EXECUTION
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OPTION ONE MORTGAGE CORPORATION,
as Servicer
and
XXXXXX BROTHERS HOLDINGS INC.,
as Seller
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Structured Asset Securities Corporation
Amortizing Residential Collateral Trust
Mortgage Pass-Through Certificates, Series 2001-BC4
SERVICING AGREEMENT
Dated as of May 1, 2001
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Table of Contents
Page
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ARTICLE I. DEFINITIONS.........................................................2
ARTICLE II. SELLER'S ENGAGEMENT OF SERVICER TO PERFORM SERVICING
RESPONSIBILITIES..............................................................13
Section 2.01 Contract for Servicing; Possession of Servicing Files..........13
Section 2.02 Books and Records..............................................14
ARTICLE III. SERVICING OF THE SERVICED MORTGAGE LOANS.........................15
Section 3.01 Servicer to Service............................................15
Section 3.02 Collection of Serviced Mortgage Loan Payments..................16
Section 3.03 Establishment of and Deposits to Custodial Account.............16
Section 3.04 Permitted Withdrawals From Custodial Account...................18
Section 3.05 Establishment of and Deposits to Escrow Account................19
Section 3.06 Permitted Withdrawals From Escrow Account......................20
Section 3.07 Restoration of Mortgaged Property..............................21
Section 3.08 Fidelity Bond and Errors and Omissions Insurance...............22
Section 3.09 Notification of Adjustments....................................22
Section 3.10 Payment of Taxes, Insurance and Other Charges..................23
Section 3.11 Protection of Accounts.........................................23
Section 3.12 Title, Management and Disposition of REO Property..............23
Section 3.13 Real Estate Owned Reports......................................25
Section 3.14 MERS...........................................................26
Section 3.15 Waiver of Prepayment Penalties.................................26
Section 3.16 Servicing and Administration of the MGIC PMI Insurance Policy..26
Section 3.17 Maintenance of Hazard Insurance................................27
Section 3.18 Realization Upon Defaulted Serviced Mortgage Loans.............29
Section 3.19 Enforcement of Due-On-Sale Clauses; Assumption Agreement.......29
ARTICLE IV. PAYMENTS TO TRUSTEE...............................................30
Section 4.01 Remittances....................................................30
Section 4.02 Statements to Trustee..........................................31
Section 4.03 Monthly Advances by Servicer...................................32
Section 4.04 Compensating Interest..........................................33
Section 4.05 Credit Reporting...............................................33
ARTICLE V. GENERAL SERVICING PROCEDURES.......................................33
Section 5.01 Servicing Compensation; Seller Remittance Amount...............33
Section 5.02 Annual Audit Report............................................34
Section 5.03 Annual Officer's Certificate...................................34
ARTICLE VI. REPRESENTATIONS, WARRANTIES AND AGREEMENTS........................35
Section 6.01 Representations, Warranties and Agreements of the Servicer.....35
Section 6.02 Remedies for Breach of Representations and Warranties of the
Servicer.......................................................36
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Section 6.03 Additional Indemnification by the Servicer; Third Party
Claims.........................................................37
Section 6.04 Indemnification with Respect to Certain Taxes and Loss of
REMIC Status...................................................38
ARTICLE VII. THE SERVICER.....................................................38
Section 7.01 Merger or Consolidation of the Servicer........................38
Section 7.02 Limitation on Liability of the Servicer and Others.............38
Section 7.03 Limitation on Resignation and Assignment by the Servicer.......39
Section 7.04 Subservicing Agreements and Successor Subservicer..............40
ARTICLE VIII. TERMINATION.....................................................41
Section 8.01 Termination for Cause..........................................41
Section 8.02 Termination Without Cause......................................42
Section 8.03 Termination for Distressed Mortgage Loans......................43
ARTICLE IX. MISCELLANEOUS PROVISIONS..........................................44
Section 9.01 Successor to the Servicer......................................44
Section 9.02 Costs..........................................................46
Section 9.03 Notices........................................................46
Section 9.04 Severability Clause............................................47
Section 9.05 No Personal Solicitation.......................................47
Section 9.06 Counterparts...................................................48
Section 9.07 Place of Delivery and Governing Law............................48
Section 9.08 Further Agreements.............................................48
Section 9.09 Intention of the Parties.......................................48
Section 9.10 Successors and Assigns; Assignment of Servicing Agreement......48
Section 9.11 Assignment by Xxxxxx Capital...................................48
Section 9.12 Amendment......................................................49
Section 9.13 Waivers........................................................49
Section 9.14 Exhibits.......................................................49
Section 9.15 Intended Third Party Beneficiaries.............................49
Section 9.16 Guarantor Audit and Inspection Rights: Access to Financial
Statements......................49
Section 9.17 Guarantor Right of Termination or Declaration of Event
of Default.....................................................50
Section 9.18 Fees for Failure to Provide Timely Reports.....................50
Section 9.19 Confidentiality................................................51
Section 9.20 Deficiency Judgments...........................................51
Section 9.21 General Interpretive Principles................................51
Section 9.22 Reproduction of Documents......................................52
EXHIBITS & SCHEDULES
EXHIBIT A-1 Mortgage Loan Schedule
EXHIBIT A-2 Monthly Reporting Format to Trustee
EXHIBIT B Custodial Account Letter Agreement
EXHIBIT C Escrow Account Letter Agreement
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SERVICING AGREEMENT
THIS SERVICING AGREEMENT (this "Agreement"), entered into as of the 1st
day of May, 2001, by and between XXXXXX BROTHERS HOLDINGS INC., a Delaware
corporation (the "Seller"), and OPTION ONE MORTGAGE CORPORATION, a California
corporation ("the Servicer") having its principal executive offices at 3 Xxx,
Xxxxxx, Xxxxxxxxxx 00000, recites and provides as follows:
RECITAL
WHEREAS, the Servicer and Xxxxxx Brothers Bank, FSB (the "Bank") are
parties to an Amended and Restated Flow Interim Servicing Agreement, dated as of
May 1, 2000, for Fixed and Adjustable Rate Mortgage Loans (the "Bank 5/1/2000
Amended Interim Agreement") and a Flow Interim Servicing Agreement, dated as of
May 1, 2000, for Fixed and Adjustable Rate Mortgage Loans (Group LB-2000) (the
"Bank 5/1/2000 Flow Interim Agreement" and together with the Bank 5/1/2000
Amended Interim Agreement, the "Bank Servicing Agreements"), pursuant to which
the Servicer services certain residential adjustable and fixed rate mortgage
loans for the Bank;
WHEREAS, the Servicer and Xxxxxx Capital, a division of the Seller
("Xxxxxx Capital"), are parties to a Flow Interim Servicing Agreement, dated as
of May 1, 2000, for Fixed and Adjustable Rate Mortgage Loans (Group LC-2000)
(the "LC Servicing Agreement") pursuant to which the Servicer services certain
residential adjustable and fixed rate mortgage loans for Xxxxxx Capital;
WHEREAS, pursuant to certain Assignment, Assumption and Recognition
Agreements, dated as of September 4, 2000, November 6, 2000 and April 6, 2001,
respectively, the Bank has assigned all of its rights, title and interest in and
to the Bank Servicing Agreements with respect to certain Serviced Mortgage Loans
(as defined below) serviced thereunder and delegated all of its obligations
under the Bank Servicing Agreements with respect to such Serviced Mortgage Loans
to the Seller, and the Seller has accepted such assignment and delegation;
WHEREAS, the Seller has conveyed certain of the Mortgage Loans
currently serviced under the Bank Servicing Agreements and the LC Servicing
Agreement (as identified on Schedule I hereto) (hereafter referred to as the
"Serviced Mortgage Loans") on a servicing-retained basis to Structured Asset
Securities Corporation (the "Depositor"), which in turn has conveyed the
Serviced Mortgage Loans to Xxxxx Fargo Bank Minnesota, National Association, as
trustee (the "Trustee") under a trust agreement dated as of May 1, 2001 (the
"Trust Agreement"), among the Trustee, the Depositor, the Seller, The Murrayhill
Company, as loss mitigation advisor, and the Federal Home Loan Mortgage
Corporation, as guarantor (the "Guarantor");
WHEREAS, multiple classes of certificates (the "Certificates"),
including the Class X Certificate, will be issued on the Closing Date pursuant
to the Trust Agreement, and Xxxxxx Brothers Inc. or a nominee thereof is
expected to be the initial registered holder of the Class X Certificate;
WHEREAS, the Seller desires that the Servicer service the Serviced
Mortgage Loans pursuant to this Agreement, and the Servicer has agreed to do so,
subject to the rights of the Seller and the Guarantor to terminate the rights
and obligations of the Servicer hereunder;
WHEREAS, the Seller and the Servicer desire to consolidate under this
Agreement the servicing of the Serviced Mortgage Loans currently serviced under
the Bank Servicing Agreements and the LC Servicing Agreement such that the
provisions of this Agreement (and not the Bank Servicing Agreements and the LC
Servicing Agreement) will govern the Serviced Mortgage Loans for so long as the
Serviced Mortgage Loans remain subject to the provisions of the Trust Agreement;
WHEREAS, the Seller and the Servicer intend that each of the Trustee
and the Guarantor be an intended third party beneficiary of this Agreement;
WHEREAS, the Seller and the Servicer acknowledge and agree that the
Seller will assign all of its rights and delegate all of its obligations
hereunder (excluding the Seller's rights and obligations as owner of the
servicing rights relating to the Serviced Mortgage Loans) to the Trustee, and
that each reference herein to the Seller is intended, unless otherwise
specified, to mean the Seller or the Trustee, as assignee, whichever is the
owner of the Serviced Mortgage Loans from time to time.
NOW, THEREFORE, in consideration of the mutual agreements hereinafter
set forth and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the Seller and the Servicer hereby
agree as follows:
ARTICLE I.
DEFINITIONS
The following terms are defined as follows (except as otherwise agreed
in writing by the parties):
Accepted Servicing Practices: With respect to any Serviced Mortgage
Loan, those mortgage servicing practices that prudent mortgage lending
institutions would employ in servicing their own portfolio of mortgage loans of
the same type as the Serviced Mortgage Loans in the jurisdiction where the
related Mortgaged Property is located.
Adjustable Rate Mortgage Loan: A Serviced Mortgage Loan under which the
Mortgage Interest Rate is adjusted from time to time in accordance with the
terms and provisions of the related Mortgage Note.
Adverse REMIC Event: As defined in Article X of the Trust Agreement.
Advancing Person: As defined in Section 4.03 hereof.
Agreement: This Servicing Agreement and all amendments hereof and
supplements hereto.
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Ancillary Income: All income derived from the Serviced Mortgage Loans,
other than the Option One Servicing Fee, the Seller Remittance Amount and
Prepayment Penalty Amounts, including but not limited to late charges, any
interest paid on funds deposited in the Custodial Account and Escrow Account
(other than interest on escrowed funds required by law to be paid to the
Mortgagor), fees received with respect to checks or bank drafts returned by the
related bank for non-sufficient funds, assumption fees, optional insurance
administrative fees, any Net Prepayment Interest Excess Amount due to Principal
Prepayments in full and all other incidental fees and charges.
Assignment of Mortgage: An assignment of the Mortgage, notice of
transfer or equivalent instrument in recordable form, sufficient under the laws
of the jurisdiction wherein the related Mortgaged Property is located to reflect
the transfer of the Mortgage to the party indicated therein, which assignment,
notice of transfer or equivalent instrument may be in the form of one or more
blanket assignments covering the Serviced Mortgage Loans secured by Mortgaged
Properties located in the same jurisdiction, if permitted by law.
Balloon Mortgage Loan: Any Serviced Mortgage Loan that by its original
terms or by virtue of any modification provides for an amortization schedule
extending beyond its originally scheduled Maturity Date.
Bank: As defined in the first RECITAL of the Agreement.
Business Day: Any day other than (i) a Saturday or Sunday, (ii) a day
on which the Guarantor is closed, or (iii) a day on which banking and savings
and loan institutions in the States of California, New York, Maryland, Minnesota
and the Commonwealth of Pennsylvania are authorized or obligated by law or
executive order to be closed.
Certificates: Any or all of the Certificates issued pursuant to the
Trust Agreement.
Closing Date: June 8, 2001.
Code: The Internal Revenue Code of 1986, as it may be amended from time
to time or any successor statute thereto, and applicable U.S. Department of the
Treasury regulations issued pursuant thereto.
Condemnation Proceeds: All awards of settlements in respect of a
Mortgaged Property, whether permanent or temporary, partial or entire, by
exercise of the power of eminent domain or condemnation, to the extent not
required to be released to a Mortgagor in accordance with the terms of the
related Serviced Mortgage Loan documents.
Conventional Loan: A conventional residential first or second lien
fixed or adjustable rate mortgage loan that is neither FHA insured nor VA
guaranteed.
Costs: For any Person, any claims, losses, damages, penalties, fines,
forfeitures, reasonable and necessary legal fees and related costs, judgments,
and other costs and expenses of such Person.
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Custodial Account: The separate account or accounts created and
maintained by the Servicer pursuant to Section 3.03.
Custodial Agreement: The custodial agreement relating to custody of the
Serviced Mortgage Loans between the Custodian and the Trustee, as acknowledged
by the Servicer, dated as of May 1, 2001.
Custodian: U.S. Bank Trust National Association.
Determination Date: The last day (or if such day is not a Business Day,
the Business Day immediately succeeding such last day) of the Due Period
immediately preceding the related Remittance Date.
Depositor: Structured Asset Securities Corporation or any successor in
interest.
Distressed Mortgage Loan: As of any Transfer Date, any Serviced
Mortgage Loan that was delinquent in payment for a period of 90 days or more as
of the first calendar day of the month in which such Transfer Date occurs,
without giving effect to any grace period permitted by the related Mortgage
Note. No Serviced Mortgage Loan shall be considered delinquent for the purpose
of this definition by virtue of the related Mortgagor having made payment to the
prior servicer.
Distribution Date: The 25th day of each month (or if such day is not a
Business Day) the next succeeding Business Day).
Due Date: The day of the calendar month on which the Monthly Payment is
due on a Serviced Mortgage Loan, exclusive of any days of grace. With respect to
the Serviced Mortgage Loans for which payment from the Mortgagor is due on a day
other than the first day of the calendar month, such Serviced Mortgage Loans
will be treated as if the Monthly Payment is due on the first day of the
immediately succeeding month.
Due Period: With respect to each Remittance Date, the period commencing
on the second day of the month immediately preceding the month of the Remittance
Date and ending on the first day of the month of the Remittance Date.
Eligible Investments: Any one or more of the obligations and securities
listed below which investment provides for a date of maturity not later than the
Determination Date in each month:
(i) direct obligations of, and obligations fully guaranteed as to
timely payment of principal and interest by, the United States of America or any
agency or instrumentality of the United States of America the obligations of
which are backed by the full faith and credit of the United States of America,
including Federal Housing Administration debentures, but excluding any of such
securities whose terms do not provide for a payment of a fixed dollar amount
upon maturity or call for redemption ("Direct Obligations") and FHLMC senior
debt obligations;
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(ii) federal funds, or demand and time deposits in, certificates of
deposits of, or bankers' acceptances issued by, any depository institution or
trust company (including U.S. subsidiaries of foreign depositories and the
Trustee or any agent of the Trustee, acting in its respective commercial
capacity) incorporated or organized under the laws of the United States of
America or any state thereof and subject to supervision and examination by
federal or state banking authorities, so long as at the time of investment or
the contractual commitment providing for such investment the commercial paper or
other short-term debt obligations of such depository institution or trust
company (or, in the case of a depository institution or trust company which is
the principal subsidiary of a holding company, the commercial paper or other
short-term debt or deposit obligations of such holding company or deposit
institution, as the case may be) have been rated by each Rating Agency in its
highest short-term rating category or one of its two highest long-term rating
categories;
(iii) repurchase agreements collateralized by Direct Obligations or
securities guaranteed by GNMA or FHLMC with any registered broker/dealer subject
to Securities Investors' Protection Corporation jurisdiction or any commercial
bank insured by the FDIC, if such broker/dealer or bank has an uninsured,
unsecured and unguaranteed obligation rated by each Rating Agency in its highest
short-term rating category;
(iv) securities bearing interest or sold at a discount issued by
any corporation incorporated under the laws of the United States of America or
any state thereof which have a credit rating from each Rating Agency, at the
time of investment or the contractual commitment providing for such investment,
at least equal to one of the two highest long-term credit rating categories of
each Rating Agency; provided, however, that securities issued by any particular
corporation will not be Eligible Investments to the extent that investment
therein will cause the then outstanding principal amount of securities issued by
such corporation and held as part of the Custodial Account to exceed 20% of the
aggregate principal amount of all Eligible Investments in the Custodial Account;
provided, further, that such securities will not be Eligible Investments if they
are published as being under review with negative implications from either
Rating Agency;
(v) commercial paper (including both non-interest-bearing discount
obligations and interest-bearing obligations payable on demand or on a specified
date not more than 180 days after the date of issuance thereof) rated by each
Rating Agency in its highest short-term rating category;
(vi) a Qualified GIC (as defined in the Trust Agreement);
(vii) certificates or receipts representing direct ownership
interests in future interest or principal payments on obligations of the United
States of America or its agencies or instrumentalities (which obligations are
backed by the full faith and credit of the United States of America) held by a
custodian in safekeeping on behalf of the holders of such receipts; and
(viii) any other demand, money market, common trust fund or time
deposit or obligation, or interest-bearing or other security or investment, (A)
rated in the highest rating category by each Rating Agency or (B) that would not
adversely affect the then current rating by either Rating Agency of any of the
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Certificates. Such investments in this subsection (viii) may include money
market mutual funds or common trust funds, including any fund for which the
Trustee or any affiliate thereof serves as an investment advisor, administrator,
shareholder servicing agent, and/or custodian or subcustodian, notwithstanding
that (x) the Trustee, or any affiliate thereof charges and collects fees and
expenses from such funds for services rendered, (y) the Trustee or any affiliate
thereof charges and collects fees and expenses for services rendered pursuant to
this Agreement, and (z) services performed for such funds and pursuant to this
Agreement may converge at any time; provided, however, that no such instrument
shall be an Eligible Investment if such instrument evidences either (i) a right
to receive only interest payments with respect to the obligations underlying
such instrument, or (ii) both principal and interest payments derived from
obligations underlying such instrument and the principal and interest payments
with respect to such instrument provide a yield to maturity of greater than 120%
of the yield to maturity at par of such underlying obligations.
