MASTER SERVICING AGREEMENT
Dated as of [ ]
among
[Countrywide] Home Equity Loan Trust 199_, Issuer
and
[Countrywide Home Loans, Inc.], Seller and Master Servicer
and
[ ], Trustee
Relating to the Mortgage Loans
Pledged as Collateral for the Issuer's
Asset Backed Notes and Asset Backed Certificates,
Series 199_,
in the Aggregate Initial
Principal Amount of $[ ]
TABLE OF CONTENTS
Page
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PRELIMINARY STATEMENT...................................................................... 1
1. Defined Terms.......................................................................... 1
Advance............................................................................ 2
Collection Account................................................................. 6
Corporate Trust Office............................................................. 8
Determination Date................................................................. 9
Distribution Date.................................................................. 10
Eligible Account................................................................... 10
Excess Proceeds.................................................................... 11
FDIC ............................................................................ 12
FHLMC ............................................................................ 12
FIRREA ............................................................................ 12
Fitch ............................................................................ 12
FNMA ............................................................................ 12
Loan-to-Value Ratio................................................................ 17
Master Servicing Fee............................................................... 18
Xxxxx'x............................................................................ 19
Mortgage File...................................................................... 19
Nonrecoverable Advance............................................................. 20
Officer's Certificate.............................................................. 20
Opinion of Counsel................................................................. 20
Outstanding........................................................................ 20
Payment Account....................................................................
Payment Account Deposit Date.......................................................
Permitted Investments.............................................................. 22
Person ............................................................................ 23
Prepayment Period.................................................................. 24
Principal Prepayment............................................................... 25
Principal Prepayment in Full....................................................... 25
Purchase Price..................................................................... 25
Qualified Insurer.................................................................. 25
Realized Loss...................................................................... 26
Relief Act......................................................................... 27
Relief Act Reductions.............................................................. 27
REO Property....................................................................... 27
Request for Release................................................................ 27
Required Insurance Policy.......................................................... 27
Servicing Advances................................................................. 29
Servicing Officer.................................................................. 30
Substitute Mortgage Loan........................................................... 30
Substitution Adjustment Amount..................................................... 30
Trustee Fee........................................................................ 30
Trustee Fee Rate................................................................... 30
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TABLE OF CONTENTS (CONT'D)
Page
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2. Conveyance of Mortgage Loans; Representations and
Warranties......................................................................... 31
(a) Conveyance of Mortgage Loans; Retention of Obligation
to Fund Advances Under Credit Line Agreements............................... 31
(b) Acceptance by Trustee; Retransfer of Mortgage
Loans....................................................................... 36
(c) Documents, Records and Funds in Possession of
Master Servicer to be Held for Trustee...................................... 38
(d) Representations, Warranties and Covenants of the
Seller and the Master Servicer.............................................. 40
(e) Covenants of the Master Servicer............................................ 42
(f) Covenants of the Depositor.................................................. 43
3. Administration and Servicing of Mortgage Loans.............................. 44
(a) Master Servicer to Service Mortgage Loans................................... 44
(b) Subservicing; Enforcement of the Obligations of
Servicers................................................................... 47
(c) Successor Servicers......................................................... 48
(d) Liability of the Master Servicer............................................ 48
(e) No Contractual Relationship Between Servicers and the
Trustee..................................................................... 49
(f) Rights of the Depositor and the Trustee in Respect of
the Master Servicer......................................................... 49
(g) Trustee to Act as Master Servicer........................................... 49
(h) Collection of Mortgage Loan Payments; Collection
Accounts; Payment Account................................................... 50
(i) Collection of Taxes, Assessments and Similar
Items; Escrow Accounts...................................................... 53
(j) Access to Certain Documentation and Information
Regarding the Mortgage Loans................................................ 54
(k) Permitted Withdrawals from the Note Account................................. 54
(l) Maintenance of Hazard Insurance; Maintenance of
Primary Insurance Policies.................................................. 56
(m) Enforcement of Due-On-Sale Clauses; Assumption
Agreements.................................................................. 58
(n) Realization Upon Defaulted Mortgage Loans; Repurchase
of Certain Mortgage Loans................................................... 60
(o) Access to Certain Documentation............................................. 63
(p) Annual Statement as to Compliance........................................... 64
(q) Annual Independent Public Accountants' Servicing
Statement; Financial Statements............................................. 64
(r) Errors and Omissions Insurance; Fidelity Bonds.............................. 65
(s) Master Servicer Monthly Data................................................ 65
4. Advances........................................................................... 65
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TABLE OF CONTENTS (CONT'D)
Page
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5. Servicing Compensation................................................................. 66
6. The Master Servicer................................................................ 66
(a) Respective Liabilities of the Depositor and the
Master Servicer............................................................. 66
(b) Merger or Consolidation of the Depositor or the
Master Servicer............................................................. 66
(c) Limitation on Liability of the Depositor, the
Seller, Master Servicer and Others.......................................... 67
(d) Limitation on Resignation of the Master Servicer............................ 68
7. Default............................................................................ 68
(a) Events of Default........................................................... 68
(b) Trustee to Act; Appointment of Successor.................................... 71
(c) Notification to Securityholders............................................. 72
8. Miscellaneous...................................................................... 72
(a) Term of Master Servicing Agreement.......................................... 72
(b) Assignment.................................................................. 73
(c) Notices..................................................................... 73
(d) Inspection and Audit Rights................................................. 74
(e) Governing Law............................................................... 74
(f) Amendment..................................................................... 75
(g) Severability of Provisions.................................................. 76
(h) No Joint Venture............................................................ 77
(i) Recordation of Agreement; Counterparts...................................... 77
(j) Limitation of Liability of [owner trustee].
(k) Nonpetition Covenants....................................................... 78
SCHEDULE I: Mortgage Loan Schedule....................................................S-I-1
SCHEDULE II: Representations and Warranties of
the Master Servicer ..............................................S-II-1
SCHEDULE III: Representations and Warranties as
to the Mortgage Loans............................................S-III-1
SCHEDULE IV: Representations and Warranties of
the Issuer .......................................................S-IV-1
EXHIBITS
EXHIBIT A FORM OF INITIAL CERTIFICATION OF TRUSTEE.............................A-1
EXHIBIT B FORM OF FINAL CERTIFICATION OF TRUSTEE...............................B-1
EXHIBIT C REQUEST FOR RELEASE
(for Trustee)........................................................C-1
EXHIBIT D REQUEST FOR RELEASE (Mortgage Loan
Paid in Full, Repurchased and Released)..............................D-1
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MASTER SERVICING AGREEMENT
THIS MASTER SERVICING AGREEMENT is made and entered into as of
[ ], by and among [Countrywide] Home Equity Loan Trust 199_, a statutory
business trust formed under the laws of the State of [Delaware] (the "Issuer"),
[ ], a [state] corporation (the "Master Servicer" or, in its capacity as
seller, the "Seller") and [Countrywide Home Loans, Inc.], a [ ] corporation
(in its capacity as trustee under the Indenture referred to below,
the "Trustee").
PRELIMINARY STATEMENT
The Issuer was formed for the purpose of issuing asset backed
notes and asset backed certificates secured by mortgage collateral. The Issuer
has entered into a trust indenture, dated as of [ ] (the "Indenture"), between
the Issuer and the Trustee, pursuant to which the Issuer intends to issue its
Home Equity Loan Asset Backed Notes and Home Equity Loan Asset Backed
Certificates, Series 199_, in the aggregate initial principal amount of $[ ]
(the "Securities"). Pursuant to the Indenture, as security for the indebtedness
represented by such Securities, the Issuer is and will be pledging to the
Trustee, or granting the Trustee a security interest in, among other things,
certain Mortgage Loans and Additional Balances, its rights under this Agreement,
the Payment Account, the Collection Account [and certain Insurance Policies] (as
each such term is defined herein).
The parties desire to enter into this Agreement to provide, among
other things, for the servicing of the Mortgage Loans by the Master Servicer.
The Master Servicer acknowledges that, in order further to secure the
Securities, the Issuer is and will be granting to the Trustee a security
interest in, among other things, its rights under this Agreement, and the Master
Servicer agrees that all covenants and agreements made by the Master Servicer
herein with respect to the Mortgage Loans shall also be for the benefit and
security of the Trustee and Holders of the Securities. For its services
hereunder, the Master Servicer will receive a Master Servicing Fee (as defined
herein) with respect to each Mortgage Loan serviced hereunder.
1. Defined Terms.
Except as otherwise specified or as the context may otherwise
require, the following terms have the respective meanings set forth below for
all purposes of this Agreement, and the definitions of such terms are applicable
to the singular as well as the plural forms of such terms and to the masculine
as well as to the feminine and neuter genders of such terms:
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Advance: The payment required to be made by the Master Servicer with
respect to any Distribution Date pursuant to Section 4, the amount of any such
payment being equal to the aggregate of payments of principal and interest (net
of the Master Servicing Fee and net of any net income in the case of any REO
Property) on the Mortgage Loans that were due on the related Due Date and not
received as of the close of business on the related Determination Date, less the
aggregate amount of any such delinquent payments that the Master Servicer has
determined would constitute a Nonrecoverable Advance if advanced.
Additional Balance: With respect to any Mortgage Loan, any future Draw
made by the related Mortgagor pursuant to the related Loan Agreement after the
Cut-off Date in the case of an Initial Loan, or after the Deposit Date in the
case of an Additional Loan; provided, however, that if an Amortization Event
occurs, then any Draw after such Amortization Event shall not be acquired by the
Issuer and shall not be an Additional Balance.
Additional Loans: All home equity line of credit loans sold by the
Depositor to the Issuer after the Closing Date pursuant to Section 2 of the Loan
Purchase Agreement.
Administration Agreement: The Administration Agreement
dated as of ___________, 199_ among the Issuer, the Trustee and
[______________], as Administrator, as it may be amended from
time to time.
Administrator: [______________], as administrator under the
Administration Agreement or any successor Administrator appointed
pursuant to the terms of the Administration Agreement.
Agreement: Means this Master Servicing Agreement, as the
same may be amended or supplemented from time to time.
Appraised Value: With respect to any Mortgaged Property, either (x) the
value set forth in an appraisal of such Mortgaged Property made to establish
compliance with the underwriting criteria then in effect in connection with the
later of the application for the Mortgage Loan secured by such Mortgaged
Property or any subsequent increase or decrease in the related Credit Limit or
to reduce or eliminate the amount of any primary insurance, or (y) if the sales
price of the Mortgaged Property is considered in accordance with the
underwriting criteria applicable to the Mortgage Loan, the lesser of (i) the
appraised value referred to in (x) above and (ii) the sales price of such
Mortgaged Property.
2
Asset Balance: With respect to any Mortgage Loan, other than a
Liquidated Mortgage Loan, and as of any day, the related Cut-off Date Asset
Balance or Deposit Date Asset Balance, [plus (i) any Additional Balances in
respect of such Mortgage Loan conveyed to the Issuer,] minus [(ii)] all
collections credited as principal in respect of any such Mortgage Loan in
accordance with the related Loan Agreement (except for any such collections that
are allocable to the Excluded Amount) and applied in reduction of the Asset
Balance thereof. For purposes of this definition, a Liquidated Mortgage Loan
shall be deemed to have an Asset Balance equal to the Asset Balance of the
related Mortgage Loan immediately prior to the final recovery of all related
Liquidation Proceeds and an Asset Balance of zero thereafter.
Assignment of Mortgage: With respect to any Mortgage, an assignment,
notice of transfer or equivalent instrument, in recordable form, sufficient
under the laws of the jurisdiction in which the related Mortgaged Property is
located to reflect the conveyance of the Mortgage, which assignment, notice of
transfer or equivalent instrument may be in the form of one or more blanket
assignments covering the Mortgage Loans secured by Mortgaged Properties located
in the same jurisdiction.
Bankruptcy Code: Means the United States Bankruptcy Reform
Act of 1978, as amended.
Basic Documents: The Trust Agreement, the Certificate of Trust, the
Indenture, the Loan Purchase Agreement, the Insurance Agreement, the
Administration Agreement, the Master Servicing Agreement, the Custodial
Agreement and the other documents and certificates delivered in connection with
any of the above.
Billing Cycle: With respect to any Mortgage Loan and Due
Date, the calendar month preceding such Due Date.
Business Day: Any day other than (i) a Saturday or a Sunday or (ii) a
day on which banking institutions in the State of New York, [_______________] or
[_____________] are required or authorized by law to be closed.
Certificateholder: The Person in whose name a Certificate is registered
in the Certificate Register except that, any Certificate registered in the name
of the Issuer, the Owner Trustee or the Trustee or any Affiliate of any of them
shall be deemed not to be outstanding and the registered holder will not be
considered a Certificateholder or a holder for purposes of giving any request,
demand, authorization, direction, notice, consent or waiver under the Indenture
or the Trust Agreement provided that, in determining whether the Trustee or the
Owner Trustee shall be protected in relying upon any such request,
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demand, authorization, direction, notice, consent or waiver, only Certificates
that the Trustee or the Owner Trustee knows to be so owned shall be so
disregarded. Owners of Certificates that have been pledged in good faith may be
regarded as Holders if the pledgee establishes to the satisfaction of the
Trustee or the Owner Trustee, as the case may be, the pledgee's right so to act
with respect to such Certificates and that the pledgee is not the Issuer, any
other obligor upon the Certificates or any Affiliate of any of the foregoing
Persons.
Certificates: The Home Equity Loan Asset Backed Certificates, Series
199_-_, each evidencing undivided beneficial interests in the Issuer and
executed by the Owner Trustee in substantially the form set forth in Exhibit A
to the Trust Agreement.
[CHL]: Means [Countrywide Home Loans, Inc.], a [New York]
corporation, and its successors and assigns.
Class: The Notes or the Certificates, as the case may be.
Closing Date: ___________, 199_.
Code: The Internal Revenue Code of 1986, as amended, and
the rules and regulations promulgated thereunder.
Collateral: The meaning specified in the Granting Clause of
the Indenture.
Collection Account: Means the Eligible Account or Accounts
established and maintained by the Master Servicer in accordance
with Section 3(h)(iii).
Collection Period: With respect to any Mortgage Loan and Payment Date
other than the first Payment Date, the calendar month preceding any such Payment
Date and with respect to the first Payment Date, the period from _____________
through [___________].
Combined Loan-to-Value Ratio: With respect to any Mortgage Loan and any
date, the percentage equivalent of a fraction, the numerator of which is the sum
of (i) the greater of (x) the Credit Limit and (y) the Cut-off Date Asset
Balance of such Mortgage Loan and (ii) the outstanding principal balance as of
the date of the origination of such Mortgage Loan (or any subsequent date as of
which such outstanding principal balance may be determined in connection with an
increase or decrease in the Credit Limit or to reduce the amount of primary
insurance for such Mortgage Loan) of any mortgage loan or mortgage loans that
are secured by liens on the Mortgaged Property that are senior or
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subordinate to the Mortgage and the denominator of which is the
Appraised Value of the related Mortgaged Property.
Corporate Trust Office: The designated office of the Trustee in the
State of ________ at which at any particular time its corporate trust business
with respect to this Agreement shall be administered, which office at the date
of the execution of this Agreement is located at ____________________________
(Attn: ___________________________, facsimile no. ________________, and which is
the address to which notices to and correspondence with the Trustee should be
directed.
Credit Limit: With respect to any Mortgage Loan, the maximum
Asset Balance permitted under the terms of the related Loan Agreement.
Custodial Agreement: Any Custodial Agreement between the
Custodian, the Trustee, the Issuer and the Master Servicer
relating to the custody of the Mortgage Loans and the Related
Documents.
Custodian: With respect to the Mortgage Loans,
[______________], a [_______________], and its successors and
assigns.
Cut-Off Date: With respect to the Initial Loans ________,
199_.
DCR: Means Duff & Xxxxxx Credit Rating Company, or any successor
thereto. If DCR is designated as a Rating Agency in the Indenture, for purposes
of Section 8(c) the address for notices to DCR shall be Duff & Xxxxxx Credit
Rating Company, 00 X. Xxxxxx Xxxxxx, 00xx Xxxxx, Xxxxxxx, Xxxxxxxx 00000,
Attention: MBS Monitoring, or such other address as DCR may hereafter furnish to
the Issuer and the Master Servicer.
Deleted Mortgage Loan: Has the meaning ascribed thereto in Section 5.
[Deposit Date: The applicable date as of which any Additional Loan is
sold to the Issuer pursuant to the Loan Purchase Agreement.
Deposit Date Asset Balance: With respect to any Additional
Loan, the Asset Balance thereof as of the Deposit Date.]
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Depositor: CWABS, Inc., a Delaware corporation, or its
successor in interest.
Determination Date: As to any Distribution Date, the ____ day of each
month or if such ____ day is not a Business Day the next preceding Business Day;
provided, however, that if such ____ day or such Business Day, whichever is
applicable, is less than two Business Days prior to the related Distribution
Date, the Determination Date shall be the first Business Day which is two
Business Days preceding such Distribution Date.
Distribution Date: The ____ day of each calendar month after the initial
issuance of the Certificates, or if such ____ day is not a Business Day, the
next succeeding Business Day, commencing in ____________, 199_.
Draw: With respect to any Mortgage Loan, a borrowing by the Mortgagor
under the related Loan Agreement.
Due Date: With respect to the Mortgage Loans, the [__]th day of the
month.
Eligible Account: Any of (i) an account or accounts maintained with a
federal or state chartered depository institution or trust company the
short-term unsecured debt obligations of which (or, in the case of a depository
institution or trust company that is the principal subsidiary of a holding
company, the debt obligations of such holding company) have the highest
short-term ratings of each Rating Agency at the time any amounts are held on
deposit therein, or (ii) an account or accounts in a depository institution or
trust company in which such accounts are insured by the FDIC (to the limits
established by the FDIC) and the uninsured deposits in which accounts are
otherwise secured such that, as evidenced by an Opinion of Counsel delivered to
the Trustee and to each Rating Agency, the Securityholders have a claim with
respect to the funds in such account or a perfected first priority security
interest against any collateral (which shall be limited to Permitted
Investments) securing such funds that is superior to claims of any other
depositors or creditors of the depository institution or trust company in which
such account is maintained, or (iii) a trust account or accounts maintained with
(a) the trust department of a federal or state chartered depository institution
or (b) a trust company, acting in its fiduciary capacity or (iv) any other
account acceptable to each Rating Agency. Eligible Accounts may
6
bear interest, and may include, if otherwise qualified under this definition,
accounts maintained with the Trustee.
Eligible Substitute Mortgage Loan: A Mortgage Loan substituted by the
Depositor for a Deleted Mortgage Loan which must, on the date of such
substitution, as confirmed in an Officers' Certificate delivered to the Trustee,
(i) have an outstanding principal balance, after deduction of the principal
portion of the monthly payment due in the month of substitution (or in the case
of a substitution of more than one Mortgage Loan for a Deleted Mortgage Loan, an
aggregate outstanding principal balance, after such deduction), not in excess of
the outstanding principal balance of the Deleted Mortgage Loan (the amount of
any shortfall to be deposited by the Seller in the Collection Account in the
month of substitution); (ii) have a Loan Rate not less than the Loan Rate of the
Deleted Mortgage Loan and not more than __% in excess of the Loan Rate of such
Deleted Mortgage Loan; (iii) have a Loan Rate based on the same index with
adjustments to such Loan Rate made on the same interest rate adjustment date as
that of the Deleted Mortgage Loan; (iv) have a Margin that is not less than the
Margin of the Deleted Mortgage Loan and not more than _____ basis points higher
than the Margin for the Deleted Mortgage Loan; (v) have a mortgage of the same
or higher level of priority as the mortgage relating to the Deleted Mortgage
Loan; (vi) have a remaining term to maturity not more than ____ months earlier
and not more than ____ months later than the remaining term to maturity of the
Deleted Mortgage Loan; (vii) comply with each representation and warranty as to
the Mortgage Loans set forth in the Loan Purchase Agreement (deemed to be made
as of the date of substitution); (viii) in general, have an original Combined
Loan-to-Value Ratio not greater than that of the Deleted Mortgage Loans; and
(ix) satisfy certain other conditions specified in the Purchase Agreement. To
the extent the Principal Balance of an Eligible Substitute Mortgage Loan is less
than the Principal Balance of the related Deleted Mortgage Loan, the Seller will
be required to make a deposit tot he Collection Account equal to such
difference; and (x) not be __ days or more delinquent.
Escrow Account: Means the Eligible Account or Accounts
established and maintained pursuant to Section 3(i) hereof.
Excess Proceeds: With respect to any Liquidated Mortgage Loan, the
amount, if any, by which the sum of any Liquidation Proceeds of such Mortgage
Loan received in the calendar month in which such Mortgage Loan became a
Liquidated Mortgage Loan, net of any amounts previously reimbursed to the Master
Servicer as Nonrecoverable Advance(s) with respect to such Mortgage Loan
pursuant to Section 3(k)(i)(C), exceeds (i) the unpaid principal balance of such
Liquidated Mortgage Loan as of the Due Date in
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the month in which such Mortgage Loan became a Liquidated Mortgage Loan plus
(ii) accrued interest at the Mortgage Rate from the Due Date as to which
interest was last paid or advanced (and not reimbursed) to Securityholders up to
the Due Date applicable to the Distribution Date immediately following the
calendar month during which such liquidation occurred.
