EXHIBIT 4.11
-------------------,
as Master Servicer
HOME EQUITY LOAN TRUST 199_-_,
as Issuer
and
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as Indenture Trustee
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SERVICING AGREEMENT
Dated as of ______, 199_
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TABLE OF CONTENTS
Page
ARTICLE I
Definitions
Section 1.1 Definitions.....................................................1
Section.1.2 Other Definitional Provisions...................................1
Section 1.3 Interest Calculations...........................................2
ARTICLE II
Representations and Warranties
Section 2.1 Representations and Warranties Regarding the Master Servicer...3
Section 2.2 Representations and Warranties of the Issuer...................4
Section 2.3 Enforcement of Representations and Warranties..................4
ARTICLE III
Administration and Servicingof Revolving Credit Loans
Section 3.1 The Master Servicer.............................................6
Section 3.2 Collection of Certain Revolving Credit Loan Payments............8
Section 3.3 Withdrawals from the Custodial Account.........................11
Section 3.4 Maintenance of Hazard Insurance; Property Protection Expenses.12
Section 3.5 Modification Agreements.......................................13
Section 3.6 Trust Estate; Related Documents................................14
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Section 3.7 Realization Upon Defaulted Revolving Credit Loans.............15
Section 3.8 Issuer and Indenture Trustee to Cooperate......................16
Section 3.9 Servicing Compensation; Payment of Certain Expenses by
Master Servicer...............................................18
Section 3.10 Annual Statement as to Compliance............................18
Section 3.11 Annual Servicing Report......................................18
Section 3.12 Access to Certain Documentation and Information Regarding the
Revolving Credit Loans.....................................................19
Section 3.13 Maintenance of Certain Servicing Insurance Policies...........19
Section 3.14 Information Required by the Internal Revenue Service
and Reports of Foreclosures and Abandonments of Mortgaged Property.........19
Section 3.15 Optional Repurchase of Defaulted Revolving Credit Loans......20
ARTICLE IV
Administration and Servicingof Revolving Credit Loans
Section 4.1 Statements to Securityholders.................................20
Section 4.2 Tax Reporting.................................................22
ARTICLE V
Payment Account
Section 5.1 Payment Account...............................................22
ARTICLE VI
The Master Servicer
Section 6.1 Liability of the Master Servicer..............................23
Section 6.2. Merger or Consolidation of, or Assumption of the Obligations
of, the Master Servicer....................................................23
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Section 6.3 Limitation on Liability of the Master Servicer and Others.....24
Section 6.4 Master Servicer Not to Resign.................................24
Section 6.5. Delegation of Duties..........................................25
Section 6.6. Master Servicer to Pay Indenture Trustee's and Owner
Trustee's Fees and Expenses; Indemnification..................25
ARTICLE VII
Default
Section 7.1 Servicing Default............................................27
Section 7.2 Indenture Trustee to Act; Appointment of Successor............29
Section 7.3 Notification to Securityholders...............................30
ARTICLE VIII
Miscellaneous Provisions
Section 8.1 Amendment.....................................................31
Section 8.2 Governing Law.................................................31
Section 8.3 Notices.......................................................31
Section 8.4 Severability of Provisions....................................31
Section 8.5 Third-Party Beneficiaries.....................................32
Section 8.6 Counterparts..................................................32
Section 8.7 Effect of Headings and Table of Contents......................32
Section 8.8 Termination Upon Purchase by the Master Servicer or
Liquidation of All Revolving Credit Loans; Partial
Redemption....................................................32
Section 8.9 Certain Matters Affecting the Indenture Trustee...............33
Section 8.10 Owner Trustee Not Liable for Related Documents...............34
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This Servicing Agreement, dated as of ______, 199__, among
______________ (the "Master Servicer"), the Home Equity Loan Trust 199_-_ (the
"Issuer"), and _________ (the "Indenture Trustee").
W I T N E S S E T H T H A T:
WHEREAS, pursuant to the terms of the Revolving Credit Loan Purchase
Agreement, ___________ (in its capacity as Seller) will sell to the Depositor
the Revolving Credit Loans together with the Related Documents on the Closing
Date, and thereafter all Additional Balances created on or after the Cut-off
Date;
WHEREAS, the Depositor will sell the Revolving Credit Loans and all of
its rights under the Revolving Credit Loan Purchase Agreement to the Issuer,
together with the Related Documents on the Closing Date, and thereafter all
Additional Balances created on or after the Cut-off Date;
WHEREAS, pursuant to the terms of the Trust Agreement, the Issuer will
issue and transfer to or at the direction of the Depositor, the Certificates;
WHEREAS, pursuant to the terms of the Indenture, the Issuer will issue
and transfer to or at the direction of the Depositor, the Notes; and
WHEREAS, pursuant to the terms of this Servicing Agreement, the Master
Servicer will service the Revolving Credit Loans directly or through one or more
Subservicers;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto agree as follows:
ARTICLE I.
Definitions
Section 1.1. Definitions. For all purposes of this Servicing Agreement,
except as otherwise expressly provided herein or unless the context otherwise
requires, capitalized terms not otherwise defined herein shall have the meanings
assigned to such terms in the Definitions contained in Appendix A to the
Indenture dated ______, 199_ (the "Indenture"), between Home Equity Loan Trust
199_-_, as issuer, and _______, as indenture trustee, which is incorporated by
reference herein. All other capitalized terms used herein shall have the
meanings specified herein.
Section 1.2. Other Definitional Provisions.
(a) All terms defined in this Servicing Agreement shall have the
defined meanings when used in any certificate or other document made or
delivered pursuant hereto unless otherwise defined therein.
(b) As used in this Servicing Agreement and in any certificate or
other document made or delivered pursuant hereto or thereto, accounting terms
not defined in this Servicing Agreement or in any such certificate or other
document, and accounting terms partly defined in this Servicing Agreement or in
any such certificate or other document, to the extent not defined, shall have
the respective meanings given to them under generally accepted accounting
principles. To the extent that the definitions of accounting terms in this
Servicing Agreement or in any such certificate or other document are
inconsistent with the meanings of such terms under generally accepted accounting
principles, the definitions contained in this Servicing Agreement or in any such
certificate or other document shall control.
(c) The words "hereof," "herein," "hereunder" and words of similar
import when used in this Servicing Agreement shall refer to this Servicing
Agreement as a whole and not to any particular provision of this Servicing
Agreement; Section and Exhibit references contained in this Servicing Agreement
are references to Sections and Exhibits in or to this Servicing Agreement unless
otherwise specified; and the term "including" shall mean "including without
limitation".
(d) The definitions contained in this Servicing Agreement are
applicable to the singular as well as the plural forms of such terms and to the
masculine as well as the feminine and neuter genders of such terms.
(e) Any agreement, instrument or statute defined or referred to
herein or in any instrument or certificate delivered in connection herewith
means such agreement, instrument or statute as from time to time amended,
modified or supplemented and includes (in the case of agreements or instruments)
references to all attachments thereto and instruments incorporated therein;
references to a Person are also to its permitted successors and assigns.
Section 1.3. Interest Calculations. All calculations of interest
hereunder that are made in respect of the Loan Balance of a Revolving Credit
Loan shall be made on a daily basis using a 365-day year. All calculations of
interest on the Securities shall be made on the basis of the actual number of
days in an Interest Period and a year assumed to consist of 360 days. The
calculation of the Servicing Fee shall be made on the basis of a 360-day year
consisting of twelve 30-day months. All dollar amounts calculated hereunder
shall be rounded to the nearest xxxxx with one-half of one xxxxx being rounded
up.
ARTICLE II.
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Representations and Warranties
Section 2.1. Representations and Warranties Regarding the Master
Servicer. The Master Servicer represents and warrants to the Issuer and for the
benefit of the Indenture Trustee, as pledgee of the Revolving Credit Loans, as
of the Cut-off Date:
(i) The Master Servicer is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Delaware and has the corporate power to own its assets and to transact
the business in which it is currently engaged. The Master Servicer is
duly qualified to do business as a foreign corporation and is in good
standing in each jurisdiction in which the character of the business
transacted by it or properties owned or leased by it requires such
qualification and in which the failure to so qualify would have a
material adverse effect on the business, properties, assets, or
condition (financial or other) of the Master Servicer;
(ii) The Master Servicer has the power and authority to
make, execute, deliver and perform this Servicing Agreement and all of
the transactions contemplated under this Servicing Agreement, and has
taken all necessary corporate action to authorize the execution,
delivery and performance of this Servicing Agreement. When executed and
delivered, this ServicingAgreement will constitute the legal, valid and
binding obligation of the Master Servicer enforceable in accordance with
its terms, except as enforcement of such terms may be limited by
bankruptcy, insolvency or similar laws affecting the enforcement of
creditors' rights generally and by the availability of equitable
remedies;
(iii) The Master Servicer is not required to obtain the
consent of any other Person or any consent, license, approval or
authorization from, or registration or declaration with, any
governmental authority, bureau or agency in connection with the
execution, delivery, performance, validity or enforceability of this
Servicing Agreement, except for such consent, license, approval or
authorization, or registration or declaration, as shall have been
obtained or filed, as the case may be;
(iv) The execution and delivery of this Servicing Agreement
and the performance of the transactions contemplated hereby by the
Master Servicer will not violate any provision of any existing law or
regulation or any order or decree of any court applicable to the Master
Servicer or any provision of the Certificate of Incorporation or Bylaws
of the Master Servicer, or constitute a material breach of any mortgage,
indenture, contract or other agreement to which the Master Servicer is a
party or by which the Master Servicer may be bound; and
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(v) No litigation or administrative proceeding of or before
any court, tribunal or governmental body is currently pending, or to the
knowledge of the Master Servicer threatened, against the Master Servicer
or any of its properties or with respect to this Servicing Agreement or
the Securities which in the opinion of the Master Servicer has a
reasonable likelihood of resulting in a material adverse effect on the
transactions contemplated by this Servicing Agreement. The foregoing
representations and warranties shall survive any termination of the
Master Servicer hereunder.
Section 2.2. Representations and Warranties of the Issuer. The Issuer
hereby represents and warrants to the Master Servicer and for the benefit of the
Indenture Trustee, as pledgee of the Revolving Credit Loans, as of the Cut-off
Date:
(i) The Issuer is a business trust duly formed and in good
standing under the laws of the State of Delaware and has full power,
authority and legal right to execute and deliver this Servicing
Agreement and to perform its obligations under this Servicing Agreement,
and has taken all necessary action to authorize the execution, delivery
and performance by it of this Servicing Agreement; and
(ii) The execution and delivery by the Issuer of this Servicing
Agreement and the performance by the Issuer of its obligations under
this Servicing Agreement will not violate any provision of any law or
regulation governing the Issuer or any order, writ, judgment or decree
of any court, arbitrator or governmental authority or agency applicable
to the Issuer or any of its assets. Such execution, delivery,
authentication and performance will not require the authorization,
consent or approval of, the giving of notice to, the filing or
registration with, or the taking of any other action with respect to,
any governmental authority or agency regulating the activities of
limited liability companies. Such execution, delivery, authentication
and performance will not conflict with, or result in a breach or
violation of, any mortgage, deed of trust, lease or other agreement or
instrument to which the Issuer is bound.
