Exhibit 10.2(G)
MORTGAGE LOAN FLOW PURCHASE, SALE & SERVICING AGREEMENT
dated as of April 30, 2003
between
PNC BANK, NATIONAL ASSOCIATION, Purchaser
and
CENDANT MORTGAGE CORPORATION and
XXXXXX'X GATE RESIDENTIAL MORTGAGE TRUST
(formerly known as CENDANT RESIDENTIAL MORTGAGE TRUST)
Sellers
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.......................................14
Section 2.01 Sale and Conveyance of Mortgage Loans............................14
Section 2.02 Possession of Mortgage Files.....................................16
Section 2.03 Books and Records................................................16
Section 2.04 Defective Documents; Delivery of Mortgage Loan Documents.........16
Section 2.05 Transfer of Mortgage Loans.......................................18
ARTICLE III: REPRESENTATIONS, WARRANTIES AND COVENANTS OF
THE SELLER; REPURCHASE AND SUBSTITUTION; REVIEW
OF MORTGAGE LOANS.........................................................19
Section 3.01 Representations, Warranties and Covenants of each Seller.........19
Section 3.02 Representations, Warranties and Covenants of the Servicer........22
Section 3.03 Representations and Warranties as to Individual Mortgage Loans...23
Section 3.04 Repurchase and Substitution......................................34
Section 3.05 Certain Covenants of each Seller and the Servicer................36
ARTICLE IV: REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
AND CONDITIONS PRECEDENT TO FUNDING.......................................37
Section 4.01 Representations and Warranties...................................37
Section 4.02 Conditions Precedent to Closing..................................39
ARTICLE V: ADMINISTRATION AND SERVICING OF MORTGAGE LOANS............................39
Section 5.01 Cendant Mortgage to Act as Servicer; Servicing Standards;
Additional Documents; Consent of the Purchaser...................39
Section 5.02 Collection of Mortgage Loan Payments.............................41
Section 5.03 Reports for Specially Serviced Mortgage Loans and
Foreclosure Sales................................................42
Section 5.04 Establishment of Collection Account; Deposits in Collection
Account..........................................................42
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Section 5.05 Permitted Withdrawals from the Collection Account................43
Section 5.06 Establishment of Escrow Accounts; Deposits in Escrow.............44
Section 5.07 Permitted Withdrawals From Escrow Accounts.......................45
Section 5.08 Payment of Taxes, Insurance and Other Charges; Maintenance
of Primary Insurance Policies; Collections Thereunder............45
Section 5.09 Transfer of Accounts.............................................46
Section 5.10 Maintenance of Hazard Insurance..................................46
Section 5.11 Maintenance of Mortgage Impairment Insurance Policy..............48
Section 5.12 Fidelity Bond; Errors and Omissions Insurance....................48
Section 5.13 Management of REO Properties.....................................49
Section 5.14 Sale of Specially Serviced Mortgage Loans and REO Properties
.................................................................51
Section 5.15 Realization Upon Specially Serviced Mortgage Loans and REO
Properties.......................................................51
Section 5.16 Investment of Funds in the Collection Account....................54
Section 5.17 MERS.............................................................54
ARTICLE VI: REPORTS; REMITTANCES; ADVANCES............................................55
Section 6.01 Remittances......................................................55
Section 6.02 Reporting........................................................56
Section 6.03 Monthly Advances by the Servicer.................................56
Section 6.04 Non-recoverable Advances.........................................56
Section 6.05 Itemization of Servicing Advances................................56
Section 6.06 Officer's Certificate............................................57
ARTICLE VII: GENERAL SERVICING PROCEDURE...............................................57
Section 7.01 Enforcement of Due-on-Sale Clauses, Assumption Agreements........57
Section 7.02 Satisfaction of Mortgages and Release of Mortgage Files..........58
Section 7.03 Servicing Compensation...........................................59
Section 7.04 Annual Statement as to Compliance................................59
Section 7.05 Annual Independent Certified Public Accountants' Servicing
Report...........................................................59
Section 7.06 Purchaser's Right to Examine Servicer Records....................59
ARTICLE VIII: REPORTS TO BE PREPARED BY THE SERVICER....................................60
Section 8.01 The Servicer's Reporting Requirements............................60
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Section 8.02 Financial Statements.............................................60
ARTICLE IX: THE SELLERS...............................................................61
Section 9.01 Indemnification; Third Party Claims..............................61
Section 9.02 Merger or Consolidation of the Seller............................62
Section 9.03 Limitation on Liability of the Sellers and Others................62
Section 9.04 Servicer Not to Resign...........................................63
ARTICLE X: DEFAULT...................................................................63
Section 10.01 Events of Default................................................63
ARTICLE XI: TERMINATION...............................................................64
Section 11.01 Term and Termination.............................................64
Section 11.02 Survival.........................................................65
ARTICLE XII: ARTICLE XII: GENERAL PROVISIONS..........................................65
Section 12.01 Successor to the Servicer........................................65
Section 12.02 Governing Law....................................................66
Section 12.03 Notices..........................................................66
Section 12.04 Severability of Provisions.......................................66
Section 12.05 Schedules and Exhibits...........................................66
Section 12.06 General Interpretive Principles..................................66
Section 12.07 Waivers and Amendments, Noncontractual Remedies
Preservation of Remedies.........................................67
Section 12.08 Captions.........................................................67
Section 12.09 Counterparts; Effectiveness......................................68
Section 12.10 Entire Agreement; Amendment......................................68
Section 12.11 Further Assurances...............................................68
Section 12.12 Intention of the Seller..........................................68
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Schedules
A. Mortgage Loan Schedule
B. Content of Mortgage File
B-1 Legal Documents
B-2 Credit Documents
C. Cendant Guidelines and Restrictions
Exhibits
Exhibit 2.05 Form of Assignment, Assumption and Recognition Agreement
Exhibit 5.03(a) Report P-4DL
Exhibit 5.03(b) Report S-5L2
Exhibit 5.03(c) Form of Notice of Foreclosure
Exhibit 5.04-1 Form of Collection Account Certification
Exhibit 5.04-2 Form of Collection Account Letter Agreement
Exhibit 5.06-1 Form of Escrow Account Certification
Exhibit 5.06-2 Form of Escrow Account Letter Agreement
Exhibit 6.02(a) Report P-139 -- Monthly Statement of Mortgage Accounts
Exhibit 6.02(b) Report S-50Y -- Private Pool Detail Report
Exhibit 6.02(c) Report S-213 -- Summary of Curtailments Made Remittance Report
Exhibit 6.02(d) Report S-214 -- Summary of Paid in Full Remittance Report
Exhibit 6.02(e) Report S-215 -- Consolidation of Remittance Report
Exhibit 6.02(f) Report T-62C -- Monthly Accounting Report
Exhibit 6.02(g) Report T-62E -- Liquidation Report
Exhibit 8.01 Report P-195 -- Delinquency Report
Exhibit 9 Form of Officer's Certificate
Exhibit 10 Form of Warranty Xxxx of Sale
Exhibit 11 Form of Additional Collateral Servicing Agreement
MORTGAGE LOAN FLOW PURCHASE, SALE & SERVICING AGREEMENT
This Mortgage Loan Flow Purchase, Sale & Servicing Agreement, dated as of
April 30, 2003, is entered into between PNC Bank, National Association, as the
Purchaser ("Purchaser"), Cendant Mortgage Corporation ("Cendant Mortgage") and
Xxxxxx'x Gate Residential Mortgage Trust (formerly known as Cendant Residential
Mortgage Trust) (the "Trust," together with Cendant Mortgage, the "Sellers" and
individually, each a "Seller"), as the Sellers and Cendant Mortgage as the
Servicer ("Servicer").
PRELIMINARY STATEMENT
1. Cendant Mortgage is engaged in the business, inter alia, of making loans to
individuals, the repayment of which is secured by a first lien mortgage on such
individuals' residences (each, a "Mortgage Loan"). The Trust is engaged in the
business of purchasing such Mortgage Loans from Cendant Mortgage and selling
same to investors.
2. Purchaser is engaged in the business, inter alia, of purchasing Mortgage
Loans for its own account.
3. Cendant Mortgage has established certain terms, conditions and loan programs,
as described in Cendant Mortgage' s Program and Underwriting Guidelines (the
"Cendant Guide") and Purchaser is willing to purchase Mortgage Loans that comply
with the terms of such terms, conditions and loan programs. The Cendant Guide is
attached hereto as Schedule C.
4. Purchaser and Sellers desire to establish a flow program whereby Cendant
Mortgage will make Mortgage Loans which meet the applicable provisions of the
Cendant Guide, and Purchaser will, on a regular basis, purchase such Mortgage
Loans from Cendant Mortgage or the Trust, as applicable, provided the parties
agree on the price, date and other conditions or considerations as set forth in
this Agreement.
5. Purchaser and Sellers wish to prescribe the terms and manner of purchase by
the Purchaser and sale by the Sellers of the Mortgage Loans, and the management
and servicing of the Mortgage Loans by Cendant Mortgage, as the Servicer , in
this Agreement.
NOW, THEREFORE, in consideration of the mutual agreements hereinafter set forth,
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:
"Acceptance of Assignment and Assumption of Lease Agreement": The specific
agreement creating a first lien on and pledge of the Cooperative Shares and the
appurtenant Proprietary Lease securing a Cooperative Loan.
"Affiliate": When used with reference to a specified Person, any Person
that (i) directly or indirectly controls or is controlled by or is under common
control with the specified Person, (ii) is an officer of, partner in or trustee
of, or serves in a similar capacity with respect to, the specified person or of
which the specified Person is an officer, partner or trustee, or with respect to
which the specified Person serves in a similar capacity, or (iii) directly or
indirectly is the beneficial owner of 10% or more of any class of equity
securities of the specified Person or of which the specified person is directly
or indirectly the owner of 10% or more of any class of equity securities.
"Agreement": This Mortgage Loan Flow Purchase, Sale & Servicing Agreement
between the Purchaser and the Sellers.
"ALTA": The American Land Title Association.
"Appraised Value": With respect to any Mortgaged Property, the lesser of:
(i) the value thereof as determined by an appraisal or a Cendant approved AVM
made for the originator of the Mortgage Loan at the time of origination of the
Mortgage Loan by an appraiser who met the minimum requirements of FNMA and
FHLMC; or (ii) the purchase price paid for the related Mortgaged Property by the
Mortgagor with the proceeds of the Mortgage Loan; provided that, in the case of
a Refinanced Mortgage Loan, such value of the Mortgaged Property shall be based
solely upon the value determined by an appraisal made for the originator of such
Refinanced Mortgage Loan at the time of origination of such Refinanced Mortgage
Loan by an appraiser who met the minimum requirements of FNMA and FHLMC.
"ARM Loan": An "adjustable rate" Mortgage Loan, the Note Rate of which is
subject to periodic adjustment in accordance with the terms of the Mortgage
Note.
"Assignment": An individual assignment of a Mortgage, notice of transfer or
equivalent instrument in recordable form, sufficient under the laws of the
jurisdiction wherein the related Mortgaged Property is located to reflect of
record the sale or transfer of the Mortgage Loan 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 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.
"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 is closed.
"Cendant Guide": As defined in paragraph 3 of the Preliminary Statement to
this Agreement.
"Code": The Internal Revenue Code of 1986, as amended.
"Collection Account": The separate trust account or accounts created and
maintained pursuant to Section 5.04 which shall be entitled "Cendant Mortgage
Corporation, as servicer and custodian for the Purchaser of Mortgage Loans under
the Mortgage Loan Flow Purchase, Sale & Servicing Agreement, dated as of April
30, 2003 ."
"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.
"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.
"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.
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"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 on Schedule B-2.
"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(3). -------
"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 period commencing
on the second day of the month immediately preceding the month of such
Remittance Date and ending on the first day of the month of in which such
Remittance Date falls.
"Eligible Account": One or more accounts (i) that are maintained with a
depository institution the long-term unsecured debt obligations of which have
been rated by each Rating Agency in one of its two highest rating categories at
the time of any deposit therein, (ii) that are trust accounts with any
depository institution assigned a long-term debt rating of not less than Baa3,
and a short term debt rating of P3, from Xxxxx'x Investors Services, Inc.,held
by the depository institution in its capacity as a corporate trustee, or (iii)
the deposits in which are insured by the FDIC (to the limits established by the
FDIC) and the uninsured deposits in which are otherwise secured such that the
Purchaser has a claim with respect to the funds in such accounts or a perfected
first security interest against any collateral securing such funds that is
superior to claims of any other depositors or creditors of the depository
institution with which such accounts are maintained. In addition, solely with
respect to Mortgage Loans which are not part of a securitization, "Eligible
Account" shall include any accounts that meet the standards established from
time to time by FNMA for eligible custodial depositories.
"Environmental Assessment": A "Phase I" environmental assessment of a
Mortgaged Property prepared by an Independent Person who regularly conducts
environmental assessments and who has any necessary license(s) required by
applicable law and has five years experience in conducting environmental
assessments.
"Environmental Conditions Precedent to Foreclosure": As defined in Section
5.15.
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"Environmental Laws": All federal, state, and local statutes, laws,
regulations, ordinances, rules, judgments, orders, decrees or other governmental
restrictions relating to the environment or to emissions, discharges or releases
of pollutants, contaminants or industrial, toxic or hazardous substances or
wastes into the environment, including ambient air, surface water, ground water,
or land, or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of pollutants,
contaminants or industrial, toxic or hazardous substances or wastes or the
cleanup or other remediation thereof.
"Escrow Account": The separate trust account or accounts created and
maintained pursuant to Section 5.06 which shall be entitled "Cendant Mortgage
Corporation, as servicer and custodian for the Purchaser under the Mortgage Loan
Flow Purchase, Sale & Servicing Agreement, dated as of April 30, 2003 (as
amended), and various mortgagors."
"Escrow Payments": The amounts constituting ground rents, taxes,
assessments, water rates, mortgage insurance premiums, fire and hazard insurance
premiums and other payments required to be escrowed by the Mortgagor with the
mortgagee pursuant to any Mortgage Loan.
"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.
"FDIC": The Federal Deposit Insurance Corporation or any successor
organization.
"FHLMC": The Federal Home Loan Mortgage Corporation (also known as Xxxxxxx
Mac) or any successor organization.
"FHLMC Servicing Guide": The FHLMC/Xxxxxxx Xxx Xxxxxxx' and Servicers'
Guide in effect on and after the Funding Date.
"Fidelity Bond": A fidelity bond to be maintained by the Servicer pursuant
to Section 5.12.
"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.
"FNMA": The Federal National Mortgage Association (also known as Xxxxxx
Xxx) or any successor organization.
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"FNMA Guide": The FNMA/Xxxxxx Mae Selling Guide and the Servicing Guide,
collectively, in effect on and after the Funding Date.
"Funding Date": Each date (up to four per month) that Purchaser purchases
Mortgage Loans from the Sellers hereunder.
"Gross Margin": With respect to each ARM Loan, the fixed percentage added
to the Index on each Rate Adjustment Date, as specified in each related Mortgage
Note and listed in the Mortgage Loan Schedule.
"Independent": With respect to any specified Person, such Person who: (i)
does not have any direct financial interest or any material indirect financial
interest in the applicable Mortgagor, the Sellers, the Purchaser, or their
Affiliates; and (b) is not connected with the applicable Mortgagor, the Sellers,
the Purchaser, or their respective Affiliates as an officer, employee, promoter,
underwriter, trustee, member, partner, shareholder, director, or Person
performing similar functions.
