Exhibit 99.1
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CWHEQ, INC.
Depositor
COUNTRYWIDE HOME LOANS, INC.
Sponsor and Master Servicer
CWHEQ REVOLVING HOME EQUITY LOAN TRUST,
Series 2005-F
the Trust
JPMORGAN CHASE BANK, N.A.
Indenture Trustee
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SALE AND SERVICING AGREEMENT
Dated as of September 29, 2005
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REVOLVING HOME EQUITY LOAN ASSET BACKED NOTES
Series 2005-F
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Table of Contents
Page
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ARTICLE I
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 1.01. Definitions..........................................................1
Section 1.02. Other Terms..........................................................1
Section 1.03. Rules of Construction................................................1
Section 1.04. Interest Calculations................................................3
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS; TAX TREATMENT
Section 2.01. Conveyance of Mortgage Loans; Retention of Obligation to Fund
Advances Under Credit Line Agreements................................3
Section 2.02. Acceptance by Indenture Trustee......................................8
Section 2.03. Representations, Warranties, and Covenants Regarding the
Master Servicer.....................................................10
Section 2.04. Representations and Warranties Regarding the Mortgage Loans;
Retransfer of Certain Mortgage Loans................................11
Section 2.05. Covenants of the Depositor..........................................14
Section 2.06. Transfers of Mortgage Loans at Election of Transferor...............14
Section 2.07. Retransfers and Transfer Deficiencies...............................16
Section 2.08. Tax Treatment.......................................................16
Section 2.09. Representations and Warranties of the Depositor.....................17
Section 2.10. Sponsor Loss Coverage Obligation....................................17
ARTICLE III
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 3.01. The Master Servicer.................................................17
Section 3.02. Collection of Certain Mortgage Loan Payments; Establishment
of Accounts.........................................................20
Section 3.03. Deposits to Payment Account.........................................22
Section 3.04. Maintenance of Hazard Insurance; Property Protection Expenses.......23
Section 3.05. Assumption and Modification Agreements..............................23
Section 3.06. Realization Upon Defaulted Mortgage Loans; Repurchase of
Certain Mortgage Loans..............................................24
Section 3.07. Indenture Trustee to Cooperate......................................25
Section 3.08. Servicing Compensation; Payment of Certain Expenses by Master
Servicer............................................................26
Section 3.09. Annual Statement as to Compliance...................................27
Section 3.10. Annual Servicing Report.............................................27
Section 3.11. Access to Certain Documentation and Information Regarding the
Mortgage Loans......................................................27
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Section 3.12. Maintenance of Certain Servicing Insurance Policies.................28
Section 3.13. Reports to the Securities and Exchange Commission...................28
Section 3.14. Tax Treatment.......................................................28
Section 3.15. Information Required by the Internal Revenue Service
Generally and Reports of Foreclosures and Abandonments of
Mortgaged Property..................................................29
Section 3.16. The Loan Insurance Policy...........................................29
ARTICLE IV
SERVICING CERTIFICATE
Section 4.01. Servicing Certificate...............................................30
Section 4.02. Acknowledgement and Cooperation.....................................33
Section 4.03. Optional Advances of the Master Servicer............................33
Section 4.04. Statements to Noteholders...........................................33
ARTICLE V
THE MASTER SERVICER, THE SPONSOR, AND THE DEPOSITOR
Section 5.01. Liability of the Sponsor, the Master Servicer, and the
Depositor...........................................................35
Section 5.02. Merger or Consolidation of, or Assumption of the Obligations
of, the Master Servicer or the Depositor............................36
Section 5.03. Limitation on Liability of the Master Servicer and Others...........36
Section 5.04. Master Servicer Not to Resign.......................................37
Section 5.05. Delegation of Duties................................................37
Section 5.06. Indemnification by the Master Servicer..............................38
ARTICLE VI
SERVICING TERMINATION
Section 6.01. Events of Servicing Termination.....................................38
Section 6.02. Indenture Trustee to Act; Appointment of Successor..................40
Section 6.03. Notification to Noteholders and the Transferor......................41
ARTICLE VII
TERMINATION
Section 7.01. Termination.........................................................41
ARTICLE VIII
MISCELLANEOUS PROVISIONS
Section 8.01. Amendment...........................................................42
Section 8.02. Governing Law.......................................................43
Section 8.03. Notices.............................................................43
Section 8.04. Severability of Provisions..........................................45
Section 8.05. Assignment..........................................................45
Section 8.06. Third Party Beneficiaries...........................................45
Section 8.07. Counterparts; Electronic Delivery...................................45
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Section 8.08. Effect of Headings and Table of Contents............................45
EXHIBIT A - MORTGAGE LOAN SCHEDULE................................................A-1
EXHIBIT B - LETTER OF REPRESENTATIONS.............................................B-1
EXHIBIT C - FORM OF REQUEST FOR RELEASE...........................................C-1
EXHIBIT D - FORM OF TRANSFER DOCUMENT.............................................D-1
ANNEX 1 DEFINITIONS....................................................XXX-1-1
ANNEX 2 ADOPTION ANNEX.................................................XXX-2-1
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This SALE AND SERVICING AGREEMENT, dated as of September 29,
2005, among CWHEQ, INC., as depositor, COUNTRYWIDE HOME LOANS, INC.,
as sponsor and master servicer, CWHEQ REVOLVING HOME EQUITY LOAN
TRUST, SERIES 2005-F, and JPMORGAN CHASE BANK, N.A., as Indenture
Trustee,
WITNESSETH THAT:
The parties agree as follows:
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 1.01. Definitions.
Unless the context requires a different meaning, capitalized
terms are used in this Agreement as defined in Annex 1.
Section 1.02. Other Terms.
Capitalized terms used in this Agreement that are not otherwise
defined have the meanings given to them in the Indenture. Defined
terms that are used only in one section or only in another definition
may be omitted from the list of defined terms in Annex 1. Defined
terms used in this Agreement are sometimes defined after their first
use without a reference such as "(as hereinafter defined)."
Section 1.03. Rules of Construction.
Except as otherwise expressly provided in this Agreement or unless the
context clearly requires otherwise:
(a) Defined terms include, as appropriate, all genders and the plural as
well as the singular.
(b) References to designated articles, sections, subsections, exhibits,
and other subdivisions of this Agreement, such as "Section 6.12 (a)," refer to
the designated article, section, subsection, exhibit, or other subdivision of
this Agreement as a whole and to all subdivisions of the designated article,
section, subsection, exhibit, or other subdivision. The exhibits and other
attachments to this Agreement are a part of this Agreement. The words
"herein," "hereof," "hereto," "hereunder," and other words of similar import
refer to this Agreement as a whole and not to any particular article, section,
exhibit, or other subdivision of this Agreement.
(c) Any term that relates to a document or a statute, rule, or
regulation includes any amendments, modifications, supplements, or any other
changes that may have occurred since the document, statute, rule, or
regulation came into being, including changes that occur after the date of
this Agreement. References to law are not limited to statutes. References to
statutes
include any rules or regulations promulgated under them by a governmental
authority charged with the administration of the statute. Any reference to any
person includes references to its successors and assigns.
(d) Any party may execute any of the requirements under this Agreement
either directly or through others, and the right to cause something to be done
rather than doing it directly shall be implicit in every requirement under
this Agreement. Unless a provision is restricted as to time or limited as to
frequency, all provisions under this Agreement are implicitly available from
time to time.
(e) The term "including" and all its variations mean "including but not
limited to." Except when used in conjunction with the word "either," the word
"or" is always used inclusively (for example, the phrase "A or B" means "A or
B or both," not "either A or B but not both").
(f) A reference to "a [thing]" or "any [of a thing]" does not imply the
existence or occurrence of the thing referred to even though not followed by
"if any," and "any [of a thing]" is any and all of it. A reference to the
plural of anything as to which there could be either one or more than one does
not imply the existence of more than one (for instance, the phrase "the
obligors on a note" means "the obligor or obligors on a note"). "Until
[something occurs]" does not imply that it must occur, and will not be
modified by the word "unless." The word "due" and the word "payable" are each
used in the sense that the stated time for payment has passed. The word
"accrued" is used in its accounting sense, i.e., an amount paid is no longer
accrued. In the calculation of amounts of things, differences and sums may
generally result in negative numbers, but when the calculation of the excess
of one thing over another results in zero or a negative number, the
calculation is disregarded and an "excess" does not exist. Portions of things
may be expressed as fractions or percentages interchangeably. The word "shall"
is used in its imperative sense, as for instance meaning a party agrees to
something or something must occur or exist.
(g) All accounting terms used in an accounting context and not otherwise
defined, and accounting terms partly defined in this Agreement, to the extent
not completely defined, shall be construed in accordance with generally
accepted accounting principles in the United States. To the extent that the
definitions of accounting terms in this Agreement are inconsistent with their
meanings under generally accepted accounting principles, the definitions in
this Agreement shall control. Capitalized terms used in this Agreement without
definition that are defined in the Uniform Commercial Code of the relevant
jurisdiction are used in this Agreement as defined in that Uniform Commercial
Code.
(h) In the computation of a period of time from a specified date to a
later specified date or an open-ended period, the words "from" and "beginning"
mean "from and including," the word "after" means "from but excluding," the
words "to" and "until" mean "to but excluding," and the word "through" means
"to and including." Likewise, in setting deadlines or other periods, "by"
means "on or before." The words "preceding," "following," and words of similar
import, mean immediately preceding or following. References to a month or a
year refer to calendar months and calendar years.
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(i) Any reference to the enforceability of any agreement against a party
means that it is enforceable against the party in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization, and other
similar laws of general applicability relating to or affecting creditors'
rights and to general equity principles.
Section 1.04. Interest Calculations.
All calculations of interest on the Asset Balance of a Mortgage Loan
under this Agreement are on a daily basis using a 365 day year. All
calculations of interest on the Notes are on the basis of the actual number of
days in an Interest Period and a year of 360 days. The calculation of the
Servicing Fee is on the basis of a 360-day year consisting of twelve 30-day
months. All dollar amounts calculated under this Agreement are rounded to the
nearest cent with one-half of one cent being rounded down.
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS; TAX TREATMENT
Section 2.01. Conveyance of Mortgage Loans; Retention of Obligation to
Fund Advances Under Credit Line Agreements.
(a) Initial Transfer. Concurrently with the execution and delivery of
this Agreement, the Depositor hereby transfers to the Trust without recourse
(subject to Sections 2.02 and 2.04) all of its right, title, and interest in
(i) each Initial Mortgage Loan, including its Asset Balance
(including all Additional Balances), the related Mortgage File, all
property that secures the Mortgage Loan, and all collections received on
it after the Cut-off Date (excluding payments due by the Cut-off Date);
(ii) property that secured an Initial Mortgage Loan that is
acquired by foreclosure or deed in lieu of foreclosure;
(iii) the Depositor's rights under the Purchase Agreement;
(iv) the Depositor's rights under the hazard insurance policies;
(v) all rights under any guaranty executed in connection with a
Mortgage Loan;
(vi) all other assets included or to be included in the Trust for
the benefit of the Noteholders and the Credit Enhancer; and
(vii) all proceeds of the foregoing.
This transfer to the Trust is to the Owner Trustee, on behalf of the Trust,
and each reference in this Agreement to this transfer shall be construed
accordingly. In addition, by the Closing Date, the Depositor shall cause the
Credit Enhancer to deliver the Policy to the Indenture Trustee for the benefit
of the Noteholders and shall cause the Loan Insurance Policy Provider to
deliver the Loan Insurance Policy to the Co-Trustee.
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(b) Additional Transfers; Conditions Precedent to Subsequent Additions.
(i) The Depositor may sell to the Trust Additional Home Equity
Loans on any Subsequent Closing Date designated by the Depositor by the
Latest Subsequent Closing Date. The Depositor shall notify the Owner
Trustee, the Indenture Trustee, the Credit Enhancer, and each Rating
Agency of its designation of a Subsequent Closing Date at least one
Business Day in advance. On each Subsequent Closing Date the Depositor
shall deliver a Transfer Document to the Owner Trustee and the Officer's
Certificate referred to in Section 2.01(b)(ii)(I) to the Owner Trustee,
the Indenture Trustee, and the Credit Enhancer, and the Indenture
Trustee shall pay, on behalf of the Trust, to the order of the
Depositor, from the Additional Loan Account, and set aside in an account
under its control for the benefit of the Depositor for later delivery to
the Depositor, the purchase price in an amount equal to the Cut-off Date
Asset Balance specified in the Transfer Document, up to the amount of
funds remaining in the Additional Loan Account. Upon delivery of the
Transfer Document and payment of the purchase price, the Depositor
hereby transfers to the Trust without recourse (subject to Sections 2.02
and 2.04) all of its right, title, and interest in each Additional Home
Equity Loan identified in the Transfer Document, including its Asset
Balance (including all Additional Balances) and all collections received
on it after the relevant Subsequent Cut-off Date (excluding payments due
by the Subsequent Cut-off Date) and all proceeds of the foregoing. This
transfer to the Trust is to the Owner Trustee, on behalf of the Trust,
and each reference in this Agreement to this transfer shall be construed
accordingly.
The Depositor shall also deliver to the Owner Trustee, the
Indenture Trustee, and the Credit Enhancer by the Opinion Delivery Date
an opinion of counsel relating to each Subsequent Closing Date to the
effect that a court in a bankruptcy context addressing the transfer of
the Additional Home Equity Loans would characterize the transfer as a
sale rather than as a secured lending and an opinion of counsel relating
to the perfection of security interest in the Additional Home Equity
Loans. On the day the revised Mortgage Loan Schedule and that opinion of
counsel are delivered, the Indenture Trustee shall deliver, on behalf of
the Trust, to the order of the Depositor the funds for the purchase
price for the Additional Home Equity Loans set aside on the relevant
Subsequent Closing Date, and any earnings on those funds since the
relevant Subsequent Closing Date.
(ii) The obligation of the Indenture Trustee on behalf of the
Trust to pay the purchase price from the relevant Additional Loan
Account for the benefit of the Depositor and the acceptance by the Owner
Trustee of the transfer of the Additional Home Equity Loans and the
other property and rights relating to them on the related Subsequent
Closing Date are subject to the satisfaction of each of the following
conditions by the Subsequent Closing Date:
(A) the Depositor shall have delivered to the Owner Trustee
a properly completed and executed Transfer Document;
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(B) as of the related Subsequent Closing Date, neither the
Sponsor nor the Depositor is insolvent nor shall either of them be
made insolvent by the transfer of the Additional Home Equity Loans
nor is either of them aware of any pending insolvency;
(C) the addition shall not result in a material adverse
federal tax consequence to the Trust, the Transferor, or the
Noteholders;
(D) the Subsequent Closing Date is not after the Latest
Subsequent Closing Date;
(E) neither the Depositor nor the Trust shall have been
advised in writing by any Rating Agency that the transfer of the
Additional Home Equity Loans would result in a reduction or
withdrawal of the Rating Agency's then current rating of the Notes
(without regard to the Policy);
(F) the Sponsor represents and warrants that on the
Subsequent Closing Date each of the representations and warranties
in Section 2.04(a) by virtue of repetition of Section 3.02(a) of
the Purchase Agreement (excluding clauses (18), (30), (32), (33),
and (34) of Section 3.02(a) of the Purchase Agreement) are true
with respect to the Additional Home Equity Loans;
(G) the Sponsor represents and warrants that the addition of
the Additional Home Equity Loans will not result in a significant
variance as of the Subsequent Closing Date from the Mortgage Loan
pool characteristics covered by the representations and warranties
in Section 3.02(a)(18), (30), (32), (33), and (34) of the Purchase
Agreement after taking into account the addition of the Additional
Home Equity Loans;
(H) as of the relevant Subsequent Closing Date, the Sponsor
is not aware of any mechanics' or similar liens or claims that
have been filed for work, labor, or material affecting the related
Mortgaged Property that are, or may be, liens prior or equal to
the lien of the related mortgage, except liens that are fully
insured against by the title insurance policy referred to in
Section 3.02(16) of the Purchase Agreement; and
(I) the Depositor shall have delivered or caused the Sponsor
to deliver to the Owner Trustee, the Indenture Trustee, and the
Credit Enhancer an Officer's Certificate confirming the
satisfaction of each of these conditions precedent.
Neither the Owner Trustee nor the Indenture Trustee need investigate or
otherwise verify compliance with these conditions, except for its receipt of
the documents specified above, and they may rely on the required Officer's
Certificate.
(c) Additional Balances; Future Fundings. Additional Balances shall be
part of the Asset Balance and are hereby transferred to the Trust on the
Closing Date for the Initial Mortgage Loans and on the relevant Subsequent
Closing Date for the Additional Home Equity
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Loans pursuant to this Section 2.01, and therefore are part of the Trust
property. Neither the Owner Trustee nor the Trust nor the Indenture Trustee
assumes the obligation under any Credit Line Agreement that provides for the
funding of future advances to the mortgagor under it, and neither the Trust
nor the Owner Trustee nor the Indenture Trustee may fund these future
advances.
(d) Delayed Delivery. In connection with the transfer under Section
2.01(a) by the Depositor, the Depositor shall effect delivery of the Mortgage
Loan Schedule to the Trust and the Indenture Trustee by the Closing Date and
delivery of the Initial Mortgage Files to the Trust, and the Trust shall
deliver them to the Indenture Trustee,
(i) no later than the Closing Date, with respect to no less than
50% of the Initial Mortgage Loans in each Loan Group,
(ii) no later than the twentieth day after the Closing Date, with
respect to no less than 40% of the Initial Mortgage Loans in each Loan
Group in addition to those delivered on the Closing Date, and
(iii) within thirty days following the Closing Date, with respect
to the remaining Initial Mortgage Loans.
In connection with the transfers by the Depositor under Section 2.01(b), the
Depositor shall effect delivery of a revised Mortgage Loan Schedule reflecting
the addition of the Additional Home Equity Loans to the Indenture Trustee
within 15 days following the relevant Subsequent Closing Date and of the
relevant Initial Mortgage Files to the Custodian,
(A) no later than the relevant Subsequent Closing Date, with
respect to no less than 10% of the relevant Additional Home Equity
Loans, and
(B) within twenty days following the relevant Subsequent
Closing Date, with respect to the remaining relevant Additional
Home Equity Loans.
