Execution Copy
XXXXXX BROTHERS BANK, FSB
Purchaser
and
XXXXX FARGO HOME MORTGAGE, INC.
Company
--------------------------------------------
SELLER'S WARRANTIES AND SERVICING AGREEMENT
Dated as of March 1, 2001
--------------------------------------------
Five-year Fixed / One-year Adjustable Rate Mortgage Loans
WFHM Series 2001-W02
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TABLE OF CONTENTS
ARTICLE I......................................................................1
DEFINITIONS....................................................................1
ARTICLE II.....................................................................9
CONVEYANCE OF MORTGAGE LOANS; POSSESSION OF MORTGAGE FILES;
BOOKS AND RECORDS; CUSTODIAL AGREEMENT; DELIVERY OF DOCUMENTS..................9
ARTICLE III...................................................................12
REPRESENTATIONS AND WARRANTIES REMEDIES AND BREACH............................12
ARTICLE IV....................................................................28
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS................................28
ARTICLE V.....................................................................42
PAYMENTS TO PURCHASER.........................................................42
ARTICLE VI....................................................................44
GENERAL SERVICING PROCEDURES..................................................44
ARTICLE VII...................................................................46
COMPANY TO COOPERATE..........................................................46
ARTICLE VIII..................................................................47
THE COMPANY...................................................................47
ARTICLE IX....................................................................49
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PASS-THROUGH TRANSFERS........................................................49
ARTICLE X.....................................................................51
DEFAULT.......................................................................51
ARTICLE XI....................................................................53
TERMINATION...................................................................53
ARTICLE XII...................................................................53
MISCELLANEOUS PROVISIONS......................................................53
EXHIBITS
Exhibit A Mortgage Loan Schedule
Exhibit B Contents of Each Mortgage Loan File
Exhibit C Custodial Agreement
Exhibit D Custodial Account Certifications
Exhibit E Escrow Account Certifications
Exhibit F Form of Assignment and Assumption Agreement
Exhibit G Underwriting Guidelines
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This is a Seller's Warranties and Servicing Agreement for five-year fixed
/ one-year adjustable rate residential first mortgage loans, dated and effective
as of March 1, 2001 and is executed between Xxxxxx Brothers Bank, FSB, as
purchaser (the "Purchaser"), and Xxxxx Fargo Home Mortgage, Inc., as seller and
servicer (the "Company").
W I T N E S S E T H
WHEREAS, the Purchaser has agreed to purchase from the Company and the
Company has agreed to sell to the Purchaser certain Mortgage Loans which have an
aggregate outstanding principal balance as of the close of business on the
Cut-off Date, after deduction of payments due on or before such date, of
$200,711,027.11;
WHEREAS, each of the Mortgage Loans is secured by a mortgage, deed of
trust or other security instrument creating a first lien on a residential
dwelling located in the jurisdiction indicated on the Mortgage Loan Schedule,
which is annexed hereto as Exhibit A; and
WHEREAS, the Purchaser and the Company wish to prescribe the manner of
purchase of the Mortgage Loans and the conveyance, servicing and control of the
Mortgage Loans.
NOW, THEREFORE, in consideration of the mutual agreements hereinafter set
forth, and for other good and valuable consideration, the receipt and adequacy
of which is hereby acknowledged, the Purchaser and the Company agree as follows:
ARTICLE I
DEFINITIONS
Whenever used herein, the following words and phrases, unless the content
otherwise requires, shall have the following meanings:
Accepted Servicing Practices: With respect to any Mortgage Loan, those
mortgage servicing practices of prudent mortgage lending institutions which
service mortgage loans of the same type as such Mortgage Loan in the
jurisdiction where the related Mortgaged Property is located.
Adjustment Date: As to each Mortgage Loan, the date on which the Mortgage
Interest Rate is adjusted in accordance with the terms of the related Mortgage
Note and Mortgage.
Agreement: This Seller's Warranties and Servicing Agreement and all
amendments hereof and supplements hereto.
ALTA: The American Land Title Association or any successor thereto.
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Appraised Value: With respect to any Mortgage Loan, the lesser of (i)
the value set forth on the appraisal made in connection with the origination of
the related Mortgage Loan as the value of the related Mortgaged Property, or
(ii) the purchase price paid for the Mortgaged Property, provided, however, in
the case of a refinanced Mortgage Loan, such value shall be based solely on the
appraisal made in connection with the origination of such Mortgage Loan.
Assignment of Mortgage: An assignment of the Mortgage, notice of transfer
or equivalent instrument in recordable form, sufficient under the laws of the
jurisdiction wherein the related Mortgaged Property is located to reflect the
sale of the Mortgage to the Purchaser.
BIF: The Bank Insurance Fund, or any successor thereto.
Business Day: Any day other than (i) a Saturday or Sunday, or (ii) a day
on which banking and savings and loan institutions in the states where the
parties are located are authorized or obligated by law or executive order to be
closed.
Buydown Agreement: An agreement between the Company and a Mortgagor, or an
agreement among the Company, a Mortgagor and a seller of a Mortgaged Property or
a third party with respect to a Mortgage Loan which provides for the application
of Buydown Funds.
Buydown Funds: In respect of any Buydown Mortgage Loan, any amount
contributed by the seller of a Mortgaged Property subject to a Buydown Mortgage
Loan, the buyer of such property, the Company or any other source, plus interest
earned thereon, in order to enable the Mortgagor to reduce the payments required
to be made from the mortgagor's funds in the early years of a Mortgage Loan.
Buydown Mortgage Loan: Any Mortgage Loan in respect of which, pursuant to
a Buydown Agreement, (i) the Mortgagor pays less than the full monthly payments
specified in the Mortgage Note for a specified period, and (ii) the difference
between the payments required under such Buydown Agreement and the Mortgage Note
is provided from Buydown Funds.
Buydown Period: The period of time when a Buydown Agreement is in effect
with respect to a related Buydown Mortgage Loan.
Closing Date: March 7, 2001.
Code: The Internal Revenue Code of 1986, as it may be amended from time to
time or any successor statute thereto, and applicable U.S. Department of the
Treasury regulations issued pursuant thereto.
Company: Xxxxx Fargo Home Mortgage, Inc., or its successor in interest or
assigns, or any successor to the Company under this Agreement appointed as
herein provided.
Condemnation Proceeds: All awards or settlements in respect of a Mortgaged
Property, whether permanent or temporary, partial or entire, by exercise of the
power of eminent domain
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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 4.04.
Custodial Agreement: The agreement governing the retention of the
originals of each Mortgage Note, Mortgage, Assignment of Mortgage and other
Mortgage Loan Documents, a form of which is annexed hereto as Exhibit C.
Custodian: The custodian under the Custodial Agreement, or its successor
in interest or assigns, or any successor to the Custodian under the Custodial
Agreement as provided therein.
Cut-off Date: March 1, 2001.
Deleted Mortgage Loan: A Mortgage Loan which is repurchased by the Company
in accordance with the terms of this Agreement and which is, in the case of a
substitution pursuant to Section 3.03, replaced or to be replaced with a
Qualified Substitute Mortgage Loan.
Determination Date: The Business Day immediately preceding the related
Remittance Date.
Due Date: The first day of the month on which the Monthly Payment is due
on a Mortgage Loan, exclusive of any days of grace.
Due Period: With respect to each Remittance Date, the period commencing on
the second day of the month preceding the month of the Remittance Date and
ending on the first day of the month of the Remittance Date.
Errors and Omissions Insurance Policy: An errors and omissions insurance
policy to be maintained by the Company pursuant to Section 4.12.
Escrow Account: The separate account or accounts created and maintained
pursuant to Section 4.06.
Escrow Payments: With respect to any Mortgage Loan, the amounts
constituting ground rents, taxes, assessments, water rates, sewer rents,
municipal charges, mortgage insurance premiums, fire and hazard insurance
premiums, condominium charges, and any other payments required to be escrowed by
the Mortgagor with the mortgagee pursuant to the Mortgage or any other related
document.
Event of Default: Any one of the conditions or circumstances enumerated in
Section 10.01.
Xxxxxx Xxx: Xxxxxx Xxx, or any successor thereto.
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FDIC: The Federal Deposit Insurance Corporation, or any successor thereto.
Fidelity Bond: A fidelity bond to be maintained by the Company pursuant to
Section 4.12.
First Remittance Date: April 18, 2001.
Xxxxxxx Mac: The Federal Home Loan Mortgage Corporation, or any successor
thereto.
Gross Margin: With respect to each Mortgage Loan, the fixed percentage
amount set forth in the related Mortgage Note which is added to the Index in
order to determine the related Mortgage Interest Rate, as set forth in the
Mortgage Loan Schedule.
Index: On each Adjustment Date, the applicable index shall in accordance
with the Mortgage Note on each Adjustment Date be a rate per annum equal to the
weekly average yield on U.S. Treasury securities adjusted to a constant maturity
of one year as made available by the Federal Reserve Board in Statistical
Release No. H.15 or a comparable publication, or, if not so published, as
reported by any Federal Reserve Bank or by any U.S. Government department or
agency, for the week for which such figures were most recently published or
reported as of the date 45 days prior to the Adjustment Date.
Insurance Proceeds: With respect to each Mortgage Loan, proceeds of
insurance policies insuring the Mortgage Loan or the related Mortgaged Property.
Liquidation Proceeds: Cash received in connection with the liquidation of
a defaulted Mortgage Loan, whether through the sale or assignment of such
Mortgage Loan, trustee's sale, foreclosure sale or otherwise, or the sale of the
related Mortgaged Property if the Mortgaged Property is acquired in satisfaction
of the Mortgage Loan.
Loan-to-Value Ratio or LTV: With respect to any Mortgage Loan, the ratio
of the original loan amount of the Mortgage Loan at its origination (unless
otherwise indicated) to the Appraised Value of the Mortgaged Property.
Monthly Advance: The portion of each Monthly Payment that is delinquent
with respect to each Mortgage Loan at the close of business on the Determination
Date required to be advanced by the Company pursuant to Section 5.03 on the
Business Day immediately preceding the Remittance Date of the related month.
Monthly Payment: The scheduled monthly payment of principal and interest
on a Mortgage Loan.
Mortgage: The mortgage, deed of trust or other instrument and riders
thereto securing a Mortgage Note, which creates a first lien on an
unsubordinated estate in fee simple in real property securing the Mortgage Note.
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Mortgage File: The items pertaining to a particular Mortgage Loan referred
to in Exhibit B annexed hereto, and any additional documents required to be
added to the Mortgage File pursuant to this Agreement.
Mortgage Impairment Insurance Policy: A mortgage impairment or blanket
hazard insurance policy as described in Section 4.11.
Mortgage Interest Rate: The annual rate of interest borne on a Mortgage
Note in accordance with the provisions of the Mortgage Note.
Mortgage Loan: An individual Mortgage Loan which is the subject of this
Agreement, each Mortgage Loan originally sold and subject to this Agreement
being identified on the Mortgage Loan Schedule, which Mortgage Loan includes
without limitation the Mortgage File, the Monthly Payments, Principal
Prepayments, Liquidation Proceeds, Condemnation Proceeds, Insurance Proceeds,
REO Disposition Proceeds and all other rights, benefits, proceeds and
obligations arising from or in connection with such Mortgage Loan.
Mortgage Loan Documents: With respect to a Mortgage Loan, the original
related Mortgage Note with applicable addenda and riders, the original related
Mortgage and the originals of any required addenda and riders, the original
related Assignment and any original intervening related Assignments, the
original related title insurance policy, related PMI policy, if any, and the
related appraisal report.
Mortgage Loan Remittance Rate: With respect to each Mortgage Loan, the
annual rate of interest remitted to the Purchaser, which shall be equal to the
Mortgage Interest Rate minus the Servicing Fee Rate.
Mortgage Loan Schedule: A schedule of Mortgage Loans annexed hereto as
Exhibit A, such schedule setting forth the following information with respect to
each Mortgage Loan: (1) the Company's Mortgage Loan number; (2) the city state
and zip code of the Mortgaged Property; (3) a code indicating whether the
Mortgaged Property is a single family residence, two-family residence,
three-family residence, four-family residence, PUD or Condominium; (4) the
current Mortgage Interest Rate; (5) the current net Mortgage Interest Rate; (6)
the current Monthly Payment; (7) the Gross Margin; (8) the original term to
maturity; (9) the scheduled maturity date; (10) the principal balance of the
Mortgage Loan as of the Cut-off Date after deduction of payments of principal
due on or before the Cut-off Date whether or not collected; (11) the
Loan-to-Value Ratio; (12) the next Adjustment Date; (13) the lifetime Mortgage
Interest Rate cap; (14) whether the Mortgage Loan is convertible or not; (15) a
code indicating the mortgage guaranty insurance company; and (16) the Servicing
Fee.
Mortgage Note: The note or other evidence of the indebtedness of a
Mortgagor secured by a Mortgage and riders thereto.
Mortgaged Property: The real property securing repayment of the debt
evidenced by a Mortgage Note.
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Mortgagor: The obligor on a Mortgage Note.
Officer's Certificate: A certificate signed by the Chairman of the Board,
the Vice Chairman of the Board, ,the President, a Vice President, an Assistant
Vice President ,the Treasurer, the Secretary or one of the Assistant Treasurers
or Assistant Secretaries of the Company, and delivered to the Purchaser as
required by this Agreement.
Opinion of Counsel: A written opinion of counsel, who may be an employee
of the Company, reasonably acceptable to the Purchaser.
Pass-Through Transfer: The sale or transfer of some or all of the Mortgage
Loans by the Purchaser to a trust to be formed as part of a publicly issued or
privately placed mortgage-backed securities transaction.
Periodic Interest Rate Cap: As to each Mortgage Loan, the maximum increase
or decrease in the Mortgage Interest Rate on any Adjustment Date as defined in
the Mortgage Note.
Person: Any individual, corporation, partnership, joint venture, limited
liability company, association, joint-stock company, trust, unincorporated
organization, government or any agency or political subdivision thereof.
PMI Policy: A policy of primary mortgage guaranty insurance issued by a
Qualified Insurer, as required by this Agreement with respect to certain
Mortgage Loans.
Prime Rate: The prime rate announced to be in effect from time to time, as
published as the average rate in The Wall Street Journal.
Principal Prepayment: Any payment or other recovery of principal on a
Mortgage Loan which is received in advance of its scheduled Due Date, including
any prepayment penalty or premium thereon and which is not accompanied by an
amount of interest representing scheduled interest due on any date or dates in
any month or months subsequent to the month of prepayment.
Principal Prepayment Period: The month preceding the month in which the
related Remittance Date occurs.
Purchaser: Xxxxxx Brothers Bank, FSB, or its successor in interest or any
successor to the Purchaser under this Agreement as herein provided.
Qualified Depository: A deposit account or accounts maintained with a
federal or state chartered depository institution the deposits in which are
insured by the FDIC to the applicable 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 Group or
Prime-1 by Xxxxx'x Investors Service, Inc. (or a comparable rating if another
rating agency is specified by the Purchaser by written notice to the Company) at
the time any deposits are held on deposit therein.
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Qualified Insurer: A mortgage guaranty insurance company duly authorized
and licensed where required by law to transact mortgage guaranty insurance
business and approved as an insurer by Xxxxxx Xxx or Xxxxxxx Mac.
Qualified Substitute Mortgage Loan: A mortgage loan eligible to be
substituted by the Company for a Deleted Mortgage Loan which must, on the date
of such substitution, (i) have an outstanding principal balance, after deduction
of all scheduled payments due in the month of substitution (or in the case of a
substitution of more than one mortgage loan for a Deleted Mortgage Loan, an
aggregate principal balance), not in excess of the Stated Principal Balance of
the Deleted Mortgage Loan; (ii) have a Mortgage Loan Remittance Rate not less
than, and not more than 2% greater, than the Mortgage Loan Remittance Rate of
the Deleted Mortgage Loan; (iii) have a remaining term to maturity not greater
than and not more than one year less than that of the Deleted Mortgage Loan; and
(iv) comply with each representation and warranty set forth in Sections 3.01 and
3.02.
Rating Agencies: Any nationally recognized statistical Rating Agency, or
its successor, including Standard & Poor's Ratings Services, Xxxxx'x Investors
Service, Inc., Fitch IBCA, Inc., and Duff & Xxxxxx Credit Rating Co.
Reconstitution Date: The date on which any or all of the Mortgage Loans
serviced under this Agreement shall be removed from this Agreement and
reconstituted as part of a Pass-Through Transfer or Whole Loan Transfer pursuant
to Section 9.01 hereof. The Reconstitution Date shall be such date which the
Purchaser and the shelf registrant shall designate. On such date, the Mortgage
Loans transferred shall cease to be covered by this Agreement and the Company's
servicing responsibilities shall cease under this Agreement with respect to the
related transferred Mortgage Loans.
Record Date: The close of business of the last Business Day of the month
preceding the month of the related Remittance Date.
REMIC: A "real estate mortgage investment conduit" within the meaning of
Section 860D of the Code.
REMIC Provisions: Provisions of the federal income tax law relating to a
REMIC, which appear at Section 860A through 860G of Subchapter M of Chapter 1,
Subtitle A of the Code, and related provisions, and regulations, rulings or
pronouncements promulgated thereunder, as the foregoing may be in effect from
time to time.
Remittance Date: The 18th day (or if such 18th day is not a Business Day,
the first Business Day immediately following) of any month, beginning with the
First Remittance Date.
REO Disposition: The final sale by the Company of any REO Property.
REO Disposition Proceeds: All amounts received with respect to an REO
Disposition pursuant to Section 4.16.
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REO Property: A Mortgaged Property acquired by the Company on behalf of
the Purchaser through foreclosure or by deed in lieu of foreclosure, as
described in Section 4.16.
Repurchase Price: Unless agreed otherwise by the Purchaser and the
Company, a price equal to (i) the Stated Principal Balance of the Mortgage Loan
plus (ii) interest on such Stated Principal Balance at the Mortgage Loan
Remittance Rate from the date on which interest has last been paid and
distributed to the Purchaser through the last day of the month in which such
repurchase takes place, less amounts received or advanced in respect of such
repurchased Mortgage Loan which are being held in the Custodial Account for
distribution in the month of repurchase.
SAIF: The Savings Association Insurance Fund, or any successor thereto.
Securities Act of 1933 or the 1933 Act: The Securities Act of 1933, as
amended.
Servicing Advances: All customary, reasonable and necessary "out of
pocket" costs and expenses other than Monthly Advances (including reasonable
attorney's fees and disbursements) incurred in the performance by the Company of
its servicing obligations, including, but not limited to, the cost of (a) the
preservation, restoration and protection of the Mortgaged Property, (b) any
enforcement or judicial proceedings, including foreclosures, (c) the management
and liquidation of any REO Property and (d) compliance with the obligations
under Section 4.08.
Servicing Fee: With respect to each Mortgage Loan, the amount of the
annual fee the Purchaser shall pay to the Company, which shall, for a period of
one full month, be equal to one-twelfth of the product of (a) the Servicing Fee
Rate and (b) the outstanding principal balance of such Mortgage Loan. Such fee
shall be payable monthly, computed on the basis of the same principal amount and
period respecting which any related interest payment on a Mortgage Loan is
computed. The obligation of the Purchaser to pay the Servicing Fee is limited
to, and the Servicing Fee is payable solely from, the interest portion
(including recoveries with respect to interest from Liquidation Proceeds, to the
extent permitted by Section 4.05) of such Monthly Payment collected by the
Company, or as otherwise provided under Section 4.05.
Servicing Fee Rate: 0.610% per annum per Mortgage Loan, until the reset
date of the Mortgage Loan at which time the rate shall become 0.25%.
Servicing File: With respect to each Mortgage Loan, the file retained by
the Company consisting of originals of all documents in the Mortgage File which
are not delivered to the Custodian and copies of the Mortgage Loan Documents
listed in the Custodial Agreement the originals of which are delivered to the
Custodian pursuant to Section 2.03.
Servicing Officer: Any officer of the Company involved in or responsible
for the administration and servicing of the Mortgage Loans whose name appears on
a list of servicing officers furnished by the Company to the Purchaser upon
request, as such list may from time to time be amended.
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Stated Principal Balance: As to each Mortgage Loan, (i) the principal
balance of the Mortgage Loan at the Cut-off Date after giving effect to payments
of principal due on or before such date, whether or not received, minus (ii) all
amounts previously distributed to the Purchaser with respect to the related
Mortgage Loan representing payments or recoveries of principal or advances in
lieu thereof.
Underwriting Guidelines: The Company's underwriting guidelines attached
hereto as Exhibit G.
Whole Loan Transfer: Any sale or transfer of some or all of the Mortgage
Loans by the Purchaser to a third party, which sale or transfer is not a
Pass-Through Transfer.
Whole Loan Transfer Date: The date on which any or all of the Mortgage
Loans serviced under this Agreement shall be sold by the Purchaser as part of a
Whole Loan Transfer pursuant to Section 9.01 hereof.
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS; POSSESSION OF MORTGAGE FILES; BOOKS AND
RECORDS; CUSTODIAL AGREEMENT; DELIVERY OF DOCUMENTS
Section 2.01 Conveyance of Mortgage Loans; Possession of Mortgage Files;
Maintenance of Servicing Files.
The Company, simultaneously with the execution and delivery of this
Agreement, does hereby sell, transfer, assign, set over and convey to the
Purchaser, without recourse, but subject to the terms of this Agreement, all the
right, title and interest of the Company in and to the Mortgage Loans. Pursuant
to Section 2.03, the Company has delivered the Mortgage Loan Documents to the
Custodian.
The contents of each Mortgage File not delivered to the Custodian are and
shall be held in trust by the Company for the benefit of the Purchaser as the
owner thereof. The Company shall maintain a Servicing File consisting of a copy
of the contents of each Mortgage File and the originals of the documents in each
Mortgage File not delivered to the Custodian. The possession of each Servicing
File by the Company is at the will of the Purchaser for the sole purpose of
servicing the related Mortgage Loan, and such retention and possession by the
Company is in a custodial capacity only. Upon the sale of the Mortgage Loans the
ownership of each Mortgage Note, the related Mortgage and the related Mortgage
File and Servicing File shall vest immediately in the Purchaser, and the
ownership of all records and documents with respect to the related Mortgage Loan
prepared by or which come into the possession of the Company shall vest
immediately in the Purchaser and shall be retained and maintained by the
Company, in trust, at the will of the Purchaser and only in such custodial
capacity. The Company shall release its custody of the contents of any Servicing
File only in accordance with written instructions from the Purchaser, unless
such release is required as incidental to the Company's servicing of the
Mortgage Loans or is in connection with a repurchase of any Mortgage Loan
pursuant to Section
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3.03 or 6.02. All such costs associated with the release, transfer and
re-delivery to the Company shall be the responsibility of the Purchaser.