"Index": With respect to each ARM Loan, on each Rate Adjustment Date, the
applicable rate index set forth on the Mortgage Loan Schedule, which shall be an
index described on such Mortgage Loan Schedule.
"Insolvency Proceeding": With respect to any Person: (i) any case, action,
or proceeding with respect to such Person before any court or other governmental
authority relating to bankruptcy, reorganization, insolvency, liquidation,
receivership, dissolution, winding-up, or relief of debtors; or (ii) any general
assignment for the benefit of creditors, composition, marshaling of assets for
creditors, or other, similar arrangement in respect of the creditors generally
of such Person or any substantial portion of such Person's creditors; in any
case undertaken under federal, state or foreign law, including the Bankruptcy
Code.
"Insurance Proceeds": Proceeds of any Primary Insurance Policy, title
policy, hazard policy or other insurance policy covering a Mortgage Loan, if
any, to the extent such proceeds are not to be applied to the restoration of the
related Mortgaged Property or released to the Mortgagor in accordance with the
procedures that the Servicer would follow in servicing mortgage loans held for
its own or its Affiliates' account or managed by it for third-party
institutional investors.
"Legal Documents": Those documents, comprising part of the Mortgage File,
set forth in Schedule B-1 of this Agreement.
"Lender-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.
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"Loan-to-Value Ratio" or "LTV": With respect to any Mortgage Loan, the
original principal balance of such Mortgage Loan divided by the lesser of the
Appraised Value of the related Mortgaged Property or the purchase price. The
Loan-to-Value Ratio of any Additional Collateral Mortgage Loan (as defined in
Exhibit 11 hereto) shall be calculated by reducing the principal balance of such
Additional Collateral Mortgage Loan by the amount of Original Additional
Collateral Requirement (as defined in Exhibit 11 hereto) with respect to such
Mortgage Loan.
"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.
"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.
"Monthly Advance": The aggregate amount of the advances made by the
Servicer on any Remittance Date pursuant to and as more fully described in
Section 6.03.
"Monthly Payment": The scheduled monthly payment of principal and interest
on a Mortgage Loan which is payable by a Mortgagor under the related Mortgage
Note.
"Monthly Period": Initially, the period from the Funding Date through to
and including the first Record Date during the term hereof, and, thereafter, the
period commencing on the day after each Record Date during the term hereof and
ending on the next succeeding Record Date during the term hereof (or, if
earlier, the date on which this Agreement terminates).
"Mortgage": The mortgage, deed of trust or other instrument securing a
Mortgage Note, which creates a first lien on 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.
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"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 and any additional
documents required to be added to the Mortgage File pursuant to the related
Purchase Price and Terms Letter or this Agreement.
"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.
"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.
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"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.
"Payment Adjustment Date": The date on which Monthly Payments shall be
adjusted. 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 provision in each
Mortgage Note that limits permissible increases and decreases in the Note Rate
on any Rate Adjustment Date to not more than [one] percentage point.
"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:
(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;
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(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.
"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 Acceptance of Assignment and Assumption of Lease 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.
"Primary Insurance Policy": Each primary policy of mortgage insurance in
effect with respect to a Mortgage Loan and as so indicated on the Mortgage Loan
Schedule, or any replacement policy therefor obtained by the Servicer pursuant
to Section 5.08.
"Principal Prepayment": Any payment or other recovery of principal on a
Mortgage Loan (including a Payoff), other than a Monthly Payment or a Prepaid
Monthly Payment which is received in advance of its scheduled Due Date,
including any prepayment penalty or premium thereon, which is not accompanied by
an amount of interest representing scheduled interest due on any date or dates
in any month or months subsequent to the month of prepayment and which is
intended to reduce the principal balance of the Mortgage Loan.
"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 and Terms Letter": With respect to any pool of Mortgage
Loans purchased and sold on any Funding Date, the letter agreement between the
Purchaser and Seller (including any exhibits, schedules and attachments
thereto), setting forth the terms and conditions of such transaction and
describing the Mortgage Loans to be purchased by the Purchaser on such Funding
Date. A Purchase Price and Terms Letter may relate to more than one pool of
Mortgage Loans to be purchased on one or more Funding Dates hereunder.
"Purchaser": PNC Bank, National Association, or its successor in interest
or any successor under this Agreement appointed as herein provided.
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"Purchaser's Account": The account of the Purchaser at a bank or other
entity most recently designated in a written notice by the Purchaser to the
Sellers as the "Purchaser's Account."
"Purchase Price": As to each Mortgage Loan to be sold hereunder, the price
set forth in the Mortgage Loan Schedule and the related Purchase Price and Terms
Letter.
"Qualified Mortgage Insurer": American Guaranty Corporation, Commonwealth
Mortgage Assurance Company, General Electric Mortgage Insurance Companies,
Mortgage Guaranty Insurance Corporation, PMI Mortgage Insurance Company,
Republic Mortgage Insurance Company or United Guaranty Residential Insurance
Corporation.
"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 Adjustable Rate Mortgage Loan,
have a Gross Margin not less than that of the Deleted Mortgage Loan, (vii) with
respect to each ARM 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 an Index as provided herein for all ARM Loans subject to this
Agreement, (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
credit grade category as the Deleted Mortgage Loan and (xiii) have the same
prepayment penalty term.
"Rate Adjustment Date": With respect to each ARM Loan, the date on which
the Note Rate adjusts.
"Rating Agency": Standard & Poor's Ratings Services, a division of The
XxXxxx-Xxxx Companies, Xxxxx'x Investors Service, Inc., 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.
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"Record Date": The close of business of the last Business Day of the month
immediately preceding the month of the related Remittance Date.
"Refinanced Mortgage Loan": A Mortgage Loan that was made to a Mortgagor
who owned the Mortgaged Property prior to the origination of such Mortgage Loan
and the proceeds of which were used in whole or part to satisfy an existing
mortgage.
"REMIC": A "real estate mortgage investment conduit" within the meaning of
Section 860D of the Internal Revenue Code or any similar tax vehicle providing
for the pooling of assets (such as a Financial Asset Security Investment Trust).
"Remittance Date": The 18th day of each calendar month, commencing on the
18th day of the month following the Funding Date, or, if such 18th day is not a
Business Day, then the next Business Day immediately preceding such 18th day.
"Remittance Rate": With respect to each Mortgage Loan, the related Note
Rate minus the Servicing Fee Rate.
"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 5.13.
"Repurchase Price": As to (a) any Defective Mortgage Loan required to be
repurchased hereunder with respect to which a breach occurred or (b) any
Mortgage Loan required to be repurchased pursuant to Section 3.04 and/or Section
7.02, an amount equal to the sum of: (1) the product of the Unpaid Principal
Balance of such Mortgage Loan at the time of repurchase multiplied by a
fraction, the numerator of which is the Purchase Price paid for such Mortgage
Loan by the Purchaser on the Funding Date, and the denominator of which is the
Unpaid Principal Balance of such Mortgage Loan on the Funding Date ; plus (2)
interest on such Mortgage Loan at the applicable Note Rate from the last date
through which interest has been paid and distributed to the Purchaser hereunder
to the date of repurchase; minus (3) any amounts received in respect of such
Defective Mortgage Loan which are being held in the Collection Account for
future remittance.
"Scheduled Principal Balance": With respect to any Mortgage Loan, (i) the
outstanding principal balance as of the Funding Date after application of
principal payments due on or before such date whether or not received, minus
(ii) all amounts previously remitted to the Purchaser with respect to such
Mortgage Loan representing (a) payments or other recoveries of principal, or (b)
advances of principal made pursuant to Section 6.03.
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"Sellers": Cendant 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": Cendant Mortgage Corporation, a New Jersey corporation.
"Servicer's Mortgage File": The documents pertaining to a particular
Mortgage Loan which are specified on Schedule B-1 and B-2 attached hereto and
any additional documents required to be included or added to the "Mortgage File"
pursuant to the related Purchase Price and Terms Letter or this Agreement.
"Servicing Advances": All "out of pocket" costs and expenses that are
customary, reasonable and necessary which are incurred by the Servicer in the
performance of its servicing obligations hereunder, including (without
duplication) (i) reasonable attorneys' fees and (ii) the cost of (a) the
preservation, restoration and protection of the Mortgaged Property, (b) any
enforcement or judicial proceedings, including foreclosures, (c) the servicing,
management and liquidation of any REO Property, and (d) compliance with the
Servicer's obligations under Section 5.08.
"Servicing Event": Any of the following events with respect to any Mortgage
Loan: (i) any Monthly Payment being more than 60 days delinquent; (ii) any
filing of an Insolvency Proceeding by or on behalf of the related Mortgagor, any
consent by or on behalf of the related Mortgagor to the filing of an Insolvency
Proceeding against such Mortgagor, or any admission by or on behalf of such
Mortgagor of its inability to pay such Person's debts generally as the same
become due; (iii) any filing of an Insolvency Proceeding against the related
Mortgagor that remains undismissed or unstayed for a period of 60 days after the
filing thereof; (iv) any issuance of any attachment or execution against, or any
appointment of a conservator, receiver or liquidator with respect to, all or
substantially all of the assets of the related Mortgagor or with respect to any
Mortgaged Property; (v) any receipt by the Servicer of notice of the foreclosure
or proposed foreclosure of any other lien on the related Mortgaged Property;
(vi) any proposal of a material modification (as reasonably determined by the
Seller) to such Mortgage Loan due to a default or imminent default under such
Mortgage Loan; or (vii) in the reasonable judgment of the Servicer, the
occurrence, or likely occurrence within 60 days, of a payment default with
respect to such Mortgage Loan that is likely to remain uncured by the related
Mortgagor within 60 days thereafter.
"Servicing Fee": The annual fee, payable monthly to the Servicer out of the
interest portion of t he Monthly Payment actually received on each Mortgage
Loan. The Servicing Fee with respect to each Mortgage Loan for any calendar
month (or a portion thereof) shall be 1/12 of the product of (i) the Scheduled
Principal Balance of the Mortgage Loan and (ii) the Servicing Fee Rate
applicable to such Mortgage Loan.
"Servicing Fee Rate": Unless otherwise specified on the Mortgage Loan
Schedule, (i) with respect to any ARM Loan, 0.375% per annum; provided that,
prior to the first Rate Adjustment Date with respect to any such Mortgage Loan,
such rate may be, at the Servicer's option, not less than 0.25% per annum; and
(ii) with respect to any Mortgage Loan other than an ARM Loan, 0.25% per annum.
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"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.
"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.
"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,
subject to the terms and conditions of this Agreement and the related Purchase
Price and Terms Letter.
Purchaser will purchase Mortgage Loan(s) from Seller, up to four (4) times
per month on such Funding Dates as may be agreed upon by Purchaser and Seller.
The closing shall, at Purchaser's option be either: by telephone, confirmed by
letter or wire as the parties shall agree; or conducted in person at such place,
as the parties shall agree. On the Funding Date and subject to the terms and
conditions of this Agreement, each Seller will sell, transfer, assign, set over
and convey to the Purchaser, without recourse except as set forth in this
Agreement, and the Purchaser will purchase, all of the right, title and interest
of the applicable Seller in and to the Mortgage Loans being conveyed by it
hereunder, as identified on the Mortgage Loan Schedule.
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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. Upon Purchaser's request, Seller shall make the Credit Documents
available in either original paper form or 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 Cendant Guide, or the representations
and warranties in Section 3.03 of this Agreement, such Mortgage Loans will be
deleted from the Mortgage Loan Schedule at Purchaser's discretion. Purchaser
may, at its option and without notice to Seller, purchase all or part of the
Mortgage Loans without conducting any partial or complete examination. The fact
that Purchaser has conducted or has failed to conduct any partial or complete
examination of the Mortgage Loan files shall not affect Purchaser's rights to
demand repurchase, substitution or other relief as provided herein.
On the Funding Date and in accordance with the terms herein, Purchaser will
pay to Seller, by wire transfer of immediately available funds, the Purchase
Price, together with interest, 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 Cendant 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 Seller after the Cut-off Date shall belong to Seller.
Section 2.02 Possession of Mortgage Files.
----------------------------
Upon the sale of any Mortgage Loan, the ownership of such Mortgage Loan,
including the Mortgage Note, the Mortgage, the contents of the related Mortgage
File and all rights, benefits, payments, proceeds and obligations arising
therefrom or in connection therewith, shall then be vested in the Purchaser, and
the ownership of all records and documents with respect to such Mortgage Loan
prepared by or which come into the possession of the Seller shall immediately
vest in the Purchaser and, to the extent retained by the Seller, shall be
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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 separately from the other books and records of the Seller. Each
Seller shall release from its custody of the contents of any Mortgage File only
in accordance with written instructions from the Purchaser, except where such
release is required as incidental to the Servicer 's servicing of the Mortgage
Loans or is in connection with a repurchase 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.
-----------------
The sale of each of its Mortgage Loans shall be reflected on the applicable
Seller' s balance sheet and other financial statements as a sale of assets by
the applicable Seller. Each Seller shall be responsible for maintaining, and
shall maintain, a complete set of books and records for the Mortgage Loans it
conveyed to the Purchaser which shall be clearly marked to reflect the sale of
each Mortgage Loan to the Purchaser and the ownership of each Mortgage Loan by
the Purchaser.
Section 2.04 Defective Documents; Delivery of Mortgage Loan Documents.
--------------------------------------------------------
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. 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 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
provided such Seller has commenced curing or correcting such Defect and is
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diligently pursuing same. Cendant Mortgage hereby covenants and agrees that, if
any Defect cannot be corrected or cured, the related Mortgage Loan shall
automatically constitute, upon the expiration of the applicable cure period
described above, without counting the cure periods provided in Section 3.04 of
this Agreement as an addition to such cure period, and without any further
action by any other party, a Defective Mortgage Loan, whereupon Cendant Mortgage
shall repurchase such Mortgage Loan by paying to the Purchaser the Repurchase
Price therefor in accordance with Section 3.04.
The applicable Seller will, with respect to each Mortgage Loan to be
purchased by the Purchaser, deliver and release to the Purchaser the Legal
Documents as set forth in Section 2.01. If the applicable Seller cannot deliver
an original Mortgage with evidence of recording thereon, original assumption,
modification and substitution agreements with evidence of recording thereon or
an original intervening assignment with evidence of recording thereon within the
applicable time periods, then such Seller shall promptly deliver to the
Purchaser such original Mortgages and original intervening assignments with
evidence of recording indicated thereon upon receipt thereof from the public
recording official, except in cases where the original Mortgage or original
intervening assignments are retained permanently by the recording office, in
which case, such Seller shall deliver a copy of such Mortgage or intervening
assignment, as the case may be, certified to be a true and complete copy of the
recorded original thereof. If the 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 Cendant Mortgage, the Purchaser may, in its sole discretion, then elect (by
providing written notice to Cendant Mortgage) to treat such Mortgage Loan as a
Defective Mortgage Loan, whereupon Cendant Mortgage shall repurchase such
Mortgage Loan by paying to the Purchaser the Repurchase Price therefor in
accordance with Section 3.04. 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 collect
the documents with its own resources with the reasonable cost and expense to be
borne by the Seller or the Purchaser may require the Seller to repurchase such
loan in accordance with Section 3.04 of this Agreement, without consideration of
the cure period provided in such Section. 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.
