EXHIBIT 99.2
SALE AND SERVICING AGREEMENT
Among
MELLON HOME EQUITY LINE OF CREDIT TRUST 2001-1,
Trust,
X.X. XXXXXX ACCEPTANCE CORPORATION I,
Depositor,
MELLON BANK, N.A.,
as Seller and Servicer,
and
XXXXX FARGO BANK MINNESOTA, N.A.,
as Indenture Trustee
Dated as of March 1, 2001
TABLE OF CONTENTS
(Not a Part of this Agreement)
Page
Parties.......................................................................1
Recitals......................................................................1
ARTICLE I DEFINITIONS; RULES OF CONSTRUCTION.............................1
Section 1.1 Definitions...............................................1
Section 1.2 Use of Words and Phrases..................................1
Section 1.3 Captions; Table of Contents...............................2
Section 1.4 Opinions..................................................2
ARTICLE II CONVEYANCE OF MORTGAGE LOANS..................................2
Section 2.1 Conveyance of the Mortgage Loans..........................2
Section 2.2 Acceptance by Indenture Trustee; Certain
Substitutions of Mortgage Loans; Certification by
Indenture Trustee.........................................8
Section 2.3 Qualified Replacement Mortgage Loans......................9
Section 2.4 Cooperation Procedures...................................11
Section 2.5 Retransfers of Mortgage Loans at Election of Seller......11
ARTICLE III REPRESENTATIONS, WARRANTIES AND COVENANTS OF
THE SELLER AND THE SERVICER..............................12
Section 3.1 Representations and Warranties of the Seller.............12
Section 3.2 Representations and Warranties of the Servicer...........14
Section 3.3 Representations and Warranties of the Seller with
Respect to the Mortgage Loans; Retransfer of Certain
Mortgage Loans...........................................16
Section 3.4 Covenants of Seller to Take Certain Actions with
Respect to the Mortgage Loans In Certain Situations......22
ARTICLE IV SERVICING AND ADMINISTRATION OF MORTGAGE
LOANS....................................................23
Section 4.1 The Servicer.............................................23
Section 4.2 Collection of Certain Mortgage Loan Payments;
Mortgage Loan Payment Record.............................26
Section 4.3 Withdrawals from the Principal and Interest Account......28
Section 4.4 Maintenance of Hazard Insurance; Property Protection
Expenses.................................................28
Section 4.5 Assumption and Modification Agreements...................29
Section 4.6 Realization Upon Defaulted Mortgage Loans................29
Section 4.7 Indenture Trustee to Cooperate...........................30
Section 4.8 Servicing Compensation; Payment of Certain Expense
by Servicer..............................................31
Section 4.9 Annual Statement as to Compliance........................31
Section 4.10 Annual Servicing Report..................................31
Section 4.11 Access to Certain Documentation and Information
Regarding the Mortgage Loans.............................32
Section 4.12 Maintenance of Certain Servicing Insurance Policies......32
Section 4.13 Reports to the Securities and Exchange Commission........32
Section 4.14 Servicer Report..........................................33
Section 4.15 Liability of Servicer....................................33
Section 4.16 Subservicing Agreements Between Servicer and
Subservicers.............................................34
Section 4.17 Resignation of the Servicer..............................34
Section 4.18 P&I Advances.............................................35
ARTICLE V SERVICING TERMINATION.........................................35
Section 5.1 Events of Servicing Termination..........................35
Section 5.2 Inspections by Insurer...................................39
Section 5.3 Merger, Conversion, Consolidation or Succession to
Business of Servicer.....................................39
Section 5.4 Notification to Noteholders..............................39
Section 5.5 Notices of Material Events...............................39
ARTICLE VI ADMINISTRATIVE DUTIES OF THE SERVICER........................40
Section 6.1 Administrative Duties with Respect to the Indenture......40
Section 6.2 Records..................................................42
Section 6.3 Additional Information to be Furnished to the Trust......42
ARTICLE VII MISCELLANEOUS...............................................42
Section 7.1 Compliance Certificates and Opinions.....................42
Section 7.2 Form of Documents Delivered to the Indenture Trustee.....43
Section 7.3 Acts of Noteholders......................................43
Section 7.4 Notices, etc. to Indenture Trustee.......................44
Section 7.5 Notices and Reports to Noteholders; Waiver of Notices....44
Section 7.6 Successors and Assigns...................................45
Section 7.7 Severability.............................................45
Section 7.8 Benefits of Agreement....................................45
Section 7.9 Legal Holidays...........................................45
Section 7.10 Governing Law............................................45
Section 7.11 Counterparts.............................................46
Section 7.12 Usury....................................................46
Section 7.13 Amendment................................................46
Section 7.14 The Insurer..............................................47
Section 7.15 Notices..................................................47
Section 7.16 Limitation of Liability..................................49
SCHEDULE I........ -- Schedule of Mortgage Loans
EXHIBIT A......... -- [Reserved]
EXHIBIT B......... -- [Reserved]
EXHIBIT C......... -- [Reserved]
EXHIBIT D......... -- Form of Trustee's Acknowledgement of Receipt
EXHIBIT E......... -- Form of Certification
EXHIBIT F......... -- Form of Servicer's Trust Receipt
SALE AND SERVICING AGREEMENT, dated as of March 1, 2001, by and among
MELLON HOME EQUITY LINE OF CREDIT TRUST 2001-1, a Delaware business trust (the
"Trust"), X.X. XXXXXX ACCEPTANCE CORPORATION I, a Delaware corporation, and
depositor (the "Depositor"), MELLON BANK, N.A., a national banking association
(the "Bank"), in its capacity as seller (in such capacity, the "Seller") and
in its capacity as servicer (in such capacity, the "Servicer"), and XXXXX
FARGO BANK MINNESOTA, N.A., a national banking association, in its capacity as
indenture trustee (the "Indenture Trustee").
WHEREAS, the Depositor desires to purchase a portfolio of Mortgage
Loans (as defined herein) originated by the Seller;
WHEREAS, the Seller is willing to sell or cause or direct to be sold
such Mortgage Loans to the Depositor;
WHEREAS, the Depositor desires to transfer such Mortgage Loans to the
Trust and the Trust desires to acquire such Mortgage Loans from the Depositor;
WHEREAS, the Servicer has agreed to service such Mortgage Loans,
which constitute the principal assets of the Trust Estate;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the Seller, the Servicer, the Trust, the
Depositor and the Indenture Trustee hereby agree as follows:
ARTICLE I
DEFINITIONS; RULES OF CONSTRUCTION
Section 1.1 Definitions.
Except as otherwise specified herein, capitalized terms used in this
Agreement are defined in Annex 1 to the Indenture, dated as of March 1, 2001
(the "Indenture"), between Mellon Home Equity Line of Credit Trust 2001-1 and
Xxxxx Fargo Bank Minnesota, N.A., as Indenture Trustee. Defined terms include,
as appropriate, all genders and the plural as well as the singular.
Section 1.2 Use of Words and Phrases.
"Herein," "hereby," "hereunder," "hereof," "hereinbefore,"
"hereinafter" and other equivalent words refer to this Agreement as a whole
and not solely to the particular section of this Agreement in which any such
word is used. Whenever used in this Agreement, any pronoun shall be deemed to
include both singular and plural and to cover all genders. As used herein, any
form of the word "include" shall be deemed to be followed by the words
"without limitation."
Section 1.3 Captions; Table of Contents.
The captions or headings in this Agreement and the Table of Contents
are for convenience only and in no way define, limit or describe the scope and
intent of any provisions of this Agreement.
Section 1.4 Opinions.
Each opinion with respect to the validity, binding nature and
enforceability of documents or Notes may be qualified to the extent that the
same may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors'
rights generally and by general principles of equity (whether considered in a
proceeding or action in equity or at law) and may state that no opinion is
expressed on the availability of the remedy of specific enforcement,
injunctive relief or any other equitable remedy. Any opinion required to be
furnished by any Person hereunder must be delivered by counsel upon whose
opinion the addressee of such opinion may reasonably rely, and such opinion
may state that it is given in reasonable reliance upon an opinion of another,
a copy of which must be attached, concerning the laws of a foreign
jurisdiction.
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS
Section 2.1 Conveyance of the Mortgage Loans.
(a) The Seller, concurrently with the execution and delivery hereof,
hereby sells, assigns, transfers, sets over and otherwise conveys or shall
request or cause to be transferred, sold, assigned, set over and otherwise
conveyed to the Depositor, and the Depositor hereby purchases and acquires,
without recourse (subject to the Seller's obligations herein), all right,
title and interest of the Seller in and to: (i) all Mortgage Loans listed on
the Schedule of Mortgage Loans, and their respective Principal Balances
(including all Additional Balances) and all principal and interest collections
in respect thereof after the Cut-Off Date; (ii) all Mortgaged Properties to
the extent that they are acquired by foreclosure or deed in lieu of
foreclosure; (iii) all of the Seller's rights under any Mortgage Insurance
Policies covering the Mortgaged Properties; (iv) all Mortgage Files and other
documents relating to the foregoing; (v) all amounts held in the Accounts
(excluding net investment earnings on the Principal and Interest Account and
the Note Account); (vi) all proceeds with respect to the foregoing; and (vii)
all other assets included or to be included in the Trust Estate created under
the Indenture for the benefit of Noteholders and the Insurer; provided,
however, that neither the Depositor nor any of its Assignees (including the
Trust and the Indenture Trustee) shall assume any obligation under any Credit
Line Agreement that provides for the funding of future advances to the
Mortgagor thereunder, it being understood that neither the Depositor nor any
of its Assignees (including the Trust and the Indenture Trustee) shall be
required or permitted to fund any such future advances.
On or before the Closing Date, the Seller will cause the Insurer to
deliver the Policy to the Indenture Trustee for the benefit of the Noteholders
of the Notes.
As full consideration for the Seller's sale, assignment, transfer,
set-over and conveyance to the Depositor of all of its right, title and
interest in and to the Mortgage Loans and the other rights and properties
specified above, the Depositor shall (A) pay to or upon the order of the
Seller $667,327,500 in immediately available funds representing the proceeds
of the sale of the Notes, net of any underwriting discounts and other
transaction costs (including the cost of obtaining the Policy as described
above), and (B) direct the issuance of one or more Certificates evidencing in
the aggregate 100% of the beneficial ownership interest in the Trust to or
upon the order of the Seller or its designees, all in such amounts as the
Seller shall determine on or before the Closing Date.
(b) It is the express intent of the parties hereto that the
conveyance of the Mortgage Loans (including the related Mortgage Files and the
other rights and properties described in Section 2.1(a) above) by the Seller
to the Depositor as contemplated by Section 2.1(a) be construed as a sale of
the Mortgage Loans by the Seller to the Depositor. It is not the intent of the
parties that such conveyance be deemed a pledge of the Mortgage Loans by the
Seller to the Depositor or any of the Depositor's Assignees (including the
Indenture Trustee) to secure a debt or other obligation of the Seller or any
Assignor of the Seller. However, in the event and to the extent that,
notwithstanding the intent of the parties hereto, any or all of the Mortgage
Loans (including the related Mortgage Files and the other rights and
properties described in Section 2.1(a) above) are held to be property of the
Seller or any of its Assignors, then:
(i) this Agreement shall also be deemed to be a security
agreement within the meaning of Article 9 of the New York UCC;
(ii) the conveyance provided for herein in Section 2.1(b)
shall be deemed to be a grant by the Seller to the Depositor of a
first priority security interest in all of the Seller's right, title
and interest in and to the Mortgage Loans (including the related
Mortgage Files and the other rights and properties described in
Section 2.1(a) above) and all amounts payable to the holder of the
Mortgage Loans and/or such rights or properties in accordance with
the terms thereof and all proceeds of the conversion, voluntary or
involuntary, of the foregoing into cash, instruments, securities or
other property, including all amounts from time to time held or
invested in the Accounts (excluding net investment earnings on the
Principal and Interest Account and the Note Account), whether in the
form of cash, instruments, securities or other property;
(iii) the possession by the Depositor or any of its
Assignees or their respective bailees or agents of items of property
that constitute instruments, money, negotiable documents or chattel
paper shall be deemed to be "possession by the secured party" for
purposes of perfecting the security interest pursuant to Section
9-305 of the New York UCC;
(iv) notifications to persons holding such property, and
acknowledgments, receipts or confirmations from persons holding such
property, shall be deemed notifications to, or acknowledgments,
receipts or confirmations from, financial intermediaries, bailees or
agents (as applicable) of the Depositor for the purpose of perfecting
such security interest under applicable law; and
(v) the obligations secured by the first priority
security interest described in clause (ii) above shall be deemed to
include any and all obligations of the Depositor or any of its
Assignees (including the Trust) to pay the principal of and interest
on the Notes to the Noteholders and to pay the fees, expenses and
other amounts required to be paid to the Servicer, the Indenture
Trustee, the Owner Trustee, the Insurer and the Certificateholders,
all in accordance with and otherwise subject to the Operative
Documents (including the Indenture).
Any assignment or other transfer of the interest of the Depositor
under any provision hereof (including but not limited to Section 2.1(d) below)
shall also be deemed to be an assignment of any security interest created
hereby. Each of the Seller and the Depositor shall, to the extent consistent
with this Agreement, take such actions as may be necessary to ensure that, if
this Agreement were deemed to create a security interest in the Mortgage
Loans, such security interest would be deemed to be a perfected security
interest of first priority under applicable law for the benefit of the
Depositor and its Assignees and would be maintained as such throughout the
terms of this Agreement and the Indenture. The Seller also covenants not to
pledge, assign or grant any security interest to any third party in any
Mortgage Loan conveyed to the Depositor hereunder.
(c) Upon the Depositor's request, the Seller shall perform (or cause
to be performed) such further acts and execute, acknowledge and deliver (or
cause to be executed, acknowledged and delivered) to the Depositor such
further documents as the Depositor shall deem necessary or advisable in order
to evidence, establish, maintain, protect, enforce or defend its rights in and
to the Mortgage Loans and other rights and properties transferred hereunder or
otherwise to carry out the intent and accomplish the purposes of this
Agreement (including UCC-1 financing statements naming the Seller as debtor
and the Depositor as secured party and any continuation statements relating
thereto).
(d) The Depositor, immediately after the purchase and sale described
in Section 2.1(a) above but otherwise concurrently with the execution and
delivery hereof, hereby transfers, sets over and otherwise conveys, to the
Trust, and the Trust hereby acquires without recourse (subject to the
Depositor's obligations herein), all right, title and interest of the
Depositor in and to: (i) all Mortgage Loans listed on the Schedule of Mortgage
Loans including their respective Principal Balances (including all Additional
Balances) and all principal and interest collected after the Cut-Off Date;
(ii) all Mortgaged Properties to the extent that they are acquired by
foreclosure or deed in lieu of foreclosure; (iii) all of the Seller's rights
under any Mortgage Insurance Policies covering the Mortgaged Properties; (iv)
all Mortgage Files and other documents relating to the foregoing; (v) all
amounts held in the Accounts (excluding net investment earnings on the
Principal and Interest Account and the Note Account); (vi) all proceeds with
respect to the foregoing; and (vii) all other assets included or to be
included in the Trust Estate created under the Indenture for the benefit of
Noteholders and the Insurer; provided, however, that neither the Trust nor any
of its Assignees (including the Indenture Trustee) shall assume any obligation
under any Credit Line Agreement that provides for the funding of future
advances to the Mortgagor thereunder, it being understood that neither the
Trust nor any of its Assignees (including the Indenture Trustee) shall be
required or permitted to fund any such future advances. In addition, on or
before the Closing Date, the Depositor will cause the Policy to be delivered
to the Indenture Trustee for the benefit of the Noteholders. As full
consideration for the Depositor's transfer, set-over and conveyance to the
Trust of all of its right, title and interest in and to the Mortgage Loans and
the other rights and properties specified above, the Trust shall (x) issue to
or upon the order of the Depositor all of the Notes upon their issuance and
(y) issue to or upon the order of the Depositor one or more Certificates
evidencing in the aggregate 100% of the beneficial ownership interest in the
Trust.
