Exhibit 10.2(A)
EXECUTION COPY
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MORTGAGE LOAN FLOW PURCHASE, SALE & SERVICING AGREEMENT
dated as of August 1, 2005
between
BANK OF AMERICA, NATIONAL ASSOCIATION
Purchaser
and
PHH MORTGAGE CORPORATION
and
XXXXXX'X GATE RESIDENTIAL MORTGAGE TRUST
(formerly known as CENDANT RESIDENTIAL MORTGAGE TRUST)
Sellers
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TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS.......................................................................................2
Section 1.01 Defined Terms.....................................................................2
ARTICLE II SALE AND CONVEYANCE OF MORTGAGE LOANS; POSSESSION
OF MORTGAGE FILES; BOOKS AND RECORDS; DELIVERY OF
MORTGAGE LOAN DOCUMENTS.....................................................................16
Section 2.01 Sale and Conveyance of Mortgage Loans............................................16
Section 2.02 Possession of Mortgage Files.....................................................18
Section 2.03 Books and Records................................................................18
Section 2.04 Defective Documents; Delivery of Mortgage Loan Documents.........................19
Section 2.05 Transfer of Mortgage Loans.......................................................21
ARTICLE III REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
SELLER; REPURCHASE AND SUBSTITUTION; REVIEW OF
MORTGAGE LOANS..............................................................................22
Section 3.01 Representations and Warranties of each Seller....................................22
Section 3.02 Representations and Warranties of the Servicer...................................25
Section 3.03 Representations and Warranties as to Individual Mortgage
Loans............................................................................26
Section 3.04 Repurchase and Substitution......................................................38
Section 3.05 Certain Covenants of each Seller and the Servicer................................40
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
AND CONDITIONS PRECEDENT TO FUNDING.........................................................42
Section 4.01 Representations and Warranties...................................................42
Section 4.02 Conditions Precedent to Closing..................................................43
ARTICLE V ADMINISTRATION AND SERVICING OF MORTGAGE LOANS...................................................43
Section 5.01 PHH Mortgage to Act as Servicer; Servicing Standards;
Additional Documents; Consent of the Purchaser...................................43
Section 5.02 Collection of Mortgage Loan Payments.............................................46
Section 5.03 Notice of Foreclosure Sale.......................................................47
Section 5.04 Establishment of Collection Account; Deposits in Collection
Account..........................................................................47
Section 5.05 Permitted Withdrawals from the Collection Account................................48
Section 5.06 Establishment of Escrow Accounts; Deposits in Escrow.............................49
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Section 5.07 Permitted Withdrawals From Escrow Accounts.......................................49
Section 5.08 Payment of Taxes, Insurance and Other Charges; Maintenance
of Primary Insurance Policies; Collections Thereunder............................50
Section 5.09 Transfer of Accounts.............................................................51
Section 5.10 Maintenance of Hazard Insurance..................................................51
Section 5.11 Reserved.........................................................................53
Section 5.12 Fidelity Bond; Errors and Omissions Insurance....................................53
Section 5.13 Realization Upon Specially Serviced Mortgage Loans and
REO Properties...................................................................54
Section 5.14 Management of REO Properties.....................................................56
Section 5.15 Sale of REO Properties...........................................................57
Section 5.16 Investment of Funds in the Collection Account....................................58
Section 5.17 MERS.............................................................................58
Section 5.18 Pledged Asset Mortgage Loans.....................................................59
Section 5.19 Inspections......................................................................63
Section 5.20 Restoration of Mortgaged Property................................................63
Section 5.21 Real Estate Owned Reports........................................................64
Section 5.22 Reports of Foreclosures and Abandonments of Mortgaged
Property.........................................................................64
Section 5.23 Notification of Adjustments......................................................64
Section 5.24 Disaster Recovery/Business Continuity Plan.......................................65
Section 5.25 Fair Credit Reporting Act........................................................65
ARTICLE VI REPORTS; REMITTANCES; ADVANCES..................................................................65
Section 6.01 Remittances......................................................................65
Section 6.02 Automated Servicing Systems and Statements to Purchaser..........................66
Section 6.03 Monthly Advances by the Servicer.................................................67
Section 6.04 Non-recoverable Advances.........................................................68
Section 6.05 Officer's Certificate............................................................68
ARTICLE VII GENERAL SERVICING PROCEDURE....................................................................68
Section 7.01 Enforcement of Due-on-Sale Clauses, Assumption
Agreements.......................................................................68
Section 7.02 Satisfaction of Mortgages and Release of Mortgage Files..........................69
Section 7.03 Servicing Compensation...........................................................70
Section 7.04 Annual Statement as to Compliance................................................70
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Section 7.05 Annual Independent Certified Public Accountants' Servicing
Report...........................................................................70
Section 7.06 Purchaser's Right to Examine Servicer Records....................................71
Section 7.07 Compliance with REMIC Provisions.................................................71
ARTICLE VIII REPORTS TO BE PREPARED BY THE SERVICER; SERVICER TO COOPERATE.................................71
Section 8.01 Financial Statements.............................................................71
Section 8.02 Provision of Information.........................................................72
Section 8.03 Cooperation with Third-party Service Providers...................................72
ARTICLE IX THE SELLERS.....................................................................................72
Section 9.01 Indemnification; Third Party Claims..............................................72
Section 9.02 Merger or Consolidation of the Seller............................................73
Section 9.03 Limitation on Liability of the Sellers and Others................................73
Section 9.04 Servicer Not to Resign...........................................................74
ARTICLE X DEFAULT..........................................................................................74
Section 10.01 Events of Default................................................................74
ARTICLE XI TERMINATION.....................................................................................76
Section 11.01 Term and Termination.............................................................76
Section 11.02 Survival.........................................................................76
ARTICLE XII GENERAL PROVISIONS.............................................................................76
Section 12.01 Successor to the Servicer........................................................76
Section 12.02 Governing Law....................................................................77
Section 12.03 Notices..........................................................................78
Section 12.04 Severability of Provisions.......................................................78
Section 12.05 Schedules and Exhibits...........................................................78
Section 12.06 General Interpretive Principles..................................................78
Section 12.07 Waivers and Amendments, Noncontractual Remedies;
Preservation of Remedies.........................................................79
Section 12.08 Captions.........................................................................79
Section 12.09 Counterparts; Effectiveness......................................................79
Section 12.10 Entire Agreement; Amendment......................................................80
Section 12.11 Further Assurances...............................................................80
Section 12.12 Intention of the Seller..........................................................80
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Section 12.13 Relationship of Parties..........................................................80
Section 12.14 Successors and Assigns...........................................................80
Section 12.15 Solicitation of Mortgagor........................................................81
Section 12.16 Confidential Information.........................................................81
Section 12.17 Equal Opportunity................................................................82
Section 12.18 Reproduction of Documents........................................................82
Section 12.19 Purchase Price and Terms Letter..................................................82
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Schedules
A. Mortgage Loan Schedule
B. Contents of Mortgage File
B-1 Legal Documents
B-2 Credit Documents
C. PHH Guide
Exhibits
Exhibit 2.05 Form of Assignment, Assumption and Recognition Agreement
Exhibit 5.01(a) Limited Power of Attorney
Exhibit 5.01(b) Workout compensation
Exhibit 5.03 Form of Notice of Foreclosure
Exhibit 5.04 Form of Collection Account Letter Agreement
Exhibit 5.06 Form of Escrow Account Letter Agreement
Exhibit 6.02 Servicer Requirements
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 6.02(h) Report P-4DL -- Delinquency Report
Exhibit 6.02(i) Report P-195 -- Delinquency Report
Exhibit 9 Form of Officer's Certificate
Exhibit 10 Form of Warranty Xxxx of Sale
Exhibit 11 Form of Xxxxxxxx-Xxxxx Certification
MORTGAGE LOAN FLOW PURCHASE, SALE & SERVICING AGREEMENT
This Mortgage Loan Flow Purchase, Sale & Servicing Agreement, dated as of
August 1, 2005, is entered into between Bank of America, National Association,
as the Purchaser ("Purchaser"), PHH Mortgage Corporation ("PHH Mortgage"), as a
Seller and as Servicer, and Xxxxxx'x Gate Residential Mortgage Trust (formerly
known as Cendant Residential Mortgage Trust) (the "Trust," together with PHH
Mortgage, the "Sellers" and individually, each a "Seller"), as a Seller.
PRELIMINARY STATEMENT
1. PHH 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 PHH Mortgage and selling same to
investors.
2. Purchaser is engaged in the business, inter alia, of purchasing Mortgage
Loans for its own account.
3. PHH Mortgage has established certain terms, conditions and loan programs, as
described in the PHH Investor Manual (the "PHH Guide"), which may be updated
from time to time, 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 current PHH Guide are attached hereto as Schedule
C.
4. Purchaser and Sellers desire to establish a flow program whereby PHH Mortgage
will make Mortgage Loans which meet the applicable provisions of the PHH Guide,
and Purchaser will, on a regular basis, purchase such Mortgage Loans from PHH
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. Following any purchase of the Mortgage Loans from the Sellers, the Purchaser
may desire to sell some or all of the Mortgage Loans to one or more purchasers
in a whole loan sale or a public or private, rated or unrated mortgage
securitization transaction.
6. 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 PHH Mortgage, as the Servicer (the
"Servicer"), in this Agreement.
NOW, THEREFORE, in consideration of the mutual agreements hereinafter set forth,
and for other good and valuable consideration, the receipt and adequacy of which
is hereby acknowledged, the Purchaser and the Sellers agree as follows:
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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 or any successor thereto.
"Appraised Value": With respect to any Mortgaged Property, the lesser of:
(i) the value thereof as determined by an appraisal or a PHH approved AVM (as
defined in the PHH Guide) 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 Xxxxxx Xxx and Xxxxxxx Mac and (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 or a PHH approved AVM (as defined in the PHH Guide) 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
Xxxxxx Mae and Xxxxxxx Mac.
"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 to the Purchaser or, in the
case of a MERS Mortgage Loan, an electronic transmission to MERS, identifying a
transfer of ownership of the related Mortgage to the Purchaser or its designee.
"Assignment, Assumption and Recognition Agreement": The agreement
substantially in the form of Exhibit 2.05 attached hereto.
"Assignment of Proprietary Lease": With respect to a Cooperative Loan, an
assignment of the Proprietary Lease sufficient under the laws of the
jurisdiction wherein the related Cooperative Unit is located to reflect the
assignment of such Proprietary Lease.
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"Assignment of Recognition Agreement": With respect to a Cooperative Loan,
an assignment of the Recognition Agreement sufficient under the laws of the
jurisdiction wherein the related Cooperative Unit is located to reflect the
assignment of such Recognition Agreement.
"AVM": Automated Value Model. Electronic system to calculate the estimated
property value from a provider that has been approved by the Seller.
"Bankruptcy Code": The Bankruptcy Reform Act of 1978 (11 U.S.C. xx.xx.
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 or banking institutions are closed.
"Code": The Internal Revenue Code of 1986, as amended.
"Collection Account": The separate Eligible Account or accounts created and
maintained pursuant to Section 5.04 which shall be entitled "PHH Mortgage
Corporation, as servicer and custodian for the Purchaser of Mortgage Loans under
the Mortgage Loan Flow Purchase, Sale & Servicing Agreement, dated as of August
1, 2005.
"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.
"Consent": A document executed by the Cooperative Corporation (i)
consenting to the sale of the Cooperative Unit to the Mortgagor and (ii)
certifying that all maintenance charges relating to the Cooperative Unit have
been paid.
"Control Agreement": With respect to each Pledged Asset Mortgage Loan, the
Pledged Collateral Account Control Agreement between the guarantor or mortgagor,
as applicable, and the related Pledged Asset Servicer, pursuant to which the
guarantor or mortgagor, as applicable, has granted a security interest in a
Securities Account.
"Cooperative Corporation": With respect to any Cooperative Loan, the
cooperative apartment corporation that holds legal title to the related
Cooperative Project and grants occupancy rights to units therein to stockholders
through Proprietary Leases or similar arrangements.
"Cooperative Lien Search": A search for (a) federal tax liens, mechanics'
liens, lis pendens, judgments of record or otherwise against (i) the Cooperative
Corporation and (ii) the seller of the Cooperative Unit, (b) filings of
Financing Statements and (c) the deed of the Cooperative Project into the
Cooperative Corporation.
"Cooperative Loan": A Mortgage Loan that is secured by a first lien on and
a perfected security interest in Cooperative Shares and the related Proprietary
Lease granting exclusive rights to occupy the related Cooperative Unit in the
building owned by the related Cooperative Corporation.
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"Cooperative Pledge Agreement": The specific agreement creating a first
lien on and pledge of the Cooperative Shares and the appurtenant Proprietary
Lease securing a Cooperative Loan.
"Cooperative Project": With respect to any Cooperative Loan, all real
property and improvements thereto and rights therein and thereto owned by a
Cooperative Corporation including without limitation the land, separate dwelling
units and all common elements.
"Cooperative Shares": With respect to any Cooperative Loan, the shares of
stock issued by a Cooperative Corporation and allocated to a Cooperative Unit
and represented by a stock certificates.
"Cooperative Unit": With respect to any Cooperative Loan, a specific unit
in a Cooperative Project.
"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 PHH Guide. The Credit Documents are specified on Schedule B-2
hereto.
"Custodial Agreement": The agreement governing the retention of the
originals of each Mortgage Note, Mortgage, Assignment and other Legal Documents
among the Purchaser, the Servicer and the Custodian.
"Custodian": The custodian under the Custodial Agreement, or its successor
in interest or assigns, or any successor to the Custodian under the Custodial
Agreement as provided therein.
"Cut-off Date": The first day of the month in which the respective Funding
Date occurs.
"Defective Mortgage Loan": As defined in Section 3.04.
"Deleted Mortgage Loan": A Mortgage Loan replaced or to be replaced with a
Qualified Substitute Mortgage Loan.
"Determination Date": The 16th day of each calendar month, commencing on
the 16th day of the month following the Funding Date, or, if such 16th day is
not a Business Day, the Business Day immediately preceding such 16th 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 calendar month
occurring in the month preceding such Remittance Date.
"Eligible Account": Either (i) an account or accounts that are maintained
with a federal or state chartered depository institution or trust company the
short-term unsecured debt obligations of which (or, in the case of a depository
institution or trust company that is the principal subsidiary of a holding
company, the debt obligations of such holding company) have the highest
short-term ratings of each Rating Agency at the time any amounts are held on
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deposit therein, (ii) a trust account or accounts maintained with the trust
department of a federal or state chartered depository institution or trust
company, acting in its fiduciary capacity or (iii) an account or accounts
maintained with a federal or state chartered depository institution or trust
company that meet the depository requirements of Xxxxxx Xxx or Xxxxxxx Mac.
"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
5.13.
"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 Eligible Account or accounts created and
maintained pursuant to Section 5.06 which shall be entitled "PHH Mortgage
Corporation, as servicer and custodian for the Purchaser under the Mortgage Loan
Flow Purchase, Sale & Servicing Agreement, dated as of August 1, 2005.
"Escrow Payments": The amounts constituting ground rents, taxes,
assessments, 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.
"Estoppel Letter": A document executed by the Cooperative Corporation
certifying, with respect to a Cooperative Unit, (i) the appurtenant Proprietary
Lease will be in full force and effect as of the date of issuance thereof, (ii)
the related Stock Certificate was registered in the Mortgagor's name and the
Cooperative Corporation has not been notified of any lien upon, pledge of, levy
of execution on or disposition of such Stock Certificate, and (iii) the
Mortgagor is not in default under the appurtenant Proprietary Lease and all
charges due the Cooperative Corporation have been paid.
"Event of Default": Any one of the conditions or circumstances enumerated
in Section 10.01.
"Xxxxxx Xxx": The Federal National Mortgage Association or any successor
organization.
"Xxxxxx Mae Guide": The Xxxxxx Xxx Selling Guide and Servicing Guide,
collectively, in effect on and after the Funding Date.
"FDIC": The Federal Deposit Insurance Corporation or any successor
organization.
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"Fidelity Bond": A fidelity bond to be maintained by the Servicer pursuant
to Section 5.12.
"Financing Statement": A financing statement in the form of a UCC-1 filed
pursuant to the Uniform Commercial Code to perfect a security interest in the
Cooperative Shares and Pledge Instruments.
"Financing Statement Change": A financing statement in the form of a UCC-3
filed to continue, terminate, release, assign or amend an existing Financing
Statement. "Xxxxxxx Mac": The Federal Home Loan Mortgage Corporation or any
successor organization.
"Xxxxxxx Mac Servicing Guide": The Xxxxxxx Xxx Xxxxxxx' and Servicers'
Guide in effect on and after the Funding Date.
"Funding Date": Each date 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.
"HUD": The United States Department of Housing and Urban Development, or
any successor thereto and including the Federal Housing Commissioner and the
Secretary of Housing and Urban Development where appropriate under the FHA
Regulations.
"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 (ii) 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.
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"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.
"Interest Only Mortgage Loan": A Mortgage Loan that only requires payments
of interest for a period of time specified in the related Mortgage Note.
"Legal Documents": Those documents, comprising part of the Mortgage File,
set forth in Schedule B-1 of this Agreement.
"Lender-Paid Mortgage Insurance Rate": With respect to any Mortgage Loan,
the Lender-Paid Mortgage Insurance Rate for any "lender-paid" Primary Insurance
Policy shall be a per annum rate equal to the percentage indicated on the
Mortgage Loan Schedule.
"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 Appraised Value
of the related Mortgaged Property, subject to any applicable law for calculating
the LTV. The Loan-to-Value Ratio of any Pledged Asset Mortgage Loan shall be
calculated by reducing the principal balance of such Pledged Asset Mortgage Loan
by the amount of the Original Pledged Asset Requirement with respect to such
Mortgage Loan. This is referred to in the PHH Guide as the effective
loan-to-value.
"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.
"MERS": Mortgage Electronic Registration Systems, Inc., a Delaware
corporation, or any successor in interest thereto.
"MERS Eligible Mortgage Loan": Any Mortgage Loan that under applicable law
and investor requirements is recordable in the name of MERS in the jurisdiction
in which the related Mortgaged Property is located.
"MERS Mortgage Loan": Any Mortgage Loan as to which the related Mortgage,
or an Assignment, has been recorded in the name of MERS, as agent for the holder
from time to time of the Mortgage Note.
"Maximum Rate": With respect to each ARM Loan, the rate per annum set forth
in the related Mortgage Note as the maximum Note Rate thereunder. The Maximum
Rate as to each ARM Loan is set forth on the related Mortgage Loan Schedule.
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"Minimum Rate": With respect to each ARM Loan, the rate per annum set forth
in the related Mortgage Note as the minimum Note Rate thereunder. The Minimum
Rate as to each ARM Loan is set forth on the related Mortgage Loan Schedule. The
floor in all cases will never be less than the Gross Margin.
"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.
"Mortgage": The mortgage, deed of trust or other instrument securing a
Mortgage Note, which creates a first lien on either (i) with respect to a
Mortgage Loan other than a Cooperative Loan, an unsubordinated estate in fee
simple in real property or (ii) with respect to a Cooperative Loan, the
Proprietary Lease and related Cooperative Shares, which in either case secures
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-1 and B-2 to this Agreement. Subject to Section
2.03, these documents shall be stored in a secure manner using paper or
electronic storage.
"Mortgage Loan": Each individual mortgage loan or Cooperative 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 and the related
Purchase Price and Terms Letter. The Mortgage Loans subject to this Agreement
shall be identified on Mortgage Loan Schedules prepared in connection with each
Funding Date.
