EXECUTION COPY
BANK OF AMERICA, NATIONAL ASSOCIATION
PURCHASER
AND
INDYMAC BANK, F.S.B.
COMPANY
FLOW SALE AND SERVICING AGREEMENT
DATED AS MARCH 1, 2006
RESIDENTIAL MORTGAGE LOANS
TABLE OF CONTENTS
ARTICLE I DEFINITIONS............................................................. 1
ARTICLE II AGREEMENT TO PURCHASE; PURCHASE PRICE; POSSESSION OF MORTGAGE FILES;
MAINTENANCE OF SERVICING FILES; BOOKS AND RECORDS; CUSTODIAL AGREEMENT;
DELIVERY OF DOCUMENTS; CLOSING CONDITIONS............................... 14
Section 2.01. Agreement to Purchase; Purchase Price................................ 14
Section 2.02. Books and Records; Transfers of Mortgage Loans....................... 16
Section 2.03. Custodial Agreement; Delivery of Documents........................... 17
Section 2.04. Quality Control Procedures........................................... 19
Section 2.05. Closing Conditions................................................... 19
ARTICLE III REPRESENTATIONS AND WARRANTIES REMEDIES AND BREACH...................... 20
Section 3.01. Company Representations and Warranties............................... 20
Section 3.02. Representations and Warranties Regarding Individual Mortgage Loans... 24
Section 3.03. Repurchase........................................................... 38
Section 3.04. Repurchase of Mortgage Loans With First Payment Defaults............. 41
Section 3.05. Purchase Price Protection............................................ 41
Section 3.06. Review of Mortgage Loans............................................. 41
ARTICLE IV ADMINISTRATION AND SERVICING OF MORTGAGE LOANS.......................... 42
Section 4.01. Company to Act as Servicer........................................... 42
Section 4.02. Liquidation of Mortgage Loans........................................ 42
Section 4.03. Collection of Mortgage Loan Payments................................. 43
Section 4.04. Establishment of and Deposits to Custodial Account................... 44
Section 4.05. Permitted Withdrawals From Custodial Account......................... 45
Section 4.06. Establishment of and Deposits to Escrow Account...................... 47
Section 4.07. Permitted Withdrawals From Escrow Account............................ 48
Section 4.08. Payment of Taxes, Insurance and Other Charges........................ 48
Section 4.09. Transfer of Accounts................................................. 49
Section 4.10. Maintenance of Hazard Insurance...................................... 49
Section 4.11. Maintenance of Mortgage Impairment Insurance......................... 50
Section 4.12. Maintenance of Fidelity Bond and Errors and Omissions Insurance...... 51
Section 4.13. Inspections.......................................................... 51
Section 4.14. Restoration of Mortgaged Property.................................... 51
Section 4.15. Maintenance of PMI Policy; Claims.................................... 52
Section 4.16. Title, Management and Disposition of REO Property.................... 53
Section 4.17. Real Estate Owned Reports............................................ 54
Section 4.18. Liquidation Reports.................................................. 54
i
Section 4.19. Reports of Foreclosures and Abandonments of Mortgaged Property....... 54
Section 4.20. [Reserved.].......................................................... 55
Section 4.21. Notification of Adjustments.......................................... 55
Section 4.22. Modifications, Waivers, Amendments and Consents...................... 55
Section 4.23. Disaster Recovery/Business Continuity Plan........................... 57
Section 4.24. Fair Credit Reporting Act............................................ 57
Section 4.25. HMDA Data Elements................................................... 57
ARTICLE V PAYMENTS TO PURCHASER................................................... 57
Section 5.01. Remittances.......................................................... 57
Section 5.02. Automated Servicing Systems and Statements to Purchaser.............. 58
Section 5.03. Monthly Advances by Company.......................................... 58
ARTICLE VI GENERAL SERVICING PROCEDURES............................................ 59
Section 6.01. Due-on-Sale Provision and Assumptions................................ 59
Section 6.02. Satisfaction of Mortgages and Release of Mortgage Files.............. 60
Section 6.03. Servicing Compensation............................................... 60
Section 6.04. Annual Statement as to Compliance.................................... 61
Section 6.05. [Reserved]........................................................... 61
Section 6.06. Right to Examine Company Records..................................... 61
Section 6.07. Compliance with REMIC Provisions..................................... 61
ARTICLE VII COMPANY TO COOPERATE.................................................... 62
Section 7.01. Provision of Information............................................. 62
Section 7.02. Financial Statements; Servicing Facility............................. 62
Section 7.03. Cooperation with Third-party Service Providers....................... 63
ARTICLE VIII THE COMPANY............................................................. 63
Section 8.01. Indemnification; Third Party Claims.................................. 63
Section 8.02. Merger or Consolidation of the Company............................... 63
Section 8.03. Limitation on Liability of Company and Others........................ 64
Section 8.04. Limitation on Resignation and Assignment by Company.................. 64
ARTICLE IX WHOLE LOAN TRANSFERS AND SECURITIZATIONS................................ 65
Section 9.01. Removal of Mortgage Loans from Inclusion Under this Agreement Upon
the Pass-Through..................................................... 65
ARTICLE X DEFAULT................................................................. 67
Section 10.01. Events of Default.................................................... 67
Section 10.02. Waiver of Defaults................................................... 68
ii
ARTICLE XI TERMINATION............................................................. 68
Section 11.01. Termination.......................................................... 68
Section 11.02. Termination Without Cause............................................ 69
ARTICLE XII MISCELLANEOUS PROVISIONS................................................ 69
Section 12.01. Successor to Company................................................. 69
Section 12.02. Amendment............................................................ 70
Section 12.03. Governing Law........................................................ 70
Section 12.04. Arbitration.......................................................... 71
Section 12.05. Duration of Agreement................................................ 71
Section 12.06. Notices.............................................................. 71
Section 12.07. Severability of Provisions........................................... 72
Section 12.08. Relationship of Parties.............................................. 72
Section 12.09. Execution; Successors and Assigns.................................... 72
Section 12.10. Recordation of Assignments of Mortgage............................... 72
Section 12.11. Assignment by Purchaser.............................................. 72
Section 12.12. Solicitation of Mortgagor............................................ 73
Section 12.13. Further Agreements................................................... 73
Section 12.14. Confidential Information............................................. 73
Section 12.15. Equal Opportunity.................................................... 74
Section 12.16. Counterparts......................................................... 74
Section 12.17. Exhibits............................................................. 74
Section 12.18. General Interpretive Principles...................................... 74
Section 12.19. Reproduction of Documents............................................ 75
Section 12.20. Purchase Price and Terms Letter...................................... 75
EXHIBITS
Exhibit A Form of Mortgage Loan Schedule
Exhibit B Contents of Each Mortgage File
Exhibit C Form of Custodial Agreement
Exhibit D Form of Assignment, Assumption and Recognition Agreement
Exhibit E Underwriting Guidelines
Exhibit F [Reserved]
Exhibit G [Reserved]
Exhibit H [Reserved]
Exhibit I Form of Memorandum of Sale
Exhibit J Servicer Requirements
Exhibit K Form of SEC Certification
Exhibit L Regulation AB Compliance Addendum
iii
This is a Flow Sale and Servicing Agreement for adjustable and fixed rate
residential first mortgage loans, dated and effective as of March 1, 2006, and
is executed between Bank of America, National Association, as purchaser (the
"Purchaser"), and IndyMac Bank, F.S.B., as seller and servicer (the "Company").
WITNESSETH
WHEREAS, the Purchaser has agreed to purchase from time to time from the
Company and the Company has agreed to sell from time to time to the Purchaser
first lien jumbo and conforming fixed and adjustable rate mortgage loans;
WHEREAS, the Mortgage Loans will be sold by the Company and purchased by
the Purchaser as pools or groups of whole loans, servicing retained (each, a
"Mortgage Loan Package") on the various Closing Dates as provided herein; and
WHEREAS, each of the Mortgage Loans will be secured by a mortgage, deed of
trust or other security instrument creating a first lien on a residential
dwelling located in the jurisdiction indicated on the related Mortgage Loan
Schedule for the related Mortgage Loan Package, which will be annexed to a
Memorandum of Sale (as defined herein) on the related Closing Date; and
WHEREAS, the Purchaser and the Company wish to prescribe the manner of
purchase of the Mortgage Loans and the conveyance, servicing and control of the
Mortgage Loans; and
WHEREAS, following any purchase of the Mortgage Loans from the Company, the
Purchaser may desire to sell some or all of the Mortgage Loans to one or more
purchasers as a whole loan transfer, agency transfer or a public or private,
rated or unrated mortgage pass-through transaction;
NOW, THEREFORE, in consideration of the mutual agreements hereinafter set
forth, and for other good and valuable consideration, the receipt and adequacy
of which is hereby acknowledged, the Purchaser and the Company agree as follows:
ARTICLE I
DEFINITIONS
Whenever used herein, the following words and phrases, unless the content
otherwise requires, shall have the following meanings:
Accepted Servicing Practices: With respect to any Mortgage Loan, procedures
(including collection procedures) that comply with applicable federal, state and
local law and that the Company customarily employs and exercises in servicing
and administering mortgage loans for its own account and the accepted mortgage
servicing practices of prudent mortgage lending institutions which service
mortgage loans of the same type as the Mortgage Loans in the jurisdiction where
the related Mortgaged Property is located.
Adjustable Rate Mortgage Loan: A Mortgage Loan that contains a provision
pursuant to which the Mortgage Interest Rate is adjusted periodically.
1
Adjustment Date: As to each Adjustable Rate Mortgage Loan, the date on
which the Mortgage Interest Rate is adjusted in accordance with the terms of the
related Mortgage Note and Mortgage.
Agreement: This Flow Sale and Servicing Agreement and all amendments hereof
and supplements hereto.
ALTA: The American Land Title Association or any successor thereto.
Appraisal: A written appraisal of a Mortgaged Property made by a Qualified
Appraiser, which appraisal must be written, in form and substance, to Xxxxxx Xxx
and Xxxxxxx Mac standards, and satisfy the requirements of Title XI of the
Financial Institution, Reform, Recovery and Enforcement Act of 1989 and the
regulations promulgated thereunder, in effect as of the date of the appraisal.
Appraised Value: With respect to any Mortgage Loan, the lesser of (i) the
value set forth on the Appraisal made in connection with the origination of the
related Mortgage Loan as the value of the related Mortgaged Property, or (ii)
the purchase price paid for the Mortgaged Property, provided, however, that in
the case of a refinance Mortgage Loan, such value shall be based solely on the
Appraisal made in connection with the origination of such Mortgage Loan.
Approved Flood Policy Insurer: An insurer that meets the guidelines of the
Federal Insurance Administration.
Assignment, Assumption and Recognition Agreement: The agreement
substantially in the form of Exhibit D attached hereto.
Assignment of Mortgage: An assignment of the Mortgage, notice of transfer
or equivalent instrument in recordable form, sufficient under the laws of the
jurisdiction wherein the related Mortgaged Property is located to reflect the
sale of the Mortgage to the Purchaser.
BIF: The Bank Insurance Fund, or any successor thereto.
BPO: A broker's price opinion with respect to a Mortgaged Property.
Business Day: Any day other than (i) a Saturday or Sunday, or (ii) a day on
which banking and savings and loan institutions in the State of New York or a
state in which the Company's servicing operations are located are authorized or
obligated by law or executive order to be closed.
Buydown Agreement: An agreement between the Company and a Mortgagor, or an
agreement among the Company, a Mortgagor and a seller of a Mortgaged Property or
a third party with respect to a Mortgage Loan which provides for the application
of Buydown Funds.
Buydown Funds: In respect of any Buydown Mortgage Loan, any amount
contributed by the seller of a Mortgaged Property subject to a Buydown Mortgage
Loan, the buyer of such property, the Company or any other source, plus interest
earned thereon, in order to enable the
2
Mortgagor to reduce the payments required to be made from the mortgagor's funds
in the early years of a Mortgage Loan.
Buydown Mortgage Loan: Any Mortgage Loan in respect of which, pursuant to a
Buydown Agreement, (i) the Mortgagor pays less than the full monthly payments
specified in the Mortgage Note for a specified period, and (ii) the difference
between the payments required under such Buydown Agreement and the Mortgage Note
is provided from Buydown Funds.
Buydown Period: The period of time when a Buydown Agreement is in effect
with respect to a related Buydown Mortgage Loan.
Closing Date: With respect to a Mortgage Loan Package, the date or dates,
set forth in the related Memorandum of Sale, on which the Purchaser will
purchase and the Company will sell the Mortgage Loans identified therein.
Code: The Internal Revenue Code of 1986, as it may be amended from time to
time or any successor statute thereto, and applicable U.S. Department of the
Treasury regulations issued pursuant thereto.
Company: IndyMac Bank, F.S.B., or its successor in interest or assigns, or
any successor to the Company under this Agreement appointed as herein provided.
Company Employees: As defined in Section 4.13.
Condemnation Proceeds: All awards or settlements in respect of a Mortgaged
Property, whether permanent or temporary, partial or entire, by exercise of the
power of eminent domain or condemnation, to the extent not required to be
released to a Mortgagor in accordance with the terms of the related Mortgage
Loan Documents.
Consumer Information: Any personally identifiable information in any form
(written electronic or otherwise) relating to a Mortgagor, including, but not
limited to: a Mortgagor's name, address, telephone number, Mortgage Loan number,
Mortgage Loan payment history, delinquency status, insurance carrier or payment
information, tax amount or payment information; the fact that the Mortgagor has
a relationship with the Company or the originator of the related Mortgage Loan;
and any other non-public personally identifiable information.
Co-op Shares: Shares issued by private non-profit housing corporations.
Custodial Account: The separate account or accounts created and maintained
pursuant to Section 4.04.
Custodial Agreement: The agreement governing the retention of the originals
of each Mortgage Note, Mortgage, Assignment of Mortgage and other Mortgage Loan
Documents, a form of which is annexed hereto as Exhibit C.
Custodian: The custodian under the Custodial Agreement, or its successor in
interest or assigns, or any successor to the Custodian under the Custodial
Agreement as provided therein.
3
Cut-off Date: With respect to each Mortgage Loan, the first day of the
month of the related Closing Date as set forth in the related Purchase Price and
Terms Letter.
Deleted Mortgage Loan: A Mortgage Loan which is repurchased by the Company
in accordance with the terms of this Agreement and which is, in the case of a
substitution pursuant to Section 3.03, replaced or to be replaced with a
Qualified Substitute Mortgage Loan.
Determination Date: The fifteenth calendar day of each month (or if such
fifteenth day is not a Business Day, the next immediately preceding Business
Day).
Due Date: The first day of the month on which the Monthly Payment is due on
a Mortgage Loan, exclusive of any days of grace.
Due Period: With respect to each Remittance Date, the period commencing on
the second day of the month preceding the month of the Remittance Date and
ending on the first day of the month of the Remittance Date.
Errors and Omissions Insurance Policy: An errors and omissions insurance
policy to be maintained by the Company pursuant to Section 4.12.
Escrow Account: The separate account or accounts created and maintained
pursuant to Section 4.06.
Escrow Payments: With respect to any Mortgage Loan, the amounts
constituting ground rents, taxes, assessments, water rates, sewer rents,
municipal charges, mortgage insurance premiums, fire and hazard insurance
premiums, condominium charges, and any other payments required to be escrowed by
the Mortgagor with the mortgagee pursuant to the Mortgage or any other related
document.
Event of Default: Any one of the conditions or circumstances enumerated in
Section 10.01.
Xxxxxx Xxx: The entity formerly known as Federal National Mortgage
Association (FNMA), or any successor thereto.
FDIC: The Federal Deposit Insurance Corporation, or any successor thereto.
Fidelity Bond: A fidelity bond to be maintained by the Company pursuant to
Section 4.12.
First Remittance Date: March 18, 2006.
Xxxxxxx Mac: The entity formerly known as the Federal Home Loan Mortgage
Corporation (FHLMC), or any successor thereto.
GAAP: Generally accepted accounting procedures, consistently applied.
4
Gross Margin: With respect to each Adjustable Rate Mortgage Loan, the fixed
percentage amount set forth in the related Mortgage Note which is added to the
Index in order to determine the related Mortgage Interest Rate, as set forth in
the Mortgage Loan Schedule.
Holding Period: As to each Mortgage Loan, the period beginning on the
Closing Date and ending on the last day of the second calendar month thereafter.
Index: With respect to any Adjustable Rate Mortgage Loan, the index in the
related Mortgage Note for the purpose of calculating interest therein.
Insurance Proceeds: With respect to each Mortgage Loan, proceeds of
insurance policies insuring the Mortgage Loan or the related Mortgaged Property.
Interim Funder: With respect to each MERS Designated Mortgage Loan, the
Person named on the MERS System as the interim funder pursuant to the MERS
Procedures Manual.
Investor: With respect to each MERS Designated Mortgage Loan, the Person
named on the MERS System as the investor pursuant to the MERS Procedures Manual.
Liquidation Proceeds: Cash received in connection with the liquidation of a
defaulted Mortgage Loan, whether through the sale or assignment of such Mortgage
Loan, trustee's sale, foreclosure sale or otherwise, or the sale of the related
Mortgaged Property if the Mortgaged Property is acquired in satisfaction of the
Mortgage Loan.
Loan-to-Value Ratio or LTV: With respect to any Mortgage Loan, the ratio of
the original loan amount of the Mortgage Loan at its origination (unless
otherwise indicated) to the Appraised Value of the Mortgaged Property.
Manufactured Home: A single family residential unit that is constructed in
a factory in sections in accordance with the Federal Manufactured Home
Construction and Safety Standards adopted on July 15, 1976, by the Department of
Housing and Urban Development ("HUD Code"), as amended in 2000, which preempts
state and local building codes. Each unit is identified by the presence of a HUD
Plate/Compliance Certificate label. The sections are then transported to the
site and joined together and affixed to a pre-built permanent foundation (which
satisfies the manufacturer's requirements and all state, county, and local
building codes and regulations). The manufactured home is built on a
non-removable, permanent frame chassis that supports the complete unit of walls,
floors, and roof. The underneath part of the home may have running gear (wheels,
axles, and brakes) that enable it to be transported to the permanent site. The
wheels and hitch are removed prior to anchoring the unit to the permanent
foundation. The manufactured home must be classified as real estate and taxed
accordingly. The permanent foundation may be on land owned by the mortgager or
may be on leased land.
Market Change Event: (a) a suspension or material limitation in trading in
securities generally on the New York Stock Exchange or on NASDAQ; (b) a general
moratorium on commercial banking activities declared by either Federal or New
York State authorities or a material disruption in commercial banking or
securities settlement or clearance services in the United States; or (c) the
outbreak or escalation of hostilities involving the United States or the
5
declaration by the United States of a national emergency or war, if the effect
of any such event specified in clause (c) in the judgment of the Purchaser or
the Company makes it impracticable or inadvisable to proceed with the
transactions as contemplated in this Agreement on the terms and in the manner
contemplated in this Agreement.
Material Adverse Change: (a) a material adverse change in, or a material
adverse effect upon, the operations, business, properties, condition (financial
or otherwise) or prospects of the Purchaser or the Company; (b) a material
impairment of the ability of the Purchaser or the Company to perform under this
Agreement or any related agreements; or (c) a material adverse effect upon the
legality, validity, binding effect or enforceability of this Agreement against
the Company (unless such material adverse effect is directly caused by an action
of the Purchaser which can be remedied by the Purchaser) or the Purchaser
(unless such material adverse effect is directly caused by an action of the
Company which can be remedied by the Company).
Memorandum of Sale: With respect to each Mortgage Loan and the Mortgage
Loan Package, the memorandum of sale, substantially in the form of Exhibit I
attached hereto, confirming the sale by Company and the purchase by Purchaser of
the Mortgage Loan Package on the related Closing Date.
MERS: MERSCORP, Inc., its successors and assigns.
MERS Designated Mortgage Loan: A Mortgage Loan for which (a) the Company
has designated or will designate MERS as, and has taken or will take such action
as is necessary to cause MERS to be, the mortgagee of record, as nominee for the
Company, in accordance with MERS Procedures Manual and (b) the Company has
designated or will designate the Custodian as the Investor on the MERS System.
MERS Procedures Manual: The MERS Procedures Manual, as it may be amended,
supplemented or otherwise modified from time to time.
MERS Report: The report from the MERS System listing MERS Designated
Mortgage Loans and other information.
MERS System: MERS mortgage electronic registry system, as more particularly
described in the MERS Procedures Manual.
Monthly Advance: The portion of each Monthly Payment that is delinquent
with respect to each Mortgage Loan at the close of business on the Determination
Date required to be advanced by the Company pursuant to Section 5.03 on the
Business Day immediately preceding the Remittance Date of the related month.
Monthly Payment: The scheduled monthly payment of principal and interest on
a Mortgage Loan.
Moody's: Xxxxx'x Investors Service, Inc.
6
Mortgage: The mortgage, deed of trust or other instrument securing a
Mortgage Note, which creates a first lien on an unsubordinated estate in fee
simple or leasehold estate in real property securing the Mortgage Note.
Mortgage File: The items pertaining to a particular Mortgage Loan referred
to in Exhibit B annexed hereto, and any additional documents required to be
added to the Mortgage File pursuant to this Agreement.
Mortgage Impairment Insurance Policy: A mortgage impairment or blanket
hazard insurance policy as described in Section 4.11.
Mortgage Interest Rate: The annual rate of interest borne on a Mortgage
Note in accordance with the provisions of the Mortgage Note.
Mortgage Loan: An individual Mortgage Loan which is the subject of this
Agreement, each Mortgage Loan originally sold and subject to this Agreement
being identified on the Mortgage Loan Schedule annexed to the related Memorandum
of Sale, which Mortgage Loan includes without limitation the Mortgage File, the
Monthly Payments, Principal Prepayments, Liquidation Proceeds, Condemnation
Proceeds, Insurance Proceeds, REO Disposition Proceeds and all other rights,
benefits, proceeds and obligations arising from or in connection with such
Mortgage Loan.
Mortgage Loan Documents: The documents referred to in Exhibit B as items 1
through 11.
Mortgage Loan Package: The pool or group of whole loans purchased on a
Closing Date, as described in the Mortgage Loan Schedule annexed to the related
Memorandum of Sale.
Mortgage Loan Remittance Rate: With respect to each Mortgage Loan, the
annual rate of interest remitted to the Purchaser, which shall be equal to the
related Mortgage Interest Rate minus the Servicing Fee Rate.
Mortgage Loan Schedule: With respect to each Mortgage Loan Package, the
schedule of Mortgage Loans substantially in the form attached as Exhibit A
hereto and annexed to the related Memorandum of Sale (and delivered in
electronic format to the Purchaser), such schedule setting forth the following
information with respect to each Mortgage Loan in the related Mortgage Loan
Package:
(1) the Company's Mortgage Loan number;
(2) Mortgagor's name (including any co-mortgagors);
(3) the full xxxxxx xxxxxxx, xxxx, xxxxx and zip code of the
Mortgaged Property;
(4) the Mortgagor's and co-mortgagor's FICO score;
(5) the number of units for all Mortgaged Properties;
7
(6) the number of bedrooms and rents by unit;
(7) a code indicating whether the Mortgaged Property is a single
family residence, two-family residence, three-family residence,
four-family residence, PUD, townhouse or condominium or secured
by Co-op Shares;
(8) the Mortgage Interest Rate as of the Cut-off Date;
(9) the Mortgage Interest Rate as of the date of origination;
(10) the current Mortgage Loan Remittance Rate;
(11) the Monthly Payment as of the date of origination;
(12) the Monthly Payment as of the Cut-off Date;
(13) the origination date of the Mortgage Loan;
(14) the principal balance of the Mortgage Loan as of the Cut-off Date
after deduction of payments of principal due on or before the
Cut-off Date whether or not collected;
(15) the date on which the first Monthly Payment was due;
(16) the last payment date on which a payment was applied;
(17) the original term to maturity or the remaining months to maturity
from the related Cut-off Date, in any case based on the original
amortization schedule, and if different, the maturity expressed
in the same manner but based on the actual amortization schedule;
(18) the scheduled maturity date;
(19) the Loan-to-Value Ratio;
(20) a code indicating the type of Adjustable Rate Mortgage Loan (i.e.
3/1, 5/1, 7/1, etc.);
(21) the Gross Margin;
(22) the Index;
(23) Adjustment Dates and the next Adjustment Date;
(24) the lifetime Mortgage Interest Rate cap and Periodic Caps;
(25) a code indicating the payment status of the Mortgage Loan (i.e.
bankruptcy, foreclosure, REO);
8
(26) a code indicating whether the Mortgage Loan is convertible or
not;
(27) a code indicating the name of the issuer of the PMI Policy, if
any;
(28) a code indicating the lien status of the Mortgage Loan;
(29) a code indicating whether the Mortgage Loan is a Buydown Mortgage
Loan;
(30) a code indicating whether such Mortgage Loan provides for a
Prepayment Penalty and, if applicable, the Prepayment Penalty
period for such loan;
(31) a code indicating whether the Mortgaged Property is
owner-occupied or investor property;
(32) the documentation level (full, alternative, limited);
(33) loan purpose;
(34) the Appraised Value;
(35) the applicable Servicing Fee Rate; and
(36) a code indicating whether the Mortgage Loan is a "high cost" (or
similarly classified) loan under applicable federal, state and
local laws.
With respect to the Mortgage Loans in the aggregate in the related
Mortgage Loan Package, the respective Mortgage Loan Schedule shall set
forth the following information, as of the Cut-Off Date:
(i) the number of Mortgage Loans;
(ii) the current aggregate outstanding principal balance of the
Mortgage Loans;
(iii) the weighted average Mortgage Interest Rate of the Mortgage
Loans; and
(iv) the weighted average months to maturity of the Mortgage
Loans.
Mortgage Note: The note or other evidence of the indebtedness of a
Mortgagor secured by a Mortgage.
Mortgaged Property: The real property, including any improvements, securing
repayment of the debt evidenced by a Mortgage Note.
Mortgagor: The obligor on a Mortgage Note.
9
Negative Amortization: A gradual increase in the mortgage debt that occurs
when the monthly fixed installment is not sufficient for full application to
both principal and interest. The interest shortage is added to the unpaid
principal balance to create "negative" amortization.
OCC: The Office of the Comptroller of the Currency.
Officer's Certificate: A certificate signed by the Chairman of the Board or
the Vice Chairman of the Board or the President, a Senior Vice President, a
First Vice President, a Vice President or an Assistant Vice President and by the
Treasurer or the Secretary or one of the Assistant Treasurers or Assistant
Secretaries of the Company, and delivered to the Purchaser as required by this
Agreement.
Opinion of Counsel: A written opinion, reasonably acceptable to the
Purchaser, of counsel, who may be an employee of the Company.
Originator: With respect to any Mortgage Loan, the entity that (i) took the
Mortgagor's loan application (ii) processed the Mortgagor's loan application, or
(iii) closed and/or funded the Mortgagor's Mortgage Loan.
Periodic Interest Rate Cap: As to each Adjustable Rate Mortgage Loan, the
maximum increase or decrease in the Mortgage Interest Rate on any Adjustment
Date pursuant to the terms of the Mortgage Note.
Person: Any individual, corporation, partnership, joint venture, limited
liability company, association, joint-stock company, trust, unincorporated
organization, government or any agency or political subdivision thereof.
PMI Policy: A policy of primary mortgage guaranty insurance issued by a
Qualified Insurer, as required by this Agreement with respect to certain
Mortgage Loans.
Prepayment Interest Shortfall: As to any Remittance Date and each Mortgage
Loan subject to a Principal Prepayment received during the related Due Period,
the amount, if any, by which one month's interest at the related Mortgage Loan
Remittance Rate on such Principal Prepayment exceeds the amount of interest paid
in connection with such Principal Prepayment.
Prepayment Premium: Payments received on a Mortgage Loan as a result of a
Principal Prepayment thereon, not otherwise due thereon in respect of principal
or interest, which are intended to be a disincentive to prepayment.
Prepayment Premium Loan: A Mortgage Loan with respect to which the
Mortgagor must pay a Prepayment Premium in connection with a Principal
Prepayment.
Prime Rate: The prime rate announced to be in effect from time to time, as
published as the average rate in The Wall Street Journal.
Principal Prepayment: Any payment or other recovery of principal on a
Mortgage Loan which is received in advance of its scheduled Due Date, including
any Prepayment Premium
10
thereon and which is not accompanied by an amount of interest representing
scheduled interest due on any date or dates in any month or months subsequent to
the month of prepayment.
Principal Prepayment Period: The Due Period preceding the related
Remittance Date.
Purchase Price: The price paid on the Closing Date by the Purchaser to the
Company for the Mortgage Loans, as calculated as set forth in the related
Purchase Price and Terms Letter.
Purchase Price and Terms Letter: The letter agreement between the Company
and the Purchaser entered into prior to the related Closing Date relating to the
sale of one or more Mortgage Loan Packages.
Purchaser: Bank of America, National Association, or its successor in
interest or any successor or assignee to the Purchaser under this Agreement as
herein provided.
Qualified Appraiser: An appraiser, duly appointed by the Company, who had
no interest, direct or indirect in the Mortgaged Property or in any loan made on
the security thereof, and whose compensation was not affected by the approval or
disapproval of the Mortgage Loan, and such appraiser and the appraisal made by
such appraiser both satisfied the requirements of Title XI of the Financial
Institution Reform, Recovery, and Enforcement Act and the regulations
promulgated thereunder, all as in effect on the date the Mortgage Loan was
originated.
Qualified Depository: Either (i) an account or accounts maintained with a
federal or state chartered depository institution or trust company the
short-term unsecured debt obligations of which (or, in the case of a depository
institution or trust company that is the principal subsidiary of a holding
company, the debt obligations of such holding company) have the highest
short-term ratings of each Rating Agency at the time any amounts are held on
deposit therein, or (ii) a trust account or accounts maintained with the trust
department of a federal or state chartered depository institution or trust
company, acting in its fiduciary capacity.
Qualified Insurer: A mortgage guaranty insurance company duly authorized
and licensed where required by law to transact mortgage guaranty insurance
business and approved as an insurer by Xxxxxx Xxx or Xxxxxxx Mac.
Qualified Substitute Mortgage Loan: A mortgage loan eligible to be
substituted by the Company for a Deleted Mortgage Loan which must, on the date
of such substitution be approved by the Purchaser and (i) have an outstanding
principal balance, after deduction of all scheduled payments due in the month of
substitution (or in the case of a substitution of more than one mortgage loan
for a Deleted Mortgage Loan, an aggregate principal balance), not in excess of
the Stated Principal Balance of the Deleted Mortgage Loan; (ii) have a Mortgage
Loan Remittance Rate not less than, and not more than 2% greater than, the
Mortgage Loan Remittance Rate of the Deleted Mortgage Loan; (iii) have a
remaining term to maturity not greater than and not more than one year less than
that of the Deleted Mortgage Loan; (iv) comply with each representation and
warranty set forth in Sections 3.01 and 3.02; (v) be of the same type as the
Deleted Mortgage Loan; (vi) have a Gross Margin not less than that of the
Deleted Mortgage Loan; (vii) have the same Index as the Deleted Mortgage Loan;
(viii) will have a FICO score not less than that of the Deleted Mortgage Loan;
(ix) have an LTV not greater than that of the Deleted Mortgage Loan;
11
(x) have a Prepayment Premium with a term and an amount at least equal to the
Prepayment Premium of the Deleted Mortgage Loan; and (xi) have a Company credit
grade not lower in quality than that of the Deleted Mortgage Loan.
Rating Agency: Each of Fitch, Inc., Xxxxx'x and S&P, or any successor
thereto.
Reconstitution Date: The date on which any or all of the Mortgage Loans
serviced under this Agreement shall be removed from this Agreement and
reconstituted as part of a Securitization or Whole Loan Transfer pursuant to
Section 9.01 hereof. The Reconstitution Date shall be such date which the
Purchaser and the subsequent purchaser or transferee of the related Mortgage
Loans shall designate. On such date, except as provided in this Agreement, the
Mortgage Loans transferred shall cease to be covered by this Agreement and the
Company's servicing responsibilities shall cease under this Agreement with
respect to the related transferred Mortgage Loans.
Record Date: The close of business of the last Business Day of the month
preceding the month of the related Remittance Date.
Regulation AB Compliance Addendum: Exhibit L attached hereto and
incorporated herein by reference thereto.
REMIC: A "real estate mortgage investment conduit" within the meaning of
Section 860D of the Code.