(e) It is the express intent of the parties hereto that the
conveyance of the Mortgage Loans (including the related Mortgage Files and the
other rights and properties described in Section 2.1(d) above) by the
Depositor to the Trust as contemplated by Section 2.1(d) be construed as a
sale of the Mortgage Loans by the Depositor to the Trust. It is, further, not
the intent of the parties that such conveyance be deemed a pledge of the
Mortgage Loans by the Depositor to the Trust or any of the Trust's Assignees
(including the Indenture Trustee) to secure a debt or other obligation of the
Depositor or any Assignor of the Depositor. However, in the event and to the
extent that, notwithstanding the intent of the parties hereto, any or all of
the Mortgage Loans (including the related Mortgage Files and the other rights
and properties described in Section 2.1(d) above) are held to be property of
the Depositor or any of its Assignors, then:
(i) this Agreement shall also be deemed to be a security
agreement within the meaning of Article 9 of the New York UCC;
(ii) the conveyance provided for herein in Section 2.1(d)
shall be deemed to be a grant by the Depositor to the Trust of a
first priority security interest in all of the Depositor's right,
title and interest in and to the Mortgage Loans (including the
related Mortgage Files and the other rights and properties described
in Section 2.1(a) above) and all amounts payable to the holder of the
Mortgage Loans and/or such rights or properties in accordance with
the terms thereof and all proceeds of the conversion, voluntary or
involuntary, of the foregoing into cash, instruments, securities or
other property, including all amounts from time to time held or
invested in the Accounts (excluding net investment earnings on the
Principal and Interest Account and the Note Account), whether in the
form of cash, instruments, securities or other property;
(iii) the possession by the Trust or any of its Assignees
or their respective bailees or agents of items of property that
constitute instruments, money, negotiable documents or chattel paper
shall be deemed to be "possession by the secured party" for purposes
of perfecting the security interest pursuant to Section 9-305 of the
California UCC;
(iv) notifications to persons holding such property, and
acknowledgments, receipts or confirmations from persons holding such
property, shall be deemed notifications to, or acknowledgments,
receipts or confirmations from, financial intermediaries, bailees or
agents (as applicable) of the Trust for the purpose of perfecting
such security interest under applicable law; and
(v) the obligations secured by the first priority
security interest described in clause (ii) above shall be deemed to
include any and all obligations of the Trust or any of its Assignees
to pay the principal of and interest on the Notes to the Noteholders
and to pay the fees, expenses and other amounts required to be paid
to the Servicer, the Indenture Trustee, the Owner Trustee, the
Insurer and the Certificateholders, all in accordance with and
otherwise subject to the Operative Documents (including the
Indenture).
Any assignment or other transfer of the interest of the Trust under
any provision hereof shall also be deemed to be an assignment of any security
interest created hereby. Each of the Depositor and the Trust shall, to the
extent consistent with this Agreement, take such actions as may be necessary
to ensure that, if this Agreement were deemed to create a security interest in
the Mortgage Loans, such security interest would be deemed to be a perfected
security interest of first priority under applicable law for the benefit of
the Trust and its Assignees and would be maintained as such throughout the
terms of this Agreement and the Indenture. The Depositor also covenants not to
pledge, assign or grant any security interest to any third party in any
Mortgage Loan conveyed to the Trust hereunder.
(f) Upon the Trust's request, the Depositor shall perform (or cause
to be performed), such further acts and execute, acknowledge and deliver (or
cause to be executed, acknowledged and delivered) to the Trust such further
documents as the Trust shall deem necessary or advisable in order to evidence,
establish, maintain, protect, enforce or defend its rights in and to the
Mortgage Loans and other rights and properties transferred hereunder or
otherwise to carry out the intent and accomplish the purposes of this
Agreement (including filing UCC-1 financing statements naming the Depositor as
debtor and the Trust as secured party and any continuation statements relating
thereto).
(g) In connection with the transfer and assignment of the Mortgage
Loans, the Seller and the Depositor agree to:
(i) cause to be delivered without recourse to the
Indenture Trustee on or prior to the 21st day after the Closing Date,
or on the Transfer Date with respect to any Qualified Replacement
Mortgage Loan, the items listed in clause (a) of the definition of
"Mortgage Files"; and
(ii) cause to be delivered without recourse to the
Servicer, on the Closing Date, or on the Transfer Date with respect
to any Qualified Replacement Mortgage Loan, the items listed in the
definitions of "Mortgage Files", other than those required to be
delivered to the Indenture Trustee as provided in clause (i) above.
The Servicer acknowledges that it is holding as custodian and bailee
for the Indenture Trustee each of the items for each Mortgage File that are
delivered to and held by it under this Section 2.1(g) or any other provision
of this Agreement.
(h) Should the long term senior unsecured debt rating of the Seller
fall below "BBB" by Standard & Poor's or "Baa2" by Xxxxx'x or an Event of
Default shall occur, the Seller shall notify the Indenture Trustee and as
promptly as practicable but in any case within 90 days of the event, (1) the
Servicer shall, at the Seller's expense, cause to be delivered to the
Indenture Trustee the items listed in the definitions of "Mortgage Files" not
previously delivered in accordance with Section 2.1(g)(ii) and (2) the Seller
shall, at its expense, and for each Mortgage Loan, shall either
(x) deliver to the Indenture Trustee an original
Assignment of Mortgage for such Mortgage Loan in favor of the
Indenture Trustee (which may be a blanket assignment if permitted by
applicable law) which the Indenture Trustee shall, at the Seller's
expense, promptly upon its receipt submit for recordation in the
appropriate real property or other records or,
(y) deliver to the Indenture Trustee an Opinion of
Counsel addressed and acceptable to the Indenture Trustee and the
Insurer 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) or,
(z) cause the MERS(R) System to indicate (and provide
evidence to the Indenture Trustee that it has done so) that the
Mortgage Loan has been assigned by the Seller to the Indenture
Trustee in accordance with this Agreement for the benefit of the
Noteholders and the Insurer by including in the MERS computer files
(a) the code "[IDENTIFY TRUSTEE SPECIFIC CODE]" in the field
"[IDENTIFY THE FIELD NAME FOR TRUSTEE]" which identifies the
Indenture Trustee and (b) the code "[IDENTIFY SERIES SPECIFIC CODE
NUMBER]" in the field "Pool Field" which identifies the Notes by
series.
All recording, if required pursuant to this Section 2.1, shall be
accomplished at the expense of the Seller. Notwithstanding anything to the
contrary contained in this Section 2.1, in those instances where the public
recording office retains the original Mortgage, the assignment of a Mortgage
or the intervening assignments of the Mortgage after it has been recorded, the
Seller shall be deemed to have satisfied its obligations hereunder upon
delivery to the Indenture Trustee of a copy of such Mortgage, such assignment
or assignments of Mortgage certified by the public recording office to be a
true copy of the recorded original thereof.
Copies of all Mortgage assignments and any Assignment of Mortgage in
recordable form received by the Indenture Trustee or held or received by the
Servicer on behalf of the Indenture Trustee shall be kept in the related
Mortgage File.
Concurrent with any delivery required pursuant to clause (g)(i)
above, the Servicer shall deliver to the Indenture Trustee for signature
powers of attorney for execution, authorizing the Servicer on behalf of the
Indenture Trustee to record the Assignments of Mortgage as provided above;
provided that the Indenture Trustee shall have no liability and shall be
indemnified by the Seller for any loss or expense incurred as a result of the
Servicer's use of such powers of attorney. The Indenture Trustee also may
execute a new assignment of mortgage for any Mortgage Loan if the original
assignment of mortgage delivered by the Seller to the Indenture Trustee is not
in recordable form at such time as the assignment of mortgage is to be
recorded by the Indenture Trustee.
If an Assignment of Mortgage is lost during the process of recording,
or is returned from the recorder's office unrecorded due to a defect therein,
the Seller shall prepare or cause to be prepared a substitute assignment or
cure such defect, as the case may be, and thereafter cause each such
assignment to be duly recorded.
(i) The Seller shall reflect on its records that the Mortgage Loans
have been sold to the Depositor by the Seller, by the Depositor to the Trust
and pledged by the Trust to the Indenture Trustee.
Section 2.2 Acceptance by Indenture Trustee; Certain
Substitutions of Mortgage Loans; Certification by Indenture Trustee.
(a) The Indenture Trustee hereby acknowledges its receipt of the
Policy and agrees to execute and deliver on the Closing Date and each Transfer
Date an acknowledgment of receipt of the Credit Line Agreements delivered by
the Seller and declares that it will hold such documents and any amendments,
replacement or supplements thereto, as well as any other assets of the Trust
Estate and delivered to the Indenture Trustee, as Indenture Trustee in trust
upon and subject to the conditions set forth herein, for the benefit of the
Noteholders and the Insurer. The Indenture Trustee further agrees to review
any Credit Line Agreements delivered by the Seller within 90 days after the
later of the Closing Date or the date of receipt of such documents, as
applicable, and to deliver to the Seller, the Servicer and the Insurer a Pool
Certification to the effect that, as to each Mortgage Loan listed in the
Schedule of Mortgage Loans (other than any Mortgage Loan paid in full or any
Mortgage Loan specifically identified in such Pool Certification as not
covered by such Pool Certification), (i) all documents described in clause (i)
of the definition of "Mortgage Files" and required to be delivered to it
pursuant to this Agreement are in its possession and (ii) such documents have
been reviewed by it and have not been damaged, torn or physically altered and
on their face appear to relate to such Mortgage Loan. The Indenture Trustee
shall be under no duty or obligation to inspect, review or examine any such
documents, instruments, certificates or other papers to verify the validity,
legality, enforceability, sufficiency, due authorization, recordability or
genuineness of same or to determine that they are genuine, enforceable, or
appropriate for the represented purpose or that they are other than what they
purport to be on their face, nor shall the Indenture Trustee be under any duty
to determine independently whether there are any intervening assignments or
assumption or modification agreements with respect to any Mortgage Loan.
(b) If the Indenture Trustee during such 90-day period from the
Closing Date or the Transfer Date, as applicable, finds any document
constituting a part of a Mortgage File which is not properly executed, has not
been received within the specified period, or is unrelated to the Mortgage
Loans identified in the Schedule of Mortgage Loans, or that any Mortgage Loan
does not conform in a material respect to the description thereof as set forth
in the Schedule of Mortgage Loans, the Indenture Trustee shall promptly so
notify the Seller and the Insurer. In performing any such review, the
Indenture Trustee may conclusively rely on the Seller as to the purported
genuineness of any such document and any signature thereon. It is understood
that the scope of the Indenture Trustee's review of the items delivered by the
Seller pursuant to Section 2.1(g)(i) is limited solely to confirming that the
documents listed in Section 2.1(g)(i) have been executed and received, on
their face, appear to relate to the Mortgage Files identified in the Schedule
of Mortgage Loans and conform materially to the description thereof in the
Schedule of Mortgage Loans with regard to Mortgagor name and original Credit
Limit.
The Seller agrees to use reasonable efforts to remedy a material
defect in a document constituting part of a Mortgage File of which it is so
notified by the Indenture Trustee. If, however, within 60 days after the
Indenture Trustee's notice to it respecting such defect the Seller has not
remedied or caused to be remedied the defect and the defect materially and
adversely affects the interest in the related Mortgage Loan of the Indenture
Trustee, Noteholders or of the Insurer, the Seller will then on the next
succeeding Business Day (i) substitute in lieu of such Mortgage Loan a
Qualified Replacement Mortgage Loan pursuant to Section 2.3 and, deliver the
Substitution Amount applicable thereto to the Servicer for deposit in the
Principal and Interest Account or (ii) reacquire such Mortgage Loan at a
purchase price equal to the Loan Reacquisition Price thereof, which
reacquisition price shall be delivered to the Servicer for deposit in the
Principal and Interest Account.
Upon receipt of any Qualified Replacement Mortgage Loan and written
notification of the Substitution Amount, if any, or of written notification
signed by a Servicing Officer to the effect that the Loan Reacquisition Price
in respect of a Unqualified Mortgage Loan has been deposited into the
Principal and Interest Account, then within 10 Business Days, the Indenture
Trustee shall, at the direction of the Servicer, execute such documents and
instruments of transfer including preparing an endorsement and assignment of
documents, in each case without recourse, representation or warranty, and take
such other actions as shall reasonably be requested by the Seller to effect
such transfer by the Trust of such Unqualified Mortgage Loan to the Seller or
its designee.
It is understood and agreed that the obligation of the Seller to
accept a transfer of a Unqualified Mortgage Loan and to either convey a
Qualified Replacement Mortgage Loan or to make a deposit of any related Loan
Reacquisition Price into the Principal and Interest Account shall constitute
the sole remedy available to Noteholders, the Insurer and the Indenture
Trustee against the Seller.
The Seller, promptly following the transfer of an Unqualified
Mortgage Loan from the Trust pursuant to this Section, shall deliver an
amended Schedule of Mortgage Loans to the Indenture Trustee and the Insurer
and shall make appropriate entries in its general account records to reflect
such transfer. The Servicer shall, following such reacquisition, appropriately
xxxx its records to indicate that it is no longer servicing such Mortgage Loan
on behalf of the Trust. The Seller, promptly following such transfer, shall
appropriately xxxx its electronic ledger and make appropriate entries in its
general account records to reflect such reacquisition.
Section 2.3 Qualified Replacement Mortgage Loans.
(a) A "Qualified Replacement Mortgage Loan" is a Mortgage Loan that
substitutes for another pursuant to Section 2.2(b), 3.3 or 3.4 hereof, which
with respect to the Mortgage Loan being replaced and as of the Replacement
Cut-Off Date (i) has the same interest rate index, a margin over such index
and a maximum interest rate at least equal to those applicable to the Mortgage
Loan being replaced, (ii) is of the same or better property type and the same
or better occupancy status as the replaced Mortgage Loan, (iii) is of the same
or better credit quality classification (determined in accordance with the
Seller's credit underwriting guidelines), (iv) shall mature no later than
February 28, 2026, (v) has a Combined Loan-to-Value Ratio no higher than that
of the replaced Mortgage Loan, (vi) has a Principal Balance equal to or less
than that of the replaced Mortgage Loan, (vii) is in the same lien position or
better, (viii) is not Delinquent, and (ix) complies with the representations
and warranties set forth in Section 3.3(a). Except with respect to clause
(vii) above, in the event that one or more mortgage loans are proposed to be
substituted for one or more Mortgage Loans, the Insurer may allow the
foregoing tests to be met on a weighted average basis or other aggregate basis
acceptable to the Insurer, as evidenced by a written approval delivered to the
Indenture Trustee and the Seller by the Insurer.
(b) Each Unqualified Mortgage Loan that is required to be repurchased
or substituted pursuant to the provisions of this Agreement shall, upon such
reacquisition or substitution in accordance with the provisions hereof, be
released from the Trust and from the lien created by the Indenture. As to each
Mortgage Loan released from the Trust in connection with the reacquisition
thereof or the conveyance of a Qualified Replacement Mortgage Loan therefor,
the Indenture Trustee will transfer, assign, set over and otherwise convey
without recourse, to or upon the order of the Seller, all of its right, title
and interest in and to such released Mortgage Loan and all the Trust's right,
title and interest to principal and interest collected on such released
Mortgage Loan on and after the first day of the calendar month in which such
Mortgage Loan is released; as applicable; provided, however, that the Trust
shall reserve and retain all right, title and interest in and to payments of
principal and interest collected on such released Mortgage Loan prior to such
date.
(c) As to each Mortgage Loan released from the Trust in connection
with the conveyance of a Qualified Replacement Mortgage Loan the Indenture
Trustee shall deliver on the date of conveyance of such Qualified Replacement
Mortgage Loan, to the Seller, the Mortgage File, properly endorsed without
recourse to the Seller.
(d) The Seller shall, in connection with the delivery of each
Qualified Replacement Mortgage Loan to the Indenture Trustee, provide the
Indenture Trustee with the information set forth in the Schedule of Mortgage
Loans with respect to such Qualified Replacement Mortgage Loan.
(e) As to any Qualified Replacement Mortgage Loan, the Seller shall,
if required to deliver any such Qualified Replacement Mortgage Loan, deliver
to the Indenture Trustee and the Servicer, as bailee and custodian for the
Indenture Trustee, with respect to such Qualified Replacement Mortgage Loan
the respective items from the related Mortgage File as are required in
accordance with Section 2.1(g). For any Remittance Period during which the
Seller substitutes one or more Qualified Replacement Mortgage Loans, the
Servicer shall determine the Substitution Amount, which the Seller shall
deposit in the Principal and Interest Account at the time of substitution. All
amounts received in respect of the Qualified Replacement Mortgage Loan during
the Remittance Period in which the circumstances giving rise to such
substitution occur shall not be a part of the Trust Estate and shall not be
deposited by the Servicer in the Principal and Interest Account. All amounts
received by the Servicer during the Remittance Period in which the
circumstances giving rise to such substitution occur in respect of any
Unqualified Mortgage Loan so removed by the Trust Estate shall be deposited by
the Servicer in the Principal and Interest Account. Upon such substitution,
the Qualified Replacement Mortgage Loan shall be subject to the terms of this
Agreement in all respects, and the Seller shall be deemed (i) to have made
with respect to such Qualified Replacement Mortgage Loan or Loans, as of the
date of substitution, the covenants, representations and warranties set forth
in Section 3.3 and (ii) to have certified that such Mortgage Loan(s) is/are
Qualified Replacement Mortgage Loan(s). The procedures applied by the Seller
in selecting each Qualified Replacement Mortgage Loan shall not be materially
adverse to the interests of the Indenture Trustee, the Noteholders or the
Insurer.
Section 2.4 Cooperation Procedures.
The Seller, the Servicer and the Indenture Trustee covenant to
provide each other with all data and information required to be provided by
them hereunder at the times required hereunder, and additionally covenant
reasonably to cooperate with each other in providing any additional
information required by any of them in connection with their respective duties
hereunder.
Section 2.5 Retransfers of Mortgage Loans at Election of Seller.
Subject to the conditions set forth below, the Seller may, but shall
not be obligated to (except the Seller shall be obligated upon a breach of a
representation or warranty), accept the reassignment of Mortgage Loans held by
the Trust as of the close of business on a Payment Date (the "Transfer Date").
