RESIDENTIAL FUNDING CORPORATION,
as Master Servicer
RESIDENTIAL FUNDING MORTGAGE SECURITIES II, INC.,
as Depositor
and
JPMORGAN CHASE BANK
as Grantor Trustee
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SERVICING AGREEMENT
Dated as of December 23, 2003
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Home Loans
TABLE OF CONTENTS
Page
ARTICLE I
Definitions
Section 1.01. DEFINITIONS............................................................1
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Section 1.02. OTHER DEFINITIONAL PROVISIONS..........................................2
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Section 1.03. INTEREST CALCULATIONS..................................................2
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ARTICLE II
Representations and Warranties
Section 2.01. REPRESENTATIONS AND WARRANTIES REGARDING THE MASTER SERVICER...........3
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Section 2.02. RESERVED...............................................................3
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Section 2.03. ENFORCEMENT OF REPRESENTATIONS AND WARRANTIES..........................4
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ARTICLE III
Administration and Servicing
of Home Loans
Section 3.01. THE MASTER SERVICER....................................................6
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Section 3.02. COLLECTION OF CERTAIN HOME LOAN PAYMENTS...............................8
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Section 3.03.WITHDRAWALS FROM THE CUSTODIAL ACCOUNT................................11
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Section 3.04. MAINTENANCE OF HAZARD INSURANCE; PROPERTY PROTECTION EXPENSES.........12
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Section 3.05. MODIFICATION AGREEMENTS; RELEASE OR SUBSTITUTION OF LIEN..............13
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Section 3.06. TRUST ESTATE; RELATED DOCUMENTS.......................................14
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Section 3.07. REALIZATION UPON DEFAULTED HOME LOANS; LOSS MITIGATION................15
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Section 3.08. DEPOSITOR AND GRANTOR TRUSTEE TO COOPERATE............................17
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Section 3.09. SERVICING COMPENSATION; PAYMENT OF CERTAIN EXPENSES BY
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MASTER SERVICER.......................................................18
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Section 3.10. ANNUAL STATEMENT AS TO COMPLIANCE.....................................18
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Section 3.11. ANNUAL SERVICING REPORT...............................................18
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Section 3.12. ACCESS TO CERTAIN DOCUMENTATION AND INFORMATION REGARDING
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THE HOME LOANS.......................................................19
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Section 3.13. MAINTENANCE OF CERTAIN SERVICING INSURANCE POLICIES...................19
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Section 3.14. INFORMATION REQUIRED BY THE INTERNAL REVENUE SERVICE AND
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REPORTS OF FORECLOSURES AND ABANDONMENTS OF MORTGAGED PROPERTY.......19
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Section 3.15. OPTIONAL REPURCHASE OF DEFAULTED HOME LOANS...........................20
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Section 4.01. STATEMENTS TO GRANTOR TRUST CERTIFICATEHOLDER.........................21
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Section 4.02. TAX REPORTING.........................................................24
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Section 4.03. RESERVED..............................................................24
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Section 4.04. EXCHANGE ACT REPORTING................................................24
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Section 5.01. RESERVED..............................................................25
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ARTICLE VI
The Master Servicer
Section 6.01. LIABILITY OF THE MASTER SERVICER......................................26
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Section 6.02. MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE OBLIGATIONS OF,
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THE MASTER SERVICER...................................................26
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Section 6.03. LIMITATION ON LIABILITY OF THE MASTER SERVICER AND OTHERS.............26
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Section 6.04. MASTER SERVICER NOT TO RESIGN.........................................27
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Section 6.05. DELEGATION OF DUTIES..................................................27
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ARTICLE VII
Default
Section 7.01. SERVICING DEFAULT.....................................................30
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Section 7.02. GRANTOR TRUSTEE TO ACT; APPOINTMENT OF SUCCESSOR......................32
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Section 7.03. NOTIFICATION TO GRANTOR TRUST CERTIFICATEHOLDER.......................33
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ARTICLE VIII
Miscellaneous Provisions
Section 8.01. AMENDMENT.............................................................34
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SECTION 8.02. GOVERNING LAW.........................................................34
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Section 8.03. NOTICES...............................................................34
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Section 8.04. SEVERABILITY OF PROVISIONS............................................34
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Section 8.05. THIRD-PARTY BENEFICIARIES.............................................35
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Section 8.06. COUNTERPARTS..........................................................35
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Section 8.07. EFFECT OF HEADINGS AND TABLE OF CONTENTS..............................35
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Section 8.08. TERMINATION UPON PURCHASE BY THE MASTER SERVICER OR LIQUIDATION
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OF ALL HOME LOANS; PARTIAL REDEMPTION................................35
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Section 8.09. CERTAIN MATTERS AFFECTING THE GRANTOR TRUSTEE.........................36
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Section 8.10. RESERVED..............................................................36
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EXHIBIT A-1 - HOME LOAN SCHEDULE FOR GROUP I LOANS.......................................A-1-1
EXHIBIT A-2 - HOME LOAN SCHEDULE FOR GROUP II LOANS......................................A-2-1
EXHIBIT B - POWER OF ATTORNEY B-1
EXHIBIT C - FORM OF REQUEST FOR RELEASE ...................................................C-1
EXHIBIT D-FORM OF FORM 10-K CERTIFICATE....................................................D-1
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This is a Servicing Agreement, dated as of December 23, 2003 (the
"Servicing Agreement"), among Residential Funding Corporation (the "Master
Servicer"), the Residential Funding Mortgage Securities II, Inc. (the
"Depositor") and JPMorgan Chase Bank (the "Grantor Trustee").
W I T N E S S E T H T H A T:
WHEREAS, pursuant to the terms of the Home Loan Purchase
Agreement, Residential Funding Corporation (in its capacity as Seller) will sell
to the Depositor the Home Loans together with the Related Documents on the
Closing Date;
WHEREAS, pursuant to the Grantor Trust Agreement, the Depositor
will transfer the Mortgage Loans and all of its rights and remedies under the
Home Loan Purchase Agreement to the Grantor Trustee, together with the Related
Documents on the Closing Date, in exchange for the Grantor Trust Certificate;
WHEREAS, the Depositor will sell the Grantor Trust Certificate
to the Issuer on the Closing Date;
WHEREAS, pursuant to the terms of the Owner Trust Agreement, the
Issuer will issue and transfer to or at the direction of the Depositor, the
Certificate;
WHEREAS, pursuant to the terms of the Indenture, the Issuer will
issue and transfer to or at the direction of the Depositor, the Notes; and
WHEREAS, pursuant to the terms of this Servicing Agreement, the
Master Servicer will service the Home Loans directly or through one or more
Subservicers.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto agree as follows:
ARTICLE I
Definitions
Section 1.01. DEFINITIONS. For all purposes of this Servicing
Agreement, except as otherwise expressly provided herein or unless the context
otherwise requires, capitalized terms not otherwise defined herein shall have
the meanings assigned to such terms in the Definitions contained in Appendix A
to the Indenture dated December 23, 2003 (the "Indenture"), between Home Loan
Trust 2003-HI4, as issuer, and JPMorgan Chase Bank, as indenture trustee, which
is incorporated by reference herein. All other capitalized terms used herein
shall have the meanings specified herein.
Section 1.02. OTHER DEFINITIONAL PROVISIONS. (a) All terms
defined in this Servicing Agreement shall have the defined meanings when used in
any certificate or other document made or delivered pursuant hereto unless
otherwise defined therein.
(b) As used in this Servicing Agreement and in any certificate or
other document made or delivered pursuant hereto or thereto, accounting terms
not defined in this Servicing Agreement or in any such certificate or other
document, and accounting terms partly defined in this Servicing Agreement or in
any such certificate or other document, to the extent not defined, shall have
the respective meanings given to them under generally accepted accounting
principles. To the extent that the definitions of accounting terms in this
Servicing Agreement or in any such certificate or other document are
inconsistent with the meanings of such terms under generally accepted accounting
principles, the definitions contained in this Servicing Agreement or in any such
certificate or other document shall control.
(c) The words "hereof," "herein," "hereunder" and words of
similar import when used in this Servicing Agreement shall refer to this
Servicing Agreement as a whole and not to any particular provision of this
Servicing Agreement; Section and Exhibit references contained in this Servicing
Agreement are references to Sections and Exhibits in or to this Servicing
Agreement unless otherwise specified; and the term "including" shall mean
"including without limitation".
(d) The definitions contained in this Servicing Agreement are
applicable to the singular as well as the plural forms of such terms and to the
masculine as well as the feminine and neuter genders of such terms.
(e) Any agreement, instrument or statute defined or referred to
herein or in any instrument or certificate delivered in connection herewith
means such agreement, instrument or statute as from time to time amended,
modified or supplemented and includes (in the case of agreements or instruments)
references to all attachments thereto and instruments incorporated therein;
references to a Person are also to its permitted successors and assigns.
Section 1.03. INTEREST CALCULATIONS. All calculations of interest
hereunder that are made in respect of the Loan Balance of a Home Loan shall be
made in accordance with the Mortgage Note. All calculations of interest on the
Securities (other than the Class A-I-1 Notes) shall be made on the basis of a
30-day month and a year assumed to consist of 360 days. Calculation of interest
on the Class A-I-1 Notes shall be made on the basis of the actual number of days
in the Interest Accrual Period and a year assumed to consist of 360 days. The
calculation of the Servicing Fee shall be made on the basis of a 30-day month
and a year assumed to consist of 360 days. All dollar amounts calculated
hereunder shall be rounded to the nearest xxxxx with one-half of one xxxxx being
rounded up.
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ARTICLE II
Representations and Warranties
Section 2.01. REPRESENTATIONS AND WARRANTIES REGARDING THE MASTER
SERVICER. The Master Servicer represents and warrants to the Grantor Trustee,
for the benefit of the Grantor Trust Certificateholder, to the Indenture
Trustee, for the benefit of the Issuer and as pledgee of the Grantor Trust
Certificate and to the Owner Trustee, on behalf of the Holder of the Owner Trust
Certificate, as of the Cut-off Date:
(i) The Master Servicer is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware and has the
corporate power to own its assets and to transact the business in which it is
currently engaged. The Master Servicer is duly qualified to do business as a
foreign corporation and is in good standing in each jurisdiction in which the
character of the business transacted by it or properties owned or leased by it
requires such qualification and in which the failure to so qualify would have a
material adverse effect on the business, properties, assets, or condition
(financial or other) of the Master Servicer;
(ii) The Master Servicer has the power and authority to make, execute,
deliver and perform this Servicing Agreement and all of the transactions
contemplated under this Servicing Agreement, and has taken all necessary
corporate action to authorize the execution, delivery and performance of this
Servicing Agreement. When executed and delivered, this Servicing Agreement will
constitute the legal, valid and binding obligation of the Master Servicer
enforceable in accordance with its terms, except as enforcement of such terms
may be limited by bankruptcy, insolvency or similar laws affecting the
enforcement of creditors' rights generally and by the availability of equitable
remedies;
(iii) The Master Servicer is not required to obtain the consent of any
other Person or any consent, license, approval or authorization from, or
registration or declaration with, any governmental authority, bureau or agency
in connection with the execution, delivery, performance, validity or
enforceability of this Servicing Agreement, except for such consent, license,
approval or authorization, or registration or declaration, as shall have been
obtained or filed, as the case may be;
(iv) The execution and delivery of this Servicing Agreement and the
performance of the transactions contemplated hereby by the Master Servicer will
not violate any provision of any existing law or regulation or any order or
decree of any court applicable to the Master Servicer or any provision of the
Certificate of Incorporation or Bylaws of the Master Servicer, or constitute a
material breach of any mortgage, indenture, contract or other agreement to which
the Master Servicer is a party or by which the Master Servicer may be bound; and
(v) No litigation or administrative proceeding of or before any court,
tribunal or governmental body is currently pending, or to the knowledge of the
Master
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Servicer threatened, against the Master Servicer or any of its
properties or with respect to this Servicing Agreement or the Grantor
Trust Certificate which in the opinion of the Master Servicer has a
reasonable likelihood of resulting in a material adverse effect on the
transactions contemplated by this Servicing Agreement.
The foregoing representations and warranties shall survive any
termination of the Master Servicer hereunder.
Section 2.02. RESERVED.
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Section 2.03. ENFORCEMENT OF REPRESENTATIONS AND WARRANTIES. The
Master Servicer, on behalf of and subject to the direction of the Grantor
Trustee, for the benefit of the Grantor Trust Certificateholder, shall enforce
the representations and warranties of the Seller pursuant to the Home Loan
Purchase Agreement. Upon the discovery by the Seller, the Depositor, the Master
Servicer, the Grantor Trustee, or any Custodian of a breach of any of the
representations and warranties made in the Home Loan Purchase Agreement or of
the existence of a Repurchase Event, in respect of any Home Loan which
materially and adversely affects the interests of the Grantor Trust
Certificateholder, the party discovering such breach or existence shall give
prompt written notice to the other parties. The Master Servicer shall promptly
notify the Seller of such breach or existence and request that, pursuant to the
terms of the Home Loan Purchase Agreement, the Seller either (i) cure such
breach or Repurchase Event in all material respects within 45 days (with respect
to a breach of the representations and warranties contained in Section 3.1(a) of
the Home Loan Purchase Agreement or Repurchase Event) or 90 days (with respect
to a breach of the representations and warranties contained in Section 3.1(b) of
the Home Loan Purchase Agreement) from the date the Seller was notified of such
breach or Repurchase Event or (ii) purchase such Home Loan at the price and in
the manner set forth in Section 3.1(c) of the Home Loan Purchase Agreement;
PROVIDED that the Seller shall, subject to compliance with all the conditions
set forth in the Home Loan Purchase Agreement, have the option to substitute an
Eligible Substitute Loan or Loans for such Home Loan. In the event that the
Seller elects to substitute one or more Eligible Substitute Loans pursuant to
Section 3.1(c) of the Home Loan Purchase Agreement, the Seller shall deliver to
the Grantor Trustee, for the benefit of the Grantor Trust Certificateholder with
respect to such Eligible Substitute Loans, the original Mortgage Note, the
Mortgage, and such other documents and agreements as are required by the Home
Loan Purchase Agreement. Payments due with respect to Eligible Substitute Loans
in the month of substitution shall not be transferred to the Grantor Trustee and
will be retained by the Master Servicer and remitted by the Master Servicer to
the Seller on the next succeeding Payment Date provided a payment at least equal
to the applicable Monthly Payment has been received by the Grantor Trustee, for
the benefit of the Grantor Trust Certificateholder, for such month in respect of
the Home Loan to be removed. The Master Servicer shall amend or cause to be
amended the Home Loan Schedule to reflect the removal of such Home Loan and the
substitution of the Eligible Substitute Loans and the Master Servicer shall
promptly deliver the amended Home Loan Schedule to the Grantor Trustee, the
Owner Trustee and the Indenture Trustee.
