LS Draft No. 1
10/01/03
================================================================================
XXXXX FARGO HOME MORTGAGE, INC.,
as Servicer
and
XXXXXX BROTHERS BANK, FSB,
as Owner
_____________________________
FLOW SUBSERVICING AGREEMENT
Dated as of October 1, 2003
Group No. 2003-SUBFLOW
_____________________________
================================================================================
TABLE OF CONTENTS
Page
----
ARTICLE I.
Definitions
ARTICLE II.
OWNER'S ENGAGEMENT OF SERVICER TO PERFORM SERVICING RESPONSIBILITIES
Section 2.01. Contract for Servicing; Possession of Servicing Files.........................................9
Section 2.02. Books and Records.............................................................................9
Section 2.03. Custodial Agreement; Delivery of Documents...................................................10
Section 2.04. Transfer of Servicing........................................................................10
ARTICLE III.
Servicing of the Mortgage Loans
Section 3.01. Servicer to Service..........................................................................11
Section 3.02. Collection and Liquidation of Mortgage Loans.................................................12
Section 3.03. Establishment of and Deposits to Custodial Account...........................................15
Section 3.04. Permitted Withdrawals From Custodial Account.................................................16
Section 3.05. Establishment of and Deposits to Escrow Account..............................................17
Section 3.06. Permitted Withdrawals From Escrow Account....................................................18
Section 3.07. Notification of Adjustments..................................................................19
Section 3.08. Reserved.....................................................................................19
Section 3.09. Payment of Taxes, Insurance and Other Charges................................................19
Section 3.10. Protection of Accounts.......................................................................20
Section 3.11. Maintenance of Hazard Insurance..............................................................20
Section 3.12. Maintenance of Mortgage Impairment Insurance.................................................21
Section 3.13. Maintenance of Fidelity Bond and Errors and Omissions Insurance..............................22
Section 3.14. Inspections..................................................................................22
Section 3.15. Restoration of Mortgaged Property............................................................23
Section 3.16. Maintenance of PMI and/or LPMI Policy; Claims................................................23
Section 3.17. Title, Management and Disposition of REO Property............................................25
Section 3.18. Real Estate Owned Reports....................................................................26
Section 3.19. Liquidation Reports..........................................................................26
Section 3.20. Reports of Foreclosures and Abandonments of Mortgaged Property...............................27
Section 3.21. Prepayment Charges...........................................................................27
Section 3.22. Credit Reporting.............................................................................27
-i-
Section 3.23. Confidentiality/Protecting Customer Information..............................................27
Section 3.24. Superior Liens...............................................................................28
ARTICLE IV.
PAYMENTS TO OWNER
Section 4.01. Remittances..................................................................................28
Section 4.02. Statements to Owner..........................................................................29
Section 4.03. Monthly Advances by Servicer.................................................................29
Section 4.04. Due Dates Other Than the First of the Month..................................................29
ARTICLE V.
GENERAL SERVICING PROCEDURES
Section 5.01. Transfers of Mortgaged Property..............................................................29
Section 5.02. Satisfaction of Mortgages and Release of Mortgage Files......................................30
Section 5.03. Servicing Compensation.......................................................................31
Section 5.04. Annual Audit Report..........................................................................31
Section 5.05. Annual Officer's Certificate.................................................................31
Section 5.06. Right to Examine Servicer Records............................................................32
ARTICLE VI.
Representations, Warranties and Agreements
Section 6.01. Representations, Warranties and Agreements of the Servicer...................................32
Section 6.02. Remedies for Breach of Representations and Warranties of the Servicer........................34
Section 6.03. Representations, Warranties and Agreements of the Owner......................................35
ARTICLE VII.
AGENCY TRANSFER; WHOLE LOAN TRANSFER; PASS-THROUGH TRANSFER
Section 7.01. Removal of Mortgage Loans from Inclusion Under this Agreement Upon an Agency
Transfer, a Pass-Through Transfer or a Whole Loan Transfer on One or More
Reconstitution Dates.......................................................................36
Section 7.02. Transfer of Servicing for Reconstitution.....................................................40
Section 7.03. Transfer of Servicing Following Reconstitution...............................................41
Section 7.04. Owner's Repurchase and Indemnification Obligations...........................................41
Section 7.05. Additional Indemnification by the Servicer...................................................42
Section 7.06. Transfer Of Servicing........................................................................43
-ii-
ARTICLE VIII.
THE SERVICER
Section 8.01. Merger or Consolidation of the Servicer......................................................43
Section 8.02. Limitation on Liability of the Servicer and Others...........................................44
Section 8.03. Limitation on Resignation and Assignment by the Servicer.....................................44
ARTICLE IX.
TERMINATION
Section 9.01. Termination for Cause........................................................................45
Section 9.02. Termination Without Cause....................................................................47
ARTICLE X.
MISCELLANEOUS PROVISIONS
Section 10.01. Successor to the Servicer....................................................................47
Section 10.02. Costs........................................................................................48
Section 10.03. Reserved.....................................................................................49
Section 10.04. Notices......................................................................................49
Section 10.05. Severability Clause..........................................................................49
Section 10.06. No Personal Solicitation.....................................................................50
Section 10.07. Counterparts.................................................................................50
Section 10.08. Place of Delivery and Governing Law..........................................................50
Section 10.09. Further Agreements...........................................................................51
Section 10.10. Intention of the Parties.....................................................................51
Section 10.11. Successors and Assigns; Assignment of Servicing Agreement....................................51
Section 10.12. Waivers......................................................................................51
Section 10.13. Exhibits.....................................................................................51
Section 10.14. General Interpretive Principles..............................................................51
Section 10.15. Reproduction of Documents....................................................................52
EXHIBITS
EXHIBIT A FORM OF SECURITIZATION SERVICING AGREEMENT
EXHIBIT B CUSTODIAL ACCOUNT CERTIFICATION
EXHIBIT C ESCROW ACCOUNT LETTER AGREEMENT
EXHIBIT D FORM OF OFFICER'S CERTIFICATE
EXHIBIT E FORM OF OPINION OF COUNSEL
EXHIBIT F TRANSFER INSTRUCTIONS
-iii-
This is a Flow Subservicing Agreement (the "Agreement"), dated
as of October 1, 2003, by and between XXXXXX BROTHERS BANK, FSB, having an
office at 000 Xxxxxxx Xxxxxx, 0xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000 (the "Owner")
and Xxxxx Fargo Home Mortgage, Inc. having an xxxxxx xx 0 Xxxx Xxxxxx, Xxx
Xxxxxx, Xxxx 00000 ("Servicer").
W I T N E S S E T H:
WHEREAS, the Owner owns certain mortgage loans secured by
mortgages or deeds of trust on residential real property (the "Mortgage Loans")
and the servicing rights relating to such Mortgage Loans, and may from time to
time originate or buy additional Mortgage Loans;
WHEREAS, the Owner desires to retain the Servicer to
subservice and provide management and disposition services for the Mortgage
Loans for the benefit of the Owner;
WHEREAS, the Owner and the Servicer desire to set forth the
terms and conditions on which the Servicer will subservice and provide
management and disposition services for the Mortgage Loans.
NOW, THEREFORE, in consideration of the mutual agreements
hereinafter set forth, and for other good and reasonable consideration, the
receipt and adequacy of which is hereby acknowledged, the Owner and Servicer
hereby agree as follows:
ARTICLE I.
Definitions
The following terms are defined as follows:
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 such Mortgage
Loans in the jurisdiction where the related Mortgaged Property is located.
Acknowledgment Agreement: A subservicing acknowledgment
agreement agreed to by the parties hereto that makes specific reference to this
Agreement to be executed on or prior to each Transfer Date with respect to the
subservicing of a pool of Mortgage Loans.
Agency Transfer: The sale or transfer by Owner of some or all
of the Mortgage Loans to Xxxxxx Xxx under its Cash Purchase Program or its MBS
Swap Program (Special Servicing Option) or to Xxxxxxx Mac under its Xxxxxxx Xxx
Xxxx Program or Gold PC Program, retaining the Servicer as "servicer"
thereunder.
Agreement: This Flow Subservicing Agreement and all amendments
hereof and supplements hereto.
Ancillary Income: All income derived from the Mortgage Loans,
excluding Servicing Fees and Prepayment Charges attributable to the Mortgage
Loans, including but not limited to interest received on funds deposited in the
Custodial Account or any Escrow Account, late charges, fees received with
respect to checks or bank drafts returned by the related bank for non-sufficient
funds, assumption fees, optional insurance administrative fees and all other
incidental fees and charges. The Servicer shall retain all Ancillary Income to
the extent not required to be deposited into the Custodial Account.
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 transfer of the Mortgage to the party indicated therein or if the
related Mortgage has been recorded in the name of MERS or its designee, such
actions as are necessary to cause the Owner or its designee 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.
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 of
New York or Iowa are authorized or obligated by law or executive order to be
closed.
Combined Loan-to-Value Ratio: As to any Mortgage Loan at any
date of determination, the ratio (expressed as a percentage) of the principal
balance of such Mortgage Loan at the date of determination, plus the principal
balance of any Superior Lien based upon the most recent information available to
the Servicer, to (a) in the case of a purchase, the lesser of the sales price of
the Mortgaged Property and its appraised value at the time of sale, or (b) in
the case of a refinancing or modification, the appraised value of the Mortgaged
Property at the time of such refinancing or modification.
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.
Custodial Account: The separate account or accounts created
and maintained pursuant to Section 3.03.
Custodial Agreement: Any custodial agreement designated by the
Owner and between the Owner and a Custodian.
Custodian: The custodian(s) appointed by the Owner from time
to time to hold certain Mortgage Loan documents.
Deboarding Fee: With respect to each Mortgage Loan, an amount
equal to: (a) $25 during the first year following the related Transfer Date, (b)
$20 during the second year following the related Transfer Date, (c) $15 during
the third year following the related Transfer Date and (d) $0, thereafter;
provided, that, for the first two years following the related Transfer Date with
respect to the first one percent (1%) of Mortgage Loans included in each package
of Mortgage Loans transferred on the related Transfer Date, the Deboarding Fee
with respect to each Distressed Mortgage Loan included in each package of
Mortgage Loans transferred on the related Transfer Date shall be $15.
-2-
Determination Date: With respect to each Mortgage Loan that
has not been removed from this Agreement as part of a Reconstitution, and with
respect to each Mortgage Loan that has been removed from this Agreement as part
of a Reconstitution and subsequently repurchased by the Owner pursuant to
Section 7.04 hereof and again becoming subject to this Agreement, the last day
(or if such day is not a Business Day, the Business Day immediately preceding
such day) of the related Due Period.
Distressed Mortgage Loan: As of any Determination Date, any
Mortgage Loan that is delinquent in payment for a period of ninety (90) days or
more, without giving effect to any grace period permitted by the related
Mortgage Loan, or for which the Servicer has accepted a deed in lieu of
foreclosure.
Due Date: The day of the calendar month on which the Monthly
Payment is due on a Mortgage Loan, exclusive of any days of grace. Pursuant to
Section 4.04, with respect to the Mortgage Loans for which payment from the
Mortgagor is due on a day other than the first day of the month, such Mortgage
Loans will be treated as if the Monthly Payment is due on the first day of the
immediately succeeding month.
Due Period: With respect to each Remittance Date, the calendar
month immediately preceding the month of the Remittance Date.
Errors and Omissions Insurance: Errors and Omissions Insurance
to be maintained by the Servicer in accordance with Section 3.13.
Escrow Account: The separate account or accounts operated and
maintained pursuant to Section 3.05.
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 document.
Event of Default: Any event set forth in Section 9.01.
Xxxxxx Xxx: Xxxxxx Xxx, or any successor thereto.
Xxxxxx Mae Guides: The Xxxxxx Xxx Selling Guide and the Xxxxxx
Mae Servicing Guide and all amendments or additions thereto.
FDIC: The Federal Deposit Insurance Corporation or any
successor thereto.
-3-
Fidelity Bond: A fidelity bond to be maintained by the
Servicer in accordance with Section 3.13.
Fitch: Fitch Ratings Inc. or any successor in interest.
Xxxxxxx Mac: The Federal Home Loan Mortgage Corporation, or
any successor thereto.
Insurance Proceeds: With respect to each Mortgage Loan,
proceeds of insurance policies insuring the Mortgage Loan or the related
Mortgaged Property, including the proceeds of any hazard or flood insurance
policy, LPMI Policy or PMI Policy.
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 REO Property, if the Mortgaged Property is acquired in
satisfaction of the Mortgage Loan.
LPMI Loan: A Mortgage Loan with a LPMI Policy.
LPMI Policy: A policy of primary mortgage guaranty insurance
issued by a Qualified Insurer pursuant to which the related premium is to be
paid by the servicer of the related Mortgage Loan from payments of interest made
by the Mortgagor in an amount as is set forth in the related Mortgage Loan
Schedule.
Maximum Rate: With respect to any adjustable rate Mortgage
Loan and any Due Period, the Maximum Interest Rate that may be charged the
borrower under the related Mortgage Note.
MERS: Mortgage Electronic Registration Systems, Inc., a
corporation organized and existing under the laws of the State of Delaware, or
any successor 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.
Monthly Advance: The portion of a Monthly Payment delinquent
with respect to each Mortgage Loan at the close of business on the related
Determination Date.
Monthly Payment: The scheduled monthly payment of principal
and interest on a Mortgage Loan.
Moody's: Xxxxx'x Investors Service, Inc. or any successor in
interest.
Mortgage: The mortgage, deed of trust or other instrument
securing a Mortgage Note, which creates a first or second lien on an
unsubordinated estate in fee simple in real property securing the Mortgage Note.
-4-
Mortgage Impairment Insurance Policy: A mortgage impairment or
blanket hazard insurance policy to be maintained by the Servicer in accordance
with Section 3.12.
Mortgage Interest Rate: The annual rate of interest borne on a
Mortgage Note.
Mortgage Loan: An individual mortgage loan that is the subject
of this Agreement and identified on the related Mortgage Loan Schedule, which
may be a first lien Mortgage Loan or a subordinate lien Mortgage Loan and which
Mortgage Loan includes without limitation the Mortgage Loan documents, 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 Remittance Rate: With respect to each Mortgage
Loan, the annual rate of interest remitted to the Owner, which shall be equal to
the Mortgage Interest Rate minus the applicable Servicing Fee, if any.
Mortgage Loan Schedule: A schedule of certain Mortgage Loans
attached to each Acknowledgment Agreement setting forth information with respect
to the related Mortgage Loans.
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.
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 by the Treasurer, the Secretary or
one of the Assistant Treasurers or Assistant Secretaries of the Servicer, and
delivered to the Owner as required by this Agreement.
Opinion of Counsel: A written opinion of counsel, who may be
an employee of the Servicer, reasonably acceptable to the Owner.
Owner: Xxxxxx Brothers Bank, FSB, or its successors in
interest and assigns.
Pass-Through Transfer: The sale or transfer of some or all of
the Mortgage Loans to a trust to be formed as part of a publicly-issued and/or
privately placed, rated or unrated, mortgage pass-through transaction, retaining
the Servicer as "servicer" (with or without a master servicer) thereunder.
Person: Any individual, corporation, partnership, joint
venture, association, limited liability company, joint-stock company, trust,
unincorporated organization, government or any agency or political subdivision
thereof.
-5-
PMI Policy: A policy of primary mortgage guaranty insurance
issued by a Qualified Insurer, as required by this Agreement with respect to
certain Mortgage Loans.
Prepayment Charge: With respect to any Mortgage Loan and
Remittance Date, the charges or premiums, if any, due in connection with a full
or partial prepayment of such Mortgage Loan during the immediately preceding
Principal Prepayment Period in accordance with the terms thereof.
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 Northeast
Edition.
Prepayment Interest Shortfall Amount: With respect to any
Mortgage Loan that was subject to a Principal Prepayment in full or in part
during any Due Period, which Principal Prepayment was applied to such Mortgage
Loan prior to such Mortgage Loan's Due Date in such Due Period, the amount of
interest (net of the related Servicing Fee for Principal Prepayments in full
only) that would have accrued on the amount of such Principal Prepayment during
the period commencing on the date as of which such Principal Prepayment was
applied to such Mortgage Loan and ending on the day immediately preceding such
Due Date, inclusive.
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 Charge 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: With respect to any Remittance
Date and any full or partial Principal Prepayment, the calendar month
immediately preceding the month of such Remittance Date.
Prior Servicer: Any prior servicer (other than the Servicer)
of any or all of the Mortgage Loans.
Qualified Depository: A federal or state chartered depository
institution the deposits in which are insured by the FDIC to the applicable
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 Owner by
written notice to the Servicer) 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 Mae or Xxxxxxx Mac.
-6-
Rating Agency: Each of Fitch, Xxxxx'x and S&P or their
successors. If such agencies or their successors are no longer in existence,
"Rating Agencies" shall be such nationally recognized statistical rating
agencies, or other comparable person, agreed upon and designated by the Owner.
Reconstitution: The actions required by Article VII in
connection with an Agency Transfer, Pass-Through Transfer or Whole Loan
Transfer.
Reconstitution Agreements: The agreement or agreements entered
into by the Owner, the Servicer, Xxxxxx Mae or Xxxxxxx Mac or certain third
parties on the Reconstitution Date(s) with respect to any or all of the Mortgage
Loans serviced hereunder, in connection with a Whole Loan Transfer, a
Pass-Through Transfer or an Agency Transfer as set forth in Section 7.01.
Reconstitution Date: The date or dates on which any or all of
the Mortgage Loans serviced under this Agreement shall be removed from this
Agreement and reconstituted as part of an Agency Transfer, a Pass-Through
Transfer or a Whole Loan Transfer pursuant to Section 7.01 hereof.
Remittance Date: With respect to each Mortgage Loan that has
not been removed from this Agreement as part of a Reconstitution, and with
respect to each Mortgage Loan that has been removed from this Agreement as part
of a Reconstitution and subsequently repurchased by the Owner pursuant to
Section 7.04 hereof and again becoming subject to this Agreement, the 5th
Business Day of any month.
REO Disposition: The final sale by the Servicer of any REO
Property.
REO Disposition Proceeds: All amounts received with respect to
an REO Disposition pursuant to Section 3.17.
REO Property: A Mortgaged Property acquired by the Servicer on
behalf of the Owner through foreclosure or by deed in lieu of foreclosure, as
described in Section 3.17.