On the fifth Business Day (the "Transfer Notice Date") prior to the Transfer
Date designated in such notice, the Seller shall give the Indenture Trustee,
the Insurer and the Servicer a notice of the proposed reassignment that
contains a list of the Mortgage Loans to be reassigned. Such reassignment of
Mortgage Loans shall be permitted upon satisfaction of the following
conditions:
(i) No Rapid Amortization Event has occurred or will
occur as a result of such removal;
(ii) On the Transfer Notice Date the
Overcollateralization Amount (after giving effect to the removal from
the Trust of the Mortgage Loans proposed to be retransferred) is at
least equal to the Specified Overcollateralization Amount;
(iii) On or before the Transfer Date, the Seller shall
have delivered to the Indenture Trustee, the Insurer and the Rating
Agencies a revised Schedule of Mortgage Loans, reflecting the
proposed retransfer (including any Qualified Replacement Mortgage
Loans proposed to be transferred) and the Transfer Date, and the
Servicer shall have marked its servicing records to show that the
Mortgage Loans reassigned to the Seller are no longer owned by the
Trust;
(iv) The Seller shall represent and warrant that random
selection procedures were used in selecting the Mortgage Loans and no
other selection procedures were used which are adverse to the
interests of the Noteholders or the Insurer were utilized in
selecting the Mortgage Loans to be removed from the Trust; and
(v) The Seller shall have delivered to the Indenture
Trustee and the Insurer an Officer's Certificate certifying that the
items set forth in subparagraphs (i) through (v), inclusive, have
been performed or are true and correct, as the case may be. The
Indenture Trustee may conclusively rely on such Officer's
Certificate, shall have no duty to make inquiries with regard to the
matters set forth therein and shall incur no liability in so relying.
Upon receiving the requisite information from the Seller, the
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 deliver, or cause to be delivered, to the
Seller (or its designee) the Mortgage File for each Mortgage Loan being so
reassigned, and the Indenture Trustee shall execute and deliver (at the
Seller's direction) to the Seller such other documents as shall be reasonably
necessary to reassign such Mortgage Loans to the Seller. Any such transfer of
the Trust's right, title and interest in and to Mortgage Loans shall be
without recourse, representation or warranty by or of the Indenture Trustee or
the Trust to the Seller.
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS
OF THE SELLER AND THE SERVICER
Section 3.1 Representations and Warranties of the Seller.
The Seller hereby represents, warrants and covenants to the Indenture
Trustee, the Servicer, the Insurer and to the Noteholders as of the Closing
Date that:
(a) The Seller is a nationally chartered banking organization duly
organized and validly existing under the laws of the United States of America
and has all licenses necessary to carry on its business as now being conducted
and is licensed, qualified and in good standing in each jurisdiction in which
the nature of its respective business, or the properties owned or leased by it
make such qualification necessary. The Seller has all requisite power and
authority to own and operate its respective properties, to carry out its
respective business as presently conducted and as proposed to be conducted and
to enter into and discharge its respective obligations under this Agreement
and the other Operative Documents to which it is a party.
(b) The execution and delivery of this Agreement and the other
Operative Documents to which the Seller is a party by the Seller and its
performance and compliance with the terms of this Agreement and of the other
Operative Documents to which it is a party have been duly authorized by all
necessary action on the part of the Seller and will not violate the Seller's
charter or bylaws or constitute a default (or an event which, with notice or
lapse of time, or both, would constitute a default) under, or result in the
breach of, any material contract, agreement or other instrument to which the
Seller is a party or by which the Seller is bound, or violate any statute or
any order, rule or regulation of any court, governmental agency or body or
other tribunal having jurisdiction over the Seller or any of its properties.
(c) This Agreement and the other Operative Documents to which the
Seller is a party, assuming due authorization, execution and delivery by the
other parties hereto and thereto, each constitutes a valid, legal and binding
obligation of the Seller enforceable against it in accordance with the terms
hereof and thereof, except as the enforcement hereof and thereof may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting creditors' rights generally and by general
principles of equity (whether considered in a proceeding or action in equity
or at law).
(d) The Seller is not in default with respect to any order or decree
of any court or any order, regulation or demand of any federal, state,
municipal or governmental agency, which might have consequences that would
materially and adversely affect the condition (financial or other) or
operations of the Seller or its properties or might have consequences that
would materially and adversely affect its performance hereunder and under the
other Operative Documents to which it is a party.
(e) No litigation is pending or, to the best of the Seller's
knowledge, threatened against the Seller which litigation might have
consequences that would prohibit its entering into this Agreement or any other
Operative Document to which it is a party or might have consequences that
would materially and adversely affect its performance hereunder and under the
other Operative Documents to which it is a party.
(f) No certificate of an officer, statement furnished in writing or
report delivered pursuant to the terms hereof by the Seller contains any
untrue statement of a material fact or omits to state any material fact
necessary to make the certificate, statement or report not misleading.
(g) All actions, approvals, consents, waivers, exemptions, variances,
franchises, orders, permits, authorizations, rights and licenses required to
be taken, given or obtained, as the case may be, by or from any federal, state
or other governmental authority or agency (other than any such actions,
approvals, etc. under any state securities laws, real estate syndication or
"Blue Sky" statutes, as to which the Seller makes no such representation or
warranty), that are necessary or advisable in connection with the purchase and
sale of the Notes and the execution and delivery by the Seller of the
Operative Documents to which it is a party, have been duly taken, given or
obtained, as the case may be, are in full force and effect on the date hereof,
are not subject to any pending proceedings or appeals (administrative,
judicial or otherwise) and either the time within which any appeal therefrom
may be taken or review thereof may be obtained has expired or no review
thereof may be obtained or appeal therefrom taken, and are adequate to
authorize the consummation of the transactions contemplated by this Agreement
and the other Operative Documents on the part of the Seller and the
performance by the Seller of its respective obligations under this Agreement
and such of the other Operative Documents to which it is a party.
(h) So long as the Notes remain outstanding, this Agreement shall be
treated as an official record of the Seller within the meaning of Section
13(e) of the Federal Deposit Insurance Act (12 USC 1823(e)).
It is understood and agreed that the representations and warranties
set forth in this Section 3.1 shall survive delivery of the Mortgage Loans to
the Indenture Trustee.
Upon discovery by the Servicer, the Seller or the Indenture Trustee
of a breach of any of the representations and warranties set forth in this
Section 3.1 which materially and adversely affects the interests of the
Noteholders or of the Insurer, the party discovering such breach shall give
prompt written notice to the other parties and the Insurer. Within 60 days of
its discovery or its receipt of notice of breach, the Seller shall cure such
breach in all material respects; provided, however, that if the Seller can
demonstrate to the reasonable satisfaction of the Insurer that it is
diligently pursuing remedial action, then the cure period may be extended with
the written approval of the Insurer.
Section 3.2 Representations and Warranties of the Servicer.
The Servicer hereby represents, warrants and covenants to the
Indenture Trustee, the Seller, the Insurer and to the Noteholders as of the
Closing Date that:
(a) The Servicer is a nationally chartered banking organization duly
organized and validly existing under the laws of the United States of America
and has all licenses necessary to carry on its business as now being conducted
and, is, in compliance with the laws of each state in which any Mortgaged
Property is located to the extent necessary to enable it to perform its
obligations hereunder and is in good standing in each jurisdiction in which
the nature of its business, or the properties owned or leased by it make such
qualification necessary. The Servicer has all requisite power and authority to
own and operate its properties, to carry out its business as presently
conducted and as proposed to be conducted and to enter into and discharge its
obligations under this Agreement and the other Operative Documents to which it
is a party.
(b) The execution and delivery of this Agreement by the Servicer and
its performance and compliance with the terms of this Agreement and the other
Operative Documents to which it is a party have been duly authorized by all
necessary action on the part of the Servicer and will not violate the
Servicer's charter or bylaws or constitute a default (or an event which, with
notice or lapse of time, or both, would constitute a default) under, or result
in the breach of, any material contract, agreement or other instrument to
which the Servicer is a party or by which the Servicer is bound or violate any
statute or any order, rule or regulation of any court, governmental agency or
body or other tribunal having jurisdiction over the Servicer or any of its
properties.
(c) This Agreement and the other Operative Documents to which the
Servicer is a party, assuming due authorization, execution and delivery by the
other parties hereto and thereto, each constitutes a valid, legal and binding
obligation of the Servicer, enforceable against it in accordance with the
terms hereof, except as the enforcement hereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally and by general principles of equity
(whether considered in a proceeding or action in equity or at law).
(d) The Servicer is not in default with respect to any order or
decree of any court or any order, regulation or demand of any federal, state,
municipal or governmental agency, which might have consequences that would
materially and adversely affect the condition (financial or other) or
operations of the Servicer or its properties or might have consequences that
would materially and adversely affect its performance hereunder and under the
other Operative Documents to which the Servicer is a party.
(e) No litigation is pending or, to the best of the Servicer's
knowledge, threatened against the Servicer which litigation might have
consequences that would prohibit its entering into this Agreement or any other
Operative Document to which it is a party or might have consequences that
would materially and adversely affect its performance hereunder and under the
other Operative Documents to which the Servicer is a party.
(f) All actions, approvals, consents, waivers, exemptions, variances,
franchises, orders, permits, authorizations, rights and licenses required to
be taken, given or obtained, as the case may be, by or from any federal, state
or other governmental authority or agency (other than any such actions,
approvals, etc. under any state securities laws, real estate syndication or
"Blue Sky" statutes, as to which the Servicer makes no such representation or
warranty), that are necessary or advisable in connection with the execution
and delivery by the Servicer of the Operative Documents to which it is a
party, have been duly taken, given or obtained, as the case may be, are in
full force and effect on the date hereof, are not subject to any pending
proceedings or appeals (administrative, judicial or otherwise) and either the
time within which any appeal therefrom may be taken or review thereof may be
obtained has expired or no review thereof may be obtained or appeal therefrom
taken, and are adequate to authorize the consummation of the transactions
contemplated by this Agreement and the other Operative Documents on the part
of the Servicer and the performance by the Servicer of its obligations under
this Agreement and such of the other Operative Documents to which it is a
party.
(g) No certificate of an officer, statement furnished in writing or
report delivered pursuant to the terms hereof by the Servicer contains any
untrue statement of a material fact or omits to state any material fact
necessary to make the certificate, statement or report not misleading.
(h) The Servicing Fee is a "current (normal) servicing fee rate" as
that term is used in Statement of Financial Accounting Standards No. 65 issued
by the Financial Accounting Standards Board. Neither the Servicer nor any
affiliate thereof will report on any financial statements any part of the
Servicing Fee as an adjustment to the sales price of the Mortgage Loans.
(i) The collection practices used by the Servicer with respect to the
Mortgage Loans directly serviced by it have been, in all material respects,
legal, proper, prudent and customary in the mortgage loan servicing business.
(j) The transactions contemplated by this Agreement are in the
ordinary course of business of the Servicer.
It is understood and agreed that the representations and warranties
set forth in this Section 3.2 shall survive delivery of the Initial Mortgage
Loans to the Indenture Trustee.
Upon discovery by the Servicer, the Seller or the Indenture Trustee
of a breach of any of the representations and warranties set forth in this
Section 3.2 which materially and adversely affects the interests of the
Noteholders or of the Insurer, the party discovering such breach shall give
prompt written notice to the other parties and the Insurer. Within 60 days of
its discovery or its receipt of notice of breach, the Servicer shall cure such
breach in all material respects; provided, however, that if the Servicer can
demonstrate to the reasonable satisfaction of the Insurer that it is
diligently pursuing remedial action, then the cure period may be extended with
the written approval of the Insurer.
Section 3.3 Representations and Warranties of the Seller with
Respect to the Mortgage Loans; Retransfer of Certain Mortgage Loans.
(a) The Seller makes the following representations and warranties,
and the Depositor makes the representations and warranties set forth in
(iv)(b) below, as to each Mortgage Loan, on which the Trust and Indenture
Trustee rely in accepting the Mortgage Loan and on which the Insurer relies in
issuing the Policy. Unless otherwise indicated, such representations and
warranties speak as of the Closing Date, in the case of the Initial Mortgage
Loans and the Transfer Date, in the case of the Qualified Replacement Mortgage
Loans, but shall survive the transfer of the Mortgage Loans to the Trust and
the pledge thereof to the Indenture Trustee pursuant to the Indenture:
(i) All of the original or certified documentation set
forth in the definition of Mortgage File and in Section 2.1(g)
(including all material documents related thereto) with respect to
each Mortgage Loan has been or will be delivered to the Indenture
Trustee as required by Section 2.1(g). All such documentation is true
and accurate in all material respects. Each of the documents and
instruments specified to be included therein has been duly executed
and in due and proper form, and each such document or instrument is
in a form generally acceptable to prudent mortgage lenders that
regularly originate, purchase or sell mortgage loans comparable to
the Mortgage Loans.
(ii) Each Mortgage Loan is being serviced by the Servicer.
(iii) The information set forth in the Schedule of
Mortgage Loans (as amended for Qualified Replacement Mortgage Loans)
for each Mortgage Loan listed is true and correct in all material
respects.
(iv) (a) Immediately prior to the transfers and
assignments herein contemplated, the Seller held good and
indefeasible title to, and was the sole owner of, each Mortgage Loan
conveyed by the Seller to the Depositor pursuant to Section 2.1
hereof, all monies due or to become due with respect thereto, and all
proceeds of such Cut-Off Date Principal Balances with respect to such
Mortgage Loans subject to no liens, charges, mortgages, encumbrances
or rights of others except liens which will be released
simultaneously with such transfers and assignments; and immediately
upon the transfers and assignments herein contemplated, the Trust
will hold good and indefeasible title to, and be the sole owner of,
each Mortgage Loan subject to no liens, charges, mortgages,
encumbrances or rights of others except the lien of the Indenture and
(b) immediately prior to the transfers and assignments herein
contemplated but after giving effect to the conveyance by the Seller
pursuant to Section 2.1, the Depositor held good and indefeasible
title to, and was the sole owner of, each Mortgage Loan (including
its Cut-Off Date Principal Balance) conveyed by the Depositor to the
Trust pursuant to Section 2.1 hereof, all monies due or to become due
with respect thereto, and all proceeds of such Cut-Off Date Principal
Balances with respect to such Mortgage Loans subject to no liens,
charges, mortgages, encumbrances or rights of others except liens
which will be released simultaneously with such transfers and
assignments; and immediately upon the transfers and assignments
herein contemplated, the Trust will hold good and indefeasible title
to, and be the sole owner of, each Mortgage Loan subject to no liens,
charges, mortgages, encumbrances or rights of others except the lien
of the Indenture.
(v) There is no valid offset, defense or counterclaim of
any obligor under any Credit Line Agreement or Mortgage. Neither the
operation of any of the terms of any such Credit Line Agreement or
any such Mortgage nor the exercise of any right thereunder will
render either such Credit Line Agreement or such Mortgage
unenforceable, in whole or in part, nor subject to any right of
rescission, set-off, claim, counterclaim or defense, including,
without limitation, the defense of usury and no such right of
rescission, set-off, counterclaim or defense has been asserted with
respect thereto.
(vi) As of the Cut-Off Date, no Minimum Monthly Payment
is more than 30 days Delinquent (measured on a contractual basis).
(vii) Each Credit Line Agreement and each Mortgage
relating to the Mortgage Loans is an enforceable obligation of the
related Mortgagor, except as the enforceability thereof may be
limited by the bankruptcy, insolvency or similar laws affecting
creditors' rights generally.
(viii) With respect to each Mortgage Loan, on each date
that the Coupon Rates have been adjusted, interest rate adjustments
on such Mortgage Loans were made in compliance with the related
Mortgage and Credit Line Agreement and applicable law.
(ix) Each Mortgaged Property is improved by a single
(one-to-four) family residential dwelling, which may include
manufactured homes, condominiums and townhouses.
(x) No Initial Mortgage Loan had an original Combined
Loan-to-Value Ratio in excess of 105.00%.
(xi) Each Mortgage is a valid and subsisting first or
junior lien of record on the Mortgaged Property (subject in the case
of any Junior Mortgage Loan only to one or more Senior Liens on such
Mortgaged Property) and subject in all cases to the exceptions to
title set forth in the title insurance policy or title search, with
respect to the related Mortgage Loan, which exceptions are generally
acceptable to banking institutions in connection with their regular
mortgage lending activities, and except for liens for (i) real estate
taxes and special assessments not yet delinquent, (ii) income taxes
not yet due, (iii) any covenants, conditions and restrictions, rights
of way, easements, and other matters of public record and such other
exceptions to which similar properties are commonly subject and which
do not individually, or in the aggregate, materially and adversely
affect the benefits of the security intended to be provided by such
Mortgage.
(xii) To the best of the Seller's knowledge, there is no
delinquent tax or assessment lien or mechanic's lien on any Mortgaged
Property relating to a Mortgage Loan, and each such Mortgaged
Property is free of substantial damage and is in good repair.