Errors and Omissions Insurance: Errors and Omissions Insurance to be
maintained by the Servicer in accordance with the FHLMC Guide.
Escrow Account: The separate account or accounts created and maintained
pursuant to Section 3.05.
Escrow Payments: With respect to any Serviced Mortgage Loan, the
amounts constituting ground rents, taxes, assessments, water rates, sewer rents,
municipal charges, mortgage insurance premiums, fire and hazard insurance
premiums, condominium charges, and any other payments required to be escrowed by
the Mortgagor with the mortgagee pursuant to the Mortgage or any other document.
Event of Default: Any of the events which may result in a termination
for cause set forth in Section 8.01.
FDIC: The Federal Deposit Insurance Corporation, or any successor
thereto.
FHA: The Federal Housing Administration, an agency within HUD or any
successor thereto and including the Federal Housing Commissioner and the
Secretary of HUD where appropriate under the FHA Regulation.
FHLMC: The Federal Home Loan Mortgage Corporation, or any successor
thereto.
FHLMC Guide: The FHLMC Single Family Seller/Servicer Guide and all
amendments or additions thereto.
Fidelity Bond: A fidelity bond to be maintained by the Servicer in
accordance with the FHLMC Guide.
Fixed Rate Mortgage Loan: Any Serviced Mortgage Loan as to which the
Mortgage Interest Rate set forth in the Mortgage Note is fixed for the term of
such Serviced Mortgage Loan.
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Final Recovery Determination: With respect to any defaulted Serviced
Mortgage Loan or any REO Property (other than any Serviced Mortgage Loan or REO
Property repurchased from the Trust), a determination made by the Servicer that
all Insurance Proceeds, Liquidation Proceeds and other payments or recoveries
which the Servicer, in its reasonable good faith judgment, expect to be finally
recoverable in respect thereof have been so recovered.
Fitch: Fitch, Inc., or any successor in interest.
FNMA: The Federal National Mortgage Association, or any successor
thereto.
FNMA Guide: The FNMA Single Family Seller/Servicer Guide and all
amendments or additions thereto.
General Servicing Fee: With respect to each Due Period and any Serviced
Mortgage Loan, an amount equal to one-twelfth the product of (i) the General
Servicing Fee Rate and (ii) the outstanding principal balance of such Serviced
Mortgage Loan as of the related Determination Date. The obligation of the
Trustee to pay the General Servicing Fee is limited to, and the General
Servicing Fee is payable solely from, the interest portion (including recoveries
with respect to interest from Liquidation Proceeds to the extent permitted by
Section 3.02 of this Agreement) of such Monthly Payments collected by the
Servicer, or as otherwise provided under this Agreement.
General Servicing Fee Rate: 0.50% per annum.
GNMA: The Government National Mortgage Association, or any successor
thereto.
Guarantor: FHLMC and its successors or assigns.
HOEPA: The Home Ownership and Equity Protection Act, as amended.
HUD: The Department of Housing and Urban Development, or any federal
agency or official thereof which may from time to time succeed to the functions
thereof with regard to FHA Mortgage Insurance. The term "HUD," for purposes of
this Agreement, is also deemed to include subdivisions thereof such as the FHA
and GNMA.
Insurance Proceeds: With respect to each Serviced Mortgage Loan,
proceeds of insurance policies insuring the Serviced Mortgage Loan or the
related Mortgaged Property, including proceeds from the MGIC PMI Insurance
Policy, to the extent such proceeds are not to be applied to the restoration and
repair of the related Mortgaged Property or released to the Mortgagor in
accordance with the procedures that the Servicer would follow in servicing
mortgage loans for its own account, subject to the terms and conditions of the
related Mortgage Note and Mortgage.
Xxxxxx Capital: As defined in the second RECITAL of this Agreement.
Liquidation Proceeds: Cash received in connection with the liquidation
of a defaulted Serviced Mortgage Loan, whether through the sale or assignment of
such Serviced Mortgage Loan, trustee's sale, foreclosure sale or otherwise, or
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the sale of the related REO Property, if the Mortgaged Property is acquired in
satisfaction of the Serviced Mortgage Loan.
MERS: Mortgage Electronic Registration Systems, Inc., a Delaware
corporation, or any successor in interest thereto.
MERS Eligible Mortgage Loan: Any Serviced Mortgage Loan that has been
designated by the Servicer as recordable in the name of MERS, as nominee.
MERS Mortgage Loan: Any Serviced Mortgage Loan as to which the related
Mortgage, or an Assignment of Mortgage, has been or will be recorded in the name
of MERS, as nominee for the holder from time to time of the related Mortgage
Note.
MGIC: Mortgage Guaranty Insurance Corporation and its successors and
assigns.
MGIC PMI Insurance Policy: The master primary mortgage insurance policy
(No. [ ]), including all related assignments, supplements and endorsements,
acquired by the Seller for the Trust Fund from MGIC for certain of those
Serviced Mortgage Loans included in the Trust Fund with loan-to-value ratios
determined as of the date of origination of greater than 60% and which Serviced
Mortgage Loans shall be specifically identified to and labeled for, the Servicer
by certificate number, Alltel/CPI Number, the percentage of such Serviced
Mortgage Loan's principal balance insured by MGIC and other applicable insurer
information in a separate schedule to be provided to the Servicer and the
Guarantor by the Seller within five Business Days of the Closing Date.
Monthly Advance: With respect to each Remittance Date and each Serviced
Mortgage Loan, an amount equal to the Monthly Payment (with the interest portion
of such Monthly Payment adjusted to the Mortgage Loan Remittance Rate) that was
due on the Serviced Mortgage Loan, and that was delinquent at the close of
business on the first day of the month in which such Remittance Date occurs, but
only to the extent that such amount is expected, in the reasonable judgment of
the Servicer, to be recoverable from collections or other recoveries in respect
of such Serviced Mortgage Loan. To the extent that the Servicer determines that
any such amount is not recoverable from collections or other recoveries in
respect of such Serviced Mortgage Loan, such determination shall be evidenced by
a certificate of a Servicing Officer delivered to the Trustee setting forth such
determination and the procedures and considerations of the Servicer forming the
basis of such determination.
Monthly Payment: The scheduled monthly payment of principal and
interest on a Serviced Mortgage Loan.
Moody's: Xxxxx'x Investors Service, Inc. or any successor in interest.
Mortgage: The mortgage, deed of trust or other instrument securing a
Mortgage Note, which creates a first or second lien on an unsubordinated estate
in fee simple in real property securing the Mortgage Note.
Mortgage Interest Rate: The annual rate of interest borne on a Mortgage
Note net of any Relief Act Reduction.
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Mortgage Loan Remittance Rate: With respect to each Serviced Mortgage
Loan, the annual rate of interest remitted to the Trustee, which shall be equal
to the Mortgage Interest Rate minus the General Servicing Fee Rate.
Mortgage Loan Schedule: A schedule of the Serviced Mortgage Loans
setting forth information with respect to such Serviced Mortgage Loans as agreed
to by the Seller, the Servicer and the Guarantor including, but not limited to,
(i) any MERS identification number (if available) with respect to each MERS
Mortgage Loan or MERS Eligible Mortgage Loan and (ii) a data field indicating
whether such Serviced Mortgage Loan is insured under the MGIC Insurance Policy,
attached hereto as Exhibit A-1.
Mortgage Note: The original, executed note or other evidence of the
indebtedness of a Mortgagor secured by a Mortgage.
Mortgaged Property: The real property securing repayment of the debt
evidenced by a Mortgage Note.
Mortgagor: The obligor on a Mortgage Note.
Net Prepayment Interest Excess Amount: With respect to any Due Period,
the amount, if any, by which the Prepayment Interest Excess Amount exceeds the
Prepayment Interest Shortfall Amount for such Due Period.
Net Sale Proceeds: The proceeds from the sale of REO Property, net of
all expenses incurred by the Servicer in connection with such sale, including,
without limitation, legal fees and expenses, referral fees, brokerage
commissions, conveyance taxes and any other related expense.
Non-MERS Eligible Mortgage Loan: Any Serviced Mortgage Loan other than
a MERS Eligible Mortgage Loan.
Non-MERS Mortgage Loan: Any Serviced Mortgage Loan other than a MERS
Mortgage Loan.
Notice Date: The fifteenth calendar day preceding each Transfer Date,
or, if such day is not a Business Day, the immediately preceding Business Day.
Officer's Certificate: A certificate signed by the Chairman of the
Board, the President or a vice president (however denominated), and by the
Treasurer, the Secretary, or one of the assistant treasurers or assistant
secretaries of the Servicer or the Seller, as applicable.
Opinion of Counsel: A written opinion of counsel, who may be an
employee of the Servicer, reasonably acceptable to the Trustee, the Guarantor
and the Seller, provided that any Opinion of Counsel relating to qualification
of the Serviced Mortgage Loans in a REMIC or compliance with the REMIC
Provisions must be an opinion of counsel acceptable to the Trustee, the
Guarantor and the Seller, who (i) is in fact independent of the Seller and the
Servicer (ii) does not have any material direct or indirect financial interest
in the Seller or the Servicer any affiliate of any such entity and (iii) is not
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connected with the Seller or Servicer as an officer, employee, director or
person performing similar functions.
Option One Servicing Fee: With respect to each Due Period and any
Serviced Mortgage Loan, an amount equal to the sum of (a) one-twelfth the
product of (i) the Option One Servicing Fee Rate and (ii) the outstanding
principal balance of such Serviced Mortgage Loan as of the related Determination
Date. The obligation of the Trustee to pay the Option One Servicing Fee is
limited to, and the Option One Servicing Fee is payable solely from, the
interest portion (including recoveries with respect to interest from Liquidation
Proceeds to the extent permitted by Section 3.02 of this Agreement) of such
Monthly Payments collected by the Servicer, or as otherwise provided under this
Agreement.
Option One Servicing Fee Rate: 0.40% per annum.
Person: Any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust, unincorporated
organization, government or any agency or political subdivision thereof.
PMI Insurer: MGIC and its successors in interest.
PMI Policy: A policy of primary mortgage guaranty insurance issued by a
Qualified Insurer, including the MGIC PMI Insurance Policy, as required by this
Agreement and the Trust Agreement with respect to certain Serviced Mortgage
Loans.
Prepayment Interest Excess Amount: With respect to any Principal
Prepayment in full or in part received on the first day of the month of the
Remittance Date, all amounts received in respect of interest on such Principal
Prepayment.
Prepayment Interest Shortfall Amount: With respect to any Serviced
Mortgage Loan that was subject to a Principal Prepayment in full or in part
during any Due Period, which Principal Prepayment was applied to such Serviced
Mortgage Loan prior to such Serviced Mortgage Loan's Due Date in such Due
Period, the amount of interest (net of the General Servicing Fee for Principal
Prepayments in full only) that would have accrued on the amount of such
Principal Prepayment during the period commencing on the date as of which such
Principal Prepayment was applied to such Serviced Mortgage Loan and ending on
the day immediately preceding such Due Date, inclusive.
Prepayment Penalty Amount: With respect to any Remittance Date, all
premiums or charges paid by the Mortgagors due to Principal Prepayments
collected by the Servicer during the immediately preceding Prepayment Period.
Prepayment Period: With respect to each Distribution Date, the
one-month period beginning on the Cut-off Date, in the case of the first
Distribution Date, and thereafter on the second day of the calendar month
immediately preceding the month in which the related Distribution Date occurs,
in the case of each subsequent Distribution Date, and ending on the first day of
the month in which such Distribution Date occurs.
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Prime Rate: The prime rate published from time to time, as published as
the average rate in The Wall Street Journal (Northeast Edition).
Principal Prepayment: Any Mortgagor payment of principal (other than a
Balloon Payment) or other recovery of principal on a Serviced Mortgage Loan that
is recognized as having been received or recovered in advance of its scheduled
Due Date and applied to reduce the principal balance of the Serviced Mortgage
Loan in accordance with the terms of the Mortgage Note.
Qualified Depository: Any of (i) a depository the accounts of which are
insured by the FDIC (to the limits established by such corporation) and the debt
obligations of which are rated P-1 by Moody's (or its equivalent) or better by
each Rating Agency; (ii) the corporate trust department of any bank the debt
obligations of which are rated A-1 by S&P and F-1 by Fitch (or its equivalent)
or better by each Rating Agency; or (iii) the Bank.
Qualified Insurer: A mortgage guaranty insurance company duly
authorized and licensed where required by law to transact mortgage guaranty
insurance business and approved as an insurer by FHLMC and FNMA.
Rating Agency: Each of Fitch, Xxxxx'x and S&P or their successors. If
such agencies or their successors are no longer in existence, "Rating Agencies"
shall be such nationally recognized statistical rating agencies, or other
comparable Person, designated by the Seller, notice of which designation shall
be given to the Trustee, the Guarantor and the Seller.
Relief Act Reduction: With respect to any Serviced Mortgage Loan as to
which there has been a reduction in the amount of the interest collectible
thereon as a result of the application of the Soldiers' and Sailors' Civil
Relief Act of 1940, as amended, any amount by which interest collectible on such
Serviced Mortgage Loan for the Due Date in the related Due Period is less than
the interest accrued thereon for the applicable one-month period at the Mortgage
Interest Rate without giving effect to such reduction.
REMIC: A "real estate mortgage investment conduit" within the meaning
of Section 860D of the Code.
Remittance Date: The 18th day (or if such 18th day is not a Business
Day, the first Business Day immediately following) of any calendar month.
REO Disposition: The final sale or other disposition by the Servicer of
any REO Property.
REO Disposition Proceeds: All amounts received with respect to an REO
Disposition pursuant to Section 3.12.
REO Property: A Mortgaged Property acquired by the Trustee on behalf of
the Trust through foreclosure or by deed in lieu of foreclosure pursuant to
Section 3.12 hereof.
S&P: Standard & Poor's Credit Markets Services, a division of the
XxXxxx-Xxxx Companies, Inc., or any successor in interest.
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Seller: Xxxxxx Brothers Holdings Inc., or its successors in interest
and assigns.
Seller Remittance Amount: With respect to each Due Period and any
Serviced Mortgage Loan, an amount equal to one-twelfth the product of (a) the
Seller Remittance Rate and (b) the outstanding principal balance of the Serviced
Mortgage Loan as of the related Determination Date. The obligation of the
Servicer to pay the Seller Remittance Amount is limited to, and the Seller
Remittance Amount is payable solely from, the interest portion (including
recoveries with respect to interest from Liquidation Proceeds to the extent
permitted by Section 3.02 of this Agreement) of such Monthly Payments collected
by the Servicer, or as otherwise provided under this Agreement
Seller Remittance Rate: With respect to each Serviced Mortgage Loan,
the difference between the General Servicing Fee Rate and the Option One
Servicing Fee Rate.
Serviced Mortgage Loan: An individual mortgage loan that is the subject
of this Agreement, each mortgage loan subject to this Agreement being identified
on the Mortgage Loan Schedule attached as Exhibit A-1 hereto, which mortgage
loan includes without limitation the Serviced Mortgage Loan documents, the
Monthly Payments, Principal Prepayments, Liquidation Proceeds, Condemnation
Proceeds, Insurance Proceeds, REO Disposition Proceeds, and all other rights,
benefits, proceeds and obligations arising from or in connection with such
mortgage loan.
Servicer: Option One Mortgage Corporation or its successor in interest
or assigns or any successor to the Servicer under this Agreement as herein
provided.
Servicing Advances: All customary, reasonable and necessary "out of
pocket" costs and expenses other than Monthly Advances (including reasonable
attorneys' fees and disbursements) incurred in the performance by the Servicer
of its servicing obligations, including, but not limited to, the cost of (a) the
preservation, inspection, restoration and protection of the Mortgaged Property,
(b) any enforcement or administrative or judicial proceedings, including
foreclosures, (c) the management and liquidation of the Mortgaged Property
(including costs incurred in connection with environmental inspections or other
related costs of foreclosure of Mortgaged Property potentially contaminated by
hazardous or toxic substance or wastes in accordance with Section 3.12 hereof)
if the Mortgaged Property is acquired in satisfaction of the Mortgage, (d)
taxes, assessments, water rates, sewer rents and other charges which are or may
become a lien upon the Mortgaged Property, and PMI Policy premiums and fire and
hazard insurance coverage, (e) any losses sustained by the Servicer with respect
to the liquidation of the Mortgaged Property and (f) compliance with the
obligations pursuant to the provisions of the FHLMC Guide.
Servicing File: The items pertaining to a particular Serviced Mortgage
Loan including, but not limited to, the computer files, data disks, books,
records, data tapes, notes, and all additional documents generated as a result
of or utilized in originating and/or servicing each Serviced Mortgage Loan,
which are held in trust for the Trustee by the Servicer.
Servicing Officer: Any officer of the Servicer involved in or
responsible for, the administration and servicing of the Serviced Mortgage Loans
whose name appears on a list of servicing officers furnished by the Servicer to
the Trustee (or its Custodian) upon request, as such list may from time to time
be amended.
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Special Servicer: The person designated by the Seller (with the prior
consent of the Trustee and the Guarantor) to assume the servicing of Distressed
Mortgage Loans pursuant to Section 8.03 hereof.
Transfer Date: The fourth calendar day of each month, or, if such day
is not a Business Day, the next succeeding Business Day. Each transfer of
servicing on a Transfer Date shall be deemed to be effective immediately
following the close of business on such Transfer Date.
Trust Agreement: As defined in the fourth RECITAL of this Agreement.
Trust Fund: The trust fund established by the Trust Agreement known as
the "Amortizing Residential Collateral Trust, 2001-BC4", the assets of which
consist of the Serviced Mortgage Loans and any related assets.
Trustee: Xxxxx Fargo Bank Minnesota, National Association, or any
successor in interest, or if any successor trustee or co-trustee shall be
appointed as provided in the Trust Agreement, then such successor trustee or
such co-trustee, as the case may be.
VA: The Veterans Administration, an agency of the United States of
America, or any successor thereto, including the Administration of Veterans
Affairs.
Any capitalized terms used and not defined in this Agreement shall have
the meanings ascribed to such terms in the Trust Agreement.
ARTICLE II.
SELLER'S ENGAGEMENT OF SERVICER TO PERFORM SERVICING
RESPONSIBILITIES
Section 2.01 Contract for Servicing; Possession of Servicing Files.
The Seller, by execution and delivery of this Agreement, does hereby
contract with the Servicer, subject to the terms of this Agreement, for the
servicing of the Serviced Mortgage Loans. On or before the Closing Date, the
Seller shall cause to be delivered the Servicing Files with respect to the
Serviced Mortgage Loans listed on the Mortgage Loan Schedule to the Servicer.