Servicer: Xxxxx Fargo Home Mortgage, Inc. or its successor in
interest or assigns or any successor to the Servicer under this Agreement as
herein provided.
Servicing Advances: All customary, reasonable and necessary
"out of pocket" costs and expenses (including reasonable attorneys' fees and
disbursements) incurred in the performance by the Servicer of its servicing
obligations, including, but not limited to, the cost of (a) the preservation,
restoration and protection of the Mortgaged Property, (b) any enforcement or
administrative or judicial proceedings, including foreclosures, (c) the
management and liquidation of the Mortgaged Property if the Mortgaged Property
is acquired in satisfaction of the Mortgage, (d) taxes, assessments, water
rates, sewer rents and other charges which are or may become a lien upon the
Mortgaged Property, PMI Policy premiums and fire and hazard insurance coverage,
(e) in connection with the liquidation of a Mortgage Loan which has a Superior
Lien, any expenditures relating to the purchase or maintenance of any Superior
Lien pursuant to Section 3.24 hereof, (f) any losses sustained by the Servicer
with respect to the liquidation of the Mortgaged Property and (g) compliance
with the obligations pursuant to the provisions of the Xxxxxx Xxx Guides.
-7-
Servicing Fee: With respect to each Mortgage Loan that has not
been removed from this Agreement as part of a Reconstitution, and with respect
to each Mortgage Loan that has been removed from this Agreement as part of a
Reconstitution and subsequently repurchased by the Owner pursuant to Section
7.04 hereof and again becoming subject to this Agreement, the monthly fee the
Owner shall pay to the Servicer shall be equal to one-twelfth the product of (a)
the Servicing Fee Rate and (b) the outstanding principal balance of such
Mortgage Loan. The obligation of the Owner 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 3.02 of this Agreement) of such Monthly Payment
collected by the Servicer, or as otherwise provided under this Agreement.
Servicing Fee Rate: The amount set forth in the related
Acknowledgment Agreement.
Servicing File: The items pertaining to a particular Mortgage
Loan including, but not limited to, the computer files, data disks, books,
records, data tapes, notes, and all additional documents generated as a result
of or utilized in originating and/or servicing each Mortgage Loan, which are
delivered to or generated by the Servicer and held in trust for the Owner by the
Servicer.
Servicing Officer: Any officer of the Servicer involved in or
responsible for, the administration and servicing of the Mortgage Loans whose
name appears on a list of servicing officers furnished by the Servicer to the
Owner upon request, as such list may from time to time be amended.
S&P: Standard & Poor's Rating Services, A Division of The
XxXxxx-Xxxx Companies, Inc. or any successor in interest.
Superior Lien: With respect to any Mortgage Loan, any other
mortgage loan relating to the corresponding Mortgaged Property which creates a
lien on the Mortgaged Property which is senior to the Mortgage Loan.
Transfer Date: The date or dates on which the servicing of a
pool of Mortgage Loans is transferred from a Prior Servicer to the Servicer, as
evidenced by an Acknowledgment Agreement, executed in accordance with Section
2.01.
Trigger Event: As defined in Section 7.01.
Whole Loan Transfer: The sale or transfer of some or all of
the Mortgage Loans to a third party purchaser in a whole loan transaction
pursuant to a seller's warranties and servicing agreement or a participation and
servicing agreement, retaining the Servicer as "servicer" thereunder.
-8-
ARTICLE II.
OWNER'S ENGAGEMENT OF SERVICER TO PERFORM SERVICING RESPONSIBILITIES
Section 2.01. Contract for Servicing; Possession of Servicing
Files.
Simultaneously with the execution and delivery of this
Agreement, the Servicer shall execute and deliver to the Owner an Officer's
Certificate in the form of Exhibit D hereto and an opinion of counsel in the
form of Exhibit E hereto. From and after each Transfer Date, the Owner shall, by
execution and delivery of the related Acknowledgment Agreement, contract with
the Servicer as an independent contractor, subject to the terms of this
Agreement, for the servicing of the Mortgage Loans listed on the Mortgage Loan
Schedule annexed to such Acknowledgment Agreement.
The Servicer shall maintain a Servicing File with respect to
each Mortgage Loan in order to service such Mortgage Loan pursuant to this
Agreement and such Servicing File is and shall be held in trust by the Servicer
for the benefit of the Owner as the owner thereof. The possession of each
Servicing File by the Servicer is at the will of the Owner for the sole purpose
of servicing the related Mortgage Loan, and such retention and possession by the
Servicer is in a custodial capacity only. The ownership of each Mortgage Note,
Mortgage, and the contents of the Servicing File shall be vested in the Owner
and the ownership of all records and documents with respect to the related
Mortgage Loan prepared by or which come into the possession of the Servicer
shall immediately vest in the Owner and shall be retained and maintained, in
trust, by the Servicer at the will of the Owner in such custodial capacity only.
The portion of each Servicing File retained by the Servicer pursuant to this
Agreement shall be appropriately marked to clearly reflect the ownership of the
related Mortgage Loan by the Owner. The Servicer shall release from its custody
the contents of any Servicing File retained by it only in accordance with this
Agreement.
Section 2.02. Books and Records.
Record title to each Mortgage and the related Mortgage Note
shall remain in the name of (i) the Owner, (ii) the Servicer or (iii) in the
name as the Owner shall designate. With respect to each Assignment of Mortgage,
if so requested by the Owner in its sole discretion, the Servicer, at the
Owner's expense, shall cause MERS(R) to designate on the MERS System the Owner
or its designee as the beneficial holder with respect to such Mortgage Loan or
shall prepare and record each Assignment of Mortgage, and track such Assignments
of Mortgage to ensure they have been recorded. The Owner shall pay all
pre-approved, reasonable and necessary fees associated with the preparation,
recording and tracking of the initial assignment of the Mortgage Loans from the
Owner to a third party. All rights arising out of the Mortgage Loans shall be
vested in the Owner. All funds received on or in connection with a Mortgage Loan
shall be received and held by the Servicer in trust for the benefit of the Owner
as the owner of the Mortgage Loans pursuant to the terms of this Agreement.
-9-
Section 2.03. Custodial Agreement; Delivery of Documents.
Pursuant to the Custodial Agreement, the Owner has or shall
deliver and release to the Custodian the Mortgage Loan documents as required
pursuant to the Custodial Agreement. 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 certification of the Custodian. The
Owner shall be responsible for maintaining the Custodial Agreement and shall pay
all fees and expenses of the Custodian, including reasonable fees and expenses
due to the Servicer's requests of the Custodian in the normal course of
Servicer's collection and foreclosure activities (including but not limited to
follow up document deliveries of the Servicer, photocopies of documents made at
the request of the Servicer and follow up document insertion fees). With respect
to each Mortgage Loan that has not been removed from this Agreement as part of a
Reconstitution, on the related Transfer Date, the Owner and the Servicer shall
enter into an assignment and assumption agreement whereby the Owner shall assign
to the Servicer, and the Servicer shall assume from the Owner, all of the
Owner's rights and responsibilities as servicer of the Mortgage Loans arising
under the applicable Custodial Agreement.
The Servicer shall forward to the Custodian original documents
evidencing an assumption, modification, consolidation or extension of any
Mortgage Loan entered into in accordance with Section 3.01 within one week of
their execution, provided, however, that the Servicer shall provide the
Custodian with a certified true copy of any such document submitted for
recordation within one week of its execution, and shall provide the original of
any document submitted for recordation or a copy of such document certified by
the appropriate public recording office to be a true and complete copy of the
original within 120 days of its submission for recordation.
Section 2.04. Transfer of Servicing.
On or prior to each Transfer Date with respect to a pool of
Mortgage Loans, the Owner shall use commercially reasonable efforts to cause the
Prior Servicer to take such steps as may be necessary or appropriate to
effectuate and evidence the transfer of the servicing of the Mortgage Loans to
the Servicer in accordance with the transfer instructions set forth in Exhibit F
hereto, which instructions may be modified from time to time by mutual agreement
of the Servicer and the Prior Servicer.
Within twenty (20) days of the related Transfer Date, Servicer
shall provide Owner with an electronic file of the related Mortgage Loans which
shall set forth whether each Mortgage Loan is or is not covered by a
transferable life-of-loan real estate tax service contract. If Owner does not
object to such electronic file within ten (10) days of receipt thereof, Servicer
shall: (i) if a Mortgage Loan is not covered by a transferable life-of-loan real
estate tax service contract, purchase such a tax service contract from a tax
service provider reasonably acceptable to Owner and invoice Owner for the cost
thereof of $71.00 for each such Mortgage Loan and (ii) if a Mortgage Loan is
covered by a transferable life-of-loan real estate tax service contract,
transfer such contract to Servicer without further cost to Owner therefor.
-10-
Within forty-five (45) days of the related Transfer Date,
Servicer shall provide Owner with an electronic file of the related Mortgage
Loans which shall set forth (i) whether each Mortgage Loan is or is not covered
by a flood certification contract and (ii) if a Mortgage Loan is not covered by
a flood certification contract, whether such Mortgage Loan is required by
applicable law or investor requirements to be covered by a flood certification
contract. If Owner does not object to such electronic file within ten (10) days
of receipt thereof, Servicer shall: (i) if a Mortgage Loan is not covered by a
flood certification contract and is required by applicable law or investor
requirements to be covered by a flood certification contract, purchase such a
flood certification contract from a flood certification contract provider
reasonably acceptable to Owner and invoice Owner for the cost thereof and (ii)
if a Mortgage Loan is covered by a flood certification contract, transfer such
contract to Servicer without further cost to Owner therefor.
ARTICLE III.
Servicing of the Mortgage Loans
Section 3.01. Servicer to Service.
The Servicer, as an independent contractor, shall service and
administer the related Mortgage Loans from and after the related Transfer Date
and shall have full power and authority, acting alone or through the utilization
of a third party service provider, to do any and all things in connection with
such servicing and administration which the Servicer may deem necessary or
desirable, consistent with the terms of this Agreement and with Accepted
Servicing Practices. The Servicer shall service the Mortgage Loans in accordance
with the guidelines of the applicable agency guides and shall comply with the
rules and regulations of the applicable agency. The Servicer shall be
responsible for any and all acts of a third party service provider and the
Servicer's utilization of such third party service provider shall in no way
relieve the liability of the Servicer under this Agreement.
Consistent with the terms of this Agreement, prior to a
Mortgage Loan becoming subject to a Reconstitution Agreement, the Servicer may
waive, modify or vary any term of any Mortgage Loan or consent to the
postponement of strict compliance with any such term or in any manner grant
indulgence to any Mortgagor if in the Servicer's reasonable and prudent
determination such waiver, modification, postponement or indulgence is not
materially adverse to the Owner, provided, however, that unless the Servicer has
obtained the prior written consent of the Owner or its designee, the Servicer
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 or
interest, reduce or increase the outstanding principal balance (except for
actual payments of principal) or change the final maturity date on such Mortgage
Loan. Without limiting the generality of the foregoing, the Servicer shall
continue, and is hereby authorized and empowered, to execute and deliver on
behalf of itself and the Owner, 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 Servicer, the Owner shall furnish the Servicer
with any powers of attorney and other documents necessary or appropriate to
enable the Servicer to carry out its servicing and administrative duties under
this Agreement.
-11-
The Servicer is authorized, without the prior approval of the
Owner, to consent to the refinancing of any Superior Lien on Mortgaged Property,
provided that (i) the resulting Combined Loan-to-Value Ratio of such Mortgage
Loan is no higher than the Combined Loan-to-Value Ratio prior to such
refinancing; (ii) the interest rate, or in the case of any Superior Lien which
is an adjustable rate Mortgage Loan, the applicable Maximum Rate which can be
charged under the related Mortgage Note is no more than 2.00% higher than the
interest rate or the Maximum Rate, as the case may be, on the Mortgage Loan
evidencing the existing Superior Lien immediately prior to the date of such
refinancing; (iii) the Mortgage Loan evidencing the Superior Lien is not subject
to negative amortization and (iv) the Monthly Payment on the Mortgage Loan
evidencing the existing Superior Lien has not increased since the Due Date
immediately prior to the date of such refinancing.
In servicing and administering the Mortgage Loans, the
Servicer shall employ procedures (including collection procedures) and exercise
the same care that it would employ and exercise in servicing and administering
similar 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 Owner's reliance on the Servicer. If reasonably
required by the Servicer, the Owner shall furnish the Servicer with any powers
of attorney and other documents necessary or appropriate to enable the Servicer
to carry out its servicing and administrative duties under this Agreement.
Section 3.02. Collection and Liquidation of Mortgage Loans.
Continuously from the related Transfer Date until the date
each Mortgage Loan ceases to be subject to this Agreement, the Servicer 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 Loans and each related
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.
The Servicer shall use its best efforts, consistent with the
procedures that the Servicer would use in servicing similar mortgage loans for
its own account, to foreclose upon or otherwise comparably convert the ownership
of such Mortgaged Properties as come into and continue in default and as to
which no satisfactory arrangements can be made for collection of delinquent
payments pursuant to Section 3.01. The Servicer shall use its best efforts to
realize upon defaulted Mortgage Loans in such a manner as will maximize the
receipt of principal and interest by the Owner, taking into account, among other
things, the timing of foreclosure proceedings. The foregoing is subject to the
provisions that, in any case in which Mortgaged Property shall have suffered
damage, the Servicer shall not be required to expend its own funds toward the
restoration of such property unless it shall determine in its discretion (i)
that such restoration will increase the proceeds of liquidation of the related
Mortgage Loan to the Owner after reimbursement to itself for such expenses, and
-12-
(ii) that such expenses will be recoverable by the Servicer through Insurance
Proceeds or Liquidation Proceeds from the related Mortgaged Property. In the
event that any payment due under any Mortgage Loan and not postponed pursuant to
Section 3.01 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
Servicer shall take such action as (1) the Servicer would take for other
institutional investors under similar circumstances with respect to a similar
mortgage loan, (2) shall be consistent with Accepted Servicing Practices, (3)
the Servicer shall determine prudently to be in the best interest of the Owner,
and (4) is consistent with any related PMI Policy or LPMI Policy. In the event
that any payment due under any Mortgage Loan is not postponed pursuant to
Section 3.01 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 Servicer shall commence foreclosure proceedings, the Servicer shall
notify the Owner or its designee in writing of the Servicer's intention to do
so, and the Servicer shall not commence foreclosure proceedings if the Owner or
its designee objects to such action within three (3) Business Days of receiving
such notice. In such connection, the Servicer shall from its own funds make all
necessary and proper Servicing Advances, provided, however, that the Servicer
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 Owner 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 3.04) or through Insurance Proceeds (respecting which it shall have
similar priority).
Notwithstanding anything to the contrary contained in this
Agreement, in connection with a foreclosure or acceptance of a deed in lieu of
foreclosure, in the event the Servicer has reasonable cause to believe that a
Mortgaged Property is contaminated by hazardous or toxic substances or wastes,
or if the Owner or its designee otherwise requests, an environmental inspection
or review of such Mortgaged Property to be conducted by a qualified inspector
shall be arranged by the Servicer. The cost for such inspection or review shall
be deemed a Servicing Advance. Upon completion of the inspection, the Servicer
shall provide the Owner or its designee with a written report of such
environmental inspection. After reviewing the environmental inspection report,
the Owner shall determine how the Servicer shall proceed with respect to the
Mortgaged Property. In the event that the environmental inspection report
indicates that the Mortgaged Property is contaminated by hazardous or toxic
substances or wastes, the Servicer shall not proceed with foreclosure or
acceptance of a deed in lieu of foreclosure. In the event that the environmental
inspection report is inconclusive as to the whether or not the Mortgaged
Property is contaminated by hazardous or toxic substances or wastes, the
Servicer shall not, without the written direction from the Owner or its
designee, proceed with foreclosure or acceptance of a deed in lieu of
foreclosure. In the event the Servicer proceeds with foreclosure or acceptance
of a deed in lieu of foreclosure in accordance with this paragraph, the Servicer
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 Servicer, the
Servicer shall be entitled to be reimbursed from amounts in the Custodial
-13-
Account pursuant to Section 3.04 hereof. In the event the Owner directs the
Servicer not to proceed with foreclosure or acceptance of a deed in lieu of
foreclosure, the Servicer shall be reimbursed for all Servicing Advances made
with respect to the related Mortgaged Property from the Custodial Account
pursuant to Section 3.04 hereof.
Notwithstanding the generality of the preceding paragraphs,
the Servicer shall take the following steps at approximately the time intervals
indicated below with respect to each Mortgagor for which there is a delinquency
until such time as such Mortgagor is current with all payments due under the
Mortgage Loan:
(a) Seven (7) to Ten (10) calendar days prior to the first Due
Date: The Servicer shall place a welcome call to the Mortgagor;
(b) Seven (7) to Fifteen (15) calendar days following the Due
Date: The Servicer shall initiate a telephone call to each Mortgagor who is
delinquent with their Monthly Payment informing them of the delinquency. The
Servicer shall also mail each Mortgagor who is delinquent with their Monthly
Payment a notice reminding the Mortgagor of such delinquency on the sixteenth
(16th) Business Day following the Due Date;
(c) Fifteen (15) calendar days following the Due Date: The
Servicer shall make a second telephone call to each Mortgagor regarding the
delinquency and on and after the expiration of the grace period shall make a
telephone call to each Mortgagor regarding the delinquency as may be deemed
appropriate by the Servicer but in no event less than twice per week until
contact or until cure arrangements are made;
(d) For each Mortgage Loan for which there is a broken promise
to pay, the Servicer will call the related Mortgagor within 48 hours. For each
Mortgage loan for which a payment with non-sufficient funds is made, the
Servicer shall use its best efforts to call the related Mortgagor within three
calendar days, but in any event shall call the related Mortgagor within one
week;
(e) Forty-five (45) calendar days following the Due Date, the
Servicer shall cause a drive-by inspection to be conducted on each Mortgaged
Property in accordance with Accepted Servicing Practices;
(f) Not later than sixty-two (62) calendar days following the
Due Date: The Servicer shall send to each Mortgagor by certified mail and by
regular mail a NOI.
