MORTGAGE LOAN SALE AND SERVICING AGREEMENT
between
BANK OF AMERICA, N.A.,
as Seller and as Servicer,
and
XXXXXX BROTHERS BANK, FSB,
as Purchaser
Dated December 1, 2003
Adjustable Rate Mortgage Loans
TABLE OF CONTENTS
Page
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SECTION 1. DEFINITIONS............................................................................1
SECTION 2. PURCHASE AND CONVEYANCE...............................................................11
SECTION 3. MORTGAGE LOAN SCHEDULE................................................................11
SECTION 4. PURCHASE PRICE........................................................................12
SECTION 5. EXAMINATION OF MORTGAGE FILES.........................................................12
SECTION 6. DELIVERY OF MORTGAGE LOAN DOCUMENTS...................................................12
Subsection 6.01. Possession of Mortgage Files..........................................................12
Subsection 6.02. Books and Records.....................................................................13
Subsection 6.03. Delivery of Mortgage Loan Documents...................................................13
SECTION 7. REPRESENTATIONS, WARRANTIES AND COVENANTS; REMEDIES FOR BREACH........................14
Subsection 7.01. Representations and Warranties Regarding Individual Mortgage Loans....................14
Subsection 7.02. Seller and Servicer Representations...................................................23
Subsection 7.03. Remedies for Breach of Representations and Warranties.................................25
SECTION 8. CLOSING...............................................................................27
SECTION 9. CLOSING DOCUMENTS.....................................................................27
SECTION 10. COSTS.................................................................................28
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SECTION 11. ADMINISTRATION AND SERVICING OF MORTGAGE LOANS........................................28
Subsection 11.01. Servicer to Act as Servicer; Subservicing.............................................28
Subsection 11.02. Liquidation of Mortgage Loans.........................................................30
Subsection 11.03. Collection of Mortgage Loan Payments..................................................30
Subsection 11.04. Establishment of Custodial Account; Deposits in Custodial Account.....................31
Subsection 11.05. Withdrawals From the Custodial Account................................................32
Subsection 11.06. Establishment of Escrow Account; Deposits in Escrow Account...........................33
Subsection 11.07. Withdrawals From Escrow Account.......................................................34
Subsection 11.08. Payment of Taxes, Insurance and Other Charges; Collections Thereunder.................34
Subsection 11.09. Transfer of Accounts..................................................................35
Subsection 11.10. Maintenance of Hazard Insurance.......................................................35
Subsection 11.11. Maintenance of Primary Mortgage Insurance Policy; Claims..............................36
Subsection 11.12. Fidelity Bond; Errors and Omissions Insurance.........................................37
Subsection 11.13. Title, Management and Disposition of REO Property.....................................37
Subsection 11.14. Servicing Compensation................................................................38
Subsection 11.15. Distributions.........................................................................38
Subsection 11.16. Statements to the Purchaser...........................................................39
Subsection 11.17. Advances by the Servicer..............................................................40
Subsection 11.18. Assumption Agreements.................................................................40
Subsection 11.19. Satisfaction of Mortgages and Release of Mortgage Files...............................41
Subsection 11.20. Annual Statement as to Compliance.....................................................41
Subsection 11.21. Annual Independent Public Accountants' Servicing Report...............................41
Subsection 11.22. Servicer Shall Provide Access and Information as Reasonably Required..................41
Subsection 11.23. Restoration of Mortgaged Property.....................................................42
Subsection 11.24. Master Servicer.......................................................................42
Subsection 11.25. Compliance with Safeguarding Customer Information Requirements........................43
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SECTION 12. THE SERVICER..........................................................................43
Subsection 12.01. Indemnification; Third Party Claims...................................................43
Subsection 12.02. Merger or Consolidation of the Servicer...............................................43
Subsection 12.03. Limitation on Liability of the Servicer and Others....................................44
Subsection 12.04. Seller and Servicer Not to Resign.....................................................44
SECTION 13. DEFAULT...............................................................................44
Subsection 13.01. Events of Default.....................................................................44
Subsection 13.02. Waiver of Default.....................................................................46
SECTION 14. TERMINATION...........................................................................46
Subsection 14.01. Termination...........................................................................46
Subsection 14.02. Termination of the Servicer Without Cause.............................................46
Subsection 14.03. Successors to the Servicer............................................................47
SECTION 15. NOTICES...............................................................................48
SECTION 16. SEVERABILITY CLAUSE...................................................................48
SECTION 17. NO PARTNERSHIP........................................................................49
SECTION 18. COUNTERPARTS..........................................................................49
SECTION 19. GOVERNING LAW.........................................................................49
SECTION 20. INTENTION OF THE PARTIES..............................................................49
SECTION 21. WAIVERS...............................................................................50
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SECTION 22. EXHIBITS..............................................................................50
SECTION 23. GENERAL INTERPRETIVE PRINCIPLES.......................................................50
SECTION 24. REPRODUCTION OF DOCUMENTS.............................................................50
SECTION 25. AMENDMENT.............................................................................51
SECTION 26. CONFIDENTIALITY.......................................................................51
SECTION 27. ENTIRE AGREEMENT......................................................................51
SECTION 28. FURTHER AGREEMENTS; TRANSFERS.........................................................51
SECTION 29. SUCCESSORS AND ASSIGNS................................................................52
SECTION 30. NON-SOLICITATION......................................................................53
SECTION 31. PROTECTION OF CONSUMER INFORMATION....................................................54
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EXHIBITS
EXHIBIT 1 FORM OF SELLER'S OFFICER'S CERTIFICATE
EXHIBIT 2 MORTGAGE LOAN DOCUMENTS
EXHIBIT 3 CONTENTS OF EACH MORTGAGE FILE
EXHIBIT 4 MORTGAGE LOAN SCHEDULE
EXHIBIT 5 UNDERWRITING GUIDELINES
EXHIBIT 6 FORM OF LOST NOTE AFFIDAVIT
EXHIBIT 7 FORM OF OPINION OF COUNSEL
EXHIBIT 8 FORM OF MONTHLY REMITTANCE REPORT
EXHIBIT 9 FORM OF CUSTODIAL ACCOUNT CERTIFICATION
EXHIBIT 10 FORM OF ESCROW ACCOUNT CERTIFICATION
EXHIBIT 11 FORM OF CERTIFICATION TO BE PROVIDED BY THE SERVICER
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MORTGAGE LOAN SALE AND SERVICING AGREEMENT
THIS MORTGAGE LOAN SALE AND SERVICING AGREEMENT (the "Agreement"),
dated December 1, 2003, is hereby executed by and among Xxxxxx Brothers Bank,
FSB, a federally chartered savings bank, as purchaser (the "Purchaser"), Bank of
America, N.A., a national banking association, in its capacity as seller (the
"Seller") and in its capacity as servicer (the "Servicer").
WITNESSETH:
WHEREAS, the Seller desires to sell to the Purchaser, and the Purchaser
desires to purchase from the Seller, certain conventional, adjustable-rate,
residential, first-lien mortgage loans (the "Mortgage Loans") as described
herein on a servicing-retained basis, and which shall be delivered as whole
loans as provided herein;
WHEREAS, each Mortgage Loan is secured by a mortgage, deed of trust or
other security instrument creating a first lien on a residential dwelling
located in the jurisdiction indicated on the Mortgage Loan Schedule which is
annexed hereto as Exhibit 4; and
WHEREAS, the Purchaser, the Seller and the Servicer wish to prescribe
the manner of the conveyance, servicing and control of the Mortgage Loans;
NOW, THEREFORE, in consideration of the premises and mutual agreements
set forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Purchaser, the Seller and the
Servicer agree as follows:
SECTION 1. DEFINITIONS.
For purposes of this Agreement, the following capitalized terms shall
have the respective meanings set forth below.
Adjustment Date: As to each Mortgage Loan, the date on which the
Mortgage Interest Rate is adjusted in accordance with the terms of the related
Mortgage Note and Mortgage.
Agency Transfer: An exchange of the Mortgage Loans for agency
securities.
Agreement: This Mortgage Loan Sale and Servicing Agreement including
all exhibits, schedules, amendments and supplements hereto.
ALTA: The American Land Title Association.
Appraised Value: With respect to any Mortgaged Property, the lesser of
(i) the value thereof as determined by a Qualified Appraiser at the time of
origination of the Mortgage Loan, and (ii) the purchase price paid for the
related Mortgaged Property by the Mortgagor with the proceeds of the Mortgage
Loan; provided, however, that in the case of a Refinanced Mortgage Loan, such
value of the Mortgaged Property is 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 a Qualified Appraiser.
Assignment of Mortgage: An individual assignment of the Mortgage,
notice of transfer or equivalent instrument in recordable form and in blank,
sufficient under the laws of the jurisdiction in which the related Mortgaged
Property is located to give record notice of the sale of the Mortgage to the
Purchaser.
BPO: A broker's price opinion with respect to a Mortgaged Property.
Business Day: Any day other than a Saturday or Sunday, or a day on
which banking and savings and loan institutions in the state in which (i) the
Servicer is located or (ii) the Custodial Account is maintained are authorized
or obligated by law or executive order to be closed.
Closing Date: December 22, 2003.
Closing Documents: The documents required to be delivered on the
Closing Date pursuant to Section 9.
CLTA: The California Land Title Association.
Code: The Internal Revenue Code of 1986, as amended, or any successor
statute thereto.
Condemnation Proceeds: All awards, compensation and settlements in
respect of a taking (whether permanent or temporary) of all or part of a
Mortgaged Property by exercise of the power of condemnation or the right of
eminent domain, to the extent not required to be released to a Mortgagor in
accordance with the terms of the related Mortgage Loan Documents.
Consumer Information: Information including but not limited to all
personal information about the Mortgagors that is supplied to the Seller by or
on behalf of the Mortgagors.
Convertible Mortgage Loan: A Mortgage Loan that by its terms and
subject to certain conditions allows the Mortgagor to convert the adjustable
Mortgage Interest Rate thereon to a fixed Mortgage Interest Rate.
Co-op: A private, cooperative housing corporation, having only one
class of stock outstanding, which owns or leases land and all or part of a
building or buildings, including apartments, spaces used for commercial purposes
and common areas therein and whose board of directors authorizes the sale of
stock and the issuance of a Co-op Lease.
Co-op Lease: With respect to a Co-op Loan, the lease with respect to a
dwelling unit occupied by the Mortgagor and relating to the stock allocated to
the related dwelling unit.
Co-op Loan: A Mortgage Loan secured by the pledge of stock allocated to
a dwelling unit in a residential cooperative housing corporation and a
collateral assignment of the related Co-op Lease.
Custodial Account: As defined in Subsection 11.04.
Custodial Agreement: That certain Custodial Agreement between Purchaser
and Custodian dated as of September 1, 1999.
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Custodian: U.S. Bank Trust National Association, or any successor under
the Custodial Agreement.
Customary Servicing Procedures: Procedures (including collection
procedures) that the Servicer customarily employs and exercises in servicing and
administering mortgage loans for its own account that are similar to the
Mortgage Loans and which are in accordance with accepted mortgage servicing
practices of prudent lending institutions.
Cut-off Date: December 1, 2003.
Cut-off Date Principal Balance: The aggregate Stated Principal Balance
of the Mortgage Loans as of the Cut-off Date which is determined after the
application, to the reduction of principal, of payments of principal due on or
before the Cut-off Date, whether or not collected, and of Principal Prepayments
received before the Cut-off Date.
Deleted Mortgage Loan: A Mortgage Loan replaced or to be replaced with
a Substitute Mortgage Loan in accordance with this Agreement.
Determination Date: With respect to each Remittance Date, the 15th day
(or, if such 15th day is not a Business Day, the following Business Day) of the
month in which such Remittance Date occurs.
Due Date: With respect to each Remittance Date, the first day of the
calendar month in which such Remittance Date occurs, which is the day on which
the Monthly Payment is due on a Mortgage Loan, exclusive of any days of grace.
Due Period: With respect to each Remittance Date, the period beginning
on the second day of the month preceding the month of the Remittance Date, and
ending on the first day of the month of the Remittance Date.
Eligible Investments: Any one or more of the following obligations or
securities:
(i) obligations of or guaranteed as to principal and interest
by Xxxxxxx Mac, Xxxxxx Xxx or any agency or instrumentality of the
United States when such obligations are backed by the full faith and
credit of the United States; provided, however, that such obligations
of Xxxxxxx Mac or Xxxxxx Xxx shall be limited to senior debt
obligations and mortgage participation certificates except that
investments in mortgage-backed or mortgage participation securities
with yields evidencing extreme sensitivity to the rate of principal
payments on the underlying mortgages shall not constitute Eligible
Investments hereunder;
(ii) repurchase agreements on obligations specified in clause
(i) maturing not more than one month from the date of acquisition
thereof;
(iii) federal funds, certificates of deposit, demand deposits,
time deposits and bankers' acceptances (which shall each have an
original maturity of not more than ninety (90) days and, in the case of
bankers' acceptances, shall in no event have an original maturity of
more than 365 days or a remaining maturity of more than thirty (30)
days) denominated in United States dollars of any United States
depository institution or trust company incorporated under the laws of
the United States or any state thereof or of any domestic branch of a
foreign depository institution or trust company;
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(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 is rated not lower than "P-2"
by Xxxxx'x Investors Service, Inc. and rated not lower than "A-2" by
Standard & Poor's Ratings Service, a division of The XxXxxx-Xxxx
Companies, Inc.; and
(v) a money market fund;
provided, however, that no instrument shall be an Eligible Investment if it
represents, either (1) the right to receive only interest payments with respect
to the underlying debt instrument or (2) the right to receive both principal and
interest payments derived from obligations underlying such instrument and the
principal and interest with respect to such instrument provide a yield to
maturity greater than 120% of the yield to maturity at par of such underlying
obligations.
Escrow Account: As defined in Subsection 11.06.
Escrow Payments: The amounts constituting ground rents, taxes,
assessments, Primary Mortgage Insurance Policy premiums (if any), fire and
hazard insurance premiums, flood insurance premiums, condominium charges and
other payments as may be required to be escrowed by the Mortgagor with the
Mortgagee pursuant to the terms of any Mortgage Note or Mortgage.
Event of Default: Any one of the conditions or circumstances enumerated
in Subsection 13.01.
Xxxxxx Mae: The entity formerly known as the Federal National Mortgage
Association or any successor thereto.
Xxxxxx Xxx Guides: The Xxxxxx Xxx Xxxxxxx' Guide and the Xxxxxx Xxx
Servicers' Guide and all amendments or additions thereto.
FDIC: The Federal Deposit Insurance Corporation or any successor
thereto.
Fidelity Bond: The fidelity bond required to be obtained by the
Servicer pursuant to Subsection 11.12.
FIRREA: The Financial Institutions Reform, Recovery, and Enforcement
Act of 1989, as amended and in effect from time to time.
Xxxxxxx Mac: The entity formerly known as the Federal Home Loan
Mortgage Corporation or any successor thereto.
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Gross Margin: With respect to each Mortgage Loan, the fixed percentage
amount set forth in each related Mortgage Note and Mortgage which is added to
the Index in order to determine the related Mortgage Interest Rate.
HUD: The United States Department of Housing and Urban Development or
any successor thereto.
Index: With respect to any Mortgage Loan, the index identified on the
Mortgage Loan Schedule and set forth in the related Mortgage Note for the
purpose of calculating interest thereon.
Initial Rate Cap: As to each Mortgage Loan, the maximum increase or
decrease in the Mortgage Interest Rate on the first Adjustment Date as provided
in the related Mortgage Note.
Insurance Proceeds: With respect to each Mortgage Loan, proceeds of
insurance policies insuring the Mortgage Loan or the related Mortgaged Property.
Lifetime Rate Cap: As to each Mortgage Loan, the maximum Mortgage
Interest Rate which shall be as permitted in accordance with the provisions of
the related Mortgage Note.
Liquidation Proceeds: The proceeds received 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 REO
Property, Insurance Proceeds and Condemnation Proceeds.
Loan-to-Value Ratio: With respect to any Mortgage Loan as of any date
of determination, the ratio, expressed as a percentage, the numerator of which
is the outstanding principal balance of the Mortgage Loan at origination (or on
such date, if a current Loan-to-Value Ratio is being calculated), and the
denominator of which is the Appraised Value of the related Mortgaged Property.
LTV: Loan-to-Value Ratio.
Monthly Payment: With respect to any Mortgage Loan, the scheduled
payment of principal and interest payable by a Mortgagor under the related
Mortgage Note on each Due Date, which such payment may change on any Adjustment
Date as provided in the related Mortgage Note and Mortgage.
Mortgage: With respect to a Mortgage Loan that is not a Co-op Loan, the
mortgage, deed of trust or other instrument creating a first lien on the
Mortgaged Property securing the Mortgage Note.
Mortgage File: With respect to any Mortgage Loan, the items listed in
Exhibit 3 hereto and any additional documents required to be added to the
Mortgage File pursuant to this Agreement and, with respect to a Co-op Loan, the
related security agreement.
Mortgage Interest Rate: With respect to each Mortgage Loan, the annual
rate at which interest accrues on such Mortgage Loan from time to time in
accordance with the provisions of the related Mortgage Note, including, but not
limited to, the limitations on such interest rate imposed by the Initial Rate
Cap, the Periodic Rate Cap/Floor and the Lifetime Rate Cap.
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Mortgage Loan: Each mortgage loan sold, assigned and transferred
pursuant to this Agreement and identified on the Mortgage Loan Schedule annexed
to this Agreement as Exhibit 4, including, without limitation, the Mortgage
File, the Monthly Payments, Principal Prepayments, Liquidation Proceeds,
Condemnation Proceeds, Insurance Proceeds, REO Disposition Proceeds, and all
other rights, benefits, proceeds and obligations arising from or in connection
with such mortgage loan.
Mortgage Loan Documents: With respect to any Mortgage Loan, the
documents listed in Exhibit 2 hereto.
Mortgage Loan Remittance Rate: With respect to any Mortgage Loan, the
annual rate of interest payable to the Purchaser, which shall be equal to the
related Mortgage Interest Rate minus the related Servicing Fee Rate.
