EXHIBIT 10.33
SUBSERVICING AGREEMENT
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This SUBSERVICING AGREEMENT ("this SA") is made as of March 2, 1995,
between:
PAN AMERICAN, FSB BANK, whose principal office is located at 0000 Xxxxx Xx
Xxxxxx Xxxx, 0xx Xxxxx, Xxx Xxxxx, Xxxxxxxxxx 00000 ("Lender"); and
DOVENMUEHLE MORTGAGE, INC. a Delaware corporation, whose address is 0000
Xxxxxxxxx Xxxx, Xxxxx 000 Xxxx, Xxxxxxxxxx, Xxxxxxxx 00000-0000 ("Subservicer").
RECITALS:
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A. Subservicer is engaged in the business of servicing and subservicing
real estate mortgage loans evidenced by promissory notes and secured by
mortgages, deeds of trust, trust deeds, security deeds, deeds to secure debt and
like security instruments.
B. Subservicer has the capacity to service or subservice for Lender the
residential mortgage loans or pools of residential mortgage loans identified on
SCHEDULE I attached hereto and made a part hereof by this reference (which,
together with any mortgage loans or pools of mortgage loans hereafter added with
the consent of the Parties, are collectively referred to herein as the "Mortgage
Loans"). In each instance, Lender is or will be either (1) the owner of the
related Mortgage Loans to be serviced by Subservicer hereunder or (2) the owner
of the right to service the related Mortgage Loans to be subserviced by
Subservicer hereunder.
C. Lender desires that Subservicer service or subservice the Mortgage
Loans and Subservicer is agreeable to doing so, all on the terms and conditions
hereinafter provided. For ease of reference and to avoid repetition, both the
servicing of Mortgage Loans owned by Lender and the subservicing of Mortgage
Loans for which Lender is the owner of the Servicing Rights are referred to
herein as "subservicing" by the Subservicer.
NOW, THEREFORE, in consideration of the Recitals and of the mutual and
several agreements of Lender and the Subservicer (collectively, the "Parties")
herein, and intending to be legally bound hereby, the Parties hereby agree as
follows with respect to the subservicing of each Mortgage Loan or group of
Mortgage Loans now or hereafter covered and governed by this SA.
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ARTICLE I - DEFINITIONS
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1.1 For purposes of this SA, each of the following terms shall have the meaning
specified with respect thereto.
"Advances" is defined in Section 3.5 below.
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"Agencies" means FHLMC, FNMA and GNMA, as the context may indicate, each an
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"Agency."
"Ancillary Income" means all fees, administrative fees and other income
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collected by Subservicer from Mortgagors or in respect of Optional Insurance,
including without limitation late charges, bad check charges, assumption fees,
fees for releases of liability, partial release fees, release deed and
satisfaction fees and any other incidental fees permissible under Applicable
Requirements, but does not include: (i) Servicing Fees; (ii) reimbursement of
Advances or certain expenses as herein provided; (iii) the fees and charges
described in Sections I.A, I.B., I.D., I.E., I.F., I.H., II and III of SCHEDULE
II attached hereto and made a part hereof by this reference; nor (iv) collection
of T&I and P&I payments from Mortgage Loan Mortgagors.
"Applicable Requirements" means and includes, as of the time of reference,
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all of the following: (i) all Mortgage Loan-related contractual obligations of
any Prior Servicer, of the Lender and of the Subservicer, as the case may be,
including without limitation those contractual obligations of Prior Servicer and
the Lender or the Subservicer contained in this SA or in the Mortgage Loan
Documents for which the Lender or Subservicer is responsible or for which any
Prior Servicer was at any time responsible; (ii) all applicable Mortgage Loan-
related federal, state and local legal and regulatory requirements (including
statutes, rules, regulations and ordinances) binding upon Lender or the
Subservicer or any Prior Servicer; (iii) all other applicable Mortgage Loan-
related requirements and guidelines of (1) each governmental agency, board,
commission, instrumentality and other governmental body or officer having
jurisdiction [including without limitation those of FHA, FHLMC, FNMA, GNMA, HUD
and VA and their respective Guides]; and (2) the PMI Companies (if any),
including without limitation their respective Guides; and (iv) all other
applicable judicial and administrative judgments, orders, stipulations, awards,
writs and injunctions.
"ARM" means an adjustable-rate Mortgage Loan which allows the holder of the
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promissory note secured thereby to periodically adjust the interest rate on the
basis of the movement in a specified index.
"Balloon" refers to a Mortgage Loan the principal of which will not fully
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amortize before the scheduled maturity of that Mortgage Loan.
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"Business Day" means any day other than (i) a Saturday or Sunday, or (ii) a
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day on which insured depository institutions in Illinois or California are
authorized or obligated by law or executive order to be closed.
"C.P.I." means Computer Power, Inc., the computer service bureau which
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provides Subservicer's C.P.I. System.
"C.P.I. System" means the Subservicer's automated loan servicing system
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provided by C.P.I.
"C.P.I." is defined in SCHEDULE II.
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"Escrow Accounts" means all funds and accounts at the time of reference
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held under the related Mortgage Loans by or for the Lender on behalf of the
Mortgagors; Investors or others, including but not limited to: (i) Mortgage Loan
trust funds and impound accounts maintained or controlled by or for the Lender
for the purpose of paying, when due, Mortgage Loan related real estate taxes and
special assessments, Hazard Insurance premiums, special hazard insurance
premiums, mortgage insurance premiums and ground rents; (ii) P&I collections
(including payoff amounts) not yet remitted to the appropriate Investors; (iii)
undisbursed loss draft proceeds arising from insured losses to Mortgage Loan
collateral, Optional Insurance premiums, buydown funds and other unapplied
payments; and (iv) all other Mortgage Loan funds held by or for the Lender in
connection with the Mortgage Loans which do not constitute corporate funds of
the Lender.
"FDIC" means Federal Deposit Insurance Corporation and any successor
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corporation.
"FHLMC" or "Xxxxxxx Mac" means the Federal Home Loan Mortgage Corporation
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and any successor corporation.
"FHA"means the Federal Housing Administration within HUD and any successor
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agency or department.
"FNMA" or "Xxxxxx Mae" means the Federal National Mortgage Association and
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any successor corporation.
"GNMA" or "Xxxxxx Xxx" means the Government National Mortgage Association
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and any successor corporation.
"Guides" means and includes, as of the time of reference, all Mortgage
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Loan-related published guidance of FHA, FHLMC, FNMA, GNMA, HUD, VA and any PMI
Companies, including without limitation mortgage letters, announcements,
circulars, handbooks and
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manuals which establish requirements or procedures applicable to the
origination, administration, pooling, servicing or subservicing of the Mortgage
Loans or claims against FHA, VA or a PMI Company in connection therewith.
"HUD" means the U.S. Department of Housing and Urban Development and any
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successor agency or department.
"Investor" means, as of the time of reference: (i) FNMA with respect to
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Mortgage Loans owned or securitized by FNMA; (ii) FHLMC with respect to Mortgage
Loans owned or securitized by FHLMC; (iii) with respect to Mortgage Loans
collateralizing securities guaranteed by GNMA, either the Party having Issuer
Responsibility or the holders of related GNMA-guaranteed certificates or GNMA,
as the context shall indicate; (iv) Lender, with respect to portfolio Mortgage
Loans owned by Lender and serviced by Subservicer hereunder, other than an owner
and holder referred to in the preceding clauses (i), (ii), (iii) or (iv).