Section 2.02 Books and Records; Transfers of Mortgage Loans.
From and after the sale of the Mortgage Loans to the Purchaser all rights
arising out of the Mortgage Loans, including, but not limited to, all funds
received on or in connection with the Mortgage Loans, shall be received and held
by the Company in trust for the benefit of the Purchaser as owner of the
Mortgage Loans, and the Company shall retain record title to the related
Mortgages for the sole purpose of facilitating the servicing and the supervision
of the servicing of the Mortgage Loans.
The sale of each Mortgage Loan shall be reflected on the Company's balance
sheet and other financial statements as a sale of assets by the Company. The
Company shall be responsible for maintaining, and shall maintain, a complete set
of books and records for each Mortgage Loan which shall be marked clearly to
reflect the ownership of each Mortgage Loan by the Purchaser. In particular, the
Company shall maintain in its possession, available for inspection by the
Purchaser, or its designee, and shall deliver to the Purchaser upon demand,
evidence of compliance with all federal, state and local laws, rules and
regulations, and requirements of Xxxxxx Mae or Xxxxxxx Mac, including but not
limited to documentation as to the method used in determining the applicability
of the provisions of the Flood Disaster Protection Act of 1973, as amended, to
the Mortgaged Property, documentation evidencing insurance coverage and
eligibility of any condominium project for approval by Xxxxxx Mae or Xxxxxxx Mac
and periodic inspection reports as required by Section 4.13. To the extent that
original documents are not required for purposes of realization of Liquidation
Proceeds or Insurance Proceeds, documents maintained by the Company may be in
the form of microfilm or microfiche or such other reliable means of recreating
original documents, including but not limited to, optical imagery techniques so
long as the Company complies with the requirements of the Xxxxxx Mae Selling and
Servicing Guide, as amended from time to time.
The Company shall maintain with respect to each Mortgage Loan and shall
make available for inspection by any Purchaser or its designee the related
Servicing File during the time the Purchaser retains ownership of a Mortgage
Loan and thereafter in accordance with applicable laws and regulations.
The Company shall keep at its servicing office books and records in which,
subject to such reasonable regulations as it may prescribe, the Company shall
note transfers of Mortgage Loans. No transfer of a Mortgage Loan may be made
unless such transfer is in compliance with the terms hereof. For the purposes of
this Agreement, the Company shall be under no obligation to deal with any person
with respect to this Agreement or the Mortgage Loans unless the books and
records show such person as the owner of the Mortgage Loan. The Purchaser may,
subject to the terms of this Agreement, sell and transfer one or more of the
Mortgage Loans, provided, however, that in no event shall there be more than
four Persons at any given time having the status of "Purchaser" hereunder. The
Purchaser also shall advise the Company of the transfer. Upon receipt of notice
of the transfer, the Company shall xxxx its books and records to reflect the
ownership of the Mortgage Loans of such assignee, and shall release the previous
Purchaser
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from its obligations hereunder with respect to the Mortgage Loans sold or
transferred. If the Company receives notification of a transfer less than five
(5) Business Days before the the Company's duties to remit and report to the new
purchaser(s) as required by Section 5 shall begin with the next Due Period.
Section 2.03 Custodial Agreement; Delivery of Documents.
The Company has delivered and released to the Custodian those Mortgage
Loan Documents as required by Exhibit B to this Agreement with respect to each
Mortgage Loan.
The Custodian has certified its receipt of all such Mortgage Loan
Documents required to be delivered pursuant to the Custodial Agreement, as
evidenced by the Initial Certification of the Custodian in the form annexed to
the Custodial Agreement. The Company shall be responsible for recording the
initial assignments of mortgage. The Purchaser will be responsible for the fees
and expenses of the Custodian.
The Company shall forward to the Custodian original documents evidencing
an assumption, modification, consolidation or extension of any Mortgage Loan
entered into in accordance with Section 4.01 or 6.01 within one week of their
execution, provided, however, that the Company shall provide the Custodian with
a certified true copy of any such document submitted for recordation within ten
(10) days of its execution, and shall provide the original of any document
submitted for recordation or a copy of such document certified by the
appropriate public recording office to be a true and complete copy of the
original within sixty days of its submission for recordation.
In the event the public recording office is delayed in returning any
original document, the Company shall deliver to the Custodian within 180 days of
its submission for recordation, a copy of such document and an Officer's
Certificate, which shall (i) identify the recorded document; (ii) state that the
recorded document has not been delivered to the Custodian due solely to a delay
by the public recording office, (iii) state the amount of time generally
required by the applicable recording office to record and return a document
submitted for recordation, and (iv) specify the date the applicable recorded
document will be delivered to the Custodian. The Company will be required to
deliver the document to the Custodian by the date specified in (iv) above. An
extension of the date specified in (iv) above may be requested from the
Purchaser, which consent shall not be unreasonably withheld.
Section 2.04 Examination of Mortgage Loan Documents.
Prior to the Closing Date, the Company shall deliver the Mortgage Loan
Documents included in the Mortgage Loan File to the Custodian. The Purchaser or
a designee may review the Mortgage Loan Documents to verify that the documents
required to be included in each Mortgage Loan File are available. If a Mortgage
Loan File is incomplete or defective or a Mortgage Loan does not conform to the
requirements of this Agreement and such omissions or defects cannot be cured
prior to the Closing Date, the Mortgage Loan shall be deleted from the Mortgage
Loan Schedule. If deleted, the Mortgage Loan may be replaced, up to one Business
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Day prior to the Closing Date, by one or more substitute Mortgage Loans which
satisfy the criteria set forth in of this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES REMEDIES AND BREACH
Section 3.01 Company Representations and Warranties.
The Company hereby represents and warrants to the Purchaser that, as of
the Closing Date:
(a) Due Organization and Authority.
The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of California and has all
licenses necessary to carry on its business as now being conducted
and is licensed, qualified and in good standing in each state where
a Mortgaged Property is located if the laws of such state require
licensing or qualification in order to conduct business of the type
conducted by the Company, and in any event the Company is in
compliance with the laws of any such state to the extent necessary
to ensure the enforceability of the related Mortgage Loan and the
servicing of such Mortgage Loan in accordance with the terms of this
Agreement; the Company has the full corporate power and authority to
execute and deliver this Agreement and to perform in accordance
herewith; the execution, delivery and performance of this Agreement
(including all instruments of transfer to be delivered pursuant to
this Agreement) by the Company and the consummation of the
transactions contemplated hereby have been duly and validly
authorized; this Agreement evidences the valid, binding and
enforceable obligation of the Company; and all requisite corporate
action has been taken by the Company to make this Agreement valid
and binding upon the Company in accordance with its terms;
(b) Ordinary Course of Business.
The consummation of the transactions contemplated by this Agreement
are in the ordinary course of business of the Company, who is in the
business of selling and servicing loans, and the transfer,
assignment and conveyance of the Mortgage Notes and the Mortgages by
the Company pursuant to this Agreement are not subject to the bulk
transfer or any similar statutory provisions in effect in any
applicable jurisdiction;
(c) No Conflicts.
Neither the execution and delivery of this Agreement, the
acquisition of the Mortgage Loans by the Company, the sale of the
Mortgage Loans to the
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Purchaser or the transactions contemplated hereby, nor the
fulfillment of or compliance with the terms and conditions of this
Agreement will conflict with or result in a breach of any of the
terms, articles of incorporation or by-laws or any legal restriction
or any agreement or instrument to which the Company is now a party
or by which it is bound, or constitute a default or result in the
violation of any law, rule, regulation, order, judgment or decree to
which the Company or its property is subject, or impair the ability
of the Purchaser to realize on the Mortgage Loans, or impair the
value of the Mortgage Loans;
(d) Ability to Service.
The Company is an approved seller/servicer of conventional
residential mortgage loans for Xxxxxx Xxx or Xxxxxxx Mac, with the
facilities, procedures, and experienced personnel necessary for the
sound servicing of mortgage loans of the same type as the Mortgage
Loans. The Company is in good standing to sell mortgage loans to and
service mortgage loans for Xxxxxx Mae or Xxxxxxx Mac, and no event
has occurred, including but not limited to a change in insurance
coverage, which would make the Company unable to comply with Xxxxxx
Mae or Xxxxxxx Mac eligibility requirements or which would require
notification to either Xxxxxx Mae or Xxxxxxx Mac;
(e) Reasonable Servicing Fee.
The Company acknowledges and agrees that the Servicing Fee
represents reasonable compensation for performing such services and
that the entire Servicing Fee shall be treated by the Company, for
accounting and tax purposes, as compensation for the servicing and
administration of the Mortgage Loans pursuant to this Agreement;
(f) Ability to Perform.
The Company does not believe, nor does it have any reason or cause
to believe, that it cannot perform each and every covenant contained
in this Agreement. The Company is solvent and the sale of the
Mortgage Loans will not cause the Company to become insolvent. The
sale of the Mortgage Loans is not undertaken to hinder, delay or
defraud any of the Company's creditors;
(g) No Litigation Pending.
There is no action, suit, proceeding or investigation pending or
threatened against the Company which, either in any one instance or
in the aggregate, may result in any material adverse change in the
business, operations, financial condition, properties or assets of
the Company, or in any material impairment of the right or ability
of the Company to carry on its business substantially as now
conducted, or in any material liability on the part of the Company,
or which would draw into question the validity of this Agreement or
the Mortgage Loans or of any action
13
taken or to be contemplated herein, or which would be likely to
impair materially the ability of the Company to perform under the
terms of this Agreement;
(h) No Consent Required.
No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery
and performance by the Company of or compliance by the Company with
this Agreement or the sale of the Mortgage Loans as evidenced by the
consummation of the transactions contemplated by this Agreement, or
if required, such approval has been obtained prior to the Closing
Date;
(i) Selection Process. The Mortgage Loans were selected from among the
outstanding five-year fixed, one-year adjustable rate one- to
four-family mortgage loans in the Company's portfolio at the Closing
Date as to which the representations and warranties set forth in
Section 3.02 could be made and such selection was not made in a
manner so as to affect adversely the interests of the Purchaser;
(j) No Untrue Information.
Neither this Agreement nor any statement, report or other document
furnished or to be furnished pursuant to this Agreement or in
connection with the transactions contemplated hereby contains any
untrue statement of fact or omits to state a fact necessary to make
the statements contained therein not misleading;
(k) Sale Treatment.
The Company has determined that the disposition of the Mortgage
Loans pursuant to this Agreement will be afforded sale treatment for
accounting and tax purposes;
(l) No Material Change.
There has been no material adverse change in the business,
operations, financial condition or assets of the Company since the
date of the Company's most recent financial statements;
(m) No Brokers' Fees.
The Company has not dealt with any broker, investment banker, agent
or other Person that may be entitled to any commission or
compensation in the connection with the sale of the Mortgage Loans;
and
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(n) Fair Consideration.
The consideration received by the Company upon the sale of the
Mortgage Loans under this Agreement constitutes fair consideration
and reasonably equivalent value of the Mortgage Loans.
Section 3.02 Representations and Warranties Regarding Individual Mortgage Loans.
As to each Mortgage Loan, the Company hereby represents and warrants to
the Purchaser that as of the Closing Date:
(a) Mortgage Loans as Described.
The information set forth in the Mortgage Loan Schedule attached
hereto as Exhibit A and the information contained on the electronic
data file delivered to the Purchaser is true and correct;
(b) Payments Current.
All payments required to be made up to the Cut-off Date for the
Mortgage Loan under the terms of the Mortgage Note have been made by
the borrower and credited. No more than five percent (5%) of the
Mortgage Loans have been 30 days delinquent more than one time
within twelve months prior to the Closing Date;
(c) No Outstanding Charges.
There are no defaults in complying with the terms of the Mortgages,
and all taxes, governmental assessments, insurance premiums,
leasehold payments, water, sewer and municipal charges, which
previously became due and owing have been paid, or an escrow of
funds has been established in an amount sufficient to pay for every
such item which remains unpaid and which has been assessed but is
not yet due and payable. The Seller has not advanced funds, or
induced, or solicited directly or indirectly, the payment of any
amount required under the Mortgage Loan, except for interest
accruing from the date of the Mortgage Note or date of disbursement
of the Mortgage Loan proceeds, whichever is later, to the day which
precedes by one month the Due Date of the first installment of
principal and interest;
(d) Original Terms Unmodified.
The terms of the Mortgage Note and Mortgage have not been impaired,
waived, altered or modified in any respect, except by a written
instrument which has been recorded, if necessary to protect the
interests of the Purchaser and which has been delivered to the
Custodian. The substance of any such waiver, alteration or
15
modification has been approved by the issuer of any related PMI
policy and the title insurer, to the extent required by the policy,
and its terms are reflected on the Mortgage Loan Schedule. No
Mortgagor has been released, in whole or in part, except in
connection with an assumption agreement approved by the issuer of
any related PMI policy and the title insurer, to the extent required
by the policy, and which assumption agreement is part of the
Mortgage Loan File delivered to the Custodian and the terms of which
are reflected in the Mortgage Loan Schedule;
(e) No Defenses.
The Mortgage Loan is not subject to any right of rescission,
set-off, counterclaim or defense, including without limitation the
defense of usury, nor will the operation of any of the terms of the
Mortgage Note or the Mortgage, or the exercise of any right
thereunder, render either the Mortgage Note or the Mortgage
unenforceable, in whole or in part, or subject to any right of
rescission, set-off, counterclaim or defense, including without
limitation the defense of usury, and no such right of rescission,
set-off, counterclaim or defense has been asserted with respect
thereto;
(f) No Satisfaction of Mortgage.
Neither the Mortgage nor the Mortgage Note has been satisfied,
canceled, subordinated or rescinded, in whole or in part, and the
Mortgaged Property has not been released from the lien of the
Mortgage, in whole or in part, nor has any instrument been executed
that would effect any such release, cancellation, subordination or
rescission;
(g) Validity of Mortgage Documents.
The Mortgage Note and the Mortgage and related documents are
genuine, and each is the legal, valid and binding obligation of the
maker thereof enforceable in accordance with its terms. All parties
to the Mortgage Note, the Mortgage and any other related document
had legal capacity to enter into the Mortgage Loan and to execute
and deliver the Mortgage Note, the Mortgage and any other related
document , and the Mortgage Note, the Mortgage and any other related
document have been duly and properly executed by such parties. The
Company has reviewed all of the documents constituting the Mortgage
File and has made such inquiries as it deems necessary tomake tand
confirm the accuracy of the representations set forth herein;
(h) No Fraud.
All the documents executed in connection with the Mortgage Loan
including, but not limited to, the Mortgage Note and the Mortgage
are free of fraud and any misrepresentation, are signed by the
persons they purport to be signed by, and witnessed or, as
appropriate, notarized by the persons whose signatures appear as
16
witnesses or notaries, and each such document constitutes the valid
and binding legal obligation of the signatories and is enforceable
in accordance with its terms;
(i) Compliance with Applicable Laws.
Any and all requirements of any federal, state or local law
including, without limitation, usury, truth-in-lending, real estate
settlement procedures, consumer credit protection, equal credit
opportunity or disclosure laws applicable to the Mortgage Loan have
been complied with, and the Company shall maintain in its
possession, available for the Purchaser's inspection, and shall
deliver to the Purchaser upon demand, evidence of compliance with
all such requirements. The consummation of the transactions
contemplated hereby will not violate any such laws or regulations.
All inspections, licenses and certificates required to be made or
issued with respect to all occupied portions of the Mortgaged
Property and, with respect to the use and occupancy of the same,
including but not limited to certificates of occupancy and fire
underwriting certificates, have been made or obtained from the
appropriate authorities;
(j) Location and Type of Mortgaged Property.
The Mortgaged Property is located in the state identified in the
Mortgage Loan Schedule and consists of a parcel of real property
with a detached single family residence erected thereon, or a two-
to four-family dwelling, or an individual condominium unit in a
condominium project, or an individual unit in a planned unit
development or a townhouse, provided, however, that any condominium
project or planned unit development shall conform with the
applicable Xxxxxx Mae requirements regarding such dwellings, and no
residence or dwelling is a mobile home or a manufactured dwelling.
As of the respective appraisal date for each Mortgaged Property, no
portion of the Mortgaged Property was being used for commercial
purposes. If the Mortgaged Property is a condominium unit or a
planned unit development (other than a de minimus planned unit
development) such condominium or planned unit development project
meets Xxxxxx Xxx eligibility requirements or is located in a
condominium or planned unit development project which has received
Xxxxxx Mae project approval and the representations and warranties
required by Xxxxxx Xxx with respect to such condominium or planned
unit development have been made and remain true and correct in all
respects;
(k) Valid First Lien.
The Mortgage is a valid, subsisting and enforceable first lien on
the Mortgaged Property, including all buildings on the Mortgaged
Property and all installations and mechanical, electrical, plumbing,
heating and air conditioning systems located in or annexed to such
buildings, and all additions, alterations and replacements made at
any time with respect to the foregoing. The lien of the Mortgage is
subject only to:
17
(1) the lien of current real property taxes and assessments not
yet due and payable;
(2) covenants, conditions and restrictions, rights of way,
easements and other matters of the public record as of the
date of recording acceptable to mortgage lending institutions
generally and specifically referred to in the lender's title
insurance policy delivered to the originator of the Mortgage
Loan and (i) referred to or otherwise considered in the
appraisal made for the originator of the Mortgage Loan and
(ii) which do not adversely affect the Appraised Value of the
Mortgaged Property set forth in such appraisal; and
(3) other matters to which like properties are commonly subject
which do not materially interfere with the benefits of the
security intended to be provided by the mortgage or the use,
enjoyment, value or marketability of the related Mortgaged
Property.
Any security agreement, chattel mortgage or equivalent document
related to and delivered in connection with the Mortgage Loan
establishes and creates a valid, subsisting and enforceable first
lien and first priority security interest on the property described
therein and the Company has full right to sell and assign the same
to the Purchaser;
(l) Full Disbursement of Proceeds.
The Mortgage Loan has been closed and the proceeds of the Mortgage
Loan have been fully disbursed, except for escrows established or
created due to seasonal weather conditions, and there is no
requirement for future advances thereunder. All costs, fees and
expenses incurred in making or closing the Mortgage Loan and the
recording of the Mortgage were paid, and the Mortgagor is not
entitled to any refund of any amounts paid or due under the Mortgage
Note or Mortgage;
(m) Consolidation of Future Advances.
Any future advances made prior to the Cut-off Date, have been
consolidated with the outstanding principal amount secured by the
Mortgage, and the secured principal amount, as consolidated, bears a
single interest rate and single repayment term reflected on the
Mortgage Loan Schedule. The lien of the Mortgage securing the
consolidated principal amount is expressly insured as having first
lien priority by a title insurance policy, an endorsement to the
policy insuring the mortgagee's consolidated interest or by other
title evidence acceptable to Xxxxxx Mae or Xxxxxxx Mac; the
consolidated principal amount does not exceed the original principal
amount of the Mortgage Loan; the Seller shall not make future
advances after the Cut-Off Date;
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(n) Ownership.
The Company is the sole owner of record and holder of the Mortgage
Loan and the related Mortgage Note and the Mortgage are not assigned
or pledged, and the Company has good and marketable title thereto
and has full right and authority to transfer and sell the Mortgage
Loan to the Purchaser. The Company is transferring the Mortgage Loan
free and clear of any and all encumbrances, liens, pledges,
equities, participation interests, claims, charges or security
interests of any nature encumbering such Mortgage Loan;
(o) Origination/Doing Business.
The Mortgage Loan was originated by a savings and loan association,
a savings bank, a commercial bank, a credit union, an insurance
company, or similar institution which is supervised and examined by
a federal or state authority or by a mortgagee approved by the
Secretary of Housing and Urban Development pursuant to Sections 203
and 211 of the National Housing Act. All parties which have had any
interest in the Mortgage Loan, whether as mortgagee, assignee,
pledgee or otherwise, are (or, during the period in which they held
and disposed of such interest, were) (1) in compliance with any and
all applicable licensing requirements of the laws of the state
wherein the Mortgaged Property is located, and (2) organized under
the laws of such state, or (3) qualified to do business in such
state, or (4) federal savings and loan associations or national
banks having principal offices in such state, or (5) not doing
business in such state;
(p) LTV, PMI Policy.
No Mortgage Loan has a LTV greater than 95%. The original LTV of the
Mortgage Loan either was not more than 80% or if the Mortgage Loan
was originated prior to July 29, 1999, the excess over 75% is and
will be insured as to payment defaults by a PMI policy until the LTV
of such Mortgage Loan is reduced to 80%. If a Mortgage Loan was
originated on or after July 29, 1999, and the original LTV is 80% or
greater, the excess over 78% is and will be insured as to payment
defaults by a PMI Policy until terminated pursuant to the Homeowners
Protection Act of 1998, 12 USC ss.4901, et seq. All provisions of
such PMI policy have been and are being complied with, such policy
is in full force and effect, and all premiums due thereunder have
been paid. The Qualified Insurer has a claims paying ability
acceptable to Xxxxxx Mae or Xxxxxxx Mac. Any Mortgage Loan subject
to a PMI policy obligates the Mortgagor thereunder to maintain the
PMI policy and to pay all premiums and charges in connection
therewith. The Mortgage Interest Rate for the Mortgage Loan as set
forth on the Mortgage Loan Schedule is net of any such insurance
premium;
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(q) Title Insurance.