Mortgage Loan Schedule: The schedule of Mortgage Loans relating to the
Mortgage Loans to be annexed hereto as Exhibit 4 on the Closing Date, setting
forth the following information with respect to each Mortgage Loan: (1) the
Seller's Mortgage Loan identifying number; (2) the Mortgagor's and
Co-Mortgagor's (if applicable) names; (3) the street address of the Mortgaged
Property, including the city, state, zip code, county, lot number, block number
and section number; (4) a code indicating whether the Mortgaged Property is a
single family residence, a 2 family dwelling, a 3-4 family dwelling, a
manufactured home, a planned unit development, a townhouse, a unit in a
condominium project, a co-operative, a mixed-use property, land, or a
non-residential property; (5) a code indicating the loan is a fixed rate or
adjustable rate Mortgage Loan (to be provided in accordance with Standard and
Poor's loan type requirements-Field 14); (6) product description (to be provided
in accordance with Standard and Poor's description categories-Field 7); (7) a
code indicating the lien status of the Mortgage Loan; (8) the original months to
maturity or the remaining months to maturity from the Cut-off Date, in any case
based on the original amortization schedule, and if different, the maturity
expressed in the same manner but based on the actual amortization schedule; (9)
the LTV at origination; (10) the combined LTV at origination; (11) the Mortgage
Interest Rate as of the Cut-off Date; (12) the payment and rate adjustment
frequencies (if applicable); (13) the Index (if applicable); (14) the initial
Adjustment Date (if applicable); (15) the initial payment Adjustment Date (if
applicable); (16) the next interest rate Adjustment Date (if applicable); (17)
the next payment Adjustment Date (if applicable); (18) the Gross Margin (if
applicable); (19) the minimum Mortgage Interest Rate under the terms of the
Mortgage Note (if applicable); (20) Mortgage Interest Rate adjustment
frequencies (if applicable); (21) the maximum Mortgage Interest Rate under the
terms of the Mortgage Note (if applicable); (22) the Mortgage Interest Rate
adjustment cap at the initial interest rate Adjustment Date (if applicable);
(23) the Mortgage Interest Rate adjustment cap at all subsequent interest rate
Adjustment Dates (if applicable); (24) the Lifetime Rate Cap (if applicable);
(25) the rounding provisions under the terms of the Mortgage Note (if
applicable); (26) the lookback provisions (# of days) under the terms of the
Mortgage Note (if applicable); (27) negative amortization indicator and limit;
(28) the date on which the first payment is due; (29) the original term of the
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Mortgage Loan; (30) the stated maturity date; (31) the amount of the Monthly
Payment; (32) the annual payment cap expressed as a percentage (for adjustable
rate mortgage loans only); (33) the next due date as of the Cut-off Date; (34)
the original principal amount of the Mortgage Loan; (35) the senior and
subordinate balances (if applicable); (36) the closing date of the Mortgage
Loan; (37) the principal balance of the Mortgage Loan as of the close of
business on the Cut-off Date; after deduction of payments of principal actually
received on or before the Cut-off Date; (38) monthly payment histories on
current and prior mortgages (24 months if available); (39) prior foreclosure
history (for the past 24 months); (40) prior bankruptcy history (for the past 24
months); (41) the loan purpose code; (42) the occupancy code; (43) the loan
documentation type, (to be provided in conformance with Standard and Poor's
documentation categories - Field 5); (44) asset verification (purchase money
loans only), (yes or no); (45) a code indicating the credit grade of the
Mortgage Loan; (46) the debt to income ratio; (47) the Mortgagor's and
co-Mortgagor's (if applicable) social security numbers; (48) the Mortgagor's and
co-Mortgagor's (if applicable) original FICO score and the next generation FICO
score for new credit scores; (49) the date of the FICO score; (50) the
Mortgagor's mailing address if different from number (3) above; (51) the
Mortgagor's home telephone number; (52) the Mortgagor's business telephone
number; (53) the purchase price of the Mortgaged Property (if a purchase); (54)
the Appraisal date and the Appraised Value of the Mortgaged Property; (55) the
Mortgagor's and co-Mortgagor's (if applicable) race; (56) the Mortgagor's and
co-Mortgagor's (if applicable) gender; (57) the Mortgagor's and co-Mortgagor's
(if applicable) date of birth; (58) the number of bedrooms; (59) rental income
per unit; (60) the combined annual income; (61) the application date; (62) the
broker's name; (63) the broker's firm name; (64) the appraiser's name; (65) the
appraiser's firm name; (66) the settlement agent; (67) the origination channel
(wholesale, retail, or correspondent); (68) flood insurance contract provider;
(69) tax service contract provider; (70) number of units; (71) as of date; (72)
amortization term; (73) balloon flag; (74) prepayment penalty flag; (75)
prepayment penalty term and prepayment penalty description (i.e.- 6 months
interest, set percentage of UPB); (76) payment history current loan; (77)
payment history previous loan and all refinanced loans; (78) mortgage insurance
provider, or code for LPMI; (79) mortgage insurance coverage percentage; (80)
mortgage insurance cost; (81) mortgage insurance certificate number; (82) number
of borrowers; (83) first time home buyer flag; (84) the year in which the
Mortgaged Property was built; (85) the monthly tax and insurance payment; (86)
the monthly servicing fee; (87) the escrow balance as of the Cut-off Date; (88)
the MIN number assigned to each Mortgage Loan, if applicable; (89) a code
indicating the Appraisal Type (Tax Assessment, BPO, Drive-By Form 704, URAR,
Form 2065, Form 2055 (Exterior only), Form 2055 (Interior Inspection), or AVM;
(90) if the Appraisal Type in #89 is an AVM, then a description of the AVM type;
(91) a code indicating whether the Borrower(s) is self-employed (yes or no);
(92) a section 32 flag and the origination points and or fees; (93) a code
indicating if a loan is assumable (yes or no); and (94) code indicating whether
the borrowers assets were verified.
Mortgage Note: The original executed note or other evidence of the
Mortgage Loan indebtedness of a Mortgagor.
Mortgaged Property: With respect to each Mortgage Loan that is not a
Co-op Loan, the Mortgagor's real property securing repayment of a related
Mortgage Note, consisting of an unsubordinated estate in fee simple or, with
respect to real property located in jurisdictions in which the use of leasehold
estates for residential purposes is a widely accepted practice, a leasehold
estate, in a single parcel or multiple parcels of real property improved by a
Residential Dwelling. With respect to a Co-op Loan, the stock allocated to a
dwelling unit in the residential cooperative housing corporation that was
pledged to secure such Co-op Loan and the related Co-op Lease.
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Mortgagee: The mortgagee or beneficiary named in the Mortgage and the
successors and assigns of such mortgagee or beneficiary.
Mortgagor: The obligor on a Mortgage Note, who is an owner of the
Mortgaged Property and the grantor or mortgagor named in the Mortgage and such
grantor's or mortgagor's successors in title to the Mortgaged Property.
NAIC: The National Association of Insurance Commissioners or any
successor organization.
Officer's Certificate: A certificate signed by the Chairman of the
Board, the Vice Chairman of the Board, a President or a Vice President of the
Person on behalf of whom such certificate is being delivered.
Opinion of Counsel: A written opinion of counsel, who may be an
employee of the Seller or the Servicer, reasonably acceptable to the Purchaser.
OTS: The Office of Thrift Supervision or any successor thereto.
Owner: As defined in Subsection 11.13.
P&I Advance: As defined in Subsection 11.17.
Periodic Rate Cap/Floor: As to each Mortgage Loan, the maximum increase
or decrease in the Mortgage Interest Rate, on any Adjustment Date as provided in
the related Mortgage Note.
Person: An individual, corporation, partnership, joint venture,
association, joint-stock company, limited liability company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
Primary Mortgage Insurance Policy: A policy of primary mortgage
guaranty insurance issued by an insurer acceptable to Xxxxxx Mae or Xxxxxxx Mac.
Principal Prepayment: Any payment or other recovery of principal on a
Mortgage Loan which is received in advance of its scheduled Due Date that 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.
Purchase Price: The price paid on the Closing Date by the Purchaser to
the Seller pursuant to this Agreement in exchange for the Mortgage Loans as set
forth in Section 4 hereto.
Purchase Price and Terms Letter: The letter agreement between the
Seller and the Purchaser, dated as of December 3, 2003 or any subsequent dates
prior to the Closing Date relating to the sale of the Mortgage Loans.
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Purchaser: The Person listed as such in the initial paragraph of this
Agreement, together with its successors and assigns as permitted under the terms
of this Agreement.
Qualified Appraiser: An appraiser of a Mortgaged Property duly
appointed by the originator of the related Mortgage Loan, who had no interest,
direct or indirect, in such Mortgaged Property or in any loan made on the
security thereof, whose compensation is not affected by the approval or
disapproval of the related Mortgage Loan and who met the minimum qualifications
of Xxxxxx Mae or Xxxxxxx Mac and satisfied the requirements of Title XI of
FIRREA.
Qualified Depository: A deposit account or accounts maintained with a
federal or state chartered depository institution the deposits in which are
insured by the FDIC to the applicable limits and the long-term unsecured debt
obligations of which (or, in the case of a depository institution that is a
subsidiary of a holding company, the long-term unsecured debt obligations of
such holding company) are rated AA by Standard & Poor's Ratings Group or Aa by
Xxxxx'x Investors Service, Inc. (or a comparable rating if another rating agency
is specified by the Purchaser by written notice to the Seller) at the time any
deposits are held on deposit therein.
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 the proceeds of which were
not used to purchase the related Mortgaged Property.
Remittance Date: The 18th day of any month, beginning in January 2004
(or, if such 18th day is not a Business Day, the following Business Day).
REO Disposition: The final sale by the Servicer of an REO Property.
REO Disposition Proceeds: All amounts received with respect to an REO
Disposition pursuant to Subsection 11.13.
REO Property: A Mortgaged Property acquired by the Servicer through
foreclosure or deed in lieu of foreclosure, as described in Subsection 11.13.
Repurchase Price: With respect to any Mortgage Loan, an amount equal to
(A) the Stated Principal Balance of such Mortgage Loan as of the date of
repurchase plus (B) interest on such Stated Principal Balance at the Mortgage
Loan Remittance Rate from and including the last Due Date through which interest
has been paid on behalf of the Mortgagor or advanced by the Servicer to the day
prior to such date of repurchase, less amounts received in respect of such
repurchased Mortgage Loan which are being held in the Custodial Account for
distribution in connection with such Mortgage Loan.
Residential Dwelling: Any one of the following: (i) a detached
one-family dwelling, (ii) a detached two- to four-family dwelling, (iii) a
one-family dwelling unit in a condominium project, (iv) a one-family dwelling in
a planned unit development, none of which is a mobile or manufactured home or
(v) a one-family dwelling unit in a Co-op property.
9
Securities: The securities issued in connection with a Securitization
evidencing beneficial ownership interests in a trust the assets of which include
the Mortgage Loans.
Securitization: The transfer of the Mortgage Loans to a trust formed as
part of a publicly issued and/or privately placed, rated securitization,
including the issuance of the related Securities.
Seller: Bank of America, N.A., a national banking association, or its
successor in interest or any successor to the Seller under this Agreement
appointed as herein provided.
Servicer: Bank of America, N.A., a national banking association, or its
successor in interest or any successor to the Servicer under this Agreement
appointed as herein provided.
Servicing Advances: All customary, reasonable and necessary
out-of-pocket costs and expenses incurred in the performance by the Servicer of
its servicing obligations, including, but not limited to, the cost of (a) the
preservation, restoration and protection of the Mortgaged Property, (b) any
enforcement or judicial proceedings, including foreclosures, (c) the management
and liquidation of the Mortgaged Property if the Mortgaged Property is acquired
in satisfaction of the Mortgage, and (d) payments made by the Servicer with
respect to a Mortgaged Property pursuant to Subsection 11.08.
Servicing Fee: With respect to each Mortgage Loan, the amount of the
annual fee the Purchaser shall pay to the Servicer, which shall, for each month,
be equal to one-twelfth of the product of (i) the Servicing Fee Rate and (ii)
the Stated Principal Balance of such Mortgage Loan. Such fee shall be payable
monthly, computed on the basis of the same principal amount and period
respecting which any related interest payment on a Mortgage Loan is computed.
The obligation of the Purchaser to pay the Servicing Fee is limited to, and
payable solely from, the interest portion (including recoveries with respect to
interest from Liquidation Proceeds and other proceeds, to the extent permitted
by Subsection 11.05) of related Monthly Payments collected by the Servicer, or
as otherwise provided under Subsection 11.05.
Servicing Fee Rate: With respect to each Mortgage Loan, an amount equal
to 0.375% 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 list of servicing officers furnished to the Purchaser by the
Servicer, as such list may be amended from time to time.
Standard & Poor's: Standard & Poor's, a division of the McGraw Hill
Companies, Inc., or any successor thereto.
Stated Principal Balance: As to each Mortgage Loan as to any date of
determination, (i) the principal balance of the Mortgage Loan at the Cut-off
Date after giving effect to the principal portion of any Monthly Payments due on
or before such date, whether or not received, as well as any Principal
Prepayments received on or before such date, minus (ii) all amounts previously
distributed to the Purchaser with respect to the Mortgage Loan representing
payments or recoveries of principal, or advances in lieu thereof.
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Substitute Mortgage Loan: A mortgage loan substituted by the Seller for
a Deleted Mortgage Loan which must, on the date of such substitution, (i) have a
Stated Principal Balance, after deduction of the principal portion of the
Monthly Payment due in the month of substitution, not in excess of, and not
materially greater or less than, the Stated Principal Balance of the Deleted
Mortgage Loan; (ii) have a Mortgage Interest Rate, Gross Margin, Initial Rate
Cap, Periodic Rate Cap/Floor and Lifetime Rate Cap equal to that of the Deleted
Mortgage Loan; (iii) have a Loan-to-Value Ratio not higher than that of the
Deleted Mortgage Loan; (iv) have a remaining term to maturity not greater than
(and not more than one year less than) that of the Deleted Mortgage Loan; (v)
comply with each representation and warranty set forth in Subsection 7.01; (vi)
be current in the payment of principal and interest; and (vii) be secured by a
Mortgaged Property of the same type and occupancy status as secured the Deleted
Mortgage Loan.
Transfers: As defined in Section 28.
Underwriting Guidelines: The underwriting guidelines of Bank of America
Mortgage, a division of Bank of America, N.A., substantially in the form
attached hereto as Exhibit 5.
Whole Loan Transfers: Any sale or transfer of some or all of the
Mortgage Loans by the Purchaser to a third party, which sale or transfer is not
an Agency Transfer or a Securitization.
SECTION 2. PURCHASE AND CONVEYANCE.
The Seller, in exchange for the payment of the Purchase Price by the
Purchaser on the Closing Date, receipt of which is hereby acknowledged, hereby
sells, transfers, assigns, sets over and conveys to the Purchaser, without
recourse, but subject to the terms of this Agreement, all of its rights, title
and interest in and to the Mortgage Loans identified in the Mortgage Loan
Schedule on Exhibit 4 as being sold by it, which Mortgage Loans identified on
Exhibit 4 collectively have an aggregate Cut-off Date Principal Balance of
[$______________], together with the related Mortgage Files and all rights and
obligations arising under the documents contained therein.
With respect to each Mortgage Loan purchased, the Purchaser shall own
and be entitled to receive: (a) all scheduled principal due after the Cut-off
Date, (b) all other payments and/or recoveries of principal collected on or
after the Cut-off Date (provided, however, that all scheduled payments of
principal due on or before the Cut-off Date and collected by the Servicer after
the Cut-off Date shall belong to the Seller) and (c) all payments of interest on
the Mortgage Loans net of the Servicing Fee (minus that portion of any such
interest payment that is allocable to the period prior to the Cut-off Date).
SECTION 3. MORTGAGE LOAN SCHEDULE.
The Seller shall deliver the Mortgage Loan Schedule to the Purchaser at
least two (2) Business Days prior to the Closing Date.
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SECTION 4. PURCHASE PRICE.
The Purchase Price for the Mortgage Loans shall be the purchase price
set forth in the Purchase Price and Terms Letter plus accrued interest at the
Mortgage Loan Remittance Rate from the Cut-off Date through the day immediately
prior to the Closing Date. Subject to the conditions set forth in Section 8
hereof, the Purchaser shall pay the Purchase Price on a best efforts basis to
the Seller by 4:00 p.m. Eastern Time on the Closing Date. Such payment shall be
made by wire transfer of immediately available funds to the account designated
by the Seller.
SECTION 5. EXAMINATION OF MORTGAGE FILES.
In addition to any rights granted to the Purchaser hereunder to
underwrite the Mortgage Loans and review the Mortgage Loan Documents prior to
the Closing Date, the Purchaser shall be entitled to conduct a due diligence
review of the Mortgage Files in accordance with the timetable and any additional
terms and conditions set forth in the Purchase Price and Terms Letter. Such
underwriting by the Purchaser or its designee shall not impair or diminish the
rights of the Purchaser or any of its successors under this Agreement with
respect to a breach of the representations and warranties contained in this
Agreement. The fact that the Purchaser or its designee has conducted or has
failed to conduct any partial or complete examination of the Mortgage Files
shall not affect the Purchaser's or any of its successors' rights to demand
repurchase or other relief or remedy provided for in this Agreement.
SECTION 6. DELIVERY OF MORTGAGE LOAN DOCUMENTS.
Subsection 6.01. Possession of Mortgage Files.
The contents of each Mortgage File required to be retained by the
Servicer to service the Mortgage Loans pursuant to this Agreement and thus not
delivered to the Purchaser or its designee are and shall be held in trust by the
Servicer for the benefit of the Purchaser as the owner thereof. The Servicer's
possession of any portion of each such Mortgage File is at the will of the
Purchaser for the sole purpose of facilitating servicing of the Mortgage Loans
pursuant to this Agreement, and such retention and possession by the Servicer
shall be in a custodial capacity only. The ownership of each Mortgage Note, each
Mortgage and the contents of each Mortgage File is vested in the Purchaser and
the ownership of all records and documents with respect to the related Mortgage
Loan prepared by or which come into the possession of the Servicer shall
immediately vest in the Purchaser and shall be retained and maintained, in
trust, by the Servicer at the will of the Purchaser in such custodial capacity
only. The Mortgage File retained by the Servicer with respect to each Mortgage
Loan pursuant to this Agreement shall be appropriately identified in the
Servicer's computer system to reflect clearly the ownership of such related
Mortgage Loan by the Purchaser. The Servicer shall release from its custody the
contents of any Mortgage File retained by it only in accordance with this
Agreement, except when such release is required in connection with a repurchase
of any such Mortgage Loan pursuant to Subsection 7.03 of this Agreement or if
required under applicable law or court order. The Servicer shall deliver to the
Purchaser copies of any documents in a Mortgage File reasonably requested by the
Purchaser within two (2) days after the date of such request, at the expense of
the Purchaser.
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Subsection 6.02. Books and Records.
All rights arising out of the Mortgage Loans including, but not limited
to, all funds received by the Servicer after the Cut-off Date on or in
connection with a Mortgage Loan as provided in Section 2 shall be vested in the
Purchaser; provided, however, that all such funds received on or in connection
with a Mortgage Loan as provided in Section 2 shall be received and held by the
Servicer in trust for the benefit of the Purchaser as the owner of the Mortgage
Loans pursuant to the terms of this Agreement.
As more fully set forth in Section 20, it is the express intention of
the parties that the transactions contemplated by this Agreement be, and be
construed as, a sale of the Mortgage Loans by the Seller and not a pledge of the
Mortgage Loans by the Seller to the Purchaser to secure a debt or other
obligation of the Seller. Consequently, the sale of each Mortgage Loan shall be
reflected as a purchase on the Purchaser's business records, tax returns and
financial statements, and as a sale of assets on the Seller's business records,
tax returns and financial statements.
Subsection 6.03. Delivery of Mortgage Loan Documents.
With respect to each Mortgage Loan, the Seller shall deliver and
release to the Purchaser, or its designee, (a) at least five (5) Business Days
prior to the Closing Date (or such later date as the Purchaser may reasonably
request), the original Mortgage Note endorsed in blank and the original
Assignment of Mortgage assigned in blank and (b) the other Mortgage Loan
Documents no later than sixty (60) days following the Closing Date, subject to
the following paragraph. All documents shall be original documents or, in the
case of Mortgage Loan Documents delivered for recording, either the original
recorded documents or clerk-certified copies.
In the event that such original or copy of any document submitted for
recordation to the appropriate public recording office is not so delivered to
the Purchaser or its designee within one hundred eighty (180) days following the
Closing Date, and in the event that the Seller does not cure such failure within
sixty (60) days after receipt of written notification of such failure from the
Purchaser, the related Mortgage Loan shall, upon the request of the Purchaser,
be repurchased by the Seller at a price and in the manner specified in
Subsection 7.03. The foregoing repurchase obligation shall not apply in the
event the Seller cannot cause the Servicer to deliver such original or
clerk-certified copy of any document submitted for recordation to the
appropriate public recording office within the specified period due to a delay
caused by the recording office in the applicable jurisdiction; provided that the
Seller shall cause the Servicer instead to deliver a recording receipt of such
recording office or, if such recording receipt is not available, an officer's
certificate of a Servicing Officer of the Servicer, confirming that such
document has been accepted for recording and that the Servicer shall immediately
deliver such document upon receipt; and, provided further, that if the Seller
cannot cause the Servicer to deliver such original or clerk-certified copy of
any document submitted for recordation to the appropriate public recording
office within the specified time for any reason within one hundred eighty (180)
days after receipt of written notification of such failure from the Purchaser,
the Seller shall repurchase the Mortgage Loan at the price and in the manner
specified in Subsection 7.03.
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To the extent received by it, the Servicer shall promptly forward to
the Purchaser, or its designee, original documents evidencing an assumption,
modification, consolidation or extension of any Mortgage Loan entered into in
accordance with this Agreement.
SECTION 7. REPRESENTATIONS, WARRANTIES AND COVENANTS; REMEDIES FOR BREACH.
