EXHIBIT 99.10
EMC MORTGAGE CORPORATION
Company,
LUMINENT MORTGAGE CAPITAL, INC., MERCURY MORTGAGE FINANCE
STATUTORY TRUST AND MAIA MORTGAGE FINANCE STATUTORY TRUST
Purchaser,
AMENDED AND RESTATED PURCHASE, WARRANTIES AND SERVICING AGREEMENT
Dated as of April 24, 2006
(Fixed and Adjustable Rate Mortgage Loans)
TABLE OF CONTENTS
ARTICLE I
Section 1.01 Defined Terms ............................................... 2
ARTICLE II
Section 2.01 Agreement to Purchase ....................................... 14
Section 2.02 Purchase Price .............................................. 15
Section 2.03 Servicing of Mortgage Loans ................................. 15
Section 2.04 Record Title and Possession of Mortgage Files; Maintenance of
Servicing Files ............................................. 15
Section 2.05 Books and Records ........................................... 16
Section 2.06 Transfer of Mortgage Loans .................................. 17
Section 2.07 Delivery of Mortgage Loan Documents ......................... 17
Section 2.08 Quality Control Procedures .................................. 19
Section 2.09 Near-term Principal Prepayments; Near Term Payment
Defaults .................................................... 19
Section 2.10 Modification of Obligations ................................. 19
ARTICLE III
Section 3.01 Representations and Warranties of the Company ............... 21
Section 3.02 Representations and Warranties as to Individual Mortgage
Loans ....................................................... 24
Section 3.03 Repurchase; Substitution .................................... 33
Section 3.04 Representations and Warranties of the Purchaser ............. 35
ARTICLE IV
Section 4.01 Company to Act as Servicer .................................. 36
Section 4.02 Collection of Mortgage Loan Payments ........................ 39
Section 4.03 Realization Upon Defaulted Mortgage Loans ................... 40
Section 4.04 Establishment of Custodial Accounts; Deposits in Custodial
Accounts .................................................... 41
Section 4.05 Permitted Withdrawals from the Custodial Account ............ 42
Section 4.06 Establishment of Escrow Accounts; Deposits in Escrow
Accounts .................................................... 43
Section 4.07 Permitted Withdrawals From Escrow Account ................... 44
Section 4.08 Payment of Taxes, Insurance and Other Charges; Maintenance of
Primary Mortgage Insurance Policies; Collections
Thereunder .................................................. 45
Section 4.09 Transfer of Accounts ........................................ 46
Section 4.10 Maintenance of Hazard Insurance ............................. 46
Section 4.11 Maintenance of Mortgage Impairment
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Insurance Policy ............................................ 47
Section 4.12 Fidelity Bond, Errors and Omissions Insurance ............... 48
Section 4.13 Title, Management and Disposition of REO Property ........... 48
Section 4.14 Notification of Maturity Date ............................... 50
ARTICLE V
Section 5.01 Distributions ............................................... 50
Section 5.02 Statements to the Purchaser ................................. 51
Section 5.03 Monthly Advances by the Company ............................. 53
Section 5.04 Liquidation Reports ......................................... 53
ARTICLE VI
Section 6.01 Assumption Agreements ....................................... 53
Section 6.02 Satisfaction of Mortgages and Release of Mortgage Files ..... 54
Section 6.03 Servicing Compensation ...................................... 55
Section 6.04 Annual Statement as to Compliance ........................... 56
Section 6.05 Annual Independent Certified Public Accountants' Servicing
Report ...................................................... 56
Section 6.06 Purchaser's Right to Examine Company Records ................ 56
ARTICLE VII
Section 7.01 Company Shall Provide Information as Reasonably Required .... 57
ARTICLE VIII
Section 8.01 Indemnification; Third Party Claims ......................... 58
Section 8.02 Merger or Consolidation of the Company ...................... 58
Section 8.03 Limitation on Liability of the Company and Others ........... 59
Section 8.04 Company Not to Assign or Resign ............................. 59
Section 8.05 No Transfer of Servicing .................................... 59
Section 8.06 Disputed Loans .............................................. 59
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ARTICLE IX
Section 9.01 Events of Default ........................................... 61
Section 9.02 Waiver of Defaults .......................................... 62
ARTICLE X
Section 10.01 Termination ................................................. 62
Section 10.02 Survival..................................................... 63
ARTICLE XI
Section 11.01 Successor to the Company .................................... 63
Section 11.02 Amendment ................................................... 64
Section 11.03 Recordation of Agreement .................................... 65
Section 11.04 Governing Law ............................................... 65
Section 11.05 Notices ..................................................... 65
Section 11.06 Severability of Provisions .................................. 66
Section 11.07 Exhibits .................................................... 66
Section 11.08 General Interpretive Principles ............................. 66
Section 11.09 Reproduction of Documents ................................... 67
Section 11.10 Confidentiality of Information .............................. 67
Section 11.11 Recordation of Assignment of Mortgage ....................... 67
Section 11.12 Assignment by Purchaser ..................................... 68
Section 11.13 No Partnership .............................................. 68
Section 11.14 Execution: Successors and Assigns ........................... 68
Section 11.15 Entire Agreement ............................................ 68
Section 11.16 No Solicitation ............................................. 68
Section 11.17 Closing ..................................................... 69
Section 11.18 Cooperation of Company with Reconstitution .................. 70
Section 11.19 Monthly Reporting with Respect to a Reconstitution ..........
EXHIBITS
A Contents of Mortgage File
B Custodial Account Letter Agreement
C Escrow Account Letter Agreement
D Form of Assignment, Assumption and Recognition Agreement
__ Form of Company Certification
E Form of Trial Balance
F Regulation AB Compliance Addendum
G Request for Release of Documents and Receipt
H Company's Underwriting Guidelines
I Form of Term Sheet
J Reconstituted Mortgage Loan Reporting
K Company's Obligations in Connection with a Reconstitution
L Additional Foreclosure Provisions
M Standard File Layout - Master Servicing
N Calculation of Realized Gain/Loss Form
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O Standard File Layout - Delinquency Reporting
Schedule I List of Disputed Loans
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This is an Amended and Restated Purchase, Warranties and Servicing
Agreement (the "Agreement"), dated as of April 24, 2006 and is executed between
EMC MORTGAGE CORPORATION, as Company, with offices located at Mac ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ (the "Company"), and
Luminent Mortgage Capital, Inc., Mercury Mortgage Finance Statutory Trust and
Maia Mortgage Finance Statutory Trust with offices located at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Purchaser").
WITNESSETH:
WHEREAS, this Agreement hereby amends, restates and supercedes that certain
Purchase, Warranties and Servicing Agreement dated as of October 27, 2005, as
amended from time to time, between the Company and the Purchaser;
WHEREAS, the Purchaser has heretofore agreed to purchase from the Company
and the Company has heretofore agreed to sell to the Purchaser, from time to
time, certain Mortgage Loans on a servicing retained basis;
WHEREAS, each of the Mortgage Loans is secured by a mortgage, deed of trust
or other security instrument creating a first lien on a residential dwelling
located in the jurisdiction indicated on the Mortgage Loan Schedule, which is
annexed to the related Term Sheet; and
WHEREAS, the Purchaser and the Company wish to prescribe the
representations and warranties of the Company with respect to itself and the
Mortgage Loans and the management, servicing and control of the Mortgage Loans;
NOW, THEREFORE, in consideration of the mutual agreements hereinafter set
forth, and for other good and valuable consideration, the receipt and adequacy
of which is hereby acknowledged, the Purchaser and the Company agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01 Defined Terms.
Whenever used in this Agreement, the following words and phrases, unless
the context otherwise requires, shall have the following meaning specified in
this Article:
Accepted Servicing Practices: With respect to any Mortgage Loan, those
mortgage servicing practices (including collection procedures) of prudent
mortgage banking institutions which service mortgage loans of the same type as
such Mortgage Loan in the jurisdiction where the related Mortgaged Property is
located, and which are in accordance with ▇▇▇▇▇▇ ▇▇▇ servicing practices and
procedures, for MBS pool mortgages, as defined in the ▇▇▇▇▇▇ Mae Guides
including future updates.
Adjustable Rate Mortgage Loan: A Mortgage Loan which provides for the
adjustment of the Mortgage Interest Rate payable in respect thereto.
Adjustment Date: As to each Adjustable Rate Mortgage Loan, the date on
which the Mortgage Interest Rate is adjusted in accordance with the terms of the
related Mortgage Note.
Agreement: This Amended and Restated Purchase, Warranties and Servicing
Agreement including all exhibits hereto, amendments hereof and supplements
hereto.
Appraised Value: With respect to any Mortgaged Property, the value thereof
as determined by an appraisal made for the originator of the Mortgage Loan at
the time of origination of the Mortgage Loan by an appraiser who met the
requirements of the Company and ▇▇▇▇▇▇ ▇▇▇.
Assignment: An individual assignment of the Mortgage, notice of transfer or
equivalent instrument, in recordable form, sufficient under the laws of the
jurisdiction wherein the related Mortgaged Property is located to reflect of
record the sale or transfer of the Mortgage Loan.
BIF: The Bank Insurance Fund, or any successor thereto.
Business Day: Any day other than: (i) a Saturday or Sunday, or (ii) a legal
holiday in the State of New York, California, Maryland, Texas or Pennsylvania,
or (iii) a day on which banks in the State of New York, California, Maryland,
Texas or Pennsylvania are authorized or obligated by law or executive order to
be closed.
Certificateholder: The beneficial holder of an owner trust certificate
issued pursuant to the trust agreement and evidencing 100% ownership interest in
the trust governed by such trust agreement.
Closing Date: With respect to any Mortgage Loan, the date stated on the
related Term Sheet.
Code: The Internal Revenue Code of 1986, or any successor statute thereto.
Company: EMC Mortgage Corporation, its successors in interest and assigns,
as permitted by this Agreement.
Company's Officer's Certificate: A certificate signed by the Chairman of
the Board, President, any Vice President or Treasurer of Company stating the
date by which Company expects to receive any missing documents sent for
recording from the applicable recording office.
Condemnation Proceeds: All awards or settlements in respect of a Mortgaged
Property, whether permanent or temporary, partial or entire, by exercise of the
power of eminent domain or condemnation, to the extent not required to be
released to a Mortgagor in accordance with the terms of the related Mortgage
Loan Documents.
Confirmation: The trade confirmation letter between the Purchaser and the
Company which relates to the Mortgage Loans.
Consumer Information: Information including, but not limited to, all
personal information about Mortgagors that is supplied to the Purchaser by or on
behalf of the Company.
Co-op Lease: With respect to a Co-op Loan, the lease with respect to a
dwelling unit occupied by the Mortgagor and relating to the stock allocated to
the related dwelling unit.
Co-op Loan: A Mortgage Loan secured by the pledge of stock allocated to a
dwelling unit in a residential cooperative housing corporation and a collateral
assignment of the related Co-op Lease.
Current Appraised Value: With respect to any Mortgaged Property, the value
thereof as determined by an appraisal made for the Company (by an appraiser who
met the requirements of the Company and ▇▇▇▇▇▇ Mae) at the request of a
Mortgagor for the purpose of canceling a Primary Mortgage Insurance Policy in
accordance with federal, state and local laws and regulations or otherwise made
at the request of the Company or Mortgagor.
Current LTV: The ratio of the Stated Principal Balance of a Mortgage Loan
to the Current Appraised Value of the Mortgaged Property.
Custodial Account: Each separate demand account or accounts created and
maintained pursuant to Section 4.04 which shall be entitled "EMC Mortgage
Corporation, in trust for the [Purchaser], Owner of Adjustable Rate Mortgage
Loans" and shall be established in an Eligible Account, in the name of the
Person that is the "Purchaser" with respect to the related Mortgage Loans.
Custodian: With respect to any Mortgage Loan, the entity stated on the
related Term Sheet, and its successors and assigns, as custodian for the
Purchaser.
Cut-off Date: With respect to any Mortgage Loan, the date stated on the
related Term Sheet.
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Determination Date: The 15th day (or if such 15th day is not a Business
Day, the Business Day immediately preceding such 15th day) of the month of the
related Remittance Date.
Disputed Loans: The Mortgage Loans listed on the attached Schedule I.
Due Date: The day of the month on which the Monthly Payment is due on a
Mortgage Loan, exclusive of any days of grace, which is the first day of the
month.
Due Period: With respect to any Remittance Date, the period commencing on
the second day of the month preceding the month of such Remittance Date and
ending on the first day of the month of the Remittance Date.
Eligible Account: An account established and maintained: (i) within FDIC
insured accounts created, maintained and monitored by the Company so that all
funds deposited therein are fully insured, or (ii) as a trust account with the
corporate trust department of a depository institution or trust company
organized under the laws of the United States of America or any one of the
states thereof or the District of Columbia which is not affiliated with the
Company (or any sub-servicer) or (iii) with an entity which is an institution
whose deposits are insured by the FDIC, the unsecured and uncollateralized
long-term debt obligations of which shall be rated "A2" or higher by Standard &
Poor's and "A" or higher by Fitch, Inc. or one of the two highest short-term
ratings by any applicable Rating Agency, and which is either (a) a federal
savings association duly organized, validly existing and in good standing under
the federal banking laws, (b) an institution duly organized, validly existing
and in good standing under the applicable banking laws of any state, (c) a
national banking association under the federal banking laws, or (d) a principal
subsidiary of a bank holding company, or (iv) if ownership of the Mortgage Loans
is evidenced by mortgaged-backed securities, the equivalent required ratings of
each Rating Agency, and held such that the rights of the Purchaser and the owner
of the Mortgage Loans shall be fully protected against the claims of any
creditors of the Company (or any sub-servicer) and of any creditors or
depositors of the institution in which such account is maintained or (v) in a
separate non-trust account without FDIC or other insurance in an Eligible
Institution. In the event that a Custodial Account is established pursuant to
clause (iii), (iv) or (v) of the preceding sentence, the Company shall provide
the Purchaser with written notice on the Business Day following the date on
which the applicable institution fails to meet the applicable ratings
requirements.
Eligible Institution: An institution having (i) the highest short-term debt
rating, and one of the two highest long-term debt ratings of each Rating Agency;
or (ii) with respect to any Custodial Account, an unsecured long-term debt
rating of at least one of the two highest unsecured long-term debt ratings of
each Rating Agency.
Equity Take-Out Refinanced Mortgage Loan: A Refinanced Mortgage Loan the
proceeds of which were in excess of the outstanding principal balance of the
existing mortgage loan as defined in the ▇▇▇▇▇▇ ▇▇▇ Guide(s).
Escrow Account: Each separate trust account or accounts created and
maintained pursuant to Section 4.06 which shall be entitled "__________________,
in trust for the [Purchaser], Owner of
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Adjustable Rate Mortgage Loans, and various Mortgagors" and shall be established
in an Eligible Account, in the name of the Person that is the "Purchaser" with
respect to the related Mortgage Loans.
Escrow Payments: With respect to any Mortgage Loan, the amounts
constituting ground rents, taxes, assessments, water rates, sewer rents,
municipal charges, mortgage insurance premiums, fire and hazard insurance
premiums, condominium charges, and any other payments required to be escrowed by
the Mortgagor with the mortgagee pursuant to the Mortgage or any other document.
Event of Default: Any one of the conditions or circumstances enumerated in
Section 9.01.
▇▇▇▇▇▇ Mae: The Federal National Mortgage Association, or any successor
thereto.
▇▇▇▇▇▇ ▇▇▇ Guide(s): The ▇▇▇▇▇▇ Mae Selling Guide and the ▇▇▇▇▇▇ ▇▇▇
Servicing Guide and all amendments or additions thereto.
FDIC: The Federal Deposit Insurance Corporation, or any successor thereto.
Fidelity Bond: A fidelity bond to be maintained by the Company pursuant to
Section 4.12.
FIRREA: The Financial Institutions Reform, Recovery, and Enforcement Act of
1989.
First Remittance Date: With respect to any Mortgage Loan, the Remittance
Date occurring in the month following the month in which the related Closing
Date occurs.
▇▇▇▇▇▇▇ Mac: The Federal Home Loan Mortgage Corporation, or any successor
thereto.
▇▇▇▇▇▇▇ Mac Servicing Guide: The ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇' and Servicers' Guide
and all amendments or additions thereto.
GAAP: Generally accepted accounting principles, consistently applied.
HUD: The United States Department of Housing and Urban Development or any
successor thereto.
Index: With respect to any Adjustable Rate Mortgage Loan, the index
identified on the Mortgage Loan Schedule and set forth in the related Mortgage
Note for the purpose of calculating the interest rate thereon.
Initial Rate Cap: As to each Adjustable Rate Mortgage Loan, where
applicable, the maximum increase or decrease in the Mortgage Interest Rate on
the first Adjustment Date.
Insurance Proceeds: With respect to each Mortgage Loan, proceeds of
insurance policies insuring the Mortgage Loan or the related Mortgaged Property.
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Lender Paid Mortgage Insurance Rate: The Lender Paid Mortgage Insurance
Rate shall be a rate per annum equal to the percentage shown on the Mortgage
Loan Schedule.
Lender Primary Mortgage Insurance Policy: Any Primary Mortgage Insurance
Policy for which premiums are paid by the Company.
Lifetime Rate Cap: As to each Adjustable Rate Mortgage Loan, the maximum
Mortgage Interest Rate over the term of such Mortgage Loan.
Liquidation Proceeds: Cash received in connection with the liquidation of a
defaulted Mortgage Loan, whether through the sale or assignment of such Mortgage
Loan, trustee's sale, foreclosure sale or otherwise.
Loan-to-Value Ratio or LTV: With respect to any Mortgage Loan, the ratio of
the original outstanding principal amount of the Mortgage Loan, to (i) the
Appraised Value of the Mortgaged Property as of the Origination Date with
respect to a Refinanced Mortgage Loan, and (ii) the lesser of the Appraised
Value of the Mortgaged Property as of the Origination Date or the purchase price
of the Mortgaged Property with respect to all other Mortgage Loans.
Luminent: Luminent Mortgage Capital, Inc., its successors in interest and
assigns.
Maia: Maia Mortgage Finance Statutory Trust, its successors in interest and
assigns.
Margin: With respect to each Adjustable Rate Mortgage Loan, the fixed
percentage amount set forth in each related Mortgage Note which is added to the
Index in order to determine the related Mortgage Interest Rate, as set forth in
the Mortgage Loan Schedule.
Master Servicer: With respect to any Pass-Through Transfer, the "master
servicer," if any, identified in the related transaction documents.
Mercury: Mercury Mortgage Finance Statutory Trust, its successors in
interest and assigns.
MERS: Mortgage Electronic Registration Systems, Inc., a corporation
organized and existing under the laws of the State of Delaware, or any successor
thereto.
Monthly Advance: The aggregate of the advances made by the Company on any
Remittance Date pursuant to Section 5.03.
Monthly Payment: The scheduled monthly payment of principal and interest on
a Mortgage Loan which is payable by a Mortgagor under the related Mortgage Note.
Mortgage: The mortgage, deed of trust or other instrument securing a
Mortgage Note which creates a first lien on an unsubordinated estate in fee
simple in real property securing the Mortgage Note.
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Mortgage File: The mortgage documents pertaining to a particular Mortgage
Loan which are specified in Exhibit A hereto and any additional documents
required to be added to the Mortgage File pursuant to this Agreement.
Mortgage Impairment Insurance Policy: A mortgage impairment or blanket
hazard insurance policy as described in Section 4.11.
Mortgage Interest Rate: The annual rate at which interest accrues on any
Mortgage Loan, which may be adjusted from time to time for an Adjustable Rate
Mortgage Loan, in accordance with the provisions of the related Mortgage Note
net of any Relief Act Reduction.
Mortgage Loan: An individual mortgage loan which is the subject of this
Agreement, each Mortgage Loan originally sold and subject to this Agreement
being identified on the Mortgage Loan Schedule attached to the related Term
Sheet, which Mortgage Loan includes without limitation the Mortgage File, the
Monthly Payments, Principal Prepayments, Liquidation Proceeds, Condemnation
Proceeds, Insurance Proceeds, REO Disposition Proceeds, and all other rights,
benefits, proceeds and obligations arising from or in connection with such
Mortgage Loan, excluding replaced or repurchased mortgage loans.
Mortgage Loan Documents: The documents listed in Exhibit A.
Mortgage Loan Remittance Rate: With respect to each Mortgage Loan, the
annual rate of interest remitted to the Purchaser, which shall be equal to the
Mortgage Interest Rate minus the Servicing Fee Rate minus the Lender Paid
Mortgage Insurance Rate.
Mortgage Loan Schedule: The schedule of Mortgage Loans annexed to the
related Term Sheet, such schedule setting forth the following information with
respect to each Mortgage Loan in the related Mortgage Loan Package:
(1) the Company's Mortgage Loan identifying number;
(2) the Mortgagor's first and last name;
(3) the street address of the Mortgaged Property including the city, state
and zip code;
(4) a code indicating whether the Mortgaged Property is owner-occupied, a
second home or an investor property;
(5) the type of residential property constituting the Mortgaged Property;
(6) the original months to maturity of the Mortgage Loan;
(7) the remaining months to maturity from the related Cut-off Date, based
on the original amortization schedule and, if different, the maturity expressed
in the same manner but based on the actual amortization schedule;
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(8) the Sales Price, if applicable, Appraised Value and Loan-to-Value
Ratio, at origination;
(9) the Mortgage Interest Rate as of origination and as of the related
Cut-off Date; with respect to each Adjustable Rate Mortgage Loan, the initial
Adjustment Date, the next Adjustment Date immediately following the related
Cut-off Date, the Index, the Margin, the Initial Rate Cap, if any, Periodic Rate
Cap, if any, minimum Mortgage Interest Rate under the terms of the Mortgage Note
and the Lifetime Rate Cap;
(10) the Origination Date of the Mortgage Loan;
(11) the stated maturity date;
(12) the amount of the Monthly Payment at origination;
(13) the amount of the Monthly Payment as of the related Cut-off Date;
(14) the original principal amount of the Mortgage Loan;
(15) the scheduled Stated Principal Balance of the Mortgage Loan as of the
close of business on the related Cut-off Date, after deduction of payments of
principal due on or before the related Cut-off Date whether or not collected;
(16) a code indicating the purpose of the Mortgage Loan (i.e., purchase,
rate and term refinance, equity take-out refinance);
(17) a code indicating the documentation style (i.e. full, alternative,
etc.);
(18) the number of times during the twelve (12) month period preceding the
related Closing Date that any Monthly Payment has been received after the month
of its scheduled due date;
(19) the date on which the first payment is or was due;
(20) a code indicating whether or not the Mortgage Loan is the subject of a
Primary Mortgage Insurance Policy and the name of the related insurance carrier;
(21) a code indicating whether or not the Mortgage Loan is currently
convertible and the conversion spread;
(22) the last Due Date on which a Monthly Payment was actually applied to
the unpaid principal balance of the Mortgage Loan;
(23) product type (i.e. fixed, adjustable, 3/1, 5/1, Option ARM, etc.);
(24) credit score and/or mortgage score, if applicable;
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(25) a code indicating whether or not the Mortgage Loan is the subject of a
Lender Primary Mortgage Insurance Policy and the name of the related insurance
carrier and the Lender Paid Mortgage Insurance Rate;
(26) a code indicating whether or not the Mortgage Loan has a prepayment
penalty and if so, the amount and term thereof;
(27) the Current Appraised Value of the Mortgage Loan and Current LTV, if
applicable; and
(28) whether the Mortgage Loan has a mandatory arbitration clause.
(29) with respect to the Mortgage Loans in the aggregate, the Mortgage Loan
Schedule attached to the related Term Sheet shall set forth the following
information, as of the related Cut-off Date:
(1) the number of Mortgage Loans;
(2) the current aggregate outstanding principal balance of the Mortgage
Loans;
(3) the weighted average Mortgage Interest Rate of the Mortgage Loans;
(4) the weighted average maturity of the Mortgage Loans;
(5) the weighted average months to next Adjustment Date;
(30) with respect to each Adjustable Rate Mortgage Loan, the lookback days;
and
(31) with respect to each Option ARM Mortgage Loan, the aggregate amount of
Negative Amortization as of the Cut-off Date, if any.
Mortgage Note: The note or other evidence of the indebtedness of a
Mortgagor secured by a Mortgage.
Mortgaged Property: The underlying real property securing repayment of a
Mortgage Note, consisting of a single parcel of real estate considered to be
real estate under the laws of the state in which such real property is located
which may include condominium units and planned unit developments, improved by a
residential dwelling; except that with respect to real property located in
jurisdictions in which the use of leasehold estates for residential properties
is a widely-accepted practice, a leasehold estate of the Mortgage, the term of
which is equal to or longer than the term of the Mortgage.
Mortgagor: The obligor on a Mortgage Note.
Negative Amortization: The portion of interest accrued at the Mortgage
Interest Rate in any month which exceeds the Monthly Payment on the related
Option ARM Mortgage Loan for such
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month and which, pursuant to the terms of the Mortgage Note, is added to the
principal balance of the Option ARM Mortgage Loan.
Nonrecoverable Advance: Any portion of a Monthly Advance or Servicing
Advance previously made or proposed to be made by the Company pursuant to this
Agreement, that, in the good faith judgment of the Company, will not or, in the
case of a proposed advance, would not, be ultimately recoverable by it from the
related Mortgagor or the related Liquidation Proceeds, Insurance Proceeds,
Condemnation Proceeds or otherwise with respect to the related Mortgage Loan.
OCC: Office of the Comptroller of the Currency, or any successor thereto.
Officers' Certificate: A certificate signed by the Chairman of the Board,
the Vice Chairman of the Board, the President, a Senior Vice President or a Vice
President or by the Treasurer or the Secretary or one of the Assistant
Treasurers or Assistant Secretaries of the Company, and delivered to the
Purchaser as required by this Agreement.
Opinion of Counsel: A written opinion of counsel, who may be an employee of
the party on behalf of whom the opinion is being given, reasonably acceptable to
the Purchaser.
Option ARM Mortgage Loan: An Adjustable Rate Mortgage Loan which (i)
provides the Mortgagor with multiple Monthly Payment options and (ii) may result
in Negative Amortization, as set forth in the Underwriting Guidelines.
Origination Date: The date on which a Mortgage Loan funded, which date
shall not, in connection with a Refinanced Mortgage Loan, be the date of the
funding of the debt being refinanced, but rather the closing of the debt
currently outstanding under the terms of the Mortgage Loan Documents.
OTS: Office of Thrift Supervision, or any successor thereto.
Pass-Through Transfer: Any transaction involving either (1) a sale or other
transfer of some or all of the Mortgage Loans directly or indirectly to an
issuing entity in connection with an issuance of publicly offered or privately
placed, rated or unrated mortgage-backed securities or (2) an issuance of
publicly offered or privately placed, rated or unrated securities, the payments
on which are determined primarily by reference to one or more portfolios of
residential mortgage loans consisting, in whole or in part, of some or all of
the Mortgage Loans.
Payment Adjustment Date: With respect to each Option ARM Mortgage Loan, the
date on which the Monthly Payment shall be adjusted.
Periodic Rate Cap: As to each Adjustable Rate Mortgage Loan, the maximum
increase or decrease in the Mortgage Interest Rate on any Adjustment Date, as
set forth in the related Mortgage Note and the related Mortgage Loan Schedule.
Permitted Investments: Any one or more of the following obligations or
securities:
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(i) direct obligations of, and obligations fully guaranteed by the
United States of America or any agency or instrumentality of the
United States of America the obligations of which are backed by the
full faith and credit of the United States of America;
(ii) (a) demand or time deposits, federal funds or bankers'
acceptances issued by any depository institution or trust company
incorporated under the laws of the United States of America or any
state thereof and subject to supervision and examination by federal
and/or state banking authorities, provided that the commercial paper
and/or the short-term deposit rating and/or the long-term unsecured
debt obligations or deposits of such depository institution or trust
company at the time of such investment or contractual commitment
providing for such investment are rated in one of the two highest
rating categories by each Rating Agency and (b) any other demand or
time deposit or certificate of deposit that is fully insured by the
FDIC;
(iii) repurchase obligations with a term not to exceed thirty (30)
days and with respect to (a) any security described in clause (i)
above and entered into with a depository institution or trust company
(acting as principal) described in clause (ii)(a) above;
(iv) securities bearing interest or sold at a discount issued by any
corporation incorporated under the laws of the United States of
America or any state thereof that are rated in one of the two highest
rating categories by each Rating Agency at the time of such investment
or contractual commitment providing for such investment; provided,
however, that securities issued by any particular corporation will not
be Permitted Investments to the extent that investments therein will
cause the then outstanding principal amount of securities issued by
such corporation and held as Permitted Investments to exceed 10% of
the aggregate outstanding principal balances of all of the Mortgage
Loans and Permitted Investments;
(v) commercial paper (including both non-interest-bearing discount
obligations and interest-bearing obligations payable on demand or on a
specified date not more than one year after the date of issuance
thereof) which are rated in one of the two highest rating categories
by each Rating Agency at the time of such investment;
(vi) any other demand, money market or time deposit, obligation,
security or investment as may be acceptable to each Rating Agency as
evidenced in writing by each Rating Agency; and
(vii) any money market funds the collateral of which consists of
obligations fully guaranteed by the United States of America or any
agency or instrumentality of the United States of America the
obligations of which are backed by the full faith and credit of the
United States of America (which may include repurchase obligations
secured by collateral described in clause (i)) and other securities
and which money
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market funds are rated in one of the two highest rating categories by
each Rating Agency; and
(viii) interests in any money market fund (including any such fund
managed or advised by the Trustee or Master Servicer or any affiliate
thereof) which at the date of acquisition of the interests in such
fund and throughout the time such interests are held in such fund has
the highest applicable long term rating by each Rating Agency or such
lower rating as will not result in the downgrading or withdrawal of
the ratings then assigned to the Certificates by each Rating Agency.
provided, however, that no instrument or security shall be a Permitted
Investment if such instrument or security evidences a right to receive only
interest payments with respect to the obligations underlying such instrument or
if such security provides for payment of both principal and interest with a
yield to maturity in excess of 120% of the yield to maturity at par or if such
investment or security is purchased at a price greater than par.