In lieu of delivery of original documentation, the Depositor may deliver
documents that have been imaged optically on delivery of an opinion of counsel
to the Indenture Trustee and the Credit Enhancer that the imaged documents are
enforceable to the same extent as the originals and do not impair the
enforceability of the transfer to the Trust of the Mortgage Loans, if the
retention of the imaged documents in the delivered format will not result in a
reduction in the then current rating of the Notes without regard to the
Policy.
(e) Xxxx Records. The Sponsor hereby confirms to the Owner Trustee and
the Indenture Trustee, on behalf of itself and any other Seller, that each
Seller has caused the portions of the Electronic Ledgers relating to the
Initial Mortgage Loans to be clearly and unambiguously marked, and has made
the appropriate entries in its general accounting records, to indicate that
the Initial Mortgage Loans have been transferred to the Trust at the direction
of the Depositor. The Master Servicer hereby confirms to the Owner Trustee and
the Indenture Trustee that it has clearly and unambiguously made appropriate
entries in its general accounting records indicating that those Initial
Mortgage Loans constitute part of the Trust and are serviced by it on behalf
of the Trust in accordance with this Agreement.
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By the relevant Subsequent Closing Date, the Sponsor shall cause the
portions of the Electronic Ledgers relating to the Additional Home Equity
Loans to be clearly and unambiguously marked, and shall make appropriate
entries in its general accounting records, to indicate that those Additional
Home Equity Loans have been transferred to the Trust at the direction of the
Depositor. By the relevant Subsequent Closing Date, the Master Servicer shall
clearly and unambiguously make appropriate entries in its general accounting
records indicating that those Additional Home Equity Loans constitute part of
the Trust and are serviced by it on behalf of the Trust in accordance with
this Agreement.
(f) UCC Filings. The Depositor and the Trust agree (subject to Section
2.01(h)) to effect any actions and execute any documents necessary to perfect
and protect the Trust's, the Indenture Trustee's, the Noteholders', and the
Credit Enhancer's interests in each Cut-off Date Asset Balance and Additional
Balances and their proceeds, including filing all necessary Continuation
Statements for the UCC1 Financing Statements filed in the State of Delaware
(which shall have been filed by the Closing Date) describing the Cut-off Date
Asset Balances and Additional Balances and naming the Depositor as debtor and
the Trust as secured party or naming the Trust as debtor and the Indenture
Trustee as secured party and any amendments to UCC1 Financing Statements
required to reflect a change in the UCC or in the name or organizational
structure of the Depositor or the Trust or the filing of any additional UCC1
Financing Statements due to the change in the state of organization of the
Depositor or the Trust (within 30 days of any event necessitating the filing).
(g) Sponsor Rating Downgrade. If the long term senior unsecured
corporate debt rating of Countrywide Home Loans, Inc. falls below "BBB" by
Standard & Poor's or "Baa2" by Xxxxx'x, then as promptly as practicable but in
any case within 90 days of the event, the Master Servicer shall, at its
expense, either
(x) request that the Indenture Trustee deliver to it the original
Assignment of Mortgage previously delivered to the Indenture Trustee
pursuant to Section 2.01(d) and then record the Assignment of Mortgage
in favor of the Indenture Trustee (which may be a blanket assignment if
permitted by applicable law) in the appropriate real property or other
records,
(y) deliver to the Indenture Trustee an Opinion of Counsel
addressed to the Indenture Trustee and the Credit Enhancer to the effect
that recording is not required to protect the Indenture Trustee's
interest in the related Mortgage Loan or, in case a court should
recharacterize the sale of the Mortgage Loans as a financing, to perfect
a first priority Security Interest in favor of the Indenture Trustee in
the related Mortgage Loan, which Opinion of Counsel also shall be
reasonably acceptable to each of the Rating Agencies (as evidenced in
writing) and the Credit Enhancer, or
(z) cause the MERS(R) System to indicate (and provide evidence to
the Indenture Trustee that it has done so) that the Mortgage Loans have
been assigned by the Trust to the Indenture Trustee in accordance with
this Agreement for the benefit of the Noteholders and the Credit
Enhancer by including (or deleting, in the case of Mortgage Loans that
are repurchased in accordance with this Agreement) in the MERS
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computer files (a) the appropriate code that identifies the Indenture
Trustee in the field for identifying the assignee and (b) the
appropriate code that has been assigned to identify the Notes to the
MERS(R) System in the field "Pool Field" identifying the Notes issued in
connection with the Mortgage Loans.
(h) Sale Treatment. Notwithstanding the characterization of the Notes as
debt of the Transferor for federal, state, and local income and franchise tax
purposes, the transfer of the Mortgage Loans is a sale by each Seller to the
Depositor and by the Depositor to the Trust of all of each Seller's and then
all the Depositor's interest in the Mortgage Loans and other property
described above. From the time the Notes are issued until such time as all or
a portion of the Notes are sold to one or more unaffiliated parties, each
Seller will report the transfer of the Mortgage Loans and the related
Additional Balances to the Depositor as a transfer of assets in exchange for
beneficial interests in the form of asset-backed securities and servicing
rights. If the transfer were to be characterized as a transfer for security
and not as a sale, however, then the Depositor hereby grants to the Trust a
Security Interest in all of the Depositor's right, title, and interest in the
Mortgage Loans whether existing now or in the future, all monies due or to
become due on the Mortgage Loans, and all their proceeds; and this Agreement
shall constitute a Security Agreement under applicable law.
Section 2.02. Acceptance by Indenture Trustee.
(a) On the Closing Date, the Custodian shall execute and deliver to the
Depositor, the Master Servicer, and the Sponsor (with a copy to the Credit
Enhancer) the Initial Certification pursuant to the Custodial Agreement. If
either (i) Initial Mortgage Loans have been delivered after the Closing Date
or (ii) Additional Home Equity Loans have been delivered after the Subsequent
Closing date pursuant to Section 2.01(e), the Custodian shall execute and
deliver to the Depositor, the Master Servicer, and the Sponsor (with a copy to
the Credit Enhancer) a Delay Delivery Certification pursuant to the Custodial
Agreement within the period specified in the Custodial Agreement. Within 180
days after the Closing Date, Custodian shall deliver to the Depositor, the
Master Servicer, and the Sponsor (with a copy to the Credit Enhancer) a Final
Certification pursuant to the Custodial Agreement. The Sponsor shall correct
any defect noted in the Final Certification within 90 days of its receipt.
(b) Upon the satisfaction of the requirements of Section 2.07, all
interest of the Trust in a Mortgage Loan shall automatically be retransferred
without recourse, representation, or warranty to the Sponsor and the Asset
Balance of the Mortgage Loan shall be deducted from the Loan Group Balance of
the related Loan Group, if
(i) the Indenture Trustee does not receive the Mortgage File for
any Mortgage Loan as required by Section 2.01(d),
(ii) the time to correct any defect in the Mortgage Loan noted on
the Final Certification has expired,
(iii) the Trust ever incurs any loss on the Mortgage Loan because
any document in its Mortgage File is defective, or
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(iv) an Assignment of Mortgage to the Indenture Trustee has not
been recorded in accordance with Section 2.01(g) and the Mortgage Loan
is not registered on the MERS(R) System.
Subject to the prior satisfaction of the requirements of Section 2.07,
the Owner Trustee shall execute any documents of transfer presented by the
Sponsor, without recourse, representation, or warranty, and take any other
actions reasonably requested by the Sponsor to effect the transfer by the
Trust of the Defective Mortgage Loan pursuant to this Section as promptly as
practical.
The sole remedy of the Noteholders, the Transferor, the Owner Trustee,
the Indenture Trustee, the Co-Trustee, the Loan Insurance Policy Provider, and
the Credit Enhancer against the Sponsor for the transfer of a Defective
Mortgage Loan to the Trust is the Sponsor's obligation to accept a transfer of
a Defective Mortgage Loan and to convey an Eligible Substitute Mortgage Loan
or to make a deposit of any Transfer Deposit Amount into the Collection
Account in accordance with Section 2.07.
Promptly following the transfer of any Defective Mortgage Loan from the
Trust pursuant to this Section or Section 2.07, the Master Servicer shall
amend the Mortgage Loan Schedule, deliver the amended Mortgage Loan Schedule
to the Indenture Trustee, and make appropriate entries in its general account
records to reflect the transfer. Following the retransfer, the Master Servicer
shall appropriately xxxx its records to indicate that it is no longer
servicing the Mortgage Loan on behalf of the Trust. The Sponsor shall
appropriately xxxx its Electronic Ledger and make appropriate entries in its
general account records to reflect the transfer promptly following the
transfer.
(c) The Sponsor shall deliver to the Indenture Trustee any documents
required to be held by the Indenture Trustee in accordance with Section 2.01
with respect to any Eligible Substitute Mortgage Loans. The Master Servicer
shall determine the Transfer Deposit Amount in any Collection Period during
which the Sponsor substitutes Eligible Substitute Mortgage Loans and the
Sponsor shall deposit that amount in the Collection Account at the time of
substitution. All amounts received on the Eligible Substitute Mortgage Loans
during the Collection Period in which the circumstances giving rise to their
transfer to the Trust occur shall not be a part of the Trust and shall not be
deposited by the Master Servicer in the Collection Account. All amounts
received on a removed Defective Mortgage Loan during the Collection Period in
which the circumstances giving rise to its transfer to the Trust occur shall
be a part of the Trust and shall be deposited by the Master Servicer in the
Collection Account. An Eligible Substitute Mortgage Loan will be subject to
the terms of this Agreement in all respects when transferred to the Trust, and
the Sponsor hereby makes the representations, warranties, and covenants in
Section 2.04 with respect to the Eligible Substitute Mortgage Loan as of the
date of substitution.
(d) The Custodian shall retain possession of each Mortgage File on
behalf of the Indenture Trustee in accordance with the Custodial Agreement.
The Master Servicer shall promptly deliver to the Indenture Trustee the
originals of any other documents constituting the Mortgage File coming into
its possession on their execution or receipt. Any documents to be
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delivered to the Indenture Trustee under this Agreement may be delivered to
the Custodian acting on behalf of the Indenture Trustee.
Section 2.03. Representations, Warranties, and Covenants Regarding the
Master Servicer.
The Master Servicer represents and warrants to the Indenture Trustee and
the Credit Enhancer that as of the Closing Date:
(i) The Master Servicer is a New York corporation, validly
existing and in good standing under the laws of the State of New York,
and has the corporate power to own its assets and to transact the
business in which it is currently engaged. The Master Servicer is duly
qualified to do business as a foreign corporation and is in good
standing in each jurisdiction in which the character of its business or
any properties owned or leased by it requires such qualification and in
which the failure so to qualify would have a material adverse effect on
the business, properties, assets, or condition (financial or other) of
the Master Servicer.
(ii) The Master Servicer has the power and authority to make,
execute, deliver, and perform this Agreement and all of the transactions
contemplated under this Agreement, and has taken all necessary corporate
action to authorize the execution, delivery, and performance of this
Agreement. When executed and delivered, this Agreement will constitute a
valid and legally binding obligation of the Master Servicer enforceable
in accordance with its terms.
(iii) The Master Servicer is not required to obtain the consent of
any other party or any consent, license, approval or authorization from,
or registration or declaration with, any governmental authority, bureau,
or agency in connection with the execution, delivery, performance,
validity, or enforceability of this Agreement, except for consents,
licenses, approvals or authorizations, or registrations or declarations
that have been obtained or filed, as the case may be, before the Closing
Date.
(iv) The execution, delivery, and performance of this Agreement by
the Master Servicer will not violate any existing law or regulation or
any order or decree of any court applicable to the Master Servicer or
the certificate of incorporation or bylaws of the Master Servicer, or
constitute a material breach of any mortgage, indenture, contract, or
other agreement to which the Master Servicer is a party or by which the
Master Servicer may be bound.
(v) No litigation or administrative proceeding of or before any
court, tribunal, or governmental body is currently pending, or to the
knowledge of the Master Servicer threatened, against the Master Servicer
or any of its properties or with respect to this Agreement, the
Indenture, or the Notes that in the opinion of the Master Servicer has a
reasonable likelihood of resulting in a material adverse effect on the
transactions contemplated by the Transaction Documents.
(vi) If any Mortgage Loan has been registered on the MERS(R)
System, the Master Servicer is a member of MERS in good standing.
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The Master Servicer covenants that it will fully furnish, in accordance
with the Fair Credit Reporting Act and its implementing regulations, accurate
and complete information (i.e., favorable and unfavorable) on its credit files
for the related Mortgagor for each Mortgage Loan to Equifax, Experian, and
Trans Union Credit Information Company on a monthly basis.
The representations, warranties, and covenants in this Section shall
survive the transfer of the Mortgage Loans to the Trust. Upon discovery of a
breach of any representation, warranty, or covenant that materially and
adversely affects the interests of the Transferor, the Noteholders, or the
Credit Enhancer, the person discovering the breach shall give prompt notice to
the other parties and to the Credit Enhancer. The Master Servicer shall cure
in all material respects any breach of any representation, warranty, or
covenant within 90 days of becoming aware of it or, with the consent of a
Responsible Officer of the Indenture Trustee, any longer period specified in
the consent.
Section 2.04. Representations and Warranties Regarding the Mortgage
Loans; Retransfer of Certain Mortgage Loans.
(a) The Sponsor by this reference repeats and incorporates in this
Agreement each representation and warranty made by it (as a Seller) in Section
3.02(a) of the Purchase Agreement (other than Section 3.02(a)(1) and (2)) to
the Indenture Trustee, the Trust, and the Credit Enhancer and, in addition,
represents and warrants to the Indenture Trustee, the Trust, and the Credit
Enhancer that as of the Cut-off Date, unless specifically stated otherwise:
(i) As of the Closing Date with respect to the Initial Mortgage
Loans, the relevant Subsequent Closing Date with respect to any
Additional Home Equity Loans, or, with respect to any Eligible
Substitute Mortgage Loan, the applicable date of substitution, this
Agreement constitutes a valid and legally binding obligation of the
Sponsor, enforceable against the Sponsor in accordance with its terms.
(ii) As of the Closing Date with respect to the Initial Mortgage
Loans, the relevant Subsequent Closing Date with respect to any
Additional Home Equity Loans, or, with respect to any Eligible
Substitute Mortgage Loan, the applicable date of substitution, either
(A) the Purchase Agreement constitutes a valid transfer to
the Depositor of all right, title, and interest of the Sellers in
the applicable Mortgage Loans, all collections received from the
Mortgage Loans after the Cut-off Date (excluding payments due by
the Cut-off Date), all proceeds of the applicable Mortgage Loans,
and any funds from time to time deposited in the Collection
Account and in the Payment Account and all other property
specified in Section 2.01(a) or (b), as applicable, and this
Agreement constitutes a valid transfer to the Trust of the
foregoing property such that, on execution of this Agreement, it
is owned by the Trust free of all liens and other encumbrances,
and is part of the corpus of the Trust conveyed to the Trust by
the Depositor, and upon payment for the Additional Balances, the
Purchase Agreement and this Agreement will constitute a valid
transfer to the Trust of all right, title, and interest of the
Sellers in the Additional Balances, all monies due
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or to become due on them, all proceeds of the Additional Balances,
and all other property specified in Section 2.01(a) relating to
the Additional Balances free of all liens and other encumbrances,
or
(B) the Purchase Agreement or this Agreement, as
appropriate, constitutes a Grant of a Security Interest to the
Owner Trustee on behalf of the Trust in the property described in
clause (A) above and the Indenture constitutes a Grant of a
Security Interest to the Indenture Trustee in the Collateral. The
Indenture Trustee has a first priority perfected Security Interest
in the Collateral, subject to the effect of Section 9 315 of the
UCC with respect to collections on the Mortgage Loans that are
deposited in the Collection Account in accordance with the next to
last paragraph of Section 3.02(b), and if this Agreement
constitutes the Grant of a Security Interest in the property
described in clause (A) above to the Trust, the Trust has a first
priority perfected Security Interest in the property, subject to
the same limitations. This Security Interest is enforceable as
such against creditors of and purchasers from the Trust, the
Depositor, and each Seller.
(b) If the substance of any representation and warranty in this Section
made to the best of the Sponsor's knowledge or as to which the Sponsor has no
knowledge is inaccurate and the inaccuracy materially and adversely affects
the interest of the Trust, the Noteholders or the Credit Enhancer in the
related Mortgage Loan then, notwithstanding that the Sponsor did not know the
substance of the representation and warranty was inaccurate at the time the
representation or warranty was made, the inaccuracy shall be a breach of the
applicable representation or warranty.
(c) The representations and warranties in this Section shall survive
delivery of the respective Mortgage Files to the Custodian pursuant to the
Custodial Agreement and the termination of the rights and obligations of the
Master Servicer pursuant to Section 5.04 or 6.02. If the Sponsor, the
Depositor, the Master Servicer, the Credit Enhancer, or a Responsible Officer
of the Indenture Trustee discovers a breach of any of the foregoing
representations and warranties, without regard to any limitation concerning
the knowledge of the Sponsor, that materially and adversely affects the
interests of the Trust, the Indenture Trustee under the Indenture, the
Noteholders, or the Credit Enhancer in the Mortgage Loan, the party
discovering the breach shall give prompt notice to the other parties and the
Credit Enhancer.
(d) The Sponsor shall use all reasonable efforts to cure in all material
respects any breach of any of the foregoing representations and warranties
(other than a breach of the representation and warranty in Section 2.04 by
virtue of the repetition of Section 3.02(a)(5) of the Purchase Agreement)
within 90 days of becoming aware of it or, not later than the Business Day
before the Payment Date in the month following the Collection Period in which
the cure period expired (or any later date that the Indenture Trustee and the
Credit Enhancer consent to), all interest of the Trust in the Defective
Mortgage Loan shall, subject to the satisfaction of the requirements of
Section 2.07, automatically be retransferred without recourse, representation,
or
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warranty to the Sponsor and the Asset Balance of the Mortgage Loan shall be
deducted from the Loan Balance.
The cure for any breach of a representation and warranty relating to the
characteristics of the Initial Mortgage Loans in the related Loan Group in the
aggregate shall be a repurchase of or substitution for only the Initial
Mortgage Loans necessary to cause the characteristics to comply with the
related representation and warranty.
