EXHIBIT 10.3
EXECUTION
RECONSTITUTED SERVICING AGREEMENT
THIS RECONSTITUTED SERVICING AGREEMENT (this "Agreement"), entered into
as of the 1st day of December, 2001, by and between XXXXXX BROTHERS BANK, FSB, a
federal savings bank (the "Seller" or "Xxxxxx Brothers Bank, FSB"), and CENDANT
MORTGAGE CORPORATION, a New Jersey corporation (the "Servicer") having an office
at 0000 Xxxxxx Xxx, Xx. Xxxxxx, Xxx Xxxxxx 00000, recites and provides as
follows:
RECITALS
WHEREAS, National Bank of Commerce ("NBC") acquired certain first lien,
adjustable rate, residential mortgage loans (the "Mortgage Loans") from the
Servicer and Xxxxxx'x Gate Residential Mortgage Trust (formerly known as Cendant
Residential Mortgage Trust) ("Xxxxxx'x Gate"), which Mortgage Loans were either
originated or acquired by the Servicer or Xxxxxx'x Gate.
WHEREAS, the Mortgage Loans were originally serviced by the Servicer
for NBC pursuant to a Mortgage Loan Flow Purchase, Sale & Servicing Agreement
dated as of February 2, 2001 (the "Mortgage Loan Flow Purchase, Sale & Servicing
Agreement"), by and among NBC, as purchaser, the Servicer, as seller and
servicer and Xxxxxx'x Gate, as seller and an Additional Collateral Assignment
and Servicing Agreement dated as of April 18, 2001 (the "Additional Collateral
Assignment and Servicing Agreement"), by and between NBC, as assignee and the
Servicer, as assignor, both of which are annexed as Exhibit B hereto (the
Mortgage Loan Flow Purchase, Sale & Servicing Agreement and the Additional
Collateral Assignment and Servicing Agreement shall hereinafter collectively be
referred to as the "Servicing Agreement").
WHEREAS, pursuant to an Assignment, Assumption and Recognition
Agreement dated as of November 29, 2001, by and among the Seller, as assignee,
NBC, as assignor, the Servicer, as seller and servicer, and Xxxxxx'x Gate, as
seller, which is annexed as Exhibit C hereto, NBC sold, assigned and transferred
all of NBC's right, title and interest in the Mortgage Loans to the Seller, the
Seller accepted such assignment from NBC and assumed all of NBC's obligations,
duties and liabilities under the Servicing Agreement and the Servicer and
Xxxxxx'x Gate acknowledged and recognized such assignment and assumption.
WHEREAS, the Seller has conveyed the Mortgage Loans to Structured Asset
Securities Corporation, a Delaware special purpose corporation ("SASCO"), which
in turn has conveyed the Mortgage Loans to Xxxxx Fargo Bank Minnesota, National
Association., a national banking association (the "Trustee"), pursuant to a
trust agreement dated as of December 1, 2001 (the "Trust Agreement"), by and
among the Trustee, Aurora Loan Services Inc., as master servicer ("Aurora", and
together with any successor Master Servicer appointed pursuant to the provisions
of the Trust Agreement, the "Master Servicer") and SASCO.
WHEREAS, the Seller desires that the Servicer continue to service the
Mortgage Loans, and the Servicer has agreed to do so.
WHEREAS, the Seller and the Servicer agree that the provisions of the
Servicing Agreement, as amended hereby with respect to the Mortgage Loans, shall
continue to apply to the Mortgage Loans, and shall govern the Mortgage Loans for
so long as such Mortgage Loans remain subject to the provisions of the Trust
Agreement.
WHEREAS, the Master Servicer and any successor master servicer shall be
obligated, among other things, to supervise the servicing of the Mortgage Loans
on behalf of the Trustee, and shall have the right under the conditions
specified herein to terminate for cause the rights and obligations of the
Servicer under this Agreement.
WHEREAS, the Seller and the Servicer intend that each of the Master
Servicer and the Trustee is an intended third party beneficiary of this
Agreement.
NOW, THEREFORE, in consideration of the mutual agreements hereinafter
set forth and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the Seller and the Servicer hereby
agree as follows:
AGREEMENT
1. Definitions. Capitalized terms used and not defined in this
Agreement, including Exhibit A hereto and any provisions of the Servicing
Agreement incorporated by reference herein (regardless of whether such terms are
defined in the Servicing Agreement), shall have the meanings ascribed to such
terms in the Trust Agreement.
2. Servicing. The Servicer agrees, with respect to the Mortgage Loans,
to perform and observe the duties, responsibilities and obligations that are to
be performed and observed under the provisions of the Servicing Agreement,
except as otherwise provided herein and on Exhibit A hereto, and that the
provisions of the Servicing Agreement, as so modified, are and shall be a part
of this Agreement to the same extent as if set forth herein in full.
3. Master Servicing; Termination of Servicer. The Servicer, including
any successor servicer hereunder, shall be subject to the supervision of the
Master Servicer, which Master Servicer shall be obligated to ensure that the
Servicer services the Mortgage Loans in accordance with the provisions of this
Agreement. The Master Servicer, acting on behalf of the Trustee and the SASCO
2001-21A Trust Fund (the "Trust Fund") created pursuant to the Trust Agreement,
shall have the same rights as Xxxxxx Brothers Bank, FSB as purchaser under the
Servicing Agreement to enforce the obligations of the Servicer under the
Servicing Agreement and the term "Purchaser" as used in the Servicing Agreement
in connection with any rights of the Purchaser shall refer to the Trust Fund or,
as the context requires, the Master Servicer acting in its capacity as agent for
the Trust Fund, except as otherwise specified in Exhibit A hereto. The Master
Servicer shall be entitled to terminate the rights and obligations of the
Servicer under this Agreement upon the failure of the Servicer to perform any of
its obligations under this Agreement, which failure results in an Event of
Default as provided in Article X of the Servicing Agreement. Notwithstanding
anything herein to the contrary, in no event shall the Master Servicer assume
any of the obligations of Xxxxxx Brothers Bank, FSB under the Servicing
Agreement; and in connection with the performance of the Master Servicer's
duties hereunder, the parties and other signatories hereto agree that the Master
Servicer shall be entitled to all of the rights, protections and limitations of
liability afforded to the Master Servicer under the Trust Agreement.
2
4. Compliance with HOEPA. The Servicer is currently in compliance with
the Home Ownership and Equity Protection Act ("HOEPA") and will continue to
operate its business in compliance with HOEPA.
5. No Representations. Neither the Servicer nor the Master Servicer
shall be obligated or required to make any representations and warranties
regarding the characteristics of the Mortgage Loans (other than those
representations and warranties made in Section 3.03 of the Servicing Agreement)
in connection with the transactions contemplated by the Trust Agreement and
issuance of the Certificates issued pursuant thereto.
6. Notices. All notices and communications between or among the parties
hereto (including any third party beneficiary thereof) or required to be
provided to the Trustee shall be in writing and shall be deemed received or
given when mailed first-class mail, postage prepaid, addressed to each other
party at its address specified below or, if sent by facsimile or electronic
mail, when facsimile or electronic confirmation of receipt by the recipient is
received by the sender of such notice. Each party may designate to the other
parties in writing, from time to time, other addresses to which notices and
communications hereunder shall be sent.
All notices required to be delivered to the Master Servicer under this
Agreement shall be delivered to the Master Servicer at the following address:
Aurora Loan Services Inc.
0000 Xxxxx Xxxxxx Xxxx
Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Attention: E. Xxxx Xxxxxxxxxx, Master Servicing, SASCO
2001-21A
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
All remittances required to be made to the Master Servicer under this
Agreement shall be made on a scheduled/scheduled basis to the following wire
account:
JPMorgan Chase Bank
New York, New York
ABA#: 000-000-000
Account Name: Aurora Loan Services Inc., Master Servicing
Payment Clearing Account
Account Number: 066-661059
Beneficiary: Aurora Loan Services Inc.
For further credit to: SASCO 2001-21A
3
All notices required to be delivered to the Trustee hereunder shall be
delivered to the Trustee at the following address:
Xxxxx Fargo Bank Minnesota, National Association
Securities Administration Services
00000 Xxxxxx Xxxx Xxxxxxx
Xxxxxxxx, XX 00000-0000
Attention: SASCO 2001-21A
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
All notices required to be delivered to the Seller hereunder shall be
delivered to the Seller at the following address:
Xxxxxx Brothers Bank, FSB
00 Xxxx 00xx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Contract Finance - Xxxxxx Xxxxxx
Telephone: (000) 000-0000
All notices required to be delivered to the Servicer hereunder shall be
delivered to the address of its office as set forth in the first paragraph of
this Agreement.
7. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, NOTWITHSTANDING
NEW YORK OR OTHER CHOICE OF LAW RULES TO THE CONTRARY.
8. Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original,
but all of which counterparts shall together constitute but one and the same
instrument.
4
Executed as of the day and year first above written.
XXXXXX BROTHERS BANK, FSB,
as Seller
By: /s/ Xxxx Xxxxxx
____________________________________
Name: Xxxx Xxxxxx
Title: Vice President
CENDANT MORTGAGE CORPORATION,
as Servicer
By: /s/ Xxxxx X. Xxxxxx
____________________________________
Name: Xxxxx X. Xxxxxx
Title: Vice President
Acknowledged By:
AURORA LOAN SERVICES INC.,
as Master Servicer
By: /s/ E. Xxxx Xxxxxxxxxx
__________________________________________________
Name: E. Xxxx Xxxxxxxxxx
Title: Executive Vice President
XXXXX FARGO BANK MINNESOTA, N.A.,
as Trustee
By: /s/ Xxxxx X. Xxxxxxxxx
__________________________________________________
Name: Xxxxx X. Xxxxxxxxx
Title: Vice President
EXHIBIT A
Modifications to the Servicing Agreement
1. Unless otherwise specified herein, for purposes of this Agreement, any
provisions of the Servicing Agreement, including definitions, relating
to (i) representations and warranties of the Purchaser, (ii) the sale
and purchase of the Mortgage Loans, (iii) Funding Dates and (iv)
Specially Serviced Mortgage Loans, shall be disregarded. The exhibits
to the Servicing Agreement and all references to such exhibits shall
also be disregarded.
2. For reporting purposes, a Mortgage Loan is "delinquent" when any
payment contractually due thereon has not been made by the close of
business on the Due Date therefor. Such Mortgage Loan is "30 days
Delinquent" if such payment has not been received by the close of
business on the corresponding day of the month immediately succeeding
the month in which such payment was first due, or, if there is no such
corresponding day (e.g., as when a 30-day month follows a 31-day month
in which a payment was due on the 31st day of such month), then on the
last day of such immediately succeeding month. Similarly for "60 days
Delinquent" and the second immediately succeeding month and "90 days
Delinquent" and the third immediately succeeding month.
3. A new definition of "Adverse REMIC Event" is hereby added to Article I
to read as follows:
"Adverse REMIC Event": As defined in Article X of the Trust
Agreement.
4. The definition of "Collection Account" is hereby amended to change the
words "the Purchaser of Mortgage Loans under the Mortgage Loan Flow
Purchase, Sale & Servicing Agreement, dated as of February 2, 2001" to
"SASCO 2001-21A Trust Fund".
5. The definition of "Custodial Agreement" in Article I is hereby amended
in its entirety to read as follows:
"Custodial Agreement" means the Custodial Agreement dated as
of December 1, 2001 between the Custodian and the Trustee.
6. The definition of "Custodian" in Article I is hereby amended in its
entirety to read as follows:
"Custodian" means U.S. Bank, National Association, any
successor in interest or any successor custodian appointed
pursuant to the Custodial Agreement.
7. The definition of "Cut Off Date" in Article I is hereby amended in its
entirety to read as follows:
"Cut Off Date": The close of business on December 1, 2001.
8. The definition of "Eligible Account" is hereby amended and restated in
its entirety to read as follows:
"Eligible Account": One or more accounts that are maintained
with (i) a depository the accounts of which are insured by the
FDIC and the debt obligations of which are rated AA (or its
equivalent) or better by each Rating Agency; (ii) the
corporate trust department of any bank the debt obligations of
which are rated at least A-1 or its equivalent by each Rating
Agency; or (iii) Xxxxxx Brothers Bank, FSB, a federal savings
bank.
9. The definition of "Escrow Account" in Article I is hereby amended by
changing the words "the Purchaser under the Mortgage Loan Flow
Purchase, Sale and Servicing Agreement, dated as of March 29, 2001 (as
amended), and various mortgagors" therein to "SASCO 2001-21A Trust
Fund".
10. The definition of "Mortgage Loan Schedule" in Article I is hereby
amended in its entirety to read as follows:
"Mortgage Loan Schedule": The schedule of Mortgage Loans
setting forth certain information with respect to the Mortgage
Loans, which Mortgage Loan Schedule is attached as Exhibit D
to this Agreement.
11. A new definition of "Opinion of Counsel" is hereby added to Article I
to read as follows:
"Opinion of Counsel" A written opinion of counsel, who may be
an employee of the Servicer, that is reasonably acceptable to
the Trustee and the Master Servicer provided that any Opinion
of Counsel relating to (a) qualification of the Mortgage Loans
in a REMIC or (b) compliance with the REMIC Provisions, must
be an opinion of counsel reasonably acceptable to the Trustee
and Xxxxxx Brothers Bank, FSB, who (i) is in fact independent
of any Seller, the Servicer and any Master Servicer of the
Mortgage Loans, (ii) does not have any material direct or
indirect financial interest in the Servicer or any Master
Servicer of the Mortgage Loans or in an affiliate of any such
entity and (iii) is not connected with any Seller, the
Servicer or any Master Servicer of the Mortgage Loans as an
officer, employee, director or person performing similar
functions.
12. A new definition of "REMIC Provisions" is hereby added to Article I to
read as follows:
"REMIC Provisions: The provisions of the federal income tax
law relating to real estate mortgage investment conduits,
which appear at sections 860A through 860G of Subchapter M of
Chapter 1 of the Code, and related provisions, and
regulations, including proposed regulations and rulings, and
administrative pronouncements promulgated thereunder, as the
foregoing may be in effect from time to time."
13. The definition of "REO Property" in Article I is hereby amended by
replacing the word "Purchaser" with "Trustee on behalf of the Trust
Fund".
2
14. The parties hereto acknowledge that Section 2.02 (Possession of
Mortgage Files) shall be inapplicable to this Agreement, as superseded
by the provisions of the Custodial Agreement and the Trust Agreement.
15. The parties hereto acknowledge that Section 2.05 (Transfer of Mortgage
Loans) of the Servicing Agreement shall be modified to indicate that
the Custodian shall prepare and execute at the direction of the Seller
any note endorsements in connection with transfer of the Mortgage Loans
to the Trust Fund as the owner of the Mortgage Loans and that the
Seller shall pay for any fees associated with the preparation and
execution of such note endorsements to the Trust Fund.
16. For purposes of servicing only, the second, third, fourth and fifth
paragraphs of Section 3.04 (Repurchase) are hereby restated to read as
follows:
Within 60 days of the earlier of either discovery by or notice
to the Servicer of any breach of a representation or warranty
set forth in Section 3.02 which materially and adversely
affects the ability of the Servicer to perform its duties and
obligations under this Agreement or otherwise materially and
adversely affects the value of the Mortgage Loans, the
Mortgaged Property or the priority of the security interest on
such Mortgaged Property, the Servicer shall use its best
efforts promptly to cure such breach in all material respects
and, if such breach cannot be cured, the Servicer shall, at
the Trustee's option, assign the Servicer's rights and
obligations under this Agreement (or respecting the affected
Mortgage Loans) to a successor Servicer selected by the Master
Servicer with the prior consent and approval of the Trustee.
Such assignment shall be made in accordance with Section
12.01.
In addition, the Servicer shall indemnify (from its
own funds) the Trustee, the Trust Fund and the Master Servicer
and hold each of them harmless against any costs resulting
from any claim, demand, defense or assertion based on or
grounded upon, or resulting from, a breach of the Servicer's
representations and warranties contained in this Agreement. It
is understood and agreed that the remedies set forth in this
Section 3.04 constitute the sole remedies of the Master
Servicer, the Trust Fund and the Trustee respecting a breach
of the foregoing representations and warranties.
Any cause of action against the Servicer relating to
or arising out of the breach of any representations and
warranties made in Section 3.01 shall accrue upon (i)
discovery of such breach by the Servicer or notice thereof by
the Trustee or Master Servicer to the Servicer, (ii) failure
by the Servicer to cure such breach within the applicable cure
period, and (iii) demand upon the Servicer by the Trustee or
the Master Servicer for compliance with this Agreement
17. Section 5.01(3)(c)(3) is hereby amended by replacing the word
"Purchaser" with "Master Servicer".
3
18. Section 5.01(3) is hereby amended by adding a new subsections (g)
thereto to read as follows:
"(g) the Servicer shall not, unless default by the related
Mortgagor has occurred or is, in the reasonable judgment of
the Servicer, imminent, knowingly permit any modification,
waiver or amendment of any material term of any Mortgage Loan
(including but not limited to the interest rate, the principal
balance, the amortization schedule, or any other term
affecting the amount or timing of payments on the Mortgage
Loan or the collateral therefor) unless the Servicer shall
have provided to the Master Servicer and the Trustee an
Opinion of Counsel in writing to the effect that such
modification, waiver or amendment would not cause an Adverse
REMIC Event."
19. The parties hereto acknowledge that the reference to each Funding Date
in the second paragraph of Section 5.04 shall mean the "close of
business on December 1, 2001."
20. Section 5.04(10) is hereby amended by adding to the end thereof the
words ", such deposit to be made from the Servicer's own funds without
reimbursement therefor."
21. Section 5.13 (Management of REO Properties) is hereby amended by
replacing the second paragraph of such section thereof with the
following:
"In the event that the Trust Fund acquires any REO Property in
connection with a default or imminent default on a Mortgage
Loan, the Servicer shall dispose of such REO Property not
later than the end of the third taxable year after the year of
its acquisition by the Trust Fund unless the Servicer has
applied for and received a grant of extension from the
Internal Revenue Service to the effect that, under the REMIC
Provisions and any relevant proposed legislation and under
applicable state law, the Trust Fund may hold REO Property for
a longer period without adversely affecting the REMIC status
of such REMIC or causing the imposition of a federal or state
tax upon such REMIC. If the Servicer has received such an
extension, then the Servicer shall continue to attempt to sell
the REO Property for its fair market value for such period
longer than three years as such extension permits (the
"Extended Period"). If the Servicer has not received such an
extension and the Servicer is unable to sell the REO Property
within the period ending 3 months before the end of such third
taxable year after its acquisition by the Trust Fund or if the
Servicer has received such an extension, and the Servicer is
unable to sell the REO Property within the period ending three
months before the close of the Extended Period, the Servicer
shall, before the end of the three year period or the Extended
Period, as applicable, (i) purchase such REO Property at a
price equal to the REO Property's fair market value or (ii)
auction the REO Property to the highest bidder (which may be
the Servicer) in an auction reasonably designed to produce a
fair price prior to the expiration of the three-year period or
the Extended Period, as the case may be. The Trustee shall
sign any document or take any other action reasonably
requested by the Servicer which would enable the Servicer, on
behalf of the Trust Fund, to request such grant of extension.
4
Notwithstanding any other provisions of this Agreement, no REO
Property acquired by the Trust Fund shall be rented (or
allowed to continue to be rented) or otherwise used by or on
behalf of the Trust Fund in such a manner or pursuant to any
terms that would: (i) cause such REO Property to fail to
qualify as "foreclosure property" within the meaning of
Section 860G(a)(8) of the Code; or (ii) subject the Trust Fund
to the imposition of any federal income taxes on the income
earned from such REO Property, including any taxes imposed by
reason of Sections 860F or 860G(c) of the Code, unless the
Servicer has agreed to indemnify and hold harmless the Trust
Fund with respect to the imposition of any such taxes."
22. Section 5.15 (Realization Upon Specially Serviced Mortgage Loans and
REO Properties) is hereby amended by changing the words "2 years" in
the last sentence of the third paragraph thereof to "3 years".
23. Section 6.01 (Remittances) is hereby amended by replacing the word
"Purchaser" with "Master Servicer" and by replacing paragraphs (1) and
(2) of such section with the following:
"(1) On each Remittance Date, the Servicer shall
remit to the Purchaser (a) all amounts credited to the
Collection Account as of the close of business on the last day
of the related Due Period (including (1) the amount of any
Payoff, together with interest thereon at the related
Remittance Rate to the end of the month in which prepayment of
the related Mortgage Loan occurs and (2) all proceeds of any
REO Disposition net of amounts payable to the Servicer
pursuant to Section 5.13), net of charges against or
withdrawals from the Collection Account in accordance with
Section 5.05, which charges against or withdrawals from the
Collection Account the Servicer shall make solely on such
Remittance Date, plus (b) all Monthly Advances, if any, which
the Servicer is obligated to remit pursuant to Section 6.03;
provided that the Servicer shall not be required to remit,
until the next following Remittance Date, any amounts
attributable to Monthly Payments collected but due on a Due
Date or Dates subsequent to the related Due Period.
(2) All remittances required to be made to the Master
Servicer shall be made to the following wire account or to
such other account as may be specified by the Master Servicer
from time to time:
JPMorgan Chase Bank
New York, New York
ABA #: 000-000-000
Account Name: Aurora Loan Services Inc.
Master Servicing Payment
Clearing Account
Account Number: 066-611059
Beneficiary: Aurora Loan Services Inc.
For further credit to: Aurora Loan Services
2001-21A
5
24. Section 6.02 (Reporting) is hereby amended by replacing the word
"Purchaser" with "Master Servicer" and by replacing the first sentence
of such section with the following:
On or before the 5th calendar day (or, if such day is
not a Business Day, on the immediately succeeding Business
Day) of each month during the term hereof, the Servicer shall
furnish to the Master Servicer (a) a monthly accounting report
containing such information in the form of FNMA Form 2010 or
such other form as shall be required by the FNMA Guides or by
the Master Servicer as to the accompanying remittance and the
most recently ended calendar month and (b) all such
information required pursuant to clause (a) above on a
magnetic tape or other similar media mutually acceptable to
the Servicer and the Master Servicer.
25. Section 6.03 (Monthly Advances by Servicer) is hereby amended by adding
the following new sentence immediately following the second sentence of
such section:
Any Prepaid Monthly Payments so used to make Monthly
Advances shall be replaced by the Servicer 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 Trust Fund required to be made on
such Remittance Date.
26. Sections 7.04 (Annual Statement as to Compliance) and 7.05 (Annual
Independent Certified Public Accountants' Servicing Report) are hereby
amended by replacing the word "Purchaser" with "Master Servicer".
27. Section 9.01 (Indemnification; Third Party Claims) is hereby amended by
changing the word "Purchaser" to "Master Servicer, Trustee and the
Trust Fund."
28. Section 9.02 (Merger or Consolidation of the Seller) is hereby amended
by changing the word "Purchaser" to "Trustee" where it appears in the
proviso to the second sentence thereof.
29. Section 9.04 (Servicer Not to Resign) is hereby amended in its entirety
to read as follows:
The Servicer shall neither assign this Agreement or
the servicing hereunder or delegate its rights or duties
hereunder or any portion hereof (to other than a third party
in the case of outsourcing routine tasks such as taxes,
insurance and property inspection, in which case the Servicer
shall be fully liable for such tasks as if the Servicer
performed them itself) or sell or otherwise dispose of all or
substantially all of its property or assets without the prior
written consent of the Trustee and the Master Servicer, which
consent shall be granted or withheld in the reasonable
discretion of such parties, provided, however, that the
Servicer may assign its rights and obligations hereunder
without prior written consent of the Trustee and the Master
Servicer to any entity that is directly owned or controlled by
the Servicer, and the Servicer guarantees the performance of
such entity hereunder. In the event of such assignment by the
Servicer, the Servicer shall provide the Trustee and the
Master Servicer with a written statement guaranteeing the
successor entity's performance of the Servicer's obligations
under the Agreement.
6
30. Section 10.01 (Events of Default) is hereby amended by changing the
words "3 Business Days" in Section 10.01(1) to "1 Business Day", by
deleting the remainder of Section 10.01(1) and by changing the words
"45 days" and 45-day" in Section 10.01(2) to "15 days and 15-day"
respectively.
