EXHIBIT 99.1
5
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CWABS, INC.
Depositor
COUNTRYWIDE HOME LOANS, INC.
Sponsor and Master Servicer
CWABS REVOLVING HOME EQUITY LOAN TRUST,
SERIES 2004-Q
the Trust
JPMORGAN CHASE BANK, N.A.
Indenture Trustee
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SALE AND SERVICING AGREEMENT
Dated as of November 23, 2004
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REVOLVING HOME EQUITY LOAN ASSET BACKED NOTES
SERIES 2004-Q
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Table of Contents
Page
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 1.01. Definitions. ............................................................................1
Section 1.02. Other Terms. ............................................................................1
Section 1.03. Rules of Construction. ..................................................................1
Section 1.04. Interest Calculations. ..................................................................1
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS; TAX TREATMENT
Section 2.01. Conveyance of Mortgage Loans; Retention of Obligation to Fund Advances Under
Credit Line Agreements. ......................................................3
Section 2.02. Acceptance by Indenture Trustee. ........................................................5
Section 2.03. Representations, Warranties, and Covenants Regarding the Master Servicer. ...............8
Section 2.04. Representations and Warranties of the Sponsor Regarding the Mortgage Loans;
Retransfer of Certain Mortgage Loans. ........................................8
Section 2.05. Covenants of the Depositor. ............................................................11
Section 2.06. Transfers of Mortgage Loans at Election of Transferor. .................................12
Section 2.07. Tax Treatment. .........................................................................13
Section 2.08. Representations and Warranties of the Depositor. .......................................13
ARTICLE III
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 3.01. The Master Servicer. ...................................................................14
Section 3.02. Collection of Certain Mortgage Loan Payments; Establishment of Accounts. ...............17
Section 3.03. Deposits to Payment Account. ...........................................................18
Section 3.04. Maintenance of Hazard Insurance; Property Protection Expenses. .........................19
Section 3.05. Assumption and Modification Agreements. ................................................19
Section 3.06. Realization Upon Defaulted Mortgage Loans; Repurchase of Certain Mortgage Loans. .......20
Section 3.07. Indenture Trustee to Cooperate. ........................................................21
Section 3.08. Servicing Compensation; Payment of Certain Expenses by Master Servicer. ................22
Section 3.09. Annual Statement as to Compliance. .....................................................22
Section 3.10. Annual Servicing Report. ...............................................................23
Section 3.11. Access to Certain Documentation and Information Regarding the Mortgage Loans. ..........23
Section 3.12. Maintenance of Certain Servicing Insurance Policies. ...................................24
Section 3.13. Reports to the Securities and Exchange Commission. .....................................24
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Section 3.14. Tax Treatment. .........................................................................24
Section 3.15. Information Required by the Internal Revenue Service Generally and Reports of
Foreclosures and Abandonments of Mortgaged Property. ........................24
ARTICLE IV
SERVICING CERTIFICATE
Section 4.01. Servicing Certificate. .................................................................25
Section 4.02. Acknowledgement and Cooperation. .......................................................28
Section 4.03. Optional Advances of the Master Servicer. ..............................................28
Section 4.04. Statements to Noteholders. .............................................................28
ARTICLE V
THE MASTER SERVICER, THE SPONSOR, AND THE DEPOSITOR
Section 5.01. Liability of the Sponsor, the Master Servicer, and the Depositor. ......................30
Section 5.02. Merger or Consolidation of, or Assumption of the Obligations of, the Master
Servicer or the Depositor. ..................................................30
Section 5.03. Limitation on Liability of the Master Servicer and Others. .............................31
Section 5.04. Master Servicer Not to Resign. .........................................................31
Section 5.05. Delegation of Duties. ..................................................................32
Section 5.06. Indemnification by the Master Servicer. ................................................32
ARTICLE VI
SERVICING TERMINATION
Section 6.01. Events of Servicing Termination. .......................................................33
Section 6.02. Indenture Trustee to Act; Appointment of Successor. ....................................35
Section 6.03. Notification to Noteholders and the Transferor. ........................................36
ARTICLE VII
TERMINATION
Section 7.01. Termination. ...........................................................................36
ARTICLE VIII
MISCELLANEOUS PROVISIONS
Section 8.01. Amendment. .............................................................................37
Section 8.02. Governing Law. .........................................................................38
Section 8.03. Notices. ...............................................................................38
Section 8.04. Severability of Provisions. ............................................................39
Section 8.05. Assignment. ............................................................................40
Section 8.06. Third-Party Beneficiaries. .............................................................40
Section 8.07. Counterparts. ..........................................................................40
Section 8.08. Effect of Headings and Table of Contents. ..............................................40
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EXHIBIT A - MORTGAGE LOAN SCHEDULE...................................................................A-1
EXHIBIT B - FORM OF CREDIT LINE AGREEMENT............................................................B-1
EXHIBIT C - LETTER OF REPRESENTATIONS................................................................C-1
EXHIBIT D - FORM OF REQUEST FOR RELEASE..............................................................D-1
ANNEX 1 DEFINITIONS..........................................................................XXX-1-1
ANNEX 2 ADOPTION ANNEX.......................................................................XXX-2-1
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This SALE AND SERVICING AGREEMENT, dated as of November 23, 2004, among
CWABS, INC., as depositor, COUNTRYWIDE HOME LOANS, INC., as sponsor and master
servicer, CWABS REVOLVING HOME EQUITY LOAN TRUST, SERIES 2004-Q, and JPMORGAN
CHASE BANK, N.A., as Indenture Trustee,
WITNESSETH THAT
The parties agree as follows.
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 1.01. Definitions.
Unless the context requires a different meaning, capitalized terms are
used in this Agreement as defined in Annex 1.
Section 1.02. Other Terms.
Capitalized terms used in this Agreement that are not otherwise defined
have the meanings given to them in the Indenture. Defined terms that are used
only in one section or only in another definition may be omitted from the list
of defined terms in Annex 1. Defined terms used in this Agreement are
sometimes defined after their first use without a reference such as "(as
hereinafter defined)."
Section 1.03. Rules of Construction.
Except as otherwise expressly provided in this Agreement or unless the
context clearly requires otherwise:
(a) Defined terms include, as appropriate, all genders and the plural as
well as the singular.
(b) References to designated articles, sections, subsections, exhibits,
and other subdivisions of this Agreement, such as "Section 6.12 (a)," refer to
the designated article, section, subsection, exhibit, or other subdivision of
this Agreement as a whole and to all subdivisions of the designated article,
section, subsection, exhibit, or other subdivision. The exhibits and other
attachments to this Agreement are a part of this Agreement. The words
"herein," "hereof," "hereto," "hereunder," and other words of similar import
refer to this Agreement as a whole and not to any particular article, section,
exhibit, or other subdivision of this Agreement.
(c) Any term that relates to a document or a statute, rule, or regulation
includes any amendments, modifications, supplements, or any other changes that
may have occurred since the document, statute, rule, or regulation came into
being, including changes that occur after the date of this Agreement.
References to law are not limited to statutes. References to statutes include
any rules or regulations promulgated under them by a governmental authority
charged
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with the administration of the statute. Any reference to any person includes
references to its successors and assigns.
(d) Any party may execute any of the requirements under this Agreement
either directly or through others, and the right to cause something to be done
rather than doing it directly shall be implicit in every requirement under
this Agreement. Unless a provision is restricted as to time or limited as to
frequency, all provisions under this Agreement are implicitly available from
time to time.
(e) The term "including" and all its variations mean "including but not
limited to." Except when used in conjunction with the word "either," the word
"or" is always used inclusively (for example, the phrase "A or B" means "A or
B or both," not "either A or B but not both").
(f) A reference to "a [thing]" or "any [of a thing]" does not imply the
existence or occurrence of the thing referred to even though not followed by
"if any," and "any [of a thing]" is any and all of it. A reference to the
plural of anything as to which there could be either one or more than one does
not imply the existence of more than one (for instance, the phrase "the
obligors on a note" means "the obligor or obligors on a note"). "Until
[something occurs]" does not imply that it must occur, and will not be
modified by the word "unless." The word "due" and the word "payable" are each
used in the sense that the stated time for payment has passed. The word
"accrued" is used in its accounting sense, i.e., an amount paid is no longer
accrued. In the calculation of amounts of things, differences and sums may
generally result in negative numbers, but when the calculation of the excess
of one thing over another results in zero or a negative number, the
calculation is disregarded and an "excess" does not exist. Portions of things
may be expressed as fractions or percentages interchangeably. The word "shall"
is used in its imperative sense, as for instance meaning a party agrees to
something or something must occur or exist.
(g) All accounting terms used in an accounting context and not otherwise
defined, and accounting terms partly defined in this Agreement, to the extent
not completely defined, shall be construed in accordance with generally
accepted accounting principles in the United States. To the extent that the
definitions of accounting terms in this Agreement are inconsistent with their
meanings under generally accepted accounting principles, the definitions in
this Agreement shall control. Capitalized terms used in this Agreement without
definition that are defined in the Uniform Commercial Code of the relevant
jurisdiction are used in this Agreement as defined in that Uniform Commercial
Code.
(h) In the computation of a period of time from a specified date to a
later specified date or an open-ended period, the words "from" and "beginning"
mean "from and including," the word "after" means "from but excluding," the
words "to" and "until" mean "to but excluding," and the word "through" means
"to and including." Likewise, in setting deadlines or other periods, "by"
means "on or before." The words "preceding," "following," and words of similar
import, mean immediately preceding or following. References to a month or a
year refer to calendar months and calendar years.
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(i) Any reference to the enforceability of any agreement against a party
means that it is enforceable against the party in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization, and other
similar laws of general applicability relating to or affecting creditors'
rights and to general equity principles.
Section 1.04. Interest Calculations.
All calculations of interest on the Asset Balance of a Mortgage Loan
under this Agreement are on a daily basis using a 365-day year. All
calculations of interest on the Notes are on the basis of the actual number of
days in an Interest Period and a year of 360 days. The calculation of the
Servicing Fee is on the basis of a 360-day year consisting of twelve 30-day
months. All dollar amounts calculated under this Agreement are rounded to the
nearest cent with one-half of one cent being rounded down.
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS; TAX TREATMENT
Section 2.01. Conveyance of Mortgage Loans; Retention of Obligation to
Fund Advances Under Credit Line Agreements.
(a) Concurrently with the execution and delivery of this Agreement, the
Depositor hereby transfers to the Trust without recourse (subject to Sections
2.02 and 2.04) all of its right, title, and interest in
(i) each Mortgage Loan, including its Asset Balance (including all
Additional Balances), the related Mortgage File, all property that
secures the Mortgage Loan, and all collections received on it after the
Cut-off Date (excluding payments due by the Cut-off Date);
(ii) property that secured a Mortgage Loan that is acquired by
foreclosure or deed in lieu of foreclosure;
(iii) the Depositor's rights under the Purchase Agreement;
(iv) the Depositor's rights under the hazard insurance policies;
(v) all rights under any guaranty executed in connection with a
Mortgage Loan;
(vi) all other assets included or to be included in the Trust for
the benefit of the Noteholders and the Credit Enhancer; and
(vii) all proceeds of the foregoing.
This transfer to the Trust is to the Owner Trustee, on behalf of the Trust,
and each reference in this Agreement to this transfer shall be construed
accordingly. In addition, by the Closing Date, the Depositor shall cause the
Credit Enhancer to deliver the Policy to the Indenture Trustee for the benefit
of the Noteholders.
(b) Reserved.
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(c) Additional Balances; Future Fundings. Additional Balances shall be
part of the Asset Balance and are hereby transferred to the Trust on the
Closing Date pursuant to this Section 2.01, and therefore are part of the
Trust property. Neither the Owner Trustee nor the Trust nor the Indenture
Trustee assumes the obligation under any Credit Line Agreement that provides
for the funding of future advances to the mortgagor under it, and neither the
Trust nor the Owner Trustee nor the Indenture Trustee may fund these future
advances.
(d) Delayed Delivery. In connection with the transfer under Section
2.01(a) by the Depositor, the Depositor shall effect delivery of the Mortgage
Loan Schedule to the Trust and the Indenture Trustee by the Closing Date and
delivery of the Mortgage Files to the Trust, and the Trust shall deliver them
to the Indenture Trustee,
(i) no later than the Closing Date, with respect to no less than 50%
of the Mortgage Loans in each Loan Group,
(ii) no later than the twentieth day after the Closing Date, with
respect to no less than 40% of the Mortgage Loans in each Loan Group in
addition to those delivered on the Closing Date, and
(iii) within thirty days following the Closing Date, with respect to
the remaining Mortgage Loans.
In lieu of delivery of original documentation, the Depositor may deliver
documents that have been imaged optically on delivery of an opinion of counsel
to the Indenture Trustee and the Note Insurer that the imaged documents are
enforceable to the same extent as the originals and do not impair the
enforceability of the transfer to the Trust of the Mortgage Loans, if the
retention of the imaged documents in the delivered format will not result in a
reduction in the then current rating of the Notes without regard to the
Policy.
(e) Substitution and Repurchase. If the Indenture Trustee does not
receive the Mortgage File for any Mortgage Loan as required by Section
2.01(d), that Mortgage Loan shall automatically be retransferred to the
Sponsor, subject to the conditions in Section 2.02(b) (as if that Mortgage
Loan were otherwise subject to these provisions). If a Transfer Deficiency
results, the Sponsor shall substitute an Eligible Substitute Mortgage Loan for
the related Mortgage Loan within five Business Days of notification of the
Transfer Deficiency by the Indenture Trustee or, if unable to effect this
substitution, deposit into the Collection Account the Transfer Deposit Amount
in immediately available funds equal to the Transfer Deficiency (or effect a
combination of substitution and deposit). This substitution or deposit shall
be accomplished in the manner specified in, and have the effect specified in,
Section 2.02(b) (as if the related Mortgage Loan were otherwise subject to
these provisions).
(f) Xxxx Records. The Sponsor hereby confirms to the Owner Trustee and
the Indenture Trustee that it has caused the portions of the Electronic
Ledgers relating to the Mortgage Loans to be clearly and unambiguously marked,
and has made the appropriate entries in its general accounting records, to
indicate that the Mortgage Loans have been transferred to the Trust at the
direction of the Depositor. The Master Servicer hereby confirms to the Owner
Trustee and the Indenture Trustee that it has clearly and unambiguously made
appropriate
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entries in its general accounting records indicating that those Mortgage Loans
constitute part of the Trust and are serviced by it on behalf of the Trust in
accordance with this Agreement.
(g) UCC Filings. The Depositor and the Trust agree (subject to paragraph
(i) below) to effect any actions and execute any documents necessary to
perfect and protect the Trust's, the Indenture Trustee's, the Noteholders',
and the Credit Enhancer's interests in each Cut-off Date Asset Balance and
Additional Balances and their proceeds, including filing all necessary
Continuation Statements for the UCC1 Financing Statements filed in the State
of Delaware (which shall have been filed by the Closing Date) describing the
Cut-off Date Asset Balances and Additional Balances and naming the Depositor
as debtor and the Trust as secured party or naming the Trust as debtor and the
Indenture Trustee as secured party and any amendments to UCC1 Financing
Statements required to reflect a change in the UCC or in the name or
organizational structure of the Depositor or the Trust or the filing of any
additional UCC1 Financing Statements due to the change in the state of
organization of the Depositor or the Trust (within 30 days of any event
necessitating the filing).