"Lender" means the Party identified as such at the top of Page 1 of this
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SA.
"Mortgage," "Mortgages" and "Mortgage Loans" refer to fixed-rate or
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adjustable-rate mortgage loans and the security deeds, trust deeds, deeds of
trust and other documents securing those fixed-rate or adjustable-rate loans
which comprise the residential mortgage loans or pools of residential mortgage
loans identified on SCHEDULE I, together with any such pools or loans hereafter
subserviced hereunder by mutual agreement of Lender and Subservicer.
"Mortgaged Premises" is a reference to the real estate encumbered by a
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Mortgage to secure a Mortgage Loan.
"Mortgagor" means the one or more mortgagors, trustors of trust deeds and
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deeds of trust, the grantors of any Mortgages securing a Mortgage Loan and the
owners of the Mortgaged Premises at the time of reference.
"Optional Insurance" means Mortgage/credit life insurance, accidental death
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insurance, disability insurance, unemployment insurance or any similar optional
insurance covering a Mortgagor for which premiums are collected by Subservicer.
"Parties" means the Lender and the Subservicer, each a "Party."
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"Person" means and includes a human individual, partnership (general or
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limited), corporation, trust, joint venture, joint stock company, association,
unincorporated organization, government or agency or political subdivision
thereof, or other entity.
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"P&I" means principal and interest.
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"PMI" means private mortgage insurance.
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"PMI Companies" is a generic reference to the insurance companies offering
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PMI.
"Prime Rate" means the fluctuating prime rate published each Business Day
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under the "MONEY RATES" column in The Wall Street Journal.
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"Prior Servicers" is a collective reference to all individuals and entities
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(except Subservicer) who at any time originated, serviced or subserviced any of
the Mortgage Loans.
"Servicing Rights" means the rights and responsibilities with respect to
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servicing and supervising the Mortgage Loans and the associated Escrow Accounts
and Mortgage Loan Files.
"Subservicer" means the Party identified as such at the top of Page 1 of
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this SA.
"T&I" means taxes and insurance.
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"Transfer Date" is defined in Section 6.3.
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"VA" means the U.S. Department of Veterans Affairs and successor agency or
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department.
ARTICLE II - AGREEMENTS OF SUBSERVICER
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2.1 In General.
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(a) The foregoing Recitals are incorporated herein an made a part hereof as
though restated at length at this point. Subservicer hereby agrees to
subservice the Mortgage Loans pursuant and subject to the terms of this SA.
(b) If any Investor requires consolidated reporting and remittances, then
Subservicer shall have no duty to report and remit to that Investor on behalf of
the Lender unless Subservicer subservices Lender's entire portfolio of mortgage
loans owned and securitized by that Investor.
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2.2 Compliance.
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(a) Subservicer will comply with, and Subservicer will endeavor to cause
each Mortgagor to comply with, all applicable state and federal rules and
regulations and requirements of PMI Companies, including those requiring the
giving of notices.
(b) Where applicable, Subservicer will comply with the National Housing
Act, as amended, and with the Servicemen's Readjustment Act of 1944, as amended,
and with all rules and regulations issued under each of those statues, and with
requirements of PMI Companies, including requirements concerning the giving of
notices and submitting of claims required to be given or submitted to FHA, VA or
to PMI Companies, to the end that the full benefit of any applicable FHA
insurance, the guaranty of the United States of America, or PMI will inure to
the benefit of Lender and Investors as their interests may appear. Subservicer
will forward copies of all such notices or claims to Investor if requested in
writing by Investor.
2.3 Duties of Subservicer with respect to Mortgage Loans. Until the P&I of
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each Mortgage Loan is paid in full, unless sooner terminated pursuant to the
terms hereof, but subject always to Applicable Requirements and Lender's
performance of its obligations under Section 3.5 below, Subservicer shall:
(a) Collect applicable payments of principal, interest and applicable
deposits for taxes, assessments and other public charges that are generally
impounded, hazard insurance premiums, FHA insurance or PMI premiums, and all
other items, as they become due;
(b) Accept payments of P&I and Escrow Account deposits only in accordance
with the Mortgage Loan Documents. Deficiencies in or excess in payments or
deposits shall be accepted and applied, or accepted and unapplied, or rejected
in accordance with the requirements of HUD and VA with respect to FHA and VA
Mortgages respectively, and in accordance with the provisions of FNMA, FHLMC and
other conventional Mortgage Loan instruments with respect to conventional
Mortgage Loans;
(c) Apply all installments and Escrow Account deposits collected by it from
the Mortgagor, and maintain permanent mortgage account records which shall
accurately reflect (and be capable of generating a paper "hard copy"): (i) at
any time in chronological order the date, amount, distribution, installment due
date and other transactions affecting the amounts due from or to the Mortgagor;
and (ii) the latest outstanding balances of principal, Escrow Account deposits,
advances and unapplied payments;
(d) Pending disbursements, segregate and hold Escrow Accounts in an
institution designated by Lender whose deposits are insured by the FDIC, meeting
the requirements of
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FHLMC, FNMA or GNMA, as appropriate, in such manner as to show the custodial
nature thereof, and so that the Investor, and each separate Mortgagor whose
funds have been contributed to such account or accounts will be individually
protected, to the extent permitted by law, under the rules of FDIC. To the
extent permitted by Applicable Requirements, Lender may designate itself as the
depository institution for such Escrow Accounts. Subservicer's records shall
show the respective interest of the Investor and each Mortgager in all such
Escrow Accounts. All funds collected for P&I shall be held by and carried in
records of the Subservicer "as trustee" and the Lender "as trustee" for the
Investor, and shall be established in such a manner as to comply with all
applicable rules and regulations of any governmental agency insuring or
guaranteeing the Mortgage Loan. Subservicer shall:
(i) deposit funds into Escrow Accounts within two (2) Business Days
after Subservicer's receipt of related funds, it being understood and agreed
that:
(1) all transfers to and from Escrow Accounts will be
accomplished through ACH or Fedwire transfers;
(2) Lender will establish and maintain all Escrow Accounts in
accordance with Agency or other Applicable Requirements and cooperate with
Subservicer to facilitate appropriate draws on such Escrow Accounts;
(3) Lender will honor (or if Lender is not bank or thrift, to
direct the banks or thrifts holding Lender's Escrow Accounts to honor) all ACH
transfer requests initiated by Subservicer;
(4) Subservicer will initiate the ACH or Fedwire fund transfer
process referred to in Section 2.2(d)(i)(1) above within one (1) Business Day
following Subservicer's receipt of such funds; and
