SERVICING AGREEMENT between COUNTRYWIDE HOME LOANS SERVICING LP (Servicer) and GOLDMAN SACHS MORTGAGE COMPANY (Owner) Dated as of July 1, 2004 Fixed & Adjustable-Rate First Lien Residential Mortgage Loans
EXECUTION
between
COUNTRYWIDE
HOME LOANS SERVICING LP
(Servicer)
and
XXXXXXX
XXXXX MORTGAGE COMPANY
(Owner)
Dated
as of July 1, 2004
Fixed
& Adjustable-Rate First Lien Residential Mortgage
Loans
DESCRIPTION
OF ATTACHMENTS
|
Exhibit
A
|
MORTGAGE
LOAN SCHEDULE
|
|
Exhibit
B
|
LIST
OF COLLATERAL DOCUMENTS
|
|
Exhibit
C
|
LIST
OF DOCUMENTS IN CREDIT FILE
|
|
Exhibit
D
|
FORM
OF XXXXXXXX-XXXXX ACT CERTIFICATION
|
THIS
SERVICING AGREEMENT (this “Agreement”) dated as
of
July 1, 2004,
is by
and between COUNTRYWIDE HOME LOANS SERVICING LP, in its capacity as servicer
(the
“Servicer”), and XXXXXXX XXXXX MORTGAGE COMPANY, and its successors and assigns,
as owner (the “Owner”).
PRELIMINARY
STATEMENT
WHEREAS,
the Owner and Countrywide Home Loans, Inc. (“Countrywide”) have entered into
that certain Master Mortgage Loan Purchase Agreement dated as of July 1, 2004
between the Owner, as purchaser and Countrywide, as seller, pursuant to which
the Owner will purchase and Countrywide will sell from time to time, certain
fixed and adjustable-rate first lien residential mortgage loans (the “Master
Mortgage Loans Purchase Agreement”);
WHEREAS,
the Servicer is in the business of providing primary servicing of mortgage
loans
and owns the right to service the Mortgage Loans (as hereinafter defined) listed
on the Mortgage Loan Schedule (as hereinafter defined);
WHEREAS,
the Owner has requested the Servicer to service the Mortgage Loans and Servicer
has agreed to service, as an independent contractor, such mortgage loans for
the
Owner on the terms and conditions set forth herein; and
WHEREAS,
the Servicer and the Owner desire to prescribe the terms and conditions
regarding the management, servicing, and control of such mortgage
loans.
NOW,
THEREFORE, in consideration of the mutual agreements and covenants herein
contained and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Servicer and the Owner agree as
follows:
ARTICLE
I
DEFINITIONS
Whenever
used herein, the following words and phrases, unless the context otherwise
requires, shall have the following meanings:
Acceptable
Servicing Procedures:
The
procedures, including prudent collection and loan administration procedures,
and
standard of care employed by prudent mortgage servicers.
Such
standard of care (i) shall not be lower than that the Servicer customarily
employs and exercises in servicing and administering similar mortgage loans
for
its own account, (ii) shall be in accordance with the requirements of the
Servicer’s policies and procedures, (iii) shall be, at a minimum, at least as
prudent as the requirements of Xxxxxx Mae as set forth from time to time in
the
Xxxxxx Xxx Selling and Servicing Guide, as amended from time to time, and (iv)
shall be in full compliance with all federal, state and local laws, ordinances,
rules and regulations.
Agreement:
This
Servicing Agreement, including all exhibits and schedules hereto, and all
amendments hereof and supplements hereto.
Ancillary
Income:
All
income if any, derived from any Mortgage Loan, including but not limited to
late
charges, fees received with respect to checks or bank drafts returned by the
related bank for non-sufficient funds, assumption fees, speed pay fees,
Prepayment Charges, reconveyance and demand statement fees, loan modification
fees and reamortization fees.
Applicable
Requirements:
The
(i) terms of the Mortgage and Mortgage Note related to each Mortgage Loan,
(ii) the federal, state, local and foreign laws, statutes, rules,
regulations, ordinances, standards, requirements, administrative rulings, orders
and processes pertaining to Mortgage Loans, including but not limited to those
pertaining to the processing, origination and servicing of the Mortgage Loans
and the servicer’s policies and procedures, (iii) the requirements of a
Primary Mortgage Insurer (if any) with respect to the processing, origination,
insuring, servicing or filing of claims in connection with the Mortgage Loans,
(iv) the requirements of the Owner as set forth in this Agreement, and
(v) the reasonable and customary mortgage servicing practices of prudent
mortgage lending institutions which service mortgage loans of the same type
as
the Mortgage Loans in the jurisdictions in which the related Mortgaged
Properties are located.
ARM
Loan:
A
Mortgage Loan as to which the related Mortgage Note provides that the Mortgage
Interest Rate may be adjusted periodically.
Assignment
of Mortgage:
An
assignment of mortgage, notice of transfer, or equivalent instrument, in
recordable form, sufficient under and complying with the laws of the
jurisdiction wherein the related Mortgaged Property is located to reflect of
record the sale of the Mortgage Loan to the assignee named therein.
2
Business
Day:
Any day
other than (i) a Saturday or Sunday, or (ii) a day on which banking or
savings and loan institutions in the States of New York, California or Texas
are
authorized or obligated by law or executive order to be closed.
Closing
Date:
The
date on which the sale and purchase of a Mortgage Loan Package is consummated
between the owner and Countrywide pursuant to the terms of the Mortgage Loan
Purchase Agreement.
Code:
The
Internal Revenue Code of 1986, as amended from time to time, or any successor
statute thereto.
Collateral
Documents:
With
respect to any Mortgage Loan, the mortgage loan documents pertaining to such
Mortgage Loan which are specified in Exhibit B hereto and any additional
mortgage documents pertaining to such Mortgage Loan required to be added to
the
related Collateral File pursuant to the terms of this Agreement.
Collateral
File:
With
respect to any Mortgage Loan, the file pertaining to such Mortgage Loan that
contains each of the related Collateral Documents.
Condemnation
Proceeds:
All
awards or settlements in respect of a taking of all or part of a Mortgaged
Property by exercise of the power of eminent domain or
condemnation.
Consents:
shall
mean the unconditional written consent or approval, as necessary, of an Investor
and any applicable Insurer to the Servicer’s servicing of the Mortgage Loans
hereunder.
Cooperative
Corporation:
The
entity that holds title (fee or an acceptable leasehold estate) to the real
property and improvements constituting the Cooperative Property and which
governs the Cooperative Property, which Cooperative Corporation must qualify
as
a Cooperative Housing Corporation under Section 216 of the Code.
Cooperative
Loan:
Any
Mortgage Loan secured by Coop Shares and a Proprietary Lease.
Cooperative
Property:
The
real property and improvements owned by the Cooperative Corporation, including
the allocation of individual dwelling units to the holders of the Coop Shares
of
the Cooperative Corporation.
Coop
Shares:
Shares
issued by a Cooperative Corporation.
Cooperative
Unit:
A
single family dwelling located in a Cooperative Property.
Countrywide:
Countrywide Home Loans, Inc., or any successor or assign to Countrywide under
this Agreement as provided herein.
Credit
File:
With
respect to any Mortgage Loan, a file pertaining to such Mortgage Loan and
containing copies of the mortgage loan documents described on Exhibit C attached
hereto, the credit documentation relating to the origination of such Mortgage
Loan and copies of the Collateral Documents. Each Credit File shall be
maintained by the Servicer (either on paper or on microfilm or any other
comparable medium), and shall be delivered to the Owner as soon as practicable
upon request.
3
Custodial
Account:
The
account or accounts created and maintained pursuant to Section 3.4 of this
Agreement which account(s) shall be an Eligible Account.
Custodial
Agreement:
Any
agreement with respect to the Mortgage Loans governing the retention of the
originals of each Mortgage Note, Mortgage, Assignment of Mortgage and other
Mortgage Loan Documents, entered into among Countrywide, the Servicer and
JPMorgan.
Custodian:
With
respect to any Mortgage Loan and the related Collateral File, JPMorgan Chase
Bank and any successor custodian under any custodial agreement which may be
entered into between the Servicer, the Owner or any subsequent Owner and the
custodian named therein regarding the warehousing and safekeeping of such
Collateral File.
Cut-off
Date:
With
respect to a Mortgage Loan Package, the first day of the month in which the
related Cutoff Date occurs or such other date as may be mutually agreed to
by
the parties.
Default:
Any
condition or circumstance that is, or with notice or the lapse of time or both,
would become, an Event of Default.
Determination
Date:
The
Business Day immediately preceding the related Remittance Date.
Due
Date:
With
respect to any Mortgage Loan, the first day of the month on which Monthly
Payments on such Mortgage Loan are due, exclusive of any days of
grace.
Due
Period:
With
respect to each Remittance Date, the period beginning on the second day of
the
month immediately preceding the month of such Remittance Date and ending on
the
first day of the month of such Remittance Date.
Eligible
Account:
An
account or accounts maintained with a Qualified Depository.
Escrow
Account:
The
separate account or accounts created and maintained pursuant to Section
3.6.
Escrow
Payments:
The
amounts constituting ground rents, taxes, assessments, water rates, mortgage
insurance premiums, if any, fire and hazard insurance premiums, and other
payments required to be escrowed by the Mortgagor with the mortgagee pursuant
to
any Mortgage Loan.
Event
of Default:
Any one
of the conditions or circumstances enumerated in Section 7.1.
FDIC:
The
Federal Deposit Insurance Corporation or any successor thereto.
4
Xxxxxx
Xxx:
Xxxxxx
Xxx, formerly known as the Federal National Mortgage Association, or any
successor thereto.
Fidelity
Bond:
A
fidelity bond to be obtained by the Servicer pursuant to Section
3.12.
Xxxxxxx
Mac:
Xxxxxxx
Mac, formerly known as the Federal Home Loan Mortgage Corporation or any
suc-cessor thereto.
Gross
Margin:
With
respect to each ARM Loan, the fixed percentage amount set forth in the related
Mortgage Note as shown in the Mortgage Loan Schedule, which amount is added
to
the Index in accordance with the terms of the related Mortgage Note to determine
on each Interest Rate Adjustment Date the Mortgage Interest Rate for such
Mortgage Loan.
Index:
With
respect to any ARM Loan, the index set forth in the applicable Mortgage Note
which is added to the Gross Margin to determine the Mortgage Interest Rate
on
each Interest Rate Adjustment Date. In the event the Index becomes unavailable
for any reason, the Servicer shall select an alternative index, in accordance
with the terms of the Mortgage Note, and such alternative index shall thereafter
be the Index for such Mortgage Loan.
Insurance
Proceeds:
Proceeds of any Primary Mortgage Insurance Policy, any title policy, any hazard
insurance policy or any other insurance policy covering a Mortgage Loan or
the
related Mortgaged Property, including any amounts required to be deposited
in
the Custodial Account pursuant to Section 3.10, to the extent such proceeds
are
not to be applied to the restoration of the related Mortgaged Property or
released to the Mortgagor in accordance with Acceptable Servicing Procedures
and
Section 3.14.
Interest
Rate Adjustment Date:
As to
any ARM Loan, the date specified in a Mortgage Note on which the Mortgage
Interest Rate for the related Mortgage Loan is subject to
adjustment.
Investor:
With
respect to any Mortgage Loan, a Person who has a beneficial interest in, or
is a
record owner of, such Mortgage Loan or any trustee acting on behalf of any
such
Person.
Late
Collections:
With
respect to any Mortgage Loan, all amounts (other than Monthly Advances) received
during any Due Period, whether as late payments of Monthly Payments or as
Insurance Proceeds, Liquidation Proceeds, Condemnation Proceeds or otherwise,
which represent late payments or collections of Monthly Payments due but
delinquent for a previous Due Period and not previ-ously recovered.
Liquidation
Proceeds:
Cash
received in connection with the liquidation of a defaulted Mortgage Loan,
whether through the sale or assignment of the Mortgage Loan, trustee's sale,
foreclosure sale or otherwise, or in connection with the sale of the Mortgaged
Property if the Mortgaged Property is a REO Property.
5
LPMI
Fee:
The
portion of the Mortgage Interest Rate relating to a LPMI Loan, which is set
forth on the related Mortgage Loan Schedule, to be retained by the Servicer
to
pay the premium due on a Primary Mortgage Insurance Policy with respect to
a
LPMI Loan.
LPMI
Loan:
Any
Mortgage Loan with respect to which the Servicer is responsible for paying
the
premium due on the related Primary Mortgage Insurance Policy with the proceeds
generated by the LPMI Fee relating to such Mortgage Loan, as set forth on the
related Mortgage Loan Schedule.
Losses:
Any
claims, penalties, fines, forfeitures, damages, liabilities, losses and
expenses, including reasonable attorneys' fees.
Maturity
Date:
With
respect to any Mortgage Loan, the maturity date of the related Mortgage Note
and
Mortgage as specified therein.
MERS:
Mortgage Electronic Registration, Inc. a corporation organized and existing
under the laws of the State of Delaware, or any successor thereto.
MERS
Mortgage Loan:
Any
Mortgage Loan registered with MERS on the MERS System.
MERS
®
System:
The
system of recording transfers of mortgages electronically maintained by
MERS.
Monthly
Advance:
Commencing with each Monthly Payment due on or after the related Cutoff Date,
the portion of each Monthly Payment that is delinquent with respect to each
Mortgage Loan at the close of business on the Determination Date required to
be
advanced by the Servicer pursuant to Section 4.3 on the Business Day immediately
preceding the Remittance Date of the related month.
Monthly
Payment:
The
scheduled monthly payment of principal and interest on a Mortgage Loan which
is
payable by a Mortgagor from time to time under the related Mortgage
Note.
Mortgage:
The
mortgage, mortgage deed, deed of trust or other instrument creating a first
lien
on or first priority ownership interest on an unsubordinated estate in fee
simple in real property securing the Mortgage Note; except that with respect
to
real property located in jurisdictions in which the use of leasehold estates
for
residential properties is a widely-accepted practice, the mortgage, deed of
trust or other instrument securing the Mortgage Note may secure and create
a
first lien upon a leasehold estate of the Mortgagor, as the case may be,
including any riders, addenda, assumption agreements or modifications relating
thereto.
Mortgage
Interest Rate:
As to
each Mortgage Loan, the annual rate at which interest accrues on such Mortgage
Loan and, with respect to an ARM Loan, as adjusted from time to time in
accordance with the provisions of the related Mortgage Note.
6
Mortgage
Loan:
Any
mortgage loan that is sold pursuant to this Agreement, as evidenced by such
mortgage loan’s inclusion on the related Mortgage Loan Schedule, which mortgage
loan includes, without limitation, the Mortgage File, the Monthly Payments,
Principal Prepayments, Liquidation Proceeds, Condemnation Proceeds, Insurance
Proceeds (if applicable) and all other rights, benefits, proceeds and
obligations arising from or in connection with such Mortgage Loan, excluding
the
servicing rights relating thereto. Unless the context requires otherwise, any
reference to the Mortgage Loans in this Agreement shall refer to the Mortgage
Loans constituting a Mortgage Loan Package.
Mortgage
Loan Package:
Pools
of Mortgage Loans sold to the Owner pursuant the Master Mortgage Loan Purchase
Agreement.