Section 2.3. Enforcement of Representations and Warranties. The Master
Servicer, on behalf of and subject to the direction of the Indenture Trustee, as
pledgee of the Revolving Credit Loans, or the Issuer, shall enforce the
representations and warranties of the Seller pursuant to the Revolving Credit
Loan Purchase Agreement. Upon the discovery by the Seller, the Depositor, the
Master Servicer, the Indenture Trustee, the Credit Enhancer, the Issuer, or any
Custodian of a breach of any of the representations and warranties made in the
Revolving Credit Loan Purchase Agreement, in respect of any
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Revolving Credit Loan which materially and adversely affects the interests of
the Securityholders or the Credit Enhancer, the party discovering such breach
shall give prompt written notice to the other parties (any Custodian being so
obligated under a Custodial Agreement). The Master Servicer shall promptly
notify the Seller of such breach and request that, pursuant to the terms of the
Revolving Credit Loan Purchase Agreement, the Seller either (i) cure such breach
in all material respects within 45 days (with respect to a breach of the
representations and warranties contained in Section 3.1(a) of the Revolving
Credit Loan Purchase Agreement) or 90 days (with respect to a breach of the
representations and warranties contained in Section 3.1(b) of the Revolving
Credit Loan Purchase Agreement) from the date the Seller was notified of such
breach or (ii) purchase such Revolving Credit Loan at the price and in the
manner set forth in Section 3.1(b) of the Revolving Credit Loan Purchase
Agreement; provided that the Seller shall, subject to compliance with all the
conditions set forth in the Revolving Credit Loan Purchase Agreement, have the
option to substitute an Eligible Substitute Loan or Loans for such Revolving
Credit Loan. In the event that the Seller elects to substitute one or more
Eligible Substitute Loans pursuant to Section 3.1(b) of the Revolving Credit
Loan Purchase Agreement, the Seller shall deliver to the Issuer with respect to
such Eligible Substitute Loans, the original Credit Line Agreement, the
Mortgage, and such other documents and agreements as are required by the
Revolving Credit Loan Purchase Agreement. Payments due with respect to Eligible
Substitute Loans in the month of substitution shall not be transferred to the
Trust and will be retained by the Master Servicer and remitted by the Master
Servicer to the Seller on the next succeeding Payment Date provided a payment at
least equal to the applicable Minimum Monthly Payment has been received by the
Issuer for such month in respect of the Revolving Credit Loan to be removed. The
Master Servicer shall amend or cause to be amended the Revolving Credit Loan
Schedule to reflect the removal of such Revolving Credit Loan and the
substitution of the Eligible Substitute Loans and the Master Servicer shall
promptly deliver the amended Revolving Credit Loan Schedule to the Owner Trustee
and Indenture Trustee.
It is understood and agreed that the obligation of the Seller to cure
such breach or purchase or substitute for such Revolving Credit Loan as to which
such a breach has occurred and is continuing shall constitute the sole remedy
respecting such breach available to the Issuer and the Indenture Trustee, as
pledgee of the Revolving Credit Loans, against the Seller. In connection with
the purchase of or substitution for any such Revolving Credit Loan by the
Seller, the Issuer shall assign to the Seller all of its right, title and
interest in respect of the Revolving Credit Loan Purchase Agreement applicable
to such Revolving Credit Loan. Upon receipt of the Repurchase Price, or upon
completion of such substitution, the Master Servicer shall notify the Custodian
and then the Custodian shall deliver the Mortgage Files to the Master Servicer,
together with all relevant endorsements and assignments prepared by the Master
Servicer which the Indenture Trustee shall execute.
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ARTICLE III.
Administration and Servicingof Revolving Credit Loans
Section3.1. The Master Servicer.
(a) The Master Servicer shall service and administer the Revolving
Credit Loans in a manner generally consistent with the terms of the Program
Guide and in a manner consistent with the terms of this Servicing Agreement and
which shall be normal and usual in its general mortgage servicing activities,
and shall have full power and authority, acting alone or through a subservicer,
to do any and all things in connection with such servicing and administration
which it may deem necessary or desirable, it being understood, however, that the
Master Servicer shall at all times remain responsible to the Issuer, the
Indenture Trustee, as pledgee of the Revolving Credit Loans; and for the
performance of its duties and obligations hereunder in accordance with the terms
hereof and the Program Guide. Without limiting the generality of the foregoing,
the Master Servicer shall continue, and is hereby authorized and empowered by
the Issuer and the Indenture Trustee, as pledgee of the Revolving Credit Loans,
to execute and deliver, on behalf of itself, the Issuer, the Indenture Trustee
or any of them, any and all instruments of satisfaction or cancellation, or of
partial or full release or discharge and all other comparable instruments with
respect to the Revolving Credit Loans and with respect to the Mortgaged
Properties. The Issuer, the Indenture Trustee and the Custodian, as applicable,
shall furnish the Master Servicer with any powers of attorney and other
documents necessary or appropriate to enable the Master Servicer to carry out
its servicing and administrative duties hereunder. In addition, the Master
Servicer may, at its own discretion and on behalf of the Indenture Trustee,
obtain credit information in the form of a "credit score" from a credit
repository. On the Closing Date, the Indenture Trustee shall deliver to the
Master Servicer a limited power of attorney generally in the form of Exhibit B
hereto.
If the Mortgage relating to a Revolving Credit Loan did not have a lien
senior to the Revolving Credit Loan on the related Mortgaged Property as of the
Cut-off Date, then the Master Servicer, in such capacity, may not consent to the
placing of a lien senior to that of the Mortgage on the related Mortgaged
Property. If the Mortgage relating to a Revolving Credit Loan had a lien senior
to the Revolving Credit Loan on the related Mortgaged Property as of the Cut-off
Date, then the Master Servicer, in such capacity, may consent to the refinancing
of the prior senior lien; provided that (i) the resulting Combined Loan-to-Value
Ratio of such Revolving Credit Loan is no higher than the greater of the
Combined Loan-to-Value Ratio prior to such refinancing and [70]% (or [80]% for
those borrowers with a FICO "credit score" of 710 or greater), (ii) the interest
rate for the loan evidencing the refinanced senior lien is no higher than the
interest rate on the loan evidencing the existing senior lien immediately prior
to the date of such
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refinancing; provided however if the loan evidencing the existing senior lien
prior to the date of refinancing is an adjustable rate and the loan evidencing
the refinanced senior lien is a fixed rate lien, then the loan evidencing the
refinanced senior lien may be up to 2.0% higher than the then-current mortgage
rate of the loan evidencing the existing senior lien and (iii) the loan
evidencing the refinanced senior lien is not subject to negative amortization.
In connection with servicing the Revolving Credit Loans, the Master
Servicer may take reasonable actions to encourage or effect the termination of
Loan Agreements that have become dormant.
The relationship of the Master Servicer (and of any successor to the
Master Servicer as servicer under this Servicing Agreement) to the Issuer under
this Servicing Agreement is intended by the parties to be that of an independent
contractor and not that of a joint venturer, partner or agent.
(b) The Master Servicer may enter into Subservicing Agreements with
Subservicers for the servicing and administration of certain of the Revolving
Credit Loans. References in this Servicing Agreement to actions taken or to be
taken by the Master Servicer in servicing the Revolving Credit Loans include
actions taken or to be taken by a Subservicer on behalf of the Master Servicer
and any amount actually received by such Subservicer in respect of a Revolving
Credit Loan shall be deemed to have been received by the Master Servicer whether
or not actually received by the Master Servicer. Each Subservicing Agreement
will be upon such terms and conditions as are not inconsistent with this
Servicing Agreement and as the Master Servicer and the Subservicer have agreed.
With the approval of the Master Servicer, a Subservicer may delegate its
servicing obligations to third-party servicers, but such Subservicers will
remain obligated under the related Subservicing Agreements. The Master Servicer
and the Subservicer may enter into amendments to the related Subservicing
Agreements; provided, however, that any such amendments shall not cause the
Revolving Credit Loans to be serviced in a manner that would be materially
inconsistent with the standards set forth in this Servicing Agreement. The
Master Servicer shall be entitled to terminate any Subservicing Agreement in
accordance with the terms and conditions thereof and without any limitation by
virtue of this Servicing Agreement; provided, however, that in the event of
termination of any Subservicing Agreement by the Master Servicer or the
Subservicer, the Master Servicer shall either act as servicer of the related
Revolving Credit Loan or enter into a Subservicing Agreement with a successor
Subservicer which will be bound by the terms of the related Subservicing
Agreement. The Master Servicer shall be entitled to enter into any agreement
with a Subservicer for indemnification of the Master Servicer and nothing
contained in this Servicing Agreement shall be deemed to limit or modify such
indemnification.
In the event that the rights, duties and obligations of the Master
Servicer are terminated hereunder, any successor to the Master Servicer in its
sole discretion may, to
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the extent permitted by applicable law, terminate the existing Subservicing
Agreement with any Subservicer in accordance with the terms of the applicable
Subservicing Agreement or assume the terminated Master Servicer's rights and
obligations under such subservicing arrangements which termination or assumption
will not violate the terms of such arrangements.
As part of its servicing activities hereunder, the Master Servicer, for
the benefit of the Trust and the Securityholders, shall use reasonable efforts
to enforce the obligations of each subservicer under the related Subservicing
Agreement, to the extent that the non-performance of any such obligation would
have a material adverse effect on a Revolving Credit Loan. Such enforcement,
including, without limitation, the legal prosecution of claims, termination of
Subservicing Agreements and the pursuit of other appropriate remedies, shall be
in such form and carried out to such an extent and at such time as the Master
Servicer, in its good faith business judgment, would require were it the owner
of the related Revolving Credit Loans. The Master Servicer shall pay the costs
of such enforcement at its own expense, and shall be reimbursed therefor only
(i) from a general recovery resulting from such enforcement to the extent, if
any, that such recovery exceeds all amounts due in respect of the related
Revolving Credit Loan or (ii) from a specific recovery of costs, expenses or
attorneys fees against the party against whom such enforcement is directed.
Section 3.2. Collection of Certain Revolving Credit Loan Payments.
(a) The Master Servicer shall make reasonable efforts to collect all
payments called for under the terms and provisions of the Revolving Credit
Loans, and shall, to the extent such procedures shall be consistent with this
Servicing Agreement and generally consistent with the Program Guide, follow such
collection procedures as shall be normal and usual in its general mortgage
servicing activities. Consistent with the foregoing, and without limiting the
generality of the foregoing, the Master Servicer may in its discretion (i) waive
any late payment charge, penalty interest or other fees which may be collected
in the ordinary course of servicing such Revolving Credit Loan and (ii) arrange
with a Mortgagor a schedule for the payment of principal and interest due and
unpaid; provided such arrangement is generally consistent with the Master
Servicer's policies with respect to home equity revolving credit loans;
provided, further, that notwithstanding such arrangement such Revolving Credit
Loans will be included in the information regarding delinquent Revolving Credit
Loans set forth in the Servicing Certificate. The Master Servicer may also
extend the Due Date for payment due on a Revolving Credit Loan in accordance
with the Program Guide, provided, however, that the Master Servicer shall first
determine that any such waiver or extension will not impair the coverage of any
related insurance policy or materially adversely affect the lien of the related
Mortgage or the interests of the Securityholders or the Credit Enhancer.
Consistent with the terms of this Servicing Agreement, the Master Servicer may
also waive, modify or vary any term of any Revolving Credit Loan (including
reduce the Credit Limit with respect to any Revolving Credit Loan) or consent to
the postponement of strict compliance with any
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such term or in any manner grant indulgence to any Mortgagor if in the Master
Servicer's determination such waiver, modification, postponement or indulgence
is not materially adverse to the interests of the Securityholders or the Credit
Enhancer, provided, however, that the Master Servicer may not modify or permit
any Subservicer to modify any Revolving Credit Loan (including without
limitation any modification that would change the Loan Rate, forgive the payment
of any principal or interest (unless in connection with the liquidation of the
related Revolving Credit Loan) or extend the final maturity date of such
Revolving Credit Loan) unless such Revolving Credit Loan is in default or, in
the judgment of the Master Servicer, such default is reasonably foreseeable. In
addition, if a Revolving Credit Loan is in default or, in the judgment of the
Master Servicer, such default is reasonably foreseeable, the Master Servicer
may, through modification, convert such Revolving Credit Loan to a fully
amortizing closed-end loan. Notwithstanding the foregoing, the Master Servicer
in its sole discretion may permit he Mortgagor (or may enter into a modification
agreement which will allow the Mortgagor) to make monthly payments, with respect
to any Billing Cycle during the related Draw Period, in a minimum amount that
will be equal to the related finance charge for such Billing Cycle.