The Mortgage Loan is covered by an ALTA lender's title insurance
policy (or in the case of any Mortgage Loan secured by a Mortgaged
Property located in a jurisdiction where such policies are not
available, an opinion of counsel of the type customarily rendered in
such jurisdiction in lieu of title insurance) or other generally
acceptable form of policy of insurance acceptable to Xxxxxx Xxx or
Xxxxxxx Mac, issued by a title insurer acceptable to Xxxxxx Xxx or
Xxxxxxx Mac and qualified to do business in the jurisdiction where
the Mortgaged Property is located, insuring the Company, its
successors and assigns, as to the first priority lien of the
Mortgage in the original principal amount of the Mortgage Loan,
subject only to the exceptions contained in clauses (1), (2) and (3)
of Paragraph (k) of this Section 3.02, and against any loss by
reason of the invalidity or unenforceability of the lien resulting
from the provisions of the Mortgage providing for adjustment to the
Mortgage Interest Rate and Monthly Payment. The Company is the sole
insured of such lender's title insurance policy, and such lender's
title insurance policy is in full force and effect and will be in
force and effect upon the consummation of the transactions
contemplated by this Agreement. No claims have been made under such
lender's title insurance policy, and no prior holder of the
Mortgage, including the Company, has done, by act or omission,
anything which would impair the coverage of such lender's title
insurance policy;
(r) No Defaults.
There is no default, breach, violation or event of acceleration
existing under the Mortgage or the Mortgage Note and no event which,
with the passage of time or with notice and the expiration of any
grace or cure period, would constitute a default, breach, violation
or event of acceleration, and neither the Company nor its
predecessors have waived any default, breach, violation or event of
acceleration;
(s) No Mechanics' Liens.
There are no mechanics' or similar liens or claims which have been
filed for work, labor or material (and no rights are outstanding
that under the law could give rise to such liens) affecting the
related Mortgaged Property which are or may be liens prior to, or
equal or coordinate with, the lien of the related Mortgage which are
not insured against by the title insurance policy referenced in
Paragraph (q) above;
(t) Location of Improvements; No Encroachments.
Except as insured against by the title insurance policy referenced
in Paragraph (q) above, all improvements which were considered in
determining the Appraised Value of the Mortgaged Property lay wholly
within the boundaries and building
20
restriction lines of the Mortgaged Property and no improvements on
adjoining properties encroach upon the Mortgaged Property. No
improvement located on or being part of the Mortgaged Property is in
violation of any applicable zoning law or regulation;
(u) Payment Terms.
The Mortgage Loans have an original term to maturity of not more
than 30 years, with interest payable in arrears on the first day of
each month. As to each Mortgage Loan on each applicable Adjustment
Date, the Mortgage Interest Rate will be adjusted to equal the sum
of the Index plus the applicable Gross Margin, rounded up or down to
the nearest multiple of 0.125% indicated by the Mortgage Note;
provided that the Mortgage Interest Rate will not increase or
decrease by more than the Periodic Interest Rate Cap on any
Adjustment Date, and will in no event exceed the maximum Mortgage
Interest Rate or be lower than the minimum Mortgage Interest Rate
listed on the Mortgage Loan Schedule for such Mortgage Loan. Each
Mortgage Note requires a monthly payment which is sufficient, during
the period prior to the first adjustment to the Mortgage Interest
Rate, to fully amortize the outstanding principal balance as of the
first day of such period over the then remaining term of such
Mortgage Note and to pay interest at the related Mortgage Interest
Rate. As to each Mortgage Loan, if the related Mortgage Interest
Rate changes on an Adjustment Date, the then outstanding principal
balance will be reamortized over the remaining life of such Mortgage
Loan. No Mortgage Loan contains terms or provisions which would
result in negative amortization;
(v) Customary Provisions.
The Mortgage and related Mortgage Note contain customary and
enforceable provisions such as to render the rights and remedies of
the holder thereof adequate for the realization against the
Mortgaged Property of the benefits of the security provided thereby,
including, (i) in the case of a Mortgage designated as a deed of
trust, by trustee's sale, and (ii) otherwise by judicial foreclosure
and upon the exercise of such rights and remedies under the law, the
holder of the Mortgage and Mortgage Note will be able to deliver
good and merchantable title to the Mortgaged Property. There is no
homestead or other exemption available to a Mortgagor which would
interfere with the right to sell the Mortgaged Property at a
trustee's sale or the right to foreclose the Mortgage;
(w) Occupancy of the Mortgaged Property.
As of the date of origination, the Mortgaged Property was lawfully
occupied under all applicable laws.
21
(x) No Additional Collateral.
The Mortgage Note is not and has not been secured by any collateral,
pledged account or other security except the lien of the
corresponding Mortgage and the security interest of any applicable
security agreement or chattel mortgage referred to in (k) above;
(y) Deeds of Trust.
In the event the Mortgage constitutes a deed of trust, a trustee,
duly qualified under applicable law to serve as such, has been
properly designated and currently so serves and is named in the
Mortgage, and no fees or expenses are or will become payable by the
Mortgagee to the trustee under the deed of trust, except in
connection with a trustee's sale after default by the Mortgagor;
(z) Acceptable Investment.
The Company has no knowledge of any circumstances or conditions with
respect to the Mortgage Loan, the Mortgaged Property, the Mortgagor
or the Mortgagor's credit standing that can reasonably be expected
to cause private institutional investors to regard the Mortgage Loan
as an unacceptable investment, cause the Mortgage Loan to become
delinquent, or adversely affect the value or marketability of the
Mortgage Loan;
(aa) Transfer of Mortgage Loans.
The Assignment upon the insertion of the name of the assignee and
recording information is in recordable form and is acceptable for
recording under the laws of the jurisdiction in which the Mortgaged
Property is located;
(bb) Mortgaged Property Undamaged.
The Mortgaged Property is undamaged by water, fire, earthquake or
earth movement, windstorm, flood, tornado or other casualty so as to
affect adversely the value of the Mortgaged Property as security for
the Mortgage Loan or the use for which the premises were intended;
(cc) Collection Practices; Escrow Deposits.
The origination and collection practices used with respect to the
Mortgage Loan have been in accordance with Accepted Servicing
Practices, and have been in all material respects legal and proper.
With respect to escrow deposits and Escrow Payments, all such
payments are in the possession of the Company and there exist no
deficiencies in connection therewith for which customary
arrangements for repayment thereof have not been made. All Escrow
Payments have been collected in full compliance with state and
federal law. No escrow deposits or
22
Escrow Payments or other charges or payments due the Company have
been capitalized under the Mortgage Note;
(dd) No Condemnation.
There is no proceeding pending or to the best of the Company's
knowledge threatened for the total or partial condemnation of the
related Mortgaged Property;
(ee) The Appraisal.
The Mortgage Loan Documents contain an appraisal of the related
Mortgaged Property by an appraiser who is licensed in the state
where the Mortgaged Property is located, and who had no interest,
direct or indirect, in the Mortgaged Property or in any loan made on
the security thereof; and whose compensation is not affected by the
approval or disapproval of the Mortgage Loan, and the appraisal and
the appraiser both satisfy the applicable requirements of Title XI
of the Financial Institution Reform, Recovery, and Enforcement Act
of 1989 and the regulations promulgated thereunder, all as in effect
on the date the Mortgage Loan was originated;
(ff) Insurance.
The Mortgaged Property securing each Mortgage Loan is insured by an
insurer acceptable to Xxxxxx Xxx or Xxxxxxx Mac against loss by fire
and such hazards as are covered under a standard extended coverage
endorsement and such other hazards as are customary in the area
where the Mortgaged Property is located pursuant to insurance
policies conforming to the requirements of Section 4.10, in an
amount which is not less than the lesser of 100% of the insurable
value of the Mortgaged Property and the outstanding principal
balance of the Mortgage Loan, but in no event less than the minimum
amount necessary to fully compensate for any damage or loss on a
replacement cost basis. If the Mortgaged Property is a condominium
unit, it is included under the coverage afforded by a blanket policy
for the project. If the improvements on the Mortgaged Property are
in an area identified in the Federal Register by the Federal
Emergency Management Agency as having special flood hazards, 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, in an amount representing
coverage not less than the least of (A) the outstanding principal
balance of the Mortgage Loan, (B) the full insurable value and (C)
the maximum amount of insurance which was available under the Flood
Disaster Protection Act of 1973, as amended. All individual
insurance policies contain a standard mortgagee clause naming the
Company and its successors and assigns as mortgagee, and all
premiums thereon have been paid. The Mortgage obligates the
Mortgagor thereunder to maintain a hazard insurance policy at the
Mortgagor's cost and expense, and on the Mortgagor's failure to do
so, authorizes the holder of the
23
Mortgage to obtain and maintain such insurance at such Mortgagor's
cost and expense, and to seek reimbursement therefor from the
Mortgagor. The hazard insurance policy is the valid and binding
obligation of the insurer, is in full force and effect, and will be
in full force and effect and inure to the benefit of the Purchaser
upon the consummation of the transactions contemplated by this
Agreement. The Company has not acted or failed to act so as to
impair the coverage of any such insurance policy or the validity,
binding effect and enforceability thereof;
(gg) Soldiers' and Sailors' Civil Relief Act.
The Mortgagor has not notified the Company, and the Company has no
knowledge of any relief requested or allowed to the Mortgagor under
the Soldiers' and Sailors' Civil Relief Act of 1940, as amended;
(hh) No Balloon Payments, Graduated Payments or Contingent Interests.
The Mortgage Loan is not a graduated payment mortgage loan and the
Mortgage Loan does not have a shared appreciation or other
contingent interest feature. No Mortgage Loan has a balloon payment
feature;
(ii) No Construction Loans.
No Mortgage Loan was made in connection with (i) the construction or
rehabilitation of a Mortgage Property or (ii) facilitating the
trade-in or exchange of a Mortgaged Property other than a
construction-to-permanent loan which has converted to a permanent
Mortgage Loan;
(jj) Underwriting.
Each Mortgage Loan was underwritten in accordance with the
underwriting guidelines of the Company; and the Mortgage Note and
Mortgage are on forms acceptable to Xxxxxxx Mac or Xxxxxx Mae;
(kk) Buydown Mortgage Loans.
With respect to each Mortgage Loan that is a Buydown Mortgage Loan:
(i) On or before the date of origination of such Mortgage Loan,
the Company and the Mortgagor, or the Company, the Mortgagor
and the seller of the Mortgaged Property or a third party
entered into a Buydown Agreement. The Buydown Agreement
provides that the seller of the Mortgaged Property (or third
party) shall deliver to the Company temporary Buydown Funds in
an amount equal to the aggregate undiscounted amount of
payments that, when added to the amount the Mortgagor on such
Mortgage Loan is obligated to pay on each Due Date in
accordance with
24
the terms of the Buydown Agreement, is equal to the full
scheduled Monthly Payment due on such Mortgage Loan. The
temporary Buydown Funds enable the Mortgagor to qualify for
the Buydown Mortgage Loan. The effective interest rate of a
Buydown Mortgage Loan if less than the interest rate set forth
in the related Mortgage Note will increase within the Buydown
Period as provided in the related Buydown Agreement so that
the effective interest rate will be equal to the interest rate
as set forth in the related Mortgage Note. The Buydown
Mortgage Loan satisfies the requirements of Xxxxxx Xxx
guidelines;
(ii) The Mortgage and Mortgage Note reflect the permanent payment
terms rather than the payment terms of the Buydown Agreement.
The Buydown Agreement provides for the payment by the
Mortgagor of the full amount of the Monthly Payment on any Due
Date that the Buydown Funds are available. The Buydown Funds
were not used to reduce the original principal balance of the
Mortgage Loan or to increase the Appraised Value of the
Mortgage Property when calculating the Loan-to-Value Ratios
for purposes of the Agreement and, if the Buydown Funds were
provided by the Company and if required under Xxxxxx Mae and
Xxxxxxx Mac guidelines, the terms of the Buydown Agreement
were disclosed to the appraiser of the Mortgaged Property;
(iii) The Buydown Funds may not be refunded to the Mortgagor unless
the Mortgagor makes a principal payment for the outstanding
balance of the Mortgage Loan;
(iv) As of the date of origination of the Mortgage Loan, the
provisions of the related Buydown Agreement complied with the
requirements of Xxxxxx Mae and Xxxxxxx Mac regarding buydown
agreements.
(ll) Bankruptcy.
No Mortgagor was a debtor in any state or federal bankruptcy or
insolvency proceeding as of the date the Mortgage loan was closed;
(mm) Interest Rate Adjustments.
All adjustments to the Mortgage Interest Rate haave been made in
accordance with the terms of the related Mortgage Note and all
applicable laws;
(nn) Leasehold Estates.
With respect to Mortgage Loans that are secured by a leasehold
estate, the lease is valid, in full force and effect and conforms to
Xxxxxx Xxx or Xxxxxxx Mac guidelines;
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(oo) The Mortgagor.
The Mortgagor is one or more natural persons and/or trustees for an
Illinois land trust or a trustee under a "living trust" and such
"living trust" is in compliance with Xxxxxx Mae or Xxxxxxx Mac
guidelines;
(pp) Delivery of Mortgage Files.
The Mortgage and any other documents required to be delivered by the
Company under the Custodial Agreement attached as Exhibit C hereto
for the Mortgage Loans have been delivered to the Custodian. The
Company is in possession of a complete, true and accurate Mortgage
File in compliance with Exhibit B, except for such documents the
originals of which have been delivered to the Custodian;
(ll) Servicing.
From and after the dated of origination, each Mortgage Loan has been
serviced in accordance with the terms of all federal, state and
local laws and regulations, the terms of the Mortgage Note and
Accepted Servicing Practices in all respects.
(mm) Due on Sale.
The Mortgage or Mortgage Note contains an enforceable provision for
the acceleration of the payment of the unpaid principal balance of
the Mortgage Loan in the event that the Mortgaged Property is sold
or transferred without the prior written consent of the Mortgagee
thereunder; and
(nn) No Violation of Environmental Laws.
There is no pending action or proceeding directly involving any
Mortgaged Property of which the Company is aware in which compliance
with any environmental law, rule or regulation is an issue; and to
the best of the Company's knowledge, nothing further remains to be
done to satisfy in full all requirements of each such law, rule or
regulation constituting a prerequisite to use, value and enjoyment
of said property.
Section 3.03 Repurchase.
It is understood and agreed that the representations and warranties set
forth in Sections 3.01 and 3.02 shall survive the sale of the Mortgage Loans to
the Purchaser and the delivery of the Mortgage Loan Documents to the Custodian
and shall inure to the benefit of the Purchaser, notwithstanding any restrictive
or qualified endorsement on any Mortgage Note or Assignment of Mortgage or the
examination or failure to examine any Mortgage File. Upon discovery by either
the Company or the Purchaser of a breach of any of the foregoing representations
and warranties which materially and adversely affects the value of the Mortgage
Loans or the interest of the Purchaser (or which materially and adversely
affects the interests of Purchaser in the
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related Mortgage Loan in the case of a representation and warranty relating to a
particular Mortgage Loan), the party discovering such breach shall give prompt
written notice to the other.
Within 90 days of the earlier of either discovery by or notice to the
Company of any breach of a representation or warranty which materially and
adversely affects the value of the Mortgage Loans, the Company shall use its
best efforts promptly to cure such breach in all material respects and, if such
breach cannot be cured, the Company shall, at the Purchaser's option, repurchase
such Mortgage Loan at the Repurchase Price. In the event that a breach shall
involve any representation or warranty set forth in Section 3.01, and such
breach cannot be cured within 90 days of the earlier of either discovery by or
notice to the Company of such breach, all of the Mortgage Loans shall, at the
Purchaser's option, be repurchased by the Company at the Repurchase Price.
However, if the breach shall involve a representation or warranty set forth in
Section 3.02 and the Company discovers or receives notice of any such breach
within 120 days of the Closing Date, the Company shall, if the breach cannot be
cured, at the Purchaser's option and provided that the Company has a Qualified
Substitute Mortgage Loan, rather than repurchase the Mortgage Loan as provided
above, remove such Mortgage Loan (a "Deleted Mortgage Loan") and substitute in
its place a Qualified Substitute Mortgage Loan or Loans, provided that any such
substitution shall be effected not later than 120 days after the Closing Date.
If the Company has no Qualified Substitute Mortgage Loan, it shall repurchase
the deficient Mortgage Loan within 90 days of the written notice of the breach
or the failure to cure, whichever is later. Any repurchase of a Mortgage Loan or
Loans pursuant to the foregoing provisions of this Section 3.03 shall be
accomplished by deposit in the Custodial Account of the amount of the Repurchase
Price for distribution to Purchaser on the next scheduled Remittance Date, after
deducting therefrom any amount received in respect of such repurchased Mortgage
Loan or Loans and being held in the Custodial Account for future distribution.
At the time of repurchase or substitution, the Purchaser and the Company
shall arrange for the reassignment of the Deleted Mortgage Loan to the Company
and the delivery to the Company of any documents held by the Custodian relating
to the Deleted Mortgage Loan. In the event of a repurchase or substitution, the
Company shall, simultaneously with such reassignment, give written notice to the
Purchaser that such repurchase or substitution has taken place, amend the
Mortgage Loan Schedule to reflect the withdrawal of the Deleted Mortgage Loan
from this Agreement, and, in the case of substitution, identify a Qualified
Substitute Mortgage Loan and amend the Mortgage Loan Schedule to reflect the
addition of such Qualified Substitute Mortgage Loan to this Agreement. In
connection with any such substitution, the Company shall be deemed to have made
as to such Qualified Substitute Mortgage Loan the representations and warranties
set forth in this Agreement except that all such representations and warranties
set forth in this Agreement shall be deemed made as of the date of such
substitution. The Company shall effect such substitution by delivering to the
Custodian for such Qualified Substitute Mortgage Loan the documents required by
Section 2.03, with the Mortgage Note endorsed as required by Section 2.03. No
substitution will be made in any calendar month after the Determination Date for
such month. The Company shall deposit in the Custodial Account the Monthly
Payment less the Servicing Fee due on such Qualified Substitute Mortgage Loan or
Loans in the month following the date of such substitution. Monthly Payments due
with respect to Qualified Substitute Mortgage Loans in the month of substitution
shall be retained by the Company. With respect to any Deleted Mortgage loan,
distributions to Purchaser shall include the Monthly Payment due on
27
any Deleted Mortgage Loan in the month of substitution, and the Company shall
thereafter be entitled to retain all amounts subsequently received by the
Company in respect of such Deleted Mortgage Loan.
For any month in which the Company substitutes a Qualified Substitute
Mortgage Loan for a Deleted Mortgage Loan, the Company shall determine the
amount (if any) by which the aggregate principal balance of all Qualified
Substitute Mortgage Loans as of the date of substitution is less than the
aggregate Stated Principal Balance of all Deleted Mortgage Loans (after
application of scheduled principal payments due in the month of substitution).
The amount of such shortfall shall be distributed by the Company in the month of
substitution pursuant to Section 5.01. Accordingly, on the date of such
substitution, the Company shall deposit from its own funds into the Custodial
Account an amount equal to the amount of such shortfall.
In addition to such repurchase or substitution obligation, the Company
shall indemnify the Purchaser and hold it harmless against any losses, damages,
penalties, fines, forfeitures, reasonable and necessary legal fees and related
costs, judgments, and other costs and expenses resulting from any claim, demand,
defense or assertion based on or grounded upon, or resulting from, a breach of
the Company representations and warranties contained in this Agreement. It is
understood and agreed that the obligations of the Company set forth in this
Section 3.03 to cure, substitute for or repurchase a defective Mortgage Loan and
to indemnify the Purchaser as provided in this Section 3.03 constitute the sole
remedies of the Purchaser respecting a breach of the foregoing representations
and warranties.
Any cause of action against the Company relating to or arising out of the
breach of any representations and warranties made in Sections 3.01 and 3.02
shall accrue as to any Mortgage Loan upon (i) discovery of such breach by the
Purchaser or notice thereof by the Company to the Purchaser, (ii) failures by
the Company to cure such breach or repurchase such Mortgage Loan as specified
above, and (iii) demand upon the Company by the Purchaser for compliance with
this Agreement.
ARTICLE IV
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 4.01 Company to Act as Servicer.
The Company, as an independent contractor, shall service and administer
the Mortgage Loans and shall have full power and authority, acting alone or
through the utilization of a third party servicing provider, to do any and all
things in connection with such servicing and administration which the Company
may deem necessary or desirable, consistent with the terms of this Agreement and
with Accepted Servicing Practices.
Consistent with the terms of this Agreement, the Company may waive, modify
or vary any term of any Mortgage Loan or consent to the postponement of strict
compliance with any such term or in any manner grant indulgence to any Mortgagor
if in the Company's reasonable and prudent determination such waiver,
modification, postponement or indulgence is
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not materially adverse to the Purchaser, provided, however, the Company shall
not make any future advances with respect to a Mortgage Loan. Unless the
Mortgagor is in default with respect to the Mortgage Loan or such default is, in
the judgment of the Company, imminent, the Company shall not permit any
modification with respect to any Mortgage Loan that would change the Mortgage
Interest Rate, defer or forgive the payment of principal (except for actual
payments of principal) or change the final maturity date on such Mortgage Loan.
The Company shall request written consent from the Purchaser to permit such a
modification and he Purchaser shall provide written consent or notify the
Company of its objection to such modification within five (5) Business Days of
its receipt of the Company's request. In the event of any such modification
which permits the deferral of interest or principal payments on any Mortgage
Loan, the Company shall, on the Business Day immediately preceding the
Remittance Date in any month in which any such principal or interest payment has
been deferred, deposit in the Custodial Account from its own funds, in
accordance with Section 5.03, the difference between (a) such month's principal
and one month's interest at the Mortgage Loan Remittance Rate on the unpaid
principal balance of such Mortgage Loan and (b) the amount paid by the
Mortgagor. The Company shall be entitled to reimbursement for such advances to
the same extent as for all other advances made pursuant to Section 5.03. Without
limiting the generality of the foregoing, the Company shall continue, and is
hereby authorized and empowered, to execute and deliver on behalf of itself and
the Purchaser, all instruments of satisfaction or cancellation, or of partial or
full release, discharge and all other comparable instruments, with respect to
the Mortgage Loans and with respect to the Mortgaged Properties. If reasonably
required by the Company, the Purchaser shall furnish the Company with any powers
of attorney and other documents necessary or appropriate to enable the Company
to carry out its servicing and administrative duties under this Agreement.
In servicing and administering the Mortgage Loans, the Company shall
employ procedures (including collection procedures) and exercise the same care
that it customarily employs and exercises in servicing and administering
mortgage loans for its own account, giving due consideration to Accepted
Servicing Practices where such practices do not conflict with the requirements
of this Agreement, and the Purchaser's reliance on the Company.
