RESIDENTIAL FUNDING COMPANY, LLC, the Company and LEHMAN CAPITAL, A DIVISION OF LEHMAN BROTHERS HOLDINGS INC., the Initial Owner SALE AND SERVICING AGREEMENT Dated as of October 30, 2006 Residential Mortgage Loans
EXECUTION
VERSION
RESIDENTIAL
FUNDING COMPANY, LLC,
the
Company
and
XXXXXX
CAPITAL, A DIVISION OF XXXXXX BROTHERS HOLDINGS INC.,
the
Initial Owner
Dated
as
of October 30, 2006
Residential
Mortgage Loans
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DEFINITIONS
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Section
1.01.
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Definitions
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1
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ARTICLE
II
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CONVEYANCE
OF MORTGAGE LOANS
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Section
2.01.
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Conveyance
of Mortgage Loans; Possession of Mortgage Files
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11
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Section
2.02.
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Acceptance
by the Initial Owner
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14
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Section
2.03.
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Assignment
of Mortgage Loans
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14
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Section
2.04.
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Representations
and Warranties of the Company
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16
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Section
2.05.
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Representations,
Warranties and Covenants of the Initial Owner
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29
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Section
2.06.
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Protection
of Consumer Information
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30
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Section
2.07.
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Premium
Recapture
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31
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Section
2.08.
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Early
Payment Default
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31
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ARTICLE
III
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ADMINISTRATION
AND SERVICING OF MORTGAGE LOANS
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Section
3.01.
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Company
to Act as Servicer
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32
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Section
3.02.
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Reserved
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32
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Section
3.03.
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Agreements
Between Company and Subservicer
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32
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Section
3.04.
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Collection
of Certain Mortgage Loan Payments and Liquidation of Mortgage
Loans
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33
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Section
3.05.
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Principal
and Interest Accounts
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33
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Section
3.06.
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Establishment
of and Deposits to Custodial Account
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34
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Section
3.07.
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Permitted
Withdrawals From Custodial Account
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35
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Section
3.08.
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Establishment
of and Deposits to Escrow Account
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36
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Section
3.09.
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Permitted
Withdrawals From Escrow Account
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37
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Section
3.10.
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Permitted
Investments
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37
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Section
3.11.
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Maintenance
of Hazard Insurance and Errors and Omissions and Fidelity
Coverage
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39
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Section
3.12.
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Waiver
of Prepayment Charges
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41
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Section
3.13.
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Monthly
Advances by the Company
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42
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Section
3.14.
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Enforcement
of Due-On-Sale Clauses
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42
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Section
3.15.
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Realization
Upon Defaulted Mortgage Loans
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43
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Section
3.16.
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Satisfaction
of Mortgages and Release of Mortgage Files
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43
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Section
3.17.
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REO
Property
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44
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Section
3.18.
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Servicing
Compensation
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45
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Section
3.19.
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Right
to Examine Company Records
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46
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Section
3.20.
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Compensating
Interest
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46
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Section
3.21.
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Credit
Reporting
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46
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Section
3.22.
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Inspections
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46
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Section
3.23.
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Maintenance
of Primary Mortgage Insurance Policy; Claims
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46
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Section
3.24.
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Compliance
With REMIC Provisions
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48
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Section
3.25.
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Notification
of Adjustments
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48
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Section
3.26.
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Restoration
of Mortgaged Property
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49
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Section
3.27.
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Payment
of Taxes, Insurance and Other Charges
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49
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ARTICLE
IV
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REPORTS
AND PAYMENTS TO THE INITIAL OWNER
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Section
4.01.
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Distributions
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50
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Section
4.02.
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Statements
to the Owner
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50
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Section
4.03.
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Distribution
Reports
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51
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Section
4.04.
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Flood
Zone Reporting
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51
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Section
4.05.
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Reports
to the Initial Owner
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51
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Section
4.06.
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Additional
Reports and Information
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52
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Section
4.07.
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Financial
Statements
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52
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ARTICLE
V
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THE
COMPANY
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Section
5.01.
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Liability
of the Company and Others
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53
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Section
5.02.
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Merger
or Consolidation of the Company
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54
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Section
5.03.
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Limitation
on Assignment, Pledge, Hypothecation and Resignation by
Company
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55
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ARTICLE
VI
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DEFAULT
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Section
6.01.
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Events
of Default of the Company
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55
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Section
6.02.
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Waiver
of Defaults
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57
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ARTICLE
VII
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TERMINATION
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Section
7.01.
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Termination
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57
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Section
7.02.
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Termination
Without Cause
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58
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ARTICLE
VIII
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CLOSING
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Section
8.01.
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General
Provisions
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58
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Section
8.02.
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Closing
Documents
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59
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ARTICLE
IX
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SECURITIZATION
TRANSACTIONS AND WHOLE-LOAN TRANSFERS; APPOINTMENT OF MASTER
SERVICER
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Section
9.01.
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Securitization
Transactions or Whole-Loan Transfers
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59
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Section
9.02.
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Designation
of a Master Servicer
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61
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ARTICLE
X
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MISCELLANEOUS
PROVISIONS
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Section
10.01.
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Successor
to the Company
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62
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Section
10.02.
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Regulation
AB
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63
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Section
10.03.
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Amendment;
Entire Agreement
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63
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Section
10.04.
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GOVERNING
LAW
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63
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Section
10.05.
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Notices
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64
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Section
10.06.
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Severability
of Provisions
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64
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Section
10.07.
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No
Partnership
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64
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Section
10.08.
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Exhibits
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64
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Section
10.09.
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Counterparts;
Successors and Assigns
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64
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Section
10.10.
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General
Interpretive Principles
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65
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Section
10.11.
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No
Solicitation
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65
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Section
10.12.
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Reproduction
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66
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Section
10.13.
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Confidentiality
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66
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Section
10.14.
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Further
Assurances
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66
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ARTICLE
XI
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COSTS
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Section
11.01.
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General
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66
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Exhibits
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Exhibit
A
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Form
of Purchase Confirmation
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Exhibit
B
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Form
of Statement to the Owner
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Exhibit
C
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[Reserved]
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Exhibit
D
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Regulation
AB Compliance Addendum
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Exhibit
E
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Mortgage
Loan Schedule Data Fields
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Exhibit
F
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[Reserved]
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Exhibit
G
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Form
of Notice of Release
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Exhibit
H
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Form
of Seller’s Officer’s Certificate
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Exhibit
I
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Form
of Custodial Account Certification
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Exhibit
J
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Form
of Custodial Account Letter Agreement
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Exhibit
K
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[Reserved]
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Exhibit
L
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[Reserved]
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Exhibit
M
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Servicing
Criteria to Be Addressed in Assessment of
Compliance
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This
is a
SALE AND SERVICING AGREEMENT, Residential Mortgage Loans, dated and effective
as
of October 30, 2006, by and between RESIDENTIAL
FUNDING COMPANY, LLC,
as
seller and servicer (the “Company”) and XXXXXX CAPITAL, A DIVISION OF XXXXXX
BROTHERS HOLDINGS INC., as the initial owner (the “Initial Owner”), together
with all amendments hereof and supplements hereto, the “Agreement”.
PRELIMINARY
STATEMENT
The
Initial Owner has agreed to purchase from the Company, from time to time, and
the Company has agreed to sell to the Initial Owner, from time to time, on
a
servicing retained basis and without recourse (except as otherwise set forth
herein), certain residential first lien mortgage loans (the “Mortgage Loans”)
identified in a Purchase Confirmation (as defined below) upon such terms as
are
set forth below;
In
consideration of the premises and the mutual agreements hereinafter set forth,
and intending to be legally bound, the Initial Owner and the Company agree
as
follows:
ARTICLE
I
DEFINITIONS
Section
1.01.
Definitions.
Whenever used in this Agreement, the following words and phrases, unless the
context otherwise requires, shall have the meanings specified in this Article.
Any capitalized term used or defined in a Purchase Confirmation that conflicts
with the corresponding definition set forth herein shall supersede such
definition.
40/30
Mortgage Loan:
A
Mortgage Loan which has an original term to maturity of not more than thirty
years from commencement of amortization, with a balloon payment in year thirty
upon a forty-year amortization schedule.
Accepted
Servicing Practices:
With
respect to any Mortgage Loan, those mortgage servicing practices of (i) prudent
mortgage lending institutions which service mortgage loans of the same type
as
such Mortgage Loan in the jurisdiction where the related Mortgaged Property
is
located and (ii) in accordance with applicable state, local and federal laws,
rules and regulations.
Acquisition
Date:
As
defined in Section 3.17.
Adjustable
Rate Mortgage Loan:
A
Mortgage Loan which provides for adjustment to the Mortgage Interest Rate
applicable thereto on each Adjustment Date as set forth in the related Mortgage
Note.
Adjustment
Date:
As to
each applicable Mortgage Loan, each date set forth in the related Mortgage
Note
on which an adjustment to the interest rate on such Mortgage Loan becomes
effective.
Advance:
A
customary, reasonable and necessary expense incurred in connection with the
institution of a foreclosure or other legal action or liquidation of a defaulted
Mortgage Loan, payment of hazard insurance policy premiums, payment of real
estate taxes, property repair, replacement, protection and preservation expenses
and expenses incurred with respect to REO Property. Notwithstanding any
provision herein to the contrary, the Company shall have no obligation to make
any Advance that the Company determines would constitute a Nonrecoverable
Advance.
Affiliate:
With
respect to any specified Person, any other Person controlling or controlled
by
or under common control with such specified Person. For the purposes of this
definition, “control” when used with respect to any specified Person means the
power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract
or
otherwise and the terms “controlling” and “controlled” have meanings correlative
to the foregoing.
Appraisal:
As to
each Mortgage Loan, an evaluation of the market value of the Mortgaged Property
made (i) in connection with the origination of the related Mortgage Loan
included in the related Mortgage File or (ii) in anticipation of a partial
release pursuant to Section 3.04.
Appraised
Value:
As to
any Mortgaged Property, the value of the related Mortgaged Property determined,
as permitted by the Program Guide, by the Appraisal or sales price for such
Mortgaged Property.
Assignment:
An
assignment of the Mortgage, notice of transfer, or equivalent instrument in
recordable form, sufficient under the laws of the jurisdiction wherein the
related Mortgaged Property is located to reflect of record the sale of the
Mortgage.
Balloon
Mortgage Loan:
Any
Mortgage Loan (a) that requires only payments of interest until the stated
maturity date of the Mortgage Loan or (b) for which Monthly Payments of
principal (not including the payment due on its stated maturity date) are based
on an amortization schedule that would be insufficient to fully amortize the
principal thereof by the stated maturity date of the Mortgage Loan.
Business
Day:
Any day
other than (i) a Saturday or a Sunday or (ii) a day on which banking
institutions in the State of Minnesota or the State of New York are required
or
authorized by law or executive order to be closed.
Cash
Receipts:
As
defined in Section 3.17.
Closing:
The
consummation of the sale and purchase of each Mortgage Pool.
Closing
Date:
With
respect to each purchase and sale of a Mortgage Pool as contemplated hereunder,
the closing date on which the purchase and sale of the Mortgage Loans
constituting a Mortgage Pool is consummated, as set forth in the related Trade
Confirmation and Purchase Confirmation.
Closing
Date Side Letter:
With
respect to each Closing Date, the side letter agreements, if any, executed
by
the Company and the Initial Owner in connection with the purchase and sale
of
the related Mortgage Pool.
2
Code:
The
Internal Revenue Code of 1986.
Commission:
The
United States Securities and Exchange Commission.
Company:
Residential Funding Company, LLC, a Delaware limited liability company, or
its
successor in interest, or any successor as herein provided.
Compensating
Interest:
Except
as otherwise set forth in the related Purchase Confirmation, with respect to
any
Remittance Date, an amount equal to Prepayment Interest Shortfalls resulting
from Full Prepayments or Partial Prepayments during the prior calendar month,
but not more than the Servicing Fee..
Condemnation
Proceeds:
All
awards, compensation and settlements in respect of a taking of all or part
of a
Mortgaged Property by exercise of the power of condemnation or the right of
eminent domain.
Consumer
Information:
Information regarding any Mortgagor held or received by the Company, including,
but not limited to, the name, address, e-mail address, IP address, telephone
number, account information and social security number of the Mortgagors and
the
fact that an individual has a relationship with the Company or the Initial
Owner
and/or its parent, affiliated or subsidiary companies that is supplied to the
Initial Owner by or on behalf of the Company.
Custodial
Account:
After
thirty (30) days from the date of this Agreement, the separate and segregated
account or accounts in the form of time deposit or demand accounts titled
“Residential Funding Corporation in trust for Xxxxxx Capital, A Division of
Xxxxxx Brothers Holdings Inc., Residential Mortgage Loans, Group No. 2006-
RETAINED FLOW” and established with a Qualified Depository as evidenced by a
certification in the form of Exhibit I hereto, in the case of an account
established with the Company, or by a letter agreement in the form of Exhibit
J
hereto, in the case of an account held by a depository other than the Company,
in either case a copy of which shall be furnished to the Initial Owner and,
upon
request, to any subsequent Initial Owner. Prior to thirty (30) days from the
date of this Agreement, Custodial Account shall mean the account or accounts
in
the form of time deposit or demand accounts maintained by or on behalf of the
Company.
Custodial
Agreement:
An
agreement between the Initial Owner and a Custodian, providing for the custody
of certain original documents relating to the Mortgage Loans.
Custodian:
A
custodian appointed by the Initial Owner.
Cut-off
Date:
With
respect to the related Closing of each Mortgage Pool, a date mutually agreed
upon by the parties and reflected in the related Purchase
Confirmation.
Depositor:
The
depositor, as such term is defined in Regulation AB, with respect to any
Securitization Transaction.
3
Determination
Date:
The
15th day (or if such 15th day is not a Business Day, the Business Day
immediately preceding such 15th day) of the month of the related Remittance
Date.
Distressed
Mortgage Loan:
As of
any Determination Date, any Mortgage Loan that is delinquent in payment for
a
period of ninety (90) days or more, without giving effect to any grace period
permitted by the related Mortgage Loan, or for which the Company has accepted
a
deed in lieu of foreclosure.
Due
Date:
With
respect to any Mortgage Loan, the day of the month on which Monthly Payments
are
due thereunder, exclusive of any grace period. With respect to the Mortgage
Loans for which payment from the Mortgagor is due on a day other than the first
day of the month, such Mortgage Loans will be treated as if the Monthly Payment
is due on the first day of the month following the actual Due Date.
Due
Period:
With
respect to each Remittance Date, the prior calendar month.
ERISA:
The
Employee Retirement Income Security Act of 1974, as amended.
Escrow
Account:
The
account or accounts in the form of time deposit or demand accounts maintained
by
or on behalf of the Company pursuant to Section 3.08.
Escrow
Payments:
The
amounts held in all escrow accounts for any Mortgage Loans which include amounts
being held for payment of taxes, assessments, water rates, mortgage insurance
premiums, fire and hazard insurance premiums and other payments required to
be
escrowed by the Mortgagor pursuant to any Mortgage Loan.
Event
of Default:
As
defined in Section 6.01.
Exchange
Act.
The
Securities Exchange Act of 1934, as amended.
Xxxxxx
Xxx:
Federal
National Mortgage Association, or Xxxxxx Mae, a federally chartered and
privately owned corporation organized and existing under the Federal National
Mortgage Association Charter Act, or any successor thereto.
Fitch:
Fitch
Ratings, a wholly owned subsidiary of Fimalac, S.A., and any successor or
successors thereto.
Xxxxxxx
Mac:
Federal
Home Loan Mortgage Corporation, or Xxxxxxx Mac, a corporate instrumentality
of
the United States created and existing under Title III of the Emergency Home
Finance Act of 1970, as amended, or any successor thereto.
Full
Prepayment:
Any
payment of the entire principal balance of a Mortgage Loan which is received
in
advance of its scheduled Due Date and is not accompanied by an amount of
interest representing scheduled interest due on any date or dates in any month
or months subsequent to the month of prepayment.
Initial
Owner:
Xxxxxx
Capital, A Division of Xxxxxx Brothers Holdings Inc.
4
Initial
Rate Cap:
As to
each Adjustable-Rate Mortgage Loan, the maximum increase or decrease in the
Mortgage Interest Rate on the first Adjustment Date as provided in the related
Mortgage Note.
Insurance
Proceeds:
Proceeds paid in respect of any Mortgage Loan pursuant to any insurance policy
covering such Mortgage Loan to the extent such proceeds are payable to the
mortgagee under the Mortgage or the Company and are not released to the
Mortgagor in accordance with Accepted Servicing Practices.
Lender
Paid Mortgage Insurance Policy Program or LPMI Policies:
A
policy of primary mortgage guaranty insurance pursuant to which the related
premium is to be paid by the owner or servicer of the related Mortgage Loan
from
payments of interest made by the Mortgagor in an amount as is set forth in
the
related Mortgage Loan Schedule.
Lifetime
Rate Cap:
With
respect to each Adjustable Rate Mortgage Loan as to which the related Mortgage
Note provides for a lifetime interest rate cap, the absolute maximum Mortgage
Interest Rate permitted over the life of such Mortgage Loan, above which the
Mortgage Interest Rate shall not be adjusted, as provided in the related
Mortgage Note.
Liquidated
Mortgage Loan:
A
Mortgage Loan as to which payment has been made to the Company of all
Liquidation Proceeds and other payments or recoveries which the Company deems
to
be finally recoverable.
Liquidation
Proceeds:
Cash,
other than Insurance Proceeds and Condemnation Proceeds, received in connection
with the liquidation of a defaulted Mortgage Loan, whether through the sale
or
assignment of such Mortgage Loan, trustee’s sale, foreclosure sale or otherwise,
or the sale of the related Mortgaged Property if the Mortgaged Property is
acquired in satisfaction of the Mortgage Loan.
Loan-to-Value
Ratio
or
LTV:
The
ratio of the principal balance of the Mortgage Loan at origination, to the
Appraised Value.
LPMI
Loan:
A
Mortgage Loan for which the Primary Mortgage Insurance Policy thereon is to
be
paid by the owner or servicer of such Mortgage Loan.
Master
Servicer:
Shall
have the meaning set forth in Section 9.02.
MERS:
Mortgage Electronic Registration Systems, Inc., a corporation organized and
existing under the laws of the State of Delaware, or any successor
thereto.
MERS®
System:
The
system of recording transfers of Mortgages electronically maintained by
MERS.
MIN:
The
Mortgage Identification Number of Mortgage Loans registered with MERS on the
MERS® System.
5
Minimum
Monthly Payment:
With
respect to a Pay Option ARM Loan, the minimum scheduled monthly payment
calculated in accordance with the terms of the related Mortgage
Note.
MOM
Loan:
Any
Mortgage Loan where MERS acts as the mortgagee of record of such Mortgage Loan,
solely as nominee for the originator of such Mortgage Loan and its successors
and assigns, at the origination thereof.
Monthly
Advance:
With
respect to each Remittance Date and each Mortgage Loan, an amount equal to
the
Monthly Payment (with the interest portion of such Monthly Payment reduced
by
the amount of such Monthly Payment attributable to the Servicing Fee) which
was
due on the Mortgage Loan on the Due Date in the related Due Period, and (i)
which was delinquent immediately preceding the Determination Date and (ii)
which
was not the subject of a previous Monthly Advance. Notwithstanding any provision
herein to the contrary, the Company shall have no obligation to make any Monthly
Advance that the Company determine would constitute a Nonrecoverable
Advance.
Monthly
Payment:
With
respect to any Mortgage Loan that is not an applicable Pay Option ARM Loan,
the
scheduled monthly payment of principal and/or interest on such Mortgage Loan
which is payable by a Mortgagor in such month under the related Mortgage Note.
With respect to any Mortgage Loan that is an applicable Pay Option ARM Loan,
and
any month, the Minimum Monthly Payment.
Moody’s:
Xxxxx’x
Investors Service, Inc. and any successor or successors thereto.
Mortgage:
The
mortgage, deed of trust or other instrument creating a first lien on a fee
simple interest in real property securing a Mortgage Note.
Mortgage
File:
The
mortgage documents listed in Section 2.01 pertaining to a particular Mortgage
Loan and any additional documents required to be added to the Mortgage File
pursuant to this Agreement.
Mortgage
Interest Rate:
With
respect to each Mortgage Loan, the annual rate at which interest accrues on
such
Mortgage Loan as provided under the related Mortgage Note.
Mortgage
Loan:
An
individual mortgage loan which is the subject of this Agreement, secured by
a
first lien on the Mortgaged Property securing the related Mortgage Note and
identified on a Mortgage Loan Schedule in connection with a Closing, which
mortgage loan includes all rights, benefits, proceeds and obligations arising
therefrom, including, without limitation, the Mortgage File, the Monthly
Payments, Liquidation Proceeds and Condemnation Proceeds.
Mortgage
Loan Schedule:
With
respect to each Mortgage Pool, the schedule of Mortgage Loans included therein
and made a part of the related Purchase Confirmation, in each case containing
the data and information listed on Exhibit E with respect to each Mortgage
Loan.
6
Mortgage
Note:
The
originally executed note evidencing the indebtedness of a Mortgagor secured
by a
Mortgage under a Mortgage Loan and any modification thereto.
Mortgage
Pool:
The
Mortgage Loans sold to the Initial Owner pursuant to a Purchase Confirmation
and
identified on a Mortgage Loan Schedule attached thereto.
Mortgaged
Property:
The
underlying real property securing such Mortgage Loan.
Mortgagor:
The
obligor on a Mortgage Note.
Negative
Amortization:
With
respect to a Pay Option ARM Loan, any portion of interest accrued at the
Mortgage Interest Rate in any month which exceeds the Monthly Payment on the
related Mortgage Loan for such month and which, pursuant to the terms of the
Mortgage Note, is added to the principal balance of the Mortgage
Loan.
Net
Escrow Payments:
Escrow
Payment balances remaining after advances by the Company for taxes and insurance
to the extent documented under a detailed statement provided to the Initial
Owner.
Nonrecoverable
Advance:
Any Advance or Monthly Advance previously made or proposed to be made in
respect of a Mortgage Loan by the Company which, in the good faith judgment
of
the Company, is not or would not ultimately be recoverable by the Company from
the related Mortgagor, related Liquidation Proceeds, Condemnation Proceeds,
Insurance Proceeds or otherwise with respect to such Mortgage Loan. The
determination by the Company that all or a portion of an Advance or a Monthly
Advance would be a Nonrecoverable Advance shall be evidenced by an Officer's
Certificate delivered to the Owner, setting forth such determination and the
procedures and considerations of the Company forming the basis of such
determination.
Notice
of Release:
A
notice of release, the form of which is attached as Exhibit G hereto, or an
electronic request in a form acceptable to the Custodian.
Officer’s
Certificate:
A
certificate signed by an authorized officer of the Company, and delivered to
the
Initial Owner as required by this Agreement.
Opinion
of Counsel:
A
written opinion of counsel, who may, unless otherwise provided herein, be
counsel for the Company; provided that any Opinion of Counsel relating to
(a) qualification of the Mortgage Loans in a REMIC or (b) compliance
with the REMIC Provisions, must be an opinion of counsel who (i) is in fact
independent of the Company, (ii) does not have any material direct or
indirect financial interest in the Company and is not an Affiliate and
(iii) is not connected with the Company as an officer, employee, director
or person performing similar functions.
Owner:
Any
Person from time to time having an Ownership Interest in the Mortgage Loans
in a
Mortgage Pool. Initially, the Initial Owner.
Ownership
Interest:
All
rights, title and interest in and to a Mortgage Pool.
7
Partial
Prepayment:
Any
payment of principal on a Mortgage Loan, other than a Full Prepayment, which
is
received in advance of its scheduled Due Date and is not accompanied by an
amount of interest representing scheduled interest due on any date or dates
in
any month or months subsequent to the month of prepayment.
Pay
Option ARM Loan:
Any
Mortgage Loan that lets Mortgagors choose one of various different payments
each
month which may include, but not be limited to, a Minimum Monthly Payment,
an
interest-only payment, full principal and interest amortized over thirty (30)
years, or full principal and interest amortized over fifteen (15)
years.
Periodic
Rate Cap:
With
respect to each Adjustable Rate Mortgage Loan, the provision of a Mortgage
Note
that provides for an absolute maximum amount by which the Mortgage Interest
Rate
therein may increase or decrease on an Adjustment Date above the Mortgage
Interest Rate previously in effect.
Permitted
Investment:
As
defined in Section 3.10.
Person:
Any
individual, corporation, partnership, joint venture, association, joint stock
company, trust, unincorporated organization or government or any agency or
political subdivision thereof.
Plan:
As
defined in Section 2.03.
Property
Charges:
Shall
have the meaning set forth in Section 3.27.
Prepayment
Interest Shortfall:
As to
any Remittance Date and any Mortgage Loan (other than a Mortgage Loan relating
to an REO Property) that was the subject of a Full Prepayment or a Partial
Prepayment during the prior calendar month, an amount equal to one month’s
interest at the Mortgage Interest Rate less the Servicing Fee Rate on the amount
of such Full Prepayment or Partial Prepayment.
Primary
Mortgage Insurance Policy:
Each
policy of primary mortgage guaranty insurance or any replacement policy
thereof.
Prime
Rate:
The
prime rate announced to be in effect from time to time, as published as the
average rate in The
Wall Street Journal.
Program
Guide:
The
underwriting guidelines of Residential Funding Company, LLC, as provided to
the
Initial Owner in connection with the sale and purchase of each Mortgage Pool
and
attached to the related Purchase Confirmation.
Purchase
Confirmation:
Those
certain purchase confirmations substantially in the form of Exhibit A hereto,
executed by the Company and the Initial Owner in connection with the purchase
and sale of each Mortgage Pool, which sets forth the terms relating thereto
including a description of the related Mortgage Loans (including the Mortgage
Loan Schedule), the aggregate Purchase Price for such Mortgage Loans, the
Closing Date and the Cut-off Date.
8
Purchase
Price:
As to
any Mortgage Loan, except as otherwise set forth in the related Purchase
Confirmation, an amount equal to the sum of (i) the product of (a) the Purchase
Price Percentage multiplied by (b) the Scheduled Principal Balance of such
Mortgage Loan and (ii) accrued interest from the Cut-off Date, inclusive,
to, but not including, the Closing Date, at the related Mortgage Interest
Rate.
Purchase
Price Percentage:
The
purchase price percentage set forth in the related Purchase
Confirmation.
Qualified
Depository:
A
depository the accounts of which are insured by the Federal Deposit Insurance
Corporation (or any successor thereto) through the Bank Insurance Fund or the
Savings Association Insurance Fund and the debt obligations of which are rated
AA or better by Standard & Poor’s, A Division of The McGraw Hill
Companies.
Reconstitution
Agreement:
Any
agreement or agreements entered into by the Initial Owner and/or certain third
parties, and the Company (if applicable), on the Reconstitution Date with
respect to any or all of the Mortgage Loans conveyed hereunder, in connection
with a Securitization Transaction as set forth in Section 9.01.
Reconstitution
Date:
Each
date on which any or all of the Mortgage Loans purchased pursuant to this
Agreement shall be reconstituted as part of a Securitization Transaction
pursuant to Section 9.01.
Regulation
AB:
Subpart
229.1100 - Asset Backed Securities (Regulation AB), 17 C.F.R.
§§229.1100-229.1123, as such may be amended from time to time, and subject to
such clarification and interpretation as have been provided by the Commission
in
the adopting release (Asset-Backed Securities, Securities Act Release No.
33-8518, 70 Fed. Reg. 1,506, 1,531 (Jan. 7, 2005)) or by the staff of the
Commission, or as may be provided by the Commission or its staff from time
to
time.
REMIC:
A “real
estate mortgage investment conduit” as defined in and subject to the REMIC
Provisions.
REMIC
Provisions:
Provisions of the federal income tax law which appear at Section 860A through
860G of Subchapter M of Chapter 1, Subtitle A of the Code, and applicable U.S.
Department of the Treasury regulations issued pursuant thereto, and related
provisions, and regulations, rulings or pronouncements promulgated thereunder,
as the foregoing may be in effect from time to time.
Remittance
Amount:
As of
any Remittance Date, (a) all amounts deposited in the Custodial Account as
of
the close of business on the last day of the related Due Period (net of charges
against or withdrawals from the Custodial Account pursuant to Section 3.07),
plus (b) all amounts, if any, which the Company is obligated to distribute
pursuant to Section 3.13, minus (c) any Full Prepayments and Partial Prepayments
received after the applicable Due Period which amounts shall be remitted on
the
following Remittance Date, together with any additional interest required to
be
deposited in the Custodial Account in connection with such Full Prepayments
and
Partial Prepayments in accordance with Section 3.06(i), and minus (d) any
amounts attributable to Monthly Payments collected but due on a Due Date or
Dates subsequent to the first day of the month of the Remittance Date, which
amounts shall be remitted on the Remittance Date next succeeding the Due Period
for such amounts.
9
Remittance
Date:
The
18th
day of
any month, or if such 18th
day is
not a Business Day, the first Business Day immediately following.
REO
Property:
A
Mortgaged Property acquired by the Owner or the Company on behalf of the Owner
through foreclosure or deed in lieu of foreclosure.
Report
Date:
With
respect to each Remittance Date, the 15th
day of
the month in which such Remittance Date occurs, or if such 15th
day is
not a Business Day, the first Business Day immediately preceding such
15th
day.
Repurchase
Price:
Unless
otherwise agreed to in the Closing Date Side Letter, with respect to any
Mortgage Loan, a price equal to (i) the outstanding principal balance of such
Mortgage Loan as of the date of repurchase plus (ii) interest on such
outstanding principal balance at the related Mortgage Interest Rate from the
date on which interest was last distributed to the Initial Owner (from payments
from the related Mortgagor) through the day prior to the date of
repurchase.
Scheduled
Principal Balance:
As to
each Mortgage Loan, (i) the principal balance of such Mortgage Loan at the
related Cut-off Date after giving effect to payments of principal due on or
before such date, whether or not received, minus (ii) all amounts previously
distributed to the Initial Owner with respect to the Mortgage Loan representing
payments or recoveries of principal or advances in lieu thereof,
plus
(iii) without duplication of amounts described in clause (i) above, the
cumulative amount of any Negative Amortization.
Securities
Act:
The
Securities Act of 1933, as amended.
Securitization
Transaction:
Any
transaction involving either (1) a sale or other transfer of some or all of
the
Mortgage Loans directly or indirectly to an issuing entity in connection with
an
issuance of publicly offered or privately placed, rated or unrated
mortgage-backed securities or (2) an issuance of publicly offered or privately
placed, rated or unrated securities, the payments on which are determined
primarily by reference to one or more portfolios of residential mortgage loans
consisting, in whole or in part, of some or all of the Mortgage
Loans.
Security
Protection Expenses:
As
defined in Section 3.17.
Servicing
Criteria:
The
“servicing criteria” set forth in Item 1122(d) of Regulation AB, as such may be
amended from time to time.
Servicing
Fee:
As to
each Mortgage Loan, the fee, payable monthly to the Company out of the interest
payments received on such Mortgage Loan equal to the product of (i) the
Servicing Fee Rate divided by 12 and (ii) the Scheduled Principal Balance of
such Mortgage Loan as of the first Business Day of each month.
10
Servicing
Fee Rate:
With
respect to each Mortgage Pool, as defined in the related Purchase Confirmation.
Standard
& Poor’s:
Standard & Poor’s Ratings Services, a division of The XxXxxx-Xxxx Companies,
Inc., and any successor or successors thereto.
Successor
Servicer:
Any
successor master servicer appointed pursuant to Section 10.01.
Trade
Confirmation:
A
letter agreement executed by the Company and the Initial Owner prior to the
relevant Closing Date confirming the general terms and conditions of a
prospective transaction contemplated therein and identifying certain of the
loan
characteristics of the Mortgage Loans constituting the Mortgage Pool to be
purchased hereunder.
Whole
Loan Transfer:
Any
sale or transfer of some or all of the Mortgage Loans, other than a
Securitization Transaction.