FDIC: The Federal Deposit Insurance Corporation, or any
successor thereto.
FHLMC: The Federal Home Loan Mortgage Corporation, a corporate
instrumentality of the United States created and existing under Title III of the
Emergency Home Finance Act of 1970, as amended, or any successor thereto.
FIRREA: The Financial Institutions Reform, Recovery, and
Enforcement Act of 1989.
Fitch: Fitch Investors Service, L.P., or any successor thereto. If Fitch
is designated as a Rating Agency in the Preliminary Statement, for purposes of
Section 8(c) the address for notices to Fitch shall be Fitch Investors Service,
L.P., Xxx Xxxxx Xxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention:
_______________________________________, or such other address as Fitch may
hereafter furnish to the Depositor and the Master Servicer.
FNMA: The Federal National Mortgage Association, a federally chartered
and privately owned corporation organized and existing under the Federal
National Mortgage Association Charter Act, or any successor thereto.
Gross Margin: With respect to any Mortgage Loan, the percentage set
forth as the "Gross Margin" for such Mortgage Loan on the Mortgage Loan
Schedule, as adjusted from time to time with respect to any [______________]
Loan in accordance with the terms of this Agreement.
Holder: Any of the Noteholders or Securityholders.
Increased Senior Lien Limitation: shall have the meaning
set forth in Section 3(a).
Indenture: Means the trust indenture, dated as of the date hereof,
between the Issuer and the Trustee, as such Indenture may be amended or
supplemented from time to time in accordance with its terms.
[Insurance Agreement: The insurance and reimbursement
agreement dated as of ______________, 199_ among the Master
8
Servicer, the Seller, the Depositor, the Issuer and the Credit Enhancer,
including any amendments and supplements thereto.]
Insurance Policy: Means, with respect to any Mortgage Loan, any
insurance policy, including all riders and endorsements thereto in effect,
including any replacement policy or policies for any Insurance Policies.
Insurance Proceeds: Proceeds paid by any insurer pursuant to any
insurance policy covering a Mortgage Loan which are required to be remitted to
the Master Servicer, or amounts required to be paid by the Master Servicer
pursuant to the last sentence of Section [_____] of the Master Servicing
Agreement, net of any component thereof (i) covering any expenses incurred by or
on behalf of the Master Servicer in connection with obtaining such proceeds,
(ii) that is applied to the restoration or repair of the related Mortgaged
Property, (iii) released to the Mortgagor in accordance with the Master
Servicer's normal servicing procedures or (iv) required to be paid to any holder
of a mortgage senior to such Mortgage Loan.
Interest Period: With respect to any Payment Date other than the first
Payment Date, the period beginning on the preceding Payment Date and ending on
the day preceding such Payment Date, and in the case of the first Payment Date,
the period beginning on the Closing Date and ending on the day preceding the
first Payment Date.
Issuer: [Countrywide] Home Equity Loan Trust 199_-_, a
Delaware business trust, or its successor in interest.
Issuer Request: A written order or request signed in the name of the
Issuer by any one of its Authorized Officers and delivered to the Trustee.
Lien: Any mortgage, deed of trust, pledge, conveyance, hypothecation,
assignment, participation, deposit arrangement, encumbrance, lien (statutory or
other), preference, priority right or interest or other security agreement or
preferential arrangement of any kind or nature whatsoever, including, without
limitation, any conditional sale or other title retention agreement, any
financing lease having substantially the same economic effect as any of the
foregoing and the filing of any financing statement under the UCC (other than
any such financing statement filed for informational purposes only) or
comparable law of any jurisdiction to evidence any of the foregoing; provided,
however, that any assignment pursuant to Section [_____] of the Master Servicing
Agreement shall not be deemed to constitute a Lien.
9
Lifetime Rate Cap: With respect to each Mortgage Loan with respect to
which the related Mortgage Note provides for a lifetime rate cap, the maximum
Loan Rate permitted over the life of such Mortgage Loan under the terms of such
Mortgage Note, as set forth on the Mortgage Loan Schedule and initially as set
forth on Exhibit A to the Master Servicing Agreement.
Liquidated Mortgage Loan: With respect to any Payment Date, any Mortgage
Loan in respect of which the Master Servicer has determined, in accordance with
the servicing procedures specified in the Master Servicing Agreement, as of the
end of the related Collection Period that substantially all Liquidation Proceeds
which it reasonably expects to recover with respect to the disposition of the
related REO have been recovered.
Liquidation Expenses: Out-of-pocket expenses (exclusive of overhead)
which are incurred by or on behalf of the Master Servicer in connection with the
liquidation of any Mortgage Loan and not recovered under any insurance policy,
such expenses including, without limitation, legal fees and expenses, any
unreimbursed amount expended (including, without limitation, amounts advanced to
correct defaults on any mortgage loan which is senior to such Mortgage Loan and
amounts advanced to keep current or pay off a mortgage loan that is senior to
such Mortgage Loan) respecting the related Mortgage Loan and any related and
unreimbursed expenditures for real estate property taxes or for property
restoration, preservation or insurance against casualty loss or damage.
Liquidation Loss Amounts: With respect to any Payment Date and any
Mortgage Loan that became a Liquidated Mortgage Loan during the related
Collection Period, the unrecovered portion of the related Asset Balance thereof
at the end of such Collection Period, after giving effect to the Net Liquidation
Proceeds applied in reduction of the Asset Balance.
Liquidation Proceeds: Proceeds (including Insurance Proceeds [but not
including amounts drawn under the Credit Enhancement Instrument]) received in
connection with the liquidation of any Mortgage Loan or related REO, whether
through trustee's sale, foreclosure sale or otherwise.
Loan Agreement: With respect to any Mortgage Loan, the credit line
account agreement executed by the related Mortgagor and any amendment or
modification thereof.
Loan Purchase Agreement: The Loan Purchase Agreement, dated as of the
Cut-off Date, between the Seller, as seller, and the Depositor, as purchaser,
with respect to the Mortgage Loans.
10
Loan Rate: With respect to any Mortgage Loan and any day,
the sum of the Index Rate and the Margin.
Loan-to-Value Ratio: With respect to any Mortgage Loan and as to any
date of determination, (i) the principal balance of such Mortgage Loan divided
by (ii) the Collateral Value of the related Mortgaged Property.
Margin: The [spread].
Master Servicer: Means [Countrywide Home Loans, Inc.], a [New York]
corporation, and its successors and assigns, in its capacity as master servicer
hereunder.
Master Servicer Advance Date: Means as to any Distribution
Date, 12:30 p.m. Pacific time on the Business Day immediately
preceding such Distribution Date.
Master Servicing Fee: As to each Mortgage Loan and any Distribution
Date, an amount payable out of each full payment of interest received on such
Mortgage Loan and equal to one-twelfth of the Master Servicing Fee Rate
multiplied by the Stated Principal Balance of such Mortgage Loan as of the Due
Date in the month of such Distribution Date (prior to giving effect to any
Scheduled Payments due on such Mortgage Loan on such Due Date), subject to
reduction as provided in Section 5.
Master Servicing Fee Rate: Means with respect to each
Mortgage Loan, [ ]% per annum.
Moody's: Xxxxx'x Investors Service, Inc., or any successor thereto. If
Xxxxx'x is designated as a Rating Agency in the Preliminary Statement, for
purposes of Section 8(c) the address for notices to Moody's shall be Xxxxx'x
Investors Service, Inc., 00 Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention:
___________________________________, or such other address as Moody's may
hereafter furnish to the Depositor or the Master Servicer.
Mortgage: The mortgage, deed of trust or other instrument creating a
first or second lien on an estate in fee simple interest in real property
securing a Mortgage Loan.
Mortgage File: The file containing the Related Documents pertaining to a
particular Mortgage Loan and any additional documents required to be added to
the Mortgage File pursuant to the Loan Purchase Agreement or the Master
Servicing Agreement.
Mortgage Loan Schedule: With respect to any date, the
schedule of Mortgage Loans included in the Trust Estate on such
11
date. The initial schedule of Mortgage Loans as of the Cut-Off Date is the
schedule set forth in Exhibit A of the Master Servicing Agreement, which
schedule sets forth as to each Mortgage Loan (i) the Cut-Off Date Trust Balance,
(ii) the Credit Limit, (iii) the Gross Margin, (iv) the name of the Mortgagor,
(v) the Lifetime Rate Cap, if any, (vi) the loan number, (vii) an indication as
to the applicable Mortgage Loan Group, and (viii) the lien position of the
related Mortgage. The Mortgage Loan Schedule will be amended from time to time
by annex to reflect Additional Loans.
Mortgage: Means the mortgage, deed of trust or other instrument creating
a first lien on an estate in fee simple or leasehold interest in real property
securing a Mortgage Note.
Mortgage File: The mortgage documents listed in Section 2(a)(i) hereof
pertaining to a particular Mortgage Loan and any additional documents delivered
to the Trustee to be added to the Mortgage File pursuant to this Agreement.
Mortgage Loans: At any time, collectively, all Initial Loans [and
Additional Loans, in each case including Additional Balances, if any, that have
been sold to the Depositor under the Loan Purchase Agreement,] in each case
together with the Related Documents, and that remain subject to the terms
thereof. Such schedule shall also set forth the total of the amounts described
under (iv) and (v) above for all of the Mortgage Loans.
Mortgage Note: With respect to a Mortgage Loan, the Loan Agreement
pursuant to which the related mortgagor agrees to pay the indebtedness evidenced
thereby and secured by the related Mortgage as modified or amended.
Mortgaged Property: The underlying property, including real
property and improvements thereon, securing a Mortgage Loan.
Mortgagor: The obligor or obligors under a Loan Agreement.
Net Liquidation Proceeds: With respect to any Liquidated
Mortgage Loan, Liquidation Proceeds net of Liquidation Expenses.
Net Loan Rate: With respect to any Mortgage Loan and any
day, the related Loan Rate less the related Servicing Fee Rate.
Nonrecoverable Advance: Any portion of an Advance previously made or
proposed to be made by the Master Servicer that, in the good faith judgment of
the Master Servicer, will not be ultimately recoverable by the Master Servicer
from the related Mortgagor, related Liquidation Proceeds or otherwise.
12
Notes: The Notes designated as the "Notes" in the
Indenture.
Noteholder or Holder: Means the Person in whose name a Note
is registered in the Note Register (as defined in the Indenture).
Officer's Certificate: A certificate (i) signed by the Chairman of the
Board, the Vice Chairman of the Board, the President, a Managing Director, a
Vice President (however denominated), an Assistant Vice President, the
Treasurer, the Secretary, or one of the Assistant Treasurers or Assistant
Secretaries of the Depositor or the Master Servicer, or (ii), if provided for in
this Agreement, signed by a Servicing Officer, as the case may be, and delivered
to the Depositor and the Trustee, as the case may be, as required by this
Agreement.
Opinion of Counsel: A written opinion of counsel, who may be counsel for
the Depositor or the Master Servicer, including, in-house counsel, reasonably
acceptable to the Trustee; provided, however, that with respect to the
interpretation or application of the REMIC Provisions, such counsel must (i) in
fact be independent of the Depositor and the Master Servicer, (ii) not have any
direct financial interest in the Depositor or the Master Servicer or in any
affiliate of either, and (iii) not be connected with the-Depositor or the Master
Servicer as an officer, employee, promoter, underwriter, trustee, partner,
director or person performing similar functions.
Outstanding: With respect to the Certificates as of any date of
determination, all Certificates theretofore executed and authenticated under
this Agreement except:
(i) Certificates theretofore canceled by the Trustee
or delivered to the Trustee for cancellation; and
(ii) Certificates in exchange for which or in lieu of which other
Certificates have been executed and delivered by the Trustee
pursuant to this Agreement.
Owner Trust Estate: The corpus of the Issuer created by the Trust
Agreement which consists of the Mortgage Loans, such assets as shall from time
to time be deposited in the Collection Account and/or the Payment Account
allocable to the Mortgage Loans in accordance with the Trust Agreement, property
that secured a Mortgage Loan and that has become REO, certain hazard insurance
policies maintained by the Mortgagors or by or on behalf of the Master Servicer
in respect of the Mortgage Loans, [the Credit Enhancement Instrument,] an
assignment of the Depositor's rights under the Loan Purchase Agreement and the
obligation of the
13
Depositor to purchase Additional Balances under the Loan Purchase Agreement and
all proceeds of each of the foregoing.
Owner Trustee: [______________], and its successors and assigns or any
successor owner trustee appointed pursuant to the terms of the Trust Agreement.
Paying Agent: Any paying agent or co-paying agent appointed
pursuant to Section 3.03 of the Indenture, which initially shall
be [______________].
Payment Account: The account established by the Trustee pursuant to
Section 8.02 of the Indenture and Section [ ] of the Master Servicing
Agreement. The Payment Account shall be an Eligible Account.
Payment Account: The separate Eligible Account created and maintained by
the Trustee pursuant to Section 3(h) in the name of the Trustee for the benefit
of the Securityholders and designated "_________________________ in trust for
registered holders of Home Equity Loan Trust Asset Backed Certificates, Series
199_-_." Funds in the Payment Account shall be held in trust for the
Securityholders for the uses and purposes set forth in this Agreement.
Payment Account Deposit Date: As to any Distribution Date,
12:30 p.m. Pacific time on the Business Day immediately preceding
such Distribution Date.
Payment Date: The [___] day of each month, or if such day
is not a Business Day, then the next Business Day.
Percentage Interest: With respect to any Note, the percentage obtained
by dividing the Security Balance of such Note by the aggregate of the Security
Balances of all Notes of the same Class. With respect to any Certificate, the
percentage obtained by dividing the denomination specified on such Certificate
by the Initial Principal Balance of the Certificates.
Permitted Investments: At any time, any one or more of the following
obligations and securities: (i) obligations of the United States or any agency
thereof, provided such obligations are backed by the full faith and credit of
the United States; (ii) general obligations of or obligations guaranteed by any
state of the United States or the District of Columbia receiving the highest
long-term debt rating of each Rating Agency rating the related Series of
Securities, or such lower rating as will not result in the downgrading or
withdrawal of the ratings then assigned to the Securities by each such Rating
Agency; (iii) commercial or finance company paper (including, without
14
limitation, commercial paper issued by Countrywide Home Loans, Inc. or any of
its affiliates) which is then receiving the highest commercial or finance
company paper rating of each such Rating Agency, or such lower rating as will
not result in the downgrading or withdrawal of the ratings then assigned to the
Securities by each such Rating Agency; (iv) certificates of deposit, demand or
time deposits, or bankers' acceptances issued by any depository institution or
trust company incorporated under the laws of the United States or of any state
thereof and subject to supervision and examination by federal and/or state
banking authorities, provided that the commercial paper and/or long term
unsecured debt obligations of such depository institution or trust company (or
in the case of the principal depository institution in a holding company system,
the commercial paper or long-term unsecured debt obligations of such holding
company, but only if Xxxxx'x Investors Service, Inc. ("Xxxxx'x") is not a Rating
Agency) are then rated one of the two highest long-term and the highest
short-term ratings of each such Rating Agency for such securities, or such lower
ratings as will not result in the downgrading or withdrawal of the rating then
assigned to the Securities by any such Rating Agency; (iv) demand or time
deposits or certificates of deposit issued by any bank or trust company or
savings institution to the extent that such deposits are fully insured by the
FDIC; (v) guaranteed reinvestment agreements issued by any bank, insurance
company or other corporation containing, at the time of the issuance of such
agreements, such terms and conditions as will not result in the downgrading or
withdrawal of the rating then assigned to the Securities by any such Rating
Agency; (vi) repurchase obligations with respect to any security described in
clauses (i) and (ii) above, in either case entered into with a depository
institution or trust company (acting as principal) described in clause (iv)
above; (vii) securities (other than stripped bonds, stripped coupons or
instruments sold at a purchase price in excess of 115% of the face amount
thereof) bearing interest or sold at a discount issued by any corporation
incorporated under the laws of the United States or any state thereof which, at
the time of such investment, have one of the two highest ratings of each Rating
Agency (except if the Rating Agency is Moody's, such rating shall be the highest
commercial paper rating of Moody's for any such securities), or such lower
rating as will not result in the downgrading or withdrawal of the rating then
assigned to the Securities by any such Rating Agency, as evidenced by a signed
writing delivered by each such Rating Agency; and (viii) such other investments
having a specified stated maturity and bearing interest or sold at a discount
acceptable to each Rating Agency as will not result in the downgrading or
withdrawal of the rating then assigned to the Securities of such Series by any
such Rating Agency, as evidenced by a signed writing delivered by each such
Rating Agency; provided that no such instrument shall be a
15
Permitted Investment if such instrument evidences the right to receive interest
only payments with respect to the obligations underlying such instrument.
Person: Any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government, or any agency or political subdivision thereof.
[Policy: The irrevocable and unconditional limited financial guaranty
insurance policy number [__________], dated as of the Closing Date, issued by
the Credit Enhancer to the Trustee for the benefit of the Noteholders and to the
Certificate Paying Agent as agent for the Issuer for the benefit of the
Securityholders.]
Pool Balance: With respect to any date, the aggregate of
the Asset Balances of all Mortgage Loans as of such date.
Prepayment Period: As to any Distribution Date, the period from the __th
day of the calendar month preceding the month of such Distribution Date (or, in
the case of the first Distribution Date, from the Cut-off Date) through the __th
of the month of such Distribution Date.
Principal Balance: With respect to any Payment Date, the Initial
Principal Balance thereof, reduced by all distributions of principal thereon
prior to such Payment Date.
Principal Prepayment: Any payment of principal by a Mortgagor on a
Mortgage Loan that is received in advance of its scheduled Due Date and is not
accompanied by an amount representing scheduled interest due on any date or
dates in any month or months subsequent to the month of prepayment. Partial
Principal Prepayments shall be applied by the Master Servicer in accordance with
the terms of the related Mortgage Note.
Principal Prepayment in Full: Any Principal Prepayment made
by a Mortgagor of the entire principal balance of a Mortgage
Loan.
Prospectus Supplement: Means the Prospectus Supplement
dated [ ] relating to the Notes.
Purchase Price: With respect to any Mortgage Loan required to be
purchased by the Seller pursuant to Section 2(a)(ii) or 2(d)(iv) hereof or
purchased at the option of the Master Servicer pursuant to Section 3(n), an
amount equal to the sum of (i) 100% of the unpaid principal balance of the
Mortgage Loan on the date of such purchase, and (ii) accrued interest thereon at
the
16
applicable Mortgage Rate (or at the applicable Adjusted Mortgage Rate if (x) the
purchaser is the Master Servicer or (y) if the purchaser is the Seller and the
Seller is the Master Servicer) from the date through which interest was last
paid by the Mortgagor to the Due Date in the month in which the Purchase Price
is to be distributed to Securityholders.
Qualified Insurer: A mortgage guaranty insurance company duly qualified
as such under the laws of the state of its principal place of business and each
state having jurisdiction over such insurer in connection with the insurance
policy issued by such insurer, duly authorized and licensed in such states to
transact a mortgage guaranty insurance business in such states and to write the
insurance provided by the insurance policy issued by it, approved as a
FNMA-approved mortgage insurer and having a claims paying ability rating of at
least "AA" or equivalent rating by a nationally recognized statistical rating
organization. Any replacement insurer with respect to a Mortgage Loan must have
at least as high a claims paying ability rating as the insurer it replaces had
on the Closing Date.
Rating Agency: Any nationally recognized statistical rating
organization, or its successor, that rated the Securities at the request of the
Depositor at the time of the initial issuance of the Securities. Initially,
[________] or [__________]. If such organization or a successor is no longer in
existence, "Rating Agency" shall be such nationally recognized statistical
rating organization, or other comparable Person, designated by the Depositor,
notice of which designation shall be given to the Trustee. References herein to
the highest short term unsecured rating category of a Rating Agency shall mean
[___] or better in the case of [__________]and [___] or better in the case of
[_____] and in the case of any other Rating Agency shall mean such equivalent
ratings. References herein to the highest long-term rating category of a Rating
Agency shall mean "[___]" in the case of [__________] and [_____] in the case of
[________] and in the case of any other Rating Agency, such equivalent rating.
Realized Loss: With respect to each Liquidated Mortgage Loan, an amount
(not less than zero or more than the Stated Principal Balance of the Mortgage
Loan) as of the date of such liquidation, equal to (i) the Stated Principal
Balance of the Liquidated Mortgage Loan as of the date of such liquidation, plus
(ii) interest at the Adjusted Net Mortgage Rate from the Due Date as to which
interest was last paid or advanced (and not reimbursed) to Securityholders up to
the Due Date in the month in which Liquidation Proceeds are required to be
distributed on the Stated Principal Balance of such Liquidated Mortgage Loan
from time to time, minus (iii) the Liquidation Proceeds, if any, received during
the month in which such liquidation occurred, to
17
the extent applied as recoveries of interest at the Adjusted Net Mortgage Rate
and to principal of the Liquidated Mortgage Loan. With respect to each Mortgage
Loan which has become the subject of a Deficient Valuation, if the principal
amount due under the related Mortgage Note has been reduced, the difference
between the principal balance of the Mortgage Loan outstanding immediately prior
to such Deficient Valuation and the principal balance of the Mortgage Loan as
reduced by the Deficient Valuation. With respect to each Mortgage Loan which has
become the subject of a Debt Service Reduction and any Distribution Date, the
amount, if any, by which the principal portion of the related Scheduled Payment
has been reduced.
