EXHIBIT 99.7
MORTGAGE LOAN FLOW PURCHASE, SALE & SERVICING AGREEMENT
dated as of May 29, 2001
between
XXXXXX BROTHERS BANK, FSB, Purchaser
and
CENDANT MORTGAGE CORPORATION and
XXXXXX'X GATE RESIDENTIAL MORTGAGE TRUST
(formerly known as CENDANT RESIDENTIAL MORTGAGE TRUST)
Sellers
Schedules
A. Mortgage Loan Schedule
B. Content of Mortgage File
B-1 Purchaser's Mortgage File
B-2 Servicer's Mortgage File
C. Cendant Guidelines and Restrictions
Exhibits
Exhibit 2.05 Form of Assignment, Assumption and Recognition Agreement
Exhibit 5.03(a) Report P-4DL
Exhibit 5.03(b) Report S-5L2
Exhibit 5.03(c) Form of Notice of Foreclosure
Exhibit 5.04-1 Form of Collection Account Certification
Exhibit 5.04-2 Form of Collection Account Letter Agreement
Exhibit 5.06-1 Form of Escrow Account Certification
Exhibit 5.06-2 Form of Escrow Account Letter Agreement
Exhibit 6.02(a) Report P-139 -- Monthly Statement of Mortgage Accounts
Exhibit 6.02(b) Report S-50Y -- Private Pool Detail Report
Exhibit 6.02(c) Report S-213 -- Summary of Curtailments Made Remittance Report
Exhibit 6.02(d) Report S-214 -- Summary of Paid in Full Remittance Report
Exhibit 6.02(e) Report S-215 -- Consolidation of Remittance Report
Exhibit 6.02(f) Report T-62C -- Monthly Accounting Report
Exhibit 6.02(g) Report T-62E -- Liquidation Report
Exhibit 8.01 Report P-195 Delinquency Report
Exhibit 9.01 Custodial Agreement
Exbitit 9.02 Form of Assignment and Assumption Agreement
Exhibit 10 Assignment and Conveyance
2
MORTGAGE LOAN FLOW PURCHASE, SALE & SERVICING AGREEMENT
This Mortgage Loan Flow Purchase, Sale & Servicing Agreement, dated as
of May 29, 2001, is entered into between Xxxxxx Brothers Bank, FSB, as the
Purchaser ("Purchaser"), Cendant Mortgage Corporation ("Cendant Mortgage") and
Xxxxxx'x Gate Residential Mortgage Trust (formerly known as Cendant Residential
Mortgage Trust) (the "Trust," together with Cendant Mortgage, the "Sellers" and
individually, each a "Seller"), as the Sellers.
PRELIMINARY STATEMENT
1. Cendant Mortgage is engaged in the business, inter alia, of making loans to
individuals, the repayment of which is secured by a first lien mortgage on such
individuals' residences (each, a "Mortgage Loan"). The Trust is engaged in the
business of purchasing such Mortgage Loans from Cendant Mortgage and selling
same to investors.
2. Purchaser is engaged in the business, inter alia, of purchasing Mortgage
Loans for its own account.
3. Cendant Mortgage has established certain terms, conditions and loan
programs, as described in Cendant Mortgage's Program and Underwriting Guidelines
(the "Cendant Guide") and Purchaser is willing to purchase Mortgage Loans that
comply with the terms of such terms, conditions and loan programs. The
applicable provisions of the Cendant Guide are attached hereto as Schedule C.
4. Purchaser and Sellers desire to establish a flow program whereby Cendant
Mortgage will make Mortgage Loans which meet the applicable provisions of the
Cendant Guide, and Purchaser will, on a regular basis, purchase such Mortgage
Loans from Cendant Mortgage or the Trust, as applicable, provided the parties
agree on the price, date and other conditions or considerations as set forth in
this Agreement.
5. Purchaser and Sellers wish to prescribe the terms and manner of purchase by
the Purchaser and sale by the Sellers of the Mortgage Loans, and the management
and servicing of the Mortgage Loans by Cendant Mortgage, as the Servicer (the
"Servicer"), in this Agreement.
NOW, THEREFORE, in consideration of the mutual agreements hereinafter set forth,
the Purchaser and the Sellers agree as follows:
3
ARTICLE I: DEFINITIONS
Section 1.01 Defined Terms.
Whenever used in this Agreement, the following words and phrases shall
have the following meaning specified in this Article:
"Affiliate": When used with reference to a specified Person, any Person
that (i) directly or indirectly controls or is controlled by or is under common
control with the specified Person, (ii) is an officer of, partner in or trustee
of, or serves in a similar capacity with respect to, the specified person or of
which the specified Person is an officer, partner or trustee, or with respect to
which the specified Person serves in a similar capacity, or (iii) directly or
indirectly is the beneficial owner of 10% or more of any class of equity
securities of the specified Person or of which the specified person is directly
or indirectly the owner of 10% or more of any class of equity securities.
"Agreement": This Mortgage Loan Flow Purchase, Sale & Servicing
Agreement between the Purchaser and the Sellers.
"ALTA": The American Land Title Association.
"Appraised Value": With respect to any Mortgaged Property, the lesser
of: (i) the value thereof as determined by an appraisal made for the originator
of the Mortgage Loan at the time of origination of the Mortgage Loan by an
appraiser who met the minimum requirements of FNMA and FHLMC; or (ii) the
purchase price paid for the related Mortgaged Property by the Mortgagor with the
proceeds of the Mortgage Loan; provided that, in the case of a Refinanced
Mortgage Loan, such value of the Mortgaged Property shall be based solely upon
the value determined by an appraisal made for the originator of such Refinanced
Mortgage Loan at the time of origination of such Refinanced Mortgage Loan by an
appraiser who met the minimum requirements of FNMA and FHLMC.
"ARM Loan": An "adjustable rate" Mortgage Loan, the Note Rate of which
is subject to periodic adjustment in accordance with the terms of the Mortgage
Note.
"Assignment": An individual assignment of a Mortgage, notice of
transfer or equivalent instrument in recordable form, sufficient under the laws
of the jurisdiction wherein the related Mortgaged Property is located to reflect
of record the sale or transfer of the Mortgage Loan.
"Bankruptcy Code": The Bankruptcy Reform Act of 1978 (11 U.S.C.
Sections 101-1330), as amended, modified, or supplemented from time to time, and
any successor statute, and all rules and regulations issued or promulgated in
connection therewith.
"Business Day": Any day other than (i) a Saturday or Sunday, or (ii) a
day on which the Federal Reserve is closed.
4
"Cendant Guide": As defined in paragraph 3 of the Preliminary Statement
to this Agreement.
"Code": The Internal Revenue Code of 1986, as amended.
"Collection Account": The separate trust account or accounts created
and maintained pursuant to Section 5.04 which shall be entitled "Cendant
Mortgage Corporation, as servicer and custodian for the Purchaser of Mortgage
Loans under the Mortgage Loan Flow Purchase, Sale & Servicing Agreement, dated
as of March 29, 2001 ."
"Condemnation Proceeds": All awards or settlements in respect of a
taking of an entire Mortgaged Property or a part thereof by exercise of the
power of eminent domain or condemnation.
"Credit Documents": Those documents, comprising part of the Mortgage
File, required of the Mortgagor, as described in Section 2 (Specific Loan
Program Guidelines) of the Guide.
"Custodian": U.S. Bank Trust National Association.
"Custodial Agreement": The agreement between the Custodian and
Purchaser attached hereto as Exhibit 9.
"Cut Off Date": The first day of the month in which the related Funding
Date occurs.
"Defective Mortgage Loan": As defined in Section 3.04(3).
"Determination Date": The 15th day of each calendar month, commencing
on the 15th day of the month following the Closing Date, or, if such 15th day is
not a Business Day, the Business Day immediately preceding such 15th day.
"Due Date": With respect to any Mortgage Loan, the day of the month on
which each Monthly Payment is due thereon, exclusive of any days of grace.
"Due Period": With respect to each Remittance Date, the period
commencing on the second day of the month immediately preceding the month of
such Remittance Date and ending on the first day of the month of such Remittance
Date.
"Effective Loan-to-Value Ratio" or "ELTV": With respect to any Mortgage
Loan which falls under Xxxxxxx Xxxxx Credit Corporation (MLCC) Additional
Collateral program, ELTV represents the Loan Balance less Pledge Amount divided
by the lesser of Purchase Price or Appraised Value of the Property.
"Eligible Account": One or more accounts (i) that are maintained with a
depository institution the long-term unsecured debt obligations of which have
been rated by each Rating Agency in one of its two highest rating categories at
the time of any deposit therein, (ii) that are trust accounts with any
depository institution held by the depository institution in its capacity as a
corporate trustee, or (iii) the deposits in which are insured by the FDIC (to
the limits
5
established by the FDIC) and the uninsured deposits in which are otherwise
secured such that the Purchaser has a claim with respect to the funds in such
accounts or a perfected first security interest against any collateral securing
such funds that is superior to claims of any other depositors or creditors of
the depository institution with which such accounts are maintained. In addition,
solely with respect to Mortgage Loans which are not part of a securitization,
"Eligible Account" shall include any accounts that meet the standards
established from time to time by FNMA for eligible custodial depositories.
"Environmental Assessment": A "Phase I" environmental assessment of a
Mortgaged Property prepared by an Independent Person who regularly conducts
environmental assessments and who has any necessary license(s) required by
applicable law and has five years experience in conducting environmental
assessments.
"Environmental Conditions Precedent to Foreclosure": As defined in
Section 5.15(v).
"Environmental Laws": All federal, state, and local statutes, laws,
regulations, ordinances, rules, judgments, orders, decrees or other governmental
restrictions relating to the environment or to emissions, discharges or releases
of pollutants, contaminants or industrial, toxic or hazardous substances or
wastes into the environment, including ambient air, surface water, ground water,
or land, or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of pollutants,
contaminants or industrial, toxic or hazardous substances or wastes or the
cleanup or other remediation thereof.
"Escrow Account": The separate trust account or accounts created and
maintained pursuant to Section 5.06 which shall be entitled "Cendant Mortgage
Corporation, as servicer and custodian for the Purchaser under the Mortgage Loan
Flow Purchase, Sale & and Servicing Agreement, dated as of March 29, 2001 (as
amended), and various mortgagors."
"Escrow Payments": The amounts constituting ground rents, taxes,
assessments, water rates, mortgage insurance premiums, fire and hazard insurance
premiums and other payments required to be escrowed by the Mortgagor with the
mortgagee pursuant to any Mortgage Loan.
"Event of Default": Any one of the conditions or circumstances
enumerated in Section 10.01.
"FDIC": The Federal Deposit Insurance Corporation or any successor
organization.
"FHLMC": The Federal Home Loan Mortgage Corporation (also known as
Xxxxxxx Mac) or any successor organization.
"FHLMC Servicing Guide": The FHLMC/Xxxxxxx Xxx Xxxxxxx' and Servicers'
Guide in effect on and after the Funding Date.
"Fidelity Bond": A fidelity bond to be maintained by the Servicer
pursuant to Section 5.12.
6
"Fixed Rate Loan": A "fixed rate" Mortgage Loan, the Note Rate of which
is not subject to any rate adjustments.
"FNMA": The Federal National Mortgage Association (also known as Xxxxxx
Mae) or any successor organization.
"FNMA Guide": The FNMA/Xxxxxx Xxx Selling Guide and the Servicing
Guide, collectively, in effect on and after the Funding Date.
"Funding Date": Each date (up to four per month) that Purchaser
purchases Mortgage Loans from the Sellers hereunder.
"Gross Margin": With respect to each ARM Loan, the fixed percentage
added to the Index on each Rate Adjustment Date, as specified in each related
Mortgage Note and listed in the Mortgage Loan Schedule.
"Independent": With respect to any specified Person, such Person who:
(i) does not have any direct financial interest or any material indirect
financial interest in the applicable Mortgagor, the Sellers, the Purchaser, or
their Affiliates; and (b) is not connected with the applicable Mortgagor, the
Sellers, the Purchaser, or their respective Affiliates as an officer, employee,
promoter, underwriter, trustee, member, partner, shareholder, director, or
Person performing similar functions.
"Index": With respect to each ARM Loan, on each Rate Adjustment Date,
the applicable rate index set forth on the Mortgage Loan Schedule, which shall
be an index described on such Mortgage Loan Schedule.
"Insolvency Proceeding": With respect to any Person: (i) any case,
action, or proceeding with respect to such Person before any court or other
governmental authority relating to bankruptcy, reorganization, insolvency,
liquidation, receivership, dissolution, winding-up, or relief of debtors; or
(ii) any general assignment for the benefit of creditors, composition,
marshaling of assets for creditors, or other, similar arrangement in respect of
the creditors generally of such Person or any substantial portion of such
Person's creditors; in any case undertaken under federal, state or foreign law,
including the Bankruptcy Code.
"Insurance Proceeds": Proceeds of any Primary Insurance Policy, title
policy, hazard policy or other insurance policy covering a Mortgage Loan, if
any, to the extent such proceeds are not to be applied to the restoration of the
related Mortgaged Property or released to the Mortgagor in accordance with the
procedures that the Servicer would follow in servicing mortgage loans held for
its own or its Affiliates' account or managed by it for third-party
institutional investors.
"Legal Documents": Those documents, comprising part of the Mortgage
File, set forth in Schedule B-1 of this Agreement.
"Lender Mortgage Insurance Fee": With respect to certain Mortgage
Loans, such fee as may be established by Seller, and which will be further set
forth on the related Mortgage Loan
7
Schedule, as the case may be, which shall be deducted from the Note Rate to
determine the Mortgage Loan Remittance Rate.
"Liquidation Proceeds": Amounts, other than Insurance Proceeds and
Condemnation Proceeds, received by the Servicer in connection with the
liquidation of a defaulted Mortgage Loan through trustee's sale, foreclosure
sale or otherwise, other than amounts received following the acquisition of an
REO Property in accordance with the provisions hereof.
"Loan-to-Value Ratio" or "LTV": With respect to any Mortgage Loan, the
original principal balance of such Mortgage Loan divided by the lesser of the
Appraised Value of the related Mortgaged Property or the purchase price.
"MAI Appraiser": With respect to any real property, a member of the
American Institute of Real Estate Appraisers with a minimum of 5 years of
experience appraising real property of a type similar to the real property being
appraised and located in the same geographical area as the real property being
appraised.
"Monthly Advance": The aggregate amount of the advances made by the
Servicer on any Remittance Date pursuant to and as more fully described in
Section 6.03.
"Monthly Payment": The scheduled monthly payment of principal and
interest on a Mortgage Loan which is payable by a Mortgagor under the related
Mortgage Note.
"Monthly Period": Initially, the period from the Closing Date through
to and including the first Record Date during the term hereof, and, thereafter,
the period commencing on the day after each Record Date during the term hereof
and ending on the next succeeding Record Date during the term hereof (or, if
earlier, the date on which this Agreement terminates).
"Mortgage": The mortgage, deed of trust or other instrument securing a
Mortgage Note, which creates a first lien on an unsubordinated estate in fee
simple in real property securing the Mortgage Note.
"Mortgaged Property": With respect to a Mortgage Loan, the underlying
real property securing repayment of a Mortgage Note, consisting of a fee simple
estate.
"Mortgage File": With respect to a particular Mortgage Loan, those
origination and servicing documents, escrow documents, and other documents as
are specified on Schedule B to this Agreement.
"Mortgage Loan": Each individual mortgage loan (including all documents
included in the Mortgage File evidencing the same, all Monthly Payments,
Principal Prepayments, Insurance Proceeds, Condemnation Proceeds, Liquidation
Proceeds, and other proceeds relating thereto, and any and all rights, benefits,
proceeds and obligations arising therefrom or in connection therewith) which is
the subject of this Agreement. The Mortgage Loans subject to this Agreement
shall be identified on Mortgage Loan Schedules prepared in connection with each
Funding Date.
8
"Mortgage Loan Remittance Rate": The Note Rate of the Mortgage Loans
less the Servicing Fee Rate and less the Lender Mortgage Insurance fee, if
applicable.
"Mortgage Loan Schedule": The list of Mortgage Loans identified on each
Funding Date that sets forth the information with respect to each Mortgage Loan
that is specified on Schedule A hereto. A Mortgage Loan Schedule will be
prepared for each Funding Date.
"Mortgage Note": The note or other evidence of the indebtedness of a
Mortgagor secured by a Mortgage.
"Mortgagor": The obligor on a Mortgage Note.
"Note Rate": With respect to any Mortgage Loan at any time any
determination thereof is to be made, the annual rate at which interest accrues
thereon.
"Officers' Certificate": A certificate signed by (i) the President or a
Vice President and (ii) the Treasurer or the Secretary or one of the Assistant
Treasurers or Assistant Secretaries of the Servicer, and delivered by the
Servicer to the Purchaser as required by this Agreement.
"Payoff": With respect to any Mortgage Loan, any payment or recovery
received in advance of the last scheduled Due Date of such Mortgage Loan, which
payment or recovery consists of principal in an amount equal to the outstanding
principal balance of such Mortgage Loan, all accrued and unpaid prepayment
penalties, premiums, and/or interest with respect thereto, and all other unpaid
sums due with respect to such Mortgage Loan.
"Permitted Investments": Any one or more of the obligations and
securities listed below which investment provides for a date of maturity not
later than the Determination Date in each month:
(i) direct obligations of, and obligations fully guaranteed by, the
United States of America, or any agency or instrumentality of the United States
of America the obligations of which are backed by the full faith and credit of
the United States of America; and
(ii) federal funds, demand and time deposits in, certificates of
deposits of, or bankers' acceptances issued by, any depository institution or
trust company incorporated or organized under the laws of the United States of
America or any state thereof and subject to supervision and examination by
federal and/or state banking authorities, so long as at the time of such
investment or contractual commitment providing for such investment the
commercial paper or other short-term debt obligations of such depository
institution or trust company (or, in the case of a depository institution or
trust company which is the principal subsidiary of a holding company, the
commercial paper or other short-term debt obligations of such holding company)
are rated "P-1" by Xxxxx'x Investors
9
Service, Inc. and the long-term debt obligations of such holding company) are
rated "P-1" by Xxxxx'x Investors Service, Inc. and the long-term debt
obligations of such depository institution or trust company (or, in the case of
a depository institution or trust company which is the principal subsidiary of a
holding company, the long-term debt obligations of such holding company) are
rated at least "Aa" by Xxxxx'x Investors Service, Inc.; provided, however, that
no such instrument shall be an Eligible Investment if such instrument evidences
either (i) a right to receive only interest payments with respect to the
obligations underlying such instrument, or (ii) both principal and interest
payments derived from obligations underlying such instrument and the principal
and interest payments with respect to such instrument provide a yield to
maturity of greater than 120% of the yield to maturity at par of such underlying
obligations.
"Person": Any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust,
incorporated organization or government or any agency or political subdivision
thereof.
"Prepaid Monthly Payment": Any Monthly Payment received prior to its
scheduled Due Date and which is intended to be applied to a Mortgage Loan on its
scheduled Due Date.
"Primary Insurance Policy": Each primary policy of mortgage insurance
in effect with respect to a Mortgage Loan and as so indicated on the Mortgage
Loan Schedule, or any replacement policy therefor obtained by the Servicer
pursuant to Section 5.08.
"Principal Prepayment": Any payment or other recovery of principal on a
Mortgage Loan (including a Payoff), other than a Monthly Payment or a Prepaid
Monthly Payment which is received in advance of its scheduled Due Date,
including any prepayment penalty or premium thereon, which is not accompanied by
an amount of interest representing scheduled interest due on any date or dates
in any month or months subsequent to the month of prepayment and which is
intended to reduce the principal balance of the Mortgage Loan.
"Purchaser": Xxxxxx Brothers Bank, FSB, or its successor in interest or
any successor under this Agreement appointed as herein provided.
"Purchaser's Account": The account of the Purchaser at a bank or other
entity most recently designated in a written notice by the Purchaser to the
Sellers as the "Purchaser's Account."
"Purchase Price": as to each Mortgage Loan to be sold hereunder, the
price set forth in the Purchase Price and Terms Letter.
"Purchase Price and Terms Letter": With respect to each purchase of
Mortgage Loans, that certain letter agreement setting forth the general terms
and conditions of such transaction and identifying the Mortgage Loans to be
purchased thereunder by and between the Seller and the Purchaser.
"Qualified Mortgage Insurer": American Guaranty Corporation,
Commonwealth Mortgage Assurance Company, General Electric Mortgage Insurance
Companies, Mortgage Guaranty Insurance Corporation, PMI Mortgage Insurance
Company, Republic Mortgage Insurance Company, Radian Guaranty Corporation, or
United Guaranty Residential Insurance Corporation.
10
"Rate Adjustment Date": With respect to each ARM Loan, the date on
which the Note Rate adjusts.