Each Servicing File delivered to the Servicer shall be held in trust by the
Servicer for the benefit of the Trustee; provided, however, that the Servicer
shall have no liability for any Servicing Files (or portions thereof) not
delivered by the Seller. The Servicer's possession of any portion of the
Serviced Mortgage Loan documents shall be at the will of the Trustee for the
sole purpose of facilitating servicing of the related Serviced Mortgage Loan
pursuant to this Agreement, and such retention and possession by the Servicer
shall be in a custodial capacity only. The ownership of each Mortgage Note,
Mortgage, and the contents of the Servicing File shall be vested in the Trustee
and the ownership of all records and documents with respect to the related
Serviced Mortgage Loan prepared by or which come into the possession of the
Servicer shall immediately vest in the Trustee and shall be retained and
maintained, in trust, by the Servicer at the will of the Trustee in such
custodial capacity only. The portion of each Servicing File retained by the
Servicer pursuant to this Agreement shall be segregated from the other books and
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records of the Servicer and shall be appropriately marked to clearly reflect the
ownership of the related Serviced Mortgage Loan by the Trustee. The Servicer
shall release from its custody the contents of any Servicing File retained by it
only in accordance with this Agreement.
Section 2.02 Books and Records.
(a) Subject to Section 3.01(a) hereof, as soon as practicable after
the Closing Date or the date on which a Qualifying Substitute Mortgage Loan is
delivered pursuant to Section 2.05 of the Trust Agreement, as applicable (but in
no event more than 90 days thereafter except to the extent delays are caused by
the applicable recording office), the Servicer, at the expense of the Seller,
shall cause the Mortgage or Assignment of Mortgage, as applicable, with respect
to each MERS Eligible Mortgage Loan, to be properly recorded in the name of MERS
in the public recording office in the applicable jurisdiction, or shall
ascertain that such have previously been so recorded.
(b) Subject to Section 3.01(a) hereof, an Assignment of Mortgage in
favor of the Trustee shall be recorded as to each Non-MERS Mortgage Loan unless
instructions to the contrary are delivered to the Servicer, in writing, by the
Trustee. Subject to the preceding sentence, as soon as practicable after the
Closing Date (but in no event more than 90 days thereafter except to the extent
delays are caused by the applicable recording office), the Servicer, at the
expense of the Seller, shall cause to be properly recorded in each public
recording office where such Non-MERS Eligible Mortgage Loans are recorded each
Assignment of Mortgage.
(c) Additionally, the Servicer shall prepare and execute, at the
direction of the Trustee, any note endorsements relating to any of the Non-MERS
Mortgage Loans.
(d) All rights arising out of the Serviced Mortgage Loans shall be
vested in the Trustee, subject to the Servicer's right to service and administer
the Serviced Mortgage Loans hereunder in accordance with the terms of this
Agreement. All funds received on or in connection with a Serviced Mortgage Loan,
other than the General Servicing Fee and other compensation to which the
Servicer is entitled as set forth herein, including but not limited to in
Section 5.01 below, shall be received and held by the Servicer in trust for the
benefit of the Trustee pursuant to the terms of this Agreement.
(e) Any out-of-pocket costs incurred by the Servicer pursuant to
this Section 2.02 and Section 3.01(a), including (a) a management fee of $0.25
per Serviced Mortgage Loan for tracking, maintaining and managing MERS recording
of the Serviced Mortgage Loans and (ii) any recording or other fees in
connection with the Servicer's obtaining the necessary powers of attorney (and
which are specified herein to be an expense of the Seller), shall be reimbursed
to the Servicer by the Seller within five (5) Business Days of receipt by the
Seller of an invoice for reimbursement. The Trust shall not reimburse Seller for
any such reimbursement to the Servicer.
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ARTICLE III.
SERVICING OF THE SERVICED MORTGAGE LOANS
Section 3.01 Servicer to Service.
The Servicer, as an independent contractor, shall service and
administer the Serviced Mortgage Loans from and after the Closing Date and shall
have full power and authority, acting alone, to do any and all things in
connection with such servicing and administration which the Servicer may deem
necessary or desirable, consistent with the terms of this Agreement and with
Accepted Servicing Practices.
The Seller and the Servicer additionally agree as follows:
(a) The Servicer shall (A) record or cause to be recorded the
Mortgage or the Assignment of Mortgage, as applicable, with respect to all MERS
Eligible Mortgage Loans, in the name of MERS, or shall ascertain that such have
previously been so recorded; (B) prepare or cause to be prepared all Assignments
of Mortgage with respect to all Non-MERS Eligible Mortgage Loans; (C) prepare
for recording or cause to be recorded, subject to Section 2.02(b) hereof, all
Assignments of Mortgage with respect to Non-MERS Mortgage Loans in the name of
the Trustee; (D) pay the recording costs pursuant to Section 2.02 hereof; and/or
(E) track such Mortgages and Assignments of Mortgage to ensure they have been
recorded. The Servicer shall be entitled to be paid by the Seller, on behalf of
the Depositor, its out-of-pocket costs for the preparation and recordation of
the Mortgages and Assignments of Mortgage. After the expenses of such recording
costs pursuant to Section 2.02 hereof shall have been paid by the Servicer, the
Servicer shall submit to the Seller a reasonably detailed invoice for
reimbursement of recording costs it incurred hereunder.
(b) If applicable, the Servicer shall, in accordance with the
relevant provisions of the Xxxxxxxx-Xxxxxxxx National Affordable Housing Act of
1990, as the same may be amended from time to time, and the regulations provided
in accordance with the Real Estate Settlement Procedures Act, provide notice to
the Mortgagor of each Mortgage of the transfer of the servicing thereto to the
Servicer.
(c) The Servicer shall be responsible for the preparation of and
costs associated with notifications to Mortgagors of the assumption of servicing
by the Servicer.
Consistent with the terms of this Agreement, the Servicer may waive any
late payment charge, assumption fee or other fee that may be collected in the
ordinary course of servicing the Serviced Mortgage Loans. The Servicer shall not
make any future advances to any Mortgagor under any Serviced Mortgage Loan, and
(unless the Mortgagor is in default with respect to the Serviced Mortgage Loan
or such default is, in the judgment of the Servicer, reasonably foreseeable) the
Servicer shall not permit any modification of any material term of any Serviced
Mortgage Loan, including any modification that would change the Mortgage
Interest Rate, defer or forgive the payment of principal or interest, reduce or
increase the outstanding principal balance (except for actual payments of
principal) or change the final maturity date on such Serviced Mortgage Loan. In
the event of any such modification which permits the deferral of interest or
principal payments on any Serviced Mortgage Loan, the Servicer shall, on the
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Business Day immediately preceding the Remittance Date in any month in which any
such principal or interest payment has been deferred, make a Monthly Advance in
accordance with Section 4.03, in an amount equal to the difference between (a)
such month's principal and one month's interest at the Mortgage Loan Remittance
Rate on the unpaid principal balance of such Serviced Mortgage Loan and (b) the
amount paid by the Mortgagor. The Servicer shall be entitled to reimbursement
for such advances to the same extent as for all other advances made pursuant to
Section 4.03. Without limiting the generality of the foregoing, the Servicer
shall continue, and is hereby authorized and empowered, to execute and deliver
on behalf of itself and the Trustee, all instruments of satisfaction or
cancellation, or of partial or full release, discharge and all other comparable
instruments, with respect to the Serviced Mortgage Loans and with respect to the
Mortgaged Properties. Upon the request of the Servicer, the Trustee shall
execute and deliver to the Servicer within the later of fifteen days from the
Closing Date or within fifteen days of such Servicer request any powers of
attorney (one for each county in which any of the Mortgaged Properties are
located) and other documents, furnished to it by the Servicer and reasonably
satisfactory to the Trustee, necessary or appropriate to enable the Servicer to
carry out its servicing and administrative duties under this Agreement.
Section 3.02 Collection of Serviced Mortgage Loan Payments.
Continuously from the Closing Date until the date each Serviced
Mortgage Loan ceases to be subject to this Agreement, the Servicer shall proceed
diligently to collect all payments due under each of the Serviced Mortgage Loans
when the same shall become due and payable and shall take special care in
ascertaining and estimating Escrow Payments and all other charges that will
become due and payable with respect to the Serviced Mortgage Loans and each
related Mortgaged Property, to the end that the installments payable by the
Mortgagors will be sufficient to pay such charges as and when they become due
and payable.
Section 3.03 Establishment of and Deposits to Custodial Account.
The Servicer shall segregate and hold all funds collected and received
pursuant to the Serviced Mortgage Loans separate and apart from any of its own
funds and general assets and shall establish and maintain one or more Custodial
Accounts, in the form of time deposit or demand accounts, titled "in trust for
Xxxxx Fargo Bank Minnesota, National Association, as trustee for ARC 2001-BC4
Trust." The Custodial Account shall be established with a Qualified Depository.
Any funds deposited in the Custodial Account may be invested in Eligible
Investments subject to the provisions of Section 3.11 hereof. Funds deposited in
the Custodial Account may be drawn on by the Servicer in accordance with Section
3.04 hereof. The creation of any Custodial Account shall be evidenced by a
letter agreement in the form of Exhibit B. A copy of such certification or
letter agreement shall be furnished to the Trustee and, upon request, to any
subsequent owner of the Serviced Mortgage Loans.
The Servicer shall deposit in the Custodial Account on a daily basis,
and retain therein, the following collections received by the Servicer and
payments made by the Servicer after the Closing Date:
(i) all payments on account of principal on the
Serviced Mortgage Loans, including all Principal Prepayments;
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(ii) all payments on account of interest on the Serviced
Mortgage Loans (including Prepayment Penalty Amounts or amounts paid by the
Servicer to the Trust Fund in lieu thereof under Section 3.01) adjusted to the
Mortgage Loan Remittance Rate and the Seller Remittance Amount;
(iii) all Liquidation Proceeds;
(iv) all Insurance Proceeds (other than any amounts
immediately applied to the restoration or repair of the Mortgaged Property or
immediately released to the Mortgagor);
(v) all Condemnation Proceeds that are not applied to
the restoration or repair of the Mortgaged Property or released to the
Mortgagor;
(vi) any Prepayment Interest Shortfall Amount required
to be paid by the Servicer;
(vii) all Monthly Advances made by the Servicer or an
Advancing Person pursuant to Section 4.03;
(viii) any amounts required to be deposited by the
Servicer in connection with the deductible clause in any blanket hazard
insurance policy;
(ix) any amounts received with respect to or related to
any REO Property or REO Disposition Proceeds;
(x) any amounts required to be deposited pursuant to
Section 3.11 in connection with any losses realized on Eligible Investments with
respect to funds held in this Custodial Agreement;
(xi) any amounts required to be deposited by the
Servicer pursuant to Section 3.16(a) in connection with any unpaid claims that
result from a breach by the Servicer or any subservicer of its obligations
hereunder or under the MGIC PMI Insurance Policy;
(xii) any amounts received by it under any PMI Policy;
and
(xiii) any other amount required hereunder to be deposited
by the Servicer in the Custodial Account.
The foregoing requirements for deposit into the Custodial Account shall
be exclusive, it being understood and agreed that, without limiting the
generality of the foregoing payments in the nature of (i) late payment charges
and insufficient fund charges, (ii) assumption fees, (iii) other Ancillary
Income and (iv) the Option One Servicing Fee need not be deposited by the
Servicer into the Custodial Account.
Any interest paid on funds deposited in the Custodial Account by the
depository institution shall accrue to the benefit of the Servicer as additional
servicing compensation and the Servicer shall be entitled to retain and withdraw
such interest from the Custodial Account pursuant to Section 3.04. Additionally,
17
any other benefit derived from the Custodial Account associated with the
receipt, disbursement and accumulation of principal, interest, taxes, hazard
insurance, mortgage insurance, etc. shall accrue for the benefit of the
Servicer.
Section 3.04 Permitted Withdrawals From Custodial Account.
The Servicer shall, from time to time, withdraw funds from the
Custodial Account for the following purposes:
(i) to pay any outstanding premiums under the MGIC PMI
Insurance Policy and to make payments to the Trustee in the amounts and in the
manner provided for in Section 4.01;
(ii) to pay the Seller Remittance Amount to the Seller;
(iii) in the event the Servicer has elected not to retain
the Option One Servicing Fee out of any Mortgagor payments on account of
interest or other recovery of interest with respect to a particular Serviced
Mortgage Loan (including late collections of interest on such Serviced Mortgage
Loan, or interest portions of Insurance Proceeds, Liquidation Proceeds or
Condemnation Proceeds) prior to the deposit of such Mortgagor payment or
recovery in the Custodial Account, to pay to itself the related Option One
Servicing Fee from all such Mortgagor payments on account of interest or other
such recovery for interest with respect to that Serviced Mortgage Loan;
(iv) to pay itself investment earnings on funds
deposited in the Custodial Account;
(v) to clear and terminate the Custodial Account upon
the termination of this Agreement;
(vi) to transfer funds to another Qualified Depository
in accordance with Section 3.11 hereof;
(vii) to invest funds in certain Eligible Investments in
accordance with Section 3.11 hereof;
(viii) to reimburse itself to the extent of funds held in
the Custodial Account for Monthly Advances of the Servicer's funds made pursuant
to Section 4.03. The Servicer's right to reimburse itself pursuant to this
subclause (viii) with respect to any Serviced Mortgage Loan shall be limited to
amounts received on or in respect of the related Serviced Mortgage Loan which
represent late recoveries of payments of principal or interest with respect to
which a Monthly Advance was made, it being understood that in the case of any
such reimbursement the Servicer's right thereto shall be prior to the rights of
the Trust Fund; provided, however, that following the final liquidation of a
Serviced Mortgage Loan, the Servicer may reimburse itself for previously
unreimbused Monthly Advances in excess of Liquidation Proceeds or Insurance
Proceeds with respect to such Serviced Mortgage Loan from any funds in the
Custodial Account, it being understood, in the case of any such reimbursement,
that the Servicer's right thereto shall be prior to the rights of the Trust
Fund. The Servicer may recover at any time from amounts on deposit in the
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Custodial Account the amount of any Monthly Advances that the Servicer deems
nonrecoverable or that remain unreimbursed to the Servicer from related
Liquidation Proceeds after the final liquidation of the Serviced Mortgage Loan.
In addition, the Servicer may, at any time, withdraw from the Custodial Account
funds that were not included in the Total Available Amount (as defined in the
Trust Agreement) for the preceding Distribution Date to reimburse itself for
Monthly Advances previously made by the Servicer, to the extent permitted by the
Guarantor; and
(ix) to reimburse itself for unreimbursed Servicing
Advances, and for any unpaid Servicing Fees, the Servicer's right to reimburse
itself pursuant to this subclause (ix) with respect to any Serviced Mortgage
Loan being limited to related Liquidation Proceeds, Condemnation Proceeds,
Insurance Proceeds, REO Disposition Proceeds and other amounts received in
respect of the related REO Property, and such other amounts as may be collected
by the Servicer from the Mortgagor or otherwise relating to the Serviced
Mortgage Loan, it being understood that, in the case of any such reimbursement,
the Servicer's right thereto shall be prior to the rights of the Trust Fund;
(x) to reimburse the Servicer for expenses incurred by,
and reimbursable to, the Servicer pursuant to Section 6.03 up to amount equal to
$500,000 in any calendar year but only to extent such amounts are determined to
be reimbursable by the Trust Fund pursuant to Section 6.03; and
(xi) to reimburse itself for expenses incurred or
reimbursable to the Servicer pursuant to Section 3.12 to the extent not
previously reimbursed under clause (ix) of this Section 3.04;
(xii) to withdraw funds necessary for the operation,
management and maintenance of any REO related property to the extent not
previously reimbursed under clause (ix) of this Section 3.04; and
(xiii) to withdraw any funds deposited to the Custodial
Account in error.
Notwithstanding the foregoing clauses (viii) and (ix), no Monthly
Advances or Servicing Advances shall be required to be made by the Servicer if
such Monthly Advance or Servicing Advance could, if made, be, in the Servicer's
reasonable judgment, nonrecoverable. The determination by the Servicer that it
has made a nonrecoverable Monthly Advance or Servicing Advance, or that any
proposed Monthly Advance or Servicing Advance would be a nonrecoverable advance,
shall be evidenced by an Officer's Certificate of the Servicer delivered to the
Depositor, the Guarantor and the Trustee.
Section 3.05 Establishment of and Deposits to Escrow Account.
The Servicer shall segregate and hold all funds collected and received
pursuant to a Serviced Mortgage Loan constituting Escrow Payments separate and
apart from any of its own funds and general assets and shall establish and
maintain one or more Escrow Accounts, in the form of time deposit or demand
accounts, titled "in trust for Xxxxx Fargo Bank Minnesota, National Association,
as Trustee for ARC 2001-BC4 Trust." The Escrow Accounts shall be established
with a Qualified Depository in a manner that shall provide maximum available
19
insurance thereunder. Funds deposited in the Escrow Account may be drawn on by
the Servicer in accordance with Section 3.06. The creation of any Escrow Account
shall be evidenced by a letter agreement in the form of Exhibit C. A copy of
such certification or letter agreement shall be furnished to the Trustee and,
upon request, to any subsequent owner of the Serviced Mortgage Loans.
The Servicer shall deposit in the Escrow Account or Accounts on a daily
basis, and retain therein:
(i) all Escrow Payments collected on account of the
Serviced Mortgage Loans, for the purpose of effecting timely payment of any such
items as required under the terms of this Agreement; and
(ii) all amounts representing Insurance Proceeds or
Condemnation Proceeds that are to be applied to the restoration or repair of any
Mortgaged Property.
The Servicer shall make withdrawals from the Escrow Account only to
effect such payments as are required under this Agreement, as set forth in
Section 3.06. The Servicer shall retain any interest paid on funds deposited in
the Escrow Account by the depository institution, other than interest on
escrowed funds required by law to be paid to the Mortgagor. Additionally, any
other benefit derived from the Escrow Account associated with the receipt,
disbursement and accumulation of principal, interest, taxes, hazard insurance,
mortgage insurance, etc. shall accrue to the Servicer. To the extent required by
law, the Servicer shall pay interest on escrowed funds to the Mortgagor
notwithstanding that the Escrow Account may be non-interest bearing or that
interest paid thereon is insufficient for such purposes.
Section 3.06 Permitted Withdrawals From Escrow Account.