It is understood and agreed that the obligation of the Seller to
cure such breach or purchase or substitute for such Home Loan as to which such a
breach has occurred and is continuing shall constitute the sole remedy
respecting such breach available to the Grantor Trustee against the Seller. Upon
receipt of the Repurchase Price, or upon completion of such substitution, the
Master
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Servicer shall notify the Custodian and then the Custodian shall deliver the
Mortgage Files to the Master Servicer, together with all relevant endorsements
and assignments prepared by the Master Servicer which the Grantor Trustee shall
execute.
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ARTICLE III
Administration and Servicing
of Home Loans
Section 3.01. THE MASTER SERVICER. (a) The Master Servicer shall
service and administer the Home Loans in accordance with the terms of this
Servicing Agreement, following such procedures as it would employ in its good
faith business judgment and which are normal and usual in its general mortgage
servicing activities, and shall have full power and authority, acting alone or
through a subservicer, to do any and all things in connection with such
servicing and administration which it may deem necessary or desirable, it being
understood, however, that the Master Servicer shall at all times remain
responsible to the Depositor, the Grantor Trustee, on behalf of the Grantor
Trust Certificateholder, the Owner Trustee on behalf of the Certificateholders
and the Indenture Trustee on behalf of the Noteholders for the performance of
its duties and obligations hereunder in accordance with the terms hereof.
Without limiting the generality of the foregoing, the Master Servicer shall
continue, and is hereby authorized and empowered by the Depositor and the
Grantor Trustee, to execute and deliver, on behalf of itself, the Depositor, the
Grantor Trustee or any of them, any and all instruments of satisfaction or
cancellation, or of partial or full release or discharge, or of consent to
modification in connection with a proposed conveyance, or of assignment of any
Mortgage and Mortgage Note in connection with the repurchase of a Home Loan and
all other comparable instruments with respect to the Home Loans and with respect
to the Mortgaged Properties, or with respect to the modification or re-recording
of a Mortgage for the purpose of correcting the Mortgage, the subordination of
the lien of the Mortgage in favor of a public utility company or government
agency or unit with powers of eminent domain, the taking of a deed in lieu of
foreclosure, the commencement, prosecution or completion of judicial or
non-judicial foreclosure, the acquisition of any property acquired by
foreclosure or deed in lieu of foreclosure, or the management, marketing and
conveyance of any property acquired by foreclosure or deed in lieu of
foreclosure. The Depositor, the Grantor Trustee and the Custodian, as
applicable, shall furnish the Master Servicer with any powers of attorney and
other documents necessary or appropriate to enable the Master Servicer to carry
out its servicing and administrative duties hereunder. In addition, the Master
Servicer may, at its own discretion and on behalf of the Grantor Trustee, obtain
credit information in the form of a Credit Score from a credit repository. On
the Closing Date, the Grantor Trustee shall deliver to the Master Servicer a
limited power of attorney substantially in the form of Exhibit B hereto.
If the Mortgage relating to a Home Loan did not have a lien
senior to the Home Loan on the related Mortgaged Property as of the Cut-off
Date, then the Master Servicer, in such capacity, may not consent to the placing
of a lien senior to that of the Mortgage on the related Mortgaged Property. If
the Mortgage relating to a Home Loan had a lien senior to the Home Loan on the
related Mortgaged Property as of the Cut-off Date, then the Master Servicer, in
such capacity, may consent to the refinancing of the prior senior lien, provided
that the following requirements are met:
(i) (A) the Mortgagor's debt-to-income ratio resulting
from such refinancing is less than the original debt-to-income ratio as
set forth on the Mortgage Loan Schedule; PROVIDED, HOWEVER, that in no
instance shall the resulting Combined Loan-to-Value Ratio of such Home
Loan be higher than that permitted by the Program Guide; or
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(B) the resulting Combined Loan-to-Value Ratio of such
Home Loan is no higher than the Combined Loan-to-Value Ratio prior to
such refinancing; PROVIDED, HOWEVER, if such refinanced mortgage loan is
a "rate and term" mortgage loan (meaning, the Mortgagor does not receive
any cash from the refinancing), the Combined Loan-to-Value Ratio may
increase to the extent of either (a) the reasonable closing costs of
such refinancing or (b) any decrease in the value of the related
Mortgaged Property, if the Mortgagor is in good standing as defined by
the Program Guide;
(ii) the interest rate, or, in the case of an adjustable rate
existing senior lien, the maximum interest rate, for the loan evidencing
the refinanced senior lien is no more than 2.0% higher than the interest
rate or the maximum interest rate, as the case may be, on the loan
evidencing the existing senior lien immediately prior to the date of
such refinancing; PROVIDED, HOWEVER (a) if the loan evidencing the
existing senior lien prior to the date of refinancing has an adjustable
rate and the loan evidencing the refinanced senior lien has a fixed
rate, then the current interest rate on the loan evidencing the
refinanced senior lien may be up to 2.0% higher than the then-current
loan rate of the loan evidencing the existing senior lien and (b) if the
loan evidencing the existing senior lien prior to the date of
refinancing has a fixed rate and the loan evidencing the refinanced
senior lien has an adjustable rate, then the maximum interest rate on
the loan evidencing the refinanced senior lien shall be less than or
equal to (x) the interest rate on the loan evidencing the existing
senior lien prior to the date of refinancing plus (y) 2.0%; and
(iii) the loan evidencing the refinanced senior lien is not
subject to negative amortization.
The relationship of the Master Servicer (and of any successor to
the Master Servicer as servicer under this Servicing Agreement) to the Depositor
under this Servicing Agreement is intended by the parties to be that of an
independent contractor and not that of a joint venturer, partner or agent.
(b) The Master Servicer may continue in effect Subservicing
Agreements entered into by Residential Funding and Subservicers prior to the
execution and delivery of this Servicing Agreement, and may enter into
Subservicing Agreements with Subservicers for the servicing and administration
of certain of the Home Loans. Each Subservicer of a Home Loan shall be entitled
to receive and retain, as provided in the related Subservicing Agreement and in
Section 3.02, the related Subservicing Fee from payments of interest received on
such Home Loan after payment of all amounts required to be remitted to the
Master Servicer in respect of such Home Loan. For any Home Loan not subject to a
Subservicing Agreement, the Master Servicer shall be entitled to receive and
retain an amount equal to the Subservicing Fee from payments of interest.
References in this Servicing Agreement to actions taken or to be taken by the
Master Servicer in servicing the Home Loans include actions taken or to be taken
by a Subservicer on behalf of the Master Servicer. Each Subservicing Agreement
will be upon such terms and conditions as are not inconsistent with this
Servicing Agreement and as the Master Servicer and the Subservicer have agreed.
With the approval of the Master Servicer, a Subservicer may delegate its
servicing obligations to third-party servicers, but such Subservicers will
remain obligated under the related Subservicing Agreements. The Master Servicer
and the Subservicer may enter into amendments to the related Subservicing
Agreements;
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PROVIDED, HOWEVER, that any such amendments shall not cause the Home Loans to be
serviced in a manner that would be materially inconsistent with the standards
set forth in this Servicing Agreement. The Master Servicer shall be entitled to
terminate any Subservicing Agreement in accordance with the terms and conditions
thereof and without any limitation by virtue of this Servicing Agreement;
PROVIDED, HOWEVER, that in the event of termination of any Subservicing
Agreement by the Master Servicer or the Subservicer, the Master Servicer shall
either act as servicer of the related Home Loan or enter into a Subservicing
Agreement with a successor Subservicer which will be bound by the terms of the
related Subservicing Agreement. The Master Servicer shall be entitled to enter
into any agreement with a Subservicer for indemnification of the Master Servicer
and nothing contained in this Servicing Agreement shall be deemed to limit or
modify such indemnification.
In the event that the rights, duties and obligations of the
Master Servicer are terminated hereunder, any successor to the Master Servicer
in its sole discretion may, to the extent permitted by applicable law, terminate
the existing Subservicing Agreement with any Subservicer in accordance with the
terms of the applicable Subservicing Agreement or assume the terminated Master
Servicer's rights and obligations under such subservicing arrangements which
termination or assumption will not violate the terms of such arrangements.
As part of its servicing activities hereunder, the Master
Servicer shall use reasonable efforts to enforce the obligations of each
Subservicer under the related Subservicing Agreement, to the extent that the
non-performance of any such obligation would have a material adverse effect on a
Home Loan. Such enforcement, including, without limitation, the legal
prosecution of claims, termination of Subservicing Agreements and the pursuit of
other appropriate remedies, shall be in such form and carried out to such an
extent and at such time as the Master Servicer would employ in its good faith
business judgment and which are normal and usual in its general mortgage
servicing activities. The Master Servicer shall pay the costs of such
enforcement at its own expense, and shall be reimbursed therefor only (i) from a
general recovery resulting from such enforcement to the extent, if any, that
such recovery exceeds all amounts due in respect of the related Home Loan or
(ii) from a specific recovery of costs, expenses or attorneys fees against the
party against whom such enforcement is directed.
Section 3.02. COLLECTION OF CERTAIN HOME LOAN PAYMENTS. (a) The
Master Servicer shall make reasonable efforts to collect all payments called for
under the terms and provisions of the Home Loans, and shall, to the extent such
procedures shall be consistent with this Servicing Agreement and generally
consistent with any related insurance policy, follow such collection procedures
as it would employ in its good faith business judgment and which are normal and
usual in its general mortgage servicing activities. Consistent with the
foregoing, and without limiting the generality of the foregoing, the Master
Servicer may in its discretion waive any late payment charge, prepayment charge
or penalty interest or other fees which may be collected in the ordinary course
of servicing such Home Loan. The Master Servicer may also extend the Due Date
for payment due on a Home Loan in accordance with the Program Guide, PROVIDED,
HOWEVER, that the Master Servicer shall first determine that any such waiver or
extension will not impair the coverage of any related insurance policy or
materially adversely affect the lien of the related Mortgage (except as
described below) or the interests of the Grantor Trust Certificateholder.
Consistent with the terms of this Servicing Agreement, the Master Servicer may
also:
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(i) waive, modify or vary any term of any Home Loan;
(ii) consent to the postponement of strict compliance with any
such term or in any manner grant indulgence to any Mortgagor;
(iii) arrange with a Mortgagor a schedule for the payment of
principal and interest due and unpaid;
(iv) forgive any portion of the amounts contractually owed under
the Home Loan;
(v) capitalize past due amounts owed under the Home Loan by
adding any amounts in arrearage to the existing principal balance
of the Home Loan (a "Capitalization Workout") of which will
result in an increased Monthly Payment amount, provided that: (A)
the amount added to the existing principal balance of the Home
Loan (the "Capitalized Amount") shall be no greater than five
times the Mortgagor's current Monthly Payment amount; and (B) the
Master Servicer shall not enter into a Capitalization Workout
unless the Combined Loan-to-Value Ratio of the Home Loan prior to
the Capitalization Workout equals or exceeds 80% and the
Mortgagor has qualified for the Capitalization Workout under the
Master Servicer's servicing guidelines;
(vi) reset the due date for the Home Loan, or any combination of
the foregoing;
if in the Master Servicer's determination such waiver, modification,
postponement or indulgence, arrangement or other action referred to above is not
materially adverse to the interests of the Grantor Trust Certificateholder and
is generally consistent with the Master Servicer's policies with respect to
mortgage loans similar to those in the Home Loan Pool (meaning, mortgage loans
used for home improvement or debt consolidation); PROVIDED, HOWEVER, that the
Master Servicer may not modify or permit any Subservicer to modify any Home Loan
(including without limitation any modification that would change the Loan Rate,
forgive the payment of any principal or interest (unless in connection with the
liquidation of the related Home Loan) or extend the final maturity date of such
Home Loan) unless such Home Loan is in default or, in the judgment of the Master
Servicer, such default is reasonably foreseeable. The general terms of any
waiver, modification, postponement or indulgence with respect to any of the Home
Loans will be included in the Servicing Certificate, and such Home Loans will
not be considered "delinquent" for the purposes of the Basic Documents so long
as the Mortgagor complies with the terms of such waiver, modification,
postponement or indulgence.
