaser may
make such arrangements for the compensation of such successor out of payments on
Mortgage Loans as it and such successor shall agree. In the event that the
Company's duties, responsibilities and liabilities under this Agreement should
be terminated pursuant to the aforementioned sections, the Company shall
discharge such duties and responsibilities during the period from the date it
acquires knowledge of such termination until the effective date thereof with the
same degree of diligence and prudence which it is obligated to exercise under
this Agreement, and shall take no action whatsoever that might impair or
prejudice the rights or financial condition of its successor. The resignation or
removal of the Company pursuant to the aforementioned sections shall not become
effective until a successor shall be appointed pursuant to this Section 12.01
and shall in no event relieve the Company of the representations and warranties
made pursuant to Sections 3.01 and 3.02 and the remedies available to the
Purchaser under Section 3.03, it being understood and agreed that the provisions
of such Sections 3.01, 3.02, and 3.03 shall be applicable to the Company
notwithstanding any such sale, assignment, resignation or termination of the
Company, or the termination of this Agreement.
Any successor appointed as provided herein shall execute, acknowledge and
deliver to the Company and to the Purchaser an instrument accepting such
appointment, wherein the successor shall make the representations and warranties
set forth in Section 3.01, except for subsections (h), (i) and (k) thereof,
whereupon such successor shall become fully vested with all
64
the rights, powers, duties, responsibilities, obligations and liabilities of the
Company, with like effect as if originally named as a party to this Agreement.
Any termination or resignation of the Company or termination of this Agreement
pursuant to Section 8.04, 10.01, 11.01 or 11.02 shall not affect any claims that
any Purchaser may have against the Company arising out of the Company's actions
or failure to act prior to any such termination or resignation.
The Company shall deliver promptly to the successor servicer the funds in
the Custodial Account and Escrow Account and all Mortgage Files and related
documents and statements held by it hereunder and the Company shall account for
all funds and shall execute and deliver such instruments and do such other
things as may reasonably be required to more fully and definitively vest in the
successor all such rights, powers, duties, responsibilities, obligations and
liabilities of the Company.
Unless the Company is terminated pursuant to Section 11.02, the Purchaser
shall be entitled to be reimbursed from the Company for all reasonable costs
associated with the transfer of servicing, including, without limitation, any
costs or expenses associated with the complete transfer of all servicing data
and the completion, correction or manipulation of such servicing data as may be
required by the Purchaser to correct any errors or insufficiencies in the
servicing data or otherwise to enable the Purchaser to service the Mortgage
Loans properly and effectively.
Upon a successor's acceptance of appointment as such, the Company shall
notify by mail the Purchaser of such appointment in accordance with the
procedures set forth in Section 12.05.
Section 12.02 Amendment.
This Agreement may be amended from time to time by the Company and by
written agreement signed by the Company and the Purchaser.
Section 12.03 Governing Law.
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF NEW YORK AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER
SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS WITHOUT REGARD TO THE CONFLICT
OF LAWS PROVISIONS OF SUCH LAWS OTHER THAN NEW YORK GENERAL OBLIGATIONS LAW
SECTION 5-1401.
EACH OF THE COMPANY AND THE PURCHASER HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVES ANY AND ALL RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN
RESPECT OR ANY LITIGATION BASED ON, OR ARISING OUT OF, UNDER, OR IN CONNECTION
WITH, THIS AGREEMENT, OR ANY OTHER DOCUMENTS AND INSTRUMENTS EXECUTED IN
CONNECTION HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
(WHETHER ORAL OR WRITTEN), OR ACTIONS OF THE COMPANY OR THE PURCHASER. THIS
PROVISION IS A MATERIAL INDUCEMENT FOR THE PURCHASER TO ENTER INTO THIS
AGREEMENT.
65
Section 12.04 [Reserved].
Section 12.05 Duration of Agreement.
This Agreement shall continue in existence and effect until terminated as
herein provided. This Agreement shall continue notwithstanding transfers of the
Mortgage Loans by the Purchaser.
Section 12.06 Notices.
All demands, notices and communications hereunder shall be in writing and
shall be deemed to have been duly given if personally delivered at or mailed by
registered mail, postage prepaid, addressed as follows:
(i) if to the Company:
Opteum Financial Services, LLC
W. 000 Xxxxxxx Xxxx
Xxxxxxx, Xxx Xxxxxx 00000
Attention: Xxxx Xxxxx-Xxxxxxxxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000
or such other address as may hereafter be furnished to the Purchaser
in writing by the Company;
(ii) if to Purchaser:
Bank of America, National Association
Hearst Tower
NC1-027-21-04
000 Xxxxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Managing Director
Telephone: (000) 000-0000
Fax: (000) 000-0000
or such other address as may hereafter be furnished to the Company in
writing by the Purchaser.
Section 12.07 Severability of Provisions.
If any one or more of the covenants, agreements, provisions or terms of
this Agreement shall be held invalid for any reason whatsoever, then such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Agreement and shall
in no way affect the validity or enforceability of the other provisions of this
Agreement.
66
Section 12.08 Relationship of Parties.
Nothing herein contained shall be deemed or construed to create a
partnership or joint venture between the parties hereto and the services of the
Company shall be rendered as an independent contractor and not as agent for the
Purchaser.
Section 12.09 Execution; Successors and Assigns.
This Agreement may be executed in one or more counterparts and by the
different parties hereto on separate counterparts, each of which, when so
executed, shall be deemed to be an original; such counterparts, together, shall
constitute one and the same agreement. Subject to Sections 8.02 and 8.04, this
Agreement shall inure to the benefit of and be binding upon the Company and the
Purchaser and their respective successors and assigns.
Section 12.10 Recordation of Assignments of Mortgage.
To the extent permitted by applicable law, each of the Assignments of
Mortgage is subject to recordation in all appropriate public offices for real
property records in all the counties or other comparable jurisdictions in which
any or all of the Mortgaged Properties are situated, and in any other
appropriate public recording office or elsewhere, such recordation to be
effected at the Company's expense, in the event recordation is either necessary
or advisable in accordance with Acceptable Servicing Practices or under
applicable law or is requested by the Purchaser at its sole option in the case
of Mortgage Loans that are not registered on MERS.
Section 12.11 Assignment by Purchaser.
The Purchaser shall have the right (without the consent of the Company in
the case of a Whole Loan Transfer or a Securitization, and otherwise with the
consent of the Company, such consent not to be unreasonably withheld) and
subject to the limits set forth in Section 2.02 and Section 9.01 hereof with
respect to Whole Loan Transfers or Securitizations, to assign, in whole or in
part, its interest under this Agreement with respect to some or all of the
Mortgage Loans, and designate any person to exercise any rights of the Purchaser
hereunder, by executing an Assignment, Assumption and Recognition Agreement and
the assignee or designee shall accede to the rights and obligations hereunder of
the Purchaser with respect to such Mortgage Loans. All references to the
Purchaser in this Agreement shall be deemed to include its assignee or designee.
In the event the Purchaser assigns this Agreement, and the assignee assumes any
of the Purchaser's obligations hereunder, the Company acknowledges and agrees to
look solely to such assignee, and not the Purchaser, for performance of the
obligations so assumed and the Purchaser shall be relieved from any liability to
the Company with respect thereto.
Section 12.12 Solicitation of Mortgagor.
From and after the Closing Date, the Company agrees that it will not take
any action and will make best efforts to prevent or cause to prevent any action
to be taken by any of its affiliates to personally, by telephone, mail or
electronic mail, solicit the Mortgagor under any Mortgage Loan for the purpose
of refinancing such Mortgage Loan; provided, however, that the Company may (i)
employ promotions or solicitations that are directed to the general public at
large or segments thereof, provided that no segment shall consist primarily of
the borrowers or obligors under the
67
Mortgage Loans, including, without limitation, mass mailing based on
commercially acquired mailing lists, newspaper, radio and television
advertisements, (ii) respond to Mortgagor requests for pay-off information, and
(iii) promote or solicit any Mortgagor for any other bank or financial products
or services, unless such promotions or solicitations are for a prepayment of a
Mortgage Loan. For the avoidance of doubt, the term "affiliates" used herein
does not include any correspondent sellers.