(h) Sponsor Rating Downgrade. If the long term senior unsecured corporate
debt rating of Countrywide Home Loans, Inc. falls below "BBB" by Standard &
Poor's or "Baa2" by Xxxxx'x, as promptly as practicable but in any case within
90 days of the event, or if an unwaived Event of Servicing Termination exists
the Master Servicer shall, at its expense, either
(x) request that the Indenture Trustee deliver to it the original
Assignment of Mortgage previously delivered to the Indenture Trustee
pursuant to Section 2.01(e) and then record the Assignment of Mortgage in
favor of the Indenture Trustee (which may be a blanket assignment if
permitted by applicable law) in the appropriate real property or other
records,
(y) deliver to the Indenture Trustee an Opinion of Counsel addressed
to the Indenture Trustee and the Credit Enhancer to the effect that
recording is not required to protect the Indenture Trustee's interest in
the related Mortgage Loan or, in case a court should recharacterize the
sale of the Mortgage Loans as a financing, to perfect a first priority
Security Interest in favor of the Indenture Trustee in the related
Mortgage Loan, which Opinion of Counsel also shall be reasonably
acceptable to each of the Rating Agencies (as evidenced in writing) and
the Credit Enhancer, or
(z) cause the MERS(R) System to indicate (and provide evidence to
the Indenture Trustee that it has done so) that the Mortgage Loans have
been assigned by the Trust to the Indenture Trustee in accordance with
this Agreement for the benefit of the Noteholders and the Credit Enhancer
by including (or deleting, in the case of Mortgage Loans that are
repurchased in accordance with this Agreement) in the MERS computer files
(a) the appropriate code that identifies the Indenture Trustee in the
field for identifying the assignee and (b) the appropriate code that has
been assigned to identify the Notes to the MERS(R) System in the field
"Pool Field" identifying the Notes issued in connection with the Mortgage
Loans.
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(i) Sale Treatment. Notwithstanding the characterization of the Notes as
debt of the Transferor for federal, state, and local income and franchise tax
purposes, the transfer of the Mortgage Loans is a sale by the Sponsor to the
Depositor and by the Depositor to the Trust of all the Sponsor's and then all
the Depositor's interest in the Mortgage Loans and other property described
above. From the time the Notes are issued until such time as all or a portion
of the Notes are sold to one or more unaffiliated parties, the Sponsor will
report the transfer of the Mortgage Loans and the related Additional Balances
to the Depositor as a transfer of assets in exchange for beneficial interests
in the form of asset-backed securities and servicing rights. If the transfer
were to be characterized as a transfer for security and not as a sale,
however, then the Depositor hereby grants to the Trust a Security Interest in
all of the Depositor's right, title, and interest in the Mortgage Loans
whether existing now or in the future, all monies due or to become due on the
Mortgage Loans, and all their proceeds; and this Agreement shall constitute a
Security Agreement under applicable law.
Section 2.02. Acceptance by Indenture Trustee.
(a) On the Closing Date, the Custodian shall execute and deliver to the
Depositor, the Master Servicer, and the Sponsor (with a copy to the Credit
Enhancer) the Initial Certification pursuant to the Custodial Agreement. If
Mortgage Loans have been delivered after the Closing Date pursuant to Section
2.01(e), the Custodian shall execute and deliver to the Depositor, the Master
Servicer, and the Sponsor (with a copy to the Credit Enhancer) a Delay
Delivery Certification pursuant to the Custodial Agreement within the period
specified in the Custodial Agreement. Within 180 days after the Closing Date,
Custodian shall deliver to the Depositor, the Master Servicer, and the Sponsor
(with a copy to the Credit Enhancer) a Final Certification pursuant to the
Custodial Agreement. The Sponsor shall correct any defect noted in the Final
Certification within 90 days of its receipt.
(b) All interest of the Trust in the Mortgage Loan shall be retransferred
without recourse, representation, or warranty to the Sponsor and the Asset
Balance of the Mortgage Loan shall be deducted from the Loan Group Balance of
the related Loan Group on the next Business Day after the Transfer Deposit
Amount is deposited to the Collection Account and any other applicable
requirements are satisfied if
(i) the time to correct any defect in any Mortgage Loan noted on the
Final Certification has expired,
(ii) the Trust ever incurs any loss on any Mortgage Loan because any
document in its Mortgage File is defective, or
(iii) an Assignment of Mortgage to the Indenture Trustee has not
been recorded in accordance with Section 2.01(h) and the Mortgage Loan is
not registered on the MERS(R) System.
Interest accrued on the Asset Balance of the Mortgage Loan to the end of the
related Collection Period shall be the property of the Trust.
The Indenture Trustee shall determine if reducing the relevant Loan Group
Balance by the Asset Balance of the retransferred Mortgage Loan would cause a
Transfer Deficiency for the
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related Loan Group. If so, the Indenture Trustee shall notify the Sponsor of
the deficiency, and within five Business Days after the retransfer the Sponsor
shall either
(x) substitute an Eligible Substitute Mortgage Loan,
(y) deposit into the Collection Account an amount (the "Transfer
Deposit Amount") in immediately available funds equal to the Transfer
Deficiency, or
(z) do a combination of both (x) and (y) above.
The reduction or substitution and the actual payment of any Transfer Deposit
Amount shall be payment in full for the Mortgage Loan.
The Owner Trustee shall execute any documents of transfer presented by
the Sponsor, without recourse, representation, or warranty, and take any other
actions reasonably requested by the Sponsor to effect the transfer by the
Trust of the Defective Mortgage Loan pursuant to this Section on receipt of
any Eligible Substitute Mortgage Loan or notice from a Servicing Officer to
the effect that the Transfer Deposit Amount for a Defective Mortgage Loan has
been deposited into the Collection Account or, if the related Allocated
Transferor Interest is not reduced below the greater of the related Minimum
Transferor Interest and the related Required Transferor Subordinated Amount as
a result of the retransfer of a Defective Mortgage Loan, as promptly as
practicable following the transfer. The sole remedy of the Noteholders, the
Transferor, the Owner Trustee, the Indenture Trustee, and the Credit Enhancer
against the Sponsor for the transfer of a Defective Mortgage Loan to the Trust
is the Sponsor's obligation to accept a transfer of a Defective Mortgage Loan
and to either convey an Eligible Substitute Mortgage Loan or to make a deposit
of any Transfer Deposit Amount into the Collection Account.
Promptly following the transfer of any Defective Mortgage Loan or
Eligible Substitute Mortgage Loan from or to the Trust pursuant to this
Section, the Master Servicer shall amend the Mortgage Loan Schedule, deliver
the amended Mortgage Loan Schedule to the Indenture Trustee, and make
appropriate entries in its general account records to reflect the transfer.
Following the retransfer, the Master Servicer shall appropriately xxxx its
records to indicate that it is no longer servicing the Mortgage Loan on behalf
of the Trust. The Sponsor shall appropriately xxxx its Electronic Ledger and
make appropriate entries in its general account records to reflect the
transfer promptly following the transfer.
Notwithstanding any other provision of this Section, a retransfer of
a Defective Mortgage Loan to the Sponsor pursuant to this Section that would
cause the Allocated Transferor Interest for the related Loan Group to be less
than the greater of the Minimum Transferor Interest for the related Loan Group
and the Required Transferor Subordinated Amount for the related Loan Group
shall not occur if either the Sponsor fails to convey an Eligible Substitute
Mortgage Loan or to deposit into the Collection Account any Transfer Deposit
Amount required by this Section with respect to the transfer of the Defective
Mortgage Loan.
(c) The Sponsor shall deliver to the Indenture Trustee any documents
required to be held by the Indenture Trustee in accordance with Section 2.01
with respect to any Eligible
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Substitute Mortgage Loans. The Master Servicer shall determine the Transfer
Deposit Amount in any Collection Period during which the Sponsor substitutes
Eligible Substitute Mortgage Loans and the Sponsor shall deposit that amount
in the Collection Account at the time of substitution. All amounts received on
the Eligible Substitute Mortgage Loans during the Collection Period in which
the circumstances giving rise to the substitution occur shall not be a part of
the Trust and shall not be deposited by the Master Servicer in the Collection
Account. All amounts received on a removed Defective Mortgage Loan during the
Collection Period in which the circumstances giving rise to the substitution
occur shall be a part of the Trust and shall be deposited by the Master
Servicer in the Collection Account. An Eligible Substitute Mortgage Loan will
be subject to the terms of this Agreement in all respects when transferred to
the Trust, and the Sponsor hereby makes the representations, warranties, and
covenants in Section 2.04 with respect to the Eligible Substitute Mortgage
Loan as of the date of substitution. The procedures applied by the Sponsor in
selecting each Eligible Substitute Mortgage Loan shall not be materially
adverse to the interests of the Indenture Trustee, the Transferor, the
Noteholders, or the Credit Enhancer.
(d) The Custodian shall retain possession of each Mortgage File on behalf
of the Indenture Trustee in accordance with the Custodial Agreement. The
Master Servicer shall promptly deliver to the Indenture Trustee the originals
of any other documents constituting the Mortgage File coming into its
possession on their execution or receipt. Any documents to be delivered to the
Indenture Trustee under this Agreement may be delivered to the Custodian
acting on behalf of the Indenture Trustee.
Section 2.03. Representations, Warranties, and Covenants Regarding the
Master Servicer.
The Master Servicer represents and warrants to the Indenture Trustee and
the Credit Enhancer that as of the Closing Date:
(i) The Master Servicer is a New York corporation, validly existing
and in good standing under the laws of the State of New York, and has the
corporate power to own its assets and to transact the business in which
it is currently engaged. The Master Servicer is duly qualified to do
business as a foreign corporation and is in good standing in each
jurisdiction in which the character of its business or any properties
owned or leased by it requires such qualification and in which the
failure so to qualify would have a material adverse effect on the
business, properties, assets, or condition (financial or other) of the
Master Servicer.
(ii) The Master Servicer has the power and authority to make,
execute, deliver, and perform this Agreement and all of the transactions
contemplated under this Agreement, and has taken all necessary corporate
action to authorize the execution, delivery, and performance of this
Agreement. When executed and delivered, this Agreement will constitute a
valid and legally binding obligation of the Master Servicer enforceable
in accordance with its terms.
(iii) The Master Servicer is not required to obtain the consent of
any other party or any consent, license, approval or authorization from,
or registration or
8
declaration with, any governmental authority, bureau, or agency in
connection with the execution, delivery, performance, validity, or
enforceability of this Agreement, except for consents, licenses,
approvals or authorizations, or registrations or declarations that have
been obtained or filed, as the case may be, before the Closing Date.
(iv) The execution, delivery, and performance of this Agreement by
the Master Servicer will not violate any existing law or regulation or
any order or decree of any court applicable to the Master Servicer or the
certificate of incorporation or bylaws of the Master Servicer, or
constitute a material breach of any mortgage, indenture, contract, or
other agreement to which the Master Servicer is a party or by which the
Master Servicer may be bound.
(v) No litigation or administrative proceeding of or before any
court, tribunal, or governmental body is currently pending, or to the
knowledge of the Master Servicer threatened, against the Master Servicer
or any of its properties or with respect to this Agreement, the
Indenture, or the Notes that in the opinion of the Master Servicer has a
reasonable likelihood of resulting in a material adverse effect on the
transactions contemplated by the Transaction Documents.
(vi) If any Mortgage Loan has been registered on the MERS(R) System,
the Master Servicer is a member of MERS in good standing.
The Master Servicer covenants that it will fully furnish, in accordance
with the Fair Credit Reporting Act and its implementing regulations, accurate
and complete information (i.e., favorable and unfavorable) on its credit files
for the related Mortgagor for each Mortgage Loan to Equifax, Experian, and
Trans Union Credit Information Company on a monthly basis.
The representations, warranties, and covenants in this Section shall
survive the transfer of the Mortgage Loans to the Trust. Upon discovery of a
breach of any representation, warranty, or covenant that materially and
adversely affects the interests of the Transferor, the Noteholders, or the
Credit Enhancer, the person discovering the breach shall give prompt notice to
the other parties and to the Credit Enhancer. The Master Servicer shall cure
in all material respects any breach of any representation, warranty, or
covenant within 90 days of becoming aware of it or, with the consent of a
Responsible Officer of the Indenture Trustee, any longer period specified in
the consent.
Section 2.04. Representations and Warranties of the Sponsor Regarding the
Mortgage Loans; Retransfer of Certain Mortgage Loans.
(a) The Sponsor by this reference repeats each representation and
warranty made by it (as Seller) in Section 3.02(iii) through 3.02(lxiii) of
the Purchase Agreement to the Indenture Trustee, the Trust, and the Credit
Enhancer and, in addition, represents and warrants to the Indenture Trustee,
the Trust, and the Credit Enhancer that as of the Cut-off Date, unless
specifically stated otherwise:
(i) As of the Closing Date (or, with respect to any Eligible
Substitute Mortgage Loan, the applicable date of substitution) this
Agreement constitutes a valid
9
and legally binding obligation of the Sponsor, enforceable against the
Sponsor in accordance with its terms.
(ii) As of the Closing Date (or, with respect to any Eligible
Substitute Mortgage Loan, the applicable date of substitution), either
(A) the Purchase Agreement constitutes a valid transfer to the
Depositor of all right, title, and interest of the Sponsor in the
Mortgage Loans, all collections received from the Mortgage Loans
after the Cut-off Date (excluding payments due by the Cut-off Date),
all proceeds of the Mortgage Loans, and any funds from time to time
deposited in the Collection Account and in the Payment Account and
all other property specified in Section 2.01(a) or (b), as
applicable, and this Agreement constitutes a valid transfer to the
Trust of the foregoing property such that, on execution of this
Agreement, it is owned by the Trust free of all liens and other
encumbrances, and is part of the corpus of the Trust conveyed to the
Trust by the Sponsor, and upon payment for the Additional Balances,
the Purchase Agreement and this Agreement will constitute a valid
transfer to the Trust of all right, title, and interest of the
Sponsor in the Additional Balances, all monies due or to become due
on them, all proceeds of the Additional Balances, and all other
property specified in Section 2.01(a) relating to the Additional
Balances free of all liens and other encumbrances, or
(B) the Purchase Agreement or this Agreement, as appropriate,
constitutes a Grant of a Security Interest to the Owner Trustee on
behalf of the Trust in the property described in clause (A) above
and the Indenture constitutes a Grant of a Security Interest to the
Indenture Trustee in the Collateral. The Indenture Trustee has a
first priority perfected Security Interest in the Collateral,
subject to the effect of Section 9-315 of the UCC with respect to
collections on the Mortgage Loans that are deposited in the
Collection Account in accordance with the next to last paragraph of
Section 3.02(b), and if this Agreement constitutes the Grant of a
Security Interest in the property described in clause (A) above to
the Trust, the Trust has a first priority perfected Security
Interest in the property, subject to the same limitations. This
Security Interest is enforceable as such against creditors of and
purchasers from the Trust, the Depositor, and the Sponsor.
If the substance of any representation and warranty in this Section made
to the best of the Sponsor's knowledge or as to which the Sponsor has no
knowledge is inaccurate and the inaccuracy materially and adversely affects
the interest of the Trust, the Noteholders, or the Credit Enhancer in the
related Mortgage Loan then, notwithstanding that the Sponsor did not know the
substance of the representation and warranty was inaccurate at the time the
representation or warranty was made, the inaccuracy shall be a breach of the
applicable representation or warranty.
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(b) The representations and warranties in this Section shall survive
delivery of the respective Mortgage Files to the Custodian pursuant to the
Custodial Agreement and the termination of the rights and obligations of the
Master Servicer pursuant to Section 5.04 or 6.02. If the Sponsor, the
Depositor, the Master Servicer, the Credit Enhancer, or a Responsible Officer
of the Indenture Trustee discovers a breach of any of the foregoing
representations and warranties, without regard to any limitation concerning
the knowledge of the Sponsor, that materially and adversely affects the
interests of the Trust, the Indenture Trustee under the Indenture, the
Noteholders, or the Credit Enhancer in the Mortgage Loan, the party
discovering the breach shall give prompt notice to the other parties and the
Credit Enhancer.
The Sponsor shall use all reasonable efforts to cure in all material
respects any breach (other than a breach of the representation and warranty in
Section 2.04 by virtue of the repetition of Section 3.02(a)(v) of the Purchase
Agreement) within 90 days of becoming aware of it or shall, not later than the
Business Day before the Payment Date in the month following the Collection
Period in which the cure period expired (or any later date that the Indenture
Trustee and the Credit Enhancer consent to), either (1) accept a transfer of
the Mortgage Loan from the Trust or (2) substitute an Eligible Substitute
Mortgage Loan in accordance with Section 2.02. The cure for any breach of a
representation and warranty relating to the characteristics of the Mortgage
Loans in the related Loan Group in the aggregate shall be a repurchase of or
substitution for only the Mortgage Loans necessary to cause the
characteristics to comply with the related representation and warranty. Upon
accepting the transfer and making any required deposit into the Collection
Account or substitution of an Eligible Substitute Mortgage Loan, as the case
may be, the Owner Trustee shall execute any documents of transfer presented by
the Sponsor, without recourse, representation, or warranty, and take any other
actions reasonably requested by the Sponsor to effect the transfer by the
Trust of the Mortgage Loans.
