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EXHIBIT 10.45
SERVICING AGREEMENT
By and Among
MEGO MORTGAGE HOME LOAN OWNER TRUST 1997-4,
the Issuer,
U.S. BANK NATIONAL ASSOCIATION,
D/B/A FIRST BANK NATIONAL ASSOCIATION,
as Indenture Trustee and Co-Owner Trustee
NORWEST BANK MINNESOTA, N.A.,
as Master Servicer
and
MEGO MORTGAGE CORPORATION,
as Servicer
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MEGO MORTGAGE HOME LOANS
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Dated as of August 16, 1997
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TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS.............................................................................................3
SECTION 1.01. DEFINITIONS.....................................................................................3
SECTION 1.02. FORMS..........................................................................................12
SECTION 1.03. INTERPRETATION.................................................................................12
SECTION 1.04. INTEREST CALCULATIONS..........................................................................12
ARTICLE II REPRESENTATIONS, WARRANTIES AND COVENANTS.............................................................12
SECTION 2.01. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE INDENTURE TRUSTEE.............................12
SECTION 2.02. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SERVICER......................................13
SECTION 2.03. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE MASTER SERVICER...............................16
SECTION 2.04. NOTICE TO MASTER SERVICER......................................................................17
ARTICLE III [RESERVED]...........................................................................................17
ARTICLE IV ASSIGNMENT OF AGREEMENT...............................................................................18
SECTION 4.01. ASSIGNMENT OF RIGHTS...........................................................................18
SECTION 4.02. ASSIGNMENT OF SERVICING OBLIGATIONS............................................................18
ARTICLE V FURTHER COOPERATION; CONFLICTS.........................................................................19
SECTION 5.01. REVIEW OF SERVICING REPORTS....................................................................19
SECTION 5.02. CONFLICTS......................................................................................19
SECTION 5.03. INSPECTIONS; OTHER ASSISTANCE..................................................................19
ARTICLE VI SERVICING DUTIES OF THE SERVICER......................................................................20
SECTION 6.01. GENERAL SCOPE OF DUTIES........................................................................20
SECTION 6.02. SPECIFIC DUTIES; COLLATERAL PROTECTION.........................................................21
SECTION 6.03. SERVICING RECORD; COLLECTIONS; REMITTANCES TO COLLECTION ACCOUNT...............................23
SECTION 6.04. ANNUAL STATEMENT AS TO COMPLIANCE; NOTICE OF TERMINATION EVENTS................................26
SECTION 6.05. COMPENSATION...................................................................................28
SECTION 6.06. ADVANCES; COMPENSATING INTEREST................................................................29
SECTION 6.07. REIMBURSEMENT OF ADVANCES......................................................................30
SECTION 6.08. MODIFICATIONS, WAIVERS, AMENDMENTS AND CONSENTS................................................30
SECTION 6.09. DUE-ON-SALE; DUE-ON-ENCUMBRANCE................................................................31
SECTION 6.10. FORECLOSURE....................................................................................32
SECTION 6.11. SALE OF FORECLOSED PROPERTIES..................................................................33
SECTION 6.12. MANAGEMENT OF REAL ESTATE OWNED................................................................34
SECTION 6.13. INSPECTIONS....................................................................................35
SECTION 6.14. MAINTENANCE OF INSURANCE.......................................................................35
SECTION 6.15. RELEASE OF FILES...............................................................................36
SECTION 6.16. [RESERVED].....................................................................................38
SECTION 6.17. SEGREGATION OF LOANS; REPORTS..................................................................38
SECTION 6.18. LATE REPORT CHARGE.............................................................................38
ARTICLE VII TERMINATION AND LIABILITIES..........................................................................39
SECTION 7.01. VOLUNTARY TERMINATION..........................................................................39
SECTION 7.02. INVOLUNTARY TERMINATION OF SERVICER............................................................40
(i)
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SECTION 7.03. SERVIER'S DUTIES UPON TERMINATION; PAYMENT TO SERVICER.........................................43
SECTION 7.04. AGREEMENT TO PAY ATTORNEYS' FEES...............................................................44
ARTICLE VIII INSURANCE COVERAGE..................................................................................45
SECTION 8.01. FIDELITY BOND COVERAGE.........................................................................45
SECTION 8.02. ERRORS AND OMISSIONS INSURANCE.................................................................45
SECTION 8.03. LIABILITY INSURANCE............................................................................45
ARTICLE IX NOTICE OF CLAIMS......................................................................................46
SECTION 9.01. NOTICE OF CLAIMS...............................................................................46
SECTION 9.02. USE OF COUNSEL.................................................................................46
ARTICLE X [RESERVED].............................................................................................47
ARTICLE XI MISCELLANEOUS PROVISIONS..............................................................................47
SECTION 11.01. AMENDMENTS, CHANGES AND MODIFICATIONS.........................................................47
SECTION 11.02. GOVERNING LAW.................................................................................47
SECTION 11.03. NOTICES.......................................................................................47
SECTION 11.04. SEVERABILITY..................................................................................47
SECTION 11.05. TERM OF AGREEMENT.............................................................................47
SECTION 11.06. LIMITATION OF LIABILITY OF PARTIES............................................................48
SECTION 11.07. LIMITATION OF LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS OF A PARTY...............48
SECTION 11.08. SURVIVAL OF OBLIGATIONS AND COVENANTS.........................................................48
SECTION 11.09. COUNTERPARTS..................................................................................48
SECTION 11.10. FORMS AND REPORTS.............................................................................48
SECTION 11.11. INDEMNIFICATION...............................................................................48
SECTION 11.12. RECITALS AND HEADINGS.........................................................................49
SECTION 11.13. RELATIONSHIP OF THE PARTIES...................................................................50
SECTION 11.14. [RESERVED]....................................................................................50
SECTION 11.15. RECORDATION OF AGREEMENT......................................................................50
EXHIBIT A DESIGNATED SERVICERS
EXHIBIT B FORM OF SERVICER REPORT
EXHIBIT C LOAN SCHEDULE
(ii)
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THIS SERVICING AGREEMENT (the "Agreement"), is made and entered into as
of August 16, 1997 by and among MEGO MORTGAGE HOME LOAN OWNER TRUST 1997-3 (the
"Issuer"), U.S. BANK NATIONAL ASSOCIATION, d/b/a FIRST BANK NATIONAL ASSOCIATION
(in its capacities as "Indenture Trustee" and "Co-Owner Trustee"), NORWEST BANK
MINNESOTA, N.A. (the "Master Servicer"), and MEGO MORTGAGE CORPORATION (the
"Servicer").
W I T N E S S E T H:
WHEREAS, the Servicer is engaged as an independent contractor in the
business of servicing conventional home improvement loans and debt consolidation
loans; and
WHEREAS, the Sale and Servicing Agreement contemplates the execution of
this Agreement and that the Loans will be serviced pursuant to the provisions
hereof; and
WHEREAS, the Issuer, the Indenture Trustee, the Master Servicer and the
Servicer desire to execute this Agreement to define the rights, duties and
obligations of the Servicer with respect to the servicing of the Loans;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements contained herein, the Issuer, the Indenture Trustee, the Master
Servicer and the Servicer each agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. DEFINITIONS.
All terms defined in this Article I (except as expressly provided
otherwise herein or unless the context otherwise requires) shall have the
respective meanings specified in this Article I for all purposes of this
Agreement. Capitalized terms used herein and not otherwise defined herein shall
have the meanings assigned in the Sale and Servicing Agreement and, if any
definition herein conflicts with the definition for such term in the Sale and
Servicing Agreement, the definition in the Sale and Servicing Agreement shall
control.
"ADVANCE" means the amounts paid and advanced by the Servicer pursuant
to Section 6.06(a) and (b) hereof.
"AGGREGATE PRINCIPAL BALANCE" means, as of any date of determination,
the sum of the principal balances for all Loans serviced by the Servicer
hereunder.
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"AGREEMENT" means this Servicing Agreement entered into by and among
the Issuer, the Indenture Trustee, the Co-Owner Trustee, the Master Servicer and
the Servicer, and all exhibits, amendments, and supplements hereto.
"BUSINESS DAY" means any day of the week other than Saturday, Sunday,
or a day which banking institutions in the City of New York or the city in which
either the Master Servicer's or the Servicer's servicing operations are located
are authorized or obligated by Law or executive order, or government decree to
close.
"CIVIL RELIEF ACT" means the Soldiers' and Sailors' Relief Act of 1940,
as amended.
"CLOSING DATE" means August 29, 1997.
"CODE" means the Internal Revenue Code of 1986, as it may be amended
from time to time, and Treasury Regulations promulgated thereunder.
"COLLECTION ACCOUNT" means the account established and maintained
pursuant to Section 6.03(g).
"CUMULATIVE NET LOSSES" means, with respect to any Distribution Date,
the aggregate amount of Net Loan Losses calculated for such Distribution Date
and each prior Distribution Date, reduced by any recoveries in respect of
principal on a Defaulted Loan received after the Due Period in which such Loan
became a Defaulted Loan.
"DEBTOR RELIEF LAWS" means any applicable state or federal liquidation,
conservatorship, bankruptcy, insolvency, rearrangement, moratorium,
reorganization, or similar debt or relief laws from time to time in effect
affecting the enforcement of creditors' rights generally and general equitable
principles (regardless of whether such enforcement is considered in a proceeding
in equity or at law).
"DEFAULTED LOAN" means a Loan with respect to which: (a) the Property
has been acquired through foreclosure or similar proceeding and sold, (b) any
portion of a Monthly Payment is more than 180 calendar days past due (without
giving effect to any grace period), or (c) the Servicer has determined in
accordance with customary servicing practices that the Loan is uncollectible.
"DESIGNATED SERVICER" means each Person, if any, listed on Exhibit A
hereto designated by the Servicer to perform the Servicer's duties, liabilities,
and obligations hereunder with respect to certain Loans, each of which
Designated Servicer (other than Preferred Equities Corporation) shall be an
Eligible Servicer and is subject to approval of the Master Servicer. Each
Designated Servicer listed on Exhibit A on the Closing Date shall be deemed to
have been approved by the Master Servicer.
"DISTRIBUTION DATE" means the twenty-fifth (25th) day of the month, or
if such 25th day is not a Business Day, the immediately following Business Day,
commencing in September 1997.
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"DUE DATE" means, with respect to each Loan, the date on which Monthly
Payments are due pursuant to the terms of the related Debt Instrument.
"DUE PERIOD" means, with respect to any Determination Date or
Distribution Date, the calendar month immediately preceding such Determination
Date or Distribution Date, as the case may be; provided, however, with respect
to the September 1997 Distribution Date, the Due Period shall mean the period
from August 16, 1997 to August 31, 1997.
"ELIGIBLE ACCOUNT" means (i) a segregated trust account that is
maintained with the corporate trust department of a depository institution the
(A) long-term debt obligations of which are at such time rated by each Rating
Agency in one of their two highest long-term rating categories or (B) short-term
debt obligations of which are then rated by each Rating Agency in their highest
short-term rating category or (C) a segregated trust account department of a
federal or state chartered depository institution or trust company having
capital and surplus of not less than $100,000,000 acting in its fiduciary
capacity, (ii) a segregated direct deposit account maintained with a depository
institution or trust company organized under the laws of the United States or
America, or any of the States thereof, or the District of Columbia, having a
certificate of deposit, short-term deposit or commercial paper rating of at
least A-1+ by Standard & Poor's and P-1 by Moody's, or (iii) an account that
will not cause any Rating Agency to downgrade or withdraw its then current
rating(s) assigned to the Notes as evidenced in writing by such Agency.
"ELIGIBLE SERVICER" means a Person that is either (a) (i) is servicing
a portfolio of mortgage loans, (ii) is legally qualified to service, and is
capable of servicing, the Loans and has all licenses required to service
mortgage loans, (iii) has demonstrated the ability to service professionally and
competently a portfolio of mortgage loans similar to the Loans with reasonable
skill and care, and (iv) has a net worth calculated in accordance with generally
accepted accounting principles of at least $500,000, or (v) has been approved in
writing by Standard & Poor's, or (b) is Norwest Bank Minnesota, N.A., Mego
Mortgage Corporation or Preferred Equities Corporation.
"FILE" means the Indenture Trustee's Home Loan File or the Servicer's
Home Loan File, as the context requires.
"FORECLOSED PROPERTY" means with respect to any Mortgage Loan any
Property acquired by the Issuer as a result of:
(i) the completion of foreclosure or comparable proceedings with
respect to the related Mortgage Loan;
(ii) the Co-Owner Trustee's acceptance of the deed or other
evidence of title to the related Property in lieu of a
foreclosure or other proceeding with respect to the related
Loan; or
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(iii) the acquisition by the Co-Owner Trustee of title thereto by
operation of law.
"FORECLOSURE ADVANCE" has the meaning ascribed thereto in Section
6.06(b) of this Agreement.
"GNMA" means the Government National Mortgage Association.
"HUD" means the United States Department of Housing and Urban
Development and any successor thereto.
"INDENTURE TRUSTEE" means U.S. Bank National Association, d/b/a First
Bank National Association, or any duly appointed successor thereto.
"INDEPENDENT" means when used with respect to any specified Person,
such Person (i) is in fact independent of the Servicer, the Master Servicer, the
Depositor (as defined in the Sale and Servicing Agreement) or any of their
respective affiliates, (ii) does not have any direct financial interest in or
any material indirect financial interest in any of the Servicer, the Master
Servicer, the Depositor or any of their respective affiliates and (iii) is not
connected with any of the Servicer, the Master Servicer, the Depositor or any of
their respective affiliates, as an officer, employee, promoter, underwriter,
trustee, partner, director or Person performing similar functions; provided,
however, that a Person shall not fail to be Independent of the Servicer, the
Master Servicer, the Depositor or any of their respective affiliates merely
because such Person is the beneficial owner of 1% or less of any class of
securities issued by Mego, the Master Servicer, the Depositor or any of their
respective affiliates, as the case may be.
"INSURANCE PROCEEDS" means, with respect to any Property, all amounts
collected in respect of related title or other insurance policy, and not
required to be applied to the restoration of the related Property or paid to the
related Obligor.
"INTEREST ADVANCE" has the meaning ascribed thereto in Section 6.06(a)
of this Agreement.
"ISSUER" means Mego Mortgage Home Loan Owner Trust 1997-4.
"LAW" means all applicable statutes, laws, ordinances, regulations,
orders, writs, injunctions, or decrees of the United States or any agency
thereof, or any state or political subdivision thereof, or any court of
competent jurisdiction thereof.