Section 12.13 Further Agreements.
The Purchaser and the Company each agree to execute and deliver to the
other such additional documents, instruments or agreements as may be necessary
or appropriate to effectuate the purposes of this Agreement.
Section 12.14 Confidential Information.
The Company and the Purchaser shall keep confidential and shall not divulge
to any party, without the other party's prior written consent, the price paid by
the Purchaser for the Mortgage Loans, except to the extent that it is reasonable
and necessary for the Company to do so in working with legal counsel, auditors,
taxing authorities or other governmental agencies.
The Purchaser and the Company agree they (i) shall comply with all
applicable laws and regulations regarding the privacy or security of Consumer
Information, (ii) shall not collect, create, use, store, access, disclose or
otherwise handle Consumer Information in any manner inconsistent with any
applicable laws or regulations regarding the privacy or security of Consumer
Information, (iii) shall not disclose Consumer Information to any affiliated or
non-affiliated third party except to enforce or preserve its rights, as
otherwise permitted or required by applicable law (or by regulatory authorities
having jurisdiction in the premises) or, in the case of the Company, at the
specific written direction of the Purchaser, (iv) shall maintain appropriate
administrative, technical and physical safeguards to protect the security,
confidentiality and integrity of Consumer Information and (v) shall promptly
notify the other party in writing upon becoming aware of any actual breach and
of any suspected breach of this section. To the best of its ability, the Company
shall promptly provide the Purchaser's regulators information regarding such
security measures upon the reasonable request of the Purchaser, which
information shall include, but not be limited to, any SAS 70 or similar
independent audit reports, summaries of test results or equivalent measures
taken by the Company with respect to its security measures, as agreed upon by
the parties. The restrictions set forth herein shall survive the termination of
this Agreement.
Section 12.15 Counterparts.
This Agreement may be executed simultaneously in any number of
counterparts. Each counterpart shall be deemed to be an original, and all such
counterparts shall constitute one and the same instrument.
Section 12.16 Exhibits.
The exhibits to this Agreement are hereby incorporated and made a part
hereof and are an integral part of this Agreement.
68
Section 12.17 General Interpretive Principles.
For purposes of this Agreement, except as otherwise expressly provided or
unless the context otherwise requires:
(a) 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;
(b) accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with GAAP;
(c) 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;
(d) 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;
(e) 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
(f) the term "include" or "including" shall mean without limitation by
reason of enumeration.
Section 12.18 Reproduction of Documents.
This Agreement and all documents relating thereto, including, without
limitation, (a) consents, waivers and modifications which may hereafter be
executed, (b) documents received by any party at the closing, and (c) financial
statements, certificates and other information previously or hereafter
furnished, may be reproduced by any photographic, photostatic, microfilm,
micro-card, miniature photographic or other similar process. The parties agree
that any such reproduction shall be admissible in evidence as the original
itself in any judicial or administrative proceeding, whether or not the original
is in existence and whether or not such reproduction was made by a party in the
regular course of business, and that any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in evidence.
Section 12.19 Purchase Price and Terms Letter.
The terms and conditions set forth in the Purchase Price and Terms Letter
between the Purchaser and the Company with respect to each Closing Date shall be
incorporated herein.
[Intentionally Blank - Next Page Signature Page]
69
IN WITNESS WHEREOF, the Company and the Purchaser have caused their names
to be signed hereto by their respective officers thereunto duly authorized as of
the day and year first above written.
BANK OF AMERICA, OPTEUM FINANCIAL SERVICES, LLC
NATIONAL ASSOCIATION
PURCHASER COMPANY
By: By:
----------------------------------- ----------------------------------
Name: Name:
--------------------------------- --------------------------------
Title: Title:
-------------------------------- -------------------------------
70
EXHIBIT A
FORM OF MORTGAGE LOAN SCHEDULE
[Attached hereto]
Exhibit A-1
EXHIBIT B
CONTENTS OF EACH MORTGAGE FILE
With respect to each Mortgage Loan, the Mortgage File shall include each of
the following items, which shall be available for inspection by the Purchaser
and any prospective Purchaser, and which shall be retained by the Company in the
Servicing File or delivered to the Custodian pursuant to Sections 2.01, 2.02 and
2.03 of the Mortgage Loan Sale and Servicing Agreement to which this Exhibit is
attached (the "Agreement"):
1. The original Mortgage Note endorsed "Pay to the order of
_____________, without recourse" and signed in the name of the Company
by an authorized officer (provided that, in the event that the
Mortgage Loan was acquired by the Company in a merger, the signature
must be in the following form: "[Company], successor by merger to
[name of predecessor]"; and in the event that the Mortgage Loan was
acquired or originated by the Company while doing business under
another name, the signature must be in the following form: "[Company],
formerly known as [previous name]"). The Mortgage Note must contain
all necessary intervening endorsements showing a complete chain of
endorsement from the Originator (each such endorsement being
sufficient to transfer all right, title and interest of the party so
endorsing, as noteholder or assignee thereof, in and to that Mortgage
Note);
2. The original of any guarantee executed in connection with the Mortgage
Note (if any).
3. The original Mortgage, with evidence of recording thereon, except as
follows. If in connection with any Mortgage Loan, the Company cannot
deliver or cause to be delivered the original Mortgage with evidence
of recording thereon on or prior to the Closing Date because of a
delay caused by the public recording office where such Mortgage has
been delivered for recordation or because such Mortgage has been lost
or because such public recording office retains the original recorded
Mortgage, the Company shall deliver or cause to be delivered to the
Custodian, a photocopy of such Mortgage, together with (i) in the case
of a delay caused by the public recording office, an Officer's
Certificate of the Company stating that such Mortgage has been
dispatched to the appropriate public recording office for recordation
and that the original recorded Mortgage or a copy of such Mortgage
certified by such public recording office to be a true and complete
copy of the original recorded Mortgage will be promptly delivered to
the Custodian upon receipt thereof by the Company; or (ii) in the case
of a Mortgage where a public recording office retains the original
recorded Mortgage or in the case where a Mortgage is lost after
recordation in a public recording office, a copy of such Mortgage
certified by such public recording office or by the title insurance
company that issued the title policy to be a true and complete copy of
the original recorded Mortgage.
Exhibit B-1
4. The originals or certified true copies of any document sent for
recordation of all assumption, modification, consolidation or
extension agreements, with evidence of recording thereon, or, if the
original of any such agreement with evidence of recording thereon has
not been returned by the public recording office where such agreement
has been delivered for recordation or such agreement has been lost or
such public recording office retains the original recorded agreement,
a photocopy of such agreement, certified by the Company or its agent
to be a true and correct copy of the agreement delivered to the
appropriate public recording office for recordation. The original
recorded agreement or, in the case of a agreement where a public
recording office retains the original recorded agreement or in the
case where an agreement is lost after recordation in a public
recording office, a copy of such agreement certified by such public
recording office to be a true and complete copy of the original
recorded agreement, will be promptly delivered to the Custodian upon
receipt thereof by the Company.