Subject to the prior satisfaction of the requirements of Section 2.07,
the Owner Trustee shall execute any documents of transfer presented by the
Sponsor, without recourse, representation, or warranty, and take any other
actions reasonably requested by the Sponsor to effect the transfer by the
Trust of the Defective Mortgage Loan pursuant to this Section as promptly as
practical.
Promptly following the transfer of any Defective Mortgage Loan from the
Trust pursuant to this Section, the Master Servicer shall amend the Mortgage
Loan Schedule, deliver the amended Mortgage Loan Schedule to the Indenture
Trustee, and make appropriate entries in its general account records to
reflect the transfer. Following the retransfer, the Master Servicer shall
appropriately xxxx its records to indicate that it is no longer servicing the
Mortgage Loan on behalf of the Trust. The Sponsor shall appropriately xxxx its
Electronic Ledger and make appropriate entries in its general account records
to reflect the transfer promptly following the transfer.
(e) The sole remedy of the Noteholders, the Indenture Trustee on behalf
of Noteholders, the Owner Trustee, and the Credit Enhancer against the Sponsor
for the breach of a representation or warranty other than the representation
and warranty in Section 2.04(a) by virtue of the repetition of Section
3.02(a)(5) of the Purchase Agreement is the Sponsor's obligation to accept a
transfer of a Mortgage Loan as to which a breach has occurred and is
continuing and to make any required deposit in the Collection Account or to
substitute an Eligible Substitute Mortgage Loan.
(f) If the representation and warranty in Section 2.04(a) by virtue of
the repetition of Section 3.02(a)(5) of the Purchase Agreement is breached,
the transfer of the affected Mortgage Loans to the Trust shall be void and the
Sponsor shall pay to the Trust the sum of (i) the amount of the related Asset
Balances, plus accrued interest on each Asset Balance at the applicable Loan
Rate to the date of payment and (ii) the amount of any loss or expense
incurred by the Transferor, the Noteholders, the Trust, or the Credit Enhancer
with respect to the affected Mortgage Loans. The Indenture Trustee may enforce
the Sponsor's obligations under this Section in its own right or as the owner
of the Trust's right to seek enforcement as the assignee of the Trust's rights
under this Agreement pursuant to the Indenture.
(g) A breach of any one of the representations in Sections 3.02(a)(58)
to (64) of the Purchase Agreement will be considered to materially adversely
affect the interests of the Noteholders.
(h) The Sponsor shall defend and indemnify the Indenture Trustee, the
Owner Trustee, the Credit Enhancer, and the Noteholders against all reasonable
costs and expenses,
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and all losses, damages, claims, and liabilities, including reasonable fees
and expenses of counsel and the amount of any settlement entered into with the
consent of the Sponsor (this consent not to be unreasonably withheld), that
may be asserted against or incurred by any of them as a result of any third
party action arising out of any breach of a representation and warranty.
Section 2.05. Covenants of the Depositor.
The Depositor covenants that:
(a) Security Interests. Except for the transfer under this Agreement,
the Depositor will not transfer any Mortgage Loan to any other person, or
create or suffer to exist any Lien on any Mortgage Loan or any interest in
one, whether existing now or in the future; the Depositor will notify the
Indenture Trustee of the existence of any Lien on any Mortgage Loan
immediately on its discovery; and the Depositor will defend the right, title,
and interest of the Trust in the Mortgage Loans, whether existing now or in
the future, against all claims of third parties claiming through the
Depositor. Nothing in this Section shall prohibit the Depositor from suffering
to exist on any Mortgage Loan any Liens for municipal or other local taxes and
other governmental charges if the taxes or governmental charges are not due at
the time or if the Depositor is contesting their validity in good faith by
appropriate proceedings and has set aside on its books adequate reserves with
respect to them.
(b) Negative Pledge. The Depositor shall not transfer or grant a
Security Interest in the Transferor Certificates except in accordance with
Section 3.10 of the Trust Agreement.
(c) Additional Indebtedness. So long as the Notes are outstanding the
Depositor will not incur any debt other than debt that (i) is non-recourse to
the assets of the Depositor other than the mortgage loans specifically pledged
as security for the debt, (ii) is subordinated in right of payment to the
rights of the Noteholders, or (iii) is assigned a rating by each of the Rating
Agencies that is the same as the then current rating of the Notes.
(d) Downgrading. The Depositor will not engage in any activity that
would result in a downgrading of the Notes without regard to the Policy.
(e) Amendment to Certificate of Incorporation. The Depositor will not
amend its Certificate of Incorporation or state of incorporation without prior
notice to the Rating Agencies, the Indenture Trustee, and the Credit Enhancer.
Section 2.06. Transfers of Mortgage Loans at Election of Transferor.
Subject to the conditions below, the Transferor may require the transfer
of Mortgage Loans in a Loan Group from the Trust to the Transferor as of the
close of business on a Payment Date (the "Transfer Date"). In connection with
any transfer, the related Allocated Transferor Interest shall be reduced by
the aggregate Asset Balances as of their Transfer Date of the Mortgage Loans
transferred. On the fifth Business Day (the "Transfer Notice Date") before the
Transfer Date designated in the notice, the Transferor shall give the Owner
Trustee, the Indenture Trustee, the Master Servicer, and the Credit Enhancer a
notice of the proposed
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transfer that contains a list of the Mortgage Loans to be transferred. These
transfers of Mortgage Loans shall be permitted if the following conditions are
satisfied:
(i) No Rapid Amortization Event has occurred.
(ii) On the Transfer Date
(A) the Allocated Transferor Interest with respect to the
related Loan Group (after giving effect to the removal of the
Mortgage Loans proposed to be transferred) exceeds
(B) the related Required Transferor Subordinated Amount.
(iii) The transfer of any Mortgage Loans from either Loan Group on
any Transfer Date during the Managed Amortization Period shall not, in
the reasonable belief of the Transferor, cause a Rapid Amortization
Event to occur or an event that with notice or lapse of time or both
would constitute a Rapid Amortization Event.
(iv) By the Transfer Date, the Transferor shall have delivered to
the Indenture Trustee a revised Mortgage Loan Schedule, reflecting the
proposed transfer and the Transfer Date, and the Master Servicer shall
have marked the Electronic Ledger to show that the Mortgage Loans
transferred to the Transferor are no longer owned by the Trust.
(v) The Transferor shall represent and warrant that the Mortgage
Loans to be removed from the Trust were selected randomly.
(vi) In connection with each transfer of Mortgage Loans pursuant
to this Section, each Rating Agency and the Credit Enhancer shall have
received by the related Transfer Notice Date notice of the proposed
transfer of Mortgage Loans and, before the Transfer Date, each Rating
Agency shall have notified in writing the Transferor, the Indenture
Trustee, and the Credit Enhancer that the transfer of Mortgage Loans
would not result in a reduction or withdrawal of its then current rating
of the Notes without regard to the Policy.
(vii) The Transferor shall have delivered to the Owner Trustee,
the Indenture Trustee, and the Credit Enhancer an Officer's Certificate
certifying that the items in subparagraphs (i) through (vi), inclusive,
have been performed or are true, as the case may be. The Owner Trustee
and the Indenture Trustee may conclusively rely on the Officer's
Certificate, shall have no duty to make inquiries with regard to the
matters in it, and shall incur no liability in so relying.
Upon receiving the requisite information from the Transferor, the Master
Servicer shall perform in a timely manner those acts required of it, as
specified above. Upon satisfaction of the above conditions, on the Transfer
Date the Indenture Trustee shall effect delivery to the Transferor the
Mortgage File for each Mortgage Loan being so transferred, and the Indenture
Trustee shall execute and deliver to the Transferor any other documents
prepared by the Transferor reasonably necessary to transfer the Mortgage Loans
to the Transferor. This transfer of the Trust's interest in Mortgage Loans
shall be without recourse, representation, or warranty by the Indenture
Trustee or the Trust to the Transferor.
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Section 2.07. Retransfers and Transfer Deficiencies.
(a) The Indenture Trustee shall determine if reducing the relevant Loan
Group Balance by the Asset Balance of any retransferred Mortgage Loan pursuant
to Section 2.02(b) or 2.04(d) would cause a Transfer Deficiency for the
related Loan Group. If so, the Indenture Trustee shall notify the Sponsor of
the deficiency, and the Sponsor shall transfer to the Trust within five
Business Days Eligible Substitute Mortgage Loans or deposit into the
Collection Account an amount in immediately available funds equal to the
amount of the Transfer Deficiency reduced by the Asset Balance of any Eligible
Substitute Mortgage Loans transferred to the Trust (the "Transfer Deposit
Amount").
(b) The Sponsor shall deliver to the Indenture Trustee any documents
required to be held by the Indenture Trustee in accordance with Section 2.01
with respect to any Eligible Substitute Mortgage Loans.
(c) All amounts received on Eligible Substitute Mortgage Loans during
the Collection Period in which the circumstances giving rise to their transfer
to the Trust occur shall not be a part of the Trust and shall not be deposited
by the Master Servicer in the Collection Account.
All amounts received on a removed Defective Mortgage Loan during the
Collection Period in which the circumstances giving rise to its transfer to
the Trust occur shall be a part of the Trust and shall be deposited by the
Master Servicer in the Collection Account.
(d) An Eligible Substitute Mortgage Loan will be subject to the terms of
this Agreement in all respects when transferred to the Trust, and the Sponsor
hereby makes the representations, warranties, and covenants in Section 2.04
with respect to the Eligible Substitute Mortgage Loan as of the date of its
transfer to the Trust.
(e) Promptly following the transfer of any Eligible Substitute Mortgage
Loan to the Trust pursuant to this Section, the Master Servicer shall amend
the Mortgage Loan Schedule, deliver the amended Mortgage Loan Schedule to the
Indenture Trustee, and make appropriate entries in its general account records
to reflect the transfer. The Sponsor shall appropriately xxxx its Electronic
Ledger and make appropriate entries in its general account records to reflect
the transfer promptly following the transfer.
Section 2.08. Tax Treatment.
The Depositor and the Transferor intend that the Notes will be
indebtedness of the Transferor for federal, state, and local income and
franchise tax purposes and for purposes of any other tax imposed on or
measured by income. The Transferor and the Depositor agree to treat the Notes
for purposes of federal, state, and local income or franchise taxes and any
other tax imposed on or measured by income, as indebtedness of the Transferor
secured by the assets of the Trust and to report the transactions contemplated
by this Agreement on all applicable tax returns in a manner consistent with
this treatment. The Administrator pursuant to the Administration Agreement
will prepare and file all tax reports required under this Agreement on behalf
of the Trust.
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Section 2.09. Representations and Warranties of the Depositor.
The Depositor represents and warrants to the Indenture Trustee on behalf
of the Noteholders and the Credit Enhancer as follows:
(i) This Agreement constitutes a valid and legally binding
obligation of the Depositor, enforceable against the Depositor in
accordance with its terms.
(ii) Immediately before the sale and assignment by the Depositor
to the Trust of each Mortgage Loan, the Depositor was the sole
beneficial owner of each Mortgage Loan (insofar as the title was
conveyed to it by the Sellers) subject to no prior lien, claim,
participation interest, mortgage, Security Interest, pledge, charge, or
other encumbrance or other interest of any nature.
(iii) As of the Closing Date with respect to the Initial Mortgage
Loans, the relevant Subsequent Closing Date with respect to any
Additional Home Equity Loans, or, with respect to any Eligible
Substitute Mortgage Loan, the applicable date of substitution, the
Depositor has transferred all right, title, and interest in the Eligible
Substitute Mortgage Loan to the Trust.
(iv) The Depositor has not transferred the Mortgage Loans to the
Trust with any intent to hinder, delay, or defraud any of its creditors.
Section 2.10. Sponsor Loss Coverage Obligation.
The Sponsor, for the benefit of the Noteholders and the Credit Enhancer,
agrees that it will pay the Sponsor Loss Coverage Obligation for any Payment
Date as reflected in the applicable Servicing Certificate to the Indenture
Trustee for deposit in the Payment Account no later than the Business Day
before the Payment Date.
ARTICLE III
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 3.01. The Master Servicer.
The Master Servicer shall service and administer the Mortgage Loans in a
manner consistent with the terms of this Agreement and with general industry
practice and shall have full power and authority, acting alone or through a
subservicer, (i) to execute and deliver, on behalf of the Noteholders, the
Trust, and the Indenture Trustee, 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. The Master Servicer shall remain responsible to the parties to
this Agreement and the Credit Enhancer for its obligations under this
Agreement. Any amounts received by any subservicer on a Mortgage Loan shall be
considered to have been received by the Master Servicer whether or not
actually received by it. Without limiting the generality of the
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foregoing, the Master Servicer may execute and deliver, on behalf of itself,
the Noteholders, and the Indenture Trustee, or any of them, any instruments of
satisfaction or cancellation, or of partial or full release or discharge, and
all other comparable instruments, with respect to the Mortgage Loans and with
respect to the Mortgaged Properties, in each case to the extent not
inconsistent with this Agreement.
At the request of a Servicing Officer, the Indenture Trustee shall
furnish the Master Servicer with any powers of attorney and other documents
appropriate to enable the Master Servicer to carry out its servicing and
administrative duties under this Agreement. The Master Servicer in this
capacity may also consent to the placing of a lien senior to that of any
mortgage on the related Mortgaged Property, if
(i) the new senior lien secures a mortgage loan that refinances an
existing first mortgage loan and
(ii) either
(a) the Loan-to-Value Ratio of the new mortgage loan
(without taking into account any closing costs that may be
financed by the new mortgage loan) is equal to or less than the
Loan-to-Value Ratio of the first mortgage loan to be replaced (for
purposes of calculating the Loan-to-Value Ratio, the Valuation of
the Mortgaged Property will be measured by the lesser of (A) the
Valuation of the Mortgaged Property as of the Cut-off Date and (B)
the Valuation of the Mortgaged Property as of the date of the
refinancing referenced in clause (i)) or
(b) the Combined Loan-to-Value Ratio of the new mortgage
loan (without taking into account any closing costs that may be
financed by the new mortgage loan) and the existing Mortgage Loan
is equal to less than 70% (for purposes of calculating the
Combined Loan-to-Value Ratio, the Valuation of the Mortgaged
Property will be measured as the lesser of (A) the Valuation of
the Mortgage Loan as of the Cut-off Date and (B) the Valuation of
the Mortgage Loan as of the date of the refinancing referenced in
clause (i)).
The aggregate Asset Balance of all the Mortgage Loans with respect to which
the senior lien may be so modified may not exceed 50% of the Original Note
Principal Balance.
The Master Servicer may also, without approval from the Rating Agencies
or the Credit Enhancer, increase the Credit Limits on Mortgage Loans if
(i) new appraisals are obtained and the weighted average Combined
Loan-to-Value Ratios of the Mortgage Loans after giving effect to the
increase are less than or equal to the weighted average Combined
Loan-to-Value Ratios of the Mortgage Loans as of the Cut-off Date and
(ii) the increases are consistent with the Master Servicer's
underwriting policies.
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In addition, the Master Servicer may increase the Credit Limits on Mortgage
Loans having aggregate Asset Balances of up to an additional 5.00% of the
Original Note Principal Balance, if
(w) the increase does not cause the Combined Loan-to-Value Ratio
of the Mortgage Loans in the related Loan Group to exceed 100%,
(x) the increase in the Credit Limit of a Mortgage Loan does not
cause the Combined Loan-to-Value Ratio of the Mortgage Loan to exceed
100%,
(y) the increase in the Credit Limit of a Mortgage Loan does not
cause the Combined Loan-to-Value Ratio of the Mortgage Loan to increase
by more than 25% (for example, a Combined Loan-to-Value Ratio of 50% can
be increased to 75%, a Combined Loan-to-Value Ratio of 60% can be
increased to 85%, and so forth), and
(z) the increase is consistent with the Master Servicer's
underwriting policies.
Furthermore, the Sponsor, without prior approval from the Rating
Agencies or the Credit Enhancer, may solicit mortgagors for a reduction in
Loan Rates. The Loan Rates of Mortgage Loans in a Loan Group having Asset
Balances at the time of the proposed modification that aggregate over time not
more than 5.0% of the related Original Note Principal Balance may be subject
to reduction. If a mortgagor notifies the Sponsor or the Master Servicer that
it wants a reduction in Loan Rate, the Sponsor shall purchase the Mortgage
Loan from the Trust as described below. Effective immediately on the same
Business Day on which the Sponsor delivers the Purchase Price for the relevant
Mortgage Loan to the Master Servicer, all interest of the Trust in the
relevant Mortgage Loan shall automatically be transferred and assigned to the
Sponsor and all benefits and burdens of ownership of the relevant Mortgage
Loan, including the right to accrued interest on it from the date of purchase
and the risk of default on the Mortgage Loan, shall pass to the Sponsor.
The Master Servicer shall promptly deliver to the Indenture Trustee a
certification signed by a Servicing Officer to the effect that all of the
requirements for a purchase of a Mortgage Loan in connection with a request by
a mortgagor for a reduction in Loan Rate have been satisfied with respect to
the relevant Mortgage Loan. The Sponsor shall deliver the Purchase Price for
the relevant Mortgage Loan to the Master Servicer promptly after a mortgagor
notifies the Sponsor or the Master Servicer that it wants a reduction in Loan
Rate, and the Master Servicer shall deposit the Purchase Price for the
modified Mortgage Loan in the Collection Account pursuant to Section 3.02
within one Business Day after its receipt of the Purchase Price for the
modified Mortgage Loan. Upon receipt by the Indenture Trustee of written
notification of the deposit signed by a Servicing Officer, the Indenture
Trustee shall release to the Sponsor the related Mortgage File and shall
execute and deliver any instruments of transfer or assignment delivered to it
for execution and reasonably acceptable to it, in each case without recourse,
representation, or warranty, necessary to release the Mortgage Loan from the
lien of the Indenture and vest in the Sponsor the Mortgage Loan previously
transferred and assigned pursuant to this provision. The certification and
written notification of the deposit each
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from a Servicing Officer may be delivered to the Indenture Trustee
electronically, and to the extent the transmission originates on its face from
a Servicing Officer, need not be manually signed.
