Exhibit 10.2
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GREENPOINT MORTGAGE SECURITIES LLC,
Sponsor,
GREENPOINT MORTGAGE FUNDING, INC.,
Servicer,
GREENPOINT HOME EQUITY LOAN TRUST 200_-_,
Issuer,
and
[INDENTURE TRUSTEE],
Indenture Trustee
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SALE AND SERVICING AGREEMENT
Dated as of ________, 200_
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Variable Rate Asset-Backed Notes
Series 200_-_
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TABLE OF CONTENTS
Page
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ARTICLE I DEFINITIONS..........................................................1
Section 1.01. Definitions..........................................1
Section 1.02. Other Definitional Provisions........................1
Section 1.03. Interest Calculations................................2
ARTICLE II CONVEYANCE OF MORTGAGE LOANS; ORIGINAL ISSUANCE OF NOTES; TAX
TREATMENT.......................................................2
Section 2.01. Conveyance of Mortgage Loans; Retention of
Obligation to Fund Advances Under Credit Line
Agreements...........................................2
Section 2.02. Further Encumbrance of Trust Property................6
Section 2.03. Acceptance by Indenture Trustee; Certain
Substitution of Mortgage Loans.......................7
Section 2.04. Representations and Warranties Regarding the
Servicer and the Sponsor.............................8
Section 2.05. Representations and Warranties of the Sponsor
Regarding the Mortgage Loans; Removal of Certain
Mortgage Loans......................................11
Section 2.06. Covenants of the Sponsor............................24
Section 2.07. Removal of Mortgage Loans at Election of Issuer.....25
Section 2.08. Execution and Authentication of Notes...............26
Section 2.09. Tax Treatment.......................................26
Section 2.10. [Reserved]..........................................26
ARTICLE III ADMINISTRATION AND SERVICING OF MORTGAGE LOANS....................26
Section 3.01. The Servicer........................................26
Section 3.02. Collection of Certain Mortgage Loan Payments........28
Section 3.03. Withdrawals from the Collection Account.............30
Section 3.04. Maintenance of Hazard Insurance; Property
Protection Expenses.................................30
Section 3.05. Assumption and Modification Agreements..............31
Section 3.06. Realization Upon Defaulted Mortgage Loans;
Repurchase of Certain Mortgage Loans................31
Section 3.07. Indenture Trustee to Cooperate......................32
Section 3.08. Servicing Compensation; Payment of Certain
Expenses by Servicer........................33
Section 3.09. Annual Statement as to Compliance...................33
Section 3.10. Annual Servicing Report.............................33
Section 3.11. Annual Opinion of Counsel...........................34
Section 3.12. Access to Certain Documentation and Information
Regarding the Mortgage Loans...........34
Section 3.13. Maintenance of Certain Servicing Insurance Policies.34
Section 3.14. Reports to the SEC..................................35
Section 3.15. Tax Returns.........................................35
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Section 3.16. Information Required by the Internal Revenue
Service Generally and Reports of Foreclosures
and Abandonments of Mortgaged Property..............36
Section 3.17. Reporting Requirements..............................36
Section 3.18. Matters Relating to MERS Loans......................36
ARTICLE IV SERVICING CERTIFICATE..............................................37
Section 4.01. Servicing Certificate...............................37
Section 4.02. Reserved............................................38
Section 4.03. Reserved............................................38
Section 4.04. Loan Data Remittance Report.........................38
Section 4.05. Reserved............................................38
ARTICLE V THE SERVICER AND THE SPONSOR........................................38
Section 5.01. Liability of the Servicer and the Sponsor...........38
Section 5.02. Merger or Consolidation of, or Assumption of the
Obligations of, the Servicer or the Sponsor.........39
Section 5.03. Limitation on Liability of the Servicer and Others..39
Section 5.04. Servicer Not to Resign..............................39
Section 5.05. Delegation of Duties................................40
Section 5.06. Indemnification of the Trust by the Servicer........40
Section 5.07. Indemnification of the Trust by the Sponsor.........40
Section 5.08. Limitation on Liability of the Sponsor..............41
ARTICLE VI SERVICING TERMINATION..............................................41
Section 6.01. Events of Servicing Termination.....................41
Section 6.02. Indenture Trustee to Act; Appointment of Successor..45
Section 6.03. Notification to Noteholders and Residual
Certificateholders..................................46
ARTICLE VII TERMINATION.......................................................46
Section 7.01. Termination.........................................46
ARTICLE VIII ADMINISTRATIVE DUTIES OF THE SERVICER............................47
Section 8.01. Administrative Duties...............................47
Section 8.02. Records.............................................49
Section 8.03. Additional Information to be Furnished to the
Issuer..............................................49
ARTICLE IX MISCELLANEOUS PROVISIONS...........................................49
Section 9.01. Amendment...........................................49
Section 9.02. Recordation of Agreement............................51
Section 9.03. Limitation on Rights of Noteholders.................51
Section 9.04. Governing Law.......................................52
Section 9.05. Notices.............................................52
Section 9.06. Severability of Provisions..........................52
Section 9.07. Assignment..........................................52
Section 9.08. Third-Party Beneficiaries...........................52
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Section 9.09. Counterparts........................................53
Section 9.10. Effect of Headings and Table of Contents............53
Section 9.11. Insurance Agreement.................................53
Section 9.12. Nonpetition Covenant................................53
EXHIBITS
EXHIBIT A: MORTGAGE LOAN SCHEDULE...........................................A-1
EXHIBIT B: FORM OF OPINION OF COUNSEL.......................................B-1
EXHIBIT C-1: FORM OF OFFICER'S CERTIFICATE: PERMANENT RELEASE..............C-1
EXHIBIT C-2: FORM OF OFFICER'S CERTIFICATE: TEMPORARY RELEASE...............C-2
EXHIBIT D: FORM OF CREDIT LINE AGREEMENT....................................D-1
EXHIBIT E: FORM OF MORTGAGE NOTE (CLOSED END MORTGAGE LOANS)................E-1
EXHIBIT F: FORM OF CERTIFICATE: LOAN LEVEL REPORTING.......................F-1
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SALE AND SERVICING AGREEMENT, dated as of ________, 200_, (the
"AGREEMENT") among GREENPOINT HOME EQUITY LOAN TRUST 200_-_, a Delaware
statutory trust (the "ISSUER" or "TRUST"), GREENPOINT MORTGAGE SECURITIES LLC, a
Delaware limited liability company (the "SPONSOR"), GREENPOINT MORTGAGE FUNDING,
INC., a New York corporation (the "SERVICER"), and [INDENTURE TRUSTEE], as
Indenture Trustee (the "INDENTURE TRUSTEE").
WHEREAS, the Issuer desires to purchase a portfolio of
Mortgage Loans arising in connection with Loan Agreements acquired by GreenPoint
Mortgage Funding, Inc.;
WHEREAS, the Sponsor has purchased such Mortgage Loans from
GreenPoint Mortgage Funding, Inc. and is willing to sell such Mortgage Loans to
the Issuer;
WHEREAS, such Mortgage Loans consist of certain home equity
revolving lines of credit (the "HELOC MORTGAGE LOANS") and certain second lien,
closed-end mortgage loans (the "CLOSED END MORTGAGE LOANS");
WHEREAS, the Servicer is willing to service all such Mortgage
Loans;
NOW, THEREFORE, in consideration of the promises and mutual
covenants herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. DEFINITIONS. All capitalized terms used in this Agreement
and not otherwise defined herein, shall have the meanings assigned thereto in
Annex A to the Indenture dated as of ________, 200_, between the Issuer and the
Indenture Trustee, as the same may be amended and supplemented from time to
time.
Section 1.02. OTHER DEFINITIONAL PROVISIONS.
(a) All terms defined in this Agreement shall have the defined meanings
when used in any instrument governed hereby and in any certificate or other
document made or delivered pursuant hereto unless otherwise defined therein.
(b) As used in this Agreement, in any instrument governed hereby and in
any certificate or other document made or delivered pursuant hereto or thereto,
accounting terms not defined in this Agreement or in any such instrument,
certificate or other document, and accounting terms partly defined in this
Agreement or in any such instrument, certificate or other document to the extent
not defined, shall have the respective meanings given to them under generally
accepted accounting principles as in effect on the date of this Agreement or any
such instrument, certificate or other document, as applicable. To the extent
that the definitions of accounting terms in this Agreement or in any such
instrument, certificate or other document are inconsistent with the meanings of
such terms under generally accepted accounting principles, the definitions
contained in this Agreement or in any such instrument, certificate or other
document shall control.
(c) Any agreement, instrument or statute defined or referred to herein
or in any instrument or certificate delivered in connection herewith means such
agreement, instrument or statute as from time to time amended, modified or
supplemented and includes (in the case of agreements or instruments) references
to all attachments thereto and instruments incorporated therein; references to a
Person are also to its permitted successors and assigns.
Section 1.03. INTEREST CALCULATIONS. All calculations of interest
hereunder that are made in respect of the Principal Balance of a Mortgage Loan
shall be made on a daily basis using a 365-day year. All calculations of
interest on the Notes shall be made on the basis of the actual number of days in
an Interest Accrual Period and a year assumed to consist of 360 days. The
calculation of the Servicing Fee shall be made on the basis of a 360-day year
consisting of twelve 30-day months. All dollar amounts calculated hereunder
shall be rounded to the nearest xxxxx with one-half of one xxxxx being rounded
down.
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
ORIGINAL ISSUANCE OF NOTES;
TAX TREATMENT
Section 2.01. CONVEYANCE OF MORTGAGE LOANS; RETENTION OF OBLIGATION TO
FUND ADVANCES UNDER CREDIT LINE AGREEMENTS.
(a) In consideration of the Issuer's delivery to or upon the order of
the Sponsor on the Closing Date of the net proceeds from the sale of the Notes
and the Residual Certificates and the other amounts to be distributed from time
to time to the Sponsor in accordance with the terms of this Agreement, the
Sponsor, concurrently with the execution and delivery of this Agreement, hereby
sells, transfers, assigns, sets over and otherwise conveys to the Issuer,
without recourse (subject to Sections 2.03, 2.05 and 2.07), all of its right,
title and interest in and to (i) each Mortgage Loan, including its Principal
Balance (including any Additional Balances related thereto) and all collections
in respect thereof received after the Cut-Off Date (excluding Interest
Collection due on or prior to the Cut-Off Date); (ii) property that secured a
Mortgage Loan that is acquired by foreclosure or deed in lieu of foreclosure;
(iii) all of the Sponsor's rights under the Purchase Agreement (including all
representations and warranties of the Seller contained therein); (iv) the
Sponsor's rights under the hazard insurance policies; (v) the Policy; (vi) the
Demand Note and the Collection Account; and (vii) any proceeds of the foregoing
and any other Trust Property and all other assets included or to be included in
the Trust for the benefit of Noteholders, the Residual Certificateholders and
the Insurer; PROVIDED, HOWEVER, neither the Indenture Trustee nor the Trust
assumes or shall assume the obligation under any Credit Line Agreement that
provides for the funding of future advances to the Mortgagor thereunder, and
neither the Trust nor the Indenture Trustee shall be obligated or permitted to
fund any such future advances. With respect to the HELOC Mortgage Loans,
Additional Balances shall be part of the related Principal Balance and are
hereby transferred to the Trust on the Closing Date pursuant to this Section
2.01, and therefore part of the Trust Property. On or prior to the Closing Date,
the Sponsor shall cause the Insurer to deliver the Policy to the Indenture
Trustee for the benefit of the Noteholders. It is the intention of the Sponsor
that the transfer and assignment contemplated by this Agreement shall constitute
a sale of the Mortgage Loans and other Trust Property from
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the Sponsor to the Issuer and that such sale should constitute a valid transfer
and assignment of the Mortgage Loans and other Trust Property to the Issuer and
the beneficial interest in and title to the Mortgage Loans and the other Trust
Property shall not be part of the Sponsor's estate in the event of the filing of
a bankruptcy petition by or against the Sponsor under any bankruptcy law. In the
event that, notwithstanding the intent of the Sponsor, the transfer and
assignment contemplated hereby is held not to be a sale, this Agreement shall
constitute a grant of a security interest in the property referred to in this
Section 2.01 for the benefit of the Noteholders, the Residual Certificateholders
and the Insurer. To the extent that the fair market value of any Additional
Balance is greater than the cash consideration paid by the Issuer for such
Additional Balance, the difference between such fair market value and the amount
of such cash consideration shall be deemed to be a capital contribution made to
the Issuer by the Sponsor. To the extent that the Sponsor receives cash
consideration for the entire fair market value of such Additional Balance on any
future date, any corresponding capital contribution that had previously been
deemed to have been made to the Issuer by the Sponsor shall be deemed to have
been redeemed.
(b) Each of the Servicer and the Sponsor agrees to take or cause to be
taken such actions and execute such documents (including, without limitation,
the filing of all necessary continuation statements for the UCC-1 financing
statements filed in the States of California, Delaware and New York,
respectively, which shall have been filed on or as of the Closing Date)
describing the Cut-Off Date Principal Balances and Additional Balances and
naming (i) the Servicer as debtor and the Sponsor as secured party, and (ii) the
Sponsor as debtor and the Issuer as secured party and any amendments to UCC-1
financing statements required to reflect a change in the name or corporate
structure of the Issuer, the Servicer or the Sponsor or the filing of any
additional UCC-1 financing statements due to the change in the principal office
of the Servicer or the Sponsor (within 10 days of any event necessitating such
filing) as are necessary to perfect and protect the Noteholders' and the
Insurer's interests in each Cut-Off Date Principal Balance and Additional
Balance and the proceeds thereof (other than maintaining possession by the
Indenture Trustee of the Mortgage Loans and the Mortgage Files).
(c) In connection with such transfer and assignment, the Servicer shall
deliver to the Custodian on behalf of the Indenture Trustee the following
documents or instruments (each a "RELATED DOCUMENT" and together for each
Mortgage Loan, the "MORTGAGE FILE") with respect to each Mortgage Loan on the
Closing Date:
(i) with respect to any Closed End Mortgage Loan, the original
Mortgage Note endorsed in blank or endorsed with the following:
"GreenPoint Mortgage Funding, Inc. to the GreenPoint Home Equity Loan
Trust 200_-_, by [Indenture Trustee], as trustee, for the Home Equity
Loan-Backed Notes, Series 200_-_ without recourse", and with respect to
any HELOC Mortgage Loan, the original Credit Line Agreement;
(ii) for each Mortgage Loan that is not a MERS Mortgage Loan,
an unsigned and un-notarized but otherwise complete original Assignment
of Mortgage in blank;
(iii) (A) for each Mortgage Loan that is not a MERS Mortgage
Loan, the original
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recorded Mortgage or, if in connection with any Mortgage Loan, the
original recorded Mortgage with evidence of recording thereon cannot be
delivered on or prior to the Closing Date because of a delay caused by
the public recording office where such original Mortgage has been
delivered for recordation or because such original Mortgage has been
lost, the Sponsor shall deliver or cause to be delivered to the
Indenture Trustee, a true and correct copy of such Mortgage, together
with (i) in the case of a delay caused by the public recording office,
an Officer's Certificate of the Sponsor stating that such original
Mortgage has been dispatched to the appropriate public recording
official or (ii) in the case of an original Mortgage that has been
lost, a certificate by the appropriate county recording office where
such Mortgage is recorded, and (B) in the case of each MERS Mortgage
Loan, the original Mortgage, noting the presence of the "Mortgage
Identification Number" of such MERS Mortgage Loan;
(iv) if applicable, the original intervening assignments, if
any ("INTERVENING Assignments"), with evidence of recording thereon,
showing a complete chain of title to the Mortgage from the originator
to the GreenPoint Mortgage Funding, Inc. (and the endorsed in blank in
accordance with clause (ii) above) or, if any such original Intervening
Assignment has not been returned from the applicable recording office
or has been lost, a true and correct copy thereof, together with (i) in
the case of a delay caused by the public recording office, an Officer's
Certificate of the Sponsor stating that such original Intervening
Assignment has been dispatched to the appropriate public recording
official for recordation or (ii) in the case of an original Intervening
Assignment that has been lost, a certificate by the appropriate county
recording office where such Mortgage is recorded;
(v) either a title policy or guaranty title with respect to
the related Mortgaged Property;
(vi) the original of any guaranty executed in connection with
the Mortgage Note;
(vii) the original of each assumption, modification,
consolidation or substitution agreement, if any, relating to the
Mortgage Loans; and
(viii) any security agreement, chattel mortgage or equivalent
instrument executed in connection with the Mortgage.
The Sponsor hereby confirms to the Indenture Trustee that it has caused
the portions of the Electronic Ledgers relating to the Mortgage Loans as of the
Closing Date to be clearly and unambiguously marked, and has made, or will make,
the appropriate entries in its general accounting records to indicate that such
Mortgage Loans have been transferred to the Trust. The Servicer hereby confirms
to the Indenture Trustee that it has clearly and unambiguously made appropriate
entries in its general accounting records indicating that such Mortgage Loans
constitute part of the Trust and are serviced by it on behalf of the Trust in
accordance with the terms hereof.
(d) Notwithstanding the characterization of the Notes as debt for
federal, state and local income and franchise tax purposes, the parties hereto
intend to treat the transfer of the
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Mortgage Loans to the Trust as provided herein as a sale, for certain non-tax
purposes, of all the Sponsor's right, title and interest in and to the Mortgage
Loans, whether now existing or hereafter created, and the other property
described above and all proceeds thereof. In the event such transfer is deemed
not to be a sale for such purposes, the Sponsor grants to the Trust, a security
interest in all of such party's right, title and interest in, to and under the
Mortgage Loans, whether now existing or hereafter created, and the other
property described above and all proceeds thereof; and this Agreement shall
constitute a security agreement under applicable law.
(e) Within 90 days following delivery of the Mortgage Files to the
Custodian on behalf of the Indenture Trustee pursuant to this Section, the
Indenture Trustee shall cause the Custodian to review on its behalf or the
Indenture Trustee shall review each such Mortgage File to ascertain that all
required documents set forth in this Section 2.01 have been executed and
received, and that such documents relate to the Mortgage Loans identified on the
Mortgage Loan Schedule and in so doing the Custodian on behalf of the Indenture
Trustee and/or the Indenture Trustee may rely on the purported due execution and
genuineness of any signature thereon. If within such 90-day period the Custodian
on behalf of the Indenture Trustee and/or the Indenture Trustee finds any
document constituting a part of a Mortgage File not to have been executed or
received or to be unrelated to the Mortgage Loans identified in said Mortgage
Loan Schedule or, if in the course of its review, the Custodian on behalf of the
Indenture Trustee and/or the Indenture Trustee determines that such Mortgage
File is otherwise defective in any material respect, the Indenture Trustee shall
promptly upon the conclusion of its review or the Custodian's review on its
behalf notify the Sponsor and the Insurer, and the Sponsor shall have a period
of 90 days after such notice within which to correct or cure any such defect.
Upon the completion of its 90-day review, the Custodian on behalf of the
Indenture Trustee and/or the Indenture Trustee shall also notify the Insurer of
any Mortgage File with respect to which it has been delivered any items other
than the original recorded Mortgage with respect to Section 2.01(c)(iii).
Neither the Custodian on behalf of the Indenture Trustee nor the
Indenture Trustee shall have any responsibility for reviewing any Mortgage File
except as expressly provided in this Section 2.01. In reviewing any Mortgage
File pursuant to this Section, the Indenture Trustee and the Custodian on behalf
of the Indenture Trustee shall have no responsibility for determining whether
any document is valid and binding, whether the text of any assignment or
endorsement is in proper or recordable form (except, if applicable, to determine
if the Indenture Trustee is the assignee or endorsee), whether any document has
been recorded in accordance with the requirements of any applicable
jurisdiction, or whether a blanket assignment is permitted in any applicable
jurisdiction, whether any Person executing any document is authorized to do so
or whether any signature thereon is genuine, but shall only be required to
determine whether a document has been executed, that it appears to be what it
purports to be, and, where applicable, that it purports to be recorded.
Upon its receipt of written notice from the Servicer or the Insurer
that a Recordation Event has occurred the Indenture Trustee shall take all
necessary steps to prepare and submit for recordation an Assignment of Mortgage
(or a blanket Assignment of Mortgage covering multiple Mortgage Loans if the
same is permitted in any applicable jurisdiction) at the expense of the Servicer
or, if the Servicer fails to pay such amounts or is no longer a party hereto,
pursuant to Section 8.7(d)(ix) of the Indenture.
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(f) The Sponsor shall sell, assign, transfer, set over and otherwise
convey without recourse to the Indenture Trustee all right, title and interest
of the Sponsor in and to any Eligible Substitute Mortgage Loan delivered to the
Indenture Trustee on behalf of the Trust by the Sponsor pursuant to Section 2.03
or Section 2.05 hereof and all its right, title and interest to principal
collected and interest accruing on such Eligible Substitute Mortgage Loan on and
after the applicable Substitute Cut-Off Date; PROVIDED, HOWEVER, that the
Sponsor shall reserve and retain all right, title and interest in and to
payments of interest due on such Eligible Substitute Mortgage Loan prior to the
applicable Substitute Cut-Off Date; PROVIDED, FURTHER, that neither the Trust
nor the Indenture Trustee shall be obligated to fund any future advances to the
related Mortgagor under such Eligible Substitute Mortgage Loan.