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At the Purchaser's request, the Assignments shall be promptly recorded in
the name of the Purchaser or in the name of a Person designated by the Purchaser
in all appropriate public offices for real property records. If any such
Assignment is lost or returned unrecorded because of a defect therein, then the
applicable Seller shall promptly prepare a substitute Assignment to cure such
defect and thereafter cause each such Assignment to be duly recorded. All
recording fees related to such a one-time recordation of the Assignments to or
by a Seller shall be paid by the applicable Seller.
Section 2.05 Transfer of Mortgage Loans.
--------------------------
Subject to the provisions of this Section 2.05, the Purchaser shall have
the right, without the consent of the Sellers, at any time and from time to
time, to assign any of the Mortgage Loans and all or any part of its interest
under this Agreement and designate any person to exercise any rights of the
Purchaser hereunder, and the assignees or designees shall accede to the rights
and obligations hereunder of the Purchaser with respect to such Mortgage Loans.
The Sellers recognize that the Mortgage Loans may be divided into "packages" for
resale ("Mortgage Loan Packages").
All of the provisions of this Agreement shall inure to the benefit of the
Purchaser and any such assignees or designees. All references to the Purchaser
shall be deemed to include its assignees or designees. Utilizing resources
reasonably available to the Seller without incurring any cost except the
Seller's overhead and employees' salaries, the applicable Seller shall cooperate
in any such assignment of the Mortgage Loans and this Agreement; provided that
the Purchaser shall bear all costs associated with any such assignment of the
Mortgage Loans and this Agreement other than such Seller's overhead or
employees' salaries.
The Servicer and the Purchaser acknowledge that the Servicer shall continue
to remit payments to the Purchaser on the Remittance Date after the transfer of
the Mortgage Loans, unless the Servicer was notified in writing of the new
record owner of the Mortgage Loans prior to the immediately preceding Record
Date, in which case, the Servicer shall remit to the new record owner (or
trustee or master servicer, as the case may be) of the Mortgage Loans.
The Servicer and Purchaser agree that in no event will the Servicer be
required to remit funds or send 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.
Any prospective assignees of the Purchaser who have entered into a
commitment to purchase any of the Mortgage Loans may review and underwrite the
Servicer's servicing and origination operations, upon reasonable prior notice to
the Servicer, and the Servicer shall cooperate with such review and underwriting
to the extent such prospective assignees request information or documents that
are reasonably available and can be produced without unreasonable expense or
effort. The Servicer shall make the Mortgage Files related to the Mortgage Loans
held by the Servicer available at the Servicer's principal operations center for
review by any such prospective assignees during normal business hours upon
reasonable prior notice to the Servicer (in no event less than 5 Business Days
prior notice). The Servicer may, in its sole discretion, require that such
prospective assignees sign a confidentiality agreement with respect to such
information disclosed to the prospective assignee which is not available to the
public at large and a release agreement with respect to its activities on the
Servicer's premises.
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The Servicer shall keep at its servicing office books and records in which,
subject to such reasonable regulations as it may prescribe, the Servicer shall
note transfers of Mortgage Loans. The Purchaser may, subject to the terms of
this Agreement, sell and transfer, in whole or in part, any or all of the
Mortgage Loans; provided that no such sale and transfer shall be binding upon
the Servicer unless such transferee shall agree in writing to an Assignment,
Assumption and Recognition Agreement, in substantially the form of Exhibit 2.05
attached hereto, and an executed copy of such Assignment, Assumption and
Recognition Agreement shall have been delivered to the Servicer. The Servicer
shall evidence its acknowledgment of any transfers of the Mortgage Loans to any
assignees of the Purchaser by executing such Assignment, Assumption and
Recognition Agreement. The Servicer shall xxxx its books and records to reflect
the ownership of the Mortgage Loans by any such assignees, and the previous
Purchaser shall be released from its obligations hereunder accruing after the
date of transfer to the extent such obligations relate to Mortgage Loans sold by
the Purchaser. This Agreement shall be binding upon and inure to the benefit of
the Purchaser and the Servicer and their permitted successors, assignees and
designees.
ARTICLE III:
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SELLER;
REPURCHASE AND SUBSTITUTION; REVIEW OF MORTGAGE LOANS
Section 3.01 Representations, Warranties and Covenants 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, or in the case of each applicable covenant, during and after the term of
this Agreement:
(1) Due Organization. The Seller is an entity duly organized, validly existing
and in good standing under the laws of its jurisdiction of organization, and has
all licenses necessary to carry on its business now being conducted and is
licensed, qualified and in good standing under the laws of each state where a
Mortgaged Property is located or is otherwise exempt under applicable law from
such qualification or is otherwise not required under applicable law to effect
such qualification; no demand for such qualification has been made upon the
Seller by any state having jurisdiction and in any event the Seller is or will
be in compliance with the laws of any such state to the extent necessary to
enforce each Mortgage Loan and with respect to Cendant Mortgage, service each
Mortgage Loan in accordance with the terms of this Agreement.
(2) Due Authority. 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,
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and this Agreement, assuming due authorization, execution and delivery by the
Purchaser, constitutes a legal, valid and binding obligation of the Seller,
enforceable against it in accordance with its terms, subject to applicable
bankruptcy, reorganization, receivership, conservatorship, insolvency,
moratorium and other laws relating to or affecting creditors' rights generally
or the rights of creditors of banks and to the general principles of equity
(whether such enforceability is considered in a proceeding in equity or at law).
(3) No Conflict. The execution and delivery of this Agreement, the acquisition
or origination, as applicable, of the Mortgage Loans by the Seller, the sale of
the Mortgage Loans, the consummation of the transactions contemplated hereby, or
the fulfillment of or compliance with the terms and conditions of this
Agreement, will not conflict with or result in a breach of any of the terms,
conditions or provisions of the Seller's organizational documents and bylaws or
any legal restriction or any agreement or instrument to which the Seller is now
a party or by which it is bound, or constitute a default or result in an
acceleration under any of the foregoing, or result in the violation of any law,
rule, regulation, order, judgment or decree to which the Seller or its property
is subject, or impair the ability of the Purchaser to realize on the Mortgage
Loans;
(4) Ability to Perform. The Seller does not believe, nor does it have any reason
or cause to believe, that it cannot perform each and every covenant contained in
this Agreement;
(5) No Material Default. Neither the Seller nor any of its Affiliates is in
material default under any agreement, contract, instrument or indenture of any
nature whatsoever to which the Seller or any of its Affiliates is a party or by
which it (or any of its assets) is bound, which default would have a material
adverse effect on the ability of the Seller to perform under this Agreement,
nor, to the best of the Seller's knowledge, has any event occurred which, with
notice, lapse of time or both, would constitute a default under any such
agreement, contract, instrument or indenture and have a material adverse effect
on the ability of the Seller to perform its obligations under this Agreement;
(6) Financial Statements. Cendant Mortgage has delivered to the Purchaser
financial statements as to its fiscal year ended December 31, 2002. Except as
has previously been disclosed to the Purchaser in writing: (a) such financial
statements fairly present the results of operations and changes in financial
position for such period and the financial position at the end of such period of
Cendant Mortgage and its subsidiaries; and (b) such financial statements are
true, correct and complete as of their respective dates and have been prepared
in accordance with generally accepted accounting principles consistently applied
throughout the periods involved, except as set forth in the notes thereto. The
Trust has delivered to the Purchaser financial statements dated as of December
31, 2002 (the "Trust Financials") and such Trust Financials fairly present the
results of operations and changes in financial position for such period and the
financial position at the end of such period of the Trust. Except as has
previously been disclosed to the Purchaser in writing, there has been no change
in such Trust Financials since their date and the Trust is not aware of any
errors or omissions therein;
(7) No Change in Business. There has been no change in the business, operations,
financial condition, properties or assets of the applicable Seller since (i) in
the case of Cendant Mortgage, the date of its financial statements and (ii) in
the case of the Trust, the date of delivery of the Trust Financials, that would
have a material adverse effect on the ability of the applicable Seller to
perform its obligations under this Agreement;
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(8) No Litigation Pending. There is no action, suit, proceeding or investigation
pending or, to the best of the Seller's knowledge, threatened, against the
Seller, which, either in any one instance or in the aggregate, if determined
adversely to the Seller would adversely affect the sale of the Mortgage Loans to
the Purchaser or the execution, delivery or enforceability of this Agreement or
result in any material liability of the Seller, or draw into question the
validity of this Agreement, or have a material adverse effect on the financial
condition of the Seller;
(9) No Consent Required. No consent, approval, authorization or order of any
court or governmental agency or body is required for the execution, delivery and
performance by the Seller of or compliance by the Seller with this Agreement,
the delivery of the Mortgage Files to the Purchaser, the sale of the Mortgage
Loans to the Purchaser or the consummation of the transactions contemplated by
this Agreement or, if required, such approval has been obtained prior to the
Funding Date;
(10) Ordinary Course of Business. The consummation of the transactions
contemplated by this Agreement is in the ordinary course of business of the
Seller, and the transfer, assignment and conveyance of the Mortgage Notes and
the Mortgages by the Seller pursuant to this Agreement are not subject to the
bulk transfer or any similar statutory provisions in effect in any applicable
jurisdiction;
(11) Broker. The Seller has dealt with Jaymes Financial, Inc., a broker, who
might be entitled to a fee or commission in connection with this transaction.
All fees due to the broker are the responsibility of the Seller; and
(12) No Untrue Information. Neither this Agreement nor any statement, report or
other agreement, document or instrument, diskette, data tape, or similar
materials 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) No Adverse Selection. The Seller has not used selection procedures that
identified the Mortgage Loans as being less desirable or valuable than other
comparable mortgage loans in the Seller's portfolio as of the Funding Date;
(14) Non-solicitation. The Seller agrees that it shall not solicit any
Mortgagors (in writing or otherwise) to refinance any of the Mortgage Loans;
provided that mass advertising or mailings (such as placing advertisements on
television, on radio, in magazines or in newspapers or including messages in
billing statements) that are not exclusively directed towards the Mortgagors
shall not constitute solicitation and shall not violate this covenant; and
(15) 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 Bliley Act; (b) such information is in connection with a proposed or
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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.
Section 3.02 Representations, Warranties and Covenants 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 or in the case
of each covenant, during and after the term of this Agreement:
(1) Ability to Service. The Servicer is an approved seller/servicer for FNMA and
FHLMC in good standing and is a mortgagee approved by the Secretary of Housing
and Urban Development pursuant to Section 203 of the National Housing Act, with
facilities, procedures and experienced personnel necessary for the servicing of
mortgage loans of the same type as the Mortgage Loans. No event has occurred
that would make the Servicer unable to comply with FNMA or FHLMC eligibility
requirements or that would require notification to either FNMA or FHLMC;
(2) 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;
(3) 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; and
(4) 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
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 any diskette, data tape, or similar
materials, is complete as required by the Agreement, true and correct in all
material respects;
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(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 Xxxx xxxx Loan, except for such documents as have
been previously delivered to the Purchaser;
(3) Owner of Record. The Mortgage relating to such Mortgage Loan has been duly
recorded in the appropriate recording office, and the applicable Seller or
Servicer is the owner of record of such Mortgage Loan and the indebtedness
evidenced by the related Mortgage Note;
(4) Payments Current. All payments required to be made up to and including the
Funding Date for such Mortgage Loan under the terms of the Mortgage Note have
been made, such that such Mortgage Loan is not delinquent 30 days or more on the
Funding Date. Unless otherwise disclosed in the Offering Materials and 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, insurance premiums,
government or other assessments, including assessments payable in future
installments, water, sewer and municipal charges, leasehold payments, ground
rents or other outstanding charges affecting the Mortgaged Property related to
such Mortgage Loan;
(6) Original Terms Unmodified. The terms of the Mortgage Note and the Mortgage
related to such Mortgage Loan (and the Proprietary Lease and the Pledge
Instruments with respect to each Cooperative Loan,) have not been impaired,
waived, altered or modified in any material respect, except as specifically set
forth in the related Mortgage Loan Schedule, and except by written instruments
which have been recorded to the extent any such recordation is required by law,
or, necessary to protect the interest of the Purchaser. The substance of any
such waiver, alteration or modification has been approved by the issuer of any
related Primary Insurance Policy and title insurance policy, to the extent
required by the related policies;
(7) No Defenses. The Mortgage Note and the Mortgage related to such Mortgage
Loan (and the Acceptance of Assignment and Assumption of Lease Agreement related
to each Cooperative Loan) are not subject to any right of rescission, set-off
counterclaim or defense, including, without limitation, the defense of usury,
nor will the operation of any of the terms of such Mortgage Note and such
Mortgage, or the exercise of any right thereunder, render such Mortgage
unenforceable, in whole or in part, or subject to any right of rescission,
set-off or defense, including, without limitation, the defense of usury and no
such right of rescission, set-off, counterclaim or defense has been asserted
with respect thereto;
(8) Hazard Insurance. (a) All buildings upon the Mortgaged Property related to
such Mortgage Loan are insured by an insurer acceptable to FNMA or FHLMC against
loss by fire, hazards of extended coverage and such other hazards as are
customary in the area where such Mortgaged Property is located, pursuant to
insurance policies conforming to the requirements of either Section 5.10 or
Section 5.11. All such insurance policies (collectively, the "hazard insurance
policy") are in full force and effect, and contain a standard mortgagee clause
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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. The insurance policy contains a standard mortgagee clause naming the
originator of such Mortgage Loan (and its successors and assigns), as insured
mortgagee. Such policies are the valid and binding obligations of the insurer,
and all premiums thereon have been paid. The insurance policy provides for
advance notice to the Seller or Servicer if the policy is canceled or not
renewed, or if any other change that adversely affects the Seller's interests is
made; the certificate includes the types and amounts of coverage provided,
describes any endorsements that are part of the "master" policy and would be
acceptable pursuant to the FNMA Guide. If required by the Flood Disaster
Protection Act of 1973, as amended, the Mortgage Loan is covered by a flood
insurance policy meeting the requirements of the current guidelines of the
Federal Insurance Administration which policy conforms to FNMA and FHLMC
requirements, as well as all additional requirements set forth in Section 5.10
of this Agreement. Such policy was issued by an insurer acceptable under FNMA
and FHLMC guidelines. The Mortgage obligates the Mortgagor thereunder to
maintain all such insurance at the Mortgagor's cost and expense, and upon the
Mortgagor's failure to do so, authorizes the holder of the Mortgage to maintain
such insurance at the Mortgagor's cost and expense and to seek reimbursement
therefor from the Mortgagor;
(9) Compliance With Applicable Laws. All requirements of any federal, state or
local law (including without limitation usury, truth in lending, real estate
settlement procedures, consumer credit protection, equal credit opportunity or
disclosure laws) applicable to the origination and servicing of such Mortgage
Loan have been complied with in all material respects;
(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 or subordinated, in whole or in part, or rescinded,
and the related Mortgaged Property has not been released from the lien of such
Mortgage, in whole or in part, nor has any instrument been executed that would
effect any such release, cancellation, subordination or rescission;
(12) Valid First Lien. The Mortgage, related to such Mortgage Loan is a valid,
subsisting and enforceable perfected first lien on the related Mortgaged
Property, including all improvements on the related Mortgaged Property, covering
the entire principal balance of the Mortgage Loan including any Negative
Amortization. The 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
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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 Acceptance of Assignment and Assumption of Lease 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 individually
or in the aggregate materially interfere with the benefits of the security
intended to be provided by the Acceptance of Assignment and Assumption of Lease
Agreement; provided, however, that the appurtenant Proprietary Lease may be
subordinated or otherwise subject to the lien of any mortgage on the Cooperative
Project;
(13) Validity of Documents. The Mortgage Note and the Mortgage related to such
Mortgage Loan (and the Acceptance of Assignment and Assumption of Lease
Agreement with respect to each Cooperative Loan) are original and 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 Acceptance of
Assignment and Assumption of Lease 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 (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 and there is no requirement for future advances thereunder; 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
-25
or other escrow agent. All costs, fees and expenses incurred in making or
closing the Mortgage Loan and the recording of the Mortgage were paid or are in