"Rating Agency": Standard & Poor's Ratings Services, a division of The
XxXxxx-Xxxx Companies, Xxxxx'x Investors Service, Inc., or Fitch Investors
Service, Inc.
"Record Date": The close of business of the last Business Day of the
month preceding the month of the related Remittance Date.
"Refinanced Mortgage Loan": A Mortgage Loan that was made to a
Mortgagor who owned the Mortgaged Property prior to the origination of such
Mortgage Loan and the proceeds of which were used in whole or part to satisfy an
existing mortgage.
"REMIC": A "real estate mortgage investment conduit" within the meaning
of Section 860D of the Internal Revenue Code or any similar tax vehicle
providing for the pooling of assets (such as a Financial Asset Security
Investment Trust).
"Remittance Date": The 18th day of each calendar month, commencing on
the 18th day of the month following the Closing Date, or, if such 18th day is
not a Business Day, then the next Business Day immediately preceding such 18th
day.
"Remittance Rate": With respect to each Mortgage Loan, the related Note
Rate minus the Servicing Fee Rate and minus Lender MI Fee where applicable.
"REO Disposition": The final sale by the Servicer of any REO Property.
"REO Property": A Mortgaged Property acquired by the Servicer on behalf
of the Purchaser as described in Section 5.13.
"Repurchase Price": As to (a) any Defective Mortgage Loan required to
be repurchased hereunder with respect to which a breach occurred or (b) any
Mortgage Loan required to be repurchased pursuant to Section 3.04 and/or Section
7.02, an amount equal to the Unpaid Principal Balance of such Mortgage Loan at
the time of repurchase; plus (2) interest on such Mortgage Loan at the
applicable Note Rate from the last date through which interest has been paid and
distributed to the Purchaser hereunder to the date of repurchase; minus (3) any
amounts received in respect of such Defective Mortgage Loan which are being held
in the Collection Account for future remittance.
"Scheduled Principal Balance": With respect to any Mortgage Loan, (i)
the outstanding principal balance as of the Funding Date after application of
principal payments due on or before such date whether or not received, minus
(ii) all amounts previously remitted to the Purchaser with respect to such
Mortgage Loan representing (a) payments or other recoveries of principal, or (b)
advances of principal made pursuant to Section 6.03.
"Sellers": Cendant Mortgage Corporation, a New Jersey corporation and
Xxxxxx'x Gate Residential Mortgage Trust (formerly known as Cendant Residential
Mortgage Trust), a
11
Delaware business trust, or their successors in interest or any successor under
this Agreement appointed as herein provided.
"Servicer": Cendant Mortgage Corporation, a New Jersey corporation.
"Servicer's Mortgage File": The documents pertaining to a particular
Mortgage Loan which are specified on Exhibit S-1 attached hereto and any
additional documents required to be included or added to the "Servicer's
Mortgage File" pursuant to this Agreement.
"Servicing Advances": All "out of pocket" costs and expenses that are
customary, reasonable and necessary which are incurred by the Servicer in the
performance of its servicing obligations hereunder, including (without
duplication) (i) reasonable attorneys' fees and (ii) the cost of (a) the
preservation, restoration and protection of the Mortgaged Property, (b) any
enforcement or judicial proceedings, including foreclosures, (c) the servicing,
management and liquidation of any Specially Serviced Mortgaged Loans and/or any
REO Property, and (d) compliance with the Servicer's obligations under Section
5.08.
"Servicing Event": Any of the following events with respect to any
Mortgage Loan: (i) any Monthly Payment being more than 60 days delinquent; (ii)
any filing of an Insolvency Proceeding by or on behalf of the related Mortgagor,
any consent by or on behalf of the related Mortgagor to the filing of an
Insolvency Proceeding against such Mortgagor, or any admission by or on behalf
of such Mortgagor of its inability to pay such Person's debts generally as the
same become due; (iii) any filing of an Insolvency Proceeding against the
related Mortgagor that remains undismissed or unstayed for a period of 60 days
after the filing thereof; (iv) any issuance of any attachment or execution
against, or any appointment of a conservator, receiver or liquidator with
respect to, all or substantially all of the assets of the related Mortgagor or
with respect to any Mortgaged Property; (v) any receipt by the Servicer of
notice of the foreclosure or proposed foreclosure of any other lien on the
related Mortgaged Property; (vi) any proposal of a material modification (as
reasonably determined by the Seller) to such Mortgage Loan due to a default or
imminent default under such Mortgage Loan; or (vii) in the reasonable judgment
of the Servicer, the occurrence, or likely occurrence within 60 days, of a
payment default with respect to such Mortgage Loan that is likely to remain
uncured by the related Mortgagor within 60 days thereafter.
"Servicing Fee": The annual fee, payable monthly to the Servicer out of
the interest portion of the Monthly Payment actually received on each Mortgage
Loan. The Servicing Fee with respect to each Mortgage Loan for any calendar
month (or a portion thereof) shall be 1/12 of the product of (i) the Scheduled
Principal Balance of the Mortgage Loan and (ii) the Servicing Fee Rate
applicable to such Mortgage Loan.
"Servicing Fee Rate": (i) with respect to any ARM Loan, 0.375% per
annum; provided that, prior to the first Rate Adjustment Date with respect to
any such Mortgage Loan, such rate may be, at the Servicer's option, not less
than 0.25% per annum; and (ii) with respect to any Mortgage Loan other than an
ARM Loan, 0.25% per annum. Such rate will be indicated on the Mortgage Loan
Schedule.
12
"Servicing Officer": Any officer of the Servicer involved in, or
responsible for, the administration and servicing of the Mortgage Loans whose
name appears on a written list of servicing officers furnished by the Servicer
to the Purchaser upon request therefor by the Purchaser, as such list may from
time to time be amended.
"Specially Serviced Mortgage Loan": A Mortgage Loan as to which a
Servicing Event has occurred and is continuing.
"Unpaid Principal Balance": With respect to any Mortgage Loan, at any
time, the actual outstanding principal balance then payable by the Mortgagor
under the terms of the related Mortgage Note.
ARTICLE II: SALE AND CONVEYANCE OF MORTGAGE LOANS; POSSESSION OF MORTGAGE
FILES; BOOKS AND RECORDS; DELIVERY OF MORTGAGE LOAN DOCUMENTS
Section 2.01 Sale and Conveyance of Mortgage Loans.
Seller agrees to sell and Purchaser agrees to purchase, from time to
time, those certain Mortgage Loans identified in a Mortgage Loan Schedule, on
the price and terms set forth herein. Purchaser, on any Funding Date, shall be
obligated to purchase only such Mortgage Loans set forth in the applicable
Mortgage Loan Schedule, subject to the terms and conditions of this Agreement.
Purchaser will purchase Mortgage Loan(s) from Seller, from time to time
on such Funding Dates as may be agreed upon by Purchaser and Seller. The closing
shall, at Purchaser's option be either: by telephone, confirmed by letter or
wire as the parties shall agree; or conducted in person at such place, as the
parties shall agree. On the Funding Date and subject to the terms and conditions
of this Agreement, each Seller will sell, transfer, assign, set over and convey
to the Purchaser, without recourse except as set forth in this Agreement, and
the Purchaser will purchase, all of the right, title and interest of the
applicable Seller in and to the Mortgage Loans being conveyed by it hereunder,
as identified on the Mortgage Loan Schedule.
Examination of the Mortgage Files may be made by Purchaser or its
designee as follows. No later than five business days prior to the Funding Date,
Seller will deliver to Purchaser or Custodian Legal Documents required pursuant
to Schedule B. Upon Purchaser's request, Seller shall make the Credit Documents
available to Purchaser for review, at Seller's place of business and during
reasonable business hours. If Purchaser makes such examination prior to the
Funding Date and identifies any Mortgage Loans that do not conform to the
Cendant Guide, such Mortgage Loans will be deleted from the Mortgage Loan
Schedule at Purchaser's discretion. Purchaser may, at its option and without
notice to Seller, purchase all or part of the Mortgage Loans without conducting
any partial or complete examination. The fact that Purchaser has conducted or
has failed to conduct any partial or complete examination of the Mortgage Loan
files shall not affect Purchaser's rights to demand repurchase, substitution or
other relief as provided herein.
13
On the Funding Date and in accordance with the terms herein, Purchaser
will pay to Seller, by wire transfer of immediately available funds, the
Purchase Price, together with interest at the Mortgage Loan Remittance Rate from
the Cut-Off Date to the Funding Date, according to the instructions to be
provided, respectively, by Cendant Mortgage and the Trust.
Purchaser shall be entitled to all scheduled principal due after the
Cut-Off Date, all other recoveries of principal collected after the Funding Date
and all payments of interest on the Mortgage Loans (minus that portion of any
such payment which is allocable to the period prior to the Funding Date). The
principal balance of each Mortgage Loan as of the Funding Date is determined
after application of payments of principal due on or before the Funding Date
whether or not collected. Therefore, payments of scheduled principal and
interest prepaid for a due date beyond the Funding Date shall not be applied to
the principal balance as of the Funding Date. Such prepaid amounts shall be the
property of Purchaser. Seller shall hold any such prepaid amounts for the
benefit of Purchaser for subsequent remittance by Seller to Purchaser. All
scheduled payments of principal due on or before the Funding Date and collected
by Seller after the Funding Date shall belong to Seller.
Section 2.02 Possession of Mortgage Files.
Upon the sale of any Mortgage Loan, the ownership of such Mortgage
Loan, including the Mortgage Note, the Mortgage, the contents of the related
Mortgage File and all rights, benefits, payments, proceeds and obligations
arising therefrom or in connection therewith, shall then be vested in the
Purchaser, and the ownership of all records and documents with respect to such
Mortgage Loan prepared by or which come into the possession of the Seller shall
immediately vest in the Purchaser and, to the extent retained by the Seller,
shall be retained and maintained, in trust, by the Seller at the will of the
Purchaser in a custodial capacity only. The contents of such Mortgage File not
delivered to the Purchaser or Purchaser's designee are and shall be held in
trust by the Seller for the benefit of the Purchaser as the owner thereof and
the Sellers' possession of the contents of each Mortgage File so retained is at
the will of the Purchaser for the sole purpose of servicing the related Mortgage
Loan, and such retention and possession by the Seller is in a custodial capacity
only. Mortgage Files shall be maintained separately from the other books and
records of the Seller. Each Seller shall release from its custody of the
contents of any Mortgage File only in accordance with written instructions from
the Purchaser, except where such release is required as incidental to the
Servicer's servicing of the Mortgage Loans or is in connection with a repurchase
of any such Mortgage Loan pursuant to Section 3.04.
Any documents released to a Seller or the Servicer in connection with the
foreclosure or servicing of any Mortgage Loan shall be held by such Person in
trust for the benefit of the Purchaser in accordance with this Section 2.02.
Such Person shall return to the Purchaser such documents when such Person's need
therefor in connection with such foreclosure or servicing no longer exists
(unless sooner requested by the Purchaser); provided that, if such Mortgage Loan
is liquidated, then, upon the delivery by a Seller or the Servicer to the
Purchaser of a request for the release of such documents and a certificate
certifying as to such liquidation, the Purchaser shall promptly release and, to
the extent necessary, deliver to such Person such documents.
14
At the option of Purchaser, the Mortgage Files shall be held by the Custodian in
accordance with the terms of the Custodial Agreement.
Section 2.03 Books and Records.
The sale of each of its Mortgage Loans shall be reflected on the
applicable Seller's balance sheet and other financial statements as a sale of
assets by the applicable Seller. Each Seller shall be responsible for
maintaining, and shall maintain, a complete set of books and records for the
Mortgage Loans it conveyed to the Purchaser which shall be clearly marked to
reflect the sale of each Mortgage Loan to the Purchaser and the ownership of
each Mortgage Loan by the Purchaser.
Section 2.04 Defective Documents; Delivery of Mortgage Loan Documents.
Subsequent to the Funding Date, if the Purchaser or either Seller finds
any document or documents constituting a part of a Mortgage File to be defective
or missing in any material respect (in this Section 2.04, a "Defect"), the party
discovering such Defect shall promptly so notify the other parties. If the
Defect pertains to the Mortgage Note or the Mortgage, then the applicable Seller
shall have a period of 45 days within which to correct or cure any such defect
after the earlier of such Seller's discovery of same or such Seller being
notified of same. If such Defect can ultimately be cured but is not reasonably
expected to be cured within such 45 day period, such Seller shall have such
additional time as is reasonably determined by the Purchaser to cure or correct
such Defect provided that such Seller has commenced curing or correcting such
Defect and is diligently pursuing same. If the Defect pertains to any other
document constituting a part of a Mortgage File, then such Seller shall have a
period of 90 days within which to correct or cure any such Defect after the
earlier of such Seller's discovery of same or such Seller being notified of
same. If such Defect can ultimately be cured but is not reasonably expected to
be cured within the 90 day period, then such Seller shall have such additional
time as is reasonably determined by the Purchaser to cure or correct such Defect
provided such Seller has commenced curing or correcting such Defect and is
diligently pursuing same. Cendant Mortgage hereby covenants and agrees that, if
any material Defect cannot be corrected or cured, the related Mortgage Loan
shall automatically constitute, upon the expiration of the applicable cure
period described above and without any further action by any other party, a
Defective Mortgage Loan, whereupon Cendant Mortgage shall repurchase such
Mortgage Loan by paying to the Purchaser the Repurchase Price therefor in
accordance with Section 3.04(3).
15
The applicable Seller will, with respect to each Mortgage Loan to be
purchased by the Purchaser, deliver and release to the Purchaser the Legal
Documents as set forth in Section 2.01. If the applicable Seller cannot deliver
an original Mortgage with evidence of recording thereon, original assumption,
modification and substitution agreements with evidence of recording thereon or
an original intervening assignment with evidence of recording thereon within the
applicable time periods, then such Seller shall promptly deliver to the
Purchaser such original Mortgages and original intervening assignments with
evidence of recording indicated thereon upon receipt thereof from the public
recording official, except in cases where the original Mortgage or original
intervening assignments are retained permanently by the recording office, in
which case, such Seller shall deliver a copy of such Mortgage or intervening
assignment, as the case may be, certified to be a true and complete copy of the
recorded original thereof.
If the original Mortgage was not delivered pursuant to the preceding
paragraph, then the applicable Seller shall use its best efforts to promptly
secure the delivery of such originals and shall cause such originals to be
delivered to the Purchaser promptly upon receipt thereof. Notwithstanding the
foregoing, if the original Mortgage, original assumption, modification, and
substitution agreements, the original of any intervening assignment or the
original policy of title insurance is not so delivered to the Purchaser within
180 days following the Funding Date, then, upon written notice by the Purchaser
to Cendant Mortgage, the Purchaser may, in its sole discretion, then elect (by
providing written notice to Cendant Mortgage) to treat such Mortgage Loan as a
Defective Mortgage Loan, whereupon Cendant Mortgage shall repurchase such
Mortgage Loan by paying to the Purchaser the Repurchase Price therefor in
accordance with Section 3.04(3). The fact that the Purchaser has conducted or
failed to conduct any partial or complete examination of the Mortgage Files
shall not affect its right to demand repurchase or any other remedies provided
in this Agreement.
At the Purchaser's request, the Assignments shall be promptly recorded
in the name of the Purchaser or in the name of a Person designated by the
Purchaser in all appropriate public offices for real property records. If any
such Assignment is lost or returned unrecorded because of a defect therein, then
the applicable Seller shall promptly prepare a substitute Assignment to cure
such defect and thereafter cause each such Assignment to be duly recorded. All
recording fees related to such a one-time recordation of the Assignments to or
by a Seller shall be paid by the applicable Seller.
Section 2.05 Transfer of Mortgage Loans.
Subject to the provisions of this Section 2.05, the Purchaser shall
have the right, without the consent of the Sellers, at any time and from time to
time, to assign any of the Mortgage Loans and all or any part of its interest
under this Agreement and designate any person to exercise any rights of the
Purchaser hereunder, and the assignees or designees shall accede to the rights
and obligations hereunder of the Purchaser with respect to such Mortgage Loans.
The Sellers recognize that the Mortgage Loans may be divided into "packages" for
resale ("Mortgage Loan Packages").
16
All of the provisions of this Agreement shall inure to the benefit of
the Purchaser and any such assignees or designees. All references to the
Purchaser shall be deemed to include its assignees or designees. Utilizing
resources reasonably available to the Seller without incurring any cost except
the Seller's overhead and employees' salaries, the applicable Seller shall
cooperate in any such assignment of the Mortgage Loans and this Agreement;
provided that the Purchaser shall bear all costs associated with any such
assignment of the Mortgage Loans and this Agreement other than such Seller's
overhead or employees' salaries.
The Servicer and the Purchaser acknowledge that the Servicer shall
continue to remit payments to the Purchaser on the Remittance Date after the
transfer of the Mortgage Loans, unless the Servicer was notified in writing of
the new record owner of the Mortgage Loans prior to the immediately preceding
Record Date, in which case, the Servicer shall remit to the new record owner (or
trustee or master servicer, as the case may be) of the Mortgage Loans.
Any prospective assignees of the Purchaser who have entered into a
commitment to purchase any of the Mortgage Loans may review and underwrite the
Servicer's servicing and origination operations, upon reasonable prior notice to
the Servicer, and the Servicer shall cooperate with such review and underwriting
to the extent such prospective assignees request information or documents that
are reasonably available and can be produced without unreasonable expense or
effort. The Servicer shall make the Mortgage Files related to the Mortgage Loans
held by the Servicer available at the Servicer's principal operations center for
review by any such prospective assignees during normal business hours upon
reasonable prior notice to the Servicer (in no event less than 5 Business Days
prior notice). The Servicer may, in its sole discretion, require that such
prospective assignees sign a confidentiality agreement with respect to such
information disclosed to the prospective assignee which is not available to the
public at large and a release agreement with respect to its activities on the
Servicer's premises.
The Servicer shall keep at its servicing office books and records in
which, subject to such reasonable regulations as it may prescribe, the Servicer
shall note transfers of Mortgage Loans. The Purchaser may, subject to the terms
of this Agreement, sell and transfer, in whole or in part, any or all of the
Mortgage Loans; provided that no such sale and transfer shall be binding upon
the Servicer unless such transferee shall agree in writing to an Assignment,
Assumption and Recognition Agreement, in substantially the form of Exhibit 2.05
attached hereto, and an executed copy of such Assignment, Assumption and
Recognition Agreement shall have been delivered to the Servicer. The Servicer
shall evidence its acknowledgment of any transfers of the Mortgage Loans to any
assignees of the Purchaser by executing such Assignment, Assumption and
Recognition Agreement. The Servicer shall xxxx its books and records to reflect
the ownership of the Mortgage Loans by any such assignees, and the previous
Purchaser shall be released from its obligations hereunder accruing after the
date of transfer to the extent such obligations relate to Mortgage Loans sold by
the Purchaser. This Agreement shall be binding upon and inure to the benefit of
the Purchaser and the Servicer and their permitted successors, assignees and
designees.
17
ARTICLE III: REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
SELLER; REPURCHASE; REVIEW OF MORTGAGE LOANS
Section 3.01 Representations and Warranties of each Seller.
Each Seller, as to itself, represents, warrants and covenants to the
Purchaser that as of each Funding Date or as of such date specifically provided
herein:
(1) Due Organization. The Seller is an entity duly organized, validly
existing and in good standing under the laws of its jurisdiction of
organization, and has all licenses necessary to carry on its business now being
conducted and is licensed, qualified and in good standing under the laws of each
state where a Mortgaged Property is located or is otherwise exempt under
applicable law from such qualification or is otherwise not required under
applicable law to effect such qualification; no demand for such qualification
has been made upon the Seller by any state having jurisdiction and in any event
the Seller is or will be in compliance with the laws of any such state to the
extent necessary to enforce each Mortgage Loan and with respect to Cendant
Mortgage, service each Mortgage Loan in accordance with the terms of this
Agreement.
(2) Due Authority. Cendant Mortgage had the full power and authority and
legal right to originate the Mortgage Loans that it originated, if any, and to
acquire the Mortgage Loans that it acquired. The Seller has the full power and
authority to hold each Mortgage Loan, to sell each Mortgage Loan and to execute,
deliver and perform, and to enter into and consummate, all transactions
contemplated by this Agreement. The Seller has duly authorized the execution,
delivery and performance of this Agreement, has duly executed and delivered this
Agreement, and this Agreement, assuming due authorization, execution and
delivery by the Purchaser, constitutes a legal, valid and binding obligation of
the Seller, enforceable against it in accordance with its terms, subject to
applicable bankruptcy, reorganization, receivership, conservatorship,
insolvency, moratorium and other laws relating to or affecting creditors' rights
generally or the rights of creditors of banks and to the general principles of
equity (whether such enforceability is considered in a proceeding in equity or
at law).