Withdrawals from the Escrow Account or Accounts may be made by the
Servicer only:
(i) to effect payments of ground rents, taxes,
assessments, water rates, sewer rents, mortgage insurance premiums, condominium
charges, fire and hazard insurance premiums or other items constituting Escrow
Payments for the related Mortgage;
(ii) to refund to any Mortgagor any funds found to be in
excess of the amounts required under the terms of the related Serviced Mortgage
Loan;
(iii) as permitted by applicable state law, for transfer
to the Custodial Account and application to reduce the principal balance of the
Serviced Mortgage Loan in accordance with the terms of the related Mortgage and
Mortgage Note;
(iv) for application to restore or repair the Mortgaged
Property in accordance with the FHLMC Guide;
(v) to pay to the Servicer, or any Mortgagor to the
extent required by law, any interest paid on the funds deposited in the Escrow
Account; and
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(vi) to reimburse itself for any Servicing Advances made
with respect to Escrow Payments for a Serviced Mortgage Loan or the related
Mortgaged Properties, but only from amounts received on the related Serviced
Mortgage Loan which represent late collections of Escrow Payments thereunder;
(vii) to withdraw any funds deposited into the Escrow
Account in error; and
(viii) to clear and terminate the Escrow Account on the
termination of this Agreement.
The Servicer will be responsible for the administration of the Escrow
Accounts and will be obligated to make Servicing Advances to the Escrow Account
in respect of its obligations under this Section 3.06, reimbursable from the
Escrow Accounts or Custodial Account to the extent not collected from the
related Mortgagor, anything to the contrary notwithstanding, when and as
necessary to avoid the lapse of insurance coverage on the Mortgaged Property, or
which the Servicer knows, or in the exercise of the required standard of care of
the Servicer hereunder should know, is necessary to avoid the loss of the
Mortgaged Property due to a tax sale or the foreclosure as a result of a tax
lien. If any such payment has not been made and the Servicer receives notice of
a tax lien with respect to the Mortgage being imposed, the Servicer will, within
ten (10) Business Days of such notice, advance or cause to be advanced funds
necessary to discharge such lien on the Mortgaged Property.
Section 3.07 Restoration of Mortgaged Property.
The Servicer need not obtain the approval of the Trustee prior to
releasing any Insurance Proceeds or Condemnation Proceeds to the Mortgagor to be
applied to the restoration or repair of the Mortgaged Property if such release
is in accordance with Accepted Servicing Practices. At a minimum, with respect
to claims of $5,000 or more, the Servicer shall comply with the following
conditions in connection with any such release of Insurance Proceeds or
Condemnation Proceeds:
(i) the Servicer shall receive satisfactory independent
verification of completion of repairs and issuance of any required approvals
with respect thereto;
(ii) the Servicer shall take all steps necessary to
preserve the priority of the lien of the Mortgage, including, but not limited to
requiring waivers with respect to mechanics' and materialmen's liens.
(iii) the Servicer shall verify that the Serviced
Mortgage Loan is not 60 or more days delinquent; and
(iv) pending repairs or restoration, the Servicer shall
place the Insurance Proceeds or Condemnation Proceeds in the Escrow Account.
With respect to claims of less than $5,000, the Servicer shall
comply with the following conditions in connection with any such release of
Insurance Proceeds or Condemnation Proceeds:
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(v) the related Mortgagor shall provide an affidavit
verifying the completion of repairs and issuance of any required approvals with
respect thereto;
(vi) the Servicer shall verify the total amount of the
claim with the applicable insurance company; and
(vii) pending repairs or restoration, the Servicer shall
place the Insurance Proceeds or Condemnation Proceeds in the Escrow Account. If
the Trustee is named as an additional loss payee, the Servicer is hereby
empowered to endorse any loss draft issued in respect of such a claim in the
name of the Trustee.
Section 3.08 Fidelity Bond and Errors and Omissions Insurance.
The Servicer shall keep in force during the term of this Agreement a
Fidelity Bond and Errors and Omissions Insurance the minimum coverage of which
shall be at least equal to the coverage required by FHLMC in the FHLMC Guide
(unless a waiver of such requirement has been obtained by the Servicer from
FHLMC). Such Fidelity Bond and Errors and Omissions Insurance shall be
maintained with recognized insurers and shall be in such form and amount as
would permit the Servicer to be qualified as a FHLMC servicer. The Servicer
shall be deemed to have complied with this provision if an affiliate of the
Servicer has such errors and omissions and fidelity bond coverage and, by the
terms of such insurance policy or fidelity bond, the coverage afforded
thereunder extends to the Servicer. The Servicer shall furnish to the Trustee a
copy of each such bond and insurance policy if the Trustee so requests.
Section 3.09 Notification of Adjustments.
With respect to each Adjustable Rate Mortgage Loan, the Servicer shall
adjust the Mortgage Interest Rate on the related interest rate adjustment date
and shall adjust the Monthly Payment on the related mortgage payment adjustment
date, if applicable, in compliance with the requirements of applicable law and
the related Mortgage and Mortgage Note. The Servicer shall execute and deliver
any and all necessary notices required under applicable law and the terms of the
related Mortgage Note and Mortgage regarding the Mortgage Interest Rate and
Monthly Payment adjustments. The Servicer shall promptly, upon written request
therefor, deliver to the Trustee such notifications and any additional
applicable data regarding such adjustments and the methods used to calculate and
implement such adjustments. Upon the discovery by the Servicer or the receipt of
notice from the Trustee that the Servicer has failed to adjust a Mortgage
Interest Rate or Monthly Payment in accordance with the terms of the related
Mortgage Note, the Servicer shall immediately deposit in the Custodial Account
from its own funds the amount of any interest loss or deferral caused thereby.
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Section 3.10 Payment of Taxes, Insurance and Other Charges. With
respect to each Serviced Mortgage Loan, the Servicer shall maintain accurate
records reflecting the status of ground rents, taxes, assessments, water rates
and other charges which are or may become a lien upon the Mortgaged Property and
the status of fire and hazard insurance coverage and shall obtain, from time to
time, all bills for the payment of such charges (including renewal premiums) and
shall effect payment thereof prior to the applicable penalty or termination date
and at a time appropriate for securing maximum discounts allowable, employing
for such purpose deposits of the Mortgagor in the Escrow Account which shall
have been estimated and accumulated by the Servicer in amounts sufficient for
such purposes, as allowed under the terms of the Mortgage or applicable
regulations. The Servicer assumes full responsibility for the payment of all
such bills and shall effect payments of all such bills irrespective of the
Mortgagor's faithful performance in the payment of same or the making of the
Escrow Payments and shall make advances from its own funds to effect such
payments. The Servicer shall employ Accepted Servicing Practices to ensure that
the Mortgaged Property is not subjected to a tax lien as a result of nonpayment
and that such Mortgaged Property is not left uninsured.
Section 3.11 Protection of Accounts.
The Servicer may transfer any Custodial Account or any Escrow Account
to a different Qualified Depository from time to time. The Servicer shall give
notice to the Trustee and the Guarantor of the location of the Custodial Account
maintained by it when established and prior to any change thereof.
The Servicer shall bear any expenses, losses or damages sustained by
the Trustee if the Custodial Account and/or the Escrow Account are not demand
deposit accounts.
Amounts on deposit in the Custodial Account and the Escrow Account may
at the option of the Servicer be invested in Eligible Investments; provided that
in the event that amounts on deposit in the Custodial Account or the Escrow
Account exceed the amount fully insured by the FDIC (the "Insured Amount"), the
Servicer shall be obligated to invest the excess amount over the Insured Amount
in Eligible Investments on the same Business Day as such excess amount becomes
present in the Custodial Account or the Escrow Account. Any such Eligible
Investment shall mature no later than the Business Day immediately preceding the
related Remittance Date, provided, however, that if such Eligible Investment is
an obligation of a Qualified Depository (other than the Servicer) that maintains
the Custodial Account or the Escrow Account, then such Eligible Investment may
mature on the related Remittance Date. Any such Eligible Investment shall be
made in the name of the Servicer in trust for the benefit of the Trustee. All
income on or gain realized from any such Eligible Investment shall be for the
benefit of the Servicer and may be withdrawn at any time by the Servicer. Any
losses incurred in respect of any such investment shall be deposited in the
Custodial Account or the Escrow Account, by the Servicer out of its own funds
immediately as realized.
Section 3.12 Title, Management and Disposition of REO Property.
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 taken in the name of the Trustee (or MERS, as applicable), or in the
event the Trustee is not authorized or permitted to hold title to real property
23
in the state where the REO Property is located, or would be adversely affected
under the "doing business" or tax laws of such state by so holding title, the
deed or certificate of sale shall be taken in the name of such Person or Persons
as shall be consistent with an Opinion of Counsel obtained by the Servicer from
any attorney duly licensed to practice law in the state where the REO Property
is located. The Person or Persons holding such title other than the Trustee
shall acknowledge in writing that such title is being held as nominee for the
Trustee.
The Servicer shall manage, conserve, protect and operate each REO
Property for the Trustee solely for the purpose of its prompt disposition and
sale. The Servicer, either itself or through an agent selected by the Servicer,
shall manage, conserve, protect and operate the REO Property in the same manner
that it manages, conserves, protects and operates other foreclosed property for
its own account, and in the same manner that similar property in the same
locality as the REO Property is managed. The Servicer shall attempt to sell the
same (and may temporarily rent the same for a period not greater than one year,
except as otherwise provided below) on such terms and conditions as the Servicer
deems to be in the best interest of the Trustee.
Notwithstanding anything to the contrary contained in this Section
3.12, in connection with a foreclosure or acceptance of a deed in lieu of
foreclosure, in the event the Servicer has reasonable cause to believe that a
Mortgaged Property is contaminated by hazardous or toxic substances or wastes,
or if the Trustee otherwise requests, an environmental inspection or review of
such Mortgaged Property to be conducted by a qualified inspector shall be
arranged by the Servicer. Upon completion of the inspection, the Servicer shall
provide the Trustee and the Guarantor with a written report of such
environmental inspection. In the event that the environmental inspection report
indicates that the Mortgaged Property is contaminated by hazardous or toxic
substances or wastes, the Servicer shall not proceed with foreclosure or
acceptance of a deed in lieu of foreclosure. In the event that the environmental
inspection report is inconclusive as to the whether or not the Mortgaged
Property is contaminated by hazardous or toxic substances or wastes, the
Servicer shall not, without the prior approval of the Trustee and the Guarantor,
proceed with foreclosure or acceptance of a deed in lieu of foreclosure. In such
instance, the Trustee and the Guarantor shall be deemed to have approved such
foreclosure or acceptance of a deed in lieu of foreclosure unless either of them
notifies the Servicer in writing, within five (5) days after its receipt of
written notice of the proposed foreclosure or deed in lieu of foreclosure from
the Servicer, that it disapproves of the related foreclosure or acceptance of a
deed in lieu of foreclosure. The Servicer shall be reimbursed for all Servicing
Advances made pursuant to this paragraph with respect to the related Mortgaged
Property from the Custodial Account.
In the event that the Trust Fund acquires any REO Property in
connection with a default or imminent default on a Serviced Mortgage Loan, the
Servicer shall dispose of such REO Property not later than the end of the third
taxable year after the year of its acquisition by the Trust Fund unless the
Servicer has applied for and received a grant of extension from the Internal
Revenue Service to the effect that, under the REMIC Provisions and any relevant
proposed legislation and under applicable state law, the applicable Trust REMIC
may hold REO Property for a longer period without adversely affecting the REMIC
status of such REMIC or causing the imposition of a federal or state tax upon
such REMIC. If the Servicer has received such an extension, then the Servicer
shall continue to attempt to sell the REO Property for its fair market value for
such period longer than three years as such extension permits (the "Extended
Period"). If the Servicer has not received such an extension and the Servicer is
24
unable to sell the REO Property within the period ending 3 months before the end
of such third taxable year after its acquisition by the Trust Fund or if the
Servicer has received such an extension, and the Servicer is unable to sell the
REO Property within the period ending three months before the close of the
Extended Period, the Servicer shall, before the end of the three year period or
the Extended Period, as applicable, (i) purchase such REO Property at a price
equal to the REO Property's fair market value or (ii) auction the REO Property
to the highest bidder (which may be the Servicer) in an auction reasonably
designed to produce a fair price prior to the expiration of the three-year
period or the Extended Period, as the case may be. The Trustee shall sign any
document or take any other action reasonably requested by the Servicer which
would enable the Servicer, on behalf of the Trust Fund, to request such grant of
extension.
Notwithstanding any other provisions of this Agreement, no REO Property
acquired by the Trust Fund shall be rented (or allowed to continue to be rented)
or otherwise used by or on behalf of the Trust Fund in such a manner or pursuant
to any terms that would: (i) cause such REO Property to fail to qualify as
"foreclosure property" within the meaning of Section 860G(a)(8) of the Code; or
(ii) subject any Trust REMIC to the imposition of any federal income taxes on
the income earned from such REO Property, including any taxes imposed by reason
of Sections 860F or 860G(c) of the Code, unless the Servicer has agreed to
indemnify and hold harmless the Trust Fund with respect to the imposition of any
such taxes.
The Servicer shall also maintain on each REO Property hazard insurance
with extended coverage in an amount which is at least equal to the lesser of (i)
the maximum insurable value of the improvements which are a part of such
property and (ii) the outstanding Principal Balance of the Serviced Mortgage
Loan at the time it becomes REO Property, to the extent required and available
under the Flood Disaster Protection Act of 1973, as amended, flood insurance in
the amount required above.
The disposition of REO Property shall be carried out by the Servicer at
such price, and upon such terms and conditions, as the Servicer deems to be in
the best interests of the Trust Fund and the Guarantor. The proceeds of sale of
the REO Property shall be promptly deposited in the Custodial Account. After the
expenses of such disposition shall have been paid, the Servicer shall reimburse
itself pursuant to Section 3.04 hereof for any Servicing Advances it incurred
with respect to such REO Property.
The Servicer shall withdraw from the Custodial Account funds necessary
for the proper operation, management and maintenance of the REO Property,
including the cost of maintaining any hazard insurance pursuant to the FHLMC
Guides. The Servicer shall make monthly distributions on each Remittance Date to
the Trustee of the net cash flow from the REO Property (which shall equal the
revenues from such REO Property net of the expenses described in this Section
3.12 and of any reserves reasonably required from time to time to be maintained
to satisfy anticipated liabilities for such expenses).
Section 3.13 Real Estate Owned Reports.
Together with the statement furnished pursuant to Section 4.02, the
Servicer shall furnish by electronic transmission to the Trustee and the
Guarantor on or before the Remittance Date each month a statement with respect
25
to any REO Property covering the operation of such REO Property for the previous
month and the Servicer's efforts in connection with the sale of such REO
Property and any rental of such REO Property incidental to the sale thereof for
the previous month. That statement shall be accompanied by such other
information as the Trustee shall reasonably request.
Section 3.14 MERS.
(a) The Servicer shall take such actions as are necessary to cause
the Trustee to be clearly identified as the owner of each MERS Mortgage Loan on
the records of MERS for purposes of the system of recording transfers of
beneficial ownership of mortgages maintained by MERS.
(b) The Servicer shall maintain in good standing its membership in
MERS. In addition, the Servicer shall comply with all rules, policies and
procedures of MERS, including the Rules of Membership, as amended, and the MERS
Procedures Manual, as amended.
(c) With respect to all MERS Mortgage Loans serviced hereunder, the
Servicer shall promptly notify MERS as to any transfer of beneficial ownership
or release of any security interest in such Serviced Mortgage Loans.
(d) With respect to all MERS Mortgage Loans serviced hereunder, the
Servicer shall notify MERS as to any transfer of servicing pursuant to Section
3.15 or Section 9.01 within 10 Business Days of such transfer of servicing. The
Servicer shall cooperate with the Trustee and any successor Servicer to the
extent necessary to ensure that such transfer of servicing is appropriately
reflected on the MERS system.
Section 3.15 Waiver of Prepayment Penalties.
Except as provided below, the Servicer or any designee of the Servicer
shall not waive any prepayment charge with respect to any Serviced Mortgage
Loan. If the Servicer or its designee fails to collect a prepayment charge at
the time of the related prepayment of any Serviced Mortgage Loan subject to such
prepayment charge, the Servicer shall pay to the Trust Fund (by deposit to the
Custodial Account) an amount equal to the amount of the prepayment charge not
collected. Notwithstanding the above, the Servicer or its designee may waive a
prepayment charge without paying to the Trust Fund the amount of such prepayment
charge only if the related prepayment is not the result of a refinancing by the
Servicer or its designee and such waiver (i) relates to a defaulted Serviced
Mortgage Loan or a reasonably foreseeable default and such waiver, in the
reasonable judgment of the Servicer, would maximize recovery of total proceeds
from the Serviced Mortgage Loan, taking into account the amount of such
prepayment charge and the related Serviced Mortgage Loan, or (ii) relates to a
prepayment charge the collection of which, in the reasonable judgment of the
Servicer, would be a violation of applicable laws.
Section 3.16 Servicing and Administration of the MGIC PMI Insurance
Policy.
(a) The Servicer shall take all such actions on behalf of the
Trustee as are necessary to service, maintain and administer the MGIC PMI
Insurance Policy and to perform and enforce the rights under such PMI Policy for
26
its own account. Except as expressly set forth herein, the Servicer shall have
full authority on behalf of the Trust to do anything it reasonably deems
appropriate or desirable in connection with the servicing, maintenance and
administration of the MGIC PMI Insurance Policy. The Servicer shall not take, or
permit any subservicer to modify or assume a Serviced Mortgage Loan covered by
the MGIC PMI Insurance Policy or take any other action with respect to such
Serviced Mortgage Loan which would result in non-coverage under the MGIC PMI
Insurance Policy of any loss which, but for the actions of the Servicer or
subservicer, would have been covered thereunder. If the PMI Insurer fails to pay
a claim under the MGIC PMI Insurance Policy as a result of breach by the
Servicer or a sub-servicer of its obligations hereunder or under the MGIC PMI
Insurance Policy, the Servicer shall be required to deposit in the Custodial
Account on or prior to the next succeeding Remittance Date an amount equal to
such unpaid claim from its own funds without any right to reimbursement from the
Trust Fund. To the extent coverage is available, the Servicer shall keep or
cause to be kept in full force and effect the MGIC PMI Insurance Policy for as
long as any Certificates are outstanding. The Servicer shall cooperate with MGIC
and shall use its best efforts to furnish all reasonable aid, evidence and
information in the possession of the Servicer to which the Servicer has access
with respect to any Serviced Mortgage Loan; provided, however, notwithstanding
anything to the contrary contained in the MGIC PMI Insurance Policy, the
Servicer shall not be required to submit any reports to MGIC until a reporting
date that is at least 15 days after the Servicer has received sufficient loan
level detail information from Xxxxxx Capital to appropriately code its servicing
system in accordance with MGIC requirements.
