Exhibit 99.9
Execution Copy
XXXXXXX XXXXX MORTGAGE LENDING, INC.
PURCHASER
AND
XXXXX FARGO BANK, N.A.
COMPANY
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SELLER'S WARRANTIES AND SERVICING AGREEMENT
DATED AS OF OCTOBER 1, 2005
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ADJUSTABLE RATE MORTGAGE LOANS
WFHM MORTGAGE LOAN SERIES 2005-W81
TABLE OF CONTENTS
ARTICLE I.................................................................. 1
DEFINITIONS................................................................ 1
ARTICLE II................................................................. 12
CONVEYANCE OF MORTGAGE LOANS; POSSESSION OF MORTGAGE FILES; BOOKS AND
RECORDS; CUSTODIAL AGREEMENT; DELIVERY OF DOCUMENTS........................ 12
ARTICLE III................................................................ 15
REPRESENTATIONS AND WARRANTIES REMEDIES AND BREACH......................... 15
ARTICLE IV................................................................. 34
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS............................. 34
ARTICLE V.................................................................. 51
PAYMENTS TO PURCHASER...................................................... 51
ARTICLE VI................................................................. 52
GENERAL SERVICING PROCEDURES............................................... 52
ARTICLE VII................................................................ 55
COMPANY TO COOPERATE....................................................... 55
ARTICLE VIII............................................................... 55
THE COMPANY................................................................ 55
ARTICLE IX................................................................. 57
REMOVAL OF MORTGAGE LOANS FROM AGREEMENT................................... 57
ARTICLE X.................................................................. 60
DEFAULT.................................................................... 60
ARTICLE XI................................................................. 62
TERMINATION................................................................ 62
ARTICLE XII................................................................ 62
MISCELLANEOUS PROVISIONS................................................... 62
EXHIBITS
Exhibit A Mortgage Loan Schedule
Exhibit A-1 Data File
Exhibit B Contents of Each Mortgage File
Exhibit C Custodial Agreement
Exhibit D Form of Assignment, Assumption and Recognition Agreement
Exhibit E Form of Custodial Account Certification
Exhibit F Form of Escrow Account Certification
Exhibit G Form of Annual Certification
Exhibit H Indemnification Agreement
This is a Seller's Warranties and Servicing Agreement for adjustable rate
residential first mortgage loans, dated and effective as of October 1, 2005, and
is executed between Xxxxxxx Xxxxx Mortgage Lending, Inc., as purchaser (the
"Purchaser"), and Xxxxx Fargo Bank, N.A., as seller and servicer (the
"Company").
WITNESSETH
WHEREAS, the Purchaser has agreed to purchase from the Company and the
Company has agreed to sell to the Purchaser certain Mortgage Loans which have an
aggregate outstanding principal balance as indicated on the Mortgage Loan
Schedule, which is annexed hereto as Exhibit A;
WHEREAS, each of the Mortgage Loans is secured by a mortgage, deed of trust
or other security instrument creating a first lien on a residential dwelling
located in the jurisdiction indicated on the Mortgage Loan Schedule; 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.
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, those
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 and in accordance
with applicable law.
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.
Agency: Xxxxxx Xxx, Xxxxxxx Mac or GNMA, or any of them as applicable.
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Agency Sale: Any sale or transfer of some or all of the Mortgage Loans by
the Purchaser to an Agency which sale or transfer is not a Pass-Through Transfer
or Whole Loan Transfer.
Agreement: This Seller's Warranties and Servicing Agreement and all
exhibits thereto, amendments hereof and supplements hereto.
ALTA: The American Land Title Association or any successor thereto.
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 refinanced Mortgage Loan, such value shall be based solely on the
appraisal made in connection with the origination of such Mortgage Loan.
Appropriate Federal Banking Agency: Appropriate Federal Banking Agency
shall have the meaning ascribed to it by Section 1813(q) of Title 12 of the
United States Code, as amended from time to time.
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 or if the related Mortgage has been
recorded in the name of MERS or its designee, such actions as are necessary to
cause the Purchaser to be shown as the owner of the related Mortgage on the
records of MERS for purposes of the system of recording transfers of beneficial
ownership of mortgages maintained by MERS, including assignment of the MIN
Number which will appear either on the Mortgage or the Assignment of Mortgage to
MERS.
Assignment of Mortgage Note and Pledge Agreement: With respect to a
Cooperative Loan, an assignment of the Mortgage Note and Pledge Agreement.
Assignment of Proprietary Lease: With respect to a Cooperative Loan, an
assignment of the Proprietary Lease sufficient under the laws of the
jurisdiction wherein the related Cooperative Apartment is located to effect the
assignment of such Proprietary Lease.
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 states where the parties
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
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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: October 28, 2005.
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: Xxxxx Fargo Bank, N.A., or its successor in interest or assigns,
or any successor to the Company under this Agreement appointed as herein
provided.
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.
Convertible Mortgage Loan: A Mortgage Loan that by its terms and subject to
certain conditions contained in the related Mortgage or Mortgage Note allows the
Mortgagor to convert the adjustable Mortgage Interest Rate on such Mortgage Loan
to a fixed Mortgage Interest Rate.
Cooperative: The entity that holds title (fee or an acceptable leasehold
estate) to all of the real property that the Project comprises, including the
land, separate dwelling units and all common areas.
Cooperative Apartment: The specific dwelling unit relating to a Cooperative
Loan.
Cooperative Lien Search: A search for (a) federal tax liens, mechanics'
liens, lis pendens, judgments of record or otherwise against (i) the
Cooperative, (ii) the seller of the Cooperative Apartment and (iii) the Company
if the Cooperative Loan is a refinanced Mortgage Loan, (b) filings of financing
statements and (c) the deed of the Project into the Cooperative.
Cooperative Loan: A Mortgage Loan that is secured by Cooperative Shares and
a Proprietary Lease granting exclusive rights to occupy the related Cooperative
Apartment.
Cooperative Shares: The shares of stock issued by a Cooperative, owned by
the Mortgagor, and allocated to a Cooperative Apartment.
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Covered Loan: A Mortgage Loan categorized as "Covered" pursuant to the
Standard & Poor's Glossary for File Format for LEVELS(R) Version 5.6c, Appendix
E, revised August 1, 2005 (excluding New Jersey "Covered Home Loans" as that
term is defined in clause (1) of the definition of that term in the New Jersey
Home Ownership Security Act of 2002).
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, between the Purchaser and the Custodian, a copy of which is annexed
hereto as Exhibit C.
Custodian: The custodian under the Custodial Agreement, or its successor in
interest or assigns, or any successor to the Custodian under the Custodial
Agreement as provided therein.
Cut-off Date: October 1, 2005.
Data File: The electronic data file prepared by the Company and delivered
to the Purchaser including the data fields set forth on Exhibit A-2 with respect
to each Mortgage Loan.
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 Business Day immediately preceding the related
Remittance Date.
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.
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Event of Default: Any one of the conditions or circumstances enumerated in
Section 10.01.
Xxxxxx Xxx: The Federal National Mortgage Association or Xxxxxx Mae, 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: November 18, 2005.
Xxxxxxx Mac: The Federal Home Loan Mortgage Corporation or Xxxxxxx Mac, or
any successor thereto.
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.
High Cost Loan: A Mortgage Loan classified as (a) a "high cost" loan under
the Home Ownership and Equity Protection Act of 1994, (b) a "high cost home,"
"threshold," "covered," (excluding New Jersey "Covered Home Loans" as that term
is defined in clause (1) of the definition of that term in the New Jersey Home
Ownership Security Act of 2002), "high risk home," "predatory" or similar loan
under any other applicable state, federal or local law or (c) a Mortgage Loan
categorized as "High Cost" pursuant to the Standard & Poor's Glossary for File
Format for LEVELS(R) Version 5.6c, Appendix E, revised August 1, 2005.
Incremental Interest: As to any Incremental Rate Mortgage Loan, the amount
of interest accrued on such Mortgage Loan attributable to the Incremental Rate;
provided, however, that with respect to any payment of interest received in
respect of such Mortgage Loan (whether paid by the Mortgagor or received as
Liquidation Proceeds or otherwise) which is less than the full amount of
interest then due with respect to such Mortgage Loan, only that portion of such
payment of interest that bears the same relationship to the total amount of such
payment of interest as the Incremental Rate, if any, in respect of such Mortgage
Loan bears to the Mortgage Interest Rate shall be allocated to the Incremental
Interest with respect thereto.
Incremental Rate: For an Incremental Rate Mortgage Loan, the per annum
increase to the initial Mortgage Interest Rate set forth in the addendum to the
related Mortgage Note, which increase takes effect upon the occurrence of
certain specified conditions prior to the first Adjustment Date and remains in
effect until the first Adjustment Date.
Incremental Rate Mortgage Loan: A Mortgage Loan for which the related
Mortgage Note includes an addendum that allows for an increase to the initial
Mortgage Interest Rate upon the occurrence of certain specified conditions.
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Index: With respect to any adjustable rate Mortgage Loan, the index
identified on the Mortgage Loan Schedule and set forth in the related Mortgage
Note for the purpose of calculating the interest thereon.
Insurance Proceeds: With respect to each Mortgage Loan, proceeds of
insurance policies insuring the Mortgage Loan or the related Mortgaged Property.
Insured Depository Institution: Insured Depository Institution shall have
the meaning ascribed to such term by Section 1813(c)(2) of Title 12 of the
United States Code, as amended from time to time.
Interest Only Mortgage Loan: A Mortgage Loan for which an interest-only
payment feature is allowed during the interest-only period set forth in the
related Mortgage Note.
Letter of Credit: With respect to a Pledged Asset Mortgage Loan, a guaranty
issued to the Company by the Pledge Holder for the Pledged Value Amount.
Liquidation Proceeds: Cash received in connection with the liquidation of a
defaulted Mortgage Loan, whether through the sale or assignment of such Mortgage
Loan, trustee's sale, foreclosure sale or otherwise, or the sale of the related
Mortgaged Property if the Mortgaged Property is acquired in satisfaction of the
Mortgage Loan.
Loan-to-Value Ratio or LTV: With respect to any Mortgage Loan, the ratio of
the original loan amount of the Mortgage Loan at its origination (unless
otherwise indicated) to the Appraised Value of the Mortgaged Property.
LPMI Policy: A PMI Policy for which the Company pays all premiums from its
own funds, without reimbursement.
MERS: Mortgage Electronic Registration Systems, Inc., a Delaware
corporation, or any successor in interest thereto.
MERS Mortgage Loan: Any Mortgage Loan registered with MERS on the MERS
System
MERS System: The system of recording transfers of mortgages electronically
maintained by MERS.
MIN: The eighteen digit Mortgage Identification Number permanently assigned
to each Mortgage Loan.
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.
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Monthly Payment: The scheduled monthly payment of principal and interest on
a Mortgage Loan or in the case of an Interest Only Mortgage Loan, payments of
(i) interest, or (ii) principal and interest, as applicable, on such Mortgage
Loan during the interest-only period.
Mortgage: The mortgage, deed of trust or other instrument securing a
Mortgage Note, which creates a first lien on an unsubordinated estate in fee
simple in real property securing the Mortgage Note, or the Pledge Agreement
securing the Mortgage Note for a Cooperative Loan.
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, which Mortgage Loan includes
without limitation the Mortgage File, the Servicing File, the Monthly Payments,
Principal Prepayments, Liquidation Proceeds, Condemnation Proceeds, Insurance
Proceeds, REO Disposition Proceeds and all other rights, benefits, proceeds and
obligations arising from or in connection with such Mortgage Loan.
Mortgage Loan Documents: With respect to a Mortgage Loan, the original
related Mortgage Note with applicable addenda and riders, the original related
Mortgage and the originals of any required addenda and riders, the original
related Assignment of Mortgage and any original intervening related Assignments
of Mortgage, the original related title insurance policy and evidence of the
related PMI policy, if any.
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: A schedule of Mortgage Loans annexed hereto as
Exhibit A, such schedule setting forth the following information with respect to
each Mortgage Loan: (1) the Company's Mortgage Loan number; (2) the city state
and zip code of the Mortgaged Property; (3) a code indicating whether the
Mortgaged Property is a single family residence, two-family residence,
three-family residence, four-family residence, planned unit development or
condominium; (4) the current Mortgage Interest Rate; (5) the current net
Mortgage Interest Rate; (6) the current Monthly Payment; (7) the Gross Margin;
(8) the original term to maturity; (9) the scheduled maturity date; (10) 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; (11) the Loan-to-Value Ratio; (12) the next Adjustment Date; (13) the
lifetime Mortgage Interest Rate cap; (14) whether the Mortgage Loan is
convertible or not; (15) a code
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indicating the mortgage guaranty insurance company; (16) a code indicating
whether the Mortgage Loan is an Interest Only Mortgage Loan; (17) a code
indicating whether the loan is subject to LPMI and (18) the Servicing Fee Rate.
Mortgage Note: The note or other evidence of the indebtedness of a
Mortgagor secured by a Mortgage.
Mortgaged Property: The real property securing repayment of the debt
evidenced by a Mortgage Note, or with respect to a Cooperative Loan, the
Cooperative Apartment.
Mortgagor: The obligor on a Mortgage Note.
Officer's Certificate: A certificate signed by the Chairman of the Board or
the Vice Chairman of the Board or the President or a Vice President or an
Assistant Vice President and certified by the Treasurer or the Secretary or one
of the Assistant Treasurers or Assistant Secretaries of the Company, and
delivered to the Purchaser as required by this Agreement.
Opinion of Counsel: A written opinion of counsel, who may be an employee of
the Company, reasonably acceptable to the Purchaser.
Pass-Through Transfer: The sale or transfer of some or all of the Mortgage
Loans by the Purchaser to a trust to be formed as part of a publicly issued or
privately placed mortgage-backed securities transaction.
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.
Pledge Account: With respect to a Pledged Asset Mortgage Loan, an account
that is managed by the Pledge Holder to secure a Letter of Credit.
Pledge Agreement: With respect to a Cooperative Loan, the specific
agreement creating a first lien on and pledge of the Cooperative Shares and the
appurtenant Proprietary Lease.
Pledge Account Maintenance Value: With respect to a Pledged Asset Mortgage
Loan, a minimum percentage of the pledged amount specified in the Underwriting
Guidelines. If the balance on the Pledge Account falls below the maintenance
value of the pledge amount, the Pledge Holder will require that more funds be
added to the Pledge Account, or decide to make a margin call.
Pledge Account Set-Up Value: With respect to a Pledged Asset Mortgage Loan,
a minimum percentage of the pledged amount specified in the Underwriting
Guidelines placed in
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the Pledge Account to allow for market fluctuations. The Pledge Holder
determines the Pledge Account Set-Up Value.
Pledge Holder: With respect to a Pledged Asset Mortgage Loan, the entity
that holds the Pledge Account, manages the Pledge Account and provides the
Letter of Credit.
Pledge Instruments: With respect to a Cooperative Loan, the Stock Power,
the Assignment of the Proprietary Lease and the Assignment of the Mortgage Note
and Pledge Agreement.
Pledged Asset Mortgage Loan: A Mortgage Loan for which the Mortgagor has
pledged financial assets to a Pledge Account to secure a Letter of Credit, as
partial collateral for the Mortgage Loan, in lieu of a cash down payment.
Pledged Value Amount: With respect to a Pledged Asset Mortgage Loan, a
minimum of 20% of the lower of the purchase price or appraised value of a
Mortgaged Property.
PMI Policy: A policy of primary mortgage guaranty insurance evidenced by an
electronic form and certificate number issued by a Qualified Insurer, as
required by this Agreement with respect to certain Mortgage Loans. The premiums
on a PMI Policy are paid (i) by the Mortgagor or (ii) by the Company from its
own funds, without reimbursement, in the case of an LPMI Policy.
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 penalty or premium 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 calendar month preceding the month in
which the related Remittance Date occurs.
Project: With respect to a Cooperative Loan, all real property owned by the
related Cooperative including the land, separate dwelling units and all common
areas.
Proprietary Lease: With respect to a Cooperative Loan, a lease on a
Cooperative Apartment evidencing the possessory interest of the Mortgagor in
such Cooperative Apartment.
Purchaser: Xxxxxxx Xxxxx Mortgage Lending, Inc., or its successor in
interest or any successor to the Purchaser under this Agreement as herein
provided.
Qualified Depository: A deposit account or accounts maintained with a
federal or state chartered depository institution the deposits in which are
insured by the FDIC to the applicable
9
limits and the short-term unsecured debt obligations of which (or, in the case
of a depository institution that is a subsidiary of a holding company, the
short-term unsecured debt obligations of such holding company) are rated A-1 by
Standard & Poor's Ratings Services or Prime-1 by Xxxxx'x Investors Service, Inc.
(or a comparable rating if another rating agency is specified by the Purchaser
by written notice to the Company) at the time any deposits are held on deposit
therein.
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, (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 two percent (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; and (iv) comply with each representation and warranty set
forth in Sections 3.01 and 3.02.
Recognition Agreement: An agreement whereby a Cooperative and a lender with
respect to a Cooperative Loan (i) acknowledge that such lender may make, or
intends to make, such Cooperative Loan, and (ii) make certain agreements with
respect to such Cooperative Loan.
Reconstitution Date: The date on which any or all of the Mortgage Loans
serviced under this Agreement shall be reconstituted as part of a Pass-Through
Transfer, Agency Sale or Whole Loan Transfer pursuant to Section 9.01 hereof.
The Reconstitution Date shall be such date which the Purchaser shall designate.
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, 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 following) 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.
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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: Unless agreed otherwise agreed by the Purchaser and the
Company, a price equal to (i) the Stated Principal Balance of the Mortgage Loan
as of the date on which such repurchase takes place, plus (ii) interest on such
Stated Principal Balance at the Mortgage Loan Remittance Rate from the date on
which interest has last been paid and distributed to the Purchaser through the
last day of the month in which such repurchase takes place, less amounts
received or advanced in respect of such repurchased Mortgage Loan which are
being held in the Custodial Account for distribution in the month of repurchase.