Section 4.02 Liquidation of Mortgage Loans.
In the event that any payment due under any Mortgage Loan and not
postponed pursuant to Section 4.01 is not paid when the same becomes due and
payable, or in the event the Mortgagor fails to perform any other covenant or
obligation under the Mortgage Loan and such failure continues beyond any
applicable grace period, the Company shall take such action as (1) the Company
would take under similar circumstances with respect to a similar mortgage loan
held for its own account for investment, (2) shall be consistent with Accepted
Servicing Practices, (3) the Company shall determine prudently to be in the best
interest of Purchaser, and (4) is consistent with any related PMI Policy. In the
event that any payment due under any Mortgage Loan is not postponed pursuant to
Section 4.01 and remains delinquent for a period of 90 days or any other default
continues for a period of 90 days beyond the expiration of any grace or cure
period, the Company shall commence foreclosure proceedings, the Company shall
notify the Purchaser in writing of the Company's intention to do so, and the
Company shall not commence foreclosure proceedings if the Purchaser objects to
such action within five (5)
29
Business Days of receiving such notice. In the event the Purchaser objects to
such foreclosure action, the Company shall not be required to make Monthly
Advances with respect to such Mortgage Loan, pursuant to Section 5.03, and the
Company's obligation to make such Monthly Advances shall terminate on the 90th
day referred to above. In such connection, the Company shall from its own funds
make all necessary and proper Servicing Advances, provided, however, that the
Company shall not be required to expend its own funds in connection with any
foreclosure or towards the restoration or preservation of any Mortgaged
Property, unless it shall determine (a) that such preservation, restoration
and/or foreclosure will increase the proceeds of liquidation of the Mortgage
Loan to Purchaser after reimbursement to itself for such expenses and (b) that
such expenses will be recoverable by it either through Liquidation Proceeds
(respecting which it shall have priority for purposes of withdrawals from the
Custodial Account pursuant to Section 4.05) or through Insurance Proceeds
(respecting which it shall have similar priority).
Notwithstanding anything to the contrary contained herein, in connection
with a foreclosure or acceptance of a deed in lieu of foreclosure, in the event
the Company has reasonable cause to believe that a Mortgaged Property is
contaminated by hazardous or toxic substances or wastes, or if the Purchaser
otherwise requests an environmental inspection or review of such Mortgaged
Property, such an inspection or review is to be conducted by a qualified
inspector. The cost for such inspection or review shall be borne by the
Purchaser. Upon completion of the inspection or review, the Company shall
promptly provide the Purchaser with a written report of the environmental
inspection.
After reviewing the environmental inspection report, the Purchaser shall
determine how the Company shall proceed with respect to the Mortgaged Property.
In the event (a) the environmental inspection report indicates that the
Mortgaged Property is contaminated by hazardous or toxic substances or wastes
and (b) the Purchaser directs the Company to proceed with foreclosure or
acceptance of a deed in lieu of foreclosure, the Company shall be reimbursed for
all reasonable costs associated with such foreclosure or acceptance of a deed in
lieu of foreclosure and any related environmental clean up costs, as applicable,
from the related Liquidation Proceeds, or if the Liquidation Proceeds are
insufficient to fully reimburse the Company, the Company shall be entitled to be
reimbursed from amounts in the Custodial Account pursuant to Section 4.05
hereof. In the event the Purchaser directs the Company not to proceed with
foreclosure or acceptance of a deed in lieu of foreclosure, the Company shall be
reimbursed for all Servicing Advances made with respect to the related Mortgaged
Property from the Custodial Account pursuant to Section 4.05 hereof.
Section 4.03 Collection of Mortgage Loan Payments.
Continuously from the date hereof until the principal and interest on all
Mortgage Loans are paid in full, the Company shall proceed diligently to collect
all payments due under each of the Mortgage Loans when the same shall become due
and payable and shall take special care in ascertaining and estimating Escrow
Payments and all other charges that will become due and payable with respect to
the Mortgage Loan and the Mortgaged Property, to the end that the installments
payable by the Mortgagors will be sufficient to pay such charges as and when
they become due and payable.
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Section 4.04 Establishment of and Deposits to Custodial Account.
The Company shall segregate and hold all funds collected and received
pursuant to a Mortgage Loan separate and apart from any of its own funds and
general assets and shall establish and maintain one or more Custodial Accounts,
in the form of time deposit or demand accounts, titled "Xxxxx Fargo Home
Mortgage, Inc. in trust for the Purchaser and/or subsequent purchasers of
Mortgage Loans, and various Mortgagors - P & I." The Custodial Account shall be
established with a Qualified Depository. Any funds deposited in the Custodial
Account shall at all times be insured to the fullest extent allowed by
applicable law. Funds deposited in the Custodial Account may be drawn on by the
Company in accordance with Section 4.05. The creation of any Custodial Account
shall be evidenced by a certification in the case of an account established with
the Company, or by a letter agreement in the case of an account held by a
depository other than the Company each in the forms attached hereto as Exhibit
D. A copy of such certification or letter agreement shall be furnished to the
Purchaser or any subsequent purchaser upon request.
The Company shall deposit in the Custodial Account within one (1) Business
Day of the Company's receipt, and retain therein, the following collections
received by the Company and payments made by the Company after the Cut-off Date,
other than payments of principal and interest due on or before the Cut-off Date,
or received by the Company prior to the Cut-off Date but allocable to a period
subsequent thereto:
(i) all payments on account of principal on the Mortgage Loans,
including all Principal Prepayments;
(ii) all payments on account of interest on the Mortgage Loans adjusted
to the Mortgage Loan Remittance Rate;
(iii) all Liquidation Proceeds;
(iv) all Insurance Proceeds including amounts required to be deposited
pursuant to Section 4.10 (other than proceeds to be held in the
Escrow Account and applied to the restoration or repair of the
Mortgaged Property or released to the Mortgagor in accordance with
Section 4.14), Section 4.11 and Section 4.15;
(v) all Condemnation Proceeds which are not applied to the restoration
or repair of the Mortgaged Property or released to the Mortgagor in
accordance with Section 4.14;
(vi) any amount required to be deposited in the Custodial Account
pursuant to Section 4.01, 5.03, 6.01 or 6.02;
(vii) any amounts payable in connection with the repurchase of any
Mortgage Loan pursuant to Section 3.03 and all amounts required to
be deposited by the
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Company in connection with a shortfall in principal amount of any
Qualified Substitute Mortgage Loan pursuant to Section 3.03;
(viii) with respect to each Principal Prepayment an amount (to be paid by
the Company out of its funds) which, when added to all amounts
allocable to interest received in connection with the Principal
Prepayment, equals one month's interest on the amount of principal
so prepaid at the Mortgage Loan Remittance Rate;
(ix) any amounts required to be deposited by the Company pursuant to
Section 4.11 in connection with the deductible clause in any blanket
hazard insurance policy; and
(x) any amounts received with respect to or related to any REO Property
and all REO Disposition Proceeds pursuant to Section 4.16.
The foregoing requirements for deposit into the Custodial Account shall be
exclusive, it being understood and agreed that, without limiting the generality
of the foregoing, payments in the nature of late payment charges and assumption
fees, to the extent permitted by Section 6.01, need not be deposited by the
Company into the Custodial Account. Any interest paid on funds deposited in the
Custodial Account by the depository institution shall accrue to the benefit of
the Company and the Company shall be entitled to retain and withdraw such
interest from the Custodial Account pursuant to Section 4.05.
Section 4.05 Permitted Withdrawals From Custodial Account.
The Company shall, from time to time, withdraw funds from the Custodial
Account for the following purposes:
(i) to make payments to the Purchaser in the amounts and in the manner
provided for in Section 5.01;
(ii) to reimburse itself for Monthly Advances of the Company's funds made
pursuant to Section 5.03, the Company's right to reimburse itself
pursuant to this subclause (ii) being limited to amounts received on
the related Mortgage Loan which represent late payments of principal
and/or interest respecting which any such advance was made, it being
understood that, in the case of any such reimbursement, the
Company's right thereto shall be prior to the rights of Purchaser,
except that, where the Company is required to repurchase a Mortgage
Loan pursuant to Section 3.03 or 6.02, the Company's right to such
reimbursement shall be subsequent to the payment to the Purchaser of
the Repurchase Price pursuant to such sections and all other amounts
required to be paid to the Purchaser with respect to such Mortgage
Loan;
(iii) to reimburse itself for unreimbursed Servicing Advances, and for any
unpaid Servicing Fees, the Company's right to reimburse itself
pursuant to this subclause (iii) with respect to any Mortgage Loan
being limited to related Liquidation Proceeds, Condemnation
Proceeds, Insurance Proceeds and such other amounts as
32
may be collected by the Company from the Mortgagor or otherwise
relating to the Mortgage Loan, it being understood that, in the case
of any such reimbursement, the Company's right thereto shall be
prior to the rights of Purchaser, except that where the Company is
required to repurchase a Mortgage Loan pursuant to Section 3.03 or
6.02, in which case the Company's right to such reimbursement shall
be subsequent to the payment to the Purchaser of the Repurchase
Price pursuant to such sections and all other amounts required to be
paid to the Purchaser with respect to such Mortgage Loan;
(iv) to pay itself interest on funds deposited in the Custodial Account;
(v) to reimburse itself for expenses incurred and reimbursable to it
pursuant to Section 8.01;
(vi) to pay any amount required to be paid pursuant to Section 4.16
related to any REO Property, it being understood that, in the case
of any such expenditure or withdrawal related to a particular REO
Property, the amount of such expenditure or withdrawal from the
Custodial Account shall be limited to amounts on deposit in the
Custodial Account with respect to the related REO Property;
(vii) to reimburse itself for any Servicing Advances or REO expenses after
liquidation of the Mortgaged Property not otherwise reimbursed
above;
(viii) to remove funds inadvertently placed in the Custodial Account by
the Company; and
(ix) to clear and terminate the Custodial Account upon the termination of
this Agreement.
In the event that the Custodial Account is interest bearing, on each
Remittance Date, the Company shall withdraw all funds from the Custodial Account
except for those amounts which, pursuant to Section 5.01, the Company is not
obligated to remit on such Remittance Date. The Company may use such withdrawn
funds only for the purposes described in this Section 4.05.
Section 4.06 Establishment of and Deposits to Escrow Account.
The Company shall segregate and hold all funds collected and received
pursuant to a Mortgage Loan constituting Escrow Payments separate and apart from
any of its own funds and general assets and shall establish and maintain one or
more Escrow Accounts, in the form of time deposit or demand accounts, titled,
"Xxxxx Fargo Home Mortgage, Inc., in trust for the Purchaser and/or subsequent
purchasers of Mortgage Loans, and various Mortgagors - T & I." The Escrow
Accounts shall be established with a Qualified Depository, in a manner which
shall provide maximum available insurance thereunder. Funds deposited in the
Escrow Account may be drawn on by the Company in accordance with Section 4.07.
The creation of any Escrow Account shall be evidenced by a certification in the
case of an account established with the Company, or by a letter agreement in the
case of an account held by a depository other than the
33
Company each in the forms attached hereto as Exhibit E. A copy of such
certification or letter agreement shall be furnished to the Purchaser or any
subsequent purchaser, upon request.
The Company shall deposit in the Escrow Account or Accounts within one (1)
Business Day of Company's receipt , and retain therein:
(i) all Escrow Payments collected on account of the Mortgage Loans, for
the purpose of effecting timely payment of any such items as
required under the terms of this Agreement;
(ii) all amounts representing Insurance Proceeds or Condemnation Proceeds
which are to be applied to the restoration or repair of any
Mortgaged Property; and
(iii) all payments on account of Buydown Funds.
The Company shall make withdrawals from the Escrow Account only to effect
such payments as are required under this Agreement, as set forth in Section
4.07. The Company shall be entitled to retain any interest paid on funds
deposited in the Escrow Account by the depository institution, other than
interest on escrowed funds required by law to be paid to the Mortgagor. To the
extent required by law, the Company shall pay interest on escrowed funds to the
Mortgagor notwithstanding that the Escrow Account may be non-interest bearing or
that interest paid thereon is insufficient for such purposes.
Section 4.07 Permitted Withdrawals From Escrow Account.
Withdrawals from the Escrow Account or Accounts may be made by the Company
only:
(i) to effect timely payments of ground rents, taxes, assessments, water
rates, mortgage insurance premiums, condominium charges, fire and
hazard insurance premiums or other items constituting Escrow
Payments for the related Mortgage;
(ii) to reimburse the Company for any Servicing Advances made by the
Company pursuant to Section 4.08 with respect to a related Mortgage
Loan, but only from amounts received on the related Mortgage Loan
which represent late collections of Escrow Payments thereunder;
(iii) to refund to any Mortgagor any funds found to be in excess of the
amounts required under the terms of the related Mortgage Loan;
(iv) for transfer to the Custodial Account and application to reduce the
principal balance of the Mortgage Loan in accordance with the terms
of the related Mortgage and Mortgage Note;
(v) for application tothe restoration or repair of the Mortgaged
Property in accordance with the procedures outlined in Section 4.14;
34
(vi) to pay to the Company, or any Mortgagor to the extent required by
law, any interest paid on the funds deposited in the Escrow Account;
(vii) to remove funds inadvertently placed in the Escrow Account by the
Company;
(viii) to remit to Purchaser payments on account of Buydown Funds as
applicable; and
(ix) to clear and terminate the Escrow Account on the termination of this
Agreement.
Section 4.08 Payment of Taxes, Insurance and Other Charges.
With respect to each Mortgage Loan, the Company shall maintain accurate
records reflecting the status of ground rents, taxes, assessments, water rates,
sewer rents, and other charges which are or may become a lien upon the Mortgaged
Property andthe status of PMI Policy premiums and fire and hazard insurance
coverage and shall obtain, from time to time, all bills for the payment of such
charges (including renewal premiums) and shall effect payment thereof prior to
the applicable penalty or termination date, employing for such purpose deposits
of the Mortgagor in the Escrow Account which shall have been estimated and
accumulated by the Company in amounts sufficient for such purposes, as allowed
under the terms of the Mortgage. The Company assumes full responsibility for the
timely payment of all such bills and shall effect timely payment of all such
charges irrespective of each Mortgagor's faithful performance in the payment of
same of the making of the Escrow Payments, and the Company shall make advances
from its own funds to effect such payments.
Section 4.09 Protection of Accounts.
The Company may transfer the Custodial Account or the Escrow Account to a
different Qualified Depository from time to time and shall provide the Purchaser
with notice of such transfer. The Company shall bear any expenses, losses or
damages sustained by the Purchaser because the Custodial Account and/or the
Escrow Account are not demand deposit accounts.
Section 4.10 Maintenance of Hazard Insurance.
The Company shall cause to be maintained for each Mortgage Loan hazard
insurance such that all buildings upon the Mortgaged Property are insured by an
insurer acceptable to Xxxxxx Mae or Xxxxxxx Mac against loss by fire, hazards of
extended coverage and such other hazards as are customary in the area where the
Mortgaged Property is located, in an amount which is at least equal to the
lesser of (i) the maximum insurable value of the improvements securing such
Mortgage Loan and (ii) the greater of (a) the outstanding principal balance of
the Mortgage Loan and (b) an amount such that the proceeds thereof shall be
sufficient to prevent the Mortgagor or the loss payee from becoming a
co-insurer. In the event a hazard insurance policy shall be in danger of being
terminated, or in the event the insurer shall cease to be acceptable to Xxxxxx
Mae or Xxxxxxx Mac, the Company shall notify the Purchaser and the related
Mortgagor, and shall use its best efforts, as permitted by applicable law, to
obtain from another qualified insurer a replacement hazard insurance policy
substantially and materially
35
similar in all respects to the original policy. In no event, however, shall a
Mortgage Loan be without a hazard insurance policy at any time, subject only to
Section 4.11 hereof.
If upon origination of the Mortgage Loan, the related Mortgaged Property
was located in an area identified by the Flood Emergency Management Agency as
having special flood hazards (and such flood insurance has been made available)
a flood insurance policy meeting the requirements of the current guidelines of
the Federal Insurance Administration is in effect with a generally acceptable
insurance carrier acceptable to Xxxxxx Mae or Xxxxxxx Mac in an amount
representing coverage equal to the lesser of (i) the minimum amount required,
under the terms of coverage, to compensate for any damage or loss on a
replacement cost basis (or the unpaid balance of the mortgage if replacement
cost coverage is not available for the type of building insured) and (ii) the
maximum amount of insurance which is available under the Flood Disaster
Protection Act of 1973, as amended. If at any time during the term of the
Mortgage Loan, the Company determines in accordance with the applicable law and
pursuant to the Xxxxxx Mae Guide, that the Mortgaged Property is located in a
special flood hazard area and is not covered by flood insurance meeting the
requirements of the Flood Disaster Protection Act of 1973, as amended, the
Company shall notify the related Mortgagor that they must obtain such flood
insurance coverage and if the Mortgagor fails to provide proof of such coverage
within forty-five (45) days of such notice, the Company shall force place the
required flood insurance on the Mortgagor's behalf.
If a Mortgage is secured by a unit in a condominium project, the Company
shall verify that the coverage required of the owner's association, including
hazard, flood, liability, and fidelity coverage, is being maintained in
accordance with then current Xxxxxx Xxx requirements, and secure from the
owner's association its agreement to notify the Company promptly of any change
in the insurance coverage or of any condemnation or casualty loss that may have
a material effect on the value of the Mortgaged Property as security.
In the event that any Purchaser or the Company shall determine that the
Mortgaged Property should be insured against loss or damage by hazards and risks
not covered by the insurance required to be maintained by the Mortgagor pursuant
to the terms of the Mortgage, the Company shall communicate and consult with the
Mortgagor with respect to the need for such insurance and bring to the
Mortgagor's attention the desirability of protection of the Mortgaged Property.
All policies required hereunder shall name the Company as loss payee and
shall be endorsed with standard or union mortgagee clauses, without
contribution, which shall provide for at least 30 days prior written notice of
any cancellation, reduction in amount or material change in coverage.
The Company shall not interfere with the Mortgagor's freedom of choice in
selecting either his insurance carrier or agent, provided, however, that the
Company shall not accept any such insurance policies from insurance companies
unless such companies are acceptable to Xxxxxx Mae and Xxxxxxx Mac and are
licensed to do business in the jurisdiction in which the Mortgaged Property is
located. The Company shall determine that such policies provide
36
sufficient risk coverage and amounts, that they insure the property owner, and
that they properly describe the property address.
Pursuant to Section 4.04, any amounts collected by the Company under any
such policies (other than amounts to be deposited in the Escrow Account and
applied to the restoration or repair of the related Mortgaged Property, or
property acquired in liquidation of the Mortgage Loan, or to be released to the
Mortgagor, in accordance with the Company's normal servicing procedures as
specified in Section 4.14) shall be deposited in the Custodial Account subject
to withdrawal pursuant to Section 4.05.
Section 4.11 Maintenance of Mortgage Impairment Insurance.
In the event that the Company shall obtain and maintain a blanket policy
insuring against losses arising from fire and hazards covered under extended
coverage on all of the Mortgage Loans, then, to the extent such policy provides
coverage in an amount equal to the amount required pursuant to Section 4.10 and
otherwise complies with all other requirements of Section 4.10, it shall
conclusively be deemed to have satisfied its obligations as set forth in Section
4.10. The Company shall prepare and make any claims on the blanket policy as
deemed necessary by the Company in accordance with Accepted Servicing Practices.
Any amounts collected by the Company under any such policy relating to a
Mortgage Loan shall be deposited in the Custodial Account subject to withdrawal
pursuant to Section 4.05. Such policy may contain a deductible clause, in which
case, in the event that there shall not have been maintained on the related
Mortgaged Property a policy complying with Section 4.10, and there shall have
been a loss which would have been covered by such policy, the Company shall
deposit in the Custodial Account at the time of such loss the amount not
otherwise payable under the blanket policy because of such deductible clause,
such amount to be deposited from the Company's funds, without reimbursement
therefor. Upon request of any Purchaser, the Company shall cause to be delivered
to such Purchaser a certified true copy of 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 such Purchaser.
Section 4.12 Maintenance of Fidelity Bond and Errors and Omissions Insurance.
The Company shall maintain with responsible companies, at its own expense,
a blanket Fidelity Bond and an Errors and Omissions Insurance Policy, with broad
coverage on all officers, employees or other persons acting in any capacity
requiring such persons to handle funds, money, documents or papers relating to
the Mortgage Loans ("Company Employees"). Any such Fidelity Bond and Errors and
Omissions Insurance Policy shall be in the form of the Mortgage Banker's Blanket
Bond and shall protect and insure the Company against losses, including forgery,
theft, embezzlement, fraud, errors and omissions and negligent acts of such
Company Employees. Such Fidelity Bond and Errors and Omissions Insurance Policy
also shall protect and insure the Company against losses in connection with the
release or satisfaction of a Mortgage Loan without having obtained payment in
full of the indebtedness secured thereby. No provision of this Section 4.12
requiring such Fidelity Bond and Errors and Omissions Insurance Policy shall
diminish or relieve the Company from its duties and obligations as set forth in
this Agreement. The minimum coverage under any such Fidelity Bond and Errors and
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Omissions Insurance Policy shall be at least equal to the amounts acceptable to
Xxxxxx Mae or Xxxxxxx Mac. Upon the request of any Purchaser, the Company shall
cause to be delivered to such Purchaser a certificate of insurance for such
Fidelity Bond and Errors and Omissions Insurance Policy and a statement from the
surety and the insurer that such Fidelity Bond and Errors and Omissions
Insurance Policy shall in no event be terminated or materially modified without
30 days' prior written notice to the Purchaser.
Section 4.13 Inspections.
If any Mortgage Loan is more than 60 days delinquent, the Company shall
inspect the Mortgaged Property and shall conduct subsequent inspections in
accordance with Xxxxxx Mae or Accepted Servicing Practices or as may be required
by the primary mortgage guaranty insurer. The Company shall produce a report of
each such inspection upon written request by the Purchaser.
Section 4.14 Restoration of Mortgaged Property.