(xiii)Each Mortgage Loan at the time it was made complied
in all material respects with all applicable state and federal laws
and regulations, including, without limitation, the federal
Truth-in-Lending Act and other consumer protection laws, real estate
settlement procedure, usury, equal credit opportunity, disclosure and
recording laws.
(xiv) With respect to each Mortgage Loan that is a First
Mortgage Loan, and, to the best of the Seller's knowledge, with
respect to each Mortgage Loan that is a Junior Mortgage Loan, (i) a
lender's title insurance policy, issued in standard American Land
Title Association form, or other form acceptable in a particular
jurisdiction by a title insurance company authorized to transact
business in the state in which the related Mortgaged Property is
situated, was issued on the date of origination of such Mortgage
Loan, and as of the Closing Date or the Transfer Date, as applicable,
each such policy is valid and remains in full force and effect, or
(ii) a title search or guaranty of title customary in the relevant
jurisdiction was obtained with respect to any Mortgage Loan as to
which no title insurance policy or binder was issued.
(xv) Each Credit Line Agreement is the legal, valid,
binding and enforceable obligation of the maker thereof and is
enforceable in accordance with its terms, except only as such
enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of
creditors' rights generally and by general principles of equity
(whether considered in a proceeding or action in equity or at law).
(xvi) The terms of each Credit Line Agreement and each
related Mortgage have not been impaired, cancelled, subordinated,
rescinded, altered or modified in any material respect (except as
reflected in the Mortgage File and in the Mortgage Loan Schedule),
and the related Mortgaged Property has not been released from the
lien of the related Mortgage, in whole or in part and no instrument
has been executed that would effect such release, cancellation,
subordination or rescission, except by a written instrument which (if
such instrument is secured by real property) has been recorded, if
necessary, to protect the interest of the Noteholders and which has
been delivered to the Indenture Trustee. The substance of any other
alteration or modification of a Credit Line Agreement and related
Mortgaged Property is reflected on the related Schedule of Mortgage
Loans.
(xvii) Except as otherwise required by law or the terms of
the Credit Line Agreement, pursuant to the statute under which the
related Mortgage Loan was made, the related Credit Line Agreement is
not and has not been secured by any collateral, pledged account or
other security except the lien of the corresponding Mortgage.
(xviii) Each Mortgaged Property is located in
the state identified in the Schedule of Mortgage Loans and consists
of one or more parcels of real property with a residential dwelling
erected thereon.
(xix) To the best of the Seller's knowledge, there is no
proceeding pending or threatened for the total or partial
condemnation of any Mortgaged Property, nor is such a proceeding
currently occurring, and each such Mortgaged Property is undamaged by
waste, fire, earthquake or earth movement, flood, tornado or other
casualty, so as to affect adversely the value of such Mortgaged
Property as security for the related Mortgage Loan or the use for
which the premises were intended.
(xx) To the best of the Seller's knowledge, with respect
to each Mortgage Loan that is a Junior Mortgage Loan, either (A) no
consent for such Mortgage Loan was required by the holder of the
related Senior Lien(s) prior to the making of such Mortgage Loan or
(B) such consent has been obtained and is contained in the related
Mortgage File.
(xxi) Each Mortgage contains customary and enforceable
provisions which render the rights and remedies of the holder thereof
adequate for the realization against the related Mortgaged Property
of the benefits of the security, including (A) in the case of a
Mortgage designated as a deed of trust, by trustee's sale and (B)
otherwise by judicial foreclosure. There is no homestead or other
exemption available which materially interferes with the right to
sell the related Mortgaged Property at a trustee's sale or the right
to foreclose the related Mortgage.
(xxii) There is no default, breach, violation or event of
acceleration existing under any Mortgage or Credit Line Agreement and
no event which, with the passage of time or with notice and the
expiration of any grace or cure period, would constitute a default,
breach, violation or event of acceleration, and the Seller has not
waived any default, breach, violation or event of acceleration;
provided, however, that the foregoing shall not apply to the extent
that the relevant default, breach, violation or other event relates
to one or more of the Delinquent Mortgage Loans.
(xxiii) To the best of the Seller's knowledge,
all parties to each Credit Line Agreement and the related Mortgage
had legal capacity to execute such Credit Line Agreement and the
related Mortgage and each such Credit Line Agreement and the related
Mortgage have been duly and properly executed by such parties.
(xxiv) No selection procedures reasonably believed by the
Seller to be adverse to the interests of the Noteholders or the
Insurer was utilized in selecting the Mortgage Loans.
(xxv) No Mortgagor has been released, in whole or in
part, except in connection with an assumption agreement which has
been approved by the applicable title insurer (to the extent required
by such title insurer) and which is part of the related Mortgage File
delivered to the Indenture Trustee.
(xxvi) To the best of the Seller's knowledge, at the time
of origination of each Mortgage Loan that is not a First Mortgage
Loan, the related senior lien was not more than 30 days delinquent.
(xxvii) To the best of the Seller's knowledge,
all required inspections, licenses and certificates with respect to
the use and occupancy of all occupied portions of all property
securing the Mortgages have been made, obtained or issued, as
applicable.
(xxviii) To the best of the Seller's knowledge,
with respect to each Mortgage Loan that is not a First Mortgage Loan,
the related senior lien does not provide for negative amortization.
(xxix) To the best of the Seller's knowledge, with
respect to each Mortgage Loan that is not a First Mortgage Loan, the
maturity date of the Mortgage Loan is prior to the maturity date of
the related senior lien if such senior lien provides for a balloon
payment.
(xxx) With respect to each Mortgage Loan, (1) the
improvements upon each related Mortgaged Property are covered by a
valid and existing hazard insurance policy with a carrier generally
acceptable to the Servicer that provides for fire and extended
coverage representing coverage not less than (a) the Credit Limit of
such Mortgage Loan or (b) the maximum insurable value of the related
Mortgaged Property.
(xxxi) With respect to any Mortgage Loan which is a First
Mortgage Loan, the Seller has caused and will cause to be performed
any and all acts required to be performed to preserve the rights and
remedies of the Servicer and the Indenture Trustee in any Mortgage
Insurance Policies applicable to such Mortgage Loan, including,
without limitation, any necessary notifications of insurers,
assignments of policies or interests therein, and establishments of
co-insured, joint loss payee and mortgagee rights in favor of the
Trust and its assignees in care of the Indenture Trustee.
(xxxii) To the best of the Seller's knowledge, each
Mortgage Loan was underwritten in all material respects in accordance
with the credit underwriting guidelines of the Seller as set forth in
the Seller's underwriting guidelines, as in effect on the date of
origination or acquisition.
(xxxiii) The Seller has received no notice of default of
any First Mortgage Loan secured by any Mortgaged Property that also
secures a Mortgage Loan which has not been cured by a party other than
the Seller or the Servicer.
(xxxiv) As of the Cut-Off Date, no Mortgagor had been
identified on the records of the Seller as being the subject of a
current bankruptcy proceeding.
(xxxv) To the best of the Seller's knowledge, the Servicer
and the Seller are in substantial compliance with any and all
applicable licensing requirements of the law of the state wherein the
property securing the Mortgage Loan is located.
(xxxvi) To the best of the Seller's knowledge, with respect
to the Mortgage Loans, the documents, instruments and agreements
submitted by each Mortgagor for loan underwriting were not falsified
and contain no untrue statement of a material fact and do not omit to
state a material fact required to be stated therein or necessary to
make the information and the statements contained therein not
misleading.
(xxxvii) Each Mortgage Loan conforms, and all the Mortgage
Loans, in the aggregate, conform, in all material respects to the
description thereof set forth in the Prospectus Supplement.
(xxxviii) During the period since origination, each Mortgage
Loan has been serviced in accordance with applicable laws.
(b) Upon the discovery by the Servicer, the Seller or the Indenture
Trustee of a breach of any of the representations and warranties made in
respect of any Mortgage Loan which materially and adversely affects the
interests of the Noteholders or of the Insurer in such Mortgage Loan, the
party discovering such breach shall give prompt written notice to the other
parties and the Insurer. The Servicer shall promptly notify the Seller of such
breach and request that the Seller cure such breach or take the actions
described in Section 3.4(b) hereof within the time periods required thereby,
and the Seller shall cure such breach or take such actions; provided, however,
that the cure for any breach of a representation and warranty relating to the
characteristics of the Mortgage Loans in the aggregate shall be a reassignment
of, or substitution for, only those Mortgage Loans necessary to cause such
characteristics to be in compliance with the related representation and
warranty, unless the Insurer shall waive such breach. Upon accepting such
transfer and making any required deposit into the Principal and Interest
Account or substitution of a Qualified Replacement Mortgage Loan, as the case
may be, the Seller shall be entitled to receive an instrument of assignment or
transfer from the Indenture Trustee to the same extent as set forth in Section
2.2 with respect to the transfer of Mortgage Loans under that Section.
It is understood and agreed that the obligation of the Seller to
accept a transfer of a Mortgage Loan as to which a breach has occurred and is
continuing and to deposit the Loan Reacquisition Price in the Principal and
Interest Account or to substitute a Qualified Replacement Mortgage Loan, and
deposit the Substitution Amount in the Principal and Interest Account, as the
case may be, shall constitute the sole remedy against the Seller respecting
such breach available to Noteholders, the Indenture Trustee on behalf of the
Noteholders and the Insurer.
Section 3.4 Covenants of Seller to Take Certain Actions with
Respect to the Mortgage Loans In Certain Situations.
(a) With respect to the representations and warranties set forth in
Section 3.3 that are made to the best of the Seller's knowledge or as to which
the Seller has no knowledge, if it is discovered by the Seller, the Servicer,
the Indenture Trustee or any Subservicer that the substance of such
representation or warranty is inaccurate and such inaccuracy materially and
adversely affects the value of the related Mortgage Loan then, notwithstanding
the Seller's lack of knowledge with respect to the substance of such
representation and warranty being inaccurate at the time the representation or
warranty was made, such inaccuracy shall be deemed a breach of the applicable
representation or warranty and the Seller shall cure such breach, repurchase
the related Mortgage Loan at the Loan Reacquisition Price or substitute a
Qualified Replacement Mortgage Loan therefor pursuant to Section 2.2(b),
3.3(b) or 3.4 hereof.
(b) With respect to the provisos and limitations as to remedies set
forth in this Section 3.4, upon the discovery by Seller, the Servicer or the
Indenture Trustee that the representations and warranties set forth in Section
3.3 of this Agreement were untrue in any material respect as of the Closing
Date and such breaches of the representations and warranties materially and
adversely affect the interests of the Noteholders or of the Insurer, the party
discovering such breach shall give prompt written notice to the other parties
and the Insurer.
The Seller acknowledges that a breach of any representation or
warranty (x) relating to marketability of title sufficient to transfer
unencumbered title to a Mortgage Loan or (y) relating to enforceability of the
Mortgage Loan against the related Mortgagor or Mortgaged Property constitutes
a breach of a representation or warranty which materially and adversely
affects the interests of the Noteholders or of the Insurer in such Mortgage
Loan.
(c) Upon the earliest to occur of the Seller's discovery, its receipt
of notice of breach from any one of the other parties hereto or from the
Insurer or such time as a breach of any representation and warranty materially
and adversely affects the interests of the Noteholders or the Insurer as set
forth above, the Seller hereby covenants and warrants that it shall cure such
breach in all material respects within 60 days or it shall, subject to the
further requirements of this paragraph, on the Remittance Date next succeeding
the end of such 60 day period (i) substitute in lieu of each Mortgage Loan
which has given rise to the requirement for action by the Seller a Qualified
Replacement Mortgage Loan and deliver the Substitution Amount applicable
thereto to the Servicer for deposit in the Principal and Interest Account or
(ii) purchase such Mortgage Loan from the Trust at the Loan Reacquisition
Price thereof, which purchase price shall be delivered to the Servicer for
deposit in the Principal and Interest Account. It is understood and agreed
that the obligation of the Seller to cure the defect, substitute for, or
purchase any Mortgage Loan as to which a representation or warranty is untrue
in any material respect and has not been remedied shall constitute the sole
remedy available to the Noteholders, the Indenture Trustee or the Insurer
against the Seller, except as otherwise provided in the Insurance Agreement.
(d) In the event that any Qualified Replacement Mortgage Loan is
delivered by the Seller to the Trust pursuant to Section 2.2(b), Section
3.3(b) or Section 3.4 hereof, the Seller shall be obligated to take the
actions described in Section 3.4(b) with respect to such Qualified Replacement
Mortgage Loan upon the discovery by any of the Noteholders, the Servicer, the
Seller, the Insurer, or the Indenture Trustee that the representations and
warranties set forth in Section 3.3(a) above are untrue in any material
respect on the date such Qualified Replacement Mortgage Loan is conveyed to
the Trust such that the interests of the Noteholders or the Insurer in the
related Qualified Replacement Mortgage Loan are materially and adversely
affected.
(e) It is understood and agreed that the covenants set forth in this
Section 3.4 shall survive the pledge of the Mortgage Loans (including the
Qualified Replacement Mortgage Loans) to the Indenture Trustee on behalf of
the Trust.
ARTICLE IV
SERVICING AND ADMINISTRATION
OF MORTGAGE LOANS
Section 4.1 The Servicer.
(a) Mellon Bank, N.A. agrees to act as the Servicer and to perform
all serving duties under this Agreement subject to the terms hereof.
(b) The Servicer shall service and administer the Mortgage Loans on
behalf of the Trust and the Insurer in a manner consistent with the terms of
this Agreement and with general industry practice and the manner in which the
Servicer services and administers mortgage loans for its own account. The
Servicer shall have full power and authority, acting alone or through a
subservicer, to do any and all things in connection with such servicing and
administration which it may deem necessary or desirable, it being understood,
however, that the Servicer shall at all times remain responsible to the
Indenture Trustee, the Insurer and the Noteholders for the performance of its
duties and obligations hereunder in accordance with the terms hereof as if it
were performing such duties and obligations directly and any amounts in
respect of the Mortgage Loans received by any such subservicer shall be deemed
to have been received by the Servicer whether or not actually received by it.
Without limiting the generality of the foregoing, the Servicer shall continue,
and is hereby authorized and empowered by the Trust and the Indenture Trustee,
to execute and deliver, on behalf of itself, the Noteholders, the Insurer and
the Indenture Trustee, or any of them, any and all instruments of satisfaction
or cancellation, or of partial or full release or discharge and all other
comparable instruments, with respect to the Mortgage Loans and with respect to
the Mortgaged Properties. The Seller and the Indenture Trustee shall upon
written request of a Servicing Officer execute any powers of attorney and
other documents prepared and furnished by the Servicer that are necessary or
appropriate to enable the Servicer to carry out its servicing and
administrative duties hereunder. The Servicer in such capacity may also
consent to the placing of a Senior Lien with respect to any Mortgage Loan on
the related Mortgaged Property, provided that
(x) such Mortgage succeeded to a first lien position
after the related Mortgage Loan was conveyed to the Trust and,
immediately following the placement of such Senior Lien, such
Mortgage is in a second lien position and the outstanding principal
amount of the mortgage loan secured by such subsequent Senior Lien is
no greater than the outstanding principal amount of the senior
mortgage loan secured by the Mortgaged Property as of the date the
related Mortgage Loan was originated; or
(y) the Mortgage relating to such Mortgage Loan was
in a second lien position as of the Cut-off Date and the new Senior
Lien secures a mortgage loan that refinances an existing first
mortgage loan and the outstanding principal amount of the replacement
first mortgage loan immediately following such refinancing is not
greater than the outstanding principal amount of such existing first
mortgage loan at the date of origination of such Mortgage Loan;
provided, further, that in the case of (x) and (y) above such Senior Lien does
not secure a note that provides for negative amortization. In the event that
the Servicer consents to the placing of a Senior Lien to that of any Mortgage
on the related Mortgaged Property other than in accordance with (x) and (y)
above and the senior lender forecloses upon such senior mortgage, the Servicer
shall repurchase the related Mortgage Loan from the Trust for an amount equal
to the Loan Acquisition Price in accordance with Section 3.4.
The Servicer may also, without prior approval from the Rating
Agencies or the Insurer, solicit Mortgagors for increases in their Credit
Limits, so long as any increase in Credit Limits is consistent with the
Servicer's underwriting policies and complies with the following requirements:
(i) the Credit Limit of any Mortgage Loan may be
increased to an amount resulting in a Combined Loan-to-Value Ratio
(as of the date of increase) based on the most recent Appraised Value
which is not in excess of the Combined Loan-to-Value Ratio of such
Mortgage Loan based on the prior Credit Limit and the prior Appraised
Value;
(ii) the Credit Limit of any Mortgage Loan having a
Combined Loan-to-Value Ratio (as of the Cut-Off Date) of less than or
equal to 65% (any such Mortgage Loan, a "65% CLTV Loan") may be
increased to an amount resulting in a 65% Combined Loan-to-Value
Ratio (as of the date of increase); provided that the amount of such
increase, together with all increases of Credit Limits with respect
to any other 60% CLTV Loans which have been granted since the Closing
Date, does not exceed an amount equal to 5% of the aggregate of the
Credit Limits (as of the Cut-Off Date) of all 60% CLTV Loans; and
(iii) the Credit Limit of any Mortgage Loan (including
any 60%; CLTV Loan) may be increased to an amount resulting in a 65%
Combined Loan-to-Value Ratio (as of the date of increase) which is 10
percentage points greater than the Combined Loan-to-Value Ratio of
such Mortgage Loan as of the Cut-Off Date; provided that (A) the
Servicer shall not increase the Combined Loan-to-Value Ratio of any
Mortgage Loan above 85%; and (b) the amount of such increase,
together with all increases of Credit Limits with respect to any
other mortgage Loans which have been granted since the Closing Date
(other than Credit Limit increases with respect to 60% CLTV Loans
which the Servicer elects to include under clause (i) above), does
not exceed an amount equal to 5% of the aggregate of the Credit
Limits (as of the Cut-Off Date) of all Mortgage Loans.