Person: Any individual, corporation, partnership, joint venture,
association, joint-stock company, limited liability company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
Prepayment Interest Shortfall: With respect to any Remittance Date, for
each Mortgage Loan that was the subject of a Principal Prepayment during the
related Prepayment Period, an amount equal to the excess of one month's interest
at the applicable Mortgage Loan Remittance Rate on the amount of such Principal
Prepayment over the amount of interest (adjusted to the Mortgage Loan Remittance
Rate) actually paid by the related Mortgagor with respect to such Prepayment
Period.
Prepayment Period: With respect to any Remittance Date, the calendar month
preceding the month in which such Remittance Date occurs.
Primary Mortgage Insurance Policy: Each primary policy of mortgage
insurance represented to be in effect pursuant to Section 3.02(hh), or any
replacement policy therefor obtained by the Company pursuant to Section 4.08.
Prime Rate: The prime rate announced to be in effect from time to time as
published as the average rate in the Wall Street Journal (Northeast Edition).
Principal Prepayment: Any payment or other recovery of principal on a
Mortgage Loan full or partial which is received in advance of its scheduled Due
Date, excluding any prepayment penalty or premium thereon, and which is not
accompanied by an amount of interest representing scheduled interest due on any
date or dates in any month or months subsequent to the month of prepayment.
Purchase Price: As defined in Section 2.02.
Purchaser: Each of Luminent, Mercury and Maia, their respective successors
in interest and assigns.
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Qualified Appraiser: An appraiser, duly appointed by the Company, who had
no interest, direct or indirect in the related Mortgaged Property or in any loan
made on the security thereof, and whose compensation is not affected by the
approval or disapproval of the Mortgage Loan, and such appraiser and the
appraisal made by such appraiser both satisfy the requirements of Title XI of
FIRREA and the regulations promulgated thereunder and the requirements of ▇▇▇▇▇▇
▇▇▇, all as in effect on the date the Mortgage Loan was originated.
Qualified Insurer: An insurance company duly qualified as such under the
laws of the states in which the related Mortgaged Property is located, duly
authorized and licensed in such states to transact the applicable insurance
business and to write the insurance provided, approved as an insurer by ▇▇▇▇▇▇
Mae or ▇▇▇▇▇▇▇ Mac.
Rating Agency: Standard & Poor's, Fitch, Inc. or, in the event that some or
all of the ownership of the Mortgage Loans is evidenced by mortgage-backed
securities, the nationally recognized rating agencies issuing ratings with
respect to such securities, if any.
Refinanced Mortgage Loan: A Mortgage Loan which was made to a Mortgagor who
owned the Mortgaged Property prior to the origination of such Mortgage Loan and
the proceeds of which were used in whole or part to satisfy an existing
mortgage.
Relief Act Reduction: With respect to any Mortgage Loan as to which there
has been a reduction in the amount of interest collectible thereon as a result
of the application of the Servicemembers Civil Relief Act, as amended, or any
similar state law, any amount by which interest collectible on such Mortgage
Loan for the Due Date in the related Due Period is less than the interest
accrued thereon for the applicable one-month period at the Mortgage Interest
Rate without giving effect to such reduction.
REMIC: A "real estate mortgage investment conduit," as such term is defined
in Section 860D of the Code.
REMIC Provisions: The provisions of the federal income tax law relating to
REMICs, which appear at Sections 860A through 860G of the Code, and the related
provisions and regulations promulgated thereunder, as the foregoing may be in
effect from time to time.
Remittance Date: The 18th day of any month, beginning with the First
Remittance Date, or if such 18th day is not a Business Day, the first Business
Day immediately preceding such 18th day.
REO Disposition: The final sale by the Company of any REO Property.
REO Disposition Proceeds: Amounts received by the Company in connection
with a related REO Disposition.
REO Property: A Mortgaged Property acquired by the Company on behalf of the
Purchaser as described in Section 4.13.
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Repurchase Price: With respect to any Mortgage Loan, a price equal to (i)
the product of the greater of 100% or the percentage of par as stated in the
Confirmation multiplied by the Stated Principal Balance of such Mortgage Loan on
the repurchase date, plus (ii) interest on such outstanding principal balance at
the Mortgage Loan Remittance Rate from the last date through which interest has
been paid and distributed to the Purchaser to the end of the month of
repurchase, plus, (iii) third party expenses incurred in connection with the
transfer of the Mortgage Loan being repurchased; less amounts received or
advanced in respect of such repurchased Mortgage Loan which are being held in
the Custodial Account for distribution in the month of repurchase.
SAIF: The Savings Association Insurance Fund, or any successor thereto.
Sales Price: With respect to any Mortgage Loan the proceeds of which were
used by the Mortgagor to acquire the related Mortgaged Property, the amount paid
by the related Mortgagor for such Mortgaged Property.
Servicing Advances: All customary, reasonable and necessary "out of pocket"
costs and expenses (including reasonable attorneys' fees and disbursements)
incurred in the performance by the Company of its servicing obligations,
including, but not limited to, the cost of (a) the preservation, restoration and
protection of the Mortgaged Property, (b) any enforcement, administrative or
judicial proceedings, or any legal work or advice specifically related to
servicing the Mortgage Loans, including but not limited to, foreclosures,
bankruptcies, condemnations, drug seizures, elections, foreclosures by
subordinate or superior lienholders, and other legal actions incidental to the
servicing of the Mortgage Loans (provided that such expenses are reasonable and
that the Company specifies the Mortgage Loan(s) to which such expenses relate
and, upon Purchaser's request, provides documentation supporting such expense
(which documentation would be acceptable to ▇▇▇▇▇▇ ▇▇▇), and provided further
that any such enforcement, administrative or judicial proceeding does not arise
out of a breach of any representation, warranty or covenant of the Company
hereunder), (c) the management and liquidation of the Mortgaged Property if the
Mortgaged Property is acquired in full or partial satisfaction of the Mortgage,
(d) taxes, assessments, water rates, sewer rates and other charges which are or
may become a lien upon the Mortgaged Property, and Primary Mortgage Insurance
Policy premiums and fire and hazard insurance coverage, (e) any expenses
reasonably sustained by the Company with respect to the liquidation of the
Mortgaged Property in accordance with the terms of this Agreement and (f)
compliance with the obligations under Section 4.08.
Servicing Fee: With respect to each Mortgage Loan, the amount of the annual
fee the Purchaser shall pay to the Company, which shall, for a period of one
full month, be equal to one-twelfth of the product of (a) the Servicing Fee Rate
and (b) the outstanding principal balance of such Mortgage Loan. Such fee shall
be payable monthly, computed on the basis of the same principal amount and
period respecting which any related interest payment on a Mortgage Loan is
computed. The obligation of the Purchaser to pay the Servicing Fee is limited
to, and the Servicing Fee is payable solely from, the interest portion of such
Monthly Payment collected by the Company, or as otherwise provided under Section
4.05 and in accordance with the ▇▇▇▇▇▇ Mae Guide(s). Any fee payable to the
Company for administrative services related to any REO Property as described in
Section 4.13 shall be payable from Liquidation Proceeds of the related REO
Property.
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Servicing Fee Rate: As set forth in the Term Sheet.
Servicing File: With respect to each Mortgage Loan, the file retained by
the Company consisting of originals of all documents in the Mortgage File which
are not delivered to the Purchaser and copies of the Mortgage Loan Documents
listed in Exhibit A, the originals of which are delivered to the Purchaser or
its designee pursuant to Section 2.04.
Servicing Officer: Any officer of the Company involved in, or responsible
for, the administration and servicing of the Mortgage Loans whose name appears
on a list of servicing officers furnished by the Company to the Purchaser upon
request, as such list may from time to time be amended.
Stated Principal Balance: As to each Mortgage Loan as of any date of
determination, (i) the principal balance of such Mortgage Loan at the Cut-off
Date after giving effect to payments of principal due on or before such date,
whether or not received, minus (ii) all amounts previously distributed to the
Purchaser with respect to the Mortgage Loan representing payments or recoveries
of principal or advances in lieu thereof, plus (iii) with respect to an Option
ARM Mortgage Loan, the cumulative amount of any Negative Amortization, if any.
Subservicer: Any subservicer which is subservicing the Mortgage Loans
pursuant to a Subservicing Agreement. Any subservicer shall meet the
qualifications set forth in Section 4.01.
Subservicing Agreement: An agreement between the Company and a Subservicer,
if any, for the servicing of the Mortgage Loans.
Term Sheet: A supplemental agreement in the form attached hereto as Exhibit
I which shall be executed and delivered by the Company and the Purchaser to
provide for the sale and servicing pursuant to the terms of this Agreement of
the Mortgage Loans listed on Schedule I attached thereto, which supplemental
agreement shall contain certain specific information relating to such sale of
such Mortgage Loans and may contain additional covenants relating to such sale
of such Mortgage Loans.
ARTICLE II
PURCHASE OF MORTGAGE LOANS; SERVICING OF MORTGAGE LOANS;
RECORD TITLE AND POSSESSION OF MORTGAGE FILES;
BOOKS AND RECORDS; CUSTODIAL AGREEMENT;
DELIVERY OF MORTGAGE LOAN DOCUMENTS
Section 2.01 Agreement to Purchase.
The Company agrees to sell and the Purchaser agrees to purchase the
Mortgage Loans having an aggregate Stated Principal Balance on the related
Cut-off Date set forth in the related Term Sheet in an amount as set forth in
the Confirmation, or in such other amount as agreed by the Purchaser and the
Company as evidenced by the actual aggregate Stated Principal Balance of the
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Mortgage Loans accepted by the Purchaser on the related Closing Date, with
servicing retained by the Company. The Company shall deliver the related
Mortgage Loan Schedule attached to the related Term Sheet for the Mortgage Loans
to be purchased on the related Closing Date to the Purchaser at least two (2)
Business Days prior to the related Closing Date. The Mortgage Loans shall be
sold pursuant to this Agreement, and the related Term Sheet shall be executed
and delivered on the related Closing Date.
Section 2.02 Purchase Price.
The Purchase Price for each Mortgage Loan shall be the percentage of par as
stated in the Confirmation (subject to adjustment as provided therein),
multiplied by the Stated Principal Balance, as of the related Cut-off Date, of
the Mortgage Loan listed on the related Mortgage Loan Schedule attached to the
related Term Sheet, after application of scheduled payments of principal due on
or before the related Cut-off Date whether or not collected.
In addition to the Purchase Price as described above, the Purchaser shall
pay to the Company, at closing, accrued interest on the Stated Principal Balance
of each Mortgage Loan as of the related Cut-off Date at the Mortgage Loan
Remittance Rate of each Mortgage Loan from the related Cut-off Date through the
day prior to the related Closing Date, inclusive.
The Purchase Price plus accrued interest as set forth in the preceding
paragraph shall be paid on the related Closing Date by wire transfer of
immediately available funds.
Purchaser shall be entitled to (1) all scheduled principal due after the
related Cut-off Date, (2) all other recoveries of principal collected on or
after the related Cut-off Date (provided, however, that all scheduled payments
of principal due on or before the related Cut-off Date and collected by the
Company or any successor servicer after the related Cut-off Date shall belong to
the Company), and (3) all payments of interest on the Mortgage Loans net of
applicable Servicing Fees (minus that portion of any such payment which is
allocable to the period prior to the related Cut-off Date). The outstanding
principal balance of each Mortgage Loan as of the related Cut-off Date is
determined after application of payments of principal due on or before the
related Cut-off Date whether or not collected, together with any unscheduled
Principal Prepayments collected prior to the related Cut-off Date; provided,
however, that payments of scheduled principal and interest prepaid for a Due
Date beyond the related Cut-off Date shall not be applied to the principal
balance as of the related Cut-off Date. Such prepaid amounts shall be the
property of the Purchaser. The Company shall deposit any such prepaid amounts
into the Custodial Account, which account is established for the benefit of the
Purchaser for subsequent remittance by the Company to the Purchaser.
Section 2.03 Servicing of Mortgage Loans.
Simultaneously with the execution and delivery of each Term Sheet, the
Company does hereby agree to directly service the Mortgage Loans listed on the
related Mortgage Loan Schedule attached to the related Term Sheet subject to the
terms of this Agreement and the related Term Sheet. The rights of the Purchaser
to receive payments with respect to the related Mortgage Loans shall be as set
forth in this Agreement.
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Section 2.04 Record Title and Possession of Mortgage Files; Maintenance of
Servicing Files.
As of the related Closing Date, the Company sold, transferred, assigned,
set over and conveyed to the Purchaser, without recourse, on a servicing
retained basis, and the Company hereby acknowledges that the Purchaser has, but
subject to the terms of this Agreement and the related Term Sheet, all the
right, title and interest of the Company in and to the Mortgage Loans. Company
will deliver the Mortgage Files to the Custodian designated by Purchaser, on or
before the related Closing Date, at the expense of the Company. The Company
shall maintain a Servicing File consisting of a copy of the contents of each
Mortgage File and the originals of the documents in each Mortgage File not
delivered to the Purchaser. The Servicing File shall contain all documents
necessary to service the Mortgage Loans. The possession of each Servicing File
by the Company is at the will of the Purchaser, for the sole purpose of
servicing the related Mortgage Loan, and such retention and possession by the
Company is in a custodial capacity only. From the related Closing Date, the
ownership of each Mortgage Loan, including the Mortgage Note, the Mortgage, the
contents of the related Mortgage File and all rights, benefits, proceeds and
obligations arising therefrom or in connection therewith, has been vested in the
Purchaser. All rights arising out of the Mortgage Loans including, but not
limited to, all funds received on or in connection with the Mortgage Loans and
all records or documents with respect to the Mortgage Loans prepared by or which
come into the possession of the Company shall be received and held by the
Company in trust for the benefit of the Purchaser as the owner of the Mortgage
Loans. Any portion of the Mortgage Files retained by the Company shall be
appropriately identified in the Company's computer system to clearly reflect the
ownership of the Mortgage Loans by the Purchaser. The Company shall release its
custody of the contents of the Mortgage Files only in accordance with written
instructions of the Purchaser, except when such release is required as
incidental to the Company's servicing of the Mortgage Loans or is in connection
with a repurchase of any Mortgage Loan or Loans with respect thereto pursuant to
this Agreement and the related Term Sheet, such written instructions shall not
be required.
Section 2.05 Books and Records.
The sale of each Mortgage Loan shall be reflected on the Company's balance
sheet and other financial statements as a sale of assets by the Company. The
Company shall be responsible for maintaining, and shall maintain, a complete set
of books and records for the Mortgage Loans that shall be appropriately
identified in the Company's computer system to clearly reflect the ownership of
the Mortgage Loan by the Purchaser. In particular, the Company shall maintain in
its possession, available for inspection by the Purchaser, or its designee and
shall deliver to the Purchaser upon demand, evidence of compliance with all
federal, state and local laws, rules and regulations, and requirements of ▇▇▇▇▇▇
▇▇▇ or ▇▇▇▇▇▇▇ Mac, as applicable, including but not limited to documentation as
to the method used in determining the applicability of the provisions of the
Flood Disaster Protection Act of 1973, as amended, to the Mortgaged Property,
documentation evidencing insurance coverage of any condominium project as
required by ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac, and periodic inspection reports as
required by Section 4.13. To the extent that original documents are not required
for purposes of realization of Liquidation Proceeds or Insurance Proceeds,
documents maintained by the Company may be in the form of microfilm or
microfiche.
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The Company shall maintain with respect to each Mortgage Loan and shall
make available for inspection by any Purchaser or its designee the related
Servicing File during the time the Purchaser retains ownership of a Mortgage
Loan and thereafter in accordance with applicable laws and regulations.
In addition to the foregoing, Company shall provide to any supervisory
agents or examiners that regulate Purchaser, including but not limited to, the
OTS, the FDIC and other similar entities, access, during normal business hours,
upon reasonable advance notice to Company and without cost to Company or such
supervisory agents or examiners, to any documentation regarding the Mortgage
Loans that may be required by any applicable regulator.
Section 2.06. Transfer of Mortgage Loans.
The Company shall keep at its servicing office books and records in which,
subject to such reasonable regulations as it may prescribe, the Company shall
note transfers of Mortgage Loans. No transfer of a Mortgage Loan may be made
unless such transfer is in compliance with the terms hereof. For the purposes of
this Agreement, the Company shall be under no obligation to deal with any person
with respect to this Agreement or any Mortgage Loan unless a notice of the
transfer of such Mortgage Loan has been delivered to the Company in accordance
with this Section 2.06 and the books and records of the Company show such person
as the owner of the Mortgage Loan. The Purchaser may, subject to the terms of
this Agreement, sell and transfer one or more of the Mortgage Loans, provided,
however, that the transferee will not be deemed to be a Purchaser hereunder
binding upon the Company unless such transferee shall agree in writing to be
bound by the terms of this Agreement and an original counterpart of the
instrument of transfer in an Assignment and Assumption of this Agreement
substantially in the form of Exhibit D hereto executed by the transferee shall
have been delivered to the Company. The Purchaser also shall advise the Company
of the transfer. Upon receipt of notice of the transfer, the Company shall ▇▇▇▇
its books and records to reflect the ownership of the Mortgage Loans of such
assignee, and the previous Purchaser shall be released from its obligations
hereunder with respect to the Mortgage Loans sold or transferred.
Section 2.07 Delivery of Mortgage Loan Documents.
The Company shall deliver and release to the Purchaser or its designee the
Mortgage Loan Documents in accordance with the terms of this Agreement and the
related Term Sheet. The documents enumerated as items (1), (2), (3), (4), (5),
(6), (7), (8), (9) and (16) in Exhibit A hereto shall be delivered by the
Company to the Purchaser or its designee no later than three (3) Business Days
prior to the related Closing Date pursuant to a bailee letter agreement. All
other documents in Exhibit A hereto, together with all other documents executed
in connection with the Mortgage Loan that Company may have in its possession,
shall be retained by the Company in trust for the Purchaser. If the Company
cannot deliver the original recorded Mortgage Loan Documents or the original
policy of title insurance, including riders and endorsements thereto, on the
related Closing Date, the Company shall, promptly upon receipt thereof and in
any case not later than 120 days from the related Closing Date, deliver such
original documents, including original recorded documents, to the Purchaser or
its designee (unless the Company is delayed in making such delivery by reason of
the fact that such documents shall not have been returned by the appropriate
recording office). If delivery is not completed within 120 days solely due to
delays in making such delivery by reason of
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the fact that such documents shall not have been returned by the appropriate
recording office, Company shall deliver such document to Purchaser, or its
designee, within such time period as specified in a Company's Officer's
Certificate. In the event that documents have not been received by the date
specified in the Company's Officer's Certificate, a subsequent Company's
Officer's Certificate shall be delivered by such date specified in the prior
Company's Officer's Certificate, stating a revised date for receipt of
documentation. The procedure shall be repeated until the documents have been
received and delivered. If delivery is not completed within 180 days solely due
to delays in making such delivery by reason of the fact that such documents
shall not have been returned by the appropriate recording office, the Company
shall continue to use its best efforts to effect delivery as soon as possible
thereafter, provided that if such documents are not delivered by the 270th day
from the date of the related Closing Date, the Company shall repurchase the
related Mortgage Loans at the Repurchase Price in accordance with Section 3.03
hereof.
The Company shall pay all initial recording fees, if any, for the
assignments of mortgage and any other fees in connection with the transfer of
all original documents to the Purchaser or its designee. Company shall prepare,
in recordable form, all assignments of mortgage necessary to assign the Mortgage
Loans to Purchaser, or its designee. Company shall be responsible for recording
the assignments of mortgage.
Company shall provide an original or duplicate original of the title
insurance policy to Purchaser or its designee within ninety (90) days of the
receipt of the recorded documents (required for issuance of such policy) from
the applicable recording office.
Any review by the Purchaser, or its designee, of the Mortgage Files shall
in no way alter or reduce the Company's obligations hereunder.
If the Purchaser or its designee discovers any defect with respect to a
Mortgage File, the Purchaser shall, or shall cause its designee to, give written
specification of such defect to the Company which may be given in the exception
report or the certification delivered pursuant to this Section 2.07, or
otherwise in writing and the Company shall cure or repurchase such Mortgage Loan
in accordance with Section 3.03.
The Company shall forward to the Purchaser, or its designee, original
documents evidencing an assumption, modification, consolidation or extension of
any Mortgage Loan entered into in accordance with Section 4.01 or 6.01 within
one week of their execution; provided, however, that the Company shall provide
the Purchaser, or its designee, with a certified true copy of any such document
submitted for recordation within one week of its execution, and shall provide
the original of any document submitted for recordation or a copy of such
document certified by the appropriate public recording office to be a true and
complete copy of the original within sixty (60) days of its submission for
recordation.
From time to time the Company may have a need for Mortgage Loan Documents
to be released from Purchaser, or its designee. Purchaser shall, or shall cause
its designee, upon the written request of the Company, within ten (10) Business
Days, deliver to the Company, any requested documentation previously delivered
to Purchaser as part of the Mortgage File, provided that such documentation is
promptly returned to Purchaser, or its designee, when the Company no
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longer requires possession of the document, and provided that during the time
that any such documentation is held by the Company, such possession is in trust
for the benefit of Purchaser. Company shall indemnify Purchaser, and its
designee, from and against any and all losses, claims, damages, penalties,
fines, forfeitures, costs and expenses (including court costs and reasonable
attorney's fees) resulting from or related to the loss, damage, or misplacement
of any documentation delivered to Company pursuant to this paragraph.
Section 2.08 Quality Control Procedures.
The Company must have an internal quality control program that verifies, on
a regular basis, the existence and accuracy of the legal documents, credit
documents, property appraisals, and underwriting decisions. The program must be
capable of evaluating and monitoring the overall quality of its loan production
and servicing activities. The program is to ensure that the Mortgage Loans are
originated and serviced in accordance with prudent mortgage banking practices
and accounting principles; guard against dishonest, fraudulent, or negligent
acts; and guard against errors and omissions by officers, employees, or other
authorized persons.
Section 2.09 Near-term Principal Prepayments; Near Term Payment Defaults.
In the event any Principal Prepayment is made by a Mortgagor in the time
period specified in the related Term Sheet, the Company shall remit to the
Purchaser an amount equal to the excess, if any, of the Purchase Price
Percentage over par multiplied by the amount of such Principal Prepayment. Such
remittance shall be made by the Company to Purchaser no later than the tenth
Business Day following receipt of such Principal Prepayment by the Company.
Unless otherwise specified in the related Term Sheet, in the event either
of the first three (3) scheduled Monthly Payments which are due under any
Mortgage Loan after the related Cut-Off Date are not made during the month in
which such Monthly Payments are due, then not later than five (5) Business Days
after notice to the Company by Purchaser (and at Purchaser's sole option), the
Company, shall repurchase such Mortgage Loan from the Purchaser pursuant to the
repurchase provisions contained in this Subsection 3.03.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF
THE COMPANY; REPURCHASE; REVIEW OF MORTGAGE LOANS
Section 3.01 Representations and Warranties of the Company.
The Company represents, warrants and covenants to the Purchaser that, as of
the related Closing Date or as of such date specifically provided herein:
(a) The Company is a corporation, duly organized, validly existing and in
good standing under the laws of the State of Delaware and has all licenses
necessary to carry out its business as now being conducted, and is licensed and
qualified to transact business in and is in good standing under the laws of each
state in which any Mortgaged Property is located or is otherwise exempt under
applicable law from such licensing or qualification or is otherwise not required
under applicable law to effect such licensing or qualification and no demand for
such licensing or qualification has been made upon such Company by any such
state, and in any event such Company is in compliance with the laws of any such
state to the extent necessary to ensure the enforceability of each Mortgage Loan
and the servicing of the Mortgage Loans in accordance with the terms of this
Agreement;
(b) The Company has the full power and authority and legal right to hold,
transfer and convey each Mortgage Loan, to sell each Mortgage Loan and to
execute, deliver and perform, and to enter into and consummate all transactions
contemplated by this Agreement and the related Term Sheet and to conduct its
business as presently conducted, has duly authorized the execution, delivery and
performance of this Agreement and the related Term Sheet and any agreements
contemplated hereby, has duly executed and delivered this Agreement and the
related Term Sheet, and any agreements contemplated hereby, and this Agreement
and the related Term Sheet and each Assignment to the Purchaser and any
agreements contemplated hereby, constitutes a legal, valid and binding
obligation of the Company, enforceable against it in accordance with its terms,
and all requisite corporate action has been taken by the Company to make this
Agreement and the related Term Sheet and all agreements contemplated hereby
valid and binding upon the Company in accordance with their terms;
(c) Neither the execution and delivery of this Agreement and the related
Term Sheet, nor the origination or purchase of the Mortgage Loans by the
Company, the sale of the Mortgage Loans to the Purchaser, the consummation of
the transactions contemplated hereby, or the fulfillment of or compliance with
the terms and conditions of this Agreement and the related Term Sheet will
conflict with any of the terms, conditions or provisions of the Company's
charter or by-laws or materially conflict with or result in a material breach of
any of the terms, conditions or provisions of any legal restriction or any
agreement or instrument to which the Company is now a party or by which it is
bound, or constitute a default or result in an acceleration under any of the
foregoing, or result in the material violation of any law, rule, regulation,
order, judgment or decree to which the Company or its properties are subject, or
impair the ability of the Purchaser to realize on the Mortgage Loans;
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(d) There is no litigation, suit, proceeding or investigation pending or,
to the best of Company's knowledge, threatened, or any order or decree
outstanding, with respect to the Company which, either in any one instance or in
the aggregate, is reasonably likely to have a material adverse effect on the
sale of the Mortgage Loans, the execution, delivery, performance or
enforceability of this Agreement and the related Term Sheet, or which is
reasonably likely to have a material adverse effect on the financial condition
of the Company;
(e) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by the Company of or compliance by the Company with this Agreement
or the related Term Sheet, or the sale of the Mortgage Loans and delivery of the
Mortgage Files to the Purchaser or the consummation of the transactions
contemplated by this Agreement or the related Term Sheet, except for consents,
approvals, authorizations and orders which have been obtained;
(f) The consummation of the transactions contemplated by this Agreement or
the related Term Sheet is in the ordinary course of business of the Company and
Company, and the transfer, assignment and conveyance of the Mortgage Notes and
the Mortgages by the Company pursuant to this Agreement or the related Term
Sheet are not subject to bulk transfer or any similar statutory provisions in
effect in any applicable jurisdiction;
(g) The origination and servicing practices used by the Company and any
prior originator or servicer with respect to each Mortgage Note and Mortgage
have been legal and in accordance with applicable laws and regulations and the
Mortgage Loan Documents, and in all material respects proper and prudent in the
mortgage origination and servicing business. Each Mortgage Loan has been
serviced in all material respects with Accepted Servicing Practices. With
respect to escrow deposits and payments that the Company, on behalf of an
investor, is entitled to collect, all such payments are in the possession of, or
under the control of, the Company, and there exist no deficiencies in connection
therewith for which customary arrangements for repayment thereof have not been
made. All escrow payments have been collected in full compliance with state and
federal law and the provisions of the related Mortgage Note and Mortgage. As to
any Mortgage Loan that is the subject of an escrow, escrow of funds is not
prohibited by applicable law and has been established in an amount sufficient to
pay for every escrowed item that remains unpaid and has been assessed but is not
yet due and payable. No escrow deposits or other charges or payments due under
the Mortgage Note have been capitalized under any Mortgage or the related
Mortgage Note;
(h) The Company used no selection procedures that identified the Mortgage
Loans as being less desirable or valuable than other comparable mortgage loans
in the Company's portfolio at the related Cut-off Date;
(i) The Company will treat the sale of the Mortgage Loans to the Purchaser
as a sale for reporting and accounting purposes and, to the extent appropriate,
for federal income tax purposes;
(j) Company is an approved seller/servicer of residential mortgage loans
for ▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇ Mac and HUD, with such facilities, procedures and
personnel necessary for the sound servicing of such mortgage loans. The Company
is duly qualified, licensed, registered and otherwise authorized under all
applicable federal, state and local laws, and regulations, if applicable,
22
meets the minimum capital requirements set forth by the OCC, and is in good
standing to sell mortgage loans to and service mortgage loans for ▇▇▇▇▇▇ Mae and
▇▇▇▇▇▇▇ Mac and no event has occurred which would make Company unable to comply
with eligibility requirements or which would require notification to either
▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac;
(k) The Company does not believe, nor does it have any cause or reason to
believe, that it cannot perform each and every covenant contained in this
Agreement or the related Term Sheet. The Company is solvent and the sale of the
Mortgage Loans will not cause the Company to become insolvent. The sale of the
Mortgage Loans is not undertaken with the intent to hinder, delay or defraud any
of the Company's creditors;
(l) No statement, tape, diskette, form, report or other document prepared
by, or on behalf of, Company pursuant to this Agreement or the related Term
Sheet or in connection with the transactions contemplated hereby, contains or
will contain any statement that is or will be inaccurate or misleading in any
material respect;
(m) The Company acknowledges and agrees that the Servicing Fee represents
reasonable compensation for performing such services and that the entire
Servicing Fee shall be treated by the Company, for accounting and tax purposes,
as compensation for the servicing and administration of the Mortgage Loans
pursuant to this Agreement. In the opinion of Company, the consideration
received by Company upon the sale of the Mortgage Loans to Purchaser under this
Agreement and the related Term Sheet constitutes fair consideration for the
Mortgage Loans under current market conditions;
(n) Company has delivered to the Purchaser financial statements of its
parent, for its last two complete fiscal years. All such financial information
fairly presents the pertinent results of operations and financial position for
the period identified and has been prepared in accordance with GAAP consistently
applied throughout the periods involved, except as set forth in the notes
thereto. There has been no change in the business, operations, financial
condition, properties or assets of the Company since the date of the Company's
financial information that would have a material adverse effect on its ability
to perform its obligations under this Agreement;
(o) The Company has not dealt with any broker, investment banker, agent or
other person that may be entitled to any commission or compensation in
connection with the sale of the Mortgage Loans;
(p) The Company is a member of MERS in good standing.