(b) The Master Servicer shall establish a Custodial Account,
which shall be an Eligible Account in which the Master Servicer shall deposit or
cause to be deposited any amounts representing payments and collections in
respect of the Home Loans received by it subsequent to the Cut-off Date (other
than in respect of the payments referred to in the following paragraph) within
one Business Day following receipt thereof (or otherwise on or prior to the
Closing Date), including the following payments and collections received or made
by it (without duplication):
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(i) all payments of principal or interest on the Home
Loans received by the Master Servicer from the respective Subservicer,
net of any portion of the interest thereof retained by the Subservicer
as Subservicing Fees;
(ii) the aggregate Repurchase Price of the Home Loans
purchased by the Master Servicer pursuant to Section 3.15 or by the
Limited Repurchase Price Holder pursuant to Section 4.03 of the Grantor
Trust Agreement;
(iii) Net Liquidation Proceeds net of any related
Foreclosure Profit;
(iv) all proceeds of any Home Loans repurchased by the
Seller pursuant to the Home Loan Purchase Agreement, and all
Substitution Adjustment Amounts required to be deposited in connection
with the substitution of an Eligible Substitute Loan pursuant to the
Home Loan Purchase Agreement;
(v) Insurance Proceeds, other than Net Liquidation
Proceeds, resulting from any insurance policy maintained on a Mortgaged
Property; and
(vi) amounts required to be paid by the Master Servicer
pursuant to Sections 3.04 and 8.08 and any prepayments or collections
constituting prepayment charges.
PROVIDED, HOWEVER, that with respect to each Collection Period, the Master
Servicer shall be permitted to retain from payments in respect of interest on
the Home Loans, the Master Servicing Fee for such Collection Period. The
foregoing requirements respecting deposits to the Custodial Account are
exclusive, it being understood that, without limiting the generality of the
foregoing, the Master Servicer need not deposit in the Custodial Account amounts
representing Foreclosure Profits, fees (including annual fees) or late charge
penalties payable by Mortgagors (such amounts to be retained as additional
servicing compensation in accordance with Section 3.09 hereof), or amounts
received by the Master Servicer for the accounts of Mortgagors for application
towards the payment of taxes, insurance premiums, assessments and similar items.
In the event any amount not required to be deposited in the Custodial Account is
so deposited, the Master Servicer may at any time withdraw such amount from the
Custodial Account, any provision herein to the contrary notwithstanding. The
Custodial Account may contain funds that belong to one or more trust funds
created for the notes or certificates of other series and may contain other
funds respecting payments on other mortgage loans belonging to the Master
Servicer or serviced or master serviced by it on behalf of others.
Notwithstanding such commingling of funds, the Master Servicer shall keep
records that accurately reflect the funds on deposit in the Custodial Account
that have been identified by it as being attributable to the Home Loans and
shall hold all collections in the Custodial Account to the extent they represent
collections on the Home Loans for the benefit of the Grantor Trust
Certificateholder, as its interests may appear. The Master Servicer shall retain
all Foreclosure Profits as additional servicing compensation.
The Master Servicer may cause the institution maintaining the Custodial
Account to invest any funds in the Custodial Account in Permitted Investments
(including obligations of the Master Servicer or any of its Affiliates, if such
obligations otherwise qualify as Permitted Investments), which shall mature not
later than the Business Day preceding the next Payment Date and which shall
10
not be sold or disposed of prior to its maturity. Except as provided above, all
income and gain realized from any such investment shall inure to the benefit of
the Master Servicer and shall be subject to its withdrawal or order from time to
time. The amount of any losses incurred in respect of the principal amount of
any such investments shall be deposited in the Custodial Account by the Master
Servicer out of its own funds immediately as realized.
(c) The Master Servicer will require each Subservicer to hold all funds
constituting collections on the Home Loans, pending remittance thereof to the
Master Servicer, in one or more accounts meeting the requirements of an Eligible
Account, and invested in Permitted Investments.
Section 3.03.WITHDRAWALS FROM THE CUSTODIAL ACCOUNT. The Master Servicer
shall, from time to time as provided herein, make withdrawals from the Custodial
Account of amounts on deposit therein pursuant to Section 3.02 that are
attributable to the Home Loans for the following purposes:
(i) to deposit in the Grantor Trust Certificate Account,
on the Business Day prior to each Payment Date, an amount equal to the
Interest Collections and Principal Collections required to be
distributed on such Payment Date and any payments or collections
constituting prepayment charges received during the related Prepayment
Period;
(ii) to the extent deposited to the Custodial Account, to
reimburse itself or the related Subservicer for previously unreimbursed
expenses incurred in maintaining individual insurance policies pursuant
to Section 3.04, or Liquidation Expenses, paid pursuant to Section 3.07
or otherwise reimbursable pursuant to the terms of this Servicing
Agreement (to the extent not payable pursuant to Section 3.09), such
withdrawal right being limited to amounts received on particular Home
Loans (other than any Repurchase Price in respect thereof) which
represent late recoveries of the payments for which such advances were
made, or from related Liquidation Proceeds or the proceeds of the
purchase of such Home Loan;
(iii) to pay to itself out of each payment received on
account of interest on a Home Loan as contemplated by Section 3.09, an
amount equal to the related Master Servicing Fee (to the extent not
retained pursuant to Section 3.02), and to pay to any Subservicer any
Subservicing Fees not previously withheld by the Subservicer;
(iv) to the extent deposited in the Custodial Account to
pay to itself as additional servicing compensation any interest or
investment income earned on funds deposited in the Custodial Account and
the Grantor Trust Certificate Account that it is entitled to withdraw
pursuant to Sections 3.02(b);
(v) to the extent deposited in the Custodial Account, to
pay to itself as additional servicing compensation any Foreclosure
Profits;
(vi) to pay to itself or the Seller, with respect to any
Home Loan or property acquired in respect thereof that has been
purchased or otherwise transferred to the Seller, the Master Servicer,
the Limited Repurchase Right Holder or other entity, all amounts
received
11
thereon and not required to be distributed to the Grantor Trust
Certificateholder as of the date on which the related Purchase Price or
Repurchase Price is determined;
(vii) to clear and terminate the Custodial Account upon
the termination of this Agreement; and
(viii)to withdraw any other amount deposited in the
Custodial Account that was not required to be deposited therein pursuant
to Section 3.02.
Since, in connection with withdrawals pursuant to clauses (ii), (iii),
(v) and (vi), the Master Servicer's entitlement thereto is limited to
collections or other recoveries on the related Home Loan, the Master Servicer
shall keep and maintain separate accounting, on a Home Loan by Home Loan basis,
for the purpose of justifying any withdrawal from the Custodial Account pursuant
to such clauses. Notwithstanding any other provision of this Servicing
Agreement, the Master Servicer shall be entitled to reimburse itself for any
previously unreimbursed expenses incurred pursuant to Section 3.07 or otherwise
reimbursable pursuant to the terms of this Servicing Agreement that the Master
Servicer determines to be otherwise nonrecoverable (except with respect to any
Home Loan as to which the Repurchase Price has been paid), by withdrawal from
the Custodial Account of amounts on deposit therein attributable to the Home
Loans on any Business Day prior to the Payment Date succeeding the date of such
determination.
Section 3.04. MAINTENANCE OF HAZARD INSURANCE; PROPERTY PROTECTION
EXPENSES. The Master Servicer shall cause to be maintained for each Home Loan
hazard insurance naming the Master Servicer or related Subservicer as loss payee
thereunder providing extended coverage in an amount which is at least equal to
at least 100% of the insurable value of the improvements (guaranteed
replacement) or the sum of the unpaid principal balance of the first mortgage
loan and the Home Loan amount. The Master Servicer shall also cause to be
maintained on property acquired upon foreclosure, or deed in lieu of
foreclosure, of any Home Loan, fire insurance with extended coverage in an
amount which is at least equal to the amount necessary to avoid the application
of any coinsurance clause contained in the related hazard insurance policy.
Amounts collected by the Master Servicer under any such policies (other than
amounts to be applied to the restoration or repair of the related Mortgaged
Property or property thus acquired or amounts released to the Mortgagor in
accordance with the Master Servicer's normal servicing procedures) shall be
deposited in the Custodial Account to the extent called for by Section 3.02. In
cases in which any Mortgaged Property is located at any time during the life of
a Home Loan in a federally designated flood area, the hazard insurance to be
maintained for the related Home Loan shall include flood insurance (to the
extent available). All such flood insurance shall be in amounts equal to the
lesser of (i) the amount required to compensate for any loss or damage to the
Mortgaged Property on a replacement cost basis and (ii) the maximum amount of
such insurance available for the related Mortgaged Property under the national
flood insurance program (assuming that the area in which such Mortgaged Property
is located is participating in such program). The Master Servicer shall be under
no obligation to require that any Mortgagor maintain earthquake or other
additional insurance and shall be under no obligation itself to maintain any
such additional insurance on property acquired in respect of a Home 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. If the Master Servicer
shall obtain and maintain a blanket policy consistent with its general mortgage
servicing activities insuring against hazard losses on all
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of the Home Loans, it shall conclusively be deemed to have satisfied its
obligations as set forth in the first sentence of this Section 3.04, it being
understood and agreed that such blanket policy may contain a deductible clause,
in which case the Master Servicer shall, in the event that there shall not have
been maintained on the related Mortgaged Property a policy complying with the
first sentence of this Section 3.04 and there shall have been a loss which would
have been covered by such policy, deposit in the Custodial Account the amount
not otherwise payable under the blanket policy because of such deductible
clause. Any such deposit by the Master Servicer shall be made on the last
Business Day of the Collection Period in the month in which payments under any
such policy would have been deposited in the Custodial Account. In connection
with its activities as servicer of the Home Loans, the Master Servicer agrees to
present, on behalf of itself, the Depositor and the Grantor Trustee, claims
under any such blanket policy.
Section 3.05. MODIFICATION AGREEMENTS; RELEASE OR SUBSTITUTION OF LIEN.
(a) The Master Servicer or the related Subservicer, as the case may be, shall be
entitled to (A) execute assumption agreements, modification agreements,
substitution agreements, and instruments of satisfaction or cancellation or of
partial or full release or discharge, or any other document contemplated by this
Servicing Agreement and other comparable instruments with respect to the Home
Loans and with respect to the Mortgaged Properties subject to the Mortgages (and
the Depositor and the Grantor Trustee each shall promptly execute any such
documents on request of the Master Servicer) and (B) approve the granting of an
easement thereon in favor of another Person, any alteration or demolition of the
related Mortgaged Property or other similar matters, in each case if it has
determined, exercising its good faith business judgment in the same manner as it
would if it were the owner of the related Home Loan, that the security for, and
the timely and full collectability of, such Home Loan would not be adversely
affected thereby. A partial release pursuant to this Section 3.05 shall be
permitted only if the Combined Loan-to-Value Ratio for such Home Loan after such
partial release does not exceed the Combined Loan-to-Value Ratio for such Home
Loan as of the Cut-off Date. Any fee collected by the Master Servicer or the
related Subservicer for processing such request will be retained by the Master
Servicer or such Subservicer as additional servicing compensation.
(b) The Master Servicer may enter into an agreement with a Mortgagor to
release the lien on the Mortgaged Property relating to a Home Loan (the
"Existing Lien"), if at the time of such agreement the Home Loan is current in
payment of principal and interest, under any of the following circumstances:
(i) in any case in which, simultaneously with the release of the
Existing Lien, the Mortgagor executes and delivers to the Master
Servicer a Mortgage on a substitute Mortgaged Property, provided that
the Combined Loan-to-Value Ratio of the Home Loan (calculated based on
the Appraised Value of the substitute Mortgaged Property) is not greater
than the Combined Loan-to-Value Ratio prior to releasing the Existing
Lien;
(ii) in any case in which, simultaneously with the release of
the Existing Lien, the Mortgagor executes and delivers to the Master
Servicer a Mortgage on a substitute Mortgaged Property, provided that:
(A) the Combined Loan-to-Value Ratio of the Home Loan (calculated based
on the Appraised Value of the substitute Mortgaged Property) is not
greater than the lesser of (1) 125% and (2) 105% of the Combined
Loan-to-Value Ratio prior to releasing the Existing Lien; and (B) the
Master Servicer determines that at least two
13
appropriate compensating factors are present (compensating factors may
include, without limitation, an increase in the Mortgagor's monthly cash
flow after debt service, the Mortgagor's debt-to-income ratio has not
increased since origination, or an increase in the Mortgagor's credit
score); or
(iii) in any case in which, at the time of release of the
Existing Lien, the Mortgagor does not provide the Master Servicer with a
Mortgage on a substitute Mortgaged Property (any Home Loan that becomes
and remains unsecured in accordance with this subsection, an "Unsecured
Loan"), provided that: (A) the Mortgagor, in addition to being current
in payment of principal and interest on the related Home Loan, is
current in payment of principal and interest on any loan senior to the
Home Loan; (B) the Mortgagor's Credit Score, as determined by the Master
Servicer at the time of the request for release of lien, is not less
than 640; (C) the Mortgagor makes a cash contribution in reduction of
the outstanding principal balance of the Home Loan, which may include
any net proceeds from the sale of the original Mortgaged Property, of
not less than 20% of the unpaid principal balance of the Home Loan; and
(D) the Mortgagor signs a reaffirmation agreement acknowledging that
they must continue to pay in accordance with the terms of the original
Mortgage Note.
(iv) If the above conditions (iii)(A) through (iii)(D) are not
met, the Master Servicer may still enter into an agreement to release
the Existing Lien, provided that: (A) the Master Servicer shall not
permit the release of an Existing Lien under this clause (iv) as to more
than 200 Home Loans in any calendar year; (B) at no time shall the
aggregate Principal Balance of Unsecured Loans exceed 5% of the then
Pool Balance; (C) the Mortgagor agrees to an automatic debit payment
plan; and (D) the Master Servicer shall provide notice to each Rating
Agency that has requested notice of such releases.