However, in the event that a Credit Line Agreement is so modified to
provide for an increased Credit Limit and the resulting Combined Loan-to-Value
Ratio exceeds the limitations specified in (i), (ii) and (iii) above, the
Servicer, not later than the Business Day preceding the Payment Date next
following the Remittance Period during which such modification occurred, shall
substitute a Qualified Replacement Mortgage Loan, for such Mortgage Loan. Any
such substitution shall be accomplished in the same manner and subject to the
same conditions as set forth in Section 2.3 and Section 3.4(c).
The Servicer may also, without prior approval from the Rating
Agencies or the Insurer, extend the maturity date of a Mortgage Loan in
connection with any permissible extension of the related Draw Period, so long
as no such extension would cause the maturity date of the Mortgage Loan to
occur later than February 28, 2026, or unless the Insurer consents in writing
thereto.
Subject to the other provisions of this Section 4.1, the Servicer may
agree to changes in the terms of a Mortgage Loan at the request of the
Mortgagor provided that such changes (i) do not materially and adversely
affect the interests of Noteholders or the Insurer 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
Insurer.
In addition to the foregoing, the Servicer may solicit Mortgagors to
change the related Coupon Rate; provided that such changes (i) do not
materially and adversely affect the interests of Noteholders or the Insurer,
(ii) are consistent with prudent and customary business practice as evidenced
by a certificate signed by a Servicing Officer delivered to the Indenture
Trustee and the Insurer and (iii) do not decrease the weighted average Margin
of the Mortgage Loans to an amount below 3.50%. Nothing herein shall limit the
right of the Seller to solicit Mortgagors with respect to new loans (including
mortgage loans) that are not Mortgage Loans.
The relationship of the Servicer (and of any successor to the
Servicer as servicer under this Agreement) to the Indenture Trustee under this
Agreement is intended by the parties to be that of an independent contractor
and not that of a joint venturer, partner or agent.
(c) In the event that the rights, duties and obligations of the
Servicer are terminated hereunder, any successor to the Servicer in its sole
discretion may, to the extent permitted by applicable law, terminate the
existing subservicer arrangements with any subservicer or assume the
terminated Servicer's rights under such subservicing arrangements which
termination or assumption will not violate the terms of such arrangements. The
Servicer shall at its expense, upon request of its successor, deliver to the
assuming party documents and records relating to each subservicing arrangement
and an accounting of amounts collected and held by it and otherwise use its
best reasonable efforts to effect the orderly and efficient transfer of the
subservicing arrangement to the assuming party.
Section 4.2 Collection of Certain Mortgage Loan Payments;
Mortgage Loan Payment Record.
(a) The Servicer shall make reasonable efforts to collect all
payments called for under the terms and provisions of the Mortgage Loans, and
shall, to the extent such procedures shall be consistent with this Agreement,
follow such collection procedures as it follows with respect to mortgage loans
in its servicing portfolio comparable to the Mortgage Loans. Consistent with
the foregoing, and without limiting the generality of the foregoing, the
Servicer may in its discretion (i) waive any late payment charge or any
assumption fees or other fees which may be collected in the ordinary course of
servicing such Mortgage Loan, (ii) modify payments of monthly principal and
interest on any Mortgage Loan becoming subject to the terms of the Civil
Relief Act, in accordance with the Servicer's general policies of comparable
mortgage loans subject to the Civil Relief Act, and (iii) arrange with a
Mortgagor a schedule for the payment of interest due and unpaid; provided that
such arrangement is consistent with the Servicer's policies with respect to
the mortgage loans it owns or services; provided, further, that
notwithstanding such arrangement such Mortgage Loans will be included in the
information regarding delinquent Mortgage Loans set forth in the Servicer
Report and monthly statement to Noteholders pursuant to Section 4.14.
(b) The Servicer shall establish and maintain with the Indenture
Trustee or one of the Indenture Trustee's Affiliates a separate trust account
(the "Principal and Interest Account") titled "Xxxxx Fargo Bank Minnesota,
N.A., as Trustee, in trust for the registered holders of Mellon Home Equity
Line of Credit Asset-Backed Notes, Series 2001-1 -- Principal and Interest
Account." The Principal and Interest Account shall be an Eligible Account. The
Servicer shall on the Closing Date deposit any amounts representing payments
on, and any collections in respect of, the Mortgage Loans received on or after
the Cut-Off Date and prior to the Closing Date, and thereafter the Servicer or
the Seller, as the case may be, shall deposit within two Business Days (unless
the requirements of Subsection (c) below have been met) following receipt
thereof the following payments and collections received or made by it (without
duplication):
(i) all payments on and collections in respect of the
Mortgage Loans;
(ii) the aggregate Loan Reacquisition Prices and
Substitution Amounts for Mortgage Loans purchased or substituted for
by the Seller pursuant to Section 2.2 or 3.4;
(iii) the aggregate purchase price of the Mortgage Loans
purchased by the Servicer pursuant to Section 4.1;
(iv) Net Liquidation Proceeds net of any related
Foreclosure Profit;
(v) Mortgage Insurance Proceeds; and
(vi) amounts required to be paid by the Seller in
connection with the termination of the Trust pursuant to Section 9.1
of the Trust Agreement;
provided, however, that with respect to each Remittance Period, the Servicer
shall retain (x) from payments in respect of interest on the Mortgage Loans,
the Servicing Fee for such Remittance Period, (y) any unreimbursed Servicing
Advance from amounts specified in Section 4.4(x) of this Agreement and (z) any
xxxxxxxxxxxx X&X Advance made by the Servicer pursuant to Section 4.18 from
the repayment or recovery of delinquent amounts on a Mortgage Loan as to which
such P&I Advance was made. The foregoing requirements respecting deposits to
the Principal and Interest Account are exclusive, it being understood that,
without limiting the generality of the foregoing, the Servicer need not
deposit in the Principal and Interest Account amounts representing Foreclosure
Profits, fees (including annual fees) payable by Mortgagors, or amounts
received by the Servicer for the accounts of Mortgagors for application
towards the payment of taxes, insurance premiums, assessments and similar
items. The Servicer shall remit all Foreclosure Profits to the Seller.
On each Remittance Date, the Servicer shall withdraw from the
Principal and Interest Account the Monthly Remittance Amount for such
Remittance Date and shall transfer it to the Note Account for distribution
pursuant to Section 8.6 of the Indenture on the related Payment Date. In
addition, the Servicer shall notify the Indenture Trustee in writing on each
Determination Date of the amount of payments and collections in the Principal
and Interest Account allocable to Interest Collections and Principal
Collections for the following Payment Date.
The Servicer may cause the institution maintaining the Principal and
Interest Account to invest any funds in the Principal and Interest Account in
Eligible Investments (including obligations of the Servicer or any of its
affiliates, if such obligations otherwise qualify as Eligible Investments),
which shall mature not later than the Determination Date and shall not be sold
or disposed of prior to its maturity. Any such investment shall be registered
in the name of the Indenture Trustee as trustee hereunder or in the name of
its nominee and to the extent such investments are certificated they shall be
maintained in the possession of the Trustee in the State in which its
Corporate Trust Office is located. Except as provided above, all income and
gain realized from any such investment, net of any loss, in any Remittance
Period shall be additional servicing compensation for the Servicer.
(c) Notwithstanding Section 4.2(b), so long as Mellon Bank, N.A. is
acting as Servicer hereunder and (i) the Servicer has and maintains a
certificate of deposit rating of at least "P-1" by Moody's and "A-1" by
Standard & Poor's, and deposit insurance provided by either the Bank Insurance
Fund or the Savings Association Insurance Fund or (ii) the Servicer provides
to the Indenture Trustee a letter of credit or other credit support acceptable
to each Rating Agency and the Insurer, then the Servicer may deposit in the
Note Account amounts received with respect to the Mortgage Loans (whether or
not allocable to principal of or interest on the Principal Balance) and which
will constitute the Monthly Remittance Amount for the next Payment Date, not
later than 12:00 noon New York time, on the Remittance Date with respect to
such Payment Date.
Section 4.3 Withdrawals from the Principal and Interest Account.
If the Servicer deposits in the Principal and Interest Account any
amount not required to be deposited therein or any amount in respect of
payments by Mortgagors by checks subsequently returned for insufficient funds
or other reason for non-payment it may at any time withdraw such amount from
the Principal and Interest Account, and any such amounts shall not be included
in the amounts to be deposited in the Principal and Interest Account pursuant
to Section 4.2, any provision herein to the contrary notwithstanding. Any
withdrawal permitted by this paragraph may be accomplished by delivering an
Officer's Certificate to the Indenture Trustee which describes the purpose of
such withdrawal. If the facts set forth on the face of such Officer's
Certificate indicate that amounts deposited were not required to be deposited
or credited under the terms of Section 4.2, the Indenture Trustee shall permit
the Servicer to withdraw or debit such amount as provided in this Section 4.3.
Section 4.4 Maintenance of Hazard Insurance; Property Protection
Expenses.
The Servicer shall use its reasonable best efforts to cause to be
delivered to it at the date of origination of each Mortgage Loan hazard
insurance naming the Servicer as loss payee thereunder providing extended
coverage in an amount which is at least equal to the lesser of (i) the maximum
insurable value of the improvements securing such Mortgage Loan from time to
time or (ii) the combined principal balance owing on such Mortgage Loan and
any mortgage loan senior to such Mortgage Loan from time to time. Amounts
collected by the Servicer under any such policies shall be deposited in the
Principal and Interest Account to the extent called for by Section 4.2. In
cases in which any Mortgaged Property is located in a federally designated
flood area, the hazard insurance to be maintained for the related Mortgage
Loan shall include flood insurance. All such flood insurance shall be in such
amounts as are required under applicable guidelines of the Federal Flood
Emergency Act. The Servicer shall be under no obligation to require that any
Mortgagor maintain earthquake or other additional insurance and shall be under
no obligation itself to maintain any such additional insurance on property
acquired in respect of a Mortgage Loan, other than pursuant to such applicable
laws and regulations as shall at any time be in force and as shall require
such additional insurance.
The Servicer will pay all "out-of-pocket" costs and expenses incurred
in the performance of its servicing obligations, including, but not limited
to, the cost of (i) Preservation Expenses, (ii) the cost of any enforcement or
judicial proceedings, including (a) foreclosures, and (b) other legal actions
and costs associated herewith that potentially affect the existence, validity,
priority, enforceability or collectibility of the Mortgage Loans, including
collection agency fees and costs of pursuing or obtaining personal judgments,
garnishments, levies, attachment and similar actions, (iii) the cost of the
conservation, management, liquidation, sale or other disposition or any
Mortgaged Property acquired in satisfaction of the related Mortgage Loan
including reasonable fees paid to any independent contractors in connection
therewith, and (iv) advances to keep senior liens current, unless with respect
to any of the foregoing the Servicer has determined that such advance would
constitute a Nonrecoverable Advance. Each such amount so paid will constitute
a "Servicing Advance." The Servicer may recover Servicing Advances (x) from
the Mortgagors to the extent permitted by the Mortgage Loans, from Liquidation
Proceeds realized upon the liquidation of the related Mortgage Loan and from
Mortgage Insurance Proceeds, and (y) as provided in Section 8.6(c) of the
Indenture.
Section 4.5 Assumption and Modification Agreements.
In any case in which a Mortgaged Property has been or is about to be
conveyed by the Mortgagor, the Servicer shall exercise or refrain from
exercising its right to accelerate the maturity of such Mortgage Loan
consistent with the then current practice of the Servicer and without regard
to the inclusion of such Mortgage Loan in the Trust. If it elects not to
enforce its right to accelerate or if it is prevented from doing so by
applicable law, the Servicer (so long as such action conforms with the
Servicer's underwriting standards at the time for new originations) is
authorized to take or enter into an assumption and modification agreement from
or with the Person to whom such Mortgaged Property has been or is about to be
conveyed, pursuant to which such Person becomes liable under the Credit Line
Agreement and, to the extent permitted by applicable law, the Mortgagor
remains liable thereon. The Servicer shall notify the Indenture Trustee that
any assumption and modification agreement has been completed by delivering to
the Indenture Trustee an Officer's Certificate certifying that such agreement
is in compliance with this Section 4.5 and, in accordance with Section 2.1(g),
shall retain, as bailee for the Indenture Trustee, the original copy of such
assumption and modification agreement. Any such assumption and modification
agreement shall, for all purposes, be considered a part of the related
Mortgage File to the same extent as all other documents and instruments
constituting a part thereof. No change in the terms of the related Credit Line
Agreement may be made by the Servicer in connection with any such assumption:
to the extent that such change would not be permitted to be made in respect of
the original Credit Line Agreement pursuant to Section 4.1(b). Any fee
collected by the Servicer for entering into any such agreement will be
retained by the Servicer as additional servicing compensation.
Section 4.6 Realization Upon Defaulted Mortgage Loans.
The Servicer shall foreclose upon or otherwise comparably convert to
ownership Mortgaged Properties securing such of the Mortgage Loans as come
into and continue in default when, in the opinion of the Servicer based upon
the practices and procedures referred to in the following sentence, no
satisfactory arrangements can be made for collection of delinquent payments
pursuant to Section 4.2; provided that if the 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 such Mortgaged Property
would not be commercially reasonable, then the Servicer will not cause the
Trust or Indenture Trustee to acquire title to such Mortgaged Property in a
foreclosure or similar proceeding and, if any such property so acquired is
determined to be affected by hazardous or toxic wastes or substances, the
Indenture Trustee shall not be liable and shall be indemnified by the Seller
to the full extent of any liability pursuant to the Comprehensive
Environmental Response, Compensation and Liability Act or any similar state
statute with respect to such matters. In connection with such foreclosure or
other conversion, the Servicer shall follow such practices (which may include,
in the case of any default on a related senior mortgage loan, the advancing of
funds to correct such default) and procedures as it shall deem, necessary or
advisable and as shall be normal and usual in its general mortgage servicing
activities. The foregoing is subject to the proviso that the Servicer shall
not be required to advance its own funds in connection with any foreclosure
unless it shall determine that such expenditure will increase Net Liquidation
Proceeds. Any such amounts advanced pursuant to this Section 4.6 shall
constitute Servicing Advances within the meaning of Section 4.4.
In the event that title to any Mortgaged Property is acquired in
foreclosure or by deed in lieu of foreclosure, the deed or certificate of sale
for such REO Property shall be issued to the Indenture Trustee, or to its
nominee on behalf of the Noteholders and the Insurer. The Servicer shall
manage, conserve, protect and operate each REO Property for the Noteholders
solely for the purpose of its prompt disposition and sale. Pursuant to its
efforts to sell such REO Property, the Servicer shall either itself or through
an agent selected by the Servicer protect and conserve such REO Property in
the same manner and to such extent as is customary in the locality where such
REO Property is located and may, incident to its conservation and protection
of the interests of the Noteholders and the Insurer, rent the same, or any
part thereof, as the Servicer deems to be in the best interest of the
Noteholders and the Insurer for the period prior to the sale of such REO
Property.
Section 4.7 Indenture Trustee to Cooperate.
On or before each Payment Date, the Servicer will notify the
Indenture Trustee of the payment in full of the Principal Balance of any
Mortgage Loan during the preceding Remittance Period, which notification shall
be by a certification of a Servicing Officer (which certification shall
include a statement to the effect that all amounts received in connection with
such payment which are required to be deposited in the Principal and Interest
Account pursuant, to Section 4.2 have been so deposited). Upon any such
payment in full, the Servicer is authorized to execute pursuant to the
authorization contained in Section 4.1 an instrument of satisfaction regarding
the related Mortgage, which instrument of satisfaction shall be recorded by
the Servicer if required by applicable law and be delivered to the Person
entitled thereto. It is understood and agreed that no expenses incurred in
connection with such instrument of satisfaction or transfer shall be
reimbursed from amounts deposited in the Principal and Interest Account. If
the Indenture Trustee is holding the Mortgage Files, from time to time and as
appropriate for the servicing or foreclosure of any Mortgage Loan, the
Indenture Trustee shall, upon request of the Servicer and delivery to the
Indenture Trustee of two copies of a Request for Release, in the form annexed
hereto as Exhibit F, signed by a Servicing Officer (or in a mutually agreed
upon electronic format that, in lieu of a signature, will originate from a
Servicing Officer), release the related Mortgage File to the Servicer and the
Indenture Trustee shall execute such documents, in the forms provided by the
Servicer, as shall be necessary to the prosecution of any such proceedings or
the taking of other servicing actions. Such Request for Release shall obligate
the Servicer to return the Mortgage File to the Indenture Trustee to the
extent required pursuant to Section 2.1(g) when the need therefor by the
Servicer no longer exists unless the Mortgage Loan shall be liquidated, in
which case, the Servicer shall deliver two copies a certificate of a Servicing
Officer similar to that hereinabove specified so stating.