31. The parties hereto acknowledge that the remedies set forth in Section
10.01 may be exercised by either the Master Servicer or the Trustee on
behalf of the Trust Fund.
32. Section 11.01 (Term and Termination) is hereby amended by changing the
references to "Purchaser" in the second and third paragraph of such
section to "Master Servicer."
33. Section 11.02 (Termination without Cause) is hereby deleted in its
entirety.
34. Section 12.01 (Successor to the Servicer) is hereby amended in its
entirety to read as follows:
Simultaneously with the termination of the Servicer's
responsibilities and duties under this Agreement (a) pursuant
to Sections 9.04, 10.01, 11.01 or 11.02, the Master Servicer
shall, in accordance with the provisions of the Trust
Agreement (i) succeed to and assume all of the Servicer's
responsibilities, rights, duties and obligations under this
Agreement, or (ii) appoint a successor meeting the eligibility
requirements of this Agreement set forth in Section 9.02 and
which shall succeed to all rights and assume all of the
responsibilities, duties and liabilities of the Servicer under
this Agreement with the termination of the Servicer's
responsibilities, duties and liabilities under this Agreement.
Any successor to the Servicer that is not at that time a
Servicer of other Mortgage Loans for the Trust Fund shall be
subject to the approval of the Master Servicer, Xxxxxx
Brothers Bank, FSB, the Trustee and each Rating Agency (as
such term is defined in the Trust Agreement). Unless the
successor servicer is at that time a servicer of other
mortgage loans for the Trust Fund, each Rating Agency must
deliver to the Trustee a letter to the effect that such
transfer of servicing will not result in a qualification,
withdrawal or downgrade of the then-current rating of any of
the Certificates. In connection with such appointment and
assumption, the Master Servicer or the Depositor, as
applicable, may make such arrangements for the compensation of
such successor out of payments on the Mortgage Loans as it and
such successor shall agree; provided, however, that no such
compensation shall be in excess of that permitted the Servicer
under this Agreement. In the event that the Servicer's duties,
responsibilities and liabilities under this Agreement should
be terminated pursuant to the aforementioned sections, the
Servicer 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 Servicer 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 Servicer of the representations and warranties
made pursuant to Section 3.02 and the remedies available to
the Trustee under Sections 3.04 and 9.01, it being understood
and agreed that the provisions of such Sections 3.02, 3.04 and
9.01 shall be applicable to the Servicer notwithstanding any
such resignation or termination of the Servicer, or the
termination of this Agreement.
7
Within a reasonable period of time, but in no event
longer than 30 days of the appointment of a successor entity,
the Servicer shall prepare, execute and deliver to the
successor entity any and all documents and other instruments,
place in such successor's possession all Servicing 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. The Servicer shall cooperate with the Trustee and
the Master Servicer, as applicable, and such successor in
effecting the termination of the Servicer's responsibilities
and rights hereunder and the transfer of servicing
responsibilities to the successor 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 Servicer to the Custodial Account or any Escrow Account
or thereafter received with respect to the Mortgage Loans.
Any successor appointed as provided herein shall
execute, acknowledge and deliver to the Trustee, the Servicer
and the Master Servicer an instrument (i) accepting such
appointment, wherein the successor shall make the
representations and warranties set forth in Section 3.02 and
(ii) an assumption of the due and punctual performance and
observance of each covenant and condition to be performed and
observed by the Servicer under this Agreement, whereupon such
successor shall become fully vested with all the rights,
powers, duties, responsibilities, obligations and liabilities
of the Servicer, with like effect as if originally named as a
party to this Agreement. Any termination or resignation of the
Servicer or termination of this Agreement pursuant to Section
12.01 shall not affect any claims that the Master Servicer or
the Trustee may have against the Servicer arising out of the
Servicer's actions or failure to act prior to any such
termination or resignation.
The Servicer shall deliver within ten (10) Business
Days to the successor Servicer the funds in the Custodial
Account and Escrow Account and all Mortgage Loan Documents and
related documents and statements held by it hereunder and the
Servicer 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 Servicer.
Upon a successor's acceptance of appointment as such,
the Servicer shall notify the Trustee and Master Servicer of
such appointment in accordance with the notice procedures set
forth herein.
8
35. Intended Third Party Beneficiaries. Notwithstanding any provision
herein to the contrary, the parties to this Agreement agree that it is
appropriate, in furtherance of the intent of such parties as set forth
herein, that the Master Servicer and the Trustee receive the benefit of
the provisions of this Agreement as intended third party beneficiaries
of this Agreement to the extent of such provisions. The Servicer shall
have the same obligations to the Master Servicer and the Trustee as if
they were parties to this Agreement, and the Master Servicer and the
Trustee shall have the same rights and remedies to enforce the
provisions of this Agreement as if they were parties to this Agreement.
The Servicer shall only take direction from the Master Servicer (if
direction by the Master Servicer is required under this Agreement)
unless otherwise directed by this Agreement. Notwithstanding the
foregoing, all rights and obligations of the Master Servicer and the
Trustee hereunder (other than the right to indemnification) shall
terminate upon termination of the Trust Agreement and of the Trust Fund
pursuant to the Trust Agreement.
36. Request for Release. When requesting a release of documents from the
Custodian, the Servicer shall use the form attached hereto as Exhibit
E.
9
EXHIBIT B
Servicing Agreement
MORTGAGE LOAN FLOW PURCHASE, SALE & SERVICING AGREEMENT
dated as of February 2, 2001
between
National Bank of Commerce, Purchaser
and
CENDANT MORTGAGE CORPORATION and
XXXXXX'X GATE RESIDENTIAL MORTGAGE TRUST
(formerly known as CENDANT RESIDENTIAL MORTGAGE TRUST)
Sellers
Schedules
A. Mortgage Loan Schedule
B. Content of Mortgage File
B-1 Purchaser's Mortgage File
B-2 Servicer's Mortgage File
C. Cendant Guidelines and Restrictions
Exhibits
Exhibit 2.05 Form of Assignment, Assumption and Recognition Agreement
Exhibit 5.03(a) Report P-4DL
Exhibit 5.03(b) Report S-5L2
Exhibit 5.03(c) Form of Notice of Foreclosure
Exhibit 5.04-1 Form of Collection Account Certification
Exhibit 5.04-2 Form of Collection Account Letter Agreement
Exhibit 5.06-1 Form of Escrow Account Certification
Exhibit 5.06-2 Form of Escrow Account Letter Agreement
Exhibit 6.02(a) Report P-139 -- Monthly Statement of Mortgage Accounts
Exhibit 6.02(b) Report S-50Y -- Private Pool Detail Report
Exhibit 6.02(c) Report S-213 -- Summary of Curtailments Made Remittance Report
Exhibit 6.02(d) Report S-214 -- Summary of Paid in Full Remittance Report
Exhibit 6.02(e) Report S-215 -- Consolidation of Remittance Report
Exhibit 6.02(f) Report T-62C -- Monthly Accounting Report
Exhibit 6.02(g) Report T-62E -- Liquidation Report
Exhibit 8.01 Report P-195 Delinquency Report
MORTGAGE LOAN FLOW PURCHASE, SALE & SERVICING AGREEMENT
This Mortgage Loan Flow Purchase, Sale & Servicing Agreement, dated as
of February 2, 2001, is entered into between National Bank of Commerce, as the
Purchaser ("Purchaser"), Cendant Mortgage Corporation ("Cendant Mortgage") and
Xxxxxx'x Gate Residential Mortgage Trust (formerly known as Cendant Residential
Mortgage Trust) (the "Trust," together with Cendant Mortgage, the "Sellers" and
individually, each a "Seller"), as the Sellers.
PRELIMINARY STATEMENT
1. Cendant Mortgage is engaged in the business, inter alia, of making loans to
individuals, the repayment of which is secured by a first lien mortgage on such
individuals' residences (each, a "Mortgage Loan"). The Trust is engaged in the
business of purchasing such Mortgage Loans from Cendant Mortgage and selling
same to investors.
2. Purchaser is engaged in the business, inter alia, of purchasing Mortgage
Loans for its own account.
3. Cendant Mortgage has established certain terms, conditions and loan programs,
as described in Cendant Mortgage's Program and Underwriting Guidelines (the
"Cendant Guide") and Purchaser is willing to purchase Mortgage Loans that comply
with the terms of such terms, conditions and loan programs. The applicable
provisions of the Cendant Guide are attached hereto as Schedule C.
4. Purchaser and Sellers desire to establish a flow program whereby Cendant
Mortgage will make Mortgage Loans which meet the applicable provisions of the
Cendant Guide, and Purchaser will, on a regular basis, purchase such Mortgage
Loans from Cendant Mortgage or the Trust, as applicable, provided the parties
agree on the price, date and other conditions or considerations as set forth in
this Agreement.
5. Purchaser and Sellers wish to prescribe the terms and manner of purchase by
the Purchaser and sale by the Sellers of the Mortgage Loans, and the management
and servicing of the Mortgage Loans by Cendant Mortgage, as the Servicer (the
"Servicer"), in this Agreement.
NOW, THEREFORE, in consideration of the mutual agreements hereinafter set forth,
the Purchaser and the Sellers agree as follows:
ARTICLE I: DEFINITIONS
Section 1.01 Defined Terms.
Whenever used in this Agreement, the following words and phrases shall
have the following meaning specified in this Article:
"Affiliate": When used with reference to a specified Person, any Person
that (i) directly or indirectly controls or is controlled by or is under common
control with the specified Person, (ii) is an officer of, partner in or trustee
of, or serves in a similar capacity with respect to, the specified person or of
which the specified Person is an officer, partner or trustee, or with respect to
which the specified Person serves in a similar capacity, or (iii) directly or
indirectly is the beneficial owner of 10% or more of any class of equity
securities of the specified Person or of which the specified person is directly
or indirectly the owner of 10% or more of any class of equity securities.
"Agreement": This Mortgage Loan Flow Purchase, Sale & Servicing
Agreement between the Purchaser and the Sellers.
"ALTA": The American Land Title Association.
"Appraised Value": With respect to any Mortgaged Property, the lesser
of: (i) the value thereof as determined by an appraisal made for the originator
of the Mortgage Loan at the time of origination of the Mortgage Loan by an
appraiser who met the minimum requirements of FNMA and FHLMC; or (ii) the
purchase price paid for the related Mortgaged Property by the Mortgagor with the
proceeds of the Mortgage Loan; provided that, in the case of a Refinanced
Mortgage Loan, such value of the Mortgaged Property shall be based solely upon
the value determined by an appraisal made for the originator of such Refinanced
Mortgage Loan at the time of origination of such Refinanced Mortgage Loan by an
appraiser who met the minimum requirements of FNMA and FHLMC.
"ARM Loan": An "adjustable rate" Mortgage Loan, the Note Rate of which
is subject to periodic adjustment in accordance with the terms of the Mortgage
Note.
"Assignment": An individual assignment of a Mortgage, notice of
transfer or equivalent instrument in recordable form, sufficient under the laws
of the jurisdiction wherein the related Mortgaged Property is located to reflect
of record the sale or transfer of the Mortgage Loan.
"Bankruptcy Code": The Bankruptcy Reform Act of 1978
(11 U.S.C.ss.ss.101-1330), as amended, modified, or supplemented from time to
time, and any successor statute, and all rules and regulations issued or
promulgated in connection therewith.
"Business Day": Any day other than (i) a Saturday or Sunday, or
(ii) a day on which the Federal Reserve is closed.
2
"Cendant Guide": As defined in paragraph 3 of the Preliminary
Statement to this Agreement.
"Code": The Internal Revenue Code of 1986, as amended.
"Collection Account": The separate trust account or accounts created
and maintained pursuant to Section 5.04 which shall be entitled "Cendant
Mortgage Corporation, as servicer and custodian for the Purchaser of Mortgage
Loans under the Mortgage Loan Flow Purchase, Sale & Servicing Agreement, dated
as of xx-xx-xx ."
"Condemnation Proceeds": All awards or settlements in respect of a
taking of an entire Mortgaged Property or a part thereof by exercise of the
power of eminent domain or condemnation.
"Credit Documents": Those documents, comprising part of the Mortgage
File, required of the Mortgagor, as described in Section 2 (Specific Loan
Program Guidelines) of the Guide.
"Defective Mortgage Loan": As defined in Section 3.04(3).
"Determination Date": The 15th day of each calendar month, commencing
on the 15th day of the month following the Closing Date, or, if such 15th day is
not a Business Day, the Business Day immediately preceding such 15th day.
"Due Date": With respect to any Mortgage Loan, the day of the month on
which each Monthly Payment is due thereon, exclusive of any days of grace.
"Eligible Account": One or more accounts (i) that are maintained with a
depository institution the long-term unsecured debt obligations of which have
been rated by each Rating Agency in one of its two highest rating categories at
the time of any deposit therein, (ii) that are trust accounts with any
depository institution held by the depository institution in its capacity as a
corporate trustee, or (iii) the deposits in which are insured by the FDIC (to
the limits established by the FDIC) and the uninsured deposits in which are
otherwise secured such that the Purchaser has a claim with respect to the funds
in such accounts or a perfected first security interest against any collateral
securing such funds that is superior to claims of any other depositors or
creditors of the depository institution with which such accounts are maintained.
In addition, solely with respect to Mortgage Loans which are not part of a
securitization, "Eligible Account" shall include any accounts that meet the
standards established from time to time by FNMA for eligible custodial
depositories.
"Environmental Assessment": A "Phase I" environmental assessment of a
Mortgaged Property prepared by an Independent Person who regularly conducts
environmental assessments and who has any necessary license(s) required by
applicable law and has five years experience in conducting environmental
assessments.
"Environmental Conditions Precedent to Foreclosure": As defined in
Section 5.15(v).
3
"Environmental Laws": All federal, state, and local statutes, laws,
regulations, ordinances, rules, judgments, orders, decrees or other governmental
restrictions relating to the environment or to emissions, discharges or releases
of pollutants, contaminants or industrial, toxic or hazardous substances or
wastes into the environment, including ambient air, surface water, ground water,
or land, or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of pollutants,
contaminants or industrial, toxic or hazardous substances or wastes or the
cleanup or other remediation thereof.
"Escrow Account": The separate trust account or accounts created and
maintained pursuant to Section 5.06 which shall be entitled "Cendant Mortgage
Corporation, as Servicer and custodian for the Purchaser under the Mortgage Loan
Flow Purchase, Sale & and Servicing Agreement, dated as of xx-xx-xx (as
amended), and various mortgagors."
"Escrow Payments": The amounts constituting ground rents, taxes,
assessments, water rates, mortgage insurance premiums, fire and hazard insurance
premiums and other payments required to be escrowed by the Mortgagor with the
mortgagee pursuant to any Mortgage Loan.
"Event of Default": Any one of the conditions or circumstances
enumerated in Section 10.01.
"FDIC": The Federal Deposit Insurance Corporation or any successor
organization.
"FHLMC": The Federal Home Loan Mortgage Corporation (also known as
Xxxxxxx Mac) or any successor organization.
"FHLMC Servicing Guide": The FHLMC/Xxxxxxx Xxx Xxxxxxx' and Servicers'
Guide in effect on and after the Funding Date.
"Fidelity Bond": A fidelity bond to be maintained by the Servicer
pursuant to Section 5.12.
"FNMA": The Federal National Mortgage Association (also known as
Xxxxxx Xxx) or any successor organization.
"FNMA Guide": The FNMA/Xxxxxx Mae Selling Guide and the Servicing
Guide, collectively, in effect on and after the Funding Date.
"Funding Date": Each date (up to four per month) that Purchaser
purchases Mortgage Loans from the Sellers hereunder.
"Gross Margin": With respect to each ARM Loan, the fixed percentage
added to the Index on each Rate Adjustment Date, as specified in each related
Mortgage Note and listed in the Mortgage Loan Schedule.
"Independent": With respect to any specified Person, such Person who:
(i) does not have any direct financial interest or any material indirect
financial interest in the applicable Mortgagor, the Sellers, the Purchaser, or
their Affiliates; and (b) is not connected with the applicable Mortgagor, the
Sellers, the Purchaser, or their respective Affiliates as an officer, employee,
promoter, underwriter, trustee, member, partner, shareholder, director, or
Person performing similar functions.
4
"Index": With respect to each ARM Loan, on each Rate Adjustment Date,
the applicable rate index set forth on the Mortgage Loan Schedule, which shall
be an index described on such Mortgage Loan Schedule.
"Insolvency Proceeding": With respect to any Person: (i) any case,
action, or proceeding with respect to such Person before any court or other
governmental authority relating to bankruptcy, reorganization, insolvency,
liquidation, receivership, dissolution, winding-up, or relief of debtors; or
(ii) any general assignment for the benefit of creditors, composition,
marshaling of assets for creditors, or other, similar arrangement in respect of
the creditors generally of such Person or any substantial portion of such
Person's creditors; in any case undertaken under federal, state or foreign law,
including the Bankruptcy Code.
"Insurance Proceeds": Proceeds of any Primary Insurance Policy, title
policy, hazard policy or other insurance policy covering a Mortgage Loan, if
any, to the extent such proceeds are not to be applied to the restoration of the
related Mortgaged Property or released to the Mortgagor in accordance with the
procedures that the Servicer would follow in servicing mortgage loans held for
its own or its Affiliates' account or managed by it for third-party
institutional investors.
"Legal Documents": Those documents, comprising part of the Mortgage
File, set forth in Schedule B-1 of this Agreement.
"Liquidation Proceeds": Amounts, other than Insurance Proceeds and
Condemnation Proceeds, received by the Servicer in connection with the
liquidation of a defaulted Mortgage Loan through trustee's sale, foreclosure
sale or otherwise, other than amounts received following the acquisition of an
REO Property in accordance with the provisions hereof.
"Loan-to-Value Ratio" or "LTV": With respect to any Mortgage Loan, the
original principal balance of such Mortgage Loan divided by the lesser of the
Appraised Value of the related Mortgaged Property or the purchase price.
"MAI Appraiser": With respect to any real property, a member of the
American Institute of Real Estate Appraisers with a minimum of 5 years of
experience appraising real property of a type similar to the real property being
appraised and located in the same geographical area as the real property being
appraised.
"Monthly Advance": The aggregate amount of the advances made by the
Servicer on any Remittance Date pursuant to and as more fully described in
Section 6.03.
"Monthly Payment": The scheduled monthly payment of principal and
interest on a Mortgage Loan which is payable by a Mortgagor under the related
Mortgage Note.
5
"Monthly Period": Initially, the period from the Closing Date through
to and including the first Record Date during the term hereof, and, thereafter,
the period commencing on the day after each Record Date during the term hereof
and ending on the next succeeding Record Date during the term hereof (or, if
earlier, the date on which this Agreement terminates).
"Mortgage": The mortgage, deed of trust or other instrument securing a
Mortgage Note, which creates a first lien on an unsubordinated estate in fee
simple in real property securing the Mortgage Note.
"Mortgaged Property": With respect to a Mortgage Loan, the underlying
real property securing repayment of a Mortgage Note, consisting of a fee simple
estate.
"Mortgage File": With respect to a particular Mortgage Loan, those
origination and servicing documents, escrow documents, and other documents as
are specified on Schedule B to this Agreement.
"Mortgage Loan": Each individual mortgage loan (including all documents
included in the Mortgage File evidencing the same, all Monthly Payments,
Principal Prepayments , Insurance Proceeds, Condemnation Proceeds, Liquidation
Proceeds, and other proceeds relating thereto, and any and all rights, benefits,
proceeds and obligations arising therefrom or in connection therewith) which is
the subject of this Agreement. The Mortgage Loans subject to this Agreement
shall be identified on Mortgage Loan Schedules prepared in connection with each
Funding Date.
"Mortgage Loan Schedule": The list of Mortgage Loans identified on each
Funding Date that sets forth the following information with respect to each
Mortgage Loan: (i) the Seller's Mortgage Loan identifying number therefor; (ii)
the subject Mortgagor's name; (iii) the street address of the subject Mortgaged
Property, including the state, city and zip code; (iv) the property type; (v)
the Loan-to-Value Ratio thereof (vi) the Note Rate thereof; (vii) the principal
amount thereof; (viii ) the documentation level thereof (e.g., full,
alternative, limited); (ix) the loan purpose thereof; (x) with respect to each
ARM Loan, the rate index, gross margin and life cap of the related Mortgage
Note, and the (xi) the Purchase Price. A Mortgage Loan Schedule will be prepared
for each Funding Date.
"Mortgage Note": The note or other evidence of the indebtedness of a
Mortgagor secured by a Mortgage.
"Mortgagor": The obligor on a Mortgage Note.
"Note Rate": With respect to any Mortgage Loan at any time any
determination thereof is to be made, the annual rate at which interest accrues
thereon.
"Officers' Certificate": A certificate signed by (i) the President or a
Vice President and (ii) the Treasurer or the Secretary or one of the Assistant
Treasurers or Assistant Secretaries of the Servicer, and delivered by the
Servicer to the Purchaser as required by this Agreement.
6
"Payoff": With respect to any Mortgage Loan, any payment or recovery
received in advance of the last scheduled Due Date of such Mortgage Loan, which
payment or recovery consists of principal in an amount equal to the outstanding
principal balance of such Mortgage Loan, all accrued and unpaid prepayment
penalties, premiums, and/or interest with respect thereto, and all other unpaid
sums due with respect to such Mortgage Loan.
"Permitted Investments": Investments that mature, unless payable on
demand, not later than the Business Day preceding the Remittance Date; provided
that such investments shall only consist of the following:
(i) direct obligations of, or obligations fully guaranteed as
to principal and interest by, the United States or any agency or
instrumentality thereof, provided such obligations are backed by the
full faith and credit of the United States;
(ii) repurchase obligations (the collateral for which is held
by a third party) with respect to any security described in clause (i)
above, provided that the long-term unsecured obligations of the party
agreeing to repurchase such obligations are at the time rated by each
Rating Agency in one of its two highest rating categories;
(iii) certificates of deposit, time deposits and bankers'
acceptances of any bank or trust company incorporated under the laws of
the United States or any state, provided that the long-term unsecured
debt obligations of such bank or trust company (or, in the case of the
principal depository institution of a depository institution holding
company, the long-term unsecured debt obligations of the depository
institution holding company) at the date of acquisition thereof have
been rated by each Rating Agency in one of its two highest rating
categories;
(iv) commercial paper (having original maturities of not more
than 365 days) of any corporation incorporated under the laws of the
United States or any state thereof which on the date of acquisition has
been rated by each Rating Agency in its highest rating category; and
(v) any other demand, money market or time deposit account or
obligation, or interest-bearing or other security or investment,
acceptable to the Purchaser (such acceptance evidenced in writing);
provided further that "Permitted Investments" shall not include any instrument
described hereunder which evidences either the right to receive (a) only
interest with respect to the obligations underlying such instrument or (b) both
principal and interest payments derived from obligations underlying such
instrument and the interest and principal payments with respect to such
instrument provide a yield to maturity at par greater than 120% of the yield to
maturity at par of the underlying obligations.
"Person": Any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust,
incorporated organization or government or any agency or political subdivision
thereof.
7
"Prepaid Monthly Payment": Any Monthly Payment received prior to its
scheduled Due Date and which is intended to be applied to a Mortgage Loan on its
scheduled Due Date.
"Primary Insurance Policy": Each primary policy of mortgage insurance
in effect with respect to a Mortgage Loan and as so indicated on the Mortgage
Loan Schedule, or any replacement policy therefor obtained by the Servicer
pursuant to Section 5.08.
"Principal Prepayment": Any payment or other recovery of principal on a
Mortgage Loan (including a Payoff), other than a Monthly Payment or a Prepaid
Monthly Payment which is received in advance of its scheduled Due Date,
including any prepayment penalty or premium thereon, which is not accompanied by
an amount of interest representing scheduled interest due on any date or dates
in any month or months subsequent to the month of prepayment and which is
intended to reduce the principal balance of the Mortgage Loan.
"Purchaser": National Bank of Commerce ("NCB") or its successor in
interest or any successor under this Agreement appointed as herein provided.
"Purchaser's Account": The account of the Purchaser at a bank or other
entity most recently designated in a written notice by the Purchaser to the
Sellers as the "Purchaser's Account."
"Purchase Price": as to each Mortgage Loan to be sold hereunder, the
price set forth in the Mortgage Loan Schedule.