(b) The Master Servicer shall establish a Custodial Account, which
shall be an Eligible Account in which the Master Servicer shall deposit or cause
to be deposited any amounts representing payments and collections in respect of
the Revolving Credit Loans received by it subsequent to the Cut-off Date (other
than in respect of the payments referred to in the following paragraph) within
one Business Day following receipt thereof (or otherwise on or prior to the
Closing Date), including the following payments and collections received or made
by it (without duplication):
(i) all payments of principal or interest on the Revolving
Credit Loans received by the Master Servicer from the respective
Subservicer, net of any portion of the interest thereof retained by the
Subservicer as Subservicing Fees;
(ii) the aggregate Repurchase Price of the Revolving Credit
Loans purchased by the Master Servicer pursuant to Section 3.15;
(iii) Net Liquidation Proceeds net of any related Foreclosure
Profit;
(iv) all proceeds of any Revolving Credit Loans repurchased
by the Seller pursuant to the Revolving Credit Loan Purchase Agreement,
and all Substitution Adjustment Amounts required to be deposited in
connection with the substitution of an Eligible Substitute Loan pursuant
to the Revolving Credit Loan Purchase Agreement;
(v) insurance proceeds, other than Net Liquidation
Proceeds, resulting from any insurance policy maintained on a Mortgaged
Property; and
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(vi) amounts required to be paid by the Master Servicer pursuant
to Section 8.8.
provided, however, that with respect to each Collection Period, the
Master Servicer shall be permitted to retain from payments in respect of
interest on the Revolving Credit Loans, the Master Servicing Fee for such
Collection Period. The foregoing requirements respecting deposits to the
Custodial Account are exclusive, it being understood that, without limiting the
generality of the foregoing, the Master Servicer need not deposit in the
Custodial Account amounts representing. Foreclosure Profits, fees (including
annual fees) or late charge penalties, payable by Mortgagors, or amounts
received by the Master Servicer for the accounts of Mortgagors for application
towards the payment of taxes, insurance premiums, assessments and similar items.
In the event any amount not required to be deposited in the Custodial Account is
so deposited, the Master Servicer may at any time withdraw such amount from the
Custodial Account, any provision herein to the contrary notwithstanding. The
Custodial Account may contain funds that belong to one or more trust funds
created for the notes or certificates of other series and may contain other
funds respecting payments on revolving credit loans or other mortgage loans
belonging to the Master Servicer or serviced or master serviced by it on behalf
of others. Notwithstanding such commingling of funds, the Master Servicer shall
keep records that accurately reflect the funds on deposit in the Custodial
Account that have been identified by it as being attributable to the Revolving
Credit Loans and shall hold all collections in the Custodial Account to the
extent they represent collections on the Revolving Credit Loans for the benefit
of the Trust, the Securityholders and the Indenture Trustee, as their interests
may appear. The Master Servicer shall retain all Foreclosure Profits as
additional servicing compensation.
The Master Servicer may cause the institution maintaining the Custodial
Account to invest any funds in the Custodial Account in Permitted Investments
(including obligations of the Master Servicer or any of its Affiliates, if such
obligations otherwise qualify as Permitted Investments), which shall mature not
later than the Business Day next preceding the Payment Date and shall not be
sold or disposed of prior to its maturity. Except as provided above, all income
and gain realized from any such investment shall inure to the benefit of the
Master Servicer and shall be subject to its withdrawal or order from time to
time. The amount of any losses incurred in respect of the principal amount of
any such investments shall be deposited in the Custodial Account by the Master
Servicer out of its own funds immediately as realized.
(c) The Master Servicer will require each Subservicer to hold all
funds constituting collections on the Revolving Credit Loans, pending remittance
thereof to the Master Servicer, in one or more accounts meeting the requirements
of an Eligible Account, and invested in Permitted Investments.
Section 3.3. Withdrawals from the Custodial Account. The Master Servicer
shall, from time to time as provided herein, make withdrawals from the Custodial
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Account of amounts on deposit therein pursuant to Section 3.2 that are
attributable to the Revolving Credit Loans for the following purposes:
(i) to deposit in the Payment Account, on the Business Day
prior to each Payment Date, an amount equal to the Interest Collections
and Principal Collections required to be distributed on such Payment
Date;
(ii) prior to either an Amortization Event or the Collection
Period preceding the end of the Revolving Period, to pay to the Seller,
the amount of any Additional Balances as and when created during the
related Collection Period, provided, that the aggregate amount so paid
to the Seller in respect of Additional Balances at any time during any
Collection Period shall not exceed the amount of Principal Collections
theretofore received for such Collection Period;
(iii) to the extent deposited to the Custodial Account, to
reimburse itself or the related Subservicer for previously unreimbursed
expenses incurred in maintaining individual insurance policies pursuant
to Section 3.4, or Liquidation Expenses, paid pursuant to Section 3.7 or
otherwise reimbursable pursuant to the terms of this Servicing Agreement
(to the extent not payable pursuant to Section 3.9), such withdrawal
right being limited to amounts received on particular Revolving Credit
Loans (other than any repurchase Price in respect thereof) which
represent late recoveries of the payments for which such advances were
made, or from related Liquidation Proceeds or the proceeds of the
purchase of such Revolving Credit Loan;
(iv) to pay to itself out of each payment received on
account of interest on a Revolving Credit Loan as contemplated by
Section 3.9, an amount equal to the related Master Servicing Fee (to the
extent not retained pursuant to Section 3.2), and to pay to any
Subservicer any Subservicing Fees not previously withheld by the
Subservicer;
(v) to the extent deposited in the Custodial Account to pay
to itself as additional servicing compensation any interest or
investment income earned on funds deposited in the Custodial Account and
Payment Account that it is entitled to withdraw pursuant to Sections
3.2(b) and 5.1;
(vi) to the extent deposited in the Custodial Account, to pay
to itself as additional servicing compensation any Foreclosure Profits
(to the extent permitted by law);
(vii) to pay to itself or the Seller, with respect to any
Revolving Credit Loan or property acquired in respect thereof that has
been purchased or otherwise
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transferred to the Seller, the Master Servicer or other entity, all
amounts received thereon and not required to be distributed to
Securityholders as of the date on which the related Purchase Price or
Repurchase Price is determined;
(viii) to reimburse itself in accordance with Section 4.2;
(ix) to withdraw any other amount deposited in the Custodial
Account that was not required to be deposited therein pursuant to
Section 3.2; and
(x) after the occurrence of an Amortization Event, to pay
to the Seller, the Excluded Amount for each Revolving Credit Loan.
Since, in connection with withdrawals pursuant to clauses (iii), (iv),
(vi) and (vii), the Master Servicer's entitlement thereto is limited to
collections or other recoveries on the related Revolving Credit Loan, the Master
Servicer shall keep and maintain separate accounting, on a Revolving Credit Loan
by Revolving Credit Loan basis, for the purpose of justifying any withdrawal
from the Custodial Account pursuant to such clauses. Notwithstanding any other
provision of this Servicing Agreement, the Master Servicer shall be entitled to
reimburse itself for any previously unreimbursed expenses incurred pursuant to
Section 3.7 or otherwise reimbursable pursuant to the terms of this Servicing
Agreement that the Master Servicer determines to be otherwise nonrecoverable
(except with respect to any Revolving Credit Loan as to which the Repurchase
Price has been paid), by withdrawal from the Custodial Account of amounts on
deposit therein attributable to the Revolving Credit Loans on any Business Day
prior to the Payment Date succeeding the date of such determination.
Section 3.4. Maintenance of Hazard Insurance; Property Protection
Expenses. The Master Servicer shall cause to be maintained for each Revolving
Credit Loan hazard insurance naming the Master Servicer or related Subservicer
as loss payee thereunder providing extended coverage in an amount which is at
least equal to the lesser of (i) the maximum insurable value of the improvements
securing such Revolving Credit Loan from time to time or (ii) the combined
principal balance owing on such Revolving Credit Loan and any mortgage loan
senior to such Revolving Credit Loan from time to time; provided, however, that
such coverage may not be less than the minimum amount required to fully
compensate for any loss or damage on a replacement cost basis. The Master
Servicer shall also cause to be maintained on property acquired upon
foreclosure, or deed in lieu of foreclosure, of any Revolving Credit Loan, fire
insurance with extended coverage in an amount which is at least equal to the
amount necessary to avoid the application of any co-insurance clause contained
in the related hazard insurance policy. mounts collected by the Master Servicer
under any such policies (other than amounts to be applied to the restoration or
repair of the related Mortgaged Property or property thus acquired or amounts
released to the Mortgagor in accordance with the Master Servicer's normal
servicing procedures) shall be deposited in the Custodial Account to the extent
called for by Section 3.2. In cases in which any Mortgaged Property is located
at any
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time during the life of a Revolving Credit Loan in a federally designated flood
area, the hazard insurance to be maintained for the related Revolving Credit
Loan shall include flood insurance (to the extent available). All such flood
insurance shall be in amounts equal to the lesser of (i) the amount required to
compensate for any loss or damage to the Mortgaged Property on a replacement
cost basis and (ii) the maximum amount of such insurance available for the
related Mortgaged Property under the national flood insurance program (assuming
that the area in which such Mortgaged Property is located is participating in
such program). The Master Servicer shall be under no obligation to require that
any Mortgagor maintain earthquake or other additional insurance and shall be
under no obligation itself to maintain any such additional insurance on property
acquired in respect of a Revolving Credit Loan, other than pursuant to such
applicable laws and regulations as shall at any time be in force and as shall
require such additional insurance. If the Master Servicer shall obtain and
maintain a blanket policy consistent with its general mortgage servicing
activities insuring against hazard losses on all of the Revolving Credit Loans,
it shall conclusively be deemed to have satisfied its obligations as set forth
in the first sentence of this Section 3.4, it being understood and agreed that
such policy may contain a deductible clause, in which case the Master Servicer
shall, in the event that there shall not have been maintained on the related
Mortgaged Property a policy complying with the first sentence of this Section
3.4 and there shall have been a loss which would have been covered by such
policy, deposit in the Custodial Account the amount not otherwise payable under
the blanket policy because of such deductible clause. Any such deposit by the
Master Servicer shall be made on the last Business Day of the Collection Period
in the month in which payments under any such policy would have been deposited
in the Custodial Account. In connection with its activities as servicer of the
Revolving Credit Loans, the Master Servicer agrees to present, on behalf of
itself, the Issuer and the Indenture Trustee, claims under any such blanket
policy.
Section 3.5. Modification Agreements. The Master Servicer or the related
Subservicer, as the case may be, shall be entitled to (A) execute assumption
agreements, substitution agreements, and instruments of satisfaction or
cancellation or of partial or full release or discharge, or any other document
contemplated by this Servicing Agreement and other comparable instruments with
respect to the Revolving Credit Loans and with respect to the Mortgaged
Properties subject to the Mortgages (and the Issuer and the Indenture Trustee
each shall promptly execute any such documents on request of the Master
Servicer) and (B) approve the granting of an easement thereon in favor of
another Person, any alteration or demolition of the related Mortgaged Property
or other similar matters, if it has determined, exercising its good faith
business judgment in the same manner as it would if it were the owner of the
related Revolving Credit Loan, that the security for, and the timely and full
collectability of, such Revolving Credit Loan would not be adversely affected
thereby. A partial release pursuant to this Section 3.5 shall be permitted only
if the Combined Loan-to-Value Ratio for such Revolving Credit Loan after such
partial release does not exceed the Combined Loan-to-Value Ratio for such
Revolving Credit Loan as of the Cut-off Date. Any fee collected by the Master
Servicer
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or the related Subservicer for processing such request will be retained by the
Master Servicer or such Subservicer as additional servicing compensation.