REMIC Provisions: Provisions of the federal income tax law relating to a
REMIC, which appear at Section 860A through 860G of Subchapter M of Chapter 1,
Subtitle A of the Code, and related provisions, and regulations, rulings or
pronouncements promulgated thereunder, as the foregoing may be in effect from
time to time.
Remittance Date: The 18th day (or if such 18th day is not a Business Day,
the first Business Day immediately preceding such 18th day) of any month,
beginning with the First Remittance Date.
REO Disposition: The final sale by the Company of any REO Property.
REO Disposition Proceeds: All amounts received with respect to an REO
Disposition pursuant to Section 4.16.
REO Property: A Mortgaged Property acquired by the Company on behalf of the
Purchaser through foreclosure or by deed in lieu of foreclosure, as described in
Section 4.16.
Repurchase Price: With respect to any Mortgage Loan, a price equal to (i)
(a) prior to the date which is twelve (12) months following the Closing Date,
the product of the Stated Principal Balance of such Mortgage Loan times the
greater of (x) the Purchase Price Percentage, or (y) 100%, and (b) thereafter,
the Stated Principal Balance of the Mortgage Loan plus (ii) interest on such
Stated Principal Balance at the Mortgage Loan Interest Rate from the date on
which interest has last been paid and distributed to the Purchaser to the last
day of the month in which such repurchase occurs, less amounts received or
advanced in respect of such repurchased Mortgage
12
Loan which are being held in the Custodial Account for distribution in the month
of repurchase plus all costs and expenses incurred by the Purchaser arising out
of or based upon such breach, including without limitation, costs and expenses
incurred in the enforcement of the Company's repurchase obligation hereunder
plus (iii) with respect to any Mortgage Loan subject to a Securitization, any
costs and damages incurred by the related trust in connection with any violation
by such Mortgage Loan of any predatory or abusive lending law.
RESPA: The Real Estate Settlement Procedures Act, as amended.
SAIF: The Savings Association Insurance Fund, or any successor thereto.
S&P: Standard & Poor's Ratings Services, a division of The XxXxxx-Xxxx
Companies., Inc.
Securities Act of 1933 or the 1933 Act: The Securities Act of 1933, as
amended.
Securitization: Any transaction involving either (1) a sale or other
transfer of some or all of the Mortgage Loans directly or indirectly by the
Purchaser to an issuing entity in connection with an issuance of publicly
offered or privately placed, rated or unrated mortgage-backed securities or (2)
an issuance of publicly offered or privately placed, rated or unrated
securities, the payments on which are determined primarily by reference to one
or more portfolios of residential mortgage loans consisting, in whole or in
part, of some or all of the Mortgage Loans.
Servicing Advances: All customary, reasonable and necessary "out of pocket"
costs and expenses (including reasonable attorneys' fees and disbursements)
other than Monthly Advances incurred in the performance by the Company of its
servicing obligations, including, but not limited to, the cost of (a) the
preservation, restoration and protection of the Mortgaged Property, (b) any
enforcement or judicial proceedings, including foreclosures, (c) the management
and liquidation of any REO Property and (d) compliance with the obligations
under Section 4.08.
Servicing Fee: With respect to each Mortgage Loan, the amount of the annual
fee the Purchaser shall pay to the Company, which shall, for a period of one
full month, be equal to one-twelfth of the product of (a) the applicable
Servicing Fee Rate and (b) the Stated Principal Balance of such Mortgage Loan.
Such fee shall be payable monthly, computed on the basis of the same principal
amount and period respecting which any related interest payment on a Mortgage
Loan is computed. The obligation of the Purchaser to pay the Servicing Fee is
limited to, and the Servicing Fee is payable solely from, the interest portion
(including recoveries with respect to interest from Liquidation Proceeds,
Condemnation Proceeds and Insurance Proceeds to the extent permitted by Section
4.05) of such Monthly Payment collected by the Company, or as otherwise provided
under Section 4.05.
Servicing Fee Rate: With respect to each Mortgage Loan, the per annum rate
specified for such Mortgage Loan set forth on the Mortgage Loan Schedule or if
not specified thereon, in the Purchase Price and Terms Letter.
Servicing File: With respect to each Mortgage Loan, the file retained by
the Company consisting of originals or copies, which may be imaged copies, of
all documents in the Mortgage
13
File which are not delivered to the Custodian and copies of the Mortgage Loan
Documents listed in the Custodial Agreement the originals of which are delivered
to the Custodian pursuant to Section 2.03.
Servicing Officer: Any officer of the Company involved in or responsible
for the administration and servicing of the Mortgage Loans whose name appears on
a list of servicing officers furnished by the Company to the Purchaser upon
request, as such list may from time to time be amended.
Stated Principal Balance: As to each Mortgage Loan, the principal balance
of the Mortgage Loan as of the first day of the month for which such calculation
is being made after giving effect to payments of principal due on or before such
date, whether or not received.
Subservicer: Any Person with which the Company has entered into a
Subservicing Agreement, provided that such Person is a Xxxxxx Xxx or Xxxxxxx Mac
approved seller/servicer in good standing and no event has occurred, including
but not limited to a change in insurance coverage, that would make it unable to
comply with the eligibility for seller/servicers imposed by Xxxxxx Mae or
Xxxxxxx Mac.
Subservicing Agreement: Any subservicing agreement (which, in the event the
Subservicer is an affiliate of the Company, need not be in writing) between the
Company and any Subservicer relating to servicing and/or administration of
certain Mortgage Loans as provided in Section 3.01(b).
Underwriting Guidelines: The underwriting guidelines of the Company with
respect to the Mortgage Loans, attached as Exhibit E hereto, as the same shall
be updated from time to time; provided, that no updated underwriting guidelines
of the Company shall constitute "Underwriting Guidelines" hereunder until such
updates have been received by the Purchaser.
Whole Loan Transfer: Any sale or transfer of some or all of the Mortgage
Loans by the Purchaser to a third party which sale or transfer is not a
Securitization.
ARTICLE II
AGREEMENT TO PURCHASE; PURCHASE PRICE; POSSESSION OF MORTGAGE FILES; MAINTENANCE
OF SERVICING FILES; BOOKS AND RECORDS; CUSTODIAL AGREEMENT; DELIVERY OF
DOCUMENTS; CLOSING CONDITIONS
Section 2.01. Agreement to Purchase; Purchase Price.
(a) Agreement to Purchase.
In exchange for the payment of the Purchase Price to the Company on
the related Closing Date, the Company agrees to sell and the Purchaser
agrees to purchase, without recourse but subject to the terms of this
Agreement, on a servicing retained basis, all the right, title and interest
of the Company in and to the Mortgage Loans in a Mortgage Loan Package
having an aggregate Stated Principal Balance on the related Cut-off Date in
an
14
amount as set forth in the related Purchase Price and Terms Letter, or in
such other amount as agreed by the Purchaser and the Company as evidenced
by the aggregate Stated Principal Balance of the Mortgage Loan Package
accepted by the Purchaser on the related Closing Date. The Company shall
deliver the Mortgage Loan Schedule for the Mortgage Loan Package to be
purchased on the related Closing Date to the Purchaser at least two (2)
Business Days prior to such Closing Date.
(b) Purchase Price.
The Purchase Price for each Mortgage Loan Package shall be the
percentage of par as stated in or as otherwise calculated pursuant to the
related Purchase Price and Terms Letter (subject to adjustment as provided
therein), plus accrued interest on the aggregate Stated Principal Balance
of the Mortgage Loan Package at the weighted average Mortgage Loan
Remittance Rate from the related Cut-off Date through the day prior to the
related Closing Date, inclusive. The initial principal amount of the
Mortgage Loans shall be the aggregate Stated Principal Balance of the
Mortgage Loans, so computed as of the related Cut-off Date, after
application of scheduled payments of principal due on or before the related
Cut-off Date, whether or not collected. Such payments shall be made to the
account designated by the Company by wire transfer to immediately available
funds by 3:00 p.m. Charlotte, North Carolina time on the related Closing
Date.
The Purchaser shall be entitled to (1) all scheduled principal due
after the related Cut-off Date, (2) all other recoveries of principal
collected on or after the related Cut-off Date (provided, however, that all
scheduled payments of principal due on or before the related Cut-off Date
and collected by the Company or any successor servicer after the related
Cut-off Date shall belong to the Company), (3) all payments of interest on
the Mortgage Loans at the Mortgage Loan Remittance Rate (minus that portion
of any such payment that is allocable to the period prior to the related
Cut-off Date) and (4) all Prepayment Premiums. The Stated Principal Balance
of each Mortgage Loan as of the related Cut-off Date is determined after
application of payments of principal due on or before the related Cut-off
Date whether or not collected together with any unscheduled principal
prepayments collected prior to the related Cut-off Date, provided, however,
that payments of scheduled principal and interest prepaid for a Due Date
beyond the Cut-off Date shall not be applied to the principal balance as of
the Cut-off Date. Such prepaid amounts (minus interest at the Servicing Fee
Rate) shall be the property of the Purchaser. The Company shall deposit any
such prepaid amounts into the Custodial Account for the benefit of the
Purchaser.
(c) Possession of Mortgage Files; Maintenance of Servicing Files.
The contents of each Servicing File are and shall be held in trust by
the Company for the benefit of the Purchaser as the owner thereof.
Possession of each Servicing File by the Company is at the will of the
Purchaser for the sole purpose of servicing the related Mortgage Loan, and
such retention and possession by the Company is in a custodial capacity
only. Upon the sale of the Mortgage Loans the ownership of each Mortgage
Note, the related Mortgage and the related Mortgage File and Servicing File
15
shall vest immediately in the Purchaser, and the ownership of all records
and documents with respect to the related Mortgage Loan prepared by or
which come into the possession of the Company shall vest immediately in the
Purchaser and shall be retained and maintained by the Company, in trust, at
the will of the Purchaser and only in such custodial capacity. The Company
shall release its custody of the contents of any Servicing File only in
accordance with written instructions from the Purchaser, unless such
release is required as incidental to the Company's servicing of the
Mortgage Loans or is in connection with a repurchase of any Mortgage Loan
pursuant to Section 3.03 or 6.02.
Section 2.02. Books and Records; Transfers of Mortgage Loans.
From and after the sale of the Mortgage Loans to the Purchaser all rights
arising out of the Mortgage Loans, including, but not limited to, all funds
received on or in connection with the Mortgage Loans, shall be received and held
by the Company in trust for the benefit of the Purchaser as owner of the
Mortgage Loans, and the Company, if applicable, shall retain record title to the
related Mortgages for the sole purpose of facilitating the servicing and the
supervision of the servicing of the Mortgage Loans.
The sale of each Mortgage Loan shall be reflected on the Company's balance
sheet and other financial statements, tax returns and business records as a sale
of assets by the Company. The Company shall be responsible for maintaining, and
shall maintain, a complete set of books and records for each Mortgage Loan,
which shall be marked clearly to reflect the ownership of each Mortgage Loan by
the Purchaser. In particular, the Company shall maintain in its possession,
available for inspection by the Purchaser, or its designee, and shall deliver to
the Purchaser upon demand, evidence of compliance with all federal, state and
local laws, rules and regulations, and requirements of Xxxxxx Mae or Xxxxxxx
Mac, including but not limited to documentation as to the method used in
determining the applicability of the provisions of the Flood Disaster Protection
Act of 1973, as amended, to the Mortgaged Property, documentation evidencing
insurance coverage and periodic inspection reports as required by Section 4.13.
To the extent that original documents are not required for purposes of
realization of Liquidation Proceeds or Insurance Proceeds, documents maintained
by the Company may be in the form of microfilm or microfiche or such other
reliable means of recreating original documents, including but not limited to,
optical imagery techniques.
The Company shall maintain with respect to each Mortgage Loan and shall
make available for inspection by the Purchaser or its designee the related
Servicing File during the time the Purchaser retains ownership of a Mortgage
Loan and thereafter in accordance with applicable laws and regulations.
The Company shall keep at its servicing office books and records in which,
subject to such reasonable regulations as it may prescribe, the Company shall
note transfers of Mortgage Loans. No transfer of a Mortgage Loan may be made
unless such transfer is in compliance with the terms hereof. For the purposes of
this Agreement, the Company shall be under no obligation to deal with any person
with respect to this Agreement or the Mortgage Loans unless the books and
records show such person as the owner of the Mortgage Loan. The Purchaser may,
subject to the terms of this Agreement, sell and transfer one or more of the
Mortgage Loans. The
16
Purchaser shall advise the Company of any such transfer. Upon receipt of notice
of the transfer, the Company shall xxxx its books and records to reflect the
ownership of the Mortgage Loans of such assignee, and shall release the previous
Purchaser from its obligations hereunder with respect to the Mortgage Loans sold
or transferred. If the Company receives notification of a transfer less than
five (5) Business Days before the last calendar day of the month, the Company's
duties to remit and report as required by Article V shall begin with the next
Due Period.
Section 2.03. Custodial Agreement; Delivery of Documents.
Pursuant to the related Custodial Agreement the Company will, with respect
to each Mortgage Loan, deliver and release the Mortgage Loan Documents to the
Custodian at least five (5) Business Days prior to the related Closing Date. In
addition, in connection with the assignment of any MERS Designated Mortgage
Loan, the Company agrees that on or prior to each Closing Date it will cause, at
its own expense, the MERS System to indicate that the related Mortgage Loans
have been assigned by the Company to the Purchaser in accordance with this
Agreement by entering in the MERS System the information required by the MERS
System to identify the Purchaser as owner of such Mortgage Loans. The Company
further agrees that it will not alter the information referenced in this
paragraph with respect to any Mortgage Loan during the term of this Agreement
unless and until such Mortgage Loan is repurchased in accordance with the terms
of this Agreement.
The Custodian shall be required to certify its receipt of the Mortgage Loan
Documents required to be delivered pursuant to the Custodial Agreement prior to
the related Closing Date, as evidenced by the initial certification of the
Custodian in the form annexed to the Custodial Agreement. The Company shall be
responsible for recording the Assignments of Mortgage, if necessary, in
accordance with Accepted Servicing Practices and this Agreement. The Purchaser
shall be responsible for the initial and on-going fees and expenses of the
Custodian.
All recording fees and other costs associated with the recording of
Assignments of Mortgage and other relevant documents to the Purchaser or its
designee will be borne by the Company. For Mortgage Loans not registered under
the MERS System, if the Purchaser requests that the related Assignments of
Mortgage be recorded, the Company shall cause such Assignments of Mortgage which
were delivered in blank to be completed and to be recorded. The Company shall be
required to deliver such Assignments of Mortgage for recording within thirty
(30) days of the date on which the Company is notified that recording will be
required pursuant to this Section 2.03. The Company shall furnish the Custodian
with a copy of each Assignment of Mortgage submitted for recording. In the event
that any such Assignment is lost or returned unrecorded because of a defect
therein, the Company shall promptly have a substitute Assignment of Mortgage
prepared or have such defect cured, as the case may be, and thereafter cause
such Assignment of Mortgage to be duly recorded.
Except as otherwise provided in this Section 2.03, upon discovery or
receipt of notice of any materially defective Mortgage Loan Document, or that a
Mortgage Loan Document is missing, the Company shall have ninety (90) days to
cure such defect or deliver such missing document to the Custodian. Any Mortgage
that is not executed as required or does not strictly comply with all legal
requirements for recording shall be deemed to be materially defective. If
17
the Company does not cure such defect or deliver such missing document within
such time period, the Company shall either repurchase or substitute for such
Mortgage Loan in accordance with Section 3.03.
The Company shall forward to the Custodian original documents evidencing an
assumption, modification, consolidation or extension of any Mortgage Loan
entered into in accordance with Section 4.01 or 6.01 within one week of their
execution, provided, however, that the Company shall provide the Custodian with
a certified true copy of any such document submitted for recordation within ten
(10) days of its execution, and shall provide the original of any document
submitted for recordation or a copy of such document certified by the
appropriate public recording office to be a true and complete copy of the
original within ten (10) days of its receipt from the public recording office.
If the original or a copy certified by the appropriate recording office of
any document submitted for recordation to the appropriate public recording
office is not so delivered to the Custodian 180 days following the related
Closing Date, and if the Company does not cure such failure within thirty (30)
days after receipt of written notification of such failure from the Purchaser,
the related Mortgage Loan shall, upon the request of the Purchaser, be
repurchased by the Company at a price and in the manner specified in Section
3.03.
In the event the public recording office is delayed in returning any
original document, the Company shall deliver to the Custodian within 180 days of
its submission for recordation, a copy of such document and an Officer's
Certificate, which shall (i) identify the recorded document; (ii) state that the
recorded document has not been delivered to the Custodian due solely to a delay
by the public recording office, (iii) state the amount of time generally
required by the applicable recording office to record and return a document
submitted for recordation, and (iv) specify the date the applicable recorded
document will be delivered to the Custodian. The Company will be required to
deliver the document to the Custodian by the date specified in (iv) above. An
extension of the date specified in (iv) above may be requested from the
Purchaser, which consent shall not be unreasonably withheld. However, if the
Company cannot deliver such original or clerk-certified copy of any document
submitted for recordation to the appropriate public recording office within 365
days following the related Closing Date, the Company shall repurchase the
related Mortgage Loan at the price and in the manner specified in Section 3.03,
within thirty (30) days after receipt of written notification of such failure
from the Purchaser.
In addition to any rights granted to the Purchaser hereunder to underwrite
the Mortgage Loans and review the Mortgage Loan Documents prior to the Closing
Date, the Purchaser shall be entitled to conduct a due diligence review of the
Mortgage Files in accordance with the timetable and any additional terms and
conditions set forth in the Purchase Price and Terms Letter. Such underwriting
by the Purchaser or its designee shall not impair or diminish the rights of the
Purchaser or any of its successors under this Agreement with respect to a breach
of the representations and warranties contained in this Agreement. The fact that
the Purchaser or its designee has conducted or has failed to conduct any partial
or complete examination of the Mortgage Files shall not affect the Purchaser's
or any of its successors' rights to demand repurchase or other relief or remedy
provided for in this Agreement.
18
Section 2.04. Quality Control Procedures.
The Company shall have an internal quality control program that verifies,
on a regular basis, the existence and accuracy of the legal documents, credit
documents, property appraisals, and underwriting decisions. The program shall
include evaluating and monitoring the overall quality of the Company's loan
production and the servicing activities of the Company in accordance with
industry standards. The Company shall make available upon request of the
Purchaser information regarding its quality control program.
Section 2.05. Closing Conditions.
The closing for the purchase and sale of each Mortgage Loan Package shall
take place on the respective Closing Date. The closing shall be either by
telephone, confirmed by letter or wire as the parties shall agree, or conducted
in person, at such place as the parties may agree.
The closing for each Mortgage Loan Package shall be subject to the
satisfaction of each of the following conditions:
(a) with respect to the Purchaser's obligations to close:
(i) the Company shall have delivered to the Purchaser and the
Custodian the related Mortgage Loan Schedule and an electronic data
file containing information on a loan-level basis;
(ii) all of the representations and warranties of the Company
under this Agreement shall be true and correct as of the related
Closing Date (or, with respect to Section 3.02, such other date
specified therein) in all material respects and no default shall have
occurred hereunder which, with notice or the passage of time or both,
would constitute an Event of Default hereunder;
(iii) the Purchaser and its counsel shall have received an
opinion from the Company's counsel, in form and substance satisfactory
to the Purchaser (with respect to the initial closing only);
(iv) the Purchaser shall have received from the Custodian an
initial certification with respect to its receipt of the Mortgage Loan
Documents for the related Mortgage Loans;
(v) the Purchaser shall have received originals of the related
Memorandum of Sale, the related Purchase Price and Terms Letter and a
funding memorandum setting forth the Purchase Price(s), and the
accrued interest thereon, for the Mortgage Loan Package, in each case
executed on behalf of the Company;
(vi) no Material Adverse Change or Market Change Event shall have
occurred since the date of the Purchase Price and Terms Letter;
(vii) all other terms and conditions of this Agreement, the
related Memorandum of Sale and the related Purchase Price and Terms
Letter to be
19
satisfied by the Company shall have been complied with in all material
respects; and
(b) with respect to the Company's obligations to close:
(i) the Company shall have received a copy of the initial
certification of the Custodian with respect to its receipt of the
Mortgage Loan Documents for the related Mortgage Loans;
(ii) the Company has received originals of the related Memorandum
of Sale, the related Purchase Price and Terms Letter and a funding
memorandum setting forth the Purchase Price(s), and accrued interest
thereon, for the Mortgage Loan Package, in each case executed on
behalf of the Purchaser;
(iii) no Material Adverse Change or Market Change Event shall
have occurred since the date of the Purchase Price and Terms Letter;
and
(iv) all terms and conditions of this Agreement, the related
Memorandum of Sale and the related Purchase Price and Terms Letter to
be satisfied by the Purchaser shall have been materially complied
with.
Upon satisfaction of the foregoing conditions, the Purchaser shall pay to
the Company on such Closing Date the Purchase Price for the related Mortgage
Loan Package, including accrued interest pursuant to Section 2.01 of this
Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES REMEDIES AND BREACH
Section 3.01. Company Representations and Warranties.
The Company hereby represents and warrants to the Purchaser that, as of the
related Closing Date:
(a) Due Organization and Authority.
The Company is a federally insured savings bank duly organized,
validly existing and in good standing under the laws of the United States
and has all licenses necessary to carry on its business as now being
conducted and is licensed, qualified and in good standing in each state
where a Mortgaged Property is located if the laws of such state require
licensing or qualification in order to conduct business of the type
conducted by the Company, and in any event the Company is in compliance
with the laws of any such state to the extent necessary to ensure the
enforceability of the related Mortgage Loan and the servicing of such
Mortgage Loan in accordance with the terms of this Agreement; the Company
has the full corporate power and authority to execute and deliver this
Agreement and to perform in accordance herewith; the execution, delivery
and performance of this Agreement (including all instruments of transfer to
be delivered pursuant to this Agreement) by the Company and the
consummation of the transactions
20
contemplated hereby have been duly and validly authorized; this Agreement
evidences the valid, binding and enforceable obligation of the Company; and
all requisite corporate action has been taken by the Company to make this
Agreement valid and binding upon the Company in accordance with its terms;
(b) Ordinary Course of Business.
The consummation of the transactions contemplated by this Agreement
are in the ordinary course of business of the Company, who is in the
business of selling and servicing loans, and the transfer, assignment and
conveyance of the Mortgage Notes and the Mortgages by the Company pursuant
to this Agreement are not subject to the bulk transfer or any similar
statutory provisions in effect in any applicable jurisdiction;
(c) No Conflicts.
Neither the execution and delivery of this Agreement, the acquisition
of the Mortgage Loans by the Company, the sale of the Mortgage Loans to the
Purchaser or the transactions contemplated hereby, nor the fulfillment of
or compliance with the terms and conditions of this Agreement will conflict
with or result in a breach of any of the terms, articles of incorporation
or by-laws or any legal restriction or any agreement or instrument to which
the Company is now a party or by which it is bound, or constitute a default
or result in the violation of any law, rule, regulation, order, judgment or
decree to which the Company or its property is subject, or impair the
ability of the Purchaser to realize on the Mortgage Loans, or impair the
value of the Mortgage Loans;
(d) Ability to Service.
The Company is an approved seller/servicer of conventional residential
mortgage loans for Xxxxxx Xxx or Xxxxxxx Mac, with the facilities,
procedures, and experienced personnel necessary for the sound servicing of
mortgage loans of the same type as the Mortgage Loans and no event has
occurred, including but not limited to a change in insurance coverage,
which would make the Company unable to comply with Xxxxxx Mae or Xxxxxxx
Mac eligibility requirements or which would require notification to either
Xxxxxx Mae or Xxxxxxx Mac;
(e) Reasonable Servicing Fee; Fair Consideration.
The Company acknowledges and agrees that the Servicing Fee represents
reasonable compensation for performing such services and that the entire
Servicing Fee shall be treated by the Company, for accounting and tax
purposes, as compensation for the servicing and administration of the
Mortgage Loans pursuant to this Agreement. The consideration received by
the Company upon the sale of the Mortgage Loans under this Agreement shall
constitute fair consideration and reasonably equivalent value for the
Mortgage Loans;
21
(f) Ability to Perform; Solvency.
The Company does not believe, nor does it have any reason or cause to
believe, that it cannot perform each and every covenant contained in this
Agreement. The Company is solvent and the sale of the Mortgage Loans will
not cause the Company to become insolvent. The sale of the Mortgage Loans
is not undertaken to hinder, delay or defraud any of the Company's
creditors;
(g) No Litigation Pending.
There is no action, suit, proceeding or investigation pending or to
its knowledge threatened against the Company which, either in any one
instance or in the aggregate, may result in any material adverse change in
the business, operations, financial condition, properties or assets of the
Company, or in any material impairment of the right or ability of the
Company to carry on its business substantially as now conducted, or in any
material liability on the part of the Company, or which would draw into
question the validity of this Agreement or the Mortgage Loans or of any
action taken or to be contemplated herein, or which would be likely to
impair materially the ability of the Company to perform under the terms of
this Agreement;
(h) No Consent Required.
No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by the Company of or compliance by the Company with this
Agreement or the sale of the Mortgage Loans as evidenced by the
consummation of the transactions contemplated by this Agreement, or if
required, such consent, approval, authorization or order has been obtained
prior to the related Closing Date;
(i) Selection Process.
The Mortgage Loans will be selected on such Closing Date from among
the outstanding fixed and adjustable rate one- to four-family mortgage
loans in the Company's portfolio at such Closing Date as to which the
representations and warranties set forth in Section 3.02 could be made and
such selection will not be made in a manner so as to affect adversely the
interests of the Purchaser;
(j) No Untrue Information.
Neither this Agreement nor any statement, report or other document
furnished by or on behalf of the Company contains any untrue statement of
material fact or omits to state a material fact necessary to make the
statements contained therein not misleading;
(k) Sale Treatment.
The Company has determined that the disposition of the Mortgage Loans
pursuant to this Agreement will be afforded sale treatment for accounting
and tax purposes;
22
(l) No Material Change.
There has been no material adverse change in the business, operations,
financial condition or assets of the Company since the date of the
Company's most recent financial statements;
(m) No Brokers' Fees.
The Company has not dealt with any broker, investment banker, agent or
other Person that may be entitled to any commission or compensation in the
connection with the sale of the Mortgage Loans;
(n) Anti-Money Laundering Law Compliance.
The Company has complied with all applicable anti-money laundering
laws and regulations, including without limitation the USA Patriot Act of
2001 (collectively, the "Anti-Money Laundering Laws"); the Company has
established an anti-money laundering compliance program as required by the
Anti-Money Laundering Laws, has conducted the requisite due diligence in
connection with the origination of each Mortgage Loan for purposes of the
Anti-Money Laundering Laws, including with respect to the legitimacy of the
applicable Mortgagor and the origin of the assets used by the said
Mortgagor to purchase the property in question, and maintains, and will
maintain, sufficient information to identify the applicable Mortgagor for
purposes of the Anti-Money Laundering Laws;
(o) Securities Law Compliance.
Neither the Company nor anyone acting on its behalf has offered,
transferred, pledged, sold or otherwise disposed of any Mortgage Loans, any
interest in any Mortgage Loans or any other similar security to, or
solicited any offer to buy or accept a transfer, pledge or other
disposition of any Mortgage Loans, any interest in any Mortgage Loans or
any other similar security from, or otherwise approached or negotiated with
respect to any Mortgage Loans, any interest in any Mortgage Loans or any
other similar security with, any person in any manner, or made any general
solicitation by means of general advertising or in any other manner, or
taken any other action which would constitute a distribution of the
Mortgage Loans under the Securities Act of 1933 or which would render the
disposition of any Mortgage Loans a violation of Section 5 of the 1933 Act
or require registration pursuant thereto, nor will it act, nor has it
authorized or will it authorize any person to act, in such manner with
respect to the Mortgage Loans;
(p) MERS.
The Company is in good standing, and will comply in all material
respects with the rules and procedures of MERS in connection with the
servicing of the MERS Designated Mortgage Loans. On or within two (2)
Business Days following the related Closing Date, the Company has provided
the Custodian and the Purchaser with a MERS Report reflecting the Purchaser
as the Investor on the MERS System with respect to each
23
MERS Designated Mortgage Loan and no Person as Interim Funder for each MERS
Designated Mortgage Loan; and
(q) Financial Statements.
The Company has made available to the Purchaser financial statements
as requested by the Purchaser. All such financial statements fairly present
the pertinent results of operations and changes in financial position for
each of such periods and the financial position at the end of each such
period of the Company's publicly reporting parent and its subsidiaries and
have been prepared in accordance with generally accepted accounting
principles consistently applied throughout the periods involved. There has
been no change in the business, operations, financial condition, properties
or assets of the Company since the date of the Company's financial
statements that would have a material adverse effect on its ability to
perform its obligations under this Agreement.
(r) Compliance with the FACT Act.
As of the Closing Date, the sale or transfer of each Mortgage Loan by
the Company complies with all applicable federal, state and local laws,
rules and regulations governing such sale or transfer, including without
limitation, the Fair and Accurate Transactions Act (the "FACT Act") and the
Fair Credit Reporting Act, each as may be amended from time to time, and
the Company has not received any actual or constructive notice of any
identity theft, fraud, or other misrepresentation in connection with such
Mortgage Loan or any party thereto.
Section 3.02. Representations and Warranties Regarding Individual Mortgage
Loans.
As to each Mortgage Loan, the Company hereby represents and warrants to the
Purchaser that as of the related Closing Date:
(a) Mortgage Loans as Described.
The information set forth in the Mortgage Loan Schedule annexed to the
related Memorandum of Sale and the information contained on the related
electronic data file delivered to the Purchaser is complete, true and
correct;
(b) Payments Current.
All payments required to be made prior to the related Cut-off Date for
the Mortgage Loan under the terms of the Mortgage Note have been made and
credited. No payment under any Mortgage Loan has ever been 30 days or more
delinquent. The first Monthly Payment after the related Cut-off Date shall
be made with respect to the Mortgage Loan within the month in which it is
due, all in accordance with the terms of the Mortgage Note;
24
(c) No Outstanding Charges.
There are no defaults in complying with the terms of the Mortgages,
and there are no delinquent taxes, governmental assessments, insurance
premiums, leasehold payments, ground rents, water, sewer and municipal
charges, including assessments payable in future installments or any other
charge affecting the lien priority of the related Mortgaged Property. The
Company has not advanced funds, or induced, or solicited directly or
indirectly, the payment of any amount required under the Mortgage Loan,
except for interest accruing from the date of the Mortgage Note or date of
disbursement of the Mortgage Loan proceeds, whichever is later, to the day
which precedes by one month the Due Date of the first installment of
principal and interest;
(d) Original Terms Unmodified.
The terms of the Mortgage Note and Mortgage have not been impaired,
waived, altered or modified in any respect, except by a written instrument
which has been recorded, if necessary, to protect the interests of the
Purchaser and maintain the lien priority of the Mortgage and which has been
delivered to the Custodian. The substance of any such waiver, alteration or
modification has been approved by the issuer of any related PMI Policy and
the title insurer, to the extent required by the policy, and its terms are
reflected on the Mortgage Loan Schedule. No instrument of waiver,
alteration or modification has been executed, and no Mortgagor has been
released, in whole or in part, except in connection with an assumption
agreement approved by the issuer of any related PMI Policy and the title
insurer, to the extent required by the policy, and which assumption
agreement is part of the Mortgage File delivered to the Custodian and the
terms of which are reflected on the related Mortgage Loan Schedule;
(e) No Defenses.
The Mortgage Note and the Mortgage are not subject to any right of
rescission, set-off, counterclaim or defense, including without limitation
the defense of usury, nor will the operation of any of the terms of the
Mortgage Note or the Mortgage, or the exercise of any right thereunder,
render either the Mortgage Note or the Mortgage unenforceable, in whole or
in part, or subject to any right of rescission, set-off, counterclaim or
defense, including without limitation the defense of usury, and no such
right of rescission, set-off, counterclaim or defense has been asserted
with respect thereto, and no Mortgagor was a debtor in any state or federal
bankruptcy or insolvency proceeding at the time the Mortgage Loan was
originated;
(f) No Satisfaction of Mortgage.
The Mortgage has not been satisfied, canceled, subordinated or
rescinded, in whole or in part, and the Mortgaged Property has not been
released from the lien of the Mortgage, in whole or in part, nor has any
instrument been executed that would effect any such satisfaction, release,
cancellation, subordination or rescission;
25
(g) Validity of Mortgage Documents.
The Mortgage Note and the Mortgage and related documents are genuine,
and each is the legal, valid and binding obligation of the maker thereof
enforceable in accordance with its terms. All parties to the Mortgage Note
and the Mortgage had legal capacity to enter into the Mortgage Loan and to
execute and deliver the Mortgage Note and the Mortgage, and the Mortgage
Note and the Mortgage have been duly and properly executed by such parties;
(h) No Fraud.