"LIQUIDATION PROCEEDS" means amounts (other than Insurance Proceeds)
received in connection with the liquidation of Defaulted Loans, whether through
trustee's sale, foreclosure sale, or otherwise.
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"LOAN" means the home loans subject to this Agreement from time to time
identified on the Loan Schedule.
"LOAN RATE" means, with respect to any Loan, the fixed, floating or
adjustable annual rate of interest set forth in the related Debt Instrument, as
may be reduced by application of the Civil Relief Act.
"LOAN SCHEDULE" means, as of any date, the schedule of Loans serviced
under this Agreement and attached to this Agreement as Exhibit C. Each Loan
Schedule shall specify with respect to each Loan the information set forth in
Exhibit C hereto.
"MASTER SERVICER" means Norwest Bank Minnesota, N.A., a national
banking association, in its capacity as Master Servicer under this Agreement,
its successors in interest or any Person appointed as successor master servicer
pursuant to the provisions of the Sale and Servicing Agreement.
"MATURITY DATE" means, with respect to any Loan, the date on which the
last payment of principal is due and payable under the related Debt Instrument.
"MONTHLY PAYMENT" means with respect to any Loan and any Due Period,
the payment of principal and interest due in such Due Period from the Obligor
pursuant to the related Debt Instrument (as amended or modified, if applicable,
pursuant to Section 6.08). The Monthly Payment related to a Servicer
Determination Date or a Distribution Date shall be the Monthly Payment due for
the preceding Due Period.
"MORTGAGE" means, with respect to any Mortgage Loan, the mortgage, deed
of trust or other security instrument creating a lien (and in a title theory
state the document conveying title to the Mortgaged Property as security for the
related Loan) or other security interest on the related Mortgaged Property.
"MORTGAGE LOAN" means a Mortgage Loan acquired by the Issuer pursuant
to the Sale and Servicing Agreement and serviced by the Servicer pursuant to
this Agreement.
"MORTGAGED PROPERTY" means, with respect to any Mortgage Loan, any fee
interest in the residential property subject to the lien of the related
Mortgage.
"MORTGAGOR" means, with respect to any Mortgage Loan, the Obligor(s) on
the related Debt Instrument.
"NET DELINQUENCY CALCULATION AMOUNT" means, with respect to any
Distribution Date, beginning with the sixth Distribution Date, the excess, if
any, of (x) the product of (a) the product of 2.5 times the 61+ Delinquency
Percentage (Rolling Six-Month) and (b) the Pool Principal Balance as
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of the preceding Due Period over (y) the aggregate of the amounts of Excess
Spread for the three preceding Distribution Dates.
"NET LOAN LOSSES" means as of any Distribution Date and with respect to
the Home Loans that become Defaulted Loans during the immediately preceding Due
Period, the aggregate Principal Balances of such Defaulted Loans as of the last
day of such Due Period, after giving effect to any recoveries attributable to
principal from whatever source received during such Due Period with respect to
such Defaulted Loans, including, without limitation, any Insurance Proceeds.
"NET LOAN RATE" means, with respect to each Loan, the related Loan Rate
less the rate at which the Servicing Fee is calculated.
"NONRECOVERABLE ADVANCES" means with respect to any Loan, (i) any
Interest Advance previously made and not reimbursed pursuant to Section
5.01(c)(i)(b) of the Sale and Servicing Agreement, or (ii) an Interest Advance
proposed to be made in respect of a Loan which, in either case, in the good
faith business judgment of the Master Servicer, as evidenced by an Officer's
Certificate delivered to the Servicer and the Indenture Trustee no later than
the Business Day following such determination, would not be recoverable
ultimately from the Payments received in subsequent Due Periods in respect of
that Loan.
"NOTICE ADDRESS" means, unless each party is notified otherwise:
(a) As to the Issuer and the Owner Trustee:
Mego Mortgage Home Loan Owner Trust 1997-4
c/o Wilmington Trust Company
Corporate Trust Administration
Xxxxxx Square North
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
(b) As to the Indenture Trustee or Co-Owner Trustee:
U.S. Bank National Association, d/b/a First Bank
National Association
First Trust Center
000 Xxxx Xxxxx Xxxxxx
Xxxxx 000
Xx. Xxxx, Xxxxxxxxx 00000
Attention: Structured Finance: Mego 1997-4
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(c) As to the Master Servicer:
Norwest Bank Minnesota, N.A.
00000 Xxxxxx Xxxx Xxxxxxx
Xxxxxxxx, Xxxxxxxx 00000-0000
Attention: Master Servicing Department
Mego Mortgage Home Loan Owner Trust
1997-4
(d) As to the Servicer:
Mego Mortgage Corporation
0000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx
President
"OBLIGOR" means, with respect to any Loan, the obligor(s) on the
related Debt Instrument.
"OFFICER'S CERTIFICATE" means a certificate executed by a Servicing
Officer certifying that (i) the Servicer has complied with all of the terms and
conditions hereof and (ii) the representations, warranties, and covenants
contained in Article II hereof are true and correct as of the date of such
certificate and (iii) as to such other matters as required by this Agreement.
"OWNER TRUSTEE" means Wilmington Trust Company, as owner trustee under
the Trust Agreement, and any successor owner trustee under the Trust Agreement.
"PAYMENT" means with respect to any Loan or the related Foreclosed
Property and any Distribution Date or related Servicer Determination Date, all
amounts received or collected on account of principal and interest by or on
behalf of the Servicer during the preceding Due Period (or with respect to the
interest component of any Monthly Payment due during such Due Period, received
or collected by or on behalf of the Servicer during the period commencing on the
first day of the preceding Due Period and ending prior to such Servicer
Determination Date) in respect of such Loan or Foreclosed Property from whatever
source, including without limitation, amounts received or collected from, or
representing:
(i) the related Obligor;
(ii) the application to amounts due on such Loan (or, in the case of
any Foreclosed Property, to amounts previously due on the related Foreclosed
Loan) of any related Insurance Proceeds, Liquidation Proceeds, any related
condemnation awards or settlements or any payments made by any related guarantor
or third-party credit-support provider;
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(iii) the operation or sale of the related Foreclosed Property;
(iv) the Purchase Price with respect to such Home Loan or Substitution
Adjustment Amounts with respect thereto; or
(v) the Termination Price pursuant to (and as defined in) Section
11.01(b) of the Sale and Servicing Agreement;
provided, however, that any amount the Servicer shall be entitled to retain as
additional servicer compensation pursuant to Section 6.05(a) shall be excluded
from the calculation of Payment.
"PERSON" means an individual, corporation, limited liability company,
partnership, association, joint-stock company, trust, unincorporated
organization or joint venture, or a court or a government or any agency or
political subdivision thereof.
"PRINCIPAL PREPAYMENT" means any payment made by the related Obligor or
other receipt of principal in full due on a Loan that is received in advance of
the scheduled maturity date of such Loan.
"PROPERTY" means a Mortgaged Property.
"SALE AND SERVICING AGREEMENT" means that certain Sale and Servicing
Agreement, dated as of August 16, 1997, by and among Mego Mortgage Home Loan
Owner Trust 1997-4, as Issuer, Financial Asset Securities Corp., as Depositor,
Mego Mortgage Corporation, as Seller and Servicer, Norwest Bank Minnesota, N.A.,
as Master Servicer, and U.S. Bank National Association, d/b/a First Bank
National Association, as Indenture Trustee and Co-Owner Trustee, relating to the
Mego Mortgage Home Loan Owner Trust 1997-4 Securities.
"SERVICER" means the servicer whose name and notice address appear on
the signature page of this Agreement, or any successor thereto appointed
pursuant to Article VII hereof with the consent of the Master Servicer and the
Indenture Trustee.
"SERVICER DETERMINATION DATE" means, except as provided in the next
sentence, with respect to any Distribution Date, the fifth (5th) Business Day
preceding each Distribution Date. The first such Servicer Determination Date
will be September 18, 1997.
"SERVICER REPORTING DATE" means the fifth (5th) Business Day preceding
each Servicer Determination Date, but in no event earlier than the tenth (10th)
calendar day of any month.
"SERVICING FEE" means, with respect to any Distribution Date (other
than the first Distribution Date), one-twelfth of the Servicing Fee rate of
1.00% times the Aggregate Principal Balance as of the opening of business on the
first day of the month preceding the month of such Distribution Date. With
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respect to the first Distribution Date, 15/360 times 1.00% times the Initial
Pool Principal Balance). The Servicing Fee shall be payable as provided in
Section 6.05 hereof.
"SERVICING OFFICER" means an officer of the Servicer responsible for
the administration and servicing of the Loans whose name and specimen signature
appear on a list of servicing officers furnished to the Master Servicer at
Closing, as such list may be amended from time to time.
"SERVICING RECORD" means the books and records for each Loan
established pursuant to Section 6.03.
"61+ DAY DELINQUENT LOAN" means, as of any Servicer Determination Date
or related Distribution Date, a Loan, other than a Defaulted Loan, with respect
to which any portion of a Monthly Payment is, as of the end of the related Due
Period, 61 days or more past due (without giving effect to any grace period, and
including Home Loans in foreclosure and Foreclosed Properties that are not
otherwise Defaulted Loans) and unpaid by the Obligor.
"61+ DELINQUENCY PERCENTAGE (ROLLING SIX MONTH)" means, as of any
Servicer Determination Date or related Distribution Date, the average of the
percentage equivalents of the fractions determined for each of the six
immediately preceding Due Periods the numerator of which is equal to the
aggregate principal balance of Loans that are 61+ Day Delinquent Loans as of the
end of such Due Period and the denominator of which is the Aggregate Principal
Balance of the Loans as of the end of such Due Period.
"TOTAL EXPECTED LOAN LOSS PERCENTAGE" means, as of any date of
determination, the percentage equivalent of the fraction, the numerator of which
is equal to the sum of (a) Cumulative Net Losses for such Distribution Date, (b)
25% of the aggregate Principal Balance of Loans which are between 31 and 60 days
past due (without giving effect to any grace period) as of the last day of the
preceding Due Period, (c) 50% of the aggregate Principal Balance of Loans which
are between 61 and 90 days past due (without giving effect to any grace period)
as of the last day of the preceding Due Period and (d) the aggregate Principal
Balance of the Loans which are more than 90 days past due (without giving effect
to any grace period) as of the last day of the preceding Due Period, and the
denominator of which is the Original Pool Principal Balance.
"TRUST" means the Issuer.
SECTION 1.02. FORMS.
All forms specified by the text hereof or by reference to exhibits
attached hereto shall be substantially as set forth herein, subject to such
changes that do not alter the substantive rights of the parties hereto or as may
be required by applicable Laws hereafter enacted.
SECTION 1.03. INTERPRETATION.
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Unless the context requires otherwise, words of the masculine gender
shall be construed to include correlative words of the feminine and neuter
genders and vice versa, and words of the singular number shall be construed to
include correlative words of the plural number and vice versa. This Agreement,
and all the terms and provisions hereof, shall be liberally construed to effect
the purposes set forth herein and to sustain the validity of this Agreement.
SECTION 1.04. INTEREST CALCULATIONS.
All payments of interest on the Loans shall be accounted for on the
basis of a 30-day month and 360-day year. No Loan will be accounted for on the
basis of simple interest.
ARTICLE II
REPRESENTATIONS, WARRANTIES AND COVENANTS
SECTION 2.01. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
INDENTURE TRUSTEE.
The Indenture Trustee represents and warrants to, and covenants with,
the Master Servicer and the Servicer as of the Closing Date that:
(a) The Indenture Trustee is a national banking association
duly organized under the laws of the United States, is validly existing
and in good standing, and has the corporate power and authority under
the laws of the United States to conduct its corporate trust business
as now conducted.
(b) The Indenture Trustee has full power and authority to
enter into and perform all transactions contemplated herein and no
consent, approval, authorization, or order of any federal, state, or
local court or governmental agency or body governing or having
jurisdiction with respect to the Indenture Trustee's trust powers is
required for the Indenture Trustee to enter into this Agreement and to
perform its obligations hereunder.
(c) The execution, delivery, and performance by it of this
Agreement (a) do not violate any provision of any law or regulation
governing the banking and trust powers of the Indenture Trustee or any
order, writ, judgment, or decree of any court, arbitrator, or
governmental authority applicable to the Indenture Trustee or any of
its assets, (b) do not violate any provision of its corporate charter
or by-laws, or (c) to the best of its knowledge do not violate any
provision of, or constitute, with or without notice or lapse of time, a
default under, or result in the creation or imposition of any lien on
any of the property of the Issuer pursuant to the provisions of any
mortgage, indenture, contract, agreement or other undertaking other
than this Agreement to which it is a party.
(d) This Agreement has been duly executed and delivered by the
Indenture Trustee and constitutes the legal, valid, and binding
agreement of the Indenture Trustee,
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enforceable in accordance with its terms, except as enforceability may
be limited by bankruptcy, insolvency, reorganization or other similar
laws affecting the enforcement of creditors' rights generally and by
equitable limitations on the availability of specific remedies,
regardless of whether such enforceability is considered in a proceeding
in equity or at law.
SECTION 2.02. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
SERVICER.