In connection with any transfer and assignment of an Eligible
Substitute Mortgage Loan to the Indenture Trustee on behalf of the Trust, the
Sponsor agrees to cause to be delivered to the Custodian on behalf of the
Indenture Trustee the items described in Section 2.01(c) on the date of such
transfer and assignment or, if a later delivery time is permitted by Section
2.01(c), then no later than such later delivery time.
(g) Each Defective Mortgage Loan that is required to be repurchased or
substituted pursuant to the provisions this Agreement or the Purchase Agreement
shall, upon such repurchase or substitution in accordance with the provisions
hereof, be released from the Trust and from the lien created by the Indenture.
As to each Mortgage Loan released from the Trust in connection with the
repurchase thereof or the conveyance of an Eligible Substitute Mortgage Loan
therefor, the Indenture Trustee will transfer, assign, set over and otherwise
convey without recourse, to or upon the order of the Sponsor, all of its right,
title and interest in and to such released Mortgage Loan and all the Trust's
right title and interest to principal collected and interest accruing on such
released Mortgage Loan on and after the first day of the calendar month in which
such Mortgage Loan is released; PROVIDED, HOWEVER, that the Trust shall reserve
and retain all right, title and interest in and to payments of principal and
interest collected on such released Mortgage Loan prior to such date.
Section 2.02. FURTHER ENCUMBRANCE OF TRUST PROPERTY.
(a) Immediately upon the conveyance to the Trust by the Sponsor of any
item of the Trust Property pursuant to Section 2.01, all right, title and
interest of the Sponsor in and to such item of Trust Property shall terminate,
and all such right, title and interest shall vest in the Trust, in accordance
with the Trust Agreement and Sections 3802 and 3805 of the Delaware Statutory
Trust Act (12 Del. Code, ss. 3801 et seq.).
(b) Immediately upon the vesting of the Trust Property in the Trust,
the Trust shall have the sole right to pledge or otherwise encumber, such Trust
Property. Pursuant to the Indenture and contemporaneously with such property
vesting in the Trust pursuant to (a) above, the Trust shall grant a security
interest in the Trust Property to secure the repayment of the Issuer Secured
Obligations. The Residual Certificates shall represent the beneficial ownership
interest in the Trust Property, and the Residual Certificateholders shall be
entitled to receive distributions with respect thereto as set forth herein.
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(c) Prior to the payment in full on the Notes, the payment of all
amounts due to the Insurer under the Insurance Agreement, the termination of the
Policy (as defined therein) and the surrender of the Policy by the Indenture
Trustee to the Insurer, the Indenture Trustee shall hold the Trust Property on
behalf of the Issuer Secured Parties. Following the payment in full of the Notes
and the payment of all amounts due to the Insurer under the Insurance Agreement,
and the release and discharge of the Indenture, all covenants of the Issuer
under Article III of the Indenture shall, until payment in full of the Residual
Certificates, remain as covenants of the Issuer for the benefit of the Residual
Certificateholders, enforceable by the Residual Certificateholders to the same
extent as such covenants were enforceable by the Insurer and the Noteholders
prior to the discharge of the Indenture. Any rights of the Indenture Trustee
under Article III of the Indenture, following the discharge of the Indenture,
shall vest in the Residual Certificateholders.
Section 2.03. ACCEPTANCE BY INDENTURE TRUSTEE; CERTAIN SUBSTITUTION OF
MORTGAGE LOANS.
(a) The Indenture Trustee shall, at such time as there are no Notes
outstanding and all sums due to (i) the Indenture Trustee or any agent or
counsel thereof pursuant to the Indenture, (ii) the Indenture Trustee pursuant
to this Agreement and (iii) the Insurer pursuant to the Insurance Agreement have
been paid, release any remaining portion of the Trust Property to the Sponsor.
(b) The Issuer hereby acknowledges its receipt of the Policy, the
Demand Note and the Mortgage Loans, and declares that the Indenture Trustee
holds and will hold such instruments, and to the extent that any documents are
delivered to it pursuant to Section 2.01, will hold such documents, and all
amounts received by it thereunder and hereunder, in trust, upon the terms herein
set forth, for the use and benefit of all present and future Noteholders, and
the Insurer. If the time to cure any defect in respect of any Mortgage Loan of
which the Indenture Trustee or the Insurer has notified the Sponsor following
the review pursuant to Section 2.01 has expired or if at any time any loss is
suffered by the Issuer or the Indenture Trustee on behalf of the Noteholders or
the Insurer, in respect of any Mortgage Loan as a result of (i) a defect in any
document constituting a part of its Mortgage File or (ii) an Assignment of
Mortgage to the Indenture Trustee not having been recorded as required by
Section 2.01, then on the next succeeding Business Day, the Sponsor shall (i)
substitute in lieu of such Mortgage Loan Eligible Substitute Mortgage Loans, and
deliver the Substitution Amount applicable thereto to the Servicer for deposit
in the Collection Account or (ii) purchase such Mortgage Loan at a purchase
price equal to the Loan Purchase Price thereof, which purchase price shall be
delivered to the Servicer for deposit in the Collection Account. Upon receipt of
any Mortgage Loan or of written notification signed by a Servicing Officer to
the effect that the Loan Purchase Price in respect of a Defective Mortgage Loan
has been deposited into the Collection Account, then as promptly as practicable,
the Indenture Trustee shall execute such documents and instruments of transfer
presented by the Sponsor, in each case without recourse, representation or
warranty, and take such other actions as shall reasonably be requested by the
Sponsor to effect such transfer by the Trust of such Defective Mortgage Loan
pursuant to this Section. It is understood and agreed that the obligation of the
Sponsor to accept a transfer of a Defective Mortgage Loan and to either convey
an Eligible Substitute Mortgage Loan or to make a deposit of any related Loan
Purchase
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Price into the Collection Account shall constitute the sole remedy respecting
such defect available to Noteholders and the Indenture Trustee against the
Sponsor.
(c) As to any Eligible Substitute Mortgage Loan, the Sponsor shall, if
required to deliver any such Eligible Substitute Mortgage Loan, deliver to the
Custodian on behalf of the Indenture Trustee with respect to such Eligible
Substitute Mortgage Loan such documents and agreements as are required to be
held by the Indenture Trustee in accordance with Section 2.01. For any
Collection Period during which the Sponsor substitutes one or more Eligible
Substitute Mortgage Loans, the Servicer shall determine the Substitution Amount
which amount shall be deposited by the Sponsor in the Collection Account at the
time of substitution. All amounts received in respect of the Eligible Substitute
Mortgage Loan during the Collection Period in which the circumstances giving
rise to such substitution occur shall not be a part of the Trust and shall not
be deposited by the Servicer in the Collection Account. All amounts received by
the Servicer during the Collection Period in which the circumstances giving rise
to such substitution occur in respect of any Defective Mortgage Loan so removed
by the Trust shall be deposited by the Servicer in the Collection Account. Upon
such substitution, the Eligible Substitute Mortgage Loan shall be subject to the
terms of this Agreement in all respects, and the Sponsor shall be deemed (i) to
have made with respect to such Eligible Substitute Mortgage Loan as of the date
of substitution, the covenants, representations and warranties set forth in
Section 2.05 and (ii) to have certified that such Mortgage Loan is an Eligible
Substitute Mortgage Loan. The procedures applied by the Sponsor in selecting
each Eligible Substitute Mortgage Loan shall not be materially adverse to the
interests of the Indenture Trustee, the Noteholders or the Insurer.
The Servicer, promptly following the transfer of a Defective Mortgage
Loan from, or an Eligible Substitute Mortgage Loan to, the Trust pursuant to
this Section, shall amend the Mortgage Loan Schedule and make appropriate
entries in its general account records to reflect such transfer. The Servicer
shall, following such transfer, appropriately xxxx its records to indicate that
it is no longer servicing such Mortgage Loan on behalf of the Trust. The
Sponsor, promptly following such transfer, shall appropriately xxxx its
Electronic Ledger and make appropriate entries in its general account records to
reflect such transfer.
Section 2.04. REPRESENTATIONS AND WARRANTIES REGARDING THE SERVICER AND
THE SPONSOR.
(a) The Servicer represents and warrants to the Indenture Trustee and
the Insurer that as of the Closing Date.
(i) The Servicer is a New York corporation, validly existing
and in good standing under the laws of the State of New York, and has
the corporate power to own its assets and to transact the business in
which it is currently engaged. The Servicer is duly qualified to do
business as a foreign corporation and is in good standing in each
jurisdiction in which the character of the business transacted by it or
any properties owned or leased by it requires such qualification and in
which the failure so to qualify would have a material adverse effect on
the business, properties, assets, or condition (financial or other) of
the Servicer;
8
(ii) The Servicer has the power and authority to make,
execute, deliver and perform this Agreement and all of the transactions
contemplated under this Agreement, and has taken all necessary
corporate action to authorize the execution, delivery and performance
of this Agreement. When executed and delivered, this Agreement will
constitute the legal, valid and binding obligation of the Servicer
enforceable in accordance with its terms, except as enforcement of such
terms may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of
creditors' rights generally and by the availability of equitable
remedies;
(iii) The Servicer is not required to obtain the consent of
any other party or any consent, license, approval or authorization
from, or registration or declaration with, any governmental authority,
bureau or agency in connection with the execution, delivery,
performance, validity or enforceability of this Agreement, except for
such consent, license, approval or authorization, or registration or
declaration, as shall have been obtained or filed, as the case may be,
prior to the Closing Date;
(iv) The execution, delivery and performance of this Agreement
by the Servicer will not violate any provision of any existing law or
regulation or any order or decree of any court applicable to the
Servicer or any provision of the Certificate of Incorporation or Bylaws
of the Servicer, or constitute a material breach of any mortgage,
Indenture, contract or other agreement to which the Servicer is a party
or by which the Servicer may be bound;
(v) No litigation or administrative proceeding of or before
any court, tribunal or governmental body is currently pending, or to
the knowledge of the Servicer threatened, against the Servicer or any
of its properties or with respect to this Agreement, or the Notes;
(vi) The Servicer is solvent and will not be rendered
insolvent by the transactions described herein and, after giving effect
to the transactions described herein, will not be left with an
unreasonably small amount of capital with which to engage in the
ordinary course of its business and the Servicer does not intend to
incur, nor does the Servicer believe that it has incurred, debts beyond
its ability to pay as they mature. The Servicer does not contemplate
the commencement of insolvency, liquidation or consolidation
proceedings or the appointment of a receiver, liquidator, conservator,
Indenture Trustee or similar official in respect of the Servicer or any
of its respective assets; and
(vii) The Servicer is a member of MERS in good standing, and
will comply in all material respects with the rules and procedures of
MERS in connection with the servicing of the MERS Mortgage Loans for as
long as such Mortgage Loans are registered with MERS.
The representations and warranties set forth in this Section 2.04(a) shall
survive the sale and assignment of the Mortgage Loans to the Trust. Upon
discovery of a breach of any representations and warranties which materially and
adversely affects the interests of the Noteholders or the Insurer, the person
discovering such breach shall give written notice within
9
five (5) days of discovery to the other parties and the Insurer. Within 30 days
of its discovery or its receipt of notice of breach, or, with the prior written
consent of a Responsible Officer of the Indenture Trustee and the Insurer, such
longer period specified in such consent, the Servicer shall cure such breach if
such breach is curable and no material adverse effect would result to the
Insurer, the Trust or the Noteholders.
(b) The Sponsor represents and warrants to the Indenture Trustee and
the Insurer that as of the Closing Date:
(i) The Sponsor is a Delaware limited liability company,
validly existing and in good standing under the laws of the State of
Delaware, and has the statutory power to own its assets and to transact
the business in which it is currently engaged. The Sponsor is duly
qualified to do business as a foreign limited liability company and is
in good standing in each jurisdiction in which the character of the
business transacted by it or any properties owned or leased by it
requires such qualification and in which the failure so to qualify
would have a material adverse effect on the business, properties,
assets, or condition (financial or other) of the Sponsor;
(ii) The Sponsor has the power and authority to make, execute,
deliver and perform this Agreement and all of the transactions
contemplated under this Agreement, and has taken all necessary
corporate action to authorize the execution, delivery and performance
of this Agreement. When executed and delivered, this Agreement will
constitute the legal, valid and binding obligation of the Sponsor
enforceable in accordance with its terms, except as enforcement of such
terms may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of
creditors' rights generally and by the availability of equitable
remedies;
(iii) The Sponsor is not required to obtain the consent of any
other party or any consent, license, approval or authorization from, or
registration or declaration with, any governmental authority, bureau or
agency in connection with the execution, delivery, performance,
validity or enforceability of this Agreement;
(iv) The execution, delivery and performance of this Agreement
by the Sponsor will not violate any provision of any existing law or
regulation or any order or decree of any court applicable to the
Sponsor or any provision of the certificate of formation or operating
agreement of the Sponsor, or constitute a material breach of any
mortgage, Indenture, contract or other agreement to which the Sponsor
is a party or by which the Sponsor may be bound;
(v) No litigation or administrative proceeding of or before
any court, tribunal or governmental body is currently pending, or to
the knowledge of the Sponsor threatened, against the Sponsor or any of
its properties or with respect to this Agreement or the Notes; and
(vi) The Sponsor is solvent and will not be rendered insolvent
by the transactions described herein and, after giving effect to the
transactions described herein, will not be left with an unreasonably
small amount of capital with which to engage in the
10
ordinary course of its business and the Sponsor does not intend to
incur, nor does the Sponsor believe that it has incurred, debts beyond
its ability to pay as they mature. The Sponsor does not contemplate the
commencement of insolvency, liquidation or consolidation proceedings or
the appointment of a receiver, liquidator, conservator, Indenture
Trustee or similar official in respect of the Sponsor or any of its
respective assets.
The representations and warranties set forth in this Section 2.04(b) shall
survive the sale and assignment of the Mortgage Loans to the Trust. Upon
discovery of a breach of any representations and warranties which materially and
adversely affects the interests of the Noteholders or the Insurer, the person
discovering such breach shall give prompt written notice to the other parties,
and the Insurer. Within 30 days of its discovery or its receipt of notice of
breach, or, with the prior written consent of a Responsible Officer of the
Indenture Trustee and the Insurer, such longer period specified in such consent,
the Sponsor shall cure such breach if such breach is curable and no material
adverse effect would result to the Insurer, the Trust or the Noteholders.
Section 2.05. REPRESENTATIONS AND WARRANTIES OF THE SPONSOR REGARDING
THE MORTGAGE LOANS; REMOVAL OF CERTAIN MORTGAGE LOANS.
(a) The Sponsor hereby makes the following representations and
warranties on which the Issuer is deemed to have relied in acquiring the
Mortgage Loans and upon which the Insurer is deemed to rely in issuing the
Policy. Such representations and warranties speak as of the execution and
delivery of this Agreement, as of the Closing Date with respect to the Mortgage
Loans and as of the related Transfer Date with respect to the Eligible
Substitute Mortgage Loans, but shall survive the sale, transfer, and assignment
of the Mortgage Loans to the Issuer and the pledge thereof to the Indenture
Trustee pursuant to the Indenture,
(i) As of the Closing Date with respect to the Mortgage Loans
and as of the related Transfer Date with respect to any Eligible
Substitute Mortgage Loans and with respect to any HELOC Mortgage Loan,
as of the date any Additional Balance is created, the information set
forth in the Mortgage Loan Schedule for such Mortgage Loans is true and
correct in all material respects;
(ii) Each Mortgage Loan is being serviced by the Servicer and
is being serviced in compliance with applicable law;
(iii) The applicable Cut-Off Date Principal Balance has not
been assigned or pledged, and the Sponsor is the sole owner and holder
of such Cut-Off Date Principal Balance free and clear of any and all
liens, claims, encumbrances, participation interests, equities,
pledges, charges or security interests of any nature, and has full
right and authority, under all governmental and regulatory bodies
having jurisdiction over the ownership of the applicable Mortgage
Loans, to sell, assign or transfer the same pursuant to this Agreement
and upon its acquisition of the Mortgage Loans, as of the Closing Date,
the Trust will be the sole owner and holder of such Mortgage Loans free
and clear of any and all liens claims, encumbrances, participating
interests, equities, pledges, charges, or security interests of any
nature;
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(iv) Except with respect to liens released immediately prior
to the transfer herein contemplated, each Credit Line Agreement and
each Mortgage Note and related Mortgage has not been assigned or
pledged and immediately prior to the transfer and assignment herein
contemplated, the Sponsor held good, marketable and indefeasible title
to, and was the sole owner and holder of, each Mortgage Loan subject to
no liens, charges, mortgages, claims, participation interests,
equities, pledges or security interests of any nature, encumbrances or
rights of others (collectively, a "LIEN"); the Sponsor has full right
and authority under all governmental and regulatory bodies having
jurisdiction over the Sponsor, subject to no interest or participation
of, or agreement with, any party, to sell and assign the same pursuant
to this Agreement; and immediately upon the transfers and assignments
herein contemplated, the Sponsor shall have transferred all of its
right, title and interest in and to each Mortgage Loan and the Trust
will hold good, marketable and indefeasible title to, and be the sole
owner of, each Mortgage Loan subject to no Liens;
(v) As of the Closing Date with respect to the Mortgage Loans
and the applicable Transfer Date with respect to any Eligible
Substitute Mortgage Loans, the related Mortgage is a valid, enforceable
and subsisting first or second lien, as set forth on the Mortgage Loan
Schedule with respect to each related Mortgaged Property, and as of the
applicable Cut-Off Date the related Mortgaged Property is free and
clear of all encumbrances and liens having priority over the first or
second lien, as applicable, of such Mortgage except for liens for (i)
real estate taxes and special assessments not yet delinquent; (ii) any
first mortgage loan secured by such Mortgaged Property and specified on
the Mortgage Loan Schedule; (iii) covenants, conditions and
restrictions, rights of way, easements and other matters of public
record as of the date of recording that are acceptable to mortgage
lending institutions generally or specifically reflected in the
appraisals; and (iv) other matters to which like properties are
commonly subject which do not materially interfere with the benefits of
the security intended to be provided by such Mortgage;
(vi) As of and after the Closing Date with respect to the
Mortgage Loans and as of and after the applicable Transfer Date with
respect to any Eligible Substitute Mortgage Loans, there is no valid
right to rescission, offset, defense (including the defense of usury)
or counterclaim of any obligor under any Loan Agreement or Mortgage;
(vii) As of the Closing Date with respect to the Mortgage
Loans and the applicable Transfer Date with respect to any Eligible
Substitute Mortgage Loans, there is no delinquent recording or other
tax or fee or assessment lien against any related Mortgaged Property;
(viii) As of the Closing Date with respect to the Mortgage
Loans and the applicable Transfer Date with respect to any Eligible
Substitute Mortgage Loans, there is no proceeding pending or threatened
for the total or partial condemnation of any Mortgaged Property, nor is
such a proceeding currently occurring, and such property is in good
repair and is undamaged by waste, fire, earthquake or earth movement,
windstorm, flood, other types of water damage, tornado or other
casualty, so as to affect adversely the
12
value of the Mortgaged Property as security for the Mortgage Loan or
the use for which the premises were intended;
(ix) As of the Closing Date with respect to the Mortgage Loans
and the applicable Transfer Date with respect to any Eligible
Substitute Mortgage Loans, there are no mechanics' or similar liens or
claims which have been filed for work, labor or material affecting the
related Mortgaged Property which are, or may be, liens prior or equal
to the lien of the related Mortgage and no rights are outstanding which
could give rise to such liens, except liens which are fully insured
against by the title insurance policy or other title protection
referred to in clause (xiv);
(x) No Minimum Monthly Payment is more than 59 days delinquent
(measured on a contractual basis);
(xi) As of the Closing Date with respect to the Mortgage Loans
and the applicable Transfer Date with respect to any Eligible
Substitute Mortgage Loans, for each Mortgage Loan, the related Mortgage
File contains each of the documents and instruments specified to be
included therein and such Mortgage File has been delivered to the
Indenture Trustee;
(xii) The related Loan Agreement and the related Mortgage at
origination complied in all material respects with applicable local,
state and federal laws and regulations, including, without limitation,
all applicable predatory and abusive lending laws, usury,
truth-in-lending, real estate settlement procedures, consumer credit
protection, equal credit opportunity, recording or disclosure laws
applicable to the Mortgage Loans, and consummation of the transactions
contemplated hereby, including without limitation the receipt of
interest, will not involve the violation of such laws;
(xiii) On the Closing Date with respect to the Mortgage Loans
and to the extent not already included in such filing, on the
applicable Transfer Date with respect to any Eligible Substitute
Mortgage Loans, the Sponsor has filed UCC-1 financing statements with
respect to such Mortgage Loans;
(xiv) A lender's policy of title insurance, xxxxxxxXxxxx.xxx
lender master protection program (standard mortgage guaranty) or a
commitment (binder) to issue the same or an attorney's certificate or
opinion of title was effective on the date of the origination of each
mortgage loan and each such policy or certificate or opinion of title
is valid and remains in full force and effect;
(xv) As of the Closing Date with respect to the Mortgage Loans
and the applicable Transfer Date with respect to any Eligible
Substitute Mortgage Loans, none of the Mortgaged Properties is a mobile
home or a manufactured housing unit;
(xvi) As of the Cut-Off Date for the Mortgage Loans no more
than approximately ______% of the Mortgage Loans (by Pool Balance) are
secured by Mortgaged Properties located in one United States postal zip
code;
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(xvii) The Combined Loan-to-Value Ratio for each Mortgage Loan
was not in excess of 100%;
(xviii) No selection procedure that identified the Mortgage
Loans as being less desirable or valuable than other comparable
mortgage loans originated or acquired by the Sponsor was utilized in
selecting the Mortgage Loans for sale to the Trust; PROVIDED, HOWEVER,
that the Mortgage Loans were selected from the pool of mortgage loans
originated in connection with the Sponsor's mortgage loan origination
program;
(xix) The Sponsor has not transferred the Mortgage Loans to
the Trust with any intent to hinder, delay or defraud any of its
creditors;
(xx) The Minimum Monthly Payment with respect to any Mortgage
Loan is not less than the interest accrued at the applicable Loan Rate
on the average daily Principal Balance during the interest period
relating to the date on which such Minimum Monthly Payment is due;
(xxi) As of the Closing Date with respect to the Mortgage
Loans and the applicable Transfer Date with respect to any Eligible
Substitute Mortgage Loans, each Loan Agreement and each Mortgage Loan
is genuine and is a legal, valid, binding and enforceable obligation of
the related Mortgagor, except as the enforceability thereof may be
limited by the bankruptcy, insolvency or similar laws affecting
creditors' rights generally;
(xxii) As of the Closing Date with respect to the Mortgage
Loans and the applicable Transfer Date with respect to any Eligible
Substitute Mortgage Loans, there has been no default, breach, violation
or event of acceleration of any senior mortgage loan related to a
Mortgaged Property that has not been cured by a party other than the
Servicer;
(xxiii) The terms of each Mortgage Note and each Mortgage have
not been impaired, altered or modified in any respect, except by a
written instrument which (if such instrument is secured by real
property) has been recorded, if necessary, to protect the interest of
the Noteholders and the Insurer and which has been delivered to the
Indenture Trustee. The substance of any such alteration or modification
is reflected on the related Mortgage Loan Schedule and has been
approved by the primary mortgage guaranty insurer, if any;
(xxiv) The definition of "prime rate" in each Credit Line
Agreement relating to a HELOC Mortgage Loan does not differ materially
from the definition in the form of Credit Line Agreement in Exhibit D;
(xxv) The weighted average remaining term to maturity of the
Mortgage Loans on a contractual basis as of the Cut-Off Date is
approximately 210 months. On each date that the Loan Rates relating to
HELOC Mortgage Loans have been adjusted, interest rate adjustments on
the HELOC Mortgage Loans were made in compliance with the related
Mortgages and Credit Line Agreement and applicable law and all required
notices of interest rate adjustments were sent to each Mortgagor on a
timely basis. Over
14
the term of each HELOC Mortgage Loan, the Loan Rate may not exceed the
related Loan Rate Cap, if any. The Loan Rate Cap for each of the HELOC
Mortgage Loans is _____%. With respect to the HELOC Mortgage Loans, the
margins range between _____% and _____% and the weighted average margin
is approximately _____% as of the Cut-Off Date. The Loan Rates on the
Mortgage Loans range between _____% and _____%, and the weighted
average Loan Rate on the Mortgage Loans is approximately _____%;
(xxvi) As of the Closing Date with respect to the Mortgage
Loans and the applicable Transfer Date with respect to any Eligible
Substitute Mortgage Loans, each Mortgaged Property consists of a single
parcel of real property with a one-to-four unit single family residence
erected thereon, or an individual condominium unit, planned unit
development unit or townhouse;
(xxvii) No more than approximately _____% (by Pool Balance) of
the Mortgage Loans are secured by real property improved by individual
condominium units, planned development units, manufactured housing or
two-to-four family residences erected thereon, and approximately
______% (by Pool Balance) of the Mortgage Loans are secured by real
property with a one-family residence erected thereon;
(xxviii) Each Mortgage Note evidencing a Closed End Mortgage
Loan is comprised of one original promissory note and each such
promissory note constitutes an "instrument" for purposes of Section
9-102(A)(47) of the UCC. There is no obligation on the part of the
Sponsor or any other party to make payments in addition to those made
by the Mortgagor with respect to the Closed End Mortgage Loans;
(xxix) The Credit Limits on the HELOC Mortgage Loans range
between $_____ and $______ with an average of approximately $_____. The
average Credit Limit Utilization Rate (weighted by Credit Limit) of the
HELOC Mortgage Loans is approximately _____%. The Principal Balances on
the Mortgage Loans range between approximately $______ and $______ with
an average of approximately $______;
(xxx) Approximately _____% of the Mortgage Loans are second
liens, and either (A) no consent for each Mortgage Loan was required by
the holder of the related senior lien, if any, prior to the making of
such Mortgage Loan or (B) such consent has been obtained and is
contained in the related Mortgage File;
(xxxi) This Agreement constitutes a valid transfer and
assignment to the Trust of all right, title and interest of the Sponsor
in and to the Cut-Off Date Principal Balances with respect to the
applicable Mortgage Loans, all monies due or to become due with respect
thereto and all proceeds of such Cut-Off Date Principal Balances with
respect to the Mortgage Loans and such funds as are from time to time
deposited in the Collection Account (excluding any investment earnings
thereon) and all other property specified in the definition of "Trust"
as being part of the corpus of the Trust conveyed to the Trust, and
upon payment for the Additional Balances, will constitute a valid
transfer and assignment to the Indenture Trustee of all right, title
and interest of the Sponsor in and to the Additional Balances, all
monies due or to become due with respect thereto, and
15
all proceeds of such Additional Balances and all other property
specified in the definition of "Trust" relating to the Additional
Balances;
(xxxii) As of the Closing Date no Mortgage Loan is the subject
of foreclosure proceedings and, to the best of the Sponsor's knowledge,
no obligor of any of the Mortgage Loans has filed for bankruptcy
protection. As of the applicable Transfer Date, no Eligible Substitute
Mortgage Loan is the subject of foreclosure proceedings and, to the
best of the Sponsor's knowledge, no obligor of any of the Eligible
Substitute Mortgage Loans has filed for bankruptcy protection.