Mortgage
Loan Remittance Rate:
with
respect to each Mortgage Loan, the interest rate payable to the Owner on each
Remittance Date which shall equal the Mortgage Interest Rate less the Servicing
Fee and any LPMI Fees, if applicable.
Mortgage
Loan Schedule:
A
schedule
of Mortgage Loans annexed hereto as Exhibit A, such schedule setting forth
the
following information with respect to each Mortgage Loan: (1) Countrywide’s
Mortgage Loan number; (2) the address, city, state and zip code of the Mortgaged
Property; (3) a code indicating whether the Mortgaged Property is a single
family residence, two-family residence, three-family residence, four family
residence or planned unit development; (4) the purpose of the Mortgage Loan;
(5)
the Mortgagor’s social security number; (6) a code indicating the occupancy
status of the Mortgaged Property (i.e., owner-occupied, non-owner, second home);
(7) a code indicating whether the Mortgagor was self-employed at the time of
origination; (8) the Mortgage Interest Rate at origination; (9) the current
Mortgage Interest Rate; (10) whether the Mortgage Loan has Monthly Payments
that
are interest only for a period of time; (11) the Servicing Fee Rate; (12) the
current Monthly Payment; (13) the original term to maturity; (14) the remaining
term to maturity; (15) the scheduled principal balance of the Mortgage Loan
as
of the Cut-off Date; (16) the principal balance of the Mortgage Loan at
origination; (17) the principal balance of the Mortgage Loan as of the Cut-off
Date after deduction of payments of principal due on or before the Cut-off
Date
whether or not collected; (18) the LTV at origination or, if the Mortgage Loan
was secured by a second lien, the combined LTV at origination; (19) the due
date
of the Mortgage Loan; (20) a PMI Policy insurer name, percent and policy number
(if applicable); (21) the type of appraisal; (22) a code indicating whether
the
Mortgage Loan is a MERS Mortgage Loan; (23) a code indicating whether the
Mortgaged Property has any subordinate financing; (24) a code indicating whether
the Mortgage Loan is secured by a leasehold interest in the related Mortgaged
Property; (25) a code indicating whether the Mortgage Loan is subject to a
prepay penalty; (26) documentation type; (27) a code indicating whether the
Mortgage Loan is a buydown loan; (28) first payment date and (29) FICO
score.
Mortgage
Note:
The
note or other evidence of the indebtedness of a Mortgagor secured by a Mortgage,
including any riders, addenda, assumption agreements or modifications relating
thereto.
7
Mortgaged
Property:
With
respect to a Mortgage Loan that is not a Cooperative Loan, the underlying real
property securing repayment of a Mortgage Note, consisting of a single parcel
of
real estate considered to be real estate under the laws of the State in which
such real property is located, which may include condominium units and planned
unit developments, improved by a residential dwelling; except that with respect
to real property located in jurisdictions in which the use of leasehold estates
for residential properties is a widely-accepted practice, a leasehold estate
of
the Mortgagor, the term of which is equal to or longer than the term of the
Mortgage. With respect to a Cooperative Loan, the stock allocated to a dwelling
unit in the residential cooperative housing corporation that was pledged to
secure such Cooperative Loan and the related Cooperative Lease.
Mortgagor:
The
obligor on a Mortgage Note and their successors in title to the Mortgage
Property.
Nonrecoverable
Advance:
Any
portion of any of a Monthly Advance or Servicing Advance previously made or
proposed to be made in respect of a Mortgage Loan by the Servicer hereunder
which, in the good faith judgment of the Servicer, will not be ultimately
recoverable from Late Collections.
Officer’s
Certificate:
A
certificate signed by the Chairman of the Board, the Vice Chairman of the Board,
the President or a Vice President, the Servicer, and delivered to the Owner
as
required by this Agreement.
Opinion
of Counsel:
A
written opinion of counsel, who may be an employee of the Servicer or an
affiliate thereof, reasonably acceptable to the Owner.
Owner:
Xxxxxxx
Xxxxx Mortgage Company or any permitted successor owner of any of the Mortgage
Loans.
Pass-Through
Transfer:
The
sale or transfer of some or all of the Mortgage Loans to a REMIC or other trust
to be formed as part of a publicly or privately traded pass-through transaction
retaining the Servicer as “servicer” thereunder.
Periodic
Rate Cap:
With
respect to each ARM Loan, the provision of each Mortgage Note which provides
for
an absolute maximum amount by which the Mortgage Interest Rate therein may
increase or decrease on an Interest Rate Adjustment Date above or below the
Mortgage Interest Rate previously in effect, equal to the rate set forth on
the
Mortgage Loan Schedule per adjustment.
Permitted
Instruments:
Any one
or more of the following obli-gations or securities:
(i) direct
obligations of, or obligations fully guaranteed as to principal and interest
by,
the United States or any agency or instrumentality thereof, provided
such
obligations are backed by the full faith and credit of the United
States;
8
(ii) repurchase
obligations with respect to any security described in clause (i) above,
provided
that the
unsecured long-term obligations of the party agreeing to repurchase such
obligations are at the time rated by Standard & Poor's Corpor-ation in one
of its three highest rating categories;
(iii) federal
funds, certificates of deposit, time deposits, and bankers' acceptances of
any
bank or trust company incorporated under the laws of the United States or any
state, provided
that the
long-term debt obligations of such bank or trust company (or, in the case of
the
principal bank in a bank holding company system, the long-term debt obligations
of the bank holding company) at the date of acquisition thereof have been rated
by Standard & Poor's Corporation in one of its three highest rating
categories;
(iv) commercial
paper of any corporation incorporated under the laws of the United States or
any
state thereof which on the date of acquisition has been rated by Standard &
Poor's Corporation in its highest short-term rating category; and
(v) any
other
obligation or security acceptable to Standard & Poor's Corporation in
respect of mortgage pass-through certificates rated in one of its three highest
rating categories, as evidenced by a letter from Standard & Poor's
Corporation to such effect.
Person:
Any
individual, corporation, partnership, joint venture, association, joint-stock
company, trust, unincorporated organization or government or any agency or
political subdivision thereof.
Prepayment
Charge:
With
respect to any Mortgage Loan, the prepayment premium or charge, if any, required
under the terms of the related Mortgage Note to be paid in connection with
a
Principal Prepayment, to the extent permitted by applicable law.
Prepayment
Period:
With
respect to a Remittance Date, the prior calendar month.
Prepayment
Interest Shortfall Amount:
With
respect to any Remittance Date and Mortgage Loan that was subject to a Principal
Prepayment in full or in part during the related Principal Prepayment Period,
which Principal Prepayment was applied to such Mortgage Loan prior to such
Mortgage Loan's Due Date in such calendar month, the amount of interest (at
the
Mortgage Loan Remittance Rate) that would have accrued on the amount of such
Principal Prepayment during the period commencing on the date as of which such
Principal Prepayment was applied to such Mortgage Loan and ending on the day
immediately preceding such Due Date, inclusive.
Primary
Mortgage Insurance Policy:
With
respect to any Mortgage Loan, the policy of primary mortgage guaranty insurance
(including all endorsements thereto), if any, issued by a Qualified Insurer
with
respect to such Mortgage Loan, or any replacement policy.
Primary
Mortgage Insurer:
The
named insurer under any Primary Mortgage Insurance Policy.
9
Prime:
As of
any date of determination, the
annual interest rate, adjusted daily, published from time to time in The Wall
Street Journal (Western Edition) as the “PRIME RATE” in the “MONEY RATES”
section.
Principal
Prepayment:
Any
payment or other recovery of principal on a Mortgage Loan (other than
Condemnation Proceeds, Insurance Proceeds, and Liquidation Proceeds) which
is
received in advance of its scheduled Due Date (not including any Prepayment
Charge) and is not accompanied by an amount of interest representing scheduled
interest due on any date or dates in any month or months subsequent to the
month
of prepayment.
Proprietary
Lease:
With
respect to any Cooperative Unit, a lease or occupancy agreement between a
Cooperative Corporation and a holder of related Coop Shares.
Qualified
Depository:
(i) A depository, the long-term unsecured debt obligations of which are
rated by a nationally recognized statistical rating agency in one of its two
highest rating categories at the time of any deposit therein, or (ii) a
depository, the deposits of which are fully insured to the maximum extent
permitted by the FDIC or (iii) the corporate trust department of a national
bank; provided that they maintain a rating by a nationally recognized
statistical rating agency in the highest rating categories for short term debt
obligations.
Qualified
Insurer:
An
insurance company duly qualified as such under the laws of the states in which
the Mortgaged Properties are located, duly authorized and licensed in such
states to transact the applicable insurance business and to write the insurance
provided, which insurer is approved in such capacity by an Agency.
Reconstitution
Agreements:
The
agreement or agreements entered into by the Servicer and the Owner and/or
certain third parties on the Reconstitution Date or Dates with respect to any
or
all of the Mortgage Loans serviced hereunder, in connection with a Whole Loan
Transfer or a Pass-Through Transfer. Such agreement or agreements shall
prescribe the rights and obligations of the Servicer in servicing the related
Mortgage Loans.
Reconstitution
Date:
The
date or dates on which any or all of the Mortgage Loans serviced under this
Agreement shall be removed from this Agreement and reconstituted as part of
a
Whole Loan Transfer or Pass-Through Transfer pursuant to Section 5.9 hereof.
On
such date, the Mortgage Loans transferred shall cease to be covered by this
Agreement and the Servicer shall cease to service those Mortgage Loans under
this Agreement in accordance with the termination provisions set forth in
Section 5.9 hereof.
Remittance
Advice Date: The
10th
day of
each month or, if such 10th
day is
not a Business Day, the first Business Day immediately following such
day.
Remittance
Date:
With
respect to each Mortgage Loan: the eighteenth (18th)
day of
any month, beginning with the eighteenth (18th)
day of
the month next following the month in which the related Cut-off Date occurs,
or
if such eighteenth (18th)
day is
not a Business Day, the first Business Day immediately following such
day.
10
REO
Property:
A
Mortgaged Property acquired in foreclosure or by deed in lieu of foreclosure,
as
described in Section 3.13.
Security
Agreement:
With
respect to any Cooperative Loan, the agreement between the owner of the related
Coop Shares and the originator of the related Mortgage Note that defines the
terms of the security interest in such Coop Shares and the related Proprietary
Lease.
Servicer:
Countrywide Home Loans Servicing LP, a Texas limited partnership or its
permitted successor in interest or any successor to the Servicer as permitted
under this Agreement.
Servicing
Advances:
All
customary, reasonable, and necessary “out of pocket” costs and expenses
(including reasonable attorneys' fees and disbursements) that are incurred
by
the Servicer in the performance of its servicing obligations hereunder,
including, but not limited to, the cost of (i) the preservation,
restoration, and protection of the Mortgaged Property, (ii) any enforcement
or judicial pro-ceedings, including foreclosures, (iii) the management and
liquida-tion of the Mortgaged Property if the Mortgaged Property is acquired
in
satisfaction of the Mortgage, and (iv) compliance with the obligations of
this Agreement, including without limitation under Sections 3.8 and
3.10.
Servicing
Fee:
With
respect to each Mortgage Loan being serviced and administered pursuant to this
Agreement, the amount of the annual fee payable to the Servicer as compensation
for ser-vicing and administering such Mortgage Loan and for managing and
disposing of REO Property in accordance with the terms of this Agreement. For
each Mortgage Loan, such fee shall, for a period of one full month, be equal
to
one-twelfth of the product of (i) the Servicing Fee Rate, multiplied by
(ii) the outstanding Unpaid Principal Balance of such Mortgage Loan as of
the first day of such month, and shall be payable in accordance with Section
5.3. With respect to any REO Property that is being managed by the Servicer
in
accordance with Section 3.13 of this Agreement, such fee shall be payable
through and until the disposition of such REO Property or the transfer of the
REO Property to the Owner for management by the Owner, and the amount of such
fee shall be based upon the Unpaid Principal Balance of the related Mortgage
Loan at the time of the related foreclosure.
Servicing
Fee Rate:
As to
(i) each Mortgage Loan that is an ARM Loan, .25% per annum with respect to
each
Due Period occurring before the initial Interest Rate Adjustment Date, and
with
respect to 5/1, 7/1 and 10/1 Loans, .375% per annum thereafter, and (ii) each
Mortgage Loan that is not an ARM Loan, .25% per annum.
Servicing
File:
As to
each Mortgage Loan, the copies of the Collateral Documents, as well as the
credit and closing packages, disclosures, copies of the all other files, books,
records and documents necessary to (a) establish the eligibility of the Mortgage
Loan for insurance by a Qualified Insurer, if any; and/or (b) service the
Mortgage Loan in accordance with Acceptable Servicing Procedures, including
the
documents listed on Exhibit
B
hereto,
some of which maybe held by the Custodian.
11
Unpaid
Principal Balance:
With
respect to each Mortgage Loan as of any date of determination: (i) the unpaid
principal balance of the Mortgage Loan at the Cut-off Date after giving effect
to payments of principal due on or before such date, whether or not received,
minus
(ii) all
amounts previously distributed to the Owner with respect to the related Mortgage
Loan representing payments or recoveries of principal or advances in lieu
thereof.
Whole
Loan Transfer:
The
sale or transfer by the Owner of some or all of the Mortgage Loans in a whole
loan or participation certificate format pursuant to a Reconstitution Agreement
retaining the Servicer as “servicer” thereunder.
3/1
Loan:
An ARM
Loan where the Mortgage Interest Rate is fixed for the first 36
months.
5/1
Loan:
An
ARM
Loan where the Mortgage Interest Rate is fixed for the first 60
months.
7/1
Loan:
An
ARM
Loan where the Mortgage Interest Rate is fixed for the first 84
months.
10/1
Loan:
An
ARM
Loan where the Mortgage Interest Rate is fixed for the first 120
months.
Any
capitalized term used herein and not otherwise defined, shall have the meaning
assigned to such term in the Master Mortgage Loan Purchase
Agreement.
12
ARTICLE
II
REPRESENTATIONS
AND WARRANTIES;
REMEDIES
FOR BREACH
Section
2.1 Representations
and Warranties of the Servicer
With
respect to a Mortgage Loan Package, the Servicer represents, warrants and
covenants to the Owner that, as of the related Closing Date:
(a) The
Servicer is duly organized, validly existing and in good standing under the
laws
of the jurisdiction in which it is organized and is qualified and licensed
to
transact business in and is in good standing under the laws of each state where
each Mortgaged Property is located to the extent necessary to ensure the
enforceability of each Mortgage Loan and the servicing of the Mortgage Loan
in
accordance with the terms of this Agreement. The execution, delivery and
performance of this Agreement (including all instruments of transfer to be
delivered pursuant to this Agreement) by the Servicer and the consummation
of
the transactions contemplated hereby have been duly and validly authorized.