The Company need not obtain the approval of the Purchaser prior to
releasing any Insurance Proceeds or Condemnation Proceeds to the Mortgagor to be
applied to the restoration or repair of the Mortgaged Property if such release
is in accordance with Accepted Servicing Practices. For claims greater than
$15,000, at a minimum the Company shall comply with the following conditions in
connection with any such release of Insurance Proceeds or Condemnation Proceeds:
(i) the Company shall receive satisfactory independent verification of
completion of repairs and issuance of any required approvals with
respect thereto;
(ii) the Company shall take all steps necessary to preserve the priority
of the lien of the Mortgage, including, but not limited to requiring
waivers with respect to mechanics' and materialmen's liens;
(iii) the Company shall verify that the Mortgage Loan is not in default;
and
(iv) pending repairs or restoration, the Company shall place the
Insurance Proceeds or Condemnation Proceeds in the Escrow Account.
If the Purchaser is named as an additional loss payee, the Company is
hereby empowered to endorse any loss draft issued in respect of such a claim in
the name of the Purchaser.
Section 4.15 Maintenance of PMI Policy; Claims.
With respect to each Mortgage Loan originated prior to July 29, 1999, with
an LTV in excess of 80%, the Company shall, without any cost to the Purchaser,
maintain or cause the Mortgagor to maintain in full force and effect a PMI
Policy insuring that portion of the Mortgage Loan in excess of 75% of value, 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%. If a
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Mortgage Loan was originated on or after July 29, 1999, and the original LTV is
80% or greater, the Company shall, without any cost to the Purchaser maintain or
cause the Mortgagor to maintain in full force and effect a PMI Policy insuring
the portion over 78% until terminated pursuant to the Homeowners Protection Act
of 1998, 12 UCS ss.4901, et seq. In the event that such PMI Policy shall be
terminated other than as required by law, the Company shall obtain from another
Qualified Insurer a comparable replacement policy, with a total coverage equal
to the remaining coverage of such terminated PMI Policy. If the insurer shall
cease to be a Qualified Insurer, the Company shall determine whether recoveries
under the PMI Policy are jeopardized for reasons related to the financial
condition of such insurer, it being understood that the Company shall in no
event have any responsibility or liability for any failure to recover under the
PMI Policy for such reason. If the Company determines that recoveries are so
jeopardized, it shall notify the Purchaser and the Mortgagor, if required, and
obtain from another Qualified Insurer a replacement insurance policy. The
Company shall not take any action which would result in noncoverage under any
applicable PMI Policy of any loss which, but for the actions of the Company
would have been covered thereunder. In connection with any assumption or
substitution agreement entered into or to be entered into pursuant to Section
6.01, the Company shall promptly notify the insurer under the related PMI
Policy, if any, of such assumption or substitution of liability in accordance
with the terms of such PMI Policy and shall take all actions which may be
required by such insurer as a condition to the continuation of coverage under
such PMI Policy. If such PMI Policy is terminated as a result of such assumption
or substitution of liability, the Company shall obtain a replacement PMI Policy
as provided above.
In connection with its activities as servicer, the Company agrees to
prepare and present, on behalf of itself and the Purchaser, claims to the
insurer under any PMI Policy in a timely fashion in accordance with the terms of
such PMI Policy and, in this regard, to take such action as shall be necessary
to permit recovery under any PMI Policy respecting a defaulted Mortgage Loan.
Pursuant to Section 4.04, any amounts collected by the Company under any PMI
Policy shall be deposited in the Custodial Account, subject to withdrawal
pursuant to Section 4.05.
Section 4.16 Title, Management and Disposition of REO Property.
In the event that title to any Mortgaged Property is acquired in
foreclosure or by deed in lieu of foreclosure, the deed or certificate of sale
shall be taken in the name of the Purchaser or the Purchaser's designee, or in
the event the Purchaser is not authorized or permitted to hold title to real
property in the state where the REO Property is located, or would be adversely
affected under the "doing business" or tax laws of such state by so holding
title, the deed or certificate of sale shall be taken in the name of such Person
or Persons as shall be consistent with an Opinion of Counsel obtained by the
Company from any attorney duly licensed to practice law in the state where the
REO Property is located. The Person or Persons holding such title other than the
Purchaser shall acknowledge in writing that such title is being held as nominee
for the Purchaser.
The Purchaser shall have the option to manage and operate any REO Property
it chooses, provided the Purchaser gives written notice of its intention to do
so within sixty (60) days after such REO Property is acquired in foreclosure or
by deed in lieu of foreclosure. The election by the Purchaser to manage any REO
Property shall not constitute a termination of any rights of the Company
pursuant to Section 11.02.
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If the Purchaser does not elect to manage and operate the REO Property,
the Company shall manage, conserve, protect and operate each REO Property for
the Purchaser solely for the purpose of its prompt disposition and sale. The
Company, either itself or through an agent selected by the Company, shall
manage, conserve, protect and operate the REO Property in the same manner that
it manages, conserves, protects and operates other foreclosed property for its
own account, and in the same manner that similar property in the same locality
as the REO Property is managed. The Company shall attempt to sell the same (and
may temporarily rent the same for a period not greater than one year, except as
otherwise provided below) on such terms and conditions as the Company deems to
be in the best interest of the Purchaser.
The Company shall use its best efforts to dispose of the REO Property as
soon as possible and shall sell such REO Property in any event within one year
after title has been taken to such REO Property, unless(i) a REMIC election has
not been made with respect to the arrangement under which the Mortgage Loans and
the REO Property are held, and (ii) the Company determines 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, (i) the Company shall report monthly to the Purchaser
as to the progress being made in selling such REO Property and (ii) if a
purchase money mortgage is taken in connection with such sale, such purchase
money mortgage shall name the Company as mortgagee, and such purchase money
mortgage shall not be held pursuant to this Agreement, but instead a separate
participation agreement among the Company and Purchaser shall be entered into
with respect to such purchase money mortgage.
The Company shall also maintain on each REO Property fire and hazard
insurance with extended coverage in amount which is at least equal to the
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.
The disposition of REO Property shall be carried out by the Company at
such price, and upon such terms and conditions, as the Company deems to be in
the best interests of the Purchaser. The proceeds of sale of the REO Property
shall be promptly deposited in the Custodial Account. As soon as practical
thereafter the expenses of such sale shall be paid and the Company shall
reimburse itself for any related unreimbursed Servicing Advances, unpaid
Servicing Fees and unreimbursed advances made pursuant to Section 5.03. On the
Remittance Date immediately following the Principal Prepayment Period in which
such sale proceeds are received the net cash proceeds of such sale remaining in
the Custodial Account shall be distributed to the Purchaser.
The Company shall withdraw from the Custodial Account in accordance with
Section 4.05, the funds necessary for the proper operation management and
maintenance of the REO Property, including the cost of maintaining any hazard
insurance pursuant to Section 4.10 and the fees of any managing agent of the
Company, or the Company itself. The REO management fee shall be $1000.00 per
Mortgage Loan. The Company shall make monthly distributions on each Remittance
Date to the Purchaser of the net cash flow from the REO Property (which shall
equal
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the revenues from such REO Property net of the expenses described in this
Section 4.16 and of any reserves reasonably required from time to time to be
maintained to satisfy anticipated liabilities for such expenses).
Section 4.17 Real Estate Owned Reports.
Together with the statement furnished pursuant to Section 5.02, the
Company shall furnish to the Purchaser on or before the Remittance Date each
month a statement with respect to any REO Property covering the operation of
such REO Property for the previous month and the Company's efforts in connection
with the sale of such REO Property and any rental of such REO Property
incidental to the sale thereof for the previous month. That statement shall be
accompanied by such other information as the Purchaser shall reasonably request.
Section 4.18 Liquidation Reports.
Upon the foreclosure sale of any Mortgaged Property or the acquisition
thereof by the Purchaser pursuant to a deed in lieu of foreclosure, the Company
shall submit to the Purchaser a liquidation report with respect to such
Mortgaged Property.
Section 4.19 Reports of Foreclosures and Abandonments of Mortgaged Property.
Following the foreclosure sale or abandonment of any Mortgaged Property,
the Company shall report such foreclosure or abandonment as required pursuant to
Section 6050J of the Code. The Company shall file information reports with
respect to the receipt of mortgage interest received in a trade or business and
information returns relating to cancellation of indebtedness income with respect
to any Mortgaged Property as required by the Code. Such reports shall be in form
and substance sufficient to meet the reporting requirements imposed by the Code.
Section 4.20 Application of Buydown Funds.
With respect to each Buydown Mortgage Loan, the Company shall have
deposited into the Escrow Account, no later than the last day of the month,
Buydown Funds in an amount equal to the aggregate undiscounted amount of
payments that, when added to the amount the Mortgagor on such Mortgage Loan is
obligated to pay on all Due Dates in accordance with the terms of the Buydown
Agreement, is equal to the full scheduled Monthly Payments which are required to
be paid by the Mortgagor under the terms of the related Mortgage Note (without
regard to the related Buydown Agreement as if the Mortgage Loan were not subject
to the terms of the Buydown Agreement). With respect to each Buydown Mortgage
Loan, the Company will distribute to the Purchaser on each RemittanceDate an
amount of Buydown Funds equal to the amount that, when added to the amount
required to be paid on such date by the related Mortgagor, pursuant to and in
accordance with the related Buydown Agreement, equals the full Monthly Payment
that would otherwise be required to be paid on such Mortgage Loan by the related
Mortgagor under the terms of the related Mortgage Note (as if the Mortgage Loan
were not a Buydown Mortgage Loan and without regard to the related Buydown
Agreement).
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If the Mortgagor on a Buydown Mortgage Loan defaults on such Mortgage Loan
during the Buydown Period and the Mortgaged Property securing such Buydown
Mortgage Loan is sold in the liquidation thereof (either by the Company or the
insurer under any related Primary Insurance Policy) the Company shall, on the
Remittance Date following the date upon which Liquidation Proceeds or REO
Disposition proceeds are received with respect to any such Buydown Mortgage
Loan, distribute to the Purchaser all remaining Buydown Funds for such Mortgage
Loan then remaining in the Escrow Account. Pursuant to the terms of each Buydown
Agreement, any amounts distributed to the Purchaser in accordance with the
preceding sentence will be applied to reduce the outstanding principal balance
of the related Buydown Mortgage Loan. If a Mortgagor on a Buydown Mortgage Loan
prepays such Mortgage Loan in it entirety during the related Buydown Period, the
Company shall be required to withdraw from the Escrow Account any Buydown Funds
remaining in the Escrow Account with respect to such Buydown Mortgage Loan in
accordance with the related Buydown Agreement. If a principal prepayment by a
Mortgagor on a Buydown Mortgage Loan during the related Buydown Period, together
with any Buydown Funds then remaining in the Escrow Account related to such
Buydown Mortgage Loan, would result in a principal prepayment of the entire
unpaid principal balance of the Buydown Mortgage Loan, the Company shall
distribute to the Purchaser on the Remittance Date occurring in the month
immediately succeeding the month in which such Principal Prepayment is received,
all Buydown Funds related to such Mortgage Loan so remaining in the Escrow
Account, together with any amounts required to be deposited into the Custodial
Account.
Section 4.21 Notification of Adjustments.
With respect to each Mortgage Loan, the Company shall adjust the Mortgage
Interest Rate on the related Adjustment Date in compliance with the requirements
of applicable law and the related Mortgage and Mortgage Note. The Company shall
execute and deliver any and all necessary notices required under applicable law
and the terms of the related Mortgage Note and Mortgage regarding the Mortgage
Interest Rate adjustments. Upon the discovery by the Company or the receipt of
notice from the Purchaser that the Company has failed to adjust a Mortgage
Interest Rate in accordance with the terms of the related Mortgage Note, the
Company shall immediately deposit in the Custodial Account from its own funds
the amount of any interest loss or deferral caused the Purchaser thereby.
ARTICLE V
PAYMENTS TO PURCHASER
Section 5.01 Remittances.
On each Remittance Date the Company shall remit by wire transfer of
immediately available funds to the Purchaser (a) all amounts deposited in the
Custodial Account as of the close of business on the Determination Date (net of
charges against or withdrawals from the Custodial Account pursuant to Section
4.05), plus (b) all amounts, if any, which the Company is obligated to
distribute pursuant to Section 5.03, minus (c) any amounts attributable to
Principal Prepayments received after the applicable Principal Prepayment Period
which amounts shall be remitted on the following Remittance Date, together with
any additional interest required to be deposited in the Custodial Account in
connection with such Principal Prepayment in accordance
42
with Section 4.04(viii); minus (d) any amounts attributable to Monthly Payments
collected but due on a Due Date or Dates subsequent to the first day of the
month of the Remittance Date, and minus (e) any amounts attributable to Buydown
Funds being held in the Custodial Account, which amounts shall be remitted on
the Remittance Date next succeeding the Due Period for such amounts.
With respect to any remittance received by the Purchaser after the second
Business Day following the Business Day on which such payment was due, the
Company shall pay to the Purchaser interest on any such late payment at an
annual rate equal to the Prime Rate, adjusted as of the date of each change,
plus three percentage points, but in no event greater than the maximum amount
permitted by applicable law. Such interest shall be deposited in the Custodial
Account by the Company on the date such late payment is made and shall cover the
period commencing with the day following such second Business Day and ending
with the Business Day on which such payment is made, both inclusive. Such
interest shall be remitted along with the distribution payable on the next
succeeding Remittance Date. The payment by the Company of any such interest
shall not be deemed an extension of time for payment or a waiver of any Event of
Default by the Company.
Section 5.02 Statements to Purchaser.
Not later than the tenth calendar day of the month, the Company shall
furnish in an agreed upon electronic format to the Purchaser or its designee, a
monthly, loan level, scheduled remittance advice, trial balance report and
payment and payoff activity detail, as to the preceding remittance and the
period ending on the last day of the preceding month.
Section 5.03 Monthly Advances by Company.
On the Business Day immediately preceding each Remittance Date, the
Company shall deposit in the Custodial Account from its own funds or from
amounts held for future distribution an amount equal to all Monthly Payments
(with interest adjusted to the Mortgage Loan Remittance Rate) which were due on
the Mortgage Loans during the applicable Due Period and which were delinquent at
the close of business on the immediately preceding Determination Date or which
were deferred pursuant to Section 4.01. Any amounts held for future distribution
and so used shall be replaced by the Company by deposit in the Custodial Account
on or before any future Remittance Date if funds in the Custodial Account on
such Remittance Date shall be less than payments to the Purchaser required to be
made on such Remittance Date. The Company's obligation to make such Monthly
Advances as to any Mortgage Loan will continue through the last Monthly Payment
due prior to the payment in full of the Mortgage Loan, or through the earlier
of: (i) the last Remittance Date prior to the Remittance Date for the
distribution of all Liquidation Proceeds and other payments or recoveries
(including Insurance Proceeds and Condemnation Proceeds) with respect to the
Mortgage Loan; and (ii) the Remittance Date prior to the date the Mortgage Loan
is converted to REO Property, provided however, that if requested by a Rating
Agency (hereinafter defined) in connection with a securitization, the Company
shall be obligated to make such advances through the Remittance Date prior to
the date on which cash is received in connection with the liquidation of REO
Property; provided, however, that such obligation shall cease if the Company
determines, in its sole reasonable opinion, that advances
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with respect to such Mortgage Loan are non-recoverable by the Company from
Liquidation Proceeds, Insurance Proceeds, Condemnation Proceeds, or otherwise
with respect to a particular Mortgage Loan. In the event that the Company
determines that any such advances are non-recoverable, the Company shall provide
the Purchaser with a certificate signed by two officers of the Company
evidencing such determination. For purposes of this paragraph, "Rating Agency"
shall mean Xxxxx'x Investors Services, Inc., Standard & Poor's Ratings Services,
Fitch IBCA, Inc., or any other nationally recognized statistical credit rating
agency.
ARTICLE VI
GENERAL SERVICING PROCEDURES
Section 6.01 Transfers of Mortgaged Property.
The Company shall use its best efforts to enforce any "due-on-sale"
provision contained in any Mortgage or Mortgage Note and to deny assumption by
the person to whom the Mortgaged Property has been or is about to be sold
whether by absolute conveyance or by contract of sale, and whether or not the
Mortgagor remains liable on the Mortgage and the Mortgage Note. When the
Mortgaged Property has been conveyed by the Mortgagor, the Company shall, to the
extent it has knowledge of such conveyance, exercise its rights to accelerate
the maturity of such Mortgage Loan under the "due-on-sale" clause applicable
thereto, provided, however, that the Company shall not exercise such rights if
prohibited by law from doing so or if the exercise of such rights would impair
or threaten to impair any recovery under the related PMI Policy, if any.
If the Company reasonably believes it is unable under applicable law to
enforce such "due-on-sale" clause, the Company shall enter into (i) an
assumption and modification agreement with the person to whom such property has
been conveyed, pursuant to which such person becomes liable under the Mortgage
Note and the original Mortgagor remains liable thereon or (ii) in the event the
Company is unable under applicable law to require that the original Mortgagor
remain liable under the Mortgage Note and the Company has the prior consent of
the primary mortgage guaranty insurer, a substitution of liability agreement
with the purchaser of the Mortgaged Property pursuant to which the original
Mortgagor is released from liability and the purchaser of the Mortgaged Property
is substituted as Mortgagor and becomes liable under the Mortgage Note. If an
assumption fee is collected by the Company for entering into an assumption
agreement the fee will be retained by the Company as additional servicing
compensation. In connection with any such assumption, neither the Mortgage
Interest Rate borne by the related Mortgage Note, the term of the Mortgage Loan,
the outstanding principal amount of the Mortgage Loan nor any other materials
terms shall be changed without Purchaser's consent.
To the extent that any Mortgage Loan is assumable, the Company shall
inquire diligently into the credit worthiness of the proposed transferee, and
shall use the underwriting criteria for approving the credit of the proposed
transferee which are used with respect to underwriting mortgage loans of the
same type as the Mortgage Loans. If the creditworthiness of the proposed
transferee does not meet such underwriting criteria, the Company diligently
shall, to the extent
44
permitted by the Mortgage or the Mortgage Note and by applicable law, accelerate
the maturity of the Mortgage Loan.
Section 6.02 Satisfaction of Mortgages and Release of Mortgage Files.
Upon the payment in full of any Mortgage Loan, or the receipt by the
Company of a notification that payment in full will be escrowed in a manner
customary for such purposes, the Company shall notify the Purchaser in the
Monthly Remittance Advice as provided in Section 5.02, and may request the
release of any Mortgage Loan Documents.
If the Company satisfies or releases a Mortgage without first having
obtained payment in full of the indebtedness secured by the Mortgage or should
the Company otherwise prejudice any rights the Purchaser may have under the
mortgage instruments, upon written demand of the Purchaser, the Company shall
repurchase the related Mortgage Loan at the Repurchase Price by deposit thereof
in the Custodial Account within 2 Business Days of receipt of such demand by the
Purchaser. The Company shall maintain the Fidelity Bond and Errors and Omissions
Insurance Policy as provided for in Section 4.12 insuring the Company against
any loss it may sustain with respect to any Mortgage Loan not satisfied in
accordance with the procedures set forth herein.
Section 6.03 Servicing Compensation.
As compensation for its services hereunder, the Company shall be entitled
to retain from the interest payment the amount of its Servicing Fee. The
Servicing Fee shall be payable monthly and shall be computed on the basis of the
same unpaid scheduled principal balance and for the period respecting which any
related interest payment on a Mortgage Loan is computed. The obligation of the
Purchaser to pay the Servicing Fee is limited to, and payable solely from, the
interest portion of such Monthly Payments.
Additional servicing compensation in the form of assumption fees, to the
extent provided in Section 6.01, and late payment charges shall be retained by
the Company to the extent not required to be deposited in the Custodial Account.
The Company shall be required to pay all expenses incurred by it in connection
with its servicing activities hereunder and shall not be entitled to
reimbursement thereof except as specifically provided for herein.
Section 6.04 Annual Statement as to Compliance.
The Company shall deliver to the Purchaser, on or before May 31, each year
beginning May 31, 2001, an Officer's Certificate, stating that (i) a review of
the activities of the Company during the preceding calendar year and of
performance under this Agreementor similar agreements has been made under such
officer's supervision, and (ii) to the best of such officer's knowledge, based
on such review, the Company has fulfilled all its obligations under this
Agreement throughout such year, or, if there has been a default in the
fulfillment of any such obligation, specifying each such default known to such
officer and the nature and status thereof and the action being taken by the
Company to cure such default.
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Section 6.05 Annual Independent Public Accountants' Servicing Report.
On or before May 31, of each year beginning May 31, 2001, the Company, at
its expense, shall cause a firm of independent public accountants which is a
member of the American Institute of Certified Public Accountants to furnish a
statement to each Purchaser to the effect that such firm has examined certain
documents and records relating to the servicing of the mortgage loans similar in
nature and that such firm is of the opinion that the provisions of this or
similar Agreements have been complied with, and that, on the basis of such
examination conducted substantially in compliance with the Uniform Single
Attestation Program for Mortgage Bankers, nothing has come to their attention
which would indicate that such servicing has not been conducted in compliance
therewith, except for (i) such exceptions as such firm shall believe to be
immaterial, and (ii) such other exceptions as shall be set forth in such
statement. By providing Purchaser a copy of a Uniform Single Attestation Program
Report from their independent public accountant's on an annual basis, Company
shall be considered to have fulfilled its obligations under this Section 6.05.
Section 6.06 Right to Examine Company Records.
The Purchaser, or its designee, shall have the right to examine and audit
any and all of the books, records, or other information of the Company, whether
held by the Company or by another on its behalf, with respect to or concerning
this Agreement or the Mortgage Loans, during business hours or at such other
times as may be reasonable under applicable circumstances, upon reasonable
advance notice. The Purchaser shall pay its own travel expenses associated with
such examination.
Section 6.07 Compliance with REMIC Provisions.
If a REMIC election has been made with respect to the arrangement under
which the Mortgage Loans and REO Property are held, the Company shall not take
any action, cause the REMIC to take any action or fail to take (or fail to cause
to be taken) any action that, under the REMIC Provisions, if taken or not taken,
as the case may be, could (i) endanger the status of the REMIC as a REMIC or
(ii) result in the imposition of a tax upon the REMIC (including but not limited
to the tax on "prohibited transactions" as defined Section 860 (a) (2) of the
Code and the tax on "contributions" to a REMIC set forth in Section 860(d) of
the Code) unless the Company has received an Opinion of Counsel (at the expense
of the party seeking to take such action) to the effect that the contemplated
action will not endanger such REMIC status or result in the imposition of any
such tax.