No fraud, error, omission, misrepresentation, negligence or similar
occurrence with respect to a Mortgage Loan has taken place on the part of
the Company, or to the best of the Company's knowledge after reasonable
inquiry, the Mortgagor, the appraiser, any builder, or any developer, or
any other party involved in the solicitation or origination of the Mortgage
Loan or in the application of any insurance in relation to such Mortgage
Loan or in connection with the sale of such Mortgage Loan to the Purchaser,
and there are no circumstances existing with respect to the Mortgage Loan
which would permit the primary mortgage guaranty insurer to deny coverage
under any insurance policy;
(i) Compliance with Applicable Laws.
All requirements of federal, state and local law including, without
limitation, usury, truth-in-lending, real estate settlement procedures,
consumer credit protection, predatory and abusive lending, equal credit
opportunity or disclosure laws applicable to the solicitation, origination
and servicing of the Mortgage Loan have been complied with, the Mortgagor
received all disclosure materials required by applicable law with respect
to the making of mortgage loans of the same type as the Mortgage Loan and,
if the Mortgage Loan is a refinanced Mortgage Loan, rescission materials
required by applicable laws, and the Company shall maintain in its
possession, available for the Purchaser's inspection, and shall deliver to
the Purchaser upon demand, evidence of compliance with all such
requirements. All inspections, licenses and certificates required to be
made or issued with respect to all occupied portions of the Mortgaged
Property and, with respect to the use and occupancy of the same, including,
but not limited to, certificates of occupancy and fire underwriting
certificates, have been made or obtained from the appropriate authorities;
(j) Fair Credit Reporting Act.
The Company has fully furnished, in accordance with the Fair Credit
Reporting Act and its implementing regulations, accurate and complete
information (i.e., favorable and unfavorable) on the related Mortgagor's
credit files to Equifax, Experian, and Trans Union Credit Information
Company (three of the credit repositories), on a monthly basis.
26
(k) Location and Type of Mortgaged Property.
The Mortgaged Property is located in the state identified in the
Mortgage Loan Schedule and consists of a contiguous parcel of real property
with a detached single family residence erected thereon, or a two- to
four-family dwelling, or an individual condominium unit in a condominium
project, or an individual unit in a planned unit development, or, in the
case of a Mortgage Loan secured by a Co-op Share, leases or occupancy
agreements. None of the Mortgaged Properties are Manufactured Homes, log
homes, mobile homes, geodesic domes or other unique property types. As of
the respective appraisal date for each Mortgaged Property, no portion of
the Mortgaged Property was being used for commercial purposes and, to the
Company's knowledge, since the date of such Appraisal, no portion of the
Mortgaged Property has been used for commercial purposes. No Mortgage Loan
finances builder inventory. If the Mortgaged Property is next to another
Mortgaged Property, such "row houses" do not, in the aggregate for all
Mortgage Loans in the Mortgage Loan Package, represent more than 1.0% of
the aggregate principal balance of such Mortgage Loans;
(l) Valid First Lien.
The Mortgage is a valid, subsisting and enforceable first lien on the
Mortgaged Property, including all buildings on the Mortgaged Property and
all installations and mechanical, electrical, plumbing, heating and air
conditioning systems located in or annexed to such buildings, and all
additions, alterations and replacements made at any time with respect to
the foregoing. The lien of the Mortgage is subject only to:
(i) the lien of current real property taxes and assessments not
yet due and payable;
(ii) covenants, conditions and restrictions, rights of way,
easements and other matters of the public record as of the date of
recording acceptable to mortgage lending institutions generally and
specifically referred to in the lender's title insurance policy
delivered to the Originator of the Mortgage Loan and (i) referred to
or otherwise considered in the Appraisal made for the Originator of
the Mortgage Loan and (ii) which do not adversely affect the Appraised
Value of the Mortgaged Property set forth in such Appraisal;
(iii) if the Mortgaged Property consists of Co-op Shares, any
lien for amounts due to the cooperative housing corporation for unpaid
assessments or charges or any lien of any assignment of rents or
maintenance expenses secured by the real property owned by the
cooperative housing corporation; and
(iv) other matters to which like properties are commonly subject
which do not individually or in the aggregate, materially interfere
with the benefits of the security intended to be provided by the
mortgage or the use, enjoyment, value or marketability of the related
Mortgaged Property.
27
Any security agreement, chattel mortgage or equivalent document
related to and delivered in connection with the Mortgage Loan establishes
and creates a valid, subsisting and enforceable first lien and first
priority security interest on the property described therein and the
Company has full right to sell and assign the same to the Purchaser;
(m) Full Disbursement of Proceeds.
The proceeds of the Mortgage Loan have been fully disbursed to or for
the account of the Mortgagor, and there is no requirement for future
advances thereunder. Any and all requirements as to completion of any
on-site or off-site improvements and any and all requirements as to
disbursements of escrow funds for such improvements have been complied
with. All costs, fees and expenses incurred in making or closing the
Mortgage Loan and the recording of the Mortgage were paid, and the
Mortgagor is not entitled to any refund of any amounts paid or due under
the Mortgage Note or Mortgage;
(n) Consolidation of Future Advances.
Any future advances made prior to the related Cut-off Date have been
consolidated with the outstanding principal amount secured by the Mortgage,
and the secured principal amount, as consolidated, bears a single interest
rate and single repayment term reflected on the Mortgage Note. The lien of
the Mortgage securing the consolidated principal amount is expressly
insured as having first lien priority by a title insurance policy, an
endorsement to the policy insuring the mortgagee's consolidated interest or
by other title evidence acceptable to Xxxxxx Mae or Xxxxxxx Mac; the
consolidated principal amount does not exceed the original principal amount
of the Mortgage Loan; the Company shall not make future advances after the
related Cut-off Date;
(o) Ownership.
The Company is the sole owner of record and holder of the Mortgage
Loan, and the related Mortgage Note and the Mortgage are not assigned or
pledged, and the Company has good and marketable title thereto and has full
right and authority to transfer and sell the Mortgage Loan to the
Purchaser. The Company is transferring the Mortgage Loan free and clear of
any and all encumbrances, liens, pledges, equities, participation
interests, claims, agreements with other parties to sell or otherwise
transfer the Mortgage Loan, charges or security interests of any nature
encumbering such Mortgage Loan;
(p) Origination/Doing Business.
The Mortgage Loan was originated by a savings and loan association, a
savings bank, a commercial bank, a credit union, an insurance company, or
similar institution that is supervised and examined by a federal or state
authority or by a mortgagee approved by the Secretary of Housing and Urban
Development pursuant to Sections 203 and 211 of the National Housing Act.
All parties which have had any interest in the Mortgage Loan, whether as
mortgagee, assignee, pledgee or otherwise, are (or, during the period in
which
28
they held and disposed of such interest, were) (1) in compliance with any
and all applicable licensing requirements of the laws of the state wherein
the Mortgaged Property is located, and (2) either (a) organized under the
laws of such state, (b) qualified to do business in such state, (c) federal
savings and loan associations or national banks having principal offices in
such state, or (d) not doing business in such state;
(q) LTV, PMI Policy.
All provisions of any PMI Policy have been and are being complied
with, such policy is in full force and effect, and all premiums due
thereunder have been paid. The insurer under such PMI Policy is a Qualified
Insurer that has a claims paying ability acceptable to Xxxxxx Mae or
Xxxxxxx Mac. Any Mortgage Loan subject to a PMI Policy obligates the
Mortgagor thereunder to maintain the PMI Policy and to pay all premiums and
charges in connection therewith. The Mortgage Interest Rate for the
Mortgage Loan as set forth on the Mortgage Loan Schedule is net of any such
insurance premium;
(r) Title Insurance.
The Mortgage Loan is covered by an ALTA lender's title insurance
policy, acceptable to Xxxxxx Xxx or Xxxxxxx Mac, or other generally
acceptable form of policy of insurance acceptable to Xxxxxx Mae or Xxxxxxx
Mac, issued by a title insurer acceptable to Xxxxxx Mae or Xxxxxxx Mac and
qualified to do business in the jurisdiction where the Mortgaged Property
is located, insuring the Company, its successors and assigns, as to the
first priority lien of the Mortgage in the original principal amount of the
Mortgage Loan, subject only to the exceptions contained in clauses (1),
(2), (3) and (4) of Paragraph (m) of this Section 3.02. For each Adjustable
Rate Mortgage Loan, such policy shall include an adjustable rate mortgage
endorsement and shall insure the Company, its successors and assigns,
against any loss by reason of the invalidity or unenforceability of the
lien resulting from the provisions of the Mortgage providing for adjustment
to the Mortgage Interest Rate or Monthly Payment. Additionally, such
lender's title insurance policy affirmatively insures ingress and egress,
and against encroachments by or upon the Mortgaged Property or any interest
therein. Where required by state law or regulation, the Mortgagor has been
given the opportunity to choose the carrier of such lender's title
insurance policy. The Company, its successors and assigns, are the sole
insureds of such lender's title insurance policy for each Mortgage Loan,
and such lender's title insurance policy is valid and remains in full force
and effect and will be in full force and effect upon the sale of the
Mortgage Loan to the Purchaser. No claims have been made under such
lender's title insurance policy, and no prior holder of the Mortgage,
including the Company, has done, by act or omission, anything which would
impair the coverage of such lender's title insurance policy. In connection
with the issuance of such lender's title insurance policy, no unlawful fee,
commission, kickback or other unlawful compensation or value of any kind
has been or will be received, retained or realized by any attorney, firm or
other person or entity, and no such unlawful items have been received,
retained or realized by the Company;
29
(s) No Defaults.
There is no default, breach, violation or event of acceleration
existing under the Mortgage or the Mortgage Note and no event which, with
the passage of time or with notice and the expiration of any grace or cure
period, would constitute a default, breach, violation or event of
acceleration, and neither the Company nor its predecessors have waived any
default, breach, violation or event of acceleration;
(t) No Mechanics' Liens.
There are no mechanics' or similar liens or claims which have been
filed for work, labor or material (and no rights are outstanding that under
the law could give rise to such liens) affecting the related Mortgaged
Property which are or may be liens prior to, or equal or coordinate with,
the lien of the related Mortgage;
(u) Location of Improvements; No Encroachments.
All improvements which were considered in determining the Appraised
Value of the Mortgaged Property lay wholly within the boundaries and
building restriction lines of the Mortgaged Property and no improvements on
adjoining properties encroach upon the Mortgaged Property. No improvement
located on or being part of the Mortgaged Property is in violation of any
applicable zoning law or regulation;
(v) Payment Terms.
Principal payments commenced no more than 60 days after the funds were
disbursed to the Mortgagor in connection with the Mortgage Loan. The
Mortgage Loans have an original term to maturity of not more than 30 years,
with interest payable in arrears on the Due Date set forth on the related
Mortgage Loan Schedule. As to each Adjustable Rate Mortgage Loan on each
applicable Adjustment Date, the Mortgage Interest Rate has been or will be
adjusted to equal the sum of the Index plus the applicable Gross Margin,
rounded up or down to the nearest multiple of 0.125% indicated by the
Mortgage Note; provided that the Mortgage Interest Rate has not increased
or decreased and will not increase or decrease by more than the Periodic
Interest Rate Cap on any Adjustment Date, and has not, nor will it in any
event, exceed the maximum Mortgage Interest Rate or be lower than the
minimum Mortgage Interest Rate listed on the Mortgage Loan Schedule for
such Mortgage Loan. As to each Adjustable Rate Mortgage Loan, each Mortgage
Note requires a monthly payment which is sufficient, during the period
prior to the first adjustment to the Mortgage Interest Rate, to fully
amortize the outstanding principal balance as of the first day of such
period over the then remaining term of such Mortgage Note and to pay
interest at the related Mortgage Interest Rate. As to each Adjustable Rate
Mortgage Loan, if the related Mortgage Interest Rate changes on an
Adjustment Date, the then outstanding principal balance will be reamortized
over the remaining life of such Mortgage Loan. No Mortgage Loan contains
terms or provisions which would result in Negative Amortization;
30
(w) Customary Provisions.
The Mortgage and related Mortgage Note contain customary and
enforceable provisions such as to render the rights and remedies of the
holder thereof adequate for the realization against the Mortgaged Property
of the benefits of the security provided thereby, including, (i) in the
case of a Mortgage designated as a deed of trust, by trustee's sale, and
(ii) otherwise by judicial foreclosure. There is no homestead or other
exemption available to a Mortgagor which would interfere with the right to
sell the Mortgaged Property at a trustee's sale or the right to foreclose
the Mortgage;
(x) Occupancy of the Mortgaged Property.
As of the date of origination, the Mortgaged Property was lawfully
occupied under applicable law and to the best of the Company's knowledge,
the Mortgaged Property is lawfully occupied as of the Closing Date;
(y) No Additional Collateral.
The Mortgage Note is not and has not been secured by any collateral,
pledged account or other security except the lien of the corresponding
Mortgage and the security interest of any applicable security agreement or
chattel mortgage referred to in Paragraph (m) above;
(z) Deeds of Trust.
In the event the Mortgage constitutes a deed of trust, a trustee, duly
qualified under applicable law to serve as such, has been properly
designated and currently so serves and is named in the Mortgage, and no
fees or expenses are or will become payable by the Mortgagee to the trustee
under the deed of trust, except in connection with a trustee's sale after
default by the Mortgagor;
(aa) Acceptable Investment.
The Company has no knowledge of any circumstances or conditions with
respect to the Mortgage Loan, the Mortgaged Property, the Mortgagor or the
Mortgagor's credit standing that can reasonably be expected to cause
private institutional investors to regard the Mortgage Loan as an
unacceptable investment, cause the Mortgage Loan to become delinquent, or
adversely affect the value or marketability of the Mortgage Loan;
(bb) Transfer of Mortgage Loans.
With respect to each Mortgage that is not recorded in the name of MERS
or its designee, the Assignment of Mortgage, upon the insertion of the name
of the assignee and recording information, is in recordable form (other
than the name of the assignee if in blank) and is acceptable for recording
under the laws of the jurisdiction in which the related Mortgaged Property
is located;
31
(cc) Mortgaged Property Undamaged.
The Mortgaged Property is in good repair and undamaged by waste, fire,
earthquake or earth movement, windstorm, flood, tornado or other casualty
so as to affect adversely the value of the Mortgaged Property as security
for the Mortgage Loan or the use for which the premises were intended;
(dd) Servicing and Collection Practices; Escrow Deposits.
The origination, servicing and collection practices used with respect
to the Mortgage Loan have been in accordance with Accepted Servicing
Practices and the terms of the Mortgage Note and have been in all material
respects legal and proper. All escrow deposits and Escrow Payments, if any,
are in the possession of, or under the control of, Seller and have been
collected and handled in full compliance with the Real Estate Settlement
Procedures Act ("RESPA") and other state and federal laws. No escrow
deposits or Escrow Payments or other charges or payments due the Company
have been capitalized under the Mortgage Note;
(ee) No Condemnation.
There is no proceeding pending or to the best of the Company's
knowledge threatened for the total or partial condemnation of the related
Mortgaged Property;
(ff) The Appraisal.
The Mortgage File contains an Appraisal of the related Mortgaged
Property in a form acceptable to Xxxxxx Xxx or Xxxxxxx Mac. The appraisal
was made and signed, prior to the approval of the Mortgage Loan
application, by a Qualified Appraiser;
(gg) Insurance.
All buildings on the Mortgaged Property are insured by an insurer
generally acceptable to prudent mortgage lending institutions (and to
Xxxxxx Mae or Xxxxxxx Mac) against loss by fire and such hazards as are
covered under a standard extended coverage endorsement and such other
hazards as are customary in the area where the Mortgaged Property is
located pursuant to insurance policies conforming to Accepted Servicing
Practices and the requirements of Section 4.10, in an amount which is not
less than the lesser of 100% of the insurable value of the Mortgaged
Property and the outstanding principal balance of the Mortgage Loan, but in
no event less than the minimum amount necessary to fully compensate for any
damage or loss on a replacement cost basis. If the Mortgaged Property is a
condominium unit, it is included under the coverage afforded by a blanket
policy for the project. If the improvements on the Mortgaged Property are
in an area identified in the Federal Register by the Federal Emergency
Management Agency as having special flood hazards, then a flood insurance
policy meeting the requirements of the current guidelines of the Federal
Insurance Administration is in effect with a generally acceptable insurance
carrier and such policy conforms to the requirements of Xxxxxx Mae or
Xxxxxxx Mac. Such flood insurance policy is in an amount representing
32
coverage not less than the least of (a) the outstanding principal balance
of the Mortgage Loan, (b) the full insurable value and (c) the maximum
amount of insurance which was available under the Flood Disaster Protection
Act of 1973, as amended. All individual insurance policies contain a
standard mortgagee clause naming the Company and its successors and assigns
as mortgagee, and all premiums thereon have been paid. The Mortgage
obligates the Mortgagor thereunder to maintain a hazard insurance policy at
the Mortgagor's cost and expense, and on the Mortgagor's failure to do so,
authorizes the holder of the Mortgage to obtain and maintain such insurance
at such Mortgagor's cost and expense, and to seek reimbursement therefor
from the Mortgagor. Each such insurance policy is the valid and binding
obligation of the insurer, is in full force and effect, and will be in full
force and effect and inure to the benefit of the Purchaser upon the
consummation of the transactions contemplated by this Agreement. The
Company has not acted or failed to act so as to impair the coverage of any
such insurance policy or the validity, binding effect and enforceability
thereof;
(hh) No Impairment of Insurance Coverage.
No action, inaction, or event has occurred and no state of facts
exists or has existed that has resulted or will result in the exclusion
from, denial of, or defense to coverage under any applicable hazard
insurance policy, PMI Policy or bankruptcy bond, irrespective of the cause
of such failure of coverage. In connection with the placement of any such
insurance, no commission, fee, or other compensation has been or will be
received by the Company or any designee of the Company or any corporation
which the Company or any officer, director, or employee had a financial
interest at the time of placement of such insurance.
(ii) Servicemembers Civil Relief Act.
The Mortgagor has not notified the Company, and the Company has no
knowledge of any relief requested by or provided to the Mortgagor under the
Servicemembers Civil Relief Act, as amended, or any similar state law;
(jj) Balloon Payments, Graduated Payments or Contingent Interests.
With respect to any Mortgage Loan which is identified on the Mortgage
Loan Schedule as a balloon mortgage loan (each, a "Balloon Mortgage Loan"),
the Mortgage Note is payable in Monthly Payments based on amortization
schedule not greater than thirty (30) years with a final Monthly Payment
substantially greater than the preceding Monthly Payment which is
sufficient to amortize the remaining principal balance of the Balloon
Mortgage Loan. The Mortgage Loan is not a Buydown Mortgage Loan, a
graduated payment mortgage loan and the Mortgage Loan does not have a
shared appreciation or other contingent interest feature;
(kk) No Construction Loans.
No Mortgage Loan was made in connection with (i) the construction or
rehabilitation of a Mortgaged Property or (ii) facilitating the trade-in or
exchange of a
33
Mortgaged Property other than a construction-to-permanent loan which has
converted to a permanent Mortgage Loan;
(ll) Underwriting.
Each Mortgage Loan was underwritten in accordance with the
Underwriting Guidelines in effect at the time such Mortgage Loan was
originated subject to the exception guidelines and processes included
therein; and the Mortgage Note and the Mortgage are on forms acceptable to
Xxxxxx Xxx or Xxxxxxx Mac;
(mm) Delivery of Mortgage Files.
The Mortgage Loan Documents for the related Mortgage Loans have been
delivered to the Custodian. The Company is in possession of a complete
Mortgage File for each Mortgage Loan in compliance with Exhibit B, except
for such documents the originals of which have been delivered to the
Custodian. All documents required to be included in the Mortgage File shall
be complete, executed as required and in compliance with applicable law.
With respect to each Mortgage Loan for which a lost note affidavit has been
delivered to the Custodian in place of the original Mortgage Note, the
related Mortgage Note is no longer in existence, and, if such Mortgage Loan
is subsequently in default, the enforcement of such Mortgage Loan or of the
related Mortgage by or on behalf of the Purchaser will not be affected by
the absence of the original Mortgage Note.
(nn) No Bankruptcy.
No Mortgagor was a debtor in any state or federal bankruptcy or
insolvency proceeding at the time the Mortgage Loan was originated and, to
the best of the Company's knowledge, following the date of origination of
the Mortgage Loan, the Mortgagor with respect to the Mortgage Loan was not
a debtor in any state or federal bankruptcy or insolvency proceeding, and
the Mortgaged Property has not been subject to any bankruptcy or
foreclosure proceedings;
(oo) No Violation of Environmental Laws.
The Mortgaged Property is free from any and all toxic or hazardous
substances (otherthan common household usage items) and there exists no
violation of any local, state or federal environmental law, rule or
regulation. There is no pending action or proceeding directly involving any
Mortgaged Property of which the Company is aware in which compliance with
any environmental law, rule or regulation is an issue; and to the best of
the Company's knowledge, nothing further remains to be done to satisfy in
full all requirements of each such law, rule or regulation constituting a
prerequisite to use and enjoyment of said property;
(pp) Texas Refinance Mortgage Loans.
Each Mortgage Loan originated in the state of Texas pursuant to
Article XVI, Section 50(a)(6) of the Texas Constitution has been originated
in compliance with the
34
provisions of Article XVI, Section 50(a)(6) of the Texas Constitution,
Texas Civil Statutes and the Texas Finance Code;
(qq) Conversion to Fixed Interest Rate.
No Adjustable Rate Mortgage Loan contains a provision permitting or
requiring conversion to a fixed interest rate Mortgage Loan;
(rr) The Mortgagor.
The Mortgagor is one or more natural persons and/or an Illinois land
trust or a "living trust" and such "living trust" is in compliance with
Xxxxxx Mae or Xxxxxxx Mac guidelines. In the event the Mortgagor is a
trust, the trustee of such trust is a natural person and is an obligor
under the Mortgage Note in his or her individual capacity;
(ss) Homeownership and Equity Protection Act; No High Cost Loans.
No Mortgage Loan is (a) a "high cost" loan under the Home Ownership
and Equity Protection Act of 1994 as amended, or (b) a "high cost,"
"threshold," "covered," "predatory," "abusive," or similarly defined loan,
including refinance loans, under any other applicable state, federal or
local law (or a similarly classified loan using different terminology under
a law imposing heightened regulatory scrutiny or additional legal liability
for residential mortgage loans having high interest rates, points and/or
fees), provided that any Mortgage Loan secured by a Mortgaged Property in
Illinois characterized as a "threshold" loan shall not be a "high cost"
loan unless it is characterized as "predatory" under applicable local law
or (c) a "High Cost Loan" or "Covered Loan" as defined in the S&P LEVELS
Glossary; the Company has implemented and conducted compliance procedures
to determine if each Mortgage Loan is "high-cost" home loan under the
applicable laws and performed a review of the disclosure provided to the
related Mortgagor in accordance with such laws and the related Mortgage
Note in order to determine that such Mortgage Loan, if subject to any such
law, does not violate any such law;
(tt) Georgia Mortgage Loans.
No Mortgage Loan secured by property located in Georgia and originated
on or after October 1, 2002 and prior to March 7, 2003 meets the definition
of a "home loan" under the Georgia Fair Lending Act;
(uu) Kentucky Mortgage Loans.
No Mortgage Loan secured by property located in the Commonwealth of
Kentucky and originated on or after June 24, 2003 had an original principal
amount of $200,000 or less;
35
(vv) New Jersey Mortgage Loans.
Each Mortgage Loan secured by property located within the State of New
Jersey and subject to the provisions of the New Jersey Home Ownership
Security Act of 2002 (the "NJ Act") (i) is either a purchase money mortgage
loan or a rate-term refinancing and (ii) does not meet definition of a (a)
"Covered Home Loan," except for a Mortgage Loan that is (x) a purchase
money mortgage loan and (y) neither a "High-Cost Home Loan" nor a
"Manufactured Home Loan" under the NJ Act, (b) "High-Cost Home Loan," (c)
"Home Improvement Loan" or (d) "Manufactured Housing Loan" under the NJ
Act;
(ww) New York Loans.
No Mortgage Loan is secured by property located in the State of New
York, had an original principal balance of $300,000 or less, and has a
mortgage application date on or after April 1, 2003, the terms of which
loan equal or exceed either the annual percentage rate or the points and
fees threshold for "high-cost home loans," as defined in Section 6-L of the
New York State Banking Law;
(xx) New Mexico Loans.
No Mortgage Loan secured by property located in the State of New
Mexico and originated on or after January 1, 2004 meets the definition of a
"home loan" under The Home Loan Protection Act;
(yy) Qualified Mortgages.
Each Mortgage Loan is a "qualified mortgage" within Section 860G(a)(3)
of the Code;
(zz) Pledged Asset Loans.
The Mortgage Loan is not a "pledged asset" mortgage loan;
(aaa) Leaseholds.
[If the Mortgage Loan is secured by a long-term residential lease, (i)
the lessor under the lease holds a fee simple interest in the land; (ii)
the terms of such lease expressly permit the mortgaging of the leasehold
estate, the assignment of the lease without the lessor's consent and the
acquisition by the holder of the Mortgage of the rights of the lessee upon
foreclosure or assignment in lieu of foreclosure or provide the holder of
the Mortgage with substantially similar protections; (iii) the terms of
such lease do not (a) allow the termination thereof upon the lessee's
default without the holder of the Mortgage being entitled to receive
written notice of, and opportunity to cure, such default, (b) allow the
termination of the lease in the event of damage or destruction as long as
the Mortgage is in existence, (c) prohibit the holder of the Mortgage from
being insured (or receiving proceeds of insurance) under the hazard
insurance policy or policies relating to the Mortgaged Property (d) permit
any increase in the rent other than pre-established increases set forth in
the lease, (e) the original term of such lease is not less
36
than the term of the related Mortgage; (f) the term of such lease does not
terminate earlier than five years after the maturity date of the Mortgage
Note, and (G) the Mortgaged Property is located in a jurisdiction in which
the use of leasehold estates in transferring ownership in residential
properties is a widely accepted practice;]
(bbb) Adjustments.
All of the terms of the related Mortgage Note pertaining to interest
adjustments, payment adjustments and adjustments of the outstanding
principal balance, if any, are enforceable and such adjustments on such
Mortgage Loan have been made properly and in accordance with the provisions
of such Mortgage Loan, including any required notices, and such adjustments
do not and will not affect the priority of the Mortgage lien;
(ccc) FICO Scores.
Each Mortgage Loan has a non-zero FICO score and a minimum FICO score
of 620;
(ddd) Prepayment Penalties.
All information on the Mortgage Loan Schedule and electronic data file
delivered to the Purchaser regarding the Prepayment Premium is complete and
accurate in all material respects and each Prepayment Premium is
permissible and enforceable in accordance with its terms under applicable
law. Prepayment Premiums on the Mortgage Loans are applicable to
prepayments resulting from both refinancings and sales of the related
Mortgaged Properties and the terms of such Prepayment Premiums do not
provide for a waiver or release (i.e., "holidays") during the term of the
Prepayment Premium. No Mortgage Loan originated on or after October 1, 2002
provides for the payment of a Prepayment Premium beyond the three year term
following the origination of the Mortgage Loan. No Mortgage Loan originated
prior to such date provides for the payment of a Prepayment Premium beyond
the five-year term following the origination of the Mortgage Loan. With
respect to any Mortgage Loan that contains a provision permitting
imposition of a Prepayment Premium: (i) prior to the Mortgage Loan's
origination, the Mortgagor agreed to such Prepayment Premium in exchange
for a monetary benefit, including, but not limited to, a rate or fee
reduction, (ii) prior to the Mortgage Loan's origination, the Mortgagor was
offered the choice of another mortgage product that did not require payment
of such a premium, (iii) the Prepayment Premium is disclosed to the
Mortgagor in the loan documents pursuant to applicable state and federal
law, and (iv) notwithstanding any state or federal law to the contrary, the
Company shall not impose such Prepayment Premium in any instance when the
mortgage debt is accelerated as the result of the Mortgagor's default in
making the Monthly Payments;
(eee) Interest Calculation.
Interest on each Mortgage Loan is calculated on the basis of a 360-day
year consisting of twelve 30-day months;
37
(fff) Due on Sale.
The Mortgage contains an enforceable provision, to the extent not
prohibited by federal law as of the date of such Mortgage, for the
acceleration of the payment of the unpaid principal balance of the Mortgage
Loan in the event that the Mortgaged Property is sold or transferred
without the prior written consent of the mortgagee thereunder;
(ggg) Flood Certification Contract.
The Company has obtained a life of loan, transferable flood
certification contract with an Approved Flood Policy Insurer acceptable to
Purchaser in its sole discretion for each Mortgage Loan and such contract
is assignable without penalty, premium or cost to the Purchaser;
(hhh) Single Premium Credit Life Insurance.
None of the proceeds of the Mortgage Loan were used to finance single
premium credit life insurance policies;
(iii) Tax Service Contracts.
The Company has obtained a life of loan, transferable real estate Tax
Service Contract on each Mortgage Loan with an Approved Tax Servicer
Contract Provider and such contract is assignable without penalty, premium
or cost to the Purchaser;
(jjj) No Arbitration Provisions.
With respect to any Mortgage Loan originated on or after August 1,
2004, neither the related Mortgage nor Mortgage Note requires the Mortgagor
to submit to arbitration to resolve any dispute arising thereunder or in
connection with the origination of such Mortgage Loan; and
Section 3.03. Repurchase.
It is understood and agreed that the representations and warranties set
forth in Sections 3.01 and 3.02 shall survive the sale of the Mortgage Loans to
the Purchaser and the delivery of the Mortgage Loan Documents to the Custodian
and shall inure to the benefit of the Purchaser, notwithstanding any restrictive
or qualified endorsement on any Mortgage Note or Assignment of Mortgage or the
examination or failure to examine any Mortgage File. Upon discovery by either
the Company or the Purchaser of any materially defective or missing Mortgage
Loan Document ("Defective Document") or a breach of any of the foregoing
representations and warranties that materially and adversely affects the value
of a Mortgage Loan or the interest of the Purchaser (or that materially and
adversely affects the interests of Purchaser in the related Mortgage Loan in the
case of a representation and warranty relating to a particular Mortgage Loan),
the party discovering such Defective Document or a breach shall give prompt
written notice to the other. Any such breach or Defective Document that causes a
Mortgage Loan not to be a "qualified mortgage" within the meaning of Section
860G(a)(3) of the Code shall be deemed to materially and adversely affect the
interests of the Purchaser.
38
Within sixty (60) days of the earlier of either discovery by or notice to
the Company of any Defective Document or a breach of a representation or
warranty which materially and adversely affects the value of a Mortgage Loan or
the interest of the Purchaser therein, the Company shall use its best efforts
promptly to cure such breach in all material respects and, if such Defective
Document or breach cannot be cured, the Company shall, at the Purchaser's
option, repurchase such Mortgage Loan at the Repurchase Price. In the event that
a breach shall involve any representation or warranty set forth in Section 3.01,
and such breach cannot be cured within sixty (60) days of the earlier of either
discovery by or notice to the Company of such breach, all of the Mortgage Loans
shall, at the Purchaser's option, exercised no later than sixty (60) days
following such cure period, be repurchased by the Company at the Repurchase
Price. However, if the breach or Defective Document shall involve a
representation or warranty set forth in Section 3.02 and the Company discovers
or receives notice of any such breach within ninety (90) days of the related
Closing Date, the Company shall, if the breach or Defective Document cannot be
cured, upon the mutual agreement by both parties, rather than repurchase the
Mortgage Loan as provided above, remove such Mortgage Loan (a "Deleted Mortgage
Loan") and substitute in its place a Qualified Substitute Mortgage Loan or
Loans, provided that any such substitution shall be effected not later than one
hundred twenty (120) days after the related Closing Date. Notwithstanding any of
the foregoing, if a breach or Defective Document would cause the Mortgage Loan
to be other than a "qualified mortgage," as defined in Section 860G(a)(3) of the
Code, any such repurchase or substitution must occur within forty-five (45) days
from the date the breach or Defective Document was discovered unless such breach
is cured during such period.