(g) Seventy-five (75) calendar days following the Due Date:
The Servicer shall send a loss mitigation solicitation letter to the Mortgagor;
(h) Ninety (90) calendar days following the Due Date: The
Servicer shall refer the Mortgage Loan for foreclosure if no payment
arrangements are in place and loss mitigation offers are exhausted;
-14-
(i) Within ten (10) Business Days of referral to foreclosure
with respect to each first lien Mortgage Loan: The Servicer shall order a
property evaluation in the form of a BPO. By the 60th day of delinquency with
respect to each subordinate lien Mortgage Loan: The Servicer shall order a
property evaluation in the form of a BPO. The Servicer shall not order a BPO
with respect to any Mortgage Loan for which the Mortgagor has made a promise to
pay or entered a repayment plan.
(j) Once foreclosure is recommended and approved, the loan
will be referred to an attorney within 72 hours;
(k) The Servicer shall place loss mitigation calls on all
foreclosure accounts no less than once a month; and
(l) On or about the one hundred twentieth calendar day after
the Due Date: The Servicer shall choose to commence foreclosure proceedings on
the related Mortgage Loan or charge off the Mortgage Loan and explore other
means of recovering the delinquent amount.
Section 3.03. Establishment of and Deposits to Custodial
Account.
The Servicer shall segregate and hold all funds collected and
received pursuant to the Mortgage Loans 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
Home Mortgage, Inc. in trust for Xxxxxx Brothers Bank, FSB, owner of Residential
Mortgage Loans, Group No. 2003-Subflow". The Custodial Account shall be
established with a Qualified Depository. Funds deposited in the Custodial
Account may be drawn on by the Servicer in accordance with Section 3.04. The
creation of any Custodial Account shall be evidenced by a certification in the
form of Exhibit B hereto. A copy of such certification shall be furnished to the
Owner and, upon request, to any subsequent owner of the Mortgage Loans.
The Servicer shall deposit in the Custodial Account within one
(1) Business Day of the Servicer's receipt, and retain therein, the following
collections received by the Servicer and payments made by the Servicer after
each Transfer Date:
(i) all payments on account of principal on the Mortgage
Loans, including all Principal Prepayments and all Prepayment Charges;
(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 3.11 (other than proceeds to be held in the
Escrow Account and applied to the restoration and repair of the Mortgaged
Property or released to the Mortgagor in accordance with the related Mortgage
Loan documents and Accepted Servicing Practices);
-15-
(v) all Condemnation Proceeds that are not applied to the
restoration or repair of the Mortgaged Property or released to the Mortgagor in
accordance with the related Mortgage Loan documents and Accepted Servicing
Practices;
(vi) any other amount required to be deposited in the
Custodial Account pursuant to this Agreement;
(vii) any amounts received from the seller of a Mortgage
Loan or any other person giving representations and warranties with respect to
the Mortgage Loan, in connection with the repurchase of any Mortgage Loan;
(viii) any amounts required to be deposited by the
Servicer pursuant to Section 3.11 in connection with the deductible clause in
any blanket hazard insurance policy;
(ix) any amounts received with respect to or related to
any REO Property or REO Disposition Proceeds;
(x) any amounts required to be deposited by the Servicer
pursuant to Section 3.16 in connection with any unpaid claims that are a result
of a breach by the Servicer or any subservicer of the obligations hereunder or
under the terms of a PMI Policy; and
(xi) any amounts received by the Servicer under a PMI or
LPMI Policy.
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 Servicing
Fees or Ancillary Income need not be deposited by the Servicer 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 Servicer and
the Servicer shall be entitled to retain and withdraw such interest from the
Custodial Account pursuant to Section 3.04. Additionally, any other benefit
derived from the Custodial Account associated with the receipt, disbursement and
accumulation of principal, interest, taxes, hazard insurance, mortgage
insurance, etc. shall accrue to the Servicer.
Section 3.04. Permitted Withdrawals From Custodial Account.
The Servicer shall, from time to time, withdraw funds from the
Custodial Account for the following purposes:
(i) to make payments to the Owner in the amounts and in
the manner provided for in Section 4.01;
(ii) in the event the Servicer has elected not to retain
the Servicing Fee out of any Mortgagor payments on account of interest or other
recovery of interest with respect to a particular Mortgage Loan (including late
collections of interest on such Mortgage Loan, or interest portions of Insurance
Proceeds, Liquidation Proceeds or Condemnation Proceeds) prior to the deposit of
-16-
such Mortgagor payment or recovery in the Custodial Account, to pay to itself
the related Servicing Fee from all such Mortgagor payments on account of
interest or other such recovery for interest with respect to that Mortgage Loan;
(iii) to reimburse itself for unreimbursed Servicing
Advances and unpaid Servicing Fees, the Servicer'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, REO
Disposition Proceeds and other amounts received in respect of the related REO
Property, and such other amounts as may be collected by the Servicer from the
Mortgagor or otherwise relating to the Mortgage Loan, it being understood that,
in the case of any such reimbursement, the Servicer's right thereto shall be
prior to the rights of the Owner;
(iv) to reimburse itself for remaining unreimbursed
Servicing Advances and unpaid Servicing Fees with respect to any defaulted
Mortgage Loan as to which the Servicer has determined that all amounts that it
expects to recover on behalf of the Owner from or on account of such Mortgage
Loan have been recovered;
(v) to pay itself interest on funds deposited in the
Custodial Account;
(vi) to transfer funds to another Qualified Depository in
accordance with Section 3.11 hereof;
(vii) to withdraw funds deposited in error; and
(viii) to clear and terminate the Custodial Account upon
the termination of this Agreement.
Section 3.05. Establishment of and Deposits to Escrow Account.
The Servicer 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 Home Mortgage, Inc. in trust for Xxxxxx Brothers
Bank, FSB, owner of Residential Mortgage Loans, Group No. 2003-Subflow, and
various Mortgagors". The Escrow Accounts shall be established with a Qualified
Depository. Funds deposited in the Escrow Account may be drawn on by the
Servicer in accordance with Section 3.06. The creation of any Escrow Account
shall be evidenced by a certification in the form of Exhibit C hereto. A copy of
such certification shall be furnished to the Owner and, upon request, to any
subsequent owner of the Mortgage Loans.
The Servicer shall deposit in the Escrow Account or Accounts
within one (1) Business Day of the Servicer's receipt, and retain therein:
(i) all Escrow Payments collected on account of the
Mortgage Loans, for the purpose of effecting timely payment of any such items as
required under the terms of this Agreement; and
-17-
(ii) all amounts representing Insurance Proceeds or
Condemnation Proceeds which are to be applied to the restoration or repair of
any Mortgaged Property.
The Servicer shall make withdrawals from the Escrow Account
only to effect such payments as are required under this Agreement, as set forth
in Section 3.06. The Servicer shall be entitled to retain any interest paid on
funds deposited in the Escrow Account by the depository institution, other than
interest on escrowed funds required by law to be paid to the Mortgagor. To the
extent required by law, the Servicer 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 3.06. Permitted Withdrawals From Escrow Account.
Withdrawals from the Escrow Account or Accounts may be made by
the Servicer 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 Servicer for any Servicing Advance
made by the Servicer with respect to a related Mortgage Loan, but only from
amounts received on the related Mortgage Loan 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) to the extent permitted by applicable law, 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 restoration or repair of the
Mortgaged Property in accordance with Section 3.15;
(vi) to pay to the Servicer, or any Mortgagor to the
extent required by law, any interest paid on the funds deposited in the Escrow
Account;
(vii) to withdraw funds deposited in error; and
(viii) to clear and terminate the Escrow Account on the
termination of this Agreement.
The Servicer will be responsible for the administration of the
Escrow Accounts and will be obligated to make Servicing Advances to the Escrow
Account in respect of its obligations under this Section 3.06, reimbursable from
the Escrow Accounts or Custodial Account to the extent not collected from the
related Mortgagor.
-18-
Section 3.07. Notification of Adjustments.
With respect to each adjustable rate Mortgage Loan, the
Servicer shall adjust the Mortgage Interest Rate on the related interest rate
adjustment date and shall adjust the Monthly Payment on the related mortgage
payment adjustment date, if applicable, in compliance with the requirements of
applicable law and the related Mortgage and Mortgage Note. The Servicer 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 and Monthly Payment adjustments. The Servicer shall promptly, upon
written request therefor, deliver to the Owner such notifications and any
additional applicable data regarding such adjustments and the methods used to
calculate and implement such adjustments. Upon the discovery by the Servicer or
the receipt of notice from the Owner that the Servicer has failed to adjust a
Mortgage Interest Rate or Monthly Payment in accordance with the terms of the
related Mortgage Note, the Servicer shall immediately deposit in the Custodial
Account from its own funds the amount of any interest loss or deferral caused
the Owner thereby.
Section 3.08. Reserved.
Section 3.09. Payment of Taxes, Insurance and Other Charges.
(a) With respect to each Mortgage Loan which provides for
Escrow Payments, the Servicer 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 fire and hazard insurance coverage and shall obtain, from time to
time, all bills for the payment of such charges (including renewal premiums)
("Property Charges") and shall effect payment thereof prior to the applicable
penalty or termination date, employing for such purpose deposits of the
Mortgagor in the Escrow Account which shall have been estimated and accumulated
by the Servicer in amounts sufficient for such purposes, as allowed under the
terms of the Mortgage. The Servicer 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 such payments
(b) To the extent that a Mortgage Loan does not provide for
Escrow Payments, the Servicer shall make advances from its own funds to effect
payment of all Property Charges upon receipt of notice of any failure to pay on
the part of the Mortgagor, or at such other time as the Servicer determines to
be in the best interest of the Owner, provided, that in any event the Servicer
shall pay such charges on or before the earlier of (a) any date by which payment
is necessary to preserve the lien status of the Mortgage or (b) the date which
is ninety days after the date on which such charges first became due. The
Servicer shall pay any late fee or penalty which is payable due to any delay in
payment of any Property Charge after the earlier to occur of (a) the date on
which the Servicer receives notice of the failure of the Mortgagor to pay such
Property Charge or (b) the date which is ninety days after the date on which
such charges first became due.
-19-
Section 3.10. Protection of Accounts.
The Servicer may transfer the Custodial Account or the Escrow
Account to a different Qualified Depository from time to time and shall notify
the Owner of each transfer.
The Servicer shall bear any expenses, losses or damages
sustained by the Owner if the Custodial Account and/or the Escrow Account are
not demand deposit accounts.
Section 3.11. Maintenance of Hazard Insurance.
The Servicer shall cause to be maintained for each Mortgage
Loan hazard insurance such that all buildings upon the Mortgaged Property are
insured by a generally acceptable insurer acceptable under Xxxxxx Xxx or Xxxxxxx
Mac guidelines 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 (i) the replacement value of
the improvements securing such Mortgage Loan and (ii) the greater of (a) the
outstanding principal balance of the Mortgage Loan and (b) an amount such that
the proceeds thereof shall be sufficient to prevent the Mortgagor or the loss
payee from becoming a co-insurer.
If upon origination of the Mortgage Loan, the related
Mortgaged Property was located in an area identified in the Federal Register 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 at any time during the
term of the Mortgage Loan, the Servicer determines in accordance with applicable
law and pursuant to the Xxxxxx Mae Guides that a Mortgaged Property is located
in a special flood hazard area and is not covered by flood insurance or is
covered in an amount less than the amount required by the Flood Disaster
Protection Act of 1973, as amended, the Servicer shall notify the related
Mortgagor that the Mortgagor must obtain such flood insurance coverage, and if
said Mortgagor fails to obtain the required flood insurance coverage within
forty-five (45) days after such notification, the Servicer shall immediately
force place the required flood insurance on the Mortgagor's behalf.
If a Mortgage Loan is secured by a unit in a condominium
project, the Servicer shall verify that the coverage required of the owner's
association, including hazard, flood, liability, and fidelity coverage, is being
maintained in accordance with then current Xxxxxx Xxx or Xxxxxxx Mac
requirements.
-20-
In the event that the Owner or the Servicer 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 Servicer 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 Servicer 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 Servicer shall not interfere with the Mortgagor's freedom
of choice in selecting either his insurance carrier or agent, provided, however,
that the Servicer shall not accept any such insurance policies from insurance
companies unless such companies are acceptable to Xxxxxx Mae or Xxxxxxx Mac and
are licensed to do business in the jurisdiction in which the Mortgaged Property
is located. The Servicer 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. The Servicer shall furnish to the
Mortgagor a formal notice of expiration of any such insurance in sufficient time
for the Mortgagor to arrange for renewal coverage by the expiration date.
Pursuant to Section 3.04, any amounts collected by the
Servicer under any such policies (other than amounts to be deposited in the
Escrow Account and applied to the restoration or repair of the related Mortgaged
Property, or property acquired in liquidation of the Mortgage Loan, or to be
released to the Mortgagor, in accordance with the Servicer's normal servicing
procedures as specified in Section 3.15) shall be deposited in the Custodial
Account subject to withdrawal pursuant to Section 3.05.
Notwithstanding anything set forth in the preceding paragraph,
the Servicer agrees to indemnify the Owner for any claims, losses, damages,
penalties, fines, forfeitures, legal fees and related costs, judgments, and any
other costs, fees and expenses that the Owner may sustain in any way related to
the failure of the Mortgagor (or the Servicer) to maintain hazard insurance or
flood insurance with respect to the related Mortgaged Property which complies
with the requirements of this section.
Section 3.12. Maintenance of Mortgage Impairment Insurance.
In the event that the Servicer 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 3.11 and otherwise complies with all other requirements of Section 3.11,
it shall conclusively be deemed to have satisfied its obligations as set forth
in Section 3.11. Any amounts collected by the Servicer under any such policy
relating to a Mortgage Loan shall be deposited in the Custodial Account subject
to withdrawal pursuant to Section 3.05. 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 3.11, and there
shall have been a loss which would have been covered by such policy, the
-21-
Servicer 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 deposited from the Servicer's funds, without
reimbursement therefor. Upon request of the Owner, the Servicer shall cause to
be delivered to the Owner a certificate of insurance for such policy and a
statement from the insurer thereunder that such policy shall in no event be
terminated or materially modified without 30 days' prior written notice to the
Owner.
Section 3.13. Maintenance of Fidelity Bond and Errors and
Omissions Insurance.
The Servicer 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 ("Servicer 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 Servicer against
losses, including forgery, theft, embezzlement, fraud, errors and omissions and
negligent acts of such Servicer Employees. Such Fidelity Bond and Errors and
Omissions Insurance Policy also shall protect and insure the Servicer against
losses in connection with the release or satisfaction of a Mortgage Loan without
having obtained payment in full of the indebtedness secured thereby. No
provision of this Section 3.13 requiring such Fidelity Bond and Errors and
Omissions Insurance Policy shall diminish or relieve the Servicer from its
duties and obligations as set forth in this Agreement. The minimum coverage
under any such bond and insurance policy shall be at least equal to the
corresponding amounts required by Xxxxxx Mae in the Xxxxxx Xxx Guides or by
Xxxxxxx Mac in the Xxxxxxx Xxx Xxxxxxx' & Servicers' Guide. Upon the request of
the Owner, the Servicer shall cause to be delivered to the Owner 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 Owner.
Section 3.14. Inspections.
The Servicer shall inspect the Mortgaged Property as often as
deemed necessary by the Servicer to assure itself that the value of the
Mortgaged Property is being preserved. In addition, if any Mortgage Loan is more
than 45 days delinquent, the Servicer 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. Upon request, the Servicer shall produce an electronic report of each
such inspection.
Section 3.15. Restoration of Mortgaged Property.
The Servicer need not obtain the approval of the Owner 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 Servicer shall comply with the following
conditions in connection with any such release of Insurance Proceeds or
Condemnation Proceeds:
-22-
(i) the Servicer shall receive satisfactory independent
verification of completion of repairs and issuance of any required approvals
with respect thereto;
(ii) the Servicer shall take all steps necessary to
preserve the priority of the lien of the Mortgage, including, but not limited to
requiring waivers with respect to mechanics' and materialmen's liens;
(iii) the Servicer shall verify that the Mortgage Loan is
not in default; and
(iv) pending repairs or restoration, the Servicer shall
place the Insurance Proceeds or Condemnation Proceeds in the Escrow Account.
If the Owner is named as an additional loss payee, the
Servicer is hereby empowered to endorse any loss draft issued in respect of such
a claim in the name of the Owner.
Section 3.16. Maintenance of PMI and/or LPMI Policy; Claims.
(a) The Servicer shall comply with all provisions of
applicable state and federal law relating to the cancellation of, or collection
of premiums with respect to, PMI Policies, including, but not limited to, the
provisions of the Homeowners Protection Act of 1998, and all regulations
promulgated thereunder, as amended from time to time. The Servicer shall be
obligated to make premium payments with respect to PMI Policies required to be
maintained by the Mortgagor rather than the Owner, if the Mortgagor is required
but fails to pay any PMI Policy premium, which shall be paid from the Servicer's
own funds. The Servicer shall not be obligated to make premium payments with
respect to LPMI Policies. Any premium payments made by the Servicer from its own
funds pursuant to this Section 3.16(a) shall be recoverable by the Servicer as a
Servicing Advance, subject to the reimbursement provisions of Section 3.04(iv).
With respect to each Mortgage Loan (other than LPMI Loans)
with a loan-to-value ratio at origination in excess of 80%, the Servicer shall
maintain or cause the Mortgagor to maintain (to the extent that the Mortgage
Loan requires the Mortgagor to maintain such insurance) in full force and effect
a PMI Policy, and shall pay or shall cause the Mortgagor to pay the premium
thereon on a timely basis, until the LTV of such Mortgage Loan is reduced to
80%. In the event that such PMI Policy shall be terminated, the Servicer shall
obtain from another Qualified Insurer a comparable replacement policy, with a
total coverage equal to the remaining coverage of such terminated PMI Policy, at
substantially the same fee level. The Servicer 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 Servicer would have been covered thereunder. In
connection with any assumption or substitution agreements entered into or to be
entered into with respect to a Mortgage Loan, the Servicer shall promptly notify
the insurer under the related PMI Policy, if any, of such assumption or
-23-
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
Servicer shall obtain a replacement PMI Policy as provided above.
(b) With respect to each Mortgage Loan covered by a PMI Policy
or LPMI Policy, the Servicer shall take all such actions on behalf of the Owner
as are necessary to service, maintain and administer the related Mortgage Loan
in accordance with such Policy and to enforce the rights under such Policy.