ARTICLE
II
CONVEYANCE
OF MORTGAGE LOANS
Section
2.01.
Conveyance of Mortgage Loans; Possession of Mortgage Files.
(a) On
each
Closing Date, the Company, simultaneously with the execution and delivery of
the
related Purchase Confirmation and the payment of the Purchase Price by the
Initial Owner by wire transfer of immediately available federal funds, shall
hereby sell, transfer and assign, without recourse, to the Initial Owner the
Ownership Interest in and to the Mortgage Loans identified in the related
Purchase Confirmation, including, the Scheduled Principal Balance of each
Mortgage Loan as of the applicable Cut-off Date and all payments in respect
thereof due after the applicable Cut-off Date, together with the related
Mortgage Files and all rights and obligations arising under the documents
contained therein on a servicing retained basis.
The
Initial Owner shall be entitled to (i) all principal due after the related
Cut-off Date, (ii) all other recoveries of late charges, assumption fees or
other charges collected after the related Cut-off Date, and (iii) all payments
of interest on the Mortgage Loans at the Mortgage Interest Rate due after the
related Cut-off Date. The principal balance of each Mortgage Loan as of the
related Cut-off Date is determined after application of payments of principal
due on or before the related Cut-off Date. All payments of principal and
interest (minus the Servicing Fee) due on the first day of the month after
the
related Cut-off Date shall belong to the Initial Owner.
(b) At
least
ten (10) Business Days prior to the related Closing Date or such other date
as
mutually agreed upon by the Initial Owner and the Company in the Trade
Confirmation, the Company shall deliver to, and deposit with, the Custodian,
as
the duly appointed agent of the Initial Owner for such purpose, the following
original documents or instruments (or copies thereof as permitted by this
Section) with respect to each Mortgage Loan so assigned:
11
(i) The
original Mortgage Note, endorsed in blank by the Company without recourse,
and
showing an unbroken chain of endorsements from the originator thereof to the
Company or an original lost note affidavit (in a form reasonably acceptable
to
the Initial Owner) from the Company stating that the original Mortgage Note
was
lost, misplaced or destroyed, together with a copy of the related Mortgage
Note;
(ii) The
original Mortgage, noting the presence of the MIN of the Mortgage Loan and
language indicating that the Mortgage Loan is a MOM Loan if the Mortgage Loan
is
a MOM Loan, with evidence of recording indicated thereon or a copy of the
Mortgage with evidence of recording indicated thereon;
(iii) Unless
the Mortgage Loan is registered on the MERS® System, an unrecorded original
Assignment of the Mortgage from the Company in blank, which shall be in
recordable form and acceptable for recording under the laws of the jurisdiction
where the Mortgaged Property is located;
(iv) The
original recorded assignment or assignments of the Mortgage showing an unbroken
chain of title from the originator thereof to the Company (or to MERS, if the
Mortgage Loan is registered on the MERS® System and noting the presence of a
MIN) with evidence of recordation noted thereon or attached thereto, or a copy
of such assignment or assignments of the Mortgage with evidence of recording
indicated thereon;
(v) The
original or copy of each modification, consolidation, extension or assumption
agreement, if any, relating to such Mortgage Loan with evidence of recordation
noted thereon or attached thereto;
(vi) The
original of any guarantee executed in connection with the Mortgage Note (if
any);
(vii) The
original Primary Mortgage Insurance certificate, if any;
In
addition, the Company shall deliver to the Initial Owner as to any Mortgage
Loan, no later than 180 days following receipt by the Company from the Initial
Owner of a request in writing specifying the Mortgage Loan and the particular
item requested, to the extent the Company can obtain such document: (i) a copy
of the original power of attorney certified by the public recording office,
and
(ii) the original title policy and all riders thereto or, in the event such
original title policy has not been received from the insurer, any one of an
original title binder, an original preliminary title report or an original
title
commitment, or a copy thereof certified by the title company, with the original
policy of title insurance to be delivered promptly following receipt thereof
from the insurer. Any documents delivered to the Initial Owner pursuant to
this
paragraph shall be deemed to be a part of the Mortgage File for the related
Mortgage Loan upon receipt by the Initial Owner.
(c) Notwithstanding
the provisions of Section 2.01(b), in the event that in connection with any
Mortgage Loan the Company cannot deliver the original of the Mortgage, any
assignment, modification or assumption agreement (or a copy thereof as permitted
by Section 2.01(b)) with evidence of recording thereon concurrently with the
execution and delivery of this Agreement because of (i) a delay caused by a
public recording office where such Mortgage, assignment, modification or
assumption agreement as the case may be, has been delivered for recordation,
or
(ii) a delay in the receipt of certain information necessary to prepare the
related assignments, the Company shall deliver to the Custodian a copy of such
Mortgage, assignment, modification or assumption agreement. The Company shall
promptly deliver to the Custodian such Mortgage, assignment, modification or
assumption agreement with evidence of recording indicated thereon upon receipt
thereof in accordance with Section 2.01(b).
12
(d) In
connection with the assignment of any Mortgage Loan registered on the MERS®
System, the Company further agrees that it will, at the Initial Owner’s request
and sole cost and expense, cause the MERS® System to indicate that such Mortgage
Loans have been assigned by the Company to the Owner by including (or, if
applicable, deleting, in the case of Mortgage Loans which are repurchased in
accordance with this Agreement) in such computer files the code in the field
“Pool Field” which identifies the series in which such loans were sold. The
Company further agrees that it will not alter the code referenced in this
paragraph with respect to any Mortgage Loan during the term of this Agreement
unless and until such Mortgage Loan is repurchased in accordance with the terms
of this Agreement.
(e) The
ownership of each Mortgage Note, Mortgage, the other contents of the Mortgage
File and the other documents listed in this Section 2.01 is vested in the
Initial Owner. Any documents required to be delivered to the Custodian by the
Company pursuant to this Section 2.01 which, prior to such delivery, are in
the
possession or control of the Company or a subservicer and which are not
delivered to the Custodian, or are requested from the Custodian in connection
with the servicing of the Mortgage Loans, are and shall be held by the Company,
either directly or through the related subservicer, in trust for the benefit
of
the Initial Owner. The ownership of all records and documents with respect
to
the related Mortgage Loan prepared by or which come into the possession or
control of the Company shall immediately vest in the Initial Owner and shall
be
retained and maintained, in trust, by the Company at the will of the Initial
Owner in such custodial capacity only. The documents listed in this Section
2.01
retained by the Company for purposes of servicing pursuant to this Agreement
shall be electronically segregated from the other books and records of the
Company and shall be appropriately marked to clearly reflect the sale of the
related Mortgage Loan to the Initial Owner. The Company shall release from
its
custody any of such documents retained by it only as required in connection
with
its servicing duties hereunder or otherwise in accordance with this Agreement,
except when such release is required in connection with a repurchase of any
such
Mortgage Loan pursuant to this Agreement.
Record
title to each Mortgage and the related Mortgage Note as of the applicable
Closing Date shall be in the name of the Initial Owner or as the Initial Owner
shall designate. All rights arising out of the Mortgage Loans including, but
not
limited to, all funds received by the Company after the related Cut-off Date
on
or in connection with a Mortgage Loan shall be vested in the Initial Owner;
provided,
however,
that
all funds received on or in connection with a Mortgage Loan shall be received
and held by the Company in trust for the benefit of the Initial Owner as the
owner of the Mortgage Loans pursuant to the terms of this
Agreement.
13
(f) The
sale
of each Mortgage Loan shall be reflected on the Company’s balance sheet and
other financial statements as a sale of assets by the Company. The Company
shall
be responsible for maintaining, and shall maintain records for each Mortgage
Loan which shall be clearly marked to reflect the ownership of each Mortgage
Loan by the Owner and shall note any transfer of a Mortgage Loan.
(g) The
Company shall forward to the Custodian original documents evidencing an
assumption, modification, consolidation or extension of any Mortgage Loan
entered into in accordance with the servicing of the Mortgage Loans pursuant
to
this Agreement within one week of their execution, provided,
however,
that
the Company shall provide the Custodian with a certified true copy of any such
document submitted for recordation within one week of its execution, and shall
provide the original of any document submitted for recordation or a copy of
such
document certified by the appropriate public recording office to be a true
and
complete copy of the original promptly upon its receipt thereof.
Section
2.02.
Acceptance by the Initial Owner.
The
Initial Owner acknowledges receipt by the Custodian as the duly appointed agent
of the Initial Owner of the documents referred to in Section 2.01 above and
declares that the Custodian as its agent, holds and will hold such documents
and
the other documents constituting a part of the Mortgage Files delivered to
the
Custodian as its agent, in trust for the use and benefit of the Initial
Owner.
On
or
prior to the related Closing Date, the Custodian shall have certified its
receipt of all documents contained in each applicable Mortgage File required
to
be delivered pursuant to the Custodial Agreement, as evidenced by the initial
certification of the Custodian delivered to the Initial Owner and the Company.
The Initial Owner shall be responsible for maintaining the Custodial Agreement
and shall pay all fees and expenses of the Custodian. On the related Closing
Date, the Company shall release any interest that it has in all such documents
upon its receipt of the Purchase Price for the Mortgage Loans. If any of such
documents required to be in the Mortgage File is missing or defective, and
such
omission or defect materially and adversely affects the interests of the Initial
Owner (each, a “Material
Defect”),
the
Company shall cure such Material Defect within sixty (60) days of receipt by
the
Company of notice from the Initial Owner or the Custodian of such defect. If
the
Company does not so cure such Material Defect within such sixty (60) days and
under Accepted Servicing Practices, such Material Defect would reasonably be
expected to result in a loss, the Company shall repurchase the related Mortgage
Loan at the Repurchase Price within five (5) days thereafter. Upon receipt
by
the Owner of the Repurchase Price, the Owner shall, or shall cause the Custodian
to, release to the Company the related Mortgage File and the Owner shall execute
and deliver such instruments of transfer or assignment, in each case without
recourse, as shall be necessary to vest in the Company or its designee, as
the
case may be, any Mortgage Loan released pursuant hereto. The obligations of
the
Company to (i) cure any Material Defect with respect to any Mortgage Loan or
purchase any Mortgage Loan as to which a Material Defect has not been cured
and,
under Accepted Servicing Practices, would reasonably be expected to result
in a
loss, and (ii) to comply with the indemnification provisions of Section 5.01,
shall constitute the sole remedies respecting such Material Defect available
to
the Owner.
Section
2.03.
Assignment of Mortgage Loans.
14
(a) On
the
related Closing Date, the Initial Owner shall pay to the Company the Purchase
Price for each Mortgage Loan listed on the Mortgage Loan Schedule.
(b) The
Initial Owner shall have the right to assign its interest under this Agreement
with respect to the Mortgage Loans and designate any person to exercise any
rights of the Initial Owner hereunder with respect to the Mortgage Loans, and
the assignee or designee shall accede to the rights and obligations hereunder
of
the Initial Owner with respect to the Mortgage Loans; provided,
however,
that
(i) the Mortgage Loans shall at all times be subject to the terms of this
Agreement; and (ii) there shall be no more than five Owners under this Agreement
with respect to a Mortgage Pool. Each assignee or designee may assign its
interest in the Mortgage Loans owned by it in whole, and not in part, to no
more
than one Person. No sale or transfer of the Mortgage Loans or assignment of
this
Agreement shall be binding upon the Company for any purpose under this Agreement
unless the Owner proposing to make such sale, transfer or assignment and its
prospective assignee have executed and delivered to the Company an assignment
and assumption agreement in form and substance reasonably satisfactory to the
Company. Upon such execution and delivery, the previous Owner shall be released
from its obligations hereunder with respect to the related Mortgage Loans,
except with respect to its obligations pursuant to Section 5.01.
No
sale
of the such Mortgage Loan shall be made to any employee benefit plan or other
plan that is subject to ERISA or Section 4975 of the Code (each, a “Plan”) or to
any person or entity that is investing on behalf of or with “plan assets” of any
Plan or to any insurance company, other than an insurance company investing
with
funds held in its general account (if such funds do not include “plan assets” of
any Plan).
The
sale
of the Mortgage Loans has not been registered or qualified under the Securities
Act or any state securities law. No sale, transfer, pledge or other disposition
of the Mortgage Loans or any interest therein shall be made unless such
disposition is made pursuant to an effective registration statement under the
Securities Act and effective registration or qualification under applicable
state securities laws, or is made in a transaction which does not require such
registration or qualification. If an Initial Owner proposes to make a
disposition (by sale, hypothecation, pledge or otherwise) without registration
or qualification, the Company shall require, in order to assure compliance
with
such laws, that the Initial Owner desiring to effect the disposition, and the
Initial Owner’s prospective transferee, certify to the Company in writing the
facts surrounding the disposition. In the event that such certification of
facts
does not on its face establish that registration or qualification is not
required, the Company may require an Opinion of Counsel satisfactory to it
that
the transfer may be made without such registration or qualification. Any such
Opinion of Counsel shall not be an expense of the Company. The Company is not
obligated to register or qualify the Mortgage Loans under the Securities Act
or
any other securities law or to take any action not otherwise required under
this
Agreement to permit the transfer of the Mortgage Loans without registration
or
qualification.
Upon
compliance with the foregoing conditions and receipt of an assignment and
assumption agreement executed by the Initial Owner and its prospective assignee
and acknowledged by the Company, the Company shall make the appropriate
notations in its books to reflect the sale of the affected Mortgage Loans to
such assignee, such assignee shall accede to the rights and the obligations
of
the Initial Owner hereunder with respect to such Mortgage Loans, and the Initial
Owner shall be released from its obligations hereunder with respect to such
Mortgage Loans that have been sold in accordance with this Agreement. For the
purposes of this Agreement, the Company shall be under no obligation to deal
with any Person with respect to this Agreement or the Mortgage Loans unless
the
books and records of the Company show such Person as the Initial Owner of such
Mortgage Loans. The Company shall not be responsible for expenses incurred
by
the Initial Owner or any transferee in connection with any sale or transfer
pursuant to this Section 2.03.
15
Section
2.04.
Representations and Warranties of the Company.
(a) The
Company, as a condition to the consummation of the transactions contemplated
hereby, hereby represents and warrants to the Initial Owner as of each Closing
Date the following:
(i) The
Company is a limited liability company duly organized, validly existing and
in
good standing under the laws governing its creation and existence and is or
will
be in compliance with the laws of each state in which any Mortgaged Property
is
located to the extent necessary to ensure the enforceability of each Mortgage
Loan in accordance with the terms of this Agreement and the related Purchase
Confirmation. The Company has the full legal power and authority to execute
and
deliver this Agreement and to perform in accordance herewith. The execution,
delivery and performance of this Agreement (including all instruments of
transfer to be delivered pursuant to this Agreement) by the Company and the
consummation of the transactions contemplated hereby have been duly and validly
authorized;
(ii) The
execution and delivery of this Agreement and the related Purchase Confirmation
by the Company and its performance and compliance with the terms of this
Agreement will not (A) violate the Company’s certificate of formation or limited
liability company agreement or (B) constitute a material default (or an event
which, with notice or lapse of time, or both, would constitute a material
default) under, result in an acceleration under, or result in the material
breach of, any material contract, agreement or other instrument to which the
Company is a party or which may be applicable to the Company or any of its
assets, or (C) result in a violation of, any law, rule, regulation, order,
judgment or decree to which the Company or its property is subject;
(iii) This
Agreement and the related Purchase Confirmation, assuming due authorization,
execution and delivery by the Initial Owner, constitutes a valid, legal and
binding obligation of the Company, enforceable against it in accordance with
the
terms hereof subject to applicable bankruptcy, insolvency, reorganization,
moratorium and other laws affecting the enforcement of creditors’ rights
generally and to general principles of equity, regardless of whether such
enforcement is considered in a proceeding in equity or at law;
(iv) The
Company is not in default with respect to any order or decree of any court
or
any order, regulation or demand of any federal, state, municipal or governmental
agency, which default might have consequences that would materially and
adversely affect the condition (financial or other) or operations of the Company
or its properties or might have consequences that would materially adversely
affect its performance hereunder;
16
(v) No
litigation is pending or, to the best of the Company’s knowledge, threatened
against the Company which would prohibit its entering into this Agreement or
the
related Purchase Confirmation or performing its obligations under this Agreement
or the related Purchase Confirmation or result in any material adverse change
in
the business, operations, financial condition, properties or assets of the
Company, or in any material impairment of the right or ability of the Company
to
carry on its business substantially as now conducted;
(vi) No
information, certificate of an officer, statement furnished in writing or report
delivered to the Initial Owner by the Company in connection with this Agreement
or any related Purchase Confirmation or in connection with the transactions
contemplated thereby, will, to the knowledge of the Company, contain any untrue
statement of a material fact or omit a material fact necessary to make the
information, certificate, statement or report not misleading. Notwithstanding
the foregoing, the Initial Owner acknowledges that the only information required
to be delivered with respect to financial information of the Company are the
balance sheets referred to in clause (xii) below;
(vii) The
consummation of the transactions contemplated by this Agreement are in the
ordinary course of business of the Company, and the transfer, assignment and
conveyance of the Mortgage Notes and the Mortgages by the Company pursuant
to
this Agreement are not subject to the bulk transfer or any similar statutory
provisions in effect in any applicable jurisdiction;
(viii) The
Company believes that it can perform the covenants contained in this Agreement
in a manner that will not have a material adverse affect on the Initial Owner.
The Company is solvent and will not be rendered insolvent by the consummation
of
the transactions contemplated hereby. The sale of the Mortgage Loans is not
undertaken to hinder, delay or defraud any of the Company’s creditors. The
Company is an approved seller/servicer of conventional residential mortgage
loans for Xxxxxx Mae or Xxxxxxx Mac. The Company is in good standing to sell
mortgage loans to and service mortgage loans for Xxxxxx Mae or Xxxxxxx Mac,
and
no event has occurred, including but not limited to a change in insurance
coverage, which would make the Company unable to comply with Xxxxxx Mae or
Xxxxxxx Mac eligibility requirements or which would require notification to
either Xxxxxx Mae or Xxxxxxx Mac;
(ix) The
execution, delivery and performance of the Company’s obligations under this
Agreement and the consummation of the transactions contemplated hereby, do
not
require any consent, approval, authorization or order of, filing with or notice
to any State of Minnesota agency or other governmental body, except such as
may
be required under the securities laws of any state or such as have been
obtained, effected or given prior to the related Closing Date;
17
(x) The
disposition of the Mortgage Loans pursuant to this Agreement will be treated
by
the Company as a sale for accounting and tax purposes;
(xi) The
Company has not dealt with any broker, investment banker, agent or other person
that may be entitled to any commission or compensation in connection with the
sale of the Mortgage Loans that will be borne by the Initial Owner;
(xii) The
Company, on or prior to the initial Closing Date, mailed to the Initial Owner
balance sheets of the Company as to its last two complete fiscal years. Such
balance sheets fairly present the pertinent assets and liabilities at the end
of
each such fiscal year of the Company and have been prepared in accordance with
generally accepted accounting principles consistently applied throughout the
periods involved, except as set forth in the notes thereto;
(xiii) The
Company has complied with all anti-money laundering laws and regulations to
the
extent that they are applicable to the Company, including without limitation
the
USA Patriot Act of 2003, and the laws and regulations administered by the U.S.
Department of Treasury’s Office of Foreign Assets Control (“OFAC”),
which
prohibit dealings with certain countries, territories, entities and individuals
named in OFAC’s Sanction Programs and on the Specially Designated Nationals and
Blocked Persons List (collectively, the “Anti-Money
Laundering Laws”).
To
the extent required of the Company by the Anti-Money Laundering Laws, the
Company has established an anti-money laundering compliance program, has
conducted due diligence in connection with the origination of each Mortgage
Loan
for the purposes of Anti-Money Laundering Laws, including with respect to the
legitimacy of the applicable Mortgagor and the origin of the assets used by
such
Mortgagor to purchase the related property, and has maintained, and will
maintain, sufficient information to identify the applicable Mortgagor for
purposes of the Anti-Money Laundering Laws;
(xiv) The
Company is a member of MERS, in good standing, and current in payment of all
fees and assessments imposed by MERS, and has complied and will comply with
all
rules and procedures of MERS in connection with the servicing of the related
Mortgage Loans for as long as such Mortgage Loans are registered with MERS
and
its assignment to the Initial Owner as assignee of the Mortgage relating to
each
Mortgage Loan that is registered with MERS, including, among other things,
that
the Company shall have confirmed the transfer to the Initial Owner, as assignee
of the Company, of the Mortgage on the MERS® System.
(b) The
Company hereby represents and warrants to the Initial Owner that as of the
related Closing Date or such other date specifically provided for herein with
respect to each Mortgage Loan the following:
18
(i) The
information set forth in the related Mortgage Loan Schedule with respect to
each
Mortgage Loan or the Mortgage Loans, as the case may be, is true and correct
in
all material respects;
(ii) Immediately
prior to the assignment of the Mortgage Loans to the Initial Owner, the Company
had good and marketable title to, with full right to transfer and sell, and
was
the sole owner of, each Mortgage Loan free and clear of any pledge, assignment,
lien, security interest or other encumbrance and no action has been taken or
failed to be taken by the Company that would affect the enforceability of any
Mortgage Loan or the interests of any Owner therein. The Company has the full
right and authority subject to no interest or participation of, or agreement
with, any other party, to sell and assign each Mortgage Loan pursuant to this
Agreement;
(iii) (A)
No
Mortgage Loan was more than 30 days delinquent in payment of principal and
interest as of the Cut-off Date and no Mortgage Loan has been more than 30
days
delinquent more than once in the 12-month period prior to the Cut-off Date
and
(B) the Company has not advanced funds, or induced, solicited or knowingly
received any advance of funds by any party other than the Mortgagor, directly
or
indirectly, for the payment of any amount required under the Mortgage Loan.
As
of the Closing Date the Company is not aware of any circumstances affecting
a
Mortgagor’s ability to make the required payments under the related Mortgage
Loan;
(iv) Subject
to clause (iii) above as respects delinquencies, there is no default, breach,
violation or event of acceleration existing under any Mortgage Note or Mortgage
and no event which, with notice and expiration of any grace or cure period,
would constitute a default, breach, violation or event of acceleration, and
no
such default, breach, violation or event of acceleration has been waived by
any
party with the right to do so or by any other entity involved in originating
or
servicing a Mortgage Loan, including without limitation the Company and its
predecessors;
(v) There
is
no delinquent tax or assessment lien against any Mortgaged Property and any
insurance premium, water, sewer and municipal charge, leasehold payment or
ground rent against any Mortgaged Property which has previously become due
and
owing has been paid, or an escrow of funds has been established in an amount
sufficient to pay for every such item which remains unpaid and which has been
assessed but is not yet due and payable;
(vi) No
Mortgagor has any right of rescission, offset, defense or counterclaim as to
the
related Mortgage Note or Mortgage, except as may be provided under the
Servicemembers’ Civil Relief Act, as amended, nor will the operation of any of
the terms of the Mortgage Note or the Mortgage, or the exercise of any right
thereunder, render either the Mortgage Note or the Mortgage unenforceable,
in
whole or in part, or subject to any right of rescission, set-off, counterclaim
or defense, including without limitation the defense of usury. No Mortgagor
was
a debtor in any state or federal bankruptcy or insolvency proceeding at any
time
following origination of the related Mortgage Loan;
19
(vii) The
Mortgage has not been satisfied, canceled, subordinated or rescinded, in whole
or in part, and the Mortgaged Property has not been released from the lien
of
the Mortgage, in whole or in part, nor has any instrument been executed that
would effect any such release, cancellation, subordination or
rescission;
(viii) There
are
no mechanics’ liens or claims for work, labor or material affecting any
Mortgaged Property which are or may be a lien prior to, or equal with, the
lien
of the related Mortgage, except such liens that are insured or indemnified
against by a title insurance policy described under clause (xiii)
below;
(ix) Each
Mortgaged Property is free of damage or other casualty and in good repair and
no
notice of total or partial condemnation has been given with respect thereto
and
the Company knows of nothing involving any Mortgaged Property that could
reasonably be expected to materially adversely affect the value or marketability
of any Mortgaged Property or the use for which the premises were
intended;
(x) Each
Mortgage Loan as of the time of its origination and as of the date of execution
hereof complied in all material respects with all applicable local, state and
federal laws and regulations, including, without limitation, any and all laws,
rules and regulations relating to consumer protection and mortgage loan
origination and funding, such as usury, truth-in-lending, real estate settlement
procedures, predatory and abusive lending, equal credit opportunity and
disclosure laws, and the consummation of the transactions contemplated hereby
will not violate any such laws or regulations;
(xi) Each
Mortgage contains customary and enforceable provisions which render the rights
and remedies of the holder adequate to realize the benefits of the security
against the Mortgaged Property, including (i) in the case of a Mortgage that
is
a deed of trust, by trustee’s sale, (ii) by summary foreclosure, if available
under applicable law, and (iii) otherwise by foreclosure, and there is no
homestead or other exemption available to the Mortgagor that would interfere
with such right to sell at a trustee’s sale or right to foreclosure, subject in
each case to applicable federal and state laws and judicial precedents with
respect to bankruptcy and right of redemption;
(xii) With
respect to each Mortgage that is a deed of trust, a trustee duly qualified
under
applicable law to serve as such is properly named, designated and serving,
and
except in connection with a trustee’s sale after default by a Mortgagor, no fees
or expenses are or will become payable to the trustee under any Mortgage that
is
a deed of trust;
20
(xiii) Each
Mortgage Loan is covered by an ALTA lender’s title insurance policy or other
generally acceptable form of policy or insurance acceptable to Xxxxxx Xxx or
Xxxxxxx Mac (including adjustable rate endorsements), issued by a title insurer
acceptable to Xxxxxx Mae or Xxxxxxx Mac and qualified to do business in the
jurisdiction where the Mortgaged Property is located, insuring (subject to
the
exceptions contained in (viii) and (xxvii) of this Section 2.04(b)) the Company,
its successors and assigns, as to the first priority lien of the Mortgage,
in
the original principal amount of the Mortgage Loan (or to the extent that a
Mortgage Note provides for negative amortization, the maximum amount of negative
amortization in accordance with the Mortgage) and against any loss by reason
of
the invalidity or unenforceability of the lien resulting from the provisions
of
the Mortgage providing for adjustment in the Mortgage Interest Rate and Monthly
Payment, unless the Mortgaged Property is located in the State of Iowa and
an
attorney’s certificate has been provided in accordance with Xxxxxx Mae servicing
practices and procedures. Where required by state law or regulation, the
Mortgagor has been given the opportunity to choose the carrier of the required
mortgage title insurance. The Company, its successors and assigns, is the sole
insured of such lender’s title insurance policy and such lender’s title
insurance policy is in full force and effect and will be in full force and
effect upon the consummation of the transactions contemplated by this Agreement.
Additionally, such lender’s title insurance policy affirmatively insures ingress
and egress to and from the Mortgaged Property and against encroachments by
or
upon the Mortgaged Property or any interest therein. No claims have been made
under such lender’s title insurance policy, and no prior holder or servicer of
the related Mortgage, including the Company, has done, by act or omission,
anything which would impair the coverage of such lender’s title insurance
policy;
(xiv) [Reserved];
(xv) The
improvements upon the Mortgaged Properties are insured against loss by fire
and
other hazards as are customary in the area where the Mortgaged Property is
located pursuant to insurance policies conforming to Accepted Servicing
Practices and issued by an insurer acceptable under the Program Guide, including
a life-of-loan flood insurance if the Mortgaged Property is in an area, that,
at
the time of origination of the related Mortgage Loan, was identified on a flood
hazard boundary map or flood insurance rate map issued by the Federal Emergency
Management Agency as having special flood hazards and such flood insurance
is
available. All individual insurance policies contain a standard mortgagee clause
naming the Company (or its predecessor) and its successors and assigns as
mortgagee, and all premiums thereon have been paid. The Mortgage requires the
Mortgagor to maintain such casualty insurance at the Mortgagor’s expense, and on
the Mortgagor’s failure to do so, authorizes the holder of the Mortgage to
obtain and maintain such insurance at the Mortgagor’s expense and to seek
reimbursement therefore from the Mortgagor. The hazard insurance policy has
been
validly issued and is in full force and effect. The Company has taken no action
that would impair the coverage of any such insurance policy, the benefits of
any
endorsement, or the validity, binding effect and enforceability of the
foregoing;
21
(xvi) The
provisions of each Mortgage Loan (including the terms of the Mortgage Note
and
Mortgage) have not been impaired, waived, altered or modified in any respect
unless approved in writing by the Company, which instrument containing such
approval has been recorded, if necessary to protect the interests of the Initial
Owner. The title insurer and issuer of the Primary Mortgage Insurance Policy,
if
any, has approved the substance of any such waiver, alteration or modification
to the extent required by the respective policy. No instrument of release or
waiver has been executed in connection with the Mortgage Loans, and no Mortgagor
has been released, in whole or in part, from its obligations in connection
with
a Mortgage Loan;
(xvii) With
respect to each Mortgage Loan, either (i) the Mortgage Loan is assumable
pursuant to the terms of the Mortgage Note, or (ii) the Mortgage Loan contains
a
customary provision for the acceleration of the payment of the unpaid principal
balance of the Mortgage Loan in the event the related Mortgaged Property is
sold
or transferred without the prior written consent of the mortgagee
thereunder;
(xviii) Principal
payments on the Mortgage Loan commenced no more than sixty (60) days after
the
proceeds of the Mortgage Loan were disbursed. The Mortgage Interest Rate is
(a)
with respect to fixed rate Mortgage Loans, the fixed interest rate set forth
in
the Mortgage Note and (b) with respect to Adjustable Rate Mortgage Loans,
adjusted and rounded on each Adjustment Date as required under the Mortgage
Note, subject to the Initial Rate Cap, the Periodic Rate Cap and the Lifetime
Rate Cap as set forth in the respective Mortgage Note. Except with respect
to
any Pay Option ARM Loans, interest only Mortgage Loans and Balloon Mortgage
Loans as indicated on the related Mortgage Loan Schedule, the Mortgage Note
for
each Mortgage Loan is payable in Monthly Payments which, (A) in the case of
a
fixed rate Mortgage Loan, are sufficient to fully amortize the original
principal balance over the original term thereof and to pay interest at the
related Mortgage Interest Rate, and (B) in the case of an Adjustable Rate
Mortgage Loan, are changed on each Adjustment Date, and, subject to the Initial
Rate Cap, the Periodic Rate Cap and the Lifetime Rate Cap as set forth in the
respective Mortgage Note and Mortgage Loan Schedule, are sufficient to fully
amortize the original principal balance over the original term thereof and
to
pay interest at the related Mortgage Interest Rate assuming no further interest
rate changes. No Adjustable Rate Mortgage Loan contains terms whereby the
Mortgagor is permitted to convert the Mortgage Loan to a fixed rate Mortgage
Loan. No Adjustable Rate Mortgage Loan permits negative amortization, except
as
otherwise indicated on the related Mortgage Loan Schedule with respect to Pay
Option ARM Loans;
(xix) The
proceeds of the Mortgage Loan have been fully disbursed, the Mortgage Loan
has
been closed, and there is no requirement for future advances thereunder and
any
and all requirements as to completion of any on-site or off-site improvements
and as to disbursements of any escrow funds therefor (including any escrow
funds
held to make Monthly Payments pending completion of such improvements) have
been
complied with. All costs, fees and expenses incurred in making, closing or
recording the Mortgage Loans were paid, and the Mortgagor is not entitled to
any
refund of any amounts paid or due under the Mortgage Note or
Mortgage;
22
(xx) With
respect to any Mortgage Loan, the Mortgage File contains an appraisal made
by an
appraiser who satisfies the requirements of Xxxxxx Xxx or Xxxxxxx Mac and Title
XI of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989
and the regulations promulgated thereunder, all as in effect on the date the
Mortgage Loan was originated;
(xxi) All
parties which have had any interest in the Mortgage Loan, whether as mortgagee,
assignee, pledgee, broker, correspondent or otherwise, are (or, during the
period in which they held and disposed of such interest, were) (1) in compliance
with any and all applicable licensing requirements of the laws of the state
wherein the Mortgaged Property is located, and (2) either (i) organized under
the laws of such state, or (ii) qualified to do business in such state, or
(iii)
federal savings and loan associations, savings banks or national banks having
principal offices in such state, or (iv) not doing business in such state.