Relief Act: The Soldiers' and Sailors' Civil Relief Act of
1940, as amended.
Relief Act Reductions: With respect to any Distribution Date and any
Mortgage Loan as to which there has been a reduction in the amount of interest
collectible thereon for the most recently ended calendar month as a result of
the application of the Relief Act, the amount, if any, by which (i) interest
collectible on such Mortgage Loan for the most recently ended calendar month is
less than (ii) interest accrued thereon for such month pursuant to the Mortgage
Note.
REO Property: A Mortgaged Property acquired by the Issuer through
foreclosure or deed-in-lieu of foreclosure in connection with a defaulted
Mortgage Loan.
Repurchase Price: With respect to any Mortgage Loan required to be
repurchased on any date pursuant to the Loan Purchase Agreement or purchased by
the Master Servicer pursuant to the Master Servicing Agreement, an amount equal
to the sum of (i) 100% of the Asset Balance thereof (without reduction for any
amounts charged off) and (ii) unpaid accrued interest at the Loan Rate on the
outstanding principal balance thereof from the Due Date to which interest was
last paid by the Mortgagor to the first day of the month following the month of
purchase. No portion of any Repurchase Price shall be included in the Excluded
Amount for any Payment Date.
Request for Release: The Request for Release submitted by the Master
Servicer to the Trustee, substantially in the form of Exhibits C and D, as
appropriate.
Required Insurance Policy: With respect to any Mortgage Loan, any
insurance policy that is required to be maintained from time to time under this
Agreement.
18
SAIF: Means the Savings Association Insurance Fund, or any
successor thereto.
S&P: Means Standard & Poor's Ratings Group, a division of XxXxxx-Xxxx
Inc. If S&P is designated as a Rating Agency in the Indenture, for purposes of
Section 8(c) the address for notices to S&P shall be Standard & Poor's Ratings
Group, 00 Xxxxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Mortgage
Surveillance Monitoring, or such other address as S&P may hereafter furnish to
the Issuer and the Master Servicer.
Securities Act: The Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder.
Security: Any of the Certificates or Notes.
Securityholder or Holder: Any Noteholder or any
Certificateholder.
Seller: [Countrywide Home Loans, Inc.], and its successors
and assigns.
Servicer Advance: Means the meaning ascribed to such term
in Section 3(h)(iv).
Servicing Account: Means the separate Eligible Account or
Accounts created and maintained pursuant to Section 3(h)(ii).
Servicing Advances: All customary, reasonable and necessary "out of
pocket" costs and expenses incurred in the performance by the Master Servicer of
its servicing obligations, including, but not limited to, the cost of (i) the
preservation, restoration and protection of a Mortgaged Property, (ii) any
expenses reimbursable to the Master Servicer pursuant to Section 3(n) and any
enforcement or judicial proceedings, including foreclosures, (iii) the
management and liquidation of any REO Property and (iv) compliance with the
obligations under Section 3(l).
Servicing Default: Means a servicing default as described
under Section 7(a) of this Agreement.
Servicing Fee: Means, as to each Mortgage Loan and any Distribution
Date, an amount equal to one month's interest at the applicable Servicing Fee
Rate on the Stated Principal Balance of such Mortgage Loan.
Servicing Fee Rate: Means, with respect to any Mortgage
Loan, the per annum rate set forth in the Mortgage Loan Schedule
for such Mortgage Loan.
19
Servicing Officer: Any officer of the Master Servicer involved in, or
responsible for, the administration and servicing of the Mortgage Loans whose
name and facsimile signature appear on a list of servicing officers furnished to
the Trustee by the Master Servicer on the Closing Date pursuant to this
Agreement, as such list may from time to time be amended.
Subservicer: Any Person with whom the Master Servicer has entered into a
Subservicing Agreement as a Subservicer by the Master Servicer pursuant to
Section 3(b).
Subservicing Agreement: The written contract between the Master Servicer
and any Subservicer relating to servicing and administration of certain Mortgage
Loans as provided in Section [ ] of the Master Servicing Agreement.
Subservicing Fee: With respect to any Mortgage Loan and any Collection
Period, the fee retained monthly by the Subservicer (or, in the case of a
nonsubserviced Mortgage Loan, by the Master Servicer) equal to the product of
(i) the Subservicing Fee Rate divided by 12 and (ii) the aggregate Asset Balance
of the Mortgage Loans as of the first day of such Collection Period.
Substitute Mortgage Loan: A Mortgage Loan substituted by the Seller for
a Deleted Mortgage Loan which must, on the date of such substitution, as
confirmed in a Request for Release, substantially in the form of Exhibit C, (i)
have a Stated Principal Balance, after deduction of the principal portion of the
Scheduled Payment due in the month of substitution, not in excess of, and not
more than 10% less than the Stated Principal Balance of the Deleted Mortgage
Loan; (ii) be accruing interest at a rate no lower than and not more than 1% per
annum higher than, that of the Deleted Mortgage Loan; (iii) have a Loan-to-Value
Ratio no higher than that of the Deleted Mortgage Loan; (iv) have a remaining
term to maturity no greater than (and not more than one year less than that of)
the Deleted Mortgage Loan; and (v) comply with each representation and warranty
set forth in Section 2(d) hereof.
Substitution Adjustment Amount: The meaning ascribed to
such term pursuant to Section 2(d)(iv).
Trust Agreement: Means the Trust Agreement, dated as of [ ],
between the Depositor and the Owner Trustee, as such Trust Agreement may
be amended or supplemented from time to time.
Trustee: Shall mean [______________], and its successors and assigns or
any successor trustee appointed pursuant to the terms of the Indenture.
Trustees: Shall mean the Trustee and the Owner Trustee.
Trust Estate: Shall have the meaning ascribed to such term
in the Indenture.
20
UCC: The Uniform Commercial Code, as amended from time to
time, as in effect in any specified jurisdiction.
Withdrawal Date: Means the ____ day of each month, or if
such day is not a Business Day, the next preceding Business Day.
2. Conveyance of Mortgage Loans; Representations and
Warranties.
(a) Conveyance of Mortgage Loans; Retention of Obligation to
Fund Advances Under Credit Line Agreements.
The Depositor, concurrently with the execution and delivery of this
Agreement, does hereby transfer, assign, set over and otherwise convey to the
Trust without recourse (subject to Sections 2(b)and 2(d) all of its right, title
and interest in and to (i) each Mortgage Loan, including its Asset Balance
(including all Additional Balances) and all collections in respect thereof
received on or after the Cut-off Date (excluding payments in respect of accrued
interest due prior to the Cut-off Date or due in the month of ____________);
(ii) property that secured a Mortgage Loan that is acquired by foreclosure or
deed in lieu of foreclosure; (iii) the Depositor's rights under the Loan
Purchase Agreement; (iv) [the Depositor's rights under the hazard insurance
policies,] (v) the Collection Account (excluding net earnings thereon); (vi) the
Policy, (vii) the Payment Account and (viii) all other assets included or to be
included in the Trust for the benefit of Securityholders; provided, however,
neither the Trustee nor the Trust assumes the obligation under any Credit Line
Agreement that provides for the funding of future advances to the Mortgagor
thereunder, and neither the Trust nor the Trustee shall be obligated or
permitted to fund any such future advances. Additional Balances shall be part of
the related Asset Balance and are hereby transferred to the Trust on the Closing
Date pursuant to this Section 2(a), and therefore part of the Trust property. In
addition, on or prior to the Closing Date, the Depositor shall cause the Credit
Enhancer to deliver the Policy to the Trustee for the benefit of the
Securityholders. The foregoing transfer, assignment, set-over and conveyance to
the Trust shall be made to the Trustee, on behalf of the Trust, and each
reference in this Agreement to such transfer, assignment, set-over and
conveyance shall be construed accordingly.
The Depositor agrees to take or cause to be taken such actions and
execute such documents (including without limitation the filing of all necessary
continuation statements for the UCC-1 financing statements filed in the State of
__________ (which shall have been filed within 90 days of the Closing Date)
21
describing the Cut-off Date Asset Balances and Additional Balances and naming
the Depositor as debtor and the Trustee as secured party and any amendments to
UCC-1 financing statements required to reflect a change in the name or corporate
structure of the Depositor or the filing of any additional UCC-1 financing
statements due to the change in the principal office of the Depositor (within 90
days of any event necessitating such filing) as are necessary to perfect and
protect the Securityholders' and Credit Enhancer's interests in each Cut-off
Date Asset Balance and Additional Balances and the proceeds thereof (other than
maintaining possession by the Trustee of the Mortgage Loans and the Mortgage
Files, which possession will, subject to the terms hereof, be maintained by the
Master Servicer as custodian and bailee of the Trustee).
In connection with such transfer and assignment by the Depositor, the
Master Servicer acknowledges that it is holding as custodian and bailee for the
Trustee the following documents or instruments (the "Related Documents") with
respect to each Mortgage Loan:
(A) the original Mortgage Note endorsed in blank;
(B) an original Assignment of Mortgage in blank in
recordable form;
(C) the original recorded Mortgage or, if, in connection
with any Mortgage Loan, the original recorded Mortgage with evidence of
recording thereon cannot be delivered on or prior to the Closing Date
because of a delay caused by the public recording office where such
original Mortgage has been delivered for recordation or because such
original Mortgage has been lost, the Seller, at the direction of the
Depositor, shall deliver or cause to be delivered to the Custodian, as
agent for the Trustee, a true and correct copy of such Mortgage,
together with (i) in the case of a delay caused by the public recording
office, an Officer's Certificate of the Depositor stating that such
original Mortgage has been dispatched to the appropriate public
recording official or (ii) in the case of an original Mortgage that has
been lost, a certificate by the appropriate county recording office
where such Mortgage is recorded;
(D) if applicable, the original intervening assignments, if
any ("Intervening Assignments"), with evidence of recording thereon,
showing a complete chain of title to the Mortgage from the originator to
the Depositor or, if any such original Intervening Assignment has not
been returned from the applicable recording office or has been lost, a
22
true and correct copy thereof, together with (i) in the case of a delay
caused by the public recording office, an Officer's Certificate of the
Seller stating that such original Intervening Assignment has been
dispatched to the appropriate public recording official for recordation
or (ii) in the case of an original Intervening Assignment that has been
lost, a certificate by the appropriate county recording office where
such Mortgage is recorded;
(E) either (1) for each Mortgage Loan with a Credit Limit in
excess of $_________, a title policy or (2) for all other Mortgage
Loans, either a title policy, a title search or guaranty of title with
respect to the related Mortgaged Property;
(F) the original of any guaranty executed in connec-
tion with the Mortgage Note;
(G) the original of each assumption, modification,
consolidation or substitution agreement, if any, relating to
the Mortgage Loan; and
(H) any security agreement, chattel mortgage or
equivalent instrument executed in connection with the Mortgage;
provided, however, that as to any Mortgage Loan, if (a) as evidenced by an
Opinion of Counsel delivered to and in form and substance satisfactory to the
Trustee and the Credit Enhancer, (x) an optical image or other representation of
the related documents specified in clauses (i) through (viii) above are
enforceable in the relevant jurisdictions to the same extent as the original of
such document and (y) such optical image or other representation does not impair
the ability of an owner of such Mortgage Loan to transfer its interest in such
Mortgage Loan, and (b) the retention of such documents in such format will not
result in a reduction in the then current rating of the Notes or Certificates,
without regard to the Policy, such optical image or other representation may be
held by the Master Servicer, as custodian for the Trustee or assignee in lieu of
the physical documents specified above.
The Seller hereby confirms to the Trustee that it has caused the
portions of its electronic ledgers relating to the Mortgage Loans to be clearly
and unambiguously marked, and has made the appropriate entries in its general
accounting records, to indicate that such Mortgage Loans have been transferred
to the Trust at the direction of the Depositor. The Master Servicer hereby
confirms to the Trustee that it has clearly and unambiguously made appropriate
entries in its general accounting records
23
indicating that such Mortgage Loans constitute part of the Trust and are
serviced by it on behalf of the Trust in accordance with the terms hereof.
The parties hereto intend that the transaction set forth herein be a
sale by the Depositor to the Trust of all the Depositor's right, title and
interest in and to the Mortgage Loans and other property described above. In the
event the transaction set forth herein is deemed not to be a sale, the Depositor
hereby grants to the Trust a security interest in all of the Depositor's right,
title and interest in, to and under the Mortgage Loans whether now existing or
hereafter created, all monies due or to become due on the Mortgage Loans and all
proceeds of any thereof; and this Agreement shall constitute a security
agreement under applicable law.
Except as hereinafter provided, the Master Servicer shall be entitled to
maintain possession of all of the foregoing documents and instruments and shall
not be required to deliver any of them to the Trustee or the Owner Trustee. In
the event, however, that possession of any of such documents or instruments is
required by any Person (including any such Trustee) acting as successor servicer
pursuant to Section 6(d) or 7(b) in order to carry out the duties of Master
Servicer hereunder, then such successor shall be entitled to request delivery,
at the expense of the Master Servicer, of such documents or instruments by the
Master Servicer and to retain such documents or instruments for servicing
purposes; provided that the Trustee or such servicers shall maintain such
documents at such offices as may be required by any regulatory body having
jurisdiction over such Mortgage Loans.
The Master Servicer's right to maintain possession of the documents
enumerated above shall continue so long as the long term unsecured debt of
[Countrywide Home Loans, Inc.] is assigned ratings of at least "____" by
__________________ and "____" by _______________. At such time as the condition
specified in the preceding sentence is not satisfied, as promptly as practicable
but in no event more than __ days in the case of clause (i) below and __ days in
the case of clause (ii) below following the occurrence of such event (a
"Delivery Event"), the Master Servicer shall, at its expense, (i) either (x)
record an assignment of Mortgage in favor of the Trustee (which may be a blanket
assignment if permitted by applicable law) in the appropriate real property or
other records or (y) deliver to the Trustee the assignment of such Mortgage in
favor of the Trustee in form for recordation, together with an Opinion of
Counsel addressed to the Trustee and the Credit Enhancer to the effect that
recording is not required to protect the Trustee's right, title and interest in
and to the related Mortgage Loan or, in
24
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 Trustee
in the related Mortgage Loan, which Opinion of Counsel also shall be reasonably
acceptable to each of the Rating Agencies (as evidenced in writing) and the
Credit Enhancer, and (ii) unless an Opinion of Counsel, reasonably acceptable to
the Trustee, the Rating Agencies (as evidenced in writing) and the Credit
Enhancer, is delivered to the Trustee and the Credit Enhancer to the effect that
delivery of the Mortgage Files is not necessary to protect the Trustee's right,
title and interest in the related Mortgage Loans; provided that the lack of
delivery will not result in a reduction in the then current rating of the "Notes
or Certificates", without regard to the Policy, deliver the related Mortgage
Files to the Trustee or to a custodian located in the State of [California]
appointed by the Trustee and acceptable to the Rating Agencies and the Credit
Enhancer to be held by the Custodian on behalf of the Trustees in trust, upon
the terms herein set forth, for the use and benefit of all present and future
Securityholders and the Custodian on behalf of the Trustee shall retain
possession thereof except to the extent the Master Servicer requires any
Mortgage Files for normal servicing as contemplated by Section _____. The
Trustee is hereby appointed as the attorney-in-fact of the Master Servicer with
the power to prepare, execute and record Assignments of Mortgages in the event
that the Master Servicer fails to do so on a timely basis as provided in this
paragraph.
Within 90 days following delivery, if any, of the Mortgage Files to the
Trustee pursuant to the preceding paragraph, the Trustee shall review each such
Mortgage File to ascertain that all required documents set forth in this Section
2(a) have been executed and received, and that such documents relate to the
Mortgage Loans identified on the Mortgage Loan Schedule and in so doing the
Trustee may rely on the purported due execution and genuineness of any signature
thereon. If within such 90-day period the Trustee finds any document
constituting a part of a Mortgage File not to have been executed or received or
to be unrelated to the Mortgage Loans identified in said Mortgage Loan Schedule
or, if in the course of its review, the Trustee determines that such Mortgage
File is otherwise defective in any material respect, the Trustee shall promptly
upon the conclusion of its review notify the Issuer and the Credit Enhancer, and
the Seller shall have a period of 90 days after such notice within which to
correct or cure any such defect.
The Trustee shall have no responsibility for reviewing any Mortgage File
except as expressly provided in this Section 2(a). In reviewing any Mortgage
File pursuant to this Section, the Trustee shall have no responsibility for
determining whether any document is valid and binding, whether the text of any
assignment
25
or endorsement is in proper or recordable form (except, if applicable, to
determine if the Trustee is the assignee or endorsee), whether any document has
been recorded in accordance with the requirements of any applicable
jurisdiction, or whether a blanket assignment is permitted in any applicable
jurisdiction, whether any Person executing any document is authorized to do so
or whether any signature thereon is genuine, but shall only be required to
determine whether a document has been executed, that it appears to be what it
purports to be, and, where applicable, that it purports to be recorded.
(b) Acceptance by Trustee; Retransfer of Mortgage
Loans.
The Trustee hereby acknowledges its receipt of the Policy and the
Mortgage Loans, and declares that the Trustee holds and will hold such
instrument, and to the extent that any documents are delivered to it pursuant to
Section 2(a), will hold such documents, and all amounts received by it
thereunder and hereunder, in trust, upon the terms herein set forth, for the use
and benefit of all present and future Securityholders and the Credit Enhancer.
If the time to cure any defect in respect of any Mortgage Loan of which the
Trustee has notified the Issuer and the Depositor following the review pursuant
to Section 2(a) has expired or if at any time any loss is suffered by the
Trustee on behalf of the Securityholders or the Credit Enhancer, in respect of
any Mortgage Loan as a result of (i) a defect in any document constituting a
part of its Mortgage File or (ii) an Assignment of Mortgage to the Trustee not
having been recorded as required by Section 2(a),then on the next succeeding
Business Day upon satisfaction of the applicable conditions described herein,
all right, title and interest of the Trust in and to such Mortgage Loan shall be
deemed to be retransferred, reassigned and otherwise reconveyed, without
recourse, representation or warranty, to the Depositor on such Business Day and
the Asset Balance of such Mortgage Loan shall be deducted from the Pool Balance;
provided, however, that interest accrued on the Asset Balance of such Mortgage
Loan to the end of the related Collection Period shall be the property of the
Trust. Upon receipt of any Eligible Substitute Mortgage Loan or then as promptly
as practicable following such deemed transfer, the Trustee shall execute such
documents and instruments of transfer presented by the Seller, 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 Defective Mortgage Loan pursuant to this Section.
The Master Servicer, promptly following the transfer of a Defective
Mortgage Loan from or to the Trust pursuant to this Section, shall amend the
Mortgage Loan Schedule and make
26
appropriate entries in its general account records to reflect such transfer. The
Master Servicer shall, following such retransfer, 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 transfer.
As to any Eligible Substitute Mortgage Loan or Loans, the Seller shall,
if a Delivery Event has occurred, deliver to the Trustee with respect to such
Eligible Substitute Mortgage Loan or Loans such documents and agreements as are
required to be held by the Trustee in accordance with Section 2(a). For any
Collection Period during which the Seller substitutes one or more Eligible
Substitute Mortgage Loans, the Master Servicer shall determine the Substitution
Adjustment Deposit Amount which amount shall be deposited by the Seller in the
Collection Account at the time of substitution. All amounts received in respect
of the Eligible Substitute Mortgage Loan or Loans during the Collection Period
in which the circumstances giving rise to such substitution occur shall not be a
part of the Issuer and shall not be deposited by the Master Servicer in the
Collection Account. All amounts received by the Master Servicer during the
Collection Period in which the circumstances giving rise to such substitution
occur in respect of any Defective Mortgage Loan so removed by the Issuer shall
be deposited by the Master Servicer in the Collection Account. Upon such
substitution, the Eligible Substitute Mortgage Loan or Loans shall be subject to
the terms of this Agreement in all respects, and the Seller shall be deemed to
have made with respect to such Eligible Substitute Mortgage Loan or Loans, as of
the date of substitution, the covenants, representations and warranties set
forth in Section 2(d). The procedures applied by the Seller in selecting each
Eligible Substitute Mortgage Loan shall not be materially adverse to the
interests of the Trustees, the Securityholders and the Credit Enhancer.
(c) Documents, Records and Funds in Possession of
Master Servicer to be Held for Trustee.
(i) Notwithstanding any other provisions of this Agreement, the
Master Servicer shall transmit to the Trustee as required by this Agreement all
documents and instruments in respect of a Mortgage Loan coming into the
possession of the Master Servicer from time to time and shall account fully to
the Trustees for any funds received by the Master Servicer or which otherwise
are collected by the Master Servicer as Liquidation Proceeds or Insurance
Proceeds in respect of any Mortgage Loan. All Mortgage Files and funds collected
or held by, or under the control of, the Master Servicer in respect of any
Mortgage Loans,
27
whether from the collection of principal and interest payments or from
Liquidation Proceeds, including but not limited to, any funds on deposit in the
Collection Account, shall be held by the Master Servicer for and on behalf of
the Trustees and shall be and remain the sole and exclusive property of the
Trustees, subject to the applicable provisions of this Agreement. The Master
Servicer also agrees that it shall not create, incur or subject any Mortgage
File or any funds that are deposited in the Collection Account, Payment Account
or any Escrow Account, or any funds that otherwise are or may become due or
payable to the Trustee for the benefit of the Securityholders, to any claim,
lien, security interest, judgment, levy, writ of attachment or other
encumbrance, or assert by legal action or otherwise any claim or right of setoff
against any Mortgage File or any funds collected on, or in connection with, a
Mortgage Loan, except, however, that the Master Servicer shall be entitled to
set off against and deduct from any such funds any amounts that are properly due
and payable to the Master Servicer under this Agreement.