(ii) notify Lender, not later than one (1) Business Day before any
Investor P&I remittance is due, if P&I funds are required to be wire-transferred
to Subservicer for remittance to such Investor;
(e) Maintain deposits received from Mortgagors for the payment of recurring
obligations in custodial accounts as specified in Subsection (d) of this
Section. If any federal or state statute or rule of law requires the payment of
interest on such deposits, Subservicer will pay such interest on Escrow Accounts
which it maintains or controls, subject to Subservicer's rights under Section
3.5. Subservicer will determine the amount of deposits to be made by Mortgagors
and will furnish to each Mortgagor, at least once a year, an analysis of the
Escrow Account;
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(f) Maintain accurate records reflecting the status of taxes, ground rents
and other recurring charges generally accepted by the mortgage servicing
industry which would become a lien on the Mortgaged Premises. For all Mortgage
Loans providing for the payment to and collection by Subservicer of Escrow
Account deposits for taxes, ground rents or such other charges, Subservicer
shall pay such charges before any penalty date and, whenever possible and when
required by Applicable Requirements, in time to secure maximum discounts
allowable. Subservicer assumes responsibility for the timely payment of all
such items and will hold harmless and indemnify Lender and Investor from all
penalties, loss or damage resulting from Subservicer's failure to discharge said
responsibility (subject to Lender's performance of its obligations under Section
3.5 below, as aforesaid);
(g) For any Mortgage Loan for which Escrow Account deposits have
theretofore been waived or suspended, upon (i) notification to Subservicer by
Subservicer's tax service of non-payment of real estate taxes, or (ii)
notification to Subservicer of non-payment of other items customarily paid from
escrow, or (iii) the failure of any Mortgagor to timely supply to Subservicer
renewal policies of fire and extended coverage insurance, endeavor to obtain the
necessary funds of policies from the Mortgagor. If the Mortgagor fails timely
to cure his or her default, then Subservicer will: (1) make an Advance to pay
any delinquent taxes and such other delinquent items; (2) if necessary, "force
place" lapsed fire and extended insurance; (3) request reimbursement from Lender
in accordance with Section 3.5; and (4) take appropriate steps to collect the
Advances as quickly as possible and (if permitted to do so under Applicable
Requirements) establish a fully funded Escrow Account at the earliest
practicable time;
(h) If funds held in a Mortgagors's Escrow Account are insufficient to
timely pay, when due and in full, related real estate taxes and assessments,
mortgage insurance premiums, hazard or flood insurance premiums, or other items
customarily paid from an Escrow Account: (1) make Advances to pay such items;
(2) endeavor to collect the Advances from the Mortgagor in the shortest
practicable time; and (3) request reimbursement from Lender in accordance with
Section 3.5;
(i) Assure that improvements on the Mortgaged Premises securing each
Mortgage Loan are insured by hazard insurance issued by companies acceptable to
Investor in an amount at least equal to the unpaid principal balance of the
Mortgage Loan or the full insurable value of the improvements, whichever is
less, of a type at least as protective as fire and extended coverage, and
containing a "standard" mortgagee clause (without contribution) in the form
customarily used in the area in which the Mortgaged Premises are located. In
all events, the provisions of the underlying Mortgage Loan Documents shall
prevail. During the course of subservicing, the mortgagee clause under the
hazard insurance will name the party insured as follows:
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Lender, its successors and/or assigns
C/O DOVENMUEHLE MORTGAGE, INC.
0000 Xxxxxxxxx Xxxx, Xxxxx 000 Xxxx
Xxxxxxxxxx, Xxxxxxxx 00000-0000
2.4 Other. Subservicer shall be responsible for further safeguarding each
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Investor's interest in the Mortgaged Premises and rights under the Mortgaged
Loan by:
(a) Inspecting the Mortgaged Premises in accordance with Applicable
Requirements, and performing such other inspections as prudence and sound
business judgment dictate;
(b) To the extent possible, security any Mortgaged Premises found to be
vacant or abandoned, and advising Investor of the status thereof;
(c) Notifying Investor if Subservicer receives notice or otherwise becomes
aware of any lien, bankruptcy, condemnation, probate proceeding, tax sale,
partition, local ordinance violation, condemnation in the nature of eminent
domain or similar event that would, in Subservicer's judgment, impair Investor's
security; and Subservicer shall assist Investor in undertaking appropriate
action to preserve its security;
(d) Advising Investor and Lender (and thereafter, if appropriate, FHA, VA
or a PMI Company) promptly upon receipt of any request for a partial release,
easement grant, substitution, subdivision or resubdivision, subordination,
alteration, or waiver of security instrument terms, and (if required by
applicable Requirements or if approved by the related Investor) seeking
necessary consents to such request;
(e) (1) Advising the Lender promptly in all cases (and advising the
related Investor, if requested) of any change in ownership of the Mortgaged
Premises subject to a Mortgage Loan, and (subject always to Applicable
Requirements) complying with all instructions of the Lender and Investors with
respect to the acceleration or modification of the indebtedness. Subservicer
will contact Lender immediately upon inquiry from a Mortgagor of the possibility
of assumption. If Lender (and, if applicable, the related Investor) shall
authorize assumption subject to qualification of the assumptors and receipt of
further documentation, then Subservicer shall, upon receipt of a signed contract
and an application fee from the Mortgagor and proposed assumptors, provide a
blank application form for completion by the Mortgagor and assumptors, with
applicable verification forms to be signed by the proposed assumptors. Upon
receipt of the completed application and signed verification forms from the
Mortgagor and proposed assumptors, as applicable, Subservicer will process the
application (i.e., request credit reports and verify all information on the
completed application) and forward the completed assumptions package to the
Lender
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and/or Investor for further processing. Lender and/or Investor will then
underwrite the requested assumption, request any required mortgage insurer's
approval, and forward approved assumption to Subservicer for final transfer and
assumption. If consent to assumption is denied, Lender and/or Investor will
prepare a proper denial letter and forward the original denial letter to the
Mortgagor and deliver a copy to the Subservicer.
(2) Notifying the Lender within one (1) Business Day following
Subservicer's receipt of a request for approval of an assumption and supplying
all information in the possession of Subservicer which is requested by the
Lender to facilitate the preparation by Lender of any required disclosures.
Lender and/or Investor will prepare and forward all disclosures to the
assumptors within time frames set by Applicable Requirements and send a copy set
of all disclosures to Subservicer. With respect to an assumption, Subservicer
shall have no responsibility or liability regarding disclosures required from
the Investor or the Lender or the accuracy of the same, except as set forth in
this Section 2.4(e).
(f) Maintaining in force all times a policy of errors and omissions
insurance coverage at Subservicer's sole expense, with appropriate deductibles.
One of the purposes of such coverage is to provide Lender and Investor
protection in liquidating a Mortgage Loan against the net loss that can be
attributed to damage to the Mortgaged Premises from a hazard or peril required
by the Investor to be insured and that otherwise would be insured but for
Subservicer's negligence in allowing insurance coverage to lapse or failing to
keep a sufficient amount of insurance in force. Subservicer shall also maintain
at all times a policy of general liability insurance in amounts satisfactory to
comply with all Applicable Requirements.