Section 3.6. Trust Estate; Related Documents.
(a) When required by the provisions of this Servicing Agreement, the
Issuer or the Indenture Trustee shall execute instruments to release property
from the terms of the Trust Agreement, Indenture or Custodial Agreement, as
applicable, or convey the Issuer's or the Indenture Trustee's interest in the
same, in a manner and under circumstances which are not inconsistent with the
provisions of this Servicing Agreement. No party relying upon an instrument
executed by the Issuer or the Indenture Trustee as provided in this Section 3.6
shall be bound to ascertain the Issuer's or the Indenture Trustee's authority,
inquire into the satisfaction of any conditions precedent or see to the
application of any moneys.
(b) If from time to time the Master Servicer shall deliver to the
Custodian copies of any written assurance, assumption agreement or substitution
agreement or other similar agreement pursuant to Section 3.5, the Custodian
shall check that each of such documents purports to be an original executed copy
(or a copy of the original executed document if the original executed copy has
been submitted for recording and has not yet been returned) and, if so, shall
file such documents, and upon receipt of the original executed copy from the
applicable recording office or receipt of a copy thereof certified by the
applicable recording office shall file such originals or certified copies with
the Related Documents. If any such documents submitted by the Master Servicer do
not meet the above qualifications, such documents shall promptly be returned by
the Custodian to the Master Servicer, with a direction to the Master Servicer to
forward the correct documentation.
(c) Upon receipt of a Request for Release from the Master Servicer,
substantially in the form of Exhibit C to the effect that a Revolving Credit
Loan has been the subject of a final payment or a prepayment in full and the
related Revolving Credit Loan has been terminated or that substantially all
Liquidation Proceeds which have been determined by the Master Servicer in its
reasonable judgment to be finally recoverable have been recovered, and upon
deposit to the Custodial Account of such final monthly payment, prepayment in
full together with accrued and unpaid interest to the date of such payment with
respect to such Revolving Credit Loan or, if applicable, Liquidation Proceeds,
the Custodian shall promptly release the Related Documents to the Master
Servicer, which the Indenture Trustee shall execute, along with such documents
as the Master Servicer or the Mortgagor may request to evidence satisfaction and
discharge of such Revolving Credit Loan, upon request of the Master Servicer. If
from time to time and as appropriate for the servicing or foreclosure of any
Revolving Credit Loan, the Master Servicer requests the Custodian to release the
Related Documents and delivers to the Custodian a trust receipt reasonably
satisfactory to the Custodian and signed by a Responsible Officer of the Master
Servicer, the Custodian shall release the Related Documents to the Master
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Servicer. If such Revolving Credit Loans shall be liquidated and the Custodian
receives a certificate from the Master Servicer as provided above, then, upon
request of the Master Servicer, the Custodian shall release the trust receipt to
the Master Servicer.
Section 3.7. Realization Upon Defaulted Revolving Credit Loans. With
respect to such of the Revolving Credit Loans as come into and continue in
default, the Master Servicer will decide whether to (i) foreclose upon the
Mortgaged Properties securing such Revolving Credit Loans, (ii) write off the
unpaid principal balance of the Revolving Credit Loans as bad debt, (iii) take a
deed in lieu of foreclosure, (iv) accept a short sale, (v) arrange for a
repayment plan, (vi) agree to a modification in accordance with this Servicing
Agreement, or (vii) take an unsecured note in each case subject to the rights of
any related first lien holder; provided that in connection with the foregoing if
the Master Servicer has actual knowledge that any Mortgaged Property is affected
by hazardous or toxic wastes or substances and that the acquisition of such
Mortgaged Property would not be commercially reasonable, then the Master
Servicer will not cause the Issuer or the Indenture Trustee to acquire title to
such Mortgaged Property in a foreclosure or similar proceeding. In connection
with such decision, the Master Servicer shall follow such practices (including,
in the case of any default on a related senior mortgage loan, the advancing of
funds to correct such default if deemed to be appropriate by the Master
Servicer) and procedures as it shall deem necessary or advisable and as shall be
normal and usual in its general mortgage servicing activities and as shall be
required or permitted by the Program Guide; provided that the Master Servicer
shall not be liable in any respect hereunder if the Master Servicer is acting in
connection with any such foreclosure or attempted foreclosure which is not
completed or other conversion in a manner that is consistent with the provisions
of this Servicing Agreement. The foregoing is subject to the proviso that the
Master Servicer shall not be required to expend its own funds in connection with
any foreclosure or attempted foreclosure which is not completed or towards the
correction of any default on a related senior mortgage loan or restoration of
any property unless it shall determine that such expenditure will increase Net
Liquidation Proceeds. In the event of a determination by the Master Servicer
that any such expenditure previously made pursuant to this Section 3.7 will not
be reimbursable from Net Liquidation Proceeds, the Master Servicer shall be
entitled to reimbursement of its funds so expended pursuant to Section 3.3.
Notwithstanding any provision of this Servicing Agreement, a Revolving
Credit Loan may be deemed to be finally liquidated if substantially all amounts
expected by the Master Servicer to be received in connection with the related
defaulted Revolving Credit Loan have been received. Any subsequent collections
with respect to any such Revolving Credit Loan shall be deposited to the
Custodial Account. For purposes of determining the amount of any Liquidation
Proceeds or Insurance Proceeds, or other unscheduled collections, the Master
Servicer may take into account minimal amounts of additional receipts expected
to be received or any estimated additional liquidation expenses expected to be
incurred in connection with the related defaulted Revolving Credit Loan.
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In the event that title to any Mortgaged Property is acquired in
foreclosure or by deed in lieu of foreclosure, the deed or certificate of sale
shall be issued to the Indenture Trustee, who shall hold the same on behalf of
the Issuer in accordance with Section 3.13 of the Indenture. Notwithstanding any
such acquisition of title and cancellation of the related Revolving Credit Loan,
such Mortgaged Property shall (except as otherwise expressly provided herein) be
considered to be an outstanding Revolving Credit Loan held as an asset of the
Issuer until such time as such property shall be sold. Consistent with the
foregoing for purposes of all calculations hereunder, so long as such Mortgaged
Property shall be considered to be an outstanding Revolving Credit Loan it shall
be assumed that, notwithstanding that the indebtedness evidenced by the related
Credit Line Agreement shall have been discharged, such Credit Line Agreement in
effect at the time of any such acquisition of title before any adjustment
thereto by reason of any bankruptcy or similar proceeding or any moratorium or
similar waiver or grace period will remain in effect.
Any proceeds from foreclosure proceedings or the purchase or repurchase
of any Revolving Credit Loan pursuant to the terms of this Servicing Agreement,
as well as any recovery resulting from a collection of Liquidation Proceeds or
Insurance Proceeds, will be applied in the following order of priority: first,
to reimburse the Master Servicer or the related Subservicer in accordance with
this Section 3.7; second, to the Master Servicer or the related Subservicer, all
Servicing Fees payable therefrom; third, to the extent of accrued and unpaid
interest on the related Revolving Credit Loan, at the Net Loan Rate to the
Payment Date on which such amounts are to be deposited in the Payment Account;
fourth, as a recovery of principal on the Revolving Credit Loan; and fifth, to
Foreclosure Profits.
Section 3.8. Issuer and Indenture Trustee to Cooperate. On or before
each Payment Date, the Master Servicer will notify the Indenture Trustee or the
Custodian, with a copy to the Issuer, of the termination of or the payment in
full and the termination of any Revolving Credit Loan during the preceding
Collection Period. Upon receipt of payment in full, the Master Servicer is
authorized to execute, pursuant to the authorization contained in Section 3.1,
if the assignments of Mortgage have been recorded as required under the
Revolving Credit Loan Purchase Agreement, an instrument of satisfaction
regarding the related Mortgage, which instrument of satisfaction shall be
recorded by the Master Servicer if required by applicable law and be delivered
to the Person entitled thereto. It is understood and agreed that any expenses
incurred in connection with such instrument of satisfaction or transfer shall be
reimbursed from amounts deposited in the Custodial Account. From time to time
and as appropriate for the servicing or foreclosure of any Revolving Credit
Loan, the Indenture Trustee or the Custodian shall, upon request of the Master
Servicer and delivery to the Indenture Trustee or Custodian, with a copy to the
Issuer, of a Request for Release, in the form annexed hereto as Exhibit C,
signed by a Servicing Officer, release or cause to be released the related
Mortgage File to the Master Servicer and the Issuer or Indenture Trustee shall
promptly execute such documents, in the forms provided by the Master
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Servicer, as shall be necessary for the prosecution of any such proceedings or
the taking of other servicing actions. Such trust receipt shall obligate the
Master Servicer to return the Mortgage File to the Indenture Trustee or the
Custodian (as specified in such receipt) when the need therefor by the Master
Servicer no longer exists unless the Revolving Credit Loan shall be liquidated,
in which case, upon receipt of a certificate of a Servicing Officer similar to
that hereinabove specified, the trust receipt shall be released to the Master
Servicer.
In order to facilitate the foreclosure of the Mortgage securing any
Revolving Credit Loan that is in default following recordation of the
assignments of Mortgage in accordance with the provisions of the Revolving
Credit Loan Purchase Agreement, the Indenture Trustee or the Issuer shall, if so
requested in writing by the Master Servicer, promptly execute an appropriate
assignment in the form provided by the Master Servicer to assign such Revolving
Credit Loan for the purpose of collection to the Master Servicer (any such
assignment shall unambiguously indicate that the assignment is for the purpose
of collection only), and, upon such assignment, such assignee for collection
will thereupon bring all required actions in its own name and otherwise enforce
the terms of the Revolving Credit Loan and deposit or credit the Net Liquidation
Proceeds, exclusive of Foreclosure Profits, received with respect thereto in the
Custodial Account. In the event that all delinquent payments due under any such
Revolving Credit Loan are paid by the Mortgagor and any other defaults are
cured, then the assignee for collection shall promptly reassign such Revolving
Credit Loan to the Indenture Trustee and return all Related Documents to the
place where the related Mortgage File was being maintained.
In connection with the Issuer's obligation to cooperate as provided in
this Section 3.8 and all other provisions of this Servicing Agreement requiring
the Issuer to authorize or permit any actions to be taken with respect to the
Revolving Credit Loans, the Indenture Trustee, as pledgee of the Revolving
Credit Loans and as assignee of record of the Revolving Credit Loans on behalf
of the Issuer pursuant to Section 3.13 of the Indenture, expressly agrees, on
behalf of the Issuer, to take all such actions on behalf of the Issuer and to
promptly execute and return all instruments reasonably required by the Master
Servicer in connection therewith; provided that if the Master Servicer shall
request a signature of the Indenture Trustee, on behalf of the Issuer, the
Master Servicer will deliver to the Indenture Trustee an Officer's Certificate
stating that such signature is necessary or appropriate to enable the Master
Servicer to carry out its servicing and administrative duties under this
Servicing Agreement.
Section 3.9. Servicing Compensation; Payment of Certain Expenses by
Master Servicer. The Master Servicer shall be entitled to receive the Master
Servicing Fee in accordance with Section 3.3 as compensation for its services in
connection with servicing the Revolving Credit Loans. Moreover, additional
servicing compensation in the form of late payment charges and other receipts
not required to be deposited in the Custodial Account as specified in Section
3.2 shall be retained by the Master Servicer. The Master Servicer shall be
required to pay all expenses incurred by it in connection with its
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activities hereunder (including payment of all other fees and expenses not
expressly stated hereunder to be for the account of the Securityholders,
including, without limitation, the fees and expenses of the Owner Trustee,
Indenture Trustee and any Custodian) and shall not be entitled to reimbursement
therefor.