In connection with any Unsecured Loan, the Master Servicer may require
the Mortgagor to enter into an agreement under which: (i) the Loan Rate may be
increased effective until a substitute Mortgage meeting the criteria under (i)
or (ii) above is provided; or (ii) any other provision may be made which the
Master Servicer considers to be appropriate. Thereafter, the Master Servicer
shall determine in its discretion whether to accept any proposed Mortgage on any
substitute Mortgaged Property as security for the Home Loan, and the Master
Servicer may require the Mortgagor to agree to any further conditions which the
Master Servicer considers appropriate in connection with such substitution,
which may include a reduction of the Loan Rate (but not below the Loan Rate in
effect at the Closing Date). Any Home Loan as to which a Mortgage on a
substitute Mortgaged Property is provided in accordance with the preceding
sentence shall no longer be deemed to be an Unsecured Loan.
Section 3.06. TRUST ESTATE; RELATED DOCUMENTS. (a) When required by the
provisions of this Servicing Agreement, the Depositor or the Grantor Trustee
shall execute instruments to release property from the terms of the Grantor
Trust Agreement or Custodial Agreement, as applicable, or convey the Depositor's
or the Grantor Trustee's interest in the same, in a manner and under
circumstances which are not inconsistent with the provisions of this Servicing
Agreement. No party relying upon an instrument executed by the Depositor or the
Grantor Trustee as provided in this
14
Section 3.06 shall be bound to ascertain the Depositor's or the Grantor
Trustee's authority, inquire into the satisfaction of any conditions precedent
or see to the application of any monies.
(b) If from time to time the Master Servicer shall deliver to the
Custodian copies of any written assurance, assumption agreement or substitution
agreement or other similar agreement pursuant to Section 3.05, the Custodian
shall check that each of such documents purports to be an original executed copy
(or a copy of the original executed document if the original executed copy has
been submitted for recording and has not yet been returned) and, if so, shall
file such documents, and upon receipt of the original executed copy from the
applicable recording office or receipt of a copy thereof certified by the
applicable recording office shall file such originals or certified copies with
the Related Documents. If any such documents submitted by the Master Servicer do
not meet the above qualifications, such documents shall promptly be returned by
the Custodian to the Master Servicer pursuant to the related Custodial
Agreement, with a direction to the Master Servicer to forward the correct
documentation.
(c) Upon receipt of a Request for Release from the Master Servicer, to
the effect that a Home Loan has been the subject of a final payment or a
prepayment in full and the related Home Loan has been terminated or that
substantially all Liquidation Proceeds which have been determined by the Master
Servicer in its reasonable judgment to be finally recoverable have been
recovered, and upon deposit to the Custodial Account of such final monthly
payment, prepayment in full together with accrued and unpaid interest to the
date of such payment with respect to such Home Loan or, if applicable,
Liquidation Proceeds, the Custodian shall promptly release the Related Documents
to the Master Servicer pursuant to the related Custodial Agreement, which the
Grantor Trustee shall execute, along with such documents as the Master Servicer
or the Mortgagor may request to evidence satisfaction and discharge of such Home
Loan, upon request of the Master Servicer. If from time to time and as
appropriate for the servicing or foreclosure of any Home Loan, the Master
Servicer requests the Custodian to release the Related Documents and delivers to
the Custodian a trust receipt reasonably satisfactory to the Custodian and
signed by a Responsible Officer of the Master Servicer, the Custodian shall
release the Related Documents to the Master Servicer pursuant to the related
Custodial Agreement. If such Home Loans shall be liquidated and the Custodian
receives a certificate from the Master Servicer as provided above, then, upon
request of the Master Servicer, the Custodian shall release the trust receipt to
the Master Servicer pursuant to the related Custodial Agreement.
Section 3.07. REALIZATION UPON DEFAULTED HOME LOANS; LOSS MITIGATION.
With respect to such of the Home Loans as come into and continue in default, the
Master Servicer will decide whether to (i) foreclose upon the Mortgaged
Properties securing such Home Loans, (ii) write off the unpaid principal balance
of the Home Loans as bad debt, (iii) take a deed in lieu of foreclosure, (iv)
accept a short sale (a payoff of the Home Loan for an amount less than the total
amount contractually owed in order to facilitate a sale of the Mortgaged
Property by the Mortgagor) or permit a short refinancing (a payoff of the Home
Loan for an amount less than the total amount contractually owed in order to
facilitate refinancing transactions by the Mortgagor not involving a sale of the
Mortgaged Property), (v) arrange for a repayment plan, (vi) agree to a
modification in accordance with this Servicing Agreement, or (vii) take an
unsecured note, in connection with a negotiated release of the lien of the
Mortgage in order to facilitate a settlement with the Mortgagor; in each case
subject to the rights of any related first lien holder; PROVIDED that in
connection with the foregoing if the Master
15
Servicer has actual knowledge that any Mortgaged Property is affected by
hazardous or toxic wastes or substances and that the acquisition of such
Mortgaged Property would not be commercially reasonable, then the Master
Servicer will not cause the Depositor or the Grantor Trustee to acquire title to
such Mortgaged Property in a foreclosure or similar proceeding. In connection
with such decision, the Master Servicer shall follow such practices (including,
in the case of any default on a related senior mortgage loan, the advancing of
funds to correct such default if deemed to be appropriate by the Master
Servicer) and procedures as it shall deem necessary or advisable and as shall be
normal and usual in its general mortgage servicing activities and as shall be
required or permitted by the Program Guide; provided that the Master Servicer
shall not be liable in any respect hereunder if the Master Servicer is acting in
connection with any such foreclosure or attempted foreclosure which is not
completed or other conversion in a manner that is consistent with the provisions
of this Servicing Agreement. The foregoing is subject to the proviso that the
Master Servicer shall not be required to expend its own funds in connection with
any foreclosure or attempted foreclosure which is not completed or towards the
correction of any default on a related senior mortgage loan or restoration of
any property unless it shall determine that such expenditure will increase Net
Liquidation Proceeds. In the event of a determination by the Master Servicer
that any such expenditure previously made pursuant to this Section 3.07 will not
be reimbursable from Net Liquidation Proceeds, the Master Servicer shall be
entitled to reimbursement of its funds so expended pursuant to Section 3.03.
Notwithstanding any provision of this Servicing Agreement, a Home Loan
may be deemed to be finally liquidated if substantially all amounts expected by
the Master Servicer to be received in connection with the related defaulted Home
Loan have been received; provided, however, the Master Servicer shall treat any
Home Loan that is 180 days or more delinquent as having been finally liquidated.
Any subsequent collections with respect to any such Home Loan shall be deposited
to the Custodial Account. For purposes of determining the amount of any
Liquidation Proceeds or Insurance Proceeds, or other unscheduled collections,
the Master Servicer may take into account minimal amounts of additional receipts
expected to be received or any estimated additional liquidation expenses
expected to be incurred in connection with the related defaulted Home Loan.
In the event that title to any Mortgaged Property is acquired in
foreclosure or by deed in lieu of foreclosure, the deed or certificate of sale
shall be issued to the Grantor Trustee, who shall hold the same on behalf of the
Grantor Trust Certificateholder. Notwithstanding any such acquisition of title
and cancellation of the related Home Loan, such Mortgaged Property shall (except
as otherwise expressly provided herein) be considered to be an outstanding Home
Loan held as an asset of the Grantor Trust until such time as such property
shall be sold.
Any proceeds from the purchase or repurchase of any Home Loan pursuant
to the terms of this Servicing Agreement (including without limitation Sections
2.03, 3.15 and 3.16) will be applied in the following order of priority: first,
to the Master Servicer or the related Subservicer, all Servicing Fees payable
therefrom to the Payment Date on which such amounts are to be deposited in the
Grantor Trust Certificate Account; second, as Interest Collections, accrued and
unpaid interest on the related Home Loan, at the Net Loan Rate to the Payment
Date on which such amounts are to be deposited in the Grantor Trust Certificate
Account; and third, as Principal Collections, as a recovery of principal on the
Home Loan on which such amounts are to be deposited into the Grantor Trust
Certificate Account.
16
Liquidation Proceeds with respect to a Liquidated Home Loan will be
applied in the following order of priority: first, to reimburse the Master
Servicer or the related Subservicer in accordance with this Section 3.07 for any
Liquidation Expenses; second, to the Master Servicer or the related Subservicer,
all unpaid Servicing Fees through the date of receipt of the final Liquidation
Proceeds; third, as Principal Collections, as a recovery of principal on the
Home Loan, up to an amount equal to the Loan Balance of the related Home Loan
immediately prior to the date it became a Liquidated Home Loan; fourth, as
Interest Collections, accrued and unpaid interest on the related Home Loan at
the Net Loan Rate through the date of receipt of the final Liquidation Proceeds;
and fifth, to Foreclosure Profits.
Proceeds and other recoveries from a Home Loan after it becomes a
Liquidated Home Loan will be applied in the following order of priority: first,
to reimburse the Master Servicer or the related Subservicer in accordance with
this Section 3.07 for any expenses previously unreimbursed from Liquidation
Proceeds or otherwise; second, to the Master Servicer or the related
Subservicer, all unpaid Servicing Fees payable thereto through the date of
receipt of the proceeds previously unreimbursed from Liquidation Proceeds or
otherwise; third, as Interest Collections, up to an amount equal to the sum of
(a) the Loan Balance of the related Home Loan immediately prior to the date it
became a Liquidated Home Loan, less any Net Liquidation Proceeds previously
received with respect to such Home Loan and applied as a recovery of principal,
and (b) accrued and unpaid interest on the related Home Loan at the Net Loan
Rate through the date of receipt of the proceeds; and fourth, to Foreclosure
Profits.
Section 3.08. DEPOSITOR AND GRANTOR TRUSTEE TO COOPERATE. On or before
each Payment Date, the Master Servicer will notify the Grantor Trustee or the
Custodian, with a copy to the Depositor, of the termination of or the payment in
full and the termination of any Home Loan during the preceding Collection
Period. Upon receipt of payment in full, the Master Servicer is authorized to
execute, pursuant to the authorization contained in Section 3.01, if the
assignments of Mortgage have been recorded if required under the Home Loan
Purchase Agreement, an instrument of satisfaction regarding the related
Mortgage, which instrument of satisfaction shall be recorded by the Master
Servicer if required by applicable law and be delivered to the Person entitled
thereto. It is understood and agreed that any expenses incurred in connection
with such instrument of satisfaction or transfer shall be reimbursed from
amounts deposited in the Custodial Account. From time to time and as appropriate
for the servicing or foreclosure of any Home Loan, the Grantor Trustee or the
Custodian shall, upon request of the Master Servicer and delivery to the Grantor
Trustee or Custodian, with a copy to the Depositor, of a Request for Release,
signed by a Servicing Officer, release or cause to be released the related
Mortgage File to the Master Servicer and the Depositor or the Grantor Trustee
shall promptly execute such documents, in the forms provided by the Master
Servicer, as shall be necessary for the prosecution of any such proceedings or
the taking of other servicing actions. Such trust receipt shall obligate the
Master Servicer to return the Mortgage File to the Grantor Trustee or the
Custodian (as specified in such receipt) when the need therefor by the Master
Servicer no longer exists unless the Home Loan shall be liquidated, in which
case, upon receipt of a certificate of a Servicing Officer similar to that
hereinabove specified, the trust receipt shall be released to the Master
Servicer.
In order to facilitate the foreclosure of the Mortgage securing any Home
Loan that is in default following recordation of the assignments of Mortgage in
accordance with the provisions of
17
the Home Loan Purchase Agreement, the Grantor Trustee or the Depositor shall, if
so requested in writing by the Master Servicer, promptly execute an appropriate
assignment in the form provided by the Master Servicer to assign such Home Loan
for the purpose of collection to the Master Servicer (any such assignment shall
unambiguously indicate that the assignment is for the purpose of collection
only), and, upon such assignment, such assignee for collection will thereupon
bring all required actions in its own name and otherwise enforce the terms of
the Home Loan and deposit or credit the Net Liquidation Proceeds, exclusive of
Foreclosure Profits, received with respect thereto in the Custodial Account. In
the event that all delinquent payments due under any such Home Loan are paid by
the Mortgagor and any other defaults are cured, then the assignee for collection
shall promptly reassign such Home Loan to the Grantor Trustee and return all
Related Documents to the place where the related Mortgage File was being
maintained.
Section 3.09. SERVICING COMPENSATION; PAYMENT OF CERTAIN EXPENSES BY
MASTER SERVICER. The Master Servicer shall be entitled to receive the Master
Servicing Fee in accordance with Sections 3.02 and 3.03 as compensation for its
services in connection with servicing the Home Loans. Moreover, additional
servicing compensation in the form of late payment charges, investment income on
amounts in the Custodial Account and the Grantor Trust Certificate Account and
other receipts not required to be deposited in the Custodial Account as
specified in Section 3.02 shall be retained by the Master Servicer. The Master
Servicer shall be required to pay all expenses incurred by it in connection with
its activities hereunder (including payment of all other fees and expenses not
expressly stated hereunder to be for the account of the Grantor Trust
Certificateholder, including, without limitation, the fees and expenses of the
Owner Trustee, Grantor Trustee, Indenture Trustee and any Custodian) and shall
not be entitled to reimbursement therefor.