At
the time the Mortgage Loan was originated, the originator was a mortgagee
approved by the Secretary of Housing and Urban Development pursuant to Sections
203 and 211 of the National Housing Act or a savings and loan association,
a
savings bank, a commercial bank, credit union, insurance company or similar
banking institution that is supervised and examined by a federal or state
authority;
(xxii) All
improvements which were considered in determining the Appraised Value of the
Mortgaged Properties lie wholly within the boundaries and the building
restriction lines of the Mortgaged Properties, no improvements on adjoining
properties to which value was assigned encroach upon the Mortgaged Properties
and the value of the Mortgaged Properties are not diminished by any improvements
on adjoining properties which encroach the Mortgaged Properties. The policy
of
title insurance, if any, affirmatively insures against loss or damage by reason
of any violation, variation, encroachment or adverse circumstance that either
is
disclosed or would have been disclosed by an accurate survey;
(xxiii) Each
Mortgage Note and Mortgage constitutes a legal, valid and binding obligation
of
the Mortgagor enforceable in accordance with its terms except as limited by
bankruptcy, insolvency or other similar laws affecting generally the enforcement
of creditor’s rights. All parties to the Mortgage Note and the Mortgage had the
legal capacity to enter into the Mortgage Loan and to execute and deliver the
Mortgage Note and the Mortgage, and the Mortgage Note and the Mortgage have
been
duly and properly executed by such parties;
23
(xxiv) No
portion of the Mortgaged Property is used for commercial purposes, and since
the
date of origination, no portion of the Mortgaged Property has been used for
commercial purposes;
(xxv) The
Mortgaged Property is lawfully occupied under applicable law and, at the time
of
origination of such Mortgage Loan, all inspections, licenses and certificates
required to be made or issued with respect to all occupied portions of the
Mortgaged Property (and, with respect to the use and occupancy of the same,
including but not limited to certificates of occupancy) were made or obtained
from the appropriate authorities. At the time that each Mortgage Loan was
originated, the Mortgagor represented that the Mortgagor would occupy the
Mortgaged Property as the Mortgagor’s primary residence or as a second or
vacation home;
(xxvi) [Reserved];
(xxvii) With
respect to each Mortgage Loan, the Mortgage creates a valid first lien on the
related Mortgaged Property subject only to (1) the lien of current real property
taxes and assessments, (2) covenants, conditions and restrictions, rights of
way, easements and other matters of public record as of the date of recording
of
the Mortgage acceptable to mortgage lending institutions generally and
specifically referred to in the lender’s title insurance policy delivered to the
originator of the Mortgage Loan and (i) referred to or to otherwise considered
in the appraisal made for the originator of the Mortgage Loan or (ii) which
do
not adversely affect the appraised value of the Mortgaged Property set forth
in
such appraisal, and (3) other matters to which like properties are commonly
subject which do not materially interfere with the benefits of the security
intended to be provided by the Mortgage or the value, use, enjoyment and
marketability of the Mortgaged Property;
(xxviii) With
respect to each Mortgage Loan, the Mortgaged Property consists of a parcel
of
real property with a single family residence erected thereon, or a two-to-four
family dwelling, or an individual condominium unit, or an individual unit in
a
planned unit development or a de minimis planned unit development; provided,
however,
that
any condominium unit or planned unit development shall conform with the
applicable Program Guide regarding such dwellings. No Mortgaged Property
consists of a mobile home, manufactured home, rural home in excess of ten acres,
log home or geodesic home;
(xxix) No
action, misrepresentation, fraud or similar occurrence in respect of a Mortgage
Loan has taken place on the part of any person, including without limitation,
the Mortgagor, any appraiser, any builder or developer or any party involved
in
the origination of the Mortgage Loan or in the application for any insurance
in
relation to such Mortgage Loan that might result in a denial, contesting,
failure or impairment of full and timely coverage under any insurance policies
required to be obtained with respect to the Mortgage Loans;
24
(xxx) The
Mortgage Note is not and has not been secured by any collateral except the
lien
of the corresponding Mortgage;
(xxxi) No
Mortgage Loan is subject to the Home Ownership and Equity Protection Act of
1994
or any comparable state law. No Mortgage Loan is classified as a “high cost,”
“threshold,” “covered”, “abusive” or “predatory” loan or a similar loan under
any applicable state, federal or local law (or similarly classified loan using
different terminology under a law imposing heightened regulatory scrutiny or
additional legal liability for residential mortgage loans having high interest
rates, points and/or fees). Each Mortgage Loan is in compliance with the
anti-predatory lending eligibility for purchase requirements of Xxxxxx Mae’s
Selling Guide. No Mortgage Loan is classified as “High Cost” or “Covered” as set
forth in the current Standard & Poor’s LEVELS® Glossary;
(xxxii) The
Mortgage Note and Mortgage are on forms acceptable to Xxxxxx Xxx or Xxxxxxx
Mac;
(xxxiii) Except
as
set forth in the related Purchase Confirmation, each Mortgage Loan was
underwritten and approved in general accordance with the Program Guide in effect
at the time the Mortgage Loan was originated;
(xxxiv) The
collection and servicing of the Mortgage Loans have been in accordance with
Accepted Servicing Practices and in compliance with all applicable laws and
regulations in all material respects.
(xxxv) With
respect to escrow deposits and payments that the Company is entitled to collect,
all such payments are in the possession of, or under the control of the Company,
and there exist no deficiencies in connection therewith for which customary
arrangements for repayment thereof have not been made. All escrow payments
have
been collected in full compliance with state and federal law and the provisions
of the related Mortgage Note and Mortgage. As to any Mortgage Loan that is
the
subject of an escrow, escrow of funds is not prohibited by applicable law and
has been established in an amount sufficient to pay for every escrowed item
that
remains unpaid and has been assessed but is not yet due and payable. No escrow
deposits or other charges or payments due under the Mortgage Note have been
capitalized under any Mortgage or the related Mortgage Note;
(xxxvi) The
Mortgagor has not notified the Company, and the Company has no knowledge of
any
relief requested or allowed to the Mortgagor under the Servicemembers’ Civil
Relief Act, as amended, or any other federal or state law that would have the
effect of suspending or reducing the Mortgagor's payment obligations under
a
Mortgage Loan or that would prevent or restrict the ability of the servicer
to
commence or continue with the foreclosure of the Mortgage Loan;
(xxxvii) No
Mortgage Loan has a Loan-to-Value Ratio of greater than 100%;
25
(xxxviii) Either
the Mortgagor is a natural person or the related co-borrower or guarantor is
a
natural person;
(xxxix) No
Mortgage Loan was made in connection with (i) the construction or rehabilitation
of a Mortgaged Property or (ii) facilitating the trade-in or exchange of a
Mortgaged Property;
(xl) No
Mortgage Loan is a Balloon Mortgage Loan that has an original stated maturity
of
less than seven (7) years;
(xli) [Reserved];
(xlii) Each
negative amortization Mortgage Loan is payable each month in monthly
installments of principal and interest in accordance with the terms of the
related Mortgage Note, as indicated on the related Mortgage Loan Schedule.
With
respect to each negative amortization Mortgage Loan, during the term of the
Mortgage Loan, the unpaid principal balance of the Mortgage Loan shall not
exceed 115% of the initial unpaid principal balance of the Mortgage
Loan.
(xliii) [Reserved];
(xliv) None
of
the Mortgage Loans are simple interest Mortgage Loans except as set forth on
the
related Purchase Confirmation;
(xlv) No
Mortgagor was required to purchase any single premium credit insurance policy
(e.g., life, disability, accident, unemployment, or health insurance product)
or
debt cancellation agreement as a condition of obtaining the extension of credit.
No Mortgagor obtained a prepaid single premium credit insurance policy (e.g.,
life, disability, accident, unemployment, mortgage, or health insurance) in
connection with the origination of the Mortgage Loan; no proceeds from any
Mortgage Loan were used to purchase single premium credit insurance policies
or
debt cancellation agreements as part of the origination of, or as a condition
to
closing, such Mortgage Loan;
(xlvi) Each
original Mortgage was recorded and, except for those Mortgage Loans subject
to
MERS, all subsequent assignments of the original Mortgage (other than the
assignment to the Initial Owner) have been recorded in the appropriate
jurisdictions wherein such recordation is necessary to perfect the lien thereof
as against creditors of the Company, or is in the process of being
recorded
(xlvii) If
the
Mortgage Loan is not registered with MERS, the Assignment of Mortgage is in
recordable form and is acceptable for recording under the laws of the
jurisdiction in which the Mortgaged Property is located;
(xlviii) The
Mortgage Loan is a qualified mortgage for inclusion in a REMIC;
26
(xlix) With
respect to any Mortgage Loan originated on or after August 1, 2004, neither
the
related Mortgage nor the related Mortgage Note requires the Mortgagor to submit
to arbitration to resolve any dispute arising thereunder or in connection with
the origination of such Mortgage Loan;
(l) With
respect to any Mortgage Loan which is a Texas Home Equity Loan, any and all
requirements of Section 50, Article XVI of the Texas Constitution applicable
to
Texas Home Equity Loans which were in effect at the time of the origination
of
the Mortgage Loan have been complied with. Specifically, without limiting the
generality of the foregoing, any fees paid in connection with such Mortgage
Loan
in order for the Mortgagor to receive a reduced interest rate are not required
to be included in the calculation of the aggregate fees pursuant to Section
50(a)(6)(E) of the Texas Constitution;
(li) The
Mortgage Files with respect to each Mortgage Loan subject to prepayment charges
specifically authorizes such prepayment charges to be collected and such
prepayment charges are permissible and enforceable in accordance with the terms
of the related Mortgage Files and applicable law (except to the extent that
the
enforceability thereof may be limited by bankruptcy, insolvency, moratorium,
receivership and other similar laws relating to creditors’ rights generally or
the collectability thereof may be limited due to acceleration in connection
with
a foreclosure). No Mortgage Loan imposes a prepayment charge for a term
in excess of three years from the date such Mortgage Loan was
originated;
(lii) To
the
best of the Company’s knowledge there are no toxic materials or other
environmental hazards on, in or that could affect any Mortgaged Property. Each
Mortgaged Property is in compliance with all local, State or federal
environmental laws or regulations;
(liii) In
the
event any Mortgage File contains a lost note affidavit in lieu of a Mortgage
Note, such lost note affidavit, when assigned, will be sufficient to effect
the
transfer of title to the related Mortgage Loan, without the need for a judicial
proceeding, administrative action, court or regulatory order, or similar action
or order;
(liv) Each
Mortgage Loan with a Loan-to-Value Ratio at origination in excess of 80% will
be
insured by a Primary Mortgage Insurance Policy covering at least 30% of the
principal balance of the Mortgage Loan at origination if the Loan-to-Value
Ratio
is between 95.00% and 90.01%, at least 25% of the principal balance of the
Mortgage Loan at origination if the Loan-to-Value Ratio is between 90.00% and
85.01%, and at least 12% of the principal balance of the Mortgage Loan at
origination if the Loan-to-Value Ratio is between 85.00% and 80.01%, and each
such Primary Insurance Policy is in full force and effect; and
(lv) Any
document to be included in the Mortgage File that is delivered as an imaged
document (and not accompanied by the original underlying document) represents
a
true, complete, and correct copy of the original document in all respects,
including, but not limited to, all signatures conforming with signatures
contained in the original document, no information having been added or deleted,
and no imaged document having been manipulated or altered in any manner. Each
imaged document is clear and legible in all material respects, including, but
not limited to, accurate reproductions of photographs. No original documents
have been or will be altered in any material manner. The destruction by the
Company of any original document underlying an imaged document or the inability
of the Company to produce a copy of such original document upon request shall
not cause (i) any material delay in the enforcement of the Mortgage Loan, (ii)
any inability to collect all amounts due under the Mortgage Loan, including
without limitation, in connection with a foreclosure or other sale of the
Mortgaged Property, (iii) private institutional investors to regard the Mortgage
Loan as an unacceptable investment or adversely affect the value or
marketability of the Mortgage Loan, or (iv) any claims from holders of
mortgage-backed securities collateralized by the Mortgage Loan.
27
(lvi) The
Mortgage Note, the Mortgage, the Assignment of Mortgage and any other documents
required to be delivered by the Company under this Agreement have been delivered
to the Initial Owner or its designee. The Company is in possession of a
complete, true and accurate Mortgage File in compliance with Section 2.01,
except for such documents the originals of which have been delivered to the
Initial Owner or its designee;
It
is
understood and agreed that the representations and warranties set forth in
Section 2.04(a) and (b) shall survive the sale of the Mortgage Loans and shall
inure to the benefit of the Initial Owner, notwithstanding any restrictive
or
qualified endorsement or assignment. Upon discovery by either the Company or
the
Initial Owner of a breach of any of the foregoing representations and warranties
which materially and adversely affects the interest of the Initial Owner in
the
related Mortgage Loan, the party discovering such breach shall give prompt
written notice to the other. Within 60 days of its discovery or its receipt
of
notice of any such breach, the Company shall (i) cure such breach in all
material respects or (ii) repurchase such Mortgage Loan at the Repurchase Price.
Any repurchase of any Mortgage Loans pursuant to the foregoing paragraph of
this
Section 2.04 shall be accomplished by direct remittance of the Repurchase
Price to the Initial Owner or in accordance with the Initial Owner’s
instructions.
With
respect to those representations and warranties which are made to the best
of
the Company’s knowledge, if it is discovered by the Company or the Initial Owner
that the substance of any representation and warranty set forth in Section
2.04(a) and (b) is inaccurate and such inaccuracy materially and adversely
affects the value of the related Mortgage Loan or the interest of the Initial
Owner (or which materially and adversely affects the value of a Mortgage Loan
or
the interests of the Initial Owner in the related Mortgage Loan in the case
of a
representation and warranty relating to a particular Mortgage Loan),
notwithstanding the Company’s lack of knowledge with respect to the substance of
such representation and warranty, such inaccuracy shall be deemed a breach
of
the applicable representation and warranty.
28
With
respect to any repurchase of any Mortgage Loans pursuant to this section 2.04,
upon receipt by the Initial Owner of the Repurchase Price, the Initial Owner
shall cause the Custodian to promptly deliver the related Mortgage File to
the
Company. The Company shall prepare the Assignment of the related Mortgage for
execution by or at the direction of the Initial Owner, as applicable, and shall
pay all costs and expenses reasonably incurred by the Initial Owner in effecting
the reconveyance of a repurchased Mortgage Loan including, without limitation,
the cost of recording the Assignment of the related Mortgage for any Mortgage
Loan that is not registered with MERS. In the event of a repurchase, the
Mortgage Loan Schedule shall be deemed amended to reflect the withdrawal of
the
such Mortgage Loans from this Agreement. In addition to the cure or repurchase
obligation set forth above, the Company shall indemnify the Initial Owner and
hold it harmless against any losses, damages, penalties, fines, forfeitures,
reasonable and necessary legal fees and related costs, judgments, and other
costs and expenses resulting from a breach of the representations and warranties
made by the Company in Section 2.04.
Section
2.05.
Representations, Warranties and Covenants of the Initial Owner.
The
Initial Owner hereby represents and warrants to and covenants with, the Company
that as of the relevant Closing Date:
(i) The
Initial Owner understands that the Mortgage Loans have not been registered
under
the Securities Act or the securities laws of any state. The Initial Owner is
acquiring the Mortgage Loans for investment for its own account only and not
with a view to or for sale or other transfer in connection with any distribution
of the Mortgage Loans in any manner that would violate the Securities Act or
any
applicable state securities law. The Initial Owner considers itself a
substantial, sophisticated institutional investor having such knowledge and
experience in financial and business matters that it is capable of evaluating
the merits and risks of investment in the Mortgage Loans. The Initial Owner
has
been furnished with all information regarding the Mortgage Loans that it has
requested from the Company. Neither the Initial Owner nor anyone acting on
its
behalf has offered, transferred, pledged, sold or otherwise disposed of the
Mortgage Loans or any interest in the Mortgage Loans to, or solicited any offer
to buy or accept a transfer, pledge or other disposition of the Mortgage Loans
or any interest in the Mortgage Loans from, or otherwise approached or
negotiated with respect to the Mortgage Loans, any interest in the Mortgage
Loans with, any Person in any manner, or made any general solicitation by means
of general advertising or in any other manner or taken any other action, which
would constitute a distribution of the Mortgage Loans under the Securities
Act
or which would render the disposition of the Mortgage Loans a violation of
Section 5 of the Securities Act or require registration pursuant thereto, nor
will it act, nor has it authorized or will it authorize any person to act,
in
such manner with respect to the Mortgage Loans;
(ii) The
Initial Owner is either (a) not a Plan that is subject to ERISA or Section
4975
of the Code and not a Person acting, directly or indirectly, on behalf of or
investing with “plan assets” of any such Plan or (b) an employee benefit plan
that is subject to ERISA or Section 4975 of the Code and the transaction
contemplated herein does not constitute and will not result in a non-exempt
prohibited transaction under Section 406 of ERISA or Section 4975 of the
Code;
29
(iii) The
Company and Initial Owner have executed (A) this Agreement and related Purchase
Confirmation contemporaneously with the sale of the Mortgage Loans by the
Company to the Initial Owner on the initial Closing Date and the transfer of
the
purchase price therefor by the Initial Owner to the Company and (B) each
additional Purchase Confirmation contemporaneously with the sale of the related
Mortgage Loans by the Company to the Initial Owner and the transfer of the
purchase price therefor by the Initial Owner to the Company;
(iv) The
Initial Owner shall maintain this Agreement continuously, from the time of
its
execution, as an official record of the Initial Owner; and
(v) The
Initial Owner has the full corporate power and authority to purchase the
Mortgage Loans and to execute, deliver and perform and to enter into and
consummate all transactions contemplated by this Agreement, has duly authorized
the execution and delivery of this Agreement, and this Agreement constitutes
the
legal, valid and binding obligation of the Initial Owner, enforceable against
it
in accordance with their respective terms, except (i) as limited by applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and
other similar laws of general application affecting enforcement of creditors’
rights generally and (ii) the availability of the remedy of specific performance
or injunctive or other forms of equitable relief may be subject to equitable
defenses and would be subject to the discretion of the court before which any
proceeding therefor may be brought.
The
Initial Owner shall indemnify the Company and hold it harmless against any
loss,
liability or expense incurred in connection with any claim, demand, defense
or
assertion based on or grounded upon, or resulting from, a breach of the Initial
Owner’s representations, warranties and covenants contained in this Section
2.05.
Section
2.06.
Protection of Consumer Information.
The
Initial Owner agrees that the Initial Owner (i) shall comply with any applicable
laws and regulations regarding the privacy and security of Consumer Information,
(ii) shall not use Consumer Information in any manner inconsistent with any
applicable laws and regulations regarding the privacy and security of Consumer
Information, (iii) shall not disclose Consumer Information to third parties
except in accordance with all applicable laws and regulations regarding privacy
and security of Consumer Information, (iv) shall maintain such physical,
technical and administrative safeguards to protect Consumer Information from
unauthorized access as are required by applicable laws and regulations regarding
privacy and security of Consumer Information, and (v) shall promptly notify
the
Company of any actual or suspected breach of the confidentiality of Consumer
Information.
30
The
Initial Owner agrees that the Initial Owner shall indemnify, defend and hold
the
Company harmless from and against any loss, claim or liability the Company
may
suffer by reason of the Initial Owner’s failure to perform the obligations set
forth in this Section 2.06.
The
Company agrees that the Company (i) shall comply with any applicable laws and
regulations regarding the privacy and security of Consumer Information, (ii)
shall only use Consumer Information to the extent necessary to carry out its
obligations under this Agreement, (iii) shall not use Consumer Information
in
any manner inconsistent with any applicable laws and regulations regarding
the
privacy and security of Consumer Information and, (iv) shall not disclose
Consumer Information to third parties except at the specific written direction
of the Initial Owner unless otherwise required by applicable law or court order,
(v) shall maintain such physical, technical and administrative safeguards to
protect Consumer Information from unauthorized access as are required by
applicable laws and regulations regarding privacy and security of Consumer
Information, and (vi) shall promptly notify the Initial Owner of any actual
or
suspected breach of the confidentiality of Consumer Information.
The
Company agrees that the Company shall indemnify, defend and hold the Initial
Owner harmless from and against any loss, claim or liability the Initial Owner
may suffer by reason of the Company’s failure to perform the obligations set
forth in this Section 2.06.
In
connection with the servicing of the Mortgage Loans hereunder, the Company
shall
implement and maintain security measures designed to meet the objectives of
the
Interagency Guidelines Establishing Information Security Standards (the
“Guidelines”),
Section 216 of the Fair and Accurate Transactions Act (including its
implementing regulations, “FACTA”),
as
well as any amendments thereto or other applicable regulations regarding
safeguarding information enacted or released by a regulatory agency having
jurisdiction over the Initial Owner or the Company. In addition, the Company
represents to the Initial Owner that it has in place a response program to
respond to any incident of unauthorized access to Customer Information (as
defined in the Guidelines). At all times during the term of this Agreement,
the
Company shall maintain administrative, technical and physical safeguards,
including proper information disposal procedures, to ensure the security,
confidentiality and integrity of Customer Information, and to protect such
information against any threats or hazards, including, without limitation,
unauthorized access or use. The Company will periodically (but not less than
annually) review and update its information security procedures.
Section
2.07.
Premium Recapture.
With
respect to any Mortgage Loan that prepays in full at any time between the
related Cut-off Date and the related Closing Date, the Company shall reimburse
the Initial Owner, on the first Remittance Date, the amount (if any) by which
the portion of the purchase price paid by the Initial Owner to the Company
for
such Mortgage Loan exceeded 100% of the outstanding Scheduled Principal Balance
of the Mortgage Loan as of the related Cut-off Date.
Section
2.08.
Early
Payment Default.
If a
Mortgagor is thirty (30) days or more delinquent with respect to the first
Monthly Payment due to the Owner on the related Mortgage Loan immediately
following the applicable Closing Date, then on the next Remittance Date, the
Company, at the Initial Owner’s option, shall repurchase such Mortgage Loan from
the Initial Owner at the Repurchase Price in accordance with the procedures
set
forth in Section 2.04 hereof; provided,
however,
that no
right to cure set forth therein shall apply; provided,
further, however,
that
this Section 2.08 shall not apply to any delinquency solely a result of a
servicing transfer in respect of such Mortgage Loan if the Company provides
the
Initial Owner with supporting proof reasonably acceptable to the Initial Owner
of the servicing transfer being the sole cause of such delinquency.
31
ARTICLE
III
ADMINISTRATION
AND SERVICING OF MORTGAGE LOANS
Section
3.01.
Company to Act as Servicer.
The
Company shall act as servicer, and in such capacity shall service and administer
the Mortgage Loans in accordance with this Agreement, and in connection
therewith shall follow Accepted Servicing Practices. The Company shall have
full
power and authority to the extent provided herein, acting alone and/or through
one or more subservicers as provided in Section 3.03, to do or cause to be
done
any and all things which it may deem necessary or desirable in connection with
such servicing and administration. In servicing and administering the Mortgage
Loans, the Company shall employ procedures (including collection procedures)
and
exercise the same care that it customarily employs and exercises in servicing
and administering mortgage loans for its own account, giving due consideration
to Accepted Servicing Practices where such practices do not conflict with the
requirements of this Agreement, and the Owner’s reliance on the Company. The
Initial Owner shall furnish the Company and any subservicer with any powers
of
attorney and other documents necessary or appropriate to enable the Company
to
service and administer the Mortgage Loans.
Section
3.02.
Reserved.
Section
3.03.
Agreements Between Company and Subservicer.
The
Initial Owner acknowledges that the Mortgage Loans may be serviced by one or
more subservicers on behalf of and at the direction of the Company; however,
it
being understood that the Company shall remain obligated and primarily liable
for each covenant and representation of the Company contained within this
Agreement without any diminution of such obligations or liabilities by virtue
of
any subservicing arrangements or by virtue of indemnification from a subservicer
and to the same extent and under the same terms and conditions as if the Company
alone were servicing and administering the Mortgage Loans. Furthermore, the
Company shall defend and indemnify the Initial Owner and hold it harmless
against any losses, damages, penalties, fines, forfeitures, judgments and any
related costs including, without limitation, reasonable and necessary legal
fees, resulting from any claim, demand, defense or liability based upon or
arising out of any act or omission on the part of any subservicer in receiving,
processing, funding or servicing any Mortgage Loan. The Company hereby agrees
that it shall be responsible for any fees or expenses incurred or due to the
subservicer including, without limitation, fees incurred in connection with
(i)
any subservicing fee and (ii) the termination of any subservicer and the
termination of any subservicing agreement entered into by the Company. All
actions of each subservicer performed pursuant to the related subservicing
agreement shall be performed on behalf of the Company with the same force and
effect as if performed directly by the Company and the Initial Owner shall
have
no obligations, duties or liabilities with respect to any subservicer including
no obligation, duty or liability of the Initial Owner to pay any subservicer’s
fees and expenses. The Company shall be deemed to have received payments on
Mortgage Loans immediately upon receipt by a subservicer of such
payments.
32
Each
subservicer shall be an approved seller/servicer for Xxxxxxx Mac and an approved
seller/servicer for Xxxxxx Mae, in good standing with Xxxxxx Xxx and Xxxxxxx
Mac, and is a mortgagee approved by the Secretary of HUD pursuant to sections
203 and 211 of the National Housing Act. In addition, no event shall have
occurred, including but not limited to, a change in insurance coverage, which
would make any subservicer unable to comply with Xxxxxx Mae, Xxxxxxx Mac or
HUD
eligibility requirements or which would require notification to Xxxxxx Mae,
Xxxxxxx Mac or HUD.
Section
3.04.
Collection of Certain Mortgage Loan Payments and Liquidation of Mortgage
Loans.
The
Company shall proceed diligently to collect all payments called for under the
terms and provisions of each of the Mortgage Loans.
Consistent
with the terms of the Agreement, the Company may waive, modify or vary any
term
of any Mortgage Loan or consent to the postponement of strict compliance with
any such term or in any manner grant indulgence to any Mortgagor if in the
Company’s reasonable and prudent determination such waiver, modification,
postponement or indulgence is not materially adverse to the interests of the
Owner; provided, however, that the Company shall not make any modification
that
has the effect of changing or deferring any Monthly Payment. The general terms
of any waiver, modification, postponement or indulgence with respect to any
of
the Mortgage Loans will be included in the statements to the Initial Owner,
and
such Mortgage Loans will not be considered delinquent for the purposes of the
Agreement so long as the Mortgagor complies with the terms of such waiver,
modification, postponement or indulgence.
The
Company shall be entitled, on behalf of the Owner, to (A) execute instruments
of
satisfaction or cancellation or of partial or full release or discharge, or
any
other comparable instruments with respect to the Mortgage Loans and the
Mortgaged Properties 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, if it has determined, exercising its prudent
judgment in the same manner as it would if it were the owner of the related
Mortgage Loan, that the security for, and the timely and full collectability
of,
such Mortgage Loan would not be adversely affected thereby. If reasonably
required by the Company, the Owner shall furnish the Company with any powers
of
attorney and other documents necessary or appropriate to enable the Company
to
carry out its servicing and administrative duties under this Agreement;
provided,
however,
that
the Owner shall have no liability for the Company’s misuse of any such powers of
attorney and other documents. A partial release pursuant to this Section 3.04
shall be permitted only if the Loan-to-Value Ratio for such Mortgage Loan after
such partial release does not exceed the Loan-to-Value Ratio for such Mortgage
Loan as of the Cut-off Date. Any fee collected by the Company or the subservicer
for processing such request will be retained by the Company or the subservicer
as additional servicing compensation.
Section
3.05.
Principal and Interest Accounts.
In
those cases where a subservicer is servicing a Mortgage Loan pursuant to a
subservicing agreement, the subservicer will be required to establish and
maintain one or more principal and interest accounts in accordance with Accepted
Servicing Practices.
33
Section
3.06.
Establishment of and Deposits to Custodial Account.
The
Company shall establish and maintain the Custodial Account to hold all funds
collected and received pursuant to the Mortgage Loans. Funds deposited in the
Custodial Account may be drawn on by the Company in accordance with Section
3.07. The Company shall deposit in the Custodial Account on a daily basis,
within one (1) Business Day of receipt, and retain therein, the following
collections received by the Company after the related Cut-off Date:
(i) all
payments on account of principal on the Mortgage Loans;
(ii) all
payments on account of interest on the Mortgage Loans adjusted to the Mortgage
Interest Rate;
(iii) all
Liquidation Proceeds;
(iv) all
Insurance Proceeds other than proceeds to be held in the applicable Escrow
Account and applied to the restoration or repair of the Mortgaged Property
or
released to the Mortgagor in accordance with Section 3.26;
(v) all
Condemnation Proceeds other than proceeds to be held in the applicable Escrow
Account and applied to the restoration or repair of the Mortgaged Property
or
released to the Mortgagor in accordance with Section 3.26;
(vi) any
amount required to be deposited in the Custodial Account pursuant to
Section 3.10;
(vii) any
amount required to be deposited in the Custodial Account pursuant to Section
3.12;
(viii) any
amount required to be deposited in the Custodial Account pursuant to the second
paragraph of Section 3.16;
(ix) any
amounts payable in connection with the repurchase of any Mortgage Loan pursuant
to Section 2.02 or 2.04; and
(x) any
amounts required to be deposited by the Company pursuant to Section 3.11 in
connection with the deductible clause in any blanket hazard insurance
policy;
(xi) any
prepayment charge received in connection with the Mortgage Loans, except to
the
extent that the related Purchase Confirmation provides that related prepayment
premiums are to be retained by the Company;
34
(xii) with
respect to Full and Partial Prepayments, the Compensating Interest, if any,
for
the month of distribution;
(xiii) any
amounts received by the Company under a Primary Mortgage Insurance
Policy;
(xiv) any
amounts received with respect to or related to any REO Property and all REO
proceeds pursuant to Section 3.17;
(xv) any
amounts required to be deposited by the Company pursuant to Section 3.23 in
connection with any unpaid claims that are a result of a breach by the Company
or any subservicer of the obligations hereunder or under the terms of a Primary
Mortgage Insurance Policy; and
(xvi) any
other
amount required to be deposited into the Custodial Account pursuant to the
terms
of this Agreement.
The
foregoing requirements for deposit into the Custodial Account shall be
exclusive, it being understood and agreed that, without limiting the generality
of the foregoing, payments in the nature of late payment charges and assumption
fees permitted to be retained by the Company need not be deposited by the
Company into the Custodial Account. Any interest paid on funds deposited in
the
Custodial Account by the depository institution shall accrue to the benefit
of
the Company and the Company shall be entitled to retain and withdraw such
interest from the Custodial Account pursuant to Section 3.07.
Section
3.07.
Permitted Withdrawals From Custodial Account.