"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 (as amended from time to time to reflect
the addition of any Qualified Substitute Mortgage Loans). 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.
"Negative Amortization": That portion of interest accrued at the Note Rate
in any month which exceeds the Monthly Payment on the related Mortgage Loan for
such month and which, pursuant to the terms of the Mortgage Note, is added to
the principal balance of the Mortgage Loan.
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"Non-recoverable Advance": As of any date of determination, any Monthly
Advance or Servicing Advance previously made or any Monthly Advance or Servicing
Advance proposed to be made in respect of a Mortgage Loan which, in the good
faith judgment of the Servicer and in accordance with the servicing standard set
forth in Section 5.01, will not or, in the case of a proposed advance, would not
be ultimately recoverable pursuant to Section 5.05 (3) or (4) hereof. The
determination by the Servicer that it has made a Non-recoverable Advance or that
any proposed advance would constitute a Non-recoverable Advance shall be
evidenced by an Officer's Certificate satisfying the requirements of Section
6.04 hereof and delivered to the Purchaser on or before the Determination Date
in any month.
"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.
"Offering Materials": All documents, tapes, or other materials relating to
the Mortgage Loans provided by Seller to Purchaser prior to Purchaser submitting
its bid to purchase the Mortgage Loans.
"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.
"Original Pledged Asset Requirement": With respect to any Pledged Asset
Mortgage Loan, an amount equal to the Pledged Assets required at the time of the
origination of such Pledged Asset Mortgage Loan. Even though for other purposes
the Original Pledged Asset Requirement may actually exceed thirty percent (30%)
of the original principal balance of a Pledged Asset Mortgage Loan, solely for
purposes of the Required Surety Payment, the Original Pledged Asset Requirement
for a Pledged Asset Mortgage Loan will be deemed not to exceed thirty percent
(30%) of its original principal balance.
"Payment Adjustment Date": With respect to each ARM Loan or Interest Only
Mortgage Loan, the date on which Monthly Payments shall be adjusted. With
respect to each ARM, Payment Adjustment Date shall occur on the date which is
eleven months from the first payment date for the Mortgage Loan, unless
otherwise specified in the Mortgage Note, and on each anniversary of such first
Payment Adjustment Date.
"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.
"Periodic Rate Cap": With respect to each ARM Loan, the maximum or minimum
permissible percentage increases and decreases in the Note Rate on any Rate
Adjustment Date determined in accordance with the related Mortgage Note.
"Permitted Investments": Investments that mature, unless payable on demand,
not later than the Business Day preceding the related Remittance Date; provided
that such investments shall only consist of the following:
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(i) direct obligations of, or obligations fully guaranteed as to
principal and interest by, the United States or any agency or
instrumentality thereof, provided such obligations are backed by the full
faith and credit of the United States;
(ii) repurchase obligations (the collateral for which is held by a
third party) with respect to any security described in clause (i) above,
provided that the long-term unsecured obligations of the party agreeing to
repurchase such obligations are at the time rated by each Rating Agency in
one of its two highest rating categories;
(iii) certificates of deposit, time deposits and bankers' acceptances
of any bank or trust company incorporated under the laws of the United
States or any state, provided that the long-term unsecured debt obligations
of such bank or trust company (or, in the case of the principal depository
institution of a depository institution holding company, the long-term
unsecured debt obligations of the depository institution holding company)
at the date of acquisition thereof have been rated by each Rating Agency in
one of its two highest rating categories;
(iv) commercial paper (having original maturities of not more than 365
days) of any corporation incorporated under the laws of the United States
or any state thereof which on the date of acquisition has been rated by
each Rating Agency in its highest rating category; and
(v) any other demand, money market or time deposit account or
obligation, or interest-bearing or other security or investment, acceptable
to the Purchaser (such acceptance evidenced in writing);
provided further that "Permitted Investments" shall not include any instrument
described hereunder which evidences either the right to receive (a) only
interest with respect to the obligations underlying such instrument or (b) both
principal and interest payments derived from obligations underlying such
instrument and the interest and principal payments with respect to such
instrument provide a yield to maturity at par greater than 120% of the yield to
maturity at par of the underlying obligations.
"Person": Any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"PHH Guide": As defined in paragraph 3 of the Preliminary Statement to this
Agreement.
"Pledge Agreements": Each Control Agreement and Pledged Asset Agreement for
each Pledged Asset Mortgage Loan.
"Pledged Assets": With respect to any Pledged Asset Mortgage Loan, the
related Securities Account and the financial assets held therein subject to a
security interest pursuant to the related Pledged Asset Agreement.
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"Pledged Asset Agreement": With respect to each Pledged Asset Mortgage
Loan, the Pledge Agreement for Securities Account between the related Mortgagor
and the related Pledged Asset Servicer pursuant to which such Mortgagor granted
a security interest in the related securities and other financial assets held
therein.
"Pledged Asset Mortgage Loan": Each Mortgage Loan as to which Pledged
Assets, in the form of a security interest in the Securities Account and the
financial assets held therein and having a value, as of the date of origination
of such Mortgage Loan, of at least equal to the related Original Pledged Asset
Requirement, were required to be provided at the closing thereof, which is
subject to the terms of this Agreement from time to time.
"Pledged Asset Servicer": The entity responsible for administering and
servicing the Pledged Assets with respect to a Pledged Asset Mortgage Loan, as
identified in the Purchase Price and Terms Letter.
"Pledged Asset Servicing Agreement": With respect to each Pledged Asset
Mortgage Loan, the Agreement between the related Pledged Asset Servicer and PHH,
including any exhibits thereto, pursuant to which such Pledged Asset Servicer
shall service and administer the related Pledged Assets.
"Pledge Instruments": With respect to each Cooperative Loan, the Stock
Power, the Assignment of the Proprietary Lease, the Assignment of the Mortgage
Note and the Cooperative Pledge Agreement.
"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.
"Prepayment Interest Shortfall Amount": With respect to any Mortgage Loan
that was subject to a voluntary (not including discounted payoffs and short
sales) Principal Prepayment in full or in part during any Principal Prepayment
Period, the amount, if any, by which one month's interest at the related
Remittance Rate on such Principal Prepayment exceeds the amount of interest paid
in connection with such Principal Prepayment.
"Prepayment Penalty": With respect to a Prepayment Penalty Loan, the
prepayment charge or penalty interest required to be paid by the Mortgagor in
connection with a prepayment of the related Mortgage Loan, as provided in the
related Mortgage Note or Mortgage, and as specified on the related Mortgage Loan
Schedule.
"Prepayment Penalty Loan": Each Mortgage Loan identified on the related
Mortgage Loan Schedule with respect to which the Mortgagor must pay a Prepayment
Penalty in connection with a Principal Prepayment.
"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.
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"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.
"Principal Prepayment Period": The Due Period preceding the related
Remittance Date.
"Proprietary Lease": The lease on a Cooperative Unit evidencing the
possessory interest of the owner of the Cooperative Shares in such Cooperative
Unit.
"Purchase Price": As to each Mortgage Loan to be sold hereunder, the price
set forth in the Mortgage Loan Schedule and the related Purchase Price and Terms
Letter.
"Purchase Price and Terms Letter": With respect to each purchase of
Mortgage Loans hereunder, 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 Sellers and the Purchaser,
which will be in a form mutually acceptable to the parties.
"Purchaser": Bank of America, National Association, 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."
"Qualified Mortgage Insurer": A mortgage guaranty insurance company duly
qualified as such under the laws of the states in which the Mortgaged Properties
are located if such qualification is necessary to issue the applicable insurance
policy or bond, duly authorized and licensed in such states to transact the
applicable insurance business and to write the insurance provided, and approved
as an insurer by Xxxxxx Xxx or Xxxxxxx Mac (or with a different rating as may be
required by a Rating Agency in connection with a Securitization in order to
achieve the desired ratings for the securities to be issued).
"Qualified Substitute Mortgage Loan": A Mortgage Loan substituted by a
Seller for a Deleted Mortgage Loan which must, on the date of such substitution,
(i) have an outstanding principal balance, after deduction of all scheduled
payments due and received in the month of substitution (or in the case of a
substitution of more than one Mortgage Loan for a Deleted Mortgage Loan, an
aggregate principal balance), not in excess of the Unpaid Principal Balance of
the Deleted Mortgage Loan and not less than ninety percent (90%) of the Unpaid
Principal Balance of the Deleted Mortgage Loan (the amount of any shortfall to
be distributed by the applicable Seller to the Purchaser in the month of
substitution), (ii) have a remaining term to maturity not greater than (and not
more than one year less than) that of the Deleted Mortgage Loan, (iii) have a
Note Rate not less than (and not more than one percentage point greater than)
the Note Rate of the Deleted Mortgage Loan, (iv) with respect to each ARM Loan,
have a Minimum Rate not less than that of the Deleted Mortgage Loan, (v) with
respect to each ARM Loan, have a Maximum Rate not less than that of the Deleted
Mortgage Loan and not more than two (2) percentage points above that of the
Deleted Mortgage Loan, (vi) with respect to each ARM Loan, have a Gross Margin
not less than that of the Deleted Mortgage Loan, (vii) with respect to each ARM
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Loan, have a Periodic Rate Cap equal to that of the Deleted Mortgage Loan,
(viii) have a Loan-to-Value Ratio at the time of substitution equal to or less
than the Loan-to-Value Ratio of the Deleted Mortgage Loan at the time of
substitution, (ix) with respect to each ARM Loan, have the same Rate Adjustment
Date as that of the Deleted Mortgage Loan, (x) with respect to each ARM Loan,
have the same Index as that of the Deleted Mortgage Loan, (xi) comply as of the
date of substitution with each representation and warranty set forth in Sections
3.01, 3.02 and 3.03, (xii) be in the same or higher credit grade category as the
Deleted Mortgage Loan and (xiii) have the same prepayment penalty term and
calculation.
"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, Inc., Xxxxx'x Investors Service, Inc., and Fitch, Inc.
"Recognition Agreement": An agreement among a Cooperative Corporation, a
lender and a Mortgagor with respect to a Cooperative Loan whereby such parties
(i) acknowledge that such lender may make, or intends to make, such Cooperative
Loan, and (ii) make certain agreements with respect to such Cooperative Loan.
"Record Date": The close of business of the first Business Day of 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.
"Reg AB": Shall have the meaning assigned to such term in Section 3.05.
"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 month in which the Funding Date occurs, or,
if such 18th day is not a Business Day, then the Business Day immediately
preceding such 18th day.
"Remittance Rate": With respect to each Mortgage Loan, the related Note
Rate minus the Servicing Fee Rate.
"REO Disposition": The final sale by the Servicer of any REO Property.
"REO Disposition Proceeds": All amounts received with respect to any REO
Disposition.
"REO Property": A Mortgaged Property acquired by the Servicer on behalf of
the Purchaser as described in Section 5.14.
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"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, a price equal to (i) (A) for claims for which notice has been provided
within twelve (12) months following the related Funding Date, the product of the
Unpaid Principal Balance of such Mortgage Loan at the time of repurchase, times
the greater of (x) the purchase price percentage used to calculate the Purchase
Price, or (y) 100%, and (B) for claims for which notice has been provided after
twelve (12) months following the related Funding Date, the Unpaid Principal
Balance of the Mortgage Loan plus (ii) interest on such Unpaid Principal Balance
at the Remittance Rate from the date on which interest has last been paid and
distributed to the Purchaser to the last day of the month in which such
repurchase occurs, less amounts received or advanced in respect of such
repurchased Mortgage Loan which are being held in the Collection Account for
distribution in the month of repurchase, plus all costs and expenses incurred by
the Purchaser arising out of or based upon such breach, including without
limitation, costs and expenses incurred in the enforcement of the applicable
Seller's repurchase obligation hereunder plus (iii) with respect to any Mortgage
Loan subject to a Securitization, any costs and damages incurred by the related
trust in connection with any violation by such Mortgage Loan of any predatory or
abusive lending law.
"Required Surety Payment": With respect to any defaulted Pledged Asset
Mortgage Loan for which a claim is payable under the related Surety Bond under
the procedures referred to herein, the lesser of (i) the principal portion of
the realized loss with respect to such Mortgage Loan and (ii) the excess, if
any, of (a) the amount of Pledged Assets required at origination with respect to
such Mortgage Loan (but not more than 30% of the original principal balance of
such Mortgage Loan) over (b) the net proceeds realized by the related Pledged
Asset Servicer from the related Pledged Assets.
"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.
"Securities Account": With respect to any Pledged Asset Mortgage Loans, the
account, together with the financial assets held therein, that is the subject of
the related Pledged Asset Agreement.
"Securitization": Shall have the meaning assigned to such term in Section
3.05.
"Sellers": PHH Mortgage Corporation, a New Jersey corporation and Xxxxxx'x
Gate Residential Mortgage Trust (formerly known as Cendant Residential Mortgage
Trust), a Delaware business trust, or their successors in interest or any
successor under this Agreement appointed as herein provided.
"Servicer": PHH Mortgage Corporation, a New Jersey corporation.
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"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; or
(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.
"Servicing Fee": The annual fee, payable monthly to the Servicer out of the
interest portion of the Monthly Payment and or Payoff 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
Unpaid Principal Balance of the Mortgage Loan and (ii) the Servicing Fee Rate
applicable to such Mortgage Loan.
"Servicing Fee Rate": With respect to each Mortgage Loan, the rate
specified on the Mortgage Loan Schedule.
"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.
"Stock Certificate": With respect to a Cooperative Loan, the certificates
evidencing ownership of the Cooperative Shares issued by the Cooperative
Corporation.
"Stock Power": With respect to a Cooperative Loan, an assignment of the
Stock Certificate or an assignment of the Cooperative Shares issued by the
Cooperative Corporation.
"Subservicer": Any Person with which the Servicer has entered into a
Subservicing Agreement, provided that such Person is a Xxxxxx Mae or Xxxxxxx Mac
approved seller/servicer in good standing and no event has occurred, including
but not limited to a change in insurance coverage, that would make it unable to
comply with the eligibility for seller/servicers imposed by Xxxxxx Mae or
Xxxxxxx Mac.
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"Subservicing Agreement": Any subservicing agreement (which, in the event
the Subservicer is an affiliate of the Servicer, need not be in writing) between
the Servicer and any Subservicer relating to servicing and/or administration of
certain Mortgage Loans as provided in Section 5.01(3).
"Surety Bond": With respect to each Pledged Asset Mortgage Loan, the surety
bond issued by the related Surety Bond Issuer covering such Pledged Asset
Mortgage Loan.
"Surety Bond Issuer": With respect to each Pledged Asset Mortgage Loan, the
surety bond issuer for the related Surety Bond covering such Pledged Asset
Mortgage Loan, as identified in the Purchase Price and Terms Letter.
"Uniform Commercial Code": The Uniform Commercial Code as in effect on the
date hereof in the State of New York; provided that if by reason of mandatory
provisions of law, the perfection or the effect of perfection or non-perfection
of the security interest in any collateral is governed by the Uniform Commercial
Code as in effect in a jurisdiction other than New York, "Uniform Commercial
Code" shall mean the Uniform Commercial Code as in effect in such other
jurisdiction for purposes of the provisions hereof relating to such perfection
or effect of perfection or non-perfection.
"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 including any cumulative Negative
Amortization.
"VA": The United States Department of Veterans Affairs.
"Warranty Xxxx of Sale": A warranty xxxx of sale with respect to the
Mortgage Loans purchased on a Funding Date in the form annexed hereto as Exhibit
10.
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, at the
price and on the terms set forth herein and in the related Purchase Price and
Terms Letter. Purchaser, on any Funding Date, shall be obligated to purchase
only such Mortgage Loans set forth in the applicable Mortgage Loan Schedule,
which shall be delivered by the Sellers to the Purchaser no later than 5
Business Days prior to the related Funding Date, subject to the terms and
conditions of this Agreement and the related Purchase Price and Terms Letter.
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.
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Examination of the Mortgage Files may be made by Purchaser or its designee
as follows. No later than 5 Business Days prior to the Funding Date, Seller will
deliver to Purchaser or its Custodian, Legal Documents required pursuant to
Schedule B-1. The Custodian shall be required to certify its receipt of the
Legal Documents required to be delivered pursuant to the Custodial Agreement
prior to the related Funding Date, as evidenced by the initial certification of
the Custodian in the form annexed to the Custodial Agreement. Upon Purchaser's
request, Seller shall make the Credit Documents available in either original
paper form or, subject to Section 2.03, electronic imaged format 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 PHH 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. In
addition to any rights granted to the Purchaser hereunder to underwrite the
Mortgage Loans and review the Legal Documents and Credit Documents prior to the
Funding Date, the Purchaser shall be entitled to conduct a due diligence review
of the Mortgage Files in accordance with the timetable and any additional terms
and conditions set forth in the Purchase Price and Terms Letter. 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.
On the Funding Date and in accordance with the terms herein, Purchaser will
pay to Seller by 3:00 p.m. Eastern Standard Time, by wire transfer of
immediately available funds, the Purchase Price, together with interest, if any,
accrued from the Cut-off Date through the day immediately preceding the Funding
Date, according to the instructions to be provided, respectively, by PHH
Mortgage and the Trust. Seller, simultaneously with the payment of the Purchase
Price, shall execute and deliver to Purchaser a Warranty Xxxx of Sale with
respect to the Mortgage Loans in the form annexed hereto as Exhibit 10.
Purchaser shall be entitled to all scheduled principal due after the
Cut-off Date, all other recoveries of principal collected after the Cut-off 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 Cut-off Date).
Notwithstanding the foregoing, on the first Remittance Date after the Funding
Date the Purchaser shall be entitled to receive the interest accrued from the
Cut-off Date through the day immediately preceding the Funding Date. The
principal balance of each Mortgage Loan as of the Cut-off Date is determined
after application of payments of principal due on or before the Cut-off Date
whether or not collected. Therefore, payments of scheduled principal and
interest prepaid for a due date beyond the Cut-off Date shall not be applied to
the principal balance as of the Cut-off Date. Such prepaid amounts 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 Cut-off Date and collected
by Servicer after the Cut-off Date shall belong to Seller.
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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 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 by the Seller and the books and records of the Seller shall
clearly reflect the sale of the related Mortgage Loan to the Purchaser. 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 or substitution 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.
Section 2.03 Books and Records.
------------------
From and after the sale of the Mortgage Loans to the Purchaser all rights
arising out of the Mortgage Loans, including, but not limited to, all funds
received on or in connection with the Mortgage Loans, shall be received and held
by the Sellers in trust for the benefit of the Purchaser as owner of the
Mortgage Loans, and the Sellers, if applicable, shall retain record title to the
related Mortgages for the sole purpose of facilitating the servicing and the
supervision of the servicing of the Mortgage Loans.
The sale of each Mortgage Loan shall be reflected on the applicable
Seller's balance sheet and other financial statements, tax returns and business
records 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. In particular, each Seller
shall maintain in its possession, available for inspection by the Purchaser, or
its designee, and shall deliver to the Purchaser upon demand, evidence of
compliance with all federal, state and local laws, rules and regulations, and
requirements of Xxxxxx Mae or Xxxxxxx Mac, including but not limited to
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documentation as to the method used in determining the applicability of the
provisions of the Flood Disaster Protection Act of 1973, as amended, to the
Mortgaged Property and periodic inspection reports as required by Section 5.19.
To the extent that original documents are not required for purposes of
realization of Liquidation Proceeds or Insurance Proceeds, documents maintained
by the Sellers may be in the form of microfilm or microfiche or such other
reliable means of recreating original documents, including but not limited to,
optical imagery techniques so long as the Sellers comply with the requirements
of Xxxxxx Mae or Xxxxxxx Mac.