If the Company does not provide a Qualified Substitute Mortgage Loan, it
shall repurchase the deficient Mortgage Loan within sixty (60) days after the
written notice of the breach or Defective Document. Notwithstanding the above
sentence, within sixty (60) days after the earlier of either discovery by, or
notice to, the Company of any breach of the representations or warranties set
forth in Section 3.02 related to a predatory or abusive lending law, the Company
shall repurchase such Mortgage Loan at the Repurchase Price. Any repurchase of a
Mortgage Loan or Loans pursuant to the foregoing provisions of this Section 3.03
shall occur on a date designated by the Purchaser and shall be accomplished by
deposit in the Custodial Account of the amount of the Repurchase Price for
distribution to the Purchaser on the next scheduled Remittance Date, after
deducting therefrom any amount received in respect of such repurchased Mortgage
Loan or Loans and being held in the Custodial Account for future distribution.
At the time of repurchase or substitution, the Purchaser and the Company
shall arrange for the reassignment of the Deleted Mortgage Loan to the Company
and the delivery to the Company of any documents held by the Custodian relating
to the Deleted Mortgage Loan. In the event of a repurchase or substitution, the
Company shall, simultaneously with such reassignment, give written notice to the
Purchaser that such repurchase or substitution has taken place, amend the
related Mortgage Loan Schedule to reflect the withdrawal of the Deleted Mortgage
Loan from this Agreement, and, in the case of substitution, identify a Qualified
Substitute Mortgage Loan and amend the related Mortgage Loan Schedule to reflect
the addition of such Qualified Substitute Mortgage Loan to this Agreement. In
connection with any such substitution, the Company shall be deemed to have made
as to such Qualified Substitute Mortgage Loan the
39
representations and warranties set forth in Sections 3.01 and 3.02 except that
all such representations and warranties set forth in this Agreement shall be
deemed made as of the date of such substitution. The Company shall effect such
substitution by delivering to the Custodian for such Qualified Substitute
Mortgage Loan the documents required by Section 2.03, with the Mortgage Note
endorsed as required by Section 2.03. No substitution will be made in any
calendar month after the Determination Date for such month. The Company shall
deposit in the Custodial Account the Monthly Payment less the Servicing Fee due
on such Qualified Substitute Mortgage Loan or Loans in the month following the
date of such substitution. Monthly Payments due with respect to Qualified
Substitute Mortgage Loans in the month of substitution shall be retained by the
Company. With respect to any Deleted Mortgage Loan, distributions to the
Purchaser shall include the Monthly Payment due on any Deleted Mortgage Loan in
the month of substitution, and the Company shall thereafter be entitled to
retain all amounts subsequently received by the Company in respect of such
Deleted Mortgage Loan.
For any month in which the Company substitutes one or more Qualified
Substitute Mortgage Loans for one or more Deleted Mortgage Loans, the amount (if
any) by which the aggregate principal balance of all such Qualified Substitute
Mortgage Loans as of the date of substitution is less than the aggregate Stated
Principal Balance of all such Deleted Mortgage Loans (after application of the
principal portion of the Monthly Payments due in the month of substitution) (the
"Substitution Adjustment Amount") shall be deposited into the Custodial Account
by the Company on or before the Remittance Date in the month succeeding the
calendar month during which the related Mortgage Loan is required to be
purchased or replaced hereunder.
In addition to such repurchase or substitution obligation, the Company
shall indemnify the Purchaser and hold it harmless against any losses, damages,
penalties, fines, forfeitures, reasonable and necessary legal fees and related
costs, judgments, and other costs and expenses resulting from any claim, demand,
defense or assertion based on or grounded upon, or resulting from, a material
breach of the representations and warranties of the Company contained in this
Agreement; provided, however, that such indemnification shall not include
punitive, consequential, exemplary or special damages (other than punitive,
consequential, exemplary and special damages required to be paid by the
indemnified party under this Agreement to any Person (other than a party to this
Agreement or any of its affiliates) arising out of an action or proceeding by
such Person, which damages shall be deemed to be direct damages to the party
required to pay such punitive, consequential, exemplary or incidental damages).
It is understood and agreed that the obligations of the Company set forth in
this Section 3.03 to cure, substitute for or repurchase a defective Mortgage
Loan and to indemnify the Purchaser as provided in this Section 3.03 constitute
the sole remedies of the Purchaser respecting a breach of the foregoing
representations and warranties.
Any cause of action against the Company relating to or arising out of the
breach of any representations and warranties made in Sections 3.01 and 3.02
shall accrue as to any Mortgage Loan upon (i) discovery of such breach by the
Purchaser or notice thereof by the Company to the Purchaser, (ii) failure by the
Company to cure such breach or repurchase such Mortgage Loan as specified above,
and (iii) demand upon the Company by the Purchaser for compliance with this
Agreement.
40
In the event that any Mortgage Loan is held by a REMIC, notwithstanding any
contrary provision of this Agreement, with respect to any Mortgage Loan that is
not in default or as to which no default is imminent, the Purchaser may, in
connection with any repurchase or substitution of a Mortgage Loan pursuant to
this Section 3.03, require that the Company deliver, at the Company's expense,
an Opinion of Counsel to the effect that such repurchase or substitution will
not (i) result in the imposition of taxes on "prohibited transactions" of such
REMIC (as defined in Section 860F of the Code) or otherwise subject the REMIC to
tax, or (ii) cause the REMIC to fail to qualify as a REMIC at any time.
Section 3.04. Repurchase of Mortgage Loans With First Payment Defaults.
Unless otherwise provided in the Purchase Price and Terms Letter, if the
related Mortgagor is thirty (30) days or more delinquent with respect to a
Monthly Payment under a Mortgage Loan at any time prior to the expiration of the
Holding Period for such Mortgage Loan, the Company shall, at the Purchaser's
option, repurchase such Loan from the Purchaser in accordance with Section 3.03
hereof; provided that the Company shall not be required to repurchase such
Mortgage Loan if it can demonstrate to the Purchaser's reasonable satisfaction
within thirty (30) days of such reported delinquency that the related Mortgagor
timely made all payments required of the Mortgagor but such payment was
otherwise misapplied. In the event a Mortgagor exercises any right of recession
it may have with respect to the related Mortgage Loan that arises as a result of
an act or omission prior to the related Closing Date, the Company shall
repurchase such Mortgage Loan at the related Repurchase Price within thirty (30)
days of receiving notice of such Mortgagor's intention to rescind the Mortgage
Loan.
Section 3.05. Purchase Price Protection.
With respect to any Mortgage Loan that prepays in full at any time prior to
the expiration of the Holding Period for such Mortgage Loan, the Company shall
reimburse the Purchaser, within 30 days following the prepayment in full of such
Mortgage Loan, the amount (if any) by which the portion of the Purchase Price
paid by the Purchaser to the Company for such Mortgage Loan exceeded 100% of the
outstanding scheduled principal balance of the Mortgage Loan as of the related
Cut-off Date.
Section 3.06. Review of Mortgage Loans.
Prior to the related Closing Date, the Purchaser shall have the right to
review the Mortgage Files and obtain BPOs on the Mortgaged Properties relating
to the Mortgage Loans purchased on the related Closing Date, with the results of
such BPO reviews to be communicated to the Company. In addition, the Purchaser
shall have the right to reject any Mortgage Loan which in the Purchaser's sole
determination (i) fails to conform to the Underwriting Guidelines or Purchase
Price and Terms Letter. Any rejected Mortgage Loan shall be removed from the
terms of this Agreement. The Company shall make available all files required by
Purchaser in order to complete its review, including all CRA/HMDA required data
fields. To the extent that during the course of the Purchaser's initial review,
the Purchaser discovers that the Mortgage Loans do not otherwise meet the
Company's Underwriting Guidelines or the terms of this Agreement, the Purchaser
shall have the right to carry out additional due diligence reviews. Purchaser's
decision to increase its due diligence review or obtain additional BPO's or
other
41
property evaluations is at its sole discretion. The additional review may be for
any reason including but not limited to credit quality, property valuations, and
data integrity. Any review performed by the Purchaser prior to the related
Closing Date shall not limit the Purchaser's rights or the Company's obligations
under this section.
ARTICLE IV
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 4.01. Company to Act as Servicer.
(a) The Company, as an independent contractor, shall service and
administer the Mortgage Loans, all in accordance with the terms of this
Agreement, Accepted Servicing Practices, applicable law and the terms of
the Mortgage Notes and Mortgages. In connection with such servicing and
administration, the Company shall have full power and authority, acting
alone or through Subservicers, to do or cause to be done any and all things
in connection with such servicing and administration which the Company may
deem necessary or desirable, including, without limitation, the power and
authority (1) to execute and deliver, on behalf of the Purchaser, customary
consents or waivers and other instruments and documents, (2) to consent,
with respect to the Mortgage Loans it services, to transfers of any
Mortgaged Property and assumptions of the Mortgage Notes and related
Mortgages (but only in the manner provided in this Agreement), (3) to
collect any Insurance Proceeds and other Liquidation Proceeds relating to
the Mortgage Loans it services, and (4) to effectuate foreclosure or other
conversion of the ownership of the Mortgaged Property securing any Mortgage
Loan it services. The Servicer shall represent and protect the interests of
the Purchaser in the same manner as it protects its own interests in
mortgage loans in its own portfolio in any claim, proceeding or litigation
regarding a Mortgage Loan and shall not make or permit any modification,
waiver or amendment of any term of any Mortgage Loan, except as provided
pursuant to Section 4.22. Without limiting the generality of the foregoing,
the Company shall continue, and is hereby authorized and empowered, to
execute and deliver on behalf of itself and the Purchaser, all instruments
of satisfaction or cancellation, or of partial or full release, discharge
and all other comparable instruments, with respect to the Mortgage Loans
and with respect to the Mortgaged Properties. If reasonably required by the
Company, the Purchaser shall furnish the Company with any powers of
attorney and other documents necessary or appropriate to enable the Company
to carry out its servicing and administrative duties under this Agreement.
Section 4.02. Liquidation of Mortgage Loans.
In the event that any payment due under any Mortgage Loan and not postponed
pursuant to Section 4.01 is not paid when the same becomes due and payable, or
in the event the Mortgagor fails to perform any other covenant or obligation
under the Mortgage Loan and such failure continues beyond any applicable grace
period, the Company shall take such action as (1) the Company would take under
similar circumstances with respect to a similar mortgage loan held for its own
account for investment, (2) shall be consistent with Accepted Servicing
Practices, (3) the Company shall determine prudently to be in the best interest
of the Purchaser,
42
and (4) is consistent with any related PMI Policy. Foreclosure or comparable
proceedings shall be initiated within one hundred twenty (120) days of default
for Mortgaged Properties for which no satisfactory arrangements can be made for
collection of delinquent payments unless prevented by statutory limitations or
states whose bankruptcy laws prohibit such actions within such timeframe. The
Company shall use its best efforts to realize upon defaulted Mortgage Loans in
such manner as will maximize the receipt of principal and interest by the
Purchaser, taking into account, among other things, the timing of foreclosure
proceedings. In such connection, the Company shall from its own funds make all
necessary and proper Servicing Advances, provided, however, that the Company
shall not be required to expend its own funds in connection with any foreclosure
or towards the restoration or preservation of any Mortgaged Property, unless it
shall determine (a) that such preservation, restoration and/or foreclosure will
increase the proceeds of liquidation of the Mortgage Loan to Purchaser after
reimbursement to itself for such expenses and (b) that such expenses will be
recoverable by it either through Liquidation Proceeds (respecting which it shall
have priority for purposes of withdrawals from the Custodial Account pursuant to
Section 4.05) or through Insurance Proceeds (respecting which it shall have
similar priority).
Notwithstanding anything to the contrary contained herein, in connection
with a foreclosure or acceptance of a deed in lieu of foreclosure, in the event
the Company has reasonable cause to believe that a Mortgaged Property is
contaminated by hazardous or toxic substances or wastes, or if the Purchaser
otherwise requests an environmental inspection or review of such Mortgaged
Property, such an inspection or review is to be conducted by a qualified
inspector. The cost for such inspection or review shall be borne by the
Purchaser. Upon completion of the inspection or review, the Company shall
promptly provide the Purchaser with a written report of the environmental
inspection.
After reviewing the environmental inspection report, the Purchaser shall
determine how the Company shall proceed with respect to the Mortgaged Property.
In the event (a) the environmental inspection report indicates that the
Mortgaged Property is contaminated by hazardous or toxic substances or wastes
and (b) the Purchaser directs the Company to proceed with foreclosure or
acceptance of a deed in lieu of foreclosure, the Company shall be reimbursed for
all reasonable costs associated with such foreclosure or acceptance of a deed in
lieu of foreclosure and any related environmental clean up costs, as applicable,
from the related Liquidation Proceeds, and/or Insurance Proceeds, or if the
Liquidation Proceeds and/or Insurance Proceeds are insufficient to fully
reimburse the Company, the Company shall be entitled to be reimbursed from
amounts in the Custodial Account pursuant to Section 4.05 hereof. In the event
the Purchaser directs the Company not to proceed with foreclosure or acceptance
of a deed in lieu of foreclosure, the Company shall be reimbursed for all
Servicing Advances made with respect to the related Mortgaged Property from the
Custodial Account pursuant to Section 4.05 hereof.
Section 4.03. Collection of Mortgage Loan Payments.
Continuously from the date hereof until the principal and interest on all
Mortgage Loans are paid in full, in accordance with this Agreement and Accepted
Servicing Standards, the Company shall proceed diligently to collect all
payments due under each of the Mortgage Loans when the same shall become due and
payable and shall take special care in ascertaining and
43
estimating Escrow Payments and all other charges that will become due and
payable with respect to the Mortgage Loan and the Mortgaged Property, to the end
that the installments payable by the Mortgagors will be sufficient to pay such
charges as and when they become due and payable.
Consistent with the foregoing, the Company may in its discretion (i) waive
any late payment charge with respect to a Mortgage Loan it services and (ii)
extend the due dates for payments due on a Mortgage Note for a period not
greater than 120 days; provided, however, that the Company cannot extend the
maturity of any such Mortgage Loan past the date on which the final payment is
due on the latest maturing Mortgage Loan as of the related Cut-off Date. In the
event of any such arrangement, the Company shall make Monthly Advances on the
related Mortgage Loan in accordance with the provisions of Section 5.03 during
the scheduled period in accordance with the amortization schedule of such
Mortgage Loan without modification thereof by reason of such arrangements. The
Company shall not be required to institute or join in litigation with respect to
collection of any payment (whether under a Mortgage, Mortgage Note or otherwise
or against any public or governmental authority with respect to a taking or
condemnation) if it reasonably believes that enforcing the provision of the
Mortgage or other instrument pursuant to which such payment is required is
prohibited by applicable law.
Section 4.04. Establishment of and Deposits to Custodial Account.
The Company shall segregate and hold all funds collected and received
pursuant to a Mortgage Loan separate and apart from any of its own funds and
general assets and shall establish and maintain one or more Custodial Accounts,
titled "Indymac Bank, F.S.B., in trust for Bank of America, National Association
and/or subsequent purchasers of Mortgage Loans, and various Mortgagors - P & I."
The Custodial Account shall be established with a Qualified Depository. Upon
request of the Purchaser and within ten (10) days thereof, the Company shall
provide the Purchaser with written confirmation of the existence of such
Custodial Account. Any funds deposited in the Custodial Account shall at all
times be insured to the fullest extent allowed by applicable law. Funds
deposited in the Custodial Account may be drawn on by the Company in accordance
with Section 4.05.
The Company shall deposit in the Custodial Account within two Business Days
of Company's receipt, and retain therein, the following collections received by
the Company and payments made by the Company after the related Cut-off Date,
other than payments of principal and interest due on or before the related
Cut-off Date, or received by the Company prior to the related Cut-off Date but
allocable to a period subsequent thereto:
(i) all payments on account of principal on the Mortgage Loans,
including all Principal Prepayments (including Prepayment Premiums
paid by the Mortgagor);
(ii) all payments on account of interest on the Mortgage Loans
adjusted to the Mortgage Loan Remittance Rate;
(iii) all Liquidation Proceeds;
44
(iv) all Insurance Proceeds, including amounts required to be
deposited pursuant to Section 4.10 (other than proceeds to be held in
the Escrow Account and applied to the restoration or repair of the
Mortgaged Property or released to the Mortgagor in accordance with
Section 4.14), Section 4.11 and Section 4.15;
(v) all Condemnation Proceeds which are not applied to the
restoration or repair of the Mortgaged Property or released to the
Mortgagor in accordance with Section 4.14;
(vi) any amounts required to be deposited in the Custodial
Account pursuant to Section 4.01, 5.01, 5.03, 6.01 or 6.02;
(vii) any amounts payable in connection with the repurchase of or
substitution for any Mortgage Loan pursuant to Section 3.03;
(viii) with respect to each Principal Prepayment an amount (to be
paid by the Company out of its funds) equal to the lesser of, with
respect to all Principal prepayments received in the Principal
Prepayment period of (i) the amount which, when added to all amounts
allocable to interest received in connection with the Principal
Prepayment, equals one month's interest on the amount of principal so
prepaid at the Mortgage Loan Remittance Rate, and (ii) the aggregate
Servicing Fee for that month;
(ix) any amounts required to be deposited by the Company pursuant
to Section 4.10 in connection with the deductible clause in any
blanket hazard insurance policy; and
(x) any amounts received with respect to or related to any REO
Property and all REO Disposition Proceeds pursuant to Section 4.16.
The foregoing requirements for deposit into the Custodial Account shall be
exclusive, it being understood and agreed that, without limiting the generality
of the foregoing, payments in the nature of late payment charges, assumption
fees and other ancillary income (other than Prepayment Premiums), to the extent
permitted by Section 6.01, need not be deposited by the Company into the
Custodial Account. Any interest paid on funds deposited in the Custodial Account
by the depository institution shall accrue to the benefit of the Company and the
Company shall be entitled to retain and withdraw such interest from the
Custodial Account pursuant to Section 4.05. The Company shall maintain adequate
records with respect to all deposits and withdrawals made pursuant to this
Section 4.04 and Section 4.05. All funds required to be deposited in the
Custodial Account shall be held in trust for the Purchaser until withdrawn in
accordance with Section 4.05.
Section 4.05. Permitted Withdrawals From Custodial Account.
The Company shall, from time to time, withdraw funds from the Custodial
Account for the following purposes:
45
(i) to make payments to the Purchaser in the amounts and in the
manner provided for in Section 5.01;
(ii) to reimburse itself for Monthly Advances of the Company's
funds made pursuant to Section 5.03, the Company's right to reimburse
itself pursuant to this subclause (ii) being limited to amounts
received on the related Mortgage Loan which represent late payments of
principal and/or interest respecting which any such advance was made,
it being understood that, in the case of any such reimbursement, the
Company's right thereto shall be prior to the rights of Purchaser,
except that, where the Company is required to repurchase a Mortgage
Loan pursuant to Section 3.03 or 6.02, the Company's right to such
reimbursement shall be subsequent to the payment to the Purchaser of
the Repurchase Price pursuant to such sections and all other amounts
required to be paid to the Purchaser with respect to such Mortgage
Loan;
(iii) to reimburse itself for unreimbursed Servicing Advances,
and for any unpaid Servicing Fees, the Company's right to reimburse
itself pursuant to this subclause (iii) with respect to any Mortgage
Loan being limited to related Liquidation Proceeds, Condemnation
Proceeds, Insurance Proceeds and such other amounts as may be
collected by the Company from the Mortgagor or otherwise relating to
the Mortgage Loan, it being understood that, in the case of any such
reimbursement, the Company's right thereto shall be prior to the
rights of Purchaser, except that where the Company is required to
repurchase a Mortgage Loan pursuant to Section 3.03, 3.04 or 6.02, in
which case the Company's right to such reimbursement shall be
subsequent to the payment to the Purchaser of the Repurchase Price
pursuant to such sections and all other amounts required to be paid to
the Purchaser with respect to such Mortgage Loan;
(iv) to reimburse itself for Monthly Advances or Servicing
Advances that will not be recoverable from the Mortgagor or through
liquidation of the related Mortgage Loan (as certified by the Company
to the Purchaser in an officer's certificate);
(v) to pay itself as part of its servicing compensation interest
on funds deposited in the Custodial Account;
(vi) to reimburse itself for expenses incurred and reimbursable
to it pursuant to Section 8.01;
(vii) to pay any amount required to be paid pursuant to Section
4.16 related to any REO Property, it being understood that, in the
case of any such expenditure or withdrawal related to a particular REO
Property, the amount of such expenditure or withdrawal from the
Custodial Account shall be limited to amounts on deposit in the
Custodial Account with respect to the related REO Property;
46
(viii) to remove funds inadvertently placed in the Custodial
Account by the Company;
(ix) to transfer funds to another Qualified Depository; and
(x) to clear and terminate the Custodial Account upon the
termination of this Agreement.
In the event that the Custodial Account is interest bearing, on each
Remittance Date, the Company shall withdraw all funds from the Custodial Account
except for those amounts which, pursuant to Section 5.01, the Company is not
obligated to remit on such Remittance Date. The Company may use such withdrawn
funds only for the purposes described in this Section 4.05.
The Company shall keep and maintain separate accounting, on a Mortgage Loan
by Mortgage Loan basis, for the purpose of justifying any withdrawal from the
Custodial Account.
Section 4.06. Establishment of and Deposits to Escrow Account.
The Company shall segregate and hold all funds collected and received
pursuant to a Mortgage Loan constituting Escrow Payments separate and apart from
any of its own funds and general assets and shall establish and maintain one or
more Escrow Accounts titled, "IndyMac Bank, F.S.B., in trust for Bank of
America, National Association and/or subsequent purchasers of Residential
Mortgage Loans, and various Mortgagors - T & I." The Escrow Accounts shall be
established with a Qualified Depository, in a manner which shall provide maximum
available insurance thereunder. Upon request of the Purchaser and within ten
(10) days thereof, the Company shall provide the Purchaser with written
confirmation of the existence of such Escrow Account. Funds deposited in the
Escrow Account may be drawn on by the Company in accordance with Section 4.07.
The Company shall deposit in the Escrow Account or Accounts within two (2)
Business Days of Company's receipt, and retain therein:
(i) all Escrow Payments collected on account of the Mortgage
Loans, for the purpose of effecting timely payment of any such items
as required under the terms of this Agreement; and
(ii) all amounts representing Insurance Proceeds or Condemnation
Proceeds which are to be applied to the restoration or repair of any
Mortgaged Property.
The Company shall make withdrawals from the Escrow Account only to effect
such payments as are required under this Agreement, as set forth in Section
4.07. The Company shall be entitled to retain any interest paid on funds
deposited in the Escrow Account by the depository institution, other than
interest on escrowed funds required by law to be paid to the Mortgagor. To the
extent required by law, the Company shall pay interest on escrowed funds to the
Mortgagor notwithstanding that the Escrow Account may be non-interest bearing or
that interest paid thereon is insufficient for such purposes.
47
Section 4.07. Permitted Withdrawals From Escrow Account.
Withdrawals from the Escrow Account or Accounts may be made by the Company
only:
(i) to effect timely payments of ground rents, taxes,
assessments, water rates, mortgage insurance premiums, condominium
charges, fire and hazard insurance premiums or other items
constituting Escrow Payments for the related Mortgage;
(ii) to reimburse the Company for any Servicing Advances made by
the Company pursuant to Section 4.08 with respect to a related
Mortgage Loan, but only from amounts received on the related Mortgage
Loan which represent late collections of Escrow Payments thereunder;
(iii) to refund to any Mortgagor any funds found to be in excess
of the amounts required under the terms of the related Mortgage Loan;
(iv) for transfer to the Custodial Account for application to
reduce the principal balance of the Mortgage Loan in accordance with
the terms of the related Mortgage and Mortgage Note;
(v) for application to the restoration or repair of the Mortgaged
Property in accordance with the procedures outlined in Section 4.14;
(vi) to pay to the Company, or any Mortgagor to the extent
required by law, any interest paid on the funds deposited in the
Escrow Account;
(vii) to remove funds inadvertently placed in the Escrow Account
by the Company; and
(viii) to clear and terminate the Escrow Account on the
termination of this Agreement.
Section 4.08. Payment of Taxes, Insurance and Other Charges.
With respect to each Mortgage Loan, the Company shall maintain accurate
records reflecting the status of ground rents, taxes, assessments, water rates,
sewer rents, and other charges which are or may become a lien upon the Mortgaged
Property and the status of PMI Policy premiums and fire and hazard insurance
coverage and shall obtain, from time to time, all bills for the payment of such
charges (including renewal premiums) and shall effect payment thereof prior to
the applicable penalty or termination date, employing for such purpose deposits
of the Mortgagor in the Escrow Account which shall have been estimated and
accumulated by the Company in amounts sufficient for such purposes, as allowed
under the terms of the Mortgage. The Company assumes full responsibility for the
timely payment of all such bills and shall effect timely payment of all such
charges irrespective of each Mortgagor's faithful performance in the payment of
same of the making of the Escrow Payments, and the Company shall make advances
from its own funds to effect such payments, which advances shall constitute
Servicing Advances hereunder; provided that the Company shall be required to so
advance only
48
to the extent that the Company, in its good faith judgment, believes the
Servicing Advance to be recoverable from Insurance Proceeds or Liquidation
Proceeds or otherwise. The costs incurred by the Company, if any, in effecting
the timely payments of taxes and assessments on the Mortgaged Properties and
related insurance premiums shall not be added to the Stated Principal Balances
of the related Mortgage Loans, notwithstanding that the terms of such Mortgage
Loans so permit.
Section 4.09. Transfer of Accounts.
The Company may transfer the Custodial Account or the Escrow Account to a
different Qualified Depository from time to time; provided that the Company
shall give written notice to the Purchaser of any proposed change of the
location of either Account not later than ten (10) Business Days prior to any
change thereof.
Section 4.10. Maintenance of Hazard Insurance.
The Company shall cause to be maintained for each Mortgage Loan hazard
insurance such that all buildings upon the Mortgaged Property are insured by an
insurer acceptable to Xxxxxx Xxx or Xxxxxxx Mac against loss by fire, hazards of
extended coverage and such other hazards as are customary or required by law in
the area where the Mortgaged Property is located, in an amount which is at least
equal to the lesser of (i) the maximum insurable value of the improvements
securing such Mortgage Loan and (ii) the greater of (a) the outstanding
principal balance of the Mortgage Loan and (b) an amount such that the proceeds
thereof shall be sufficient to prevent the Mortgagor or the loss payee from
becoming a co-insurer. In the event a hazard insurance policy shall be in danger
of being terminated, or in the event the insurer shall cease to be acceptable to
Xxxxxx Mae or Xxxxxxx Mac, the Company shall notify the Purchaser and the
related Mortgagor, and shall use its best efforts, as permitted by applicable
law, to obtain from another qualified insurer a replacement hazard insurance
policy substantially and materially similar in all respects to the original
policy. In no event, however, shall a Mortgage Loan be without a hazard
insurance policy at any time, subject only to Section 4.11 hereof.
If the related Mortgaged Property is located in an area identified by the
Flood Emergency Management Agency as having special flood hazards (and such
flood insurance has been made available), the Company will cause to be
maintained a flood insurance policy meeting the requirements of the current
guidelines of the Federal Insurance Administration in effect with an insurance
carrier acceptable to Xxxxxx Mae or Xxxxxxx Mac in an amount representing
coverage equal to the least of (i) the minimum amount required, under the terms
of coverage, to compensate for any damage or loss on a replacement cost basis
(or the unpaid balance of the mortgage if replacement cost coverage is not
available for the type of building insured) and (ii) the maximum amount of
insurance which is available under the Flood Disaster Protection Act of 1973, as
amended, and (iii) the outstanding balance of the Mortgage Loan. If at any time
during the term of the Mortgage Loan, the Company determines in accordance with
applicable law and pursuant to the FEMA Guides that a Mortgaged Property is
located in a special flood hazard area and is not covered by flood insurance or
is covered in an amount less than the amount required by the Flood Disaster
Protection Act of 1973, as amended, the Company shall notify the related
Mortgagor to obtain such flood insurance coverage, and if said Mortgagor fails
to obtain the required flood insurance coverage within forty-five (45) days
after such
49
notification, the Company shall immediately force place the required flood
insurance on the Mortgagor's behalf. Any out-of-pocket expenses or advance made
by the Company on such force placed flood insurance coverage shall be deemed a
Servicing Advance.
If a Mortgage is secured by a unit in a condominium project, the Company
shall verify that the coverage required of the owner's association, including
hazard, flood, liability, and fidelity coverage, is being maintained in
accordance with then current Xxxxxx Xxx or Xxxxxxx Mac requirements, and secure
from the owner's association its agreement to notify the Company promptly of any
change in the insurance coverage or of any condemnation or casualty loss that
may have a material effect on the value of the Mortgaged Property as security.
All policies required hereunder shall name the Company as loss payee and
shall be endorsed with standard mortgagee clauses, without contribution, which
shall provide for at least thirty (30) days prior written notice of any
cancellation, reduction in amount or material change in coverage.
The Company shall not interfere with the Mortgagor's freedom of choice in
selecting either an insurance carrier or agent, provided, however, that the
Company shall not accept any such insurance policies from insurance companies
unless such companies are acceptable to Xxxxxx Mae or Xxxxxxx Mac and are
licensed to do business in the jurisdiction in which the Mortgaged Property is
located. The Company shall determine that such policies provide sufficient risk
coverage and amounts, that they insure the property owner, and that they
properly describe the property address.
Pursuant to Section 4.04, any amounts collected by the Company under any
such policies (other than amounts to be deposited in the Escrow Account and
applied to the restoration or repair of the related Mortgaged Property, or
property acquired in liquidation of the Mortgage Loan, or to be released to the
Mortgagor, in accordance with the Company's normal servicing procedures as
specified in Section 4.14) shall be deposited in the Custodial Account subject
to withdrawal pursuant to Section 4.05.
Section 4.11. Maintenance of Mortgage Impairment Insurance.
In the event that the Company shall obtain and maintain a blanket policy
insuring against losses arising from fire and hazards covered under extended
coverage on all of the Mortgage Loans, then, to the extent such policy (1) names
the Company as loss payee, (2) provides coverage in an amount equal to the
amount required pursuant to Section 4.10 without coinsurance, and (3) otherwise
complies with Accepted Servicing Practices and all other requirements of Section
4.10, it shall conclusively be deemed to have satisfied its obligations as set
forth in Section 4.10. The Company shall prepare and make any claims on the
blanket policy as deemed necessary by the Company in accordance with prudent
servicing practices. Any amounts collected by the Company under any such policy
relating to a Mortgage Loan shall be deposited in the Custodial Account subject
to withdrawal pursuant to Section 4.05. Such policy may contain a deductible
clause, in which case, in the event that there shall not have been maintained on
the related Mortgaged Property a policy complying with Section 4.10, and there
shall have been a loss which would have been covered by such policy, the Company
shall deposit in the Custodial Account at the time of such loss the amount not
otherwise payable under
50
the blanket policy because of such deductible clause, such amount to be
deposited from the Company's funds, without reimbursement therefor. Upon request
of the Purchaser, the Company shall cause to be delivered to the Purchaser a
certificate of insurance for such policy and a statement from the insurer
thereunder that such policy shall in no event be terminated or materially
modified without thirty (30) days' prior written notice to the Purchaser.
Section 4.12. Maintenance of Fidelity Bond and Errors and Omissions Insurance.
The Company shall maintain with responsible companies, at its own expense,
a blanket Fidelity Bond and an Errors and Omissions Insurance Policy, with broad
coverage on all officers, employees or other persons acting in any capacity
requiring such persons to handle funds, money, documents or papers relating to
the Mortgage Loans ("Company Employees"). Any such Fidelity Bond and Errors and
Omissions Insurance Policy shall be in the form of the Mortgage Banker's Blanket
Bond and shall protect and insure the Company against losses, including forgery,
theft, embezzlement, fraud, errors and omissions and negligent acts of such
Company Employees. Such Fidelity Bond and Errors and Omissions Insurance Policy
also shall protect and insure the Company against losses in connection with the
release or satisfaction of a Mortgage Loan without having obtained payment in
full of the indebtedness secured thereby. No provision of this Section 4.12
requiring such Fidelity Bond and Errors and Omissions Insurance Policy shall
diminish or relieve the Company from its duties and obligations as set forth in
this Agreement. The minimum coverage under any such Fidelity Bond and Errors and
Omissions Insurance Policy shall be at least equal to the amounts acceptable to
Xxxxxx Mae or Xxxxxxx Mac. Upon the request of the Purchaser, the Company shall
cause to be delivered to the Purchaser a certificate of insurance for such
Fidelity Bond and Errors and Omissions Insurance Policy.
Section 4.13. Inspections.