the process of being paid, and the Mortgagor is not entitled to any refund of
any amounts paid or due under the Mortgage Note or Mortgage (excluding refunds
which may result from escrow analysis adjustments);
(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 Acceptance of Assignment and
Assumption of Lease 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 FNMA and FHLMC
(or, in jurisdictions where ALTA policies are not generally approved for use, a
lender's title insurance policy acceptable to FNMA and FHLMC), issued by a title
insurer acceptable to FNMA and FHLMC and qualified to do business in the
jurisdiction where the related Mortgaged Property is located, insuring (subject
to the exceptions contained in clauses (12)(a) and (b) above) the Seller or
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. Where required
by applicable state law or regulation, the Mortgagor has been given the
opportunity to choose the carrier of the required mortgage title insurance. The
Seller or Servicer is the sole insured of such lender's title insurance policy,
and such lender's title insurance policy is in full force and effect and will be
in full force and effect upon the consummation of the transactions contemplated
by this Agreement and will inure to the benefit of the Purchaser without any
further act. No claims have been made under such lender's title insurance
policy, neither the Seller, nor any prior holder of the related 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 FNMA and FHLMC;
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(19) No Defaults. (a) There is no default, breach, violation or event of
acceleration existing under the Mortgage, the Mortgage Note, or any other
agreements, documents, or instruments related to such Mortgage Loan; (b)There is
no event that, with the lapse of time, the giving of notice, or both, would
constitute such a default, breach, violation or event of acceleration; (c) the
Mortgagor(s) with respect to such Mortgage Loan is (1) not in default under any
other Mortgage Loan or (2) the subject of an Insolvency Proceeding; (d) no event
of acceleration has previously occurred, and no notice of default has been sent,
with respect to such Mortgage Loan; (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 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 Acceptance of Assignment and Assumption of Lease 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, Acceptance of Assignment and Assumption of Lease Agreement and
Recognition Agreement to pay any maintenance charges or assessments owed by the
Mortgagor The Seller has not advanced funds, or induced, solicited or knowingly
received any advance of funds from a party other than the owner of the Mortgaged
Property subject to the Mortgage, directly or indirectly, for the payment of any
amount required by the Mortgage Loan;
(20) No Mechanics' Liens. There are no mechanics' or similar liens, except such
liens as are expressly insured against by a title insurance policy, or claims
that have been filed for work, labor or material (and no rights are outstanding
that under law could give rise to such lien) affecting the related Mortgaged
Property that are or may be liens prior to, or equal or coordinate with, the
lien of the related Mortgage;
(21) Location of Improvements; No Encroachments. All improvements that were
considered in determining the Appraised Value of the related Mortgaged Property
lay wholly within the boundaries and building restriction lines of such
Mortgaged Property, and no improvements on adjoining properties encroach upon
such Mortgaged Property except as permitted under the terms of the FNMA Guide
and the FHLMC Selling Guide; No improvement located on or part of any Mortgaged
Property is in violation of any applicable zoning law or regulation, and all
inspections, licenses and certificates required to be made or issued with
respect to all occupied portions of such Mortgaged Property, and with respect to
the use and occupancy of the same, including certificates of occupancy, have
been made or obtained from the appropriate authorities;
(22) Origination; Payment Terms. Principal payments on such Mortgage Loan
commenced or will commence no more than 60 days after funds were disbursed in
connection with such Mortgage Loan. If the interest rate on the related Mortgage
Note is adjustable, the adjustment is based on the Index set forth on the
related Mortgage Loan Schedule. The related Mortgage Note is payable on the
first day of each month in arrears, in accordance with the payment terms
described on the related Mortgage Loan Schedule. 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;
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(23) Due On Sale. Except as noted otherwise in the Offering Materials and 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 in the Offering Materials and
the Mortgage Loan Schedule, such Mortgage Loan is not subject to any Prepayment
Penalty; With respect to each Mortgage Loan that contains a prepayment penalty,
such prepayment penalty is enforceable and will be enforced by the Servicer, and
such prepayment penalty is permitted pursuant to federal, state and local law;
(25) Mortgaged Property Undamaged; No Condemnation. The related Mortgaged
Property (and with respect to a Cooperative Loan, the related Cooperative
Project and Cooperative Unit) is free of material damage by waste, fire,
earthquake, windstorm, flood or other casualty, and there has been and is no
proceeding pending for the total or partial condemnation thereof;
(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. There is no homestead or other
exemption available to the Mortgagor which would interfere with the right to
sell the Mortgaged Property at a trustee's sale or the right to foreclose the
Mortgage subject to applicable federal and state laws and judicial precedent
with respect to bankruptcy and right of redemption;
(27) Conformance With Underwriting Standards. Such Mortgage Loan was
underwritten in accordance with the Cendant Guide and all of the Sellers
underwriting guidelines and criteria, each as in effect as of the time of
origination;
(28) Appraisal. The Mortgage File contains an appraisal of the related Mortgaged
Property on forms and with riders approved by FNMA and FHLMC, signed prior to
the approval of such Mortgage Loan application by an appraiser, duly appointed
by the originator of such Mortgage Loan, whose compensation is not affected by
the approval or disapproval of such Mortgage Loan and who met the minimum
qualifications of FNMA and FHLMC for appraisers. 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 a approved automated valuation model in
lieu of an appraisal, with the written prior approval of the Purchaser;
(29) Deeds of Trust. If the related Mortgage constitutes a deed of trust, then a
trustee, authorized and 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;
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(30) LTV; Primary Mortgage Insurance Policy. Except with respect to Additional
Collateral Mortgage Loans (as defined in Exhibit 11 hereto), 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 insureds 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. The Mortgage Loan Schedule
will include the mortgage interest rate which is net of any such insurance
premium. No action has been taken or failed to be taken by the Seller on or
prior to the Funding Date which has resulted or will result in an exclusion
from, denial of, or defense to coverage under any Primary Insurance Policy
(including, without limitation, any exclusions, denials, counterclaims or
defenses which would limit or reduce the availability of the timely payment of
the full amount of the loss otherwise due thereunder to the insured) whether
arising out of actions, representations, errors, omissions, negligence, or fraud
of the Seller, or for any other reason under such coverage;
(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;
(32) Supervision and Examination by a Federal or State Authority. Each Mortgage
Loan either was (a) closed in the name of the Cendant Mortgage, or (b) closed in
the name of another entity that is either a savings and loan association, a
savings bank, a commercial bank, credit union, insurance company or an
institution which is supervised and examined by a federal or state authority, or
a mortgagee approved by the Secretary of Housing and Urban Development pursuant
to Sections 203 and 211 of the National Housing Act (a "HUD Approved
Mortgagee"), and was so at the time such Mortgage Loan was originated (Cendant
Mortgage or such other entity, the "Originator") or (c) closed in the name of a
loan broker under the circumstances described in the following sentence. If such
Mortgage Loan was originated through a loan broker, in addition to complying
with the representations in Section 3.03(27) of this Agreement, 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
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Trust is selling to Purchaser were originated by or on behalf of Cendant
Mortgage and subsequently assigned to the Trust. With respect to any broker fees
collected and paid on any of the Mortgage Loans, all broker fees have been
properly assessed to the borrower and no claims will arise as to broker fees
that are double charged and for which the borrower would be entitled to
reimbursement;
(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; Soldiers' and Sailors' 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 Soldiers' and Sailors'
Civil Relief Act of 1940;
(35) FNMA/FHLMC Documents. The Mortgage Note and Mortgage are standard FNMA or
FHLMC documents or are in forms otherwise acceptable to them;
(36) 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. To the
extent any Mortgage Loan contains any "buydown" provision, such buydown funds
have been maintained and administered in accordance with, and such Mortgage Loan
otherwise complies with, FNMA and FHLMC requirements relating to buydown loans.
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 is in recordable form and is acceptable for recording under
the laws of the jurisdiction in which the Mortgaged Property is located;
(38) 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;
(39) Unless otherwise disclosed in the Offering Materials and the Mortgage Loan
Schedule, no Mortgage Loan has a balloon payment feature, and each Mortgage Loan
has an original term to maturity of not more than 30 years. 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, but has a final
Monthly Payment substantially greater than the preceding Monthly Payments which
is sufficient to pay the entire remaining principal balance of such Mortgage
Loan as of such Monthly Payment. Each Mortgage Loan with a balloon payment
feature matures not less than five (5) years after the first Monthly Payment is
due;
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(40) 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 Cendant Guide;
(41) No Mortgage Loan is subject to the provisions of the Homeownership and
Equity Protection Act of 1994;
(42) Unless otherwise disclosed in the Offering Materials and 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) 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 Acceptance of Assignment and Assumption of Lease 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) Interest on each Mortgage Loan is calculated on the basis of a 360-day year
consisting of twelve 30-day months;
(45) The Mortgaged Property is in material compliance with all applicable
environmental laws pertaining to environmental hazards including, without
limitation, asbestos, and neither the Seller nor the related Mortgagor, has
received any notice of any violation or potential violation of such law;
(46) Unless otherwise disclosed in the Offering Materials and the Mortgage Loan
Schedule, no Mortgage Loan is subject to negative amortization;
(47) 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 FNMA
and qualified to do business in the jurisdiction where the Cooperative Unit is
located;
(48) 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) 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
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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; and
(50) With respect to each Cooperative Loan, each Acceptance of Assignment and
Assumption of Lease 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 Acceptance of Assignment and
Assumption of Lease 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) With respect to each Cooperative Loan, the related cooperative corporation
that owns title to the related cooperative apartment building is a "cooperative
housing corporation" within the meaning of Section 216 of the Code, and is in
material compliance with applicable federal, state and local laws which, if not
complied with, could have a material adverse effect on the Mortgaged Property;
(52) Except for the Additional Collateral Mortgage Loans (as defined in Exhibit
11 attached hereto), the related Mortgage Note is not and has not been secured
by any collateral except the lien of the corresponding Mortgage and the security
interest of any applicable security agreement or chattel mortgage and such
collateral does not serve as security for any other obligation;
(53) As to Mortgage Loans that are not Cooperative Loans, the Mortgaged Property
is located in the state identified in the Mortgage Loan Schedule and consists of
a single parcel of real property with a detached single family residence erected
thereon, or a townhouse, or a two-to four-family dwelling, or an individual
condominium unit in a condominium project, or an individual unit in a planned
unit development or a de minimis planned unit development, provided, however,
that no residence or dwelling is a single parcel of real property with a
cooperative housing corporation erected thereon, or a mobile home. As of the
date of origination, no portion of the Mortgaged Property was used for
commercial purposes (other than the use of a portion of such Mortgaged Property
as a home office), and since the date of origination no portion of the Mortgaged
Property has been used for commercial purposes (other than the use of a portion
of such Mortgaged Property as a home office);
(54) With respect to any ground lease to which a Mortgaged Property may be
subject: (i) a true, correct and complete copy of the ground lease and all
amendments, modifications and supplements thereto is included in the Mortgage
File, and the Mortgagor is the owner of a valid and subsisting leasehold
interest under such ground lease; (ii) such ground lease is in full force and
effect, unmodified and not supplemented by any writing or otherwise except as
contained in the Mortgage File; (iii) all rent, additional rent and other
charges reserved therein have been fully paid to the extent payable as of the
Funding Date; (iv) the Mortgagor enjoys the quiet and peaceful possession of the
leasehold estate, subject to any sublease; (v) the Mortgagor is not in default
under any of the terms of such ground lease, and there are no circumstances
which, with the passage of time or the giving of notice, or both, would result
in a default under such ground lease; (vi) the lessor under such ground lease is
not in default under any of the terms or provisions of such ground lease on the
part of the lessor to be observed or performed; (vii) the lessor under such
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ground lease has satisfied any repair or construction obligations due as of the
Funding Date pursuant to the terms of such ground lease; (viii) the execution,
delivery and performance of the Mortgage do not require the consent (other than
those consents which have been obtained and are in full force and effect) under,
and will not contravene any provision of or cause a default under, such ground
lease; (ix) the ground lease term extends, or is automatically renewable, for at
least five years beyond the maturity date of the related Mortgage Loan; and (x)
the Purchaser has the right to cure defaults on the ground lease:
(55) All information supplied by, on behalf of, or concerning the Mortgagor is
true, accurate and complete and does not contain any statement that is or will
be inaccurate or misleading in any material respect;
(56) None of the Mortgage Loans are subject to the Home Ownership and Equity
Protection Act of 1994 or any comparable state law, including and predatory
lending or "high cost" loan law;
(57) None of the proceeds of the Mortgage Loan were used to finance
single-premium credit insurance policies;
(58) The origination and servicing practices with respect to each Mortgage Note
and Mortgage have been legal and in accordance with applicable laws and
regulations, and in all material respects proper and prudent in the mortgage
origination and servicing business. Each Mortgage Loan has been serviced in all
material respects in compliance with the terms and provisions of the Mortgage
Loans, utilizing the same care, skill, prudence and diligence with Servicer
services similar assets for third party institutional investors, 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; and
(59)With respect to escrow deposits and payments that the Seller or Servicer is
entitled to collect, all such payments are in the possession of, or under the
control of, the Seller or Servicer, and there exist no deficiencies in
connection therewith for which customary arrangements for repayment thereof have
not been made. All escrow payments have been collected and are being maintained
in full compliance with applicable state and federal law and the provisions of
the related Mortgage Note and Mortgage. As to any Mortgage Loan that is the
subject of an escrow, escrow of funds is not prohibited by applicable law and
has been established in an amount reasonably sufficient (based on an initial or
past escrow analysis) to pay for every escrowed item that remains unpaid and has
been assessed but is not yet due and payable. No escrow deposits or other
charges or payments due under the Mortgage Note have been capitalized under any
Mortgage or the related Mortgage Note. Any interest required to be paid pursuant
to state and local law has been properly paid and credited.
Section 3.04 Repurchase and Substitution.
---------------------------
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 or lack of examination of any Mortgage File.
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Upon discovery by either of the Sellers or the Purchaser of a breach of any
of the representations and warranties contained in Sections 3.01, 3.02 or 3.03
that materially and adversely affects the interest of the Purchaser or the value
of the Mortgage Loans (or that materially and adversely affects the interests of
the Purchaser or the value of 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.
Unless permitted a greater period of time to cure as set forth in Section
2.04, the applicable Seller shall have a period of 60 days from the earlier of
either discovery by or receipt of written notice from the Purchaser to the
Seller of any breach of any of the representations and warranties contained in
Sections 3.01, 3.02 or 3.03 that materially and adversely affects the interest
of the Purchaser or the value of the Mortgage Loans (or that materially and
adversely affects the interests of the Purchaser or the value of 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 within 30 days of the Due Date after the 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, as is reasonably
determined by the Purchaser to cure such breach provided that the Seller has
commenced curing or correcting such breach and is diligently pursuing same. Each
Seller hereby covenants and agrees with respect to each Mortgage Loan conveyed
by it that, if any breach relating thereto cannot be corrected or cured within
the applicable cure period or such additional time, if any, as is reasonably
determined by the Purchaser, then such Seller shall, at the direction of the
Purchaser, repurchase the Defective Mortgage Loan at the applicable Repurchase
Price. Notwithstanding anything to the contrary contained herein, if the first
regularly scheduled payment of principal and interest due under any Mortgage
Loan 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 and the related borrower has attempted to make a
timely payment, no repurchase shall be required. Within 10 Business 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, at its
option and assuming that such Seller has a Qualified Substitute Mortgage Loan or
Loans, rather than repurchase the Mortgage Loan as provided above in connection
with a breach of a representation or warranty with respect to such Mortgage Loan
in Section 3.03 remove such Mortgage Loan ("Deleted Mortgage Loan") and
substitute in its place a Qualified Substitute Mortgage Loan or Loans. If the
applicable Seller has no Qualified Substitute Mortgage Loan, it shall repurchase
the Defective Mortgage Loan.