The Servicer represents and warrants to, and covenants with, the
Issuer, the Indenture Trustee and the Master Servicer as of the Closing Date
that:
(a) Servicer is a corporation duly organized, validly
existing, and in good standing under the laws of the jurisdiction of
its incorporation and has all licenses necessary to carry on its
business as now being conducted and is licensed, qualified and in good
standing in each state where the Property is located if the laws of
such state require licensing or qualification in order to conduct
business of the type conducted by Servicer and perform its obligations
hereunder; Servicer 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 by Servicer and
the consummation of the transactions contemplated hereby have been duly
and validly authorized by all necessary corporate action; this
Agreement evidences the valid, binding and enforceable obligation of
Servicer, and all requisite corporate action has been taken by Servicer
to make this Agreement valid, binding and enforceable upon Servicer in
accordance with its terms, subject to the effect of Debtor Relief Laws,
none of which will effect the ownership of the Loans by the Issuer;
(b) All actions, approvals, consents, waivers, exemptions,
variances, franchises, orders, permits, authorizations, rights and
licenses required to be taken, given or obtained, as the case may be,
by or from any federal, state or other governmental authority or agency
that are necessary in connection with the execution and delivery by
Servicer of this Agreement, have been duly taken, given or obtained, as
the case may be, are in full force and effect on the date hereof, are
not subject to any pending proceedings or appeals (administrative,
judicial or otherwise) and either the time within which any appeal
therefrom may be taken or review thereof may be obtained has expired or
no review thereof may be obtained or appeal therefrom taken, and are
adequate to authorize the consummation of the transactions contemplated
by this Agreement on the part of Servicer and the performance by
Servicer of its obligations under this Agreement;
(c) Neither the execution and delivery of this Agreement, the
consummation of the transactions contemplated herein, nor the
fulfillment of or compliance with the terms of this Agreement will
result in the breach of any terms or provisions of the certificate of
incorporation or by-laws of Servicer 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 material
agreement, indenture or loan or credit agreement or other material
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instrument to which Servicer or its property is subject, or result in
the violation of any law, rule, regulation, order, judgment or decree
to which Servicer or its property is subject;
(d) Servicer does not believe, nor does it have any reason or
cause to believe, that it cannot perform each and every covenant of the
Servicer contained in this Agreement;
(e) There is no action, suit, proceeding or investigation
pending or, to the best of Servicer's knowledge, threatened against
Servicer which, either in any one instance or in the aggregate, may (i)
result in any material adverse change in the business, operations,
financial condition, properties or assets of Servicer or in any
material impairment of the right or ability of Servicer to carry on its
business substantially as now conducted, or in any material liability
on the part of Servicer or of any action taken or to be taken in
connection with the obligations of Servicer contemplated herein, or
which would be likely to impair materially the ability of Servicer to
perform under the terms of this Agreement, or (ii) which would draw
into question the validity of this Agreement;
(f) Servicer is not in default with respect to any order or
decree of any court or any order, regulation or demand of any federal,
state, municipal or governmental agency, which default might have
consequences that would materially and adversely affect the condition
(financial or other) or operations of Servicer or its properties or
might have consequences that would materially and adversely affect the
execution and delivery of this Agreement and its performance hereunder;
(g) The Servicer is solvent and will not be rendered insolvent
as a result of the performance of its obligations pursuant to this
Agreement;
(h) The Servicer has not waived any default, breach, violation
or event of acceleration existing under any Debt Instrument or any
related Mortgage;
(i) The Servicer shall comply with, and shall service each
Loan, in accordance with the terms of this Agreement and all applicable
laws, and all reasonable instructions of the Master Servicer not in
conflict with any of the foregoing;
(j) The Servicer shall at all times act in good faith in a
commercially reasonable manner and shall comply with all applicable
state and federal laws affecting the servicing of the Loans;
(k) From time to time the Servicer shall report, as more fully
set forth in this Agreement, information relating to the Loans to the
Master Servicer and shall do every act and thing that may be necessary
or required to perform its duties under this Agreement;
(l) The Servicer agrees that, so long as it shall continue to
serve in the capacity contemplated under the terms of this Agreement,
it shall remain in good standing under the Laws governing its creation
and existence and qualified under the Laws of each state
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in which the nature of its business requires such qualification, it
shall maintain all licenses, permits and approvals required by any law
or regulations as may be necessary to perform its obligations under
this Agreement and to retain all rights to service the Loans. The
Servicer has no present intention to dissolve or otherwise dispose of
all or substantially all of its assets, and or to voluntarily
consolidate with or merge into any other entity or permit one or more
other entities to consolidate with or merge into it. If the Servicer
consolidates with or merges into another entity, or permits one or more
entities to consolidate or merge into it, or sells or otherwise
transfers to another such entity all or substantially all of its assets
and thereafter dissolves, and if the surviving, resulting, or
transferee entity, as the case may be, is not an Eligible Servicer or
is otherwise not reasonably acceptable to the Master Servicer, the
Servicer shall be deemed to have requested a voluntary termination
pursuant to Section 7.01 hereof;
(m) No information, Officer's Certificate, statement furnished
in writing, or report required hereunder, delivered by the Servicer to
the Master Servicer or its agents shall, to the best knowledge of the
Servicer, contain any untrue statement of a material fact or omit to
state a material fact necessary to make the information, certificate,
statement, or report not misleading and there has been no material
adverse change in the financial condition of the Servicer since the
date of the Servicer's most recent audited financial statements;
(n) The Servicer is a mortgage banker, state or national bank,
or a lender that actively provides servicing of loans on residential
housing, and the transactions contemplated by this Agreement are in the
ordinary course of business of the Servicer;
(o) The origination and collections practices used by the
Servicer and its respective affiliates with respect to the Loans have
been in all respects legal, proper, prudent and customary in the
mortgage lending and servicing business;
(p) The Servicer is an Eligible Servicer;
(q) The Servicer shall at all times maintain stockholders'
equity, calculated in accordance with generally accepted accounting
principles, of at least $32,000,000;
(r) The Servicer has caused and will cause to be performed any
and all acts required to be performed by the Servicer to preserve the
rights and remedies of the Indenture Trustee in any insurance policies
applicable to the Loans including, without limitation, in each case,
any necessary notifications of insurers, assignments of policies or
interests therein, and establishments of co-insured, joint loss payee
and mortgagee rights in favor of the Indenture Trustee; and
(s) Neither this Agreement nor any statement, report or other
document furnished or to be furnished pursuant to this Agreement by
Servicer or in connection with the transactions contemplated hereby and
thereby by Servicer contains any untrue statement
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of material fact or omits to state a material fact necessary to make
the statements contained herein or therein not misleading.
(t) The Servicer's Home Loan Files will be located in the
State of Georgia and will not be removed to another state without an
Opinion of Counsel to the effect that such removal will not affect the
taxation of the Trust Estate.
SECTION 2.03. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE MASTER
SERVICER.
The Master Servicer represents and warrants to, and covenants with, the
Issuer, the Indenture Trustee and the Servicer as of the Closing Date that:
(a) The Master Servicer is a national banking association duly
organized and validly existing under the laws of the United States of
America, with full power and authority to own its properties and
conduct its business as such properties are presently owned and such
business is presently conducted;
(b) The Master Servicer has the full power and authority to
execute, deliver and perform, and to enter into and consummate all
transactions contemplated by this Agreement, has duly authorized the
execution, delivery and performance of this Agreement, has duly
executed and delivered this Agreement, and this Agreement, when duly
authorized, executed and delivered by the other parties hereto, will
constitute a legal, valid and binding obligation of the Master
Servicer, enforceable against it in accordance with its terms;
(c) Neither the execution and delivery of this Agreement, the
consummation of the transactions required of it herein or therein, nor
the fulfillment of or compliance with the terms and conditions of this
Agreement will conflict with or result in a breach of any of the terms,
conditions or provisions of the Master Servicer's charter or bylaws or
any legal restriction or any material agreement or instrument to which
the Master Servicer is now a party or by which it is bound, or
constitute a material default or result in an acceleration under any of
the foregoing, or result in the violation of any law, rule, regulation,
order, judgment or decree to which the Master Servicer or its property
is subject;
(d) The Master Servicer is not in default, and upon the
execution and delivery of this Agreement and its performance of and
compliance with the terms hereof will not constitute a violation of,
any law, any order or decree of any court, or any order, regulation or
demand of any federal, state or local governmental or regulatory
authority;
(e) No action, suit or other proceeding or investigation is
pending or, to the Master Servicer's knowledge, threatened before any
court of any federal, state or local governmental or regulatory
authority (A) asserting the invalidity of this Agreement, (B) seeking
to prevent the consummation of any of the transactions contemplated by
this Agreement, or (C) seeking any determination or ruling that would
materially and adversely
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affect the ability of the Master Servicer to perform its obligations
under this Agreement; and
(f) No consent, approval, authorization or order of,
registration or filing with or notice to, any court or any federal,
state or local government or regulatory authority is required for the
execution, delivery and performance by the Master Servicer of this
Agreement.
SECTION 2.04. NOTICE TO MASTER SERVICER.
If, at any time, any representation or warranty of the Servicer set
forth in this Agreement is not true and correct in any material respect as of
the time made, the Servicer shall immediately notify the Master Servicer of such
fact and provide a full and accurate explanation thereof.
ARTICLE III
[RESERVED]
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ARTICLE IV
ASSIGNMENT OF AGREEMENT
SECTION 4.01. ASSIGNMENT OF RIGHTS
(a) The Servicer acknowledges that, from time to time, (i) the
Indenture Trustee and the Master Servicer may assign their respective right,
title and interest in this Agreement with respect to one or more Loans and (ii)
the Indenture Trustee may appoint a successor master servicer hereunder, as
provided below. The Indenture Trustee or the Master Servicer, as the case may
be, shall provide the Servicer ten (10) days prior notice of any such assignment
or appointment; provided, however, that the failure to give such notice shall
not affect the validity of such assignment or appointment. The Servicer consents
to each such assignment and waives any further notice thereof.
In the event the Master Servicer is terminated as master servicer under
the Sale and Servicing Agreement, a successor master servicer shall be appointed
pursuant to the terms of the Sale and Servicing Agreement and the Indenture
Trustee or such successor master servicer shall provide the Servicer written
notice of such appointment. Upon such appointment, the successor master servicer
shall be the successor in all respects to the Master Servicer in its capacity as
master servicer under this Agreement and shall be subject to all the
responsibilities, restrictions, duties and liabilities relating thereto placed
on the Master Servicer by the terms and provisions of this Agreement. Upon
receipt of the written notice described in this section, and until such
successor master servicer is terminated or replaced, the Servicer shall
recognize and deal with the successor master servicer under this Agreement as
master servicer hereunder for all purposes without any further action on the
part of any party hereto.
SECTION 4.02. ASSIGNMENT OF SERVICING OBLIGATIONS.
Except as otherwise provided in Section 2.02(n) and this Section 4.02,
the Servicer may not assign any of its rights or privileges hereunder or make or
enter into any delegation, subcontract, authorization or appointment with
respect to any of its duties, liabilities or obligations hereunder without the
prior written consent of the Master Servicer. Exhibit A hereto contains the name
of each Designated Servicer, each of which Designated Servicer (other than any
Designated Servicer listed on Exhibit A on the Closing Date) is subject to the
approval of the Master Servicer. Notwithstanding any subservicing agreement, any
of the provisions of this Agreement relating to agreements or arrangements
between the Servicer and a Designated Servicer, or reference to actions taken
through a Designated Servicer or otherwise, the Servicer shall remain obligated
and primarily liable for the servicing and administration of the Loans in
accordance with the provisions of this Agreement without diminution of such
obligation or liability by virtue of such subservicing agreement or arrangement
or by virtue of indemnification from the Designated Servicer and to the same
extent and under the same terms and conditions as if the Servicer alone were
servicing and administering the Loans. For purposes of this Agreement, the
Servicer shall be deemed to have received payments on Loans when any Designated
Servicer has received such payment. The Servicer shall be entitled to enter into
any agreement with a Designated Servicer providing for indemnification of the
Servicer by the Designated
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Servicer, and nothing contained in this Agreement shall be deemed to limit or
modify such indemnification.
ARTICLE V
FURTHER COOPERATION; CONFLICTS
SECTION 5.01. REVIEW OF SERVICING REPORTS.
In the event the reports pertaining to any Loan are, in the reasonable
judgment of the Master Servicer, defective in accordance with the terms of this
Agreement, Servicer shall cooperate with the Master Servicer in curing such
defects.
SECTION 5.02. CONFLICTS.
Nothing in this Agreement shall preclude the Servicer, in its
individual capacity, from entering into other mortgage loans or other financial
transactions with any Obligor other than refinancing any Loan.
SECTION 5.03. INSPECTIONS; OTHER ASSISTANCE.
(a) Servicer shall allow, and shall cause each Designated
Servicer to allow, the Master Servicer's and the Indenture Trustee's
representatives at any time and from time to time, during normal
business hours, reasonable access to Servicer's or Designated
Servicer's premises where services in respect of the Loans are being
provided to examine Servicer's performance under this Agreement and to
cooperate with Servicer's and the Designated Servicer's staff to
facilitate the servicing of the Loans. The Servicer shall provide, and
shall cause each Designated Servicer to provide, to representatives of
the Master Servicer and the Indenture Trustee reasonable access to the
documentation regarding the Loans and to those employees of the
Servicer who are responsible for the performance of the Servicer's
duties hereunder and to the books of account, records, reports, and
other papers of the Servicer and to allow such persons to discuss its
affairs, finances, and accounts with those employees and independent
accountants for the purpose of reviewing or evaluating the financial
condition of the Servicer. In each case, such access (i) shall be
afforded upon reasonable request and during normal business hours, and
(ii) shall not interfere with the normal business operations of the
Servicer or the Designated Servicer, as applicable. Nothing in this
section shall derogate from the obligation of the Servicer to observe
any applicable law prohibiting disclosure of information regarding the
Obligors, and the failure of the Servicer to provide access as provided
in this section as a result of such obligation shall not constitute a
breach of this section.
(b) If the Master Servicer or the Indenture Trustee receives
any written inquiries, legal notices or other legal documents, or other
written communications relating to a
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Loan, the recipient shall furnish a copy thereof to the Servicer within
five Business Days of receipt of such notice or other communication.
ARTICLE VI
SERVICING DUTIES OF THE SERVICER
SECTION 6.01. GENERAL SCOPE OF DUTIES.
(a) From and after the date hereof, the Servicer shall service
and administer the Loans pursuant to the terms hereof without regard to
the terms of any other agreement with respect to the servicing of the
Loans.
(b) The Servicer's duties hereunder are generally to provide
loan administration servicing on behalf of the Master Servicer as agent
for the Issuer, including but not limited to the collection of payments
for the reduction of principal and application of interest, the
remittance of collected payments, certain foreclosure services as
specified herein, and the employment of collection personnel to perform
such services. Subject to the terms and conditions set forth herein,
the Servicer shall service and administer the Loans in accordance with
all requirements of applicable law, and otherwise in accordance with
all other terms of this Agreement and the terms of the respective Loans
(including the related Debt Instruments and Mortgages), on behalf of
the Master Servicer as agent for the Issuer and consistent with the
ordinary practices of prudent mortgage lending institutions, but
without regard to: (i) any relationship that the Servicer or any
affiliate of the Servicer may have with the related Obligor; (ii) the
Servicer's obligation to make Advances pursuant to this Agreement; or
(iii) the Servicer's right to receive compensation for its services
hereunder.