(g) The disbursing of insurance loss settlements, including:
(1) the receiving of reports of hazard insurance losses and assuring
that proof of loss statements are properly filed;
(2) authorizing the restoration and rehabilitation of the Mortgaged
Premises;
(3) collecting, endorsing and disbursing the insurance loss proceeds
and arranging for progress inspection and payments, if necessary;
(4) complying with all applicable FHA, VA or PMI Company requirements
pertaining to settlement of mortgage insurance losses; and
(5) endeavoring to preserve the priority of the Mortgage lien by
complying with applicable mechanics' lien laws, to the extent commercially
reasonable and in
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accordance with Subservicer's present practices and disbursement practices
customary in the mortgage servicing industry;
(h) Processing insurance loss drafts in the following manner:
(1) Provided that the Mortgage Loan is current in all respects,
Subservicer may endorse and deliver to Mortgagor without prior inspection of the
Mortgaged Premises and completion or repairs settlement drafts for losses up to
the amount of Two Thousand Five Hundred Dollars ($2,500.00);
(2) With respect to settlement drafts for losses in excess of Two
Thousand Five Hundred Dollars ($2,500.00), but no more than Five Thousand
Dollars ($5,000.00), Subservicer may exercise its discretion as to the necessity
of inspection and completion of repairs prior to endorsement and delivery of the
draft. Subservicer's discretion will be based on factors such as extent of the
loss, location of the Mortgaged Premises, Mortgage Loan payment history, extent
of Mortgage Loan amortization, probable equity in the Mortgaged Premises, and
any other relevant factors.
(3) Prior to endorsement and delivery of settlement of drafts or
losses in excess of Five Thousand Dollars ($5,000.00), Subservicer shall have an
inspection of the Mortgaged Premises performed to ensure that the repairs have
been completed.
(i) Preparing and filing all necessary federal and state tax reports and
returns with appropriate Investors, Mortgagors and the Internal Revenue Service,
in accordance with Applicable Requirements, covering the period of Subservicer's
subservicing of the related Mortgage Loans.
2.5 Investor Accounting. Subject always to Applicable Requirements,
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Subservicer shall:
(a) Make and implement interest rate adjustments in compliance with
applicable regulatory adjustable-rate mortgage loan requirements and the
Mortgage Loan Documents, which adjustments reflect the applicable movements of
the applicable Mortgage Loan rate index. Subservicer shall execute and deliver
all appropriate notices required by applicable adjustable-rate mortgage loan
regulations and the Mortgage Loan Documents regarding such interest rate
adjustments including but not by way of limitation, timely notification to
Investor or to Investor's successors or assigns, of applicable date and
information regarding such interest rate adjustments, and methods of
implementation of such interest rate adjustments, new schedules of Investors'
shares of collections of P&I, and of all prepayments of any Mortgage Loan
hereunder by Mortgagor.
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(b) Perform such other customary duties, furnish copies of reports
available as standard reports through Subservicer's C.P.I. System, and execute
such other documents in connection with its duties hereunder as Lender and
Investor from time to time reasonably may require. Customized reports and
computer tapes requested by Lender will be at Lender's expense.
(c) Not accept any prepayment of any Mortgage Loan except as required or
permitted under Applicable Requirements, nor waive, modify, release or consent
to postponement on the part of the Mortgagor of any term or provision of the
Mortgage Loan Documents without the written consent of the Investor.
(d) Upon payment of the Mortgage Loan in full, Subservicer shall: (i)
request the promissory note and original recorded documents from the Lender,
Agency or document custodian, as appropriate; (ii) prepare and send to Lender
for required execution and acknowledgment any documents required by law to be
executed by Lender to effectuate release, satisfaction or reconveyance of the
related Mortgage; (iii) for so-called "reconveyance states," prepare and send to
the Trustee any necessary request for reconveyance, release, satisfaction or
reconveyance documents, together with any applicable fees and charges in
connection therewith; (iv) for non-reconveyance states and in accordance with
Applicable Requirements, either (A) prepare and send to the public officer
responsible for the recording of real estate documents any necessary release or
satisfaction documents, together with any required fees, or (B) prepare and send
to the Mortgagor any necessary release or satisfaction documents, for further
processing at the behest of the Mortgagor; and (v) refund any unapplied
Mortgagor deposits. Lender (or the Mortgagor to the extent permissible under
Applicable Requirements) shall bear the Subservicer's out-of-pocket costs to
complete release, satisfaction or reconveyance process.
(e) Where Investors require interest paid through the end of the month
although interest due from the Mortgagor is to the actual date of the pay-off,
advance funds to cover any uncollected interest due the Investor, as provided in
Section 3.5.
(f) Remit and report to Investors as follows:
(i) within ten (10) Business Days after the end of each month, remit
by check to Lender: (1) all P&I payments due Lender on warehouse or portfolio
Mortgage Loans; (2) all service fees due Lender with respect to Agency-owned or
third-party-owned Mortgage Loans; (3) all recoveries of Advances theretofore
reimbursed to Subservicer by Lender; and (4) all other sums (if any) then due
Lender from Subservicer under this SA; except that Subservicer may deduct from
(1), (2), (3) and (4): (A) compensation then due Subservicer, as set forth in
SCHEDULE II; and (B) any other sums then due Subservicer in accordance with
Section 4.1;
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(ii) remit to the applicable Agencies P&I payments and guaranty fee
payments and render reports due from Subservicer in accordance with Applicable
Requirements; and
(iii) deliver to Lender reports on P&I payments and net service fees
as soon as the same are available, but not later than ten (10) Business Days
after the month in question; and Subservicer shall also send to Lender a copy of
all Investor-required "hard copy" paper reports, including each monthly FHLMC
MidaNet Reconciliation Report, within four (4) Business Days after the related
Investor Cut-Off Date.
(g) If Lender requires that Subservicer report and remit directly to any
Agency with respect to all mortgage loans servicing-related by Lender for that
Agency, then Subservicer must service one hundred percent (100%) of mortgage
loans which are servicing-retained by Lender for that Agency; and Subservicer
will submit all reports and make all remittances to that Agency under Lender's
assigned "seller/servicer" number or under such other number that Lender and
that Agency may designate in writing to Subservicer.
(h) If the Investor instructs Lender to service release or subservice
release any Mortgage Loan(s) and Lender shall deliver such notice to
Subservicer, then Subservicer shall immediately acknowledge, in writing to
Lender, the Investor's request and proceed in accordance with the Investor's
instructions. If Lender determines and instructs Subservicer not to proceed
with the Investor's instruction, Lender agrees to hold Subservicer harmless from
any action taken against Subservicer by the Investor, and from any loss or
damage, including reasonable attorney's fees, resulting therefrom.
(i) Manage Escrow Accounts and related deposit accounts as directed by
Lender, hold any related custodial deposit accounts associated with receipt,
disbursement and accumulation of principal, interest, taxes, hazard insurance,
mortgage insurance, etc. as "trustee" for Lender and/or Investor and/or
Mortgagors with the exception of GNMA servicing. Pursuant to GNMA's
regulations, Subservicer, as subservicer, is not permitted to withdraw/disburse
funds from "P&I" custodial accounts. Any benefit or value derived from Escrow
Account deposits shall accrue to the exclusive benefit of Lender.
2.6 Delinquency Control. Subservicer shall:
-------------------
(a) Be responsible for protecting the Investor's investment in the Mortgage
Loans by endeavoring to maintain the maximum possible number of Mortgage Loans
in a current status, dealing quickly and effectively with Mortgagors who are
delinquent or in default. Subservicer's delinquent Mortgage Loan subservicing
program shall include: (i) an adequate accounting system which will immediately
and positively indicate the existence of delinquent
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Mortgage Loans; (ii) a procedure that provides for sending delinquent notices,
assessing late charges and returning inadequate payments; and (iii) procedures
for the individual analysis of distressed or chronically delinquent Mortgage
Loans and counseling of the related Mortgagors.