This
Agreement evidences the valid, binding and enforceable obligation of the
Servicer; and all requisite action has been taken by the Servicer to make this
Agreement valid and binding upon the Servicer in accordance with its
term;
(b) The
Servicer has the full power and authority to (i) perform and enter into and
consummate all transactions contemplated by this Agreement and (ii) to service
each Mortgage Loan;
(c) The
consummation of the transactions contemplated by this Agreement are in the
ordinary course of business of the Servicer, which is in the business of
servicing loans;
(d) Neither
the consummation of the transactions contemplated hereby, nor the fulfillment
of
or compliance with the terms and conditions of this Agreement, will conflict
with or result in a breach of any of the terms, conditions or provisions of
the
Servicer's certificate of limited partnership or partnership agreement or result
in a material breach of any legal restriction or any material agreement or
instrument to which the Servicer is now a party or by which it is bound, or
constitute a material default or result in an acceleration under any of the
foregoing, or result in the violation of any material law, rule, regulation,
order, judgment or decree to which the Servicer or its property is
subject;
(e) The
Servicer is an approved servicer for Xxxxxx Xxx and Xxxxxxx Mac in good
standing. No event has occurred, including a change in insurance coverage,
which
would make the Servicer unable to comply with Xxxxxx Mae or Xxxxxxx Mac
eligibility requirements;
(f) There
is
no action, suit, proceeding, investiga-tion or litigation pending or, to the
Servicer’s knowledge, threatened, which either in any one instance or in the
aggregate, if determined adversely to the Servicer would materially and
adversely affect the Servicer’s ability to service the Mortgage Loans hereunder
in accordance with the terms hereof, or the Servicer’s ability to perform its
obligations under this Agreement;
13
(g) No
consent, approval, authorization or order of any court or governmental agency
or
body is required for the execution, delivery and performance by the Servicer,
of
or compliance by the Servicer with, this Agreement or the consummation of the
transactions contemplated by this Agreement, or if required, such consent,
approval, authorization or order has been obtained prior to the related Closing
Date;
(h) The
Servicer acknowledges and agrees that the Servicing Fee represents reasonable
compensation for performing such services and that the entire Servicing Fee
shall be treated by the Servicer, for accounting and tax purposes, as
compensation for the servicing and administration of the Mortgage Loans pursuant
to this Agreement;
(i) The
Servicer does not believe, nor does it have any reason or cause to believe,
that
it cannot perform each and every covenant contained in this
Agreement;
(j) 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 Mortgage Loans registered with MERS;
(k) The
Servicer has serviced, and shall at all times service, the Mortgage Loans in
accordance with the Acceptable Servicing Procedures, the Mortgage Note and
applicable federal, state and local laws and regulations, including, without
limitation, usury, truth-in-lending, real estate settlement procedures, consumer
credit protection, equal credit opportunity or disclosure laws, and the Servicer
shall maintain in its possession, available for the Owner’s inspection and shall
deliver to the Owner upon demand, evidence of compliance with all such
requirements. All inspections, licenses and certificates required to be made
or
issued with respect to all occupied portions of the Mortgaged Property and,
with
respect to the use and occupancy of the same, including but not limited to
certificates of occupancy and fire underwriting certificates, have been made
or
obtained from the appropriate authorities;
(l) The
Servicer has fully furnished (or caused to be furnished), in accordance with
the
Fair Credit Reporting Act and its implementing regulations, accurate and
complete information (e.g., favorable and unfavorable) on its borrower credit
files to Equifax, Experian and Trans Union Credit Information Company, or any
their successors and assigns (three of the credit repositories), on a monthly
basis; and
(m) No
statement, report or other document prepared and furnished by the Servicer
or to
be prepared and furnished by the Servicer pursuant to this Agreement in
connection with the transactions contemplated hereby contain or will contain
any
untrue statement of fact or omit to state a fact necessary to make the
statements contained therein not misleading.
Section
2.2 Remedies
for Breaches of Representations or Warranties.
The
Servicer shall indemnify the Owner and hold it harmless against any losses,
damages, penalties, fines, forfeitures, reasonable and necessary legal fees
and
related costs, judgments, and other costs and expenses resulting from a breach
of the Servicer’s representations and warranties contained in Section 2.1 that
materially and adversely affects the value of one or more of the Mortgage Loans.
The obligations of the Servicer set forth in this Section 2.2 to indemnify
the
Owner as provided in this Section 2.2 constitute the sole remedies of the Owner
with respect to a breach of the foregoing representations and
warranties.
14
ARTICLE
III
ADMINISTRATION
AND SERVICING OF MORTGAGE LOANS
Section
3.1 Identification
of Mortgage Loans; Servicer to Act as Servicer
(a) The
Servicer, as independent servicer, shall commence servicing and administering
each Mortgage Loan on behalf of the Owner from and after the Cut-off Date in
accordance with the terms and conditions of this Agreement and Acceptable
Servicing Procedures. Except as otherwise expressly provided in this Agreement,
the Servicer shall have full power and authority, acting alone, to do any and
all things reasonably consistent with the terms of this Agreement, including
but
not limited to the following: (i) to execute and deliver, on behalf of the
Owner, customary consents or waivers and other instruments and documents, (ii)
to consent to transfers of any Mortgaged Property and assumptions of the
Mortgage Notes and related Mortgages (but only in the manner provided in this
Agreement), (iii) to collect any Insurance Proceeds and other Liquidation
Proceeds, and (iv) to effectuate foreclosure or other conversion of the
ownership of the Mortgaged Property securing any Mortgage Loan; provided that
the Servicer shall not take any action that is inconsistent with or prejudices
the interests of the Owner under this Agreement. The Servicer further is
authorized and empowered by the Owner, in its own name 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 Owner, 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 Trustee and its successors and assigns. The Servicer shall
at
all times act in the best interests of the Owner in performing its obligations
under this Agreement.
(b) The
documents comprising the Collateral File relating to each Mortgage Loan serviced
hereunder and that are retained by the Servicer pursuant to the terms hereof,
together with all other documents with respect to each such Mortgage Loan which
are prepared by or which come into the possession of the Servicer, shall
immediately vest in the Owner and shall be held and maintained in trust by
the
Servicer at the will of the Owner and in a custodial capacity only. The
documents comprising each Collateral File and all related documents which come
into the possession of the Servicer and are so held by the Servicer shall be
segregated from the other books and records of the Servicer and shall be
appropriately marked to clearly reflect the ownership interest of the Owner
in
such Collateral File and related documents. The Servicer shall release its
custody of any such documents only in accordance with written instructions
from
the Owner, unless such release is required as incidental to the Servicer’s
servicing of the Mortgage Loans.
15
The
Servicer shall maintain with respect to each Mortgage Loan and shall make
available for inspection by the Owner or its designee the related Servicing
File
during the time the Owner retains ownership of a Mortgage Loan and thereafter
in
accordance with Applicable Law. The Servicer shall keep at its servicing office
books and records in which, subject to such reasonable regulations as it may
prescribe, the Servicer shall note transfers of Mortgage Loans. No transfer
of a
Mortgage Loan may be made unless such transfer is in compliance with the terms
hereof. For the purposes of this Agreement, the Servicer shall be under no
obligation to deal with any person with respect to this Agreement or the
Mortgage Loans unless the books and records show such person as the owner of
the
Mortgage Loan. The Owner may, subject to the terms of this Agreement, sell
and
transfer one or more of the Mortgage Loans, provided, however, that in no event
shall there be more than four Persons at any given time having the status of
“Owner” hereunder. The Owner also shall advise the Servicer of the transfer.
Upon receipt of notice of the transfer, the Servicer shall xxxx its books and
records to reflect the ownership of the Mortgage Loans of such assignee, and
shall release the previous Owner from its obligations hereunder with respect
to
the Mortgage Loans sold or transferred. If the Servicer receives written
notification of a transfer less than five (5) Business Days before the monthly
Determination Date, the Servicer’s duties to remit and report to the new
purchaser(s) as required by Section 5.9 hereof shall begin with the first
Determination Date after the Reconstitution Date.
(c) Consistent
with the terms of this Agreement and subject to the REMIC Provisions if the
Mortgage Loans have been transferred to a REMIC, the Servicer may waive, modify
or vary any term of any Mortgage Loan or consent to the postponement of strict
compliance with any such term or in any manner grant indulgence to any Mortgagor
if in the Servicer’s reasonable and prudent determination such waiver,
modification, postponement or indulgence is not materially adverse to the Owner.
In the event of any such modification which permits the deferral of interest
or
principal payments on any Mortgage Loan, the Servicer shall, on the Business
Day
immediately preceding the Remittance Date in any month in which any such
principal or interest payment has been deferred, deposit in the Custodial
Account from its own funds, in accordance with Section 5.3, the difference
between (a) such month’s principal and one month’s interest at the Mortgage Loan
Remittance Rate on the unpaid principal balance of such Mortgage Loan and (b)
the amount paid by the Mortgagor. The Servicer shall be entitled to
reimbursement for such advances to the same extent as for all other advances
made pursuant to Section 5.3. Without limiting the generality of the foregoing,
the Servicer shall continue, and is hereby authorized and empowered, to execute
and deliver on behalf of itself and the Owner, all instruments of satisfaction
or cancellation, or of partial or full release, discharge and all other
comparable instruments, with respect to the Mortgage Loans and with respect
to
the Mortgaged Properties. If reasonably required by the Servicer, the Owner
shall 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 under this Agreement.
(d) As
to
each ARM Loan, the Servicer shall make periodic Mortgage Interest Rate and
Monthly Payment adjustments, as applicable, in strict compliance with
(i) the terms of the Mortgage and Mortgage Note, (ii) all applicable
law, and (iii) Acceptable Servicing Procedures.
Section
3.2 Liquidation
of Mortgage Loans
16
In
the
event that any payment due under any Mortgage Loan is not paid when the same
becomes due and payable, or in the event the Mortgagor fails to perform any
other covenant or obligation under the Mortgage Loan and such failure continues
beyond any applicable grace period, the Servicer shall take such action as
(1)
the Servicer would take under similar circumstances with respect to a similar
mortgage loan held for its own account for investment, (2) shall be consistent
with Accepted Servicing Practices, and (3) the Servicer shall determine
prudently to be in the best interest of the Owner. In the event that any payment
due under any Mortgage Loan remains delinquent for a period of 90 days or any
other default continues for a period of 30 days beyond the expiration of any
grace or cure period, the Servicer shall commence foreclosure proceedings,
the
Servicer shall notify the Owner in writing of the Servicer’s intention to do so,
and the Servicer shall not commence foreclosure proceedings if the Owner objects
to such action within ten (10) Business Days of receiving such notice. In the
event the Owner objects to such foreclosure action, the Servicer shall not
be
required to make Monthly Advances with respect to such Mortgage Loan, pursuant
to Section 4.3, and the Servicer’s obligation to make such Monthly Advances
shall terminate on the 90th day referred to above. In such connection, the
Servicer shall from its own funds make all necessary and proper Servicing
Advances, provided,
however,
that
the Servicer shall not be required to expend its own funds in connection with
any foreclosure or towards the restoration or preservation of any Mortgaged
Property, unless it shall determine (a) that such preservation, restoration
and/or foreclosure will increase the proceeds of liquidation of the Mortgage
Loan to the Owner after reimbursement to itself for such expenses and (b) that
such expenses will be recoverable by it either through Liquidation Proceeds
(respecting which it shall have priority for purposes of withdrawals from the
Custodial Account pursuant to Section 3.5) or through Insurance Proceeds
(respecting which it shall have similar priority).
Section
3.3 Collection
of Mortgage Loan Payments
Continuously
from the date hereof until the principal and interest on all Mortgage Loans
being serviced hereunder are paid in full or this Agreement is otherwise
terminated, the Servicer will proceed diligently to collect all payments due
under each of such Mortgage Loans when the same shall become due and payable.
With respect to those Mortgage Loans, if any, as to which the Servicer collects
Escrow Payments, the Servicer will ascertain or estimate, as the case may be,
annual ground rents, taxes, assessments, water rates, fire and hazard insurance
premiums, mortgage insurance premiums and all other charges that, as provided
in
any Mortgage, will become due and payable so that the Escrow Payments payable
by
the Mortgagors will be sufficient to pay such charges as and when they become
due and payable. The Servicer shall not be required to institute or join in
litigation with respect to collection of any payment (whether under a Mortgage,
Mortgage Note, Primary Mortgage Insurance Policy or otherwise or against any
public or governmental authority with respect to a taking or condemnation)
if in
its reasonable judgment it believes that it will be unable to enforce the
provision of the Mortgage or other instrument pursuant to which payment is
required.
17
Section
3.4 Establishment
of Custodial Account; Deposits in Custodial
Account
(a) The
Servicer shall segregate and hold all funds collected and received pursuant
to
the Mortgage Loans separate and apart from any of its own funds and general
assets and shall establish and maintain one or more Custodial Accounts
(collectively, with respect to the accounts maintained by any one Servicer,
its
“Custodial Account”), in the form of time deposit or demand accounts, which may
be interest bearing, titled, with respect to the Servicer, “Countrywide Home
Loans Servicing LP, in trust for Xxxxxxx Xxxxx Mortgage Company as Owner, and
any successor Owner.
(b) With
respect to each Mortgage Loan, the Servicer shall not later than the end of
the
second Business Day following receipt thereof, deposit in the Custodial Account
and retain therein the following payments and collections received by the
Servicer subsequent to the Cut-off Date:
(i) all
payments on account of principal, including Principal Prepayments, actually
collected by the Servicer on the Mortgage Loans;
(ii) all
payments on account of interest actually collected by the Servicer on the
Mortgage Loans less the Servicing Fee;
(iii) all
Liquidation Proceeds;
(iv) all
Insurance Proceeds, other than Insurance Pro-ceeds to be held in the Escrow
Account and applied to the restoration and repair of the Mortgaged Property
or
released to the Mortgagor in accordance with Acceptable Servicing
Procedures;
(v) all
Condemnation Proceeds which are not released to the Mortgagor in accordance
with
the Owner's written consent and Acceptable Servicing Procedures and Section
3.14;
(vi) any
amounts with respect to Monthly Advances required to be deposited in the
Custodial Account pursuant to Section 4.3;
(vii) any
amount required to be deposited in the Custodial Account pursuant to Sections
3.1(c), 3.1(d), 3.4(c), 3.10(a) or (b), 3.11(b), 3.13(c), (d) and (f), and
4.1(b) of this Agreement; and
(vii) the
Prepayment Interest Shortfall Amount, if any, for the month of distribution
(such deposit shall be made from the Servicer’s own funds, without reimbursement
therefor up to a maximum amount per month equal to the lesser of one half of
(a)
one-twelfth of the product of (i) the Servicing Fee Rate and (ii) the Unpaid
Principal Balance of such Mortgage Loans, or (b) the aggregate Servicing Fee
actually received for such month for the Mortgage Loans)
18
(c) The
Servicer may cause the funds on deposit from time to time in the Custodial
Account to be invested in Permitted Instruments, which investments shall mature
not later than the Business Day immediately preceding the applicable Remittance
Date next following the date of such investment. All such investments shall
be
made in the name of the Servicer or its nominee. All income and gain realized
from any such investment shall be for the benefit of the Servicer and shall
be
subject to its withdrawal or order from time to time. The Servicer shall
indemnify the Owner for any and all losses incurred in respect of any such
investment by the Servicer, and the amount of any losses incurred in respect
of
any such investment shall be deposited in the Custodial Account by the Servicer
out if its own funds immediately, without reimbursement therefor.
(d) It
is
understood and agreed that payments in the nature of Ancillary Income need
not
be deposited by the Servicer in the Custodial Account.