The sole remedy of the Noteholders, the Indenture Trustee on behalf of
Noteholders, the Owner Trustee, and the Credit Enhancer against the Sponsor
for the breach of a representation or warranty other than the representation
and warranty in Section 2.04 by virtue of the repetition of Section 3.02(a)(v)
of the Purchase Agreement is the Sponsor's obligation to accept a transfer of
a Mortgage Loan as to which a breach has occurred and is continuing and to
make any required deposit in the Collection Account or to substitute an
Eligible Substitute Mortgage Loan. If the representation and warranty in
Section 2.04 by virtue of the repetition of Section 3.02(a)(v) of the Purchase
Agreement is breached, the transfer of the affected Mortgage Loans to the
Trust shall be void and the Sponsor shall pay to the Trust the sum of (i) the
amount of the related Asset Balances, plus accrued interest on each Asset
Balance at the applicable Loan Rate to the date of payment and (ii) the amount
of any loss or expense incurred by the Transferor, the Noteholders, the Trust,
or the Credit Enhancer with respect to the affected Mortgage Loans. The
Indenture Trustee may enforce the Sponsor's obligations under this Section in
its own right or as the owner of the Trust's right to seek enforcement as the
assignee of the Trust's rights under this Agreement pursuant to the Indenture.
The Sponsor shall defend and indemnify the Indenture Trustee, the Owner
Trustee, the Credit Enhancer, and the Noteholders against all reasonable costs
and expenses, and all losses,
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damages, claims, and liabilities, including reasonable fees and expenses of
counsel and the amount of any settlement entered into with the consent of the
Sponsor (this consent not to be unreasonably withheld), that may be asserted
against or incurred by any of them as a result of any third-party action
arising out of any breach of a representation and warranty.
Section 2.05. Covenants of the Depositor.
The Depositor covenants that:
(a) Security Interests. Except for the transfer under this Agreement, the
Depositor will not transfer any Mortgage Loan to any other person, or create
or suffer to exist any Lien on any Mortgage Loan or any interest in one,
whether existing now or in the future; the Depositor will notify the Indenture
Trustee of the existence of any Lien on any Mortgage Loan immediately on its
discovery; and the Depositor will defend the right, title, and interest of the
Trust in the Mortgage Loans, whether existing now or in the future, against
all claims of third parties claiming through the Depositor. Nothing in this
Section shall prohibit the Depositor from suffering to exist on any Mortgage
Loan any Liens for municipal or other local taxes and other governmental
charges if the taxes or governmental charges are not due at the time or if the
Depositor is contesting their validity in good faith by appropriate
proceedings and has set aside on its books adequate reserves with respect to
them.
(b) Negative Pledge. The Depositor shall not transfer or grant a Security
Interest in the Transferor Certificates except in accordance with Section 3.10
of the Trust Agreement.
(c) Additional Indebtedness. So long as the Notes are outstanding the
Depositor will not incur any debt other than debt that (i) is non-recourse to
the assets of the Depositor other than the mortgage loans specifically pledged
as security for the debt, (ii) is subordinated in right of payment to the
rights of the Noteholders, or (iii) is assigned a rating by each of the Rating
Agencies that is the same as the then current rating of the Notes.
(d) Downgrading. The Depositor will not engage in any activity that would
result in a downgrading of the Notes without regard to the Policy.
(e) Amendment to Certificate of Incorporation. The Depositor will not
amend its Certificate of Incorporation or state of incorporation without prior
notice to the Rating Agencies, the Indenture Trustee, and the Credit Enhancer.
Section 2.06. Transfers of Mortgage Loans at Election of Transferor.
Subject to the conditions below, the Transferor may require the transfer
of Mortgage Loans in a Loan Group from the Trust to the Transferor as of the
close of business on a Payment Date (the "Transfer Date"). In connection with
any transfer, the related Allocated Transferor Interest shall be reduced by
the aggregate Asset Balances as of their Transfer Date of the Mortgage Loans
transferred. On the fifth Business Day (the "Transfer Notice Date") before the
Transfer Date designated in the notice, the Transferor shall give the Owner
Trustee, the Indenture Trustee, the Master Servicer, and the Credit Enhancer a
notice of the proposed transfer that contains a list of the Mortgage Loans to
be transferred. These transfers of Mortgage Loans shall be permitted if the
following conditions are satisfied:
(i) No Rapid Amortization Event has occurred.
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(ii) On the Transfer Date the Allocated Transferor Interest with
respect to the related Loan Group (after giving effect to the removal of
the Mortgage Loans proposed to be transferred) exceeds the greater of the
related Minimum Transferor Interest and the related Required Transferor
Subordinated Amount.
(iii) The transfer of any Mortgage Loans from either Loan Group on
any Transfer Date during the Managed Amortization Period shall not, in
the reasonable belief of the Transferor, cause a Rapid Amortization Event
to occur or an event that with notice or lapse of time or both would
constitute a Rapid Amortization Event.
(iv) By the Transfer Date, the Transferor shall have delivered to
the Indenture Trustee a revised Mortgage Loan Schedule, reflecting the
proposed transfer and the Transfer Date, and the Master Servicer shall
have marked the Electronic Ledger to show that the Mortgage Loans
transferred to the Transferor are no longer owned by the Trust.
(v) The Transferor shall represent and warrant that the Mortgage
Loans to be removed from the Trust were selected randomly.
(vi) In connection with each transfer of Mortgage Loans pursuant to
this Section, each Rating Agency and the Credit Enhancer shall have
received by the related Transfer Notice Date notice of the proposed
transfer of Mortgage Loans and, before the Transfer Date, each Rating
Agency shall have notified in writing the Transferor, the Indenture
Trustee, and the Credit Enhancer that the transfer of Mortgage Loans
would not result in a reduction or withdrawal of its then current rating
of the Notes without regard to the Policy.
(vii) The Transferor shall have delivered to the Owner Trustee, the
Indenture Trustee, and the Credit Enhancer an Officer's Certificate
certifying that the items in subparagraphs (i) through (vi), inclusive,
have been performed or are true, as the case may be. The Owner Trustee
and the Indenture Trustee may conclusively rely on the Officer's
Certificate, shall have no duty to make inquiries with regard to the
matters in it, and shall incur no liability in so relying.
Upon receiving the requisite information from the Transferor, the Master
Servicer shall perform in a timely manner those acts required of it, as
specified above. Upon satisfaction of the above conditions, on the Transfer
Date the Indenture Trustee shall effect delivery to the Transferor the
Mortgage File for each Mortgage Loan being so transferred, and the Indenture
Trustee shall execute and deliver to the Transferor any other documents
prepared by the Transferor reasonably necessary to transfer the Mortgage Loans
to the Transferor. This transfer of the Trust's interest in Mortgage Loans
shall be without recourse, representation, or warranty by the Indenture
Trustee or the Trust to the Transferor.
Section 2.07. Tax Treatment.
The Depositor and the Transferor intend that the Notes will be
indebtedness of the Transferor for federal, state, and local income and
franchise tax purposes and for purposes of any other tax imposed on or
measured by income. The Transferor and the Depositor agree to
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treat the Notes for purposes of federal, state, and local income or franchise
taxes and any other tax imposed on or measured by income, as indebtedness of
the Transferor secured by the assets of the Trust and to report the
transactions contemplated by this Agreement on all applicable tax returns in a
manner consistent with this treatment. The Administrator pursuant to the
Administration Agreement will prepare and file all tax reports required under
this Agreement on behalf of the Trust.
Section 2.08. Representations and Warranties of the Depositor.
The Depositor represents and warrants to the Indenture Trustee on behalf
of the Noteholders and the Credit Enhancer as follows:
(i) This Agreement constitutes a valid and legally binding
obligation of the Depositor, enforceable against the Depositor in
accordance with its terms.
(ii) Immediately before the sale and assignment by the Depositor to
the Trust of each Mortgage Loan, the Depositor was the sole beneficial
owner of each Mortgage Loan (insofar as the title was conveyed to it by
the Sponsor) subject to no prior lien, claim, participation interest,
mortgage, Security Interest, pledge, charge, or other encumbrance or
other interest of any nature.
(iii) As of the Closing Date, the Depositor has transferred all
right, title, and interest in the Mortgage Loans to the Trust and, as of
each applicable date of substitution, the Depositor has transferred all
right, title, and interest in the Eligible Substitute Mortgage Loan to
the Trust.
(iv) The Depositor has not transferred the Mortgage Loans to the
Trust with any intent to hinder, delay, or defraud any of its creditors.
ARTICLE III
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 3.01. The Master Servicer.
The Master Servicer shall service and administer the Mortgage Loans in a
manner consistent with the terms of this Agreement and with general industry
practice and shall have full power and authority, acting alone or through a
subservicer, (i) to execute and deliver, on behalf of the Noteholders, the
Trust, and the Indenture Trustee, customary consents or waivers and other
instruments and documents, (ii) to consent to transfers of any Mortgaged
Property and assumptions of the Mortgage Notes and related Mortgages (but only
in the manner provided in this Agreement), (iii) to collect any Insurance
Proceeds and other Liquidation Proceeds, and (iv) to effectuate foreclosure or
other conversion of the ownership of the Mortgaged Property securing any
Mortgage Loan. The Master Servicer shall remain responsible to the parties to
this Agreement and the Credit Enhancer for its obligations under this
Agreement. Any amounts received by any subservicer on a Mortgage Loan shall be
considered to have been received by the Master Servicer whether or not
actually received by it. Without limiting the generality of the
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foregoing, the Master Servicer may execute and deliver, on behalf of itself,
the Noteholders, and the Indenture Trustee, or any of them, any instruments of
satisfaction or cancellation, or of partial or full release or discharge, and
all other comparable instruments, with respect to the Mortgage Loans and with
respect to the Mortgaged Properties, in each case to the extent not
inconsistent with this Agreement.
At the request of a Servicing Officer, the Indenture Trustee shall
furnish the Master Servicer with any powers of attorney and other documents
appropriate to enable the Master Servicer to carry out its servicing and
administrative duties under this Agreement. The Master Servicer in this
capacity may also consent to the placing of a lien senior to that of any
mortgage on the related Mortgaged Property, if
(i) the new senior lien secures a mortgage loan that refinances an
existing first mortgage loan and
(ii) either
(a) the Loan-to-Value Ratio of the new mortgage loan (without
taking into account any closing costs that may be financed by the
new mortgage loan) is equal to or less than the Loan-to-Value Ratio
of the first mortgage loan to be replaced (for purposes of
calculating the Loan-to-Value Ratio, the Valuation of the Mortgaged
Property will be measured by the lesser of (A) the Valuation of the
Mortgaged Property as of the Cut-off Date and (B) the Valuation of
the Mortgaged Property as of the date of the refinancing referenced
in clause (i)) or
(b) the Combined Loan-to-Value Ratio of the new mortgage loan
(without taking into account any closing costs that may be financed
by the new mortgage loan) and the existing Mortgage Loan is equal to
less than 70% (for purposes of calculating the Combined
Loan-to-Value Ratio, the Valuation of the Mortgaged Property will be
measured as the lesser of (A) the Valuation of the Mortgage Loan as
of the Cut-off Date and (B) the Valuation of the Mortgage Loan as of
the date of the refinancing referenced in clause (i)).
The aggregate Asset Balance of all the Mortgage Loans with respect to which
the senior lien may be so modified may not exceed 50% of the Original Note
Principal Balance.
The Master Servicer may also, without approval from the Rating Agencies
or the Credit Enhancer, increase the Credit Limits on Mortgage Loans if
(i) new appraisals are obtained and the weighted average Combined
Loan-to-Value Ratios of the Mortgage Loans after giving effect to the
increase are less than or equal to the weighted average Combined
Loan-to-Value Ratios of the Mortgage Loans as of the Cut-off Date and
(ii) the increases are consistent with the Master Servicer's
underwriting policies.
In addition, the Master Servicer may increase the Credit Limits on Mortgage
Loans having aggregate Asset Balances of up to an additional 5.0% of the
Original Note Principal Balance, if
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(w) the increase does not cause the Combined Loan-to-Value
Ratio of the Mortgage Loans in the related Loan Group to exceed 80%,
(x) the increase in the Credit Limit of a Mortgage Loan does
not cause the Combined Loan-to-Value Ratio of the Mortgage Loan to
exceed 100%,
(y) the increase in the Credit Limit of a Mortgage Loan does
not cause the Combined Loan-to-Value Ratio of the Mortgage Loan to
increase by more than 25% (for example, a Combined Loan-to-Value
Ratio of 50% can be increased to 75%, a Combined Loan-to-Value Ratio
of 60% can be increased to 85%, and so forth), and
(z) the increase is consistent with the Master Servicer's
underwriting policies.
Furthermore, the Originator, without prior approval from the Rating
Agencies or the Credit Enhancer, may solicit mortgagors for a reduction in
Loan Rates. Loan Rates of Mortgage Loans in a Loan Group having Asset Balances
at the time of the proposed modification that aggregate over time not more
than 5.0% of the related Original Note Principal Balance may be subject to
reduction. If a mortgagor notifies the Originator or the Master Servicer that
it wants a reduction in Loan Rate, the Originator shall purchase the Mortgage
Loan from the Trust as described below. Effective immediately on the same
Business Day on which the Originator delivers the Purchase Price for the
relevant Mortgage Loan to the Master Servicer, all interest of the Trust in
the relevant Mortgage Loan shall automatically be transferred and assigned to
the Originator and all benefits and burdens of ownership of the relevant
Mortgage Loan, including the right to accrued interest on it from the date of
purchase and the risk of default on the Mortgage Loan, shall pass to the
Originator.
The Master Servicer shall promptly deliver to the Indenture Trustee a
certification signed by a Servicing Officer to the effect that all of the
requirements for a purchase of a Mortgage Loan in connection with a request by
a mortgagor for a reduction in Loan Rate have been satisfied with respect to
the relevant Mortgage Loan. The Originator shall deliver the Purchase Price
for the relevant Mortgage Loan to the Master Servicer promptly after a
mortgagor notifies the Originator or the Master Servicer that it wants a
reduction in Loan Rate, and the Master Servicer shall deposit it in the
Collection Account pursuant to Section 3.02 within one Business Day. Upon
receipt by the Indenture Trustee of written notification of the deposit signed
by a Servicing Officer, the Indenture Trustee shall release to the Originator
the related Mortgage File and shall execute and deliver any instruments of
transfer or assignment delivered to it for execution and reasonably acceptable
to it, in each case without recourse, representation, or warranty, necessary
to release the Mortgage Loan from the lien of the Indenture and vest in the
Originator the Mortgage Loan previously transferred and assigned pursuant to
this provision. The certification and written notification of the deposit each
from a Servicing Officer may be delivered to the Indenture Trustee
electronically, and to the extent the transmission originates on its face from
a Servicing Officer, need not be manually signed.
16
In addition, the Master Servicer may agree to changes in the terms of a
Mortgage Loan at the request of the mortgagor if the changes (i) do not
materially and adversely affect the interests of Noteholders, the Transferor,
or the Credit Enhancer and (ii) are consistent with prudent and customary
business practice as evidenced by a certificate signed by a Servicing Officer
delivered to the Indenture Trustee and the Credit Enhancer.
In addition, the Master Servicer may solicit mortgagors to change any
other terms of the related Mortgage Loans if the changes (i) do not materially
and adversely affect the interests of the Noteholders, the Transferor, or the
Credit Enhancer and (ii) are consistent with prudent and customary business
practice as evidenced by a certificate signed by a Servicing Officer delivered
to the Indenture Trustee and the Credit Enhancer. Nothing in this Agreement
shall limit the right of the Master Servicer to solicit mortgagors with
respect to new loans (including mortgage loans) that are not Mortgage Loans.
The Master Servicer may register any Mortgage Loan on the MERS(R) System,
or cause the removal from registration of any Mortgage Loan on the MERS(R)
System, and execute and deliver, on behalf of the Owner Trustee, any
instruments of assignment and other comparable instruments with respect to the
assignment or re-recording of a mortgage in the name of MERS, solely as
nominee for the Owner Trustee and its successors and assigns.