Section 3.02 Representations and Warranties as to Individual Mortgage
Loans.
References in this Section to percentages of Mortgage Loans refer in each
case to the percentage of the aggregate Stated Principal Balance of the Mortgage
Loans as of the related Cut-off Date, based on the outstanding Stated Principal
Balances of the Mortgage Loans as of the related Cut-off Date, and giving effect
to scheduled Monthly Payments due on or prior to the related Cut-off Date,
whether or not received. References to percentages of Mortgaged Properties
refer, in each case, to the percentages of expected aggregate Stated Principal
Balances of the related Mortgage
23
Loans (determined as described in the preceding sentence). The Company hereby
represents and warrants to the Purchaser, as to each Mortgage Loan, as of the
related Closing Date as follows:
(a) The information set forth in the Mortgage Loan Schedule attached to the
related Term Sheet is true, complete and correct in all material respects as of
the related Cut-Off Date;
(b) The Mortgage creates a valid, subsisting and enforceable first lien or
a first priority ownership interest in an estate in fee simple in real property
securing the related Mortgage Note subject to principles of equity, bankruptcy,
insolvency and other laws of general application affecting the rights of
creditors;
(c) All payments due prior to the related Cut-off Date for such Mortgage
Loan have been made as of the related Closing Date; the Mortgage Loan has not
been dishonored; there are no material defaults under the terms of the Mortgage
Loan; the Company has not advanced its own funds, or induced, solicited or
knowingly received any advance of funds from a party other than the owner of the
Mortgaged Property subject to the Mortgage, directly or indirectly, for the
payment of any amount required by the Mortgage Loan. As of the related Closing
Date, all of the Mortgage Loans will have an actual interest paid to date of
their related Cut-off Date (or later) and will be due for the scheduled monthly
payment next succeeding the Cut-off Date (or later), as evidenced by a posting
to Company's servicing collection system. No payment under any Mortgage Loan is
delinquent as of the related Closing Date nor has any scheduled payment been
delinquent at any time during the twelve (12) months prior to the month of the
related Closing Date. For purposes of this paragraph, a Mortgage Loan will be
deemed delinquent if any payment due thereunder was not paid by the Mortgagor in
the month such payment was due;
(d) There are no defaults by Company in complying with the terms of the
Mortgage, and all taxes, governmental assessments, insurance premiums, water,
sewer and municipal charges, leasehold payments or ground rents which previously
became due and owing have been paid, or escrow funds have been established in an
amount sufficient to pay for every such escrowed item which remains unpaid and
which has been assessed but is not yet due and payable;
(e) The terms of the Mortgage Note and the Mortgage have not been impaired,
waived, altered or modified in any respect, except by written instruments which
have been recorded to the extent any such recordation is required by law, or,
necessary to protect the interest of the Purchaser and maintain the lien
priority of the Mortgage. No instrument of waiver, alteration or modification
has been executed except in connection with a modification agreement and which
modification agreement is part of the Mortgage File and the terms of which are
reflected in the related Mortgage Loan Schedule, and no Mortgagor has been
released, in whole or in part, from the terms thereof except in connection with
an assumption agreement and which assumption agreement is part of the Mortgage
File and the terms of which are reflected in the related Mortgage Loan Schedule;
the substance of any such waiver, alteration or modification has been approved
by the issuer of any related Primary Mortgage Insurance Policy, Lender Primary
Mortgage Insurance Policy and title insurance policy, to the extent required by
the related policies;
(f) The Mortgage Note and the Mortgage are not subject to any right of
rescission, set-off, counterclaim or defense, including, without limitation, the
defense of usury, nor will the operation of
24
any of the terms of the Mortgage Note or the Mortgage, or the exercise of any
right thereunder, render the Mortgage Note or Mortgage unenforceable, in whole
or in part, or subject to any right of rescission, set-off, counterclaim or
defense, including the defense of usury, and no such right of rescission,
set-off, counterclaim or defense has been asserted with respect thereto; and as
of the related Closing Date the Mortgagor was not a debtor in any state or
federal bankruptcy or insolvency proceeding;
(g) All buildings or other customarily insured improvements upon the
Mortgaged Property are insured by a Qualified Insurer, against loss by fire,
hazards of extended coverage and such other hazards as are provided for in the
▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac Guide, as well as all additional requirements set
forth in Section 4.10 of this Agreement. All such standard hazard policies are
in full force and effect and contain a standard mortgagee clause naming the
Company and its successors in interest and assigns as loss payee and such clause
is still in effect and all premiums due thereon have been paid. If required by
the Flood Disaster Protection Act of 1973, as amended, the Mortgage Loan is
covered by a flood insurance policy meeting the requirements of the current
guidelines of the Federal Insurance Administration which policy conforms to
▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac requirements, as well as all additional requirements
set forth in Section 4.10 of this Agreement. Such policy was issued by a
Qualified Insurer. The Mortgage obligates the Mortgagor thereunder to maintain
all such insurance at the Mortgagor's cost and expense, and on the Mortgagor's
failure to do so, authorizes the holder of the Mortgage to maintain such
insurance at the Mortgagor's cost and expense and to seek reimbursement therefor
from the Mortgagor. Neither the Company (nor any prior originator or servicer of
any of the Mortgage Loans) nor any Mortgagor has engaged in any act or omission
which has impaired or would impair the coverage of any such policy, the benefits
of the endorsement provided for herein, or the validity and binding effect of
either;
(h) Each Mortgage Loan complies with, and the Company has complied with,
applicable local, state and federal laws, regulations and other requirements
including, without limitation, usury, equal credit opportunity, real estate
settlement procedures, the Federal Truth-In-Lending Act, disclosure laws and all
predatory and abusive lending laws and consummation of the transactions
contemplated hereby, including without limitation, the receipt of interest by
the owner of such Mortgage Loan, will not involve the violation of any such
laws, rules or regulations. None of the Mortgage Loans are (a) Mortgage Loans
subject to 12 CFR Part 226.31, 12 CFR Part 226.32 or 226.34 of Regulation Z, the
regulation implementing TILA, which implements the Home Ownership and Equity
Protection Act of 1994, as amended, or (b) classified and/or defined, as a "high
cost", "threshold", "predatory" "high risk home loan" or "covered" loan (or a
similarly classified loan using different terminology under a law imposing
additional legal liability for mortgage loans having high interest rates, points
and or/fees) under any other state, federal or local law including, but not
limited to, the States of Georgia, New York, North Carolina, New Jersey,
Massachusetts, Arkansas, Kentucky or New Mexico. In addition to and
notwithstanding anything to the contrary herein, no Mortgage Loan for which the
Mortgaged Property is located in New Jersey is a Home Loan as defined in the Act
that was made, arranged, or assigned by a person selling either a manufactured
home or home improvements to the Mortgaged Property or was made by an originator
to whom the Mortgagor was referred by any such seller. Each Mortgage Loan is
being (and has been) serviced in accordance with Accepted Servicing Practices
and applicable state and federal laws, including, without limitation, the
Federal Truth-In-Lending Act and other consumer protection laws, real estate
settlement procedures, usury, equal credit opportunity and disclosure laws.
Company shall maintain
25
in its possession, available for the Purchaser's inspection, as appropriate, and
shall deliver to the Purchaser or its designee upon demand, evidence of
compliance with all such requirements;
(i) The Mortgage has not been satisfied, canceled or subordinated, in whole
or in part, or rescinded, and the Mortgaged Property has not been released from
the lien of the Mortgage, in whole or in part nor has any instrument been
executed that would effect any such release, cancellation, subordination or
rescission. The Company has not waived the performance by the Mortgagor of any
action, if the Mortgagor's failure to perform such action would cause the
Mortgage Loan to be in default, nor has the Company waived any default resulting
from any action or inaction by the Mortgagor;
(j) The Mortgage (including any Negative Amortization which may arise
thereunder if the Mortgage is an Option ARM Mortgage Loan) is a valid,
subsisting, enforceable and perfected first lien on the Mortgaged Property,
including all buildings on the Mortgaged Property and all installations and
mechanical, electrical, plumbing, heating and air conditioning systems affixed
to such buildings, and all additions, alterations and replacements made at any
time with respect to the foregoing securing the Mortgage Note's original
principal balance subject to principles of equity, bankruptcy, insolvency and
other laws of general application affecting the rights of creditors. The
Mortgage and the Mortgage Note do not contain any evidence of any security
interest or other interest or right thereto. Such lien is free and clear of all
adverse claims, liens and encumbrances having priority over the first lien of
the Mortgage subject only to (1) the lien of non-delinquent current real
property taxes and assessments not yet due and payable, (2) covenants,
conditions and restrictions, rights of way, easements and other matters of the
public record as of the date of recording which are acceptable to mortgage
lending institutions generally and either (A) which are referred to in the
lender's title insurance policy delivered to the originator or otherwise
considered in the appraisal made for the originator of the Mortgage Loan, or (B)
which do not adversely affect the residential use or Appraised Value of the
Mortgaged Property as set forth in such appraisal, and (3) other matters to
which like properties are commonly subject which do not individually or in the
aggregate materially interfere with the benefits of the security intended to be
provided by the Mortgage or the use, enjoyment, value or marketability of the
related Mortgaged Property. Any security agreement, chattel mortgage or
equivalent document related to and delivered in connection with the Mortgage
Loan establishes and creates a valid, subsisting, enforceable and perfected
first lien and first priority security interest on the property described
therein, and the Company has the full right to sell and assign the same to the
Purchaser;
(k) The Mortgage Note and the related Mortgage are original and genuine and
each is the legal, valid and binding obligation of the maker thereof,
enforceable in all respects in accordance with its terms subject to principles
of equity, bankruptcy, insolvency and other laws of general application
affecting the rights of creditors, and the Company has taken all action
necessary to transfer such rights of enforceability to the Purchaser. All
parties to the Mortgage Note and the Mortgage had the legal capacity to enter
into the Mortgage Loan and to execute and deliver the Mortgage Note and the
Mortgage. The Mortgage Loan Documents are on forms acceptable to ▇▇▇▇▇▇ Mae and
▇▇▇▇▇▇▇ Mac. The Mortgage Note and the Mortgage have been duly and properly
executed by such parties. No fraud, error, omission, misrepresentation,
negligence or similar occurrence with respect to a Mortgage Loan has taken place
on the part of Company or the Mortgagor, or on the part of any other party
involved in the origination or servicing of the Mortgage
26
Loan. The proceeds of the Mortgage Loan have been fully disbursed and there is
no requirement for future advances thereunder, and any and all requirements as
to completion of any on-site or off-site improvements and as to disbursements of
any escrow funds therefor have been complied with. All costs, fees and expenses
incurred in making or closing the Mortgage Loan and the recording of the
Mortgage were paid, and the Mortgagor is not entitled to any refund of any
amounts paid or due under the Mortgage Note or Mortgage;
(l) The Company is the sole owner and holder of the Mortgage Loan and the
indebtedness evidenced by the Mortgage Note. Upon the sale of the Mortgage Loan
to the Purchaser, the Company will retain the Mortgage File or any part thereof
with respect thereto not delivered to the Purchaser or the Purchaser's designee
in trust only for the purpose of servicing and supervising the servicing of the
Mortgage Loan. Immediately prior to the transfer and assignment to the
Purchaser, the Mortgage Loan, including the Mortgage Note and the Mortgage, were
not subject to an assignment, sale or pledge to any person other than Purchaser,
and the Company had good and marketable title to and was the sole owner thereof
and had full right to transfer and sell the Mortgage Loan to the Purchaser free
and clear of any encumbrance, equity, lien, pledge, charge, claim or security
interest and has the full right and authority subject to no interest or
participation of, or agreement with, any other party, to sell and assign the
Mortgage Loan pursuant to this Agreement and following the sale of the Mortgage
Loan, the Purchaser will own such Mortgage Loan free and clear of any
encumbrance, equity, participation interest, lien, pledge, charge, claim or
security interest. The Company intends to relinquish all rights to possess,
control and monitor the Mortgage Loan, except for the purposes of servicing the
Mortgage Loan as set forth in this Agreement. After the related Closing Date,
the Company will not have any right to modify or alter the terms of the sale of
the Mortgage Loan and the Company will not have any obligation or right to
repurchase the Mortgage Loan or substitute another Mortgage Loan, except as
provided in this Agreement, or as otherwise agreed to by the Company and the
Purchaser;
(m) Each Mortgage Loan is covered by an ALTA lender's title insurance
policy or other generally acceptable form of policy or insurance acceptable to
▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac (including adjustable rate endorsements), issued by a
title insurer acceptable to ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac and qualified to do
business in the jurisdiction where the Mortgaged Property is located, insuring
(subject to the exceptions contained in (j)(1), (2) and (3) above) the Company,
its successors and assigns, as to the first priority lien of the Mortgage in the
original principal amount of the Mortgage Loan (including, if the Mortgage Loan
is an Option ARM Mortgage Loan which provides for Negative Amortization, the
maximum amount of Negative Amortization in accordance with the Mortgage) and
against any loss by reason of the invalidity or unenforceability of the lien
resulting from the provisions of the Mortgage providing for adjustment in the
Mortgage Interest Rate and Monthly Payment and, with respect to an Option ARM
Mortgage Loan which provides for Negative Amortization, the Negative
Amortization provisions of the Mortgage Note. Where required by state law or
regulation, the Mortgagor has been given the opportunity to choose the carrier
of the required mortgage title insurance. The Company, its successors and
assigns, is the sole insured of such lender's title insurance policy, such title
insurance policy has been duly and validly endorsed to the Purchaser or the
assignment to the Purchaser of the Company's interest therein does not require
the consent of or notification to the insurer and such lender's title insurance
policy is in full force and effect and will be in full force and effect upon the
consummation of the transactions contemplated by this Agreement. No claims have
been made under such lender's title insurance
27
policy, and no prior holder or servicer of the related Mortgage, including the
Company, nor any Mortgagor, has done, by act or omission, anything which would
impair the coverage of such lender's title insurance policy;
(n) There is no default, breach, violation or event of acceleration
existing under the Mortgage or the related Mortgage Note and no event which,
with the passage of time or with notice and the expiration of any grace or cure
period, would constitute a default, breach, violation or event permitting
acceleration; and neither the Company, nor any prior mortgagee has waived any
default, breach, violation or event permitting acceleration;
(o) There are no mechanics' or similar liens or claims which have been
filed for work, labor or material (and no rights are outstanding that under law
could give rise to such liens) affecting the related Mortgaged Property which
are or may be liens prior to or equal to the lien of the related Mortgage;
(p) All improvements subject to the Mortgage which were considered in
determining the appraised value of the Mortgaged Property lie wholly within the
boundaries and building restriction lines of the Mortgaged Property (and wholly
within the project with respect to a condominium unit) and no improvements on
adjoining properties encroach upon the Mortgaged Property except those which are
insured against by the title insurance policy referred to in clause (m) above
and all improvements on the property comply with all applicable zoning and
subdivision laws and ordinances;
(q) Each Mortgage Loan was originated by or for the Company pursuant to,
and conforms with, the Company's underwriting guidelines attached as Exhibit H
hereto. With respect to each Mortgage Loan which is not an Option ARM Mortgage
Loan, the Mortgage Loan bears interest at an adjustable rate (if applicable) as
set forth in the related Mortgage Loan Schedule, and Monthly Payments under the
Mortgage Note are due and payable on the first day of each month. The Mortgage
contains the usual and enforceable provisions of the Company at the time of
origination for the acceleration of the payment of the unpaid principal amount
of the Mortgage Loan if the related Mortgaged Property is sold without the prior
consent of the mortgagee thereunder;
(r) The Mortgaged Property is not subject to any material damage. At
origination of the Mortgage Loan there was not, since origination of the
Mortgage Loan there has not been, and there currently is no proceeding pending
for the total or partial condemnation of the Mortgaged Property. The Company has
not received notification that any such proceedings are scheduled to commence at
a future date;
(s) The related Mortgage contains customary and enforceable provisions such
as to render the rights and remedies of the holder thereof adequate for the
realization against the Mortgaged Property of the benefits of the security
provided thereby, including, (1) in the case of a Mortgage designated as a deed
of trust, by trustee's sale, and (2) otherwise by judicial foreclosure. There is
no homestead or other exemption available to the Mortgagor which would interfere
with the right to sell the Mortgaged Property at a trustee's sale or the right
to foreclose the Mortgage;
28
(t) If the Mortgage constitutes a deed of trust, a trustee, authorized and
duly qualified if required under applicable law to act as such, has been
properly designated and currently so serves and is named in the Mortgage, and no
fees or expenses, except as may be required by local law, are or will become
payable by the Purchaser to the trustee under the deed of trust, except in
connection with a trustee's sale or attempted sale after default by the
Mortgagor;
(u) The Mortgage File contains an appraisal of the related Mortgaged
Property signed prior to the final approval of the mortgage loan application by
a Qualified Appraiser, approved by the Company, who had no interest, direct or
indirect, in the Mortgaged Property or in any loan made on the security thereof,
and whose compensation is not affected by the approval or disapproval of the
Mortgage Loan, and the appraisal and appraiser both satisfy the requirements of
▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac and Title XI of the Federal Institutions Reform,
Recovery, and Enforcement Act of 1989 and the regulations promulgated
thereunder, all as in effect on the date the Mortgage Loan was originated. The
appraisal is in a form acceptable to ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac;
(v) All parties which have had any interest in the Mortgage, whether as
mortgagee, assignee, pledgee or otherwise, are (or, during the period in which
they held and disposed of such interest, were) (A) in compliance with any and
all applicable licensing requirements of the laws of the state wherein the
Mortgaged Property is located, and (B) (1) organized under the laws of such
state, or (2) qualified to do business in such state, or (3) federal savings and
loan associations or national banks or a Federal Home Loan Bank or savings bank
having principal offices in such state, or (4) not doing business in such state;
(w) The related Mortgage Note is not and has not been secured by any
collateral except the lien of the corresponding Mortgage and the security
interest of any applicable security agreement or chattel mortgage referred to
above and such collateral does not serve as security for any other obligation
except any second liens;
(x) The Mortgagor has received and has executed, where applicable, all
disclosure materials required by applicable law with respect to the making of
such mortgage loans;
(y) The Mortgage Loan does not contain balloon or "graduated payment"
features or a shared appreciation or other contingent interest feature; No
Mortgage Loan is subject to a buydown agreement or contains any buydown
provision;
(z) The Mortgagor is not in bankruptcy and, the Mortgagor is not insolvent
and the Company has no knowledge of any circumstances or conditions with respect
to the Mortgage, the Mortgaged Property, the Mortgagor or the Mortgagor's credit
standing that could reasonably be expected to cause investors to regard the
Mortgage Loan as an unacceptable investment, cause the Mortgage Loan to become
delinquent, or materially adversely affect the value or marketability of the
Mortgage Loan;
(aa) Each Mortgage Loan bears interest based upon a thirty (30) day month
and a three hundred and sixty (360) day year. The Mortgage Loans have an
original term to maturity of not more than thirty (30) years, with interest
payable in arrears on the first day of each month. As to each Adjustable Rate
Mortgage Loan, on each applicable Adjustment Date, the Mortgage Interest
29
Rate will be adjusted to equal the sum of the Index, plus the applicable Margin;
provided, that the Mortgage Interest Rate, on each applicable Adjustment Date,
will not increase by more than the Initial Rate Cap or Periodic Rate Cap, as
applicable. Over the term of each Adjustable Rate Mortgage Loan, the Mortgage
Interest Rate will not exceed such Mortgage Loan's Lifetime Rate Cap. With
respect to each adjustable rate Mortgage Loan, each Mortgage Note requires a
monthly payment which is sufficient (a) during the period prior to the first
adjustment to the Mortgage Interest Rate, to fully amortize the original
principal balance over the original term thereof and to pay interest at the
related Mortgage Interest Rate, and (b) during the period following each
Adjustment Date, to fully amortize the outstanding principal balance as of the
first day of such period over the then remaining term of such Mortgage Note and
to pay interest at the related Mortgage Interest Rate. With respect to each
Adjustable Rate Mortgage Loan, the Mortgage Note provides that when the Mortgage
Interest Rate changes on an Adjustment Date, the then outstanding principal
balance will be reamortized over the remaining life of the Mortgage Loan or,
with respect to interest-only Mortgage Loans, on an Adjustment Date following
the related interest-only period. With respect to each Mortgage Loan which is
not an Option ARM Mortgage Loan, the Mortgage Note does not permit Negative
Amortization. With respect to each Option ARM Mortgage Loan, the related
Mortgage Note requires a Monthly Payment, which is sufficient during the period
following each Payment Adjustment Date, to fully amortize the outstanding
principal balance as of the first day of such period (including any Negative
Amortization) over the then remaining term of such Mortgage Note and to pay
interest at the related Mortgage Interest Rate. None of the Mortgage Loans
contain a conversion feature which would cause the Mortgage Loan interest rate
to convert to a fixed interest rate. None of the Mortgage Loans are considered
agricultural loans;
(bb) (INTENTIONALLY LEFT BLANK)
(cc) (INTENTIONALLY LEFT BLANK)
(dd) (INTENTIONALLY LEFT BLANK)
(ee) (INTENTIONALLY LEFT BLANK)
(ff) (INTENTIONALLY LEFT BLANK)
(gg) (INTENTIONALLY LEFT BLANK)
(hh) In the event the Mortgage Loan had an LTV at origination greater than
80.00%, the excess of the principal balance of the Mortgage Loan over 75.0% of
the Appraised Value of the Mortgaged Property with respect to a Refinanced
Mortgage Loan, or the lesser of the Appraised Value or the purchase price of the
Mortgaged Property with respect to a purchase money Mortgage Loan was insured as
to payment defaults by a Primary Mortgage Insurance Policy issued by a Qualified
Insurer. No Mortgage Loan has an LTV over 95%. With respect to each Option ARM
Mortgage Loan, the maximum amount of Negative Amortization in accordance with
the Mortgage when combined with the original principal balance of the Option ARM
Mortgage Loan shall not result in a Loan-to-Value Ratio in excess of 100%. All
provisions of such Primary Mortgage Insurance Policy have been and are being
complied with, such policy is in full force and effect, and all premiums due
thereunder have been paid. No Mortgage Loan requires payment of such
30
premiums, in whole or in part, by the Purchaser. No action, inaction, or event
has occurred and no state of facts exists that has, or will result in the
exclusion from, denial of, or defense to coverage. Any Mortgage Loan subject to
a Primary Mortgage Insurance Policy obligates the Mortgagor thereunder to
maintain the Primary Mortgage Insurance Policy, subject to state and federal
law, and to pay all premiums and charges in connection therewith. No action has
been taken or failed to be taken, on or prior to the Closing Date which has
resulted or will result in an exclusion from, denial of, or defense to coverage
under any Primary Mortgage Insurance Policy (including, without limitation, any
exclusions, denials or defenses which would limit or reduce the availability of
the timely payment of the full amount of the loss otherwise due thereunder to
the insured) whether arising out of actions, representations, errors, omissions,
negligence, or fraud of the Company or the Mortgagor, or for any other reason
under such coverage; The mortgage interest rate for the Mortgage Loan as set
forth on the related Mortgage Loan Schedule is net of any such insurance
premium. Any Mortgage Loan subject to a Lender Primary Mortgage Insurance Policy
obligates the Company to maintain the Lender Primary Mortgage Insurance Policy
and to pay all premiums and charges in connection therewith;
(ii) Each of the Mortgage and the Assignment of Mortgage (unless the
Mortgage is registered with MERS) is in recordable form and is acceptable for
recording under the laws of the jurisdiction in which the Mortgaged Property is
located. Any Mortgage registered with MERS has been assigned a valid mortgage
identification number by MERS;
(jj) None of the Mortgage Loans are secured by an interest in a leasehold
estate. The Mortgaged Property is located in the state identified in the related
Mortgage Loan Schedule and consists of a single parcel of real property with a
detached single family residence erected thereon, or a townhouse, or a two-to
four-family dwelling, or an individual condominium unit in a condominium
project, or an individual unit in a planned unit development or a de minimis
planned unit development, provided, however, that no residence or dwelling is a
single parcel of real property with a manufactured home not affixed to a
permanent foundation, or a mobile home. Any condominium unit or planned unit
development conforms with the Company's underwriting guidelines. As of the date
of origination, no portion of any Mortgaged Property was used for commercial
purposes, and since the Origination Date, no portion of any Mortgaged Property
has been, or currently is, used for commercial purposes;
(kk) Payments on the Mortgage Loan commenced no more than sixty (60) days
after the funds were disbursed in connection with the Mortgage Loan. The
Mortgage Note is payable on the first day of each month in monthly installments
of principal and interest (or in the case of interest-only loans is payable on
the first day of each month in monthly installments of interest only), which
installments are subject to change due to the adjustments to the Mortgage
Interest Rate on each Adjustment Date, with interest calculated and payable in
arrears. Each of the Mortgage Loans will amortize fully by the stated maturity
date, over an original term of not more than thirty years from commencement of
amortization;
(ll) As of the Closing Date of the Mortgage Loan, the Mortgage Property was
lawfully occupied under applicable law, and all inspections, licenses and
certificates required to be made or issued with respect to all occupied portions
of the Mortgaged Property and, with respect to the use
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and occupancy of the same, including but not limited to certificates of
occupancy and fire underwriting certificates, have been made or obtained from
the appropriate authorities;
(mm) There is no pending action or proceeding directly involving the
Mortgaged Property in which compliance with any environmental law, rule or
regulation is an issue; there is no violation of any environmental law, rule or
regulation with respect to the Mortgaged Property; and the Company has not
received any notice of any environmental hazard on the Mortgaged Property and
nothing further remains to be done to satisfy in full all requirements of each
such law, rule or regulation constituting a prerequisite to use and enjoyment of
said property;
(nn) The Mortgagor has not notified the Company, and the Company has no
knowledge of any relief requested or allowed to the Mortgagor under the
Servicemembers' Civil Relief Act, as amended, or similar state or local laws;
(oo) No Mortgage Loan is a construction or rehabilitation Mortgage Loan or
was made to facilitate the trade-in or exchange of a Mortgaged Property;
(pp) The Mortgagor for each Mortgage Loan is a natural person;
(qq) None of the Mortgage Loans are Co-op Loans;
(rr) With respect to each Mortgage Loan that has a prepayment penalty
feature, each such prepayment penalty is enforceable and will be enforced by the
Company and each prepayment penalty is permitted pursuant to federal, state and
local law and all information on the related Mortgage Loan Schedule regarding
prepayment penalties is complete and accurate in all material respects. No
Mortgage Loan will impose a prepayment penalty for a term in excess of five
years from the date such Mortgage Loan was originated. Except as otherwise set
forth on the Mortgage Loan Schedule, with respect to each Mortgage Loan that
contains a prepayment penalty, such prepayment penalty is at least equal to the
lesser of (A) the maximum amount permitted under applicable law and (B) six
months interest at the related Mortgage Interest Rate on the amount prepaid in
excess of 20% of the original principal balance of such Mortgage Loan;
(ss) With respect to each Mortgage Loan either (i) the fair market value of
the Mortgaged Property securing such Mortgage Loan was at least equal to 80
percent of the original principal balance of such Mortgage Loan at the time such
Mortgage Loan was originated or (ii) (a) the Mortgage Loan is only secured by
the Mortgage Property and (b) substantially all of the proceeds of such Mortgage
Loan were used to acquire or to improve or protect the Mortgage Property. For
the purposes of the preceding sentence, if the Mortgage Loan has been
significantly modified other than as a result of a default or a reasonable
foreseeable default, the modified Mortgage Loan will be viewed as having been
originated on the date of the modification;
(tt) The Mortgage Loan was originated by a mortgagee approved by the
Secretary of Housing and Urban Development pursuant to sections 203 and 211 of
the National Housing Act, a savings and loan association, a savings bank, a
commercial bank, credit union, insurance company or similar institution which is
supervised and examined by a federal or state authority;
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(uu) None of the Mortgage Loans are simple interest Mortgage Loans and none
of the Mortgaged Properties are timeshares;
(vv) All of the terms of the Mortgage pertaining to interest rate
adjustments, payment adjustments and adjustments of the outstanding principal
balance are enforceable, all such adjustments have been properly made, including
the mailing of required notices, and such adjustments do not and will not affect
the priority of the Mortgage lien. With respect to each Mortgage Loan which has
passed its initial Adjustment Date, Company has performed an audit of the
Mortgage Loan to determine whether all interest rate adjustments have been made
in accordance with the terms of the Mortgage Note and Mortgage;
(ww) Each Mortgage Note, each Mortgage, each Assignment and any other
documents required pursuant to this Agreement to be delivered to the Purchaser
or its designee, or its assignee for each Mortgage Loan, have been, on or before
the related Closing Date, delivered to the Purchaser or its designee, or its
assignee;
(xx) There is no Mortgage Loan that was originated on or after October 1,
2002 and before March 7, 2003, which is secured by property located in the State
of Georgia;
(yy) No Mortgage Loan is secured by Mortgaged Property in the Commonwealth
of Massachusetts with a loan application date on or after November 7, 2004 that
refinances a mortgage loan that is less than sixty (60) months old, unless such
Mortgage Loan (1) is on an investment property, (ii) meets the requirements set
forth in the Code of Massachusetts Regulation ("CMR"), 209 CMR 53.04(1)(b), or
(iii) meets the requirements set forth in the 209 CMR 53.04(1)(c);
(zz) The origination, servicing and collection practices used with respect
to the Mortgage Loan have been in accordance with Accepted Servicing Practices,
and have been in all material respects legal and proper. With respect to escrow
deposits and Escrow Payments, all such payments are in the possession of the
Company and there exist no deficiencies in connection therewith for which
customary arrangements for repayment thereof have not been made. All Escrow
Payments have been collected in full compliance with state and federal law. No
escrow deposits or Escrow Payments or other charges or payments due the Company
have been capitalized under the Mortgage Note;
(aaa) Each Mortgage Loan is covered by a paid in full, life of loan, flood
certification contract and each of these contracts is assignable to the
Purchaser and its assigns, if applicable and required by law;
(bbb) No Mortgage Loan is a High Cost Loan or Covered Loan, as applicable
(as such terms are defined in the then current Standard & Poor's LEVELS(R)
Glossary, which is now, Version 5.6c Revised, Appendix E) and no Mortgage Loan
originated on or after October 1, 2002 through March 6, 2003 is governed by the
"Georgia Fair Lending Act.";
(ccc) The interest-only period with respect to any "interest-only" Mortgage
Loan shall be for a fixed period not to exceed one hundred twenty (120) months;
and
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(ddd) If the related Mortgage Loan is going into a REMIC Pass-Through
Transfer, the Mortgage Loan constitutes a "qualified mortgage" under Section
860G(a)(3)(A) of the Code and Treasury Regulation Section 1.860G-2(a)(1).