(b) Provide Lender and Investor with month-end collection and delinquency
report within three (3) Business Days following the end of each month,
identifying and describing the status of any delinquent Mortgage Loans, and will
from time to time as need may arise, provide Lender and Investor with Mortgage
Loan service reports relating to any items of information which Subservicer is
otherwise required to provide hereunder, or detailing any matters the
Subservicer believes should be brought to the special attention of Lender and
Investor.
(c) Upon the request and under the direction of Lender and Investor, assist
in the foreclosure or other acquisition of the Mortgaged Premises securing any
Mortgage Loan, the transfer or the Mortgaged Premises to the FHA or VA and the
collection of any applicable mortgage insurance or guaranties and, pending
completion of these steps, protect the Mortgaged Premises from waste and
vandalism. At the option of the Investor, Investor may assign such Mortgage
Loan to the Subservicer which will then conduct all such proceedings in its own
name, promptly thereafter assigning and conveying to the Investor any title,
equity or other property or right acquired by such proceedings. Subservicer
will have title to the Mortgaged Premises conveyed in the name designated by
Investor. Subservicer shall be entitled to promptly recoup all of its actual
expenses incurred under this Section 2.6, including court costs and attorney's
fees, in the manner described in Sections 2.5(f) and 4.1.
2.7 Books and Records. Subservicer shall provide to Lender, not later than
-----------------
ninety (90) days after the close of Subservicer's fiscal year, a statement of
Subservicer financial condition as of the close of Subservicer fiscal year,
certified by Subservicer's independent auditors, together with a report of
Subservicer's independent auditors on the Uniform Single Audit Program for
Mortgage Bankers. Subservicer will cooperate in all reasonable ways with
Lender's auditors. Any additional requests for Mortgage Loan audit or
confirmations to be performed by Subservicer's audit firm on Lender's Mortgage
Loans shall be at Lender's sole expense. Subservicer will keep records
satisfactory to Lender and Investor pertaining to each Mortgage Loan, and
subject to Applicable Requirements: (i) such records shall be the property of
Lender; and (ii) upon termination of this SA, such records shall be delivered to
Lender or Lender's designee at Lender's expense.
2.8 Insurance. Subservicer will maintain in effect at all times and at its
---------
cost, a blanket fidelity bond and an errors and omission policy acceptable to
FHLMC, FNMA and GNMA. If so requested by Lender, Subservicer shall cause
certificates evidencing the existence of such coverage to be delivered to
Lender.
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2.9 Optional Services. Lender shall have the right, at the inception of this
-----------------
SA, to elect the following two optional services now provided by Lender:
2.9.1 Private Label Servicing.
-----------------------
(a) If the related box appearing immediately after the
signature blocks of the Parties on page 22 of this SA contains an "X" at the
time of execution of this SA by Lender, then Lender has elected to utilize the
Private Label Servicing Option ("the PLS Option") offered by Subservicer. If
Lender elects the PLS Option, Subservicer will:
(1) provide payment coupon books to be affected
mortgagors customized with the Lender's logo and other camera-ready customized
graphic designs and paid for by Lender; and
(2) the payee on the Mortgagor's checks will be the
Lender, c/o Subservicer.
(b) The additional cost to Lender of the PLS Option is
specified in Part I of SCHEDULE II.
2.9.2 Payoff Alert.
------------
(a) If the related box appearing immediately after the signature
blocks of the Parties on page 22 of this SA contains an "X" at the time of
execution of this SA by Lender, then Lender has elected to utilize the Payoff
Alert Service Option ("the PAS Option") offered by Subservicer. If PAS Option
is elected, then in addition to the duties of Subservicer set forth in Section
2.3 with respect to the Mortgage Loans, Subservicer shall, on each Business Day
during the Term of his SA, unless the use of offering of PAS is sooner
terminated by Lender or Subservicer in accordance with Section 2.9.2(c):
(1) identify and place in a special temporary file (and log into a
special log book maintained by Subservicer for this purpose) those written
requests for Mortgage Loan verifications and payoff statements received by
Subservicer by any means; and
(2) at the end of the next Business Day, deliver to Lender, by
facsimile transmission to a telephone number and marked for the attention of an
individual as specified in writing by Lender to Subservicer from time to time, a
copy of each such payoff or verification request received by Subservicer but not
theretofore delivered to Lender.
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(b) The fixed monthly flat fee for PAS shall be determined in
accordance with Part I of SCHEDULE II.
(c) Lender may terminate its election to use the PAS at any time
during the Term of this SA by written notice of termination delivered to
Subservicer not less than thirty (30) days before the effective date of
termination. Subservicer may terminate the PAS by written notice of termination
delivered to Lender not less than sixty (60) days before the effective date of
termination of the PAS.
ARTICLE III - AGREEMENTS OF LENDER
----------------------------------
3.1 Documentation. Lender shall provide (or cause any transferor servicer or
-------------
subservicer of any Mortgage Loans to provide) to Subservicer, at no cost to
Subservicer:
(a) prior to commencement of subservicing hereunder, all files, documents
and records which are necessary or appropriate for Subservicer to receive in
order to conduct the subservicing of the Mortgage Loans, as indicated in
SCHEDULE III attached hereto and made a part hereof by this reference, it being
understood that (i) every item listed on SCHEDULE III is not absolutely required
to properly subservice each Mortgage Loan, and that (ii) Subservicer will notify
Lender of any instances of deficiency, when discovered, and request from Lender
any documents not theretofore supplied which Subservicer believes it needs to
properly subservice the related Mortgage Loan.
(b) applicable documentation for each Mortgage Loan to be subserviced
hereunder, to enable Subservicer to convert all required database fields and
continue the Mortgage Loan on Subservicer C.P.I., System, without necessity of
special enhancements, optional subsystems or special programming. All such
documentation must be delivered to the Subservicer promptly after the related
Transfer Date, and in all events in a reasonable amount of time before any
Investor reporting is due from Subservicer;
(c) if applicable and as soon as possible, a complete listing of any
Mortgage Loans where the Mortgage Loan payment is inclusive of a personal or
group insurance premium. This list will also provide; the name of the insurance
company; type of premium coverage; premium amount; and the name and telephone
number of the individual at Lender's firm or affiliate knowledgeable of such
coverage. Furthermore, should Lender misrepresent, misinform, provide
inadequate information or no information regarding the status of personal or
group insurance coverages (i.e. mortgage life insurance) which would cause
Subservicer to incur a loss or damage, Lender agrees to hold Subservicer
harmless from, and defined Subservicer against, any and all claims, liabilities,
damages and loss, including reasonable attorneys' fees, resulting therefrom;
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(d) physical evidence that a hazard insurance policy is in force for each
Mortgage Loan delivered to Subservicer for subservicing and allowing Subservicer
sufficient time to receive evidence in house that all notifications shall be
forwarded to Subservicer. Further, Lender agrees to hold Subservicer harmless
from any loss or damage caused by insufficient evidence of hazard insurance
coverage delivered to Subservicer or any loss or damage which occurred during a
lapsed policy prior to delivery of subservicing to Subservicer;
(e) complete credit files and any files associated with required or
optional quality control audits and any associated record keeping validating
required random sampling; and
(f) for each Mortgage Loan to be subserviced hereunder, all at Lender's
cost, the transfer of any existing real estate tax service contracts to
Subservicer; see the provisions of Part I of SCHEDULE II concerning real estate
tax service contracts not then in existence.