For so long as any Mortgage Loan is registered on the MERS(R) System, the
Master Servicer shall maintain in good standing its membership in MERS and
shall comply in all material respects with the rules and procedures of MERS in
connection with the servicing of the Mortgage Loans that are registered with
MERS. If any Mortgage Loans are registered on the MERS(R) System, the Master
Servicer may cause MERS to execute and deliver an assignment of mortgage in
recordable form to transfer any of the Mortgage Loans registered on the
MERS(R) System from MERS to the Owner Trustee. The Master Servicer shall
promptly notify MERS of any transfer of beneficial ownership or release of any
Security Interest in any MOM Loan.
The relationship of the Master Servicer to the Trust and the Indenture
Trustee under this Agreement is intended by the parties to be that of an
independent contractor and not that of a joint venturer, partner, or agent of
the Trust or the Indenture Trustee.
(b) If the rights and obligations of the Master Servicer are terminated
under this Agreement, any successor to the Master Servicer in its sole
discretion may terminate the existing subservicer arrangements with any
subservicer or assume the terminated Master Servicer's rights under those
subservicing arrangements to the extent permitted by applicable law and the
subservicing agreements.
Section 3.02. Collection of Certain Mortgage Loan Payments; Establishment
of Accounts.
(a) The Master Servicer shall make reasonable efforts to collect all
payments called for under the Mortgage Loans, and shall follow the collection
procedures it follows for mortgage loans in its servicing portfolio comparable
to the Mortgage Loans, to the extent consistent with this Agreement.
Consistent with the foregoing, and without limiting the generality of the
foregoing, the Master Servicer may in its discretion (i) waive any late
payment
17
charge or any assumption fees or other fees that may be collected in the
ordinary course of servicing the Mortgage Loans and (ii) arrange with a
mortgagor a schedule for the payment of interest due and unpaid if the
arrangement is consistent with the Master Servicer's policies with respect to
the mortgage loans it owns or services. Notwithstanding any arrangement, the
Mortgage Loans will be included in the information regarding delinquent
Mortgage Loans in the Servicing Certificate and monthly statement to
Noteholders pursuant to Section 7.04 of the Indenture.
(b) The Master Servicer shall establish and maintain a trust account (the
"Collection Account") with the title specified in the Adoption Annex. The
Collection Account shall be an Eligible Account. The Master Servicer or the
Sponsor, as the case may be, shall deposit or cause to be deposited within two
Business Days following its receipt the following payments and collections
received or made by it (without duplication):
(1) all collections on the Mortgage Loans;
(2) the amounts deposited to the Collection Account pursuant to
Section 4.03;
(3) Net Liquidation Proceeds net of any related Foreclosure Profit;
(4) Insurance Proceeds; and
(5) any amounts required to be deposited pursuant to Section 7.01.
No other amounts are to be deposited to the Collection Account, including
amounts representing Foreclosure Profits, fees (including annual fees) or late
charge penalties payable by mortgagors, or amounts received by the Master
Servicer for the accounts of mortgagors for application towards the payment of
taxes, insurance premiums, assessments, excess pay off amounts, and similar
items. The Master Servicer shall remit all Foreclosure Profits to the Sponsor.
The Master Servicer may retain, from payments of interest on the Mortgage
Loans in each Loan Group in each Collection Period, the related Servicing Fee
for the Collection Period and any unreimbursed optional advance with respect
to the related Loan Group made by the Master Servicer pursuant to Section
4.03.
The Master Servicer may make a net deposit in the Collection Account of
the amounts required by this Section.
On the Business Day before each Payment Date to the extent on deposit in
the Collection Account, the Master Servicer shall withdraw from the Collection
Account and remit to the Indenture Trustee, the amount to be applied on the
next Payment Date by the Indenture Trustee pursuant to Section 8.03 of the
Indenture, and the Indenture Trustee will deposit that amount in the Payment
Account pursuant to the Indenture.
The Indenture Trustee shall hold amounts deposited in the Payment Account
as trustee for the Noteholders, the Transferor, and the Credit Enhancer. In
addition, the Master Servicer shall notify the Indenture Trustee and the
Credit Enhancer on each Determination Date of the amount of collections in the
Collection Account to be transferred to the Payment Account and their
allocation to Interest Collections and Principal Collections for the Mortgage
Loans in each Loan Group for the related Payment Date. Following this
notification, the Master Servicer may
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withdraw from the Collection Account and retain any amounts that constitute
income realized from the investment of the collections. The Master Servicer
will be entitled to receive, as additional servicing compensation, income
earned on the collections in the Payment Account.
Amounts on deposit in the Collection Account will be invested in Eligible
Investments maturing no later than the day before the next Payment Date at the
direction of the Master Servicer. All income realized from any investment in
Eligible Investments of funds in the Collection Account shall be the property
of the Master Servicer and may be withdrawn from time to time from the
Collection Account. Any losses incurred on these investments that reduce their
principal amount shall be deposited in the Collection Account by the Master
Servicer out of its own funds immediately as realized.
Section 3.03. Deposits to Payment Account.
The Master Servicer shall
(i) on the Business Day before each of the first three Payment
Dates, deposit in the Payment Account any shortfall in the amount
required to pay the Note Interest on those Payment Dates for each Class
of Notes resulting solely from the failure of certain Mortgage Loans to
be fully indexed and
(ii) on the Business Day before the first Payment Date, deposit in
the Payment Account for each Loan Group any amounts representing payments
on, and any collections in respect of, the Mortgage Loans in each Loan
Group received after the Cut-off Date and before the Closing Date
(exclusive of payments of accrued interest due by the Cut-off Date).
Section 3.04. Maintenance of Hazard Insurance; Property Protection
Expenses.
The Master Servicer shall cause to be maintained for each Mortgage Loan
hazard insurance naming the Master Servicer or the related subservicer as loss
payee under it providing extended coverage in an amount that is at least equal
to the lesser of (i) the maximum insurable value of the improvements securing
the Mortgage Loan from time to time or (ii) the combined principal balance
owing on the Mortgage Loan and any mortgage loan senior to the Mortgage Loan
from time to time. The Master Servicer shall also maintain on property
acquired through foreclosure, or by deed in lieu of foreclosure, hazard
insurance with extended coverage in an amount which is at least equal to the
lesser of (i) the maximum insurable value from time to time of the
improvements that are a part of the property or (ii) the combined principal
balance owing on the Mortgage Loan and any mortgage loan senior to the
Mortgage Loan at the time of the foreclosure or deed in lieu of foreclosure
plus accrued interest and the good-faith estimate of the Master Servicer of
related Liquidation Expenses to be incurred.
Amounts collected by the Master Servicer under these policies shall be
deposited in the Collection Account to the extent called for by Section 3.02.
The hazard insurance to be maintained for the related Mortgage Loan shall
include flood insurance when the Mortgaged Property is located in a federally
designated flood area. The flood insurance shall be in the amount required
under applicable guidelines of the Federal Flood Emergency Act. No other
insurance need be carried on any Mortgaged Properties pursuant to this
Agreement.
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Section 3.05. Assumption and Modification Agreements.
When a Mortgaged Property has been or is about to be conveyed by the
mortgagor, the Master Servicer shall exercise its right to accelerate the
maturity of the Mortgage Loan consistent with the then current practice of the
Master Servicer and without regard to the inclusion of the Mortgage Loan in
the Trust. If it elects not to enforce its right to accelerate or if it is
prevented from doing so by applicable law, the Master Servicer (so long as its
action conforms with the underwriting standards generally acceptable in the
industry at the time for new origination) may enter into an assumption and
modification agreement with the person to whom the Mortgaged Property has been
or is about to be conveyed, pursuant to which that person becomes liable under
the Credit Line Agreement and, to the extent permitted by applicable law, the
mortgagor remains liable on it. The Master Servicer shall notify the Indenture
Trustee that any assumption and modification agreement has been completed by
delivering to the Indenture Trustee an Officer's Certificate certifying that
the agreement is in compliance with this Section and by forwarding the
original copy of the assumption and modification agreement to the Indenture
Trustee. Any assumption and modification agreement shall be a part of the
related Mortgage File. No change in the terms of the related Credit Line
Agreement may be made by the Master Servicer in connection with the assumption
to the extent that the change would not be permitted to be made in the
original Credit Line Agreement pursuant to Section 3.01(a). Any fee collected
by the Master Servicer for entering into the assumption and modification
agreement will be retained by the Master Servicer as additional servicing
compensation.
Section 3.06. Realization Upon Defaulted Mortgage Loans; Repurchase of
Certain Mortgage Loans.
The Master Servicer shall foreclose or otherwise comparably convert to
ownership Mortgaged Properties securing defaulted Mortgage Loans when, in the
opinion of the Master Servicer based on normal and usual practices and
procedures, no satisfactory arrangements can be made for collection of
delinquent payments pursuant to Section 3.02. Alternatively, the Master
Servicer may forego foreclosure and charge off a defaulted Mortgage Loan if in
the Master Servicer's opinion the proceeds of foreclosure and liquidation are
likely to produce an amount less than the unpaid principal balance of senior
liens on the Mortgaged Property. If the Master Servicer has actual knowledge
or reasonably believes that any Mortgaged Property is affected by hazardous or
toxic wastes or substances and that the acquisition of the Mortgaged Property
would not be commercially reasonable, then the Master Servicer will not cause
the Trust to acquire title to the Mortgaged Property in a foreclosure or
similar proceeding. In connection with foreclosure or other conversion (or a
decision to forego foreclosure and charge off a defaulted Mortgage Loan), the
Master Servicer shall follow the practices and procedures it deems appropriate
and that are normal and usual in its general mortgage servicing activities,
including advancing funds to correct a default on a related senior mortgage
loan. However, the need not expend its own funds in connection with any
foreclosure or towards the correction of any default on a related senior
mortgage loan or restoration of any property unless it determines, in its sole
discretion, that the expenditure will increase Net Liquidation Proceeds and
the Master Servicer acts in accordance with the servicing standards in this
Agreement.
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If title to any Mortgaged Property is acquired in foreclosure or by deed
in lieu of foreclosure, the deed or certificate of sale shall be issued to the
Indenture Trustee, or to its nominee on behalf of Noteholders. The Master
Servicer shall dispose of the Mortgaged Property as soon as practicable in a
manner that maximizes its Liquidation Proceeds.
The Master Servicer, in its sole discretion, may purchase for its own
account from the Trust any Mortgage Loan that is 151 days or more delinquent.
The price for any Mortgage Loan purchased shall be 100% of its Asset Balance
plus accrued interest on it at the applicable Loan Rate from the date through
which interest was last paid by the related mortgagor to the first day of the
month in which the purchase price is to be distributed to the Noteholders. The
purchase price shall be deposited in the Collection Account. The Master
Servicer may only exercise this right on or before the penultimate day of the
calendar month in which the Mortgage Loan became 151 days delinquent. Any
delinquent Mortgage Loan that becomes current but thereafter again becomes 151
days or more delinquent may be purchased by the Master Servicer pursuant to
this Section.
Upon receipt of a certificate from the Master Servicer in the form of
Exhibit D, the Indenture Trustee shall release to the Master Servicer the
related Mortgage File and shall execute and deliver any instruments of
transfer prepared by the Master Servicer, without recourse, necessary to vest
in the purchaser of the Mortgage Loan any Mortgage Loan released to it and the
Master Servicer shall succeed to all the Trust's interest in the Mortgage Loan
and all related security and documents. This assignment shall be an assignment
outright and not for security. The Master Servicer shall then own the Mortgage
Loan, and all security and documents, free of any further obligation to the
Trust, the Owner Trustee, the Indenture Trustee, the Credit Enhancer, the
Transferor, or the Noteholders with respect to it. The certification by the
Master Servicer may be delivered to the Indenture Trustee electronically, and
if it is, its form may differ from Exhibit D so long as it contains the
information required by Exhibit D (that is, the relevant loan number, at least
one of the five reasons for requesting file as found in Exhibit D, and the
acknowledgment that the Mortgage File will be held in accordance with this
Agreement and will promptly be returned to the Indenture Trustee when the need
for it by the Master Servicer no longer exists unless the Mortgage Loan has
been liquidated or retransferred), and to the extent the transmission
originates on its face from a Servicing Officer, need not be manually signed.
Section 3.07. Indenture Trustee to Cooperate.
By each Payment Date, the Master Servicer will notify the Indenture
Trustee whenever the Asset Balance of any Mortgage Loan has been paid in full
during the preceding Collection Period. A Servicing Officer shall certify that
the Mortgage Loan has been paid in full and that all amounts received in
connection with the payment that are required to be deposited in the
Collection Account pursuant to Section 3.02 have been so deposited or
credited. Upon payment in full pursuant to Section 3.01, the Master Servicer
is authorized to execute an instrument of satisfaction regarding the related
mortgage, which instrument of satisfaction shall be recorded by the Master
Servicer if required by applicable law and be delivered to the person entitled
to it.
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If the mortgage has been registered on the MERS(R) System, the Master
Servicer shall cause the removal of the mortgage from registration on the
MERS(R) System and execute and deliver, on behalf of the Indenture Trustee and
the Noteholders, any instruments of satisfaction or cancellation or of partial
or full release. No expenses incurred in connection with the instrument of
satisfaction or transfer shall be reimbursed from amounts deposited in the
Collection Account or the Payment Account.
As appropriate for the servicing or foreclosure of any Mortgage Loan, or
in connection with the payment in full of the Asset Balance of any Mortgage
Loan, upon request of the Master Servicer and delivery to the Indenture
Trustee of a Request for Release substantially in the form of Exhibit D signed
by a Servicing Officer, the Indenture Trustee shall release the related
Mortgage File to the Master Servicer and the Indenture Trustee shall execute
any documents provided by the Master Servicer necessary to the prosecution of
any proceedings or the taking of other servicing actions. The Request for
Release by a Servicing Officer may be delivered to the Indenture Trustee
electronically, and if it is, its form may differ from Exhibit D so long as it
contains the information required by Exhibit D (that is, the relevant loan
number, at least one of the five reasons for requesting file as found in
Exhibit D, and the acknowledgment that the Mortgage File will be held in
accordance with this Agreement and will promptly be returned to the Indenture
Trustee when the need for it by the Master Servicer no longer exists unless
the Mortgage Loan has been liquidated or retransferred), and to the extent the
transmission originates on its face from a Servicing Officer, need not be
manually signed. The Master Servicer shall return the Mortgage File to the
Indenture Trustee when the need for it by the Master Servicer no longer
exists, unless the Mortgage Loan is liquidated, in which case, upon receipt of
a certificate of a Servicing Officer similar to that specified above, the
Request for Release shall be released by the Indenture Trustee to the Master
Servicer.
To facilitate the foreclosure of the mortgage securing any Mortgage Loan
that is in default following recordation of the assignments of mortgage in
accordance with this Agreement, if so requested by the Master Servicer, the
Indenture Trustee shall execute an appropriate assignment in the form provided
to the Indenture Trustee by the Master Servicer to assign the Mortgage Loan
for the purpose of collection to the Master Servicer or a subservicer. The
assignment shall unambiguously indicate that the assignment is for the purpose
of collection only. The Master Servicer will then bring all required actions
in its own name and otherwise enforce the terms of the Mortgage Loan and
deposit the Net Liquidation Proceeds, exclusive of Foreclosure Profits, in the
Collection Account. If all delinquent payments due under the Mortgage Loan are
paid by the mortgagor and any other defaults are cured, then the Master
Servicer shall promptly reassign the Mortgage Loan to the Indenture Trustee
and return the related Mortgage File to the place where it was being
maintained.
Section 3.08. Servicing Compensation; Payment of Certain Expenses by
Master Servicer.
The Master Servicer may retain the Servicing Fee pursuant to Section 3.02
as compensation for its services in servicing the Mortgage Loans. Moreover,
additional servicing compensation in the form of late payment charges or other
receipts not required to be deposited in the Collection Account (other than
Foreclosure Profits) shall be retained by the Master
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Servicer. The Master Servicer must pay all expenses incurred by it in
connection with its activities under this Agreement (including payment of all
other fees and expenses not expressly stated under this Agreement to be for
the account of another person) and shall not be entitled to reimbursement
under this Agreement except as specifically provided in this Agreement.