Section 3.03 Repurchase; Substitution.
It is understood and agreed that the representations and warranties set
forth in Sections 3.01 and 3.02 shall survive the sale of the Mortgage Loans and
delivery of the Mortgage Loan Documents to the Purchaser, or its designee, and
shall inure to the benefit of the Purchaser, notwithstanding any restrictive or
qualified endorsement on any Mortgage Note or Assignment or the examination, or
lack of examination, of any Mortgage File. Upon discovery by either the Company
or the Purchaser of a breach of any of the foregoing representations and
warranties which materially and adversely affects the value of the Mortgage
Loans or the interest of the Purchaser in any Mortgage Loan, the party
discovering such breach shall give prompt written notice to the other. With
respect to the representations and warranties contained in Section 3.02 that are
made to the best of the Company's knowledge, if it is discovered by either the
Company or the Purchaser that the substance of such representation and warranty
is inaccurate and/or incomplete and such inaccuracy and/or incompleteness
materially and adversely affects the value of the related Mortgage Loan, the
Purchaser shall be entitled to all the remedies to which it would be entitled
for a breach of representation or warranty, including without limitation, the
repurchase requirements contained herein, notwithstanding the Company's lack of
knowledge with respect to the inaccuracy and/or incompleteness at the time the
representation was made. The Company shall have a period of sixty (60) days from
the earlier of its discovery or its receipt of notice of any such breach within
which to correct or cure such breach. The Company hereby covenants and agrees
that if any such breach is not corrected or cured within such sixty day period,
the Company shall, at the Purchaser's option and not later than ninety (90) days
of its discovery or its receipt of notice of such breach, repurchase such
Mortgage Loan at the Repurchase Price or, with the Purchaser's prior consent and
at Purchaser's sole option, substitute a Mortgage Loan as provided below. In the
event that any such breach shall involve any representation or warranty set
forth in Section 3.01, and such breach is not cured within sixty (60) days of
the earlier of either discovery by or notice to the Company of such breach, all
affected Mortgage Loans shall, at the option of the Purchaser, be repurchased by
the Company at the Repurchase Price. Any such repurchase shall be accomplished
by wire transfer of immediately available funds to Purchaser in the amount of
the Repurchase Price. Notwithstanding anything to the contrary herein, within
sixty (60) days of the earlier of either discovery by or notice to the Company
of any breach of the representations or warranties pertaining to a Mortgage Loan
constituting a "high cost" loan, the Company shall repurchase such Mortgage Loan
at the Repurchase Price.
If the Company is required to repurchase any Mortgage Loan pursuant to this
Section 3.03, the Company may, with the Purchaser's prior consent and at
Purchaser's sole option, within ninety (90) days from the related Closing Date,
remove such defective Mortgage Loan from the terms of this Agreement and
substitute another mortgage loan for such defective Mortgage Loan, in lieu of
repurchasing such defective Mortgage Loan. Any substitute Mortgage Loan is
subject to Purchaser acceptability. Any substituted Loans will comply with the
representations and warranties set forth in this Agreement as of the
substitution date.
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The Company shall amend the related Mortgage Loan Schedule to reflect the
withdrawal of the removed Mortgage Loan from this Agreement and the substitution
of such substitute Mortgage Loan therefor. Upon such amendment, the Purchaser
shall review the Mortgage File delivered to it relating to the substitute
Mortgage Loan. In the event of such a substitution, accrued interest on the
substitute Mortgage Loan for the month in which the substitution occurs and any
Principal Prepayments made thereon during such month shall be the property of
the Purchaser and accrued interest for such month on the Mortgage Loan for which
the substitution is made and any Principal Prepayments made thereon during such
month shall be the property of the Company. The principal payment on a
substitute Mortgage Loan due on the Due Date in the month of substitution shall
be the property of the Company and the principal payment on the Mortgage Loan
for which the substitution is made due on such date shall be the property of the
Purchaser.
For any month in which the Company is permitted to substitute one or more
substitute Mortgage Loans, the Company will determine the amount (if any) by
which the aggregate Stated Principal Balance (after application of the principal
portion of all scheduled payments due in the month of substitution) of all the
substitute Mortgage Loans in the month of substitution is less then the
aggregate Stated Principal Balance (after application of the principal portion
of the scheduled payment due in the month of substitution) of the such replaced
Mortgage Loan. An amount equal to the aggregate of such deficiencies described
in the preceding sentence for any Remittance Date shall be deposited into the
Custodial Account by the Company on the related Determination Date in the month
following the calendar month during which the substitution occurred.
It is understood and agreed that the obligation of the Company set forth in
this Section 3.03 to cure, repurchase or substitute for a defective Mortgage
Loan, and to indemnify Purchaser pursuant to Section 8.01, constitute the sole
remedies of the Purchaser respecting a breach of the foregoing representations
and warranties. If the Company fails to repurchase or substitute for a defective
Mortgage Loan in accordance with this Section 3.03, or fails to cure a defective
Mortgage Loan to Purchaser's reasonable satisfaction in accordance with this
Section 3.03, or to indemnify Purchaser pursuant to Section 8.01, that failure
shall be an Event of Default and the Purchaser shall be entitled to pursue all
remedies available in this Agreement as a result thereof. No provision of this
paragraph shall affect the rights of the Purchaser to terminate this Agreement
for cause, as set forth in Sections 10.01 and 11.01.
Any cause of action against the Company relating to or arising out of the
breach of any representations and warranties made in Sections 3.01 and 3.02
shall accrue as to any Mortgage Loan upon (i) the earlier of discovery of such
breach by the Company or notice thereof by the Purchaser to the Company, (ii)
failure by the Company to cure such breach or repurchase such Mortgage Loan as
specified above, and (iii) demand upon the Company by the Purchaser for
compliance with this Agreement.
In the event that any Mortgage Loan is held by a REMIC, notwithstanding any
contrary provision of this Agreement, with respect to any Mortgage Loan that is
not in default or as to which no default is imminent, no substitution pursuant
to Subsection 3.03 shall be made after the applicable REMIC's "start up day" (as
defined in Section 860G(a) (9) of the Code), unless the Company has obtained an
Opinion of Counsel to the effect that such substitution will not (i) result in
the imposition of taxes on "prohibited transactions" of such REMIC (as defined
in Section 860F of the
35
Code) or otherwise subject the REMIC to tax, or (ii) cause the REMIC to fail to
qualify as a REMIC at any time.
Section 3.04 Representations and Warranties of the Purchaser.
The Purchaser represents, warrants and convenants to the Company that, as
of the related Closing Date or as of such date specifically provided herein:
(a) Luminent is a corporation, duly organized, validly existing and in good
standing under the laws of the State of Maryland and Mercury and Maia are
business trusts duly organized, validly existing and in good standing under the
laws of the State of Maryland and each is qualified to transact business in, is
in good standing under the laws of, and possesses all licenses necessary for the
conduct of its business in, each state in which any Mortgaged Property is
located or is otherwise exempt or not required under applicable law to effect
such qualification or license;
(b) The Purchaser has full power and authority to hold each Mortgage Loan,
to purchase each Mortgage Loan pursuant to this Agreement and the related Term
Sheet and to execute, deliver and perform, and to enter into and consummate all
transactions contemplated by this Agreement and the related Term Sheet and to
conduct its business as presently conducted, has duly authorized the execution,
delivery and performance of this Agreement and the related Term Sheet, has duly
executed and delivered this Agreement and the related Term Sheet;
(c) None of the execution and delivery of this Agreement and the related
Term Sheet, the purchase of the Mortgage Loans, the consummation of the
transactions contemplated hereby, or the fulfillment of or compliance with the
terms and conditions of this Agreement and the related Term Sheet will conflict
with any of the terms, conditions or provisions of the Purchaser's charter,
organizational documents or by-laws or materially conflict with or result in a
material breach of any of the terms, conditions or provisions of any legal
restriction or any agreement or instrument to which the Purchaser is now a party
or by which it is bound, or constitute a default or result in an acceleration
under any of the foregoing, or result in the material violation of any law,
rule, regulation, order, judgment or decree to which the Purchaser or its
property is subject;
(d) There is no litigation pending or to the best of the Purchaser's
knowledge, threatened with respect to the Purchaser which is reasonably likely
to have a material adverse effect on the purchase of the related Mortgage Loans,
the execution, delivery or enforceability of this Agreement and the related Term
Sheet, or which is reasonably likely to have a material adverse effect on the
financial condition of the Purchaser;
(e) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by the Purchaser of or compliance by the Purchaser with this
Agreement and the related Term Sheet, the purchase of the Mortgage Loans or the
consummation of the transactions contemplated by this Agreement and the related
Term Sheet except for consents, approvals, authorizations and orders which have
been obtained;
36
(f) The consummation of the transactions contemplated by this Agreement and
the related Term Sheet is in the ordinary course of business of the Purchaser;
(g) The Purchaser will treat the purchase of the Mortgage Loans from the
Company as a purchase for reporting, tax and accounting purposes; and
(h) The Purchaser does not believe, nor does it have any cause or reason to
believe, that it cannot perform each and every of its covenants contained in
this Agreement and the related Term Sheet.
The Purchaser shall indemnify the Company and hold it harmless against any
claims, proceedings, losses, damages, penalties, fines, forfeitures, reasonable
and necessary legal fees and related costs, judgments, and other costs and
expenses resulting from a breach by the Purchaser of the representations and
warranties contained in this Section 3.04. It is understood and agreed that the
obligations of the Purchaser set forth in this Section 3.04 to indemnify the
Company as provided herein constitute the sole remedies of the Company
respecting a breach of the foregoing representations and warranties.
37
ARTICLE IV
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 4.01 Company to Act as Servicer.
The Company, as independent contract servicer, shall service and administer
the Mortgage Loans in accordance with this Agreement and the related Term Sheet
(including, without limitation, the provisions set forth in the Regulation AB
Compliance Addendum attached as Exhibit F hereto) and with Accepted Servicing
Practices, and shall have full power and authority, acting alone, to do or cause
to be done any and all things in connection with such servicing and
administration which the Company may deem necessary or desirable and consistent
with the terms of this Agreement and the related Term Sheet and with Accepted
Servicing Practices and exercise the same care that it customarily employs for
its own account. Except as set forth in this Agreement and the related Term
Sheet, the Company shall service the Mortgage Loans in strict compliance with
the servicing provisions of the ▇▇▇▇▇▇ ▇▇▇ Guides (special servicing option),
which include, but are not limited to, provisions regarding the liquidation of
Mortgage Loans, the collection of Mortgage Loan payments, the payment of taxes,
insurance and other charges, the maintenance of hazard insurance with a
Qualified Insurer, the maintenance of mortgage impairment insurance, the
maintenance of fidelity bond and errors and omissions insurance, inspections,
the restoration of Mortgaged Property, the maintenance of Primary Mortgage
Insurance Policies and Lender Primary Mortgage Insurance Policies, insurance
claims, the title, management and disposition of REO Property, permitted
withdrawals with respect to REO Property, liquidation reports, and reports of
foreclosures and abandonments of Mortgaged Property, the transfer of Mortgaged
Property, the release of Mortgage Files, annual statements, and examination of
records and facilities. In the event of any conflict, inconsistency or
discrepancy between any of the servicing provisions of this Agreement and the
related Term Sheet and any of the servicing provisions of the ▇▇▇▇▇▇ Mae Guides,
the provisions of this Agreement and the related Term Sheet shall control and be
binding upon the Purchaser and the Company.
Consistent with the terms of this Agreement and the related Term Sheet, the
Company may waive, modify or vary any term of any Mortgage Loan or consent to
the postponement of any such term or in any manner grant indulgence to any
Mortgagor if in the Company's reasonable and prudent determination such waiver,
modification, postponement or indulgence is not materially adverse to the
Purchaser, provided, however, that unless the Company has obtained the prior
written consent of the Purchaser, the Company shall not permit any modification
with respect to any Mortgage Loan that would change the Mortgage Interest Rate,
defer for more than ninety days or forgive any payment of principal or interest,
reduce or increase the outstanding principal balance (except for actual payments
of principal) or change the final maturity date on such Mortgage Loan. In the
event of any such modification which has been agreed to in writing by the
Purchaser and which permits the deferral of interest or principal payments on
any Mortgage Loan, the Company shall, on the Business Day immediately preceding
the Remittance Date in any month in which any such principal or interest payment
has been deferred, deposit in the Custodial Account from its own funds, in
accordance with Section 4.04, the difference between (a) such month's principal
and one month's interest at the Mortgage Loan Remittance Rate on the unpaid
principal balance of such Mortgage Loan and (b) the amount paid by the
Mortgagor. The Company shall be entitled to
38
reimbursement for such advances to the same extent as for all other advances
pursuant to Section 4.05. Without limiting the generality of the foregoing, the
Company shall continue, and is hereby authorized and empowered, to prepare,
execute and deliver, all instruments of satisfaction or cancellation, or of
partial or full release, discharge and all other comparable instruments, with
respect to the Mortgage Loans and with respect to the Mortgaged Properties.
Notwithstanding anything herein to the contrary, the Company may not enter into
a forbearance agreement or similar arrangement with respect to any Mortgage Loan
which runs more than 180 days after the first delinquent Due Date. Any such
agreement shall be approved by Purchaser and, if required, by the Primary
Mortgage Insurance Policy insurer and Lender Primary Mortgage Insurance Policy
insurer, if required.
Notwithstanding anything in this Agreement to the contrary, if any Mortgage
Loan becomes subject to a Pass-Through Transfer, the Company (a) with respect to
such Mortgage Loan, shall not permit any modification with respect to such
Mortgage Loan that would change the Mortgage Interest Rate and (b) shall not
(unless the Mortgagor is in default with respect to such Mortgage Loan or such
default is, in the judgment of the Company, reasonably foreseeable) make or
permit any modification, waiver or amendment of any term of such Mortgage Loan
that would both (i) effect an exchange or reissuance of such Mortgage Loan under
Section 1001 of the Code (or Treasury regulations promulgated thereunder) and
(ii) cause any REMIC to fail to qualify as a REMIC under the Code or the
imposition of any tax on "prohibited transactions" or "contributions" after the
startup date under the REMIC Provisions.
Prior to taking any action with respect to the Mortgage Loans subject to a
Pass-Through Transfer, which is not contemplated under the terms of this
Agreement, the Company will obtain an Opinion of Counsel acceptable to the
trustee in such Pass-Through Transfer with respect to whether such action could
result in the imposition of a tax upon any REMIC (including but not limited to
the tax on prohibited transactions as defined in Section 860F(a)(2) of the Code
and the tax on contributions to a REMIC set forth in Section 860G(d) of the
Code)(either such event, an "Adverse REMIC Event"), and the Company shall not
take any such actions as to which it has been advised that an Adverse REMIC
Event could occur.
The Company shall not permit the creation of any "interests" (within the
meaning of Section 860G of the Code) in any REMIC. The Company shall not enter
into any arrangement by which a REMIC will receive a fee or other compensation
for services nor permit a REMIC to receive any income from assets other than
"qualified mortgages" as defined in Section 860G(a)(3) of the Code or "permitted
investments" as defined in Section 860G(a)(5) of the Code.
In servicing and administering the Mortgage Loans, the Company shall employ
Accepted Servicing Practices, giving due consideration to the Purchaser's
reliance on the Company. Unless a different time period is stated in this
Agreement or the related Term Sheet, Purchaser shall be deemed to have given
consent in connection with a particular matter if Purchaser does not
affirmatively grant or deny consent within five (5) Business Days from the date
Purchaser receives a second written request for consent for such matter from
Company as servicer.
The Mortgage Loans may be subserviced by a Subservicer on behalf of the
Company provided that the Subservicer is an entity that engages in the business
of servicing loans, and in
39
either case shall be authorized to transact business, and licensed to service
mortgage loans, in the state or states where the related Mortgaged Properties it
is to service are situated, if and to the extent required by applicable law to
enable the Subservicer to perform its obligations hereunder and under the
Subservicing Agreement, and in either case shall be a ▇▇▇▇▇▇▇ Mac or ▇▇▇▇▇▇ Mae
approved mortgage servicer in good standing, and no event has occurred,
including but not limited to a change in insurance coverage, which would make it
unable to comply with the eligibility requirements for lenders imposed by ▇▇▇▇▇▇
▇▇▇ or for seller/servicers imposed by ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac, or which would
require notification to ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac. In addition, each Subservicer
will obtain and preserve its qualifications to do business as a foreign
corporation and its licenses to service mortgage loans, in each jurisdiction in
which such qualifications and/or licenses are or shall be necessary to protect
the validity and enforceability of this Agreement, or any of the Mortgage Loans
and to perform or cause to be performed its duties under the related
Subservicing Agreement. The Company may perform any of its servicing
responsibilities hereunder or may cause the Subservicer to perform any such
servicing responsibilities on its behalf, but the use by the Company of the
Subservicer shall not release the Company from any of its obligations hereunder
and the Company shall remain responsible hereunder for all acts and omissions of
the Subservicer as fully as if such acts and omissions were those of the
Company. The Company shall pay all fees and expenses of the Subservicer from its
own funds, and the Subservicer's fee shall not exceed the Servicing Fee. Company
shall notify Purchaser promptly in writing upon the appointment of any
Subservicer.
At the cost and expense of the Company, without any right of reimbursement
from the Custodial Account, the Company shall be entitled to terminate the
rights and responsibilities of the Subservicer and arrange for any servicing
responsibilities to be performed by a successor subservicer meeting the
requirements in the preceding paragraph, provided, however, that nothing
contained herein shall be deemed to prevent or prohibit the Company, at the
Company's option, from electing to service the related Mortgage Loans itself. In
the event that the Company's responsibilities and duties under this Agreement
are terminated pursuant to Section 4.13, 8.04, 9.01 or 10.01 and if requested to
do so by the Purchaser, the Company shall at its own cost and expense terminate
the rights and responsibilities of the Subservicer effective as of the date of
termination of the Company. The Company shall pay all fees, expenses or
penalties necessary in order to terminate the rights and responsibilities of the
Subservicer from the Company's own funds without reimbursement from the
Purchaser.
Notwithstanding any of the provisions of this Agreement relating to
agreements or arrangements between the Company and the Subservicer or any
reference herein to actions taken through the Subservicer or otherwise, the
Company shall not be relieved of its obligations to the Purchaser and shall be
obligated to the same extent and under the same terms and conditions as if it
alone were servicing and administering the Mortgage Loans. The Company shall be
entitled to enter into an agreement with the Subservicer for indemnification of
the Company by the Subservicer and nothing contained in this Agreement shall be
deemed to limit or modify such indemnification. The Company will indemnify and
hold Purchaser harmless from any loss, liability or expense arising out of its
use of a Subservicer to perform any of its servicing duties, responsibilities
and obligations hereunder.
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Any Subservicing Agreement and any other transactions or services relating
to the Mortgage Loans involving the Subservicer shall be deemed to be between
the Subservicer and Company alone, and the Purchaser shall have no obligations,
duties or liabilities with respect to the Subservicer including no obligation,
duty or liability of Purchaser to pay the Subservicer's fees and expenses. For
purposes of distributions and advances by the Company pursuant to this
Agreement, the Company shall be deemed to have received a payment on a Mortgage
Loan when the Subservicer has received such payment.
Section 4.02 Collection of Mortgage Loan Payments.
Continuously from the date hereof until the date each Mortgage Loan ceases
to be subject to this Agreement, the Company will proceed diligently to collect
all payments due under each Mortgage Loan when the same shall become due and
payable and shall, to the extent such procedures shall be consistent with this
Agreement, Accepted Servicing Practices, and the terms and provisions of any
related Primary Mortgage Insurance Policy and Lender Primary Mortgage Insurance
Policy, follow such collection procedures as it follows with respect to mortgage
loans comparable to the Mortgage Loans and held for its own account. Further,
the Company will take special care in ascertaining and estimating annual escrow
payments, and all other charges that, as provided in the Mortgage, will become
due and payable, so that the installments payable by the Mortgagors will be
sufficient to pay such charges as and when they become due and payable.
The Company shall not waive the collection of any otherwise applicable
prepayment penalty or reduce the amount thereof actually collected, unless: (i)
the enforceability thereof will have been limited by bankruptcy, insolvency,
moratorium, receivership and other similar laws relating to creditors' rights
generally, (ii) the enforcement thereof is illegal, or any local, state or
federal agency has threatened legal action if the prepayment penalty is
enforced, (iii) the collectability thereof will have been limited due to
acceleration in connection with a foreclosure or other involuntary payment or
(iv) such waiver is standard and customary in servicing similar mortgage loans
and relates to a default or a reasonably foreseeable default and would, in the
reasonable judgment of the Company, maximize recovery of total proceeds taking
into account the value of such prepayment penalty and the related mortgage loan.
In no event will the Company waive a prepayment penalty in connection with a
refinancing of a Mortgage Loan that is not related to a default or a reasonably
foreseeable default.
Section 4.03 Realization Upon Defaulted Mortgage.
The Company shall use its best efforts, consistent with the procedures that
the Company would use in servicing loans for its own account, consistent with
Accepted Servicing Practices, any Primary Mortgage Insurance Policies and Lender
Primary Mortgage Insurance Policies and the best interest of Purchaser, 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 pursuant to Section 4.01. Foreclosure or comparable proceedings shall
be initiated within ninety (90) days of default for Mortgaged Properties for
which no satisfactory arrangements can be made for collection of delinquent
payments, subject to state and federal law and regulation. The Company shall use
its best efforts to realize upon defaulted Mortgage Loans in such manner as will
maximize the receipt of
41
principal and interest by the Purchaser, taking into account, among other
things, the timing of foreclosure proceedings. The foregoing is subject to the
provisions that, in any case in which a Mortgaged Property shall have suffered
damage, the Company shall not be required to expend its own funds toward the
restoration of such property unless it shall determine in its discretion (i)
that such restoration will increase the proceeds of liquidation of the related
Mortgage Loan to the Purchaser after reimbursement to itself for such expenses,
and (ii) that such expenses will be recoverable by the Company through Insurance
Proceeds or Liquidation Proceeds from the related Mortgaged Property, as
contemplated in Section 4.05. Company shall obtain prior approval of Purchaser
as to repair or restoration expenses in excess of ten thousand dollars
($10,000). The Company shall notify the Purchaser in writing of the commencement
of foreclosure proceedings and not less than 5 days prior to the acceptance or
rejection of any offer of reinstatement. The Company shall be responsible for
all costs and expenses incurred by it in any such proceedings or functions;
provided, however, that it shall be entitled to reimbursement thereof from the
related property, as contemplated in Section 4.05. Notwithstanding anything to
the contrary contained herein, in connection with a foreclosure or acceptance of
a deed in lieu of foreclosure, in the event the Company has reasonable cause to
believe that a Mortgaged Property is contaminated by hazardous or toxic
substances or wastes, or if the Purchaser otherwise requests an environmental
inspection or review of such Mortgaged Property, such an inspection or review is
to be conducted by a qualified inspector at the Purchaser's expense. Upon
completion of the inspection, the Company shall promptly provide the Purchaser
with a written report of the environmental inspection. After reviewing the
environmental inspection report, the Purchaser shall determine how the Company
shall proceed with respect to the Mortgaged Property.
Notwithstanding anything to the contrary contained herein, the Purchaser
may, at the Purchaser's sole option, terminate the Company as servicer of any
Mortgage Loan which becomes ninety (90) days or greater delinquent in payment of
a scheduled Monthly Payment, without payment of any termination fee with respect
thereto, provided that the Company shall on the date said termination takes
effect be reimbursed for any unreimbursed Monthly Advances of the Company's
funds made pursuant to Section 5.03 and any unreimbursed Servicing Advances and
Servicing Fees in each case relating to the Mortgage Loan underlying such
delinquent Mortgage Loan notwithstanding anything to the contrary set forth in
Section 4.05. In the event of any such termination, the provisions of Section
11.01 hereof shall apply to said termination and the transfer of servicing
responsibilities with respect to such delinquent Mortgage Loan to the Purchaser
or its designee.
In the event that a Mortgage Loan becomes part of a REMIC, and becomes REO
Property, such property shall be disposed of by the Company, with the consent of
Purchaser as required pursuant to this Agreement, before the close of the third
taxable year following the taxable year in which the Mortgage Loan became an REO
Property, unless the Company provides to the trustee under such REMIC an opinion
of counsel to the effect that the holding of such REO Property subsequent to the
close of the third taxable year following the taxable year in which the Mortgage
Loan became an REO Property, will not result in the imposition of taxes on
"prohibited transactions" as defined in Section 860F of the Code, or cause the
transaction to fail to qualify as a REMIC at any time that certificates are
outstanding. Company shall manage, conserve, protect and operate each such REO
Property for the certificateholders solely for the purpose of its prompt
disposition and sale in a manner which does not cause such property to fail to
qualify as "foreclosure property" within
42
the meaning of Section 860F(a)(2)(E) of the Code, or any "net income from
foreclosure property" which is subject to taxation under the REMIC provisions of
the Code. Pursuant to its efforts to sell such property, the Company shall
either itself or through an agent selected by Company, protect and conserve such
property in the same manner and to such an extent as is customary in the
locality where such property is located. Additionally, Company shall perform the
tax withholding and reporting related to Sections 1445 and 6050J of the Code.
Section 4.04 Establishment of Custodial Accounts; Deposits in Custodial
Accounts.