If any Mortgage Loan is more than ninety (90) days delinquent, the Company
immediately shall inspect the Mortgaged Property and shall conduct subsequent
inspections in accordance with Accepted Servicing Practices or as may be
required by the primary mortgage guaranty insurer. The Company shall keep a
written report of each such inspection.
Section 4.14. Restoration of Mortgaged Property.
The Company need not obtain the approval of the Purchaser prior to
releasing any Insurance Proceeds or Condemnation Proceeds to the Mortgagor to be
applied to the restoration or repair of the Mortgaged Property if such release
is in accordance with Accepted Servicing Practices. For claims greater than
$15,000, at a minimum the Company shall comply with the following conditions in
connection with any such release of Insurance Proceeds or Condemnation Proceeds:
(i) the Company shall receive satisfactory independent
verification of completion of repairs and issuance of any required
approvals with respect thereto;
51
(ii) the Company shall take all steps necessary to preserve the
priority of the lien of the Mortgage, including, but not limited to
requiring waivers with respect to mechanics' and materialmen's liens;
(iii) the Company shall verify that the Mortgage Loan is not in
default; and
(iv) pending repairs or restoration, the Company shall place the
Insurance Proceeds or Condemnation Proceeds in the Escrow Account.
If the Purchaser is named as an additional loss payee, the Company is
hereby empowered to endorse any loss draft issued in respect of such a claim in
the name of the Purchaser.
Section 4.15. Maintenance of PMI Policy; Claims.
If a Mortgage Loan has an original LTV greater than 80%, the Company shall,
without any cost to the Purchaser maintain or cause the Mortgagor to maintain in
full force and effect a PMI Policy insuring the portion over 78% until
terminated pursuant to the Homeowners Protection Act of 1998, 12 UCS Section
4901, et seq. In the event that such PMI Policy shall be terminated other than
as required by law, the Company shall obtain from another Qualified Insurer a
comparable replacement policy, with a total coverage equal to the remaining
coverage of such terminated PMI Policy. If the insurer shall cease to be a
Qualified Insurer, the Company shall determine whether recoveries under the PMI
Policy are jeopardized for reasons related to the financial condition of such
insurer, it being understood that the Company shall in no event have any
responsibility or liability for any failure to recover under the PMI Policy for
such reason. If the Company determines that recoveries are so jeopardized, it
shall notify the Purchaser and the Mortgagor, if required, and obtain from
another Qualified Insurer a replacement insurance policy. The Company shall not
take any action which would result in noncoverage under any applicable PMI
Policy of any loss which, but for the actions of the Company would have been
covered thereunder. In connection with any assumption or substitution agreement
entered into or to be entered into pursuant to Section 6.01, the Company shall
promptly notify the insurer under the related PMI Policy, if any, of such
assumption or substitution of liability in accordance with the terms of such PMI
Policy and shall take all actions which may be required by such insurer as a
condition to the continuation of coverage under such PMI Policy. If such PMI
Policy is terminated as a result of such assumption or substitution of
liability, the Company shall obtain a replacement PMI Policy as provided above.
In connection with its activities as servicer, the Company agrees to
prepare and present, on behalf of itself and the Purchaser, claims to the
insurer under any PMI Policy in a timely fashion in accordance with the terms of
such PMI Policy and, in this regard, to take such action as shall be necessary
to permit recovery under any PMI Policy respecting a defaulted Mortgage Loan.
Pursuant to Section 4.04, any amounts collected by the Company under any PMI
Policy shall be deposited in the Custodial Account, subject to withdrawal
pursuant to Section 4.05.
52
Section 4.16. Title, Management and Disposition of REO Property.
In the event that title to any Mortgaged Property is acquired in
foreclosure or by deed in lieu of foreclosure, the deed or certificate of sale
shall be taken in the name of the Purchaser, or unless the Purchaser notifies
the Company that the Purchaser is not authorized or permitted to hold title to
real property in the state where the REO Property is located, or would be
adversely affected under the "doing business" or tax laws of such state by so
holding title, in which case the deed or certificate of sale shall be taken in
the name of such Person or Persons as the Purchaser shall be direct. The Person
or Persons holding such title other than the Purchase shall acknowledge in
writing that such title is being held as nominee for the Purchaser.
The Company shall manage, conserve, protect and operate each REO Property
for the Purchaser solely for the purpose of its prompt disposition and sale.
However, the Purchaser shall have the option to manage and operate the REO
Property provided the Purchaser gives written notice of its intention to do so
within sixty (60) days after such REO Property is acquired in foreclosure or by
deed in lieu of foreclosure. The election by the Purchaser to manage the REO
Property shall not constitute a termination of any rights of the Company
pursuant to Section 11.02.
If the Purchaser does not elect to manage and operate the REO Property, the
Company shall manage, conserve, protect and operate each REO Property for the
Purchaser solely for the purpose of its prompt disposition and sale. The
Company, either itself or through an agent selected by the Company, shall
manage, conserve, protect and operate the REO Property in the same manner that
it manages, conserves, protects and operates other foreclosed property for its
own account, and in the same manner that similar property in the same locality
as the REO Property is managed. The Company shall attempt to sell the same (and
may temporarily rent the same for a period not greater than one year, except as
otherwise provided below) on such terms and conditions as the Company deems to
be in the best interest of the Purchaser.
The Company shall use its best efforts to dispose of the REO Property as
soon as possible and shall sell such REO Property in any event within three (3)
years after title has been taken to such REO Property, unless (i) a REMIC
election has not been made with respect to the arrangement under which the
Mortgage Loans and the REO Property are held, and (ii) the Company determines,
and gives an appropriate notice to the Purchaser to such effect, that a longer
period is necessary for the orderly liquidation of such REO Property. If a
period longer than three (3) years is permitted under the foregoing sentence and
is necessary to sell any REO Property, (i) the Company shall report monthly to
the Purchaser as to the progress being made in selling such REO Property and
(ii) if, with the written consent of the Purchaser, a purchase money mortgage is
taken in connection with such sale, such purchase money mortgage shall name the
Company as mortgagee, and such purchase money mortgage shall not be held
pursuant to this Agreement, but instead a separate participation agreement among
the Company and Purchaser shall be entered into with respect to such purchase
money mortgage.
The Company shall also maintain on each REO Property fire and hazard
insurance with extended coverage in amount which is at least equal to the amount
required by Xxxxxx Mae and, to the extent required and available under the Flood
Disaster Protection Act of 1973, as amended, flood insurance in the amount
required above.
53
The disposition of REO Property shall be carried out by the Company at such
price, and upon such terms and conditions, as the Company deems to be in the
best interests of the Purchaser. Notwithstanding any other provision in this
Section, no REO Property shall be marketed for less than the Appraised Value
without the prior consent of the Purchaser, and no REO Property shall be sold
for less than ninety percent (90%) of its Appraised Value without the prior
consent of the Purchaser. The proceeds of sale of the REO Property shall be
promptly deposited in the Custodial Account. As soon as practical thereafter the
expenses of such sale shall be paid and the Company shall reimburse itself for
any related unreimbursed Servicing Advances, unpaid Servicing Fees and
unreimbursed advances made pursuant to Section 5.03. On the Remittance Date
immediately following the Principal Prepayment Period in which such sale
proceeds are received the net cash proceeds of such sale remaining in the
Custodial Account shall be distributed to the Purchaser.
The Company shall withdraw from the Custodial Account funds necessary for
the proper operation management and maintenance of the REO Property, including
the cost of maintaining any hazard insurance pursuant to Section 4.11. The
Company shall make monthly distributions on each Remittance Date to the
Purchaser of the net cash flow from the REO Property (which shall equal the
revenues from such REO Property net of the expenses described in this Section
4.16 and of any reserves reasonably required from time to time to be maintained
to satisfy anticipated liabilities for such expenses).
Section 4.17. Real Estate Owned Reports.
Together with the statement furnished pursuant to Section 5.02, the Company
shall furnish to the Purchaser on or before the Remittance Date each month a
statement with respect to any REO Property covering the operation of such REO
Property for the previous month and the Company's efforts in connection with the
sale of such REO Property and any rental of such REO Property incidental to the
sale thereof for the previous month. That statement shall be accompanied by such
other information as the Purchaser shall reasonably request.
Section 4.18. Liquidation Reports.
Upon the foreclosure sale of any Mortgaged Property or the acquisition
thereof by the Company pursuant to a deed in lieu of foreclosure, the Company
shall submit to the Purchaser a liquidation report with respect to such
Mortgaged Property.
Section 4.19. Reports of Foreclosures and Abandonments of Mortgaged Property.
Following the foreclosure sale or abandonment of any Mortgaged Property,
the Company shall report such foreclosure or abandonment as required pursuant to
Section 6050J of the Code. The Company shall file information reports with
respect to the receipt of mortgage interest received in a trade or business,
reports of foreclosures and abandonments of any Mortgaged Property and
information returns relating to cancellation of indebtedness income with respect
to any Mortgaged Property as required by the Code. Such reports shall be in form
and substance sufficient to meet the reporting requirements imposed by the Code.
54
Section 4.20. [Reserved.]
Section 4.21. Notification of Adjustments.
With respect to each Mortgage Loan, the Company shall adjust the Mortgage
Interest Rate on the related Adjustment Date in compliance with the requirements
of applicable law and the related Mortgage and Mortgage Note. The Company shall
execute and deliver any and all necessary notices required under applicable law
and the terms of the related Mortgage Note and Mortgage regarding the Mortgage
Interest Rate adjustments. The Company shall promptly, upon written request,
deliver to the Purchaser such notifications along with information regarding the
applicable date of such adjustments and the methods used to calculate and
implement such adjustments. Upon the discovery by the Company or the receipt of
notice from the Purchaser that the Company has failed to adjust a Mortgage
Interest Rate in accordance with the terms of the related Mortgage Note, the
Company shall immediately deposit in the Custodial Account from its own funds
the amount of any interest loss or deferral caused the Purchaser thereby.
Section 4.22. Modifications, Waivers, Amendments and Consents.
(a) Subject to this Section 4.22, the Company may agree to any
modification, waiver, forbearance, or amendment of any term of any Mortgage
Loan without the consent of the Purchaser. All modifications, waivers,
forbearances or amendments of any Mortgage Loan shall be in writing and
shall be consistent with Accepted Servicing Practices.
(b) The Company shall not agree to enter into, and shall not enter
into, any modification, waiver, forbearance or amendment of any term of any
Mortgage Loan if such modification, waiver, forbearance, or amendment
would:
(i) affect the amount or timing of any related payment of
principal, interest or other amount payable thereunder;
(ii) in the Company's judgment, materially impair the security
for such Mortgage Loan or reduce the likelihood of timely payment of
amounts due thereon; or
(iii) otherwise constitutes a "significant modification" within
the meaning of Treasury Regulations Section 1.860G-2(b);
unless, in each case, (a) such Mortgage Loan is 90 days or more past due or (b)
the Company delivers to the Purchaser an Opinion of Counsel to the effect that
such modification, waiver, forbearance or amendment would not affect the REMIC
status of the Trust Estate and, in either case, such modification, waiver,
forbearance or amendment is reasonably likely to produce a greater recovery with
respect to such Mortgage Loan than would liquidation. Subject to Accepted
Servicing Practices, the Company may permit a forbearance for a Mortgage Loan
which, in the Company's judgment, is subject to imminent default.
55
(c) Any payment of interest, which is deferred pursuant to any
modification, waiver, forbearance or amendment permitted hereunder, shall
not, for purposes hereof, be added to the unpaid principal balance of the
related Mortgage Loan, notwithstanding that the terms of such Mortgage Loan
or such modification, waiver or amendment so permit.
(d) The Company may, as a condition to granting any request by a
Mortgagor for consent, modification, waiver, forbearance or amendment, the
granting of which is within the Company's discretion pursuant to the
Mortgage Loan and is permitted by the terms of this Agreement, require that
such Mortgagor pay to the Company, as additional servicing compensation, a
reasonable or customary fee for the additional services performed in
connection with such request, together with any related costs and expenses
incurred by the Company, which amount shall be retained by the Company as
additional servicing compensation.
(e) The Company shall notify the Purchaser, in writing, of any
modification, waiver, forbearance or amendment of any term of any Mortgage
Loan and the date thereof, and shall deliver to the Purchaser (or, at the
direction of the Purchaser, the Custodian) for deposit in the related
Mortgage File, an original counterpart of the agreement relating to such
modification, waiver, forbearance or amendment, promptly (and in any event
within ten Business Days) following the execution thereof; provided,
however, that if any such modification, waiver, forbearance or amendment is
required by applicable law to be recorded, the Company (i) shall deliver to
the Purchaser a copy thereof and (ii) shall deliver to the Purchaser such
document, with evidence of notification upon receipt thereof from the
public recording office.
(f) To the extent consistent with the terms of this Agreement, the
Company may waive (or permit a Subservicer to waive) a Prepayment Premium
only under the following circumstances: (i) such waiver relates to a
default or a reasonably foreseeable default and would, in the reasonable
judgment of the Company, maximize recovery of total proceeds taking into
account the value of such Prepayment Premium and the related Mortgage Loan,
(ii) such waiver is required under state or federal law or (iii) the
mortgage debt has been accelerated as a result of the Mortgagor's default
in making its Monthly Payments. The Company shall not waive any Prepayment
Premium unless it is waived in accordance with this Section 4.22(f).
In lieu of the remedies provided in Section 3.04, the Company shall pay the
amount of any Prepayment Premium (to the extent not collected and remitted to
the Purchaser) to the Purchaser or its assignees if (1) the representation in
Section 3.02(ggg) is breached and such breach materially and adversely affects
the interests of the Purchaser or its assigns or (2) the Company waives any
Prepayment Premium other than as permitted under this Section 4.22(f). The
Company shall pay the amount of such Prepayment Premium, for the benefit of the
Purchaser or any assignee of the Purchaser, by depositing such amount into the
Custodial Account at the time that the amount prepaid on the related Mortgage
Loan is required to be deposited into the Custodial Account.
56
Section 4.23. Disaster Recovery/Business Continuity Plan.
The Company shall establish contingency plans, recovery plans and proper
risk controls to ensure Company's continued performance under this Agreement.
The plans must be in place within thirty (30) calendar days after the date of
this Agreement and shall include, but not be limited to, testing, control
functions, accountability and corrective actions to be immediately implemented,
if necessary. The Company agrees to make summaries of the plans available to the
Purchaser or its regulators upon request.
Section 4.24. Fair Credit Reporting Act.
(a) The Company shall furnish, in accordance with the Fair Credit
Reporting Act and its implementing regulations, accurate and complete
information (i.e., favorable and unfavorable) on each Mortgagor's credit
files to Equifax, Experian, and Trans Union Credit Information Company
(three of the credit repositories), on a monthly basis.
(b) The Company agrees to transmit full-file credit reporting data for
each Mortgage Loan pursuant to Xxxxxx Xxx Guide Announcement 95-19 and for
each Mortgage Loan, the Company shall report one of the following statuses
each month: new origination, current, delinquent (30-, 60-, 90-days, etc.),
foreclosed or charged-off.
(c) The Company shall comply with Title V of the Xxxxx-Xxxxx-Xxxxxx
Act of 1999 and all applicable regulations promulgated thereunder, relating
to the Mortgage Loans and the related Mortgagors and shall provide all
required notices thereunder.
Section 4.25. HMDA Data Elements.
The Company shall provide to the Purchaser all data and information (in
form and substance acceptable to the Purchaser) required to be collected by the
originator or owner of residential mortgage loans under the Federal Home
Mortgage Disclosure Act.
ARTICLE V
PAYMENTS TO PURCHASER
Section 5.01. Remittances.
On each Remittance Date the Company shall remit by wire transfer of
immediately available funds to the Purchaser (a) all amounts deposited in the
Custodial Account as of the close of business on the Determination Date (net of
charges against or withdrawals from the Custodial Account pursuant to Section
4.05), plus (b) all amounts, if any, which the Company is obligated to
distribute pursuant to Section 5.03, minus (c) any amounts attributable to
Principal Prepayments received after the applicable Principal Prepayment Period
which amounts shall be remitted on the following Remittance Date, together with
any additional interest required to be deposited in the Custodial Account in
connection with such Principal Prepayment in accordance with Section 4.04(viii);
minus (d) any amounts attributable to Monthly Payments collected but due on a
Due Date or Dates subsequent to the first day of the month of the Remittance
Date,
57
[and minus (e) any amounts attributable to Buydown Funds being held in the
Custodial Account,] which amounts shall be remitted on the Remittance Date next
succeeding the Due Period for such amounts.
With respect to any remittance received by the Purchaser more than one (1)
Business Day after the Remittance Date on which such payment was due, the
Company shall pay to the Purchaser interest on any such late payment at an
annual rate equal to the Prime Rate, adjusted as of the date of each change,
plus three percentage points, but in no event greater than the maximum amount
permitted by applicable law. Such interest shall be deposited in the Custodial
Account by the Company on the date such late payment is made and shall cover the
period commencing with the day following the Business Day on which such payment
was due and ending with the Business Day on which such payment is made, both
inclusive. Such interest shall be remitted along with the distribution payable
on the next succeeding Remittance Date. The payment by the Company of any such
interest shall not be deemed an extension of time for payment or a waiver of any
Event of Default by the Company.
Section 5.02. Automated Servicing Systems and Statements to Purchaser.
The Company shall setup, format, maintain and transmit to the Purchaser the
Company's servicing date and other electronic data storage and transmission
systems related to the Mortgage Loans (collectively, the "Servicing Systems") in
accordance with the guidelines and requirements set forth in Exhibit J attached
hereto (the "Servicer Requirements"), and the Company shall cooperate with the
Purchaser to receive data fields from the Purchaser that are to be incorporated
in the Servicing Systems in accordance with the Servicer Requirements.
Not later than the tenth (10th) day of each month, the Company shall
furnish to the Purchaser, with respect to the preceding month, a monthly
collection report, a monthly paid in full report that summarizes Mortgage Loans
paid in full during the Due Period and a monthly trial balance report that
provides a trial balance as of the last day of the month preceding such
Remittance Date in electronic format agreed upon by the Company and the
Purchaser.
Not later than the tenth (10th) day of each month, the Company shall
furnish to the Purchaser a delinquency report and a monthly remittance advice,
including the information set forth in Exhibit J, in both a physical form and a
mutually agreeable electronic format as to the remittance on such Remittance
Date and as to the period ending on the last day of the month preceding such
Remittance Date.
Section 5.03. Monthly Advances by Company.
No later than the close of business on the Business Day preceding each
Remittance Date, the Company shall deposit in the Custodial Account from its own
funds or from amounts held for future distribution an amount equal to all
Monthly Payments (with interest adjusted to the Mortgage Loan Remittance Rate)
which were due on the Mortgage Loans during the applicable Due Period and which
were delinquent at the close of business on the related Determination Date or
which were deferred pursuant to Section 4.01. Any amounts held for future
distribution and so used shall be replaced by the Company by deposit in the
Custodial Account on or before any future Remittance Date if funds in the
Custodial Account on such Remittance Date shall be less
58
than payments to the Purchaser required to be made on such Remittance Date. The
Company's obligation to make such Monthly Advances as to any Mortgage Loan will
continue through the last Monthly Payment due prior to the payment in full of
the Mortgage Loan, or through the earlier of: (i) the last Remittance Date prior
to the Remittance Date for the distribution of all Liquidation Proceeds and
other payments or recoveries (including Insurance Proceeds and Condemnation
Proceeds) with respect to the Mortgage Loan; and (ii) the Remittance Date prior
to the date the Mortgage Loan is converted to REO Property, provided however,
that if requested by a Rating Agency in connection with a securitization, the
Company shall be obligated to make such advances through the Remittance Date
prior to the date on which cash is received in connection with the liquidation
of REO Property; provided, however, that any such obligation under this Section
5.03 shall cease if the Company determines, in its sole reasonable opinion, that
advances with respect to such Mortgage Loan are non-recoverable by the Company
from Liquidation Proceeds, Insurance Proceeds, Condemnation Proceeds, or
otherwise with respect to a particular Mortgage Loan. In the event that the
Company determines that any such advances are non-recoverable, the Company shall
provide the Purchaser with a certificate signed by two officers of the Company
evidencing such determination.
ARTICLE VI
GENERAL SERVICING PROCEDURES
Section 6.01. Due-on-Sale Provision and Assumptions.
The Company shall use its best efforts to enforce any "due-on-sale"
provision contained in any Mortgage or Mortgage Note and to deny assumption by
the person to whom the Mortgaged Property has been or is about to be sold
whether by absolute conveyance or by contract of sale, and whether or not the
Mortgagor remains liable on the Mortgage and the Mortgage Note. When the
Mortgaged Property has been conveyed by the Mortgagor, the Company shall, to the
extent it has knowledge of such conveyance, exercise its rights to accelerate
the maturity of such Mortgage Loan under the "due-on-sale" clause applicable
thereto, provided, however, that the Company shall not exercise such rights if
prohibited by law from doing so or if the exercise of such rights would impair
or threaten to impair any recovery under the related PMI Policy, if any.
If the Company reasonably believes it is unable under applicable law to
enforce such "due-on-sale" clause or that either a decision not to exercise the
"due-on-sale" provision or a decision to permit an assumption of the Mortgage
Loan is in the best interest of the Purchaser, the Company shall enter into (i)
an assumption and modification agreement with the person to whom such property
has been conveyed, pursuant to which such person becomes liable under the
Mortgage Note and the original Mortgagor remains liable thereon or (ii) in the
event the Company is unable under applicable law to require that the original
Mortgagor remain liable under the Mortgage Note, a substitution of liability
agreement with the purchaser of the Mortgaged Property pursuant to which the
original Mortgagor is released from liability and the purchaser of the Mortgaged
Property is substituted as Mortgagor and becomes liable under the Mortgage Note.
The Company shall notify the Purchaser that any such substitution of liability
or assumption agreement has been completed by forwarding to the Purchaser the
original of any such substitution of liability or assumption agreement, which
document shall be added to the
59
related Mortgage File and shall, for all purposes, be considered a part of such
Mortgage File to the same extent as all other documents and instruments
constituting a part thereof. If an assumption fee is collected by the Company
for entering into an assumption agreement such fee will be retained by the
Company as additional servicing compensation. In connection with any such
assumption, neither the Mortgage Interest Rate borne by the related Mortgage
Note, the term of the Mortgage Loan, the outstanding principal amount of the
Mortgage Loan nor any other material terms shall be changed without Purchaser's
consent.
To the extent that any Mortgage Loan is assumable, the Company shall
inquire diligently into the credit-worthiness of the proposed transferee, and
shall use the Underwriting Guidelines criteria for approving the credit of the
proposed transferee. If the credit-worthiness of the proposed transferee does
not meet such underwriting criteria, the Company diligently shall, to the extent
permitted by the Mortgage or the Mortgage Note and by applicable law, accelerate
the maturity of the Mortgage Loan.
Section 6.02. Satisfaction of Mortgages and Release of Mortgage Files.
Upon the payment in full of any Mortgage Loan, or the receipt by the
Company of a notification that payment in full will be escrowed in a manner
customary for such purposes, the Company immediately shall notify the Purchaser
and shall request the release of any Mortgage Loan Documents.
If the Company satisfies or releases a Mortgage without first having
obtained payment in full of the indebtedness secured by the Mortgage or should
the Company otherwise prejudice any rights the Purchaser may have under the
mortgage instruments, upon written demand of the Purchaser, the Company shall
repurchase the related Mortgage Loan at the Repurchase Price, plus any
prepayment penalty or premium provided for in the terms of the Mortgage Note, if
applicable, by deposit thereof in the Custodial Account within one Business Day
of receipt of such demand by the Purchaser. The Company shall maintain the
Fidelity Bond and Errors and Omissions Insurance Policy as provided for in
Section 4.12 insuring the Company against any loss it may sustain with respect
to any Mortgage Loan not satisfied in accordance with the procedures set forth
herein.
Section 6.03. Servicing Compensation.
As compensation for its services hereunder, the Company shall be entitled
to withdraw from the Custodial Account the amount of its Servicing Fee. The
Servicing Fee shall be payable monthly and shall be computed on the basis of the
same unpaid scheduled principal balance and for the period respecting which any
related interest payment on a Mortgage Loan is computed. The obligation of the
Purchaser to pay the Servicing Fee is limited to, and payable solely from, the
interest portion of such Monthly Payments, Liquidation Proceeds, or Insurance
Proceeds. Notwithstanding the foregoing, with respect to the payment of the
Servicing Fee for any month, the aggregate Servicing Fee shall be reduced (but
not below zero) by an amount equal to the Prepayment Interest Shortfall for the
related Principal Prepayment Period.
Additional servicing compensation in the form of assumption fees, to the
extent provided in Section 6.01, late payment charges and other ancillary income
(other than Prepayment
60
Premiums) shall be retained by the Company to the extent not required to be
deposited in the Custodial Account. The Company shall be required to pay all
expenses incurred by it in connection with its servicing activities hereunder
and shall not be entitled to reimbursement thereof except as specifically
provided for herein.
Section 6.04. Annual Statement as to Compliance.
The Company shall deliver to the Purchaser, not later than the earlier of
March 15 of each year (if such day is not a Business Day, the preceding Business
Day), an Officer's Certificate, stating that (i) a review of the activities of
the Company during the preceding fiscal year and of performance under this
Agreement or similar agreements has been made under such officer's supervision,
and (ii) to the best of such officer's knowledge, based on such review, the
Company has fulfilled all its obligations under, and complied fully with the
provisions of, this Agreement throughout such fiscal year, or, if there has been
a default in the fulfillment of any such obligation, specifying each such
default known to such officer and the nature and status thereof and the action
being taken by the Company to cure such default.
Section 6.05. [Reserved]
Section 6.06. Right to Examine Company Records.
The Purchaser, or its designee, shall have the right to examine and audit
any and all of the related books, records, or other information of the Company,
whether held by the Company or by another on its behalf, with respect to or
concerning this Agreement or the Mortgage Loans, during business hours or at
such other times as may be reasonable under applicable circumstances, upon
reasonable advance notice. The Purchaser shall pay its own travel expenses
associated with such examination.
Section 6.07. Compliance with REMIC Provisions.
If a REMIC election has been made with respect to the arrangement under
which the Mortgage Loans and REO Property are held, the Company shall not take
any action, cause the REMIC to take any action or fail to take (or fail to cause
to be taken) any action that, under the REMIC Provisions, if taken or not taken,
as the case may be, could (i) endanger the status of the REMIC as a REMIC or
(ii) result in the imposition of a tax upon the REMIC (including but not limited
to the tax on "prohibited transactions" as defined in Section 860 (a) (2) of the
Code and the tax on "contributions" to a REMIC set forth in Section 860(d) of
the Code) unless the Company has received an Opinion of Counsel (at the expense
of the party seeking to take such action) to the effect that the contemplated
action will not endanger such REMIC status or result in the imposition of any
such tax.
61
ARTICLE VII
COMPANY TO COOPERATE
Section 7.01. Provision of Information.
During the term of this Agreement, the Company shall furnish to the
Purchaser such periodic, special, or other reports or information, and copies or
originals of any documents contained in the Servicing File for each Mortgage
Loan provided for herein. All other special reports or information not provided
for herein as shall be necessary, reasonable, or appropriate with respect to the
Purchaser or any regulatory agency will be provided at the Purchaser's expense.
All such reports, documents or information shall be provided by and in
accordance with all reasonable instructions and directions which the Purchaser
may give. Upon request from the Purchaser, the Company shall deliver no later
than sixty (60) days after such request any Servicing File or document therein,
or copies thereof, to the Purchaser at the direction of the Purchaser. The
Purchaser shall return any original Servicing File or document therein delivered
pursuant to this Section no later than fifteen (15) days after receipt thereof.
In addition, during the term of this Agreement, the Company shall provide
to the OCC and to comparable regulatory authorities supervising the Purchaser or
any of Purchaser's assigns (including beneficial owners of securities issued in
Securitizations backed by the Mortgage Loans) and the examiners and supervisory
agents of the OCC and such other authorities, access to the documentation
required by applicable regulations of the OCC and other authorities supervising
the Purchaser or any of its assigns with respect to the Mortgage Loans. Such
access shall be afforded without charge, but only upon reasonable and prior
written request and during normal business hours at the offices designated by
the Company.
The Company shall execute and deliver all such instruments and take all
such action as the Purchaser may reasonably request from time to time, in order
to effectuate the purposes and to carry out the terms of this Agreement.
Section 7.02. Financial Statements; Servicing Facility.
In connection with marketing the Mortgage Loans, the Purchaser may make
available to a prospective purchaser the audited financial statements of the
Company, which shall include information relating to the Company, for the most
recently completed two fiscal years for which such financial statements are
available, as well as a Consolidated Statement of Condition at the end of the
last two fiscal years covered by such Consolidated Statement of Operations. The
Company also shall make available any comparable interim statements to the
extent any such statements have been prepared by or on behalf of the Company
(and are available upon request to members or stockholders of the Company or to
the public at large).
The Company also shall make available to the Purchaser or prospective
purchaser a knowledgeable financial or accounting officer for the purpose of
answering questions respecting recent developments affecting the Company or the
financial statements of the Company, and to permit any prospective purchaser to
inspect the Company's servicing facilities for the purpose of
62
satisfying such prospective purchaser that the Company has the ability to
service the Mortgage Loans as provided in this Agreement.
Section 7.03. Cooperation with Third-party Service Providers.
The Company shall cooperate with the Purchaser in servicing the Mortgage
Loans in accordance with the usual and customary requirements of any credit
enhancement, risk management and other service providers and shall otherwise
cooperate with the Purchaser in connection with such third-party service
providers and the provision of third-party services; provided, however, that
such requirements are reasonably acceptable to the Company and pose no greater
risk, obligation or expense to the Company than otherwise set forth in this
Agreement. Any additional costs and/or expenses will be paid by the requesting
party.
ARTICLE VIII
THE COMPANY
Section 8.01. Indemnification; Third Party Claims.
The Company shall indemnify the Purchaser and hold it harmless against any
and all claims, losses, damages, penalties, fines, forfeitures, reasonable and
necessary legal fees and related costs, judgments, and any other costs, fees and
expenses that the Purchaser may sustain as a result of the failure of the
Company to perform its duties and service the Mortgage Loans in compliance with
the terms of this Agreement; provided, however, that such indemnification shall
not include punitive, consequential, exemplary or special damages (other than
punitive, consequential, exemplary and special damages required to be paid by
the indemnified party under this Agreement to any Person (other than a party to
this Agreement or any of its affiliates) arising out of an action or proceeding
by such Person, which damages shall be deemed to be direct damages to the party
required to pay such punitive, consequential, exemplary or incidental damages).
The Company immediately shall notify the Purchaser if a claim is made by a third
party with respect to this Agreement or the Mortgage Loans, assume (with the
prior written consent of the Purchaser) the defense of any such claim and pay
all expenses in connection therewith, including counsel fees, and promptly pay,
discharge and satisfy any judgment or decree which may be entered against it or
the Purchaser in respect of such claim. The provisions of this Section 8.01(a)
shall survive termination of this Agreement.
Section 8.02. Merger or Consolidation of the Company.
The Company shall keep in full effect its existence, rights and franchises
as a corporation, and shall obtain and preserve its qualification to do business
as a foreign corporation in each jurisdiction in which such qualification is or
shall be necessary to protect the validity and enforceability of this Agreement
or any of the Mortgage Loans and to perform its duties under this Agreement.
Any person into which the Company may be merged or consolidated, or any
corporation resulting from any merger, conversion or consolidation to which the
Company shall be a party, or any Person succeeding to the business of the
Company, shall be the successor of the Company
63
hereunder, without the execution or filing of any paper or any further act on
the part of any of the parties hereto, anything herein to the contrary
notwithstanding, provided, however, that the successor or surviving Person shall
be an institution (i) having a GAAP net worth of not less than $25,000,000, (ii)
the deposits of which are insured by the FDIC, SAIF and/or BIF, (iii) who is a
Xxxxxx Xxx or Xxxxxxx Mac-approved company in good standing. Furthermore, in the
event the Company transfers or otherwise disposes of all or substantially all of
its assets to an affiliate of the Company, such affiliate shall satisfy the
condition above, and shall also be fully liable to the Purchaser for all of the
Company's obligations and liabilities hereunder.
Section 8.03. Limitation on Liability of Company and Others.