Section 3.10. Annual Statement as to Compliance.
(a) The Master Servicer will deliver to the Issuer and the Indenture
Trustee, with a copy to the Credit Enhancer, on or before March 31 of each year,
beginning March 31, 1998, an Officer's Certificate stating that (i) a review of
the activities of the Master Servicer during the preceding calendar year and of
its performance under servicing agreements, including this Servicing Agreement
has been made under such officer's supervision and (ii) to the best of such
officer's knowledge, based on such review, the Master Servicer has complied in
all material respects with the minimum servicing standards set forth in the
Uniform Single Attestation Program for Mortgage Bankers and has fulfilled all of
its material obligations in all material respects throughout such year, or, if
there has been material noncompliance with such servicing standards or a default
in the fulfillment in all material respects of any such obligation relating to
this Servicing Agreement, such statement shall include a description of such
noncompliance or specify each such default, as the case may be, known to such
officer and the nature and status thereof.
(b) The Master Servicer shall deliver to the Issuer and the
Indenture Trustee, with a copy to the Credit Enhancer, promptly after having
obtained knowledge thereof, but in no event later than five Business Days
thereafter, written notice by means of an Officer's Certificate of any event
which with the giving of notice or the lapse of time or both, would become a
Servicing Default.
Section 3.11. Annual Servicing Report. On or before [March 31] of each
year, beginning [March 31], 199_, the Master Servicer at its expense shall cause
a firm of nationally recognized independent public accountants (who may also
render other services to the Master Servicer) to furnish a report to the Issuer,
the Indenture Trustee, the Depositor, the Credit Enhancer and each Rating Agency
stating its opinion that, on the basis of an examination conducted by such firm
substantially in accordance with standards established by the American Institute
of Certified Public Accountants, the assertions made pursuant to Section 3.10
regarding compliance with the minimum servicing standards set forth in the
Uniform Single Attestation Program for Mortgage Bankers during the preceding
calendar year are fairly stated in all material respects, subject to such
exceptions and other qualifications that, in the opinion of such firm, such
accounting standards require it to report. In rendering such statement, such
firm may rely, as to matters relating to the direct servicing of such Revolving
Credit Loans by Subservicers, upon comparable statements for examinations
conducted by independent public accountants substantially in accordance with
standards established by the
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American Institute of Certified Public Accountants (rendered within one year of
such statement) with respect to such Subservicers.
Section 3.12. Access to Certain Documentation and Information Regarding
the Revolving Credit Loans. Whenever required by statute or regulation, the
Master Servicer shall provide to the Credit Enhancer, any Securityholder upon
reasonable request (or a regulator for a Securityholder) or the Indenture
Trustee, reasonable access to the documentation regarding the Revolving Credit
Loans such access being afforded without charge but only upon reasonable request
and during normal business hours at the offices of the Master Servicer. Nothing
in this Section 3.12 shall derogate from the obligation of the Master Servicer
to observe any applicable law prohibiting disclosure of information regarding
the Mortgagors and the failure of the Master Servicer to provide access as
provided in this Section 3.12 as a result of such obligation shall not
constitute a breach of this Section 3.12.
Section 3.13. Maintenance of Certain Servicing Insurance Policies. The
Master Servicer shall during the term of its service as servicer maintain in
force (i) a policy or policies of insurance covering errors and omissions in the
performance of its obligations as master servicer hereunder and (ii) a fidelity
bond in respect of its officers, employees or agents. Each such policy or
policies and bond shall be at least equal to the coverage that would be required
by FNMA or FHLMC, whichever is greater, for Persons performing servicing for
revolving credit loans purchased by such entity.
Section 3.14. Information Required by the Internal Revenue Service and
Reports of Foreclosures and Abandonments of Mortgaged Property. The Master
Servicer shall prepare and deliver all federal and state information reports
when and as required by all applicable state and federal income tax laws. In
particular, with respect to the requirement under Section 6050J of the Code to
the effect that the Master Servicer or Subservicer shall make reports of
foreclosures and abandonments of any mortgaged property for each year beginning
in [1998], the Master Servicer or Subservicer shall file reports relating to
each instance occurring during the previous calendar year in which the Master
Servicer (i) on behalf of the Issuer, acquires an interest in any Mortgaged
Property through foreclosure or other comparable conversion in full or partial
satisfaction of a Revolving Credit Loan, or (ii) knows or has reason to know
that any Mortgaged Property has been abandoned. The reports from the Master
Servicer or Subservicer shall be in form and substance sufficient to meet the
reporting requirements imposed by Section 6050J and Section 6050H (reports
relating to mortgage interest received) of the Code.
Section 3.15. Optional Repurchase of Defaulted Revolving Credit Loans.
Notwithstanding any provision in Section 3.7 to the contrary, the Master
Servicer, at its option and in its sole discretion, may repurchase any Revolving
Credit Loan delinquent in payment for a period of 60 days or longer for a price
equal to the Repurchase Price.
ARTICLE IV.
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Administration and Servicingof Revolving Credit Loans
Section 4.1. Statements to Securityholders. (a) With respect to each
Payment Date, on the Business Day following the related Determination Date the
Master Servicer shall forward to the Indenture Trustee and the Indenture Trustee
pursuant to Section 3.26 of the Indenture shall forward or cause to be forwarded
by mail to each Certificateholder, Noteholder, the Credit Enhancer, the
Depositor, the Owner Trustee, the Certificate Paying Agent and each Rating
Agency, a statement setting forth the following information as to the Notes and
Certificates, to the extent applicable:
(i) the aggregate amount of (a) Interest Collections, (b)
Principal Collections and (c) Substitution Adjustment Amounts;
(ii) the amount of such distribution as principal to the
Noteholders;
(iii) the amount of such distribution as interest to the
Noteholders, separately stating the portion thereof in respect of
overdue accrued interest;
(iv) the amount of any Credit Enhancement Draw Amount;
(v) the amount of such distribution as principal and
interest to the Certificateholders of the Certificates, separately
stating the portion thereof which resulted in a reduction of the
Certificate Principal Balance thereof;
(vi) the aggregate Loan Balance of the Revolving Credit Loans as
of the end of the preceding Collection Period;
(vii) the number and aggregate Loan Balances of Revolving
Credit Loans (a) as to which the Minimum Monthly Payment is delinquent
for 30-59 days, 60-89 days and 90 or more days, respectively, (b) that
are foreclosed and (c) that have become REO, in each case as of the end
of the preceding Collection Period; provided, however, that such
information will not be provided on the statements relating to the first
Payment Date;
(viii) the weighted average Net Loan Rate for the related
Collection Period;
(ix) the aggregate Liquidation Loss Amounts with respect to
the related Collection Period, the amount of any Liquidation Loss
Distribution Amounts with respect to the Notes, and the aggregate of the
Liquidation Loss Amounts from all Collection Periods to date expressed
as dollars and as a percentage of the aggregate Cut-off Date Loan
Balance;
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(x) the aggregate Excess Loss Amounts with respect to the
related Collection Period and the aggregate of the Excess Loss Amounts
from all Collection Periods to date;
(xi) the aggregate Special Hazard Losses, Fraud Losses,
Bankruptcy Losses and losses caused by or resulting from an
Extraordinary Event with respect to the related Collection Period and
the aggregate of each of such losses from all Collection Periods to
date;
(xii) the Note Balance of each Class of Notes and the
Certificate Principal Balance of the Certificates after giving effect to
the distribution of principal on such Payment Date;
(xiii) the aggregate Servicing Fees for the related Collection
Period and the aggregate amount of Draws for the related Collection
Period; and
(xiv) the Outstanding Reserve Amount, the Special Hazard Amount,
the Fraud Loss Amount, the Bankruptcy Loss Amount and the Reserve Amount
Target immediately following such Payment Date.
In the case of information furnished pursuant to clauses (ii) and (iii)
above, the amounts shall be expressed as an aggregate dollar amount per Variable
Funding Note, Term Note or Certificate, as applicable, with a $1,000
denomination.
In addition the Master Servicer shall forward to the Indenture Trustee
any other information reasonably requested by the Indenture Trustee necessary to
make distributions pursuant to Section 3.5 of the Indenture. Prior to the close
of business on the Business Day next succeeding each Determination Date, the
Master Servicer shall furnish a written statement to the Certificate Paying
Agent and the Indenture Trustee setting forth the aggregate amounts required to
be withdrawn from the Custodial Account and deposited into the Payment Account
on the Business Day preceding the related Payment Date pursuant to Section 3.3.
The determination by the Master Servicer of such amounts shall, in the absence
of obvious error, be presumptively deemed to be correct for all purposes
hereunder and the Owner Trustee and Indenture Trustee shall be protected in
relying upon the same without any independent check or verification. In
addition, upon the Issuer's written request, the Master Servicer shall promptly
furnish information reasonably requested by the Issuer that is reasonably
available to the Master Servicer to enable the Issuer to perform its federal and
state income tax reporting obligations.
Section 4.2. Tax Reporting. ___________ (the "Trust Tax Matters Person")
hereby agrees (i) to cause the Issuer to file or cause to be filed federal and
state income tax returns and information statements as a partnership for each of
its taxable years, (ii) to cause the Issuer to file or cause to be filed any
information returns or reports and to make
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any elections or take any other similar action required for the Issuer to be
classified as a partnership for federal income tax purposes, and (iii) pursuant
to Section 5.5 of the Trust Agreement, to act as "tax matters partner" (as
defined in Section 6231(a)(7) of the Code) for the Issuer. The Trust Tax Matters
Person, as tax matters partner, shall (i) act on behalf of the Issuer in
relation to any tax matter or controversy involving the Issuer and (ii)
represent the Issuer in any administrative or judicial proceeding relating to an
examination or audit by any governmental taxing authority with respect thereto.
The legal expenses, including without limitation attorneys' or accountants'
fees, and costs of any such proceeding and any liability resulting therefrom
shall be expenses of the Issuer and the Trust Tax Matters Person shall be
entitled to reimbursement therefor out of amounts attributable to the Revolving
Credit Loans on deposit in the Custodial Account as provided by Section 3.3 of
the Servicing Agreement unless such legal expenses and costs are incurred by
reason of the Trust Tax Matters Person's willful misfeasance, bad faith or gross
negligence. Within 90 days after the end of each calendar year, the Trust Tax
Matters Person shall cause the Issuer to provide to each Certificateholder an
Internal Revenue Service "K-1" or any successor schedule and supplemental
information, if required by law, to enable each Certificateholder to file its
federal and state income tax returns.
ARTICLE V.
Payment Account
Section 5.1. Payment Account. The Indenture Trustee shall establish and
maintain a Payment Account titled "____________, as Indenture Trustee, for the
benefit of the Securityholders, the Certificate Paying Agent and the Credit
Enhancer pursuant to the Indenture, dated as of ______, 199_, between Home
Equity Loan Trust 199_-_ and The ___________". The Payment Account shall be an
Eligible Account. On each Payment Date, amounts on deposit in the Payment
Account will be distributed by the Indenture Trustee in accordance with Section
3.5 of the Indenture. The Indenture Trustee shall, upon written request from the
Master Servicer, invest or cause the institution maintaining the Payment Account
to invest the funds in the Payment Account in Permitted Investments designated
in the name of the Indenture Trustee, which shall mature not later than the
Business Day next preceding the Payment Date next following the date of such
investment (except that (i) any investment in the institution with which the
Payment Account is maintained may mature on such Payment Date and (ii) any other
investment may mature on such Payment Date if the Indenture Trustee shall
advance funds on such Payment Date to the Payment Account in the amount payable
on such investment on such Payment Date, pending receipt thereof to the extent
necessary to make distributions on the Securities) and shall not be sold or
disposed of prior to maturity. All income and gain realized from any such
investment shall be for the benefit of the Master Servicer and shall be subject
to its withdrawal or order from time to time. The amount of any losses incurred
in respect of any such investments shall be deposited
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in the Payment Account by the Master Servicer out of its own funds immediately
as realized.