5. The original Assignment of Mortgage, in blank, for each Mortgage Loan,
in form and substance acceptable for recording (except for the
insertion of the name of the assignee and recording information). If
the Mortgage Loan was acquired by the Company in a merger, the
Assignment of Mortgage must be made by "[Company], successor by merger
to [name of predecessor]." If the Mortgage Loan was acquired or
originated by the Company while doing business under another name, the
Assignment of Mortgage must be made by "[Company], formerly know as
[previous name]." Subject to the foregoing and where permitted under
the applicable laws of the jurisdiction wherein the Mortgaged property
is located, such Assignments of Mortgage may be made by blanket
assignments for Mortgage Loans secured by the Mortgaged Properties
located in the same county. If the related Mortgage has been recorded
in the name of Mortgage Electronic Registration Systems, Inc. ("MERS")
or its designee, no Assignment of Mortgage will be required to be
prepared or delivered and instead, the Company shall take all actions
as are necessary to cause the Purchaser to be shown as the owner of
the related Mortgage Loan on the records of MERS for purposes of the
system of recording transfers of beneficial ownership of mortgages
maintained by MERS.
6. For any Mortgage Loan not recorded in the name of MERS, originals or
certified true copies of documents sent for recordation of all
intervening assignments of the Mortgage with evidence of recording
thereon, or if any such intervening assignment has not been returned
from the applicable recording office or has been lost or if such
public recording office retains the original recorded assignments of
mortgage, the Company shall deliver or cause to be delivered to the
Custodian, a photocopy of such intervening assignment, together with
(i) in the case of a delay caused by the public recording office, an
Officer's Certificate of the Company stating that such intervening
Assignment of Mortgage has been dispatched to the appropriate public
recording office for recordation and that such original recorded
intervening Assignment of Mortgage or a copy of such intervening
Assignment of Mortgage certified by the appropriate public recording
office or by the title insurance company that issued the title policy
to be a true and complete copy of
Exhibit B-2
the original recorded intervening Assignment of Mortgage will be
promptly delivered to the Custodian upon receipt thereof by the
Company; or (ii) in the case of an intervening assignment where a
public recording office retains the original recorded intervening
Assignment of Mortgage or in the case where an intervening Assignment
of Mortgage is lost after recordation in a public recording office, a
copy of such intervening Assignment of Mortgage certified by such
public recording office to be a true and complete copy of the original
recorded intervening Assignment of Mortgage.
7. The original PMI Policy or certificate of insurance, where required
pursuant to the Agreement.
8. The original mortgagee policy of title insurance or evidence of title.
9. Any security agreement, chattel mortgage or equivalent executed in
connection with the Mortgage.
10. For each Mortgage Loan which is secured by a residential long-term
lease, if any, a copy of the lease with evidence of recording
indicated thereon, or, if the lease is in the process of being
recorded, a photocopy of the lease, certified by an officer of the
respective prior owner of such Mortgage Loan or by the applicable
title insurance company, closing/settlement/escrow agent or company or
closing attorney to be a true and correct copy of the lease
transmitted for recordation.
11. For each Mortgage Loan secured by Co-op Shares, the originals of the
following documents or instruments:
(A) the stock certificate;
(B) the stock power executed in blank;
(C) the executed proprietary lease;
(D) the executed recognition agreement;
(E) the executed assignment of recognition agreement;
(F) the executed UCC-1 financing statement with evidence of
recording thereon; and
(G) executed UCC-3 financing statements or other appropriate UCC
financing statements required by state law, evidencing a complete and
unbroken line from the mortgagee to the Trustee with evidence of
recording thereon (or in a form suitable for recordation)
With respect to each Mortgage Loan, the Mortgage File shall include each of the
following items to the extent in the possession of the Company or in the
possession of the Company's agent(s):
Exhibit B-3
12. The original hazard insurance policy and, if required by law, flood
insurance policy, in accordance with Section 4.10 of the Agreement.
13. Residential loan application.
14. Mortgage Loan closing statement.
15. Verification of employment and income.
16. Verification of acceptable evidence of source and amount of down
payment.
17. Credit report on the Mortgagor.
18. Residential appraisal report.
19. Photograph of the Mortgaged Property.
20. Survey of the Mortgaged Property, if required by the title company or
applicable law.
21. Copy of each instrument necessary to complete identification of any
exception set forth in the exception schedule in the title policy,
i.e. map or plat, restrictions, easements, sewer agreements, home
association declarations, etc.
22. All required disclosure statements.
23. If available, termite report, structural engineer's report, water
potability and septic certification.
24. Sales contract, if applicable.
25. Evidence of payment of taxes and insurance premiums, insurance claim
files, correspondence, current and historical computerized data files,
and all other processing, underwriting and closing papers and records
which are customarily contained in a mortgage file and which are
required to document the Mortgage Loan or to service the Mortgage
Loan.
26. Amortization schedule, if available.
27. Original power of attorney, if applicable.
In the event of a delay by the public recording office in returning any
recorded document, the Company shall deliver to the Custodian, within 180 days
of the Closing Date, an Officer's Certificate which shall (i) identify the
recorded document, (ii) state that the recorded document has not been delivered
to the Custodian due solely to a delay caused by the public recording office,
(iii) state the amount of time generally required by the applicable recording
office to record and return a document submitted for recordation, and (iv)
specify the date the applicable recorded document will be delivered to the
Custodian. The Company shall be required to deliver to the Custodian the
applicable recorded document by the date specified in (iv) above. An
Exhibit B-4
extension of the date specified in (iv) above may be requested form the
Purchaser, which consent shall not be unreasonably withheld.
Exhibit B-5
EXHIBIT C
FORM OF CUSTODIAL AGREEMENT
[Attached hereto]
Exhibit C-1
EXHIBIT D
FORM OF ASSIGNMENT, ASSUMPTION AND RECOGNITION AGREEMENT
[DATE OF ASSIGNMENT]
ASSIGNMENT, ASSUMPTION AND RECOGNITION AGREEMENT dated ___________________,
among _________________, a _________________ corporation having an office at
_________________ ("Assignor"), _________________, having an office at
_________________ ("Assignee") and [NAME OF COMPANY] (the "Company"), having an
office at [INSERT COMPANY ADDRESS]:
For and in consideration of the sum of one dollar ($1.00) and other
valuable consideration the receipt and sufficiency of which are hereby
acknowledged, and of the mutual covenants herein contained, the parties hereto
hereby agree as follows:
1. With respect to the Mortgage Loans listed on Exhibit A hereto, the
Assignor hereby grants, transfers and assigns to Assignee all of the right,
title and interest of Assignor, as Purchaser, in, to and under that certain
Mortgage Loan Sale and Servicing Agreement, (the "Mortgage Loan Sale and
Servicing Agreement"), dated as of [INSERT DATE OF AGREEMENT], and the
Memorandum of Sale dated [INSERT DATE] (together with the Mortgage Loan Sale and
Servicing Agreement, the "Mortgage Loan Sale and Servicing Agreement"), each by
and between Bank of America, National Association (the "Purchaser") and the
Company, and the Mortgage Loans delivered thereunder by the Company to the
Assignor, and that certain Custodial Agreement, (the "Custodial Agreement"),
dated as of [INSERT DATE OF AGREEMENT], by and among the Company, the Purchaser
and _________________ (the "Custodian").