Subsection 7.01. Representations and Warranties Regarding Individual
Mortgage Loans.
The Seller, with respect to Mortgage Loans sold by it, and, solely if
specified below, the Servicer, hereby represent and warrant to the Purchaser
that, as to each Mortgage Loan, as of the Closing Date or such other date
specified herein:
(a) The information set forth in the Mortgage Loan Schedule
and the Mortgage Loan Documents is true, correct and complete in all
material respects.
(b) There are no defaults by the Seller, the Servicer or any
prior originator in complying with the terms of the Mortgage, and all
taxes, ground rents, governmental assessments, insurance premiums,
leasehold payments, water, sewer and municipal charges which previously
became due and owing have been paid, or escrow funds have been
established in an amount sufficient to pay for every such escrowed item
which remains unpaid and which has been assessed but is not yet due and
payable.
(c) The terms of the Mortgage Note and the Mortgage have not
been impaired, waived, altered or modified in any respect, except by
written instruments which have been recorded in the applicable public
recording office required by law or if necessary to maintain the lien
priority of the Mortgage, and which have been delivered to the
Purchaser; the substance of any such waiver, alteration or modification
has been approved by the insurer under the Primary Mortgage Insurance
Policy, if any, and by the title insurer, to the extent required by the
related policy, and is reflected on the Mortgage Loan Schedule. No
other instrument of waiver, alteration or modification has been
executed, and no Mortgagor has been released, in whole or in part,
except in connection with an assumption agreement approved by the
insurer under the Primary Mortgage Insurance Policy, if any, and by the
title insurer, to the extent required by the policy, and which
assumption agreement is a part of the Mortgage File and is reflected on
the Mortgage Loan Schedule.
(d) The Mortgage Note and the Mortgage are not subject to any
right of rescission, set-off, counterclaim or defense, including,
without limitation, the defense of usury, nor will the operation of any
of the terms of the Mortgage Note and the Mortgage, or the exercise of
any right thereunder, render either the Mortgage Note or the Mortgage
unenforceable, in whole or in part, or subject to any right of
rescission, set-off, counterclaim or defense, including, without
limitation, the defense of usury, and no such right of rescission,
set-off, counterclaim or defense has been asserted with respect
thereto; and the Mortgagor was not a debtor in any state or federal
bankruptcy or insolvency proceeding at the time the Mortgage Loan was
originated.
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(e) All buildings or other customarily insured improvements
upon the Mortgaged Property are insured by an insurer generally
acceptable to Xxxxxx Xxx and to prudent mortgage lending institutions
against loss by fire, hazards of extended coverage and such other
hazards as are provided for in the Xxxxxx Mae Guides as well as all
additional requirements set forth herein, pursuant to an insurance
policy conforming to the requirements of Customary Servicing Procedures
and providing coverage in an amount equal to the lesser of (i) the full
insurable value of the Mortgaged Property or (ii) the outstanding
principal balance owing on the Mortgage Loan. All such insurance
policies are in full force and effect and contain a standard mortgagee
clause naming the originator of the Mortgage Loan, its successors and
assigns as mortgagee and all premiums thereon have been paid. If the
Mortgaged Property is in an area identified on a flood hazard map or
flood insurance rate map issued by the Federal Emergency Management
Agency as having special flood hazards (and such flood insurance has
been made available), a flood insurance policy meeting the requirements
of the current guidelines of the Federal Insurance Administration is in
effect which policy conforms to the requirements of Xxxxxx Xxx or
Xxxxxxx Mac. The Mortgage obligates the Mortgagor thereunder to
maintain all such insurance at the Mortgagor's cost and expense, and on
the Mortgagor's failure to do so, authorizes the holder of the Mortgage
to maintain such insurance at the Mortgagor's cost and expense and to
seek reimbursement therefor from the Mortgagor.
(f) Any and all requirements of any federal, state or local
law including, without limitation, usury, truth in lending, real estate
settlement procedures, consumer credit protection, equal credit
opportunity, fair housing or disclosure laws applicable to the
origination and servicing of the Mortgage Loan have been complied with;
the Servicer maintains, and shall maintain, evidence of such compliance
as required by applicable law or regulation and shall make such
evidence available for inspection at the Servicer's office during
normal business hours upon reasonable advance notice.
(g) The Mortgage has not been satisfied, canceled,
subordinated or rescinded, in whole or in part (other than as to
Principal Prepayments in full which may have been received on or after
the Cut-off Date and prior to the Closing Date), and the Mortgaged
Property has not been released from the lien of the Mortgage, in whole
or in part, nor has any instrument been executed that would effect any
such satisfaction, cancellation, subordination, rescission or release.
Neither the Seller nor the Servicer has waived the performance by the
Mortgagor of any action, if the Mortgagor's failure to perform such
action would cause the Mortgage Loan to be in default, and neither the
Seller nor the Servicer has waived any default.
(h) The Mortgage is a valid, existing, perfected and
enforceable first lien on the Mortgaged Property, including all
improvements on the Mortgaged Property, free and clear of all adverse
claims, liens and encumbrances having priority over the lien of the
Mortgage, subject only to (i) the lien of current real property taxes
and assessments not yet due and payable, (ii) covenants, conditions and
restrictions, rights of way, easements and other matters of the public
record as of the date of recording being acceptable to mortgage lending
institutions generally and either (A) specifically referred to in the
lender's title insurance policy delivered to the originator of the
Mortgage Loan or (B) which do not adversely affect the Appraised Value
of the Mortgaged Property and (iii) 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 the Mortgage or the use, enjoyment, value or
marketability of the related Mortgaged Property. Any security
agreement, chattel mortgage or equivalent document related to and
delivered in connection with the Mortgage Loan establishes and creates
a valid, existing and enforceable first lien and first priority
security interest on the property described therein and the Seller has
the full right to sell and assign the same to the Purchaser. With
respect to any Co-op Loan, the related Mortgage is a valid, subsisting
and enforceable first priority security interest on the related
cooperative shares securing the Mortgage Note, subject only to (a)
liens of the related residential cooperative housing corporation for
unpaid assessments representing the Mortgagor's pro rata share of the
related residential cooperative housing corporation's payments for its
blanket mortgage, current and future real property taxes, insurance
premiums, maintenance fees and other assessments to which like
collateral is commonly subject and (b) other matters to which like
collateral is commonly subject which do not materially interfere with
the benefits of the security interest intended to be provided by the
related security agreement.
15
(i) The Mortgage Note, the related Mortgage and, in the case
of a Co-op Loan, the related security agreement, are original and
genuine and each is the legal, valid and binding obligation of the
maker thereof, enforceable in all respects in accordance with its terms
except as enforceability may be limited by (i) bankruptcy, insolvency,
liquidation, receivership, moratorium, reorganization or other similar
laws affecting the enforcement of the rights of creditors and (ii)
general principles of equity, whether enforcement is sought in a
proceeding in equity or at law and the Seller has taken all action
necessary to transfer such rights of enforceability to the Purchaser.
(j) All parties to the Mortgage Note, the Mortgage and, in the
case of a Co-op Loan, the related security agreement, had the legal
capacity to enter into the Mortgage Loan and to execute and deliver the
Mortgage Note and the Mortgage, and the Mortgage Note and the Mortgage
have been duly and properly executed by such parties. Either the
Mortgagor is a natural person or the related co-borrower or guarantor
is a natural person.
(k) The proceeds of the Mortgage Loan have been fully
disbursed to or for the account of the Mortgagor and there is no
obligation for the Mortgagee to advance additional funds thereunder and
any and all requirements as to completion of any on-site or off-site
improvement and as to disbursements of any escrow funds therefor have
been complied with. All costs, fees and expenses incurred in making or
closing the Mortgage Loan and the recording of the Mortgage have been
paid, and the Mortgagor is not entitled to any refund of any amounts
paid or due to the Mortgagee pursuant to the Mortgage Note or Mortgage.
(l) The Seller and all other parties which have had any
interest in the Mortgage Loan, whether as mortgagee, assignee, pledgee
or otherwise, are (or, during the period in which they held and
disposed of such interest, were) in compliance with any and all
applicable "doing business" and licensing requirements of the laws of
the state wherein the Mortgaged Property is located.
16
(m) The Mortgage Loan is covered by an ALTA or CLTA lender's
title insurance policy, acceptable to Xxxxxx Xxx or Xxxxxxx Mac, issued
by a title insurer acceptable to Xxxxxx Mae or Xxxxxxx Mac and
qualified to do business in the jurisdiction where the Mortgaged
Property is located, insuring (subject to the exceptions contained in
(h)(i), (ii) and (iii) above) the Seller, its successors and assigns as
to the first priority lien of the Mortgage in the original principal
amount of the Mortgage Loan and against any loss by reason of the
invalidity or unenforceability of the lien resulting from the
provisions of the Mortgage providing for adjustment in the Mortgage
Interest Rate or Monthly Payment. The Seller and its successors and
assigns are the sole insureds 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 and its assigns without any further act. No
claims have been made under such lender's title insurance policy, and
the Seller has not done, by act or omission, anything which would
impair the coverage of such lender's title insurance policy.
(n) There is no default, breach, violation or event of
acceleration existing under the Mortgage or the Mortgage Note and no
event which, with the passage of time or with notice and the expiration
of any grace or cure period, would constitute a default, breach,
violation or event permitting acceleration, and neither the Seller nor
the Servicer has waived any default, breach, violation or event
permitting acceleration.
(o) There are no, and, as of the Closing Date, neither the
Seller nor the Servicer has received any notice of any, mechanics' or
similar liens or claims 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 which are or may be liens
prior to, or equal or coordinate with, the lien of the related
Mortgage.
(p) All improvements which were considered in determining the
Appraised Value of the related Mortgaged Property lay wholly within the
boundaries and building restriction lines of the Mortgaged Property,
and no improvements on adjoining properties encroach upon the Mortgaged
Property.
(q) The Mortgage Loan was originated by a commercial bank or
similar banking institution which is supervised and examined by a
federal or state authority, or by a mortgagee approved by the Secretary
of HUD.
(r) Principal payments on the Mortgage Loan commenced no more
than sixty (60) days after the proceeds of the Mortgage Loan were
disbursed. The Mortgage Loans identified on Exhibit 4 are 1/1 year
adjustable rate mortgage loans, each having an original term to
maturity of not more than thirty (30) years, with interest payable in
arrears on the first day of the month. As to each Mortgage Loan, on
each applicable Adjustment Date, the Mortgage Interest Rate will be
adjusted to equal the sum of the Index plus the applicable Gross
Margin, rounded up or down as provided in the Mortgage Note; provided,
however, that the Mortgage Interest Rate will not increase or decrease
by more than the Initial Rate Cap on the first Adjustment Date or the
Periodic Rate Cap/Floor on any subsequent Adjustment Date, and will in
no event exceed the Lifetime Rate Cap. Each Mortgage Note requires a
Monthly Payment that is sufficient (i) during the period prior to the
first adjustment to the Mortgage Interest Rate, to amortize the
original principal balance fully over the original term thereof and to
pay interest at the related Mortgage Interest Rate, and (ii) during the
period following each Adjustment Date, to amortize the outstanding
principal balance fully as of the first day of such period over the
then- remaining term of such Mortgage Note and to pay interest at the
related Mortgage Interest Rate. No Mortgage Note permits negative
amortization. Interest on the Mortgage Note is calculated on the basis
of a 360-day year consisting of twelve 30-day months. Unless otherwise
indicated on the Mortgage Loan Schedule, no Mortgage Loan is a
Convertible Mortgage Loan.
17
(s) There is no proceeding pending or, to the Seller's
knowledge, threatened for the total or partial condemnation of the
Mortgaged Property and such property is in good repair and is undamaged
by waste, fire, earthquake or earth movement, windstorm, flood, tornado
or other casualty, so as to affect adversely the value of the Mortgaged
Property as security for the Mortgage Loan or the use for which the
premises were intended.
(t) The Mortgage and related Mortgage Note contain customary
and enforceable provisions such as to render the rights and remedies of
the holder thereof adequate for the realization against the Mortgaged
Property of the benefits of the security provided thereby, including
(i) in the case of a Mortgage designated as a deed of trust, by
trustee's sale, and (ii) otherwise by judicial foreclosure. To the best
of the Seller's knowledge, following the date of origination of the
Mortgage Loan, the Mortgaged Property has not been subject to any
bankruptcy proceeding or foreclosure proceeding and the Mortgagor has
not filed for protection under applicable bankruptcy laws. There is no
homestead or other exemption or right available to the Mortgagor or any
other person which would interfere with the right to sell the Mortgaged
Property at a trustee's sale or the right to foreclose the Mortgage.
(u) The Mortgage Note and Mortgage are on forms acceptable to
Xxxxxx Xxx or Xxxxxxx Mac.
(v) The Mortgage Note is not and has not been secured by any
collateral except the lien of the corresponding Mortgage on the
Mortgaged Property and the security interest of any applicable security
agreement or chattel mortgage referred to in (h) above.
(w) The Mortgage File contains an appraisal of the related
Mortgaged Property, in a form acceptable to Xxxxxx Mae or Xxxxxxx Mac
and such appraisal complies with the requirements of FIRREA, and was
made and signed, prior to the approval of the Mortgage Loan
application, by a Qualified Appraiser.
(x) In the event the Mortgage constitutes a deed of trust, a
trustee, duly qualified under applicable law to serve as such, has been
properly designated and currently so serves and is named in the
Mortgage, and no fees or expenses are or will become payable by the
Purchaser to the trustee under the deed of trust, except in connection
with a trustee's sale after default by the Mortgagor.
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(y) The Mortgage Loan is not a graduated payment mortgage loan
and the Mortgage Loan does not have a shared appreciation, balloon
payment or other contingent interest feature, nor does it contain any
"buydown" provision which is currently in effect.
(z) The Mortgage contains an enforceable provision for the
acceleration of the payment of the unpaid principal balance of the
Mortgage Loan in the event that the Mortgaged Property is sold or
transferred without the prior written consent of the mortgagee
thereunder.
(aa) The Mortgagor has received all disclosure materials
required by applicable law with respect to the making of mortgage loans
of the same type as the Mortgage Loan and rescission materials required
by applicable law if the Mortgage Loan is a Refinanced Mortgage Loan
and has acknowledged receipt of such materials to the extent required
by applicable law and such documents will remain in the Mortgage File.
(bb) No Mortgage Loan has an LTV at origination in excess of
80%. Each Mortgage Loan with an LTV at origination in excess of 80%, if
any, will be subject to a Primary Mortgage Insurance Policy, issued by
an insurer acceptable to Xxxxxx Mae or Xxxxxxx Mac at the time of
origination, which insures that portion of the Mortgage Loan in excess
of the portion of the Appraised Value of the Mortgaged Property as
required by Xxxxxx Mae and Xxxxxxx Mac guidelines. All provisions of
such Primary Mortgage 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 Mortgage subject to any such Primary
Mortgage Insurance Policy obligates the Mortgagor thereunder to
maintain such insurance and to pay all premiums and charges in
connection therewith at least until the LTV of such Mortgage Loan is
reduced to less than 80%. The Mortgage Interest Rate for the Mortgage
Loan does not include any such insurance premium. No Mortgage Loan
requires payment of such premiums, in whole or in part, by the
Purchaser.
(cc) As of the date of origination of the Mortgage Loan, (i)
the Mortgaged Property is lawfully occupied under applicable law, (ii)
all inspections, licenses and certificates required to be made or
issued with respect to all occupied portions of the Mortgaged Property
and, with respect to the use and occupancy of the same, including but
not limited to certificates of occupancy, have been made or obtained
from the appropriate authorities and (iii) no improvement located on or
part of the Mortgaged Property is in violation of any zoning law or
regulation.
(dd) The Assignment of Mortgage is in recordable form and is
acceptable for recording under the laws of the jurisdiction in which
the Mortgaged Property is located.
(ee) All payments required to be made prior to the Cut-off
Date for such Mortgage Loan under the terms of the Mortgage Note have
been made, the Mortgage Loan has not been dishonored, there are no
material defaults under the terms of the Mortgage Loan and no Mortgage
Loan has been thirty (30) days or more delinquent in the twelve (12)
month period immediately prior to the Cut-off Date.
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(ff) None of the Seller, the Servicer or any prior originator
or servicer has advanced funds, or induced, solicited or knowingly
received any advance from any party other than the Mortgagor, directly
or indirectly, for the payment of any amount due under the Mortgage
Loan.
(gg) With respect to each Mortgage Loan, the Servicer is in
possession of a complete Mortgage File except for the documents which
have been delivered to the Purchaser or which have been submitted for
recording and not yet returned.
(hh) Immediately prior to the payment of the Purchase Price,
the Seller was the sole owner and holder of the Mortgage Loans and the
indebtedness evidenced by the Mortgage Note. The Mortgage Loans,
including the Mortgage Note and the Mortgage, were not assigned or
pledged by the Seller and the Seller had good and marketable title
thereto, and the Seller had full right to transfer and sell the
Mortgage Loans to the Purchaser free and clear of any encumbrance,
participation interest, lien, equity, pledge, claim or security
interest and had full right and authority subject to no interest or
participation in, or agreement with any other party to sell or
otherwise transfer the Mortgage Loans. Following the sale of the
Mortgage Loan, the Purchaser will own such Mortgage Loan free and clear
of any encumbrance, equity, participation interest, lien, pledge,
charge, claim or security interest. The Seller intends to relinquish
all rights to monitor, possess and control the Mortgage Loan except in
connection with the servicing of the Mortgage Loan by the Servicer as
set forth in this Agreement. After the Closing Date, neither the Seller
nor the Servicer will have any right to modify or alter the terms of
the sale of the Mortgage Loan and neither the Seller nor the Servicer
will have any obligation or right to repurchase the Mortgage Loan,
except as provided in this Agreement or as otherwise agreed to by the
Seller, the Servicer and the Purchaser.
(ii) Any future advances made prior to the Cut-off Date have
been consolidated with the outstanding principal amount secured by the
Mortgage, and the secured principal amount, as consolidated, bears a
single interest rate and single repayment term. The lien of the
Mortgage securing the consolidated principal amount is expressly
insured as having first lien priority by a title insurance policy, an
endorsement to the policy insuring the mortgagee's consolidated
interest or by other title evidence acceptable to Xxxxxx Mae and
Xxxxxxx Mac. The consolidated principal amount does not exceed the
original principal amount of the Mortgage Loan.
(jj) The Mortgage Loan was underwritten in accordance with the
Underwriting Guidelines in effect at the time of origination with
exceptions thereto exercised in a reasonable manner, which exceptions
will have no material adverse effects on the Purchaser.
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(kk) With respect to a Mortgage Loan that is not a Co-op Loan
and is not secured by an interest in a leasehold estate, the Mortgaged
Property is located in the state identified in the Mortgage Loan
Schedule and consists of a parcel of real property with a detached
single family residence erected thereon, or a two- to four-family
dwelling, or an individual condominium unit, or an individual unit in a
planned unit development; provided, however, that any condominium
project or planned unit development generally conforms with the
Underwriting Guidelines regarding such dwellings, and no residence or
dwelling is a mobile home or manufactured dwelling (or underlying
Mortgaged Property, in the case of a Co-op Loan). As of the date of
origination, no portion of the Mortgaged Property was used for
commercial purposes and, to the Seller's knowledge, since the date of
origination, no portion of the Mortgaged Property has been used for
commercial purposes; provided, that Mortgaged Properties which contain
a home office shall not be considered as being used for commercial
purposes as long as the Mortgaged Property has not been altered for
commercial purposes and is not storing any chemicals or raw materials
other than those commonly used for homeowner repair, maintenance and/or
household purposes.
(ll) If the Mortgaged Property is a condominium unit or a
planned unit development (other than a de minimis planned unit
development) such condominium or planned unit development project meets
Xxxxxx Xxx or Xxxxxxx Mac eligibility requirements for sale to Xxxxxx
Mae or Xxxxxxx Mac, as the case may be, or is located in a condominium
or planned unit development project which has received Xxxxxx Mae or
Xxxxxxx Mac project approval or as to which Xxxxxx Mae's and Xxxxxxx
Mac's eligibility requirements have been waived.