Neither the Company nor any of the directors, officers, employees or agents
of the Company shall be under any liability to the Purchaser for any action
taken or for refraining from the taking of any action in good faith pursuant to
this Agreement, or for errors in judgment, provided, however, that this
provision shall not protect the Company or any such person against any breach of
warranties or representations made herein, or failure to perform its obligations
in strict compliance with any standard of care set forth in this Agreement or
any other liability which would otherwise be imposed under this Agreement. The
Company and any director, officer, employee or agent of the Company may rely in
good faith on any document of any kind prima facie properly executed and
submitted by any Person respecting any matters arising hereunder. The Company
shall not be under any obligation to appear in, prosecute or defend any legal
action which is not incidental to its duties to service the Mortgage Loans in
accordance with this Agreement and which in its opinion may involve it in any
expense or liability, provided, however, that the Company may, with the consent
of the Purchaser, undertake any such action which it may deem necessary or
desirable in respect to this Agreement and the rights and duties of the parties
hereto. In such event, the Company shall be entitled to reimbursement from the
Purchaser of the reasonable legal expenses and costs of such action, unless any
such costs result from a breach of the Company's representations and warranties
made herein or its failure to perform its obligations in compliance with this
Agreement.
Section 8.04. Limitation on Resignation and Assignment by Company.
The Purchaser has entered into this Agreement with the Company and
subsequent purchasers will purchase the Mortgage Loans in reliance upon the
independent status of the Company, and the representations as to the adequacy of
its servicing facilities, personnel, records and procedures, its integrity,
reputation and financial standing, and the continuance thereof. Therefore, the
Company shall neither assign this Agreement or the servicing hereunder or
delegate its rights or duties hereunder or any portion hereof or sell or
otherwise dispose of all of its property or assets without the prior written
consent of the Purchaser, which consent shall not be unreasonably withheld.
The Company shall not resign from the obligations and duties hereby imposed
on it except by mutual consent of the Company and the Purchaser or upon the
determination that its duties hereunder are no longer permissible under
applicable law and such incapacity cannot be cured by the Company. Any such
determination permitting the resignation of the Company shall be evidenced by an
Opinion of Counsel to such effect delivered to the Purchaser which Opinion of
Counsel shall be in form and substance acceptable to the Purchaser. No such
resignation shall
64
become effective until a successor shall have assumed the Company's
responsibilities and obligations hereunder in the manner provided in Section
12.01.
Without in any way limiting the generality of this Section 8.04, in the
event that the Company either shall assign this Agreement or the servicing
responsibilities hereunder or delegate its duties hereunder or any portion
thereof or sell or otherwise dispose of all or substantially all of its property
or assets, without the prior written consent of the Purchaser, then the
Purchaser shall have the right to terminate this Agreement upon notice given as
set forth in Section 10.01, without any payment of any penalty or damages and
without any liability whatsoever to the Company or any third party.
ARTICLE IX
WHOLE LOAN TRANSFERS AND SECURITIZATIONS
Section 9.01. Removal of Mortgage Loans from Inclusion Under this Agreement Upon
the Pass-Through.
The Purchaser and the Company agree that with respect to some or all of the
Mortgage Loans, the Purchaser, at its sole option, may effect one or more Whole
Loan Transfers or Securitizations, retaining the Company as the servicer thereof
or subservicer if a master servicer is employed, or as applicable the
"seller/servicer." On the Reconstitution Date, the Mortgage Loans transferred
shall cease to be serviced by the Company pursuant to this Agreement as provided
in this Section 9.01; provided, however, that, in the event that any Mortgage
Loan transferred pursuant to this Section 9.01 is rejected by the transferee,
the Company shall continue to service such rejected Mortgage Loan on behalf of
the Purchaser in accordance with the terms and provisions of this Agreement.
The Company shall cooperate with the Purchaser in connection with each
Whole Loan Transfer or Securitization in accordance with this Section 9.01. In
connection therewith the Company shall:
(a) make all representations and warranties set forth in Section 3.01
as of the closing date of each Whole Loan Transfer or Securitization and
the representations and warranties set forth in Section 3.02 of this
Agreement with respect to the Mortgage Loans subject to such Whole Loan
Transfer or Securitization as of the Closing Date, modified to the extent
necessary to accurately reflect the pool statistics of the Mortgage Loans
as of the date of such Whole Loan Transfer or Securitization and any events
or circumstances existing subsequent to the related Closing Date(s);
(b) execute an Assignment, Assumption and Recognition Agreement or at
the option of the Purchaser, negotiate in good faith and execute any
pooling and servicing agreement or similar agreements necessary to
effectuate the foregoing provided such agreements create no greater
obligation or cost on the part of the Company than otherwise set forth in
this Agreement or do not materially and adversely alter the Company's
rights hereunder;
65
(c) make representations and warranties (1) that the Company has
serviced the Mortgage Loans in accordance with the terms of this Agreement,
provided accurate statements to the Purchaser pursuant to Section 5.02 of
this Agreement, and otherwise complied with all covenants and obligations
hereunder and (2) that the Company has taken no action nor omitted to take
any required action the omission of which would have the effect of
impairing any mortgage insurance or guarantee on the Mortgage Loans, and
(3) regarding the accuracy of the information provided to the Purchaser by
the Company on or before the closing date of the applicable Whole Loan
Transfer; and
(d) provide as applicable:
(i) any and all information and appropriate verification of
information which may be reasonably available to the Company,
including information regarding the Company's foreclosure, delinquency
and loss experience and the Company's underwriting standards, whether
through letters of its auditors and counsel or otherwise, as the
Purchaser shall request; and
(ii) such additional opinions of counsel, letters from auditors,
and certificates of public officials or officers of the Company as are
reasonably believed necessary by the trustee, any rating agency or any
credit enhancement provider, as the case may be, in connection with
Whole-Loan Transfers or Securitizations; provided, however, that the
Purchaser shall pay the reasonable third-party costs associated with
the preparation of the foregoing information.
In order to facilitate compliance with Regulation AB promulgated under the
Securities Act, the Company, the Servicer and the Purchaser agree to comply with
the provisions of the Regulation AB Compliance Addendum attached hereto as
Exhibit L. In the event the Purchaser has elected to have the Company hold
record title to the Mortgages (other than MERS Designated Mortgage Loans), prior
to the Reconstitution Date the Company shall prepare an Assignment of Mortgage
in blank or to the trustee from the Company acceptable to the Purchaser or the
trustee for each related Mortgage Loan that is part of the Whole Loan Transfers
or Securitizations. The Company shall pay all preparation and recording costs
associated therewith if the related Assignments of Mortgage have not been
previously prepared and recorded in Purchaser's name. The Company shall execute
each Assignment of Mortgage, track such Assignments of Mortgage to ensure they
have been recorded and deliver them as required by the Purchaser or the trustee
upon the Company's receipt thereof.
All Mortgage Loans not sold or transferred pursuant to Whole Loan Transfers
or Securitizations shall remain subject to this Agreement and shall continue to
be serviced in accordance with the terms of this Agreement and with respect
thereto this Agreement shall remain in full force and effect.
66
ARTICLE X
DEFAULT
Section 10.01. Events of Default.
Each of the following shall constitute an Event of Default on the part of
the Company:
(i) any failure by the Company to remit to the Purchaser any
payment required to be made under the terms of this Agreement which
continues unremedied for a period of one (1) Business Day after the
date upon which written notice of such failure, requiring the same to
be remedied, shall have been given to the Company by the Purchaser; or
(ii) failure by the Company duly to observe or perform in any
material respect any other of the covenants or agreements on the part
of the Company set forth in this Agreement that continues unremedied
for a period of thirty (30) days after the date on which written
notice of such failure, requiring the same to be remedied, shall have
been given to the Company by the Purchaser or by the Custodian; or
(iii) failure by the Company to maintain its license to do
business in any jurisdiction where the Mortgaged Property is located
if such license is required; or
(iv) a decree or order of a court or agency or supervisory
authority having jurisdiction for the appointment of a conservator or
receiver or liquidator in any insolvency, readjustment of debt,
including bankruptcy, marshaling of assets and liabilities or similar
proceedings, or for the winding-up or liquidation of its affairs,
shall have been entered against the Company and such decree or order
shall have remained in force undischarged or unstayed for a period of
sixty (60) days; or
(v) the Company shall consent to the appointment of a conservator
or receiver or liquidator in any insolvency, readjustment of debt,
marshaling of assets and liabilities or similar proceedings of or
relating to the Company or of or relating to all or substantially all
of its assets; or
(vi) the Company shall admit in writing its inability to pay its
debts generally as they become due, file a petition to take advantage
of any applicable insolvency, bankruptcy or reorganization statute,
make an assignment for the benefit of its creditors, voluntarily
suspend payment of its obligations or cease its normal business
operations for three Business Days; or
(vii) the Company ceases to meet the servicer eligibility
qualifications of Xxxxxx Xxx or Xxxxxxx Mac; or
67
(viii) the Company attempts to assign its right to servicing
compensation hereunder or to assign this Agreement or the servicing
responsibilities hereunder or to delegate its duties hereunder or any
portion thereof in violation of Section 8.04.
If the Company obtains knowledge of an Event of Default, the Company shall
promptly notify the Purchaser. In each and every such case, so long as an Event
of Default shall not have been remedied, in addition to whatever rights the
Purchaser may have at law or equity to damages, including injunctive relief and
specific performance, the Purchaser, by notice in writing to the Company, may
terminate all the rights and obligations of the Company under this Agreement and
in and to the Mortgage Loans and the proceeds thereof.
Upon receipt by the Company of such written notice, all authority and power
of the Company under this Agreement, whether with respect to the Mortgage Loans
or otherwise, shall pass to and be vested in the successor appointed pursuant to
Section 12.01. Upon written request from the Purchaser, the Company shall, at
its expense, prepare, execute and deliver to the successor entity designated by
the Purchaser any and all documents and other instruments, place in such
successor's possession all Mortgage Files, and do or cause to be done all other
acts or things necessary or appropriate to effect the purposes of such notice of
termination, including but not limited to the transfer and endorsement or
assignment of the Mortgage Loans and related documents, at the Company's sole
expense. The Company shall cooperate with the Purchaser and such successor in
effecting the termination of the Company's responsibilities and rights
hereunder, including without limitation, the transfer to such successor for
administration by it of all cash amounts which shall at the time be credited by
the Company to the Custodial Account or Escrow Account or thereafter received
with respect to the Mortgage Loans.
Section 10.02. Waiver of Defaults.
By a written notice, the Purchaser may waive any default by the Company in
the performance of its obligations hereunder and its consequences. Upon any
waiver of a past default, such default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been remedied for every
purpose of this Agreement. No such waiver shall extend to any subsequent or
other default or impair any right consequent thereon except to the extent
expressly so waived.
ARTICLE XI
TERMINATION
Section 11.01. Termination.
This Agreement shall terminate upon either: (i) the later of the final
payment or other liquidation (or any advance with respect thereto) of the last
Mortgage Loan or the disposition of any REO Property with respect to the last
Mortgage Loan and the remittance of all funds due hereunder; or (ii) mutual
consent of the Company and the Purchaser in writing. The representations and
warranties and indemnification provisions contained herein shall survive the
termination of this Agreement.
68
Upon written request from the Purchaser in connection with any such
termination, the Company shall prepare, execute and deliver, any and all
documents and other instruments, place in the Purchaser's possession all
Mortgage Files, and do or accomplish all other acts or things necessary or
appropriate to effect the purposes of such notice of termination, whether to
complete the transfer and endorsement or assignment of the Mortgage Loans and
related documents, or otherwise, at the Company's sole expense. The Company
agrees to cooperate with the Purchaser and such successor in effecting the
termination of the Company's responsibilities and rights hereunder as servicer,
including, without limitation, the transfer to such successor for administration
by it of all cash amounts which shall at the time be credited by the Company to
the Custodial Account or Escrow Account or thereafter received with respect to
the Mortgage Loans.
Section 11.02. Termination Without Cause.
The Purchaser may terminate, at its sole option, any rights the Company may
have hereunder with respect to any Mortgage Loan Package, without cause as
provided in this Section 11.02. Any such notice of termination shall be in
writing and delivered to the Company by registered mail as provided in Section
12.05.
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.01. Successor to Company.
Prior to termination of the Company's responsibilities and duties under
this Agreement pursuant to Sections 8.04, 10.01, 11.01(ii), the Purchaser shall,
(i) succeed to and assume all of the Company's responsibilities, rights, duties
and obligations under this Agreement, or (ii) appoint a successor having the
characteristics set forth in Section 8.02 and which shall succeed to all rights
and assume all of the responsibilities, duties and liabilities of the Company
under this Agreement prior to the termination of Company's responsibilities,
duties and liabilities under this Agreement. In connection with such appointment
and assumption, the Purchaser may make such arrangements for the compensation of
such successor out of payments on Mortgage Loans as it and such successor shall
agree. In the event that the Company's duties, responsibilities and liabilities
under this Agreement should be terminated pursuant to the aforementioned
sections, the Company shall discharge such duties and responsibilities during
the period from the date it acquires knowledge of such termination until the
effective date thereof with the same degree of diligence and prudence which it
is obligated to exercise under this Agreement, and shall take no action
whatsoever that might impair or prejudice the rights or financial condition of
its successor. The resignation or removal of the Company pursuant to the
aforementioned sections shall not become effective until a successor shall be
appointed pursuant to this Section 12.01 and shall in no event relieve the
Company of the representations and warranties made pursuant to Sections 3.01 and
3.02 and the remedies available to the Purchaser under Section 3.03, it being
understood and agreed that the provisions of such Sections 3.01, 3.02, and 3.03
shall be applicable to the Company notwithstanding any such sale, assignment,
resignation or termination of the Company, or the termination of this Agreement.
69
Any successor appointed as provided herein shall execute, acknowledge and
deliver to the Company and to the Purchaser an instrument accepting such
appointment, wherein the successor shall make the representations and warranties
set forth in Section 3.01, except for subsections (h), (i) and (k) thereof,
whereupon such successor shall become fully vested with all the rights, powers,
duties, responsibilities, obligations and liabilities of the Company, with like
effect as if originally named as a party to this Agreement. Any termination or
resignation of the Company or termination of this Agreement pursuant to Section
8.04, 10.01, or 11.01 shall not affect any claims that any Purchaser may have
against the Company arising out of the Company's actions or failure to act prior
to any such termination or resignation.
The Company shall deliver promptly to the successor servicer the funds in
the Custodial Account and Escrow Account and all Mortgage Files and related
documents and statements held by it hereunder and the Company shall account for
all funds and shall execute and deliver such instruments and do such other
things as may reasonably be required to more fully and definitively vest in the
successor all such rights, powers, duties, responsibilities, obligations and
liabilities of the Company.
Unless the Company is terminated pursuant to Section 11.02, the Purchaser
shall be entitled to be reimbursed from the Company for all costs associated
with the transfer of servicing, including, without limitation, any costs or
expenses associated with the complete transfer of all servicing data and the
completion, correction or manipulation of such servicing data as may be required
by the Purchaser to correct any errors or insufficiencies in the servicing data
or otherwise to enable the Purchaser to service the Mortgage Loans properly and
effectively.
Upon a successor's acceptance of appointment as such, the Company shall
notify by mail the Purchaser of such appointment in accordance with the
procedures set forth in Section 12.05.
Section 12.02. Amendment.
This Agreement may be amended from time to time by written agreement signed
by the Company and the Purchaser.
Section 12.03. Governing Law.
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF NEW YORK AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER
SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
EACH OF THE COMPANY AND THE PURCHASER HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVES ANY AND ALL RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN
RESPECT OR ANY LITIGATION BASED ON, OR ARISING OUT OF, UNDER, OR IN CONNECTION
WITH, THIS AGREEMENT, OR ANY OTHER DOCUMENTS AND INSTRUMENTS EXECUTED IN
CONNECTION HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
(WHETHER ORAL OR WRITTEN), OR ACTIONS OF THE COMPANY OR THE PURCHASER. THIS
70
PROVISION IS A MATERIAL INDUCEMENT FOR THE PURCHASER TO ENTER INTO THIS
AGREEMENT.
Section 12.04. Arbitration.
In the event a claim or controversy arises concerning the interpretation or
enforcement of the terms of this Agreement, the parties hereto agree that such
claim or controversy may be settled by final, binding arbitration if the parties
hereto, as applicable, consent to such arbitration at the time such claim or
controversy arises which consent may be withheld by any party hereto in its sole
discretion.
Section 12.05. Duration of Agreement.
This Agreement shall continue in existence and effect until terminated as
herein provided. This Agreement shall continue notwithstanding transfers of the
Mortgage Loans by the Purchaser.
Section 12.06. Notices.
All demands, notices and communications hereunder shall be in writing and
shall be deemed to have been duly given if personally delivered at or mailed by
registered mail, postage prepaid, addressed as follows:
(i) if to the Company:
IndyMac Bank, F.S.B.
0000 Xxxx Xxxxxxxx Xxxxxxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
Attention: Secondary Marketing
Telephone: _________________
Fax: ______________________
or such other address as may hereafter be furnished to the Purchaser
in writing by the Company;
(ii) if to Purchaser:
Bank of America, National Association
Hearst Tower
NC1-027-21-04
000 Xxxxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Managing Director
Telephone: (000) 000-0000
Fax: (000) 000-0000
or such other address as may hereafter be furnished to the Company in
writing by the Purchaser.
71
Section 12.07. Severability of Provisions.
If any one or more of the covenants, agreements, provisions or terms of
this Agreement shall be held invalid for any reason whatsoever, then such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Agreement and shall
in no way affect the validity or enforceability of the other provisions of this
Agreement.
Section 12.08. Relationship of Parties.
Nothing herein contained shall be deemed or construed to create a
partnership or joint venture between the parties hereto and the services of the
Company shall be rendered as an independent contractor and not as agent for the
Purchaser.
Section 12.09. Execution; Successors and Assigns.
This Agreement may be executed in one or more counterparts and by the
different parties hereto on separate counterparts, each of which, when so
executed, shall be deemed to be an original; such counterparts, together, shall
constitute one and the same agreement. Subject to Sections 8.02 and 8.04, this
Agreement shall inure to the benefit of and be binding upon the Company and the
Purchaser and their respective successors and assigns.
Section 12.10. Recordation of Assignments of Mortgage.
To the extent permitted by applicable law, each of the Assignments of
Mortgage is subject to recordation in all appropriate public offices for real
property records in all the counties or other comparable jurisdictions in which
any or all of the Mortgaged Properties are situated, and in any other
appropriate public recording office or elsewhere, such recordation to be
effected at the Company's expense, in the event recordation is either necessary
or advisable in accordance with Acceptable Servicing Practices or under
applicable law or is requested by the Purchaser at its sole option in the case
of Mortgage Loans that are not registered on MERS.
Section 12.11. Assignment by Purchaser.
The Purchaser shall have the right, without the consent of the Company but
subject to the limits set forth in Section 2.02 and Section 9.01 hereof, to
assign, in whole or in part, its interest under this Agreement with respect to
some or all of the Mortgage Loans, and designate any person to exercise any
rights of the Purchaser hereunder, by executing an Assignment, Assumption and
Recognition Agreement and the assignee or designee shall accede to the rights
and obligations hereunder of the Purchaser with respect to such Mortgage Loans.
All references to the Purchaser in this Agreement shall be deemed to include its
assignee or designee. In the event the Purchaser assigns this Agreement, and the
assignee assumes any of the Purchaser's obligations hereunder, the Company
acknowledges and agrees to look solely to such assignee, and not the Purchaser,
for performance of the obligations so assumed and the Purchaser shall be
relieved from any liability to the Company with respect thereto.
72
Section 12.12. Solicitation of Mortgagor.
From and after the Closing Date, the Company agrees that it will not take
any action or permit or cause any action to be taken by any of its agents or
affiliates, or by any independent contractors or independent mortgage brokerage
companies on the Company's behalf, to personally, by telephone, mail or
electronic mail, solicit the Mortgagor under any Mortgage Loan for the purpose
of refinancing such Mortgage Loan. It is understood and agreed that (i)
promotions undertaken by the Company or any of its affiliates which are directed
to the general public at large, including, without limitation, mass mailings
based on commercially acquired mailing lists, newspaper, radio or television
advertisements shall not constitute solicitation under this Section, nor is the
Company prohibited from responding to unsolicited requests or inquiries made by
a Mortgagor or an agent of a Mortgagor and (ii) all rights and benefits relating
to the solicitation of any Mortgagors to refinance any Mortgage Loans and the
attendant rights, title and interest in and to the list of such Mortgagors and
data relating to their mortgages (including insurance renewal dates) shall be
transferred to the Purchaser on the Closing Date and the Company shall take no
action to undermine these rights and benefits.
Section 12.13. Further Agreements.
The Purchaser and the Company each agree to execute and deliver to the
other such additional documents, instruments or agreements as may be necessary
or appropriate to effectuate the purposes of this Agreement.
Section 12.14. Confidential Information.
The Purchaser and the Company shall keep confidential and shall not divulge
to any Person, without the other party's prior written consent, the price paid
by the Purchaser for the Mortgage Loans, except to the extent that it is
reasonable and necessary for such party to do so in working with legal counsel,
auditors, taxing authorities or other governmental agencies.
The Purchaser and the Company agree they (i) shall comply with all
applicable laws and regulations regarding the privacy or security of Consumer
Information, (ii) shall not collect, create, use, store, access, disclose or
otherwise handle Consumer Information in any manner inconsistent with any
applicable laws or regulations regarding the privacy or security of Consumer
Information, (iii) shall not disclose Consumer Information to any affiliated or
non-affiliated third party except to enforce or preserve its rights, as
otherwise permitted or required by applicable law (or by regulatory authorities
having jurisdiction in the premises) or, in the case of the Company, at the
specific written direction of the Purchaser, (iv) shall maintain appropriate
administrative, technical and physical safeguards to protect the security,
confidentiality and integrity of Consumer Information, including maintaining
security measures designed to meet the Interagency Guidelines Establishing
Standards for Safeguarding Consumer Information published in final form on
February 1, 2001, 66 Fed. Reg. 8616, and the rules promulgated thereunder and
(v) shall promptly notify the other party in writing upon becoming aware of any
actual breach and of any suspected breach of this section. The Company shall
promptly provide the Purchaser's regulators information regarding such security
measures upon the reasonable request of the Purchaser, which information shall
include, but not be limited to, any SAS 70 or similar independent audit reports,
summaries of test results or equivalent measures taken by the
73
Company with respect to its security measures, as agreed upon by the parties.
Each party shall indemnify and defend the other party against, and shall hold
the other party harmless from, any cost, expense, loss, claim or other liability
that such other party may suffer as a result of or in connection with its
failure to comply with or perform the obligations set forth in this section. The
restrictions set forth herein shall survive the termination of this Agreement.
Section 12.15. Equal Opportunity.
The Purchaser and the Company represent that they are equal opportunity
employers and do not discriminate in employment of persons or awarding of
subcontracts because of a person's race, sex, age, religion, national origin,
veteran or handicap status. The Company is aware of and fully informed of the
Purchaser's responsibilities and agrees to the provisions under the following:
(a) Executive Order 11246, as amended or superseded in whole or in part, and as
contained in Section 202 of said Executive Order as found at 41 C.F.R. Section
60-1.4(a)(1-7); (b) Section 503 of the Rehabilitation Act of 1973 as contained
in 41 C.F.R. Section 60-741.4; and (c) The Vietnam Era Veterans' Readjustment
Assistance Act of 1974 as contained in 41 C.F.R. Section 60-250.4.
Section 12.16. Counterparts.
This Agreement may be executed simultaneously in any number of
counterparts. Each counterpart shall be deemed to be an original, and all such
counterparts shall constitute one and the same instrument.
Section 12.17. Exhibits.
The exhibits to this Agreement are hereby incorporated and made a part
hereof and are an integral part of this Agreement.
Section 12.18. General Interpretive Principles.
For purposes of this Agreement, except as otherwise expressly provided or
unless the context otherwise requires:
(a) the terms defined in this Agreement have the meanings assigned to
them in this Agreement and include the plural as well as the singular, and
the use of any gender herein shall be deemed to include the other gender;
(b) accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with GAAP;
(c) references herein to "Articles", "Sections", "Subsections",
"Paragraphs", and other subdivisions without reference to a document are to
designated Articles, Sections, Subsections, Paragraphs and other
subdivisions of this Agreement;
(d) a reference to a SubSection without further reference to a Section
is a reference to such SubSection as contained in the same Section in which
the reference appears, and this rule shall also apply to Paragraphs and
other subdivisions;
74
(e) the words "herein", "hereof", "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
provision; and
(f) the term "include" or "including" shall mean without limitation by
reason of enumeration.
Section 12.19. Reproduction of Documents.
This Agreement and all documents relating thereto, including, without
limitation, (a) consents, waivers and modifications which may hereafter be
executed, (b) documents received by any party at the closing, and (c) financial
statements, certificates and other information previously or hereafter
furnished, may be reproduced by any photographic, photostatic, microfilm,
micro-card, miniature photographic or other similar process. The parties agree
that any such reproduction shall be admissible in evidence as the original
itself in any judicial or administrative proceeding, whether or not the original
is in existence and whether or not such reproduction was made by a party in the
regular course of business, and that any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in evidence.
Section 12.20. Purchase Price and Terms Letter.
The terms and conditions set forth in the Purchase Price and Terms Letter
between the Purchaser and the Company with respect to each Closing Date shall be
incorporated herein. In the event of any conflict between the terms of this
Agreement and the related Purchase Price and Terms Letter, this Agreement shall
control.
[Intentionally Blank - Next Page Signature Page]
75
IN WITNESS WHEREOF, the Company and the Purchaser have caused their names
to be signed hereto by their respective officers thereunto duly authorized as of
the day and year first above written.
BANK OF AMERICA, NATIONAL ASSOCIATION INDYMAC BANK, F.S.B.
PURCHASER COMPANY
By: /s/ Xxxxx X. Good By: /s/ Xxx Xxxxxx
--------------------------------- ------------------------------------
Name: Xxxxx X. Good Name: Xxx Xxxxxx
Title: Vice President Title: First Vice President
76
EXHIBIT A
FORM OF MORTGAGE LOAN SCHEDULE
[Attached hereto]
EXHIBIT B
CONTENTS OF EACH MORTGAGE FILE
With respect to each Mortgage Loan, the Mortgage File shall include each of
the following items, which shall be available for inspection by the Purchaser
and any prospective Purchaser, and which shall be retained by the Company in the
Servicing File or delivered to the Custodian pursuant to Sections 2.01, 2.02 and
2.03 of the Flow Sale and Servicing Agreement to which this Exhibit is attached
(the "Agreement"):
1. The original Mortgage Note endorsed "Pay to the order of
_____________, without recourse" and signed in the name of the Company
by an authorized officer (provided that, in the event that the
Mortgage Loan was acquired by the Company in a merger, the signature
must be in the following form: "[Company], successor by merger to
[name of predecessor]"; and in the event that the Mortgage Loan was
acquired or originated by the Company while doing business under
another name, the signature must be in the following form: "[Company],
formerly known as [previous name]"). The Mortgage Note must contain
all necessary intervening endorsements showing a complete chain of
endorsement from the Originator (each such endorsement being
sufficient to transfer all right, title and interest of the party so
endorsing, as noteholder or assignee thereof, in and to that Mortgage
Note);
2. The original of any guarantee executed in connection with the Mortgage
Note (if any).
3. The original Mortgage, with evidence of recording thereon, except as
follows. If in connection with any Mortgage Loan, the Company cannot
deliver or cause to be delivered the original Mortgage with evidence
of recording thereon on or prior to the Closing Date because of a
delay caused by the public recording office where such Mortgage has
been delivered for recordation or because such Mortgage has been lost
or because such public recording office retains the original recorded
Mortgage, the Company shall deliver or cause to be delivered to the
Custodian, a photocopy of such Mortgage, together with (i) in the case
of a delay caused by the public recording office, an Officer's
Certificate of the Company stating that such Mortgage has been
dispatched to the appropriate public recording office for recordation
and that the original recorded Mortgage or a copy of such Mortgage
certified by such public recording office to be a true and complete
copy of the original recorded Mortgage will be promptly delivered to
the Custodian upon receipt thereof by the Company; or (ii) in the case
of a Mortgage where a public recording office retains the original
recorded Mortgage or in the case where a Mortgage is lost after
recordation in a public recording office, a copy of such Mortgage
certified by such public recording office or by the title insurance
company that issued the title policy to be a true and complete copy of
the original recorded Mortgage.
4. The originals or certified true copies of any document sent for
recordation of all assumption, modification, consolidation or
extension agreements, with evidence of recording thereon, or, if the
original of any such agreement with evidence of recording thereon has
not been returned by the public recording office where such agreement
has been delivered for recordation or such agreement has been lost or
such public recording office retains the original recorded agreement,
a photocopy of such agreement, certified by the Company or its agent
to be a true and correct copy of the agreement delivered to the
appropriate public recording office for recordation. The original
recorded agreement or, in the case of a agreement where a public
recording office retains the original recorded agreement or in the
case where an agreement is lost after recordation in a public
recording office, a copy of such agreement certified by such public
recording office to be a true and complete copy of the original
recorded agreement, will be promptly delivered to the Custodian upon
receipt thereof by the Company.
5. The original Assignment of Mortgage, in blank, for each Mortgage Loan,
in form and substance acceptable for recording (except for the
insertion of the name of the assignee and recording information). If
the Mortgage Loan was acquired by the Company in a merger, the
Assignment of Mortgage must be made by "[Company], successor by merger
to [name of predecessor]." If the Mortgage Loan was acquired or
originated by the Company while doing business under another name, the
Assignment of Mortgage must be made by "[Company], formerly know as
[previous name]." Subject to the foregoing and where permitted under
the applicable laws of the jurisdiction wherein the Mortgaged property
is located, such Assignments of Mortgage may be made by blanket
assignments for Mortgage Loans secured by the Mortgaged Properties
located in the same county. If the related Mortgage has been recorded
in the name of Mortgage Electronic Registration Systems, Inc. ("MERS")
or its designee, no Assignment of Mortgage will be required to be
prepared or delivered and instead, the Company shall take all actions
as are necessary to cause the Purchaser to be shown as the owner of
the related Mortgage Loan on the records of MERS for purposes of the
system of recording transfers of beneficial ownership of mortgages
maintained by MERS.
6. For any Mortgage Loan not recorded in the name of MERS, originals or
certified true copies of documents sent for recordation of all
intervening assignments of the Mortgage with evidence of recording
thereon, or if any such intervening assignment has not been returned
from the applicable recording office or has been lost or if such
public recording office retains the original recorded assignments of
mortgage, the Company shall deliver or cause to be delivered to the
Custodian, a photocopy of such intervening assignment, together with
(i) in the case of a delay caused by the public recording office, an
Officer's Certificate of the Company stating that such intervening
Assignment of Mortgage has been dispatched to the appropriate public
recording office for recordation and that such original recorded
intervening Assignment of Mortgage or a copy of such intervening
Assignment of Mortgage certified by the appropriate public recording
office or by the title
2
insurance company that issued the title policy to be a true and
complete copy of the original recorded intervening Assignment of
Mortgage will be promptly delivered to the Custodian upon receipt
thereof by the Company; or (ii) in the case of an intervening
assignment where a public recording office retains the original
recorded intervening Assignment of Mortgage or in the case where an
intervening Assignment of Mortgage is lost after recordation in a
public recording office, a copy of such intervening Assignment of
Mortgage certified by such public recording office to be a true and
complete copy of the original recorded intervening Assignment of
Mortgage.
7. The original PMI Policy or certificate of insurance, where required
pursuant to the Agreement.
8. The original mortgagee policy of title insurance or evidence of title.
9. Any security agreement, chattel mortgage or equivalent executed in
connection with the Mortgage.
10. For each Mortgage Loan which is secured by a residential long-term
lease, if any, a copy of the lease with evidence of recording
indicated thereon, or, if the lease is in the process of being
recorded, a photocopy of the lease, certified by an officer of the
respective prior owner of such Mortgage Loan or by the applicable
title insurance company, closing/settlement/escrow agent or company or
closing attorney to be a true and correct copy of the lease
transmitted for recordation.
11. For each Mortgage Loan secured by Co-op Shares, the originals of the
following documents or instruments:
(A) the stock certificate;
(B) the stock power executed in blank;
(C) the executed proprietary lease;
(D) the executed recognition agreement;
(E) the executed assignment of recognition agreement;
(F) the executed UCC-1 financing statement with evidence of
recording thereon; and
(G) executed UCC-3 financing statements or other appropriate UCC
financing statements required by state law, evidencing a complete and
unbroken line from the mortgagee to the Trustee with evidence of
recording thereon (or in a form suitable for recordation)
With respect to each Mortgage Loan, the Mortgage File shall include each of the
following items to the extent in the possession of the Company or in the
possession of the Company's agent(s):
3
12. The original hazard insurance policy and, if required by law, flood
insurance policy, in accordance with Section 4.10 of the Agreement.