Section 3.10. ANNUAL STATEMENT AS TO COMPLIANCE. (a) The Master Servicer
will deliver to the Depositor, the Grantor Trustee, the Owner Trustee and the
Indenture Trustee on or before the earlier of (i) March 31 of each year,
beginning with the first March 31 that occurs at least six months after the
Cut-off Date, or (ii) with respect to any calendar year during which the
Depositor's annual report on Form 10-K is required to be filed in accordance
with the Exchange Act and the rules and regulations of the Commission, the date
on which the Depositor's annual report on Form 10-K is required to be filed in
accordance with the Exchange Act and the rules and regulations of the Commission
(or, in each case, if such day is not a Business Day, the immediately preceding
Business Day), an Officers' Certificate stating, as to each signer thereof, that
(a) a review of the activities of the Master Servicer during the preceding
calendar year and of its performance under servicing agreements, including this
Servicing Agreement has been made under such officer's supervision and (b) to
the best of such officer's knowledge, based on such review, the Master Servicer
has complied in all material respects with the minimum servicing standards set
forth in the Uniform Single Attestation Program for Mortgage Bankers and has
fulfilled all of its material obligations in all material respects throughout
such year, or, if there has been material noncompliance with such servicing
standards or a default in the fulfillment in all material respects of any such
obligation relating to this Servicing Agreement, such statement shall include a
description of such noncompliance or specify each such default, as the case may
be, known to such officer and the nature and status thereof.
(b) The Master Servicer shall deliver to the Depositor, the Grantor
Trustee, the Indenture Trustee and the Owner Trustee, promptly after having
obtained knowledge thereof, but in no event
18
later than five Business Days thereafter, written notice by means of an
Officer's Certificate of any event which with the giving of notice or the lapse
of time or both, would become a Servicing Default.
Section 3.11. ANNUAL SERVICING REPORT. On or before the earlier of (a)
March 31 of each year, beginning with the first March 31 that occurs at least
six months after the Cut-off Date, or (b) with respect to any calendar year
during which the Depositor's annual report on Form 10-K is required to be filed
in accordance with the Exchange Act and the rules and regulations of the
Commission, the date on which the Depositor's annual report on Form 10-K is
required to be filed in accordance with the Exchange Act and the rules and
regulations of the Commission (or, in each case, if such day is not a Business
Day, the immediately preceding Business Day), the Master Servicer at its expense
shall cause a firm of nationally recognized independent public accountants (who
may also render other services to the Master Servicer) to furnish a report to
the Depositor, the Grantor Trustee, the Owner Trustee, the Indenture Trustee and
each Rating Agency stating its opinion that, on the basis of an examination
conducted by such firm substantially in accordance with standards established by
the American Institute of Certified Public Accountants, the assertions made
pursuant to Section 3.10 regarding compliance with the minimum servicing
standards set forth in the Uniform Single Attestation Program for Mortgage
Bankers during the preceding calendar year are fairly stated in all material
respects, subject to such exceptions and other qualifications that, in the
opinion of such firm, such accounting standards require it to report. In
rendering such statement, such firm may rely, as to matters relating to the
direct servicing of such Home Loans by Subservicers, upon comparable statements
for examinations conducted by independent public accountants substantially in
accordance with standards established by the American Institute of Certified
Public Accountants (rendered within one year of such statement) with respect to
such Subservicers.
Section 3.12. ACCESS TO CERTAIN DOCUMENTATION AND INFORMATION REGARDING
THE HOME LOANS. Whenever required by statute or regulation, the Master Servicer
shall provide to any Securityholder upon reasonable request (or a regulator for
a Securityholder), the Grantor Trustee, the Owner Trustee or the Indenture
Trustee, reasonable access to the documentation regarding the Home Loans such
access being afforded without charge but only upon reasonable request and during
normal business hours at the offices of the Master Servicer. Nothing in this
Section 3.12 shall derogate from the obligation of the Master Servicer to
observe any applicable law prohibiting disclosure of information regarding the
Mortgagors and the failure of the Master Servicer to provide access as provided
in this Section 3.12 as a result of such obligation shall not constitute a
breach of this Section 3.12.
Section 3.13. MAINTENANCE OF CERTAIN SERVICING INSURANCE POLICIES. The
Master Servicer shall during the term of its service as servicer maintain in
force (i) a policy or policies of insurance covering errors and omissions in the
performance of its obligations as master servicer hereunder and (ii) a fidelity
bond in respect of its officers, employees or agents. Each such policy or
policies and bond shall be at least equal to the coverage that would be required
by FNMA or FHLMC, whichever is greater, for Persons performing servicing for
loans similar to the Home Loans purchased by such entity.
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Section 3.14. INFORMATION REQUIRED BY THE INTERNAL REVENUE SERVICE AND
REPORTS OF FORECLOSURES AND ABANDONMENTS OF MORTGAGED PROPERTY. The Master
Servicer shall prepare and deliver all federal and state information reports
when and as required by all applicable state and federal income tax laws. In
particular, with respect to the requirement under Section 6050J of the Code to
the effect that the Master Servicer or Subservicer shall make reports of
foreclosures and abandonments of any mortgaged property for each year beginning
in 2004, the Master Servicer or Subservicer shall file reports relating to each
instance occurring during the previous calendar year in which the Master
Servicer (i) on behalf of the Depositor, acquires an interest in any Mortgaged
Property through foreclosure or other comparable conversion in full or partial
satisfaction of a Home Loan, or (ii) knows or has reason to know that any
Mortgaged Property has been abandoned. The reports from the Master Servicer or
Subservicer shall be in form and substance sufficient to meet the reporting
requirements imposed by Section 6050J and Section 6050H (reports relating to
mortgage interest received) of the Code.
Section 3.15. OPTIONAL REPURCHASE OF DEFAULTED HOME LOANS.
Notwithstanding any provision in Section 3.07 to the contrary, the Master
Servicer, at its option and in its sole discretion, may repurchase any Home Loan
delinquent in payment for a period of 90 days or longer for a price equal to the
Repurchase Price.
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ARTICLE IV
Servicing Certificate
Section 4.01. STATEMENTS TO GRANTOR TRUST CERTIFICATEHOLDER. (a) With
respect to each Payment Date, on the Business Day following the related
Determination Date, the Master Servicer shall forward to the Grantor Trustee,
any Grantor Trust Certificateholder, the Owner Trustee, the Certificate Paying
Agent, the Class B Trustee and the Indenture Trustee, and the Indenture Trustee
pursuant to Section 3.26 of the Indenture shall cause to be forwarded by mail or
otherwise make available electronically at xxx.xxxxxxxx.xxx/xxx to each
Certificateholder, Noteholder, the Depositor and each Rating Agency, a statement
setting forth the following information (the "Servicing Certificate") as to the
Notes and Certificates, to the extent applicable:
(i) the aggregate amount of (a) Interest Collections, (b)
Principal Collections and (c) Substitution Adjustment Amounts;
(ii) the amount of such distribution as principal to the
Noteholders;
(iii) the amount of such distribution as interest to the
Noteholders, separately stating the portion thereof in respect of
overdue accrued interest;
(iv) the number and Pool Balance of the Home Loans as of the end
of the related Collection Period;
(v) the number and aggregate Loan Balances of Home Loans (a) as
to which the Monthly Payment is Delinquent for 30-59 days, 60-89 days
and 90 or more days, respectively, (b) that are foreclosed, (c) that
have become REO, and (d) that have been finally liquidated due to being
180 days or more delinquent, in each case as of the end of the related
Collection Period; PROVIDED, HOWEVER, that such information will not be
provided on the statements relating to the first Payment Date;
(vi) the weighted average Loan Rate for the related Collection
Period;
(vii) the aggregate Liquidation Loss Amounts with respect to the
related Collection Period, the amount of any Liquidation Loss
Distribution Amounts with respect to the Notes, and the aggregate of the
Liquidation Loss Amounts from all Collection Periods to date expressed
as dollars and as a percentage of the aggregate Cut-off Date Loan
Balance;
(viii)the Note Balance of the Notes, the Component Principal
Balance of the B Component and the Certificate Principal Balance of the
Certificates after giving effect to the distribution of principal on
such Payment Date;
(x) the aggregate Servicing Fees for the related Collection
Period;
(xi) the Outstanding Reserve Amount and the Reserve Amount
Target immediately following such Payment Date;
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(xii) (a) the number and principal amount of release agreements
pursuant to Section 3.05(b)(iv) entered into during the calendar year
and since the Closing Date, stated separately, for the Home Loans and,
the aggregate outstanding principal amount of such release agreements
expressed as a percentage of the Pool Balance with information provided
separately with respect to all Unsecured Loans and (b) the number and
principal amount of Capitalization Workouts pursuant to Section
3.02(a)(v) entered into since the Closing Date;
(xiii)the aggregate amount recovered during the related
Collection Period consisting of all subsequent recoveries on any Home
Loan that was 180 days or more delinquent;
(xiv) the Net Monthly Excess Cash Flow for the related Payment
Date, and the aggregate unpaid Accrued Note Interest and Accrued
Component Interest with respect to each Class of Notes and the B
Component, respectively, for such Payment Date and all prior Payment
Dates;
(xv) (a) the amount of such distribution to the Holders of each
Security applied to reduce the Note Principal Balance or Component
Principal Balance thereof, and (b) the aggregate amount included in
clause (a) representing Principal Prepayments;
(xvi)the amount of such distribution to Holders of each Class of
Notes and the B Component allocable to interest;
(xviiif the distribution to the Holders of any Class of Notes or
the B Component is less than the full amount that would be distributable
to such Holders if there were sufficient funds available therefor, the
amount of the shortfall;
(xviiithe Reserve Amount Target and Outstanding Reserve Amount,
in each case after giving effect to the amounts distributed on the
related Payment Date;
(xix)the occurrence of the Credit Support Depletion Date; and
(xx) the amount if any, to be paid by a Derivative Counterparty
under a Derivative Contract.
In the case of information furnished pursuant to clauses (ii) and (iii)
above, the amounts shall be expressed as an aggregate dollar amount per Note or
Certificate, as applicable, with a $1,000 denomination.
(b) In addition, with respect to each Payment Date, on the Business Day
following the related Determination Date, the Master Servicer shall forward to
the Rating Agencies the following information for each Capitalization Workout
entered into during the related Collection Period:
(i) the original Home Loan amount;
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(ii) the Home Loan amount after the Capitalization Workout;
(iii)the original Monthly Payment amount;
(iv) the Monthly Payment amount after the Capitalization
Workout;
(v) the Capitalized Amount as defined in Section 3.02(a)(v)
herein;
(vi) the Combined Loan-to-Value Ratio prior to the
Capitalization Workout;
(vii)the Combined Loan-to-Value Ratio after the Capitalization Workout; and
(viiiif an appraisal was used in determining the Combined
Loan-to-Value Ratio referred to in (vii) above, the type and date of
appraisal.
The Master Servicer shall also forward to the Grantor Trustee or the
Indenture Trustee any other information reasonably requested by the Grantor
Trustee or the Indenture Trustee necessary to make distributions pursuant to
Section 4.02 of the Grantor Trust Agreement or Section 3.05 of the Indenture, as
applicable. Prior to the close of business on the Business Day next succeeding
each Determination Date, the Master Servicer shall furnish a written statement
to the Grantor Trustee, the Certificate Paying Agent and the Indenture Trustee
setting forth the aggregate amounts required to be withdrawn from the Custodial
Account and deposited into the Grantor Trust Certificate Account on the Business
Day preceding the related Payment Date pursuant to Section 3.03. The
determination by the Master Servicer of such amounts shall, in the absence of
obvious error, be presumptively deemed to be correct for all purposes hereunder
and the Grantor Trustee, the Owner Trustee and the Indenture Trustee shall be
protected in relying upon the same without any independent check or
verification. In addition, upon the Depositor's written request, the Master
Servicer shall promptly furnish information reasonably requested by the
Depositor that is reasonably available to the Master Servicer to enable the
Depositor to perform its federal and state income tax reporting obligations.
The Master Servicer shall provide the Grantor Trustee and the Indenture
Trustee with the notice of anticipated final distribution on the Grantor Trust
Certificate, as and when required under Section 4.02(b) of the Grantor Trust
Agreement.
The Master Servicer shall provide the Grantor Trustee any reasonably
requested information, including any information required in connection with
Section 6.13 of the Grantor Trust Agreement and 4.02 of this Servicing
Agreement.
Section 4.02. TAX REPORTING. The Grantor Trustee shall furnish or cause
to be furnished to Holders of the Grantor Trust Certificate and shall file or
cause to be filed with the Internal Revenue Service, together with Form 1041 or
such other form as may be applicable, such information with respect to the
income and deductions of the Grantor Trust at the time or times and in the
manner required by the Code, including such other customary factual information
as is available to the Grantor Trustee to enable Grantor Trust Certificateholder
to prepare its tax returns, including information required with respect to
computing the accrual of original issue and market discount. The parties to this
Servicing Agreement agree to perform their obligations hereunder in a manner
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so as to maintain the status of the Grantor Trust as a grantor trust under U.S.
federal income tax law and to prevent the imposition of any federal, state or
local income, prohibited transaction, contribution or other tax on the Grantor
Trust to the extent that maintaining such status and avoiding such taxes are
reasonably within the control of such parties and are reasonably within the
scope of their duties under this Servicing Agreement. It is understood and
agreed that the Master Servicer shall make all tax filings required under this
Section 4.02 and Section 6.13 of the Grantor Trust Agreement.
Section 4.03. RESERVED.