(xxxiii) The proceeds of each Closed End Mortgage Loan have
been fully disbursed, and there is no obligation on the part of the
mortgagee to make future advances thereunder. Any and all requirements
as to completion of any on-site or off-site improvements and as to
disbursements of any escrow funds therefor have been complied with. All
costs, fees and expenses incurred in making or closing or recording
such Closed End Mortgage Loans were paid;
(xxxiv) Each Mortgage contains customary and enforceable
provisions which render the rights and remedies of the holder thereof
adequate for the realization against the related Mortgaged Property of
the benefits of the security, including (A) in the case of a Mortgage
designated as a deed of trust, by trustee's sale and (B) otherwise by
judicial foreclosure. Subject to applicable state law, there is no
homestead or other exemption available to the Mortgagor which would
materially interfere with the rights to sell the Mortgaged Property at
a trustee's sale or the right to foreclose upon the related Mortgage;
(xxxv) As of the Closing Date with respect to the Mortgage
Loans and the applicable Transfer Date with respect to any Eligible
Substitute Mortgage Loan, except for events permissible under Section
3.05 of this Agreement, there is no default, breach, violation or event
of acceleration existing under any Mortgage or the related Mortgage
Note and no event which, with the passage of time or with notice and
the expiration of any grace or cure period, would constitute a default,
breach, violation or event of acceleration; and the Sponsor has not
waived any default, breach, violation or event of acceleration;
(xxxvi) To the best knowledge of the Sponsor, all parties to
the Mortgage Note and the Mortgage had legal capacity to execute the
Mortgage Note and the Mortgage and each Mortgage Note and Mortgage have
been duly and properly executed by such parties; Each Mortgage and
Mortgage Note is the legal, valid and binding obligation of the related
Mortgagor and is enforceable by the Issuer against the Mortgagor in
accordance with its terms, except only as such enforcement may be
limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the enforcement of creditors' rights generally
and by law; There is only one originally executed Mortgage Note or
Credit Line Agreement and promissory Note, as applicable, for each
Mortgage Loan;
(xxxvii) As of the Cut-Off Date no more than approximately
____% of the Principal Balance of the Mortgage Loans represent Mortgage
Loans with respect to
16
which the related Mortgagor had a Credit Score of ___ or less at the
time of origination or whose Credit Score was unavailable.
(xxxviii) As of the Closing Date with respect to the Mortgage
Loans and the applicable Transfer Date with respect to any Eligible
Substitute Mortgage Loan, no Mortgagor has been released, in whole or
in part, except in connection with an assumption agreement which has
been approved by the applicable title insurer (to the extent required
by such title insurer) and which is part of the Mortgage File delivered
to the Indenture Trustee;
(xxxix) At the time of origination of each Mortgage Loan, the
related prior lien was not more than 30 days delinquent. Additionally,
as of the Closing Date, no senior mortgage loan on the related
Mortgaged Property was more than 59 days delinquent;
(xl) All required inspections, licenses and certificates with
respect to the use and occupancy of all occupied portions of all
property securing the Mortgages have been made, obtained or issued, as
applicable;
(xli) If the improvements securing a Mortgage Loan were in a
federally designated special flood hazard area as of the date of
origination, flood insurance to the extent required in Section 3.04
covers the related Mortgaged Property (either by coverage under the
federal flood insurance program or by coverage by private insurers);
(xlii) With respect to each Mortgage Loan, the related prior
lien does not provide for negative amortization;
(xliii) With respect to each Mortgage Loan, the maturity date
of the Mortgage Loan is prior to the maturity date of the related prior
lien if such prior lien provides for a balloon payment;
(xliv) All amounts received after the Cut-Off Date with
respect to the Mortgage Loans to which the Sponsor is not entitled will
be deposited into the Collection Account within one Business Day after
the Closing Date;
(xlv) Each Mortgage Loan is secured by a property having an
appraised value as of origination of $_________ or less;
(xlvi) Except for events permissible under Section 3.05(a)(x)
of this Agreement, there are no defaults in complying with the terms of
the Mortgage, and either (1) any taxes, governmental assessments,
insurance premiums, water, sewer and municipal charges or ground rents
which previously became due and owing have been paid, or (2) an escrow
of funds has been established in an amount sufficient to pay for every
such item which remains unpaid and which has been assessed but is not
yet due and payable. There are no defaults in complying with the terms
of any senior mortgage on the related Mortgaged Property that have not
been cured by anyone other than the Servicer, except for any payment
defaults of less than 30 days. Except for payments in the nature of
escrow payments, including without limitation, taxes and insurance
payments, the Sponsor has not advanced funds, or induced, solicited or
knowingly
17
received any advance of funds by a party other than the Mortgagor,
directly or indirectly, for the payment of any amount required by the
Mortgage Note, except for interest accruing from the date of the
Mortgage Note or date of disbursement of the Mortgage proceeds,
whichever is greater, to the day which precedes by one month the Due
Date of the first installment of principal and interest;
(xlvii) With respect to each Mortgage Loan, the improvements
upon each Mortgaged Property are covered by a valid and existing hazard
insurance policy with a carrier generally acceptable to the Servicer
that provides for fire and extended coverage representing coverage not
less than (a) the Credit Limit of such HELOC Mortgage Loan or (b) the
Cut-Off Date Principal Balance of such Closed End Mortgage Loan or (c)
the maximum insurable value of the Mortgaged Property;
(xlviii) No misrepresentation of a material fact or fraud in
respect of the origination, modification or amendment of any Mortgage
Loan has taken place on the part of any person, including, without
limitation, the related Mortgagor, any appraiser, any builder or
developer or any party involved in the origination of such Mortgage
Loan;
(xlix) With respect to the Mortgage Loans, the terms of the
Mortgage Note and the Mortgage have not been impaired, altered or
modified in any material respect, except by a written instrument which
has been recorded or is in the process of being recorded, if necessary,
to protect the interests of the Insurer and the Noteholders and which
has been or will be delivered to the Indenture Trustee on behalf of the
Trust, no Mortgage has been satisfied, cancelled or rescinded, in whole
or in part, and the Mortgaged Property securing the Mortgage has not
been released from the lien of the Mortgage, in whole or in part, nor
has any instrument been executed that would effect any such release,
cancellation or rescission;
(l) As of the Cut-Off Date, no Mortgage Loan is more than 59
days delinquent in payment of principal and interest;
(li) Except for Mortgage Loans that are delinquent for a time
period less than that set forth in (l) above, there is no default,
breach, violation or event of acceleration existing under any Mortgage
or the related Mortgage Note and no event which, with the passage of
time or with notice and the expiration of any grace or cure period,
would constitute a default, breach, violation or event of acceleration;
and neither the Sponsor, nor any other entity involved in originating
or servicing a Mortgage Loan, has waived any default, breach, violation
or event of acceleration;
(lii) None of the Mortgage Loans is a cooperative share
mortgage;
(liii) Each appraisal of a Mortgage Loan that was used to
determine the appraised value of the related Mortgaged Property was
conducted generally in accordance with the Sponsor's mortgage loan
origination program(s) and customary industry standards and included an
assessment of the fair market value of the related mortgaged property
at the time of the appraisal. The Mortgage File contains an appraisal
of the applicable Mortgaged Property;
18
(liv) All individual insurance policies contain a standard
mortgagee clause naming the Servicer, its successors and assigns, as
mortgagee. All premiums thereon have been paid. Each Mortgage obligates
the Mortgagor thereunder to maintain all such insurance at the
Mortgagor's cost and expense, and upon the Mortgagor's failure to do
so, authorizes the holder of the Mortgage to obtain and maintain such
insurance at the Mortgagor's cost and expense and to seek reimbursement
therefor from the Mortgagor;
(lv) Any advances made after the date of origination of a
Mortgage Loan but prior to the Cut-Off Date have been consolidated with
the outstanding principal amount secured by the related Mortgage, and
the secured principal amount, as consolidated, bears a single interest
rate and single repayment term reflected on the Mortgage Loan Schedule.
The consolidated principal amount does not exceed the original
principal amount of the related Mortgage Loan;
(lvi) No improvement located on or being part of any Mortgaged
Property is in violation of any applicable zoning law or regulation.
All inspections, licenses and certificates required to be made or
issued with respect to all occupied portions of each Mortgaged Property
and, with respect to the use and occupancy of the same, including, but
not limited to, certificates of occupancy and fire underwriting
certificates, have been made or obtained from the appropriate
authorities and such Mortgaged Property is lawfully occupied under the
applicable law and all improvements which were included for the purpose
of determining the appraised value of the Mortgaged Property lie wholly
within the boundaries and building restriction lines of such property,
and no improvements on adjoining property encroach upon the Mortgage
Property;
(lvii) The proceeds of each fixed rate and balloon Mortgage
Loan have been fully disbursed and there is no obligation on the part
of the mortgagee to make future advances thereunder and any and all
requirements as to completion of any on-site or off-site improvements
and as to disbursement of any escrow funds therefor have been complied
with. All costs, fees and expenses incurred in making, closing or
recording the Mortgage Loans were paid and the Mortgagor is not
entitled to any refund of amounts paid or due under the Mortgage Note;
(lviii) No Mortgage Loan has a shared appreciation feature, or
other contingent interest feature;
(lix) All parties which have had any interest in the Mortgage
Loan, whether as originator, mortgagee, assignee, pledgee or otherwise,
are (or, during the period in which they held and disposed of such
interest, were): (A) organized under the laws of such state, or (B)
qualified to do business in such state, or (C) federal savings and loan
associations or national banks having principal offices in such state,
or (D) not doing business in such state so as to require qualification
or licensing, or (E) not otherwise required or licensed in such state.
To the best of Sponsor's knowledge, all parties which have had any
interest in the Mortgage Loan were in compliance with any and all
applicable licensing requirements of the laws of the state wherein the
Mortgaged Property is located or were not required to be licensed in
such state;
19
(lx) Each document or instrument in the related Mortgage File
is in a form generally acceptable to prudent mortgage lenders that
regularly originate or purchase mortgage loans comparable to the
Mortgage Loans for sale to prudent investors in the secondary market
that invest in mortgage loans such as the Mortgage Loans;
(lxi) Each original Mortgage was recorded and all subsequent
assignments of the original Mortgage (other than the assignment to the
Indenture Trustee) have been recorded in the appropriate jurisdictions
wherein such recordation is necessary to perfect the lien thereof as
against creditors of the Sponsor, or is in the process of being
recorded;
(lxii) No Mortgage Loan was originated under a buydown plan;
(lxiii) No Mortgage Loan is subject to the requirements of the
Home Ownership and Equity Protection Act of 1994 ("HOEPA") or is in
violation of any state or municipal law comparable to HOEPA;
(lxiv) The Servicer for each Mortgage Loan will accurately and
fully report its borrower credit files to all three credit repositories
in a timely manner;
(lxv) No proceeds from any Mortgage Loan were used to purchase
single-premium credit insurance policies;
(lxvi) No Mortgage Loan has a prepayment penalty term longer
than five years after its origination;
(lxvii) Each Mortgage Loan conforms, and all Mortgage Loans in
the aggregate conform, in all material respects, to the descriptions
thereof set forth in the Prospectus Supplement;
(lxviii) Each Mortgage Loan was originated on or after
________, 200_;
(lxix) The Sponsor represents and warrants that the Servicer
currently operates or actively participates in an on-going business (A)
to originate single family mortgage loans ("LOANS"), and/or (B) to make
periodic purchases of Loans from originators or sellers, and/or (C) to
issue and/or purchase securities or bonds supported by the Loans, a
portion of which Loans are made to borrowers who are:
(a) low-income families (families with incomes of 80%
or less of area median income) living in low-income
areas (a census tract or block numbering area in
which the median income does not exceed 80 percent of
the area median income); or
(b) very low-income families (families with incomes
of 60% or less of area median income).
(lxx) Each Mortgage contains a provision for the acceleration
of the payment of the unpaid principal balance of the related Mortgage
Loan in the event the
20
related Mortgaged Property is sold or transferred without the prior
consent of the mortgagee thereunder;
(lxxi) Each Mortgage Loan was originated substantially in
accordance with Sponsor's underwriting criteria, which conform to the
underwriting criteria set forth in the Prospectus Supplement.
(lxxii) There exists no violation of any local, state or
federal environmental law, rule or regulation in respect of any
Mortgaged Property which violation has or could have a material adverse
effect on the market value of such Mortgaged Property. Sponsor has no
knowledge of any pending action or proceeding directly involving any
such Mortgaged Property in which compliance with any environmental law,
rule or regulation is in issue; and, to the best of Sponsor's
knowledge, nothing further remains to be done to satisfy in full all
requirements of each such law, rule or regulation constituting a
prerequisite to the use and enjoyment of any such Mortgaged Property;
(lxxiii) The Sponsor has caused or will cause to be performed
any and all acts required to be performed to preserve the rights and
remedies of the Indenture Trustee in any insurance policies applicable
to the Mortgage Loans including, without limitation, any necessary
notifications of insurers, assignment of policies or interests therein,
and establishments of co-insured, joint loss payee and mortgagee rights
in favor of the Indenture Trustee;
(lxxiv) The related Mortgage Note is not and has not been
secured by any collateral, pledged account or other security except the
lien of the corresponding Mortgage;
(lxxv) There is no obligation on the part of the Sponsor or
any other party to make payments in addition to those made by the
Mortgagor;
(lxxvi) With respect to each Mortgage constituting a deed of
trust, a trustee, duly qualified under existing law to serve as such,
has been properly designated and currently so serves and is named in
such Mortgage, and no fees or expenses are or will become payable by
the Noteholders or the Trust to the trustee under the deed of trust,
except in connection with a trustee's sale after default by the
Mortgagor;
(lxxvii) Each Mortgagor has executed a statement to the effect
that such Mortgagor has received all disclosure materials including the
notice of the right of cancellation or rescission required by
applicable law with respect to the making of the Mortgage Loan and any
waiver of any right of cancellation or rescission exercised by the
Mortgagor was in accordance with applicable law and is binding on the
Mortgagor;
(lxxviii) The security interest created pursuant to Section
2.01 hereof is a valid and continuing security interest (as defined in
the UCC) in favor of the Issuer in the property sold, transferred,
assigned, set over and otherwise conveyed from the Sponsor to the
Issuer pursuant to this Agreement, which security interest is prior to
all other Liens and is enforceable as such against creditors of and
purchasers from the Sponsor;
21
(lxxix) The Sponsor has not authorized the filing of and is
not aware of any financing statements against the Sponsor that include
a description of collateral covering the property sold, transferred,
assigned, set over and otherwise conveyed from the Sponsor to the
Issuer pursuant to this Agreement other than any financing statement
relating to the security interest granted to the Issuer hereunder that
has not been terminated;
(lxxx) The Sponsor is not aware of any judgment or tax lien
filings against it;
(lxxxi) None of the Mortgage Notes has any marks or notations
indicating that they have been pledged, assigned or otherwise conveyed
to any Person other than the Issuer;
(lxxxii) The pool tape from which the selection of the
Mortgage Loans being acquired on the Closing Date was made available to
the accountants that are providing a comfort letter to the Insurer in
connection with the Prospectus Supplement and with respect to the
Mortgage Loans as of the Closing Date, the information on the pool tape
was complete and accurate as of its date and included a description of
the same Mortgage Loans that are described on the Schedule of Mortgage
Loans and the payments due thereunder as of the Closing Date;
(lxxxiii) With respect to each Mortgage Loan, the payments
required of the related Mortgagor will be such that the Mortgage Loan
will fully amortize over its amortization term; and
(lxxxiv) The sale, transfer, assignment and conveyance of the
Mortgage Loans by the Sponsor to the Issuer pursuant to the Sale and
Servicing Agreement is not subject to and will not result in any tax,
fee or governmental charge payable by the Seller, the Sponsor, the
Issuer or the Indenture Trustee to any federal, state or local
governments ("TRANSFER TAXES") other than Transfer Taxes which have or
will have been paid by the Sponsor as due; PROVIDED, that in the event
that the Trust or the Indenture Trustee receives actual notice of any
Transfer Taxes arising out of the transfer, assignment or conveyance of
the Mortgage Loans, on written demand by the Issuer or the Indenture
Trustee, or upon the Sponsor's otherwise being given notice thereof by
the Issuer or the Indenture Trustee, the Sponsor shall pay, and
otherwise indemnify and hold the Issuer, the Indenture Trustee and the
Insurer harmless, on an after-tax basis, from and against any and all
Transfer Taxes, it being understood that the Noteholders, the Issuer,
the Indenture Trustee and the Insurer shall have no obligation to pay
any such Transfer Taxes.