Securities Act of 1933 or the 1933 Act: The Securities Act of 1933, as
amended.
Servicing Advances: All customary, reasonable and necessary "out of pocket"
costs and expenses other than Monthly Advances (including reasonable attorney's
fees and disbursements) 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 (excluding the Company's obligation to pay the premiums on
LPMI Policies).
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 Servicing Fee Rate
and (b) the outstanding principal balance of such Mortgage Loan. Such fee shall
be payable monthly, computed on the basis of the same principal amount and
period respecting which any related interest payment on a Mortgage Loan is
received. 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, 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: 0.250% per annum per Mortgage Loan.
Servicing File: With respect to each Mortgage Loan, the file retained by
the Company consisting of originals of all documents in the Mortgage File which
are not delivered to the Custodian and copies of the Mortgage Loan Documents
listed in the Custodial Agreement the originals of which are delivered to the
Custodian pursuant to Section 2.03.
Servicing Officer: Any officer of the Company involved in or responsible
for the administration and servicing of the Mortgage Loans whose name appears on
a list of servicing officers furnished by the Company to the Purchaser upon
request, as such list may from time to time be amended.
Stated Principal Balance: As to each Mortgage Loan and as of any date of
determination, (i) the principal balance of the Mortgage Loan at the Cut-off
Date after giving effect to payments
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of principal due on or before such date, whether or not received, minus (ii) all
amounts previously distributed to the Purchaser with respect to the related
Mortgage Loan representing payments or recoveries of principal or advances in
lieu thereof.
Stock Certificate: With respect to a Cooperative Loan, a certificate
evidencing ownership of the Cooperative Shares issued by the Cooperative.
Stock Power: With respect to a Cooperative Loan, an assignment of the Stock
Certificate or an assignment of the Cooperative Shares issued by the
Cooperative.
Subsidy Account: An account maintained by the Company specifically to hold
all Subsidy Funds to be applied to individual Subsidy Loans.
Subsidy Funds: With respect to any Subsidy Loans, funds contributed by the
employer of a Mortgagor in order to reduce the payments required from the
Mortgagor for a specified period in specified amounts.
Subsidy Loan: Any Mortgage Loan subject to a temporary interest subsidy
agreement pursuant to which the monthly interest payments made by the related
Mortgagor will be less than the scheduled monthly interest payments on such
Mortgage Loan, with the resulting difference in interest payments being provided
by the employer of the Mortgagor. Each Subsidy Loan will be identified as such
in the related Data File and on the Mortgage Loan Schedule.
TimeSaver(R) Mortgage Loan: A Mortgage Loan which has been refinanced
pursuant to a Company program that allows a rate/term refinance of an existing
Company serviced loan with minimal documentation.
Underwriting Guidelines: The underwriting guidelines of the Company, as
provided to the Purchaser by the Company.
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
Pass-Through Transfer or Agency Sale.
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS; POSSESSION OF MORTGAGE FILES; BOOKS AND RECORDS;
CUSTODIAL AGREEMENT; DELIVERY OF DOCUMENTS
Section 2.01 Conveyance of Mortgage Loans; Possession of Mortgage Files;
Maintenance of Servicing Files.
The Company, simultaneously with the execution and delivery of this
Agreement, does hereby sell, transfer, assign, set over and convey to the
Purchaser, without recourse, but subject to the terms of this Agreement, all the
right, title and interest of the Company in and to the
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Mortgage Loans. Pursuant to Section 2.03, the Company has delivered the Mortgage
Loan Documents to the Custodian.
The contents of each Mortgage File not delivered to the Custodian are and
shall be held in trust by the Company for the benefit of the Purchaser as the
owner thereof. The Company shall maintain a Servicing File consisting of a copy
of the contents of each Mortgage File and the originals of the documents in each
Mortgage File not delivered to the Custodian. The possession of each Servicing
File by the Company is at the will of the Purchaser for the sole purpose of
servicing the related Mortgage Loan, and such retention and possession by the
Company is in a custodial capacity only. Upon the sale of the Mortgage Loans the
ownership of each Mortgage Note, the related Mortgage and the related Mortgage
File and Servicing File shall vest immediately in the Purchaser, and the
ownership of all records and documents with respect to the related Mortgage Loan
prepared by or which come into the possession of the Company shall vest
immediately in the Purchaser and shall be retained and maintained by the
Company, in trust, at the will of the Purchaser and only in such custodial
capacity. The Company shall release its custody of the contents of any Servicing
File only in accordance with written instructions from the Purchaser, unless
such release is required as incidental to the Company's servicing of the
Mortgage Loans or is in connection with a repurchase of any Mortgage Loan
pursuant to Section 3.03 or 6.02. All such costs associated with the release,
transfer and re-delivery of any Mortgage Files and Servicing Files between the
parties shall be the responsibility of the party in possession of such file or
files.
In addition, in connection with the assignment of any MERS Mortgage
Loan, the Company agrees that it will cause, the MERS(R) System to indicate that
such Mortgage Loans have been assigned by the Company to the Purchaser in
accordance with this Agreement by including (or deleting, in the case of
Mortgage Loans which are repurchased in accordance with this Agreement) in such
computer files the information required by the MERS(R) System to identify the
Purchaser as beneficial owner of such Mortgage Loans.
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 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 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 Xxx or Xxxxxxx Mac, including but not
limited to documentation as to the method used in
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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 eligibility of any condominium project for approval by
Xxxxxx Mae or Xxxxxxx Mac and records of periodic inspections 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 so long as the Company complies with the
requirements of the Xxxxxx Mae Selling and Servicing Guide, as amended from time
to time.
The Company shall maintain with respect to each Mortgage Loan and shall
make available for inspection by any purchaser or its designee the related
Servicing File during the time the Purchaser retains ownership of a Mortgage
Loan and thereafter in accordance with applicable laws and regulations.
The Company shall keep at its servicing office books and records in which,
subject to such reasonable regulations as it may prescribe, the Company shall
note transfers of Mortgage Loans. No transfer of a Mortgage Loan may be made
unless such transfer is in compliance with the terms hereof. For the purposes of
this Agreement, the Company shall be under no obligation to deal with any Person
with respect to this Agreement or the Mortgage Loans unless the books and
records show such Person as the owner of the Mortgage Loan. The Purchaser may,
subject to the terms of this Agreement, sell and transfer one or more of the
Mortgage Loans. The Purchaser also shall advise the Company of the 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, including a loan schedule, with a final loan schedule by the
third Business Day before the last Business Day of the month, the Company's
duties to remit and report as required by Section 5 shall begin with the next
Due Period.
Section 2.03 Custodial Agreement; Delivery of Documents.
The Company has delivered to the Custodian those Mortgage Loan Documents as
required by Exhibit B to this Agreement with respect to each Mortgage Loan.
The Custodian has certified its receipt of all such Mortgage Loan Documents
required to be delivered pursuant to the Custodial Agreement, as evidenced by
the Initial Certification of the Custodian in the form annexed to the Custodial
Agreement. The Purchaser will be responsible for the fees and expenses of the
Custodian.
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
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public recording office to be a true and complete copy of the original within
sixty days of its submission for recordation.
In the event the public recording office is delayed in returning any
original document, the Company shall deliver to the Custodian within 240 days of
its submission for recordation, a copy of such document and an Officer's
Certificate, which shall (i) identify the recorded document; (ii) state that the
recorded document has not been delivered to the Custodian due solely to a delay
by the public recording office, (iii) state the amount of time generally
required by the applicable recording office to record and return a document
submitted for recordation, and (iv) specify the date the applicable recorded
document will be delivered to the Custodian. The Company will be required to
deliver the document to the Custodian by the date specified in (iv) above. An
extension of the date specified in (iv) above may be requested from the
Purchaser, which consent shall not be unreasonably withheld. In the event that
any document described above has not been delivered to the Custodian by the date
set forth in (iv) above or by the extended date as may be agreed to by both
parties, then the Company shall, at Purchaser's request, repurchase the related
Mortgage Loan for which such documents have not been delivered.
In the event that new, replacement, substitute or additional Stock
Certificates are issued with respect to existing Cooperative Shares, the Company
immediately shall deliver to the Custodian the new Stock Certificates, together
with the related Stock Powers in blank. Such new Stock Certificates shall be
subject to the related Pledge Instruments and shall be subject to all of the
terms, covenants and conditions 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
Closing Date:
(a) Due Organization and Authority.
The Company is a national banking association duly organized, validly
existing and in good standing under the laws of the United States and
has all licenses necessary to carry on its business as now being
conducted 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
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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 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.
The Company is a HUD approved mortgagee and is in good standing to
sell mortgage loans to and service mortgage loans for Xxxxxx Mae or
Xxxxxxx Mac, 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.
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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;
(f) Ability to Perform.
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
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 approval has been obtained prior to the Closing Date;
(i) Selection Process.
The Mortgage Loans were selected from among the outstanding adjustable
rate one- to four-family mortgage loans in the Company's mortgage
banking portfolio at the Closing Date as to which the representations
and warranties set forth in Section 3.02 could be made and such
selection was not made in a manner so as to affect adversely the
interests of the Purchaser;
(j) No Untrue Information.
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Neither this Agreement nor any statement, report or other document
furnished or to be furnished pursuant to this Agreement or in
connection with the transactions contemplated hereby contains any
untrue statement of fact or omits to state a 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;
(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; and
(n) MERS Status
The Company is a member of MERS in good standing.
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 Closing Date:
(a) Mortgage Loans as Described.
The information set forth in the Mortgage Loan Schedule attached
hereto as Exhibit A and the information contained on the Data File
attached hereto as Exhibit A-1 delivered to the Purchaser is true and
correct;
(b) Payments Current.
All payments required to be made up to the 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 been 30 days
delinquent more than one time within twelve months prior to the
Closing Date;
(c) No Outstanding Charges.
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There are no defaults in complying with the terms of the Mortgages,
and all taxes, governmental assessments, insurance premiums, leasehold
payments, water, sewer and municipal charges, which previously became
due and owing have been paid, or an escrow of funds has been
established in an amount sufficient to pay for every such item which
remains unpaid and which has been assessed but is not yet due and
payable. 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 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 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 in the Mortgage Loan
Schedule;
(e) No Defenses.
The Mortgage Loan is 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;
(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;. The
Company has not waived the performance by the Mortgagor of any action,
if the Mortgagor's failure to perform such action would cause the
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Mortgage Loan to be in default, nor has the Company waived any default
resulting from any action or inaction by the Mortgagor;
(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;
With respect to each Cooperative Loan, the Mortgage Note, the
Mortgage, the Pledge Agreement, 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, the Mortgage, the Pledge Agreement, the Proprietary Lease, the
Stock Power, Recognition Agreement and the Assignment of Proprietary
Lease had legal capacity to enter into the Mortgage Loan and to
execute and deliver such documents, and such documents have been duly
and properly executed by such parties;
(h) Regarding the Mortgagor.
The Mortgagor is one or more natural persons and/or trustees for an
Illinois land trust or a trustee under a "living trust" and such
"living trust" is in compliance with the Underwriting Guidelines for
such trusts;
(i) No Fraud.
No error, omission, misrepresentation, negligence, fraud or similar
occurrence with respect to a Mortgage Loan has taken place on the part
of the Company, or the Mortgagor, or to the best of the Company's
knowledge, any appraiser, any builder, or any developer, or any other
party involved in the origination of the Mortgage Loan or in the
application of any insurance in relation to such Mortgage Loan;
(j) Compliance with Applicable Laws.
Any and all requirements of any federal, state or local law including,
without limitation, usury, truth-in-lending, real estate settlement
procedures, consumer credit protection, equal credit opportunity,
disclosure laws, predatory and abusive lending laws applicable to the
Mortgage Loan have been complied with. 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
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appropriate authorities. Each Mortgage File contains evidence of such
compliance as required by applicable law or regulation;
(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 a Cooperative Apartment, or an individual unit
in a planned unit development or a townhouse, provided, however, that
any condominium project or planned unit development shall conform with
the applicable Xxxxxx Mae or Xxxxxxx Mac requirements, or the
Underwriting Guidelines, regarding such dwellings, and no residence or
dwelling is a mobile home. As of the respective appraisal date for
each Mortgaged Property, any Mortgaged Property being used for
commercial purposes conforms to the Underwriting Guidelines and, to
the best of the Company's knowledge, since the date of such appraisal,
no portion of the Mortgaged Property has been used for commercial
purposes outside of the Underwriting Guidelines;
(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:
(1) the lien of current real property taxes and assessments not yet
due and payable;
(2) covenants, conditions and restrictions, rights of way, easements
and other matters of the public record as of the date of
recording 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; and
(3) other matters to which like properties are commonly subject which
do not 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.
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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;
With respect to each Cooperative Loan, each Pledge Agreement creates a
valid, enforceable and subsisting first security interest in the
Cooperative Shares and Proprietary Lease, subject only to (i) the lien
of the related Cooperative for unpaid assessments representing the
Mortgagor's pro rata share of the Cooperative's payments for its
blanket mortgage, current and future real property taxes, insurance
premiums, maintenance fees and other assessments to which like
collateral is commonly subject and (ii) other matters to which like
collateral is commonly subject which do not materially interfere with
the benefits of the security intended to be provided by the Pledge
Agreement; provided, however, that the appurtenant Proprietary Lease
may be subordinated or otherwise subject to the lien of any mortgage
on the Project;
(m) Full Disbursement of Proceeds.
The proceeds of the Mortgage Loan have been fully disbursed, except
for escrows established or created due to seasonal weather conditions,
and there is no requirement for future advances thereunder. 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 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 Loan Schedule. 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 Xxx 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 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
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transferring the Mortgage Loan free and clear of any and all
encumbrances, liens, pledges, equities, participation interests,
claims, 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 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) organized under the laws of such state, or (3)
qualified to do business in such state, or (4) federal savings and
loan associations or national banks having principal offices in such
state, or (5) not doing business in such state;
(q) LTV, PMI Policy.
Except as set forth on the Mortgage Loan Schedule, no Mortgage Loan
has an LTV greater than 95%. If the LTV of the Mortgage Loan was
greater than 80% at the time of origination, a portion of the unpaid
principal balance of the Mortgage Loan is and will be insured as to
payment defaults by a PMI Policy. If the Mortgage Loan is insured by a
PMI Policy for which the Mortgagor pays all premiums, the coverage
will remain in place until (i) the LTV decreases to 78% or (ii) the
PMI Policy is otherwise terminated pursuant to the Homeowners
Protection Act of 1998, 12 USC Section 4901, et seq. All provisions of
such PMI Policy or LPMI Policy have been and are being complied with,
such policy is in full force and effect, and all premiums due
thereunder have been paid, and to the best of Company's knowledge, no
state of facts exist that would result in the exclusion from, denial
of, or defense to coverage. The Qualified Insurer has a claims paying
ability acceptable to Xxxxxx Mae or Xxxxxxx Mac. Any Mortgage Loan
subject to a PMI Policy or LPMI Policy obligates the Mortgagor or the
Company to maintain the PMI Policy or LPMI Policy and to pay all
premiums and charges in connection therewith;
(r) Title Insurance.
The Mortgage Loan is covered by an ALTA lender's title insurance
policy (or in the case of any Mortgage Loan secured by a Mortgaged
Property located in a jurisdiction where such policies are generally
not available, an opinion of counsel of the type customarily rendered
in such jurisdiction in lieu of title insurance) or other generally
acceptable form of policy of insurance acceptable to Xxxxxx Xxx or
Xxxxxxx Mac, issued by a title insurer acceptable to Xxxxxx Xxx or
Xxxxxxx Mac
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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) and (3) of Paragraph (l) of this Section
3.02, and 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 and
Monthly Payment. Additionally, such lender's title insurance policy
includes no exceptions regarding ingress, egress or encroachments that
impact the value or the marketability of the Mortgaged Property. The
Company is the sole insured of such lender's title insurance policy,
and such lender's title insurance policy is in full force and effect
and will be in force and effect upon the consummation of the
transactions contemplated by this Agreement. 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;
(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 which are not
insured against by the title insurance policy referenced in Paragraph
(r) above;
(u) Location of Improvements; No Encroachments.
Except as insured against by the title insurance policy referenced in
Paragraph (r) above, 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.
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The Mortgage Loans have an original term to maturity of not more than
30 years, with interest payable in arrears on the first day of each
month. As to each adjustable rate Mortgage Loan on each applicable
Adjustment Date, the Mortgage Interest Rate will be adjusted to equal
the sum of the Index plus the applicable Gross Margin, rounded up or
down to the nearest multiple of 0.125% indicated by the Mortgage Note;
provided that the Mortgage Interest Rate will not increase or decrease
by more than the Periodic Interest Rate Cap on any Adjustment Date,
and will in no 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 Mortgage Loan that is
not an Interest Only 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 or, with respect to an Interest Only Mortgage Loan, on
an Adjustment Date following the related interest only period, 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;
(w) Convertible Mortgage Loans; Simple Interest.
No Mortgage Loan is a Convertible Mortgage Loan and no Mortgage Loan
is a simple interest Mortgage Loan;
(x) 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;
(y) Occupancy of the Mortgaged Property.
As of the date of origination, the Mortgaged Property was lawfully
occupied under applicable law;
(z) No Additional Collateral.
Except in the case of a Pledged Asset Mortgage Loan and as indicated
on the related Data File, the Mortgage Note is not and has not been
secured by any
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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 (l)
above;
(aa) 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;
(bb) 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;
(cc) Transfer of Mortgage Loans.
The Assignment of Mortgage, upon the insertion of the name of the
assignee and recording information, is in recordable form and is
acceptable for recording under the laws of the jurisdiction in which
the Mortgaged Property is located (except with respect to each MERS
Designated Mortgage Loan ). Each original Mortgage was recorded and,
except for those Mortgage Loans subject to the MERS identification
system, all subsequent assignments of the original Mortgage (other
than the assignment to the Purchaser) have been recorded in the
appropriate jurisdictions wherein such recordation is necessary to
perfect the lien thereof as against creditors of the Company, or is in
the process of being recorded;
(dd) Mortgaged Property Undamaged.