(ii) The Master Servicer hereby acknowledges that concurrently
with the execution of this Agreement, the Trustee has acquired and holds a
security interest in the Trustee Mortgage Files and in all Mortgage Loans
represented by such Mortgage Files and in all funds now or hereafter held by, or
under the control of, the Master Servicer that are collected by the Master
Servicer in connection with the Mortgage Loans, whether as Scheduled Payments,
as Principal Prepayments, or as Liquidation Proceeds or Insurance Proceeds, and
in all proceeds of the foregoing and proceeds of proceeds (but excluding any
Master Servicing Fees, Servicing Fees, Trustee Fees and any other amounts or
reimbursements to which the Master Servicer is entitled under this Agreement).
The Master Servicer agrees that so long as the Mortgage Loans are assigned to
the Trustee, all Master Servicer Mortgage Files and Trustee Mortgage Files (and
any documents or instruments constituting a part of such files), and such funds
which come into the possession or custody of, or which are subject to the
control of, the Master Servicer shall be held by the Master Servicer for and on
behalf of the Trustee as the Trustee's agent and bailee for purposes of
perfecting the Trustee's security interest therein, as provided by Section 9-305
of the Uniform Commercial Code of the state in which such property is located,
or by other laws, as specified in Section _____ of the Indenture. The Master
Servicer hereby accepts such agency and acknowledges that the Trustee, as
secured party, will be deemed to have possession at all times of all Mortgage
Files and any other documents or instruments constituting a part of such files,
such funds and other items for purposes of Section 9-305 of the Uniform
Commercial Code of the state in which such property is held by the Master
Servicer.
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(d) Representations, Warranties and Covenants of the
Seller and the Master Servicer.
(i) [Countrywide Home Loans, Inc.], in its capacities as Seller and
Master Servicer, hereby makes the representations and warranties set forth in
Schedule II hereto, and by this reference incorporated herein, to the Depositor
and the Trustee, as of the Closing Date, or if so specified therein, as of the
Cut-off Date.
(ii) The Seller, in its capacity as Seller, hereby makes the
representations and warranties set forth in Schedule III hereto, and by this
reference incorporated herein, to the Depositor and the Trustee, as of the
Closing Date, or if so specified therein, as of the Cut-off Date.
(iii) Upon discovery by any of the parties hereto of a breach of a
representation or warranty made pursuant to Section 2(d)(ii) that materially and
adversely affects the interests of the Securityholders in any Mortgage Loan, the
party discovering such breach shall give prompt notice thereof to the other
parties. The Seller hereby covenants that within 90 days of the earlier of its
discovery or its receipt of written notice from any party of a breach of any
representation or warranty made pursuant to Section 2(d)(ii) which materially
and adversely affects the interests of the Securityholders in any Mortgage Loan,
it shall cure such breach in all material respects, and if such breach is not so
cured, shall, (i) if such 90-day period expires prior to the second anniversary
of the Closing Date, remove such Mortgage Loan (a "Deleted Mortgage Loan") from
the Issuer and substitute in its place a Substitute Mortgage Loan, in the manner
and subject to the conditions set forth in this Section; or (ii) repurchase the
affected Mortgage Loan or Mortgage Loans from the Trustee at the Purchase Price
in the manner set forth below; provided, however, that any such substitution
pursuant to (i) above shall not be effected prior to the delivery to the
Trustees of the Opinion of Counsel required by [Section ____ {delivery of
opinion}] hereof, if any, and any such substitution pursuant to (i) above shall
not be effected prior to the additional delivery to the Trustee of a Request for
Release substantially in the form of Exhibit D and the Mortgage File for any
such Substitute Mortgage Loan. The Seller shall promptly reimburse the Master
Servicer and the Trustee for any expenses reasonably incurred by the Master
Servicer or any Trustee in respect of enforcing the remedies for such breach.
With respect to the representations and warranties described in this Section
which are made to the best of the Seller's knowledge, if it is discovered by
either the Depositor, the Seller or any Trustee that the substance of such
representation and warranty is inaccurate and such inaccuracy materially and
adversely affects the value of the related Mortgage Loan or the
29
interests of the Securityholders therein, notwithstanding the Seller's lack of
knowledge with respect to the substance of such representation or warranty, such
inaccuracy shall be deemed a breach of the applicable representation or
warranty.
With respect to any Substitute Mortgage Loan or Loans, the Seller shall
deliver to the Trustee for the benefit of the Securityholders the Mortgage Note,
the Mortgage, the related assignment of the Mortgage, and such other documents
and agreements as are required by Section 2(a), with the Mortgage Note endorsed
and the Mortgage assigned as required by Section 2(a). No substitution is
permitted to be made in any calendar month after the Determination Date for such
month. Scheduled Payments due with respect to Substitute Mortgage Loans in the
month of substitution shall not be part of the Issuer and will be retained by
the Seller on the next succeeding Distribution Date. For the month of
substitution, distributions to Securityholders will include the monthly payment
due on any Deleted Mortgage Loan for such month and thereafter the Seller shall
be entitled to retain all amounts received in respect of such Deleted Mortgage
Loan. The Master Servicer shall amend the Mortgage Loan Schedule for the benefit
of the Securityholders to reflect the removal of such Deleted Mortgage Loan and
the substitution of the Substitute Mortgage Loan or Loans and the Master
Servicer shall deliver the amended Mortgage Loan Schedule to the Trustees. Upon
such substitution, the Substitute Mortgage Loan or Loans shall be subject to the
terms of this Agreement in all respects, and the Seller shall be deemed to have
made with respect to such Substitute Mortgage Loan or Loans, as of the date of
substitution, the representations and warranties made pursuant to Section
2(d)(ii) with respect to such Mortgage Loan. Upon any such substitution and the
deposit to the Collection Account of the amount required to be deposited therein
in connection with such substitution as described in the following paragraph,
the Trustee shall release the Mortgage File held for the benefit of the
Securityholders relating to such Deleted Mortgage Loan to the Seller and shall
execute and deliver at the Seller's direction such instruments of transfer or
assignment prepared by the Seller, in each case without recourse, as shall be
necessary to vest title in the Seller, or its designee, the Trustee's interest
in any Deleted Mortgage Loan substituted for pursuant to this Section 2(d).
For any month in which the Seller substitutes one or more Substitute
Mortgage Loans for one or more Deleted Mortgage Loans, the Master Servicer will
determine the amount (if any) by which the aggregate principal balance of all
such Substitute Mortgage Loans as of the date of substitution is less than the
aggregate Stated Principal Balance of all such Deleted Mortgage Loans (after
application of the scheduled principal portion of the
30
monthly payments due in the month of substitution). The amount of such shortage
(the "Substitution Adjustment Amount") plus an amount equal to the aggregate of
any unreimbursed Advances with respect to such Deleted Mortgage Loans shall be
deposited in the Collection Account by the Seller on or before the Payment
Account Deposit Date for the Distribution Date in the month succeeding the
calendar month during which the related Mortgage Loan became required to be
purchased or replaced hereunder.
In the event that the Seller shall have repurchased a Mortgage Loan, the
Purchase Price therefor shall be deposited in the Collection Account pursuant to
Section 3(h) on or before the Payment Account Deposit Date for the Distribution
Date in the month following the month during which the Seller became obligated
hereunder to repurchase or replace such Mortgage Loan and upon such deposit of
the Purchase Price, the delivery of the Opinion of Counsel required by Section
2(d) and receipt of a Request for Release in the form of Exhibit D hereto, the
Trustee shall release the related Mortgage File held for the benefit of the
Securityholders to such Person, and the Trustee shall execute and deliver at
such Person's direction such instruments of transfer or assignment prepared by
such Person, in each case without recourse, as shall be necessary to transfer
title from the Trustee. It is understood and agreed that the obligation under
this Agreement of any Person to cure, repurchase or replace any Mortgage Loan as
to which a breach has occurred and is continuing shall constitute the sole
remedy against such Persons respecting such breach available to Securityholders,
the Depositor or the Trustees on their behalf.
The representations and warranties made pursuant to this Section 2(d)
shall survive delivery of the respective Mortgage Files to the Trustee for the
benefit of the Securityholders.
(e) Covenants of the Master Servicer.
The Master Servicer hereby covenants to the Depositor and the Trustees
as follows:
(i) the Master Servicer shall comply in the performance of
its obligations under this Agreement with all reasonable rules and
requirements of the insurer under each Required Insurance Policy; and
(ii) no written information, certificate of an officer,
statement furnished in writing or written report delivered to the
Depositor, any affiliate of the Depositor or any Trustee and prepared by
the Master Servicer pursuant to this Agreement will contain any untrue
statement of a material fact or omit to state a material fact necessary
to
31
make such information, certificate, statement or report not
misleading.
(f) Covenants of the Depositor.
The Depositor hereby covenants that, except for the transfer
under the Indenture, the Depositor will not sell, pledge, assign or
transfer to any other Person, or grant, create, incur, assume or suffer
to exist any Lien on any Mortgage Loan, whether now existing or
hereafter created, or any interest therein; the Depositor will notify
the Trustee of the existence of any Lien on any Mortgage Loan
immediately upon discovery thereof; and the Depositor will defend the
right, title and interest of the Trust in, to and under the Mortgage
Loans, whether now existing or hereafter created, against all claims of
third parties claiming through or under the Depositor; provided,
however, that nothing in this Section 2(e) shall prevent or be deemed to
prohibit the Depositor from suffering to exist upon any of the Mortgage
Loans any Liens for municipal or other local taxes and other
governmental charges if such taxes or governmental charges shall not at
the time be due and payable or if the Depositor shall currently be
contesting the validity thereof in good faith by appropriate proceedings
and shall have set aside on its books adequate reserves with respect
thereto.
3. Administration and Servicing of Mortgage Loans.
The parties agree that, subject to the provisions of Section 7 hereof,
the Master Servicer shall service the Mortgage Loans in the manner and on the
terms and conditions set forth below:
(a) Master Servicer to Service Mortgage Loans.
(i) The Master Servicer shall service and administer the Mortgage
Loans in a manner consistent with the terms of this Agreement and with
general industry practice and shall have full power and authority,
acting alone or through a subservicer, 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 Master
Servicer shall at all times remain responsible to the Trustees, the
Securityholders and the Credit Enhancer for the performance of its
duties and obligations hereunder in accordance with the terms hereof.
Any amounts received by any subservicer in respect of a Mortgage Loan
shall be deemed to have been received by the Master Servicer whether or
not actually received by it. Without limiting the generality of the
foregoing, the Master Servicer shall
32
continue, and is hereby authorized and empowered by the Trustee, to
execute and deliver, on behalf of itself, the Securityholders and the
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 Trustee shall, upon the written
request of a Servicing Officer, furnish the Master Servicer with any
powers of attorney and other documents necessary or appropriate to
enable the Master Servicer to carry out its servicing and administrative
duties hereunder. The Master Servicer in such capacity may also consent
to the placing of a lien senior to that of any Mortgage on the related
Mortgaged Property, provided that
(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 such senior lien does not secure a note that provides
for negative amortization. Notwithstanding the foregoing, the Master Servicer
can consent to the placing of liens senior to that of a Mortgage on the related
Mortgaged Property which have a principal balance in excess of the principal
balance of the senior lien it replaces on Mortgage Loans having in the aggregate
Asset Balances not in excess of ___% of the Cut-off Date Pool Balance; provided,
however, that, with respect to Mortgage Loans which as of the Cut-off Date had
Combined Loan-to-Value Ratios in excess of ___%, the aggregate Asset Balance of
such Mortgage Loans with respect to which the senior lien may be so modified
shall not exceed _____% of the Cut-off Date Pool Balance (such ___% and _____%
herein referred to as the "Increased Senior Lien Limitation"). Any such increase
33
to the principal balance of the senior lien shall not exceed the greater of
$_______ and _____% of the principal balance of the senior lien prior to such
increase.
The Master Servicer may also, without prior approval from the Rating
Agencies or the Credit Enhancer, increase the Credit Limits on Mortgage Loans
provided that (i) new appraisals are obtained and the Combined Loan-to-Value
Ratios of the Mortgage Loans after giving effect to such increase are less than
or equal to the Combined Loan-to-Value Ratios or the Mortgage Loans as of the
Cut-off Date and (ii) such increases are consistent with the Master Servicer's
underwriting policies. In addition, the Master Servicer may increase the Credit
Limits on Mortgage Loans having aggregate balances of up to ____% of the
aggregate Cut-off Date Pool Balance, without obtaining new appraisals provided
that (i) the increase in the Credit Limit does not cause the Combined
Loan-to-Value Ratios of the Mortgage Loans to exceed _____% and (ii) the
increase is consistent with the Master Servicer's underwriting policies.
Furthermore, the Master Servicer may, without prior approval from the
Rating Agencies and the Credit Enhancer solicit Mortgagors for a reduction in
Loan Rates; provided that the Master Servicer can only reduce such Loan Rates on
up to ____% of the Mortgage Loans by Cut-off Date Pool Balance. Any such
solicitations shall not result in a reduction in the weighted average Gross
Margin of the Mortgage Loans in the pool by more than ____ basis points taking
into account any such prior reductions.
In addition, the Master 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 Securityholders or the
Credit Enhancer and (ii) are consistent with prudent and customary business
practice as evidenced by a certificate signed by a Servicing Officer delivered
to the Trustee and the Credit Enhancer.
In addition to the foregoing, the Master Servicer may solicit Mortgagors
to change any other terms of the related Mortgage Loans, provided that such
changes (i) do not materially and adversely affect the interest of
Securityholders or the Credit Enhancer and (ii) are consistent with prudent and
customary business practice as evidenced by a certificate signed by a Servicing
Officer delivered to the Trustee and the Credit Enhancer. Nothing herein shall
limit the right of the Master Servicer to solicit Mortgagors with respect to new
loans (including mortgage loans) that are not Mortgage Loans.
34
The relationship of the Master Servicer (and of any successor to the
Master Servicer as servicer under this Agreement) to the 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.
(ii) In the event that the rights, duties and obligations of the
Master Servicer are terminated hereunder, any successor to the Master
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 Master Servicer's rights under such
subservicing arrangements which termination or assumption will not
violate the terms of such arrangements.
(b) Subservicing; Enforcement of the Obligations of
Servicers.
(i) The Master Servicer may arrange for the subservicing of any
Mortgage Loan by a Subservicer pursuant to a subservicing agreement; provided,
however, that such subservicing arrangement and the terms of the related
subservicing agreement must provide for the servicing of such Mortgage Loans in
a manner consistent with the servicing arrangements contemplated hereunder.
Unless the context otherwise requires, references in this Agreement to actions
taken or to be taken by the Master Servicer in servicing the Mortgage Loans
include actions taken or to be taken by a Subservicer on behalf of the Master
Servicer. Notwithstanding the provisions of any subservicing agreement, any of
the provisions of this Agreement relating to agreements or arrangements between
the Master Servicer and a Subservicer or reference to actions taken through a
Subservicer or otherwise, the Master Servicer shall remain obligated and liable
to the Depositor, the Trustees and the Securityholders for the servicing and
administration of the Mortgage Loans in accordance with the provisions of this
Agreement without diminution of such obligation or liability by virtue of such
subservicing agreements or arrangements or by virtue of indemnification from the
Subservicer and to the same extent and under the same terms and conditions as if
the Master Servicer alone were servicing and administering the Mortgage Loans.
All actions of each Subservicer performed pursuant to the related subservicing
agreement shall be performed as an agent of the Master Servicer with the same
force and effect as if performed directly by the Master Servicer.
(ii) For purposes of this Agreement, the Master Servicer shall be
deemed to have received any collections, recoveries or payments with respect to
the Mortgage Loans that
35
are received by a Subservicer regardless of whether such payments are remitted
by the Subservicer to the Master Servicer.
(iii) As part of its servicing activities hereunder, the Master
Servicer, for the benefit of the Trustees and the Securityholders, shall use its
best reasonable efforts to enforce the obligations of each Subservicer under the
related Subservicing Agreement, to the extent that the non-performance of any
such obligation would have material and adverse effect on a Mortgage Loan. Such
enforcement, including, without limitation, the legal prosecution of claims,
termination of Subservicing Agreements and the pursuit of other appropriate
remedies, shall be in such form and carried out to such an extent and at such
time as the Master Servicer, in its good faith business judgment, would require
were it the owner of the related Mortgage Loans. The Master Servicer shall pay
the costs of such enforcement at its own expense, and shall be reimbursed
therefor only (i) from a general recovery resulting from such enforcement to the
extent, if any, that such recovery exceeds all amounts due in respect of the
related Mortgage Loan or (ii) from a specific recovery of costs, expenses or
attorneys fees against the party against whom such enforcement is directed.
(c) Successor Servicers.
The Master Servicer shall be entitled to terminate any Subservicing
Agreement that may exist in accordance with the terms and conditions of such
Subservicing Agreement and without any limitation by virtue of this Agreement;
provided, however, that in the event of termination of any Subservicing
Agreement by the Master Servicer or the Subservicer, the Master Servicer shall
either act as servicer of the related Mortgage Loan or enter into a Subservicing
Agreement with a successor Subservicer which will be bound by the terms of the
related Subservicing Agreement. If the Master Subservicer or any affiliate of
the Master Servicer acts as Subservicer, it will not assume liability for the
representations and warranties of the Subservicer which it replaces. If the
Master Subservicer enters into a Subservicing Agreement with a successor
Subservicer, the Master Servicer shall use reasonable efforts to have the
successor Subservicer assume liability for the representations and warranties
made by the terminated Subservicer in respect of the related Mortgage Loans and,
in the event of any such assumption by the successor Subservicer, the Master
Servicer may, in the exercise of its business judgment, release the terminated
Servicer from liability for such representations and warranties.
36
(d) Liability of the Master Servicer.
Notwithstanding any Subservicing Agreement, any of the provisions of
this Agreement relating to agreements or arrangements between the Master
Servicer or a Subservicer or references to actions taken through a Subservicer
or otherwise, the Master Servicer shall remain obligated and liable to the
Trustees and Securityholders for the servicing and administering of the Pledged
Mortgages in accordance with the provisions of Section 3(a) without diminution
of such obligation or liability by virtue of such Subservicing Agreements or
arrangements or by virtue of indemnification from the Subservicer and to the
same extent and under the same terms and conditions as if the Master Servicer
alone were servicing and administering the Pledged Mortgages. The Master
Servicer shall be entitled to enter into any agreement with a Subservicer for
indemnification of the Master Servicer and nothing contained in this Agreement
shall be deemed to limit or modify such indemnification.
(e) No Contractual Relationship Between Subservicers
and the Trustees.
Any Servicing Agreement that may be entered into and any other
transactions or services relating to the Mortgage Loans involving a Servicer in
its capacity as such and not as an originator shall be deemed to be between the
Subservicer and the Master Servicer alone and the Trustees and Securityholders
shall not be deemed parties thereto and shall have no claims, rights,
obligations, duties or liabilities with respect to the Subservicer in its
capacity as such except as set forth in Section 3(g).
(f) Rights of the Depositor and the Trustees in
Respect of the Master Servicer.
The Depositor may, but is not obligated to, enforce the obligations of
the Master Servicer hereunder and may, but is not obligated to, perform, or
cause a designee to perform, any defaulted obligation of the Master Servicer
hereunder and in connection with any such defaulted obligation to exercise the
related rights of the Master Servicer hereunder; provided that the Master
Servicer shall not be relieved of any of its obligations hereunder by virtue of
such performance by the Depositor or its designee. Neither the Trustees nor the
Depositor shall have any responsibility or liability for any action or failure
to act by the Master Servicer nor shall the Trustees or the Depositor be
obligated to supervise the performance of the Master Servicer hereunder or
otherwise.
37
(g) Trustee to Act as Master Servicer.
In the event that the Master Servicer shall for any reason no longer be
the Master Servicer hereunder (including by reason of an Event of Default), the
Trustee or its successor shall thereupon assume all of the rights and
obligations of the Master Servicer hereunder arising thereafter (except that the
Trustee shall not be (i) liable for losses of the Master Servicer pursuant to
Section 3(l) hereof or any acts or omissions of the predecessor Master Servicer
hereunder), (ii) obligated to make Advances if it is prohibited from doing so by
applicable law, (iii) obligated to effectuate repurchases or substitutions of
Mortgage Loans hereunder including, but not limited to, repurchases or
substitutions of Mortgage Loans pursuant to Section 2(c)(ii) or 2(d) hereof,
(iv) responsible for expenses of the Master Servicer pursuant to Section 2(d) or
(v) deemed to have made any representations and warranties of the Master
Servicer hereunder). Any such assumption shall be subject to Section 7(b)
hereof. If the Master Servicer shall for any reason no longer be the Master
Servicer (including by reason of any Event of Default), the Trustee or its
successor shall succeed to any rights and obligations of the Master Servicer
under each subservicing agreement.