Section
3.5 Permitted
Withdrawals from the Custodial
Account
(a) The
Servicer may, from time to time, withdraw funds from the Custodial Account
for
the following purposes:
(i) to
make
payments and distributions to the Owner in the amounts and in the manner
provided for in Section 4.1;
(ii) to
reimburse itself for Monthly Advances made by the Servicer from its own funds
pursuant to Section 4.3, the Servicer’s right to reimburse itself pursuant to
this subclause (ii) being limited to amounts received on the related Mortgage
Loan which represent late payments of principal and/or interest respecting
which
any such Monthly Advance was made and such other amounts as are collected by
the
Servicer from the related Mortgagor or otherwise relating to the Mortgage Loan;
(or to amounts received on the Mortgage Loans as a whole in the event that
such
Monthly Advance is made to pay a shortfall in a Monthly Payment made by a
Mortgagor entitled to relief under the Servicemembers Civil Relief Act).
Notwithstanding the foregoing, the Servicer may reimburse itself for Monthly
Advances from any funds in the Custodial Account if it has determined that
such
funds are Nonrecoverable Advances (or if all funds, with respect to the related
Mortgage Loan, have previously been remitted to the Owner);
|
(iii)
|
to
reimburse itself for unreimbursed Servicing Advances and any
|
unpaid
Servicing Fees, Servicer’s right to reimburse itself pursuant to this subclause
(ii) with respect to any Mortgage Loan being limited to related proceeds from
Liquidation Proceeds, Condemnation Proceeds, Primary Mortgage Insurance Proceeds
and Other Insurance Proceeds; provided that the Servicer may reimburse itself
from any funds in the Custodial Account for Servicing Advances and Servicing
Fees if all funds with respect to the related Mortgage Loan have previously
been
remitted to Owner; provided,
however,
that
the Servicer may reimburse itself for Servicing Advances which it has determined
are Nonrecoverable Advances.
19
(iv) to
pay
itself any Servicing Fee and other servicing compensation not paid to the
Servicer pursuant to Section 5.3;
(v) to
pay to
itself any interest earned on funds deposited in the Custodial
Account;
(vi) if
there
shall be amounts deposited in the Custodial Account in error, including the
Servicing Fee and other servicing compensation not required to be deposited
therein, to withdraw such amounts; and
(vii) to
clear
and terminate the Custodial Account upon the termination of this Agreement
in
accordance with Article 8.
Section
3.6 Establishment
of Escrow Account; Deposits in Escrow Account; Escrow Analysis
(a) The
Servicer shall segregate and hold all funds collected and received pursuant
to
the Mortgage Loans which constitute Escrow Payments separate and apart from
any
of its own funds and general assets and shall establish and maintain one or
more
Escrow Accounts (collectively, with respect to the accounts maintained by any
one Servicer, its “Escrow Account”), in the form of time deposit or demand
accounts, which may be interest bearing, titled, with respect to the Servicer,
“Countrywide Home Loans Servicing LP, in trust for Xxxxxxx Sachs Mortgage
Company, as Owner, and any successor Owner, and certain Mortgagors.” The Escrow
Account shall be an Eligible Account.
(b) The
Servicer shall not later than the end of the second Business Day following
receipt thereof (or sooner if required by applicable law) deposit in the Escrow
Account maintained by the Servicer and retain therein: (i) all Escrow
Payments collected on account of the Mortgage Loans for the purpose of effecting
timely payment of any such items as required under the terms of this Agreement,
and (ii) all amounts representing proceeds of any hazard insurance policy
which are to be applied to the restoration or repair of any Mortgaged Property.
The Servicer shall make withdrawals from the Escrow Account maintained by the
Servicer only in accordance with Section 3.7. The Servicer shall be entitled
to
retain any interest earned on funds deposited in the Escrow Account maintained
by the Servicer other than interest on escrowed funds required by law to be
paid
to the Mort-gagor and, to the extent required by law, the Servicer shall pay
interest on escrowed funds to the Mortgagor notwithstanding that the Escrow
Account maintained by the Servicer may not bear interest or that the interest
earned on such escrowed funds is insufficient for such purpose.
Section
3.7 Permitted
Withdrawals from the Escrow Account
Withdrawals
from the Escrow Account maintained by the Servicer may be made by the Servicer
only (a) to effect timely payments of taxes, assessments, water rates,
insurance premiums, fire and hazard insurance premiums or other items
constituting Escrow Payments for the related Mortgage; (b) to reimburse the
Servicer for any Servicing Advance made by the Servicer pursuant to Sections
3.8, 3.10 and 3.11 with respect to a related Mortgage Loan, the Servicer’s right
to reimburse itself pursuant to this clause (b) being limited to the amounts
as
may be collected by the Servicer from the related Mortgagor or from the related
insurer; (c) to refund to any Mortgagor any funds found to be in excess of
the amounts required under the terms of the related Mortgage Loan; (d) for
transfer to the Custodial Account in accordance with the terms of this
Agreement; (e) for application to restoration or repair of the related
Mortgaged Property in accordance with the provisions of Section 3.14,
(f) to pay to a Mortgagor, to the extent required by Applicable
Requirements, interest on the funds deposited in the Escrow Account; (g) to
pay to itself any interest earned on funds deposited in the Escrow Account
(and
not required to be paid to the related Mortgagor), (h) to remove funds
inadvertently placed in the Escrow Account by the Servicer; or (i) to clear
and
terminate the Escrow Account upon the termination of this Agreement, in
accordance with Article 8.
20
Section
3.8 Payment
of Taxes, Insurance and Other Charges
With
respect to each Mortgage Loan, the Servicer shall maintain accurate records
reflecting the status of property taxes, assess-ments and other charges which
are or may become a lien upon the Mortgaged Property and the status of Primary
Mortgage Insurance Policy premiums, if any, and fire and hazard insurance
coverage and flood insurance, all as required hereunder. If a Mortgage Loan
requires Escrow Payments, the Servicer shall obtain, from time to time, all
bills for the payment of such charges (including renewal premiums) and shall
effect payment thereof prior to the applicable penalty or termination date
in a
manner consistent with Acceptable Servicing Procedures, employing for such
purpose Mortgagor deposits in the Escrow Account. The Servicer shall, with
respect to each Mortgage Loan for which Escrow Payments are maintained, conduct
an escrow analysis in accordance with industry standard procedures. If a
Mortgage Loan does not require Escrow Payments, or if there are insufficient
funds in the related Escrow Account, the Servicer shall cause all such bills
to
be paid on a timely basis and shall from its own funds, if necessary, make
a
Servicing Advance to make timely payment of all such bills. The Servicer shall
monitor the payment status of such charges (including renewal premiums) by
the
related Mortgagor, and shall effect payment thereof in a manner consistent
with
Acceptable Servicing Procedures, and in all events prior to the foreclosure
of
any lien against the Mortgaged Property resulting from non-payment of such
property taxes, assessments and other charges and prior to the termination
of
any such insurance coverage.
Section
3.9 Transfer
of Custodial Accounts
and
Escrow Accounts
The
Servicer may from time to time transfer the Custodial Account or the Escrow
Account maintained by it to a different depository institution, provided
that
each such account shall be and remain an Eligible Account.
Section
3.10 Maintenance
of Hazard Insurance
The
Servicer shall cause to be maintained, with a Qualified Insurer for each
Mortgage Loan serviced by it, fire and hazard insurance with extended coverage
customary in the area where the Mortgaged Property is located pursuant to
insurance policies conforming to the requirements of Xxxxxx Xxx and Xxxxxxx
Mac,
in an amount which is at least equal to the lesser of (i) 100% of the
maximum insurable value of the improvements securing the Mortgage Loan or
(ii) the Unpaid Principal Balance of the Mortgage Loan. If the Mortgaged
Property is in an area then identified on a flood hazard boundary map or flood
insurance rate map issued by the Federal Emergency Management Agency as having
special flood hazards (and such flood insurance is available), the Servicer
will
cause to be maintained a flood insurance policy meeting the requirements of
the
current guidelines of the Federal Insurance Administration with a generally
acceptable insurance carrier acceptable to Xxxxxx Mae or Xxxxxxx Mac. Such
flood
insurance shall be in an amount representing coverage not less than the least
of
(i) the outstanding principal balance of the Mortgage Loan, (ii) the
full insurable value of the improvements securing such Mortgage Loan or
(iii) the maximum amount of insurance available under the National Flood
Insurance Act of 1968 and the Flood Disaster Protection Act of 1973, each as
amended. The Servicer shall also maintain on each REO Property with an insurer
acceptable to Xxxxxx Mae or Xxxxxxx Mac (x) fire and hazard insurance with
extended coverage in an amount that is at least equal to the maximum insurable
value of the improvements securing the Mortgage Loan that are a part of such
property, (y) liability insurance and (z) to the extent required and available
under the National Flood Insurance Act of 1968, the Flood Disaster Protection
Act of 1973, each as amended, or other applicable federal law, flood insurance
in an amount as provided above. Any costs incurred by the Servicer maintaining
insurance under this Section 3.10 shall be recoverable as Servicing Advances.
Any amounts collected by the Servicer under any such policies shall be paid
over
or applied by the Servicer in accordance with Acceptable Servicing Procedures
for the restoration or repair of the Mortgaged Property subject to the related
Mortgage, for release to the Mortgagor in accordance with Acceptable Servicing
Procedures, or for application in reduction of the Mortgage Loan. Any such
amounts shall be deposited in the Custodial Account and subject to withdrawal
pursuant to Section 3.5. It is understood and agreed that no earthquake or
other
additional insurance is required to be maintained by the Servicer hereunder
in
connection with any Mortgage Loan or Mortgaged Property, other than pursuant
to
applicable laws and regulations that are at any time in force and require such
additional insurance. All policies required hereunder shall be endorsed with
standard mortgagee clauses with loss payable to the Servicer, and shall provide
for at least 30 days prior written notice to the Servicer of any cancellation,
reduction in amount, or material change in coverage. The Servicer shall not
interfere with the Mortgagor's freedom of choice in selecting either his
insurance carrier or agent upon any policy renewal; provided,
however,
upon
any such policy renewal, the Servicer shall not accept any such insurance
policies, unless the insurers are acceptable to Xxxxxx Mae or Xxxxxxx Mac and
are licensed to do business in the jurisdiction in which the Mortgaged Property
is located.
21
In
the
event a hazard insurance policy shall be in danger of being terminated, or
in
the event the insurer shall cease to be acceptable
to Xxxxxx Mae and Xxxxxxx Mac,
the
Servicer shall notify the Owner and the related Mortgagor, and shall use its
best efforts, as permitted by applicable law, to obtain from another Qualified
Insurer a replacement hazard insurance policy substantially and materially
similar in all respects to the original policy. In no event, however, shall
a
Mortgage Loan be without a hazard insurance policy at any time.
If
a
Mortgage is secured by a unit in a condominium project, the Servicer shall
verify that the coverage required of the owner's association, including hazard,
flood, liability, and fidelity coverage, is being maintained in accordance
with
then current requirements of Xxxxxx Mae, Xxxxxxx Mac,
and
secure from the owner's association its agreement to notify the Servicer
promptly of any change in the insurance coverage or of any condemnation or
casualty loss that may have a material effect on the value of the Mortgaged
Property as security.
22
Notwithstanding
anything set forth in the preceding paragraphs, the Servicer agrees to indemnify
the Owner for any claims, losses, damages, penalties, fines, forfeitures, legal
fees and related costs, judgments, and any other costs, fees and expenses that
the Owner may sustain in any way related to the failure of the Mortgagor (or
the
Servicer) to maintain hazard insurance or flood insurance with respect to the
related Mortgaged Property which complies with the requirements of this
section.
Section
3.11 Maintenance
of Primary Mortgage Insurance Policies; Collections Thereunder
(a) The
parties acknowledge that not all Mortgage Loans will be covered by Primary
Mortgage Insurance. In the event that any Mortgage Loans are or become covered
by Primary Mortgage Insurance, the provisions set forth below shall
apply.
(b) If
a
Mortgage Loan is covered by a Primary Mortgage Insurance Policy as of the
Cut-off Date, or if a Mortgage Loan becomes covered by a Primary Mortgage
Insurance Policy pursuant to subsection 3.11(c) below, the Servicer shall cause
the premium for each such Primary Mortgage Insurance Policy, beginning with
the
premium due after the Cut-off Date in the case of any Mortgage Loan covered
by a
Primary Insurance Policy prior to the Cut-off Date, to be paid on a timely
basis
and shall from its own funds, if necessary, make a Servicing Advance to pay
the
premium on a timely basis. The Servicer will not cancel or refuse to renew
any
such Primary Mortgage Insurance Policy that is required to be kept in force
under any Mortgage and pursuant to this subsection, or pursuant to subsection
3.11(c) below, unless a replacement Primary Mortgage Insurance Policy for such
canceled or non renewed policy is obtained from and maintained with an insurer
that satisfies the standards set forth in this subsection. The Servicer shall
not take any action or fail to take any action that would result in non-coverage
under any applicable Primary Mortgage Insurance Policy of any loss which, but
for the actions of the Servicer, would have been covered thereunder. In
connection with any assumption or substitution agreement entered into or to
be
entered into pursuant to Section 4.1, the Servicer shall promptly notify the
insurer under the related Primary Mortgage Insurance Policy, if any, of such
assumption or substitution of liability in accordance with the terms of such
policy and shall take all actions which may be required by such insurer as
a
condition to the continuation of coverage under such Primary Mortgage Insurance
Policy. If such Primary Mortgage Insurance Policy is terminated as a result
of
such assumption or substitution of liability, the Servicer shall obtain a
replacement Primary Mortgage Insurance Policy as provided above.
(c) As
part
of its activities as servicer of the Mortgage Loans, the Servicer agrees to
prepare and present, on behalf of itself and the Owner, claims under any Primary
Mortgage Insurance Policy in a timely fashion in accordance with the terms
thereof and, in this regard, to take such reasonable action as shall be
necessary to permit recovery under any Primary Mortgage Insurance Policy
respecting a defaulted Mortgage Loan. Pursuant to Section 3.4, any amounts
collected by the Servicer under any Primary Mortgage Insurance Policy shall
be
deposited in the Custodial Account, subject to withdrawal pursuant to Section
3.5, and remitted to the Owner on the appropriate Remittance Date.
23
Section
3.12 Fidelity
Bond; Errors and Omissions Insurance
The
Servicer shall maintain, at its own expense, with responsible companies that
meet the requirements of Xxxxxx Xxx or Xxxxxxx Mac, a blanket fidelity bond
and
an errors and omissions insurance policy, with broad coverage on all officers,
employees, agents and other persons acting in any capacity requiring such
persons to handle funds, money, documents or papers relating to the Mortgage
Loans (collectively, the “Servicer Employees”). Any such fidelity bond and
errors and omissions insurance 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 omis-sions, failure to maintain
any insurance policies required pursuant to this Agreement, and negligent acts
of such Servicer Employees. Such fidelity bond shall also protect and insure
the
Servicer against losses in connection with the release or satisfaction of a
Mortgage Loan without having obtained payment in full of the indebtedness
secured thereby. No provision of this Section 3.12 requiring such fidelity
bond
and errors and omissions insurance shall diminish or relieve the Servicer from
its duties and obliga-tions as set forth in this Agreement. The terms of any
such fidelity bond and errors and omissions insurance policy shall be at least
equal to the corresponding amounts required by Xxxxxx Mae in the Xxxxxx Xxx
Selling and Servicing Guide, or by Xxxxxxx Mac in the Xxxxxxx Mac Seller’s and
Servicer’s Guide. Upon the request of the Owner, the Servicer shall cause to be
delivered to the Owner a certified true copy of such 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 30 days prior written notice
to the Owner.