The Company shall segregate and hold all funds collected and received
pursuant to each Mortgage Loan separate and apart from any of its own funds and
general assets and shall establish and maintain one or more Custodial Accounts.
The Custodial Account shall be an Eligible Account. Funds shall be deposited in
the Custodial Account within 24 hours of receipt, and shall at all times be
insured by the FDIC up to the FDIC insurance limits, or must be invested in
Permitted Investments for the benefit of the Purchaser. Funds deposited in the
Custodial Account may be drawn on by the Company in accordance with Section
4.05. The creation of any Custodial Account shall be evidenced by a letter
agreement in the form shown in Exhibit B hereto. The original of such letter
agreement shall be furnished to the Purchaser on the Closing Date, and upon the
request of any subsequent Purchaser.
The Company shall deposit in the Custodial Account on a daily basis, and
retain therein the following payments and collections received or made by it
subsequent to the Cut-off Date, or received by it prior to the Cut-off Date but
allocable to a period subsequent thereto, other than in respect of principal and
interest on the Mortgage Loans due on or before the Cut-off Date:
(i) all payments on account of principal, including Principal Prepayments,
on the Mortgage Loans;
(ii) all payments on account of interest on the Mortgage Loans adjusted to
the Mortgage Loan Remittance Rate;
(iii) all Liquidation Proceeds;
(iv) any amounts required to be deposited by the Company in connection with
any REO Property pursuant to Section 4.13 and in connection therewith, the
Company shall provide the Purchaser with written detail itemizing all of such
amounts;
(v) all Insurance Proceeds including amounts required to be deposited
pursuant to Sections 4.08, 4.10 and 4.11, other than proceeds to be held in the
Escrow Account and applied to the restoration or repair of the Mortgaged
Property or released to the Mortgagor in accordance with Accepted Servicing
Practices, the Mortgage Loan Documents or applicable law;
(vi) all Condemnation Proceeds affecting any Mortgaged Property which are
not released to the Mortgagor in accordance with Accepted Servicing Practices,
the loan documents or applicable law;
43
(vii) any Monthly Advances;
(viii) with respect to each full or partial Principal Prepayment, any
Prepayment Interest Shortfalls, to the extent of the Company's aggregate
Servicing Fee received with respect to the related Prepayment Period;
(ix) any amounts required to be deposited by the Company pursuant to
Section 4.10 in connection with the deductible clause in any blanket hazard
insurance policy, such deposit shall be made from the Company's own funds,
without reimbursement therefor; and
(x) any amounts required to be deposited in the Custodial Account pursuant
to Section 4.01, 4.13 or 6.02.
The foregoing requirements for deposit in the Custodial Account shall be
exclusive, it being understood and agreed that, without limiting the generality
of the foregoing, payments in the nature of late payment charges and assumption
fees, to the extent permitted by Section 6.01, need not be deposited by the
Company in the Custodial Account. Any interest paid on funds deposited in the
Custodial Account by the depository institution shall accrue to the benefit of
the Company and the Company shall be entitled to retain and withdraw such
interest from the Custodial Account pursuant to Section 4.05 (iv). The Purchaser
shall not be responsible for any losses suffered with respect to investment of
funds in the Custodial Account.
Section 4.05 Permitted Withdrawals From the Custodial Account.
The Company may, from time to time, withdraw from the Custodial Account for
the following purposes:
(i) to make payments to the Purchaser in the amounts and in the manner
provided for in Section 5.01;
(ii) to reimburse itself for Monthly Advances, the Company's right to
reimburse itself pursuant to this subclause (ii) being limited to amounts
received on the related Mortgage Loan which represent late collections (net of
the related Servicing Fees) of principal and/or interest respecting which any
such advance was made, it being understood that, in the case of such
reimbursement, the Company's right thereto shall be prior to the rights of the
Purchaser, except that, where the Company is required to repurchase a Mortgage
Loan, pursuant to Section 3.03, the Company's right to such reimbursement shall
be subsequent to the payment to the Purchaser of the Repurchase Price pursuant
to such Section and all other amounts required to be paid to the Purchaser with
respect to such Mortgage Loan;
(iii) to reimburse itself for unreimbursed Servicing Advances and any
unpaid Servicing Fees(or REO administration fees described in Section 4.13), the
Company's right to reimburse itself pursuant to this subclause (iii) with
respect to any Mortgage Loan being limited to related proceeds from Liquidation
Proceeds, Condemnation Proceeds and Insurance Proceeds in accordance with the
44
relevant provisions of the ▇▇▇▇▇▇ Mae Guides or as otherwise set forth in this
Agreement; any recovery shall be made upon liquidation of the REO Property;
(iv) to pay to itself as part of its servicing compensation (a) any
interest earned on funds in the Custodial Account (all such interest to be
withdrawn monthly not later than each Remittance Date), and (b) the Servicing
Fee from that portion of any payment or recovery as to interest with respect to
a particular Mortgage Loan;
(v) to pay to itself with respect to each Mortgage Loan that has been
repurchased pursuant to Section 3.03 all amounts received thereon and not
distributed as of the date on which the related repurchase price is determined;
(vi) to transfer funds to another Eligible Account in accordance with
Section 4.09 hereof;
(vii) to remove funds inadvertently placed in the Custodial Account by the
Company;
(vi) to clear and terminate the Custodial Account upon the termination of
this Agreement; and
(vii) to reimburse itself for Nonrecoverable Advances to the extent not
reimbursed pursuant to clause (ii) or clause (iii).
Section 4.06 Establishment of Escrow Accounts; Deposits in Escrow Accounts.
The Company shall segregate and hold all funds collected and received
pursuant to each Mortgage Loan which constitute Escrow Payments separate and
apart from any of its own funds and general assets and shall establish and
maintain one or more Escrow Accounts. The Escrow Account shall be an Eligible
Account. Funds deposited in each Escrow Account shall at all times be insured in
a manner to provide maximum insurance under the insurance limitations of the
FDIC, or must be invested in Permitted Investments. Funds deposited in the
Escrow Account may be drawn on by the Company in accordance with Section 4.07.
The creation of any Escrow Account shall be evidenced by a letter agreement in
the form shown in Exhibit C. The original of such letter agreement shall be
furnished to the Purchaser on the Closing Date, and upon request to any
subsequent purchaser.
The Company shall deposit in the Escrow Account or Accounts on a daily
basis, and retain therein:
(i) all Escrow Payments collected on account of the Mortgage Loans, for the
purpose of effecting timely payment of any such items as required under the
terms of this Agreement;
(ii) all Insurance Proceeds which are to be applied to the restoration or
repair of any Mortgaged Property; and
(iii) all Servicing Advances for Mortgagors whose Escrow Payments are
insufficient to cover escrow disbursements.
45
The Company shall make withdrawals from the Escrow Account only to
effect such payments as are required under this Agreement, and for such other
purposes as shall be as set forth or in accordance with Section 4.07. The
Company shall be entitled to retain any interest paid on funds deposited in the
Escrow Account by the depository institution other than interest on escrowed
funds required by law to be paid to the Mortgagor and, to the extent required by
law, the Company shall pay interest on escrowed funds to the Mortgagor
notwithstanding that the Escrow Account is non-interest bearing or that interest
paid thereon is insufficient for such purposes. The Purchaser shall not be
responsible for any losses suffered with respect to investment of funds in the
Escrow Account.
Section 4.07 Permitted Withdrawals From Escrow Account.
Withdrawals from the Escrow Account may be made by Company only:
(i) to effect timely payments of ground rents, taxes, assessments, water
rates, Primary Mortgage Insurance Policy premiums, if applicable, fire and
hazard insurance premiums, condominium assessments and comparable items;
(ii) to reimburse Company for any Servicing Advance made by Company with
respect to a related Mortgage Loan but only from amounts received on the related
Mortgage Loan which represent late payments or collections of Escrow Payments
thereunder;
(iii) to refund to the Mortgagor any funds as may be determined to be
overages;
(iv) for transfer to the Custodial Account in accordance with the terms of
this Agreement;
(v) for application to restoration or repair of the Mortgaged Property;
(vi) to pay to the Company, or to the Mortgagor to the extent required by
law, any interest paid on the funds deposited in the Escrow Account;
(vii) to clear and terminate the Escrow Account on the termination of this
Agreement. As part of its servicing duties, the Company shall pay to the
Mortgagors interest on funds in Escrow Account, to the extent required by law,
and to the extent that interest earned on funds in the Escrow Account is
insufficient, shall pay such interest from its own funds, without any
reimbursement therefor; and
(viii) to pay to the Mortgagors or other parties Insurance Proceeds
deposited in accordance with Section 4.06.
Section 4.08 Payment of Taxes, Insurance and Other Charges; Maintenance of
Primary Mortgage Insurance Policies; Collections Thereunder.
With respect to each Mortgage Loan, the Company shall maintain accurate
records reflecting the status of ground rents, taxes, assessments, water rates
and other charges which are or may
46
become a lien upon the Mortgaged Property and the status of primary mortgage
insurance premiums and fire and hazard insurance coverage and shall obtain, from
time to time, all bills for the payment of such charges, including renewal
premiums and shall effect payment thereof prior to the applicable penalty or
termination date and at a time appropriate for securing maximum discounts
allowable, employing for such purpose deposits of the Mortgagor in the Escrow
Account which shall have been estimated and accumulated by the Company in
amounts sufficient for such purposes, as allowed under the terms of the Mortgage
or applicable law. To the extent that the Mortgage does not provide for Escrow
Payments, the Company shall determine that any such payments are made by the
Mortgagor at the time they first become due. The Company assumes full
responsibility for the timely payment of all such bills and shall effect timely
payments of all such bills irrespective of the Mortgagor's faithful performance
in the payment of same or the making of the Escrow Payments and shall make
advances from its own funds to effect such payments.
The Company will maintain in full force and effect Primary Mortgage
Insurance Policies or Lender Primary Mortgage Insurance Policies issued by a
Qualified Insurer with respect to each Mortgage Loan for which such coverage is
herein required. Such coverage will be terminated only with the approval of
Purchaser, or as required by applicable law or regulation. The Company will not
cancel or refuse to renew any Primary Mortgage Insurance Policy or Lender
Primary Mortgage Insurance Policy in effect on the Closing Date that is required
to be kept in force under this Agreement unless a replacement Primary Mortgage
Insurance Policy or Lender Primary Mortgage Insurance Policy for such canceled
or nonrenewed policy is obtained from and maintained with a Qualified Insurer.
The Company shall not take any action which would result in non-coverage under
any applicable Primary Mortgage Insurance Policy or Lender Primary Mortgage
Insurance Policy of any loss which, but for the actions of the Company would
have been covered thereunder. In connection with any assumption or substitution
agreement entered into or to be entered into pursuant to Section 6.01, the
Company shall promptly notify the insurer under the related Primary Mortgage
Insurance Policy or Lender Primary Mortgage Insurance Policy, if any, of such
assumption or substitution of liability in accordance with the terms of such
policy and shall take all actions which may be required by such insurer as a
condition to the continuation of coverage under the Primary Mortgage Insurance
Policy or Lender Primary Mortgage Insurance Policy. If such Primary Mortgage
Insurance Policy or Lender Primary Mortgage Insurance Policy is terminated as a
result of such assumption or substitution of liability, the Company shall obtain
a replacement Primary Mortgage Insurance Policy or Lender Primary Mortgage
Insurance Policy as provided above.
In connection with its activities as servicer, the Company agrees to
prepare and present, on behalf of itself and the Purchaser, claims to the
insurer under any Private Mortgage Insurance Policy in a timely fashion in
accordance with the terms of such Primary Mortgage Insurance Policy or Lender
Primary Mortgage Insurance Policy and, in this regard, to take such action as
shall be necessary to permit recovery under any Primary Mortgage Insurance
Policy or Lender Primary Mortgage Insurance Policy respecting a defaulted
Mortgage Loan. Pursuant to Section 4.04, any amounts collected by the Company
under any Primary Mortgage Insurance Policy or Lender Primary Mortgage Insurance
Policy shall be deposited in the Custodial Account, subject to withdrawal
pursuant to Section 4.05.
Section 4.09 Transfer of Accounts.
47
The Company may transfer the Custodial Account or the Escrow Account to a
different Eligible Account from time to time. Such transfer shall be made only
upon obtaining the prior written consent of the Purchaser, which consent will
not be unreasonably withheld.
Section 4.10 Maintenance of Hazard Insurance.
The Company shall cause to be maintained for each Mortgage Loan fire and
hazard insurance with extended coverage as is acceptable to ▇▇▇▇▇▇ ▇▇▇ or
▇▇▇▇▇▇▇ Mac and customary in the area where the Mortgaged Property is located in
an amount which is equal to the lesser of (i) the maximum insurable value of the
improvements securing such Mortgage Loan or (ii) the greater of (a) the
outstanding principal balance of the Mortgage Loan, (plus, if the Mortgage Loan
is an Option ARM Mortgage Loan which provides for Negative Amortization, the
maximum amount of Negative Amortization in accordance with the Mortgage), and
(b) an amount such that the proceeds thereof shall be sufficient to prevent the
Mortgagor and/or the mortgagee from becoming a co-insurer. If required by the
Flood Disaster Protection Act of 1973, as amended, each Mortgage Loan shall be
covered by a flood insurance policy meeting the requirements of the current
guidelines of the Federal Insurance Administration in effect with an insurance
carrier acceptable to ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac, in an amount representing
coverage not less than the least of (i) the outstanding principal balance of the
Mortgage Loan (plus, if the Mortgage Loan is an Option ARM Mortgage Loan which
provides for Negative Amortization, the maximum amount of Negative Amortization
in accordance with the Mortgage), (ii) the maximum insurable value of the
improvements securing such Mortgage Loan or (iii) the maximum amount of
insurance which is available under the Flood Disaster Protection Act of 1973, as
amended. If at any time during the term of the Mortgage Loan, the Company
determines in accordance with applicable law and pursuant to the ▇▇▇▇▇▇ Mae
Guides that a Mortgaged Property is located in a special flood hazard area and
is not covered by flood insurance or is covered in an amount less than the
amount required by the Flood Disaster Protection Act of 1973, as amended, the
Company shall notify the related Mortgagor that the Mortgagor must obtain such
flood insurance coverage, and if said Mortgagor fails to obtain the required
flood insurance coverage within forty-five (45) days after such notification,
the Company shall immediately force place the required flood insurance on the
Mortgagor's behalf. The Company shall also maintain on each REO Property, fire
and hazard insurance with extended coverage in an amount which is at least equal
to the maximum insurable value of the improvements which are a part of such
property, and, to the extent required and available under the Flood Disaster
Protection Act of 1973, as amended, flood insurance in an amount as provided
above. Any amounts collected by the Company under any such policies other than
amounts to be deposited in the Escrow Account and applied to the restoration or
repair of the Mortgaged Property or REO Property, or released to the Mortgagor
in accordance with Accepted Servicing Practices, shall be deposited in the
Custodial Account, subject to withdrawal pursuant to Section 4.05. It is
understood and agreed that no other additional insurance need be required by the
Company of the Mortgagor or maintained on property acquired in respect of the
Mortgage Loan, other than pursuant to this Agreement, the ▇▇▇▇▇▇ ▇▇▇ Guides or
such applicable state or federal laws and regulations as shall at any time be in
force and as shall require such additional insurance. All such policies shall be
endorsed with standard mortgagee clauses with loss payable to the Company and
its successors and/or assigns and shall provide for at least thirty days prior
written notice of any cancellation, reduction in the amount or material change
in coverage to the Company. The Company shall not interfere with the Mortgagor's
freedom of
48
choice in selecting either his insurance carrier or agent, provided, however,
that the Company shall not accept any such insurance policies from insurance
companies unless such companies are Qualified Insurers.
Section 4.11 Maintenance of Mortgage Impairment Insurance Policy.
In the event that the Company shall obtain and maintain a blanket policy
issued by a Qualified Insurer insuring against hazard losses on all of the
Mortgage Loans, then, to the extent such policy provides coverage in an amount
equal to the amount required pursuant to Section 4.10 and otherwise complies
with all other requirements of Section 4.10, it shall conclusively be deemed to
have satisfied its obligations as set forth in Section 4.10, it being understood
and agreed that such policy may contain a deductible clause, in which case the
Company shall, in the event that there shall not have been maintained on the
related Mortgaged Property or REO Property a policy complying with Section 4.10,
and there shall have been a loss which would have been covered by such policy,
deposit in the Custodial Account the amount not otherwise payable under the
blanket policy because of such deductible clause. In connection with its
activities as servicer of the Mortgage Loans, the Company agrees to prepare and
present, on behalf of the Purchaser, claims under any such blanket policy in a
timely fashion in accordance with the terms of such policy. Upon request of the
Purchaser, the Company shall cause to be delivered to the Purchaser a certified
true copy of such policy and shall use its best efforts to obtain a statement
from the insurer thereunder that such policy shall in no event be terminated or
materially modified without thirty (30) days' prior written notice to the
Purchaser.
Section 4.12 Fidelity Bond, Errors and Omissions Insurance.
The Company shall maintain, at its own expense, a blanket fidelity bond and
an errors and omissions insurance policy, with broad coverage with responsible
companies on all officers, employees or other persons acting in any capacity
with regard to the Mortgage Loan to handle funds, money, documents and papers
relating to the Mortgage Loan. The Fidelity Bond shall be in the form of the
Mortgage Banker's Blanket Bond and shall protect and insure the Company against
losses, including forgery, theft, embezzlement and fraud of such persons. The
errors and omissions insurance shall protect and insure the Company against
losses arising out of errors and omissions and negligent acts of such persons.
Such errors and omissions insurance shall also protect and insure the Company
against losses in connection with the failure to maintain any insurance policies
required pursuant to this Agreement and the release or satisfaction of a
Mortgage Loan without having obtained payment in full of the indebtedness
secured thereby. No provision of this Section 4.12 requiring the Fidelity Bond
or errors and omissions insurance shall diminish or relieve the Company from its
duties and obligations as set forth in this Agreement. The minimum coverage
under any such bond and insurance policy shall be at least equal to the
corresponding amounts required by ▇▇▇▇▇▇ Mae in the ▇▇▇▇▇▇ ▇▇▇ Guides. Upon
request by the Purchaser, the Company shall deliver to the Purchaser a
certificate from the surety and the insurer as to the existence of the Fidelity
Bond and errors and omissions insurance policy and shall obtain a statement from
the surety and the insurer that such Fidelity Bond or insurance policy shall in
no event be terminated or materially modified without thirty (30) days' prior
written notice to the Purchaser. The Company shall notify the Purchaser within
five (5) business days of receipt of notice that such Fidelity Bond or insurance
policy will be, or has been, materially modified or terminated. The Purchaser
(or any
49
party having the status of Purchaser hereunder) and any subsidiary thereof and
their successors or assigns as their interests may appear must be named as loss
payees on the Fidelity Bond and as additional insured on the errors and
omissions policy. Upon request by Purchaser, Company shall provide Purchaser
with an insurance certificate certifying coverage under this Section 4.12, and
will provide an update to such certificate upon request, or upon renewal or
material modification of coverage.
Section 4.13 Title, Management and Disposition of REO Property.
In the event that title to the Mortgaged Property is acquired in
foreclosure or by deed in lieu of foreclosure, the deed or certificate of sale
shall be taken in the name of the Purchaser or its designee, or in the event the
Purchaser or its designee is not authorized or permitted to hold title to real
property in the state where the REO Property is located, or would be adversely
affected under the "doing business" or tax laws of such state by so holding
title, the deed or certificate of sale shall be taken in the name of such Person
or Persons as shall be consistent with an opinion of counsel obtained by the
Company from an attorney duly licensed to practice law in the state where the
REO Property is located. Any Person or Persons holding such title other than the
Purchaser shall acknowledge in writing that such title is being held as nominee
for the benefit of the Purchaser.
The Company shall notify the Purchaser in accordance with the ▇▇▇▇▇▇ Mae
Guides of each acquisition of REO Property upon such acquisition (and, in any
event, shall provide notice of the consummation of any foreclosure sale within
three (3) Business Days of the date Company receives notice of such
consummation), together with a copy of the drive by appraisal or brokers price
opinion of the Mortgaged Property obtained in connection with such acquisition,
and thereafter assume the responsibility for marketing such REO property in
accordance with Accepted Servicing Practices. Thereafter, the Company shall
continue to provide certain administrative services to the Purchaser relating to
such REO Property as set forth in this Section 4.13. No Servicing Fee shall be
assessed or otherwise accrue on any REO Property from and after the date on
which it becomes an REO Property.
The Company shall, either itself or through an agent selected by the
Company, and in accordance with the ▇▇▇▇▇▇ ▇▇▇ Guides manage, conserve, protect
and operate each REO Property in the same manner that it manages, conserves,
protects and operates other foreclosed property for its own account, and in the
same manner that similar property in the same locality as the REO Property is
managed. The Company shall cause each REO Property to be inspected promptly upon
the acquisition of title thereto and shall cause each REO Property to be
inspected at least monthly thereafter or more frequently as required by the
circumstances. The Company shall make or cause to be made a written report of
each such inspection. Such reports shall be retained in the Mortgage File and
copies thereof shall be forwarded by the Company to the Purchaser.
The Company shall use its best efforts to dispose of the REO Property as
soon as possible and shall sell such REO Property in any event within one year
after title has been taken to such REO Property, unless the Company determines,
and gives an appropriate notice to the Purchaser to such effect, that a longer
period is necessary for the orderly liquidation of such REO Property. If a
longer period than one (1) year is permitted under the foregoing sentence and is
necessary to sell any REO Property, the Company shall report monthly to the
Purchaser as to the progress being made in selling
50
such REO Property. No REO Property shall be marketed for less than the Appraised
Value, without the prior consent of Purchaser. No REO Property shall be sold for
less than ninety five percent (95%) of its Appraised Value, without the prior
consent of Purchaser. All requests for reimbursement of Servicing Advances shall
be in accordance with the ▇▇▇▇▇▇ Mae Guides. The disposition of REO Property
shall be carried out by the Company at such price, and upon such terms and
conditions, as the Company deems to be in the best interests of the Purchaser
(subject to the above conditions) only with the prior written consent of the
Purchaser. Company shall provide monthly reports to Purchaser in reference to
the status of the marketing of the REO Properties.
Notwithstanding anything to the contrary contained herein, the Purchaser
may, at the Purchaser's sole option, terminate the Company as servicer of any
such REO Property without payment of any termination fee with respect thereto,
provided that the Company shall on the date said termination takes effect be
reimbursed for any unreimbursed advances of the Company's funds made pursuant to
Section 5.03 and any unreimbursed Servicing Advances and Servicing Fees in each
case relating to the Mortgage Loan underlying such REO Property notwithstanding
anything to the contrary set forth in Section 4.05. In the event of any such
termination, the provisions of Section 11.01 hereof shall apply to said
termination and the transfer of servicing responsibilities with respect to such
REO Property to the Purchaser or its designee. Within five Business Days of any
such termination, the Company shall, if necessary convey such property to the
Purchaser and shall further provide the Purchaser with the following information
regarding the subject REO Property: the related drive by appraisal or brokers
price opinion, and copies of any related Mortgage Impairment Insurance Policy
claims. In addition, within five Business Days, the Company shall provide the
Purchaser with the following information and documents regarding the subject REO
Property: the related trustee's deed upon sale and copies of any related hazard
insurance claims, or repair bids.
Section 4.14 Notification of Maturity Date.
With respect to each Mortgage Loan, the Company shall execute and deliver
to the Mortgagor any and all necessary notices required under applicable law and
the terms of the related Mortgage Note and Mortgage regarding the maturity date
if required under applicable law.
ARTICLE V
PAYMENTS TO THE PURCHASER
Section 5.01 Distributions.
On each Remittance Date, the Company shall distribute by wire transfer of
immediately available funds to the Purchaser (i) all amounts credited to the
Custodial Account as of the close of business on the preceding Determination
Date, net of charges against or withdrawals from the Custodial Account pursuant
to Section 4.05, plus (ii) all Monthly Advances, if any, which the Company is
obligated to distribute pursuant to Section 5.03, plus, (iii) interest at the
Mortgage Loan Remittance Rate on any Principal Prepayment from the date of such
Principal Prepayment through the end of the month for which disbursement is made
provided that the Company's obligation as to payment of such interest shall be
limited to the Servicing Fee earned during the month of the distribution, minus
(iv) any amounts attributable to Monthly Payments collected but due on a Due
51
Date or Dates subsequent to the preceding Determination Date, which amounts
shall be remitted on the Remittance Date next succeeding the Due Period for such
amounts. It is understood that, by operation of Section 4.04, the remittance on
the first Remittance Date with respect to Mortgage Loans purchased pursuant to
the related Term Sheet is to include principal collected after the Cut-off Date
through the preceding Determination Date plus interest, adjusted to the Mortgage
Loan Remittance Rate collected through such Determination Date exclusive of any
portion thereof allocable to the period prior to the Cut-off Date, with the
adjustments specified in clauses (ii), (iii) and (iv) above.
With respect to any remittance received by the Purchaser after the
Remittance Date, the Company shall pay to the Purchaser interest on any such
late payment at an annual rate equal to the Prime Rate, adjusted as of the date
of each change, plus three (3) percentage points, but in no event greater than
the maximum amount permitted by applicable law. Such interest shall cover the
period commencing with the day following the Business Day such payment was due
and ending with the Business Day on which such payment is made to the Purchaser,
both inclusive. The payment by the Company of any such interest shall not be
deemed an extension of time for payment or a waiver of any Event of Default by
the Company. On each Remittance Date, the Company shall provide a remittance
report detailing all amounts being remitted pursuant to this Section 5.01.
Section 5.02 Statements to the Purchaser.
The Company shall furnish to the Purchaser an individual loan accounting
report, as of the last Business Day of each month, in the Company's assigned
loan number order to document Mortgage Loan payment activity on an individual
Mortgage Loan basis. With respect to each month, the corresponding individual
loan accounting report shall be received by the Purchaser no later than the
tenth Business Day of the following month on a disk or tape or other
computer-readable format or in such format as may be mutually agreed upon by
both the Purchaser and Company, and shall provide the information required to be
contained in the monthly statements to certificateholders as specified in the
related pooling and servicing agreement, to the extent applicable to the
Company.
(i) With respect to each Monthly Payment, the amount of such remittance
allocable to principal (including a separate breakdown of any full Principal
Prepayment, including the date of such prepayment, along with a detailed report
of interest on principal prepayment amounts remitted in accordance with Section
4.04);
(ii) with respect to each Monthly Payment, the amount of such remittance
allocable to interest;
(iii) the amount of servicing compensation received by the Company during
the prior distribution period;
(iv) the Stated Principal Balance of each Mortgage Loan; and
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(v) The number and aggregate outstanding principal balances of Mortgage
Loans (a) delinquent (1) 30 to 59 days, (2) 60 to 89 days, (3) 90 days or more;
(b) as to which foreclosure has commenced; and (c) as to which REO Property has
been acquired.
The Company shall also provide a trial balance, in the form of Exhibit E
hereto, with each such Report.
In addition, not later than the 10th calendar day of each month (or if such
10th day is not a Business Day, the Business Day immediately preceding such 10th
day), the Company shall forward to the Master Servicer reports in the format set
forth in Exhibit M, Exhibit N and Exhibit O attached hereto.
The Company shall prepare and file any and all information statements or
other filings required to be delivered to any governmental taxing authority
pursuant to any applicable law with respect to the Mortgage Loans.
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Section 5.03 Monthly Advances by the Company.
Not later than the close of business on the Business Day preceding each
Remittance Date, the Company shall deposit in the Custodial Account an amount
equal to all payments not previously advanced by the Company, whether or not
deferred pursuant to Section 4.01, of principal (due after the Cut-off Date) and
interest not allocable to the period prior to the Cut-off Date, adjusted to the
Mortgage Loan Remittance Rate, which were due on a Mortgage Loan and delinquent
at the close of business on the related Determination Date.
The Company's obligation to make such Monthly Advances as to any Mortgage
Loan will continue through the last Monthly Payment due prior to the payment in
full of the Mortgage Loan, or through the Remittance Date prior to the date on
which the Mortgaged Property liquidates (including Insurance Proceeds, proceeds
from the sale of REO Property or Condemnation Proceeds) with respect to the
Mortgage Loan unless the Company deems such advance to be a Nonrecoverable
Advance. In such event, the Company shall deliver to the Purchaser an Officer's
Certificate of the Company to the effect that an officer of the Company has
reviewed the related Mortgage File and has made the reasonable determination
that any additional advances are nonrecoverable.
Section 5.04 Liquidation Reports.
Upon the foreclosure sale of any Mortgaged Property or the acquisition
thereof by the Purchaser pursuant to a deed-in-lieu of foreclosure, the Company
shall submit to the Purchaser a liquidation report with respect to such
Mortgaged Property in a form mutually acceptable to Company and Purchaser. The
Company shall also provide reports on the status of REO Property containing such
information as Purchaser may reasonably require.
Section 5.05 Prepayment Interest Shortfalls.