The Master Servicer shall, upon request of the Trustee, but at the
expense of the Master Servicer, deliver to the assuming party all documents and
records relating to each subservicing agreement or substitute subservicing
agreement and the Mortgage Loans then being serviced thereunder and an
accounting of amounts collected or held by it and otherwise use its best efforts
to effect the orderly and efficient transfer of the substitute subservicing
agreement to the assuming party.
(h) Collection of Mortgage Loan Payments; Collection
Accounts; Payment Account.
(i) The Master Servicer shall make reasonable efforts in
accordance with the customary and usual standards of practice of prudent
mortgage servicers to collect all payments called for under the terms and
provisions of the Mortgage Loans to the extent such procedures shall be
consistent with this Agreement and the terms and provisions of any related
Required Insurance Policy. Consistent with the foregoing, the Master Servicer
may in its discretion (i) waive any late payment charge or any prepayment charge
or penalty interest in connection with the prepayment of a Mortgage Loan and
(ii) extend the due dates for payments due on a Mortgage Note for a period not
greater than 180 days; provided, however, that the Master Servicer cannot extend
the maturity of any such Mortgage Loan past the date on which the final payment
is due on the latest maturing Mortgage Loan as of
38
the Cut-off Date. In the event of any such arrangement, the Master Servicer
shall make Advances on the related Mortgage Loan in accordance with the
provisions of Section 4 during the scheduled period in accordance with the
amortization schedule of such Mortgage Loan without modification thereof by
reason of such arrangements. The Master Servicer shall not be required to
institute or join in litigation with respect to collection of any payment
(whether under a Mortgage, Mortgage Note or otherwise or against any public or
governmental authority with respect to a taking or condemnation) if it
reasonably believes that enforcing the provision of the Mortgage or other
instrument pursuant to which such payment is required is prohibited by
applicable law.
(ii) The Master Servicer shall establish and maintain a
Collection Account into which the Master Servicer shall deposit or cause to be
deposited on a daily basis within one Business Day of receipt, except as
otherwise specifically provided herein, the following payments and collections
remitted by Subservicers or received by it in respect of Mortgage Loans
subsequent to the Cut-off Date (other than in respect of principal and interest
due on the Mortgage Loans on or before the Cut-off Date) and the following
amounts required to be deposited hereunder:
(A) all collections on account of principal on the
Mortgage Loans;
(B) all collections on account of interest on the
Mortgage Loans, net of the related Master Servicing Fee;
(C) all Insurance Proceeds and Liquidation Proceeds, other than
proceeds to be applied to the restoration or repair of the Mortgaged
Property or released to the Mortgagor in accordance with the Master
Servicer's normal servicing procedures;
(D) any amount required to be deposited by the Master Servicer
pursuant to Section 3(h)(v) in connection with any losses on Permitted
Investments;
(E) any amounts required to be deposited by the Master Servicer
pursuant to Section 3(l)(ii), 3(l)(iv), and in respect of net monthly
rental income from REO Property pursuant to Section 3(n) hereof;
(F) all Substitution Adjustment Amounts;
(G) all Advances made by the Master Servicer pursuant
to Section 4; and
39
(H) any other amounts required to be deposited hereunder.
The foregoing requirements for remittance by the Master Servicer shall
be exclusive, it being understood and agreed that, without limiting the
generality of the foregoing, payments in the nature of prepayment penalties,
late payment charges or assumption fees, if collected, need not be remitted by
the Master Servicer. In the event that the Master Servicer shall remit any
amount not required to be remitted, it may at any time withdraw or direct the
institution maintaining the Collection Account to withdraw such amount from the
Collection Account, any provision herein to the contrary notwithstanding. Such
withdrawal or direction may be accomplished by delivering written notice thereof
to the Trustee or such other institution maintaining the Collection Account
which describes the amounts deposited in error in the Collection Account. The
Master Servicer shall maintain adequate records with respect to all withdrawals
made pursuant to this Section. All funds deposited in the Collection Account
shall be held in trust for the Securityholders until withdrawn in accordance
with Section 3(k).
(iii) The Trustee shall establish and maintain, on behalf of the
Securityholders, the Payment Account. The Trustee shall, promptly upon receipt,
deposit in the Payment Account and retain therein the following:
(A) the aggregate amount remitted by the Master
Servicer to the Trustee pursuant to Section 3(k)(i)(I);
(B) any amount deposited by the Master Servicer pursuant to
Section 3(h)(iv) in connection with any losses on Permitted Investments;
and
(C) any other amounts deposited hereunder which are required to
be deposited in the Payment Account.
In the event that the Master Servicer shall remit any amount not
required to be remitted, it may at any time direct the Trustee to withdraw such
amount from the Payment Account, any provision herein to the contrary
notwithstanding. Such direction may be accomplished by delivering an Officer's
Certificate to the Trustee which describes the amounts deposited in error in the
Payment Account. All funds deposited in the Payment Account shall be held by the
Trustee in trust for the Securityholders until disbursed in accordance with this
Agreement or withdrawn in accordance with Section 3(k). In no event shall the
Trustee incur liability for withdrawals from the Payment Account at the
direction of the Master Servicer.
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(iv) Each institution at which the Collection Account or the
Payment Account is maintained shall invest the funds therein as directed in
writing by the Master Servicer in Permitted Investments, which shall mature not
later than (i) in the case of the Collection Account, the second Business Day
next preceding the related Payment Account Deposit Date (except that if such
Permitted Investment is an obligation of the institution that maintains such
account, then such Permitted Investment shall mature not later than the Business
Day next preceding such Payment Account Deposit Date) and (ii) in the case of
the Payment Account, the Business Day next preceding the Distribution Date
(except that if such Permitted Investment is an obligation of the institution
that maintains such fund or account, then such Permitted Investment shall mature
not later than such Distribution Date) and, in each case, shall not be sold or
disposed of prior to its maturity. All such Permitted Investments shall be made
in the name of the Trustee, for the benefit of the Securityholders. All income
and gain net of any losses realized from any such investment of funds on deposit
in the Collection Account or the Payment Account shall be for the benefit of the
Master Servicer as servicing compensation and shall be remitted to it monthly as
provided herein. The amount of any realized losses in the Collection Account or
the Payment Account incurred in any such account in respect of any such
investments shall promptly be deposited by the Master Servicer in the Collection
Account or paid to the Trustee for deposit into the Payment Account, as
applicable. The Trustee in its fiduciary capacity shall not be liable for the
amount of any loss incurred in respect of any investment or lack of investment
of funds held in the Collection Account or the Payment Account and made in
accordance with this Section 3(h).
(v) The Master Servicer shall give notice to the Trustee, the
Seller, each Rating Agency and the Depositor of any proposed change of the
location of the Collection Account prior to any change thereof. The Trustee
shall give notice to the Master Servicer, the Seller, each Rating Agency and the
Depositor of any proposed change of the location of the Payment Account prior to
any change thereof.
(i) Collection of Taxes, Assessments and Similar
Items; Escrow Accounts.
(i) To the extent required by the related Mortgage Note and not
violative of current law, the Master Servicer shall establish and maintain one
or more accounts (each, an "Escrow Account") and deposit and retain therein all
collections from the Mortgagors (or advances by the Master Servicer) for the
payment of taxes, assessments, hazard insurance premiums or comparable items for
the account of the Mortgagors. Nothing herein shall
41
require the Master Servicer to compel a Mortgagor to establish an Escrow Account
in violation of applicable law.
(ii) Withdrawals of amounts so collected from the Escrow Accounts
may be made only to effect timely payment of taxes, assessments, hazard
insurance premiums, condominium or PUD association dues, or comparable items, to
reimburse the Master Servicer out of related collections for any payments made
pursuant to Sections 3(a) hereof (with respect to taxes and assessments and
insurance premiums) and 3(l) hereof (with respect to hazard insurance), to
refund to any Mortgagors any sums determined to be overages, to pay interest, if
required by law or the terms of the related Mortgage or Mortgage Note, to
Mortgagors on balances in the Escrow Account or to clear and terminate the
Escrow Account at the termination of this Agreement in accordance with Section
8(a) hereof. The Escrow Accounts shall not be a part of the Issuer.
(iii) The Master Servicer shall advance any payments referred to
in Section 3(i)(i) that are not timely paid by the Mortgagors on the date when
the tax, premium or other cost for which such payment is intended is due, but
the Master Servicer shall be required so to advance only to the extent that such
advances, in the good faith judgment of the Master Servicer, will be recoverable
by the Master Servicer out of Insurance Proceeds, Liquidation Proceeds or
otherwise.
(j) Access to Certain Documentation and Information
Regarding the Mortgage Loans.
The Master Servicer shall afford the Depositor and the Trustee
reasonable access to all records and documentation regarding the Mortgage Loans
and all accounts, insurance information and other matters relating to this
Agreement, such access being afforded without charge, but only upon reasonable
request and during normal business hours at the office designated by the Master
Servicer.
Upon reasonable advance notice in writing, the Master Servicer will
provide to each Securityholder which is a savings and loan association, bank or
insurance company certain reports and reasonable access to information and
documentation regarding the Mortgage Loans sufficient to permit such
Securityholder to comply with applicable regulations of the OTS or other
regulatory authorities with respect to investment in the Certificates; provided
that the Master Servicer shall be entitled to be reimbursed by each such
Securityholder for actual expenses incurred by the Master Servicer in providing
such reports and access.
42
(k) Permitted Withdrawals from the Note Account.
(i) The Master Servicer may from time to time make withdrawals
from the Collection Account for the following purposes:
(A) to pay to the Master Servicer (to the extent not previously
retained by the Master Servicer) the servicing compensation to which it
is entitled pursuant to Section 5, and to pay to the Master Servicer, as
additional servicing compensation, earnings on or investment income with
respect to funds in or credited to the Collection Account;
(B) to reimburse the Master Servicer for unreimbursed Advances
made by it, such right of reimbursement pursuant to this subclause (ii)
being limited to amounts received on the Mortgage Loan(s) in respect of
which any such Advance was made;
(C) to reimburse the Master Servicer for any
Nonrecoverable Advance previously made;
(D) to reimburse the Master Servicer for Insured
Expenses from the related Insurance Proceeds;
(E) to reimburse the Master Servicer for (a) unreimbursed
Servicing Advances, the Master Servicer's right to reimbursement
pursuant to this clause (a) with respect to any Mortgage Loan being
limited to amounts received on such Mortgage Loan(s) which represent
late recoveries of the payments for which such advances were made
pursuant to Section 3(a) or Section 3(i) and (b) for unpaid Master
Servicing Fees as provided in Section 3(n) hereof;
(F) to pay to the purchaser, with respect to each Mortgage Loan
or property acquired in respect thereof that has been purchased pursuant
to Section 2(c)(ii), 2(d) or 3(n), all amounts received thereon after
the date of such purchase;
(G) to reimburse the Seller, the Master Servicer or the Depositor
for expenses incurred by any of them and reimbursable pursuant to
Section 6(c) hereof;
(H) to withdraw any amount deposited in the Collection
Account and not required to be deposited therein;
(I) on or prior to the Payment Account Deposit Date, to withdraw
an amount equal to the related Available Funds and the Trustees Fees for
such Distribution Date and remit
43
such amount to the Trustee for deposit in the Payment
Account; and
(J) to clear and terminate the Collection Account upon
termination of this Agreement pursuant to Section 8 (a) hereof.
The Master Servicer shall keep and maintain separate accounting, on a
Mortgage Loan by Mortgage Loan basis, for the purpose of justifying any
withdrawal from the Collection Account pursuant to such subclauses (i), (ii),
(iv), (v) and (vi). Prior to making any withdrawal from the Collection Account
pursuant to subclause (iii), the Master Servicer shall deliver to the Trustee an
Officer's Certificate of a Servicing Officer indicating the amount of any
previous Advance determined by the Master Servicer to be a Nonrecoverable
Advance and identifying the related Mortgage Loans(s), and their respective
portions of such Nonrecoverable Advance.
(ii) The Trustee shall withdraw funds from the Payment Account
for distributions to Securityholders in the manner specified in this Agreement
(and to withhold from the amounts so withdrawn, the amount of any taxes that it
is authorized to withhold pursuant to the last paragraph of [Section
8.11/trustee]). In addition, the Trustee may from time to time make withdrawals
from the Payment Account for the following purposes:
(A) to pay to itself the Trustee Fee for the related
Distribution Date;
(B) to pay to the Master Servicer as additional servicing
compensation earnings on or investment income with respect to funds in
the Payment Account;
(C) to withdraw and return to the Master Servicer any amount
deposited in the Payment Account and not required to be deposited
therein; and
(D) to clear and terminate the Payment Account upon termination
of the Agreement pursuant to 8(a) hereof.
(l) Maintenance of Hazard Insurance; Maintenance of
Primary Insurance Policies.
(i) The Master Servicer shall cause to be maintained, for each
Mortgage Loan, hazard insurance with extended coverage in an amount that is at
least equal to the lesser of (i) the maximum insurable value of the improvements
securing such Mortgage Loan or (ii) the greater of (y) the outstanding
44
principal balance of the Mortgage Loan and (z) an amount such that the proceeds
of such policy shall be sufficient to prevent the Mortgagor and/or the mortgagee
from becoming a co-insurer. Each such policy of standard hazard insurance shall
contain, or have an accompanying endorsement that contains, a standard mortgagee
clause. Any amounts collected by the Master Servicer under any such policies
(other than the amounts to be applied to the restoration or repair of the
related Mortgaged Property or amounts released to the Mortgagor in accordance
with the Master Servicer's normal servicing procedures) shall be deposited in
the Collection Account. Any cost incurred by the Master Servicer in maintaining
any such insurance shall not, for the purpose of calculating monthly
distributions to the Securityholders or remittances to the Trustee for their
benefit, be added to the principal balance of the Mortgage Loan, notwithstanding
that the terms of the Mortgage Loan so permit. Such costs shall be recoverable
by the Master Servicer out of late payments by the related Mortgagor or out of
Liquidation Proceeds to the extent permitted by Section 3(k) hereof. It is
understood and agreed that no earthquake or other additional insurance is to be
required of any Mortgagor or maintained on property acquired in respect of a
Mortgage other than pursuant to such applicable laws and regulations as shall at
any time be in force and as shall require such additional insurance. If the
Mortgaged Property is located at the time of origination of the Mortgage Loan in
a federally designated special flood hazard area and such area is participating
in the national flood insurance program, the Master Servicer shall cause flood
insurance to be maintained with respect to such Mortgage Loan. Such flood
insurance shall be in an amount equal to the least of (i) the original principal
balance of the related Mortgage Loan, (ii) the replacement value of the
improvements which are part of such Mortgaged Property, and (iii) the maximum
amount of such insurance available for the related Mortgaged Property under the
national flood insurance program.
(ii) In the event that the Master Servicer shall obtain and
maintain a blanket policy insuring against hazard losses on all of the Mortgage
Loans, it shall conclusively be deemed to have satisfied its obligations as set
forth in the first sentence of this Section, it being understood and agreed that
such policy may contain a deductible clause on terms substantially equivalent to
those commercially available and maintained by comparable servicers. If such
policy contains a deductible clause, the Master Servicer shall, in the event
that there shall not have been maintained on the related Mortgaged Property a
policy complying with the first sentence of this Section, and there shall have
been a loss that would have been covered by such policy, deposit in the
Collection Account the amount not otherwise payable under the blanket policy
because of such
45
deductible clause. In connection with its activities as Master Servicer of the
Mortgage Loans, the Master Servicer agrees to present, on behalf of itself, the
Depositor, and the Trustee for the benefit of the Securityholders, claims under
any such blanket policy.
(iii) The Master Servicer shall not take any action which would
result in non-coverage under any applicable Primary Insurance Policy of any loss
which, but for the actions of the Master Servicer, would have been covered
thereunder. The Master Servicer shall not cancel or refuse to renew any such
Primary Insurance Policy that is in effect at the date of the initial issuance
of the Notes and the Certificates and is required to be kept in force hereunder
unless the replacement Primary Insurance Policy for such canceled or non-renewed
policy is maintained with a Qualified Insurer. The Master Servicer shall not be
required to maintain any Primary Insurance Policy with respect to any Mortgage
Loan with a Loan-to-Value Ratio less than or equal to 80% as of any date of
determination or, based on a new appraisal, the principal balance of such
Mortgage Loan represents 80% or less of the new appraised value. The Master
Servicer agrees to effect the timely payment of the premiums on each Primary
Insurance Policy, and such costs not otherwise recoverable shall be recoverable
by the Master Servicer from the related liquidation proceeds.
(iv) In connection with its activities as Master Servicer of the
Mortgage Loans, the Master Servicer agrees to present on behalf of itself, the
Trustee and Securityholders, claims to the insurer under any Primary Insurance
Policies and, in this regard, to take such reasonable action as shall be
necessary to permit recovery under any Primary Insurance Policies respecting
defaulted Mortgage Loans. Any amounts collected by the Master Servicer under any
Primary Insurance Policies shall be deposited in the Collection Account.
(m) Enforcement of Due-On-Sale Clauses; Assumption
Agreements.
(i) Except as otherwise provided in this Section, when any
property subject to a Mortgage has been conveyed by the Mortgagor, the Master
Servicer shall to the extent that it has knowledge of such conveyance, enforce
any due-on-sale clause contained in any Mortgage Note or Mortgage, to the extent
permitted under applicable law and governmental regulations, but only to the
extent that such enforcement will not adversely affect or jeopardize coverage
under any Required Insurance Policy. Notwithstanding the foregoing, the Master
Servicer is not required to exercise such rights with respect to a Mortgage Loan
if the Person to whom the related Mortgaged Property has
46
been conveyed or is proposed to be conveyed satisfies the terms and conditions
contained in the Mortgage Note and Mortgage related thereto and the consent of
the mortgagee under such Mortgage Note or Mortgage is not otherwise so required
under such Mortgage Note or Mortgage as a condition to such transfer. In the
event that the Master Servicer is prohibited by law from enforcing any such
due-on-sale clause, or if coverage under any Required Insurance Policy would be
adversely affected, or if nonenforcement is otherwise permitted hereunder, the
Master Servicer is authorized, subject to Section 3(m)(ii), to take or enter
into an assumption and modification agreement from or with the person to whom
such property has been or is about to be conveyed, pursuant to which such person
becomes liable under the Mortgage Note and, unless prohibited by applicable
state law, the Mortgagor remains liable thereon, provided that the Mortgage Loan
shall continue to be covered (if-so covered before the Master Servicer enters
such agreement) by the applicable Required Insurance Policies. The Master
Servicer, subject to Section 3(m)(ii), is also authorized with the prior
approval of the insurers under any Required Insurance Policies to enter into a
substitution of liability agreement with such Person, pursuant to which the
original Mortgagor is released from liability and such Person is substituted as
Mortgagor and becomes liable under the Mortgage Note. Notwithstanding the
foregoing, the Master Servicer shall not be deemed to be in default under this
Section by reason of any transfer or assumption which the Master Servicer
reasonably believes it is restricted by law from preventing, for any reason
whatsoever.
(ii) Subject to the Master Servicer's duty to enforce any
due-on-sale clause to the extent set forth in Section 3(m)(i) hereof, in any
case in which a Mortgaged Property has been conveyed to a Person by a Mortgagor,
and such Person is to enter into an assumption agreement or modification
agreement or supplement to the Mortgage Note or Mortgage that requires the
signature of the Trustee, or if an instrument of release signed by the Trustee
is required releasing the Mortgagor from liability on the Mortgage Loan, the
Master Servicer shall prepare and deliver or cause to be prepared and delivered
to the Trustee for signature and shall direct, in writing, the Trustee to
execute the assumption agreement with the Person to whom the Mortgaged Property
is to be conveyed and such modification agreement or supplement to the Mortgage
Note or Mortgage or other instruments as are reasonable or necessary to carry
out the terms of the Mortgage Note or Mortgage or otherwise to comply with any
applicable laws regarding assumptions or the transfer of the Mortgaged Property
to such Person. In connection with any such assumption, no material term of the
Mortgage Note may be changed. In addition, the substitute Mortgagor and the
Mortgaged Property must be acceptable to the Master Servicer in accordance with
its
47
underwriting standards as then in effect. Together with each such substitution,
assumption or other agreement or instrument delivered to the Trustee for
execution by it, the Master Servicer shall deliver an Officer's Certificate
signed by a Servicing Officer stating that the requirements of this subsection
have been met in connection therewith. The Master Servicer shall notify the
Trustee that any such substitution or assumption agreement has been completed by
forwarding to the Trustee the original of such substitution or assumption
agreement, which in the case of the original shall be added to the related
Mortgage File and shall, for all purposes, be considered a part of such Mortgage
File to the same extent as all other documents and instruments constituting a
part thereof. Any fee collected by the Master Servicer for entering into an
assumption or substitution of liability agreement will be retained by the Master
Servicer as additional servicing compensation.
(n) Realization Upon Defaulted Mortgage Loans;
Repurchase of Certain Mortgage Loans.