In order to facilitate the foreclosure of the Mortgage securing any
Mortgage Loan that is in default and as to which recordation of the
Assignments of Mortgage in accordance with the provisions of this Agreement
has occurred, the Indenture Trustee shall, if so requested in writing by the
Servicer, execute an appropriate assignment in the form provided to the
Indenture Trustee by the Servicer to assign such Mortgage Loan to the Servicer
for the purpose of collection (any such assignment shall unambiguously
indicate that the assignment is for the purpose of collection only), and, upon
such assignment, the Servicer shall thereupon bring all required actions in
its own name and otherwise enforce the terms of the Mortgage loan and deposit
or credit the Net Liquidation Proceeds, exclusive of Foreclosure Profits,
received with respect thereto in the Principal and Interest Account. In the
event that all delinquent payments due under any such Mortgage Loan are paid
by the Mortgagor and any other defaults are cured then the Servicer shall
promptly reassign such Mortgage Loan to the Indenture Trustee to the extent
required in accordance with Section 2.1(h) and return the related Mortgage
File to the place where it was being maintained.
Section 4.8 Servicing Compensation; Payment of Certain Expense
by Servicer.
The Servicer shall be entitled to receive the Servicing Fee in
accordance with Section 4.2(b) as compensation for its services in connection
with servicing the Mortgage Loans. Moreover, net investment earnings on the P&
I Account and the Note Account (other than net investment earnings on amounts
in the Note Account from the day prior to each Payment Date to such Payment
Date), additional servicing compensation in the form of late payment charges
or other receipts not required to be deposited in the Principal and Interest
Account (other than Foreclosure Profits) shall be retained by the Servicer.
The Servicer shall be required to pay all expenses incurred by it in
connection with its activities hereunder and shall not be entitled to
reimbursement therefor except as specifically provided herein.
Section 4.9 Annual Statement as to Compliance.
(a) The Servicer will deliver to the Indenture Trustee, the Insurer
and the Rating Agencies, on or before April 20 of each year, beginning April
20, 2002, an Officer's Certificate stating that (i) a review of the activities
of the Servicer during the preceding fiscal year ending December 31 (or such
shorter period as is applicable in the case of the first report) and of its
performance under this Agreement had been made under such officer's
supervision and (ii) to the best of such officer's knowledge, based on such
review, the Servicer has, fulfilled all its material obligations under this
Agreement throughout such fiscal year, or, if there has been a default in the
fulfillment of any such obligation, specifying each such default known to such
officer and the nature and status thereof.
(b) The Servicer shall deliver to the Indenture Trustee, the Insurer
and each of the Rating Agencies, promptly after having obtained knowledge
thereof, but in no event later than five Business Days thereafter, written
notice by means of an Officer's Certificate of any event which with the giving
of notice or the lapse of time or both, would become an Event of Default.
Section 4.10 Annual Servicing Report.
On or before April 20 of each year, beginning April 20, 2002, the
Servicer at its expense shall cause a firm of nationally recognized
independent public accountants (who may also render other services to the
Servicer) to furnish a report to the Indenture Trustee, the Seller, the
Insurer and each Rating Agency to the effect that such firm, with respect to
the Servicer's overall servicing operations (i) performed applicable tests in
accordance substantially in compliance with the testing procedures as set
forth in Appendix 3 of the Audit Guide for Audits of HUD Approved
Nonsupervised Mortgagees, (ii) examined such operations substantially in
compliance with the requirements of the Uniform Single Attestation Program for
Mortgage Bankers, and in either case stating such firm's conclusions relating
thereto or (iii) examined such operations in accordance with the requirements
of SAS 70.
Section 4.11 Access to Certain Documentation and Information
Regarding the Mortgage Loans.
(a) The Servicer shall provide to the Indenture Trustee, the Insurer
and the agents and examiners of each of the foregoing (when accompanied by
each of the foregoing) access to the documentation regarding the Mortgage
Loans required by applicable state and federal regulations, such access being
afforded without charge but only upon reasonable request and during normal
business hours at the offices of the Servicer.
Upon any change in the format of the computer tape maintained by the
Servicer in respect of the Mortgage Loans, the Servicer shall deliver a copy
of such computer tape to the Indenture Trustee and in addition shall provide a
copy of such computer tape to the Indenture Trustee and the Insurer at such
other times as the Indenture Trustee or the Insurer may reasonably request.
Section 4.12 Maintenance of Certain Servicing Insurance Policies.
The Servicer shall during the term of its service as servicer
maintain in force (i) a policy or policies of insurance covering errors and
omissions in the performance of its obligations as servicer hereunder and (ii)
a fidelity bond in respect of its officers, employees or agents. Each such
policy or policies and bond together, shall comply with the requirements from
time to time of the Federal National Mortgage Association for persons
performing servicing for mortgage loans purchased by such Association.
Section 4.13 Reports to the Securities and Exchange Commission.
Within 15 days after each Payment Date, the Indenture Trustee shall,
in accordance with industry standards, file with the Commission via the
Electronic Data Gathering and Retrieval System (XXXXX), a Form 8-K with a copy
of the statement to the Noteholders for such Payment Date as an exhibit
thereto. Prior to January 30, 2002, the Indenture Trustee shall, in accordance
with industry standards, file a Form 15 Suspension Notification with respect
to the Trust Estate, if applicable. Prior to March 30, 2002, the Indenture
Trustee shall file a Form 10-K, in substance conforming to industry standards,
with respect to the Trust Estate. The Owner Trustee and the Servicer hereby
grant to the Indenture Trustee a limited power of attorney to execute and file
each such document on behalf of the Owner Trustee and Servicer. Such power of
attorney shall continue until either the earlier of (i) receipt by the
Indenture Trustee from the Owner Trustee and the Servicer of written
termination of such power of attorney and (ii) the termination of the Trust
Estate. The Owner Trustee and the Servicer agree to promptly furnish to the
Indenture Trustee, from time to time upon request, such further information,
reports, and financial statements within their control related to this
Agreement and the Mortgage Loans as the Indenture Trustee reasonably deems
appropriate to prepare and file all necessary reports with the Commission. The
Indenture Trustee shall have no responsibility to file any items other than
those specified in this Section.
Section 4.14 Servicer Report.
On the tenth day of each month, the Servicer shall send to the
Indenture Trustee and the Insurer a report (the "Servicer Report"), in the
form of a computer tape or other electronic media, detailing the aggregate
payments on the Mortgage Loans during the prior Remittance Period. Such tape
shall be in the form and have the specifications as may be agreed to between
the Servicer and the Indenture Trustee and the Insurer from time to time.
Section 4.15 Liability of Servicer and Seller.
(a) The Servicer shall not be relieved of its obligations under this
Agreement notwithstanding any subservicing agreement or any of the provisions
of this Agreement relating to agreements or arrangements between the Servicer
and a subservicer or otherwise, and the Servicer shall be obligated to the
same extent and under the same terms and conditions as if it alone were
servicing and administering the Mortgage Loans. The Servicer shall be entitled
to enter into any agreement with a subservicer for indemnification of the
Servicer by such subservicer and nothing contained in such Subservicing
Agreement shall be deemed to limit or modify this Agreement. The Trust shall
not indemnify the Servicer for any losses due to the Servicer's or any
subservicer's negligence.
(b) The Servicer, with respect to (i) below and the Seller with
respect to (ii) below, shall defend, indemnify and hold harmless the Indenture
Trustee (including its officers, directors, employees and agents), the Owner
Trustee (including its officers, directors, employees and agents), the
Depositor and the Trust from and against any and all claims, damages,
liabilities, losses, costs and expenses (including the reasonable fees and
expenses of counsel) to the extent that such claims, damages, liabilities,
losses, costs or expenses arose out of, or were imposed upon the Indenture
Trustee, the Owner Trustee, the Depositor or the Trust in connection with or
by reason of (i) any failure by the Servicer to perform its duties under this
Agreement or any errors or omissions of the Servicer related to such duties,
including the making of any inaccurate representations or warranties hereunder
or (ii) in the case of each of the Indenture Trustee or the Owner Trustee, the
performance of their duties or the exercise of their rights hereunder or under
the other Operative Documents, except to the extent that such claim, damage,
liability, loss, cost or expense resulted from the Indenture Trustee's or the
Owner Trustee's negligence or willful misconduct. The provisions of this
Section 4.15(b) shall run directly to and be enforceable by each injured party
subject to the limitations hereof, and the indemnification provided by the
Servicer to the Indenture Trustee, the Owner Trustee, the Noteholders, the
Depositor and the Trust pursuant to this Section 4.15(b) shall survive the
payment in full of the Notes, the termination of the Indenture and the
resignation or removal of the Indenture Trustee or the Owner Trustee. The
Servicer or the Seller, as applicable, shall pay any amounts owing pursuant to
this Section 4.15(b) directly to the indemnified Person within thirty (30)
days of request thereof, and such amounts shall not be deposited in either the
Principal and Interest Account or the Note Account. Indemnification under this
Section 4.15(b) shall include reasonable fees and expenses of counsel and
expenses of litigation reasonably incurred. If the Servicer or the Seller has
made any indemnity payments to the Indenture Trustee, the Owner Trustee, the
Depositor or the Trust pursuant to this Section 4.15(b) and such party
thereafter collects any of such amounts from others, such party will promptly
repay such amounts collected to the Servicer, or the Seller without interest.
Section 4.16 Subservicing Agreements Between Servicer and
Subservicers.
The Servicer may enter into subservicing agreements for any servicing
and administration of Mortgage Loans with any institution (including
affiliates) which is acceptable to the Insurer and is in compliance with the
laws of each state necessary to enable it to perform its obligations under
such subservicing agreement. The Servicer shall give notice to the Indenture
Trustee and the Insurer of the appointment of any subservicer and shall
furnish to the Insurer and the Rating Agencies a copy of the subservicing
agreement, unless the subservicer is an affiliate of the Servicer. For
purposes of this Agreement, the Servicer shall be deemed to have received
payments on Mortgage Loans when any subservicer has received such payments.
Any such subservicing agreement shall be consistent with and not violate the
provisions of this Agreement.
Any subservicing agreement and any other transactions or services
relating to the Mortgage Loans involving a subservicer shall be deemed to be
between the subservicer and the Servicer alone and the Insurer, the Indenture
Trustee and the Noteholders shall not be deemed parties thereto and shall have
no claims, rights, obligations, duties or liabilities with respect to any
subservicer except as set forth in Section 4.1(c).
Section 4.17 Resignation of the Servicer.
Subject to Section 5.1(c), the Servicer shall not resign from the
obligations and duties hereby imposed on it except:
(1) upon determination that its duties hereunder are no longer
permissible under applicable law or are in material conflict by reason of
applicable law with any other activities carried on by it, the other
activities of the Servicer so causing such a conflict being of a type and
nature carried on by the Servicer at the date of this Agreement or
(2) if
(a) the Servicer has proposed a successor
Servicer to the Indenture Trustee in writing and the proposed
successor 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 Servicer stating that the proposed appointment
of the successor Servicer as 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 Servicer is acceptable
to the Insurer in its sole discretion, as evidenced by a
letter to the Indenture Trustee.
Any determination pursuant to clause (1) above permitting the
resignation of the Servicer shall be evidenced by an opinion of counsel to
such effect which shall be delivered to the Indenture Trustee and the Insurer.
Any resignation of Mellon Bank, N.A., as Servicer shall not relieve it of
responsibility for the obligations specified in Section 8.2 of the Trust
Agreement.
Section 4.18 P&I Advances.
On each Remittance Date, the Servicer may at its discretion, but
shall not be obligated to, with respect to each Mortgage Loan for which the
Minimum Monthly Payment due during the related Remittance Period has not yet
been received, advance the amount of such delinquent payment (such advance, a
"P&I Advance") by depositing the aggregate amount of P&I Advances for such
Remittance Date into the Note Account.
ARTICLE V
SERVICING TERMINATION
Section 5.1 Events of Servicing Termination.
(a) If any one of the following events ("Event of Servicing
Termination") shall occur and be continuing:
(i) The Servicer shall fail to deliver to the Indenture
Trustee any proceeds or required payment, which failure continues
unremedied for three Business Days following written notice to an
Authorized Officer of the Servicer from the Indenture Trustee or from
the Insurer or Noteholders evidencing Percentage Interests
aggregating not less than 25%; provided, however, that if the
Servicer does not remit the Monthly Remittance Amount to the Note
Account by the day prior to the Payment Date, without limiting the
foregoing, the Servicer shall pay to the Indenture Trustee, for the
account of the Indenture Trustee, interest at the Prime Rate thereon
from such day prior to the Payment Date to but not including the date
that such remittance is made;
(ii) The Servicer shall (I) apply for or consent to the
appointment of a receiver, trustee, liquidator, conservator,
custodian or similar entity with respect to itself or its property,
(II) admit in writing its inability to pay its debts generally as
they become due, (III) make a general assignment for the benefit of
creditors, (IV) be adjudicated a bankrupt or insolvent, (V) commence
a voluntary case under the federal bankruptcy laws of the United
States of America or file a voluntary petition or answer seeking
reorganization, an arrangement with creditors or an order for relief
or seeking to take advantage of any insolvency law or file an answer
admitting the material allegations of a petition filed against it in
any bankruptcy, reorganization or insolvency proceeding or (VI) take
corporate action for the purpose of effecting any of the foregoing;
(iii) If without the application, approval or consent of
the Servicer, a proceeding shall be instituted in any court of
competent jurisdiction, under any law relating to bankruptcy,
insolvency, reorganization or relief of debtors, seeking in respect
of the Servicer an order for relief or an adjudication in bankruptcy,
reorganization, dissolution, winding up, liquidation, a composition
or arrangement with creditors, a readjustment of debts, the
appointment of a trustee, receiver, liquidator, conservator or
custodian or similar entity with respect to the Servicer or of all or
any substantial part of its assets, or other like relief in respect
thereof under any bankruptcy or insolvency law, and, if such
proceeding is being contested by the Servicer in good faith, the same
shall (A) result in the entry of an order for relief or any such
adjudication or appointment or (B) continue undismissed or pending
and unstayed for any period of 75 consecutive days;
(iv) The Servicer shall fail to cure any breach of any of
its representations and warranties set forth in Section 3.2 or
perform any of its covenants or other obligations hereunder (except
those otherwise provided for pursuant to clauses (i) and (v) of this
Section 5.1(a)), which failure materially and adversely affects the
interests of the Noteholders or Insurer and which failure continues
for a period of 30 days after the Servicer's discovery or receipt of
notice thereof from the Indenture Trustee, the Insurer, or
Noteholders evidencing Percentage Interests aggregating not less than
25%; provided, however, that if the Servicer can demonstrate to the
reasonable satisfaction of the Insurer that it is diligently pursuing
remedial action, then the cure period may be extended with the
written consent of the Insurer; or
(v) The Servicer shall fail to make any required
Servicing Advance which failure continues for 30 days or more after
written notice from the Insurer if such failure has a material and
adverse affect on Net Liquidation Proceeds, in the sole determination
of the Insurer;
then, and in each and every such case, so long as an Event of Servicing
Termination shall not have been remedied by the Servicer, either the Indenture
Trustee or the Noteholders evidencing Percentage Interests aggregating not
less than 51%, in each case with the written consent of the Insurer, or the
Insurer, in all cases with and by notice then given in writing to the Servicer
and the Indenture Trustee may terminate all of the rights and obligations of
the Servicer as servicer under this Agreement. Any such notice to the Servicer
shall also be given to each Rating Agency and the Insurer. Within 90 days
after the receipt by the Servicer of such written notice, all authority and
power of the Servicer under this Agreement, whether with respect to the Notes
or the Mortgage Loans or otherwise, shall pass to and be vested in the
Indenture Trustee pursuant to and under this Section 5.1 and, without
limitation, the Indenture Trustee is hereby authorized and empowered to
execute and deliver, on behalf of the Servicer, as attorney-in-fact or
otherwise, any and all documents and other instruments, and to do or
accomplish all other acts or things necessary or appropriate to effect the
purposes of such notice of termination, whether to complete the transfer and
endorsement of each Mortgage Loan and related documents, or otherwise. The
Servicer agrees to cooperate with the Indenture Trustee in effecting the
termination of the responsibilities and rights of the Servicer hereunder,
including, without limitation, the transfer to the Indenture Trustee for the
administration by it of all cash amounts that shall at the time be held by the
Servicer and to be deposited by it in the Note Account, or that have been
deposited by the Servicer in the Note Account or thereafter received by the
Servicer with respect to the Mortgage Loans. The Indenture Trustee shall be
entitled to be reimbursed from the Servicer (or by the Trust pursuant to
Section 5.9 or 8.6 of the Indenture if the Servicer is unable to fulfill its
obligations hereunder) for all costs associated with the transfer of servicing
from the predecessor servicer, including, without limitation, any costs or
expenses associated with the complete transfer of all servicing data and the
completion, correction or manipulation of such servicing data as may be
required by the Indenture Trustee to correct any errors or insufficiencies in
the servicing data or otherwise to enable the Indenture Trustee to service the
Mortgage Loans properly and effectively. All reasonable costs and expenses
(including attorneys' fees) incurred in connection with amending this
Agreement to reflect such succession as Servicer pursuant to this Section 5.1
shall be paid by the predecessor Servicer (or if the predecessor Servicer is
the Indenture Trustee, the initial Servicer) upon presentation of reasonable
documentation of such costs and expenses.