Not later than the close of business on the Business Day preceding each
Remittance Date in the month following the related Prepayment Period, the
Company shall deposit in the Custodial Account an amount equal to any Prepayment
Interest Shortfalls with respect to such Prepayment Period, which in the
aggregate shall not exceed the Company's aggregate Servicing Fee received with
respect to the related Due Period.
ARTICLE VI
GENERAL SERVICING PROCEDURES
Section 6.01 Assumption Agreements.
The Company will, to the extent it has knowledge of any conveyance or
prospective conveyance by any Mortgagor of the Mortgaged Property (whether by
absolute conveyance or by contract of sale, and whether or not the Mortgagor
remains or is to remain liable under the Mortgage Note and/or the Mortgage),
exercise its rights to accelerate the maturity of such Mortgage Loan under any
"due-on-sale" clause to the extent permitted by law; provided, however, that the
Company
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shall not exercise any such rights if prohibited by law or the terms of the
Mortgage Note from doing so or if the exercise of such rights would impair or
threaten to impair any recovery under the related Primary Mortgage Insurance
Policy or Lender Primary Mortgage Insurance Policy, if any. If the Company
reasonably believes it is unable under applicable law to enforce such
"due-on-sale" clause, the Company, with the approval of the Purchaser, will
enter into an assumption agreement with the person to whom the Mortgaged
Property has been conveyed or is proposed to be conveyed, pursuant to which such
person becomes liable under the Mortgage Note and, to the extent permitted by
applicable state law, the Mortgagor remains liable thereon. Where an assumption
is allowed pursuant to this Section 6.01, the Company, with the prior consent of
the Purchaser and the primary mortgage insurer, if any, is authorized to enter
into a substitution of liability agreement with the person to whom the Mortgaged
Property has been conveyed or is proposed to be conveyed pursuant to which the
original mortgagor is released from liability and such Person is substituted as
mortgagor and becomes liable under the related Mortgage Note. Any such
substitution of liability agreement shall be in lieu of an assumption agreement.
In connection with any such assumption or substitution of liability, the
Company shall follow the underwriting practices and procedures of the Company.
With respect to an assumption or substitution of liability, the Mortgage
Interest Rate borne by the related Mortgage Note, the amount of the Monthly
Payment and the maturity date may not be changed (except pursuant to the terms
of the Mortgage Note). If the credit of the proposed transferee does not meet
such underwriting criteria, the Company diligently shall, to the extent
permitted by the Mortgage or the Mortgage Note and by applicable law, accelerate
the maturity of the Mortgage Loan. The Company shall notify the Purchaser that
any such substitution of liability or assumption agreement has been completed by
forwarding to the Purchaser the original of any such substitution of liability
or assumption agreement, which document 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. All fees collected by the Company for entering into an assumption or
substitution of liability agreement shall belong to the Company.
Notwithstanding the foregoing paragraphs of this Section or any other
provision of this Agreement, the Company shall not be deemed to be in default,
breach or any other violation of its obligations hereunder by reason of any
assumption of a Mortgage Loan by operation of law or any assumption which the
Company may be restricted by law from preventing, for any reason whatsoever. For
purposes of this Section 6.01, the term "assumption" is deemed to also include a
sale of the Mortgaged Property subject to the Mortgage that is not accompanied
by an assumption or substitution of liability agreement.
Section 6.02 Satisfaction of Mortgages and Release of Mortgage Files.
Upon the payment in full of any Mortgage Loan, or the receipt by the
Company of a notification that payment in full will be escrowed in a manner
customary for such purposes, the Company will immediately notify the Purchaser
by a certification, which certification shall include a statement to the effect
that all amounts received or to be received in connection with such payment
which are required to be deposited in the Custodial Account pursuant to Section
4.04 have been or will be so deposited, of a Servicing Officer and shall request
delivery to it of the portion of the Mortgage File held by the Purchaser. The
Purchaser shall no later than five Business Days after
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receipt of such certification and request, release or cause to be released to
the Company, the related Mortgage Loan Documents and, upon its receipt of such
documents, the Company shall promptly prepare and deliver to the Purchaser the
requisite satisfaction or release. No later than five (5) Business Days
following its receipt of such satisfaction or release, the Purchaser shall
deliver, or cause to be delivered, to the Company the release or satisfaction
properly executed by the owner of record of the applicable mortgage or its duly
appointed attorney in fact. No expense incurred in connection with any
instrument of satisfaction or deed of reconveyance shall be chargeable to the
Custodial Account.
In the event the Company satisfies or releases a Mortgage without having
obtained payment in full of the indebtedness secured by the Mortgage or should
it otherwise prejudice any right the Purchaser may have under the mortgage
instruments, the Company, upon written demand, shall remit within two (2)
Business Days to the Purchaser the then outstanding principal balance of the
related Mortgage Loan by deposit thereof in the Custodial Account. The Company
shall maintain the Fidelity Bond and errors and omissions insurance insuring the
Company against any loss it may sustain with respect to any Mortgage Loan not
satisfied in accordance with the procedures set forth herein.
From time to time and as appropriate for the servicing or foreclosure of
the Mortgage Loan, including for the purpose of collection under any Primary
Mortgage Insurance Policy or Lender Primary Mortgage Insurance Policy, the
Purchaser shall, upon request of the Company and delivery to the Purchaser of a
servicing receipt signed by a Servicing Officer, release the portion of the
Mortgage File held by the Purchaser to the Company. Such servicing receipt shall
obligate the Company to return the related Mortgage documents to the Purchaser
when the need therefor by the Company no longer exists, unless the Mortgage Loan
has been liquidated and the Liquidation Proceeds relating to the Mortgage Loan
have been deposited in the Custodial Account or the Mortgage File or such
document has been delivered to an attorney, or to a public trustee or other
public official as required by law, for purposes of initiating or pursuing legal
action or other proceedings for the foreclosure of the Mortgaged Property either
judicially or non-judicially, and the Company has delivered to the Purchaser a
certificate of a Servicing Officer certifying as to the name and address of the
Person to which such Mortgage File or such document was delivered and the
purpose or purposes of such delivery. Upon receipt of a certificate of a
Servicing Officer stating that such Mortgage Loan was liquidated, the servicing
receipt shall be released by the Purchaser to the Company.
Section 6.03 Servicing Compensation.
As compensation for its services hereunder, the Company shall be entitled
to withdraw from the Custodial Account (to the extent of interest payments
collected on the Mortgage Loans) or to retain from interest payments collected
on the Mortgage Loans, the amounts provided for as the Company's Servicing Fee,
subject to payment of compensating interest on Principal Prepayments as capped
by the Servicing Fee pursuant to Section 5.01 (iii). Additional servicing
compensation in the form of assumption fees, as provided in Section 6.01, and
prepayment penalties or premiums thereon, late payment charges or otherwise
shall be retained by the Company to the extent not required to be deposited in
the Custodial Account. No Servicing Fee shall be payable in connection with
partial Monthly Payments. The Company shall be required to pay all expenses
incurred by it in
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connection with its servicing activities hereunder and shall not be entitled to
reimbursement therefor except as specifically provided for.
Section 6.04 [Reserved]
Section 6.05 [Reserved]
Section 6.06 Purchaser's Right to Examine Company Records.
The Purchaser shall have the right to examine and audit upon reasonable
notice to the Company, during business hours or at such other times as might be
reasonable under applicable circumstances, any and all of the books, records,
documentation or other information of the Company, or held by another for the
Company or on its behalf or otherwise, which relates to the performance or
observance by the Company of the terms, covenants or conditions of this
Agreement.
The Company shall provide to the Purchaser and any supervisory agents or
examiners representing a state or federal governmental agency having
jurisdiction over the Purchaser, including but not limited to OTS, FDIC and
other similar entities, access to any documentation regarding the Mortgage Loans
in the possession of the Company which may be required by any applicable
regulations. Such access shall be afforded without charge, upon reasonable
request, during normal business hours and at the offices of the Company, and in
accordance with the FDIC, OTS, or any other similar federal or state
regulations, as applicable.
ARTICLE VII
REPORTS TO BE PREPARED BY SERVICER
Section 7.01 Company Shall Provide Information as Reasonably Required.
The Company shall furnish to the Purchaser during the term of this
Agreement, such periodic, special or other reports, information or
documentation, whether or not provided for herein, as shall be necessary,
reasonable or appropriate in respect to the Purchaser, or otherwise in respect
to the Mortgage Loans and the performance of the Company under this Agreement,
including any reports, information or documentation reasonably required to
comply with any regulations regarding any supervisory agents or examiners of the
Purchaser all such reports or information to be as provided by and in accordance
with such applicable instructions and directions as the Purchaser may reasonably
request in relation to this Agreement or the performance of the Company under
this Agreement. The Company agrees to execute and deliver all such instruments
and take all such action as the Purchaser, from time to time, may reasonably
request in order to effectuate the purpose and to carry out the terms of this
Agreement.
In connection with marketing the Mortgage Loans, the Purchaser may make
available to a prospective purchaser audited financial statements of the Company
for the most recently completed two (2) fiscal years for which such statements
are available, as well as a Consolidated Statement of
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Condition at the end of the last two (2) fiscal years covered by any
Consolidated Statement of Operations. Upon written request, the Company shall
furnish promptly to the Purchaser or a prospective purchaser copies of the
statements specified above.
The Company shall make reasonably available to the Purchaser or any
prospective Purchaser a knowledgeable financial or accounting officer for the
purpose of answering questions and to permit any prospective purchaser to
inspect the Company's servicing facilities for the purpose of satisfying such
prospective purchaser that the Company has the ability to service the Mortgage
Loans as provided in this Agreement.
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ARTICLE VIII
THE SERVICER
Section 8.01 Indemnification; Third Party Claims.
The Company agrees to indemnify the Purchaser and hold it harmless against
any and all claims, losses, damages, penalties, fines, forfeitures, legal fees
and related costs, judgments, and any other costs, fees and expenses that the
Purchaser may sustain in any way related to the failure of the Company to
observe and perform its duties, obligations, covenants, and agreements to
service the Mortgage Loans in strict compliance with the terms of this
Agreement. The Company agrees to indemnify the Purchaser and hold it harmless
against any and all claims, losses, damages, penalties, fines, forfeitures,
legal fees and related costs, judgments, and any other costs, fees and expenses
that the Purchaser may sustain in any way from any claim, demand, defense or
assertion based on or grounded upon, or resulting from any assertion based on,
grounded upon or resulting from a breach of any of the representation or
warranty set forth in Sections 3.01 or 3.02 of this Agreement. The Company shall
immediately notify the Purchaser if a claim is made by a third party against
Company with respect to this Agreement or the Mortgage Loans, assume (with the
consent of the Purchaser) the defense of any such claim and pay all expenses in
connection therewith, including counsel fees, whether or not such claim is
settled prior to judgment, and promptly pay, discharge and satisfy any judgment
or decree which may be entered against it or the Purchaser in respect of such
claim. The Company shall follow any written instructions received from the
Purchaser in connection with such claim. The Purchaser shall promptly reimburse
the Company for all amounts advanced by it pursuant to the two preceding
sentences except when the claim relates to the failure of the Company to service
and administer the Mortgages in strict compliance with the terms of this
Agreement, the breach of representation or warranty set forth in Sections 3.01
or 3.02, or the negligence, bad faith or willful misconduct of Company. The
provisions of this Section 8.01 shall survive termination of this Agreement.
Section 8.02 Merger or Consolidation of the Company.
The Company will keep in full effect its existence, rights and franchises
as a corporation under the laws of the state of its incorporation except as
permitted herein, and will 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 duties under this Agreement.
Any Person into which the Company may be merged or consolidated, or any
corporation resulting from any merger, conversion or consolidation to which the
Company shall be a party, or any Person succeeding to the business of the
Company whether or not related to loan servicing, shall be the successor of the
Company hereunder, without the execution or filing of any paper or any further
act on the part of any of the parties hereto, anything herein to the contrary
notwithstanding; provided, however, that the successor or surviving Person shall
be an institution (i) having a GAAP net worth of not less than $25,000,000, (ii)
the deposits of which are insured by the FDIC, SAIF and/or BIF, and which is a
HUD-approved mortgagee whose primary business is in origination and
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servicing of first lien mortgage loans, and (iii) who is a ▇▇▇▇▇▇ ▇▇▇ or
▇▇▇▇▇▇▇ Mac approved seller/servicer in good standing.
Section 8.03 Limitation on Liability of the Company and Others.
Neither the Company nor any of the officers, employees or agents of the
Company shall be under any liability to the Purchaser 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 made in good faith; provided, however, that
this provision shall not protect the Company or any such person against any
breach of warranties or representations made herein, or failure to perform its
obligations in strict compliance with any standard of care set forth in this
Agreement, or any liability which would otherwise be imposed by reason of
negligence, bad faith or willful misconduct, or any breach of the terms and
conditions of this Agreement. The Company and any officer, employee or agent of
the Company may rely in good faith on any document of any kind prima facie
properly executed and submitted by the Purchaser respecting any matters arising
hereunder. The Company shall not be under any obligation to appear in, prosecute
or defend any legal action which is not incidental to its duties to service the
Mortgage Loans in accordance with this Agreement and which in its reasonable
opinion may involve it in any expenses or liability; provided, however, that the
Company may, with the consent of the Purchaser, undertake any such action which
it may deem necessary or desirable in respect to this Agreement and the rights
and duties of the parties hereto. In such event, the reasonable legal expenses
and costs of such action and any liability resulting therefrom shall be
expenses, costs and liabilities for which the Purchaser will be liable, and the
Company shall be entitled to be reimbursed therefor from the Purchaser upon
written demand.
Section 8.04 Company Not to Assign or Resign.
The Company shall not assign this Agreement or resign from the obligations
and duties hereby imposed on it except by mutual consent of the Company and the
Purchaser or upon the determination that its duties hereunder are no longer
permissible under applicable law and such incapacity cannot be cured by the
Company. Any such determination permitting the resignation of the Company shall
be evidenced by an Opinion of Counsel to such effect delivered to the Purchaser
which Opinion of Counsel shall be in form and substance acceptable to the
Purchaser. No such resignation shall become effective until a successor shall
have assumed the Company's responsibilities and obligations hereunder in the
manner provided in Section 11.01.
Section 8.05 No Transfer of Servicing.
With respect to the retention of the Company to service the Mortgage Loans
hereunder, the Company acknowledges that the Purchaser has acted in reliance
upon the Company's independent status, the adequacy of its servicing facilities,
plan, personnel, records and procedures, its integrity, reputation and financial
standing and the continuance thereof. Without in any way limiting the generality
of this Section, the Company shall not either assign this Agreement or the
servicing hereunder or delegate its rights or duties hereunder or any portion
thereof, or sell or otherwise dispose of all or substantially all of its
property or assets, without the prior written approval of the Purchaser, which
consent shall be granted or withheld in the Purchaser's sole discretion.
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Without in any way limiting the generality of this Section 8.05, in the
event that the Company either shall assign this Agreement or the servicing
responsibilities hereunder or delegate its duties hereunder or any portion
thereof without (i) satisfying the requirements set forth herein or (ii) the
prior written consent of the Purchaser, then the Purchaser shall have the right
to terminate this Agreement, without any payment of any penalty or damages and
without any liability whatsoever to the Company (other than with respect to
accrued but unpaid Servicing Fees and Servicing Advances remaining unpaid) or
any third party.
Section 8.06 Disputed Loans.
The Company agrees to indemnify the Purchaser and its assigns and hold them
harmless against any and all claims, losses, damages, penalties, fines,
forfeitures, legal fees and related costs, judgments, and any other costs, fees
and expenses that the Purchaser and its assigns may sustain in any way from any
claim, demand, defense or assertion based on or grounded upon, or resulting from
any assertion based on, grounded upon or resulting from a Disputed Loan. The
Company shall immediately notify the Purchaser if a claim is made by a third
party against the Company with respect to any Disputed Loan, assume (with the
consent of the Purchaser) the defense of any such claim and pay all expenses in
connection therewith, including counsel fees, whether or not such claim is
settled prior to judgment, and promptly pay, discharge and satisfy any judgment
or decree which may be entered against it or the Purchaser in respect of such
claim. When all exceptions with respect to a Disputed Loan identified on
Schedule 1 are cured, such loan will no longer be a Disputed Loan, but shall be
a Mortgage Loan; provided, however, that if the Purchaser or its assigns incur
any losses, claims, damages, penalties, fines, legal costs and any other costs,
from any claim, demand, defense or assertion based upon or grounded upon, or
resulting from any assertion based or resulting from a exception(s) identified
on Schedule 1 for a Disputed Loan that has subsequently become a Mortgage Loan,
the Company shall indemnify the Purchaser and its assigns in accordance with
this Section 8.06
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ARTICLE IX
DEFAULT
Section 9.01 Events of Default.
In case one or more of the following Events of Default by the Company shall
occur and be continuing, that is to say:
(i) any failure by the Company to remit to the Purchaser any payment
required to be made under the terms of this Agreement which continues unremedied
for a period of two (2) Business Days after written notice is received by the
Company; or
(ii) failure on the part of the Company duly to observe or perform in any
material respect any other of the covenants or agreements on the part of the
Company set forth in this Agreement which continues unremedied for a period of
thirty (30) days after the date on which written notice of such failure,
requiring the same to be remedied, shall have been given to the Company by the
Purchaser; or
(iii) a decree or order of a court or agency or supervisory authority
having jurisdiction for the appointment of a conservator or receiver or
liquidator in any insolvency, bankruptcy, readjustment of debt, marshalling of
assets and liabilities or similar proceedings, or for the winding-up or
liquidation of its affairs, shall have been entered against the Company and such
decree or order shall have remained in force undischarged or unstayed for a
period of sixty days; or
(iv) the Company shall consent to the appointment of a conservator or
receiver or liquidator in any insolvency, bankruptcy, readjustment of debt,
marshalling of assets and liabilities or similar proceedings of or relating to
the Company or of or relating to all or substantially all of its property; or
(v) the Company shall admit in writing its inability to pay its debts
generally as they become due, file a petition to take advantage of any
applicable insolvency or reorganization statute, make an assignment for the
benefit of its creditors, or voluntarily suspend payment of its obligations; or
(vi) Company ceases to be approved by either ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac as a
mortgage loan seller or servicer for more than thirty days; or
(vii) the Company attempts to assign its right to servicing compensation
hereunder or the Company attempts, without the consent of the Purchaser, to sell
or otherwise dispose of all or substantially all of its property or assets or to
assign this Agreement or the servicing responsibilities hereunder or to delegate
its duties hereunder or any portion thereof; or
(viii) the Company ceases to be (a) licensed to service first lien
residential mortgage loans in any jurisdiction in which a Mortgaged Property is
located and such licensing is required, and (b) qualified to transact business
in any jurisdiction where it is currently so qualified, but only to the
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extent such non-qualification materially and adversely affects the Company's
ability to perform its obligations hereunder; or
(ix) the Company fails to meet the eligibility criteria set forth in the
last sentence of Section 8.02.
Then, and in each and every such case, so long as an Event of Default shall
not have been remedied, the Purchaser, by notice in writing to the Company
(except in the case of an Event of Default under clauses (iii), (iv) or (v)
above, in which case, automatically and without notice) Company may, in addition
to whatever rights the Purchaser may have under Sections 3.03 and 8.01 and at
law or equity or to damages, including injunctive relief and specific
performance, terminate all the rights and obligations of the Company under this
Agreement and in and to the Mortgage Loans and the proceeds thereof without
compensating the Company for the same. On or after the receipt by the Company of
such written notice (or, in the case of an Event of Default under clauses (iii),
(iv) or (v) above, in which case, automatically and without notice), all
authority and power of the Company under this Agreement, whether with respect to
the Mortgage Loans or otherwise, shall pass to and be vested in the successor
appointed pursuant to Section 11.01. Upon written request from the Purchaser,
the Company shall prepare, execute and deliver, any and all documents and other
instruments, place in such successor's possession all Mortgage Files, and 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, at the Company's sole expense. The Company agrees to cooperate with
the Purchaser and such successor in effecting the termination of the Company's
responsibilities and rights hereunder, including, without limitation, the
transfer to such successor for administration by it of all cash amounts which
shall at the time be credited by the Company to the Custodial Account or Escrow
Account or thereafter received with respect to the Mortgage Loans or any REO
Property.
Section 9.02 Waiver of Defaults.
The Purchaser may waive only by written notice any default by the Company
in the performance of its obligations hereunder and its consequences. Upon any
such waiver of a past default, such default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been remedied for every
purpose of this Agreement. No such waiver shall extend to any subsequent or
other default or impair any right consequent thereon except to the extent
expressly so waived in writing.
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ARTICLE X
TERMINATION
Section 10.01 Termination.
The respective obligations and responsibilities of the Company shall
terminate upon: (i) the later of the final payment or other liquidation (or any
advance with respect thereto) of the last Mortgage Loan and the disposition of
all remaining REO Property and the remittance of all funds due hereunder; or
(ii) by mutual consent of the Company and the Purchaser in writing; or (iii)
termination with cause under the terms of this Agreement. Termination of the
Agreement pursuant to Section 10.01 (iii) shall void Purchaser's obligation to
purchase Mortgage Loans for which Purchaser has issued a Confirmation,
commitment confirmation or a substantially similar commitment to purchase
Mortgage Loans.
Section 10.02 Survival.
Termination of this Agreement under Section 10.01 shall not affect any of
the Company's obligations regarding repurchase, indemnification or otherwise,
all of which shall survive such termination and remain in full force and effect.
ARTICLE XI
MISCELLANEOUS PROVISIONS
Section 11.01 Successor to the Company.
Prior to termination of Company's responsibilities and duties under this
Agreement pursuant to Sections 4.13, 8.04, 9.01, 10.01 (ii) or (iii), the
Purchaser shall (i) succeed to and assume all of the Company's responsibilities,
rights, duties and obligations under this Agreement, or (ii) appoint a successor
having the characteristics set forth in Section 8.02 hereof and which shall
succeed to all rights and assume all of the responsibilities, duties and
liabilities of the Company under this Agreement prior to the termination of
Company's responsibilities, duties and liabilities under this Agreement. In
connection with such appointment and assumption, the Purchaser may make such
arrangements for the compensation of such successor out of payments on Mortgage
Loans as the Purchaser and such successor shall agree. In the event that the
Company's duties, responsibilities and liabilities under this Agreement should
be terminated pursuant to the aforementioned Sections, the Company shall
discharge such duties and responsibilities during the period from the date it
acquires knowledge of such termination until the effective date thereof with the
same degree of diligence and prudence which it is obligated to exercise under
this Agreement, and shall take no action whatsoever that might impair or
prejudice the rights or financial condition of its successor. The resignation or
removal of Company pursuant to the aforementioned Sections shall not become
effective until a successor shall be appointed pursuant to this Section and
shall in no event relieve the Company of the representations and warranties made
pursuant to Sections 3.01, 3.02 and 3.03 and the remedies available to the
Purchaser thereunder and under Section 8.01, it being understood and agreed that
the
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provisions of such Sections 3.01, 3.02, 3.03 and 8.01 shall be applicable to the
Company notwithstanding any such resignation or termination of the Company, or
the termination of this Agreement.
Any successor appointed as provided herein shall execute, acknowledge and
deliver to the Company and to the Purchaser an instrument accepting such
appointment, whereupon such successor shall become fully vested with all the
rights, powers, duties, responsibilities, obligations and liabilities of the
Company, with like effect as if originally named as a party to this Agreement.
Any termination or resignation of the Company or this Agreement pursuant to
Section 4.13, 8.04, 9.01 or 10.01 shall not affect any claims that the Purchaser
may have against the Company arising prior to any such termination or
resignation.
The Company shall promptly deliver to the successor the funds in the
Custodial Account and the Escrow Account and the Mortgage Files and related
documents and statements held by it hereunder and the Company shall account for
all funds. The Company shall execute and deliver such instruments and do such
other things all as may reasonably be required to more fully and definitely vest
and confirm in the successor all such rights, powers, duties, responsibilities,
obligations and liabilities of the Company. The successor shall make
arrangements as it may deem appropriate to reimburse the Company for unrecovered
Servicing Advances which the successor retains hereunder and which would
otherwise have been recovered by the Company pursuant to this Agreement but for
the appointment of the successor servicer.
Upon a successor's acceptance of appointment as such, the Company shall
notify by mail the Purchaser of such appointment.
Section 11.02 Amendment.
This Agreement may be amended from time to time by the Company and the
Purchaser by written agreement signed by the Company and the Purchaser.
Section 11.03 Recordation of Agreement.
To the extent permitted by applicable law, 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 of the properties
subject to the Mortgages are situated, and in any other appropriate public
recording office or elsewhere, such recordation to be effected by the Company at
the Company's expense on direction of the Purchaser accompanied by an opinion of
counsel to the effect that such recordation materially and beneficially affects
the interest of the Purchaser or is necessary for the administration or
servicing of the Mortgage Loans.
Section 11.04 Governing Law.
This Agreement and the related Term Sheet shall be governed by and
construed in accordance with the laws of the State of New York except to the
extent preempted by Federal law. The obligations, rights and remedies of the
parties hereunder shall be determined in accordance with such laws.
65
Section 11.05 Notices.
Any demands, notices or other communications permitted or required
hereunder shall be in writing and shall be deemed conclusively to have been
given if personally delivered at or mailed by registered mail, postage prepaid,
and return receipt requested or certified mail, return receipt requested, or
transmitted by telex, telegraph or telecopier and confirmed by a similar mailed
writing, as follows:
(i) if to the Purchaser:
Luminent Mortgage Capital, Inc.:
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
One Commerce Square
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Maia Mortgage Finance Statutory Trust:
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
One Commerce Square
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Mercury Mortgage Finance Statutory Trust:
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
66
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
One Commerce Square
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
(ii) if to the Company:
EMC Mortgage Corporation
Mac ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇,
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Bear ▇▇▇▇▇▇▇ Mortgage Capital Corporation
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇
or such other address as may hereafter be furnished to the other party by like
notice. Any such demand, notice or communication hereunder shall be deemed to
have been received on the date delivered to or received at the premises of the
addressee (as evidenced, in the case of registered or certified mail, by the
date noted on the return receipt).
Section 11.06 Severability of Provisions.
Any part, provision, representation or warranty of this Agreement and the
related Term Sheet which is prohibited or which is held to be void or
unenforceable shall be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof. Any part,
provision, representation or warranty of this Agreement which is prohibited or
unenforceable or is held to be void or unenforceable in any jurisdiction shall
be ineffective, as to such jurisdiction, to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction as to any Mortgage Loan
shall not invalidate or render unenforceable such provision in any other
jurisdiction. To the extent permitted by applicable law, the parties hereto
waive any provision of law that prohibits or renders void or unenforceable any
provision hereof. If the invalidity of any part, provision, representation or
warranty of this Agreement shall deprive any party of the economic benefit
intended to be conferred by this Agreement, the parties shall negotiate, in good
faith, to
67
develop a structure the economic effect of which is nearly as possible the same
as the economic effect of this Agreement without regard to such invalidity.
Section 11.07 Exhibits.
The exhibits to this Agreement are hereby incorporated and made a part
hereof and are an integral part of this Agreement.
Section 11.08 General Interpretive Principles.
For purposes of this Agreement, except as otherwise expressly provided or
unless the context otherwise requires:
(i) the terms defined in this Agreement have the meanings assigned to them
in this Agreement and include the plural as well as the singular, and the use of
any gender herein shall be deemed to include the other gender;
(ii) accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting principles;
(iii) references herein to "Articles", "Sections", Subsections",
"Paragraphs", and other subdivisions without reference to a document are to
designated Articles, Sections, Subsections, Paragraphs and other subdivisions of
this Agreement;
(iv) a reference to a Subsection without further reference to a Section is
a reference to such Subsection as contained in the same Section in which the
reference appears, and this rule shall also apply to Paragraphs and other
subdivisions;
(v) the words "herein", "hereof ", "hereunder" and other words of similar
import refer to this Agreement as a whole and not to any particular provision;
(vi) the term "include" or "including" shall mean without limitation by
reason of enumeration; and
(viii) headings of the Articles and Sections in this Agreement are for
reference purposes only and shall not be deemed to have any substantive effect.
Section 11.09 Reproduction of Documents.
This Agreement and all documents relating thereto, including, without
limitation, (i) consents, waivers and modifications which may hereafter be
executed, (ii) documents received by any party at the closing, and (iii)
financial statements, certificates and other information previously or hereafter
furnished, may be reproduced by any photographic, photostatic, microfilm,
micro-card, miniature photographic or other similar process. The parties agree
that any such reproduction shall be admissible in evidence as the original
itself in any judicial or administrative proceeding, whether or not the original
is in existence and whether or not such reproduction was made by a party in the
68
regular course of business, and that any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in evidence.
Section 11.10 Confidentiality of Information.
Each party recognizes that, in connection with this Agreement, it may
become privy to non-public information regarding the financial condition,
operations and prospects of the other party. Each party agrees to keep all
non-public information regarding the other party strictly confidential, and to
use all such information solely in order to effectuate the purpose of the
Agreement, provided that each party may provide confidential information to its
employees, agents and affiliates who have a need to know such information in
order to effectuate the transaction, provided further that such information is
identified as confidential non-public information. In addition, confidential
information may be provided to a regulatory authority with supervisory power
over Purchaser, provided such information is identified as confidential
non-public information.