(c) Subject only to the above-described servicing standards
and the terms of this Agreement and of the respective Loans, the
Servicer shall have full power and authority, to do or cause to be done
any and all things in connection with such servicing and administration
which it may deem necessary or desirable (including exercising any
remedy under any Loan, retaining counsel in connection with the
performance of any of its obligations hereunder, and instigating
litigation to enforce any obligation of any Obligor, without the
consent or approval of the Indenture Trustee, unless any such consent
or approval is expressly required hereunder or under the Sale and
Servicing Agreement or applicable law, and except that the consent of
the Indenture Trustee shall be required prior to the taking of any
action with respect to any Loan or Property as to which the Servicer is
on notice of any potential environmental liabilities with respect to
such Property), subject only to applicable laws, this Agreement, and
the respective Loans. In performing its obligations hereunder the
Servicer shall at all times act in good faith in a commercially
reasonable manner. In connection with the servicing of the Loans, the
Servicer shall prepare and execute any and all financing statements,
continuation statements and other
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documents or instruments necessary to maintain the lien created by any
Loan on the related Property. The Servicer may agree to modifications,
waivers, amendments, subordinations, consents to or with respect to any
documents related to the Loan only as permitted by Section 6.08. The
Servicer shall notify the Master Servicer of any such action and the
date thereof, and shall provide the Master Servicer on each Servicer
Reporting Date a status report with respect to such actions. The
Servicer shall deliver to the Master Servicer for deposit in the
related File an original counterpart of the agreement relating to such
action and a copy of such agreement for the Master Servicer's records
promptly following the execution thereof. The Servicer shall service
and administer the Loans in accordance with applicable state and
federal law and shall provide to the borrowers under the Loans any
reports required to be provided to them thereby. At the direction of
the Master Servicer, the Indenture Trustee shall execute any powers of
attorney and other documents, prepared or provided by the Servicer,
necessary or appropriate to enable the Servicer to carry out its
servicing and administrative duties hereunder and necessary to maintain
the lien created by any Mortgage on the related Mortgaged Property or
any portion thereof; provided, however, that the Servicer shall
indemnify the Indenture Trustee and the Master Servicer for any loss to
the Indenture Trustee or the Master Servicer resulting from any
negligence with respect to, or misuse of, any such power of attorney by
the Servicer.
(d) The Servicer agrees to provide the Master Servicer with
such information as is necessary to enable the Master Servicer to
monitor the number and aggregate principal balance of Loans that are
the subject of modifications, waivers or amendments pursuant to Section
6.01(c), and as may be necessary to enable the Master Servicer to
comply with its reporting obligations under the Sale and Servicing
Agreement.
SECTION 6.02. SPECIFIC DUTIES; COLLATERAL PROTECTION.
(a) From the Closing Date to the termination of this
Agreement, Servicer shall service the Loans as required herein, as
servicer on behalf of Master Servicer as agent for the Issuer and,
subject to the provisions of this Agreement, shall do all things
necessary to perform such services, including without limitation:
(i) preparing and maintaining such books and
records and preparing and transmitting such reports concerning
the Loans as Servicer prepares and maintains for loans held
for its own account and as may be reasonably requested by the
Master Servicer (provided that such books and records shall be
clearly marked to reflect the ownership of each Loan by the
Owner Trustee and the Co-Owner Trustee and the pledge thereof
to the Indenture Trustee for the benefit of the
Securityholders);
(ii) receiving, processing and accounting for
payments and credits on the Loans;
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(iii) responding as appropriate in writing or by
telephone to borrower inquiries, requests or billing error
notices and making appropriate adjustments;
(iv) use its best efforts to collect all payments
called for under the terms and provisions of the Loans, and
shall, to the extent such procedures shall be consistent with
this Agreement, follow such collection procedures as it would
follow with respect to mortgage loans comparable to the Loans
and held for its own account; provided, however, that the
Servicer shall not modify or waive any provision of any Loan
except as provided in Section 6.08;
(v) providing supplies, telecommunications and
data transmission and processing equipment and programs as
needed to permit the proper administration and operation of
all Loans; and
(vi) remitting all collected payments to the
Collection Account, as applicable, in accordance with Section
6.03(e) of this Agreement.
(b) Servicer shall be responsible for safeguarding the
Indenture Trustee's interest in each Property and rights under any
agreements relating to the Loans, including, without limitation:
(i) Upon written notice to the Servicer from the
Master Servicer of the necessity for same, the Servicer shall
notify in writing each of the Obligors of the sale of the
Loans to the Issuer;
(ii) Servicer shall promptly notify the Master
Servicer whenever it receives notice or otherwise becomes
aware of any notice of liens, bankruptcies, condemnations,
probate proceedings, tax sales, partitions, local ordinance
violations, condemnations or proceedings in eminent domain
that would, in Servicer's judgment, impair the Indenture
Trustee's security; and Servicer shall on behalf of the Master
Servicer as agent for the Indenture Trustee undertake
appropriate action to preserve its security for the related
Loan; and
(iii) Servicer shall advise the Master Servicer with
respect to requests for partial releases, easements,
substitutions, divisions, subordinations, alterations, or
waivers of security instrument terms and shall enter into any
of the foregoing only in accordance with Section 6.01(c).
(c) Servicer shall not solicit any Obligor to refinance the
related Loan.
SECTION 6.03.00 SERVICING RECORD; COLLECTIONS; REMITTANCES TO
COLLECTION ACCOUNT.
(a) The Servicer shall establish and maintain books and
records (a "Servicing Record") in which the Servicer shall record all
payments received or collected by or on
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behalf of the Servicer in respect of each Loan and each Foreclosed
Property relating to such Loan and all amounts owing to the Servicer in
compensation for services rendered by the Servicer hereunder and in
reimbursement of costs and expenses incurred by the Servicer hereunder
in respect of such Loan.
(b) Except as otherwise provided herein, amounts received or
collected by the Servicer from or on behalf of any Obligor or in
respect of any Foreclosed Property shall be recorded to the applicable
Servicing Record:
(i) in the case of any amount received or collected
directly by the Servicer, promptly following deposit of the
receipt or collection in the Collection Account (but in any
event not later than the Servicer Determination Date next
following the date of receipt or collection by the Servicer);
and
(ii) amounts received or collected by the Servicer in
connection with the sale of any Loan or any Foreclosed
Property shall be so recorded on and as of the date of
receipt. Each Servicing Record shall separately reflect
amounts so received or collected by the Servicer in each Due
Period. Any prepaid Monthly Payment received on any Loan shall
be recorded as a prepaid monthly payment when received. All
Payments received from or on behalf of an Obligor shall be
allocated first, to the oldest payment overdue at such time
and apportioned, as to such oldest payment first to scheduled
interest (other than default interest) due on such oldest
payment date and second, to any principal due and payable in
accordance with the related Debt Instrument, and third, to
default interest, late charges and other amounts payable under
the related obligations.
(c) The Servicer shall record separately to each Servicing
Record relating to each Servicer Determination Date, on a Loan-by-Loan
basis, each of the following Payments collected or received by the
Servicer, the Master Servicer or the Indenture Trustee in respect of
each Loan and each Foreclosed Property relating to such Loan:
(i) all payments on account of principal (including
all Principal Prepayments);
(ii) all payments on account of interest;
(iii) all amounts paid by or on behalf of the related
Obligor in respect of Foreclosure Advances previously advanced
by the Servicer;
(iv) all revenues received or collected in respect
of any Foreclosed Property including, without limitation, all
proceeds of the sale of any Foreclosed Property pursuant to
Section 6.11 of this Agreement;
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(v) all Liquidation Proceeds and any Insurance
Proceeds not required to be applied to the restoration of the
property securing the Loan or paid to the Obligor;
(vi) all proceeds received in connection with the
purchase or repurchase of a Loan by Mego Mortgage Corporation
pursuant to the Sale and Servicing Agreement and all
Substitution Adjustment Amounts;
(vii) any condemnation awards or settlements or any
payments made by any related guarantor or third party
credit-support provider and any and all other amounts received
in respect of a Loan and not specified above; and
(viii) any and all other amounts received in respect
of Loans and not specified above.
(d) Notwithstanding anything to the contrary herein, the
Servicer shall not be required to record in the Servicing Record, and
the Servicer shall not have any right or interest in, any amount due or
received with respect to any Loan or any related Foreclosed Property
subsequent to the date of repurchase of such Loan or Foreclosed
Property from the Issuer.
(e) On or before each Servicer Determination Date, the
Servicer shall separately record in each Servicing Record, the items
required to be included in the Servicer Certificate and additionally
the following items with respect to the Loans to the extent not
included therein:
(i) any unpaid or current Servicing Fees due the
Servicer with respect to the preceding Due Period;
(ii) the amount of fees incurred during the
preceding Due Period to be paid to any Independent contractor
hired by the Servicer to operate and manage a Foreclosed
Property;
(iii) all amounts due as of the end of the preceding
Due Period in reimbursement of Interest Advances and for which
the Servicer is entitled to be reimbursed in accordance with
Section 6.07, and all collections of interest in respect of
related Loans;
(iv) all amounts due as of the end of the preceding
Due Period in reimbursement of Foreclosure Advances and for
which the Servicer is entitled to be reimbursed in accordance
with Section 6.07 (separately identifying the type and amount
of each expense then due);
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(v) based on information provided to the Servicer
by the Master Servicer, all Other Fees required to be
distributed pursuant to the Sale and Servicing Agreement, as
applicable on the next succeeding Distribution Date;
(vi) promptly following each Distribution Date, the
aggregate amount of the Master Servicer Fee, the Servicer Fee,
the Indenture Trustee Fee and the Owner Trustee Fee Reserve
paid to the Master Servicer, the Servicer, the Indenture
Trustee and the Servicer, respectively, on such Distribution
Date, in each case pursuant to the Sale and Servicing
Agreement;
(vii) promptly following each Distribution Date, the
aggregate amount of Interest Advances and Foreclosure Advances
reimbursed to the Master Servicer or the Servicer;
(viii) the principal balance of Loans that became
Defaulted Loans during the prior Due Period;
(ix) the 61+ Day Delinquency Percentage (Rolling
Six Month) and the Net Delinquency Calculation Amount;
(x) identification by loan number, Obligor name,
address of Property, and principal balance of each Loan with
respect to which the Master Servicer has requested that the
Indenture Trustee obtain the environmental report required by
the Sale and Servicing Agreement in connection with deciding
to foreclose on or otherwise acquire title to the related
Property;
(xi) the principal balance of each Loan with
respect to which the Master Servicer, in consultation with the
Servicer, has determined under Section 6.10(a) in good faith,
in accordance with customary mortgage loan servicing
practices, that all amounts which it expects to receive with
respect to such Loan have been received; and
(xii) any other information, requested of the
Servicer in writing by the party making such request, with
respect to the Loans reasonably required by the Master
Servicer or the Indenture Trustee to determine the amount of
required distributions under the Sale and Servicing Agreement
and determinable by the Servicer without undue burden from the
Servicer or the items otherwise required to be maintained in
each Servicing Record.
(f) [reserved]
(g) The Indenture Trustee shall maintain an account (a
"Collection Account") in the name and for the benefit of the Indenture
Trustee at a depository institution selected by it, which shall be an
Eligible Account and shall provide the location and designation of
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such account to the Master Servicer in writing. All Payments received
by Servicer (except for the additional servicing compensation to be
retained by the Servicer pursuant to Section 6.05 hereof) shall be
deposited by the Servicer into the Collection Account no later than the
second Business Day following the date of receipt thereof by the
Servicer. The Servicer shall have no right to make withdrawals from the
Collection Account. The Indenture Trustee shall withdraw amounts
deposited into the Collection Account no later than two (2) Business
Days prior to each Distribution Date.
(h) If any amount is deposited in a Collection Account in
error, the Servicer may notify the Master Servicer and the Indenture
Trustee in writing of the amount of such deposit and in connection
therewith shall be required to provide such information to the Master
Servicer as may be necessary in the opinion of the Master Servicer to
verify the accuracy of such certification. The Master Servicer shall
make such verification within one Business Day following receipt of
such notice, and if it agrees with the Servicer that such amount was
deposited in error in the Collection Account, promptly instruct the
Indenture Trustee in writing to withdraw such erroneous amount from the
Collection Account and remit it directly to the Servicer. Upon receipt
of instructions from the Master Servicer, the Indenture Trustee shall
promptly withdraw the erroneous deposit and remit the same to the
Servicer; provided, however, that if the Master Servicer has not
received evidence reasonably satisfactory to it of the Servicer's
entitlement to reimbursement pursuant to this section, or if the
Servicer has prior thereto been reimbursed, the Master Servicer shall
have no obligation to instruct the Indenture Trustee to make, and the
Indenture Trustee shall not be obligated to make, any distribution in
respect of such amount.
(i) The Servicer covenants and agrees, to the extent required
by law, to send to each Obligor with respect to a Loan specified in a
written notice from the Indenture Trustee or the Master Servicer, if
any, a written notice informing such Obligor of the sale of its Loan to
the Issuer.
SECTION 6.04. ANNUAL STATEMENT AS TO COMPLIANCE; NOTICE OF TERMINATION
EVENTS.
(a) The Servicer will deliver to Master Servicer, the
Indenture Trustee, the Owner Trustee and the Depositor within 150 days
following the end of each fiscal year of the Servicer, an Officer's
Certificate stating with respect to the Loans serviced hereunder, that:
(i) a review of the activities of the Servicer
during the preceding fiscal year (or in connection with the
first such Officer's Certificate the period from the Closing
Date through the end of such fiscal year) and of the
Servicer's performance under this Agreement with respect to
such Loans has been made under the supervision of the officer
who signed such Officer's Certificate;
(ii) 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 such portion of
such year), or if there has been a default in the fulfillment
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of any such obligation, such Officer's Certificate shall
specify each such default known to such signer and the nature
and status thereof and what action the Servicer proposes to
take with respect thereto; and
(iii) the Servicer's fidelity bond coverage, errors
and omissions insurance coverage and liability insurance
coverage continue in full force and effect and continue to
comply with the requirements of Sections 8.01, 8.02, and 8.03
of this Agreement.
(b) Within 150 days following the end of each fiscal year of
the Servicer, the Servicer at its expense, shall cause a firm of
Independent Accountants acceptable to the Master Servicer to furnish to
the Master Servicer, the Owner Trustee and the Indenture Trustee a
report, prepared in accordance with generally accepted accounting
principles (the "Accountant's Servicer Report") including: (i) an
opinion on the financial position of the Servicer at the end of its
most recent fiscal year, and the results of operations and changes in
financial position of the Servicer for such year then ended on the
basis of an examination conducted in accordance with generally accepted
auditing standards, and (ii) a letter or letters to the effect that,
based on an examination of certain specified documents and records
relating to the servicing of the Servicer's mortgage loan portfolio
conducted in compliance with the audit program for mortgages serviced
for FNMA, the United States Department of Housing and Urban Development
Mortgagee Audit Standards or the Uniform Single Attestation Program for
Mortgage Bankers (the "Applicable Accounting Standards") such firm is
of the opinion that such servicing has been conducted in compliance
with the Applicable Accounting Standards except for such exceptions as
such firm shall believe to be immaterial and such other exceptions as
shall be set forth in such statement. The Servicer shall be required to
pay all expenses incurred by it in connection with such examination,
including fees and disbursements of independent accountants and
expenses incurred in connection with distribution of reports to the
Master Servicer.