The
Company shall, from time to time, withdraw funds from the Custodial Account
for
the following purposes:
(i) to
make
payments to the Initial Owner in the amounts and in the manner provided for
in
Section 4.01;
(ii) to
reimburse itself for any unreimbursed Advances, and any unpaid Servicing Fees,
the Company’s right to reimburse itself pursuant to this subclause (ii) with
respect to any Mortgage Loan being limited to related Liquidation Proceeds,
Condemnation Proceeds, Insurance Proceeds and such other amounts as may be
collected by the Company from the Mortgagor or otherwise relating to the
Mortgage Loan, it being understood that in the case of any such reimbursement,
the Company’s right thereto shall be prior to the rights of the Owner, except
that, where the Company is required to repurchase a Mortgage Loan pursuant
to
Section 2.04, the Company’s right to such reimbursement shall be subsequent to
the payment to the Owner of the Repurchase Price pursuant to such sections
and
all other amounts required to be paid to the Owner with respect to such Mortgage
Loan;
(iii) to
reimburse itself for Monthly Advances of the Company’s funds made pursuant to
Section 3.13, the Company’s right to reimburse itself pursuant to this subclause
(iii) being limited to amounts received on the related Mortgage Loan which
represent late payments of principal and/or interest respecting which any such
Monthly Advance was made, it being understood that in the case of any such
reimbursement, the Company’s right thereto shall be prior to the rights of the
Owner, except that, where the Company is required to repurchase a Mortgage
Loan
pursuant to Section 2.04, the Company’s right to such reimbursement shall be
subsequent to the payment to the Owner of the Repurchase Price pursuant to
such
sections and all other amounts required to be paid to the Owner with respect
to
such Mortgage Loan;
35
(iv) to
reimburse itself for any Advance or Monthly Advance that the Company has
determined is a Nonrecoverable Advance;
(v) to
reimburse itself for any Security Protection Expenses pursuant to Section 3.17,
the Company’s right to reimburse itself pursuant to this subclause (v) being
limited to amounts on deposit in the Custodial Account with respect to the
related REO Property;
(vi) to
pay to
itself with respect to each Mortgage Loan that has been repurchased pursuant
to
Sections 2.02 and 2.04 all amounts received thereon and not required to be
distributed to the Initial Owner;
(vii) to
pay
itself interest on funds deposited in the Custodial Account;
(viii) to
clear
the Custodial Account of all amounts on deposit therein attributable to the
Mortgage Loans upon the termination of this Agreement; and
(ix) to
withdraw funds deposited in error.
In
the
event that the Custodial Account is interest bearing, on each Remittance Date,
the Company shall withdraw all funds from the Custodial Account except for
those
amounts which, pursuant to Section 4.01, the Company is not obligated to remit
on such Remittance Date. The Company may use such withdrawn funds only for
the
purposes described in this Section 3.07.
Section
3.08.
Establishment of and Deposits to Escrow Account.
The
Company shall maintain the Escrow Account to hold all Escrow Payments. The
Escrow Account shall be insured by the FDIC in a manner which shall provide
the
maximum available insurance thereunder. Funds deposited in the Escrow Account
may be drawn on by the Company in accordance with Section 3.09.
The
Company shall deposit in the Escrow Account on a daily basis, within one (1)
Business Day of receipt, and retain therein:
(i) all
Escrow Payments collected on account of the Mortgage Loans, for the purpose
of
effecting timely payment of any such items as required under the terms of this
Agreement; and
36
(ii) all
amounts representing Insurance Proceeds or Condemnation Proceeds which are
to be
applied to the restoration or repair of any Mortgaged Property pursuant to
Section 3.26.
The
Company shall make withdrawals from the Escrow Account only to effect such
payments as are required under this Agreement, as set forth in Section 3.09.
The
Company shall be entitled to retain any interest paid on funds deposited in
the
Escrow Account by the depository institution, other than interest on escrowed
funds required by law to be paid to the Mortgagor. To the extent required by
law, the Company shall pay interest on escrowed funds to the Mortgagor
notwithstanding that the Escrow Account may be non-interest bearing or that
interest paid thereon is insufficient for such purposes.
Section
3.09.
Permitted Withdrawals From Escrow Account.
Withdrawals from the Escrow Account may be made by the Company
only:
(i) to
effect
timely payments of ground rents, taxes, assessments, water rates, mortgage
insurance premiums, condominium charges, fire and hazard insurance premiums
or
other items constituting Escrow Payments for the related Mortgage;
(ii) to
reimburse the Company for any servicing advance made by the Company pursuant
to
Section 3.11(a) with respect to a related Mortgage Loan, but only from amounts
received on the related Mortgage Loan which represent late collections of Escrow
Payments thereunder;
(iii) to
refund
to any Mortgagor any funds found to be in excess of the amounts required under
the terms of the related Mortgage Loan;
(iv) for
transfer to the Custodial Account and application to reduce the principal
balance of the Mortgage Loan in accordance with the terms of the related
Mortgage and Mortgage Note;
(v) to
pay to
the Company, or any Mortgagor to the extent required by law, any interest paid
on the funds deposited in the Escrow Account;
(vi) to
clear
and terminate the Escrow Account on the termination of this Agreement;
and
(vii) to
withdraw funds deposited in error.
Section
3.10.
Permitted Investments.
The
depository institution at which the Custodial Account has been established
may
at the direction of the Company, invest the funds in the Custodial Account
in
Permitted Investments, which shall mature not later than the Remittance Date
next following the date of such investment. All income and gain realized from
any such investment shall be for the benefit of the Company and shall be subject
to its withdrawal or order from time to time. The amount of any losses incurred
in respect of any such investments shall be deposited in the Custodial Account
by the Company out of its own funds immediately as such losses are realized.
As
used herein, “Permitted Investments” shall include the following:
37
(i) obligations
of or guaranteed as to timely payment of principal and interest by the United
States or any agency or instrumentality thereof when such obligations are backed
by the full faith and credit of the United States;
(ii) repurchase
agreements on obligations specified in clause (i) maturing not more than one
month from the date of acquisition thereof, provided that the unsecured
short-term debt obligations of the party agreeing to repurchase such obligations
are at the time rated by each Rating Agency in its highest short-term rating
available;
(iii) federal
funds, certificates of deposit, demand deposits, time deposits and bankers’
acceptances (which shall each have an original maturity of not more than 90
days
and, in the case of bankers’ acceptances, shall in no event have an original
maturity of more than 365 days or a remaining maturity of more than 30 days)
denominated in United States dollars of any U.S. depository institution or
trust
company incorporated under the laws of the United States or any state thereof
or
of any domestic branch of a foreign depository institution or trust company;
provided that the debt obligations of such depository institution or trust
company at the date of acquisition thereof have been rated by each Rating Agency
in its highest short-term rating available; and, provided further that, if
the
original maturity of such short-term obligations of a domestic branch of a
foreign depository institution or trust company shall exceed 30 days, the
short-term rating of such institution shall be A-1+ in the case of Standard
& Poor’s if Standard & Poor’s is a Rating Agency;
(iv) commercial
paper and demand notes (having original maturities of not more than 365 days)
of
any corporation incorporated under the laws of the United States or any state
thereof which on the date of acquisition has been rated by each Rating Agency
in
its highest short-term rating available; provided that such commercial paper
shall have a remaining maturity of not more than 30 days;
(v) any
mutual fund, money market fund, common trust fund or other pooled investment
vehicle, the assets of which are limited to instruments that otherwise would
constitute Permitted Investments hereunder and have been rated by each Rating
Agency in its highest short-term rating available (in the case of Standard
&
Poor’s such rating shall be either AAAm or AAAm-G), including any such fund that
is managed by the Trustee or any affiliate of the Trustee or for which the
Trustee or any of its affiliates acts as an adviser; and
(vi) other
obligations or securities that are acceptable to each Rating Agency as a
Permitted Investment hereunder and will not reduce the rating assigned to any
Class of Certificates by such Rating Agency (without giving effect to any
Certificate Policy (as defined in the Series Supplement) in the case of Insured
Certificates (as defined in the Series Supplement) below the lower of the
then-current rating assigned to such Certificates by such Rating Agency, as
evidenced in writing; provided, however, no instrument shall be a Permitted
Investment if it represents, either (1) the right to receive only interest
payments with respect to the underlying debt instrument or (2) the right to
receive both principal and interest payments derived from obligations underlying
such instrument and the principal and interest payments with respect to such
instrument provide a yield to maturity greater than 120% of the yield to
maturity at par of such underlying obligations.
38
provided,
however,
that no
such instrument shall be a Permitted Investment if such instrument evidences
either (i) a right to receive only interest payments with respect to the
obligations underlying such instrument, or (ii) both principal and interest
payments derived from obligations underlying such instrument and the principal
and interest payments with respect to such instrument provide a yield to
maturity of greater than 120% of the yield to maturity at par of such underlying
obligations. References herein to the highest rating available on unsecured
long-term debt shall mean AAA in the case of Standard & Poor’s and Fitch and
Aaa in the case of Xxxxx’x, and for purposes of this Agreement, any references
herein to the highest rating available on unsecured commercial paper and
short-term debt obligations shall mean the following: A-1 in the case of
Standard & Poor’s, P-1 in the case of Xxxxx’x and F-1 in the case of Fitch;
provided,
that in
the event that any Rating Agency changes any of the highest ratings available
as
provided in this sentence, such adjusted highest rating available shall be
applicable.
Notwithstanding
anything to the contrary contained herein, with respect to Mortgage Loans
subject to an Agency Transfer or a Securitization Transaction, in the event
that
the applicable Reconstitution Agreement has a more limiting definition of
“Permitted Investments” (or such similar concept), then such definition
contained in such Reconstitution Agreement shall apply to such Mortgage
Loans.
The
Company shall bear any expenses, losses or damages sustained by the Owner
because the Custodial Account and/or the Escrow Account are not demand deposit
accounts.
Section
3.11.
Maintenance of Hazard Insurance and Errors and Omissions and Fidelity
Coverage.
(a) The
Company shall cause to be maintained for each Mortgage Loan and on property
acquired upon foreclosure, or deed in lieu of foreclosure, of any Mortgage
Loan,
fire and hazard insurance with extended coverage customary in the area where
the
Mortgaged Property is located and flood insurance by a generally acceptable
insurer rated A:VI or better in the current Best’s Key Rating Guide (“Best’s”)
and in accordance with Accepted Servicing Practices at least equal to the lesser
of (i) the maximum insurable value of the improvements securing the related
Mortgage Loan and (ii) the greater of (a) the outstanding principal balance
of
the Mortgage Loan and (b) the minimum amount necessary to prevent the Mortgagor
and/or Mortgagee from becoming a co-insurer. If the Mortgaged Property is in
an
area identified in the Federal Register by the Federal Emergency Management
Agency as having special flood hazards (and such flood insurance has been made
available) the Company will cause to be maintained a flood insurance policy
meeting the requirements of the current guidelines of the Federal Insurance
Administration with a generally acceptable insurance carrier rated A:VI or
better in Best’s, in an amount representing coverage not less than the least of
(i) the minimum amount required, under the terms of coverage, to compensate
for
any damage or loss on a replacement cost basis (or the outstanding principal
balance of the mortgage if replacement cost coverage is not available for the
type of building insured), (ii) the full insurable value of the Mortgaged
Property or (iii) the maximum amount of insurance available under the National
Flood Insurance Act of 1968 and the Flood Disaster Protection Act of 1973,
each
as amended. Any amounts collected by the Company under any such policies (other
than amounts applied to the restoration or repair of the related Mortgaged
Property or property thus acquired or amounts released to the Mortgagor in
accordance with Acceptable Servicing Practices) shall be deposited in the
Custodial Account, subject to withdrawal pursuant to Section 3.07. All policies
required hereunder shall be endorsed with standard mortgagee clauses with loss
payable to the Company, its successors and its assigns, without contribution,
or, upon request of the Initial Owner, to the Initial Owner, and shall provide
for at least 30 days prior written notice to the Company of any cancellation,
reduction in amount or material change in coverage thereof. The Company shall
not interfere with the Mortgagor’s freedom of choice in selecting either his
insurance carrier or agent, provided, however, that the Company shall not accept
any such insurance policies from insurance companies unless such companies
are
rated A:VI or better in Best’s and are licensed to do business in the
jurisdiction in which the Mortgaged Property is located. In the event that
the
Company shall obtain and maintain a blanket policy insuring against hazard
losses on all of the Mortgage Loans, then, to the extent such policy provides
coverage in an amount equal to the amount required pursuant to this Section
3.11(a) and otherwise complies with all of the requirements of this Section
3.11(a), it shall conclusively be deemed to have satisfied its obligations
as
set forth in the first sentence of this Section 3.11(a), it being understood
and
agreed that such policy may contain a deductible clause, in which case the
Company shall, in the event there shall have been a loss which would have been
covered by such policy, deposit in the Custodial Account from the Company’s own
funds at the time of such loss the amount not otherwise payable under the
blanket policy because of such deductible clause without any right of
reimbursement. In connection with its activities as servicer of the Mortgage
Loans, the Company agrees to present, on behalf of itself and the Owner, claims
under any such blanket policy in a timely fashion in accordance with the terms
of such policy. Upon request of the Owner, the Company shall cause to be
delivered to the Owner a certified true copy of such policy and shall use
reasonable efforts to obtain a statement from the insurer thereunder that such
policy shall in no event be terminated or materially modified without thirty
(30) days prior written notice to the Owner.
39
If
a
Mortgage is secured by a unit in a condominium project, the Company shall verify
that the coverage required of the owner’s association, including hazard, flood,
liability, and fidelity coverage, is being maintained in accordance with then
current Xxxxxx Xxx requirements, and secure from the owner’s association its
agreement to notify the Company promptly of any change in the insurance coverage
or of any condemnation or casualty loss that may have a material effect on
the
value of the Mortgaged Property as security.
The
Company shall cause to be maintained on each Mortgaged Property earthquake
or
such other or additional insurance as may be required pursuant to such
applicable laws and regulations as shall at any time be in force and as shall
require such additional insurance, or pursuant to the requirements of any
private mortgage guaranty insurer, or as may be required to conform with
Accepted Servicing Practices.
40
In
the
event that the Owner or the Company shall determine that the Mortgaged Property
should be insured against loss or damage by hazards and risks not covered by
the
insurance required to be maintained by the Mortgagor pursuant to the terms
of
the Mortgage, the Company shall communicate and consult with the Mortgagor
with
respect to the need for such insurance and bring to the Mortgagor’s attention
the desirability of protection of the Mortgaged Property.
The
Company shall determine that such policies provide sufficient risk coverage
and
amounts, that they insure the property owner, and that they properly describe
the property address. The Company shall furnish to the Mortgagor a formal notice
of expiration of any such insurance in sufficient time for the Mortgagor to
arrange for renewal coverage by the expiration date.
(b) The
Company shall obtain and maintain at its own expense and keep in full force
and
effect throughout the term of this Agreement a blanket fidelity bond and an
errors and omissions insurance policy covering the Company’s officers and
employees and other persons acting on behalf of the Company in any capacity
requiring such persons to handle funds, money, documents or papers relating
to
the Mortgage Loans (collectively, the “Company Employees”). The amount of
coverage shall be at least equal to the coverage that would be required by
Xxxxxx Xxx or Xxxxxxx Mac with respect to the Company if the Company were
servicing and administrating the Mortgage Loans for Xxxxxx Mae or Xxxxxxx Mac
in
addition to other mortgage loans being serviced and administered by the Company.
Any such fidelity bond and errors and omissions insurance policy shall be in
the
form of the Mortgage Banker’s Blanket Bond and shall protect and insure the
Company against losses, including forgery, theft, embezzlement, fraud, errors
and omissions and negligent acts of such Company Employees. Such fidelity bond
and errors and omissions insurance policy also shall protect and insure the
Company against losses in connection with the release or satisfaction of a
Mortgage Loan without having obtained payment in full of the indebtedness
secured thereby. No provision of this Section 3.11(b) requiring such fidelity
bond and errors and omissions insurance policy shall diminish or relieve the
Company from its duties and obligations as set forth in this Agreement. Upon
the
request of the Owner, the Company shall cause to be delivered to such Owner
a
copy of such fidelity bond and insurance policy
Section
3.12.
Waiver of Prepayment Charges.
Except
as set forth below, the Company or any designee of the Company shall not waive
any prepayment charge with respect to any Mortgage Loan. If the Company or
its
designee fails to collect a prepayment charge at the time of the related
prepayment of any Mortgage Loan subject to such prepayment charge, the Company
shall pay to the Custodial Account an amount equal to the amount of the
prepayment charge not collected. Notwithstanding the above, the Company or
its
designee may waive a prepayment charge without paying to the Custodial Account
the amount of the prepayment charge only if the related prepayment is not the
result of a refinancing by the Company or its designee and such waiver (a)
relates to a defaulted Mortgage Loan or a reasonably foreseeable default, such
waiver is standard and customary in servicing similar mortgage loans to the
Mortgage Loans, and such waiver, in the reasonable judgment of the Company,
would maximize recovery of total proceeds from the Mortgage Loan, taking into
account the amount of such prepayment charge and the related Mortgage Loan,
or
(b) relates to a prepayment charge the collection of which, in the reasonable
judgment of the Company, would be a violation of applicable laws.
41
Section
3.13.
Monthly Advances by the Company.
On the
Business Day immediately preceding each Remittance Date, the Company shall
deposit in the Custodial Account from its own funds an amount equal to all
Monthly Payments (with interest adjusted with respect to the related Servicing
Fee) which were due on the Mortgage Loans during the applicable Due Period
and
which were delinquent at the close of business on the immediately preceding
Determination Date or which were deferred pursuant to Section 3.01; provided,
however,
that in
accordance with the definition thereof, the Company shall have no obligation
to
make any such Monthly Advance that the Company determines would be a
Nonrecoverable Advance. The Company’s obligation to make such Monthly Advances
as to any Mortgage Loan will continue, subject to a nonrecoverability
determination, through the last Monthly Payment due prior to the payment in
full
of the Mortgage Loan, or through the last Remittance Date prior to the
Remittance Date for the distribution of all Liquidation Proceeds and other
payments or recoveries (including Insurance Proceeds and Condemnation Proceeds)
with respect to the Mortgage Loan.
Section
3.14.
Enforcement of Due-On-Sale Clauses.
(a) When
any
Mortgaged Property is conveyed or is about to be conveyed, the Company shall
declare such Mortgage Loan due and payable, shall take reasonable efforts to
deny assumption by the Person to whom the Mortgaged Property is about to be
sold
and shall enforce any due-on-sale clause contained in any Mortgage Note or
Mortgage in accordance with Accepted Servicing Practices, in all cases whether
or not the Mortgagor remains liable on the Mortgage and the Mortgage Note,
to
the extent permitted under applicable law and governmental regulations, but
only
to the extent that such enforcement will not adversely affect or jeopardize
coverage under any insurance policy. Notwithstanding the foregoing, the Company
shall not be deemed to be in default under this Section 3.14(a) by reason of
any
transfer or assumption which the Company is restricted by law from
preventing.
(b) If
the
Company reasonably believes it is unable under applicable law to enforce such
“due-on-sale” clause, the Company shall enter into (i) an assumption and
modification agreement with the person to whom such property has been conveyed,
pursuant to which such person becomes liable under the Mortgage Note and the
original Mortgagor remains liable thereon or (ii) in the event the Company
is
unable under applicable law to require that the original Mortgagor remain liable
under the Mortgage Note and the Company has the prior consent of the primary
mortgage guaranty insurer, a substitution of liability agreement with the
purchaser of the Mortgaged Property pursuant to which the original Mortgagor
is
released from liability and the purchaser of the Mortgaged Property is
substituted as Mortgagor and becomes liable under the Mortgage Note. In
connection with any assumption entered into by the Company, neither the Mortgage
Interest Rate borne by the related Mortgage Note, the term of the Mortgage
Loan
nor the outstanding principal amount of the Mortgage Loan shall be
changed.
(c) To
the
extent that any Mortgage Loan is assumable, the Company shall inquire into
the
creditworthiness of the proposed transferee, and shall use the underwriting
criteria for approving the credit of the proposed transferee which are used
by
Xxxxxx Mae with respect to underwriting mortgage loans of the same type as
the
Mortgage Loans. If the credit of the proposed transferee does not meet such
underwriting criteria, the Company shall, to the extent permitted by the
Mortgage or the Mortgage Note and by applicable law, accelerate the maturity
of
the Mortgage Loan.
42
Section
3.15.
Realization Upon Defaulted Mortgage Loans.
In the
event that any payment due under any Mortgage Loan is not paid when the same
becomes due and payable, or in the event the Mortgagor fails to perform any
other covenant or obligation under the Mortgage Loan and such failure continues
beyond any applicable grace period, the Company shall take such action as (a)
the Company would take under similar circumstances with respect to a similar
mortgage loan held for its own account for investment, (b) shall be consistent
with Accepted Servicing Practices, (c) the Company shall determine prudently
to
be in the best interest of Owner and (d) is consistent with any related Primary
Mortgage Insurance Policy. In the event that any payment due under any Mortgage
Loan remains delinquent for a period of ninety (90) days or any other default
continues for a period of ninety (90) days beyond the expiration of any grace
or
cure period, the Company shall commence foreclosure proceedings, provided that,
prior to commencing foreclosure proceedings, the Company shall notify the Owner
in writing of the Company’s intention to do so, and the Company shall not
commence foreclosure proceedings if the Owner objects to such action within
five
(5) Business Days of receiving such notice. In such connection, the Company
shall from its own funds make all necessary and proper Advances; provided,
however,
that
the Company shall not be required to make any such Advance, unless it shall
determine (a) that such preservation, restoration and/or foreclosure will
increase the proceeds of liquidation of the Mortgage Loan to Owner after
reimbursement to itself for such expenses and (b) that such Advance will be
recoverable by it either through Liquidation Proceeds (respecting which it
shall
have priority for purposes of withdrawals from the Custodial Account pursuant
to
Section 3.07) or through Insurance Proceeds (respecting which it shall have
similar priority). In the event of a determination by the Company that any
such
Advance previously made pursuant to this Section 3.15 shall not be recoverable
from the proceeds of the related Mortgage Loan, the Company shall be entitled
to
reimbursement of its funds so expended pursuant to Section 3.07.
Notwithstanding
any provision of the Agreement, a Mortgage Loan may be deemed to be finally
liquidated if substantially all amounts expected by the Company to be received
in connection with the related defaulted Mortgage Loan have been received;
provided,
however,
that
any subsequent collections with respect to any such Mortgage Loan shall be
deposited to the Custodial Account. For purposes of determining the amount
of
any Liquidation Proceeds, Condemnation Proceeds or Insurance Proceeds, or other
unscheduled collections, the Company 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 Mortgage Loan.
Section
3.16.
Satisfaction of Mortgages and Release of Mortgage Files.
(a) Upon
the
payment in full of any Mortgage Loan or upon the receipt by the Company of
a
notification that payment in full will be escrowed in a manner customary for
such purposes, the Company will immediately notify the Initial Owner in the
monthly remittance advice as provided in Section 4.02, and may request the
release of any Mortgage Files from the Initial Owner in accordance with this
Section 3.16, in connection with which the Company shall deliver a Notice of
Release to the Custodian. No expenses incurred in connection with any instrument
of satisfaction or deed of reconveyance shall be chargeable to funds
attributable to the Mortgage Loans on deposit in the Custodial
Account.
43
(b) If
the
Company satisfies or releases a Mortgage without first having obtained payment
in full of the indebtedness secured by the Mortgage (or without payment in
full
being escrowed in a manner customary for such purposes) the Company shall
deposit into the Custodial Account the outstanding principal balance, plus
all
accrued interest on such Mortgage Loan at the Mortgage Interest Rate, on the
day
preceding the Remittance Date in the month following the date of such
release.
Section
3.17.
REO
Property.
In the
event that title to a Mortgaged Property is acquired in foreclosure or by deed
in lieu of foreclosure, the deed or certificate of sale to the REO Property
shall be taken in the name of the Company or, in the event that the Company
is
not authorized or permitted to hold title to real property in the state where
the REO Property is located, or would be adversely affected under the “doing
business” or tax laws of such state by so holding title, in the name of the
Initial Owner’s designee. The Company shall acknowledge in writing that such
title is being held as nominee for the Initial Owner.
The
Company shall manage, conserve, protect and operate each REO Property for the
Owner solely for the purpose of its prompt disposition and sale. The Company
by
itself or through an agent shall manage or cause the subservicer to manage
the
REO Property in accordance with Accepted Servicing Practices and in a manner
that is consistent with the manner in which it would manage, protect and operate
or liquidate its own similar property in the same locality, and in a manner
that
is in the best interests of the Initial Owner. The Company shall attempt to
sell
the same (and may temporarily rent the same for a period not greater than one
year, except as otherwise provided below) on such terms and conditions as the
Company deems to be in the best interest of the Owner.
The
Company shall use reasonable efforts to dispose of the REO Property as soon
as
possible and shall sell such REO Property in any event not later than the end
of
the third taxable year after the year of its acquisition unless (i) (A) a REMIC
election has not been made with respect to the arrangement under which the
Mortgage Loans and the REO Property are held, and (ii) the Company determines,
and gives an appropriate notice to the Owner to such effect, that a longer
period is necessary for the orderly liquidation of such REO Property. If a
period longer than one year is permitted under the foregoing sentence and is
necessary to sell any REO Property, the Company shall report monthly to the
Owner as to the progress being made in selling such REO Property.
The
Company shall also maintain on each REO Property fire and hazard insurance
with
extended coverage in amount which is at least equal to the maximum insurable
value of the improvements which are a part of such property, liability insurance
and, to the extent required and available under the Flood Disaster Protection
Act of 1973, as amended, flood insurance in the amount required above.
44
Notwithstanding
anything to the contrary contained in this Section 3.17, in connection with
a
foreclosure or acceptance of a deed in lieu of foreclosure, in the event the
Company has reasonable cause to believe that a Mortgaged Property is
contaminated by hazardous or toxic substances or wastes, or if the Owner
otherwise requests, an environmental inspection or review of such Mortgaged
Property to be conducted by a qualified inspector shall be arranged by the
Company. Upon completion of the inspection, the Company shall provide the Owner
with a written report of such environmental inspection. In the event that the
environmental inspection report indicates that the Mortgaged Property is
contaminated by hazardous or toxic substances or wastes, the Company shall
not
proceed with foreclosure or acceptance of a deed in lieu of foreclosure. In
the
event that the environmental inspection report is inconclusive as to the whether
or not the Mortgaged Property is contaminated by hazardous or toxic substances
or wastes, the Company shall not, without the prior approval of the Owner,
proceed with foreclosure or acceptance of a deed in lieu of foreclosure. In
the
event the Owner or its designee directs the Company not to proceed with
foreclosure or acceptance of a deed in lieu of foreclosure, the Company shall
be
reimbursed for all Servicing Advances made with respect to the related Mortgaged
Property from the Custodial Account pursuant to Section 3.07
hereof.
The
disposition of REO Property shall be carried out by the Company at such price,
and upon such terms and conditions, as the Company deems to be in the best
interests of the Owner. The proceeds of sale of the REO Property shall be
promptly deposited in the Custodial Account. As soon as practical thereafter,
the expenses of such sale shall be paid and the Company shall reimburse itself
for any related unreimbursed Advances, unpaid Servicing Fees and unreimbursed
Monthly Advances made pursuant to Section 3.13, and on the Remittance Date
immediately following the Due Period in which such sale proceeds are received,
the net cash proceeds of such sale remaining in the Custodial Account shall
be
distributed to the Owner.
The
Company shall make advances of all funds necessary for the proper operation,
management and maintenance of the REO Property (such funds, “Security Protection
Expenses”), including the cost of maintaining any hazard insurance pursuant to
Section 3.11, such advances to be reimbursed from the disposition or liquidation
proceeds of the REO Property. The Company shall make monthly distributions
on
each Remittance Date to the Owner of the net cash flow from the REO Property
(which shall equal the revenues from such REO Property net of the expenses
described in this Section 3.17 and of any reserves reasonably required from
time
to time to be maintained to satisfy anticipated liabilities for such
expenses).
Section
3.18.
Servicing Compensation.
As
consideration for servicing the Mortgage Loans, the Company shall retain a
Servicing Fee with respect to each Mortgage Loan, which amount shall be prorated
for any portion of a month during which the Mortgage Loan is serviced by the
Company pursuant to this Agreement. The obligation of the Initial Owner to
pay
the Servicing Fee is limited to, and the Servicing Fee is payable solely from
the interest portion of each Monthly Payment collected by the Company, or as
otherwise provided under Section 3.07.
45
The
Company shall be required to pay all expenses incurred by it in connection
with
its servicing activities hereunder and shall not be entitled to reimbursement
thereof except as specifically provided for herein.
Section
3.19.
Right
to Examine Company Records.
(a) The
Owner
upon reasonable request and at its own expense, shall have the right, upon
five
(5) Business Days prior written notice, at all reasonable times and as often
as
reasonably required, to examine and audit during normal business hours at the
office of the Company any and all of the books, records or other information
of
the Company whether held by the Company or by another on behalf of the Company,
which may be relevant to the Mortgage Loans owned by the Owner.
(b) The
Company shall provide to the Initial Owner and any supervisory agents or
examiners representing a state or federal governmental agency having
jurisdiction over the Initial Owner, including without limitation the Office
of
Thrift Supervision (or any successor thereto), the FDIC and other similar
entities, access to any documentation regarding the Mortgage Loans in the
possession of the Company that is required by any applicable regulations. Such
access shall be afforded without charge, upon reasonable request, during normal
business hours, at the offices of the Company and in accordance with any
applicable regulations.
(c) All
records, servicing files, loan documents and accounts required by this Agreement
are maintained in accordance with the requirements of this Agreement, Accepted
Servicing Practices and applicable law.
Section
3.20.
Compensating Interest.
Notwithstanding any other provisions contained herein, the amount of the
Servicing Fee that the Company shall be entitled to receive for its activities
hereunder for the period ending on each Remittance Date shall be reduced (but
not below zero) by an amount equal to Compensating Interest (if any) for such
Remittance Date.
Section
3.21.
Credit Reporting.
For
each Mortgage Loan, the Company shall accurately and fully furnish, or cause
to
be furnished, on a monthly basis and in accordance with the Fair Credit
Reporting Act and its implementing regulations, accurate and complete
information (e.g. favorable and unfavorable) on its borrower credit files to
each of the following credit repositories: Equifax, Credit Information Services,
Inc., Experian Information Solutions, Inc. and Trans Union, LLC.
Section
3.22.
Inspections.
The
Company shall inspect, or cause to be inspected, the Mortgaged Property as
often
as deemed necessary by the Company to assure itself that the value of the
Mortgaged Property is being preserved. In addition, if any Mortgage Loan is
more
than 60 days delinquent, the Company shall promptly inspect, or cause to be
inspected, the Mortgaged Property and shall conduct, or cause to be conducted,
subsequent inspections in accordance with Accepted Servicing Practices or as
may
be required by the primary mortgage guaranty insurer. The Company shall keep
a
written report of each such inspection.
Section
3.23.
Maintenance of Primary Mortgage Insurance Policy; Claims.
The
Company shall comply with all provisions of applicable state and federal law
relating to the cancellation of, or collection of premiums with respect to,
Primary Mortgage Insurance Policies, including, but not limited to, the
provisions of the Homeowners Protection Act of 1998, and all regulations
promulgated thereunder, as amended from time to time.
46
The
Company shall be obligated to make premium payments with respect to Primary
Mortgage Insurance Policies, (i) to the extent of the Primary Mortgage Insurance
Policy fee set forth on the Mortgage Loan Schedule with respect to any LPMI
Loans, which shall be paid out of the interest portion of the related Monthly
Payment or, if a Monthly Payment is not made, from the Company’s own funds and
(ii) if the Mortgagor is required but fails to pay any Primary Mortgage
Insurance Policy premium, which shall be paid from the Company’s own funds. Any
premium payments made by the Company from its own funds pursuant to this Section
3.23 shall be recoverable by the Company as a Servicing Advance, subject to
the
reimbursement provisions of Section 3.07.
With
respect to each Mortgage Loan (other than LPMI Loans) with a loan-to-value
ratio
at origination in excess of 80%, the Company shall, without any cost to the
Owner, maintain or cause the Mortgagor to maintain (to the extent that the
Mortgage Loan requires the Mortgagor to maintain such insurance) in full force
and effect a Primary Mortgage Insurance Policy, and shall pay or shall cause
the
Mortgagor to pay the premium thereon on a timely basis, until the LTV of such
Mortgage Loan is reduced to 80%. In the event that such Primary Mortgage
Insurance Policy shall be terminated, the Company shall obtain from an insurer,
duly authorized and licensed where required by law to transact mortgage guaranty
insurance business and approved as an insurer by Xxxxxx Xxx or Xxxxxxx Mac,
a
comparable replacement policy, with a total coverage equal to the remaining
coverage of such terminated Primary Mortgage Insurance Policy, at substantially
the same fee level. The Company shall not take any action which would result
in
noncoverage under any applicable Primary Mortgage Insurance Policy of any loss
which, but for the actions of the Company would have been covered thereunder.