Section
3.13 Title,
Management and Disposition of Real Estate Owned
(a) In
the
event that title to any Mortgaged Property is acquired in foreclosure or by
deed
in lieu of foreclosure (“REO Property”), the deed or certificate of sale shall
be taken in the name of the Servicer for the benefit of the Owner or,
in
the event the Owner is not authorized or permitted to hold title to real
property in the state where the REO Property is located, or would be adversely
affected under the “doing business” or tax laws of such state by so holding
title, the deed or certificate of sale shall be taken in the name of such Person
or Persons as shall be consistent with an Opinion of Counsel obtained by the
Servicer from any attorney duly licensed to practice law in the state where
the
REO Property is located. The Person or Persons holding such title other than
the
Owner shall acknowledge in writing that such title is being held as nominee
for
the Owner.
(b) The
Servicer shall manage, conserve, protect, and operate each REO Property solely
for the purpose of its prompt disposition and sale. The Servicer shall either
itself or through an agent selected by the Servicer, manage, conserve, protect,
and operate the REO Property in accordance with Acceptable Servicing Procedures.
The Servicer shall attempt to sell the same (and may temporarily rent the same
for a period not greater than one year) on such terms and conditions as the
Servicer deems to be in the best interest of the Owner. In the event that the
Owner elects to manage an REO Property, the Owner shall, prior to assuming
such
management, reimburse the Servicer for all unreimbursed Servicing Advances,
Nonrecoverable Advances and Servicing Fees related to such REO
Property.
24
The
Servicer shall use its best efforts to dispose of the REO Property as soon
as
possible and shall sell such REO Property in any event within three years after
title has been taken to such REO Property, not later than the end of the third
taxable year after the year of its acquisition unless (i) (A) a REMIC election
has not been made with respect to the arrangement under which the Mortgage
Loans
and the REO Property are held, and (ii) the Servicer determines, and gives
an
appropriate notice to the Owner to such effect, that a longer period is
necessary for the orderly liquidation of such REO Property. If a period longer
than three years is permitted under the foregoing sentence and is necessary
to
sell any REO Property, (i) the Servicer shall report monthly to the Owner as
to
the progress being made in selling such REO Property and (ii) if, with the
written consent of the Owner, a purchase money mortgage is taken in connection
with such sale, such purchase money mortgage shall name the Servicer as
mortgagee, and such purchase money mortgage shall not be held pursuant to this
Agreement, but instead a separate participation agreement among the Servicer
and
Owner shall be entered into with respect to such purchase money mortgage.
Notwithstanding
anything to the contrary contained in this Section 3.13, in connection with
a
foreclosure or acceptance of a deed in lieu of foreclosure, in the event the
Servicer has reasonable cause to believe that a Mortgaged Property is
contaminated by hazardous or toxic substances or wastes, or if the Owner
otherwise requests, an environmental inspection or review of such Mortgaged
Property to be conducted by a qualified inspector shall be arranged by the
Servicer. Upon completion of the inspection, the Servicer shall provide the
Owner with a written report of such environmental inspection. In the event
that
the environmental inspection report indicates that the Mortgaged Property is
contaminated by hazardous or toxic substances or wastes, the Servicer shall
not
proceed with foreclosure or acceptance of a deed in lieu of foreclosure. In
the
event that the environmental inspection report is inconclusive as to the whether
or not the Mortgaged Property is contaminated by hazardous or toxic substances
or wastes, the Servicer shall not, without the prior approval of the Owner,
proceed with foreclosure or acceptance of a deed in lieu of foreclosure. In
the
event the Owner or its designee directs the Servicer not to proceed with
foreclosure or acceptance of a deed in lieu of foreclosure, the Servicer shall
be reimbursed for all customary, reasonable, and necessary “out of pocket” costs
and expenses that are incurred by the Servicer with respect to the related
Mortgaged Property from the Custodial Account, as though such costs were
Servicing Advances, pursuant to Section 3.4 hereof.
(c) The
Servicer shall hold all funds collected and received in connection with the
operation of REO Property separate and apart from its own funds or general
assets, in the Custodial Account.
(d) The
Servicer shall deposit, or cause to be deposited not later than the end of
the
second Business Day following receipt thereof in the Custodial Account
maintained by it all revenues received with respect to the conservation and
disposition of any REO Property for distribution to the Owner pursuant to the
provisions of Section 4.1.
25
(e) The
Servicer shall also maintain on each REO Property fire and hazard insurance
with
extended coverage, liability insurance, and flood insurance in accordance with
the provisions of Sections 3.8 and 3.10 hereof.
(f) The
Servicer shall undertake to sell the REO Property at such price and upon such
terms and conditions as the Owner shall approve that shall maximize the proceeds
from the disposition of the REO Property. The proceeds of sale of the REO
Property shall be promptly deposited in the Custodial Account and the Servicer
shall xxxx the Owner in accordance with Section 3.5(b) for such expenses and
for
any related unreimbursed Servicing Advances, unreimbursed Nonrecoverable
Advances, unpaid Servicing Fees, unpaid property management fees.
Section
3.14 Application
of Proceeds of Insurance to Repair or Restoration
The
Servicer shall collect the proceeds from all policies of insurance required
to
be maintained pursuant to Section 3.10 with respect to all losses that may
occur. The Servicer may remit such proceeds to the Mortgagor toward the
restoration or repair of the related property in a manner, and shall otherwise
take such actions in connection with such restoration and repair, as shall
be
consistent with Acceptable Servicing Procedures.
The
Servicer need not obtain the approval of the Owner prior to releasing any
Insurance Proceeds or Condemnation Proceeds to the Mortgagor to be applied
to
the restoration or repair of the Mortgaged Property if such release is in
accordance with Accepted Servicing Practices. For claims greater than the lesser
of $15,000, at a minimum the Servicer shall comply with the following conditions
in connection with any such release of Insurance Proceeds or Condemnation
Proceeds:
|
(1)
|
The
Servicer shall receive satisfactory independent verification of completion
of repairs and issuance of any required approvals with respect
thereto;
|
|
(2)
|
the
Servicer shall take all steps necessary to preserve the priority
of the
lien of the Mortgage, including, but not limited to requiring waivers
with
respect to me-chanics' and materialmen's
liens;
|
|
(3)
|
the
Servicer shall verify that the Mortgage Loan is not in default;
and
|
|
(4)
|
pending
repairs or restoration, the Servicer shall place the Insurance Proceeds
or
Condemnation Proceeds in the Escrow
Account.
|
26
If
the
Owner is named as an additional loss payee, the Servicer is hereby empowered
to
endorse any loss draft issued in respect of such a claim in the name of the
Owner.
Section
3.15 Inspections
The
Servicer or its authorized representative shall conduct inspections of Mortgaged
Properties at such times and in a manner consistent with Acceptable Servicing
Procedures. For any Mortgage Loan that is not insured by a Primary Mortgage
Insurance Policy, in the event such Mortgage Loan becomes 45 days delinquent,
(a) the Servicer shall inspect the related Mortgage Property as promptly as
practicable after the 45th day of delinquency, (b) the Servicer may perform
an
inspection at such other times and at such intervals as the Servicer deems
appropriate and (c) the Servicer shall immediately perform an inspection upon
any abandonment of the related Mortgaged Property. For any Mortgage Loan that
is
insured by a Primary Mortgage Insurance Policy, the Servicer shall inspect
the
related Mortgaged Property as directed by the related Primary Insurer; provided,
however, that, at a minimum, in the event the Mortgage Loan becomes 60 days
delinquent, the Servicer shall inspect the related Mortgaged Property prior
to
the 90th day of delinquency. The Servicer shall keep a written report of each
such inspection.
ARTICLE
IV
PAYMENTS
TO THE OWNER
Section
4.1 Distributions
(a) On
each
Remittance Date the Servicer shall remit to the Owner (a) all amounts credited
to the Custodial Account as of the close of business on the preceding
Determination Date, net of charges or withdrawals from the Custodial Account
pursuant to Section 3.5, plus (b) all Monthly Advances, if any, that the
Servicer is obligated to distribute pursuant to Section 4.3; minus (c) any
amounts attributable to Principal Prepayments received after the related
Principal Prepayment Period; minus (d) any amounts attributable to Monthly
Payments collected but due on a Due Date or Dates subsequent to the preceding
Determination Date. It is understood that by operation of Section 3.4, the
remittance on the first Remittance Date with respect to a Mortgage Loan Package
is to include principal collected after the Cut-off Date through the preceding
Determination Date plus interest, adjusted to the Mortgage Loan Remittance
Rate,
collected through such Determination Date exclusive of any portion thereof
allocable to the period of time prior to the Cut-off Date, with the adjustments
specified in (b), (c) and (d) above. Each such remittance shall be made by
wire
or other electronic funds transfer of immediately available funds to the account
of the Owner according to the written wire instructions provided by the Owner
to
the Servicer from time to time.
(b) With
respect to any remittance to the Owner made by the Servicer after the second
Business Day following the Business Day on which such remittance was due, the
Servicer shall pay to the Owner interest on such late remittance at an annual
rate equal to Prime plus two percent (2.0%), but in no event greater than the
maximum amount permitted by applicable law. Such interest shall be deposited
in
the Custodial Account by the Servicer on the date such late remittance is made
and shall cover the period commencing with the date on which such remittance
was
due and ending with the Business Day on which such late remittance is made,
both
inclusive. Such interest shall be remitted along with such late remittance.
The
payment by the Servicer of any such interest shall not be deemed an extension
of
time for payment or a waiver of any Event of Default by the
Servicer.
27
Section
4.2 Reports
(a) Not
later
than each Remittance Advice Date, the Servicer shall furnish to the Owner via
any electronic medium a monthly report in a form reasonable acceptable to
institutional buyers of mortgage loans, which report shall include, without
limitation, with respect to each Mortgage Loan the following loan-level
information: (i) the balance due as of the last day of the related Due Period,
(ii) all Principal Prepayments applied to the Mortgagor’s account during the
related Prepayment Period, and (iii) the delinquency and bankruptcy status
of
the Mortgage Loan, if applicable.
(b) With
respect to any REO Property, and upon the request of the Owner, the Servicer
shall furnish to the Owner a statement describing the Servicer’s efforts during
the previous month in connection with the sale of such REO Property, including
any rental of such REO Property incidental to the sale thereof and an operating
statement. The Servicer shall also provide the Owner with such information
concerning the Mortgage Loans as is necessary for Owner to prepare its federal
income tax return and as the Owner may reasonably request from time to time.
The
Owner agrees to pay for all reasonable out-of-pocket expenses incurred by the
Servicer in connection with complying with any request made by the Owner
hereunder if such information is not customarily provided by the Servicer in
the
ordinary course of servicing mortgage loans similar to the Mortgage
Loans.
Section
4.3 Monthly
Advances by Servicer
On
the
Determination Date, the Servicer shall deposit in the Custodial Account from
its
own funds or from amounts held for future distribution an amount equal to all
Monthly Payments to the extent not allocable to the period prior to the Cut-off
Date (with interest adjusted to the Mortgage Loan Remittance Rate) which were
due on the Mortgage Loans during the applicable Due Period and which were
delinquent as of the close of business on the Business Day prior to the related
Determination Date or which were deferred pursuant to Section 3.1(c). Any
amounts held for future distribution and so used shall be replaced by the
Servicer by deposit in the Custodial Account on or before any future Remittance
Date if funds in the Custodial Account on such Remittance Date shall be less
than payments to the Owner required to be made on such Remittance Date. The
Servicer's obligation to make such Monthly Advances as to any Mortgage Loan
will
continue through the last Monthly Payment due prior to the payment in full
of
the Mortgage Loan, or through the earlier of: (i) the last Remit-tance Date
prior to the Remittance Date for the distribution of all Liquidation Proceeds
and other payments or recoveries (including Insurance Proceeds and Condemnation
Proceeds) with respect to the Mortgage Loan; and (ii) the Remittance Date prior
to the date the Mortgage Loan is converted to REO Property, provided
28
however,
that if
requested by a Rating Agency in connection with Pass-Through Transfer, the
Servicer shall be obligated to make such advances through the Remittance Date
prior to the date on which cash is received in connection with the liquidation
of REO Property; provided,
however,
that
such obligation shall cease if the Servicer determines, in its sole reasonable
opinion, that advances with respect to such Mortgage Loan are non-recoverable
by
the Servicer from Liquidation Proceeds, Insurance Proceeds, Condemnation
Proceeds, or otherwise with respect to a particu-lar Mortgage Loan. In the
event
that the Servicer determines that any such advances are non-recoverable, the
Servicer shall provide the Owner with a certificate signed by two officers
of
the Servicer evidencing such determination.
29
ARTICLE
V
GENERAL
SERVICING PROCEDURE; COVENANTS;
REPRESENTATIONS
AND WARRANTIES
Section
5.1 Assumption
Agreements
(a) The
Servicer will use its best efforts to enforce any “due-on-sale” provision
contained in any Mortgage or Mortgage Note and to deny assumption by the person
to whom the Mortgaged Property has been or is about to be sold, whether by
absolute conveyance or by contract of sale, and whether or not the Mortgagor
remains liable on the Mortgage and the Mortgage Note, provided
that in
accordance with the terms of the Mortgage Note, the Servicer may permit an
assumption if but only if the Owner approves the creditworthiness of the
assuming party. When the Mortgaged Property has been conveyed by the Mortgagor,
the Servicer will, to the extent it has knowledge of such conveyance, exercise
its rights to accelerate the maturity of such Mortgage Loan under the
“due-on-sale” clause applicable thereto; provided,
however,
the
Servicer will not exercise such rights if prohibited by Applicable Requirements
from doing so or if the exercise of such rights would impair or threaten to
impair any recovery under the related Primary Mortgage Insurance Policy, if
any.
If the Servicer reasonably believes it is unable under Applicable Requirements
to enforce such “due-on-sale” clause, the Servicer will request the written
permission of the Primary Mortgage Insurer, if required to cause the coverage
under the Primary Mortgage Insurance Policy to remain in full force and effect,
and the Owner prior to entering into an assumption and modification agreement
with the person to whom such property has been conveyed, pursuant to which
such
person becomes liable under the Mortgage Note and, to the extent permitted
by
Applicable Requirements, the Mortgagor remains liable thereon. In connection
with any such assumption, the related Mortgage Interest Rate, the Unpaid
Principal Balance, and the term of the Mortgage Loan may not be changed. If
an
assumption is allowed pursuant to this Section 5.1(a), the Servicer, with the
prior consent of the Primary Mortgage Insurer, if any, is authorized to enter
into a substitution of liability agreement with the purchaser of the Mortgaged
Property pursuant to which the original Mortgagor is released from liability
and
the purchaser of the Mortgaged Property is substituted as Mortgagor and becomes
liable under the Mortgage Note. Any such substitution of liability agreement
shall be in lieu of an assump-tion agreement.
(b) The
Servicer shall follow Acceptable Servicing Procedures (including underwriting
standards) with respect to any such assumption or substitution of liability.