The Mortgaged Property is undamaged by waste, fire, earthquake or
earth movement, windstorm, flood, tornado or other casualty so as to
affect adversely the value of the Mortgaged Property as security for
the Mortgage Loan or the use for which the premises were intended;
(ee) 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 have been in all material respects legal and proper.
The Mortgage Loan has been serviced by the Company and any predecessor
servicer in accordance with the
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terms of the Mortgage Note. With respect to escrow deposits and Escrow
Payments, all such payments are in the possession of the Company and
there exist no deficiencies in connection therewith for which
customary arrangements for repayment thereof have not been made. All
Escrow Payments have been collected in full compliance with state and
federal law. No escrow deposits or Escrow Payments or other charges or
payments due the Company have been capitalized under the Mortgage
Note;
(ff) 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;
(gg) The Appraisal.
The Mortgage Loan Documents for each Mortgage Loan include an
appraisal of the related Mortgaged Property which generally conform to
the requirements of Xxxxxx Xxx and Xxxxxxx Mac. As to each
TimeSaver(R) Mortgage Loan, the appraisal may be from the original of
the existing Company-serviced loan, which was refinanced via such
TimeSaver(R) Mortgage Loan. The appraisal was conducted by an
appraiser who had no interest, direct or indirect, in the Mortgaged
Property or in any loan made on the security thereof; and whose
compensation is not affected by the approval or disapproval of the
Mortgage Loan, and the appraisal and the appraiser both satisfy the
applicable requirements of Title XI of the Financial Institution
Reform, Recovery, and Enforcement Act of 1989 and the regulations
promulgated thereunder, all as in effect on the date the Mortgage Loan
was originated;
(hh) Insurance.
The Mortgaged Property securing each Mortgage Loan is insured by an
insurer acceptable 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 the requirements of Section 4.10, in an amount which is
at least equal to the lesser of (a) 100% of the insurable value, on a
replacement cost basis, of the improvements on the related Mortgaged
Property, or (b) the greater of (i) the outstanding principal balance
of the Mortgage Loan or (ii) an amount such that the proceeds of such
insurance shall be sufficient to avoid the application to the
Mortgagor or loss payee of any coinsurance clause under the policy. If
the Mortgaged Property is 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, a flood insurance policy meeting the
requirements of the
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current guidelines of the Federal Insurance Administration is in
effect with a generally acceptable insurance carrier, in an amount
representing 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. Where required by state law or regulation, the
Mortgagor has been given an opportunity to choose the carrier of the
required hazard insurance, provided the policy is not a "master" or
"blanket" hazard insurance policy covering the common facilities of a
planned unit development. 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. The hazard 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, and has no
knowledge of any action or failure to act on the part of the
Mortgagor, so as to impair the coverage of any such insurance policy
or the validity, binding effect and enforceability thereof;
(ii) Servicemembers Civil Relief Act.
The Mortgagor has not notified the Company and the Company has no
knowledge of any relief requested or allowed to, the Mortgagor under
the Servicemembers Civil Relief Act.
(jj) No Balloon Payments, Graduated Payments or Contingent Interests.
The Mortgage Loan is not a graduated payment mortgage loan and the
Mortgage Loan does not have a shared appreciation or other contingent
interest feature. No Mortgage Loan has a balloon payment feature;
(kk) No Construction Loans.
No Mortgage Loan was made in connection with (i) the construction or
rehabilitation of a Mortgage Property or (ii) facilitating the
trade-in or exchange of a Mortgaged Property other than a
construction-to-permanent loan which has converted to a permanent
Mortgage Loan;
(ll) Underwriting.
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Each Mortgage Loan was underwritten in accordance with the
Underwriting Guidelines of the Company; and the Mortgage Note and
Mortgage are on forms acceptable to Xxxxxxx Mac or Xxxxxx Mae;
(mm) Buydown Mortgage Loans.
With respect to each Mortgage Loan that is a Buydown Mortgage Loan:
(i) On or before the date of origination of such Mortgage Loan, the
Company and the Mortgagor, or the Company, the Mortgagor and the
seller of the Mortgaged Property or a third party entered into a
Buydown Agreement. The Buydown Agreement provides that the seller
of the Mortgaged Property (or third party) shall deliver to the
Company temporary Buydown Funds in an amount equal to the
aggregate undiscounted amount of payments that, when added to the
amount the Mortgagor on such Mortgage Loan is obligated to pay on
each Due Date in accordance with the terms of the Buydown
Agreement, is equal to the full scheduled Monthly Payment due on
such Mortgage Loan. The temporary Buydown Funds enable the
Mortgagor to qualify for the Buydown Mortgage Loan. The effective
interest rate of a Buydown Mortgage Loan if less than the
interest rate set forth in the related Mortgage Note will
increase within the Buydown Period as provided in the related
Buydown Agreement so that the effective interest rate will be
equal to the interest rate as set forth in the related Mortgage
Note. The Buydown Mortgage Loan satisfies the requirements of
Xxxxxx Xxx or Xxxxxxx Mac guidelines;
(ii) The Mortgage and Mortgage Note reflect the permanent payment
terms rather than the payment terms of the Buydown Agreement. The
Buydown Agreement provides for the payment by the Mortgagor of
the full amount of the Monthly Payment on any Due Date that the
Buydown Funds are available. The Buydown Funds were not used to
reduce the original principal balance of the Mortgage Loan or to
increase the Appraised Value of the Mortgage Property when
calculating the Loan-to-Value Ratios for purposes of the
Agreement and, if the Buydown Funds were provided by the Company
and if required under Xxxxxx Mae or Xxxxxxx Mac guidelines, the
terms of the Buydown Agreement were disclosed to the appraiser of
the Mortgaged Property;
(iii) The Buydown Funds may not be refunded to the Mortgagor unless
the Mortgagor makes a principal payment for the outstanding
balance of the Mortgage Loan;
(iv) As of the date of origination of the Mortgage Loan, the
provisions of the related Buydown Agreement complied with the
requirements of Xxxxxx Mae or Xxxxxxx Mac regarding buydown
agreements;
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(nn) Mortgage File.
With respect to each Mortgage Loan, the Company is in possession of a
complete Mortgage File except for the documents which have been
delivered to the Purchaser or the Custodian or which have been
submitted for recording and not yet returned;
(oo) Calculation of Interest.
Interest on each Mortgage Loan is calculated on the basis of a 360-day
year consisting of twelve 30-day months;
(pp) Environmental Matters.
To the best of the Company's knowledge, there is no pending action or
proceeding directly involving the Mortgaged Property in which
compliance with any environmental law, rule or regulation is an issue;
there is no violation of any environmental law, rule or regulation
with respect to the Mortgage Property; and 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;
(qq) Ground Leases.
No Mortgage Loan is a leasehold mortgage loan;
(rr) Home Ownership and Equity Protection Act.
No Mortgage Loan is a Covered Loan or a High Cost Loan;
(ss) Anti Money Laundering Laws.
The Company has complied with all applicable anti money laundering
laws and regulations, (collectively, the "Anti Money Laundering
Laws"); and 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;
(tt) Due on Sale.
The Mortgage contains an enforceable provision, to the extent
allowable under applicable laws governing the application of
due-on-sale provision, for the acceleration of the payment of the
unpaid principal balance of the Mortgage Loan in the event that the
Mortgaged Property is sold or transferred without the prior written
consent of the mortgagee thereunder;
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(uu) Tax Service Contract; Flood Certification Contract.
Each Mortgage Loan shall have a tax service contract and, if
applicable, a flood insurance contract which shall have a term of the
life of the Mortgage Loan. Each such tax service and flood insurance
contract shall be fully transferable without penalty, premium or cost
to the Purchaser or its designee;
(vv) Credit Reporting.
The Company, in its capacity as servicer for each Mortgage Loan, has
fully furnished in accordance with the Fair Credit Reporting Act and
its implementing regulations, accurate and complete information on its
borrowers credit files to Equifax, Experian and Trans Union Credit
Information Company on a monthly basis;
(ww) Single Premium Credit Life Insurance.
No Mortgagor was required to purchase any credit life, disability,
accident or health insurance product as a condition of obtaining the
extension of credit. No proceeds from any Mortgage Loan were used to
purchase single premium credit insurance policies as part of the
origination of, or as a condition to closing, such Mortgage Loan;
(xx) Fair Consideration.
The consideration received by the Company upon the sale of the
Mortgage Loans under this Agreement constitutes fair consideration and
reasonably equivalent value for the Mortgage Loans;
(yy) 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
as of the Closing Date, to the best of the Company's knowledge, the
Company has not received notice that any Mortgagor is a debtor under
any state or federal bankruptcy or insolvency proceeding; and
(zz) Prepayment Penalty.
No Mortgage Loan is subject to a prepayment penalty.
(aaa) Cooperative Loans.
With respect to each Cooperative Loan:
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(i) The Cooperative Shares are held by a person as a
tenant-stockholder in a Cooperative. Each original UCC financing
statement, continuation statement or other governmental filing or
recordation necessary to create or preserve the perfection and
priority of the first lien and security interest in the
Cooperative Loan and Proprietary Lease has been timely and
properly made. Any security agreement, chattel mortgage or
equivalent document related to the Cooperative Loan and delivered
to Purchaser or its designee establishes in Purchaser a valid and
subsisting perfected first lien on and security interest in the
Mortgaged Property described therein, and Purchaser has full
right to sell and assign the same;
(ii) A Cooperative Lien Search has been made by a company competent to
make the same which company is acceptable to Xxxxxx Mae and
qualified to do business in the jurisdiction where the
Cooperative is located;
(iii) (a) The term of the related Proprietary Lease is not less than
the terms of the Cooperative Loan; (b) there is no provision in
any Proprietary Lease which requires the Mortgagor to offer for
sale the Cooperative Shares owned by such Mortgagor first to the
Cooperative; (c) there is no prohibition in any Proprietary Lease
against pledging the Cooperative Shares or assigning the
Proprietary Lease; (d) the Cooperative has been created and
exists in full compliance with the requirements for residential
cooperatives in the jurisdiction in which the Project is located
and qualifies as a cooperative housing corporation under Section
210 of the Code; (e) the Recognition Agreement is on a form
published by Aztech Document Services, Inc. or includes similar
provisions; and (f) the Cooperative has good and marketable title
to the Project, and owns the Project either in fee simple; such
title is free and clear of any adverse liens or encumbrances,
except the lien of any blanket mortgage;
(iv) The Company has the right under the terms of the Mortgage Note,
Pledge Agreement and Recognition Agreement to pay any maintenance
charges or assessments owed by the Mortgagor;
(v) Each Stock Power (i) has all signatures guaranteed or (ii) if all
signatures are not guaranteed, then such Cooperative Shares will
be transferred by the stock transfer agent of the Cooperative if
the Company undertakes to convert the ownership of the collateral
securing the related Cooperative Loan.
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
32
of Mortgage or the examination or failure to examine any Mortgage File. Upon
discovery by either the Company or the Purchaser of a breach of any of the
foregoing representations and warranties which materially and adversely affects
the value of the Mortgage Loans or the interest of the Purchaser (or which
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 breach shall give prompt
written notice to the other.
Within 60 days of the earlier of either discovery by or notice to the
Company of any breach of a representation or warranty which materially and
adversely affects the value of the Mortgage Loans, the Company shall use its
best efforts promptly to cure such breach in all material respects and, if such
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 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, be repurchased by the Company at the Repurchase Price.
However, if the breach shall involve a representation or warranty set forth in
Section 3.02 and the Company discovers or receives notice of any such breach
within 120 days of the Closing Date, the Company shall, if the breach cannot be
cured, at the Purchaser's option and provided that the Company has a Qualified
Substitute Mortgage Loan, rather than repurchase the Mortgage Loan as provided
above, remove such Mortgage Loan (a "Deleted Mortgage Loan") and substitute in
its place a Qualified Substitute Mortgage Loan or Loans, provided that any such
substitution shall be effected not later than 120 days after the Closing Date.
If the Company has no Qualified Substitute Mortgage Loan, it shall repurchase
the deficient Mortgage Loan within 60 days of the written notice of the breach
or the failure to cure, whichever is later. Any repurchase of a Mortgage Loan or
Loans pursuant to the foregoing provisions of this Section 3.03 shall be
accomplished by deposit in the Custodial Account of the amount of the Repurchase
Price for distribution to 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. If the Company repurchases a Mortgage Loan that is
a MERS Mortgage Loan, the Company shall cause MERS to designate on the MERS(R)
System to remove the Purchaser as the beneficial holder with respect to such
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 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 Mortgage Loan Schedule to reflect the addition of
such Qualified Substitute Mortgage Loan to this Agreement. In connection with
any such substitution, the Company shall be deemed to have made as to such
Qualified Substitute Mortgage Loan the representations and warranties set forth
in this Agreement 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
33
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 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 a Qualified Substitute
Mortgage Loan for a Deleted Mortgage Loan, the Company shall determine the
amount (if any) by which the aggregate principal balance of all Qualified
Substitute Mortgage Loans as of the date of substitution is less than the
aggregate Stated Principal Balance of all Deleted Mortgage Loans (after
application of scheduled principal payments due in the month of substitution).
The amount of such shortfall shall be distributed by the Company in the month of
substitution pursuant to Section 5.01. Accordingly, on the date of such
substitution, the Company shall deposit from its own funds into the Custodial
Account an amount equal to the amount of such shortfall.
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 breach of
the representations and warranties contained in this Agreement. It is understood
and agreed that the obligations of the Company set forth in this Section 3.03 to
cure, substitute for or repurchase a defective Mortgage Loan and to indemnify
the Purchaser as provided in this Section 3.03 constitute the sole remedies of
the Purchaser respecting a breach of the foregoing representations and
warranties.
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) failures 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.
ARTICLE IV
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 4.01 Company to Act as Servicer.
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The Company, as an independent contractor, shall service and administer the
Mortgage Loans and shall have full power and authority, acting alone or through
the utilization of a third party servicing provider, to do any and all things in
connection with such servicing and administration which the Company may deem
necessary or desirable, consistent with the terms of this Agreement and with
Accepted Servicing Practices. The Company shall be responsible for any and all
acts of a third party servicing provider, and the Company's utilization of a
third party servicing provider shall in no way relieve the liability of the
Company under this Agreement.
Consistent with the terms of this Agreement, the Company may waive, modify
or vary any term of any Mortgage Loan or consent to the postponement of strict
compliance with any such term or in any manner grant indulgence to any Mortgagor
if in the Company's reasonable and prudent determination such waiver,
modification, postponement or indulgence is not materially adverse to the
Purchaser, provided, however, the Company shall not make any future advances
with respect to a Mortgage Loan. The Company shall not permit any modification
with respect to any Mortgage Loan that would change the Mortgage Interest Rate,
defer or forgive the payment of principal (except for actual payments of
principal) or change the final maturity date on such Mortgage Loan. In the event
of any such modification which permits the deferral of interest or principal
payments on any Mortgage Loan, the Company shall, on the Business Day
immediately preceding the Remittance Date in any month in which any such
principal or interest payment has been deferred, deposit in the Custodial
Account from its own funds, in accordance with Section 5.03, the difference
between (a) such month's principal and one month's interest at the Mortgage Loan
Remittance Rate on the unpaid principal balance of such Mortgage Loan and (b)
the amount paid by the Mortgagor. The Company shall be entitled to reimbursement
for such advances to the same extent as for all other advances made pursuant to
Section 5.03. 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.
In servicing and administering the Mortgage Loans, the Company shall employ
procedures (including collection procedures) and exercise the same care that it
customarily employs and exercises in servicing and administering mortgage loans
for its own account, giving due consideration to Accepted Servicing Practices
where such practices do not conflict with the requirements of this Agreement,
and the Purchaser's reliance on the Company.
The Company is authorized and empowered by the Purchaser, in its own name,
when the Company believes it appropriate in its reasonable judgment to register
any Mortgage Loan on the MERS(R) System, or cause the removal from the
registration of any Mortgage Loan on the MERS(R) System, to execute and deliver,
on behalf of the Purchaser, any and all instruments of assignment and other
comparable instruments with respect to such assignment or re-recording of a
Mortgage in the name of MERS, solely as nominee for the Purchaser and its
successors and assigns.
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The Company will comply in all material respects with the rules and
procedures of MERS in connection with the servicing of the MERS Mortgage Loans
for as long as such Mortgage Loans are registered with MERS.
The Company shall cause to be maintained for each Cooperative Loan a copy
of the financing statements and shall file and such financing statements and
continuation statements as necessary, in accordance with the Uniform Commercial
Code applicable in the jurisdiction in which the related Cooperative Apartment
is located, to perfect and protect the security interest and lien of the
Purchaser.
The Company shall apply any Principal Prepayment on an Interest Only
Mortgage Loan to the then-outstanding principal balance, which application shall
not reamortize the then-outstanding principal balance of such Interest Only
Mortgage Loan.
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 Purchaser, and (4) is consistent with any related PMI Policy. In the event
that any payment due under any Mortgage Loan is not postponed pursuant to
Section 4.01 and remains delinquent for a period of 90 days or any other default
continues for a period of 90 days beyond the expiration of any grace or cure
period, the Company shall commence foreclosure proceedings. In the event the
Purchaser objects to such foreclosure action, the Company shall not be required
to make Monthly Advances with respect to such Mortgage Loan, pursuant to Section
5.03, and the Company's obligation to make such Monthly Advances shall terminate
on the 90th day referred to above. 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.
36
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 Company shall
proceed, in the best interest of the Purchaser, 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 Company shall 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, or if the Liquidation 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 Company does not 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, 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 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.
Section 4.04 Establishment of and Deposits to Custodial Account.