In
connection with any assumption or substitution agreements entered into or to
be
entered into with respect to a Mortgage Loan, the Company shall promptly notify
the insurer under the related Primary Mortgage Insurance Policy, if any, of
such
assumption or substitution of liability in accordance with the terms of such
Primary Mortgage Insurance Policy and shall take all actions which may be
required by such insurer as a condition to the continuation of coverage under
such Primary Mortgage Insurance Policy. If such Primary Mortgage Insurance
Policy is terminated as a result of such assumption or substitution of
liability, the Company shall obtain a replacement Primary Mortgage Insurance
Policy as provided above.
With
respect to each Mortgage Loan covered by a Primary Mortgage Insurance Policy,
the Company shall take all such actions on behalf of the Owner as are necessary
to service, maintain and administer the related Mortgage Loan in accordance
with
such policy and to enforce the rights under such policy. Except as expressly
set
forth herein, the Company shall have full authority on behalf of the Owner
to do
anything it deems appropriate or desirable in connection with the servicing,
maintenance and administration of such policy; provided
that
the
Company shall not take any action to permit any modification or assumption
of a
Mortgage Loan covered by a Primary Mortgage Insurance Policy, or take any other
action with respect to such Mortgage Loan, which would result in non-coverage
under such policy of any loss which, but for actions of the Company, would
have
been covered thereunder. If the related insurer fails to pay a claim under
a
LPMI or Primary Mortgage Insurance Policy solely as a result of a breach by
the
Company of its obligations hereunder or under such Policy, the Company shall
be
required to deposit in the Custodial Account on or prior to the next succeeding
Remittance Date an amount equal to such unpaid claim from its own funds without
any rights to reimbursement from the Owner; provided, that once the Company
has
paid the amount of such unpaid claim and the Owner has otherwise fully recovered
all amounts due to the Owner with respect to the Mortgage Loan, the Owner shall
(at the Company’s cost and expense) cooperate with the Company in permitting the
Company to be subrogated to the rights of the Owner with respect to such
Mortgage Loan to the same extent that the insurer would have been subrogated
under the applicable Primary Mortgage Insurance Policy had such insurer not
failed to pay such claim. The Company shall cooperate with the related insurer
and shall furnish all reasonable evidence and information in the possession
of
the Company to which the Company has access with respect to the related Mortgage
Loan; provided,
however,
notwithstanding anything to the contrary contained in any Primary Mortgage
Insurance Policy, the Company shall not be required to submit any reports to
the
related insurer until a reporting date that is at least 15 days after the
Company has received sufficient loan level information from each Owner to
appropriately code its servicing systems in accordance with the insurer’s
requirements.
47
In
connection with its activities as servicer, the Company agrees to prepare and
present, on behalf of itself and the Owner, claims to the insurer under any
Primary Mortgage Insurance Policy in a timely fashion in accordance with the
terms of such Primary Mortgage Insurance Policy and, in this regard, to take
such action as shall be necessary to permit recovery under any Primary Mortgage
Insurance Policy respecting a defaulted Mortgage Loan. Any amounts collected
by
the Company under any Primary Mortgage Insurance Policy shall be deposited
in
the Custodial Account pursuant to Section 3.06, subject to withdrawal pursuant
to Section 3.07.
Section
3.24.
Compliance With REMIC Provisions.
If a
REMIC election has been made with respect to the arrangement under which the
Mortgage Loans and REO Property are held, the Company shall not take any action,
cause the REMIC to take any action or fail to take (or fail to cause to be
taken) any action that, under the REMIC Provisions, if taken or not taken,
as
the case may be, could (i) endanger the status of the REMIC as a REMIC or (ii)
result in the imposition of a tax upon the REMIC (including but not limited
to
the tax on “prohibited transactions” as defined Section 860F(a)(2) of the Code
and the tax on “contributions” to a REMIC set forth in Section 860G(d) of the
Code) unless the Company has received an Opinion of Counsel (at the expense
of
the party seeking to take such an action) to the effect that the contemplated
action will not endanger such REMIC status or result in the imposition of any
such tax.
Section
3.25.
Notification of Adjustments.
With
respect to each Adjustable Rate Mortgage Loan, the Company shall adjust the
Mortgage Interest Rate on the related Adjustment Date in compliance with the
requirements of applicable law and the related Mortgage and Mortgage Note.
The
Company shall execute and deliver any and all necessary notices required under
applicable law and the terms of the related Mortgage Note and Mortgage regarding
the Mortgage Interest Rate adjustments. The Company shall promptly, upon written
request therefor, deliver to the Owner such notifications and any additional
applicable data regarding such adjustments and the methods used to calculate
and
implement such adjustments. Upon the discovery by the Company or the receipt
of
notice from the Owner that the Company has failed to adjust a Mortgage Interest
Rate in accordance with the terms of the related Mortgage Note, the Company
shall immediately deposit in the Custodial Account from its own funds the amount
of any interest loss or deferral caused the Owner thereby.
48
Section
3.26.
Restoration of Mortgaged Property.
The
Company need not obtain the approval of the Owner prior to releasing any
Insurance Proceeds or Condemnation Proceeds to the Mortgagor to be applied
to
the restoration or repair of the Mortgaged Property if such release is in
accordance with Accepted Servicing Practices. At a minimum, the Company shall
comply with the following conditions in connection with any such release of
Insurance Proceeds or Condemnation Proceeds:
(a) the
Company shall receive satisfactory independent verification of completion of
repairs and issuance of any required approvals with respect thereto;
(b) the
Company shall take all steps necessary to preserve the priority of the lien
of
the Mortgage, including, but not limited to requiring waivers with respect
to
mechanics’ and materialmen’s liens;
(c) the
Company shall verify that the Mortgage Loan is not in default; and
(d) pending
repairs or restoration, the Company shall place the Insurance Proceeds or
Condemnation Proceeds in the Escrow Account.
If
the
Owner is named as an additional loss payee, the Company is hereby empowered
to
endorse any loss draft issued in respect of such a claim in the name of the
Owner.
Section
3.27.
Payment of Taxes, Insurance and Other Charges.
(a) With
respect to each Mortgage Loan which provides for Escrow Payments, the Company
shall maintain, or cause to be maintained, accurate records reflecting the
status of ground rents, taxes, assessments, water rates, sewer rents, and other
charges which are or may become a lien upon the Mortgaged Property and the
status of Primary Mortgage Insurance Policy premiums and fire and hazard
insurance coverage and shall obtain, from time to time, all bills for the
payment of such charges (including renewal premiums) (“Property
Charges”)
and
shall effect payment thereof prior to the applicable penalty or termination
date, employing for such purpose deposits of the Mortgagor in the Escrow Account
which shall have been estimated and accumulated by the Company in amounts
sufficient for such purposes, as allowed under the terms of the Mortgage. The
Company shall effect timely payment of all such charges irrespective of each
Mortgagor’s faithful performance in the payment of same or the making of the
Escrow Payments, and the Company shall make Advances from its own funds to
effect such payments.
(b) To
the
extent that a Mortgage Loan does not provide for Escrow Payments, the Company
shall make Advances from its own funds to effect payment of all Property Charges
upon receipt of notice of any failure to pay on the part of the Mortgagor,
or at
such other time as the Company determines to be in the best interest of the
Owner, provided, that in any event the Company shall pay such charges on or
before the earlier of (a) any date by which payment is necessary to preserve
the
lien status of the Mortgage or (b) the date which is ninety days after the
date
on which such charges first became due. The Company shall pay any late fee
or
penalty which is payable due to any delay in payment of any Property Charge
after the earlier to occur of (a) the date on which the Company receives notice
of the failure of the Mortgagor to pay such Property Charge or (b) the date
which is ninety days after the date on which such charges first became
due.
49
ARTICLE
IV
REPORTS
AND PAYMENTS TO THE INITIAL OWNER
Section
4.01.
Distributions.
On each
Remittance Date the Company shall distribute to the Initial Owner in immediately
available funds by wire transfer, the Remittance Amount with respect to the
Mortgage Loans.
With
respect to any remittance required by the immediately preceding paragraph
received by the Owner after the first Business Day following the Business Day
on
which such payment was due, the Company shall pay to the Owner interest on
any
such late payment at an annual rate equal to the Prime Rate, adjusted as of
the
date of each change, but in no event greater than the maximum amount permitted
by applicable law. Such interest shall be deposited in the Custodial Account
by
the Company on the date such late payment is made (and remitted to the Owner
along with the payment when made) and shall cover the period commencing with
the
day following such first Business Day and ending with the Business Day on which
such payment is made, both inclusive. The payment by the Company of any such
interest shall not be deemed an extension of time for payment or a waiver of
any
default by the Company.
Section
4.02.
Statements to the Owner.
On each
Report Date, the Company shall forward to the Owner a statement in electronic
format setting forth certain information in respect of the Mortgage Loans as
provided in Exhibit B.
Within
a
reasonable period of time after the end of each calendar year, the Company
shall
furnish to the Initial Owner a statement containing (i) the amount, if any,
of
the distribution expected on the related Remittance Date allocable to principal
and/or interest and (ii) the number and aggregate Principal Balance of the
Mortgage Loans at the close of business on such Remittance Date after giving
effect to all distributions allocable to principal made on the related
Determination Date, including, for this purpose, the Principal Balances of
all
Mortgage Loans repurchased pursuant to Section 2.02 or 2.04, the proceeds of
which are being distributed on the related Remittance Date. Such obligation
of
the Company shall be deemed to have been satisfied to the extent that
substantially comparable information shall be provided by the Company pursuant
to any requirements of the Code as from time to time in force.
In
addition, not more than 60 days after the end of each calendar year, the Company
shall furnish to each Person who was an Owner at any time during such calendar
year an annual statement in accordance with the requirements of applicable
federal income tax law as to the aggregate of remittances for the applicable
portion of such year. Such obligation of the Company shall be deemed to have
been satisfied to the extent that substantially comparable information shall
be
provided by the Company pursuant to any requirements of the Internal Revenue
Code as from time to time are in force. The Company shall also provide the
Owner
with such information concerning the Mortgage Loans necessary for the Owner
to
prepare its federal income tax return as the Initial Owner may reasonably
request from time to time.
50
The
Company shall prepare and file any and all tax returns, information statements
or other filings required to be delivered to any governmental taxing authority
or to the Owner pursuant to any applicable law with respect to the Mortgage
Loans and the transactions contemplated hereby.
Section
4.03.
Distribution Reports.
Prior
to the close of business on the Business Day next succeeding each Determination
Date, the Company shall furnish a statement to the Initial Owner setting forth
the amount to be distributed on the next succeeding Remittance Date on account
of principal of and interest on the Mortgage Loans.
Section
4.04.
Flood
Zone Reporting.
If at
any time during the term of the Mortgage Loan, the Company determines in
accordance with applicable law and Accepted Servicing Practices that a Mortgaged
Property is located in a special flood hazard area and is not covered by flood
insurance or is covered in an amount less than the amount required by the Flood
Disaster Protection Act of 1973, as amended, the Company shall notify the
related Mortgagor that the Mortgagor must obtain such flood insurance coverage,
and if said Mortgagor fails to obtain the required flood insurance coverage
within thirty (30) days after such notification, the Company shall immediately
force place the required flood insurance on the Mortgagor’s behalf.
Section
4.05.
Reports to the Initial Owner.
(a) On
or
before March 15 of each calendar year, commencing in 2007, the Company
shall:
(i) deliver
to the Initial Owner a certificate of an officer of the Company stating, as
to
each signer thereof, that (i) a review of the Company’s activities during the
immediately preceding calendar year (or applicable portion thereof) and of
its
performance under this Agreement during such period has been made under such
officer’s supervision, (ii) to the best of such officers’ knowledge, based on
such review, the Company has fulfilled all of its obligations under this
Agreement in all material respects throughout such calendar year (or applicable
portion thereof) or, if there has been a failure to fulfill any such obligation
in any material respect, specifically identifying each such failure known to
such officer and the nature and the status thereof and (iii) to the best of
such
officer’s knowledge, each subservicer has fulfilled its obligations under its
subservicing agreement in all material respects, or, if there has been a failure
to fulfill any such obligation in any material respect, specifically identifying
each such failure known to such officer and the nature and the status
thereof;
(ii) deliver
to the Initial Owner a report regarding the Company’s assessment of compliance
with the Servicing Criteria during the immediately preceding calendar year,
as
addressed under Rules 13a-18 and 15d-18 of the Exchange Act and Item 1122 of
Regulation AB. Such report shall be addressed to the Initial Owner and signed
by
an authorized officer of the Company, and shall address each of the Servicing
Criteria specified on Exhibit M hereto; and
51
(iii) deliver
to the Initial Owner a report of a registered public accounting firm reasonably
acceptable to the Initial Owner that attests to, and reports on, the assessment
of compliance made by the Company and delivered pursuant to the preceding
paragraph. Such attestation shall be in accordance with Rules 1-02(a)(3) and
2-02(g) of Regulation S-X under the Securities Act and the Exchange
Act.
Section
4.06.
Additional Reports and Information.
(a) Reports
of Foreclosures and Abandonments of Mortgaged Property.
Following the foreclosure sale or abandonment of any Mortgaged Property, the
Company shall report such foreclosure or abandonment as required pursuant to
Section 6050J of the Code.
(b) Company
Shall Provide Information as Reasonably Required.
The
Company shall furnish to the Initial Owner, such periodic, special or other
reports, information or documentation, whether or not provided for herein,
as
shall be necessary, reasonable or appropriate in respect to the Initial Owner,
or otherwise in respect to the Mortgage Loans and the performance of the Company
under this Agreement, including any reports, information or documentation
reasonably required to comply with any regulations regarding any supervisory
agents or examiners of the Initial Owner all such reports or information to
be
as provided by and in accordance with such applicable instructions and
directions as the Initial Owner may reasonably request in relation to the
performance of the Company under this Agreement.
Section
4.07.
Financial Statements.
The
Company hereby authorizes the Initial Owner, in connection with a sale of the
Mortgage Loans, to make available to prospective purchasers copies of any
publicly available Consolidated Statement of Operations of the Company prepared
by or at the request of the Company for the most recently completed three (3)
fiscal years for which such a statement is available, as well as a Consolidated
Statement of Condition at the end of the last two (2) fiscal years covered
by
such Consolidated Statement of Operations. Alternatively, if the Company does
not itself have a Consolidated Statement of Operations or a Consolidated
Statement of Condition, but is a subsidiary of a publicly held parent company
which does have such statements, the Company will make available to the Initial
Owner a copy of any publicly available Consolidated Statement of Operations
and
Consolidated Statement of Condition of the parent company, which set forth
a
consolidating statement of the financial condition of the Company. The Company
will also make available to the Initial Owner any comparable interim statements
to the extent any such statements have been prepared by the Company or its
parent, as the case may be (and are available to its stockholders or the public
at large). The Company, if it has not already done so, shall promptly furnish
to
the Initial Owner copies of the statements specified above.
After
executing a confidentiality agreement and upon reasonable notice, a prospective
purchaser shall have the right and the Company also agrees to make available
during normal business hours a knowledgeable financial or accounting officer
for
the purpose of answering questions respecting recent developments affecting,
directly or indirectly, the Company’s ability to perform under this Agreement,
or the publicly available financial statements of the Company, and to permit
such prospective purchaser upon reasonable notice and during normal business
hours to inspect the Company’s servicing facilities for the purpose of
satisfying such prospective purchaser that the Company has the ability to
service the Mortgage Loans in accordance with the terms of this
Agreement.
52
ARTICLE
V
THE
COMPANY
Section
5.01.
Liability of the Company and Others.
The
Company shall be liable in accordance herewith only to the extent of the
obligations specifically imposed upon and undertaken by the Company
herein.
Neither
the Company, nor any of the directors, officers, employees or agents of the
Company shall be under any liability to any Initial Owner for any action taken
or for refraining from the taking of any action in good faith in accordance
with
the servicing of the Mortgage Loans under this Agreement, or for errors in
judgment; provided,
however,
that
this provision shall not protect the Company or any such person against any
breach of warranties or representations made herein, failure to perform
obligations in compliance with the standards of care in this Agreement, or
any
liability which would otherwise be imposed by reason of willful misfeasance,
bad
faith or negligence in the performance of duties or by reason of reckless
disregard of obligations and duties hereunder. The Company and any director,
officer, employee or agent of the Company 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.
Notwithstanding
the foregoing, the Company shall indemnify and hold harmless the Owner and
any
director, officer, employee or agent of the Owner for any loss, liability or
expense incurred by such Owner arising (i) from any breach of warranty or
representation or covenant of the Company made herein that materially and
adversely affects the interests of the Owner or (ii) reasons of willful
misfeasance, bad faith or negligence of the Company in the performance of its
duties hereunder or by reason of reckless disregard of its obligations and
duties hereunder.
The
Company and any director, officer, employee or agent of the Company shall be
indemnified by the Owner and held harmless against any loss, liability or
expense incurred in connection with any legal action relating to this Agreement,
other than any loss, liability or expense incurred by reason of willful
misfeasance, bad faith or negligence of the Company in the performance of its
duties hereunder and any loss, liability or expense incurred by reason of a
breach by the Company of any representation, warranty or covenant made by it
herein.
In
case
any proceeding shall be instituted involving any indemnified party (each, an
“Indemnified Party”) in respect of which indemnity may be sought pursuant to
this Agreement, such Indemnified Party shall promptly notify the indemnifying
party (the “Indemnifying Party”) in writing and the Indemnifying Party, upon
written request of the Indemnified Party, shall retain legal counsel reasonably
satisfactory to the Indemnified Party to represent the Indemnified Party. The
Indemnifying Party shall pay the reasonable fees and disbursements of such
counsel related to such proceeding. In any such proceeding, the Indemnified
Party shall have the right to retain its own counsel, but the reasonable fees
and expenses of such counsel shall be at the expense of the Indemnified Party
unless (i) the Indemnifying Party and the Indemnified Parties shall have
mutually agreed to the retention of such counsel or (ii) the named parties
to
any such proceeding (including any impleaded parties) include both the
Indemnifying Party and the Indemnified Party and representation of both parties
by the same counsel would be inappropriate due to actual or potential differing
interests between them. It is understood that the Indemnifying Party shall
not,
in connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the reasonable fees and expenses of more than one
separate firm for the Indemnified Party. Any firm retained pursuant to clause
(ii) of the second preceding sentence shall be designated in writing by the
Indemnified Party. The Indemnifying Party may, at its option, at any time upon
written notice to the Indemnified Party, assume the defense of any proceeding
and may designate counsel satisfactory to the Indemnified Party in connection
therewith, provided that the counsel so designated would have no actual or
potential conflict of interest in connection with such representation. Unless
it
shall assume the defense of any proceeding, the Indemnifying Party shall not
be
liable for any settlement of any proceeding, effected without its written
consent, but if settled with such consent or if there be a final judgment for
the plaintiff, the Indemnifying Party agrees to indemnify the Indemnified Party
from and against any loss or liability by reason of such settlement or judgment.
If Indemnifying Party assumes the defense of any proceeding, it shall be
entitled to settle such proceeding with the consent of the Indemnified Party
or,
if such settlement provides for unconditional release of any Indemnified Party
in connection with all matters and liability relating to the proceeding that
have been asserted against the Indemnified Party in such proceeding by the
other
parties to such settlement, without the consent of the Indemnified Party. The
provisions of this Section 5.01 shall survive termination of this
Agreement.
53
The
Company shall not be under any obligation to appear in, prosecute or defend
any
legal action which is not incidental to its duties under this Agreement and
which in its opinion may involve it in any expense or liability; provided,
however,
that
the Company may in its discretion undertake any such legal action which it
may
deem necessary or desirable in respect of this Agreement and the rights and
duties of the parties hereto. In such event, the reasonable legal expenses
and
costs of such action and any liability resulting therefrom shall be expenses,
costs and liabilities payable or reimbursable by the Owner upon presentation
of
reasonable documentation with respect thereto.
Section
5.02.
Merger or Consolidation of the Company.
The
Company will keep in full effect its existence, rights and franchises as a
limited liability company under the laws of the State of Delaware, and will
obtain and preserve its qualification to do business as a foreign limited
liability company in each jurisdiction in which such qualification is or shall
be necessary to protect the validity and enforceability of this Agreement or
any
of the Mortgage Loans and to perform its duties under this
Agreement.
Any
Person into which the Company may be merged or consolidated, or any corporation
resulting from any merger or consolidation to which the Company shall be a
party, or any Person succeeding to the business of the Company, shall be the
successor of the Company hereunder, without the execution or filing of any
paper
or any further act on the part of any of the parties hereto, anything herein
to
the contrary notwithstanding; provided however, that the successor or surviving
Person shall have a net worth of at least $25,000,000 and shall be a Xxxxxx
Xxx-
or Xxxxxxx Mac-approved servicer in good standing.
54
Section
5.03.
Limitation on Assignment, Pledge, Hypothecation and Resignation by
Company.
The
Initial Owner has entered into this Agreement with the Company and subsequent
purchasers will purchase the Mortgage Loans in reliance upon the independent
status of the Company, and the adequacy of its servicing facilities, personnel,
records and procedures, its integrity, reputation and financial standing, and
the continuance thereof. The Company may assign, pledge or hypothecate this
Agreement only upon express written consent of the Owner. The Company shall
request such consent sixty (60) Business Days prior to the proposed assignment
and the Owner shall give written notice of such consent (or denied consent)
thirty (30) Business Days prior to the date the assignment shall become
effective. The Company, as servicer, may assign this Agreement or resign from
the obligations and duties hereby imposed on it (a) upon sixty (60) days prior
written notice to the Owner and with the Owner’s prior written consent, or (b)
upon a determination that its duties hereunder are no longer permissible under
applicable law and such incapacity cannot be cured by the Company. Any such
determination permitting the resignation of the Company as contemplated by
clause (b) shall be evidenced by an Opinion of Counsel to such effect delivered
to the Initial Owner. Upon the Company’s resignation, the Owner shall either
assume the responsibilities, duties, rights and obligations of the Company
or
appoint a Successor Servicer in accordance with Section 10.01. No such
resignation shall become effective until a successor which satisfies the
requirements of Section 10.01 and is acceptable to the Owner has assumed the
Company’s duties as servicer hereunder, unless a determination has been made
that the Company’s duties as servicer hereunder are no longer permissible under
applicable law. All costs with respect to such resignation shall be paid by
the
Company.
ARTICLE
VI
DEFAULT
Section
6.01.
Events of Default of the Company.
“Event
of Default”, wherever used herein, means any one of the following
events:
(i) the
Company shall fail to remit to the Initial Owner any payment required to be
made
under the terms of this Agreement and such failure shall continue unremedied
for
a period of one (1) Business Day after the date upon which written notice or
oral notice (promptly confirmed in writing) of such failure, requiring such
failure to be remedied, shall have been given to the Company by the Initial
Owner; or
(ii) the
Company shall fail to observe or perform in any material respect any other
of
the covenants or agreements on the part of the Company contained in this
Agreement as it relates to the Initial Owner and such failure shall continue
unremedied for a period of thirty (30) days after the date on which written
notice of such failure, requiring the same to be remedied, shall have been
given
to the Company by the Initial Owner; or
55
(iii) a
decree
or order of a court or agency or supervisory authority having jurisdiction
in an
involuntary case under any present or future federal or state bankruptcy,
insolvency or similar law or appointing a conservator or receiver or liquidator
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 Company and such decree or order shall
have
remained in force undischarged or unstayed for a period of 60 days;
or
(iv) the
Company shall consent to the appointment of a conservator or receiver or
liquidator in any insolvency, readjustment of debt, marshalling of assets and
liabilities or similar proceedings of, or relating to, the Company or of, or
relating to, all or substantially all of the property of the Company;
(v) the
Company shall admit in writing its inability to pay its debts generally as
they
become due, file a petition to take advantage of, or commence a voluntary case
under, any applicable insolvency or reorganization statute, make an assignment
for the benefit of its creditors, voluntarily suspend payment of its obligations
or cease its normal business operations for five (5) Business Days;
(vi) failure
by the Company to be in compliance with the “doing business” or licensing laws
of any jurisdiction where a Mortgaged Property is located but only to the extent
such failure materially and adversely affects the enforceability of the Mortgage
Loans or the Company’s ability to perform its obligations
hereunder;
(vii) the
Company ceases to meet the qualifications of a Xxxxxx Mae or Xxxxxxx Mac
servicer;
(viii) the
Company fails to maintain a minimum net worth of $25,000,000;
(ix) the
Company attempts, in violation of this Agreement, to assign its right to
servicing compensation hereunder or the Company attempts, in violation of this
Agreement, to sell or otherwise dispose of all or substantially all of its
property or assets or to assign this Agreement or the servicing responsibilities
hereunder (in the event that such sale, disposition or assignment would have
a
negative impact on the ability of the Company to perform its obligations under
this Agreement or service the Mortgage Loans in general) or to delegate its
duties hereunder or any portion thereof; or
(x) if
(a)
after a Reconstitution in a Securitization
Transaction,
any of
the Rating Agencies reduces or withdraws the rating of any of the certificates
issued by a securitization trust that owns the Mortgage Loans citing the
servicing by the Company as a sole or material factor, (b) Standard & Poor's
lowers the Company’s servicing rating anytime after the date of this Agreement
to below “average” or (c) Xxxxx’x lowers the Company’s servicing rating anytime
after the date of this Agreement to below “SQ3”.
56
If
an
Event of Default described in this Section shall occur, then, and in each and
every such case, so long as such Event of Default shall not have been remedied,
the Initial Owner by notice in writing to the Company, may terminate all of
the
rights and obligations of the Company under this Agreement other than its right
to receive servicing compensation for servicing the Mortgage Loans hereunder
during any period prior to the date of such termination and may exercise any
and
all other remedies available at law or equity; provided,
further,
that the
Owner may terminate any commitment the Owner has entered into to purchase
additional Mortgage Loans from the Company hereunder; provided,
however,
that
any liability of the Company under this Agreement arising prior to such
termination shall survive. On or after the receipt by the Company of such
written notice, all authority and power of the Company under this Agreement
shall, in accordance with Section 10.01, pass to and be vested in the Initial
Owner or the Successor Servicer appointed pursuant to Section
10.01.
Upon
written request from any Owner, the Company shall prepare, execute and deliver
to the successor entity designated by the Owner any and all documents and other
instruments, place in such successor’s possession any Mortgage Files in the
Company’s possession or control, and do or cause to be done all other acts or
things necessary or appropriate to effect the purposes of such notice of
termination, including but not limited to the transfer and endorsement or
assignment of the Mortgage Loans and related documents, at the Company’s sole
expense. The Company shall cooperate with the Owner and such successor in
effecting the termination of the Company’s responsibilities and rights
hereunder, including without limitation, the transfer to such successor for
administration by it of all cash amounts which shall at the time be credited
by
the Company to the Custodial Account or Escrow Account or thereafter received
with respect to the Mortgage Loans.
Section
6.02.
Waiver of Defaults.
By
written notice, the Owner may waive such default by the Company in the
performance of its obligations hereunder and its consequences. Upon any such
waiver of a past default, such default shall cease to exist, and any Event
of
Default, as defined in Section 6.01, arising therefrom shall be deemed to have
been remedied for every purpose of this Agreement. No such waiver shall extend
to any subsequent or other default or impair any right consequent thereon except
to the extent expressly so waived.
ARTICLE
VII
TERMINATION
Section
7.01.
Termination.
This
Agreement shall terminate upon the earlier of: (i) the later of the final
payment or other liquidation (or any advance with respect thereto) of the last
Mortgage Loan subject to this Agreement or the disposition of any REO Property
with respect to the last Mortgage Loan and the remittance of all funds due
hereunder, (ii) the exercise of the Owner’s right pursuant to Section 6.01 to
terminate this Agreement upon an Event of Default or (iii) (ii) by mutual
consent of the Company and the Initial Owner in writing. All representations,
warranties, rights to audits, indemnity obligations, and other remedies
available to the Owner under this Agreement, at law or in equity, will survive
the termination of this Agreement.
57
Section
7.02.
Termination Without Cause.
This
Agreement and the Company’s rights hereunder with respect to some or all of the
Mortgage Loans shall additionally terminate at the sole option of the Owner,
without cause, upon 30 days written notice, subject to the limitations set
forth
below. Any such notice of termination shall be in writing and delivered to
the
Company by registered mail. The Owner and the Company shall comply with the
termination procedures set forth in Sections 6.01 and 10.01 hereof.
In
the
event the Owner terminates the Company without cause with respect to some or
all
of the Mortgage Loans, the Owner shall be required to pay to the Company a
termination fee equal to 1.50% of the aggregate unpaid principal balance of
the
Mortgage Loans as of such termination date; provided, that no termination fee
shall be paid or payable with respect to the unpaid principal balance of any
Distressed Mortgage Loan.
ARTICLE
VIII
CLOSING
Section
8.01.
General Provisions.
Each
closing for the purchase and sale of Mortgage Loans hereunder shall take place
on the related Closing Date. At the Initial Owner’s option, the closing shall be
either: by telephone, confirmed by letter or wire as the parties shall agree;
or
conducted in person, at such place as the parties shall agree.
Each
closing for a Mortgage Pool shall be subject to each of the following
conditions:
(a) No
later
than the date set forth in the related Trade Confirmation, the Company shall
deliver to the Initial Owner a Mortgage Loan Schedule with respect to the
Mortgage Loans to be purchased and sold on such date;
(b) All
of
the representations and warranties of the Company under Section 2.04(b) with
respect to the related Mortgage Loans, and under Section 2.04(a), shall be
true
and correct as of the related Closing Date;
(c) The
Initial Owner shall have received, or the Initial Owner’s attorneys shall have
received in escrow, all closing documents as specified in Section 8.02 of this
Agreement, in such forms as are agreed upon and acceptable to the Initial Owner,
duly executed by all signatories other than the Initial Owner as required
pursuant to the respective terms thereof; and
(d) The
Company shall have delivered and released to the Custodian on or prior to the
related Closing Date all documents required to be delivered on or prior to
the
Closing Date pursuant to Section 2.01.
Subject
to the foregoing conditions, the Initial Owner shall pay to the Company on
the
related Closing Date the Purchase Price (including accrued interest), plus
any
additional costs specified in this Agreement by wire transfer of immediately
available funds to the account designated by the Company.
58
Section
8.02.
Closing Documents.
The
closing documents to be delivered on the initial Closing Date shall consist
of
the following documents, as well as the documents listed below in connection
with a Closing on any date other than the initial Closing Date:
(i) this
Agreement; and
(ii) an
Officer’s Certificate, in the form of Exhibit H hereto, including all
attachments thereto.
The
closing documents for the Mortgage Loans to be purchased on each Closing Date
under this Agreement (including the initial Closing Date) shall consist of
the
following documents:
(iii) the
related Trade Confirmation;
(iv) the
related Purchase Confirmation, including all annexes thereto;
(v) each
of
the documents required to be delivered by the Company pursuant to Article II
hereof prior to such Closing Date; and
(vi) if
requested by the Owner with respect to such Closing Date, an Officer’s
Certificate, in the form of Exhibit H hereto, including all attachments
thereto.
In
addition, within thirty (30) days after the initial Closing Date, the Company
shall deliver to the Initial Owner a Custodial Account certification in the
form
of Exhibit I hereto.
ARTICLE
IX
SECURITIZATION
TRANSACTIONS AND WHOLE-LOAN TRANSFERS;
APPOINTMENT
OF MASTER SERVICER
Section
9.01.
Securitization Transactions or Whole-Loan Transfers.