(3) No Conflict. The execution and delivery of this Agreement, the
acquisition or origination, as applicable, of the Mortgage Loans by the Seller,
the sale of the Mortgage Loans, the consummation of the transactions
contemplated hereby, or the fulfillment of or compliance with the terms and
conditions of this Agreement, will not conflict with or result in a breach of
any of the terms, conditions or provisions of the Seller's organizational
documents and bylaws or any legal restriction or any agreement or instrument to
which the Seller is now a party or by which it is bound, or constitute a default
or result in an acceleration under any of the foregoing, or result in the
violation of any law, rule, regulation, order, judgment or decree to which the
Seller or its property is subject, or impair the ability of the Purchaser to
realize on the Mortgage Loans;
(4) Ability to Perform. The Seller does not believe, nor does it have any
reason or cause to believe, that it cannot perform each and every covenant
contained in this Agreement;
(5) No Material Default. Neither the Seller nor any of its Affiliates is in
material default under any agreement, contract, instrument or indenture of any
nature whatsoever to which the Seller or any of its Affiliates is a party or by
which it (or any of its assets) is bound, which default would have a material
adverse effect on the ability of the Seller to perform under this Agreement,
nor, to the best of the Seller's knowledge, has any event occurred which, with
notice, lapse of time or both, would constitute a default under any such
agreement, contract, instrument or indenture and have a material adverse
effect on the ability of the Seller to perform its obligations under this
Agreement;
(6) Financial Statements. Cendant Mortgage has delivered to the Purchaser
financial statements as to its fiscal year ended December 31, 1999. Except as
has previously been disclosed to the Purchaser in writing: (a) such financial
statements fairly present the results of operations and changes in financial
position for such period and the financial position at the end of such period of
Cendant Mortgage and its subsidiaries; and (b) such financial statements are
true, correct and complete as of their respective dates and have been prepared
in accordance with generally accepted accounting principles consistently applied
throughout the periods involved, except as set forth in the notes thereto. The
Trust has delivered to the Purchaser financial statements dated as of December
31, 1999 and a copy of its Offering Circular dated May 21, 1998 (the "Trust
Financials") and such Trust Financials fairly present the results of operations
and changes in financial position for such period and the financial position at
the end of such period of the Trust. Except as has previously been disclosed to
the Purchaser in writing, there has been no change in such Trust Financials
since their date and the Trust is not aware of any errors or omissions therein;
(7) No Change in Business. There has been no change in the business,
operations, financial condition, properties or assets of the applicable Seller
since (i) in the case of Cendant Mortgage, the date of its financial statements
and (ii) in the case of the Trust, the date of delivery of the Trust Financials,
that would have a material adverse effect on the ability of the applicable
Seller to perform its obligations under this Agreement;
(8) No Litigation Pending. There is no action, suit, proceeding or
investigation pending or, to the best of the Seller's knowledge, threatened,
against the Seller, which, either in any one instance or in the aggregate, if
determined adversely to the Seller would adversely affect the sale of the
Mortgage Loans to the Purchaser or the execution, delivery or enforceability of
this Agreement or result in any material liability of the Seller, or draw into
question the validity of this Agreement, or have a material adverse effect on
the financial condition of the Seller;
(9) No Consent Required. No consent, approval, authorization or order of
any court or governmental agency or body is required for the execution, delivery
and performance by the Seller of or compliance by the Seller with this
Agreement, the delivery of the Mortgage Files to the Purchaser, the sale of the
Mortgage Loans to the Purchaser or the consummation of the transactions
contemplated by this Agreement or, if required, such approval has been obtained
prior to the Funding Date;
(10) Ordinary Course of Business. The consummation of the transactions
contemplated by this Agreement is in the ordinary course of business of the
Seller, and the transfer, assignment and conveyance of the Mortgage Notes and
the Mortgages by the Seller pursuant to this Agreement are not subject to the
bulk transfer or any similar statutory provisions in effect in any applicable
jurisdiction;
(11) No Broker. The Seller has not dealt with any broker or agent or anyone
else who might be entitled to a fee or commission in connection with this
transaction; and
(12) No Untrue Information. Neither this Agreement nor any statement, report
or other agreement, document or instrument furnished or to be furnished pursuant
to this Agreement contains or will contain any materially untrue statement of
fact or omits or will omit to state a fact necessary to make the statements
contained therein not misleading.
2
Section 3.02 Representations and Warranties of the Servicer.
The Servicer represents, warrants and covenants to the
Purchaser that as of the Funding Date or as of such date specifically provided
herein:
(1) Ability to Service. The Servicer is an approved seller/servicer for
FNMA and FHLMC in good standing and is a mortgagee approved by the Secretary of
Housing and Urban Development pursuant to Section 203 of the National Housing
Act, with facilities, procedures and experienced personnel necessary for the
servicing of mortgage loans of the same type as the Mortgage Loans. No event has
occurred that would make the Servicer unable to comply with FNMA or FHLMC
eligibility requirements or that would require notification to either FNMA or
FHLMC;
(2) Collection Practices. The collection practices used by the Servicer
with respect to each Mortgage Note and Mortgage have been in all respects legal,
proper and prudent in the mortgage servicing business;
(3) Due Organization. The Servicer is an entity duly organized, validly
existing and in good standing under the laws of its jurisdiction of
organization, and has all licenses necessary to carry on its business now being
conducted and is licensed, qualified and in good standing under the laws of each
state where a Mortgaged Property is located or is otherwise exempt under
applicable law from such qualification or is otherwise not required under
applicable law to effect such qualification; no demand for such qualification
has been made upon the Servicer by any state having jurisdiction and in any
event the Servicer is or will be in compliance with the laws of any such state
to the extent necessary to enforce each Mortgage Loan and service each Mortgage
Loan in accordance with the terms of this Agreement.
(4) Due Authority. Servicier has the full power and authority to execute,
deliver and perform, and to enter into and consummate, all transactions
contemplated by this Agreement. The Servicer has duly authorized the execution,
delivery and performance of this Agreement, has duly executed and delivered this
Agreement, and this Agreement, assuming due authorization, execution and
delivery by the Purchaser, constitutes a legal, valid and binding obligation of
the Servicer, enforceable against it in accordance with its terms, subject to
applicable bankruptcy, reorganization, receivership, conservatorship,
insolvency, moratorium and other laws relating to or affecting creditors' rights
generally or the rights of creditors of banks and to the general principles of
equity (whether such enforceability is considered in a proceeding in equity or
at law).
(5) No Conflict. The execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby, or the fulfillment of or
compliance with the terms and conditions of this Agreement, will not conflict
with or result in a breach of any of the terms, conditions or provisions of the
Servicer's organizational documents and bylaws or any legal restriction or any
agreement or instrument to which the Servicer is now a party or by which it is
bound, or constitute a default or result in an acceleration under any of the
foregoing, or result in the violation of any law, rule, regulation, order,
judgment or decree to which the Servicer or its property is subject, or impair
the ability of the Purchaser to realize on the Mortgage Loans;
(6) Ability to Perform. The Servicer does not believe, nor does it have any
reason or cause to believe, that it cannot perform each and every covenant
contained in this Agreement;
3
(7) No Material Default. Neither the Servicer nor any of its Affiliates is
in material default under any agreement, contract, instrument or indenture of
any nature whatsoever to which the Servicer or any of its Affiliates is a party
or by which it (or any of its assets) is bound, which default would have a
material adverse effect on the ability of the Servicer to perform under this
Agreement, nor, has any event occurred which, with notice, lapse of time or
both, would constitute a default under any such agreement, contract, instrument
or indenture and have a material adverse effect on the ability of the Servicer
to perform its obligations under this Agreement;
(8) Financial Statements. Servicer has delivered to the Purchaser financial
statements as to its fiscal year ended December 31, 1999. Except as has
previously been disclosed to the Purchaser in writing: (a) such financial
statements fairly present the results of operations and changes in financial
position for such period and the financial position at the end of such period of
Servicer and its subsidiaries; and (b) such financial statements are true,
correct and complete as of their respective dates and have been prepared in
accordance with generally accepted accounting principles consistently applied
throughout the periods involved, except as set forth in the notes thereto.
(9) No Change in Business. There has been no change in the business,
operations, financial condition, properties or assets of the Servicer since the
date of its financial statements that would have a material adverse effect on
the ability of the Servicer to perform its obligations under this Agreement;
(10) No Litigation Pending. There is no action, suit, proceeding or
investigation pending or, to the best of the Servicer's knowledge, threatened,
against the Servicer, which, either in any one instance or in the aggregate, if
determined adversely to the Servicer would adversely affect the sale of the
Mortgage Loans to the Purchaser or the execution, delivery or enforceability of
this Agreement or result in any material liability of the Servicer, or draw into
question the validity of this Agreement, or have a material adverse effect on
the financial condition of the Servicer;
(11) No Consent Required. No consent, approval, authorization or order of
any court or governmental agency or body is required for the execution, delivery
and performance by the Servicer of or compliance by the Servicer with this
Agreement or the consummation of the transactions contemplated by this Agreement
or, if required, such approval has been obtained prior to the Funding Date;
(12) Ordinary Course of Business. The consummation of the transactions
contemplated by this Agreement is in the ordinary course of business of the
Servicer;
(13) No Broker. The Servicer has not dealt with any broker or agent or
anyone else who might be entitled to a fee or commission in connection with this
transaction; and
(14) No Untrue Information. Neither this Agreement nor any statement, report
or other agreement, document or instrument furnished or to be furnished pursuant
to this Agreement contains or will contain any materially untrue statement of
fact or omits or will omit to state a fact necessary to make the statements
contained therein not misleading.
4
Section 3.03 Representations and Warranties as to Individual Mortgage Loans.
With respect to each Mortgage Loan, the applicable Seller hereby makes
the following representations and warranties to the Purchaser on which the
Purchaser specifically relies in purchasing such Mortgage Loan. Such
representations and warranties speak as of the Funding Date unless otherwise
indicated, but shall survive any subsequent transfer, assignment or conveyance
of such Mortgage Loans:
(1) Mortgage Loan as Described. Such Mortgage Loan complies with the terms
and conditions set forth herein, and all of the information set forth with
respect thereto on the Mortgage Loan Schedule is true and correct in all
material respects;
(2) Complete Mortgage Files. The instruments and documents specified in
Section 2.02 with respect to such Mortgage Loan have been delivered to the
Purchaser in compliance with the requirements of Article II. The Seller is in
possession of a Mortgage File respecting such Mortgage Loan, except for such
documents as have been previously delivered to the Purchaser;
(3) Owner of Record. The Mortgage relating to such Mortgage Loan has been
duly recorded in the appropriate recording office, and the applicable Seller or
Servicer is the owner of record of such Mortgage Loan and the indebtedness
evidenced by the related Mortgage Note;
(4) Payments Current. All payments required to be made up to and including
the Funding Date for such Mortgage Loan under the terms of the Mortgage Note
have been made, such that such Mortgage Loan is not delinquent 30 days or more
on the Funding Date, and has not been so delinquent in the twelve months prior
to the Funding Date;
(5) No Outstanding Charges. There are no delinquent taxes, insurance
premiums, assessments, including assessments payable in future installments, or
other outstanding charges affecting the Mortgaged Property related to such
Mortgage Loan;
(6) Original Terms Unmodified. The terms of the Mortgage Note and the
Mortgage related to such Mortgage Loan have not been impaired, waived, altered
or modified in any material respect, except as specifically set forth in the
related Mortgage Loan Schedule;
(7) No Defenses. The Mortgage Note and the Mortgage related to such
Mortgage Loan are not subject to any right of rescission, set-off or defense,
including the defense of usury, nor will the operation of any of the terms of
such Mortgage Note and such Mortgage, or the exercise of any right thereunder,
render such Mortgage unenforceable, in whole or in part, or subject to any right
of rescission, set-off or defense, including the defense of usury and no such
right of rescission, set-off or defense has been asserted with respect thereto;
(8) Hazard Insurance. (a) All buildings upon the Mortgaged Property related
to such Mortgage Loan are insured by an insurer acceptable to FNMA or FHLMC
against loss by fire, hazards of extended coverage and such other hazards as are
customary in the area where such Mortgaged Property is located, pursuant to
insurance policies conforming to the requirements of either Section 5.10 or
Section 5.11. All such insurance policies (collectively, the "hazard insurance
policy") contain a standard mortgagee clause naming the originator of such
Mortgage Loan, its successors and assigns, as mortgagee. Such policies are the
valid and binding obligations of the insurer, and all premiums
5
thereon due to date have been paid. The related Mortgage obligates the Mortgagor
thereunder to maintain all such insurance at such Mortgagor's cost and expense,
and on such Mortgagor's failure to do so, authorizes the holder of such Mortgage
to maintain such insurance at such Mortgagor's cost and expense and to seek
reimbursement therefor from such Mortgagor; or (b) in the case of a condominium
or PUD project that is not covered by an individual policy, the condominium or
PUD project is covered by a "master" or "blanket" policy and there exists and is
in the Servicer's Mortgage File a certificate of insurance showing that the
individual unit that secures the first mortgage or share loan is covered under
such policy. The insurance policy contains a standard mortgagee clause naming
the originator of such Mortgage Loan (and its successors and assigns), as
insured mortgagee. Such policies are the valid and binding obligations of the
insurer, and all premiums thereon have been paid. The insurance policy provides
for advance notice to the Seller or Servicer if the policy is canceled or not
renewed, or if any other change that adversely affects the Seller's interests is
made; the certificate includes the types and amounts of coverage provided,
describes any endorsements that are part of the "master" policy and would be
acceptable pursuant to the FNMA Guide;
(9) Compliance With Applicable Laws. All requirements of any federal, state
or local law (including usury, truth in lending, real estate settlement
procedures, consumer credit protection, equal credit opportunity or disclosure
laws) applicable to the origination and servicing of such Mortgage Loan have
been complied with in all material respects;
(10) No Satisfaction of Mortgage. The Mortgage related to such Mortgage Loan
has not been satisfied, canceled or subordinated, in whole or in part, or
rescinded, and the related Mortgaged Property has not been released from the
lien of such Mortgage, in whole or in part, nor has any instrument been executed
that would effect any such release, cancellation, subordination or rescission;
(11) Valid First Lien. The Mortgage related to such Mortgage Loan is a
valid, subsisting and enforceable perfected first lien on the related Mortgaged
Property, including all improvements on the related Mortgaged Property, which
Mortgaged Property is free and clear of any encumbrances and liens having
priority over the first lien of the Mortgage subject only to (a) the lien of
current real estate taxes and special assessments not yet due and payable, (b)
covenants, conditions and restrictions, rights of way, easements and other
matters of the public record as of the date of recording of such Mortgage which
are acceptable to mortgage lending institutions generally, are referred to in
the lender's title insurance policy and do not adversely affect the market value
or intended use of the related Mortgaged Property, and (c) other matters to
which like properties are commonly subject which do not individually or in the
aggregate materially interfere with the benefits of the security intended to be
provided by such Mortgage or the use, enjoyment, or market value of the related
Mortgaged Property;
(12) Validity of Documents. The Mortgage Note and the Mortgage related to
such Mortgage Loan are genuine and each is the legal, valid and binding
obligation of the maker thereof, enforceable in accordance with its terms,
except as such enforcement may be limited by bankruptcy, insolvency,
reorganization or other similar laws affecting the enforcement of creditors'
rights generally and general equitable principles (regardless whether such
enforcement is considered in a proceeding in equity or at law);
(13) Valid Execution of Documents. All parties to the Mortgage Note and the
Mortgage related to such Mortgage Loan had legal capacity to enter into such
Mortgage Loan and to execute and deliver the related Mortgage Note and the
related Mortgage and the related Mortgage Note and the related Mortgage have
been duly and properly executed by such parties;
6
(14) Full Disbursement of Proceeds. Such Mortgage Loan has closed and the
proceeds of such Mortgage Loan have been fully disbursed prior to the Funding
Date; provided that, with respect to any Mortgage Loan originated within the
previous 120 days, alterations and repairs with respect to the related Mortgaged
Property or any part thereof may have required an escrow of funds in an amount
sufficient to pay for all outstanding work within 120 days of the origination of
such Mortgage Loan, and, if so, such funds are held in escrow by the Seller, a
title company or other escrow agent;
(15) Ownership. The Mortgage Note and the Mortgage related to such Mortgage
Loan or any interest or participation therein have not been assigned, pledged or
otherwise transferred by the applicable Seller, and the Seller has good and
marketable title thereto, and the Seller is the sole owner thereof and has full
right and authority to transfer and sell such Mortgage Loan, and is transferring
such Mortgage Loan to the Purchaser free and clear of any encumbrance, equity,
lien, pledge, charge, claim or security interest;
(16) Doing Business. All parties that have had any interest in such Mortgage
Loan, whether as mortgagee, assignee, pledgee or otherwise, are (or, during the
period in which they held and disposed of such interest, were) in compliance
with any and all applicable licensing requirements of the laws of the state
wherein the related Mortgaged Property is located;
(17) Title Insurance. (a) Such Mortgage Loan is covered by an ALTA lender's
title insurance policy or short form title policy acceptable to FNMA and FHLMC
(or, in jurisdictions where ALTA policies are not generally approved for use, a
lender's title insurance policy acceptable to FNMA and FHLMC), issued by a title
insurer acceptable to FNMA and FHLMC and qualified to do business in the
jurisdiction where the related Mortgaged Property is located, insuring (subject
to the exceptions contained in clauses (12)(a) and (b) above) the Seller or
Servicier, its successors and assigns as to the first priority lien of the
related Mortgage in the original principal amount of such Mortgage Loan and in
the case of ARM Loans, against any loss by reason of the invalidity or
unenforceability of the lien resulting from the provisions of such Mortgage
providing for adjustment to the applicable Note Rate and Monthly Payment.