The Company shall segregate and hold all funds collected and received in
connection with 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,
in the form of time deposit or demand accounts, titled "Xxxxx Fargo Bank, N.A.,
in trust for the Purchaser and/or subsequent purchasers of Mortgage Loans - P &
I." The Custodial Account shall be established with a Qualified Depository. On
the Closing Date, the Company shall provide the Purchaser with written
confirmation of the existence of such Custodial Account in the form of Exhibit
E. 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 one (1) Business
Day of Company's receipt, and retain therein, the following collections received
by the Company and payments made by the Company after the Cut-off Date, other
than payments of principal and interest due on or before the Cut-off Date, or
received by the Company prior to the Cut-off Date but allocable to a period
subsequent thereto:
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(i) all payments on account of principal on the Mortgage Loans, including
all Principal Prepayments;
(ii) all payments on account of interest on the Mortgage Loans adjusted to
the Mortgage Loan Remittance Rate;
(iii) all Liquidation Proceeds;
(iv) all Insurance Proceeds including amounts required to be deposited
pursuant to Section 4.10 (other than proceeds to be held in the Escrow
Account and applied to the restoration or repair of the Mortgaged
Property or released to the Mortgagor in accordance with Section
4.14), Section 4.11 and Section 4.15;
(v) all Condemnation Proceeds which are not applied to the restoration or
repair of the Mortgaged Property or released to the Mortgagor in
accordance with Section 4.14;
(vi) any amount required to be deposited in the Custodial Account pursuant
to Section 4.01, 5.03, 6.01 or 6.02;
(vii) any amounts payable in connection with the repurchase of any Mortgage
Loan pursuant to Section 3.03 and all amounts required to be deposited
by the Company in connection with a shortfall in principal amount of
any Qualified Substitute 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) 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;
(ix) any amounts required to be deposited by the Company pursuant to
Section 4.11 in connection with the deductible clause in any blanket
hazard insurance policy;
(x) any amounts received with respect to or related to any REO Property
and all REO Disposition Proceeds pursuant to Section 4.16; and
(xi) an amount from the Subsidy Account that when added to the Mortgagor's
payment will equal the full monthly amount due under the related
Mortgage Note.
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 and assumption
fees, to the extent permitted by Section 6.01 and any amounts received with
respect to or related to Incremental Interest, 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
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and the Company shall be entitled to retain and withdraw such interest from the
Custodial Account pursuant to Section 4.05.
Section 4.05 Permitted Withdrawals From Custodial Account.
The Company shall, from time to time, withdraw funds from the Custodial
Account for the following purposes:
(i) to make payments to the Purchaser in the amounts and in the manner
provided for in Section 5.01;
(ii) to reimburse itself for Monthly Advances of the Company's funds made
pursuant to Section 5.03, the Company's right to reimburse itself
pursuant to this subclause (ii) being limited to amounts received on
the related Mortgage Loan which represent late Monthly Payments,
Liquidation Proceeds, Condemnation Proceeds, Insurance Proceeds and
such other amounts as may be collected by the Company 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 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 pay itself interest on funds deposited in the Custodial Account;
(v) to reimburse itself for expenses incurred and reimbursable to it
pursuant to Section 8.01;
(vi) 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
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or withdrawal from the Custodial Account shall be limited to amounts
on deposit in the Custodial Account with respect to the related REO
Property;
(vii) to reimburse itself for any Servicing Advances or REO expenses after
liquidation of the Mortgaged Property not otherwise reimbursed above;
(viii) to remove funds inadvertently placed in the Custodial Account by the
Company; and
(ix) 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.
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, in the form of time deposit or demand accounts, titled,
"Xxxxx Fargo Bank, N.A., in trust for the Purchaser and/or subsequent purchasers
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. On the Closing Date, the Company
shall provide the Purchaser with written confirmation of the existence of such
Escrow Account in the form of Exhibit F hereto. 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 one (1)
Business Day 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;
(ii) all amounts representing Insurance Proceeds or Condemnation Proceeds
which are to be applied to the restoration or repair of any Mortgaged
Property; and
(iii) all payments on account of Buydown Funds.
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
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Mortgagor. To the extent required by law, the Company shall pay interest on
escrowed funds to the Mortgagor notwithstanding that the Escrow Account may be
non-interest bearing or that interest paid thereon is insufficient for such
purposes.
Section 4.07 Permitted Withdrawals From Escrow Account.
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 and 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;
(viii) to remit to Purchaser payments on account of Buydown Funds as
applicable; and
(ix) to clear and terminate the Escrow Account on the termination of this
Agreement.
Section 4.08 Payment of Taxes, Insurance and Other Charges.
With respect to each Mortgage Loan, the Company shall maintain accurate
records reflecting the status of ground rents, taxes, assessments, water rates,
sewer rents, and other charges which are or may become a lien upon the Mortgaged
Property and the status of PMI Policy premiums and fire and hazard insurance
coverage and shall obtain, from time to time, all bills for the payment of such
charges (including renewal premiums) and shall effect payment thereof prior to
the applicable penalty or termination date, employing for such purpose deposits
of the Mortgagor in the Escrow Account (excluding the payment of LPMI Policy
premiums, which are to be paid from the Company's own funds without
reimbursement) which shall have
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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 or the making of the Escrow Payments, and the
Company shall make advances from its own funds to effect such payments.
Section 4.09 Protection of Accounts.
The Company may transfer the Custodial Account, Subsidy Account or the
Escrow Account to a different Qualified Depository from time to time, provided
that the Company shall give notice to the Purchaser within ten (10) Business
Days of such transfer.
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 in the area where the
Mortgaged Property is located, in an amount which is at least equal to the
lesser of (a) 100% of the insurable value, on a replacement cost basis, of the
improvements on the related Mortgaged Property, or (b) the greater of (i) the
outstanding principal balance of the Mortgage Loan or (ii) an amount such that
the proceeds of such insurance shall be sufficient to avoid the application to
the Mortgagor or loss payee of any coinsurance clause under the policy. 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) a flood insurance policy meeting the
requirements of the current guidelines of the Federal Insurance Administration
is in effect with a generally acceptable insurance carrier acceptable to Xxxxxx
Mae or Xxxxxxx Mac in an amount representing coverage equal to the lesser of (i)
the minimum amount required, under the terms of coverage, to compensate for any
damage or loss on a replacement cost basis (or the unpaid balance of the
mortgage if replacement cost coverage is not available for the type of building
insured) and (ii) the maximum amount of insurance which is available under the
Flood Disaster Protection Act of 1973, as amended.
If 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 Mae 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.
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In the event that any Purchaser or the Company shall determine that the
Mortgaged Property should be insured against loss or damage by hazards and risks
not covered by the insurance required to be maintained by the Mortgagor pursuant
to the terms of the Mortgage, the Company shall communicate and consult with the
Mortgagor with respect to the need for such insurance and bring to the
Mortgagor's attention the desirability of protection of the Mortgaged Property.
All policies required hereunder shall name the Company as loss payee and
shall be endorsed with standard or union mortgagee clauses, without
contribution, which shall provide for at least 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 his 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 Xxx and 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 provides
coverage in an amount equal to the amount required pursuant to Section 4.10 and
otherwise complies with 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 Accepted Servicing Practices.
Any amounts collected by the Company under any such policy relating to a
Mortgage Loan shall be deposited in the Custodial Account subject to withdrawal
pursuant to Section 4.05. Such policy may contain a deductible clause, in which
case, in the event that there shall not have been maintained on the related
Mortgaged Property a policy complying with Section 4.10, and there shall have
been a loss which would have been covered by such policy, the Company shall
deposit in the Custodial Account at the time of such loss the amount not
otherwise payable under the blanket policy because of such deductible clause,
such amount to be deposited from the Company's funds, without reimbursement
therefor. Upon request of the Purchaser, the Company shall cause to be delivered
to such Purchaser a certificate of insurance and a statement from the insurer
thereunder
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that such policy shall in no event be terminated or materially modified without
30 days' prior written notice to such 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 acceptable to Xxxxxx Mae or Xxxxxxx Mac.
Upon the request of any Purchaser, the Company shall cause to be delivered to
such Purchaser a certificate of insurance for such Fidelity Bond and Errors and
Omissions Insurance Policy and a statement from the surety and the insurer that
such Fidelity Bond and Errors and Omissions Insurance Policy shall in no event
be terminated or materially modified without 30 days' prior written notice to
the Purchaser.
Section 4.13 Inspections.
If any Mortgage Loan is more than 60 days delinquent, the Company
immediately shall inspect the Mortgaged Property and shall conduct subsequent
inspections in accordance with Accepted Servicing Practices or as may be
required by the primary mortgage guaranty insurer. The Company shall keep a
written report of each such inspection.
Section 4.14 Restoration of Mortgaged Property.
The Company need not obtain the approval of the Purchaser prior to
releasing any Insurance Proceeds or Condemnation Proceeds to the Mortgagor to be
applied to the restoration or repair of the Mortgaged Property if such release
is in accordance with Accepted Servicing Practices. For claims greater than
$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;
44
(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.
Except in the case of a Pledged Asset Mortgage Loan, for each Mortgage Loan
with an LTV in excess of 80% at the time of origination, 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 of the unpaid principal
balance of the Mortgage Loan as to payment defaults. If the Mortgage Loan is
insured by a PMI Policy for which the Mortgagor pays all premiums, the coverage
will remain in place until (i) the LTV decreases to 78% or (ii) the PMI Policy
is otherwise terminated pursuant to the Homeowners Protection Act of 1998, 12
USC Section 4901, et seq. In the event that such PMI Policy shall be terminated
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.
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In the event that the Company's rights hereunder are terminated pursuant to
Section 10.01 the Company shall pay any premiums on each LPMI Policy (which may
include a one-time lump sum to the related LPMI provider to continue the related
LPMI Policy) until the applicable Mortgage Loans have been paid in full or
otherwise liquidated or another entity acceptable to the insurers of such LPMI
Policy undertakes to pay such LPMI premiums.
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 Company, or in the event the Company is not
authorized or permitted to hold title to real property in the state where the
REO Property is located, or would be adversely affected under the "doing
business" or tax laws of such state by so holding title, the deed or certificate
of sale shall be taken in the name of such Person or Persons as shall be
consistent with an Opinion of Counsel obtained by the Company from any attorney
duly licensed to practice law in the state where the REO Property is located.
The Person or Persons holding such title other than the Purchaser shall
acknowledge in writing that such title is being held as nominee for the
Purchaser.
The Company shall manage, conserve, protect and operate each REO Property
for the Purchaser solely for the purpose of its prompt disposition and sale. 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 prior to the
close of the third calendar year beginning after the year in which 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 that a longer period is
necessary for the orderly liquidation of such REO Property. If a period longer
than three years is permitted under the foregoing sentence, (i) the Company
shall report monthly to the Purchaser as to the progress being made in selling
such REO Property and (ii) if a purchase money mortgage is taken in connection
with such sale, such purchase money mortgage (a) shall name the Company as
mortgagee, and (2) shall not be held pursuant to this Agreement.
The Company shall also maintain on each REO Property fire and hazard
insurance with extended coverage in amount which is at least equal to the
maximum insurable value of the improvements which are a part of such property
and, to the extent required and available under the Flood Disaster Protection
Act of 1973, as amended, flood insurance in the amount required above. 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
46
related costs, judgments, and any other costs, fees and expenses that the
Purchaser may sustain in any way related to premises liability claims made with
respect to an REO Property and based on losses occurring prior to the related
REO Disposition.
The disposition of REO Property shall be carried out by the Company at such
price, and upon such terms and conditions, as the Company deems to be in the
best interests of the Purchaser. The proceeds of sale of the REO Property shall
be promptly deposited in the Custodial Account. As soon as practical thereafter
the expenses of such sale shall be paid and the Company shall reimburse itself
for any related unreimbursed Servicing Advances, unpaid Servicing Fees and
unreimbursed advances made pursuant to Section 5.03. On the Remittance Date
immediately following the Principal Prepayment Period in which such sale
proceeds are received the net cash proceeds of such sale remaining in the
Custodial Account shall be distributed to the Purchaser.
The Company shall withdraw from the Custodial Account funds necessary for
the proper operation management and maintenance of the REO Property, including
the cost of maintaining any hazard insurance pursuant to Section 4.10 and the
fees of any managing agent of the Company, or the Company itself. 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 Purchaser 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 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.
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Section 4.20 Application of Buydown Funds.
With respect to each Buydown Mortgage Loan, the Company shall have
deposited into the Escrow Account, no later than the last day of the month,
Buydown Funds in an amount equal to the aggregate undiscounted amount of
payments that, when added to the amount the Mortgagor on such Mortgage Loan is
obligated to pay on all Due Dates in accordance with the terms of the Buydown
Agreement, is equal to the full scheduled Monthly Payments which are required to
be paid by the Mortgagor under the terms of the related Mortgage Note (without
regard to the related Buydown Agreement as if the Mortgage Loan were not subject
to the terms of the Buydown Agreement). With respect to each Buydown Mortgage
Loan, the Company will distribute to the Purchaser on each Remittance Date an
amount of Buydown Funds equal to the amount that, when added to the amount
required to be paid on such date by the related Mortgagor, pursuant to and in
accordance with the related Buydown Agreement, equals the full Monthly Payment
that would otherwise be required to be paid on such Mortgage Loan by the related
Mortgagor under the terms of the related Mortgage Note (as if the Mortgage Loan
were not a Buydown Mortgage Loan and without regard to the related Buydown
Agreement).
If the Mortgagor on a Buydown Mortgage Loan defaults on such Mortgage Loan
during the Buydown Period and the Mortgaged Property securing such Buydown
Mortgage Loan is sold in the liquidation thereof (either by the Company or the
insurer under any related Primary Insurance Policy) the Company shall, on the
Remittance Date following the date upon which Liquidation Proceeds or REO
Disposition proceeds are received with respect to any such Buydown Mortgage
Loan, distribute to the Purchaser all remaining Buydown Funds for such Mortgage
Loan then remaining in the Escrow Account. Pursuant to the terms of each Buydown
Agreement, any amounts distributed to the Purchaser in accordance with the
preceding sentence will be applied to reduce the outstanding principal balance
of the related Buydown Mortgage Loan. If a Mortgagor on a Buydown Mortgage Loan
prepays such Mortgage Loan in its entirety during the related Buydown Period,
the Company shall be required to withdraw from the Escrow Account any Buydown
Funds remaining in the Escrow Account with respect to such Buydown Mortgage Loan
in accordance with the related Buydown Agreement. If a principal prepayment by a
Mortgagor on a Buydown Mortgage Loan during the related Buydown Period, together
with any Buydown Funds then remaining in the Escrow Account related to such
Buydown Mortgage Loan, would result in a principal prepayment of the entire
unpaid principal balance of the Buydown Mortgage Loan, the Company shall
distribute to the Purchaser on the Remittance Date occurring in the month
immediately succeeding the month in which such Principal Prepayment is received,
all Buydown Funds related to such Mortgage Loan so remaining in the Escrow
Account, together with any amounts required to be deposited into the Custodial
Account.
Section 4.21 Notification of Adjustments.
With respect to each adjustable rate 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. Upon the
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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 Confidentiality/Protection of Customer Information.
The Company shall keep confidential and shall not divulge to any party,
without the Purchaser's prior written consent, the price paid by the Purchaser
for the Mortgage Loans, except to the extent that it is reasonable and necessary
for the Company to do so in working with legal counsel, auditors, taxing
authorities or other governmental agencies. Each party agrees that it shall
comply with all applicable laws and regulations regarding the privacy or
security of Customer Information and shall maintain appropriate administrative,
technical and physical safeguards to protect the security, confidentiality and
integrity of Customer Information, including maintaining security measures
designed to meet the objectives of the Interagency Guidelines Establishing
Standards for Safeguarding Customer Information, 66 Fed. Reg. 8616 (the
"Interagency Guidelines"). For purposes of this Section, the term "Customer
Information" shall have the meaning assigned to it in the Interagency
Guidelines.
Section 4.23 Credit Reporting.
For Each Mortgage Loan, the Servicer shall furnish on a monthly basis
complete information on the related borrower credit files to Equifax, Experian
and Trans Union Credit Information Company, in accordance with the Fair Credit
Reporting Act and its implementing regulations.
Section 4.24 Pledged Asset Mortgage Loans.
For each Pledged Asset Mortgage Loan, the Company has obtained a Letter of
Credit from the Pledge Holder for the Pledged Value Amount. The Pledge Holder is
responsible for managing the Pledge Account, which includes making a
determination as to the types of assets or accounts the Mortgagor may pledge, as
well as the Pledge Account Set-Up Value and Pledge Account Maintenance Value. In
the event that the value of the Pledge Account is reduced below the Pledge
Account Maintenance Value, the Pledge Holder will require the Mortgagor to add
funds to the Pledge Account. In the event the Mortgagor is unable to comply with
the Pledge Account Maintenance Value requirements, the Pledge Holder can perform
a margin call. The Company has no role in the management or maintenance of the
Pledge Account.
Section 4.25 Establishment of and Deposits to Subsidy Account.
The Company shall segregate and hold all Subsidy Funds collected and
received pursuant to the Subsidy Loans separate and apart from any of its own
funds and general assets and shall establish and maintain one or more Subsidy
Accounts, in the form of time deposit or demand accounts, titled "Xxxxx Fargo
Bank, N.A., in trust for the Purchaser, its successors or assigns,
49
and/or subsequent purchasers of residential Mortgage Loans, and various
Mortgagors." The Subsidy Account shall be established with a Qualified
Depository.
The Company shall, from time to time, withdraw funds from the Subsidy
Account for the following purposes:
(i) to deposit in the Custodial Account in the amounts and in the
manner provided for in Section 4.04(xi);
(ii) to transfer funds to another eligible institution in accordance
with Section 4.09 hereof;
(iii) to withdraw funds deposited in error; and
(iv) to clear and terminate the Subsidy Account upon the termination
of this Agreement.
Notwithstanding anything to the contrary elsewhere in this Agreement, the
Company may employ the Escrow Account as the Subsidy Account to the extent that
the Company can separately identify any Subsidy Funds deposited therein.
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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, 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 after the second
Business Day following the Business Day 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 such second Business Day 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 Statements to Purchaser.