"Qualified Mortgage Insurer": American Guaranty Corporation,
Commonwealth Mortgage Assurance Company, General Electric Mortgage Insurance
Companies, Mortgage Guaranty Insurance Corporation, PMI Mortgage Insurance
Company, Republic Mortgage Insurance Company or United Guaranty Residential
Insurance Corporation.
"Rate Adjustment Date": With respect to each ARM Loan, the date on
which the Note Rate adjusts.
"Rating Agency": Standard & Poor's Ratings Services, a division of The
XxXxxx-Xxxx Companies, Xxxxx'x Investors Service, Inc., Fitch Investors Service,
Inc. or Duff & Xxxxxx Credit Rating Co.
"Record Date": The close of business of the last Business Day of the
month preceding the month of the related Remittance Date.
"Refinanced Mortgage Loan": A Mortgage Loan that was made to a
Mortgagor who owned the Mortgaged Property prior to the origination of such
Mortgage Loan and the proceeds of which were used in whole or part to satisfy an
existing mortgage.
"REMIC": A "real estate mortgage investment conduit" within the meaning
of Section 860D of the Internal Revenue Code or any similar tax vehicle
providing for the pooling of assets (such as a Financial Asset Security
Investment Trust).
8
"Remittance Date": The 18th day of each calendar month, commencing on
the 18th day of the month following the Closing Date, or, if such 18th day is
not a Business Day, then the next Business Day immediately preceding such 18th
day.
"Remittance Rate": With respect to each Mortgage Loan, the related Note
Rate minus the Servicing Fee Rate.
"REO Disposition": The final sale by the Servicer of any REO Property.
"REO Property": A Mortgaged Property acquired by the Servicer on behalf
of the Purchaser as described in Section 5.13.
"Repurchase Price": As to (a) any Defective Mortgage Loan required to
be repurchased hereunder with respect to which a breach occurred or (b) any
Mortgage Loan required to be repurchased pursuant to Section 3.04 and/or Section
7.02, an amount equal to the Unpaid Principal Balance of such Mortgage Loan at
the time of repurchase plus any premium or minus any discount paid for such
Mortgage Loan by the Purchaser on the Funding Date; plus (2) interest on such
Mortgage Loan at the applicable Note Rate from the last date through which
interest has been paid and distributed to the Purchaser hereunder to the date of
repurchase; minus (3) any amounts received in respect of such Defective Mortgage
Loan which are being held in the Collection Account for future remittance.
"Scheduled Principal Balance": With respect to any Mortgage Loan, (i)
the outstanding principal balance as of the Funding Date after application of
principal payments due on or before such date whether or not received, minus
(ii) all amounts previously remitted to the Purchaser with respect to such
Mortgage Loan representing (a) payments or other recoveries of principal, or (b)
advances of principal made pursuant to Section 6.03.
"Sellers": Cendant Mortgage Corporation, a New Jersey corporation and
Xxxxxx'x Gate Residential Mortgage Trust (formerly known as Cendant Residential
Mortgage Trust), a Delaware business trust, or their successors in interest or
any successor under this Agreement appointed as herein provided.
"Servicer": Cendant Mortgage Corporation, a New Jersey corporation.
"Servicer's Mortgage File": The documents pertaining to a particular
Mortgage Loan which are specified on Exhibit S-1 attached hereto and any
additional documents required to be included or added to the "Servicer's
Mortgage File" pursuant to this Agreement.
"Servicing Advances": All "out of pocket" costs and expenses that are
customary, reasonable and necessary which are incurred by the Servicer in the
performance of its servicing obligations hereunder, including (without
duplication) (i) reasonable attorneys' fees and (ii) the cost of (a) the
preservation, restoration and protection of the Mortgaged Property, (b) any
enforcement or judicial proceedings, including foreclosures, (c) the servicing,
management and liquidation of any Specially Serviced Mortgaged Loans and/or any
REO Property, and (d) compliance with the Servicer's obligations under Section
5.08.
9
"Servicing Event": Any of the following events with respect to any
Mortgage Loan: (i) any Monthly Payment being more than 60 days delinquent; (ii)
any filing of an Insolvency Proceeding by or on behalf of the related Mortgagor,
any consent by or on behalf of the related Mortgagor to the filing of an
Insolvency Proceeding against such Mortgagor, or any admission by or on behalf
of such Mortgagor of its inability to pay such Person's debts generally as the
same become due; (iii) any filing of an Insolvency Proceeding against the
related Mortgagor that remains undismissed or unstayed for a period of 60 days
after the filing thereof; (iv) any issuance of any attachment or execution
against, or any appointment of a conservator, receiver or liquidator with
respect to, all or substantially all of the assets of the related Mortgagor or
with respect to any Mortgaged Property; (v) any receipt by the Servicer of
notice of the foreclosure or proposed foreclosure of any other lien on the
related Mortgaged Property; (vi) any proposal of a material modification (as
reasonably determined by the Seller) to such Mortgage Loan due to a default or
imminent default under such Mortgage Loan; or (vii) in the reasonable judgment
of the Servicer, the occurrence, or likely occurrence within 60 days, of a
payment default with respect to such Mortgage Loan that is likely to remain
uncured by the related Mortgagor within 60 days thereafter.
"Servicing Fee": The annual fee, payable monthly to the Servicer out of
the interest portion of the Monthly Payment actually received on each Mortgage
Loan. The Servicing Fee with respect to each Mortgage Loan for any calendar
month (or a portion thereof) shall be 1/12 of the product of (i) the Scheduled
Principal Balance of the Mortgage Loan and (ii) the Servicing Fee Rate
applicable to such Mortgage Loan.
"Servicing Fee Rate": (i) with respect to any ARM Loan, 0.375% per
annum; provided that, prior to the first Rate Adjustment Date with respect to
any such Mortgage Loan, such rate may be, at the Servicer's option, not less
than 0.25% per annum; and (ii) with respect to any Mortgage Loan other than an
ARM Loan, 0.25% per annum.
"Servicing Officer": Any officer of the Servicer involved in, or
responsible for, the administration and servicing of the Mortgage Loans whose
name appears on a written list of servicing officers furnished by the Servicer
to the Purchaser upon request therefor by the Purchaser, as such list may from
time to time be amended.
"Specially Serviced Mortgage Loan": A Mortgage Loan as to which a
Servicing Event has occurred and is continuing.
"Unpaid Principal Balance": With respect to any Mortgage Loan, at any
time, the actual outstanding principal balance then payable by the Mortgagor
under the terms of the related Mortgage Note.
10
ARTICLE II: SALE AND CONVEYANCE OF MORTGAGE LOANS;
POSSESSION OF MORTGAGE FILES; BOOKS AND RECORDS;
DELIVERY OF MORTGAGE LOAN DOCUMENTS
Section 2.01 Sale and Conveyance of Mortgage Loans.
Seller agrees to sell and Purchaser agrees to purchase, from time to
time, those certain Mortgage Loans identified in a Mortgage Loan Schedule, on
the price and terms set forth herein. Purchaser, on any Funding Date, shall be
obligated to purchase only such Mortgage Loans set forth in the applicable
Mortgage Loan Schedule, subject to the terms and conditions of this Agreement
and subject to the approval of the Mortgage Loan Schedule at Purchaser's sole
discretion.
Purchaser will purchase Mortgage Loan(s) from Seller, up to four (4)
times per month on such Funding Dates as may be agreed upon by Purchaser and
Seller. The closing shall, at Purchaser's option be either: by telephone,
confirmed by letter or wire as the parties shall agree; or conducted in person
at such place, as the parties shall agree. On the Funding Date and subject to
the terms and conditions of this Agreement, each Seller will sell, transfer,
assign, set over and convey to the Purchaser, without recourse except as set
forth in this Agreement, and the Purchaser will purchase, all of the right,
title and interest of the applicable Seller in and to the Mortgage Loans being
conveyed by it hereunder, as identified on the Mortgage Loan Schedule.
Examination of the Mortgage Files may be made by Purchaser or its
designee as follows. No later than 48 hours prior to the Funding Date, Seller
will deliver to Purchaser Legal Documents required pursuant to Schedule B. Upon
Purchaser's request, Seller shall make the Credit Documents available to
Purchaser for review, at Seller's place of business and during reasonable
business hours. If Purchaser makes such examination prior to the Funding Date
and identifies any Mortgage Loans that do not conform to the Cendant Guide, such
Mortgage Loans will be deleted from the Mortgage Loan Schedule at Purchaser's
discretion. Purchaser may, at its option and without notice to Seller, purchase
all or part of the Mortgage Loans without conducting any partial or complete
examination. The fact that Purchaser has conducted or has failed to conduct any
partial or complete examination of the Mortgage Loan files shall not affect
Purchaser's rights to demand repurchase, substitution or other relief as
provided herein.
On the Funding Date and in accordance with the terms herein, Purchaser
will pay to Seller, by wire transfer of immediately available funds, the
Purchase Price, together with interest, if any, accrued but unpaid by the
Borrower through the day immediately preceding the Funding Date, according to
the instructions to be provided, respectively, by Cendant Mortgage and the
Trust.
Purchaser shall be entitled to all scheduled principal due after the Funding
Date, all other recoveries of principal collected after the Funding Date and all
payments of interest on the Mortgage Loans (minus that portion of any such
payment which is allocable to the period prior to the Funding Date). The
principal balance of each Mortgage Loan as of the Funding Date is determined
after application of payments of principal due on or before the Funding Date
whether or not collected. Therefore, payments of scheduled principal and
interest prepaid for a due date beyond the Funding Date shall not be applied to
the principal balance as of the Funding Date. Such prepaid amounts shall be the
property of Purchaser. Seller shall hold any such prepaid amounts for the
benefit of Purchaser for subsequent remittance by Seller to Purchaser. All
scheduled payments of principal due on or before the Funding Date and collected
by Seller after the Funding Date shall belong to Seller.
11
Section 2.02 Possession of Mortgage Files.
Upon the sale of any Mortgage Loan, the ownership of such Mortgage
Loan, including the Mortgage Note, the Mortgage, the contents of the related
Mortgage File and all rights, benefits, payments, proceeds and obligations
arising therefrom or in connection therewith, shall then be vested in the
Purchaser, and the ownership of all records and documents with respect to such
Mortgage Loan prepared by or which come into the possession of the Seller shall
immediately vest in the Purchaser and, to the extent retained by the Seller,
shall be retained and maintained, in trust, by the Seller at the will of the
Purchaser in a custodial capacity only. The contents of such Mortgage File not
delivered to the Purchaser are and shall be held in trust by the Seller for the
benefit of the Purchaser as the owner thereof and the Sellers' possession of the
contents of each Mortgage File so retained is at the will of the Purchaser for
the sole purpose of servicing the related Mortgage Loan, and such retention and
possession by the Seller is in a custodial capacity only. Mortgage Files shall
be maintained separately from the other books and records of the Seller. Each
Seller shall release from its custody of the contents of any Mortgage File only
in accordance with written instructions from the Purchaser, except where such
release is required as incidental to the Servicer's servicing of the Mortgage
Loans or is in connection with a repurchase of any such Mortgage Loan pursuant
to Section 3.04.
Any documents released to a Seller or the Servicer in connection with the
foreclosure or servicing of any Mortgage Loan shall be held by such Person in
trust for the benefit of the Purchaser in accordance with this Section 2.02.
Such Person shall return to the Purchaser such documents when such Person's need
therefor in connection with such foreclosure or servicing no longer exists
(unless sooner requested by the Purchaser); provided that, if such Mortgage Loan
is liquidated, then, upon the delivery by a Seller or the Servicer to the
Purchaser of a request for the release of such documents and a certificate
certifying as to such liquidation, the Purchaser shall promptly release and, to
the extent necessary, deliver to such Person such documents.
Section 2.03 Books and Records.
The sale of each of its Mortgage Loans shall be reflected on the
applicable Seller's balance sheet and other financial statements as a sale of
assets by the applicable Seller. Each Seller shall be responsible for
maintaining, and shall maintain, a complete set of books and records for the
Mortgage Loans it conveyed to the Purchaser which shall be clearly marked to
reflect the sale of each Mortgage Loan to the Purchaser and the ownership of
each Mortgage Loan by the Purchaser.
12
Section 2.04 Defective Documents; Delivery of Mortgage Loan Documents.
If the Purchaser or either Seller finds any document or documents
constituting a part of a Mortgage File to be defective or missing in any
material respect (in this Section 2.04, a "Defect"), the party discovering such
Defect shall promptly so notify the other parties. If the Defect pertains to the
Mortgage Note or the Mortgage, then the applicable Seller shall have a period of
45 days within which to correct or cure any such defect after the earlier of
such Seller's discovery of same or such Seller being notified of same. If such
Defect can ultimately be cured but is not reasonably expected to be cured within
such 45 day period, such Seller shall have such additional time as is reasonably
determined by the Purchaser to cure or correct such Defect provided that such
Seller has commenced curing or correcting such Defect and is diligently pursuing
same. If the Defect pertains to any other document constituting a part of a
Mortgage File, then such Seller shall have a period of 90 days within which to
correct or cure any such Defect after the earlier of such Seller's discovery of
same or such Seller being notified of same. If such Defect can ultimately be
cured but is not reasonably expected to be cured within the 90 day period, then
such Seller shall have such additional time as is reasonably determined by the
Purchaser to cure or correct such Defect provided such Seller has commenced
curing or correcting such Defect and is diligently pursuing same. Cendant
Mortgage hereby covenants and agrees that, if any material Defect cannot be
corrected or cured, the related Mortgage Loan shall automatically constitute,
upon the expiration of the applicable cure period described above and without
any further action by any other party, a Defective Mortgage Loan, whereupon
Cendant Mortgage shall repurchase such Mortgage Loan by paying to the Purchaser
the Repurchase Price therefor in accordance with Section 3.04(3).
The applicable Seller will, with respect to each Mortgage Loan to be
purchased by the Purchaser, deliver and release to the Purchaser the Legal
Documents as set forth in Section 2.01. If the applicable Seller cannot deliver
an original Mortgage with evidence of recording thereon, original assumption,
modification and substitution agreements with evidence of recording thereon or
an original intervening assignment with evidence of recording thereon within the
applicable time periods, then such Seller shall promptly deliver to the
Purchaser such original Mortgages and original intervening assignments with
evidence of recording indicated thereon upon receipt thereof from the public
recording official, except in cases where the original Mortgage or original
intervening assignments are retained permanently by the recording office, in
which case, such Seller shall deliver a copy of such Mortgage or intervening
assignment, as the case may be, certified to be a true and complete copy of the
recorded original thereof.
If the original Mortgage was not delivered pursuant to the preceding
paragraph, then the applicable Seller shall use its best efforts to promptly
secure the delivery of such originals and shall cause such originals to be
delivered to the Purchaser promptly upon receipt thereof. Notwithstanding the
foregoing, if the original Mortgage, original assumption, modification, and
substitution agreements, the original of any intervening assignment or the
original policy of title insurance is not so delivered to the Purchaser within
180 days following the Funding Date, then, upon written notice by the Purchaser
to Cendant Mortgage, the Purchaser may, in its sole discretion, then elect (by
providing written notice to Cendant Mortgage) to treat such Mortgage Loan as a
Defective Mortgage Loan, whereupon Cendant Mortgage shall repurchase such
Mortgage Loan by paying to the Purchaser the Repurchase Price therefor in
accordance with Section 3.04(3). The fact that the Purchaser has conducted or
failed to conduct any partial or complete examination of the Mortgage Files
shall not affect its right to demand repurchase or any other remedies provided
in this Agreement.
13
At the Purchaser's request, the Assignments shall be promptly recorded
in the name of the Purchaser or in the name of a Person designated by the
Purchaser in all appropriate public offices for real property records. If any
such Assignment is lost or returned unrecorded because of a defect therein, then
the applicable Seller shall promptly prepare a substitute Assignment to cure
such defect and thereafter cause each such Assignment to be duly recorded. All
recording fees related to such a one-time recordation of the Assignments to or
by a Seller shall be paid by the applicable Seller.
Section 2.05 Transfer of Mortgage Loans.
Subject to the provisions of this Section 2.05, the Purchaser shall
have the right, without the consent of the Sellers, at any time and from time to
time, to assign any of the Mortgage Loans and all or any part of its interest
under this Agreement and designate any person to exercise any rights of the
Purchaser hereunder, and the assignees or designees shall accede to the rights
and obligations hereunder of the Purchaser with respect to such Mortgage Loans.
The Sellers recognize that the Mortgage Loans may be divided into "packages" for
resale ("Mortgage Loan Packages").
All of the provisions of this Agreement shall inure to the benefit of
the Purchaser and any such assignees or designees. All references to the
Purchaser shall be deemed to include its assignees or designees. Utilizing
resources reasonably available to the Seller without incurring any cost except
the Seller's overhead and employees' salaries, the applicable Seller shall
cooperate in any such assignment of the Mortgage Loans and this Agreement;
provided that the Purchaser shall bear all costs associated with any such
assignment of the Mortgage Loans and this Agreement other than such Seller's
overhead or employees' salaries.
The Servicer and the Purchaser acknowledge that the Servicer shall
continue to remit payments to the Purchaser on the Remittance Date after the
transfer of the Mortgage Loans, unless the Servicer was notified in writing of
the new record owner of the Mortgage Loans prior to the immediately preceding
Record Date, in which case, the Servicer shall remit to the new record owner (or
Trustee or Master Servicer, as the case may be) of the Mortgage Loans.
Any prospective assignees of the Purchaser who have entered into a
commitment to purchase any of the Mortgage Loans may review and underwrite the
Servicer's servicing and origination operations, upon reasonable prior notice to
the Servicer, and the Servicer shall cooperate with such review and underwriting
to the extent such prospective assignees request information or documents that
are reasonably available and can be produced without unreasonable expense or
effort. The Servicer shall make the Mortgage Files related to the Mortgage Loans
held by the Servicer available at the Servicer's principal operations center for
review by any such prospective assignees during normal business hours upon
reasonable prior notice to the Servicer (in no event less than 5 Business Days
prior notice). The Servicer may, in its sole discretion, require that such
prospective assignees sign a confidentiality agreement with
respect to such information disclosed to the prospective assignee which is not
available to the public at large and a release agreement with respect to its
activities on the Servicer's premises.
14
The Servicer shall keep at its servicing office books and records in
which, subject to such reasonable regulations as it may prescribe, the Servicer
shall note transfers of Mortgage Loans. The Purchaser may, subject to the terms
of this Agreement, sell and transfer, in whole or in part, any or all of the
Mortgage Loans; provided that no such sale and transfer shall be binding upon
the Servicer unless such transferee shall agree in writing to an Assignment,
Assumption and Recognition Agreement, in substantially the form of Exhibit 2.05
attached hereto, and an executed copy of such Assignment, Assumption and
Recognition Agreement shall have been delivered to the Servicer. The Servicer
shall evidence its acknowledgment of any transfers of the Mortgage Loans to any
assignees of the Purchaser by executing such Assignment, Assumption and
Recognition Agreement. The Servicer shall xxxx its books and records to reflect
the ownership of the Mortgage Loans by any such assignees, and the previous
Purchaser shall be released from its obligations hereunder accruing after the
date of transfer to the extent such obligations relate to Mortgage Loans sold by
the Purchaser. This Agreement shall be binding upon and inure to the benefit of
the Purchaser and the Servicer and their permitted successors, assignees and
designees.
15
ARTICLE III: REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
SELLER; REPURCHASE; REVIEW OF MORTGAGE LOANS
Section 3.01 Representations and Warranties of each Seller.
Each Seller, as to itself, represents, warrants and covenants to the
Purchaser that as of each Funding Date or as of such date specifically provided
herein:
(1) Due Organization. The Seller is an entity duly organized, validly existing
and in good standing under the laws of its jurisdiction of organization, and has
all licenses necessary to carry on its business now being conducted and is
licensed, qualified and in good standing under the laws of each state where a
Mortgaged Property is located or is otherwise exempt under applicable law from
such qualification or is otherwise not required under applicable law to effect
such qualification; no demand for such qualification has been made upon the
Seller by any state having jurisdiction and in any event the Seller is or will
be in compliance with the laws of any such state to the extent necessary to
enforce each Mortgage Loan and with respect to Cendant Mortgage, service each
Mortgage Loan in accordance with the terms of this Agreement.
(2) Due Authority. The Seller had the full power and authority and legal right
to originate the Mortgage Loans that it originated, if any, and to acquire the
Mortgage Loans that it acquired. The Seller has the full power and authority to
hold each Mortgage Loan, to sell each Mortgage Loan and to execute, deliver and
perform, and to enter into and consummate, all transactions contemplated by this
Agreement. The Seller has duly authorized the execution, delivery and
performance of this Agreement, has duly executed and delivered this Agreement,
and this Agreement, assuming due authorization, execution and delivery by the
Purchaser, constitutes a legal, valid and binding obligation of the Seller,
enforceable against it in accordance with its terms, subject to applicable
bankruptcy, reorganization, receivership, conservatorship, insolvency,
moratorium and other laws relating to or affecting creditors' rights generally
or the rights of creditors of banks and to the general principles of equity
(whether such enforceability is considered in a proceeding in equity or at law).
(3) No Conflict. The execution and delivery of this Agreement, the acquisition
or origination, as applicable, of the Mortgage Loans by the Seller, the sale of
the Mortgage Loans, the consummation of the transactions contemplated hereby, or
the fulfillment of or compliance with the terms and conditions of this
Agreement, will not conflict with or result in a breach of any of the terms,
conditions or provisions of the Seller's organizational documents and bylaws or
any legal restriction or any agreement or instrument to which the Seller is now
a party or by which it is bound, or constitute a default or result in an
acceleration under any of the foregoing, or result in the violation of any law,
rule, regulation, order, judgment or decree to which the Seller or its property
is subject, or impair the ability of the Purchaser to realize on the Mortgage
Loans;
(4) Ability to Perform. The Seller does not believe, nor does it have any
reason or cause to believe, that it cannot perform each and every covenant
contained in this Agreement;
16
(5) No Material Default. Neither the Seller nor any of its Affiliates is in
material default under any agreement, contract, instrument or indenture of any
nature whatsoever to which the Seller or any of its Affiliates is a party or by
which it (or any of its assets) is bound, which default would have a material
adverse effect on the ability of the Seller to perform under this Agreement,
nor, to the best of the Seller's knowledge, has any event occurred which, with
notice, lapse of time or both, would constitute a default under any such
agreement, contract, instrument or indenture and have a material adverse effect
on the ability of the Seller to perform its obligations under this Agreement;
(6) Financial Statements. Cendant Mortgage has delivered to the Purchaser
financial statements as to its fiscal year ended December 31, 1999. Except as
has previously been disclosed to the Purchaser in writing: (a) such financial
statements fairly present the results of operations and changes in financial
position for such period and the financial position at the end of such period of
Cendant Mortgage and its subsidiaries; and (b) such financial statements are
true, correct and complete as of their respective dates and have been prepared
in accordance with generally accepted accounting principles consistently applied
throughout the periods involved, except as set forth in the notes thereto. The
Trust has delivered to the Purchaser pro forma financial statements dated as of
December 31, 1999 and a copy of its Offering Circular dated November 4, 1999
(the "Trust Financials") and such Trust Financials represent a fair and
reasonable projection of the expected performance of the Trust in 2000. Except
as has previously been disclosed to the Purchaser in writing, there has been no
change in such Trust Financials since their date and the Trust is not aware of
any errors or omissions therein;
In addition to the foregoing, Sellers shall provide financial
statements annually or at such other times as NCB requests.
(7) No Change in Business. There has been no change in the business, operations,
financial condition, properties or assets of the applicable Seller since (i) in
the case of Cendant Mortgage, the date of its financial statements and (ii) in
the case of the Trust, the date of delivery of the Trust Financials, that would
have a material adverse effect on the ability of the applicable Seller to
perform its obligations under this Agreement;
(8) No Litigation Pending. There is no action, suit, proceeding or investigation
pending or, to the best of the Seller's knowledge, threatened, against the
Seller, which, either in any one instance or in the aggregate, if determined
adversely to the Seller would adversely affect the sale of the Mortgage Loans to
the Purchaser or the execution, delivery or enforceability of this Agreement or
result in any material liability of the Seller, or draw into question the
validity of this Agreement, or have a material adverse effect on the financial
condition of the Seller;
(9) No Consent Required. No consent, approval, authorization or order of any
court or governmental agency or body is required for the execution, delivery and
performance by the Seller of or compliance by the Seller with this Agreement,
the delivery of the Mortgage Files to the Purchaser, the sale of the Mortgage
Loans to the Purchaser or the consummation of the transactions contemplated by
this Agreement or, if required, such approval has been obtained prior to the
Funding Date;
17
(10) Ordinary Course of Business. The consummation of the transactions
contemplated by this Agreement is in the ordinary course of business of the
Seller, and the transfer, assignment and conveyance of the Mortgage Notes and
the Mortgages by the Seller pursuant to this Agreement are not subject to the
bulk transfer or any similar statutory provisions in effect in any applicable
jurisdiction;
(11) No Broker. The Seller has not dealt with any broker or agent or anyone else
who might be entitled to a fee or commission in connection with this
transaction; and
(12) No Untrue Information. Neither this Agreement nor any statement, report or
other agreement, document or instrument furnished or to be furnished pursuant to
this Agreement contains or will contain any materially untrue statement of fact
or omits or will omit to state a fact necessary to make the statements contained
therein not misleading.