With respect to the representations and warranties set forth in this Section
2.05 that are made to the best of the Sponsor's knowledge or as to which the
Sponsor has no knowledge, if it is discovered by the Sponsor, the Servicer, the
Insurer, or a Responsible Officer of the Indenture Trustee that the substance of
such representation and warranty is inaccurate and such inaccuracy materially
and adversely affects the value of the related Mortgage Loan then,
notwithstanding the Sponsor's lack of knowledge with respect to the substance of
such representation and warranty being inaccurate at the time the representation
or warranty was made, such inaccuracy shall be
22
deemed a breach of the applicable representation or warranty. Notwithstanding
the foregoing, a breach of any of the representations and warranties set forth
in clauses (lxiii) through (lxvi) of this Section 2.05 will be deemed to
materially and adversely affect the value of the related Mortgage Loan.
(b) It is understood and agreed that the representations and warranties
set forth in this Section 2.05 shall survive delivery of the respective Mortgage
Files to the Indenture Trustee pursuant to Section 2.01 and the termination of
the rights and obligations of the Servicer pursuant to Section 5.04 or 6.02.
Upon discovery by the Sponsor, the Servicer, the Insurer or a Responsible
Officer of the Indenture Trustee of a breach of any of the foregoing
representations and warranties, without regard to any limitation set forth
therein concerning the knowledge of the Sponsor as to the facts stated therein,
which materially and adversely affects the interests of the Trust or the
Noteholders or the Insurer in the related Mortgage Loans, the party discovering
such breach shall give prompt written notice to the other parties and to the
Insurer. Within 90 days of its discovery or its receipt of notice of such
breach, the Sponsor shall use all reasonable efforts to cure such breach or
shall, not later than the Business Day next preceding the Payment Date in the
month following the Collection Period in which any such cure period expired (or
such later date that is acceptable to the Indenture Trustee or the Insurer as
evidenced by their written consents), either (a) repurchase such Mortgage Loan
from the Trust at the Loan Purchase Price or (b) substitute an Eligible
Substitute Mortgage Loan, each in the same manner and subject to the same
conditions as set forth in Section 2.03 and the representations and warranties
set forth in Section 2.04; PROVIDED, HOWEVER, that the cure for any breach of a
representation and warranty relating to the characteristics of the Mortgage
Loans in the aggregate shall be a repurchase of or substitution for only the
Mortgage Loans necessary to cause such characteristics to be in compliance with
the related representation and warranty. Upon accepting such transfer and making
any required deposit into the Collection Account or substitution of an Eligible
Substitute Mortgage Loans, as the case may be, the Sponsor shall be entitled to
receive an instrument of assignment or transfer from the Indenture Trustee to
the same extent as set forth in Section 2.03 with respect to the transfer of
Mortgage Loans under that Section. The Insurer shall be notified of any
substitution of an Eligible Substitute Mortgage Loan.
It is understood and agreed that the obligation of the Sponsor to
repurchase a Mortgage Loan as to which a breach has occurred and is continuing
and deposit in the Collection Account the Loan Purchase Price or to substitute
an Eligible Substitute Mortgage Loan, as the case may be, shall constitute the
sole remedy against the Sponsor respecting such breach available to Noteholders,
the Indenture Trustee on behalf of Noteholders and the Insurer; PROVIDED,
HOWEVER, that the Sponsor shall defend and indemnify the Indenture Trustee, the
Insurer and the Noteholders against all reasonable costs and expenses, and all
losses, damages, claims and liabilities, including reasonable fees and expenses
of counsel and the amount of any settlement entered into with the consent of the
Sponsor (such consent not to be unreasonably withheld), which may be asserted
against or incurred by any of them as a result of any third-party action arising
out of any breach of any such representation and warranty. Notwithstanding the
foregoing, with regard to any breach of the representation and warranty set
forth in Section 2.05(a)(xxxi), the Sponsor shall pay to the Trust the Loan
Purchase Price.
The Sponsor does hereby assign to the Trust the benefits of the
representations and warranties made to it with respect to the Mortgage Loans
under the Mortgage Loan Purchase
23
Agreement and the Trust may exercise the rights with respect thereto relating to
a Mortgage Loan, including the right to require repurchase in the event such
Mortgage Loan is not repurchased by the Sponsor
Section 2.06. COVENANTS OF THE SPONSOR. The Sponsor hereby covenants
that:
(a) SECURITY INTERESTS. The Sponsor will not sell, pledge, assign or
transfer to any other Person, or grant, create, incur, assume or suffer to exist
any Lien on any Mortgage Loans, whether now existing or hereafter created, or
any interest therein; the Sponsor will notify the Indenture Trustee and the
Insurer of the existence of any Lien on any Mortgage Loans immediately upon
discovery thereof; and the Sponsor will defend the Trust's right, title and
interest (including the Trust's security interest) in, to and under the Mortgage
Loans, whether now existing or hereafter created, against all claims of third
parties claiming through or under the Sponsor; PROVIDED, HOWEVER, that nothing
in this Section 2.06(a) shall prevent or be deemed to prohibit the Sponsor from
suffering to exist upon any of the Mortgage Loans any Liens for municipal or
other local taxes and other governmental charges if such taxes or governmental
charges shall not at the time be due and payable or if the Sponsor shall
currently be contesting the validity thereof in good faith by appropriate
proceedings and shall have set aside on its books adequate reserves with respect
thereto.
(b) UCC-1 FINANCING STATEMENTS. On the Closing Date with respect to the
Mortgage Loans and, to the extent not already included in such filing, on the
applicable Transfer Date with respect to any Eligible Substitute Mortgage Loans,
the Sponsor will file UCC-1 financing statements with respect to such Mortgage
Loans.
(c) NEGATIVE PLEDGE. The Sponsor hereby agrees not to transfer, assign,
exchange, pledge, finance, hypothecate, grant a security interest in or
otherwise convey the Residual Certificates except in accordance with Sections
5.04 and 6.02 hereof and in accordance with the Insurance Agreement and the
Trust Agreement.
(d) DOWNGRADING. The Sponsor will not engage in any activity which
would result in a downgrading or withdrawal of the ratings on the Notes without
regard to the effect of the Policy.
(e) AMENDMENT TO CERTIFICATE OF FORMATION. The Sponsor will not amend
its certificate of formation without prior written notice to the Indenture
Trustee and the Rating Agencies and the prior written consent of the Insurer
which consent shall not be unreasonably withheld.
(f) PRINCIPAL PLACE OF BUSINESS. The Sponsor's principal place of
business is in California, and the Sponsor will not change its principal place
of business without prior written notice to the Indenture Trustee, the Rating
Agencies and the Insurer.
(g) NO NOTIFICATION OF MORTGAGORS. The Sponsor hereby agrees not to
notify Mortgagors of the transfer of the Mortgage Loans to the Trust unless
required by the terms of the Mortgage Loans or applicable law.
24
Section 2.07. REMOVAL OF MORTGAGE LOANS AT ELECTION OF ISSUER. Subject
to the conditions set forth below and Section 8.2 of the Indenture, the Issuer
may, but shall not be obligated to, require the removal of Mortgage Loans, from
time to time, as of the close of business on a Payment Date (each, a "REMOVAL
DATE"). On the tenth Business Day (the "REMOVAL NOTICE DATE") prior to the
Removal Date designated in such notice, the Issuer shall give the Indenture
Trustee, the Insurer and the Servicer a notice of the proposed removal that
contains a list of the Mortgage Loans in the Pool to be removed. Such removal of
Mortgage Loans shall be permitted upon satisfaction of the following conditions:
(i) A Rapid Amortization Event shall not have occurred;
(ii) On the Removal Date, the Overcollateralization Amount
(after giving effect to the removal of the Mortgage Loans proposed to
be removed) equals or exceeds the Specified Overcollateralization
Amount;
(iii) The transfer of such Mortgage Loans on any Removal Date
during the Managed Amortization Period shall not, in the reasonable
belief of the Sponsor, cause a Rapid Amortization Event to occur or an
event which with notice or lapse of time or both would constitute such
a Rapid Amortization Event and a Rapid Amortization Event has not
occurred;
(iv) On or before the Removal Date, the Issuer shall have
delivered to the Indenture Trustee a revised Mortgage Loan Schedule,
reflecting the proposed transfer and the Removal Date, and the Servicer
shall have marked the Electronic Ledger to show that the Mortgage Loans
removed are no longer included in the Pool;
(v) The Seller shall represent and warrant that its selection
procedures are random and no selection procedures reasonably believed
by the Seller to be adverse to the interests of the Noteholders or the
Insurer were utilized in selecting the Mortgage Loans to be removed
from the Pool;
(vi) In connection with each such removal of Mortgage Loans
pursuant to this Section, each Rating Agency shall have received on or
prior to the related Removal Notice Date notice of such proposed
removal of Mortgage Loans and, prior to the Removal Date, shall have
notified the Indenture Trustee and the Insurer in writing that such
removal of Mortgage Loans would not result in a reduction or withdrawal
of its then current ratings of the Notes, without regard to the Policy;
and
(vii) The Issuer shall have delivered to the Indenture Trustee
and the Insurer an Officer's Certificate certifying that the items set
forth in subparagraphs (i) through (vi), inclusive, have been performed
or are true and correct, as the case may be. The Indenture Trustee and
the Insurer may conclusively rely on such Officer's Certificate, shall
have no duty to make inquiries with regard to the matters set forth
therein and shall incur no liability in so relying.
(viii) The Insurer shall have been given an opportunity to
review any Mortgage Loans proposed to be removed by the Trust.
25
(ix) The Issuer shall have delivered a certificate in the form
of Exhibit C-1 hereto to the Indenture Trustee.
Upon receiving the requisite information from the Issuer, the Servicer
shall perform in a timely manner those acts required of it, as specified above.
Upon satisfaction of the above conditions, on the Removal Date the Indenture
Trustee shall deliver, or cause to be delivered, to the Issuer the Mortgage File
for each Mortgage Loan being so transferred, and the Indenture Trustee shall
execute and deliver to the Issuer such other documents prepared by the Issuer as
shall be reasonably necessary to remove such Mortgage Loans from the Pool. Any
such removal of Mortgage Loans shall be without recourse, representation or
warranty by or of the Indenture Trustee or the Trust to the Issuer. The review
right given to the Insurer in clause (viii), above, must be completed prior to
the Removal Date.
Section 2.08. EXECUTION AND AUTHENTICATION OF NOTES. The Indenture
Trustee, on behalf of the Issuer, has caused to be executed, authenticated and
delivered to or upon the order of the Sponsor, in exchange for the Issuer,
concurrently with the sale, assignment and conveyance to the Indenture Trustee
of the Issuer, one Class of Notes in authorized denominations and the Residual
Certificates, evidencing the ownership of the Issuer.
Section 2.09. TAX TREATMENT. It is the intention of the Sponsor and the
Residual Certificateholders that the Notes will be indebtedness of the Sponsor
for federal, state and local income and franchise tax purposes and for purposes
of any other tax imposed on or measured by income. The Sponsor, the Indenture
Trustee and each Noteholder (or Note Owner) by acceptance of its Note (or, in
the case of a Note Owner, by virtue of such Note Owner's acquisition of a
beneficial interest therein) agrees to treat the Notes (or beneficial interest
therein), for purposes of federal, state and local income or franchise taxes and
any other tax imposed on or measured by income, as indebtedness of the Sponsor
secured by the assets of the Trust and to report the transactions contemplated
by this Agreement on all applicable tax returns in a manner consistent with such
treatment. Each Noteholder agrees that it will cause any Note Owner acquiring an
interest in a Note through it to comply with this Agreement as to treatment of
the Notes as indebtedness for federal, state and local income and franchise tax
purposes and for purposes of any other tax imposed on or measured by income. The
Indenture Trustee will prepare and file all tax reports required hereunder
consistent with this Agreement except as may be required by or provided in
Section 3.15.
Section 2.10. [RESERVED].
ARTICLE III
ADMINISTRATION AND SERVICING
OF MORTGAGE LOANS
Section 3.01. THE SERVICER.
(a) The Servicer is hereby authorized to act as agent for the Trust and
in such capacity shall manage, service, administer and make collections on the
Mortgage Loans and perform the other actions under this Agreement. The Servicer
shall service and administer the
26
Mortgage Loans in a manner consistent with the terms of this Agreement and with
general industry practice and shall have full power and authority, acting alone
or through a subservicer, to do any and all things in connection with such
servicing and administration which it may deem necessary or desirable, it being
understood, however, that the Servicer shall at all times remain responsible to
the Indenture Trustee, the Noteholders, the Residual Certificateholders and the
Insurer for the performance of its duties and obligations hereunder in
accordance with the terms hereof. Any amounts received by any subservicer in
respect of a Mortgage Loan shall be deemed to have been received by the Servicer
whether or not actually received by it. Without limiting the generality of the
foregoing, the Servicer shall continue, and is hereby authorized and empowered
by the Trust, to execute and deliver, on behalf of the Trust, any and all
instruments of satisfaction or cancellation, or of partial or full release or
discharge and all other comparable instruments, with respect to the Mortgage
Loans and with respect to the Mortgaged Properties and to make deposits to and
withdrawals from the Collection Account. The Indenture Trustee and the Owner
Trustee shall, upon the written request of a Servicing Officer, furnish the
Servicer with any powers of attorney and other documents necessary or
appropriate to enable the Servicer to carry out its servicing and administrative
duties hereunder and consistent with the Indenture Trustee's internal policies.
The Servicer in such capacity may also consent to the placing of a lien senior
to that of any Mortgage on the related Mortgaged Property, provided that
(i) such Mortgage succeeded to a first lien position after the
related Mortgage Loan was conveyed to the Trust and, immediately
following the placement of such senior lien, such Mortgage is in a
second lien position and the outstanding principal amount of the
mortgage loan secured by such subsequent senior lien is no greater than
the outstanding principal amount of the senior mortgage loan secured by
the Mortgaged Property as of the date the related Mortgage Loan was
originated; or
(ii) the Mortgage relating to such Mortgage Loan was in a
second lien position as of the Cut-Off Date and the new senior lien
secures a mortgage loan that refinances an existing first mortgage loan
and the outstanding principal amount of the replacement first mortgage
loan immediately following such refinancing is not greater than the
outstanding principal amount of such existing first mortgage loan at
the date of origination of such Mortgage Loan;
PROVIDED, FURTHER, that such senior lien does not secure a note that provides
for negative amortization.
The Servicer may also, without prior approval from the Rating Agencies
or the Insurer, increase the Credit Limits on HELOC Mortgage Loans provided that
(i) new appraisals are obtained and the Combined Loan-to-Value Ratios of the
HELOC Mortgage Loans after giving effect to such increase are less than or equal
to the Combined Loan-to-Value Ratios of the Mortgage Loans as of the Cut-Off
Date and (ii) such increases are consistent with the Servicer's credit and
collection policies. No material change or departure from the Servicer's credit
and collection policies with respect to any Mortgage Loans as in effect as of
the Closing Date shall be permitted without the prior written consent of the
Insurer.
In addition, the Servicer may agree to changes in the terms of a
Mortgage Loan at the request of the Mortgagor; PROVIDED that (i) such changes do
not materially and adversely affect
27
the interests of Noteholders, the Residual Certificateholders or the Insurer,
(ii) such changes are consistent with prudent and customary business practice as
evidenced by a certificate signed by a Servicing Officer delivered to the
Indenture Trustee and the Insurer and (iii) the Rating Agencies and the Insurer
are promptly notified of the changes.
In addition to the foregoing, the Servicer may solicit Mortgagors to
change any other terms of the related Mortgage Loans; PROVIDED that such changes
(i) do not materially and adversely affect the interest of Noteholders or the
Insurer, (ii) are consistent with prudent and customary business practice as
evidenced by a certificate signed by a Servicing Officer delivered to the
Indenture Trustee and the Insurer and (iii) do not adjust the maturity date of
such Mortgage Loan past the date that is six months before the Final Scheduled
Payment Date of the Notes. Nothing herein shall limit the right of the Servicer
to solicit Mortgagors with respect to new loans (including mortgage loans) that
are not Mortgage Loans.
The relationship of the Servicer (and of any successor to the Servicer
as servicer under this Agreement) to the Indenture Trustee under this Agreement
is intended by the parties to be that of an independent contractor and not that
of a joint venturer, partner or agent.
(b) In the event that the rights, duties and obligations of the
Servicer are terminated hereunder, any successor to the Servicer in its sole
discretion may, to the extent permitted by applicable law, terminate the
existing subservicer arrangements with any subservicer, without charge, or
assume the terminated Servicer's rights under such subservicing arrangements
which termination or assumption will not violate the terms of such arrangements.
Section 3.02. COLLECTION OF CERTAIN MORTGAGE LOAN PAYMENTS.
(a) Servicer shall make reasonable efforts to collect all payments
called for under the terms and provisions of the Mortgage Loans, and shall, to
the extent such procedures shall be consistent with this Agreement, follow such
collection procedures as it follows with respect to home equity loans in its
servicing portfolio comparable to the Mortgage Loans. Consistent with the
foregoing, and without limiting the generality of the foregoing, the Servicer
may in its discretion (i) waive any late payment charge or any assumption fees
or other fees which may be collected in the ordinary course of servicing such
Mortgage Loans and (ii) arrange with a Mortgagor a schedule for the payment of
interest due and unpaid; PROVIDED that such arrangement is consistent with the
Servicer's policies with respect to the Mortgage Loans it owns or services;
PROVIDED, FURTHER, that notwithstanding such arrangement such Mortgage Loans
will be included in the information regarding delinquent Mortgage Loans set
forth in the Servicing Certificate and monthly statement to Noteholders pursuant
to Section 4.01.
(b) The Servicer shall on the Closing Date deposit into the Collection
Account any amounts representing payments on, and any collections in respect of,
the Mortgage Loans received after the Cut-Off Date and prior to the Closing Date
(exclusive of payments in respect of accrued interest due on or prior to such
Cut-Off Date) and thereafter the Servicer, or the Sponsor, as the case may be,
shall deposit into the Collection Account within one Business Day following
receipt thereof the following payments and collections received or made by it
(without duplication):
28
(i) all collections on and in respect of the Mortgage Loans;
(ii) the amounts, if any, deposited to the Collection Account
pursuant to Section 3.04;
(iii) Net Liquidation Proceeds;
(iv) Insurance Proceeds (including, for this purpose, any
amount required to be credited by the Servicer pursuant to the last
sentence of Section 3.04 and excluding the portion thereof, if any,
that has been applied to the restoration or repair of the related
Mortgaged Property or released to the related Mortgagor in accordance
with the normal servicing procedures of the Servicer);
(v) any amounts required to be deposited therein pursuant to
Section 7.01;
(vi) any amounts drawn under the Policy pursuant to Section
8.4(f) of the Indenture, but only to be used for the payment of the
items specified in Sections 8.7(d)(iii) and (vi) of the Indenture, as
applicable;
(vii) the amounts, if any, required to be deposited therein by
the Sponsor pursuant to Section 2.05(b) hereof;
(viii) any amounts drawn pursuant to the Demand Note;
PROVIDED, HOWEVER, that with respect to each Collection Period, the Servicer
shall be permitted to retain from payments in respect of interest on the
Mortgage Loans, the Servicing Fee for such Collection Period. The foregoing
requirements respecting deposits to the Collection Account are exclusive, it
being understood that, without limiting the generality of the foregoing, the
Servicer need not deposit in the Collection Account amounts representing
Foreclosure Profits, fees (including annual fees) or late charge penalties
payable by Mortgagors, or amounts received by the Servicer for the accounts of
Mortgagors for application towards the payment of taxes, insurance premiums,
assessments, excess pay off amounts and similar items. The Servicer shall remit
all Foreclosure Profits to the Sponsor.
The Indenture Trustee shall hold amounts deposited in the Collection
Account as Indenture Trustee for the Noteholders and the Insurer. The Servicer
shall notify the Indenture Trustee and the Insurer in writing on each
Determination Date of the amount of payments and collections in the Collection
Account allocable to Interest Collections and Principal Collections for the
related Payment Date. Following such notification, the Servicer shall be
entitled to withdraw from the Collection Account and retain any amounts that
constitute income and gain realized from the investment of such payments and
collections.
At the written direction of the Servicer, the Indenture Trustee shall
invest funds in the Collection Account in Eligible Investments specified in such
written direction. All income and gain realized from any investment in Eligible
Investments of funds in the Collection Account shall be for the benefit of the
Servicer and shall be subject to its withdrawal from time to time. The amount of
any losses incurred in respect of the principal amount of any such investments
shall be deposited in the Collection Account by the Servicer out of its own
funds immediately as
29
realized. In the absence of written direction the Indenture Trustee shall invest
funds in the Collection Account as directed by the Sponsor.