The Master Servicer shall use reasonable efforts to foreclose upon or
otherwise comparably convert the ownership of properties securing such of the
Mortgage Loans as come into and continue in default and as to which no
satisfactory arrangements can be made for collection of delinquent payments. In
connection with such foreclosure or other conversion, the Master Servicer shall
follow such practices and procedures as it shall deem necessary or advisable and
as shall be normal and usual in its general mortgage servicing activities and
meet the requirements of the insurer under any Required Insurance Policy;
provided, however, that the Master Servicer shall not be required to expend its
own funds in connection with any foreclosure or towards the restoration of any
property unless it shall determine (i) that such restoration and/or foreclosure
will increase the proceeds of liquidation of the Mortgage Loan after
reimbursement to itself of such expenses and (ii) that such expenses will be
recoverable to it through Liquidation Proceeds (respecting which it shall have
priority for purposes of withdrawals from the Collection Account). The Master
Servicer shall be responsible for all other costs and expenses incurred by it in
any such proceedings; provided, however, that it shall be entitled to
reimbursement thereof from the liquidation proceeds with respect to the related
Mortgaged Property, as provided in the definition of Liquidation Proceeds. If
the Master Servicer has knowledge that a Mortgaged Property which the Master
Servicer is contemplating acquiring in foreclosure or by deed in lieu of
foreclosure is located within a one mile radius of any site listed in the
Expenditure Plan for the Hazardous Substance Clean Up Bond Act of 1984 or other
site with environmental or hazardous waste risks known to the Master Servicer,
the Master Servicer will, prior to acquiring the
48
Mortgaged Property, consider such risks and only take action in accordance with
its established environmental review procedures.
With respect to any REO Property, the deed or certificate of sale shall
be taken in the name of the Trustee for the benefit of the Securityholders, or
its nominee, on behalf of the Securityholders. The Trustee's name shall be
placed on the title to such REO Property solely as the Trustee under the
Indenture and not in its individual capacity. The Master Servicer shall ensure
that the title to such REO Property references the Indenture and the Trustee's
capacity thereunder. Pursuant to its efforts to sell such REO Property, the
Master Servicer shall either itself or through an agent selected by the Master
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
Securityholders, rent the same, or any part thereof, as the Master Servicer
deems to be in the best interest of the Securityholders for the period prior to
the sale of such REO Property. The Master Servicer shall prepare for and deliver
to the Trustee a statement with respect to each REO Property that has been
rented showing the aggregate rental income received and all expenses incurred in
connection with the management and maintenance of such REO Property at such
times as is necessary to enable the Trustee to comply with the reporting
requirements of the REMIC Provisions. The net monthly rental income, if any,
from such REO Property shall be deposited in the Collection Account no later
than the close of business on each Determination Date. [The Master Servicer
shall perform the tax reporting and withholding required by Sections 1445 and
6050J of the Code with respect to foreclosures and abandonments, the tax
reporting required by Section 6050H of the Code with respect to the receipt of
mortgage interest from individuals and any tax reporting required by Section
6050P of the Code with respect to the cancellation of indebtedness by certain
financial entities, by preparing such tax and information returns as may be
required, in the form required, and delivering the same to the Trustee for
filing.]
In the event that the Issuer acquires any Mortgaged Property as
aforesaid or otherwise in connection with a default or imminent default on a
Mortgage Loan, the Master Servicer shall dispose of such Mortgaged Property
prior to two years after its acquisition by the Issuer unless the Trustee shall
have been supplied with an Opinion of Counsel to the effect that the holding by
the Issuer of such Mortgaged Property subsequent to such two-year period will
not result in the imposition of taxes on "prohibited transactions" of the REMIC
defined in Section 860F of the Code or cause the REMIC to fail to qualify as a
REMIC at any time that any Notes or Certificates are outstanding, in which
49
case the Issuer may continue to hold such Mortgaged Property (subject to any
conditions contained in such Opinion of Counsel). Notwithstanding any other
provision of this Agreement, no Mortgaged Property acquired by the Issuer shall
be rented (or allowed to continue to be rented) or otherwise used for the
production of income by or on behalf of the Issuer in such a manner or pursuant
to any terms that would (i) cause such Mortgaged Property to fail to qualify as
"foreclosure property" within the meaning of Section 860G(a)(8) of the Code or
(ii) subject the REMIC to the imposition of any federal, state or local income
taxes on the income earned from such Mortgaged Property under Section 860G(c) of
the Code or otherwise, unless the Master Servicer has agreed to indemnify and
hold harmless the Issuer with respect to the imposition of any such taxes.
The decision of the Master Servicer to foreclose on a defaulted Mortgage
Loan shall be subject to a determination by the Master Servicer that the
proceeds of such foreclosure would exceed the costs and expenses of bringing
such a proceeding. The income earned from the management of any REO Properties,
net of reimbursement to the Master Servicer for expenses incurred (including any
property or other taxes) in connection with such management and net of
unreimbursed Master Servicing Fees, Advances and Servicing Advances, shall be
applied to the payment of principal of and interest on the related defaulted
Mortgage Loans (with interest accruing as though such Mortgage Loans were still
current) and all such income shall be deemed, for all purposes in this
Agreement, to be payments on account of principal and interest on the related
Mortgage Notes and shall be deposited into the Collection Account. To the extent
the net income received during any calendar month is in excess of the amount
attributable to amortizing principal and accrued interest at the related
Mortgage Rate on the related Mortgage Loan for such calendar month, such excess
shall be considered to be a partial prepayment of principal of the related
Mortgage Loan.
The proceeds from any liquidation of a Mortgage Loan, as well as any
income from an REO Property, will be applied in the following order of priority:
first, to reimburse the Master Servicer for any related unreimbursed Servicing
Advances and Master Servicing Fees; second, to reimburse the Master Servicer for
any unreimbursed Advances; third, to reimburse the Collection Account for any
Nonrecoverable Advances (or portions thereof) that were previously withdrawn by
the Master Servicer pursuant to Section 3(k)(i)(C) that related to such Mortgage
Loan; fourth, to accrued and unpaid interest (to the extent no Advance has been
made for such amount or any such Advance has been reimbursed) on the Mortgage
Loan or related REO Property, at the Adjusted Net Mortgage Rate to the Due Date
occurring in the month in which such amounts are required to be distributed; and
fifth, as a
50
recovery of principal of the Mortgage Loan. Excess Proceeds, if any, from the
liquidation of a Liquidated Mortgage Loan will be retained by the Master
Servicer as additional servicing compensation pursuant to Section 5.
The Master Servicer, in its sole discretion, shall have the right to
purchase for its own account from the Issuer any Mortgage Loan which is 91 days
or more delinquent at a price equal to the Purchase Price. The Purchase Price
for any Mortgage Loan purchased hereunder shall be deposited in the Collection
Account and the Trustee, upon receipt of a certificate from the Master Servicer
in the form of Exhibit D hereto, shall release or cause to be released to the
purchaser of such Mortgage Loan the related Mortgage File and shall execute and
deliver such instruments of transfer or assignment prepared by the purchaser of
such Mortgage Loan, in each case without recourse, as shall be necessary to vest
in the purchaser of such Mortgage Loan any Mortgage Loan released pursuant
hereto and the purchaser of such Mortgage Loan shall succeed to all the
Trustee's right, title and interest in and to such Mortgage Loan and all
security and documents related thereto. Such assignment shall be an assignment
outright and not for security. The purchaser of such Mortgage Loan shall
thereupon own such Mortgage Loan, and all security and documents, free of any
further obligation to the Trustee or the Securityholders with respect thereto.
(o) Access to Certain Documentation.
The Master Servicer shall provide to the OTS and the FDIC and to
comparable regulatory authorities supervising Holders of subordinated Notes or
Certificates and the examiners and supervisory agents of the OTS, the FDIC and
such other authorities, access to the documentation regarding the Mortgage Loans
required by applicable regulations of the OTS and the FDIC. Such access shall be
afforded without charge, but only upon reasonable and prior written request and
during normal business hours at the offices designated by the Master Servicer.
Nothing in this Section shall limit the obligation of the Master Servicer to
observe any applicable law prohibiting disclosure of information regarding the
Mortgagors and the failure of the Master Servicer to provide access as provided
in this Section as a result of such obligation shall not constitute a breach of
this Section.
(p) Annual Statement as to Compliance.
The Master Servicer shall deliver to the Depositor and the Trustees on
or before 120 days after the end of the Master Servicer's fiscal year,
commencing with its 199_ fiscal year, an Officer's Certificate stating, as to
the signer thereof, that (i)
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a review of the activities of the Master Servicer during the preceding calendar
year and of the performance of the Master Servicer under this Agreement has been
made under such officer's supervision and (ii) to the best of such officer's
knowledge, based on such review, the Master Servicer has fulfilled all its
obligations under this Agreement throughout such 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. The Trustee shall
forward a copy of each such statement to each Rating Agency.
(q) Annual Independent Public Accountants' Servicing
Statement; Financial Statements.
On or before 120 days after the end of the Master Servicer's fiscal
year, commencing with its 199_ fiscal year, the Master Servicer at its expense
shall cause a nationally or regionally recognized firm of independent public
accountants (who may also render other services to the Master Servicer, the
Seller or any affiliate thereof) which is a member of the American Institute of
Certified Public Accountants to furnish a statement to the Trustees and the
Depositor to the effect that-such firm has examined certain documents and
records relating to the servicing of the Mortgage Loans under this Agreement or
of mortgage loans under pooling and servicing agreements substantially similar
to this Agreement (such statement to have attached thereto a schedule setting
forth the pooling and servicing agreements covered thereby) and that, on the
basis of such examination, conducted substantially in compliance with the
Uniform Single Attestation Program for Mortgage Bankers or the Audit Program for
Mortgages serviced for FNMA and FHLMC, such servicing has been conducted in
compliance with such pooling and servicing agreements except for such
significant exceptions or errors in records that, in the opinion of such firm,
the Uniform Single Attestation Program for Mortgage Bankers or the Audit Program
for Mortgages serviced for FNMA and FHLMC requires it to report. In rendering
such statement, such firm may rely, as to matters relating to direct servicing
of mortgage loans by Subservicers, upon comparable statements for examinations
conducted substantially in compliance with the Uniform Single Audit Program for
Mortgage Bankers or the Audit Program for Mortgages serviced for FNMA and FHLMC
(rendered within one year of such statement) of independent public accountants
with respect to the related Subservicer. Copies of such statement shall be
provided by the Trustee to any Securityholder upon request at the Master
Servicer's expense, provided such statement is delivered by the Master Servicer
to the Trustee.
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(r) Errors and Omissions Insurance; Fidelity Bonds.
The Master Servicer shall for so long as it acts as master servicer
under this Agreement, obtain and maintain in force (a) a policy or policies of
insurance covering errors and omissions in the performance of its obligations as
Master Servicer hereunder and (b) a fidelity bond in respect of its officers,
employees and agents. Each such policy or policies and bond shall, together,
comply with the requirements from time to time of FNMA or FHLMC for persons
performing servicing for mortgage loans purchased by FNMA or FHLMC. In the event
that any such policy or bond ceases to be in effect, the Master Servicer shall
obtain a comparable replacement policy or bond from an insurer or issuer,
meeting the requirements set forth above as of the date of such replacement.
(s) Master Servicer Monthly Data.
On or before noon California time on the Determination Date, the Master
Servicer shall provide by modem to the Trustee with respect to the Mortgage
Loans, an electronic data file (accompanied by a hardcopy report) in a format
which is mutually agreed upon by the Master Servicer and the Trustee. The
Trustee shall be under no duty to recalculate, verify or recompute the
information provided to it by the Master Servicer hereunder.
4. Advances.
The Master Servicer shall determine on or before each Master Servicer
Advance Date whether it is required to make an Advance pursuant to the
definition thereof. If the Master Servicer determines it is required to make an
Advance, it shall, on or before the Master Servicer Advance Date, deposit into
the Collection Account an amount equal to the Advance. The Master Servicer shall
be entitled to be reimbursed from the Collection Account for all Advances of its
own funds made pursuant to this Section as provided in Section 3(k). The
obligation to make Advances with respect to any Mortgage Loan shall continue if
such Mortgage Loan has been foreclosed or otherwise terminated and the related
Mortgaged Property has not been liquidated.
5. Servicing Compensation.
As compensation for its activities hereunder, the Master Servicer shall
be entitled to retain or withdraw from the Collection Account an amount equal to
the Master Servicing Fee for each Mortgage Loan, provided that the aggregate
Master Servicing Fee with respect to any Distribution Date shall be reduced (i)
by an amount equal to the aggregate of the Prepayment Interest Shortfalls, if
any, with respect to such Distribution Date, but not below an amount equal to
one-half of the aggregate
53
Master Servicing Fee for such Distribution Date before reduction thereof in
respect of such Prepayment Interest Shortfalls, and (ii) with respect to the
first Distribution Date, an amount equal to any amount to be deposited into the
Payment Account by the Depositor pursuant to Section 2(a)(i) and not so
deposited.
Additional servicing compensation in the form of Excess Proceeds,
Prepayment Interest Excess, prepayment penalties, assumption fees, late payment
charges and all income and gain net of any losses realized from Permitted
Investments shall be retained by the Master Servicer to the extent not required
to be deposited in the Collection Account pursuant to Section 3(h) hereof. The
Master Servicer shall be required to pay all expenses incurred by it in
connection with its master servicing activities hereunder (including payment of
any premiums for hazard insurance and any Primary Insurance Policy and
maintenance of the other forms of insurance coverage required by this Agreement)
and shall not be entitled to reimbursement therefor except as specifically
provided in this Agreement.
6. The Master Servicer.
(a) Respective Liabilities of the Depositor and the
Master Servicer.
The Master Servicer shall be liable in accordance herewith only to the
extent of the obligations specifically imposed upon and undertaken by it herein.
(b) Merger or Consolidation of the Depositor or the
Master Servicer.
The Depositor and the Master Servicer will each keep in full effect its
existence, rights and franchises as a corporation under the laws of the United
States or under the laws of one of the states thereof and will each obtain and
preserve its qualification to do business as a foreign corporation in each
jurisdiction in which such qualification is or shall be necessary to protect the
validity and enforceability of this Agreement, or any of the Mortgage Loans and
to perform its respective duties under this Agreement.
Any Person into which the Depositor or the Master Servicer may be merged
or consolidated, or any Person resulting from any merger or consolidation to
which the Depositor or the Master Servicer shall be a party, or any person
succeeding to the business of the Depositor or the Master Servicer, shall be the
successor of the Depositor or the Master Servicer, as the case may be,
hereunder, without the execution or filing of any paper or any further act on
the part of any of the parties hereto,
54
anything herein to the contrary notwithstanding; provided, however, that the
successor or surviving Person to the Master Servicer shall be qualified to sell
mortgage loans to, and to service mortgage loans on behalf of, FNMA or FHLMC.
(c) Limitation on Liability of the Depositor, the
Seller, Master Servicer and Others.
None of the Depositor, the Seller, the Master Servicer or any of the
directors, officers, employees or agents of the Depositor, the Seller or the
Master Servicer shall be under any liability to the Securityholders for any
action taken or for refraining from the taking of any action in good faith
pursuant to this Agreement, or for errors in judgment; provided, however, that
this provision shall not protect the Depositor, the Seller, the Master Servicer
or any such Person against any breach of representations or warranties made by
it herein or protect the Depositor, the Seller, the Master Servicer or any such
Person from any liability which would otherwise be imposed by reasons of willful
misfeasance, bad faith or gross negligence in the performance of duties or by
reason of reckless disregard of obligations and duties hereunder. The Depositor,
the Seller, the Master Servicer and any director, officer, employee or agent of
the Depositor, the Seller or the Master Servicer may rely in good faith on any
document of any kind prima facie properly executed and submitted by any Person
respecting any matters arising hereunder. The Depositor, the Seller, the Master
Servicer and any director, officer, employee or agent of the Depositor, the
Seller or the Master Servicer shall be indemnified by the Issuer and held
harmless against any loss, liability or expense incurred in connection with any
audit, controversy or judicial proceeding relating to a governmental taxing
authority or any legal action relating to this Agreement, the Notes or the
Certificates, other than any loss, liability or expense related to any specific
Mortgage Loan or Mortgage Loans (except as any such loss, liability or expense
shall be otherwise reimbursable pursuant to this Agreement) and any loss,
liability or expense incurred by reason of willful misfeasance, bad faith or
gross negligence in the performance of duties hereunder or by reason of reckless
disregard of obligations and duties hereunder. None of the Depositor, the Seller
or the Master Servicer shall be under any obligation to appear in, prosecute or
defend any legal action that is not incidental to its respective duties
hereunder and which in its opinion may involve it in any expense or liability;
provided, however, that any of the Depositor, the Seller or the Master Servicer
may in its discretion undertake any such action that it may deem necessary or
desirable in respect of this Agreement and the rights and duties of the parties
hereto and interests of the Trustees and the Securityholders hereunder. In such
event, the legal expenses and costs of such action and any
55
liability resulting therefrom shall be expenses, costs and liabilities of the
Issuer, and the Depositor, the Seller and the Master Servicer shall be entitled
to be reimbursed therefor out of the Collection Account.
(d) Limitation on Resignation of the Master Servicer.
The Master Servicer shall not resign from the obligations and duties
hereby imposed on it except (a) upon appointment of a successor servicer and
receipt by the Trustee of a letter from each Rating Agency that such a
resignation and appointment will not result in a downgrading of the rating of
any of the Certificates, or (b) upon determination that its duties hereunder are
no longer permissible under applicable law. Any such determination under clause
(b) permitting the resignation of the Master Servicer shall be evidenced by an
Opinion of Counsel to such effect delivered to the Trustee. No such resignation
shall become effective until the Trustee or a successor master servicer shall
have assumed the Master Servicer's responsibilities, duties, liabilities and
obligations hereunder.
7. Default.
(a) Events of Default.
"Event of Default," wherever used herein, means any one of
the following events:
(i) any failure by the Master Servicer to deposit in
the Collection Account or remit to the Trustee any payment (other
than a payment required to be made under Section 4 hereof)
required to be made with respect to any Class of Certificates
under the terms of this Agreement, which failure shall continue
unremedied for five days after the date upon which written notice
of such failure shall have been given to the Master Servicer by
the Trustee or the Depositor or to the Master Servicer, the
Depositor and the Trustee by the Holders of Notes or Certificates
of such Class evidencing not less than 25% of the total
distributions allocated to such Class; or
(ii) any failure by the Master Servicer duly to
observe or perform in any material respect any other of the
covenants or agreements on the part of the Master Servicer
contained in this Agreement, which failure shall continue
unremedied for a period of thirty days after the date on which
written notice of such failure shall have been given to the
Master Servicer by the Trustee or the Depositor, or to the Master
Servicer,
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the Depositor and the Trustee by the Holders of Notes or
Certificates of any Class evidencing not less than 25% of the
total distributions allocated to such Class; or
(iii) a decree or order of a court or agency or
supervisory authority having jurisdiction in the premises for the
appointment of a receiver or liquidator in any insolvency,
readjustment of debt, marshalling of assets and liabilities or
similar proceeding, or for the winding-up or liquidation of its
affairs, shall have been entered against the Master Servicer and
such decree or order shall have remained in force undischarged or
unstayed for a period of 60 consecutive days; or
(iv) the Master Servicer shall consent to the
appointment of a receiver or liquidator in any insolvency,
readjustment of debt, marshalling of assets and liabilities or
similar proceedings of or relating to the Master Servicer or all
or substantially all of the property of the Master Servicer; or
(v) the Master Servicer shall admit in writing its
inability to pay its debts generally as they become due, file a
petition to take advantage of, or commence a voluntary case
under, any applicable insolvency or reorganization statute, make
an assignment for the benefit of its creditors, or voluntarily
suspend payment of its obligations; or
[(vi) so long as the Master Servicer is the Seller, any
failure by the Seller to observe or perform in any material
respect any other of the covenants or agreements on the part of
the Seller contained in this Agreement, which failure shall
continue unremedied for a period of 60 days after the date on
which written notice of such failure shall have been given to the
Seller by the Trustee or the Depositor, or to the Seller and the
Trustee by the Holders of Notes or Certificates of any Class
evidencing not less than 25% of the total distributions allocated
to such Class; or]
(vii) any failure of the Master Servicer to make any
Advance in the manner and at the time required to be made
pursuant to Section 4 which continues unremedied for a period of
one Business Day after the date of such failure.
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If an Event of Default described in clauses (i) to (vi) of this Section
shall occur, then, and in each and every such case, so long as such Event of
Default shall not have been remedied, the Trustee may, or at the direction of
the Holders of Notes or Certificates of any Class evidencing not less than 25%
of the total distributions allocated to such Class, the Trustee shall by notice
in writing to the Master Servicer (with a copy to each Rating Agency), terminate
all of the rights and obligations of the Master Servicer under this Agreement
and in and to the Mortgage Loans and the proceeds thereof, other than its rights
as a Securityholder. If an Event of Default described in clause (vii) hereof
shall occur, the Trustee shall, by notice in writing to the Master Servicer and
the Depositor, terminate all of the rights and obligations of the Master
Servicer under this Agreement and in and to the Mortgage Loans and the proceeds
thereof, other than its rights as a Securityholder. On and after the receipt by
the Master Servicer of such written notice, all authority and power of the
Master Servicer hereunder, whether with respect to the Mortgage Loans or
otherwise, shall pass to and be vested in the Trustee. [The Trustee shall
thereupon make any Advance described in clause (vii) hereof subject to Section
3(g) hereof.] The Trustee is hereby authorized and empowered to execute and
deliver, on behalf of the Master 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 or assignment of
the Mortgage Loans and related documents, or otherwise. Unless expressly
provided in such written notice, no such termination shall affect any obligation
of the Master Servicer to pay amounts owed pursuant to Article VIII. The Master
Servicer agrees to cooperate with the Trustee in effecting the termination of
the Master Servicer's responsibilities and rights hereunder, including, without
limitation, the transfer to the Trustee of all cash amounts which shall at the
time be credited to the Collection Account, or thereafter be received with
respect to the Mortgage Loans.