Section 2.04 Defective Documents; Delivery of Mortgage Loan Documents.
---------------------------------------------------------
If, subsequent to the related Funding Date, 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.
Any Mortgage that is not executed as required or does not strictly comply with
all material legal requirements shall be deemed to have a Defect. If the Defect
pertains to the Mortgage Note or the Mortgage, then the applicable Seller shall
have a period of 60 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 60 day period, such Seller shall have such additional time
as is reasonably determined by the Purchaser to cure or correct such Defect, but
not to exceed an additional 45 days, 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 60 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 60 day period, then such Seller shall have such
additional time as is reasonably determined by the Purchaser to cure or correct
such Defect, but not to exceed an additional 45 days, provided such Seller has
commenced curing or correcting such Defect and is diligently pursuing same. PHH
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 PHH
Mortgage shall repurchase such Mortgage Loan by paying to the Purchaser the
Repurchase Price therefor in accordance with Section 3.04.
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 by the local public recording official. If the
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applicable Seller cannot deliver the original security instrument or if an
original intervening assignment has been lost, then the applicable Seller will
deliver a copy of such security instrument or intervening assignment, certified
by the local public recording official. If the original title policy has been
lost, the applicable Seller will deliver a duplicate original title policy.
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 PHH Mortgage, the Purchaser may, in its sole discretion, then elect (by
providing written notice to PHH Mortgage) to treat such Mortgage Loan as a
Defective Mortgage Loan, whereupon PHH Mortgage shall repurchase such Mortgage
Loan by paying to the Purchaser the Repurchase Price therefor in accordance with
Section 3.04. It is understood that from time to time certain local recorder
offices become backlogged with document volume. It is agreed that the Seller
will provide an Officer's Certificate to document that the Seller has performed
all necessary tasks to insure delivery of the required documentation within 180
days and the delay beyond 180 is caused by the backlog. If the delay exceeds 360
days, regardless of the backlog the Purchaser may elect to either collect the
documents with its own resources with the reasonable cost and expense to be
borne by the Seller or treat such Mortgage Loan as a Defective Mortgage Loan,
whereupon PHH Mortgage shall repurchase such Mortgage Loan by paying to the
Purchaser the Repurchase Price therefor in accordance with Section 3.04. 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 by a
Seller shall be paid by the applicable Seller.
In addition to the foregoing, in connection with the assignment of any MERS
Mortgage Loan or MERS Eligible Mortgage Loan, the Sellers agree that on or prior
to each Funding Date it will cause, at its own expense, the MERS System to
indicate that the related Mortgage Loans have been assigned by the applicable
Seller to the Purchaser in accordance with this Agreement by entering in the
MERS System the information required by the MERS System to identify the
Purchaser as owner of such Mortgage Loans. The Sellers further agree that they
will not alter the information referenced in this paragraph with respect to any
Mortgage Loan during the term of this Agreement unless and until such Mortgage
Loan is repurchased in accordance with the terms of this Agreement.
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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").
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 third party 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 Purchaser agree that in no event will the Servicer be
required to remit funds or make available via Servicer's website remittance
reports to more than four (4) Persons (not including the Servicer or any
Affiliate or transferee thereof) at any given time with respect to any Mortgage
Loans sold on a particular Funding Date.
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 3 Business Days prior to the 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 fifteen (15) 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,
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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.
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SELLER;
REPURCHASE AND SUBSTITUTION; 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 PHH Mortgage, service each
Mortgage Loan in accordance with the terms of this Agreement.
(2) Due Authority. The Seller 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,
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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; Solvency. 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. The Seller is solvent and the sale of the Mortgage
Loans will not cause the Seller to become insolvent. The sale of the Mortgage
Loans is not undertaken to hinder, delay or defraud any of the Seller's
creditors;
(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. PHH Mortgage has delivered to the Purchaser financial
statements as to its fiscal year ended December 31, 2004. 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
PHH 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, 2004 (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 PHH 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;
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(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;
(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) Non-solicitation. In the event the Seller chooses to solicit any Mortgagors
(in writing or otherwise) to refinance any of the Mortgage Loans during the term
of this Agreement, such solicitations shall be directed at all of Seller's
customers and will not be exclusively directed towards the Mortgagors relating
to the Mortgage Loans sold hereunder;
(14) Privacy. The Seller agrees and acknowledges that as to all nonpublic
personal information received or obtained by it with respect to any Mortgagor:
(a) such information is and shall be held by Seller in accordance with all
applicable law, including but not limited to the privacy provisions of the
Xxxxx-Xxxxx Xxxxxx Act; (b) such information is in connection with a proposed or
actual secondary market sale related to a transaction of the Mortgagor for
purposes of 16 C.F.R.ss.313.14(a)(3); and (c) Seller is hereby prohibited from
disclosing or using any such information other than to carry out the express
provisions of this Agreement, or as otherwise permitted by applicable law;
(15) Selection Process. The Mortgage Loans will be selected on such Funding Date
from among the outstanding fixed and adjustable rate one- to four-family
mortgage loans in the Seller's portfolio at such Funding Date as to which the
representations and warranties set forth in Section 3.03 could be made and such
selection will not be made in a manner so as to affect adversely the interests
of the Purchaser;
(16) Sale Treatment. The Seller has determined that the disposition of the
Mortgage Loans pursuant to this Agreement will be afforded sale treatment for
accounting and tax purposes;
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(17) Anti-Money Laundering Law Compliance. The Seller has complied with all
applicable anti-money laundering laws and regulations, including without
limitation the USA Patriot Act of 2001 (collectively, the "Anti-Money Laundering
Laws"); the Seller has established an anti-money laundering compliance program
as required by the Anti-Money Laundering Laws, has conducted the requisite due
diligence in connection with the origination of each Mortgage Loan for purposes
of the Anti-Money Laundering Laws, including with respect to the legitimacy of
the applicable Mortgagor and the origin of the assets used by the said Mortgagor
to purchase the property in question, and maintains, and will maintain,
sufficient information to identify the applicable Mortgagor for purposes of the
Anti-Money Laundering Laws;
(18) Securities Law Compliance. Neither the Seller nor anyone acting on its
behalf has offered, transferred, pledged, sold or otherwise disposed of any
Mortgage Loans, any interest in any Mortgage Loans or any other similar security
to, or solicited any offer to buy or accept a transfer, pledge or other
disposition of any Mortgage Loans, any interest in any Mortgage Loans or any
other similar security from, or otherwise approached or negotiated with respect
to any Mortgage Loans, any interest in any Mortgage Loans or any other similar
security with, any person in any manner, or made any general solicitation by
means of general advertising or in any other manner, or taken any other action
which would constitute a distribution of the Mortgage Loans under the Securities
Act of 1933 or which would render the disposition of any Mortgage Loans a
violation of Section 5 of the Securities Act of 1933 or require registration
pursuant thereto, nor will it act, nor has it authorized or will it authorize
any person to act, in such manner with respect to the Mortgage Loans; and
(19) Fair Consideration. The consideration received by the Seller upon the sale
of the Mortgage Loans under this Agreement shall constitute fair consideration
and reasonably equivalent value for the Mortgage Loans.
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 Xxxxxx
Xxx and Xxxxxxx Mac 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 Xxxxxx Mae or Xxxxxxx Mac
eligibility requirements or that would require notification to either Xxxxxx Mae
or Xxxxxxx Mac;
(2) Reasonable Servicing Fee. The Servicer acknowledges and agrees that the
Servicing Fee represents reasonable compensation for performing such services
and that the entire Servicing Fee shall be treated by the Servicer, for
accounting and tax purposes, as compensation for the servicing and
administration of the Mortgage Loans pursuant to this Agreement;
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(3) 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 ability of the Servicer to
service the Mortgage Loans hereunder in accordance with the terms hereof or have
a material adverse effect on the financial condition of the Servicer;
(4) 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;
(5) MERS. The Servicer is a member of MERS in good standing, and will comply in
all material respects with the rules and procedures of MERS in connection with
the servicing of the MERS Mortgage Loans for as long as such Mortgage Loans are
registered with MERS. By the end of the month in which the related Funding Date
occurs, the Servicer has provided the Custodian and the Purchaser with a MERS
report reflecting the Purchaser as the Investor on MERS with respect to each
MERS Mortgage Loan and no Person as Interim Funder for each MERS Mortgage Loan;
(6) Non-solicitation. In the event the Servicer chooses to solicit any
Mortgagors (in writing or otherwise) to refinance any of the Mortgage Loans
during the term of this Agreement, such solicitations shall be directed at all
of the Servicer's customers and will not be exclusively directed towards the
Mortgagors relating to the Mortgage Loans sold hereunder; and
(7) Privacy. The Servicer agrees and acknowledges that as to all nonpublic
personal information received or obtained by it with respect to any Mortgagor:
(a) such information is and shall be held by Servicer in accordance with all
applicable law, including but not limited to the privacy provisions of the
Xxxxx-Xxxxx Bliley Act; (b) such information is in connection with a proposed or
actual secondary market sale related to a transaction of the Mortgagor for
purposes of 16 C.F.R.ss.313.14(a)(3); and (c) Servicer is hereby prohibited from
disclosing or using any such information other than to carry out the express
provisions of this Agreement, or as otherwise permitted by applicable law.
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 and electronic data file is complete, 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 or its Custodian. All documents
required to be included in the Mortgage File shall be complete, executed as
26
required and in compliance with applicable law. With respect to each Mortgage
Loan for which a lost note affidavit has been delivered to the Custodian in
place of the original Mortgage Note, if such Mortgage Loan is subsequently in
default, the enforcement of such Mortgage Loan or of the related Mortgage by or
on behalf of the Purchaser will not be affected by the absence of the original
Mortgage Note;
(3) Owner of Record. The Mortgage relating to such Mortgage Loan has been duly
recorded in (or sent for recording to) 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, if the Mortgage Loan is a Pledged Asset Mortgage Loan,
neither the Mortgage Loan nor the related Pledged Assets has been dishonored.
Unless otherwise disclosed in the Offering Materials or the Mortgage Loan
Schedule, there has been no delinquency, exclusive of any period of grace, in
any payment by the Mortgagor thereunder during the twelve months preceding the
Funding Date; and, if the Mortgage Loan is a Cooperative Loan, no foreclosure
action or private or public sale under the Uniform Commercial Code has ever been
threatened or commenced with respect to the Cooperative Loan;
(5) No Outstanding Charges. There are no delinquent taxes, governmental
assessments, insurance premiums, water, sewer or municipal charges, including
assessments payable in future installments or any other charge affecting the
lien priority of the related Mortgaged Property. The Seller has not advanced
funds, or induced, or solicited directly or indirectly, the payment of any
amount required under the Mortgage Loan, except for interest accruing from the
date of the Mortgage Note or date of disbursement of the Mortgage Loan proceeds,
whichever is later, to the day which precedes by one month the Due Date of the
first installment of principal and interest;
(6) Original Terms Unmodified. The terms of the Mortgage Note and the Mortgage
related to such Mortgage Loan (and the Proprietary Lease and the Pledge
Instruments with respect to each Cooperative Loan, and the Pledged Assets with
respect to each Pledged Asset 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 (and the Cooperative Pledge Agreement related to each Cooperative Loan, and
the related Pledge Agreement with respect to each Pledged Asset Mortgage Loan)
are not subject to any right of rescission, set-off, counterclaim 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 related Pledge Agreement with
respect to each Pledged Asset Mortgage Loan), or the exercise of any right
thereunder, render such Mortgage (or the related Pledge Agreement with respect
to each Pledged Asset Mortgage Loan) 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;
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(8) Hazard Insurance. (a) All buildings upon the Mortgaged Property related to
such Mortgage Loan are insured by an insurer acceptable to Xxxxxx Xxx or Xxxxxxx
Mac 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 Section 5.10. 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 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 unit in a planned unit
development ("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 Mortgage File a certificate of insurance showing that
the individual unit that secures the first mortgage is covered under such
policy. Such 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. Each insurance policy described above
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 Xxxxxx Mae Guide or Xxxxxxx Mac Servicing
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, predatory and abusive lending, equal credit
opportunity or disclosure laws) applicable to the origination and servicing of
such Mortgage Loan have been complied with in all material respects. The
Mortgagor received all disclosure materials required by applicable law with
respect to the making of mortgage loans of the same type as the Mortgage Loan
and, if the Mortgage Loan is a Refinanced Mortgage Loan, rescission materials
required by applicable laws, and the Seller shall maintain in its possession,
available for the Purchaser's inspection, and shall deliver to the Purchaser
upon demand, evidence of compliance with all such requirements. All inspections,
licenses and certificates required to be made or issued with respect to all
occupied portions of the Mortgaged Property and, with respect to the use and
occupancy of the same, including, but not limited to, certificates of occupancy,
have been made or obtained from the appropriate authorities;
(10) No Fraud. No error or omission, misrepresentation, negligence or fraud in
respect of such Mortgage Loan has taken place on the part of any Person in
connection with the origination and servicing of such Mortgage Loan.
(11) No Satisfaction of Mortgage. The Mortgage related to such Mortgage Loan has
not been satisfied, canceled, subordinated or rescinded, 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;
28
(12) Valid First Lien. The Mortgage, including any Negative Amortization,
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; with respect
to each Cooperative Loan, each Cooperative Pledge Agreement creates a valid,
enforceable and subsisting first security interest in the collateral securing
the related Mortgage Note subject only to (a) the lien of the related
Cooperative Corporation for unpaid assessments representing the obligor's pro
rata share of the Cooperative Corporation's payments for its blanket mortgage,
current and future real property taxes, insurance premiums, maintenance fees and
other assessments to which like collateral is commonly subject and (b) other
matters to which like collateral is commonly subject which do not materially
interfere with the benefits of the security intended to be provided by the
Cooperative Pledge Agreement; provided, however, that the appurtenant
Proprietary Lease may be subordinated or otherwise subject to the lien of any
mortgage on the Cooperative Project.
Any security agreement, chattel mortgage or equivalent document related to and
delivered in connection with the Mortgage Loan establishes and creates a valid,
subsisting and enforceable first lien and first priority security interest on
the property described therein and the Seller has full right to sell and assign
the same to the Purchaser. The Mortgaged Property was not, as of the date of
origination of the Mortgage Loan, subject to a mortgage, deed of trust, deed to
secure debt or other security instrument creating a lien subordinate to the lien
of the Mortgage;
(13) Validity of Documents. The Mortgage Note and the Mortgage related to such
Mortgage Loan (and the Cooperative Pledge Agreement with respect to each
Cooperative 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);
(14) 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; with respect to each
Cooperative Loan, all parties to the Mortgage Note and the Mortgage Loan had
legal capacity to execute and deliver the Mortgage Note, the Cooperative Pledge
Agreement, the Proprietary Lease, the Stock Power, the Recognition Agreement,
the Financing Statement and the Assignment of Proprietary Lease and such
documents have been duly and properly executed by such parties; each Stock Power
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(i) has all signatures guaranteed or (ii) if all signatures are not guaranteed,
then such Cooperative Shares will be transferred by the stock transfer agent of
the Cooperative Corporation if the Seller undertakes to convert the ownership of
the collateral securing the related Cooperative Loan;
(15) 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;]
(16) Ownership. The Mortgage Note and the Mortgage related to such Mortgage Loan
have not been assigned, pledged or otherwise transferred by the applicable
Seller, in whole or in part, and the Seller has good and marketable title
thereto, and the Seller is the sole owner thereof (and with respect to any
Cooperative Loan, the sole owner of the related Cooperative Pledge Agreement)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;
(17) 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;
(18) Title Insurance. (a) Such Mortgage Loan is covered by an ALTA lender's
title insurance policy or short form title policy acceptable to Xxxxxx Xxx and
Xxxxxxx Mac (or, in jurisdictions where ALTA policies are not generally approved
for use, a lender's title insurance policy acceptable to Xxxxxx Xxx and Xxxxxxx
Mac), issued by a title insurer acceptable to Xxxxxx Mae and Xxxxxxx Mac 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 Servicer, its successors and assigns as to
the first priority lien of the related Mortgage in the original principal amount
of such Mortgage Loan including any Negative Amortization 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, either such lender's
title insurance policy affirmatively insures that there is ingress and egress to
and from the Mortgaged Property or the Seller warrants that there is ingress and
egress to and from the Mortgaged Property and the 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
originator of the Mortgage Loan, its successor and/or assignee 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, neither the
Seller, nor to the best of Seller's knowledge, any prior holder of the related
30
Mortgage 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 Xxxxxx Mae and Xxxxxxx Mac;
(19) No Defaults. (a) There is no default, breach, violation or event of
acceleration existing under the Mortgage, the Mortgage Note (or the related
Pledge Agreement with respect to each Pledged Asset Mortgage Loan), 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 not 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; (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 Mortgage, the
Mortgage Note (or the related Pledge Agreement with respect to each Pledged
Asset Mortgage Loan), or any other agreements, documents, or instruments related
to such Mortgage Loan; and (f) with respect to each Cooperative Loan, there is
no default in complying with the terms of the Mortgage Note, the Cooperative
Pledge Agreement and the Proprietary Lease and all maintenance charges and
assessments (including assessments payable in the future installments, which
previously became due and owing) have been paid, and the Seller has the right
under the terms of the Mortgage Note, Cooperative Pledge Agreement and
Recognition Agreement to pay any maintenance charges or assessments owed by the
Mortgagor;
(20) No Mechanics' Liens. As of the date of origination of such Mortgage Loan,
there were 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;
(21) 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 Xxxxxx Mae Guide and the Xxxxxxx Mac
Servicer 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;
(22) Origination; Payment Terms. Except with respect to Interest Only Mortgage
Loans, 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 Mortgage Loans have an original term to maturity of not more than
30 years, with interest payable on the first day of each month in arrears, in
31
accordance with the payment terms described on the related Mortgage Loan
Schedule. As to each ARM Loan on each applicable Adjustment Date, the Mortgage
Interest Rate has been or will be adjusted to equal the sum of the Index plus
the applicable Gross Margin, rounded up or down to the nearest multiple of
0.125% indicated by the Mortgage Note; provided that the Note Rate has not
increased or decreased and will not increase or decrease by more than the
Periodic Interest Rate Cap on any Adjustment Date, and has not, nor will it in
any event, exceed the maximum Note Rate or be lower than the minimum Note Rate
listed on the Mortgage Loan Schedule for such Mortgage Loan. As to each ARM Loan
(other than a Mortgage Loan subject to Negative Amortization or an Interest Only
Mortgage Loan), each Mortgage Note requires a monthly payment which is
sufficient, during the period prior to the first adjustment to the Note Rate, to
fully amortize the outstanding principal balance as of the first day of such
period over the then remaining term of such Mortgage Note and to pay interest at
the related Note Rate. As to each Mortgage Note relating to an Interest Only
Mortgage Loan, each Mortgage Note requires a monthly payment, commencing with
the first monthly payment after the end of the interest only period, which is
sufficient to amortize the outstanding principal balance fully over the then
remaining term of such Mortgage Note. As to each ARM Loan, if the related Note
Rate changes on a Payment Adjustment Date, the then outstanding principal
balance will be reamortized over the remaining life of such Mortgage Loan. With
respect to any Mortgage Loan subject to Negative Amortization the Monthly
Payments are sufficient during the period following each Payment Adjustment Date
to fully amortize the outstanding principal balance as of the first day of such
period (including any Negative Amortization) over the original term thereof in
accordance with the terms and conditions set forth in the Mortgage Note;
(23) 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;
(24) Prepayment Penalty. Except as noted otherwise on the Mortgage Loan
Schedule, such Mortgage Loan is not subject to any Prepayment Penalty. All
information on the Mortgage Loan Schedule and electronic data file delivered to
the Purchaser regarding any Prepayment Penalty is complete and accurate in all
material respects and each Prepayment Penalty is permissible and enforceable in
accordance with its terms under applicable law. No Mortgage Loan originated on
or after October 1, 2002 provides for the payment of a Prepayment Penalty beyond
the three-year term following the origination of the Mortgage Loan. No Mortgage
Loan originated prior to such date provides for the payment of a Prepayment
Penalty beyond the five-year term following the origination of the Mortgage
Loan. The Prepayment Penalty is disclosed to the Mortgagor in the loan documents
pursuant to applicable state and federal law;
(25) Mortgaged Property Undamaged; No Condemnation. As of the Funding Date, the
related Mortgaged Property (and with respect to a Cooperative Loan, the related
Cooperative Project and Cooperative Unit) is free of material damage and waste
and there is no proceeding pending for the total or partial condemnation
thereof;
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(26) 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;
(27) Conformance With Underwriting Standards. Such Mortgage Loan was
underwritten in accordance with the PHH Guide;
(28) Appraisal. The Mortgage File contains an appraisal of the related Mortgaged
Property on forms and with riders approved by Xxxxxx Xxx and Xxxxxxx Mac, 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 Xxxxxx Mae and Xxxxxxx Mac for appraisers. Each
appraisal of the Mortgage Loan was made in accordance with the relevant
provisions of the Financial Institutions Reform, Recovery, and Enforcement Act
of 1989. In accordance with specified programs Seller may utilize an approved
AVM in lieu of an appraisal;
(29) 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;
(30) LTV; Primary Mortgage Insurance Policy. Except with respect to Pledged
Asset Mortgage Loans and any loan program as defined in the PHH Guide not
requiring Primary Mortgage Insurance, if such Mortgage Loan had a Loan-to-Value
Ratio of more than 80% at origination, 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 insured's in the
amount set forth on the Mortgage Loan Schedule; provided that, a Primary
Mortgage Insurance Policy will not be required for any Cooperative Loan if (i)
the proceeds of such Cooperative Loan were used to purchase a Cooperative Unit
at the "insider's price" when the building was converted to a Cooperative
Corporation, (ii) the value of the Cooperative Unit for purposes of establishing
the LTV at origination was such "insider's price", (iii) the principal amount of
the Cooperative Loan at origination was not more than 100% of such "insider's
price" and (iv) the LTV at origination, as calculated using the Appraised Value
at origination, was less than or equal to 80%. 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 (other than a
"lender-paid" 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;
(31) Occupancy. The related Mortgaged Property (or with respect to a Cooperative
Loan, the related Cooperative Unit) is lawfully occupied under applicable law
and all inspections, licenses and certificates required to be made or issued
with respect to all occupied portions of the Mortgaged Property (or with respect
to a Cooperative Loan, the related Cooperative Unit) and, with respect to the
use and occupancy of the same, including but not limited to certificates of
occupancy, have been made or obtained from the appropriate authorities;
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(32) Supervision and Examination by a Federal or State Authority. Each Mortgage
Loan either was (a) closed in the name of PHH 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 similar 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 (PHH 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. PHH Mortgage is a HUD
Approved Mortgagee. 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 PHH Mortgage or on behalf of
PHH Mortgage by an entity meeting the requirements of clause (b) or (c) above
and subsequently assigned to the Trust.