(c) In addition, the Servicer will provide to the Master
Servicer, the Owner Trustee and the Indenture Trustee a report of a
firm of Independent Accountants acceptable to the Master Servicer which
shall state that (1) a review in accordance with agreed upon procedures
was made of such number of Servicer Certificates which the Independent
Accountants deem necessary to carry out their review of Servicer
performance, but in no case less than two and (2) except as disclosed
in the Accountant's Report, no exceptions or errors in the Servicer
Certificates so examined were found. The Accountant's Report shall also
indicate that the firm is independent of the Servicer within the
meaning of the Code of Professional Ethics of the American Institute of
Certified Public Accountants.
(d) At the expense of the Servicer, annually within 90 days of
each anniversary of the Closing Date, the Servicer (and each Designated
Servicer) shall cause a firm of nationally recognized independent
public accountants designated by the Master Servicer to
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review, in accordance with agreed upon procedures, the servicing books
and records of the Servicer (and any Designated Servicer) to evaluate
the Servicer's performance under this Agreement in order to confirm
that the records of the Servicer accurately reflect collections,
delinquencies and other relevant data with respect to the Loans
reported to the Master Servicer, and that such data is accurately
reported to the Master Servicer. Any such review shall be conducted
upon reasonable notice during normal business hours. Any exceptions or
errors disclosed by such procedures shall be included in a report
delivered to the Master Servicer, the Indenture Trustee, the Owner
Trustee and the Depositor (the "Servicer Review Report").
(e) The Servicer shall deliver to the Master Servicer, the
Owner Trustee and the Indenture Trustee promptly after having obtained
knowledge thereof, but in no event later than two Business Days
thereafter, written notice in an Officer's Certificate of any event
which with the giving of notice or lapse of time, or both, would cause
the Servicer to be involuntarily terminated under Section 7.02.
SECTION 6.05. COMPENSATION.
In consideration for services rendered hereunder, the Servicer
shall be entitled to the following amounts; provided, however, that the right to
receive compensation for servicing the Loans may not be transferred in whole or
in part except in connection with the transfer of all of the Servicer's
responsibilities and obligations as permitted under this Agreement:
(a) the Servicing Fee, which shall be due and payable to the
Servicer as distributed from the Note Distribution Account by the
Indenture Trustee pursuant to the Sale and Servicing Agreement; and
(b) in respect of each Loan, all prepayment penalties and
assumption and processing fees paid by any Obligor, and all similar
fees customarily associated with the servicing of home improvement
loans paid by any Obligor (including, but not limited to, late charges)
in each case paid to and retained by the Servicer from related Obligor
payments designated specifically for such purpose.
SECTION 6.06. ADVANCES; COMPENSATING INTEREST.
(a) With respect to each Loan (other than a Defaulted Loan),
not later than the close of business on the Servicer Determination
Date, the Servicer shall advance from the Servicer's own funds or from
funds on deposit in the Collection Account in respect of amounts
available for future Distribution Dates, an amount equal to the amount,
if any, by which (i) the aggregate portions of Monthly Payments due on
all Loans at the related Net Loan Rate during the preceding Due Period
allocable to interest exceeds (ii) the aggregate amount to be deposited
into the Note Distribution Account with respect to all Loans and such
Distribution Date and allocated in accordance with Section 6.03(c) to
interest (an "Interest Advance"). Notwithstanding anything in this
paragraph to the contrary, the
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Servicer shall not be required to make any Interest Advance (i) if the
Master Servicer determines that such Interest Advance, if made, would
constitute a Nonrecoverable Advance, or (ii) with respect to shortfalls
in interest resulting from application of the Civil Relief Act or from
full or partial prepayments of any Loan. Any funds so applied from
funds on deposit in the Collection Account in respect of amounts
available for distribution on future Distribution Dates shall be
reimbursed by the Servicer in the remittance for the following month.
The Servicer shall provide the Master Servicer written evidence of the
remittance to the Collection Account of each Interest Advance on the
Business Day following the day of remittance.
(b) The Servicer shall advance (each, a "Foreclosure Advance")
from its own funds the following amounts in respect of any Mortgage
Loan or Foreclosed Property, as applicable, only if (i) in the
Servicer's good faith judgment, the Servicer would make such an advance
if it or an affiliate held the affected Mortgage Loan or Foreclosed
Property for its own account and (ii) the Master Servicer, after
consultation with the Servicer, determines that such amounts will be
recoverable from related Payments or foreclosure proceeds and approves
such advance in writing:
(i) all third party costs and expenses (including
legal fees and costs and expenses relating to bankruptcy or
insolvency proceedings in respect of any Obligor) associated
with the institution of foreclosure proceedings in respect of
any such Loan pursuant to Section 6.10;
(ii) all insurance premiums due and payable in
respect of each Foreclosed Property, prior to the date on
which the related insurance policy would otherwise be
terminated;
(iii) all real estate taxes and assessments in
respect to each Foreclosed Property that have resulted in the
imposition of a lien thereon, other than amounts that are due
but not yet delinquent;
(iv) all costs and expenses necessary to preserve
and maintain each Foreclosed Property;
(v) all fees and expenses payable to any
Independent Contractor hired to operate and manage a
Foreclosed Property; and
(vi) all fees and expenses of any independent
appraiser or other real estate expert retained pursuant to
Section 6.11.
SECTION 6.07. REIMBURSEMENT OF ADVANCES.
(a) The Servicer shall be entitled to be reimbursed for any
Interest Advance on a Loan from Payments in respect of that Loan or, if
such Loan shall become a Defaulted
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Loan or an Interest Advance shall become a Nonrecoverable Advance and
the Servicer shall not have been fully reimbursed for any Interest
Advances with respect to such Loan, the Servicer shall be entitled to
be reimbursed for the outstanding amount of such Interest Advances from
Payments of unrelated Loans to the extent such amounts are distributed
to the Master Servicer with respect to Interest Advances by the Issuer
pursuant to the Sale and Servicing Agreement. No interest shall accrue
on any unreimbursed Interest Advance for any period prior to the
reimbursement thereof.
(b) The Servicer shall be entitled to be reimbursed for any
Foreclosure Advance in respect of any Loan from Payments in respect of
that Loan, or if the Payments for such Loan are insufficient to
reimburse the full amount of the Foreclosure Advance, from Payments of
unrelated Loans to the extent such amounts are distributed to the
Master Servicer with respect to Foreclosure Advances by the Issuer
pursuant to the Sale and Servicing Agreement. No interest shall accrue
on any unreimbursed Foreclosure Advance for any period prior to the
reimbursement thereof.
(c) The Master Servicer shall offset against amounts otherwise
distributable to the Servicer under this section, amounts, if any,
which were required to be deposited in any Collection Account with
respect to the related Due Period, but which were not so deposited.
SECTION 6.08. MODIFICATIONS, WAIVERS, AMENDMENTS AND CONSENTS.
(a) The Servicer shall not agree to any modification, waiver,
or amendment of any provision of any Loan unless, in the Servicer's
good faith judgment, (i) such modification, waiver, or amendment would
minimize the loss that might otherwise be experienced with respect to
such Loan, and (ii) such Loan has experienced a payment default or a
payment default is reasonably foreseeable by the Servicer.
(b) Notwithstanding anything herein to the contrary, the
Servicer may agree to subordinate the position of the security interest
in the Property which secures any Mortgage Loan, provided such
subordination (i) would permit the Obligor to refinance a senior lien
to take advantage of a lower interest rate or (ii) would permit the
Obligor to extend the term of any senior lien.
(c) The Servicer shall notify the Master Servicer and the
Indenture Trustee of any modification, waiver or amendment of any
provision of any Loan and the date thereof, and shall deliver to the
Indenture Trustee for deposit in the related Home Loan File, an
original counterpart of the agreement relating to such modification,
waiver or amendment, promptly following the execution thereof. Such
notice shall state that the conditions contained in this Section have
been satisfied.
SECTION 6.09. DUE-ON-SALE; DUE-ON-ENCUMBRANCE.
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(a) If any Loan contains a provision, in the nature of a
"due-on-sale" clause, which by its terms:
(i) provides that such Loan shall (or may at the
obligee's option) become due and payable upon the sale or
other transfer of an interest in the related Property; or
(ii) provides that such Loan may not be assumed
without the consent of the related obligee in connection with
any such sale or other transfer,
then, for so long as such Loan is an asset of the Issuer, the Servicer
shall consult with the Master Servicer regarding any right the Trust or
the Indenture Trustee may have as the obligee of record with respect to
such Loan (1) to accelerate the payments thereon, or (2) to withhold
its consent to any such sale or other transfer, and shall take such
action as Master Servicer shall direct.
(b) If any Loan contains a provision, in the nature of a
"due-on-encumbrance" clause, which by its terms:
(i) provides that such Loan shall (or may at the
obligee's option) become due and payable upon the creation of
any lien or other encumbrance on the related Property; or
(ii) requires the consent of the related obligee to
the creation of any such lien or other encumbrance on the
related Property,
then, for so long as such Loan is an asset of the Trust, the Servicer
shall consult with the Master Servicer regarding any right the Trust or
the Indenture Trustee may have as the obligee of record with respect to
such Loan (x) to accelerate the payments thereon, or (y) to withhold
its consent to the creation of any such lien or other encumbrance, and
shall take such action as the Master Servicer shall direct.
SECTION 6.10. FORECLOSURE.
(a) If any Monthly Payment due under any Loan is not paid when
the same becomes due and payable, or if the Obligor fails to perform
any other covenant or obligation under the Loan and such failure
continues beyond any applicable grace period, the Servicer shall,
following consultation with the Master Servicer, take appropriate
action with respect to such Loan that the Servicer deems is in the best
interest of the Issuer.
In the event that the Servicer, in consultation with the
Master Servicer, determines not to proceed against the Property or
Obligor, as applicable, on or before the Determination Date following
such determination the Servicer shall determine in good faith in
accordance with customary servicing practices that all amounts which it
expects to receive with respect to such
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Loan have been received. If the Servicer makes such a determination, it
shall be reflected in the Servicing Record in accordance with Section
6.03.
(b) With respect to any Loan, unless otherwise prohibited by
applicable law, the Servicer upon consultation with the Master
Servicer, on behalf of the Trust and the Indenture Trustee, may, at any
time, institute foreclosure proceedings, exercise any power of sale to
the extent permitted by law, obtain a deed in lieu of foreclosure, or
otherwise acquire possession of or title to the related Property, by
operation of law or otherwise.
In accordance with the criteria for proceeding against the
Property set forth in Section 6.10(a), the Servicer shall be permitted
to institute foreclosure proceedings, repossess, exercise any power of
sale to the extent permitted by law, obtain a deed in lieu of
foreclosure, or otherwise acquire possession of or title to any
Property, by operation of law or otherwise only in the event that in
the Servicer's reasonable judgement such action is likely to result in
a positive economic benefit to the Issuer by creating net liquidation
proceeds (after reimbursement of all amounts owed with respect to such
Loan to the Master Servicer or the Servicer) and provided that, with
respect to any Property, prior to taking title thereto, the Servicer
has requested that the Indenture Trustee obtain, and the Indenture
Trustee shall have obtained, an environmental review to be performed on
such Property by a company with recognized expertise, the scope of
which is limited to the review of public records and documents for
information regarding whether such Property has on it, under it or is
near, hazardous or toxic material or waste. If such review reveals that
such Property has on it, under it or is near hazardous or toxic
material or waste or reveals any other environmental problem, the
Indenture Trustee shall provide a copy of the related report to the
Servicer and Master Servicer, and title shall be taken to such Property
only after obtaining the written consent of the Indenture Trustee.
In connection with any foreclosure proceeding on a Mortgage
Loan, the Servicer shall follow such practices and procedures in a
manner which is consistent with the Servicer's procedure for
foreclosure with respect to similar loans held in the Servicer's
portfolio for its own account or, if there are no such loans, loans
serviced by the Servicer for others, giving due consideration to
accepted servicing practices of prudent lending institutions. To the
extent required by Section 6.06, the Servicer shall advance all
necessary and proper Foreclosure Advances until final disposition of
the Foreclosed Property and shall manage such Foreclosed Property
pursuant to Section 6.12. If, in following such foreclosure procedures,
title to the Foreclosed Property is acquired, the deed or certificate
of sale shall be issued to the Co-Owner Trustee and the Indenture
Trustee.
SECTION 6.11. SALE OF FORECLOSED PROPERTIES.
(a) The Servicer may sell Property only on the terms and
subject to the conditions set forth in this Section 6.11 and in Section
6.10.
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(b) Upon approval of the Master Servicer, the Servicer may
offer to sell to any Person any Foreclosed Property, if and when the
Servicer determines consistent with the servicing standards contained
herein and the criteria set forth in Section 6.10 that such a sale
would be in the best interests of the Issuer, but shall, in any event,
so offer to sell any Foreclosed Property in accordance with the
criteria set forth in Section 6.10. The Servicer shall give the Master
Servicer and the Indenture Trustee not less than five days' prior
notice of its intention to sell any Foreclosed Property, and shall
accept the highest bid received from any Person for any Foreclosed
Property in an amount at least equal to the sum of:
(i) the principal balance of the related foreclosed
Loan, unreimbursed Foreclosure Advances plus the outstanding
amount of any liens superior in priority to the lien of the
foreclosed Loan; and
(ii) all unpaid interest accrued thereon at the
related Net Loan Rate through the date of sale.
In the absence of any such bids, the Servicer shall accept the highest
bid from any Person that the Servicer determines to be a fair price for
such Foreclosed Property, if the highest bidder is a Person that is
Independent, or by an Independent appraiser retained by the Servicer
and approved by the Master Servicer, if the highest bidder is a Person
that is not Independent. In the absence of any bid determined to be
fair as aforesaid, the Servicer shall offer the affected Foreclosed
Property to any Person that is Independent in a commercially reasonable
manner for a period of not less than 10 or more than 30 days, and shall
accept the highest cash bid received therefor in excess of the highest
bid previously submitted. If no such bid is received, any Person that
is not Independent and that had submitted a bid previously may resubmit
its original bid, and the Servicer may accept, upon approval of the
Master Servicer, the highest outstanding cash bid, regardless of from
whom received and shall follow any instructions of the Master Servicer
in effecting the sale of any Property.
(c) In determining whether any bid constitutes a fair price
for any Foreclosed Property, the Servicer shall take into account, and
any independent appraiser or other expert in real estate matters shall
be instructed to take into account, as applicable, among other factors,
the financial standing of any tenant of the Property or Foreclosed
Property, the physical condition of the Property or Foreclosed Property
and the state of the local and national economies.