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Section 4.04. EXCHANGE ACT REPORTING. The Master Servicer shall, on
behalf of the Depositor and in respect of the Trust Estate, prepare, sign and
cause to be filed with the Commission any periodic reports required to be filed
under the provisions of the Exchange Act, and the rules and regulations of the
Commission thereunder. Neither the Master Servicer nor the Indenture Trustee
shall have any liability with respect to the Master Servicer's failure to
properly prepare or file such periodic reports resulting from or relating to the
Master Servicer's inability or failure to obtain any information not resulting
from the Master Servicer's own negligence or willful misconduct. Any Form 10-K
filed with the Commission in connection with this Section 4.04 shall include a
certification, signed by the senior officer in charge of the servicing functions
of the Master Servicer, in the form attached as Exhibit D hereto or such other
form as may be required or permitted by the Commission (the "Form 10-K
Certification"), in compliance with Rule 13a-14 and 15d-14 under the Exchange
Act and any additional directives of the Commission. This Section 4.04 may be
amended in accordance with the provisions of this Servicing Agreement without
the consent of the Securityholders.
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ARTICLE V
RESERVED
Section 5.01. RESERVED.
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ARTICLE VI
The Master Servicer
Section 6.01. LIABILITY OF THE MASTER SERVICER. The Master Servicer
shall be liable in accordance herewith only to the extent of the obligations
specifically imposed upon and undertaken by the Master Servicer herein.
Section 6.02. MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE
OBLIGATIONS OF, THE MASTER SERVICER. Any corporation into which the Master
Servicer may be merged or converted or with which it may be consolidated, or any
corporation resulting from any merger, conversion or consolidation to which the
Master Servicer shall be a party, or any corporation succeeding to the business
of the Master Servicer, shall be the successor of the Master Servicer,
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.
The Master Servicer may assign its rights and delegate its duties and
obligations under this Servicing Agreement; provided that the Person accepting
such assignment or delegation shall be a Person which is qualified to service
mortgage loans similar to those in the Home Loan Pool (meaning, mortgage loans
used for home improvement or debt consolidation), is reasonably satisfactory to
the Grantor Trustee, the Indenture Trustee, the Owner Trustee and the Depositor,
is willing to service the Home Loans and executes and delivers to the Grantor
Trustee and the Depositor an agreement, in form and substance reasonably
satisfactory to the Grantor Trustee and the Depositor, which contains an
assumption by such Person of the due and punctual performance and observance of
each covenant and condition to be performed or observed by the Master Servicer
under this Servicing Agreement; provided further that each Rating Agency's
rating of the Securities and the B Note in effect immediately prior to such
assignment and delegation will not be qualified, reduced, or withdrawn as a
result of such assignment and delegation (as evidenced by a letter to such
effect from each Rating Agency); and provided further that the Owner Trustee
receives an Opinion of Counsel to the effect that such assignment or delegation
shall not cause the Trust to be treated as a corporation for federal or state
income tax purposes.
Section 6.03. LIMITATION ON LIABILITY OF THE MASTER SERVICER AND OTHERS.
Neither the Master Servicer nor any of the directors or officers or employees or
agents of the Master Servicer shall be under any liability to the Depositor, the
Owner Trustee, the Grantor Trustee, the Indenture Trusee or the Grantor Trust
Certificateholder or any Securityholder for any action taken or for refraining
from the taking of any action in good faith pursuant to this Servicing
Agreement, PROVIDED, HOWEVER, that this provision shall not protect the Master
Servicer or any such Person against any liability which would otherwise be
imposed by reason of its willful misfeasance, bad faith or gross negligence in
the performance of its duties hereunder or by reason of its reckless disregard
of its obligations and duties hereunder. The Master Servicer and any director or
officer or employee or agent of the Master Servicer may rely in good faith on
any document of any kind PRIMA FACIE properly executed and submitted by any
Person respecting any matters arising hereunder. The Master Servicer and any
director or officer or employee or agent of the Master Servicer shall be
indemnified by the Depositor and held harmless against any loss, liability or
expense incurred in connection with any legal action relating to this Servicing
Agreement, the Grantor Trust Certificate
26
or the Securities, including any amount paid to the Owner Trustee, the Grantor
Trustee or the Indenture Trustee pursuant to Section 6.06(b), other than any
loss, liability or expense incurred by reason of its willful misfeasance, bad
faith or gross negligence in the performance of its duties hereunder or by
reason of its reckless disregard of its obligations and duties hereunder. The
Master Servicer shall not be under any obligation to appear in, prosecute or
defend any legal action which is not incidental to its duties to service the
Home Loans in accordance with this Servicing Agreement, and which in its opinion
may involve it in any expense or liability; PROVIDED, HOWEVER, that the Master
Servicer may in its sole discretion undertake any such action which it may deem
necessary or desirable in respect of this Servicing Agreement, and the rights
and duties of the parties hereto and the interests of the Securityholders. In
such event, the reasonable legal expenses and costs of such action and any
liability resulting therefrom shall be expenses, costs and liabilities of the
Master Servicer shall be entitled to be reimbursed therefor. The Master
Servicer's right to indemnity or reimbursement pursuant to this Section 6.03
shall survive any resignation or termination of the Master Servicer pursuant to
Section 6.04 or 7.01 with respect to any losses, expenses, costs or liabilities
arising prior to such resignation or termination (or arising from events that
occurred prior to such resignation or termination).
Section 6.04. MASTER SERVICER NOT TO RESIGN. Subject to the provisions
of Section 6.02, the Master Servicer shall not resign from the obligations and
duties hereby imposed on it except (i) upon determination that the performance
of its obligations or duties hereunder are no longer permissible under
applicable law or are in material conflict by reason of applicable law with any
other activities carried on by it or its subsidiaries or Affiliates, the other
activities of the Master Servicer so causing such a conflict being of a type and
nature carried on by the Master Servicer or its subsidiaries or Affiliates at
the date of this Servicing Agreement or (ii) upon satisfaction of the following
conditions: (a) the Master Servicer has proposed a successor servicer to the
Depositor, the Grantor Trustee, the Indenture Trustee and the Owner Trustee in
writing and such proposed successor servicer is reasonably acceptable to the
Depositor, the Grantor Trustee, the Indenture Trustee and the Owner Trustee; and
(b) each Rating Agency shall have delivered a letter to the Depositor and the
Grantor Trustee prior to the appointment of the successor servicer stating that
the proposed appointment of such successor servicer as Master Servicer hereunder
will not result in the reduction or withdrawal of the then current rating of the
Securities and the Class B Note; PROVIDED, HOWEVER, that no such resignation by
the Master Servicer shall become effective until such successor servicer or, in
the case of (i) above, the Grantor Trustee shall have assumed the Master
Servicer's responsibilities and obligations hereunder or the Grantor Trustee
shall have designated a successor servicer in accordance with Section 7.02. Any
such resignation shall not relieve the Master Servicer of responsibility for any
of the obligations specified in Sections 7.01 and 7.02 as obligations that
survive the resignation or termination of the Master Servicer. Any such
determination permitting the resignation of the Master Servicer shall be
evidenced by an Opinion of Counsel to such effect delivered to the Grantor
Trustee, the Indenture Trustee and the Owner Trustee.
Section 6.05. DELEGATION OF DUTIES. In the ordinary course of business,
the Master Servicer at any time may delegate any of its duties hereunder to any
Person, including any of its Affiliates, who agrees to conduct such duties in
accordance with standards comparable to those with which the Master Servicer
complies pursuant to Section 3.01. Such delegation shall not relieve the Master
Servicer of its liabilities and responsibilities with respect to such duties and
shall not constitute a resignation within the meaning of Section 6.04.
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Section 6.06. MASTER SERVICER TO PAY GRANTOR TRUSTEE'S, OWNER TRUSTEE'S
AND INDENTURE TRUSTEE'S FEES AND EXPENSES; INDEMNIFICATION. (a) The Master
Servicer covenants and agrees to pay to the Grantor Trustee, the Owner Trustee
and the Indenture Trustee and any co-trustee of the Grantor Trustee, the Owner
Trustee or the Indenture Trustee from time to time, and the Grantor Trustee, the
Owner Trustee, the Indenture Trustee and any such co-trustee shall be entitled
to, reasonable compensation (which shall not be limited by any provision of law
in regard to the compensation of a trustee of an express trust) for all services
rendered by each of them in the execution of the trusts created under the
Grantor Trust Agreement, the Owner Trust Agreement and the Indenture and in the
exercise and performance of any of the powers and duties under the Grantor Trust
Agreement, the Owner Trust Agreement or the Indenture, as the case may be, of
the Grantor Trustee, the Owner Trustee, the Indenture Trustee and any
co-trustee, and the Master Servicer will pay or reimburse the Grantor Trustee,
the Owner Trustee, the Indenture Trustee and any co-trustee upon request for all
reasonable expenses, disbursements and advances incurred or made by the Grantor
Trustee, the Owner Trustee, the Indenture Trustee or any co-trustee in
accordance with any of the provisions of this Servicing Agreement except any
such expense, disbursement or advance as may arise from its negligence, wilful
misfeasance or bad faith.
(b) The Master Servicer agrees to indemnify the Grantor Trustee, the
Owner Trustee and the Indenture Trustee for, and to hold the Grantor Trustee,
the Owner Trustee and the Indenture Trustee, as the case may be, harmless
against, any loss, liability or expense incurred without negligence, bad faith
or willful misconduct on the part of the Grantor Trustee, the Owner Trustee or
the Indenture Trustee, as the case may be, arising out of, or in connection
with, the acceptance and administration of the Issuer and the assets thereof,
including the costs and expenses (including reasonable legal fees and expenses)
of defending the Grantor Trustee, the Owner Trustee or the Indenture Trustee, as
the case may be, against any claim in connection with the exercise or
performance of any of its powers or duties under any Basic Document (including,
without limitation, any claim against the Grantor Trustee, the Owner Trustee or
the Indenture Trustee alleging a violation of the Homeownership and Equity
Protection Act of 1994, as amended), provided that:
(i) with respect to any such claim, the Grantor Trustee,
the Owner Trustee or the Indenture Trustee, as the case may be, shall
have given the Master Servicer written notice thereof promptly after the
Grantor Trustee, the Owner Trustee or the Indenture Trustee, as the case
may be, shall have actual knowledge thereof;
(ii) while maintaining control over its own defense, the
Issuer, the Grantor Trustee, the Owner Trustee or the Indenture Trustee,
as the case may be, shall cooperate and consult fully with the Master
Servicer in preparing such defense; and
(iii) notwithstanding anything in this Servicing
Agreement to the contrary, the Master Servicer shall not be liable for
settlement of any claim by the Grantor Trustee, the Owner Trustee or the
Indenture Trustee, as the case may be, entered into without the prior
consent of the Master Servicer.
No termination of this Servicing Agreement shall affect the obligations created
by this Section 6.06 of the Master Servicer to indemnify the Grantor Trustee,
the Owner Trustee and the Indenture Trustee under the conditions and to the
extent set forth herein.
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Notwithstanding the foregoing, the indemnification provided by the
Master Servicer in this Section 6.06(b) shall not pertain to any loss, liability
or expense of the Grantor Trustee, the Owner Trustee or the Indenture Trustee,
including the costs and expenses of defending itself against any claim, incurred
in connection with any actions taken by the Grantor Trustee, the Owner Trustee
or the Indenture Trustee at the direction of the Noteholders or
Certificateholders, as the case may be, pursuant to the terms of this Servicing
Agreement.
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ARTICLE VII
Default
Section 7.01. SERVICING DEFAULT. If any one of the following events
("Servicing Default") shall occur and be continuing:
(i) Any failure by the Master Servicer to deposit in the
Custodial Account, Grantor Trust Certificate Account or Payment Account
any deposit required to be made under the terms of this Servicing
Agreement which continues unremedied for a period of five Business Days
after the date upon which written notice of such failure shall have been
given to the Master Servicer by the Depositor, the Grantor Trustee, the
Owner Trustee or the Indenture Trustee; or
(ii) Failure on the part of the Master Servicer duly to
observe or perform in any material respect any other covenants or
agreements of the Master Servicer set forth in the Grantor Trust
Agreement or in this Servicing Agreement, which failure, in each case,
materially and adversely affects the interests of the Grantor Trust
Certificateholder, any Securityholder or any holder of the Class B Notes
and which continues unremedied for a period of 45 days after the date on
which written notice of such failure, requiring the same to be remedied,
and stating that such notice is a "Notice of Default" hereunder, shall
have been given to the Master Servicer by the Depositor, the Grantor
Trustee, the Owner Trustee or the Indenture Trustee; or
(iii) The entry against the Master Servicer of a decree
or order by a court or agency or supervisory authority having
jurisdiction in the premises for the appointment of a trustee,
conservator, receiver or liquidator in any insolvency, conservatorship,
receivership, readjustment of debt, marshalling of assets and
liabilities or similar proceedings, or for the winding up or liquidation
of its affairs, and the continuance of any such decree or order
undischarged or unstayed and in effect for a period of 60 consecutive
days; or
(iv) The Master Servicer shall voluntarily go into
liquidation, consent to the appointment of a conservator, receiver,
liquidator or similar person in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings of or
relating to the Master Servicer or of or relating to all or
substantially all of its property, or a decree or order of a court,
agency or supervisory authority having jurisdiction in the premises for
the appointment of a conservator, receiver, liquidator or similar person
in any insolvency, readjustment of debt, marshalling of assets and
liabilities or similar proceedings, or for the winding-up or liquidation
of its affairs, shall have been entered against the Master Servicer and
such decree or order shall have remained in force undischarged, unbonded
or unstayed for a period of 60 days; or the Master Servicer shall admit
in writing its inability to pay its debts generally as they become due,
file a petition to take advantage of any applicable insolvency or
reorganization statute, make an assignment for the benefit of its
creditors or voluntarily suspend payment of its obligations.