ARTICLE VI.
The Master Servicer
Section 6.1. Liability of the Master Servicer. The Master Servicer shall
be liable in accordance herewith only to the extent of the obligations
specifically imposed upon and undertaken by the Master Servicer herein.
Section 6.2.. Merger or Consolidation of, or Assumption of the
Obligations of, the Master Servicer. Any corporation into which the Master
Servicer may be merged or converted or with which it may be consolidated, or any
corporation resulting from any merger, conversion or consolidation to which the
Master Servicer shall be a party, or any corporation succeeding to the business
of the Master Servicer, shall be the successor of the Master Servicer,
hereunder, without the execution or filing of any paper or any further act on
the part of any of the parties hereto, anything herein to the contrary
notwithstanding.
The Master Servicer may assign its rights and delegate its duties and
obligations under this Servicing Agreement; provided that the Person accepting
such assignment or delegation shall be a Person which is qualified to service
revolving credit loans, is reasonably satisfactory to the Indenture Trustee (as
pledgee of the Revolving Credit Loans), the Issuer and the Credit Enhancer, is
willing to service the Revolving Credit Loans and executes and delivers to the
Indenture Trustee and the Issuer an agreement, in form and substance reasonably
satisfactory to the Credit Enhancer, the Indenture Trustee and the Issuer, which
contains an assumption by such Person of the due and punctual performance and
observance of each covenant and condition to be performed or observed by the
Master Servicer under this Servicing Agreement; provided further that each
Rating Agency's rating of the Securities in effect immediately prior to such
assignment and delegation will not be qualified, reduced, or withdrawn as a
result of such assignment and delegation (as evidenced by a letter to such
effect from each Rating Agency), if determined without regard to the Credit
Enhancement Instrument.
Section 6.3. Limitation on Liability of the Master Servicer and Others.
Neither the Master Servicer nor any of the directors or officers or employees or
agents of the Master Servicer shall be under any liability to the Issuer, the
Owner Trustee, the Indenture Trustee or the Securityholders for any action taken
or for refraining from the taking of any action in good faith pursuant to this
Servicing Agreement, provided, however, that this provision shall not protect
the Master Servicer or any such Person against any liability which would
otherwise be imposed by reason of its willful misfeasance, bad faith or gross
negligence in the performance of its duties hereunder or by reason of its
reckless disregard of its obligations and duties hereunder. The Master Servicer
and any director or
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officer or employee or agent of the Master Servicer may rely in good faith on
any document of any kind prima facie properly executed and submitted by any
Person respecting any matters arising hereunder. The Master Servicer and any
director or officer or employee or agent of the Master Servicer shall be
indemnified by the Issuer and held harmless against any loss, liability or
expense incurred in connection with any legal action relating to this Servicing
Agreement or the Securities, including any amount paid to the Owner Trustee or
the Indenture Trustee pursuant to Section 6.6(b), other than any loss, liability
or expense incurred by reason of its willful misfeasance, bad faith or gross
negligence in the performance of its duties hereunder or by reason of its
reckless disregard of its obligations and duties hereunder. The Master Servicer
shall not be under any obligation to appear in, prosecute or defend any legal
action which is not incidental to its duties to service the Revolving Credit
Loans in accordance with this Servicing Agreement, and which in its opinion may
involve it in any expense or liability; provided, however, that the Master
Servicer may in its sole discretion undertake any such action which it may deem
necessary or desirable in respect of this Servicing Agreement, and the rights
and duties of the parties hereto and the interests of the Securityholders. In
such event, the reasonable legal expenses and costs of such action and any
liability resulting therefrom shall be expenses, costs and liabilities of the
Master Servicer shall be entitled to be reimbursed therefor. The Master
Servicer's right to indemnity or reimbursement pursuant to this Section 6.3
shall survive any resignation or termination of the Master Servicer pursuant to
Section 6.4 or 7.1 with respect to any losses, expenses, costs or liabilities
arising prior to such resignation or termination (or arising from events that
occurred prior to such resignation or termination).
Section 6.4. Master Servicer Not to Resign. Subject to the provisions of
Section 6.2, the Master Servicer shall not resign from the obligations and
duties hereby imposed on it except (i) upon determination that the performance
of its obligations or duties hereunder are no longer permissible under
applicable law or are in material conflict by reason of applicable law with any
other activities carried on by it or its subsidiaries or Affiliates, the other
activities of the Master Servicer so causing such a conflict being of a type and
nature carried on by the Master Servicer or its subsidiaries or Affiliates at
the date of this Servicing Agreement or (ii) upon satisfaction of the following
conditions: (a) the Master Servicer has proposed a successor servicer to the
Issuer and the Indenture Trustee in writing and such proposed successor servicer
is reasonably acceptable to the Issuer, the Indenture Trustee and the Credit
Enhancer; (b) each Rating Agency shall have delivered a letter to the Issuer,
the Credit Enhancer and the Indenture Trustee prior to the appointment of the
successor servicer stating that the proposed appointment of such successor
servicer as Master Servicer hereunder will not result in the reduction or
withdrawal of the then current rating of the Securities, if determined without
regard to the Credit Enhancement Instrument; and (c) such proposed successor
servicer is reasonably acceptable to the Credit Enhancer, as evidenced by a
letter to the Issuer and the Indenture Trustee; provided, however, that no such
resignation by the Master Servicer shall become effective until such successor
servicer or, in the case of (i) above, the Indenture Trustee, as pledgee of the
Revolving Credit Loans, shall have assumed the Master Servicer's
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responsibilities and obligations hereunder or the Indenture Trustee, as pledgee
of the Revolving Credit Loans, shall have designated a successor servicer in
accordance with Section 7.2. Any such resignation shall not relieve the Master
Servicer of responsibility for any of the obligations specified in Sections 7.1
and 7.2 as obligations that survive the resignation or termination of the Master
Servicer. Any such determination permitting the resignation of the Master
Servicer shall be evidenced by an Opinion of Counsel to such effect delivered to
the Indenture Trustee and the Credit Enhancer.
Section 6.5.. Delegation of Duties. In the ordinary course of business,
the Master Servicer at any time may delegate any of its duties hereunder to any
Person, including any of its Affiliates, who agrees to conduct such duties in
accordance with standards comparable to those with which the Master Servicer
complies pursuant to Section 3.1. Such delegation shall not relieve the Master
Servicer of its liabilities and responsibilities with respect to such duties and
shall not constitute a resignation within the meaning of Section 6.4.
Section 6.6.. Master Servicer to Pay Indenture Trustee's and Owner
Trustee's Fees and Expenses; Indemnification.
(a) The Master Servicer covenants and agrees to pay to the Owner
Trustee, the Indenture Trustee and any co-trustee of the Indenture Trustee or
the Owner Trustee from time to time, and the Owner Trustee, the Indenture
Trustee and any such co-trustee shall be entitled to, reasonable compensation
(which shall not be limited by any provision of law in regard to the
compensation of a trustee of an express trust) for all services rendered by each
of them in the execution of the trusts created under the Trust Agreement and the
Indenture and in the exercise and performance of any of the powers and duties
under the Trust Agreement or the Indenture, as the case may be, of the Owner
Trustee, the Indenture Trustee and any co-trustee, and the Master Servicer will
pay or reimburse the Indenture Trustee and any co-trustee upon request for all
reasonable expenses, disbursements and advances incurred or made by the
Indenture Trustee or any co-trustee in accordance with any of the provisions of
this Servicing Agreement except any such expense, disbursement or advance as may
arise from its negligence, wilful misfeasance or bad faith.
(b) The Master Servicer agrees to indemnify the Indenture Trustee
and the Owner Trustee for, and to hold the Indenture Trustee and the Owner
Trustee, as the case may be, harmless against, any loss, liability or expense
incurred without negligence, bad faith or willful misconduct on its part,
arising out of, or in connection with, the acceptance and administration of the
Issuer and the assets thereof, including the costs and expenses (including
reasonable legal fees and expenses) of defending itself against any claim in
connection with the exercise or performance of any of its powers or duties under
any Basic Document, provided that:
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(i) with respect to any such claim, the Indenture Trustee
or Owner Trustee, as the case may be, shall have given the Master
Servicer written notice thereof promptly after the Indenture Trustee or
Owner Trustee, as the case may be, shall have actual knowledge thereof;
(ii) while maintaining control over its own defense, the
Issuer, the Indenture Trustee or Owner Trustee, as the case may be,
shall cooperate and consult fully with the Master Servicer in preparing
such defense; and
(iii) notwithstanding anything in this Servicing Agreement to
the contrary, the Master Servicer shall not be liable for settlement of
any claim by the Indenture Trustee or the Owner Trustee, as the case may
be, entered into without the prior consent of the Master Servicer.
No termination of this Servicing Agreement shall affect the obligations
created by this Section 6.6 of the Master Servicer to indemnify the Indenture
Trustee and the Owner Trustee under the conditions and to the extent set forth
herein.
Notwithstanding the foregoing, the indemnification provided by the
Master Servicer in this Section 6.6(b) shall not pertain to any loss, liability
or expense of the Indenture Trustee or the Owner Trustee, including the costs
and expenses of defending itself against any claim, incurred in connection with
any actions taken by the Indenture Trustee or the Owner Trustee at the direction
of the Noteholders or Certificateholders, as the case may be, pursuant to the
terms of this Servicing Agreement.
ARTICLE VII.