(d) Subject to the provisions of Section 6.10, the Servicer
shall act on behalf of the Master Servicer for the benefit of the
Issuer in negotiating and taking any other action necessary or
appropriate in connection with the sale of any Foreclosed Property,
including the collection of all amounts payable in connection
therewith. Any sale of a Foreclosed Property shall be without recourse
to the Issuer, the Indenture Trustee, or the Master Servicer, and shall
be consummated in accordance with the terms of this Agreement. If
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consummated in accordance with this Agreement, the Servicer shall not
have any liability to the Indenture Trustee or the Master Servicer with
respect to the purchase price for any Foreclosed Property accepted and
approved by the Master Servicer.
SECTION 6.12. MANAGEMENT OF REAL ESTATE OWNED.
(a) If the Issuer acquires any Foreclosed Property pursuant to
Section 6.10, the Servicer shall have full power and authority, subject
only to the specific requirements and prohibitions of this Agreement,
to do any and all things in connection therewith as are consistent with
the manner in which the Servicer manages and operates similar property
owned by the Servicer or any of its affiliates on such terms and for
such period as the Master Servicer may direct after consultation with
the Servicer.
(b) The Servicer may contract with any Independent contractor
for the operation and management of any Foreclosed Property, provided
that:
(i) the terms and conditions of any such contract
may not be inconsistent herewith;
(ii) any such contract shall require, or shall be
administered so as to require, that the Independent Contractor
remit rents and other revenue generated from the property to
the Servicer as soon as practicable, but in no event later
than two Business Days following the receipt thereof by such
Independent Contractor;
(iii) none of the provisions of this Section 6.12(c)
relating to any such contract or to actions taken through any
such Independent Contractor shall be deemed to relieve the
Servicer of any of its duties and obligations to the Master
Servicer or the Issuer with respect to the operation and
management of any such Foreclosed Property; and
(iv) the Servicer shall be obligated with respect
thereto to the same extent as if it alone were performing all
duties and obligations in connection with the operation and
management of such Foreclosed Property.
The Servicer shall be entitled to enter into any agreement with any
Independent Contractor performing services for it related to its duties
and obligations hereunder which contract may provide for
indemnification of the Servicer by such Independent Contractor, and
nothing in this Agreement shall be deemed to limit or modify such
indemnification. The Servicer shall be solely liable for all fees owed
by it to any such Independent Contractor, but shall be entitled to be
reimbursed for all such fees advanced by it pursuant to Section
6.06(b)(v), in the manner provided in Section 6.07(b).
SECTION 6.13. INSPECTIONS.
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The Servicer shall inspect or cause to be inspected each Property and
Foreclosed Property at such times and in such manner as are consistent with the
servicing standards set forth in Section 6.01.
SECTION 6.14. MAINTENANCE OF INSURANCE.
(a) The Servicer shall maintain or cause to be maintained for
each Foreclosed Property such types and amounts of insurance as the
Master Servicer shall deem reasonable. The Servicer shall maintain for
each Loan, fire and hazard insurance naming Mego Mortgage Corporation
as loss payee thereunder providing for extended coverage in an amount
that is at least equal to the least of (i) the maximum insurable value
of the improvements securing the Loan from time to time, (ii) the
combined principal balance owing on such Loan and any mortgage loan
senior to such Loan and (iii) the minimum amount required to compensate
for damage or loss on a replacement cost basis. In cases in which any
Property securing a Loan is located in a federally designated flood
area, the hazard insurance to be maintained for the related Loan shall
include flood insurance to the extent such flood insurance is available
and the Servicer has determined such insurance to be necessary in
accordance with accepted mortgage loan servicing standards for mortgage
loans similar to the Mortgage Loans. All such flood insurance shall be
in amounts equal to the least of (A) the maximum insurable value of the
improvement securing such Loan, (B) the combined principal balance
owing on such Loan and any mortgage loan senior to such Loan and
(C) the maximum amount of insurance available under the National Flood
Insurance Act of 1968, as amended.
(b) Any amounts collected by the Servicer under any insurance
policies shall be paid over or applied by the Servicer as follows:
(i) in the case of amounts received in respect of any
Loan:
(A) for the restoration or repair of the
affected Property, in which event such amounts shall
be released to the Obligor in accordance with the
terms of the related Loan, or, to the extent not so
used,
(B) in reduction of the principal balance of
the related Loan, in which event such amounts shall
be credited to the related Servicing Record,
unless the related Loan documents require a different
application, in which case such amounts shall be applied in
the manner provided therein; and
(ii) subject to Section 6.12, in the case of amounts
received in respect of any Foreclosed Property, for the
restoration or repair of such Foreclosed Property, unless the
Servicer determines, consistent with the servicing standards
set forth in Section 6.01, that such restoration or repair is
not in the best economic interest of the Issuer, in which
event such amounts shall be credited, as
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of the date of receipt, to the applicable Servicing Record as
an Obligor payment received from the operation of such
Foreclosed Property.
SECTION 6.15.00 RELEASE OF FILES.
(a) If, with respect to any Loan:
(i) the outstanding principal balance of such Loan
plus all interest accrued thereon and other amounts due
thereunder shall have been paid;
(ii) the Servicer shall have received, in escrow,
payment in full of such Loan in a manner customary for such
purposes;
(iii) such Loan has been repurchased or a Qualified
Substitute Loan has been conveyed to the Trust pursuant to the
Sale and Servicing Agreement;
(iv) the related Foreclosed Property has been sold
pursuant to Section 6.11; or
(v) such Loan or the related Foreclosed Property
has been sold in connection with the termination of the
Issuer;
then, in each case, the Servicer shall have delivered to the Indenture
Trustee and the Master Servicer an Officer's Certificate, signed by a
Servicing Officer, to the effect that the Servicer has complied with
all of its obligations hereunder with respect to such Loan and
requesting that the Indenture Trustee release to the Servicer the
related File, then the Indenture Trustee shall, within three (3)
Business Days or such shorter period as may be required by applicable
law, release, or cause to be released, the related File (unless such
file previously has been released) to the Servicer and execute and
deliver such instruments of transfer or assignment, in each case
without recourse, as shall be necessary to vest ownership of such Loan
in the Servicer or such other Person as may be specified in such
certification, the forms of any such instrument to be appended to such
certificate.
(b) From time to time and as appropriate for the servicing or
foreclosure of any Loan, the Servicer may request the release of a File
by providing to the Indenture Trustee and the Master Servicer a written
request of the Servicer, signed by a Servicing Officer and stating the
reason for release of the related File (or any requested portion
thereof) and the date by which the Servicer expects to return the
related File (or any requested portion thereof). Such receipt shall
obligate the Servicer, to return the File (or such portion thereof) to
the Indenture Trustee when the need therefor by the Servicer, no longer
exists unless any of the conditions specified in subsection (a) above,
is satisfied prior thereto. The Indenture Trustee shall release such
receipt to the Servicer (i) upon the Servicer's return of the File (or
such portion thereof) to the Indenture Trustee or (ii) if any of the
conditions specified in subsection (a) has been satisfied, and the
Servicer has not yet
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returned the File (or such portion thereof) to the Indenture Trustee,
upon receipt of a certificate certifying that any of such condition has
been satisfied. The Indenture Trustee shall provide a copy of such
receipt to the Master Servicer.
(c) All documents and instruments held in the custody of the
Servicer (as agent for the Indenture Trustee) shall be held by the
Servicer for the benefit of, and as agent for, the Certificateholders
and the Indenture Trustee as the owner thereof. It is intended that by
the Servicer's agreement pursuant to this Section 6.15(c) the Indenture
Trustee shall be deemed to have possession of the documents and
instruments in the custody of the Servicer for purposes of Section
9-305 of the Uniform Commercial Code of the State in which such
documents or instruments are located. The Servicer shall promptly
report to the Master Servicer and the Indenture Trustee, any failure by
it to hold the documents and instruments as herein provided and shall
promptly take appropriate action to remedy any such failure. In acting
as custodian of such documents and instruments, the Servicer agrees not
to assert any legal or beneficial ownership interest in the Loans or
such documents or instruments. The Servicer agrees to indemnify the
Master Servicer, the Certificateholders and the Indenture Trustee for
any and all liabilities, obligations, losses, damages, payments, costs,
or expenses of any kind whatsoever which may be imposed on, incurred by
or asserted against the Master Servicer, the Certificateholders or the
Indenture Trustee as the result of any act or omission by the Servicer
relating to the maintenance and custody of such documents or
instruments; provided, however, that the Servicer will not be liable
(i) for any portion of any such amount resulting from the negligence or
misconduct of the Master Servicer, any Certificateholder or the
Indenture Trustee and (ii) for any portion of any such amount resulting
from the Servicer's compliance with any instructions or directions
consistent with this Agreement issued to the Servicer by the Master
Servicer, the Certificateholders or the Indenture Trustee. The Master
Servicer and the Indenture Trustee shall have no duty to monitor or
otherwise oversee the Servicer's performance as custodian hereunder.
SECTION 6.16. [RESERVED].
SECTION 6.17. SEGREGATION OF LOANS; REPORTS.
The Servicer shall segregate any documents related to the Loans in its
possession from all other assets. Not later than 3:00 p.m. (Eastern time) on the
Servicer Reporting Date following each Due Period, the Servicer shall submit to
the Master Servicer a Servicer Certificate, substantially in the forms attached
hereto as Exhibit B, which shall include, without limitation, (i) an accounting
report summarizing the activity in the Servicing Record with respect to payments
collected, (ii) default management reports summarizing the status of delinquent
Loans, Loans in bankruptcy and Loans in foreclosure including, without
limitation, the Servicer's then current 61+ Delinquency Percentage (Rolling Six
Month) and the current Net Delinquency Calculation Amount, (iii) certification
that all amounts required to be deposited to the Collection Account for the
related Due Period were so deposited and that the amount of any such withdrawals
from the Collection Account for such Due Period conform to the amounts of such
required withdrawals as reported by the Servicer to the Master
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Servicer, or identifying the amount of any discrepancies, and (iv) a statement
to the effect that the Loans are owned by the Issuer, and shall provide from
time to time as requested by the Master Servicer, such additional information as
the Master Servicer may reasonably require.
SECTION 6.18.00 LATE REPORT CHARGE.
The Servicer hereby acknowledges that the Servicer Certificate required
to be provided to the Master Servicer under Section 6.17 hereof must be
delivered in a timely manner to enable the Master Servicer to meet its reporting
obligations to the Indenture Trustee. The following charges will apply to all
late Servicer Certificates and to all Servicer Certificates which are incomplete
and adversely affect the ability of the Master Servicer to meet its reporting
obligations:
First occurrence: No charge.
Second occurrence: $100 for each day (not to exceed $500) report is late or remains incomplete as
described above.
Third occurrence: $250 for each day (not to exceed $1,250) report is late or remains incomplete as
described above.
Fourth occurrence: $500 for each day (not to exceed $2,500) report is late or remains incomplete
as described above.
Fifth or more: $500 for each day (not to exceed $2,500) report is late or remains incomplete
as described above. Servicer may be subject to termination under
Section 7.02 hereof.
The Master Servicer will notify the Servicer of the first occurrence and will
provide reasonable assistance to the Servicer to remedy the situation. Following
the first occurrence, the Master Servicer will notify the Servicer in writing of
each subsequent occurrence. Payment of all charges as identified in the Master
Servicer's notice to the Servicer is required to be made within ten days of
billing by the Master Servicer. The Master Servicer, in its sole discretion, may
waive any of the charges provided for in this Section 6.18.
ARTICLE VII
TERMINATION AND LIABILITIES
SECTION 7.01. VOLUNTARY TERMINATION.
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The Servicer shall not have the right to resign from the obligations
and duties hereby imposed on it, unless it shall be prohibited by applicable law
from performing such obligation and duties, in which case, the Servicer shall
cooperate in the orderly transfer of servicing to the successor subservicer
designated by the Master Servicer, and the Servicer shall continue to perform
such duties as are not prohibited until such transfer is completed. Except as
permitted by Section 2.02(n), or Article IV, Servicer shall have no right or
privilege to assign, subcontract, or transfer its rights and duties under this
Agreement. The Servicer may request a voluntary termination of this Agreement.
Upon such request, the Servicer will use its best efforts to secure three bids
from qualified subservicers and present the bids to the Master Servicer. The
Master Servicer shall consent to such voluntary termination if (a) one or more
of such bids are reasonably acceptable to the Master Servicer or (b) the Master
Servicer has consented to the substitution of a different substitute subservicer
whose name has not been submitted by the Servicer, provided that, in either
case, the successor servicer (a) is an Eligible Servicer, and (b) executes an
agreement pursuant to which the successor subservicer accepts and assumes all of
the Servicer's duties, liabilities and obligations hereunder from and after the
date of such successor subservicer's acceptance and makes representations and
warranties similar to those set forth in Section 2.02 hereof. A bid from a
successor subservicer who does not meet the foregoing requirements shall not be
deemed acceptable to the Master Servicer. Upon termination of the Servicer
pursuant to this Section 7.01 and the completion of all of the Servicer's
obligations under this Agreement, the Servicer shall be entitled to all amounts
paid by the successor subservicer with respect to the transfer of the Servicer's
duties, liabilities and obligations hereunder less any costs and expenses of the
Issuer, the Indenture Trustee or the Master Servicer incurred in connection with
such transfer. No resignation of the Servicer shall become effective until the
Master Servicer or the Indenture Trustee or a successor servicer, as accepted
above, shall have assumed the Servicer's servicing responsibilities. The
Servicer shall comply with Section 7.03 hereof in the event of the consent of
the Master Servicer to such voluntary termination.
SECTION 7.02. INVOLUNTARY TERMINATION OF SERVICER.