(33) 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;
(34) Insolvency Proceedings; The Servicemembers Civil Relief Act. The related
Mortgagor (1) is not the subject of any Insolvency Proceeding; and (2) has not
requested any relief allowed to such Mortgagor under the Servicemembers Civil
Relief Act;
(35) Xxxxxx Xxx/Xxxxxxx Mac Documents. Such Mortgage Loan was closed on standard
Xxxxxx Mae or Xxxxxxx Mac documents or on such documents otherwise acceptable to
them;
(36) Payments. Unless otherwise disclosed in the Offering Materials and the
Mortgage Loan Schedule, no Mortgage Loan contains provisions pursuant to which
Monthly Payments are (a) paid or partially paid with funds deposited in any
separate account established by the Seller, the Mortgagor, or anyone on behalf
of the Mortgagor, (b) paid by any source other than the Mortgagor or (c)
contains any other similar provisions which may constitute a "buydown"
provision. The Mortgage Loan is not a graduated payment mortgage loan and the
Mortgage Loan does not have a shared appreciation or other contingent interest
feature;
(37) The Assignment of Mortgage. The Assignment is in recordable form and is
acceptable for recording under the laws of the jurisdiction in which the
Mortgaged Property is located;
(38) No Advances. Any principal advances made to the Mortgagor prior to the
Cut-off Date have been consolidated with the outstanding principal amount
secured by the Mortgage, and the secured principal amount, as consolidated,
bears a single interest rate and single repayment term. The consolidated
principal amount does not exceed the original principal amount of the Mortgage
Loan plus any Negative Amortization;
34
(39) Balloon Loans. Unless otherwise disclosed in the Offering Materials or the
Mortgage Loan Schedule, no Mortgage Loan has a balloon payment feature. With
respect to any Mortgage Loan with a balloon payment feature, the Mortgage Note
is payable in Monthly Payments based on a thirty year amortization schedule and
has a final Monthly Payment substantially greater than the preceding Monthly
Payment which is sufficient to amortize the remaining principal balance of the
Mortgage Loan;
(40) Condominium Units/PUDs. If the residential dwelling on the Mortgaged
Property is a condominium unit or a unit in a planned unit development (other
than a de minimis planned unit development) such condominium or planned unit
development project meets the eligibility requirements of the PHH Guide;
(41) High Cost Mortgage Loans. None of the Mortgage Loans are classified as (a)
"high cost" loans under the provisions of the Homeownership and Equity
Protection Act of 1994 or (b) "high cost", "high risk home", "threshold",
"covered", "abusive", "predatory" or similarly defined loan under any other
applicable state, federal or local law. No Mortgage Loan is a High Cost Loan or
Covered Loan, as applicable (as such terms are defined in the current Standard &
Poor's LEVELS(R) Glossary Revised, Appendix E). None of the proceeds of the
Mortgage Loan were used to finance single-premium credit life insurance
policies;
(42) No Rehabilitation Loan. Unless otherwise disclosed in the Offering
Materials or the Mortgage Loan Schedule, no Mortgage Loan was made in connection
with (a) the construction or rehabilitation of a Mortgaged Property or (b)
facilitating the trade-in or exchange of a Mortgaged Property;
(43) No Adverse Conditions. The Seller has no knowledge of any circumstances or
condition with respect to the Mortgage, the Mortgage Property (or with respect
to a Cooperative Loan, the Cooperative Pledge Agreement, the Cooperative Unit or
the Cooperative Project), the Mortgagor or the Mortgagor's credit standing that
can reasonably be expected to cause the Mortgage Loan to be an unacceptable
investment, cause the Mortgage Loan to become delinquent, or adversely affect
the value of the Mortgage Loan;
(44) Scheduled Interest. Interest on each Mortgage Loan is calculated on the
basis of a 360-day year consisting of twelve 30-day months;
(45) Environmental Laws. The Mortgaged Property is in compliance with all
applicable environmental laws, rules and regulations pertaining to environmental
hazards including, without limitation, asbestos, there is no pending action or
proceeding directly involving any Mortgaged Property in which compliance with
any environmental law, rule or regulation is an issue and neither the Seller
nor, to the Seller's knowledge, the related Mortgagor, has received any notice
of any violation or potential violation of such law;
(46) Negative Amortization. Unless otherwise disclosed in the Offering Materials
and the Mortgage Loan Schedule, no Mortgage Loan is subject to negative
amortization;
35
(47) Cooperative Lien Search. With respect to each Cooperative Loan, a
Cooperative Lien Search has been made by a company competent to make the same
which company is acceptable to Xxxxxx Mae and Xxxxxxx Mac and qualified to do
business in the jurisdiction where the Cooperative Unit is located;
(48) Cooperative Loan - Proprietary Lease. With respect to each Cooperative
Loan, (i) the terms of the related Proprietary Lease is longer than the terms of
the Cooperative Loan, (ii) there is no provision in any Proprietary Lease which
requires the Mortgagor to offer for sale the Cooperative Shares owned by such
Mortgagor first to the Cooperative Corporation, (iii) there is no prohibition in
any Proprietary Lease against pledging the Cooperative Shares or assigning the
Proprietary Lease and (iv) the Recognition Agreement is on a form of agreement
published by the Aztech Document Systems, Inc. or includes provisions which are
no less favorable to the lender than those contained in such agreement;
(49) Cooperative Loan - UCC Financing Statement. With respect to each
Cooperative Loan, each original UCC financing statement, continuation statement
or other governmental filing or recordation necessary to create or preserve the
perfection and priority of the first priority lien and security interest in the
Cooperative Shares and Proprietary Lease has been timely and properly made. Any
security agreement, chattel mortgage or equivalent document related to the
Cooperative Loan and delivered to the Mortgagor or its designee establishes in
the Mortgagor a valid and subsisting perfected first lien on and security
interest in the Mortgaged Property described therein, and the Mortgagor has full
right to sell and assign the same;
(50) Cooperative Loan - Cooperative Pledge Agreement. With respect to each
Cooperative Loan, each Cooperative Pledge Agreement contains enforceable
provisions such as to render the rights and remedies of the holder thereof
adequate for the realization of the benefits of the security provided thereby.
The Cooperative Pledge Agreement contains an enforceable provision for the
acceleration of the payment of the Unpaid Principal Balance of the Mortgage Note
in the event the Cooperative Unit is transferred or sold without the consent of
the holder thereof;
(51) Imaging. Each imaged document represents a true, complete, and correct copy
of the original document in all respects, including, but not limited to, all
signatures conforming with signatures contained in the original document, no
information having been added or deleted, and no imaged document having been
manipulated or altered in any manner. Each imaged document is clear and legible,
including, but not limited to, accurate reproductions of photographs. Each
imaged document complies with the requirements of Xxxxxx Mae or Xxxxxxx Mac. No
original documents have been or will be altered in any manner;
(52) Qualified Mortgage. Each Mortgage Loan constitutes a "qualified mortgage"
under Section 860G(a)(3)(A) of the Code and Treasury Regulation Section
1.860-2(a)(1);
(53) Fair Credit Reporting Act. The Seller has fully furnished, in accordance
with the Fair Credit Reporting Act and its implementing regulations, accurate
and complete information (i.e., favorable and unfavorable) on the related
Mortgagor's credit files to Equifax, Experian, and Trans Union Credit
Information Company (three of the credit repositories), on a monthly basis;
36
(54) Location and Type of Mortgaged Property. The Mortgaged Property is located
in the state identified in the Mortgage Loan Schedule and consists of a
contiguous parcel of real property with a detached single family residence
erected thereon, or a two- to four-family dwelling, or an individual condominium
unit in a condominium project, or an individual unit in a planned unit
development, or, in the case of a Mortgage Loan secured by Cooperative Shares,
leases or occupancy agreements. None of the Mortgaged Properties are mobile
homes or geodesic domes or other unique property types. As of the respective
appraisal date for each Mortgaged Property, no portion of the Mortgaged Property
was being used for commercial or mixed-use purposes and since the date of such
appraisal, no portion of the Mortgaged Property has been used for commercial
purposes. No Mortgage Loan finances builder inventory. If the Mortgaged Property
is a condominium unit or a planned unit development (other than a de minimus
planned unit development) such condominium or planned unit development project
meets Xxxxxx Mae or Xxxxxxx Mac eligibility requirements or the eligibility
requirements set forth in the PHH Guide or is located in a condominium or
planned unit development project which has received Xxxxxx Mae or Xxxxxxx Mac
project approval or has been approved pursuant to the PHH Guide and the
representations and warranties required by Xxxxxx Mae or Xxxxxxx Mac or the PHH
Guide with respect to such condominium or planned unit development have been
made and remain true and correct in all respects. If the Mortgaged Property is
next to another Mortgaged Property, such "row houses" do not, in the aggregate
for all the Mortgage Loans in the pool of Mortgage Loans, represent more than
1.0% of the aggregate principal balance of such Mortgage Loans;
(55) No Additional Collateral. The Mortgage Note is not and has not been secured
by any collateral, pledged account or other security except the lien of the
corresponding Mortgage and the security interest of any applicable security
agreement or chattel mortgage referred to in Paragraph (12) above or in the case
of Pledged Asset Mortgage Loans, the related Pledged Assets;
(56) Servicing and Collection Practices; Escrow Deposits. The origination,
servicing and collection practices used with respect to the Mortgage Loan have
been in accordance with the servicing standard set forth in Section 5.01 and the
terms of the Mortgage Note and have been in all material respects legal and
proper. All escrow deposits and Escrow Payments, if any, are in the possession
of, or under the control of, the Servicer and have been collected and handled in
compliance with the Real Estate Settlement Procedures Act ("RESPA") and other
state and federal laws. No escrow deposits or Escrow Payments or other charges
or payments due a Seller have been capitalized under the Mortgage Note;
(57) No Impairment of Insurance Coverage. No action, inaction, or event has
occurred and no state of facts exists or has existed that has resulted or will
result in the exclusion from, denial of, or defense to coverage under any
applicable hazard insurance policy, Primary Insurance Policy or bankruptcy bond,
irrespective of the cause of such failure of coverage. In connection with the
placement of any such insurance, no commission, fee, or other compensation has
been or will be received by the Sellers or any designee of the Sellers or any
corporation which the Sellers had a financial interest at the time of placement
of such insurance;
(58) Conversion to Fixed Interest Rate. No ARM Loan contains a provision
permitting or requiring conversion to a fixed interest rate Mortgage Loan;
37
(59) The Mortgagor. The Mortgagor is one or more natural persons and/or an
Illinois land trust or a "living trust" and such "living trust" is in compliance
with Xxxxxx Mae or Xxxxxxx Mac guidelines. In the event the Mortgagor is a
trust, the trustee of such trust is a natural person and is an obligor under the
Mortgage Note in his or her individual capacity;
(60) Texas Refinance Mortgage Loans. Each Mortgage Loan originated in the state
of Texas pursuant to Article XVI, Section 50(a)(6) of the Texas Constitution has
been originated in compliance with the provisions of Article XVI, Section
50(a)(6) of the Texas Constitution, Texas Civil Statutes and the Texas Finance
Code. If the Mortgage Loan was originated in Texas, it is not a cash-out
refinancing;
(61) Georgia Mortgage Loans. No Mortgage Loan secured by property located in
Georgia and originated on or after October 1, 2002 and prior to March 7, 2003
meets the definition of a "home loan" under the Georgia Fair Lending Act; [If
applicable.]
(62) New Jersey Mortgage Loans. Each Mortgage Loan secured by property located
within the State of New Jersey and subject to the provisions of the New Jersey
Home Ownership Security Act of 2002 (the "NJ Act") (i) is either a purchase
money mortgage loan or a rate-term refinancing and (ii) does not meet definition
of a (A) "Covered Home Loan," except for a Mortgage Loan that is (x) a purchase
money mortgage loan and (y) neither a "High-Cost Home Loan" nor a "Manufactured
Home Loan" under the NJ Act, (B) "High-Cost Home Loan," (C) "Home Improvement
Loan" or (D) "Manufactured Housing Loan" under the NJ Act; and
(63) No Arbitration Provisions. With respect to any Mortgage Loan originated on
or after August 1, 2004, neither the related Mortgage nor Mortgage Note requires
the Mortgagor to submit to arbitration to resolve any dispute arising thereunder
or in connection with the origination of such Mortgage Loan.
Section 3.04 Repurchase and Substitution.
----------------------------
(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 or failure to examine any Mortgage File.
(2) Upon discovery by either of the Sellers or the Purchaser of a Defect in any
Mortgage File or 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
interest of the Purchaser (or that materially and adversely affects the
interests of the Purchaser in the related Mortgage Loan, in the case of a
representation or warranty relating to a particular Mortgage Loan), the party
discovering such breach shall give prompt written notice to the other. Any such
breach or Defect that causes a Mortgage Loan not to be a "qualified mortgage"
within the meaning of Section 860G(a)(3) of the Code shall be deemed to
materially and adversely affect the interests of the Purchaser.
(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 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 interest of the Purchaser
38
(or that materially and adversely affects the interests of the Purchaser in the
related Mortgage Loan, in the case of a representation or warranty relating to a
particular Mortgage Loan) (a "Defective Mortgage Loan"; provided that "Defective
Mortgage Loan" shall also include (a) any Mortgage Loan treated or designated as
such in accordance with Section 2.04 and (b) any Mortgage Loan regarding which
the Mortgagor fails to make the first regularly scheduled payment of principal
and interest due following the related Funding Date within 30 days of its Due
Date following the related Funding Date) 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, but no more than 30 additional days, 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, but no more than 45
additional days, 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. Notwithstanding anything to the contrary
contained herein, if the first regularly scheduled payment of principal and
interest due under any Mortgage Loan following the related Funding Date has been
delinquent more than 30 days, the Purchaser may, by written notice to the
applicable Seller, require that the Seller repurchase the related Mortgage Loan.
However, if the Seller provides evidence that the delinquency was due to a
servicing setup error, no repurchase shall be required. Within 30 days following
the delivery of any such written notice from the Purchaser, the applicable
Seller shall repurchase the specified Mortgage Loan by paying the Repurchase
Price therefor by wire transfer of immediately available funds directly to the
Purchaser's Account.
Notwithstanding the previous paragraph, the applicable Seller may, with the
consent of the Purchaser and assuming that such Seller has a Qualified
Substitute Mortgage Loan or Loans, rather than repurchase the Mortgage Loan as
provided above, remove such Mortgage Loan (a "Deleted Mortgage Loan") and
substitute in its place a Qualified Substitute Mortgage Loan or Loans, provided
that any such substitution shall be effected not later than one hundred twenty
(120) days after the related Funding Date. If the applicable Seller has no
Qualified Substitute Mortgage Loan or if the Purchaser does not consent to the
substitution, the Seller shall repurchase the Defective Mortgage Loan as
provided above.
As to any Deleted Mortgage Loan for which the applicable Seller substitutes
a Qualified Substitute Mortgage Loan or Loans, the applicable Seller shall
effect such substitution by delivering to the Purchaser or its designee for such
Qualified Substitute Mortgage Loan or Loans the Legal Documents as are required
by Section 2. Upon such substitution, such Qualified Substitute Mortgage Loan or
Loans shall be subject to the terms of this Agreement in all respects, and the
applicable Seller shall be deemed to have made with respect to such Qualified
Substitute Mortgage Loan or Loans, as of the date of substitution, the
covenants, representations and warranties set forth in Sections 3.01, 3.02 and
3.03.
For any month in which the applicable Seller substitutes one or more
Qualified Substitute Mortgage Loans for one or more Deleted Mortgage Loans, the
Servicer will determine the amount (if any) by which the aggregate principal
balance of all such Qualified Substitute Mortgage Loans as of the date of
substitution (after application of the scheduled principal payments due in the
39
month of substitution which have been received or as to which an advance has
been made) is less than the aggregate outstanding principal balance of all such
Deleted Mortgage Loans. The amount of such shortfall shall be paid by the
applicable Seller on the date of such substitution by wire transfer of
immediately available funds directly to the Purchaser's Account.
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 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 to cure any breach of such Seller's representations
and warranties contained in Sections 3.01, 3.02 and 3.03 or to repurchase or
substitute for 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 or the
Servicer's representations and warranties contained in Sections 3.01, 3.02 and
3.03 shall constitute the sole remedies of the Purchaser respecting a breach of
such representations and warranties.