Additionally, such lender's title insurance policy affirmatively insures against
encroachments by or upon the related Mortgaged Property or any interest therein
or any other adverse circumstance that either is disclosed or would have been
disclosed by an accurate survey. The Seller or Servicer is the sole insured of
such lender's title insurance policy, and such lender's title insurance policy
is in full force and effect and will be in full force and effect upon the
consummation of the transactions contemplated by this Agreement and will inure
to the benefit of the Purchaser without any further act. No claims have been
made under such lender's title insurance policy, no prior holder of the related
Mortgage (including the Seller) has done, by act or omission, anything that
would impair the coverage of such lender's insurance policy, and, there is no
act, omission, condition, or information that would impair the coverage of such
lender's insurance policy; (b) The mortgage title insurance policy covering each
unit mortgage in a condominium or PUD project related to such Mortgage Loan
meets all requirements of FNMA and FHLMC;
(18) No Defaults. (a) There is no default, breach, violation or event of
acceleration existing under the Mortgage, the Mortgage Note, or any other
agreements, documents, or instruments related to such Mortgage Loan; (b) there
is no event that, with the lapse of time, the giving of notice, or both, would
constitute such a default, breach, violation or event of acceleration; (c) the
Mortgagor(s) with respect to such Mortgage Loan is (1) not in default under any
other Mortgage Loan or (2) the subject of an Insolvency Proceeding; (d) no event
of acceleration has previously occurred, and no notice of default has been sent,
with respect to such Mortgage Loan; and (e) in no event has the Seller waived
any of its rights or remedies in respect of any default, breach, violation or
event of acceleration under the
7
Mortgage, the Mortgage Note, or any other agreements, documents, or instruments
related to such Mortgage Loan;
(19) No Mechanics' Liens. There are no mechanics' or similar liens, except
such liens as are expressly insured against by a title insurance policy, or
claims that have been filed for work, labor or material (and no rights are
outstanding that under law could give rise to such lien) affecting the related
Mortgaged Property that are or may be liens prior to, or equal or coordinate
with, the lien of the related Mortgage;
(20) Location of Improvements; No Encroachments. As of the date of
origination of such Mortgage Loan, all improvements that were considered in
determining the Appraised Value of the related Mortgaged Property lay wholly
within the boundaries and building restriction lines of such Mortgaged Property,
and no improvements on adjoining properties encroach upon such Mortgaged
Property except as permitted under the terms of the FNMA Guide and the FHLMC
Selling Guide; no improvement located on or part of any Mortgaged Property is in
violation of any applicable zoning law or regulation, and all inspections,
licenses and certificates required to be made or issued with respect to all
occupied portions of such Mortgaged Property, and with respect to the use and
occupancy of the same, including certificates of occupancy, have been made or
obtained from the appropriate authorities;
(21) Origination; Payment Terms. Principal payments on such Mortgage Loan
commenced or will commence no more than 60 days after funds were disbursed in
connection with such Mortgage Loan. If the interest rate on the related Mortgage
Note is adjustable, the adjustment is based on the Index set forth on the
related Mortgage Loan Schedule. The related Mortgage Note is payable on the
first day of each month in arrears, in accordance with the payment terms
described on the related Mortgage Loan Schedule;
(22) Due On Sale. Except as noted otherwise on the Mortgage Loan Schedule,
the related Mortgage contains the usual and customary "due-on-sale" clause or
other similar provision for the acceleration of the payment of the Unpaid
Principal Balance of such Mortgage Loan if the related Mortgaged Property or any
interest therein is sold or transferred without the prior consent of the
mortgagee thereunder;
(23) Prepayment Penalty. Except as noted otherwise on the Mortgage Loan
Schedule, such Mortgage Loan is not subject to any Prepayment Penalty;
(24) Mortgaged Property Undamaged; No Condemnation. As of the Funding Date,
the related Mortgaged Property is free of material damage and waste and there is
no proceeding pending for the total or partial condemnation thereof;
(25) Customary Provisions. The related Mortgage contains customary and
enforceable provisions that render the rights and remedies of the holder thereof
adequate for the realization against the related Mortgaged Property of the
benefits of the security provided thereby, including, (a) in the case of a
Mortgage designated as a deed of trust, by trustee's sale, and (b) in the case
of a Mortgage, otherwise by judicial foreclosure;
(26) Conformance With Underwriting Standards. Such Mortgage Loan was
underwritten in accordance with underwriting standards of Cendant Mortgage;
(27) Appraisal. The Mortgage File contains an appraisal of the related
Mortgaged Property on forms
8
and with riders approved by FNMA and FHLMC, signed prior to the approval of such
Mortgage Loan application by an appraiser, duly appointed by the originator of
such Mortgage Loan, whose compensation is not affected by the approval or
disapproval of such Mortgage Loan and who met the minimum qualifications of FNMA
and FHLMC for appraisers;
(28) Deeds of Trust. If the related Mortgage constitutes a deed of trust,
then a trustee, duly qualified under applicable law to serve as such, has been
properly designated and currently so serves and is named in such Mortgage, and
no fees or expenses are or will become payable by the Purchaser to the trustee
under such deed of trust, except in connection with a trustee's sale after
default by the related Mortgagor;
(29) LTV; Primary Mortgage Insurance Policy. If such Mortgage Loan had a
Loan-to-Value Ratio of more than 80% at origination, and is not originated under
an additional collateral mortgage loan program, such Mortgage Loan is and will
be subject to a Primary Insurance Policy issued by a Qualified Mortgage Insurer,
which insures the Seller or Servicer, its successors and assigns and insureds in
the amount set forth on the Mortgage Loan Schedule. All provisions of such
Primary Insurance Policy have been and are being complied with, such policy is
in full force and effect, and all premiums due thereunder have been paid. Any
related Mortgage subject to any such Primary Insurance Policy obligates the
Mortgagor thereunder to maintain such insurance for the time period required by
law and to pay all premiums and charges in connection therewith. As of the date
of origination, the Loan-to-Value Ratio of such Mortgage Loan is as specified in
the applicable Mortgage Loan Schedule;
(30) Occupancy. As of the date of origination of such Mortgage Loan, the
related Mortgaged Property is lawfully occupied under applicable law;
(31) Supervision and Examination by a Federal or State Authority. Each
Mortgage Loan either was (a) closed in the name of the Cendant Mortgage, or (b)
closed in the name of another entity that is either a savings and loan
association, a savings bank, a commercial bank, credit union, insurance company
or an institution which is supervised and examined by a federal or state
authority, or a mortgagee approved by the Secretary of Housing and Urban
Development pursuant to Sections 203 and 211 of the National Housing Act (a "HUD
Approved Mortgagee"), and was so at the time such Mortgage Loan was originated
(Cendant Mortgage or such other entity, the "Originator") or (c) closed in the
name of a loan broker under the circumstances described in the following
sentence. If such Mortgage Loan was originated through a loan broker, such
Mortgage Loan met the Originator's underwriting criteria at the time of
origination and was originated in accordance with the Originator's policies and
procedures and the Originator acquired such Mortgage Loan from the loan broker
contemporaneously with the origination thereof. The Mortgage Loans that the
Trust is selling to Purchaser were originated by or on behalf of Cendant
Mortgage and subsequently assigned to the Trust.
(32) Adjustments. All of the terms of the related Mortgage Note pertaining
to interest rate adjustments, payment adjustments and adjustments of the
outstanding principal balance, if any, are enforceable and such adjustments will
not affect the priority of the lien of the related Mortgage; all such
adjustments on such Mortgage Loan have been made properly and in accordance with
the provisions of such Mortgage Loan;
(33) Insolvency Proceedings; Soldiers' and Sailors' Relief Act. The related
Mortgagor (1) is not the subject of any Insolvency Proceeding; and (2) has not
notified the Seller of any relief requested by or
9
allowed to such Mortgagor under the Soldiers' and Sailors' Civil Relief Act of
1940;
(34) FNMA/FHLMC Documents. Such Mortgage Loan was closed on standard FNMA or
FHLMC documents or on such documents otherwise acceptable to them.
(35) Acceptable Investment. To the best of Seller's knowledge, there is no
circumstance or condition with respect to the related Mortgage File, Mortgage,
Mortgaged Property, Mortgagor or Mortgagor's credit standing, including but not
limited to 'limited income documentation programs' whereby the lending decision
is based upon factors other than the Mortgagor's income, that can reasonably be
expected to cause private institutional investors to regard such Mortgage Loan
as an unacceptable investment, cause such Mortgage Loan to become delinquent, or
adversely affect the value or marketability of such Mortgage Loan;
Section 3.04 Repurchase.
(1) It is understood and agreed that the representations and warranties set
forth in Sections 3.01, 3.02 and 3.03 shall survive the sale of the Mortgage
Loans to the Purchaser and shall inure to the benefit of the Purchaser,
notwithstanding any restrictive or qualified endorsement on any Mortgage Note or
Assignment or the examination of any Mortgage File.
(2) Upon discovery by either of the Sellers or the Purchaser of a breach of
any of the representations and warranties contained in Sections 3.01, 3.02 or
3.03 that materially and adversely affects the value of a Mortgage Loan, the
party discovering such breach shall give prompt written notice to the other.
(3) Unless permitted a greater period of time to cure as set forth in
Section 2.04, the applicable Seller shall have a period of 60 days from the
earlier of either discovery by or receipt of written notice from the Purchaser
to the Seller of any breach of any of the representations and warranties
contained in Sections 3.01, 3.02 or 3.03 that materially and adversely affects
the value of a Mortgage Loan (a "Defective Mortgage Loan"; provided that
"Defective Mortgage Loan" shall also include any Mortgage Loan treated or
designated as such in accordance with Section 2.04) within which to correct or
cure such breach. If such breach can ultimately be cured but is not reasonably
expected to be cured within the 60-day period, then the applicable Seller shall
have such additional time, if any, as is reasonably determined by the Purchaser
to cure such breach provided that the Seller has commenced curing or correcting
such breach and is diligently pursuing same. Each Seller hereby covenants and
agrees with respect to each Mortgage Loan conveyed by it that, if any breach
relating thereto cannot be corrected or cured within the applicable cure period
or such additional time, if any, as is reasonably determined by the Purchaser,
then such Seller shall, at the direction of the Purchaser, repurchase the
Defective Mortgage Loan at the applicable Repurchase Price.
(4) Any repurchase of a Defective Mortgage Loan required hereunder shall be
accomplished by payment of the applicable Repurchase Price within 3 Business
Days of expiration of the applicable time period referred to above in paragraph
3.04(3) by wire transfer of immediately available funds directly to the
Purchaser's Account. It is understood and agreed that the obligations of a
Seller (a) set forth in this Section 3.04(4) to cure any breach of such Seller's
representations and warranties contained in Section 3.03 or to repurchase the
Defective Mortgage Loan(s) and (b) set forth in Section 9.01 to indemnify the
Purchaser in connection with any breach of a Seller's representations and
10
warranties contained in Section 3.03 shall constitute the sole remedies of the
Purchaser respecting a breach of such representations and warranties.
(5) The parties further agree that, in recognition of the Trust's rights
against Cendant Mortgage with respect to the Mortgage Loans acquired by it from
Cendant Mortgage and conveyed to the Purchaser hereunder, the Purchaser shall
have the right to cause Cendant Mortgage to repurchase directly any Defective
Mortgage Loan (other than as a result of a breach by the Trust of Section 3.03
(3) or 3.03(15) hereof, in which case the Purchaser shall have the right to
cause the Trust to repurchase directly the Defective Mortgage Loan) acquired
hereunder by the Purchaser from the Trust.
Section 3.05 Certain Covenants of each Seller and the Servicer.
Without incurring undue effort or any cost except the Seller's overhead
or employees' salaries, each Seller shall take reasonable steps to assist the
Purchaser, if the Purchaser so requests, in securitizing the Mortgage Loans and
selling undivided interests in such Mortgage Loans in a public offering or
private placement or selling participating interests in such Mortgage Loans,
which steps may include, (a) providing any information relating to the Mortgage
Loans reasonably necessary to assist in the preparation of any disclosure
documents, (b) providing information relating to delinquencies and defaults with
respect to the Servicer's servicing portfolio (or such portion thereof as is
similar to the Mortgage Loans), (c) entering into any other servicing, custodial
or other similar agreements, that are consistent with the provisions of this
Agreement, and which contain such provisions as are customary in securitizations
rated "AAA" (including a securitization involving a REMIC) (a "Securitization"),
and (d) providing as of the date of such securitization representations and
warranties as to the Seller and the Mortgage Loans, which are consistent with
the representations and warranties contained in this Agreement, but modified, if
necessary, to reflect changes since the Funding Date. In connection with such a
Securitization, the Purchaser may be required to engage a master servicer or
trustee to determine the allocation of payments to and make remittances to the
certificateholders, at the Purchaser's sole cost and expense. In the event that
a master servicer or trustee to determine the allocation of payments to and make
remittances to the certificateholders is requested by the Purchaser, the
Servicer agrees to service the Mortgage Loans in accordance with the reasonable
and customary requirements of such Securitization, which may include the
Servicer's acting as a subservicer in a master servicing arrangement. With
respect to the then owners of the Mortgage Loans, the Servicer shall thereafter
deal solely with such master servicer or trustee, as the case may be with
respect to such Mortgage Loans which are subject to the Securitization and shall
not be required to deal with any other party with respect to such Mortgage
Loans. The cost of such securitization shall be borne by the Purchaser, other
than the Seller's overhead or employees' salaries.
11
ARTICLE IV: REPRESENTATIONS AND WARRANTIES OF THE PURCHASER AND
CONDITIONS PREDCEDENT TO FUNDING
Section 4.01 Representations and Warranties.
The Purchaser represents, warrants and covenants to the Seller that as
of each Funding Date or as of such date specifically provided herein:
(1) Due Organization. The Purchaser is an entity duly organized, validly
existing and in good standing under the laws of its jurisdiction of
organization, and has all licenses necessary to carry on its business now being
conducted and is licensed, qualified and in good standing under the laws of each
state where a Mortgaged Property is located or is otherwise exempt under
applicable law from such qualification or is otherwise not required under
applicable law to effect such qualification; no demand for such qualification
has been made upon the Purchaser by any state having jurisdiction and in any
event the Purchaser is or will be in compliance with the laws of any such state
to the extent necessary to enforce each Mortgage Loan.
(2) Due Authority. The Purchaser had the full power and authority and legal
right to acquire the Mortgage Loans that it acquired. The Purchaser has the full
power and authority to hold each Mortgage Loan, to sell each Mortgage Loan and
to execute, deliver and perform, and to enter into and consummate, all
transactions contemplated by this Agreement. The Purchaser has duly authorized
the execution, delivery and performance of this Agreement, has duly executed and
delivered this Agreement, and this Agreement, assuming due authorization,
execution and delivery by the Seller, constitutes a legal, valid and binding
obligation of the Purchaser, enforceable against it in accordance with its
terms, subject to applicable bankruptcy, reorganization, receivership,
conservatorship, insolvency, moratorium and other laws relating to or affecting
creditors' rights generally or the rights of creditors of banks and to the
general principles of equity (whether such enforceability is considered in a
proceeding in equity or at law);
(3) No Conflict. None of the execution and delivery of this Agreement, the
acquisition or origination, as applicable, of the Mortgage Loans by the
Purchaser, the purchase of the Mortgage Loans, the consummation of the
transactions contemplated hereby, or the fulfillment of or compliance with the
terms and conditions of this Agreement, will conflict with or result in a breach
of any of the terms, conditions or provisions of the Purchaser's organizational
documents and bylaws or any legal restriction or any agreement or instrument to
which the Purchaser is now a party or by which it is bound, or constitute a
default or result in an acceleration under any of the foregoing, or result in
the violation of any law, rule, regulation, order, judgment or decree to which
the Purchaser or its property is subject, or impair the ability of the Purchaser
to realize on the Mortgage Loans, or impair the value of the Mortgage Loans;
(4) Ability to Perform. The Purchaser does not believe, nor does it have
any reason or cause to believe, that it cannot perform each and every covenant
contained in this Agreement;
(5) No Material Default. The Purchaser is not in material default under any
agreement, contract, instrument or indenture of any nature whatsoever to which
the Purchaser is a party or by which it (or any of its assets) is bound, which
default would have a material adverse effect on the ability of the Purchaser to
perform under this Agreement, nor, to the best of the Purchaser's knowledge, has
any event occurred which, with notice, lapse of time or both) would constitute a
default under any such agreement, contract, instrument or indenture and have a
material adverse effect on the ability of the
12
Purchaser to perform its obligations under this Agreement;
(6) No Change in Business. There has been no change in the business,
operations, financial condition, properties or assets of the Purchaser since the
date of the Purchaser's financial statements that would have a material adverse
effect on the ability of the Purchaser to perform its obligations under this
Agreement;
(7) Litigation Pending. There is no action, suit, proceeding or
investigation pending or, to the best of the Purchaser's knowledge, threatened,
against the Purchaser, which, either in any one instance or in the aggregate, if
determined adversely to the Purchaser would adversely affect the purchase of the
Mortgage Loans or the execution, delivery or enforceability of this Agreement or
result in any material liability of the Purchaser, or draw into question the
validity of this Agreement, or the Mortgage Loans or have a material adverse
effect on the financial condition of the Purchaser;
(8) Broker. The Purchaser has not dealt with any broker or agent or anyone
else who might be entitled to a fee or commission in connection with this
transaction.
(9) No Consent Required. No consent, approval, authorization or order of
any court or governmental agency or body is required for the execution, delivery
and performance by the Purchaser of or compliance by the Purchaser with this
Agreement, the purchase of the Mortgage Loans from the Seller or the
consummation of the transactions contemplated by this Agreement or, if required,
such approval has been obtained prior to the Funding Date;
(10) Ordinary Course of Business. The consummation of the transactions
contemplated by this Agreement is in the ordinary course of business of the
Purchaser; and
(11) Non-Petition Agreement. The Purchaser covenants and agrees that it
shall not, prior to the date which is one year and one day (or if longer, the
applicable preference period then in effect) after the payment in full of all
rated obligations of Xxxxxx'x Gate Residential Mortgage Trust, acquiesce,
petition or otherwise, directly or indirectly, invoke or cause Xxxxxx'x Gate
Residential Mortgage Trust to invoke the process of any governmental authority
for the purpose of commencing or sustaining a case against Xxxxxx'x Gate
Residential Mortgage Trust under any federal or state bankruptcy, insolvency or
similar law or appointing a receiver, liquidator, assignee, trustee, custodian,
sequestrator, or other similar official of Xxxxxx'x Gate Residential Mortgage
Trust. This covenant and agreement shall be binding upon the Purchaser and any
assignee or transferee of the Purchaser.
(12) No Untrue Information. Neither this Agreement nor any statement, report
or other agreement, document or instrument furnished or to be furnished pursuant
to this Agreement contains or will contain any materially untrue statement of
fact or omits or will omit to state a fact necessary to make the statements
contained therein not misleading.
(13) The Purchaser agrees that it shall not solicit any Mortgagors (in
writing or otherwise) to refinance any of the Mortgage Loans; provided that mass
advertising or mailings (such as placing advertisements on television, on radio,
in magazines or in newspapers or including messages in billing statements) that
are not exclusively directed towards the Mortgagors shall not constitute
solicitation and shall not violate this covenant.
13
Section 4.02. Conditions Precedent to Closing.
Each purchase of Mortgage Loans hereunder shall be subject to each of the
following conditions:
(a) All of the representations and warranties of Seller under the
Cendant Guide, and of Seller and Purchaser under this
Agreement shall be true and correct as of the Funding Date,
and no event shall have occurred which, with notice or the
passage of time, would constitute an Event of Default under
this Agreement or under the Cendant Guide;
(b) Purchaser shall have received, or Purchaser's attorneys shall
have received in escrow, all closing documents as specified
herein, in such forms as are agreed upon and acceptable to
Purchaser, duly executed by all signatories other than
Purchaser as required pursuant to the respective terms
thereof;
(c) All other terms and conditions of this Agreement shall have
been complied with.
Subject to the foregoing conditions, Purchaser shall pay to Seller on each
Funding Date the applicable Purchase Price as provided herein.
14
ARTICLE V: ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 5.01 Cendant Mortgage to Act as Servicer; Servicing Standards;
Additional Documents; Consent of the Purchaser.
(1) The Servicer, as independent contract servicer, shall service and
administer the Mortgage Loans and REO Property from and after each Funding Date
in accordance with the terms and provisions of the Mortgage Loans, applicable
law and the terms and provisions of this Agreement for and on behalf of, and in
the best interests of, the Purchaser (without taking into account any
relationship the Servicer may have with any Mortgagor or other Person, the
participation, if any, of the Servicer in any financing provided in connection
with the sale of any Mortgaged Property, or the Servicer's obligation to advance
any expenses or incur any costs in the performance of its duties hereunder) in
accordance with a standard that is not less than the higher of (a) the same
care, skill, prudence and diligence with which it services similar assets held
for its own or its Affiliates' account and (b) the same care, skill, prudence
and diligence with which it services similar assets for third party
institutional investors, in each case giving due consideration to customary and
usual standards of practice of prudent institutional mortgage loan servicers
utilized with respect to mortgage loans comparable to the Mortgage Loans.
Subject to the foregoing standards, in connection with such servicing and
administration, the Servicer shall seek to maximize the timely recovery of
principal and interest on the Mortgage Notes; provided that nothing contained
herein shall be construed as an express or implied guarantee by the Servicer of
the collectibility of payments on the Mortgage Loans or shall be construed as
impairing or adversely affecting any rights or benefits specifically provided by
this Agreement to the Seller, including with respect to Servicing Fees.
(2) To the extent consistent with Section 5.01(1) and further subject to
any express limitations set forth in this Agreement, the Servicer (acting alone
or, solely in the circumstances permitted hereunder, acting through a
subservicer) shall have full power and authority to do or cause to be done any
and all things that it may deem necessary or desirable in connection with such
servicing and administration, including the power and authority (a) to execute
and deliver, on behalf of the Purchaser, customary consents or waivers and other
instruments and documents (including estoppel certificates), (b) to consent to
transfers of any Mortgaged Property and assumptions of the Mortgage Notes and
related Mortgages, (c) to submit claims to collect any Insurance Proceeds and
Liquidation Proceeds, (d) to consent to the application of any Insurance
Proceeds or Condemnation Proceeds to the restoration of the applicable Mortgaged
Property or otherwise, (e) to bring an action in a court of law, including an
unlawful detainer action, to enforce rights of the Purchaser with respect to any
Mortgaged Property, (f) to execute and deliver, on behalf of the Purchaser,
documents relating to the management, operation, maintenance, repair, leasing,
marketing and sale of any Mortgaged Property or any REO Property, and (g) to
effectuate foreclosure or other conversion of the ownership of the Mortgaged
Property securing any Mortgage Loan; provided that the Servicer shall not take
any action not provided for in this Agreement that is materially inconsistent
with or materially prejudices the interest of the Purchaser in any Mortgage Loan
or under this Agreement. If reasonably requested by the Servicer, the Purchaser
shall furnish the Servicer with any powers of attorney and other documents
reasonably necessary or appropriate to enable the Servicer to service and
administer the Mortgage Loans and the REO Properties, including documents
relating to the foreclosure, receivership, management, operation, maintenance,
repair, leasing, marketing and sale (in foreclosure or otherwise) of any
Mortgaged Property or any REO Property. Nothing contained in this Agreement
shall limit the ability of the Servicer to lend money to (whether on a secured
or unsecured basis), and otherwise generally engage
15
in any kind of business or dealings with, any Mortgagor as though the Servicer
were not a party to this Agreement or to the transactions contemplated hereby.