Except as expressly set forth herein, the Servicer shall have full authority on
behalf of the Owner to do anything it deems appropriate or desirable in
connection with the servicing, maintenance and administration of such Policy;
provided that the Servicer shall not take any action to permit any modification
or assumption of a Mortgage Loan covered by a LPMI or PMI Policy, or take any
other action with respect to such Mortgage Loan, which would result in
non-coverage under such Policy of any loss which, but for actions of any
Servicer or the subservicer, would have been covered thereunder. If the
Qualified Insurer fails to pay a claim under a LPMI or PMI Policy solely as a
result of a breach by the Servicer or subservicer of its obligations hereunder
or under such Policy, the Servicer shall be required to deposit in the Custodial
Account on or prior to the next succeeding Remittance Date an amount equal to
such unpaid claim from its own funds without any rights to reimbursement from
the Owner. The Servicer shall cooperate with the Qualified Insurers and shall
furnish all reasonable evidence and information in the possession of the
Servicer to which the Servicer has access with respect to the related Mortgage
Loan; provided, however, notwithstanding anything to the contrary contained in
any LPMI Policy or PMI Policy, the Servicer shall not be required to submit any
reports to the related Qualified Insurer until a reporting date that is at least
15 days after the Servicer has received sufficient loan level information from
each Owner to appropriately code its servicing systems in accordance with the
Qualified Insurer's requirements.
(c) In connection with its activities as servicer, the
Servicer agrees to prepare and present, on behalf of itself and the Owner,
claims to the Qualified Insurer under any PMI Policy or LPMI Policy in a timely
fashion in accordance with the terms of such PMI Policy or LPMI Policy and, in
this regard, to take such action as shall be necessary to permit recovery under
any PMI Policy or LPMI Policy respecting a defaulted Mortgage Loan. Any amounts
collected by the Servicer under any PMI Policy or LPMI Policy shall be deposited
in the Custodial Account pursuant to Section 3.03(xii), subject to withdrawal
pursuant to Section 3.04.
(d) The Owner shall furnish the Servicer with any powers of
attorney and other documents (within three (3) Business Days upon request from
the Servicer) in form as provided to it necessary or appropriate to enable the
Servicer to service and administer any PMI or LPMI Policy; provided, however,
that the Owner shall not be liable for the actions of the Servicer under such
power of attorney.
-24-
Section 3.17. 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 Owner's designee, or in the event the
Owner's designee is not authorized or permitted to hold title to real property
in the state where the REO Property is located, or would be adversely affected
under the "doing business" or tax laws of such state by so holding title, the
deed or certificate of sale shall be taken in the name of such Person or Persons
as shall be consistent with an Opinion of Counsel obtained by the Servicer from
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 Owner shall
acknowledge in writing that such title is being held as nominee for the Owner's
designee.
The Servicer shall manage, conserve, protect and operate each
REO Property for the Owner solely for the purpose of its prompt disposition and
sale. The Servicer, either itself or through an agent selected by the Servicer,
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 Servicer 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 Servicer
deems to be in the best interest of the Owner.
The Servicer shall use its best efforts to dispose of the REO
Property as soon as possible and shall sell such REO Property in any event
within one year after title has been taken to such REO Property, unless (i) (A)
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 Servicer
determines, and gives an appropriate notice to the Owner to such effect, that a
longer period is necessary for the orderly liquidation of such REO Property. If
a period longer than one year is permitted under the foregoing sentence and is
necessary to sell any REO Property, the Servicer shall report monthly to the
Owner as to the progress being made in selling such REO Property.
The disposition of REO Property shall be carried out by the
Servicer at such price, and upon such terms and conditions, as the Servicer
deems to be in the best interests of the Owner. Notwithstanding the previous
sentence, prior to acceptance by the Servicer of an offer to sell any REO
Property for a sale price that is less than 90% of the unpaid principal balance
of the related Mortgage Loan, the Servicer shall notify the Owner or its
designee of such offering in writing which notification shall set forth all
material terms of said offer (each a "Notice of Sale"). The Owner or its
designee shall be deemed to have approved the sale of any REO Property unless it
notifies the Servicer in writing within five (5) Business Days after its receipt
of the related Notice of Sale, that it disapproves of the related sale, in which
case the Servicer shall not proceed with such sale. The Servicer 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, liability insurance and, to the
extent required and available under the Flood Disaster Protection Act of 1973,
as amended, flood insurance in the amount required above.
-25-
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 Servicer shall reimburse itself for any
related unreimbursed Servicing Advances, unpaid Servicing Fees and unreimbursed
advances made pursuant to this Section or Section 4.03, and 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 Owner.
The Servicer shall make advances of all funds necessary for
the proper operation, management and maintenance of the REO Property, including
the cost of maintaining any hazard insurance pursuant to Section 3.10, such
advances to be reimbursed from the disposition or liquidation proceeds of the
REO Property. The Servicer shall make monthly distributions on each Remittance
Date to the Owner 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 3.17 and of any reserves reasonably required from time to time to be
maintained to satisfy anticipated liabilities for such expenses).
Section 3.18. Real Estate Owned Reports.
Together with the statement furnished pursuant to Section
4.02, the Servicer shall furnish to the Owner or its designee on or before the
tenth (10th) day of each month a statement with respect to any REO Property
covering the operation of such REO Property for the previous month and the
Servicer'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
Owner or its designee shall reasonably request.
Section 3.19. Liquidation Reports.
Upon the foreclosure sale of any Mortgaged Property or the
acquisition thereof by the Owner or its designee pursuant to a deed in lieu of
foreclosure, the Servicer shall submit to the Owner or its designee a
liquidation report with respect to such Mortgaged Property. In addition, the
Servicer shall provide the Owner or its designee a report setting forth
Servicing Advances and other expenses incurred in connection with the
liquidation of any Mortgage Loan.
Section 3.20. Reports of Foreclosures and Abandonments of
Mortgaged Property.
Following the foreclosure sale or abandonment of any Mortgaged
Property, the Servicer shall report such foreclosure or abandonment as required
pursuant to Section 6050J of the Code.
-26-
Section 3.21. Prepayment Charges.
The Servicer or any designee of the Servicer shall not waive
any Prepayment Charge with respect to any Mortgage Loan which contains a
Prepayment Charge which prepays during the term of the penalty. If the Servicer
or its designee fails to collect the Prepayment Charge upon any prepayment of
any Mortgage Loan which contains a Prepayment Charge, the Servicer shall pay the
Owner an amount equal to the Prepayment Charge which was not collected.
Notwithstanding the above, the Servicer or its designee may waive a Prepayment
Charge without paying the Owner the amount of the Prepayment Charge if (i) the
Mortgage Loan is in default (defined as 61 days or more delinquent) and such
waiver would maximize recovery of total proceeds taking into account the value
of such Prepayment Charge and the related Mortgage Loan or (ii) if the
prepayment is not a result of a refinance by the Servicer or any of its
affiliates and (a) the Mortgage Loan is foreseen to be in default and such
waiver would maximize recovery of total proceeds taking into account the value
of such Prepayment Charge and the related Mortgage Loan or (b) the collection of
the Prepayment Charge would be in violation of applicable laws.
Section 3.22. Credit Reporting.
For each Mortgage Loan, the Servicer shall accurately and
fully furnish, in accordance with the Fair Credit Reporting Act and its
implementing regulations, accurate and complete information (e.g., favorable and
unfavorable) on its borrower credit files to each of the following credit
repositories: Equifax Credit Information Services, Inc., Trans Union, LLC and
Experian Information Solution, Inc., on a monthly basis.
Section 3.23. Confidentiality/Protecting Customer Information.
Each party agrees that it shall comply with all applicable
laws and regulations regarding the privacy or security of Customer Information
shall maintain appropriate administrative, technical and physical safeguards to
protect the security, confidentiality and integrity of Customer Information,
including, if applicable, maintaining security measures designed to meet the
Interagency Guidelines Establishing Standards for Safeguarding Customer
Information, 66 Fed. Reg. 8616 and complying with the privacy regulations under
Title V of the Xxxxx-Xxxxx-Xxxxxx Act, 15 U.S.C. ss. 6801 et seq., and the rules
promulgated thereunder. For purposes of this Section, "Customer Information"
means any personal information concerning a Mortgagor that is disclosed by one
party to this Agreement to the other.
Section 3.24. Superior Liens.
The Servicer shall monitor the status of each Superior Lien in
accordance with Accepted Servicing Practices. If necessary to comply with
Accepted Servicing Practices and permitted by applicable law, the Servicer shall
file (or cause to be filed) a request for notice of any action by a superior
lienholder under a Superior Lien for the protection of the Owner's interest,
where permitted by local law and whenever applicable state law does not require
that a junior lienholder be named as a party defendant in foreclosure
proceedings in order to foreclose such junior lienholder's equity of redemption.
-27-
If the Servicer is notified that any superior lienholder has
accelerated or intends to accelerate the obligations secured by the Superior
Lien, or has declared or intends to declare a default under the mortgage or the
promissory note secured thereby, or has filed or intends to file an election to
have the Mortgaged Property sold or foreclosed, the Servicer shall take, on
behalf of the Owner, whatever actions are necessary to protect the interests of
the Owner in accordance with Accepted Servicing Practices. The Servicer shall
not make such a Servicing Advance except to the extent that it determines in its
reasonable good faith judgment that such advance would be recoverable from
Liquidation Proceeds on the related Mortgage Loan and in no event in an amount
that is greater than the then outstanding principal balance of the related
Mortgage Loan. The Servicer shall thereafter take such action as is necessary to
recover the amount so advanced.
ARTICLE IV.
PAYMENTS TO OWNER
Section 4.01. Remittances.
On each Remittance Date the Servicer shall remit by wire
transfer of immediately available funds to the Owner all amounts deposited in
the Custodial Account as of the close of business on the last day of the related
Due Period (net of charges against or withdrawals from the Custodial Account
pursuant to Section 3.04).
With respect to any remittance received by the Owner after the
second Business Day following the Business Day on which such remittance payment
was due, the Servicer shall pay to the Owner 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 Servicer 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 Servicer of any such
interest shall not be deemed an extension of time for payment or a waiver of any
Event of Default by the Servicer.
Section 4.02. Statements to Owner.
Not later than the tenth (10th) calendar day of each month,
the Servicer shall furnish to the Owner or its designee electronic monthly
remittance advices in the Fidelity (or any successor thereto) S214, S215, P139,
P196 and T383 formats (or in such other formats mutually agreed to between the
Servicer and the Owner or its designee) and a manual advice in the form of the
-28-
90 Plus Foreclosure/Bankruptcy REO Report (or in such other format mutually
agreed to between the Servicer and the Owner or its designee), all such advices
relating to the period ending on the last day of the preceding calendar month.
Beginning with calendar year 2004, the Servicer shall prepare
and file any and all tax returns, information statements or other filings for
the tax year 2004 and subsequent tax years required to be delivered to any
governmental taxing authority or to the Owner pursuant to any applicable law
with respect to the Mortgage Loans and the transactions contemplated hereby. In
addition, the Servicer shall provide the Owner with such information concerning
the Mortgage Loans as is necessary for the Owner to prepare its federal income
tax return as the Owner may reasonably request from time to time.
Section 4.03. Monthly Advances by Servicer.
The Servicer shall not be required to make Monthly Advances
prior to any Reconstitution Date.
Section 4.04. Due Dates Other Than the First of the Month.
Mortgage Loans having Due Dates other than the first day of a
month shall be accounted for as described in this Section 4.04. Any payment due
on a day other than the first day of each month shall be considered due on the
first day of the month following the month in which that payment is due as if
such payment were due on the first day of said month. For example, a payment due
on August 15 shall be considered to be due on September 1 of said month. Any
payment collected on a Mortgage Loan after the related Transfer Date shall be
deposited in the Custodial Account. For Mortgage Loans with Due Dates on the
first day of a month, deposits to the Custodial Account begin with the payment
due on the first of the month following the related Transfer Date.
ARTICLE V.
GENERAL SERVICING PROCEDURES
Section 5.01. Transfers of Mortgaged Property.
The Servicer 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 Servicer 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 Servicer 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 or
LPMI Policy, if any.
-29-
If the Servicer reasonably believes it is unable under
applicable law to enforce such "due-on-sale" clause, the Servicer 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 Servicer is unable under applicable law to require that the
original Mortgagor remain liable under the Mortgage Note and the Servicer has
the prior consent of the primary mortgage guaranty insurer, a substitution of
liability agreement with the Owner of the Mortgaged Property pursuant to which
the original Mortgagor is released from liability and the Owner of the Mortgaged
Property is substituted as Mortgagor and becomes liable under the Mortgage Note.
If an assumption fee is collected by the Servicer for entering into an
assumption agreement, such fee will be retained by the Servicer as additional
servicing compensation. In connection with any such assumption, neither the
Mortgage Interest Rate borne by the related Mortgage Note, the term of the
Mortgage Loan nor the outstanding principal amount of the Mortgage Loan shall be
changed.
To the extent that any Mortgage Loan is assumable, the
Servicer shall inquire diligently into the creditworthiness of the proposed
transferee, and shall use the underwriting criteria for approving the credit of
the proposed transferee which are used by the Servicer, its affiliates or Xxxxxx
Xxx with respect to underwriting mortgage loans of the same type as the Mortgage
Loans. If the credit of the proposed transferee does not meet such underwriting
criteria, the Servicer 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 5.02. Satisfaction of Mortgages and Release of
Mortgage Files.
Upon the payment in full of any Mortgage Loan, or the receipt
by the Servicer of a notification that payment in full will be escrowed in a
manner customary for such purposes, the Servicer shall notify the Owner in the
Monthly Remittance Advice as provided in Section 4.02, and may request the
release of any Mortgage Loan Documents from the Owner in accordance with this
Section 5.02 hereof.
If the Servicer satisfies or releases a Mortgage without first
having obtained payment in full of the indebtedness secured by the Mortgage or
should the Servicer otherwise prejudice any rights the Owner may have under the
mortgage instruments, the Servicer shall deposit into the Custodial Account the
entire outstanding principal balance, plus all accrued interest on such Mortgage
Loan, on the day preceding the Remittance Date in the month following the date
of such release. The Servicer shall maintain the Fidelity Bond and Errors and
Omissions Insurance Policy as provided for in Section 3.13 insuring the Servicer
against any loss it may sustain with respect to any Mortgage Loan not satisfied
in accordance with the procedures set forth herein.
-30-
Section 5.03. Servicing Compensation.
As consideration for servicing the Mortgage Loans subject to
this Agreement, the Servicer shall retain the relevant Servicing Fee for each
Mortgage Loan remaining subject to this Agreement during any month or part
thereof. Such Servicing Fee shall be payable monthly. Additional servicing
compensation in the form of Ancillary Income shall be retained by the Servicer
and is not required to be deposited in the Custodial Account. The obligation of
the Owner 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) of such Monthly Payment collected by the
Servicer.
The Servicer shall be required to pay all expenses incurred by
it in connection with its servicing activities hereunder and shall not be
entitled to reimbursement thereof except as specifically provided for herein.
Section 5.04. Annual Audit Report.
On or before February 28th of each year beginning February 28,
2004, the Servicer, at its expense, shall cause a firm of independent public
accountants which is a member of the American Institute of Certified Public
Accountants to furnish a statement to the Owner to the effect that such firm has
examined certain documents and records relating to the servicing of mortgage
loans similar in nature to the Mortgage Loans 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 Owner a copy of a Uniform
Single Attestation Program Report from their independent public accountant's on
an annual basis, Servicer shall be considered to have fulfilled its obligations
under this Section 5.04.
Section 5.05. Annual Officer's Certificate.
The Servicer shall deliver to the Owner, on or before February
28th, each year beginning February 28, 2004, an Officer's Certificate, stating
that (i) a review of the activities of the Servicer 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 Servicer has fulfilled all its
obligations under this Agreement throughout such year, or, if there has been a
default in the fulfillment of any such obligation, specifying each such default
known to such officer and the nature and status thereof and the action being
taken by the Servicer to cure such default.
-31-
Section 5.06. Right to Examine Servicer Records.
The Owner shall have the right to examine and audit any and
all of the books, records, or other information of the Servicer, whether held by
the Servicer 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 Owner shall pay its own expenses in connection with any such
examination; provided, that, the Servicer shall not charge the Owner additional
costs for such examination.
ARTICLE VI.
Representations, Warranties and Agreements
Section 6.01. Representations, Warranties and Agreements of
the Servicer.
The Servicer, as a condition to the consummation of the
transactions contemplated hereby, hereby makes the following representations and
warranties to the Owner as of each Transfer Date:
(a) Due Organization and Authority. The Servicer is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its formation 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 Servicer, and in any event the Servicer is in compliance
with the laws of any such state to the extent necessary to ensure the
enforceability of the terms of this Agreement; the Servicer 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 Servicer 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 Servicer and all
requisite corporate action has been taken by the Servicer to make this Agreement
valid and binding upon the Servicer 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 Servicer;
(c) No Conflicts. Neither the execution and delivery of this
Agreement, the acquisition of the servicing responsibilities by the Servicer 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, conditions or provisions of the Servicer's charter
or by-laws or any legal restriction or any agreement or instrument to which the
Servicer is now a party or by which it is bound, or constitute a default or
result in an acceleration under any of the foregoing, or result in the violation
-32-
of any law, rule, regulation, order, judgment or decree to which the Servicer or
its property is subject, or impair the ability of the Servicer to service the
Mortgage Loans, or impair the value of the Mortgage Loans;
(d) Ability to Perform. The Servicer 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;
(e) No Litigation Pending. There is no action, suit,
proceeding or investigation pending or threatened against the Servicer 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 Servicer, or in any material impairment of the right or ability of
the Servicer to carry on its business substantially as now conducted, or in any
material liability on the part of the Servicer, or which would draw into
question the validity of this Agreement or of any action taken or to be taken in
connection with the obligations of the Servicer contemplated herein, or which
would be likely to impair materially the ability of the Servicer to perform
under the terms of this Agreement;
(f) 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 Servicer of or compliance by the
Servicer with this Agreement, or if required, such approval has been obtained
prior to the related Transfer Date;
(g) No Default. The Servicer is not in default, and no event
or condition exists that after the giving of notice or lapse of time or both,
would constitute an event of default under any material mortgage, indenture,
contract, agreement, judgment, or other undertaking, to which the Servicer is a
party or which purports to be binding upon it or upon any of its assets, which
default could impair materially the ability of the Servicer to perform under the
terms of this Agreement;
(h) Ability to Service. The Servicer is an approved
seller/servicer of conventional residential mortgage loans for Xxxxxx Mae and
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 Servicer is in good standing to service mortgage loans for
either Xxxxxx Mae or Xxxxxxx Mac, and no event has occurred, including but not
limited to a change in insurance coverage, which would make the Servicer unable
to comply with either Xxxxxx Mae or Xxxxxxx Mac eligibility requirements or
which would require notification to either of Xxxxxx Mae or Xxxxxxx Mac;
(i) No Untrue Information. 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; and
-33-
(j) No Commissions to Third Parties. The Servicer 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 Owner.