Liquidation Expenses are reimbursable to the Master Servicer
FIRST, from related Liquidation Proceeds and
SECOND, from the Payment Account from funds attributable to the related
Loan Group pursuant to Section 8.03(a)(x) of the Indenture.
Section 3.09. Annual Statement as to Compliance.
(a) The Master Servicer will deliver to the Indenture Trustee, the Credit
Enhancer, and the Rating Agencies, by the date in each year specified in the
Adoption Annex, beginning on the date specified in the Adoption Annex, an
Officer's Certificate stating that (i) a review of the activities of the
Master Servicer during the preceding fiscal year (or the applicable shorter
period for the first report) and of its performance under this Agreement has
been made under the officer's supervision and (ii) to the best of the
officer's knowledge, based on the review, the Master Servicer has fulfilled
all of its material obligations under this Agreement throughout the fiscal
year, or, if there has been a default in the fulfillment of those obligations,
specifying each default known to the officer and its nature and status.
(b) Within five Business Days after obtaining knowledge of it, the Master
Servicer shall notify the Indenture Trustee, the Credit Enhancer, and each of
the Rating Agencies of any event that with the giving of notice or the lapse
of time would become an Event of Servicing Termination by delivering an
Officer's Certificate describing the event.
Section 3.10. Annual Servicing Report.
By the date in each year specified in the Adoption Annex, beginning on
the date specified in the Adoption Annex, the Master Servicer, at its expense,
shall cause a firm of nationally recognized independent public accountants
(who may also render other services to the Master Servicer) to furnish a
report to the Indenture Trustee, the Credit Enhancer, and each Rating Agency
to the effect that the firm has examined certain documents and records
relating to the servicing of mortgage loans during the most recent fiscal year
then ended under sale and servicing agreements or pooling and servicing
agreements (substantially similar to this Agreement, including this
Agreement), that the examination was conducted substantially in compliance
with the audit guide for audits of non-supervised mortgagees approved by the
Department of Housing and Urban Development for use by independent public
accountants (to the extent that the procedures in the audit guide are
applicable to the servicing obligations in those agreements), and that the
examination has disclosed no items of noncompliance with this Agreement that,
in the opinion of the firm, are material, except for the items of
noncompliance described in the report.
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Section 3.11. Access to Certain Documentation and Information Regarding the
Mortgage Loans.
(a) The Master Servicer shall provide to the Indenture Trustee, the
Credit Enhancer, any Noteholders or Note Owners that are federally insured
savings and loan associations, the Office of Thrift Supervision, successor to
the Federal Home Loan Bank Board, the FDIC, and the supervisory agents and
examiners of the Office of Thrift Supervision access to the documentation
regarding the Mortgage Loans required by applicable regulations of the Office
of Thrift Supervision and the FDIC (acting as operator of the Savings
Association Insurance Fund or the Bank Insurance Fund). The Master Servicer
will provide access without charge but only after reasonable notice and during
normal business hours at the offices of the Master Servicer. Nothing in this
Section shall derogate from the obligation of the Master Servicer to observe
any applicable law prohibiting disclosure of information regarding the
mortgagors and the failure of the Master Servicer to provide access as
provided in this Section as a result of this obligation shall not constitute a
breach of this Section.
(b) The Master Servicer shall supply the information needed to make
required payments and to furnish required reports to Noteholders and to make
any claim under the Policy, in the form the Indenture Trustee reasonably
requests, to the Indenture Trustee and any Paying Agent by the start of the
Determination Date preceding the related Payment Date.
Section 3.12. Maintenance of Certain Servicing Insurance Policies.
The Master Servicer shall during the term of its service as master
servicer maintain in force (i) policies of insurance covering errors and
omissions in the performance of its obligations as master servicer under this
Agreement and (ii) a fidelity bond covering its officers, employees, or
agents. Each policy and bond together shall comply with the requirements from
time to time of Xxxxxx Xxx for persons performing servicing for mortgage loans
purchased by Xxxxxx Mae.
Section 3.13. Reports to the Securities and Exchange Commission.
The Administrator shall, on behalf of the Trust, effect filing with the
Securities and Exchange Commission of any periodic reports required to be
filed under the Securities Exchange Act of 1934 and the rules and regulations
of the Securities and Exchange Commission under it. At the request of the
Administrator, each of the Sponsor, the Master Servicer, the Depositor, the
Indenture Trustee, and the Transferor shall cooperate with the Administrator
in the preparation of these reports and shall provide to the Indenture Trustee
in a timely manner all information or documentation the Indenture Trustee
reasonably requests in connection with the performance of its obligations
under this Section. The Master Servicer shall prepare, execute, and deliver
all certificates or other documents required to be delivered by the Trust
pursuant to the Xxxxxxxx-Xxxxx Act of 2002 or the rules and regulations
promulgated thereunder.
Section 3.14. Tax Treatment.
The Transferor shall treat the Mortgage Loans as its property for all
federal, state, or local tax purposes and shall report all income earned
thereon (including amounts payable as fees to the Master Servicer) as its
income for income tax purposes. The Master Servicer shall prepare
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all tax information required by law to be distributed to Noteholders. The
Master Servicer shall not be liable for any liabilities, costs, or expenses of
the Trust, the Noteholders, the Transferor, or the Note Owners arising under
any tax law, including federal, state, or local income and franchise or excise
taxes or any other tax imposed on or measured by income (or any interest or
penalty with respect to any tax or arising from a failure to comply with any
tax requirement).
Section 3.15. Information Required by the Internal Revenue Service
Generally and Reports of Foreclosures and Abandonments of Mortgaged Property.
The Master Servicer shall prepare and deliver all federal and state
information reports when and as required by all applicable state and federal
income tax laws. In particular, with respect to the requirement under Section
6050J of the Code for reports of foreclosures and abandonments of any
mortgaged property, the Master Servicer shall file reports relating to each
instance occurring during the previous calendar year in which the Master
Servicer (i) on behalf of the Indenture Trustee acquires an interest in any
Mortgaged Property through foreclosure or other comparable conversion in full
or partial satisfaction of a Mortgage Loan, or (ii) knows or has reason to
know that any Mortgaged Property has been abandoned. The reports from the
Master Servicer shall be in form, substance, and timing sufficient to meet the
reporting requirements imposed by Section 6050J of the Code.
ARTICLE IV
SERVICING CERTIFICATE
Section 4.01. Servicing Certificate.
Not later than each Determination Date, the Master Servicer shall deliver
(a) to the Indenture Trustee (with a copy to the Credit Enhancer), the data
(including loan level data) necessary to prepare the items below and the
statement for Noteholders required to be prepared pursuant to Section 4.04 and
(b) to the Indenture Trustee, the Owner Trustee, the Sponsor, the Depositor,
the Paying Agent, the Credit Enhancer, and each Rating Agency a Servicing
Certificate (in written form or the form of computer readable media or such
other form as may be agreed to by the Indenture Trustee and the Master
Servicer), together with an Officer's Certificate to the effect that the
Servicing Certificate is correct in all material respects, stating the related
Collection Period, Payment Date, the series number of the Notes, the date of
this Agreement, and:
(i) the aggregate amount of collections received on the Mortgage
Loans in each Loan Group by the Determination Date for the related
Collection Period;
(ii) the aggregate amount of (a) Interest Collections for each Loan
Group for the related Collection Period and (b) Principal Collections for
each Loan Group for the related Collection Period;
(iii) the Investor Floating Allocation Percentage and the Investor
Fixed Allocation Percentage for each Loan Group for the related
Collection Period;
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(iv) the Investor Interest Collections and Investor Principal
Collections for each Loan Group for the related Collection Period;
(v) the Interest Collections that are not Investor Interest
Collections and Transferor Principal Collections for each Loan Group for
the related Collection Period;
(vi) the Note Interest and the applicable Note Rate for each Class
of Notes for the related Interest Period;
(vii) the amount of the Note Interest that is not payable to the
Holders of each Class of Notes because of insufficient Investor Interest
Collections for the related Loan Group;
(viii) the Unpaid Investor Interest Shortfall for each Class of
Notes and the amount of interest on the shortfall at the applicable Note
Rate for each Class of Notes applicable from time to time (separately
stated) to be distributed on the related Payment Date;
(ix) the remaining Unpaid Investor Interest Shortfall for each Class
of Notes after the distribution on the related Payment Date;
(x) the amount of any Basis Risk Carryforward for each Class of
Notes in the distribution; (xi) the amount of the remaining Basis Risk
Carryforward for each Class of Notes after giving effect to the related
distribution;
(xii) the Accelerated Principal Payment Amount and the portion of it
that will be distributed pursuant to Section 8.03(a)(vii) of the
Indenture for each Loan Group;
(xiii) the Scheduled Principal Collections Payment Amount for each
Loan Group, separately stating its components;
(xiv) the amount of any Transfer Deposit Amount for each Loan Group
paid by the Sponsor or the Depositor pursuant to Section 2.02 or 2.04;
(xv) any accrued Servicing Fees for the Mortgage Loans in each Loan
Group for previous Collection Periods and the Servicing Fee for the
related Collection Period;
(xvi) the Investor Loss Amount for each Loan Group for the related
Collection Period; (xvii) the aggregate amount of Investor Loss Reduction
Amounts for previous Payment Dates that have not been previously
reimbursed to the Holders of each Class of Notes pursuant to Section
8.03(a)(iv), Section 8.03(a)(viii), or Section 8.03(c) of the Indenture;
(xviii) the aggregate Asset Balance of the Mortgage Loans in each
Loan Group as of the end of the preceding Collection Period and as of the
end of the second preceding Collection Period;
(xix) The Rolling Three Month Delinquency Rate (as defined in the
Insurance Agreement) and the Excess Spread Percentage for the Payment
Date, except
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that the Master Servicer shall not be required to include this
information in the first two Servicing Certificates;
(xx) the Note Principal Balance for each Class of Notes and loan
factor after giving effect to the payment on each Class of Notes on the
related Payment Date and to any reduction because of the related Investor
Loss Amount;
(xxi) the Transferor Interest and the Available Transferor
Subordinated Amount for each Loan Group after giving effect to the
distribution on the Payment Date;
(xxii) the aggregate amount of Additional Balances created on the
Mortgage Loans in each Loan Group during the previous Collection Period;
(xxiii) for each Loan Group, the number and aggregate Asset Balances
of Mortgage Loans (x) as to which the Minimum Monthly Payment is
delinquent for 30-59 days, 60-89 days, and 90 or more days, respectively
and (y) that have become REO, in each case as of the end of the preceding
Collection Period;
(xxiv) whether a Rapid Amortization Event has occurred since the
prior Determination Date, specifying the Rapid Amortization Event if one
has occurred;
(xxv) whether an Event of Servicing Termination has occurred since
the prior Determination Date, specifying the Event of Servicing
Termination if one has occurred;
(xxvi) the amount to be distributed to the Credit Enhancer pursuant
to Section 8.03(a)(vi), Section 8.03(a)(ix), and Section 8.03(a)(xi) of
the Indenture, stated separately;
(xxvii) the Guaranteed Principal Payment Amount for each Class of
Notes for the Payment Date;
(xxviii) the Credit Enhancement Draw Amount for each Class of Notes
for the related Payment Date;
(xxix) the amount to be distributed on the Mortgage Loans in each
Loan Group to the Transferor pursuant to Section 8.03(a)(xiii) of the
Indenture;
(xxx) the amount to be paid to the Master Servicer pursuant to
Section 8.03(a)(x) of the Indenture;
(xxxi) the Maximum Rate for the related Collection Period and the
Weighted Average Net Loan Rate for the Mortgage Loans in each Loan Group;
(xxxii) the expected amount of any optional advances pursuant to
Section 4.03 by the Master Servicer on the Mortgage Loans in each Loan
Group included in the distribution on the related Payment Date and the
aggregate expected amount of optional advances pursuant to Section 4.03
by the Master Servicer outstanding on the Mortgage Loans in each Loan
Group as of the close of business on the related Payment Date;
(xxxiii) the number and principal balances of any Mortgage Loans in
each Loan Group transferred to the Transferor pursuant to Section 2.06;
and
(xxxiv) in the Servicing Certificates for the first and second
Payment Dates, the number and Cut-off Date Asset Balance of Mortgage
Loans for each Loan Group for
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which the Mortgage Loan File was not delivered to the Indenture Trustee
within 30 days of the Closing Date.
The Indenture Trustee and the Owner Trustee shall conclusively rely on
the information in a Servicing Certificate for purposes of making
distributions pursuant to Section 8.03 of the Indenture or distributions on
the Transferor Certificates, shall have no duty to inquire into this
information and shall have no liability in so relying. The format and content
of the Servicing Certificate may be modified by the mutual agreement of the
Master Servicer, the Indenture Trustee, and the Credit Enhancer. The Master
Servicer shall give notice of any changes to the Rating Agencies.
Section 4.02. Acknowledgement and Cooperation.
The Depositor, the Master Servicer, and the Indenture Trustee acknowledge
that without the need for any further action on the part of the Credit
Enhancer, the Depositor, the Master Servicer, the Indenture Trustee, or the
Note Registrar (a) to the extent the Credit Enhancer makes payments, directly
or indirectly, on account of principal of or interest or other amounts on any
Notes to the Holders of the Notes or the Credit Enhancer, as applicable, will
be fully subrogated to the rights of these Holders to receive the principal
and interest from the Trust and (b) the Credit Enhancer shall be paid the
principal and interest or other amounts but only from the sources and in the
manner provided in this Agreement for the payment of the principal and
interest or other amounts. The Indenture Trustee and the Master Servicer shall
cooperate in all respects with any reasonable request by the Credit Enhancer
for action to preserve or enforce the Credit Enhancer's rights or interests
under this Agreement and the Indenture without limiting the rights or
affecting the interests of the Holders as otherwise stated in this Agreement
and the Indenture.
Section 4.03. Optional Advances of the Master Servicer.
The Master Servicer, in its sole discretion, may advance the interest
component of any delinquent Minimum Monthly Payment (or any portion of it) by
depositing the amount into the Collection Account by the related Determination
Date.
Section 4.04. Statements to Noteholders.
Concurrently with each payment to Noteholders, the Master Servicer shall
deliver to the Indenture Trustee the data necessary to prepare a statement
(the "Monthly Statement") for each Payment Date with the following information
with respect to each Loan Group:
(i) the related Investor Floating Allocation Percentage for the
preceding Collection Period;
(ii) the aggregate amount to be paid to the related Class of
Noteholders;
(iii) the amount of Note Interest in the payment related to each
Class of Notes and the applicable Note Rate;
(iv) the amount of any related Unpaid Investor Interest Shortfall in
the payment;
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(v) the amount of the remaining related Unpaid Investor Interest
Shortfall after giving effect to the payment;
(vi) the amount of principal in the payment, separately stating its
components;
(vii) the amount of the reimbursement of previous related Investor
Loss Amounts in the payment;
(viii) the amount of the aggregate of unreimbursed related Investor
Loss Reduction Amounts after giving effect to the payment;
(ix) the amount of any related Basis Risk Carryforward in the
payment;
(x) the amount of the remaining related Basis Risk Carryforward
after giving effect to the payment;
(xi) the Servicing Fee for the Payment Date;
(xii) the Note Principal Balance of the related Class of Notes and
the factor to seven decimal places obtained by dividing the Note
Principal Balance of the related Class of Notes for the Payment Date by
the Original Note Principal Balance of the related Class of Notes after
giving effect to the payment;
(xiii) the Loan Group Balance as of the end of the preceding
Collection Period; (xiv) any Credit Enhancement Draw Amount for the
related Class of Notes; (xv) the number and aggregate Asset Balances of
Mortgage Loans in the related Loan Group as to which the Minimum Monthly
Payment is delinquent for 30-59 days, 60-89 days, and 90 or more days,
respectively, as of the end of the preceding Collection Period;
(xvi) the book value (within the meaning of 12 C.F.R. ss. 571.13 or
comparable provision) of any real estate acquired through foreclosure or
grant of a deed in lieu of foreclosure for the related Loan Group;
(xvii) the amount of any optional advances on the Mortgage Loans in
the related Loan Group pursuant to Section 4.03 by the Master Servicer
included in the payment on the Payment Date and the aggregate amount of
optional advances pursuant to Section 4.03 on Mortgage Loans in the
related Loan Group by the Master Servicer outstanding as of the close of
business on the Payment Date;
(xviii) the Note Rate for the related Class of Notes for the Payment
Date;
(xix) the number and principal balances of any Mortgage Loans in
that Loan Group retransferred to the Transferor pursuant to each of
Section 2.04 and Section 2.06;
(xx) the amount of Subordinated Transferor Collections for the
Mortgage Loans in that Loan Group included in the payment;
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(xxi) the amount of Overcollateralization Step-Down Amount for that
Loan Group included in the payment;
(xxii) the Available Transferor Subordinated Amount for that Loan
Group and the Payment Date; and
(xxiii) for the first Payment Date, the number and Cut-off Date
Asset Balance of Mortgage Loans in that Loan Group for which the Mortgage
Loan File was not delivered to the Indenture Trustee within 30 days of
the Closing Date.