The
Servicer shall notify the Owner that any such substitution of liability or
assumption agreement has been completed by forwarding to the Owner or its
designee the original of any such substitution of liability or assumption
agreement, which document shall be added to the related Collateral File and
shall, for all purposes, be considered a part of such Collateral File to the
same extent as all other documents and instruments constituting a part
thereof.
(c) For
purposes of this Section 5.1, the term “assumption” is deemed to also include a
sale of the Mortgaged Property subject to the Mortgage that is not accompanied
by an assumption or substitution of liability agreement.
30
Section
5.2 Satisfaction
of Mortgages and Release of Collateral Files
(a) Upon
the
payment in full of any Mortgage Loan, or the receipt by the Servicer of a
notification that payment in full will be escrowed in a manner customary for
such purposes, the Servicer (i) shall prepare
the appropriate documents and instruments required to satisfy or release the
lien of the Mortgage in accordance with applicable state law requirements,
(ii)
shall promptly and within the time periods appropriate to process the
satisfaction or release within the applicable legal deadlines notify
the Owner of such event and (iii) shall request that the Owner deliver the
required portion of the Collateral File to the Servicer. The Owner shall, within
five (5) Business Days following its receipt of any such certification and
request, send to the Servicer the requested portion of the Collateral File.
Upon
receipt of such package, the Servicer shall prepare and execute the documents
and instruments necessary to satisfy or release the lien of the Mortgage and
shall process
such satisfaction or release in accordance with applicable state law
requirements. In addition, if, with respect to any Mortgage Loan that has been
paid in full, the Owner has recorded or caused to be recorded in the appropriate
public recording office of the jurisdiction in which the related Mortgaged
Property is located the related Assignment of Mortgage which designates the
Owner as the holder of record of the Mortgage,
the
Servicer shall prepare and deliver to the Owner, together with a request for
execution, the documents and instruments necessary to satisfy or release the
lien of the Mortgage. The Owner shall, within five (5) Business Days following
its receipt of any such request, send to the Servicer the fully-executed
documents that were prepared and requested by the Servicer. Upon receipt of
such
package, the Servicer shall process
such satisfaction or release in accordance with applicable state law
requirements. In the event that applicable state law requires that a
satisfaction or release be recorded within a shorter time period than the
processes set forth above permits, the Servicer shall advise the Owner
accordingly and shall use reasonable efforts to ensure that the lien of the
Mortgage is released or satisfied in accordance with applicable state law
requirements. The Owner shall assist therewith by returning to the Servicer
the
required portion of the Collateral File (and, if applicable, the executed
satisfaction and release documents and instruments) within the time periods
specified by the Servicer. The
Servicer shall not be liable for and the Owner shall indemnify the Servicer
against any third party liability for failure to release the lien of a Mortgage
as required under applicable law to the extent that such failure was caused
by
the Owner’s breach of its obligations under this Section 5.2.
(b) If
the
Servicer satisfies or releases a Mortgage without first having obtained payment
in full of the indebtedness secured by the Mortgage or should the Servicer
otherwise prejudice any rights the Owner may have under the mortgage
instruments, upon written demand of the Owner, the Servicer shall remit to
the
Owner the then unpaid principal balance of the related Mortgage Loan. The
Servicer shall maintain the fidelity bond and errors and omissions insurance
policy as provided for in Section 3.12 insuring the Servicer against any loss
it
may sustain with respect to any Xxxx-xxxx Loan not satisfied in accordance
with
the procedures set forth herein.
31
Section
5.3 Servicing
Compensation
As
compensation for its services hereunder, the Servicer shall be entitled to
pay
itself the Servicing Fee with respect to each Mortgage Loan from the gross
amount of interest payments on such Mortgage Loan which are actually received
by
the Servicer with respect thereto. Additional servicing compensation in the
form
of all Ancillary Income which are actually received by the Servicer may be
retained by the Servicer to the extent not required to be deposited into the
Custodial Account pursuant to the terms of this Agreement. The Servicer shall
be
required to pay all expenses incurred by it in connection with its servicing
activities hereunder and shall not be entitled to reimbursement therefor except
as specifically provided for in this Agreement.
Section
5.4 Statements
as to Compliance
The
Servicer will deliver to the Owner, by March 15th
of
each
year, beginning in 2004, an Officer’s Certificate, stating that (i) a
review of the activities of the Servicer during the preceding fiscal year and
of
performance under this Agreement has been made under such officer’s supervision,
(ii) based on such review, the Servicer has ful-filled all of its
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 and the actions
being taken by the Servicer to cure such default, and (iii) all reports
and
information provided to the Owner by the Servicer, pursuant to the Servicer’s
reporting requirements under the Agreement, are accurate and complete in all
material respects. Copies of such statement may be provided by the Owner to
any
Person identified as a prospective purchaser of the Mortgage Loans.
Section
5.5 Annual
Independent Public Accountants' Servicing Report
The
Servicer shall, on or before March 15th
of each
year, beginning in 2004, cause, at its sole cost and expense, a firm of
independent public accountants, which is a member of the American Institute
of
Certified Public Accountants, to furnish a statement to the Owner to the effect
that such firm has examined certain documents and records and performed certain
other procedures relating to the servicing of the Mortgage Loans during the
immediately preceding fiscal year of the Servicer and that such firm is of
the
opinion that, on the basis of such examination conducted substantially in
compliance with the Uniform Single Attestation Program for Mortgage Bankers,
such servicing has been conducted in compliance therewith, except for such
exceptions as shall be set forth in such statement.
Section
5.6 Annual
Xxxxxxxx-Xxxxx Act Certification
(a) For
so
long as a Person is required by Section 302 of the Xxxxxxxx-Xxxxx Act of 2002
(the “Act”) to provide an annual certification, by March 15th
of each
year, beginning in 2004, an officer of the Servicer shall execute and deliver
an
Officer’s Certificate to such Person (hereafter, the “Beneficiary”) for the
benefit of the Beneficiary and its officers, directors and affiliates, pursuant
to which such officer shall certify to those matters substantially as set forth
in Exhibit D.
32
(b) The
Servicer shall indemnify and hold harmless the Beneficiary and its officers,
directors, agents and affiliates from and against any losses, damages,
penalties, fines, forfeitures, reasonable legal fees and related costs,
judgments and other costs and expenses arising out of or based upon a breach
by
the Servicer or any of its officers, directors, agents or affiliates of its
obligations under this Section 5.6.
Section
5.7 Owner's
Right to Examine Servicer Records, etc.
The
Owner
shall have the right, at the Owner's expense, except for immaterial items in
the
ordinary course of business, to examine and audit the Servicer's books of
account, records, reports, and other papers relating to (i) the performance
by
the Servicer of its obligations and duties under this Agreement, or (ii) the
Mortgage Loans, to make copies and extracts therefrom, and to discuss the
affairs, finances, and accounts of such Servicer relating to such performance
with its officers and employees, all at such reasonable times and places and
as
often as may be reasonably requested.
Section
5.8 Consents
and Approvals
The
Owner
shall timely obtain, at its sole cost and expense, the consents and approvals
required by law or pursuant to contract to consummate the transactions
contemplated hereby. All such consents will be obtained without any cost
or expense to the Servicer and will be obtained without any adverse modification
in the terms of any of the agreements relating to the Mortgage Loans or the
imposition of any burdensome provisions or conditions on the
Servicer.
Section
5.9 Removal
of Mortgage Loans from Inclusion Under this Agreement Upon a Whole Loan Transfer
or a Pass-Through Transfer on One or More Reconstitution
Dates
(a) The
Servicer and the Owner agree that with respect to some or all of the Mortgage
Loans, the Owner may effect one or more Whole Loan Transfers and/or one or
more
Pass-Through Transfers, retaining the Servicer as servicer thereof or
subservicer if a master servicer is employed; provided, however, the Owner
agrees to use commercially reasonable efforts not to effect a Whole Loan
Transfer or a Pass Through Transfer if the aggregate outstanding principal
balance of the Mortgage Loans subject to such Whole Loan Transfer or Pass
Through Transfer is less that $10,000,000. In connection with a Whole Loan
Transfer, the related Reconstitution Agreement shall provide that no more than
four (4) Persons shall have the status of “Owner” thereunder.
(b) With
respect to each Whole Loan Transfer or Pass-Through Transfer, as the case may
be, entered into by Owner, Servicer agrees:
(i) negotiate
in good faith and execute a servicer agreement reasonably required to effectuate
the Pass-Through Transfer, provided such agreement creates no greater obligation
or cost on the part of the Servicer than otherwise set forth in this Agreement,
and provided further that the Servicer shall be entitled to a servicing fee
under that agreement at a rate per annum no less than the Servicing Fee Rate;
33
(ii) to
cooperate fully with the Owner and any prospective the Owner with respect to
all
reasonable requests that are necessary to effect a Pass-Through Transfer or
Whole Loan Transfer;
(iii) provide
as applicable:
(A) information
pertaining to the Servicer of the type and scope customarily included in
offering documents for residential mortgage-backed securities transactions
involving multiple loan originators; and
(B) such
opinions of counsel, letters from auditors, and certificates of public officials
or officers of the Servicer as are reasonably believed necessary by the trustee,
any rating agency or the Owner, as the case may be, in connection with such
Pass-Through Transfer. The Owner shall pay all third party costs associated
with
the preparation of the information described in clause (ii)(A) above and the
delivery of any opinions, letters or certificates described in this clause
(ii)(B). The Servicer shall not be required to execute any servicer agreement
unless a draft of the agreement is provided to the Servicer at least 10 days
before the Reconstitution Date, or such longer period as may reasonably be
required for the Servicer and its counsel to review and comment on the
agreement;
(c) In
connection with any Pass-Through Transfer, the Servicer, upon request, will
bring down the representations and warranties made in Section 2.1 in to a date
no later than the related Reconstitution Date;
(d) In
connection with any Pass-Through Transfer, the Servicer shall indemnify, defend
and hold harmless the Owner from and against any and all losses, claims,
expenses, damages or liabilities to which the Owner may be subject to as a
result of any untrue statement of any material fact contained in any information
(such information, the “Servicer Information”) prepared and furnished to the
Owner by the Servicer for inclusion in any related offering document or
prospectus (collectively, “Offering Materials”), or arise out of, or are based
upon, any omission in the Servicer Information necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, and will reimburse the Owner for damages or expenses reasonably
incurred by it; provided, however, that the Servicer shall be liable only
insofar as such untrue statement or omission relates solely to the Servicer
Information in the Offering Materials furnished to the Owner by the Servicer
specifically for inclusion in the Prospectus Supplement. The Owner shall
indemnify, defend and hold harmless the Servicer from and against any and all
losses, claims, expenses, damages or liabilities to which the Servicer may
be
subject to as a result of any untrue statement of any material fact contained
in
any Offering Materials, or arise out of, or are based upon, any omission in
any
information included in the Offering Materials necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, and will reimburse the Servicer for damages or expenses reasonably
incurred by it; provided, however, that Owner shall be liable only insofar
as
such untrue statement or omission does not relate to the Servicer Information
in
the Offering Materials furnished to the Owner by the Servicer specifically
for
inclusion in the Prospectus Supplement; and
34
(e) All
Mortgage Loans not sold or transferred pursuant to Pass-Through Transfers shall
remain subject to this Agreement and shall continue to be serviced in accordance
with the terms of this Agreement and with respect thereto this Agreement shall
remain in full force and effect.
Section
5.10 Compliance
with REMIC Provisions
If
a
REMIC election has been made with respect to the arrangement under which the
Mortgage Loans and REO Property are held, the Servicer shall not take any
action, cause the REMIC to take any action or fail to take (or fail to cause
to
be taken) any action that, under the REMIC Provisions, if taken or not taken,
as
the case may be, could (i) endanger the status of the REMIC as a REMIC or (ii)
result in the imposition of a tax upon the REMIC (including but not limited
to
the tax on “prohibited transactions” as defined Section 860G(a)(2) of the Code
and the tax on “contributions” to a REMIC set forth in Section 860(D) of the
Code) unless the Servicer has received an Opinion of Counsel (at the expense
of
the party seeking to take such action) to the effect that the contemplated
action will not endanger such REMIC status or result in the imposition of any
such tax.
ARTICLE
VI
THE
SERVICER
Section
6.1 Indemnification;
Third Party Claims
Subject
to Section 6.3, the Servicer agrees to indemnify and hold harmless the Owner
against any and all Losses that the Owner may sustain in any way related to
the
failure of such Servicer to service the Mortgage Loans in compliance with the
terms of this Agreement; provided,
however,
the
Servicer shall not be liable hereunder (a) to the extent such Losses directly
result from the Custodian's negligent action, negligent failure to act, bad
faith, willful misconduct or breach under the Custodial Agreement, dated as
of
November 1, 2003, among the Owner, the Servicer and the Custodian,(b) with
respect to any action or inaction in accordance with the direction or consent
of
the Owner or (c) resulting from the Owner's failure to respond to a request
by
the Servicer for direction or consent in accordance with Section 3.1(c)
hereof. The Servicer shall immediately notify the Owner if a claim is made
by a
third party with respect to this Agreement or the Mortgage Loans. The Servicer
shall assume (with the written consent of the Owner) the defense of any such
claim and pay all reasonable expenses in connection therewith, including counsel
fees, and promptly pay, discharge and satisfy any judgment or decree which
may
be entered against the Servicer or the Owner in respect of such claim. The
Servicer shall follow any written instructions received from the Owner in
connection with any such claim and the Owner shall promptly reimburse the
Servicer for all amounts reasonably advanced by it pursuant to the preceding
sentence, except when the claim (a) is related to the Servicer’s obligations to
indemnify the Owner pursuant hereto, (b) results from the failure of the
Servicer to service the Mortgage Loans in compliance with the terms of this
Agreement or (c) results from the Servicer's willful misconduct, bad faith
or negligence in performing its duties under this Agreement.
35
The
Owner
shall indemnify and hold harmless the Servicer against any and all Losses that
the Servicer may sustain as a result of (a) any act or omission on the part
of
the Owner or (b) a breach of any of the Owner’s representations, warranties or
covenants or obligations contained herein.
With
respect to any Mortgage Loan, in the event that the Owner records or causes
to
be recorded in the appropriate public recording office of the jurisdiction
in
which the related Mortgaged Property is located the related Assignment of
Mortgage which designates the Owner as the holder of record of the Mortgage,
the
Owner shall comply with the provisions of Section 5.2(a) regarding the execution
and delivery of release and reconveyance documents, and shall immediately
complete, sign and return to the Servicer any additional documents that may
be
required of the holder of record of the Mortgage and may be reasonably requested
by the Servicer in order to permit the Servicer to comply with the Servicer’s
servicing obligations, and, in its capacity as the holder of record, shall
take
such other action as may be reasonably requested by the Servicer. In addition,
if, as a result of the recording of the related Assignment of Mortgage, the
Owner, in its capacity as the holder of record, receives written notice of
any
action with respect to the related Mortgage or the related Mortgaged Property,
the Owner shall send a copy of such notice to the Servicer immediately in
accordance with the provisions of Section 9.8 of this Agreement.
The
Owner
agrees that the Servicer shall have no liability to the Owner for the Owner’s
failure to comply with the provisions set forth in this paragraph.