(b) The Servicer shall deposit into the Custodial Account pursuant
to Section 3.03(xi) hereof all Insurance Proceeds received from MGIC under the
terms of the MGIC PMI Insurance Policy. The Servicer shall pay to MGIC pursuant
to Section 3.04(i) hereof the monthly insurance premium due to MGIC in
accordance with the terms of such policy.
(c) Notwithstanding the provisions of (a) and (b) above, the
Servicer shall not take any action in regard to the MGIC PMI Insurance Policy
inconsistent with the interests of the Trustee or the Certificateholders or with
the rights and interests of the Trustee or the Certificateholders under this
Agreement. The Servicer shall provide notice to the Guarantor of any action
taken with regard to the MGIC PMI Insurance Policy not already noted in the
monthly remittance advice provided to the Trustee and the Guarantor pursuant to
Section 4.02.
(d) The Trustee shall furnish the Servicer with any powers of
attorney and other documents (within fifteen (15) days upon request from the
Servicer) in form as provided to it necessary or appropriate to enable the
Servicer to service and administer the MGIC PMI Insurance Policy; provided,
however, that the Trustee shall not be liable for the actions of the Servicer
under such powers of attorney.
Section 3.17 Maintenance of Hazard Insurance.
The Servicer shall cause to be maintained for each Serviced Mortgage
Loan hazard insurance such that all buildings upon the Mortgaged Property are
insured by a generally acceptable insurer against loss by fire, hazards of
extended coverage and such other hazards as are customary in the area where the
Mortgaged Property is located in an amount which is at least equal to the lesser
of (i) the current principal balance of such Serviced Mortgage Loan and (ii) the
27
amount necessary to fully compensate for any damage or loss to the improvements
that are a part of such property on a replacement cost basis, in each case in an
amount not less than the amount as is necessary to avoid the application of any
co-insurance clause contained in the related hazard insurance policy.
Any payments by the Servicer for hazard insurance, other than as set
forth in the last paragraph of this Section 3.17, shall be deemed Servicing
Advances, reimbursable in accordance with Section 3.04(ix), to the extent not
collected from the related Mortgagor. The Servicer will comply in the
performance of this Agreement with all reasonable rules and requirements of each
insurer under any such hazard policies. Any amounts to be collected by the
Servicer under any such policies (other than amounts to be applied to the
restoration or repair of the property or amounts to be released to the Mortgagor
subject to the terms and conditions of the related Mortgage and Mortgage Note)
shall be deposited in the Custodial Account, subject to withdrawal pursuant to
Section 3.04, if received in respect of a Serviced Mortgage Loan. Any cost
incurred by the Servicer in maintaining any such insurance shall not, for the
purpose of calculating distributions to Certificateholders, be added to the
unpaid principal balance of the related Serviced Mortgage Loan, notwithstanding
that the terms of such Serviced Mortgage Loan so permit. It is understood and
agreed that no earthquake or other additional insurance is to be required of any
Mortgagor 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
Mortgaged Property or REO Property is at any time in an area identified in the
Federal Register by the Federal Emergency Management Agency as having special
flood hazards and flood insurance has been made available, the Servicer will
cause to be maintained a flood insurance policy in respect thereof. Such flood
insurance shall be in an amount equal to the lesser of (i) the unpaid principal
balance of the related Serviced Mortgage Loan 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).
In the event that the Servicer shall obtain and maintain a blanket
policy with an insurer having a General Policy Rating of B:III or better in
Best's Key Rating Guide (or such other rating that is comparable to such rating)
insuring against hazard losses on all of the Serviced Mortgage Loans, it shall
conclusively be deemed to have satisfied its obligations as set forth in the
first two sentences of this Section 3.17, it being understood and agreed that
such policy may contain a deductible clause, in which case the Servicer shall,
in the event that there shall not have been maintained on the related Mortgaged
Property or REO Property a policy complying with the first two sentences of this
Section 3.17, and there shall have been one or more losses which would have been
covered by such policy, deposit to the Custodial Account from its own funds
without right of reimbursement the amount not otherwise payable under the
blanket policy because of such deductible clause. In connection with its
activities as administrator and servicer of the Serviced Mortgage Loans, the
Servicer agrees to prepare and present, on behalf of itself, the Trustee and the
Certificateholders, claims under any such blanket policy in a timely fashion in
accordance with the terms of such policy.
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Section 3.18 Realization Upon Defaulted Serviced Mortgage Loans.
(a) The Servicer shall, consistent with Accepted Servicing
Practices, foreclose upon or otherwise comparably convert the ownership of
properties securing such of the Serviced Mortgage Loans (including selling any
such Serviced Mortgage Loans other than converting the ownership of the related
properties) as come into and continue in default and as to which no satisfactory
arrangements can be made for collection of delinquent payments. The Servicer
shall be responsible for all costs and expenses incurred by it in any such
proceedings; provided, however, that such costs and expenses will be recoverable
as Servicing Advances by the Servicer as contemplated in Section 3.04. The
foregoing is subject to the provision that, in any case in which Mortgaged
Property shall have suffered damage from an uninsured cause, the Servicer shall
not be required to expend its own funds toward the restoration of such Mortgaged
Property unless in its determination such restoration will increase the proceeds
of liquidation of the related Serviced Mortgage Loan after reimbursement to
itself for such expenses.
(b) If the Servicer determines that it is in the best economic
interest of the Trust and the Certificateholders to sell a Distressed Mortgage
Loan rather than foreclosing, the Servicer may effect such a sale. The net
proceeds of such sale shall be Liquidation Proceeds.
(c) Proceeds received in connection with any Final Recovery
Determination, as well as any recovery resulting from a partial collection of
Insurance Proceeds, Liquidation Proceeds or Condemnation Proceeds, in respect of
any Serviced Mortgage Loan, will be applied in the following order of priority:
first, to unpaid General Servicing Fees; second, to reimburse the Servicer or
any sub-servicer for any related unreimbursed Servicing Advances and Monthly
Advances pursuant to Section 3.04; third, to accrued and unpaid interest on the
Serviced Mortgage Loan, to the date of the Final Recovery Determination, or to
the Due Date prior to the Distribution Date on which such amounts are to be
distributed if not in connection with a Final Recovery Determination; and
fourth, as a recovery of principal of the Serviced Mortgage Loan. The portion of
the recovery so allocated to any unpaid Option One Servicing Fee shall be
reimbursed to the Servicer or any Sub-Servicer pursuant to Section 3.04.
Section 3.19 Enforcement of Due-On-Sale Clauses; Assumption Agreement.
The Servicer will, to the extent it has knowledge of any conveyance or
prospective conveyance of any Mortgaged Property by any Mortgagor (whether by
absolute conveyance or contract of sale, and whether or not the Mortgagor
remains or is to remain liable under the Mortgage Note and/or the Mortgage),
exercise its rights to accelerate the maturity of such Serviced Mortgage Loan
under the "due-on-sale" clause, if any, applicable thereto; provided, however,
that the Servicer shall not be required to take such action if in its sole
business judgment the Servicer believes it is not in the best interests of the
Trust Fund and shall not exercise any such rights if prohibited by law from
doing so. If the Servicer reasonably believes it is unable under applicable law
to enforce such "due-on-sale" clause, or if any of the other conditions set
forth in the proviso to the preceding sentence apply, the Servicer will enter
into an assumption and modification agreement from or with the person to whom
such property has been conveyed or is proposed to be conveyed, pursuant to which
such person becomes liable under the Mortgage Note and, to the extent permitted
by applicable state law, the Mortgagor remains liable thereon. The Servicer is
also authorized to enter into a substitution of liability agreement with such
29
person, pursuant to which the original Mortgagor is released from liability and
such person is substituted as the Mortgagor and becomes liable under the
Mortgage Note, provided that no such substitution shall be effective unless such
person satisfies the underwriting criteria of the Servicer and has a credit risk
rating at least equal to that of the original Mortgagor. In connection with any
assumption or substitution, the Servicer shall apply such underwriting standards
and follow such practices and procedures as shall be normal and usual in its
general mortgage servicing activities and as it applies to other mortgage loans
owned solely by it. The Servicer shall not take or enter into any assumption and
modification agreement, however, unless (to the extent practicable in the
circumstances) it shall have received confirmation, in writing, of the continued
effectiveness of any applicable hazard insurance policy. Any fee collected by
the Servicer in respect of an assumption, modification or substitution of
liability agreement shall be retained by the Servicer as additional servicing
compensation. In connection with any such assumption, no material term of the
Mortgage Note (including but not limited to the related Mortgage Interest Rate
and the amount of the Monthly Payment) may be amended or modified, except as
otherwise required pursuant to the terms thereof. The Servicer shall notify the
Trustee that any such substitution, modification or assumption agreement has
been completed by forwarding to the Trustee or the Custodian the executed
original of such substitution, modification or assumption agreement, which
document shall be added to the related Mortgage File and shall, for all
purposes, be considered a part of such Mortgage File to the same extent as all
other documents and instruments constituting a part thereof.
Notwithstanding the foregoing paragraph or any other provision of this
Agreement, the Servicer shall not be deemed to be in default, breach or any
other violation of its obligations hereunder by reason of any assumption of a
Serviced Mortgage Loan by operation of law or by the terms of the Mortgage Note
or any assumption which the Servicer may be restricted by law from preventing,
for any reason whatever. For purposes of this Section 3.19, the term
"assumption" is deemed to also include a sale (of the Mortgaged Property)
subject to the Mortgage that is not accompanied by an assumption or substitution
of liability agreement.
ARTICLE IV.
PAYMENTS TO TRUSTEE
Section 4.01 Remittances.
On each Remittance Date, no later than 3:00 p.m. New York City time,
the Servicer shall remit on a scheduled/scheduled basis by wire transfer of
immediately available funds to the Trustee (a) all amounts deposited in the
Custodial Account as of the close of business on the last day of the related Due
Period (net of charges against or withdrawals from the Custodial Account
pursuant to Section 3.04), plus (b) all Monthly Advances, if any, which the
Servicer or other Advancing Person is obligated to make pursuant to Section
4.03, minus (c) any amounts attributable to Principal Prepayments, Liquidation
Proceeds, Insurance Proceeds, Condemnation Proceeds or REO Disposition Proceeds
received after the applicable Due Period, which amounts shall be remitted on the
following Remittance Date, together with any additional interest required to be
deposited in the Custodial Account in connection with such Principal Prepayment
in accordance with Section 3.03(vi), and minus (d) any amounts attributable to
Monthly Payments collected but due on a Due Date or Due Dates subsequent to the
first day of the month in which such Remittance Date occurs, which amounts shall
30
be remitted on the Remittance Date next succeeding the Due Date related to such
Monthly Payment.
With respect to any remittance received by the Trustee after the second
Business Day following the Business Day on which such payment was due, the
Servicer shall pay to the Trustee interest on any such late payment at an annual
rate equal to the Prime Rate, adjusted as of the date of each change, plus two
(2) percentage points, but in no event greater than the maximum amount permitted
by applicable law. Such interest shall be deposited in the Custodial Account by
the Servicer on the date such late payment is made and shall cover the period
commencing with the day following such Business Day and ending with the Business
Day on which such payment is made, both inclusive. Such interest shall be
remitted along with the distribution payable on the next succeeding Remittance
Date. The payment by the Servicer of any such interest shall not be deemed an
extension of time for payment or a waiver of any Event of Default by the
Trustee.
All remittances required to be made to the Trustee shall be made on a
scheduled/scheduled basis to the following wire account or to such other account
as may be specified by the Trustee from time to time:
Xxxxx Fargo Bank Minnesota,
National Association
Minneapolis, Minnesota
ABA# 000-00-000
Account Name: Corporate Trust Account Number 0000000000
For further credit to: Custodial Account No. [ _________ ]
Section 4.02 Statements to Trustee.
Not later than the 13th calendar day of June and the 10th calendar day
of each subsequent month (or if such calendar day is not a Business Day, the
immediately succeeding Business Day), the Servicer shall furnish to the Trustee
(a) a monthly remittance advice in the form of Exhibit A-2 attached hereto or
other format mutually acceptable to the Servicer, the Trustee, and the Guarantor
as to the accompanying remittance and the period ending on the Determination
Date and (b) all such information required pursuant to clause (a) above on a
magnetic tape or other similar media reasonably acceptable to the Trustee. Such
monthly remittance advice shall also be provided by the Servicer to the
Guarantor and Aurora Loan Services Inc. on behalf of the Seller.
Such monthly remittance advice shall also be accompanied with a
supplemental report provided to the Seller and Guarantor which includes on a
cumulative and aggregate basis (i) the amount of claims filed, (ii) the amount
of any claim payments made, (iii) the amount of claims denied or curtailed and
(iv) policies cancelled with respect to those Serviced Mortgage Loans covered by
the MGIC PMI Insurance Policy or any other provider of primary mortgage
insurance purchased by the Trust. The Trustee will convert such data into a
format acceptable to the Guarantor and provide monthly reports to the Guarantor
pursuant to the Trust Agreement; provided, however, notwithstanding anything to
the contrary contained in the MGIC PMI Insurance Policy, the Servicer shall not
be required to submit any supplemental reports including the foregoing data with
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respect to the MGIC PMI Insurance Policy until a reporting date that is at least
15 days after the Servicer has received sufficient loan level detail information
from the Depositor to appropriately code its servicing system in accordance with
MGIC requirements.
In addition, not more than 60 days after the end of each calendar year,
commencing December 31, 2001, the Servicer shall provide (as such information
becomes reasonably available to the Servicer) the Trustee such information
concerning the Serviced Mortgage Loans and annual remittances to the Trustee
therefrom as is necessary for each Certificateholder to prepare its federal
income tax return. Such obligation of the Servicer shall be deemed to have been
satisfied to the extent that substantially comparable information shall be
provided by the Servicer to the Trustee pursuant to any requirements of the Code
as from time to time are in force.
Beginning with calendar year 2002, the Servicer shall provide the
Trustee with such information concerning the Serviced Mortgage Loans as is
necessary for the Trustee to prepare the Trust Fund's federal income tax return
and for any investor in the Certificates to prepare any required tax return.
Section 4.03 Monthly Advances by Servicer.
On the Business Day immediately preceding each Remittance Date, the
Servicer shall deposit in the Custodial Account from its own funds or from
amounts held for future distribution, or both, an amount equal to all Monthly
Payments which were due on the Serviced Mortgage Loans during the applicable Due
Period and which were delinquent at the close of business on the immediately
preceding Determination Date. Any amounts held for future distribution and so
used shall be replaced by the Servicer by deposit in the Custodial Account on or
before any future Remittance Date if funds in the Custodial Account on such
Remittance Date shall be less than remittances to the Trustee required to be
made on such Remittance Date. The Servicer shall keep appropriate records of
such amounts and will provide such records to the Trustee and the Guarantor upon
request. The Guarantor, in its reasonable judgment, shall have the right to
require the Servicer to remit from its own funds to the Custodial Account an
amount equal to all Monthly Advances previously made out of funds held in the
Custodial Account and not previously reimbursed from collections on the Serviced
Mortgage Loans, and in such event, the Servicer shall thereafter remit all
Monthly Advances from its own funds. In no event shall the preceding sentence be
construed as limiting the Servicer's right to (i) pass through late collections
on the related Serviced Mortgage Loans in lieu of making Monthly Advances (ii)
reimburse itself for such Monthly Advances from late collections on the related
Serviced Mortgage Loans or (iii) utilize an Advancing Person (as defined below).
The Servicer shall make Monthly Advances through the Distribution Date
immediately preceding the distribution of all Liquidation Proceeds and other
payments or recoveries (including Insurance Proceeds and Condemnation Proceeds)
with respect to the related Serviced Mortgage Loans.
The Servicer may enter into a facility with any person which provides
that such person (an "Advancing Person") may fund Monthly Advances required
under this Section 4.03 and/or Servicing Advances, although no such facility
shall reduce or otherwise affect the Servicer's obligation to fund such Monthly
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Advances and/or Servicing Advances. Any Monthly Advances and/or Servicing
Advances made by an Advancing Person shall be reimbursed to the Advancing Person
in the same manner as reimbursements would be made to the Servicer under Section
3.04 if such Monthly Advances or Servicing Advance were funded by the Servicer.
Section 4.04 Compensating Interest.
The Servicer shall be required to deposit in the Custodial Account, and
retain therein with respect to each Principal Prepayment, the Prepayment
Interest Shortfall Amount, if any, for the related Due Period. Such deposit
shall be made from the Servicer's own funds, without reimbursement therefore, up
to an amount equal to the lesser of (i) the Prepayment Interest Shortfall Amount
or (ii) the General Servicing Fee. To the extent that the Prepayment Interest
Shortfall Amount exceeds the Option One Servicing Fee, the Seller agrees to
subordinate the Seller Remittance Amount to cover such shortfall in any
Compensating Interest Payment. The Servicer shall not be obligated to pay any
Prepayment Interest Shortfall Amount with respect to any Relief Act Reduction.
Section 4.05 Credit Reporting.
For each Serviced Mortgage Loan, in accordance with its current
servicing practices, the Servicer will accurately and fully report its
underlying borrower credit files to each of the following credit repositories or
their successors: Equifax Credit Information Services, Inc., Trans Union, LLC
and Experian Information Solution, Inc., on a monthly basis in a timely manner.
ARTICLE V.
GENERAL SERVICING PROCEDURES
Section 5.01 Servicing Compensation; Seller Remittance Amount.
As consideration for servicing the Serviced Mortgage Loans subject to
this Agreement, the Servicer shall retain (a) the Option One Servicing Fee for
each Serviced Mortgage Loan remaining subject to this Agreement during any month
and (b) Ancillary Income. The Option One Servicing Fee shall be payable monthly.
The obligation of the Trustee to pay the Option One Servicing Fee is
limited as provided in Section 3.04(iii). The aggregate of the Option One
Servicing Fees for any month with respect to the Serviced Mortgage Loans shall
be reduced by any Prepayment Interest Shortfall Amount with respect to such
month. In addition, the Seller Remittance Amount shall be used to pay the
Prepayment Interest Shortfall Amount to the extent not covered by the Option One
Servicing Fee. The Servicer shall be entitled to recover any unpaid Option One
Servicing Fee and the Seller shall be entitled to recover the Servicer
Remittance Amount, to the extent not remitted, out of Insurance Proceeds,
Condemnation Proceeds or Liquidation Proceeds to the extent permitted in Section
3.04 and out of amounts derived from the operation and sale of an REO Property
to the extent permitted by Section 3.12.