(mm) The Seller used no adverse selection procedures in
selecting the Mortgage Loan from among the outstanding first-lien,
residential mortgage loans owned by it which were available for
inclusion in the Mortgage Loans.
(nn) Each Mortgage Loan is a "qualified mortgage" within
Section 860G(a)(3) of the Code.
(oo) With respect to each Mortgage where a lost note affidavit
has been delivered to the Purchaser or its designee in place of the
related Mortgage Note, the related Mortgage Note is no longer in
existence. Each such lost note affidavit is substantially in the form
attached hereto as Exhibit 6.
(pp) No fraud was committed by the Seller or the Servicer or,
to the Seller's or the Servicer's knowledge, any other person in
connection with the origination of the Mortgage Loan.
(qq) The origination practices used by the Seller and the
collection and servicing practices used by the Servicer with respect to
each Mortgage Loan have been in all respects legal, proper, prudent and
customary in the mortgage origination and servicing industry and the
collection and servicing practices used by the Servicer have been
acceptable to Xxxxxx Mae and Xxxxxxx Mac.
(rr) The Mortgagor is not in bankruptcy and is not insolvent
and neither the Seller nor the Servicer have any knowledge of any
circumstances or condition with respect to the Mortgage, the Mortgaged
Property, the Mortgagor or the Mortgagor's credit standing that could
reasonably be expected to cause investors to regard the Mortgage Loan
as an unacceptable investment, cause the Mortgage Loan to become
delinquent or materially adversely affect the value or the
marketability of the Mortgage Loan.
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(ss) The Mortgagor has not notified the Seller or the
Servicer, and neither the Seller nor the Servicer has knowledge of any
relief requested or allowed to the Mortgagor under the Soldiers' and
Sailors' Civil Relief Act of 1940.
(tt) No Mortgage Loan was made in connection with (i) the
construction or rehabilitation of a Mortgaged Property or (ii)
facilitating the trade-in or exchange of a Mortgaged Property.
(uu) To the best of the Seller's knowledge, there exists no
violation of any local, state or federal environmental law, rule or
regulation in respect of the Mortgaged Property which violation has had
or would have a material adverse effect on the market value of such
Mortgaged Property. There is no pending action or proceeding directly
involving any Mortgaged Property of which the Seller or the Servicer is
aware in which compliance with any environmental law, rule or
regulation is an issue.
(vv) No action, inaction, or event has occurred and no state
of affairs exists or has existed that has resulted or will result in
the exclusion from, denial of, or defense to coverage under any
applicable special hazard insurance policy, Primary Mortgage Insurance
Policy (if any) or bankruptcy bond, irrespective of the cause of such
failure of coverage. In connection with the placement of any such
insurance, no commission, fee, or other compensation has been or will
be received by the Seller or the Servicer or any designee of the Seller
or the Servicer or any corporation in which the Seller, the Servicer or
any officer, director, or employee of the Seller or the Servicer had a
financial interest at the time of placement of such insurance.
(ww) With respect to any ground lease to which a Mortgaged
Property may be subject: (A) the Mortgagor is the owner of a valid and
subsisting leasehold interest under such ground lease; (B) such ground
lease is in full force and effect, unmodified and not supplemented by
any writing or otherwise; (C) all rent, additional rent and other
charges reserved therein have been fully paid to the extent payable as
of the Closing Date; (D) the Mortgagor enjoys the quiet and peaceful
possession of the leasehold estate; (E) the Mortgagor is not in default
under any of the terms of such ground lease, and, to the best of the
Seller's knowledge, there are no circumstances which, with the passage
of time or the giving of notice, or both, would result in a default
under such ground lease; (F) the lessor under such ground lease is not
in default under any of the terms or provisions of such ground lease on
the part of the lessor to be observed or performed; (G) the lessor
under such ground lease has satisfied any repair or construction
obligations due as of the Closing Date pursuant to the terms of such
ground lease; and (H) the execution, delivery and performance of the
Mortgage do not require the consent (other than those consents which
have been obtained and are in full force and effect) under, and will
not contravene any provision of or cause a default under, such ground
lease.
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(xx) With respect to escrow deposits and payments that the
Servicer is entitled to collect, all such payments are in the
possession of, or under the control of the Servicer, and there exist no
deficiencies in connection therewith for which customary arrangements
for repayment thereof have not been made. All escrow payments have been
collected in full compliance with state and federal law and the
provisions of the related Mortgage Note and Mortgage. As to any
Mortgage Loan that is the subject of an escrow, escrow of funds is not
prohibited by applicable law and has been established in an amount
sufficient to pay for every escrowed item that remains unpaid and has
been assessed but is not yet due and payable. No escrow deposits or
other charges or payments due under the Mortgage Note have been
capitalized under any Mortgage or the related Mortgage Note.
(yy) The Mortgage Loan characteristics set forth in Section 4
of the Purchase Price and Terms Letter are true and complete in all
material respects.
(zz) With respect to a Mortgage Loan that is a Co-op Loan, the
stock that is pledged as security for the Mortgage Loan is held by a
person as a tenant-stockholder (as defined in Section 216 of the Code)
in a cooperative housing corporation (as defined in Section 216 of the
Code).
(aaa) No Mortgage Loan is (i) covered by the Home Ownership
and Equity Protection Act of 1994, as amended ("HOEPA"), (ii) in
violation of any comparable state law or (iii) considered a "high cost"
mortgage loan under Section 32 of HOEPA or a "high cost," "predatory"
or similar loan under any other applicable state, federal or local law
(or a similarly classified loan using different terminology under a law
imposing heightened regulatory scrutiny or additional legal liability
for residential mortgage loans having high interest rates, points
and/or fees).
Subsection 7.02. Seller and Servicer Representations.
The Seller and Servicer hereby represent and warrant to the Purchaser
that, as to itself, as of the Closing Date:
(a) It is a national banking association, duly organized,
validly existing, and in good standing under the laws of the United
States of America and has all licenses necessary to carry on its
business as now being conducted and is licensed, qualified and in good
standing in the states where the Mortgaged Property is located if the
laws of such state require licensing or qualification in order to
conduct business of the type conducted by it. It is an approved
seller/servicer in good standing of conventional residential mortgage
loans for Xxxxxx Mae or Xxxxxxx Mac and is a HUD-approved mortgagee
under Section 203 of the National Housing Act. It has corporate power
and authority to execute and deliver this Agreement and to perform in
accordance herewith; the execution, delivery and performance of this
Agreement (including all instruments of transfer to be delivered
pursuant to this Agreement) by it and the consummation of the
transactions contemplated hereby have been duly and validly authorized.
This Agreement, assuming due authorization, execution and delivery by
the Purchaser, evidences the legal, valid, binding and enforceable
obligation of it, subject to applicable law except as enforceability
may be limited by (i) bankruptcy, insolvency, liquidation,
receivership, moratorium, reorganization or other similar laws
affecting the enforcement of the rights of creditors and (ii) general
principles of equity, whether enforcement is sought in a proceeding in
equity or at law. All requisite corporate action has been taken by it
to make this Agreement valid and binding upon it in accordance with the
terms of this Agreement.
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(b) No consent, approval, authorization or order is required
for the transactions contemplated by this Agreement from any court,
governmental agency or body, or federal or state regulatory authority
having jurisdiction over it or, if required, such consent, approval,
authorization or order has been or will, prior to the Closing Date, be
obtained.
(c) The consummation of the transactions contemplated by this
Agreement are in its ordinary course of business and will not result in
the breach of any term or provision of its charter or by-laws or result
in the breach of any term or provision of, or conflict with or
constitute a default under or result in the acceleration of any
obligation under, any agreement, indenture or loan or credit agreement
or other instrument to which it or its property is subject, or result
in the violation of any law, rule, regulation, order, judgment or
decree to which it or its property is subject.
(d) Its transfer, assignment and conveyance of the Mortgage
Notes and the Mortgages pursuant to this Agreement are not subject to
the bulk transfer or any similar statutory provisions in effect in any
applicable jurisdiction.
(e) There is no action, suit, proceeding or investigation
pending or, to its best knowledge, threatened against it which, either
individually or in the aggregate, would result in any material adverse
change in its business, operations, financial condition, properties or
assets, or in any material impairment of its right or ability to carry
on its business substantially as now conducted or which would draw into
question the validity of this Agreement or the Mortgage Loans or of any
action taken or to be taken in connection with its obligations
contemplated herein, or which would materially impair its ability to
perform under the terms of this Agreement.
(f) It 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.
(g) It acknowledges and agrees that the Servicing Fee shall be
treated by the Servicer, for accounting and tax purposes, as
compensation for the servicing and administration of the Mortgage Loans
pursuant to this Agreement.
(h) It has determined that the disposition of the Mortgage
Loans pursuant to this Agreement will be afforded sale treatment for
accounting and tax purposes.
(i) It is solvent and the sale of the Mortgage Loans will not
cause it to become insolvent. The sale of the Mortgage Loans is not
undertaken with the intent to hinder, delay or defraud any of its
creditors.
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(j) It has not dealt with any broker, investment banker, agent
or other person that may be entitled to any commission or compensation
in connection with the sale of the Mortgage Loans.
(k) None of this Agreement, the Mortgage Loan Schedule or the
Mortgage Loan Documents furnished in connection with this transaction
contain any untrue statement of fact by the Seller or the Servicer, or
omits to state a fact, necessary to make the statements of the Seller
or Servicer herein or therein, in the light of the circumstances under
which they were made, not materially misleading; provided, however,
that the Purchaser acknowledges that it had the opportunity to dictate
the contents of the Mortgage Loan Schedule and, therefore, the Seller
and the Servicer shall not be liable for any omitted fields on the
Mortgage Loan Schedule that were not requested by the Purchaser.
(l) The Seller has complied with all applicable anti-money
laundering laws and regulations, including without limitation the USA
Patriot Act of 2001 (collectively, the "Anti-Money Laundering Laws");
the Seller has established an anti-money laundering compliance program
as required by the Anti-Money Laundering Laws, has conducted the
requisite due diligence in connection with the origination of each
Mortgage Loan for purposes of the Anti-Money Laundering Laws, including
with respect to the legitimacy of the applicable Mortgagor and the
origin of the assets used by the said Mortgagor to purchase the
property in question, and maintains, and will maintain, sufficient
information to identify the applicable Mortgagor for purposes of the
Anti-Money Laundering Laws.
Subsection 7.03. Remedies for Breach of Representations and Warranties.
It is understood and agreed that the representations and warranties set
forth in Subsections 7.01 and 7.02 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 of Mortgage or the examination or lack of examination of any Mortgage
File. Upon discovery by the Seller, the Servicer or the Purchaser of a breach of
any of the foregoing representations and warranties which materially and
adversely affects the value of the Mortgage Loans or the interest of the
Purchaser therein (or which materially and adversely affects the interest of the
Purchaser in or the value of the related Mortgage Loan in the case of a
representation and warranty relating to a particular Mortgage Loan), the party
discovering such breach shall give prompt written notice to the others.
Within sixty (60) days after the earlier of either discovery by or
notice to either the Seller or the Servicer of any breach of a representation or
warranty which materially and adversely affects the value of a Mortgage Loan or
the Mortgage Loans or the interest of the Purchaser therein, the Seller or the
Servicer, as the case may be, shall use its best efforts promptly to cure such
breach in all material respects and, if such breach cannot be cured, the Seller
shall repurchase such Mortgage Loan or Mortgage Loans at the Repurchase Price.
However, the Seller may, at its option and assuming that the Seller has a
Substitute Mortgage Loan, rather than repurchase the Mortgage Loan as provided
above, remove such Mortgage Loan and substitute in its place a Substitute
Mortgage Loan or Substitute Mortgage Loans; provided, however, that any such
substitution shall be effected not later than ninety (90) days after the Closing
Date. If the Seller has no Substitute Mortgage Loan, it shall repurchase the
deficient Mortgage Loan. Any repurchase of a Mortgage Loan pursuant to the
foregoing provisions of this Subsection 7.03 shall occur on a date designated by
the Purchaser, and acceptable to the Seller, and shall be accomplished by the
Seller remitting to the Servicer the amount of the Repurchase Price for
distribution to the Purchaser on the next scheduled Remittance Date.
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At the time of repurchase of any deficient Mortgage Loan (or removal of
any Deleted Mortgage Loan), the Purchaser and the Seller shall arrange for the
assignment of the repurchased Mortgage Loan (or Deleted Mortgage Loan) to the
Seller or its designee and the delivery to the Seller of any documents held by
the Purchaser relating to the repurchased Mortgage Loan in the manner required
by this Agreement with respect to the purchase and sale of such Mortgage Loan on
the Closing Date. In the event a deficient Mortgage Loan is repurchased, the
Seller shall, simultaneously with its remittance to the Servicer of such
Repurchase Price, give written notice to the Purchaser that such repurchase has
taken place. Upon such repurchase, the Mortgage Loan Schedule shall
simultaneously be amended to reflect the withdrawal of the repurchased Mortgage
Loan from this Agreement.
As to any Deleted Mortgage Loan for which the Seller substitutes one or
more Substitute Mortgage Loans, the Seller shall effect such substitution by
delivering to the Purchaser for each Substitute Mortgage Loan the Mortgage Note,
the Mortgage, the Assignment of Mortgage and such other documents and agreements
as are required by Subsection 6.03. The Seller shall remit to the Servicer for
distribution the Monthly Payment due on each Substitute Mortgage Loan in the
month following the date of such substitution. Monthly Payments due with respect
to Substitute Mortgage Loans in the month of substitution will be retained by
the Seller. For the month of substitution, distributions to the Purchaser will
include the Monthly Payment due on such Deleted Mortgage Loan in the month of
substitution, and the Seller shall thereafter be entitled to retain all amounts
subsequently received by it in respect of such Deleted Mortgage Loan. The Seller
shall give written notice to the Purchaser that such substitution has taken
place and shall amend the Mortgage Loan Schedule to reflect the removal of such
Deleted Mortgage Loan from the terms of this Agreement and the substitution of
the Substitute Mortgage Loan. Upon such substitution, each Substitute Mortgage
Loan shall be subject to the terms of this Agreement in all respects, and the
Seller shall be deemed to have made with respect to such Substitute Mortgage
Loan, as of the date of substitution, the covenants, representations and
warranties set forth in Subsections 7.01 and 7.02.
For any month in which the Seller substitutes one or more Substitute
Mortgage Loans for one or more Deleted Mortgage Loans, the Seller will determine
the amount (if any) by which the aggregate principal balance of all such
Substitute Mortgage Loans as of the date of substitution is less than the
aggregate Stated Principal Balance of all such Deleted Mortgage Loans (after
application of scheduled principal payments due in the month of substitution).
The amount of such shortfall, plus an amount equal to the aggregate of any
Monthly Advances made with respect to such Deleted Mortgage Loans, shall be
remitted to the Servicer by the Seller for distribution by the Servicer in the
month of substitution.
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In addition to such cure, repurchase and substitution obligations, the
Seller or the Servicer shall indemnify the Purchaser and hold it harmless
against any out-of-pocket losses, penalties, fines, forfeitures, reasonable and
necessary legal fees and related costs, judgments, and other costs and expenses
resulting from any claim, demand, defense or assertion by any third party that
is based on or grounded upon, or resulting from, a breach of the Seller or the
Servicer, as applicable, representations and warranties contained in this
Agreement; provided, however, indemnification shall not be available for any
economic losses of the Purchaser due to reinvestment losses, loss of investment
income or any other special, indirect or consequential losses or damages.
No action may be brought against the Seller or the Servicer, as
applicable, relating to or arising out of the breach of any representations and
warranties made in Subsections 7.01 or 7.02 with respect to any Mortgage Loan
unless and until (i) discovery of such breach by the Purchaser or notice thereof
by the Seller or the Servicer to Purchaser, (ii) failure by the Seller or the
Servicer, as applicable, to cure such breach, repurchase such Mortgage Loan as
specified above, substitute a Substitute Mortgage Loan for such Mortgage Loan as
specified above and/or indemnify the Purchaser and (iii) demand upon the Seller
or the Servicer, as applicable, by the Purchaser for compliance with the terms
of this Agreement.
It is understood and agreed that the obligations of the Seller or the
Servicer, as applicable, set forth in this Subsection 7.03 to cure, repurchase
or substitute for a defective Mortgage Loan and/or to indemnify the Purchaser
constitute the sole remedies of the Purchaser respecting a breach of the
representations and warranties set forth in Subsections 7.01 and 7.02.
SECTION 8. CLOSING.
The closing for the purchase and sale of the Mortgage Loans shall take
place on the Closing Date. The closing shall be by telephone, confirmed by
letter or wire as the parties shall agree. The closing shall be subject to each
of the following conditions:
(a) all of the representations and warranties of the Seller
and the Servicer in this Agreement shall be true and correct as of the
Closing Date and no event shall have occurred which, with notice or the
passage of time, would constitute an Event of Default under this
Agreement;
(b) the Seller's attorneys shall have received in escrow all
Closing Documents as specified in Section 9, in such forms as are
agreed upon and acceptable to the Purchaser, duly executed by all
signatories as required pursuant to the terms hereof; and
(c) all other terms and conditions of this Agreement required
to be complied with or performed shall have been complied with or
performed.
SECTION 9. CLOSING DOCUMENTS.
On the Closing Date, the Seller and the Servicer shall deliver to its
attorneys in escrow fully executed originals of:
(a) this Agreement, executed by the Seller and the Servicer,
including all exhibits;
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(b) an Officer's Certificate, in the form of Exhibit 1 hereto,
for the Seller and the Servicer including all attachments thereto;
(c) the Mortgage Loan Schedule, one copy to be attached
hereto;
(d) an opinion of in-house counsel for the Seller and the
Servicer, substantially in the form attached hereto as Exhibit 7;
(e) an Escrow Account Certification;
(f) a Custodial Account Certification;
(g) the Purchase Price and Terms Letter; and
(h) a certified true copy of the Custodial Agreement. On the
Closing Date, the Purchaser will assign to the Seller its rights as the
Servicer under the Custodial Agreement.
SECTION 10. COSTS.
The Seller shall pay any commissions due its salesmen and the legal
fees and expenses of its attorneys. The Purchaser shall pay the cost of
preparing and recording the Assignments of Mortgage (and, if any Assignment of
Mortgage is missing, the reasonable cost of securing a copy of such Assignment
of Mortgage). The Purchaser shall pay the Seller's cost of delivering the
Mortgage Loan Documents to a location designated by the Purchaser (if other than
the Custodian). All other costs and expenses incurred in connection with the
sale of the Mortgage Loans by the Seller to the Purchaser, including without
limitation the fees and expenses of the Custodian, all costs and expenses of the
Seller, the Servicer and the Purchaser incurred in connection with any Transfer
or further assignment of the Mortgage Loans and the Purchaser's attorneys' fees,
shall be paid by the Purchaser.
SECTION 11. ADMINISTRATION AND SERVICING OF MORTGAGE LOANS.
Subsection 11.01. Servicer to Act as Servicer; Subservicing.
The Servicer shall service and administer the Mortgage Loans in
accordance with this Agreement and Customary Servicing Procedures and the terms
of the Mortgage Notes and Mortgages, and shall have full power and authority,
acting alone or through subservicers or agents, to do or cause to be done any
and all things in connection with such servicing and administration which the
Servicer may deem necessary or desirable and consistent with the terms of this
Agreement. The Servicer may perform its servicing responsibilities through
agents or independent contractors, but shall not thereby be released from any of
its responsibilities hereunder. Notwithstanding anything to the contrary, the
Servicer may delegate any of its duties under this Agreement to one or more of
its affiliates without regard to any of the requirements of this section;
provided, however, that the Servicer shall not be released from any of its
responsibilities hereunder by virtue of such delegation. The Mortgage Loans may
be subserviced by one or more unaffiliated subservicers on behalf of the
Servicer provided each subservicer is a Xxxxxx Xxx approved seller/servicer or a
Xxxxxxx Mac approved seller/servicer in good standing, and no event has
occurred, including but not limited to a change in insurance coverage, that
would make it unable to comply with the eligibility for seller/servicers imposed
by Xxxxxx Xxx or Xxxxxxx Mac, or which would require notification to Xxxxxx Mae
or Xxxxxxx Mac. The Servicer shall pay all fees and expenses of the subservicer
from its own funds (provided that any such expenditures that would constitute
Servicing Advances if made by the Servicer hereunder shall be reimbursable to
the Servicer as Servicing Advances), and the subservicer's fee shall not exceed
the Servicing Fee.