Not later than the 10th Business Day of each month the Company shall
furnish to the Purchaser a monthly remittance advice, with a trial balance
report attached thereto, as to the preceding remittance and the period ending on
the last day of the preceding month.
Section 5.03 Monthly Advances by Company.
On the Business Day immediately 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 immediately preceding Determination Date
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or which were deferred pursuant to Section 4.01. Any amounts held for future
distribution and so used shall be replaced by the Company by deposit in the
Custodial Account on or before any future Remittance Date if funds in the
Custodial Account on such Remittance Date shall be less than payments to the
Purchaser required to be made on such Remittance Date. The Company's obligation
to make such Monthly Advances as to any Mortgage Loan will continue through the
last Monthly Payment due prior to the payment in full of the Mortgage Loan, or
through the last Remittance Date prior to the Remittance Date for the
distribution of all Liquidation Proceeds and other payments or recoveries
(including REO Disposition Proceeds, Insurance Proceeds and Condemnation
Proceeds) with respect to the Mortgage Loan; provided, however, that such
obligation 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, REO Disposition 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 Transfers of Mortgaged Property.
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, the Company shall enter into (i) an
assumption and modification agreement with the Person to whom such property has
been conveyed, pursuant to which such Person becomes liable under the Mortgage
Note and the original Mortgagor remains liable thereon or (ii) in the event the
Company is unable under applicable law to require that the original Mortgagor
remain liable under the Mortgage Note and the Company has the prior consent of
the primary mortgage guaranty insurer, a substitution of liability agreement
with the purchaser of the Mortgaged Property pursuant to which the original
Mortgagor is released from liability and the purchaser of the Mortgaged Property
is substituted as Mortgagor and becomes liable under the Mortgage Note. If an
assumption fee is collected by the Company for entering into an assumption
agreement the fee will be retained by the Company as additional servicing
compensation. In connection with any such assumption, neither the Mortgage
Interest Rate
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borne by the related Mortgage Note, the term of the Mortgage Loan, the
outstanding principal amount of the Mortgage Loan nor any other material terms
shall be changed without Purchaser's consent.
To the extent that any Mortgage Loan is assumable, the Company shall
inquire diligently into the credit worthiness of the proposed transferee, and
shall use the underwriting criteria for approving the credit of the proposed
transferee which are used with respect to underwriting mortgage loans of the
same type as the Mortgage Loan. 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 shall notify the Purchaser in the
monthly remittance advice as provided in Section 5.02, and may 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 by deposit thereof
in the Custodial Account within 2 Business Days 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 principal balance and for the period respecting which any related
interest payment on a Mortgage Loan is received. The obligation of the Purchaser
to pay the Servicing Fee is limited to, and payable solely from, the interest
portion of such Monthly Payments.
Additional servicing compensation in the form of assumption fees, to the
extent provided in Section 6.01, and late payment charges 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 Statements as to Compliance.
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The Company shall deliver to the Purchaser, on or before February 28th,
each year beginning February 28, 2006, an Officer's Certificate, stating that
(i) a review of the activities of the Company during the preceding calendar 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 this Agreement throughout such year, or, if there has been a default in
the fulfillment of any such obligation, specifying each such default known to
such officer and the nature and status thereof and the action being taken by the
Company to cure such default.
Section 6.05 Annual Independent Public Accountants' Servicing Report.
On or before February 28th, of each year beginning February 28, 2006, the
Company, at its expense, shall cause a firm of independent public accountants
which is a member of the American Institute of Certified Public Accountants to
furnish a statement to each Purchaser to the effect that such firm has examined
certain documents and records relating to the servicing of the mortgage loans
similar in nature and that such firm is of the opinion that the provisions of
this or similar Agreements have been complied with, and that, on the basis of
such examination conducted substantially in compliance with the Uniform Single
Attestation Program for Mortgage Bankers, nothing has come to their attention
which would indicate that such servicing has not been conducted in compliance
therewith, except for (i) such exceptions as such firm shall believe to be
immaterial, and (ii) such other exceptions as shall be set forth in such
statement. By providing Purchaser a copy of a Uniform Single Attestation Program
Report from their independent public accountant's on an annual basis, Company
shall be considered to have fulfilled its obligations under this Section 6.05.
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 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 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, fail to take any action, or fail
to cause the REMIC to take 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 860F(a) (2) of the Code and the tax on "contributions" to a REMIC set
forth in Section 860G(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.
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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.
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 a Consolidated Statement of Operations of
the Company for the most recently completed two fiscal years for which such a
statement is 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, upon request, 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 Purchaser or prospective
purchasers a knowledgeable financial or accounting officer for the purpose of
answering questions respecting recent developments affecting the Company or the
financial statements of the Company, and to permit any prospective purchaser to
inspect the Company's servicing facilities for the purpose of satisfying such
prospective purchaser that the Company has the ability to service the Mortgage
Loans as provided in this Agreement.
ARTICLE VIII
THE COMPANY
Section 8.01 Indemnification; Third Party Claims.
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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 in any way related to the failure of the
Company to perform its duties and service the Mortgage Loans in strict
compliance with the terms of this Agreement. 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 Company shall follow any written instructions received from
the Purchaser in connection with such claim. The Purchaser promptly shall
reimburse the Company for all amounts advanced by it pursuant to the preceding
sentence except when the claim is in any way related to the Company's
indemnification pursuant to Section 3.03, or the failure of the Company to
service and administer the Mortgage Loans in strict compliance with the terms of
this Agreement.
Section 8.02 Merger or Consolidation of the Company.
The Company shall keep in full effect its existence, rights and franchises
and shall obtain and preserve its qualification to do business in each
jurisdiction in which such qualification is or shall be necessary to protect the
validity and enforceability of this Agreement or any of the Mortgage Loans and
to perform its duties under this Agreement.
Any Person into which the Company may be merged or consolidated, or any
corporation resulting from any merger, conversion or consolidation to which the
Company shall be a party, or any Person succeeding to the business of the
Company, shall be the successor of the Company hereunder, without the execution
or filing of any paper or any further act on the part of any of the parties
hereto, anything herein to the contrary notwithstanding, provided, however, that
the successor or surviving Person shall be an institution (i) having a net worth
of not less than $25,000,000 and (ii) which is a Xxxxxx Xxx/Xxxxxxx Mac-approved
seller/servicer 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
56
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.
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 rights hereunder or
delegate its rights or duties hereunder (other than pursuant to Section 4.01) 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 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 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 Purchaser or any
third party.
ARTICLE IX
REMOVAL OF MORTGAGE LOANS FROM AGREEMENT
Section 9.01 Removal of Mortgage Loans from Inclusion Under this Agreement
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 Whole Loan
Transfers, Agency Sales or Pass-Through Transfers, retaining the Company as the
servicer thereof or subservicer if a master
57
servicer is employed, or as applicable the "seller/servicer." 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, Agency Sale or Pass-Through Transfer in accordance with
this Section 9.01; provided that no such Whole Loan Transfer, Agency Sale or
Pass-Through Transfer shall create a greater obligation or cost on the part of
the Company than otherwise set forth in this Agreement. In connection therewith
the Company shall:
(a) make all representations and warranties with respect to the Mortgage
Loans as of the Closing Date and with respect to the Company itself as
of the closing date of each Agency Sale, Whole Loan Transfer or
Pass-Through Transfer;
(b) negotiate in good faith and execute any seller/servicer agreements
required to effectuate the foregoing;
(c) with respect to any Mortgage Loans that are subject to a Pass-Through
Transfer or other securitization (a "Securitization") in which the
filing of a Xxxxxxxx-Xxxxx Certification directly with the Securities
and Exchange Commission is required, by February 28th of each year or
in connection with any additional Xxxxxxxx-Xxxxx Certification
required to be filed upon thirty (30) days written request, an officer
of the Company shall execute and deliver an Officer's Certification
substantially in the form attached hereto as Exhibit G, to the entity
filing the Xxxxxxxx-Xxxxx Certification directly with the Securities
and Exchange Commission (the "Sarbanes Certifying Party") for the
benefit of such entity and such entity's affiliates and the officers,
directors and agents of such entity and such entity's affiliates, and
shall indemnify such entity or persons arising out of any breach of
Company's obligations or representations relating thereto as provided
in such Officer's Certification.
(d) to cooperate fully with the Purchaser and any prospective purchaser
with respect to all reasonable requests and due diligence procedures
and with respect to the preparation (including, but not limited to,
the endorsement, delivery, assignment, and execution) of the Mortgage
Loan Documents and other related documents;
(e) provide as applicable:
(i) any and all information and appropriate verification of
information which may be reasonably available to the Company,
including the Company's foreclosure, delinquency experience and
the Company's underwriting standards, whether through letters of
its auditors and counsel or otherwise, as the Purchaser shall
request; provided that the Purchaser executes an Indemnification
Agreement substantially in the form of Exhibit H attached hereto;
58
(ii) such additional representations, warranties, covenants, 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 the Purchaser, as
the case may be, in connection with such Agency Sales, Whole Loan
Transfers or Pass-Through Transfers. The Purchaser shall pay all
third-party costs associated with the preparation of such
information. The Company shall execute any seller/servicer
agreements required within a reasonable period of time after
receipt of such seller/servicer agreements which time shall be
sufficient for the Company and Company's counsel to review such
seller/servicer agreements. Under this Agreement, the Company
shall retain a Servicing Fee for each Mortgage Loan at the
Servicing Fee Rate;
(f) to negotiate and execute one or more subservicing agreements between
the Company and any master servicer which is generally considered to
be a prudent master servicer in the secondary mortgage market,
designated by the Purchaser in its sole discretion after consultation
with the Company and/or one or more custodial and servicing agreements
among the Purchaser, the Company and a third party custodian/trustee
which is generally considered to be a prudent custodian/trustee in the
secondary mortgage market designated by the Purchaser in its sole
discretion after consultation with the Company, in either case for the
purpose of pooling the Mortgage Loans with other Mortgage Loans for
resale or securitization;
(g) in connection with any securitization of any Mortgage Loans, to
execute a pooling and servicing agreement, which pooling and servicing
agreement may, at the Purchaser's direction, contain contractual
provisions including, but not limited to, a 24 day certificate payment
delay (54 day total payment delay), servicer advances of delinquent
scheduled payments of principal and interest through liquidation
(unless deemed non recoverable) and prepayment interest shortfalls (to
the extent of the monthly servicing fee payable thereto);
In the event the Purchaser has elected to have the Company hold record
title to the Mortgages, prior to the Reconstitution Date the Company shall
prepare an Assignment of Mortgage in blank or to the trustee from the Company
acceptable to the trustee for each Mortgage Loan that is part of the Agency
Sales, Whole Loan Transfers or Pass-Through Transfers. The Purchaser shall pay
all preparation and recording costs associated therewith, if the Assignments of
Mortgage have been previously prepared and recorded in the name of the Purchaser
or its designee. 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 trustee upon the Company's receipt thereof. Additionally, the
Company shall prepare and execute, at the direction of the Purchaser, any note
endorsements in connection with any and all seller/servicer agreements.
59
All Mortgage Loans (i) not sold or transferred pursuant to Agency Sales,
Whole Loan Transfers or Pass-Through Transfers or (ii) that are subject to a
Securitization for which the related trust is terminated for any reason, 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.
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 two (2) Business Days after the date upon
which written notice of such failure, requiring the same to be
remedied, shall have been given to the 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 or in the Custodial Agreement
which continues unremedied for a period of 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 and to
service residential mortgage loans 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
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 property; 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,
60
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 qualifications of a Xxxxxx Mae/Xxxxxxx
Mac servicer; or
(viii) the Company, if it is an Insured Depository Institution, shall
become the subject of a cease and desist order of the Appropriate
Federal Banking Agency or enter into a memorandum of understanding,
consent agreement or any similar agreement with the Appropriate
Federal Banking Agency, any of which would have, or is purportedly the
result of, any condition which would have a material adverse effect on
the Company's ability to service the Mortgage Loans as provided in
this Agreement;
(ix) 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; or
(ix) failure by the Company to duly perform, within the required time
period, its obligations under Section 9.01(c) of this Agreement, which
failure continues unremedied for a period of thirty (30) days after
the date on which written notice of such failure, requiring the same
to be remedied, shall have been given to the Company by 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 any Purchaser, the Company shall
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, Subsidy Account or Escrow Account or
thereafter received with respect to the Mortgage Loans.
Section 10.02 Waiver of Defaults.
61
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.
Section 11.02 Termination Without Cause.
The Purchaser may terminate, at its sole option, any rights the Company may
have hereunder, 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.
The Company shall be entitled to receive, as such liquidated damages, upon
the transfer of the servicing rights, an amount equal to: (i) 2.25% of the
aggregate outstanding principal amount of the Mortgage Loans as of the
termination date paid by the Purchaser to the Company with respect to all of the
Mortgage Loans for which a servicing fee rate of .25% is paid per annum, (ii)
3.25% of the aggregate outstanding principal amount of the Mortgage Loans as of
the termination date paid by the Purchaser to the Company with respect to all of
the Mortgage Loans for which a servicing fee rate of .375% is paid per annum,
and (iii) 3.75% of the aggregate outstanding principal amount of the Mortgage
Loans as of the termination date paid by the Purchaser to the Company with
respect to all of the Mortgage Loans for which a servicing fee rate of .44% or
greater is paid per annum.
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.01 Successor to Company.
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Prior to termination of the Company's responsibilities and duties under
this Agreement pursuant to Sections 8.04, 10.01, 11.01 (ii) or pursuant to
Section 11.02 the Purchaser shall, (i) succeed to and assume all of the
Company's responsibilities, rights, duties and obligations under this Agreement,
or (ii) appoint a successor having the characteristics set forth in Section 8.02
and which shall succeed to all rights and assume all of the responsibilities,
duties and liabilities of the Company under this Agreement prior to the
termination of Company's responsibilities, duties and liabilities under this
Agreement arising from and after such termination. In connection with such
appointment and assumption, the Purchaser may make such arrangements for the
compensation of such successor out of payments on Mortgage Loans as it and such
successor shall agree. 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 and
8.01, it being understood and agreed that the provisions of such Sections 3.01,
3.02, 3.03 and 8.01 shall be applicable to the Company notwithstanding any such
sale, assignment, resignation or termination of the Company, or the termination
of this Agreement.
Any successor appointed as provided herein shall execute, acknowledge and
deliver to the Company and to the Purchaser an instrument accepting such
appointment, wherein the successor shall make the representations and warranties
set forth in Section 3.01, except for subsections (h) with respect to the sale
of the Mortgage Loans and subsections (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, 11.01 or 11.02 shall not affect any claims that any Purchaser may
have against the Company arising out of the Company's actions or failure to act
prior to any such termination or resignation.
The Company shall deliver promptly to the successor servicer the funds in
the Custodial Account, Subsidy 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.
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.
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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.
Section 12.04 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 12.05 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 with respect to servicing issues:
Xxxxx Fargo Bank, N.A.
1 Home Xxxxxx
Xxx Xxxxxx, XX 00000-0000
Attention: Xxxx X. Xxxxx, MAC X2401-042
Fax: 515/000-0000
(ii) if to the Company with respect to all other issues:
Xxxxx Fargo Bank, N.A.
0000 Xxx Xxxxxxxxxx Xxx
Xxxxxxxxx, XX 00000
Attention: Structured Finance Manager, MAC X3906-012
Fax: 301/000-0000
In each instance, with a copy to:
Xxxxx Fargo Bank, N.A.
1 Home Campus
Xxx Xxxxxx, Xxxx 00000-0000
Attention: General Counsel MAC X2401-06T
or such other address as may hereafter be furnished to the Purchaser
in writing by the Company;
64
(ii) if to Purchaser:
Xxxxxxx Xxxxx Mortgage Lending, Inc.
0 Xxxxx Xxxxxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx Xxxxxxx
or such other address as may hereafter be furnished to the Company in
writing by the Purchaser.
Section 12.06 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 12.07 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 12.08 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 Section 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 12.09 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
under applicable law or requested by the Purchaser at its sole option.
Section 12.10 Assignment by Purchaser.
The Purchaser shall have the right, without the consent of the Company but
subject to the limit set forth in Section 2.02 hereof, to assign, in whole or in
part, its interest under this
65
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 substantially in the form
attached as Exhibit D, 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.
Section 12.11 Solicitation of Mortgagor.
Neither party shall, after the Closing Date, take any action to solicit the
refinancing of any Mortgage Loan. It is understood and agreed that neither (i)
promotions undertaken by either party or any affiliate which are directed to the
general public at large, including, without limitation, mass mailings based upon
commercially acquired mailing lists, newspaper, radio, television advertisements
nor (ii) serving the refinancing needs of a Mortgagor who, without solicitation,
contacts either party in connection with the refinance of such Mortgage or
Mortgage Loan, shall constitute solicitation under this Section.
Section 12.12 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 12.13 Waivers.
No term or provision of this Agreement may be waived or modified unless
such waiver or modification is in writing and signed by the party against whom
such waiver or modification is sought to be enforced.
Section 12.14. Acknowledgement of Anti-Predatory Lending Policies.
On the Purchase Date, Purchaser has in place internal policies and
procedures that expressly prohibit its purchase of any high cost Mortgage Loan
as specified in Section 3.02 (rr).
[Intentionally Blank - Next Page Signature Page]
66
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.
XXXXXXX XXXXX MORTGAGE LENDING, INC. XXXXX FARGO BANK, N.A.
PURCHASER COMPANY
By: By:
--------------------------------- ------------------------------------
Name: Name:
------------------------------- ----------------------------------
Title: Title:
------------------------------ ---------------------------------
67
STATE OF )
) ss:
COUNTY OF __________________________)
On the _____ day of _______________, 20__ before me, a Notary Public in and
for said State, personally appeared ________________________, known to me to be
_______________________ of Xxxxx Fargo Bank, N.A., the national banking
association that executed the within instrument and also known to me to be the
person who executed it on behalf of said bank, and acknowledged to me that such
bank executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand affixed my office seal the
day and year in this certificate first above written.