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
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by Article II. 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 the purposes of determining the Repurchase Price with respect to a
Qualified Substitute Mortgage Loan, such Qualified Substitute Mortgage Loan
shall be considered to have been purchased at a Purchase Price as would have
been determined under the Purchase Price and Terms Letter pursuant to which the
Deleted Mortgage Loan was purchased.
For any month in which the applicable Seller substitutes one or more
Qualified Substitute Mortgage Loans for one or more Deleted Mortgage Loans, the
applicable Seller 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 scheduled principal payments due in the
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 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 the Defective
Mortgage Loan(s) and (b) set forth in Section 9.01 to indemnify the Purchaser in
connection with any breach of a Seller's representations and 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.
If pursuant to the foregoing provisions the Seller repurchases a Mortgage
Loan that is a MERS Mortgage Loan, the Servicer shall either (i) cause MERS to
execute and deliver an assignment of the Mortgage in recordable form to transfer
the Mortgage from MERS to the Seller and shall cause such Mortgage to be removed
from registration on the MERS(R) System in accordance with MERS's rules and
regulations or (ii) cause MERS to designate on the MERS(R) System the Seller as
the beneficial holder of such Mortgage Loan.
In recognition of the Trust's rights against Cendant Mortgage with respect
to the Mortgage Loans acquired by it from Cendant Mortgage and conveyed to the
Purchaser hereunder, the Purchaser shall have the right to cause Cendant
Mortgage to repurchase directly any Defective Mortgage Loan (other than as a
result of a breach by the Trust of Section 3.03 (3) or 3.03(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.
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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 30 days' advance written notice to
the related Seller or Sellers (it is agreed that electronic mail shall be
considered valid notification if 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,
and which contain such provisions as are customary in securitizations rated
"AAA" (including a securitization involving a REMIC) (a "Securitization") and
(d) to restate 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, and (e) provide 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. 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.
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 Seller that as of
each Funding Date or as of such date specifically provided herein:
(1) Due Organization. The Purchaser is an entity duly organized, validly
existing and in good standing under the laws of its jurisdiction of
organization, and has all licenses necessary to carry on its business now being
conducted and is licensed, qualified and in good standing under the laws of each
state where a Mortgaged Property is located or is otherwise exempt under
applicable law from such qualification or is otherwise not required under
applicable law to effect such qualification; no demand for such qualification
has been made upon the Purchaser by any state having jurisdiction and in any
event the Purchaser is or will be in compliance with the laws of any such state
to the extent necessary to enforce each Mortgage Loan.
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(2) Due Authority. The Purchaser had the full power and authority and legal
right to acquire the Mortgage Loans that it acquired. The Purchaser has the full
power and authority to hold each Mortgage Loan, to sell each Mortgage Loan and
to execute, deliver and perform, and to enter into and consummate, all
transactions contemplated by this Agreement. The Purchaser has duly authorized
the execution, delivery and performance of this Agreement, has duly executed and
delivered this Agreement, and this Agreement, assuming due authorization,
execution and delivery by the Seller, constitutes a legal, valid and binding
obligation of the Purchaser, enforceable against it in accordance with its
terms, subject to applicable bankruptcy, reorganization, receivership,
conservatorship, insolvency, moratorium and other laws relating to or affecting
creditors' rights generally or the rights of creditors of banks and to the
general principles of equity (whether such enforceability is considered in a
proceeding in equity or at law);
(3) No Conflict. None of the execution and delivery of this Agreement, the
acquisition or origination, as applicable, of the Mortgage Loans by the
Purchaser, the purchase of the Mortgage Loans, the consummation of the
transactions contemplated hereby, or the fulfillment of or compliance with the
terms and conditions of this Agreement, will conflict with or result in a breach
of any of the terms, conditions or provisions of the Purchaser's organizational
documents and bylaws or any legal restriction or any agreement or instrument to
which the Purchaser is now a party or by which it is bound, or constitute a
default or result in an acceleration under any of the foregoing, or result in a
material violation of any law, rule, regulation, order, judgment or decree to
which the Purchaser or its property is subject, ;
(4) Litigation Pending. There is no action, suit, proceeding or investigation
pending or, to the best of the Purchaser's knowledge, threatened, against the
Purchaser, which, either in any one instance or in the aggregate, if determined
adversely to the Purchaser would materially adversely affect the purchase of the
Mortgage Loans or the execution, delivery or enforceability of this Agreement ,
or draw into question the validity of this Agreement, or the Mortgage Loans;
(5) Broker. The Purchaser has not dealt with any broker or agent or anyone else
who might be entitled to a fee or commission in connection with this
transaction.
(6) 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; and
(7) 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
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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;
(8) Non-solicitation. The Purchaser agrees that it shall not solicit any
Mortgagors (in writing or otherwise) to refinance any of the Mortgage Loans;
provided that mass advertising or mailings (such as placing advertisements on
television, on radio, in magazines or in newspapers or including messages in
billing statements) that are not exclusively directed towards the Mortgagors
shall not constitute solicitation and shall not violate this covenant; and
(9) MERS. The Purchaser 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 Purchaser's performance of its obligations under this Agreement with respect
to the Mortgage Loans, for as long as such Mortgage Loans are registered with
MERS.
Section 4.02 Conditions Precedent to Closing.
-------------------------------
Each purchase of Mortgage Loans hereunder shall be subject to each of the
following conditions:
(a) All of the representations and warranties of Seller under the
Cendant Guide, and of Seller and Purchaser under this Agreement
shall be true and correct as of the Funding Date, and no event
shall have occurred which, with notice or the passage of time,
would constitute an Event of Default under this Agreement or
under the Cendant Guide;
(b) Purchaser shall have received, or Purchaser's attorneys shall
have received in escrow, all closing documents as specified
herein, in such forms as are agreed upon and acceptable to
Purchaser, duly executed by all signatories other than Purchaser
as required pursuant to the respective terms thereof;
(c) All other terms and conditions of this Agreement shall have been
complied with.
Subject to the foregoing conditions, Purchaser shall pay to Seller on each
Funding Date the applicable Purchase Price as provided herein.
ARTICLE V:
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 5.01 Cendant Mortgage to Act as Servicer; Servicing
--------------------------------------------------------
Standards; Additional Documents; Consent of the Purchaser.
---------------------------------------------------------
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(1) The Servicer, as independent contract servicer, shall service and administer
the Mortgage Loans and REO Property from and after each Funding Date in
accordance with the terms and provisions of the Mortgage Loans, applicable law
and the terms and provisions of this Agreement for and on behalf of, and in the
best interests of, the Purchaser (without taking into account any relationship
the Servicer may have with any Mortgagor or other Person, the participation, if
any, of the Servicer in any financing provided in connection with the sale of
any Mortgaged Property, or the Servicer's obligation to advance any expenses or
incur any costs in the performance of its duties hereunder) in accordance with a
standard that is not less than the higher of (a) the same care, skill, prudence
and diligence with which it services similar assets held for its own or its
Affiliates' account and (b) the same care, skill, prudence and diligence with
which it services similar assets for third party institutional investors, in
each case giving due consideration to customary and usual standards of practice
of prudent institutional mortgage loan servicers utilized with respect to
mortgage loans comparable to the Mortgage Loans. Subject to the foregoing
standards, in connection with such servicing and administration, the Servicer
shall seek to maximize the timely recovery of principal and interest on the
Mortgage Notes; provided that nothing contained herein shall be construed as an
express or implied guarantee by the Servicer of the collectibility of payments
on the Mortgage Loans or shall be construed as impairing or adversely affecting
any rights or benefits specifically provided by this Agreement to the Seller,
including with respect to Servicing Fees.
In the event that any of the Mortgage Loans included on the Mortgage Loan
Schedule for a particular Funding Date are Additional Collateral Mortgage Loans
(as defined in Exhibit 11 hereto), Seller and Purchaser shall enter into an
Additional Collateral Servicing Agreement, substantially in the form of Exhibit
11 hereto, and such Additional Collateral Mortgage Loans will be serviced in
accordance with the terms of the related Additional Collateral Servicing
Agreement and the terms of this Agreement.
(2) To the extent consistent with Section 5.01(1) and further subject to any
express limitations set forth in this Agreement, the Servicer (acting alone or,
solely in the circumstances permitted hereunder, acting through a subservicer)
shall have full power and authority to do or cause to be done any and all things
that it may deem necessary or desirable in connection with such servicing and
administration, including the power and authority (a) to execute and deliver, on
behalf of the Purchaser, customary consents or waivers and other instruments and
documents (including estoppel certificates), (b) to consent to transfers of any
Mortgaged Property and assumptions of the Mortgage Notes and related Mortgages,
(c) to submit claims to collect any Insurance Proceeds and Liquidation Proceeds,
(d) to consent to the application of any Insurance Proceeds or Condemnation
Proceeds to the restoration of the applicable Mortgaged Property or otherwise,
(e) to bring an action in a court of law, including an unlawful detainer action,
to enforce rights of the Purchaser with respect to any Mortgaged Property, (f)
to execute and deliver, on behalf of the Purchaser, documents relating to the
management, operation, maintenance, repair, leasing, marketing and sale of any
Mortgaged Property or any REO Property, and (g) to effectuate foreclosure or
other conversion of the ownership of the Mortgaged Property securing any
Mortgage Loan; provided that the Servicer shall not take any action not provided
for in this Agreement that is materially inconsistent with or materially
prejudices the interest of the Purchaser in any Mortgage Loan or under this
Agreement. If reasonably requested by the Servicer, the Purchaser shall furnish
the Servicer with any powers of attorney and other documents reasonably
necessary or appropriate to enable the Servicer to service and administer the
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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) 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 FNMA, provided that the Servicer
shall specifically notify the Purchaser in writing and obtain the Purchaser's
written consent prior to the Servicer taking any of the following actions: (1)
modifying, amending or waiving any of the financial terms of, or making any
other material modifications to, a Mortgage Loan, except the Servicer may, upon
the Mortgagor's request, accept a principal prepayment and re-amortize the then
remaining principal balance over the then remaining term of the loan (resulting
in a lower scheduled monthly payment but no change in the maturity date); (2)
making, with respect to any REO Property, Servicing Advances provided that the
Servicer shall not be required to so advise the Purchaser to the extent that
each related Servicing Advance as to the related Mortgaged Property or REO
Property is in the best interests of the Purchaser or other owner of the
Mortgage Loan and that are deemed to be recoverable by the Servicer; (3)
forgiving principal or interest on, or permitting to be satisfied at a discount,
any Mortgage Loan; (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 20 Business Days of the date such recommendation is made,
then the Purchaser shall be deemed to have rejected such recommended action(s)
and the Servicer shall not take any such action(s);
(d) the Servicer shall notify the Purchaser of any modification, waiver or
amendment of any term of any Mortgage Loan and the date thereof and shall
deliver to the Purchaser, for deposit in the related Mortgage File, an original
counterpart of the agreement relating to such modification, waiver or amendment
promptly following the execution thereof;
(e) the Servicer shall remain primarily liable for the full performance of
its obligations hereunder notwithstanding any appointment by the Servicer of a
subservicer or subservicers hereunder; and
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(f) the Purchaser may at any time and from time to time, in its sole
discretion, upon 10 Business Days written notice to the Servicer, terminate the
Servicer's servicing obligations hereunder with respect to (1) any REO Property
or (2) any Mortgage Loan that, in accordance with the Purchaser's internal
credit classification criteria, has been classified as "doubtful" or a "loss."
Upon the effectiveness of any such termination of the Servicer's servicing
obligations with respect to any such REO Property or Mortgage Loan, the Servicer
shall deliver all agreements, documents, and instruments related thereto to the
Purchaser, in accordance with applicable law.
Section 5.02 Collection of Mortgage Loan Payments.
------------------------------------
Continuously from the date hereof until the principal and interest on all
Mortgage Loans are paid in full, the Servicer will proceed diligently to collect
all payments due under each Mortgage Loan when the same shall become due and
payable and shall, to the extent such procedures shall be consistent with this
Agreement and the terms and provisions of any related Primary Insurance Policy,
follow such collection procedures as it follows with respect to mortgage loans
comparable to the Mortgage Loans, which procedures shall in any event comply
with the servicing standards set forth in Section 5.01. Furthermore, the
Servicer shall ascertain and estimate annual ground rents, taxes, assessments,
fire and hazard insurance premiums, mortgage insurance premiums, and all other
charges that, as provided in the Mortgages, will become due and payable to the
end that the installments payable by the Mortgagors will be sufficient to pay
such charges as and when they become due and payable.
Section 5.03 Reports for Specially Serviced Mortgage Loans and Foreclosure
-------------------------------------------------------------
Sales.
-----
The Servicer shall, within five (5) calendar days following each Record
Date, deliver to the Purchaser monthly reports (substantially in the form of
Exhibit 5.03(a) and Exhibit 5.03(b) attached hereto) with respect to all
Specially Serviced Mortgage Loans. In addition, the Servicer shall, within one
(1) Business Day following the occurrence of any foreclosure sale with respect
to any Mortgaged Property, deliver to the Purchaser a notice of foreclosure sale
substantially in the form of Exhibit 5.03(c) attached hereto.
Section 5.04 Establishment of Collection Account; Deposits in Collection
-------------------------------------------------------------
Account.
-------
The Servicer shall segregate and hold all funds collected and received
pursuant to each Mortgage Loan separate and apart from any of its own funds and
general assets and shall establish and maintain one or more Collection Accounts,
in the form of time deposit or demand accounts. Each custodial Account shall be
an Eligible Account. The creation of any Collection Account shall be evidenced
by a certification in the form of Exhibit 5.04-1 attached hereto, in the case of
an account established with the Servicer, or a letter agreement in the form of
Exhibit 5.04-2 attached hereto, in the case of an account held by a depository
other than the Servicer. In either case, a copy of such certification or letter
agreement shall be furnished to the Purchaser.