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At the cost and expense of the Servicer, without any right of
reimbursement from the Custodial Account, the Servicer shall be entitled to
terminate the rights and responsibilities of a subservicer and arrange for any
servicing responsibilities to be performed by a successor subservicer meeting
the requirements in the preceding paragraph; provided, however, that nothing
contained herein shall be deemed to prevent or prohibit the Servicer, at the
Servicer's option, from electing to service the related Mortgage Loans itself.
If the Servicer's responsibilities and duties under this Agreement are
terminated and if requested to do so by the Purchaser, the Servicer shall at its
own cost and expense terminate the rights and responsibilities of the
subservicer as soon as is reasonably possible. The Servicer shall pay all fees,
expenses or penalties necessary in order to terminate the rights and
responsibilities of the subservicer from the Servicer's own funds without
reimbursement from the Purchaser.
The Servicer shall be entitled to enter into an agreement with the
subservicer for indemnification of the Servicer by the subservicer and nothing
contained in this Agreement shall be deemed to limit or modify such
indemnification.
Any subservicing agreement and any other transactions or services
relating to the Mortgage Loans involving the subservicer shall be deemed to be
between the subservicer and Servicer alone, and the Purchaser shall have no
obligations, duties or liabilities with respect to the subservicer including no
obligation, duty or liability of Purchaser to pay the subservicer's fees and
expenses. For purposes of distributions and advances by the Servicer pursuant to
this Agreement, the Servicer shall be deemed to have received a payment on a
Mortgage Loan when the subservicer has received such payment.
Consistent with the terms of this Agreement, the Servicer may waive,
modify or vary any term of any Mortgage Loan or consent to the postponement of
strict compliance with any such term or in any manner grant indulgence to any
Mortgagor; provided, however, that (unless the Mortgagor is in default with
respect to the Mortgage Loan, or such default is, in the judgment of the
Servicer, imminent, and the Servicer has the consent of the Purchaser) the
Servicer shall not enter into any payment plan or agreement to modify payments
with a Mortgagor lasting more than six (6) months or permit any modification
with respect to any Mortgage Loan which would materially and adversely affect
the Mortgage Loan, including without limitation, any modification that would
change the Mortgage Interest Rate, the Lifetime Rate Cap, the Initial Rate Cap,
the Periodic Rate Cap/Floor or the Gross Margin, defer or forgive the payment of
any principal or interest, change the outstanding principal amount (except for
actual payments of principal), make any future advances or extend the final
maturity date, as the case may be, with respect to such Mortgage Loan. Without
limiting the generality of the foregoing, the Servicer in its own name or acting
through subservicers or agents is hereby authorized and empowered by the
Purchaser when the Servicer believes it appropriate and reasonable in its best
judgment, to execute and deliver, on behalf of itself and the Purchaser, all
instruments of satisfaction or cancellation, or of partial or full release,
discharge and all other comparable instruments, with respect to the Mortgage
Loans and the Mortgaged Properties and to institute foreclosure proceedings or
obtain a deed-in-lieu of foreclosure so as to convert the ownership of such
properties, and to hold or cause to be held title to such properties, on behalf
of the Purchaser pursuant to the provisions of Subsection 11.13.
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The Servicer shall make all required Servicing Advances and shall
service and administer the Mortgage Loans in accordance with all applicable
laws, rules and regulations and shall provide to the Mortgagors any reports
required to be provided to them thereby. The Purchaser shall furnish to the
Servicer any powers of attorney and other documents reasonably necessary or
appropriate to enable the Servicer to carry out its servicing and administrative
duties under this Agreement.
Notwithstanding anything to the contrary contained herein, in
connection with a foreclosure or acceptance of a deed-in-lieu of foreclosure, if
the Servicer has reasonable cause to believe that a Mortgaged Property is
contaminated by hazardous or toxic substances or wastes, or if the Purchaser
otherwise requests an environmental inspection or review of such Mortgaged
Property, such an inspection or review is to be conducted by a qualified
inspector at the Purchaser's expense. Upon completion of the inspection, the
Servicer shall promptly provide the Purchaser with a written report of the
environmental inspection. After reviewing the inspection, the Purchaser shall
determine how the Servicer shall proceed with respect to the Mortgaged Property.
Subsection 11.02. Liquidation of Mortgage Loans.
If any payment due under any Mortgage Loan is not paid when the same
becomes due and payable, or in the event the Mortgagor fails to perform any
other covenant or obligation under the Mortgage Loan and such failure continues
beyond any applicable grace period, the Servicer shall take such action as it
shall deem to be in the best interest of the Purchaser. If any payment due under
any Mortgage Loan remains delinquent for a period of ninety (90) days or more,
the Servicer shall commence foreclosure proceedings in accordance with Customary
Servicing Procedures and the guidelines set forth by Xxxxxx Xxx or Xxxxxxx Mac.
In such connection, the Servicer shall from its own funds make all necessary and
proper Servicing Advances. If the portion of any Liquidation Proceeds or REO
Disposition Proceeds allocable as a recovery of interest on any Mortgage Loan is
less than the full amount of accrued and unpaid interest on such Mortgage Loan
as of the date such proceeds are received, then the applicable Servicing Fees
with respect to such Mortgage Loan shall be paid first and any amounts remaining
thereafter shall be distributed to the Purchaser.
Subsection 11.03. Collection of Mortgage Loan Payments.
Continuously from the date hereof until the principal and interest on
all Mortgage Loans are paid in full, the Servicer will proceed diligently, in
accordance with this Agreement, to collect all payments due under each of the
Mortgage Loans when the same shall become due and payable. Further, the Servicer
will in accordance with Customary Servicing Procedures ascertain and estimate
taxes, assessments, fire and hazard insurance premiums, premiums for Primary
Mortgage Insurance Policies (if any), and all other charges that, as provided in
any Mortgage, 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.
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Subsection 11.04. Establishment of Custodial Account; Deposits in
Custodial 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 Custodial Accounts
(collectively, the "Custodial Account"), titled "Bank of America, N.A., in trust
for Xxxxxx Brothers Bank, FSB as Purchaser of Mortgage Loans and various
Mortgagors." Such Custodial Account shall be established with a Qualified
Depository. In any case, the Custodial Account shall be insured by the FDIC in a
manner which shall provide maximum available insurance thereunder and which may
be drawn on by the Servicer. The creation of the Custodial Account shall be
evidenced by a certificate delivered by the Servicer (the "Custodial Account
Certification") substantially in the form of Exhibit 9 hereto.
The Servicer shall deposit in the Custodial Account on a daily basis,
and retain therein the following payments and collections received or made by it
subsequent to the Cut-off Date (other than in respect of principal and interest
on the Mortgage Loans due on or before the Cut-off Date):
(a) all payments on account of principal, including Principal
Prepayments, on the Mortgage Loans;
(b) all payments on account of interest on the Mortgage Loans
adjusted to the Mortgage Loan Remittance Rate;
(c) all Liquidation Proceeds;
(d) all proceeds received by the Servicer under any title
insurance policy, hazard insurance policy, Primary Mortgage Insurance
Policy (if any) or other insurance policy other than proceeds to be
held in the Escrow Account and applied to the restoration or repair of
the Mortgaged Property or released to the Mortgagor in accordance with
Customary Servicing Procedures;
(e) all awards or settlements in respect of condemnation
proceedings or eminent domain affecting any Mortgaged Property which
are not released to the Mortgagor in accordance with Customary
Servicing Procedures;
(f) any amount required to be deposited in the Custodial
Account pursuant to Subsections 11.15, 11.17 and 11.19;
(g) any amount required to be deposited by the Servicer in
connection with any REO Property pursuant to Subsection 11.13;
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(h) any amounts payable in connection with the repurchase of
any Mortgage Loan pursuant to Subsection 7.03, and all amounts required
to be deposited by the Servicer in connection with shortfalls in
principal amount of Qualified Substitute Mortgage Loans pursuant to
Subsection 7.03;
(i) with respect to each Principal Prepayment in full, an
amount (to be paid by the Servicer out of its own funds) which, when
added to all amounts allocable to interest received in connection with
the Principal Prepayment in full, equals one month's interest on the
amount of principal so prepaid for the month of prepayment at the
applicable Mortgage Loan Remittance Rate; provided, however, that the
Servicer's aggregate obligations under this paragraph for any month
shall be limited to the total amount of Servicing Fees actually
received with respect to the Mortgage Loans by the Servicer during such
month; and
(j) amounts required to be deposited by the Servicer in
connection with the deductible clause of any hazard insurance policy.
The foregoing requirements for deposit in the Custodial Account shall
be exclusive, it being understood and agreed that, without limiting the
generality of the foregoing, payments in the nature of late payment charges,
assumption fees and other ancillary fees need not be deposited by the Servicer
in the Custodial Account.
The Servicer may invest the funds in the Custodial Account in Eligible
Investments designated in the name of the Servicer for the benefit of the
Purchaser, which shall mature not later than the Business Day next preceding the
Remittance Date next following the date of such investment (except that (A) any
investment in the institution with which the Custodial Account is maintained may
mature on such Remittance Date and (B) any other investment may mature on such
Remittance Date if the Servicer shall advance funds on such Remittance Date,
pending receipt thereof to the extent necessary to make distributions to the
Owner) and shall not be sold or disposed of prior to maturity. Notwithstanding
anything to the contrary herein and above, all income and gain realized from any
such investment shall be for the benefit of the Servicer and shall be subject to
withdrawal by the Servicer. The amount of any losses incurred in respect of any
such investments shall be deposited in the Custodial Account by the Servicer out
of its own funds immediately as realized.
Subsection 11.05. Withdrawals From the Custodial Account.
The Servicer shall, from time to time, withdraw funds from the
Custodial Account for the following purposes:
(a) to make payments to the Purchaser in the amounts and in
the manner provided for in Subsection 11.15;
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(b) to reimburse itself for P&I Advances, the Servicer's right
to reimburse itself pursuant to this subclause (b) with respect to any
Mortgage Loan being limited to related Liquidation Proceeds,
Condemnation Proceeds, Insurance Proceeds, REO Disposition 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 any such reimbursement, the Servicer's
right thereto shall be prior to the rights of the Purchaser with
respect to such Mortgage Loan, except that, where the Seller is
required to repurchase a Mortgage Loan, pursuant to Subsection 7.03,
the Servicer's right to such reimbursement shall be subsequent to the
payment to the Purchaser of the Repurchase Price pursuant to Subsection
7.03, and all other amounts required to be paid to the Purchaser with
respect to such Mortgage Loan;
(c) to reimburse itself for any unpaid Servicing Fees and for
unreimbursed Servicing Advances, the Servicer's right to reimburse
itself pursuant to this subclause (c) with respect to any Mortgage Loan
being limited to related Liquidation Proceeds, Condemnation Proceeds,
Insurance Proceeds, REO Disposition 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
any such reimbursement, the Servicer's right thereto shall be prior to
the rights of the Purchaser unless the Seller is required to repurchase
a Mortgage Loan pursuant to Subsection 7.03, in which case the
Servicer's right to such reimbursement shall be subsequent to the
payment to the Purchaser of the Repurchase Price pursuant to Subsection
7.03 and all other amounts required to be paid to the Purchaser with
respect to such Mortgage Loan;
(d) to reimburse itself for unreimbursed Servicing Advances
and for xxxxxxxxxxxx X&X Advances, to the extent that such amounts are
nonrecoverable (as certified by the Servicer to the Purchaser in an
Officer's Certificate) by the Servicer pursuant to subclause (b) or (c)
above, provided that the Mortgage Loan for which such advances were
made is not required to be repurchased by the Seller pursuant to
Subsection 7.03;
(e) to reimburse itself for expenses incurred by and
reimbursable to it pursuant to Subsection 12.01;
(f) to withdraw amounts to make P&I Advances in accordance
with Subsection 11.17;
(g) to pay to itself any interest earned or any investment
earnings on funds deposited in the Custodial Account, net of any losses
on such investments;
(h) to withdraw any amounts inadvertently deposited in the
Custodial Account; and
(i) to clear and terminate the Custodial Account upon the
termination of this Agreement.
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Subsection 11.06. Establishment of Escrow Account; Deposits in Escrow
Account.
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 (collectively, the "Escrow Account"),
titled "Bank of America, N.A., in trust for Xxxxxx Brothers Bank, FSB as
Purchaser of Mortgage Loans and various Mortgagors." The Escrow Account shall be
established with a Qualified Depository. In any case, the Escrow Account shall
be insured by the FDIC in a manner which shall provide maximum available
insurance thereunder and which may be drawn on by the Servicer. The creation of
the Escrow Account shall be evidenced by a certificate delivered by the Servicer
(the "Escrow Account Certification") substantially in the form of Exhibit 10
hereto.
The Servicer shall deposit in the Escrow Account on a daily basis, and
retain therein: (a) all Escrow Payments collected on account of the Mortgage
Loans, for the purpose of effecting timely payment of any such items as required
under the terms of this Agreement, (b) all amounts representing proceeds of any
hazard insurance policy which are to be applied to the restoration or repair of
any Mortgaged Property and (c) all amounts representing proceeds of any Primary
Mortgage Insurance Policy (if any). The Servicer shall make withdrawals
therefrom only in accordance with Subsection 11.07 hereof. As part of its
servicing duties, the Servicer shall pay to the Mortgagors interest on funds in
the Escrow Account, to the extent required by law.
Subsection 11.07. Withdrawals From Escrow Account.
Withdrawals from the Escrow Account shall be made by the Servicer only
(a) to effect timely payments of ground rents, taxes, assessments, premiums for
Primary Mortgage Insurance Policies (if any), fire and hazard insurance premiums
or other items constituting Escrow Payments for the related Mortgage, (b) to
reimburse the Servicer for any Servicing Advance made by Servicer pursuant to
Subsection 11.08 hereof with respect to a related Mortgage Loan, (c) to refund
to any Mortgagor any funds found to be in excess of the amounts required under
the terms of the related Mortgage Loan, (d) for transfer to the Custodial
Account upon default of a Mortgagor or in accordance with the terms of the
related Mortgage Loan and if permitted by applicable law, (e) for application to
restore or repair of the Mortgaged Property, (f) to pay to the Mortgagor, to the
extent required by law, any interest paid on the funds deposited in the Escrow
Account, (g) to pay to itself any interest earned on funds deposited in the
Escrow Account (and not required to be paid to the Mortgagor), (h) to the extent
permitted under the terms of the related Mortgage Note and applicable law, to
pay late fees with respect to any Monthly Payment which is received after the
applicable grace period, (i) to withdraw suspense payments that are deposited
into the Escrow Account, (j) to withdraw any amounts inadvertently deposited in
the Escrow Account or (k) to clear and terminate the Escrow Account upon the
termination of this Agreement.
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Subsection 11.08. Payment of Taxes, Insurance and Other Charges;
Collections Thereunder.
With respect to each Mortgage Loan, the Servicer shall maintain
accurate records reflecting the status of ground rents, taxes, assessments and
other charges which are or may become a lien upon the Mortgaged Property and the
status of premiums for Primary Mortgage Insurance Policies (if any) 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. If a Mortgage does not provide for
Escrow Payments, the Servicer shall determine that any such payments are made by
the Mortgagor. The Servicer assumes full responsibility for the timely payment
of all such bills and shall effect timely payments of all such bills
irrespective of each Mortgagor's faithful performance in the payment of same or
the making of the Escrow Payments and shall make Servicing Advances to effect
such payments, subject to its ability to recover such Servicing Advances
pursuant to Subsections 11.05(c), 11.05(d) and 11.07(b). No costs incurred by
the Servicer or subservicers in effecting the payment of taxes and assessments
on the Mortgaged Properties shall, for the purpose of calculating remittances to
the Purchaser, be added to the amount owing under the related Mortgage Loans,
notwithstanding that the terms of such Mortgage Loans so permit.
Subsection 11.09. Transfer of Accounts.
The Servicer may transfer the Custodial Account or the Escrow Account
to a different Qualified Depository. Such transfer shall be made only upon
obtaining the prior written consent of the Purchaser, such consent not to be
unreasonably withheld.
Subsection 11.10. Maintenance of Hazard Insurance.
The Servicer shall cause to be maintained for each Mortgage Loan fire
and hazard insurance with extended coverage customary in the area where the
Mortgaged Property is located by an insurer acceptable to Xxxxxx Xxx or Xxxxxxx
Mac in an amount which is at least equal to the lesser of (a) the full insurable
value of the Mortgaged Property or (b) the greater of (i) the outstanding
principal balance owing on the Mortgage Loan and (ii) an amount such that the
proceeds of such insurance shall be sufficient to avoid the application to the
Mortgagor or loss payee of any coinsurance clause under the policy. If the
Mortgaged Property is in an area identified in the Federal Register by the
Federal Emergency Management Agency as a special flood hazard area (and such
flood insurance has been made available) the Servicer will cause to be
maintained a flood insurance policy meeting the requirements of the National
Flood Insurance Program, in an amount representing coverage not less than the
lesser of (A) the minimum amount required under the terms of the coverage to
compensate for any damage or loss to the Mortgaged Property on a
replacement-cost basis (or the outstanding principal balance of the Mortgage
Loan if replacement-cost basis is not available) or (B) the maximum amount of
insurance available under the National Flood Insurance Program. The Servicer
shall also maintain on REO Property fire and hazard insurance with extended
coverage in an amount which is at least equal to the maximum insurable value of
the improvements which are a part of such property, liability insurance and, to
the extent required and available under the National Flood Insurance Program,
flood insurance in an amount required above. 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 property subject
to the related Mortgage or property acquired in liquidation of the Mortgage
Loan, or to be released to the Mortgagor in accordance with Customary Servicing
Procedures) shall be deposited in the Custodial Account, subject to withdrawal
pursuant to Subsection 11.05. It is understood and agreed that no earthquake or
other additional insurance need be required by the Servicer of any Mortgagor or
maintained on REO Property other than pursuant to such applicable laws and
regulations as shall at any time be in force and as shall require such
additional insurance. All policies required hereunder shall be endorsed with
standard mortgagee clauses with loss payable to Servicer, and shall provide for
at least thirty (30) days prior written notice of any cancellation, reduction in
amount or material change in coverage to the Servicer. The Servicer shall not
interfere with the Mortgagor's freedom of choice in selecting either its
insurance carrier or agent; provided, however, that the Servicer shall not
accept any such insurance policies from insurance companies unless such
companies are acceptable to Xxxxxx Xxx and Xxxxxxx Mac and are licensed to do
business in the state wherein the property subject to the policy is located.
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The hazard insurance policies for each Mortgage Loan secured by a unit
in a condominium development or planned unit development shall be maintained
with respect to such Mortgage Loan and the related development in a manner which
is consistent with Xxxxxx Mae or Xxxxxxx Mac requirements.
Subsection 11.11. Maintenance of Primary Mortgage Insurance Policy;
Claims.