In the event of a repurchase or substitution, the Seller shall,
simultaneously with such repurchase or substitution, give written notice (by
telecopier, electronically or otherwise) to the Purchaser that such repurchase
or substitution has taken place, amend the related Mortgage Loan Schedule to
reflect the withdrawal of the Deleted Mortgage Loan from this Agreement, and in
the case of substitution, identify the Qualified Substitute Mortgage Loan(s) and
amend the related Mortgage Loan Schedule to reflect the addition of such
Qualified Substitute Mortgage Loan(s) this Agreement.
The parties further agree that, in recognition of the Trust's rights
against PHH Mortgage with respect to the Mortgage Loans acquired by it from PHH
Mortgage and conveyed to the Purchaser hereunder, the Purchaser shall have the
right to cause PHH 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
(16) 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 by 15 days' advance written notice to
the related Seller or Sellers (it is agreed that electronic mail shall not be
considered valid notification if not followed by verbal communication by the
Purchaser to the related Seller or Sellers), in re-selling the Mortgage Loans in
a whole loan sale or 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,
40
and which contain such provisions as are customary in securitizations rated
"AAA" (including a securitization involving a REMIC) (a "Securitization"), (d)
restating the representations and warranties contained in Article III hereof as
of the closing date of such Securitization or whole loan sale; provided,
however, Servicer may qualify and/or modify any such representations or
warranties to reflect any facts or circumstances arising subsequent to the
related Funding Date, (e) providing such opinions of counsel as are customary in
such transactions, provided, however, that any opinion of outside counsel shall
be provided at Purchaser's expense, (f) providing Xxxxxxxx-Xxxxx certifications
in the form of Exhibit 11 (or in such other form so as to be consistent with the
requirements of Regulation AB of the Securities Act of 1933, as amended ("Reg
AB"), (g) following the effective date of Reg AB, (i) providing at the request
of the Purchaser information reasonably available to the Seller or Servicer
required to be disclosed under Reg AB in connection with a Securitization and
(ii) complying with the servicer reporting and other requirements applicable to
servicers under Reg AB in connection with a Securitization and (h) provide at
the request of the Purchaser customary indemnifications contained in
Securitizations relating to disclosure provided by the Sellers and Servicer, the
Xxxxxxxx-Xxxxx certification and failure to comply with the applicable
Securitization agreements and the provisions of Reg AB applicable to servicers.
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 is requested by the
Purchaser to determine the allocation of payments and to make remittances to the
certificateholders, 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.
In the event the Purchaser has elected to have the Servicer hold record
title to the Mortgages, the Servicer shall prepare an Assignment in blank or to
the trustee from the Servicer acceptable to the Purchaser or the trustee for
each Mortgage Loan that is part of the whole loan sale or Securitization. The
Servicer shall pay all preparation and recording costs associated therewith if
the Assignments have not been previously prepared and recorded in Purchaser's
name. The Servicer shall execute each Assignment, track such Assignments to
ensure they have been recorded and deliver them as required by the Purchaser or
the trustee upon the Servicer's receipt thereof. Additionally, the Servicer
shall prepare and execute, at the direction of the Purchaser, any note
endorsements in connection with any pooling and servicing agreements.
All Mortgage Loans not sold or transferred pursuant to whole loan sale or
Securitization shall remain subject to this Agreement and shall continue to be
serviced in accordance with the terms of this Agreement and with respect thereto
this Agreement shall remain in full force and effect
41
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER AND CONDITIONS
PRECEDENT TO FUNDING
Section 4.01 Representations and Warranties.
-------------------------------
The Purchaser represents, warrants and covenants to the Sellers 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 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;
(4) 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; and
42
(5) Privacy. Purchaser agrees and acknowledges that as to all nonpublic personal
information received or obtained by it with respect to any Mortgagor: (a) such
information is and shall be held by Purchaser in accordance with all applicable
law, including but not limited to the privacy provisions of the Xxxxx-Xxxxx
Xxxxxx Act; (b) such information is in connection with a proposed or actual
secondary market sale related to a transaction of the Mortgagor for purposes of
16 C.F.R.ss.313.14(a)(3); and (c) Purchaser is hereby prohibited from disclosing
or using any such information other than to carry out the express provisions of
this Agreement, or as otherwise permitted by applicable law.
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 the Sellers and the
Servicer under the PHH Guide, and of the Sellers 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 PHH 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 the related
Seller on each Funding Date the applicable Purchase Price as provided herein.
ARTICLE V
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 5.01 PHH 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,
the Xxxxxx Mae Guide 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
43
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 collectability 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.
In the event that any of the Mortgage Loans included on the Mortgage Loan
Schedule for a particular Funding Date are Pledged Asset Mortgage Loans, such
Pledged Asset Mortgage Loans will be serviced in accordance with Section 5.18
hereof.
(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. The Purchaser shall furnish the Servicer with a power of attorney in
the form of Exhibit 5.01(a) 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 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) The Servicer may arrange for the subservicing of any Mortgage Loan it
services by a Subservicer pursuant to a Subservicing Agreement; provided,
however, that such subservicing arrangement and the terms of the related
Subservicing Agreement must provide for the servicing of such Mortgage Loan in a
manner consistent with the servicing arrangements contemplated hereunder. The
44
Servicer shall be solely liable for all fees owed to the Subservicer under the
Subservicing Agreement, regardless whether the Servicer's compensation hereunder
is adequate to pay such fees. Notwithstanding the provisions of any Subservicing
Agreement, any of the provisions of this Agreement relating to agreements or
arrangements between the Servicer and a Subservicer or reference to actions
taken through a Subservicer or otherwise, the Servicer shall remain obligated
and liable to the Purchaser for the servicing and administration of the Mortgage
Loans it services in accordance with the provisions of this Agreement without
diminution of such obligation or liability by virtue of such Subservicing
Agreements or arrangements or by virtue of indemnification from the Subservicer
and to the same extent and under the same terms and conditions as if the
Servicer alone were servicing and administering those Mortgage Loans. All
actions of each Subservicer performed pursuant to the related Subservicing
Agreement shall be performed as agent of the Servicer with the same force and
effect as if performed directly by the Servicer. For purposes of this Agreement,
the Servicer shall be deemed to have received any collections, recoveries or
payments with respect to the Mortgage Loans it services that are received by a
Subservicer regardless of whether such payments are remitted by the Subservicer
to the Servicer. Any Subservicing Agreement entered into by the Servicer shall
provide that it may be assumed or terminated by the Purchaser, if the Purchaser
has assumed the duties of the Servicer, or by any successor servicer, at the
Purchaser's or successor servicer's option, as applicable, without cost or
obligation to the assuming or terminating party or its assigns. Any Subservicing
Agreement, and any other transactions or services relating to the Mortgage Loans
involving a Subservicer, shall be deemed to be between the Servicer and such
Subservicer alone, and the Purchaser shall not be deemed parties thereto and
shall have no claims or rights of action against, rights, obligations, duties or
liabilities to or with respect to the Subservicer or its officers, directors or
employees, except as set forth in Section 5.01(2).
(4) Notwithstanding anything to the contrary contained herein:
(a) the Servicer acknowledges that the Purchaser 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 Xxxxxx Xxx,
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 be permitted to do so in the event of a
Specially Serviced Mortgage Loan or with respect to a Mortgage
Loan insured by HUD, the VA or a Primary Insurance Policy, upon
45
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 no change in the maturity date); (2) selling
any Specially Serviced Mortgage Loan; (3) forgiving principal or
interest on, or permitting to be satisfied at a discount, any
Mortgage Loan except in the event of a Specially Serviced
Mortgage Loan; or (4) 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 5 Business Days of the date such recommendation
is made, then the Purchaser shall be deemed to have accepted such
recommended action(s) and the Servicer shall 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) in accordance with the Xxxxxx Mae Guide, the Servicer shall be
entitled to workout compensation as it relates to repayment
plans, loan modifications, short-sales, deed-in lieu of
foreclosure, and hardship assumptions as evidenced in Exhibit
5.01(b);
(f) 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
(g) the Purchaser may at any time and from time to time, in its sole
discretion, upon 30 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" and
Purchaser shall reimburse the Servicer for all unreimbursed
Monthly Advances and Servicing Advances, take all necessary steps
and absorb all associated costs to assume such servicing 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.
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
46
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 standard 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 Notice of Foreclosure Sale.
---------------------------
The Servicer shall, within two (2) Business Days 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.
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
which shall be an Eligible Account. The creation of any Collection Account shall
be evidenced by a letter agreement in the form of Exhibit 5.04 attached hereto.
A copy of such letter agreement shall be furnished to the Purchaser upon
Purchaser's request.
The Servicer shall deposit in the Collection Account, within two Business
Days after receipt (or as otherwise required pursuant to this Agreement in the
case of clauses (7), (8), (9) and (10) of this Section 5.04) and retain therein
the following payments and collections received or made by it subsequent to each
Cut-off Date, or received by it prior to the Cut-off 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 Cut-off Date:
(1) all payments on account of principal, including Principal Prepayments and
Prepayment Penalties paid by the Mortgagor, on the Mortgage Loans;
(2) all payments on account of interest less the related Servicing Fee on the
Mortgage Loans;
(3) all Liquidation Proceeds;
(4) all REO Disposition Proceeds;
(5) all Insurance Proceeds, including amounts required to be deposited pursuant
to Section 5.10, 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 Servicer's normal servicing
procedures and the servicing standard set forth in Section 5.01 (1), the related
Mortgages or applicable law;
47
(6) all Condemnation Proceeds affecting any Mortgaged Property which are not
released to a Mortgagor in accordance with the Servicer's normal servicing
procedures and the servicing standard set forth in Section 5.01(1), the related
Mortgage or applicable law;
(7) any Monthly Advances (and any amounts that were held for future distribution
that were used to make Monthly Advances and that are required to be replaced by
the Servicer) in accordance with Section 6.03;
(8) any amounts required to be deposited by the Servicer pursuant to Section
5.16 in connection with any losses on Permitted Investments;
(9) with respect to each Principal Prepayment, the related Prepayment Interest
Shortfall Amount (to be paid by the Servicer out of its own funds without
reimbursement), subject to a maximum amount with respect to each Remittance Date
as set forth in Section 6.03(3); and
(10) 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.
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, on the Mortgage Loans 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
that the Servicer has determined to be Non-Recoverable Advances as provided in
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 use amounts held for future distributions following the next Remittance
Date to make Monthly Advances with respect to such Remittance Date pursuant to
Section 6.03;
(4) to reimburse itself for unreimbursed Servicing Advances 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
(or substitute a Qualified Substitute Mortgage Loan for) 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 applicable Repurchase Price (or delivery of a Qualified
Substitute Mortgage Loan) and all other amounts required to be paid to the
Purchaser with respect to such Mortgage Loan;
48
(5) to pay to itself as additional servicing compensation any interest earned on
funds in the Collection Account (all such interest to be withdrawn monthly not
later than each Remittance Date);
(6) 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);
(7) to remove any amounts deposited into the Collection Account in error; and
(8) to clear and terminate the Collection Account in the event a new Collection
Account has been established, or upon the termination of this Agreement, with
any funds contained therein to be distributed in accordance with the terms of
this Agreement.
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 which shall be an Eligible Account. The
creation of any Escrow Account shall be evidenced by a letter agreement in the
form shown on Exhibit 5.06 attached hereto. A copy of such letter agreement
shall be furnished to the Purchaser upon Purchaser's request.
The Servicer shall deposit in each Escrow Account within two Business Days
after receipt, 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.
Section 5.07 Permitted Withdrawals From Escrow Accounts.
-------------------------------------------
Withdrawal s from any Escrow Account may be made by the Servicer only (i)
to effect timely payments of ground rents, taxes, assessments, hazard insurance
premiums, Primary Insurance Policy premiums, if applicable, and comparable items
constituting Escrow Payments for the related Mortgage, (ii) to reimburse the
49
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 the
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 in the event a new Escrow Account has been
established or upon 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, 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(30), 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 Funding Date or reflected on the Mortgage Loan Schedule 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
50
with an insurer that satisfies the standards set forth in Section 3.03(30). The
Servicer shall not take any action which would result in 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) the Servicer shall give written notice thereof to the Purchaser no later
than ten (10) Business Days prior to any such transfer. Notwithstanding anything
to the contrary contained herein, the Collection Account and each Escrow Account
shall at all times constitute Eligible Accounts.
Section 5.10 Maintenance of Hazard Insurance.
--------------------------------
The Servicer shall cause to be maintained for each Mortgage Loan fire and
hazard insurance such that all buildings upon the Mortgaged Property are insured
by an insurer acceptable to Xxxxxx Xxx or Xxxxxxx Mac 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. In the event a hazard insurance policy shall be in danger
of being terminated, or in the event the insurer shall cease to be acceptable to
Xxxxxx Mae or Xxxxxxx Mac, the Servicer shall notify 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.
51
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
Federal Insurance Administration with a generally acceptable insurance carrier
acceptable to Xxxxxx Mae or Xxxxxxx Mac, in an amount representing coverage not
less than the lesser of (a) the minimum amount required, under the terms of
coverage, to compensate for any damage or loss on a replacement cost basis (or
the outstanding principal balance of the related Mortgage Loan if replacement
cost coverage is not available for the type of building insured) or (b) the
maximum amount of insurance which is available under the Flood Disaster
Protection Act of 1973, as amended (assuming that the area in which such
Mortgaged Property is located is participating in such program). If at any time
during the term of the Mortgage Loan, the Servicer determines in accordance with
applicable law and pursuant to the FEMA Guides that a Mortgaged Property is
located in a special flood hazard area and is not covered by flood insurance or
is covered in an amount less than the amount required by the Flood Disaster
Protection Act of 1973, as amended, the Servicer shall notify the related
Mortgagor to obtain such flood insurance coverage, and if said Mortgagor fails
to obtain the required flood insurance coverage within forty-five (45) days
after such notification, the Servicer shall immediately force place the required
flood insurance on the Mortgagor's behalf. Any out-of-pocket expenses or advance
made by the Servicer on such force placed flood insurance coverage shall be
deemed a Servicing Advance.
If a Mortgage is secured by a unit in a condominium project, the Servicer
shall verify that the coverage required of the owner's association, including
hazard, flood, liability, and fidelity coverage, is being maintained in
accordance with then current Xxxxxx Mae or Xxxxxxx Mac requirements, and secure
from the owner's association its agreement to notify the Servicer promptly of
any change in the insurance coverage or of any condemnation or casualty loss
that may have a material effect on the value of the Mortgaged Property as
security.
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 are
acceptable to Xxxxxx Mae or Xxxxxxx Mac and 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. The Servicer shall determine that such
policies provide sufficient risk coverage and amounts, that they insure the
property owner, and that they properly describe the property address. The
52
Servicer shall furnish to the Mortgagor a formal notice of expiration of any
such insurance in sufficient time for the Mortgagor to arrange for renewal
coverage by the expiration date. If a hazard policy becomes in danger of being
terminated, or the insurer ceases to be acceptable to Xxxxxx Xxx or Xxxxxxx Mac,
the Servicer shall notify 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.
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 and the servicing standard set forth in Section 5.01(1) shall be
deposited in the Collection Account within two Business Days 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 shall
require such additional insurance.
Section 5.11 Reserved.
---------
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 Xxxxxx Mae or Xxxxxxx
Mac on all officers, employees or other Persons acting in any capacity with
regard to the Mortgage Loans 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 Xxxxxx Mae in the Xxxxxx Xxx
Guide or by Xxxxxxx Mac in the Xxxxxxx Mac Servicing Guide. The Servicer shall
cause to be delivered to the Purchaser upon request: (i) a certified true copy
of the Fidelity Bond and insurance policy; and (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.
53
Section 5.13 Realization Upon Specially Serviced Mortgage Loans and REO
-------------------------------------------------------------
Properties.
-----------
The Servicer shall foreclose upon or otherwise comparably convert the
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(4)(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 5.15 as
soon as possible but in no event later than 3 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.
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 5.14(4). 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
54
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 to the use,
management or disposal of any hazardous materials for which investigation,
testing, monitoring, containment, clean-up or re mediation 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 as set forth 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 this Section 5.13 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(4)(c), the Purchaser is deemed to have accepted Servicer's
recommendation 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 this Section 5.13 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(4)(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(4)(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 for which investigation, testing,
monitoring, containment, clean-up or re mediation could be required under any
federal, state or local law or regulation on any Mortgaged Property, the
Servicer shall request the approval of the Purchaser in accordance with Section
5.01(4)(c) and, if such action is deemed 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.
55
Section 5.14 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 Person designated by the
Purchaser. The Servicer (acting alone or through a subservicer or managing agent
specializing in the disposition of REO Properties), on behalf of the Purchaser,
shall, subject to Section 5.01(4)(c), dispose of any REO Property pursuant to
Section 5.15. 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 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 Mortgage
File and copies thereof shall be forwarded by the Servicer to the Purchaser.
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(4)(c)), to do any and all things in connection with any REO
Property as are consistent with the servicing standard set forth in Section
5.01. In connection therewith, the Servicer shall deposit or cause to be
deposited within two (2) Business Day of receipt 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
5.13, the Servicer shall withdraw (without duplication) from the Collection
Account and/or Escrow 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:
56
(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 or assessed by any "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 (1) through (5) 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 (1) or (2) 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 5.15 Sale of REO Properties.
-----------------------
The Servicer shall offer to sell any REO Property in the manner that is in
the best interests of the Purchaser or other owner of the REO, but 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 time specified in Section 5.13. In
accordance with the servicing standard set forth in Section 5.01, the Servicer
or designated agent of the Servicer shall solicit bids and offers from Persons
for the purchase of any REO Property.
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 REO
Property, including the collection of all amounts payable in connection
therewith. The Servicer shall manage and negotiate terms of sale on Specially
Serviced Mortgage Loans or REO Properties with the same care, skill, prudence
and diligence with which Servicer manages its own REO Properties. The proceeds
of any sale after deduction of the expenses of such sale incurred in connection
therewith shall be promptly deposited in the Collection Account in accordance
with Section 5.04.
57
Section 5.16 Investment of Funds in the Collection Account.
----------------------------------------------
The Servicer may direct any depository institution which holds the
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:
(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.
Section 5.17 MERS.
-----
In the case of each MERS Mortgage Loan, the Servicer shall, as soon as
practicable after the Purchaser's request (but in no event later than the end of
the month in which the related Funding Date occurs with respect to each Mortgage
Loan that was a MERS Mortgage Loan as of the Funding Date, or with respect to
each Mortgage Loan that was a MERS Eligible Mortgage Loan as of the Funding Date
and subsequent to the Funding Date becomes a MERS Mortgage Loan, by the end of
the month in which the Mortgage Loan becomes a MERS Mortgage Loan), take such
actions as are necessary to cause the Purchaser to be clearly identified as the
owner of each MERS Mortgage Loan on the records of MERS for purposes of the
system of recording transfers of beneficial ownership of mortgages maintained by
MERS. The Servicer shall maintain in good standing its membership in MERS. In
addition, the Servicer shall comply with all rules, policies and procedures of
MERS, including the Rules of Membership, as amended, and the MERS Procedures
Manual, as amended. With respect to all MERS Mortgage Loans serviced hereunder,
the Servicer shall promptly notify MERS as to any transfer of beneficial
58
ownership or release of any security interest in such Mortgage Loans. The
Servicer shall cooperate with the Purchaser and any successor owner or successor
servicer to the extent necessary to ensure that any transfer of ownership or
servicing is appropriately reflected on the MERS system.
Section 5.18 Pledged Asset Mortgage Loans.