ARTICLE VII
COMPANY TO COOPERATE
Section 7.01 Provision of Information.
During the term of this Agreement, the Company shall furnish to the
Purchaser such periodic, special, or other reports or information, and copies or
originals of any documents
46
contained in the Servicing File for each Mortgage Loan provided for herein. All
other special reports or information not provided for herein as shall be
necessary, reasonable, or appropriate with respect to the Purchaser or any
regulatory agency will be provided at the Purchaser's expense. All such reports,
documents or information shall be provided by and in accordance with all
reasonable instructions and directions which the Purchaser may give.
The Company shall execute and deliver all such instruments and take all
such action as the Purchaser may reasonably request from time to time, in order
to effectuate the purposes and to carry out the terms of this Agreement.
Section 7.02 Financial Statements; Servicing Facility.
In connection with marketing the Mortgage Loans, the Purchaser may make
available to a prospective Purchaser a Consolidated Statement of Operations of
the Company for the most recently completed two fiscal years for which such a
statement is available, as well as a Consolidated Statement of Condition at the
end of the last two fiscal years covered by such Consolidated Statement of
Operations. The Company also shall make available any comparable interim
statements to the extent any such statements have been prepared by or on behalf
of the Company (and are available upon request to members or stockholders of the
Company or to the public at large).
The Company also shall make available to Purchaser or prospective
Purchaser a knowledgeable financial or accounting officer for the purpose of
answering questions respecting recent developments affecting the Company or the
financial statements of the Company, and to permit any prospective Purchaser to
inspect the Company's servicing facilities for the purpose of satisfying such
prospective Purchaser that the Company has the ability to service the Mortgage
Loans as provided in this Agreement.
ARTICLE VIII
THE COMPANY
Section 8.01 Indemnification; Third Party Claims.
The Company shall indemnify the Purchaser and hold it harmless against any
and all claims, losses, damages, penalties, fines, forfeitures, reasonable and
necessary legal fees and related costs, judgments, and any other costs, fees and
expenses that the Purchaser may sustain in any way related to the failure of the
Company to perform its duties and service the Mortgage Loans in strict
compliance with the terms of this Agreement. The Company immediately shall
notify the Purchaser if a claim is made by a third party with respect to this
Agreement or the Mortgage Loans, assume (with the prior written consent of the
Purchaser) the defense of any such claim and pay all expenses in connection
therewith, including counsel fees, and promptly pay, discharge and satisfy any
judgment or decree which may be entered against it or the Purchaser in respect
of such claim. The Company shall follow any written instructions received from
the Purchaser in connection with such claim. The Purchaser promptly shall
reimburse the Company for all amounts advanced by it pursuant to the preceding
sentence except when the
47
claim is in any way related to the Company's indemnification pursuant to Section
3.03, or the failure of the Company to service and administer the Mortgage Loans
in strict compliance with the terms of this Agreement.
Section 8.02 Merger or Consolidation of the Company.
The Company shall keep in full effect its existence, rights and franchises
as a corporation, and shall obtain and preserve its qualification to do business
as a foreign corporation in each jurisdiction in which such qualification is or
shall be necessary to protect the validity and enforceability of this Agreement
or any of the Mortgage Loans and to perform its duties under this Agreement.
Any person into which the Company may be merged or consolidated, or any
corporation resulting from any merger, conversion or consolidation to which the
Company shall be a party, or any Person succeeding to the business of the
Company, shall be the successor of the Company 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 $15,000,000 and (ii) which is a Xxxxxx Xxx/Xxxxxxx Mac-approved
company in good standing. Furthermore, in the event the Company transfers or
otherwise disposes of all or substantially all of its assets to an affiliate of
the Company, such affiliate shall satisfy the condition above, and shall also be
fully liable to the Purchaser for all of the Company's obligations and
liabilities hereunder.
Section 8.03 Limitation on Liability of Company and Others.
Neither the Company nor any of the directors, officers, employees or
agents of the Company shall be under any liability to the Purchaser for any
action taken or for refraining from the taking of any action in good faith
pursuant to this Agreement, or for errors in judgment, provided, however, that
this provision shall not protect the Company or any such person against any
breach of warranties or representations made herein, or failure to perform its
obligations in strict compliance with any standard of care set forth in this
Agreement or any other liability which would otherwise be imposed under this
Agreement. The Company and any director, officer, employee or agent of the
Company may rely in good faith on any document of any kind prima facie properly
executed and submitted by any Person respecting any matters arising hereunder.
The Company shall not be under any obligation to appear in, prosecute or defend
any legal action which is not incidental to its duties to service the Mortgage
Loans in accordance with this Agreement and which in its opinion may involve it
in any expense or liability, provided, however, that the Company may, with the
consent of the Purchaser, undertake any such action which it may deem necessary
or desirable in respect to this Agreement and the rights and duties of the
parties hereto. In such event, the Company shall be entitled to reimbursement
from the Purchaser of the reasonable legal expenses and costs of such action.
48
Section 8.04 Limitation on Resignation and Assignment by Company.
The Purchaser has entered into this Agreement with the Company and
subsequent Purchaser will purchase the Mortgage Loans in reliance upon the
independent status of the Company, and the representations as to the adequacy of
its servicing facilities, personnel, records and procedures, its integrity,
reputation and financial standing, and the continuance thereof. Therefore, the
Company shall neither assign this Agreement or the servicing hereunder or
delegate its rights or duties hereunder or any portion hereof or sell or
otherwise dispose of all of its property or assets without the prior written
consent of the Purchaser, which consent shall not be unreasonably withheld by
the Purchaser, with the understanding that any successor servicer meet the
requirements of this Agreement and be acceptable to the Rating Agencies and
trustee upon reconstitution.
The Company shall not resign from the obligations and duties hereby
imposed on it except by mutual consent of the Company and the Purchaser or upon
the determination that its duties hereunder are no longer permissible under
applicable law and such incapacity cannot be cured by the Company. Any such
determination permitting the resignation of the Company shall be evidenced by an
Opinion of Counsel to such effect delivered to the Purchaser which Opinion of
Counsel shall be in form and substance acceptable to the Purchaser. No such
resignation shall become effective until a successor shall have assumed the
Company's responsibilities and obligations hereunder in the manner provided in
Section 12.01.
Without in any way limiting the generality of this Section 8.04, in the
event that the Company either shall assign this Agreement or the servicing
responsibilities hereunder or delegate its duties hereunder or any portion
thereof or sell or otherwise dispose of all or substantially all of its property
or assets, without the prior written consent of the Purchaser, then the
Purchaser shall have the right to terminate this Agreement upon notice given as
set forth in Section 10.01, without any payment of any penalty or damages and
without any liability whatsoever to the Company or any third party.
ARTICLE IX
PASS-THROUGH TRANSFERS
Section 9.01 Removal of Mortgage Loans from Inclusion Under this Agreement
Upon the Pass-Through
The Purchaser and the Company agree that with respect to some or all of
the Mortgage Loans, the Purchaser, at its sole option, shall effect up to four
Whole Loan Transfers or Pass-Through Transfers, retaining the Company as the
servicer thereof or subservicer if a master servicer is employed, or as
applicable the "seller/servicer." On the Reconstitution Date, the Mortgage Loans
transferred shall cease to be covered by this Agreement; provided, however,
that, in the event that any Mortgage Loan transferred pursuant to this Section 9
is rejected by the transferee, the Company shall continue to service such
rejected Mortgage Loan on behalf of the Purchaser in accordance with the terms
and provisions of this Agreement.
49
The Company shall cooperate with the Purchaser in connection with each
Whole Loan Transfer or Pass-Through Transfer in accordance with this Section 9.
In connection therewith the Company shall:
(a) make all representations and warranties with respect to the Mortgage
Loans as of the Closing Date and with respect to the Company itself
as of the closing date of each Whole Loan Transfer or Pass-Through
Transfer;
(b) negotiate in good faith and execute any seller/servicer agreements
or pooling and servicing agreements required by the shelf registrant
to effectuate the foregoing provided such agreements create no
greater obligation or cost on the part of the Company than otherwise
set forth in this Agreement;
(c) provide as applicable:
(i) any and all information and appropriate verification of
information which may be reasonably available to the Company,
whether through letters of its auditors and counsel or
otherwise, as the Purchaser shall request;
(ii) such additional representations, warranties, covenants,
opinions of counsel, letters from auditors, and certificates
of public officials or officers of the Company as are
reasonably believed necessary by the trustee, any rating
agency, guarantor or the Purchaser, as the case may be, in
connection with such Whole Loan Transfers or Pass-Through
Transfers. The Purchaser shall pay all third party costs
associated with the preparation of such information. The
Company shall execute any seller/servicer agreements required
within a reasonable period of time after receipt of such
seller/servicer agreements which time shall be sufficient for
the Seller and Seller's counsel to review such seller/servicer
agreements. Under this Agreement, the Company shall retain a
servicing fee at a rate per annum equal to no less than 0.25 %
per Mortgage Loan.
(d) indemnify the Purchaser for any material misstatements contained in
the information provided pursuant to (c) above; and
(e) in the event the Mortgage Loans become subject to a Xxxxxxx Mac
securitization, negotiate in good faith the terms of such
reconstitution agreements as may be required.
In the event the Purchaser has elected to have the Company hold record
title to the Mortgages, prior to the Reconstitution Date the Company shall
prepare an Assignment in blank or to the trustee from the Company acceptable to
the trustee for each Mortgage Loan that is part of the Whole Loan Transfers or
Pass-Through Transfers. The Purchaser shall pay all preparation and recording
costs associated therewith, unless the Assignment is the initial Assignement
delivered pursuant to Section 2.03. The Company shall execute each Assignment,
track such Assignments to ensure they have been recorded and deliver them as
required by the trustee upon
50
the Company's receipt thereof. Additionally, the Company shall prepare and
execute, at the direction of the Purchaser, any note endorsements in connection
with any and all seller/servicer agreements.
All Mortgage Loans not sold or transferred pursuant to Whole Loan
Transfers or Pass-Through Transfers shall remain subject to this Agreement and
shall continue to be serviced in accordance with the terms of this Agreement and
with respect thereto this Agreement shall remain in full force and effect.
ARTICLE X
DEFAULT
Section 10.01 Events of Default.
Each of the following shall constitute an Event of Default on the part of
the Company:
(i) any failure by the Company to remit to the Purchaser any payment
required to be made under the terms of this Agreement which
continues unremedied for a period of five days after the date upon
which written notice of such failure, requiring the same to be
remedied, shall have been given to the Company by the Purchaser; or
(ii) failure by the Company duly to observe or perform in any material
respect any other of the covenants or agreements on the part of the
Company set forth in this Agreement or in the Custodial Agreement
which continues unremedied for a period of 30 days after the date on
which written notice of such failure, requiring the same to be
remedied, shall have been given to the Company by the Purchaser or
by the Custodian; or
(iii) failure by the Company to maintain its license to do business in any
jurisdiction where the Mortgaged Property is located if such license
is required; or
(iv) a decree or order of a court or agency or supervisory authority
having jurisdiction for the appointment of a conservator or receiver
or liquidator in any insolvency, readjustment of debt, including
bankruptcy, marshaling of assets and liabilities or similar
proceedings, or for the winding-up or liquidation of its affairs,
shall have been entered against the Company and such degree or order
shall have remained in force undischarged or unstayed for a period
of 60 days; or
(v) the Company shall consent to the appointment of a conservator or
receiver or liquidator in any insolvency, readjustment of debt,
marshaling of assets and liabilities or similar proceedings of or
relating to the Company or of or relating to all or substantially
all of its property; or
(vi) the Company shall admit in writing its inability to pay its debts
generally as they become due, file a petition to take advantage of
any applicable insolvency,
51
bankruptcy or reorganization statute, make an assignment for the
benefit of its creditors, voluntarily suspend payment of its
obligations or cease its normal business operations for three
Business Days; or
(vii) the Company ceases to meet the qualifications of a Xxxxxx
Mae/Xxxxxxx Mac servicer; or
(viii) the Company attempts to assign its right to servicing compensation
hereunder or to assign this Agreement or the servicing
responsibilities hereunder or to delegate its duties hereunder or
any portion thereof in violation of Section 8.04.
In each and every such case, so long as an Event of Default shall not have
been remedied, in addition to whatever rights the Purchaser may have at law or
equity to damages, including injunctive relief and specific performance, the
Purchaser, by notice in writing to the Company, may terminate all the rights and
obligations of the Company under this Agreement and in and to the Mortgage Loans
and the proceeds thereof.
Upon receipt by the Company of such written notice, all authority and
power of the Company under this Agreement, whether with respect to the Mortgage
Loans or otherwise, shall pass to and be vested in the successor appointed
pursuant to Section 12.01. Upon written request from any Purchaser, the Company
shall prepare, execute and deliver to the successor entity designated by the
Purchaser any and all documents and other instruments, place in such successor's
possession all Mortgage Files, and do or cause to be done all other acts or
things necessary or appropriate to effect the purposes of such notice of
termination, including but not limited to the transfer and endorsement or
assignment of the Mortgage Loans and related documents, at the Company's sole
expense. The Company shall cooperate with the Purchaser and such successor in
effecting the termination of the Company's responsibilities and rights
hereunder, including without limitation, the transfer to such successor for
administration by it of all cash amounts which shall at the time be credited by
the Company to the Custodial Account or Escrow Account or thereafter received
with respect to the Mortgage Loans.
Section 10.02 Waiver of Defaults.
By a written notice, the Purchaser may waive any default by the Company in
the performance of its obligations hereunder and its consequences. Upon any
waiver of a past default, such default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been remedied for every
purpose of this Agreement. No such waiver shall extend to any subsequent or
other default or impair any right consequent thereon except to the extent
expressly so waived.
52
ARTICLE XI
TERMINATION
Section 11.01 Termination.
This Agreement shall terminate upon either: (i) the later of the final
payment or other liquidation (or any advance with respect thereto) of the last
Mortgage Loan or the disposition of any REO Property with respect to the last
Mortgage Loan and the remittance of all funds due hereunder; or (ii) mutual
consent of the Company and the Purchaser in writing.
Section 11.02 Termination Without Cause.
The Purchaser may terminate, at its sole option, any rights the Company
may have hereunder, without cause as provided in this Section 11.02. Any such
notice of termination shall be in writing and delivered to the Company by
registered mail as provided in Section 12.05.
The Company shall be entitled to receive, as such liquidated damages, upon
the transfer of the servicing rights, an amount equal to 2.75% of the aggregate
outstanding principal amount of the Mortgage Loans as of the termination date
paid by the Purchaser to the Company with respect to all of the Mortgage Loans.
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.01 Successor to Company.
Prior to termination of the Company's responsibilities and duties under
this Agreement pursuant to Sections 8.04, 10.01, 11.01 (ii) or pursuant to
Section 11.02, the Purchaser shall, (i) succeed to and assume all of the
Company's responsibilities, rights, duties and obligations under this Agreement,
or (ii) appoint a successor having the characteristics set forth in Section 8.02
and which shall succeed to all rights and assume all of the responsibilities,
duties and liabilities of the Company under this Agreement prior to the
termination of Company's responsibilities, duties and liabilities under this
Agreement. In connection with such appointment and assumption, the Purchaser may
make such arrangements for the compensation of such successor out of payments on
Mortgage Loans as it and such successor shall agree. In the event that the
Company's duties, responsibilities and liabilities under this Agreement should
be terminated pursuant to the aforementioned sections, the Company shall
discharge such duties and responsibilities during the period from the date it
acquires knowledge of such termination until the effective date thereof with the
same degree of diligence and prudence which it is obligated to exercise under
this Agreement, and shall take no action whatsoever that might impair or
prejudice the rights or financial condition of its successor. The resignation or
removal of the Company pursuant to the
53
aforementioned sections shall not become effective until a successor shall be
appointed pursuant to this Section 12.01 and shall in no event relieve the
Company of the representations and warranties made pursuant to Sections 3.01 and
3.02 and the remedies available to the Purchaser under Section 3.03, it being
understood and agreed that the provisions of such Sections 3.01, 3.02, and 3.03
shall be applicable to the Company notwithstanding any such sale, assignment,
resignation or termination of the Company, or the termination of this Agreement.
Any successor appointed as provided herein shall execute, acknowledge and
deliver to the Company and to the Purchaser an instrument accepting such
appointment, wherein the successor shall make the representations and warranties
set forth in Section 3.01, except for subsections (h), (i) and (k) thereof,
whereupon such successor shall become fully vested with all the rights, powers,
duties, responsibilities, obligations and liabilities of the Company, with like
effect as if originally named as a party to this Agreement. Any termination or
resignation of the Company or termination of this Agreement pursuant to Section
8.04, 10.01, 11.01 or 11.02 shall not affect any claims that any Purchaser may
have against the Company arising out of the Company's actions or failure to act
prior to any such termination or resignation.
The Company shall deliver promptly to the successor servicer the funds in
the Custodial Account and Escrow Account and all Mortgage Files and related
documents and statements held by it hereunder and the Company shall account for
all funds and shall execute and deliver such instruments and do such other
things as may reasonably be required to more fully and definitively vest in the
successor all such rights, powers, duties, responsibilities, obligations and
liabilities of the Company.
Upon a successor's acceptance of appointment as such, the Company shall
notify by mail the Purchaser of such appointment in accordance with the
procedures set forth in Section 12.05.
Section 12.02 Amendment.
This Agreement may be amended from time to time by the Company and by
written agreement signed by the Company and the Purchaser.
Section 12.03 Governing Law.
This Agreement shall be construed in accordance with the laws of the State
of New York and the obligations, rights and remedies of the parties hereunder
shall be determined in accordance with such laws.
Each of the Company and the Purchaser hereby knowingly, voluntarily and
intentionally waives any and all rights it may have to a trial by jury in
respect or any litigation based on, or arising out of, under, or in connection
with, this Agreement, or any other documents and instruments executed in
connection herewith, or any course of conduct, course of dealing, statements
(whether oral or written), or actions of the Company or the Purchaser. This
provision is a material inducement for the Purchaser to enter into this
Agreement
54
Section 12.04 Duration of Agreement.
This Agreement shall continue in existence and effect until terminated as
herein provided. This Agreement shall continue notwithstanding transfers of the
Mortgage Loans by the Purchaser.
Section 12.05 Notices.
All demands, notices and communications hereunder shall be in writing and
shall be deemed to have been duly given if personally delivered at or mailed by
registered mail, postage prepaid, addressed as follows:
(i) if to the Company:
Xxxxx Fargo Home Mortgage, Inc.
0 Xxxx Xxxxxx
Xxx Xxxxxx, Xxxx 00000-0000
Attention: General Counsel - MAC #X2401-06T
or such other address as may hereafter be furnished to the Purchaser
in writing by the Company;
(ii) if to Purchaser:
Xxxxxx ____________________
0 Xxxxx Xxxxx
Xxxxxx, ___ Xxxxx
Xxx Xxxx, XX
10285-_______
Attention:
Section 12.06 Severability of Provisions.
If any one or more of the covenants, agreements, provisions or terms of
this Agreement shall be held invalid for any reason whatsoever, then such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Agreement and shall
in no way affect the validity or enforceability of the other provisions of this
Agreement.
Section 12.07 Relationship of Parties.
Nothing herein contained shall be deemed or construed to create a
partnership or joint venture between the parties hereto and the services of the
Company shall be rendered as an independent contractor and not as agent for the
Purchaser.
55
Section 12.08 Execution; Successors and Assigns.
This Agreement may be executed in one or more counterparts and by the
different parties hereto on separate counterparts, each of which, when so
executed, shall be deemed to be an original; such counterparts, together, shall
constitute one and the same agreement. Subject to Section 8.04, this Agreement
shall inure to the benefit of and be binding upon the Company and the Purchaser
and their respective successors and assigns.
Section 12.09 Recordation of Assignments of Mortgage.
To the extent permitted by applicable law, each of the Assignments of
Mortgage is subject to recordation in all appropriate public offices for real
property records in all the counties or other comparable jurisdictions in which
any or all of the Mortgaged Properties are situated, and in any other
appropriate public recording office or elsewhere, such recordation to be
effected at the Company's expense in the event recordation is either necessary
under applicable law or requested by the Purchaser at its sole option. The
Company shall only be responsible for the costs of recording the initial
Assignments of Mortgage. In no event shall the Company be responsible for the
cost of recording Assignments of Mortgage in connection with a subsequent sale
or transfer of the Mortgage Loans by the Purchaser.
Section 12.10 Assignment by Purchaser.
The Purchaser shall have the right, without the consent of the Company but
subject to the limit set forth in Section 2.02 hereof, to assign, in whole or in
part, its interest under this Agreement with respect to some or all of the
Mortgage Loans, and designate any person to exercise any rights of the Purchaser
hereunder, by executing an Assignment and Assumption Agreement and the assignee
or designee shall accede to the rights and obligations hereunder of the
Purchaser with respect to such Mortgage Loans. All references to the Purchaser
in this Agreement shall be deemed to include its assignee or designee.
Section 12.11 Solicitation of Mortgagor.
The Purchaser, its affiliates, successors or assigns shall not, without the
prior written consent of the Company, take any action to solicit or make direct
contact with the Mortgagor under any Mortgage Loan except to the extent required
by the Company's breach of this Agreement or as required under applicable law or
regulatory authority. It is understood and agreed that the gathering of
information or research data concerning the Mortgagor or the Mortgage Loan or
promotions undertaken by the Purchaser which are directed to the general public
at large, including, without limitation, mass mailings based upon commercially
acquired mailing lists, newspaper, radio, television advertisements or from
servicing needs of a Mortgagor who, without solicitation, contacts the
Purchaser, shall not constitute solicitation under this Section. Notwithstanding
any provision of this Agreement to the contrary, in the event the Purchaser, its
affiliates, successors or assigns fails to obtain such written consent, the
Company shall be entitled, in its sole discretion, to terminate its obligations
and duties under this Agreement. Upon transfer of the servicing rights and
obligations under this Agreement to the Purchaser or Purchaser's designee, the
Company shall be entitled to receive as liquidated damages, an amount
56
equal to 2.75% of the aggregate outstanding principal amount of the Mortgage
Loans as of the termination date paid by the Purchaser to the Company with
respect to all of the Mortgage Loans.