Section 3.02 Representations and Warranties of the Servicer.
The Servicer represents, warrants and covenants to the Purchaser
that as of the Funding Date or as of such date specifically provided herein:
(1) Ability to Service. The Servicer is an approved seller/servicer for FNMA and
FHLMC in good standing and is a mortgagee approved by the Secretary of Housing
and Urban Development pursuant to Section 203 of the National Housing Act, with
facilities, procedures and experienced personnel necessary for the servicing of
mortgage loans of the same type as the Mortgage Loans. No event has occurred
that would make the Servicer unable to comply with FNMA or FHLMC eligibility
requirements or that would require notification to either FNMA or FHLMC;
(2) No Litigation Pending. There is no action, suit, proceeding or investigation
pending or, to the best of the Servicer's knowledge, threatened, against the
Servicer which, either in any one instance or in the aggregate, if determined
adversely to the Servicer would adversely affect the ability of the Servicer to
service the Mortgage Loans hereunder in accordance with the terms hereof or have
a material adverse effect on the financial condition of the Servicer; and
(3) Collection Practices. The collection practices used by the Servicer with
respect to each Mortgage Note and Mortgage have been in all respects legal,
proper and prudent in the mortgage servicing business.
18
Section 3.03 Representations and Warranties as to Individual Mortgage Loans.
With respect to each Mortgage Loan, the applicable Seller hereby makes
the following representations and warranties to the Purchaser on which the
Purchaser specifically relies in purchasing such Mortgage Loan. Such
representations and warranties speak as of the Funding Date unless otherwise
indicated, but shall survive any subsequent transfer, assignment or conveyance
of such Mortgage Loans:
(1) Mortgage Loan as Described. Such Mortgage Loan complies with the terms and
conditions set forth herein, and all of the information set forth with respect
thereto on the Mortgage Loan Schedule is true and correct in all material
respects;
(2) Complete Mortgage Files. The instruments and documents specified in Section
2.02 with respect to such Mortgage Loan have been delivered to the Purchaser in
compliance with the requirements of Article II. The Seller is in possession of a
Mortgage File respecting such Mortgage Loan, except for such documents as have
been previously delivered to the Purchaser;
(3) Owner of Record. The Mortgage relating to such Mortgage Loan has been duly
recorded in the appropriate recording office, and the applicable Seller or
Servicer is the owner of record of such Mortgage Loan and the indebtedness
evidenced by the related Mortgage Note;
(4) Payments Current. All payments required to be made up to and including the
Funding Date for such Mortgage Loan under the terms of the Mortgage Note have
been made, such that such Mortgage Loan is not delinquent 30 days or more on the
Funding Date;
(5) No Outstanding Charges. To the Seller and Servicer's knowledge, there are no
delinquent taxes, insurance premiums, assessments, including assessments payable
in future installments, or other outstanding charges affecting the Mortgaged
Property related to such Mortgage Loan;
(6) Original Terms Unmodified. The terms of the Mortgage Note and the Mortgage
related to such Mortgage Loan have not been impaired, waived, altered or
modified in any material respect, except as specifically set forth in the
related Mortgage Loan Schedule;
(7) No Defenses. The Mortgage Note and the Mortgage related to such Mortgage
Loan are not subject to any right of rescission, set-off or defense, including
the defense of usury, nor will the operation of any of the terms of such
Mortgage Note and such Mortgage, or the exercise of any right thereunder, render
such Mortgage unenforceable, in whole or in part, or subject to any right of
rescission, set-off or defense, including the defense of usury and no such right
of rescission, set-off or defense has been asserted with respect thereto;
19
(8) Hazard Insurance. (a) All buildings upon the Mortgaged Property related to
such Mortgage Loan are insured by an insurer acceptable to FNMA or FHLMC against
loss by fire, hazards of extended coverage and such other hazards as are
customary in the area where such Mortgaged Property is located, pursuant to
insurance policies conforming to the requirements of either Section 5.10 or
Section 5.11. All such insurance policies (collectively, the "hazard insurance
policy") contain a standard mortgagee clause naming the originator of such
Mortgage Loan, its successors and assigns, as mortgagee. Such policies are the
valid and binding obligations of the insurer, and all premiums thereon due to
date have been paid. The related Mortgage obligates the Mortgagor thereunder to
maintain all such insurance at such Mortgagor's cost and expense, and on such
Mortgagor's failure to do so, authorizes the holder of such Mortgage to maintain
such insurance at such Mortgagor's cost and expense and to seek reimbursement
therefor from such Mortgagor; or (b) in the case of a condominium or PUD project
that is not covered by an individual policy, the condominium or PUD project is
covered by a "master" or "blanket" policy and there exists and is in the
Servicer's Mortgage File a certificate of insurance showing that the individual
unit that secures the first mortgage or share loan is covered under such policy.
The insurance policy contains a standard mortgagee clause naming the originator
of such Mortgage Loan (and its successors and assigns), as insured mortgagee.
Such policies are the valid and binding obligations of the insurer, and all
premiums thereon have been paid. The insurance policy provides for advance
notice to the Seller or Servicer if the policy is canceled or not renewed, or if
any other change that adversely affects the Seller's interests is made; the
certificate includes the types and amounts of coverage provided, describes any
endorsements that are part of the "master" policy and would be acceptable
pursuant to the FNMA Guide;
(9) Compliance With Applicable Laws. All requirements of any federal, state or
local law (including usury, truth in lending, real estate settlement procedures,
consumer credit protection, equal credit opportunity or disclosure laws)
applicable to the origination and servicing of such Mortgage Loan have been
complied with in all material respects;
(10) No Satisfaction of Mortgage. The Mortgage related to such Mortgage Loan has
not been satisfied, canceled or subordinated, in whole or in part, or rescinded,
and the related Mortgaged Property has not been released from the lien of such
Mortgage, in whole or in part, nor has any instrument been executed that would
effect any such release, cancellation, subordination or rescission;
(11) Valid First Lien. The Mortgage related to such Mortgage Loan is a valid,
subsisting and enforceable perfected first lien on the related Mortgaged
Property, including all improvements on the related Mortgaged Property, which
Mortgaged Property is free and clear of any encumbrances and liens having
priority over the first lien of the Mortgage subject only to (a) the lien of
current real estate taxes and special assessments not yet due and payable, (b)
covenants, conditions and restrictions, rights of way, easements and other
matters of the public record as of the date of recording of such Mortgage which
are acceptable to mortgage lending institutions generally, are referred to in
the lender's title insurance policy and do not adversely affect the market value
or intended use of the related Mortgaged Property, and (c) other matters to
which like properties are commonly subject which do not individually or in the
aggregate materially interfere with the benefits of the security intended to be
provided by such Mortgage or the use, enjoyment, or market value of the related
Mortgaged Property;
20
(12) Validity of Documents. The Mortgage Note and the Mortgage related to such
Mortgage Loan 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
general equitable principles (regardless whether such enforcement is considered
in a proceeding in equity or at law);
(13) Valid Execution of Documents. All parties to the Mortgage Note and the
Mortgage related to such Mortgage Loan had legal capacity to enter into such
Mortgage Loan and to execute and deliver the related Mortgage Note and the
related Mortgage and the related Mortgage Note and the related Mortgage have
been duly and properly executed by such parties;
(14) Full Disbursement of Proceeds. Such Mortgage Loan has closed and the
proceeds of such Mortgage Loan have been fully disbursed prior to the Funding
Date; provided that, with respect to any Mortgage Loan originated within the
previous 120 days, alterations and repairs with respect to the related Mortgaged
Property or any part thereof may have required an escrow of funds in an amount
sufficient to pay for all outstanding work within 120 days of the origination of
such Mortgage Loan, and, if so, such funds are held in escrow by the Seller, a
title company or other escrow agent;
(15) Ownership. The Mortgage Note and the Mortgage related to such Mortgage Loan
or any interest or participation therein have not been assigned, pledged or
otherwise transferred by the applicable Seller, and the Seller has good and
marketable title thereto, and the Seller is the sole owner thereof and has full
right and authority to transfer and sell such Mortgage Loan, and is transferring
such Mortgage Loan to the Purchaser free and clear of any encumbrance, equity,
lien, pledge, charge, claim or security interest;
(16) Doing Business. All parties that have had any interest in such 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 related Mortgaged Property is located;
(17) Title Insurance. (a) Such Mortgage Loan is covered by an ALTA lender's
title insurance policy or short form title policy acceptable to FNMA and FHLMC
(or, in jurisdictions where ALTA policies are not generally approved for use, a
lender's title insurance policy acceptable to FNMA and FHLMC), issued by a title
insurer acceptable to FNMA and FHLMC and qualified to do business in the
jurisdiction where the related Mortgaged Property is located, insuring (subject
to the exceptions contained in clauses (12)(a) and (b) above) the Seller or
Servicier, its successors and assigns as to the first priority lien of the
related Mortgage in the original principal amount of such Mortgage Loan and in
the case of ARM Loans, against any loss by reason of the invalidity or
unenforceability of the lien resulting from the provisions of such Mortgage
providing for adjustment to the applicable Note Rate and Monthly Payment.
Additionally, such lender's title insurance policy affirmatively insures against
encroachments by or upon the related Mortgaged Property or any interest therein
or any other adverse circumstance that either is disclosed or would have been
disclosed by an accurate survey. The Seller or Servicer is the sole insured of
such lender's title insurance policy, and such lender's title insurance policy
is in full force and effect and will be in full force and effect upon the
consummation of the transactions contemplated by this Agreement and will inure
to the benefit of the Purchaser without any further act. No claims have been
made under such lender's title insurance policy, no prior holder of the related
Mortgage (including the Seller) has done, by act or omission, anything that
would impair the coverage of such lender's insurance policy, and, to the best of
the Seller's knowledge, there is no act, omission, condition, or information
that would impair the coverage of such lender's insurance policy; (b) The
mortgage title insurance policy covering each unit mortgage in a condominium or
PUD project related to such Mortgage Loan meets all requirements of FNMA and
FHLMC;
21
(18) No Defaults. (a) There is no default, breach, violation or event of
acceleration existing under the Mortgage, the Mortgage Note, or any other
agreements, documents, or instruments related to such Mortgage Loan; (b) to the
best of the Seller's knowledge, there is no event that, with the lapse of time,
the giving of notice, or both, would constitute such a default, breach,
violation or event of acceleration; (c) the Mortgagor(s) with respect to such
Mortgage Loan is (1) not in default under any other Mortgage Loan or (2) the
subject of an Insolvency Proceeding; (d) no event of acceleration has previously
occurred, and no notice of default has been sent, with respect to such Mortgage
Loan; and (e) in no event has the Seller waived any of its rights or remedies in
respect of any default, breach, violation or event of acceleration under the
Mortgage, the Mortgage Note, or any other agreements, documents, or instruments
related to such Mortgage Loan;
(19) No Mechanics' Liens. As of the date of origination of such Mortgage Loan,
there were no mechanics' or similar liens, except such liens as are expressly
insured against by a title insurance policy, or claims that have been filed for
work, labor or material (and no rights are outstanding that under law could give
rise to such lien) affecting the related Mortgaged Property that are or may be
liens prior to, or equal or coordinate with, the lien of the related Mortgage;
(20) Location of Improvements; No Encroachments. As of the date of origination
of such Mortgage Loan, all improvements that were considered in determining the
Appraised Value of the related Mortgaged Property lay wholly within the
boundaries and building restriction lines of such Mortgaged Property, and no
improvements on adjoining properties encroach upon such Mortgaged Property
except as permitted under the terms of the FNMA Guide and the FHLMC Selling
Guide; no improvement located on or part of any Mortgaged Property is in
violation of any applicable zoning law or regulation, and all inspections,
licenses and certificates required to be made or issued with respect to all
occupied portions of such Mortgaged Property, and with respect to the use and
occupancy of the same, including certificates of occupancy, have been made or
obtained from the appropriate authorities;
(21) Origination; Payment Terms. Principal payments on such Mortgage Loan
commenced or will commence no more than 60 days after funds were disbursed in
connection with such Mortgage Loan. If the interest rate on the related Mortgage
Note is adjustable, the adjustment is based on the Index set forth on the
related Mortgage Loan Schedule. The related Mortgage Note is payable on the
first day of each month in arrears, in accordance with the payment terms
described on the related Mortgage Loan Schedule;
22
(22) Due On Sale. Except as noted otherwise on the Mortgage Loan Schedule, the
related Mortgage contains the usual and customary "due-on-sale" clause or other
similar provision for the acceleration of the payment of the Unpaid Principal
Balance of such Mortgage Loan if the related Mortgaged Property or any interest
therein is sold or transferred without the prior consent of the mortgagee
thereunder;
(23) Prepayment Penalty. Except as noted otherwise on the Mortgage Loan
Schedule, such Mortgage Loan is not subject to any Prepayment Penalty;
(24) Mortgaged Property Undamaged; No Condemnation. As of the Funding Date, the
related Mortgaged Property is free of material damage and waste and there is no
proceeding pending for the total or partial condemnation thereof;
(25) Customary Provisions. The related Mortgage contains customary and
enforceable provisions that render the rights and remedies of the holder thereof
adequate for the realization against the related Mortgaged Property of the
benefits of the security provided thereby, including, (a) in the case of a
Mortgage designated as a deed of trust, by trustee's sale, and (b) in the case
of a Mortgage, otherwise by judicial foreclosure;
(26) Conformance With Underwriting Standards. Such Mortgage Loan was
underwritten in accordance with underwriting standards of Cendant Mortgage;
(27) Appraisal. The Mortgage File contains an appraisal of the related Mortgaged
Property on forms and with riders approved by FNMA and FHLMC, signed prior to
the approval of such Mortgage Loan application by an appraiser, duly appointed
by the originator of such Mortgage Loan, whose compensation is not affected by
the approval or disapproval of such Mortgage Loan and who met the minimum
qualifications of FNMA and FHLMC for appraisers;
(28) Deeds of Trust. If the related Mortgage constitutes a deed of trust, then a
trustee, duly qualified under applicable law to serve as such, has been properly
designated and currently so serves and is named in such Mortgage, and no fees or
expenses are or will become payable by the Purchaser to the trustee under such
deed of trust, except in connection with a trustee's sale after default by the
related Mortgagor;
(29) LTV; Primary Mortgage Insurance Policy. If such Mortgage Loan had a
Loan-to-Value Ratio of more than 80% at origination, such Mortgage Loan is and
will be subject to a Primary Insurance Policy issued by a Qualified Mortgage
Insurer, which insures the Seller or Servicer, its successors and assigns and
insureds in the amount set forth on the Mortgage Loan Schedule. All provisions
of such Primary Insurance Policy have been and are being complied with, such
policy is in full force and effect, and all premiums due thereunder have been
paid. Any related Mortgage subject to any such Primary Insurance Policy
obligates the Mortgagor thereunder to maintain such insurance for the time
period required by law and to pay all premiums and charges in connection
therewith. As of the date of origination, the Loan-to-Value Ratio of such
Mortgage Loan is as specified in the applicable Mortgage Loan Schedule;
23
(30) Occupancy. As of the date of origination of such Mortgage Loan, the related
Mortgaged Property is lawfully occupied under applicable law;
(31) Supervision and Examination by a Federal or State Authority. Each Mortgage
Loan either was (a) closed in the name of the Cendant Mortgage, or (b) closed in
the name of another entity that is either a savings and loan association, a
savings bank, a commercial bank, credit union, insurance company or an
institution which is supervised and examined by a federal or state authority, or
a mortgagee approved by the Secretary of Housing and Urban Development pursuant
to Sections 203 and 211 of the National Housing Act (a "HUD Approved
Mortgagee"), and was so at the time such Mortgage Loan was originated (Cendant
Mortgage or such other entity, the "Originator") or (c) closed in the name of a
loan broker under the circumstances described in the following sentence. If such
Mortgage Loan was originated through a loan broker, such Mortgage Loan met the
Originator's underwriting criteria at the time of origination and was originated
in accordance with the Originator's policies and procedures and the Originator
acquired such Mortgage Loan from the loan broker contemporaneously with the
origination thereof. The Mortgage Loans that the Trust is selling to Purchaser
were originated by or on behalf of Cendant Mortgage and subsequently assigned to
the Trust.
(32) Adjustments. All of the terms of the related Mortgage Note pertaining to
interest rate adjustments, payment adjustments and adjustments of the
outstanding principal balance, if any, are enforceable and such adjustments will
not affect the priority of the lien of the related Mortgage; all such
adjustments on such Mortgage Loan have been made properly and in accordance with
the provisions of such Mortgage Loan;
(33) Insolvency Proceedings; Soldiers' and Sailors' Relief Act. The related
Mortgagor (1) is not the subject of any Insolvency Proceeding; and (2) has not
notified the Seller of any relief requested by or allowed to such Mortgagor
under the Soldiers' and Sailors' Civil Relief Act of 1940;
(34) FNMA/FHLMC Documents. Such Mortgage Loan was closed on standard FNMA or
FHLMC documents or on such documents otherwise acceptable to them.
(35) Acceptable Investment. To the best of the Seller's knowledge, there is no
circumstance or condition with respect to the related Mortgage File, Mortgage,
Mortgaged Property, Mortgagor or Mortgagor's credit standing that can reasonably
be expected to cause private institutional investors to regard such Mortgage
Loan as an unacceptable investment, cause such Mortgage Loan to become
delinquent, or adversely affect the value or marketability of such Mortgage
Loan;
24
Section 3.04 Repurchase.
(1) It is understood and agreed that the representations and warranties set
forth in Sections 3.01, 3.02 and 3.03 shall survive the sale of the Mortgage
Loans to the Purchaser and shall inure to the benefit of the Purchaser,
notwithstanding any restrictive or qualified endorsement on any Mortgage Note or
Assignment or the examination of any Mortgage File.
(2) Upon discovery by either of the Sellers or the Purchaser of a breach of any
of the representations and warranties contained in Sections 3.01, 3.02 or 3.03
that materially and adversely affects the value of a Mortgage Loan, the party
discovering such breach shall give prompt written notice to the other.
(3) Unless permitted a greater period of time to cure as set forth in Section
2.04, the applicable Seller shall have a period of 60 days from the earlier of
either discovery by or receipt of written notice from the Purchaser to the
Seller of any breach of any of the representations and warranties contained in
Section 3.03 that materially and adversely affects the value of a Mortgage Loan
(a "Defective Mortgage Loan"; provided that "Defective Mortgage Loan" shall also
include any Mortgage Loan treated or designated as such in accordance with
Section 2.04) within which to correct or cure such breach. If such breach can
ultimately be cured but is not reasonably expected to be cured within the 60-day
period, then the applicable Seller shall have such additional time, if any, as
is reasonably determined by the Purchaser to cure such breach provided that the
Seller has commenced curing or correcting such breach and is diligently pursuing
same. Each Seller hereby covenants and agrees with respect to each Mortgage Loan
conveyed by it that, if any breach relating thereto cannot be corrected or cured
within the applicable cure period or such additional time, if any, as is
reasonably determined by the Purchaser, then such Seller shall, at the direction
of the Purchaser, repurchase the Defective Mortgage Loan at the applicable
Repurchase Price.
(4) Any repurchase of a Defective Mortgage Loan required hereunder shall be
accomplished by payment of the applicable Repurchase Price within 3 Business
Days of expiration of the applicable time period referred to above in paragraph
3.04(3) by wire transfer of immediately available funds directly to the
Purchaser's Account. It is understood and agreed that the obligations of a
Seller (a) set forth in this Section 3.04(4) to cure any breach of such Seller's
representations and warranties contained in Section 3.03 or to repurchase the
Defective Mortgage Loan(s) and (b) set forth in Section 9.01 to indemnify the
Purchaser in connection with any breach of a Seller's representations and
warranties contained in Section 3.03 shall constitute the sole remedies of the
Purchaser respecting a breach of such representations and warranties.
(5) The parties further agree that, in recognition of the Trust's rights against
Cendant Mortgage with respect to the Mortgage Loans acquired by it from Cendant
Mortgage and conveyed to the Purchaser hereunder, the Purchaser shall have the
right to cause Cendant Mortgage to repurchase directly any Defective Mortgage
Loan (other than as a result of a breach by the Trust of Section 3.03 (3) or
3.03(15) hereof, in which case the Purchaser shall have the right to cause the
Trust to repurchase directly the Defective Mortgage Loan) acquired hereunder by
the Purchaser from the Trust.
25
(6) If (a) Mortgagor is thirty (30) days or more delinquent with respect to any
of the first (1) Monthly Payments due on the related Mortgage Loan immediately
following the applicable Funding Date or (b) a Mortgage Loan is in bankruptcy or
litigation within the first (1) months immediately following the applicable
Funding Date, the Seller, at the Purchaser's option, shall promptly repurchase
such Mortgage Loan from the Purchaser in accordance with the procedures in
Section 3.04(4) hereof.
Section 3.05 Certain Covenants of each Seller and the Servicer.
Without incurring undue effort or any cost except the Seller's overhead or
employees' salaries, each Seller shall take reasonable steps to assist the
Purchaser, if the Purchaser so requests, in securitizing the Mortgage Loans and
selling undivided interests in such Mortgage Loans in a public offering or
private placement or selling participating interests in such Mortgage Loans,
which steps may include, (a) providing any information relating to the Mortgage
Loans reasonably necessary to assist in the preparation of any disclosure
documents, (b) providing information relating to delinquencies and defaults with
respect to the Servicer's servicing portfolio (or such portion thereof as is
similar to the Mortgage Loans), (c) entering into any other servicing, custodial
or other similar agreements, that are consistent with the provisions of this
Agreement, and which contain such provisions as are customary in securitizations
rated "AAA" (including a securitization involving a REMIC) (a "Securitization"),
and (d) providing as of the date of such securitization representations and
warranties as to the Seller and the Mortgage Loans, which are consistent with
the representations and warranties contained in this Agreement, but modified, if
necessary, to reflect changes since the Funding Date. In connection with such a
Securitization, the Purchaser may be required to engage a master servicer or
trustee to determine the allocation of payments to and make remittances to the
certificateholders, at the Purchaser's sole cost and expense. In the event that
a master servicer or trustee to determine the allocation of payments to and make
remittances to the certificateholders is requested by the Purchaser, the
Servicer agrees to service the Mortgage Loans in accordance with the reasonable
and customary requirements of such Securitization, which may include the
Servicer's acting as a subservicer in a master servicing arrangement. With
respect to the then owners of the Mortgage Loans, the Servicer shall thereafter
deal solely with such master servicer or trustee, as the case may be with
respect to such Mortgage Loans which are subject to the Securitization and shall
not be required to deal with any other party with respect to such Mortgage
Loans.The cost of such securitization shall be borne by the Purchaser, other
than the Seller's overhead or employees' salaries.
26
ARTICLE IV: REPRESENTATIONS AND WARRANTIES OF THE PURCHASER AND
CONDITIONS PREDCEDENT TO FUNDING
Section 4.01 Representations and Warranties.
The Purchaser represents, warrants and covenants to the Seller that as
of each Funding Date or as of such date specifically provided herein:
(1) Due Organization. The Purchaser is an entity duly organized, validly
existing and in good standing under the laws of its jurisdiction of
organization, and has all licenses necessary to carry on its business now being
conducted and is licensed, qualified and in good standing under the laws of each
state where a Mortgaged Property is located or is otherwise exempt under
applicable law from such qualification or is otherwise not required under
applicable law to effect such qualification; no demand for such qualification
has been made upon the Purchaser by any state having jurisdiction and in any
event the Purchaser is or will be in compliance with the laws of any such state
to the extent necessary to enforce each Mortgage Loan.