(a) Upon
10
days’ prior written notice of intent to the Company, the Owner and the Company
agree that the Owner may consummate a Securitization Transaction or Whole-Loan
Transfer and assign its rights under this Agreement with respect to the Mortgage
Loans subject to such Securitization Transaction or Whole-Loan Transfer subject
to the terms of this Agreement; provided,
however,
that
the transferee will not be deemed to be the Owner hereunder unless such
transferee shall agree in writing to be bound by the terms of this Agreement
and
a counterpart of the document evidencing such agreement shall have been executed
by the Owner and the transferee and delivered to the Company.
(b) The
Owner
and the Company agree that in connection with the completion of a Securitization
Transaction, the Company shall:
59
(i) provide
the Owner with an Officer’s Certificate on behalf of the Company that restates
as of the Reconstitution Date all representations and warranties made by the
Company pursuant to Section 2.04(a) of this Agreement and to restate the
representations and warranties made by the Company in Section 2.04(b) as of
the
Closing Date on which such Mortgage Loans were purchased by the Initial Owner
pursuant. to this Agreement, together with any additional reasonable
representations and warranties which may be required by the rating agencies
in
connection with the Securitization Transaction, which shall be mutually agreed
upon by the Company and the Owner and shall be standard representations and
warranties for Securitization Transactions involving mortgage loans similar
to
the Mortgage Loans and shall not impose any additional obligations or
liabilities on the Company than are set forth in this Agreement;
(ii) cooperate
with the Owner with respect to reasonable requests which have been made by
the
Owner by prior notice and if the Company is required to be a party to any of
the
Reconstitution Agreements, execute any Reconstitution Agreement, subject to
the
provisions of this Section 9.01(b), and subject to the mutual agreement between
the Owner and the Company as to the terms thereof, within a reasonable period
of
time, but in no event shall any prior notice and request to execute a
Reconstitution Agreement be made to the Company less than ten (10) days prior
to
the date such Reconstitution Agreement is to be executed;
(iii) provide
to any master servicer or trustee, as applicable, and/or the Owner, as of a
recent date prior to the Securitization Transaction, any and all publicly
available information and appropriate verification of information which may
be
reasonably available to the Company, whether through letters of its auditors
and
counsel or otherwise, as the Owner, trustee or a master servicer shall
reasonably request as to the related Mortgage Loans and that is customary
information for a Securitization Transaction;
(iv) [Reserved];
(v) deliver
to the Owner an Opinion of Counsel with respect to the enforceability of the
Reconstitution Agreement against the Company, it being understood that the
cost
of any Opinion of Counsel for outside counsel shall be the responsibility of
the
Owner, subject to Section 9.01(c), and
(vi) provide
all other assistance reasonably requested by the Owner in connection with
effectuation and completion of the Securitization Transaction.
With
respect to any Securitization Transaction, the Owner shall be entitled to
include in any disclosure document with respect to the related Securitization
Transaction, information provided by the Company, as required by the rating
agencies or applicable law, and the Company acknowledges and agrees that the
related investors will be permitted to rely on such information. The Company
shall indemnify the Owner for any untrue statement of any material fact
contained in such information, or the omission to state therein a material
fact
required to be stated therein or necessary to make the statements therein,
in
the light of the circumstances in which they were made, not misleading. In
addition, the Owner shall indemnify the Company and its affiliates for any
untrue statement of any material fact contained in other information contained
in any disclosure document with respect to the related Securitization
Transaction, or the omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in the light of
the
circumstances in which they were made, not misleading. This paragraph shall
only
apply to a Securitization Transaction not governed by the Regulation AB
Addendum.
60
(c) The
Owner
and the Company agree that in connection with the completion of a Whole-Loan
Transfer, the Company shall cooperate with the Owner with respect to reasonable
requests which have been made by the Owner by prior notice and shall provide
all
other assistance reasonably requested by the Owner in connection with
effectuation and completion of the Whole-Loan Transfer.
(d) The
Owner
shall reimburse the Company for all reasonable out-of-pocket costs and expenses
(including auditor and legal fees) incurred in connection with any
Securitization Transaction; provided,
however,
that
all amounts required to be paid by the Owner pursuant to this clause (b) shall
be subject to the prior notice and approval of the Owner, such approval not
to
be unreasonably withheld; and provided farther, that such legal fees for the
first such Securitization Transaction shall not exceed $5,000 and shall not
exceed $3,000 for any additional Securitization Transaction.
(e) All
Mortgage Loans not sold or transferred pursuant to Section 2.03, a
Securitization Transaction or a Whole-Loan Transfer shall be subject to this
Agreement and shall continue to be serviced in accordance with the terms of
this
Agreement and with respect thereto this Agreement shall remain in full force
and
effect.
(f) Upon
receipt by the Company of notice from Xxxxxx Xxx, Xxxxxxx Mac or other such
third party purchaser of a breach of any Owner representation or warranty
contained in any Reconstitution Agreement or a request by Xxxxxx Mae, Xxxxxxx
Mac, the trustee or third party purchaser as the case may be, for the repurchase
of any Mortgage Loan transferred to Xxxxxx Mae or Xxxxxxx Mac pursuant to a
Securitization or a Whole Loan Transfer or to a trustee pursuant to a
Securitization
Transaction
or to a
third party purchaser pursuant to a Whole Loan Transfer, the Company shall
promptly notify the Owner of same. In addition, the Company shall reasonably
cooperate with the Owner in connection with the Owner’s cure of a breach of any
Owner representation or warranty contained in any Reconstitution
Agreement.
Section
9.02.
Designation of a Master Servicer.
(a) Notwithstanding
anything to the contrary contained in this Agreement, the Initial Owner shall
have the right, in its sole discretion, upon reasonable prior written notice
to
the Company, to appoint and designate a Master Servicer as master servicer
of
Mortgage Loans subject to a permitted Whole Loan Transfer or Securitization
Transaction. The Company shall service the Mortgage Loans, and remit and report
to the Master Servicer, in accordance with the terms of this Agreement. As
of
the date of this Agreement, the Initial Owner designates Aurora Loan Services
LLC as the Master Servicer and this shall constitute written notice of such
appointment.
61
(b) Upon
appointment of a Master Servicer in accordance with Section 9.02(a), the Company
shall correspond and communicate solely with the Master Servicer, as if the
Master Servicer were the “Initial Owner” hereunder. The Master Servicer shall
have all rights as designee of the Initial Owner to enforce the covenants and
conditions set forth in this Agreement, and the Company shall follow and shall
be entitled to rely on the instructions of the Master Servicer under this
Agreement as if such instructions were the instructions of the Initial Owner.
The Master Servicer shall have the right to give any waivers or consents
required or allowed under this Agreement on behalf of the Initial Owner, and
the
Company shall be entitled to rely on such waivers and consents as if such
waivers or consents were the waivers or consents of the Initial Owner. The
Master Servicer is empowered to enter into and execute and deliver any
amendments or modifications to this Agreement as the Initial Owner’s designee
hereunder, and such amendments or modifications shall be binding upon the
Initial Owner as if the Initial Owner had executed and delivered the same.
The
Company shall treat the Master Servicer as “Initial Owner” hereunder until the
Company receives written notice from the Initial Owner that the Initial Owner
has terminated the Master Servicer. Notwithstanding the foregoing, it is
understood that the appointment of a Master Servicer shall not change any
indemnification obligation of the Company or the Initial Owner
hereunder.
(c) Upon
receipt of written notice of termination of the Master Servicer, the Company
shall no longer deal with the Master Servicer and shall instead deal directly
with the Initial Owner. From and after receipt of such notice of termination
of
the Master Servicer, the Company shall service the applicable Mortgage Loans
in
accordance with the provisions of this Agreement and shall give no effect to
any
Master Servicing Agreement entered into with the Master Servicer.
ARTICLE
X
MISCELLANEOUS
PROVISIONS
Section
10.01.
Successor to the Company.
Any
successor servicer appointed as provided herein (the “Successor Servicer”) shall
meet the requirements of Section 5.02 and shall execute, acknowledge and deliver
to the Company and the Owner an instrument accepting such appointment, wherein
such Successor Servicer shall make the representations set forth in Section
2.04(a) and whereupon such Successor Servicer shall succeed to the rights and
obligations of the Company under this Agreement and shall become fully vested
with all the rights, powers, duties, responsibilities, obligations and
liabilities of the Company with like effect as if originally named as a party
to
this Agreement; provided that, in connection with such appointment and
assumption, the Owner may make such arrangements for the compensation of such
successor out of payments on Mortgage Loans as it and such Successor Servicer
shall agree. In connection with the termination or resignation of the Company
as
servicer hereunder, either (i) the Successor Servicer shall represent and
warrant that it is a member of MERS in good standing and shall agree to comply
in all material respects with the rules and procedures of MERS in connection
with the servicing of the Mortgage Loans that are registered with MERS, or
(ii)
the Company shall cooperate with the Successor Servicer in causing MERS to
execute and deliver an Assignment of Mortgage in recordable form to transfer
the
Mortgage from MERS to the Owner and to execute and deliver such other notices,
documents and other instruments as may be necessary or desirable to effect
a
transfer of such Mortgage Loan or servicing of such Mortgage Loan on the MERS®
System to the Successor Servicer. The Company shall file or cause to be filed
any such assignment in the appropriate recording office.
62
In
the
event that the Company’s duties, responsibilities and liabilities under this
Agreement should be terminated under this Agreement, the Company shall discharge
such duties and responsibilities during the period from the date it acquires
knowledge of such termination until the effective date thereof with the same
degree of diligence and prudence which it is obligated to exercise under this
Agreement, and shall take no action whatsoever that might impair or prejudice
the rights or financial condition of its successor. The resignation or removal
of the Company pursuant to the aforementioned sections shall not become
effective until a successor shall be appointed pursuant to this Section 10.01
and shall in no event relieve the Company of the representations and warranties
made pursuant to Sections 2.04(a) and (b) and the remedies available to the
Owner under this Agreement, it being understood and agreed that the provisions
of such sections shall be applicable to the Company notwithstanding any such
sale, assignment, resignation or termination of the Company, or the termination
of this Agreement.
Within
thirty (30) days of the appointment of a Successor Servicer, the Company shall
prepare, execute and deliver to the successor entity any and all documents
and
other instruments, place in such Successor Servicer’s possession any Mortgage
Files in the Company’s possession or control, and do or cause to be done all
other acts or things necessary or appropriate to effect the purposes of such
notice of termination, including but not limited to the transfer of the Mortgage
Notes and related documents. The Company shall cooperate with the Owner and
such
successor in effecting the termination of the Company’s responsibilities and
rights hereunder and the transfer of servicing responsibilities to the successor
servicer, including without limitation, the transfer to such successor for
administration by it of all cash amounts which shall at the time be credited
by
the Company to the Custodial Account or Escrow Account or thereafter received
with respect to the Mortgage Loans.
Section
10.02.
Regulation AB.
In
order to facilitate compliance with Regulation AB, the Company and the Owner
agree to comply with the provisions of the Regulation AB Compliance Addendum
attached hereto as Exhibit
D.
Section
10.03.
Amendment; Entire Agreement.
This
Agreement may be amended from time to time by the Company and the Initial Owner
by written agreement signed by the Company and the Initial Owner. This
Agreement, as supplemented by the Trade Confirmations and Purchase
Confirmations, shall constitute the entire agreement between the parties. No
term or provision of this Agreement may be waived or modified unless such waiver
or modification is in writing and signed by the party against whom such waiver
or modification is sought to be enforced.
Section
10.04.
GOVERNING LAW.
THIS
AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK (OTHER THAN SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW) AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED
IN
ACCORDANCE WITH SUCH LAWS.
63
Section
10.05.
Notices.
All
demands and notices hereunder shall be in writing and shall be deemed to have
been duly given if personally delivered at or mailed by registered or certified
mail, postage prepaid, or sent by overnight courier to (a) in the case of the
Company, (i) Residential Funding Company, LLC, 0000 Xxxxxxxxxx Xxxx Xxxxxxxxx,
Xxxxx 000, Xxxxxxxxxxx, Xxxxxxxxx 00000, Attention: Office of the President,
and
(ii) Residential Funding Company, LLC, 0000 X. Xxxxxxx Xxxxxx, Xxxxx 000,
Xxxxxxx, Xxxxxxxxxx 00000, Attention: Servicing Manager, and (iii) such other
address as may hereafter be furnished to the Initial Owner in writing by the
Company, (b) in the case of the Initial Owner, (i) Lehman Capital, A Division
of
Xxxxxx Brothers Holdings, Inc., 000 Xxxxxxx Xxxxxx, 0xx Xxxxx, Xxx Xxxx, Xxx
Xxxx 00000, Attention: Contract Finance, (ii) Aurora Loan Services LLC,
00000
Xxxx Xxxxxxx Xxxxx, Xxxxxxxxx, XX 00000,
Attn:
E. Xxxx Xxxxxxxxxx and (iii) such other address or addresses as may hereafter
be
furnished to the Company in writing by the Initial Owner and (c) in the case
of
any Owner other than the Initial Owner, to such address as may be furnished
to
the Company in writing by such Initial Owner.
Section
10.06.
Severability of Provisions.
If any
part, provision, representation or warranty of this Agreement shall be for
any
reason whatsoever held invalid, then such item shall be deemed severable from
the remaining provisions of this Agreement and shall in no way affect the
validity or enforceability of the other provisions of this Agreement. Any part,
provision, representation or warranty of this Agreement that is prohibited
or
unenforceable or is held to be void or unenforceable in any jurisdiction shall
be ineffective, as to such jurisdiction, to the extent of such prohibition
or
unenforceability without invalidating the remaining provisions hereof, and
any
such prohibition or unenforceability in any jurisdiction as to any Mortgage
Loan
shall not invalidate or render unenforceable such provision in any other
jurisdiction. To the extent permitted by applicable law, the parties hereto
waive any provision of law that prohibits or renders void or unenforceable
any
provision hereof. If the invalidity of any part, provision, representation
or
warranty of this Agreement shall deprive any party of the economic benefit
intended to be conferred by this Agreement, the parties shall negotiate, in
good-faith, to develop a structure, the economic effect of which is as close
as
possible to the economic effect of this Agreement, without regard to such
invalidity.
Section
10.07.
No
Partnership.
Nothing
herein contained shall be deemed or construed to create a co-partnership or
joint venture between the parties hereto and the services of the Company shall
be rendered as an independent contractor and not as agent for the Initial
Owner.
Section
10.08.
Exhibits.
The
exhibits to this Agreement are hereby incorporated and made a part hereof and
are an integral part of this Agreement.
Section
10.09.
Counterparts; Successors and Assigns.
This
Agreement may be executed in one or more counterparts and by the different
parties hereto on separate counterparts, each of which, when so executed, shall
be deemed to be an original; such counterparts, together, shall constitute
one
and the same agreement. This Agreement shall inure to the benefit of and be
binding upon the Company and the Initial Owner and their respective permitted
successors and assigns.
64
Section
10.10.
General Interpretive Principles.
For
purposes of this Agreement, except as otherwise expressly provided or unless
the
context otherwise requires:
(a) the
terms
defined in this Agreement have the meanings assigned to them in this Agreement
and include the plural as well as the singular, and the use of any gender herein
shall be deemed to include the other gender;
(b) the
exhibits to this Agreement are hereby incorporated and made a part hereof and
are an integral part of this Agreement;
(c) accounting
terms not otherwise defined herein have the meanings assigned to them in
accordance with generally accepted accounting principles;
(d) references
herein to “Articles”, “Sections”, “Subsections”, “Paragraphs”, and other
subdivisions without reference to a document are to designated Articles,
Sections, Subsections, Paragraphs and other subdivisions of this
Agreement;
(e) a
reference to a Subsection without further reference to a Section is a reference
to such Subsection as contained in the same Section in which the reference
appears, and this rule shall also apply to Paragraphs and other
subdivisions;
(f) the
words
“herein”, “hereof”, “hereunder” and other words of similar import refer to this
Agreement as a whole and not to any particular provision; and
(g) the
term
“include” or “including” shall mean without limitation by reason of
enumeration.
Section
10.11.
No
Solicitation.
From and
after the related Closing Date, the Company agrees that it will not take any
action or permit or cause any action to be taken by any of its agents or
Affiliates, or by any independent contractors on the Company’s behalf, to
personally, by telephone, by mail, or electronically by e-mail or through the
internet or otherwise, solicit the borrower or obligor under any Mortgage Loan
for any purpose including, without limitation, to refinance the Mortgage Loan,
in whole or in part, without the prior written consent of the Initial Owner.
It
is understood and agreed by the Company and the Initial Owner that all rights
and benefits relating to the solicitation of any Mortgagors shall be transferred
to the Initial Owner pursuant hereto on the related Closing Date and the Company
shall take no action to undermine these rights and benefits. Notwithstanding
the
foregoing, it is understood and agreed that promotions undertaken by the Company
or any Affiliate of the Company which are directed to the general public at
large, including, without limitation, mass mailing based on commercially
acquired mailing lists, newspaper, radio and television advertisements shall
not
constitute solicitation under this Section 8.10. Notwithstanding anything to
the
contrary, this Section 8.10 shall not prohibit the Company or its agents or
affiliates from serving the refinancing needs or other financial needs of a
Mortgagor who, without solicitation, contacts the Company or its agents or
affiliates directly. The provisions of this Section 8.10 shall survive
termination of this Agreement.
65
Section
10.12.
Reproduction.
This
Agreement and all documents relating thereto, including, without limitation,
(a)
consents, waivers and modifications which may hereafter be executed, (b)
documents received by any party at the closing, and (c) financial statements,
certificates and other information previously or hereafter furnished, may be
reproduced by any photographic, photostatic, microfilm, micro-card, miniature
photographic or other similar process. The parties agree that any such
reproduction shall be admissible in evidence as the original itself in any
judicial or administrative proceeding, whether or not the original is in
existence and whether or not such reproduction was made by a party in the
regular course of business, and that any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in
evidence.
Section
10.13.
Confidentiality.
The
Company shall keep confidential and shall not divulge to any party, without
the
Initial Owner’s prior written consent, the Purchase Price paid by the Initial
Owner for any Mortgage Loan or Mortgage Pool, except to the extent that it
is
appropriate for the Company to do so in working with legal counsel, auditors,
taxing authorities or other governmental agencies.
Section
10.14.
Further Assurances.
The
Initial Owner and the Company each agree to execute and deliver to the other
such additional documents, instruments or agreements as may be necessary or
appropriate to effectuate the purposes of this Agreement.
ARTICLE
XI
COSTS
Section
11.01.
General.
The
Initial Owner shall pay any commissions due its salesmen and the legal fees
and
expenses of its attorneys. All other costs and expenses incurred in connection
with the transfer and delivery of the Mortgage Loans, including fees for the
preparation and tracking of Assignments of Mortgage, fees for title policy
endorsements and continuations and the Company’s attorney’s fees, shall be paid
by the Company. In addition, the Company shall pay any fees related to the
set
up of all tax contracts or flood insurance contracts for the Mortgage Loans.
The
Company shall indemnify the Initial Owner for any losses or liabilities incurred
during the period from the Closing Date of the Mortgage Loans until the set
up
of the tax service contracts or flood insurance contracts resulting from
nonexistence of the tax service contracts or flood insurance contracts during
this interim period. On the related Closing Date, the Company shall pay to
the
Initial Owner a fee of $25.00 per Mortgage Loan with respect to Mortgage Loans
which are not MERS Designated Mortgage Loans for the initial recordation of
the
Assignments of Mortgage (the “Assignment Fees”), which Assignment Fees shall be
deducted from the actual Purchase Price proceeds paid to the Company on the
such
Closing Date. In addition, on the related Closing Date, the Initial Owner shall
deduct from the Purchase Price $75.00 for each Mortgage Loan missing a tax
service contract and $18.00 for each Mortgage Loan missing a flood
certification.
66
IN
WITNESS WHEREOF,
the
Company and the Initial Owner have caused their names to be signed hereto by
their respective officers duly authorized as of the date first above
written.
RESIDENTIAL
FUNDING COMPANY, LLC
By:
Name:
Title:
XXXXXX
CAPITAL, A DIVISION OF XXXXXX BROTHERS HOLDINGS INC.
By:
Name:
Xxxx Xxxxxx
Title:
Authorized Signatory
S-1
EXHIBIT
A
FORM
OF PURCHASE CONFIRMATION
[RFC
LETTERHEAD]
[DATE]
[INITIAL
OWNER]
[STREET
ADDRESS]
[CITY,
STATE AND ZIP]
Attn:
[CONTACT, TITLE]
Re: Purchase
Confirmation
Gentlemen
and Ladies:
This
purchase confirmation (the “Purchase Confirmation”) between Residential Funding
Company, LLC (the “Company”) and Xxxxxx Capital, A Division of Xxxxxx Brothers
Holdings Inc. (the “Initial Owner”) sets forth our agreement pursuant to which
the Initial Owner is purchasing, and the Company is selling, on a
servicing-retained basis, those certain residential mortgage loans (Group
200_-_) identified in Exhibit A hereto and more particularly described herein
(the “Mortgage Loans”) as well as all prepayment premiums related
thereto.
The
purchase, sale and servicing of the Mortgage Loans as contemplated herein shall
be governed by that certain Sale and Servicing Agreement, dated as of October
[__], 2006, between the Initial Owner and the Company (as amended herein and
otherwise, the “Agreement”). By executing this Purchase Confirmation, each of
the Initial Owner and the Company again makes, with respect to itself and,
in
the case of the Company, each Mortgage Loan as of the related Closing Date
or
such other date as indicated in the Agreement, all of the representations and
warranties made by each such party in the Agreement (including, without
limitation, those representations and warranties contained in Section 2.04
of
the Agreement), except as the same may be amended by this Purchase
Confirmation.
All
exhibits hereto are incorporated herein in their entirety. In the event there
exists any inconsistency between the Agreement and this Purchase Confirmation,
the latter shall be controlling notwithstanding anything contained in the
Agreement to the contrary. All capitalized terms used herein and not otherwise
defined herein shall have the meanings assigned to such terms in the
Agreement.
1. Assignment
and Conveyance of Mortgage Loans.
Simultaneous with Initial Owner’s payment of the Purchase Price in accordance
with Section 2.01 of the Agreement, the Company does hereby sell, transfer,
assign and convey to the Initial Owner all of the right, title and interest
of
the Company in and to the Mortgage Loans listed on Exhibit A
hereto.
2. Defined
Terms.
As used
in the Agreement, the following defined terms shall have the meanings set forth
below.
A-1
a. Closing
Date: [DATE].
b. Compensating
Interest: [DEFINITION].
c. Cut-off
Date: [DATE].
d. Purchase
Price: [DEFINITION].
e. Purchase
Price Percentage: [%].
f. Servicing
Fee Rate: [DEFINITION].
3. Description
of Mortgage Loans: Each Mortgage Loan complies with the specifications set
forth
below in all material respects.
a. Loan
Type: Each Mortgage Loan is [an adjustable rate] [a fixed rate] Mortgage
Loan.
x. Xxxx
Position: Each Mortgage Loan is secured by a perfected first lien
Mortgage.
c. Underwriting
Criteria: Each Mortgage Loan was underwritten generally in accordance with
the
underwriting guidelines attached hereto as Exhibit B.
4. Additional
Stipulations Regarding Mortgage Loan Package.
[________________________________________]
5. Amendments
to the Standard Terms. Solely for purposes of the Mortgage Loans listed on
the
attached Mortgage Loan Schedule, the Standard Terms shall be amended as
follows:
A-2
Kindly
acknowledge your agreement to the terms of this Purchase Confirmation by signing
in the appropriate space below and returning this Purchase Confirmation to
the
undersigned. Telecopy signatures shall be deemed valid and binding to the same
extent as the original.
RESIDENTIAL
FUNDING COMPANY, LLC, as
Company
By:
Name:
Title:
XXXXXX
CAPITAL, A DIVISION OF XXXXXX BROTHERS HOLDINGS INC.,
as
Initial Owner
By:
Name:
Title:
A-3
Exhibit
A to Purchase Confirmation
MORTGAGE
LOANS
A-4
Exhibit
B to Purchase Confirmation
UNDERWRITING
GUIDELINES
A-5
EXHIBIT
B
FORM
OF STATEMENT TO THE OWNER
(attached)
B-1
EXHIBIT
C
[RESERVED]
C-1
EXHIBIT
D
REGULATION
AB COMPLIANCE ADDENDUM
Pursuant
to that certain Sale and Interim Servicing Agreement, dated as of October 30,
2006 (as amended, modified or supplemented, the “Agreement”),
by
and between Xxxxxx Capital, A Division of Xxxxxx Brothers Holdings Inc. (the
“Initial
Owner”)
and
Residential Funding Company, LLC (the “Company”),
the
Company and the Initial Owner have agreed to be bound by the terms as set forth
below in this Regulation AB Compliance Addendum (this “Reg
AB
Addendum”).
ARTICLE
I
DEFINED
TERMS
Capitalized
terms used but not defined herein shall have the meanings assigned to such
terms
in the Agreement. The following terms shall have the meanings set forth below,
unless the context clearly indicates otherwise:
Commission:
The
United States Securities and Exchange Commission.
Company
Information:
As
defined in Section 2.07(a).
Depositor:
The
depositor, as such term is defined in Regulation AB, with respect to any
Securitization Transaction.
Exchange
Act:
The
Securities Exchange Act of 1934, as amended.
Master
Servicer:
With
respect to any Securitization Transaction, the “master servicer,” if any,
identified in the related transaction documents.
Qualified
Correspondent:
Any
Person from which the Company purchased Mortgage Loans, provided that the
following conditions are satisfied: (i) such Mortgage Loans were originated
pursuant to an agreement between the Company and such Person that contemplated
that such Person would underwrite mortgage loans from time to time, for sale
to
the Company, in accordance with underwriting guidelines designated by the
Company (“Designated Guidelines”) or guidelines that do not vary materially from
such Designated Guidelines; (ii) such Mortgage Loans were in fact underwritten
as described in clause (i) above and were acquired by the Company within 180
days after origination; (iii) either (x) the Designated Guidelines were, at
the
time such Mortgage Loans were originated, used by the Company in origination
of
mortgage loans of the same type as the Mortgage Loans for the Company’s own
account or (y) the Designated Guidelines were, at the time such Mortgage Loans
were underwritten, designated by the Company on a consistent basis for use
by
lenders in originating mortgage loans to be purchased by the Company; and (iv)
the Company employed, at the time such Mortgage Loans were acquired by the
Company, pre-purchase or post-purchase quality assurance procedures (which
may
involve, among other things, review of a sample of mortgage loans purchased
during a particular time period or through particular channels) designed to
ensure that Persons from which it purchased mortgage loans properly applied
the
underwriting criteria designated by the Company.
D-1
Reconstitution:
Any
Securitization Transaction or Whole Loan Transfer.
Reconstitution
Agreement:
An
agreement entered into by the Company and the Initial Owner and/or certain
third
parties in connection with a Reconstitution with respect to any or all of the
Mortgage Loans serviced under this Agreement.
Regulation
AB:
Subpart
229.1100 - Asset Backed Securities (Regulation AB), 17 C.F.R.
§§229.1100-229.1123, as such may be amended from time to time, and subject to
such clarification and interpretation as have been provided by the Commission
in
the adopting release (Asset-Backed Securities, Securities Act Release No.
33-8518, 70 Fed. Reg. 1,506, 1,531 (Jan. 7, 2005)) or by the staff of the
Commission, or as may be provided by the Commission or its staff from time
to
time.
Securities
Act:
The
Securities Act of 1933, as amended.
Securitization
Transaction:
Any
transaction involving either (1) a sale or other transfer of some or all of
the
Mortgage Loans directly or indirectly to an issuing entity in connection with
an
issuance of publicly offered or privately placed, rated or unrated
mortgage-backed securities or (2) an issuance of publicly offered or privately
placed, rated or unrated securities, the payments on which are determined
primarily by reference to one or more portfolios of residential mortgage loans
consisting, in whole or in part, of some or all of the Mortgage
Loans.
Servicer:
As
defined in Section 2.03(c).
Servicing
Criteria:
The
“servicing criteria” set forth in Item 1122(d) of Regulation AB, as such may be
amended from time to time.
Static
Pool Information:
Static
pool information as described in Item 1l05(a)(l)-(3) and 1105(c) of Regulation
AB.
Subcontractor:
Any
vendor, subcontractor or other Person that is not responsible for the overall
servicing (as “servicing” is commonly understood by participants in the
mortgage-backed securities market) of Mortgage Loans but performs one or more
discrete functions identified in Item l122( d) of Regulation AB with respect
to
Mortgage Loans under the direction or authority of the Company or a
Subservicer.
Subservicer:
Any
Person that services Mortgage Loans on behalf of the Company or any Subservicer
and is responsible for the performance (whether directly or through Subservicers
or Subcontractors) of a substantial portion of the material servicing functions
required to be performed by the Company under this Agreement or any
Reconstitution Agreement that are identified in Item 1122(d) of Regulation
AB.
Whole
Loan Transfer:
Any
sale or transfer of some or all of the Mortgage Loans, other than a
Securitization Transaction.
D-2
ARTICLE
II
COMPLIANCE
WITH REGULATION AB
Section
2.01. Intent
of the Parties; Reasonableness.
The
Initial Owner and the Company acknowledge and agree that the purpose of Article
II of this Reg AB Addendum is to facilitate compliance by the Initial Owner
and
any Depositor with the provisions of Regulation AB and related rules and
regulations of the Commission. Although Regulation AB is applicable by its
terms
only to offerings of asset-backed securities that are registered under the
Securities Act, the Company acknowledges that investors in privately offered
securities may require that the Initial Owner or any Depositor provide
comparable disclosure in unregistered offerings. References in this Agreement
to
compliance with Regulation AB include provision of comparable disclosure in
private offerings.
Neither
the Initial Owner, any Master Servicer nor any Depositor shall exercise its
right to request delivery of information or other performance under these
provisions other than in good faith, or for purposes other than compliance
with
the Securities Act, the Exchange Act and the rules and regulations of the
Commission thereunder (or the provision in a private offering of disclosure
comparable to that required under the Securities Act). The Company acknowledges
that interpretations of the requirements of Regulation AB may change over time,
whether due to interpretive guidance provided by the Commission or its staff,
consensus among participants in the asset-backed securities markets, advice
of
counsel, or otherwise, and agrees to comply with requests made by the Initial
Owner, any Master Servicer or any Depositor in good faith for delivery of
information under these provisions on the basis of evolving interpretations
of
Regulation AB. In connection with any Securitization Transaction, the Company
shall cooperate fully with the Initial Owner and any Master Servicer to deliver
to the Initial Owner (including any of its assignees or designees), any Master
Servicer and any Depositor, any and all statements, reports, certifications,
records and any other information necessary in the good faith determination
of
the Initial Owner, the Master Servicer or any Depositor to permit the Initial
Owner, such Master Servicer or such Depositor to comply with the provisions
of
Regulation AB, together with such disclosures relating to the Company, any
Subservicer and the Mortgage Loans, or the servicing of the Mortgage Loans,
reasonably believed by the Initial Owner or any Depositor to be necessary in
order to effect such compliance.
The
Initial Owner (including any of its assignees or designees) shall cooperate
with
the Company by providing timely notice of requests for information under these
provisions and by reasonably limiting such requests to information required
to
comply with Regulation AB.
Section
2.02. Additional
Representations and Warranties of the Company.
(a) The
Company hereby represents to the Initial Owner, to any Master Servicer and
to
any Depositor, as of the date on which information is first provided to the
Initial Owner or any Depositor under Section 2.03 that, except as disclosed
in
writing to the Initial Owner or such Depositor prior to such date: (i) the
Company is not aware and has not received notice that any default or early
amortization event has occurred as to any other Securitization Transaction
due
to any act or failure to act by the Company as a Servicer; (ii) the Company
has
not been terminated as servicer in a residential mortgage loan securitization
due to a servicing default or to application of a servicing performance test
or
trigger; (iii) no material noncompliance with the applicable Servicing Criteria
with respect to other securitizations of residential mortgage loans involving
the Company as servicer has been disclosed or reported by the Company; (iv)
no
material changes to the Company’s policies or procedures with respect to the
servicing function it will perform under this Agreement and any Reconstitution
Agreement for mortgage loans of a type similar to the Mortgage Loans have
occurred during the three-year period immediately preceding the related
Securitization Transaction; (v) there are no aspects of the Company’s financial
condition that could have a material adverse effect on the performance by the
Company of its servicing obligations under this Agreement or any related
Reconstitution Agreement; (vi) there are no legal or governmental
proceedings pending (or governmental proceedings known to be contemplated)
against the Company or any Subservicer that are material to investors in the
related Securitization Transaction; (vii) there are no affiliations,
relationships or transactions relating to the Company or any Subservicer with
respect to any Securitization Transaction and any party thereto identified
by
the related Depositor of a type described in Item 1119 of Regulation AB; and
(viii) each Mortgage Loan was originated by a Qualified
Xxxxxxxxxxxxx.