The Company agrees that, after the Closing Date, it will not take any
action to solicit the refinancing of any Mortgage Loan. It is understood and
agreed that promotions undertaken by the Company or any affiliate of the Company
which are directed to the general public at large, including, without
limitation, mass mailings based upon commercially acquired mailing lists,
newspaper, radio, television advertisements or from servicing the refinancing
needs of a Mortgagor who, without solicitation, contacts the Company in
connection with the refinance of such Mortgage or Mortgage Loan, shall not
constitute solicitation under this Section. Notwithstanding anything to the
contrary, this Section shall not prohibit the Company from soliciting any
Mortgagor to provide other services including but not limited to credit cards,
insurance investments and banking related services.
[Intentionally Blank - Next Page Signature Page]
57
IN WITNESS WHEREOF, the Company and the Purchaser have caused their names
to be signed hereto by their respective officers thereunto duly authorized as of
the day and year first above written.
XXXXXX BROTHERS BANK, FSB XXXXX FARGO HOME MORTGAGE, INC.
By:________________________ By:_________________________
Name:______________________ Name:_______________________
Title:_____________________ Title:______________________
58
STATE OF )
) ss:
COUNTY OF ____________ )
On the _____ day of _______________, 20___ before me, a Notary Public in
and for said State, personally appeared ____________, known to me to be
___________ of Xxxxx Fargo Home Mortgage, Inc., the corporation that executed
the within instrument and also known to me to be the person who executed it on
behalf of said corporation, and acknowledged to me that such corporation
executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand affixed my office seal the
day and year in this certificate first above written.
________________________________
Notary Public
My Commission expires___________
59
STATE OF )
) ss:
COUNTY OF )
On the _____ day of _______________, 20___ before me, a Notary Public in
and for said State, personally appeared _______________________, known to me to
be the __________________ of ______________________________, the corporation
that executed the within instrument and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand affixed my office seal the
day and year in this certificate first above written.
________________________________________
Notary Public
My Commission expires __________________
60
EXHIBIT A
MORTGAGE LOAN SCHEDULE
61
EXHIBIT A-1
ELECTRONIC DATA FILE ELEMENTS
62
EXHIBIT B
CONTENTS OF EACH MORTGAGE FILE
With respect to each Mortgage Loan, the Mortgage File shall include each
of the following items, which shall be available for inspection by the Purchaser
and any prospective Purchaser, and which shall be retained by the Company in the
Servicing File or delivered to the Custodian pursuant to Sections 2.01 and 2.03
of the Seller's Warranties and the Servicing Agreement to which this Exhibit is
attached (the "Agreement"):
1. The original Mortgage Note bearing all intervening endorsements,
endorsed "Pay to the order of ____________ without recourse" and
signed in the name of the Company by an authorized officer (in the
event that the Mortgage Loan was acquired by the Company in a
merger, the signature must be in the following form: "[Company],
successor by merger to [name of predecessor]"; and in the event that
the Mortgage Loan was acquired or originated by the Company while
doing business under another name, the signature must be in the
following form: "[Company], formerly known as [previous name]").
2. The original of any guarantee executed in connection with the
Mortgage Note (if any).
3. The original Mortgage, with evidence of recording thereon or a
certified true and correct copy of the Mortgage sent for
recordation. If in connection with any Mortgage Loan, the Company
cannot deliver or cause to be delivered the original Mortgage with
evidence of recording thereon on or prior to the Closing Date
because of a delay caused by the public recording office where such
Mortgage has been delivered for recordation or because such Mortgage
has been lost or because such public recording office retains the
original recorded Mortgage, the Company shall deliver or cause to be
delivered to the Custodian, a photocopy of such Mortgage, together
with (i) in the case of a delay caused by the public recording
office, an Officer's Certificate of the Company stating that such
Mortgage has been dispatched to the appropriate public recording
office for recordation and that the original recorded Mortgage or a
copy of such Mortgage certified by such public recording office to
be a true and complete copy of the original recorded Mortgage will
be promptly delivered to the Custodian upon receipt thereof by the
Company; or (ii) in the case of a Mortgage where a public recording
office retains the original recorded Mortgage or in the case where a
Mortgage is lost after recordation in a public recording office, a
copy of such Mortgage certified by such public recording office or
by the title insurance company that issued the title policy to be a
true and complete copy of the original recorded Mortgage.
4. the originals or certified true copies of any document sent for
recordation of all assumption, modification, consolidation or
extension agreements, with evidence of recording thereon.
5. The original Assignment of Mortgage for each Mortgage Loan, in form
and substance acceptable for recording (except for the insertion of
the name of the assignee and recording information). The Assignment
of Mortgage must be duly recorded only if recordation is either
necessary under applicable law or commonly required by private
institutional mortgage investors in the area where the Mortgaged
Property is located or on direction of the Purchaser as provided in
the Custodial Agreement. If the Assignment of Mortgage is to be
recorded, the Mortgage shall be assigned to the Purchaser. If the
Assignment of Mortgage is not to be recorded, the Assignment of
Mortgage shall be delivered in blank. If the Mortgage Loan was
acquired by the Company in a merger, the Assignment of Mortgage must
be made by "[Company], successor by merger to [name of
predecessor]." If the Mortgage Loan was acquired or originated by
the Company while doing business under another name, the Assignment
of Mortgage must be by "[Company], formerly know as [previous
name]."
6. Originals or certified true copies of documents sent for recordation
of all intervening assignments of the Mortgage with evidence of
recording thereon, or if any such intervening assignment has not
been returned from the applicable recording office or has been lost
or if such public recording office retains the original recorded
assignments of mortgage, the Company shall deliver or cause to be
delivered to the Custodian, a photocopy of such intervening
assignment, together with (i) in the case of a delay caused by the
public recording office, an Officer's Certificate of the Company
stating that such intervening assignment of mortgage has been
dispatched to the appropriate public recording office for
recordation and that such original recorded intervening assignment
of mortgage or a copy of such intervening assignment of mortgage
certified by the appropriate public recording office or by the title
insurance company that issued the title policy to be a true and
complete copy of the original recorded intervening assignment of
mortgage will be promptly delivered to the Custodian upon receipt
thereof by the Company; or (ii) in the case of an intervening
assignment where a public recording office retains the original
recorded intervening assignment or in the case where an intervening
assignment is lost after recordation in a public recording office, a
copy of such intervening assignment certified by such public
recording office to be a true and complete copy of the original
recorded intervening assignment.
7. The original PMI Policy or certificate of insurance, where required
pursuant to the Agreement.
8. The original mortgagee policy of title insurance or evidence of
title.
9. Any security agreement, chattel mortgage or equivalent executed in
connection with the Mortgage.
With respect to each Mortgage Loan, the Mortgage File shall include each of the
following items to the extent required by the Underwriting Guidelines:
10. The original hazard insurance policy and, if required by law, flood
insurance policy, in accordance with Section 4.10 of the Agreement.
11. Residential loan application.
12. Mortgage Loan closing statement.
13. Verification of employment and income, unless originated under the
Company's Limited Documentation program .
14. Verification of acceptable evidence of source and amount of down
payment.
15. Credit report on the Mortgagor.
16. Residential appraisal report.
17. Photograph of the Mortgaged Property.
18. Survey of the Mortgage property, if required by the title company or
applicable law.
19. Copy of each instrument necessary to complete identification of any
exception set forth in the exception schedule in the title policy,
i.e. map or plat, restrictions, easements, sewer agreements, home
association declarations, etc.
20. All required disclosure statements.
21. If available, termite report, structural engineer's report, water
potability and septic certification.
22. Sales contract, if applicable.
23. Evidence of payment of taxes and insurance premiums, insurance claim
files, correspondence, current and historical computerized data
files, and all other processing, underwriting and closing papers and
records which are customarily contained in a mortgage loan file and
which are required to document the Mortgage Loan or to service the
Mortgage Loan.
24. Amortization schedule, if available.
25. Payment history for any Mortgage Loan that has been closed for more
than 90 days.
26. Original power of attorney. if applicable.
In the event an Officer's Certificate of the Company is delivered to the
Custodian because of a delay caused by the public recording office in returning
any recorded document, the Company shall deliver to the Custodian, within 240
days of the Closing Date, an Officer's Certificate which shall (i) identify the
recorded document, (ii) state that the recorded document has not been delivered
to the Custodian due solely to a delay caused by the public recording office,
(iii) state the amount of time generally required by the applicable recording
office to record and return a document submitted for recordation, and (iv)
specify the date the applicable recorded document will be delivered to the
Custodian. The Company shall be required to deliver to the Custodian the
applicable recorded document by the date specified in (iv) above. An extension
of the date specified in (iv) above may be requested form the Purchaser, which
consent shall not be unreasonably withheld.
EXHIBIT C
CUSTODIAL AGREEMENT
EXHIBIT D
FORMS OF CUSTODIAL ACCOUNT CERTIFICATIONS
CUSTODIAL ACCOUNT CERTIFICATION
_________________________, 20__
Xxxxx Fargo Home Mortgage, Inc. hereby certifies that it has established
the account described below as a Custodial Account pursuant to Section 4.04 of
the Seller's Warranties and Servicing Agreement, dated as of __________________,
20__,.
Title of Account: Xxxxx Fargo Home Mortgage, Inc. in trust for the
Purchaser and/or subsequent purchasers of Mortgage
Loans, and various Mortgagors - P & I
Address of office or branch
of the Company at which
Account is maintained:
________________________________________
________________________________________
________________________________________
________________________________________
XXXXX FARGO HOME MORTGAGE, INC.
Company
By: ____________________________________
Name: __________________________________
Title: _________________________________
CUSTODIAL ACCOUNT LETTER AGREEMENT
_________________________, 20__
To: _____________________________
_____________________________
_____________________________
(the "Depository")
As Company under the Seller's Warranties and Servicing Agreement, dated as
of ____________, 20__, (the "Agreement"), we hereby authorize and request you to
establish an account, as a Custodial Account pursuant to Section 4.04 of the
Agreement, to be designated as "Xxxxx Fargo Home Mortgage, Inc., in trust for
the Purchaser and/or subsequent purchasers of Mortgage Loans, and various
Mortgagors - P & I". All deposits in the account shall be subject to withdrawal
therefrom by order signed by the Company.. This letter is submitted to you in
duplicate. Please execute and return one original to us.
XXXXX FARGO HOME MORTGAGE, INC.
Company
By: ____________________________________
Name: __________________________________
Title: _________________________________
Date: __________________________________
The undersigned, as Depository, hereby certifies that the above described
account has been established under Account Number _______________, at the office
of the Depository indicated above, and agrees to honor withdrawals on such
account as provided above..
________________________________________
Depository
By: ____________________________________
Name: __________________________________
Title: _________________________________
Date: __________________________________
EXHIBIT E
FORMS OF ESCROW ACCOUNT CERTIFICATIONS
ESCROW ACCOUNT CERTIFICATION
_________________________, 20__
Xxxxx Fargo Home Mortgage, Inc. hereby certifies that it has established
the account described below as an Escrow Account pursuant to Section 4.06 of the
Seller's Warranties and Servicing Agreement, dated as of __________, 20__,.
Title of Account: Xxxxx Fargo Home Mortgage, Inc. in trust for the
Purchaser and/or subsequent purchasers of Mortgage
Loans, and various Mortgagors - T & I
Address of office or branch
of the Company at which
Account is maintained:
________________________________________
________________________________________
________________________________________
________________________________________
XXXXX FARGO HOME MORTGAGE, INC.
Company
By: ____________________________________
Name: __________________________________
Title: _________________________________
ESCROW ACCOUNT LETTER AGREEMENT
_________________________, 20__
To: _____________________________
_____________________________
_____________________________
(the "Depository")
As Company under the Seller's Warranties and Servicing Agreement, dated as
of _____________, 20__, (the "Agreement"), we hereby authorize and request you
to establish an account, as an Escrow Account pursuant to Section 4.06 of the
Agreement, to be designated as "Xxxxx Fargo Home Mortgage, Inc., in trust for
the Purchaser and/or subsequent purchasers of Mortgage Loans, and various
Mortgagors - T & I". All deposits in the account shall be subject to withdrawal
therefrom by order signed by the Company. This letter is submitted to you in
duplicate. Please execute and return one original to us.
XXXXX FARGO HOME MORTGAGE, INC.
Company
By: ____________________________________
Name: __________________________________
Title: _________________________________
Date: __________________________________
The undersigned, as Depository, hereby certifies that the above described
account has been established under Account Number _____________, at the office
of the Depository indicated above, and agrees to honor withdrawals on such
account as provided above..
________________________________________
Depository
By: ____________________________________
Name: __________________________________
Title: _________________________________
Date: __________________________________
EXHIBIT F
FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT
ASSIGNMENT AND ASSUMPTION
____________, 2000
ASSIGNMENT AND ASSUMPTION, dated ___________________, 2000 between
_________________, a _________________ corporation having an office at
_________________ ("Assignor") and _________________, having an office at
_________________ ("Assignee"):
For and in consideration of the sum of one dollar ($1.00) and other
valuable consideration the receipt and sufficiency of which are hereby
acknowledge, and of the mutual covenants herein contained, the parties hereto
hereby agree as follows:
1. The Assignor hereby grants, transfers and assigns to Assignee all of
the right, title and interest of Assignor, as Purchaser, in, to and under that
certain Seller's Warranties and Servicing Agreement, (the "Seller's Warranties
and Servicing Agreement"), dated as of _________________, by and between
_________________ (the "Purchaser"), and _________________ (the "Company"), and
the Mortgage Loans delivered thereunder by the Company to the Assignor, and that
certain Custodial Agreement, (the "Custodial Agreement"), dated as of
_________________, by and among the Company, the Purchaser and _________________
(the "Custodian").
2. The Assignor warrants and represents to, and covenants with, the
Assignee that:
a. The Assignor is the lawful owner of the Mortgage Loans with the
full right to transfer the Mortgage Loans free from any and all claims and
encumbrances whatsoever;
b. The Assignor has not received notice of, and has no knowledge of,
any offsets, counterclaims or other defenses available to the Company with
respect to the Seller's Warranties and Servicing Agreement or the Mortgage
Loans;
c. The Assignor has not waived or agreed to any waiver under, or
agreed to any amendment or other modification of, the Seller's Warranties and
Servicing Agreement, the Custodial Agreement or the Mortgage Loans, including
without limitation the transfer of the servicing obligations under the Seller's
Warranties and Servicing Agreement. The Assignor has no knowledge of, and has
not received notice of, any waivers under or amendments or other modifications
of, or assignments of rights or obligations under, the Seller's Warranties and
Servicing Agreement or the Mortgage Loans; and
d. Neither the Assignor nor anyone acting on its behalf has offered,
transferred, pledged, sold or otherwise disposed of the Mortgage Loans, any
interest in the Mortgage Loans or any other similar security to, or solicited
any offer to buy or accept a transfer, pledge or other disposition of the
Mortgage Loans, any interest in the Mortgage Loans or any other similar security
from, or otherwise approached or negotiated with respect to the Mortgage Loans,
any interest in the Mortgage Loans or any other similar security with, any
person in any manner, or made any general solicitation by means of general
advertising or in any other manner, or taken any other action which would
constitute a
distribution of the Mortgage Loans under the Securities Act of 1933 (the "33
Act") or which would render the disposition of the Mortgage Loans a violation of
Section 5 of the 33 Act or require registration pursuant thereto.
3. That Assignee warrants and represent to, and covenants with, the
Assignor and the Company pursuant to Section 12.10 of the Seller's Warranties
and Servicing Agreement that:
a. The Assignee agrees to be bound, as Purchaser, by all of the
terms, covenants and conditions of the Seller's Warranties and Servicing
Agreement, the Mortgage Loans and the Custodial Agreement, and from and after
the date hereof, the Assignee assumes for the benefit of each of the Company and
the Assignor all of the Assignor's obligations as purchaser thereunder;
b. The Assignee understands that the Mortgage Loans have not been
registered under the 33 Act or the securities laws of any state;
c. The purchase price being paid by the Assignee for the Mortgage
Loans are in excess of $250,000.00 and will be paid by cash remittance of the
full purchase price within 60 days of the sale;
d. The Assignee is acquiring the Mortgage Loans for investment for
its own account only and not for any other person. In this connection, neither
the Assignee nor any person authorized to act therefor has offered to Mortgage
Loans by means of any general advertising or general solicitation within the
meaning of Rule 502(c) of US Securities and Exchange Commission Regulation D,
promulgated under the 1933 Act;
e. The Assignee considers itself a substantial sophisticated
institutional investor having such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks of
investment in the Mortgage Loans;
f. The Assignee has been furnished with all information regarding
the Mortgage Loans that it has requested from the Assignor or the Company;
g. Neither the Assignee nor anyone acting on its behalf has offered,
transferred, pledged, sold or otherwise disposed of the Mortgage Loans, any
interest in the Mortgage Loans or any other similar security to, or solicited
any offer to buy or accept a transfer, pledge or other disposition of the
Mortgage Loans, any interest in the Mortgage Loans or any other similar security
from, or otherwise approached or negotiated with respect to the Mortgage Loans,
any interest in the Mortgage Loans or any other similar security with, any
person in any manner which would constitute a distribution of the Mortgage Loans
under the 33 Act or which would render the disposition of the Mortgage Loans a
violation of Section 5 of the 33 Act or require registration pursuant thereto,
nor will it act, nor has it authorized or will it authorize any person to act,
in such manner with respect to the Mortgage Loans; and
h. Either (1) the Assignee is not an employee benefit plan ("Plan")
within the meaning of section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA") or a plan (also "Plan") within the meaning of
section 4975(e)(1) of the Internal Revenue Code of 1986 ("Code"), and the
Assignee is not directly or indirectly purchasing the Mortgage Loans on behalf
of, investment manager of, as named fiduciary of, as Trustee of, or with assets
of, a Plan; or (2) the Assignee's purchase of the Mortgage Loans will not result
in a prohibited transaction under section 406 of ERISA or section 4975 of the
Code.
i. The Assignee's address for purposes of all notices and
correspondence related to the Mortgage Loans and the Seller's Warranties and
Servicing Agreements is:
________________________________________
________________________________________
________________________________________
Attention: _____________________________
The Assignee's wire transfer instructions for purposes of all remittances
and payments related to the Mortgage Loans and the Seller's Warranties and
Servicing Agreement is:
________________________________________
________________________________________
________________________________________
Attention: _____________________________
[Signatures Follow]
IN WITNESS WHEREOF, the parties have caused this Assignment and Assumption
to be executed by their duly authorized officers as of the date first above
written.
___________________________________ ______________________________________
Assignor Assignee
By: _______________________________ By: __________________________________
Name: _____________________________ Name: ________________________________
Its: ______________________________ Its: _________________________________
Tax Payer Identification No.: Tax Payer Identification No.:
___________________________________ ______________________________________
EXHIBIT G
UNDERWRITING GUIDELINES
MORTGAGE LOAN PURCHASE AGREEMENT
This is a Purchase Agreement (the "Agreement"), dated as of March 1, 2001
by and between Xxxxxx Brothers Bank, FSB, having an office at 0 Xxxxx Xxxxx
Xxxxxx, Xxx Xxxx, XX 00000-0000 (the "Purchaser") and Xxxxx Fargo Home Mortgage,
Inc., having an xxxxxx xx 0 Xxxx Xxxxxx, Xxx Xxxxxx, Xxxx 00000-0000 (the
"Seller").
W I T N E S S E T H
WHEREAS, the Seller agrees to sell, and the Purchaser agrees to purchase,
certain conventional residential five-year fixed, one-year adjustable rate
mortgage loans (the "Mortgage Loans") on a servicing retained basis as described
herein:
WHEREAS, the Mortgage Loans shall be delivered as whole loans; and
WHEREAS, the parties intend hereby to set forth the terms and conditions
upon which the proposed transactions will be effected.
NOW THEREFORE, in consideration of the promises and the mutual agreements
set forth herein, the parties hereto agree as follows:
SECTION 1. All capitalized terms not otherwise defined herein have the
respective meanings set forth in the Seller's Warranties and Servicing
Agreement, dated as of the date herewith (the "Seller's Warranties and Servicing
Agreement"). The following terms are defined as follows (except as otherwise
agreed by the parties):
Cut-off Date: March 1, 2001
Closing Date: March 7, 2001
First Remittance Date: April 18, 2001
Servicing Fee Rate: 0.610% until the reset date of the Mortgage
Loan after which the rate shall become 0.25%
SECTION 2. Agreement to Purchase. The Seller agrees to sell, and the
Purchaser agrees to purchase, Mortgage Loans having an aggregate principal
balance on the Cut-off Date in an amount as set forth in the Commitment Letter,
dated as of February 5, 2001 (the "Commitment Letter"), or in such other amount
as agreed by the Purchaser and the Seller as evidenced by the actual aggregate
principal balance of the Mortgage Loans accepted by the Purchaser on the Closing
Date. The Mortgage Loans will be delivered pursuant to a Seller's Warranties and
Servicing Agreement, between the Purchaser and the Seller.
SECTION 3. Mortgage Schedules. The Seller has provided the Purchaser with
certain information constituting a listing of the Mortgage Loans to be purchased
under this Agreement
(the "Mortgage Loan Schedule") substantially in the form attached hereto as
Exhibit 1. The Mortgage Loan Schedule shall conform to the definition of
"Mortgage Loan Schedule" under the Seller's Warranties and Servicing Agreement.
SECTION 4. Purchase Price. The purchase price for the Mortgage Loans (the
"Purchase Price") shall be the percentage of par as stated in the Commitment
Letter, multiplied by the aggregate principal balance, as of the Cut-off Date,
of the Mortgage Loans listed on the related Mortgage Loan Schedule, after
application of scheduled payments of principal due on or before the Cut-off Date
whether or not collected. The Purchase Price may be adjusted as stated in the
Commitment Letter.
In addition to the Purchase Price as described above, the Purchaser shall
pay to the Seller, at closing, accrued interest on the initial principal amount
of the Mortgage Loans at the weighted average Mortgage Loan Remittance Rate from
the Cut-off Date through the day prior to the Closing Date, inclusive.