2. The Assignor warrants and represents to, and covenants with, the
Assignee that:
a. The Assignor is the lawful owner of the Mortgage Loans with the
full right to transfer the Mortgage Loans free from any and all claims and
encumbrances whatsoever;
b. The Assignor has not received notice of, and has no knowledge of,
any offsets, counterclaims or other defenses available to the Company with
respect to the Mortgage Loan Sale and Servicing Agreement or the Mortgage Loans;
c. The Assignor has not waived or agreed to any waiver under, or
agreed to any amendment or other modification of, the Mortgage Loan Sale and
Servicing Agreement, the Custodial Agreement or the Mortgage Loans, including
without limitation the transfer of the servicing obligations under the Mortgage
Loan Sale and Servicing Agreement. The Assignor has no knowledge of, and has not
received notice of, any waivers under or amendments or other modifications of,
or assignments of rights or obligations under, the Mortgage Loan Sale and
Servicing Agreement or the Mortgage Loans; and
d. Neither the Assignor nor anyone acting on its behalf has offered,
transferred, pledged, sold or otherwise disposed of the Mortgage Loans, any
interest in the Mortgage Loans or any other similar security to, or solicited
any offer to buy or accept a transfer,
Exhibit D-1
pledge or other disposition of the Mortgage Loans, any interest in the Mortgage
Loans or any other similar security from, or otherwise approached or negotiated
with respect to the Mortgage Loans, any interest in the Mortgage Loans or any
other similar security with, any person in any manner, or made any general
solicitation by means of general advertising or in any other manner, or taken
any other action which would constitute a distribution of the Mortgage Loans
under the Securities Act of 1933 (the "Securities Act") or which would render
the disposition of the Mortgage Loans a violation of Section 5 of the Securities
Act or require registration pursuant thereto.
3. That Assignee warrants and represent to, and covenants with, the
Assignor and the Company pursuant to Section 12.10 of the Mortgage Loan Sale and
Servicing Agreement that:
a. The Assignee agrees to be bound, as Purchaser, by all of the terms,
covenants and conditions of the Mortgage Loan Sale and Servicing Agreement, the
Mortgage Loans and the Custodial Agreement, and from and after the date hereof,
the Assignee assumes for the benefit of each of the Company and the Assignor all
of the Assignor's obligations as purchaser thereunder;
b. The Assignee understands that the Mortgage Loans have not been
registered under the Securities Act or the securities laws of any state;
c. The purchase price being paid by the Assignee for the Mortgage
Loans is in excess of $250,000.00 and will be paid by cash remittance of the
full purchase price within 60 days of the sale;
d. The Assignee is acquiring the Mortgage Loans for investment for its
own account only and not for any other person. In this connection, neither the
Assignee nor any person authorized to act therefor has offered to sell the
Mortgage Loans by means of any general advertising or general solicitation
within the meaning of Rule 502(c) Regulation D, promulgated under the Securities
Act;
e. The Assignee considers itself a substantial sophisticated
institutional investor having such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks of
investment in the Mortgage Loans;
f. The Assignee has been furnished with all information regarding the
Mortgage Loans that it has requested from the Assignor or the Company;
g. Neither the Assignee nor anyone acting on its behalf has offered,
transferred, pledged, sold or otherwise disposed of the Mortgage Loans, any
interest in the Mortgage Loans or any other similar security to, or solicited
any offer to buy or accepted a transfer, pledge or other disposition of the
Mortgage Loans, any interest in the Mortgage Loans or any other similar security
from, or otherwise approached or negotiated with respect to the Mortgage Loans,
any interest in the Mortgage Loans or any other similar security with, any
person in any manner which would constitute a distribution of the Mortgage Loans
under the Securities Act or which would render the disposition of the Mortgage
Loans a violation of Section 5 of the Securities Act or require registration
pursuant thereto, nor will it act, nor has it
Exhibit D-2
authorized or will it authorize any person to act, in such manner with respect
to the Mortgage Loans; and
h. Either (1) the Assignee is not an employee benefit plan ("Plan")
within the meaning of section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA") or a plan ("Plan") within the meaning of
section 4975(e)(1) of the Internal Revenue Code of 1986 ("Code"), and the
Assignee is not directly or indirectly purchasing the Mortgage Loans on behalf
of, investment manager of, as named fiduciary of, as trustee of, or with assets
of, a Plan; or (2) the Assignee's purchase of the Mortgage Loans will not result
in a prohibited transaction under section 406 of ERISA or section 4975 of the
Code.
i. The Assignee's address for purposes of all notices and
correspondence related to the Mortgage Loans and the Mortgage Loan Sale and
Servicing Agreement is:
[NAME AND ADDRESS OF ASSIGNEE]
Attention: __________________________
Telephone: __________________________
Fax: ________________________________
The Assignee's wire transfer instructions for purposes of all remittances
and payments related to the Mortgage Loans and the Mortgage Loan Sale and
Servicing Agreement is:
For the account of [NAME OF ASSIGNEE]
A/C#: _______________________________
ABA#: _______________________________
Attention: __________________________
Taxpayer ID#: _______________________
4. Accuracy of the Servicing Agreement.
The Company and the Assignor represent and warrant to the Assignee that (i)
attached hereto as Exhibit B are true, accurate and complete copies of the
Mortgage Loan Sale and Servicing Agreement, the Custodial Agreement and all
amendments and modifications, if any, thereto, (ii) neither the Mortgage Loan
Sale and Servicing Agreement nor the Custodial Agreement has been amended or
modified in any respect, except as set forth in this Agreement, and (iii) no
notice of termination has been given to the Company under the Mortgage Loan Sale
and Servicing Agreement. The Company represents and warrants that through the
date hereof the Company has serviced the Mortgage Loans in accordance with the
terms of the Mortgage Loan Sale and Servicing Agreement.
5. Recognition of Assignee.
From and after the date hereof, the Company shall note the transfer of the
Mortgage Loans to the Assignee in its books and records, the Company shall
recognize the Assignee as the owner of the Mortgage Loans and the Company shall
service the Mortgage Loans for the benefit of the Assignee pursuant to the
Mortgage Loan Sale and Servicing Agreement, the terms of which are incorporated
herein by reference. It is the intention of the Assignor, the Company and the
Assignee that the Mortgage Loan Sale and Servicing Agreement and the Custodial
Exhibit D-3
Agreement shall be binding upon and inure to the benefit of the Company and the
Assignee and their respective successors and assigns.
[Signatures Follow]
Exhibit D-4
IN WITNESS WHEREOF, the parties have caused this Assignment, Assumption and
Recognition Agreement be executed by their duly authorized officers as of the
date first above written.
[NAME OF ASSIGNOR] [NAME OF ASSIGNEE]
By: By:
-------------------------------- -------------------------------------
Name: Name:
------------------------------ -----------------------------------
Its: Its:
------------------------------- ------------------------------------
[NAME OF COMPANY]
Company
By:
--------------------------------
Name:
------------------------------
Its:
-------------------------------
Exhibit D-5
EXHIBIT A
to the Assignment, Assumption and Recognition Agreement
MORTGAGE LOAN SCHEDULE
Exhibit D-6
EXHIBIT B
to the Assignment, Assumption and Recognition Agreement
EXECUTION COPIES OF MORTGAGE LOAN SALE AND SERVICING AGREEMENT
AND MEMORANDUM OF SALE
Exhibit D-7
EXHIBIT E
[RESERVED]
Exhibit E-1
EXHIBIT F
[RESERVED]
Exhibit F-1
EXHIBIT G
[RESERVED]
Exhibit G-1
EXHIBIT H
[RESERVED]
Exhibit H-1
EXHIBIT I
FORM OF MEMORANDUM OF SALE
CLOSING DATE:
This Memorandum of Sale (this "Memorandum"), dated as of _______ (the
"Closing Date"), confirms the sale by Opteum Financial Services, LLC (the
"Company"), to Bank of America, National Association (the "Purchaser"), and the
purchase by the Purchaser from the Company, of the first lien [fixed rate]
[adjustable rate] residential mortgage loans on a servicing retained basis
described on the Mortgage Loan Schedule attached hereto as Schedule I (the
"Mortgage Loans"), pursuant to the terms of the Mortgage Loan Sale and Servicing
Agreement (the "Mortgage Loan Sale and Servicing Agreement"), dated as of
_________ , and is by and between the Purchaser and the Company.
For good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the Company does hereby bargain, sell, convey, assign
and transfer to Purchaser without recourse, except as provided in the Mortgage
Loan Sale and Servicing Agreement, and on a servicing retained basis, all right,
title and interest of the Company in and to each of the Mortgage Loans, together
with all documents maintained as part of the related Mortgage Files, all
Mortgaged Properties which secure any Mortgage Loan but are acquired by
foreclosure, deed in lieu of foreclosure after the Cut-off Date or otherwise,
all payments of principal and interest received on the Mortgage Loans after the
Cut-off Date, all other unscheduled collections collected in respect of the
Mortgage Loans after the Cut-off Date, and all proceeds of the foregoing,
subject, however, to the rights of the Company under the Mortgage Loan Sale and
Servicing Agreement.