In addition, the Master Servicer may agree to changes in the terms of a
Mortgage Loan at the request of the mortgagor if the changes (i) do not
materially and adversely affect the interests of Noteholders, the Transferor,
or the Credit Enhancer, and (ii) are consistent with prudent and customary
business practice as evidenced by a certificate signed by a Servicing Officer
delivered to the Indenture Trustee and the Credit Enhancer.
In addition, the Master Servicer may solicit mortgagors to change any
other terms of the related Mortgage Loans if the changes (i) do not materially
and adversely affect the interests of the Noteholders, the Transferor, or the
Credit Enhancer and (ii) are consistent with prudent and customary business
practice as evidenced by a certificate signed by a Servicing Officer delivered
to the Indenture Trustee and the Credit Enhancer. Nothing in this Agreement
shall limit the right of the Master Servicer to solicit mortgagors with
respect to new loans (including mortgage loans) that are not Mortgage Loans.
The Master Servicer may register any Mortgage Loan on the MERS(R)
System, or cause the removal from registration of any Mortgage Loan on the
MERS(R) System, and execute and deliver, on behalf of the Owner Trustee, any
instruments of assignment and other comparable instruments with respect to the
assignment or re-recording of a mortgage in the name of MERS, solely as
nominee for the Owner Trustee and its successors and assigns.
For so long as any Mortgage Loan is registered on the MERS(R) System,
the Master Servicer shall maintain in good standing its membership in MERS and
shall comply in all material respects with the rules and procedures of MERS in
connection with the servicing of the Mortgage Loans that are registered with
MERS. If any Mortgage Loans are registered on the MERS(R) System, the Master
Servicer may cause MERS to execute and deliver an assignment of mortgage in
recordable form to transfer any of the Mortgage Loans registered on the
MERS(R) System from MERS to the Owner Trustee. The Master Servicer shall
promptly notify MERS of any transfer of beneficial ownership or release of any
Security Interest in any MOM Loan.
The relationship of the Master Servicer to the Trust and the Indenture
Trustee under this Agreement is intended by the parties to be that of an
independent contractor and not that of a joint venturer, partner, or agent of
the Trust or the Indenture Trustee.
(b) If the rights and obligations of the Master Servicer are terminated
under this Agreement, any successor to the Master Servicer in its sole
discretion may terminate the existing subservicer arrangements with any
subservicer or assume the terminated Master Servicer's rights under those
subservicing arrangements to the extent permitted by applicable law and the
subservicing agreements.
Section 3.02. Collection of Certain Mortgage Loan Payments;
Establishment of Accounts.
(a) The Master Servicer shall make reasonable efforts to collect all
payments called for under the Mortgage Loans, and shall follow the collection
procedures it follows for
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mortgage loans in its servicing portfolio comparable to the Mortgage Loans, to
the extent consistent with this Agreement. Consistent with the foregoing, and
without limiting the generality of the foregoing, the Master Servicer may in
its discretion (i) waive any late payment charge or any assumption fees or
other fees that may be collected in the ordinary course of servicing the
Mortgage Loans and (ii) arrange with a mortgagor a schedule for the payment of
interest due and unpaid if the arrangement is consistent with the Master
Servicer's policies with respect to the mortgage loans it owns or services.
Notwithstanding any arrangement, the Mortgage Loans will be included in the
information regarding delinquent Mortgage Loans in the Servicing Certificate
and monthly statement to Noteholders pursuant to Section 7.04 of the
Indenture.
(b) The Master Servicer shall establish and maintain a trust account
(the "Collection Account") with the title specified in the Adoption Annex. The
Collection Account shall be an Eligible Account and will initially be
established by the Master Servicer at Countrywide Bank, N.A., which is an
affiliate of the Master Servicer. The Master Servicer or the Sponsor, as the
case may be, shall deposit or cause to be deposited in the Collection Account
within two Business Days following its receipt the following payments and
collections received or made by it (without duplication):
(1) all collections on the Mortgage Loans;
(2) the amounts deposited to the Collection Account pursuant to
Section 4.03;
(3) Net Liquidation Proceeds net of any related Foreclosure
Profit;
(4) Insurance Proceeds; and
(5) any amounts required to be deposited pursuant to Section 7.01.
No other amounts are to be deposited to the Collection Account,
including amounts representing Foreclosure Profits, fees (including annual
fees) or late charge penalties payable by mortgagors, or amounts received by
the Master Servicer for the accounts of mortgagors for application towards the
payment of taxes, insurance premiums, assessments, excess pay off amounts, and
similar items. The Master Servicer shall remit all Foreclosure Profits to the
Sponsor. The Master Servicer may retain, from payments of interest on the
Mortgage Loans in each Loan Group in each Collection Period, the related
Servicing Fee for the Collection Period and any unreimbursed optional advance
with respect to the related Loan Group made by the Master Servicer pursuant to
Section 4.03.
The Master Servicer may make a net deposit in the Collection Account of
the amounts required by this Section.
On the Business Day before each Payment Date to the extent on deposit in
the Collection Account, the Master Servicer shall withdraw from the Collection
Account and remit to the Indenture Trustee, the amount to be applied on that
Payment Date by the Indenture Trustee pursuant to Section 8.03 of the
Indenture with respect to both Loan Groups, and the Indenture Trustee will
deposit that amount in the Payment Account pursuant to the Indenture.
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The Indenture Trustee shall hold amounts deposited in the Payment
Account as trustee for the Noteholders, the Transferor, and the Credit
Enhancer. In addition, the Master Servicer shall notify the Indenture Trustee
and the Credit Enhancer on each Determination Date of the amount of
collections in the Collection Account to be transferred to the Payment Account
and their allocation to Interest Collections and Principal Collections for the
Mortgage Loans in each Loan Group for the related Payment Date. Following this
notification, the Master Servicer may withdraw from the Collection Account and
retain any amounts that constitute income realized from the investment of the
collections. The Master Servicer will be entitled to receive, as additional
servicing compensation, income earned on the collections in the Payment
Account.
Amounts on deposit in the Collection Account will be invested in
Eligible Investments maturing no later than the day before the next Payment
Date at the direction of the Master Servicer. All income realized from any
investment in Eligible Investments of funds in the Collection Account shall be
the property of the Master Servicer and may be withdrawn from time to time
from the Collection Account. Any losses incurred on these investments that
reduce their principal amount shall be deposited in the Collection Account by
the Master Servicer out of its own funds immediately as realized.
(c) Upon its receipt of the Officer's Certificate specified in Section
2.01(b)(ii)(I) confirming satisfaction of the conditions precedent to
subsequent additions in Section 2.01(c) on a Subsequent Closing Date
designated by the Depositor, the Indenture Trustee shall withdraw from the
Additional Loan Account and set aside for the benefit of the Depositor for
later delivery pursuant to Section 3.02(d) an amount equal to the Cut-off Date
Asset Balance in the Transfer Document to purchase the Additional Home Equity
Loans covered by the Transfer Document.
(d) On the date on which the revised Mortgage Loan Schedule reflecting
the addition of the Additional Home Equity Loans covered by a Transfer
Document is delivered to the Indenture Trustee and the Credit Enhancer along
with an opinion of counsel to the effect that a court in a bankruptcy context
addressing the transfer of the Additional Home Equity Loans would characterize
the transfer as a sale rather than as a secured lending, the Indenture Trustee
shall deliver to the order of the Depositor an amount in cash equal to the
actual Cut-off Date Asset Balance of the relevant Additional Home Equity
Loans, and to the Master Servicer any earnings on those funds since the
relevant Subsequent Closing Date. If after that payment any funds remain from
the original set aside with respect to the Transfer Document pursuant to
Section 2.01(b), then they shall be returned to the Additional Loan Account.
If on the Latest Subsequent Closing Date any funds remain in the Indenture
Trustee's possession from any set aside under Section 3.01(b), then they shall
be returned to the Additional Loan Account.
Section 3.03. Deposits to Payment Account.
The Master Servicer shall
(i) on the Business Day before each of the first three Payment
Dates, deposit in the Payment Account any shortfall in the amount
required to pay the Note Interest on those Payment Dates for each Class
of Notes resulting solely from the failure of certain Mortgage Loans to
be fully indexed and
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(ii) on the Business Day before the first Payment Date, deposit in
the Payment Account
(A) an amount for each Loan Group equal to the excess of the
aggregate amount payable pursuant to Sections 8.03(a)(i) and (ii)
of the Indenture for that Loan Group on the first Payment Date
over what the aggregate Investor Interest Collections for that
Loan Group would be if the Minimum Monthly Payments on the related
Mortgage Loans due during the first Collection Period were made on
each Mortgage Loan and
(B) for each Loan Group any amounts representing payments
on, and any collections in respect of, the Mortgage Loans in each
Loan Group received after the Cut-off Date and before the Closing
Date (exclusive of payments of accrued interest due by the Cut-off
Date).
Section 3.04. Maintenance of Hazard Insurance; Property Protection
Expenses.
The Master Servicer shall cause to be maintained for each Mortgage Loan
hazard insurance naming the Master Servicer or the related subservicer as loss
payee under it providing extended coverage in an amount that is at least equal
to the lesser of (i) the maximum insurable value of the improvements securing
the Mortgage Loan from time to time or (ii) the combined principal balance
owing on the Mortgage Loan and any mortgage loan senior to the Mortgage Loan
from time to time. The Master Servicer shall also maintain on property
acquired through foreclosure, or by deed in lieu of foreclosure, hazard
insurance with extended coverage in an amount which is at least equal to the
lesser of (i) the maximum insurable value from time to time of the
improvements that are a part of the property or (ii) the combined principal
balance owing on the Mortgage Loan and any mortgage loan senior to the
Mortgage Loan at the time of the foreclosure or deed in lieu of foreclosure
plus accrued interest and the good faith estimate of the Master Servicer of
related Liquidation Expenses to be incurred.
Amounts collected by the Master Servicer under these policies shall be
deposited in the Collection Account to the extent called for by Section 3.02.
The hazard insurance to be maintained for the related Mortgage Loan shall
include flood insurance when the Mortgaged Property is located in a federally
designated flood area. The flood insurance shall be in the amount required
under applicable guidelines of the Federal Flood Emergency Act. No other
insurance need be carried on any Mortgaged Properties pursuant to this
Agreement.
Section 3.05. Assumption and Modification Agreements.
When a Mortgaged Property has been or is about to be conveyed by the
mortgagor, the Master Servicer shall exercise its right to accelerate the
maturity of the Mortgage Loan consistent with the then current practice of the
Master Servicer and without regard to the inclusion of the Mortgage Loan in
the Trust. If it elects not to enforce its right to accelerate or if it is
prevented from doing so by applicable law, the Master Servicer (so long as its
action conforms with the underwriting standards generally acceptable in the
industry at the time for new origination) may enter into an assumption and
modification agreement with the person to whom the Mortgaged Property has been
or is about to be conveyed, pursuant to which that
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person becomes liable under the Credit Line Agreement and, to the extent
permitted by applicable law, the mortgagor remains liable on it. The Master
Servicer shall notify the Indenture Trustee that any assumption and
modification agreement has been completed by delivering to the Indenture
Trustee an Officer's Certificate certifying that the agreement is in
compliance with this Section and by forwarding the original copy of the
assumption and modification agreement to the Indenture Trustee. Any assumption
and modification agreement shall be a part of the related Mortgage File. No
change in the terms of the related Credit Line Agreement may be made by the
Master Servicer in connection with the assumption to the extent that the
change would not be permitted to be made in the original Credit Line Agreement
pursuant to Section 3.01(a). Any fee collected by the Master Servicer for
entering into the assumption and modification agreement will be retained by
the Master Servicer as additional servicing compensation.
Section 3.06. Realization Upon Defaulted Mortgage Loans; Repurchase of
Certain Mortgage Loans.
The Master Servicer shall foreclose or otherwise comparably convert to
ownership Mortgaged Properties securing defaulted Mortgage Loans when, in the
opinion of the Master Servicer based on normal and usual practices and
procedures, no satisfactory arrangements can be made for collection of
delinquent payments pursuant to Section 3.02. Alternatively, the Master
Servicer may forego foreclosure and charge off a defaulted Mortgage Loan if in
the Master Servicer's opinion the proceeds of foreclosure and liquidation are
likely to produce an amount less than the unpaid principal balance of senior
liens on the Mortgaged Property. If the Master Servicer has actual knowledge
or reasonably believes that any Mortgaged Property is affected by hazardous or
toxic wastes or substances and that the acquisition of the Mortgaged Property
would not be commercially reasonable, then the Master Servicer will not cause
the Trust to acquire title to the Mortgaged Property in a foreclosure or
similar proceeding. In connection with foreclosure or other conversion (or a
decision to forego foreclosure and charge off a defaulted Mortgage Loan), the
Master Servicer shall follow the practices and procedures it deems appropriate
and that are normal and usual in its general mortgage servicing activities and
that satisfy the requirements of the issuer of the Loan Insurance Policy with
respect to the Mortgage Loans covered by it, including advancing funds to
correct a default on a related senior mortgage loan. However, the Master
Servicer shall not be required to expend its own funds in connection with any
foreclosure or towards the correction of any default on a related senior
mortgage loan or restoration of any property unless it determines, in its sole
discretion, that the expenditure will increase Net Liquidation Proceeds and
the Master Servicer acts in accordance with the servicing standards in this
Agreement.
If title to any Mortgaged Property is acquired in foreclosure or by deed
in lieu of foreclosure, the deed or certificate of sale shall be issued to the
Indenture Trustee, or to its nominee on behalf of Noteholders. The Master
Servicer shall dispose of the Mortgaged Property as soon as practicable in a
manner that maximizes its Liquidation Proceeds.
The Master Servicer, in its sole discretion, may purchase for its own
account from the Trust any Mortgage Loan that is 151 days or more delinquent.
The price for any Mortgage Loan
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purchased shall be 100% of its Asset Balance plus accrued interest on it at
the applicable Loan Rate from the date through which interest was last paid by
the related mortgagor to the first day of the month in which the purchase
price is to be distributed to the Noteholders. The purchase price shall be
deposited in the Collection Account. The Master Servicer may only exercise
this right on or before the penultimate day of the calendar month in which the
Mortgage Loan became 151 days delinquent. Any delinquent Mortgage Loan that
becomes current but thereafter again becomes 151 days or more delinquent may
be purchased by the Master Servicer pursuant to this Section.
Upon receipt of a certificate from the Master Servicer in the form of
Exhibit C, the Indenture Trustee shall release to the Master Servicer the
related Mortgage File and shall execute and deliver any instruments of
transfer prepared by the Master Servicer, without recourse, necessary to vest
in the purchaser of the Mortgage Loan any Mortgage Loan released to it and the
Master Servicer shall succeed to all the Trust's interest in the Mortgage Loan
and all related security and documents. This assignment shall be an assignment
outright and not for security. The Master Servicer shall then own the Mortgage
Loan, and all security and documents, free of any further obligation to the
Trust, the Owner Trustee, the Indenture Trustee, the Credit Enhancer, the
Transferor, or the Noteholders with respect to it. The certification by the
Master Servicer may be delivered to the Indenture Trustee electronically, and
if it is, its form may differ from Exhibit C so long as it contains the
information required by Exhibit C (that is, the relevant loan number, at least
one of the five reasons for requesting file as found in Exhibit C, and the
acknowledgment that the Mortgage File will be held in accordance with this
Agreement and will promptly be returned to the Indenture Trustee when the need
for it by the Master Servicer no longer exists unless the Mortgage Loan has
been liquidated or retransferred), and to the extent the transmission
originates on its face from a Servicing Officer, need not be manually signed.
Section 3.07. Indenture Trustee to Cooperate.
By each Payment Date, the Master Servicer will notify the Indenture
Trustee whenever the Asset Balance of any Mortgage Loan has been paid in full
during the preceding Collection Period. A Servicing Officer shall certify that
the Mortgage Loan has been paid in full and that all amounts received in
connection with the payment that are required to be deposited in the
Collection Account pursuant to Section 3.02 have been so deposited or
credited. Upon payment in full pursuant to Section 3.01, the Master Servicer
is authorized to execute an instrument of satisfaction regarding the related
mortgage, which instrument of satisfaction shall be recorded by the Master
Servicer if required by applicable law and be delivered to the person entitled
to it.
If the mortgage has been registered on the MERS(R) System, the Master
Servicer shall cause the removal of the mortgage from registration on the
MERS(R) System and execute and deliver, on behalf of the Indenture Trustee and
the Noteholders, any instruments of satisfaction or cancellation or of partial
or full release. No expenses incurred in connection with the instrument of
satisfaction or transfer shall be reimbursed from amounts deposited in the
Collection Account or the Payment Account.
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As appropriate for the servicing or foreclosure of any Mortgage Loan, or
in connection with the payment in full of the Asset Balance of any Mortgage
Loan, upon request of the Master Servicer and delivery to the Indenture
Trustee of a Request for Release substantially in the form of Exhibit C signed
by a Servicing Officer, the Indenture Trustee shall release the related
Mortgage File to the Master Servicer and the Indenture Trustee shall execute
any documents provided by the Master Servicer necessary to the prosecution of
any proceedings or the taking of other servicing actions. The Request for
Release by a Servicing Officer may be delivered to the Indenture Trustee
electronically, and if it is, its form may differ from Exhibit C so long as it
contains the information required by Exhibit C (that is, the relevant loan
number, at least one of the five reasons for requesting file as found in
Exhibit C, and the acknowledgment that the Mortgage File will be held in
accordance with this Agreement and will promptly be returned to the Indenture
Trustee when the need for it by the Master Servicer no longer exists unless
the Mortgage Loan has been liquidated or retransferred), and to the extent the
transmission originates on its face from a Servicing Officer, need not be
manually signed. The Master Servicer shall return the Mortgage File to the
Indenture Trustee when the need for it by the Master Servicer no longer
exists, unless the Mortgage Loan is liquidated, in which case, upon receipt of
a certificate of a Servicing Officer similar to that specified above, the
Request for Release shall be released by the Indenture Trustee to the Master
Servicer.