----------------------------------------
Notary Public
My Commission expires
------------------
68
STATE OF )
) ss:
COUNTY OF __________________________)
On the _____ day of _______________, 20__ before me, a Notary Public in and
for said State, personally appeared ________________________, known to me to be
the ______________________________ of _________________________, the corporation
that executed the within instrument and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand affixed my office seal the
day and year in this certificate first above written.
----------------------------------------
Notary Public
My Commission expires
------------------
69
EXHIBIT A
MORTGAGE LOAN SCHEDULE
EXHIBIT A-1
DATA FILE
(1) the street address of the Mortgaged Property including the city, state,
county and zip code;
(2) a code indicating whether the Mortgaged Property is a single family
residence, a 2-4 family dwelling, a PUD, a Cooperative Loan, a townhouse,
manufactured housing or a unit in a condominium project;
(3) the Mortgage Interest Rate as of the Cut-off Date;
(4) the current Monthly Payment;
(5) loan term, number of months;
(6) the stated maturity date;
(7) the Stated Principal Balance of the Mortgage Loan as of the close of
business on the Cut-off Date, after deduction of payments of principal due
on or before the Cut-off Date;
(8) the Loan-to-Value Ratio;
(9) a code indicating whether the Mortgage Loan is an Interest Only Mortgage
Loan;
(10) a code indicating whether the Mortgage Loan is a temporary buydown (Y or
N);
(11) the Servicing Fee Rate;
(12) a code indicating whether the Mortgage Loan is covered by lender-paid
mortgage insurance (Y or N);
(13) a code indicating whether the Mortgage Loan is a TimeSaver(R) Mortgage Loan
(Y or N);
(14) the Mortgagor's first and last name;
(15) a code indicating whether the Mortgaged Property is owner-occupied;
(16) the remaining months to maturity from the Cut-off Date, based on the
original amortization schedule;
(17) the date on which the first Monthly Payment was due on the Mortgage Loan;
(18) the last Due Date on which a Monthly Payment was actually applied to the
actual principal balance;
(19) the original principal amount of the Mortgage Loan;
(20) a code indicating the purpose of the loan (i.e., purchase, financing,
rate/term refinancing, cash-out refinancing);
(21) the Mortgage Interest Rate at origination;
((22) a code indicating the documentation style (i.e., full (providing two years
employment verification - 2 years W-2's and current pay stub or 2 years
1040's for self employed borrowers), alternative or reduced);
(23) a code indicating if the Mortgage Loan is subject to a PMI Policy;
(24) the Appraised Value of the Mortgage Property;
(25) the sale price of the Mortgaged Property, if applicable;
(26) the Mortgagor's Underwriting FICO Score;
(27) term of prepayment penalty in years;
(28) a code indicating the product type;
(29) a code indicating the credit grade of the Mortgage Loan;
(30) the unpaid balance of the Mortgage Loan as of the close of business on the
Cut-off Date, after deduction of all payments of principal;
(31) the Note date of the Mortgage Loan;
(32) the mortgage insurance certificate number and percentage of coverage, if
applicable;
(33) the Mortgagor's date of birth;
(34) the MIN Number;
(35) employer name;
(36) subsidy program code;
(37) servicer name;
(38) the combined Loan-to-Value Ratio;
(39) the total Loan-to-Value Ratio;
(40) whether the Mortgage Loan is convertible (Y or N);
(41) a code indicating whether the Mortgage Loan is a relocation loan (Y or N);
(42) a code indicating whether the Mortgage Loan is a leasehold loan (Y or N);
(43) a code indicating whether the Mortgage Loan is an Alt A loan (Y or N);
(44) a code indicating whether the Mortgage Loan is a no ratio loan (Y or N);
(45) a code indicating whether the Mortgage Loan is a Pledged Asset Mortgage
Loan (Y or N);
(46) effective LTV percentage for Pledged Asset Mortgage Loans;
(47) citizenship type code;
(48) a code indicating whether the Mortgage Loan is a conforming or
non-conforming loan, based on the original loan balance;
(49) the name of the client for which the Mortgage Loan was originated;
(50) the program code;
(51) the loan sub doc code;
(52) a code indicating amortization type (1 or 2);
(53) interest only note payment;
(54) first full amortization payment date;
(55) interest only term, number of months;
(56) remaining interest only term, number of months;
(57) a code indicating whether the Mortgage Loan is a 2nd lien (Y or N);
(58) a code indicating borrower VOA or lender VOA (L or B);
(59) combined current loan balance;
The Company shall provide the following
For the Home Mortgage Disclosure Act (HMDA):
(60) the Mortgagor's and co-Mortgagor's (if applicable) ethnicity;
(61) the Mortgagor's and co-Mortgagor's (if applicable) race;
(62) lien status;
(63) for cash-out refinance loans, the cash purpose;
(64) the Mortgagor's and co-Mortgagor's (if applicable) gender;
(65) the Mortgagor's and co-Mortgagor's (if applicable) social security numbers;
(66) the number of units for the property;
(67) the year in which the property was built;
(68) the qualifying monthly income of the Mortgagor;
(69) the number of bedrooms contained in the property;
(70) a code indicating first time buyer (Y or N);
(71) the total rental income, if any;
The Seller shall provide the following
for the adjustable rate Mortgage Loans (if applicable):
(72) the maximum Mortgage Interest Rate under the terms of the Mortgage Note;
(73) the Periodic Interest Rate Cap;
(74) the Index;
(75) the next Adjustment Date;
(76) the Gross Margin; and
(77) the lifetime interest rate cap.
DRAFT
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 and 2.03
of the Seller's Warranties and Servicing Agreement to which this Exhibit is
attached (the "Agreement"):
1. The original Mortgage Note bearing all intervening endorsements,
endorsed "Pay to the order of _________ without recourse" and signed
in the name of the Company by an authorized officer (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]").
2. The original of any guarantee executed in connection with the Mortgage
Note (if any).
3. The original Mortgage, with evidence of recording thereon or a
certified true and correct copy of the Mortgage sent for recordation.
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.
Further, with respect to MERS Mortgage Loans, (a) the Mortgage names
MERS as the Mortgagee and (b) the requirements set forth in the
Electronic Tracking
DRAFT
Agreement have been satisfied, with a conformed recorded copy to
follow as soon as the same is received by the Company.
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.
5. The original Assignment of Mortgage for each Mortgage Loan, in form
and substance acceptable for recording (except for the insertion of
the name of the assignee and recording information). The Assignment of
Mortgage must be duly recorded only if recordation is either necessary
under applicable law or commonly required by private institutional
mortgage investors in the area where the Mortgaged Property is located
or on direction of the Purchaser. If the Assignment of Mortgage is to
be recorded, the Mortgage shall be assigned to the Purchaser. If the
Assignment of Mortgage is not to be recorded, the Assignment of
Mortgage shall be delivered in blank. 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
by "[Company], formerly know as [previous name]."
6. Originals or certified true copies of documents sent for recordation
of all intervening assignments of the Mortgage with evidence of
recording thereon, or if any such intervening assignment has not been
returned from the applicable recording office or has been lost or if
such public recording office retains the original recorded assignments
of mortgage, the Company shall deliver or cause to be delivered to the
Custodian, a photocopy of such intervening assignment, together with
(i) in the case of a delay caused by the public recording office, an
Officer's Certificate of the Company stating that such intervening
assignment of mortgage has been dispatched to the appropriate public
recording office for recordation and that such original recorded
intervening assignment of mortgage or a copy of such intervening
assignment of mortgage certified by the appropriate public recording
office or by the title insurance company that issued the title policy
to be a true and complete copy of 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 or in the case where an
intervening assignment is lost after recordation in a public recording
office, a copy of such intervening assignment certified by such public
recording office to be a true and complete copy of the original
recorded intervening assignment.
7. The original mortgagee policy of title insurance or other evidence of
title such as a copy of the title commitment or copy of the
preliminary title commitment.
2
DRAFT
8. Any security agreement, chattel mortgage or equivalent executed in
connection with the Mortgage.
9. The original Letter of Credit for each Pledged Asset Mortgage Loan and
an assignment, in blank, from the Company to the Purchaser, of such
Letter of Credit.
10. For each Cooperative Loan, the original or a seller certified true
copy of the following:
The original Pledge Agreement entered into by the Mortgagor with
respect to such Cooperative Loan;
UCC-3 assignment in blank (or equivalent instrument), sufficient under
the laws of the jurisdiction where the related Cooperative Apartment
is located to reflect of record the sale and assignment of the
Cooperative Loan to the Purchaser;
Original Assignment of Mortgage Note and Pledge Agreement in blank
showing a complete chain of assignment from the originator of the
related Cooperative Loan to the Company;
Original Form UCC-1 and any continuation statements with evidence of
filing thereon with respect to such Cooperative Loan;
Cooperative Shares with a Stock Certificate in blank attached;
Original Proprietary Lease;
Original Assignment of Proprietary Lease, in blank, and all
intervening assignments thereof;
Original recognition agreement of the interests of the mortgagee with
respect to the Cooperative Loan by the Cooperative, the stock of which
was pledged by the related Mortgagor to the originator of such
Cooperative Loan; and
Originals of any assumption, consolidation or modification agreements
relating to any of the items specified above.
With respect to each Mortgage Loan, the Servicing 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):
11. The original hazard insurance policy and, if required by law, flood
insurance policy, in accordance with Section 4.10 of the Agreement.
12. Residential loan application.
13. Mortgage Loan closing statement.
3
DRAFT
14. Verification of employment and income, unless originated under the
Company's Limited Documentation program, Xxxxxx Xxx Timesaver Plus.
15. Verification of acceptable evidence of source and amount of down
payment.
16. Credit report on the Mortgagor.
17. Residential appraisal report.
18. Photograph of the Mortgaged Property.
19. Survey of the Mortgage property, if required by the title company or
applicable law.
20. 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.
21. All required disclosure statements.
22. If available, termite report, structural engineer's report, water
potability and septic certification.
23. Sales contract, if applicable.
24. 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 loan file and which are
required to document the Mortgage Loan or to service the Mortgage
Loan.
25. Amortization schedule, if available.
26. Payment history for any Mortgage Loan that has been closed for more
than 90 days.
27. Original power of attorney, if applicable.
In the event an Officer's Certificate of the Company is delivered to the
Custodian because of a delay caused by the public recording office in returning
any recorded document, the Company shall deliver to the Custodian, within 240
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
4
DRAFT
recorded document will be delivered to the Custodian. The Company shall be
required to deliver to the Custodian the applicable recorded document by the
date specified in (iv) above or by the extended date as may be agreed to by both
parties. An extension of the date specified in (iv) above may be requested from
the Purchaser, which consent shall not be unreasonably withheld.
5
EXHIBIT C
CUSTODIAL AGREEMENT
EXHIBIT D
ASSIGNMENT, ASSUMPTION AND RECOGNITION AGREEMENT
____________, 20__
ASSIGNMENT, ASSUMPTION AND RECOGNITION AGREEMENT, dated _________________,
20__ between _________________, a _________________ corporation having an office
at _________________ ("Assignor") and _________________, having an office at
_________________ ("Assignee"):
For and in consideration of the sum of one dollar ($1.00) and other
valuable consideration the receipt and sufficiency of which are hereby
acknowledge, and of the mutual covenants herein contained, the parties hereto
hereby agree as follows:
1. 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 Seller's Warranties and Servicing Agreement, (the "Seller's Warranties
and Servicing Agreement"), dated as of _________________, by and between
_________________ (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
_________________, by and among the Company, the Purchaser and _________________
(the "Custodian").
2. From and after the date hereof (the "Closing Date"), the Company shall
and does hereby recognize that the Assignor will transfer the Mortgage Loans and
assign its rights under the Sellers Warranties and Servicing Agreement (solely
to the extent set forth herein) to the Assignee. The Company hereby acknowledges
and agrees that from and after the date hereof (i) the Assignee will be the
owner of the Mortgage Loans, (ii) the Company shall look solely to the Assignee
for performance of any obligations of the Assignor [insofar as they relate to
the enforcement of the representations, warranties and covenants with respect to
the Mortgage Loans], (iii) the [Assignee] shall have all the rights and remedies
available to the Assignor, insofar as they relate to the Mortgage Loans, under
the Seller's Warranties and Servicing Agreement, and shall be entitled to
enforce all of the obligations of the Company thereunder insofar as they relate
to the Mortgage Loans, and (iv) all references to the Purchaser [(insofar as
they relate to the rights, title and interest and, with respect to obligations
of the Purchaser, only insofar as they relate to the enforcement of the
representations, warranties and covenants of the Company)] under the Seller's
Warranties and Servicing Agreement insofar as they relate to the Mortgage Loans,
shall be deemed to refer to the Assignee.
3. 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 Seller's Warranties and Servicing Agreement or the Mortgage
Loans;
c. The Assignor has not waived or agreed to any waiver under, or
agreed to any amendment or other modification of, the Seller's Warranties and
Servicing Agreement, the Custodial Agreement or the Mortgage Loans, including
without limitation the transfer of the servicing obligations under the Seller's
Warranties and Servicing Agreement. The Assignor has no knowledge of, and has
not received notice of, any waivers under or amendments or other modifications
of, or assignments of rights or obligations under, the Seller's Warranties and
Servicing Agreement or the Mortgage Loans; and
d. Neither the Assignor nor anyone acting on its behalf has offered,
transferred, pledged, sold or otherwise disposed of the Mortgage Loans, any
interest in the Mortgage Loans or any other similar security to, or solicited
any offer to buy or accept a transfer, pledge or other disposition of the
Mortgage Loans, any interest in the Mortgage Loans or any other similar security
from, or otherwise approached or negotiated with respect to the Mortgage Loans,
any interest in the Mortgage Loans or any other similar security with, any
person in any manner, or made any general solicitation by means of general
advertising or in any other manner, or taken any other action which would
constitute a distribution of the Mortgage Loans under the Securities Act of 1933
(the "33 Act") or which would render the disposition of the Mortgage Loans a
violation of Section 5 of the 33 Act or require registration pursuant thereto.
4. That Assignee warrants and represent to, and covenants with, the
Assignor and the Company pursuant to Section 12.10 of the Seller's Warranties
and Servicing Agreement that:
a. The Assignee agrees to be bound, as Purchaser, by all of the terms,
covenants and conditions of the Seller's Warranties and Servicing Agreement, the
Mortgage Loans and the Custodial Agreement, and from and after the date hereof,
the Assignee assumes for the benefit of each of the Company and the Assignor all
of the Assignor's obligations as purchaser thereunder;
b. The Assignee understands that the Mortgage Loans have not been
registered under the 33 Act or the securities laws of any state;
c. The purchase price being paid by the Assignee for the Mortgage
Loans are 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) of US Securities and Exchange Commission
Regulation D, promulgated under the 1933 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 33 Act or which would render the disposition of the
Mortgage Loans a violation of Section 5 of the 33 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
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 (also "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 Seller's Warranties and
Servicing Agreements is:
___________________________________
___________________________________
___________________________________
Attention: ________________________
The Assignee's wire transfer instructions for purposes of all remittances
and payments related to the Mortgage Loans and the Seller's Warranties and
Servicing Agreement is:
___________________________________
___________________________________
___________________________________
Attention: ________________________
5. 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
Seller's Warranties and Servicing Agreement, the terms of which are incorporated
herein by reference. It is the intention of the Assignor, the Company and the
Assignee that the Seller's Warranties and Servicing Agreement shall be binding
upon and inure to the benefit of the Company and the Assignee and their
respective successors and assigns
[Signatures Follow]
IN WITNESS WHEREOF, the parties have caused this Assignment, Assumption and
Recognition to be executed by their duly authorized officers as of the date
first above written.
Assignor Assignee
By: By:
--------------------------------- ------------------------------------
Name: Name:
------------------------------- ----------------------------------
Its: Its:
-------------------------------- -----------------------------------
Acknowledged and agreed to by:
-------------------------------------
Company
By:
---------------------------------
Name:
-------------------------------
Its:
--------------------------------
EXHIBIT E
FORMS OF CUSTODIAL ACCOUNT CERTIFICATIONS
CUSTODIAL ACCOUNT CERTIFICATION
____________, 20__
Xxxxx Fargo Bank, N.A. hereby certifies that it has established the account
described below as a Custodial Account pursuant to Section 4.04 of the Seller's
Warranties and Servicing Agreement, dated as of _________________, 20__ ,.
Title of Account: Xxxxx Fargo Bank, N.A. in trust for the Purchaser and/or
subsequent purchasers of Mortgage Loans - P & I
Address of office or branch
of the Company at which
Account is maintained:
________________________________________
________________________________________
________________________________________
________________________________________
XXXXX FARGO BANK, N.A. Company
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
EXHIBIT F
FORMS OF ESCROW ACCOUNT CERTIFICATIONS
ESCROW ACCOUNT CERTIFICATION
____________, 20__
Xxxxx Fargo Bank, N.A. hereby certifies that it has established the account
described below as an Escrow Account pursuant to Section 4.06 of the Seller's
Warranties and Servicing Agreement, dated as of ______________, 20__,.