Notwithstanding other provisions of this Section 11.10 or any other express
or implied agreement, arrangement, or understanding to the contrary, the Company
and Purchaser (the "Parties") agree that the Parties (and their employees,
representatives and other agents) may disclose to any and all persons, without
limitation of any kind from the commencement of discussions, the purported or
claimed U.S. federal income tax treatment of the purchase of the Mortgage Loans
and related transactions covered by this letter agreement ("tax treatment") and
any fact that may be relevant to understanding the tax treatment ("tax
structure") and all materials of any kind (including opinions or other tax
analyses) that are provided to the Parties relating to such tax treatment and
tax structure, except where confidentiality is reasonably necessary to comply
with securities laws.
The Company and Purchaser each agree that it (i) shall comply with any
applicable laws and regulations regarding the privacy and security of Consumer
Information including, but not limited to the ▇▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act, Title V,
Subtitle A, 15 U.S.C. Section 6801 et seq., (ii) shall not use Consumer
Information in any manner inconsistent with any applicable laws and regulations
regarding the privacy and security of Consumer Information, (iii) shall not
disclose Consumer Information to third parties except at the specific written
direction of the Purchaser, (iv) shall maintain adequate physical, technical and
administrative safeguards to protect Consumer Information from unauthorized
access as provided by the applicable laws and regulations, and (v) shall
immediately notify the Purchaser of any actual or suspected breach of the
confidentiality of Consumer Information that would have a material and adverse
effect on the Purchaser.
The Company agrees that the Company shall indemnify, defend and hold the
Purchaser harmless from and against any loss, claim or liability the Purchaser
may suffer by reason of the Company's failure to perform the obligations set
forth in this Section 11.10.
The Purchaser agrees that the Purchaser shall indemnify, defend and hold
the Company harmless from and against any loss, claim or liability the Company
may suffer by reason of the Purchaser's failure to perform the obligations set
forth in this Section 11.10.
Section 11.11 Recordation of Assignments of Mortgage.
69
To the extent permitted by applicable law, each of the Assignments is
subject to recordation, unless MERS is identified on the Mortgage or on a
properly recorded assignment of the Mortgage, in all appropriate public offices
for real property records in all the counties or other comparable jurisdictions
in which any or all of the Mortgaged Properties are situated, and in any other
appropriate public recording office or elsewhere, such recordation to be
effected by and at the Company's expense in the event recordation is either
necessary under applicable law or requested by the Purchaser at its sole option.
Section 11.12 Assignment.
The Purchaser shall have the right, without the consent of the Company, to
assign, in whole or in part, its interest under this Agreement with respect to
some or all of the Mortgage Loans, and designate any person to exercise any
rights of the Purchaser hereunder, by executing an Assignment and Assumption
Agreement substantially in the form of Exhibit D hereto and the assignee or
designee shall accede to the rights and obligations hereunder of the Purchaser
with respect to such Mortgage Loans. In no event shall Purchaser sell a partial
interest in any Mortgage Loan without the written consent of Company, which
consent shall not be unreasonably denied. All references to the Purchaser in
this Agreement shall be deemed to include its assignee or designee. The Company
shall have the right, only with the consent of the Purchaser or otherwise in
accordance with this Agreement, to assign, in whole or in part, its interest
under this Agreement with respect to some or all of the Mortgage Loans.
Section 11.13 No Partnership.
Nothing herein contained shall be deemed or construed to create a
co-partnership or joint venture between the parties hereto and the services of
the Company shall be rendered as an independent contractor and not as agent for
Purchaser.
Section 11.14 Signature Pages/Counterparts; Successors and Assigns.
This Agreement and/or any Term Sheet shall be executed by each party (i) in
one or more fully executed copies, each of which shall constitute a fully
executed original Agreement, and/or (ii) in counterparts having one or more
original signatures, and all such counterparts containing the original
signatures of all of the parties hereto taken together shall constitute a fully
executed original Agreement or Term Sheet, as applicable, and/or (iii) by
delivery of one or more original signed signature pages to the other parties
hereto (x) by mail or courier, and/or (y) by electronic transmission, including
without limitation by telecopier, facsimile or email of a scanned image
("Electronic Transmission"), each of which as received shall constitute for all
purposes an executed original signature page of such party. The Purchaser may
deliver a copy of this Agreement and/or any Term Sheet, fully executed as
provided herein, to each other party hereto by mail and/or courier and/or
Electronic Transmission, and such copy as so delivered shall constitute a fully
executed original Agreement or Term Sheet, as applicable, superseding any prior
form of the Agreement or Term Sheet, as applicable, that differs therefrom in
any respect. This Agreement shall inure to the benefit of and be binding upon
the Company and the Purchaser and their respective successor and assigns.
70
Section 11.15 Entire Agreement.
The Company acknowledges that no representations, agreements or promises
were made to the Company by the Purchaser or any of its employees other than
those representations, agreements or promises specifically contained herein and
in the Confirmation. The Confirmation and this Agreement and the related Term
Sheet sets forth the entire understanding between the parties hereto; provided,
however, only this Agreement and the related Term Sheet shall be binding upon
all successors of both parties. In the event of any inconsistency between the
Confirmation and this Agreement, this Agreement and the related Term Sheet shall
control.
Section 11.16. No Solicitation.
From and after the Closing Date, the Company agrees that it will not take
any action or permit or cause any action to be taken by any of its agents or
affiliates, to personally, by telephone or mail, solicit the borrower or obligor
under any Mortgage Loan to refinance the Mortgage Loan, in whole or in part,
without the prior written consent of the Purchaser. Notwithstanding the
foregoing, it is understood and agreed that (i) promotions undertaken by the
Company or any affiliate of the Company which are directed to the general public
at large, or segments thereof, provided that no segment shall consist primarily
of the Mortgage Loans, including, without limitation, mass mailing based on
commercially acquired mailing lists, newspaper, radio and television
advertisements and (ii) responses to unsolicited requests or inquiries made by a
Mortgagor or an agent of a Mortgagor, shall not constitute solicitation under
this Section 11.16. This Section 11.16 shall not be deemed to preclude the
Company or any of its affiliates from soliciting any Mortgagor for any other
financial products or services. The Company shall use its best efforts to
prevent the sale of the name of any Mortgagor to any Person who is not affiliate
of the Company.
Section 11.17. Closing.
The closing for the purchase and sale of the Mortgage Loans shall take
place on the related Closing Date. The closing shall be either: by telephone,
confirmed by letter or wire as the parties shall agree, or conducted in person,
at such place as the parties shall agree.
The closing for the Mortgage Loans to be purchased on the related Closing
Date shall be subject to each of the following conditions:
(a) at least one (1) Business Day prior to the related Closing Date, the
Company shall deliver to the Purchaser a magnetic diskette, or transmit by
modem, a listing on a loan-level basis of the information contained in the
related Mortgage Loan Schedule attached to the related Term Sheet;
(b) all of the representations and warranties of the Company under this
Agreement shall be materially true and correct as of the related Closing Date
and no event shall have occurred which, with notice or the passage of time,
would constitute a material default under this Agreement;
(c) the Purchaser shall have received, or the Purchaser's attorneys shall
have received in escrow, all documents required pursuant to this Agreement, the
related Term Sheet, an opinion of
71
counsel and an officer's certificate, all in such forms as are agreed upon and
acceptable to the Purchaser, duly executed by all signatories other than the
Purchaser as required pursuant to the terms hereof;
(d) the Company shall have delivered and released to the Purchaser (or its
designee) on or prior to the related Closing Date all documents required
pursuant to the terms of this Agreement and the related Term Sheet; and
(e) all other terms and conditions of this Agreement, the related Term
Sheet and the Confirmation shall have been materially complied with.
Subject to the foregoing conditions, the Purchaser shall pay to the Company
on the related Closing Date the Purchase Price, plus accrued interest pursuant
to Section 2.02 of this Agreement, by wire transfer of immediately available
funds to the account designated by the Company.
Section 11.18. Cooperation of Company with a Reconstitution.
The Company and the Purchaser agree that with respect to some or all of the
Mortgage Loans, on or after the related Closing Date, on one or more dates (each
a "Reconstitution Date") at the Purchaser's sole option, the Purchaser may
effect a sale (each, a "Reconstitution") of some or all of the Mortgage Loans
then subject to this Agreement, without recourse, to:
(a) one or more third party purchasers in one or more whole loan transfers
(each, a "Whole Loan Transfer"); or
(b) one or more trusts or other entities to be formed as part of one or
more Pass-Through Transfer.
The Company agrees to execute in connection with any agreements among the
Purchaser, the Company, and any servicer in connection with a Whole Loan
Transfer, an Assignment, Assumption and Recognition Agreement substantially in
the form of Exhibit D hereto, or, at Purchaser's request, a seller's warranties
and servicing agreement or a participation and servicing agreement or similar
agreement in form and substance reasonably acceptable to the parties, and in
connection with a Pass-Through Transfer, a pooling and servicing agreement in
form and substance reasonably acceptable to the parties, (collectively the
agreements referred to herein are designated, the "Reconstitution Agreements").
It is understood that any such Reconstitution Agreement will not contain any
greater obligations on the part of Company than are contained in this Agreement.
The Purchaser shall not effect in excess of three (3) Reconstitutions, excluding
subperforming Mortgage Loans that are repurchased in a Pass-Through Transfer.
Notwithstanding anything to the contrary in this Section 11.18, the Company
agrees that it is required to perform the obligations described in Exhibit K
hereto.
With respect to each Whole Loan Transfer and each Pass-Through Transfer
entered into by the Purchaser, the Company agrees (1) to cooperate fully with
the Purchaser and any prospective purchaser with respect to all reasonable
requests and due diligence procedures; (2) to execute, deliver and perform all
Reconstitution Agreements required by the Purchaser; (3) to restate the
72
representations and warranties set forth in Section 3.01 of this Agreement as of
the settlement or closing date in connection with such Reconstitution (each, a
"Reconstitution Date"); and (4) to modify this Agreement in accordance with
Exhibit K attached hereto. In that connection, the Company shall provide to such
servicer or issuer, as the case may be, and any other participants in such
Reconstitution: (i) any and all information (including servicing portfolio
information) and appropriate verification of information (including servicing
portfolio information) which may be reasonably available to the Company, whether
through letters of its auditors and counsel or otherwise, as the Purchaser or
any such other participant shall request upon reasonable demand; and (ii) such
additional representations, warranties, covenants, opinions of counsel, letters
from auditors, and certificates of public officials or officers of the Company
as are reasonably agreed upon by the Company and the Purchaser or any such other
participant. In connection with each Pass-Through Transfer, the Company agrees
to provide reasonable and customary indemnification to the Purchaser and its
affilates for disclosure contained in any offering document relating to the
Company or its affilates, the Mortgage Loans and the underwriting standards of
the Mortgage Loans. The Purchaser shall be responsible for the costs relating to
the delivery of such information.
All Mortgage Loans not sold or transferred pursuant to a Reconstitution
shall remain subject to, and serviced in accordance with the terms of, this
Agreement and the related Term Sheet, and with respect thereto this Agreement
and the related Term Sheet shall remain in full force and effect.
73
IN WITNESS WHEREOF, the Company and the Purchaser have caused their names
to be signed hereto by their respective officers thereunto duly authorized as of
the day and year first above written.
EMC MORTGAGE CORPORATION
Company
By:
---------------------------
Name:
Title:
LUMINENT MORTGAGE CAPITAL, INC.
Purchaser
By:
---------------------------
Name:
Title:
MERCURY MORTGAGE FINANCE
STATUTORY TRUST
Purchaser
By:
---------------------------
Name:
Title:
MAIA MORTGAGE FINANCE STATUTORY
TRUST
Purchaser
By:
---------------------------
Name:
Title:
74
EXHIBIT A
CONTENTS OF MORTGAGE FILE
With respect to each Mortgage Loan, the Mortgage File shall include each of
the following items, which shall be available for inspection by the Purchaser,
and which shall be retained by the Company in the Servicing File or delivered to
the Purchaser or its designee pursuant to Sections 2.04 and 2.05 of the Amended
and Restated Purchase, Warranties and Servicing Agreement.
1. The original Mortgage Note endorsed "Pay to the order of
____________________________________________________, without recourse," and
signed via original signature in the name of the Company by an authorized
officer, with all intervening endorsements showing a complete chain of title
from the originator to the Company, together with any applicable riders. If the
Mortgage Loan was acquired by the Company in a merger, the endorsement must be
by "[Company], successor by merger to the [name of predecessor]". If the
Mortgage Loan was acquired or originated by the Company while doing business
under another name, the endorsement must be by "[Company] formerly known as
[previous name]". Mortgage Notes may be in the form of a lost note affidavit
subject to Purchaser acceptability.
2. In the case of a Mortgage Loan that is not a MERS Mortgage Loan, the
original Mortgage (together with a standard adjustable rate mortgage rider) with
evidence of recording thereon, or a copy thereof certified by the public
recording office in which such mortgage has been recorded or, if the original
Mortgage has not been returned from the applicable public recording office, a
true certified copy, certified by the Company.
3. For each Mortgage Loan that is a MERS Mortgage Loan, the original
Mortgage, noting the presence of the MIN of the Mortgage Loan and either
language indicating that the Mortgage Loan is a MOM Loan or if the Mortgage Loan
was not a MOM Loan at origination, the original Mortgage and the assignment
thereof to MERS, with evidence of recording indicated thereon, or a copy of the
Mortgage certified by the public recording office in which such Mortgage has
been recorded.
4. The original or certified copy, certified by the Company, of the Primary
Mortgage Insurance Policy, if required.
5. In the case of a Mortgage Loan that is not a MERS Mortgage Loan, the
original Assignment, from the Company to _____________________________________,
or in accordance with Purchaser's instructions, which assignment shall, but for
any blanks requested by Purchaser, be in form and substance acceptable for
recording. If the Mortgage Loan was acquired or originated by the Company while
doing business under another name, the Assignment must be by "[Company] formerly
known as [previous name]". If the Mortgage Loan was acquired by the Company in a
merger, the endorsement must be by "[Company], successor by merger to the [name
of predecessor]". None of the Assignments are blanket assignments of mortgage.
75
6. The original policy of title insurance, including riders and
endorsements thereto, or if the policy has not yet been issued, a written
commitment or interim binder or preliminary report of title issued by the title
insurance or escrow company.
7. Originals of all recorded intervening Assignments, or copies thereof,
certified by the public recording office in which such Assignments have been
recorded showing a complete chain of title from the originator to the Company,
with evidence of recording thereon, or a copy thereof certified by the public
recording office in which such Assignment has been recorded or, if the original
Assignment has not been returned from the applicable public recording office, a
true certified copy, certified by the Company.
8. Originals, or copies thereof certified by the public recording office in
which such documents have been recorded, of each assumption, extension,
modification, written assurance or substitution agreements, if applicable, or if
the original of such document has not been returned from the applicable public
recording office, a true certified copy, certified by the Company.
9. If the Mortgage Note or Mortgage or any other material document or
instrument relating to the Mortgage Loan has been signed by a person on behalf
of the Mortgagor, the original or copy of power of attorney or other instrument
that authorized and empowered such person to sign bearing evidence that such
instrument has been recorded, if so required in the appropriate jurisdiction
where the Mortgaged Property is located, or a copy thereof certified by the
public recording office in which such instrument has been recorded or, if the
original instrument has not been returned from the applicable public recording
office, a true certified copy, certified by the Company.
10. reserved.
11. Mortgage Loan closing statement (Form HUD-1) and any other
truth-in-lending or real estate settlement procedure forms required by law.
12. Residential loan application.
13. Uniform underwriter and transmittal summary (▇▇▇▇▇▇ ▇▇▇ Form 1008) or
reasonable equivalent.
14. Credit report on the mortgagor.
15. Business credit report, if applicable.
16. Residential appraisal report and attachments thereto.
17. The original of any guarantee executed in connection with the Mortgage
Note.
18. Verification of employment and income except for Mortgage Loans
originated under a limited documentation program, all in accordance with
Company's underwriting guidelines.
76
19. Verification of acceptable evidence of source and amount of down
payment, in accordance with Company's underwriting guidelines.
20. Photograph of the Mortgaged Property (may be part of appraisal).
21. Survey of the Mortgaged Property, if any.
22. Sales contract, if applicable.
23. If available, termite report, structural engineer's report, water
portability and septic certification.
24. Any original security agreement, chattel mortgage or equivalent
executed in connection with the Mortgage.
25. Name affidavit, if applicable.
Notwithstanding anything to the contrary herein, Company may provide one
certificate for all of the Mortgage Loans indicating that the documents were
delivered for recording.
77
EXHIBIT B
CUSTODIAL ACCOUNT LETTER AGREEMENT
______________, 2005
To: [_______________________]
(the "Depository")
As "Company" under the Amended and Restated Purchase, Warranties and
Servicing Agreement, dated as of April 24, 2006 (the "Agreement"), we hereby
authorize and request you to establish an account, as a Custodial Account
pursuant to Section 4.04 of the Agreement, to be designated as
"[______________________________________], in trust for the [Purchaser], Owner
of Adjustable Rate Mortgage Loans". All deposits in the account shall be subject
to withdrawal therefrom by order signed by the Company. This letter is submitted
to you in duplicate. Please execute and return one original to us.
EMC MORTGAGE CORPORATION
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
The undersigned, as "Depository", hereby certifies that the above described
account has been established under Account Number [__________], at the office of
the depository indicated above, and agrees to honor withdrawals on such account
as provided above. The full amount deposited at any time in the account will be
insured up to applicable limits by the Federal Deposit Insurance Corporation
through the Bank Insurance Fund or the Savings Association Insurance Fund or
will be invested in Permitted Investments as defined in the Agreement.
[_______________________]
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
78
EXHIBIT C
ESCROW ACCOUNT LETTER AGREEMENT
_____________, 2005
To: [_______________________]
(the "Depository")
As "Company" under the Purchase Warranties and Servicing Agreement, dated
as of April 24, 2006 (the "Agreement"), we hereby authorize and request you to
establish an account, as an Escrow Account pursuant to Section 4.06 of the
Agreement, to be designated as "[__________________________], in trust for the
[Purchaser], Owner of Adjustable Rate Mortgage Loans, and various Mortgagors."
All deposits in the account shall be subject to withdrawal therefrom by order
signed by the Company. This letter is submitted to you in duplicate. Please
execute and return one original to us.
EMC MORTGAGE CORPORATION
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
The undersigned, as "Depository", hereby certifies that the above described
account has been established under Account Number __________, at the office of
the depository indicated above, and agrees to honor withdrawals on such account
as provided above. The full amount deposited at any time in the account will be
insured up to applicable limits by the Federal Deposit Insurance Corporation
through the Bank Insurance Fund or the Savings Association Insurance Fund or
will be invested in Permitted Investments as defined in the Agreement.
[_______________________]
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
79
EXHIBIT D
FORM OF ASSIGNMENT, ASSUMPTION AND RECOGNITION AGREEMENT
This is a Purchase, Assignment, Assumption and Recognition Agreement (this
"PAAR Agreement") made as of __________, 200__, among EMC Mortgage Corporation
(the "Assignor"), ___________________ (the "Assignee"), and
_______________________ (the "Company").
In consideration of the mutual promises contained herein the parties hereto
agree that the residential mortgage loans (the "Assigned Loans") listed on
Attachment 1 annexed hereto (the "Assigned Loan Schedule") now serviced by
Company for Assignor and its successors and assigns pursuant to the Amended and
Restated Purchase, Warranties and Servicing Agreement, dated as of April 24,
2006, between Assignor and Company (the "Purchase Agreement") shall be subject
to the terms of this PAAR Agreement. Capitalized terms used herein but not
defined shall have the meanings ascribed to them in the Purchase Agreement.
PURCHASE, ASSIGNMENT AND ASSUMPTION
1. Assignor hereby grants, transfers and assigns to Assignee all of the
right, title and interest of Assignor in the Assigned Loans and, as they relate
to the Assigned Loans, all of its right, title and interest in, to and under the
Purchase Agreement.
2. Simultaneously with the execution hereof, (i) Assignee shall pay to
Assignor the "Funding Amount" as set forth in that certain letter agreement,
dated as of _________ ____, between Assignee and Assignor (the "Confirmation")
and (ii) Assignor, at its expense, shall have caused to be delivered to Assignee
or its designee the Mortgage File for each Assigned Loan in Assignor's or its
custodian's possession, as set forth in the Purchase Agreement, along with, for
each Assigned Loan, an endorsement of the Mortgage Note from the Company, in
blank, and an assignment of mortgage in recordable form from the Company, in
blank. Assignee shall pay the Funding Amount by wire transfer of immediately
available funds to the account specified by Assignor. Assignee shall be entitled
to all scheduled payments due on the Assigned Loans after ___________, 200__ and
all unscheduled payments or other proceeds or other recoveries on the Assigned
Loans received on and after _____________, 200__.
REPRESENTATIONS, WARRANTIES AND COVENANTS
3. Assignor warrants and represents to Assignee and Company as of the date
hereof:
(a) Attached hereto as Attachment 2 is a true and accurate copy of the
Purchase Agreement, which agreement is in full force and effect as of the date
hereof and the provisions of which have not been waived, amended or modified in
any respect, nor has any notice of termination been given thereunder;
(b) Assignor is the lawful owner of the Assigned Loans with full right to
transfer the Assigned Loans and any and all of its interests, rights and
obligations under the Purchase Agreement
80
as they relate to the Assigned Loans, free and clear from any and all claims and
encumbrances; and upon the transfer of the Assigned Loans to Assignee as
contemplated herein, Assignee shall have good title to each and every Assigned
Loan, as well as any and all of Assignee's interests, rights and obligations
under the Purchase Agreement as they relate to the Assigned Loans, free and
clear of any and all liens, claims and encumbrances;
(c) There are no offsets, counterclaims or other defenses available to
Company with respect to the Assigned Loans or the Purchase Agreement;
(d) Assignor has no knowledge of, and has not received notice of, any
waivers under, or any modification of, any Assigned Loan;
(e) Assignor is duly organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation, and has all requisite power
and authority to acquire, own and sell the Assigned Loans;
(f) Assignor has full corporate power and authority to execute, deliver and
perform its obligations under this PAAR Agreement, and to consummate the
transactions set forth herein. The consummation of the transactions contemplated
by this PAAR Agreement is in the ordinary course of Assignor's business and will
not conflict with, or result in a breach of, any of the terms, conditions or
provisions of Assignor's charter or by-laws or any legal restriction, or any
material agreement or instrument to which Assignor is now a party or by which it
is bound, or result in the violation of any law, rule, regulation, order,
judgment or decree to which Assignor or its property is subject. The execution,
delivery and performance by Assignor of this PAAR Agreement and the consummation
by it of the transactions contemplated hereby, have been duly authorized by all
necessary corporate action on part of Assignor. This PAAR Agreement has been
duly executed and delivered by Assignor and, upon the due authorization,
execution and delivery by Assignee and Company, will constitute the valid and
legally binding obligation of Assignor enforceable against Assignor in
accordance with its terms except as enforceability may be limited by bankruptcy,
reorganization, insolvency, moratorium or other similar laws now or hereafter in
effect relating to creditors' rights generally, and by general principles of
equity regardless of whether enforceability is considered in a proceeding in
equity or at law;
(g) No consent, approval, order or authorization of, or declaration, filing
or registration with, any governmental entity is required to be obtained or made
by Assignor in connection with the execution, delivery or performance by
Assignor of this PAAR Agreement, or the consummation by it of the transactions
contemplated hereby; and
(h) Neither Assignor nor anyone acting on its behalf has offered,
transferred, pledged, sold or otherwise disposed of the Assigned Loans or any
interest in the Assigned Loans, or solicited any offer to buy or accept a
transfer, pledge or other disposition of the Assigned Loans, or any interest in
the Assigned Loans or otherwise approached or negotiated with respect to the
Assigned Loans, or any interest in the Assigned Loans with any Person in any
manner, or made any general solicitation by means of general advertising or in
any other manner, or taken any other action which would constitute a
distribution of the Assigned Loans under the Securities Act of 1933, as amended
81
(the "1933 Act") or which would render the disposition of the Assigned Loans a
violation of Section 5 of the 1933 Act or require registration pursuant thereto.
4. Assignee warrants and represents to, and covenants with, Assignor and
Company as of the date hereof:
(a) Assignee is duly organized, validly existing and in good standing under
the laws of the jurisdiction of its organization and has all requisite power and
authority to acquire, own and purchase the Assigned Loans;
(b) Assignee has full corporate power and authority to execute, deliver and
perform its obligations under this PAAR Agreement, and to consummate the
transactions set forth herein. The consummation of the transactions contemplated
by this PAAR Agreement is in the ordinary course of Assignee's business and will
not conflict with, or result in a breach of, any of the terms, conditions or
provisions of Assignee's charter or by-laws or any legal restriction, or any
material agreement or instrument to which Assignee is now a party or by which it
is bound, or result in the violation of any law, rule, regulation, order,
judgment or decree to which Assignee or its property is subject. The execution,
delivery and performance by Assignee of this PAAR Agreement and the consummation
by it of the transactions contemplated hereby, have been duly authorized by all
necessary corporate action on part of Assignee. This PAAR Agreement has been
duly executed and delivered by Assignee and, upon the due authorization,
execution and delivery by Assignor and Company, will constitute the valid and
legally binding obligation of Assignee enforceable against Assignee in
accordance with its terms except as enforceability may be limited by bankruptcy,
reorganization, insolvency, moratorium or other similar laws now or hereafter in
effect relating to creditors' rights generally, and by general principles of
equity regardless of whether enforceability is considered in a proceeding in
equity or at law;
(c) No consent, approval, order or authorization of, or declaration, filing
or registration with, any governmental entity is required to be obtained or made
by Assignee in connection with the execution, delivery or performance by
Assignee of this PAAR Agreement, or the consummation by it of the transactions
contemplated hereby; and
(d) Assignee agrees to be bound as "Purchaser" by all of the terms,
covenants and conditions of the Purchase Agreement with respect to the Assigned
Loans, and from and after the date hereof, Assignee assumes for the benefit of
each of Assignor and Company all of Assignor's obligations as "Purchaser"
thereunder but solely with respect to such Assigned Loans.
5. Company warrants and represents to, and covenant with, Assignor and
Assignee as of the date hereof:
(a) Attached hereto as Attachment 2 is a true and accurate copy of the
Purchase Agreement, which agreement is in full force and effect as of the date
hereof and the provisions of which have not been waived, amended or modified in
any respect, nor has any notice of termination been given thereunder;
82
(b) Company is duly organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation, and has all requisite power
and authority to service the Assigned Loans and otherwise to perform its
obligations under the Purchase Agreement;
(c) Company has full corporate power and authority to execute, deliver and
perform its obligations under this PAAR Agreement, and to consummate the
transactions set forth herein. The consummation of the transactions contemplated
by this PAAR Agreement is in the ordinary course of Company's business and will
not conflict with, or result in a breach of, any of the terms, conditions or
provisions of Company's charter or by-laws or any legal restriction, or any
material agreement or instrument to which Company is now a party or by which it
is bound, or result in the violation of any law, rule, regulation, order,
judgment or decree to which Company or its property is subject. The execution,
delivery and performance by Company of this PAAR Agreement and the consummation
by it of the transactions contemplated hereby, have been duly authorized by all
necessary corporate action on part of Company. This PAAR Agreement has been duly
executed and delivered by Company, and, upon the due authorization, execution
and delivery by Assignor and Assignee, will constitute the valid and legally
binding obligation of Company, enforceable against Company in accordance with
its terms except as enforceability may be limited by bankruptcy, reorganization,
insolvency, moratorium or other similar laws now or hereafter in effect relating
to creditors' rights generally, and by general principles of equity regardless
of whether enforceability is considered in a proceeding in equity or at law;
(d) No consent, approval, order or authorization of, or declaration, filing
or registration with, any governmental entity is required to be obtained or made
by Assignee in connection with the execution, delivery or performance by Company
of this PAAR Agreement, or the consummation by it of the transactions
contemplated hereby;
(e) No event has occurred from the Closing Date to the date hereof which
would render the representations and warranties as to the related Assigned Loans
made by the Company in Section 3.01 of the Purchase Agreement to be untrue in
any material respect; and
(f) Neither this AAR Agreement nor any certification, statement, report or
other agreement, document or instrument furnished or to be furnished by the
Company pursuant to this AAR Agreement contains or will contain any materially
untrue statement of fact or omits or will omit to state a fact necessary to make
the statements contained therein not misleading.
RECOGNITION OF ASSIGNEE
6. From and after the date hereof, Company shall recognize Assignee as
owner of the Assigned Loans and will service the Assigned Loans in accordance
with the Purchase Agreement. It is the intention of Assignor, Company and
Assignee that this PAAR Agreement shall be binding upon and for the benefit of
the respective successors and assigns of the parties hereto. Neither Company nor
Assignor shall amend or agree to amend, modify, waiver, or otherwise alter any
of the terms or provisions of the Purchase Agreement which amendment,
modification, waiver or other alteration would in any way affect the Assigned
Loans without the prior written consent of Assignee.