3.2 Further Notification. Lender shall:
--------------------
(a) Advise Subservicer upon delivery of each Mortgage Loan submitted for
subservicing, as to whether the Mortgage Loan is in a warehouse (unsold) status
or, if sold, specific information regarding the intended permanent Investor. If
a Mortgage Loan which has been delivered to Subservicer in a warehouse (unsold)
status is sold, Lender will immediately notify Subservicer of the sale by phone
and will deliver a written copy of the permanent Investor's purchase advice for
funding detailed report immediately thereafter. If the Investor charges a
penalty for late reporting, remittances, etc., which were caused by Lender's
delay in notifying Subservicer of the Investor's purchase of the Mortgage
Loan(s), Lender agrees to promptly pay the penalty and Subservicer shall have no
liability on account thereof; and
(b) Discharge Subservicer from all liability for all Advances which are
related to any Mortgage Loan included in any pool that has been created through
"Mortgage-backed pass-through certificates" or securities, including Advances
due to negative amortization. Subservicer will reimburse Lender as recoveries
are made from Mortgagors, as provided in Section 3.5.
3.3 Default. If: (i) Lender shall fail to pay to Subservicer any sums as and
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when due and payable to Subservicer under this SA, whether as compensation,
reimbursement or otherwise; or (ii) any secured party holding a security
interest granted by Lender as debtor shall demand that Subservicer pay over to
that secured party any sums otherwise payable to Lender under this SA; or (iii)
Lender shall be in default hereunder in any other respect; then Subservicer
shall: (A) be entitled to set off, against its damages, all sums due from
Subservicer to Lender hereunder; and (B) have and may exercise all other
remedies permitted by law for breach of contract.
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3.4 Compliance. During the Term of this SA, including any extensions hereof,
----------
Lender agrees to comply with those Applicable Requirements relating to the
Mortgage Loans which are the responsibility of Lender.
3.5 Advances.
--------
(a) The Lender has agreed: (i) to bear the risk of credit losses inherent
in the Mortgage Loan servicing and subservicing portfolios hereunder, except for
those losses caused by Subservicer's failure to comply with Applicable
Requirements (including failure to comply with the provisions of this SA) and
except as explicitly agreed to be borne by FHA, VA or any PMI Companies; and
(ii) to allow Subservicer to deduct, from service fees due Lender hereunder as
provided in Section 2.5(f), the amount of all advances required to be made by
Subservicer (collectively, the "Advances") to third parties (A) under the terms
of this SA, or (B) under any applicable Servicing Agreements by which
Subservicer is or may be bound, or (C) otherwise under Applicable Requirements.
If at any time the total amount of service fees due Lender (but not yet
remitted to Lender) under Section 2.5(f) is insufficient to fully fund
Subservicer's Advance obligations hereunder, Lender will provide funding or
reimburse Subservicer therefor within two (2) Business Days after Lender's
receipt of Subservicer's written request therefor, except that Subservicer shall
not request funding or reimbursement: (i) for P&I Advances, more often than
once per month per Investor; nor (ii) for T&I or other required Advances, more
often than once per week.
In general, but without limiting the generality of the term "Advances",
Advances may be triggered by the need to pay any of the following: principal
and/or interest to an Investor; FHA mortgage insurance premiums or PMI, ground
rents, taxes, special assessments or Hazard Insurance premiums over and above
the amounts held in the related Escrow Accounts for such purposes; costs,
expenses and fees of foreclosure or of acquiring title to the Mortgaged Premises
by deed in lieu of foreclosure; and costs, fees and expenses of conveyance of
any Mortgaged Premises to the FHA or VA or a PMI Company or to inspect or
protect or repair the Mortgaged Premises; and recording charges and trustees'
fees incident to release, reconveyance or satisfaction of any paid in full
Mortgage Loan.
(b) Subservicer shall diligently endeavor to collect and recover from the
Mortgagors all Advances made by Subservicer which are not timely paid by, but
which are the ultimate obligations of, the Mortgagors. If and when Subservicer
is required to pay interest to any Investor through the end of a month, even
though interest on an underlying Mortgage Loan ceased to accrue as of the date
of payoff, the interest not collected as a consequence of the payoff before the
end of such month shall be treated as an Advance to
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be paid by or reimbursed by Lender, except to the extent the loss is
attributable to the Subservicer's failure to apply timely related payments
actually received by Subservicer.
(c) Upon any collection of Advances by Subservicer from time to time, such
collections shall be promptly applied in full, to the extent thereof, in the
following order of priority: (i) to reimburse Subservicer for any unrecouped
Advances disbursed by Subservicer from Subservicer's corporate resources if
Subservicer has elected in any instance to fund Advances from its own corporate
resources; and (ii) any excess shall be refunded to the Lender.
(d) Subservicer shall utilize funds received from Lender under this Section
3.5 solely to fund Advances required to be made by Subservicer under this SA or
otherwise under Applicable Requirements, and FOR NO OTHER PURPOSES WHATSOEVER.
Subservicer will provide complete supporting documentation to Lender within two
(2) Business Days following receipt from Lender of funds under this Section 3.5,
detailing the Subservicer's uses of the funds so received.
3.6 Document Custodians; Expenses. Lender will bear the entire cost of
-----------------------------
establishment and maintenance of each document custodian regime required by
FNMA, FHLMC or GNMA with respect to any of the Mortgage Loans.
ARTICLE IV - COMPENSATION
-------------------------
4.1 Compensation to Subservicer. For providing the services contained in this
---------------------------
SA, the Parties agree that:
(a) Subservicer shall be paid the fees and funded for Advances and certain
expenses as provided in SCHEDULE II, in Sections 2.5(f) and 3.5 and in this
Section 4.1, during the Term of this SA and after termination or expiration of
this SA, but only: (i) if Subservicer is continuing to provide the services
required of it hereunder with respect to the Mortgage Loans; and (ii) until
completion of transfer of subservicing to Lender or its designee.
(b) Subservicer reserves the right to charge Lender: (i) for any
additional out-of-pocket costs which Subservicer expects to incur for the set-up
and subservicing of any Mortgage Loan which is not then compatible with, and
therefore cannot be subserviced on, Subservicer's C.P.I. System without special
enhancements, optional subsystems or special programming; and (ii) a monthly
administrative fee for each Investor not now specified in SCHEDULE II (to take
account of special servicing requirements and guidelines specified by such
Investor), and a monthly fee for each bank account required to be maintained to
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service that Investor, all to be mutually agreed upon by both Parties in advance
and in a writing which may be made a part of SCHEDULE II.
(c) Any miscellaneous costs incurred by Subservicer from extraordinary
requests by Lender shall be billed to Lender at cost and promptly paid by Lender
upon receipt of billing.
4.2 Solicitation.
------------
(a) Lender and Subservicer and their respective affiliates reserve the
right to solicit individual Mortgagors for Optional Insurance. Any resulting
income will be allocated in accordance with SCHEDULE II. Subservicer agrees to
designate Lender or its designee as agent of record for all such policies in
force at the time of transfer of subservicing, on the condition that Lender has
provided Subservicer with the required state, Agency, Investor, insurer or any
other regulatory or applicable approvals.