Default
Section 7.1. Servicing Default. If any one of the following events
("Servicing Default") shall occur and be continuing:
(i) Any failure by the Master Servicer to deposit in the
Custodial Account or Payment Account any deposit required to be made
under the terms of this Servicing Agreement which continues unremedied
for a period of five Business Days after the date upon which written
notice of such failure shall have been given to the Master Servicer by
the Issuer or the Indenture Trustee or to the Master Servicer, the
Issuer and the Indenture Trustee by the Credit Enhancer; or
(ii) Failure on the part of the Master Servicer duly to
observe or perform in any material respect any other covenants or
agreements of the Master Servicer set forth in the Securities or in this
Servicing Agreement, which failure, in each case, materially and
adversely affects the interests of Securityholders or the Credit
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Enhancer and which continues unremedied for a period of 45 days after
the date on which written notice of such failure, requiring the same to
be remedied, and stating that such notice is a "Notice of Default"
hereunder, shall have been given to the Master Servicer by the Issuer or
the Indenture Trustee or to the Master Servicer, the Issuer and the
Indenture Trustee by the Credit Enhancer; or
(iii) The entry against the Master Servicer of a decree or
order by a court or agency or supervisory authority having jurisdiction
in the premises for the appointment of a trustee, conservator, receiver
or liquidator in any insolvency, conserva-torship, receivership,
readjustment of debt, marshalling of assets and liabilities or similar
proceedings, or for the winding up or liquidation of its affairs, and
the continuance of any such decree or order unstayed and in effect for a
period of 60 consecutive days; or
The Master Servicer shall voluntarily go into liquidation, consent to
the appointment of a conservator, receiver, liquidator or similar person in any
insolvency, readjustment of debt, marshalling of assets and liabilities or
similar proceedings of or relating to the Master Servicer or of or relating to
all or substantially all of its property, or a decree or order of a court,
agency or supervisory authority having jurisdiction in the premises for the
appointment of a conservator, receiver, liquidator or similar person in any
insolvency, readjustment of debt, marshalling of assets and liabilities or
similar proceedings, or for the winding-up or liquidation of its affairs, shall
have been entered against the Master Servicer and such decree or order shall
have remained in force undischarged, unbonded or unstayed for a period of 60
days; or the Master Servicer shall admit in writing its inability to pay its
debts generally as they become due, file a petition to take advantage of any
applicable insolvency or reorganization statute, make an assignment for the
benefit of its creditors or voluntarily suspend payment of its obligations,
then, and in every such case, so long as a Servicing Default shall not have been
remedied by the Master Servicer, Indenture Trustee, with the consent of the
Credit Enhancer, or the Credit Enhancer, by notice then given in writing to the
Master Servicer (and to the Issuer and the Indenture Trustee if given by the
Credit Enhancer) may terminate all of the rights and obligations of the Master
Servicer as servicer under this Servicing Agreement other than its right to
receive servicing compensation and expenses for servicing the Revolving Credit
Loans hereunder during any period prior to the date of such termination and the
Issuer or the Indenture Trustee, with the consent of the Credit Enhancer, or the
Credit Enhancer may exercise any and all other remedies available at law or
equity. Any such notice to the Master Servicer shall also be given to each
Rating Agency, the Credit Enhancer and the Issuer. On or after the receipt by
the Master Servicer of such written notice, all authority and power of the
Master Servicer under this Servicing Agreement, whether with respect to the
Securities or the Revolving Credit Loans or otherwise, shall pass to and be
vested in the Indenture Trustee as pledgee of the Revolving Credit Loans,
pursuant to and under this Section 7.1; and, without limitation, the Indenture
Trustee is hereby authorized and empowered to execute and deliver, on behalf of
the Master Servicer, as attorney-in-fact or otherwise, any and all
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documents and other instruments, and to do or accomplish all other acts or
things necessary or appropriate to effect the purposes of such notice of
termination, whether to complete the transfer and endorsement of each Revolving
Credit Loan and related documents, or otherwise. The Master Servicer agrees to
cooperate with the Indenture Trustee in effecting the termination of the
responsibilities and rights of the Master Servicer hereunder, including, without
limitation, the transfer to the Indenture Trustee for the administration by it
of all cash amounts relating to the Revolving Credit Loans that shall at the
time be held by the Master Servicer and to be deposited by it in the Custodial
Account, or that have been deposited by the Master Servicer in the Custodial
Account or thereafter received by the Master Servicer with respect to the
Revolving Credit Loans. All reasonable costs and expenses (including, but not
limited to, attorneys' fees) incurred in connection with amending this Servicing
Agreement to reflect such succession as Master Servicer pursuant to this Section
7.1 shall be paid by the predecessor Master Servicer (or if the predecessor
Master Servicer is the Indenture Trustee, the initial Master Servicer) upon
presentation of reasonable documentation of such costs and expenses.
Notwithstanding any termination of the activities of the Master Servicer
hereunder, the Master Servicer shall be entitled to receive, out of any late
collection of a payment on a Revolving Credit Loan which was due prior to the
notice terminating the Master Servicer's rights and obligations hereunder and
received after such notice, that portion to which the Master Servicer would have
been entitled pursuant to Sections 3.3 and 3.9 as well as its Master Servicing
Fee in respect thereof, and any other amounts payable to the Master Servicer
hereunder the entitlement to which arose prior to the termination of its
activities hereunder.
Notwithstanding the foregoing, a delay in or failure of performance
under Section 7.1(i) or under Section 7.1(ii) after the applicable grace periods
specified in such Sections, shall not constitute a Servicing Default if such
delay or failure could not be prevented by the exercise of reasonable diligence
by the Master Servicer and such delay or failure was caused by an act of God or
the public enemy, acts of declared or undeclared war, public disorder, rebellion
or sabotage, epidemics, landslides, lightning, fire, hurricanes, earthquakes,
floods or similar causes. The preceding sentence shall not relieve the Master
Servicer from using reasonable efforts to perform its respective obligations in
a timely manner in accordance with the terms of this Servicing Agreement and the
Master Servicer shall provide the Indenture Trustee, the Credit Enhancer and the
Securityholders with notice of such failure or delay by it, together with a
description of its efforts to so perform its obligations. The Master Servicer
shall immediately notify the Indenture Trustee, the Credit Enhancer and the
Owner Trustee in writing of any Servicing Default.
Section 7.2. Indenture Trustee to Act; Appointment of Successor.
(a) On and after the time the Master Servicer receives a notice of
termination pursuant to Section 7.1 or sends a notice pursuant to Section 6.4,
the Indenture Trustee as pledgee of the Revolving Credit Loans shall be the
successor in all respects to the Master
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Servicer in its capacity as servicer under this Servicing Agreement and the
transactions set forth or provided for herein and shall be subject to all the
responsibilities, duties and liabilities relating thereto placed on the Master
Servicer by the terms and provisions hereof. Nothing in this Servicing Agreement
or in the Trust Agreement shall be construed to permit or require the Indenture
Trustee to (i) succeed to the responsibilities, duties and liabilities of the
initial Master Servicer in its capacity as Seller under the Revolving Credit
Loan Purchase Agreement, (ii) be responsible or accountable for any act or
omission of the Master Servicer prior to the issuance of a notice of termination
hereunder, (iii) require or obligate the Indenture Trustee, in its capacity as
successor Master Servicer, to purchase, repurchase or substitute any Revolving
Credit Loan, (iv) fund any Additional Balances with respect to any Revolving
Credit Loan, (v) fund any losses on any Permitted Investment directed by any
other Master Servicer, or (vi) be responsible for the representations and
warranties of the Master Servicer. As compensation therefor, the Indenture
Trustee shall be entitled to such compensation as the Master Servicer would have
been entitled to hereunder if no such notice of termination had been given.
Notwithstanding the above, (i) if the Indenture Trustee is unwilling to act as
successor Master Servicer, or (ii) if the Indenture Trustee is legally unable so
to act, the Indenture Trustee as pledgee of the Revolving Credit Loans may (in
the situation described in clause (i)) or shall (in the situation described in
clause (ii)) appoint or petition a court of competent jurisdiction to appoint
any established housing and home finance institution, bank or other mortgage
loan or home equity loan servicer having a net worth of not less than
$10,000,000 as the successor to the Master Servicer hereunder in the assumption
of all or any part of the responsibilities, duties or liabilities of the Master
Servicer hereunder; provided that any such successor Master Servicer shall be
acceptable to the Credit Enhancer, as evidenced by the Credit Enhancer's prior
written consent which consent shall not be unreasonably withheld and provided
further that the appointment of any such successor Master Servicer will not
result in the qualification, reduction or withdrawal of the ratings assigned to
the Securities by the Rating Agencies, if determined without regard to the
Credit Enhancement Instrument. Pending appointment of a successor to the Master
Servicer hereunder, unless the Indenture Trustee is prohibited by law from so
acting, the Indenture Trustee shall act in such capacity as hereinabove
provided. In connection with such appointment and assumption, the successor
shall be entitled to receive compensation out of payments on Revolving Credit
Loans in an amount equal to the compensation which the Master Servicer would
otherwise have received pursuant to Section 3.9 (or such lesser compensation as
the Indenture Trustee and such successor shall agree). The appointment of a
successor Master Servicer shall not affect any liability of the predecessor
Master Servicer which may have arisen under this Servicing Agreement prior to
its termination as Master Servicer (including, without limitation, the
obligation to purchase Revolving Credit Loans pursuant to Section 3.1, to pay
any deductible under an insurance policy pursuant to Section 3.4 or to indemnify
the Indenture Trustee pursuant to Section 6.6), nor shall any successor Master
Servicer be liable for any acts or omissions of the predecessor Master Servicer
or for any breach by such Master Servicer of any of its representations or
warranties contained herein or in any related document or agreement. The
Indenture Trustee and such successor shall take such
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action, consistent with this Servicing Agreement, as shall be necessary to
effectuate any such succession.
(b) Any successor, including the Indenture Trustee, to the Master
Servicer as servicer shall during the term of its service as servicer (i)
continue to service and administer the Revolving Credit Loans for the benefit of
the Securityholders, (ii) maintain in force a policy or policies of insurance
covering errors and omissions in the performance of its obligations as Master
Servicer hereunder and a fidelity bond in respect of its officers, employees and
agents to the same extent as the Master Servicer is so required pursuant to
Section 3.13 and (iii) be bound by the terms of the Insurance Agreement.
(c) Any successor Master Servicer, including the Indenture Trustee,
shall not be deemed in default or to have breached its duties hereunder if the
predecessor Master Servicer shall fail to deliver any required deposit to the
Custodial Account or otherwise cooperate with any required servicing transfer or
succession hereunder.
Section 7.3. Notification to Securityholders. Upon any termination of or
appointment of a successor to the Master Servicer pursuant to this Article VII
or Section 6.4, the Indenture Trustee shall give prompt written notice thereof
to the Securityholders, the Credit Enhancer, the Issuer and each Rating Agency.
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ARTICLE VIII.
Miscellaneous Provisions
Section 8.1. Amendment. This Servicing Agreement may be amended from
time to time by the parties hereto, provided that any amendment be accompanied
by a letter from the Rating Agencies that the amendment will not result in the
downgrading or withdrawal of the rating then assigned to the Securities, if
determined without regard to the Credit Enhancement Instrument and the consent
of the Credit Enhancer and the Indenture Trustee.
SECTION 8.2. GOVERNING LAW. THIS SERVICING AGREEMENT SHALL BE CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS
AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH
SUCH LAWS.
Section 8.3. Notices. All demands, notices and communications hereunder
shall be in writing and shall be deemed to have been duly given if personally
delivered at or mailed by certified mail, return receipt requested, to (a) in
the case of the Master Servicer, ______________, Attention: Managing Director -
Mortgage Finance, (b) in the case of the Credit Enhancer, ___________________,
(c) in the case of [Xxxxx'x, Home Revolving Credit Loan Monitoring Group, 4th
Floor, 00 Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000], (d) in the case of [Standard
& Poor's, 00 Xxxxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention:
Residential Mortgage Surveillance Group], (e) in the case of the Owner Trustee,
_________________, and (f) in the case of the Issuer, to Home Equity Loan Trust
199_-_, c/o Owner Trustee, _____________, and (g) in the case of the Indenture
Trustee, _______________, or, as to each party, at such other address as shall
be designated by such party in a written notice to each other party. Any notice
required or permitted to be mailed to a Securityholder shall be given by first
class mail, postage prepaid, at the address of such Securityholder as shown in
the Register. Any notice so mailed within the time prescribed in this Servicing
Agreement shall be conclusively presumed to have been duly given, whether or not
the Securityholder receives such notice. Any notice or other document required
to be delivered or mailed by the Indenture Trustee to any Rating Agency shall be
given on a reasonable efforts basis and only as a matter of courtesy and
accommodation and the Indenture Trustee shall have no liability for failure to
delivery such notice or document to any Rating Agency.
Section 8.4. Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Servicing Agreement shall be
for any reason whatsoever held invalid, then such covenants, agreements,
provisions or terms shall be deemed severable from the remaining covenants,
agreements, provisions or terms of this Servicing Agreement and shall in no way
affect the validity or enforceability of the other
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provisions of this Servicing Agreement or of the Securities or the rights of the
Securityholders thereof.
Section 8.5. Third-Party Beneficiaries. This Servicing Agreement will
inure to the benefit of and be binding upon the parties hereto, the
Securityholders, the Credit Enhancer, the Owner Trustee and their respective
successors and permitted assigns. Except as otherwise provided in this Servicing
Agreement, no other Person will have any right or obligation hereunder.
Section 8.6. Counterparts. This instrument may be executed in any number
of counterparts, each of which so executed shall be deemed to be an original,
but all such counterparts shall together constitute but one and the same
instrument.
Section 8.7. Effect of Headings and Table of Contents. The Article and
Section headings herein and the Table of Contents are for convenience only and
shall not affect the construction hereof.