The Servicer shall deposit in the Collection Account on a daily basis,
within two Business Days after receipt (or as otherwise required pursuant to
this Agreement in the case of clauses (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 Funding Date, or received by it prior to the Funding Date but
allocable to a period subsequent thereto, other than in respect of principal and
interest on the Mortgage Loans due on or before the Funding Date:
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(1) all payments on account of principal, including Principal Prepayments, on
the Mortgage Loans;
(2) all payments on account of interest on the Mortgage Loans;
(3) all Liquidation Proceeds;
(4) all REO Proceeds;
(5) all Insurance Proceeds, including amounts required to be deposited pursuant
to Sections 5.10 and 5.11, other than proceeds to be held in the Escrow Account
and applied to the restoration or repair of the Mortgaged Properties or released
to the applicable Mortgagors in accordance with the Servicer's normal servicing
procedures, the related Mortgages or applicable law;
(6) all Condemnation Proceeds affecting any Mortgaged Property which are not
released to a Mortgagor in accordance with the Servicer's normal servicing
procedures, the related Mortgage or applicable law;
(7) any Monthly Advances in accordance with Section 6.03;
(8) any amounts required to be deposited by the Servicer pursuant to Section
5.11 in connection with the deductible clause in any blanket hazard insurance
policy, such deposit to be made from the Servicer's own funds without
reimbursement therefor;
(9) any amounts required to be deposited by the Servicer pursuant to Section
5.16 in connection with any losses on Permitted Investments; 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, 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 make payments to the Purchaser in the amounts, at the times and in the
manner provided for in Section 6.01;
(2) to reimburse itself for unreimbursed Monthly Advances, the Servicer's right
to reimburse itself pursuant to this Subsection (3) being limited to amounts
received on the related Mortgage Loan which represent late payments of principal
and/or interest with respect to which any such Monthly Advance was made;
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(3) to reimburse itself for unreimbursed Servicing Advances and for unreimbursed
Monthly Advances, the Servicer's right to reimburse itself pursuant to this
Subsection (3) with respect to any Mortgage Loan being limited to related
Liquidation Proceeds, Condemnation Proceeds, and Insurance Proceeds, 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;
(4) to pay to itself, solely out of the interest portion of the Monthly Payment
actually received with respect to a Mortgage Loan during the period ending on
the most recent Determination Date, the Servicing Fee with respect to such
Mortgage Loan;
(5) to pay to itself as additional servicing compensation (a) any interest
earned on funds in the Collection Account (all such interest to be withdrawn
monthly not later than each Remittance Date) and (b) any prepayment penalties or
premiums relating to any Principal Prepayments; provided that no such amounts
shall be payable as servicing compensation to the extent they relate to a
Mortgage Loan with respect to which a default, breach, violation, or event of
acceleration exists or would exist but for the lapse of time, the giving of
notice, or both;
(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 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, in the form of time deposit or demand
accounts. The creation of any Escrow Account shall be evidenced by a
certification in the form shown on Exhibit 5.06-1 attached hereto, in the case
of an account established with the Servicer, or a letter agreement in the form
shown on Exhibit 5.06-2 attached hereto, in the case of an account held by a
depository other than the Servicer, such depository having been consented to by
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the Purchaser. In either case, a copy of such certification or letter agreement
shall be furnished to the Purchaser. Each Escrow Account shall be an Eligible
Account.
The Servicer shall deposit in each Escrow Account on a daily basis, and
retain therein, (i) all Escrow Payments collected on account of the related
Mortgage Loans for the purpose of effecting timely payment of any such items as
required under the terms of this Agreement, and (ii) all Insurance Proceeds
which are to be applied to the restoration or repair of any Mortgaged Property.
The Servicer shall make withdrawals therefrom only to effect such payments as
are required under Sections 5.07 and/or 5.08. The Servicer shall be entitled to
retain any interest paid on funds deposited in the Escrow Account by the
depository institution other than interest on escrowed funds required by law to
be paid to the Mortgagor and, to the extent required by law, the Servicer shall
pay interest on escrowed funds to the Mortgagor notwithstanding that the Escrow
Account is non-interest bearing or that interest paid thereon is insufficient
for such purposes, without any right of reimbursement therefor.
Section 5.07 Permitted Withdrawals From Escrow Accounts.
------------------------------------------
Withdrawals from any Escrow Account may be made by the Servicer only (i) to
effect timely payments of ground rents, taxes, assessments, water rates, hazard
insurance premiums, Primary Insurance Policy premiums, if applicable, and
comparable items constituting Escrow Payments for the related Mortgage, (ii) to
reimburse the Servicer for any Servicing Advance made by the Servicer with
respect to a related Mortgage Loan but only from amounts received on the related
Mortgage Loan that represent late payments or collections of Escrow Payments
thereunder, (iii) to refund to the Mortgagor any funds as may be determined to
be overages, (iv) if permitted by applicable law, for transfer to the Collection
Account in accordance with the terms of this Agreement, (v) for application to
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 on the termination of this Agreement.
Section 5.08 Payment of Taxes, Insurance and Other Charges; Maintenance of
-------------------------------------------------------------
Primary Insurance Policies; Collections Thereunder.
--------------------------------------------------
With respect to each Mortgage Loan, the Servicer shall maintain accurate
records reflecting the status of ground rents, taxes, assessments, water rates
and other charges which are or may become a lien upon the Mortgaged Property and
the status of Primary Insurance Policy premiums and fire and hazard insurance
coverage and shall obtain, from time to time, all bills for the payment of such
charges, including renewal premiums, and shall effect payment thereof prior to
the applicable penalty or termination date and at a time appropriate for
securing maximum discounts allowable, employing for such purpose deposits of the
Mortgagor in the Escrow Account which shall have been estimated and accumulated
by the Servicer in amounts sufficient for such purposes, as allowed under the
terms of the Mortgage and applicable law. If a Mortgage does not provide for
Escrow Payments, then the Servicer shall require that any such payments be made
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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 ensure 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 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 in conformance with terms of 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) concurrently upon any such transfer, the Servicer shall give written notice
thereof to the Purchaser. Notwithstanding anything to the contrary contained
herein, the Collection Account and each Escrow Account shall at all times
constitute Eligible Accounts.
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Section 5.10 Maintenance of Hazard Insurance.
-------------------------------
The Servicer shall cause to be maintained for each Mortgage Loan fire and
hazard insurance with extended coverage as is customary in the area where the
Mortgaged Property is located in an amount that is at least equal to the lesser
of (a) the maximum insurable value of the improvements securing such Mortgage
Loan and (b) the greater of (1) the Unpaid Principal Balance of such Mortgage
Loan or (2) an amount such that the proceeds thereof shall be sufficient to
prevent the Mortgagor and/or the loss payee from becoming a co-insurer.
If any Mortgaged Property is in an area identified by the Federal Emergency
Management Agency as having special flood hazards and such flood insurance has
been made available, then the Servicer will cause to be maintained a flood
insurance policy meeting the requirements of the current guidelines of the
Federal Insurance Administration with a generally acceptable insurance carrier,
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).
The Servicer shall also maintain on each REO Property fire, hazard and
liability insurance, and to the extent required and available under the Flood
Disaster Protection Act of 1973, as amended, flood insurance with extended
coverage in an amount which is at least equal to the lesser of (a) the maximum
insurable value of the improvements which are a part of such property and (b)
the outstanding principal balance of the related Mortgage Loan at the time it
became an REO Property plus accrued interest at the Note Rate and related
Servicing Advances.
All such policies shall be endorsed with standard mortgagee clauses with
loss payable to the Servicer, or upon request to the Purchaser, and shall
provide for at least 30 days prior written notice of any cancellation, reduction
in the amount of, or material change in, coverage to the Servicer. The Servicer
shall not interfere with the Mortgagor's freedom of choice in selecting either
his insurance carrier or agent, provided that the Servicer shall not accept any
such insurance policies from insurance companies unless such companies (a)
currently reflect (1) a general policyholder's rating of B+ or better and a
financial size category of III or better in Best's Key Rating Guide, or (2) a
general policyholder's rating of "A" or "A-" or better in Best's Key Rating
Guide, and (b) are licensed to do business in the state wherein the related
Mortgaged Property is located. Notwithstanding the foregoing, the Servicer may
accept a policy underwritten by Lloyd's of London or, if it is the only coverage
available, coverage under a state's Fair Access to Insurance Requirement (FAIR)
Plan. If a hazard policy becomes in danger of being terminated, or the insurer
ceases to have the ratings noted above, the Servicer shall notify the Purchaser
and the related Mortgagor, and shall use its best efforts, as permitted by
applicable law, to obtain from another qualified insurer a replacement hazard
insurance policy substantially and materially similar in all respects to the
original policy. In no event, however, shall a Mortgage Loan be without a hazard
insurance policy at any time, subject only to Section 5.11.
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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 servicing
procedures, in compliance with this Agreement 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 as shall
require such additional insurance.
Section 5.11 Maintenance of Mortgage Impairment Insurance Policy.
- --------------------------------------------------
If the Servicer obtains and maintains a blanket policy issued by an issuer
that has a Best's Key rating of A+ insuring against hazard losses on all of the
Mortgage Loans, then, to the extent such policy provides coverage in an amount
equal to the amount required pursuant to Section 5.10 and otherwise complies
with all other requirements of Section 5.10, it shall conclusively be deemed to
have satisfied its obligations as set forth in Section 5.10, it being understood
and agreed that such policy may contain a deductible clause, in which case the
Servicer shall, if there shall not have been maintained on the related Mortgaged
Property or REO Property a policy complying with Section 5.10 and there shall
have been one or more losses which would have been covered by such policy,
deposit in the Collection Account the amount not otherwise payable under the
blanket policy because of such deductible clause; provided that the Servicer
shall not be entitled to obtain reimbursement therefor. In connection with its
activities as servicer of the Mortgage Loans, the Servicer agrees to prepare and
present, on behalf of the Purchaser, claims under any such blanket policy in a
timely fashion in accordance with the terms of such policy. Upon request of the
Purchaser, the Servicer shall cause to be delivered to the Purchaser a certified
true copy of such policy and a statement from the insurer thereunder that such
policy shall in no event be terminated or materially modified without 30 days'
prior written notice to the Purchaser.
Section 5.12 Fidelity Bond; Errors and Omissions Insurance.
---------------------------------------------
The Servicer shall maintain, at its own expense, a blanket fidelity bond
and an errors and omissions insurance policy, with broad coverage with
responsible companies that would meet the requirements of FNMA and FHLMC on all
officers, employees or other Persons acting in any capacity with regard to the
Mortgage Loan to handle funds, money, documents and papers relating to the
Mortgage Loans. The Fidelity Bond and errors and omissions insurance shall be in
the form of the "Mortgage Banker's Blanket Bond" and shall protect and insure
the Servicer against losses, including losses arising by virtue of any Mortgage
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Loan not being satisfied in accordance with the procedures set forth in Section
7.02 and/or losses resulting from or arising in connection with forgery, theft,
embezzlement, fraud, errors and omissions and negligent acts of or by such
Persons. Such Fidelity Bond shall also protect and insure the Servicer against
losses in connection with the failure to maintain any insurance policies
required pursuant to this Agreement and the release or satisfaction of a
Mortgage Loan without having obtained payment in full of the indebtedness
secured thereby. No provision of this Section 5.12 requiring the Fidelity Bond
and errors and omissions insurance shall diminish or relieve the Servicer from
its duties and obligations as set forth in this Agreement. The minimum coverage
under any such bond and insurance policy shall be at least equal to the
corresponding amounts required by FNMA in the FNMA Guide and by FHLMC in the
FHLMC Servicing Guide. The Servicer shall cause to be delivered to the Purchaser
on or before the Funding Date: (i) a certified true copy of the Fidelity Bond
and insurance policy; (ii) a written statement from the surety and the insurer
that such Fidelity Bond or insurance policy shall in no event be terminated or
materially modified without 30 days' prior written notice to the Purchaser; and
(iii) written evidence reasonably satisfactory to the Purchaser that such
Fidelity Bond or insurance policy provides that the Purchaser is a beneficiary
or loss payee thereunder.
Section 5.13 Management of REO Properties.
----------------------------
If title to any Mortgaged Property is acquired in foreclosure or by deed in
lieu of foreclosure (each, an "REO Property"), the deed or certificate of sale
shall be taken in the name of the Purchaser or the Person (which may be the
Servicer for the benefit of the Purchaser) designated by the Purchaser, or in
the event the Purchaser or such Person is not authorized or permitted to hold
title to real property in the state where the REO Property is located, or would
be adversely affected under the "doing business" or tax laws of such state by so
holding title, the deed or certificate of sale shall be taken in the name of
such Person or Persons as shall be consistent with an opinion of counsel
obtained by the Purchaser from an attorney duly licensed to practice law in the
state where the REO Property is located. The Servicer (acting alone or through a
subservicer), on behalf of the Purchaser, shall, subject to Section 5.01(3)(c),
dispose of any REO Property pursuant to Section 5.14. Prior to acquiring such
title the Servicer will notify the Purchaser as to how the title will be held.
Unless an appraisal prepared by an MAI Appraiser who is Independent in
accordance with the provisions of 12 C.F.R. 225.65 shall have been obtained in
connection with the acquisition of such REO Property, promptly following any
acquisition by the Purchaser (through the Servicer) of an REO Property, the
Servicer shall obtain a narrative appraisal thereof in order to determine the
fair market value of such REO Property. The Servicer shall promptly notify the
Purchaser of the results of such appraisal. The Servicer shall also cause each
REO Property to be inspected promptly upon the acquisition of title thereto and
shall cause each REO Property to be inspected at least annually thereafter, and
Servicer shall be entitled to be reimbursed for expenses in connection therewith
in accordance with this Agreement. The Servicer shall make or cause to be made a
written report of each such inspection. Such reports shall be retained in the
Mortgage File and copies thereof shall be forwarded by the Servicer to the
Purchaser. The Servicer shall also furnish to the Purchaser the applicable
reports required under Section 8.01.
Notwithstanding anything to the contrary contained herein, if a REMIC
election has been or is to be made with respect to the arrangement under which
the Mortgage Loans and the REO Properties are held, then the Servicer shall
manage, conserve, protect and operate each REO Property in a manner that does
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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(3)(c)), to do any and all things in connection with any REO
Property as are consistent with the servicing standards set forth in Section
5.01. In connection therewith, the Servicer shall deposit or cause to be
deposited on a daily basis in the Collection Account all revenues and
collections received or collected by it with respect to each REO Property,
including all proceeds of any REO Disposition. Subject to Section 5.15, the
Servicer shall withdraw (without duplication) from the Collection Account, but
solely from the revenues and collections received or collected by it with
respect to a specific REO Property, such funds necessary for the proper
operation, management and maintenance of such REO Property, including the
following:
(1) all insurance premiums due and payable in respect of such REO Property;
(2) all real estate taxes and assessments in respect of such REO Property that
may result in the imposition of a lien thereon;
(3) all customary and reasonable costs and expenses necessary to maintain,
repair, appraise, evaluate, manage or operate such REO Property (including the
customary and reasonable costs incurred by any "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).
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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
reimbursement for Servicing Advances relating to the subject REO Property.
Section 5.14 Sale of REO Properties.
----------------------
Subject to Section 5.01 (and, specifically, Section 5.01(3)(c)) and Section
5.15, 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 5.15. In
accordance with the servicing standards 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 Specially Serviced Mortgage Loan or REO Property and,
upon receipt thereof, promptly (but in any event within 3 Business Days) present
such bids and offers to the Purchaser. The Servicer shall not accept any bid or
offer for any Specially Serviced Mortgage Loan or REO Property except in
compliance with Section 5.01(3)(c). The Purchaser may reject any bid or offer if
the Purchaser determines the rejection of such bid or offer would be in the best
interests of the Purchaser. The Purchaser shall notify the Servicer of such
determination within three (3) Business Days of notice of any such bids from the
Servicer. If the Purchaser rejects any bid or offer, the Servicer shall, if
appropriate, seek an extension of the 3 year period referred to in Section 5.15.