To facilitate the foreclosure of the mortgage securing any Mortgage Loan
that is in default following recordation of the assignments of mortgage in
accordance with this Agreement, if so requested by the Master Servicer, the
Indenture Trustee shall execute an appropriate assignment in the form provided
to the Indenture Trustee by the Master Servicer to assign the Mortgage Loan
for the purpose of collection to the Master Servicer or a subservicer. The
assignment shall unambiguously indicate that the assignment is for the purpose
of collection only. The Master Servicer will then bring all required actions
in its own name and otherwise enforce the terms of the Mortgage Loan and
deposit the Net Liquidation Proceeds, exclusive of Foreclosure Profits, in the
Collection Account. If all delinquent payments due under the Mortgage Loan are
paid by the mortgagor and any other defaults are cured, then the Master
Servicer shall promptly reassign the Mortgage Loan to the Indenture Trustee
and return the related Mortgage File to the place where it was being
maintained.
Section 3.08. Servicing Compensation; Payment of Certain Expenses by
Master Servicer.
The Master Servicer may retain the Servicing Fee pursuant to Section
3.02 as compensation for its services in servicing the Mortgage Loans.
Moreover, additional servicing compensation in the form of late payment
charges or other receipts not required to be deposited in the Collection
Account (other than Foreclosure Profits) shall be retained by the Master
Servicer. The Master Servicer must pay all expenses incurred by it in
connection with its activities under this Agreement (including payment of all
other fees and expenses not expressly stated under this Agreement to be for
the account of another person) and shall not be entitled to reimbursement
under this Agreement except as specifically provided in this Agreement.
Liquidation Expenses are reimbursable to the Master Servicer
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FIRST, from related Liquidation Proceeds and
SECOND, from the Payment Account from funds attributable to the related
Loan Group pursuant to Section 8.03(a)(x) of the Indenture.
Section 3.09. Annual Statement as to Compliance.
(a) The Master Servicer will deliver to the Indenture Trustee, the
Credit Enhancer, and the Rating Agencies, by the date in each year specified
in the Adoption Annex, beginning on the date specified in the Adoption Annex,
an Officer's Certificate stating that (i) a review of the activities of the
Master Servicer during the preceding fiscal year (or the applicable shorter
period for the first report) and of its performance under this Agreement has
been made under the officer's supervision and (ii) to the best of the
officer's knowledge, based on the review, the Master Servicer has fulfilled
all of its material obligations under this Agreement throughout the fiscal
year, or, if there has been a default in the fulfillment of those obligations,
specifying each default known to the officer and its nature and status.
(b) Within five Business Days after obtaining knowledge of it, the
Master Servicer shall notify the Indenture Trustee, the Credit Enhancer, and
each of the Rating Agencies of any event that with the giving of notice or the
lapse of time would become an Event of Servicing Termination by delivering an
Officer's Certificate describing the event.
Section 3.10. Annual Servicing Report.
By the date in each year specified in the Adoption Annex, beginning on
the date specified in the Adoption Annex, the Master Servicer, at its expense,
shall cause a firm of nationally recognized independent public accountants
(who may also render other services to the Master Servicer) to furnish a
report to the Indenture Trustee, the Credit Enhancer, and each Rating Agency
to the effect that the firm has examined certain documents and records
relating to the servicing of mortgage loans during the most recent fiscal year
then ended under sale and servicing agreements or pooling and servicing
agreements (substantially similar to this Agreement, including this
Agreement), that the examination was conducted substantially in compliance
with the audit guide for audits of non supervised mortgagees approved by the
Department of Housing and Urban Development for use by independent public
accountants (to the extent that the procedures in the audit guide are
applicable to the servicing obligations in those agreements), and that the
examination has disclosed no items of noncompliance with this Agreement that,
in the opinion of the firm, are material, except for the items of
noncompliance described in the report.
Section 3.11. Access to Certain Documentation and Information Regarding
the Mortgage Loans.
(a) The Master Servicer shall provide to the Indenture Trustee, the
Credit Enhancer, any Noteholders or Note Owners that are federally insured
savings and loan associations, the Office of Thrift Supervision, successor to
the Federal Home Loan Bank Board, the FDIC, and the supervisory agents and
examiners of the Office of Thrift Supervision access to the documentation
regarding the Mortgage Loans required by applicable regulations of the Office
of Thrift Supervision and the FDIC (acting as operator of the Savings
Association
27
Insurance Fund or the Bank Insurance Fund). The Master Servicer will provide
access without charge but only after reasonable notice and during normal
business hours at the offices of the Master Servicer. Nothing in this Section
shall derogate from the obligation of the Master Servicer to observe any
applicable law prohibiting disclosure of information regarding the mortgagors
and the failure of the Master Servicer to provide access as provided in this
Section as a result of this obligation shall not constitute a breach of this
Section.
(b) The Master Servicer shall supply the information needed to make
required payments and to furnish required reports to Noteholders and to make
any claim under the Policy, in the form the Indenture Trustee reasonably
requests, to the Indenture Trustee and any Paying Agent by the start of the
Determination Date preceding the related Payment Date.
Section 3.12. Maintenance of Certain Servicing Insurance Policies.
The Master Servicer shall during the term of its service as master
servicer maintain in force (i) policies of insurance covering errors and
omissions in the performance of its obligations as master servicer under this
Agreement and (ii) a fidelity bond covering its officers, employees, or
agents. Each policy and bond together shall comply with the requirements from
time to time of Xxxxxx Xxx for persons performing servicing for mortgage loans
purchased by Xxxxxx Mae.
Section 3.13. Reports to the Securities and Exchange Commission.
The Administrator shall, on behalf of the Trust, effect filing with the
Securities and Exchange Commission of any periodic reports required to be
filed under the Securities Exchange Act of 1934 and the rules and regulations
of the Securities and Exchange Commission under it. At the request of the
Administrator, each of the Sponsor, the Master Servicer, the Depositor, the
Indenture Trustee, and the Transferor shall cooperate with the Administrator
in the preparation of these reports and shall provide to the Indenture Trustee
in a timely manner all information or documentation the Indenture Trustee
reasonably requests in connection with the performance of its obligations
under this Section. The Master Servicer shall prepare, execute, and deliver
all certificates or other documents required to be delivered by the Trust
pursuant to the Xxxxxxxx-Xxxxx Act of 2002.
Section 3.14. Tax Treatment.
The Transferor shall treat the Mortgage Loans as its property for all
federal, state, or local tax purposes and shall report all income earned
thereon (including amounts payable as fees to the Master Servicer) as its
income for income tax purposes. The Master Servicer shall prepare all tax
information required by law to be distributed to Noteholders. The Master
Servicer shall not be liable for any liabilities, costs, or expenses of the
Trust, the Noteholders, the Transferor, or the Note Owners arising under any
tax law, including federal, state, or local income and franchise or excise
taxes or any other tax imposed on or measured by income (or any interest or
penalty with respect to any tax or arising from a failure to comply with any
tax requirement).
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Section 3.15. Information Required by the Internal Revenue Service
Generally and Reports of Foreclosures and Abandonments of Mortgaged Property.
The Master Servicer shall prepare and deliver all federal and state
information reports when and as required by all applicable state and federal
income tax laws. In particular, with respect to the requirement under Section
6050J of the Code for reports of foreclosures and abandonments of any
mortgaged property, the Master Servicer shall file reports relating to each
instance occurring during the previous calendar year in which the Master
Servicer (i) on behalf of the Indenture Trustee acquires an interest in any
Mortgaged Property through foreclosure or other comparable conversion in full
or partial satisfaction of a Mortgage Loan, or (ii) knows or has reason to
know that any Mortgaged Property has been abandoned. The reports from the
Master Servicer shall be in form, substance, and timing sufficient to meet the
reporting requirements imposed by Section 6050J of the Code.
Section 3.16. The Loan Insurance Policy.
The Master Servicer shall take whatever action is appropriate to
maximize the amounts payable under the Loan Insurance Policy and to service
the Mortgage Loans in the manner required by the Loan Insurance Policy. The
Master Servicer shall prepare and submit all claims eligible for submission
under the Loan Insurance Policy and shall perform all of the obligations of
the insured under the Loan Insurance Policy other than those in Section
6.15(a) of the Indenture to be performed by the Co-Trustee. If the Loan
Insurance Policy is terminated for any reason other than the exhaustion of its
coverage, or if the claims-paying ability rating of its issuer is reduced to
below investment grade, or, with respect to the initial issuer of such policy,
to "[A+]" or below by Standard & Poor's or "[A1]" or below by Moody's, the
Master Servicer will use its best efforts to obtain a comparable policy from
an insurer that is acceptable to the Rating Agencies and consented to by the
Credit Enhancer (which consent shall not be unreasonably withheld). The
replacement policy will provide coverage equal to the then remaining coverage
of the Loan Insurance Policy if available. However, if the premium cost of a
replacement policy exceeds the premium cost of the Loan Insurance Policy, the
coverage amount of the replacement policy will be reduced so that its premium
cost will not exceed the premium cost of the Loan Insurance Policy. The Master
Servicer will withdraw from the Collection Account (to the extent of available
funds) and forward to the Co-Trustee (1) on or before 12:00 NOON (New York
City time) on the 45th day following the Closing Date, the initial premium due
under the Loan Insurance Policy, (2) on or before 12:00 NOON (New York City
time) on each Payment Date, the monthly premium due under the Loan Insurance
Policy for that Payment Date, and (3) on the due date therefor, any other
amount owed to the Loan Insurance Policy Provider under the Loan Insurance
Policy.
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ARTICLE IV
SERVICING CERTIFICATE
Section 4.01. Servicing Certificate.
Not later than each Determination Date, the Master Servicer shall
deliver (a) to the Indenture Trustee, the data necessary to prepare the items
below and the statement for Noteholders required to be prepared pursuant to
Section 4.04 and (b) to the Indenture Trustee, the Owner Trustee, the Sponsor,
the Depositor, the Paying Agent, the Credit Enhancer, and each Rating Agency a
Servicing Certificate (in written form or the form of computer readable media
or such other form as may be agreed to by the Indenture Trustee and the Master
Servicer), together with an Officer's Certificate to the effect that the
Servicing Certificate is correct in all material respects, stating the related
Collection Period, Payment Date, the series number of the Notes, the date of
this Agreement, and:
(i) the aggregate amount of collections received on the Mortgage
Loans in each Loan Group by the Determination Date for the related
Collection Period;
(ii) the aggregate amount of (a) Interest Collections for each
Loan Group for the related Collection Period and (b) Principal
Collections for each Loan Group for the related Collection Period;
(iii) the Investor Floating Allocation Percentage and the Investor
Fixed Allocation Percentage for each Loan Group for the related
Collection Period;
(iv) the Investor Interest Collections and Investor Principal
Collections for each Loan Group for the related Collection Period;
(v) the Interest Collections that are not Investor Interest
Collections and Transferor Principal Collections for each Loan Group for
the related Collection Period;
(vi) the Note Interest and the applicable Note Rate for each Class
of Notes for the related Interest Period;
(vii) the amount of the Note Interest that is not payable to the
Holders of each Class of Notes because of insufficient Investor Interest
Collections for the related Loan Group;
(viii) the Unpaid Investor Interest Shortfall for each Class of
Notes and the amount of interest on the shortfall at the applicable Note
Rate for each Class of Notes applicable from time to time (separately
stated) to be distributed on the related Payment Date;
(ix) the remaining Unpaid Investor Interest Shortfall for each
Class of Notes after the distribution on the related Payment Date;
(x) the amount of any Basis Risk Carryforward for each Class of
Notes in the distribution;
30
(xi) the amount of the remaining Basis Risk Carryforward for each
Class of Notes after giving effect to the related distribution;
(xii) the Accelerated Principal Payment Amount and the portion of
it that will be distributed pursuant to Section 8.03(a)(vii) of the
Indenture for each Loan Group;
(xiii) the amount of payment received on the Loan Insurance
Policy, the amount of such payment expected to be paid on the next
Payment Date and the amount of the remaining coverage under the Loan
Insurance Policy;
(xiv) the Scheduled Principal Collections Payment Amount for each
Loan Group, separately stating its components;
(xv) the amount of any Transfer Deposit Amount for each Loan Group
paid by the Sponsor or the Depositor pursuant to Section 2.07;
(xvi) any accrued Servicing Fees for the Mortgage Loans in each
Loan Group for previous Collection Periods and the Servicing Fee for the
related Collection Period;
(xvii) the Investor Loss Amount for each Loan Group for the
related Collection Period;
(xviii) the aggregate amount of Investor Loss Reduction Amounts
for previous Payment Dates that have not been previously reimbursed to
the Holders of each Class of Notes pursuant to Section 8.03(a)(iv),
Section 8.03(a)(viii), or Section 8.03(c) of the Indenture;
(xix) the aggregate Asset Balance of the Mortgage Loans in each
Loan Group as of the end of the preceding Collection Period and as of
the end of the second preceding Collection Period;
(xx) the amount of payments received on the Sponsor Loss Coverage
Obligation, the amount of such payments expected to be received for the
next Payment Date and the amount of its remaining coverage;
(xxi) the Note Principal Balance for each Class of Notes and loan
factor after giving effect to the payment on each Class of Notes on the
related Payment Date and to any reduction because of the related
Investor Loss Amount;
(xxii) the Transferor Interest and the Available Transferor
Subordinated Amount for each Loan Group after giving effect to the
distribution on the Payment Date;
(xxiii) the aggregate amount of Additional Balances created on the
Mortgage Loans in each Loan Group during the previous Collection Period;
(xxiv) for each Loan Group, the number and aggregate Asset
Balances of Mortgage Loans (x) as to which the Minimum Monthly Payment
is delinquent for 30-59 days, 60-89 days, and 90 or more days,
respectively and (y) that have become REO, in each case as of the end of
the preceding Collection Period;
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(xxv) whether a Rapid Amortization Event has occurred since the
prior Determination Date, specifying the Rapid Amortization Event if one
has occurred;
(xxvi) whether an Event of Servicing Termination has occurred
since the prior Determination Date, specifying the Event of Servicing
Termination if one has occurred;
(xxvii) the amount to be distributed to the Credit Enhancer
pursuant to Section 8.03(a)(vi), Section 8.03(a)(ix), and Section
8.03(a)(xi) of the Indenture, stated separately;
(xxviii) the Guaranteed Principal Payment Amount for each Class of
Notes for the Payment Date;
(xxix) the Credit Enhancement Draw Amount for each Class of Notes
for the related Payment Date;
(xxx) the amount to be distributed on the Mortgage Loans in each
Loan Group to the Transferor pursuant to Section 8.03(a)(xiii) of the
Indenture;
(xxxi) the amount to be paid to the Master Servicer pursuant to
Section 8.03(a)(x) of the Indenture;
(xxxii) the Maximum Rate for the related Collection Period and the
Weighted Average Net Loan Rate for the Mortgage Loans in each Loan
Group;
(xxxiii) the expected amount of any optional advances pursuant to
Section 4.03 by the Master Servicer on the Mortgage Loans in each Loan
Group included in the distribution on the related Payment Date and the
aggregate expected amount of optional advances pursuant to Section 4.03
by the Master Servicer outstanding on the Mortgage Loans in each Loan
Group as of the close of business on the related Payment Date;
(xxxiv) the number and principal balances of any Mortgage Loans in
each Loan Group transferred to the Transferor pursuant to Section 2.06;
(xxxv) in the Servicing Certificates for the first and second
Payment Dates, the number and Cut-off Date Asset Balance of Mortgage
Loans for each Loan Group for which the Mortgage Loan File was not
delivered to the Indenture Trustee within 30 days of the Closing Date;
and
(xxxvi) the number and aggregate Asset Balances of Mortgage Loans
in each Loan Group that are in foreclosure.
The Indenture Trustee and the Owner Trustee shall conclusively rely on
the information in a Servicing Certificate for purposes of making
distributions pursuant to Section 8.03 of the Indenture or distributions on
the Transferor Certificates, shall have no duty to inquire into this
information, and shall have no liability in so relying. The format and content
of the Servicing Certificate may be modified by the mutual agreement of the
Master Servicer, the Indenture Trustee, and the Credit Enhancer. The Master
Servicer shall give notice of any changes to the Rating Agencies.
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Section 4.02. Acknowledgement and Cooperation.
The Depositor, the Master Servicer, and the Indenture Trustee
acknowledge that without the need for any further action on the part of the
Credit Enhancer, the Depositor, the Master Servicer, the Indenture Trustee, or
the Note Registrar (a) to the extent the Credit Enhancer makes payments,
directly or indirectly, on account of principal of or interest or other
amounts on any Notes to the Holders of the Notes, the Credit Enhancer will be
fully subrogated to the rights of these Holders to receive the principal and
interest from the Trust and (b) the Credit Enhancer shall be paid the
principal and interest or other amounts but only from the sources and in the
manner provided in this Agreement for the payment of the principal and
interest or other amounts. The Indenture Trustee and the Master Servicer shall
cooperate in all respects with any reasonable request by the Credit Enhancer
for action to preserve or enforce the Credit Enhancer's rights or interests
under this Agreement and the Indenture without limiting the rights or
affecting the interests of the Holders as otherwise stated in this Agreement
and the Indenture.
Section 4.03. Optional Advances of the Master Servicer.
The Master Servicer, in its sole discretion, may advance the interest
component of any delinquent Minimum Monthly Payment (or any portion of it) by
depositing the amount into the Collection Account by the related Determination
Date.
Section 4.04. Statements to Noteholders.