The Master Servicer or the Indenture Trustee at the direction of the
Majority Securityholders may, by written notice, terminate all of the Servicer's
rights pursuant to this Agreement with respect to all Loans upon the happening
of any one or more of the following events:
(a) Failure of the Servicer to deposit to the Collection
Account all moneys relating to the Loans received by the Servicer no
later than the second Business Day following receipt thereof by the
Servicer, which failure continues unremedied for two Business Days;
(b) Upon two Business Days after the related Servicer
Determination Date, failure of the Servicer to make any Advance as
required by this Agreement, failure of the Servicer to purchase any
Loan as required pursuant to Article III or Section 6.10(b), or failure
of Servicer to make any other advance of funds at the time and in the
manner required by this Agreement;
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(c) Any representation, warranty, or statement of the Servicer
made in this Agreement or any certificate, report, or other writing
delivered pursuant hereto shall be determined to have been false in any
material respect as of the time made;
(d) Failure of the Servicer duly to observe or perform in any
material respect any of its other covenants or agreements contained in
this Agreement that continues unremedied for a period of thirty (30)
days after the earlier of (1) the date on which the Servicer gives
notice of such failure to the Master Servicer and (2) the date on which
written notice of such failure, requiring the same to be remedied,
shall have been given to the Servicer by the Master Servicer; provided
that, if the Master Servicer determines in the reasonable exercise of
its discretion, that such failure cannot be corrected under any
reasonable circumstances despite the Servicer's best efforts within
such period, the Master Servicer, may immediately terminate the
Servicer pursuant to this section;
(e) Issuance or entry of a decree or order of a court, agency
or supervisory authority having jurisdiction in the premises appointing
a conservator, receiver, liquidator, assignee, trustee, custodian,
sequestrator or other similar official in any bankruptcy, insolvency,
readjustment of debt, marshaling of assets and liabilities or similar
proceeding affecting the Servicer or substantially all of its
properties, or for the winding-up or liquidation of its affairs, if
such decree or order shall have remained in force undischarged or
unstayed for a period of sixty (60) days or the commencement of an
involuntary case under the federal bankruptcy laws, as now or hereafter
in effect, or another present or future federal or state bankruptcy,
insolvency or similar law and such case is not dismissed within sixty
(60) days;
(f) Consent by the Servicer to the appointment of a
conservator, receiver or liquidator in any bankruptcy, insolvency,
readjustment of debt, marshaling of assets and liabilities or similar
proceeding affecting the Servicer or substantially all of its
properties;
(g) Admission in writing by the Servicer of its inability to
pay its debts generally as they mature, or the filing of a petition to
take advantage of any applicable bankruptcy or insolvency statute or
Debtor Relief Laws, the making of an assignment for the benefit of
creditors, or the voluntary suspension of payment of its obligations;
(h) Termination of the Sale and Servicing Agreement;
(i) Failure of the Servicer for a period of more than thirty
days to pay to the Master Servicer any late charges assessed pursuant
to Section 6.18 hereof after written notice thereof to Servicer;
(j) Failure by the Servicer to deliver to the Master Servicer
the Servicer Certificate by the Servicer Reporting Date, or failure on
the part of the Servicer to observe its covenants and agreements set
forth in Section 2.02(i);
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(k) The entry of a decree or order for relief by a court or
regulatory authority having jurisdiction in respect of the Servicer in
an involuntary case under the federal bankruptcy laws, as now or
hereafter in effect, or another present or future, federal or state,
bankruptcy, insolvency or similar law, or appointing a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar
official of the Servicer or of any substantial part of their respective
properties or ordering the winding up or liquidation of the affairs of
the Servicer and the continuance of any such decree or order unstayed
and in effect for a period of 60 consecutive days or the commencement
of an involuntary case under the federal bankruptcy laws, as now or
hereinafter in effect, or another present or future federal or state
bankruptcy, insolvency or similar law and such case is not dismissed
within 60 days;
(l) The commencement by the Servicer of a voluntary case under
the federal bankruptcy laws, as now or hereinafter in effect, or any
other present or future, federal or state bankruptcy, insolvency or
similar law, or the consent by the Servicer to the appointment of or
taking possession by a receiver, liquidator, assignee, trustee,
custodian, sequestrator or other similar official of the Servicer or of
any substantial part of its property or the making by the Servicer of
an assignment for the benefit of creditors or the failure by the
Servicer generally to pay its debts as such debts become due or the
taking of corporate action by the Servicer in furtherance of any of the
foregoing or the admission in writing by the Servicer of an inability
to pay its debts as they become due;
(m) The Master Servicer determines that the performance by the
Servicer of its servicing duties hereunder with respect to the Loans is
not, in the reasonable opinion of the Master Servicer, after
consultation with the Servicer, in conformity with acceptable standards
after considering the following factors: (A) the terms and conditions
of this Agreement, (B) conformity with the servicing standards, (C) the
Servicer's practices as of the Closing Date, provided that such
practices are either (i) consistent with industry standards for the
servicing of loans similar to the Loans or (ii) the Servicer's
historical practices and procedures; or
(n) The Total Expected Loan Loss Percentage exceeds 21.1250%
prior to the fifth anniversary of the Cut-Off Date or 31.6875%
thereafter.
then, and in each and every such case, the Master Servicer or the Indenture
Trustee at the direction of the Majority Securityholders may, by notice in
writing to the Servicer, terminate all of the rights and obligations of the
Servicer as Servicer under this Agreement and in and to the Loans and the
proceeds thereof. On and after the receipt by the Servicer of such written
notice, and the appointment of and acceptance of a successor subservicer, all
authority, power, obligations and responsibilities of the Servicer with respect
to the Loans shall pass to and be vested in and become the responsibilities and
obligations of such successor subservicer. The Servicer agrees to cooperate with
the successor subservicer in effecting the termination of the responsibilities
and rights of the Servicer hereunder. The
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Servicer shall give written notice of the occurrence of any event in this
Section 7.02 to the Master Servicer within two (2) days of the happening of such
event.
The Master Servicer, with the consent of the Indenture Trustee, who may
request consent of the Majority Securityholders, may waive any default by the
Servicer under this Section 7.02. Upon any such waiver of a past default, such
default shall cease to exist, and any default arising therefrom shall be deemed
to have been remedied for every purpose of this Agreement. No such waiver shall
extend to any subsequent or other default or impair any right consequent
thereon.
SECTION 7.03. SERVIER'S DUTIES UPON TERMINATION; PAYMENT TO SERVICER.
(a) From and after the receipt by the Servicer of such written
notice of its termination from the Master Servicer or the Indenture
Trustee pursuant to Section 7.02, or upon a termination pursuant to
Section 7.01 hereof:
(i) The Master Servicer may terminate all of the
rights and obligations of the Servicer under this Agreement;
(ii) The Servicer shall cooperate with the Master
Servicer and the Indenture Trustee in effecting the
termination of the Servicer's responsibilities and rights
hereunder, including, without limitation, the transfer to the
successor servicer for administration by it of all cash
amounts that shall at the time be held by the prior Servicer
for deposit, or have been deposited by the prior Servicer, in
the Collection Accounts or thereafter received with respect to
the Loans and the delivery to the successor servicer of all
Files and a computer tape in readable form containing the
Servicing Record and any other information necessary to enable
the successor servicer to service the Loans and the other
Issuer Property;
(iii) All authority and power of the Servicer under
this Agreement shall pass to and be vested in the Master
Servicer or its designee, and without limiting the generality
of the foregoing, the Master Servicer or such designee shall
be authorized and empowered to execute and deliver, on behalf
and at the expense of the Servicer, as attorney-in-fact or
otherwise, any and all documents and other instruments, and to
do or accomplish all other acts and things necessary or
appropriate to effect the transfer and endorsement or
assignment of the Loans and the Loan Files and related
documents, or otherwise; and
(iv) The Servicer shall promptly (and in any event
no later than ten Business Days subsequent to such notice)
provide the Master Servicer, or its designee with all
documents and records requested by it to enable it to assume
the Servicer's functions hereunder, and cooperate with the
Master Servicer or its designee in effecting the termination
of the Servicer's responsibilities and rights hereunder,
including, without limitation, the transfer within one
Business Day to the Master Servicer or its designee for
administration by it of all cash amounts
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which shall at the time be or should have been remitted
pursuant to this Agreement or thereafter be received with
respect to the Loans or any related property (provided,
however, that the Servicer shall continue to be entitled to
receive all amounts accrued or owing to it under this
Agreement on or prior to the date of such termination).
(b) The Servicer agrees to indemnify and hold the Issuer, the
Indenture Trustee and the Master Servicer harmless from any and all
loss, damage and expenses (including reasonable attorney's fees) that
any of them may incur in connection with the Servicer's failure to
perform in compliance with this Agreement.
(c) Notwithstanding anything to the contrary herein, the
Servicer shall remain liable for all liabilities and obligations
incurred by it as Servicer hereunder prior to the time that termination
under Section 7.01 or Section 7.02 becomes effective, including the
obligation to indemnify the Master Servicer pursuant to Section 11.12
hereof in connection with the servicing of the Loans under this
Agreement prior to such termination. In addition, the Master Servicer
may set off and deduct any amounts owed by the terminated Servicer from
any amounts payable to the terminated Servicer. The terminated Servicer
shall grant the Master Servicer reasonable access to the terminated
Servicer's premises at the terminated Servicer's expense.
(d) The Servicer agrees to cooperate with any successor
subservicer in effecting the transfer of the Servicer's subservicing
responsibilities and rights hereunder, including, without limitation,
the transfer to such successor subservicer of all relevant records and
documents and a computer tape in readable form (including any Files in
the possession of the Servicer and the Servicing Record) and all
amounts credited to the Servicing Record or thereafter received with
respect to the Loans and not otherwise permitted to be retained by the
Servicer pursuant to this Agreement. In addition, the Servicer, at its
sole cost and expense, shall prepare, execute, and deliver to the
successor subservicer all Files and shall do or accomplish all other
acts necessary or appropriate to effect such termination and transfer
of subservicing responsibilities.
(e) If requested by the Master Servicer, the successor
servicer shall direct the Obligors to make all payments under the Loans
directly to the successor servicer, or to a lockbox established by the
Servicer at the direction of the Master Servicer at the prior
Servicer's expense.
SECTION 7.04. AGREEMENT TO PAY ATTORNEYS' FEES.
If it is determined in a judicial proceeding that any party to this
Agreement has failed to perform under any provision of this Agreement, and if
one or more of the other parties shall employ attorneys or incur other expenses
to enforce the performance, or observance of the terms of this Agreement by the
nonperforming party, or to perform such obligations itself or themselves, then
such
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parties, to the extent permitted by Law, shall be reimbursed by the
nonperforming party, on demand, for reasonable attorneys' fees and other
out-of-pocket expenses.
ARTICLE VIII
INSURANCE COVERAGE
SECTION 8.01. FIDELITY BOND COVERAGE.
At its sole cost and expense, Servicer shall obtain and maintain at all
times during the term of this Agreement fidelity bond coverage with a
responsible surety company with respect to all of Servicer's employees as may be
necessary to protect the Issuer, the Indenture Trustee and the Master Servicer
against losses, including, without limitation, those arising from theft,
embezzlement, fraud, or misplacement of funds, money, or documents. The issuer,
policy terms and forms and amounts of coverage, including applicable
deductibles, shall be satisfactory to the Master Servicer, but in any event the
amount of such coverage shall conform to FNMA levels. The Servicer shall provide
to the Master Servicer upon request written evidence of such insurance coverage.
Servicer agrees to notify the Master Servicer and the Indenture Trustee in
writing within five (5) days of the cancellation or termination of any such
coverage. Servicer further agrees to notify the Master Servicer and the
Indenture Trustee in writing within five (5) days of filing a claim under such
coverage and to assign to the Master Servicer for the benefit of the Indenture
Trustee and the Issuer the proceeds of such coverage allocable to losses
suffered with respect to the property of the Issuer.
SECTION 8.02. ERRORS AND OMISSIONS INSURANCE.
At its sole cost and expense, Servicer shall obtain and maintain at all
times during the term of this Agreement errors and omissions insurance coverage
covering Servicer and its employees issued by a responsible insurance company.
The issuer, policy terms and forms and amounts of coverage, including applicable
deductibles, shall be satisfactory to the Master Servicer, but in any event the
amount of such coverage shall conform to FNMA levels. Servicer agrees to notify
the Master Servicer and the Indenture Trustee in writing within five (5) days of
the cancellation or termination of any such errors and omissions insurance
coverage. The Servicer shall provide to the Master Servicer and the Indenture
Trustee upon request written evidence of such insurance coverage.
SECTION 8.03. LIABILITY INSURANCE.
At its sole cost and expense, Servicer shall obtain and maintain at all
times during the term of this Agreement such comprehensive general liability,
automobile liability, workers' compensation and other insurance as may be
necessary to protect the interests of Servicer, the Issuer, the Indenture
Trustee and the Master Servicer in connection with the performance of this
Agreement, and which, with respect to property acquired by the Servicer upon
foreclosure of a Loan, shall provide for comprehensive general liability
coverage in such amount and on such terms as may be required by the Master
Servicer. The Servicer shall provide to the Master Servicer and the Indenture
Trustee upon
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request written evidence of such insurance coverage. Servicer agrees to notify
the Master Servicer and the Indenture Trustee in writing within five (5) days of
the cancellation or termination of any such coverage.
ARTICLE IX
NOTICE OF CLAIMS
SECTION 9.01. NOTICE OF CLAIMS.
Servicer shall promptly notify the Master Servicer and the Indenture
Trustee in writing of any and all litigation and claims made or threatened
against the Issuer, the Indenture Trustee, the Master Servicer or Servicer in
connection with this Agreement of which the Servicer becomes aware other than
those relating solely to the foreclosure of prior liens on Property. Likewise,
each of the Master Servicer and the Indenture Trustee agrees to notify the
Servicer promptly in writing of any and all litigation and claims made or
threatened against the Issuer, the Indenture Trustee, the Master Servicer or
Servicer in connection with this Agreement of which such party becomes aware
other than those relating solely to the foreclosure of prior liens on Property.
SECTION 9.02. USE OF COUNSEL.
To the extent that legal counsel may be required in connection with a
claim made against Master Servicer or the Indenture Trustee related to
Servicer's performance of its duties under this Agreement, Servicer shall, at
Master Servicer's direction, use counsel selected, retained and paid directly by
Master Servicer or the Indenture Trustee ("Master Servicer Counsel") in
connection with all matters requiring legal counsel, and Servicer shall
cooperate with Master Servicer, the Indenture Trustee and Master Servicer
Counsel in connection with such matters and shall do everything reasonably
requested of it in connection with such matters. Servicer's failure to use such
Master Servicer Counsel or approved counsel or to cooperate as required in this
Section 9.02 shall constitute a material breach of this Agreement. The
requirements of this Section 9.02 shall not apply to Servicer's retention, use
and payment of its own counsel to advise it with respect to its rights under
this Agreement or claims made against Servicer that are not also against any of
the Master Servicer or the Indenture Trustee.
ARTICLE X
[RESERVED]
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ARTICLE XI
MISCELLANEOUS PROVISIONS
SECTION 11.01.00 AMENDMENTS, CHANGES AND MODIFICATIONS.