-----------------------------
(a) Representations of Servicer
(1) Servicer hereby represents and warrants to Purchaser that
prior to its assignment to Purchaser of the security
interest in and to any Pledged Assets set forth in Section
5.18(b) hereof, Servicer had a first priority perfected
security interest in each Securities Account, and/or, if
necessary to perfect a first priority security interest in
each asset contained in such Securities Account, a first
priority perfected security interest in each such asset
contained in such Securities Account and following
Servicer's assignment of the Pledged Asset Agreements and
such security interest in and to any Pledged Assets,
Purchaser has a first priority perfected security interest
in each Securities Account, and/or, if necessary to perfect
a first priority security interest in each asset contained
in such Securities Account, a perfected first priority
security interest in each such asset contained in such
Securities Account. Servicer hereby represents and warrants
to Purchaser that prior to the related Pledged Asset
Servicer's assignment to the Servicer of the security
interest in and to any Pledged Assets, the related Pledged
Asset Servicer had a first priority perfected security
interest in each Securities Account, and/or, if necessary to
perfect a first priority security interest in each asset
contained in such Securities Account, a first priority
perfected security interest in each such asset contained in
such Securities Account and following such Pledged Asset
Servicer's assignment of the Pledged Asset Agreements and
such security interest in and to any Pledged Assets, the
Servicer had a first priority perfected security interest in
each Securities Account, and/or, if necessary to perfect a
first priority security interest in each asset contained in
such Securities Account, a perfected first priority security
interest in each such asset contained in such Securities
Account.
(2) Servicer represents and warrants to Purchaser that each
Pledged Asset Mortgage Loan is insured under the terms and
provisions of a Surety Bond subject to the limitations set
forth therein. Servicer covenants that within 2 Business
Days after the Funding Date for any purchase of Pledged
Asset Mortgage Loans, Servicer will deliver to each Surety
Bond Issuer any instrument required to be delivered under
the related Surety Bond, executed by the necessary parties,
and that all other requirements for transferring coverage
under the related Surety Bonds in respect of such Pledged
59
Asset Mortgage Loans to the Purchaser shall be complied
with. Servicer shall indemnify Purchaser and hold it
harmless against any and all claims, losses, damages,
penalties, fines, forfeitures, reasonable and necessary
legal fees and related costs, judgments, and any other
costs, fees and expenses that are related to or arise from
the non-payment of Required Surety Payments with respect to
the Pledged Asset Mortgage Loans purchased by Purchaser from
applicable Seller under this Agreement. The indemnification
obligation provided in this subparagraph 2 with respect to
each Pledged Asset Mortgage Loan shall expire upon receipt
by the related Surety Bond Issuer of the necessary
documentation referred to in this paragraph, signed by the
appropriate parties thereto.
(3) Servicer represents and warrants that the assignment of
rights to Purchaser under each Surety Bond, as described
herein, will not result in Purchaser assuming any
obligations or liabilities of Servicer with respect thereto.
(4) Servicer represents and warrants that each Pledged Asset
Servicing Agreement and the Pledge Agreements are in full
force and effect as of the Funding Date and their provisions
have not been waived, amended or modified in any respect,
nor has any notice of termination been given thereunder.
Servicer represents to Purchaser that as of the Funding
Date, neither Servicer nor any Pledged Asset Servicer is in
default under the related Pledged Asset Servicing Agreement.
(b) Assignment of Security Interest
(1) With respect to each Pledged Asset Mortgage Loan sold to
Purchaser under this Agreement, the Servicer hereby assigns
to the Purchaser its security interest in and to any related
Pledged Assets, all of its rights in each related Pledge
Agreement, its right to receive amounts due or to become due
in respect of any related Pledged Assets and its rights as
beneficiary under the related Surety Bond in respect of any
Pledged Asset Mortgage Loans.
(c) Servicing of Pledged Assets
(1) The parties acknowledge that pursuant to each Pledged Asset
Servicing Agreement between Servicer and the related Pledged
Asset Servicer, the Securities Accounts and other Pledged
Assets in which Purchaser shall (pursuant to the terms of
this Agreement) have a security interest, shall continue to
be maintained and serviced by such Pledged Asset Servicer.
Servicer represents and warrants that the terms of each
Pledged Asset Servicing Agreement are not inconsistent with
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any of the provisions of this Agreement. Subject to
subsection (c)(2) below, the Servicer shall service and
administer the Securities Accounts and other Pledged Assets,
in accordance with (i) prudent business practices and
procedures employed in the industry to administer securities
accounts and additional collateral similar to that securing
the Pledged Asset Mortgage Loans; (ii) the terms of the
related Pledge Agreements; and (iii) the terms of this
Agreement. Servicer's obligations under this Section 5.18(c)
will be subject to the provisions of Section 9.04 hereof.
(2) Notwithstanding any other provision of this Agreement to the
contrary, except as provided below in this subsection
(c)(2), the Servicer shall have no duty or obligation to
service and administer the Pledged Assets, and the Servicer
shall not be deemed to be the Pledged Asset Servicer with
respect to any Pledged Asset Mortgage Loan, unless and until
the related Pledged Asset Servicer's obligations to
administer the Pledged Asset as provided in the related
Pledged Asset Servicing Agreement have been terminated with
respect to such Pledged Asset Mortgage Loans sold hereunder,
in which case the Servicer shall be bound to service and
administer the related Pledged Assets and the related Surety
Bond in accordance with the provisions of this Agreement and
the related Pledge Agreements, from the date of such
termination. The Servicer shall enforce the obligations of
each Pledged Asset Servicer to service and administer the
Pledged Assets as provided in the related Pledged Asset
Servicing Agreement, and shall take appropriate action
thereunder if any Pledged Asset Servicer fails to
substantially comply with its obligations to administer the
Pledged Assets. Such enforcement, including without
limitation, the legal prosecution of claims, termination of
the related Pledged Asset Servicing Agreement with respect
to the related Pledged Asset Mortgage Loans, and the pursuit
of other appropriate remedies, shall be carried out as the
Servicer, in its good faith business judgment, would require
were it the owner of the related Securities Accounts and
other Pledged Assets. Without in any way limiting any other
remedies set forth herein, Servicer shall indemnify
Purchaser and hold it harmless against any and all claims,
losses, damages, penalties, fines, forfeitures, reasonable
and necessary legal fees and related costs, judgments, and
any other costs, fees and expenses (collectively, "Losses")
that arise with respect to Pledged Asset Mortgage Loans
purchased by Purchaser from Servicer hereunder, provided
that (i) such Losses are caused by the related Pledged Asset
Servicer's failure to administer the Pledged Assets as
provided in the related Pledged Asset Servicing Agreement
and in a manner consistent with the standard set forth in
subsection (c)(1) above, (ii) the indemnification contained
in this subsection (c)(2) will in no event exceed the
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Original Pledged Asset Requirement for the related Pledged
Asset Mortgage Loan, and (iii) such indemnification
liability shall be offset to the extent that the Losses are
covered by a Required Surety Payment.
(3) The related Pledged Asset Servicer shall us e its best
reasonable efforts to realize upon any related Pledged
Assets for such of the Pledged Asset Mortgage Loans as come
into and continue in default and as to which no satisfactory
arrangements can be made for collection of delinquent
payments; provided that the related Pledged Asset Servicer
shall not obtain title to any such Pledged Assets as a
result of or in lieu of the disposition thereof or
otherwise; and provided further that (i) the related Pledged
Asset Servicer shall not proceed with respect to such
Pledged Assets in any manner that would impair the ability
to recover against the related Mortgaged Property, and (ii)
the Servicer shall proceed with any acquisition of REO
Property in a manner that preserves the ability to apply the
proceeds of such Pledged Assets against amounts owed under
the defaulted Mortgage Loan. Any proceeds realized from such
Pledged Assets (other than amounts to be released to the
Mortgagor or the related guarantor in accordance with
procedures that the Servicer would follow in servicing loans
held for its own account, subject to the terms and
conditions of the related Mortgage and Mortgage Note and to
the terms and conditions of any security agreement,
guarantee agreement, mortgage or other agreement governing
the disposition of the proceeds of such Pledged Assets)
shall be deposited in the Collection Account, subject to
withdrawal pursuant to Section 5.05 hereof; provided, that
such proceeds shall not be so deposited if the Required
Surety Payment in respect of such Pledged Asset Mortgage
Loan has been deposited in the Collection Account or
otherwise paid to the Purchaser (except to the extent of any
such proceeds taken into account in calculating the amount
of the Required Surety Payment).
(4) Servicer's obligations to administer the Securities Accounts
shall terminate upon termination of the related Pledged
Asset Agreement. Purchaser acknowledges coverage under the
terms and provisions of the related Surety Bond as to any
particular Pledged Asset Mortgage Loan shall terminate upon
termination of the related Pledged Asset Agreement;
provided, however, that such termination shall not affect
claims arising under this Agreement or the related Surety
Bond prior to the date of termination of the related Pledged
Asset Agreement.
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(5) The Pledged Asset Servicer with respect to each Pledged
Asset Mortgage Loan may, without the consent of the
Purchaser, amend or modify a Pledged Asset Agreement in any
non-material respect to reflect administrative or account
changes, provided that the same are consistent with the PHH
Guide.
(d) Surety Bonds
(1) If a Required Surety Payment is payable pursuant to the
related Surety Bond with respect to any Pledged Asset
Mortgage Loan, as determined by the Servicer, the related
Pledged Asset Servicer shall so notify the related Surety
Bond Issuer promptly. The Servicer shall cause the prompt
completion of any necessary documentation relating to the
related Surety Bond and shall cause the prompt submission of
such documentation to the related Surety Bond Issuer as a
claim for a required surety. The Purchaser shall execute
such documentation if requested by the related Pledged Asset
Servicer.
(2) In the event that the Servicer receives a Required Surety
Payment from a Surety Bond Issuer on behalf of the
Purchaser, the Servicer shall deposit such Required Surety
Payment in the Collection Account and shall distribute such
Required Surety Payment, or the proceeds thereof, in
accordance with the provisions hereof applicable to
Insurance Proceeds.
(3) Purchaser will cooperate with Servicer to transfer to
Purchaser the coverage of each Surety Bond in respect of the
related Pledged Asset Mortgage Loans.
Section 5.19 Inspections.
------------
If any Mortgage Loan is more than ninety (90) days delinquent, the Servicer
immediately shall inspect the Mortgaged Property and shall conduct subsequent
inspections in accordance with the servicing standard set forth in Section
5.01(1) or as may be required by the primary mortgage guaranty insurer. The
Servicer shall keep a written report of each such inspection.
Section 5.20 Restoration of Mortgaged Property.
----------------------------------
The Servicer need not obtain the approval of the Purchaser prior to
releasing any Insurance Proceeds or Condemnation Proceeds to the Mortgagor to be
applied to the restoration or repair of the Mortgaged Property if such release
is in accordance with servicing standards set forth in Section 5.01(1). For
claims greater than $15,000, at a minimum the Servicer shall comply with the
following conditions in connection with any such release of Insurance Proceeds
or Condemnation Proceeds:
(a) the Servicer shall receive satisfactory independent verification of
completion of repairs and issuance of any required approvals with
respect thereto;
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(b) the Servicer shall take all steps necessary to preserve the priority
of the lien of the Mortgage, including, but not limited to requiring
waivers with respect to mechanics' and materialmen's liens;
(c) the Servicer shall verify that the Mortgage Loan is not in default;
and
(d) pending repairs or restoration, the Servicer shall place the Insurance
Proceeds or Condemnation Proceeds in the Escrow Account.
If the Purchaser is named as an additional loss payee, the Servicer is
hereby empowered to endorse any loss draft issued in respect of such a claim in
the name of the Purchaser.
Section 5.21 Real Estate Owned Reports.
--------------------------
Together with the reports furnished pursuant to Section 6.02, the Servicer
shall furnish to the Purchaser on or before the Remittance Date each month a
statement in the form of Exhibit 5.21 with respect to any REO Property covering
the operation of such REO Property for the previous month and the Servicer's
efforts in connection with the sale of such REO Property and any rental of such
REO Property incidental to the sale thereof for the previous month. That
statement shall be accompanied by such other information as the Purchaser shall
reasonably request.
Section 5.22 Reports of Foreclosures and Abandonments of Mortgaged
------------------------------------------------------------
Property.
---------
Following the foreclosure sale or abandonment of any Mortgaged Property,
the Servicer shall report such foreclosure or abandonment as required pursuant
to Section 6050J of the Code. The Servicer shall file information reports with
respect to the receipt of mortgage interest received in a trade or business,
reports of foreclosures and abandonments of any Mortgaged Property and
information returns relating to cancellation of indebtedness income with respect
to any Mortgaged Property as required by the Code. Such reports shall be in form
and substance sufficient to meet the reporting requirements imposed by the Code.
Section 5.23 Notification of Adjustments.
----------------------------
With respect to each Mortgage Loan, the Servicer shall adjust the Note Rate
on the related Rate Adjustment Date in compliance with the requirements of
applicable law and the related Mortgage and Mortgage Note. The Servicer shall
execute and deliver any and all necessary notices required under applicable law
and the terms of the related Mortgage Note and Mortgage regarding the Note Rate
adjustments. The Servicer shall promptly, upon written request, deliver to the
Purchaser such notifications along with information regarding the applicable
date of such adjustments and the methods used to calculate and implement such
adjustments. Upon the discovery by the Servicer or the receipt of notice from
the Purchaser that the Servicer has failed to adjust a Note Rate in accordance
with the terms of the related Mortgage Note, the Servicer shall immediately
deposit in the Collection Account from its own funds the amount of any interest
loss or deferral caused the Purchaser thereby.
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Section 5.24 Disaster Recovery/Business Continuity Plan.
-------------------------------------------
The Servicer shall establish contingency plans, recovery plans and proper
risk controls to ensure Servicer's continued performance under this Agreement.
The plans must be in place within thirty (30) calendar days after the date of
this Agreement and shall include, but not be limited to, testing and corrective
actions to be immediately implemented, if necessary. The Servicer agrees to make
copies or summaries of the plans available to the Purchaser or its regulators
upon request.
Section 5.25 Fair Credit Reporting Act.
--------------------------
(a) The Servicer shall furnish, in accordance with the Fair Credit
Reporting Act and its implementing regulations, accurate and complete
information (i.e., favorable and unfavorable) on each Mortgagor's credit files
to Equifax, Experian, and Trans Union Credit Information Servicer (three of the
credit repositories), on a monthly basis.
(b) The Servicer agrees to transmit full-file credit reporting data for
each Mortgage Loan pursuant to Xxxxxx Xxx Guide Announcement 95-19 and for each
Mortgage Loan, the Servicer shall report one of the following statuses each
month: new origination, current, delinquent (30-, 60-, 90-days, etc.),
foreclosed or charged-off.
(c) The Servicer shall comply with Title V of the Xxxxx-Xxxxx-Xxxxxx Act of
1999 and all applicable regulations promulgated thereunder, relating to the
Mortgage Loans and the related Mortgagors and shall provide all required notices
thereunder.
ARTICLE VI
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
related Determination Date (including (1) the amount of any Principal Prepayment
occurring during the related Principal Prepayments Period, 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 5.15),
net of charges against or withdrawals from the Collection Account pursuant to
Subsection 5.05, plus (b) all amounts, if any, which the Servicer is obligated
to remit as Monthly Advances pursuant to Subsection 6.03, minus (c) any amounts
attributable to Principal Prepayments received after the end of the calendar
month preceding the month in which the Remittance Date occurs, minus (d) any
amounts attributable to Monthly Payments collected but due on a Due Date or Due
Dates subsequent to the related Due Period.
(2) All remittances made to the Purchaser on each Remittance Date will be made
to the Purchaser by wire transfer of immediately available funds according to
the instructions that will be provided by Purchaser to the Servicer.
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(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 One month LIBOR (as
published in the Walls Street Journal) plus 200 basis 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 Automated Servicing Systems and Statements to Purchaser.
--------------------------------------------------------
The Servicer shall setup, format, maintain and transmit to the Purchaser
the Servicer's servicing files and other electronic data storage and
transmission systems related to the Mortgage Loans (collectively, the "Servicing
Systems") in accordance with the guidelines and requirements set forth in
Exhibit 6.02 attached hereto (the "Servicer Requirements"), and the Servicer
shall cooperate with the Purchaser to receive data from the Purchaser that is to
be incorporated in the Servicing Systems in accordance with this Agreement. The
Purchaser shall reimburse the Servicer for any reasonable out-of-pocket expenses
incurred in connection with the Servicer's implementation of the Servicing
Systems.
Not later than the first (1st) Business Day of each month, the Servicer
shall furnish to the Purchaser, with respect to the preceding month, a monthly
collection report, a monthly paid in full report that summarizes Mortgage Loans
paid in full during the related Principal Prepayment and a monthly trial balance
report that provides a trial balance as of the last day of the month preceding
such Remittance Date in electronic format agreed upon by the Servicer and the
Purchaser.
Not later than the fifth (5th) Business Day of each month, the Servicer
shall furnish to the Purchaser a delinquency report and a monthly remittance
advice, including the information set forth in Exhibit 6.02, in both a physical
form (including via website) and a mutually agreeable electronic format as to
the remittance on such Remittance Date and as to the period ending on the last
day of the month preceding such Remittance Date.
On or before the 5th Business Day following the Accounting Cut-off Date 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(i)
attached hereto with respect to the most recently ended Due 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 and the amount of any Principal Prepayments as of the most recent
Accounting Cut-off Date. Such monthly reports shall be available by the Servicer
for the Purchaser on Servicer's secured web-site. The Servicer shall provide
training, secured access and password(s) to the Purchaser on the operation of
the website.
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In addition to the foregoing, utilizing resources reasonably available to
the Servicer and to the extent the requested data is contained within the
Servicer's electronic systems 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, periodic,
special or other reports, information or documentation are not customarily
prepared by the Servicer or require that the Servicer program data processing
systems to create the reports, information or documentation, 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, information or documentation. 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 6.03 Monthly Advances by the Servicer.
---------------------------------
(1) On or prior to each related Remittance Date, the Servicer shall either (a)
deposit in the Collection Account from its own funds an amount equal to the
aggregate amount of all Monthly Payments which were due on the Mortgage Loans
during the applicable Due Period and which were delinquent at the close of
business on the immediately preceding Determination Date (each such advance, a
"P&I Advance"), (b) cause to be made an appropriate entry in the records of the
Collection Account that amounts held for future distribution have been, as
permitted by this Section 6.03, used by the Servicer in discharge of any such
P&I Advance or (c) make P&I Advances in the form of any combination of (a) or
(b) aggregating the total amount of advances to be made. Any amounts held for
future distribution and so used shall be replaced by the Servicer by deposit in
the Collection Account on or before any future Remittance Date if funds in the
Collection Account on such Remittance Date shall be less than payments to the
Purchaser required to be made on such Remittance Date. The Servicer's obligation
to make P&I Advances as to any Mortgage Loan is mandatory and will continue
through the last Monthly Payment due prior to the payment in full of a Mortgage
Loan, or through the last related Remittance Date prior to the Remittance Date
for the distribution of all other payments or recoveries (including proceeds
under any title, hazard or other insurance policy, or condemnation awards) with
respect to a Mortgage Loan; provided, however, that such obligation shall cease
if the Servicer, in its good faith judgment, determines that such P&I Advances
would not be a Nonrecoverable Advance pursuant to Section 6.04. The
determination by the Servicer that a P&I Advance, if made, would be a
Nonrecoverable Advance, shall be evidenced by an Officer's Certificate of the
Servicer, delivered to the Purchaser, which details the reasons for such
determination. The Servicer shall not have any obligation to advance amounts in
respect of shortfalls relating to the Servicemembers Civil Relief Act and
similar state and local laws.