X-0
(b) If
so
requested by the Initial Owner, any Master Servicer or any Depositor on any
date
following the date on which information is first provided to the Initial Owner,
any Master Servicer or any Depositor under Section 2.03, the Company shall,
within five Business Days following such request, confirm in writing the
accuracy of the representations and warranties set forth in paragraph (a) of
this Section or, if any such representation and warranty is not accurate as
of
the date of such request, provide reasonably adequate disclosure of the
pertinent facts, in writing, to the requesting party.
Section
2.03. Information
to Be Provided by the Company.
In
connection with any Securitization Transaction, the Company shall (i) within
five Business Days following a request by the Initial Owner or any Depositor,
provide to the Initial Owner and such Depositor (or, as applicable, cause each
Subservicer to provide), in writing and in form and substance reasonably
satisfactory to the Initial Owner and such Depositor, the information and
materials specified in paragraphs (a), (b), (c), (f) and (g) of this Section,
and (ii) as promptly as practicable following notice to or discovery by the
Company, provide to the Initial Owner and any Depositor (in writing and in
form
and substance reasonably satisfactory to the Initial Owner and such Depositor)
the information specified in paragraph (d) of this Section provided, that the
Company shall not be required to provide such information and materials with
respect to a Subservicer if Regulation AB does not require disclosure of such
information and materials.
(a) If
so
requested by the Initial Owner or any Depositor, the Company shall provide
such
information regarding (i) the Company, as originator of the Mortgage Loans
(including as an acquirer of Mortgage Loans from a Qualified Correspondent)
and
(ii) as applicable, each Subservicer, as is requested for the purpose of
compliance with Items 1103(a)(l), 1105, 1110, 1117 and 1119 of Regulation AB.
Such information shall include, at a minimum:
(A) the
originator’s form of organization;
D-4
(B) a
description of the originator’s origination program and how long the originator
has been engaged in originating residential mortgage loans, which description
shall include a discussion of the originator’s experience in originating
mortgage loans of a similar type as the Mortgage Loans; information regarding
the size and composition of the originator’s origination portfolio; and
information that may be material to an analysis of the performance of the
Mortgage Loans, including the originators’ credit-granting or underwriting
criteria for mortgage loans of similar type(s) as the Mortgage Loans and such
other information as the Initial Owner or any Depositor may reasonably request
for the purpose of compliance with Item 1110(b)(2) of Regulation
AB;
(C) a
description of any legal or governmental proceedings pending (or governmental
proceedings known to be contemplated) against the Company and each Subservicer
that would be material to investors in the related Securitization Transaction;
and
(D) a
description of any affiliation or relationship, as described in Item 1119 of
Regulation AB, between the Company, each Subservicer and any of the following
parties to a Securitization Transaction, as such parties are identified to
the
Company by the Initial Owner or any Depositor in writing in advance of such
Securitization Transaction:
|
(1)
|
the
sponsor;
|
|
(2)
|
the
depositor;
|
|
(3)
|
the
issuing entity;
|
|
(4)
|
any
servicer;
|
|
(5)
|
any
trustee;
|
|
(6)
|
any
originator;
|
|
(7)
|
any
significant obligor;
|
|
(8)
|
any
enhancement or support provider;
and
|
|
(9)
|
any
other material transaction party.
|
(b) If
so
requested by the Initial Owner or any Depositor, the Company shall provide
Static Pool Information with respect to the mortgage loans (of a similar type
as
the Mortgage Loans) originated by the Company, if the Company is an originator
of Mortgage Loans (including as an acquirer of Mortgage Loans from a Qualified
Correspondent). Such Static Pool Information shall be prepared by the Company
on
the basis of its reasonable, good faith interpretation of the requirements
of
Item 1105(a)(1)-(3) of Regulation AB. The content of such Static Pool
Information may be in the form customarily provided by the Company, and need
not
be customized for the Initial Owner or any Depositor. Such Static Pool
Information for each vintage origination year or prior securitized pool, as
applicable, shall be presented in increments no less frequently than quarterly
over the life of the mortgage loans included in the vintage origination year
or
prior securitized pool. The most recent periodic increment must be as of a
date
no later than 135 days prior to the date of the prospectus or other offering
document in which the Static Pool Information is to be included or incorporated
by reference. The Static Pool Information shall be provided in an electronic
format that provides a permanent record of the information provided, such as
a
portable document format (pdf) file, or other such electronic format reasonably
required by the Initial Owner or the Depositor, as applicable.
D-5
Promptly
following notice or discovery of a material error in Static Pool Information
provided pursuant to the immediately preceding paragraph (including an omission
to include therein information required to be provided pursuant to such
paragraph), the Company shall provide corrected Static Pool Information to
the
Initial Owner or any Depositor, as applicable, in the same format in which
Static Pool Information was previously provided to such party by the
Company.
If
so
requested by the Initial Owner or any Depositor, the Company shall provide
at
the expense of the requesting party (to the extent of any additional incremental
expense associated with delivery pursuant to this Agreement), such statements
and agreed-upon procedures letters of certified public accountants reasonably
acceptable to the Initial Owner or Depositor, as applicable, pertaining to
Static Pool Information relating to prior securitized pools for securitizations
closed on or after January 1, 2006 or, in the case of Static Pool Information
with respect to the Company’s originations or purchases, to calendar months
commencing January 1, 2006, as the Initial Owner or such Depositor shall
reasonably request. Such statements and letters shall be addressed to and be
for
the benefit of such parties as the Initial Owner or such Depositor shall
designate, which may include, by way of example, any Sponsor, any Depositor
and
any broker dealer acting as underwriter, placement agent or initial Initial
Owner with respect to a Securitization Transaction. Any such statement or letter
may take the form of a standard, generally applicable document accompanied
by a
reliance letter authorizing reliance by the addressees designated by the Initial
Owner or such Depositor.
(c) If
so
requested by the Initial Owner or any Depositor, the Company shall provide
such
information regarding the Company, as servicer of the Mortgage Loans, and each
Subservicer (each of the Company and each Subservicer, for purposes of this
paragraph, a “Servicer”), as is requested for the purpose of compliance with
Items 1108, 1117 and 1119 of Regulation AB. Such information shall include,
at a
minimum:
(A) the
Servicer’s form of organization;
(B) a
description of how long the Servicer has been servicing residential mortgage
loans; a general discussion of the Servicer’s experience in servicing assets of
any type as well as a more detailed discussion of the Servicer’s experience in,
and procedures for, the servicing function it will perform under the Agreement
and any Reconstitution Agreements; information regarding the size, composition
and growth of the Servicer’s portfolio of residential mortgage loans of a type
similar to the Mortgage Loans and information on factors related to the Servicer
that may be material to any analysis of the servicing of the Mortgage Loans
or
the related asset-backed securities, as applicable, including, without
limitation:
(1) whether
any prior securitizations of mortgage loans of a type similar to the Mortgage
Loans involving the Servicer have defaulted or experienced an early amortization
event because of servicing during the three-year period immediately preceding
the related Securitization Transaction;
(2) the
extent of outsourcing the Servicer utilizes;
D-6
(3) whether
there has been previous disclosure of material noncompliance with the applicable
servicing criteria with respect to other securitizations of residential mortgage
loans involving the Servicer as a servicer during the three-year period
immediately preceding the related Securitization Transaction;
(4) whether
the Servicer has been terminated as servicer in a residential mortgage loan
securitization due to a servicing default or to application of a servicing
performance trigger; and
(5) such
other information as the Initial Owner or any Depositor may reasonably request
for the purpose of compliance with Item 1108(b)(2) of Regulation
AB;
(C) a
description of any material changes during the three-year period immediately
preceding the related Securitization Transaction to the Servicer’s policies or
procedures with respect to the servicing function it will perform under the
Agreement and any Reconstitution Agreements for mortgage loans of a type similar
to the Mortgage Loans;
(D) information
regarding the Servicer’s financial condition, to the extent that there is a
material risk that an adverse financial event or circumstance involving the
Servicer could have a material adverse effect on the performance by the Company
of its servicing obligations under the Agreement or any Reconstitution
Agreement;
(E) a
statement by an authorized officer of the Servicer to the effect that the
Servicer has made all advances required to be made on residential mortgage
loans
serviced by it during the three-year period immediately preceding the related
Securitization Transaction, or, if such statement would not be accurate,
information regarding the percentage and type of advances not made as required,
and the reasons for such failure to advance;
(F) a
description of the Servicer’s processes and procedures designed to address any
special or unique factors involved in servicing loans of a similar type as
the
Mortgage Loans;
(G) a
description of the Servicer’s processes for handling delinquencies, losses,
bankruptcies and recoveries, such as through liquidation of mortgaged
properties, sale of defaulted mortgage loans or workouts; and
(H) information
as to how the Servicer defines or determines delinquencies and charge-offs,
including the effect of any grace period, re-aging, restructuring, partial
payments considered current or other practices with respect to delinquency
and
loss experience.
(d) For
the
purpose of satisfying the reporting obligation under the Exchange Act with
respect to any class of asset-backed securities, for so long as the Depositor
is
required to file reports under the Exchange Act with respect to a Securitization
Transaction, the Company shall (or shall cause each Subservicer to) (i) provide
prompt notice to the Initial Owner, any Master Servicer and any Depositor in
writing of (A) any litigation or governmental proceedings involving the Company
or any Subservicer that would be material to investors in the related
Securitization Transaction, (B) any affiliations or relationships of the type
described in Item 1119 of Regulation AB that develop following the closing
date of a Securitization Transaction between the Company or any Subservicer
and
any of the parties specified in clause (D) of paragraph (a) of this Section
(and
any other parties identified in writing by the requesting party) with respect
to
such Securitization Transaction, (C) any Event of Default under the terms of
this Agreement or any Reconstitution Agreement, (D) any merger, consolidation
or
sale of substantially all of the assets of the Company, and (E) the Company’s
entry into a material agreement after the applicable closing date with a
Subservicer to perform or assist in the performance of any of the Company’s
obligations under this Agreement or any Reconstitution Agreement and (ii)
provide to the Initial Owner and any Depositor a description of such
proceedings, affiliations or relationships.
D-7
(e) As
a
condition to the succession to the Company or any Subservicer as a servicer
or
subservicer (when such Company, Subservicer or successor services the threshold
percentage of mortgage loans set forth in Item 1108(a)(2)(iii) of Regulation
AB
(or such other threshold as reasonably determined in good faith to be material
by securitization counsel of the Initial Owner and agreed to by the Company)
with respect to the pool assets in a Securitization Transaction or sub-pool
thereof), under the Agreement or any Reconstitution Agreement by any Person
(i)
into which the Company or such Subservicer may be merged or consolidated, or
(ii) which may be appointed as a successor to the Company or any
Subservicer, the Company shall provide to the Initial Owner, any Master
Servicer, and any Depositor, at least 15 calendar days prior to the effective
date of such succession or appointment, (x) written notice to the Initial Owner
and any Depositor of such succession or appointment and (y) in writing and
in
form and substance reasonably satisfactory to the Initial Owner and such
Depositor, all information reasonably requested by the Initial Owner or any
Depositor in order to comply with its reporting obligation under Item 6.02
of
Form 8-K with respect to any class of asset-backed securities.
(f) In
addition to such information as the Company, as servicer, is obligated to
provide pursuant to other provisions of the Agreement, concurrently with the
monthly reports otherwise required to be delivered by the servicer under the
Agreement, the
Company or any applicable Subservicer, shall, to the extent the Company or
such
Subservicer has knowledge, provide to the party responsible for filing a
distribution report on Form 10-D in respect of a Securitization that includes
Mortgage Loans serviced by the Company or such Subservicer (including, if
applicable, the Master Servicer) notice of the occurrence of any of the
following events along with all information, data, and materials related thereto
as may be required to be included in the related distribution report on Form
10-D (as specified in the provisions of Regulation AB referenced
below):
(i) any
material modifications, extensions or waivers of pool asset terms, fees,
penalties or payments during the distribution period or that have cumulatively
become material over time (Item 1121(a)(11) of Regulation AB);
(ii) material
breaches of pool asset representations or warranties or transaction covenants
(Item 1121(a)(12) of Regulation AB); and
D-8
(iii) information
regarding any material pool asset changes (such as additions, substitutions
or
repurchases) (Item 1121(a)(14) of Regulation AB).
(g) The
Company shall provide to the Initial Owner, any Master Servicer and any
Depositor, upon request evidence of the authorization of the person signing
any
certification or statement, copies or other evidence of Fidelity Bond Insurance
and Errors and Omissions Insurance policy, publicly available financial
information and reports, and such other information reasonably related to the
Company’s or such Subservicer’s performance hereunder.
(h) In
the
event that (i) the Company does not reasonably believe that certain information
requested under Section 2.03 is required to be disclosed pursuant to Regulation
AB and (ii) the Company has not provided such information for any of its own
securitizations, the Initial Owner shall pay all reasonable documented costs
incurred by the Company in connection with the preparation and delivery of
such
information, and the Company shall promptly deliver such information after
expiration of a reasonable period of time for establishing the necessary systems
and procedures to produce such information. Further, notwithstanding anything
to
the contrary herein, when determining if information is required under
Regulation AB, all threshold and other requirements shall be determined solely
by looking at the Company’s mortgage loans and those of its third-party
originators. The Company shall have no obligation with respect to disclosure
or
reporting under Regulation AB in the event that the aggregation of its
third-party originated Mortgage Loans with those of the Initial Owner’s other
sellers require additional disclosure; provided, however, the Company shall
otherwise cooperate with the Initial Owner to provide disclosure or reporting
under Regulation AB in the event that such disclosure or reporting is required
under Regulation AB and not otherwise available to the Initial Owner. For
purposes of clarification with respect to the two immediately preceding
sentences, all Mortgage Loans sold by the Company pursuant to the Agreement
were
originated by Qualified Correspondents. The Company acknowledges that a
Subservicer or Subcontractor that performs services with respect to mortgage
loans involved in a Securitization Transaction in addition to the Mortgage
Loans
may be determined by a Depositor or a Master Servicer to be an entity
participating in the servicing function on the basis of the aggregate balance
of
such mortgage loans, without regard to whether such Subservicer or Subcontractor
would be a participating entity with respect to the Mortgage Loans viewed in
isolation. The Company shall (A) respond as promptly as practicable to any
good
faith request by the Initial Owner or any Depositor or Master Servicer for
information regarding each Subservicer and each Subcontractor and (B) cause
each
Subservicer and each Subcontractor with respect to which the Initial Owner
or
any Depositor or Master Servicer requests delivery of an assessment of
compliance and accountants’ attestation to deliver such within the time required
under Section 2.05.
Section
2.04. Servicer
Compliance Statement.
On
or
before March 15 of each calendar year, commencing in 2007, the Company shall
deliver to the Initial Owner, any Master Servicer and any Depositor a statement
of compliance addressed to the Initial Owner, such Master Servicer and such
Depositor and signed by an authorized officer of the Company, to the effect
that
(i) a review of the Company’s activities during the immediately preceding
calendar year (or applicable portion thereof) and of its performance under
the
Agreement and any applicable Reconstitution Agreement during such period has
been made under such officer’s supervision, and (ii) to the best of such
officers’ knowledge, based on such review, the Company has fulfilled all of its
obligations under the Agreement and any applicable Reconstitution Agreement
in
all material respects throughout such calendar year (or applicable portion
thereof) or, if there has been a failure to fulfill any such obligation in
any
material respect, specifically identifying each such failure known to such
officer and the nature and the status thereof.
D-9
Section
2.05. Report
on Assessment of Compliance and Attestation.
(a) On
or
before March 15 of each calendar year, commencing in 2007, the Company
shall:
(i) deliver
to the Initial Owner, any Master Servicer and any Depositor a report (in form
and substance reasonably satisfactory to the Initial Owner, such Master Servicer
and such Depositor and on which it is hereby agreed that the Initial Owner,
any
Master Servicer and any Depositor is entitled to rely) regarding the Company’s
assessment of compliance with the Servicing Criteria during the immediately
preceding calendar year, as required under Rules 13a-18 and 15d-18 of the
Exchange Act and Item 1122 of Regulation AB. Such report shall be signed by
an
authorized officer of the Company, and shall address each of the “Applicable
Servicing Criteria” specified on Exhibit B hereto;
(ii) deliver
to the Initial Owner, any Master Servicer and any Depositor a report of a
registered public accounting firm reasonably acceptable to the Initial Owner,
such Master Servicer and such Depositor that attests to, and reports on, the
assessment of compliance made by the Company and delivered pursuant to the
preceding paragraph. Such attestation shall be in accordance with Rules
1-02(a)(3) and 2-02(g) of Regulation S-X under the Securities Act and the
Exchange Act;
(iii) cause
each Subservicer and each Subcontractor determined by the Company pursuant
to
Section 2.06(b) to be “participating in the servicing function” within the
meaning of Item 1122 of Regulation AB to deliver to the Initial Owner, any
Master Servicer and any Depositor an assessment of compliance and accountants’
attestation as and when provided in paragraphs (a) and (b) of this Section;
and
(iv) deliver,
and cause each Subservicer and Subcontractor described in clause (iii) to
provide, to the Initial Owner, any Depositor, any Master Servicer and any other
Person that will be responsible for signing the certification (a “Sarbanes
Certification”) required by Rules 13a-14(d) and 15d-14(d) under the Exchange Act
(pursuant to Section 302 of the Xxxxxxxx-Xxxxx Act of 2002) on behalf of an
asset-backed issuer with respect to a Securitization Transaction a
certification, signed by the appropriate officer of the Company, in the form
attached hereto as Exhibit A.
The
Company acknowledges that the parties identified in clause (a)(iv) above may
rely on the certification provided by the Company pursuant to such clause in
signing a Sarbanes Certification and filing such with the Commission. Neither
the Initial Owner nor any Depositor will request delivery of a certification
under clause (a)(iv) above unless a Depositor is required under the Exchange
Act
to file an annual report on Form 10-K with respect to an issuing entity whose
asset pool includes Mortgage Loans.
D-10
(b) Each
assessment of compliance provided by a Subservicer pursuant to
Section 2.05(a)(iii) shall address those Servicing Criteria specified on
Exhibit B hereto delegated to such Subservicer. An assessment of compliance
provided by a Subcontractor pursuant to Section 2.05(a)(iii) need not address
any elements of the Servicing Criteria other than those specified by the Company
pursuant to Section 2.06.
Section
2.06. Use
of
Subservicers and Subcontractors.
The
Company shall not hire or otherwise utilize the services of any Subservicer,
to
fulfill any of the obligations of the Company as servicer under the Agreement
or
any Reconstitution Agreement unless the Company complies with the provisions
of
paragraph (a) of this Section. The Company shall not hire or otherwise utilize
the services of any Subcontractor “participating in the Servicing function”
within the meaning of Item 1122 of Regulation AB, and shall not permit any
Subservicer to hire or otherwise utilize the services of any such Subcontractor
to fulfill any of the obligations of the Company as servicer under the Agreement
or any Reconstitution Agreement unless the Company complies with the provisions
of paragraph (b) of this Section.
(a) It
shall
not be necessary for the Company to seek the consent of the Initial Owner,
any
Master Servicer or any Depositor to the utilization of any Subservicer. The
Company shall cause any Subservicer used by the Company (or by any Subservicer)
for the benefit of the Initial Owner and any Depositor to comply with the
provisions of this Section and with Sections 2.02, 2.03( c), (e), (f) and (g),
2.04, 2.05 and 2.07 of this Reg AB Addendum to the same extent as if such
Subservicer were the Company, and to provide the information required with
respect to such Subservicer under Section 2.03(d) of this Reg AB Addendum.
The
Company shall be responsible for obtaining from each Subservicer and delivering
to the Initial Owner and any Depositor any servicer compliance statement
required to be delivered by such Subservicer under Section 2.04, any assessment
of compliance and attestation required to be delivered by such Subservicer
under
Section 2.05 and Regulation AB and any certification required to be delivered
to
the Person that will be responsible for signing the Sarbanes Certification
under
Section 2.05 as and when required to be delivered under Regulation
AB.
(b) It
shall
not be necessary for the Company to seek the consent of the Initial Owner,
any
Master Servicer or any Depositor to the utilization of any Subcontractor. The
Company shall promptly upon request provide to the Initial Owner, any Master
Servicer and any Depositor (or any designee of the Depositor, such as an
administrator) a written description (in form and substance reasonably
satisfactory to the Initial Owner, such Depositor and such Master Servicer)
of
the role and function of each Subcontractor utilized by the Company or any
Subservicer, specifying (i) the identity of each such Subcontractor, (ii) which
(if any) of such Subcontractors are “participating in the servicing function”
within the meaning of Item 1122 of Regulation AB, and (iii) which elements
of
the Servicing Criteria will be addressed in assessments of compliance provided
by each Subcontractor identified pursuant to clause (ii) of this
paragraph.
D-11
As
a
condition to the utilization of any Subcontractor determined to be
“participating in the servicing function” within the meaning of Item 1122 of
Regulation AB, the Company shall cause any such Subcontractor used by the
Company (or by any Subservicer) for the benefit of the Initial Owner and any
Depositor to comply with the applicable provisions of Sections 2.05 and 2.07
of
this Reg AB Addendum. The Company shall be responsible for obtaining from each
Subcontractor and delivering to the Initial Owner and any Depositor any
assessment of compliance and attestation and the other certifications required
to be delivered by such Subservicer and such Subcontractor under Section 2.05,
in each case as and when required to be delivered.
Section
2.07. Indemnification;
Remedies.
(a) The
Company shall indemnify the Initial Owner, each affiliate of the Initial Owner,
and each of the following parties participating in a Securitization Transaction:
each sponsor and issuing entity; each Person (including, but not limited to,
any
Master Servicer if applicable) responsible for the preparation, execution or
filing of any report required to be filed with the Commission with respect
to
such Securitization Transaction, or for execution of a certification pursuant
to
Rule 13a-14(d) or Rule 15d-14(d) under the Exchange Act with respect to such
Securitization Transaction; each broker dealer acting as underwriter, placement
agent or initial purchaser, each Person who controls any of such parties or
the
Depositor (within the meaning of Section 15 of the Securities Act and Section
20
of the Exchange Act); and the respective present and former directors, officers,
employees, agents and affiliates of each of the foregoing and of the Depositor
(each, a “Initial Owner Indemnified Party”), and shall hold each of them
harmless from and against any losses, damages, penalties, fines, forfeitures,
reasonable legal fees and expenses and related costs, judgments, and any other
costs, fees and expenses that any of them may sustain arising out of or based
upon:
(i) (A)
any
untrue statement of a material fact contained or alleged to be contained in
any
information, report, certification, data or other material provided under this
Article II by or on behalf of the Company, or provided under this Article II
by
or on behalf of any Subservicer or Subcontractor (collectively, the “Company
Information”), or (B) the omission or alleged omission to state in the Company
Information a material fact required to be stated in the Company Information
or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided, by way
of
clarification, that clause (B) of this paragraph shall be construed solely
by
reference to the Company Information and not to any other information
communicated in connection with a sale or purchase of securities, without regard
to whether the Company Information or any portion thereof is presented together
with or separately from such other information;
(ii) any
breach by the Company of its obligations under this Article II, including
particularly any failure by the Company, any Subservicer or any Subcontractor
to
deliver any information, report, certification, accountants’ letter or other
material when and as required under this Article II, including any failure
by
the Company to identify pursuant to Section 2.06(b) any Subcontractor
“participating in the servicing function” within the meaning of Item 1122 of
Regulation AB;
D-12
(iii) any
breach by the Company of a representation or warranty set forth in Section
2.02(a) or in a writing furnished pursuant to Section 2.02(b) and made as of
a
date prior to the closing date of the related Securitization Transaction, to
the
extent that such breach is not cured by such closing date, or any breach by
the
Company of a representation or warranty in a writing furnished pursuant to
Section 2.02(b) to the extent made as of a date subsequent to such closing
date;
or
(iv) the
gross
negligence, bad faith or willful misfeasance in the performance of the Company’s
duties, or by reason of reckless disregard of obligations and duties, under
this
Article II.
The
Initial Owner shall indemnify the Company, each Person who controls the Company
(within the meaning of Section 15 of the Securities Act and Section 20 of the
Exchange Act), and the respective present and former directors, officers,
employees, agents and affiliates of each of the foregoing (each, a “Company
Indemnified Party;” together with the Initial Owner Indemnified Parties, the
“Indemnified Parties”), and shall hold each of them harmless from and against
any losses, damages, penalties, fines, forfeitures, reasonable legal fees and
expenses and related costs, judgments, and any other costs, fees and expenses
that any of them may sustain arising out of or based upon any untrue statement
contained or alleged to be contained in the publicly filed registration
statement (including all documents incorporated therein by reference) with
respect to the related Securitization Transaction (collectively, the “Filing”)
with the Commission or the omission or alleged omission to state in the Filing
with the Commission a material fact required to be stated or necessary to be
stated in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, in each case to the
extent, but only to the extent, that such untrue statement, alleged untrue
statement, omission, or alleged omission arose out of or was based upon any
information or statement, other than the Company Information, in the Filing
with
the Commission.
If
the
indemnification provided for herein is unavailable or insufficient to hold
harmless an Indemnified Party, then the Company agrees that it shall contribute
to the amount paid or payable by such Indemnified Party as a result of any
claims, losses, damages or liabilities incurred by such Indemnified Party in
such proportion as is appropriate to reflect the relative fault of such
Indemnified Party on the one hand and the Company on the other.
In
the
case of any failure of performance described in clause (a)(ii) of this Section,
the Company shall promptly reimburse the Initial Owner, any Depositor, as
applicable, and each Person responsible for the preparation, execution or filing
of any report required to be filed with the Commission with respect to such
Securitization Transaction, or for execution of a certification pursuant to
Rule
13a-14(d) or Rule 15d-14(d) under the Exchange Act with respect to such
Securitization Transaction, for all costs reasonably incurred by each such
party
in order to obtain the information, report, certification, or other material
not
delivered as required by the Company, any Subservicer or any
Subcontractor.
This
indemnification shall survive the termination of this Agreement or the
termination of any party to this Agreement.
D-13
(b) (i) Any
failure by the Company, any Subservicer or any Subcontractor to deliver any
information, report, certification, accountants’ letter or other material when
and as required under this Article II, or any breach by the Company of a
representation or warranty set forth in Section 2.02(a) or in a writing
furnished pursuant to Section 2.02(b) and made as of a date prior to the closing
date of the related Securitization Transaction, to the extent that such breach
is not cured by such closing date, or any breach by the Company of a
representation or warranty in a writing furnished pursuant to Section 2.02(b)
to
the extent made as of a date subsequent to such closing date, shall immediately
and automatically, without notice or grace period, constitute an Event of
Default with respect to the Company under the Agreement and any applicable
Reconstitution Agreement, and shall entitle the Initial Owner or any Depositor,
as applicable, in its sole discretion to terminate the rights and obligations
of
the Company as servicer under the Agreement and/or any applicable Reconstitution
Agreement without payment (notwithstanding anything in this Agreement or any
applicable Reconstitution Agreement to the contrary) of any compensation to
the
Company (and if the Company is servicing any of the Mortgage Loans in a
Securitization Transaction, appoint a successor servicer reasonably acceptable
to any Master Servicer for such Securitization Transaction); provided that
to
the extent that any provision of the Agreement and/or any applicable
Reconstitution Agreement expressly provides for the survival of certain rights
or obligations following termination of the Company as servicer, such provision
shall be given effect. Neither the Initial Owner, any Master Servicer nor any
Depositor shall be entitled to terminate the rights and obligations of the
Company pursuant to this subparagraph (b)(i) if a failure of the Company to
identify a Subcontractor “participating in the servicing function” within the
meaning of Item 1122 of Regulation AB was attributable solely to the role or
functions of such Subcontractor with respect to mortgage loans other than the
Mortgage Loans.
(ii) The
Company shall promptly reimburse the Initial Owner (or any designee of the
Initial Owner, such as a master servicer) and any Depositor, as applicable,
for
all reasonable expenses incurred by the Initial Owner (or such designee) or
such
Depositor, as such are incurred, in connection with the termination of the
Company as servicer and the transfer of servicing of the Mortgage Loans to
a
successor servicer. The provisions of this paragraph shall not limit whatever
rights the Initial Owner or any Depositor may have under other provisions of
the
Agreement and/or any applicable Reconstitution Agreement or otherwise, whether
in equity or at law, such as an action for damages, specific performance or
injunctive relief.
Section
2.08. Third-Party
Beneficiary.
For
purposes of this Article II and any related provisions thereto, each Master
Servicer shall be considered a third-party beneficiary of this Reg AB Addendum,
entitled to all the rights and benefits hereof as if it were a direct party
to
Article II of this Agreement.
D-14
EXHIBIT
A
FORM
OF
ANNUAL CERTIFICATION
Re: The
[
]
agreement dated as of [ ],
200[ ]
(the “Agreement”), among [IDENTIFY PARTIES]
I,
________________________________, the _____________________ of [NAME OF COMPANY]
(the “Company”), certify to [the Initial Owner], [the Depositor], and the
[Master Servicer] [Securities Administrator] [Trustee], and their officers,
with
the knowledge and intent that they will rely upon this certification,
that:
(1)
I
have
reviewed the servicer compliance statement of the Company provided in accordance
with Item 1123 of Regulation AB (the “Compliance Statement”), the report on
assessment of the Company’s compliance with the servicing criteria set forth in
Item 1122(d) of Regulation AB and identified as the responsibility of the
Company on Exhibit B to the Regulation AB Compliance Addendum to the Agreement
(the “Servicing Criteria”), provided in accordance with Rules 13a-18 and 15d-18
under Securities Exchange Act of 1934, as amended (the “Exchange Act”) and Item
1122 of Regulation AB (the “Servicing Assessment”), the registered public
accounting firm’s attestation report provided in accordance with Rules 13a-18
and 15d-18 under the Exchange Act and Section 1122(b) of Regulation AB (the
“Attestation Report”), and all servicing reports, officer’s certificates and
other information relating to the servicing of the Mortgage Loans by the Company
during 200[ ] that were delivered by the Company to the [Depositor] [Master
Servicer] [Securities Administrator] [Trustee] pursuant to the Agreement
(collectively, the “Company Servicing Information”);
(2)
Based
on
my knowledge, the Company Servicing Information, 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 the light of the circumstances under
which such statements were made, not misleading with respect to the period
of
time covered by the Company Servicing Information;
(3)
Based
on
my knowledge, all of the Company Servicing Information required to be provided
by the Company under the Agreement has been provided to the [Depositor] [Master
Servicer] [Securities Administrator] [Trustee];
(4)
I
am
responsible for reviewing the activities performed by the Company as servicer
under the Agreement, and based on my knowledge and the compliance review
conducted in preparing the Compliance Statement and except as disclosed in
the
Compliance Statement, the Servicing Assessment or the Attestation Report, the
Company has fulfilled its obligations under the Agreement in all material
respects; and
D-15
(5)
The
Compliance Statement required to be delivered by the Company pursuant to this
Agreement, and the Servicing Assessment and Attestation Report required to
be
provided by the Company and by any Subservicer and Subcontractor pursuant to
the
Agreement, have been provided to the [Depositor] [Master Servicer]. Any material
instances of noncompliance described in such reports have been disclosed to
the
[Depositor] [Master Servicer]. Any material instance of noncompliance with
the
Servicing Criteria has been disclosed in such reports.