(b) Except upon the prior written request or consent of Lender, Subservicer
shall never, and hereby agrees not to: (i) solicit a refinancing of any
Mortgage Loan; nor (ii) sell or rent to anyone a list of the Mortgage Loan
Mortgagors; nor (iii) supply a list of Mortgage Loan Mortgagors to any Person
except as permitted elsewhere in this SA or as required by law or to comply with
legal process.
ARTICLE V - TERM; TRANSFERS
---------------------------
5.1 Term. The Term of this SA shall be for five (5) years, commencing as of
----
the first Transfer Date and ending on the day before the fifth (5th) anniversary
of that first Transfer Date [or the last day of the month in which the day
before the fifth (5th) anniversary occurs if the first Transfer Date was not the
first day of a month].
5.2 Reimbursement. Subservicer's right to funding or reimbursement for actual
-------------
expenses, and funding or reimbursement for any Advances made on behalf of Lender
in accordance with terms of this SA shall not be abrogated nor impaired even if
the Investor to which Lender has sold Mortgage Loans instructs Subservicer in
writing to service release or subservice release any Mortgage Loans to Lender or
Investor's designee.
5.3 Notice of Subservicing Transfers. Lender shall give to Subservicer at
--------------------------------
least one-hundred twenty (120) days prior written notice of the intended
effective date of any transfer of subservicing by Subservicer to Lender or to
any third party, to permit orderly scheduling of subservicing transfers.
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5.4 Transfers; Accounting. Upon cessation of subservicing of any Mortgage Loan
---------------------
or any group of Mortgage Loans, Subservicer will: (i) account for and turn
over, as appropriate, to Lender, Lender's designee, the Investors or Investors'
designees, all funds collected under the related Mortgage Loan or group of
Mortgage Loans, less all sums then due Subservicer; (ii) deliver to Lender,
Lender's designee, Investors or Investors' designees all records and documents
relating to each Mortgage Loan no longer subserviced; (iii) advise the related
Mortgagors that their Mortgage Loans will henceforth be serviced by Lender,
Lender's designee, Investor or Investors' designees; and (iv) otherwise comply
with Applicable Requirements.
ARTICLE VI - REPRESENTATIONS, WARRANTIES
----------------------------------------
AND COVENANTS OF LENDER
-----------------------
6.1 Assistance. Lender warrants and represents to, and covenants and agrees
----------
with Subservicer that, to the extent possible, Lender shall cooperate with and
assist Subservicer as requested by Subservicer, in carrying out Subservicer's
covenants, agreements, duties and responsibilities under this SA and in
connection therewith shall execute and deliver all such papers, documents and
instruments as may be necessary and appropriate in furtherance thereof. Lender
agrees to comply with all Applicable Requirements binding upon it.
6.2 Notice of Breach. Lender shall immediately notify Subservicer of any
----------------
failure or anticipated failure on Lender's part to observe and perform any
warranty, presentation, covenant or agreement required to be observed and
performed by it as Lender under this SA.
6.3 Tax and Insurance Premium Payments Before a Transfer Date.
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6.3.1 Tax Payments. Lender warrants that, as of each "Transfer Date"
------------
(i.e., as of each date of delivery of the subservicing of related Mortgage Loans
to Subservicer for subservicing hereunder): (i) all real estate taxes for those
related Mortgage Loan shall be current; and (ii) all related real estate taxes
which will become delinquent within thirty (30) days after the Transfer Date in
question shall be paid before the related Transfer Date. Lender will indemnify
and hold Subservicer harmless of and from any tax penalties and interest which
arose or accrued prior to the delivery of the related subservicing to
Subservicer or on account of any breach by Lender under this Section 6.3.1.
6.3.2 Insurance Premiums. Lender warrants that, as of each Transfer
------------------
Date: (i) all insurance premiums for the related Mortgage Loans shall be
current; and (ii) all related insurance premiums which will become delinquent
within thirty (30) days after the Transfer Date in question shall be paid before
the related Transfer Date. Lender will indemnify and
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hold Subservicer harmless of and from all loss, damage and expense (including
reasonable attorneys' fees) on account of any breach by Lender under this
Section 6.3.2.
6.4 Authority. Lender is a corporation, duly organized, validly existing and
---------
in good standing under the laws of the United States of America, and has all
requisite power and authority to enter into and perform its obligations under
this SA. The individuals executing this SA on behalf of the Lender are duly
authorized so to do.
6.5 Prior Compliance with Applicable Requirements. Lender warrants to
---------------------------------------------
Subservicer that to the best of Lender's knowledge each Mortgage Loan was, prior
to its subservicing Transfer Date hereunder, underwritten, originated, closed,
serviced, and (if applicable) assigned or securitized or sold in compliance with
all Applicable Requirements, except as otherwise disclosed (i) in SCHEDULE IV
attached hereto and made a part hereof by this reference or (ii) to Subservicer
in writing before the related Transfer Date. To the best of Lender's knowledge,
as of its subservicing Transfer Date, there is no default of any Prior Servicer
of any Mortgage Loan.
ARTICLE VII - REPRESENTATIONS, WARRANTIES
-----------------------------------------
AND COVENANTS OF SUBSERVICER
----------------------------
Subject to the provisions of ARTICLE VIII below, Subservicer warrants and
represents to, and covenants and agrees with, Lender as follows:
7.1 Notice of Breach. Subservicer shall immediately notify Lender of any
----------------
failure or anticipated failure on its part to observe and perform any warranty,
representation, covenant or agreement required to be observed and performed by
it as Subservicer. For any breach by Subservicer hereunder, Subservicer shall
have the cure rights specified in Paragraph (1) of Part II of SCHEDULE II.
7.2 Agency Approvals. Subservicer is an approved servicer for FHLMC and FNMA,
----------------
an approved issuer/servicer for GNMA and a lender approved by FHA and VA.
7.3 Authority. Subservicer is a duly organized and validly existing
---------
corporation in good standing under the law of Delaware and has all requisite
power and authority to enter into this SA and the individuals executing this SA
on behalf of Subservicer are duly authorized so to do.
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ARTICLE VII - INDEPENDENCE OF PARTIES;
--------------------------------------
INDEMNIFICATION; SURVIVAL
-------------------------
8.1 Independence of Parties. The following terms shall govern the relationship
-----------------------
between Lender and Subservicer:
(a) Subservicer shall have the status of and act as an independent
contractor. Nothing herein contained shall be construed to create a partnership
or joint venture between Lender [or any of them if Lender consists of more than
one Person] and Subservicer.
(b) Subservicer shall not be responsible for representations, warranties or
contractual obligations in connection with (1) the sale to or by FHLMC, FNMA or
GNMA of any of the Mortgage Loans, or (2) the servicing or subservicing of any
of the Mortgage Loans prior to the related Transfer Date and assumption of
subservicing of the related Mortgage Loans by Subservicer pursuant to this SA.
(c) Anything herein contained in this ARTICLE VIII or elsewhere in this SA
to the contrary notwithstanding, the representations and warranties of
Subservicer contained in this SA shall not be construed as a warranty or
guarantee by Subservicer as to future payments by any Mortgagor.