Section 3.03. WITHDRAWALS FROM THE COLLECTION ACCOUNT. From time to
time, withdrawals may be made from the Collection Account by the Servicer or the
Indenture Trustee for the following purposes:
(i) If not received by the Servicer pursuant to Section
3.02(b), to the Servicer as payment for its Servicing Fee pursuant to
Section 3.08;
(ii) To pay to the Servicer amounts on deposit in the
Collection Account that are not to be included in the distributions and
payments pursuant to Section 8.7 of the Indenture to the extent
provided by the second to the last and the last paragraph of Section
3.02(b);
(iii) To make or to permit the Indenture Trustee to make
distributions and payments pursuant to Section 8.7 of the Indenture;
(iv) Prior to the Collection Period preceding the commencement
of the Rapid Amortization Period, to pay to the Sponsor the amount of
any Additional Balances related to HELOC Mortgage Loans included in the
Pool as and when created during the related Collection Period;
PROVIDED, that the aggregate amount so paid to the Sponsor in respect
of Additional Balances with respect to the HELOC Mortgage Loans at any
time during any Collection Period shall not exceed the amount of
Principal Collections theretofore received for such Collection Period;
(v) To pay to the Servicer any Liquidation Expenses not
reimbursed prior to the deposit of Net Liquidation Proceeds to the
Collection Account;
(vi) Upon termination of the Trust, to make any payments
required by Section 7.01.
If the Servicer deposits in the Collection Account any amount not
required to be deposited therein or any amount in respect of payments by
Mortgagors made by checks subsequently returned for insufficient funds or other
reason for non-payment it may at any time withdraw such amount from the
Collection Account, and any such amounts shall not be included in the amounts to
be deposited in the Collection Account pursuant to Section 3.02(b), any
provision herein to the contrary notwithstanding.
Section 3.04. MAINTENANCE OF HAZARD INSURANCE; PROPERTY PROTECTION
EXPENSES. The Servicer shall cause to be maintained for each Mortgage Loan
hazard insurance naming the Servicer or its successors or assigns as loss payee
thereunder providing extended coverage in an amount which is at least equal to
the lesser of (i) the maximum insurable value of the improvements securing such
Mortgage Loan from time to time or (ii) the combined principal balance owing on
such Mortgage Loan and any mortgage loan senior to such Mortgage Loan from time
to time. The Servicer shall also maintain on property acquired upon foreclosure,
or by deed in lieu of foreclosure, hazard insurance with extended coverage in an
amount which is at least equal to the lesser of (i) the maximum insurable value
from time to time of the
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improvements which are a part of such property or (ii) the combined principal
balance owing on such Mortgage Loan and any mortgage loan senior to such
Mortgage Loan at the time of such foreclosure or deed in lieu of foreclosure
plus accrued interest and the good-faith estimate of the Servicer of related
Liquidation Expenses to be incurred in connection therewith. Amounts collected
by the Servicer under any such policies shall be deposited in the Collection
Account to the extent called for by Section 3.02. In cases in which any
Mortgaged Property is located in a federally designated flood area, the hazard
insurance to be maintained for the related Mortgage Loan shall include flood
insurance. All such flood insurance shall be in such amounts as are required
under applicable guidelines of the Federal Flood Emergency Act. The Servicer
shall be under no obligation to require that any Mortgagor maintain earthquake
or other additional insurance and shall be under no obligation itself to
maintain any such additional insurance on property acquired in respect of a
Mortgage Loan, other than pursuant to such applicable laws and regulations as
shall at any time be in force and as shall require such additional insurance. If
the Servicer shall obtain and maintain a blanket policy consistent with prudent
industry standards insuring against hazard losses on all of the Mortgage Loans
in an aggregate amount prudent under industry standards, it shall (a)
conclusively be deemed to have satisfied its obligations as set forth in the
first sentence of this Section 3.04 and (b) if there shall have been a loss
which would have been covered by such policy, deposit in the Collection Account
without right of reimbursement, as the case may be, the amount not otherwise
payable under the blanket policy because of any deductible clause.
Section 3.05. ASSUMPTION AND MODIFICATION AGREEMENTS. In any case in
which a Mortgaged Property has been or is about to be conveyed by the Mortgagor,
the Servicer shall exercise its right to accelerate the maturity of such
Mortgage Loan consistent with the then current practice of the Servicer and
without regard to the inclusion of such Mortgage Loan in the Trust. If it elects
not to enforce its right to accelerate or if it is prevented from doing so by
applicable law, the Servicer (so long as such action conforms with the
underwriting standards generally acceptable in the industry at the time for new
origination) is authorized to take or enter into an assumption and modification
agreement from or with the Person to whom such Mortgaged Property has been or is
about to be conveyed, pursuant to which such Person becomes liable under the
Loan Agreement and, to the extent permitted by applicable law, the Mortgagor
remains liable thereon. The Servicer shall notify the Indenture Trustee that any
assumption and modification agreement has been completed by delivering to the
Indenture Trustee an Officer's Certificate signed by a Servicing Officer
certifying that such agreement is in compliance with this Section 3.05 and by
forwarding to the Indenture Trustee the original copy of such assumption and
modification agreement. Any such assumption and modification agreement shall,
for all purposes, be considered a part of the related Mortgage File to the same
extent as all other documents and instruments constituting a part thereof. No
change in the terms of the related Loan Agreement may be made by the Servicer in
connection with any such assumption to the extent that such change would not be
permitted to be made in respect of the original Loan Agreement pursuant to the
fourth paragraph of Section 3.01(a). Any fee collected by the Servicer for
entering into any such agreement will be retained by the Servicer as additional
servicing compensation.
Section 3.06. REALIZATION UPON DEFAULTED MORTGAGE LOANS; REPURCHASE OF
CERTAIN MORTGAGE LOANS. The Servicer shall foreclose upon or otherwise
comparably convert to ownership Mortgaged Properties securing such of the
Mortgage Loans as come into and continue
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in default when, in the opinion of the Servicer based upon the practices and
procedures referred to in the following sentence, no satisfactory arrangements
can be made for collection of delinquent payments pursuant to Section 3.02;
PROVIDED, that if the Servicer has knowledge or reasonably believes that any
Mortgaged Property is affected by hazardous or toxic wastes or substances and
that the acquisition of such Mortgaged Property would not be commercially
reasonable, then the Servicer will not cause the Trust to acquire title to such
Mortgaged Property in a foreclosure or similar proceeding. In connection with
such foreclosure or other conversion, the Servicer shall follow such practices
(including, in the case of any default on a related senior mortgage loan, the
advancing of funds to correct such default) and procedures as it shall deem
necessary or advisable and as shall be normal and usual in its general mortgage
servicing activities. The foregoing is subject to the proviso that the Servicer
shall not incur any Liquidation Expenses or otherwise expend its own funds in
connection with any foreclosure or towards the correction of any default on a
related senior mortgage loan or restoration of any property unless it shall
determine that such expenditure will increase Net Liquidation Proceeds.
In the event that title to any Mortgaged Property is acquired in
foreclosure or by deed in lieu of foreclosure, the deed or certificate of sale
shall be issued to the Indenture Trustee, or to its nominee on behalf of the
Trust.
Section 3.07. INDENTURE TRUSTEE TO COOPERATE. On or before each Payment
Date, the Servicer will notify the Indenture Trustee of the payment in full of
the Principal Balance of any Mortgage Loan during the preceding Collection
Period, which notification shall be by a certification (which certification
shall include a statement to the effect that all amounts received in connection
with such payment which are required to be deposited in the Collection Account
pursuant to Section 3.02 have been so deposited or credited) of a Servicing
Officer. Upon any such payment in full, the Servicer is authorized to execute,
pursuant to the authorization contained in Section 3.01, if the assignments of
Mortgage have been recorded as required hereunder, an instrument of satisfaction
regarding the related Mortgage, which instrument of satisfaction shall be
recorded by the Servicer if required by applicable law and be delivered to the
Person entitled thereto. It is understood and agreed that no expenses incurred
in connection with such instrument of satisfaction or transfer shall be
reimbursed from amounts deposited in the Collection Account. If the Indenture
Trustee is holding the Mortgage Files, from time to time and as appropriate for
the servicing or foreclosure of any Mortgage Loan, or in connection with the
payment in full of the Principal Balance of any Mortgage Loan, the Indenture
Trustee shall, upon request of the Servicer and delivery to the Indenture
Trustee of a Request for Release substantially in the form attached hereto as
Exhibit C signed by a Servicing Officer, release the related Mortgage File to
the Servicer and the Indenture Trustee shall execute such documents, in the
forms provided by the Servicer, as shall be necessary to the prosecution of any
such proceedings or the taking of other servicing actions. Such trust receipt
shall obligate the Servicer to return the Mortgage File to the Indenture Trustee
when the need therefor by the Servicer no longer exists unless the Mortgage Loan
shall be liquidated, in which case, upon receipt of a certificate of a Servicing
Officer similar to that hereinabove specified, the trust receipt shall be
released by the Indenture Trustee.
In order to facilitate the foreclosure of the Mortgage securing any
Mortgage Loan that is in default following recordation of the Assignment of
Mortgage in accordance with the provisions hereof, the Indenture Trustee shall,
if so requested in writing by the Servicer, execute
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an appropriate assignment in the form provided to the Indenture Trustee by the
Servicer to assign such Mortgage Loan for the purpose of collection to the
Servicer or to the related subservicer (any such assignment shall unambiguously
indicate that the assignment is for the purpose of collection only), and, upon
such assignment, the Servicer will thereupon bring all required actions in its
own name and otherwise enforce the terms of the Mortgage Loan and deposit the
Net Liquidation Proceeds, exclusive of Foreclosure Profits, received with
respect thereto in the Collection Account. In the event that all delinquent
payments due under any such Mortgage Loan are paid by the Mortgagor and any
other defaults are cured, then the Servicer shall, within two Business Days,
reassign such Mortgage Loan to the Indenture Trustee and return the related
Mortgage File to the place where it was being maintained. After such
reassignment, the Servicer, if requested by such Residual Certificateholders and
if offered suitable indemnification and reimbursement for expenses, is
authorized to seek a deficiency judgment if permitted by law against the
Mortgagor under such Liquidated Mortgage Loan on behalf of the Residual
Certificateholders to the extent of any losses on liquidation of any Mortgage
Loan.
Section 3.08. SERVICING COMPENSATION; PAYMENT OF CERTAIN EXPENSES BY
SERVICER. The Servicer shall be entitled to receive the Servicing Fee pursuant
to Section 3.03 as compensation for its services in connection with servicing
the Mortgage Loans. Moreover, additional servicing compensation in the form of
late payment charges or other receipts not required to be deposited in the
Collection Account (other than Foreclosure Profits) shall be retained by the
Servicer. The Servicer shall be required to pay all expenses incurred by it in
connection with its activities hereunder (including payment of all other fees
and expenses not expressly stated hereunder to be for the account of the
Noteholders and the Residual Certificateholders) and shall not be entitled to
reimbursement therefor except as specifically provided herein. Liquidation
Expenses are reimbursable to the Servicer solely from related Liquidation
Proceeds of the related Mortgage Loan.
Section 3.09. ANNUAL STATEMENT AS TO COMPLIANCE.
(a) The Servicer will deliver to the Indenture Trustee, the Insurer and
the Rating Agencies, on or before __________ of each year, beginning
___________, 200_, an Officer's Certificate stating that (i) a review of the
activities of the Servicer during the preceding fiscal year (or such shorter
period as is applicable in the case of the first report) and of its performance
under this Agreement has been made under such officer's supervision and (ii) to
the best of such officer's knowledge, based on such review, the Servicer has
fulfilled all of its material obligations under this Agreement throughout such
fiscal year, or, if there has been a default in the fulfillment of any such
obligation, specifying each such default known to such officer and the nature
and status thereof.
(b) The Servicer shall deliver to the Indenture Trustee, the Insurer
and each of the Rating Agencies, promptly after having obtained knowledge
thereof, but in no event later than five Business Days thereafter, written
notice by means of an Officer's Certificate of any event which with the giving
of notice or the lapse of time or both, would become an Event of Servicing
Termination.
Section 3.10. ANNUAL SERVICING REPORT. On or before ____________ of
each year, beginning ___________, 200_, the Servicer, at its expense, shall
cause a firm of nationally
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recognized independent public accountants (who may also render other services to
the Servicer) to furnish a report to the Indenture Trustee, the Insurer and each
Rating Agency to the effect that such firm has examined certain documents and
records relating to the servicing of mortgage loans during the most recent
fiscal year then ended under pooling and servicing agreements (substantially
similar to this Agreement, including this Agreement), that such examination was
conducted substantially in compliance with the audit guide for audits of
non-supervised mortgagees approved by the Department of Housing and Urban
Development for use by independent public accountants (to the extent that the
procedures in such audit guide are applicable to the servicing obligations set
forth in such agreements) and that such examination has disclosed no items of
noncompliance with the provisions of this Agreement which, in the opinion of
such firm, are material, except for such items of noncompliance as shall be set
forth in such report.
Section 3.11. ANNUAL OPINION OF COUNSEL. On or before ___________ of
each year, beginning ___________, 200_, the Sponsor, at its expense, shall
deliver to the Indenture Trustee and the Insurer the applicable Opinion of
Counsel specified in Exhibit B hereto.
Section 3.12. ACCESS TO CERTAIN DOCUMENTATION AND INFORMATION REGARDING
THE MORTGAGE LOANS.
(a) Servicer shall provide to the Indenture Trustee, the Insurer, any
Noteholders that are federally insured savings and loan associations, the Office
of Thrift Supervision, successor to the Federal Home Loan Bank Board, the FDIC
and the supervisory agents and examiners of the Office of Thrift Supervision
access to the documentation regarding the Mortgage Loans required by applicable
regulations of the Office of Thrift Supervision and the FDIC (acting as operator
of the SAIF or the BIF), such access being afforded without charge but only upon
reasonable request and during normal business hours at the offices of the
Servicer. Nothing in this Section 3.12 shall derogate from the obligation of the
Servicer to observe any applicable law prohibiting disclosure of information
regarding the Mortgagors and the failure of the Servicer to provide access as
provided in this Section 3.12 as a result of such obligation shall not
constitute a breach of this Section 3.12.
(b) The Servicer shall supply information in such form as the Indenture
Trustee shall reasonably request to the Indenture Trustee and the Note Paying
Agent, on or before the start of the Determination Date preceding the related
Payment Date, as is required in the Indenture Trustee's reasonable judgment to
enable the Note Paying Agent or the Indenture Trustee, as the case may be, to
make required distributions and to furnish the required reports to the
Noteholders and to make any claim under the Policy.
Section 3.13. MAINTENANCE OF CERTAIN SERVICING INSURANCE POLICIES. The
Servicer shall maintain, at its own expense, a blanket fidelity bond (the
"FIDELITY BOND") and an errors and omissions insurance policy, with broad
coverage with financially responsible companies on all officers, employees, or
other persons acting in any capacity with regard to the Mortgage Loans to handle
funds, money, documents and papers relating to the Mortgage Loans. The Fidelity
Bond and errors and omissions insurance policy shall be in the form of the
Mortgage Banker's Blanket Bond and shall protect and insure the Servicer against
losses, including forgery, theft, embezzlement, fraud, errors and omissions and
negligent acts of such persons. Such Fidelity
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Bond shall also protect and insure the Servicer against losses in connection
with the failure to maintain any insurance policies required pursuant to this
Agreement and the release or satisfaction of a Mortgage Loan without having
obtained payment in full of the indebtedness secured thereby. No provision of
this Section 3.13 requiring the Fidelity Bond and errors and omissions insurance
policy shall diminish or relieve the Servicer from its duties and obligations as
set forth in this Agreement. The minimum coverage under any such bond and
insurance policy shall be at least equal to the corresponding amounts required
by the Federal Home Loan Mortgage Corporation in the Federal Home Loan Mortgage
Corporation's Seller/Servicer's Guide. Upon request of the Indenture Trustee or
the Insurer, the Servicer shall cause to be delivered to the Indenture Trustee
or the Insurer a certified true copy of the Fidelity Bond and errors and
omissions insurance policy and a statement from the surety and the insurer that
such Fidelity Bond and errors and omissions insurance policy shall in no event
be terminated or materially modified without thirty days' prior written notice
to the Indenture Trustee and the Insurer.
Section 3.14. REPORTS TO THE SEC. Within 15 days after each Payment
Date, the Manager shall, on behalf of the Trust and in accordance with industry
standards, file with the SEC via the Electronic Data Gathering and Retrieval
System (XXXXX), a Form 8-K with a copy of the report of the Noteholders for such
Payment Date as an exhibit thereto. Prior to ________, 200_ (and, if applicable,
prior to March 30 of each year), the Manager shall, on behalf of the Trust and
in accordance with industry standards, file with the SEC via XXXXX a Form 10-K
with respect to the Trust. In addition, the Sponsor will cause its senior
officer in charge of securitization to execute the certification (the "Form 10-K
Certification") required pursuant to Rile 13a-14 under the Securities and
Exchange Act of 1934, as amended, and file the same with the SEC prior to
________, 200_ (and if applicable, prior to ________ of each year). To the
extent any information or exhibits required to be included in the Form 10-K are
not available by March 30, the Manager shall, on behalf of the Trust, file one
or more amended Form 10-K's to include such missing information or exhibits
promptly after receipt thereof by the Manager. Promptly following the first day
legally permissible under applicable regulations and interpretations of the SEC,
the Manager shall, on behalf of the Trust an in accordance with industry
standards, file with the SEC via XXXXX a Form 15 Suspension Notification with
respect to the Trust, if applicable. Each of the Servicer, the Sponsor and the
Indenture Trustee agree to furnish to the Manager promptly, from time to time
upon request, such further information, reports and financial statements within
its control related to this Agreement and the Mortgage Loans as the Manager
reasonable deems appropriate to prepare and file all necessary reports with the
SEC. The Manager shall have no responsibility to file any items other than those
specified in this section.
Section 3.15. TAX RETURNS. In accordance with Section 2.09 hereof, the
Servicer shall prepare and file any federal, state or local income and franchise
tax return for the Trust as well as any other applicable return and apply for a
taxpayer identification number on behalf of the Trust as provided in Article VI
of the Trust Agreement, including, without limitation, forms 1099 and 1065. The
Sponsor shall treat the Mortgage Loans as its property for all federal, state or
local tax purposes and shall report all income earned thereon (including amounts
payable as fees to the Servicer) as its income for income tax purposes. In the
event the Trust shall be required pursuant to an audit or administrative
proceeding or change in applicable regulations to file federal, state or local
tax returns, the Servicer shall prepare and file or shall cause to be prepared
and filed any tax returns required to be filed by the Trust; the Indenture
Trustee shall promptly sign such returns and deliver such returns after
signature to the Servicer and such returns shall be filed by the Servicer. The
Indenture Trustee shall also prepare or shall cause to be
35
prepared all tax information required by law to be distributed to Noteholders.
In no event shall the Indenture Trustee or the Servicer be liable for any
liabilities, costs or expenses of the Trust, the Noteholders, the Residual
Certificateholders or the Note Owners arising under any tax law, including,
without limitation, federal, state or local income and franchise or excise taxes
or any other tax imposed on or measured by income (or any interest or penalty
with respect thereto or arising from a failure to comply therewith).
Section 3.16. INFORMATION REQUIRED BY THE INTERNAL REVENUE SERVICE
GENERALLY AND REPORTS OF FORECLOSURES AND ABANDONMENTS OF MORTGAGED PROPERTY.
The Servicer shall prepare and deliver all federal and state information reports
when and as required by all applicable state and federal income tax laws. In
particular, with respect to the requirement under Section 6050J of the Code to
the effect that the Servicer shall make reports of foreclosures and abandonments
of any mortgaged property for each year beginning in 200_, the Servicer shall
file reports relating to each instance occurring during the previous calendar
year in which the Servicer (i) on behalf of the Indenture Trustee acquires an
interest in any Mortgaged Property through foreclosure or other comparable
conversion in full or partial satisfaction of a Mortgage Loan, or (ii) knows or
has reason to know that any Mortgaged Property has been abandoned. The reports
from the Servicer shall be in form and substance sufficient to meet the
reporting requirements imposed by Section 6050J.
Section 3.17. REPORTING REQUIREMENTS. For each Mortgage Loan, the
Servicer will accurately and fully report its borrower credit files to each of
Equifax Credit Information Services, Inc., TransUnion, LLC and Experion
Information Solution, Inc. (or their successors) in a timely manner on a monthly
basis.
Section 3.18. MATTERS RELATING TO MERS LOANS.
(a) The Servicer further is authorized and empowered by the Indenture
Trustee and the Insurer, on behalf of the Noteholders, the Insurer and the
Indenture Trustee, in its own name or in the name of the subservicer, when the
Servicer believes it appropriate in its best judgment to register any Mortgage
Loan on the MERS System, or cause the removal from the registration of any
Mortgage Loan on the MERS System, to execute and deliver, on behalf of the
Indenture Trustee, the Insurer and the Noteholders or any of them, any and all
instruments of assignment and other comparable instruments with respect to such
assignment or re-recording of a Mortgage in the name of MERS, solely as nominee
for the Indenture Trustee and its successors and assigns.