Section 6.02. Remedies for Breach of Representations and
Warranties of the Servicer.
It is understood and agreed that the representations and
warranties set forth in Section 6.01 shall survive the engagement of the
Servicer to perform the servicing responsibilities as of the related Transfer
Date hereunder and the delivery of the Servicing Files to the Servicer and shall
inure to the benefit of the Owner. Upon discovery by either the Servicer or the
Owner of a breach of any of the foregoing representations and warranties which
materially and adversely affects the ability of the Servicer to perform its
duties and obligations under this Agreement or otherwise materially and
adversely affects the value of the Mortgage Loans, the Mortgaged Property or the
priority of the security interest on such Mortgaged Property or the interest of
the Owner, 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 Servicer of any breach of a representation or warranty set forth in
Section 6.01 which materially and adversely affects the ability of the Servicer
to perform its duties and obligations under this Agreement or otherwise
materially and adversely affects the value of the Mortgage Loans, the Mortgaged
Property or the priority of the security interest on such Mortgaged Property,
the Servicer shall use its best efforts promptly to cure such breach in all
material respects and, if such breach cannot be cured, the Servicer shall, at
the Owner's option, assign the Servicer's rights and obligations under this
Agreement (or respecting the affected Mortgage Loans) to a successor servicer,
subject to the approval of the Owner, which approval shall be in the Owner's
sole discretion. Such assignment shall be made in accordance with Sections 9.01
and 10.01 hereof.
In addition, the Servicer shall indemnify the Owner 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 Servicer representations
and warranties contained in this Agreement.
Any cause of action against the Servicer relating to or
arising out of the breach of any representations and warranties made in Section
6.01 shall accrue upon (i) discovery of such breach by the Servicer or notice
thereof by the Owner to the Servicer, (ii) failure by the Servicer to cure such
breach within the applicable cure period, and (iii) demand upon the Servicer by
the Owner for compliance with this Agreement.
-34-
Section 6.03. Representations, Warranties and Agreements of
the Owner.
(a) Due Organization and Authority. The Owner is a federal
savings bank duly organized, validly existing and in good standing under the
laws of the United States and has all licenses necessary to carry on its
business as now being conducted and is licensed, qualified and in good standing
in each state if the laws of such state require licensing or qualification in
order to conduct business of the type conducted by the Owner, and in any event
the Owner is in compliance with the laws of any such state to the extent
necessary to ensure the enforceability of the terms of this Agreement; the Owner
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 Owner 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 Owner
and all requisite corporate action has been taken by the Owner to make this
Agreement valid and binding upon the Owner 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 Owner;
(c) No Conflicts. Neither the execution and delivery of this
Agreement, 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, conditions or provisions of the
Owner's charter or by-laws or any legal restriction or any agreement or
instrument to which the Owner is now a party or by which it is bound, or
constitute a default or result in an acceleration under any of the foregoing, or
result in the violation of any law, rule, regulation, order, judgment or decree
to which the Owner or its property is subject;
(d) Ability to Perform. The Owner 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;
(e) No Litigation Pending. There is no action, suit,
proceeding or investigation pending or threatened against the Owner which,
either in any one instance or in the aggregate, which would draw into question
the validity of this Agreement or of any action taken or to be taken in
connection with the obligations of the Owner contemplated herein, or which would
be likely to impair materially the ability of the Owner to perform under the
terms of this Agreement;
(f) 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 Owner of or compliance by the Owner
with this Agreement, or if required, such approval has been obtained prior to
the execution of this Agreement;
-35-
(g) No Default. The Owner is not in default, and no event or
condition exists that after the giving of notice or lapse of time or both, would
constitute an event of default under any material mortgage, indenture, contract,
agreement, judgment, or other undertaking, to which the Owner is a party or
which purports to be binding upon it or upon any of its assets, which default
could impair materially the ability of the Owner to perform under the terms of
this Agreement;
(h) No Commissions to Third Parties. The Owner 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 Servicer.
(i) Predatory Lending Regulations; High Cost Loans. None of
the Mortgage Loans are classified as (i) "high cost" loans under the Home
Ownership and Equity Protection Act of 1994 or (ii) "high cost," "threshold,"
"covered" or "predatory" loans under any other applicable state, federal or
local law.
ARTICLE VII.
AGENCY TRANSFER; WHOLE LOAN TRANSFER; PASS-THROUGH TRANSFER
Section 7.01. Removal of Mortgage Loans from Inclusion Under
this Agreement Upon an Agency Transfer, a Pass-Through Transfer or a Whole Loan
Transfer on One or More Reconstitution Dates.
(a) The Owner and the Servicer agree that with respect to some
or all of the Mortgage Loans, from time to time the Owner shall:
(1) Effect an Agency Transfer, and/or
(2) Effect a Whole Loan Transfer, and/or
(3) Effect a Pass-Through Transfer,
in each case retaining the Servicer as the servicer thereof to service the
Mortgage Loans on a "scheduled/scheduled" basis.
(b) All Mortgage Loans not sold or transferred pursuant to an
Agency Transfer, Pass-Through Transfer or Whole Loan Transfer and any and all
Mortgage Loans repurchased by the Owner pursuant to Section 7.04 below with
respect to an Agency Transfer, Pass-Through Transfer or Whole Loan Transfer
shall be 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. On each Reconstitution Date,
the Mortgage Loans transferred shall cease to be covered by this Agreement and
the Servicer's servicing responsibilities shall cease under this Agreement with
-36-
respect to the related transferred Mortgage Loans, other than the right of the
Owner to cause a transfer of the servicing responsibilities to the Mortgage
Loans in accordance with Section 7.03 below. The Owner and the Servicer hereby
agree to use commercially reasonable efforts to cause the successor owner in an
Agency Transfer, Pass-Through Transfer or Whole Loan Transfer to pay for all of
the Servicer's costs in connection with each reconstitution entered into by such
successor owner.
(c) With respect to each Whole Loan Transfer, Pass-Through
Transfer or Agency Transfer, the forms of Reconstitution Agreements to be
entered into by the Owner, the Servicer, Xxxxxx Mae or Xxxxxxx Mac or certain
third parties shall include, but are not limited to, (i) a Xxxxxx Mae Mortgage
Selling and Servicing Contract, a Pool Purchase Contract, and any and all
servicing agreements and tri-party agreements reasonably required by Xxxxxx Xxx
with respect to a Xxxxxx Mae Transfer, (ii) a Purchase Contract and all purchase
documents associated therewith as set forth in the Xxxxxxx Xxx Xxxxxxx' &
Servicers' Guide, and any and all servicing agreements and tri-party agreements
reasonably required by Xxxxxxx Mac with respect to a Xxxxxxx Mac Transfer, (iii)
a Pooling and Servicing Agreement and/or a servicing, subservicing/master
servicing agreement and related custodial/trust agreement, insurance agreements,
loss mitigation advisory or credit risk management agreements, and other related
documents with respect to a Pass-Through Transfer, and (iv) a Seller's
Warranties and Servicing Agreement or a Sale and Servicing Agreement and related
custodial agreement and closing documents with respect to a Whole Loan Transfer.
Notwithstanding the previous sentence, the Reconstitution Agreement with respect
to Pass-Through Transfers shall be substantially in the form of the
Securitization Servicing Agreement attached hereto as Exhibit A.
(d) Each Reconstitution Agreement shall prescribe the rights
and obligations of the Servicer in servicing the related Mortgage Loans and
shall provide for servicing compensation to the Servicer (calculated on a
weighted average basis for all the related Mortgage Loans as of the
Reconstitution Date), net of any guarantee fees due Xxxxxx Mae or Xxxxxxx Mac,
if applicable, at least equal to the Servicing Fee and Ancillary Income due the
Servicer in accordance with this Agreement. The form of relevant Reconstitution
Agreement to be entered into by the Owner and/or master servicer or trustee and
the Servicer with respect to Pass-Through Transfers and/or Whole Loan Transfers
shall be reasonably satisfactory in form and substance to the Owner and the
Servicer (giving due regard to any Rating Agency, insurer, guarantor, loss
mitigation or credit risk management advisor or master servicing requirements)
and the representations and warranties and servicing provisions contained
therein shall be substantially similar to those contained in this Agreement,
unless otherwise mutually agreed by the parties. Said agreements shall be
negotiated in good faith and executed by Servicer to effectuate the foregoing
provided such agreements do not create materially greater obligations or costs
on the part of the Servicer than otherwise set forth in this Agreement.
(e) Notwithstanding subsection (d) above, with respect to each
Pass-Through Transfer, the applicable Reconstitution Agreement shall contain
provisions which contain the following terms and conditions:
-37-
(i) The Servicer shall service the related Mortgage Loan
on a "scheduled/scheduled" basis;
(ii) The Servicer shall advance from its own funds or
funds held for future distribution all amounts with respect to Monthly Advances
unless the Servicer determines that such advances would be nonrecoverable (as
evidenced by an Officer's Certificate);
(iii) With respect to each Principal Prepayment in full
or in part, the Servicer shall remit the Prepayment Interest Shortfall Amount,
if any, as set forth in such Reconstitution Agreement;
(iv) The definition of Remittance Date shall be the 18th
day (or if such 18th day is not a Business Day, the first Business Day
immediately following) of any month;
(v) The definition of Due Period shall be, 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;
(vi) Not later than the tenth (10th) calendar day of each
month, the Servicer shall furnish to the Owner or its designee an electronic
monthly remittance advice in the Fidelity (or any successor thereto) S50Y format
relating to the period ending on the last day of the preceding calendar month;
and
(vii) If the servicing fee rate (the "Reconstituted
Servicing Fee Rate") contained in such Reconstitution Agreement is greater than
the Servicing Fee Rate, the Servicer shall remit to the Owner or its designee on
each Remittance Date thereunder, with respect to the related Due Period and each
Mortgage Loan, an amount equal to one-twelfth the product of (A) the difference
between (1) the Servicing Fee Rate and (2) the Reconstituted Servicing Fee Rate
and (B) the outstanding principal balance of such Mortgage Loan as of the
related Determination Date; provided, that the Servicer shall make such
remittances only with respect to those Mortgage Loans for which a Monthly
Payment has been received.
In addition, any such Reconstitution Agreement may, at the
option of the Owner, contain a provision that will permit the Owner or its
assignees to terminate the rights of Owner as servicer of the Mortgage Loans
upon the occurrence of certain trigger events ("Trigger Events").
(f) The Servicer shall cooperate with the Owner in connection
with any Agency Transfer, Pass-Through Transfer or Whole Loan Transfer
contemplated by the Owner pursuant to this Section 7.01. In that connection, the
Servicer shall:
(i) execute any Reconstitution Agreement within a
reasonable period of time after receipt of any Reconstitution Agreement which
time shall be sufficient for the Servicer and Servicer's counsel to review such
Reconstitution Agreement, but such time shall not exceed ten (10) days after
such receipt; in the case of any Agency Transfer, the Reconstitution Agreements
shall be those customarily employed by Xxxxxx Xxx or Xxxxxxx Mac for
transactions of such nature.;
-38-
(ii) to cooperate fully with the Owner, Xxxxxx Mae,
Xxxxxxx Mac, the trustee or a third party purchaser and any prospective
purchaser, at the Owner's expense, with respect to all reasonable requests and
due diligence procedures;
(iii) service in accordance with one or more loss
mitigation advisory or credit risk management agreements in a form agreeable to
the Servicer;
(iv) deliver to the Owner and to any Person designated by
the Owner (a) for inclusion in any prospectus or other offering material such
publicly available information regarding the Servicer, its mortgage loan
delinquency and foreclosure experience and, (b) such other information as is
reasonably requested by the Owner and which the Servicer is capable of providing
without unreasonable effort or expense, and to indemnify the Owner and its
affiliates for material misstatements contained in such information, provided
that the Owner and its affiliates shall also provide indemnification to the
Servicer, its successors and assigns, with respect to the accuracy of all other
information the Owner or its affiliates may disclose in any securitzation
offering materials and (c) such statements and audit letters of reputable,
certified public accountants pertaining to information provided by the Servicer
pursuant to clause (a) above as shall be reasonably requested by the Owner,
provided that the Owner shall pay all third party costs associated with the
preparation of such information;
(v) If requested by Owner, for so long as a certificate
under the Xxxxxxxx-Xxxxx Act of 2003, as amended, ("Xxxxxxxx-Xxxxx") is required
to be given on behalf of the trust fund pursuant to any Reconstitution, no later
than February 28th of each year (or if not a Business Day, the immediately
preceding Business Day), or at any other time that a party provides a
certification directly to the Securities and Exchange Commission pursuant to
Xxxxxxxx-Xxxxx and the related Reconstitution, and upon thirty (30) days written
request of such parties, an officer of the Servicer shall execute and deliver an
Officer's Certificate to the party providing such certification directly to the
Securities and Exchange Commission; and
(vi) to provide, on an ongoing basis from information
obtained through its servicing of the Mortgage Loans, any information necessary
to enable the "tax matters person" for any REMIC in a Pass-Through Transfer,
including any master servicer or trustee acting in such capacity, to perform its
obligations in accordance with applicable law and customary secondary mortgage
market standards for securitized transactions.
(g) The Servicer shall provide to the Owner or issuer, as the
case may be, and any other participants in such Agency Transfer, Whole Loan
Transfer or Pass-Through Transfer, (i) any and all information with respect to
itself, its servicing portfolio or the Mortgage Loans and appropriate
verification of information which may be reasonably available to the Servicer,
whether through letters of its auditors and counsel or otherwise, as the Owner
or any such other participant shall request upon reasonable demand, provided,
that the Owner or such participant shall pay all third party costs associated
with the preparation of such information and (ii) such additional
representations, warranties, covenants, opinions of counsel, letters from
-39-
auditors, and certificates of public officials or officers of the Servicer as
are reasonably believed necessary by Xxxxxx Xxx, Xxxxxxx Mac, the trustee, such
third party purchaser, any master servicer, any Rating Agency or the Owner, as
the case may be, in connection with such transactions.
(h) To the extent required by the applicable Reconstitution
Agreements or otherwise requested by the Owner in connection with a
Reconstitution, the Servicer shall prepare Assignments of Mortgage in form and
substance acceptable to Xxxxxx Mae, Xxxxxxx Mac, the trustee or such third
party, as the case may be, for each Mortgage Loan that is part of a
Reconstitution. The Servicer shall execute each Assignment of Mortgage, track
such Assignments of Mortgage to ensure they have been recorded and deliver them
as required by Xxxxxx Mae, Xxxxxxx Mac, the trustee or such third party, as the
case may be, upon the Servicer's receipt thereof. The Owner shall pay all
pre-approved, reasonable and necessary fees associated with the preparation,
recording and tracking of such Assignments of Mortgage. If reasonably required
by the Servicer, the Owner shall furnish the Servicer with any powers of
attorney and other documents necessary or appropriate to enable the Servicer to
carry out its servicing and administrative duties under the applicable
Reconstitution Agreement.
Section 7.02. Transfer of Servicing for Reconstitution.
The Owner or its designee shall use its best efforts to meet
the following requirements in connection with any Agency Transfer, Pass-Through
Transfer or Whole Loan Transfer contemplated by the Owner pursuant to Section
7.01. In that connection, the Owner or its designee shall:
(a) provide notification to the Servicer, no later than seven
(7) Business Days prior to the last Business Day of the month for any Whole Loan
Transfer or Pass-Through Transfer, or in the case of an Agency Transfer, provide
notification to Servicer no later than seven (7) Business Days prior to the
applicable agency's cut-off date. Such notification shall include copies of the
proposed Reconstitution Agreement and/or the applicable Agency Transfer
documents;
(b) provide contact information for the Owner and/or the
selling agent responsible for assigning the loans;
(c) provide the following information to transfer the related
Mortgage Loans five (5) Business Days prior to the investor's cutoff in an excel
format:
Servicer Loan Number
Investor or Agency Loan Number (if applicable)
Sold Balance
Interest Rate
Service Fee Rate (and Guaranty Fee Rate if applicable)
Pass-Through Rate
P&I Constant
Actual UPB
Effective Date; and
-40-
(d) provide the new investor's contact information and wiring
instructions five (5) Business Days prior to the last Business Day of the month
for any Whole Loan Transfer or Pass Through Transfer, or in the case of an
Agency Transfer, five (5) Business Days prior to the applicable agency's cut-off
date.
Section 7.03. Transfer of Servicing Following Reconstitution.
Following a Reconstitution of Mortgage Loans, the Owner or its
designee (which may include the master servicer, trustee, insurer, guarantor or
certificateholders) shall have the right, in its sole discretion, to cause the
Servicer at any time under any Reconstitution Agreement to transfer the
servicing responsibilities and duties with respect to some or all of the
Mortgage Loans serviced thereunder to the Owner or any designee of the Owner;
provided, however, that the Owner shall provide the Servicer with sixty (60)
days prior written notice and provided further that such transfer shall be
subject to the approval of Xxxxxx Xxx or Xxxxxxx Mac, as the case may be, with
respect to Agency Transfers, the trustee, master servicer or Rating Agency with
respect to Pass-Through Transfers or any relevant third party purchaser with
respect to Whole Loan Transfers. The Servicer agrees to cooperate with the Owner
in such transfer of servicing responsibilities and shall comply with the
termination procedures set forth in Sections 9.01 and 10.01 hereof.
Section 7.04. Owner's Repurchase and Indemnification
Obligations.