30
Then, and in every such case, so long as a Servicing Default shall not have been
remedied by the Master Servicer, the Grantor Trustee, by notice then given in
writing to the Master Servicer may terminate all of the rights and obligations
of the Master Servicer as servicer under this Servicing Agreement other than its
right to receive servicing compensation and expenses for servicing the Home
Loans hereunder during any period prior to the date of such termination, and the
Depositor, the Grantor Trustee, the Owner Trustee or the Indenture Trustee may
exercise any and all other remedies available at law or equity. Any such notice
to the Master Servicer shall also be given to each Rating Agency and the
Depositor. On or after the receipt by the Master Servicer of such written
notice, all authority and power of the Master Servicer under this Servicing
Agreement, whether with respect to the Securities or the Home Loans or
otherwise, shall pass to and be vested in the Grantor Trustee, pursuant to and
under this Section 7.01; and, without limitation, the Grantor Trustee is hereby
authorized and empowered to execute and deliver, on behalf of the Master
Servicer, as attorney-in-fact or otherwise, any and all documents and other
instruments, and to do or accomplish all other acts or things necessary or
appropriate to effect the purposes of such notice of termination, whether to
complete the transfer and endorsement of each Home Loan and related documents,
or otherwise. The Master Servicer agrees to cooperate with the Grantor Trustee
in effecting the termination of the responsibilities and rights of the Master
Servicer hereunder, including, without limitation, the transfer to the Grantor
Trustee for the administration by it of all cash amounts relating to the Home
Loans that shall at the time be held by the Master Servicer and to be deposited
by it in the Custodial Account, or that have been deposited by the Master
Servicer in the Custodial Account or thereafter received by the Master Servicer
with respect to the Home Loans. All reasonable costs and expenses (including,
but not limited to, attorneys' fees) incurred in connection with amending this
Servicing Agreement to reflect such succession as Master Servicer pursuant to
this Section 7.01 shall be paid by the predecessor Master Servicer (or if the
predecessor Master Servicer is the Grantor Trustee, the initial Master Servicer)
upon presentation of reasonable documentation of such costs and expenses.
Notwithstanding any termination of the activities of the Master Servicer
hereunder, the Master Servicer shall be entitled to receive, out of any late
collection of a payment on a Home Loan which was due prior to the notice
terminating the Master Servicer's rights and obligations hereunder and received
after such notice, that portion to which the Master Servicer would have been
entitled pursuant to Sections 3.03 and 3.09 as well as its Master Servicing Fee
in respect thereof, and any other amounts payable to the Master Servicer
hereunder the entitlement to which arose prior to the termination of its
activities hereunder.
Notwithstanding the foregoing, a delay in or failure of performance
under Section 7.01(i) or under Section 7.01(ii) after the applicable grace
periods specified in such Sections, shall not constitute a Servicing Default if
such delay or failure could not be prevented by the exercise of reasonable
diligence by the Master Servicer and such delay or failure was caused by an act
of God or the public enemy, acts of declared or undeclared war, public disorder,
rebellion or sabotage, epidemics, landslides, lightning, fire, hurricanes,
earthquakes, floods or similar causes. The preceding sentence shall not relieve
the Master Servicer from using reasonable efforts to perform its respective
obligations in a timely manner in accordance with the terms of this Servicing
Agreement and the Master Servicer shall provide the Grantor Trustee, the Grantor
Trust Certificateholder, the Owner Trustee and the Indenture Trustee with notice
of such failure or delay by it, together with a description of its efforts to so
perform its obligations. The Master Servicer shall immediately notify
31
the Grantor Trustee, the Depositor, the Owner Trustee and the Indenture Trustee
in writing of any Servicing Default.
Section 7.02. GRANTOR TRUSTEE TO ACT; APPOINTMENT OF SUCCESSOR. (a) On
and after the time the Master Servicer receives a notice of termination pursuant
to Section 7.01 or sends a notice pursuant to Section 6.04, the Grantor Trustee
shall be the successor in all respects to the Master Servicer in its capacity as
servicer under this Servicing Agreement and the transactions set forth or
provided for herein and shall be subject to all the responsibilities, duties and
liabilities relating thereto placed on the Master Servicer by the terms and
provisions hereof. Nothing in this Servicing Agreement or in the Grantor Trust
Agreement shall be construed to permit or require the Grantor Trustee to (i)
succeed to the responsibilities, duties and liabilities of the initial Master
Servicer in its capacity as Seller under the Home Loan Purchase Agreement, (ii)
be responsible or accountable for any act or omission of the Master Servicer
prior to the issuance of a notice of termination hereunder, (iii) require or
obligate the Grantor Trustee, in its capacity as successor Master Servicer, to
purchase, repurchase or substitute any Home Loan, (iv) fund any losses on any
Permitted Investment directed by any other Master Servicer or (v) be responsible
for the representations and warranties of the Master Servicer. As compensation
therefor, the Grantor Trustee shall be entitled to such compensation as the
Master Servicer would have been entitled to hereunder if no such notice of
termination had been given. Notwithstanding the above, (i) if the Grantor
Trustee is unwilling to act as successor Master Servicer, or (ii) if the Grantor
Trustee is legally unable so to act, the Grantor Trustee may (in the situation
described in clause (i)) or shall (in the situation described in clause (ii))
appoint or petition a court of competent jurisdiction to appoint any established
housing and home finance institution, bank or other mortgage loan or home equity
loan servicer having a net worth of not less than $10,000,000 as the successor
to the Master Servicer hereunder in the assumption of all or any part of the
responsibilities, duties or liabilities of the Master Servicer hereunder;
provided that the appointment of any such successor Master Servicer will not
result in the qualification, reduction or withdrawal of the ratings assigned to
the Securities and the Class B Notes by the Rating Agencies. Pending appointment
of a successor to the Master Servicer hereunder, unless the Grantor Trustee is
prohibited by law from so acting, the Grantor Trustee shall act in such capacity
as herein above provided. In connection with such appointment and assumption,
the successor shall be entitled to receive compensation out of payments on Home
Loans in an amount equal to the compensation which the Master Servicer would
otherwise have received pursuant to Section 3.09 (or such lesser compensation as
the Grantor Trustee and such successor shall agree). The appointment of a
successor Master Servicer shall not affect any liability of the predecessor
Master Servicer which may have arisen under this Servicing Agreement prior to
its termination as Master Servicer (including, without limitation, the
obligation to purchase Home Loans pursuant to Section 3.01, to pay any
deductible under an insurance policy pursuant to Section 3.04 or to indemnify
the Grantor Trustee pursuant to Section 6.06), nor shall any successor Master
Servicer be liable for any acts or omissions of the predecessor Master Servicer
or for any breach by such Master Servicer of any of its representations or
warranties contained herein or in any related document or agreement. The Grantor
Trustee and such successor shall take such action, consistent with this
Servicing Agreement, as shall be necessary to effectuate any such succession.
(b) Any successor, including the Grantor Trustee, to the Master Servicer
as servicer shall during the term of its service as servicer (i) continue to
service and administer the Home Loans for the benefit of the Grantor Trust
Certificateholder and the Securityholders and (ii) maintain in
32
force a policy or policies of insurance covering errors and omissions in the
performance of its obligations as Master Servicer hereunder and a fidelity bond
in respect of its officers, employees and agents to the same extent as the
Master Servicer is so required pursuant to Section 3.13.
(c) Any successor Master Servicer, including the Grantor Trustee, shall
not be deemed in default or to have breached its duties hereunder if the
predecessor Master Servicer shall fail to deliver any required deposit to the
Custodial Account or otherwise cooperate with any required servicing transfer or
succession hereunder.
Section 7.03. NOTIFICATION TO GRANTOR TRUST CERTIFICATEHOLDER. Upon any
termination of or appointment of a successor to the Master Servicer pursuant to
this Article VII or Section 6.04, the Grantor Trustee shall give prompt written
notice thereof to the Grantor Trust Certificateholder, the Depositor and each
Rating Agency.
33
ARTICLE VIII
Miscellaneous Provisions
Section 8.01. AMENDMENT. This Servicing Agreement may be amended from
time to time by the parties hereto, provided that any amendment be accompanied
by a letter from the Rating Agencies that the amendment will not result in the
downgrading or withdrawal of the rating then assigned to the Securities and the
Class B Notes, and the consent of the Grantor Trustee. Promptly after the
execution by the Master Servicer, the Depositor and the Grantor Trustee of any
amendment of this Servicing Agreement pursuant to this Section 8.01, the Grantor
Trustee shall provide the Custodian with written copies thereof. Any failure of
the Grantor Trustee to mail such notice, or any defect therein, shall not,
however, in any way impair or affect the validity of any such amendment.
SECTION 8.02. GOVERNING LAW. THIS SERVICING AGREEMENT SHALL BE CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS
AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH
SUCH LAWS.
Section 8.03. NOTICES. All demands, notices and communications hereunder
shall be in writing and shall be deemed to have been duly given if personally
delivered at or mailed by certified mail, return receipt requested, to (a) in
the case of the Master Servicer, 0000 Xxxxx Xxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxx,
Xxxxxxxxxx 00000-0000, Attention: Addition Director - Bond Administration, (b)
in the case of Xxxxx'x, Home Mortgage Loan Monitoring Group, 00 Xxxxxx Xxxxxx,
0xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, (c) in the case of Standard & Poor's, 00
Xxxxx Xxxxxx - 41st Floor, New York, New York 10041, Attention: Residential
Mortgage Surveillance Group, (d) in the case of the Owner Trustee, Wilmington
Trust Company, Xxxxxx Square North, 0000 Xxxxx Xxxxxx Xxxxxx, Xxxxxxxxxx,
Xxxxxxxx 00000-0000, Attention: Corporate Trust Administration, (e) in the case
of the Depositor, to Home Loan Trust 2003-HI4, c/o Owner Trustee, Wilmington
Trust Company, Xxxxxx Square North, 0000 Xxxxx Xxxxxx Xxxxxx, Xxxxxxxxxx,
Xxxxxxxx 00000-0000, Attention: Corporate Trust Administration, (f) in the case
of the Grantor Trustee, JPMorgan Chase Bank, 4 New York Plaza, 6th Floor, New
York, New York, 10004, Attention: Institutional Trust Services/Structured
Finance Services - Home Loan Trust 2003-HI4 and (g) in the case of the
Underwriters c/o the Representative, at Bear, Xxxxxxx & Co. Inc., 000 Xxxxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000; or, as to each party, at such other address as
shall be designated by such party in a written notice to each other party. Any
notice required or permitted to be mailed to a Securityholder shall be given by
first class mail, postage prepaid, at the address of such Securityholder as
shown in the Register. Any notice so mailed within the time prescribed in this
Servicing Agreement shall be conclusively presumed to have been duly given,
whether or not the Securityholder receives such notice. Any notice or other
document required to be delivered or mailed by the Grantor Trustee to any Rating
Agency shall be given on a reasonable efforts basis and only as a matter of
courtesy and accommodation and the Grantor Trustee shall have no liability for
failure to delivery such notice or document to any Rating Agency.
Section 8.04. SEVERABILITY OF PROVISIONS. If any one or more of the
covenants, agreements, provisions or terms of this Servicing Agreement shall be
for any reason whatsoever held invalid, then such covenants, agreements,
provisions or terms shall be deemed severable from the remaining
34
covenants, agreements, provisions or terms of this Servicing Agreement and shall
in no way affect the validity or enforceability of the other provisions of this
Servicing Agreement or of the Grantor Trust Certificate or the Securities or the
rights of the Grantor Trust Certificateholder or the Securityholders thereof.
Section 8.05. THIRD-PARTY BENEFICIARIES. This Servicing Agreement will
inure to the benefit of and be binding upon the parties hereto, the Indenture
Trustee, the Home Loan Trust 2003-HI4, Securityholders, the Owner Trustee and
their respective successors and permitted assigns. Except as otherwise provided
in this Servicing Agreement, no other Person will have any right or obligation
hereunder.
Section 8.06. COUNTERPARTS. This instrument may be executed in any
number of counterparts, each of which so executed shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same instrument.
Section 8.07. EFFECT OF HEADINGS AND TABLE OF CONTENTS. The Article and
Section headings herein and the Table of Contents are for convenience only and
shall not affect the construction hereof.
Section 8.08. TERMINATION UPON PURCHASE BY THE MASTER SERVICER OR
LIQUIDATION OF ALL HOME LOANS; PARTIAL REDEMPTION. (a) The respective
obligations and responsibilities of the Master Servicer, the Depositor and the
Grantor Trustee created hereby shall terminate upon the last action required to
be taken by the Grantor Trustee pursuant to the Grantor Trust Agreement
following the earlier of:
(i) the final payment or other liquidation of the last Home Loan
remaining in the Grantor Trust or, if such Grantor Trust is terminated,
remaining as the property of the Grantor Trust Certificateholder as set
forth in Section 8.11, or
(ii) the purchase by the Master Servicer from the Grantor
Trustee of all Home Loans and all property acquired in respect of any
Home Loan at a price equal to the Termination Price.
The right of the Master Servicer to purchase the assets of the Grantor Trustee
pursuant to clause (ii) above on any Payment Date is conditioned upon the Pool
Balance (after applying payments received in the related Collection Period) as
of such Payment Date being less than ten percent of the aggregate of the Cut-off
Date Loan Balances of the Home Loans. If such right is exercised by the Master
Servicer, the Master Servicer shall deposit the Termination Price calculated
pursuant to clause (ii) above with the Grantor Trustee pursuant to Section 4.01
of the Grantor Trust Agreement and, upon the receipt of such deposit, the
Grantor Trustee or Custodian shall release to the Master Servicer, the files
pertaining to the Home Loans being purchased.