(b) In connection with the sale and assignment of any MERS Mortgage
Loan by the Sponsor to the Issuer, the Sponsor agrees that it will cause, at the
Sponsor's expense, the MERS System to indicate that such Mortgage Loans have
been assigned by the Sponsor to the Indenture Trustee in accordance with the
Indenture for the benefit of the Issuer Secured Parties by including (or
deleting, in the case of Mortgage Loans which are repurchased in accordance with
this Agreement) in such computer files the information required by the MERS
System to identify the series of the Notes issued in connection with such
Mortgage Loans. The Sponsor further
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agrees that it will not, and will not permit the Seller or the Servicer to, and
the Seller and the Servicer agree that they will not, alter the information
referenced in this paragraph with respect to any Mortgage Loan during the term
of this Agreement unless and until such Mortgage Loan is repurchased in
accordance with the terms of this Agreement. If at any time pursuant to Section
2.03, 2.05 or 2.07 the Sponsor repurchases a Mortgage Loan that is a MERS
Mortgage Loan, the Servicer shall either (i) cause MERS to execute and deliver
an assignment of the Mortgage in recordable form to transfer the Mortgage from
MERS to the Sponsor and shall cause such Mortgage to be removed from
registration on the MERS System in accordance with MERS' rules and regulations
or (ii) cause MERS to designate on the MERS System the Sponsor (or any party
indicated by the Sponsor) as the beneficial holder of such Mortgage Loan.
(c) In connection with the termination or resignation of the Servicer
hereunder, either (i) the successor Servicer, including the Indenture Trustee if
the Indenture Trustee is acting as successor Servicer, shall represent and
warrant that it is a member of MERS in good standing and shall agree to comply
in all material respects with the rules and procedures of MERS in connection
with the servicing of the Mortgage Loans that are registered with MERS, or (ii)
the predecessor Servicer shall cooperate with the successor Servicer either (x)
in causing MERS to execute and deliver an assignment of Mortgage in recordable
form to transfer the Mortgage from MERS to the Indenture Trustee and to execute
and deliver such other notices, documents and other instruments as may be
necessary or desirable to effect a transfer of such Mortgage Loan or servicing
of such Mortgage Loan on the MERS System to the successor Servicer or (y) in
causing MERS to designate on the MERS System the successor Servicer as the
servicer of such Mortgage Loan.
ARTICLE IV
SERVICING CERTIFICATE
Section 4.01. SERVICING CERTIFICATE. Not later than seven (7) Business
Days prior to the Payment Date, the Servicer shall deliver to the Indenture
Trustee, a Servicing Certificate (in written form or the form of computer
readable media or such other form as may be agreed to by the Indenture Trustee
and the Servicer), together with an Officer's Certificate to the effect that
such Servicing Certificate is true and correct in all material respects, stating
the related Collection Period, Payment Date, the series number of the Notes, the
date of this Agreement, and:
(i) the aggregate amount of collections received on the
Mortgage Loans on or prior to the Determination Date in respect of such
Collection Period;
(ii) the aggregate amount of (a) Interest Collections and (b)
Principal Collections for such Collection Period;
(iii) the Principal Collections for such Payment Date,
separately stating the components thereof;
(iv) any accrued and unpaid Servicing Fees for previous
Collection Periods and the Servicing Fee for such Collection Period;
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(v) the Pool Balance as of the end of the preceding Collection
Period and as of the end of the second preceding Collection Period;
(vi) the aggregate amount of Additional Balances created
during the previous Collection Period;
(vii) the number and aggregate Principal Balances of Mortgage
Loans (A) as to which the Minimum Monthly Payment is delinquent for
30-59 days, 60-89 days, 90-119 days, 120-149 days, 150-179 days and 180
or more days respectively and (B) that have become REO, in each case as
of the end of the preceding Collection Period; (C) as to which
foreclosure proceedings have been commenced, and (D) in bankruptcy and
delinquent as of the close of business on the last day of the calendar
month preceding such Distribution Date;
(viii) the amount to be paid to the Servicer pursuant to
Section 8.7(c)(xi) of the Indenture;
(ix) the number and Principal Balances of any Mortgage Loans
removed to the Sponsor pursuant to Section 2.07;
The Indenture Trustee shall conclusively rely upon the information
contained in a Servicing Certificate for purposes of making distributions
pursuant to Section 8.7 of the Indenture, shall have no duty to inquire into
such information and shall have no liability in so relying. The format and
content of the Servicing Certificate may be modified by the mutual agreement of
the Servicer, the Indenture Trustee and the Insurer. The Servicer shall give
notice of any such change to the Rating Agencies.
Section 4.02. RESERVED.
Section 4.03. RESERVED.
Section 4.04. LOAN DATA REMITTANCE REPORT. On the seventh Business Day
before each Payment Date (the "LOAN DATA REMITTANCE DATE") by noon Eastern
Standard time, the Servicer shall furnish a report (the "LOAN DATA REMITTANCE
REPORT") in the form attached as Exhibit F to this Agreement to the Insurer and
the Indenture Trustee by electronic medium as agreed to by the Servicer, the
Indenture Trustee and the Insurer.
Section 4.05. [RESERVED].
ARTICLE V
The Servicer and the Sponsor
Section 5.01. LIABILITY OF THE SERVICER AND THE SPONSOR. The Servicer
shall be liable in accordance herewith only to the extent of the obligations
specifically imposed upon and undertaken by the Servicer herein. The Sponsor
shall be liable in accordance herewith only to the extent of the obligations
specifically imposed upon and undertaken by the Sponsor.
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Section 5.02. MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE
OBLIGATIONS OF, THE SERVICER OR THE SPONSOR. Any entity into which the Servicer
or the Sponsor may be merged or consolidated, or any entity resulting from any
merger, conversion or consolidation to which the Servicer or the Sponsor shall
be a party, or any entity succeeding to the business of the Servicer or the
Sponsor, shall be the successor of the Servicer or the Sponsor, as the case may
be, 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.
Section 5.03. LIMITATION ON LIABILITY OF THE SERVICER AND OTHERS.
Neither the Servicer nor any of the directors or officers or employees or agents
of the Servicer shall be under any liability to the Trust or the Noteholders or
Residual Certificateholders for any action taken or for refraining from the
taking of any action by the Servicer in good faith pursuant to this Agreement,
or for errors in judgment; PROVIDED, HOWEVER, that this provision shall not
protect the Servicer or any such Person against any breach of representations
and warranties made herein, or against any specific liability imposed on the
Servicer for a breach of its servicing under this Agreement or against liability
which would otherwise be imposed by reason of willful misfeasance, bad faith or
negligence in the performance of duties of the Servicer or by reason of reckless
disregard of obligations and duties of the Servicer hereunder. The Servicer and
any director or officer or 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 and any
director or officer or employee or agent of the Servicer shall be indemnified by
the Trust, in accordance with the priorities set forth in Section 8.7(b) of the
Indenture and held harmless against any loss, liability or expense incurred in
connection with any legal action relating to this Agreement or the Notes, other
than any loss, liability or expense related to any specific Mortgage Loan
(except as any such loss, liability or expense shall be otherwise reimbursable
pursuant to this Agreement) and any loss, liability or expense incurred by
reason of its willful misfeasance, bad faith or negligence, breach of
representations and warranties made herein, or against any specific liability
imposed on the Servicer for a breach of its servicing under this Agreement or
against in the performance of duties hereunder or by reason of its reckless
disregard of obligations and duties hereunder. The Servicer shall not be under
any obligation to appear in, prosecute or defend any legal action which is not
incidental to duties to service the 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 in its sole discretion undertake any
such action which it may deem necessary or desirable in respect of this
Agreement, and the rights and duties of the parties hereto and the interests of
the Noteholders and Residual Certificateholders hereunder. In such event, the
reasonable legal expenses and costs of such action and any liability resulting
therefrom shall be expenses, costs and liabilities of the Trust and the Servicer
shall only be entitled to be reimbursed therefor pursuant to Section 8.7(d)(ix)
of the Indenture. The Servicer's right to indemnity or reimbursement pursuant to
this Section 5.03 shall survive any resignation or termination of the Servicer
pursuant to Section 5.04 or 6.01 with respect to any losses, expenses, costs or
liabilities arising prior to such resignation or termination (or arising from
events that occurred prior to such resignation or termination).
Section 5.04. SERVICER NOT TO RESIGN. Subject to the provisions of
Section 5.02, the Servicer shall not resign from the obligations and duties
hereby imposed on it except (i) upon determination that the performance of its
obligations or duties hereunder are no longer permissible under applicable law
or are in material conflict by reason of applicable law with any
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other activities carried on by it or its subsidiaries or Affiliates, the other
activities of the Servicer so causing such a conflict being of a type and nature
carried on by the Servicer or its subsidiaries or Affiliates at the date of this
Agreement or (ii) upon satisfaction of the following conditions: (a) the
Servicer has proposed a successor servicer to the Indenture Trustee and the
Insurer in writing and such proposed successor servicer is reasonably acceptable
to the Indenture Trustee; (b) each Rating Agency shall have delivered a letter
to the Indenture Trustee and the Insurer prior to the appointment of the
successor servicer stating that the proposed appointment of such successor
servicer as Servicer hereunder will not result in the qualification, reduction
or withdrawal of the then current rating of the Notes without regard to the
Policy; and (c) such proposed successor servicer is reasonably acceptable to the
Insurer, as evidenced by a letter from each to the Indenture Trustee; PROVIDED,
HOWEVER, that no such resignation by the Servicer shall become effective until
the Indenture Trustee or successor servicer designated by the Servicer as
provided above shall have assumed the Servicer's responsibilities and
obligations hereunder or the Indenture Trustee shall have designated a successor
servicer in accordance with Section 6.02. Any such resignation shall not relieve
the Servicer of responsibility for any of the obligations specified in Sections
6.01 and 6.02 as obligations that survive the resignation or termination of the
Servicer. Any such determination permitting the resignation of the Servicer
pursuant to clause (i) above shall be evidenced by an Opinion of Counsel to such
effect delivered to the Indenture Trustee and the Insurer. The Servicer shall
have no claim (whether by subrogation or otherwise) or other action against any
Noteholder or Residual Certificateholder for any amounts paid by the Servicer
pursuant to any provision of this Agreement.
Section 5.05. DELEGATION OF DUTIES. In the ordinary course of business,
the Servicer at any time may delegate any of its duties hereunder to any Person,
including any of its Affiliates, or any subservicer referred to in Section 3.01,
who agrees to conduct such duties in accordance with standards comparable to
those with which the Servicer complies pursuant to Section 3.01. Such delegation
shall not relieve the Servicer of its liabilities and responsibilities with
respect to such duties and shall not constitute a resignation within the meaning
of Section 5.04. The Servicer's delegation of any of its duties hereunder to any
subservicer shall be subject to the prior approval of the Insurer. The Servicer
shall terminate its delegation of any of its duties hereunder to any subservicer
at the Insurer's reasonable request.
Section 5.06. INDEMNIFICATION OF THE TRUST BY THE SERVICER. The
Servicer shall indemnify and hold harmless the Trust, the Owner Trustee and the
Indenture Trustee from and against any loss, liability, expense, damage or
injury suffered or sustained by reason of the Servicer's activities or omissions
in servicing or administering the Mortgage Loans that are not in accordance with
this Agreement or breach of representations and warranties made herein,
including, but not limited to, any judgment, award, settlement, reasonable
attorneys' fees and expenses and other costs or expenses incurred in connection
with the defense of any actual or threatened action, proceeding or claim. Any
such indemnification, including any amounts the Issuer shall cause the Servicer
to pay pursuant to Section 6.7 of the Indenture, shall not be payable from the
assets of the Trust. The provisions of this indemnity shall run directly to and
be enforceable by an injured party subject to the limitations hereof. The
provisions of this Section 5.06 shall survive termination of this Agreement.
Section 5.07. INDEMNIFICATION OF THE TRUST BY THE SPONSOR.
Notwithstanding anything to the contrary contained herein, the Sponsor (i)
agrees to be liable directly to the
40
injured party for the entire amount of any losses, claims, damages, liabilities
and expenses of the Trust (other than those attributable to a Noteholder as a
result of defaults on the Mortgage Loans) to the extent that the Sponsor would
be liable if the Trust were a partnership under the Delaware Revised Uniform
Limited Partnership Act in which the Sponsor was a general partner and (ii)
shall indemnify and hold harmless the Trust, the Owner Trustee and the Indenture
Trustee from and against any loss, liability, expense, damage, claim or injury
(other than those attributable to a Noteholder as a result of defaults on the
Mortgage Loans) arising out of or based on this Agreement by reason of any acts,
omissions, or alleged acts or omissions arising out of activities of the Trust,
the Owner Trustee or the Indenture Trustee, or the actions of the Servicer,
including, but not limited to, amounts payable to the Servicer pursuant to
Section 5.03, any judgment, award, settlement, reasonable attorneys' fees and
expenses and other costs or expenses incurred in connection with the defense of
any actual or threatened action, proceeding or claim; PROVIDED that the Sponsor
shall not indemnify the Owner Trustee or the Indenture Trustee (but shall
indemnify any other injured party) if such loss, liability, expense, damage or
injury is due to the Owner Trustee's or the Indenture Trustee's willful
misconduct, bad faith or negligence, breach of representations and warranties
made herein, or against any specific liability imposed on the Owner Trustee or
Indenture Trustee for a breach of its obligations hereunder. The provisions of
this indemnity shall run directly to and be enforceable by an injured party
subject to the limitations hereof.
Section 5.08. LIMITATION ON LIABILITY OF THE SPONSOR. None of the
directors or officers or employees or agents of the Sponsor shall be under any
liability to the Trust, the Owner Trustee or the Indenture Trustee, the
Noteholders or the Residual Certificateholders, it being expressly understood
that all such liability is expressly waived and released as a condition of, and
as consideration for, the execution of this Agreement and the issuance of the
Notes; PROVIDED, HOWEVER, that this provision shall not protect any such Person
against any liability which would otherwise be imposed by reason of willful
misfeasance, bad faith, negligence or breach of representations and warranties
made herein, or against any specific liability imposed on such Person in the
performance of the duties hereunder. Except as provided in Section 5.07, the
Sponsor shall not be under any liability to the Trust, the Owner Trustee or the
Indenture Trustee or the Noteholders or the Residual Certificateholders for any
action taken or for refraining from the taking of any action in its capacity as
Sponsor pursuant to this Agreement whether arising from express or implied
duties under this Agreement; PROVIDED, HOWEVER, that this provision shall not
protect the Sponsor against any liability which would otherwise be imposed by
reason of willful misconduct, bad faith or negligence in the performance of its
duties or by reason of reckless disregard of its obligations and duties
hereunder. The Sponsor and any director or officer or employee or agent of the
Sponsor 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.
ARTICLE VI
Servicing Termination
Section 6.01. EVENTS OF SERVICING TERMINATION. If any one of the
following events ("EVENTS OF SERVICING TERMINATION") shall occur and be
continuing:
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(i) Any failure by the Servicer to deposit in the Collection
Account any deposit 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 shall have
been given to the Servicer by the Indenture Trustee or to the Servicer
and the Indenture Trustee by the Insurer or Holders of Notes evidencing
more than 25% of the Principal Balance of the Notes instruct otherwise;
or
(ii) Failure on the part of the Servicer or the Sponsor duly
to observe or perform any covenants or agreements of the Servicer or
Sponsor set forth in the Notes or in this Agreement, which failure
continues unremedied for a period of 15 days after the date on which
written notice of such failure, requiring the same to be remedied, and
stating that such notice is a "Notice of Default" hereunder, shall have
been given to the Servicer by the Indenture Trustee or to the Servicer
and the Indenture Trustee by the Insurer or the Holders of Notes
evidencing more than 25% of the Principal Balance of the Notes;
PROVIDED, that a failure on the part of the Sponsor to perform its
obligations under Section 2.03 or 2.05 hereof shall not be subject to
the 15 day cure period;
(iii) The entry against the Servicer of a decree or order by a
court or agency or supervisory authority having jurisdiction in the
premises for the appointment of a trustee, conservator, receiver or
liquidator in any insolvency, conservatorship, receivership,
readjustment of debt, marshalling of assets and liabilities or similar
proceedings, or for the winding up or liquidation of its affairs, and
the continuance of any such decree or order unstayed and in effect for
a period of 60 consecutive days;
(iv) The consent by the Servicer to the appointment of a
trustee, conservator, receiver or liquidator in any insolvency,
conservatorship, receivership, readjustment of debt, marshalling of
assets and liabilities or similar proceedings of or relating to the
Servicer or of or relating to substantially all of its property; or 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 or reorganization statute, make an assignment for
the benefit of its creditors, or voluntarily suspend payment of its
obligations;
(v) The entry against the Sponsor of a decree or order by a
court or agency or supervisory authority having jurisdiction in the
premises for the appointment of a trustee, conservator, receiver or
liquidator in any insolvency, conservatorship, receivership,
readjustment of debt, marshalling of assets and liabilities or similar
proceedings, or for the winding up or liquidation of its affairs, and
the continuance of any such decree or order unstayed and in effect for
a period of 60 consecutive days;
(vi) The consent by the Sponsor to the appointment of a
trustee, conservator, receiver or liquidator in any insolvency,
conservatorship, receivership, readjustment of debt, marshalling of
assets and liabilities or similar proceedings of or relating to the
Sponsor or of or relating to substantially all of its property; or the
Sponsor shall admit in writing its inability to pay its debts generally
as they become due, file a petition to take advantage of any applicable
insolvency or reorganization statute, make an
42
assignment for the benefit of its creditors, or voluntarily suspend
payment of its obligations;
(vii) Aggregate Realized Losses over any one twelve-month
period exceed _____% of the Initial Pool Balance;
(viii) The Three Month Rolling Delinquency Rate exceeds
_____%;
(ix) Cumulative Realized Losses exceed the following
percentage of the Initial Pool Balance on any Payment Date as set forth
below:
Cumulative Realized
Payment Date Loss Percentage
------------ -------------------
1st through __th ____%
___th through __th ____%
__th through __th ____%
__st and thereafter ____%
(x) GreenPoint Bank fails to maintain the capital standards
established for "well capitalized" institutions under the prompt
corrective action regulations issued pursuant to the Federal Deposit
Insurance Corporation Improvement Act of 1991, as amended;
(xi) GreenPoint Bank, GreenPoint Financial Corp. or its
affiliates fail to pay any principal amount of at least $1,000,000 when
due, subject to the applicable grace period, if any, specified in the
agreement or other instrument relating to such debt and shall continue
after the applicable grace period if the effect of such event is to
accelerate the maturity and repayment of such debt before the stated
maturity thereof;
(xii) GreenPoint Bank shall no longer own 100% of the Servicer
either directly or indirectly;
(xiii) GreenPoint Bank shall sell the servicing platform of
the Servicer to a Person not affiliated with the Bank who is not
acceptable to the Insurer;
(xiv) A subservicer is contracted to service loans in
securitizations sponsored by the Sponsor and insured by the Insurer and
such subservicer is not acceptable to the Insurer;
(xv) Any failure by the Servicer to obtain the prior written
consent of the Insurer prior to the merger or consolidation of the
Servicer with, or the acquisition of the Servicer by, any entity that
is not 100% owned, directly or indirectly, by GreenPoint Financial
Corp.
(xvi) Any governmental authority, including the Federal
Deposit Insurance Corporation or any other governmental authority with
regulatory powers over the GreenPoint Bank, GreenPoint Financial Corp.
or its affiliates, shall take any mandatory
43
or discretionary supervisory action against the GreenPoint Bank,
GreenPoint Financial Corp. or its affiliates, including, without
limitation, by cease and desist order, memorandum or understanding,
capital directive or directive to take prompt corrective action, which
action, in the reasonable opinion of the Insurer, would have a material
adverse impact on (A) the business, operations or financial condition
of the GreenPoint Bank or the Servicer or (B) the ability of GreenPoint
Bank or the Servicer to perform its obligations under any transaction
document to which it is a party; or
(xvii) GreenPoint Bank's credit ratings fall below investment
grade by Xxxxx'x or Standard & Poor's;
then, and in each and every such case, so long as an Event of Servicing
Termination shall not have been remedied by the Servicer, either the Indenture
Trustee, the Insurer or the Holders of Notes evidencing more than 50% of the
Outstanding Amount of the Notes, in each case with the consent of the Insurer,
by notice then given in writing to the Servicer (and to the Indenture Trustee if
given by the Insurer or the Holders of Notes) may terminate all of the rights
and obligations of the Servicer as servicer under this Agreement. Any such
notice to the Servicer shall also be given to each Rating Agency and the
Insurer. On or after the receipt by the Servicer of such written notice, all
authority and power of the Servicer under this Agreement, whether with respect
to the Notes or the Mortgage Loans or otherwise, shall pass to and be vested in
the Indenture Trustee pursuant to and under this Section 6.01; and, without
limitation, the Indenture Trustee is hereby authorized and empowered to execute
and deliver, on behalf of the Servicer, as attorney-in-fact or otherwise, any
and all documents and other instruments, and to do or accomplish all other acts
or things necessary or appropriate to effect the purposes of such notice of
termination, whether to complete the transfer and endorsement of each Mortgage
Loan and related documents, or otherwise. The Servicer agrees to cooperate with
the Indenture Trustee in effecting the termination of the responsibilities and
rights of the Servicer hereunder, including, without limitation, the transfer to
the Indenture Trustee for the administration by it of all cash amounts that
shall at the time be held by the Servicer to be deposited by it in the
Collection Account, or that have been deposited by the Servicer in the
Collection Account or thereafter received by the Servicer with respect to the
Mortgage Loans. All reasonable costs and expenses (including attorneys' fees and
expenses) incurred in connection with amending this Agreement to reflect such
succession as Servicer pursuant to this Section 6.01 shall be paid by the
predecessor Servicer (or if the predecessor Servicer is the Indenture Trustee,
the initial Servicer) upon presentation of reasonable documentation of such
costs and expenses.