13. Residential loan application.
14. Mortgage Loan closing statement.
15. Verification of employment and income.
16. Verification of acceptable evidence of source and amount of down
payment.
17. Credit report on the Mortgagor.
18. Residential appraisal report.
19. Photograph of the Mortgaged Property.
20. Survey of the Mortgaged Property, if required by the title company or
applicable law.
21. Copy of each instrument necessary to complete identification of any
exception set forth in the exception schedule in the title policy,
i.e. map or plat, restrictions, easements, sewer agreements, home
association declarations, etc.
22. All required disclosure statements.
23. If available, termite report, structural engineer's report, water
potability and septic certification.
24. Sales contract, if applicable.
25. Evidence of payment of taxes and insurance premiums, insurance claim
files, correspondence, current and historical computerized data files,
and all other processing, underwriting and closing papers and records
which are customarily contained in a mortgage file and which are
required to document the Mortgage Loan or to service the Mortgage
Loan.
26. Amortization schedule, if available.
27. Original power of attorney, if applicable.
In the event of a delay by the public recording office in returning any
recorded document, the Company shall deliver to the Custodian, within 180 days
of the Closing Date, an Officer's Certificate which shall (i) identify the
recorded document, (ii) state that the recorded document has not been delivered
to the Custodian due solely to a delay caused by the public recording office,
(iii) state the amount of time generally required by the applicable recording
office to record and return a document submitted for recordation, and (iv)
specify the date the applicable recorded document will be delivered to the
Custodian. The Company shall be required to deliver
4
to the Custodian the applicable recorded document by the date specified in (iv)
above. An extension of the date specified in (iv) above may be requested form
the Purchaser, which consent shall not be unreasonably withheld.
5
EXHIBIT C
FORM OF CUSTODIAL AGREEMENT
[Attached hereto]
EXHIBIT D
FORM OF ASSIGNMENT, ASSUMPTION AND RECOGNITION AGREEMENT
[DATE OF ASSIGNMENT]
ASSIGNMENT, ASSUMPTION AND RECOGNITION AGREEMENT dated ___________________,
among _________________, a _________________ corporation having an office at
_________________ ("Assignor"), _________________, having an office at
_________________ ("Assignee") and [NAME OF COMPANY] (the "Company"), having an
office at [INSERT COMPANY ADDRESS]:
For and in consideration of the sum of one dollar ($1.00) and other
valuable consideration the receipt and sufficiency of which are hereby
acknowledged, and of the mutual covenants herein contained, the parties hereto
hereby agree as follows:
1. With respect to the Mortgage Loans listed on Exhibit A hereto, the
Assignor hereby grants, transfers and assigns to Assignee all of the right,
title and interest of Assignor, as Purchaser, in, to and under that certain Flow
Sale and Servicing Agreement, (the "Flow Sale and Servicing Agreement"), dated
as of March 1, 2006, and the Memorandum of Sale dated [INSERT DATE] (together
with the Flow Sale and Servicing Agreement, the "Flow Sale Agreement"), each by
and between Bank of America, National Association (the "Purchaser") and the
Company, and the Mortgage Loans delivered thereunder by the Company to the
Assignor, and that certain Custodial Agreement, (the "Custodial Agreement"),
dated as of [INSERT DATE OF AGREEMENT], by and among the Company, the Purchaser
and _________________ (the "Custodian").
2. The Assignor warrants and represents to, and covenants with, the
Assignee that:
a. The Assignor is the lawful owner of the Mortgage Loans with the
full right to transfer the Mortgage Loans free from any and all claims and
encumbrances whatsoever;
b. The Assignor has not received notice of, and has no knowledge of,
any offsets, counterclaims or other defenses available to the Company with
respect to the Flow Sale Agreement or the Mortgage Loans;
c. The Assignor has not waived or agreed to any waiver under, or
agreed to any amendment or other modification of, the Flow Sale Agreement, the
Custodial Agreement or the Mortgage Loans, including without limitation the
transfer of the servicing obligations under the Flow Sale Agreement. The
Assignor has no knowledge of, and has not received notice of, any waivers under
or amendments or other modifications of, or assignments of rights or obligations
under, the Flow Sale Agreement or the Mortgage Loans; and
d. Neither the Assignor nor anyone acting on its behalf has offered,
transferred, pledged, sold or otherwise disposed of the Mortgage Loans, any
interest in the Mortgage Loans or any other similar security to, or solicited
any offer to buy or accept a transfer, pledge or other disposition of the
Mortgage Loans, any interest in the Mortgage Loans or any
1
other similar security from, or otherwise approached or negotiated with respect
to the Mortgage Loans, any interest in the Mortgage Loans or any other similar
security with, any person in any manner, or made any general solicitation by
means of general advertising or in any other manner, or taken any other action
which would constitute a distribution of the Mortgage Loans under the Securities
Act of 1933 (the "Securities Act") or which would render the disposition of the
Mortgage Loans a violation of Section 5 of the Securities Act or require
registration pursuant thereto.
3. That Assignee warrants and represent to, and covenants with, the
Assignor and the Company pursuant to Section 12.10 of the Flow Sale Agreement
that:
a. The Assignee agrees to be bound, as Purchaser, by all of the terms,
covenants and conditions of the Flow Sale Agreement, the Mortgage Loans and the
Custodial Agreement, and from and after the date hereof, the Assignee assumes
for the benefit of each of the Company and the Assignor all of the Assignor's
obligations as purchaser thereunder;
b. The Assignee understands that the Mortgage Loans have not been
registered under the Securities Act or the securities laws of any state;
c. The purchase price being paid by the Assignee for the Mortgage
Loans is in excess of $250,000.00 and will be paid by cash remittance of the
full purchase price within 60 days of the sale;
d. The Assignee is acquiring the Mortgage Loans for investment for its
own account only and not for any other person. In this connection, neither the
Assignee nor any person authorized to act therefor has offered to sell the
Mortgage Loans by means of any general advertising or general solicitation
within the meaning of Rule 502(c) Regulation D, promulgated under the Securities
Act;
e. The Assignee considers itself a substantial sophisticated
institutional investor having such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks of
investment in the Mortgage Loans;
f. The Assignee has been furnished with all information regarding the
Mortgage Loans that it has requested from the Assignor or the Company;
g. Neither the Assignee nor anyone acting on its behalf has offered,
transferred, pledged, sold or otherwise disposed of the Mortgage Loans, any
interest in the Mortgage Loans or any other similar security to, or solicited
any offer to buy or accepted a transfer, pledge or other disposition of the
Mortgage Loans, any interest in the Mortgage Loans or any other similar security
from, or otherwise approached or negotiated with respect to the Mortgage Loans,
any interest in the Mortgage Loans or any other similar security with, any
person in any manner which would constitute a distribution of the Mortgage Loans
under the Securities Act or which would render the disposition of the Mortgage
Loans a violation of Section 5 of the Securities Act or require registration
pursuant thereto, nor will it act, nor has it authorized or will it authorize
any person to act, in such manner with respect to the Mortgage Loans; and
2
h. Either (1) the Assignee is not an employee benefit plan ("Plan")
within the meaning of Section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA") or a plan ("Plan") within the meaning of
Section 4975(e)(1) of the Internal Revenue Code of 1986 ("Code"), and the
Assignee is not directly or indirectly purchasing the Mortgage Loans on behalf
of, investment manager of, as named fiduciary of, as trustee of, or with assets
of, a Plan; or (2) the Assignee's purchase of the Mortgage Loans will not result
in a prohibited transaction under Section 406 of ERISA or Section 4975 of the
Code.
i. The Assignee's address for purposes of all notices and
correspondence related to the Mortgage Loans and the Flow Sale Agreement is:
[NAME AND ADDRESS OF ASSIGNEE]
Attention: _________________________
Telephone: _________________________
Fax: _______________________________
The Assignee's wire transfer instructions for purposes of all remittances
and payments related to the Mortgage Loans and the Flow Sale Agreement is:
For the account of [NAME OF ASSIGNEE]
A/C#: ______________________________
ABA#: ______________________________
Attention: _________________________
Taxpayer ID#: ______________________
4. Accuracy of the Servicing Agreement.
The Company and the Assignor represent and warrant to the Assignee that (i)
attached hereto as Exhibit B are true, accurate and complete copies of the Flow
Sale Agreement, the Custodial Agreement and all amendments and modifications, if
any, thereto, (ii) neither the Flow Sale Agreement nor the Custodial Agreement
has been amended or modified in any respect, except as set forth in this
Agreement, and (iii) no notice of termination has been given to the Company
under the Flow Sale Agreement. The Company represents and warrants that through
the date hereof the Company has serviced the Mortgage Loans in accordance with
the terms of the Flow Sale Agreement.
5. Recognition of Assignee.
From and after the date hereof, the Company shall note the transfer of the
Mortgage Loans to the Assignee in its books and records, the Company shall
recognize the Assignee as the owner of the Mortgage Loans and the Company shall
service the Mortgage Loans for the benefit of the Assignee pursuant to the Flow
Sale Agreement, the terms of which are incorporated herein by reference. It is
the intention of the Assignor, the Company and the Assignee that the Flow Sale
Agreement and the Custodial Agreement shall be binding upon and inure to the
benefit of the Company and the Assignee and their respective successors and
assigns.
[Signatures Follow]
3
IN WITNESS WHEREOF, the parties have caused this Assignment, Assumption and
Recognition Agreement be executed by their duly authorized officers as of the
date first above written.
[NAME OF ASSIGNOR] [NAME OF ASSIGNEE]
By: By:
------------------------------------ ---------------------------------
Name: Name:
---------------------------------- -------------------------------
Its: Its:
----------------------------------- --------------------------------
INDYMAC BANK, F.S.B. Company
By:
------------------------------------
Name:
----------------------------------
Its:
-----------------------------------
4
EXHIBIT A
to the Assignment, Assumption and Recognition Agreement
MORTGAGE LOAN SCHEDULE
5
EXHIBIT B
to the Assignment, Assumption and Recognition Agreement
EXECUTION COPIES OF FLOW SALE AND SERVICING AGREEMENT
AND MEMORANDUM OF SALE
6
EXHIBIT E
UNDERWRITING GUIDELINES
[Attached hereto]
EXHIBIT F
[RESERVED]
EXHIBIT G
[RESERVED]
EXHIBIT H
[RESERVED]
2
EXHIBIT I
FORM OF MEMORANDUM OF SALE
CLOSING DATE:
This Memorandum of Sale (this "Memorandum"), dated as of _______ (the
"Closing Date"), confirms the sale by IndyMac Bank, F.S.B. (the "Company"), to
Bank of America, National Association (the "Purchaser"), and the purchase by the
Purchaser from the Company, of the first lien jumbo conforming [fixed rate]
[adjustable rate] residential mortgage loans on a servicing retained basis
described on the Mortgage Loan Schedule attached hereto as Schedule I (the
"Mortgage Loans"), pursuant to the terms of the Flow Sale and Servicing
Agreement (the "Flow Sale and Servicing Agreement"), dated as of March 1, 2006,
and is by and between the Purchaser and the Company.
For good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the Company does hereby bargain, sell, convey, assign
and transfer to Purchaser without recourse, except as provided in the Flow Sale
and Servicing Agreement, and on a servicing retained basis, all right, title and
interest of the Company in and to each of the Mortgage Loans, together with all
documents maintained as part of the related Mortgage Files, all Mortgaged
Properties which secure any Mortgage Loan but are acquired by foreclosure, deed
in lieu of foreclosure after the Cut-off Date or otherwise, all payments of
principal and interest received on the Mortgage Loans after the Cut-off Date,
all other unscheduled collections collected in respect of the Mortgage Loans
after the Cut-off Date, and all proceeds of the foregoing, subject, however, to
the rights of the Company under the Flow Sale and Servicing Agreement.
The Company has delivered to the Custodian prior to the date hereof the
documents with respect to each Mortgage Loan required to be delivered under the
Flow Sale and Servicing Agreement.
Capitalized terms that are used herein but are not defined herein shall
have the respective meanings set forth in the Flow Sale and Servicing Agreement.
3
IN WITNESS WHEREOF, the parties hereto, by the hands of their duly
authorized officers, execute this Memorandum as of the Closing Date referred to
above.
BANK OF AMERICA, NATIONAL ASSOCIATION INDYMAC BANK, F.S.B
as Purchaser as Company
By: By:
-------------------------------- ------------------------------
Name: Name:
----------------------------- ----------------------------
Its: Its:
------------------------------ -----------------------------
4
SCHEDULE I
MORTGAGE LOAN SCHEDULE
5
EXHIBIT J
SERVICER REQUIREMENTS
Loading/Updating Investor Headers
1. The Purchaser will provide investor header matrix for input on MSP by
Company. Updates/additions will occur monthly, including new investor
header detail for each new deal that is settled.
2. The Company will load investor headers upon receipt or before month
end. The following fields will need to be updated on IN03: MS OPT, MS
INV CNTRL NO, MS MO DELQ, and MS JUST FL.
3. The Company will update the investor headers on the first business day
of the next/following month to ensure that the correct loan accounts
will appear on the corresponding 413 file that will represent the new
month's activity.
Loading Account Numbers
1. Upon receipt of a funding schedule, the Purchaser will deliver a cross
reference of Company-to-Purchaser account numbers to the Company. The
account numbers will be delivered in the xxxx 55 layout for loading in
the next Company MSP cycle.
2. The Company will load account numbers on or before the first business
day of the month to ensure that the correct the Purchaser account
numbers will appear on the corresponding 413 file that will represent
the new month's activity.
Automated Monetary Transaction File - 413
1. Call Fidelity PowerCell and request installation of IP 770
2. On the first business day of the month, the financial transactions for
the LSBO portfolio will transmit from the Company MSP system to the
the Purchaser MSP system.
Monthly Company File - Automated
1. Call Fidelity PowerCell and initiate an SSR for the installation of IP
1804 and the interchange set-up required to host and transmit this
file. This enhancement will provide an automated month-end feed from
the Company to the Purchaser for the LSBO portfolio identified by the
corresponding investor headers. The feed will include all new loans
purchased by the Purchaser in the previous month, as well as a
maintenance file for all existing loans in the LSBO portfolio
2. Once installed, populate XX flag on the IN03 screen. This flag will
assist with synchronizing the feeds received in the Monthly Company
File and the corresponding 413 file.
6
3. Bank of America will receive and process the electronic file on the
first business day of the month for the previous month-end file. Note:
This file comes from the Company automatically with the installation
of the IP.
Monthly Company File - Manual
For testing purposes, and in the event that the IP is not installed prior to
initial conversion, a manual process is in place to provide the Monthly Company
File data feed for REMOTE MSP clients.
1. The Company will load/update investor header information received from
the Purchaser.
2. The Company will send an email granting permission to Fidelity to
provide the manual feed of accounts in the assigned investor headers
identified. The email will contain the MSP client and corresponding
investor/categories to be included in the feed.
3. Bank of America will receive and process the file on the first
business day of the month for the previous month-end file.
NOTE: For LICENSED MSP clients, the Company will install and use the existing
work-around EZTrieve process. (This will require the installation, testing, and
implementation of the EZTrieve until the IP is ready.) The Company will be
required to develop a test file and production files until the IP is available.
Reporting Requirements
Required reports for the LSBO project are as follows:
o S215 - Report summarizes the collections made during the reporting
period
o S214 - Report summarizes paid in full loans made during the reporting
period
o P139 - Monthly statement of mortgage accounts or a trial balance as of
the cutoff date
o SCHEDULED REMITTANCE REPORTS - Companys send on a monthly basis. We
would like this report by the 5th business day.
o DELINQUENCY REPORT - Report from the Company to be sent by the 5th
business day. If the Company is a Fidelity client, we would like a
P4DL report. Otherwise, a similar report will suffice. LSBO would like
this report sent via e-mail or fax.
NOTE: These S215, S214, and P139 reports will be provided in an electronic
format. These reports are automatically generated when the 951/139 cutoff is
calendared. The reports are required for the LSBO project; reports in addition
to these may be required.
7
EXHIBIT K
SEC CERTIFICATION
I, [identify the senior officer in charge of servicing], certify [to [name
of depositor] (the "Depositor"), and its officers, directors and affiliates, and
with the knowledge and intent that they will rely upon this certification,]
that:
(a) I have reviewed the information required to be delivered to the
trustee by the servicer pursuant to the pooling and servicing
agreement (the "Servicing Information");
(b) Based on my knowledge, the Servicing Information, taken as a whole,
does not contain erroneous or incomplete information required to be
provided to the trustee by the servicer under the pooling and
servicing agreement;
(c) Based on my knowledge, the Servicing Information required to be
provided to the trustee by the servicer under the pooling and
servicing agreement has been provided to the trustee;
(d) I am responsible for reviewing the activities performed by the
servicer under the pooling and servicing agreement and based upon the
review required under the pooling and servicing agreement, and except
as disclosed in the report, the servicer has fulfilled its obligations
under the pooling and servicing agreement; and
(e) I have disclosed to [the Depositor's certificate public
accountants][the servicer's certified public accountants] all
significant deficiencies relating to the servicer's compliance with
the minimum servicing standards in accordance with a review conducted
in compliance with the Regulation AB attestation.
Date:
-------------------------------------
-------------------------------------------
[Signature]
-------------------------------------------
[Title]
8
EXHIBIT L
REGULATION AB COMPLIANCE ADDENDUM
This Regulation AB Compliance Addendum (this "Reg AB Addendum"), dated as
of March 2, 2006 by and between Bank of America, National Association (the
"Purchaser") and Indymac Bank, F.S.B. (the "Company"), to that certain Flow Sale
and Servicing Agreement Agreement, dated as of March 1, 2006 by and between the
Company and the Purchaser (as amended, modified or supplemented, the
"Agreement").
WITNESSETH
WHEREAS, the Company and the Purchaser have agreed to adopt an addendum to
the Agreement to reflect the intention of the parties to comply with Regulation
AB.
NOW, THEREFORE, in consideration of the mutual promises and mutual
obligations set forth herein, the Company and the Purchaser hereby agree as
follows:
SECTION 1
DEFINED TERMS
Capitalized terms used but not defined herein shall have the meanings
assigned to such terms in the Agreement. The following terms shall have the
meanings set forth below, unless the context clearly indicates otherwise:
Commission: The United States Securities and Exchange Commission.
Company Information: As defined in Section 2.07(a).
Depositor: The depositor, as such term is defined in Regulation AB, with respect
to any Securitization Transaction.
Exchange Act: The Securities Exchange Act of 1934, as amended.
Master Servicer: With respect to any Securitization Transaction, the "master
servicer," if any, identified in the related transaction documents.
Qualified Correspondent: Any Person from which the Company purchased Mortgage
Loans, provided that the following conditions are satisfied: (i) such Mortgage
Loans were originated pursuant to an agreement between the Company and such
Person that contemplated that such Person would underwrite mortgage loans from
time to time, for sale to the Company, in accordance with underwriting
guidelines designated by the Company ("Designated Guidelines") or guidelines
that do not vary materially from such Designated Guidelines; (ii) such Mortgage
Loans were in fact underwritten as described in clause (i) above and were
acquired by the Company within 180 days after origination; (iii) either (x) the
Designated Guidelines were, at the time such Mortgage Loans were originated,
used by the Company in origination of mortgage
9
loans of the same type as the Mortgage Loans for the Company's own account or
(y) the Designated Guidelines were, at the time such Mortgage Loans were
underwritten, designated by the Company on a consistent basis for use by lenders
in originating mortgage loans to be purchased by the Company; and (iv) the
Company employed, at the time such Mortgage Loans were acquired by the Company,
pre-purchase or post-purchase quality assurance procedures (which may involve,
among other things, review of a sample of mortgage loans purchased during a
particular time period or through particular channels) designed to ensure that
Persons from which it purchased mortgage loans properly applied the underwriting
criteria designated by the Company.
Reconstitution: Any Securitization Transaction or Whole Loan Transfer.
Regulation AB: Subpart 229.1100 - Asset Backed Securities (Regulation AB), 17
C.F.R. Sections 229.1100-229.1123, as such may be amended from time to time, and
subject to such clarification and interpretation as have been provided by the
Commission in the adopting release (Asset-Backed Securities, Securities Act
Release No. 33-8518, 70 Fed. Reg. 1,506, 1,531 (Jan. 7, 2005)) or by the staff
of the Commission, or as may be provided by the Commission or its staff from
time to time.
Securities Act: The Securities Act of 1933, as amended.
Securitization Transaction: Any transaction involving either (1) a sale or other
transfer of some or all of the Mortgage Loans directly or indirectly to an
issuing entity in connection with an issuance of publicly offered or privately
placed, rated or unrated mortgage-backed securities or (2) an issuance of
publicly offered or privately placed, rated or unrated securities, the payments
on which are determined primarily by reference to one or more portfolios of
residential mortgage loans consisting, in whole or in part, of some or all of
the Mortgage Loans.
Servicer: As defined in Section 2.03(c).
Servicing Criteria: The "servicing criteria" set forth in Item 1122(d) of
Regulation AB, as such may be amended from time to time.
Static Pool Information: Static pool information as described in Item
1l05(a)(l)-(3) and 1105(c) of Regulation AB.
Subcontractor: Any vendor, subcontractor or other Person that is not responsible
for the overall servicing (as "servicing" is commonly understood by participants
in the mortgage-backed securities market) of Mortgage Loans but performs one or
more discrete functions identified in Item l122( d) of Regulation AB with
respect to Mortgage Loans under the direction or authority of the Company or a
Subservicer.
Subservicer: Any Person that services Mortgage Loans on behalf of the Company or
any Subservicer and is responsible for the performance (whether directly or
through Subservicers or Subcontractors) of a substantial portion of the material
servicing functions required to be performed by the Company under this Agreement
or any Reconstitution Agreement that are identified in Item 1122(d) of
Regulation AB.
10
Third-Party Originator: Each Person, other than the Company or a Qualified
Correspondent, that, for purposes of Regulation AB, originated Mortgage Loans
acquired by the Company.
Whole Loan Transfer: Any sale or transfer of some or all of the Mortgage Loans,
other than a Securitization Transaction.
SECTION 2
COMPLIANCE WITH REGULATION AB
Section 2.01 Intent of the Parties; Reasonableness.
The Purchaser and the Company acknowledge and agree that the purpose of Article
II of this Reg AB Addendum is to facilitate compliance by the Purchaser and any
Depositor with the provisions of Regulation AB and related rules and regulations
of the Commission and that the provisions of this Reg AB Addendum shall be
applicable to all Mortgage Loans included in a Securitization Transaction
closing on or after January 1, 2006, regardless whether the Mortgage Loans were
purchased by the Purchaser from the Company prior to the date hereof. Although
Regulation AB is applicable by its terms only to offerings of asset-backed
securities that are registered under the Securities Act, the Company
acknowledges that investors in privately offered securities may require that the
Purchaser or any Depositor provide comparable disclosure in unregistered
offerings. References in this Agreement to compliance with Regulation AB include
provision of comparable disclosure in private offerings.
Neither the Purchaser nor any Depositor shall exercise its right to request
delivery of information or other performance under these provisions other than
in good faith, or for purposes other than compliance with the Securities Act,
the Exchange Act and the rules and regulations of the Commission thereunder (or
the provision in a private offering of disclosure comparable to that required
under the Securities Act). The Company acknowledges that interpretations of the
requirements of Regulation AB may change over time, whether due to interpretive
guidance provided by the Commission or its staff, consensus among participants
in the asset-backed securities markets, advice of counsel, or otherwise, and
agrees to comply with requests made by the Purchaser, any Master Servicer or any
Depositor in good faith for delivery of information under these provisions on
the basis of evolving interpretations of Regulation AB. In connection with any
Securitization Transaction, the Company shall cooperate fully with the Purchaser
and any Master Servicer to deliver to the Purchaser (including any of its
assignees or designees), any Master Servicer and any Depositor, any and all
statements, reports, certifications, records and any other information necessary
in the good faith determination of the Purchaser, the Master Servicer or any
Depositor to permit the Purchaser, such Master Servicer or such Depositor to
comply with the provisions of Regulation AB, together with such disclosures
relating to the Company, any Subservicer, any Third-Party Originator and the
Mortgage Loans, or the servicing of the Mortgage Loans, reasonably believed by
the Purchaser or any Depositor to be necessary in order to effect such
compliance.
The Purchaser (including any of its assignees or designees) shall cooperate with
the Company by providing timely notice of requests for information under these
provisions and by reasonably
11
limiting such requests to information required, in the Purchaser's reasonable
judgment, to comply with Regulation AB.
Section 2.02 Additional Representations and Warranties of the Company.
(a) The Company thereby represents to the Purchaser, to any Master
Servicer and to any Depositor, as of the date on which information is
first provided to the Purchaser, any Master Servicer or any Depositor
under Section 2.03 that, except as disclosed in writing to the
Purchaser, such Master Servicer or such Depositor prior to such date:
(i) the Company is not aware and has not received notice that any
default, early amortization or other performance triggering event has
occurred as to any other securitization due to any act or failure to
act of the Company; (ii) the Company has not been terminated as
servicer in a residential mortgage loan securitization, either due to
a servicing default or to application of a servicing performance test
or trigger; (iii) no material noncompliance with the applicable
Servicing Criteria with respect to other securitizations of
residential mortgage loans involving the Company as servicer has been
disclosed or reported by the Company; (iv) no material changes to the
Company's policies or procedures with respect to the servicing
function it will perform under this Agreement and any Reconstitution
Agreement for mortgage loans of a type similar to the Mortgage Loans
have occurred during the three-year period immediately preceding the
related Securitization Transaction; (v) there are no aspects of the
Company's financial condition that could have a material adverse
effect on the performance by the Company of its servicing obligations
under this Agreement or any Reconstitution Agreement; (vi) there are
no material legal or governmental proceedings pending (or known to be
contemplated) against the Company, any Subservicer or any Third-Party
Originator; and (vii) there are no affiliations, relationships or
transactions relating to the Company, any Subservicer or any
Third-Party Originator with respect to any Securitization Transaction
and any party thereto identified by the related Depositor of a type
described in Item 1119 of Regulation AB.
(b) If so requested by the Purchaser, any Master Servicer or any Depositor
on any date following the date on which information is first provided
to the Purchaser, any Master Servicer or any Depositor under Section
2.03, the Company shall, within five Business Days following such
request, confirm in writing the accuracy of the representations and
warranties set forth in paragraph (a) of this Section or, if any such
representation and warranty is not accurate as of the date of such
request, provide reasonably adequate disclosure of the pertinent
facts, in writing, to the requesting party.
Section 2.03 Information to Be Provided by the Company.
In connection with any Securitization Transaction, the Company shall (i) within
ten Business Days following request by the Purchaser or any Depositor, provide
to the Purchaser and such Depositor (or, as applicable, cause each Third-Party
Originator and each Subservicer to provide), in writing and in form and
substance reasonably satisfactory to the Purchaser and such
12
Depositor, the information and materials specified in paragraphs (a), (b), (c),
(f) and (g) of this Section, and (ii) as promptly as practicable following
notice to or discovery by the Company, provide to the Purchaser and any
Depositor (in writing and in form and substance reasonably satisfactory to the
Purchaser and such Depositor) the information specified in paragraph (d) of this
Section.
(a) If so requested by the Purchaser or any Depositor, the Company shall
provide such information regarding (i) the Company, as originator of
the Mortgage Loans (including as an acquirer of Mortgage Loans from a
Qualified Correspondent), or (ii) each Third-Party Originator, and
(iii) as applicable, each Subservicer, as is requested for the purpose
of compliance with Items 1103(a)(l), 1105, 1110, 1117 and 1119 of
Regulation AB. Such information shall include, at a minimum:
(i) the originator's form of organization;
(ii) a description of the originator's origination program and how
long the originator has been engaged in originating residential
mortgage loans, which description shall include a discussion of
the originator's experience in originating mortgage loans of a
similar type as the Mortgage Loans; information regarding the
size and composition of the originator's origination portfolio;
and information that may be material, in the good faith
judgment of the Purchaser or any Depositor, to an analysis of
the performance of the Mortgage Loans, including the
originators' credit-granting or underwriting criteria for
mortgage loans of similar type(s) as the Mortgage Loans and
such other information as the Purchaser or any Depositor may
reasonably request for the purpose of compliance with Item
1110(b)(2) of Regulation AB;
(iii) a description of any material legal or governmental proceedings
pending (or known to be contemplated) against the Company, each
Third-Party Originator and each Subservicer; and
(iv) a description of any affiliation or relationship between the
Company, each Third-Party Originator, each Subservicer and any
of the following parties to a Securitization Transaction, as
such parties are identified to the Company by the Purchaser or
any Depositor in writing in advance of such Securitization
Transaction:
the sponsor;
the depositor;
the issuing entity;
any servicer;
any trustee;
any originator;
any significant obligor;
any enhancement or support provider; and
any other material transaction party.
13
(b) If so requested by the Purchaser or any Depositor, the Company shall
provide (or, as applicable, cause each Third-Party Originator to
provide) Static Pool Information with respect to the mortgage loans
(of a similar type as the Mortgage Loans, as reasonably identified by
the Purchaser as provided below) originated by (i) the Company, if the
Company is an originator of Mortgage Loans (including as an acquirer
of Mortgage Loans from a Qualified Correspondent), and/or (ii) each
Third-Party Originator. Such Static Pool Information shall be prepared
by the Company (or Third-Party Originator) on the basis of its
reasonable, good faith interpretation of the requirements of Item
1105(a)(1)-(3) of Regulation AB. To the extent that there is
reasonably available to the Company (or Third-Party Originator) Static
Pool Information with respect to more than one mortgage loan type, the
Purchaser or any Depositor shall be entitled to specify whether some
or all of such information shall be provided pursuant to this
paragraph. The content of such Static Pool Information may be in the
form customarily provided by the Company, and need not be customized
for the Purchaser or any Depositor. Such Information for each vintage
origination year or prior securitized pool, as applicable, shall be
presented in increments no less frequently than quarterly over the
life of the mortgage loans included in the vintage origination year or
prior securitized pool. The most recent periodic increment must be as
of a date no later than 135 days prior to the date of the prospectus
or other offering document in which the Static Pool Information is to
be included or incorporated by reference. The Static Pool Information
shall be provided in an electronic format that provides a permanent
record of the information provided, such as a portable document format
(pdf) file, or other such electronic format reasonably required by the
Purchaser or the Depositor, as applicable.
Promptly following notice or discovery of a material error in Static Pool
Information provided pursuant to the immediately preceding paragraph (including
an omission to include therein information required to be provided pursuant to
such paragraph), the Company shall provide corrected Static Pool Information to
the Purchaser or any Depositor, as applicable, in the same format in which
Static Pool Information was previously provided to such party by the Company.
If so requested by the Purchaser or any Depositor, the Company shall provide
(or, as applicable, cause each Third-Party Originator to provide), at the
expense of the requesting party (to the extent of any additional incremental
expense associated with delivery pursuant to this Agreement), such statements
and agreed-upon procedures letters of certified public accountants reasonably
acceptable to the Purchaser or Depositor, as applicable, pertaining to Static
Pool Information relating to prior securitized pools for securitizations closed
on or after January 1, 2006 or, in the case of Static Pool Information with
respect to the Company's or Third-Party Originator's originations or purchases,
to calendar months commencing January 1, 2006, as the Purchaser or such
Depositor shall reasonably request. Such statements and letters shall be
addressed to and be for the benefit of such parties as the Purchaser or such
Depositor shall designate, which may include, by way of example, any Sponsor,
any Depositor and any broker dealer acting as underwriter, placement agent or
initial purchaser with respect to a Securitization Transaction. Any such
statement or letter may take the form of a standard, generally applicable
14
document accompanied by a reliance letter authorizing reliance by the addressees
designated by the Purchaser or such Depositor.