Section
6.2 Servicer
Covenants; Merger or Consolidation of the Servicer
(a) The
Servicer covenants that it will keep in full force and effect its existence,
rights and franchises as a limited partnership, and its status as a Xxxxxx
Xxx
or Xxxxxxx Mac approved servicer in good standing and will obtain and preserve
its qualification to do business as a foreign corporation in each jurisdiction
in which such qualifi-cation is or shall be necessary to protect the validity
and enforceability of this Agreement or any of the Mortgage Loans and to perform
its duties under this Agreement.
(b) Any
Person into which the Servicer may be merged or consolidated, or any business
organization resulting from any merger, conversion or consolidation to which
the
Servicer shall be a party, or any Person succeeding to all or substantially
all
of the business or assets of the Servicer (whether or not related to loan
servicing), shall be the successor of the Servicer hereunder, without the
execution or filing of any paper or any further act on the part of any of the
parties hereto, anything herein to the contrary notwithstanding; provided,
however, that the Servicer shall not, without the prior written approval of
the
Owner, be a party to any such merger, consolidation or conversion, or sell
or
otherwise dispose of all or substantially all of its business or assets unless
the successor or surviving person shall be an institution that is a Xxxxxx
Mae
or Xxxxxxx Mac approved servicer in good standing.
36
Section
6.3 Limitation
on Liability of the Servicer and Others
The
Servicer and the directors, officers, employees or agents of the Servicer shall
not be under any liability to the Owner for (a) any action taken or for
refraining from the taking of any action in good faith pursuant to this
Agreement, (b) errors in judgment, or (c) any action or inaction in accordance
with the direction or consent of the Owner; provided, however, this provision
shall not protect the Servicer against any breach of warranties or
representations made herein, any failure to perform its obligations in
accordance with any standard of care set forth in this Agreement (unless in
accordance with the direction or consent of the Owner), or any liability which
would otherwise be imposed by reason of willful misconduct, bad faith or gross
negligence in the performance of its duties or by reason of any breach of the
terms and conditions of the Agreement. The Servicer and any officer, employee
or
agent of the Servicer may rely in good faith on any document of any kind prima
facie properly executed and submitted by any Person respecting any matters
arising hereunder. Subject to Section 6.1, the Servicer shall not be under
any
obligation to appear in, prosecute or defend any legal action which is not
incidental to its duties under this Agreement and which may involve it in any
expense or liability; provided, however, that the Servicer may, with the consent
of the Owner, undertake any such action which it may deem necessary or desirable
with respect to this Agreement and the rights, duties and the interests of
the
parties hereto. In such event, the legal expenses and costs of such action
and
any lia-bility resulting therefrom shall be
reimbursed to the Servicer in accordance with Section 6.1.
Section
6.4 Servicer
Not to Resign
The
Servicer shall not resign from the obligations and duties hereby imposed on
it
except by mutual consent of the Servicer and the Owner or upon the determination
that the Servicer's duties hereunder are no longer permissible under Applicable
Requirements and such incapacity cannot be cured by the Servicer. Any such
determination permitting the resignation of the Servicer shall be evidenced
by
an Opinion of Counsel to such effect delivered to the Owner. No such resignation
shall become effective until a successor which satisfies the requirements set
forth in Section 9.1 has assumed the Servicer's responsibilities and obligations
hereunder in accordance with such Section.
Section
6.5 No
Transfer of Servicing
The
Servicer acknowledges that the Owner has entered into this Agreement with the
Servicer in reliance upon the adequacy of the Servicer's servicing facilities,
plan, personnel, records, and procedures, its integrity, reputation, and
financial standing and the continuance thereof. Without in any way limiting
the
generality of this Section, the Servicer shall not either assign this Agreement
or the servicing hereunder without the prior written approval of the Owner
in its sole discretion.
Section
6.6 [Reserved]
37
Section
6.7 Representations
and Warranties of the Owner
With
respect to the Mortgage Loans, the Owner hereby makes to the Servicer as of
the
Cut-off Date each of the representations and warranties set forth
below:
(a) The
Owner
has all requisite corporate or organizational power, authority and capacity,
to
carry on its business as it is now being conducted, to execute and deliver
this
Agreement, and to perform all of its obligations hereunder. The Owner does
not
believe, nor does it have any cause or reason to believe, that it cannot perform
each and every covenant contained in this Agreement.
(b) The
execution, delivery and performance of this Agreement by the Owner and the
consummation of the transactions contemplated thereby have been duly and validly
authorized by all necessary corporate, shareholder or other action; this
Agreement has been duly and validly executed and delivered by the Owner, and
is
a valid and legally binding agreement of the Owner enforceable against the
Owner
in accordance with its terms, subject to bankruptcy, insolvency and similar
laws
affecting generally the enforcement of creditor’s rights and the discretion of a
court to grant specific performance of contracts. Any requisite consents or
approvals of third parties (including Investors and any other applicable
regulatory authorities) to the execution and delivery of this Agreement or
the
performance of the transactions contemplated hereby by the Owner have been
obtained or will be obtained prior to the Cut-off Date or such other date as
expressly provided herein.
ARTICLE
VII
DEFAULT
Section
7.1 Events
of
Default
In
case
one or more of the following Events of Default by the Servicer shall occur
and
be continuing:
(i) any
failure by the Servicer to remit to the Owner when due any payment required
to
be made under the terms of this Agreement, which failure continues unremedied
for a period of three (3) days after the date upon which written notice of
such
failure, requiring the same to be remedied, shall have been given to the
Servicer by the Owner; the Owner shall use reasonable efforts to notify the
Servicer that it has not received the payment due, but the Owner’s notice shall
not be a condition of the Event of Default; or
(ii) any
failure by the Servicer to duly observe or perform, in any material respect,
any
other covenant, obligation or agreement of the Servicer as set forth in this
Agreement, which failure continues unremedied for a period of 30 days after
the
date on which written notice of such failure, requiring the same to be remedied,
shall have been given to the Servicer by the Owner; or
38
(iii) a
decree
or order of a court or agency or super-visory authority having jurisdiction
for
the appointment of a conservator or receiver or liquidator in any insolvency,
readjustment of debt, including bankruptcy, marshaling of assets and
liabilities, or similar proceedings, or for the winding-up or liquidation of
its
affairs, shall have been entered against the Servicer and such decree or order
shall have remained in force, undischarged or unstayed for a period of thirty
(30) days; or
(iv) the
Servicer shall consent to the appointment of a conservator, receiver or
liquidator in any insolvency, readjustment of debt, marshaling of assets and
liabilities or similar proceedings of or relating to the Servicer or relating
to
all or substantially all of the Servicer's property; or
(v) the
Servicer shall admit in writing its inability to pay its debts 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 obligation
or ceases its normal business operations for three (3) Business Days;
or
(vi) failure
by the Servicer to maintain its license to do business in any jurisdiction
where
a Mortgaged Property is located if such license is required and such failure
continues unremedied for a period of thirty (30) days; or
(vii) the
Servicer attempts to assign its right to servicing compensation
hereunder
or to assign this Agreement or the servicing responsibilities hereunder or
to
delegate its duties hereunder or any portion thereof in violation of this
Agreement, including Section 6.5; or
(vii) the
Servicer shall cease to be an approved servicer for Xxxxxx Xxx or Xxxxxxx
Mac.
(viii) the
Servicer shall cease to have a minimum net worth of $25,000,000 as determined
in
accordance with the Financial Accounting Standards Board’s generally accepted
accounting principles;
then,
and
in each and every such case, so long as such Event of Default shall not have
been remedied, the Owner, by notice in writing to the Servicer (in each such
instance, the “Defaulted Servicer”), may, in addition to whatever rights the
Owner may have at law or equity to damages, including injunctive relief and
specific performance, commence termination of all of the rights and obligations
of the Defaulted Servicer under this Agreement and may exercise any and all
other remedies available at law or at equity. Upon receipt by the Defaulted
Servicer of such written notice from the Owner stating the intent to terminate
the Defaulted Servicer as servicer under this Agreement as a result of such
Event of Default, all authority and power of the Defaulted Servicer under this
Agreement, whether with respect to the Mortgage Loans or otherwise, shall pass
to and be vested in the successor appointed pursuant to Section 9.1. Upon
written request from the Owner, the Defaulted Servicer shall, at its sole
expense, prepare, execute, and deliver to a successor any and all documents
and
other instruments, place in such successor's possession all Collateral Files
and
Servicing Files, and do or cause to be done all other acts or things necessary
or appropriate to effect the purposes of such notice of termination, all of
which shall be undertaken immediately and shall be completed as soon as possible
and in all events by not later than thirty (30) Business Days following the
Owner’s request therefor. The Defaulted Servicer agrees to cooperate with the
Owner- and such successor in effecting the termination of the Defaulted
Servicer's responsibilities and rights hereunder, including, without limitation,
the transfer to such successor for administration by it of all cash amounts
which shall at the time be credited by the Defaulted Servicer to the Custodial
Account, the Escrow Account or the REO Account and all other amounts which
may
thereafter be received with respect to the Mortgage Loans and to which the
Defaulted Servicer is not entitled pursuant to the terms of this
Agreement.
39
Section
7.2 Waiver
of
Defaults
The
Owner
may waive any default by the Defaulted Servicer in the performance of its
obligations hereunder and its consequences. Upon any waiver of a past default,
such default shall cease to exist, and any Event of Default arising therefrom
shall be deemed to have been remedied for every purpose of this Agreement.
No
such waiver shall extend to any subsequent or other default or impair any right
consequent thereto except to the extent expressly so waived.
Section
7.3 Survival
of Certain Obligations and Liabilities of the
Defaulted Servicer
The
representations, warranties, covenants, indemnities and agreements of the
parties provided in this Agreement and the parties’ obligations hereunder shall
survive the execution and delivery and the termination or expiration of this
Agreement. Notwithstanding any termination of the rights and obligations of
the
Defaulted Servicer pursuant to this Section 7, the Defaulted Servicer shall
remain liable for any actions of the Defaulted Servicer prior to the effective
time of such termination.
ARTICLE
VIII
TERMINATION
Section
8.1 Termination
of Agreement
This
Agreement shall terminate upon any of: (i) the later of the distribution to
the Owner of final payment or liquidation with respect to the last Mortgage
Loan
and each REO Property, or the disposition of all property acquired upon
foreclosure or deed in lieu of foreclosure with respect to the last Mortgage
Loan and the remittance of all funds due hereunder, (ii) the mutual consent
of the parties in writing,
or
(iii) the termination of the Servicer pursuant to Section 8.2.
Section
8.2 Termination
of the Servicer
due to
an Event of Default
(a) Upon
30
days’ written notice, the Owner may, at its sole option, upon the occurrence of
an Event of Default and in accordance with Section 7.1, terminate any rights
the
Servicer may have hereunder. Any such notice of termination shall be in writing
and delivered to the terminated Servicer (in such instance, the “Terminated
Servicer”) by registered mail as provided in Section 9.8 of this Agreement. If
the Owner so terminates the rights of a Terminated Servicer, the Owner with
full
cooperation of the Terminated Servicer shall arrange for the transfer of
servicing to, at the Owner’s option, the Owner or a third party, and the
Terminated Servicer shall continue servicing, for the Servicing Fee provided
herein, the Mortgage Loans under this Agreement until the Owner gives the
Terminated Servicer notice of the transfer and such transfer has been
completed.
40
(b) The
Terminated Servicer agrees to cooperate with the Owner and such successor in
effecting the termination of the Terminated Servicer's responsibilities and
rights hereunder, including, without limitation, the transfer to such successor
for administration by it of all cash amounts which shall at the time be credited
by the Terminated Servicer to the Custodial Account, the Escrow Account or
the
REO Account, or thereafter be received with respect to the Mortgage Loans and
to
which the Terminated Servicer is not entitled pursuant to the terms of this
Agreement.
Section
8.3 Termination
Without Cause
Upon
at
least 30 days prior notice, the Owner may terminate, at its sole option the
Servicer without cause. Any such notice of termination shall be in writing
and
delivered to the Servicer and any Rating Agency by registered mail as provided
in Section 9.7. In the event the Owner so chooses to terminate the Servicer,
the
Servicer shall be entitled to receive, as liquidated damages, upon its
termination as Servicer hereunder without cause pursuant to this Section 8.3,
an
amount equal to two percent (2%) of the aggregate outstanding principal amount
of each Mortgage Loan as of the termination date paid by the Owner to the
Servicer.
ARTICLE
IX
MISCELLANEOUS
PROVISIONS
Section
9.1 Successor
to the Servicer
(a) Prior
to
termination of the Servicer's responsibilities and duties under this Agreement
pursuant to Section 6.4, 7.1, 8.1 or 8.2, the Owner shall either
(i) succeed to and assume all of the Servicer's responsibilities, rights,
duties, and obligations under this Agreement from and after the date of such
succession or (ii) appoint a successor to the Servicer that shall succeed to
all
rights and assume all of the responsibilities, duties and liabilities of the
Servicer under this Agreement prior to the termination of the Servicer's
responsibilities, duties and liabilities under this Agreement pursuant to
Section 8.2 above. In the event that the Servicer's duties, responsibilities,
and liabili-ties under this Agreement shall be terminated pursuant to the
foregoing Sections, the Servicer shall discharge such duties and
responsibilities, and be compensated therefor as provided in this Agreement,
during the period from the date it acquires knowledge of such termination until
the effective date thereof with the same degree of diligence and prudence which
it is obligated to exercise under this Agree-ment and shall take no action
whatsoever that might impair or prejudice the rights or financial condition
of
its successor. The resignation or removal of the Servicer pursuant to the
foregoing Sections shall not become effective until a successor shall have
been
appointed pursuant to this Section and shall in no event relieve the Servicer
of
its non-servicing duties, obligations, covenants, representations and
warranties, it being understood and agreed that the provisions of Sections
5.10,
6.1, Article 7 and Article 8 shall be applicable to the Servicer notwithstanding
any such resignation or termination of the Servicer or the termi-na-tion of
this
Agreement.
41
(b) The
Servicer shall promptly deliver to the successor (i) the funds in the Custodial
Account and the Escrow Account to which the Owner is entitled pursuant to the
terms of this Agree-ment, (ii) all other funds to which the Owner is entitled
pursuant to the terms of this Agreement, (iii) all other amounts which may
thereafter be received with respect to the Mortgage Loans and to which the
Servicer is not entitled pursuant to the terms of this Agreement and (iv) all
Collateral Files and Servicing Files and related documents and statements held
by it hereunder. The Servicer shall account for all funds and shall execute
and
deliver such instruments and do such other things as may reasonably be required
to more fully and definitively vest in the successor all such rights, powers,
duties, responsi-bili-ties, obligations and liabilities of the
Servicer.
(c) Upon
a
successor's acceptance of appointment as such, the Owner shall notify the
Servicer of such appointment.
Section
9.2 Amendment
This
Agreement may be amended from time to time by the parties by written agreement
signed by both of the parties.
Section
9.3 Duration
of Agreement
This
Agreement shall continue in existence and effect until terminated as herein
provided.
Section
9.4 Governing
Law
This
Agreement shall be governed by and construed in accordance with the internal
laws of the State of New York, without reference to the choice of law doctrine
of such state.