Notwithstanding the foregoing, a delay in or failure of performance
under Section 6.01(i) for a period of one Business Day or under Section 6.01(ii)
for a period of 15 days, shall not constitute an Event of Servicing Termination
if such delay or failure could not be prevented by the exercise of reasonable
diligence by the Servicer and such delay or failure was caused by an act of God
or the public enemy, acts of declared or undeclared war, public disorder,
rebellion or sabotage, epidemics, landslides, lightning, fire, hurricanes,
earthquakes or floods. The preceding sentence shall not relieve the Servicer
from using its best efforts to perform its respective obligations in a timely
manner in accordance with the terms of this Agreement and the Servicer shall
provide the Indenture Trustee, the Sponsor, the Insurer and the Noteholders and
Residual Certificateholders with an Officer's Certificate giving prompt notice
of such failure or delay by it, together with a description of its efforts to so
perform its obligations. The Servicer shall
44
immediately notify the Indenture Trustee and the Insurer in writing of any
Events of Servicing Termination.
Section 6.02. INDENTURE TRUSTEE TO ACT; APPOINTMENT OF SUCCESSOR.
(a) On and after the time the Servicer receives a notice of termination
pursuant to Section 6.01 or resigns pursuant to Section 5.04, the Indenture
Trustee shall be the successor in all respects to the Servicer in its capacity
as servicer under this Agreement and the transactions set forth or provided for
herein and shall be subject to all the responsibilities, duties and liabilities
relating thereto placed on the Servicer by the terms and provisions hereof.
Notwithstanding the above, if the Indenture Trustee becomes the Servicer
hereunder, it shall have no responsibility or obligation (i) of repurchase or
substitution with respect to any Mortgage Loan, (ii) with respect to any
representation or warranty of the Servicer, and (iii) for any act or omission of
either a predecessor or successor Servicer other than the Indenture Trustee. As
compensation therefor, the Indenture Trustee shall be entitled to such
compensation as the Servicer would have been entitled to hereunder if no such
notice of termination had been given. In addition, the Indenture Trustee will be
entitled to compensation with respect to its expenses in connection with
conversion of certain information, documents and record keeping, as provided in
Sections 6.7 and 6.8 of the Indenture. Notwithstanding the above, (i) if the
Indenture Trustee is unwilling to act as successor Servicer, or (ii) if the
Insurer is unwilling to have the Indenture Trustee act as successor Servicer or
(iii) if the Indenture Trustee is legally unable so to act, the Indenture
Trustee may with the consent of the Insurer (in the situation described in
clauses (i) or (ii)) or shall (in the situation described in clause (iii))
appoint or petition a court of competent jurisdiction to appoint, any
established housing and home finance institution, bank or other mortgage loan or
home equity loan servicer with all licenses and permits required to perform its
obligations under this Agreement and having a net worth of not less than
$15,000,000 as the successor to the Servicer hereunder in the assumption of all
or any part of the responsibilities, duties or liabilities of the Servicer
hereunder; PROVIDED that any such successor Servicer shall be acceptable to the
Insurer, as evidenced by its prior written consent, which consent shall not be
unreasonably withheld; and PROVIDED, FURTHER, that the appointment of any such
successor Servicer will not result in the qualification, reduction or withdrawal
of the ratings assigned to the Notes by the Rating Agencies without regard to
the Policy. Pending appointment of a successor to the Servicer hereunder, unless
the Indenture Trustee is prohibited by law from so acting, the Indenture Trustee
shall act in such capacity as hereinabove provided. In connection with such
appointment and assumption, the successor shall be entitled to receive
compensation out of payments on Mortgage Loans in an amount equal to the
compensation which the Servicer would otherwise have received pursuant to
Section 3.08 (or such lesser compensation as the Indenture Trustee and such
successor shall agree). The Indenture Trustee and such successor shall take such
action, consistent with this Agreement, as shall be necessary to effectuate any
such succession.
(b) Any successor, including the Indenture Trustee, to the Servicer as
servicer shall during the term of its service as servicer (i) continue to
service and administer the Mortgage Loans for the benefit of the Noteholders,
Residual Certificateholders and the Insurer and (ii) maintain in force a policy
or policies of insurance covering errors and omissions in the performance of its
obligations as Servicer hereunder and a fidelity bond in respect of its
officers, employees and agents to the same extent as the Servicer is so required
pursuant to Section 3.13.
45
The appointment of a successor Servicer shall not affect any liability of the
predecessor Servicer which may have arisen under this Agreement prior to its
termination as Servicer (including, without limitation, any deductible under an
Insurance Policy pursuant to Section 3.04), nor shall any successor Servicer be
liable for any acts or omissions of the predecessor Servicer or for any breach
by such Servicer of any of its representations or warranties contained herein.
Section 6.03. NOTIFICATION TO NOTEHOLDERS AND RESIDUAL
CERTIFICATEHOLDERS. Upon any termination or appointment of a successor to the
Servicer pursuant to this Article VI or Section 5.04, the Indenture Trustee
shall give prompt written notice thereof to the Noteholders, Residual
Certificateholders (at their respective addresses appearing in the Note Register
and in the Residual Certificate Register), the Insurer and each Rating Agency.
ARTICLE VII
TERMINATION
Section 7.01. TERMINATION.
(a) The respective obligations and responsibilities of the Servicer,
the Sponsor and the Indenture Trustee created hereby (other than the obligation
of the Indenture Trustee to make certain payments to Noteholders after the final
Payment Date and the obligation of the Servicer to send certain notices as
hereinafter set forth) shall terminate upon the last action required to be taken
by the Indenture Trustee on the final Payment Date pursuant to this Article VII
following the later of (A) the Payment Date following payment in full of all
amounts owing to the Insurer under the Insurance Agreement and (B) the earliest
of (i) the transfer, under the conditions specified in Section 7.01(b), to the
Sponsor of the Noteholders' interest in each remaining Mortgage Loan and all
property acquired in respect of any remaining Mortgage Loans, (ii) the day
following the Payment Date on which the distribution made to Noteholders has
reduced the Note Principal Balance to zero and no other amounts are owed to the
Noteholders hereunder, and no other amounts are owed to the Insurer pursuant to
the Insurance Agreement and Section 8.7 of the Indenture, (iii) the final
payment or other liquidation of the last Mortgage Loan remaining in the Trust
(including, without limitation, the disposition of the Mortgage Loans pursuant
to Section 5.4 of the Indenture) or the disposition of all property acquired
upon foreclosure or deed in lieu of foreclosure of any Mortgage Loan and (iv)
the Payment Date in _____ 20__; PROVIDED, HOWEVER, that in no event shall the
trust created hereby continue beyond the expiration of 21 years from the date of
death of the last surviving descendants of Xxxxxx X. Xxxxxxx, the late
ambassador of the United States to the Court of St. Xxxxx, living on the date
hereof. Upon termination in accordance with clause (a)(B)(i) of this Section
7.01, the Indenture Trustee shall execute such documents and instruments of
transfer presented by the Sponsor, in each case without recourse, representation
or warranty, and take such other actions as the Sponsor may reasonably request
to effect the transfer of the Mortgage Loans to the Sponsor.
(b) Subject to Section 7.01(d), the Sponsor shall have the right to
effect the transfer to the Sponsor of each Mortgage Loan on any Payment Date on
or after the Payment Date immediately prior to which the Pool Balance is less
than or equal to ten percent (10%) of the Initial Pool Balance. If the Sponsor
elects to exercise its right it will notify the Issuer, the Servicer, the
Indenture Trustee and the Insurer no later than thirty-five (35) days prior to
the
46
Payment Date on which the transfer is to take place. The Indenture Trustee will
make the transfer on such Payment Date subject to Section 7.01(d) and provided
that the Redemption Price for the Notes has been deposited with it not less than
five (5) Business Days prior to such Payment Date.
(c) The Sponsor, at its expense, shall prepare and deliver to the
Indenture Trustee for execution, at the time the related Mortgage Loans are to
be released to the Sponsor, appropriate documents assigning each such Mortgage
Loan from the Indenture Trustee to the Sponsor and shall promptly record such
assignments.
(d) The Sponsor shall not exercise its right to repurchase the Mortgage
Loans pursuant to Section 7.01(b) hereof if (a) such repurchase would result in
a draw on the Policy, without the consent of the Insurer, and (b) any
Reimbursement Amount due to the Insurer would not be fully satisfied pursuant to
the repurchase.
ARTICLE VIII
ADMINISTRATIVE DUTIES OF THE SERVICER
Section 8.01. ADMINISTRATIVE DUTIES.
(a) DUTIES WITH RESPECT TO THE INDENTURE. The Servicer shall perform
all its duties and the duties of the Issuer under the Indenture. In addition,
the Servicer shall consult with the Owner Trustee as the Servicer deems
appropriate regarding the duties of the Issuer under the Indenture. The Servicer
shall monitor the performance of the Issuer and shall advise the Owner Trustee
when action is necessary to comply with the Issuer's duties under the Indenture.
The Servicer shall prepare for execution by the Issuer or shall cause the
preparation by other appropriate Persons of all such documents, reports,
filings, instruments, certificates and opinions as it shall be the duty of the
Issuer to prepare, file or deliver pursuant to the Indenture. In furtherance of
the foregoing, the Servicer shall take all necessary action that is the duty of
the Issuer to take pursuant to the Indenture.
(b) DUTIES WITH RESPECT TO THE ISSUER.
(i) In addition to the duties of the Servicer set forth in
this Agreement or any of the Basic Documents, the Servicer shall
perform such calculations and shall prepare for execution by the Issuer
or the Owner Trustee or shall cause the preparation by other
appropriate Persons of all such documents, reports, filings,
instruments, certificates and opinions as it shall be the duty of the
Issuer or the Owner Trustee to prepare, file or deliver pursuant to
this Agreement or any of the Basic Documents or under state and federal
tax and securities laws, and at the request of the Owner Trustee shall
take all appropriate action that it is the duty of the Issuer to take
pursuant to this Agreement or any of the Basic Documents, including,
without limitation, pursuant to Sections 2.6 and 2.11 of the Trust
Agreement. In accordance with the directions of the Issuer or the Owner
Trustee, the Servicer shall administer, perform or supervise the
performance of such other activities in connection with the Mortgage
Loans (including the Basic Documents) as are not covered by any of the
foregoing provisions and as are expressly
47
requested by the Issuer or the Owner Trustee and are reasonably within
the capability of the Servicer.
(ii) Notwithstanding anything in this Agreement or any of the
Basic Documents to the contrary, the Servicer shall be responsible for
promptly notifying the Owner Trustee and the Indenture Trustee and the
Insurer in the event that any withholding tax is imposed on the
Issuer's payments (or allocations of income) to a Residual
Certificateholder (as defined in the Trust Agreement) as contemplated
by this Agreement. Any such notice shall be in writing and specify the
amount of any withholding tax required to be withheld by the Owner
Trustee or the Indenture Trustee pursuant to such provision.
(iii) Notwithstanding anything in this Agreement or the Basic
Documents to the contrary, the Servicer shall be responsible for
performance of the duties of the Issuer or the Sponsor set forth in
Section 5.1(a), (b), (c) and (d) of the Trust Agreement with respect
to, among other things, accounting and reports to Residual
Certificateholders (as defined in the Trust Agreement).
(iv) The Servicer shall perform the duties of the Sponsor
specified in Section 11.2 of the Trust Agreement required to be
performed in connection with the resignation or removal of the Owner
Trustee, and any other duties expressly required to be performed by the
Servicer under this Agreement or any of the Basic Documents.
(v) In carrying out the foregoing duties or any of its other
obligations under this Agreement, the Servicer may enter into
transactions with or otherwise deal with any of its Affiliates;
PROVIDED, HOWEVER, that the terms of any such transactions or dealings
shall be in accordance with any directions received from the Issuer and
shall be, in the Servicer's opinion, no less favorable to the Issuer in
any material respect.
(c) NON-MINISTERIAL MATTERS. With respect to matters that in the
reasonable judgment of the Servicer are non-ministerial, the Servicer shall not
take any action pursuant to this Article VIII unless within a reasonable time
before the taking of such action, the Servicer shall have notified the Owner
Trustee and the Insurer of the proposed action and the Owner Trustee and the
Insurer shall not have withheld consent or provided an alternative direction.
For the purpose of the preceding sentence, "non-ministerial matters" shall
include:
(A) the amendment of or any supplement to the Indenture;
(B) the initiation of any claim or lawsuit by the Issuer and
the compromise of any action, claim or lawsuit brought by or against
the Issuer (other than in connection with the collection of the
Mortgage Loans);
(C) the amendment, change or modification of this Agreement or
any of the Basic Documents;
(D) the appointment of successor Note Registrars, successor
Paying Agents and successor Indenture Trustees pursuant to the
Indenture or the appointment of
48
successor Servicers or the consent to the assignment by the Note
Registrar, Paying Agent or Indenture Trustee of its obligations under
the Indenture; and
(E) the removal of the Indenture Trustee.
(d) EXCEPTIONS. Notwithstanding anything to the contrary in this
Agreement, except as expressly provided herein or in the other Basic Documents,
the Servicer, in its capacity hereunder, shall not be obligated to, and shall
not, (1) make any payments to the Noteholders or the Residual Certificateholders
under the Basic Documents, (2) sell the Trust Property pursuant to Section 5.4
of the Indenture, (3) take any other action that the Issuer directs the Servicer
not to take on its behalf or (4) in connection with its duties hereunder assume
any indemnification obligation of any other Person.
(e) The Indenture Trustee or any successor Servicer shall not be
responsible for any obligations or duties of the Servicer under Section 8.01.
Section 8.02. RECORDS. The Servicer shall maintain appropriate books of
account and records relating to services performed under this Agreement, which
books of account and records shall be accessible for inspection by the Issuer,
the Insurer and the Indenture Trustee at any time during normal business hours.
Section 8.03. ADDITIONAL INFORMATION TO BE FURNISHED TO THE ISSUER. The
Servicer shall furnish to the Issuer and the Indenture Trustee from time to time
such additional information regarding the Mortgage Loans as the Issuer and the
Indenture Trustee shall reasonably request.
ARTICLE IX
MISCELLANEOUS PROVISIONS
Section 9.01. AMENDMENT. This Agreement may be amended from time to
time by agreement among the Sponsor, the Servicer, and the Indenture Trustee, in
each case without notice to or the consent of any of the Noteholders or Residual
Certificateholders, but only with the consent of the Insurer (which consent
shall not be unreasonably withheld), (i) to cure any ambiguity, (ii) to correct
any defective provisions or to correct or supplement any provisions herein that
may be inconsistent with any other provisions herein, (iii) to add to the duties
of the Sponsor or the Servicer, (iv) to add any other provisions with respect to
matters or questions arising under this Agreement or the Policy, as the case may
be, which shall not be inconsistent with the provisions of this Agreement, (v)
to add or amend any provisions of this Agreement as required by any Rating
Agency or any other nationally recognized statistical rating organization in
order to maintain or improve any rating of the Notes (it being understood that,
after obtaining the ratings in effect on the Closing Date, neither the Indenture
Trustee, the Sponsor nor the Servicer is obligated to obtain, maintain or
improve any such rating) or (vi) to comply with any requirement imposed by the
Code; PROVIDED, HOWEVER, that such action shall not, as evidenced by an Opinion
of Counsel, materially and adversely affect the interests of any Noteholder, any
Residual Certificateholder, or the Insurer; and PROVIDED, FURTHER, that the
amendment shall be deemed not to adversely affect in any material respect the
interests of the Noteholders and the
49
Residual Certificateholders and no opinion referred to in the preceding proviso
shall be required to be delivered if the Person requesting the amendment obtains
a letter from each Rating Agency stating that the amendment would not result in
the downgrading or withdrawal of the respective ratings then assigned to the
Notes without regard to the Policy.
This Agreement also may be amended from time to time by agreement among
the Servicer, the Sponsor and the Indenture Trustee, with the consent of the
Insurer and the Holders of the Notes evidencing more than 50% of the Outstanding
Amount of the Notes and the Holders of the Residual Certificates evidencing more
than 50% of the percentage interest in the Residual Certificates (which consent
of such Holders of Notes and Residual Certificates given pursuant to this
Section 9.01 or pursuant to any other provision of this Agreement shall be
conclusive and binding on such Holder and all future Holders of such securities
and of any security issued upon the transfer thereof or in exchange thereof or
in lieu thereof whether or not notation of such consent is made upon the
security) for the purpose of adding any provisions to or changing in any manner
or eliminating any of the provisions of this Agreement or of modifying in any
manner the rights of the Noteholders or the Residual Certificateholders;
PROVIDED, HOWEVER, that no such amendment shall (i) reduce in any manner the
amount of, or delay the timing of, payments on the Notes or distributions or
payments under the Policy which are required to be made on any Note without the
consent of the Holder of such Note or (ii) reduce the aforesaid percentage
required to consent to any such amendment, without the consent of the Holders of
all then outstanding Notes and Residual Certificates or (iii) adversely affect
in any material respect the interests of the Insurer.
Following the execution and delivery of any such amendment hereto or to
the Policy, either the Sponsor, if the Sponsor requested the amendment, or the
Servicer, if the Servicer requested the amendment, shall reimburse the Insurer
for the reasonable out-of-pocket costs and expenses incurred by each in
connection with such amendment.
Prior to the execution of any such amendment, the party hereto
requesting any such amendment shall furnish written notification of the
substance of such amendment to each Rating Agency. In addition, promptly after
the execution of any such amendment made with the consent of the Noteholders or
the Residual Certificateholders, the Indenture Trustee shall furnish written
notification of the substance of such amendment to each Noteholder and Residual
Certificateholder and fully executed original counterparts of the instruments
effecting such amendment to the Insurer.
It shall not be necessary for the consent of Noteholders or Residual
Certificateholders under this Section 9.01 to approve the particular form of any
proposed amendment or consent, but it shall be sufficient if such consent shall
approve the substance thereof. The manner of obtaining such consents and of
evidencing the authorization of the execution thereof by Noteholders and
Residual Certificateholders shall be subject to such reasonable requirements as
the Indenture Trustee may prescribe.
In executing any amendment permitted by this Section 9.01, the
Indenture Trustee shall be entitled to receive, and shall be fully protected in
relying upon, an Opinion of Counsel stating that such amendment is authorized or
permitted hereby and that all conditions precedent to the execution and delivery
of such amendment have been satisfied. The Indenture Trustee may, but
50
shall not be obligated to, enter into any such amendment which affects the
Indenture Trustee's own rights, duties or immunities under this Agreement or
otherwise.
Section 9.02. RECORDATION OF AGREEMENT. This Agreement is subject to
recordation in all appropriate public offices for real property records in all
the counties or other comparable jurisdictions in which any or all of the
properties subject to the Mortgages are situated, and in any other appropriate
public recording office or elsewhere, such recordation to be effected by the
Servicer, but only upon direction of Noteholders accompanied by an Opinion of
Counsel to the effect that such recordation materially and beneficially affects
the interests of Noteholders. The Noteholders requesting such recordation shall
bear all costs and expenses of such recordation. The Indenture Trustee shall
have no obligation to ascertain whether such recordation so affects the
interests of the Noteholders.
For the purpose of facilitating the recordation of this Agreement as
herein provided and for other purposes, this Agreement may be executed
simultaneously in any number of counterparts, each of which counterparts shall
be deemed to be an original, and such counterparts shall constitute but one and
the same instrument.
LIMITATION ON RIGHTS OF NOTEHOLDERS. No Noteholder shall have
any right to vote (except as provided in Sections 6.01, 7.01, and 9.01 herein
and Section 5.4 of the Indenture) or in any manner otherwise control the
operation and management of the Trust, or the obligations of the parties hereto,
nor shall anything herein set forth, or contained in the terms of the Notes, be
construed so as to constitute the Noteholders from time to time as partners or
members of an association; nor shall any Noteholder be under any liability to
any third person by reason of any action taken by the parties to this Agreement
pursuant to any provision hereof.
No Noteholder shall have any right by virtue or by availing itself of
any provisions of this Agreement to institute any suit, action or proceeding in
equity or at law upon or under or with respect to this Agreement, unless such
Holder previously shall have given to the Indenture Trustee a written notice of
default and of the continuance thereof, as hereinbefore PROVIDED, and unless
also the Holders of Notes evidencing more than 50% of the Outstanding Amount of
the Notes shall have made written request upon the Indenture Trustee to
institute such action, suit or proceeding in its own name as Indenture Trustee
hereunder and shall have offered to the Indenture Trustee such reasonable
indemnity as it may require against the costs, expenses and liabilities to be
incurred therein or thereby, and the Indenture Trustee, for 60 days after its
receipt of such notice, request and offer of indemnity, shall have neglected or
refused to institute any such action, suit or proceeding; it being understood
and intended, and being expressly covenanted by each Noteholder with every other
Noteholder and the Indenture Trustee, that no one or more Holders of Notes shall
have any right in any manner whatever by virtue or by availing itself or
themselves of any provisions of this Agreement to affect, disturb or prejudice
the rights of the Holders of any other of the Notes, or to obtain or seek to
obtain priority over or preference to any other such Holder, or to enforce any
right under this Agreement, except in the manner herein provided and for the
equal, ratable and common benefit of all Noteholders. For the protection and
enforcement of the provisions of this Section 9.03, each and every Noteholder
and the Indenture Trustee shall be entitled to such relief as can be given
either at law or in equity.