Upon receipt by the Servicer of notice from Xxxxxx Mae,
Xxxxxxx Mac or other such third party purchaser of a breach of the Owner
representation or warranty contained in any Reconstitution Agreement or a
request by Xxxxxx Mae, Xxxxxxx Mac, the trustee or such third party purchaser,
as the case may be, for the repurchase of any Mortgage Loan transferred to
Xxxxxx Mae or Xxxxxxx Mac pursuant to an Agency Transfer or to a trustee
pursuant to a Pass-Through Transfer or to a third party purchaser pursuant to a
Whole Loan Transfer, the Servicer shall promptly notify the Owner of same and
shall, at the direction of the Owner, use its best efforts to cure and correct
any such breach and to satisfy the requests or concerns of Xxxxxx Mae, Xxxxxxx
Mac, the trustee or the third party purchaser related to such deficiencies of
the related Mortgage Loans transferred to Xxxxxx Mae, Xxxxxxx Mac, the trustee
or other such third party purchaser.
The Owner shall reimburse the Servicer for any Mortgage Loan
transferred to Xxxxxx Mae or Xxxxxxx Mac pursuant to an Agency Transfer or to a
trustee pursuant to a Pass-Through Transfer or to a third party purchaser
pursuant to a Whole Loan Transfer with respect to which the Servicer has been
required by Xxxxxx Mae, Xxxxxxx Mac, the trustee or such third party purchaser
to repurchase due to a breach of a representation or warranty made by the Owner
with respect to the Mortgage Loans, or the servicing thereof prior to the
transfer date to Xxxxxx Mae, Xxxxxxx Mac, the trustee or any third party
purchaser in any Reconstitution Agreement and not due to a breach of the
Servicer's obligations thereunder or pursuant to this Agreement. The amount to
be paid by the Owner to the Servicer shall equal that repurchase price paid by
-41-
the Servicer to Xxxxxx Mae, Xxxxxxx Mac, or the third party purchaser plus all
reasonable costs and expenses borne by the Servicer in connection with the
repurchase of such Mortgage Loan from Xxxxxx Mae, Xxxxxxx Mac, the trustee or
the third party purchaser, including, but not limited to, reasonable and
necessary attorneys' fees.
At the time of repurchase, the Custodian and the Servicer
shall arrange for the reassignment of the repurchased Mortgage Loan to the Owner
according to the Owner's instructions and the delivery to the Custodian of any
documents held by Xxxxxx Mae, Xxxxxxx Mac, the trustee or other relevant third
party purchaser with respect to the repurchased Mortgage Loan pursuant to the
related Reconstitution Agreement. If the repurchased Mortgage Loan is a MERS
Mortgage Loan, the Servicer shall cause MERS to designate on the MERS(R) System
the Owner as the beneficial holder with respect to such Mortgage Loan. In the
event of a repurchase, the Servicer shall, simultaneously with such
reassignment, give written notice to the Owner that such repurchase has taken
place, and amend the Mortgage Loan Schedule to reflect the addition of the
repurchased Mortgage Loan to this Agreement. In connection with any such
addition, the Servicer and the Owner shall be deemed to have made as to such
repurchased 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 repurchase.
If a Mortgage Loan has been paid in full or repurchased
pursuant to Section 7.04, the Servicer is authorized and empowered by the Owner,
in its own name to cause the removal from the registration of any Mortgage Loan
on the MERS(R) System or to execute and deliver, on behalf of the Owner, any and
all instruments of satisfaction or release and other comparable instruments with
respect to such release or satisfaction of a Mortgage, in the name of MERS,
solely as nominee for the Owner and its successors and assigns.
Section 7.05. Additional Indemnification by the Servicer.
The Servicer shall indemnify the Owner 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 Owner may sustain in any way related to the
failure of the Servicer to perform its duties and service the Mortgage Loans in
strict compliance with the terms of this Agreement or any Reconstitution
Agreement entered into pursuant to Section 7.01. The Servicer shall immediately
notify the Owner if a claim is made by a third party with respect to this
Agreement or any Reconstitution Agreement or the Mortgage Loans, shall promptly
notify Xxxxxx Mae, Xxxxxxx Mac, the trustee or other relevant third party with
respect to any claim made by a third party with respect to any Reconstitution
Agreement, assume (with the prior written consent of the Owner) the defense of
any such claim and pay all expenses in connection therewith, including counsel
fees, promptly pay, discharge and satisfy any judgment or decree which may be
entered against it or the Owner in respect of such claim and follow any written
instructions received from the Owner in connection with such claim. The Owner
promptly shall reimburse the Servicer for all amounts advanced by it pursuant to
the preceding sentence except when the claim is in any way related to the
Servicer's indemnification pursuant to Section 6.02, or the failure of the
Servicer to service and administer the Mortgage Loans in strict compliance with
-42-
the terms of this Agreement or any Reconstitution Agreement. In the event a
dispute arises between the Servicer and the Owner with respect to any of the
rights and obligations of the parties pursuant to this Agreement, and such
dispute is adjudicated in a court of law, by an arbitration panel or any other
judicial process, then the losing party shall indemnify and reimburse the
winning party for all attorney's fees and other costs and expenses related to
the adjudication of said dispute.
Section 7.06. Transfer Of Servicing.
In the event that the Servicer's duties, responsibilities and
liabilities under this Agreement should be terminated pursuant to the provisions
of this Agreement, the Servicer shall discharge such duties and responsibilities
during the period from the date it acquires knowledge of such termination until
the effective date thereof with the same degree of diligence and prudence which
it is obligated to exercise under this Agreement, and shall take no action
whatsoever that might impair or prejudice the rights or financial condition of
its successor. The resignation or removal of the Servicer pursuant to the
aforementioned sections shall not become effective until a successor shall be
appointed by the Owner. The Servicer shall deliver promptly to the successor
servicer the funds in the Custodial Account and Escrow Account and all Servicing
Files and related documents and statements held by it hereunder and the Servicer
shall account for all funds and shall execute and deliver such instruments and
do such other things as may reasonably be required to more fully and
definitively vest in the successor all such rights, powers, duties,
responsibilities, obligations and liabilities of the Servicer.
ARTICLE VIII.
THE SERVICER
Section 8.01. Merger or Consolidation of the Servicer.
The Servicer shall keep in full effect its existence, rights
and franchises as a corporation, and shall obtain and preserve its qualification
to do business as a foreign corporation in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and
enforceability of this Agreement or any of the Mortgage Loans and to perform its
duties under this Agreement.
Any Person into which the Servicer may be merged or
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Servicer shall be a party, or any Person succeeding
to the business of the Servicer, shall be the successor of the Servicer
hereunder, without the execution or filing of any paper or any further act on
the part of any of the parties hereto, anything herein to the contrary
notwithstanding, 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- and Xxxxxxx Mac-approved servicer in good standing.
-43-
Section 8.02. Limitation on Liability of the Servicer and
Others.
Neither the Servicer nor any of the directors, officers,
employees or agents of the Servicer shall be under any liability to the Owner
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 Servicer 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 liability which would otherwise be imposed by reason of any
breach of the terms and conditions of this Agreement. The Servicer and any
director, officer, employee or agent of the Servicer may rely in good faith on
any document of any kind prima facie properly executed and submitted by any
Person respecting any matters arising hereunder. The Servicer 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 Servicer may, with the consent of the Owner,
undertake any such action which it may deem necessary or desirable in respect of
this Agreement and the rights and duties of the parties hereto. In such event,
the Servicer shall be entitled to reimbursement from the Owner for the
reasonable legal expenses and costs of such action.
Section 8.03. Limitation on Resignation and Assignment by the
Servicer.
The Owner has entered into this Agreement with the Servicer
and subsequent transferees of the Owner will purchase the Mortgage Loans in
reliance upon the independent status of the Servicer, and the representations as
to the adequacy of its servicing facilities, plant, personnel, records and
procedures, its integrity, reputation and financial standing, and the
continuance thereof. Therefore, the Servicer shall not assign this Agreement or
the servicing responsibilities hereunder or delegate its rights or duties
hereunder or any portion hereof (to other than a third party service provider)
or sell or otherwise dispose of all or substantially all of its property or
assets without the prior written consent of the Owner, which consent shall not
be unreasonably withheld.
The Servicer shall not resign from the obligations and duties
hereby imposed on it except by mutual consent of the Servicer and the Owner or
upon the determination that its duties hereunder are no longer permissible under
applicable law and such incapacity cannot be cured by the Servicer. Any such
determination permitting the resignation of the Servicer shall be evidenced by
an Opinion of Counsel to such effect delivered to the Owner which Opinion of
Counsel shall be in form and substance acceptable to the Owner. No such
resignation shall become effective until a successor shall have assumed the
Servicer's responsibilities and obligations hereunder in the manner provided in
Section 10.01.
Without in any way limiting the generality of this Section
8.03, in the event that the Servicer either shall assign this Agreement or the
servicing responsibilities hereunder or delegate its duties hereunder or any
portion thereof (to other than a third party service provider) or sell or
otherwise dispose of all or substantially all of its property or assets, without
-44-
the prior written consent of the Owner, then the Owner shall have the right to
terminate this Agreement upon notice given as set forth in Section 9.01, without
any payment of any penalty or damages and without any liability whatsoever to
the Servicer or any third party.
ARTICLE IX.
TERMINATION
Section 9.01. Termination for Cause.
(a) This Agreement shall be terminable at the sole option of
the Owner, if any of the following events of default (each, an "Event of
Default") exist on the part of the Servicer:
(i) any failure by the Servicer to remit to the Owner any
payment required to be made under the terms of this Agreement which continues
unremedied for a period of five (5) calendar days after the date upon which
written notice of such failure, requiring the same to be remedied, shall have
been given to the Servicer by the Owner; or
(ii) failure by the Servicer duly to observe or perform
in any material respect any other of the covenants or agreements on the part of
the Servicer set forth in this Agreement which continues unremedied for a period
of five (5) days after the date on which written notice of such failure,
requiring the same to be remedied, shall have been given to the Servicer by the
Owner; or
(iii) failure by the Servicer to maintain its license to
do business or service residential mortgage loans in any jurisdiction where the
Mortgaged Properties are located; 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, marshalling of assets and liabilities or similar proceedings, or for
the winding-up or liquidation of its affairs, shall have been entered against
the Servicer and such decree or order shall have remained in force undischarged
or unstayed for a period of sixty (60) days; or
(v) the Servicer shall consent to the appointment of a
conservator or receiver or liquidator in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings of or relating to
the Servicer or of or relating to all or substantially all of its property; or
(vi) the Servicer shall admit in writing its inability to
pay its debts generally as they become due, file a petition to take advantage of
any applicable insolvency, bankruptcy or reorganization statute, make an
assignment for the benefit of its creditors, voluntarily suspend payment of its
obligations or cease its normal business operations for three Business Days; or
-45-
(vii) the Servicer ceases to meet the qualifications of a
Xxxxxx Xxx or Xxxxxxx Mac lender/servicer; or
(viii) the Servicer attempts, without the consent of the
Owner, to assign the servicing of the Mortgage Loans or its right to servicing
compensation hereunder or the Servicer attempts, without the consent of the
Owner, to sell or otherwise dispose of all or substantially all of its property
or assets or to assign this Agreement or the servicing responsibilities
hereunder or to delegate its duties hereunder or any portion thereof; or
(ix) if (x) after a Reconstitution in a Pass-Through
Transfer, any of the Rating Agencies reduces or withdraws the rating of any of
the certificates issued by a securitization trust that owns the Mortgage Loans
due to a reason attributable to the Servicer or (y) the Servicer's residential
primary servicer rating for servicing of subprime loans issued by any of the
Rating Agencies is reduced below its rating in effect on the Transfer Date or
withdrawn; or
(x) the termination of any Reconstitution Agreement or
any securitization servicing agreement as a result of the occurrence of any
Trigger Event or "special termination event" by the Servicer thereunder; or
(xi) the net worth of the Servicer shall be less than
$25,000,000.
In each and every such case, so long as an event of default
shall not have been remedied, in addition to whatsoever rights the Owner may
have at law or equity to damages, including injunctive relief and specific
performance, the Owner, by notice in writing to the Servicer, may terminate all
the rights and obligations of the Servicer under this Agreement and in and to
the servicing contract established hereby and the proceeds thereof.
Upon receipt by the Servicer of such written notice, all
authority and power of the Servicer under this Agreement, whether with respect
to the Mortgage Loans or otherwise, shall pass to and be vested in a successor
servicer appointed by the Owner. Upon written request from the Owner, the
Servicer shall prepare, execute and deliver to the successor entity designated
by the Owner any and all documents and other instruments, place in such
successor's possession all Servicing Files, and do or cause to be done all other
acts or things necessary or appropriate to effect the purposes of such notice of
termination, including but not limited to the transfer of the Mortgage Loans and
related documents, at the Servicer's sole expense. The Servicer shall cooperate
with the Owner and such successor in effecting the termination of the Servicer's
responsibilities and rights hereunder, including without limitation, the
transfer to such successor for administration by it of all cash amounts which
shall at the time be credited by the Servicer to the Custodial Account or Escrow
Account or thereafter received with respect to the Mortgage Loans.
By a written notice, the Owner may waive any default by the
Servicer in the performance of its obligations hereunder and its consequences.
Upon any waiver of a past default, such default shall cease to exist, and any
Event of Default arising therefrom shall be deemed to have been remedied for
every purpose of this Agreement. No such waiver shall extend to any subsequent
or other default or impair any right consequent thereon except to the extent
expressly so waived.
-46-
Section 9.02. Termination Without Cause.
This Agreement and the Servicer's rights hereunder with
respect to some or all of the Mortgage Loans shall terminate upon: (i) the later
of (a) the distribution of the final payment or liquidation proceeds on the last
Mortgage Loan to the Owner (or advances by the Servicer for the same), and (b)
the disposition of all REO Property acquired upon foreclosure of the last
Mortgage Loan and the remittance of all funds due hereunder, or (ii) mutual
consent of the Servicer and the Owner in writing or (iii) at the sole option of
the Owner, without cause, upon sixty (60) days written notice. Any such notice
of termination shall be in writing and delivered to the Servicer by registered
mail to the address set forth at the beginning of this Agreement. The Owner and
the Servicer shall comply with the termination procedures set forth in Sections
9.01 and 10.01 hereof.
In the event the Owner terminates the Servicer without cause
with respect to some or all of the Mortgage Loans in accordance with Section
9.02(iii), (x) the Owner shall be required to pay to the Servicer the related
Deboarding Fee and (y) the Owner or a successor servicer shall reimburse the
Servicer for all accrued and unpaid Servicing Fees and unreimbursed Servicing
Advances upon the transfer of servicing to such successor servicer.
ARTICLE X.
MISCELLANEOUS PROVISIONS
Section 10.01. Successor to the Servicer.
Simultaneously with the termination of the Servicer's
responsibilities and duties under this Agreement pursuant to Sections 6.02,
7.03, 8.03, 9.01 or 9.02, the Owner or its designee shall (i) succeed to and
assume all of the Servicer's responsibilities, rights, duties and obligations
under this Agreement, or (ii) appoint a successor and which shall succeed to all
rights and assume all of the responsibilities, duties and liabilities of the
Servicer under this Agreement simultaneously with the termination of the
Servicer's responsibilities, duties and liabilities under this Agreement. In
connection with such appointment and assumption, the Owner may make such
arrangements for the compensation of such successor out of payments on Mortgage
Loans as it and such successor shall agree, provided, however, that no such
compensation shall be in excess of that permitted the Servicer under this
Agreement without the consent of the Owner. In the event that the Servicer's
duties, responsibilities and liabilities under this Agreement should be
terminated pursuant to the aforementioned sections, the Servicer shall discharge
such duties and responsibilities during the period from the date it acquires
knowledge of such termination until the effective date thereof with the same
degree of diligence and prudence which it is obligated to exercise under this
Agreement, and shall take no action whatsoever that might impair or prejudice
the rights or financial condition of its successor. The resignation or removal
-47-
of the Servicer pursuant to the aforementioned sections shall not become
effective until a successor shall be appointed pursuant to this Section 10.01
and shall in no event relieve the Servicer of the representations and warranties
made pursuant to Sections 6.01 and the remedies available to the Owner under
Section 6.02 and 7.05, it being understood and agreed that the provisions of
such Sections 6.01, 6.02 and 7.05 shall be applicable to the Servicer
notwithstanding any such resignation or termination of the Servicer, or the
termination of this Agreement.
Within 30 days of the appointment of a successor entity by the
Owner, the Servicer shall prepare, execute and deliver to the successor entity
any and all documents and other instruments, place in such successor's
possession all Servicing Files, and do or cause to be done all other acts or
things necessary or appropriate to effect the purposes of such notice of
termination, including but not limited to the transfer of the Mortgage Notes and
related documents. The Servicer shall cooperate with the Owner and such
successor in effecting the termination of the Servicer's responsibilities and
rights hereunder and the transfer of servicing responsibilities to the successor
servicer, including without limitation, the transfer to such successor for
administration by it of all cash amounts which shall at the time be credited by
the Servicer to the Custodial Account or Escrow Account or thereafter received
with respect to the Mortgage Loans.
Any successor appointed as provided herein shall execute,
acknowledge and deliver to the Servicer and to the Owner an instrument accepting
such appointment, wherein the successor shall make the representations and
warranties set forth in Section 6.01, whereupon such successor shall become
fully vested with all the rights, powers, duties, responsibilities, obligations
and liabilities of the Servicer, with like effect as if originally named as a
party to this Agreement. Any termination or resignation of the Servicer or
termination of this Agreement pursuant to Sections 6.02, 7.03, 8.03, 9.01 or
9.02 shall not affect any claims that the Owner may have against the Servicer
arising out of the Servicer's actions or failure to act prior to any such
termination or resignation.
The Servicer shall deliver promptly to the successor servicer
the funds in the Custodial Account and Escrow Account and all Mortgage Loan
documents and related documents and statements held by it hereunder and the
Servicer shall account for all funds and shall execute and deliver such
instruments and do such other things as may reasonably be required to more fully
and definitively vest in the successor all such rights, powers, duties,
responsibilities, obligations and liabilities of the Servicer.
Upon a successor's acceptance of appointment as such, the
Servicer shall notify by mail the Owner of such appointment in accordance with
the procedures set forth in Section 10.04.
Section 10.02. Costs.
The Owner shall pay any commissions due its salesmen and the
legal fees and expenses of its attorneys. Costs and expenses incurred in
connection with the transfer of the servicing responsibilities, including fees
for delivering Servicing Files, shall be paid by the Owner. The Owner shall pay
-48-
up to a maximum of $8.75 per Mortgage Loan for the costs associated with the
preparation, delivery and tracking of Assignments of Mortgages. The Owner shall
be responsible for the costs associated with the recording of Assignments of
Mortgage.