The amounts furnished pursuant to clauses (ii), (iii) (for Note
Interest), (iv), (v), (vi), (vii), and (viii) above shall be expressed as a
dollar amount per $1,000 increment of Notes.
If the Monthly Statement is not accessible to any of the Noteholders, the
Master Servicer, the Credit Enhancer, or either Rating Agency on the Indenture
Trustee's internet website, the Indenture Trustee shall forward a hard copy of
it to each Noteholder, the Master Servicer, the Credit Enhancer, and each
Rating Agency immediately after the Indenture Trustee becomes aware that the
Monthly Statement is not accessible to any of them via the Indenture Trustee's
internet website. The address of the Indenture Trustee's internet website
where the Monthly Statement will be accessible is
xxxxx://xxx.xxxxxxxx.xxx/xxx. Assistance in using the Indenture Trustee's
internet website may be obtained by calling the Indenture Trustee's customer
service desk at (000) 000-0000. The Indenture Trustee shall notify each
Noteholder, the Master Servicer, the Credit Enhancer, and each Rating Agency
in writing of any change in the address or means of access to the internet
website where the Monthly Statement is accessible.
Within 60 days after the end of each calendar year, the Master Servicer
shall prepare and forward to the Indenture Trustee the information in clauses
(iii) and (vi) above aggregated for the calendar year. This requirement of the
Master Servicer shall be satisfied if substantially comparable information is
provided by the Master Servicer or a Paying Agent pursuant to any requirements
of the Code.
The Indenture Trustee shall prepare (in a manner consistent with the
treatment of the Notes as indebtedness of the Transferor, or as may be
otherwise required by Section 3.14) Internal Revenue Service Form 1099 (or any
successor form) and any other tax forms required to be filed or furnished to
Noteholders for payments by the Indenture Trustee (or the Paying Agent) on the
Notes and shall file and distribute such forms as required by law.
ARTICLE V
THE MASTER SERVICER, THE SPONSOR, AND THE DEPOSITOR
Section 5.01. Liability of the Sponsor, the Master Servicer, and the
Depositor.
The Sponsor, the Depositor, and the Master Servicer shall be liable only
for their express agreements under this Agreement.
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Section 5.02. Merger or Consolidation of, or Assumption of the
Obligations of, the Master Servicer or the Depositor.
Any corporation into which the Master Servicer or the Depositor may be
merged or consolidated, or any corporation resulting from any merger,
conversion, or consolidation to which the Master Servicer or the Depositor is
a party, or any corporation succeeding to the business of the Master Servicer
or the Depositor, shall be the successor of the Master Servicer or the
Depositor, as the case may be, under this Agreement, without the execution or
filing of any paper or any further act on the part of any of the parties to
this Agreement, notwithstanding anything in this Agreement to the contrary.
Section 5.03. Limitation on Liability of the Master Servicer and Others.
Neither the Master Servicer nor any of its directors, officers,
employees, or agents is liable to the Trust, the Owner Trustee, the
Transferor, or the Noteholders for the Master Servicer's taking any action or
refraining from taking any action in good faith pursuant to this Agreement, or
for errors in judgment. This provision shall not protect the Master Servicer
or any of its directors, officers, employees, or agents against any liability
that would otherwise be imposed for misfeasance, bad faith, or gross
negligence in the performance of the duties of the Master Servicer or for
reckless disregard of the obligations of the Master Servicer. The Master
Servicer and any of its directors, officers, employees, or agents may rely in
good faith on any document of any kind prima facie properly executed and
submitted by any person about anything arising under this Agreement.
The Master Servicer and each of its directors, officers, employees, and
agents shall be indemnified by the Trust (but only from funds available from
the applicable Loan Group) and held harmless against any loss, liability, or
expense incurred in connection with any legal action relating to this
Agreement, the Transferor Certificates, or the Notes, other than any loss,
liability, or expense related to any specific Mortgage Loan that is otherwise
not reimbursable pursuant to this Agreement and any loss, liability, or
expense incurred due to its willful misfeasance, bad faith, or gross
negligence in the performance of duties under this Agreement or due to its
reckless disregard of its obligations under this Agreement.
The Master Servicer need not appear in, prosecute, or defend any legal
action that is not incidental to its duties to service the Mortgage Loans in
accordance with this Agreement, and that in its opinion may involve it in any
expense or liability. The Master Servicer may in its sole discretion undertake
any action that it deems appropriate with respect to this Agreement and the
interests of the Noteholders. If so, the reasonable legal expenses and costs
of the action and any resulting liability shall be expenses, costs, and
liabilities of the Trust, and the Master Servicer shall only be entitled to be
reimbursed pursuant to Section 8.03(a)(x) of the Indenture (but only from
funds available from the applicable Loan Group). The Master Servicer's right
to indemnity or reimbursement pursuant to this Section shall survive any
resignation or termination of the Master Servicer pursuant to Section 5.04 or
6.01 with respect to any losses, expenses, costs, or liabilities arising
before its resignation or termination (or arising from events that occurred
before its resignation or termination).
31
Section 5.04. Master Servicer Not to Resign.
Subject to Section 5.02, the Master Servicer shall not resign as Master
Servicer under this Agreement except
(i) if the performance of its obligations under this Agreement are
no longer permissible under applicable law or due to applicable law are
in material conflict with any other activities carried on by it or its
subsidiaries or Affiliates that are of a type and nature carried on by
the Master Servicer or its subsidiaries or Affiliates at the date of this
Agreement or
(ii) if
(a) the Master Servicer has proposed a successor Master
Servicer to the Indenture Trustee and the proposed successor Master
Servicer is reasonably acceptable to the Indenture Trustee;
(b) each Rating Agency has delivered a letter to the Indenture
Trustee before the appointment of the successor Master Servicer
stating that the proposed appointment of the successor Master
Servicer as Master Servicer under this Agreement will not result in
the reduction or withdrawal of the then current rating of the Notes
without regard to the Policy; and
(c) the proposed successor Master Servicer is reasonably
acceptable to the Credit Enhancer in its sole discretion, as
evidenced by a letter to the Indenture Trustee.
No resignation by the Master Servicer shall become effective until the
Indenture Trustee or successor Master Servicer designated by the Master
Servicer has assumed the Master Servicer's obligations under this Agreement or
the Indenture Trustee has designated a successor Master Servicer in accordance
with Section 6.02. Any resignation shall not relieve the Master Servicer of
responsibility for any of the obligations specified in Sections 6.01 and 6.02
as obligations that survive the resignation or termination of the Master
Servicer. Any determination permitting the resignation of the Master Servicer
pursuant to clause (i) above shall be evidenced by an Opinion of Counsel to
that effect delivered to the Indenture Trustee and the Credit Enhancer. The
Master Servicer shall have no claim (whether by subrogation or otherwise) or
other action against the Transferor, any Noteholder, or the Credit Enhancer
for any amounts paid by the Master Servicer pursuant to any provision of this
Agreement.
Section 5.05. Delegation of Duties.
In the ordinary course of business, the Master Servicer may delegate any
of its duties under this Agreement at any time to any person who agrees to act
in accordance with standards comparable to those with which the Master
Servicer complies pursuant to Section 3.01, including any of its Affiliates or
any subservicer referred to in Section 3.01. This delegation shall not relieve
the Master Servicer of its obligations under this Agreement and shall not
constitute a resignation within the meaning of Section 5.04.
32
Section 5.06. Indemnification by the Master Servicer.
The Master Servicer shall indemnify the Trust, the Owner Trustee, and the
Indenture Trustee against any loss, liability, expense, damage, or injury
suffered or sustained due to the Master Servicer's actions or omissions in
servicing or administering the Mortgage Loans that are not in accordance with
this Agreement, including any judgment, award, settlement, reasonable
attorneys' fees, and other costs or expenses incurred in connection with the
defense of any actual or threatened action, proceeding, or claim. This
indemnification is not payable from the assets of the Trust. This indemnity
shall run directly to and be enforceable by an injured party subject to any
applicable limitations.
The Indenture Trustee and any director, officer, employee, or agent of
the Indenture Trustee shall be indemnified by the Master Servicer and held
harmless against any loss, liability or expense (i) incurred in connection
with any legal action relating to this Agreement, the Indenture, the Custodial
Agreement, the Administration Agreement, the Notes, or the Transferor
Certificates, or in connection with the performance of any of the Indenture
Trustee's duties thereunder, other than any loss, liability or expense
incurred by reason of willful misfeasance, bad faith or negligence in the
performance of any of the Indenture Trustee's duties under this Agreement, the
Indenture, or the Custodial Agreement or by reason of reckless disregard of
the Indenture Trustee's obligations and duties under this Agreement.
The indemnity provisions of this Section shall survive the termination of
this Agreement or the resignation or removal of the Indenture Trustee under
the Indenture.
ARTICLE VI
SERVICING TERMINATION
Section 6.01. Events of Servicing Termination.
If any one of the following events ("Events of Servicing Termination")
shall occur and be continuing:
(i) any failure by the Master Servicer to deposit in the Collection
Account any deposit required to be made under this Agreement or to remit
to the Indenture Trustee amounts required to be deposited to the Payment
Account that continues unremedied either beyond the relevant Payment Date
or for five Business Days after the date when notice of the failure has
been given to the Master Servicer by the Indenture Trustee or to the
Master Servicer and the Indenture Trustee by the Credit Enhancer or
Holders of Notes representing not less than 25% of the Outstanding Amount
of both Classes of Notes; or
(ii) failure by the Master Servicer duly to observe or perform in
any material respect any other covenants or agreements of the Master
Servicer in the Notes or in this Agreement that materially and adversely
affects the interests of the Noteholders or the Credit Enhancer and
continues unremedied for a period of 60 days after the date on which
notice of the failure, requiring it to be remedied, and stating that
33
the notice is a "Notice of Default" under this Agreement, has been given
to the Master Servicer by the Indenture Trustee or to the Master Servicer
and the Indenture Trustee by the Credit Enhancer or the Holders of Notes
representing not less than 25% of the Outstanding Amount of both Classes
of Notes; or
(iii) an Insolvency Event occurs with respect to the Master
Servicer;
then, until the Event of Servicing Termination has been remedied by the Master
Servicer, either the Indenture Trustee (with the consent of the Credit
Enhancer), the Credit Enhancer, or the Holders of Notes representing not less
than 51% of the Outstanding Amount of both Classes of Notes with the consent
of the Credit Enhancer by notice then given to the Master Servicer (and to the
Indenture Trustee if given by the Credit Enhancer or the Holders of Notes) may
terminate all of the rights and obligations of the Master Servicer as servicer
under this Agreement. This notice to the Master Servicer shall also be given
to each Rating Agency and the Credit Enhancer.
From the receipt by the Master Servicer of the notice, all the rights and
obligations of the Master Servicer under this Agreement, whether with respect
to the Notes or the Mortgage Loans or otherwise, shall pass to and be vested
in the Indenture Trustee pursuant to this Section; and the Indenture Trustee
is authorized to execute and deliver, on behalf of the Master Servicer, as
attorney-in-fact or otherwise, any documents, and to do anything else
appropriate to effect the purposes of the notice of termination, whether to
complete the transfer and endorsement of each Mortgage Loan and related
documents, or otherwise. The Master Servicer agrees to cooperate with the
Indenture Trustee in effecting the termination of the rights and obligations
of the Master Servicer under this Agreement, including the transfer to the
Indenture Trustee for the administration by it of all cash amounts that are
held by the Master Servicer and are to be deposited by it in the Collection
Account, or that have been deposited by the Master Servicer in the Collection
Account or are subsequently received by the Master Servicer with respect to
the Mortgage Loans. All reasonable costs and expenses (including attorneys'
fees) incurred in connection with transferring the Mortgage Files to the
successor Master Servicer and amending this Agreement to reflect the
succession as Master Servicer pursuant to this Section shall be paid by the
predecessor Master Servicer (or if the predecessor Master Servicer is the
Indenture Trustee, the initial Master Servicer) on presentation of reasonable
documentation of the costs and expenses.
Notwithstanding the foregoing, a delay in or failure of performance under
Section 6.01(i) for a period of five or more Business Days or under Section
6.01(ii) for a period of 60 or more days, shall not constitute an Event of
Servicing Termination if the delay or failure could not be prevented by the
exercise of reasonable diligence by the Master Servicer and the delay or
failure was caused by an act of God or the public enemy, acts of declared or
undeclared war, public disorder, rebellion or sabotage, epidemics, landslides,
lightning, fire, hurricanes, earthquakes, floods, or similar causes. The
preceding sentence shall not relieve the Master Servicer from using its best
efforts to perform its obligations in a timely manner in accordance with the
terms of this Agreement, and the Master Servicer shall provide the Indenture
Trustee, the Depositor, the Transferor, the Credit Enhancer, and the
Noteholders with an Officers'
34
Certificate giving prompt notice of its failure or delay, together with a
description of its efforts to perform its obligations. The Master Servicer
shall immediately notify the Indenture Trustee of any Events of Servicing
Termination.
In connection with the termination of the Master Servicer if any mortgage
is registered on the MERS(R) System, then, either (i) the successor Master
Servicer, including the Indenture Trustee if the Indenture Trustee is acting
as successor Master Servicer, shall represent and warrant that it is a member
of MERS in good standing and shall agree to comply in all material respects
with the rules and procedures of MERS in connection with the servicing of the
Mortgage Loans that are registered with MERS, or (ii) the predecessor Master
Servicer shall cooperate with the successor Master Servicer in causing MERS to
execute and deliver an assignment of mortgage in recordable form to transfer
all the mortgages registered on the MERS(R) System from MERS to the Indenture
Trustee and to execute and deliver any other notices and documents appropriate
to effect a transfer of those mortgages or the servicing of the Mortgage Loan
on the MERS(R) System to the successor Master Servicer. The predecessor Master
Servicer shall file the assignment in the appropriate recording office. The
successor Master Servicer shall deliver the assignment to the Indenture
Trustee promptly upon receipt of the original with evidence of recording on it
or a copy certified by the public recording office in which the assignment was
recorded.
Section 6.02. Indenture Trustee to Act; Appointment of Successor.
(a) From the time the Master Servicer receives a notice of termination
pursuant to Section 6.01 or resigns pursuant to Section 5.04, the Indenture
Trustee shall be the successor in all respects to the Master Servicer in its
capacity as Master Servicer under this Agreement and the transactions
contemplated by this Agreement and shall be subject to all the obligations of
the Master Servicer under this Agreement except (i) the obligation to
repurchase or substitute for any Mortgage Loan, (ii) with respect to any
representation or warranty of the Master Servicer, or (iii) for any act or
omission of either a predecessor or successor Master Servicer other than the
Indenture Trustee. As its compensation under this Agreement, the Indenture
Trustee shall be entitled to the compensation the Master Servicer would have
been entitled to under this Agreement if no notice of termination had been
given. In addition, the Indenture Trustee will be entitled to compensation
with respect to its expenses in connection with conversion of certain
information, documents, and record keeping, as provided in Section 6.01.