(3) Notwithstanding anything to the contrary contained herein:
(a) the Servicer acknowledges that the Purchaser or its
designee will retain title to, and ownership of, the Mortgage Loans and the REO
Properties and that the Servicer does not hereby acquire any title to, security
interest in, or other rights of any kind in or to any Mortgage Loan or REO
Property or any portion thereof;
(b) the Servicer shall not file any lien or any other
encumbrance on, exercise any right of setoff against, or attach or assert any
claim in or on any Mortgage Loan or REO Property, unless authorized pursuant to
a judicial or administrative proceeding or a court order;
(c) the Servicer shall, in servicing the Mortgage Loans,
follow and comply with the servicing guidelines established by FNMA, provided
that the Servicer shall specifically notify the Purchaser in writing and obtain
the Purchaser's written consent prior to the Servicer taking any of the
following actions: (1) modifying, amending or waiving any of the financial terms
of, or making any other material modifications to, a Mortgage Loan, except the
Servicer may, upon the Mortgagor's request, accept a principal prepayment and
re-amortize the then remaining principal balance over the then remaining term of
the loan (resulting in a lower scheduled monthly payment but not change in the
maturity date); (2) selling any Specially Serviced Mortgage Loan or REO
Property; (3) making, with respect to any Specially Serviced Mortgage Loan or
REO Property, Servicing Advances (irrespective of whether non-recoverable);
provided that the Servicer shall not be required to so advise the Purchaser to
the extent that each related Servicing Advance as to the related Mortgaged
Property or REO Property is not in excess of $10,000; (4) forgiving principal or
interest on, or permitting to be satisfied at a discount, any Mortgage Loan; (5)
accepting substitute or additional collateral, or releasing any collateral, for
a Mortgage Loan. If the Purchaser has not approved or rejected in writing any
proposed action(s) recommended by the Servicer to be taken hereunder within 20
Business Days of the date such recommendation is made, then the Purchaser shall
be deemed to have rejected such recommended action(s) and the Servicer shall not
take any such action(s);
(d) the Servicer shall notify the Purchaser of any
modification, waiver or amendment of any term of any Mortgage Loan and the date
thereof and shall deliver to the Purchaser, for deposit in the related Mortgage
File, an original counterpart of the agreement relating to such modification,
waiver or amendment promptly following the execution thereof;
(e) the Servicer shall remain primarily liable for the
full performance of its obligations hereunder notwithstanding any appointment by
the Servicer of a subservicer or subservicers hereunder; and
(f) the Purchaser may at any time and from time to time,
in its sole discretion, upon 10 Business Days written notice to the Servicer,
terminate the Servicer's servicing obligations hereunder with respect to (1) any
REO Property or (2) any Mortgage Loan that, in accordance with the Purchaser's
internal credit classification criteria, has been classified as "doubtful" or a
"loss." Upon the effectiveness of any such termination of the Servicer's
servicing obligations with respect to any such REO Property or Mortgage Loan,
the Servicer shall deliver all agreements, documents, and instruments related
thereto to the Purchaser, in accordance with applicable law.
16
Section 5.02 Collection of Mortgage Loan Payments.
Continuously from the date hereof until the principal and interest on
all Mortgage Loans are paid in full, the Servicer will proceed diligently to
collect all payments due under each Mortgage Loan when the same shall become due
and payable and shall, to the extent such procedures shall be consistent with
this Agreement and the terms and provisions of any related Primary Insurance
Policy, follow such collection procedures as it follows with respect to mortgage
loans comparable to the Mortgage Loans, which procedures shall in any event
comply with the servicing standards set forth in Section 5.01. Furthermore, the
Servicer shall ascertain and estimate annual ground rents, taxes, assessments,
fire and hazard insurance premiums, mortgage insurance premiums, and all other
charges that, as provided in the Mortgages, will become due and payable to the
end that the installments payable by the Mortgagors will be sufficient to pay
such charges as and when they become due and payable.
Section 5.03 Collection of Mortgage Loan Payments.
The Servicer shall, within five (5) calendar days following each Record
Date, deliver to the Purchaser monthly reports (substantially in the form of
Exhibit 5.03(a) and Exhibit 5.03(b) attached hereto) with respect to all
Specially Serviced Mortgage Loans. In addition, the Servicer shall, within one
(1) Business Day following the occurrence of any foreclosure sale with respect
to any Mortgaged Property, deliver to the Purchaser a notice of foreclosure sale
substantially in the form of Exhibit 5.03(c) attached hereto.
Section 5.04 Establishment of Collection Account; Deposits in Collection
Account.
The Servicer shall segregate and hold all funds collected and received
pursuant to each Mortgage Loan separate and apart from any of its own funds and
general assets and shall establish and maintain one or more Collection Accounts,
in the form of time deposit or demand accounts constituting Eligible Accounts,
with any funds in excess of the current FDIC established insurance limits
invested in Permitted Investments. The creation of any Collection Account shall
be evidenced by a certification in the form of Exhibit 5.04-1 attached hereto,
in the case of an account established with the Servicer, or a letter agreement
in the form of Exhibit 5.04-2 attached hereto, in the case of an account held by
a depository other than the Servicer. In either case, a copy of such
certification or letter agreement shall be furnished to the Purchaser.
The Servicer shall deposit in the Collection Account on a daily basis,
within two Business Days after receipt (or as otherwise required pursuant to
this Agreement in the case of clauses (7), (8) and (9) of this Section 5.04) and
retain therein the following payments and collections received or made by it
subsequent to each Funding Date, or received by it prior to the Funding Date but
allocable to a period subsequent thereto, other than in respect of principal and
interest on the Mortgage Loans due on or before the Funding Date:
1) all payments on account of principal, including Principal Prepayments, on
the Mortgage Loans;
2) all payments on account of interest on the Mortgage Loans;
3) all Liquidation Proceeds;
4) all Insurance Proceeds, including amounts required to be deposited pursuant
to Sections 5.10 and 5.11, other than proceeds to be held in the Escrow
Account and applied to the restoration or repair of the Mortgaged
Properties or released to the applicable Mortgagors in accordance with the
17
Servicer's normal servicing procedures, the related Mortgages or applicable
law;
5) all Condemnation Proceeds affecting any Mortgaged Property which are not
released to a Mortgagor in accordance with the Servicer's normal servicing
procedures, the related Mortgage or applicable law;
6) any Monthly Advances in accordance with Section 6.03;
7) any amounts required to be deposited by the Servicer pursuant to Section
5.11 in connection with the deductible clause in any blanket hazard
insurance policy, such deposit to be made from the Servicer's own funds
without reimbursement therefor;
8) any amounts required to be deposited by the Servicer pursuant to Section
5.16(ii) in connection with any losses on Permitted Investments; and
9) any amounts required to be deposited in the Collection Account pursuant to
Sections 7.01 or 7.02 or otherwise pursuant to the terms hereof.
10) interest on the amount of any Payoff at the related Remittance Rate to the
end of the month in which prepayment of the related Mortgage Loan occurs.
The foregoing requirements for deposit in the Collection Account shall
be exclusive, it being understood and agreed that, without limiting the
generality of the foregoing, payments in the nature of late payment charges and
assumption fees, to the extent permitted by Section 7.01, need not be deposited
by the Servicer in the Collection Account and shall be retained by the Servicer
as additional compensation.
Section 5.05 Permitted Withdrawals from the Collection Account.
The Servicer may, from time to time in accordance with the provisions
hereof, withdraw amounts from the Collection Account for the following purposes
(without duplication):
1) to reimburse itself for unreimbursed Monthly Advances and Servicing
Advances (other than with respect to REO Properties) that are approved by
the Purchaser as being non-recoverable in accordance with Section 6.04;
2) to make payments to the Purchaser in the amounts, at the times and in the
manner provided for in Section 6.01;
3) to reimburse itself for Monthly Advances, the Servicer's right to reimburse
itself pursuant to this Subsection 3 being limited to amounts received on
the related Mortgage Loan which represent late payments of principal and/or
interest with respect to which any such Monthly Advance was made;
4) to reimburse itself for unreimbursed Servicing Advances (other than with
respect to REO Properties) and for unreimbursed Monthly Advances, the
Servicer's right to reimburse itself pursuant to this Subsection 4 with
respect to any Mortgage Loan being limited to related Liquidation Proceeds,
Condemnation Proceeds, Insurance Proceeds and such other amounts as may be
collected by the Servicer from the Mortgagor or otherwise relating to the
Mortgage Loan, it being understood that, in the case of such reimbursement,
the Servicer's right thereto shall be prior to the rights of the Purchaser,
except that, where a Seller or the Servicer is required to repurchase a
Mortgage Loan pursuant to Sections 2.04, 3.04 and/or 7.02, the Servicer's
right to such reimbursement shall be subsequent and subordinate to the
payment to the Purchaser of the
18
applicable Repurchase Price and all other amounts required to be paid to
the Purchaser with respect to such Mortgage Loan;
5) to pay to itself, solely out of the interest portion of the Monthly Payment
actually received with respect to a Mortgage Loan during the period ending
on the most recent Determination Date, the Servicing Fee with respect to
such Mortgage Loan;
6) to pay to itself as additional servicing compensation (a) any interest
earned on funds in the Collection Account (all such interest to be
withdrawn monthly not later than each Remittance Date) and (b) any
prepayment penalties or premiums relating to any Principal Prepayments;
provided that no such amounts shall be payable as servicing compensation to
the extent they relate to a Mortgage Loan with respect to which a default,
breach, violation, or event of acceleration exists or would exist but for
the lapse of time, the giving of notice, or both;
7) to pay to itself with respect to each Mortgage Loan that has been
repurchased pursuant to Sections 2.04, 3.04 and/or 7.02 all amounts
received thereon and not distributed as of the date on which the related
Repurchase Price is determined (except to the extent that such amounts
constitute part of the Repurchase Price to be remitted to the Purchaser);
8) to remove any amounts deposited into the Collection Account in error; and
9) to clear and terminate the Collection Account upon the termination of this
Agreement, with any funds contained therein to be distributed in accordance
with the terms of this Agreement.
10) The Servicer shall keep and maintain a separate, detailed accounting, on a
Mortgage Loan-by-Mortgage Loan basis, for the purpose of justifying any
withdrawal from the Collection Account pursuant to this Section.
Section 5.06 Establishment of Escrow Accounts; Deposits in Escrow.
The Servicer shall segregate and hold all funds collected and received
pursuant to each Mortgage Loan which constitute Escrow Payments separate and
apart from any of its own funds and general assets and shall establish and
maintain one or more Escrow Accounts, in the form of time deposit or demand
accounts. The creation of any Escrow Account shall be evidenced by a
certification in the form shown on Exhibit 5.06-1 attached hereto, in the case
of an account established with the Servicer, or a letter agreement in the form
shown on Exhibit 5.06-2 attached hereto, in the case of an account held by a
depository other than the Servicer, such depository having been consented to by
the Purchaser. In either case, a copy of such certification or letter agreement
shall be furnished to the Purchaser.
The Servicer shall deposit in each Escrow Account on a daily basis, and
retain therein, (i) all Escrow Payments collected on account of the related
Mortgage Loans for the purpose of effecting timely payment of any such items as
required under the terms of this Agreement, and (ii) all Insurance Proceeds
which are to be applied to the restoration or repair of any Mortgaged Property.
The Servicer shall make withdrawals therefrom only to effect such payments as
are required under Sections 5.07 and/or 5.08. The Servicer shall be entitled to
retain any interest paid on funds deposited in the Escrow Account by the
depository institution other than interest on escrowed funds required by law to
be paid to the Mortgagor and, to the extent required by law, the Servicer shall
pay interest on escrowed funds to the Mortgagor notwithstanding that the Escrow
Account is non-interest bearing or that interest paid thereon is insufficient
for such purposes, without any right of reimbursement therefor. The Servicer
shall be responsible for ensuring that the administrator of the Escrow Account
complies with all applicable laws, and shall indemnify and hold the Purchaser
harmless with respect to the administration of such Accounts.
19
Section 5.07 Permitted Withdrawals From Escrow Accounts.
Withdrawals from any Escrow Account may be made by the Servicer only
(i) to effect timely payments of ground rents, taxes, assessments, water rates,
hazard insurance premiums, Primary Insurance Policy premiums, if applicable, and
comparable items constituting Escrow Payments for the related Mortgage, (ii) to
reimburse the Servicer for any Servicing Advance made by the Servicer with
respect to a related Mortgage Loan but only from amounts received on the related
Mortgage Loan that represent late payments or collections of Escrow Payments
thereunder, (iii) to refund to the Mortgagor any funds as may be determined to
be overages, (iv) if permitted by applicable law, for transfer to the Collection
Account in accordance with the terms of this Agreement, (v) for application to
restoration or repair of the Mortgaged Property in accordance with the terms of
the related Mortgage Loan, (vi) to pay to the Servicer, or to the Mortgagor to
the extent required by law, any interest paid on the funds deposited in the
Escrow Account, (vii) to reimburse a Mortgagor in connection with the making of
the Payoff of the related Mortgage Loan or the termination of all or part of the
escrow requirement in connection with the Mortgage Loan, (viii) to remove any
amounts deposited into the Escrow Account in error; or (ix) to clear and
terminate the Escrow Account on the termination of this Agreement.
Section 5.08 Payment of Taxes, Insurance and Other Charges; Maintenance of
Primary Insurance Policies; Collections Thereunder.
With respect to each Mortgage Loan, the Servicer shall maintain
accurate records reflecting the status of ground rents, taxes, assessments,
water rates and other charges which are or may become a lien upon the Mortgaged
Property and the status of Primary Insurance Policy premiums and fire and hazard
insurance coverage and shall obtain, from time to time, all bills for the
payment of such charges, including renewal premiums, and shall effect payment
thereof prior to the applicable penalty or termination date and at a time
appropriate for securing maximum discounts allowable, employing for such purpose
deposits of the Mortgagor in the Escrow Account which shall have been estimated
and accumulated by the Servicer in amounts sufficient for such purposes, as
allowed under the terms of the Mortgage and applicable law. If a Mortgage does
not provide for Escrow Payments, then the Servicer shall require that any such
payments be made by the Mortgagor at the time they first become due. The
Servicer assumes full responsibility for the timely payment of all such bills
and shall effect timely payments of all such bills irrespective of the
Mortgagor's faithful performance in the payment of same or the making of the
Escrow Payments and shall make advances from its own funds to effect such
payments but shall be entitled to reimbursement thereof in accordance with the
terms of this Agreement.
The Servicer shall maintain in full force and effect a Primary
Insurance Policy, conforming in all respects to the description set forth in
Section 3.03(29), issued by an insurer described in that Section, with respect
to each Mortgage Loan for which such coverage is required. Such coverage will be
maintained until the Loan-to-Value Ratio of the related Mortgage Loan is reduced
to 75% or less in the case of a Mortgage Loan having a Loan-to-Value Ratio at
origination in excess of 80% or until such time, if any, as such insurance is
required to be released in accordance with the provisions of applicable law
including, but not limited to, the Homeowners Protection Act of 1998. The
Servicer shall assure that all premiums due under any Primary Insurance Policy
are paid in a timely manner, but, shall be entitled to reimbursement pursuant to
the terms of this Agreement for premiums paid by the Servicer on behalf of any
Mortgagor who is obligated to pay such premiums but fails to do so. The Servicer
shall not cancel or refuse to renew any Primary Insurance Policy in effect on
the Closing Date that is required to be kept in force under this Agreement
unless a replacement Primary Insurance Policy for such canceled or nonrenewed
policy is obtained from and maintained with an insurer that satisfies the
standards set forth in Section 3.03. The Servicer shall not take any action
which would result in
20
noncoverage under any applicable Primary Insurance Policy of any loss which, but
for the actions of the Servicer, would have been covered thereunder. In
connection with any assumption or substitution agreement entered into or to be
entered into pursuant to Section 7.01, the Servicer shall promptly notify the
insurer under the related Primary Insurance Policy, if any, of such assumption
or substitution of liability in accordance with the terms of such policy and
shall take all actions which may be required by such insurer as a condition to
the continuation of coverage under the Primary Insurance Policy. If such Primary
Insurance Policy is terminated as a result of such assumption or substitution of
liability, then the Servicer shall obtain, and, except as otherwise provided
above, maintain, a replacement Primary Insurance Policy as provided above.
In connection with its activities as servicer, the Servicer agrees to
prepare and present, on behalf of itself and the Purchaser, claims to the
insurer under any Primary Insurance Policy in a timely fashion in accordance
with the terms of such policies and, in this regard, to take such action as
shall be necessary to permit recovery under any Primary Insurance Policy
respecting a defaulted Mortgage Loan. Pursuant to Section 5.04, any amounts
collected by the Servicer under any Primary Insurance Policy shall be deposited
in the Collection Account, subject to withdrawal in accordance with Section
5.05.
Section 5.09 Transfer of Accounts.
The Servicer may transfer the Collection Account or any Escrow Account
to a different depository institution from time to time; provided that (i) no
such transfer shall be made unless all certifications or letter agreements
required under Section 5.04 have been executed and delivered by the parties
thereto; and (ii) concurrently upon any such transfer, the Servicer shall give
written notice thereof to the Purchaser. Notwithstanding anything to the
contrary contained herein, the Collection Account and each Escrow Account shall
at all times constitute Eligible Accounts.
To the extent that at any time the funds in either the Collection
Account or the Escrow Account should exceed the FDIC maximum insurance limit,
(the "Excess Amount"), the Servicer shall put such Excess Amounts into Permitted
Investments, which funds shall be brought back into the Collection Account or
Escrow Account, as the case may be, for distribution to the Purchaser on the
related Remittance Date.
Section 5.10 Maintenance of Hazard Insurance.
The Servicer shall cause to be maintained for each Mortgage Loan fire
and hazard insurance with extended coverage as is customary in the area where
the Mortgaged Property is located in an amount that is at least equal to the
lesser of (a) the maximum insurable value of the improvements securing such
Mortgage Loan and (b) the greater of (1) the Unpaid Principal Balance of such
Mortgage Loan or (2) an amount such that the proceeds thereof shall be
sufficient to prevent the Mortgagor and/or the loss payee from becoming a
co-insurer.
If any Mortgaged Property is in an area identified by the Federal
Emergency Management Agency as having special flood hazards and such flood
insurance has been made available, then the Servicer will cause to be maintained
a flood insurance policy meeting the requirements of the current guidelines of
the National Flood Insurance Program with a generally acceptable insurance
carrier, in an amount representing coverage not less than the lesser of (a) the
outstanding principal balance of the related Mortgage Loan or (b) the maximum
amount of insurance which is available under the Flood Disaster Protection Act
of 1973, as amended.
21
The Servicer shall also maintain on each REO Property fire, hazard and
liability insurance, and to the extent required and available under the Flood
Disaster Protection Act of 1973, as amended, flood insurance with extended
coverage in an amount which is at least equal to the lesser of (a) the maximum
insurable value of the improvements which are a part of such property and (b)
the outstanding principal balance of the related Mortgage Loan at the time it
became an REO Property plus accrued interest at the Note Rate and related
Servicing Advances.
All such policies shall be endorsed with standard mortgagee clauses
with loss payable to the Servicer, or upon request to the Purchaser, and shall
provide for at least 30 days prior written notice of any cancellation, reduction
in the amount of, or material change in, coverage to the Servicer. The Servicer
shall not interfere with the Mortgagor's freedom of choice in selecting either
his insurance carrier or agent, provided that the Servicer shall not accept any
such insurance policies from insurance companies unless such companies (a)
currently reflect (1) a general policyholder's rating of B+ or better and a
financial size category of III or better in Best's Key Rating Guide, or (2) a
general policyholder's rating of "A" or "A-" or better in Best's Key Rating
Guide, and (b) are licensed to do business in the state wherein the related
Mortgaged Property is located. Notwithstanding the foregoing, the Servicer may
accept a policy underwritten by Lloyd's of London or, if it is the only coverage
available, coverage under a state's Fair Access to Insurance Requirement (FAIR)
Plan. If a hazard policy becomes in danger of being terminated, or the insurer
ceases to have the ratings noted above, the Servicer shall notify the Purchaser
and the related Mortgagor, and shall use its best efforts, as permitted by
applicable law, to obtain from another qualified insurer a replacement hazard
insurance policy substantially and materially similar in all respects to the
original policy. In no event, however, shall a Mortgage Loan be without a hazard
insurance policy at any time, subject only to Section 5.11.
Pursuant to Section 5.04, any amounts collected by the Servicer under
any such policies other than amounts to be deposited in the Escrow Account and
applied to the restoration or repair of the Mortgaged Property or REO Property,
or released to the Mortgagor in accordance with the Servicer's normal servicing
procedures, shall be deposited in the Collection Account within one Business Day
after receipt, subject to withdrawal in accordance with Section 5.05. Any cost
incurred by the Servicer in maintaining any such insurance shall not, for the
purpose of calculating remittances to the Purchaser, be added to the unpaid
principal balance of the related Mortgage Loan, notwithstanding that the terms
of such Mortgage Loan so permit.