(c) If so requested by the Purchaser or any Depositor, the Company shall
provide such information regarding the Company, as servicer of the
Mortgage Loans, and each Subservicer (each of the Company and each
Subservicer, for purposes of this paragraph, a "Servicer"), as is
requested for the purpose of compliance with Items 1108, 1117 and 1119
of Regulation AB. Such information shall include, at a minimum:
(i) the Servicer's form of organization;
(ii) a description of how long the Servicer has been servicing
residential mortgage loans; a general discussion of the
Servicer's experience in servicing assets of any type as well
as a more detailed discussion of the Servicer's experience in,
and procedures for, the servicing function it will perform
under the Agreement and any Reconstitution Agreements;
information regarding the size, composition and growth of the
Servicer's portfolio of residential mortgage loans of a type
similar to the Mortgage Loans and information on factors
related to the Servicer that may be material, in the good faith
judgment of the Purchaser or any Depositor, to any analysis of
the servicing of the Mortgage Loans or the related asset-backed
securities, as applicable, including, without limitation:
whether any prior securitizations of mortgage loans of a
type similar to the Mortgage Loans involving the Servicer
have defaulted or experienced an early amortization or other
performance triggering event because of servicing during the
three-year period immediately preceding the related
Securitization Transaction;
the extent of outsourcing the Servicer utilizes;
whether there has been previous disclosure of material
noncompliance with the applicable servicing criteria with
respect to other securitizations of residential mortgage
loans involving the Servicer as a servicer during the
three-year period immediately preceding the related
Securitization Transaction;
whether the Servicer has been terminated as servicer in a
residential mortgage loan securitization, either due to a
servicing default or to application of a servicing
performance test or trigger; and
such other information as the Purchaser or any Depositor may
reasonably request for the purpose of compliance with Item
1108(b)(2) of Regulation AB;
15
(iii) a description of any material changes during the three-year
period immediately preceding the related Securitization
Transaction to the Servicer's policies or procedures with
respect to the servicing function it will perform under the
Agreement and any Reconstitution Agreements for mortgage loans
of a type similar to the Mortgage Loans;
(iv) information regarding the Servicer's financial condition, to
the extent that there is a material risk that an adverse
financial event or circumstance involving the Servicer could
have a material adverse effect on the performance by the
Company of its servicing obligations under the Agreement or any
Reconstitution Agreement;
(v) information regarding advances made by the Servicer on the
Mortgage Loans and the Servicer's overall servicing portfolio
of residential mortgage loans for the three-year period
immediately preceding the related Securitization Transaction,
which may be limited to a statement by an authorized officer of
the Servicer to the effect that the Servicer has made all
advances required to be made on residential mortgage loans
serviced by it during such period, or, if such statement would
not be accurate, information regarding the percentage and type
of advances not made as required, and the reasons for such
failure to advance;
(vi) a description of the Servicer's processes and procedures
designed to address any special or unique factors involved in
servicing loans of a similar type as the Mortgage Loans;
(vii) a description of the Servicer's processes for handling
delinquencies, losses, bankruptcies and recoveries, such as
through liquidation of mortgaged properties, sale of defaulted
mortgage loans or workouts; and
(viii) information as to how the Servicer defines or determines
delinquencies and charge-offs, including the effect of any
grace period, re-aging, restructuring, partial payments
considered current or other practices with respect to
delinquency and loss experience;
(ix) a description of any material legal or governmental proceedings
pending (or known to be contemplated) against the Servicer; and
(x) a description of any affiliation or relationship between the
Servicer and any of the following parties to a Securitization
Transaction, as such parties are identified to the Servicer by
the Purchaser or any Depositor in writing in advance of such
Securitization Transaction:
(1) the sponsor;
(2) the depositor;
(3) the issuing entity;
(4) any servicer;
(5) any trustee;
16
(6) any originator;
(7) any significant obligor;
(8) any enhancement or support provider; and
(9) any other material transaction party.
(d) For the purpose of satisfying the reporting obligation under the
Exchange Act with respect to any class of asset-backed securities, the
Company shall (or shall cause each Subservicer and Third-Party
Originator to) (i) provide prompt notice to the Purchaser, any Master
Servicer and any Depositor in writing of (a) any material litigation
or governmental proceedings involving the Company, any Subservicer or
any Third-Party Originator, (b) any affiliations or relationships that
develop following the closing date of a Securitization Transaction
between the Company, any Subservicer or any Third-Party Originator and
any of the parties specified in clause (d) of paragraph (a) of this
Section (and any other parties identified in writing by the requesting
party) with respect to such Securitization Transaction, (c) any Event
of Default under the terms of this Agreement or any Reconstitution
Agreement, (d) any merger, consolidation or sale of substantially all
of the assets of the Company, and (e) the Company's entry into an
agreement with a Subservicer to perform or assist in the performance
of any of the Company's obligations under this Agreement or any
Reconstitution Agreement and (ii) provide to the Purchaser and any
Depositor a description of such proceedings, affiliations or
relationships.
(e) As a condition to the succession to the Company or any Subservicer as
servicer or subservicer under the Agreement or any Reconstitution
Agreement by any Person (i) into which the Company or such Subservicer
may be merged or consolidated, or (ii) which may be appointed as a
successor to the Company or any Subservicer, the Company shall provide
to the Purchaser, any Master Servicer, and any Depositor, at least 15
calendar days prior to the effective date of such succession or
appointment, (x) written notice to the Purchaser and any Depositor of
such succession or appointment and (y) in writing and in form and
substance reasonably satisfactory to the Purchaser and such Depositor,
all information reasonably requested by the Purchaser or any Depositor
in order to comply with its reporting obligation under Item 6.02 of
Form 8-K with respect to any class of asset-backed securities.
(f) In addition to such information as the Company, as servicer, is
obligated to provide pursuant to other provisions of the Agreement,
not later than ten days prior to the deadline for the filing of any
distribution report on Form 10-D in respect of any Securitization
Transaction that includes any of the Mortgage Loans serviced by the
Company or any Subservicer, the Company or such Subservicer, as
applicable, shall, to the extent the Company or such Subservicer has
knowledge, provide to the party responsible for filing such report
(including, if applicable, the Master Servicer) notice of the
occurrence of any of the following events along with all information,
data, and materials related thereto as may be required to be included
in the related distribution report on Form 10-D (as specified in the
provisions of Regulation AB referenced below):
17
(1) any material modifications, extensions or waivers of pool asset
terms, fees, penalties or payments during the distribution
period or that have cumulatively become material over time
(Item 1121(a)(11) of Regulation AB);
(2) material breaches of pool asset representations or warranties
or transaction covenants (Item 1121(a)(12) of Regulation AB);
and
(3) information regarding new asset-backed securities issuances
backed by the same pool assets, any pool asset changes (such
as, additions, substitutions or repurchases), and any material
changes in origination, underwriting or other criteria for
acquisition or selection of pool assets (Item 1121(a)(14) of
Regulation AB).
(g) The Company shall provide to the Purchaser, any Master Servicer and
any Depositor, evidence of the authorization of the person signing any
certification or statement, copies or other evidence of Fidelity Bond
Insurance and Errors and Omissions Insurance policy, financial
information and reports, and such other information related to the
Company or any Subservicer or the Company or such Subservicer's
performance hereunder.
Section 2.04 Servicer Compliance Statement.
On or before March 1 of each calendar year, commencing in 2007, the Company
shall deliver to the Purchaser, any Master Servicer and any Depositor a
statement of compliance addressed to the Purchaser, such Master Servicer and
such Depositor and signed by an authorized officer of the Company, to the effect
that (i) a review of the Company's activities during the immediately preceding
calendar year (or applicable portion thereof) and of its performance under the
Agreement and any applicable Reconstitution Agreement during such period has
been made under such officer's supervision, and (ii) to the best of such
officers' knowledge, based on such review, the Company has fulfilled all of its
obligations under the Agreement and any applicable Reconstitution Agreement in
all material respects throughout such calendar year (or applicable portion
thereof) or, if there has been a failure to fulfill any such obligation in any
material respect, specifically identifying each such failure known to such
officer and the nature and the status thereof.
Section 2.05 Report on Assessment of Compliance and Attestation.
(a) On or before March 1 of each calendar year, commencing in 2007, the
Company shall:
(i) deliver to the Purchaser, any Master Servicer and any Depositor
a report (in form and substance reasonably satisfactory to the
Purchaser, such Master Servicer and such Depositor) regarding
the Company's assessment of compliance with the Servicing
Criteria during the immediately preceding calendar year, as
required under Rules 13a-18 and 15d-18 of the Exchange Act and
Item 1122 of Regulation AB. Such report shall be addressed to
the Purchaser, such Master Servicer and such Depositor and
18
signed by an authorized officer of the Company, and shall
address each of the "Applicable Servicing Criteria" specified
on Exhibit B hereto;
(ii) deliver to the Purchaser, any Master Servicer and any Depositor
a report of a registered public accounting firm reasonably
acceptable to the Purchaser, such Master Servicer and such
Depositor that attests to, and reports on, the assessment of
compliance made by the Company and delivered pursuant to the
preceding paragraph. Such attestation shall be in accordance
with Rules 1-02(a)(3) and 2-02(g) of Regulation S-X under the
Securities Act and the Exchange Act;
(iii) cause each Subservicer, and each Subcontractor determined by
the Company pursuant to Section 2.06(b) to be "participating in
the servicing function" within the meaning of Item 1122 of
Regulation AB and deliver to the Purchaser, any Master Servicer
and any Depositor an assessment of compliance and accountants'
attestation as and when provided in paragraphs (a) and (b) of
this Section; and
(iv) deliver, and cause each Subservicer and Subcontractor described
in clause (iii) to provide, to the Purchaser, any Depositor,
any Master Servicer and any other Person that will be
responsible for signing the certification (a "Sarbanes
Certification") required by Rules 13a-14(d) and 15d-14(d) under
the Exchange Act (pursuant to Section 302 of the Xxxxxxxx-Xxxxx
Act of 2002) on behalf of an asset-backed issuer with respect
to a Securitization Transaction a certification, signed by the
appropriate officer of the Company, in the form attached hereto
as Exhibit A.
The Company acknowledges that the parties identified in clause (a)(iv) above may
rely on the certification provided by the Company pursuant to such clause in
signing a Sarbanes Certification and filing such with the Commission. Neither
the Purchaser nor any Depositor will request delivery of a certification under
clause (a)(iv) above unless a Depositor is required under the Exchange Act to
file an annual report on Form 10-K with respect to an issuing entity whose asset
pool includes Mortgage Loans.
(a) Each assessment of compliance provided by a Subservicer pursuant to
Section 2.05(a)(iii) shall address each of the Servicing Criteria
specified on a certification substantially in the form of Exhibit B
hereto delivered to the Purchaser concurrently with the execution of
this Reg AB Addendum or, in the case of a Subservicer subsequently
appointed as such, on or prior to the date of such appointment. An
assessment of compliance provided by a Subcontractor pursuant to
Section 2.05(a)(iii) need not address any elements of the Servicing
Criteria other than those specified by the Company pursuant to Section
2.06.
Section 2.06 Use of Subservicers and Subcontractors.
The Company shall not hire or otherwise utilize the services of any Subservicer
to fulfill any of the obligations of the Company as servicer under the Agreement
or any Reconstitution
19
Agreement unless the Company complies with the provisions of paragraph (a) of
this Section. The Company shall not hire or otherwise utilize the services of
any Subcontractor, and shall not permit any Subservicer to hire or otherwise
utilize the services of any Subcontractor, to fulfill any of the obligations of
the Company as servicer under the Agreement or any Reconstitution Agreement
unless the Company complies with the provisions of paragraph (b) of this
Section.
(a) It shall not be necessary for the Company to seek the consent of the
Purchaser, any Master Servicer or any Depositor to the utilization of
any Subservicer. The Company shall cause any Subservicer used by the
Company (or by any Subservicer) for the benefit of the Purchaser and
any Depositor to comply with the provisions of this Section and with
Sections 2.02, 2.03( c), (e), (f) and (g), 2.04, 2.05 and 2.07 of this
Reg AB Addendum to the same extent as if such Subservicer were the
Company, and to provide the information required with respect to such
Subservicer under Section 2.03(d) of this Reg AB Addendum. The Company
shall be responsible for obtaining from each Subservicer and
delivering to the Purchaser and any Depositor any servicer compliance
statement required to be delivered by such Subservicer under Section
2.04, any assessment of compliance and attestation required to be
delivered by such Subservicer under Section 2.05 and any certification
required to be delivered to the Person that will be responsible for
signing the Sarbanes Certification under Section 2.05 as and when
required to be delivered.
(b) It shall not be necessary for the Company to seek the consent of the
Purchaser, any Master Servicer or any Depositor to the utilization of
any Subcontractor. The Company shall promptly upon request provide to
the Purchaser, any Master Servicer and any Depositor (or any designee
of the Depositor, such as an administrator) a written description (in
form and substance satisfactory to the Purchaser, such Depositor and
such Master Servicer) of the role and function of each Subcontractor
utilized by the Company or any Subservicer, specifying (i) the
identity of each such Subcontractor, (ii) which (if any) of such
Subcontractors are "participating in the servicing function" within
the meaning of Item 1122 of Regulation AB, and (iii) which elements of
the Servicing Criteria will be addressed in assessments of compliance
provided by each Subcontractor identified pursuant to clause (ii) of
this paragraph.
As a condition to the utilization of any Subcontractor determined to be
"participating in the servicing function" within the meaning of Item 1122 of
Regulation AB, the Company shall cause any such Subcontractor used by the
Company (or by any Subservicer) for the benefit of the Purchaser and any
Depositor to comply with the provisions of Sections 2.05 and 2.07 of this Reg AB
Addendum to the same extent as if such Subcontractor were the Company. The
Company shall be responsible for obtaining from each Subcontractor and
delivering to the Purchaser and any Depositor any assessment of compliance and
attestation and the other certifications required to be delivered by such
Subservicer and such Subcontractor under Section 2.05, in each case as and when
required to be delivered.
20
Section 2.07 Indemnification; Remedies.
(a) The Company shall indemnify the Purchaser, each affiliate of the
Purchaser, and each of the following parties participating in a
Securitization Transaction: each sponsor and issuing entity; each
Person (including, but not limited to, any Master Servicer if
applicable) responsible for the preparation, execution or filing of
any report required to be filed with the Commission with respect to
such Securitization Transaction, or for execution of a certification
pursuant to Rule 13a-14(d) or Rule 15d-14(d) under the Exchange Act
with respect to such Securitization Transaction; each broker dealer
acting as underwriter, placement agent or initial purchaser, each
Person who controls any of such parties or the Depositor (within the
meaning of Section 15 of the Securities Act and Section 20 of the
Exchange Act); and the respective present and former directors,
officers, employees, agents and affiliates of each of the foregoing
and of the Depositor (each, an "Indemnified Party"), and shall hold
each of them harmless from and against any claims, losses, damages,
penalties, fines, forfeitures, legal fees and expenses and related
costs, judgments, and any other costs, fees and expenses that any of
them may sustain arising out of or based upon:
(i) (A) any untrue statement of a material fact contained or
alleged to be contained in any information, report,
certification, data, accountants' letter or other material
provided under this Article II by or on behalf of the Company,
or provided under this Article II by or on behalf of any
Subservicer, Subcontractor or Third-Party Originator
(collectively, the "Company Information"), or (B) the omission
or alleged omission to state in the Company Information a
material fact required to be stated in the Company Information
or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not
misleading; provided, by way of clarification, that clause (B)
of this paragraph shall be construed solely by reference to the
Company Information and not to any other information
communicated in connection with a sale or purchase of
securities, without regard to whether the Company Information
or any portion thereof is presented together with or separately
from such other information;
(ii) any breach by the Company of its obligations under this Article
II, including particularly any failure by the Company, any
Subservicer, any Subcontractor or any Third-Party Originator to
deliver any information, report, certification, accountants'
letter or other material when and as required under this
Article II, including any failure by the Company to identify
pursuant to Section 2.06(b) any Subcontractor "participating in
the servicing function" within the meaning of Item 1122 of
Regulation AB;
(iii) any breach by the Company of a representation or warranty set
forth in Section 2.02(a) or in a writing furnished pursuant to
Section 2.02(b) and made as of a date prior to the closing date
of the related Securitization
21
Transaction, to the extent that such breach is not cured by
such closing date, or any breach by the Company of a
representation or warranty in a writing furnished pursuant to
Section 2.02(b) to the extent made as of a date subsequent to
such closing date; or
(iv) the negligence, bad faith or willful misconduct of the Company
in connection with its performance under this Article II.
If the indemnification provided for herein is unavailable or insufficient to
hold harmless an Indemnified Party, then the Company agrees that it shall
contribute to the amount paid or payable by such Indemnified Party as a result
of any claims, losses, damages or liabilities incurred by such Indemnified Party
in such proportion as is appropriate to reflect the relative fault of such
Indemnified Party on the one hand and the Company on the other.
In the case of any failure of performance described in clause (a)(ii) of this
Section, the Company shall promptly reimburse the Purchaser, any Depositor, as
applicable, and each Person responsible for the preparation, execution or filing
of any report required to be filed with the Commission with respect to such
Securitization Transaction, or for execution of a certification pursuant to Rule
13a-14(d) or Rule 15d-14(d) under the Exchange Act with respect to such
Securitization Transaction, for all costs reasonably incurred by each such party
in order to obtain the information, report, certification, accountants' letter
or other material not delivered as required by the Company, any Subservicer, any
Subcontractor or any Third-Party Originator.
This indemnification shall survive the termination of this Agreement or the
termination of any party to this Agreement.
(a) (i) Any failure by the Company, any Subservicer, any
Subcontractor or any Third-Party Originator to deliver any
information, report, certification, accountants' letter or
other material when and as required under this Article II, or
any breach by the Company of a representation or warranty set
forth in Section 2.02(a) or in a writing furnished pursuant to
Section 2.02(b) and made as of a date prior to the closing date
of the related Securitization Transaction, to the extent that
such breach is not cured by such closing date, or any breach by
the Company of a representation or warranty in a writing
furnished pursuant to Section 2.02(b) to the extent made as of
a date subsequent to such closing date, shall, except as
provided in clause (ii) of this paragraph, immediately and
automatically, without notice or grace period, constitute an
Event of Default with respect to the Company under the
Agreement and any applicable Reconstitution Agreement, and
shall entitle the Purchaser or any Depositor, as applicable, in
its sole discretion to terminate the rights and obligations of
the Company as servicer under the Agreement and/or any
applicable Reconstitution Agreement without payment
(notwithstanding anything in this Agreement or any applicable
Reconstitution Agreement to the contrary) of any compensation
to the Company (and if the Company is servicing any of the
Mortgage Loans in a Securitization Transaction, appoint a
successor servicer reasonably
22
acceptable to any Master Servicer for such Securitization
Transaction); provided that to the extent that any provision of
the Agreement and/or any applicable Reconstitution Agreement
expressly provides for the survival of certain rights or
obligations following termination of the Company as servicer,
such provision shall be given effect.
(ii) Any failure by the Company, any Subservicer or any
Subcontractor to deliver any information, report, certification
or accountants' letter when and as required under Section 2.04
or 2.05, including any failure by the Company to identify
pursuant to Section 2.06(b) any Subcontractor "participating in
the servicing function" within the meaning of Item 1122 of
Regulation AB, which continues unremedied for ten (10) calendar
days after the date on which such information, report,
certification or accountants' letter was required to be
delivered shall constitute an Event of Default with respect to
the Company under the Agreement and any applicable
Reconstitution Agreement, and shall entitle the Purchaser, any
Master Servicer or any Depositor, as applicable, in its sole
discretion to terminate the rights and obligations of the
Company as servicer under the Agreement and/or any applicable
Reconstitution Agreement without payment (notwithstanding
anything in this Agreement to the contrary) of any compensation
to the Company; provided that to the extent that any provision
of the Agreement and/or any applicable Reconstitution Agreement
expressly provides for the survival of certain rights or
obligations following termination of the Company as servicer,
such provision shall be given effect.
Neither the Purchaser, any Master Servicer nor any Depositor shall be
entitled to terminate the rights and obligations of the Company pursuant to
this subparagraph (b)(ii) if a failure of the Company to identify a
Subcontractor "participating in the servicing function" within the meaning
of Item 1122 of Regulation AB was attributable solely to the role or
functions of such Subcontractor with respect to mortgage loans other than
the Mortgage Loans.
(iii) The Company shall promptly reimburse the Purchaser (or any
designee of the Purchaser, such as a master servicer) and any
Depositor, as applicable, for all reasonable expenses incurred
by the Purchaser (or such designee) or such Depositor, as such
are incurred, in connection with the termination of the Company
as servicer and the transfer of servicing of the Mortgage Loans
to a successor servicer. The provisions of this paragraph shall
not limit whatever rights the Purchaser or any Depositor may
have under other provisions of the Agreement and/or any
applicable Reconstitution Agreement or otherwise, whether in
equity or at law, such as an action for damages, specific
performance or injunctive relief.
23
Section 2.08 Third-Party Beneficiary.
For purposes of this Article II and any related provisions thereto, each Master
Servicer shall be considered a third-party beneficiary of this Agreement,
entitled to all the rights and benefits hereof as if it were a direct party to
this Agreement.
24
EXHIBIT A
FORM OF ANNUAL CERTIFICATION
Re: The Flow Sale and Servicing Agreement dated as of March 1, 2006 (the
"Agreement"), between Bank of America, National Association and IndyMac Bank,
F.S.B.
I, ________________________________, the _____________________ of IndyMac Bank,
F.S.B. (the "Company"), certify to [the Purchaser], [the Depositor], and the
[Master Servicer] [Securities Administrator] [Trustee], and their officers, with
the knowledge and intent that they will rely upon this certification, that:
(1) I have reviewed the servicer compliance statement of the Company
provided in accordance with Item 1123 of Regulation AB (the "Compliance
Statement"), the report on assessment of the Company's compliance with the
servicing criteria set forth in Item 1122(d) of Regulation AB and identified as
the responsibility of the Company on Exhibit B to the Regulation AB Compliance
Addendum to the Agreement (the "Servicing Criteria"), provided in accordance
with Rules 13a-18 and 15d-18 under Securities Exchange Act of 1934, as amended
(the "Exchange Act") and Item 1122 of Regulation AB (the "Servicing
Assessment"), the registered public accounting firm's attestation report
provided in accordance with Rules 13a-18 and 15d-18 under the Exchange Act and
Section 1122(b) of Regulation AB (the "Attestation Report"), and all servicing
reports, officer's certificates and other information relating to the servicing
of the Mortgage Loans by the Company during 200[ ] that were delivered by the
Company to the [Depositor] [Master Servicer] [Securities Administrator]
[Trustee] pursuant to the Agreement (collectively, the "Company Servicing
Information");
(2) Based on my knowledge, the Company Servicing Information, taken as a
whole, does not contain any untrue statement of a material fact or omit to state
a material fact necessary to make the statements made, in the light of the
circumstances under which such statements were made, not misleading with respect
to the period of time covered by the Company Servicing Information;
(3) Based on my knowledge, all of the Company Servicing Information
required to be provided by the Company under the Agreement has been provided to
the [Depositor] [Master Servicer] [Securities Administrator] [Trustee];
(4) I am responsible for reviewing the activities performed by the Company
as servicer under the Agreement, and based on my knowledge and the compliance
review conducted in preparing the Compliance Statement and except as disclosed
in the Compliance Statement, the Servicing Assessment or the Attestation Report,
the Company has fulfilled its obligations under the Agreement in all material
respects; and
(5) The Compliance Statement required to be delivered by the Company
pursuant to this Agreement, and the Servicing Assessment and Attestation Report
required to be provided by the Company and by any Subservicer and Subcontractor
pursuant to the Agreement, have been provided to the [Depositor] [Master
Servicer]. Any material instances of noncompliance
described in such reports have been disclosed to the [Depositor] [Master
Servicer]. Any material instance of noncompliance with the Servicing Criteria
has been disclosed in such reports.
Date:
---------------------------------
By:
-----------------------------------
Name:
Title:
2
EXHIBIT B
SERVICING CRITERIA TO BE ADDRESSED IN ASSESSMENT OF COMPLIANCE
The assessment of compliance to be delivered by [the Company] [Name of
Subservicer] shall address, at a minimum, the criteria identified as below as
"Applicable Servicing Criteria";
--------------------------------------------------------------------------------
APPLICABLE
SERVICING
SERVICING CRITERIA CRITERIA
--------------------------------------------------------------------------------
REFERENCE CRITERIA
--------------------------------------------------------------------------------
GENERAL SERVICING CONSIDERATIONS
--------------------------------------------------------------------------------
1122(d)(1)(i) Policies and procedures are instituted to
monitor any performance or other triggers and
events of default in accordance with the
transaction agreements.
--------------------------------------------------------------------------------
1122(d)(1)(ii) If any material servicing activities are
outsourced to third parties, policies and
procedures are instituted to monitor the third
party's performance and compliance with such
servicing activities.
--------------------------------------------------------------------------------
1122(d)(1)(iii) Any requirements in the transaction agreements
to maintain a back-up servicer for the mortgage
loans are maintained.
--------------------------------------------------------------------------------
1122(d)(1)(iv) A fidelity bond and errors and omissions policy
is in effect on the party participating in the
servicing function throughout the reporting
period in the amount of coverage required by and
otherwise in accordance with the terms of the
transaction agreements.
--------------------------------------------------------------------------------
CASH COLLECTION AND ADMINISTRATION
--------------------------------------------------------------------------------
1122(d)(2)(i) Payments on mortgage loans are deposited into
the appropriate custodial bank accounts and
related bank clearing accounts no more than two
business days following receipt, or such other
number of days specified in the transaction
agreements.
--------------------------------------------------------------------------------
1122(d)(2)(ii) Disbursements made via wire transfer on behalf
of an obligor or to an investor are made only by
authorized personnel.
--------------------------------------------------------------------------------
1122(d)(2)(iii) Advances of funds or guarantees regarding
collections, cash flows or distributions, and
any interest or other fees charged for such
advances, are made, reviewed and approved as
specified in the transaction agreements.
--------------------------------------------------------------------------------
1122(d)(2)(iv) The related accounts for the transaction, such
as cash reserve accounts or accounts established
as a form of overcollateralization, are
separately maintained (e.g., with respect to
commingling of cash) as set forth in the
transaction agreements.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
APPLICABLE
SERVICING
SERVICING CRITERIA CRITERIA
--------------------------------------------------------------------------------
REFERENCE CRITERIA
--------------------------------------------------------------------------------
1122(d)(2)(v) Each custodial account is maintained at a
federally insured depository institution as set
forth in the transaction agreements. For
purposes of this criterion, "federally insured
depository institution" with respect to a
foreign financial institution means a foreign
financial institution that meets the
requirements of Rule 13k-1 (b)(1) of the
Securities Exchange Act.
--------------------------------------------------------------------------------
1122(d)(2)(vi) Unissued checks are safeguarded so as to prevent
unauthorized access.
--------------------------------------------------------------------------------
1122(d)(2)(vii) Reconciliations are prepared on a monthly basis
for all asset-backed securities related bank
accounts, including custodial accounts and
related bank clearing accounts. These
reconciliations are (a) mathematically accurate;
(b) prepared within 30 calendar days after the
bank statement cutoff date, or such other number
of days specified in the transaction agreements;
(c) reviewed and approved by someone other than
the person who prepared the reconciliation; and
(d) contain explanations for reconciling items.
These reconciling items are resolved within 90
calendar days of their original identification,
or such other number of days specified in the
transaction agreements.
--------------------------------------------------------------------------------
INVESTOR REMITTANCES AND REPORTING
--------------------------------------------------------------------------------
1122(d)(3)(i) Reports to investors, including those to be
filed with the Commission, are maintained in
accordance with the transaction agreements and
applicable Commission requirements.
Specifically, such reports (a) are prepared in
accordance with timeframes and other terms set
forth in the transaction agreements; (b) provide
information calculated in accordance with the
terms specified in the transaction agreements;
(c) are filed with the Commission as required by
its rules and regulations; and (d) agree with
investors' or the trustee's records as to the
total unpaid principal balance and number of
mortgage loans serviced by the Servicer.
--------------------------------------------------------------------------------
1122(d)(3)(ii) Amounts due to investors are allocated and
remitted in accordance with timeframes,
distribution priority and other terms set forth
in the transaction agreements.
--------------------------------------------------------------------------------
1122(d)(3)(iii) Disbursements made to an investor are posted
within two business days to the Servicer's
investor records, or such other number of days
specified in the transaction agreements.
--------------------------------------------------------------------------------
1122(d)(3)(iv) Amounts remitted to investors per the investor
reports agree with cancelled checks, or other
form of payment, or custodial bank statements.
--------------------------------------------------------------------------------
2
--------------------------------------------------------------------------------
APPLICABLE
SERVICING
SERVICING CRITERIA CRITERIA
--------------------------------------------------------------------------------
REFERENCE CRITERIA
--------------------------------------------------------------------------------
POOL ASSET ADMINISTRATION
--------------------------------------------------------------------------------
122(d)(4)(i) Collateral or security on mortgage loans is
maintained as required by the transaction
agreements or related mortgage loan documents.
--------------------------------------------------------------------------------
1122(d)(4)(ii) Mortgage loan and related documents are
safeguarded as required by the transaction
agreements
--------------------------------------------------------------------------------
1122(d)(4)(iii) Any additions, removals or substitutions to the
asset pool are made, reviewed and approved in
accordance with any conditions or requirements
in the transaction agreements.
--------------------------------------------------------------------------------
1122(d)(4)(iv) Payments on mortgage loans, including any
payoffs, made in accordance with the related
mortgage loan documents are posted to the
Servicer's obligor records maintained no more
than two business days after receipt, or such
other number of days specified in the
transaction agreements, and allocated to
principal, interest or other items (e.g.,
escrow) in accordance with the related mortgage
loan documents.
--------------------------------------------------------------------------------
1122(d)(4)(v) The Servicer's records regarding the mortgage
loans agree with the Servicer's records with
respect to an obligor's unpaid principal
balance.
--------------------------------------------------------------------------------
1122(d)(4)(vi) Changes with respect to the terms or status of
an obligor's mortgage loans (e.g., loan
modifications or re-agings) are made, reviewed
and approved by authorized personnel in
accordance with the transaction agreements and
related pool asset documents.
--------------------------------------------------------------------------------
1122(d)(4)(vii) Loss mitigation or recovery actions (e.g.,
forbearance plans, modifications and deeds in
lieu of foreclosure, foreclosures and
repossessions, as applicable) are initiated,
conducted and concluded in accordance with the
timeframes or other requirements established by
the transaction agreements.
--------------------------------------------------------------------------------
1122(d)(4)(viii) Records documenting collection efforts are
maintained during the period a mortgage loan is
delinquent in accordance with the transaction
agreements. Such records are maintained on at
least a monthly basis, or such other period
specified in the transaction agreements, and
describe the entity's activities in monitoring
delinquent mortgage loans including, for
example, phone calls, letters and payment
rescheduling plans in cases where delinquency is
deemed temporary (e.g., illness or
unemployment).
--------------------------------------------------------------------------------
3
--------------------------------------------------------------------------------
APPLICABLE
SERVICING
SERVICING CRITERIA CRITERIA
--------------------------------------------------------------------------------
REFERENCE CRITERIA
--------------------------------------------------------------------------------
1122(d)(4)(ix) Adjustments to interest rates or rates of return
for mortgage loans with variable rates are
computed based on the related mortgage loan
documents.
--------------------------------------------------------------------------------
1122(d)(4)(x) Regarding any funds held in trust for an obligor
(such as escrow accounts): (a) such funds are
analyzed, in accordance with the obligor's
mortgage loan documents, on at least an annual
basis, or such other period specified in the
transaction agreements; (b) interest on such
funds is paid, or credited, to obligors in
accordance with applicable mortgage loan
documents and state laws; and (c) such funds are
returned to the obligor within 30 calendar days
of full repayment of the related mortgage loans,
or such other number of days specified in the
transaction agreements.
--------------------------------------------------------------------------------
1122(d)(4)(xi) Payments made on behalf of an obligor (such as
tax or insurance payments) are made on or before
the related penalty or expiration dates, as
indicated on the appropriate bills or notices
for such payments, provided that such support
has been received by the servicer at least 30
calendar days prior to these dates, or such
other number of days specified in the
transaction agreements.
--------------------------------------------------------------------------------
1122(d)(4)(xii) Any late payment penalties in connection with
any payment to be made on behalf of an obligor
are paid from the servicer's funds and not
charged to the obligor, unless the late payment
was due to the obligor's error or omission.
--------------------------------------------------------------------------------
1122(d)(4)(xiii) Disbursements made on behalf of an obligor are
posted within two business days to the obligor's
records maintained by the servicer, or such
other number of days specified in the
transaction agreements.
--------------------------------------------------------------------------------
1122(d)(4)(xiv) Delinquencies, charge-offs and uncollectible
accounts are recognized and recorded in
accordance with the transaction agreements.
--------------------------------------------------------------------------------
1122(d)(4)(xv) Any external enhancement or other support,
identified in Item 1114(a)(1) through (3) or
Item 1115 of Regulation AB, is maintained as set
forth in the transaction agreements.
--------------------------------------------------------------------------------
4
[INDYMAC BANK, F.S.B.]
[NAME OF SUBSERVICER]
Date:
----------------------------------
By:
------------------------------------
Name:
Title:
5