Section
9.5 General
Interpretive Principles
For
purposes of this Agreement, except as otherwise expressly provided or unless
the
context otherwise requires:
(i) the
terms
defined in this Agreement have the meanings assigned to them in this Agreement
and include the plural as well as the singular, and the use of any gender herein
shall be deemed to include the other gender;
42
(ii) accounting
terms not otherwise defined herein have the meanings assigned to them in
accordance with generally accepted accounting principles;
(iii) references
herein to “Articles,” “Sections,” “Subsections,” “Paragraphs,” and other
subdivisions without reference to a document are to designated Articles,
Sections, Subsections, Paragraphs, and other subdivisions of this
Agreement;
(iv) a
reference to a Subsection without further reference to a Section is a reference
to such Subsection as contained in the same Section in which the reference
appears, and this rule shall also apply to Paragraphs and other
subdivisions;
(v) the
words
“herein,” “hereof,” “hereunder,” and other words of similar import refer to this
Agreement as a whole and not to any particular provision; and
(vi) the
term
“include” or “including” shall mean without limitation by
reason
of
enumeration.
Section
9.6 Reproduction
of Documents
This
Agreement and all documents relating hereto, including without limitation
(i) consents, waivers, and modifications which may hereafter be executed,
(ii) documents received by any party at the closing, and
(iii) financial statements, certificates, and other information previously
or hereafter furnished, may be reproduced by any photographic, photostatic,
microfilm, microcard, miniature photographic or other similar process. The
parties agree that any such reproduction shall be admissible in evidence as
the
original itself in any judicial or administrative proceeding, whether or not
the
original is in existence and whether or not such reproduction was made by a
party in the regular course of business, and that any enlargement, facsimile
or
further reproduction of such reproduction shall likewise be admissible in
evidence.
Section
9.7 Notices
All
demands, notices, consents, waivers and other communications hereunder shall
be
in writing and shall be deemed to have been duly given if personally delivered
or delivered by facsimile, overnight courier, or registered mail, postage
prepaid, or delivered by telefacsimile, to:
(i) in
the
case of the Servicer, at the address set forth below or such other address
as
may hereafter be furnished to the Owner in writing by the Servicer:
Countrywide
Homes Loans Servicing LP
000
Xxxxxxxxxxx Xxx
Xxxx
Xxxxxx, XX 00000
Attention:
Investor Accounting
With
a
copy to:
Countrywide
Home Loans, Inc.
0000
Xxxx
Xxxxxxx
Xxxxxxxxx,
XX 00000
Attention:
General Counsel
43
(ii) in
the
case of the Owner, at the address set forth below, or such other address as
may
hereafter be furnished to the Servicer by the Owner:
Xxxxxxx
Xxxxx Mortgage Company
00
Xxxxx
Xxxxxx
Xxx
Xxxx,
XX 00000
Attention:
Xxxxxx Xxxxxxxxx
Tel:
(000) 000-0000
Fax:
(000) 000-0000
with
copies to:
Xxxxxxx
Xxxxx Mortgage Company
Xxx
Xxx
Xxxx Xxxxx
Xxx
Xxxx,
XX 00000
Attention:
Xxx Xxxxxxx
Tel:
(000) 000-0000
Fax:
(000) 000-0000
and
Xxxxxxx
Xxxxx Mortgage Company
000
Xxxxxx Xxxxxx Xxxxx
Xxxxx
000
Xxxxx
Xx.
Xxxxxxxxxx, XX 00000
Attention:
Xxxxxx Xxxxx
Tel:
(000) 000-0000
Fax:
(000) 000-0000
and
in
the case of any subsequent Owner, as set forth in written notice supplied to
the
Servicer by such subsequent Owner. All reports that are due to the Owner from
the Servicer pursuant to Section 4.2 shall be deemed to have been duly given
if
delivered to the internet address from time to time provided by the Owner to
the
Servicer.
Section
9.8 Severability
of Provisions
If
any
one or more of the covenants, agreements, provisions or terms of this Agreement
shall be held invalid for any reason whatsoever, 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 covenants, agreements,
provisions or terms of this Agreement or the rights of the Owner hereunder.
If
the invalidity of any part, provision, representation or warranty of this
Agreement shall deprive any party of the economic benefit intended to be
conferred by this Agreement, the parties shall negotiate in good faith to
develop a structure the economic effect of which is nearly as possible the
same
as the economic effect of this Agreement without regard to such
invalidity.
44
Section
9.9 Disclosure
of Relationship
Each
party (including the respective affiliates) shall have the right upon obtaining
prior written consent from the other party, from time to time, to publish,
distribute, advertise or otherwise disclose the relationship and the general
services created and performed under this Agreement; provided, however, such
disclosure shall not identify the amount or nature of fees earned or to be
paid
hereunder. No disclosure permitted by this Section 9.10 shall include any
Mortgagor information.
Section
9.10 Exhibits
and
Schedules
The
following exhibits and schedules to this Agreement are hereby incorporated
and
made a part hereof and are an integral part of this Agreement:
|
Exhibit
A
|
MORTGAGE
LOAN SCHEDULE
|
|
Exhibit
B
|
LIST
OF COLLATERAL DOCUMENTS
|
|
Exhibit
C
|
LIST
OF DOCUMENTS IN CREDIT FILE
|
|
Exhibit
D
|
FORM
OF XXXXXXXX-XXXXX ACT CERTIFICATION
|
Section
9.11 Counterparts;
Successors and Assigns
This
Agreement may be executed in one or more counterparts and by the different
parties hereto on separate counterparts, each of which, when so executed, shall
be deemed to be an original; such counterparts, together, shall constitute
one
and the same agree-ment. Subject to Sections 6.4, 6.5, 7.1 and 8.1, this
Agreement shall inure to the benefit of and be binding upon the Servicer, the
Owner and their respective successors and assigns.
45
Section
9.12 Effect
of
Headings
The
headings in this Agreement are for purposes of reference only and shall not
limit or otherwise affect the meaning hereof.
Section
9.13 Other
Agreements Superseded
This
Agreement supersedes all prior agreements and under-standings relating to the
subject matter hereof.
[signatures
start on next page]
46
IN
WITNESS WHEREOF, the Servicer and the Owner- have caused their names to be
signed to this Servicing Agreement by their respective officers thereunto duly
authorized as of the day and year first above written.
COUNTRYWIDE
HOME LOANS SERVICING LP,
the
Servicer
By:
____________________________________
Name:
Title:
Name:
Title:
XXXXXXX
SACHS MORTGAGE COMPANY,
the
Owner
|
By:
|
Xxxxxxx
Xxxxx Real Estate Funding Corp., its General
Partner
|
By:
____________________________________
Name:
Title
Name:
Title
EXHIBIT
A
MORTGAGE
LOAN SCHEDULE
[attach
read-only diskette]
EXHIBIT
B
LIST
OF CREDIT DOCUMENTS
Copy
of
Note
Copy
of
Mortgage or Deed of Trust, including all riders
Copy
of
all riders to Note and Mortgage or Deed of Trust
Settlement
statement (HUD 1)
Copy
of
PMI Certificate (if applicable)
Appraisal
Flood
determination certificate
Hazard
Insurance declaration page
Loan
application
EXHIBIT
C
LIST
OF DOCUMENTS IN COLLATERAL FILE
With
respect to each Mortgage Loan, the Collateral File shall include each of the
following items, which shall be available for inspection by the Owner and any
prospective Owner, and which shall be retained by Countrywide in the Servicing
File or delivered to the Custodian):
|
1.
|
The
original Mortgage Note bearing all intervening endorsements, endorsed
“Pay
to the order of ______________, without recourse” and signed in the name
of Countrywide by an authorized officer (in the event that the Mortgage
Loan was acquired by Countrywide in a merger, the signature must
be in the
following form: “[Countrywide], successor by merger to [name of
predecessor]”; and in the event that the Mortgage Loan was acquired or
originated by Countrywide while doing business under another name,
the
signature must be in the following form: “[Countrywide], formerly know as
[previous name]”).
|
|
2.
|
The
original of any personal endorsement, surety and/or guaranty agreement
executed in connection with the Mortgage Note, if
any.
|
|
3.
|
Except
as set forth below, the original Mortgage, with evidence of recording
thereon or a certified true and correct copy of the Mortgage sent
for
recordation. If in connection with any Mortgage Loan, Countrywide
cannot
deliver or cause to be delivered the original Mortgage with evidence
of
recording thereon on or prior to the Closing Date because of a delay
caused by the public recording office where such Mortgage has been
delivered for recordation or because such Mortgage has been lost
or
because such public recording office retains the original recorded
Mortgage, Countrywide shall deliver or cause to be delivered to the
Custodian, a photocopy of such Mortgage, together with (i) in the
case of
a delay caused by the public recording office, an Officer’s Certificate of
Countrywide stating that such Mortgage has been dispatched to the
appropriate public recording office for recordation and that the
original
recorded Mortgage or a copy of such Mortgage certified by such public
recording office to be a true and complete copy of the original recorded
Mortgage will be promptly delivered to the Custodian upon receipt
thereof
by Countrywide; or (ii) in the case of a Mortgage where a public
recording
office retains the original recorded Mortgage or in the case where
a
Mortgage is lost after recordation in a public recording office,
a copy of
such Mortgage certified by such public recording office or by the
title
insurance company that issued the title policy to be a true and complete
copy of the original recorded
Mortgage.
|
|
4.
|
The
originals or certified true copies of all assumption, modification,
consolidation or extension agreements, with evidence of recording
noted
thereon if recordation is required to maintain the lien of the mortgage
or
is otherwise required, or, if recordation is not so required, an
original
or copy of any such assumption, modification, consolidation or extension
agreements.
|
|
5.
|
The
original Assignment of Mortgage for each Mortgage Loan, in form and
substance acceptable for recording, from Countrywide to “______________”
or as otherwise directed by the Owner. If the Mortgage Loan was acquired
by Countrywide in a merger, the Assignment of Mortgage must be made
by
“[Countrywide], successor by merger to [name of predecessor].” If the
Mortgage Loan was acquired or originated by Countrywide while doing
business under another name, the Assignment of Mortgage must be by
“[Countrywide], formerly know as [previous name].” Subject to the
foregoing and where permitted under the Applicable Laws of the
jurisdiction wherein the Mortgaged property is located, such Assignments
of Mortgage may be made by blanket assignments for Mortgage Loans
secured
by the Mortgaged Properties located in the same
county.
|
|
6.
|
Originals
or certified true copies of all intervening assignments of the Mortgage
necessary to show a complete chain of title from the original mortgagee
to
the Seller, with evidence of recording thereon, or if any such intervening
assignment has not been returned from the applicable recording office
or
has been lost or if such public recording office retains the original
recorded assignments of mortgage, Countrywide shall deliver or cause
to be
delivered to the Custodian, a photocopy of such intervening assignment,
together with (i) in the case of a delay caused by the public recording
office, an Officer’s Certificate of Countrywide stating that such
intervening assignment of mortgage has been dispatched to the appropriate
public recording office for recordation and that such original recorded
intervening assignment of mortgage or a copy of such intervening
assignment of mortgage certified by the appropriate public recording
office or by the title insurance company that issued the title policy
to
be a true and complete copy of the original recorded intervening
assignment of mortgage will be promptly delivered to the Custodian
upon
receipt thereof by Countrywide; or (ii) in the case of an intervening
assignment where a public recording office retains the original recorded
intervening assignment or in the case where an intervening assignment
is
lost after recordation in a public recording office, a copy of such
intervening assignment certified by such public recording office
to be a
true and complete copy of the original recorded intervening
assignment.
|
|
7.
|
The
original mortgage policy of title insurance or evidence of title,
if
available.
|
|
8.
|
Any
security agreement, chattel mortgage or equivalent executed in connection
with the Mortgage.
|
With
respect to each Mortgage Loan, the Mortgage File shall include each of the
following items to the extent in the possession of Countrywide or in the
possession of Countrywide’s agent(s):
|
1.
|
The
original hazard insurance policy and, if required by law, flood insurance
policy, in accordance with Section 4.10 of the
Agreement.
|
|
2.
|
Residential
loan application.
|
|
3.
|
Mortgage
Loan closing statement.
|
|
4.
|
Verification
of employment and income, as required by the respective loan
program.
|
|
5.
|
Verification
of acceptable evidence of source and amount of down payment, as required
by the respective loan program.
|
|
6.
|
Credit
report on the Mortgagor, if
available.
|
|
7.
|
Residential
appraisal report, as required by the respective loan
program.
|
|
8.
|
Photograph
of the Mortgaged Property.
|
|
9.
|
Survey
of the Mortgaged Property, if required by the title company or Applicable
Law.
|
|
10.
|
Copy
of each instrument necessary to complete identification of any exception
set forth in the exception schedule in the title policy, i.e. map
or plat,
restrictions, easements, sewer agreements, home association declarations,
etc.
|
|
11.
|
All
required disclosure statements.
|
|
12.
|
If
available, termite report, structural engineer’s report, water potability
and septic certification.
|
|
13.
|
Sales
contract, if applicable.
|
|
14.
|
Amortization
schedule, if available.
|
|
15.
|
Original
power of attorney, if applicable.
|
EXHIBIT
D
FORM
OF XXXXXXXX-XXXXX ACT CERTIFICATION
I,
[NAME
OF CERTIFYING INDIVIDUAL], a duly elected and acting officer of Countrywide
Home
Loans Servicing LP (the “Servicer”), hereby certify, pursuant to Section 5.6 of
that certain Servicing Agreement (the “Agreement”), dated as of [DATE] between
the Servicer and Xxxxxxx Xxxxx Mortgage Company (the “Owner”), to [ENTITY NAME]
(the “Beneficiary”) with respect to the calendar year immediately preceding the
date of this Certificate, as follows:
|
1.
|
I
have reviewed the annual statement of compliance (“Annual Statement of
Compliance”) prepared by Servicer, and the annual independent public
accountant’s servicing report made in accordance with the Uniform Single
Attestation Program for Mortgage Bankers (“Annual Independent Public
Accountant’s Servicing Report”), which have been furnished to the
Beneficiary pursuant to the Agreement and any subsequent servicing
agreement related thereto or to the Mortgage Loans (collectively,
the
“Servicing Agreement”);
|
|
2.
|
Based
on my knowledge, the information in the Annual Statement of Compliance,
the Annual Independent Public Accountant’s Servicing Report and all final
servicing reports prepared by Servicer and delivered to the Beneficiary
pursuant to the Servicing Agreement relating to the servicing of
the
Mortgage Loans, taken as a whole, does not contain any untrue statement
of
material fact or omit to state a material fact necessary to make
the
statements made, in light of the circumstances under which such statements
were made, not misleading as of the last day of the period covered
by such
statements or reports;
|
|
3.
|
Based
on my knowledge, the servicing information required to be provided
to the
Beneficiary by the Servicer under the Servicing Agreement has been
provided to the Beneficiary;
|
|
4.
|
I
am responsible for reviewing the activities performed by the Servicer
under the Servicing Agreement and based upon the review required
by the
Servicing Agreement, and except as disclosed in the Annual Statement
of
Compliance and the Annual Independent Public Accountant’s Servicing Report
submitted to the Beneficiary, the Servicer has, as of the last day
of the
period covered by the Annual Statement of Compliance, fulfilled its
obligations under the Servicing Agreement; and
|
|
5.
|
I
have disclosed to the Beneficiary’s certified public accountants all
significant deficiencies relating to the Servicer’s compliance with the
minimum servicing standards in accordance with a review conducted
in
compliance with the Uniform Single Attestation Program for Mortgage
Bankers or similar standard as set forth in the Servicing
Agreement.
|