The Purchaser shall be entitled to (1) all scheduled principal due after
the Cut-off Date, (2) all other recoveries of principal collected after the
Cut-off Date (provided, however, that all scheduled payments of principal due on
or before the Cut-off Date and collected by the Seller after the Cut-off Date
shall belong to the Seller), and (3) all payments of interest on the Mortgage
Loans at the Mortgage Loan Remittance Rate (minus that portion of any such
payment which is allocable to the period prior to the Cut-off Date). The
principal balance of each Mortgage Loan as of the Cut-off Date is determined
after application of payments of principal due on or before the Cut-off Date
whether or not collected. Therefore, payments of scheduled principal and
interest prepaid for a Due Date beyond the Cut-off Date shall not be applied to
the principal balance as of the Cut-off Date. Such prepaid amounts (minus
interest at the Servicing Fee Rate) shall be the property of the Purchaser. The
Seller shall deposit any such prepaid amounts into the Custodial Account, which
account is established for the benefit of the Purchaser for subsequent
remittance by the Seller to the Purchaser.
SECTION 5. Examination of Mortgage Files. Prior to the Closing Date, the
Seller shall (a) deliver to the Purchaser in escrow, for examination, the
Mortgage File for each Mortgage Loan, including a copy of the Assignment of
Mortgage, pertaining to each Mortgage Loan, or (b) make the Mortgage Files
available to the Purchaser for examination at the Seller's offices or such other
location as shall otherwise be agreed upon by the Purchaser and the Seller. Such
examination may be made by the Purchaser, or by any prospective purchaser of the
Mortgage Loans from the Purchaser, at any time before or after the Closing Date
upon prior reasonable notice to the Seller. The fact that the Purchaser or any
prospective purchaser of the Mortgage Loans has conducted or has failed to
conduct any partial or complete examination of the Mortgage Files shall not
affect the Purchaser's (or any of its successor's) rights to demand repurchase,
substitution or other relief or remedy as provided under the related Seller's
Warranties and Servicing Agreement.
SECTION 6. Representations, Warranties and Agreements of Seller. The
Seller agrees and acknowledges that it shall, as a condition to the consummation
of the transactions contemplated hereby, make the representations and warranties
specified in Section 3.01 and 3.02
2
of the Seller's Warranties and Servicing Agreement, as of the Closing Date. The
meaning of the term "Agreement" as used in Sections 3.01 and 3.02 of the
Seller's Warranties and Servicing Agreement shall include this Agreement. The
Seller, without conceding that the Mortgage Loans are securities, hereby makes
the following additional representations, warranties and agreements which shall
be deemed to have been made as of the Closing Date:
a) neither the Seller nor anyone acting on its behalf has offered,
transferred, pledged, sold or otherwise disposed of any Mortgage Loans,
any interest in any Mortgage Loans or any other similar security to, or
solicited any offer to buy or accept a transfer, pledge or other
disposition of any Mortgage Loans, any interest in any Mortgage Loans or
any other similar security from, or otherwise approached or negotiated
with respect to any Mortgage Loans, any interest in any Mortgage Loans or
any other similar security with, any person in any manner, or made any
general solicitation by means of general advertising or in any other
manner, or taken any other action which would constitute a distribution of
the Mortgage Loans under the Securities Act of 1933 (the "1933 Act") or
which would render the disposition of any Mortgage Loans a violation of
Section 5 of the 1933 Act or require registration pursuant thereto, nor
will it act, nor has it authorized or will it authorize any person to act,
in such manner with respect to the Mortgage Loans; and
b) the Seller has not dealt with any broker or agent or anyone else who
might be entitled to a fee or commission in connection with this
transaction other than the Purchaser.
SECTION 7. Representation, Warranties and Agreement of Purchaser. The
Purchaser, without conceding that the Mortgage Loans are securities, hereby
makes the following representations, warranties and agreements, which shall have
been deemed to have been made as of the Closing Date.
a) the Purchaser understands that the Mortgage Loans have not been
registered under the 1933 Act or the securities laws of any state;
b) the Purchaser is acquiring the Mortgage Loans for its own account only
and not for any other person;
c) the Purchaser considers itself a substantial, sophisticated
institutional investor having such knowledge and experience in financial
and business matters that it is capable of evaluating the merits and risks
of investment in the Mortgage Loans;
d) the Purchaser has been furnished with all information regarding the
Mortgage Loans which it has requested from the Seller or the Company; and
e) neither the Purchaser nor anyone acting on its behalf offered,
transferred, pledged, sold or otherwise disposed of any Mortgage Loan, any
interest in any Mortgage Loan or any other similar security to, or
solicited any offer to buy or accept a transfer, pledge or other
disposition of any Mortgage Loan, any interest in any Mortgage Loan or any
other
3
similar security from, or otherwise approached or negotiated with respect
to any Mortgage Loan, any interest in any Mortgage Loan or any other
similar security with, any person in any manner, or made any general
solicitation by means of general advertising or in any other manner, or
taken any other action which would constitute a distribution of the
Mortgage Loans under the 1933 Act or which would render the disposition of
any Mortgage Loan a violation of Section 5 of the 1933 Act or require
registration pursuant thereto, nor will it act, nor has it authorized or
will it authorize any person to act, in such manner with respect to the
Mortgage Loans.
SECTION 8. Closing. The closing for the purchase and sale of the Mortgage
Loans, shall take place on the Closing Date. At the Purchaser's option, the
Closing shall be either: by telephone, confirmed by letter or wire as the
parties shall agree; or conducted in person, at such place as the parties shall
agree.
The closing shall be subject to each of the following conditions:
a) all of the representations and warranties of the Seller under this
Agreement and under the Seller's Warranties and Servicing Agreement shall
be true and correct as of the Closing Date and no event shall have
occurred which, with notice or the passage of time, would constitute a
default under this Agreement or an Event of Default under the related
Seller's Warranties and Servicing Agreement;
b) the Purchaser shall have received, or the Purchaser's attorneys shall
have received in escrow, all Closing Documents as specified in Section 9
of this Agreement, in such forms as are agreed upon and acceptable to the
Purchaser, duly executed by all signatories other than the Purchaser as
required pursuant to the respective terms thereof;
c) the Seller shall have delivered and released to the Custodian under the
Seller's Warranties and Servicing Agreement all documents required
pursuant to the related Custodial Agreement; and
d) all other terms and conditions of this Agreement and the Seller's
Warranties and Servicing Agreement shall have been complied with.
Subject to the foregoing conditions, the Purchaser shall pay to the Seller
on the Closing Date the Purchase Price, plus accrued interest pursuant to
Section 4 of this Agreement, by wire transfer of immediately available funds to
the account designated by the Seller.
SECTION 9. Closing Documents. With respect to the Mortgage Loans, the
Closing Documents shall consist of fully executed originals of the following
documents:
1. The originally executed Escrow Agreement, in three counterparts;
2. the Seller's Warranties and Servicing Agreement, dated as of the
Cut-off Date, in three counterparts;
4
3. this Agreement in three counterparts;
4. an originally executed Side Letter (the "Side Letter") regarding
repurchase price, by and between the Seller and the Purchaser, dated
as of March 7, 2001 in three counterparts.
5. the originally executed Custodial Assignment and Assumption
Agreement by and between the Purchase and Seller dated as of March
7, 2001 in three counter-parts assigning the Purchaser's rights as
Initial Servicer under the Custodial Agreement, dated as of July 13,
1999, by and between the Purchaser, as owner and the Initial
Servicer and LaSalle Bank, N.A. (the "Custodian");
6. the Mortgage Loan Schedule, one copy to be attached to each
counterpart of the Seller's Warranties and Servicing Agreement, to
each counterpart of this Agreement, and to each counterpart of the
Custodial Agreement, as the Mortgage Loan Schedule thereto;
7. an Officer's Certificate of the Seller;
8. a Receipt and Certification, as required under the Custodial
Agreement; and
9. an Opinion of Counsel of the Seller, in the form of Exhibit 2
hereto;
SECTION 10. Costs. The Purchaser shall pay any commissions due its
salesmen, the legal fees and expenses of its attorneys and the costs and
expenses associated with the Custodian. The Seller shall be responsible for
reasonable costs and expenses associated with any preparation and recording of
the initial Assignments of Mortgage. All other costs and expenses incurred in
connection with the transfer and delivery of the Mortgage Loans, including fees
for title policy endorsements and continuations and the Seller's attorney fees.
SECTION 11. Servicing. The Mortgage Loans shall be serviced by the Seller
in accordance with the terms of the applicable Seller's Warranties and Servicing
Agreement. The Seller shall be entitled to servicing fees calculated as provided
therein, at the Servicing Fee Rate shown on the first page of this Agreement
unless otherwise agreed by the parties.
SECTION 12. Financial Statements. The Seller understands that in
connection with the Purchaser's marketing of the Mortgage Loans, the Purchaser
shall make available to prospective purchasers a Consolidated Statement of
Operations of the Seller for the most recently completed two fiscal years
respecting which such a statement is available, as well as a Consolidated
Statement of Condition at the end of the last two fiscal years covered by such
Consolidated Statement of Operations. The Purchaser shall also make available
any comparable interim statements to the extent any such statements have been
prepared by the Seller in a format intended or otherwise suitable for the public
at large. The Seller, if it has not already done so, agrees to furnish promptly
to the Purchaser copies of the statements specified above. The Seller
5
shall also make available information on its servicing performance with respect
to loans in its own portfolio and loans serviced for others (if any), including
loss and delinquency ratios.
The Seller also agrees to allow access to a knowledgeable (as shall be
determined by the Seller) financial or accounting officer for the purpose of
answering questions asked by any prospective purchaser regarding recent
developments affecting the Seller or the financial statements of the Seller.
SECTION 13. Mandatory Delivery. The sale and delivery on the Closing Date
of the Mortgage Loans described on the Mortgage Loan Schedule is mandatory, it
being specifically understood and agreed that each Mortgage Loan is unique and
identifiable on the date hereof and that an award of money damages would be
insufficient to compensate the Purchaser for the losses and damages incurred by
the Purchaser (including damages to prospective purchasers of the Mortgage
Loans) in the event of the Seller's failure to deliver the Mortgage Loans on or
before the Closing Date. All rights and remedies of the Purchaser under this
Agreement are distinct from, and cumulative with, any other rights or remedies
under this Agreement or afforded by law or equity and all such rights and
remedies may be exercised concurrently, independently or successively.
SECTION 14. Notices. All demands, notices and communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed, by
registered or certified mail, return receipt requested, or, if by other means,
when received by the other party at the address shown on the first page hereof,
or such other address as may hereafter be furnished to the other party by like
notice. Any such demand, notice of communication hereunder shall be deemed to
have been received on the date delivered to or received at the premises of the
addressee (as evidenced, in the case of registered or certified mail, by the
date noted on the return receipt).
SECTION 15. Severability Clause. Any part, provision, representation or
warranty of this Agreement which is prohibited or which is held to be void or
unenforceable shall be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof. Any part,
provision, representation or warranty of this Agreement which is prohibited or
unenforceable or is held to be void or unenforceable in any jurisdiction shall
be ineffective, as to such jurisdiction, to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction as to any Mortgage Loan
shall not invalidate or render unenforceable such provision in any other
jurisdiction. To the extent permitted by applicable law, the parties hereto
waive any provision of law which prohibits or renders void or unenforceable any
provision hereof. If the invalidity of any part, provision, representation or
warranty of this Agreement shall deprive any party of the economic benefit
intended to be conferred by this Agreement, the parties shall negotiate, in
good-faith, to develop a structure the economic effect of which is as close as
possible to the economic effect of this Agreement without regard to such
invalidity.
SECTION 16. Counterparts. This Agreement may be executed simultaneously in
any number of counterparts. Each counterpart shall be deemed to be an original,
and all such counterparts shall constitute one and the same instrument.
6
SECTION 17. Place of Delivery and Governing Law. This Agreement shall be
construed in accordance with the laws of the State of New York and the
obligations, rights and remedies of the parties hereunder shall be determined in
accordance with the laws of the State of New York, except to the extent
preempted by Federal Law.
SECTION 18. Further Agreements. The Purchaser and the Seller each agree to
execute and deliver to the other such additional documents, instruments or
agreements as may be necessary or appropriate to effectuate the purposes of this
Agreement.
Without limiting the generality of the foregoing, the Seller shall
reasonably cooperate with the Purchaser in connection with the initial resales
of the Mortgage Loans by the Purchaser. In that connection, the Seller shall
provide to the Purchaser: (i) any and all information and appropriate
verification of information, whether through letters of its auditors and counsel
or otherwise, as the Purchaser shall reasonably request, and (ii) such
additional representations, warranties, covenants, opinions of counsel, letters
from auditors and certificates of public officials or officers of the Seller as
are reasonably believed necessary by the Purchaser in connection with such
resales. The requirement of the Seller pursuant to (ii) above shall terminate on
the Closing Date. Prior to incurring any out-of-pocket expenses pursuant to this
paragraph, the Seller shall notify the Purchaser in writing of the estimated
amount of such expense. The Purchaser shall reimburse the Seller for any such
expense following its receipt of appropriate details thereof.
SECTION 19. Intention of the Parties. It is the intention of the parties
that the Purchaser is purchasing, and the Seller is selling, an undivided 100%
ownership interest in the Mortgage Loans and not a debt instrument of the Seller
or another security. Accordingly, the parties hereto each intend to treat the
transaction for Federal income tax purposes as a sale by the Seller, and a
purchase by the Purchaser, of the Mortgage Loans. The Purchaser shall have the
right to review the Mortgage Loans and the related Mortgage Loan Files to
determine the characteristics of the Mortgage Loans which shall affect the
Federal income tax consequences of owning the Mortgage Loans and the Seller
shall cooperate with all reasonable requests made by the Purchaser in the course
of such review.
SECTION 20. Successors and Assigns; Assignment of Purchase Agreement. This
Agreement shall bind and inure to the benefit and be enforceable by the Seller
and the Purchaser and the respective successors and assigns of the Seller and
the Purchaser. This Agreement shall not be assigned, pledged or hypothecated by
the Seller to a third party without the consent of the Purchaser.
SECTION 21. Waivers; Other Agreements. No term or provision of this
Agreement may be waived or modified unless such waiver or modification is in
writing and signed by the party against whom such waiver or modification is
sought to be enforced.
SECTION 22. Exhibits. The exhibits to this Agreement are hereby
incorporated and made a part hereof and are an integral part of this Agreement.
7
SECTION 23. General Interpretive Principles. For purposes of this
Agreement, except as otherwise expressly provided or unless the context
otherwise requires:
a) the terms defined in this Agreement have the meanings assigned to them
in this Agreement and include the plural as well as the singular, and the
use of any gender herein shall be deemed to include the other gender;
b) accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting
principles;
c) references herein to "Articles", "Sections", "Subsections",
"Paragraphs", and other subdivisions without reference to a document are
to designated Articles, Sections, Subsections, Paragraphs and other
subdivisions of this Agreement;
d) a reference to a Subsection without further reference to a Section is a
reference to such Subsection as contained in the same Section in which the
reference appears, and this rule shall also apply to Paragraphs and other
subdivisions;
e) the words "herein", "hereof", "hereunder" and other words of similar
import refer to this Agreement as a whole and not to any particular
provision; and
f) the term "include" or "including" shall mean without limitation by
reason of enumeration.
SECTION 24. Reproduction of Documents. This Agreement and all documents
relating thereto, including, without limitation, (a) consents, waivers and
modifications which may hereafter be executed, (b) documents received by any
party at the closing, and (c) financial statements, certificates and other
information previously or hereafter furnished, may be reproduced by any
photographic, photostatic, microfilm, micro-card, miniature photographic or
other similar process. The parties agree that any such reproduction shall be
admissible in evidence as the original itself in any judicial or administrative
proceeding, whether or not the original is in existence and whether or not such
reproduction was made by a party in the regular course of business, and that any
enlargement, facsimile or further reproduction of such reproduction shall
likewise be admissible in evidence.
[Signatures Follow]
8
IN WITNESS WHEREOF, the Seller and the Purchaser have caused their names
to be signed hereto by their respective officers thereunto duly authorized as of
the date first above written.
XXXXXX BROTHERS BANK, FSB
(Purchaser)
By: ____________________________________
Name: __________________________________
Title: _________________________________
XXXXX FARGO HOME MORTGAGE, INC.
(Seller)
By: ____________________________________
Name: __________________________________
Title: _________________________________
9
EXHIBIT 1
MORTGAGE LOAN SCHEDULE
EXHIBIT 2
FORM OF OPINION OF COUNSEL
@
@
@
@
Re: Xxxxx Fargo Home Mortgage, Inc.
Mortgage Loan Series @
Dear Sir/Madam:
I am @ of Xxxxx Fargo Home Mortgage, Inc. and have acted as counsel to Xxxxx
Fargo Home Mortgage, Inc. (the "Company"), with respect to certain matters in
connection with the sale by the Company of the mortgage loans designated as
Mortgage Loan Series @ (the "Mortgage Loans") pursuant to that certain Seller's
Warranties and Servicing Agreement and Mortgage Loan Purchase Agreement by and
between the Company and @ (the "Purchaser"), dated as of @, 2000, (the
"Agreements"), which sale is in the form of whole Mortgage Loans. Capitalized
terms not otherwise defined herein have the meanings set forth in the Seller's
Warranties and Servicing Agreement.
I have examined the following documents:
1. the Seller's Warranties and Servicing Agreement;
2. the Mortgage Loan Purchase Agreement;
3. the Custodial Agreement;
4. the form of endorsement of the Mortgage Notes; and
5. such other documents, records and papers as I have deemed necessary and
relevant as a basis for this opinion.
To the extent I have deemed necessary and proper, I have relied upon the
representations and warranties of the Company contained in the Agreements. I
have assumed the authenticity of all documents submitted to me as originals, the
genuineness of all signatures, the legal capacity of natural persons and the
conformity to the originals of all documents.
Based upon the foregoing, it is my opinion that;
1. The Company is a corporation duly organized, validly existing and in good
standing under the laws of the state of California.
2. The Company has the power to engage in the transactions contemplated by
the Agreements, the Custodial Agreement and all requisite power, authority
and legal right to execute and deliver the Agreements, the Custodial
Agreement and the Mortgage Loans, and to perform and observe the terms and
conditions of such instruments.
3. Each person who, as an officer or attorney-in-fact of the Company, signed
(a) the Agreements, each dated as of @, 2001, by and between the Company
and the Purchaser, and (b) any other document delivered prior hereto or on
the date hereof in connection with the sale and servicing of the Mortgage
Loans in accordance with the Agreements and the person was, at the
respective times of such signing and delivery, and is, as of the date
hereof, duly elected or appointed, qualified and acting and as such
officer or attorney-in-fact, and the signatures of such persons appearing
on such documents are their genuine signatures.
4. Each of the Agreements, the Custodial Agreement and the Mortgage Loans,
has been duly authorized, executed and delivered by the Company and is a
legal, valid and binding agreement enforceable in accordance with its
terms, subject to 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 or with the Purchaser's
ownership of the Mortgage Loans.
5. The Company has been duly authorized to allow any of its officers to
execute any and all documents by original signature in order to complete
the transactions contemplated by the Agreements and the Custodial
Agreement, and by original or facsimile signature in order to execute the
endorsements to the Mortgage Notes and the assignments of the Mortgages,
and the original or facsimile signature of the officer at the Company
executing the endorsements to the Mortgage Notes and the assignments of
the Mortgages represents the legal and valid signature of said officer of
the Company.
6. Either (i) no consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by the Company of or compliance by the Company with the
Agreements, the Custodial Agreement or the sale and delivery of the
Mortgage Loans or the consummation of the transactions contemplated by the
Agreements, and the Custodial Agreement; or (ii) any required consent,
approval, authorization or order has been obtained by the Company.
7. Neither the consummation of the transactions contemplated by, nor the
fulfillment of the terms of the Agreements and the Custodial Agreement,
will conflict with or results in or will result in a breach of or
constitutes or will constitute a default under the charter or by-laws of
the Company, the terms of any indenture or other agreement or instrument
to which the Company is a party or by which it is bound or to which it is
subject, or violates any statute or order, rule, regulations, writ,
injunction or decree of any court, governmental authority or regulatory
body to which the Company is subject or by which it is bound.
8. There is no action, suit, proceeding or investigation pending or, to the
best of my knowledge, threatened against the Company which, in my opinion,
either in any one instance or in the aggregate, may result in any material
adverse change in the business, operations, financial condition,
properties or assets of the Company or in any material impairment of the
right or ability of the Company to carry on its business substantially as
now conducted or in any material liability on the part of the Company or
which would draw into question the validity of the Agreements, and the
Custodial Agreement, or of any action taken or to be taken in connection
with the transactions contemplated thereby, or which would be likely to
impair materially the ability of the Company to perform under the terms of
the Agreements and the Custodial Agreement.
9. For purposes of the foregoing, I have not regarded any legal or
governmental actions, investigations or proceedings to be "threatened"
unless the potential litigant or governmental authority has manifested to
the legal department of the Company or an employee of the Company
responsible for the receipt of process a present intention to initiate
such proceedings; nor have I regarded any legal or governmental actions,
investigations or proceedings as including those that are conducted by
state or federal authorities in connection with their routine regulatory
activities. The sale of each Mortgage Note and Mortgage as and in the
manner contemplated by the Agreements is sufficient fully to transfer all
right, title and interest of the Company thereto as noteholder and
mortgagee, apart from the rights to service the Mortgage Loans pursuant to
the Agreements.
10. The form of endorsement that is to be used with respect to the Mortgage
Loans is legally valid and sufficient to duly endorse the Mortgage Notes
to the Purchaser. Upon the completion of the endorsement of the Mortgage
Notes and the completion of the assignments of the Mortgages, and the
recording thereof, the endorsement of the Mortgage Notes, the delivery to
the Custodian of the completed assignments of the Mortgages, and the
delivery of the original endorsed Mortgage Notes to the Custodian would be
sufficient to permit the entity to which such Mortgage Note is initially
endorsed at the Purchaser's direction, and to whom such assignment of
Mortgages is initially assigned at the Purchaser's direction, to avail
itself of all protection available under applicable law against the claims
of any present or future creditors of the Company, and would be sufficient
to prevent any other sale, transfer, assignment, pledge or hypothecation
of the Mortgages and the Mortgage Notes by the Company from being
enforceable.
This opinion is given to you for your sole benefit, and no other person or
entity is entitled to rely hereon except that the purchaser or purchasers to
which you initially and directly resell the Mortgage Loans may rely on this
opinion as if it were addressed to them as of its date.
Sincerely,
@
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@/@