Notwithstanding any termination of the activities of the Master Servicer
hereunder, the Master Servicer shall be entitled to receive, out of any late
collection of a Scheduled Payment on a Mortgage Loan which was due prior to the
notice terminating such Master Servicer's rights and obligations as Master
Servicer hereunder and received after such notice, that portion thereof to which
such Master Servicer would have been entitled pursuant to Sections 3(k)(i)(A)
through (H),and any other amounts payable to such Master Servicer hereunder the
entitlement to which arose prior to the termination of its activities hereunder.
58
(b) Trustee to Act; Appointment of Successor.
On and after the time the Master Servicer receives a notice of
termination pursuant to Section 7(a) hereof, the Trustee shall, subject to and
to the extent provided in Section 3(g), be the successor to the Master Servicer
in its capacity as master servicer under this Agreement and the transactions set
forth or provided for herein and shall be subject to all the responsibilities,
duties and liabilities relating thereto placed on the Master Servicer by the
terms and provisions hereof and applicable law including the obligation to make
Advances pursuant to Section 4. As compensation therefor, the Trustee shall be
entitled to all funds relating to the Mortgage Loans that the Master Servicer
would have been entitled to charge to the Collection Account or Payment Account
if the Master Servicer had continued to act hereunder. Notwithstanding the
foregoing, if the Trustee has become the successor to the Master Servicer in
accordance with Section 7(a) hereof, the Trustee may, if it shall be unwilling
to so act, or shall, if it is prohibited by applicable law from making Advances
pursuant to Section 4 hereof or if it is otherwise unable to so act, appoint, or
petition a court of competent jurisdiction to appoint, any established mortgage
loan servicing institution the appointment of which does not adversely affect
the then current rating of the Securities by each Rating Agency as the successor
to the Master Servicer hereunder in the assumption of all or any part of the
responsibilities, duties or liabilities of the Master Servicer hereunder. Any
successor to the Master Servicer shall be an institution which is a FNMA and
FHLMC approved seller/servicer in good standing, which has a net worth of at
least $10,000,000, and which is willing to service the Mortgage Loans and
executes and delivers to the Depositor and the Trustees an agreement accepting
such delegation and assignment, which contains an assumption by such Person of
the rights, powers, duties, responsibilities, obligations and liabilities of the
Master Servicer (other than liabilities of the Master Servicer under Section
6(c) hereof incurred prior to termination of the Master Servicer under Section
7(a)), with like effect as if originally named as a party to this Agreement; and
provided further that each Rating Agency acknowledges that its rating of the
Securities in effect immediately prior to such assignment and delegation will
not be qualified or reduced as a result of such assignment and delegation.
Pending appointment of a successor to the Master Servicer hereunder, the
Trustee, unless the Trustee is prohibited by law from so acting, shall, subject
to Section 3(g) hereof, act in such capacity as hereinabove provided. In
connection with such appointment and assumption, the Trustee may make such
arrangements for the compensation of such successor out of payments on Mortgage
Loans as it and such successor shall agree; provided, however, that no such
compensation shall be in excess of the Master Servicing Fee permitted the
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Master Servicer hereunder. The Trustee and such successor shall take such
action, consistent with this Agreement, as shall be necessary to effectuate any
such succession. Neither the Trustee nor any other successor master servicer
shall be deemed to be in default hereunder by reason of any failure to make, or
any delay in making, any distribution hereunder or any portion thereof or any
failure to perform, or any delay in performing, any duties or responsibilities
hereunder, in either case caused by the failure of the Master Servicer to
deliver or provide, or any delay in delivering or providing, any cash,
information, documents or records to it.
Any successor to the Master Servicer as master servicer shall give
notice to the Mortgagors of such change of servicer and shall, during the term
of its service as master servicer maintain in force the policy or policies that
the Master Servicer is required to maintain pursuant to 3(r).
(c) Notification to Securityholders.
(i) Upon any termination of or appointment of a successor to the
Master Servicer, the Trustee shall give prompt written notice thereof to
Securityholders and to each Rating Agency.
(ii) Within 60 days after the occurrence of any Event of Default,
the Trustee shall transmit by mail to all Securit-yholders notice of each such
Event of Default hereunder known to the Trustee, unless such Event of Default
shall have been cured or waived.
8. Miscellaneous.
(a) Term of Master Servicing Agreement.
The obligations to be performed by the Master Servicer under this
Agreement shall commence on and as of the date on which the Issuer issues the
Securities and shall terminate as to each Mortgage Loan upon (i) the payment in
full of all principal and interest due under such Mortgage Loan or other
liquidation of such Mortgage Loan as contemplated by this Agreement, (ii) the
termination of the Master Servicer's rights and powers under this Agreement by
the Trustee as provided in Section 7(a) of this Agreement, or (iii) the release
by the Trustee of its security interest in any Mortgage Loan.
(b) Assignment.
Notwithstanding anything to the contrary contained herein,
except as provided in Section 6(b), this Agreement may not be
60
assigned by the Master Servicer without the prior written consent
of the Trustee and Depositor.
(c) Notices.
(i) The Trustee shall use its best efforts to promptly provide
notice to each Rating Agency with respect to each of the following of which it
has actual knowledge:
1. Any material change or amendment to this Agreement;
2. The occurrence of any Event of Default that has not
been cured;
3. The resignation or termination of the Master
Servicer or the Trustee and the appointment of any successor;
4. The repurchase or substitution of Mortgage Loans
pursuant to Section 2(d); and
5. The final payment to Securityholders.
In addition, the Trustee shall promptly furnish to each Rating Agency
copies of the following:
1. Each report to Securityholders described in the
Indenture;
2. Each annual statement as to compliance described in
Section 3(p);
3. Each annual independent public accountants' servic-
ing report described in Section 3(q); and
4. Any notice of a purchase of a Mortgage Loan
pursuant to Section 2(c)(ii), 2(d) or 3(n).
(ii) All directions, demands and notices hereunder shall be in
writing and shall be deemed to have been duly given when delivered to (a) in the
case of the Depositor, CWABS, Inc., 000 Xxxxx Xxxx Xxxxxx, Xxxxxxxx, Xxxxxxxxxx
00000, Attention: _______________, (b) in the case of the Master Servicer,
_____________________________________________, Attention: _________________ or
such other address as may be hereafter furnished to the Depositor and the
Trustees by the Master Servicer in writing, (c) in the case of the Trustees,
_______________________________________________________,
Attention: __________________________________________________, or
such other address as the Trustee may hereafter furnish to the
Depositor or Master Servicer and (d) in the case of the Rating
61
Agencies, the address specified therefor in the definition corresponding to the
name of such Rating Agency. Notices to Securityholders shall be deemed given
when mailed, first class postage prepaid, to their respective addresses
appearing in the Certificate Register.
(d) Inspection and Audit Rights.
The Master Servicer agrees that, on reasonable prior notice, it will
permit and will cause each Subservicer to permit any representative of the
Depositor or the Trustee during the Master Servicer's normal business hours, to
examine all the books of account, records, reports and other papers of the
Master Servicer relating to the Mortgage Loans, to make copies and extracts
therefrom, to cause such books to be audited by independent certified public
accountants selected by the Depositor or the Trustee and to discuss its affairs,
finances and accounts relating to the Mortgage Loans with its officers,
employees and independent public accountants (and by this provision the Master
Servicer hereby authorizes said accountants to discuss with such representative
such affairs, finances and accounts), all at such reasonable times and as often
as may be reasonably requested. Any out-of-pocket expense incident to the
exercise by the Depositor or the Trustee of any right under this Section 8(d)
shall be borne by the party requesting such inspection; all other such expenses
shall be borne by the Master Servicer or the related Subservicer.
(e) Governing Law.
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE
SUBSTANTIVE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO
BE PERFORMED IN THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS AND REMEDIES
OF THE PARTIES HERETO AND THE SECURITYHOLDERS SHALL BE DETERMINED IN ACCORDANCE
WITH SUCH LAWS.
(f) Amendment.
This Agreement may be amended from time to time by the Issuer, the
Master Servicer and the Trustee without the consent of any of the
Securityholders to cure any ambiguity, or to correct or supplement any
provisions herein, or to make such other provisions with respect to matters or
questions arising under this Agreement as shall not be inconsistent with any
other provisions herein; provided that such action shall not, as evidenced by an
Opinion of Counsel (which Opinion of Counsel shall not be an expense of the
Trustee or the Issuer), adversely affect in any material respect the interests
of any Securityholder; provided, however, that the amendment shall not
62
be deemed to adversely affect in any material respect the interests of the
Securityholders if the Person requesting the amendment obtains a letter from
each Rating Agency stating that the amendment would not result in the
downgrading or withdrawal of the respective ratings then assigned to the
Securities; it being understood and agreed that any such letter in and of itself
will not represent a determination as to the materiality of any such amendment
and will represent a determination only as to the credit issues affecting any
such rating. The Trustee, the Depositor and the Master Servicer also may at any
time and from time to time amend this Agreement without the consent of the
Securityholders to modify, eliminate or add to any of its provisions to such
extent as shall be necessary or helpful to maintain the qualification of the
Issuer as a REMIC under the Code or to avoid or minimize the risk of the
imposition of any tax on the REMIC pursuant to the Code that would be a claim at
any time prior to the final redemption of the Securities, provided that the
Trustee has been provided an Opinion of Counsel, which opinion shall be an
expense of the party requesting such opinion but in any case shall not be an
expense of the Trustee or the Issuer, to the effect that such action is
necessary or helpful to maintain such qualification or to avoid or minimize the
risk of the imposition of such a tax.
This Agreement may also be amended from time to time by the Depositor,
the Master Servicer and the Trustee with the consent of the Holders of a
Majority in Interest of each Class of Notes or Certificates affected thereby for
the purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of this Agreement or of modifying in any manner the rights
of the Holders of Notes or Certificates; provided, however, that no such
amendment shall (i) reduce in any manner the amount of, or delay the timing of,
payments required to be distributed on any Certificate without the consent of
the Holder of such Note or Certificate, (ii) adversely affect in any material
respect the interests of the Holders of any Class of Notes or Certificates in a
manner other than as described in (i), without the consent of the Holders of
Notes or Certificates of such Class evidencing, as to such Class, Percentage
Interests aggregating 66%, or (iii) reduce the aforesaid percentages of Notes or
Certificates the Holders of which are required to consent to any such amendment,
without the consent of the Holders of all such Notes or Certificates then
outstanding.
[Notwithstanding any contrary provision of this Agreement, the Trustee
shall not consent to any amendment to this Agreement unless it shall have first
received an Opinion of Counsel, which opinion shall not be an expense of the
Trustee or the Issuer, to the effect that such amendment will not cause the
imposition of any tax on the REMIC or the Securityholders or cause the Issuer
63
to fail to qualify as a REMIC at any time that any Certificates
are outstanding.]
Promptly after the execution of any amendment to this Agreement
requiring the consent of Securityholders, the Trustee shall furnish written
notification of the substance or a copy of such amendment to each Securityholder
and each Rating Agency.
It shall not be necessary for the consent of Securityholders under this
Section to approve the particular form of any proposed amendment, but it shall
be sufficient if such consent shall approve the substance thereof. The manner of
obtaining such consents and of evidencing the authorization of the execution
thereof by Securityholders shall be subject to such reasonable regulations as
the Trustee may prescribe.
Nothing in this Agreement shall require the Trustee to enter into an
amendment without receiving an Opinion of Counsel (which Opinion shall not be an
expense of the Trustee or the Issuer, satisfactory to the Trustee that (i) such
amendment is permitted and is not prohibited by this Agreement and that all
requirements for amending this Agreement have been complied with; and (ii)
either (A) the amendment does not adversely affect in any material respect the
interests of any Securityholder or (B) the conclusion set forth in the
immediately preceding clause (A) is not required to be reached pursuant to this
Section 8(f).
(g) Severability of Provisions.
If any one or more of the covenants, agreements, provisions or terms of
this Agreement shall be for any reason whatsoever held invalid, then such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Agreement and shall
in no way affect the validity or enforceability of the other provisions of this
Agreement.
(h) No Joint Venture.
The Master Servicer and the Issuer are not partners or joint venturers
with each other and nothing herein shall be construed to make them such partners
or joint venturers or impose any liability as such of either of them.
(i) Recordation of Agreement; Counterparts.
This Agreement is subject to recordation in all appropriate public
offices for real property records in all the counties or other comparable
jurisdictions in which any or all of the properties subject to the Mortgages are
situated, and in any
64
other appropriate public recording office or elsewhere, such recordation to be
effected by the Master Servicer at its expense, but only upon direction by the
Trustee accompanied by an Opinion of Counsel to the effect that such recordation
materially and beneficially affects the interests of the Securityholders.
For the purpose of facilitating the recordation of this Agreement as
herein provided and for other purposes, this Agreement may be executed
simultaneously in any number of counterparts, each of which counterparts shall
be deemed to be an original, and such counterparts shall constitute but one and
the same instrument.
(j) Limitation of Liability of [owner trustee].
It is expressly understood and agreed by the parties hereto that (a)
this Agreement is executed and delivered by [owner trustee], not individually or
personally but solely as owner trustee of [Countrywide] Home Equity Loan Trust
199_ 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 Issuer is made and
intended not as personal representations, undertakings and agreements by [owner
trustee] but is made and intended for the purpose for binding only the Issuer,
(c) nothing herein contained shall be construed as creating any liability on
[owner trustee], other than any liability arising out of its gross negligence,
bad faith or willful misconduct, and (d) under no circumstances shall [owner
trustee] be personally liable for the payment of any indebtedness or expenses of
the Issuer or be liable for the breach or failure of any obligation,
representation, warranty or covenant made or undertaken by the Issuer under this
Agreement or the other Operative Documents.
(k) Nonpetition Covenants.
Notwithstanding any prior termination of this Agreement, the Master
Servicer shall not, prior to the date which is one year and one day after the
termination of this Agreement with respect to the Issuer or the Depositor,
acquiesce, petition or otherwise invoke or cause the Issuer or the Depositor (or
any assignee) to invoke the process of any court or government authority for the
purpose of commencing or sustaining a case against the Issuer or the Depositor
under any federal or state bankruptcy, insolvency or similar law, or appointing
a receiver, liquidator, assignee, trustee, custodian, sequestrator or other
similar official of the Issuer or the Depositor or any substantial part of its
property, or ordering the winding up or liquidation of the affairs of the Issuer
or the Depositor.
65
IN WITNESS WHEREOF, each party has caused this Master Servicing
Agreement to be executed by its duly authorized officer or officers as of the
day and year first above written.
[Countrywide] Home Equity Loan Trust
199_,
as Issuer
By: [owner trustee]
not in its
individual capacity
but solely as
Owner Trustee
By:
Its:
[COUNTRYWIDE HOME LOANS, INC.]
as Seller and Master Servicer
By:_________________________________________
Its:________________________________________
[ ],
as Trustee
By:_________________________________________
Its:________________________________________
66
SCHEDULE I
Mortgage Loan Schedule
S-I-1
SCHEDULE II
[Countrywide] Home Equity Loan Trust 199_
Asset Backed Notes and Asset Backed Certificates
Series 199_
Representations and Warranties of the Master Servicer
____________________________ ("Seller-Master Servicer") hereby makes the
representations and warranties set forth in this Schedule II to the Issuer, the
Depositor and the Trustees, as of the Closing Date, or if so specified herein,
as of the Cut-off Date. Capitalized terms used but not otherwise defined in this
Schedule II shall have the meanings ascribed thereto in the Indenture (the
"Indenture") relating to the above-referenced Series, among Seller-Master
Servicer, as seller and master servicer, CWABS, Inc., as depositor, and
_____________________, as trustee.
(i) The Master Servicer is a [New York] corporation, validly
existing and in good standing under the laws of the State of [New York],
and has the corporate power to own its assets and to transact the
business in which it is currently engaged. The Master Servicer is duly
qualified to do business as a foreign corporation and is in good
standing in each jurisdiction in which the character of the business
transacted by it or any properties owned or leased by it requires such
qualification and in which the failure so to qualify would have a
material adverse effect on the business, properties, assets, or
condition (financial or other) of the Master Servicer;
(ii) The Master Servicer has the power and authority to make,
execute, deliver and perform this Agreement and all of the transactions
contemplated under the Agreement, and has taken all necessary corporate
action to authorize the execution, delivery and performance of this
Agreement. When executed and delivered, this Agreement will constitute
the legal, valid and binding obligation of the Master Servicer
enforceable in accordance with its terms, except as enforcement of such
terms may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors'
rights generally and by the availability of equitable remedies;
(iii) The Master Servicer is not required to obtain the
consent of any other party or any consent, license, approval or
authorization from, or registration or declaration with, any
governmental authority, bureau or
S-II-1
agency in connection with the execution, delivery, performance, validity
or enforceability of this Agreement, except for such consent, license,
approval or authorization, or registration or declaration, as shall have
been obtained or filed, as the case may be, prior to the Closing Date;
(iv) The execution, delivery and performance of this
Agreement by the Master Servicer will not violate any provision of any
existing law or regulation or any order or decree of any court
applicable to the Master Servicer or any provision of the Certificate of
Incorporation or Bylaws of the Master Servicer, or constitute a material
breach of any mortgage, indenture, contract or other agreement to which
the Master Servicer is a party or by which the Master Servicer may be
bound; and
(v) No litigation or administrative proceeding of or before
any court, tribunal or governmental body is currently pending, or to the
knowledge of the Master Servicer threatened, against the Master Servicer
or any of its properties or with respect to this Agreement or the
Certificates which in the opinion of the Master Servicer has a
reasonable likelihood of resulting in a material adverse effect on the
transactions contemplated by this Agreement.
S-II-2
SCHEDULE III
[Countrywide] Home Equity Loan Trust 199_
Asset Backed Notes and Asset Backed Certificates
Series 199_
Representations and Warranties as to the Mortgage Loans
____________________________ ("Seller") hereby makes the
representations and warranties set forth in this Schedule III to the Depositor
and the Trustee, as of the Closing Date, or if so specified herein, as of the
Cut-off Date. Capitalized terms used but not otherwise defined in this Schedule
III shall have the meanings ascribed thereto in the Indenture (the "Indenture")
relating to the above-referenced Series, among Seller, as seller and master
servicer, CWABS, Inc., as depositor, and ________________________, as trustee.