With respect to each Mortgage Loan with a LTV in excess of 80%, if any,
the Servicer shall, without any cost to the Purchaser, maintain or cause the
Mortgagor to maintain in full force and effect a Primary Mortgage Insurance
Policy insuring that portion of the Mortgage Loan in excess of a percentage in
conformance with Xxxxxx Mae requirements. The Servicer shall pay or shall cause
the Mortgagor to pay the premium thereon on a timely basis, at least until the
LTV of such Mortgage Loan is reduced to 80%. If such Primary Mortgage Insurance
Policy shall be terminated, the Servicer shall obtain from another insurer a
comparable replacement policy, with a total coverage equal to the remaining
coverage of such terminated Primary Mortgage Insurance Policy. If the insurer
shall cease to be a qualified insurer, the Servicer shall obtain from another
qualified insurer a replacement insurance policy. The Servicer shall not take
any action which would result in noncoverage under any applicable Primary
Mortgage 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 Subsection
11.18, the Servicer shall promptly notify the insurer under the related Primary
Mortgage Insurance Policy, if any, of such assumption or substitution of
liability in accordance with the terms of such Primary Mortgage Insurance Policy
and shall take all actions which may be required by such insurer as a condition
to the continuation of coverage under such Primary Mortgage Insurance Policy. If
such Primary Mortgage Insurance Policy is terminated as a result of such
assumption or substitution of liability, the Servicer shall obtain a replacement
Primary Mortgage 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 Mortgage Insurance Policy (if any) in a timely fashion
in accordance with the terms of such Primary Mortgage Insurance Policy and, in
this regard, to take such action as shall be necessary to permit recovery under
any Primary Mortgage Insurance Policy respecting a defaulted Mortgage Loan.
Pursuant to Subsection 11.06, any amounts collected by the Servicer under any
Primary Mortgage Insurance Policy (if any) shall be deposited in the Escrow
Account, subject to withdrawal pursuant to Subsection 11.07.
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Subsection 11.12. 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 on all
officers, employees or other persons acting in any capacity requiring such
persons to handle funds, money, documents or papers relating to the Mortgage
Loans. These policies must insure the Servicer against losses resulting from
fraud, theft, errors, omissions, negligence, dishonest or fraudulent acts
committed by the Servicer's personnel, any employees of outside firms that
provide data processing services for the Servicer, and temporary contract
employees or student interns. The Fidelity Bond shall also protect and insure
the Servicer against losses in connection with the release or satisfaction of a
Mortgage Loan without having obtained payment in full of the indebtedness
secured thereby. No provision of this Subsection 11.12 requiring such 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 Fidelity Bond and insurance policy shall be at least
equal to the corresponding amounts required by Xxxxxx Xxx in the Xxxxxx Mae
Servicers' Guide or by Xxxxxxx Mac in the Xxxxxxx Xxx Xxxxxxx' & Servicers'
Guide, as amended or restated from time to time, or in an amount as may be
permitted to the Servicer by express waiver of Xxxxxx Xxx or Xxxxxxx Mac. Upon
request of the Purchaser, the Servicer shall cause to be delivered to the
Purchaser a certified true copy of such Fidelity Bond or a certificate
evidencing the same with a statement that the Servicer shall endeavor to provide
written notice to the Purchaser thirty (30) days prior to modification or any
material change.
Subsection 11.13. Title, Management and Disposition of REO Property.
If title to the Mortgaged Property is acquired in foreclosure or by
deed in lieu of foreclosure, the deed or certificate of sale shall be taken in
the name of the Servicer or its nominee, in either case as nominee, for the
benefit of the Purchaser of record on the date of acquisition of title (the
"Owner"). If the Servicer 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, at the expense of the Purchaser, from an attorney duly licensed to
practice law in the state where the REO Property is located. The Person or
Persons holding such title other than the Owner shall acknowledge in writing
that such title is being held as nominee for the Owner.
The Servicer shall cause to be deposited on a daily basis in the
Custodial Account all revenues received with respect to the conservation and
disposition of the related REO Property and shall withdraw therefrom funds
necessary for the proper operation, management and maintenance of the REO
Property, including the cost of maintaining any hazard insurance pursuant to
Subsection 11.10 and the fees of any managing agent acting on behalf of the
Servicer. Any disbursement in excess of $5,000 shall be made only with the
written approval of the Purchaser. The Servicer shall make distributions as
required on each Remittance Date to the Purchaser of the net cash flow from the
REO Property (which shall equal the revenues from such REO Property net of the
expenses described above and of any reserves reasonably required from time to
time to be maintained to satisfy anticipated liabilities for such expenses).
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The disposition of REO Property shall be carried out by the Servicer in
accordance with the provisions of this Agreement and shall be made at such
price, and upon such terms and conditions, as the Servicer deems to be in the
best interests of the Owner. Upon the request of the Owner, and at the Owner's
expense, the Servicer shall cause an appraisal of the REO Property to be
performed for the Owner. The proceeds of sale of the REO Property shall be
promptly deposited in the Custodial Account and, as soon as practical
thereafter, the expenses of such sale shall be paid, the Servicer shall
reimburse itself for any related unreimbursed Servicing Advances, unpaid
Servicing Fees, unreimbursed advances made pursuant to Subsection 11.17 and any
appraisal performed pursuant to this paragraph and the net cash proceeds of such
sale remaining in the Custodial Account shall be distributed to the Purchaser.
The Servicer shall either itself or through an agent selected by the
Servicer, manage, conserve, protect and operate the REO Property in the same
manner that it manages, conserves, protects and operates other foreclosed
property for its own account, and in the same manner that similar property in
the same locality as the REO Property is managed. The Servicer shall attempt to
sell the same within a three-year period (and may temporarily rent the same) on
such terms and conditions as the Servicer deems to be in the best interest of
the Owner.
Upon request, with respect to any REO Property, the Servicer shall
furnish to the Owner a statement covering the Servicer's efforts in connection
with the sale of that REO Property and any rental of the REO Property incidental
to the sale thereof for the previous month (together with an operating
statement).
Subsection 11.14. Servicing Compensation.
As compensation for its services hereunder, the Servicer shall be
entitled to retain the Servicing Fee from interest payments actually collected
on the Mortgage Loans. Additional servicing compensation in the form of
assumption fees, late payment charges, prepayment penalties and other ancillary
income shall be retained by the Servicer to the extent not required to be
deposited in the Custodial 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.
Subsection 11.15. Distributions.
On each Remittance Date the Servicer shall remit by wire transfer of
immediately available funds to the account designated in writing by the
Purchaser of record on the preceding Record Date (a) all Monthly Payments due in
the Due Period prior to such Remittance Date and received by the Servicer prior
to the related Determination Date, plus (b) all amounts, if any, which the
Servicer is obligated to distribute pursuant to Subsection 11.17, plus (c) any
amounts attributable to Principal Prepayments received in the calendar month
preceding the month in which the Remittance Date occurs, together with any
additional interest required to be deposited in the Custodial Account in
connection with such Principal Prepayments in accordance with Subsection
11.04(i), minus (d) all amounts that may be withdrawn from the Custodial Account
pursuant to Subsections 11.05(b) through (e).
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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 at its principal office
by Bank of America, N.A., or its successor, as its prime lending rate, adjusted
as of the date of each change, plus two percent (2%), 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 immediately preceding the Business Day on which
such payment is made, both inclusive. The payment by the Servicer of any such
interest shall not be deemed an extension of time for payment or a waiver of any
Event of Default by the Servicer.
Subsection 11.16. Statements to the Purchaser.
Not later than the tenth calendar day of each month, the Servicer shall
forward to the Purchaser a statement, substantially in the form of Exhibit 8 and
certified by a Servicing Officer, setting forth on a loan-by-loan basis: (a) the
amount of the distribution made on such Remittance Date which is allocable to
principal and allocable to interest; (b) the amount of servicing compensation
received by the Servicer during the prior calendar month; and (c) the aggregate
Stated Principal Balance of the Mortgage Loans as of the last day of the
preceding month. Such statement shall also include information regarding
delinquencies on Mortgage Loans, indicating the number and aggregate principal
amount of Mortgage Loans which are either one (1), two (2) or three (3) or more
months delinquent and the book value of any REO Property. The Servicer shall
submit to the Purchaser monthly a liquidation report with respect to each
Mortgaged Property sold in a foreclosure sale as of the related Record Date and
not previously reported. Such liquidation report shall be incorporated into the
remittance report delivered to Purchaser in the form of Exhibit 8 hereto. Upon
the written request of the Purchaser, the Servicer shall also provide such
information as set forth above to the Purchaser in electronic form in the
Servicer's standard format.
In addition, within a reasonable period of time after the end of each
calendar year, the Servicer will furnish a report to each Person that was a
Purchaser at any time during such calendar year. Such report shall state the
aggregate of amounts distributed to the Purchaser for such calendar year. Such
obligation of the Servicer shall be deemed to have been satisfied to the extent
that substantially comparable information shall be provided by the Servicer
pursuant to any requirements of the Code.
The Servicer shall prepare and file any and all tax returns,
information statements or other filings required to be delivered to any
governmental taxing authority, the Mortgagor or to the Purchaser pursuant to any
applicable law with respect to the Mortgage Loans and the transactions
contemplated hereby. In addition, the Servicer shall provide the Purchaser with
such information concerning the Mortgage Loans as is necessary for such
Purchaser to prepare federal income tax returns as the Purchaser may reasonably
request from time to time.
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Subsection 11.17. Advances by the Servicer.
On the Business Day immediately preceding each Remittance Date, the
Servicer shall either (a) deposit in the Custodial Account from its own funds an
amount equal to the aggregate amount of all Monthly Payments (with interest
adjusted to the Mortgage Loan Remittance Rate) which were due on the Mortgage
Loans during the applicable Due Period and which were delinquent at the close of
business on the immediately preceding Determination Date (each such advance, a
"P&I Advance"), (b) cause to be made an appropriate entry in the records of the
Custodial Account that amounts held for future distribution have been, as
permitted by this Subsection 11.17, used by the Servicer in discharge of any
such P&I Advance or (c) make P&I Advances in the form of any combination of (a)
or (b) aggregating the total amount of advances to be made. Any amounts held for
future distribution and so used 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
Purchaser required to be made on such Remittance Date. The Servicer's obligation
to make P&I Advances as to any Mortgage Loan will continue through the last
Monthly Payment due prior to the payment in full of a Mortgage Loan, or through
the last Remittance Date prior to the Remittance Date for the distribution of
all other payments or recoveries (including proceeds under any title, hazard or
other insurance policy, or condemnation awards) with respect to a Mortgage Loan;
provided, however, that such obligation shall cease if the Servicer, in its good
faith judgment, determines that such P&I Advances would not be recoverable
pursuant to Subsection 11.05(d). The determination by the Servicer that a P&I
Advance, if made, would be nonrecoverable, shall be evidenced by an Officer's
Certificate of the Servicer, delivered to the Purchaser, which details the
reasons for such determination.
Subsection 11.18. Assumption Agreements.
The Servicer will use its best efforts to enforce any "due-on-sale"
provision contained in any Mortgage or Mortgage Note; provided that, subject to
the Purchaser's prior approval, the Servicer shall permit such assumption if so
required in accordance with the terms of the Mortgage or the Mortgage Note. When
the Mortgaged Property has been conveyed by the Mortgagor, the Servicer will, to
the extent it has knowledge of such conveyance, exercise its rights to
accelerate the maturity of such Mortgage Loan under the "due-on-sale" clause
applicable thereto; provided, however, the Servicer will not exercise such
rights if prohibited by law from doing so or if the exercise of such rights
would impair or threaten to impair any recovery under the related Primary
Mortgage Insurance Policy, if any. In connection with any such assumption, the
outstanding principal amount, the Monthly Payment, or the Mortgage Interest
Rate, the Lifetime Rate Cap, the Gross Margin, the Initial Rate Cap or the
Periodic Rate Cap/Floor of the related Mortgage Note shall not be changed, and
the term of the Mortgage Loan will not be increased or decreased. If an
assumption is allowed pursuant to this Subsection 11.18, the Servicer with the
prior consent of the issuer of the Primary Mortgage Insurance Policy, if any, is
authorized to enter into a substitution of liability agreement with the
purchaser of the Mortgaged Property pursuant to which the original Mortgagor is
released from liability and the purchaser of the Mortgaged Property is
substituted as Mortgagor and becomes liable under the Mortgage Note.
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Subsection 11.19. Satisfaction of Mortgages and Release of Mortgage
Files.
Upon the payment in full of any Mortgage Loan, or the receipt by the
Servicer of a notification that payment in full will be escrowed in a manner
customary for such purposes, the Servicer will obtain the portion of the
Mortgage File that is in the possession of the Purchaser or its designee,
prepare and process any required satisfaction or release of the Mortgage and
notify the Purchaser in accordance with the provisions of this Agreement. The
Purchaser or its designee agrees to deliver to the Servicer the original
Mortgage Note for any Mortgage Loan not later than five (5) Business Days
following its receipt of a notice from the Servicer that such a payment in full
has been received or that a notification has been received that such a payment
in full shall be made. Such Mortgage Note shall be held by the Servicer, in
trust, for the purpose of canceling such Mortgage Note and delivering the
canceled Mortgage Note to the Mortgagor in a timely manner as and to the extent
provided under applicable state law.
If the Servicer grants a satisfaction or release of a Mortgage without
having obtained payment in full of the indebtedness secured by the Mortgage or
should the Servicer otherwise prejudice any right the Purchaser may have under
the mortgage instruments, the Servicer, upon written demand of the Purchaser,
shall remit to the Purchaser the Stated Principal Balance of the related
Mortgage Loan by deposit thereof in the Custodial Account. The Fidelity Bond
shall insure the Servicer against any loss it may sustain with respect to any
Mortgage Loan not satisfied in accordance with the procedures set forth herein.
Subsection 11.20. Annual Statement as to Compliance.
Within ninety (90) days after the Servicer's fiscal year end, beginning
with the fiscal year end 2003, the Servicer will deliver to the Purchaser an
Officer's Certificate stating that (a) a review of the activities of the
Servicer during the preceding calendar year and if performance under this
Agreement has been made under such officer's supervision, and (b) to the best of
such officer's knowledge, based on such review, the Servicer has fulfilled all
its obligations under this Agreement throughout such year, or, if there has been
a default in the fulfillment of any such obligation, specifying each such
default known to such officer and the nature and status thereof and the action
being taken by the Servicer to cure such default.
Subsection 11.21. Annual Independent Public Accountants' Servicing
Report.
Within ninety (90) days after the Servicer's fiscal year end, beginning
with the fiscal year end 2003, the Servicer at its expense shall cause a firm of
independent public accountants which is a member of the American Institute of
Certified Public Accountants to furnish a statement to the Purchaser to the
effect that such firm has, with respect to the Servicer's overall servicing
operations, examined such operations in accordance with the requirements of the
Uniform Single Attestation Program for Mortgage Bankers, stating such firm's
conclusions relating thereto.
Subsection 11.22. Servicer Shall Provide Access and Information as
Reasonably Required.
The Servicer shall provide to the Purchaser, and for any Purchaser
insured by FDIC or NAIC, the supervisory agents and examiners of FDIC and OTS or
NAIC, access to any documentation regarding the Mortgage Loans which may be
required by applicable regulations. Such access shall be afforded without
charge, but only upon reasonable request, during normal business hours and at
the offices of the Servicer.
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In addition, the Servicer shall furnish upon request by the Purchaser,
during the term of this Agreement, such periodic, special or other reports or
information, whether or not provided for herein, as shall be necessary,
reasonable and appropriate with respect to the purposes of this Agreement and
applicable regulations. All such reports or information shall be provided by and
in accordance with all reasonable instructions and directions the Purchaser may
require. 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.
Subsection 11.23. Restoration of Mortgaged Property.
The Servicer need not obtain the approval of the Purchaser prior to
releasing any Insurance Proceeds or Condemnation Proceeds to the Mortgagor to be
applied to the restoration or repair of the Mortgaged Property if such release
is in accordance with Customary Servicing Procedures. At a minimum, the Servicer
shall comply with the following conditions in connection with any such release
of Insurance Proceeds or Condemnation Proceeds:
(a) the Servicer shall receive satisfactory independent
verification of completion of repairs and issuance of any required
approvals with respect thereto;
(b) the Servicer shall take all steps necessary to preserve
the priority of the lien of the Mortgage, including, but not limited to
requiring waivers with respect to mechanics' and materialmen's liens;
(c) the Servicer shall verify that the Mortgage Loan is not in
default; and
(d) pending repairs or restoration, the Servicer shall place
the Insurance Proceeds or Condemnation Proceeds in the Escrow Account.
If the Purchaser is named as an additional loss payee, the Servicer is
hereby empowered to endorse any loss draft issued in respect of such a claim in
the name of the Purchaser.
Subsection 11.24. Master Servicer.
The Purchaser has designated Aurora Loan Services, Inc. ("Aurora") as
its master servicer for the Mortgage Loans being sold by the Seller and
purchased by the Purchaser pursuant to this Agreement. The Purchaser has
empowered and given the authority to Aurora, in its capacity as the Purchaser's
master servicer, to conduct and administer certain servicing and pool
administration activities of the Servicer on the Purchaser's behalf. The parties
hereto agree that this interaction between Aurora and the Servicer will occur
when Aurora deals with the Servicer in its capacity of servicer of the Mortgage
Loans pursuant to the terms hereof. The parties hereto expect that subsequent to
the closing of the purchase and sale contemplated hereunder, representatives of
Aurora will contact the Servicer (a) to discuss the reporting and remittance
timing and requirements relative to the servicing/master servicing function and
(b) to provide the Servicer with any forms which the Servicer will be required
to produce in connection with the monthly reporting process.
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Subsection 11.25. Compliance with Safeguarding Customer Information
Requirements.
The Servicer has implemented and shall maintain security measures
designed to meet the objectives of the Interagency Guidelines Establishing
Standards for Safeguarding Customer Information published in final form on
February 1, 2001, 66 Fed. Reg. 8616, and the rules promulgated thereunder, as
amended from time to time. The Servicer shall provide the Purchaser with
information regarding such security measures upon the reasonable request of the
Purchaser, which information shall include, but not be limited to, any audit
reports, summaries of test results or equivalent measures taken by the Servicer
and relating to the applicable Mortgage Loans with respect to its security
measures, as agreed upon by the parties.
SECTION 12. THE SERVICER.
Subsection 12.01. Indemnification; Third Party Claims.
The Servicer agrees to indemnify and hold harmless the Purchaser
against any and all claims, losses, penalties, fines, forfeitures, legal fees
and related costs, judgments, and any other costs, fees and expenses that the
Purchaser may sustain in any way related to the failure of the Servicer to
service the Mortgage Loans in compliance with the terms of this Agreement. The
Servicer shall immediately notify the Purchaser if a claim is made by a third
party with respect to this Agreement or the Mortgage Loans, and the Servicer
shall assume (with the consent of the Purchaser, which consent shall not be
unreasonably withheld or delayed) the defense of any such claim and pay all
expenses in connection therewith, including counsel fees. The Servicer shall
provide the Purchaser with a written report of all expenses and advances
incurred by the Servicer, if any, pursuant to this Subsection 12.01 and the
Purchaser shall promptly reimburse the Servicer for all amounts advanced by it
pursuant to the preceding sentence except when the claim in any way relates to
the failure of the Servicer to service the Mortgage Loans in accordance with the
terms of this Agreement.
Subsection 12.02. Merger or Consolidation of the Servicer.
The Servicer will keep in full effect its existence, rights and
franchises as a national banking association, and will obtain and preserve its
qualification to do business in each jurisdiction in which such qualification is
or shall be necessary to protect the validity and enforceability of this
Agreement or any of the Mortgage Loans and to perform its duties under this
Agreement.
Any Person into which the Servicer may be merged or consolidated, or
any entity resulting from any merger, conversion or consolidation to which the
Servicer shall be a party, or any Person succeeding to substantially all of the
business of the Servicer (whether or not related to loan servicing), shall be
the successor of the Servicer 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.
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Subsection 12.03. Limitation on Liability of the Servicer and Others.
The duties and obligations of the Servicer shall be determined solely
by the express provisions of this Agreement, the Servicer shall not be liable
except for the performance of such duties and obligations as are specifically
set forth in this Agreement and no implied covenants or obligations shall be
read into this Agreement against the Servicer. Neither the Servicer nor any of
the directors, officers, employees or agents of the Servicer shall be under any
liability to the Purchaser for any action taken or for refraining from the
taking of any action in accordance with Customary Servicing Procedures and
otherwise in good faith pursuant to this Agreement or for errors in judgment;
provided, however, that this provision shall not protect the Servicer against
any liability resulting from any breach of any representation or warranty made
herein, or from any liability specifically imposed on the Servicer herein; and,
provided further, that this provision shall not protect the Servicer against any
liability that would otherwise be imposed by reason of the willful misfeasance,
bad faith or gross negligence in the performance of duties or by reason of
reckless disregard of the obligations or duties hereunder. The Servicer and any
director, officer, employee or agent of the Servicer may rely on any document of
any kind which it in good faith reasonably believes to be genuine and to have
been adopted or signed by the proper authorities respecting any matters arising
hereunder. Subject to the terms of Subsection 12.01, the Servicer shall have no
obligation to appear with respect to, prosecute or defend any legal action which
is not incidental to the Servicer's duty to service the Mortgage Loans in
accordance with this Agreement.