Section 10.03. Reserved.
Section 10.04. Notices.
All demands, notices and communications hereunder shall be in
writing and shall be deemed to have been duly given if mailed by overnight
courier, addressed as follows (or such other address as may hereafter be
furnished to the other party by like notice):
(i) if to the Owner:
Xxxxxx Brothers Bank, FSB
000 Xxxxxxx Xxxxxx
0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Manager, Contract Finance
(ii) if to the Servicer:
Xxxxx Fargo Home Mortgage, Inc.
0000 Xxx Xxxxxxx Xxx
XXX X0000-00X
Xxxxxxxxx, XX 00000
Attn: Managing Director, Subservicing
with a copy to:
Xxxxx Fargo Home Mortgage, Inc.
1 Home Xxxxxx
Xxx Xxxxxx, XX 00000-0000
Attention: General Counsel, MAC X2401-06T
Facsimile: 000-000-0000
Any such demand, notice or communication hereunder shall be
deemed to have been received on the date delivered to or received at the
premises of the addressee.
Section 10.05. 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,
-49-
representation or warranty of this Agreement which is prohibited or
unenforceable or is held to be void or unenforceable in any jurisdiction shall
be ineffective, as to such jurisdiction, to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction as to any Mortgage Loan
shall not invalidate or render unenforceable such provision in any other
jurisdiction. To the extent permitted by applicable law, the parties hereto
waive any provision of law which prohibits or renders void or unenforceable any
provision hereof. If the invalidity of any part, provision, representation or
warranty of this Agreement shall deprive any party of the economic benefit
intended to be conferred by this Agreement, the parties shall negotiate, in
good-faith, to develop a structure the economic effect of which is as close as
possible to the economic effect of this Agreement without regard to such
invalidity.
Section 10.06. No Personal Solicitation.
From and after each Transfer Date, the Servicer hereby agrees
that it will not take any action or permit or cause any action to be taken by
any of its agents or affiliates, or by any independent contractors on the
Servicer's behalf, to personally, by telephone or mail, solicit the borrower or
obligor under any related Mortgage Loan for any purpose whatsoever, including to
refinance a Mortgage Loan, in whole or in part, without the prior written
consent of the Owner. It is understood and agreed that all rights and benefits
relating to the solicitation of any Mortgagors and the attendant rights, title
and interest in and to the list of such Mortgagors and data relating to their
Mortgages (including insurance renewal dates) shall be transferred to the Owner
pursuant hereto on the related Transfer Date and the Servicer shall take no
action to undermine these rights and benefits. Notwithstanding the foregoing, it
is understood and agreed that promotions undertaken by the Servicer or any
affiliate of the Servicer which are directed to the general public at large,
including, without limitation, mass mailing based on commercially acquired
mailing lists, newspaper, radio and television advertisements shall not
constitute solicitation under this Section 10.06. Notwithstanding anything to
the contrary, this Section 10.06 shall not prohibit the Servicer or its agents
or affiliates from serving the refinancing needs or other financial needs of a
Mortgagor who without solicitation, contacts the Servicer or its agents or
affiliates directly.
Section 10.07. 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 10.08. Place of Delivery and Governing Law.
This Agreement shall be deemed in effect when a fully executed
counterpart thereof is received by the Owner in the State of New York and shall
be deemed to have been made in the 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.
-50-
Section 10.09. Further Agreements.
The Owner and the Servicer each agree to execute and deliver
to the other such reasonable and appropriate additional documents, instruments
or agreements as may be necessary or appropriate to effectuate the purposes of
this Agreement.
Section 10.10. Intention of the Parties.
It is the intention of the parties that the Owner is
conveying, and the Servicer is receiving only a contract for servicing the
Mortgage Loans. Accordingly, the parties hereby acknowledge that the Owner
remains the sole and absolute owner of the Mortgage Loans and all rights related
thereto.
Section 10.11. Successors and Assigns; Assignment of Servicing
Agreement.
This Agreement shall bind and inure to the benefit of and be
enforceable by the Servicer and the Owner and the respective successors and
assigns of the Servicer and the Owner. This Agreement shall not be assigned,
pledged or hypothecated by the Servicer to a third party without the prior
written consent of the Owner, which consent shall not be unreasonably withheld.
Section 10.12. 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 10.13. Exhibits.
The exhibits to this Agreement are hereby incorporated and
made a part hereof and are an integral part of this Agreement.
Section 10.14. General Interpretive Principles.
For purposes of this Agreement, except as otherwise expressly
provided or unless the context otherwise requires:
-51-
(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 by reason of
enumeration.
Section 10.15. 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.
-52-
IN WITNESS WHEREOF, the Servicer and the Owner have caused
their names to be signed hereto by their respective officers thereunto duly
authorized as of the date first above written.
XXXXXX BROTHERS BANK, FSB
(Owner)
By: _____________________________________
Name: Xxxx X. Xxxxxx
Title: Vice President
Xxxxx Fargo Home Mortgage, Inc.
(Servicer)
By: _____________________________________
Name:________________________________
Title:_______________________________
EXHIBIT A
FORM OF SECURITIZATION SERVICING AGREEMENT
A-1
EXHIBIT B
CUSTODIAL ACCOUNT CERTIFICATION
_____________ __, ____
Xxxxx Fargo Home Mortgage, Inc. hereby certifies that it has
established the account described below as a Custodial Account pursuant to
Section 3.03 of the Flow Subservicing Agreement, dated as of October 1, 2003,
Residential Adjustable and Fixed Rate Mortgage Loans, Group No. 2003-Subflow.
Title of Account: "Xxxxx Fargo Home Mortgage, Inc. in trust for Xxxxxx Brothers
Bank, FSB, as owner of Mortgage Loans, Group No.
2003-Subflow."
Account Number: ______________________.
Address of office or branch of _________________________________________
the Servicer at which account
is maintained: _________________________________________
Xxxxx Fargo Home Mortgage, Inc.
Servicer
By:______________________________________
Name:____________________________________
Title:___________________________________
Date:____________________________________
B-1
EXHIBIT C
ESCROW ACCOUNT CERTIFICATION
_____________ ___, ____
Xxxxx Fargo Home Mortgage, Inc. hereby certifies that it has
established the account described below as an Escrow Account pursuant to Section
3.05 of the Flow Subservicing Agreement, dated as of October 1, 2003,
Residential Adjustable and Fixed Rate Mortgage Loans, Group No. 2003-Subflow.
Title of Account: "Xxxxx Fargo Home Mortgage, Inc. in trust for Xxxxxx Brothers
Bank, FSB, as owner of Mortgage Loans, Group No.
2003-Subflow."
Account Number: ______________________.
Address of office or branch of _________________________________________
the Servicer at which account
is maintained: _________________________________________
Xxxxx Fargo Home Mortgage, Inc.
Servicer
By:______________________________________
Name:____________________________________
Title:___________________________________
Date:____________________________________
C-1
EXHIBIT D
FORM OF OFFICER'S CERTIFICATE
I, ____________________, hereby certify that I am the duly
elected [Vice] President of Xxxxx Fargo Home Mortgage, Inc. a banking
corporation organized under the laws of the State of _______, (the "Servicer")
and further as follows:
1. Attached hereto as Exhibit 1 is a true, correct and
complete copy of the charter of the Servicer which is in full force and effect
on the date hereof and which has been in effect without amendment, waiver,
rescission or modification.
2. Attached hereto as Exhibit 2 is a true, correct and
complete copy of the bylaws of the Servicer which are in effect on the date
hereof and which have been in effect without amendment, waiver, rescission or
modification.
3. Attached hereto as Exhibit 3 is an original certificate of
good standing of the Servicer, issued within ten days of the date hereof, and no
event has occurred since the date thereof which would impair such standing.
4. Attached hereto as Exhibit 4 is a true, correct and
complete copy of the corporate resolutions of the Board of Directors of the
Servicer authorizing the Servicer to execute and deliver the Flow Subservicing
Agreement, dated as of October 1, 2003 (the "Agreement"), by and between the
Servicer and Xxxxxx Brothers Bank, FSB, (the "Owner"), and such resolutions are
in effect on the date hereof and have been in effect without amendment, waiver
rescission or modification.
5. To the best of my knowledge, 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 Servicer of or
compliance by the Servicer with the Agreement or the consummation of the
transactions contemplated by the Agreement; or (ii) any required consent,
approval, authorization or order has been obtained by the Servicer.
6. To the best of my knowledge, neither the consummation of
the transactions contemplated by, nor the fulfillment of the terms of the
Agreement, 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 Servicer, the terms of any indenture or other agreement or instrument to
which the Servicer is a party or by which it is bound or to which it is subject,
or any statute or order, rule, regulations, writ, injunction or decree of any
court, governmental authority or regulatory body to which the Servicer is
subject or by which it is bound.
7. To the best of my knowledge, there is no action, suit,
proceeding or investigation pending or threatened against the Servicer which, in
my judgment, 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 Servicer or in any material impairment of the right
D-1
or ability of the Servicer to carry on its business substantially as now
conducted or in any material liability on the part of the Servicer or which
would draw into question the validity of the Agreement or of any action taken or
to be taken in connection with the transactions contemplated hereby, or which
would be likely to impair materially the ability of the Servicer to perform
under the terms of the Agreement.
8. Each person listed on Exhibit 5 attached hereto who, as an
officer or representative of the Servicer, signed the Agreement and any other
document delivered prior hereto or on the date hereof in connection with the
Agreement, was, at the respective times of such signing and delivery, and is
now, a duly elected or appointed, qualified and acting officer or representative
of the Servicer, who holds the office set forth opposite his or her name on
Exhibit 5, and the signatures of such persons appearing on such documents are
their genuine signatures.
9. The Servicer is duly authorized to engage in the
transactions described and contemplated in the Agreement.
D-2
IN WITNESS WHEREOF, I have hereunto signed my name and affixed
the seal of the Servicer.
Dated:________________________________ By:___________________________________
Name:_________________________________
[Seal] Title: [Vice] President
I, ________________________, an [Assistant] Secretary of Xxxxx
Fargo Home Mortgage, Inc. hereby certify that ____________ is the duly elected,
qualified and acting [Vice] President of the Servicer and that the signature
appearing above is [her] [his] genuine signature.
IN WITNESS WHEREOF, I have hereunto signed my name.
Dated:________________________________ By:___________________________________
Name:_________________________________
Title: [Assistant] Secretary
D-3
EXHIBIT 5 to
Servicer's Officer's Certificate
Name Title Signature
---- ----- ---------
--------------------------------
--------------------------------
--------------------------------
--------------------------------
--------------------------------
--------------------------------
D-4
EXHIBIT E
FORM OF OPINION OF COUNSEL TO THE SERVICER
(date)
Xxxxxx Brothers Bank, FSB
000 Xxxxxxx Xxxxxx
0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
You have requested [our] [my] opinion, as [Assistant] General
Counsel to Xxxxx Fargo Home Mortgage, Inc. (the "Servicer"), with respect to
certain matters in connection with the servicing by the Servicer of the Mortgage
Loans pursuant to that certain Flow Subservicing Agreement, Group No.
2003-Subflow, by and between the Servicer and Xxxxxx Brothers Bank, FSB (the
"Owner"), dated as of October 1, 2003, (the "Servicing Agreement"). Capitalized
terms not otherwise defined herein have the meanings set forth in the Servicing
Agreement.
[We] [I] have examined the following documents:
1. the Servicing Agreement; and
2. such other documents, records and papers as [we] [I] have
deemed necessary and relevant as a basis for this opinion.
To the extent [we] [I] have deemed necessary and proper, [we]
[I] have relied upon the representations and warranties of the Servicer
contained in the Servicing Agreement. [We] [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 [our] [my] opinion that:
1. The Servicer is a duly organized, validly existing
corporation in good standing under the laws of the state of ______________ and
is qualified to service and administer the Mortgage Loans in the states where
the Mortgaged Properties are located.
2. The Servicer has the power to engage in the transactions
contemplated by the Servicing Agreement and all requisite power, authority and
legal right to execute and deliver the Servicing Agreement, and to perform and
observe the terms and conditions of such instruments.
3. The Servicing Agreement has been duly authorized, executed
and delivered by the Servicer and is a legal, valid and binding agreement
enforceable in accordance with its respective terms against the Servicer,
subject to bankruptcy laws and other similar laws of general application
affecting rights of creditors 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.
1
4. 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 Servicer of or compliance by the Servicer with the
Servicing Agreement, or the servicing of the Mortgage Loans or the consummation
of the transactions contemplated by the Servicing Agreement; or (ii) any
required consent, approval, authorization or order has been obtained by the
Servicer.
5. Neither the consummation of the transactions contemplated
by, nor the fulfillment of the terms of, the Servicing Agreement 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 Servicer, the
terms of any indenture or other agreement or instrument to which the Servicer 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 Servicer is subject or by
which it is bound.
6. There is no action, suit, proceeding or investigation
pending or, to the best of [our] [my] knowledge, threatened against the Servicer
which, in [our] [my] judgment, 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 Servicer or in any material impairment of
the right or ability of the Servicer to carry on its business substantially as
now conducted or in any material liability on the part of the Servicer or which
would draw into question the validity of the Servicing 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
Servicer to perform under the terms of the Servicing Agreement.
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 resell the Mortgage Loans may rely on this opinion as if
it were addressed to them as of its date, provided that the Servicer remains the
Servicer of the Mortgage Loans under the Servicing Agreement.
Very truly yours,
[Name]
[Assistant] General Counsel
2
EXHIBIT F
TRANSFER INSTRUCTIONS
GENERAL REQUIREMENTS
The Prior Servicer agrees to coordinate with the Servicer to effect an efficient
and orderly Servicing Transfer. Within five (5) days after the Transfer Date for
any Mortgage Loans, to the extent available on Prior Servicer's servicing
system, Prior Servicer shall deliver to Servicer with respect to such Mortgage
Loans all records, files and information required to complete the Servicing
Transfer. The Prior Servicer agrees to provide the Servicer with samples of all
data files and reports prior to the Transfer Date. Unless otherwise specified
all reports will be in an electronic format acceptable to the Servicer.
Unless directed otherwise, herein, all documents, records, files, notices and
other communications must be directed to:
America's Servicing Company
Attn: Xxxx Xxxxxxx X2509-02B
1 Home Xxxxxx
Xxx Xxxxxx, XX 00000-0000
DATA TRANSFER AND REPORTING REQUIREMENTS
Master record data as of the Transfer Date.
The Prior Servicer agrees to provide master record data in a file formats
compatible with the Servicer's servicing system in accordance with one of the
Options described in Attachment (1). The Prior Servicer agrees to support the
Servicer in data mapping and testing prior to the Transfer Date. The Prior
Servicer agrees to provide hard copy master file record information for selected
loans prior to and on the Transfer Date to facilitate a valid data transfer. The
Servicer shall provide the selected loan listing to the Prior Servicer.
The Prior Servicer shall credit all accrued interest due on escrow to the
individual accounts prior to the Transfer Date and provide confirmation of such
to the Servicer.
Reports
1. A trial balance report as of the Transfer Date
2. A data conversion balancing report including loan level detail as
specified by the Servicer in Attachment (2)
3. All system code descriptions required to analyze and load the loan data
4. A hard copy and electronic listing of all loans in Bankruptcy. This
report should identify the chapter type
5. A report of all available transaction history
1
6. A listing of loans, as of the Transfer Date, with an insurance expiration
date within 30 days after the Transfer Date
7. A report listing all loans with hazard insurance including payee, due
date, payment term, payment amount, payment type (escrow vs non-escrow)
8. A report showing the next tax due date, as of the Transfer Date, showing
the next tax due date, economic loss date and unpaid tax and insurance
items
9. A report listing all loans with real estate taxes, including payee, due
dates, payment term, payment amount, payment type (escrow vs non-escrow)
10. A report of escrowed loans not analyzed
11. A report of any loans with an escrow disbursement stop including an
explanation for the stop and the stop expiration date
12. A report listing all loans with private mortgage insurance including
insurance company, certificate number, payment amount, payment term, due
date, payment status (borrower paid vs lender paid)
13. A report listing all loans with credit life insurance or other optional
products, including insuring company, plan ID, certificate number, due
date, loan due date, payment amount
14. A report showing all loans with a Force Placed insurance policy in
effect; such report shall indicate if a binder or policy is in effect
15. A listing of any Mortgage Loans with damaged properties, including date
of last property inspection, maintenance results, and BPO or appraisal
results
16. A copy of the escrow analysis history
17. A report reflecting all Mortgage Loans for which relief has been
requested under the Soldier's and Sailor's Civil Relief Act of 1940, as
amended; including the Prior Servicer's loan number, mortgagor name, due
date, unpaid principal balance, effective date of the subsidy, active
duty start date and active duty termination date
18. Collection activity as noted on the Prior Servicer's servicing system for
the last twelve (12) months
19. A status report of all Mortgage Loans in bankruptcy, including bankruptcy
chapter, bankruptcy file date, bankruptcy case number, state and district
where files, bankruptcy attorney or firm assigned, foreclosure attorney
or firm assigned if different, identify any suspended foreclosure,
identify any Chapter 7 loan that has been discharged
20. For loans with active Chapter 13 bankruptcies provide a complete payment
history for both pre- and post-petition payments, including the original
confirmed claim amount and a breakdown of all amounts included in the
claim
21. A report of all ARM Mortgage Loans, including the Prior Servicer loan
number, due date, current interest rate, current P&I, Unpaid Principal
Balance and ARM plan identifier
22. A report of all ARM Mortgage Loans with pending interest rate and or P&I
change dates and any ARM Mortgage Loans with pending effective interest
rate or payment changes dates equal to or within ninety (90) days of the
Transfer date, including the Prior Servicer loan number, due date,
current interest rate, current P&I, Unpaid Principal Balance, pending
interest rate, pending P&I, pending effective date and ARM plan
identifier
23. A report of all Mortgage Loans with a buydown subsidy, including the
Prior Servicer loan number, due date, total monthly payment, monthly
buydown subsidy amount, remaining buydown balance, schedule of future
monthly buydown payments and effective dates of buydown payment changes
2
24. A report of all balloon payment loans including reset option indicator,
current interest rate, due date, maturity date, unpaid principal balance
25. A report of all balloon loans where a reset option is in process
Escrow Funds
Tax and Insurance (T&I) funds must be wire transferred to the Servicer within 5
business days of the Transfer Date. Wiring instructions are:
Bank Name: _____________________________
ABA# __To be provided prior to Transfer Date
ACCT: _________________________________
Acct: ___________________________________
INVESTOR REPORTING
The Prior Servicer agrees to schedule an investor cutoff (including all monetary
activity) as of the Business Day immediately preceding the Transfer Date so that
all standard transfer and remittance reports are produced. Prior Servicer is
responsible for any required reporting and remitting, as is normally completed,
on all collections prior to the Transfer Date.