It is understood and agreed that no earthquake or other additional
insurance need be required by the Servicer of the Mortgagor or maintained on
property acquired in respect of the Mortgage Loan, other than pursuant to such
applicable laws and regulations as shall at any time be in force and as shall
require such additional insurance.
22
Section 5.11 Maintenance of Mortgage Impairment Insurance Policy.
If the Servicer obtains and maintains a blanket policy issued by an
issuer that has a Best's Key rating of A+:V insuring against hazard losses on
all of the Mortgage Loans, then, to the extent such policy provides coverage in
an amount equal to the amount required pursuant to Section 5.10 and otherwise
complies with all other requirements of Section 5.10, it shall conclusively be
deemed to have satisfied its obligations as set forth in Section 5.10, it being
understood and agreed that such policy may contain a deductible clause, in which
case the Servicer shall, if there shall not have been maintained on the related
Mortgaged Property or REO Property a policy complying with Section 5.10 and
there shall have been one or more losses which would have been covered by such
policy, deposit in the Collection Account the amount not otherwise payable under
the blanket policy because of such deductible clause; provided that the Servicer
shall not be entitled to obtain reimbursement therefor. In connection with its
activities as servicer of the Mortgage Loans, the Servicer agrees to prepare and
present, on behalf of the Purchaser, claims under any such blanket policy in a
timely fashion in accordance with the terms of such policy. Upon request of the
Purchaser, the Servicer shall cause to be delivered to the Purchaser a certified
true copy of such policy and a statement from the insurer thereunder that such
policy shall in no event be terminated or materially modified without 30 days'
prior written notice to the Purchaser.
Section 5.12 Fidelity Bond; Errors and Omissions Insurance.
The Servicer shall maintain, at its own expense, a blanket fidelity
bond and an errors and omissions insurance policy, with broad coverage with
responsible companies that would meet the requirements of FNMA and FHLMC on all
officers, employees or other Persons acting in any capacity with regard to the
Mortgage Loan to handle funds, money, documents and papers relating to the
Mortgage Loans. The Fidelity Bond and errors and omissions insurance shall be in
the form of the "Mortgage Banker's Blanket Bond" and shall protect and insure
the Servicer against losses, including losses arising by virtue of any Mortgage
Loan not being satisfied in accordance with the procedures set forth in Section
7.02 and/or losses resulting from or arising in connection with forgery, theft,
embezzlement, fraud, errors and omissions and negligent acts of or by such
Persons. Such Fidelity Bond shall also protect and insure the Servicer against
losses in connection with the failure to maintain any insurance policies
required pursuant to this Agreement and the release or satisfaction of a
Mortgage Loan without having obtained payment in full of the indebtedness
secured thereby. No provision of this Section 5.12 requiring the Fidelity Bond
and errors and omissions insurance shall diminish or relieve the Servicer from
its duties and obligations as set forth in this Agreement. The minimum coverage
under any such bond and insurance policy shall be at least equal to the
corresponding amounts required by FNMA in the FNMA Guide and by FHLMC in the
FHLMC Servicing Guide. The Servicer shall cause to be delivered to the Purchaser
on or before the Closing Date: (i) a certified true copy of the Fidelity Bond
and insurance policy; (ii) a written statement from the surety and the insurer
that such Fidelity Bond or insurance policy shall in no event be terminated or
materially modified without 30 days prior written notice to the Purchaser; and
(iii) written evidence reasonably satisfactory to the Purchaser that such
Fidelity Bond or insurance policy provides that the Purchaser is a beneficiary
or loss payee thereunder.
Section 5.13 Management of REO Properties.
If title to any Mortgaged Property is acquired in foreclosure or by deed in lieu
of foreclosure (each, an "REO Property"), the deed or certificate of sale shall
be taken in the name of the Purchaser or the
23
Person (which may be the Servicer for the benefit of the Purchaser) designated
by the Purchaser, or in the event the Purchaser or such Person is not authorized
or permitted to hold title to real property in the state where the REO Property
is located, or would be adversely affected under the "doing business" or tax
laws of such state by so holding title, the deed or certificate of sale shall be
taken in the name of such Person or Persons as shall be consistent with an
opinion of counsel obtained by the Servicer from an attorney duly licensed to
practice law in the state where the REO Property is located. The Servicer
(acting alone or through a subservicer), on behalf of the Purchaser, shall,
subject to Section 5.01(iii)(c), dispose of any REO Property pursuant to Section
5.14. Unless an appraisal prepared by an MAI Appraiser who is Independent in
accordance with the provisions of 12 C.F.R. 225.65 shall have been obtained in
connection with the acquisition of such REO Property, promptly following any
acquisition by the Purchaser (through the Servicer) of an REO Property, the
Servicer shall obtain a narrative appraisal thereof (at the expense of the
Purchaser) in order to determine the fair market value of such REO Property. The
Servicer shall promptly notify the Purchaser of the results of such appraisal.
The Servicer shall also cause each REO Property to be inspected promptly upon
the acquisition of title thereto and shall cause each REO Property to be
inspected at least annually thereafter, and Servicer shall be entitled to be
reimbursed for expenses in connection therewith in accordance with this
Agreement. The Servicer shall make or cause to be made a written report of each
such inspection. Such reports shall be retained in the Servicer's Mortgage File
and copies thereof shall be forwarded by the Servicer to the Purchaser. The
Servicer shall also furnish to the Purchaser the applicable reports required
under Section 8.01.
Notwithstanding anything to the contrary contained herein, if a REMIC election
has been or is to be made with respect to the arrangement under which the
Mortgage Loans and the REO Properties are held, then the Servicer shall manage,
conserve, protect and operate each REO Property in a manner that does not cause
such REO Property to fail to qualify as "foreclosure property" within the
meaning of Section 86OG(a)(8) of the Code or result in the receipt by such REMIC
of any "income from non-permitted assets" within the meaning of Section
86OF(a)(2)(B) or any "net income from foreclosure property" within the meaning
of Section 86OG(c)(2) of the Code (or comparable provisions of any successor or
similar legislation).
The Servicer shall deposit and hold all revenues and funds collected and
received in connection with the operation of each REO Property in the Collection
Account, and the Servicer shall account separately for revenues and funds
received or expended with respect to each REO Property.
The Servicer shall have full power and authority, subject only to the specific
requirements and prohibitions of this Agreement (and, in particular, Section
5.01(iii)(c)), to do any and all things in connection with any REO Property as
are consistent with the servicing standards set forth in Section 5.01. In
connection therewith, the Servicer shall deposit or cause to be deposited on a
daily basis in the Collection Account all revenues and collections received or
collected by it with respect to each REO Property, including all proceeds of any
REO Disposition. Subject to Section 5.15(iv), the Servicer shall withdraw
(without duplication) from the Collection Account, but solely from the revenues
and collections received or collected by it with respect to a specific REO
Property, such funds necessary for the proper operation, management and
maintenance of such REO Property, including the following:
(1) all insurance premiums due and payable in respect of such REO Property;
(2) all real estate taxes and assessments in respect of such REO Property that
may result in the imposition of a lien thereon;
(3) all customary and reasonable costs and expenses necessary to maintain,
repair, appraise, evaluate, manage or operate such REO Property (including the
customary and reasonable costs incurred by any
24
"managing agent" retained by the Servicer in connection with the maintenance,
management or operation of such REO Property);
(4) all reasonable costs and expenses of restoration improvements, deferred
maintenance and tenant improvements; and
(5) all other reasonable costs and expenses, including reasonable attorneys'
fees, that the Servicer may suffer or incur in connection with its performance
of its obligations under this Section (other than costs and expenses that the
Servicer is expressly obligated to bear pursuant to this Agreement).
To the extent that amounts on deposit in the Collection Account are insufficient
for the purposes set forth in clauses (a) through (e) above, the Servicer shall,
subject to Section 6.04, advance the amount of funds required to cover the
shortfall with respect thereto. The Servicer shall promptly notify the Purchaser
in writing of any failure by the Servicer to make a Servicing Advance of the
type specified in clauses (a) or (b) above (irrespective of whether such
Servicing Advance is claimed to be non-recoverable by the Servicer pursuant to
Section 6.04).
Following the consummation of an REO Disposition, the Servicer shall remit to
the Purchaser, in accordance with Section 6.01, any proceeds from such REO
Disposition in the Collection Account following the payment of all expenses and
Servicing Advances relating to the subject REO Property.
Section 5.14 Sale of Specially Serviced Mortgage Loans and REO Properties.
Subject to Section 5.01 (and, specifically, Section 5.01(iii)(c)) and Section
5.15, the Servicer shall offer to sell any REO Property no later than the time
determined by the Servicer to be sufficient to result in the sale of such REO
Property on or prior to the purchase date specified in Section 5.15(iii). In
accordance with the servicing standards set forth in Section 5.01, the Servicer
shall solicit bids and offers from Persons for the purchase of any Specially
Serviced Mortgage Loan or REO Property and, upon receipt thereof, promptly (but
in any event within 3 Business Days) present such bids and offers to the
Purchaser. The Servicer shall not accept any bid or offer for any Specially
Serviced Mortgage Loan or REO Property except in compliance with Section
5.01(iii)(c). The Purchaser may reject any bid or offer if the Purchaser
determines the rejection of such bid or offer would be in the best interests of
the Purchaser. If the Purchaser rejects any bid or offer, the Servicer shall, if
appropriate, seek an extension of the 2 year period referred to in Section 5.15.
Subject to Section 5.01 (and, specifically, Section 5.01(iii)(c)) and Section
5.15, the Servicer shall act on behalf of the Purchaser in negotiating and
taking any other action necessary or appropriate in connection with the sale of
any Specially Serviced Mortgage Loan or REO Property, including the collection
of all amounts payable in connection therewith. The terms of sale of any
Specially Serviced Mortgage Loan or REO Property shall be in the sole discretion
of the Purchaser. Any sale of a Specially Serviced Mortgage Loan or any REO
Disposition shall be without recourse to, or representation or warranty by, the
Purchaser or the Servicer, and, if consummated in accordance with the terms of
this Agreement, then the Servicer shall have no liability to the Purchaser with
respect to the purchase price therefor accepted by the Purchaser. The proceeds
of any sale after deduction of the expenses of such sale incurred in connection
therewith shall be promptly deposited in (a) if such sale is an REO Disposition,
in the Collection Account in accordance with Section 5.13 and (b) in any other
circumstance, the Collection Account in accordance with Section 5.04.
Section 5.15 Realization Upon Specially Serviced Mortgage Loans and REO
Properties.
Subject to Section 5.01(iii)(c), the Servicer shall foreclose upon or otherwise
comparably convert the
25
ownership of properties securing such of the Specially Serviced Mortgage Loans
as come into and continue in default and as to which (a) in the reasonable
judgment of the Servicer, no satisfactory arrangements can, in accordance with
prudent lending practices, be made for collection of delinquent payments
pursuant to Section 5.01 and (b) such foreclosure or other conversion is
otherwise in accordance with Section 5.01. The Servicer shall not be required to
expend its own funds in connection with any foreclosure or towards the
restoration, repair, protection or maintenance of any property unless it shall
determine that such expenses will be recoverable to it as Servicing Advances
either through Liquidation Proceeds or through Insurance Proceeds (in accordance
with Section 5.05) or from any other source relating to the Specially Serviced
Mortgage Loan. The Servicer shall be required to advance funds for all other
costs and expenses incurred by it in any such foreclosure proceedings; provided
that it shall be entitled to reimbursement thereof from the proceeds of
liquidation of the related Mortgaged Property, as contemplated by Section 5.05.
Upon any Mortgaged Property becoming an REO Property, the Servicer shall
promptly notify the Purchaser thereof, specifying the date on which such
Mortgaged Property became an REO Property. Pursuant to its efforts to sell such
REO Property, the Servicer shall, either itself or through an agent selected by
it, protect and conserve such REO Property in accordance with the servicing
standards set forth in Section 5.01 and may, subject to Section 5.01(iii)(c) and
incident to its conservation and protection of the interests of the Purchaser,
rent the same, or any part thereof, for the period to the sale of such REO
Property.
Notwithstanding anything to the contrary contained herein, the Purchaser shall
not, and the Servicer shall not on the Purchaser's behalf, acquire any real
property (or personal property incident to such real property) except in
connection with a default or a default that is imminent on a Mortgage Loan. If
the Purchaser acquires any real property (or personal property incident to such
real property) in connection with such a default, then such property shall be
disposed of by the Servicer in accordance with this Section and Section 5.14 as
soon as possible but in no event later than 2 years after its acquisition by the
Servicer on behalf of the Purchaser, unless the Servicer obtains, at the expense
of the Purchaser, in a timely fashion an extension from the Internal Revenue
Service for an additional specified period.
Any recommendation of the Servicer to foreclose on a defaulted Mortgage Loan
shall be subject to a determination by the Servicer that the proceeds of such
foreclosure would exceed the costs and expenses of bringing such a proceeding.
The income earned from the management of any REO Property, net of reimbursement
to the Servicer for Servicing Advances and fees for work-out compensation in
accordance with the FHLMC Servicing Guide, incurred with respect to such REO
Property under Section 5.13, shall be applied to the payment of the costs and
expenses set forth in Section 5.13(iv), with any remaining amounts to be
promptly deposited in the Collection Account in accordance with Section 5.13.
If, in the exercise of its servicing obligations with respect to any Mortgaged
Property hereunder, the Servicer deems it is necessary or advisable to obtain an
Environmental Assessment, then the Servicer shall so obtain an Environmental
Assessment, it being understood that all reasonable costs and expenses incurred
by the Servicer in connection with any such Environmental Assessment (including
the cost thereof) shall be deemed to be Servicing Advances recoverable by the
Servicer pursuant to Section 5.13(iv). Such Environmental Assessment shall (a)
assess whether (1) such Mortgaged Property is in material violation of
applicable Environmental Laws or (2) after consultation with an environmental
expert, taking the actions necessary to comply with applicable Environmental
Laws is reasonably likely to produce a greater recovery on a net present value
basis than not taking such actions, and (b) identify whether (1) any
circumstances are present at such Mortgaged Property relating
26
to the use, management or disposal of any hazardous materials for which
investigation, testing, monitoring, containment, clean-up or remediation could
be required under any federal, state or local law or regulation, or (2) if such
circumstances exist, after consultation with an environmental expert, taking
such actions is reasonably likely to produce a greater recovery on a present
value basis than not taking such actions. (The conditions described in the
immediately preceding clauses (a) and (b) shall be referred to herein as
"Environmental Conditions Precedent to Foreclosure.") If any such Environmental
Assessment so warrants, the Servicer is hereby authorized to and shall perform
such additional environmental testing as it deems necessary and prudent to
establish the satisfaction of the foregoing Environmental Conditions Precedent
to Foreclosure or to proceed in accordance with Subsection (vi) or (vii), as the
case may be, below (such additional testing thereafter being included in the
term "Environmental Assessment").
If an Environmental Assessment deemed necessary or advisable by the Servicer in
accordance with Subsection 5 of this Section 5.15 establishes that any of the
Environmental Conditions Precedent to Foreclosure is not satisfied with respect
to any Mortgaged Property, but the Servicer in good faith reasonably believes
that it is in the best economic interest of the Purchaser to proceed against
such Mortgaged Property and, if title thereto is acquired, to take such
remedial, corrective or other action with respect to the unsatisfied condition
or conditions as may be prescribed by applicable law to satisfy such condition
or conditions, then the Servicer shall so notify the Purchaser. If, pursuant to
Section 5.01(iii)(c), the Purchaser has notified the Servicer in writing to
proceed against such Mortgaged Property, then the Servicer shall so proceed. The
cost of any remedial, corrective or other action contemplated by the preceding
sentence in respect of any of the Environmental Conditions Precedent to
Foreclosure that is not satisfied shall not be an expense of the Servicer and
the Servicer shall not be required to expend or risk its own funds or otherwise
incur any financial liability in connection with any such action.
If an Environmental Assessment deemed necessary or advisable by the Servicer in
accordance with Subsection 5 of this Section 5.15 establishes that any of the
Environmental Conditions Precedent to Foreclosure is not satisfied with respect
to any Mortgaged Property and, in accordance with Section 5.01(iii)(c), the
Purchaser elects or is deemed to have elected not to proceed against such
Mortgaged Property, then the Servicer shall, subject to Section 5.01(iii)(c),
take such action as it deems to be in the best economic interest of the
Purchaser (other than proceeding against the Mortgaged Property or directly or
indirectly becoming the owner or operator thereof) as determined in accordance
with the servicing standard set forth in Section 5.01 and is hereby authorized
at such time as it deems appropriate to release such Mortgaged Property from the
lien of the related Mortgage.
Prior to the Servicer taking any action with respect to the use, management or
disposal of any hazardous materials on any Mortgaged Property, the Servicer
shall request the approval of the Purchaser in accordance with Section
5.01(iii)(c) and, if such action is approved by the Purchaser, (a) keep the
Purchaser apprised of the progress of such action; and (b) take such action in
compliance with all applicable Environmental Laws.
Section 5.16 Investment of Funds in the Collection Account.
The Servicer may direct any depository institution which holds a Collection
Account to invest the funds in the Collection Account in one or more Permitted
Investments bearing interest. All such Permitted Investments shall be held to
maturity, unless payable on demand. In the event amounts on deposit in the
Collection Account are at any time invested in a Permitted Investment payable on
demand, the Servicer shall:
27
(a) consistent with any notice required to be given thereunder, demand
that payment thereon be made on the last day such Permitted Investment
may otherwise mature hereunder in an amount equal to the lesser of (1)
all amounts then payable thereunder and (2) the amount required to be
withdrawn on such date; and
(b) demand payment of all amounts due thereunder promptly upon
determination by the Servicer or notice from the Purchaser that such
Permitted Investment would not constitute a Permitted Investment in
respect of funds thereafter on deposit in the Collection Account.
All income and gain realized from investment of funds deposited in the
Collection Account shall be for the benefit of the Servicer and shall be subject
to its withdrawal in accordance with Section 5.05. The Servicer shall deposit in
the Collection Account the amount of any loss incurred in respect of any
Permitted Investment immediately upon realization of such loss.
Except as otherwise expressly provided in this Agreement, if any default occurs
in the making of a payment due under any Permitted Investment, or if a default
occurs in any other performance required under any Permitted Investment, the
Purchaser may elect to take such action, or instruct the Servicer to take such
action, as may be appropriate to enforce such payment or performance, including
the institution and prosecution of appropriate proceedings, at the expense of
the Servicer.
28
ARTICLE V: REPORTS; REMITTANCES; ADVANCES
Section 6.01 Remittances.
(1) On each Remittance Date, the Servicer shall remit to the Purchaser (a)
all amounts credited to the Collection Account as of the close of business on
the preceding Determination Date (including (1) the amount of any Payoff,
together with interest thereon at the related Remittance Rate to the end of the
month in which prepayment of the related Mortgage Loan occurs and (2) all
proceeds of any REO Disposition net of amounts payable to the Servicer pursuant
to Section 5.13), net of charges against or withdrawals from the Collection
Account in accordance with Section 5.05, which charges against or withdrawals
from the Collection Account the Servicer shall make solely on such Remittance
Date, plus (b) all Monthly Advances, if any, which the Servicer is obligated to
remit pursuant to Section 6.03; provided that the Servicer shall not be required
to remit, until the next following Remittance Date, any amounts attributable to
Monthly Payments collected but due on a Due Date or Dates subsequent to the
preceding Determination Date.
(2) All remittances made to the Purchaser on each Remittance Date will be
made to the Purchaser or Purchaser's designee by wire transfer of immediately
available funds accordingly to the instructions that will be provided by
Purchaser to the Servicer.
(3) With respect to any remittance received by the Purchaser after the
Business Day on which such payment was due, the Servicer shall pay to the
Purchaser interest on any such late payment at an annual rate equal to the rate
of interest as is publicly announced from time to time by Citibank, N.A., New
York, New York, as its prime lending rate, adjusted as of the date of each
change, plus two percentage points, but in no event greater than the maximum
amount permitted by applicable law. Such interest shall be paid by the Servicer
to the Purchaser on the date such late payment is made and shall cover the
period commencing with the Business Day on which such payment was due and ending
with the Business Day on which such payment is made, both inclusive. Such
interest shall be remitted along with such late payment. Neither the payment by
the Servicer nor the acceptance by the Purchaser of any such interest shall be
deemed an extension of time for payment or a waiver by the Purchaser of any
Event of Default.
Section 6.02 Reporting.
On or before the 5th calendar day (or, if such day is not a Business
Day, on the immediately succeeding Business Day) of each month during the term
hereof, the Servicer shall deliver to the Purchaser monthly accounting reports
in the form of Exhibits 6.02(a) through 6.02(g) attached hereto with respect to
the most recently ended Monthly Period. Such monthly accounting reports shall
include information as to the aggregate Unpaid Principal Balance of all Mortgage
Loans, the scheduled amortization of all Mortgage Loans, any delinquencies and
the amount of any Principal Prepayments as of the most recently ended Record
Date. The Purchaser may assess penalty fees in accordance with FNMA guidelines
for late or incorrect reporting.