Notwithstanding the above, (i) if the Indenture Trustee is unwilling to
act as successor Master Servicer, or (ii) if the Indenture Trustee is legally
unable to so act, the Indenture Trustee may (in the situation described in
clause (i)) or shall (in the situation described in clause (ii)) appoint, or
petition a court of competent jurisdiction to appoint, any established housing
and home finance institution, bank, or other mortgage loan or home equity loan
servicer having a net worth of not less than $15,000,000 as the successor to
the Master Servicer under this Agreement to assume of any obligations of the
Master Servicer under this Agreement. The successor Master Servicer must be
acceptable to the Credit Enhancer in its sole discretion, as evidenced by the
Credit Enhancer's prior consent, as applicable, which consent shall not be
unreasonably withheld. The appointment of the successor Master Servicer must
not result in the
35
qualification, reduction, or withdrawal of the ratings assigned to the Notes
by the Rating Agencies without regard to the Policy.
Pending appointment of a successor to the Master Servicer, unless the
Indenture Trustee is prohibited by law from so acting, the Indenture Trustee
shall act as Master Servicer. In connection with this appointment and
assumption, the successor shall be entitled to receive compensation out of
payments on Mortgage Loans in an amount equal to the compensation that the
Master Servicer would otherwise have received pursuant to Section 3.08 (or any
lesser compensation the Indenture Trustee and the successor agree to). The
Indenture Trustee and the successor shall take any action, consistent with
this Agreement, necessary to effectuate the succession.
(b) The appointment of a successor Master Servicer shall not affect any
liability of the predecessor Master Servicer that may have arisen under this
Agreement before its termination as Master Servicer (including any deductible
under an insurance policy pursuant to Section 3.04), nor shall any successor
Master Servicer be liable for any acts or omissions of the predecessor Master
Servicer or for any breach by the predecessor Master Servicer of any of its
representations or warranties in this Agreement. Except for any compensation
agreement with the Indenture Trustee, any successor Master Servicer shall be
subject to all the terms of this Agreement from the time that it accepts its
appointment to the same extent as if it were originally named as Master
Servicer.
Section 6.03. Notification to Noteholders and the Transferor.
Upon any termination or appointment of a successor to the Master Servicer
pursuant to this Article or Section 5.04, the Indenture Trustee shall give
prompt notice of it to the Noteholders at their respective addresses appearing
in the Note Register, the Transferor, the Credit Enhancer, and each Rating
Agency.
ARTICLE VII
TERMINATION
Section 7.01. Termination.
(a) The respective obligations and responsibilities of the Sponsor, the
Master Servicer, the Depositor, the Trust, and the Indenture Trustee created
by this Agreement (other than the obligation of the Master Servicer to send
certain notices) shall terminate on the earlier of
(i) the transfer of all the Mortgage Loans pursuant to Section
7.01(b),
(ii) the termination of the Trust Agreement or the Indenture, and
(iii) the final payment or other liquidation of the last Mortgage
Loan remaining in the Trust or the disposition of all property acquired
in foreclosure or by deed in lieu of foreclosure of any Mortgage Loan.
Upon termination in accordance with this Section, the Indenture Trustee
shall execute any documents and instruments of transfer presented by the
Transferor, in each case without
36
recourse, representation, or warranty, and take any other actions the
Transferor reasonably requests to effect the transfer of the Mortgage Loans to
the Transferor. Notwithstanding the termination of this Agreement, the Master
Servicer shall comply with this Agreement in winding up activities under this
Agreement after termination if necessary.
(b) With the consent of the Credit Enhancer the Transferor may effect the
transfer of all the Mortgage Loans at their termination purchase price on any
Payment Date from the Payment Date immediately before which the aggregate Note
Principal Balance of both Classes of Notes is less than or equal to 10% of the
aggregate Original Note Principal Balance of both Classes of Notes and require
the Trust to redeem the Notes pursuant to Section 10.01 of the Indenture with
the proceeds. The termination purchase price is the sum of:
(i) the aggregate Note Principal Balance for both Classes of Notes,
(ii) accrued aggregate Note Interest through the day preceding the
final Payment Date, and
(iii) interest accrued on any aggregate Unpaid Investor Interest
Shortfall, to the extent legally permissible.
(c) The Transferor must notify the Credit Enhancer, the Trust, and the
Indenture Trustee of any election to effect the transfer of the Mortgage Loans
pursuant to Section 7.01(b) no later than the first day of the month before
the month in which the transfer is to occur. The proceeds from the purchase of
the Mortgage Loans, for purposes of payments on the Notes, shall be considered
to have been received in the Collection Period before the Collection Period in
which the Payment Date on which the purchase takes place occurs.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
Section 8.01. Amendment.
This Agreement may be amended from time to time by the Sponsor, the
Master Servicer, the Depositor, the Owner Trustee, and the Indenture Trustee,
if the Rating Agency Condition is satisfied (in connection with which the
consent of the Credit Enhancer shall not be unreasonably withheld). However,
no amendment that significantly changes the permitted activities of the Trust
may be promulgated without the consent of a majority of the aggregate
Outstanding Amount of both Classes of Notes. For this purpose no Notes owned
by the Sponsor or any of its affiliates may vote, nor shall their Notes be
considered outstanding. This Agreement may also be amended from time to time
by the Sponsor, the Master Servicer, the Depositor, the Owner Trustee, and the
Indenture Trustee, with the consent of the Credit Enhancer (which consent
shall not be unreasonably withheld) and Holders of not less than 662/3% of the
aggregate Outstanding Amount of both Classes of Notes.
The Indenture Trustee may enter into any amendment of this Agreement as
to which the Rating Agency Condition is satisfied, and when so requested by an
Issuer Request, the Indenture Trustee shall enter into any amendment of this
Agreement
37
(i) that does not impose further obligations or liabilities on the
Indenture Trustee, and
(ii) as to which either the Rating Agency Condition is satisfied or
Holders of not less than 662/3% of the aggregate Outstanding Amount of
both Classes of Notes and the Credit Enhancer have consented.
Following the execution and delivery of any amendment to this Agreement
or to the Policy to which the Credit Enhancer was required to consent, either
the Transferor, if the Transferor requested the amendment, or the Master
Servicer, if the Master Servicer requested the amendment, shall reimburse the
Credit Enhancer for the reasonable out-of-pocket costs and expenses incurred
by them in connection with the amendment.
Before the execution of the amendment, the party to this Agreement
requesting the amendment shall notify each Rating Agency of the substance of
the amendment. The Indenture Trustee shall deliver fully executed original
counterparts of the instruments effecting the amendment to the Credit
Enhancer.
Section 8.02. Governing Law.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS PROVISIONS THAT WOULD
RESULT IN THE APPLICATION OF THE LAWS OF ANOTHER STATE.
Section 8.03. Notices.
All notices, demands, instructions, consents, and other communications
required or permitted under this Agreement shall be in writing and signed by
the party giving the same and shall be personally delivered or sent by first
class or express mail (postage prepaid), national overnight courier service,
or by facsimile transmission or other electronic communication device capable
of transmitting or creating a written record (confirmed by first class mail)
and shall be considered to be given for purposes of this Agreement on the day
that the writing is delivered when personally delivered or sent by facsimile
or overnight courier or three Business Days after it was sent to its intended
recipient if sent by first class mail. A facsimile has been delivered when the
sending machine issues an electronic confirmation of transmission. Unless
otherwise specified in a notice sent or delivered in accordance with the
provisions of this Section, notices, demands, instructions, consents, and
other communications in writing shall be given to or made on the respective
parties at their respective addresses indicated below:
if to the Trust at:
CWABS Revolving Home Equity Loan Trust, Series 2004-Q
Wilmington Trust Company, as Owner Trustee
Xxxxxx Square North
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000-0000
Attention: Corporate Trust Administration
Telecopy: 000-000-0000
38
if to the Depositor at:
CWABS, Inc.
0000 Xxxx Xxxxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Legal Department
Telecopy: (000) 000-0000
if to the Master Servicer at:
Countrywide Home Loans, Inc.
0000 Xxxx Xxxxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Legal Department,
Telecopy: (000) 000-0000
if to the Indenture Trustee at:
the Corporate Trust Office
Telecopy: 000-000-0000
if to the Credit Enhancer at:
XL Capital Assurance Inc.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Surveillance
Telecopy: (000) 000-0000
Confirmation: (000) 000-0000
if to Xxxxx'x at:
Residential Loan Monitoring Group, 4th Floor
00 Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
and if to Standard & Poor's at:
00 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Whenever a notice or other communication to the Credit Enhancer refers to
an Event of Servicing Termination or with respect to which failure on the part
of the Credit Enhancer to respond would constitute consent or acceptance, then
a copy of the notice or other communication shall also be sent to the
attention of the General Counsel of the Credit Enhancer and shall be marked to
indicate "URGENT MATERIAL ENCLOSED."
Section 8.04. Severability of Provisions.
Any provisions of this Agreement that are held invalid for any reason or
unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of the invalidity or
39
unenforceability without invalidating the remaining provisions of this
Agreement, and the prohibition or unenforceability in a jurisdiction shall not
invalidate or render unenforceable that provision in any other jurisdiction.
Section 8.05. Assignment.
Except as provided in Sections 5.02 and 5.04, this Agreement may not be
assigned by the Depositor or the Master Servicer without the prior consent of
the Credit Enhancer.
Section 8.06. Third-Party Beneficiaries.
This Agreement will be binding on the parties to this Agreement, and
inure to the benefit of the parties to this Agreement, the Noteholders, the
Transferor, the Note Owners, the Owner Trustee, and the Credit Enhancer and
their respective successors and permitted assigns. The Credit Enhancer is a
third party beneficiary of this Agreement. No other person will have any
rights under this Agreement.
Section 8.07. Counterparts.
This Agreement may be executed in any number of copies, and by the
different parties on the same or separate counterparts, each of which shall be
considered to be an original instrument.
Section 8.08. Effect of Headings and Table of Contents.
The Article and Section headings in this Agreement and the Table of
Contents are for convenience only and shall not affect the construction of
this Agreement.
40
IN WITNESS WHEREOF, the Depositor, the Sponsor and Master Servicer, the
Trust, and the Indenture Trustee have caused this Agreement to be duly
executed by their respective officers all as of the day and year first above
written.
CWABS, INC.
Depositor
By: /s/ Xxxx Xxxxxxx, Xx.
------------------------------------
Name: Xxxx Xxxxxxx, Xx.
Title: Vice President
COUNTRYWIDE HOME LOANS, INC.
Sponsor and Master Servicer
By: /s/ Xxxx Xxxxxxx, Xx.
------------------------------------
Name: Xxxx Xxxxxxx, Xx.
Title: Senior Vice President
JPMORGAN CHASE BANK, N.A.
Indenture Trustee
By: /s/ Xxxxxx X. Xxxxxxx
------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Authorized Officer
41
CWABS REVOLVING HOME EQUITY LOAN
TRUST, SERIES 2004-Q
By: WILMINGTON TRUST COMPANY, not in
its individual capacity but solely
as Owner Trustee
By: /s/ Xxxxx X. Xxxxxxxx
------------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Financial Services Officer
42
State of CALIFORNIA )
) ss.:
County of LOS ANGELES )
On the 23rd day of November, 2004 before me, a notary public in and for
the State of California, personally appeared Xxxx Xxxxxxx, Xx., known to me
who, being by me duly sworn, did depose and say that he resides at Calabasas,
California; that he is the Vice President of CWABS, Inc. a Delaware
corporation, one of the parties that executed the foregoing instrument; that
he signed his name thereto by order of the Board of Directors of said
corporation.
/s/ Xxxxxx X. Xxxxxx
------------------------------------
Notary Public
Xxxxxx X. Xxxxxx
Commission # 1325392
Notary Public - California
Los Angeles County
My Comm. Expires October 15, 2005.
43
State of CALIFORNIA )
) ss.:
County of LOS ANGELES )
On the 23rd day of November, 2004 before me, a notary public in and for
the State of California, personally appeared Xxxx Xxxxxxx, Xx., known to me
who, being by me duly sworn, did depose and say that he resides at Calabasas,
California; that he is the Senior Vice President of Countrywide Home Loans,
Inc., a New York corporation, one of the parties that executed the foregoing
instrument; and that he signed his name thereto by order of the Board of
Directors of said corporation.
/s/ Xxxxxx X. Xxxxxx
------------------------------------
Notary Public
Xxxxxx X. Xxxxxx
Commission # 1325392
Notary Public - California
Los Angeles County
My Comm. Expires October 15, 2005.
44
State of ILLINOIS )
) ss.:
County of XXXX )
On the 23th day of November, 2004 before me, a notary public in and for
the State of Illinois, personally appeared Xxxxxx X. Xxxxxxx, known to me who,
being by me duly sworn, did depose and say that he resides at Batavia,
Illinois; that he is the Authorized Officer of JPMorgan Chase Bank, N.A., a
national banking association, one of the parties that executed the foregoing
instrument; that he signed his name thereto by order of the Board of Directors
of said corporation.
/s/ Xxxxxx Xxxxxx Xxxxxx
------------------------------------
Notary Public
OFFICIAL SEAL
Notary Public, State of Illinois
My Commission Expires: 08-09-05
----------------
45
State of DELAWARE )
) ss.:
County of NEW CASTLE )
On the 19th day of November, 2004 before me, a notary public in and for the
State of Delaware, personally appeared Xxxxx X. Xxxxxxxx, known to me who,
being by me duly sworn, did depose and say that she resides at Wilmington,
Delaware; that she is the Assistant Vice President of Wilmington Trust
Company, not in its individual capacity but in its capacity as Owner Trustee
of CWABS REVOLVING HOME EQUITY LOAN TRUST, SERIES 2004-Q, one of the parties
that executed the foregoing instrument; that she signed her name thereto by
order of the Board of Directors of said corporation.
/s/ Xxx Xxxxxxxxx
--------------------------------
Notary Public
My Commission Expires May 28, 2006
46
EXHIBIT A
MORTGAGE LOAN SCHEDULE
[Delivered to Indenture Trustee Only]
A-1
EXHIBIT B
FORM OF CREDIT LINE AGREEMENT
B-1
EXHIBIT C
FORM OF LETTER OF REPRESENTATIONS
C-1
EXHIBIT D
FORM OF REQUEST FOR RELEASE OF DOCUMENTS
[DATE]
JPMorgan Chase Bank, N.A.
as Indenture Trustee
0 Xxx Xxxx Xxxxx
0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Institutional Trust Services, Countrywide HEL CWABS 2004-Q
Attn: Corporate Trust Services Division
Re: CWABS, Inc. Revolving Home Equity Loan
Asset Backed Notes, Series 2004-Q
---------------------------------
Gentlemen:
In connection with the administration of the Mortgage Loans held by you
as Indenture Trustee under the Sale and Servicing Agreement, dated as of
November 23, 2004, among CWABS, Inc. as Depositor, Countrywide Home Loans,
Inc., as Sponsor and Master Servicer, CWABS Revolving Home Equity Loan Trust,
Series 2004-Q and you, as Indenture Trustee (the "Agreement"), we hereby
request a release of the Mortgage File held by you as Indenture Trustee with
respect to the following described Mortgage Loan for the reason indicated
below.
Loan No.:
[MIN No.]
Reason for requesting file:
--------------------------
1. Mortgage Loan paid in full. (The Master
--------------- Servicer hereby certifies that all
amounts received in connection with the
payment in full of the Mortgage Loan
which are required to be deposited in the
Collection Account pursuant to Section
3.02 of the Agreement have been so
deposited).
2. Retransfer of Mortgage Loan. (The Master
Servicer hereby certifies that the
Transfer Deposit Amount has been
deposited in the Collection Account
pursuant to the Agreement).
--------------- 3. The Mortgage Loan is being foreclosed.
--------------- 4. The Mortgage Loan is being re-financed by
another depository institution. (The
Master Servicer hereby certifies that all
amounts received in connection with the
payment in full of the Mortgage Loan
which are required to be deposited in the
Collection Account pursuant to Section
3.02 of the Agreement have been so
deposited).
--------------- 5. Other (Describe).
The undersigned acknowledges that the above Mortgage File will be held by
the undersigned in accordance with the provisions of the Agreement and will
promptly be returned
C-1
to the Indenture Trustee when the need therefor by the Master Servicer no
longer exists unless the Mortgage Loan has been liquidated or retransferred.
Capitalized terms used herein shall have the meanings ascribed to them in
the Agreement.
COUNTRYWIDE HOME LOANS, INC.