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Additional servicing compensation in the form of Ancillary Income shall
be retained by the Servicer only to the extent such fees or charges are received
by the Servicer. The Servicer shall also be entitled pursuant to Section 3.04
and Section 3.06 to withdraw from the Custodial Account and Escrow Account,
respectively, as additional servicing compensation, interest or other income
earned on deposits therein, subject to Section 3.11.
The Servicer shall be required to pay all expenses incurred by it in
connection with its servicing activities hereunder and shall not be entitled to
reimbursement thereof except as specifically provided for herein.
Section 5.02 Annual Audit Report.
Not more than ninety days after the end of the Servicer's fiscal year
commencing with the fiscal year ending April 30, 2002, Servicer shall, at its
own expense, cause a firm of independent public accountants (who may also render
other services to Servicer), which is a member of the American Institute of
Certified Public Accountants, to furnish to the Seller, the Trustee and the
Guarantor (i) year-end audited (if available) financial statements of the
Servicer and (ii) a statement to the effect that such firm has examined certain
documents and records for the preceding fiscal year (or during the period from
the date of commencement of such Servicer's duties hereunder until the end of
such preceding fiscal year in the case of the first such certificate) and that,
on the basis of such examination conducted substantially in compliance with the
Uniform Single Attestation Program for Mortgage Bankers, such firm is of the
opinion that Servicer's overall servicing operations have been conducted in
compliance with the Uniform Single Attestation Program for Mortgage Bankers
except for such exceptions that, in the opinion of such firm, the Uniform Single
Attestation Program for Mortgage Bankers requires it to report, in which case
such exceptions shall be set forth in such statement.
Section 5.03 Annual Officer's Certificate.
Not more than ninety days after the end of the Servicer's fiscal year
commencing with the fiscal year ending April 30, 2002 the Servicer, at its own
expense, will deliver to the Seller, the Trustee and the Guarantor a Servicing
Officer's certificate stating, as to each signer thereof, that (i) a review of
the activities of the Servicer during such preceding fiscal year and of
performance under this Agreement has been made under such officers' supervision,
and (ii) to the best of such officers' knowledge, based on such review, the
Servicer has fulfilled all its obligations under this Agreement for such year,
or, if there has been a default in the fulfillment of all such obligations,
specifying each such default known to such officers and the nature and status
thereof including the steps being taken by the Servicer to remedy such default.
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ARTICLE VI.
REPRESENTATIONS, WARRANTIES
AND AGREEMENTS
Section 6.01 Representations, Warranties and Agreements of the
Servicer.
The Servicer, as a condition to the consummation of the transactions
contemplated hereby, hereby makes the following representations and warranties
to the Seller and the Guarantor as of the Closing Date:
(a) Due Organization and Authority. The Servicer is a corporation
duly organized, validly existing and in good standing under the laws of the
State of California and has all licenses necessary to carry on its business as
now being conducted and is licensed, qualified and in good standing in each
state where a Mortgaged Property is located if the laws of such state require
licensing or qualification in order to conduct business of the type conducted by
the Servicer, and in any event the Servicer is in compliance with the laws of
any such state to the extent necessary to ensure the enforceability of the terms
of this Agreement; the Servicer has the full power and authority to execute and
deliver this Agreement and to perform in accordance herewith; the execution,
delivery and performance of this Agreement (including all instruments of
transfer to be delivered pursuant to this Agreement) by the Servicer and the
consummation of the transactions contemplated hereby have been duly and validly
authorized; this Agreement evidences the valid, binding and enforceable
obligation of the Servicer and all requisite action has been taken by the
Servicer to make this Agreement valid and binding upon the Servicer in
accordance with its terms;
(b) Ordinary Course of Business. The consummation of the
transactions contemplated by this Agreement are in the ordinary course of
business of the Servicer;
(c) No Conflicts. Neither the execution and delivery of this
Agreement, the acquisition of the servicing responsibilities by the Servicer or
the transactions contemplated hereby, nor the fulfillment of or compliance with
the terms and conditions of this Agreement, will conflict with or result in a
breach of any of the terms, conditions or provisions of the Servicer's
organizational documents or any legal restriction or any agreement or instrument
to which the Servicer is now a party or by which it is bound, or constitute a
default or result in an acceleration under any of the foregoing, or result in
the violation of any law, rule, regulation, order, judgment or decree to which
the Servicer or its property is subject, or impair the ability of the Servicer
to service the Serviced Mortgage Loans, or impair the value of the Serviced
Mortgage Loans;
(d) Ability to Perform. The Servicer does not believe, nor does it
have any reason or cause to believe, that it cannot perform each and every
covenant contained in this Agreement;
(e) No Litigation Pending. There is no action, suit, proceeding or
investigation pending or, to the best of our knowledge, threatened against the
Servicer which, either in any one instance or in the aggregate, may result in
any material adverse change in the business, operations, financial condition,
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properties or assets of the Servicer, or in any material impairment of the right
or ability of the Servicer to carry on its business substantially as now
conducted, or in any material liability on the part of the Servicer, or which
would draw into question the validity of this Agreement or of any action taken
or to be taken in connection with the obligations of the Servicer contemplated
herein, or which would be likely to impair materially the ability of the
Servicer to perform under the terms of this Agreement;
(f) No Consent Required. No consent, approval, authorization or
order of any court or governmental agency or body is required for the execution,
delivery and performance by the Servicer of or compliance by the Servicer with
this Agreement;
(g) Ability to Service. The Servicer is an approved seller/servicer
of conventional residential mortgage loans for FNMA and FHLMC, with the
facilities, procedures, and experienced personnel necessary for the sound
servicing of mortgage loans of the same type as the Serviced Mortgage Loans. The
Servicer is in good standing to service mortgage loans for FHLMC. The Servicer
is a member in good standing of the MERS system, if applicable;
(h) No Untrue Information. Neither this Agreement nor any
statement, report or other document furnished or to be furnished pursuant to
this Agreement or in connection with the transactions contemplated hereby
contains any untrue statement of fact or omits to state a material fact
necessary to make the statements contained therein not misleading;
(i) No Commissions to Third Parties. The Servicer has not dealt
with any broker or agent or anyone else who might be entitled to a fee or
commission in connection with this transaction other than the Seller, and
(j) To the best of its knowledge, the Servicer, in its origination
practices, is currently materially in compliance with HOEPA and will continue to
operate its business in compliance with HOEPA.
Section 6.02 Remedies for Breach of Representations and Warranties of
the Servicer.
It is understood and agreed that the representations and warranties set
forth in Section 6.01 shall survive the engagement of the Servicer to perform
the servicing responsibilities as of the Closing Date hereunder and the delivery
of the Servicing Files to the Servicer and shall inure to the benefit of the
Seller, the Trustee and the Guarantor. Upon discovery by either the Servicer,
the Guarantor, the Trustee or the Seller of a breach of any of the foregoing
representations and warranties which materially and adversely affects the
ability of the Servicer to perform its duties and obligations under this
Agreement or otherwise materially and adversely affects the value of the
Serviced Mortgage Loans, the Mortgaged Property, the priority of the security
interest on such Mortgaged Property or the interest of the Seller, the Trustee
or the Guarantor, the party discovering such breach shall give prompt written
notice to the other.
Within 60 days of the earlier of either discovery by or notice to the
Servicer of any breach of a representation or warranty set forth in Section 6.01
which materially and adversely affects the ability of the Servicer to perform
its duties and obligations under this Agreement or otherwise materially and
adversely affects the value of the Serviced Mortgage Loans, the Mortgaged
Property or the priority of the security interest on such Mortgaged Property,
the Servicer shall use its best efforts promptly to cure such breach in all
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material respects and, if such breach cannot be cured, the Servicer shall, at
the Trustee's option, assign the Servicer's rights and obligations under this
Agreement (or respecting the affected Serviced Mortgage Loans) to a successor
Servicer. Such assignment shall be made in accordance with Sections 9.01 and
9.02.
In addition, the Servicer shall indemnify the Seller, the Guarantor and
the Trustee and hold each of them harmless against any Costs resulting from any
claim, demand, defense or assertion based on or grounded upon, or resulting
from, a breach of the Servicer's representations and warranties contained in
this Agreement. It is understood and agreed that the remedies set forth in this
Section 6.02 constitute the sole remedies of the Seller, the Guarantor and the
Trustee respecting a breach of the foregoing representations and warranties.
Any cause of action against the Servicer relating to or arising out of
the breach of any representations and warranties made in Section 6.01 shall
accrue upon (i) discovery of such breach by the Servicer or notice thereof by
the Seller, the Guarantor or the Trustee to the Servicer, (ii) failure by the
Servicer to cure such breach within the applicable cure period, and (iii) demand
upon the Servicer by the Seller, the Trustee or the Guarantor for compliance
with this Agreement.
Section 6.03 Additional Indemnification by the Servicer; Third Party
Claims.
The Servicer shall indemnify the Seller, the Depositor, the Trustee,
the Guarantor and the Trust Fund and hold them harmless against any and all
Costs that the indemnified party may sustain in any way related to (i) the
failure of the Servicer to perform its duties and service the Serviced Mortgage
Loans in material compliance with the terms of this Agreement or (ii) the
failure of the Servicer to cause any event to occur which would have occurred if
the Servicer were applying Accepted Servicing Practices under this Agreement.
The Servicer shall immediately notify the Seller, Depositor, the Guarantor, the
Trustee, or any other relevant party if a claim is made by a third party with
respect to this Agreement or the Serviced Mortgage Loans, assume (with the prior
written consent of the indemnified party) the defense of any such claim and pay
all expenses in connection therewith, including counsel fees, promptly pay,
discharge and satisfy any judgment or decree which may be entered against it or
any indemnified party in respect of such claim and follow any written
instructions received from such indemnified party in connection with such claim.
The Servicer shall be promptly reimbursed from the Trust Fund for all amounts
advanced by it pursuant to the preceding sentence except when the claim is in
any way related to the Servicer's indemnification pursuant to Section 6.02, or
the failure of the Servicer to service and administer the Serviced Mortgage
Loans in material compliance with the terms of this Agreement. In the event a
dispute arises between an indemnified party and the Servicer with respect to any
of the rights and obligations of the parties pursuant to this Agreement, and
such dispute is adjudicated in a court of law, by an arbitration panel or any
other judicial process, then the losing party shall indemnify and reimburse the
winning party for all attorneys' fees and other costs and expenses related to
the adjudication of said dispute.
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Section 6.04 Indemnification with Respect to Certain Taxes and Loss of
REMIC Status.
In the event that any REMIC fails to qualify as a REMIC, loses its
status as a REMIC, or incurs federal, state or local taxes as a result of a
prohibited transaction or prohibited contribution under the REMIC Provisions due
to the negligent performance by the Servicer of its duties and obligations set
forth herein, the Servicer shall indemnify the Guarantor, the Holder of the
related Residual Certificate or the Trust Fund, as applicable, against any and
all losses, claims, damages, liabilities or expenses ("Losses") resulting from
such negligence; provided, however, that the Servicer shall not be liable for
any such Losses attributable to the action or inaction of the Trustee, the
Depositor or the Holder of such Residual Certificate, as applicable, nor for any
such Losses resulting from misinformation provided by the Holder of such
Residual Certificate on which the Servicer has relied. The foregoing shall not
be deemed to limit or restrict the rights and remedies of the Holder of such
Residual Certificate now or hereafter existing at law or in equity.
Notwithstanding the foregoing, however, in no event shall the Servicer have any
liability (1) for any action or omission that is taken in accordance with and in
compliance with the express terms of, or which is expressly permitted by the
terms of, this Agreement, (2) for any Losses other than arising out of a
negligent performance by the Servicer of its duties and obligations set forth
herein, and (3) for any special or consequential damages to Certificateholders
(in addition to payment of principal and interest on the Certificates).
ARTICLE VII.
THE SERVICER
Section 7.01 Merger or Consolidation of the Servicer.
The Servicer shall keep in full effect its existence, rights and
franchises as a corporation, and shall obtain and preserve its qualification to
do business as a foreign entity in each jurisdiction in which such qualification
is or shall be necessary to protect the validity and enforceability of this
Agreement or any of the Serviced Mortgage Loans and to perform its duties under
this Agreement.
Any Person into which the Servicer may be merged or consolidated, or
any corporation resulting from any merger, conversion or consolidation to which
the Servicer shall be a party, or any Person succeeding to the business of the
Servicer, shall, with the prior written consent of the Guarantor and the
Trustee, be the successor of the 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; provided, however, that the
successor or surviving Person shall be an institution (i) having a net worth of
not less than $15,000,000, and (ii) which is a FHLMC-approved servicer in good
standing.
Section 7.02 Limitation on Liability of the Servicer and Others.
Neither the Servicer nor any of the directors, officers, employees or
agents of the Servicer shall be under any liability to the Seller, the
Depositor, the Guarantor or the Trustee for any action taken or for refraining
from the taking of any action in good faith pursuant to this Agreement, or for
errors in judgment; provided, however, that this provision shall not protect the
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Servicer or any such person against any breach of warranties or representations
made herein, or failure to perform its obligations in strict compliance with any
standard of care set forth in this Agreement, or any liability which would
otherwise be imposed by reason of any breach of the terms and conditions of this
Agreement. The Servicer and any director, officer, employee or agent of the
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 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 Serviced
Mortgage Loans in accordance with this Agreement and which in its opinion may
involve it in any expense or liability; provided, however, that the Servicer
may, with the consent of the Trustee, undertake any such action which it deems
necessary or desirable in respect of this Agreement and the rights and duties of
the parties hereto. In such event, the Servicer shall be entitled to
reimbursement from the Trust Fund for the reasonable legal expenses and costs of
such action.
Section 7.03 Limitation on Resignation and Assignment by the Servicer.
The Seller has entered into this Agreement with the Servicer in
reliance upon the independent status of the Servicer, and the representations as
to the adequacy of its servicing facilities, plant, personnel, records and
procedures, its integrity, reputation and financial standing, and the
continuance thereof. Therefore, the Servicer shall neither assign its rights
under this Agreement or the servicing hereunder nor delegate its duties
hereunder or any portion thereof, or sell or otherwise dispose of all or
substantially all of its property or assets without, in each case, the prior
written consent of the Seller, the Guarantor and the Trustee, which consent, in
the case of an assignment of rights or delegation of duties, shall be granted or
withheld in the discretion of the Seller, the Guarantor and the Trustee, and
which consent, in the case of a sale or disposition of all or substantially all
of the property or assets of the Servicer, shall not be unreasonably withheld;
provided, that in each case, there must be delivered to the Seller, the Trustee
and the Guarantor a letter from each Rating Agency to the effect that such
transfer of servicing or sale or disposition of assets will not result in a
qualification, withdrawal or downgrade of the then-current rating of any of the
Certificates. Notwithstanding the foregoing, the Servicer, without the consent
of the Seller, the Guarantor or the Trustee, may retain third-party contractors
to perform certain servicing and loan administration functions, including
without limitation, hazard insurance administration, tax payment and
administration, flood certification and administration, collection services and
similar functions; provided, however, that the retention of such contractors by
Servicer shall not limit the obligation of the Servicer to service the Serviced
Mortgage Loans pursuant to the terms and conditions of this Agreement.
The Servicer shall not resign from the obligations and duties hereby
imposed on it except by mutual consent of the Seller, the Trustee and the
Guarantor or upon the determination that its duties hereunder are no longer
permissible under applicable law and such incapacity cannot be cured by the
Servicer. Any such determination permitting the resignation of the Servicer
shall be evidenced by an Opinion of Counsel to such effect delivered to the
Seller, the Guarantor and the Trustee which Opinion of Counsel shall be in form
and substance acceptable to the Seller, the Guarantor and the Trustee. No such
resignation shall become effective until a successor shall have assumed the
Servicer's responsibilities and obligations hereunder in the manner provided in
Section 9.01.
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Without in any way limiting the generality of this Section 7.03, in the
event that the Servicer either shall assign this Agreement or the servicing
responsibilities hereunder or delegate its duties hereunder or any portion
thereof or sell or otherwise dispose of all or substantially all of its property
or assets, without the prior written consent of the Seller, the Guarantor and
the Trustee, then such parties shall have the right to terminate this Agreement
upon notice given as set forth in Section 8.01, without any payment of any
penalty or damages and without any liability whatsoever to the Servicer or any
third party.
Section 7.04 Subservicing Agreements and Successor Subservicer.
(a) The Servicer may enter into subservicing agreements for any
servicing and administration of the Serviced Mortgage Loans with any institution
which (i) is (A) pre-approved by the Guarantor and (B) an approved Xxxxxxx Mac
Seller/Servicer as indicated in writing, and (ii) which represents and warrants
that it is in compliance with the laws of each state as necessary to enable it
to perform its obligations under such subservicing agreement; provided, however,
that in connection with such subservicing agreement, the decision to approve
shall remain in the Guarantor's sole discretion. For this purpose, subservicing
shall not be deemed to include the use of a tax service, or services for
reconveyance, insurance or brokering REO Property. The Servicer shall give prior
written notice to the Guarantor and the Trustee of the appointment of any
subservicer and shall furnish to the Guarantor a copy of such subservicing
agreement. For purposes of this Agreement, the Servicer shall be deemed to have
received payments on Serviced Mortgage Loans immediately upon receipt by any
subservicer of such payments. Any such subservicing agreement shall be
consistent with and not violate the provisions of this Agreement. Each
subservicing agreement shall provide that a successor Servicer shall have the
option to terminate such agreement without payment of any fees if the
predecessor Servicer is terminated or resigns. The Guarantor shall have the
right to direct the Servicer (at the Servicer's expense) to terminate any
subservicer that (i) having previously been an approved Xxxxxxx Mac
Seller/Servicer, no longer has such approval or (ii) at the Guarantor's
reasonable request.
(b) The Servicer may terminate any subservicing agreement to which
it is a party in accordance with the terms and conditions of such subservicing
agreement and either itself directly service the related Serviced Mortgage Loans
or enter into a subservicing agreement with a successor subservicer that
qualifies under Section 7.04(a).
(c) Notwithstanding any subservicing agreement or the provisions of
this Agreement relating to agreements or arrangements between the Servicer and a
subservicer or reference to actions taken through a subservicer or otherwise,
the Servicer shall remain obligated and primarily liable to the Trustee, the
Guarantor and the Certificateholders for the servicing and administering of the
Serviced Mortgage Loans in accordance with the provisions of Article III without
diminution of such obligation or liability by virtue of such subservicing
agreements or arrangements or by virtue of indemnification from the subservicer
and to the same extent and under the same terms and conditions as if the
Servicer alone were servicing and administering the Mortgage Loans. The Servicer
shall be entitled to enter into any agreement with a subservicer for
indemnification of the Servicer by such subservicer and nothing contained in
this Agreement shall be deemed to limit or modify such indemnification.