Subsection 12.04. Seller and Servicer Not to Resign.
Neither the Seller nor the Servicer shall assign this Agreement or
resign from the obligations and duties hereby imposed on it except by mutual
consent of the Servicer or the Seller, as the case may be, and the Purchaser or
upon the determination that the Servicer's duties hereunder are no longer
permissible under applicable law and such incapacity cannot be cured by the
Servicer. Any such determination permitting the unilateral resignation of the
Servicer shall be evidenced by an Opinion of Counsel to such effect delivered to
the Purchaser, which Opinion of Counsel shall be in form and substance
acceptable to the Purchaser. No such resignation or assignment shall become
effective until a successor has assumed the Servicer's responsibilities and
obligations hereunder in accordance with Subsection 14.03.
SECTION 13. DEFAULT.
Subsection 13.01. Events of Default.
In case one or more of the following Events of Default by the Servicer
shall occur and be continuing:
(a) 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 two (2) Business Days after the
date upon which written notice of such failure, requiring the same to
be remedied, shall have been given to the Servicer by the Purchaser;
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(b) failure by the Servicer to duly observe or perform, in any
material respect, any other covenants, obligations or agreements of the
Servicer as set forth in this Agreement which failure continues
unremedied for a period of thirty (30) days after the date on which
written notice of such failure, requiring the same to be remedied,
shall have been given to the Servicer by the Purchaser;
(c) a decree or order of a court or agency or supervisory
authority having jurisdiction for the appointment of a conservator or
receiver or liquidator in any insolvency, bankruptcy, readjustment of
debt, marshalling of assets and liabilities or similar proceedings, or
for the winding-up or liquidation of its affairs, shall have been
entered against the Servicer and such decree or order shall have
remained in force, undischarged or unstayed for a period of sixty (60)
days;
(d) the Servicer shall consent to the appointment of a
conservator or receiver or liquidator in any insolvency, bankruptcy,
readjustment of debt, marshalling of assets and liabilities or similar
proceedings of or relating to the Servicer or relating to all or
substantially all of the Servicer's property;
(e) the Servicer shall admit in writing its inability to pay
its debts as they become due, file a petition to take advantage of any
applicable insolvency or reorganization statute, make an assignment for
the benefit of its creditors, or voluntarily suspend payment of its
obligations;
(f) the Servicer shall cease to be qualified to do business
under the laws of any state in which a Mortgaged Property is located,
but only to the extent such qualification is necessary to ensure the
enforceability of each Mortgage Loan and to perform the Servicer's
obligations under this Agreement; or
(g) the Servicer shall fail to meet the servicer eligibility
qualifications of Xxxxxx Xxx and the Servicer shall fail to meet the
servicer eligibility qualifications of Xxxxxxx Mac;
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 Servicer, may, in
addition to whatever rights the Purchaser may have at law or equity to damages,
including injunctive relief and specific performance, commence termination of
all the rights and obligations of the Servicer under this Agreement and in and
to the Mortgage Loans and the proceeds thereof. Upon receipt by the Servicer of
such written notice from the Purchaser stating that it intends to terminate the
Servicer as a result of such Event of Default, all authority and power of the
Servicer under this Agreement, whether with respect to the Mortgage Loans or
otherwise, shall pass to and be vested in the successor appointed pursuant to
Subsection 14.03. Upon written request from the Purchaser, the Servicer shall
prepare, execute and deliver to a successor any and all documents and other
instruments, place in such successor's possession all Mortgage Files and do or
cause to be done all other acts or things necessary or appropriate to effect the
purposes of such notice of termination, including, but not limited to, the
transfer and endorsement or assignment of the Mortgage Loans and related
documents to the successor at the Servicer's sole expense. The Servicer agrees
to cooperate with the Purchaser and such successor in effecting the termination
of the Servicer's responsibilities and rights hereunder, including, without
limitation, the transfer to such successor for administration by it of all
amounts which shall at the time be credited by the Servicer to the Custodial
Account or Escrow Account or thereafter received with respect to the Mortgage
Loans.
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Subsection 13.02. Waiver of Default.
The Purchaser may waive any default by the Servicer in the performance
of its obligations hereunder and its consequences. Upon any waiver of a past
default, such default shall cease to exist, and any Event of Default arising
therefrom shall be deemed to have been remedied for every purpose of this
Agreement. No such waiver shall extend to any subsequent or other default or
impair any right consequent thereto except to the extent expressly so waived.
SECTION 14. TERMINATION.
Subsection 14.01. Termination.
The respective obligations and responsibilities of the Servicer, as
servicer, shall terminate upon (a) the distribution to the Purchaser of the
final payment or liquidation with respect to the last Mortgage Loan (or advances
of same by the Servicer), or (b) the disposition of all property acquired upon
foreclosure or deed in lieu of foreclosure with respect to the last Mortgage
Loan and the remittance of all funds due hereunder, unless terminated with
respect to all or a portion of the Mortgage Loans on an earlier date pursuant to
Section 13. Upon written request from the Purchaser in connection with any such
termination, the Servicer shall prepare, execute and deliver, any and all
documents and other instruments, place in the Purchaser's possession all
Mortgage Files, and do or accomplish all other acts or things necessary or
appropriate to effect the purposes of such notice of termination, whether to
complete the transfer and endorsement or assignment of the Mortgage Loans and
related documents, or otherwise, at the Purchaser's sole expense. The Servicer
agrees to cooperate with the Purchaser and such successor in effecting the
termination of the Servicer's responsibilities and rights hereunder as servicer,
including, without limitation, the transfer to such successor for administration
by it of all cash amounts which shall at the time be credited by the Servicer to
the Custodial Account or Escrow Account or thereafter received with respect to
the Mortgage Loans.
Subsection 14.02. Termination of the Servicer Without Cause.
Notwithstanding anything herein to the contrary, the Purchaser may
terminate the obligations and responsibilities of the Servicer in its capacity
as Servicer, without cause, upon payment to the Servicer of a termination fee
equal to two percent (2%) of the aggregate outstanding principal balance of the
Mortgage Loans as of the date of such termination. In addition, the Purchaser
shall reimburse the Servicer for any and all out-of-pocket costs incurred by the
Servicer in connection with such termination; provided, however, that the
Purchaser's reimbursement obligation for such out-of-pocket costs shall not
exceed Fifty Dollars ($50.00) per Mortgage Loan. The termination fee provided
for in this Subsection 14.02 shall be paid by the Purchaser within ten (10)
Business Days of any such termination without cause by the Purchaser, and the
Purchaser shall reimburse the Servicer for its out-of-pocket costs resulting
from such termination within ten (10) Business Days following the Purchaser's
receipt of an invoice for such costs.
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Subsection 14.03. Successors to the Servicer.
Prior to the termination of the Servicer's responsibilities and duties
under this Agreement pursuant to Subsections 12.04, 13.01 or 14.01, the
Purchaser shall, (a) succeed to and assume all of the Servicer's
responsibilities, rights, duties and obligations under this Agreement or (b)
appoint a successor which shall succeed to all rights and assume all of the
responsibilities, duties and liabilities of the Servicer under this Agreement
upon such termination. In connection with such appointment and assumption, the
Purchaser may make such arrangements for the compensation of such successor out
of payments on Mortgage Loans as it and such successor shall agree. If the
Servicer's duties, responsibilities and liabilities under this Agreement shall
be terminated pursuant to the aforementioned Subsections, 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 Subsections shall not
become effective until a successor shall be appointed pursuant to this
Subsection and shall in no event relieve the Seller of the representations and
warranties made pursuant to Subsections 7.01 and 7.02 and the remedies available
to the Purchaser under Subsection 7.03, it being understood and agreed that the
provisions of such Subsections 7.01 and 7.02 shall be applicable to the Seller
notwithstanding any such resignation or termination of the Servicer, or the
termination of this Agreement.
Any successor appointed as provided herein shall execute, acknowledge
and deliver to the Servicer and to the Purchaser an instrument accepting such
appointment, 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 this Agreement pursuant to
Subsections 12.04, 13.01 or 14.01 shall not affect any claims that the Purchaser
may have against the Servicer arising prior to any such termination or
resignation.
The Servicer shall promptly deliver to the successor the funds in the
Custodial Account and Escrow Account and all Mortgage Files 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 by mail the Purchaser of such appointment.
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SECTION 15. NOTICES.
All demands, notices and communications hereunder shall be in writing
and shall be deemed to have been duly given if mailed, by registered or
certified mail, return receipt requested, or, if by other means, when received
by the other party at the address as follows:
(a) if to the Purchaser:
Xxxxxx Brothers Bank, FSB
000 0xx Xxxxxx
0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
(b) if to the Seller:
Bank of America, N.A.
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Secondary Marketing Manager
(c) if to the Servicer:
Bank of America, N.A.
c/o Bank of America Mortgage
000 Xxxx Xxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Servicing Manager
or such other address as may hereafter be furnished to the other party by like
notice. Any such demand, notice or communication hereunder shall be deemed to
have been received on the date delivered to or received at the premises of the
addressee (as evidenced, in the case of registered or certified mail, by the
date noted on the return receipt).
SECTION 16. SEVERABILITY CLAUSE.
Any part, provision, representation or warranty of this Agreement which
is prohibited or which is held to be void or unenforceable shall be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof. Any part, provision, representation or warranty of
this Agreement which is prohibited or unenforceable or is held to be void or
unenforceable in any jurisdiction shall be ineffective, as to such jurisdiction,
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction as to any Mortgage Loan shall not invalidate or render
unenforceable such provision in any other jurisdiction. To the extent permitted
by applicable law, the parties hereto waive any provision of law which prohibits
or renders void or unenforceable any provision hereof. If the invalidity of any
part, provision, representation or warranty of this Agreement shall deprive any
party of the economic benefit intended to be conferred by this Agreement, the
parties shall negotiate, in good-faith, to develop a structure the economic
effect of which is nearly as possible the same as the economic effect of this
Agreement without regard to such invalidity.
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SECTION 17. NO PARTNERSHIP.
Nothing herein contained shall be deemed or construed to create a
co-partnership or joint venture between the parties hereto and the services of
the Servicer shall be rendered as an independent contractor and not as agent for
the Purchaser.
SECTION 18. COUNTERPARTS.
This Agreement may be executed simultaneously in any number of
counterparts. Each counterpart shall be deemed to be an original, and all such
counterparts shall constitute one and the same instrument.
SECTION 19. GOVERNING LAW.
EXCEPT TO THE EXTENT PREEMPTED BY FEDERAL LAW, THE AGREEMENT SHALL BE
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE
CONFLICTS OF LAWS PROVISIONS OF NEW YORK OR ANY OTHER JURISDICTION.
SECTION 20. INTENTION OF THE PARTIES.
It is the intention of the parties that the Purchaser is purchasing,
and the Seller is selling, the Mortgage Loans and not a debt instrument of the
Seller or another security. Accordingly, the parties hereto each intend to treat
the transaction for federal income tax purposes as a sale by the Seller, and a
purchase by the Purchaser, of the Mortgage Loans. The Purchaser shall have the
right to review the Mortgage Loans and the related Mortgage Files to determine
the characteristics of the Mortgage Loans which shall affect the federal income
tax consequences of owning the Mortgage Loans and the Seller and the Servicer
shall cooperate with all reasonable requests made by the Purchaser in the course
of such review.
It is not the intention of the parties that such conveyances be deemed
a pledge thereof. However, in the event that, notwithstanding the intent of the
parties, such assets are held to be the property of the Seller or if for any
other reason this Agreement is held or deemed to create a security interest in
either such assets, then (a) this Agreement shall be deemed to be a security
agreement within the meaning of the Uniform Commercial Code of the State of New
York and (b) the conveyances provided for in this Agreement shall be deemed to
be an assignment and a grant by the Seller to the Purchaser of a security
interest in all of the assets transferred, whether now owned or hereafter
acquired.
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SECTION 21. WAIVERS.
No term or provision of this Agreement may be waived or modified unless
such waiver or modification is in writing and signed by the party against whom
such waiver or modification is sought to be enforced.
SECTION 22. EXHIBITS.
The exhibits to this Agreement are hereby incorporated and made a part
hereof and are an integral part of this Agreement.
SECTION 23. GENERAL INTERPRETIVE PRINCIPLES.
For purposes of this Agreement, except as otherwise expressly provided
or unless the context otherwise requires:
(a) the terms defined in this Agreement have the meanings
assigned to them in this Agreement and include the plural as well as
the singular, and the use of any gender herein shall be deemed to
include the other gender;
(b) accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted
accounting principles;
(c) references herein to "Articles," "Sections,"
"Subsections," "Paragraphs" and other subdivisions without reference to
a document are to designated Articles, Sections, Subsections,
Paragraphs and other subdivisions of this Agreement;
(d) reference to a Subsection without further reference to a
Section is a reference to such Subsection as contained in the same
Section in which the reference appears, and this rule shall also apply
to Paragraphs and other subdivisions;
(e) the words "herein," "hereof," "hereunder" and other words
of similar import refer to this Agreement as a whole and not to any
particular provision; and
(f) the term "include" or "including" shall mean without
limitation by reason of enumeration.
SECTION 24. REPRODUCTION OF DOCUMENTS.
This Agreement and all documents relating thereto, including, without
limitation (a) consents, waivers and modifications which may hereafter be
executed, (b) documents received by any party at the closing and (c) financial
statements, certificates and other information previously or hereafter
furnished, may be reproduced by any photographic, photostatic, microfilm,
micro-card, miniature photographic or other similar process. The parties hereto
agree that any such reproduction shall be admissible in evidence as the original
itself in any judicial or administrative proceeding, whether or not the original
is in existence and whether or not such reproduction was made by a party hereto
in the regular course of business, and that any enlargement, facsimile or
further reproduction of such reproduction shall likewise be admissible in
evidence.
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SECTION 25. AMENDMENT.
This Agreement may be amended from time to time by the Purchaser, the
Seller and the Servicer by written agreement signed by the parties hereto.
SECTION 26. CONFIDENTIALITY.
Each of the Purchaser, the Seller and the Servicer shall employ proper
procedures and standards designed to maintain the confidential nature of the
terms of this Agreement, except to the extent (a) the disclosure of which is
reasonably believed by such party to be required in connection with regulatory
requirements or other legal requirements relating to its affairs; (b) disclosed
to any one or more of such party's employees, officers, directors, agents,
attorneys or accountants who would have access to the contents of this Agreement
and such data and information in the normal course of the performance of such
person's duties for such party, to the extent such party has procedures in
effect to inform such person of the confidential nature thereof; (c) that is
disclosed in a prospectus, prospectus supplement or private placement memorandum
relating to a securitization of the Mortgage Loans by the Purchaser (or an
affiliate assignee thereof) or to any person in connection with the resale or
proposed resale of all or a portion of the Mortgage Loans by such party in
accordance with the terms of this Agreement; and (d) that is reasonably believed
by such party to be necessary for the enforcement of such party's rights under
this Agreement.
Notwithstanding any other express or implied agreement to the contrary,
each of the Purchaser and the Seller agree and acknowledge that each of them and
each of their employees, representatives, and other agents may disclose to any
and all persons, without limitation of any kind, the tax treatment and tax
structure of the transaction and all materials of any kind (including opinions
or other tax analyses) that are provided to any of them relating to such tax
treatment and tax structure, except to the extent that confidentiality is
reasonably necessary to comply with U.S. federal or state securities laws. For
purposes of this paragraph, the terms "tax treatment" and "tax structure" have
the meanings specified in Treasury Regulation section 1.6011-4(c).
SECTION 27. ENTIRE AGREEMENT.
This Agreement constitutes the entire agreement and understanding
relating to the subject matter hereof between the parties hereto and any prior
oral or written agreements between them shall be deemed to have merged herewith.
SECTION 28. FURTHER AGREEMENTS; TRANSFERS.
The Seller, the Servicer and the Purchaser each agree to execute and
deliver to the other such reasonable and appropriate additional documents,
instruments or agreements as may be necessary or appropriate to effectuate the
purposes of this Agreement.
51
The Seller and the Servicer each agree to enter into additional
documents, instruments or agreements as may be reasonably necessary to effect
one or more Whole-Loan Transfers, Agency Transfers or Securitizations (each, a
"Transfer") of the Mortgage Loans. The parties also agree that the servicing
provisions set forth in this Agreement may be altered in a manner reasonably
acceptable to the Servicer if necessary to effect a Transfer (including, but not
limited to, any changes required to satisfy rating agency requirements or the
requirements of Xxxxxx Xxx or Xxxxxxx Mac). If the Purchaser sells any Mortgage
Loans as part of a Whole Loan Transfer, the Purchaser may assign this Agreement,
to the extent it relates to those Mortgage Loans, to any subsequent purchaser
pursuant to the provisions of Section 29. Notwithstanding the foregoing, the
Servicer shall not be required to service the Mortgage Loans for more than three
(3) Persons at any time and shall not recognize any Transfer if following such
Transfer more than three (3) Persons would be Purchasers hereunder. As used
herein and in Section 29, the trust formed in connection with a Securitization
shall be deemed to constitute a single "Person." All reasonable out-of-pocket
costs actually incurred by the Seller or the Servicer, including reasonable
attorney's fees and accountant's fees in connection with performing its
obligations under this Section 28 with respect to a Transfer shall be reimbursed
by the Purchaser upon demand therefor.
With respect to any Mortgage Loans sold in a Transfer where the
Servicer is the servicer, the Servicer agrees that on or before March 15th of
each year beginning March 15, 2004, the Servicer shall deliver to the depositor
and the trustee, and their officers, directors and affiliates, a certification
in a form mutually agreed upon which is substantially similar to that attached
as Exhibit 11 hereto, executed by the senior officer in charge of servicing at
the Servicer for use in connection with any Form 10-K to be filed with the
Securities and Exchange Commission with respect to the securitization trust so
long as such certification is required pursuant to the terms of the
Xxxxxxxx-Xxxxx Act of 2002, as such may be in effect and amended from time to
time.
SECTION 29. SUCCESSORS AND ASSIGNS.
This Agreement shall bind and inure to the benefit of and be
enforceable by the initial Purchaser, the Seller and the Servicer, and the
respective successors and assigns of the initial Purchaser, Seller and the
Servicer. The initial Purchaser and any subsequent Purchasers may assign this
Agreement to any Person to whom any Mortgage Loan is transferred pursuant to a
sale or financing upon prior written notice to the Servicer in accordance with
the following paragraph; provided, however, that the Servicer shall not be
required to service the Mortgage Loans for more than three (3) Persons at any
time and shall not recognize any assignment of this Agreement to the extent that
following such assignment more than three (3) Persons would be Purchasers
hereunder. Upon any such assignment and written notice thereof to the Servicer,
the Person to whom such assignment is made shall succeed to all rights and
obligations of the Purchaser under this Agreement to the extent of the related
Mortgage Loan or Mortgage Loans and this Agreement, to the extent of the related
Mortgage Loan or Loans, shall be deemed to be a separate and distinct Agreement
between the Servicer and such Purchaser, and a separate and distinct Agreement
between the Servicer and each other Purchaser to the extent of the other related
Mortgage Loan or Loans.
52
At least five (5) Business Days prior to the end of the month preceding
the date upon which the first remittance is to be made to an assignee of the
Purchaser, the Purchaser shall provide to the Servicer written notice of any
assignment setting forth: (a) the Servicer's applicable Mortgage Loan
identifying number for each of the Mortgage Loans affected by such assignment;
(b) the aggregate scheduled transfer balance of such Mortgage Loans; and (c) the
full name, address and wiring instructions of the assignee and the name and
telephone number of an individual representative for such assignee, to whom the
Servicer should: (i) send remittances; (ii) send any notices required by or
provided for in this Agreement; and (iii) deliver any legal documents relating
to the Mortgage Loans (including, but not limited to, contents of any Mortgage
File obtained after the effective date of any assignment).