The Company has delivered to the Custodian prior to the date hereof the
documents with respect to each Mortgage Loan required to be delivered under the
Mortgage Loan Sale and Servicing Agreement.
Capitalized terms that are used herein but are not defined herein shall
have the respective meanings set forth in the Mortgage Loan Sale and Servicing
Agreement.
Exhibit I-1
IN WITNESS WHEREOF, the parties hereto, by the hands of their duly
authorized officers, execute this Memorandum as of the Closing Date referred to
above.
BANK OF AMERICA, NATIONAL OPTEUM FINANCIAL SERVICES, LLC
ASSOCIATION
as Purchaser as Company
By: By:
-------------------------------- -------------------------------------
Name: Name:
------------------------------ -----------------------------------
Its: Its:
------------------------------- ------------------------------------
Exhibit I-2
SCHEDULE I
MORTGAGE LOAN SCHEDULE
Exhibit I-3
EXHIBIT J
SERVICER REQUIREMENTS
Loading/Updating Investor Headers
1. The Purchaser will provide investor header matrix for input on MSP by
Company. Updates/additions will occur monthly, including new investor
header detail for each new deal that is settled.
2. The Company will load investor headers upon receipt or before month
end. The following fields will need to be updated on IN03: MS OPT, MS
INV CNTRL NO, MS MO DELQ, and MS JUST FL.
3. The Company will update the investor headers on the first business day
of the next/following month to ensure that the correct loan accounts
will appear on the corresponding 413 file that will represent the new
month's activity.
Loading Account Numbers
1. Upon receipt of a funding schedule, the Purchaser will deliver a cross
reference of Company-to-Purchaser account numbers to the Company. The
account numbers will be delivered in the xxxx 55 layout for loading in
the next Company MSP cycle.
2. The Company will load account numbers on or before the first business
day of the month to ensure that the correct the Purchaser account
numbers will appear on the corresponding 413 file that will represent
the new month's activity.
Automated Monetary Transaction File - 413
1. Call Fidelity PowerCell and request installation of IP 770
2. On the first business day of the month, the financial transactions for
the LSBO portfolio will transmit from the Company MSP system to the
the Purchaser MSP system.
Monthly Company File - Automated
1. Call Fidelity PowerCell and initiate an SSR for the installation of IP
1804 and the interchange set-up required to host and transmit this
file. This enhancement will provide an automated month-end feed from
the Company to the Purchaser for the LSBO portfolio identified by the
corresponding investor headers. The feed will include all new loans
purchased by the Purchaser in the previous month, as well as a
maintenance file for all existing loans in the LSBO portfolio
2. Once installed, populate XX flag on the IN03 screen. This flag will
assist with synchronizing the feeds received in the Monthly Company
File and the corresponding 413 file.
Exhibit J-1
3. Bank of America will receive and process the electronic file on the
first business day of the month for the previous month-end file. Note:
This file comes from the Company automatically with the installation
of the IP.
Monthly Company File - Manual
For testing purposes, and in the event that the IP is not installed prior to
initial conversion, a manual process is in place to provide the Monthly Company
File data feed for REMOTE MSP clients.
1. The Company will load/update investor header information received from
the Purchaser.
2. The Company will send an email granting permission to Fidelity to
provide the manual feed of accounts in the assigned investor headers
identified. The email will contain the MSP client and corresponding
investor/categories to be included in the feed.
3. Bank of America will receive and process the file on the first
business day of the month for the previous month-end file.
NOTE: For LICENSED MSP clients, the Company will install and use the existing
work-around EZTrieve process. (This will require the installation, testing, and
implementation of the EZTrieve until the IP is ready.) The Company will be
required to develop a test file and production files until the IP is available.
Reporting Requirements
Required reports for the LSBO project are as follows:
o S215 - Report summarizes the collections made during the reporting
period
o S214 - Report summarizes paid in full loans made during the reporting
period
o P139 - Monthly statement of mortgage accounts or a trial balance as of
the cutoff date
o SCHEDULED REMITTANCE REPORTS - Companys send on a monthly basis. We
would like this report by the 5th business day.
o DELINQUENCY REPORT - Report from the Company to be sent by the 5th
business day. If the Company is a Fidelity client, we would like a
P4DL report. Otherwise, a similar report will suffice. LSBO would like
this report sent via e-mail or fax.
NOTE: These S215, S214, and P139 reports will be provided in an electronic
format. These reports are automatically generated when the 951/139 cutoff is
calendared. The reports are required for the LSBO project; reports in addition
to these may be required.
Exhibit J-2
EXHIBIT K
[Reserved]
Exhibit K-1
REGULATION AB COMPLIANCE ADDENDUM
TO MORTGAGE LOAN SALE AND SERVICING AGREEMENT
This Regulation AB Compliance Addendum (this "Reg AB Addendum"), dated as
of September 1, 2006, by and between Bank of America, National Association (the
"Purchaser") and Opteum Financial Services, LLC (the "Company"), to that certain
Mortgage Loan Sale and Servicing Agreement, dated as of September 1, 2006, by
and between the Company and the Purchaser (as amended, modified or supplemented,
the "Agreement").
WITNESSETH
WHEREAS, the Company and the Purchaser have agreed to adopt an addendum to
the Agreement to reflect the intention of the parties to comply with Regulation
AB.
NOW, THEREFORE, in consideration of the mutual promises and mutual
obligations set forth herein, the Company and the Purchaser hereby agree as
follows:
ARTICLE I
DEFINED TERMS
Capitalized terms used but not defined herein shall have the meanings
assigned to such terms in the Agreement. The following terms shall have the
meanings set forth below, unless the context clearly indicates otherwise:
Company Information: As defined in Section 2.07(a).
Qualified Correspondent: Any Person from which the Company purchased
Mortgage Loans, provided that the following conditions are satisfied: (i) such
Mortgage Loans were originated pursuant to an agreement between the Company and
such Person that contemplated that such Person would underwrite mortgage loans
from time to time, for sale to the Company, in accordance with underwriting
guidelines designated by the Company ("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 Company within 180 days after the Origination Date; (iii) either
(x) the Designated Guidelines were, at the time such Mortgage Loans were
originated, used by the Company in origination of mortgage loans of the same
type as the Mortgage Loans for the Company's own account or (y) the Designated
Guidelines were, at the time such Mortgage Loans were underwritten, designated
by the Company on a consistent basis for use by lenders in originating mortgage
loans to be purchased by the Company; and (iv) the Company employed, at the time
such Mortgage Loans were acquired by the Company, 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
Company.
Reconstitution: Any Securitization Transaction or Whole Loan Transfer.
A-1
Regulation AB: Subpart 229.1100 - Asset Backed Securities (Regulation AB),
17 C.F.R. Sections 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.
Servicer: As defined in Section 2.03(c).
Servicing Criteria: The "servicing criteria" set forth in Item 1122(d) of
Regulation AB, as such may be amended from time to time.
Static Pool Information: Static pool information as described in Item
1l05(a)(l)-(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 l122( d) of
Regulation AB with respect to Mortgage Loans under the direction or authority of
the Company or a Subservicer.
Third-Party Originator: Each Person, other than a Qualified Correspondent,
that originated Mortgage Loans acquired by the Company.