If the current remittance method id other than actual/actual, the Prior Servicer
will calculate and provide an electronic loan level Test of Expected P&I to the
Servicer at least three (3) business days before funds settlement. Supporting
electronic loan level documentation must accompany the Test calculation. The
Servicer will review the calculation and upon agreement, notify the Prior
Servicer of the account to wire P&I funds to. The funds should be wired no later
than the 15th of each month.
Additional Cutoff and Remittance Reports. The Prior Servicer agrees to provide
all cutoff and remittance reports in an electronic format acceptable to the
Servicer within the timeframes specified, if requested by the Servicer. This
includes, but is not limited to a trial balance, collection report, and
reconciliation of P&I and T&I accounts.
Prior Servicer must provide a list of all outstanding T&I disbursement checks
related to the loans transferred and will provide a summary of their standard
timing to resolve stale checks, including procedures for how stale checks for
this portfolio are to be handled. The Servicer will provide a contact who will
assist with copies of cancelled checks.
ESCROW REQUIREMENTS
With respect to the Mortgage Loans the Prior Servicer shall pay all hazard and
flood insurance premiums which become due prior to and within thirty (30) days
following the Transfer Date, and all real estate taxes for which the economic
loss date is prior to or within thirty (30) days following the Transfer Date,
assuming the bills are available for payment, and shall indemnify the Servicer
against any tax penalties incurred prior to the Transfer Date or uninsured
losses due to the non-payment of premiums or policy cancellation.
3
The Participating Servicer shall cooperate with the Servicer to assign and or
transfer real estate tax service contracts and flood insurance tracking
contracts to the Servicer at the Servicer's direction.
The Prior Servicer shall mail short-year escrow analysis histories to all
Mortgagors within sixty (60) days after the Transfer Date.
HAZARD INSURANCE
As of the Transfer Date the Prior Servicer shall cancel any Force Placed
coverage in effect.
The Participating Servicer shall provide a properly documented file for each
Mortgage Loan with an insurance loss draft, including the date, cause, and
amount of the loss, amount of insurance proceeds received to date, conversations
with or information received from contractors, correspondence to or from
insurance companies and or Mortgagor, status of the repairs, inspection reports,
a report of expected future proceeds, and a detailed listing of all funds
received and disbursed.
With respect to the Mortgage Loans, the Prior Servicer shall transmit to the
applicable insurance companies or agents, notification of the transfer of the
servicing to the Servicer and instructions to deliver all notices and insurance
statements, as the case may be, to the Servicer from and after the Transfer
Date. Such notices shall specify the new mortgagee clause. The Prior Servicer
shall provide the Servicer with copies of the all such notices or shall provide
an Officer's Certification that such notices were produced and transmitted as
specified herein.
The new mortgagee clause applicable to hazard, flood, and miscellaneous (i.e.,
earthquake, mine, etc.) will read as follows:
America's Servicing Company
Its successors and or assigns as their interest may appear
X.X. Xxx 0000
Xxxxxxxxxxx, XX 00000-0000
REAL ESTATE TAXES
The Prior Servicer shall provide to the Servicer all due and unpaid tax bills in
their possession as of the Transfer Date and shall forward all stub bills in its
possession.
If life-of-loan tax contracts exist on the Mortgage Loans the Prior Servicer
shall aid the Servicer in the transfer of the life-of-loan tax contracts.
4
Notice to Taxing Authorities
In connection with the transfer of the servicing for any Mortgage Loans, Prior
Servicer shall provide written notice to tax xxxx services or tax authorities
(as applicable) of the assignment of the Mortgage Loans. Copies of all such
notices shall be provided to Servicer with five (5) days of the Transfer Date.
America's Servicing Company
X.X. Xxx 000
Xxxxxxxxx, XX 00000
PRIVATE MORTGAGE INSURANCE
With respect to the Mortgage Loans, the Prior Servicer shall transmit to the
applicable private mortgage insurance companies, notification of the transfer of
the servicing to the Servicer and instructions to deliver all notices and
insurance statements, as the case may be, to the Servicer from and after the
Transfer Date.
America's Servicing Company
0000 Xxx Xxxxxxx Xxx X0000-000
Xxxxxxxxx, XX 00000
MORTGAGOR NOTIFICATION
The Prior Servicer shall provide the Servicer with a copy of the form of such
notice for review prior to mailing. The notification to the Mortgagor must
indicate that all future correspondence and payments must be sent to:
Correspondence Address Payment Address
---------------------- ---------------
America's Servicing Company America's Servicing Company
Customer Service X3902-01H P.O. Box 4392
0000 Xxx Xxxxxxx Xxx Xxxxxx, XX 00000-0000
Xxxxxxxxx, XX 00000
Customer Service Phone Number: (000) 000-0000
Customer Service Hours of Operation: Monday through Friday 9:00 a.m.
to 6:00 p.m. EST
In the event a "goodbye" letter is sent to a Mortgagor and the servicing for the
related Mortgage Loan is not transferred to the Servicer, then the Prior
Servicer shall send (on behalf of itself and Servicer) a second letter to such
Mortgagor advising such Mortgagor that the servicing transfer will not take
place.
RECORDS AND FILES
As of the Transfer Date the Prior Servicer shall provide any Mortgagor financial
information obtained within the 45 days prior to the transfer date.
The Prior Servicer shall provide copies of all written correspondence regarding
delinquencies.
5
File Delivery
The Prior Servicer shall deliver the servicing files to the Servicer within
three (3) days of the Transfer Date. Arrangements shall be made for an inside
delivery of the servicing files. The Prior Servicer agrees to coordinate the
file delivery with the Servicer. The Prior Servicer agrees to the best of its
ability remove any files for loans that pay off prior to the Transfer Date.
Packaging Instructions for Files
The files shall be placed in a box in Prior Servicer's loan number order.
Transmittals shall be attached to each box listing contents by loan number. Two
master transmittals shall be forwarded with each shipment
File Delivery Address:
Business Archives
Attn: Xxxxxx
0000-X Xxxxxxx Xxxxxxx Xxxx
Xxxxxxxxx, XX 00000
(000) 000-0000
CUSTOMER SERVICE
Credit Life Insurance and Other Optional Products
The Prior Servicer shall cooperate with the direction of the Servicer as to the
transfer of any credit life, accident or disability insurance or other such
optional products. The Prior Servicer must determine if any optional products
are transferable to the Servicer. If the products are not transferable the Prior
Servicer must provide the appropriate written instructions to the Mortgagor
related to the continuation of any optional products prior to the Transfer Date.
The Prior Servicer will remove the premium amount(s) from the Mortgagor's total
monthly payment and disburse any and all premiums to the product vendor or the
Mortgagor prior to the Transfer Date.
IRS Reporting
Prior Servicer shall prepare, report to the Internal Revenue Service and provide
to borrowers, all in accordance with applicable law, rules and regulations, any
and all tax information required to be provided with respect to the Mortgage
Loans for that portion of the calendar year prior to the Transfer Date.
The Prior Servicer shall provide to the Servicer confirmation that Social
Security Number validation has been completed on the Mortgage Loans and, when
and by whom.
6
Lien Release
Prior Servicer shall send for recordation all Mortgage Loan satisfactions for
all Mortgage Loans that pay in full prior to the Transfer Date.
Litigation
In the event the Prior Servicer receives notification of Litigation being issued
in conjunction with any Mortgage Loan the Prior Servicer will give written
notification to the Servicer within five (5) business days. In the event time
does not permit prior approval by the Servicer, Prior Servicer will retain
counsel to represent the Servicer's interests and obtain said approval as soon
thereafter as possible. The costs incurred in providing legal representation in
conjunction with any such Mortgage Loan serviced hereunder will be borne by the
Servicer.
On the Transfer Date the Prior Servicer shall provide the Servicer with a
listing of any loans on which a partial release is pending, including an
explanation for each case and all documentation received as of the Transfer
Date.
Name Changes
The Prior Servicer shall provide a file for each pending legal name change along
with the appropriate documentation (i.e., quit claims, death certificates,
divorce decrees, etc.) to the Servicer at the time of the Servicing Transfer.
LOANS IN LOSS MITIGATION
For any Mortgage Loan in loss mitigation the Prior Servicer shall provide a
status report in accordance with the Reports section above. Hard copy screen
prints may be substituted for the electronic reports, bust must contain the
required information. The Prior Servicer shall make available any written
procedures for loss mitigation alternatives.
The Prior Servicer must provide all copies of financial information provided by
the Mortgagor to make financial decisions on the loss mitigation alternatives.
For Short Sales and Deed's in Lieu the Prior Servicer shall provide a copy of
the appraisal and or title search performed for the property.
The Prior Servicer must provide any written agreements entered into with the
Mortgagor including any modification documents, repayment plans, stipulated
repayment plans, or any other document that constitutes approval of the loss
mitigation workout or alternative. Information related to loss mitigation
efforts must be sent to:
America's Servicing Company
0000 Xxx Xxxxxxx Xxx X0000-00X
Xxxxxxxxx, XX 00000
7
LOANS IN BANKRUPTCY
For any Mortgage Loan in bankruptcy the Prior Servicer shall provide a status
report in accordance with the Reports section above. Hard copy screen prints may
be substituted for the electronic reports, but must contain the required
information. The Prior Servicer shall complete the Bankruptcy Worksheet,
Attachment (3) for each loan in bankruptcy.
Notice to Bankruptcy Trustees
In connection with the transfer of the servicing for any Mortgage Loans, Prior
Servicer shall provide written notice, in accordance with applicable court
procedures, to bankruptcy trustees with respect to the assignment of any
Bankruptcy Loans. Such notices shall be mailed to the bankruptcy trustees prior
to the respective Transfer Date. Copies of all such notices shall be provided to
Servicer within five (5) days of the Transfer Date.
America's Servicing Company
Attn: Bankruptcy Department
0000 Xxxxxxxxx Xxxxxxxxx
Xxxx Xxxx, XX 00000
PROCEDURES AFTER TRANSFER
Payoff Funds Received After Transfer
The Prior Servicer shall wire transfer any payoff funds that are received by the
Prior Servicer the same day of receipt. Payoff wiring instructions:
Bank: M&T Bank, Baltimore, MD
RT# 000000000
ACCT# 19119520
For further credit to Customer's Loan Acct# ______________
The Prior Servicer shall reimburse the Servicer for additional per diem interest
on any payoff check that is not received by the Servicer on the day of its
receipt by the Prior Servicer. The Prior Servicer will forward the Servicer a
check in the appropriate amount upon receipt of a properly documented request.
Payoff mailing instructions:
America's Servicing Company
Cash Management Department
0000 Xxx Xxxxxxx Xxx X0000-00X
Xxxxxxxxx, XX 00000
Mortgage Payments Received After Transfer
Any mortgage payments received by Prior Servicer after the Transfer Date must be
forwarded to Servicer on a daily basis and be clearly identified with the Prior
Servicer's loan number in upper right corner of check. All checks should be
date-stamped and endorsed as follows:
8
Pay to the order of America's Servicing Company without recourse.
By
(Name of Signer) (Title of Signer) (Name of Company)
Prior Servicer agrees to forward all payments received after the Transfer Date
via overnight delivery on a daily basis for a period of sixty (60) days.
Forwarded to Servicer's Cash Management Department via overnight delivery.
America's Servicing Company
Cash Management Department
0000 Xxx Xxxxxxx Xxx X0000-00X
Xxxxxxxxx, XX 00000
NSF Checks After Transfer
All checks related to NSF's, NSF on draft accounts, stop payment, etc. which
were not reversed by Prior Servicer prior to cut-off shall be handled as
follows:
1. Clearly identified COPY (front and back) of item(s) will be forwarded to
Servicer.
2. Upon receipt, Servicer will reverse funds from appropriate account(s).
3. After reversal, Servicer will forward funds to Prior Servicer, within
five business days from the date received from the Prior Servicer.
4. Upon receipt of funds, Prior Servicer will forward the original item(s)
to Servicer.
Other Checks Received After Transfer
The following procedures shall apply to checks (other than payments, NSF's or
stop payments) received by the Prior Servicer after the Transfer Date:
1. Checks shall be clearly identified with Prior Servicer's loan number in
the upper right-hand corner.
2. Checks that include funds for two or more accounts should be accompanied
by a detailed listing providing Prior Servicer's loan number and amount due
each account.
3. Checks should be properly endorsed.
4. The purpose of check shall be identified and grouped accordingly (i.e.,
tax refund, loss draft, payment of special insurance, principal payment,
etc.)
9
5. Checks shall be forwarded to Servicer Cash Management Department via
overnight delivery at the above address.
Correspondence Received After Transfer
All correspondence, insurance renewals, cancellation notices, customer
inquiries, etc., received by Prior Servicer after the Transfer Date shall be
identified with the Prior Servicer's loan number and forwarded via overnight
delivery on a daily basis to the Servicer:
America's Servicing Company
Customer Service Department
0000 Xxx Xxxxxxx Xxx X0000-00X
Xxxxxxxxx, XX 00000
INVESTOR REPURCHASE REQUIREMENTS
Any Investor approved repurchase requests must be submitted to the Servicer
within five days of receipt. The request should be forwarded to:
America's Servicing Company
Sales and Acquisitions MAC 2509-02B
Attn: Xxxxxxx Xxxxxx
1 Home Xxxxxx
Xxx Xxxxxx, XX 00000-0000
The following information must accompany the request:
1. Repurchaser's loan number, Servicer loan number, Mortgagor's name, and
property address;
2. Repurchaser's approval to repurchase the loan; and
3. A contact person's name, telephone number, and address for further
communication regarding the repurchase proceedings.
Upon receipt, the Servicer will generate a repurchase invoice and forward to the
designated contact. This invoice will include remittance instructions.
The Servicer and the Repurchaser must coordinate the effective date of Transfer
to ensure compliance with the Xxxxxxxx-Xxxxxxxx Act. The Servicer will notify
the customer of the Transfer no later than 15 days prior to the first payment
due date to the Repurchaser.
Upon receipt of the repurchase funds, the Servicer will forward all servicing
documentation and legal documents pertaining to such loan.
10
ATTACHMENT (1) FILE SPECIFICATIONS
Option to be determined by the Servicer based upon expected loan volumes and
system compatibility.
OPTION 1:
May be a Delimited or Fixed Text file, Spreadsheet file, DBF file or Database or
SAV file. If auxiliary data files are provided, each file must contain the Loan
Number as the key field.
Electronic Extract with file specifications in a flat file and produced on one
of the following:
3490 Tape Cartridge
3480 Tape Cartridge
3590 Tape Cartridge
6250 Reel
1600 Reel
Encrypted or password protected attachments to e-mail are acceptable if size
permits. Maximum size is 5MB.
OPTION 2:
If a non-Fidelity client the following files on tape are required:
Data layout on tape, diskette or via e-mail (copybook) Master loan file
and associated trailer or auxiliary files ARM and drafting information
(if applicable) Insurance and tax information
Acceptable tape formats:
18 or 36 Track Cartridges
1600 or 6250 BPI Reels
3490 Compressed
3480 or 3390 Cartridge Tapes
OPTION 3:
If the Prior Servicer is an Fidelity licensed client the following tapes are
required:
FM PCR Files On-line Files History Files
------------ ------------- -------------
PCRSAVE OLLW Current History File
SUSPENSE OLDE Xxxx File History 01
UTLUNL Forefile History 02
MASUNL TMAN
HISUNL OLCS (Recorder)
RAWSAVE TAXdel
11
Prior Servicer shall complete an Fidelity AUTHORIZATION AND SELECTION CRITERIA
REQUEST form.
OPTION 4:
If the Prior Servicer is an Fidelity remote client the Prior Servicer shall
complete an Fidelity AUTHORIZATION AND SELECTION CRITERIA REQUEST form.
ATTACHMENT (2) DATA CONVERSION BALANCING FILE
Required data: File to be provided in an electronic spreadsheet format
FHA Case Number
Prior Servicer loan number
Mortgagor name
Unpaid principal balance
Escrow balance
Escrow advance balance
P&I payment
Escrow payment
A&H payment amount
Credit life payment amount
Total monthly payment
Next due date
Interest rate
Interest on escrow accrual
Recoverable corporate advance amount
Unapplied/suspense funds balance
Buydown subsidy balance (replacement reserve)
Pending escrow payment
Pending escrow payment effective date
12
ATTACHMENT (3) BANKRUPTCY STATUS REPORT
PRIOR SERVICER'S ATTORNEY:
Date Bankruptcy Filed:_________________ Name:__________________________________
Chapter:_______________________________ Address:_______________________________
Case Number:___________________________ _____________________________________
Post-Petition Due Date:________________ Phone Number:__________________________
MORTGAGOR'S ATTORNEY:
Contractual Due Date
at Time of Filing:_____________________ Name:__________________________________
Date File Referred to Attorney:________ Address:_______________________________
Bankruptcy State/District: ____________ Phone Number:___________________
PRIOR SERVICER'S ATTORNEY:
Date Bankruptcy Filed:_________________ Name:__________________________________
Chapter:_______________________________ Address:_______________________________
Case Number:___________________________ _____________________________________
Post-Petition Due Date:________________ Phone Number:__________________________
MORTGAGOR'S ATTORNEY:
Contractual Due Date
at Time of Filing:_____________________ Name:__________________________________
Date File Referred to Attorney:________ Address:_______________________________
Bankruptcy State/District: ____________ Phone Number:___________________
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
NOTE: PLEASE ATTACH MORTGAGE, NOTE, AND TITLE POLICY (ORIGINAL OR COPIES) TO
THE BACK OF THIS PAGE
* PLEASE ATTACH A BREAKDOWN OF TRUSTEE MONEY RECEIVED.
** PLEASE ATTACH A BREAKDOWN OF ALL PAYMENTS RECEIVED FROM THE DEBTOR AND
WHICH POST-PETITION PAYMENT THE MONEY WAS APPLIED TO.
13