(2) Due Authority. The Purchaser had the full power and authority and legal
right to acquire the Mortgage Loans that it acquired. The Purchaser has the full
power and authority to hold each Mortgage Loan, to sell each Mortgage Loan and
to execute, deliver and perform, and to enter into and consummate, all
transactions contemplated by this Agreement. The Purchaser has duly authorized
the execution, delivery and performance of this Agreement, has duly executed and
delivered this Agreement, and this Agreement, assuming due authorization,
execution and delivery by the Seller, constitutes a legal, valid and binding
obligation of the Purchaser, enforceable against it in accordance with its
terms, subject to applicable bankruptcy, reorganization, receivership,
conservatorship, insolvency, moratorium and other laws relating to or affecting
creditors' rights generally or the rights of creditors of banks and to the
general principles of equity (whether such enforceability is considered in a
proceeding in equity or at law);
(3) No Conflict. None of the execution and delivery of this Agreement, the
acquisition or origination, as applicable, of the Mortgage Loans by the
Purchaser, the purchase of the Mortgage Loans, the consummation of the
transactions contemplated hereby, or the fulfillment of or compliance with the
terms and conditions of this Agreement, will conflict with or result in a breach
of any of the terms, conditions or provisions of the Purchaser's organizational
documents and bylaws or any legal restriction or any agreement or instrument to
which the Purchaser is now a party or by which it is bound, or constitute a
default or result in an acceleration under any of the foregoing, or result in
the violation of any law, rule, regulation, order, judgment or decree to which
the Purchaser or its property is subject, or impair the ability of the Purchaser
to realize on the Mortgage Loans, or impair the value of the Mortgage Loans;
(4) Ability to Perform. The Purchaser does not believe, nor does it have any
reason or cause to believe, that it cannot perform each and every covenant
contained in this Agreement;
27
(5) No Material Default. The Purchaser is not in material default under any
agreement, contract, instrument or indenture of any nature whatsoever to which
the Purchaser is a party or by which it (or any of its assets) is bound, which
default would have a material adverse effect on the ability of the Purchaser to
perform under this Agreement, nor, to the best of the Purchaser's knowledge, has
any event occurred which, with notice, lapse of time or both) would constitute a
default under any such agreement, contract, instrument or indenture and have a
material adverse effect on the ability of the Purchaser to perform its
obligations under this Agreement;
(6) No Change in Business. There has been no change in the business, operations,
financial condition, properties or assets of the Purchaser since the date of the
Purchaser's financial statements that would have a material adverse effect on
the ability of the Purchaser to perform its obligations under this Agreement;
(7) Litigation Pending. There is no action, suit, proceeding or investigation
pending or, to the best of the Purchaser's knowledge, threatened, against the
Purchaser, which, either in any one instance or in the aggregate, if determined
adversely to the Purchaser would adversely affect the purchase of the Mortgage
Loans or the execution, delivery or enforceability of this Agreement or result
in any material liability of the Purchaser, or draw into question the validity
of this Agreement, or the Mortgage Loans or have a material adverse effect on
the financial condition of the Purchaser;
(8) Broker. The Purchaser has not dealt with any broker or agent or anyone else
who might be entitled to a fee or commission in connection with this
transaction.
(9) No Consent Required. No consent, approval, authorization or order of any
court or governmental agency or body is required for the execution, delivery and
performance by the Purchaser of or compliance by the Purchaser with this
Agreement, the purchase of the Mortgage Loans from the Seller or the
consummation of the transactions contemplated by this Agreement or, if required,
such approval has been obtained prior to the Funding Date;
(10) Ordinary Course of Business. The consummation of the transactions
contemplated by this Agreement is in the ordinary course of business of the
Purchaser; and
(11) Non-Petition Agreement. The Purchaser covenants and agrees that it shall
not, prior to the date which is one year and one day (or if longer, the
applicable preference period then in effect) after the payment in full of all
rated obligations of Xxxxxx'x Gate Residential Mortgage Trust, acquiesce,
petition or otherwise, directly or indirectly, invoke or cause Xxxxxx'x Gate
Residential Mortgage Trust to invoke the process of any governmental authority
for the purpose of commencing or sustaining a case against Xxxxxx'x Gate
Residential Mortgage Trust under any federal or state bankruptcy, insolvency or
similar law or appointing a receiver, liquidator, assignee, trustee, custodian,
sequestrator, or other similar official of Xxxxxx'x Gate Residential Mortgage
Trust. This covenant and agreement shall be binding upon the Purchaser and any
assignee or transferee of the Purchaser.
28
(12) No Untrue Information. Neither this Agreement nor any statement, report or
other agreement, document or instrument furnished or to be furnished pursuant to
this Agreement contains or will contain any materially untrue statement of fact
or omits or will omit to state a fact necessary to make the statements contained
therein not misleading.
(13) The Purchaser agrees that it shall not solicit any Mortgagors (in writing
or otherwise) to refinance any of the Mortgage Loans; provided that mass
advertising or mailings (such as placing advertisements on television, on radio,
in magazines or in newspapers or including messages in billing statements) that
are not exclusively directed towards the Mortgagors shall not constitute
solicitation and shall not violate this covenant.
Section 4.02. Conditions Precedent to Closing.
Each purchase of Mortgage Loans hereunder shall be subject to each of the
following conditions:
(a) All of the representations and warranties of Seller under the
Cendant Guide, and of Seller and Purchaser under this
Agreement shall be true and correct as of the Funding Date,
and no event shall have occurred which, with notice or the
passage of time, would constitute an Event of Default under
this Agreement or under the Cendant Guide;
(b) Purchaser shall have received, or Purchaser's attorneys shall
have received in escrow, all closing documents as specified
herein, in such forms as are agreed upon and acceptable to
Purchaser, duly executed by all signatories other than
Purchaser as required pursuant to the respective terms
thereof;
(c) All other terms and conditions of this Agreement shall have
been complied with.
Subject to the foregoing conditions, Purchaser shall pay to Seller on each
Funding Date the applicable Purchase Price as provided herein.
29
ARTICLE V: ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 5.01 Cendant Mortgage to Act as Servicer; Servicing Standards;
Additional Documents; Consent of the Purchaser.
(1) The Servicer, as independent contract servicer, shall service and administer
the Mortgage Loans and REO Property from and after each Funding Date in
accordance with the terms and provisions of the Mortgage Loans, applicable law
and the terms and provisions of this Agreement for and on behalf of, and in the
best interests of, the Purchaser (without taking into account any relationship
the Servicer may have with any Mortgagor or other Person, the participation, if
any, of the Servicer in any financing provided in connection with the sale of
any Mortgaged Property, or the Servicer's obligation to advance any expenses or
incur any costs in the performance of its duties hereunder) in accordance with a
standard that is not less than the higher of (a) the same care, skill, prudence
and diligence with which it services similar assets held for its own or its
Affiliates' account and (b) the same care, skill, prudence and diligence with
which it services similar assets for third party institutional investors, in
each case giving due consideration to customary and usual standards of practice
of prudent institutional mortgage loan servicers utilized with respect to
mortgage loans comparable to the Mortgage Loans. Subject to the foregoing
standards, in connection with such servicing and administration, the Servicer
shall seek to maximize the timely recovery of principal and interest on the
Mortgage Notes; provided that nothing contained herein shall be construed as an
express or implied guarantee by the Servicer of the collectibility of payments
on the Mortgage Loans or shall be construed as impairing or adversely affecting
any rights or benefits specifically provided by this Agreement to the Seller,
including with respect to Servicing Fees.
(2) To the extent consistent with Section 5.01(1) and further subject to any
express limitations set forth in this Agreement, the Servicer (acting alone or,
solely in the circumstances permitted hereunder, acting through a subservicer)
shall have full power and authority to do or cause to be done any and all things
that it may deem necessary or desirable in connection with such servicing and
administration, including the power and authority (a) to execute and deliver, on
behalf of the Purchaser, customary consents or waivers and other instruments and
documents (including estoppel certificates), (b) to consent to transfers of any
Mortgaged Property and assumptions of the Mortgage Notes and related Mortgages,
(c) to submit claims to collect any Insurance Proceeds and Liquidation Proceeds,
(d) to consent to the application of any Insurance Proceeds or Condemnation
Proceeds to the restoration of the applicable Mortgaged Property or otherwise,
(e) to bring an action in a court of law, including an unlawful detainer action,
to enforce rights of the Purchaser with respect to any Mortgaged Property, (f)
to execute and deliver, on behalf of the Purchaser, documents relating to the
management, operation, maintenance, repair, leasing, marketing and sale of any
Mortgaged Property or any REO Property, and (g) to effectuate foreclosure or
other conversion of the ownership of the Mortgaged Property securing any
Mortgage Loan; provided that the Servicer shall not take any action not provided
for in this Agreement that is materially inconsistent with or materially
prejudices the interest of the Purchaser in any Mortgage Loan or under this
Agreement. If reasonably requested by the Servicer, the Purchaser shall furnish
the Servicer with any powers of attorney and other documents reasonably
necessary or appropriate to enable the Servicer to service and administer the
Mortgage Loans and the REO Properties, including documents relating to the
foreclosure, receivership, management, operation, maintenance, repair, leasing,
marketing and sale (in foreclosure or otherwise) of any Mortgaged Property or
any REO Property. Nothing contained in this Agreement shall limit the ability of
the Servicer to lend money to (whether on a secured or unsecured basis), and
otherwise generally engage in any kind of business or dealings with, any
Mortgagor as though the Servicer were not a party to this Agreement or to the
transactions contemplated hereby.
30
(3) Notwithstanding anything to the contrary contained herein:
(a) the Servicer acknowledges that the Purchaser will retain title to,
and ownership of, the Mortgage Loans and the REO Properties and that the
Servicer does not hereby acquire any title to, security interest in, or other
rights of any kind in or to any Mortgage Loan or REO Property or any portion
thereof;
(b) the Servicer shall not file any lien or any other encumbrance on,
exercise any right of setoff against, or attach or assert any claim in or on any
Mortgage Loan or REO Property, unless authorized pursuant to a judicial or
administrative proceeding or a court order;
(c) the Servicer shall, in servicing the Mortgage Loans, follow and
comply with the servicing guidelines established by FNMA, provided that the
Servicer shall specifically notify the Purchaser in writing and obtain the
Purchaser's written consent prior to the Servicer taking any of the following
actions: (1) modifying, amending or waiving any of the financial terms of, or
making any other material modifications to, a Mortgage Loan, except the Servicer
may, upon the Mortgagor's request, accept a principal prepayment and re-amortize
the then remaining principal balance over the then remaining term of the loan
(resulting in a lower scheduled monthly payment but not change in the maturity
date); (2) selling any Specially Serviced Mortgage Loan or REO Property; (3)
making, with respect to any Specially Serviced Mortgage Loan or REO Property,
Servicing Advances (irrespective of whether non-recoverable); provided that the
Servicer shall not be required to so advise the Purchaser to the extent that
each related Servicing Advance as to the related Mortgaged Property or REO
Property is not in excess of $10,000; (4) forgiving principal or interest on, or
permitting to be satisfied at a discount, any Mortgage Loan; (5) accepting
substitute or additional collateral, or releasing any collateral, for a Mortgage
Loan. If the Purchaser has not approved or rejected in writing any proposed
action(s) recommended by the Servicer to be taken hereunder within 20 Business
Days of the date such recommendation is made, then the Purchaser shall be deemed
to have rejected such recommended action(s) and the Servicer shall not take any
such action(s);
(d) the Servicer shall notify the Purchaser of any modification, waiver
or amendment of any term of any Mortgage Loan and the date thereof and shall
deliver to the Purchaser, for deposit in the related Mortgage File, an original
counterpart of the agreement relating to such modification, waiver or amendment
promptly following the execution thereof;
31
(e) the Servicer shall remain primarily liable for the full performance
of its obligations hereunder notwithstanding any appointment by the Servicer of
a subservicer or subservicers hereunder; and
(f) the Purchaser may at any time and from time to time, in its sole
discretion, upon 10 Business Days written notice to the Servicer, terminate the
Servicer's servicing obligations hereunder with respect to (1) any REO Property
or (2) any Mortgage Loan that, in accordance with the Purchaser's internal
credit classification criteria, has been classified as "doubtful" or a "loss."
Upon the effectiveness of any such termination of the Servicer's servicing
obligations with respect to any such REO Property or Mortgage Loan, the Servicer
shall deliver all agreements, documents, and instruments related thereto to the
Purchaser, in accordance with applicable law.
Section 5.02 Collection of Mortgage Loan Payments.
Continuously from the date hereof until the principal and interest on
all Mortgage Loans are paid in full, the Servicer will proceed diligently to
collect all payments due under each Mortgage Loan when the same shall become due
and payable and shall, to the extent such procedures shall be consistent with
this Agreement and the terms and provisions of any related Primary Insurance
Policy, follow such collection procedures as it follows with respect to mortgage
loans comparable to the Mortgage Loans, which procedures shall in any event
comply with the servicing standards set forth in Section 5.01. Furthermore, the
Servicer shall ascertain and estimate annual ground rents, taxes, assessments,
fire and hazard insurance premiums, mortgage insurance premiums, and all other
charges that, as provided in the Mortgages, will become due and payable to the
end that the installments payable by the Mortgagors will be sufficient to pay
such charges as and when they become due and payable.
Section 5.03 Collection of Mortgage Loan Payments.
The Servicer shall, within five (5) calendar days following each Record
Date, deliver to the Purchaser monthly reports (substantially in the form of
Exhibit 5.03(a) and Exhibit 5.03(b) attached hereto) with respect to all
Specially Serviced Mortgage Loans. In addition, the Servicer shall, within one
(1) Business Day following the occurrence of any foreclosure sale with respect
to any Mortgaged Property, deliver to the Purchaser a notice of foreclosure sale
substantially in the form of Exhibit 5.03(c) attached hereto.
32
Section 5.04 Establishment of Collection Account; Deposits in Collection
Account.
The Servicer shall segregate and hold all funds collected and received
pursuant to each Mortgage Loan separate and apart from any of its own funds and
general assets and shall establish and maintain one or more Collection Accounts,
in the form of time deposit or demand accounts. The creation of any Collection
Account shall be evidenced by a certification in the form of Exhibit 5.04-1
attached hereto, in the case of an account established with the Servicer, or a
letter agreement in the form of Exhibit 5.04-2 attached hereto, in the case of
an account held by a depository other than the Servicer. In either case, a copy
of such certification or letter agreement shall be furnished to the Purchaser.
The Servicer shall deposit in the Collection Account on a daily basis,
within two Business Days after receipt (or as otherwise required pursuant to
this Agreement in the case of clauses (7), (8) and (9) of this Section 5.04) and
retain therein the following payments and collections received or made by it
subsequent to each Funding Date, or received by it prior to the Funding Date but
allocable to a period subsequent thereto, other than in respect of principal and
interest on the Mortgage Loans due on or before the Funding Date:
1) all payments on account of principal, including Principal Prepayments, on the
Mortgage Loans;
2) all payments on account of interest on the Mortgage Loans;
3) all Liquidation Proceeds;
4) all Insurance Proceeds, including amounts required to be deposited pursuant
to Sections 5.10 and 5.11, other than proceeds to be held in the Escrow
account and applied to the restoration or repair of the Mortgaged Properties
or released to the applicable Mortgagors in accordance with the Servicer's
normal servicing procedures, the related Mortgages or applicable law;
5) all Condemnation Proceeds affecting any Mortgaged Property which are not
released to a Mortgagor in accordance with the Servicer's normal servicing
procedures, the related Mortgage or applicable law;
6) any Monthly Advances in accordance with Section 6.03;
7) any amounts required to be deposited by the Servicer pursuant to Section
5.11 in connection with the deductible clause in any blanket hazard
insurance policy, such deposit to be made from the Servicer's own funds
without reimbursement therefor;
8) any amounts required to be deposited by the Servicer pursuant to Section
5.16(ii) in connection with any losses on Permitted Investments; and
9) any amounts required to be deposited in the Collection Account pursuant to
Sections 7.01 or 7.02 or otherwise pursuant to the terms hereof.
33
The foregoing requirements for deposit in the Collection Account shall
be exclusive, it being understood and agreed that, without limiting the
generality of the foregoing, payments in the nature of late payment charges and
assumption fees, to the extent permitted by Section 7.01, need not be deposited
by the Servicer in the Collection Account and shall be retained by the Servicer
as additional compensation.
Section 5.05 Permitted Withdrawals from the Collection Account.
The Servicer may, from time to time in accordance with the provisions
hereof, withdraw amounts from the Collection Account for the following purposes
(without duplication):
1) to reimburse itself for unreimbursed Monthly Advances and Servicing
Advances (other than with respect to REO Properties) that are approved by
the Purchaser as being non-recoverable in accordance with Section 6.04;
2) to make payments to the Purchaser in the amounts, at the times and in the
manner provided for in Section 6.01;
3) to reimburse itself for Monthly Advances, the Servicer's right to reimburse
itself pursuant to this Subsection (iii) being limited to amounts received
on the related Mortgage Loan which represent late payments of principal
and/or interest with respect to which any such Monthly Advance was made;
4) to reimburse itself for unreimbursed Servicing Advances (other than with
respect to REO Properties) and for unreimbursed Monthly Advances, the
Servicer's right to reimburse itself pursuant to this Subsection (iv) with
respect to any Mortgage Loan being limited to related Liquidation Proceeds,
Condemnation Proceeds, Insurance Proceeds and such other amounts as may be
collected by the Servicer from the Mortgagor or otherwise relating to the
Mortgage Loan, it being understood that, in the case of such reimbursement,
the Servicer's right thereto shall be prior to the rights of the Purchaser,
except that, where a Seller or the Servicer is required to repurchase a
Mortgage Loan pursuant to Sections 2.04, 3.04 and/or 7.02, the Servicer's
right to such reimbursement shall be subsequent and subordinate to the
payment to the Purchaser of the applicable Repurchase Price and all other
amounts required to be paid to the Purchaser with respect to such Mortgage
Loan;
5) to pay to itself, solely out of the interest portion of the Monthly Payment
actually received with respect to a Mortgage Loan during the period ending
on the most recent Determination Date, the Servicing Fee with respect to
such Mortgage Loan;
6) to pay to itself as additional servicing compensation (a) any interest
earned on funds in the Collection Account (all such interest to be
withdrawn monthly not later than each Remittance Date) and (b) any
prepayment penalties or premiums relating to any Principal Prepayments;
provided that no such amounts shall be payable as servicing compensation to
the extent they relate to a Mortgage Loan with respect to which a default,
breach, violation, or event of acceleration exists or would exist but for
the lapse of time, the giving of notice, or both;
7) to pay to itself with respect to each Mortgage Loan that has been
repurchased pursuant to Sections 2.04, 3.04 and/or 7.02 all amounts
received thereon and not distributed as of the date on which the related
Repurchase Price is determined (except to the extent that such amounts
constitute part of the Repurchase Price to be remitted to the Purchaser);
34
8) to remove any amounts deposited into the Collection Account in error; and
9) to clear and terminate the Collection Account upon the termination of this
Agreement, with any funds contained therein to be distributed in accordance
with the terms of this Agreement.
10) The Servicer shall keep and maintain a separate, detailed accounting, on a
Mortgage Loan-by-Mortgage Loan basis, for the purpose of justifying any
withdrawal from the Collection Account pursuant to this Section.
Section 5.06 Establishment of Escrow Accounts; Deposits in Escrow.
The Servicer shall segregate and hold all funds collected and received
pursuant to each Mortgage Loan which constitute Escrow Payments separate and
apart from any of its own funds and general assets and shall establish and
maintain one or more Escrow Accounts, in the form of time deposit or demand
accounts. The creation of any Escrow Account shall be evidenced by a
certification in the form shown on Exhibit 5.06-1 attached hereto, in the case
of an account established with the Servicer, or a letter agreement in the form
shown on Exhibit 5.06-2 attached hereto, in the case of an account held by a
depository other than the Servicer, such depository having been consented to by
the Purchaser. In either case, a copy of such certification or letter agreement
shall be furnished to the Purchaser.
The Servicer shall deposit in each Escrow Account on a daily basis, and
retain therein, (i) all Escrow Payments collected on account of the related
Mortgage Loans for the purpose of effecting timely payment of any such items as
required under the terms of this Agreement, and (ii) all Insurance Proceeds
which are to be applied to the restoration or repair of any Mortgaged Property.
The Servicer shall make withdrawals therefrom only to effect such payments as
are required under Sections 5.07 and/or 5.08. The Servicer shall be entitled to
retain any interest paid on funds deposited in the Escrow Account by the
depository institution other than interest on escrowed funds required by law to
be paid to the Mortgagor and, to the extent required by law, the Servicer shall
pay interest on escrowed funds to the Mortgagor notwithstanding that the Escrow
Account is non-interest bearing or that interest paid thereon is insufficient
for such purposes, without any right of reimbursement therefor. The Servicer
shall be responsible for ensuring that the administrator of the Escrow Account
complies with all applicable laws, and shall indemnify and hold the Purchaser
harmless with respect to the administration of such Accounts.
35
Section 5.07 Permitted Withdrawals From Escrow Accounts.
Withdrawals from any Escrow Account may be made by the Servicer only
(i) to effect timely payments of ground rents, taxes, assessments, water rates,
hazard insurance premiums, Primary Insurance Policy premiums, if applicable, and
comparable items constituting Escrow Payments for the related Mortgage, (ii) to
reimburse the Servicer for any Servicing Advance made by the Servicer with
respect to a related Mortgage Loan but only from amounts received on the related
Mortgage Loan that represent late payments or collections of Escrow Payments
thereunder, (iii) to refund to the Mortgagor any funds as may be determined to
be overages, (iv) if permitted by applicable law, for transfer to the Collection
Account in accordance with the terms of this Agreement, (v) for application to
restoration or repair of the Mortgaged Property in accordance with the terms of
the related Mortgage Loan, (vi) to pay to the Servicer, or to the Mortgagor to
the extent required by law, any interest paid on the funds deposited in the
Escrow Account, (vii) to reimburse a Mortgagor in connection with the making of
the Payoff of the related Mortgage Loan or the termination of all or part of the
escrow requirement in connection with the Mortgage Loan, (viii) to remove any
amounts deposited into the Escrow Account in error; or (ix) to clear and
terminate the Escrow Account on the termination of this Agreement.
Section 5.08 Payment of Taxes, Insurance and Other Charges; Maintenance of
Primary Insurance Policies; Collections Thereunder.
With respect to each Mortgage Loan, the Servicer shall maintain
accurate records reflecting the status of ground rents, taxes, assessments,
water rates and other charges which are or may become a lien upon the Mortgaged
Property and the status of Primary Insurance Policy premiums and fire and hazard
insurance coverage and shall obtain, from time to time, all bills for the
payment of such charges, including renewal premiums, and shall effect payment
thereof prior to the applicable penalty or termination date and at a time
appropriate for securing maximum discounts allowable, employing for such purpose
deposits of the Mortgagor in the Escrow Account which shall have been estimated
and accumulated by the Servicer in amounts sufficient for such purposes, as
allowed under the terms of the Mortgage and applicable law. If a Mortgage does
not provide for Escrow Payments, then the Servicer shall require that any such
payments be made by the Mortgagor at the time they first become due. The
Servicer assumes full responsibility for the timely payment of all such bills
and shall effect timely payments of all such bills irrespective of the
Mortgagor's faithful performance in the payment of same or the making of the
Escrow Payments and shall make advances from its own funds to effect such
payments but shall be entitled to reimbursement thereof in accordance with the
terms of this Agreement.