Concurrently with each payment to Noteholders, the Master Servicer shall
deliver to the Indenture Trustee the data necessary to prepare a statement
(the "Monthly Statement") for each Payment Date with the following information
with respect to each Loan Group:
(i) the related Investor Floating Allocation Percentage for the
preceding Collection Period;
(ii) the aggregate amount to be paid to the related Class of
Noteholders;
(iii) the amount of Note Interest in the payment related to each
Class of Notes and the applicable Note Rate;
(iv) the amount of any related Unpaid Investor Interest Shortfall
in the payment;
(v) the amount of the remaining related Unpaid Investor Interest
Shortfall after giving effect to the payment;
(vi) the amount of principal in the payment, separately stating
its components;
(vii) the amount of the reimbursement of previous related Investor
Loss Amounts in the payment;
(viii) the amount of the aggregate of unreimbursed related
Investor Loss Reduction Amounts after giving effect to the payment;
(ix) the amount of any related Basis Risk Carryforward in the
payment;
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(x) the amount of the remaining related Basis Risk Carryforward
after giving effect to the payment;
(xi) the Servicing Fee for the Payment Date;
(xii) the Note Principal Balance of the related Class of Notes and
the factor to seven decimal places obtained by dividing the Note
Principal Balance of the related Class of Notes for the Payment Date by
the Original Note Principal Balance of the related Class of Notes after
giving effect to the payment;
(xiii) each Loan Group Balance as of the end of the preceding
Collection Period;
(xiv) any Credit Enhancement Draw Amount for the related Class of
Notes;
(xv) the number and aggregate Asset Balances of Mortgage Loans in
the related Loan Group as to which the Minimum Monthly Payment is
delinquent for 30-59 days, 60-89 days, and 90 or more days,
respectively, as of the end of the preceding Collection Period;
(xvi) the book value (within the meaning of 12 C.F.R. ss. 571.13
or comparable provision) of any real estate acquired through foreclosure
or grant of a deed in lieu of foreclosure for the related Loan Group;
(xvii) the amount of any optional advances on the Mortgage Loans
in the related Loan Group pursuant to Section 4.03 by the Master
Servicer included in the payment on the Payment Date and the aggregate
amount of optional advances pursuant to Section 4.03 on Mortgage Loans
in the related Loan Group by the Master Servicer outstanding as of the
close of business on the Payment Date;
(xviii) the Note Rate for the related Class of Notes for the
Payment Date;
(xix) the number and principal balances of any Mortgage Loans in
that Loan Group retransferred to the Transferor pursuant to each of
Section 2.04 and Section 2.06;
(xx) the amount of Subordinated Transferor Collections for the
Mortgage Loans in that Loan Group;
(xxi) the amount of Excess Overcollateralization Amount for the
related Class of Notes and the Payment Date;
(xxii) the amount of Loan Insurance Policy payments included in
the payment;
(xxiii) the amount of Sponsor Loss Coverage Obligation payments
included in the payment;
(xxiv) the Available Transferor Subordinated Amount for that Loan
Group and the Payment Date;
(xxv) for the first Payment Date, the number and Cut-off Date
Asset Balance of Mortgage Loans in that Loan Group for which the
Mortgage Loan File was
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not delivered to the Indenture Trustee within 30 days of the Closing
Date or Subsequent Closing Date, as applicable;
(xxvi) the Adjusted Loan Group Balance of each Loan Group; and
(xxvii) the OC Deficiency Amount for each Loan Group.
The amounts furnished pursuant to clauses (ii), (iii) (for Note
Interest), (iv), (v), (vi), (vii), and (viii) above shall be expressed as a
dollar amount per $1,000 increment of Notes.
If the Monthly Statement is not accessible to any of the Noteholders,
the Master Servicer, the Credit Enhancer, or either Rating Agency on the
Indenture Trustee's internet website, the Indenture Trustee shall forward a
hard copy of it to each Noteholder, the Master Servicer, the Credit Enhancer,
and each Rating Agency immediately after the Indenture Trustee becomes aware
that the Monthly Statement is not accessible to any of them via the Indenture
Trustee's internet website. The address of the Indenture Trustee's internet
website where the Monthly Statement will be accessible is
xxxxx://xxx.xxxxxxxx.xxx/xxx. Assistance in using the Indenture Trustee's
internet website may be obtained by calling the Indenture Trustee's customer
service desk at (000) 000-0000. The Indenture Trustee shall notify each
Noteholder, the Master Servicer, the Credit Enhancer, and each Rating Agency
in writing of any change in the address or means of access to the internet
website where the Monthly Statement is accessible.
Within 60 days after the end of each calendar year, the Master Servicer
shall prepare and forward to the Indenture Trustee the information in clauses
(iii) and (vi) above aggregated for the calendar year. This requirement of the
Master Servicer shall be satisfied if substantially comparable information is
provided by the Master Servicer or a Paying Agent pursuant to any requirements
of the Code.
The Indenture Trustee shall prepare (in a manner consistent with the
treatment of the Notes as indebtedness of the Transferor, or as may be
otherwise required by Section 3.14) Internal Revenue Service Form 1099 (or any
successor form) and any other tax forms required to be filed or furnished to
Noteholders for payments by the Indenture Trustee (or the Paying Agent) on the
Notes and shall file and distribute such forms as required by law.
ARTICLE V
THE MASTER SERVICER, THE SPONSOR, AND THE DEPOSITOR
Section 5.01. Liability of the Sponsor, the Master Servicer, and the
Depositor.
The Sponsor, the Depositor, and the Master Servicer shall be liable only
for their express agreements under this Agreement.
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Section 5.02. Merger or Consolidation of, or Assumption of the
Obligations of, the Master Servicer or the Depositor.
Any corporation into which the Master Servicer or the Depositor may be
merged or consolidated, or any corporation resulting from any merger,
conversion, or consolidation to which the Master Servicer or the Depositor is
a party, or any corporation succeeding to the business of the Master Servicer
or the Depositor, shall be the successor of the Master Servicer or the
Depositor, as the case may be, under this Agreement, without the execution or
filing of any paper or any further act on the part of any of the parties to
this Agreement, notwithstanding anything in this Agreement to the contrary.
Section 5.03. Limitation on Liability of the Master Servicer and Others.
Neither the Master Servicer nor any of its directors, officers,
employees, or agents is liable to the Trust, the Owner Trustee, the
Transferor, or the Noteholders for the Master Servicer's taking any action or
refraining from taking any action in good faith pursuant to this Agreement, or
for errors in judgment. This provision shall not protect the Master Servicer
or any of its directors, officers, employees, or agents against any liability
that would otherwise be imposed for misfeasance, bad faith, or gross
negligence in the performance of the duties of the Master Servicer or for
reckless disregard of the obligations of the Master Servicer. The Master
Servicer and any of its directors, officers, employees, or agents may rely in
good faith on any document of any kind prima facie properly executed and
submitted by any person about anything arising under this Agreement.
The Master Servicer and each of its directors, officers, employees, and
agents shall be indemnified by the Trust (but only from funds available from
the applicable Loan Group) and held harmless against any loss, liability, or
expense incurred in connection with any legal action relating to this
Agreement, the Transferor Certificates, or the Notes, other than any loss,
liability, or expense related to any specific Mortgage Loan that is otherwise
not reimbursable pursuant to this Agreement and any loss, liability, or
expense incurred due to its willful misfeasance, bad faith, or gross
negligence in the performance of duties under this Agreement or due to its
reckless disregard of its obligations under this Agreement.
The Master Servicer need not appear in, prosecute, or defend any legal
action that is not incidental to its duties to service the Mortgage Loans in
accordance with this Agreement, and that in its opinion may involve it in any
expense or liability. The Master Servicer may in its sole discretion undertake
any action that it deems appropriate with respect to this Agreement and the
interests of the Noteholders. If so, the reasonable legal expenses and costs
of the action and any resulting liability shall be expenses, costs, and
liabilities of the Trust, and the Master Servicer shall only be entitled to be
reimbursed pursuant to Section 8.03(a)(x) of the Indenture (but only from
funds available from the applicable Loan Group). The Master Servicer's right
to indemnity or reimbursement pursuant to this Section shall survive any
resignation or termination of the Master Servicer pursuant to Section 5.04 or
6.01 with respect to any losses, expenses, costs, or liabilities arising
before its resignation or termination (or arising from events that occurred
before its resignation or termination).
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Section 5.04. Master Servicer Not to Resign.
Subject to Section 5.02, the Master Servicer shall not resign as Master
Servicer under this Agreement except
(i) if the performance of its obligations under this Agreement are
no longer permissible under applicable law or due to applicable law are
in material conflict with any other activities carried on by it or its
subsidiaries or Affiliates that are of a type and nature carried on by
the Master Servicer or its subsidiaries or Affiliates at the date of
this Agreement or
(ii) if
(a) the Master Servicer has proposed a successor Master
Servicer to the Indenture Trustee and the proposed successor
Master Servicer is reasonably acceptable to the Indenture Trustee;
(b) each Rating Agency has delivered a letter to the
Indenture Trustee before the appointment of the successor Master
Servicer stating that the proposed appointment of the successor
Master Servicer as Master Servicer under this Agreement will not
result in the reduction or withdrawal of the then current rating
of the Notes without regard to the Policy; and
(c) the proposed successor Master Servicer is reasonably
acceptable to the Credit Enhancer in its sole discretion, as
evidenced by a letter to the Indenture Trustee.
No resignation by the Master Servicer shall become effective until the
Indenture Trustee or successor Master Servicer designated by the Master
Servicer has assumed the Master Servicer's obligations under this Agreement or
the Indenture Trustee has designated a successor Master Servicer in accordance
with Section 6.02. Any resignation shall not relieve the Master Servicer of
responsibility for any of the obligations specified in Sections 6.01 and 6.02
as obligations that survive the resignation or termination of the Master
Servicer. Any determination permitting the resignation of the Master Servicer
pursuant to clause (i) above shall be evidenced by an Opinion of Counsel to
that effect delivered to the Indenture Trustee and the Credit Enhancer. The
Master Servicer shall have no claim (whether by subrogation or otherwise) or
other action against the Transferor, any Noteholder, or the Credit Enhancer
for any amounts paid by the Master Servicer pursuant to any provision of this
Agreement.
Section 5.05. Delegation of Duties.
In the ordinary course of business, the Master Servicer may delegate any
of its duties under this Agreement at any time to any person who agrees to act
in accordance with standards comparable to those with which the Master
Servicer complies pursuant to Section 3.01, including any of its Affiliates or
any subservicer referred to in Section 3.01. This delegation shall not relieve
the Master Servicer of its obligations under this Agreement and shall not
constitute a resignation within the meaning of Section 5.04.
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Section 5.06. Indemnification by the Master Servicer.
The Master Servicer shall indemnify the Trust, the Owner Trustee, the
Co-Trustee, and the Indenture Trustee against any loss, liability, expense,
damage, or injury suffered or sustained due to the Master Servicer's actions
or omissions in servicing or administering the Mortgage Loans that are not in
accordance with this Agreement, including any judgment, award, settlement,
reasonable attorneys' fees, and other costs or expenses incurred in connection
with the defense of any actual or threatened action, proceeding, or claim.
This indemnification is not payable from the assets of the Trust. This
indemnity shall run directly to and be enforceable by an injured party subject
to any applicable limitations.
The Indenture Trustee and any director, officer, employee, or agent of
the Indenture Trustee shall be indemnified by the Master Servicer and held
harmless against any loss, liability or expense (i) incurred in connection
with any legal action relating to this Agreement, the Indenture, the Custodial
Agreement, the Administration Agreement, the Notes, or the Transferor
Certificates, or in connection with the performance of any of the Indenture
Trustee's duties thereunder, other than any loss, liability or expense
incurred by reason of willful misfeasance, bad faith or negligence in the
performance of any of the Indenture Trustee's duties under this Agreement, the
Indenture, or the Custodial Agreement or by reason of reckless disregard of
the Indenture Trustee's obligations and duties under this Agreement.
The indemnity provisions of this Section shall survive the termination
of this Agreement or the resignation or removal of the Indenture Trustee or
the Co-Trustee under the Indenture.
ARTICLE VI
SERVICING TERMINATION
Section 6.01. Events of Servicing Termination.
If any one of the following events ("Events of Servicing Termination")
shall occur and be continuing:
(i) any failure by the Master Servicer to deposit in the
Collection Account any deposit required to be made under this Agreement
or to remit to the Indenture Trustee amounts required to be deposited to
the Payment Account that continues unremedied either beyond the relevant
Payment Date or for five Business Days after the date when notice of the
failure has been given to the Master Servicer by the Indenture Trustee
or to the Master Servicer and the Indenture Trustee by the Credit
Enhancer or Holders of Notes representing not less than 25% of the
Outstanding Amount of both Classes of Notes; or
(ii) failure by the Master Servicer duly to observe or perform in
any material respect any other covenants or agreements of the Master
Servicer in the Notes or in this Agreement that materially and adversely
affects the interests of the
38
Noteholders or the Credit Enhancer and continues unremedied for 60 days
after the date on which notice of the failure, requiring it to be
remedied, and stating that the notice is a "Notice of Default" under
this Agreement, has been given to the Master Servicer by the Indenture
Trustee or to the Master Servicer and the Indenture Trustee by the
Credit Enhancer or the Holders of Notes representing not less than 25%
of the Outstanding Amount of both Classes of Notes; or
(iii) an Insolvency Event occurs with respect to the Master
Servicer;
then, until the Event of Servicing Termination has been remedied by the Master
Servicer, either the Indenture Trustee (with the consent of the Credit
Enhancer), the Credit Enhancer, or the Holders of Notes representing not less
than 51% of the Outstanding Amount of both Classes of Notes with the consent
of the Credit Enhancer by notice then given to the Master Servicer (and to the
Indenture Trustee if given by the Credit Enhancer or the Holders of Notes) may
terminate all of the rights and obligations of the Master Servicer as servicer
under this Agreement. This notice to the Master Servicer shall also be given
to each Rating Agency and the Credit Enhancer.
From the receipt by the Master Servicer of the notice, all the rights
and obligations of the Master Servicer under this Agreement, whether with
respect to the Notes or the Mortgage Loans or otherwise, shall pass to and be
vested in the Indenture Trustee pursuant to this Section; and the Indenture
Trustee is authorized to execute and deliver, on behalf of the Master
Servicer, as attorney-in-fact or otherwise, any documents, and to do anything
else appropriate to effect the purposes of the notice of termination, whether
to complete the transfer and endorsement of each Mortgage Loan and related
documents, or otherwise. The Master Servicer agrees to cooperate with the
Indenture Trustee in effecting the termination of the rights and obligations
of the Master Servicer under this Agreement, including the transfer to the
Indenture Trustee for the administration by it of all cash amounts that are
held by the Master Servicer and are to be deposited by it in the Collection
Account, or that have been deposited by the Master Servicer in the Collection
Account or are subsequently received by the Master Servicer with respect to
the Mortgage Loans. All reasonable costs and expenses (including attorneys'
fees) incurred in connection with transferring the Mortgage Files to the
successor Master Servicer and amending this Agreement to reflect the
succession as Master Servicer pursuant to this Section shall be paid by the
predecessor Master Servicer (or if the predecessor Master Servicer is the
Indenture Trustee, the initial Master Servicer) on presentation of reasonable
documentation of the costs and expenses.
Notwithstanding the foregoing, a delay in or failure of performance
under Section 6.01(i) for five or more Business Days or under Section 6.01(ii)
for 60 or more days, shall not constitute an Event of Servicing Termination if
the delay or failure could not be prevented by the exercise of reasonable
diligence by the Master Servicer and the delay or failure was caused by an act
of God or the public enemy, acts of declared or undeclared war, public
disorder, rebellion or sabotage, epidemics, landslides, lightning, fire,
hurricanes, earthquakes, floods, or similar causes. The preceding sentence
shall not relieve the Master Servicer from using its best efforts to perform
its obligations in a timely manner in accordance with the terms of this
39
Agreement, and the Master Servicer shall provide the Indenture Trustee, the
Depositor, the Transferor, the Credit Enhancer, and the Noteholders with an
Officers' Certificate giving prompt notice of its failure or delay, together
with a description of its efforts to perform its obligations. The Master
Servicer shall immediately notify the Indenture Trustee of any Events of
Servicing Termination.
In connection with the termination of the Master Servicer if any
mortgage is registered on the MERS(R) System, then, either (i) the successor
Master Servicer, including the Indenture Trustee if the Indenture Trustee is
acting as successor Master Servicer, shall represent and warrant that it is a
member of MERS in good standing and shall agree to comply in all material
respects with the rules and procedures of MERS in connection with the
servicing of the Mortgage Loans that are registered with MERS, or (ii) the
predecessor Master Servicer shall cooperate with the successor Master Servicer
in causing MERS to execute and deliver an assignment of mortgage in recordable
form to transfer all the mortgages registered on the MERS(R) System from MERS
to the Indenture Trustee and to execute and deliver any other notices and
documents appropriate to effect a transfer of those mortgages or the servicing
of the Mortgage Loan on the MERS(R) System to the successor Master Servicer.
The predecessor Master Servicer shall file the assignment in the appropriate
recording office. The successor Master Servicer shall deliver the assignment
to the Indenture Trustee promptly upon receipt of the original with evidence
of recording on it or a copy certified by the public recording office in which
the assignment was recorded.
Section 6.02. Indenture Trustee to Act; Appointment of Successor.
(a) From the time the Master Servicer receives a notice of termination
pursuant to Section 6.01 or resigns pursuant to Section 5.04, the Indenture
Trustee shall be the successor in all respects to the Master Servicer in its
capacity as Master Servicer under this Agreement and the transactions
contemplated by this Agreement and shall be subject to all the obligations of
the Master Servicer under this Agreement except (i) the obligation to
repurchase or substitute for any Mortgage Loan, (ii) with respect to any
representation or warranty of the Master Servicer, or (iii) for any act or
omission of either a predecessor or successor Master Servicer other than the
Indenture Trustee. As its compensation under this Agreement, the Indenture
Trustee shall be entitled to the compensation the Master Servicer would have
been entitled to under this Agreement if no notice of termination had been
given. In addition, the Indenture Trustee will be entitled to compensation
with respect to its expenses in connection with conversion of certain
information, documents, and record keeping, as provided in Section 6.01.
Notwithstanding the above, (i) if the Indenture Trustee is unwilling to
act as successor Master Servicer, or (ii) if the Indenture Trustee is legally
unable to so act, the Indenture Trustee may (in the situation described in
clause (i)) or shall (in the situation described in clause (ii)) appoint, or
petition a court of competent jurisdiction to appoint, any established housing
and home finance institution, bank, or other mortgage loan or home equity loan
servicer having a net worth of not less than $15,000,000 as the successor to
the Master Servicer under this Agreement to assume of any obligations of the
Master Servicer under this Agreement. The successor Master Servicer must be
acceptable to the Credit Enhancer in its sole discretion, as
40
evidenced by the Credit Enhancer's prior consent, as applicable, which consent
shall not be unreasonably withheld. The appointment of the successor Master
Servicer must not result in the qualification, reduction, or withdrawal of the
ratings assigned to the Notes by the Rating Agencies without regard to the
Policy.