(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
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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 an advance with respect to
such Mortgage Loan would constitute a Non-recoverable Advance.
(3) On or prior to each related Remittance Date, the Servicer shall deposit into
the Collection Account payments on account of Prepayment Interest Shortfall
Amount in an aggregate amount equal to the lesser of (i) the aggregate amount of
Prepayment Interest Shortfall Amounts for the related Remittance Date resulting
solely from Principal Prepayments during the related Principal Prepayment
Period, and (ii) the total amount of the servicing compensation that would be
payable to the Servicer if no Principal Prepayments were made during the
Principal Prepayment Period related to such Remittance Date. Such payments shall
be deposited into the Collection Account.
Section 6.04 Non-recoverable Advances.
-------------------------
The determination by the Servicer that it has made a Non-recoverable
Advance or 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.
Section 6.05 Officer's Certificate.
----------------------
The Seller shall deliver to the Purchaser an Officer's Certificate in the
form attached hereto as Exhibit 9 on the Initial Funding Date and upon
Purchaser's reasonable request thereafter.
ARTICLE VII
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 attempt to 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.)
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(3) If the Servicer receives a request for any Mortgage Loan 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(3), 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.
(4) 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.
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. 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.
With the exception of short sales, 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 5 Business Days following discovery of such release, 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.
69
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 Custodian shall, upon request of the Servicer and delivery
to the Custodian of a servicing receipt signed by a Servicing Officer pursuant
to the Custodial Agreement, release the Custodian's Mortgage File held by the
Custodian to the Servicer. Such servicing receipt shall obligate the Servicer to
return the related mortgage documents to the Custodian 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 Custodian'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 Custodian a certificate of
a Servicing Officer certifying as to the name and address of the Person to which
such Custodian'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 Custodian to the Servicer.
Section 7.03 Servicing Compensation.
-----------------------
As compensation for its services hereunder, the Servicer shall be entitled
to retain from interest payments on the related 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 as provided in Section 5.01(e), and
other similar compensation 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 or the Purchaser's designee on
or before March 15 of each year, beginning with March 15, 2006, an Officers'
Certificate in the form of Exhibit 11 (or such other form as required by Reg AB)
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
officer and the nature and status thereof.
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Section 7.05 Annual Independent Certified Public Accountants' Servicing
-------------------------------------------------------------
Report.
-------
On or before February 28 of each year beginning February 28, 2006 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 mortgage loans by the
Servicer generally that include a sampling of the Mortgage Loans, the provisions
of this Agreement 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. Notwithstanding the foregoing, following the effective
date for Reg AB, the Servicer shall be required to provide such accountant's
reports as is required by Reg AB for Mortgage Loans included in public
securitizations.
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 15 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.
Section 7.07 Compliance with REMIC Provisions
--------------------------------
If a REMIC election has been made with respect to the arrangement under
which the Mortgage Loans and REO Property are held, the Servicer shall not take
any action, cause the REMIC to take any action or fail to take (or fail to cause
to be taken) any action that, under the REMIC Provisions, if taken or not taken,
as the case may be, could (i) endanger the status of the REMIC as a REMIC or
(ii) result in the imposition of a tax upon the REMIC (including but not limited
to the tax on "prohibited transactions" as defined in Section 860 (a) (2) of the
Code and the tax on "contributions" to a REMIC set forth in Section 860(d) of
the Code) unless the Servicer has received an Opinion of Counsel (at the expense
of the party seeking to take such action) to the effect that the contemplated
action will not endanger such REMIC status or result in the imposition of any
such tax.
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ARTICLE VIII
REPORTS TO BE PREPARED BY THE SERVICER; SERVICER TO COOPERATE
Section 8.01 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 available for its two
most recently completed fiscal years, 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 Funding Date and all other financial statements
prepared following the Funding Date to the extent any such statements are
available upon request to the public at large.
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.
Section 8.02 Provision of Information.
-------------------------
The Servicer shall provide to the OCC and to comparable regulatory
authorities supervising the Purchaser or any of Purchaser's assigns (including
beneficial owners of securities issued in Pass-Through Transfers backed by the
Mortgage Loans) and the examiners and supervisory agents of the OCC and such
other authorities, access to the documentation required by applicable
regulations of the OCC and other authorities supervising the Purchaser or any of
its assigns with respect to the Mortgage Loans. Such access shall be afforded
without charge, but only upon reasonable and prior written request and during
normal business hours at the offices designated by the Servicer.
The Servicer shall execute and deliver all such instruments and take all
such action as the Purchaser may reasonably request from time to time, in order
to effectuate the purposes and to carry out the terms of this Agreement.
Section 8.03 Cooperation with Third-party Service Providers.
-----------------------------------------------
The Servicer shall cooperate with the Purchaser in servicing the Mortgage
Loans in accordance with the usual and customary requirements of any credit
enhancement, risk management and other service providers and shall otherwise
cooperate with the Purchaser in connection with such third-party service
providers and the provision of third-party services; provided, however, that
such requirements are reasonably acceptable to the Servicer and pose no greater
risk, obligation or expense to the Servicer than otherwise set forth in this
Agreement. Any additional costs and/or expenses will be paid by the requesting
party.
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ARTICLE IX
THE SELLERS
Section 9.01 Indemnification; Third Party Claims.
------------------------------------
Each Seller and Servicer shall, jointly and severally, 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 either Seller of any of its representations and
warranties contained in Article III or (ii) a breach by either 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 and in accordance
with the standard of care in Section 9.03, provided however, in the case of both
of the preceding clauses (i) and (ii), PHH Mortgage shall have no obligation to
indemnify an Indemnified Party for a breach by the Trust of the Trust's
representations contained in Sections 3.01, 3.03(3) or 3.03(16) hereof. In the
event of a breach by the Trust of the Trust's representations in Section 3.01,
3.03(3) or 3.03(16), the Indemnified Party's sole right to indemnification shall
be from the Trust. 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 (with the prior written
consent of the Purchaser) 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 Purchaser in respect of such claim. Nothing contained herein shall
prohibit the Purchaser, 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. The Servicer shall be reimbursed from amounts on deposit in the
Collection Account for all amounts advanced by it pursuant to the second
preceding sentence except when the claim in any way relates to the Servicer's
indemnification pursuant to this Section 9.01.
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 by the Purchaser, the successor or surviving
Person, in the case of a merger or consolidation, etc. of the Servicer, shall be
an institution (i) having a GAAP net worth of not less than $35,000,000, and
(ii) who is a Xxxxxx Xxx/Xxxxxxx Mac-approved company in good standing.
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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, with the consent of the Purchaser, 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 except when the claim in any
way relates to the Servicer's indemnification pursuant to Section 9.01. This
indemnity shall survive the termination of this Agreement.
Section 9.04 Servicer Not to Resign.
-----------------------
With respect to the retention by PHH Mortgage of the servicing of the
Mortgage Loans and the REO Properties hereunder, PHH Mortgage acknowledges that
the Purchaser has acted in reliance upon PHH 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, PHH 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 consent of the Purchaser (which consent shall
not be unreasonably withheld), or (ii) upon determination that its duties
hereunder are no longer permissible under applicable law and such incapacity
cannot be cured by PHH Mortgage. Any determination permitting the resignation of
PHH 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. No such
resignation or assignment shall become effective until a successor has assumed
the Servicer's responsibilities and obligations hereunder in accordance with
Subsection 12.01.
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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 1 Business Day;
(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 30 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 30-day period shall not
begin with respect to any failure to cure, repurchase or substitute 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 PHH Mortgage to be eligible to service Mortgage
Loans for Xxxxxx Xxx or Xxxxxxx Mac;
(7) except as permitted by this Agreement, any sale, transfer, assignment, or
other disposition by a Seller/Servicer of all or substantially all of its
property or assets, any assignment by a Seller/Servicer of this Agreement or any
of a Seller's/Servicer's rights or obligations hereunder 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; or
(8) any failure by the Seller/Servicer to be in compliance with applicable
"doing business" or licensing laws of any jurisdiction where Mortgaged Property
is located;
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 Servicer may,
in addition to whatever rights the Purchaser may have at law or equity to
damages, including injunctive relief and specific performance, terminate all the
rights and obligations of the Servicer 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 Default under
Subsection (3), (4) or (5) of this Section 10.01, this Agreement and all
authority and power of the Servicer 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 Servicer under this Agreement (whether with respect to the Mortgage
Loans or otherwise), shall pass to and be vested in the successor appointed
pursuant to Section 12.01. Notwithstanding the occurrence of an Event of
Default, the Sellers or the Servicer, as applicable, shall be entitled to all
amounts due to such party and remaining unpaid on such date of termination.
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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 Servicer 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 Servicer 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 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 delivery and payment for the Mortgage Loans on each Funding Date as
well as the termination of this Agreement and shall inure to the benefit of the
parties, their successors and assigns. The Sellers and Servicer further agree
that the representations, warranties and covenants made by Sellers and Servicer
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.
ARTICLE XII
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
76
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.
The Servicer shall, at its expense, promptly deliver to the successor the
funds in the Collection Account and the Escrow Account and the Mortgage Files
and related documents and statements held by it hereunder and the Servicer shall
account for all funds. The Servicer shall execute and deliver such instruments
and do such other things all as may reasonably be required to more fully and
definitely vest and confirm in the successor all such rights, powers, duties,
responsibilities, obligations and liability of the Servicer. The successor shall
make such arrangements as it may deem appropriate to reimburse the Servicer for
unrecovered Servicing Advances which the successor retains hereunder and which
could otherwise have been recovered by the Servicer pursuant to this Agreement
but for the appointment of the successor Servicer.
The Purchaser shall be entitled to be reimbursed from the Servicer for all
costs associated with the transfer of servicing, including, without limitation,
any costs or expenses associated with the complete transfer of all servicing
data and the completion, correction or manipulation of such servicing data as
may be required by the Purchaser to correct any errors or insufficiencies in the
servicing data or otherwise to enable the Purchaser to service the Mortgage
Loans properly and effectively.
Section 12.02 Governing Law.
--------------
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF NEW YORK AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER
SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
EACH OF THE SELLERS, THE SERVICER AND THE PURCHASER HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVES ANY AND ALL RIGHTS IT MAY HAVE TO A TRIAL
BY JURY IN RESPECT OR ANY LITIGATION BASED ON, OR ARISING OUT OF, UNDER, OR IN
CONNECTION WITH, THIS AGREEMENT, OR ANY OTHER DOCUMENTS AND INSTRUMENTS EXECUTED
IN CONNECTION HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
(WHETHER ORAL OR WRITTEN), OR ACTIONS OF THE SELLERS, THE SERVICER OR THE
PURCHASER. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE PURCHASER TO ENTER
INTO THIS AGREEMENT
77
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, Bank of
America, National Association, Hearst Tower, NC1-027-21-04, 000 Xxxxx Xxxxx
Xxxxxx, 00xx Xxxxx, Xxxxxxxxx, XX, 00000, Attention: Managing Director,
telephone: 000-000-0000, fax: 000-000-0000 or such further address as may
hereafter be furnished to the Sellers and Servicer by the Purchaser, (ii) in the
case of PHH Mortgage, PHH Mortgage Corporation, 0000 Xxxxxxxxxx Xxxx, Xx.
Xxxxxx, XX 00000, Attention: Vice President, Servicing, and (iii) in the case of
the Trust, c/o PHH Mortgage Corporation, as Administrator, 0000 Xxxxxxxxxx Xxxx,
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 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;
78
(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 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.
79
Section 12.10 Entire Agreement; Amendment.
----------------------------
This Agreement (including the schedules and exhibits annexed hereto or
referred to herein), together with the PHH 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 and the Servicer 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.
Section 12.12 Intention of the Seller.
------------------------
Each Seller intends that the conveyance of such Seller's right, title and
interest in and to the Mortgage Loans to the Purchaser shall constitute a sale
and not a pledge of security for a loan. If such conveyance is deemed to be a
pledge of security for a loan, however, the applicable Seller intends that the
rights and obligations of the parties to such loan shall be established pursuant
to the terms of this Agreement. Each Seller also intends and agrees that, in
such event, (i) the applicable Seller shall be deemed to have granted to the
Purchaser and its assigns a first priority security interest in such Seller's
entire right, title and interest in and to the Mortgage Loans, all principal and
interest received or receivable with respect to the Mortgage Loans, all amounts
held from time to time in the accounts mentioned pursuant to this Agreement and
all reinvestment earnings on such amounts, together with all of the applicable
Seller's right, title and interest in and to the proceeds of any title, hazard
or other insurance policies related to such Mortgage Loans and (ii) this
Agreement shall constitute a security agreement under applicable law. All rights
and remedies of the Purchaser under this Agreement are distinct from, and
cumulative with, any other rights or remedies under this Agreement or afforded
by law or equity and all such rights and remedies may be exercised concurrently,
independently or successively.
Section 12.13 Relationship of Parties.
------------------------
Nothing herein contained shall be deemed or construed to create a
partnership or joint venture between the parties hereto and the services of the
Servicer shall be rendered as an independent contractor and not as agent for the
Purchaser.
Section 12.14 Successors and Assigns.
-----------------------
Subject to Sections 9.02 and 9.04, this Agreement shall inure to the
benefit of and be binding upon the Sellers, the Servicer and the Purchaser and
their respective successors and assigns.
80
Section 12.15 Solicitation of Mortgagor.
--------------------------
From and after each Funding Date, each of the Purchaser, Sellers and
Servicer agrees that it will not take any action or permit or cause any action
to be taken by any of its agents or affiliates, or by any independent
contractors or independent mortgage brokerage companies on the Purchaser's,
Seller's or Servicer's, as applicable, behalf, to personally, by telephone, mail
or electronic mail, solicit the Mortgagor under any Mortgage Loan for the
purpose of refinancing such Mortgage Loan. It is understood and agreed that
promotions undertaken by the Purchaser, Seller or Servicer, as applicable, or
any of its affiliates which are directed to such entity's entire portfolio of
mortgage loans (as opposed to only the Mortgage Loans) or to the general public
at large, including, without limitation, mass mailings based on commercially
acquired mailing lists, newspaper, radio or television advertisements shall not
constitute solicitation under this Section, nor is the Purchaser, Seller or
Servicer, as applicable, prohibited from responding to unsolicited requests or
inquiries made by a Mortgagor or an agent of a Mortgagor.
Section 12.16 Confidential Information.
-------------------------
Each of the Sellers and the Servicer shall keep confidential and shall not
divulge to any party, without the Purchaser's prior written consent, the price
paid by the Purchaser for the Mortgage Loans, except to the extent that it is
reasonable and necessary for the Sellers or Servicer, as applicable, to do so in
working with legal counsel, auditors, taxing authorities or other governmental
agencies.
The Purchaser, the Sellers and the Servicer agree they (i) shall comply
with all applicable laws and regulations regarding the privacy or security of
nonpublic personal information received or obtained by a party with respect to a
Mortgagor ("Consumer Information"), (ii) shall not collect, create, use, store,
access, disclose or otherwise handle Consumer Information in any manner
inconsistent with any applicable laws or regulations regarding the privacy or
security of Consumer Information, (iii) shall not disclose Consumer Information
to any affiliated or non-affiliated third party except to enforce or preserve
its rights, as otherwise permitted or required by applicable law (or by
regulatory authorities having jurisdiction in the premises) or, in the case of
the Servicer, at the specific written direction of the Purchaser, (iv) shall
maintain appropriate administrative, technical and physical safeguards to
protect the security, confidentiality and integrity of Consumer Information,
including maintaining security measures designed to meet the Interagency
Guidelines Establishing Standards for Safeguarding Consumer Information
published in final form on February 1, 2001, 66 Fed. Reg. 8616, and the rules
promulgated thereunder and (v) shall promptly notify the other party in writing
upon becoming aware of any actual breach and of any suspected breach of this
section. The Servicer shall promptly provide the Purchaser's regulators
information regarding such security measures upon the reasonable request of the
Purchaser, which information shall include, but not be limited to, any SAS 70 or
similar independent audit reports, summaries of test results or equivalent
measures taken by the Servicer with respect to its security measures, as agreed
upon by the parties. Each party shall indemnify and defend the other party
against, and shall hold the other party harmless from, any cost, expense, loss,
claim or other liability that such other party may suffer as a result of or in
connection with its failure to comply with or perform the obligations set forth
in this section. The restrictions set forth herein shall survive the termination
of this Agreement.
81
Section 12.17 Equal Opportunity.
------------------
The Purchaser, the Sellers and the Servicer represent that they are equal
opportunity employers and do not discriminate in employment of persons or
awarding of subcontracts because of a person's race, sex, age, religion,
national origin, veteran or handicap status. The Sellers and Servicer are aware
of and fully informed of the Purchaser's responsibilities and agree to the
provisions under the following: (a) Executive Order 11246, as amended or
superseded in whole or in part, and as contained in Section 202 of said
Executive Order as found at 41 C.F.R. ss. 60-1.4(a)(1-7); (b) Section 503 of the
Rehabilitation Act of 1973 as contained in 41 C.F.R. ss. 60-741.4; and (c) The
Vietnam Era Veterans' Readjustment Assistance Act of 1974 as contained in 41
C.F.R. ss. 60-250.4.
Section 12.18 Reproduction of Documents.
--------------------------
This Agreement and all documents relating thereto, including, without
limitation, (a) consents, waivers and modifications which may hereafter be
executed, (b) documents received by any party at the closing, and (c) financial
statements, certificates and other information previously or hereafter
furnished, may be reproduced by any photographic, photostatic, microfilm,
micro-card, miniature photographic or other similar process. The parties agree
that any such reproduction shall be admissible in evidence as the original
itself in any judicial or administrative proceeding, whether or not the original
is in existence and whether or not such reproduction was made by a party in the
regular course of business, and that any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in evidence.
Section 12.19 Purchase Price and Terms Letter.
--------------------------------
The terms and conditions set forth in the Purchase Price and Terms Letter
between the Purchaser and the Sellers with respect to each Funding Date shall be
incorporated herein. In the event of any conflict between the terms of this
Agreement and the related Purchase Price and Terms Letter, this Agreement shall
control.
82
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.
BANK OF AMERICA, NATIONAL
ASSOCIATION
By:__________________________________
Name:
Title:
PHH MORTGAGE CORPORATION
By:__________________________________
Name:
Title:
XXXXXX'X GATE RESIDENTIAL
MORTGAGE TRUST (formerly known as
CENDANT RESIDENTIAL MORTGAGE
TRUST)
By: PHH Mortgage Corporation, as
Administrator
By:__________________________________
Name:
Title:
EXHIBIT 2.05
FORM OF ASSIGNMENT, ASSUMPTION AND RECOGNITION AGREEMENT
THIS ASSIGNMENT, ASSUMPTION AND RECOGNITION AGREEMENT (this "Assignment"),
dated of _________ __, 2005, is entered into among [_______________], a
_______________ (the "Assignee"), [______________________] (the "Assignor"),
[PHH Mortgage Corporation] [Xxxxxx'x Gate Residential Mortgage Trust] (the
"Seller "), with PHH Mortgage Corporation, as the servicer (the "Servicer").