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ARTICLE VIII.
TERMINATION
Section 8.01 Termination for Cause.
This Agreement shall be terminable at the option of the Seller, the
Trustee or the Guarantor if any of the following events of default exist on the
part of the Servicer:
(i) any failure by the Servicer to remit to the Trustee
any payment required to be made under the terms of this Agreement which
continues unremedied for a period of one Business Day after the date upon which
written notice of such failure, requiring the same to be remedied, shall have
been given to the Servicer by the Trustee; or
(ii) failure by the Servicer duly to observe or perform
in any material respect any other of the covenants or agreements on the part of
the Servicer set forth in this Agreement which continues unremedied for a period
of 15 days; or
(iii) failure by the Servicer to maintain its license to
do business or service residential mortgage loans in any jurisdiction, if
required by such jurisdiction, where the Mortgaged Properties are located; or
(iv) a decree or order of a court or agency or
supervisory authority having jurisdiction for the appointment of a conservator
or receiver or liquidator in any insolvency, readjustment of debt, including
bankruptcy, marshaling of assets and liabilities or similar proceedings, or for
the winding-up or liquidation of its affairs, shall have been entered against
the Servicer and such decree or order shall have remained in force undischarged
or unstayed for a period of 60 days; or
(v) the Servicer shall consent to the appointment of a
conservator or receiver or liquidator in any insolvency, readjustment of debt,
marshaling of assets and liabilities or similar proceedings of or relating to
the Servicer or of or relating to all or substantially all of its property; or
(vi) the 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, bankruptcy or reorganization statute, make an
assignment for the benefit of its creditors, voluntarily suspend payment of its
obligations or cease its normal business operations for three Business Days; or
(vii) the Servicer ceases to meet the qualifications of a
FNMA or FHLMC seller/servicer; or
(viii) the Servicer attempts to assign the servicing of
the Serviced Mortgage Loans or its right to servicing compensation hereunder or
the Servicer attempts to sell or otherwise dispose of all or substantially all
of its property or assets or to assign this Agreement or the servicing
responsibilities hereunder or to delegate its duties hereunder or any portion
thereof, in each case without complying fully with the provisions of Section
7.03.
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In each and every such case, so long as an event of default shall not
have been remedied within the applicable cure period, in addition to whatever
rights the Seller, the Trustee or the Guarantor may have at law or equity to
damages, including injunctive relief and specific performance, the Seller, the
Trustee or the Guarantor, by notice in writing to the Servicer, may terminate
all the rights and obligations of the Servicer under this Agreement and in and
to the servicing contract established hereby and the proceeds thereof.
Upon receipt by the Servicer of such written notice, all authority and
power of the Servicer under this Agreement, whether with respect to the Serviced
Mortgage Loans or otherwise, shall pass to and be vested in a successor Servicer
appointed by the Seller, the Trustee and the Guarantor. Upon written request
from the Trustee, the Servicer shall prepare, execute and deliver to the
successor entity designated by the Trustee any and all documents and other
instruments, place in such successor's possession all Servicing Files, and do or
cause to be done all other acts or things necessary or appropriate to effect the
purposes of such notice of termination, including but not limited to the
transfer and endorsement or assignment of the Serviced Mortgage Loans and
related documents, at the Servicer's sole expense. The Servicer shall cooperate
with the Seller and the Trustee and such successor in effecting the termination
of the Servicer's responsibilities and rights hereunder, including without
limitation, the transfer to such successor for administration by it of all cash
amounts which shall at the time be credited by the Servicer to the Custodial
Account or Escrow Account or thereafter received with respect to the Serviced
Mortgage Loans.
By a written notice, the Seller and the Trustee, with the consent of
the Guarantor, may waive any default by the Servicer in the performance of its
obligations hereunder and its consequences. Upon any waiver of a past default,
such default shall cease to exist, and any Event of Default arising therefrom
shall be deemed to have been remedied for every purpose of this Agreement. No
such waiver shall extend to any subsequent or other default or impair any right
consequent thereon except to the extent expressly so waived.
Section 8.02 Termination Without Cause.
(a) This Agreement shall terminate upon: (i) the later of (a) the
distribution of the final payment or liquidation proceeds on the last Serviced
Mortgage Loan to the Trust Fund, and (b) the disposition of all REO Property
acquired upon foreclosure of the last Serviced Mortgage Loan and the remittance
of all funds due hereunder or (ii) mutual consent of the Servicer and the
Trustee in writing, provided such termination is also acceptable to the
Guarantor and the Rating Agencies. In addition, with the prior written consent
of the Guarantor, the Seller may terminate this Agreement with respect to all of
the Serviced Mortgage Loans, without cause, provided, that the Seller gives the
Servicer 30 days' notice. Any such notice of termination shall be in writing and
delivered to the Servicer by registered mail to the address set forth in Section
9.03. The Seller and the Servicer shall comply with the termination procedures
set forth in Section 9.01 hereof. The termination fee to be paid by the Seller
from its own funds without reimbursement for a termination of servicing without
cause pursuant to this Section 8.02 shall be equal to $15.00 per Serviced
Mortgage Loan, payable no later than five Business Days following the date of
such termination. All unreimbursed Servicing Fees, Servicing Advances and
Monthly Advances still owing the Servicer shall be paid by the Seller, or
successor servicer, from its own funds within 5 Business Days of the date of
such termination without right of reimbursement from the Trust Fund. In
42
connection with any termination pursuant to clause (ii) of the first sentence of
this Section 8.02(a), all unreimbursed Option One Servicing Fees, Servicing
Advances and Monthly Advances still owing the Servicer shall be paid at the time
of such termination by the Trust Fund.
Upon a termination of the Servicer for cause pursuant to Section 8.01
or Section 9.17, all unreimbursed Servicing Fees, Servicing Advances and Monthly
Advances still owing the Servicer shall be paid by the Trust Fund as such
amounts are received from the related Serviced Mortgage Loans. In connection
with any termination pursuant to the second sentence of this Section 8.02(a),
the Seller or successor servicer will be responsible for reimbursing the
Servicer for all unreimbursed out-of-pocket Servicing Advances, Monthly Advances
and Servicing Fees and other reasonable and necessary out-of-pocket costs
associated with any transfer of servicing at the time of such transfer of
servicing. Any invoices received by the Servicer after termination will be
forwarded to the Seller, which such Seller or successor servicer shall pay
within five (5) Business Days upon receipt from the Servicer.
(b) In the event that the Servicer decides to terminate its
obligations under this Agreement as set forth in clause (ii) of Section 8.02(a),
the Servicer agrees that it will continue to service the Serviced Mortgage Loans
beyond the prescribed termination date until such time as the Trustee, using
reasonable commercial efforts, is able to identify a successor servicer meeting
the characteristics of Sections 7.01 and 9.01.
Section 8.03 Termination for Distressed Mortgage Loans. Subject to the
requirements set forth in this Section 8.03, the Seller may terminate this
Agreement with the prior consent of the Trustee and the Guarantor, with respect
to the servicing of those Serviced Mortgage Loans that are determined to be
Distressed Mortgage Loans as of the Notice Date and servicing of such Serviced
Mortgage Loans shall be transferred to the Special Servicer. The appointment of
a Special Servicer by the Seller and the execution of a special servicing
agreement between the Seller and the Special Servicer shall be subject to the
consent of the Trustee and the Guarantor, and the receipt of confirmation from
the Rating Agencies that the transfer of servicing to the Special Servicer shall
not result in a reduction of any rating previously given by such Rating Agency
to any Certificate. Any monthly fee paid to the Special Servicer in connection
with any Serviced Mortgage Loan serviced by such Special Servicer shall not
exceed one-twelfth of the product of (a) 0.50% and (b) the outstanding principal
balance of such Serviced Mortgage Loan. All unreimbursed Option One Servicing
Fees, Servicing Advances and Monthly Advances owing to the Servicer relating to
such Distressed Mortgage Loans shall be reimbursed and paid to the Servicer upon
such transfer to the Special Servicer.
All reasonable costs and expenses incurred in connection with a
transfer of servicing to the Special Servicer including, without limitation, the
costs and expenses of the Trustee or any other Person in appointing a Special
Servicer, or of transferring the Servicing Files and the other necessary data to
the Special Servicer, shall be paid by the Seller from its own funds without
reimbursement.
The Seller shall be responsible for the delivery of all required
Transfer Notices and will send a copy of the Transfer Notice to the Trustee.
43
ARTICLE IX.
MISCELLANEOUS PROVISIONS
Section 9.01 Successor to the Servicer.
Simultaneously with the termination of the Servicer's responsibilities
and duties under this Agreement (a) pursuant to Sections 6.02, 7.03, 8.01 or
8.02(a)(ii), the Trustee shall (i) within 90 days of the Servicer's receipt of
notice of such termination, succeed to and assume all of the Servicer's
responsibilities, rights, duties and obligations under this Agreement (except
that the Trustee shall immediately assume all of the obligations of the Servicer
to make Monthly Advances), or (ii) appoint a successor having the
characteristics set forth in clauses (i) and (ii) of Section 7.01 and which
shall succeed to all rights and assume all of the responsibilities, duties and
liabilities of the Servicer under this Agreement simultaneously with the
termination of the Servicer's responsibilities, duties and liabilities under
this Agreement; or (b) as a result of termination of the Servicer without cause
by the Seller pursuant to Section 8.02 hereof, the Seller shall appoint a
successor having the characteristics set forth in clauses (i) and (ii) of
Section 7.01 and which shall succeed to all rights and assume all of the
responsibilities, duties and liabilities of the Servicer under this Agreement
simultaneously with the termination of the Servicer's responsibilities, duties
and liabilities under this Agreement. Any successor to the Servicer shall be
subject to the approval of the Trustee and the Guarantor and, to the extent
required by the Trust Agreement, shall be a member in good standing of the MERS
system (if any of the Serviced Mortgage Loans are MERS Eligible Mortgage Loans,
unless such Serviced Mortgage Loans are withdrawn from MERS and Assignments of
Mortgage are recorded in favor of the Trustee at the expense of the successor
Servicer). The final approval of a successor servicer shall be conditioned upon
the receipt by the Trustee, the Seller and the Guarantor of a letter from each
Rating Agency to the effect that such transfer of servicing will not result in a
qualification, withdrawal or downgrade of the then-current rating of any of the
Certificates. In connection with such appointment and assumption, the Trustee or
the Seller, as applicable, may make such arrangements for the compensation of
such successor out of payments on Serviced Mortgage Loans as it and such
successor shall agree, provided, however, that no such compensation shall be in
excess of the General Servicing Fee permitted under this Agreement. In the event
that the Servicer's duties, responsibilities and liabilities under this
Agreement should be terminated pursuant to the aforementioned sections, the
Servicer shall discharge such duties and responsibilities during the period from
the date it acquires knowledge of such termination until the effective date
thereof with the same degree of diligence and prudence which it is obligated to
exercise under this Agreement, and shall take no action whatsoever that might
impair or prejudice the rights or financial condition of its successor. The
resignation or removal of the Servicer pursuant to the aforementioned sections
shall not become effective until a successor servicer shall be appointed
pursuant to this Section 9.01, or until the Trustee succeeds to and assumes all
of the Servicer's responsibilities, rights, duties and obligations pursuant to
this Section 9.01, and shall in no event relieve the Servicer of the
representations and warranties made pursuant to Section 6.01 and the remedies
available to the Trustee, the Guarantor and the Seller under Section 6.02 and
6.03, it being understood and agreed that the provisions of such Sections 6.01,
6.02 and 6.03 shall be applicable to the Servicer notwithstanding any such
resignation or termination of the Servicer, or the termination of this
Agreement. Notwithstanding the foregoing, the Trustee, in its capacity as
successor servicer, shall not be responsible for the lack of information and/or
documents that it cannot obtain through reasonable efforts.
44
Within a reasonable period of time, but in no event longer than 30 days
after the appointment of a successor entity, the Servicer shall prepare, execute
and deliver to the successor entity any and all documents and other instruments,
place in such successor's possession all Servicing Files, and do or cause to be
done all other acts or things necessary or appropriate to effect the purposes of
such notice of termination, including but not limited to the transfer and
endorsement of the Mortgage Notes and related documents, and the preparation and
recordation of Assignments of Mortgage. The Servicer shall cooperate with the
Trustee or the Seller, as applicable, and such successor in effecting the
termination of the Servicer's responsibilities and rights hereunder and the
transfer of servicing responsibilities to the successor Servicer, including
without limitation, the transfer to such successor for administration by it of
all cash amounts which shall at the time be credited by the Servicer to the
Custodial Account or Escrow Account or thereafter received with respect to the
Serviced Mortgage Loans.
Any successor servicer appointed as provided herein shall execute,
acknowledge and deliver to the Trustee, the Servicer and the Seller an
instrument (i) accepting such appointment, wherein the successor shall make the
representations and warranties set forth in Section 6.01 (including a
representation that the successor servicer is a member of MERS, unless none of
the Serviced Mortgage Loans are MERS Mortgage Loans or MERS Eligible Mortgage
Loans or any such Serviced Mortgage Loans have been withdrawn from MERS and
Assignments of Mortgage are recorded in favor of the Trustee) and (ii) an
assumption of the due and punctual performance and observance of each covenant
and condition to be performed and observed by the Servicer under this Agreement,
whereupon such successor servicer shall become fully vested with all the rights,
powers, duties, responsibilities, obligations and liabilities of the Servicer,
with like effect as if originally named as a party to this Agreement. Any
termination or resignation of the Servicer or termination of this Agreement
pursuant to Sections 6.02, 7.03, 8.01 or 8.02 shall not affect any claims that
the Seller, the Depositor, the Guarantor or the Trustee may have against the
Servicer arising out of the Servicer's actions or failure to act prior to any
such termination or resignation. In addition, in the event any successor
Servicer is appointed pursuant to Section 8.03 of this Agreement, such successor
Servicer must satisfy the conditions relating to the transfer of servicing set
forth in the Trust Agreement.
The Servicer shall deliver promptly to the successor Servicer the funds
in the Custodial Account and Escrow Account and all Serviced Mortgage Loan
documents and related documents and statements held by it hereunder and the
Servicer shall account for all funds and shall execute and deliver such
instruments and do such other things as may reasonably be required to more fully
and definitively vest in the successor all such rights, powers, duties,
responsibilities, obligations and liabilities of the Servicer.
Upon a successor's acceptance of appointment as such, the Servicer
shall notify the Trustee, the Seller and the Guarantor of such appointment in
accordance with the procedures set forth in Section 9.03.
45
Section 9.02 Costs.
The Seller shall pay any legal fees and expenses of its attorneys.
Costs and expenses incurred in connection with the transfer of the servicing
responsibilities, including fees for delivering Servicing Files, shall be paid
by the Seller. Subject to Sections 2.02 and 3.01(a), the Seller shall pay the
costs associated with the preparation, delivery and recording of Assignments of
Mortgages.
Section 9.03 Notices.
All demands, notices and communications hereunder shall be in writing
and shall be deemed to have been duly given if sent by facsimile or mailed by
overnight courier, addressed as follows (or such other address as may hereafter
be furnished to the other party by like notice):
(i) if to the Seller:
Xxxxxx Capital, A Division of
Xxxxxx Brothers Holdings Inc.
Three World Financial Center
New York, New York 10285
Attention: Manager, Contract Finance
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
(ii) if to the Servicer:
Option One Mortgage Corporation
3 Ada
Xxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxxxx X. Xxxxxxxxx,
Contract Analyst
Technical Servicing Department
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
(iii) if to the Trustee:
Xxxxx Fargo Bank Minnesota,
National Association
00000 Xxxxxx Xxxx Xxxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: Corporate Trust Group
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
46
(iv) if to the Guarantor:
Federal Home Loan Mortgage Corporation
0000 Xxxxx Xxxxxx Xxxx
XxXxxx, Xxxxxxxx 00000
Attention: Structured Finance - Director of Specialized
Business Services
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Any such demand, notice or communication hereunder shall be deemed to
have been received on the date delivered to or received at the premises of the
addressee.
Section 9.04 Severability Clause.
Any part, provision, representation or warranty of this Agreement which
is prohibited or which is held to be void or unenforceable shall be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof. Any part, provision, representation or warranty of
this Agreement which is prohibited or unenforceable or is held to be void or
unenforceable in any jurisdiction shall be ineffective, as to such jurisdiction,
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction as to any Serviced Mortgage Loan shall not invalidate or render
unenforceable such provision in any other jurisdiction. To the extent permitted
by applicable law, the parties hereto waive any provision of law which prohibits
or renders void or unenforceable any provision hereof. If the invalidity of any
part, provision, representation or warranty of this Agreement shall deprive any
party of the economic benefit intended to be conferred by this Agreement, the
parties shall negotiate, in good-faith, to develop a structure the economic
effect of which is as close as possible to the economic effect of this Agreement
without regard to such invalidity.
Section 9.05 No Personal Solicitation.
From and after the related Closing Date, the Servicer hereby agrees
that it will not take any action or permit or cause any action to be taken by
any of its agents or affiliates, or by any independent contractors or
independent mortgage brokerage companies on the Servicer's behalf, to
personally, by telephone or mail, solicit the Mortgagor under any Serviced
Mortgage Loan for the purpose of refinancing such Serviced Mortgage Loan;
provided, that the Servicer may solicit any Mortgagor for whom the Servicer has
received a request for verification of mortgage status, a request for demand for
payoff, a mortgagor initiated written or verbal communication indicating a
desire to prepay the related Serviced Mortgage Loan, or the mortgagor initiates
a title search, provided further, it is understood and agreed that promotions
undertaken by the Servicer or any of its affiliates which (i) concern optional
insurance products or other additional projects or (ii) are directed to the
general public at large, including without limitation, mass mailings based on
commercially acquired mailing lists, newspaper, radio and television
advertisements shall not constitute solicitation under this Section 9.05 nor is
the Servicer prohibited from responding to unsolicited requests or inquiries
made by a Mortgagor or an agent of a Mortgagor.
47
Section 9.06 Counterparts.
This Agreement may be executed simultaneously in any number of
counterparts. Each counterpart shall be deemed to be an original, and all such
counterparts shall constitute one and the same instrument.
Section 9.07 Place of Delivery and Governing Law.