(b) The Master Servicer, at its expense, shall prepare and deliver to
the Grantor Trustee for execution, at the time the Home Loans are to be released
to the Master Servicer, appropriate documents assigning each such Home Loan from
the Grantor Trustee or the Depositor to the Master Servicer or the appropriate
party.
35
(c) The Master Servicer shall give the Grantor Trustee not less than
seven Business Days' prior written notice of the Payment Date on which the
Master Servicer anticipates that the final distribution will be made to Grantor
Trust Certificateholder. Notice of any termination, specifying the anticipated
Final Scheduled Payment Date or other Payment Date (which shall be a date that
would otherwise be a Payment Date) upon which the Grantor Trust
Certificateholder may surrender its Grantor Trust Certificate to the Grantor
Trustee (if so required by the terms hereof) for payment of the final
distribution and cancellation, shall be given promptly by the Master Servicer to
the Grantor Trustee specifying:
(i) the anticipated Final Scheduled Payment Date or other
Payment Date upon which final payment of the Grantor Trust Certificate
is anticipated to be made upon presentation and surrender of Grantor
Trust Certificate at the office or agency of the Grantor Trustee therein
designated; and
(ii) the amount of any such final payment, if known.
(d) In the event that the Grantor Trust Certificateholder shall not
surrender its Grantor Trust Certificate for final payment and cancellation on or
before the Final Payment Date (if so required by the terms hereof), the Grantor
Trustee shall on such date cause all funds in the Grantor Trust Certificate
Account not distributed in final distribution to Grantor Trust Certificateholder
to be withdrawn therefrom and deposited into a separate escrow account for the
benefit of the Grantor Trust Certificateholder, and the Master Servicer if it
exercised its right to purchase the assets of the Grantor Trust shall give a
second written notice to the Grantor Trust Certificateholder to surrender its
Grantor Trust Certificate for cancellation and receive the final distribution
with respect thereto. If within six months after the second notice the Grantor
Trust Certificate shall not have been surrendered for cancellation, the Grantor
Trustee shall take appropriate steps as directed by the Master Servicer, if
applicable, to contact the Grantor Trust Certificateholder concerning surrender
of its Grantor Trust Certificate. The costs and expenses of maintaining the
escrow account and of contacting the Grantor Trust Certificateholder shall be
paid out of the assets which remain in the escrow account. If within nine months
after the second notice the Grantor Trust Certificate shall not have been
surrendered for cancellation, the Grantor Trustee shall pay to the Master
Servicer, as applicable, all amounts distributable to the holders thereof and
the Master Servicer, shall thereafter hold such amounts until distributed to
such holders. No interest shall accrue or be payable to the Grantor Trust
Certificateholder on any amount held in the escrow account or by the Master
Servicer, as a result of the Grantor Trust Certificateholder's failure to
surrender its Grantor Trust Certificate for final payment thereof in accordance
with this Section 8.08(d), and the Grantor Trust Certificateholder shall look
only to the Master Servicer for such payment.
Section 8.09. CERTAIN MATTERS AFFECTING THE GRANTOR TRUSTEE. For all
purposes of this Servicing Agreement, in the performance of any of its duties or
in the exercise of any of its powers hereunder, the Grantor Trustee shall be
subject to and entitled to the benefits of Article VI of the Grantor Trust
Agreement.
Section 8.10. RESERVED.
36
Section 8.11. TERMINATION BY GRANTOR TRUST CERTIFICATEHOLDER. If the
Grantor Trust Certificateholder terminates the Grantor Trust Agreement, then the
Master Servicer shall continue to service the Home Loans pursuant to the
Servicing Agreement, solely for the Grantor Trust Certificateholder, the
Indenture Trustee on behalf of the Noteholders and the Owner Trustee on behalf
of the Certificateholders, and such Holder shall have all rights of the Grantor
Trustee hereunder, until the Servicing Agreement is terminated.
37
IN WITNESS WHEREOF, the Master Servicer, the Grantor Trustee and the
Depositor have caused this Servicing Agreement to be duly executed by their
respective officers or representatives all as of the day and year first above
written.
RESIDENTIAL FUNDING CORPORATION,
as Master Servicer
By:
----------------------------------------------------
Name: Xxxx Xxxxxxxx
Title: Managing Director
RESIDENTIAL FUNDING MORTGAGE
SECURITIES II, INC.
By:
---------------------------------------------------
Name: Xxxx Xxxxx
Title: Vice President
JPMORGAN CHASE BANK, as Grantor Trustee
By:
----------------------------------------------------
Name: Xxxx XxXxxxxxx
Title: Vice President
EXHIBIT A-1
HOME LOAN SCHEDULE FOR GROUP I LOANS
(Available Upon Request)
EXHIBIT A-2
HOME LOAN SCHEDULE FOR GROUP II LOANS
(Available Upon Request)
EXHIBIT B
LIMITED POWER OF ATTORNEY
KNOW ALL MEN BY THESE PREMISES:
That JPMorgan Chase Bank, as Grantor Trustee (the "Grantor Trustee"),
under the Grantor Trust Agreement (the "Grantor Trustee") among
_____________________________ and the Grantor Trustee, a national banking
association organized and existing under the laws of the State of New York, and
having its principal office located at 4 New York Plaza, 6th Floor, in the City
of New York in the State of New York, hath made, constituted and appointed, and
does by these presents make, constitute and appoint Residential Funding
Corporation, a corporation organized and existing under the laws of the State of
Delaware, its true and lawful Attorney-in-Fact, with full power and authority to
sign, execute, acknowledge, deliver, file for record, and record any instrument
on its behalf and to perform such other act or acts as may be customarily and
reasonably necessary and appropriate to effectuate the following enumerated
transactions in respect of any of the mortgages or deeds of trust (the
"Mortgages" and the "Deeds of Trust", respectively) creating a trust or second
lien or an estate in fee simple interest in real property securing a Home Loan
and promissory notes secured thereby (the "Mortgage Notes") for which the
undersigned is acting as Grantor Trustee for various Securityholders (whether
the undersigned is named therein as mortgagee or beneficiary or has become
mortgagee by virtue of Endorsement of the Mortgage Note secured by any such
Mortgage or Deed of Trust) and for which Residential Funding Corporation is
acting as master servicer pursuant to a Servicing Agreement, dated as of
December 23, 2003 (the "Servicing Agreement"). This appointment shall apply only
to transactions which the Grantor Trustee is authorized to enter into under the
Grantor Trust Agreement, but in no event shall apply to any transactions other
than the following enumerated transactions only:
1. The modification or re-recording of a Mortgage or Deed of Trust,
where said modification or re-recording is for the purpose of correcting the
Mortgage or Deed of Trust to conform same to the original intent of the parties
thereto or to correct title errors discovered after such title insurance was
issued and said modification or re-recording, in either instance, does not
adversely affect the lien of the Mortgage or Deed of Trust as insured.
2. The subordination of the lien of a Mortgage or Deed of Trust to an
easement in favor of a public utility company or a government agency or unit
with powers of eminent domain; this section shall include, without limitation,
the execution of partial satisfactions/releases, partial reconveyances or the
execution of requests to trustees to accomplish same.
3. With respect to a Mortgage or Deed of Trust, the foreclosure, the
taking of a deed in lieu of foreclosure, or the completion of judicial or
non-judicial foreclosure or termination, cancellation or rescission of any such
foreclosure, including, without limitation, any and all of the following acts:
a. The substitution of trustee(s) serving under a Deed of
Trust, in accordance with state law and the Deed of Trust;
b. Statements of breach or non-performance;
c. Notices of default;
d. Cancellations/rescissions of notices of default and/or
notices of sale;
e. The taking of a deed in lieu of foreclosure; and
f. Such other documents and actions as may be necessary under
the terms of the Mortgage, Deed of Trust or state law to
expeditiously complete said transactions.
4. The conveyance of the properties to the mortgage insurer, or the
closing of the title to the property to be acquired as real
estate owned, or conveyance of title to real estate owned.
5. The completion of loan assumption agreements.
6. The full satisfaction/release of a Mortgage or Deed of Trust or
full reconveyance upon payment and discharge of all sums secured
thereby, including, without limitation, cancellation of the
related Mortgage Note.
7. The assignment of any Mortgage or Deed of Trust and the related
Mortgage Note, in connection with the repurchase of the Home Loan
secured and evidenced thereby pursuant to the requirements of a
Residential Funding Corporation Seller Contract.
8. The full assignment of a Mortgage or Deed of Trust upon payment
and discharge of all sums secured thereby in conjunction with the
refinancing thereof, including, without limitation, the
endorsement of the related Mortgage Note.
9. The modification or re-recording of a Mortgage or Deed of Trust,
where said modification or re-recording is for the purpose of any
modification pursuant to Section 3.01 of the Servicing Agreement.
10. The subordination of the lien of a Mortgage or Deed of Trust,
where said subordination is in connection with any modification
pursuant to Section 3.01 of the Servicing Agreement, and the
execution of partial satisfactions/releases in connection with
such same Section 3.01.
The undersigned gives said Attorney-in-Fact full power and authority to execute
such instruments and to do and perform all and every act and thing necessary and
proper to carry into effect the power or powers granted by or under this Limited
Power of Attorney as fully as the undersigned might or could do, and hereby does
ratify and confirm to all that said Attorney-in-Fact shall lawfully do or cause
to be done by authority hereof.
Third parties without actual notice may rely upon the exercise of the power
granted under this Limited Power of Attorney; and may be satisfied that this
Limited Power of Attorney shall continue in full force and effect has not been
revoked unless an instrument of revocation has been made in writing by the
undersigned.
JPMORGAN CHASE BANK, not in its
individual capacity, but solely
as Grantor Trustee under the
Grantor Trustee Agreement
------------------------------------- ----------------------------
Name: ______________________________ Name: ______________________
Title: _______________________________ Title: ______________________
STATE OF )
SS.
COUNTY OF )
On this __ day of _______________, 2003, before me the undersigned,
Notary Public of said State, personally appeared _______________________________
personally known to me to be duly authorized officers of JPMorgan Chase Bank
that executed the within instrument and personally known to me to be the persons
who executed the within instrument on behalf of JPMorgan Chase Bank therein
named, and acknowledged to me such JPMorgan Chase Bank executed the within
instrument pursuant to its by-laws.
WITNESS my hand and official seal.
-------------------------------
Notary Public in and for the
State of ___________________
After recording, please mail to:
=============================
-----------------------------
Attn: ________________________
EXHIBIT C
FORM OF REQUEST FOR RELEASE
DATE:
TO:
RE: REQUEST FOR RELEASE OF DOCUMENTS
In connection with your administration of the Home Loans, we request the release
of the Mortgage File described below.
Servicing Agreement Dated:
Series #:
Account #:
Pool #:
Loan #:
Borrower Name(s):
Reason for Document Request: (circle one)
Home Loan Prepaid in Full
Home Loan Repurchased
"We hereby certify that all amounts received or to be received in connection
with such payments which are required to be deposited have been or will be so
deposited as provided in the Servicing Agreement."
-------------------------------------
Residential Funding Corporation
Authorized Signature
******************************************************************
TO CUSTODIAN/Grantor TRUSTEE: Please acknowledge this request, and check off
documents being enclosed with a copy of this form. You should retain this form
for your files in accordance with the terms of the Servicing Agreement.
Enclosed Documents: [ ]
Promissory Note
[ ] Mortgage or Deed of Trust
[ ] Assignment(s) of Mortgage or
Deed of Trust
[ ] Title Insurance Policy
[ ] Other: ___________________________
-----------------
Name
-----------------
Title
-----------------
Date
EXHIBIT D
FORM OF FORM 10-K CERTIFICATE
I, [identify the certifying individual], certify that:
1. I have reviewed the annual report on Form 10-K for the fiscal year
[___], and all reports on Form 8-K containing distribution or servicing reports
filed in respect of periods included in the year covered by that annual report,
of the trust (the "Trust") created pursuant to the Amended and Restated Owner
Trust Agreement dated December 23, 2003 (the "Owner Trust Agreement") between
Residential Funding Mortgage Securities II, Inc. (the "Company") and Wilmington
Trust Company (the "Owner Trustee");
2. Based on my knowledge, the information in these reports, taken as a
whole, does not contain any untrue statement of a material fact or omit to state
a material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading as of the
last day of the period covered by that annual report;
3. Based on my knowledge, the servicing information required to be
provided to the JPMorgan Chase Bank, as grantor trustee (the "Grantor Trustee")
under the Grantor Trust Agreement, dated as of December 23, 2003 between the
Company and the Grantor Trustee (the "Grantor Trust Agreement") by the Master
Servicer under the Servicing Agreement, dated as of December 23, 2003 among
Residential Funding Corporation, the Company and the Grantor Trustee (the
"Servicing Agreement") is included in these reports;
4. I am responsible for reviewing the activities performed by the Master
Servicer under the Servicing Agreement and based upon the review required under
the Servicing Agreement, and except as disclosed in the report, the Master
Servicer has fulfilled its obligations under the Servicing Agreement; and
5. I have disclosed to the Company's certified public accountants all
significant deficiencies relating the Master Servicer's compliance with the
minimum servicing standards in accordance with a review conducted in compliance
with the Uniform Single Attestation Program for Mortgage Bankers as set forth in
the Servicing Agreement.
Date:____________
_________________________________*
[Signature]
Name:
Title:
* - to be signed by the senior officer in charge of the servicing functions of
the Master Servicer.