The Servicer shall provide the Purchaser with such information
concerning the Mortgage Loans as is necessary for the Purchaser to prepare its
federal income tax return as the Purchaser may reasonably request from time to
time.
29
Section 6.03 Monthly Advances by the Servicer.
(1) Not later than the close of business on the Business Day immediately
preceding each Remittance Date, the Servicer shall deposit in the Collection
Account an amount equal to all Monthly Payments not previously advanced by the
Servicer (with interest adjusted to the Remittance Rate) that were due on a
Mortgage Loan and delinquent at the close of business on the related
Determination Date. The Servicer may reduce the total amount to be deposited in
the Collection Account as required by the foregoing sentence by the amount of
funds in the Collection Account which represent Prepaid Monthly Payments.
(2) The Servicer's obligations to make Monthly Advances as to any Mortgage
Loan will continue through the last Monthly Payment due prior to the payment in
full of the Mortgage Loan, or through the Remittance Date prior to the
Remittance Date for the remittance of all Liquidation Proceeds and other
payments or recoveries (including Insurance Proceeds or Condemnation Proceeds)
with respect to the Mortgage Loan; provided that such obligation shall cease if
the Servicer furnishes to the Purchaser an Officers' Certificate evidencing the
determination by the Servicer in accordance with Section 6.04 that advances with
respect to such Mortgage Loan are non-recoverable.
Section 6.04 Non-recoverable Advances.
The determination by the Servicer that any Monthly Advance or Servicing
Advance, if made, would constitute a non-recoverable advance shall be evidenced
by an Officers' Certificate delivered to the Purchaser detailing the reasons for
such determination, with copies of a relevant appraisal by an MAI Appraiser who
is Independent and, if such reports are to be used to determine that any Monthly
Advance or Servicing Advance would be a non-recoverable advance, all engineers'
reports, environmental reports or other information relevant thereto that
support such determination. Such Officers' Certificate shall set forth the
Servicer's considerations in reaching its conclusion that such advance is
non-recoverable, and such conclusion shall be based upon, in addition to the
above-described appraisal and reports, income and expense statements, rent
rolls, occupancy, property inspections, servicer inquiries and other information
of similar nature that support the Servicer's conclusion that such advance is
non-recoverable. The Purchaser shall have a period of 45 days following the
later of (i) the receipt by the Purchaser of such Officers' Certificate and all
documentation supplied by the Servicer relating thereto and (ii) the receipt by
the Purchaser of such other related documentation or information as shall have
been reasonably requested by the Purchaser within 30 days following the delivery
of such Officers' Certificate, to approve, by the exercise by the Purchaser of
its reasonable credit judgment, the subject Monthly Advance or Servicing Advance
as a non-recoverable advance. Only if the Purchaser has so approved any Monthly
Advance or Servicing Advance as non-recoverable shall the Servicer be entitled
to reimbursement for such non-recoverable advance (solely to the extent made) as
provided in Section 5.05 or Section 5.13, as applicable. The Servicer shall also
deliver to the Purchaser from time to time upon request copies of any appraisals
and other reports or information of the type described in this Section 6.04 that
it possesses relative to any Mortgaged Property.
Section 6.05 Itemization of Servicing Advances.
The Servicer shall provide the Purchaser with an itemization of all Servicing
Advances incurred or made by the Servicer hereunder not less than quarterly and
at such other times as the Purchaser may from time to time reasonably request.
30
ARTICLE VI: GENERAL SERVICING PROCEDURE
Section 7.01 Enforcement of Due-on-Sale Clauses, Assumption Agreements.
(1) The Servicer will, to the extent it has knowledge of any conveyance or
prospective conveyance by any Mortgagor of the Mortgaged Property (whether by
absolute conveyance or by contract of sale, and whether or not the Mortgagor
remains or is to remain liable under the Mortgage Note and/or the Mortgage),
exercise its rights to accelerate the maturity of such Mortgage Loan under any
"due-on-sale" clause applicable thereto; provided that the Servicer shall not
exercise any such rights if prohibited by law from doing so or if the exercise
of such rights would impair or threaten to impair any recovery under the related
Primary Insurance Policy, if any.
(2) If the Servicer is prohibited from enforcing such "due-on-sale" clause,
then the Servicer will enter into an assumption agreement with the Person to
whom the Mortgaged Property has been conveyed or is proposed to be conveyed,
pursuant to which such Person becomes liable under the Mortgage Note and, to the
extent permitted by applicable state law, the Mortgagor remains liable thereon.
(For purposes of this Section 7.01, the term "assumption" is deemed to also
include a sale of the Mortgaged Property subject to the Mortgage that is not
accompanied by an assumption or substitution of liability agreement.) If any
Mortgage Loan is to be assumed, then the Servicer shall inquire into the
creditworthiness of the proposed transferee and shall use the same underwriting
criteria for approving the credit of the proposed transferee that are used with
respect to underwriting mortgage loans of the same type as the Mortgage Loans.
Where an assumption is allowed, the Servicer, with the prior written consent of
the primary mortgage insurer, if any, and subject to the conditions of Section
7.01(iii), shall, and is hereby authorized to, enter into a substitution of
liability agreement with the Person to whom the Mortgaged Property is proposed
to be conveyed pursuant to which the original mortgagor is released from
liability and such Person is substituted as mortgagor and becomes liable under
the related Mortgage Note. Any such substitution of liability agreement shall be
in lieu of an assumption agreement. In no event shall the Note Rate, the amount
of the Monthly Payment or the final maturity date be changed. The Servicer shall
notify the Purchaser that any such substitution of liability or assumption
agreement has been completed by forwarding to the Purchaser the original of any
such substitution of liability or assumption agreement, which document shall be
added to the related Purchaser's Mortgage File and shall, for all purposes, be
considered a part of such Purchaser's Mortgage File to the same extent as all
other documents and instruments constituting a part thereof. Any fee collected
by the Servicer for entering into an assumption or substitution of liability
agreement shall be retained by the Servicer as additional compensation for
servicing the Mortgage Loans.
(3) If the credit of the proposed transferee does not meet such
underwriting criteria, then the Servicer shall, to the extent permitted by the
Mortgage or the Mortgage Note and by applicable law, accelerate the maturity of
the Mortgage Loan.
31
Section 7.02 Satisfaction of Mortgages and Release of Mortgage Files.
Upon the payment in full of any Mortgage Loan, the Servicer will
immediately notify the Purchaser by a certification of a Servicing Officer,
which certification shall include a statement to the effect that all amounts
received or to be received in connection with such payment which are required to
be deposited in the Collection Account pursuant to Section 5.04 have been or
will be so deposited and shall request delivery to it of the Purchaser's
Mortgage File held by the Purchaser or its designee. Upon receipt of such
certification and request, the Purchaser shall promptly release the related
mortgage documents to the Servicer and the Servicer shall promptly prepare and
process any satisfaction or release. No expense incurred in connection with any
instrument of satisfaction or deed of reconveyance shall be chargeable to the
Collection Account.
If the Servicer satisfies or releases a Mortgage without having
obtained payment in full of the indebtedness secured by the Mortgage, or should
it otherwise take such action which results in a reduction of the coverage under
the Primary Insurance Policy, if any, then the Servicer shall promptly give
written notice thereof to the Purchaser, and, within 10 Business Days following
written demand therefor from the Purchaser to the Servicer, the Servicer shall
repurchase the related Mortgage Loan by paying to the Purchaser the Repurchase
Price therefor by wire transfer of immediately available funds directly to the
Purchaser's Account.
From time to time and as appropriate for the servicing or foreclosure
of the Mortgage Loan, including for this purpose collection under any Primary
Insurance Policy, the Purchaser or Purchaser's designee shall, upon request of
the Servicer and delivery to the Purchaser of a servicing receipt signed by a
Servicing Officer, release the Purchaser's Mortgage File held by the Purchaser
to the Servicer. Such servicing receipt shall obligate the Servicer to return
the related Mortgage documents to the Purchaser when the need therefor by the
Servicer no longer exists, unless the Mortgage Loan has been liquidated and the
Liquidation Proceeds relating to the Mortgage Loan have been deposited in the
Collection Account or the Purchaser's Mortgage File or such document has been
delivered to an attorney, or to a public trustee or other public official as
required by law, for purposes of initiating or pursuing legal action or other
proceedings for the foreclosure of the Mortgaged Property either judicially or
nonjudicially, and the Servicer has delivered to the Purchaser a certificate of
a Servicing Officer certifying as to the name and address of the Person to which
such Purchaser's Mortgage File or such document was delivered and the purpose or
purposes of such delivery. Upon receipt of a certificate of a Servicing Officer
stating that such Mortgage Loan was liquidated and the Liquidation Proceeds were
deposited in the Collection Account, the servicing receipt shall be released by
the Purchaser to the Servicer.
32
Section 7.03 Servicing Compensation.
As compensation for its services hereunder, the Servicer shall be
entitled to retain from interest payments actually collected on the Mortgage
Loans the amounts provided for as the Servicing Fee. The Servicing Fee in
respect of a Mortgage Loan for a particular month shall become payable only upon
the receipt by the Servicer from the Mortgagor of the full Monthly Payment in
respect of such Mortgage Loan. Additional servicing compensation in the form of
assumption fees, as provided in Section 7.01, late payment charges and other
servicer compensation for modifications, short sales, and other services not to
exceed those fees described in the FHLMC Servicing Guide shall be retained by
the Servicer to the extent not required to be deposited in the Collection
Account. The Servicer shall be required to pay all expenses incurred by it in
connection with its servicing activities hereunder and shall not be entitled to
reimbursement therefor except as specifically provided for herein.
Section 7.04 Annual Statement as to Compliance.
The Servicer will deliver to the Purchaser on or before March 31 of
each year, beginning with March 31, 2002, an Officers' Certificate stating that
(i) a review of the activities of the Servicer during the preceding calendar
year and of performance under this Agreement has been made under such officers'
supervision, (ii) the Servicer has fully complied with the provisions of this
Agreement and (iii) to the best of such officers' knowledge, based on such
review, the Servicer has fulfilled all of its obligations under this Agreement
throughout such year, or, if there has been a default in the fulfillment of any
such obligation, specifying each such default known to such officers and the
nature and status thereof.
Section 7.05 Annual Independent Certified Public Accountants' Servicing Report.
On or before March 31 of each year beginning March 31, 2002, the
Servicer at its expense shall cause a firm of independent public accountants
which is a member of the American Institute of Certified Public Accountants to
furnish a statement to the Purchaser to the effect that such firm has examined
certain documents and records relating to the servicing of the mortgage loans
generally that include a sampling of the Mortgage Loans, the provisions of
Article VI have been complied with and, on the basis of such an examination
conducted substantially in accordance with the Uniform Single Attestation
Program for Mortgage Bankers, such servicing has been conducted in compliance
with this Agreement, except for (i) such exceptions as such firm shall believe
to be immaterial, and (ii) such other exceptions as shall be set forth in such
statement.
Section 7.06 Purchaser's Right to Examine Servicer Records.
The Purchaser shall have the right to examine and audit, during
business hours or at such other times as are reasonable under applicable
circumstances, upon five days advance notice any and all of (i) the credit and
other loan files relating to the Mortgage Loans or the Mortgagors, (ii) any and
all books, records, documentation or other information of the Servicer (whether
held by the Servicer or by another) relating to the servicing of the Mortgage
Loans and (iii) any and all books, records, documentation or other information
of the Servicer (whether held by the Servicer or by another) that are relevant
to the performance or observance by the Servicer of the terms, covenants or
conditions of this Agreement. The Servicer shall be obligated to make the
foregoing information available to the Purchaser at the site where such
information is stored; provided that the Purchaser shall be required to pay all
reasonable costs and expenses incurred by the Servicer in making such
information available.
33
ARTICLE VIII REPORTS TO BE PREPARED BY THE SERVICER
Section 8.01 The Servicer's Reporting Requirements.
Electronic Format. If requested by the Purchaser or its designee, the Servicer
shall supply any and all information regarding the Mortgage Loans and the REO
Properties, including all reports required to be delivered pursuant to this
Section 5.03, Section 6.02 and Section 8.01, to the Purchaser in electronic
format reasonably acceptable to Purchaser.
REO Property Reports. On or before the 3rd Business Day preceding each
Determination Date, the Servicer shall deliver to the Purchaser a report, in
form acceptable to Purchaser, describing in reasonable detail the Servicer's
efforts in connection with the sale of each REO Property and setting forth all
operating income (including rental income) and operating expenses pertaining to
each REO Property for the previous month, together with rent rolls, operating
statements, and such other information as is referenced on such report
pertaining to the REO Property.
Additional Reports; Further Assurances. On or before the 3rd Business Day
preceding each Determination Date, the Servicer shall deliver to the Purchaser
(i) a report, acceptable to the Purchaser, describing in reasonable detail all
Mortgage Loans that are 90 days or more delinquent and the Servicer's activities
in connection with such delinquencies and (ii) a report (substantially in the
form of Exhibit 8.01 attached hereto) with respect to delinquent Mortgage Loans.
Utilizing resources reasonably available to the Servicer without incurring any
cost except the Servicer's overhead and employees' salaries, the Servicer shall
furnish to the Purchaser during the term of this Agreement such periodic,
special or other reports, information or documentation, whether or not provided
for herein, as shall be reasonably requested by the Purchaser with respect to
Mortgage Loans or REO Properties (provided the Purchaser shall have given the
Servicer reasonable notice and opportunity to prepare such reports, information
or documentation), including any reports, information or documentation
reasonably required to comply with any regulations of any governmental agency or
body having jurisdiction over the Purchaser, all such reports or information to
be as provided by and in accordance with such applicable instructions and
directions as the Purchaser may reasonably request. If any of such reports are
not customarily prepared by the Servicer or require that the Servicer program
data processing systems to create the reports, then the Purchaser shall pay to
the Servicer a fee mutually agreed to by the Purchaser and the Servicer taking
into account the Servicer's actual time and cost in preparing such reports. The
Servicer agrees to execute and deliver all such instruments and take all such
action as the Purchaser, from time to time, may reasonably request in order to
effectuate the purposes and to carry out the terms of this Agreement.
Section 8.02 Financial Statements.
The Servicer understands that, in connection with marketing the
Mortgage Loans, the Purchaser may make available to any prospective purchaser of
the Mortgage Loans the Servicer's audited financial statements for its fiscal
year 1999 and its audited financial statements for fiscal year 2000, together
with any additional statements provided pursuant to the next sentence. During
the term hereof, the Servicer will deliver to the Purchaser audited financial
statements for each of its fiscal years following the Closing Date and all other
financial statements prepared following the Closing Date to the extent any such
statements are available upon request to the public at large.
34
The Servicer also agrees to make available upon reasonable notice and
during normal business hours to any prospective purchasers of the Mortgage Loans
a knowledgeable financial or accounting officer for the purpose of answering
questions respecting recent developments affecting the Servicer or the financial
statements of the Servicer which may affect, in any material respect, the
Servicer's ability to comply with its obligations under this Agreement, and to
permit any prospective purchasers upon reasonable notice and during normal
business hours to inspect the Servicer's servicing facilities for the purpose of
satisfying such prospective purchasers that the Servicer has the ability to
service the Mortgage Loans in accordance with this Agreement.
35
ARTICLE IX: THE SELLERS
Section 9.01 Indemnification; Third Party Claims.
Each Seller shall indemnify and hold harmless the Purchaser, its
directors, officers, agents, employees, and assignees (each, an "Indemnified
Party") from and against any costs, damages, expenses (including reasonable
attorneys' fees and costs, irrespective of whether or not incurred in connection
with the defense of any actual or threatened action, proceeding, or claim),
fines, forfeitures, injuries, liabilities or losses ("Losses") suffered or
sustained in any way by any such Person, no matter how or when arising
(including Losses incurred or sustained in connection with any judgment, award,
or settlement), in connection with or relating to (i) a breach by such Seller of
any of its representations and warranties contained in Article III or (ii) a
breach by such Seller of any of its covenants and other obligations contained
herein including any failure to service the Mortgage Loans in compliance with
the terms hereof. The applicable Seller shall immediately (i) notify the
Purchaser if a claim is made by a third party with respect to this Agreement,
any Mortgage Loan and/or any REO Property (ii) assume the defense of any such
claim and pay all expenses in connection therewith, including attorneys' fees,
and (iii) promptly pay, discharge and satisfy any judgment, award, or decree
that may be entered against it or the Indemnified Party in respect of such
claim. Nothing contained herein shall prohibit the Indemnified Party, at its
expense, from retaining its own counsel to assist in any such proceedings or to
observe such proceedings; provided that neither Seller shall be obligated to pay
or comply with any settlement to which it has not consented. All amounts
required to be paid or reimbursed by a Seller hereunder shall be paid or
reimbursed as and when incurred by the Indemnified Party upon demand therefor by
such Indemnified Party.
Section 9.02 Merger or Consolidation of the Seller.
Each Seller will keep in full effect its existence, rights and
franchises as a corporation or a Delaware business trust, as applicable, under
the laws of the state of its organization and will obtain and preserve its
qualification to do business as a foreign entity in each jurisdiction in which
such qualification is or shall be necessary to protect the validity and
enforceability of this Agreement or any of the Mortgage Loans and to perform its
duties under this Agreement.
Any Person into which a Seller may be merged or consolidated, or any
corporation resulting from any merger, conversion or consolidation (including by
means of the sale of all or substantially all of such Seller's assets to such
Person) to which the Seller shall be a party, or any Person succeeding to the
business of the Seller, shall be the successor of the Seller hereunder, without
the execution or filing of any paper or any further act on the part of any of
the parties hereto, anything herein to the contrary notwithstanding; provided
that, unless otherwise consented to by the Purchaser, the successor or surviving
Person, in the case of a merger or consolidation, etc. of the Servicer, shall be
an institution qualified to service mortgage loans on behalf of FNMA and FHLMC
in accordance with the requirements of Section 3.02(1), shall not cause a rating
on any security backed by a Mortgage Loan to be downgraded and shall satisfy the
requirements of Section 12.01 with respect to the qualifications of a successor
to such Seller.
36
Section 9.03 Limitation on Liability of the Sellers and Others.
Neither the Sellers nor any of the officers, employees or agents of the
Sellers shall be under any liability to the Purchaser for any action taken or
for refraining from the taking of any action in good faith pursuant to this
Agreement or pursuant to the express written instructions of the Purchaser, or
for errors in judgment made in good faith; provided that this provision shall
not protect the Sellers or any such Person against any breach of warranties or
representations made herein, or failure to perform its obligations in compliance
with any standard of care set forth in this Agreement, or any liability which
would otherwise be imposed by reasons of willful misfeasance, bad faith,
negligence or any breach in the performance of the obligations and duties
hereunder. The Sellers and any officer, employee or agent of the Sellers may
rely in good faith on any document of any kind reasonably believed by the
Sellers or such Person to be genuine and prima facie properly executed and
submitted by any Person respecting any matters arising hereunder.
The Sellers shall not be under any obligation to appear in, prosecute or defend
any legal action that is not incidental to their duties hereunder and which in
their opinion may involve them in any expense or liability; provided that the
Sellers may in their discretion undertake any such action that it may deem
necessary or desirable in respect of this Agreement and the rights and duties of
the parties hereto. In such event, the legal expenses and costs of such action
and any liability resulting therefrom shall be expenses, costs and liabilities
for which the Sellers shall be entitled to be reimbursed therefor out of the
Collection Account. This indemnity shall survive the termination of this
Agreement.
Section 9.04 Servicer Not to Resign.
With respect to the retention by Cendant Mortgage of the servicing of
the Mortgage Loans and the REO Properties hereunder, Cendant Mortgage
acknowledges that the Purchaser has acted in reliance upon Cendant Mortgage's
Independent status, the adequacy of its servicing facilities, plan, personnel,
records and procedures, its integrity, reputation and financial standing and the
continuance thereof. Consequently, Cendant Mortgage shall not assign the
servicing rights retained by it hereunder to any third party nor resign from the
obligations and duties hereby imposed on it except (i) with the approval of the
Purchaser, such approval not to be unreasonably withheld, or (ii) 30 Business
Days following any determination that its duties hereunder are no longer
permissible under applicable law and such incapacity cannot be cured by Cendant
Mortgage. Any determination permitting the transfer of the servicing rights or
the resignation of Cendant Mortgage under Subsection (ii) hereof shall be
evidenced by an opinion of counsel to such effect delivered to the Purchaser,
which opinion of counsel shall be in form and substance reasonably acceptable to
the Purchaser.
37
ARTICLE X: DEFAULT
Section 10.01 Events of Default.