This Agreement shall be deemed in effect when a fully executed
counterpart thereof is received by the Seller in the State of New York and shall
be deemed to have been made in the State of New York. THIS AGREEMENT SHALL BE
GOVERNED BY, AND 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 THE LAWS OF THE STATE OF NEW YORK, NOTWITHSTANDING
NEW YORK OR OTHER CHOICE OF LAW RULES TO THE CONTRARY.
Section 9.08 Further Agreements.
The Seller and the Servicer each agree to execute and deliver to the
other such reasonable and appropriate additional documents, instruments or
agreements as may be necessary or appropriate to effectuate the purposes of this
Agreement.
Section 9.09 Intention of the Parties.
It is the intention of the parties that the Seller is conveying, and
the Servicer is receiving, only a contract for servicing the Serviced Mortgage
Loans. Accordingly, the parties hereby acknowledge that the Trust Fund remains
the sole and absolute owner of the Serviced Mortgage Loans and all rights (other
than the servicing rights) related thereto.
Section 9.10 Successors and Assigns; Assignment of Servicing Agreement.
This Agreement shall bind and inure to the benefit of and be
enforceable by the Servicer, the Seller, the Trustee and the Guarantor and their
respective successors and assigns. This Agreement shall not be assigned, pledged
or hypothecated by the Servicer to a third party except in accordance with
Section 7.03.
Section 9.11 Assignment by Xxxxxx Capital.
The Seller shall have the right, upon notice to but without the consent
of the Servicer, to assign, in whole or in part, its interest under this
Agreement to the Depositor, which in turn shall assign such rights to the
Trustee, and the Trustee then shall succeed to all rights of the Seller under
this Agreement. All references to the Seller in this Agreement shall be deemed
to include its assignee or designee and any subsequent assignee or designee,
specifically including the Trustee.
48
Section 9.12 Amendment.
This Agreement may be amended from time to time by the Servicer and the
Seller with the prior written consent of the Trustee and the Guarantor by
written agreement signed by the Seller and the Servicer; provided that the party
requesting such amendment shall, at its own expense, provide the Trustee with an
Opinion of Counsel that such amendment will not materially adversely affect the
interest of the Certificateholders in the Serviced Mortgage Loans.
Section 9.13 Waivers.
No term or provision of this Agreement may be waived or modified unless
such waiver or modification is in writing and signed by the party against whom
such waiver or modification is sought to be enforced.
Section 9.14 Exhibits.
The exhibits to this Agreement are hereby incorporated and made a part
hereof and are an integral part of this Agreement.
Section 9.15 Intended Third Party Beneficiaries.
Notwithstanding any provision herein to the contrary, the parties to
this Agreement agree that it is appropriate, in furtherance of the intent of
such parties as set forth herein, that the Trustee and the Guarantor receive the
benefit of the provisions of this Agreement as intended third party
beneficiaries of this Agreement to the extent of such provisions. The Servicer
shall have the same obligations to the Trustee and the Guarantor as if they were
parties to this Agreement, and the Trustee and the Guarantor shall have the same
rights and remedies to enforce the provisions of this Agreement as if they were
parties to this Agreement. The Servicer shall only take direction from the
Trustee (if direction by the Trustee is required under this Agreement) unless
otherwise directed by this Agreement or the Loss Mitigation Advisory Agreement.
Notwithstanding the foregoing, all rights and obligations of the Trustee
hereunder (other than the right to indemnification) shall terminate upon
termination of the Trust Agreement and of the Trust Fund pursuant to the Trust
Agreement, and all rights of the Guarantor hereunder (other than the right to
indemnification) shall terminate upon termination of the Trust Fund.
Section 9.16 Guarantor Audit and Inspection Rights: Access to Financial
Statements.
(a) During business hours, or at such other times as may be
reasonable under the applicable circumstances, and upon reasonable advance
notice to the Servicer, the Guarantor, with the assistance and cooperation of an
appropriate Servicing Officer or other knowledgeable financial officer of the
Servicer, shall have the right to (i) review and audit the Servicer's servicing
procedures as they relate to the Serviced Mortgage Loans and (ii) examine and
audit the Servicing Files and related book, records and other information of the
Servicer, but solely as they relate to the Serviced Mortgage Loans and this
Agreement.
(b) Within one hundred eighty days after the Closing Date, to the
extent the Servicing Files contain information relating to the underwriting
criteria used in the origination of each Serviced Mortgage Loan, the Guarantor
will have the right to review up to 800 of the Servicing Files and the related
49
underwriting documentation in order to ascertain whether each such Serviced
Mortgage Loan was originated generally in accordance with the applicable
underwriting standards. If the Guarantor determines that more than 20% (by
number) of such 800 Serviced Mortgage Loans were not originated in accordance
with the applicable underwriting standards, the Guarantor will have the right to
review additional Servicing Files until the Guarantor obtains a sample
containing less than 20% (by number) of such Serviced Mortgage Loans not so
originated.
(c) With respect to any Serviced Mortgage Loan that goes into
foreclosure, the Guarantor will have the right to request the Servicer to
deliver a copy of the related Servicing File to the Guarantor to review.
(d) The Servicer shall make available upon the request of the
Guarantor any comparable interim financial statements, but only to the extent
that such statements have been prepared by or on behalf of the Servicer in the
normal course of its business and are available upon request to its members or
stockholders or to the public at large.
Section 9.17 Guarantor Right of Termination or Declaration of Event of
Default.
Notwithstanding any other provision of this Agreement, in the event
either (i) any Class of Certificates issued by the Trust Fund with an initial
rating assigned by the Rating Agencies of "AA" (or an equivalent rating) is
downgraded to "A" (or an equivalent rating) or lower, or (ii) a Realized Loss is
applied to reduce the principal balance of the Class B Certificates, the
Guarantor, in its sole discretion, shall have the right to terminate the
Servicer (or any subservicers) of the Serviced Mortgage Loans to which such
applied Realized Loss is attributable and to appoint a successor servicer in
accordance with the procedures set forth in Section 9.01.
Section 9.18 Fees for Failure to Provide Timely Reports.
In the event the Trustee fails to provide certain reports to the
Guarantor accurately, completely and timely due to the Servicer's failure to
timely provide the necessary information to the Trustee, and the Trustee is
required to pay a fee to the Guarantor, such fee shall be paid by the Servicer.
The fees are as follows:
1. For the first such failure, the amount of $500.
2. For the second such failure, the amount of $750.
3. For the third such failure, the amount of $1,000.
4. The fourth such failure in any successive two-year period shall
constitute a Servicer Event of Default under this Agreement.
The Servicer shall not be required to make any such payments upon the
first such failure during each successive two year period following the Closing
Date.
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Section 9.19 Confidentiality.
The Trustee hereby agrees to hold and treat all Confidential
Information (as defined below) in confidence and in accordance with this Section
9.19. Such Confidential Information will not, without the prior written consent
of the Servicer, be disclosed to the Guarantor or used by the Trustee or by its
subsidiaries, affiliates, directors, officers, employees, agents or controlling
persons (collectively, the "Information Recipients") other than for the purpose
of taking permitted action under this Agreement or any other agreement.
Disclosure that is not in violation of the Right to Financial Privacy Act of
1978, as amended, the Xxxxx-Xxxxx-Xxxxxx Act of 1999 (the "G-L-B Act") or other
applicable law by the Trustee of any Confidential Information at the request of
its outside auditors or governmental regulatory authorities in connection with
an examination of the Trustee or the Servicer by any such authority shall not
constitute a breach of its obligations under this Section 9.19, and shall not
require the prior consent of the Servicer.
As used herein, "Confidential Information" means non-public personal
information (as defined in the G-L-B Act and its enabling regulations issued by
the Federal Trade Commission) regarding Borrowers. Confidential Information
shall not include information which (i) is or becomes generally available to the
public other than as a result of disclosure by the Trustee or any of its
Information Recipients; (ii) was available to the Trustee on a non-confidential
basis from a person or entity other than the Servicer prior to its disclosure to
the Trustee; (iii) is required to be disclosed by a governmental authority or
related governmental agencies or as otherwise required by law; or (iv) becomes
available to the Trustee on a non-confidential basis from a person or entity
other than the Servicer who, to the best knowledge of the Trustee, is not
otherwise bound by a confidentiality agreement with the Servicer, and is not
otherwise prohibited from transmitting the information to the Trustee.
Section 9.20 Deficiency Judgments.
Pursuant to the Trust Agreement, the Holders of the Subordinate
Certificates that are or may be affected by a Realized Loss on a Liquidated
Mortgage Loan are deemed to have repurchased the ownership interest in such
Liquidated Mortgage Loan held by Holders of the Senior Certificates. In
connection with the liquidation of a Serviced Mortgage Loan, if (i) the Servicer
is directed by the Trustee to seek a deficiency judgment, (ii) the Servicer is
offered suitable indemnification and reimbursement for expenses from the Holders
of Subordinate Certificates, and (iii) such action is permitted by law, the
Servicer shall seek a deficiency judgment under such Liquidated Mortgage Loan on
behalf of the Holders of the Subordinate Certificates to the extent of any
Realized Loss.
Section 9.21 General Interpretive Principles.
For purposes of this Agreement, except as otherwise expressly provided
or unless the context otherwise requires:
(a) the terms defined in this Agreement have the meanings assigned
to them in this Agreement and include the plural as well as the singular, and
the use of any gender herein shall be deemed to include the other gender;
51
(b) accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting principles;
(c) references herein to "Articles", "Sections", "Subsections",
"Paragraphs", and other subdivisions without reference to a document are to
designated Articles, Sections, Subsections, Paragraphs and other subdivisions of
this Agreement;
(d) a reference to a Subsection without further reference to a
Section is a reference to such Subsection as contained in the same Section in
which the reference appears, and this rule shall also apply to Paragraphs and
other subdivisions;
(e) the words "herein", "hereof", "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
provision; and
(f) the term "include" or "including" shall mean by reason of
enumeration.
Section 9.22 Reproduction of Documents.
This Agreement and all documents relating thereto, including, without
limitation, (a) consents, waivers and modifications which may hereafter be
executed, (b) documents received by any party at the closing, and (c) financial
statements, certificates and other information previously or hereafter
furnished, may be reproduced by any photographic, photostatic, microfilm,
micro-card, miniature photographic or other similar process. The parties agree
that any such reproduction shall be admissible in evidence as the original
itself in any judicial or administrative proceeding, whether or not the original
is in existence and whether or not such reproduction was made by a party in the
regular course of business, and that any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in evidence.
52
IN WITNESS WHEREOF, the Servicer and the Seller have caused their names
to be signed hereto by their respective officers thereunto duly authorized as of
the date first above written.
XXXXXX BROTHERS HOLDINGS INC., as Seller
By: /s/ Xxxxxxx Xxxxxxxxxx
------------------------------------
Name: Xxxxxxx Xxxxxxxxxx
Title: Senior Vice President
OPTION ONE MORTGAGE CORPORATION,
as Servicer
By: /s/ Xxxxx X. Xxxxx
------------------------------------
Name: Xxxxx X. Xxxxx
Title: Assistant Secretary
Acknowledged by:
XXXXX FARGO BANK MINNESOTA,
NATIONAL ASSOCIATION,
as Trustee
By: /s/ Xxx Xxxxx
-------------------------------------------
Name:
Title:
FEDERAL HOME LOAN MORTGAGE CORPORATION,
as Guarantor
By: /s/ Xxxxxxx Xxxxxx
-------------------------------------------
Name: Xxxxxxx Xxxxxx
Title: Director, Securities Marketing Investors
EXHIBIT A-1
Schedule of Serviced Mortgage Loans
EXHIBIT A-2
MONTHLY REPORTING FORMAT TO XXXXX FARGO BANK MINNESOTA, N.A.
The format for the tape should be:
1. Record length of 240
2. Blocking factor of 07 records per block
3. ASCII
4. Unlabeled tape
5. 6250 or 1600 BPI (please indicate)
COBOL
Field Name Position Length "picture"
---------- -------- ------ ---------
Trustee No. 001-002 2 "01"
Unit Code 003-004 2 " "
Loan Number 005-014 10 X(10)
Borrower Name 015-034 20 X(20)
Old Payment Amount 035-045 11 S9(9)V9(02)
Old Loan Rate 046-051 6 9(2)V9(04)
Servicer Fee Rate 052-057 6 9(2)V9(04)
Servicer Ending Balance 058-068 11 S9(9)V9(02)
Servicer Next Due Date 069-076 8 CCYYMMDD
Curtail Amt 1 - Before 077-087 11 S9(9)V9(02)
Curtail Date 1 088-095 8 CCYYMMDD
Curtail Amt 1 - After 096-106 11 S9(9)V9(02)
Curtail Amt 2 - Before 107-117 11 S9(9)V9(02)
Curtail Date 2 118-125 8 CCYYMMDD
Curtail Amt 2 - After 126-136 11 S9(9)V9(02)
Curtail Amt 3 - Before 137-147 11 S9(9)V9(02)
Curtail Date 3 148-155 8 CCYYMMDD
Curtail Amt 3 - After 156-166 11 S9(9)V9(02)
New Payment Amount 167-177 11 S9(9)V9(02)
New Loan Rate 178-183 6 9(2)V9(04)
Index Rate 184-189 6 9(2)V9(04)
Remaining Term 190-192 3 9(3)
Liquidation Amount 193-203 11 S9(9)V9(02)
Action Code 204-205 2 X(02)
Scheduled Principal 206-216 11 S9(9)V9(02)
Scheduled Interest 217-227 11 S9(9)V9(02)
Scheduled Ending Balance 228-238 11 S9(9)V9(02)
FILLER 239-240 2 X(02)
Trailer Record:
Number of Records 001-006 6 9(06)
FILLER 000-000 000 X(234)
A-2-1
Field Names and Descriptions:
Field Name Description
---------- -----------
Trustee No. Hard code as "01" used internally
Unit Code Hard code as " " used internally
Loan Number Investor's loan number
Borrower Name Last name of borrower
Old Payment Amount P&I amount used for the applied
payment
Old Loan Rate Gross interest rate used for the
applied payment
Servicer Fee Rate Servicer's fee rate
Servicer Ending Balance Ending actual balance after a
payment has been applied
Servicer Next Due Date Borrower's next due date for a
payment
Curtailment Amount 1 - Before Amount of curtailment applied before
the payment
Curtailment Date 1 Date of curtailment should coincide
with the payment date applicable to
the curtailment
Curtailment Amount 1 - After Amount of curtailment applied after
the payment
Curtailment Amount 2 - Before Amount of curtailment applied before
the payment
Curtailment Date 2 Date of curtailment should coincide
with the payment date applicable to
the curtailment
Curtailment Amount 2 - After Amount of curtailment applied after
the payment
Curtailment Amount 3 - Before Amount of curtailment applied before
the payment
Curtailment Date 3 Date of curtailment should coincide
with the payment date applicable to
the curtailment
Curtailment Amount 3 - After Amount of curtailment applied after
the payment
New Payment Amount For ARM, Equal, or Buydown loans,
when a payment change occurs, this
is the scheduled payment
New Loan Rate For ARM loans, when the gross
interest rate change occurs, this
is the scheduled rate
Index Rate For ARM loans, the index rate used
in calculating the new gross
interest rate
Remaining Term For ARM loans, the number of months
left on the loan used to determine
the new P&I amount
A-2-2
Liquidation Amount The payoff amount of the loan
Action Code For delinquent loans:
12 -- Relief Provisions
15 -- Bankruptcy/Litigation
20 -- Referred for Deed-in-lieu,
short sale
30 -- Referred to attorney to begin
foreclosure
60 -- Loan Paid in full
70 -- Real Estate Owned
Scheduled Principal Amount of principal from borrower
payment due to bondholder
Scheduled Interest Amount of interest from borrower
payment due to bondholder
Scheduled Ending Balance Ending scheduled balance of loan
FILLER Should be filled with spaces
A-2-3
Delinquency Reporting Data Fields to be
provided to Trustee
Servicer Loan #
Investor Loan #
Borrower Name
Address
State
Due Date
Action Code
FC Received
File Referred to Atty
NOD
Complaint Filed
Sale Published
Target Sale Date
Actual Sale Date
Loss Mit Approval Date
Loss Mit Type
Loss Mit Estimated Completion Date
Loss Mit Actual Completion Date
Loss Mit Broken Plan Date
BK Chapter
BK Filed Date
Post Petition Due
Motion for Relief
Lift of Stay
RFD
Occupant Code
Eviction Start Date
Eviction Completed Date
List Price
List Date
Accepted Offer Price
Accepted Offer Date
Estimated REO Closing Date
Actual REO Sale Date
A-2-4
EXHIBIT B
CUSTODIAL ACCOUNT LETTER AGREEMENT
_______ __, 20__
To: ___________________________
___________________________
___________________________
(the "Depository")
As Servicer under the Servicing Agreement, dated as of February 1, 2001
(the "Agreement"), we hereby authorize and request you to establish an account,
as a Custodial Account pursuant to Section 3.03 of the Agreement, to be
designated as "in trust for Xxxxx Fargo Bank Minnesota, N.A., as Trustee for ARC
2001-BC4 Trust." All deposits in the account shall be subject to withdrawal
therefrom by order signed by the Servicer. This letter is submitted to you in
duplicate. Please execute and return one original to us.
OPTION ONE MORTGAGE CORPORATION
By:____________________________
Name:
Title:
The undersigned, as Depository, hereby certifies that the above
described account has been established under Account Number __________, at the
office of the Depository indicated above, and agrees to honor withdrawals on
such account as provided above.
_______________________________
Depository
By:____________________________
Name:
Title:
Date:
B-1
EXHIBIT C
ESCROW ACCOUNT LETTER AGREEMENT
_______ __, 20__
To: ___________________________
___________________________
___________________________
(the "Depository")
As Servicer under the Servicing Agreement, dated as of May 1, 2001 (the
"Agreement"), we hereby authorize and request you to establish an account, as an
Escrow Account pursuant to Section 3.05 of the Agreement, to be designated as
"in trust for Xxxxx Fargo Bank Minnesota, N.A., as Trustee for ARC 2001-BC4
Trust." All deposits in the account shall be subject to withdrawal therefrom by
order signed by the Servicer. This letter is submitted to you in duplicate.
Please execute and return one original to us.
OPTION ONE MORTGAGE CORPORATION
By:____________________________
Name:
Title:
The undersigned, as Depository, hereby certifies that the above
described account has been established under Account Number __________, at the
office of the Depository indicated above, and agrees to honor withdrawals on
such account as provided above.
_______________________________
Depository
By:____________________________
Name:
Title:
Date:
C-1