ARTICLE II
COMPLIANCE WITH REGULATION AB
Section 2.01 Intent of the Parties; Reasonableness.
The Purchaser and the Company acknowledge and agree that the purpose of
Article II of this Reg AB Addendum is to facilitate compliance by the Purchaser
and any Depositor with the provisions of Regulation AB and related rules and
regulations of the Commission and that the provisions of this Reg AB Addendum
shall be applicable to all Mortgage Loans included in a Securitization
Transaction closing on or after January 1, 2006. Although Regulation AB is
applicable by its terms only to offerings of asset-backed securities that are
registered under the Securities Act, the Company 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). The Company 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
A-2
the Purchaser, any Master Servicer or any Depositor in good faith for delivery
of information under these provisions on the basis of established and evolving
interpretations of Regulation AB. In connection with any Securitization
Transaction, the Company shall cooperate fully with the Purchaser and any Master
Servicer to deliver to the Purchaser (including any of its assignees or
designees), any Master Servicer and any Depositor, any and all statements,
reports, certifications, records and any other information necessary in the good
faith determination of the Purchaser, the Master Servicer or any Depositor to
permit the Purchaser, such Master Servicer or such Depositor to comply with the
provisions of Regulation AB, together with such disclosures relating to the
Company, any Subservicer, any Third-Party Originator and the Mortgage Loans, or
the servicing of the Mortgage Loans, reasonably believed by the Purchaser or any
Depositor to be necessary in order to effect such compliance.
The Purchaser (including any of its assignees or designees) shall cooperate
with the Company by providing timely notice of requests for information under
these provisions and by reasonably limiting such requests to information
required, in the Purchaser's reasonable judgment, to comply with Regulation AB.
Section 2.02 Additional Representations and Warranties of the Company.
(a) The Company thereby represents to the Purchaser, to any Master
Servicer and to any Depositor, as of the date on which information is
first provided to the Purchaser, any Master Servicer or any Depositor
under Section 2.03 that, except as disclosed in writing to the
Purchaser, such Master Servicer or such Depositor prior to such date:
(i) the Company 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 Company; (ii) the Company 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 Company as servicer has been
disclosed or reported by the Company; (iv) no material changes to the
Company'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
Company's financial condition that could have a material adverse
effect on the performance by the Company 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 Company, any Subservicer or any Third-Party
Originator; and (vii) there are no affiliations, relationships or
transactions relating to the Company, 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.
A-3
(b) If so requested by the Purchaser, any Master Servicer or any Depositor
on any date following the date on which information is first provided
to the Purchaser, any Master Servicer or any Depositor under Section
2.03, the Company 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 2.03 Information to Be Provided by the Company.
In connection with any Securitization Transaction, the Company shall (i)
within five Business Days following request by the Purchaser or any Depositor,
provide to the Purchaser and such Depositor (or, as applicable, cause each
Third-Party Originator and each Subservicer to provide), in writing and in form
and substance reasonably satisfactory to the Purchaser and such Depositor, the
information and materials specified in paragraphs (a), (b), (c), (f) and (g) of
this Section, and (ii) as promptly as practicable following notice to or
discovery by the Company, 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 Company shall
provide such information regarding (i) the Company, 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)(l), 1105, 1110, 1117 and 1119 of
Regulation AB. Such information shall include, at a minimum:
(i) the originator's form of organization;
(ii) 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;
(iii) a description of any material legal or governmental proceedings
pending (or known to be contemplated) against the Company, each
Third-Party Originator and each Subservicer; and
A-4
(iv) a description of any affiliation or relationship between the
Company, each Third-Party Originator, each Subservicer and any
of the following parties to a Securitization Transaction, as
such parties are identified to the Company 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;
(8) any enhancement or support provider; and
(9) any other material transaction party.
(b) If so requested by the Purchaser or any Depositor, the Company 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) serviced by the Company or any
Third-Party Originator and originated by (i) the Company, if the
Company 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
by the Company (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 Company (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. The content of such Static Pool Information may be in the
form customarily provided by the Company, and need not be customized
for the Purchaser or any Depositor. 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 Company shall provide corrected Static Pool Information to
the Purchaser or any Depositor, as applicable, in the
A-5
same format in which Static Pool Information was previously provided to such
party by the Company.
If so requested by the Purchaser or any Depositor, the Company 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 statements
and 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 the Company'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 statements and 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.
(c) If so requested by the Purchaser or any Depositor, the Company shall
provide such information regarding the Company, as servicer of the
Mortgage Loans, and each Subservicer (each of the Company and each
Subservicer, for purposes of this paragraph, a "Servicer"), as is
requested for the purpose of compliance with Items 1108, 1117 and 1119
of Regulation AB. Such information shall include, at a minimum:
(i) the Servicer's form of organization;
(ii) a description of how long the Servicer has been servicing
residential mortgage loans; a general discussion of the
Servicer's experience in servicing assets of any type as well
as a more detailed discussion of the Servicer's experience in,
and procedures for, the servicing function it will perform
under the Agreement and any Reconstitution Agreements;
information regarding the size, composition and growth of the
Servicer's portfolio of residential mortgage loans of a type
similar to the Mortgage Loans and information on factors
related to the 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
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;
A-6
(2) the extent of outsourcing the 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 Servicer as a servicer
during the three-year period immediately preceding the
related Securitization Transaction;
(4) whether the 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;
(iii) a description of any material changes during the three-year
period immediately preceding the related Securitization
Transaction to the Servicer's policies or procedures with
respect to the servicing function it will perform under the
Agreement and any Reconstitution Agreements for mortgage loans
of a type similar to the Mortgage Loans;
(iv) information regarding the Servicer's financial condition, to
the extent that there is a material risk that an adverse
financial event or circumstance involving the Servicer could
have a material adverse effect on the performance by the
Servicer of its servicing obligations under the Agreement or
any Reconstitution Agreement;
(v) information regarding advances made by the Servicer on the
Mortgage Loans and the 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 Servicer to the effect that the 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;
(vi) a description of the 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;
(vii) a description of the 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
A-7
(viii) information as to how the 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;
(ix) a description of any material legal or governmental proceedings
pending (or known to be contemplated) against the Servicer; and
(x) a description of any affiliation or relationship between the
Servicer and any of the following parties to a Securitization
Transaction, as such parties are identified to the Servicer 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;
(8) any enhancement or support provider; and
(9) any other material transaction party.
(d) For the purpose of satisfying the reporting obligation under the
Exchange Act with respect to any class of asset-backed securities, the
Servicer shall (or shall cause each Subservicer and Third-Party
Originator to) (i) provide prompt notice to the Purchaser, any Master
Servicer and any Depositor in writing of (A) any material litigation
or governmental proceedings involving the Servicer, any Subservicer or
any Third-Party Originator, (B) any affiliations or relationships that
develop following the closing date of a Securitization Transaction
between 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, (C)
any Event of Default under the terms of this Agreement or any
Reconstitution Agreement, (D) any merger, consolidation or sale of
substantially all of the assets of the Servicer, and (E) the
Servicer's entry into an agreement with a Subservicer to perform or
assist in the performance of any of the Servicer's obligations under
this Agreement or any Reconstitution Agreement 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 the Agreement or any Reconstitution
Agreement by any Person (i) into which the Servicer or such
Subservicer may be merged or consolidated, or (ii) which may be
appointed as a successor to the Servicer or any Subservicer, the
Servicer shall provide to the Purchaser, any Master Servicer, and any
Depositor, at least 15 calendar days prior to the effective date of
such succession or
A-8
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 the Agreement,
not later than ten days prior to the deadline for the filing of any
distribution report on Form 10-D in respect of any Securitization
Transaction that includes any of the Mortgage Loans serviced by the
Servicer or any Subservicer, the Servicer or such Subservicer, as
applicable, shall, to the extent the Servicer or such Subservicer has
knowledge, provide to the party responsible for filing such report
(including, if applicable, the Master Servicer) notice of the
occurrence of any of the following events along with all information,
data, and materials related thereto as may be required to be included
in the related distribution report on Form 10-D (as specified in the
provisions of Regulation AB referenced below):
(1) any material modifications, extensions or waivers of pool asset
terms, fees, penalties or payments during the distribution period
or that have cumulatively become material over time (Item
1121(a)(11) of Regulation AB);
(2) material breaches of pool asset representations or warranties or
transaction covenants (Item 1121(a)(12) of Regulation AB); and
(3) information regarding new asset-backed securities issuances
backed by the same pool assets, any pool asset changes (such as,
additions, substitutions or repurchases), and any material
changes in origination, underwriting or other criteria for
acquisition or selection of pool assets (Item 1121(a)(14) of
Regulation AB).