51
Anything to the contrary notwithstanding, by accepting its Note, each
Noteholder agrees that unless a Insurer Default exists, the Insurer shall have
the right to exercise all rights of the Noteholder under this Agreement without
any further consent of the Noteholder.
Section 9.04. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS (OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE NEW
YORK GENERAL OBLIGATIONS LAW), AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 9.05. NOTICES. All demands, notices and communications
hereunder shall be in writing and shall be deemed to have been duly given if
sent via facsimile (receipt confirmed), personally delivered at or mailed by
certified mail, return receipt requested, to (a) in the case of the Sponsor,
GreenPoint Mortgage Securities LLC, 000 Xxxx Xxxxxx Xxxxx, Xxxxxxxx #00000,
Xxxxxx, Xxxxxxxxxx 00000, Attention: X.X. Xxxxxxx, (b) in the case of the
Servicer, GreenPoint Mortgage Funding, Inc., 000 Xxxx Xxxxxx Xxxxx, Xxxxxxxx
#00000, Xxxxxx, Xxxxxxxxxx 00000, Attention: Xxxxxxx XxxXxxxxxx, (c) in the case
of the Indenture Trustee, at the Corporate Trust Office, (d) in the case of the
Insurer, [Insurer's Address] (telecopy number (___) ____-_____), (e) in the case
of [First Rating Agency], [First Rating Agency's Address], and (f) in the case
of [Second Rating Agency], [Second Rating Agency's Address], or, as to each
party, at such other address as shall be designated by such party in a written
notice to each other party. Any notice required or permitted to be mailed to a
Noteholder shall be given by first class mail, postage prepaid, at the address
of such Holder as shown in the Note Register. Any notice so mailed within the
time prescribed in this Agreement shall be conclusively presumed to have been
duly given, whether or not the Noteholder or Residual Certificateholder receives
such notice. Any notice or other document required to be delivered or mailed by
the Indenture Trustee to any Rating Agency shall be given on a best efforts
basis and only as a matter of courtesy and accommodation and the Indenture
Trustee shall have no liability for failure to deliver such notice or document
to any Rating Agency.
Section 9.06. SEVERABILITY OF PROVISIONS. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions or
terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or of the Notes or the
rights of the Holders thereof.
Section 9.07. ASSIGNMENT. Notwithstanding anything to the contrary
contained herein, except as provided in Sections 5.02 and 5.04, this Agreement
may not be assigned by the Sponsor or the Servicer without the prior written
consent of the Insurer and Holders of the Notes evidencing Percentage Interests
aggregating not less than ___%.
Section 9.08. THIRD-PARTY BENEFICIARIES. This Agreement will inure to
the benefit of and be binding upon the parties hereto, the Residual
Certificateholders, the Note Owners or the Insurer and their respective
successors and permitted assigns. Except as otherwise provided in this
Agreement, no other Person will have any right or obligation hereunder.
52
Section 9.09. COUNTERPARTS. This instrument may be executed in any
number of counterparts, each of which so executed shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same instrument.
Section 9.10. EFFECT OF HEADINGS AND TABLE OF CONTENTS. The Article and
Section headings herein and the Table of Contents are for convenience only and
shall not affect the construction hereof.
Section 9.11. INSURANCE AGREEMENT. The Indenture Trustee is authorized
and directed to execute and deliver the Insurance Agreement and to perform the
obligations of the Indenture Trustee thereunder.
Section 9.12. NONPETITION COVENANT. Until one year plus one day shall
have elapsed since the termination of the Trust in accordance with Section 7.01,
none of the Sponsor, the Company, the Servicer, nor the Indenture Trustee shall
petition or otherwise invoke the process of any court or government authority
for the purpose of commencing or sustaining a case against the Sponsor or the
Trust under any federal or state bankruptcy, insolvency or similar law or
appointing a receiver, liquidator, assignee, Indenture Trustee, custodian,
sequestrator or other similar official of the Sponsor or the Trust or any
substantial part of its property, or ordering the winding up or liquidation of
the affairs of the Sponsor or the Trust.
53
IN WITNESS WHEREOF, the Sponsor, the Servicer and the Indenture Trustee
have caused this Agreement to be duly executed by their respective officers all
as of the day and year first above written.
GREENPOINT MORTGAGE SECURITIES LLC,
as Sponsor
By:
-------------------------------
Name:
Title:
GREENPOINT MORTGAGE FUNDING, INC.,
as Company and Servicer
By:
-------------------------------
Name:
Title:
[INDENTURE TRUSTEE], not in its individual
capacity but solely
as Indenture Trustee
By:
-------------------------------
Name:
Title:
GREENPOINT HOME EQUITY LOAN TRUST
200_-_, as Issuer
By: [Owner Trustee], not in its individual
capacity but solely as Owner
Indenture Trustee
By:
-------------------------------
Name:
Title:
[Sale and Servicing Agreement]
State of ________ )
) ss.:
County of ________ )
On the ___th day of _______, 200_ before me, a notary public in and for
the State of ________, personally appeared _________________, known to me who,
being by me duly sworn, did depose and say that he resides at
______________________; that he is the _____________________ of GreenPoint
Mortgage Securities LLC, a Delaware limited liability company, one of the
parties that executed the foregoing instrument; that he knows the seal of said
company; that the seal affixed to said instrument is such seal; that it was so
affixed by order of the members of said company; and that he signed his name
thereto by like order.
----------------------------------
Notary Public
[Notarial Seal]
State of ________ )
) ss.:
County of ________ )
On the ___ day of _________, 200_ before me, a notary public in and for
the State of New York, personally appeared __________, known to me who, being by
me duly sworn, did depose and say that he resides at ______________________;
that he is the _____________________ of [Owner Trustee], one of the parties that
executed the foregoing instrument; that he knows the seal of said corporation;
that the seal affixed to said instrument is such corporate seal; that it was so
affixed by order of the Board of Directors of said corporation; and that he
signed his name thereto by like order.
----------------------------------
Notary Public
[Notarial Seal]
State of ________ )
) ss.:
County of ________ )
On the ____ day of _________, 200_ before me, a notary public in and
for the State of ________, personally appeared _____________________, known to
me who, being by me duly sworn, did depose and say that he resides at
_________________, ____________, ________ _____; that he is the ______________
of GreenPoint Mortgage Funding, Inc., a closely-held California corporation, one
of the parties that executed the foregoing instrument; that he knows the seal of
said corporation; that the seal affixed to said instrument is such corporate
seal; that it was so affixed by order of the Board of Directors of said
corporation; and that he signed his name thereto by like order.
----------------------------------
Notary Public
[Notarial Seal]
State of ________ )
) ss.:
County of ________ )
On the ___ day of _________, 200_ before me, a notary public in and for
the State of ________, personally appeared _________________, known to me who,
being by me duly sworn, did depose and say that he resides at _______________,
_______________ _____; that he is the _____________ of [Indenture Trustee], a
_____________, one of the parties that executed the foregoing instrument; and
that he signed his name thereto by order of the Board of Directors of said
corporation.
----------------------------------
Notary Public
[Notarial Seal]
EXHIBIT A
MORTGAGE LOAN SCHEDULE
A-1
EXHIBIT B
FORM OF OPINION OF COUNSEL
WITH RESPECT TO SECTION 3.11 OF THE
SALE AND SERVICING AGREEMENT
The opinions set forth below may be subject to all the qualifications,
assumptions, limitations and exceptions taken or made in the opinions of counsel
to the Company delivered on the Closing Date. Unless otherwise indicated, all
capitalized terms used herein shall have the meanings ascribed to them in the
Sale and Servicing Agreement dated as of ________, 200_ among GreenPoint
Mortgage Funding, Inc. (the "COMPANY" and the "SERVICER"), GreenPoint Mortgage
Securities LLC (the "SPONSOR") and [Indenture Trustee], as Indenture Trustee.
Terms used but not defined herein shall have the meaning given to such terms in
the above-referenced Sale and Servicing Agreement.
The Indenture Trustee has a valid perfected first priority security
interest with respect to the Sponsor's right, title and interest in and to the
Mortgage Loans (including all Eligible Substitute Mortgage Loans), subject to
the exceptions and qualifications set forth in the Opinion of Counsel attached
to the Indenture as Exhibit B.
B-1
EXHIBIT C-1
FORM OF OFFICER'S CERTIFICATE
REQUEST BY THE SERVICER FOR PERMANENT
RELEASE OF MORTGAGE LOANS AND MORTGAGE FILES
TO: [Indenture Trustee],
as Indenture Trustee
[Indenture Trustee's Address]
Gentlemen:
In connection with the payment in full of the Mortgage Loans held by you as
Indenture Trustee, under the Sale and Servicing Agreement dated as of ________,
200_ among GreenPoint Mortgage Funding, Inc., as Servicer, GreenPoint Mortgage
Securities LLC, as Sponsor, and you, as Indenture Trustee, the undersigned
requests the release of the Mortgage Loans and the Mortgage Files for the
Mortgage Loans identified in the schedule attached to this Request.
The undersigned hereby certifies that (i) the release of Collateral requested
will not impair the security under the Indenture, (ii) any and all payments
received on the Mortgage Loans identified in the schedule attached to this
Request which are required to be deposited in the Collection Account pursuant to
Section 3.02 of such Sale and Servicing Agreement have been so deposited, (iii)
the information with respect to such factual matters necessary for us to so
certify is in our possession and (iv) I am qualified to make these
certifications.
GREENPOINT MORTGAGE FUNDING, INC.,
as Servicer
By:
-------------------------------
Name:
--------------------------
Title:
-------------------------
Date:
--------------------------
ACKNOWLEDGED BY:
[INDENTURE TRUSTEE],
as Indenture Trustee
By:
-------------------------------
Name:
--------------------------
Title:
-------------------------
Date:
--------------------------
C-1-1
EXHIBIT C-2
FORM OF OFFICER'S CERTIFICATE
REQUEST BY THE SERVICER FOR TEMPORARY
RELEASE OF MORTGAGE LOANS AND MORTGAGE FILES
TO: [Indenture Trustee],
as Indenture Trustee
[Indenture Trustee's Address]
Gentlemen:
In connection with the administration of the Mortgage Loans held by you as
Indenture Trustee, under the Sale and Servicing Agreement dated as of ________,
200_ among GreenPoint Mortgage Funding, Inc., as Servicer, GreenPoint Mortgage
Securities LLC, as Sponsor, and you, as Indenture Trustee, the undersigned
requests the temporary release of the Mortgage Loans and the related Mortgage
Files for the Mortgage Loans identified in the schedule attached to this
Request.
GREENPOINT MORTGAGE FUNDING, INC.,
as Servicer
By:
-------------------------------
Name:
--------------------------
Title:
-------------------------
Date:
--------------------------
ACKNOWLEDGED BY:
[INDENTURE TRUSTEE],
as Indenture Trustee
By:
-------------------------------
Name:
--------------------------
Title:
-------------------------
Date:
--------------------------
C-2-1
EXHIBIT D
FORM OF CREDIT LINE AGREEMENT
D-1
EXHIBIT E
FORM OF MORTGAGE NOTE FOR
CLOSED END MORTGAGE LOANS
E-1
EXHIBIT F
FORM OF CERTIFICATE:
LOAN LEVEL REPORTING
DETAIL RECORD FIELDS: FILE NAME: T0##MMYY.LNS
------------------------- -------- ----------------- --------------------------------------------------------------------------
DATA: FIELD FORMAT DEFINITION
T0nnMMYY.LSN NBR
------------------------- -------- ----------------- --------------------------------------------------------------------------
Servicer Loan No. 1 13(X) Unique loan number assigned to the mortgage by the Seller/Servicer
------------------------- -------- ----------------- --------------------------------------------------------------------------
Blank 1(x)
------------------------- -------- ----------------- --------------------------------------------------------------------------
Due Date of Last Paid 2 YYYYMMDD DUE DATE of last full payment received from the borrower.
Installment (DDLPI)
------------------------- -------- ----------------- --------------------------------------------------------------------------
Blank 1(x)
------------------------- -------- ----------------- --------------------------------------------------------------------------
Last Payment Received 3 YYYYMMDD RECEIPT DATE of the last fully paid monthly installment of
principal, interest, and escrow (if any) that was received from the
borrower. Note: Dates of partial payments should not be entered
here. {Data is when payment was actually received from the
borrower) IF THIS INFORMATION IS NOT AVAILABLE, THEN POPULATE THE
FIELD WITH THE DEFAULT VALUE OF 19000101.
------------------------- -------- ----------------- --------------------------------------------------------------------------
Blank 1(x)
------------------------- -------- ----------------- --------------------------------------------------------------------------
Unpaid Principal 4 13.2 Unpaid Principal balance as of the end of the current period
Balance (UPB) 100%
------------------------- -------- ----------------- --------------------------------------------------------------------------
Blank 1(x)
------------------------- -------- ----------------- --------------------------------------------------------------------------
Interest Paid 5 13.2 Gross / Coupon Interest payment amount
------------------------- -------- ----------------- --------------------------------------------------------------------------
Blank 1(x)
------------------------- -------- ----------------- --------------------------------------------------------------------------
Principal Paid 6 13.2 Total principal paid down on the mortgage balance.
* For approved payment reversals or principal applied incorrectly
in a prior cycle the amount of negative principal to bring the
mortgage balance in line with the correct UPB reported.
------------------------- -------- ----------------- --------------------------------------------------------------------------
Blank 1(x)
------------------------- -------- ----------------- --------------------------------------------------------------------------
Draw Amount 7 13.2 Total draws made against the line of credit for the current month
------------------------- -------- ----------------- --------------------------------------------------------------------------
Blank 1(x)
------------------------- -------- ----------------- --------------------------------------------------------------------------
F-1
------------------------- -------- ----------------- --------------------------------------------------------------------------
DATA: FIELD FORMAT DEFINITION
T0nnMMYY.LSN NBR
------------------------- -------- ----------------- --------------------------------------------------------------------------
Exception Code 8 2(x) This field should contain an exception code only when exception
activity occurs for that period, otherwise this field should
contain a 0.
DEFAULT VALUE IS 0.
40 Inactivate loan, deemed the loan non-recoverable
60 Payoff - mortgage matured
61 Payoff - mortgage prepaid
65 Payoff - mortgage repurchased
69 Payoff - mortgage liquidated
70 Transfer to REO (status change exception)
72 Foreclosure (change of status from Active to Foreclosure)
80 Substituted Loan - Loan is added as a substitute for another loan
81 Reinstated Loan - Loan was previously delinquent, but the
borrower has brought it current.
90 Loan Modified - This is an exceptional activity code which is
reserved for future use. Modifications typically require
repurchase from the trust prior to modifying the loan.
------------------------- -------- ----------------- --------------------------------------------------------------------------
Blank 1(x)
------------------------- -------- ----------------- --------------------------------------------------------------------------
Exception Date 9 YYYYMMDD Date the exception occurred. If an exception has not occurred, this
field should contain the default value of 19000101.
------------------------- -------- ----------------- --------------------------------------------------------------------------
Blank 1(x)
------------------------- -------- ----------------- --------------------------------------------------------------------------
Mortgage Note Rate 10 6.3 Rate associated with the borrower's scheduled payment
------------------------- -------- ----------------- --------------------------------------------------------------------------
Blank 1(x)
------------------------- -------- ----------------- --------------------------------------------------------------------------
Mortgage P&I Amount 11 13.2 Principal and interest portion of the borrowers minimum installment.
Note: 100% of the principal and interest amount should be entered in
this field, including servicing and guarantee fees.
------------------------- -------- ----------------- --------------------------------------------------------------------------
Blank 1(x)
------------------------- -------- ----------------- --------------------------------------------------------------------------
Realized Losses 12 13.2 Amount of realized losses for that period. This field will also include
any supplemental claims or proceeds for loans liquidated in a previous
cycle.
------------------------- -------- ----------------- --------------------------------------------------------------------------
Blank 1(x)
------------------------- -------- ----------------- --------------------------------------------------------------------------
Cumulative Principal 13 13.2 Total principal payments advanced by the Servicer and not repaid by the
Advances borrower.
NOT APPLICABLE--DO NOT REPORT
------------------------- -------- ----------------- --------------------------------------------------------------------------
Blank 1(x)
------------------------- -------- ----------------- --------------------------------------------------------------------------
Interest Advances 14 13.2 Amount of interest payment advanced by the Servicer for that period.
NOT APPLICABLE--DO NOT REPORT
------------------------- -------- ----------------- --------------------------------------------------------------------------
Blank 1(x)
------------------------- -------- ----------------- --------------------------------------------------------------------------
Loan Status 15 1(X) Pertains to activity in the prior reporting cycle.
0 - Active
4 - Foreclosure
5 - REO
6 - Closed (PAYOFFS & REPURCHASES)
9 - Bankruptcy (OVERRIDES ACTIVE STATUS)
Note: 30,60 & 90 day delinquency status will be derived from the DDLPI
field.
------------------------- -------- ----------------- --------------------------------------------------------------------------
Blank 1(x)
------------------------- -------- ----------------- --------------------------------------------------------------------------
Subservicer No. 16 6 Subservicer ID# - 6 digits
------------------------- -------- ----------------- --------------------------------------------------------------------------
Blank 1(x)
------------------------- -------- ----------------- --------------------------------------------------------------------------
Actual Loan Balance 17 13.2 Actual loan balance outstanding from the borrower.
------------------------- -------- ----------------- --------------------------------------------------------------------------
Blank 1(x)
------------------------- -------- ----------------- --------------------------------------------------------------------------
F-2
------------------------- -------- ----------------- --------------------------------------------------------------------------
DATA: FIELD FORMAT DEFINITION
T0nnMMYY.LSN NBR
------------------------- -------- ----------------- --------------------------------------------------------------------------
Next Interest Rate 18 YYYYMMDD Applies only to ARM loans and reflects the next pending interest rate
Change Date adjustment date. DEFAULT IS 19000101. SINCE LOANS ADJUST MONTHLY, ONLY
REPORT THE FIRST ADJUSTMENT DATE FOR LOANS WITH TEASER PERIOD.
------------------------- -------- ----------------- --------------------------------------------------------------------------
Blank 1(x)
------------------------- -------- ----------------- --------------------------------------------------------------------------
Next Interest Payment 19 YYYYMMDD Applies only to payment capped ARM loans and reflects the next pending
Change Date payment adjustment date. DEFAULT IS 19000101.
------------------------- -------- ----------------- --------------------------------------------------------------------------
Blank 1(x)
------------------------- -------- ----------------- --------------------------------------------------------------------------
Index Value at Reset 20 6.3 The index rate used in determining the ARM coupon.
Date DEFAULT VALUE IS 0 FOR AN ARM LOAN IF THE INDEX IS NOT CHANGING IN THE
CURRENT PERIOD. ALSO POPULATE 0 IF THE LOAN IS A FIXED RATE LOAN.
------------------------- -------- ----------------- --------------------------------------------------------------------------
Blank 1(x)
------------------------- -------- ----------------- --------------------------------------------------------------------------
Next Mortgage Rate 21 6.3 Should be populated in advance of the rate adjustment.. DEFAULT VALUE IS
expected at reset date 0 FOR AN ARM LOAN IF THE RATE IS NOT CHANGING. DEFAULT VALUE IS 0 IF
THE LOAN IS A FIXED RATE LOAN.
------------------------- -------- ----------------- --------------------------------------------------------------------------
Blank 1(x)
------------------------- -------- ----------------- --------------------------------------------------------------------------
Collateral Group No. # 22 2 This is a collateral grouping number for whole loan directed collateral
deals. DEFAULT VALUE IS 0. REPORT THE HELOCS AND FIXED RATES SEPARATELY.
------------------------- -------- ----------------- --------------------------------------------------------------------------
Blank 1(x)
------------------------- -------- ----------------- --------------------------------------------------------------------------
Current Arrearage Paid 23 13.2 The current amount of cashflow applied to the arrearage balance.
Applies to loans that have been or are currently in default.
DEFAULT VALUE IS 0.
------------------------- -------- ----------------- --------------------------------------------------------------------------
Blank 1(x)
------------------------- -------- ----------------- --------------------------------------------------------------------------
Outstanding Arrearage 24 13.2 The total amount of outstanding interest accrued under forbearance
Balance period, after current arrearage payment. DEFAULT VALUE IS 0.
------------------------- -------- ----------------- --------------------------------------------------------------------------
Blank 1(x)
------------------------- -------- ----------------- --------------------------------------------------------------------------
Loan Number 25 13(X) Loan number assigned to the mortgage by ___. Used for disclosure.
------------------------- -------- ----------------- --------------------------------------------------------------------------
Blank 1(x)
------------------------- -------- ----------------- --------------------------------------------------------------------------
Prepayment Premium 26 13.2 The borrowers penalty payment for prepaying his mortgage. This amount
Amount is allocated in aggregate as a directed collateral amount to a specific
bond. DEFAULT VALUE IS 0.
------------------------- -------- ----------------- --------------------------------------------------------------------------
The Notes:
o File must be a text file (either space or tab delimited).
o Any dates should be in YYYYMMDD format. They should not contain slashes (/)
or dashes (-).
o Number fields should NOT include commas.
o Any negative number should be denoted by a "-" in front of the number, do
not put the "-" after the number or use parentheses.
F-3