36
The Servicer shall maintain in full force and effect a Primary
Insurance Policy, conforming in all respects to the description set forth in
Section 3.03(29), issued by an insurer described in that Section, with respect
to each Mortgage Loan for which such coverage is required. Such coverage will be
maintained until the Loan-to-Value Ratio of the related Mortgage Loan is reduced
to 75% or less in the case of a Mortgage Loan having a Loan-to-Value Ratio at
origination in excess of 80% or until such time, if any, as such insurance is
required to be released in accordance with the provisions of applicable law
including, but not limited to, the Homeowners Protection Act of 1998. The
Servicer shall assure that all premiums due under any Primary Insurance Policy
are paid in a timely manner, but, shall be entitled to reimbursement pursuant to
the terms of this Agreement for premiums paid by the Servicer on behalf of any
Mortgagor who is obligated to pay such premiums but fails to do so. The Servicer
shall not cancel or refuse to renew any Primary Insurance Policy in effect on
the Closing Date that is required to be kept in force under this Agreement
unless a replacement Primary Insurance Policy for such canceled or nonrenewed
policy is obtained from and maintained with an insurer that satisfies the
standards set forth in Section 3.03. The Servicer shall not take any action
which would result in noncoverage under any applicable Primary Insurance Policy
of any loss which, but for the actions of the Servicer, would have been covered
thereunder. In connection with any assumption or substitution agreement entered
into or to be entered into pursuant to Section 7.01, the Servicer shall promptly
notify the insurer under the related Primary Insurance Policy, if any, of such
assumption or substitution of liability in accordance with the terms of such
policy and shall take all actions which may be required by such insurer as a
condition to the continuation of coverage under the Primary Insurance Policy. If
such Primary Insurance Policy is terminated as a result of such assumption or
substitution of liability, then the Servicer shall obtain, and, except as
otherwise provided above, maintain, a replacement Primary Insurance Policy as
provided above.
In connection with its activities as servicer, the Servicer agrees to
prepare and present, on behalf of itself and the Purchaser, claims to the
insurer under any Primary Insurance Policy in a timely fashion in accordance
with the terms of such policies and, in this regard, to take such action as
shall be necessary to permit recovery under any Primary Insurance Policy
respecting a defaulted Mortgage Loan. Pursuant to Section 5.04, any amounts
collected by the Servicer under any Primary Insurance Policy shall be deposited
in the Collection Account, subject to withdrawal in accordance with Section
5.05.
Section 5.09 Transfer of Accounts.
The Servicer may transfer the Collection Account or any Escrow Account
to a different depository institution from time to time; provided that (i) no
such transfer shall be made unless all certifications or letter agreements
required under Section 5.04 have been executed and delivered by the parties
thereto; and (ii) concurrently upon any such transfer, the Servicer shall give
written notice thereof to the Purchaser. Notwithstanding anything to the
contrary contained herein, the Collection Account and each Escrow Account shall
at all times constitute Eligible Accounts.
Section 5.10 Maintenance of Hazard Insurance.
The Servicer shall cause to be maintained for each Mortgage Loan
fire and hazard insurance with extended coverage as is customary in the area
where the Mortgaged Property is located in an amount that is at least equal to
the lesser of (a) the maximum insurable value of the improvements securing such
Mortgage Loan and (b) the greater of (1) the Unpaid Principal Balance of such
Mortgage Loan or (2) an amount such that the proceeds thereof shall be
sufficient to prevent the Mortgagor and/or the loss payee from becoming a
co-insurer.
37
If any Mortgaged Property is in an area identified by the Federal
Emergency Management Agency as having special flood hazards and such flood
insurance has been made available, then the Servicer will cause to be maintained
a flood insurance policy meeting the requirements of the current guidelines of
the National Flood Insurance Program with a generally acceptable insurance
carrier, in an amount representing coverage not less than the lesser of (a) the
outstanding principal balance of the related Mortgage Loan or (b) the maximum
amount of insurance which is available under the Flood Disaster Protection Act
of 1973, as amended.
The Servicer shall also maintain on each REO Property fire, hazard and
liability insurance, and to the extent required and available under the Flood
Disaster Protection Act of 1973, as amended, flood insurance with extended
coverage in an amount which is at least equal to the lesser of (a) the maximum
insurable value of the improvements which are a part of such property and (b)
the outstanding principal balance of the related Mortgage Loan at the time it
became an REO Property plus accrued interest at the Note Rate and related
Servicing Advances.
All such policies shall be endorsed with standard mortgagee clauses
with loss payable to the Servicer, or upon request to the Purchaser, and shall
provide for at least 30 days prior written notice of any cancellation, reduction
in the amount of, or material change in, coverage to the Servicer. The Servicer
shall not interfere with the Mortgagor's freedom of choice in selecting either
his insurance carrier or agent, provided that the Servicer shall not accept any
such insurance policies from insurance companies unless such companies (a)
currently reflect (1) a general policyholder's rating of B+ or better and a
financial size category of III or better in Best's Key Rating Guide, or (2) a
general policyholder's rating of "A" or "A-" or better in Best's Key Rating
Guide, and (b) are licensed to do business in the state wherein the related
Mortgaged Property is located. Notwithstanding the foregoing, the Servicer may
accept a policy underwritten by Lloyd's of London or, if it is the only coverage
available, coverage under a state's Fair Access to Insurance Requirement (FAIR)
Plan. If a hazard policy becomes in danger of being terminated, or the insurer
ceases to have the ratings noted above, the Servicer shall notify the Purchaser
and the related Mortgagor, and shall use its best efforts, as permitted by
applicable law, to obtain from another qualified insurer a replacement hazard
insurance policy substantially and materially similar in all respects to the
original policy. In no event, however, shall a Mortgage Loan be without a hazard
insurance policy at any time, subject only to Section 5.11.
Pursuant to Section 5.04, any amounts collected by the Servicer under
any such policies other than amounts to be deposited in the Escrow Account and
applied to the restoration or repair of the Mortgaged Property or REO Property,
or released to the Mortgagor in accordance with the Servicer's normal servicing
procedures, shall be deposited in the Collection Account within one Business Day
after receipt, subject to withdrawal in accordance with Section 5.05. Any cost
incurred by the Servicer in maintaining any such insurance shall not, for the
purpose of calculating remittances to the Purchaser, be added to the unpaid
principal balance of the related Mortgage Loan, notwithstanding that the terms
of such Mortgage Loan so permit.
It is understood and agreed that no earthquake or other additional
insurance need be required by the Servicer of the Mortgagor or maintained on
property acquired in respect of the Mortgage Loan, other than pursuant to such
applicable laws and regulations as shall at any time be in force and as shall
require such additional insurance.
38
Section 5.11 Maintenance of Mortgage Impairment Insurance Policy.
If the Servicer obtains and maintains a blanket policy issued by an
issuer that has a Best's Key rating of A+:V insuring against hazard losses on
all of the Mortgage Loans, then, to the extent such policy provides coverage in
an amount equal to the amount required pursuant to Section 5.10 and otherwise
complies with all other requirements of Section 5.10, it shall conclusively be
deemed to have satisfied its obligations as set forth in Section 5.10, it being
understood and agreed that such policy may contain a deductible clause, in which
case the Servicer shall, if there shall not have been maintained on the related
Mortgaged Property or REO Property a policy complying with Section 5.10 and
there shall have been one or more losses which would have been covered by such
policy, deposit in the Collection Account the amount not otherwise payable under
the blanket policy because of such deductible clause; provided that the Servicer
shall not be entitled to obtain reimbursement therefor. In connection with its
activities as servicer of the Mortgage Loans, the Servicer agrees to prepare and
present, on behalf of the Purchaser, claims under any such blanket policy in a
timely fashion in accordance with the terms of such policy. Upon request of the
Purchaser, the Servicer shall cause to be delivered to the Purchaser a certified
true copy of such policy and a statement from the insurer thereunder that such
policy shall in no event be terminated or materially modified without 30 days'
prior written notice to the Purchaser.
39
Section 5.12 Fidelity Bond; Errors and Omissions Insurance.
The Servicer shall maintain, at its own expense, a blanket fidelity
bond and an errors and omissions insurance policy, with broad coverage with
responsible companies that would meet the requirements of FNMA and FHLMC on all
officers, employees or other Persons acting in any capacity with regard to the
Mortgage Loan to handle funds, money, documents and papers relating to the
Mortgage Loans. The Fidelity Bond and errors and omissions insurance shall be in
the form of the "Mortgage Banker's Blanket Bond" and shall protect and insure
the Servicer against losses, including losses arising by virtue of any Mortgage
Loan not being satisfied in accordance with the procedures set forth in Section
7.02 and/or losses resulting from or arising in connection with forgery, theft,
embezzlement, fraud, errors and omissions and negligent acts of or by such
Persons. Such Fidelity Bond shall also protect and insure the Servicer against
losses in connection with the failure to maintain any insurance policies
required pursuant to this Agreement and the release or satisfaction of a
Mortgage Loan without having obtained payment in full of the indebtedness
secured thereby. No provision of this Section 5.12 requiring the Fidelity Bond
and errors and omissions insurance shall diminish or relieve the Servicer from
its duties and obligations as set forth in this Agreement. The minimum coverage
under any such bond and insurance policy shall be at least equal to the
corresponding amounts required by FNMA in the FNMA Guide and by FHLMC in the
FHLMC Servicing Guide. The Servicer shall cause to be delivered to the Purchaser
on or before the Closing Date: (i) a certified true copy of the Fidelity Bond
and insurance policy; (ii) a written statement from the surety and the insurer
that such Fidelity Bond or insurance policy shall in no event be terminated or
materially modified without 30 days prior written notice to the Purchaser; and
(iii) written evidence reasonably satisfactory to the Purchaser that such
Fidelity Bond or insurance policy provides that the Purchaser is a beneficiary
or loss payee thereunder.
Section 5.13 Management of REO Properties.
If title to any Mortgaged Property is acquired in foreclosure or by deed in lieu
of foreclosure (each, an "REO Property"), the deed or certificate of sale shall
be taken in the name of the Purchaser or the Person (which may be the Servicer
for the benefit of the Purchaser) designated by the Purchaser, or in the event
the Purchaser or such Person is not authorized or permitted to hold title to
real property in the state where the REO Property is located, or would be
adversely affected under the "doing business" or tax laws of such state by so
holding title, the deed or certificate of sale shall be taken in the name of
such Person or Persons as shall be consistent with an opinion of counsel
obtained by the Servicer from an attorney duly licensed to practice law in the
state where the REO Property is located. The Servicer (acting alone or through a
subservicer), on behalf of the Purchaser, shall, subject to Section
5.01(iii)(c), dispose of any REO Property pursuant to Section 5.14. Unless an
appraisal prepared by an MAI Appraiser who is Independent in accordance with the
provisions of 12 C.F.R. 225.65 shall have been obtained in connection with the
acquisition of such REO Property, promptly following any acquisition by the
Purchaser (through the Servicer) of an REO Property, the Servicer shall obtain a
narrative appraisal thereof (at the expense of the Purchaser) in order to
determine the fair market value of such REO Property. The Servicer shall
promptly notify the Purchaser of the results of such appraisal. The Servicer
shall also cause each REO Property to be inspected promptly upon the acquisition
of title thereto and shall cause each REO Property to be inspected at least
annually thereafter, and Servicer shall be entitled to be reimbursed for
expenses in connection therewith in accordance with this Agreement. The Servicer
shall make or cause to be made a written report of each such inspection. Such
reports shall be retained in the Servicer's Mortgage File and copies thereof
shall be forwarded by the Servicer to the Purchaser. The Servicer shall also
furnish to the Purchaser the applicable reports required under Section 8.01.
40
Notwithstanding anything to the contrary contained herein, if a REMIC election
has been or is to be made with respect to the arrangement under which the
Mortgage Loans and the REO Properties are held, then the Servicer shall manage,
conserve, protect and operate each REO Property in a manner that does not cause
such REO Property to fail to qualify as "foreclosure property" within the
meaning of Section 86OG(a)(8) of the Code or result in the receipt by such REMIC
of any "income from non-permitted assets" within the meaning of Section
86OF(a)(2)(B) or any "net income from foreclosure property" within the meaning
of Section 86OG(c)(2) of the Code (or comparable provisions of any successor or
similar legislation).
The Servicer shall deposit and hold all revenues and funds collected and
received in connection with the operation of each REO Property in the Collection
Account, and the Servicer shall account separately for revenues and funds
received or expended with respect to each REO Property.
The Servicer shall have full power and authority, subject only to the specific
requirements and prohibitions of this Agreement (and, in particular, Section
5.01(iii)(c)), to do any and all things in connection with any REO Property as
are consistent with the servicing standards set forth in Section 5.01. In
connection therewith, the Servicer shall deposit or cause to be deposited on a
daily basis in the Collection Account all revenues and collections received or
collected by it with respect to each REO Property, including all proceeds of any
REO Disposition. Subject to Section 5.15(iv), the Servicer shall withdraw
(without duplication) from the Collection Account, but solely from the revenues
and collections received or collected by it with respect to a specific REO
Property, such funds necessary for the proper operation, management and
maintenance of such REO Property, including the following:
(1) all insurance premiums due and payable in respect of such REO Property;
(2) all real estate taxes and assessments in respect of such REO Property that
may result in the imposition of a lien thereon;
(3) all customary and reasonable costs and expenses necessary to maintain,
repair, appraise, evaluate, manage or operate such REO Property (including the
customary and reasonable costs incurred by any "managing agent" retained by the
Servicer in connection with the maintenance, management or operation of such REO
Property);
(4) all reasonable costs and expenses of restoration improvements, deferred
maintenance and tenant improvements; and
(5) all other reasonable costs and expenses, including reasonable attorneys'
fees, that the Servicer may suffer or incur in connection with its performance
of its obligations under this Section (other than costs and expenses that the
Servicer is expressly obligated to bear pursuant to this Agreement).
41
To the extent that amounts on deposit in the Collection Account are insufficient
for the purposes set forth in clauses (a) through (e) above, the Servicer shall,
subject to Section 6.04, advance the amount of funds required to cover the
shortfall with respect thereto. The Servicer shall promptly notify the Purchaser
in writing of any failure by the Servicer to make a Servicing Advance of the
type specified in clauses (a) or (b) above (irrespective of whether such
Servicing Advance is claimed to be non-recoverable by the Servicer pursuant to
Section 6.04).
Following the consummation of an REO Disposition, the Servicer shall remit to
the Purchaser, in accordance with Section 6.01, any proceeds from such REO
Disposition in the Collection Account following the payment of all expenses and
Servicing Advances relating to the subject REO Property.
Section 5.14 Sale of Specially Serviced Mortgage Loans and REO Properties.
Subject to Section 5.01 (and, specifically, Section 5.01(iii)(c)) and Section
5.15, the Servicer shall offer to sell any REO Property no later than the time
determined by the Servicer to be sufficient to result in the sale of such REO
Property on or prior to the purchase date specified in Section 5.15(iii). In
accordance with the servicing standards set forth in Section 5.01, the Servicer
shall solicit bids and offers from Persons for the purchase of any Specially
Serviced Mortgage Loan or REO Property and, upon receipt thereof, promptly (but
in any event within 3 Business Days) present such bids and offers to the
Purchaser. The Servicer shall not accept any bid or offer for any Specially
Serviced Mortgage Loan or REO Property except in compliance with Section
5.01(iii)(c). The Purchaser may reject any bid or offer if the Purchaser
determines the rejection of such bid or offer would be in the best interests of
the Purchaser. If the Purchaser rejects any bid or offer, the Servicer shall, if
appropriate, seek an extension of the 2 year period referred to in Section 5.15.
Subject to Section 5.01 (and, specifically, Section 5.01(iii)(c)) and Section
5.15, the Servicer shall act on behalf of the Purchaser in negotiating and
taking any other action necessary or appropriate in connection with the sale of
any Specially Serviced Mortgage Loan or REO Property, including the collection
of all amounts payable in connection therewith. The terms of sale of any
Specially Serviced Mortgage Loan or REO Property shall be in the sole discretion
of the Purchaser. Any sale of a Specially Serviced Mortgage Loan or any REO
Disposition shall be without recourse to, or representation or warranty by, the
Purchaser or the Servicer, and, if consummated in accordance with the terms of
this Agreement, then the Servicer shall have no liability to the Purchaser with
respect to the purchase price therefor accepted by the Purchaser. The proceeds
of any sale after deduction of the expenses of such sale incurred in connection
therewith shall be promptly deposited in (a) if such sale is an REO Disposition,
in the Collection Account in accordance with Section 5.13 and (b) in any other
circumstance, the Collection Account in accordance with Section 5.04.
42
Section 5.15 Realization Upon Specially Serviced Mortgage Loans and REO
Properties.
Subject to Section 5.01(iii)(c), the Servicer shall foreclose upon or otherwise
comparably convert the ownership of properties securing such of the Specially
Serviced Mortgage Loans as come into and continue in default and as to which (a)
in the reasonable judgment of the Servicer, no satisfactory arrangements can, in
accordance with prudent lending practices, be made for collection of delinquent
payments pursuant to Section 5.01 and (b) such foreclosure or other conversion
is otherwise in accordance with Section 5.01. The Servicer shall with reasonable
efforts, notify the Purchaser before initiating any foreclosure or comparable
proceedings. The Servicer shall not be required to expend its own funds in
connection with any foreclosure or towards the restoration, repair, protection
or maintenance of any property unless it shall determine that such expenses will
be recoverable to it as Servicing Advances either through Liquidation Proceeds
or through Insurance Proceeds (in accordance with Section 5.05) or from any
other source relating to the Specially Serviced Mortgage Loan. The Servicer
shall be required to advance funds for all other costs and expenses incurred by
it in any such foreclosure proceedings; provided that it shall be entitled to
reimbursement thereof from the proceeds of liquidation of the related Mortgaged
Property, as contemplated by Section 5.05.
Upon any Mortgaged Property becoming an REO Property, the Servicer shall
promptly notify the Purchaser thereof, specifying the date on which such
Mortgaged Property became an REO Property. Pursuant to its efforts to sell such
REO Property, the Servicer shall, either itself or through an agent selected by
it, protect and conserve such REO Property in accordance with the servicing
standards set forth in Section 5.01 and may, subject to Section 5.01(iii)(c) and
incident to its conservation and protection of the interests of the Purchaser,
rent the same, or any part thereof, for the period to the sale of such REO
Property.
Notwithstanding anything to the contrary contained herein, the Purchaser shall
not, and the Servicer shall not on the Purchaser's behalf, acquire any real
property (or personal property incident to such real property) except in
connection with a default or a default that is imminent on a Mortgage Loan. If
the Purchaser acquires any real property (or personal property incident to such
real property) in connection with such a default, then such property shall be
disposed of by the Servicer in accordance with this Section and Section 5.14 as
soon as possible but in no event later than 2 years after its acquisition by the
Servicer on behalf of the Purchaser, unless the Servicer obtains, at the expense
of the Purchaser, in a timely fashion an extension from the Internal Revenue
Service for an additional specified period.
Any recommendation of the Servicer to foreclose on a defaulted Mortgage Loan
shall be subject to a determination by the Servicer that the proceeds of such
foreclosure would exceed the costs and expenses of bringing such a proceeding.
The income earned from the management of any REO Property, net of reimbursement
to the Servicer for Servicing Advances and fees for work-out compensation in
accordance with the FHLMC Servicing Guide, incurred with respect to such REO
Property under Section 5.13, shall be applied to the payment of the costs and
expenses set forth in Section 5.13(iv), with any remaining amounts to be
promptly deposited in the Collection Account in accordance with Section 5.13.
43
If, in the exercise of its servicing obligations with respect to any Mortgaged
Property hereunder, the Servicer deems it is necessary or advisable to obtain an
Environmental Assessment, then the Servicer shall so obtain an Environmental
Assessment, it being understood that all reasonable costs and expenses incurred
by the Servicer in connection with any such Environmental Assessment (including
the cost thereof) shall be deemed to be Servicing Advances recoverable by the
Servicer pursuant to Section 5.13(iv). Such Environmental Assessment shall (a)
assess whether (1) such Mortgaged Property is in material violation of
applicable Environmental Laws or (2) after consultation with an environmental
expert, taking the actions necessary to comply with applicable Environmental
Laws is reasonably likely to produce a greater recovery on a net present value
basis than not taking such actions, and (b) identify whether (1) any
circumstances are present at such Mortgaged Property relating to the use,
management or disposal of any hazardous materials for which investigation,
testing, monitoring, containment, clean-up or remediation could be required
under any federal, state or local law or regulation, or (2) if such
circumstances exist, after consultation with an environmental expert, taking
such actions is reasonably likely to produce a greater recovery on a present
value basis than not taking such actions. (The conditions described in the
immediately preceding clauses (a) and (b) shall be referred to herein as
"Environmental Conditions Precedent to Foreclosure.") If any such Environmental
Assessment so warrants, the Servicer is hereby authorized to and shall perform
such additional environmental testing as it deems necessary and prudent to
establish the satisfaction of the foregoing Environmental Conditions Precedent
to Foreclosure or to proceed in accordance with Subsection (vi) or (vii), as the
case may be, below (such additional testing thereafter being included in the
term "Environmental Assessment").
If an Environmental Assessment deemed necessary or advisable by the Servicer in
accordance with Subsection (v) of this Section 5.15 establishes that any of the
Environmental Conditions Precedent to Foreclosure is not satisfied with respect
to any Mortgaged Property, but the Servicer in good faith reasonably believes
that it is in the best economic interest of the Purchaser to proceed against
such Mortgaged Property and, if title thereto is acquired, to take such
remedial, corrective or other action with respect to the unsatisfied condition
or conditions as may be prescribed by applicable law to satisfy such condition
or conditions, then the Servicer shall so notify the Purchaser. If, pursuant to
Section 5.01(iii)(c), the Purchaser has notified the Servicer in writing to
proceed against such Mortgaged Property, then the Servicer shall so proceed. The
cost of any remedial, corrective or other action contemplated by the preceding
sentence in respect of any of the Environmental Conditions Precedent to
Foreclosure that is not satisfied shall not be an expense of the Servicer and
the Servicer shall not be required to expend or risk its own funds or otherwise
incur any financial liability in connection with any such action.
If an Environmental Assessment deemed necessary or advisable by the Servicer in
accordance with Subsection (v) of this Section 5.15 establishes that any of the
Environmental Conditions Precedent to Foreclosure is not satisfied with respect
to any Mortgaged Property and, in accordance with Section 5.01(iii)(c), the
Purchaser elects or is deemed to have elected not to proceed against such
Mortgaged Property, then the Servicer shall, subject to Section 5.01(iii)(c),
take such action as it deems to be in the best economic interest of the
Purchaser (other than proceeding against the Mortgaged Property or directly or
indirectly becoming the owner or operator thereof) as determined in accordance
with the servicing standard set forth in Section 5.01 and is hereby authorized
at such time as it deems appropriate to release such Mortgaged Property from the
lien of the related Mortgage.
44
Prior to the Servicer taking any action with respect to the use, management or
disposal of any hazardous materials on any Mortgaged Property, the Servicer
shall request the approval of the Purchaser in accordance with Section
5.01(iii)(c) and, if such action is approved by the Purchaser, (a) keep the
Purchaser apprised of the progress of such action; and (b) take such action in
compliance with all applicable Environmental Laws.
Section 5.16 Investment of Funds in the Collection Account.
The Servicer may direct any depository institution which holds a Collection
Account to invest the funds in the Collection Account in one or more Permitted
Investments bearing interest. All such Permitted Investments shall be held to
maturity, unless payable on demand. In the event amounts on deposit in the
Collection Account are at any time invested in a Permitted Investment payable on
demand, the Servicer shall:
(a) consistent with any notice required to be given thereunder, demand
that payment thereon be made on the last day such Permitted Investment
may otherwise mature hereunder in an amount equal to the lesser of (1)
all amounts then payable thereunder and (2) the amount required to be
withdrawn on such date; and
(b) demand payment of all amounts due thereunder promptly upon
determination by the Servicer or notice from the Purchaser that such
Permitted Investment would not constitute a Permitted Investment in
respect of funds thereafter on deposit in the Collection Account.
All income and gain realized from investment of funds deposited in the
Collection Account shall be for the benefit of the Servicer and shall be subject
to its withdrawal in accordance with Section 5.05. The Servicer shall deposit in
the Collection Account the amount of any loss incurred in respect of any
Permitted Investment immediately upon realization of such loss.
Except as otherwise expressly provided in this Agreement, if any default occurs
in the making of a payment due under any Permitted Investment, or if a default
occurs in any other performance required under any Permitted Investment, the
Purchaser may elect to take such action, or instruct the Servicer to take such
action, as may be appropriate to enforce such payment or performance, including
the institution and prosecution of appropriate proceedings, at the expense of
the Servicer.
45
ARTICLE V: REPORTS; REMITTANCES; ADVANCES
Section 6.01 Remittances.