Title of Account: Xxxxx Fargo Bank, N.A. in trust for the Purchaser and/or
subsequent purchasers of Mortgage Loans, and various
Mortgagors - T & I
Address of office or branch
of the Company at which
Account is maintained:
________________________________________
________________________________________
________________________________________
________________________________________
XXXXX FARGO BANK, N.A. Company
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
EXHIBIT G
FORM OF ANNUAL CERTIFICATION
I, ______________________, Vice President of Xxxxx Fargo Bank, N.A. (the
"Servicer"), certify to __________________, and its officers, directors, agents
and affiliates (the "Sarbanes Certifying Party"), and with the knowledge and
intent that they will rely upon this certification, that:
(i) Based on my knowledge, the information relating to the Mortgage Loans
and the servicing thereof submitted by the Servicer to the Sarbanes
Certifying Party which is used in connection with preparation of the
reports on Form 8-K and the annual report on Form 10-K filed with the
Securities and Exchange Commission with respect to the Securitization,
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 light of the circumstances under which such statements were
made, not misleading as of the date of this certification;
(ii) The servicing information required to be provided to the Sarbanes
Certifying Party by the Servicer under the relevant servicing
agreement has been provided to the Sarbanes Certifying Party;
(iii) I am responsible for reviewing the activities performed by the
Servicer under the relevant servicing agreement and based upon the
review required by the relevant servicing agreement, and except as
disclosed in the Annual Statement of Compliance, the Annual
Independent Public Accountant's Servicing Report and all servicing
reports, officer's certificates and other information relating to the
servicing of the Mortgage Loans submitted to the Sarbanes Certifying
Party, the Servicer has, as of the date of this certification
fulfilled its obligations under the relevant servicing agreement; and
(iv) I have disclosed to the Sarbanes Certifying Party all significant
deficiencies relating to the Servicer's compliance with the minimum
servicing standards in accordance with a review conducted in
compliance with the Uniform Single Attestation Program for Mortgage
Bankers or similar standard as set forth in the relevant servicing
agreement.
(v) The Servicer shall indemnify and hold harmless the Sarbanes Certifying
Party and its officers, directors, agents and affiliates from and
against any losses, damages, penalties, fines, forfeitures, reasonable
legal fees and related costs, judgments and other costs and expenses
arising out of or based upon a breach by the Servicer or any of its
officers, directors, agents or affiliates of its obligations under
this Certification or the negligence, bad faith or willful misconduct
of the Servicer in connection therewith. If the indemnification
provided for herein is unavailable or insufficient to hold harmless
the Sarbanes Certifying Party, then the Servicer agrees that it shall
contribute to the amount paid or payable by the Sarbanes
Certifying Party as a result of the losses, claims, damages or
liabilities of the Sarbanes Certifying Party in such proportion as is
appropriate to reflect the relative fault of the Sarbanes Certifying
Party on the one hand and the Servicer on the other in connection with
a breach of the Servicer's obligations under this Certification or the
Servicer's negligence, bad faith or willful misconduct in connection
therewith.
IN WITNESS WHEREOF, I have hereunto signed my name and affixed the seal of the
Servicer.
Dated: By:
------------------ ------------------------------------
Name:
----------------------------------
Title:
---------------------------------
EXHIBIT H
INDEMNIFICATION AGREEMENT
Indemnification Agreement dated as of ___________, 200__ (the
"Agreement") between Xxxxx Fargo Bank, N.A. ("Company") and
_____________________ (the "Depositor").
Reference is made to the issuance of ____________________, Series
________, Asset-Backed Certificates (the "Certificates"), pursuant to a Pooling
and Servicing Agreement, dated as of _______________ (the "Pooling and Servicing
Agreement"), among the Depositor as depositor, _________________ as master
servicer and _____________________ as trustee. The Depositor will sell certain
of the Certificates to _______________ (the "Underwriter") for offer and sale
pursuant to the terms of an Underwriting Agreement, dated ______________, ____,
between the Depositor and the Underwriter. Capitalized terms not otherwise
defined herein shall have the meanings set forth in the Pooling and Servicing
Agreement.
Reference is also made to the information provided by the Company
contained in the Prospectus Supplement, under the caption, "The
Originators--______________" and "The Servicer--"__________" (collectively, the
"Company Information").
1. (a) Company agrees to indemnify and hold harmless the Depositor and
each of its directors and officers and affiliates and each person, if any, who
controls the Depositor within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act (each, a "Depositor Indemnified Party"), against
any and all actual losses, claims, expenses, damages or liabilities to which the
Depositor Indemnified Party may become subject, under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement of any
material fact contained in the Company Information or omission to state therein,
a material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances under which such
statements were made, not misleading (in each case, regardless of whether a
final judgment has been entered by a finder of fact); and will reimburse any
such reasonable legal or other expenses reasonably incurred by the Depositor
Indemnified Party in connection with investigating or defending any such loss,
claim, damage, liability or action. This indemnity agreement will be in addition
to any liability which Company may otherwise have.
(b) The Depositor agrees to indemnify and hold harmless the
Company and each of its directors and officers and affiliates and each person,
if any, who controls the Company within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act (each, a "Company Indemnified
Party" and collectively with any Depositor Indemnified Party, "Indemnified
Parties"), against any and all actual losses, claims, expenses, damages or
liabilities to which the Company Indemnified Party may become subject, under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
the Prospectus Supplement other than with respect to the Company Information, or
omission to state therein a material fact required to be stated therein or
necessary to make the statements made therein not misleading (in each case,
regardless of
whether a final judgment has been entered by a finder of fact); and will
reimburse such reasonable legal or other expenses actually incurred by the
Company Indemnified Party in connection with investigating or defending any such
loss, claim, damage, liability or action. This indemnity agreement will be in
addition to any liability which the Depositor may otherwise have.
(c) Promptly after receipt by an Indemnified Party under this
Section 1 of notice of the commencement of any action described therein, such
Indemnified Party will, if a claim in respect thereof is to be made against the
indemnifying party under this Section 1, notify the indemnifying party of the
commencement thereof, but the omission so to notify the indemnifying party will
not relieve the indemnifying party from any liability that it may have to the
Indemnified Party (a) under this Agreement except to the extent that the
omission to notify the indemnifying party with respect to this Agreement
materially adversely affects the indemnifying party's ability to perform under
this Agreement or (b) other than under this Agreement. In case any such action
is brought against the Indemnified Party, and it notifies the indemnifying party
of the commencement thereof, the Indemnifying Party will be entitled to
participate therein, and, to the extent that it may wish to do so, jointly with
any other indemnifying party similarly notified, to assume the defense thereof,
with counsel reasonably satisfactory to the Indemnified Party (who shall not,
except with the consent of the Indemnified Party, be counsel to the indemnifying
party), and, after notice from the indemnifying party to the Indemnified Party
under this Section 1, the indemnifying party shall not be liable for any legal
or other expenses subsequently incurred by the Indemnified Party in connection
with the defense thereof other than reasonable costs of investigation.
The Indemnified Party shall have the right to employ separate counsel
in any such action and to participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of the Indemnified Party
unless: (i) the employment thereof has been specifically authorized by the
indemnifying party in writing; (ii) a conflict or potential conflict exists
(based on advice of counsel to the Indemnified Party) between the Indemnified
Party and the indemnifying party (in which case the indemnifying party will not
have the right to direct the defense of such action on behalf of the Indemnified
Party) or (iii) the indemnifying party has failed to assume the defense of such
action and employ counsel reasonably satisfactory to the Indemnified Party, in
which case, if the Indemnified Party notifies the indemnifying party in writing
that it elects to employ separate counsel at the expense of the indemnifying
party, the indemnifying party shall not have the right to assume the defense of
such action on behalf of the Indemnified Party, it being understood, however,
the indemnifying party shall not, in connection with any one such action or
separate but substantially similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstances, be liable for the
reasonable fees and expenses of more than one separate firm of attorneys at any
time for the Indemnified Party, which firm shall be designated in writing by the
Company, in the case of Company Indemnified Parties, or by the Depositor, in the
case of Depositor Indemnified Parties.
The Indemnified Party, as a condition of the indemnity agreements
contained in Section 1(a), Section 1(b) and Section 1(c), shall use its best
efforts to cooperate with the indemnifying party in the defense of any such
action or claim. The indemnifying party shall not be liable for any settlement
of any such action effected without its written consent (which
2
consent shall not be unreasonably withheld), but if settled with its written
consent or if there be a final judgment for the plaintiff in any such action,
the indemnifying party agrees to indemnify and hold harmless the Indemnified
Party from and against any loss or liability (to the extent set forth in Section
1(a), Section 1(b) or Section 1(c) as applicable) by reason of such settlement
or judgment.
2. All demands, notices and communications hereunder shall be in
writing and shall be deemed to have been duly given if personally delivered to
or mailed by registered mail, postage prepaid, or transmitted by facsimile and
confirmed by similar mailed writing as follows:
(i) if to the Company:
Xxxxx Fargo Bank, N.A.
0000 Xxx Xxxxxxx Xxx, Xxxxxxxx 0
Xxxxxxxxx, XX 00000
Attention: Structured Finance Manager, MAC X3901-016
Fax: 301/000-0000
(ii) with a copy to:
Xxxxx Fargo Bank, N.A.
1 Home Campus
Xxx Xxxxxx, Xxxx 00000-0000
Attention: General Counsel MAC X2401-06T
or such other address as may hereafter be furnished to the Depositor
in writing by the Company;
(iii) if to the Depositor:
@
@
@
@
or such other address as may hereafter be furnished to the Company in
writing by the Depositor.
3. This Agreement may be executed in any number of counterparts, each
of which when so executed shall be deemed to be an original, but all of such
counterparts shall together constitute one instrument.
4. This Agreement shall be construed in accordance with the laws of
the State of New York.
3
IN WITNESS WHEREOF, the Depositor and Company have caused their names
to be signed by their respective officers thereunto duly authorized as of the
date first above written.
XXXXX FARGO BANK, N.A. Company
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
----------------------------------------
Depositor
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
4
MORTGAGE LOAN PURCHASE AGREEMENT
This is a Mortgage Loan Purchase Agreement (the "Agreement"), dated as of
October 1, 2005 by and between Xxxxxxx Xxxxx Mortgage Lending, Inc., having an
office at 4 World Financial Center, 9th Floor, New York, NY 10080 (the
"Purchaser") and Xxxxx Fargo Bank, N.A., having an xxxxxx xx 0 Xxxx Xxxxxx, Xxx
Xxxxxx, Xxxx 00000-0000 (the "Seller").
WITNESSETH
WHEREAS, the Seller agrees to sell, and the Purchaser agrees to purchase,
certain conventional residential adjustable rate mortgage loans (the "Mortgage
Loans") on a servicing retained basis as described herein:
WHEREAS, the Mortgage Loans shall be delivered as whole loans; and
WHEREAS, the parties intend hereby to set forth the terms and conditions
upon which the proposed transactions will be effected.
NOW THEREFORE, in consideration of the promises and the mutual agreements
set forth herein, the parties hereto agree as follows:
SECTION 1. All capitalized terms not otherwise defined herein have the
respective meanings set forth in the Seller's Warranties and Servicing
Agreement, dated as of the date herewith (the "Seller's Warranties and Servicing
Agreement"). The following terms are defined as follows (except as otherwise
agreed by the parties):
Cut-off Date: October 1, 2005
Closing Date: October 28, 2005
First Remittance Date: November 18, 2005
Servicing Fee Rate: .250%
SECTION 2. Agreement to Purchase. The Seller agrees to sell, and the
Purchaser agrees to purchase, Mortgage Loans having an aggregate principal
balance on the Cut-off Date in an amount as set forth in the Commitment Letter,
dated as of September 23, 2005 (the "Commitment Letter"), or in such other
amount as agreed by the Purchaser and the Seller as evidenced by the actual
aggregate principal balance of the Mortgage Loans accepted by the Purchaser on
the Closing Date. The Mortgage Loans will be delivered pursuant to a Seller's
Warranties and Servicing Agreement, between the Purchaser and the Seller.
SECTION 3. Mortgage Schedules. The Seller has provided the Purchaser with
certain information constituting a listing of the Mortgage Loans to be purchased
under this Agreement
5
(the "Mortgage Loan Schedule") substantially in the form attached hereto as
Exhibit 1. The Mortgage Loan Schedule shall conform to the definition of
"Mortgage Loan Schedule" under the Seller's Warranties and Servicing Agreement.
SECTION 4. Purchase Price. The purchase price for the Mortgage Loans (the
"Purchase Price") shall be the percentage of par as stated in the Commitment
Letter, multiplied by the aggregate principal balance, as of the Cut-off Date,
of the Mortgage Loans listed on the related Mortgage Loan Schedule, after
application of scheduled payments of principal due on or before the Cut-off Date
whether or not collected. The Purchase Price may be adjusted as stated in the
Commitment Letter.
In addition to the Purchase Price as described above, the Purchaser shall
pay to the Seller, at closing, accrued interest on the aggregate principal
amount of the Mortgage Loans at the weighted average Mortgage Loan Remittance
Rate from the Cut-off Date through the day prior to the Closing Date, inclusive.
The Purchaser shall be entitled to (1) all scheduled principal due after
the Cut-off Date, (2) all other recoveries of principal collected after the
Cut-off Date (provided, however, that all scheduled payments of principal due on
or before the Cut-off Date and collected by the Seller after the Cut-off Date
shall belong to the Seller), and (3) all payments of interest on the Mortgage
Loans at the Mortgage Loan Remittance Rate (minus that portion of any such
payment which is allocable to the period prior to the Cut-off Date). The
principal balance of each Mortgage Loan as of the Cut-off Date is determined
after application of payments of principal due on or before the Cut-off Date
whether or not collected. Therefore, 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
Seller shall deposit any such prepaid amounts into the Custodial Account, which
account is established for the benefit of the Purchaser for subsequent
remittance by the Seller to the Purchaser.
SECTION 5. Examination of Mortgage Files. Prior to the Closing Date, the
Seller shall (a) deliver to the Purchaser in escrow, for examination, the
Mortgage File for each Mortgage Loan, including a copy of the Assignment of
Mortgage, pertaining to each Mortgage Loan, or (b) make the Mortgage Files
available to the Purchaser for examination at the Seller's offices or such other
location as shall otherwise be agreed upon by the Purchaser and the Seller. Such
examination may be made by the Purchaser or by any prospective purchaser of the
Mortgage Loans from the Purchaser, at any time before or after the Closing Date
upon prior reasonable notice to the Seller. The fact that the Purchaser or any
prospective purchaser of the Mortgage Loans 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 successor's) rights to demand repurchase,
substitution or other relief or remedy as provided under the related Seller's
Warranties and Servicing Agreement.
Upon the Seller's receipt of the Purchase Price, the Seller shall provide
notification to the Custodian to release ownership of the Mortgage Loan
Documents specified above to the Purchaser. Such notification shall be in a form
of a written notice by facsimile or other
6
electronic media, with a copy sent to the Purchaser. Subsequent to such release,
such Mortgage Loan Documents shall be retained by the Custodian for the benefit
of the Purchaser.
SECTION 6. Representations, Warranties and Agreements of Seller. The Seller
agrees and acknowledges that it shall, as a condition to the consummation of the
transactions contemplated hereby, make the representations and warranties
specified in Section 3.01 and 3.02 of the Seller's Warranties and Servicing
Agreement, as of the Closing Date. The meaning of the term "Agreement" as used
in Sections 3.01 and 3.02 of the Seller's Warranties and Servicing Agreement
shall include this Agreement. The Seller, without conceding that the Mortgage
Loans are securities, hereby makes the following additional representations,
warranties and agreements which shall be deemed to have been made as of the
Closing Date:
a) neither the Seller 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 (the "1933 Act") 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; and
b) the Seller has not dealt with any broker or agent or anyone else who
might be entitled to a fee or commission in connection with this
transaction other than the Purchaser.
SECTION 7. Representation, Warranties and Agreement of Purchaser. The
Purchaser, without conceding that the Mortgage Loans are securities, hereby
makes the following representations, warranties and agreements, which shall have
been deemed to have been made as of the Closing Date.
a) the Purchaser understands that the Mortgage Loans have not been
registered under the 1933 Act or the securities laws of any state;
b) the Purchaser is acquiring the Mortgage Loans for its own account only
and not for any other Person;
c) the Purchaser 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;
7
d) the Purchaser has been furnished with all information regarding the
Mortgage Loans which it has requested from the Seller; and
e) neither the Purchaser nor anyone acting on its behalf offered,
transferred, pledged, sold or otherwise disposed of any Mortgage Loan, any
interest in any Mortgage Loan or any other similar security to, or
solicited any offer to buy or accept a transfer, pledge or other
disposition of any Mortgage Loan, any interest in any Mortgage Loan or any
other similar security from, or otherwise approached or negotiated with
respect to any Mortgage Loan, any interest in any Mortgage Loan 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 1933 Act or which would render the disposition of
any Mortgage Loan 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.
SECTION 8. Closing. The closing for the purchase and sale of the Mortgage
Loans, shall take place on the Closing Date. At the Purchaser's option, 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 shall
agree.
The closing shall be subject to each of the following conditions:
a) all of the representations and warranties of the Seller under this
Agreement and under the Seller's Warranties and Servicing Agreement shall
be true and correct as of the Closing Date and no event shall have occurred
which, with notice or the passage of time, would constitute a default under
this Agreement or an Event of Default under the related Seller's Warranties
and Servicing Agreement;
b) the Purchaser shall have received, or the Purchaser's attorneys shall
have received in escrow, all Closing Documents as specified in Section 9 of
this Agreement, in such forms as are agreed upon and acceptable to the
Purchaser, duly executed by all signatories other than the Purchaser as
required pursuant to the respective terms thereof;
c) the Seller shall have delivered and released to the Custodian under the
Seller's Warranties and Servicing Agreement all documents required pursuant
to the related Custodial Agreement; and
d) all other terms and conditions of this Agreement and the Seller's
Warranties and Servicing Agreement shall have been complied with.
Subject to the foregoing conditions, the Purchaser shall pay to the Seller
on the Closing Date the Purchase Price, plus accrued interest pursuant to
Section 4 of this Agreement, by wire transfer of immediately available funds to
the account designated by the Seller.
8
SECTION 9. Closing Documents. With respect to the Mortgage Loans, the
Closing Documents shall consist of fully executed originals of the following
documents:
1. the Seller's Warranties and Servicing Agreement, dated as of the
Cut-off Date, in two counterparts;
2. this Agreement in two counterparts;
3. the Custodial Agreement, in three counterparts, in the form attached
as an exhibit to the Seller's Warranties and Servicing Agreement;
4. the Mortgage Loan Schedule, one copy to be attached to each
counterpart of the Seller's Warranties and Servicing Agreement, to
each counterpart of this Agreement, and to each counterpart of the
Custodial Agreement, as the Mortgage Loan Schedule thereto;
5. a Receipt and Certification, as required under the Custodial
Agreement;
6. an Opinion of Counsel of the Seller, in the form of Exhibit 2 hereto;
7. a Custodial Account Certification in the form attached as Exhibit G to
the Seller's Warranties and Servicing Agreement;
8. as Escrow Account Certification in the form attached as Exhibit E to
the Seller's Warranties and Servicing Agreement; and
9. an Officer's Certificate, in the form of Exhibit 3 hereto, including
all attachments thereto.