RECITALS
--------
WHEREAS the Assignor, the Seller and the Servicer have entered into a
certain Mortgage Loan Flow Purchase, Sale and Servicing Agreement, dated as of
August 1, 2005 (as amended or modified to the date hereof, the "Agreement"),
pursuant to which the Assignor has acquired certain Mortgage Loans pursuant to
the terms of the Agreement and Servicer has agreed to service such Mortgage
Loans; and
WHEREAS the Assignee has agreed, on the terms and conditions contained
herein, to purchase from the Assignor [certain] [all] of the Mortgage Loans (the
"Specified Mortgage Loans") which are subject to the provisions of the Agreement
and are listed on the mortgage loan schedule attached as Exhibit I hereto (the
"Specified Mortgage Loan Schedule");
NOW, THEREFORE, in consideration of the mutual promises contained herein
and other good and valuable consideration (the receipt and sufficiency of which
are hereby acknowledged), the parties agree as follows:
1. Assignment and Assumption
-------------------------
(a) On and of the date hereof, the Assignor hereby sells, assigns and
transfers to the Assignee all of its right, title and interest in the Specified
Mortgage Loans and all rights related thereto as provided under the Agreement to
the extent relating to the Specified Mortgage Loans, the Assignee hereby accepts
such assignment from the Assignor, and the Seller hereby acknowledges such
assignment and assumption.
(b) On and as of the date hereof, the Assignor represents and warrants to
the Assignee that the Assignor has not taken any action that would serve to
impair or encumber the Assignee's ownership interests in the Specified Mortgage
Loans since the date of the Assignor's acquisition of the Specified Mortgage
Loans.
2. Recognition of Purchaser
------------------------
From and after the date hereof, both the Assignee and the Seller shall note
the transfer of the Specified Mortgage Loans to the Assignee in their respective
books and records and shall recognize the Assignee as the owner of the Specified
Mortgage Loans, and Servicer shall service the Specified Mortgage Loans for the
benefit of the Assignee pursuant to the Agreement, the terms of which are
incorporated herein by reference. It is the intention of the Seller, the
Servicer, the Assignee and the Assignor that the Assignment shall be binding
upon and inure to the benefit of the Assignee and the Assignor and their
successors and assigns.
3. Representations and Warranties
------------------------------
(a) The Assignee represents and warrants that it is a sophisticated
investor able to evaluate the risks and merits of the transactions contemplated
hereby, and that it has not relied in connection therewith upon any statements
or representations of the Seller or the Assignor other than those contained in
the Agreement or this Assignment.
(b) Each of the parties hereto represents and warrants that it is duly and
legally authorized to enter into this Assignment.
(c) Each of the parties hereto represents and warrants that this Assignment
has been duly authorized, executed and delivered by it and (assuming due
authorization, execution and delivery thereof by each of the other parties
hereto) constitutes its legal, valid and binding obligation, enforceable against
it 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 by general equitable principles
(regardless of whether such enforcement is considered in a proceeding in equity
or at law).
(d) The Seller and the Servicer hereby represent and warrant that the
representations and warranties set forth in Sections 3.01 and 3.02 of the
Agreement are true and correct as of the date hereof and that the
representations and warranties set forth in Section 3.03 of the Agreement are
true and correct as of the related Funding Date.
4. Continuing Effect
-----------------
Except as contemplated hereby, the Agreement shall remain in full force and
effect in accordance with its terms.
5. Governing Law
-------------
This Assignment and the rights and obligations hereunder shall be governed
by and construed in accordance with the internal laws of the State of New York.
6. Notices
-------
Any notices or other communications permitted or required under the
Agreement to be made to the Assignee shall be made in accordance with the terms
of the Agreement and shall be sent to the Assignee as follows:
[_____________________], or to such other address as may hereafter be furnished
by the Assignee to the parties in accordance with the provisions of the
Agreement.
7. Counterparts
------------
This Agreement may be executed in counterparts, each of which when so
executed shall be deemed to be an original and all of which when taken together
shall constitute one and the same instrument.
8. Definitions
-----------
Any capitalized term used but not defined in this Agreement has the same
meaning as in the Agreement.
[Assignment continues with signature page]
IN WITNESS WHEREOF, the parties hereto have executed this Assignment the
day and year first above written.
ASSIGNOR:
[___________________]
By: _______________________
Name: _______________________
Title:
SELLER:
[PHH MORTGAGE CORPORATION]
[XXXXXX'X GATE RESIDENTIAL
MORTGAGE TRUST]
By: _______________________
Name: _______________________
Title:
ASSIGNEE:
By: _______________________
Name: _______________________
Title:
SERVICER:
PHH MORTGAGE CORPORATION
By: _______________________
Name: _______________________
Title:
EXHIBIT 6.02
SERVICER REQUIREMENTS
Loading/Updating Investor Headers
1. The Purchaser will provide investor header matrix for input on MSP by
Servicer. Updates/additions will occur monthly, including new investor
header detail for each new deal that is settled.
2. The Servicer will load investor headers upon receipt or before month
end. The following fields will need to be updated on IN03: MS OPT,
MS INV CNTRL NO, MS MO DELQ, and MS JUST FL.
3. The Servicer will update the investor headers on the first business day
of the next/following month to ensure that the correct loan accounts
will appear on the corresponding 413 file that will represent the new
month's activity.
Loading Account Numbers
1. Upon receipt of a funding schedule, the Purchaser will deliver a cross
reference of Servicer-to-Purchaser account numbers to the Servicer. The
account numbers will be delivered in the xxxx 55 layout for loading in
the next Servicer MSP cycle.
2. The Servicer will load account numbers on or before the first business
day of the month to ensure that the correct the Purchaser account
numbers will appear on the corresponding 413 file that will represent
the new month's activity.
Automated Monetary Transaction File - 413
1. Call Fidelity PowerCell and request installation of IP 770
2. On the first business day of the month, the financial transactions for
the LSBO portfolio will transmit from the Servicer MSP system to the
Purchaser MSP system.
Monthly Servicer File - Automated
1. Call Fidelity PowerCell and initiate an SSR for the installation of IP
1804 and the interchange set-up required to host and transmit this
file. This enhancement will provide an automated month-end feed from
the Servicer to the Purchaser for the LSBO portfolio identified by the
corresponding investor headers. The feed will include all new loans
purchased by the Purchaser in the previous month, as well as a
maintenance file for all existing loans in the LSBO portfolio
2. Once installed, populate XX flag on the IN03 screen. Thisflag will
assist with synchronizing the feeds received in the Monthly Servicer
File and the corresponding 413 file.
3. Bank of America will receive and process the electronic file on the
first business day of the month for the previous month-end file. Note:
This file comes from the Servicer automatically with the installation
of the IP.
Monthly Servicer File - Manual
For testing purposes, and in the event that the IP is not installed prior to
initial conversion, a manual process is in place to provide the Monthly Servicer
File data feed for remote MSP clients.
1. The Servicer will load/update investor header information received from
the Purchaser.
2. The Servicer will send an email granting permission to Fidelity to
provide the manual feed of accounts in the assigned investor headers
identified. The email will contain the MSP client and corresponding
investor/categories to be included in the feed.
3. Bank of America will receive and process the file on the first business
day of the month for the previous month-end file.
Note: For licensed MSP clients, the Servicer will install and use the existing
work-around EZTrieve process. (This will require the installation, testing, and
implementation of the EZTrieve until the IP is ready.) The Servicer will be
required to develop a test file and production files until the IP is available.
Reporting Requirements
Required reports for the LSBO project are as follows:
o S215 - Report summarizes the collections made during the reporting period
o S214 - Report summarizes paid in full loans made during the reporting
period
o P139 - Monthly statement of mortgage accounts or a trial balance as of
the cutoff date
o Scheduled Remittance Reports - Servicers send on a monthly basis. We
would like this report by the 5th business day.
o Delinquency Report - Report from the Servicer to be sent by the 5th
business day. If the Servicer is a Fidelity client, we would like a P4DL
report. Otherwise, a similar report will suffice. LSBO would like this
report sent via e-mail or fax.
Note: These S215, S214, and P139 reports will be provided in an electronic
format. These reports are automatically generated when the 951/139 cutoff is
calendared. The reports are required for the LSBO project; reports in addition
to these may be required.
EXHIBIT 10
FORM OF WARRANTY XXXX OF SALE
On this _______ day of ________, 200__, [PHH Mortgage Corporation]
[Xxxxxx'x Gate Residential Mortgage Trust] ("Seller") as the Seller under that
certain Mortgage Loan Flow Purchase, Sale & Servicing Agreement, dated as of
August 1, 2005 (the "Agreement") does hereby sell, transfer, assign, set over
and convey to Bank of America, National Association as Purchaser under the
Agreement, without recourse, but subject to the terms of the Agreement, all
rights, title and interest of the Seller in and to the Mortgage Loans listed on
the Mortgage Loan Schedule attached hereto, together with the related Mortgage
Files and all rights and obligations arising under the documents contained
therein. Pursuant to Section 2.01 of the Agreement, the Seller has delivered to
the Purchaser or its custodian the Legal Documents for each Mortgage Loan to be
purchased as set forth in the Agreement. The contents of each related Mortgage
File required to be retained by PHH Mortgage Corporation ("PHH") to service the
Mortgage Loans pursuant to the Agreement and thus not delivered to the Purchaser
are and shall be held in trust by PHH for the benefit of the Purchaser as the
owner thereof. PHH's possession of any portion of each such Mortgage File is at
the will of the Purchaser for the sole purpose of facilitating servicing of the
related Mortgage Loan pursuant to the Agreement, and such retention and
possession by PHH shall be in a custodial capacity only. The ownership of each
Mortgage Note, Mortgage, and the contents of the Mortgage File and 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 PHH shall immediately vest in the Purchaser and shall be retained
and maintained, in trust, by PHH at the will of the Purchaser in such custodial
capacity only.
The Seller confirms to the Purchaser that the representations and
warranties set forth in Sections 3.01, 3.02 and 3.03 of the Agreement are true
and correct as of the date hereof, and that all statements made in the Sellers'
Officer's Certificate and all attachments thereto remain complete, true and
correct in all respects as of the date hereof.
Capitalized terms used herein and not otherwise defined shall have the
meanings set forth in the Agreement.
[PHH MORTGAGE CORPORATION]
[XXXXXX'X GATE RESIDENTIAL MORTGAGE TRUST]
(Seller)
By:
Name:
Title:
EXHIBIT 11
FORM OF XXXXXXXX-XXXXX CERTIFICATION
I, Xxxxxx Xxxxxx, certify to [Master Servicer Name], in connection with [Insert
name and date of applicable contract and/or name of securitization deal] (the
"Agreement"), that I am a duly elected Senior Vice President of PHH Mortgage
Corporation, a corporation organized under the laws of the State of New Jersey
(the "Servicer") and further as follows:
(i) Based on my knowledge, the information in the Annual Statement of
Compliance, and the Annual Independent Public Accountant's Servicing Report and
all servicing reports, officer's certificates and other information relating to
the servicing of the Mortgage Loans submitted to the Master Servicer by the
Servicer, does not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading, as of the
last day of the period covered by the Annual Statement of Compliance;
(ii) Based on my knowledge, the servicing information required to be provided to
the Master Servicer by the Servicer under the Agreement has been provided to the
Master Servicer;
(iii) I am responsible for reviewing the activities performed by the Servicer
under this Agreement and based upon the review required by this Agreement, and
except as disclosed in the Annual Statement of Compliance, the Annual
Independent Public Accountant's Servicing Report, or otherwise disclosed in a
writing submitted to the Master Servicer, the Servicer has, as of last day of
the period covered by the Annual Statement of Compliance, fulfilled its
obligations under this Agreement; and
(iv) I have disclosed to the Master Servicer all significant deficiencies
relating to the Servicer's compliance with the minimum servicing standards as
determined in accordance with a review conducted in compliance with the Uniform
Single Attestation Program for Mortgage Bankers as set forth in this Agreement.
Capitalized terms used herein and not defined shall have the meanings ascribed
to them in the Agreement.
PHH Mortgage Corporation
By: ______________________________
Xxxxxx Xxxxxx
Senior Vice President
Date:
Schedule B-1
CONTENTS OF PURCHASER'S MORTGAGE FILE
With respect to each Mortgage Loan, the Purchaser's Mortgage File shall
include each of the following items, which shall be available for inspection by
the Purchaser, and which shall be retained by the applicable Seller or delivered
to the Purchaser pursuant to the provisions of the Sellers' Warranties and
Servicing Agreement.
To be Delivered 5 days prior to Closing Date:
---------------------------------------------
1. The original Mortgage Note bearing all intervening endorsements,
endorsed, at the direction of the Purchaser either (1) "Pay to the
order of [Purchaser or designee], without recourse," or (2) in blank
and signed in the name of the applicable Seller by an authorized
officer. To the extent that there is no space on the face of the
Mortgage Notes for endorsements, the endorsement may be contained on
an allonge, if state law so allows and the Purchaser is so advised by
the Seller that state law so allows
2. If the Mortgage Loan is not a MERS Mortgage Loan, the original
Assignment of Mortgage for each Mortgage Loan, in form and substance
acceptable for recording. The Mortgage shall be assigned, at the
direction of the Purchaser either (1) to [Purchaser or designee] or
(2) with assignee's name left blank. The Assignment of Mortgage must
be duly recorded only on the direction of the Purchaser. If the
Mortgage Loan was acquired by the applicable Seller in a merger, the
Assignment of Mortgage must be made by "PHH Mortgage Corporation,
successor by merger to [name of predecessor]." If the Mortgage Loan
was acquired or originated by the Seller while doing business under
another name or under an assumed name, the Assignment must be by "PHH
Mortgage Corporation formerly known as [previous name] or [PHH
Mortgage Corporation dba ______________, ] respectively.
3. With respect to each Pledged Asset Mortgage Loan, a copy of the related
Control Agreement and Pledged Asset Agreement.
4. With respect to each Pledged Asset Mortgage Loan, a copy of the UCC-1,
to the extent the Pledged Asset Servicer was required to deliver such
UCC-1 to Servicer, and an original form UCC-3, if applicable, to the
extent the Pledged Asset Servicer was required to deliver such UCC-3
to Servicer, together with any instrument required to be delivered
under the related Surety Bond for transferring coverage under such
Surety Bond.
5. With respect to each Cooperative Loan, the original Stock Certificate
and related Stock Power, in blank, executed by the Mortgagor with such
signature guaranteed and original Stock Power, in blank executed by
the Seller provided, that if the Seller delivers a certified copy, the
Seller shall deliver the original Stock Certificate and Stock Powers
to the Custodian on or prior to the date which is 180 days after the
related Closing Date.
To be delivered within 180 days after the related Closing Date:
---------------------------------------------------------------
1. The original Mortgage with evidence of recording thereon. If in
connection with any Mortgage Loan, the applicable Seller cannot
deliver or cause to be delivered the original Mortgage with evidence
of recording thereon on or prior to the Closing Date because of a
delay caused by the public recording office where such Mortgage has
been delivered for recordation or because such Mortgage has been lost
or because such public recording office retains the original recorded
Mortgage, the applicable Seller shall deliver or cause to be delivered
to the Custodian, a photocopy of such Mortgage, together with (i) in
the case of a delay caused by the public recording office, an
Officer's Certificate of the applicable Seller (or certified by the
title company, escrow agent, or closing attorney) stating that such
Mortgage has been dispatched to the appropriate public recording
office for recordation and that the original recorded Mortgage or a
copy of such Mortgage certified by such public recording office to be
a true and complete copy of the original recorded Mortgage will be
promptly delivered to the Custodian upon receipt thereof by the
applicable Seller; or (ii) in the case of a Mortgage where a public
recording office retains the original recorded Mortgage or in the case
where a Mortgage is lost after recordation in a public recording
office, a copy of such Mortgage certified by such public recording
office to be a true and complete copy of the original recorded
Mortgage;
2. To the extent applicable, the original of each power of attorney,
surety agreement or guaranty agreement with respect to such Mortgage
Loan;
3. Originals of any executed intervening assignments of the Mortgage, with
evidence of recording thereon or, if the original intervening
assignment has not yet been returned from the recording office, a copy
of such assignment certified by the applicable Seller to be a true
copy of the original of the assignment which has been sent for
recording in the appropriate jurisdiction in which the Mortgaged
Property is located.
4. Originals of all assumption, modification and substitution agreements,
if any, or, if the originals of any such assumption, modification and
substitution agreements have not yet been returned from the recording
office, a copy of such instruments certified by the applicable Seller
to be a true copy of the original of such instruments which have been
sent for recording in the appropriate jurisdictions in which the
Mortgaged Properties are located.
5. The original mortgagee policy of title insurance or, in the event such
original title policy is unavailable, a certified true copy of the
related policy binder or commitment for title certified to be true and
complete by the title insurance company, in each case, including an
Environmental Protection Agency Endorsement and an adjustable-rate
endorsement.
6. With respect to each Cooperative Loan, the original Recognition
Agreement and the original Assignment of Recognition Agreement;
7. With respect to each Cooperative Loan, an Estoppel Letter and/or
Consent;
8. With respect to each Cooperative Loan, the Cooperative Lien Search;
9. With respect to each Cooperative Loan, the guaranty of the Mortgage
Note and Cooperative Loan, if any;
10. With respect to each Cooperative Loan, the original Cooperative Pledge
Agreement;
11. With respect to each Cooperative Loan, the original Proprietary Lease
and the Assignment of Proprietary Lease executed by the Mortgagor in
blank or if the Proprietary Lease has been assigned by the Mortgagor
to the Seller, then the Seller must execute an assignment of the
Assignment of Proprietary Lease in blank; and
12. With respect to each Cooperative Loan, the recorded state and county
Financing Statements and Financing Statement Changes;
From time to time, the Sellers shall forward to the Custodian additional
original documents pursuant to the Agreement or additional documents evidencing
an assumption, modification, consolidation or extension of a Mortgage Loan
approved by the Sellers, in accordance with the Agreement. All such mortgage
documents held by the Custodian as to each Mortgage Loan shall constitute the
"Custodial File".
PHH Mortgage Corporation
Mortgage File Cover Sheet: Credit Documents (Schedule B-2)
Prepared by:_________________________ Phone: _____________
Location: PHH Mortgage Corporation Fax: ________________
------------------------
Borrower Name: ___________________
Loan Number:
________________________________________________________________________________
General:
_______ 1. Mortgage File Cover Sheet Checklist - Inside File
_______ 2. Borrower's Authorization to Obtain Information (Original)
_______ 3. Fannie Mae1008(original) or Underwriter's Worksheet (CUW2)
Applications:
_______ 4. Final Signed Typed Loan Application (Form 1003 or personal profile)
_______ 5. Initial Signed Loan Application (personal profile, handwritten or typed)
Credit Documentation:
_______ 6. Credit Report(s), Merged In-file or RMCR) (original or photocopy)
_______ 7. Borrower's explanations (credit, employment, etc., if applicable)
_______ 8. VOM(s) or other form of verification(s) on all mortgages (not required
on Aus scored loans)
_______ 9. Separation agreement, divorce decree (if applicable)
_______ 10. Miscellaneous Credit Documents (if applicable)
Employment/Income Documentation:
_______ 11. Copy or Original initial VOE(s); OR
_______ 12. Paystubs dated with 30 days of closing; OR
_______ 13. IRS Form W-2's Original or Copy (for wage earner); OR
_______ 14. IRS Form 1040's, 1120's, 1065's, etc.,(2 years)for self-employed);
_______ 15. Leases (if applicable)
_______ 16. All documentation required to support Borrower's cash flow for loans
Originated.
Asset Documentation:
_______ 17. Copy or Original VOD(s) or source of funds to close (if applicable)
_______ 18. Gift Letter (if applicable) (original)
_______ 19. Verification of original purchase price, real estate sales contract, or
HUD-1 on first mortgage (if applicable) Property
Documentation:
_______ 20. Appraisal, including original photos of subject and comps. (original)
_______ 21. Review Appraisal or second full Appraisal (if required) (original)
_______ 22. 442 Final Inspection
_______ 23. Copy or Original Contract of Sale
_______ 24. Miscellaneous