Subject to Section 5.01 (and, specifically, Section 5.01(3)(c)) and Section
5.15, the Servicer shall act on behalf of the Purchaser in negotiating and
taking any other action necessary or appropriate in connection with the sale of
any REO Property, including the collection of all amounts payable in connection
therewith. The terms of sale of any REO Property shall be in the sole discretion
of the Purchaser. Any sale of any REO Disposition shall be without recourse to,
or representation or warranty by, the Purchaser or the Servicer, and, if
consummated in accordance with the terms of this Agreement, then the Servicer
shall have no liability to the Purchaser with respect to the purchase price
therefor accepted by the Purchaser. The proceeds of any sale after deduction of
the expenses of such sale incurred in connection therewith shall be promptly
deposited in (a) if such sale is an REO Disposition, in the Collection Account
in accordance with Section 5.13 and (b) in any other circumstance, the
Collection Account in accordance with Section 5.04.
Section 5.15 Realization Upon Specially Serviced Mortgage Loans and REO
-------------------------------------------------------------
Properties.
----------
Subject to Section 5.01(3)(c), 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
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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(3)(c) and
incident to its conservation and protection of the interests of the Purchaser,
rent the same, or any part thereof, for the period to the sale of such REO
Property.
Notwithstanding anything to the contrary contained herein, the Purchaser
shall not, and the Servicer shall not on the Purchaser's behalf, acquire any
real property (or personal property incident to such real property) except in
connection with a default or a default that is imminent on a Mortgage Loan. If
the Purchaser acquires any real property (or personal property incident to such
real property) in connection with such a default, then such property shall be
disposed of by the Servicer in accordance with this Section and Section 5.14 as
soon as possible but in no event later than 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.
Any recommendation of the Servicer to foreclose on a defaulted Mortgage
Loan shall be subject to a determination by the Servicer that the proceeds of
such foreclosure would exceed the costs and expenses of bringing such a
proceeding. The income earned from the management of any REO Property, net of
reimbursement to the Servicer for Servicing Advances and fees for work-out
compensation in accordance with the FHLMC Servicing Guide, incurred with respect
to such REO Property under Section 5.13, shall be applied to the payment of the
costs and expenses set forth in Section 5.13(4), with any remaining amounts to
be promptly deposited in the Collection Account in accordance with Section 5.13.
If, in the exercise of its servicing obligations with respect to any
Mortgaged Property hereunder, the Servicer deems it is necessary or advisable to
obtain an Environmental Assessment, then the Servicer shall so obtain an
Environmental Assessment, it being understood that all reasonable costs and
expenses incurred by the Servicer in connection with any such Environmental
Assessment (including the cost thereof) shall be deemed to be Servicing Advances
recoverable by the Servicer pursuant to Section 5.13(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
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,
-51-
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 5.15 establishes that any of the
Environmental Conditions Precedent to Foreclosure is not satisfied with respect
to any Mortgaged Property, but the Servicer in good faith reasonably believes
that it is in the best economic interest of the Purchaser to proceed against
such Mortgaged Property and, if title thereto is acquired, to take such
remedial, corrective or other action with respect to the unsatisfied condition
or conditions as may be prescribed by applicable law to satisfy such condition
or conditions, then the Servicer shall so notify the Purchaser. If, pursuant to
Section 5.01(3)(c), the Purchaser has notified the Servicer in writing to
proceed against such Mortgaged Property, then the Servicer shall so proceed. The
cost of any remedial, corrective or other action contemplated by the preceding
sentence in respect of any of the Environmental Conditions Precedent to
Foreclosure that is not satisfied shall not be an expense of the Servicer and
the Servicer shall not be required to expend or risk its own funds or otherwise
incur any financial liability in connection with any such action.
If an Environmental Assessment deemed necessary or advisable by the
Servicer in accordance with this Section 5.15 establishes that any of the
Environmental Conditions Precedent to Foreclosure is not satisfied with respect
to any Mortgaged Property and, in accordance with Section 5.01(3)(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(3)(c), take
such action as it deems to be in the best economic interest of the Purchaser
(other than proceeding against the Mortgaged Property or directly or indirectly
becoming the owner or operator thereof) as determined in accordance with the
servicing standard set forth in Section 5.01 and is hereby authorized at such
time as it deems appropriate to release such Mortgaged Property from the lien of
the related Mortgage.
Prior to the Servicer taking any action with respect to the use, management
or disposal of any hazardous materials on any Mortgaged Property, the Servicer
shall request the approval of the Purchaser in accordance with Section
5.01(3)(c) and, if such action is approved by the Purchaser, (a) keep the
Purchaser apprised of the progress of such action; and (b) take such action in
compliance with all applicable Environmental Laws.
Notwithstanding anything to the contrary in this Agreement, the Purchaser
may, at the Purchaser's sole option, terminate the Servicer as servicer of any
REO Property or Specially Serviced Mortgage Loan without payment of any
termination fee with respect thereto, provided that the Servicer shall on the
date said termination takes effect be reimbursed by withdrawal from the
Collection Account for any unreimbursed Monthly Advances of the Servicer's funds
-52-
made pursuant to Section 6.03 and any unreimbursed Servicing Advances in each
case relating to the Specially Serviced Mortgage Loan or the Mortgage Loan
underlying such REO Property notwithstanding anything to the contrary set forth
in Section 5.05. Furthermore, the Purchaser will take such necessary steps as
may be necessary to assume the servicing of the REO property and comply with all
applicable law in the event of any such termination. In the event of any such
termination, the provisions of Section 11.03 hereof shall apply to said
termination and the transfer of servicing responsibilities with respect to such
Specially Serviced Mortgage Loan or REO Property to the Purchaser or its
designee.
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 more than 30 days
thereafter with respect to each Mortgage Loan that was a MERS Mortgage Loan as
of the Funding Date, or 90 days thereafter with respect to each Mortgage Loan
that was a MERS Eligible Mortgage Loan as of the Funding Date and subsequent to
-53-
the Funding Date becomes a MERS Mortgage Loan), l 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.
Each of the Purchaser and the Servicer shall maintain in good standing its
membership in MERS. In addition, Each of the Purchaser and 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 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.
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
preceding Determination Date excluding the amount of any Payoff and Principal
Prepayment received after the Due Period for the related Remittance Date
(including (1) the amount of any Payoff and Principal Prepayment received during
the related Due 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 except those Payoffs and Principal Prepayments received on the last day
of the related Due Period and (2) all proceeds of any REO Disposition net of
amounts payable to the Servicer pursuant to Section 5.13), net of charges
against or withdrawals from the Collection Account in accordance with Section
5.05, which charges against or withdrawals from the Collection Account the
Servicer shall make solely on such Remittance Date, plus (b) all Monthly
Advances, if any, which the Servicer is obligated to remit pursuant to Section
6.03; provided that the Servicer shall not be required to remit, until the next
following Remittance Date, any amounts attributable to Monthly Payments
collected but due on a Due Date or Dates subsequent to the 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 accordingly to
the instructions that will be provided by Purchaser to the Servicer.
(3) With respect to any remittance received by the Purchaser after the Business
Day on which such payment was due, the Servicer shall pay to the Purchaser
interest on any such late payment at an annual rate equal to One-month LIBOR (as
published in the Wall 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
-54-
payment was due and ending with the Business Day on which such payment is made,
both inclusive. Such interest shall be remitted along with such late payment.
Neither the payment by the Servicer nor the acceptance by the Purchaser of any
such interest shall be deemed an extension of time for payment or a waiver by
the Purchaser of any Event of Default.
Section 6.02 Reporting.
---------
On or before the 5th calendar day (or, if such day is not a Business Day,
on the immediately succeeding Business Day) of each month during the term
hereof, the Servicer shall deliver to the Purchaser monthly accounting reports
in the form of Exhibits 6.02(a) through 6.02(g) attached hereto with respect to
the most recently ended Monthly Period. Such monthly accounting reports shall
include information as to the aggregate Unpaid Principal Balance of all Mortgage
Loans, the scheduled amortization of all Mortgage Loans, any delinquencies and
the amount of any Principal Prepayments as of the most recently ended Record
Date.
The Servicer shall provide the Purchaser with such information concerning
the Mortgage Loans as is necessary for the Purchaser to prepare its federal
income tax return as the Purchaser may reasonably request from time to time.
Section 6.03 Monthly Advances by the Servicer.
--------------------------------
Not later than the close of business on the Business Day immediately
preceding each Remittance Date, the Servicer shall deposit in the Collection
Account an amount equal to all Monthly Payments whether or not deferred pursuant
to Section 5.01 not previously advanced by the Servicer (with interest adjusted
to the Remittance Rate) that were due on a Mortgage Loan on the immediately
preceding Due Date and delinquent at the close of business on the related
Determination Date. The Servicer may reduce the total amount to be deposited in
the Collection Account as required by the foregoing sentence by the amount of
funds in the Collection Account which represent Prepaid Monthly Payments.
The Servicer's obligations to make Monthly Advances as to any Mortgage Loan
will continue through the last Monthly Payment due prior to the payment in full
of the Mortgage Loan, or through the Remittance Date prior to the Remittance
Date for the remittance of all Liquidation Proceeds and other payments or
recoveries (including Insurance Proceeds or Condemnation Proceeds) with respect
to the Mortgage Loan; provided that such obligation shall cease if the Servicer
furnishes to the Purchaser an Officers' Certificate evidencing the determination
by the Servicer in accordance with Section 6.04 that an advance with respect to
such Mortgage Loan would constitute a Non-recoverable Advance.
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.
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Section 6.05 Itemization of Servicing Advances.
---------------------------------
The Servicer shall provide the Purchaser with an itemization of all
Servicing Advances incurred or made by the Servicer hereunder as the Purchaser
may from time to time reasonably request.
Section 6.06 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.)
(3) If any Mortgage Loan is to be assumed, then the Servicer shall inquire into
the creditworthiness of the proposed transferee and shall use the same
underwriting criteria for approving the credit of the proposed transferee that
are used with respect to underwriting mortgage loans of the same type as the
Mortgage Loans. Where an assumption is allowed, the Servicer, with the prior
written consent of the insurer under the Primary Insurance Policy, 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
-56-
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 Mortgage
File and shall, for all purposes, be considered a part of such 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. If the credit of the
proposed transferee does not meet such underwriting criteria, then the Servicer
, to the extent permitted by the Mortgage or the Mortgage Note and by applicable
law, shall instruct the Mortgagor of the Mortgage Property on the process
required to transfer title by paying off 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 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.
If the Servicer satisfies or releases a Mortgage without having obtained
payment in full of the indebtedness secured by the Mortgage, or should it
otherwise take such action which results in a reduction of the coverage under
the Primary Insurance Policy, if any, then the Servicer shall promptly give
written notice thereof to the Purchaser, and, within 10 Business Days following
written demand therefor from the Purchaser to the Servicer, the Servicer shall
repurchase the related Mortgage Loan by paying to the Purchaser the Repurchase
Price therefor by wire transfer of immediately available funds directly to the
Purchaser's Account.
From time to time and as appropriate for the servicing or foreclosure of
the Mortgage Loan, including for this purpose collection under any Primary
Insurance Policy, the Purchaser shall, upon request of the Servicer and delivery
to the Purchaser of a servicing receipt signed by a Servicing Officer, release
the Mortgage File held by the Purchaser to the Servicer. Such servicing receipt
shall obligate the Servicer to return the related mortgage documents to the
Purchaser when the need therefor by the Servicer no longer exists, unless the
Mortgage Loan has been liquidated and the Liquidation Proceeds relating to the
Mortgage Loan have been deposited in the Collection Account or the Mortgage File
or such document has been delivered to an attorney, or to a public trustee or
other public official as required by law, for purposes of initiating or pursuing
legal action or other proceedings for the foreclosure of the Mortgaged Property
either judicially or nonjudicially, and the Servicer has delivered to the
Purchaser a certificate of a Servicing Officer certifying as to the name and
address of the Person to which such Mortgage File or such document was delivered
and the purpose or purposes of such delivery. Upon receipt of a certificate of a
Servicing Officer stating that such Mortgage Loan was liquidated and the
Liquidation Proceeds were deposited in the Collection Account, the servicing
receipt shall be released by the Purchaser to the Servicer.
-57-
Section 7.03 Servicing Compensation.
----------------------
As compensation for its services hereunder, the Servicer shall be entitled
to retain from interest payments on the Mortgage Loans the amounts provided for
as the Servicing Fee. The Servicing Fee in respect of a Mortgage Loan for a
particular month shall become payable only upon the receipt by the Servicer from
the Mortgagor of the full Monthly Payment in respect of such Mortgage Loan.
Additional servicing compensation in the form of assumption fees, as provided in
Section 7.01, late payment charges and other servicer compensation for
modifications, short sales, and other shall be retained by the Servicer to the
extent not required to be deposited in the Collection Account. The Servicer
shall be required to pay all expenses incurred by it in connection with its
servicing activities hereunder and shall not be entitled to reimbursement
therefor except as specifically provided for herein.
Section 7.04 Annual Statement as to Compliance.
---------------------------------
The Servicer will deliver to the Purchaser on or before March 31 of each
year, beginning with March 31, 2004, an Officers' Certificate stating that (i) a
review of the activities of the Servicer during the preceding calendar year and
of performance under this Agreement has been made under such officers'
supervision, (ii) the Servicer has fully complied with the provisions of this
Agreement and (iii) to the best of such officers' knowledge, based on such
review, the Servicer has fulfilled all of its obligations under this Agreement
throughout such year, or, if there has been a default in the fulfillment of any
such obligation, specifying each such default known to such officer and the
nature and status thereof.
Section 7.05 Annual Independent Certified Public Accountants' Servicing
-------------------------------------------------------------
Report.
------
On or before April 15 of each year beginning April 15, 2004, 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 Article VI have been complied with and, on the basis of such an examination
conducted substantially in accordance with the Uniform Single Attestation
Program for Mortgage Bankers, such servicing has been conducted in compliance
with this Agreement, except for (i) such exceptions as such firm shall believe
to be immaterial, and (ii) such other exceptions as shall be set forth in such
statement.
Section 7.06 Purchaser's Right to Examine Servicer Records.
---------------------------------------------
The Purchaser shall have the right to examine and audit, during business
hours or at such other times as are reasonable under applicable circumstances,
upon ten 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
-58-
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.
ARTICLE VIII:
REPORTS TO BE PREPARED BY THE SERVICER
Section 8.01 The Servicer's Reporting Requirements.
-------------------------------------
(1) Electronic Format. If requested by the Purchaser, the Servicer shall
supply any and all information regarding the Mortgage Loans and the REO
Properties, including all reports required to be delivered pursuant to Section
5.03, Section 6.02 and this Section 8.01, to the Purchaser in electronic format
reasonably acceptable to Purchaser, unless otherwise limited by the servicing
system utilized by the Servicer.
(2) Additional Reports; Further Assurances. On or before the 3rd Business
Day preceding each Determination Date, the Servicer shall deliver to the
Purchaser (i) a report, acceptable to the Purchaser, describing in reasonable
detail all Mortgage Loans that are 90 days or more delinquent and the Servicer's
activities in connection with such delinquencies and (ii) a report
(substantially in the form of Exhibit 8.01 attached hereto) with respect to
delinquent Mortgage Loans. Utilizing resources reasonably available to the
Servicer without incurring any cost except the Servicer's overhead and
employees' salaries, the Servicer shall furnish to the Purchaser during the term
of this Agreement such periodic, special or other reports, information or
documentation, whether or not provided for herein, as shall be reasonably
requested by the Purchaser with respect to Mortgage Loans or REO Properties
(provided the Purchaser shall have given the Servicer reasonable notice and
opportunity to prepare such reports, information or documentation), including
any reports, information or documentation reasonably required to comply with any
regulations of any governmental agency or body having jurisdiction over the
Purchaser, all such reports or information to be as provided by and in
accordance with such applicable instructions and directions as the Purchaser may
reasonably request. If any of such reports are not customarily prepared by the
Servicer or require that the Servicer program data processing systems to create
the reports, then the Purchaser shall pay to the Servicer a fee mutually agreed
to by the Purchaser and the Servicer taking into account the Servicer's actual
time and cost in preparing such reports. The Servicer agrees to execute and
deliver all such instruments and take all such action as the Purchaser, from
time to time, may reasonably request in order to effectuate the purposes and to
carry out the terms of this Agreement.