In case one or more of the following events shall occur and be
continuing:
(1) any failure by the Servicer to remit to the Purchaser any payment
required to be made under the terms of this Agreement which continues
unremedied for a period of 3 Business Days unless such failure to remit
is due to a cause beyond the Servicer's control, including an act of
God, act of civil, military or governmental authority, fire, epidemic,
flood, blizzard, earthquake, riot, war, or sabotage, provided that the
Servicer gives the Purchaser notice of such cause promptly and uses
commercially reasonable efforts to correct such failure to remit and
does so remit within 2 Business Days following the end of the duration
of the cause of such failure to remit; or
(2) any failure on the part of a Seller/Servicer duly to observe or perform
in any material respect any of the covenants or agreements on the part
of such Seller/Servicer set forth in this Agreement which continues
unremedied for a period of 45 days after the date on which written
notice of such failure, requiring the same to be remedied, shall have
been given to the applicable Seller/Servicer by the Purchaser; provided
that such 45-day period shall not begin with respect to any failure to
cure or repurchase in accordance with Sections 2.04 and/or 3.04 until
the expiration of the cure periods provided for in Sections 2.04 and/or
3.04, as applicable;
(3) any filing of an Insolvency Proceeding by or on behalf of a
Seller/Servicer, any consent by or on behalf of a Seller/Servicer to
the filing of an Insolvency Proceeding against a Seller/Servicer, or
any admission by or on behalf of a Seller/Servicer of its inability to
pay its debts generally as the same become due;
(4) any filing of an Insolvency Proceeding against a Seller/Servicer that
remains undismissed or unstayed for a period of 60 days after the
filing thereof;
(5) any issuance of any attachment or execution against, or any appointment
of a conservator, receiver or liquidator with respect to, all or
substantially all of the assets of a Seller/Servicer;
(6) any failure or inability of Cendant Mortgage to be eligible to service
Mortgage Loans for FNMA or FHLMC;
(7) any sale, transfer, assignment, or other disposition by a
Seller/Servicer of all or substantially all of its property or assets
to a Person who does not meet the qualifications enumerated or
incorporated by reference into Section 9.02, any assignment by a
Seller/Servicer of this Agreement or any of a Seller's/Servicer's
rights or obligations hereunder except in accordance with Section 9.04,
or any action taken or omitted to be taken by a Seller/Servicer in
contemplation or in furtherance of any of the foregoing, without the
consent of the Purchaser;
then, and in each and every such case, so long as an Event of Default shall not
have been remedied, the Purchaser, by notice in writing to the Sellers may, in
addition to whatever rights the Purchaser may have at law or in equity to
damages, including injunctive relief and specific performance, terminate all the
rights and obligations of the Sellers under this Agreement and in and to the
Mortgage Loans and the proceeds thereof subject to Section 12.01, without the
Purchaser's incurring any penalty or fee of any kind whatsoever in connection
therewith; provided that, upon the occurrence of an Event of
38
Default under Subsection (3), (4) or (5) of this Section 10.01, this Agreement
and all authority and power of the Sellers hereunder (whether with respect to
the Mortgage Loans, the REO Properties or otherwise) shall automatically cease.
On or after the receipt by the Sellers of such written notice, all authority and
power of the Sellers under this Agreement (whether with respect to the Mortgage
Loans or otherwise) shall cease.
39
ARTICLE XI: TERMINATION
Section 11.01 Term and Termination.
(1) The servicing obligations of the Servicer under this Agreement may be
terminated as provided in Section 10.01 hereof.
(2) In any case other than as provided under Subsection (1) hereof, the
respective obligations and responsibilities of the Sellers hereunder shall
terminate upon: (a) the later of the final payment or other liquidation (or any
advance with respect thereto) of the last Mortgage Loan or the disposition of
all REO Property and the remittance of all funds due hereunder; or (b) the
mutual written consent of the Sellers and the Purchaser.
(3) Upon any termination of this Agreement or the servicing obligations of
the Servicer hereunder, then the Servicer shall prepare, execute and deliver all
agreements, documents and instruments, including all Servicer Mortgage Files,
and do or accomplish all other acts or things necessary or appropriate to effect
such termination, all at the Servicer's sole expense. In any such event, the
Servicer agrees to cooperate with the Purchaser in effecting the termination of
the Servicer's servicing responsibilities hereunder, including the transfer to
the Purchaser or its designee for administration by it of all cash amounts which
shall at the time be contained in, or credited by the Servicer to, the
Collection Account and/or the Escrow Account or thereafter received with respect
to any Mortgage Loan or REO Property.
Section 11.02 Termination without Cause
In the event that any Mortgage Loans become delinquent in their payment
obligations, and the Purchaser has no disposition option other than to sell such
non-performing Mortgage Loans to a third party purchaser on a servicing released
basis, then Seller agrees to act in the following manner: (i) either allow the
servicing function on such non-performing Mortgage Loans to be released to the
Purchaser's third party purchaser; or (ii) purchase the non-performing Mortgage
Loans from the Purchaser under the same price and terms which the Purchaser's
third party purchaser would have purchased such non-performing Mortgage Loans.
Section 11.03 Survival.
Notwithstanding anything to the contrary contained herein, the
representations and warranties of the parties contained herein and in any
certificate or other instrument delivered pursuant hereto, as well as the other
covenants hereof (including those set forth in Section 9.01) that, by their
terms, require performance after the termination by this Agreement, shall
survive the termination of this Agreement and shall inure to the benefit of the
parties, their successors and assigns. Sellers further agree that the
representations, warranties and covenants made by Sellers herein and in any
certificate or other instrument delivered pursuant hereto shall be deemed to be
relied upon by Purchaser notwithstanding any investigation heretofore made by
Purchaser or on Purchaser's behalf.
40
ARTICLE VIIII: GENERAL PROVISIONS
Section 12.01 Successor to the Servicer.
Upon the termination of the Servicer's servicing responsibilities and duties
under this Agreement pursuant to Section 9.04, 10.01, or 11.01, the Purchaser
shall (i) succeed to and assume all of the Servicer's responsibilities, rights,
duties and obligations under this Agreement or (ii) appoint a successor servicer
which shall succeed to all rights and assume all of the responsibilities, duties
and liabilities of the Servicer under this Agreement prior to the termination of
the Servicer's responsibilities, duties and liabilities under this Agreement. If
the Servicer's duties, responsibilities and liabilities under this Agreement
should be terminated pursuant to the aforementioned sections, then the Servicer
shall continue to discharge such duties and responsibilities during the period
from the date it acquires knowledge of such termination until the effective date
thereof (if applicable) all on the terms and conditions contained herein and
shall take no action whatsoever that might impair or prejudice the rights or
financial condition of its successor. The termination of the Servicer's
servicing responsibilities pursuant to any of the aforementioned Sections shall
not, among other things, relieve the Servicer of its obligations pursuant to
Section 2.04 and/or 7.02, the representations and warranties or other
obligations set forth in Sections 2.04, 3.01, 3.02 and 3.03 and the remedies
available to the Purchaser under the various provisions of this Agreement. In
addition, such termination shall not affect any claims that the Purchaser may
have against the Servicer arising prior to any such termination.
Section 12.02 Governing Law.
This Agreement is to be governed by, and construed in accordance with
the internal laws of the State of New York without giving effect to principals
of conflicts of laws. The obligations, rights, and remedies of the parties
hereunder shall be determined in accordance with such laws.
Section 12.03 Notices.
Any notices or other communications permitted or required hereunder
shall be in writing and shall be deemed conclusively to have been given if
personally delivered, sent by courier with delivery against signature therefor,
mailed by registered mail, postage prepaid, and return receipt requested or
transmitted by telex, telegraph or telecopier and confirmed by a similar writing
mailed or sent by courier as provided above, to (i) in the case of the
Purchaser, Xxxxxx Brothers Bank, FSB, 0 Xxxxx Xxxxxxxxx Xxxxxx, 0xx Xxxxx, Xxx
Xxxx, XX 00000 Attention: Manager, Contract Finance, or such other address as
may hereafter be furnished to the Seller in writing by the Purchaser, (ii) in
the case of the Cendant Mortgage, Cendant Mortgage Corporation, 0000 Xxxxxx Xxx,
Xx. Xxxxxx, XX 00000, Attention: Xxxxx X. Xxxxxx, Vice President, Secondary
Marketing, and (iii) in the case of the Trust, c/o Cendant Mortgage Corporation,
as Administrator, 0000 Xxxxxx Xxx, Xx. Xxxxxx, XX 00000, Attention: Xxxxx X.
Xxxxxx, Vice President, Secondary Marketing ,or such other address as may
hereafter be furnished to the Purchaser in writing by the applicable Seller.
Section 12.04 Severability of Provisions.
If any one or more of the covenants, agreements, provisions or terms of
this Agreement shall be for any reason whatsoever held invalid, the invalidity
of any such covenant, agreement, provision or
41
term of this Agreement shall in no way affect the validity or enforceability of
the other provisions of this Agreement.
Section 12.05 Schedules and Exhibits.
The schedules and exhibits that are attached to this Agreement are
hereby incorporated herein and made a part hereof by this reference.
Section 12.06 General Interpretive Principles.
For purposes of this Agreement, except as otherwise expressly provided
or unless the context otherwise requires:
(1) the terms defined in this Agreement have the meanings assigned to them in
this Agreement and include the plural as well as the singular, and the use of
any gender herein shall be deemed to include the other gender;
(2) any reference in this Agreement to this Agreement or any other agreement,
document, or instrument shall be a reference to this Agreement or any other such
agreement, document, or instrument as the same has been amended, modified, or
supplemented in accordance with the terms hereof and thereof (as applicable);
(3) accounting terms not otherwise defined herein have the meanings assigned to
them in accordance with generally accepted accounting principles;
(4) references herein to "Articles," "Sections," "Subsections," "Paragraphs,"
and other subdivisions without reference to a document are to designated
articles, sections, subsections, paragraphs and other subdivisions of this
Agreement, unless the context shall otherwise require;
(5) a reference to a subsection without further reference to a section is a
reference to such subsection as contained in the same section in which the
reference appears, and this rule shall also apply to Paragraphs and other
subdivisions;
(6) a reference to a "day" shall be a reference to a calendar day;
(7) the words "herein," "hereof," "hereunder" and other words of similar import
refer to this Agreement as a whole and not to any particular provision; and
(8) the terms "include" and "including" shall mean without limitation by reason
of enumeration.
Section 12.07 Waivers and Amendments, Noncontractual Remedies; Preservation of
Remedies.
This Agreement may be amended, superseded, canceled, renewed or extended and the
terms hereof may be waived, only by a written instrument signed by authorized
representatives of the parties or, in the case of a waiver, by an authorized
representative of the party waiving compliance. No such written instrument shall
be effective unless it expressly recites that it is intended to amend,
supersede, cancel, renew or extend this Agreement or to waive compliance with
one or more of the terms hereof, as the case may be. No delay on the part of any
party in exercising any right, power or privilege hereunder shall operate as a
waiver thereof, nor shall any waiver on the part of any party of any such right,
power or privilege, or any single or partial exercise of any such right, power
or privilege, preclude any further exercise thereof or the exercise of any other
such right, power or privilege. The rights and remedies herein provided are
cumulative and are not exclusive of any rights or remedies that any party may
42
otherwise have at law or in equity.
Section 12.08 Captions.
All section titles or captions contained in this Agreement or in any schedule or
exhibit annexed hereto or referred to herein, and the table of contents to this
Agreement, are for convenience only, shall not be deemed a part of this
Agreement and shall not affect the meaning or interpretation of this Agreement.
Section 12.09 Counterparts; Effectiveness.
This Agreement may be executed by the parties hereto in separate counterparts,
each of which when so executed and delivered shall be an original, but all such
counterparts shall together constitute one and the same instrument. This
Agreement shall become effective as of the date first set forth herein upon the
due execution and delivery of this Agreement by each of the parties hereto.
Section 12.10 Entire Agreement; Amendment.
This Agreement (including the schedules and exhibits annexed hereto or referred
to herein), together with the Cendant Guide, contains the entire agreement
between the parties hereto with respect to the transactions contemplated hereby
and supersedes all prior agreements, written or oral, with respect thereto. No
amendment, modification or alteration of the terms or provisions of this
Agreement shall be binding unless the same shall be in writing and duly executed
by the authorized representatives of the parties hereto.
Section 12.11 Further Assurances.
Each party hereto shall take such additional action as may be reasonably
necessary to effectuate this Agreement and the transactions contemplated hereby.
The Sellers will promptly and duly execute and deliver to the Purchaser such
documents and assurances and take such further action as the Purchaser may from
time to time reasonably request in order to carry out more effectively the
intent and purpose of this Agreement and to establish and protect the rights and
remedies created or intended to be created in favor of the Purchaser.
43
IN WITNESS WHEREOF, the Sellers and the Purchaser have caused their names to be
signed hereto by their respective officers as of the date first written above.
XXXXXX BROTHERS BANK, FSB
By:
-------------------------------
Name:
Title:
CENDANT MORTGAGE CORPORATION
By:
-------------------------------
Name:
Title:
XXXXXX'X GATE RESIDENTIAL MORTGAGE
TRUST (formerly known as CENDANT
RESIDENTIAL MORTGAGE TRUST)
By: Cendant Mortgage Corporation, as
Administrator
By:
-------------------------------
Name:
Title:
44
Schedule B-1
On or prior to the Closing Date, the Seller shall deliver to
the Purchaser, or its designee, each of the following documents for each
Mortgage Loan:
(i) The original Mortgage Note endorsed, "Pay to the order of
________________, without recourse" and signed in the name of the Seller by an
authorized officer. In the event that the Mortgage Loan was acquired by the
Seller in a merger, the endorsement must be by "[SELLER], successor by merger to
[name of predecessor]"; and in the event that the Mortgage Loan was acquired or
originated by the Seller while doing business under another name, the
endorsement must be by "[SELLER], formerly known as [previous name]";
(ii) Original recorded Mortgage, with evidence of recording information
thereon except for any Mortgage which has been forwarded to the appropriate
recorder's office for recordation and which has not been returned by such
recording officer, in which case the Seller shall deliver and release to
Purchaser a certified true copy of any such Mortgage so certified by the Seller
with evidence of such Mortgage's delivery to the appropriate recorder's office.
In addition, the Seller shall deliver and release to the Purchaser the original
recorded Mortgage within 90 days after the Closing Date;
(iii) Original Assignment of Mortgage, in blank, which assignment shall be in
form and substance acceptable for recording but not recorded. In the event that
the Mortgage Loan was acquired by the Seller in a merger, the assignment must be
by "[SELLER], successor by merger to [name of predecessor]"; and in the event
that the Mortgage Loan was acquired or originated by the Seller while doing
business under another name, the assignment must be by "[SELLER], formerly known
as [previous name]";
(iv) Original policy of title insurance, except for those Mortgage Loans
originated within 60 days before the Closing Date, for which Mortgage Loans the
Seller shall have delivered and released to the Purchaser the related binders.
In addition, the Seller shall deliver to the Purchaser the original policy of
title insurance within 90 days after the Closing Date. The policy must be
properly endorsed, any necessary notices of transfer must be forwarded and any
other action required to be taken must be taken in order to fully protect, under
the terms of the policy and applicable law, Purchaser's interest as first
mortgagee;
(v) Original of all assumption, extensions and modification agreements;
(vi) If required under Section 7, the original policy of primary mortgage
guaranty insurance, or where such insurance is provided by a master policy, a
certified true copy of the master policy and the original certificate of
insurance;
(vii) Original recorded intermediate assignments of the Mortgage, including
warehousing assignments, if any.
(viii) Copies of documents evidencing the Borrower's pledge of additional
collateral securing the Mortgage Loan, if applicable.
45
EXHIBITS
46
Exhibit 9.01
CUSTODIAL AGREEMENT
[INTENTIONALLY OMITTED]
47
Exhibit 9.02
Form of Assignment and Assumption Agreement
THIS ASSIGNMENT AND ASSUMPTION AGREEMENT is made as of May 29, 2001 by
and between Xxxxxx Brothers Bank, FSB ("Assignor") and Cendant Mortgage
Corporation ("Assignee").
In Accordance with the terms of the Custody Agreement dated as of
September 1, 1999 (the "Custody Agreement") among the Owner, the Initial
Servicer and U.S. Bank Trust National Association as custodian (the "Custodian")
and for an in consideration of the mutual agreements herein contained and other
valuable consideration the receipt and adequacy of which hereby are
acknowledged, the parties hereto hereby agree as follows:
1. Capitalized terms used herein shall have the meanings assigned
in the Custody Agreement.
2. The Assignor hereby grants, transfers and assigns to Assignee,
and Assignee hereby assumes all of the rights, of Assignor, as
Servicer, in, to and under the Custody Agreement with respect
to the Mortgage Loans on the attached schedule.
3. The Assignor warrants and represents to, and covenants with,
the Assignee that:
a. The Assignor has not received notice of, and has no
knowledge of any offsets, counterclaims or other
defenses available to the Custodian or the Owner with
respect to the Custody Agreement; and
b. The Assignor has not waived or agreed to any waiver
under, or agreed to any amendment or other
modification of, the Custody Agreement or the
Mortgage Loans, including without limitation the
transfer of the servicing obligations under the
Custody Agreement. The Assignor has no knowledge of,
and has not received notice of, any waivers under or
amendments or other modifications of, or assignments
of rights or obligations under, the Custody
Agreement.
4. That Assignee warrants and represents to, and convenants with,
the Assignor and the Custodian that the Assignee agrees to be
bound, as Servicer, by all of the terms, covenants and
conditions of the Custody Agreement, and from and after the
date hereof, and the Assignee hereby assumes all obligations
of Servicer under the Custody Agreement.
48
IN WITNESS WHEREOF, the parties have caused this Assignment and
Assumption Agreement to be executed by their duly authorized officers as of the
date set forth below.
Dated: May 29, 2001
Xxxxxx Brothers Bank, FSB Cendant Mortgage Corporation
Assignor Assignee
By: By:
------------------------ ------------------------------
Name: Name:
------------------------ ------------------------------
Title: Title:
------------------------ ------------------------------
Its: Its:
------------------------ ------------------------------
Taxpayer Taxpayer
Identification No. Identification No.:
-------------- ----------------
49
EXHIBIT 10
ASSIGNMENT AND CONVEYANCE
On this 29th day of May 2001, Cendant Mortgage Corporation
("Cendant Mortgage") and Xxxxxx'x Gate Residential Mortgage Trust (formerly
known as Cendant Residential Mortgage Trust) as the Sellers, under that certain
Mortgage Loan Flow Purchase, Sale & Servicing Agreement, dated as of May 29,
2001 (the "Agreement") does hereby sell, transfer, assign, set over and convey
to Xxxxxx Brothers Bank, FSB, as Purchaser under the Agreement all rights, title
and interest of the Seller in and to the Mortgage Loans listed on the Mortgage
Loan Schedule attached hereto. Pursuant to Section 2 of the Agreement, the
Seller has delivered to the Custodian the documents for each Mortgage Loan to be
purchased as set forth in the Agreement. The ownership of each Mortgage Note,
Mortgage, and the contents of each Mortgage File is vested in the Purchaser and
the ownership of all records and documents with respect to the related Mortgage
Loan prepared by or which come into the possession of the Seller shall
immediately vest in the Purchaser and shall be delivered promptly by the Seller
to the Purchaser.
The Seller confirms to the Purchaser that the representations
and warranties set forth in Section 3.03 of the Agreement with respect to the
Mortgage Loans listed on the Mortgage Loan Schedule attached hereto, and the
representations and warranties in Section 3.01 of the Agreement with respect to
the Seller are true and correct as of the date hereof.
The Purchaser does hereby contract with Cendant Mortgage (the
"Servicer") as Servicer under the Agreement, to carry out the servicing
responsibilities related to the Mortgage Loans listed on the Mortgage Loan
Schedule attached hereto. The Servicer hereby accepts the servicing
responsibilities transferred hereby and on the date hereof assumes all servicing
responsibilities related to the Mortgage Loans identified on the attached
Mortgage Loan Schedule hereto all in accordance with the Agreement.
Capitalized terms used herein and not otherwise defined shall
have the meanings set forth in the Agreement.
CENDANT MORTGAGE CORPORATION (Seller and Servicer)
By:
------------------------------
Name:
Title:
XXXXXX'X GATE RESIDENTIAL MORTGAGE TRUST
(formerly known as CENDANT RESIDENTIAL MORTGAGE
TRUST) (Seller)
By: Cendant Mortgage Corporation, as Administrator
By:
------------------------------
Name:
Title:
XXXXXX BROTHERS BANK, FSB (Purchaser)
By:
------------------------------
Name: Xxxx Xxxxxx
Title: Vice President
50
MORTGAGE LOAN SCHEDULE