Nothing herein shall relieve the Servicer from using its best efforts
to perform its respective obligations in a timely manner in accordance with
the terms of this Agreement and the Servicer shall provide the Indenture
Trustee, the Seller, the Insurer and the Noteholders with an Officer's
Certificate giving prompt notice of such failure or delay by it, together with
a description of its efforts to so perform its obligations. The Servicer shall
immediately notify the Indenture Trustee and the Insurer in writing of any
Events of Servicing Termination.
(b) In addition to the foregoing, the Insurer may remove the Servicer
upon the occurrence of any of the following:
(i) the Servicer shall fail to deliver to the Indenture
Trustee any proceeds or required payment, which failure continues
unremedied for three Business Days following written notice to an
Authorized Officer of the Servicer from the Indenture Trustee or from
the Insurer or Noteholders evidencing Percentage Interests
aggregating not less than 25%;
(ii) the Servicer shall fail to make any required
Servicing Advance which failure continues for 30 days or more after
written notice from the Insurer if such failure has a material and
adverse affect on Net Liquidation Proceeds, in the sole determination
of the Insurer; or
(iii) the failure of the Servicer to perform one or more
of its material obligations under this Agreement, which failure
continues for thirty days or more after written notice from the
Insurer.
(c) No removal or resignation of the Servicer shall become effective
until the Indenture Trustee or a successor servicer acceptable to the Insurer
shall have assumed the Servicer's responsibilities and obligations in
accordance with this Section.
(d) Upon removal or resignation of the Servicer, the Servicer also
shall promptly deliver or cause to be delivered to a successor servicer or the
Indenture Trustee all the books and records (including, without limitation,
all Mortgage Files or portions thereof in the Servicer's possession and all
records kept in electronic form) that the Servicer has maintained for the
Mortgage Loans, including all tax bills, assessment notices, insurance premium
notices and all other documents then in the Servicer's possession.
(e) Any collections received by the Servicer after removal or
resignation shall be endorsed by it to the Indenture Trustee and remitted
directly and immediately to the Indenture Trustee or the successor Servicer.
(f) Upon removal or resignation of the Servicer, the Indenture
Trustee (x) may solicit bids for a successor servicer as described below, and
(y) pending the appointment of a successor Servicer as a result of soliciting
such bids, shall serve as Servicer pursuant to this Section 5.1. The Indenture
Trustee shall, if it is unable to obtain a qualifying bid and is prevented by
law from acting as Servicer, appoint, or petition a court of competent
jurisdiction to appoint, any housing and home finance institution, bank or
mortgage servicing institution which has shareholders' equity of not less than
$5,000,000, as determined in accordance with generally accepted accounting
principles, and acceptable to the Insurer as the successor to the Servicer
hereunder in the assumption of all or any part of the responsibilities, duties
or liabilities of the Servicer hereunder. The compensation of any successor
servicer (including, without limitation, the Indenture Trustee) so appointed
shall be the aggregate Servicing Fees, together with the other servicing
compensation in the form of assumption fees, late payment charges or otherwise
as provided in Section 4.8.
(g) In the event the Indenture Trustee solicits bids as provided
above, the Indenture Trustee shall solicit, by public announcement, bids from
housing and home finance institutions, banks and mortgage servicing
institutions meeting the qualifications set forth above. Such public
announcement shall specify that the successor Servicer shall be entitled to
the full amount of the aggregate Servicing Fees as servicing compensation,
together with the other servicing compensation in the form of assumption fees,
late payment charges or otherwise as provided in Section 4.8. Within thirty
days after any such public announcement, the Indenture Trustee shall negotiate
and effect the sale, transfer and assignment of the servicing rights and
responsibilities hereunder to the qualified party submitting the highest
satisfactory bid. The Indenture Trustee shall deduct from any sum received by
the Indenture Trustee from the successor to the Servicer in respect of such
sale, transfer and assignment all costs and expenses of any public
announcement and of any sale, transfer and assignment of the servicing rights
and responsibilities hereunder. After such deductions, the remainder of such
sum shall be paid by the Indenture Trustee to the Servicer at the time of such
sale, transfer and assignment to the Servicer's successor.
(h) The Indenture Trustee and such successor shall take such action,
consistent with this Agreement, as shall be necessary to effectuate any such
succession. The Servicer agrees to cooperate with the Indenture Trustee and
any successor Servicer in effecting the termination of the Servicer's
servicing responsibilities and rights hereunder and shall promptly provide the
Indenture Trustee or such successor Servicer, as applicable, all documents and
records reasonably requested by it to enable it to assume the Servicer's
functions hereunder and shall promptly also transfer to the Indenture Trustee
or such successor Servicer, as applicable, all amounts which then have been or
should have been deposited in the Principal and Interest Account or the Note
Account by the Servicer or which are thereafter received with respect to the
Mortgage Loans. Neither the Indenture Trustee nor any other successor Servicer
shall be held liable by reason of any failure to make, or any delay in making,
any distribution hereunder or any portion thereof caused by (i) the failure of
the Servicer to deliver, or any delay in delivering, cash, documents or
records to it, or (ii) restrictions imposed by any regulatory authority having
jurisdiction over the Servicer.
(i) The Servicer which is being removed or is resigning shall give
notice to the Mortgagors and to Xxxxx'x and S&P of the transfer of the
servicing to the successor.
(j) The Indenture Trustee shall give notice to the Insurer, Xxxxx'x
and S&P and to the Noteholders of the occurrence of any event specified in
Section 5.1(a) of which the Indenture Trustee has actual knowledge.
(k) The Indenture Trustee or any other successor Servicer, upon
assuming the duties of Servicer hereunder, shall thereupon make all Servicing
Advances which the Servicer has theretofore failed to pay with respect to the
Mortgage Loans.
Section 5.2 Inspections by Insurer.
At any reasonable time and from time to time upon reasonable notice,
the Insurer, the Indenture Trustee, or any agents or representatives thereof
may inspect the Servicer's servicing operations and discuss the servicing
operations of the Servicer with any of its officers or directors.
Section 5.3 Merger, Conversion, Consolidation or Succession to
Business of Servicer.
Any corporation into which the Servicer may be merged or converted or
with which it may be consolidated, or any corporation resulting from any
merger, conversion or consolidation to which the Servicer shall be a party, or
any corporation succeeding to all or substantially all of the business of the
Servicer, shall be the successor of the Servicer hereunder, without the
execution or filing of any paper or any further act on the part of any of the
parties hereto provided that such corporation meets the qualifications set
forth in Section 5.1(f).
Section 5.4 Notification to Noteholders.
Upon any termination or appointment of a successor to the Servicer
pursuant to this Article V, the Indenture Trustee shall give prompt written
notice thereof to the Noteholders at their respective addresses appearing in
the Note Register, the Insurer and each Rating Agency.
Section 5.5 Notices of Material Events.
The Servicer shall give prompt notice to the Insurer, the Indenture
Trustee, Xxxxx'x and S&P of the occurrence of any of the following events:
(a) Any default or any fact or event which results in the occurrence
of a default by the Seller or the Servicer under any Operative Document or
would constitute a material breach of a representation, warranty or covenant
under any Operative Document.
(b) The submission of any claim or the initiation of any legal
process, litigation or administrative or judicial investigation against the
Seller or the Servicer in any federal, state or local court or before any
governmental body or agency, or before any arbitration board, or any such
proceedings threatened by any governmental agency, which, if adversely
determined, would have a material adverse effect upon any of the Seller's or
the Servicer's ability to perform its obligations under any Operative
Document.
(c) The commencement of any proceedings by or against the Seller or
the Servicer under any applicable bankruptcy, reorganization, liquidation,
insolvency or other similar law now or hereafter in effect or of any
proceeding in which a receiver, liquidator, trustee or other similar official
shall have been, or may be, appointed or requested for the Seller or the
Servicer; and
(d) The receipt of notice from any agency or governmental body having
authority over the conduct of the Seller's or the Servicer's business that the
Seller or the Servicer is to cease and desist, or to undertake any practice,
program, procedure or policy employed by the Seller or the Servicer in the
conduct of the business of any of them, and such cessation or undertaking will
materially adversely affect the conduct of the Seller's or the Servicer's
business or its ability to perform under the Operative Documents or materially
adversely affect the financial affairs of the Seller or the Servicer.
ARTICLE VI
ADMINISTRATIVE DUTIES OF THE SERVICER
Section 6.1 Administrative Duties with Respect to the Indenture.
The Servicer shall perform all its duties and the duties of the Trust
under the Indenture. In addition, the Servicer shall consult with the Owner
Trustee as the Servicer deems appropriate regarding the duties of the Trust
under the Indenture. The Servicer shall monitor the performance of the Trust
and shall advise the Owner Trustee when action is necessary to comply with the
Trust's duties under the Indenture. The Servicer shall prepare for execution
by the Trust or shall cause the preparation by other appropriate Persons of
all such documents, reports, filings, instruments, certificates and opinions
as it shall be the duty of the Trust to prepare, file or deliver pursuant to
the Indenture. In furtherance of the foregoing, the Servicer shall take all
necessary action that is the duty of the Trust to take pursuant to the
Indenture.
(a) Duties with Respect to the Trust.
(i) In addition to the duties of the Servicer set forth
in this Agreement or any of the Operative Documents, the Servicer
shall perform such calculations and shall prepare for execution by
the Trust or the Owner Trustee or shall cause the preparation by
other appropriate Persons of all such documents, reports, filings,
instruments, certificates and opinions as it shall be the duty of the
Trust or the Owner Trustee to prepare, file or deliver pursuant to
this Agreement or any of the Operative Documents or under state and
federal tax and securities laws, and at the request of the Owner
Trustee shall take all appropriate action that it is the duty of the
Trust to take pursuant to this Agreement or any of the Operative
Documents. In accordance with the directions of the Trust or the
Owner Trustee, the Servicer shall administer, perform or supervise
the performance of such other activities in connection with the
Mortgage Loans (including the Operative Documents) as are not covered
by any of the foregoing provisions and as are expressly requested by
the Trust or the Owner Trustee and are reasonably within the
capability of the Servicer.
(ii) Notwithstanding anything in this Agreement or any of
the Operative Documents to the contrary, the Servicer shall be
responsible for promptly notifying the Owner Trustee and the
Indenture Trustee in the event that any withholding tax is imposed on
the Trust's payments (or allocations of income) with respect to the
Certificateholders' interest in the Trust as contemplated by this
Agreement. Any such notice shall be in writing and specify the amount
of any withholding tax required to be withheld by the Owner Trustee
or the Indenture Trustee pursuant to such provision.
(iii) Notwithstanding anything in this Agreement or the
Operative Documents to the contrary, the Servicer shall be
responsible for performance of the duties of the Trust or the
Depositor set forth in Section 5.1(a), (b), (c) and (d) of the Trust
Agreement with respect to, among other things, accounting and reports
with respect to the Certificateholders' interest in the Trust.
(iv) In carrying out the foregoing duties or any of its
other obligations under this Agreement, the Servicer may enter into
transactions with or otherwise deal with any of its Affiliates;
provided, however, that the terms of any such transactions or
dealings shall be in accordance with any directions received from the
Trust (with the written consent of the Insurer) and shall be, in the
Servicer's opinion, no less favorable to the Trust or the Insurer in
any material respect.
(b) Non-Ministerial Matters. With respect to matters that in the
reasonable judgment of the Servicer are non-ministerial, the Servicer shall
not take any action pursuant to this Article VI unless within a reasonable
time before the taking of such action, the Servicer shall have notified the
Owner Trustee and the Insurer of the proposed action and the Owner Trustee and
the Insurer shall have consented in writing thereto or provided an alternative
direction. For the purpose of the preceding sentence, "non-ministerial
matters" shall include:
(i) the amendment of or any supplement to the Indenture;
(ii) the initiation of any claim or lawsuit by the Trust
and the compromise of any action, claim or lawsuit brought by or
against the Trust (other than in connection with the collection of
the Mortgage Loans);
(iii) the amendment, change or modification of this
Agreement or any of the Operative Documents;
(iv) the appointment of successor Note Registrars,
successor Paying Agents and successor Indenture Trustees pursuant to
the Indenture or the appointment of Successor Servicers or the
consent to the assignment by the Note Registrar, Paying Agent or
Indenture Trustee of its obligations under the Indenture; and
(v) the removal of the Indenture Trustee.
(c) Exceptions. Notwithstanding anything to the contrary in this
Agreement, except as expressly provided herein or in the other Operative
Documents, the Servicer, in its capacity hereunder, shall not be obligated to,
and shall not, (1) make any payments to the Noteholders under the Operative
Documents, (2) sell the Trust Property pursuant to Section 5.6 of the
Indenture, (3) take any other action that the Trust directs the Servicer not
to take on its behalf (unless the Insurer so directs) or (4) in connection
with its duties hereunder assume any indemnification obligation of any other
Person.
(d) Responsibility. The Indenture Trustee or any successor Servicer
shall not be responsible for any obligations or duties of the Servicer under
this Section 6.1.
Section 6.2 Records
The Servicer shall maintain appropriate books of account and records
relating to services performed under this Agreement, which books of account
and records shall be accessible for inspection by the Trust, the Indenture
Trustee and the Insurer at any time during normal business hours.
Section 6.3 Additional Information to be Furnished to the Trust
The Servicer shall furnish to the Trust, the Indenture Trustee and
the Insurer from time to time such additional information regarding the
Mortgage Loans as the Trust, the Indenture Trustee or the Insurer shall
reasonably request.
ARTICLE VII
MISCELLANEOUS
Section 7.1 Compliance Certificates and Opinions.
Upon any application or request by the Seller, the Insurer or the
Noteholders to the Indenture Trustee to take any action under any provision of
this Agreement, the Seller or the Noteholders, as the case may be, shall
furnish to the Indenture Trustee a certificate stating that all conditions
precedent, if any, provided for in this Agreement relating to the proposed
action have been complied with, except that in the case of any such
application or request as to which the furnishing of any documents is
specifically required by any provision of this Agreement relating to such
particular application or request, no additional certificate need be
furnished.
Except as otherwise specifically provided herein, each certificate or
opinion with respect to compliance with a condition or covenant provided for
in this Agreement shall include:
(a) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto.
(b) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based; and
(c) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
Section 7.2 Form of Documents Delivered to the Indenture Trustee.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and
one or more other such Persons as to other matters, and any such Person may
certify or give an opinion as to such matters in one or several documents.
Any certificate of an Authorized Officer of the Indenture Trustee may
be based, insofar as it relates to legal matters, upon an opinion of counsel,
unless such Authorized Officer knows, or in the exercise of reasonable care
should know, that the opinion is erroneous. Any such certificate of an
Authorized Officer of the Indenture Trustee or any opinion of counsel may be
based, insofar as it relates to factual matter upon a certificate or opinion
of, or representations by, one or more Authorized Officers of the Seller or of
the Servicer, stating that the information with respect to such factual
matters is in the possession of the Seller or of the Servicer, unless such
Authorized Officer or counsel knows, or in the exercise of reasonable care
should know, that the certificate or opinion or representations with respect
to such matters are erroneous. Any opinion of counsel may also be based,
insofar as it relates to factual matters, upon a certificate or opinion of, or
representations by, an Authorized Officer of the Indenture Trustee, stating
that the information with respect to such matters is in the possession of the
Indenture Trustee, unless such counsel knows, or in the exercise of reasonable
care should know, that the certificate or opinion or representations with
respect to such matters are erroneous. Any opinion of counsel may be based on
the written opinion of other counsel, in which event such opinion of counsel
shall be accompanied by a copy of such other counsel's opinion and shall
include a statement to the effect that such counsel believes that such counsel
and the Indenture Trustee may reasonably rely upon the opinion of such other
counsel.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Agreement, they may, but need not, be consolidated and
form one instrument.
Section 7.3 Acts of Noteholders.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Agreement to be given or taken by the
Noteholders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Noteholders in person or by an
agent duly appointed in writing; and, except as herein otherwise expressly
provided, such action shall become effective when such instrument or
instruments are delivered to the Indenture Trustee and the Insurer has
consented thereto in writing, and, where it is hereby expressly required, to
the Seller. Such instrument or instruments (and the action embodied therein
and evidenced thereby) are herein sometimes referred to as the "act" of the
Noteholders signing such instrument or instruments. Proof of execution of any
such instrument or of a writing appointing any such agent shall be sufficient
for any purpose of this Agreement and conclusive in favor of the Indenture
Trustee and the Trust, if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by the certificate of any notary public or other officer
authorized by law to take acknowledgments of deeds, certifying that the
individual signing such instrument or writing acknowledged to him the
execution thereof. Whenever such execution is by an officer of a corporation
or a member of a partnership on behalf of such corporation or partnership,
such certificate or affidavit shall also constitute sufficient proof of his
authority.