This Agreement may be amended, changed, modified, or altered only with
written consent of the Issuer, the Indenture Trustee, the Master Servicer and
the Servicer by an instrument in writing that specifically refers to this
Agreement and that is executed by all parties adversely affected by such
amendment, change, modification or alteration.
SECTION 11.02.00 GOVERNING LAW.
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES
HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 11.03.00 NOTICES.
All demands, notices, certificates or other communications hereunder
shall be in writing (unless otherwise specified) and shall be deemed given when
personally delivered or four (4) Business Days after mailing by United States
Postal Service Second Day Priority Mail, postage prepaid, return receipt
requested, addressed to the appropriate Notice Address.
SECTION 11.04.00 SEVERABILITY.
In the event any provision of this Agreement shall be held invalid or
unenforceable by any court of competent jurisdiction, such holding shall not
invalidate or render unenforceable any other provision hereof. Such invalid or
unenforceable provision shall be amended, if possible, in accordance with
Section 11.01 hereof in order to accomplish the purposes of this Agreement.
SECTION 11.05.00 TERM OF AGREEMENT.
With respect to each Loan, the term of this Agreement shall end upon
the earlier to occur of (i) termination of all of Servicer's rights pursuant to
this Agreement with respect to all Loans as provided in Section 7.01 or 7.02, or
(ii) as provided in Section 6.15.
SECTION 11.06.00 LIMITATION OF LIABILITY OF PARTIES.
Each party to this Agreement shall be liable under this Agreement only
to the extent that obligations are imposed upon the party against whom
enforcement is sought.
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SECTION 11.07.00 LIMITATION OF LIABILITY OF DIRECTORS, OFFICERS,
EMPLOYEES AND AGENTS OF A PARTY.
No director, officer, employee or agent of any party to this Agreement
shall be individually liable to any other party for taking of any action or for
refraining to take any action in good faith pursuant to this Agreement or for
errors in judgment. In addition, in the event any party to this Agreement is
entitled to indemnification hereunder, the officers, directors, employees, and
agents of such party shall also be entitled to indemnification hereunder to the
same extent and under the same circumstances as such party.
SECTION 11.08.00 SURVIVAL OF OBLIGATIONS AND COVENANTS.
The representations, warranties and covenants of Servicer under
Sections 2.02, 7.04 and 11.11 hereof shall survive the expiration of this
Agreement, termination or resignation of Servicer under this Agreement and any
assignment of this Agreement or the rights of the Servicer hereunder by the
Servicer and shall be continuing without regard to any such expiration,
termination, resignation or assignment.
SECTION 11.09.00 COUNTERPARTS.
This Agreement may be executed in any number of counterparts, each of
which shall be an original, provided, however, that all such counterparts shall
together constitute one and the same Agreement.
SECTION 11.10.00 FORMS AND REPORTS.
All forms or reports required by this Agreement will be prescribed by
the Master Servicer from time to time and may be amended, supplemented, or
replaced as the Master Servicer shall deem appropriate.
SECTION 11.11.00 INDEMNIFICATION.
The Servicer agrees to, and does hereby indemnify and hold harmless the
Issuer, the Indenture Trustee and the Master Servicer and their respective
directors, officers, employees, and agents, and their successors and assigns
against, and shall reimburse the Issuer, the Indenture Trustee and the Master
Servicer, as applicable, for any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, claims, costs, expenses and
disbursements of any kind or nature whatsoever, including reasonable fees and
expenses of counsel and expenses of litigation which may be imposed on, incurred
by or asserted against any of such indemnified parties, in any way related to,
or arising out of, this Agreement or any of the transactions contemplated
herein, to the extent that any of the same results from or arises out of (1) any
material breach of any representation or warranty made by the Servicer in this
Agreement, (2) the negligence, willful misfeasance, or bad faith of the Servicer
in the performance of its duties under this Agreement or by reason of reckless
disregard of its obligations and duties under this Agreement, or (3) from any
material breach by the Servicer of any covenant or obligation of the Servicer
under this Agreement or any schedule, written statement, document or certificate
furnished by
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Servicer pursuant to this Agreement; provided, however, that no such party shall
be entitled to indemnification hereunder for any loss attributable solely to
such party's own gross negligence or willful misconduct. The indemnities
contained in this Section 11.11 shall survive the termination of this Agreement.
The indemnity obligations set forth in this Section 11.11 shall be in addition
to (but not exclusive of) any other remedies set forth in this Agreement, but in
no event shall this indemnity or any other remedy to which a party may be
entitled provide recovery for amounts already recovered under any other
provision of this Agreement or any other agreement or from any other source.
The Servicer may rely on the written instructions and directions of the
Master Servicer pursuant to the terms of this Agreement and shall not be liable
to the Issuer, the Indenture Trustee or the Master Servicer for any action taken
or for refraining from the taking of any action in good faith pursuant to such
instructions and directions; provided, however, that this provision shall not
protect the Servicer against any material breach of any representation or
warranty made herein or material failure to perform its obligations in
compliance with any standard of care set forth in this Agreement, or any
liability that would otherwise be imposed by reason of any material breach of
the terms and conditions of this Agreement.
The Master Servicer agrees to, and does hereby indemnify and hold the
Servicer harmless against, and shall reimburse the Servicer for any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
claims, costs, expenses and disbursements of any kind or nature whatsoever which
may be imposed on, incurred by or asserted against the Servicer with respect to
any action taken or not taken in good faith pursuant to the instructions and
directions of the Master Servicer as provided herein.
SECTION 11.12.00 RECITALS AND HEADINGS.
The terms and phrases used in the recitals of this Agreement have been
included for convenience of reference only and the meaning, construction, and
interpretation of such words and phrases for purposes of this Agreement shall be
determined by reference to Section 1.01 hereof. The table of contents, titles
and headings of the articles and sections of this Agreement have been inserted
for convenience of reference only and are not to be considered a part hereof and
shall not in any way modify or restrict any of the terms or provisions hereof
and shall not be considered or given any effect in construing this Agreement or
any provision hereof in ascertaining intent, if any questions of intent should
arise.
SECTION 11.13.00 RELATIONSHIP OF THE PARTIES.
In performing its duties and obligations hereunder, Servicer shall be
an independent contractor with, and not an agent of, the Issuer, the Indenture
Trustee or the Master Servicer. Nothing herein contained shall be deemed or
construed to create a partnership or joint venture among the Issuer, the
Indenture Trustee or the Master Servicer and the Servicer.
SECTION 11.14.00 [RESERVED].
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SECTION 11.15.00 RECORDATION OF AGREEMENT.
To the extent permitted by applicable law, this Agreement may be
recorded in all appropriate public offices for real property records in all the
counties or other comparable jurisdictions in which any or all of the Properties
are situated, and in any other appropriate public recording office or elsewhere,
such recordation to be effected by the Servicer at the expense of the Issuer, if
the Indenture Trustee determines that such recordation materially and
beneficially affects the interests of the affected Certificateholders, and the
Servicer provides written notice to the Master Servicer.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the Servicer, the Master Servicer, the Issuer, and
the Indenture Trustee have caused their names to be signed hereto by their
respective officers duly authorized as of the date and year first above written.
ISSUER:
MEGO MORTGAGE HOME LOAN
OWNER TRUST 1997-4
By: WILMINGTON TRUST COMPANY,
not in its individual capacity
but solely as Owner Trustee
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
INDENTURE TRUSTEE
AND CO-OWNER TRUSTEE:
U.S. BANK NATIONAL ASSOCIATION, d/b/a
FIRST BANK NATIONAL ASSOCIATION
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
MASTER SERVICER:
NORWEST BANK MINNESOTA, N.A.
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
SERVICER:
MEGO MORTGAGE CORPORATION
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
52
EXHIBIT A
DESIGNATED SERVICERS
1. Preferred Equities Corporation
A-1
53
EXHIBIT B
FORM OF SERVICER REPORT
SERVICER CERTIFICATE
MEGO MORTGAGE HOME LOAN OWNER TRUST 1997-4
================================================================================
DUE PERIOD: (date)
DISTRIBUTION AMOUNT:
Payments Received On Loans:
Interest:
Ending Aggregate Principal Balance
of Loans as of the preceding
Monthly Cutoff $ 0.00
--------------
Less: Total Amount of New Defaulted Loans from Prior Due Period: $ 0.00
--------------
Adjusted Beginning Aggregate Principal Balance: $ 0.00
--------------
Weighted Average Interest Rate: 0.0000%
--------------
Number of Days: 30/360
--------------
Scheduled Interest (Less interest collected on defaulted loans): $ 0.00(a)
--------------
Actual Interest Collected: $ 0.00(b)
--------------
Total Interest Advanced: $ 0.00(a-b)
--------------
Interest Advanced: $ 0.00
--------------
Principal:
Regular Installments: $ 0.00
--------------
Adjustments to Regular Installments: $ 0.00
--------------
Total Regular Installments: $ 0.00
--------------
Curtailments: $ 0.00
--------------
Adjustments to Curtailments: $ 0.00
--------------
Total Curtailments: $ 0.00
--------------
Paid in Fulls: $ 0.00
--------------
Adjustments to Paid in Fulls: $ 0.00
--------------
Total Paid in Fulls: $ 0.00
--------------
Foreclosures/Other:
Default Principal Activity $ 0.00
--------------
Total Principal Collections: $ 0.00
--------------
B-1
54
Loans Purchased By Servicer
as of the Monthly Cutoff:
100% of the Principal Balance
of Loans: $ 0.00
--------------
Unpaid Accrued Interest for such
Loans: $ 0.00
--------------
TOTAL PRINCIPAL AND INTEREST DISTRIBUTION AMOUNT: $ 0.00
--------------
DEFAULTED LOANS:
Total amount of Defaulted Loans (Cumulative): $ 0.00
--------------
(a+b+c)
Foreclosed Property Sold: $ 0.00(a)
------------
Loans 180 Days Past Due: $ 0.00(b)
------------
Loans Determined to be Uncollectible: $ 0.00(c)
------------
Total amount of Loans which became Defaulted Loans
during the Due Period: $ 0.00
--------------
Collections Received on Defaulted Loans: $ 0.00
--------------
(a+b+c+d)
Interest Received: $ 0.00(a)
------------
Principal Received: $ 0.00(b)
------------
Foreclosure Funds: $ 0.00(c)
------------
Other: $ 0.00(d)
------------
Remaining Defaulted Loan Balance Reflecting all
Collections Received, less expenses
of recoveries (Net Loan Losses): $ 0.00
------------
Aggregate UPB of Loans between
31 and 60 Days Past Due: $ 0.00
------------
Aggregate UPB of Loans between
61 and 90 Days Past Due: $ 0.00
------------
Aggregate UPB of Loans more
than 90 Days Past Due: $ 0.00
------------
Total loans to be foreclosed #
(see attached)
B-2
55
DELINQUENCY INFORMATION:
61 Day + Delinquency Percentage (Rolling Six Month):
(c+f+i+l+o+r)/6
Period: (date)
All Loans 61+ Days Delinquent: $ 0.00
------------
Less:
Defaulted Loans Included: $ 0.00
------------
61 Day Delinquent Loans: $ 0.00(a)
------------
Aggregate UPB: $ 0.00(b)
------------
Delinquency Percentage: $ 0.00(c)(a/b)
------------
Period: (date)
All Loans 61+ Days Delinquent: $ 0.00
------------
Less:
Defaulted Loans Included: $ 0.00
------------
61 Day Delinquent Loans: $ 0.00(d)
------------
Aggregate UPB: $ 0.00(e)
------------
Delinquency Percentage: $ 0.00(f)(d/e)
------------
Period: (date)
All Loans 61+ Days Delinquent: $ 0.00
------------
Less:
Defaulted Loans Included: $ 0.00
------------
61 Day Delinquent Loans: $ 0.00(g)
------------
Aggregate UPB: $ 0.00(h)
------------
Delinquency Percentage: $ 0.00(i)(g/h)
------------
Period: (date)
All Loans 61+ Days Delinquent: $ 0.00
------------
Less:
Defaulted Loans Included: $ 0.00
------------
61 Day Delinquent Loans: $ 0.00(j)
------------
Ending Aggregate UPB: $ 0.00(k)
------------
Delinquency Percentage: (l) (j/k)
------------
Period: (date)
All Loans 61+ Days Delinquent: $ 0.00
------------
Less:
Defaulted Loans Included: $ 0.00
------------
61 Day Delinquent Loans: $ 0.00(m)
------------
Ending Aggregate UPB: $ 0.00(n)
------------
Delinquency Percentage: (o) (m/n)
------------
Period: (date)
All Loans 61+ Days Delinquent: $ 0.00
------------
Less:
Defaulted Loans Included: $ 0.00
------------
61 Day Delinquent Loans: $ 0.00(p)
X-0
00
Xxxxxx Xxxxxxxxx XXX: $ 0.00(q)
-----------
Delinquency Percentage: -----------(r) (p/q)
OVERCOLLATERALIZATION:
Overcollateralization Target Amount: $ 0.00
------------
Actual Overcollateralization Amount: $ 0.00
------------
Net Delinquency Calculation Amount: $ 0.00
------------
ADVANCES:
Advances made by Servicer with respect to
this Reporting Period:
Foreclosure Advances: $ 0.00
-----------
Interest Advances: $ 0.00
-----------
Total Advances This Period: $ 0.00
-----------
Cumulative Advances made by Servicer:
Foreclosure Advances: $ 0.00
-----------
Interest Advances: $ 0.00
-----------
Total Advances: $ 0.00
-----------
ADVANCES SERVICER ENTITLED TO REIMBURSEMENT:
Foreclosure Advances: $ 0.00
-----------
Interest Advances: $ 0.00
-----------
Total Advances: $ 0.00
-----------
FEES:
Master Servicing Fee: $ 0.00
------------
Servicing Fees: $ 0.00
------------
Indenture Trustees Fees: $ 0.00
------------
Owner Trustee Fee Reserve: $ 0.00
------------
Other Fees: $ 0.00
------------
OTHER:
Unpaid Principal Balance - Current Loans: $ 0.00
------------
Total Unpaid Principal Balance: $ 0.00
------------
B-4
57
All information included in this Certificate is based on the detailed accounting
and servicing reports provided to the Master Servicer. Additionally, all loans
have been serviced and accounted for in accordance with the applicable
requirements of the Servicing Agreement.
Date:
--------------
Certified By: Signature:
------------------------------------
Typed Name:
-----------------------------------
Title:
----------------------------------------
THIS SERVICER CERTIFICATE TO BE SUPPORTED BY DETAILED ACCOUNTING AND SERVICING
REPORTS AS REQUESTED BY THE MASTER SERVICER.
B-5
58
EXHIBIT C
LOAN SCHEDULE
Attached