Pending appointment of a successor to the Master Servicer, unless the
Indenture Trustee is prohibited by law from so acting, the Indenture Trustee
shall act as Master Servicer. In connection with this appointment and
assumption, the successor shall be entitled to receive compensation out of
payments on Mortgage Loans in an amount equal to the compensation that the
Master Servicer would otherwise have received pursuant to Section 3.08 (or any
lesser compensation the Indenture Trustee and the successor agree to). The
Indenture Trustee and the successor shall take any action, consistent with
this Agreement, necessary to effectuate the succession.
(b) The appointment of a successor Master Servicer shall not affect any
liability of the predecessor Master Servicer that may have arisen under this
Agreement before its termination as Master Servicer (including any deductible
under an insurance policy pursuant to Section 3.04), nor shall any successor
Master Servicer be liable for any acts or omissions of the predecessor Master
Servicer or for any breach by the predecessor Master Servicer of any of its
representations or warranties in this Agreement. Except for any compensation
agreement with the Indenture Trustee, any successor Master Servicer shall be
subject to all the terms of this Agreement from the time that it accepts its
appointment to the same extent as if it were originally named as Master
Servicer.
Section 6.03. Notification to Noteholders and the Transferor.
Upon any termination or appointment of a successor to the Master
Servicer pursuant to this Article or Section 5.04, the Indenture Trustee shall
give prompt notice of it to the Noteholders at their respective addresses
appearing in the Note Register, the Transferor, the Credit Enhancer, and each
Rating Agency.
ARTICLE VII
TERMINATION
Section 7.01. Termination.
(a) The respective obligations and responsibilities of the Sponsor, the
Master Servicer, the Depositor, the Trust, and the Indenture Trustee created
by this Agreement (other than the obligation of the Master Servicer to send
certain notices) shall terminate on the earlier of
(i) the transfer of all the Mortgage Loans pursuant to Section
7.01(b),
(ii) the termination of the Trust Agreement or the Indenture, and
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(iii) the final payment or other liquidation of the last Mortgage
Loan remaining in the Trust or the disposition of all property acquired
in foreclosure or by deed in lieu of foreclosure of any Mortgage Loan.
Upon termination in accordance with this Section, the Indenture Trustee
shall execute any documents and instruments of transfer presented by the
Transferor, in each case without recourse, representation, or warranty, and
take any other actions the Transferor reasonably requests to effect the
transfer of the Mortgage Loans to the Transferor. Notwithstanding the
termination of this Agreement, the Master Servicer shall comply with this
Agreement in winding up activities under this Agreement after termination if
necessary.
(b) With the consent of the Credit Enhancer and the Master Servicer, the
Transferor may effect the transfer of all the Mortgage Loans at their
termination purchase price on any Payment Date from the Payment Date
immediately before which the aggregate Note Principal Balance of both Classes
of Notes is less than or equal to 10% of the aggregate Original Note Principal
Balance of both Classes of Notes and require the Trust to redeem the Notes
pursuant to Section 10.01 of the Indenture with the proceeds. The termination
purchase price is the sum of:
(i) the aggregate Note Principal Balance for both Classes of
Notes,
(ii) accrued aggregate Note Interest through the day preceding the
final Payment Date, and
(iii) interest accrued on any aggregate Unpaid Investor Interest
Shortfall, to the extent legally permissible.
(c) The Transferor must notify the Credit Enhancer, the Trust, and the
Indenture Trustee of any election to effect the transfer of the Mortgage Loans
pursuant to Section 7.01(b) no later than the first day of the month before
the month in which the transfer is to occur. The proceeds from the purchase of
the Mortgage Loans, for purposes of payments on the Notes, shall be considered
to have been received in the Collection Period before the Collection Period in
which the Payment Date on which the purchase takes place occurs.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
Section 8.01. Amendment.
This Agreement may be amended from time to time by the Sponsor, the
Master Servicer, the Depositor, the Owner Trustee, and the Indenture Trustee,
if the Rating Agency Condition is satisfied (in connection with which the
consent of the Credit Enhancer shall not be unreasonably withheld). However,
no amendment that significantly changes the permitted activities of the Trust
may be promulgated without the consent of a majority of the aggregate
Outstanding Amount of both Classes of Notes. For this purpose no Notes owned
by the Sponsor or any of its affiliates may vote, nor shall their Notes be
considered outstanding. This
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Agreement may also be amended from time to time by the Sponsor, the Master
Servicer, the Depositor, the Owner Trustee, and the Indenture Trustee, with
the consent of the Credit Enhancer (which consent shall not be unreasonably
withheld) and Holders of not less than 66?% of the aggregate Outstanding
Amount of both Classes of Notes.
The Indenture Trustee may enter into any amendment of this Agreement as
to which the Rating Agency Condition is satisfied, and when so requested by an
Issuer Request, the Indenture Trustee shall enter into any amendment of this
Agreement
(i) that does not impose further obligations or liabilities on the
Indenture Trustee, and
(ii) as to which either the Rating Agency Condition is satisfied
or Holders of not less than 66?% of the aggregate Outstanding Amount of
both Classes of Notes and the Credit Enhancer have consented.
Following the execution and delivery of any amendment to this Agreement
or to the Policy to which the Credit Enhancer was required to consent, either
the Transferor, if the Transferor requested the amendment, or the Master
Servicer, if the Master Servicer requested the amendment, shall reimburse the
Credit Enhancer for the reasonable out-of-pocket costs and expenses incurred
by them in connection with the amendment.
Before the execution of the amendment, the party to this Agreement
requesting the amendment shall notify each Rating Agency of the substance of
the amendment. The Indenture Trustee shall deliver fully executed original
counterparts of the instruments effecting the amendment to the Credit
Enhancer.
Section 8.02. Governing Law.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS PROVISIONS THAT WOULD
RESULT IN THE APPLICATION OF THE LAWS OF ANOTHER STATE.
Section 8.03. Notices.
All notices, demands, instructions, consents, and other communications
required or permitted under this Agreement shall be in writing and signed by
the party giving the same and shall be personally delivered or sent by first
class or express mail (postage prepaid), national overnight courier service,
or by facsimile transmission or other electronic communication device capable
of transmitting or creating a written record (confirmed by first class mail)
and shall be considered to be given for purposes of this Agreement on the day
that the writing is delivered when personally delivered or sent by facsimile
or overnight courier or three Business Days after it was sent to its intended
recipient if sent by first class mail. A facsimile has been delivered when the
sending machine issues an electronic confirmation of transmission. Unless
otherwise specified in a notice sent or delivered in accordance with the
provisions of this Section, notices, demands, instructions, consents, and
other communications in writing shall be given to or made on the respective
parties at their respective addresses indicated below:
43
if to the Trust at:
CWHEQ Revolving Home Equity Loan Trust, Series 2005-F
Wilmington Trust Company, as Owner Trustee
Xxxxxx Square North
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000-0000
Attention: Corporate Trust Administration
Telecopy: (000) 000-0000
if to the Depositor at:
CWHEQ, Inc.
0000 Xxxx Xxxxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Legal Department
Telecopy: (000) 000-0000
if to the Master Servicer at:
Countrywide Home Loans, Inc.
0000 Xxxx Xxxxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Legal Department,
Telecopy: (000) 000-0000
if to the Indenture Trustee at:
the Corporate Trust Office
Telecopy: (000) 000-0000
if to the Credit Enhancer at:
Ambac Assurance Corporation
Xxx Xxxxx Xxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Consumer Asset Backed Securities Group
Telecopy: (000) 000-0000
Confirmation: (000) 000-0000
if to Xxxxx'x at:
Residential Loan Monitoring Group, 4th Floor
00 Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
and if to Standard & Poor's at:
00 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
44
Whenever a notice or other communication to the Credit Enhancer refers
to an Event of Servicing Termination or with respect to which failure on the
part of the Credit Enhancer to respond would constitute consent or acceptance,
then a copy of the notice or other communication shall also be sent to the
attention of the General Counsel of the Credit Enhancer and shall be marked to
indicate "URGENT MATERIAL ENCLOSED."
Section 8.04. Severability of Provisions.
Any provisions of this Agreement that are held invalid for any reason or
unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of the invalidity or unenforceability without
invalidating the remaining provisions of this Agreement, and the prohibition
or unenforceability in a jurisdiction shall not invalidate or render
unenforceable that provision in any other jurisdiction.
Section 8.05. Assignment.
Except as provided in Sections 5.02 and 5.04, this Agreement may not be
assigned by the Depositor or the Master Servicer without the prior consent of
the Credit Enhancer.
Section 8.06. Third-Party Beneficiaries.
This Agreement will be binding on the parties to this Agreement, and
inure to the benefit of the parties to this Agreement, the Noteholders, the
Transferor, the Note Owners, the Owner Trustee, the Co-Trustee, and the Credit
Enhancer and their respective successors and permitted assigns. The Credit
Enhancer and the Co-Trustee are each a third party beneficiary of this
Agreement. No other person will have any rights under this Agreement.
Section 8.07. Counterparts; Electronic Delivery.
This Agreement may be executed in any number of copies, and by the
different parties on the same or separate counterparts, each of which shall be
considered to be an original instrument. Any signature page to this Agreement
containing a manual signature may be delivered by facsimile transmission or
other electronic communication device capable of transmitting or creating a
printable written record, and when so delivered shall have the effect of
delivery of an original manually signed signature page.
Section 8.08. Effect of Headings and Table of Contents.
The Article and Section headings in this Agreement and the Table of
Contents are for convenience only and shall not affect the construction of
this Agreement.
45
IN WITNESS WHEREOF, the Depositor, the Sponsor and Master Servicer, the
Trust, and the Indenture Trustee have caused this Agreement to be duly
executed by their respective officers all as of the day and year first above
written.
CWHEQ, INC.
Depositor
By: /s/ Xxxx Xxxxxxx, Xx.
---------------------------------
Name: Xxxx Xxxxxxx, Xx.
Title: Vice President
COUNTRYWIDE HOME LOANS, INC.
Sponsor and Master Servicer
By: /s/ Xxxx Xxxxxxx, Xx.
---------------------------------
Name: Xxxx Xxxxxxx, Xx.
Title: Senior Vice President
JPMORGAN CHASE BANK, N.A.
Indenture Trustee
By: /s/ Xxxxx X. Xxxxxxxxxx
---------------------------------
Name: Xxxxx X. Xxxxxxxxxx
Title: Attorney-In-Fact
46
CWHEQ REVOLVING HOME EQUITY
LOAN TRUST, SERIES 2005-F
By: WILMINGTON TRUST COMPANY, not
in its individual capacity but
solely as Owner Trustee
By: /s/ Xxxxx X. Xxxxxx
--------------------------------
Name: Xxxxx X. Xxxxxx
Title: Assistant Vice President
47
State of CALIFORNIA )
) ss.:
County of LOS ANGELES )
On the 29th day of September, 2005 before me, a notary public in and for
the State of California, personally appeared Xxxx Xxxxxxx, Xx., known to me
who, being by me duly sworn, did depose and say that he resides at Calabasas,
California; that he is the Vice President of CWHEQ, Inc. a Delaware
corporation, one of the parties that executed the foregoing instrument; that
he signed his name thereto by order of the Board of Directors of said
corporation.
/s/ Xxxxxx X. Xxxxxx
---------------------------------
Notary Public
Xxxxxx X. Xxxxxx
Commission # 1325392
Notary Public - California
Los Angeles County
My Comm. Expires October 15, 2005.
48
State of CALIFORNIA )
) ss.:
County of LOS ANGELES )
On the 29th day of September, 2005 before me, a notary public in and for
the State of California, personally appeared Xxxx Xxxxxxx, Xx., known to me
who, being by me duly sworn, did depose and say that he resides at Calabasas,
California; that he is the Senior Vice President of Countrywide Home Loans,
Inc., a New York corporation, one of the parties that executed the foregoing
instrument; and that he signed his name thereto by order of the Board of
Directors of said corporation.
/s/ Xxxxxx X. Xxxxxx
---------------------------------
Notary Public
Xxxxxx X. Xxxxxx
Commission # 1325392
Notary Public - California
Los Angeles County
My Comm. Expires October 15, 2005.
49
State of ILLINOIS )
) ss.:
County of WILL )
On the 29th day of September, 2005 before me, a notary public in and for
the State of Illinois, personally appeared Xxxxx X. Xxxxxxxxxx, known to me
who, being by me duly sworn, did depose and say that he resides at Plainfield,
Illinois; that he is the Attorney-In-Fact of JPMorgan Chase Bank, N.A., a
national banking association, one of the parties that executed the foregoing
instrument; that he signed his name thereto by order of the Board of Directors
of said corporation.
/s/ Xxxxx Xxxx Xxxxxx
---------------------------------
Notary Public
OFFICIAL XXXX
Xxxxx Xxxx Xxxxxx
Notary Public, State of Illinois
My Commission Expires: 02/03/06
50
State of DELAWARE )
) ss.:
County of NEW CASTLE )
On the 23rd day of September, 2005 before me, a notary public in and for
the State of Delaware, personally appeared Xxxxx X. Xxxxxx, known to me who,
being by me duly sworn, did depose and say that she resides at Wilmington,
Delaware; that she is an Assistant Vice President of Wilmington Trust Company,
not in its individual capacity but in its capacity as Owner Trustee of CWHEQ
Revolving Home Equity Loan Trust, Series 2005-F, one of the parties that
executed the foregoing instrument; that she signed her name thereto by order
of the Board of Directors of said corporation.
/s/ J. Xxxxxxxxxxx Xxxxxx
---------------------------------
Notary Public
OFFICIAL SEAL
J. Xxxxxxxxxxx Xxxxxx
Notary Public, State of Delaware
My Commission Expires: June 23, 2007
51
EXHIBIT A
MORTGAGE LOAN SCHEDULE
[Delivered to Indenture Trustee Only]
A-1
EXHIBIT B
FORM OF LETTER OF REPRESENTATIONS
B-1
EXHIBIT C
FORM OF REQUEST FOR RELEASE OF DOCUMENTS
[DATE]
JPMorgan Chase Bank, N.A.
as Indenture Trustee
0 Xxx Xxxx Xxxxx
0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Worldwide Securities Services/Global Debt, Countrywide
HEL CWHEQ 2005-F
Attn: Corporate Trust Services Division
Re: CWHEQ, Inc. Revolving Home Equity Loan
Asset Backed Notes, Series 2005-F
--------------------------------------
Gentlemen:
In connection with the administration of the Mortgage Loans held by you
as Indenture Trustee under the Sale and Servicing Agreement, dated as of
September 29, 2005, among CWHEQ, Inc. as Depositor, Countrywide Home Loans,
Inc., as Sponsor and Master Servicer, CWHEQ Revolving Home Equity Loan Trust,
Series 2005-F and you, as Indenture Trustee (the "Agreement"), we hereby
request a release of the Mortgage File held by you as Indenture Trustee with
respect to the following described Mortgage Loan for the reason indicated
below.
Loan No.:
[MIN No.]
Reason for requesting file:
--------------------------
_________________ 1. Mortgage Loan paid in full. (The Master Servicer
hereby certifies that all amounts received in
connection with the payment in full of the Mortgage
Loan which are required to be deposited in the
Collection Account pursuant to Section 3.02 of the
Agreement have been so deposited).
_________________ 2. Retransfer of Mortgage Loan. (The Master Servicer
hereby certifies that the Transfer Deposit Amount has
been deposited in the Collection Account pursuant to
the Agreement).
_________________ 3. The Mortgage Loan is being foreclosed.
_________________ 4. The Mortgage Loan is being re-financed by another
depository institution. (The Master Servicer hereby
certifies that all amounts received in connection with
the payment in full of the Mortgage Loan which are
required to be deposited in the Collection Account
pursuant to Section 3.02 of the Agreement have been so
deposited).
_________________ 5. Other (Describe).
C-1
The undersigned acknowledges that the above Mortgage File will be held
by the undersigned in accordance with the provisions of the Agreement and will
promptly be returned to the Indenture Trustee when the need therefor by the
Master Servicer no longer exists unless the Mortgage Loan has been liquidated
or retransferred.
Capitalized terms used herein shall have the meanings ascribed to them
in the Agreement.
COUNTRYWIDE HOME LOANS, INC.
By:_______________________________
Name:
Title: Servicing Officer
C-2
EXHIBIT D
FORM OF TRANSFER DOCUMENT
The Sponsor hereby transfers to the Depositor, and the Depositor hereby
transfers to the Owner Trustee for the benefit of CWHEQ Revolving Home Equity
Loan Trust, Series 2005-F the below identified Additional Home Equity Loans.
Subsequent Closing Date: _________________
Subsequent Cut-off Date: __________________
Cut-off Date Asset Balance: $ ______________
Additional Home Equity Loans:
[Each of the Sponsor's funded Mortgage Loans owned by it for securitization on
the above referenced Subsequent Cut-off Date sequentially by date beginning
with the earliest date on which any of them were funded, and within a date
alphabetically, are hereby transferred to the Trust until either their
aggregate Cut-off Date Asset Balance is as close as possible to equal to the
Cut-off Date Asset Balance indicated above without exceeding it or all of the
loans through the Subsequent Cut-off Date have been transferred.]
This Transfer Document is delivered pursuant to the Purchase Agreement and the
Sale and Servicing Agreement, dated as of September 29, 2005, among CWHEQ,
Inc., Countrywide Home Loans, Inc., CWHEQ Revolving Home Equity Loan Trust,
Series 2005-F, and JPMorgan Chase Bank, N.A., and the capitalized terms used
in this document have the meanings given to them in those agreements.
Dated: __________ , 2005.
COUNTRYWIDE HOME LOANS, INC. CWHEQ, INC.
By : ___________________ By : ___________________
Name: Name:
Title: Title:
D-1
ANNEX 1
DEFINITIONS
"Adoption Annex" means Annex 2 to this Agreement.
"Affiliate" of any person means any other person controlling, controlled
by or under common control with the person. For purposes of this definition,
"control" means the power to direct the management and policies of a person,
directly or indirectly, whether through ownership of voting securities, by
contract or otherwise and "controlling" and "controlled" shall have meanings
correlative to the foregoing.
"Agreement" means this Sale and Servicing Agreement.