(1) On each Remittance Date, the Servicer shall remit to the Purchaser (a) all
amounts credited to the Collection Account as of the close of business on the
preceding Determination Date (including (1) the amount of any Payoff, together
with interest thereon at the related Remittance Rate to the date of prepayment
of the related Mortgage Loan and (2) all proceeds of any REO Disposition net of
amounts payable to the Servicer pursuant to Section 5.13), net of charges
against or withdrawals from the Collection Account in accordance with Section
5.05, which charges against or withdrawals from the Collection Account the
Servicer shall make solely on such Remittance Date, plus (b) all Monthly
Advances, if any, which the Servicer is obligated to remit pursuant to Section
6.03; provided that the Servicer shall not be required to remit, until the next
following Remittance Date, any amounts attributable to Monthly Payments
collected but due on a Due Date or Dates subsequent to the preceding
Determination Date.
(2) All remittances made to the Purchaser on each Remittance Date will be made
to the Purchaser by wire transfer of immediately available funds accordingly to
the instructions that will be provided by Purchaser to the Servicer.
(3) With respect to any remittance received by the Purchaser after the Business
Day on which such payment was due, the Servicer shall pay to the Purchaser
interest on any such late payment at an annual rate equal to the rate of
interest as is publicly announced from time to time by Citibank, N.A., New York,
New York, as its prime lending rate, adjusted as of the date of each change,
plus two percentage points, but in no event greater than the maximum amount
permitted by applicable law. Such interest shall be paid by the Servicer to the
Purchaser on the date such late payment is made and shall cover the period
commencing with the Business Day on which such payment was due and ending with
the Business Day on which such payment is made, both inclusive. Such interest
shall be remitted along with such late payment. Neither the payment by the
Servicer nor the acceptance by the Purchaser of any such interest shall be
deemed an extension of time for payment or a waiver by the Purchaser of any
Event of Default.
Section 6.02 Reporting.
On or before the 5th calendar day (or, if such day is not a Business
Day, on the immediately succeeding Business Day) of each month during the term
hereof, the Servicer shall deliver to the Purchaser monthly accounting reports
in the form of Exhibits 6.02(a) through 6.02(g) attached hereto with respect to
the most recently ended Monthly Period. Such monthly accounting reports shall
include information as to the aggregate Unpaid Principal Balance of all Mortgage
Loans, the scheduled amortization of all Mortgage Loans, any delinquencies and
the amount of any Principal Prepayments as of the most recently ended Record
Date. The Purchaser may assess penalty fees in accordance with FNMA guidelines
for late or incorrect reporting.
46
The Servicer shall provide the Purchaser with such information
concerning the Mortgage Loans as is necessary for the Purchaser to prepare its
federal income tax return as the Purchaser may reasonably request from time to
time.
Section 6.03 Monthly Advances by the Servicer.
(1) Not later than the close of business on the Business Day immediately
preceding each Remittance Date, the Servicer shall deposit in the Collection
Account an amount equal to all Monthly Payments not previously advanced by the
Servicer (with interest adjusted to the Remittance Rate) that were due on a
Mortgage Loan and delinquent at the close of business on the related
Determination Date. The Servicer may reduce the total amount to be deposited in
the Collection Account as required by the foregoing sentence by the amount of
funds in the Collection Account which represent Prepaid Monthly Payments.
(2) The Servicer's obligations to make Monthly Advances as to any Mortgage Loan
will continue through the last Monthly Payment due prior to the payment in full
of the Mortgage Loan, or through the Remittance Date prior to the Remittance
Date for the remittance of all Liquidation Proceeds and other payments or
recoveries (including Insurance Proceeds or Condemnation Proceeds) with respect
to the Mortgage Loan; provided that such obligation shall cease if any Monthly
Payment due under a Mortgage Loan is delinquent for 120 days or more and the
Servicer at the time of the determination furnishes to the Purchaser an
Officers' Certificate evidencing the determination by the Servicer in accordance
with Section 6.04 that advances with respect to such Mortgage Loan are
non-recoverable.
47
Section 6.04 Non-recoverable Advances.
The determination by the Servicer that any Monthly Advance or Servicing
Advance, if made, would constitute a non-recoverable advance shall be evidenced
by an Officers' Certificate delivered to the Purchaser detailing the reasons for
such determination, with copies of a relevant appraisal by an MAI Appraiser who
is Independent and, if such reports are to be used to determine that any Monthly
Advance or Servicing Advance would be a non-recoverable advance, all engineers'
reports, environmental reports or other information relevant thereto that
support such determination. Such Officers' Certificate shall set forth the
Servicer's considerations in reaching its conclusion that such advance is
non-recoverable, and such conclusion shall be based upon, in addition to the
above-described appraisal and reports, income and expense statements, rent
rolls, occupancy, property inspections, servicer inquiries and other information
of similar nature that support the Servicer's conclusion that such advance is
non-recoverable. The Purchaser shall have a period of 45 days following the
later of (i) the receipt by the Purchaser of such Officers' Certificate and all
documentation supplied by the Servicer relating thereto and (ii) the receipt by
the Purchaser of such other related documentation or information as shall have
been reasonably requested by the Purchaser within 30 days following the delivery
of such Officers' Certificate, to approve, by the exercise by the Purchaser of
its reasonable credit judgment, the subject Monthly Advance or Servicing Advance
as a non-recoverable advance. Only if the Purchaser has so approved any Monthly
Advance or Servicing Advance as non-recoverable shall the Servicer be entitled
to reimbursement for such non-recoverable advance (solely to the extent made) as
provided in Section 5.05 or Section 5.13, as applicable. The Servicer shall also
deliver to the Purchaser from time to time upon request copies of any appraisals
and other reports or information of the type described in this Section 6.04 that
it possesses relative to any Mortgaged Property.
Section 6.05 Itemization of Servicing Advances.
The Servicer shall provide the Purchaser with an itemization of all Servicing
Advances incurred or made by the Servicer hereunder not less than quarterly and
at such other times as the Purchaser may from time to time reasonably request.
ARTICLE VI: GENERAL SERVICING PROCEDURE
Section 7.01 Enforcement of Due-on-Sale Clauses, Assumption Agreements.
(1) The Servicer will, to the extent it has knowledge of any conveyance or
prospective conveyance by any Mortgagor of the Mortgaged Property (whether by
absolute conveyance or by contract of sale, and whether or not the Mortgagor
remains or is to remain liable under the Mortgage Note and/or the Mortgage),
exercise its rights to accelerate the maturity of such Mortgage Loan under any
"due-on-sale" clause applicable thereto; provided that the Servicer shall not
exercise any such rights if prohibited by law from doing so or if the exercise
of such rights would impair or threaten to impair any recovery under the related
Primary Insurance Policy, if any.
48
(2) If the Servicer is prohibited from enforcing such "due-on-sale" clause, then
the Servicer will enter into an assumption agreement with the Person to whom the
Mortgaged Property has been conveyed or is proposed to be conveyed, pursuant to
which such Person becomes liable under the Mortgage Note and, to the extent
permitted by applicable state law, the Mortgagor remains liable thereon. (For
purposes of this Section 7.01, the term "assumption" is deemed to also include a
sale of the Mortgaged Property subject to the Mortgage that is not accompanied
by an assumption or substitution of liability agreement.) If any Mortgage Loan
is to be assumed, then the Servicer shall inquire into the creditworthiness of
the proposed transferee and shall use the same underwriting criteria for
approving the credit of the proposed transferee that are used with respect to
underwriting mortgage loans of the same type as the Mortgage Loans. Where an
assumption is allowed, the Servicer, with the prior written consent of the
primary mortgage insurer, if any, and subject to the conditions of Section
7.01(iii), shall, and is hereby authorized to, enter into a substitution of
liability agreement with the Person to whom the Mortgaged Property is proposed
to be conveyed pursuant to which the original mortgagor is released from
liability and such Person is substituted as mortgagor and becomes liable under
the related Mortgage Note. Any such substitution of liability agreement shall be
in lieu of an assumption agreement. In no event shall the Note Rate, the amount
of the Monthly Payment or the final maturity date be changed. The Servicer shall
notify the Purchaser that any such substitution of liability or assumption
agreement has been completed by forwarding to the Purchaser the original of any
such substitution of liability or assumption agreement, which document shall be
added to the related Purchaser's Mortgage File and shall, for all purposes, be
considered a part of such Purchaser's Mortgage File to the same extent as all
other documents and instruments constituting a part thereof. Any fee collected
by the Servicer for entering into an assumption or substitution of liability
agreement shall be retained by the Servicer as additional compensation for
servicing the Mortgage Loans.
(3) If the credit of the proposed transferee does not meet such underwriting
criteria, then the Servicer shall, to the extent permitted by the Mortgage or
the Mortgage Note and by applicable law, accelerate the maturity of the Mortgage
Loan.
Section 7.02 Satisfaction of Mortgages and Release of Mortgage Files.
Upon the payment in full of any Mortgage Loan, the Servicer will
immediately notify the Purchaser by a certification of a Servicing Officer,
which certification shall include a statement to the effect that all amounts
received or to be received in connection with such payment which are required to
be deposited in the Collection Account pursuant to Section 5.04 have been or
will be so deposited and shall request delivery to it of the Purchaser's
Mortgage File held by the Purchaser. Upon receipt of such certification and
request, the Purchaser shall promptly release the related mortgage documents to
the Servicer and the Servicer shall promptly prepare and process any
satisfaction or release. No expense incurred in connection with any instrument
of satisfaction or deed of reconveyance shall be chargeable to the Collection
Account.
If the Servicer satisfies or releases a Mortgage without having
obtained payment in full of the indebtedness secured by the Mortgage, or should
it otherwise take such action which results in a reduction of the coverage under
the Primary Insurance Policy, if any, then the Servicer shall promptly give
written notice thereof to the Purchaser, and, within 10 Business Days following
written demand therefor from the Purchaser to the Servicer, the Servicer shall
repurchase the related Mortgage Loan by paying to the Purchaser the Repurchase
Price therefor by wire transfer of immediately available funds directly to the
Purchaser's Account.
49
From time to time and as appropriate for the servicing or foreclosure
of the Mortgage Loan, including for this purpose collection under any Primary
Insurance Policy, the Purchaser shall, upon request of the Servicer and delivery
to the Purchaser of a servicing receipt signed by a Servicing Officer, release
the Purchaser's Mortgage File held by the Purchaser to the Servicer. Such
servicing receipt shall obligate the Servicer to return the related Mortgage
documents to the Purchaser when the need therefor by the Servicer no longer
exists, unless the Mortgage Loan has been liquidated and the Liquidation
Proceeds relating to the Mortgage Loan have been deposited in the Collection
Account or the Purchaser's Mortgage File or such document has been delivered to
an attorney, or to a public trustee or other public official as required by law,
for purposes of initiating or pursuing legal action or other proceedings for the
foreclosure of the Mortgaged Property either judicially or nonjudicially, and
the Servicer has delivered to the Purchaser a certificate of a Servicing Officer
certifying as to the name and address of the Person to which such Purchaser's
Mortgage File or such document was delivered and the purpose or purposes of such
delivery. Upon receipt of a certificate of a Servicing Officer stating that such
Mortgage Loan was liquidated and the Liquidation Proceeds were deposited in the
Collection Account, the servicing receipt shall be released by the Purchaser to
the Servicer.
Section 7.03 Servicing Compensation.
As compensation for its services hereunder, the Servicer shall be
entitled to retain from interest payments on the Mortgage Loans the amounts
provided for as the Servicing Fee. The Servicing Fee in respect of a Mortgage
Loan for a particular month shall become payable only upon the receipt by the
Servicer from the Mortgagor of the full Monthly Payment in respect of such
Mortgage Loan. Additional servicing compensation in the form of assumption fees,
as provided in Section 7.01, late payment charges and other servicer
compensation for modifications, short sales, and other services not to exceed
those fees described in the FHLMC Servicing Guide shall be retained by the
Servicer to the extent not required to be deposited in the Collection Account.
The Servicer shall be required to pay all expenses incurred by it in connection
with its servicing activities hereunder and shall not be entitled to
reimbursement therefor except as specifically provided for herein.
Section 7.04 Annual Statement as to Compliance.
The Servicer will deliver to the Purchaser on or before March 31 of
each year, beginning with March 31, 2001, an Officers' Certificate stating that
(i) a review of the activities of the Servicer during the preceding calendar
year and of performance under this Agreement has been made under such officers'
supervision, (ii) the Servicer has fully complied with the provisions of this
Agreement and (iii) to the best of such officers' knowledge, based on such
review, the Servicer has fulfilled all of its obligations under this Agreement
throughout such year, or, if there has been a default in the fulfillment of any
such obligation, specifying each such default known to such officers and the
nature and status thereof.
50
Section 7.05 Annual Independent Certified Public Accountants' Servicing Report.
On or before March 31 of each year beginning March 31, 2001, the
Servicer at its expense shall cause a firm of independent public accountants
which is a member of the American Institute of Certified Public Accountants to
furnish a statement to the Purchaser to the effect that such firm has examined
certain documents and records relating to the servicing of the mortgage loans
generally that include a sampling of the Mortgage Loans, the provisions of
Article VI have been complied with and, on the basis of such an examination
conducted substantially in accordance with the Uniform Single Attestation
Program for Mortgage Bankers, such servicing has been conducted in compliance
with this Agreement, except for (i) such exceptions as such firm shall believe
to be immaterial, and (ii) such other exceptions as shall be set forth in such
statement.
Section 7.06 Purchaser's Right to Examine Servicer Records.
The Purchaser shall have the right to examine and audit, during
business hours or at such other times as are reasonable under applicable
circumstances, upon ten days advance notice any and all of (i) the credit and
other loan files relating to the Mortgage Loans or the Mortgagors, (ii) any and
all books, records, documentation or other information of the Servicer (whether
held by the Servicer or by another) relating to the servicing of the Mortgage
Loans and (iii) any and all books, records, documentation or other information
of the Servicer (whether held by the Servicer or by another) that are relevant
to the performance or observance by the Servicer of the terms, covenants or
conditions of this Agreement. The Servicer shall be obligated to make the
foregoing information available to the Purchaser at the site where such
information is stored; provided that the Purchaser shall be required to pay all
reasonable costs and expenses incurred by the Servicer in making such
information available.
ARTICLE VIII REPORTS TO BE PREPARED BY THE SERVICER
Section 8.01 The Servicer's Reporting Requirements.
Electronic Format. If requested by the Purchaser, the Servicer shall supply any
and all information regarding the Mortgage Loans and the REO Properties,
including all reports required to be delivered pursuant to this Section 5.03,
Section 6.02 and Section 8.01, to the Purchaser in electronic format reasonably
acceptable to Purchaser.
REO Property Reports. On or before the 3rd Business Day preceding each
Determination Date, the Servicer shall deliver to the Purchaser a report, in
form acceptable to Purchaser, describing in reasonable detail the Servicer's
efforts in connection with the sale of each REO Property and setting forth all
operating income (including rental income) and operating expenses pertaining to
each REO Property for the previous month, together with rent rolls, operating
statements, and such other information as is referenced on such report
pertaining to the REO Property.
51
Additional Reports; Further Assurances. On or before the 3rd Business Day
preceding each Determination Date, the Servicer shall deliver to the Purchaser
(i) a report, acceptable to the Purchaser, describing in reasonable detail all
Mortgage Loans that are 90 days or more delinquent and the Servicer's activities
in connection with such delinquencies and (ii) a report (substantially in the
form of Exhibit 8.01 attached hereto) with respect to delinquent Mortgage Loans.
Utilizing resources reasonably available to the Servicer without incurring any
cost except the Servicer's overhead and employees' salaries, the Servicer shall
furnish to the Purchaser during the term of this Agreement such periodic,
special or other reports, information or documentation, whether or not provided
for herein, as shall be reasonably requested by the Purchaser with respect to
Mortgage Loans or REO Properties (provided the Purchaser shall have given the
Servicer reasonable notice and opportunity to prepare such reports, information
or documentation), including any reports, information or documentation
reasonably required to comply with any regulations of any governmental agency or
body having jurisdiction over the Purchaser, all such reports or information to
be as provided by and in accordance with such applicable instructions and
directions as the Purchaser may reasonably request. If any of such reports are
not customarily prepared by the Servicer or require that the Servicer program
data processing systems to create the reports, then the Purchaser shall pay to
the Servicer a fee mutually agreed to by the Purchaser and the Servicer taking
into account the Servicer's actual time and cost in preparing such reports. The
Servicer agrees to execute and deliver all such instruments and take all such
action as the Purchaser, from time to time, may reasonably request in order to
effectuate the purposes and to carry out the terms of this Agreement.
Section 8.02 Financial Statements.
The Servicer understands that, in connection with marketing the
Mortgage Loans, the Purchaser may make available to any prospective purchaser of
the Mortgage Loans the Servicer's audited financial statements for its fiscal
year 1999 and its audited financial statements for fiscal year 1998, together
with any additional statements provided pursuant to the next sentence. During
the term hereof, the Servicer will deliver to the Purchaser audited financial
statements for each of its fiscal years following the Closing Date and all other
financial statements prepared following the Closing Date to the extent any such
statements are available upon request to the public at large.
The Servicer also agrees to make available upon reasonable notice and
during normal business hours to any prospective purchasers of the Mortgage Loans
a knowledgeable financial or accounting officer for the purpose of answering
questions respecting recent developments affecting the Servicer or the financial
statements of the Servicer which may affect, in any material respect, the
Servicer's ability to comply with its obligations under this Agreement, and to
permit any prospective purchasers upon reasonable notice and during normal
business hours to inspect the Servicer's servicing facilities for the purpose of
satisfying such prospective purchasers that the Servicer has the ability to
service the Mortgage Loans in accordance with this Agreement.
52
ARTICLE VII: THE SELLERS
Section 9.01 Indemnification; Third Party Claims.
Each Seller shall indemnify and hold harmless the Purchaser, its
directors, officers, agents, employees, and assignees (each, an "Indemnified
Party") from and against any costs, damages, expenses (including reasonable
attorneys' fees and costs, irrespective of whether or not incurred in connection
with the defense of any actual or threatened action, proceeding, or claim),
fines, forfeitures, injuries, liabilities or losses ("Losses") suffered or
sustained in any way by any such Person, no matter how or when arising
(including Losses incurred or sustained in connection with any judgment, award,
or settlement), in connection with or relating to (i) a breach by such Seller of
any of its representations and warranties contained in Article III or (ii) a
breach by such Seller of any of its covenants and other obligations contained
herein including any failure to service the Mortgage Loans in compliance with
the terms hereof. The applicable Seller shall immediately (i) notify the
Purchaser if a claim is made by a third party with respect to this Agreement,
any Mortgage Loan and/or any REO Property (ii) assume the defense of any such
claim and pay all expenses in connection therewith, including attorneys' fees,
and (iii) promptly pay, discharge and satisfy any judgment, award, or decree
that may be entered against it or the Indemnified Party in respect of such
claim. Nothing contained herein shall prohibit the Indemnified Party, at its
expense, from retaining its own counsel to assist in any such proceedings or to
observe such proceedings; provided that neither Seller shall be obligated to pay
or comply with any settlement to which it has not consented. All amounts
required to be paid or reimbursed by a Seller hereunder shall be paid or
reimbursed as and when incurred by the Indemnified Party upon demand therefor by
such Indemnified Party.
Section 9.02 Merger or Consolidation of the Seller.
Each Seller will keep in full effect its existence, rights and
franchises as a corporation or a Delaware business trust, as applicable, under
the laws of the state of its organization and will obtain and preserve its
qualification to do business as a foreign entity in each jurisdiction in which
such qualification is or shall be necessary to protect the validity and
enforceability of this Agreement or any of the Mortgage Loans and to perform its
duties under this Agreement.
Any Person into which a Seller may be merged or consolidated, or any
corporation resulting from any merger, conversion or consolidation (including by
means of the sale of all or substantially all of such Seller's assets to such
Person) to which the Seller shall be a party, or any Person succeeding to the
business of the Seller, shall be the successor of the Seller hereunder, without
the execution or filing of any paper or any further act on the part of any of
the parties hereto, anything herein to the contrary notwithstanding; provided
that, unless otherwise consented to by the Purchaser, the successor or surviving
Person, in the case of a merger or consolidation, etc. of the Servicer, shall be
an institution qualified to service mortgage loans on behalf of FNMA and FHLMC
in accordance with the requirements of Section 3.02(1), shall not cause a rating
on any security backed by a Mortgage Loan to be downgraded and shall satisfy the
requirements of Section 12.01 with respect to the qualifications of a successor
to such Seller.
53
Section 9.03 Limitation on Liability of the Sellers and Others.
Neither the Sellers nor any of the officers, employees or agents of the
Sellers shall be under any liability to the Purchaser for any action taken or
for refraining from the taking of any action in good faith pursuant to this
Agreement or pursuant to the express written instructions of the Purchaser, or
for errors in judgment made in good faith; provided that this provision shall
not protect the Sellers or any such Person against any breach of warranties or
representations made herein, or failure to perform its obligations in compliance
with any standard of care set forth in this Agreement, or any liability which
would otherwise be imposed by reasons of willful misfeasance, bad faith,
negligence or any breach in the performance of the obligations and duties
hereunder. The Sellers and any officer, employee or agent of the Sellers may
rely in good faith on any document of any kind reasonably believed by the
Sellers or such Person to be genuine and prima facie properly executed and
submitted by any Person respecting any matters arising hereunder.
The Sellers shall not be under any obligation to appear in, prosecute or defend
any legal action that is not incidental to their duties hereunder and which in
their opinion may involve them in any expense or liability; provided that the
Sellers may in their discretion undertake any such action that it may deem
necessary or desirable in respect of this Agreement and the rights and duties of
the parties hereto. In such event, the legal expenses and costs of such action
and any liability resulting therefrom shall be expenses, costs and liabilities
for which the Sellers shall be entitled to be reimbursed therefor out of the
Collection Account. This indemnity shall survive the termination of this
Agreement.
Section 9.04 Servicer Not to Resign.
With respect to the retention by Cendant Mortgage of the servicing of
the Mortgage Loans and the REO Properties hereunder, Cendant Mortgage
acknowledges that the Purchaser has acted in reliance upon Cendant Mortgage's
Independent status, the adequacy of its servicing facilities, plan, personnel,
records and procedures, its integrity, reputation and financial standing and the
continuance thereof. Consequently, Cendant Mortgage shall not assign the
servicing rights retained by it hereunder to any third party nor resign from the
obligations and duties hereby imposed on it except (i) with the approval of the
Purchaser, such approval not to be unreasonably withheld, or (ii) 3 Business
Days following any determination that its duties hereunder are no longer
permissible under applicable law and such incapacity cannot be cured by Cendant
Mortgage. Any determination permitting the transfer of the servicing rights or
the resignation of Cendant Mortgage under Subsection (ii) hereof shall be
evidenced by an opinion of counsel to such effect delivered to the Purchaser,
which opinion of counsel shall be in form and substance reasonably acceptable to
the Purchaser.
54
ARTICLE VIII: DEFAULT
Section 10.01 Events of Default.