(d) Anything herein contained in this ARTICLE VIII or elsewhere in this SA
to the contrary notwithstanding, Subservicer shall not be responsible for
performance or compliance under any loan repurchase agreements, representations
or warranties of an origination nature, or those servicing representations and
warranties directly or indirectly related to the origination process made
between Lender and any Investor either prior or subsequent to this SA.
8.2 Indemnification by Subservicer. Except as otherwise stated herein,
------------------------------
Subservicer hereby agrees to, and shall, indemnify, defend and hold Lender
harmless from any liability, claim, loss or damage, including reasonable
attorneys' fees, resulting from or arising out of Subservicer's failure to
observe or perform any or all of Subservicer's covenants, agreements, warranties
or representations contained in this SA, EXCLUDING HOWEVER any failure by
Subservicer:
(a) to make any payment of money to a third party which failure is
attributable to a default of Lender hereunder, including without limitation a
failure of Lender to provide funding for that payment or to timely reimburse
Subservicer in accordance with Section 3.5; or
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(b) which is a result of Subservicer's compliance with a directive of the
Lender or any Investor or with Applicable Requirements; or
(c) which is attributable to a failure of Lender or any Investor or Prior
Servicer to comply with Applicable Requirements.
8.3 Indemnification by Lender. Lender hereby agrees to, and shall, indemnify,
-------------------------
defend and hold the Subservicer harmless from any liability, claim, loss or
damage, including reasonable attorneys' fees, directly or indirectly resulting
from or arising out of Lender's failure to observe or perform any of Lender's
covenants, agreements, warranties or representations contained in this SA.
Further, Lender will indemnify Subservicer and hold it harmless of and from any
liability, claim, loss or damage, including reasonable attorneys' fees, directly
or indirectly resulting from or arising out of:
(a) any failure of Lender or any Investor or Prior Servicer to comply with
Applicable Requirements; or
(b) Subservicer's compliance with a directive of the Lender or any
Investor.
8.4 Survival. The indemnifications, representations and warranties set forth
--------
herein shall survive the expiration or termination of this SA.
ARTICLE IX - MISCELLANEOUS
--------------------------
9.1 Due Date of Payments; Interest Rate on Delayed Payments due Subservicer.
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All fees, payments, charges, expenses, Advances and any other sums payable to
Subservicer by Lender hereunder, shall be due and payable as provided for
herein. Upon any failure of Lender to timely comply with its funding
obligations hereunder and without waiving any such default of Lender, all sums
optionally advanced by Subservicer from its own resources shall bear interest on
a per diem basis, based upon an annual interest rate of two percent (2%) over
the Prime Rate.
9.2 Changes in Practices. The Parties acknowledge that the standard practices
--------------------
and procedures of the mortgage servicing industry change or may change over a
period of time. To accommodate these changes, Subservicer may from time to time
notify Lender of such changes in practices and procedures. Should any such
proposed changes, made in good faith by Subservicer, be unacceptable to Lender,
then Subservicer shall have no further obligation to continue subservicing under
the terms of this SA, and may terminate this SA in accordance with ARTICLE V.
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9.3 Assignment. This SA may be assigned only after written consent of both
----------
Lender and Subservicer.
9.4 Prior Agreements. If any provision of this SA is inconsistent with any
----------------
prior agreements between the Parties, oral or written, the terms of this SA
shall prevail; and after the effective date of this SA, the relationship and
agreements between Lender and Subservicer shall be governed entirely in
accordance with the terms of this SA.
9.5 Annual Financial Statements
---------------------------
(a) Lender agrees to furnish to the Subservicer, within ninety (90) days
following the end of each of its fiscal years during the Term, a copy of its
audited financial statements for the fiscal year then ended, including a balance
sheet and supporting schedules and containing a detailed statement of income and
expenses.
(b) Subservicer agrees to furnish to Lender, within ninety (90) days
following the end of each of its fiscal years during the Term, a copy of
Subservicer's audited financial statements for the fiscal year then ended,
including a balance sheet and supporting schedules and containing a detailed
statement of income and expenses.
9.6 Entire Agreement. This SA contains the entire agreement between the
----------------
Parties with respect to its subject matter and cannot be modified in any respect
except by an amendment in writing signed by both Parties.
9.7 Invalidity. The invalidity of any portion of this SA shall in no way
----------
affect the remaining portion hereof.
9.8 Effect. Except as otherwise stated herein, this SA shall remain in effect
------
until Lender's's interest in all of Mortgage Loans referred to, including the
underlying security, are liquidated completely, unless sooner terminated or
expired pursuant to the terms hereof.
9.9 Applicable Law. This SA shall be governed by and construed in accordance
--------------
with the laws of Illinois.
9.10 Notices. All notices, requests, demands and other communications which are
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required or permitted to be given to a Party under this SA shall be in writing
and shall be deemed to have been duly given: (i) upon the receipt thereof
by the recipient Party; or (ii) upon the sending thereof (A) by registered
or certified mail, postage prepaid, return receipt requested, or (B) by a
recognized overnight courier service marked in each instance for the
attention of the President of the Subservicer or the Loan Servicing
Manager of the Lender, as the case may be and addressed to the recipient
Party at that Party's address set forth on the first page
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hereof or to such other address in the United States of America as the recipient
shall specify in a notice delivered to the other Party in accordance with this
Section.
9.11 Waivers. Either Party may, with written consent of both Parties, by
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written notice to the other:
(a) Waive compliance with any of the terms, conditions or covenants
required to be complied with by the other hereunder; and
(b) Waive or modify performance of any of the obligations of the other
hereunder.
The waiver by either Party of a breach of any provision of this SA shall
not operate or be construed as a waiver of any other or subsequent breach.
9.12 Binding Effect. This SA shall inure to the benefit of and be binding upon
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the Parties and their successors and permitted assigns.
9.13 Headings. Headings of the ARTICLES and Sections in this SA are for
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reference purposes only and shall not be deemed to have any substantive effect.
IN WITNESS WHEREOF, each Party has caused this SA to be signed in its
corporate name by its proper officers duly authorized, as of the day, month and
year first above written.
Subservicer Lender:
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DOVENMUEHLE MORTGAGE, INC., a PAN AMERICAN BANK, FSB
Delaware corporation
By: /s/ XXXXXXX X. XXXXXX, XX. By: /s/ XXXXXX X. XXXXXX
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Xxxxxxx X. Xxxxxx, Xx. Xxxxxx X. Xxxxxx
Its President Its Executive Vice President
ATTEST: ATTEST:
By: /s/ XXXXXXX X. XXXX By: /s/ XXXXX X. XXXXX
---------------------------- ---------------------------
Xxxxxxx X. Xxxx Xxxxx X. Xxxxx
Its Assistant Secretary Vice President
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[X] If the box at the left margin of this line contains an "X" at the time of
execution of this SA by Lender, then Lender has elected to utilize the Private
Label Servicing Option offered by Subservicer and more fully described in
Section 2.9.1.
[X] If the box at the left margin of this line contains an "X" at the time of
execution of this SA by Lender, then Lender has elected to utilize the Payoff
Service Option offered by Subservicer and more fully described in Section 2.9.2.
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