"Appraised Value" for any Mortgaged Property means the value established
by any of the following: (i) a full appraisal, drive-by appraisal or
electronic appraisal of the Mortgaged Property made to establish compliance
with the underwriting criteria then in effect in connection with the
application for the Mortgage Loan secured by the Mortgaged Property, and (ii)
with respect to any Mortgage Loan as to which the Servicer consents to a new
senior lien pursuant to Section 3.01(a), in compliance with the underwriting
criteria then in effect in connection with the application for the related
senior mortgage loan.
"Collection Account" means the Eligible Account or Eligible Accounts
created and maintained for the benefit of the Noteholders, the Transferor, and
the Credit Enhancer pursuant to Section 3.02(b).
"Combined Loan-to-Value Ratio" for any Mortgage Loan as of any date
means a fraction
o whose numerator is the sum of (i) the Credit Limit and (ii) the
outstanding principal balance as of the date of execution of the related
original Credit Line Agreement (or any subsequent date as of which the
outstanding principal balance may be determined in connection with an
increase in the Credit Limit for the Mortgage Loan) of any mortgage loans
that are senior or equal in priority to the Mortgage Loan and that are
secured by the same Mortgaged Property and
o whose denominator is the Valuation of the related
Mortgaged Property.
"Credit Limit Utilization Rate" for any Mortgage Loan means a fraction
whose numerator is the Cut-off Date Asset Balance for the Mortgage Loan and
whose denominator is the related Credit Limit.
"Cut-off Date Loan Balance" means the Loan Balance calculated as of the
Cut-off Date.
"Defective Mortgage Loan" means a Mortgage Loan subject to retransfer
pursuant to Section 2.02(b) or 2.04(d).
"Delay Delivery Certification" has the meaning given to it in the
Custodial Agreement.
Xxx-1-1
"Depositor" means CWHEQ, Inc., a Delaware corporation, or its successor
in interest.
"Due Date" for any Mortgage Loan means the fifteenth day of the month.
"Electronic Ledger" means the electronic master record of home equity
credit line mortgage loans maintained by the Master Servicer or by the
Sponsor, as appropriate.
"Eligible Substitute Mortgage Loan" means a Mortgage Loan transferred to
the Trust by the Sponsor in connection with the retransfer of a Defective
Mortgage Loan that must, on the date of its transfer to the Trust,
(i) have an outstanding Asset Balance (or in the case of a
substitution of more than one Mortgage Loan for a Defective Mortgage
Loan, an aggregate Asset Balance), not 10% more than the Transfer
Deficiency relating to the Defective Mortgage Loan;
(ii) have a Loan Rate not less than the Loan Rate of the Defective
Mortgage Loan and not more than 1.000% in excess of the Loan Rate of the
Defective Mortgage Loan;
(iii) have a Loan Rate based on the same Index with adjustments to
the Loan Rate made on the same Interest Rate Adjustment Date as that of
the Defective Mortgage Loan;
(iv) have a FICO score not less than the FICO score of the
Defective Mortgage Loan and not more than 50 points higher than the
Defective Mortgage Loan;
(v) have a Gross Margin that is not less than the Gross Margin of
the Defective Mortgage Loan and not more than 100 basis points higher
than the Gross Margin for the Defective Mortgage Loan;
(vi) if the Mortgage Loan is being transferred to the Trust in
connection with the retransfer a Defective Mortgage Loan in Loan Group
1, the Mortgage Loan's original principal balance (by credit limit)
conforms to Xxxxxx Xxx or Xxxxxxx Mac guidelines;
(vii) have a mortgage of the same or higher level of priority as
the mortgage relating to the Defective Mortgage Loan at the time the
mortgage was transferred to the Trust;
(viii) have a remaining term to maturity not more than six months
earlier than the remaining term to maturity of the Defective Mortgage
Loan, not later than the maturity date of the related Notes, and not
more than 60 months later than the remaining term to maturity of the
Defective Mortgage Loan;
(ix) comply with each representation and warranty in Section 2.04
(to be made as of the date of transfer to the Trust); and
(x) have an original Combined Loan-to-Value Ratio not greater than
that of the Defective Mortgage Loan.
Xxx-1-2
More than one Eligible Substitute Mortgage Loan may be substituted for a
Defective Mortgage Loan if the Eligible Substitute Mortgage Loans meet the
foregoing attributes in the aggregate and the substitution is approved in
advance by the Credit Enhancer. The procedures applied by the Sponsor in
selecting each Eligible Substitute Mortgage Loan shall not be materially
adverse to the interests of the Indenture Trustee, the Transferor, the
Noteholders, or the Credit Enhancer.
"Event of Servicing Termination" has the meaning given to it in Section
6.01.
"FDIC" means the Federal Deposit Insurance Corporation or any successor
to it.
"Foreclosure Profit" on a Liquidated Mortgage Loan means the
excess of
(i) the aggregate of its Net Liquidation Proceeds over
(ii) the related Asset Balance (plus accrued and unpaid interest
on it at the applicable Loan Rate from the date interest was last paid
to the end of the Collection Period during which the Mortgage Loan
became a Liquidated Mortgage Loan) of the Liquidated Mortgage Loan
immediately before the final recovery of its Liquidation Proceeds.
"Gross Margin" for any Mortgage Loan means the percentage shown as the
"Gross Margin" for the Mortgage Loan on Exhibit A.
"Indenture" means the indenture of even date with this Agreement between
the Trust and the Indenture Trustee.
"Indenture Trustee Fee" means a fee that is separately agreed to between
the Master Servicer and the Indenture Trustee.
"Indenture Trustee Fee Rate" means the per annum rate at which the
Indenture Trustee Fee is calculated.
"Index" for each Interest Rate Adjustment Date for a Mortgage Loan means
the highest "prime rate" as published in the "Money Rates" table of The Wall
Street Journal as of the first business day of the calendar month.
"Initial Mortgage Loans" means the Mortgage Loans acquired by the Trust
on the Closing Date identified on Exhibit A.
"Insurance Proceeds" means proceeds paid by any insurer (including the
insurer of the Loan Insurance Policy under the Loan Insurance Policy but
excluding the Credit Enhancer under the Policy) pursuant to any insurance
policy covering a Mortgage Loan net of any amount (i) covering any expenses of
the Master Servicer in connection with obtaining the proceeds, (ii) applied to
the restoration or repair of the related Mortgaged Property, (iii) released to
the mortgagor in accordance with the Master Servicer's normal servicing
procedures, or (iv) required to be paid to any holder of a mortgage senior to
the Mortgage Loan.
"Interest Rate Adjustment Date" for each Mortgage Loan means any date on
which the Loan Rate is adjusted in accordance with the related Credit Line
Agreement.
"Latest Subsequent Closing Date" means the date specified in the
Adoption Annex.
Xxx-1-3
"Lien" means any mortgage, deed of trust, pledge, conveyance,
hypothecation, assignment, participation, deposit arrangement, encumbrance,
lien (statutory or other), preference, priority right, or interest or other
Security Agreement or preferential arrangement of any kind or nature
whatsoever, including any conditional sale or other title retention agreement,
any financing lease having substantially the same economic effect as any of
the foregoing, and the filing of any Financing Statement under the UCC (other
than any Financing Statement filed for informational purposes only) or
comparable law of any jurisdiction to evidence any of the foregoing except
that any assignment pursuant to Section 5.02 is not a Lien.
"Lifetime Rate Cap" for each Mortgage Loan whose related Mortgage Note
provides for a lifetime rate cap means the maximum Loan Rate permitted over
the life of the Mortgage Loan under the terms of the related Credit Line
Agreement, as shown on the Mortgage Loan Schedule.
"Liquidated Mortgage Loan" for any Payment Date means any Mortgage Loan
in respect of which the Master Servicer has determined, in accordance with the
servicing procedures specified in this Agreement, as of the end of the related
Collection Period, that all Liquidation Proceeds which it expects to recover
with respect to the disposition of the Mortgage Loan or the related REO have
been recovered.
"Liquidation Expenses" means out-of-pocket expenses (exclusive of
overhead) that are incurred by the Master Servicer in connection with the
liquidation of any Mortgage Loan and not recovered under any insurance policy,
including legal fees and expenses, any unreimbursed amount expended pursuant
to Section 3.06 (including amounts advanced to correct defaults on any
mortgage loan which is senior to the Mortgage Loan and amounts advanced to
keep current or pay off a mortgage loan that is senior to the Mortgage Loan)
respecting the related Mortgage Loan and any related and unreimbursed
expenditures with respect to real estate property taxes, water or sewer taxes,
condominium association dues, property restoration or preservation or
insurance against casualty, loss or damage.
"Liquidation Proceeds" means proceeds (including Insurance Proceeds but
not including amounts drawn under the Policy) received in connection with the
liquidation of any Mortgage Loan or related REO, whether through trustee's
sale, foreclosure sale or otherwise.
"Loan Rate Cap" for each Mortgage Loan means the lesser of (i) the
Lifetime Rate Cap or (ii) the applicable state usury ceiling.
"Loan-to-Value Ratio" for any date of determination for any mortgage
loan means a fraction whose numerator is the outstanding principal balance of
the mortgage loan as of the date of determination and whose denominator is the
Valuation of the related Mortgaged Property.
"Master Servicer" means Countrywide Home Loans, Inc., a New
York corporation and any successor to it and any successor under this
Agreement.
"Minimum Monthly Payment" for any Mortgage Loan and any month means the
minimum amount required to be paid by the related mortgagor in that month.
Xxx-1-4
"Net Liquidation Proceeds" for any Liquidated Mortgage Loan means
Liquidation Proceeds net of Liquidation Expenses.
"Officer's Certificate" means a certificate (i) signed by the Chairman
of the Board, the Vice Chairman of the Board, the President, a Managing
Director, a Vice President (however denominated), an Assistant Vice President,
the Treasurer, the Secretary, or one of the Assistant Treasurers or Assistant
Secretaries of the Depositor, the Sponsor, the Transferor, or the Master
Servicer, or (ii), if provided for in this Agreement, signed by a Servicing
Officer.
"Opinion Delivery Date" means the date specified in the Adoption Annex.
"Opinion of Counsel" means a written opinion of counsel acceptable to
the Indenture Trustee, who may be in-house counsel for the Depositor, the
Sponsor, the Master Servicer, or the Transferor (except that any opinion
pursuant to Section 5.04 or relating to taxation must be an opinion of
independent outside counsel) and who, in the case of opinions delivered to the
Credit Enhancer or the Rating Agency, is reasonably acceptable to it.
"Purchase Price" with respect to any Mortgage Loan required to be
purchased by the Sponsor pursuant to Section 2.03 or 2.04 or purchased at the
option of the Master Servicer pursuant to Section 3.01 or 3.06 means an amount
equal to the sum of
(i) 100% of the unpaid principal balance of the Mortgage Loan on
the date of such purchase,
(ii) accrued interest on the Mortgage Loan at the applicable
Mortgage Rate (or at the applicable Adjusted Mortgage Rate if (x) the
purchaser is the Master Servicer or (y) if the purchaser is Countrywide
and Countrywide is an affiliate of the Master Servicer) from the date
through which interest was last paid by the Mortgagor to the Due Date in
the month in which the Purchase Price is to be distributed to
Noteholders, and
(iii) in the case of any Mortgage Loan required to be purchased by
the Sponsor because of, or that arises out of, a violation of any
predatory or abusive lending law with respect to the related Mortgage
Loan, any costs and damages incurred by the Trust relating to such
violation of any predatory or abusive lending law with respect to the
related Mortgage Loan.
"REO" means a Mortgaged Property that is acquired by the Trust in
foreclosure or by deed in lieu of foreclosure.
"Seller" means any Seller of Mortgage Loans pursuant to the Purchase
Agreement.
"Servicing Certificate" means a certificate completed and executed by a
Servicing Officer in accordance with Section 4.01.
"Servicing Officer" means any officer of the Master Servicer involved
in, or responsible for, the administration and servicing of the Mortgage Loans
whose name and specimen signature appear on a list of servicing officers
furnished to the Indenture Trustee (with
Xxx-1-5
a copy to the Credit Enhancer) by the Master Servicer on the Closing Date, as
the list may be amended from time to time.
"Sponsor" means Countrywide Home Loans, Inc., a New York
corporation and any successor to it.
"Sponsor Loss Coverage Amount" means initially the amount specified in
the Adoption Annex, and thereafter as reduced by the amount of all previous
payments of the Sponsor Loss Coverage Obligation.
"Sponsor Loss Coverage Obligation" for any Payment Date means the lesser
of (i) the remaining Sponsor Loss Coverage Amount before payment of the
Sponsor Loss Coverage Obligation for that Payment Date and (ii) an amount
equal to the losses realized on the Mortgage Loans covered by the Insurance
Policy with respect to which a claim for payment was denied by the Loan
Insurer due to an exclusion in the Loan Insurance Policy minus any such amount
previously paid to the Trustee as Sponsor Loss Coverage Obligation. A claim
for realized losses on a Mortgage Loan covered by the Loan Insurance Policy
that is denied payment by the Loan Insurer for any other reason or that is not
of the insured perils covered by the Loan Insurance Policy will not be a
Sponsor Loss Coverage Obligation and will not be payable by the sponsor.
"Subsequent Closing Date" means any date designated by the Depositor on
which the Trust acquires Additional Home Equity Loans pursuant to Section
2.01(b).
"Subsequent Cut-off Date" means the cut-off date designated by the
Depositor in a Transfer Document in connection with the acquisition of
Additional Home Equity Loans by the Trust pursuant to Section 2.01(b).
"Transfer Date" has the meaning given to it in Section 2.06.
"Transfer Deficiency" with respect to a Loan Group means that the excess
of the Loan Group Balance of that Loan Group over the Note Principal Balance
of the related Class of Notes after a retransfer of a Mortgage Loan in the
related Loan Group pursuant to Section 2.02(b) or 2.04(d) would be less than
the related Required Transferor Subordinated Amount.
The amount of any Transfer Deficiency with respect to a Loan Group is
the lesser of
o the Asset Balance of the Defective Mortgage Loan and
o the excess of
o the related Required Transferor Subordinated Amount
over
o the excess of the Loan Group Balance of that Loan
Group over the Note Principal Balance of the related Class of Notes
after a retransfer of a Mortgage Loan pursuant to Section 2.02(b) or
2.04(d), without taking into account the Asset Balance of any Eligible
Substitute Mortgage Loans transferred to the Trust in connection with
the Transfer Deficiency.
In any computation involving a Mortgage Loan required to be purchased by
the Sponsor because of, or arising out of, a violation of any predatory or
abusive lending law with
Xxx-1-6
respect to the Mortgage Loan, the Transferor Interest
shall be reduced for any costs and damages incurred by the Trust relating to
the violation of any predatory or abusive lending law with respect to the
Mortgage Loan.
"Transfer Deposit Amount" has the meaning given to it in Section 2.07.
"Transfer Document" means a document substantially in the form of
Exhibit D.
"Transfer Notice Date" has the meaning given to it in Section 2.06.
"Valuation" of any Mortgaged Property means the lesser of (i) the
Appraised Value of the Mortgaged Property and (ii) in the case of a Mortgaged
Property purchased within one year of the origination of the related Mortgage
Loan, the purchase price of the Mortgaged Property.
Xxx-1-7
The following have the meanings given to them in the Indenture:
Accelerated Principal Payment Amount Investor Loss Reduction Amount
Additional Balance Investor Principal Collections
Additional Home Equity Loans Issuer Request
Additional Loan Account Loan Group
Adjusted Loan Group Balance Loan Group Balance
Allocated Transferor Interest Loan Rate
Asset Balance Loan Insurance Policy
Assignment of Mortgage Managed Amortization Period
Available Transferor Subordinated Amount Maximum Rate
Basis Risk Carryforward MERS
Business Day MERS(R) System
Closing Date MIN
Co-Trustee Minimum Transferor Interest
Code MOM Loan
Collection Period Xxxxx'x
Corporate Trust Office Mortgage File
Credit Enhancement Draw Amount Mortgage Loan
Credit Enhancer Mortgage Loan Schedule
Credit Enhancer Default Mortgage Note
Credit Limit Mortgaged Property
Credit Line Agreement Note
Custodial Agreement Note Rate
Cut-off Date Note Interest
Cut-off Date Asset Balance Note Principal Balance
Determination Date Noteholder or Holder
Eligible Account Note Owner
Eligible Investments Note Register and Note Registrar
Guaranteed Principal Payment Amount Original Note Principal Balance
Indenture Trustee Outstanding Amount
Initial Mortgage File Paying Agent
Insolvency Event Payment Date
Insurance Agreement Policy
Interest Collections Principal Collections
Interest Formula Rate Purchase Agreement
Interest Period Rapid Amortization Event
Investor Fixed Allocation Percentage Rating Agency
Investor Floating Allocation Percentage Rating Agency Condition
Investor Interest Collections Required Transferor Subordinated Amount
Investor Loss Amount Responsible Officer
Xxx-1-8
Scheduled Principal Collections Payment Amount
Servicing Fee
Standard & Poor's
Transferor
Transferor Certificates
Transferor Interest
Transferor Principal Collections
Trust
Trust Agreement
UCC
Unpaid Investor Interest Shortfall
Weighted Average Net Loan Rate
Xxx-1-9
ANNEX 2
ADOPTION ANNEX
The initial aggregate principal amount of the Notes is $2,706,750,000,
the initial aggregate principal amount of the Class 1-A Notes is
$1,092,725,000, and the initial aggregate principal amount of the Class 2-A
Notes is $1,614,025,000.
The title of the Collection Account is "JPMorgan Chase Bank, N.A. as
Indenture Trustee, Collection Account in trust for the registered holders of
Revolving Home Equity Loan Asset Backed Notes, Series 2005-F and Ambac
Assurance Corporation."
The date on which the Master Servicer delivers the Officer's Certificate
in each year is March 15, and the first Officer's Certificate pursuant to
Section 3.09 is March 15, 2006.
The date on which the Master Servicer delivers the annual servicing
report in each year is March 15, and the first annual servicing report
pursuant to Section 3.10 is March 15, 2006.
The Sponsor Loss Coverage Amount initially is 1.00% of aggregate
Original Note Principal Balance of both Classes of Notes.
The Latest Subsequent Closing Date is October 31, 2005.
The Opinion Delivery Date is November 7, 2005.
Xxx-2-1