In case one or more of the following events shall occur and be
continuing:
(1) any failure by the Servicer to remit to the Purchaser any payment required
to be made under the terms of this Agreement which continues unremedied for
a period of 3 Business Days unless such failure to remit is due to a cause
beyond the Servicer's control, including an act of God, act of civil,
military or governmental authority, fire, epidemic, flood, blizzard,
earthquake, riot, war, or sabotage, provided that the Servicer gives the
Purchaser notice of such cause promptly and uses its reasonable efforts to
correct such failure to remit and does so remit within 2 Business Days
following the end of the duration of the cause of such failure to remit; or
(2) any failure on the part of a Seller/Servicer duly to observe or perform in
any material respect any of the covenants or agreements on the part of such
Seller/Servicer set forth in this Agreement which continues unremedied for
a period of 60 days after the date on which written notice of such failure,
requiring the same to be remedied, shall have been given to the applicable
Seller/Servicer by the Purchaser; provided that such 60-day period shall
not begin with respect to any failure to cure or repurchase in accordance
with Sections 2.04 and/or 3.04 until the expiration of the cure periods
provided for in Sections 2.04 and/or 3.04, as applicable;
(3) any filing of an Insolvency Proceeding by or on behalf of a
Seller/Servicer, any consent by or on behalf of a Seller/Servicer to the
filing of an Insolvency Proceeding against a Seller/Servicer, or any
admission by or on behalf of a Seller/Servicer of its inability to pay its
debts generally as the same become due;
(4) any filing of an Insolvency Proceeding against a Seller/Servicer that
remains undismissed or unstayed for a period of 60 days after the filing
thereof;
(5) any issuance of any attachment or execution against, or any appointment of
a conservator, receiver or liquidator with respect to, all or substantially
all of the assets of a Seller/Servicer;
(6) any failure or inability of Cendant Mortgage to be eligible to service
Mortgage Loans for FNMA or FHLMC;
(7) any sale, transfer, assignment, or other disposition by a Seller/Servicer
of all or substantially all of its property or assets to a Person who does
not meet the qualifications enumerated or incorporated by reference into
Section 9.02, any assignment by a Seller/Servicer of this Agreement or any
of a Seller's/Servicer's rights or obligations hereunder except in
accordance with Section 9.04, or any action taken or omitted to be taken by
a Seller/Servicer in contemplation or in furtherance of any of the
foregoing, without the consent of the Purchaser;
55
then, and in each and every such case, so long as an Event of Default shall not
have been remedied, the Purchaser, by notice in writing to the Sellers may, in
addition to whatever rights the Purchaser may have at law or in equity to
damages, including injunctive relief and specific performance, terminate all the
rights and obligations of the Sellers under this Agreement and in and to the
Mortgage Loans and the proceeds thereof subject to Section 12.01, without the
Purchaser's incurring any penalty or fee of any kind whatsoever in connection
therewith; provided that, upon the occurrence of an Event of Default under
Subsection (3), (4) or (5) of this Section 10.01, this Agreement and all
authority and power of the Sellers hereunder (whether with respect to the
Mortgage Loans, the REO Properties or otherwise) shall automatically cease. On
or after the receipt by the Sellers of such written notice, all authority and
power of the Sellers under this Agreement (whether with respect to the Mortgage
Loans or otherwise) shall cease.
ARTICLE IX: TERMINATION
Section 11.01 Term and Termination.
(1) The servicing obligations of the Servicer under this Agreement may be
terminated as provided in Section 10.01 hereof.
(2) In any case other than as provided under Subsection (1) hereof, the
respective obligations and responsibilities of the Sellers hereunder shall
terminate upon: (a) the later of the final payment or other liquidation (or any
advance with respect thereto) of the last Mortgage Loan or the disposition of
all REO Property and the remittance of all funds due hereunder; or (b) the
mutual written consent of the Sellers and the Purchaser.
(3) Upon any termination of this Agreement or the servicing obligations of the
Servicer hereunder, then the Servicer shall prepare, execute and deliver all
agreements, documents and instruments, including all Servicer Mortgage Files,
and do or accomplish all other acts or things necessary or appropriate to effect
such termination, all at the Servicer's sole expense. In any such event, the
Servicer agrees to cooperate with the Purchaser in effecting the termination of
the Servicer's servicing responsibilities hereunder, including the transfer to
the Purchaser or its designee for administration by it of all cash amounts which
shall at the time be contained in, or credited by the Servicer to, the
Collection Account and/or the Escrow Account or thereafter received with respect
to any Mortgage Loan or REO Property.
56
Section 11.02 Survival.
Notwithstanding anything to the contrary contained herein, the
representations and warranties of the parties contained herein and in any
certificate or other instrument delivered pursuant hereto, as well as the other
covenants hereof (including those set forth in Section 9.01) that, by their
terms, require performance after the termination by this Agreement, shall
survive the termination of this Agreement and shall inure to the benefit of the
parties, their successors and assigns. Sellers further agree that the
representations, warranties and covenants made by Sellers herein and in any
certificate or other instrument delivered pursuant hereto shall be deemed to be
relied upon by Purchaser notwithstanding any investigation heretofore made by
Purchaser or on Purchaser's behalf.
ARTICLE X: GENERAL PROVISIONS
Section 12.01 Successor to the Servicer.
Upon the termination of the Servicer's servicing responsibilities and duties
under this Agreement pursuant to Section 9.04, 10.01, or 11.01, the Purchaser
shall (i) succeed to and assume all of the Servicer's responsibilities, rights,
duties and obligations under this Agreement or (ii) appoint a successor servicer
which shall succeed to all rights and assume all of the responsibilities, duties
and liabilities of the Servicer under this Agreement prior to the termination of
the Servicer's responsibilities, duties and liabilities under this Agreement. If
the Servicer's duties, responsibilities and liabilities under this Agreement
should be terminated pursuant to the aforementioned sections, then the Servicer
shall continue to discharge such duties and responsibilities during the period
from the date it acquires knowledge of such termination until the effective date
thereof (if applicable) all on the terms and conditions contained herein and
shall take no action whatsoever that might impair or prejudice the rights or
financial condition of its successor. The termination of the Servicer's
servicing responsibilities pursuant to any of the aforementioned Sections shall
not, among other things, relieve the Servicer of its obligations pursuant to
Section 2.04 and/or 7.02, the representations and warranties or other
obligations set forth in Sections 2.04, 3.01, 3.02 and 3.03 and the remedies
available to the Purchaser under the various provisions of this Agreement. In
addition, such termination shall not affect any claims that the Purchaser may
have against the Servicer arising prior to any such termination.
Section 12.02 Governing Law.
This Agreement is to be governed by, and construed in accordance with
the internal laws of the State of New York without giving effect to principals
of conflicts of laws. The obligations, rights, and remedies of the parties
hereunder shall be determined in accordance with such laws.
57
Section 12.03 Notices.
Any notices or other communications permitted or required hereunder
shall be in writing and shall be deemed conclusively to have been given if
personally delivered, sent by courier with delivery against signature therefor,
mailed by registered mail, postage prepaid, and return receipt requested or
transmitted by telex, telegraph or telecopier and confirmed by a similar writing
mailed or sent by courier as provided above, to (i) in the case of the
Purchaser, NBC_ c/o Xxxxx Xxxxxxxx, 000 Xxxxxx Xxxxxx, Xxxxxxx, XX 00000 and NBC
x/x Xxxxx Xxxxxxxxxx, Xxx Xxxxxxxx Xxxxxx, Xxxxxxx, XX, 00000xxxx other address
as may hereafter be furnished to the Seller in writing by the Purchaser, (ii) in
the case of the Cendant Mortgage, Cendant Mortgage Corporation, 0000 Xxxxxxxxxx
Xxxx, Xx. Xxxxxx, XX 00000, Attention: Xxxxx X. Xxxxxx, Vice President,
Secondary Marketing, and (iii) in the case of the Trust, c/o Cendant Mortgage
Corporation, as Administrator, 0000Xxxxxxxxxx Xxxx, Xx. Xxxxxx, XX 00000,
Attention: Xxxxx X. Xxxxxx, Vice President, Secondary Marketing ,or such other
address as may hereafter be furnished to the Purchaser in writing by the
applicable Seller.
Section 12.04 Severability of Provisions.
If any one or more of the covenants, agreements, provisions or terms of
this Agreement shall be for any reason whatsoever held invalid, the invalidity
of any such covenant, agreement, provision or term of this Agreement shall in no
way affect the validity or enforceability of the other provisions of this
Agreement.
Section 12.05 Schedules and Exhibits.
The schedules and exhibits that are attached to this Agreement are
hereby incorporated herein and made a part hereof by this reference.
Section 12.06 General Interpretive Principles.
For purposes of this Agreement, except as otherwise expressly provided
or unless the context otherwise requires:
(1) the terms defined in this Agreement have the meanings assigned to them in
this Agreement and include the plural as well as the singular, and the use of
any gender herein shall be deemed to include the other gender;
(2) any reference in this Agreement to this Agreement or any other agreement,
document, or instrument shall be a reference to this Agreement or any other such
agreement, document, or instrument as the same has been amended, modified, or
supplemented in accordance with the terms hereof and thereof (as applicable);
(3) accounting terms not otherwise defined herein have the meanings assigned to
them in accordance with generally accepted accounting principles;
58
(4) references herein to "Articles," "Sections," "Subsections," "Paragraphs,"
and other subdivisions without reference to a document are to designated
articles, sections, subsections, paragraphs and other subdivisions of this
Agreement, unless the context shall otherwise require;
(5) a reference to a subsection without further reference to a section is a
reference to such subsection as contained in the same section in which the
reference appears, and this rule shall also apply to Paragraphs and other
subdivisions;
(6) a reference to a "day" shall be a reference to a calendar day;
(7) the words "herein," "hereof," "hereunder" and other words of similar import
refer to this Agreement as a whole and not to any particular provision; and
(8) the terms "include" and "including" shall mean without limitation by reason
of enumeration.
Section 12.07 Waivers and Amendments, Noncontractual Remedies; Preservation of
Remedies.
This Agreement may be amended, superseded, canceled, renewed or extended and the
terms hereof may be waived, only by a written instrument signed by authorized
representatives of the parties or, in the case of a waiver, by an authorized
representative of the party waiving compliance. No such written instrument shall
be effective unless it expressly recites that it is intended to amend,
supersede, cancel, renew or extend this Agreement or to waive compliance with
one or more of the terms hereof, as the case may be. No delay on the part of any
party in exercising any right, power or privilege hereunder shall operate as a
waiver thereof, nor shall any waiver on the part of any party of any such right,
power or privilege, or any single or partial exercise of any such right, power
or privilege, preclude any further exercise thereof or the exercise of any other
such right, power or privilege. The rights and remedies herein provided are
cumulative and are not exclusive of any rights or remedies that any party may
otherwise have at law or in equity.
Section 12.08 Captions.
All section titles or captions contained in this Agreement or in any schedule or
exhibit annexed hereto or referred to herein, and the table of contents to this
Agreement, are for convenience only, shall not be deemed a part of this
Agreement and shall not affect the meaning or interpretation of this Agreement.
Section 12.09 Counterparts; Effectiveness.
This Agreement may be executed by the parties hereto in separate counterparts,
each of which when so executed and delivered shall be an original, but all such
counterparts shall together constitute one and the same instrument. This
Agreement shall become effective as of the date first set forth herein upon the
due execution and delivery of this Agreement by each of the parties hereto.
59
Section 12.10 Entire Agreement; Amendment.
This Agreement (including the schedules and exhibits annexed hereto or referred
to herein), together with the Cendant Guide, contains the entire agreement
between the parties hereto with respect to the transactions contemplated hereby
and supersedes all prior agreements, written or oral, with respect thereto. It
is agreed and understood that this agreement may be amended at such time in the
future should the Purchaser and Servicer enter into a subservicing relationship
of products not contained in this agreement or in the capacity of Seller and
Purchaser, the addition of products such as FHA, and VA loans. No amendment,
modification or alteration of the terms or provisions of this Agreement shall be
binding unless the same shall be in writing and duly executed by the authorized
representatives of the parties hereto.
Section 12.11 Further Assurances.
Each party hereto shall take such additional action as may be reasonably
necessary to effectuate this Agreement and the transactions contemplated hereby.
The Sellers will promptly and duly execute and deliver to the Purchaser such
documents and assurances and take such further action as the Purchaser may from
time to time reasonably request in order to carry out more effectively the
intent and purpose of this Agreement and to establish and protect the rights and
remedies created or intended to be created in favor of the Purchaser.
60
IN WITNESS WHEREOF, the Sellers and the Purchaser have caused their names to be
signed hereto by their respective officers as of the date first written above.
NATIONAL BANK OF COMMERCE
By: /s/ W. Xxxxx Xxxxxxxx
---------------------------------------------------
Name: W. Xxxxx Xxxxxxxx
Title: SVP
CENDANT MORTGAGE CORPORATION
By: /s/ Xxxxx X. Xxxxxx
----------------------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Vice President
XXXXXX'X GATE RESIDENTIAL MORTGAGE TRUST (formerly known as
CENDANT RESIDENTIAL MORTGAGE TRUST)
By: Cendant Mortgage Corporation, as Administrator
By: /s/ Xxxxx X. Xxxxxx
----------------------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Vice President
61
EXHIBIT C
Assignment, Assumption and Recognition Agreement
ASSIGNMENT, ASSUMPTION AND RECOGNITION AGREEMENT
THIS ASSIGNMENT, ASSUMPTION AND RECOGNITION AGREEMENT (this
"Assignment"), dated of November 29, 2001, is entered into among XXXXXX BROTHERS
BANK, FSB (the "Assignee"), NATIONAL BANK OF COMMERCE (the "Assignor"), CENDANT
MORTGAGE CORPORATION and XXXXXX'X GATE RESIDENTIAL MORTGAGE TRUST (each being
called a "Seller"), and CENDANT MORTGAGE CORPORATION in its capacity as the
servicer of loans (the "Servicer").
RECITALS
WHEREAS the Assignor and the Sellers have entered into a certain
MORTGAGE LOAN FLOW PURCHASE, SALE & SERVICING AGREEMENT dated as of February 2,
2001 (the "Sale Agreement"), pursuant to which the Assignor has acquired certain
Mortgage Loans from the Sellers, and Servicer has agreed to service such
Mortgage Loans; and
WHEREAS the Assignor and Servicer have entered into a certain
ADDITIONAL COLLATERAL ASSIGNMENT AND SERVICING AGREEMENT dated as of April 18,
2001 (the "Additional Collateral Assignment"), pursuant to which the Servicer
has assigned its rights with respect to the Additional Collateral, and Servicer
has agreed to service such Mortgage Loans; and
WHEREAS the Assignee has agreed, on the terms and conditions contained
herein, to purchase from the Assignor certain Mortgage Loans (the "Specified
Mortgage Loans") which are listed on the mortgage loan schedule attached as
Exhibit I hereto;
WHEREAS, unless otherwise defined herein, all defined terms used herein
shall have the same meaning as defined in the Sale Agreement and Additional
Collateral Agreement.
NOW, THEREFORE, in consideration of the mutual promises contained
herein and other good and valuable consideration (the receipt and sufficiency of
which are hereby acknowledged), the parties agree as follows:
1. Assignment and Assumption.
(a) Sale Agreement
(i) On and as of the date hereof, the Assignor hereby sells,
assigns, and transfers to the Assignee all of its right, title and interest in
the Specified Mortgage Loans and all rights of Assignor related thereto under
the Sale Agreement to the extent relating to the Specified Mortgage Loans.
Assignee hereby accepts such assignment from the Assignor. The Sellers hereby
acknowledges such assignment and assumption.
(ii) Assignor represents and warrants to the Assignee that the
Assignor has not taken any action that would serve to impair or encumber the
Assignee's ownership interest in the Specified Mortgage Loans since the date of
the Assignor's acquisition of the Specified Mortgage Loans.
(iii) The sole recourse of Assignee with respect to any
Specified Mortgage Loans under the Sale Agreement shall be against the Sellers
and Servicer. Assignee shall have no claims or recourse against Assignor except
for breaches of any representations, warranties or covenants specifically made
by Assignor under this Agreement. Assignor shall have no liabilities with
respect to any representations or warranties made by Seller or Servicer in the
Sale Agreement or any documents relating to the Sale Agreement.
(iv) Assignor shall be responsible for confirming that
Assignee's interest in the Specified Mortgage Loans has been registered with the
Surety Bond Issuer.
(b) Additional Collateral Assignment
(i) On and as of the date hereof, the Assignor hereby sells,
assigns, and transfers to the Assignee all of its right, title and interest in
the Additional Collateral and all rights of Assignor related thereto under the
Additional Collateral Assignment to the extent relating to the Specified
Mortgage Loans. Assignee hereby accepts such assignment from the Assignor. The
Servicer hereby acknowledges such assignment and assumption.
(ii) With respect to each Specified Mortgage Loan, the
Assignee hereby assigns to the Purchaser its security interest in and to any
Additional Collateral, all of its rights in each Additional Collateral
Agreement, its right to receive amounts due or to become due in respect of any
Additional Collateral and its rights as beneficiary under the Surety Bond in
respect of any Specified Mortgage Loans. Assignee hereby accepts such assignment
from the Assignor. The Servicer hereby acknowledges such assignment and
assumption.
(iii) Assignor represents and warrants to Assignee that prior
to its assignment to the Assignee, Assignor has a first priority perfected
security interest in each Securities Account, or, if necessary to perfect a
first priority security interest in each asset contained in such Securities
Account, a first priority perfected security interest in each such asset
contained in such Securities Account and following Assignor's assignment of the
Pledge Agreements and related security interest, the related investor has a
first priority perfected security interest in each Securities Account, or if
necessary to perfect a first priority security interest in each asset contained
in such Securities Account, a perfected first priority security interest in each
such asset contained in such Securities Account. Assignor further represents and
warrants that all rights assigned hereunder to Assignee are fully and freely
assignable by Assignor.
(iv) Servicer represents and warrants to Assignee that the
Specified Mortgage Loans are insured under the terms and provisions of the
Surety Bond subject to the limitations set forth therein. Servicer covenants
that within 2 Business Days after the date hereof, the Assignor will deliver to
the Surety Bond Issuer an "Assignment and Notice of Transfer" in the form of
Attachment 2 to the Surety Bond, or any other similar instrument required to be
delivered under the Surety Bond, executed by Assignee, Assignor and MLCC, and
that all other requirements for transferring coverage under the Surety Bond in
respect of such Specified Mortgage Loans to the Assignee shall be complied with;
provided, that in no event shall the Servicer have any liability directly
resulting from a failure on the part of the Assignee to execute the Assignment
and Notice of Transfer. Assignor shall indemnify Assignee and hold it harmless
against any and all claims, losses, damages, penalties, fines, forfeitures,
reasonable and necessary legal fees and related costs, judgments, and any other
costs, fees and expenses that are related to or arise from the non-payment of
Required Surety Payments with respect to the Specified Mortgage Loans purchased
by Assignor from Assignor hereunder. The indemnification obligation provided in
this subparagraph shall expire upon receipt by the Surety Bond Issuer of an
Assignment and Notice of Transfer referred to in this paragraph, signed by both
Assignor and Assignee.
(v) Assignor represents and warrants that the assignment of
rights to the Assignee under the Surety Bond, as described herein, will not
result in Purchaser assuming any obligations or liabilities of Assignor or
Servicer with respect thereto.
(vi) With respect to any Specified Mortgage Loans for which a
Form UCC-3 has been filed in the appropriate recording office, the Assignor
shall cause to be delivered a Form UCC-3 in blank giving notice of the
assignment of the related security interest to the Assignee.
2. Recognition of Purchaser.
From and after the date hereof, both the Assignor, Servicer and the
Sellers shall note the transfer of the Specified Mortgage Loans to the Assignee
in their respective books and records and shall recognize the Assignee as the
owner of the Specified Mortgage Loans. Servicer shall service the Specified
Mortgage Loans for the benefit of the Assignee pursuant to the Sale Agreement.
It is the intention of the Sellers, the Servicer, the Assignee and the Assignor
that the Sale Agreement shall be binding upon and inure to the benefit of the
Assignee.
3. Representations and Warranties.
(a) The Assignee represents and warrants that it is a
sophisticated investor able to evaluate the risks and merits of the transactions
contemplated hereby, and that it has not relied in connection therewith upon any
statements or representations of the Sellers or the Assignor other than those
contained in the Agreement or this Assignment.
(b) Each of the parties hereto represents and warrants as to
such party that: (i) such party is duly and legally authorized to enter into
this Assignment; and (ii) this Assignment has been duly authorized, executed and
delivered by such party; and (iii) this Assignment constitutes such party's
legal, valid and binding obligation, enforceable against it in accordance with
its terms, except as such enforcement may be limited by bankruptcy, insolvency,
reorganization or other similar laws affecting the enforcement of creditors'
rights generally and by general equitable principles (regardless of whether such
enforcement is considered in a proceeding in equity or at law).
4. Bringdown of Representations and Warranties. With respect to the
Specified Mortgage Loans, each of the Sellers and the Servicer hereby brings
down and remakes (a) each representation and warranty in the Sale Agreement as
of the date hereof, and (b) each representation and warranty in the Additional
Collateral Agreement, including those representations of MLCC from the Loan
Purchase and Sale Agreement incorporated as Exhibit A thereto. The Assignee
shall have recourse against the Sellers and the Servicer for breaches of such
remade representations and warranties in accordance with the respective
provisions of the Sale Agreement and Additional Collateral Agreement. All
references to "Purchaser" in the Sale Agreement and Additional Collateral
Agreement shall be deemed to be Assignee.
5. Indemnification. Servicer hereby acknowledges that, in accordance with
Section 4(b) of the Additional Collateral Assignment, Servicer shall indemnify
the Assignee for any failure on the part of MLCC to service the Specified
Mortgage Loans in accordance with the terms of the Loan Purchase and Sale
Agreement.
Servicer hereby agrees that in the event that the Servicer resigns or is
terminated as servicer as permitted under Servicing Agreement, Servicer will
take all steps necessary to assign to the successor servicer their rights under
the Specified Mortgage Loan, including without limitation, assigning to the
successor servicer the Servicers rights under the Loan Purchase and Sale
Agreement and executing and delivering such additional documents, instruments or
agreements as may be necessary or appropriate to effectuate such assignment.
6. Continuing Effect. Except as contemplated hereby, the Agreement shall
remain in full force and effect in accordance with its terms.
7. Governing Law. This Assignment and the rights and obligations hereunder
shall be governed by and construed in accordance with the internal laws of the
State of New York.
8. Notices. Any notices or other communications permitted or required
under the this Assignment or under any of the Sale Agreement to be made to the
Assignee shall be made in accordance with the terms of the Sale Agreement and
shall be sent to the Assignee as follows: Xxxxxx Brothers Bank, FSB, 3 World
Financial Center, NY, NY 10285, or to such other address as may hereafter be
furnished by the Assignee to the parties in accordance with the provisions of
the Sale Agreement. Notices to other parties hereto shall be sent to the
addresses of such parties as set out in the Acquisition Agreement.
9. Counterparts. This Assignment may be executed in counterparts, each
of which when so executed shall be deemed to be an original and all of which
when taken together shall constitute one and the same instrument.
10. 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.
THIS ASSIGNMENT is made as of the date first written above.
NATIONAL BANK OF COMMERCE XXXXXX BROTHERS BANK, FSB
By: By:
--------------------------------- ---------------------------------
Print Name: Print Name:
------------------------- -------------------------
Title: Title:
------------------------------ ------------------------------
CENDANT MORTGAGE CORPORATION XXXXXX'X GATE RESIDENTIAL
(as Seller and Servicer) MORTGAGE TRUST
By: By:
--------------------------------- ---------------------------------
Print Name: Print Name:
------------------------- -------------------------
Title: Title:
------------------------------ ------------------------------
EXHIBIT D
Mortgage Loan Schedule
(retained in a separate closing binder entitled
"SASCO 2001-21A Mortgage Loan Schedule"
at XxXxx Xxxxxx LLP)
EXHIBIT E
REQUEST FOR RELEASE OF DOCUMENTS AND RECEIPT
-----------------------
[Date]
[Custodian]
[Address]
Attention: [ ]
In connection with the administration of the mortgages held by you as
Custodian under a certain Custodial Agreement dated as of December 1, 2001,
between Xxxxx Fargo Bank Minnesota, N.A., as Trustee, and you, as Custodian (the
"Custodial Agreement"), the undersigned Servicer hereby requests a release of
the Mortgage File held by you as Custodian with respect to the following
described Mortgage Loan for the reason indicated below.
Mortgagor's Name:
Address:
Loan No.:
Reason for requesting file:
___ 1. Mortgage Loan paid in full. (The Servicer hereby certifies that
all amounts received in connection with the loan have been or will be credited
to the Collection Account or the Certificate Account (whichever is applicable)
pursuant to the Trust Agreement.)
___ 2. Mortgage Loan being foreclosed.
___ 3. Mortgage Loan repurchased. (The Servicer hereby certifies that
the Purchase Price has been credited to the Collection Account or the
Certificate Account (whichever is applicable) pursuant to the Trust Agreement.)
___ 4. Other. (Describe.)
The undersigned acknowledges that the above Mortgage File will be held
by the undersigned in accordance with the provisions of the Trust Agreement and
will be returned to you within ten (10) days of our receipt of the Mortgage
File, except if the Mortgage Loan has been paid in full, or repurchased (in
which case the Mortgage File will be retained by us permanently).
Capitalized terms used herein shall have the meanings ascribed to them
in the Custodial Agreement.
-------------------------------------
CENDANT MORTGAGE CORPORATION
By:
----------------------------------
Name:
Title: Servicing Officer
2