(c) The ownership of the Notes shall be proved by the Note Register.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other action by any Noteholder shall bind the Noteholder of every
Note issued upon the registration of transfer thereof or in exchange therefor
or in lieu thereof, in respect of anything done, omitted or suffered to be
done by the Indenture Trustee or the Trust in reliance thereon, whether or not
notation of such action is made upon such Notes.
Section 7.4 Notices, etc. to Indenture Trustee.
Any request, demand, authorization, direction, notice, consent,
waiver or act of the Noteholders or other documents provided or permitted by
this Agreement to be made upon, given or furnished to, or filed with the
Indenture Trustee by any Noteholder, the Insurer or by the Seller shall be
sufficient for every purpose hereunder if made, given, furnished or filed in
writing to or with and received by the Indenture Trustee at its Corporate
Trust Office as set forth in the Indenture.
Section 7.5 Notices and Reports to Noteholders; Waiver of
Notices.
Where this Agreement provides for notice to Noteholders of any event
or the mailing of any report to Noteholders, such notice or report shall be
sufficiently given (unless otherwise herein expressly provided) if mailed,
first-class postage prepaid, to each Noteholder affected by such event or to
whom such report is required to be mailed, at the address of such Noteholder
as it appears on the Note Register, not later than the latest date, and not
earlier than the earliest date, prescribed for the giving of such notice or
the mailing of such report. In any case where a notice or report to
Noteholders is mailed in the manner provided above, neither the failure to
mail such notice or report nor any defect in any notice or report so mailed to
any particular Noteholder shall affect the sufficiency of such notice or
report with respect to other Noteholders, and any notice or report which is
mailed in the manner herein provided shall be conclusively presumed to have
been duly given or provided.
Where this Agreement provides for notice in any manner, such notice
may be waived in writing by any Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Noteholders shall be filed with the Indenture
Trustee, but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such waiver.
In case, by reason of the suspension of regular mail service as a
result of a strike, work stoppage or similar activity, it shall be impractical
to mail notice of any event to Noteholders when such notice is required to be
given pursuant to any provision of this Agreement, then any manner of giving
such notice as shall be satisfactory to the Indenture Trustee shall be deemed
to be a sufficient giving of such notice.
Where this Agreement provides for notice to any rating agency that
rated any Notes, failure to give such notice shall not affect any other rights
or obligations created hereunder.
Section 7.6 Successors and Assigns.
All covenants and agreements in this Agreement by any party hereto
shall bind its successors and assigns, whether so expressed or not.
Section 7.7 Severability.
In case any provision in this Agreement or in the Notes shall be
invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.
Section 7.8 Benefits of Agreement.
Nothing in this Agreement or in the Notes, expressed or implied,
shall give to any Person, other than the Noteholders, the Insurer and the
parties hereto and their successors hereunder, any benefit or any legal or
equitable right, remedy or claim under this Agreement.
Section 7.9 Legal Holidays.
In any case where the date of any Payment Date, any other date on
which any distribution to any Noteholder is proposed to be paid, or any date
on which a notice is required to be sent to any Person pursuant to the terms
of this Agreement shall not be a Business Day, then (notwithstanding any other
provision of the Notes or this Agreement) payment or mailing need not be made
on such date, but may be made on the next succeeding Business Day with the
same force and effect as if made or mailed on the nominal date of any such
Payment Date, or such other date for the payment of any distribution to any
Noteholder or the mailing of such notice, as the case may be, and no interest
shall accrue for the period from and after any such nominal date, provided
such payment is made in full on such next succeeding Business Day.
Section 7.10 Governing Law.
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND
THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE
DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 7.11 Counterparts.
This instrument may be executed in any number of counterparts, each
of which so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
Section 7.12 Usury.
The amount of interest payable or paid on any Note under the terms of
this Agreement shall be limited to an amount which shall not exceed the
maximum nonusurious rate of interest allowed by the applicable laws of the
State of New York or any applicable law of the United States permitting a
higher maximum nonusurious rate that preempts such applicable New York laws,
which could lawfully be contracted for, charged or received (the "Highest
Lawful Rate"). In the event any payment of interest on any Note exceeds the
Highest Lawful Rate, the Trust stipulates that such excess amount will be
deemed to have been paid to the Noteholder inadvertently in error by the
Indenture Trustee acting on behalf of the Trust and the Noteholder receiving
such excess payment shall promptly, upon discovery of such error or upon
notice thereof from the Indenture Trustee on behalf of the Trust, refund the
amount of such excess or, at the option of such Noteholder, apply the excess
to the payment of principal of such Note, if any, remaining unpaid in any
event, the Indenture Trustee shall not be responsible for any repayment of
such excess payments. In addition, all sums paid or agreed to be paid to the
Indenture Trustee for the benefit of Noteholders of Notes for the use,
forbearance or detention of money shall, to the extent permitted by applicable
law, be amortized, prorated, allocated and spread throughout the full term of
such Notes.
Section 7.13 Amendment.
(a) The Indenture Trustee, the Seller and the Servicer, may at any
time and from time to time, with the prior written approval of the Insurer but
without the giving of notice to or the receipt of the consent of the
Noteholders, amend this Agreement, and the Indenture Trustee shall consent to
such amendment, for the purpose of (i) curing any ambiguity, or correcting or
supplementing any provision hereof which may be inconsistent with any other
provision hereof, or to add provisions hereto which are not inconsistent with
the provisions hereof, or (ii) complying with the requirements of the Code and
the regulations proposed or promulgated thereunder; provided, however, that
any such action shall not, (i) as evidenced in writing from the Rating
Agencies delivered to the Indenture Trustee, reduce the then-current rating on
the Notes or (ii) as evidenced by an opinion of counsel delivered to the
Indenture Trustee, materially and adversely affect the interests of any
Noteholder (without its written consent).
(b) The Indenture Trustee, the Seller and the Servicer may, at any
time and from time to time, with the prior written approval of the Insurer but
without the giving of notice to or the receipt of the consent of the
Noteholders, amend this Agreement, and the Indenture Trustee shall consent to
such amendment, for the purpose of changing the definition of "Specified
Overcollateralization Amount" (as defined in the Insurance Agreement);
provided, however, that no such change shall affect the weighted average life
of the Notes (assuming an appropriate prepayment speed as determined by the
Underwriters as evidenced in writing) by more than five percent, as determined
by the Underwriters.
(c) In addition to (a) and (b) this Agreement may also be amended by
the Indenture Trustee, the Seller, and the Servicer at any time and from time
to time, with the prior written approval of the Insurer and not less than a
majority of the Percentage Interest represented by the Notes then Outstanding,
for the purpose of adding any provisions or changing in any manner or
eliminating any of the provisions of this Agreement or of modifying in any
manner the rights of the Noteholders hereunder; provided, however, that no
such amendment shall (a) change in any manner the amount of, or change the
timing of, payments which are required to be distributed to any Noteholder
without the consent of such Noteholder or (b) reduce the aforesaid percentages
of Percentage Interests which are required to consent to any such amendments,
without the consent of all Noteholders then Outstanding.
(d) The Insurer, the Noteholders, Moody's and S&P shall be provided
with copies of any amendments to this Agreement, together with copies of any
opinions or other documents or instruments executed in connection therewith.
Section 7.14 The Insurer.
The Insurer is a third-party beneficiary of this Agreement. Any right
conferred to the Insurer shall be suspended during any period in which the
Insurer is in default in its payment obligations under the Policy except with
respect to amendments to this Agreement pursuant to Section 7.13. During any
period of suspension the Insurer's rights hereunder shall vest in the
Noteholders of the Notes and shall be exercisable by the Noteholders of at
least a majority in Percentage Interest of the Notes then Outstanding. At such
time as the Notes are no longer Outstanding hereunder and the Insurer has been
reimbursed for all payments made pursuant to the Policy to which it is
entitled hereunder, the Insurer's rights hereunder shall terminate. Except at
such time as an Insurer Default has occurred and is continuing, the Insurer
shall be deemed the 100% Noteholder for purposes of all voting rights,
consents, directions, notices and waivers hereunder.
Section 7.15 Notices.
All notices hereunder shall be given as follows, until any
superseding instructions are given to all other Persons listed below:
The Indenture Trustee: Xxxxx Fargo Bank Minnesota, N.A.
00000 Xxxxxx Xxxx Xxxxxxx
Xxxxxxxx, Xxxxxxxx 00000
ATTN: Mellon Heloc 2001-1
Fax: (000) 000-0000
Confirmation: (000) 000-0000
and
The Seller and Servicer: Mellon Bank, N.A.
One Mellon Bank Center
000 Xxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Attn: Asset Backed Finance,
AIM 151-0410
Fax: (000) 000-0000
Confirmation: 000-000-0000
The Depositor: X.X. Xxxxxx Acceptance Corporation I
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Tel: (000) 000-0000
The Insurer: Ambac Assurance Corporation
Xxx Xxxxx Xxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Structured Finance
Department -MBS
Fax: (000) 000-0000
Confirmation: (000) 000-0000
In each case in which notice or other communication to the Insurer
refers to an Event of Servicing Termination, a claim on the Policy or with
respect to which failure on the part of the Insurer to respond shall be deemed
to constitute consent or acceptance, then a copy of such notice or other
communication should also be sent to the attention of the general counsel (fax
no. 000-000-0000 and with the same confirmation number as stated above) and
should be marked "URGENT MATERIAL ENCLOSED".
Moody's: Xxxxx'x Investors Service
00 Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: The Home Equity
Monitoring Department
S&P: Standard & Poor's Ratings Group
00 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Mortgage Surveillance
Group
The Trust: Mellon Home Equity Line of Credit
Trust 2001-1
c/o Wilmington Trust Company, as
Owner Trustee
Xxxxxx Square North
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Section 7.16 Limitation of Liability.
It is expressly understood and agreed by the parties hereto that (a)
this Agreement is executed and delivered by Wilmington Trust Company, not
individually or personally but solely as Owner Trustee of the Trust under the
Trust Agreement, in the exercise of the powers and authority conferred and
vested in it, (b) each of the representations, undertakings and agreements
herein made on the part of the Trust is made and intended not as personal
representations, undertakings and agreements by Wilmington Trust Company but
is made and intended for the purpose for binding only the Trust, (c) nothing
herein contained shall be construed as creating any liability on Wilmington
Trust Company individually or personally, to perform any covenant either
expressed or implied contained herein, all such liability, if any, being
expressly waived by the parties to this Agreement and by any person claiming
by, through or under them and (d) under no circumstances shall Wilmington
Trust Company be personally liable for the payment of any indebtedness or
expenses of the Trust or be liable for the breach or failure of any
obligation, representation, warranty or covenant made or undertaking by the
Trust under this Agreement or any related documents.
[Signature Page Follows]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective officers thereunto duly authorized, all
as of the day and year first above written.
MELLON BANK, N.A.,
as Seller and Servicer
By: /s/ Xxxxxxx X. Xxxxxxxxxxx
----------------------------------------
Name: Xxxxxxx X. Xxxxxxxxxxx
Title: Vice President
MELLON HOME EQUITY LINE OF CREDIT
TRUST 2001-1,
By: WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as
Owner Trustee
By: /s/ Xxxxxxxx Xxxxx
----------------------------------------
Name: Xxxxxxxx Xxxxx
Title: Senior Financial Services Officer
X.X. XXXXXX ACCEPTANCE CORPORATION I,
as Depositor
By: /s/ Xxxxxxx Xxxxxxx
----------------------------------------
Name: Xxxxxxx Xxxxxxx
Title: Vice President
XXXXX FARGO BANK MINNESOTA, N.A.
not in its individual capacity but solely
as Indenture Trustee
By: /s/ Xxx Xxxxx
----------------------------------------
Name: Xxx Xxxxx
Title: Assistant Vice President
EXHIBIT B
[Reserved]
EXHIBIT C
[Reserved]
[List Addressees]
EXHIBIT D
FORM OF TRUSTEE'S ACKNOWLEDGMENT OF RECEIPT
Xxxxx Fargo Bank Minnesota, N.A., a national banking association, in
its capacity as indenture trustee (the "Indenture Trustee") under that certain
Sale and Servicing Agreement, dated as of March 1, 2001 (the "Sale and
Servicing Agreement"), by and among Mellon Bank, N.A., a nationally chartered
banking association, as Seller (the "Seller"), Mellon Bank, N.A., as Servicer,
the Depositor Acceptance Corporation I, Mellon Home Equity Line of Credit
Trust 2001-1, as Trust, and the Indenture Trustee, hereby acknowledges receipt
of the items delivered to it by the Seller with respect to the Mortgage Loans.
The Schedule of Mortgage Loans is attached to this Receipt.
The Indenture Trustee hereby additionally acknowledges that it shall
review such items as required by Section 2.2(a) of the Sale and Servicing
Agreement and shall otherwise comply with Section 2.2(b) of the Sale and
Servicing Agreement as required thereby.
XXXXX FARGO BANK MINNESOTA, N.A., as
Indenture Trustee
By:
---------------------------------------
Name:
Title:
Dated: ______________
[List Addressees]
EXHIBIT E
FORM OF CERTIFICATION
WHEREAS, the undersigned is an Authorized Officer of Xxxxx Fargo Bank
Minnesota, N.A., a national banking association, acting in its capacity as
indenture trustee (the "Indenture Trustee") of a certain pool of mortgage
loans (the "Pool") heretofore conveyed in trust to the Indenture Trustee,
pursuant to that certain Sale and Servicing Agreement, dated as of March 1,
2001 (the "Sale and Servicing Agreement"), by and among Mellon Bank, N.A., a
nationally chartered banking association, as Seller (the "Seller"), Mellon
Bank, N.A., as Servicer, the Depositor Acceptance Corporation I, as Depositor,
Mellon Home Equity Line of Credit Trust 2001-1, as Trust, and the Indenture
Trustee; and
WHEREAS, the Indenture Trustee is required, pursuant to Section
2.2(a) of the Sale and Servicing Agreement, to review certain items from the
Mortgage Files relating to the Pool within a specified period following the
Closing Date and Transfer Date and to notify the Seller promptly of any
defects with respect to the Pool, and the Seller is required to remedy such
defects or take certain other action, all as set forth in Section 2.2(b) of
the Sale and Servicing Agreement; and
WHEREAS, Section 2.2(a) of the Sale and Servicing Agreement requires
the Indenture Trustee to deliver this Certification upon the satisfaction of
certain conditions set forth therein;
NOW, THEREFORE, the Indenture Trustee has determined that as to each
Mortgage Loan listed in the Schedule of Mortgage Loans (other than any
Mortgage Loan paid in full or any Mortgage Loan specifically identified in
this Certification as not covered by this Certification), (i) all documents
required to be delivered to it (contained in a Mortgage File) pursuant to the
Sale and Servicing Agreement are in its possession and (ii) such documents
have been reviewed by it and on their face appear to relate to such Mortgage
Loan. The Indenture Trustee makes no certification hereby, however, with
respect to any intervening assignments or assumption and modification
agreements. Capitalized terms used but not defined in this Certification shall
have the meanings provided pursuant to the Sale and Servicing Agreement.
XXXXX FARGO BANK
MINNESOTA, N.A.,
By:
--------------------------------------
Name:
Title:
Date:_______________
EXHIBIT F
REQUEST FOR RELEASE OF DOCUMENTS
[DATE]
To: Xxxxx Fargo Bank Minnesota, N.A.
0000 00xx Xxxxxx X.X.
Xxxxxxxxxxx, XX 00000-0000
Attn: Inventory Control
Re: The Sale and Servicing Agreement dated as of March 1, 2001,
among, Mellon Home Equity Line of Credit Trust 2001-1, as Trust,
X.X. Xxxxxx Acceptance Corporation I, as Depositor, Mellon Bank,
N.A., as Seller and Servicer, and Xxxxx Fargo Bank Minnesota,
N.A., as Indenture Trustee
In connection with the administration of the Mortgage Loans held by
you, as Indenture Trustee, pursuant to the above-captioned Sale and Servicing
Agreement, we request the release, and hereby acknowledge receipt, of the
Mortgage File for the Mortgage Loan described below, for the reason indicated.
Mortgage Loan Number:
Mortgagor Name, Address & Zip Code:
Reason for Requesting Documents (check one)
1. Mortgage Paid in Full
------
2. Foreclosure
------
3. Substitution
------
4. Other Liquidation
------
5. Nonliquidation Reason:
------ --------------
By:
--------------------------------------
(authorized signer of [_________])
Issuer:
---------------------------------
Address:
---------------------------------
Date:
---------------------------------
Trustee
Xxxxx Fargo Bank Minnesota, N.A.
Please acknowledge the execution of the above request by your signature and
date below:
------------------------ ----------------
Signature Date
Documents returned to Trustee:
------------------------ ----------------
Trustee Date