SECTION 10. Costs. The Purchaser shall pay any commissions due its
salesmen, the legal fees and expenses of its attorneys and the costs and
expenses associated with the Custodian. The Seller shall be responsible for
reasonable costs and expenses associated with any preparation and recording of
the initial Assignments of Mortgage. All other costs and expenses incurred in
connection with the transfer and delivery of the Mortgage Loans, including fees
for title policy endorsements and continuations and the Seller's attorney fees,
shall be paid by the Seller.
SECTION 11. Servicing. The Mortgage Loans shall be serviced by the Seller
in accordance with the terms of the applicable Seller's Warranties and Servicing
Agreement. The Seller shall be entitled to servicing fees calculated as provided
therein, at the Servicing Fee Rate shown on the first page of this Agreement
unless otherwise agreed by the parties.
SECTION 12. Financial Statements. The Seller understands that in connection
with the Purchaser's marketing of the Mortgage Loans, the Purchaser may request
from the Seller and make available to prospective purchasers a Consolidated
Statement of Operations of the Seller for the most recently completed two fiscal
years respecting which such a statement is available, as well as a Consolidated
Statement of Condition at the end of the last two fiscal years covered
9
by such Consolidated Statement of Operations. The Purchaser, upon request, shall
also make available any comparable interim statements to the extent any such
statements have been prepared by the Seller in a format intended or otherwise
suitable for the public at large. The Seller, upon request, agrees to furnish
promptly to the Purchaser copies of the statements specified above. The Seller
shall also make available information on its servicing performance with respect
to loans in its own portfolio and loans serviced for others (if any), including
foreclosure and delinquency ratios.
The Seller also agrees to allow access to a knowledgeable (as shall be
determined by the Seller) financial or accounting officer for the purpose of
answering questions asked by any prospective purchaser regarding recent
developments affecting the Seller or the financial statements of the Seller.
SECTION 13. Mandatory Delivery. The sale and delivery on the Closing Date
of the Mortgage Loans described on the Mortgage Loan Schedule is mandatory, it
being specifically understood and agreed that each Mortgage Loan is unique and
identifiable on the date hereof and that an award of money damages would be
insufficient to compensate the Purchaser for the losses and damages incurred by
the Purchaser (including damages to prospective purchasers of the Mortgage
Loans) in the event of the Seller's failure to deliver the Mortgage Loans on or
before the Closing Date. All rights and remedies of the Purchaser under this
Agreement are distinct from, and cumulative with, any other rights or remedies
under this Agreement or afforded by law or equity and all such rights and
remedies may be exercised concurrently, independently or successively.
SECTION 14. Notices. All demands, notices and communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed, by
registered or certified mail, return receipt requested, or, if by other means,
when received by the other party at the address shown on the first page hereof,
or such other address as may hereafter be furnished to the other party by like
notice. Any such demand, notice of communication hereunder shall be deemed to
have been received on the date delivered to or received at the premises of the
addressee (as evidenced, in the case of registered or certified mail, by the
date noted on the return receipt).
SECTION 15. Severability Clause. Any part, provision, representation or
warranty of this Agreement which is prohibited or which is held to be void or
unenforceable shall be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof. Any part,
provision, representation or warranty of this Agreement which is prohibited or
unenforceable or is held to be void or unenforceable in any jurisdiction shall
be ineffective, as to such jurisdiction, to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction as to any Mortgage Loan
shall not invalidate or render unenforceable such provision in any other
jurisdiction. To the extent permitted by applicable law, the parties hereto
waive any provision of law which prohibits or renders void or unenforceable any
provision hereof. If the invalidity of any part, provision, representation or
warranty of this Agreement shall deprive any party of the economic benefit
intended to be conferred by this Agreement, the parties shall negotiate, in
good-faith, to develop a structure the
10
economic effect of which is as close as possible to the economic effect of this
Agreement without regard to such invalidity.
SECTION 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 17. Place of Delivery and Governing Law. This Agreement shall be
deemed in effect when a fully executed counterpart thereof is received by the
Purchaser in the State of New York and shall be deemed to have been made in
State of New York. The Agreement shall be construed in accordance with the laws
of the State of New York and the obligations, rights and remedies of the parties
hereunder shall be determined in accordance with the laws of the State of New
York, except to the extent preempted by Federal Law.
SECTION 18. Further Agreements. The Purchaser and the Seller 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.
Without limiting the generality of the foregoing, the Seller shall
reasonably cooperate with the Purchaser in connection with the initial resales
of the Mortgage Loans by the Purchaser. In that connection, the Seller shall
provide to the Purchaser: (i) any and all information and appropriate
verification of information, whether through letters of its auditors and counsel
or otherwise, as the Purchaser shall reasonably request, and (ii) such
additional representations, warranties, covenants, opinions of counsel, letters
from auditors and certificates of public officials or officers of the Seller as
are reasonably believed necessary by the Purchaser in connection with such
resales. Prior to incurring any out-of-pocket expenses pursuant to this
paragraph, the Seller shall notify the Purchaser in writing of the estimated
amount of such expense. The Purchaser shall reimburse the Seller for any such
expense following its receipt of appropriate details thereof.
SECTION 19. Intention of the Parties. It is the intention of the parties
that the Purchaser is purchasing, and the Seller is selling, an undivided 100%
ownership interest in the Mortgage Loans and not a debt instrument of the Seller
or another security. Accordingly, the parties hereto each intend to treat the
transaction for Federal income tax purposes as a sale by the Seller, and a
purchase by the Purchaser, of the Mortgage Loans. The Purchaser shall have the
right to review the Mortgage Loans and the related Mortgage Files to determine
the characteristics of the Mortgage Loans which shall affect the Federal income
tax consequences of owning the Mortgage Loans and the Seller shall cooperate
with all reasonable requests made by the Purchaser in the course of such review.
SECTION 20. Successors and Assigns; Assignment of Purchase Agreement. This
Agreement shall bind and inure to the benefit of and be enforceable by the
Seller and the Purchaser and the respective successors and assigns of the Seller
and the Purchaser. This Agreement shall not be assigned, pledged or hypothecated
by the Seller to a third party without the consent of the Purchaser.
11
SECTION 21. Waivers; Other Agreements. No term or provision of this
Agreement may be waived or modified unless such waiver or modification is in
writing and signed by the party against whom such waiver or modification is
sought to be enforced.
SECTION 22. Exhibits. The exhibits to this Agreement are hereby
incorporated and made a part hereof and are an integral part of this Agreement.
SECTION 23. General Interpretive Principles. For purposes of this
Agreement, except as otherwise expressly provided or unless the context
otherwise requires:
a) the terms defined in this Agreement have the meanings assigned to them
in this Agreement and include the plural as well as the singular, and the
use of any gender herein shall be deemed to include the other gender;
b) accounting terms not otherwise defined herein have the meanings assigned
to them in accordance with generally accepted accounting principles;
c) references herein to "Articles", "Sections", "Subsections",
"Paragraphs", and other subdivisions without reference to a document are to
designated Articles, Sections, Subsections, Paragraphs and other
subdivisions of this Agreement;
d) a reference to a Subsection without further reference to a Section is a
reference to such Subsection as contained in the same Section in which the
reference appears, and this rule shall also apply to Paragraphs and other
subdivisions;
e) the words "herein", "hereof", "hereunder" and other words of similar
import refer to this Agreement as a whole and not to any particular
provision; and
f) the term "include" or "including" shall mean without limitation by
reason of enumeration.
SECTION 24. Reproduction of Documents. This Agreement and all documents
relating thereto, including, without limitation, (a) consents, waivers and
modifications which may hereafter be executed, (b) documents received by any
party at the closing, and (c) financial statements, certificates and other
information previously or hereafter furnished, may be reproduced by any
photographic, photostatic, microfilm, micro-card, miniature photographic or
other similar process. The parties 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.
[Signatures Follow]
12
IN WITNESS WHEREOF, the Seller and the Purchaser have caused their names to
be signed hereto by their respective officers thereunto duly authorized as of
the date first above written.
XXXXXXX XXXXX MORTGAGE LENDING, INC.
(Purchaser)
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
XXXXX FARGO BANK, N.A.
(Seller)
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
13
EXHIBIT 1
MORTGAGE LOAN SCHEDULE
EXHIBIT 2
FORM OF OPINION OF COUNSEL
@
@
@
@
Re: Xxxxx Fargo Bank, N.A.
Mortgage Loan Series @
Dear Sir/Madam:
I am @ of Xxxxx Fargo Bank, N.A. and have acted as counsel to Xxxxx Fargo Bank,
N.A. (the "Company"), with respect to certain matters in connection with the
sale by the Company of the mortgage loans designated as Mortgage Loan Series @
(the "Mortgage Loans") pursuant to that certain Seller's Warranties and
Servicing Agreement and Mortgage Loan Purchase Agreement by and between the
Company and @ (the "Purchaser"), dated as of @, 20__, (the "Agreements"), which
sale is in the form of whole Mortgage Loans. Capitalized terms not otherwise
defined herein have the meanings set forth in the Seller's Warranties and
Servicing Agreement.
I have examined the following documents:
1. the Seller's Warranties and Servicing Agreement;
2. the Mortgage Loan Purchase Agreement;
3. the Custodial Agreement;
4. the form of endorsement of the Mortgage Notes; and
5. such other documents, records and papers as I have deemed necessary and
relevant as a basis for this opinion.
To the extent I have deemed necessary and proper, I have relied upon the
representations and warranties of the Company contained in the Agreements. I
have assumed the authenticity of all documents submitted to me as originals, the
genuineness of all signatures, the legal capacity of natural persons and the
conformity to the originals of all documents.
Based upon the foregoing, it is my opinion that;
1. The Company is a national banking association duly organized, validly
existing and in good standing under the laws of the United States.
2. The Company has the power to engage in the transactions contemplated by the
Agreements, the Custodial Agreement and all requisite power, authority and
legal right to execute and deliver the Agreements, the Custodial Agreement
and the Mortgage Loans, and to perform and observe the terms and conditions
of such instruments.
3. Each person who, as an officer or attorney-in-fact of the Company, signed
(a) the Agreements, each dated as of @, 20__, by and between the Company
and the Purchaser, and (b) any other document delivered prior hereto or on
the date hereof in connection with the sale and servicing of the Mortgage
Loans in accordance with the Agreements was, at the respective times of
such signing and delivery, and is, as of the date hereof, duly elected or
appointed, qualified and acting as such officer or attorney-in-fact, and
the signatures of such persons appearing on such documents are their
genuine signatures.
4. Each of the Agreements, the Custodial Agreement, and the Mortgage Loans,
has been duly authorized, executed and delivered by the Company and is a
legal, valid and binding agreement enforceable in accordance with its
terms, subject to the effect of insolvency, liquidation, conservatorship
and other similar laws administered by the Federal Deposit Insurance
Corporation affecting the enforcement of contract obligations of insured
banks and subject to the application of the rules of equity, including
those respecting the availability of specific performance, none of which
will materially interfere with the realization of the benefits provided
thereunder or with the Purchaser's ownership of the Mortgage Loans.
5. The Company has been duly authorized to allow any of its officers to
execute any and all documents by original or facsimile signature in order
to complete the transactions contemplated by the Agreements and the
Custodial Agreement and in order to execute the endorsements to the
Mortgage Notes and the assignments of the Mortgages, and the original or
facsimile signature of the officer at the Company executing the Agreements,
the Custodial Agreement, the endorsements to the Mortgage Notes and the
assignments of the Mortgages represents the legal and valid signature of
said officer of the Company.
6. Either (i) 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 the
Agreements, the Custodial Agreement or the sale and delivery of the
Mortgage Loans or the consummation of the transactions
contemplated by the Agreements and the Custodial Agreement; or (ii) any
required consent, approval, authorization or order has been obtained by the
Company.
7. Neither the consummation of the transactions contemplated by, nor the
fulfillment of the terms of the Agreements and the Custodial Agreement,
will conflict with or results in or will result in a breach of or
constitutes or will constitute a default under the charter or by-laws of
the Company, the terms of any indenture or other agreement or instrument to
which the Company is a party or by which it is bound or to which it is
subject, or violates any statute or order, rule, regulations, writ,
injunction or decree of any court, governmental authority or regulatory
body to which the Company is subject or by which it is bound.
8. There is no action, suit, proceeding or investigation pending or, to the
best of my knowledge, threatened against the Company which, in my opinion,
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 the Agreements, and the Custodial
Agreement, or of any action taken or to be taken in connection with the
transactions contemplated thereby, or which would be likely to impair
materially the ability of the Company to perform under the terms of the
Agreements and the Custodial Agreement.
9. For purposes of the foregoing, I have not regarded any legal or
governmental actions, investigations or proceedings to be "threatened"
unless the potential litigant or governmental authority has manifested to
the legal department of the Company or an employee of the Company
responsible for the receipt of process a present intention to initiate such
proceedings; nor have I regarded any legal or governmental actions,
investigations or proceedings as including those that are conducted by
state or federal authorities in connection with their routine regulatory
activities. The sale of each Mortgage Note and Mortgage as and in the
manner contemplated by the Agreements is sufficient fully to transfer all
right, title and interest of the Company thereto as noteholder and
mortgagee, apart from the rights to service the Mortgage Loans pursuant to
the Agreements.
10. The form of endorsement that is to be used with respect to the Mortgage
Loans is legally valid and sufficient to duly endorse the Mortgage Notes to
the Purchaser. Upon the completion of the endorsement of the Mortgage Notes
and the completion of the assignments of the Mortgages, and the recording
thereof, the endorsement of the Mortgage Notes, the delivery to the
Custodian of the completed assignments of the Mortgages, and the delivery
of the original endorsed Mortgage Notes to the Custodian would be
sufficient to permit the entity to which such Mortgage Note is initially
endorsed at the Purchaser's direction, and to whom such assignment of
Mortgages is initially assigned at the Purchaser's direction, to avail
itself of all protection available under applicable law against the claims
of any present or future creditors of the Company, and
would be sufficient to prevent any other sale, transfer, assignment, pledge
or hypothecation of the Mortgages and the Mortgage Notes by the Company
from being enforceable.
This opinion is given to you for your sole benefit, and no other person or
entity is entitled to rely hereon except that the purchaser or purchasers to
which you initially and directly resell the Mortgage Loans may rely on this
opinion as if it were addressed to them as of its date.
Sincerely,
@
@
@/@
EXHIBIT 3
COMPANY'S OFFICER'S CERTIFICATE
I, ________________________, hereby certify that I am the duly elected
______________ of [Company], a ______________ (the "Company"), and further
certify, on behalf of the Company as follows:
1. Attached hereto as Exhibit A is a true, correct and complete copy of
the Articles of Association of the Company which are in full force and
effect on the date hereof.
2. Attached hereto as Exhibit B is a true, correct and complete copy of
the bylaws of the Company which are in effect on the date hereof.
3. The execution and delivery by the Company of the Seller's Warranties
and Servicing Agreement, dated as of _____________, 20__, (the "Sale
and Servicing Agreement") and the Mortgage Loan Purchase Agreement
dated as of _____, 20__, (the "Custodial Agreement" and together with
the Sale and Servicing Agreement, the "Agreements") are in the
ordinary course of business of the Company.
4. A true and correct copy of the resolution of the Mortgage Banking
Committee of the Board of Directors of the Company authorizing the
Company to enter into the Agreements is attached hereto as Exhibit C.
5. Each person who, as an officer or representative of the Company,
signed (a) the Agreements, or (b) any other document delivered prior
hereto or on the date hereof in connection with any transaction
described in the Agreements was, at the respective times of such
signing and delivery a duly elected or appointed, qualified and acting
officer or representative of the Company, and the signatures of such
persons appearing on such documents are their genuine signatures.
6. Either (i) 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
the Agreements or the sale of the Mortgage Loans or the consummation
of the transactions contemplated by the Agreements; or (ii) any
required consent, approval, authorization or order has been obtained
by the Company.
7. To the best of my knowledge, neither the consummation of the
transactions contemplated by, nor the fulfillment of the terms of the
Agreements, conflicts or will conflict with or results or will result
in a breach of, or constitutes or will constitute a default under, the
charter or by-laws of the Company, the terms of
any indenture or other agreement or instrument to which the Company is
a party or by which it is bound or to which it is subject, or any
statute or order, rule, regulation, writ, injunction or decree of any
court, governmental authority or regulatory body to which the Company
is subject or by which it is bound.
8. There are no actions, suits or proceedings pending or, to the best of
my knowledge, threatened against or affecting the Company that would
materially and adversely affect the Company's ability to perform its
obligations under the Agreements. No proceedings for merger,
consolidation, liquidation, dissolution, conservatorship or
receivership of the Company are pending, or to my knowledge
threatened, and no such proceeding is contemplated by the Company.
9. The Company is duly authorized to engage in the transactions described
and contemplated by the Agreements.
10. Capitalized terms used but not defined herein shall have the meanings
assigned in the Seller's Warranties and Servicing Agreement.
IN WITNESS WHEREOF, I have hereunto signed by name and affixed the seal of
the Company.
Dated: By:
------------------------------ ------------------------------------
Name:
----------------------------------
[Seal] Title:
---------------------------------
I, __________, __________ of Xxxxx Fargo Bank, N.A., hereby certify that
___________ is the duly elected, qualified and acting ___________ of the
Company and that the signature appearing above is his genuine signature.
IN WITNESS WHEREOF, I have hereunto signed my name.
Dated: By:
------------------------------ ------------------------------------
Name:
----------------------------------
Title:
---------------------------------