Section 8.02 Financial Statements.
--------------------
The Servicer understands that, in connection with marketing the Mortgage
Loans, the Purchaser may make available to any prospective purchaser of the
Mortgage Loans the Servicer's audited financial statements for its fiscal year
2001 and its audited financial statements for fiscal year 2002, together with
any additional statements provided pursuant to the next sentence. During the
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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.
ARTICLE IX:
THE SELLERS
Section 9.01 Indemnification; Third Party Claims.
-----------------------------------
Each Seller and the Servicer shall indemnify and hold harmless the
Purchaser, its directors, officers, agents, employees, and assignees (each, an
"Indemnified Party") from and against any costs, damages, expenses (including
reasonable attorneys' fees and costs, irrespective of whether or not incurred in
connection with the defense of any actual or threatened action, proceeding, or
claim), fines, forfeitures, injuries, liabilities or losses ("Losses") suffered
or sustained in any way by any such Indemnified Party, 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), Cendant 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(1), 3.01(2), 3.01(3), 3.01(4), 3.01(5), 3.01(7), 3.01(8), 3.01(9),
3.01(10), 3.03(3) or 3.03(16) hereof. In the event of a breach by the Trust of
the Trust's representations in Sections 3.01(1), 3.01(2), 3.01(3), 3.01(4),
3.01(5), 3.01(7), 3.01(8), 3.01(9), 3.01(10), 3.03(3) or 3.03(16), the
Indemnified Party's sole right to indemnification shall be from the Trust. The
applicable Seller or Servicer 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
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except when the claim in any way relates to the Servicer's indemnification
pursuant to this Section 9.01. The provisions of this Section 9.01 shall survive
termination of this Agreement and transfer of the servicing rights.
Section 9.02 Merger or Consolidation of the Seller.
-------------------------------------
Each Seller will keep in full effect its existence, rights and franchises
as a corporation or a Delaware business trust, as applicable, under the laws of
the state of its organization and will obtain and preserve its qualification to
do business as a foreign entity in each jurisdiction in which such qualification
is or shall be necessary to protect the validity and enforceability of this
Agreement or any of the Mortgage Loans and to perform its duties under this
Agreement.
Any Person into which a Seller may be merged or consolidated, or any
corporation resulting from any merger, conversion or consolidation (including by
means of the sale of all or substantially all of such Seller's assets to such
Person) to which the Seller shall be a party, or any Person succeeding to the
business of the Seller, shall be the successor of the Seller hereunder, without
the execution or filing of any paper or any further act on the part of any of
the parties hereto, anything herein to the contrary notwithstanding; provided
that, unless otherwise consented to by the Purchaser, the successor or surviving
Person, in the case of a merger or consolidation, etc. of the Servicer, shall be
an institution qualified to service mortgage loans on behalf of FNMA and FHLMC
in accordance with the requirements of Section 3.02(1), shall not cause a rating
on any security backed by a Mortgage Loan to be downgraded and shall satisfy the
requirements of Section 12.01 with respect to the qualifications of a successor
to such Seller.
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, gross
negligence or any breach in the performance of the obligations and duties
hereunder. The Sellers and any officer, employee or agent of the Sellers may
rely in good faith on any document of any kind reasonably believed by the
Sellers or such Person to be genuine and prima facie properly executed and
submitted by any Person respecting any matters arising hereunder.
The Sellers shall not be under any obligation to appear in, prosecute or
defend any legal action that is not incidental to their duties hereunder and
which in their opinion may involve them in any expense or liability; provided
that the Sellers may in their discretion undertake any such action that it may
deem necessary or desirable in respect of this Agreement and the rights and
duties of the parties hereto. In such event, the legal expenses and costs of
such action and any liability resulting therefrom shall be expenses, costs and
liabilities for which the Sellers shall be entitled to be reimbursed therefor
out of the Collection Account. This indemnity shall survive the termination of
this Agreement.
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Section 9.04 Servicer Not to Resign.
----------------------
With respect to the retention by Cendant Mortgage of the servicing of the
Mortgage Loans and the REO Properties hereunder, Cendant Mortgage acknowledges
that the Purchaser has acted in reliance upon Cendant Mortgage's Independent
status, the adequacy of its servicing facilities, plan, personnel, records and
procedures, its integrity, reputation and financial standing and the continuance
thereof. Consequently, Cendant Mortgage shall not assign the servicing rights
retained by it hereunder to any third party nor resign from the obligations and
duties hereby imposed on it except (i) with the approval of the Purchaser, such
approval not to be unreasonably withheld, or (ii) 3 Business Days following any
determination that its duties hereunder are no longer permissible under
applicable law and such incapacity cannot be cured by Cendant Mortgage. Any
determination permitting the transfer of the servicing rights or the resignation
of Cendant Mortgage under Subsection (ii) hereof shall be evidenced by an
opinion of counsel to such effect delivered to the Purchaser, which opinion of
counsel shall be in form and substance reasonably acceptable to the Purchaser.
ARTICLE X:
DEFAULT
Section 10.01 Events of Default.
-----------------
In case one or more of the following events shall occur and be continuing:
(1) any failure by the Servicer to remit to the Purchaser any payment required
to be made under the terms of this Agreement which continues unremedied for a
period of 3 Business Days ;
(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;
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(6) any failure or inability of Cendant Mortgage to be eligible to service
Mortgage Loans for FNMA or FHLMC;
(7) any sale, transfer, assignment, or other disposition by a Seller/Servicer of
all or substantially all of its property or assets to a Person who does not meet
the qualifications enumerated or incorporated by reference into Section 9.02,
any assignment by a Seller/Servicer of this Agreement or any of a
Seller's/Servicer's rights or obligations hereunder except in accordance with
Section 9.04, or any action taken or omitted to be taken by a Seller/Servicer in
contemplation or in furtherance of any of the foregoing, without the consent of
the Purchaser; or
(8) any failure by the Seller 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 Sellers may, in
addition to whatever rights the Purchaser may have at law or in equity to
damages, including injunctive relief and specific performance, terminate all the
rights and obligations of the Sellers under this Agreement and in and to the
Mortgage Loans and the proceeds thereof subject to Section 12.01, without the
Purchaser's incurring any penalty or fee of any kind whatsoever in connection
therewith; provided that, upon the occurrence of an Event of Default under
Subsection (3), (4) or (5) of this Section 10.01, this Agreement and all
authority and power of the Sellers hereunder (whether with respect to the
Mortgage Loans, the REO Properties or otherwise) shall automatically cease. On
or after the receipt by the Sellers of such written notice, all authority and
power of the Sellers under this Agreement (whether with respect to the Mortgage
Loans or otherwise) shall cease. 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.
ARTICLE XI:
TERMINATION
Section 11.01 Term and Termination.
--------------------
(1) The servicing obligations of the Servicer under this Agreement may be
terminated as provided in Section 10.01 hereof.
(2) In any case other than as provided under Subsection (1) hereof, the
respective obligations and responsibilities of the Sellers hereunder shall
terminate upon: (a) the later of the final payment or other liquidation (or any
advance with respect thereto) of the last Mortgage Loan or the disposition of
all REO Property and the remittance of all funds due hereunder; or (b) the
mutual written consent of the Sellers and the Purchaser.
(3) Upon any termination of this Agreement or the servicing obligations of the
Servicer hereunder, then the Servicer shall prepare, execute and deliver all
agreements, documents and instruments, including all 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 (except as otherwise provided in
Section 11.01(1)). In any such event, the Servicer agrees to cooperate with the
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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. Sellers further agree that the
representations, warranties and covenants made by Sellers herein and in any
certificate or other instrument delivered pursuant hereto shall be deemed to be
relied upon by Purchaser notwithstanding any investigation heretofore made by
Purchaser or on Purchaser's behalf.
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
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 promptly deliver to the successor the funds in the
Custodial 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,
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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.
Section 12.02 Governing Law.
-------------
This Agreement is to be governed by, and construed in accordance with the
internal laws of the State of New York without giving effect to principals of
conflicts of laws. The obligations, rights, and remedies of the parties
hereunder shall be determined in accordance with such laws.
Section 12.03 Notices.
-------
Any notices or other communications permitted or required hereunder shall
be in writing and shall be deemed conclusively to have been given if personally
delivered, sent by courier with delivery against signature therefor, mailed by
registered mail, postage prepaid, and return receipt requested or transmitted by
telex, telegraph or telecopier and confirmed by a similar writing mailed or sent
by courier as provided above, to (i) in the case of the Purchaser, PNC Bank,
National Association,1 PNC Plaza, 000 0xx Xxxxxx, 00xx Xxxxx, Xxxxxxxxxx, XX
00000, Attention: Xxxxx Xxxxxxxx, (ii) in the case of the Cendant Mortgage,
Cendant Mortgage Corporation, 0000 Xxxxxxxxxx Xxxx, Xx. Xxxxxx, XX 00000,
Attention: Xxxxx X. Xxxxxx, Vice President, Secondary Marketing, and (iii) in
the case of the Trust, c/o Cendant Mortgage Corporation, as Administrator, 0000
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;
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(2) any reference in this Agreement to this Agreement or any other agreement,
document, or instrument shall be a reference to this Agreement or any other such
agreement, document, or instrument as the same has been amended, modified, or
supplemented in accordance with the terms hereof and thereof (as applicable);
(3) accounting terms not otherwise defined herein have the meanings assigned to
them in accordance with generally accepted accounting principles;
(4) references herein to "Articles," "Sections," "Subsections," "Paragraphs, "
and other subdivisions without reference to a document are to designated
articles, sections, subsections, paragraphs and other subdivisions of this
Agreement, unless the context shall otherwise require;
(5) a reference to a subsection without further reference to a section is a
reference to such subsection as contained in the same section in which the
reference appears, and this rule shall also apply to Paragraphs and other
subdivisions;
(6) a reference to a "day" shall be a reference to a calendar day;
(7) the words "herein," "hereof," "hereunder" and other words of similar import
refer to this Agreement as a whole and not to any particular provision; and
(8) the terms "include" and "including" shall mean without limitation by reason
of enumeration .
Section 12.07 Waivers and Amendments, Noncontractual Remedies; Preservation
-------------------------------------------------------------
of Remedies.
-----------
This Agreement may be amended, superseded, canceled, renewed or extended
and the terms hereof may be waived, only by a written instrument signed by
authorized representatives of the parties or, in the case of a waiver, by an
authorized representative of the party waiving compliance. No such written
instrument shall be effective unless it expressly recites that it is intended to
amend, supersede, cancel, renew or extend this Agreement or to waive compliance
with one or more of the terms hereof, as the case may be. No delay on the part
of any party in exercising any right, power or privilege hereunder shall operate
as a waiver thereof, nor shall any waiver on the part of any party of any such
right, power or privilege, or any single or partial exercise of any such right,
power or privilege, preclude any further exercise thereof or the exercise of any
other such right, power or privilege. The rights and remedies herein provided
are cumulative and are not exclusive of any rights or remedies that any party
may 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.
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Section 12.09 Counterparts; Effectiveness.
---------------------------
This Agreement may be executed by the parties hereto in separate
counterparts, each of which when so executed and delivered shall be an original,
but all such counterparts shall together constitute one and the same instrument.
This Agreement shall become effective as of the date first set forth herein upon
the due execution and delivery of this Agreement by each of the parties hereto.
Section 12.10 Entire Agreement; Amendment.
---------------------------
This Agreement (including the schedules and exhibits annexed hereto or
referred to herein), together with the Cendant Guide, contains the entire
agreement between the parties hereto with respect to the transactions
contemplated hereby and supersedes all prior agreements, written or oral, with
respect thereto. No amendment, modification or alteration of the terms or
provisions of this Agreement shall be binding unless the same shall be in
writing and duly executed by the authorized representatives of the parties
hereto.
Section 12.11 Further Assurances.
------------------
Each party hereto shall take such additional action as may be reasonably
necessary to effectuate this Agreement and the transactions contemplated hereby.
The Sellers will promptly and duly execute and deliver to the Purchaser such
documents and assurances and take such further action as the Purchaser may from
time to time reasonably request in order to carry out more effectively the
intent and purpose of this Agreement and to establish and protect the rights and
remedies created or intended to be created in favor of the Purchaser.
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.
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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.
PNC BANK, NATIONAL ASSOCIATION
By:_________________________________________
Name:
Title:
CENDANT MORTGAGE CORPORATION
By:________________________________________
Name: Xxxxx X. Xxxxxx
Title: Vice President
XXXXXX'X GATE RESIDENTIAL
MORTGAGE TRUST (formerly known as
CENDANT RESIDENTIAL MORTGAGE TRUST)
By: Cendant Mortgage Corporation, as Administrator
By:_________________________________________
Name: Xxxxx X. Xxxxxx
Title: Vice President
EXHIBIT 2.05
FORM OF ASSIGNMENT, ASSUMPTION AND RECOGNITION AGREEMENT
THIS ASSIGNMENT, ASSUMPTION AND RECOGNITION AGREEMENT (this "Assignment"),
dated of June __, 2003, is entered into among [_________________], a
___________________ (the "Assignee"), PNC Bank, National Association (the
"Assignor"), Cendant Mortgage Corporation and Xxxxxx'x Gate Residential Mortgage
Trust (the "Seller "), with Cendant 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 & Servicing Agreement, dated as of
April 30, 2003 (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, the Assignee, the Seller and the Servicer
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).
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.
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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]
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IN WITNESS WHEREOF, the parties hereto have executed this Assignment the
day and year first above written.
ASSIGNOR:
PNC BANK, NATIONAL ASSOCIATION
By: ______________________
Name: ______________________
Title: ______________________
SELLER:
[CENDANT MORTGAGE CORPORATION]
[XXXXXX'X GATE RESIDENTIAL
MORTGAGE TRUST]
By: ______________________
Name: ______________________
Title: ______________________
ASSIGNEE:
By: ______________________
Name: ______________________
Title: ______________________
SERVICER:
CENDANT MORTGAGE CORPORATION
By: ______________________
Name: ______________________
Title: ______________________
EXHIBIT 10
FORM OF WARRANTY XXXX OF SALE
On this 30th day of April, 2003, [Cendant 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 April 30,
2003 (the "Agreement") does hereby sell, transfer, assign, set over and convey
to PNC Bank, 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 Cendant Mortgage Corporation ("Cendant") to service the Mortgage
Loans pursuant to the Agreement and thus not delivered to the Purchaser are and
shall be held in trust by Cendant for the benefit of the Purchaser as the owner
thereof. Cendant'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 Cendant 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 Cendant shall immediately vest in the Purchaser and shall be
retained and maintained, in trust, by Cendant 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.
[CENDANT MORTGAGE CORPORATION]
[XXXXXX'X GATE RESIDENTIAL MORTGAGE
TRUST]
(Seller)
By:
Name: Xxxxx X. Xxxxxx
Title: Vice-President
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