(g) If so reasonably requested by the Purchaser, any Depositor or any
Master Servicer, the Servicer shall provide to the Purchaser, any
Master Servicer and any Depositor, evidence of the authorization of
the person signing any certification or statement, copies or other
evidence of Fidelity Bond Insurance and Errors and Omissions Insurance
policy, financial information and reports, and such other information
related to the Servicer or any Subservicer or the Servicer or such
Subservicer's performance hereunder.
Section 2.04 Servicer Compliance Statement.
On or before March 15 of each calendar year, commencing in 2007, the
Servicer shall deliver to the Purchaser, any Master Servicer and any Depositor a
statement of compliance addressed to the Purchaser, such Master Servicer 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
A-9
the immediately preceding calendar year (or applicable portion thereof) and of
its performance under the 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 the 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 2.05 Report on Assessment of Compliance and Attestation.
(a) On or before March 15 of each calendar year, commencing in 2007, the
Servicer shall:
(i) deliver to the Purchaser, any Master Servicer and any Depositor
a report (in form and substance reasonably satisfactory to the
Purchaser, such Master Servicer 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, such Master Servicer and such Depositor and
signed by an authorized officer of the Servicer, and shall
address each of the "Applicable Servicing Criteria" specified on
Exhibit B hereto;
(ii) deliver to the Purchaser, any Master Servicer and any Depositor
a report of a registered public accounting firm reasonably
acceptable to the Purchaser, such Master Servicer 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 Section 2.06(b) to be "participating in the
servicing function" within the meaning of Item 1122 of
Regulation AB and deliver to the Purchaser, any Master Servicer
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, and cause each Subservicer and Subcontractor described
in clause (iii) to provide, to the Purchaser, any Depositor, any
Master Servicer 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, signed by the
appropriate officer of the Servicer, in the form attached hereto
as Exhibit A.
A-10
The Servicer acknowledges that the parties identified in clause (a)(iv) above
may rely on the certification provided by the Servicer pursuant to such clause
in signing a Sarbanes Certification and filing such with the Commission. Neither
the Purchaser nor any Depositor will request delivery of a certification under
clause (a)(iv) above unless a Depositor is required under the Exchange Act to
file an annual report on Form 10-K with respect to an issuing entity whose asset
pool includes Mortgage Loans.
(b) Each assessment of compliance provided by a Subservicer pursuant to
Section 2.05(a)(iii) shall address each of the Servicing Criteria
specified on a certification substantially in the form of Exhibit B
hereto delivered to the Purchaser concurrently with the execution of
this Reg AB Addendum 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
Section 2.05(a)(iii) need not address any elements of the Servicing
Criteria other than those specified by the Servicer pursuant to
Section 2.06.
Section 2.06 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 servicer under
the 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 the Agreement
or any Reconstitution Agreement unless the Servicer complies with the provisions
of paragraph (b) of this Section.
(a) It shall not be necessary for the Servicer to seek the consent of the
Purchaser, any Master Servicer or any Depositor to the utilization of
any Subservicer. The Servicer shall cause any Subservicer used by the
Servicer (or by any Subservicer) for the benefit of the Purchaser and
any Depositor to comply with the provisions of this Section and with
Sections 2.02, 2.03( c), (e), (f) and (g), 2.04, 2.05 and 2.07 of this
Reg AB Addendum to the same extent as if such Subservicer were the
Servicer, and to provide the information required with respect to such
Subservicer under Section 2.03(d) of this Reg AB Addendum. 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 Section
2.04, any assessment of compliance and attestation required to be
delivered by such Subservicer under Section 2.05 and any certification
required to be delivered to the Person that will be responsible for
signing the Sarbanes Certification under Section 2.05 as and when
required to be delivered.
(b) It shall not be necessary for the Servicer to seek the consent of the
Purchaser, any Master Servicer or any Depositor to the utilization of
any Subcontractor. The Servicer shall promptly upon request provide to
the Purchaser, any Master Servicer and any Depositor (or any designee
of the Depositor, such as an administrator) a written description (in
form and substance satisfactory to the
A-11
Purchaser, such Depositor and such Master Servicer) 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 Sections 2.05 and 2.07 of this Reg AB
Addendum 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 and the other certifications required to be delivered by such
Subservicer and such Subcontractor under Section 2.05, in each case as and when
required to be delivered.
Section 2.07 Indemnification; Remedies.
(a) 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 (including, but not limited to, any Master Servicer if
applicable) 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, agents and affiliates of each of the foregoing
and of the Depositor (each, an "Indemnified Party"), and shall hold
each of them harmless from and against any claims, 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:
(1) (A) any untrue statement of a material fact contained or alleged
to be contained in any information, report, certification, data,
accountants' letter or other material provided under this Article
II by or on behalf of the Servicer, or provided under this
Article II by or on behalf of any Subservicer, Subcontractor or
Third-Party Originator (collectively, the "Servicer
Information"), or (B) the omission or alleged omission to state
in the Servicer Information a material fact required to be stated
in the Servicer Information or necessary in order to make the
statements therein, in the light of the circumstances under which
they were made, not misleading; provided, by way of
clarification, that clause (B) of this
A-12
paragraph shall be construed solely by reference to the Servicer
Information and not to any other information communicated in
connection with a sale or purchase of securities, without regard
to whether the Servicer Information or any portion thereof is
presented together with or separately from such other
information;
(2) any breach by the Servicer of its obligations under this Article
II, including particularly any failure by 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
II, including any failure by the Servicer to identify pursuant to
Section 2.06(b) any Subcontractor "participating in the servicing
function" within the meaning of Item 1122 of Regulation AB;
(3) any breach by the Servicer of a representation or warranty set
forth in Section 2.02(a) or in a writing furnished pursuant to
Section 2.02(b) and made as of a date prior to the closing date
of the related Securitization Transaction, to the extent that
such breach is not cured by such closing date, or any breach by
the Servicer of a representation or warranty in a writing
furnished pursuant to Section 2.02(b) to the extent made as of a
date subsequent to such closing date; or
(4) the negligence, bad faith or willful misconduct of the Servicer
in connection with its performance under this Article II.
If the indemnification provided for herein is unavailable or insufficient to
hold harmless an Indemnified Party, then the Servicer agrees that it shall
contribute to the amount paid or payable by such Indemnified Party as a result
of any claims, losses, damages or liabilities incurred by such Indemnified Party
in such proportion as is appropriate to reflect the relative fault of such
Indemnified Party on the one hand and the Servicer on the other.
In the case of any failure of performance described in clause (a)(ii) of this
Section, the Servicer shall promptly reimburse the Purchaser, any Depositor, as
applicable, and each Person responsible for the preparation, execution or filing
of any report required to be filed with the Commission with respect to such
Securitization Transaction, or for execution of a certification pursuant to Rule
13a-14(d) or Rule 15d-14(d) under the Exchange Act with respect to such
Securitization Transaction, for all costs reasonably incurred by each such party
in order to obtain the information, report, certification, accountants' letter
or other material not delivered as required by the Servicer, any Subservicer,
any Subcontractor or any Third-Party Originator.