By:_______________________________
Name:
Title: Servicing Officer
C-2
ANNEX 1
DEFINITIONS
"Adoption Annex" means Annex 2 to this Agreement.
"Affiliate" of any person means any other person controlling, controlled
by or under common control with the person. For purposes of this definition,
"control" means the power to direct the management and policies of a person,
directly or indirectly, whether through ownership of voting securities, by
contract or otherwise and "controlling" and "controlled" shall have meanings
correlative to the foregoing.
"Agreement" means this Sale and Servicing Agreement.
"Appraised Value" for any Mortgaged Property means the value established
by any of the following: (i) with respect to Credit Line Agreements with
Credit Limits greater than $100,000, by a full appraisal, (ii) with respect to
Credit Line Agreements with Credit Limits equal to or less than $100,000, by
either a drive by inspection or electronic appraisal of the Mortgaged Property
made to establish compliance with the underwriting criteria then in effect in
connection with the application for the Mortgage Loan secured by the Mortgaged
Property, and (iii) with respect to any Mortgage Loan as to which the Servicer
consents to a new senior lien pursuant to Section 3.01(a), in compliance with
the underwriting criteria then in effect in connection with the application
for the related senior mortgage loan.
"Collection Account" means the Eligible Account or Eligible Accounts
created and maintained for the benefit of the Noteholders, the Transferor, and
the Credit Enhancer pursuant to Section 3.02(b).
"Combined Loan-to-Value Ratio" for any Mortgage Loan as of any date
means a fraction
o whose numerator is the sum of (i) the Credit Limit and (ii) the
outstanding principal balance as of the date of execution of the related
original Credit Line Agreement (or any subsequent date as of which the
outstanding principal balance may be determined in connection with an
increase in the Credit Limit for the Mortgage Loan) of any mortgage loans
that are senior or equal in priority to the Mortgage Loan and that are
secured by the same Mortgaged Property and
o whose denominator is the Valuation of the related Mortgaged
Property.
"Credit Limit Utilization Rate" for any Mortgage Loan means a fraction
whose numerator is the Cut-off Date Asset Balance for the Mortgage Loan and
whose denominator is the related Credit Limit.
"Cut-off Date Loan Balance" means the Loan Balance calculated as of the
Cut-off Date.
"Defective Mortgage Loan" means a Mortgage Loan subject to retransfer
pursuant to Section 2.02 or 2.04.
"Delay Delivery Certification" has the meaning given to it in the
Custodial Agreement.
Xxx-1-1
"Depositor" means CWABS, Inc., a Delaware corporation, or its successor
in interest.
"Draw" for any Mortgage Loan means an additional borrowing by the
mortgagor after the Cut-off Date, in accordance with the related Mortgage
Note.
"Due Date" for any Mortgage Loan means the fifteenth day of the month.
"Electronic Ledger" means the electronic master record of home equity
credit line mortgage loans maintained by the Master Servicer or by the
Sponsor, as appropriate.
"Eligible Substitute Mortgage Loan" means a Mortgage Loan substituted by
the Sponsor for a Defective Mortgage Loan that must, on the date of the
substitution,
(i) have an outstanding Asset Balance (or in the case of a
substitution of more than one Mortgage Loan for a Defective Mortgage
Loan, an aggregate Asset Balance), not 10% more or 10% less than the
Transfer Deficiency relating to the Defective Mortgage Loan;
(ii) have a Loan Rate not less than the Loan Rate of the Defective
Mortgage Loan and not more than 1.000% in excess of the Loan Rate of the
Defective Mortgage Loan;
(iii) have a Loan Rate based on the same Index with adjustments to
the Loan Rate made on the same Interest Rate Adjustment Date as that of
the Defective Mortgage Loan;
(iv) have a FICO score not less than the FICO score of the Defective
Mortgage Loan and not more than 50 points higher than the Defective
Mortgage Loan;
(v) have a Gross Margin that is not less than the Gross Margin of
the Defective Mortgage Loan and not more than 100 basis points higher
than the Gross Margin for the Defective Mortgage Loan;
(vi) if the Mortgage Loan is being substituted for a Defective
Mortgage Loan in Loan Group 1, the Mortgage Loan's original principal
balance (by credit limit) conforms to Xxxxxx Xxx or Xxxxxxx Mac
guidelines;
(vii) have a mortgage of the same or higher level of priority as the
mortgage relating to the Defective Mortgage Loan at the time the mortgage
was transferred to the Trust;
(viii) have a remaining term to maturity not more than six months
earlier than the remaining term to maturity of the Defective Mortgage
Loan, not later than the maturity date of the related Notes, and not more
than 60 months later than the remaining term to maturity of the Defective
Mortgage Loan;
(ix) comply with each representation and warranty in Section 2.04
(to be made as of the date of substitution); and
(x) have an original Combined Loan-to-Value Ratio not greater than
that of the Defective Mortgage Loan.
Xxx-1-2
More than one Eligible Substitute Mortgage Loan may be substituted for a
Defective Mortgage Loan if the Eligible Substitute Mortgage Loans meet the
foregoing attributes in the aggregate and the substitution is approved in
advance by the Credit Enhancer.
"Event of Servicing Termination" has the meaning given to it in Section
6.01.
"Excess Spread Percentage" has the meaning given to it in the Insurance
Agreement.
"FDIC" means the Federal Deposit Insurance Corporation or any successor
to it.
"Foreclosure Profit" on a Liquidated Mortgage Loan means the amount by
which (i) the aggregate of its Net Liquidation Proceeds exceeds (ii) the
related Asset Balance (plus accrued and unpaid interest on it at the
applicable Loan Rate from the date interest was last paid to the end of the
Collection Period during which the Mortgage Loan became a Liquidated Mortgage
Loan) of the Liquidated Mortgage Loan immediately before the final recovery of
its Liquidation Proceeds.
"Gross Margin" for any Mortgage Loan means the percentage shown as the
"Gross Margin" for the Mortgage Loan on Exhibit A to this Agreement.
"Indenture" means the indenture of even date with this Agreement between
the Trust and the Indenture Trustee.
"Indenture Trustee Fee" means a fee that is separately agreed to between
the Master Servicer and the Indenture Trustee.
"Indenture Trustee Fee Rate" means the per annum rate at which the
Indenture Trustee Fee is calculated.
"Index" for each Interest Rate Adjustment Date for a Mortgage Loan means
the highest "prime rate" as published in the "Money Rates" table of The Wall
Street Journal as of the first business day of the calendar month.
"Insurance Proceeds" means proceeds paid by any insurer (other than the
Credit Enhancer under the Policy) pursuant to any insurance policy covering a
Mortgage Loan net of any amount (i) covering any expenses of the Master
Servicer in connection with obtaining the proceeds, (ii) applied to the
restoration or repair of the related Mortgaged Property, (iii) released to the
mortgagor in accordance with the Master Servicer's normal servicing
procedures, or (iv) required to be paid to any holder of a mortgage senior to
the Mortgage Loan.
"Interest Rate Adjustment Date" for each Mortgage Loan means any date on
which the Loan Rate is adjusted in accordance with the related Credit Line
Agreement.
"Lien" means any mortgage, deed of trust, pledge, conveyance,
hypothecation, assignment, participation, deposit arrangement, encumbrance,
lien (statutory or other), preference, priority right, or interest or other
Security Agreement or preferential arrangement of any kind or nature
whatsoever, including any conditional sale or other title retention agreement,
any financing lease having substantially the same economic effect as any of
the foregoing, and the filing of any Financing Statement under the UCC (other
than any Financing Statement filed
Xxx-1-3
for informational purposes only) or comparable law of any jurisdiction to
evidence any of the foregoing except that any assignment pursuant to Section
5.02 is not a Lien.
"Lifetime Rate Cap" for each Mortgage Loan whose related Mortgage Note
provides for a lifetime rate cap means the maximum Loan Rate permitted over
the life of the Mortgage Loan under the terms of the related Credit Line
Agreement, as shown on the Mortgage Loan Schedule.
"Liquidated Mortgage Loan" for any Payment Date means any Mortgage Loan
in respect of which the Master Servicer has determined, in accordance with the
servicing procedures specified in this Agreement, as of the end of the related
Collection Period, that all Liquidation Proceeds which it expects to recover
with respect to the disposition of the Mortgage Loan or the related REO have
been recovered.
"Liquidation Expenses" means out-of-pocket expenses (exclusive of
overhead) that are incurred by the Master Servicer in connection with the
liquidation of any Mortgage Loan and not recovered under any insurance policy,
including legal fees and expenses, any unreimbursed amount expended pursuant
to Section 3.06 (including amounts advanced to correct defaults on any
mortgage loan which is senior to the Mortgage Loan and amounts advanced to
keep current or pay off a mortgage loan that is senior to the Mortgage Loan)
respecting the related Mortgage Loan and any related and unreimbursed
expenditures with respect to real estate property taxes, water or sewer taxes,
condominium association dues, property restoration or preservation or
insurance against casualty, loss or damage.
"Liquidation Proceeds" means proceeds (including Insurance Proceeds but
not including amounts drawn under the Policy) received in connection with the
liquidation of any Mortgage Loan or related REO, whether through trustee's
sale, foreclosure sale or otherwise.
"Loan Rate Cap" for each Mortgage Loan means the lesser of (i) the
Lifetime Rate Cap or (ii) the applicable state usury ceiling.
"Loan-to-Value Ratio" for any date of determination for any mortgage loan
means a fraction whose numerator is the outstanding principal balance of the
mortgage loan as of the date of determination and whose denominator is the
Valuation of the related Mortgaged Property.
"Master Servicer" means Countrywide Home Loans, Inc., a New York
corporation and any successor to it and any successor under this Agreement.
"Minimum Monthly Payment" for any Mortgage Loan and any month means the
minimum amount required to be paid by the related mortgagor in that month.
"Net Liquidation Proceeds" for any Liquidated Mortgage Loan means
Liquidation Proceeds net of Liquidation Expenses.
"Officer's Certificate" means a certificate (i) signed by the Chairman of
the Board, the Vice Chairman of the Board, the President, a Managing Director,
a Vice President (however denominated), an Assistant Vice President, the
Treasurer, the Secretary, or one of the Assistant
Xxx-1-4
Treasurers or Assistant Secretaries of the Depositor, the Sponsor, the
Transferor, or the Master Servicer, or (ii), if provided for in this
Agreement, signed by a Servicing Officer.
"Opinion of Counsel" means a written opinion of counsel acceptable to the
Indenture Trustee, who may be in-house counsel for the Depositor, the Sponsor,
the Master Servicer, or the Transferor (except that any opinion pursuant to
Section 5.04 or relating to taxation must be an opinion of independent outside
counsel) and who, in the case of opinions delivered to the Credit Enhancer or
the Rating Agency, is reasonably acceptable to it.
"Purchase Price" with respect to any Mortgage Loan required to be
purchased by the Sponsor pursuant to Section 2.03 or 2.04 or purchased at the
option of the Master Servicer pursuant to Section 3.01 or 3.06 means an amount
equal to the sum of
(i) 100% of the unpaid principal balance of the Mortgage Loan on the
date of such purchase,
(ii) accrued interest on the Mortgage Loan at the applicable
Mortgage Rate (or at the applicable Adjusted Mortgage Rate if (x) the
purchaser is the Master Servicer or (y) if the purchaser is Countrywide
and Countrywide is an affiliate of the Master Servicer) from the date
through which interest was last paid by the Mortgagor to the Due Date in
the month in which the Purchase Price is to be distributed to
Noteholders, and
(iii) in the case of any Mortgage Loan required to be purchased by
the Sponsor because of, or that arises out of, a violation of any
predatory or abusive lending law with respect to the related Mortgage
Loan, any costs and damages incurred by the Trust relating to such
violation of any predatory or abusive lending law with respect to the
related Mortgage Loan.
"REO" means a Mortgaged Property that is acquired by the Trust in
foreclosure or by deed in lieu of foreclosure.
"Servicing Certificate" means a certificate completed and executed by a
Servicing Officer in accordance with Section 4.01.
"Servicing Officer" means any officer of the Master Servicer involved in,
or responsible for, the administration and servicing of the Mortgage Loans
whose name and specimen signature appear on a list of servicing officers
furnished to the Indenture Trustee (with a copy to the Credit Enhancer) by the
Master Servicer on the Closing Date, as the list may be amended from time to
time.
"Sponsor" means Countrywide Home Loans, Inc., a New York corporation and
any successor to it.
"Spread Rate" has the meaning given to it in the Insurance Agreement.
"Transfer Date" has the meaning given to it in Section 2.06.
"Transfer Deficiency" means that the related Allocated Transferor
Interest after a retransfer of a Mortgage Loan in the related Loan Group
pursuant to Section 2.02(b) would be
Xxx-1-5
less than the sum of (i) the greater of the related Minimum Transferor
Interest and the related Required Transferor Subordinated Amount and (ii) in
the case of any Mortgage Loan required to be purchased by the Sponsor because
of, or that arises out of, a violation of any predatory or abusive lending law
with respect to the related Mortgage Loan, any costs and damages incurred by
the Trust relating to such violation of any predatory or abusive lending law
with respect to the related Mortgage Loan.
"Transfer Deposit Amount" has the meaning given to it in Section 2.02(b).
"Transfer Notice Date" has the meaning given to it in Section 2.06.
"Valuation" of any Mortgaged Property means the lesser of (i) the
Appraised Value of the Mortgaged Property and (ii) in the case of a Mortgaged
Property purchased within one year of the origination of the related Mortgage
Loan, the purchase price of the Mortgaged Property.
Xxx-1-6
The following have the meanings given to them in the Indenture:
Accelerated Principal Payment Amount
Additional Balance
Asset Balance
Assignment of Mortgage
Available Transferor Subordinated Amount
Basis Risk Carryforward
Business Day
Closing Date
Code
Collection Period
Corporate Trust Office
Credit Enhancement Draw Amount
Credit Enhancer
Credit Enhancer Default
Credit Limit
Credit Line Agreement
Custodial Agreement
Cut-off Date
Cut-off Date Asset Balance
Determination Date
Eligible Account
Eligible Investments
Guaranteed Principal Payment Amount
Indenture Trustee
Insolvency Event
Insurance Agreement
Interest Collections
Interest Formula Rate
Interest Period
Investor Fixed Allocation Percentage
Investor Floating Allocation Percentage
Investor Interest Collections
Investor Loss Amount
Investor Loss Reduction Amount
Investor Principal Collections
Issuer Request
Loan Group
Loan Group Balance
Loan Rate
Managed Amortization Period
Maximum Rate
MERS
MERS(R) System
MIN
Minimum Transferor Interest
MOM Loan
Xxxxx'x
Mortgage File
Mortgage Loan
Mortgage Loan Schedule
Mortgage Note
Mortgaged Property
Note
Note Rate
Note Interest
Note Principal Balance
Noteholder or Holder
Note Owner
Note Register and Note Registrar
Original Note Principal Balance
Outstanding Amount
Paying Agent
Payment Date
Policy
Principal Collections
Purchase Agreement
Rapid Amortization Event
Rating Agency
Rating Agency Condition
Required Transferor Subordinated
Amount
Responsible Officer
Scheduled Principal Collections
Payment Amount
Servicing Fee
Standard & Poor's
Transferor
Transferor Certificates
Transferor Interest
Transferor Principal Collections
Trust
Trust Agreement
UCC
Unpaid Investor Interest Shortfall
Weighted Average Net Loan Rate
Xxx-1-7
ANNEX 2
ADOPTION ANNEX
The initial aggregate principal amount of the Notes is $1,000,000,000,
the initial aggregate principal amount of the Class 1-A Notes is $361,760,000,
and the initial aggregate principal amount of the Class 2-A Notes is
$638,240,000
The title of the Collection Account is "JPMorgan Chase Bank, N.A., as
Indenture Trustee, Collection Account in trust for the registered holders of
Revolving Home Equity Loan Asset Backed Notes, Series 2004-Q and XL Capital
Assurance Inc."
The date on which the Master Servicer delivers the Officer's Certificate
in each year is March 31, and the first Officer's Certificate pursuant to
Section 3.09 is March 31, 2005.
The date on which the Master Servicer delivers the annual servicing
report in each year is March 15, and the first annual servicing report
pursuant to Section 3.10 is March 15, 2005.
Xxx-2-1