Section 8.8. Termination Upon Purchase by the Master Servicer or
Liquidation of All Revolving Credit Loans; Partial Redemption.
(a) The respective obligations and responsibilities of the Master
Servicer, the Issuer and the Indenture Trustee created hereby shall terminate
upon the last action required to be taken by the Issuer pursuant to the Trust
Agreement and by the Indenture Trustee pursuant to the Indenture following the
earlier of:
(i) the date on or before which the Indenture or Trust Agreement
is terminated, or
(ii) the purchase by the Master Servicer from the Issuer of
all Revolving Credit Loans and all property acquired in respect of any
Revolving Credit Loan at a price equal to 100% of the unpaid Loan
Balance of each Revolving Credit Loan, plus accrued and unpaid interest
thereon at the Weighted Average Net Loan Rate up to the day preceding
the Payment Date on which such amounts are to be distributed to
Securityholders, plus any amounts due and owing to the Credit Enhancer
under the Insurance Agreement (any unpaid Master Servicing Fee shall be
deemed paid at such time).
The right of the Master Servicer to purchase the assets of the Issuer pursuant
to clause (ii) above is conditioned upon the Pool Balance as of such date being
less than ten percent of the aggregate of the Cut-off Date Loan Balances of the
Revolving Credit Loans. If such right is exercised by the Master Servicer, the
Master Servicer shall deposit the amount calculated pursuant to clause (ii)
above with the Indenture Trustee pursuant to Section 4.10 of the Indenture and,
upon the receipt of such deposit, the Indenture Trustee or
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Custodian shall release to the Master Servicer, the files pertaining to the
Revolving Credit Loans being purchased.
(b) Subject to the provisions of clause (c) below, the Master
Servicer has the right to purchase a portion of the Revolving Credit Loans upon
the Pool Balance as of such date being less than ten percent of the aggregate of
the Cut-off Date Loan Balances of the Revolving Credit Loans at a price equal to
100% of the unpaid Loan Balance of each Revolving Credit Loan so purchased, plus
accrued and unpaid interest thereon at the Weighted Average Net Loan Rate up to
the day preceding the Payment Date on which such amounts are to be distributed
to Securityholders, plus any amounts due and owing to the Credit Enhancer under
the Insurance Agreement (any unpaid Master Servicing Fee shall be deemed paid at
such time). If such right is exercised by the Master Servicer, the Master
Servicer shall deposit the amount calculated above with the Indenture Trustee
pursuant to Section 5.2 of the Indenture and, upon the receipt of such deposit,
the Indenture Trustee or Custodian shall release to the Master Servicer, the
files pertaining to the Revolving Credit Loans being purchased.
(c) With respect to any purchase of a portion of the Revolving
Credit Loans by the Master Servicer pursuant to subsection (b) above, the
following conditions must be satisfied: (i) the Master Servicer shall have
delivered to the Indenture Trustee and the Credit Enhancer a loan schedule
containing a list of all Revolving Credit Loans remaining in the Trust after
such removal; (ii) the Master Servicer shall represent and warrant that no
selection procedures adverse to the interests of the Securityholders or the
Credit Enhancer were used by the Master Servicer in selecting such Revolving
Credit Loans; and (iii) each Rating Agency shall have notified the Master
Servicer that such retransfer would not result in a reduction or withdrawal of
the ratings of the Securities, if determined without regard to the Credit
Enhancement Instrument. In lieu of a cash payment, if an Amortization Event had
previously occurred, all or a portion of such purchase price by the Master
Servicer may be in the form of Additional Balances on other Revolving Credit
Loans not previously conveyed to the Trust.
(d) The Master Servicer, at its expense, shall prepare and deliver
to the Indenture Trustee for execution, at the time the Revolving Credit Loans
are to be released to the Master Servicer, appropriate documents assigning each
such Revolving Credit Loan from the Indenture Trustee or the Issuer to the
Master Servicer or the appropriate party.
Section 8.9. Certain Matters Affecting the Indenture Trustee. For all
purposes of this Servicing Agreement, in the performance of any of its duties or
in the exercise of any of its powers hereunder, the Indenture Trustee shall be
subject to and entitled to the benefits of Article VI of the Indenture.
Section 8.10. Owner Trustee Not Liable for Related Documents. The
recitals contained herein shall be taken as the statements of the Depositor, and
the Owner Trustee assumes no responsibility for the correctness thereof. The
Owner Trustee makes no
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representations as to the validity or sufficiency of this Servicing Agreement,
of any Basic Document or of the Certificates (other than the signatures of the
Owner Trustee on the Certificates) or the Notes, or of any Related Documents.
The Owner Trustee shall at no time have any responsibility or liability with
respect to the sufficiency of the Owner Trust Estate or its ability to generate
the payments to be distributed to Certificateholders under the Trust Agreement
or the Noteholders under the Indenture, including, the compliance by the
Depositor or the Seller with any warranty or representation made under any Basic
Document or in any related document or the accuracy of any such warranty or
representation, or any action of the Certificate Paying Agent, the Certificate
Registrar or the Indenture Trustee taken in the name of the Owner Trustee.
IN WITNESS WHEREOF, the Master Servicer, the Indenture Trustee and the
Issuer have caused this Servicing Agreement to be duly executed by their
respective officers or representatives all as of the day and year first above
written.
-------------------------------------,
as Master Servicer
By:
Title:
HOME EQUITY LOAN TRUST 199_-_
By:______________, not in its
individual capacity but solely as
Owner Trustee
By:
Title:
__________________, as Indenture
Trustee
By:
Title:Vice President
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EXHIBIT A
REVOLVING CREDIT LOAN SCHEDULE
TO BE PROVIDED UPON REQUEST
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EXHIBIT B
LIMITED POWER OF ATTORNEY
KNOW ALL MEN BY THESE PREMISES:
That_______________, as Indenture Trustee (the "Trustee"), under the
Indenture (the "Indenture") among ________________________________________ and
the Indenture Trustee, a organized and existing under the laws of the State of
New York, and having an office located at______________, hath made, constituted
and appointed, and does by these presents make, constitute and
appoint________________, a corporation organized and existing under the laws of
the State of Delaware, its true and lawful Attorney-in-Fact, with full power and
authority to sign, execute, acknowledge, deliver, file for record, and record
any instrument on its behalf and to perform such other act or acts as may be
customarily and reasonably necessary and appropriate to effectuate the following
enumerated transactions in respect of any of the mortgages or deeds of trust
(the "Mortgages" and the "Deeds of Trust", respectively) creating a trust or
second lien or an estate in fee simple interest in real property securing a
Revolving Credit Loan and promissory notes secured thereby (the "Mortgage
Notes") for which the undersigned is acting as Trustee for various
certificateholders (whether the undersigned is named therein as mortgagee or
beneficiary or has become mortgagee by virtue of indorsement of the Mortgage
Note secured by any such Mortgage or Deed of Trust) and for which ____________
is acting as master servicer.
This appointment shall apply only to transactions which the Trustee is
authorized to enter into under the Indenture, but in no event shall apply to any
transactions other than the following enumerated transactions only:
1. The modification or re-recording of a Mortgage or Deed of Trust,
where said modification or re-recording is for the purpose of correcting the
Mortgage or Deed of Trust to conform same to the original intent of the parties
thereto or to correct title errors discovered after such title insurance was
issued and said modification or re-recording, in either instance, does not
adversely affect the lien of the Mortgage or Deed of Trust as insured.
2. The subordination of the lien of a Mortgage or Deed of Trust to an
easement in favor of a public utility company or a government agency or unit
with powers of eminent domain; this section shall include, without limitation,
the execution of partial
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satisfaction/releases, partial reconveyances or the execution of requests to
trustees to accomplish same.
3. The qualified subordination of the lien of a Mortgage or Deed of
Trust to a lien of a creditor that is created in connection with the refinancing
of a debt secured by seller that was superior to the lien of the Mortgage or
Deed of Trust.
4. With respect to a Mortgage or Deed of Trust, the foreclosure, the
taking of a deed in lieu of foreclosure, or the completion of judicial or
non-judicial foreclosure or termination, cancellation or rescission of any such
foreclosure, including, without limitation, any and all of the following acts:
(a) The substitution of trustee(s) serving under a Deed of Trust, in
accordance with state law and the Deed of Trust;
(b) Statements of breach or non-performance;
(c) Notices of default;
(d) Cancellations/rescissions of notices of default and/or notices
of sale;
(e) The taking of a deed in lieu of foreclosure; and
(f) Such other documents and actions as may be necessary under the
terms of the Mortgage, Deed of Trust or state law to expeditiously complete said
transactions.
5. The conveyance of the properties to the mortgage insurer, or the
closing of the title to the property to be acquired as real estate owned, or
conveyance of title to real estate owned.
6. The completion of loan assumption agreements.
7. The full satisfaction/release of a Mortgage or Deed of Trust or full
reconveyance upon payment and discharge of all sums secured thereby, including,
without limitation, cancellation of the related Mortgage Note.
8. The assignment of any Mortgage or Deed of Trust and the related
Mortgage Note, in connection with the repurchase of the Revolving Credit Loan
secured and evidenced thereby pursuant to the requirements of a ____________
Seller Contract, including, with limitation, by reason of conversion of an
adjustable rate mortgage loan from a variable rate to a fixed rate.
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9. The full assignment of a Mortgage or Deed of Trust upon payment and
discharge of all sums secured thereby in conjunction with the refinancing
thereof, including, without limitation, the endorsement of the related Mortgage
Note. The undersigned gives said Attorney-in-Fact full power and authority to
execute such instruments and to do and perform all and every act and thing
necessary and proper to carry into effect the power or powers granted by or
under this Limited Power of Attorney as fully as the undersigned might or could
do, and hereby does ratify and confirm to all that said Attorney-in-Fact shall
lawfully do or cause to be done by authority hereof.
Third parties without actual notice may rely upon the exercise of the
power granted under this Limited Power of Attorney; and may be satisfied that
this Limited Power of Attorney shall continue in full force and effect has not
been revoked unless an instrument of revocation has been made in writing by the
undersigned.
----------------------,
not to its individual capacity, by
solely Indenture
Trustee under the Agreements and the
Indentures
Name:
Name: Title:
Title:
STATE OF )
SS.
COUNTY OF )
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On this __th day of _______, 199__, before me the undersigned,
Notary Public of said State, personally appeared _______________________________
personally known to me to be duly authorized officers of ______________that
executed the within instrument and personally known to me to be the persons who
executed the within instrument on behalf of ______________ therein named, and
acknowledged to me such ______________ executed the within instrument pursuant
to its by-laws.
WITNESS my hand and official seal.
Notary Public in and for the
State of
After recording, please mail to:
Attn:
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EXHIBIT C
FORM OF REQUEST FOR RELEASE
DATE:
TO:
RE: REQUEST FOR RELEASE OF DOCUMENTS
In connection with your administration of the Revolving Credit Loans, we
request the release of the Mortgage File described below.
Servicing Agreement Dated:
Series #:
Account #:
Pool #:
Loan #:
Borrower Name(s):
Reason for Document Request: (circle one) Revolving Credit Loan Prepaid
in Full
Revolving Credit Loan Repurchased
"We hereby certify that all amounts received or to be received in
connection with such payments which are required to be deposited have been or
will be so deposited as provided in the Servicing Agreement."
-------------------------------------
Authorized Signature
-40-
****************************************************************** TO
CUSTODIAN/INDENTURE TRUSTEE: Please acknowledge this request, and check off
documents being enclosed with a copy of this form. You should retain this form
for your files in accordance with the terms of the Servicing Agreement.
Enclosed Documents: [ ] Promissory Note
[ ] Mortgage or Deed of Trust
[ ] Assignment(s) of Mortgage or
Deed of Trust
[ ] Title Insurance Policy
[ ] Other: ______________________ Title
Date
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