If the Purchaser has not provided the notice of assignment required by
this Section 29, the Servicer shall not be required to treat any other Person as
a "Purchaser" hereunder and may continue to treat the Purchaser which purports
to assign the Agreement as the "Purchaser" for all purposes of this Agreement.
SECTION 30. NON-SOLICITATION.
From and after the Closing Date, the Seller hereby agrees that it will
not take any action or permit or cause any action to be taken by any of its
agents or affiliates, or by any independent contractors on its behalf, to
personally, by telephone or mail, solicit a Mortgagor under any Mortgage Loan
for the purpose of refinancing a Mortgage Loan, in whole or in part, without the
prior written consent of Purchaser. It is understood and agreed that all rights
and benefits relating to the solicitation of any Mortgagors and the attendant
rights, title and interest in and to the list of such Mortgagors and data
relating to their Mortgages (including insurance renewal dates) shall be
transferred to Purchaser pursuant hereto on the Closing Date and the Seller
shall not take any action to undermine these rights and benefits.
Notwithstanding the foregoing, it is understood and agreed that the
Seller:
(a) may advertise its availability for handling refinancings
of mortgages in its portfolio, including the promotion of terms it has
available for such refinancings, through the sending of letters or
promotional material, so long as it does not specifically target
Mortgagors and so long as such promotional material either is sent to
the mortgagors for all of the mortgages in its servicing portfolio
(those it owns as well as those serviced for others) or sent to all of
the mortgagors who have specific types of mortgages (such as FHA, VA,
conventional fixed-rate or conventional adjustable-rate) or sent to
those mortgagors whose mortgages fall within specific interest rate
ranges;
(b) may provide pay-off information and otherwise cooperate
with individual mortgagors who contact it about prepaying their
mortgages by advising them of refinancing terms and streamlined
origination arrangements that are available; and
(c) may offer to refinance a Mortgage Loan made within thirty
(30) days following receipt by it of a pay-off request from the related
Mortgagor.
53
Promotions undertaken by the Seller or any affiliate of the Seller
which are directed to the general public at large (including, without
limitation, mass mailing based on commercially acquired mailing lists,
newspaper, radio and television advertisements), shall not constitute
solicitation under this Section 30.
SECTION 31. PROTECTION OF CONSUMER INFORMATION.
The Purchaser agrees that the Purchaser (i) shall not disclose Consumer
Information to third parties except at the specific written direction of the
Seller or the Servicer; provided, however, that the Purchaser may disclose
Consumer Information to third parties in connection with secondary market
transactions to the extent not prohibited by applicable law, (ii) shall maintain
reasonable protection to protect Consumer Information from unauthorized access
and (iii) shall immediately notify the Seller of any actual or suspected breach
of the confidentiality of Consumer Information of which the Purchaser has
knowledge.
[SIGNATURES ON FOLLOWING PAGE]
54
IN WITNESS WHEREOF, the Purchaser, the Seller and the Servicer have
caused their names to be signed hereto by their respective officers thereunto
duly authorized on the date first above written.
XXXXXX BROTHERS BANK, FSB,
as Purchaser
By:_________________________________
Name:_______________________________
Title:______________________________
BANK OF AMERICA, N.A.,
as Seller and as Servicer
By: ________________________________
Name:_______________________________
Title:______________________________
55
EXHIBIT 1
FORM OF SELLER'S AND SERVICER'S OFFICER'S CERTIFICATE
I, [_____________], hereby certify that I am a duly elected
[_____________] of Bank of America, N.A., a national banking association (the
"Bank"), and further certify, on behalf of the Bank as follows:
1. Attached hereto as Attachment I are a true and correct copy of the
Articles of Association and by-laws of the Bank as are in full force and effect
on the date hereof. No event has occurred which has affected the good standing
of the Bank under the laws of the United States.
2. No proceedings looking toward liquidation, dissolution or bankruptcy
of the Bank or a merger pursuant to which the Bank would not be the surviving
entity are pending or contemplated.
3. Each person who, as an officer or attorney-in-fact of the Bank,
signed (a) the Mortgage Loan Sale and Servicing Agreement (the "Sale
Agreement"), dated December 1, 2003, by and between the Bank, as seller and as
servicer, and Xxxxxx Brothers Bank, FSB, as purchaser, and (b) any other
document delivered prior hereto or on the date hereof in connection with the
sale and servicing of the Mortgage Loans in accordance with the Sale Agreement
was, at the respective times of such signing and delivery, and is, as of the
date hereof, duly elected or appointed, qualified and acting as such officer or
attorney-in-fact, and the signatures of such persons appearing on such documents
are their genuine signatures.
4. All of the representations and warranties of the Bank contained in
Subsections 7.01 and 7.02 of the Sale Agreement were true and correct in all
material respects as of the Closing Date.
5. The Bank has performed all of its duties and has satisfied all the
material conditions on its part to be performed or satisfied prior to the
Closing Date pursuant to the Sale Agreement.
All capitalized terms used herein and not otherwise defined shall have
the meaning assigned to them in the Sale Agreement.
IN WITNESS WHEREOF, I have hereunto signed my name on this 22nd day of
December, 2003.
BANK OF AMERICA, N.A.
By:______________________
Name:____________________
Title:___________________
I, _________________________, a ____________________ of Bank of
America, N.A., hereby certify that __________________________ is a duly elected,
qualified and acting _______________________ of the Seller and the Servicer and
that the signature appearing above is such person's genuine signature.
IN WITNESS WHEREOF, I have hereunto signed my name on this 22nd day of
December, 2003.
BANK OF AMERICA, N.A.
By:______________________
Name:____________________
Title:___________________
EXHIBIT 2
MORTGAGE LOAN DOCUMENTS
With respect to each Mortgage Loan, the Mortgage Loan Documents shall
consist of the following:
(a) the original Mortgage Note bearing all intervening
endorsements, endorsed in blank and signed in the name of the Seller by
an officer thereof or, if the original Mortgage Note has been lost or
destroyed, a lost note affidavit substantially in the form of Exhibit 6
hereto;
(b) the original Assignment of Mortgage with assignee's name
left blank;
(c) the original of any guarantee executed in connection with
the Mortgage Note;
(d) the original Mortgage with evidence of recording thereon,
or if any such mortgage has not been returned from the applicable
recording office or has been lost, or if such public recording office
retains the original recorded mortgage, a photocopy of such mortgage
certified by the Seller to be a true and complete copy of the original
recorded mortgage;
(e) the originals of all assumption, modification,
consolidation or extension agreements, if any, with evidence of
recording thereon;
(f) the originals of all intervening assignments of mortgage
with evidence of recording thereon, or if any such intervening
assignment of mortgage has not been returned from the applicable
recording office or has been lost or if such public recording office
retains the original recorded assignments of mortgage, a photocopy of
such intervening assignment of mortgage, certified by the Seller to be
a true and complete copy of the original recorded intervening
assignment of mortgage;
(g) the original mortgagee title insurance policy or
attorney's opinion of title and abstract or a title commitment or title
binder if an original title insurance policy has not been issued, or a
duplicate copy of an original title insurance policy, including an
Environmental Protection Agency Endorsement and an adjustable-rate
endorsement;
(h) the original of any security agreement, chattel mortgage
or equivalent document executed in connection with the Mortgage;
(i) a copy of any applicable power of attorney; and
(j) with respect to any Co-op Loan, the Co-op shares, the
Co-op Lease, the related security agreement and all other documents
related thereto.
EXHIBIT 3
CONTENTS OF EACH MORTGAGE FILE
With respect to each Mortgage Loan, the Mortgage File shall include
each of the following items, unless otherwise disclosed to the Purchaser on the
data tape, which shall be available for inspection by the Purchaser and which
shall be retained by the Servicer or delivered to the Purchaser:
(a) Copies of the Mortgage Loan Documents.
(b) Residential loan application.
(c) Mortgage Loan closing statement.
(d) Verification of employment and income, if required.
(e) Verification of acceptable evidence of source and amount
of down payment.
(f) Credit report on Mortgagor, in a form acceptable to either
Xxxxxx Mae or Xxxxxxx Mac.
(g) Residential appraisal report.
(h) Photograph of the Mortgaged Property.
(i) Survey of the Mortgaged Property, unless a survey is not
required by the title insurer.
(j) Copy of each instrument necessary to complete
identification of any exception set forth in the exception schedule in
the title policy, i.e., map or plat, restrictions, easements, home
owner association declarations, etc.
(k) Copies of all required disclosure statements.
(l) If applicable, termite report, structural engineer's
report, water potability and septic certification.
(m) Sales Contract, if applicable.
(n) The Primary Mortgage Insurance Policy or certificate of
insurance or electronic notation of the existence of such policy, where
required pursuant to the Agreement.
(o) Evidence of electronic notation of the hazard insurance
policy, and, if required by law, evidence of the flood insurance
policy.
EXHIBIT 4
MORTGAGE LOAN SCHEDULE
[INTENTIONALLY OMITTED]
EXHIBIT 5
UNDERWRITING GUIDELINES
[INTENTIONALLY OMITTED]
EXHIBIT 6
FORM OF LOST NOTE AFFIDAVIT
___________________________________, being first duly sworn upon oath
deposes and states:
That he/she is authorized by Bank of America, N.A. ("B of A") to
execute this Lost Note Affidavit on behalf of B of A. Notwithstanding anything
contained herein, he/she shall have no personal liability pursuant to this Lost
Note Affidavit.
That the note dated _________, executed by ___________ in the original
principal sum of $____________, payable to the order of _________________ and
secured by a mortgage (, or deed of trust or other instrument creating a lien
securing the Note (as defined below)) date on premises commonly known as
_________________________________________, a copy of which is attached hereto as
Exhibit A (the "Note") was lost and /or destroyed and the affiant herein has no
knowledge of the location or whereabouts of said Note and said Note has not been
paid, satisfied, transferred, assigned, pledged, or hypothecated in any way.
NOW THEREFORE, for and in consideration of _______________and its
successors and/or assigns, accepting a certified copy of the Note identified on
Exhibit "A" in lieu of the original Note, B of A does hereby agree to defend,
indemnify and hold harmless _______________ its respective transferees, and
their respective assigns (the "Indemnified") from and against any and all loss
or damage, together with all reasonable costs, charges and expenses (whether or
not a lawsuit is filed) (collectively, the "Loss") incurred as a result of the
inability to enforce the Note in accordance with its terms due to the lack of an
original Note or incurred by reason of any claim, demand, suit, cause of action
or proceeding by a third party arising out of the Indemnified's inability to
enforce the Note according to its terms or the inability to receive any related
insurance proceeds due to the lack of an original Note by a third party. B of A
shall pay any such Loss upon demand provided that B of A is notified of any such
Loss in writing, after __________ or transferee becomes aware of same, at the
following address: Bank of America, 000 Xxxxx Xxxxx Xxxxxx, 0xx Xxxxx,
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000; Attention: Secondary Marketing Manager; with
copy to _______________________; Attention: ________________. B of A does hereby
further agree that should the original Note ever be found by it, it will
promptly notify _________________ or its respective transferees, or their
respective assigns, as applicable, and upon receipt by B of A of the original
Note, will endorse to _______________ or its designee or transferee, as
applicable, without recourse, such original Note and promptly forward said Note
to_______________ or its designee or transferee, as applicable. Upon receipt to
the original Note by __________________ this indemnification agreement shall
become null and void as to any loss accruing subsequent to ___________________'s
receipt of such original Note, however, B of A shall remain liable as to any
loss accruing on or prior to __________________'s receipt of such original Note.
[SIGNATURE ON FOLLOWING PAGE]
Executed this _______day of _________________, 200__.
BANK OF AMERICA, N.A.
By:
Witness:
Subscribed and sworn to before me this _______ day of_________________, 200__.
___________________________________
Notary Public
EXHIBIT 7
FORM OF OPINION OF COUNSEL
December 22, 2003
Xxxxxx Brothers Bank, FSB
000 0xx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
I am Assistant General Counsel to Bank of America Corporation
and have acted as special counsel to Bank of America, N.A. (the "Bank") in
connection with the transactions referred to herein. In that capacity, I am
familiar with the sale by the Bank of the Mortgage Loans pursuant to that
certain Mortgage Loan Sale and Servicing Agreement by and between the Bank, as
Seller and as Servicer, and Xxxxxx Brothers Bank, FSB, as Purchaser, dated as of
December 1, 2003 (the "Sale Agreement"). Capitalized terms not otherwise defined
herein have the meanings set forth in the Sale Agreement.
In connection with rendering this opinion letter, I have
examined the Sale Agreement and such other records and other documents as I have
deemed necessary and relevant. As to matters of fact, I have examined and relied
upon representations of the parties contained in the Sale Agreement and, where I
have deemed appropriate, representations and certifications of officers of the
Bank or public officials. I have assumed the authenticity of all documents
submitted to me as originals, the genuineness of all signatures, the legal
capacity of natural persons and the conformity to the originals of all documents
submitted to me as copies. I have assumed that all parties, except for the Bank,
had the corporate power and authority to enter into and perform all obligations
under such documents, and, as to such parties, I also have assumed the due
authorization by all requisite corporate action, the due execution and delivery
and the validity, binding effect and enforceability of such documents. I have
not examined the Mortgages, the Mortgage Loan Documents or other documents in
the Mortgage Files (such documents, collectively, the "Mortgage Documents"), and
I express no opinion concerning the conformity of any of the Mortgage Documents
to the requirements of the Sale Agreement.
The opinions set forth herein are limited to matters governed
by the laws of the State of North Carolina and the federal laws of the United
States of America, and no opinion is expressed herein as to the laws of any
other jurisdiction. For purposes of these opinions, I have disregarded the
choice of law provision in the Sale Agreement and, instead, have assumed that
the Sale Agreement is governed exclusively by the internal, substantive laws and
judicial interpretation of the State of North Carolina. I assume no obligation
to supplement this opinion if any applicable laws change after the date of this
opinion, or if I become aware of any facts that might change the opinions
expressed herein after the date of this opinion. I do not express any opinion,
either implicitly or otherwise, on any issue not expressly addressed below.
Based upon the foregoing, I am of the opinion that:
1. The Bank is duly organized and validly existing as a
national banking association in good standing under the federal laws of the
United States and has the requisite power and authority, corporate or other, to
own its own properties and conduct its own business, as presently conducted by
it, and to enter into and perform its obligations under the Sale Agreement.
2. The Bank has authorized the execution, delivery and
performance of the Sale Agreement by all necessary corporate action and the Sale
Agreement has been duly executed and delivered by the Bank.
3. No consent, approval, authorization or order of any State
of North Carolina or federal court or governmental agency or body is required
for the execution, delivery and performance by the Bank of the Sale Agreement or
the consummation by the Bank of the transactions contemplated by the terms of
the Sale Agreement, except for those consents, approvals, authorizations or
orders which previously have been obtained.
4. The Sale Agreement constitutes the legal, valid and binding
obligation of the Bank, enforceable against the Bank in accordance with its
terms, subject to the following:
(a) This opinion is subject to the effect of applicable
bankruptcy, insolvency, receivership, reorganization,
fraudulent conveyance, moratorium and similar laws affecting
the enforcement of creditors' rights generally.
(b) The opinion is subject to the effect of general principles
of equity (regardless of whether considered in a proceeding in
equity or at law), which may, among other things, deny rights
of specific performance.
5. The consummation of the transactions contemplated by, and
the performance by the Bank of any other of the terms of, the Sale Agreement,
will not result in a breach of any term or provision of the articles of
association or by-laws of the Bank or, to the best of my knowledge, conflict
with, result in a breach, violation or acceleration of, or constitute a default
under, the terms of any material indenture or other material agreement or
instrument to which the Bank is a party or by which it is bound or any order of
any State of North Carolina or federal court, regulatory body, administrative
agency or governmental body having jurisdiction over the Bank.
6. To the best of my knowledge, there are no actions,
proceedings or investigations pending or threatened before any court,
administrative agency or other tribunal (a) asserting the invalidity of the Sale
Agreement or (b) seeking to prevent the consummation of any of the transactions
contemplated by the Sale Agreement, which might materially and adversely affect
the performance by the Bank of its obligations under, or the validity or
enforceability of, the Sale Agreement.
This opinion letter is rendered for the sole benefit of the
persons or entities to which it is addressed, and no other person or entity is
entitled to rely hereon without my prior written consent. Copies of this opinion
letter may not be furnished to any other person or entity, nor may any portion
of this opinion letter be quoted, circulated or referred to in any other
document without my prior written consent.
Very truly yours,
Xxxx X. Xxxx
Assistant General Counsel
EXHIBIT 8
FORM OF MONTHLY REMITTANCE REPORT
[INTENTIONALLY OMITTED]
EXHIBIT 9
FORM OF CUSTODIAL ACCOUNT CERTIFICATION
_________ __, 2003
Bank of America, N.A. hereby certifies that it has established the
account described below as a Custodial Account pursuant to Subsection 11.04 of
the Mortgage Loan Sale and Servicing Agreement, dated December 1, 2003,
Adjustable Rate Mortgage Loans.
Title of Account: "Bank of America, N.A., in trust for Xxxxxx Brothers Bank,
FSB, as Purchaser of Mortgage Loans and various Mortgagors."
Account Number: __________________________
Address of office or branch of
Bank of America, N.A. at which
the Custodial Account is maintained: 000 Xxxx Xxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxx 00000
BANK OF AMERICA, N.A.
By:______________________________
Name:____________________________
Title:___________________________
EXHIBIT 10
FORM OF ESCROW ACCOUNT CERTIFICATION
_________ __, 2003
Bank of America, N.A. hereby certifies that it has established the account
described below as an Escrow Account pursuant to Subsection 11.06 of the
Mortgage Loan Sale and Servicing Agreement, dated December 1, 2003, Adjustable
Rate Mortgage Loans.
Title of Account: "Bank of America, N.A., in trust for Xxxxxx Brothers Bank,
FSB, as Purchaser of Mortgage Loans and various Mortgagors."
Account Number: __________________________
Address of office or branch of
Bank of America, N.A. at which
the Escrow Account is maintained: 000 Xxxx Xxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxx 00000
BANK OF AMERICA, N.A.
By:______________________________
Name:____________________________
Title:___________________________
EXHIBIT 11
FORM OF CERTIFICATION TO BE PROVIDED BY THE SERVICER
Re: [______________] (the "Trust"), Mortgage Pass-Through
Certificates, Series [_____], issued pursuant to the Pooling and
Servicing Agreement, dated as of [_____], 2003 (the "Pooling and
Servicing Agreement"), among [_____], as depositor (the
"Depositor"), [_____], as trustee (the "Trustee"), [_____], as
servicer (the "Servicer"), and [_____], as responsible party
----------------------------------------------------------------
I, [identify the certifying individual], certify to the
Depositor and the Trustee, and their officers, directors and affiliates, and
with the knowledge and intent that they will rely upon this certification, that:
1. The servicing information required to be provided to the
Trustee by the Servicer under the Pooling and Servicing
Agreement has been so provided;
2. I am responsible for reviewing the activities performed by the
Servicer under the Pooling and Servicing Agreement and based
upon my knowledge and the annual compliance review required
under the Pooling and Servicing Agreement, and except as
disclosed in the annual compliance statement required to be
delivered to the Trustee in accordance with the terms of the
Pooling and Servicing Agreement (which has been so delivered
to the Trustee), the Servicer has fulfilled its obligation
under the Pooling and Servicing Agreement; and
3. All significant deficiencies relating to the Servicer's
compliance with the minimum servicing standards for purpose of
the report provided by an independent public accountant, after
conducting a review conducted in compliance with the Uniform
Single Attestation Program for Mortgage Bankers or similar
procedure, as set forth in the Pooling and Servicing
Agreement, have been disclosed to such accountant.
Date: _____________________
___________________________
[Signature]
[Title]