This indemnification shall survive the termination of this Agreement or the
termination of any party to this Agreement.
(b) (1) Any failure by 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 II, or
A-13
any breach by the Servicer of a representation or warranty set forth
in Section 2.02(a) or in a writing furnished pursuant to Section
2.02(b) and made as of a date prior to the closing date of the related
Securitization Transaction, to the extent that such breach is not
cured by such closing date, or any breach by the Servicer of a
representation or warranty in a writing furnished pursuant to Section
2.02(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 Servicer under the
Agreement and any applicable Reconstitution Agreement, and shall
entitle the Purchaser or any Depositor, as applicable, in its sole
discretion to terminate the rights and obligations of the Servicer as
servicer under the 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 Servicer (and if the Servicer is servicing any of
the Mortgage Loans in a Securitization Transaction, appoint a
successor servicer reasonably acceptable to any Master Servicer for
such Securitization Transaction); provided that to the extent that any
provision of the 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.
(2) Any failure by the Servicer, any Subservicer or any Subcontractor
to deliver any information, report, certification or accountants'
letter when and as required under Section 2.04 or 2.05, including any
failure by the Servicer to identify pursuant to Section 2.06(b) any
Subcontractor "participating in the servicing function" within the
meaning of Item 1122 of Regulation AB, which continues unremedied
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 the Agreement and
any applicable Reconstitution Agreement, and shall entitle the
Purchaser, any Master Servicer or any Depositor, as applicable, in its
sole discretion to terminate the rights and obligations of the
Servicer as servicer under the 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 the Agreement and/or
any applicable Reconstitution Agreement expressly provides for the
survival of certain rights or obligations following termination of the
Servicer as servicer, such provision shall be given effect.
Neither the Purchaser, any Master Servicer 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.
(3) 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
A-14
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 the 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.
The Purchaser shall indemnify the Servicer, each affiliate of the Servicer,
each Person who controls any of such parties or the Servicer (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 Servicer (each, a "Servicer Indemnified Party," 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) any untrue statement of a material fact contained in any offering
materials related to a Securitization Transaction, including without limitation
the registration statement, prospectus, prospectus supplement, any private
placement memorandum, any free writing prospectuses, any ABS informational and
computational material, and any amendments or supplements to the foregoing
(collectively, the "Securitization Materials") or
(ii) the omission to state in the Securitization Materials a material fact
required to be stated in the Securitization Materials or necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading,
but only to the extent that such untrue statement or omission is other than
a statement or omission arising out of, resulting from, or based upon the
Servicer Information.
If the indemnification provided for herein is unavailable or insufficient
to hold harmless a Servicer Indemnified Party, then the Purchaser agrees that it
shall contribute to the amount paid or payable by such Servicer Indemnified
Party as a result of any claims, losses, damages or liabilities incurred by such
Servicer Indemnified Party in such proportion as is appropriate to reflect the
relative fault of such Servicer Indemnified Party on the one hand and the
Purchaser on the other.
This indemnification shall survive the termination of this Agreement or the
termination of any party to this Agreement.
Section 2.08 Third-Party Beneficiary.
For purposes of this Article II and any related provisions thereto, each
Master Servicer shall be considered a third-party beneficiary of this Agreement,
entitled to all the rights and benefits hereof as if it were a direct party to
this Agreement.
A-15
EXHIBIT A
FORM OF ANNUAL CERTIFICATION
Re: The [_________] agreement dated as of [__], 200[_] (the "Agreement"),
among [IDENTIFY PARTIES]
I, ________________________________, the _____________________ of [NAME OF
COMPANY] (the "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 and identified as
the responsibility of the Company on Exhibit B to the Regulation AB Compliance
Addendum to the Agreement (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 this Agreement, and the Servicing Assessment and Attestation Report
required to be provided by the Company and by any Subservicer and 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 [Depositor] [Master Servicer]. Any material instance
of noncompliance with the Servicing Criteria has been disclosed in such reports.
A-16
Date:
-----------------------------------
By:
-------------------------------------
Name:
Title:
A-17
EXHIBIT B
SERVICING CRITERIA TO BE ADDRESSED IN ASSESSMENT OF COMPLIANCE
The assessment of compliance to be delivered by [the Company] [Name of
Subservicer] shall address, at a minimum, the criteria identified as below as
"Applicable Servicing Criteria";
SERVICING CRITERIA APPLICABLE
-------------------------------------------------------------------------------- SERVICING
REFERENCE CRITERIA CRITERIA
---------------- ------------------------------------------------------------- ------------
GENERAL SERVICING CONSIDERATIONS
1122(d)(1)(i) Policies and procedures are instituted to monitor any X
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 X
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 X
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 X
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 X
or to an investor are made only by authorized personnel.
1122(d)(2)(iii) Advances of funds or guarantees regarding collections, cash X
flows or distributions, and any interest or other fees
charged for such advances, are made, reviewed and approved as
specified in the transaction agreements.
1122(d)(2)(iv) The related accounts for the transaction, such as cash X
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.
A-18
SERVICING CRITERIA APPLICABLE
-------------------------------------------------------------------------------- SERVICING
REFERENCE CRITERIA CRITERIA
---------------- ------------------------------------------------------------- ------------
1122(d)(2)(v) Each custodial account is maintained at a federally insured X
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 X
access.
1122(d)(2)(vii) Reconciliations are prepared on a monthly basis for all X
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 X
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 Company.
1122(d)(3)(ii) Amounts due to investors are allocated and remitted in X
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 X
business days to the Company'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 X
with cancelled checks, or other form of payment, or custodial
bank statements.
A-19
SERVICING CRITERIA APPLICABLE
-------------------------------------------------------------------------------- SERVICING
REFERENCE CRITERIA CRITERIA
---------------- ------------------------------------------------------------- ------------
POOL ASSET ADMINISTRATION
1122(d)(4)(i) Collateral or security on mortgage loans is maintained as X
required by the transaction agreements or related mortgage
loan documents.
1122(d)(4)(ii) Mortgage loan and related documents are safeguarded as X
required by the transaction agreements
1122(d)(4)(iii) Any additions, removals or substitutions to the asset pool X
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 X
accordance with the related mortgage loan documents are
posted to the Company'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 Company's records regarding the mortgage loans agree with X
the Company'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 X
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.
1122(d)(4)(vii) Loss mitigation or recovery actions (e.g., forbearance plans, X
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.
1122(d)(4)(viii) Records documenting collection efforts are maintained during X
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).
A-20
SERVICING CRITERIA APPLICABLE
-------------------------------------------------------------------------------- SERVICING
REFERENCE CRITERIA CRITERIA
---------------- ------------------------------------------------------------- ------------
1122(d)(4)(ix) Adjustments to interest rates or rates of return for mortgage X
loans with variable rates are computed based on the related
mortgage loan documents.
1122(d)(4)(x) Regarding any funds held in trust for an obligor (such as X
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.
1122(d)(4)(xi) Payments made on behalf of an obligor (such as tax or X
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.
1122(d)(4)(xii) Any late payment penalties in connection with any payment to X
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.
1122(d)(4)(xiii) Disbursements made on behalf of an obligor are posted within X
two business days to the obligor's records maintained by the
servicer, or such other number of days specified in the
transaction agreements.
1122(d)(4)(xiv) Delinquencies, charge-offs and uncollectible accounts are X
recognized and recorded in accordance with the transaction
agreements.
1122(d)(4)(xv) Any external enhancement or other support, identified in Item if obligated
1114(a)(1) through (3) or Item 1115 of Regulation AB, is under
maintained as set forth in the transaction agreements. transaction
documents
A-21