(i) As of the Closing Date, this Agreement constitutes a legal,
valid and binding obligation of the Seller, enforceable against the
Seller in accordance with its terms, except as enforcement of such terms
may be limited by bankruptcy, insolvency, reorganization, moratorium or
other similar laws now or hereafter in effect affecting the enforcement
of creditors' rights generally and by the availability of equitable
remedies;
(ii) As of the Closing Date with respect to the Mortgage Loans
and as of the applicable Transfer Date with respect to any Eligible
Substitute Mortgage Loan, either (A) the Purchase Agreement constitutes
a valid transfer and assignment to the Depositor of all right, title and
interest of the Seller in and to the Cut-off Date Asset Balances with
respect to the applicable Mortgage Loans, all monies due or to become
due with respect thereto (excluding payments in respect of accrued
interest due prior to the Cut-off Date or due in the month of
_________), and all proceeds of such Cut-off Date Asset Balances with
respect to the Mortgage Loans and such funds as are from time to time
deposited in the Collection Account (excluding any investment earnings
thereon) and all other property specified in the definition of "Asset"
as being part of the corpus of the Trust conveyed to the Trust by the
Seller, and upon payment for the Additional Balances, will constitute a
valid transfer and assignment to the Trustee of all right, title and
interest of the Seller in and to the Additional Balances, all monies due
or to become due with respect thereto, and all proceeds of such
Additional Balances and all other property specified in the definition
of "Asset" relating to the Additional Balances or (B) the Purchase
Agreement or this Agreement, as
S-III-1
appropriate, constitutes a grant of a security interest (as defined in
the UCC as in effect in California) in such property to the Trustee on
behalf of the Trust. If this Agreement constitutes the grant of a
security interest to the Trust in such property, and if the Trustee
obtains and maintains possession of the Mortgage File for each Mortgage
Loan, the Trust shall have a first priority perfected security interest
in such property, subject to the effect of Section 9-306 of the UCC with
respect to collections on the Mortgage Loans that are deposited in the
Collection Account in accordance with the next to last paragraph of
Section _______; provided, however, that nothing in this clause (ii)
shall be construed to obligate the Master Servicer to deliver any
Mortgage Files other than as set forth in Section 2(a) hereof;
(iii) As of the Closing Date with respect to the Mortgage Loans
and the applicable Transfer Date with respect to any Eligible Substitute
Mortgage Loan and as of the date any Additional Balance is created, the
information set forth in the Mortgage Loan Schedule for such Mortgage
Loans is true and correct in all material respects;
(iv) The applicable Cut-off Date Asset Balance has not been
assigned or pledged, and the Seller is the sole owner and holder of such
Cut-off Date Asset Balance free and clear of any and all liens, claims,
encumbrances, participation interests, equities, pledges, charges or
security interests of any nature, and has full right and authority,
under all governmental and regulatory bodies having jurisdiction over
the ownership of the applicable Mortgage Loan, to sell, assign or
transfer the same pursuant to the Purchase Agreement;
(v) As of the Closing Date with respect to the Mortgage Loans and
the applicable Transfer Date with respect to any Eligible Substitute
Mortgage Loan, the related Mortgage Note and the Mortgage with respect
to each Mortgage Loan have not been assigned or pledged, and the Seller
is the sole owner and holder of the Mortgage Loan free and clear of any
and all liens, claims, encumbrances, participation interests, equities,
pledges, charges or security interests of any nature, and has full right
and authority, under all governmental and regulatory bodies having
jurisdiction over the ownership of the applicable Mortgage Loans, to
sell and assign the same pursuant to the Purchase Agreement;
(vi) As of the Closing Date with respect to the Mortgage Loans
and the applicable Transfer Date with respect to any Eligible Substitute
Mortgage Loan, the related Mortgage
S-III-2
is a valid and subsisting first or second lien, as set forth on the
Mortgage Loan Schedule with respect to each related Mortgage Loan, on
the property therein described, and as of the applicable Cut-off Date
the related Mortgaged Property is free and clear of all encumbrances and
liens having priority over the first or second lien, as applicable, of
such Mortgage except for liens for (i) real estate taxes and special
assessments not yet delinquent; (ii) any first mortgage loan secured by
such Mortgaged Property and specified on the Mortgage Loan Schedule;
(iii) covenants, conditions and restrictions, rights of way, easements
and other matters of public record as of the date of recording that are
acceptable to mortgage lending institutions generally; and (iv) other
matters to which like properties are commonly subject which do not
materially interfere with the benefits of the security intended to be
provided by such Mortgage;
(vii) As of the Closing Date with respect to the Mortgage Loans
and the applicable Transfer Date with respect to any Eligible Substitute
Mortgage Loan, there is no valid offset, defense or counterclaim of any
obligor under any Credit Line Agreement or Mortgage;
(viii) To the best knowledge of the Seller, as of the Closing
Date with respect to the Mortgage Loans and the applicable Transfer Date
with respect to any Eligible Substitute Mortgage Loan, there is no
delinquent recording or other tax or fee or assessment lien against any
related Mortgaged Property;
(ix) As of the Closing Date with respect to the Mortgage Loans
and the applicable Transfer Date with respect to any Eligible Substitute
Mortgage Loan, there is no proceeding pending or, to the best knowledge
of the Seller, threatened for the total or partial condemnation of the
related Mortgaged Property, and such property is free of material
damage;
(x) To the best knowledge of the Seller, as of the Closing Date
with respect to the Mortgage Loans and the applicable Transfer Date with
respect to any Eligible Substitute Mortgage Loan, there are no
mechanics' or similar liens or claims which have been filed for work,
labor or material affecting the related Mortgaged Property which are, or
may be, liens prior or equal to the lien of the related Mortgage, except
liens which are fully insured against by the title insurance policy
referred to in clause (xiv);
(xi) No Minimum Monthly Payment is more than 89 days delinquent
(measured on a contractual basis); and with
S-III-3
respect to the Mortgage Loans no more than _____% (by Cut-off Date Pool
Balance) were 30-59 days delinquent (measured on a contractual basis)
and no more than _____% (by Cut-off Date Pool Balance) were 60-89 days
delinquent (measured on a contractual basis);
(xii) As of the Closing Date with respect to the Mortgage Loans
and the applicable Transfer Date with respect to any Eligible Substitute
Mortgage Loan, for each Mortgage Loan, the related Mortgage File
contains each of the documents and instruments specified to be included
therein;
(xiii) The related Mortgage Note and the related Mortgage at
origination complied in all material respects with applicable state and
federal laws, including, without limitation, usury, truth-in-lending,
real estate settlement procedures, consumer credit protection, equal
credit opportunity or disclosure laws applicable to the Mortgage Loan;
(xiv) Either a lender's title insurance policy or binder was
issued on the date of origination of the Mortgage Loan and each such
policy is valid and remains in full force and effect, or a title search
or guaranty of title customary in the relevant jurisdiction was obtained
with respect to a Mortgage Loan as to which no title insurance policy or
binder was issued;
(xv) As of the Closing Date with respect to the Mortgage Loans
and the applicable Transfer Date with respect to any Eligible Substitute
Mortgage Loan, none of the Mortgaged Properties is a mobile home or a
manufactured housing unit that is not considered or classified as part
of the real estate under the laws of the jurisdiction in which it is
located;
(xvi) As of the Cut-off Date for the Mortgage Loans no more than
_____% of such Mortgage Loans, by aggregate principal balance, are
secured by Mortgaged Properties located in one United States postal zip
code;
(xvii) The Combined Loan-to-Value Ratio for each Xxxx-
xxxx Loan was not in excess of 100%;
(xviii) No selection procedure reasonably believed by the Seller
to be adverse to the interests of the Securit-yholders or the Credit
Enhancer was utilized in selecting the Mortgage Loans;
S-III-4
(xix) The Seller has not transferred the Mortgage
Loans to the Trust with any intent to hinder, delay or
defraud any of its creditors;
(xx) The Minimum Monthly Payment with respect to any Mortgage
Loan is not less than the interest accrued at the applicable Loan Rate
on the average daily Asset Balance during the interest period relating
to the date on which such Minimum Monthly Payment is due;
(xxi) Within 90 days of the Closing Date with respect to the
Mortgage Loans and, to the extent not already included in such filing
with respect to the Mortgage Loans, the applicable Transfer Date with
respect to any Eligible Substitute Mortgage Loan, the Seller will file
UCC-1 financing statements with respect to the Mortgage Loans;
(xxii) As of the Closing Date with respect to the Mortgage Loans
and the applicable Transfer Date with respect to any Eligible Substitute
Mortgage Loan, each Credit Line Agreement and each Mortgage Loan 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;
(xxiii) As of the Closing Date with respect to the Mortgage Loans
and the applicable Transfer Date with respect to any Eligible Substitute
Mortgage Loan, the Seller has not received a notice of default of any
senior mortgage loan related to a Mortgaged Property that has not been
cured by a party other than the Master Servicer;
(xxiv) The definition of Prime Rate in each Credit Line Agreement
relating to a Mortgage Loan does not differ materially from the
definition in the form of Credit Line Agreement in ____________;
(xxv) The weighted average remaining term to maturity of the
Mortgage Loans on a contractual basis as of the Cutoff Date for the
Mortgage Loans is approximately ___ months. On each date that the Loan
Rates have been adjusted, interest rate adjustments on the Mortgage
Loans were made in compliance with the related Mortgage and Mortgage
Note and applicable law. Over the term of each Mortgage Loan, the Loan
Rate may not exceed the related Loan Rate Cap, if any. The Loan Rate
Caps range between ____% and ____%. The Margins range between ____% and
____% and the weighted average Margin is approximately ____% as of the
Cut-off Date for the Mortgage Loans. The Loan Rates on such Mortgage
S-III-5
Loans range between ____% and _____% and the weighted average Loan Rate
is approximately _____%.
(xxvi) As of the Closing Date with respect to the Mortgage Loans
and the applicable Transfer Date with respect to any Eligible Substitute
Mortgage Loan, each Mortgaged Property consists of a single parcel of
real property with a one-to-four unit single family residence erected
thereon, or an individual condominium unit, planned unit development
unit or townhouse;
(xxvii) No more than _____% (by Cut-off Date Pool Balance) of the
Mortgage Loans are secured by real property improved by individual
condominium units, planned development units, townhouses or two-to-four
family residences erected thereon, and at least _____% (by Cut-off Date
Pool Balance) of the Mortgage Loans are secured by real property with a
detached one-family residence erected thereon;
(xxviii) The Credit Limits on the Mortgage Loans range between
$________ and $__________ with an average of $_________. As of the
Cut-off Date for the Mortgage Loans, no Mortgage Loan had a principal
balance in excess of approximately $__________ and the average principal
balance of the Mortgage Loans is equal to approximately $_________; and
(xxix) Approximately ____% and _____% of the Mortgage Loans, by
aggregate principal balance as of the Cut-off Date for the Mortgage
Loans, are first and second liens, respectively.
S-III-6
SCHEDULE IV
[Countrywide] Home Equity Loan Trust 199_
Asset Backed Notes and Asset Backed Certificates
Series 199_
Representations and Warranties of the Issuer.
[Countrywide] Home Equity Loan Trust 199_ (the "Issuer") hereby makes
the representations and warranties set forth in this Schedule IV to the Master
Servicer and the Trustee, as of the Closing Date. Capitalized terms used but not
otherwise defined in this Schedule IV shall have the meanings ascribed thereto
in the Master Servicing Agreement (the "Master Servicing Agreement") relating to
the above-referenced Series, among [Countrywide Home Loans, Inc.], as Master
Servicer, [Countrywide] Home Equity Loan Trust 199_, as Issuer, and [ ], as
Trustee.
(1) The Issuer is a statutory business trust duly organized,
validly existing and in good standing under the laws of the State of
[Delaware], and possesses all requisite authority, power, licenses,
permits and franchises to conduct any and all business contemplated by
the Master Servicing Agreement and to comply with its obligations under
the terms of this Agreement, the performance of which have been duly
authorized by all necessary action.
(2) Neither the execution and delivery of the Master Servicing
Agreement by the Issuer, nor the performance and compliance with the
terms thereof by the Issuer will (A) result in a material breach of any
term or provision of the instruments creating the Issuer or governing
its operations, or (B) materially conflict with, result in a material
breach, violation or acceleration of, or result in a material default
under, the terms of any other material agreement or instrument to which
the Issuer is a party or by which it may be bound, or (C) constitute a
material violation of any statute, order or regulation applicable to the
Issuer of any court, regulatory body, administrative agency or
governmental body having jurisdiction over the Issuer; and the Issuer is
not in breach or violation of any material indenture or other material
agreement or instrument, or in violation of any statute, order or
regulation of any court, regulatory body, administrative agency or
governmental body having jurisdiction over it which breach or violation
may materially impair the Issuer's ability to perform or meet any of its
obligations under the Master Servicing Agreement.
S-IV-1
(3) This Agreement, and all documents and instruments
contemplated hereby, which are executed and delivered by the Issuer,
will, assuming due authorization, execution by and delivery to the other
parties hereto and thereto, constitute valid, legal and binding
obligations of the Issuer, enforceable in accordance with their
respective terms, except that (a) the enforceability thereof may be
limited by bankruptcy, insolvency, moratorium, receivership and other
similar laws relating to creditors' rights generally and (b) the remedy
of specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion of the
court before which any proceeding therefor may be brought.
(4) No litigation is pending or, to the best of the Issuer's
knowledge, threatened against the Issuer that would materially and
adversely affect the execution, delivery or enforceability of the Master
Servicing Agreement or the ability of the Issuer to perform its
obligations thereunder.
(5) Immediately prior to the transfer and assignment of the
Mortgage Loans to the Trustee, the Issuer had good title to, and was the
sole owner of, each Mortgage Loan free and clear of any liens, charges
or encumbrances or any ownership or participation interests in favor of
any other Person.
S-IV-2
EXHIBIT A
FORM OF INITIAL CERTIFICATION OF TRUSTEE
[date]
[Master Servicer]
[Issuer]
_____________________
_____________________
Re: Master Servicing Agreement among
[Countrywide] Home Equity Loan Trust 199_, as
Issuer, [Countrywide Home Loans, Inc.], as
Master Servicer, and [ ], as Trustee,
Asset Backed Notes and Asset Backed
Certificates, Series 199_
Gentlemen:
In accordance with Section 2(b) of the above-captioned Master Servicing
Agreement (the "Master Servicing Agreement"), the undersigned, as Trustee,
hereby certifies that, as to each Mortgage Loan listed in the Mortgage Loan
Schedule (other than any Mortgage Loan listed in the attached schedule), it has
received:
(i) the original Mortgage Note, endorsed as provided in the
following form: "Pay to the order of ________, without
recourse"; and
(ii) a duly executed assignment of the Mortgage (which may be included in a
blanket assignment or assignments).
Based on its review and examination and only as to the foregoing
documents, such documents appear regular on their face and related to such
Mortgage Loan.
The Trustee has made no independent examination of any documents
contained in each Mortgage File beyond the review specifically required in the
Master Servicing Agreement. The Trustee makes no representations as to: (i) the
validity, legality, sufficiency, enforceability or genuineness of any of the
documents contained in each Mortgage File of any of the Mortgage Loans
identified on the Mortgage Loan Schedule, (ii) the collectability, insurability,
effectiveness or suitability of any such Mortgage Loan or (iii) the correctness
of any information
A-1
set forth in the Mortgage Loan Schedule, other than the information specified in
items (i) through (iv) and (vi) thereof.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the Master Servicing Agreement.
[ ]
as Trustee
By:_________________________________________
Name:_______________________________________
Title:______________________________________
A-2
EXHIBIT B
FORM OF FINAL CERTIFICATION OF TRUSTEE
[date]
[Master Servicer]
[Issuer]
_____________________
_____________________
Re: Master Servicing Agreement among [Countrywide]
Home Equity Loan Trust 199_, as Issuer,
[Countrywide Home Loans, Inc.], as Master
Servicer, and [ ], as Trustee, Asset Backed
Notes and Asset Backed Certificates,
Series 199_
Gentlemen:
In accordance with Section 2(b) of the above-captioned Master Servicing
Agreement (the "Master Servicing Agreement"), the undersigned, as Trustee,
hereby certifies that as to each Mortgage Loan listed in the Mortgage Loan
Schedule (other than any Mortgage Loan paid in full or listed on the attached
Document Exception Report) it has received:
(i) The original Mortgage Note, endorsed in the form provided in Section
2(a) of the Master Servicing Agreement, with all intervening endorsements
showing a complete chain of endorsement from the originator to the Issuer.
(ii) The original recorded Mortgage.
(iii) A duly executed assignment of the Mortgage in the form provided in
Section 2(a) of the Master Servicing Agreement, or, if the Master Servicer has
certified or the Trustee otherwise knows that the related Mortgage has not been
returned from the applicable recording office, a copy of the assignment of the
Mortgage (excluding information to be provided by the recording office).
(iv) The original or duplicate original recorded assignment or assignments
of the Mortgage showing a complete chain of assignment from the originator to
the Issuer.
B-1
(v) The original or duplicate original lender's title policy and all riders
thereto or, any one of an original title binder, an original preliminary title
report or an original title commitment, or a copy thereof certified by the title
company.
Based on its review and examination and only as to the foregoing
documents, (a) such documents appear regular on their face and related to such
Mortgage Loan, and (b) the information set forth in items (i), (ii), (iii),
(iv), (vi) and (xi) of the definition of the "Mortgage Loan Schedule" in Section
1 of the Master Servicing Agreement accurately reflects information set forth in
the Trustee Mortgage File.
The Trustee has made no independent examination of any documents
contained in each Mortgage File beyond the review specifically required in the
Master Servicing Agreement. The Trustee makes no representations as to: (i) the
validity, legality, sufficiency, enforceability or genuineness of any of the
documents contained in each Mortgage File of any of the Mortgage Loans
identified on the Mortgage Loan Schedule, or (ii) the collectability,
insurability, effectiveness or suitability of any such Mortgage Loan.
Notwithstanding anything herein to the contrary, the Trustee has made no
determination and makes no representations as to whether (i) any endorsement is
sufficient to transfer all right, title and interest of the party so endorsing,
as noteholder or assignee thereof, in and to that Mortgage Note or (ii) any
assignment is in recordable form or sufficient to effect the assignment of and
transfer to the assignee thereof, under the Mortgage to which the assignment
relates.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the Master Servicing Agreement.
[ ],
as Trustee
By:_________________________________________
Name:_______________________________________
Title:______________________________________
B-2
EXHIBIT C
REQUEST FOR RELEASE
(for Trustee)
[Countrywide] Home Equity Loan Trust 199_
Asset Backed Notes and Asset Backed Certificates
Series 199_
Loan Information
Name of Mortgagor: _________________________________________
Servicer
Loan No.: _________________________________________
Trustee
Name: _________________________________________
Address: _________________________________________
_________________________________________
Trustee
Mortgage File No.: _________________________________________
The undersigned Master Servicer hereby acknowledges that it has received
from [ ], as Trustee for the Holders of Notes of the above-referenced Series,
the documents referred to below (the "Documents"). All capitalized terms not
otherwise defined in this Request for Release shall have the meanings given them
in the Master Servicing Agreement (the "Master Servicing Agreement") relating to
the above-referenced Series among the Trustee, [Countrywide Home Loans, Inc.],
as Master Servicer, and [Countrywide] Home Equity Loan Trust 199_, as Issuer.
( ) Mortgage Note dated ____________, 19__, in the original
principal sum of $__________, made by __________________.
payable to, or endorsed to the order of, the Trustee.
( ) Mortgage recorded on _________________ as instrument no.
________________ in the County Recorder's Office of the
County of ___________________, State of _______________ in
book/reel/docket ________________ of official records at
page/image ________________.
( ) Deed of Trust recorded on __________________ as instrument
no. _________________ in the County Recorder's Office of the
County of ________________, State of _______________ in
C-1
book/reel/docket _______________ of official records at
page/image ________________.
( ) Assignment of Mortgage or Deed of Trust to the Trustee,
recorded on _________________ as instrument no. _________
in the County Recorder's Office of the County of __________,
State of ________________ in book/reel/docket
of official records at page/image _______________.
( ) Other documents, including any amendments, assignments or
other assumptions of the Mortgage Note or Mortgage.
( ) ___________________________________________________________________
( ) ___________________________________________________________________
( ) ___________________________________________________________________
( ) ___________________________________________________________________
The undersigned Master Servicer hereby acknowledges and agrees as
follows:
(1) The Master Servicer shall hold and retain possession of the
Documents in trust for the benefit of the Trustee, solely for the
purposes provided in the Agreement.
(2) The Master Servicer shall not cause or knowingly permit the
Documents to become subject to, or encumbered by, any claim, liens,
security interest, charges, writs of attachment or other impositions nor
shall the Master Servicer assert or seek to assert any claims or rights
of setoff to or against the Documents or any proceeds thereof.
(3) The Master Servicer shall return each and every Document
previously requested from the Mortgage File to the Trustee when the need
therefor no longer exists, unless the Mortgage Loan relating to the
Documents has been liquidated and the proceeds thereof have been
remitted to the Note Account and except as expressly provided in the
Master Servicing Agreement.
C-2
(4) The Documents and any proceeds thereof, including any
proceeds of proceeds, coming into the possession or control of the
Master Servicer shall at all times be earmarked for the account of the
Trustee, and the Master Servicer shall keep the Documents and any
proceeds separate and distinct from all other property in the Master
Servicer's possession, custody or control.
[COUNTRYWIDE HOME LOANS, INC.]
By ____________________________________________
Its ___________________________________________
Date: _________________, 19___
C-3
EXHIBIT D
REQUEST FOR RELEASE OF DOCUMENTS
To: [Trustee] Attn: Mortgage Custody
Services
Re: The Master Servicing Agreement dated [ ] among [Countrywide
Home Loans, Inc.] ("[CHL]"), as Master Servicer, [Countrywide]
Home Equity Loan Trust 199_, as Issuer, and [ ], as Trustee
Ladies and Gentlemen:
In connection with the administration of the Mortgage Loans held by you as
Trustee for [Countrywide] Home Equity Loan Trust 199_, as Issuer, we request the
release of the Mortgage File for the Mortgage Loan(s) described below, for the
reason indicated.
FT Account#: Pool #:
Mortgagor's Name, Address and Zip Code:
Mortgage Loan Number:
Reason for Requesting Documents (check one)
_______1. Mortgage Loan paid in full ([CHL] hereby certifies that
all amounts have been received.)
_______2. Mortgage Loan Liquidated ([CHL] hereby certifies that all
proceeds of foreclosure, insurance, or other liquidation have
been finally received.)
_______3. Mortgage Loan in Foreclosure.
_______4. Other (explain): ____________________________________
If item 1 or 2 above is checked, and if all or part of the Trustee Mortgage File
was previously released to us, please release to us our previous receipt on file
with you, as well as an additional documents in your possession relating to the
above-specified Mortgage Loan. If item 3 or 4 is checked, upon return of all of
the above documents to you as Trustee, please acknowledge your receipt by
signing in the space indicated below, and returning this form.
D-1
[COUNTRYWIDE HOME LOANS, INC.] [address]
By:________________________
Name:______________________
Title:____________________
Date:______________________
TRUSTEE CONSENT TO RELEASE AND
ACKNOWLEDGEMENT OF RECEIPT
By:________________________
Name:______________________
Title:____________________
Date:______________________
D-2