Date:
By:
Name:
Title:
D-16
EXHIBIT
B
SERVICING
CRITERIA TO BE ADDRESSED IN ASSESSMENT OF COMPLIANCE
The
assessment of compliance to be delivered by [Residential Funding Company, LLC]
[Homecomings Financial Network, Inc.] [Name of other Subservicer] shall address,
at a minimum, the criteria identified below as “Applicable Servicing
Criteria”;
|
Servicing
Criteria
|
Applicable
Servicing
Criteria
|
|
|
Reference
|
Criteria
|
|
|
General
Servicing Considerations
|
||
|
1122(d)(1)(i)
|
Policies
and procedures are instituted to monitor any performance or other
triggers
and events of default in accordance with the transaction agreements.
|
X
|
|
1122(d)(1)(ii)
|
If
any material servicing activities are outsourced to third parties,
policies and procedures are instituted to monitor the third party’s
performance and compliance with such servicing activities.
|
X
|
|
1122(d)(1)(iii)
|
Any
requirements in the transaction agreements to maintain a back-up
servicer
for the mortgage loans are maintained.
|
|
|
1122(d)(1)(iv)
|
A
fidelity bond and errors and omissions policy is in effect on the
party
participating in the servicing function throughout the reporting
period in
the amount of coverage required by and otherwise in accordance with
the
terms of the transaction agreements.
|
X
|
|
Cash
Collection and Administration
|
||
|
1122(d)(2)(i)
|
Payments
on mortgage loans are deposited into the appropriate custodial bank
accounts and related bank clearing accounts no more than two business
days
following receipt, or such other number of days specified in the
transaction agreements.
|
X
|
|
1122(d)(2)(ii)
|
Disbursements
made via wire transfer on behalf of an obligor or to an investor
are made
only by authorized personnel.
|
X
|
|
1122(d)(2)(iii)
|
Advances
of funds or guarantees regarding collections, cash flows or distributions,
and any interest or other fees charged for such advances, are made,
reviewed and approved as specified in the transaction agreements.
|
X
|
D-17
|
Servicing
Criteria
|
Applicable
Servicing
Criteria
|
|
|
Reference
|
Criteria
|
|
|
1122(d)(2)(iv)
|
The
related accounts for the transaction, such as cash reserve accounts
or
accounts established as a form of overcollateralization, are separately
maintained (e.g., with respect to commingling of cash) as set forth
in the
transaction agreements.
|
X
|
|
1122(d)(2)(v)
|
Each
custodial account is maintained at a federally insured depository
institution as set forth in the transaction agreements. For purposes
of
this criterion, “federally insured depository institution” with respect to
a foreign financial institution means a foreign financial institution
that
meets the requirements of Rule 13k-1 (b)(1) of the Securities Exchange
Act.
|
X
|
|
1122(d)(2)(vi)
|
Unissued
checks are safeguarded so as to prevent unauthorized access.
|
X
|
|
1122(d)(2)(vii)
|
Reconciliations
are prepared on a monthly basis for all asset-backed securities related
bank accounts, including custodial accounts and related bank clearing
accounts. These reconciliations are (A) mathematically accurate;
(B)
prepared within 30 calendar days after the bank statement cutoff
date, or
such other number of days specified in the transaction
agreements;
(C) reviewed and approved by someone other than the person who prepared
the reconciliation; and (D) contain explanations for reconciling
items.
These reconciling items are resolved within 90 calendar days of their
original identification, or such other number of
days
specified in the transaction agreements.
|
X
|
|
Investor
Remittances and Reporting
|
||
|
1122(d)(3)(i)
|
Reports
to investors, including those to be filed with the Commission, are
maintained in accordance with the transaction agreements and applicable
Commission requirements. Specifically, such reports (A) are prepared
in
accordance with timeframes and other terms
set
forth in the transaction agreements; (B) provide information calculated
in
accordance with the terms specified in the transaction agreements;
(C) are
filed with the Commission as required by its rules and regulations;
and
(D) agree with investors’ or the trustee’s records as
to
the total unpaid principal balance and number of mortgage loans serviced
by the Servicer.
|
X
|
|
1122(d)(3)(ii)
|
Amounts
due to investors are allocated and remitted in accordance with timeframes,
distribution priority and other terms set forth in the transaction
agreements.
|
X
|
|
1122(d)(3)(iii)
|
Disbursements
made to an investor are posted within two business days to the Servicer’s
investor records, or such other number of days specified in the
transaction agreements.
|
X
|
D-18
|
Servicing
Criteria
|
Applicable
Servicing
Criteria
|
|
|
Reference
|
Criteria
|
|
|
1122(d)(3)(iv)
|
Amounts
remitted to investors per the investor reports agree with cancelled
checks, or other form of payment, or custodial bank statements.
|
X
|
|
Pool
Asset Administration
|
||
|
1122(d)(4)(i)
|
Collateral
or security on mortgage loans is maintained as required by the transaction
agreements or related mortgage loan documents.
|
X
|
|
1122(d)(4)(ii)
|
Mortgage
loan and related documents are safeguarded as required by the transaction
agreements
|
X
|
|
1122(d)(4)(iii)
|
Any
additions, removals or substitutions to the asset pool are made,
reviewed
and approved in accordance with any conditions or requirements in
the
transaction agreements.
|
X
|
|
1122(d)(4)(iv)
|
Payments
on mortgage loans, including any payoffs, made in accordance with
the
related mortgage loan documents are posted to the Servicer’s obligor
records maintained no more than two business days after receipt,
or such
other number of days specified in the transaction agreements, and
allocated to principal, interest or other items (e.g., escrow) in
accordance with the related mortgage loan documents.
|
X
|
|
1122(d)(4)(v)
|
The
Servicer’s records regarding the mortgage loans agree with the Servicer’s
records with respect to an obligor’s unpaid principal balance.
|
X
|
|
1122(d)(4)(vi)
|
Changes
with respect to the terms or status of an obligor’s mortgage loans (e.g.,
loan modifications or re-agings) are made, reviewed and approved
by
authorized personnel in accordance with the transaction agreements
and
related pool asset documents.
|
X
|
|
1122(d)(4)(vii)
|
Loss
mitigation or recovery actions (e.g., forbearance plans, modifications
and
deeds in lieu of foreclosure, foreclosures and repossessions, as
applicable) are initiated, conducted and
concluded
in accordance with the timeframes or other requirements established
by the
transaction agreements.
|
X
|
D-19
|
Servicing
Criteria
|
Applicable
Servicing
Criteria
|
|
|
Reference
|
Criteria
|
|
|
1122(d)(4)(viii)
|
Records
documenting collection efforts are maintained during the period a
mortgage
loan is delinquent in accordance with the transaction agreements.
Such
records are maintained on at least a monthly basis, or such other
period
specified in the transaction agreements, and
describe
the entity’s activities in monitoring delinquent mortgage loans including,
for example, phone calls, letters and payment rescheduling plans
in cases
where delinquency is deemed temporary (e.g., illness or unemployment).
|
X
|
|
1122(d)(4)(ix)
|
Adjustments
to interest rates or rates of return for mortgage loans with variable
rates are computed based on the related mortgage loan documents.
|
X
|
|
1122(d)(4)(x)
|
Regarding
any funds held in trust for an obligor (such as escrow accounts):
(A) such
funds are analyzed, in accordance with the obligor’s mortgage loan
documents, on at least an annual basis, or such other period specified
in
the transaction agreements; (B) interest on
such
funds is paid, or credited, to obligors in accordance with applicable
mortgage loan documents and state laws; and (C) such funds are returned
to
the obligor within 30 calendar days of full repayment of the related
mortgage loans, or such other number of days specified
in
the transaction agreements.
|
X
|
|
1122(d)(4)(xi)
|
Payments
made on behalf of an obligor (such as tax or insurance payments)
are made
on or before the related penalty or expiration dates, as indicated
on the
appropriate bills or notices for such payments, provided that such
support
has been received by the servicer at least 30
calendar
days prior to these dates, or such other number of days specified
in the
transaction agreements.
|
X
|
|
1122(d)(4)(xii)
|
Any
late payment penalties in connection with any payment to be made
on behalf
of an obligor are paid from the servicer’s funds and not charged to the
obligor, unless the late payment was due to the obligor’s error or
omission.
|
X
|
|
1122(d)(4)(xiii)
|
Disbursements
made on behalf of an obligor are posted within two business days
to the
obligor’s records maintained by the servicer, or such other number of days
specified in the transaction agreements.
|
X
|
|
1122(d)(4)(xiv)
|
Delinquencies,
charge-offs and uncollectible accounts are recognized and recorded
in
accordance with the transaction agreements.
|
X
|
D-20
|
Servicing
Criteria
|
Applicable
Servicing
Criteria
|
|
|
Reference
|
Criteria
|
|
|
1122(d)(4)(xv)
|
Any
external enhancement or other support, identified in Item 1114(a)(1)
through (3) or Item 1115 of Regulation AB, is maintained as set forth
in
the transaction agreements.
|
X
if
obligated under transaction
documents
|
D-21
EXHIBIT
E
MORTGAGE
LOAN SCHEDULE DATA FIELDS
|
(1)
|
the
Seller’s Mortgage Loan identifying
number;
|
|
(2)
|
the
Mortgagor’s and Co-Mortgagor’s (if applicable)
names;
|
|
(3)
|
the
street address of the Mortgaged Property, including the city, state,
zip
code, county, lot number, block number and section
number;
|
|
(4)
|
a
code indicating whether the Mortgaged Property is a single family
residence, a 2 family dwelling, a 3-4 family dwelling, a manufactured
home, a PUD, a townhouse, a unit in a condominium project, a co-operative,
a mixed-use property, land, or a non-residential
property;
|
|
(5)
|
a
code indicating the loan is a fixed rate or adjustable rate Mortgage
Loan
(to be provided in accordance with Standard and Poor’s loan type
requirements-Field 14);
|
|
(6)
|
Product
Description (to be provided in accordance with Standard and Poor’s
description categories-Field 7);
|
|
(7)
|
a
code indicating the lien status of the Mortgage
Loan;
|
|
(8)
|
the
original months to maturity or the remaining months to maturity from
the
Cut-off Date, in any case based on the original amortization schedule,
and
if different, the maturity expressed in the same manner but based
on the
actual amortization schedule;
|
|
(9)
|
the
Loan to Value Ratio at origination;
|
|
(10)
|
reserved;
|
|
(11)
|
the
Mortgage Interest Rate as of the Cut-off
Date;
|
|
(12)
|
the
Payment and Rate Adjustment Frequencies (if
applicable);
|
|
(13)
|
the
Index (if applicable);
|
|
(14)
|
the
initial Interest Rate Adjustment Date (if
applicable);
|
|
(15)
|
the
initial Payment Adjustment Date (if
applicable);
|
|
(16)
|
the
next Interest Rate Adjustment Date (if
applicable);
|
|
(17)
|
the
next Payment Adjustment Date (if
applicable);
|
|
(18)
|
the
Gross Margin (if applicable);
|
|
(19)
|
the
minimum Mortgage Interest Rate under the terms of the Mortgage Note
(if
applicable);
|
|
(20)
|
Mortgage
Interest Rate adjustment frequencies (if
applicable);
|
|
(21)
|
the
maximum Mortgage Interest Rate under the terms of the Mortgage Note
(if
applicable);
|
|
(22)
|
the
Mortgage Interest Rate adjustment cap at the initial Interest Rate
Adjustment Date (if applicable);
|
|
(23)
|
the
Mortgage Interest Rate adjustment cap at all subsequent Interest
Rate
Adjustment Dates (if applicable);
|
|
(24)
|
the
Lifetime Mortgage Interest Rate Cap (if
applicable);
|
|
(25)
|
the
rounding provisions under the terms of the Mortgage Note (if
applicable);
|
|
(26)
|
the
lookback provisions (#of days) under the terms of the Mortgage Note
(if
applicable);
|
|
(27)
|
negative
amortization indicator and limit;
|
|
(28)
|
the
date on which the first payment is
due;
|
|
(29)
|
the
original term of the Mortgage Loan;
|
|
(30)
|
the
stated maturity date;
|
E-1
|
(31)
|
the
amount of the Monthly Payment;
|
|
(32)
|
the
Annual Payment Cap expressed as a percentage (for Arms
only);
|
|
(33)
|
the
next due date as of the Cut-off
Date;
|
|
(34)
|
the
original principal amount of the Mortgage
Loan;
|
|
(35)
|
the
Senior and Subordinate balances (if
applicable);
|
|
(36)
|
the
closing date of the Mortgage Loan;
|
|
(37)
|
the
principal balance of the Mortgage Loan as of the close of business
on the
Cut-off Date; after deduction of payments of principal actually received
on or before the Cut-off Date;
|
|
(38)
|
monthly
payment histories on current mortgages (24 months if
available);
|
|
(39)
|
prior
foreclosure history (for the past 24
months);
|
|
(40)
|
prior
bankruptcy history (for the past 24
months);
|
|
(41)
|
the
loan purpose code;
|
|
(42)
|
the
occupancy code;
|
|
(43)
|
the
loan documentation type, (to be provided in conformance with Standard
and
Poor’s documentation categories- Field
5);
|
|
(44)
|
Asset
Verification (Purchase Money loans only), (yes or
no);
|
|
(45)
|
a
code indicating the Credit Grade of the Mortgage
Loan;
|
|
(46)
|
the
debt to income ratio;
|
|
(47)
|
the
Mortgagor’s and Co-Mortgagor’s (if applicable) social security
numbers;
|
|
(48)
|
the
Mortgagor’s and Co-Mortgagor’s (if applicable) original FICO score and the
Next Generation FICO score for new credit
scores;
|
|
(49)
|
the
Mortgagor’s mailing address if different from Number (3)
above;
|
|
(50)
|
the
purchase price of the Mortgaged Property (if a
purchase);
|
|
(51)
|
the
Appraisal date and the Appraisal value of the Mortgaged
Property;
|
|
(52)
|
the
Mortgagor’s and Co-Mortgagor’s (if applicable)
race;
|
|
(53)
|
the
Mortgagor’s and Co-Mortgagor’s (if applicable)
gender;
|
|
(54)
|
the
Mortgagor’s and Co-Mortgagor’s (if applicable) date of
birth;
|
|
(55)
|
the
number of bedrooms;
|
|
(56)
|
rental
income per unit;
|
|
(57)
|
the
combined annual income;
|
|
(58)
|
the
application date;
|
|
(59)
|
the
appraiser’s name;
|
|
(60)
|
the
appraiser’s firm name;
|
|
(61)
|
flood
insurance contract provider;
|
|
(62)
|
tax
service contract provider;
|
|
(63)
|
number
of units;
|
|
(64)
|
as
of date;
|
|
(65)
|
amortization
term;
|
|
(66)
|
balloon
flag;
|
|
(67)
|
prepayment
penalty flag;
|
|
(68)
|
prepayment
penalty term and prepayment penalty description (i.e.- 6 months interest,
set percentage of UPB);
|
|
(69)
|
payment
history current loan;
|
|
(70)
|
payment
history previous loan and all refinanced
loans;
|
|
(71)
|
mortgage
insurance provider, or code for
LPMI;
|
E-2
|
(72)
|
mortgage
insurance coverage percentage;
|
|
(73)
|
mortgage
insurance certificate number;
|
|
(74)
|
number
of borrowers;
|
|
(75)
|
first
time home buyer flag;
|
|
(76)
|
the
year in which the Mortgaged Property was
built;
|
|
(77)
|
the
monthly tax and insurance payment;
|
|
(78)
|
the
monthly servicing fee;
|
|
(79)
|
the
escrow balance as of the Cut-off
Date;
|
|
(80)
|
The
MIN number assigned to each Mortgage Loan, if
applicable;
|
|
(81)
|
a
code indicating the Appraisal Type (Tax Assessment, BPO, Drive-By
Form
704, URAR, Form 2065, Form 2055 (Exterior only), Form 2055 (Interior
Inspection), or AVM;
|
|
(82)
|
a
code indicating whether the Borrower(s) is self-employed (yes or
no);
|
|
(83)
|
a
code indicating whether the loan is High Cost or Covered (HC, CV,
HL);
|
|
(84)
|
a
section 32 flag and the origination points and or
fees;
|
|
(85)
|
code
indicating if a loan is assumable (yes or no);
and
|
|
(86)
|
annual
percentage rate (taken directly from the final
TIL).
|
E-3
EXHIBIT
F
[RESERVED]
F-1
EXHIBIT
G
FORM
OF NOTICE OF RELEASE
Date: [to
be
sent at least one day prior to sale]
To: XXXXX
FARGO BANK, N.A.
|
From:
|
RESIDENTIAL
FUNDING COMPANY, LLC
|
|
Re:
|
Custody
Agreement dated as of March 1, 1996 (the “Agreement”) among Xxxxx Fargo
Bank, N.A. (as successor in interest to Norwest Bank Minnesota, N.A.),
as
custodian (“Custodian”), and Xxxxxx Capital, A Division of Xxxxxx Brothers
Holdings Inc., as owner and initial servicer
|
Ladies
and Gentlemen:
In
connection with the administration of the Mortgage Loans held by you as
Custodian, the undersigned requests the release of the Custodial Files for
the
Mortgage Loans identified in Schedule A to this request to Residential Funding
Company, LLC (pursuant to the Assignment and Assumption, dated as of October
30,
2006, between Xxxxxx Capital, A Division of Xxxxxx Brothers Holdings Inc.,
as
assignor, and Residential Funding Company, LLC, as assignee).
RESIDENTIAL
FUNDING COMPANY, LLC,
as
Registered Holder
By:
Printed
Name:
Title:
Date:
ACKNOWLEDGED:
XXXXX
FARGO BANK, N.A.,
as
Custodian
By:
Printed
Name:
Title:
Date:
G-1
Schedule
A to Notice of Release
MORTGAGE
LOANS
G-2
EXHIBIT
H
FORM
OF SELLER’S OFFICER’S CERTIFICATE
I,
____________________, hereby certify that I am the duly elected
____________________ of [COMPANY], a state chartered institution organized
under
the laws of the state of [STATE], (the “Company”) and further as
follows:
|
1.
|
Attached
hereto as Exhibit 1 is a true, correct and complete copy of the
certificate of formation of the Company which is in full force and
effect
on the date hereof and which has been in effect without amendment,
waiver,
rescission or modification.
|
|
2.
|
Attached
hereto as Exhibit 2 is a true, correct and complete copy of the limited
liability company agreement of the Company which is in effect on
the date
hereof and which has been in effect without amendment, waiver, rescission
or modification.
|
|
3.
|
Attached
hereto as Exhibit 3 is an original certificate of good standing of
the
Company issued within twenty days of the date hereof, and no event
has
occurred since the date thereof which would impair such
standing.
|
|
4.
|
Attached
hereto as Exhibit 4 is a true, correct and complete copy of the Unanimous
Written Consent of Directors in Lieu of Meeting of Board of Directors
Regarding RCG - Capital Markets Group Signing Authority, dated September
1, 2005.
|
|
5.
|
Either
(i) no consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery
and
performance by the Company of or compliance by the Company with the
Purchase Agreement, the sale of the mortgage loans or the consummation
of
the transactions contemplated by the agreements; or (ii) any required
consent, approval, authorization or order has been obtained by the
Company.
|
|
6.
|
Neither
the consummation of the transactions contemplated by, nor the fulfillment
of the terms of the Purchase Agreement conflicts or will conflict
with or
results or will result in a breach of or constitutes or will constitute
a
default under the certificate of formation or limited liability company
agreement of the Company, the terms of any material indenture or
other
material agreement or instrument to which the Company is a party
or by
which it is bound or to which it is subject, or any statute or order,
rule, regulations, writ, injunction or decree of any court, governmental
authority or regulatory body to which the Company is subject or by
which
it is bound.
|
|
7.
|
No
litigation is pending or, to the best of the Company’s knowledge,
threatened against the Company which would prohibit its entering
into this
Agreement or the related Purchase Confirmation or performing its
obligations under this Agreement or the related Purchase Confirmation
or
result in any material adverse change in the business, operations,
financial condition, properties or assets of the Company, or in any
material impairment of the right or ability of the Company to carry
on its
business substantially as now
conducted.
|
H-1
|
8.
|
Each
person listed on Exhibit 5 attached hereto who, as an officer or
representative of the Company, signed the Purchase Agreement and
any other
document delivered prior hereto or on the date hereof in connection
with
any purchase described in the agreements set forth above was, at
the
respective times of such signing and delivery, and is now, a duly
elected
or appointed, qualified and acting officer or representative of the
Company, who holds the office set forth opposite his or her name
on
Exhibit 5, and the signatures of such persons appearing on such documents
are their genuine signatures.
|
|
9.
|
The
Company is duly authorized to engage in the transactions described
and
contemplated in the Purchase
Agreement.
|
|
10.
|
The
Mortgage Loans are not subject to any security interest, claim, pledge,
hypothecation or lien.
|
H-2
IN
WITNESS WHEREOF, I have hereunto signed my name.
|
Dated:
|
By:
Name:
Title:
|
I,
________________________, an Associate of [COMPANY], hereby certify that
________________________ is the duly elected, qualified and acting
________________________ of the Company and that the signature appearing above
is [her] [his] genuine signature.
IN
WITNESS WHEREOF, I have hereunto signed my name.
|
Dated:
|
By:
Name:
Title:
|
H-3
EXHIBIT
5
to
Company’s
Officer’s Certificate
|
Name
|
Title
|
Signature
|
H-4
EXHIBIT
I
FORM
OF CUSTODIAL ACCOUNT CERTIFICATION
_______
__, 200_
_____________________________________________
hereby certifies that it has established the account described below as a
Custodial Account pursuant to Section 3.06 of the Sale and Servicing Agreement,
dated as of October [__], 2006, , Group No. 2006-RETAINED FLOW.
Title
of
Account: “Residential
Funding Company, LLC in trust for Xxxxxx Capital, A Division of Xxxxxx Brothers
Holdings Inc., Residential Mortgage Loans, Group No. 2006-RETAINED
FLOW”.
Account
Number:
Address
of office or branch of the Company at which Account is maintained:
Residential
Funding Company, LLC
By:
Name:
Title:
I-1
The
undersigned, as Depository acknowledges the foregoing.
Depository
By: ___________________________
Name:
Title:
Date:
I-2
EXHIBIT
J
FORM
OF CUSTODIAL ACCOUNT LETTER AGREEMENT
_______
__, 200[_]
To:
(the
“Depository”)
As
Company under the Sale and Servicing Agreement, dated as of October [__], 2006,
Group No. 2006-RETAINED FLOW (the “Agreement”), we hereby authorize and request
you to establish an account, as a Custodial Account pursuant to Section 3.06
of
the Agreement, to be designated as “Residential Funding Company, LLC in trust
for Xxxxxx Capital, A Division of Xxxxxx Brothers Holdings Inc., Residential
Mortgage Loans, Group No. 2006-RETAINED FLOW” All deposits in the account shall
be subject to withdrawal therefrom by order signed by the Company. You may
refuse any deposit which would result in violation of the requirement that
the
account be fully insured as described below. This letter is submitted to you
in
duplicate. Please execute and return one original to us.
Residential
Funding Company, LLC
By:
Name:
Title:
Date:
J-1
The
undersigned, as Depository, hereby acknowledges the foregoing.
Depository
By:
Name:
Title:
Date:
J-2
EXHIBIT
K
[RESERVED]
K-1
EXHIBIT
L
[RESERVED]
L-1
EXHIBIT
M
SERVICING
CRITERIA TO BE ADDRESSED IN ASSESSMENT OF COMPLIANCE
The
assessment of compliance to be delivered by the Company shall address, at a
minimum, the criteria identified as below as “Applicable Servicing
Criteria”:
|
Servicing
Criteria
|
Applicable
Servicing Criteria
|
|
|
Reference
|
Criteria
|
|
|
|
General
Servicing Considerations
|
|
|
1122(d)(1)(i)
|
Policies
and procedures are instituted to monitor any performance or other
triggers
and events of default in accordance with the transaction
agreements.
|
X
|
|
1122(d)(1)(ii)
|
If
any material servicing activities are outsourced to third parties,
policies and procedures are instituted to monitor the third party’s
performance and compliance with such servicing activities.
|
X
|
|
1122(d)(1)(iii)
|
Any
requirements in the transaction agreements to maintain a back-up
servicer
for the mortgage loans are maintained.
|
Not
applicable
|
|
1122(d)(1)(iv)
|
A
fidelity bond and errors and omissions policy is in effect on the
party
participating in the servicing function throughout the reporting
period in
the amount of coverage required by and otherwise in accordance with
the
terms of the transaction agreements.
|
X
|
|
|
Cash
Collection and Administration
|
|
|
1122(d)(2)(i)
|
Payments
on mortgage loans are deposited into the appropriate custodial bank
accounts and related bank clearing accounts no more than two business
days
following receipt, or such other number of days specified in the
transaction agreements.
|
X
|
|
1122(d)(2)(ii)
|
Disbursements
made via wire transfer on behalf of an obligor or to an investor
are made
only by authorized personnel.
|
X
|
|
1122(d)(2)(iii)
|
Advances
of funds or guarantees regarding collections, cash flows or distributions,
and any interest or other fees charged for such advances, are made,
reviewed and approved as specified in the transaction
agreements.
|
X
|
|
1122(d)(2)(iv)
|
The
related accounts for the transaction, such as cash reserve accounts
or
accounts established as a form of overcollateralization, are separately
maintained (e.g., with respect to commingling of cash) as set forth
in the
transaction agreements.
|
X
|
|
1122(d)(2)(v)
|
Each
custodial account is maintained at a federally insured depository
institution as set forth in the transaction agreements. For purposes
of
this criterion, “federally insured depository institution” with respect to
a foreign financial institution means a foreign financial institution
that
meets the requirements of Rule 13k-1(b)(1) of the Securities Exchange
Act.
|
X
|
|
1122(d)(2)(vi)
|
Unissued
checks are safeguarded so as to prevent unauthorized
access.
|
X
|
|
1122(d)(2)(vii)
|
Reconciliations
are prepared on a monthly basis for all asset-backed securities related
bank accounts, including custodial accounts and related bank clearing
accounts. These reconciliations are (A) mathematically accurate;
(B)
prepared within 30 calendar days after the bank statement cutoff
date, or
such other number of days specified in the transaction agreements;
(C)
reviewed and approved by someone other than the person who prepared
the
reconciliation; and (D) contain explanations for reconciling items.
These
reconciling items are resolved within 90 calendar days of their original
identification, or such other number of days specified in the transaction
agreements.
|
X
|
M-1
|
Servicing
Criteria
|
Applicable
Servicing Criteria
|
|
|
Reference
|
Criteria
|
|
|
|
Investor
Remittances and Reporting
|
|
|
1122(d)(3)(i)
|
Reports
to investors, including those to be filed with the Commission, are
maintained in accordance with the transaction agreements and applicable
Commission requirements. Specifically, such reports (A) are prepared
in
accordance with timeframes and other terms set forth in the transaction
agreements; (B) provide information calculated in accordance with
the
terms specified in the transaction agreements; (C) are filed with
the
Commission as required by its rules and regulations; and (D) agree
with
investors’ or the trustee’s records as to the total unpaid principal
balance and number of mortgage loans serviced by the
Servicer.
|
X
|
|
1122(d)(3)(ii)
|
Amounts
due to investors are allocated and remitted in accordance with timeframes,
distribution priority and other terms set forth in the transaction
agreements.
|
X
|
|
1122(d)(3)(iii)
|
Disbursements
made to an investor are posted within two business days to the Servicer’s
investor records, or such other number of days specified in the
transaction agreements.
|
X
|
|
1122(d)(3)(iv)
|
Amounts
remitted to investors per the investor reports agree with cancelled
checks, or other form of payment, or custodial bank
statements.
|
X
|
|
|
Pool
Asset Administration
|
|
|
1122(d)(4)(i)
|
Collateral
or security on mortgage loans is maintained as required by the transaction
agreements or related mortgage loan documents.
|
X
|
|
1122(d)(4)(ii)
|
Mortgage
loan and related documents are safeguarded as required by the transaction
agreements
|
X
|
|
1122(d)(4)(iii)
|
Any
additions, removals or substitutions to the asset pool are made,
reviewed
and approved in accordance with any conditions or requirements in
the
transaction agreements.
|
X
|
|
1122(d)(4)(iv)
|
Payments
on mortgage loans, including any payoffs, made in accordance with
the
related mortgage loan documents are posted to the Servicer’s obligor
records maintained no more than two business days after receipt,
or such
other number of days specified in the transaction agreements, and
allocated to principal, interest or other items (e.g., escrow) in
accordance with the related mortgage loan documents.
|
X
|
|
1122(d)(4)(v)
|
The
Servicer’s records regarding the mortgage loans agree with the Servicer’s
records with respect to an obligor’s unpaid principal
balance.
|
X
|
|
1122(d)(4)(vi)
|
Changes
with respect to the terms or status of an obligor's mortgage loans
(e.g.,
loan modifications or re-agings) are made, reviewed and approved
by
authorized personnel in accordance with the transaction agreements
and
related pool asset documents.
|
X
|
|
1122(d)(4)(vii)
|
Loss
mitigation or recovery actions (e.g., forbearance plans, modifications
and
deeds in lieu of foreclosure, foreclosures and repossessions, as
applicable) are initiated, conducted and concluded in accordance
with the
timeframes or other requirements established by the transaction
agreements.
|
X
|
|
1122(d)(4)(viii)
|
Records
documenting collection efforts are maintained during the period a
mortgage
loan is delinquent in accordance with the transaction agreements.
Such
records are maintained on at least a monthly basis, or such other
period
specified in the transaction agreements, and describe the entity’s
activities in monitoring delinquent mortgage loans including, for
example,
phone calls, letters and payment rescheduling plans in cases where
delinquency is deemed temporary (e.g., illness or
unemployment).
|
X
|
|
1122(d)(4)(ix)
|
Adjustments
to interest rates or rates of return for mortgage loans with variable
rates are computed based on the related mortgage loan
documents.
|
X
|
M-2
|
Servicing
Criteria
|
Applicable
Servicing Criteria
|
|
|
Reference
|
Criteria
|
|
|
1122(d)(4)(x)
|
Regarding
any funds held in trust for an obligor (such as escrow accounts):
(A) such
funds are analyzed, in accordance with the obligor’s mortgage loan
documents, on at least an annual basis, or such other period specified
in
the transaction agreements; (B) interest on such funds is paid, or
credited, to obligors in accordance with applicable mortgage loan
documents and state laws; and (C) such funds are returned to the
obligor
within 30 calendar days of full repayment of the related mortgage
loans,
or such other number of days specified in the transaction
agreements.
|
X
|
|
1122(d)(4)(xi)
|
Payments
made on behalf of an obligor (such as tax or insurance payments)
are made
on or before the related penalty or expiration dates, as indicated
on the
appropriate bills or notices for such payments, provided that such
support
has been received by the servicer at least 30 calendar days prior
to these
dates, or such other number of days specified in the transaction
agreements.
|
X
|
|
1122(d)(4)(xii)
|
Any
late payment penalties in connection with any payment to be made
on behalf
of an obligor are paid from the servicer’s funds and not charged to the
obligor, unless the late payment was due to the obligor’s error or
omission.
|
X
|
|
1122(d)(4)(xiii)
|
Disbursements
made on behalf of an obligor are posted within two business days
to the
obligor’s records maintained by the servicer, or such other number of days
specified in the transaction agreements.
|
X
|
|
1122(d)(4)(xiv)
|
Delinquencies,
charge-offs and uncollectible accounts are recognized and recorded
in
accordance with the transaction agreements.
|
X
|
|
1122(d)(4)(xv)
|
Any
external enhancement or other support, identified in Item 1114(a)(1)
through (3) or Item 1115 of Regulation AB, is maintained as set forth
in
the transaction agreements.
|
Not
applicable
|
|
|
|
|
M-3