83
MISCELLANEOUS
7. All demands, notices and communications related to the Assigned Loans,
the Purchase Agreement and this PAAR Agreement shall be in writing and shall be
deemed to have been duly given if personally delivered at or mailed by
registered mail, postage prepaid, as follows:
(a) In the case of Company,
____________________
____________________
____________________
____________________
____________________
With a copy to ______________________________________.
(b) In the case of Assignor,
____________________
____________________
____________________
____________________
____________________
(c) In the case of Assignee,
EMC Mortgage Corporation
Mac ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
___________________
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ___________
Telecopier No.: (212) 272-____
8. Each party will pay any commissions it has incurred and the fees of its
attorneys in connection with the negotiations for, documenting of and closing of
the transactions contemplated by this PAAR Agreement.
84
9. This PAAR Agreement shall be construed in accordance with the laws of
the State of New York, without regard to conflicts of law principles, and the
obligations, rights and remedies of the parties hereunder shall be determined in
accordance with such laws.
10. No term or provision of this PAAR Agreement may be waived or modified
unless such waiver or modification is in writing and signed by the party against
whom such waiver or modification is sought to be enforced.
11. This PAAR Agreement shall inure to the benefit of the successors and
assigns of the parties hereto. Any entity into which Assignor, Assignee or
Company may be merged or consolidated shall, without the requirement for any
further writing, be deemed Assignor, Assignee or Company, respectively,
hereunder.
12. This PAAR Agreement shall survive the conveyance of the Assigned Loans,
the assignment of the Purchase Agreement to the extent of the Assigned Loans by
Assignor to Assignee and the termination of the Purchase Agreement.
13. This PAAR Agreement may be executed simultaneously in any number of
counterparts. Each counterpart shall be deemed to be an original and all such
counterparts shall constitute one and the same instrument.
14. In the event that any provision of this PAAR Agreement conflicts with
any provision of the Purchase Agreement with respect to the Assigned Loans, the
terms of this PAAR Agreement shall control. In the event that any provision of
this PAAR Agreement conflicts with any provision of the Confirmation with
respect to the Assigned Loans, the terms of this PAAR Agreement shall control.
[MODIFICATION OF PURCHASE AGREEMENT
15. The Company and Assignor hereby amend the Purchase Agreement as
follows:
(a) The following definitions are added to Section 1.01 of the Purchase
Agreement:
Securities Administrator: ________________________
Supplemental PMI Insurer: ________________________
Supplemental PMI Policy: The primary guarantee insurance policy of the
Supplemental PMI Insurer attached hereto as Exhibit J, or any successor
Supplemental PMI Policy given to the Servicer by the Assignee.
Trustee: ________________________
(b) The following definition is amended and restated:
85
Insurance Proceeds: Proceeds of any Primary Mortgage Insurance Policy, the
Supplemental PMI Policy, any title policy, any hazard insurance policy or
any other insurance policy covering a Mortgage Loan or other related
Mortgaged Property, including any amounts required to be deposited in the
Custodial Account pursuant to Section 4.04, to the extent such proceeds are
not to be applied to the restoration of the related Mortgaged Property or
released to the Mortgagor in accordance with Accepted Servicing Practices.
(c) The following are added as the fourth, fifth and sixth paragraphs of
Section 4.08:
"In connection with its activities as servicer, the Company agrees to
prepare and present, on behalf of itself and the Purchaser, claims to the
Supplemental PMI Insurer with respect to the Supplemental PMI Policy and, in
this regard, to take such action as shall be necessary to permit recovery under
any Supplemental PMI Policy respecting a defaulted Mortgage Loan. Pursuant to
Section 4.04, any amounts collected by the Company under any Supplemental PMI
Policy shall be deposited in the Custodial Account, subject to withdrawal
pursuant to Section 4.05.
In accordance with the Supplemental PMI Policy, the Company shall provide
to the Supplemental PMI Insurer any required information regarding the Mortgage
Loans.
The Company shall provide to the [Securities Administrator] on a monthly
basis via computer tape, or other mutually acceptable format, the unpaid
principal balance, insurer certificate number, lender loan number, and premium
due the Supplemental PMI Insurer for each Mortgage Loan covered by the
Supplemental PMI Policy. In addition, the Company agrees to forward to the
Purchaser and the [Securities Administrator] any statements or other reports
given by the Supplemental PMI Insurer to the Servicer in connection with a claim
under the Supplemental PMI Policy."
(d) Clause (vi) of Section 6.1 is amended to read as follows:
"Company ceases to be approved by either ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac as a
mortgage loan seller or servicer for more than thirty days, or the Company fails
to meet the servicer eligibility requirements of the Supplemental PMI Insurer;
or"]
86
IN WITNESS WHEREOF, the parties hereto have executed this PAAR Agreement as
of the day and year first above written.
EMC MORTGAGE CORPORATION
Assignor
By:
---------------------------
Name:
-------------------------
Title:
------------------------
------------------------------
Assignee
By:
---------------------------
Name:
-------------------------
Title:
------------------------
------------------------------
Company
By:
---------------------------
Name:
-------------------------
Title:
------------------------
87
EXHIBIT ___
FORM OF COMPANY CERTIFICATION
I, [identify certifying individual], certify to the [Trustee] [Seller]
[Securities Administrator] [Mortgage Loan Seller] [Purchaser] and [Master
Servicer] that:
1. I have reviewed the servicing reports prepared by [COMPANY] (the
"Company") pursuant to the [Servicing Agreement] (the "Servicing Agreement"),
dated as of __________ between __________ or the Company (as modified by the AAR
Agreement (as defined below) and delivered to [MASTER SERVICER] (the "Master
Servicer") pursuant to the Assignment, Assumption and Recognition Agreement (the
"AAR Agreement"), dated as of __________ among [ASSIGNOR] as Assignor, Company
and [ASSIGNEE], as Assignee.
2. Based on my knowledge, the information in these reports, taken as a
whole, does not contain any untrue statement of a material fact or omit to state
a material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading as of the
last day of the period covered by such servicing reports.
3. Based on my knowledge, the servicing information required to be provided
to the Master Servicer under the Servicing Agreement and the AAR Agreement is
included in these reports.
4. I am responsible for reviewing the activities performed the Company
under the Servicing Agreement and the AAR Agreement and based upon the review
required under the Servicing Agreement and the AAR Agreement, and except as
disclosed in the Annual Statement of Compliance, the Company has fulfilled its
obligations under the Servicing Agreement and the AAR Agreement.
5. I have disclosed to the Master Servicer's certified public accountants
all significant deficiencies relating to the Company's compliance with the
minimum servicing standards in accordance with a review conduced in compliance
with the Uniform Single Attestation Program for Mortgage Bankers or similar
standard as set forth in the Servicing Agreement and the AAR Agreement.
Capitalized terms used but not defined herein have the meanings ascribed to
them in the AAR Agreement.
Date:_________________
----------------------
[Signature]
[Title]
88
ATTACHMENT 1
ASSIGNED LOAN SCHEDULE
ATTACHMENT 2
PURCHASE, WARRANTIES AND SERVICING AGREEMENT
EXHIBIT E
FORM OF TRIAL BALANCE
2
EXHIBIT F
REGULATION AB COMPLIANCE ADDENDUM
3
EXHIBIT G
REQUEST FOR RELEASE OF DOCUMENTS AND RECEIPT
RE: Mortgage Loan # ______________________________
BORROWER: ________________________________________
PROPERTY: ________________________________________
Pursuant to an Amended and Restated Purchase, Warranties and Servicing Agreement
(the "Agreement") between the Company and the Purchaser, the undersigned hereby
certifies that he or she is an officer of the Company requesting release of the
documents for the reason specified below. The undersigned further certifies
that:
(Check one of the items below)
_____ On _________________, the above captioned mortgage loan was paid in full
or that the Company has been notified that payment in full has been or will be
escrowed. The Company hereby certifies that all amounts with respect to this
loan which are required under the Agreement have been or will be deposited in
the Custodial Account as required.
_____ The above captioned loan is being repurchased pursuant to the terms of the
Agreement. The Company hereby certifies that the repurchase price has been
credited to the Custodial Account as required under the Agreement.
_____ The above captioned loan is being placed in foreclosure and the original
documents are required to proceed with the foreclosure action. The Company
hereby certifies that the documents will be returned to the Purchaser in the
event of reinstatement.
_____ Other (explain)
__________________________________________________
__________________________________________________
All capitalized terms used herein and not defined shall have the meanings
assigned to them in the Agreement.
Based on this certification and the indemnities provided for in the
Agreement, please release to the Company all original mortgage documents in your
possession relating to this loan.
Dated:________________
By:
----------------------------------
Signature
----------------------------------
Title
Send documents to: _____________________________________________________________
______________________________________________
______________________________________________
Acknowledgement:
Purchaser hereby acknowledges that all original documents previously
released on the above captioned mortgage loan have been returned and received by
the Purchaser.
Dated:________________
By:
----------------------------------
Signature
----------------------------------
Title
2
EXHIBIT H
COMPANY'S UNDERWRITING GUIDELINES
3
EXHIBIT I
FORM OF TERM SHEET
This TERM SHEET (the "Term Sheet") dated _____________, between
______________________, a ________ corporation, located at
____________________________(the "Company") and EMC Mortgage Corporation, a
Delaware corporation, located at ______________ (the "Purchaser") is made
pursuant to the terms and conditions of that certain Amended and Restated
Purchase, Warranties and Servicing Agreement (the "Agreement") dated as of April
24, 2006 between the Company and the Purchaser, the provisions of which are
incorporated herein as if set forth in full herein, as such terms and conditions
may be modified or supplemented hereby. All initially capitalized terms used
herein unless otherwise defined shall have the meanings ascribed thereto in the
Agreement.
The Purchaser hereby purchases from the Company and the Company hereby
sells to the Purchaser, all of the Company's right, title and interest in and to
the Mortgage Loans on a servicing retained basis described on the Mortgage Loan
Schedule annexed hereto as Schedule I, pursuant to and in accordance with the
terms and conditions set forth in the Agreement, as same may be supplemented or
modified hereby. Hereinafter, the Company shall service the Mortgage Loans for
the benefit of the Purchaser and all subsequent transferees of the Mortgage
Loans pursuant to and in accordance with the terms and conditions set forth in
the Agreement.
1. Definitions
For purposes of the Mortgage Loans to be sold pursuant to this Term Sheet,
the following terms shall have the following meanings:
Aggregate Principal Balance
(as of the Cut-Off Date):
Closing Date:
Custodian:
Cut-off Date:
Initial Weighted Average
Mortgage Loan Remittance Rate:
Mortgage Loan:
Purchase Price Percentage:
Servicing Fee Rate:
Additional Closing Conditions:
4
In addition to the conditions specified in the Agreement, the obligation of each
of the Company and the Purchaser is subject to the fulfillment, on or prior to
the applicable Closing Date, of the following additional conditions: [None].
Additional Loan Documents:
In addition to the contents of the Mortgage File specified in the Agreement, the
following documents shall be delivered with respect to the Mortgage Loans:
[None]
[Additional] [Modification] of Representations and Warranties:
[In addition to the representations and warranties set forth in the
Agreement, as of the date hereof, the Company makes the following additional
representations and warranties with respect to the Mortgage Loans: [None].
[Notwithstanding anything to the contrary set forth in the Agreement, with
respect to each Mortgage Loan to be sold on the Closing Date, the representation
and warranty set forth in Section ______ of the Agreement shall be modified to
read as follows:]
Except as modified herein, Section ______ of the Agreement shall remain in
full force and effect as of the date hereof.
5
IN WITNESS WHEREOF, the parties hereto have caused their names to be
signed hereto by their respective duly authorized officers as of the date first
above written.
----------------------------------------
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
EMC MORTGAGE CORPORATION
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
6
SCHEDULE I
MORTGAGE LOAN SCHEDULE
EXHIBIT J
RECONSTITUTED MORTGAGE LOAN REPORTING
(a) Servicer Mortgage Loan Number
(b) FNMA Mortgage Loan Number (if applicable)
(c) Lender/Seller Mortgage Loan Number (plus any other loan number)
(d) Month end date/ date file created
(e) Scheduled Beginning Balance
(f) Actual Beginning Balance
(g) Scheduled Ending Balance
(h) Actual Ending Balance
(i) Gross Rate (current gross rate)
(j) Net Rate (current passthrough)
(k) Last Payment Date (LPI_DATE in Fannie's Laser Reporting)
(l) Next Due Date
(m) Delinquency Month (if available)
(n) Default Flag, i.e. FC, REO, etc. (if applicable)
(o) Pay-In-Full Date (Mortgage Loan paid off by Mortgagor)
(p) Foreclosure start date
(q) Foreclosure end date
(r) REO Property date
(s) With respect to Liquidated Mortgage Loans:
(i) claim date
(ii) claim amount
(iii) proceeds
(iv) amount of loss or gain (as applicable)
(v) the date of the loss or gain.
(vi) the liquidation reason (paid in full or repurchased out of deal)
(t) Fannie's Laser Reporting (For FNMA loans)
(i) Action Code (for default or paid off Mortgage Loans; i.e. 60, 65,
etc.)
(ii) Action Date
(iii) Remit Prin (submitted principal amount)
(iv) Remit Int (submitted interest amount)
(v) Pool/Invest indicator (indicating Schedule/Schedule or Actual/Actual
pool)
EXHIBIT K
COMPANY'S OBLIGATIONS IN CONNECTION
WITH A RECONSTITUTION
o The Company shall (i) possess the ability to service securitization
documents; (ii) service on a "Scheduled/Scheduled" reporting basis
(advancing through the liquidation of an REO Property), (iii) make
compensating interest payments on payoffs and curtailments and (iv) remit
and report to a master servicer in format acceptable to such master
servicer.
o The Company shall provide an acceptable annual certification (officer's
certificate) to the master servicer (as required by the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act
of 2002) as well as any other annual certifications required under the
securitization documents (i.e. the annual statement as to compliance/annual
independent certified public accountants' servicing report due by March 15
of each year).
o The Company shall allow for the Purchaser, the master servicer or their
designee to perform a review of audited financials and net worth of the
Company.
o The Company shall provide information on each Custodial Account as
requested by the master servicer or the Purchaser, and each Custodial
Accounts shall comply with the requirements for such accounts as set forth
in the securitization documents.
o The Company shall maintain its servicing system in accordance with the
requirements of the master servicer.
EXHIBIT L
ADDITIONAL FORECLOSURE PROVISIONS
In connection with any Pass-Through Transfer the Company and the Purchaser
hereby amend the Agreement as follows (which provisions may be modified to
conform as necessary the parties and documentation relating to such Pass-Through
Transfer and as may be reflected in an assignment and assumption agreement
pursuant to which the Agreement is assigned in a Pass-Through Transfer):
The following is added after the first paragraph of Section 4.03 of the
Agreement:
Notwithstanding anything in this Agreement to the contrary, for so long as
the Master Servicer has not notified the Company that the Controlling Class
Holder is no longer entitled to the rights described in this Section 4.03:
(a) The Company shall not commence foreclosure proceedings or any
alternative to foreclosure proceedings with respect to a Mortgage Loan unless
(i) no later than five (5) Business Days prior to its commencement of such
foreclosure proceedings or such alternative foreclosure proceedings, it notifies
the Master Servicer of its intention to do so, and (ii) the Controlling Class
Holder, through the Master Servicer, does not, within three (3) Business Days
from the date the Controlling Class Holder receives notice from the Master
Servicer, affirmatively object to such action.
(b) In the event that the Company determines not to proceed with
foreclosure proceedings or any alternative to foreclosure proceedings with
respect to a Mortgage Loan that becomes 60 days' or more delinquent and the
Company has determined that it is unable to collect payments due under such
Mortgage Loan in accordance with Accepted Servicing Practices, the Company
shall, prior to taking any action with respect to such Mortgage Loan, promptly
provide the Master Servicer with notice of such determination and a description
of such other action as it intends to take with respect to such Mortgage Loan;
provided, that the Company shall not be permitted to proceed with any such
action unless the Controlling Class Holder, through the Master Servicer, does
not, within three (3) Business Days from the date the Controlling Class Holder
receives notice from the Master Servicer, affirmatively object to the Company
taking such action.
(c) If the Controlling Class Holder timely and affirmatively objects to an
action or contemplated action of the Company pursuant to either (a) or (b)
above, then the Controlling Class Holder shall instruct the Master Servicer to
hire, at the Controlling Class Holder's sole cost and expense, three appraisal
firms, selected by the Master Servicer in its sole and absolute discretion from
the list of appraisal firms attached as Exhibit C, to compute the fair value of
the Mortgaged Property relating to the related Mortgage Loan utilizing the
▇▇▇▇▇▇ Mae Form 2055 Exterior-Only Inspection Residential Appraisal Report (each
such appraisal-firm computation, a "Fair Value Price"), in each case (other than
as set forth in (d) below) no later than 30 days from the date of such
Controlling Class Holder objection. All costs relating to the computation of the
related Fair Value Prices shall be for the account of the Controlling Class
Holder and shall be paid by the Controlling Class Holder at the time of such
Mortgage Loan and the related Mortgaged Property are purchased by the
Controlling Class Holder.
(i) If the Master Servicer shall have received three Fair Value Prices
by the end of such 30-day period, then the Controlling Class Holder shall,
no later than five Business Days after the expiration of such 30-day
period, purchase such Mortgage Loan for an amount equal to the lesser of
(i) the unpaid principal balance of the related Mortgage Loan (the "Unpaid
Principal Balance") and (ii) the average of such three Fair Value Prices
respectively determined by such appraisal firms; and shall deliver such
amount to the Company against the assignment of the related Mortgage Loan
and the delivery of the related documents on the purchase date.
(ii) If the Master Servicer shall not have received three Fair Value
Prices by the end of the 30-day period set forth in clause (1)(c) above,
then:
(A) If the Master Servicer shall have received only two Fair
Value Prices by the end of such 30-day period, then the Master
Servicer shall determine, in its reasonable discretion, the fair
value of the Mortgaged Property and other collateral relating to
such Mortgage Loan (such fair value, the "Master Servicer's Fair
Value Price") and the Controlling Class Holder shall, no later
than five Business Days after the expiration of such 30-day
period, purchase such Mortgage Loan for an amount equal to the
least of (1) the Unpaid Principal Balance thereof, (2) the
average of such Fair Value Prices determined by such appraisal
firms and (3) the Master Servicer's Fair Value Price; and shall
deliver such amount to the Company against the assignment of the
related Mortgage Loan and the delivery of the related documents
on the purchase date.
(B) If the Master Servicer shall have received only one Fair
Value Price by the end of such 30-day period, then the Master
Servicer will determine the Master Servicer Fair Value Price of
the Mortgaged Property related to such Mortgage Loan and the
Controlling Class Holder shall, no later than five Business Days
after the expiration of such 30-day period, purchase such
Mortgage Loan for an amount equal to the least of (1) the Unpaid
Principal Balance thereof, (2) the Fair Value Price determined by
such appraisal firm and (3) the Master Servicer's Fair Value
Price; and shall deliver such amount to the Company against the
assignment of the related Mortgage Loan and the delivery of the
related documents on the purchase date.
(C) If the Master Servicer shall not have received any such
Fair Value Prices by the end of such 30-day period, then the
Master Servicer will determine the Master Servicer Fair Value
Price of the Mortgaged Property related to such Mortgage Loan and
the Controlling Class Holder shall, no later than five Business
Days after the expiration of such 30-day period, purchase such
Mortgage Loan for an amount equal to the lesser of (1) the Unpaid
Principal Balance thereof and (2) the Master Servicer's Fair
Value Price; and shall deliver such amount to the Company against
the assignment
of the related Mortgage Loan and the delivery of the related
documents on the purchase date.
(D) If the Master Servicer has not received three Fair Value
Prices by the end of such 30-day period, it shall continue for
the next 30 days to try to obtain three Fair Value Prices. Upon
the earlier of the date that it obtains the three Fair Value
Prices, or the end of the 30-day extension, the Master Servicer
shall recalculate the price payable pursuant to this Section 4.03
and, within five Business Days thereafter, (i) the Controlling
Class Holder shall pay the Company the positive difference
between the recalculated purchase price, and the price actually
paid by it, or (ii) the Company shall refund to the Controlling
Class Holder the positive difference between the purchase price
actually paid by the Controlling Class Holder, and the
recalculated purchase price.
(d) The Controlling Class Holder shall not be entitled to any of its rights
with respect to a Mortgage Loan if it fails to purchase such Mortgage Loan as
set forth herein.
(e) Any notice, confirmation, instruction or objection pursuant to
paragraphs (a), (b) and (c) above may be delivered via facsimile or other
written or electronic communication as the parties hereto and the Controlling
Class Holder agree to from time to time.
(f) For the avoidance of doubt, the Controlling Class Holders' rights set
forth in this Section 4.03 are intended to provide the Controlling Class Holder,
for so long as the Controlling Class Holder owns 100% of the Certificates, with
the unilateral right to control foreclosure decisions in respect of delinquent
and defaulted Mortgage Loans, and certain exclusive purchase rights so as to
maximize the recovery value on delinquent and defaulted Mortgage Loans and the
Controlling Class Holder shall not have any right to purchase a Mortgage Loan
that is not a delinquent or defaulted Mortgage Loan as to which the Company is
prepared to commence foreclosure proceedings or any alternative to foreclosure
proceedings or take other action to collect payments due under such Mortgage
Loan.
(g) To the extent that the Controlling Class Holder purchases any Mortgage
Loan pursuant to this Section 4.03, at the option of the Controlling Class
Holder, the Company will continue to service such Mortgage Loan in accordance
with this Agreement. The parties acknowledge that, in such event, the Master
Servicer will have no duty or responsibility to master service any such Mortgage
Loan.
EXHIBIT M
STANDARD FILE LAYOUT - MASTER SERVICING
STANDARD FILE LAYOUT - MASTER SERVICING
COLUMN NAME DESCRIPTION DECIMAL FORMAT COMMENT
--------------------------- -------------------------------------------------- ------- ---------------------------------------
SER_INVESTOR_NBR A value assigned by the Servicer to define a group Text up to 10 digits
of loans.
LOAN_NBR A unique identifier assigned to each loan by the Text up to 10 digits
investor.
SERVICER_LOAN_NBR A unique number assigned to a loan by the Text up to 10 digits
Servicer. This may be different than the LOAN_NBR.
BORROWER_NAME The borrower name as received in the file. It is Maximum length of 30 (Last, First)
not separated by first and last name.
SCHED_PAY_AMT Scheduled monthly principal and scheduled interest 2 No commas(,) or dollar signs ($)
payment that a borrower is expected to pay, P&I
constant.
NOTE_INT_RATE The loan interest rate as reported by the 4 Max length of 6
Servicer.
NET_INT_RATE The loan gross interest rate less the service fee 4 Max length of 6
rate as reported by the Servicer.
SERV_FEE_RATE The servicer's fee rate for a loan as reported by 4 Max length of 6
the Servicer.
SERV_FEE_AMT The servicer's fee amount for a loan as reported 2 No commas(,) or dollar signs ($)
by the Servicer.
NEW_PAY_AMT The new loan payment amount as reported by the 2 No commas(,) or dollar signs ($)
Servicer.
NEW_LOAN_RATE The new loan rate as reported by the Servicer. 4 Max length of 6
ARM_INDEX_RATE The index the Servicer is using to calculate a 4 Max length of 6
forecasted rate.
ACTL_BEG_PRIN_BAL The borrower's actual principal balance at the 2 No commas(,) or dollar signs ($)
beginning of the processing cycle.
ACTL_END_PRIN_BAL The borrower's actual principal balance at the end 2 No commas(,) or dollar signs ($)
of the processing cycle.
BORR_NEXT_PAY_DUE_DATE The date at the end of processing cycle that the MM/DD/YYYY
borrower's next payment is due to the Servicer, as
reported by Servicer.
SERV_CURT_AMT_1 The first curtailment amount to be applied. 2 No commas(,) or dollar signs ($)
SERV_CURT_DATE_1 The curtailment date associated with the first MM/DD/YYYY
curtailment amount.
CURT_ADJ_AMT_1 The curtailment interest on the first curtailment 2 No commas(,) or dollar signs ($)
amount, if applicable.
SERV_CURT_AMT_2 The second curtailment amount to be applied. 2 No commas(,) or dollar signs ($)
SERV_CURT_DATE_2 The curtailment date associated with the second MM/DD/YYYY
curtailment amount.
CURT_ADJ_AMT_2 The curtailment interest on the second 2 No commas(,) or dollar signs ($)
curtailment amount, if applicable.
SERV_CURT_AMT_3 The third curtailment amount to be applied. 2 No commas(,) or dollar signs ($)
SERV_CURT_DATE_3 The curtailment date associated with the third MM/DD/YYYY
curtailment amount.
CURT_ADJ_AMT_3 The curtailment interest on the third curtailment 2 No commas(,) or dollar signs ($)
amount, if applicable.
PIF_AMT The loan "paid in full" amount as reported by the 2 No commas(,) or dollar signs ($)
Servicer.
PIF_DATE The paid in full date as reported by the Servicer. MM/DD/YYYY
ACTION_CODE The standard FNMA numeric code used to indicate Action Code Key: 15=Bankruptcy,
the default/delinquent status of a particular 30=Foreclosure, 60=PIF,
loan. 63=Substitution, 65=Repurchase, 70=REO
INT_ADJ_AMT The amount of the interest adjustment as reported 2 No commas(,) or dollar signs ($)
by the Servicer.
SOLDIER_SAILOR_ADJ_AMT The Soldier and Sailor Adjustment amount, if 2 No commas(,) or dollar signs ($)
applicable.
NON_ADV_LOAN_AMT The Non Recoverable Loan Amount, if applicable. 2 No commas(,) or dollar signs ($)
LOAN_LOSS_AMT The amount the Servicer is passing as a loss, if 2 No commas(,) or dollar signs ($)
applicable.
SCHED_BEG_PRIN_BAL The scheduled outstanding principal amount due at 2 No commas(,) or dollar signs ($)
the beginning of the cycle date to be passed
through to investors.
SCHED_END_PRIN_BAL The scheduled principal balance due to investors 2 No commas(,) or dollar signs ($)
at the end of a processing cycle.
SCHED_PRIN_AMT The scheduled principal amount as reported by the 2 No commas(,) or dollar signs ($)
Servicer for the current cycle -- only applicable
for Scheduled/Scheduled Loans.
SCHED_NET_INT The scheduled gross interest amount less the 2 No commas(,) or dollar signs ($)
service fee amount for the current cycle as
reported by the Servicer -- only applicable for
Scheduled/Scheduled Loans.
ACTL_PRIN_AMT The actual principal amount collected by the 2 No commas(,) or dollar signs ($)
Servicer for the current reporting cycle -- only
applicable for Actual/Actual Loans.
ACTL_NET_INT The actual gross interest amount less the service 2 No commas(,) or dollar signs ($)
fee amount for the current reporting cycle as
reported by the Servicer -- only applicable for
Actual/Actual Loans.
PREPAY_PENALTY_AMT The penalty amount received when a borrower 2 No commas(,) or dollar signs ($)
prepays on his loan as reported by the Servicer.
PREPAY_PENALTY_WAIVED The prepayment penalty amount for the loan waived 2 No commas(,) or dollar signs ($)
by the servicer.
MOD_DATE The Effective Payment Date of the Modification for MM/DD/YYYY
the loan.
MOD_TYPE The Modification Type. Varchar - value can be alpha or numeric
DELINQ_P&I_ADVAN CE_AMT The current outstanding principal and interest 2 No commas(,) or dollar signs ($)
advances made by Servicer.
EXHIBIT N
CALCULATION OF REALIZED GAIN/LOSS FORM
EXHIBIT : CALCULATION OF REALIZED LOSS/GAIN FORM 332- INSTRUCTION SHEET
NOTE: DO NOT NET OR COMBINE ITEMS. SHOW ALL EXPENSES INDIVIDUALLY AND ALL
CREDITS AS SEPARATE LINE ITEMS. CLAIM PACKAGES ARE DUE ON THE REMITTANCE
REPORT DATE. LATE SUBMISSIONS MAY RESULT IN CLAIMS NOT BEING PASSED UNTIL
THE FOLLOWING MONTH. THE SERVICER IS RESPONSIBLE TO REMIT ALL FUNDS PENDING
LOSS APPROVAL AND/OR RESOLUTION OF ANY DISPUTED ITEMS.
THE NUMBERS ON THE 332 FORM CORRESPOND WITH THE NUMBERS LISTED BELOW.
LIQUIDATION AND ACQUISITION EXPENSES:
1. The Actual Unpaid Principal Balance of the Mortgage Loan. For
documentation, an Amortization Schedule from date of default through
liquidation breaking out the net interest and servicing fees
advanced is required.
2. The Total Interest Due less the aggregate amount of servicing fee
that would have been earned if all delinquent payments had been made
as agreed. For documentation, an Amortization Schedule from date of
default through liquidation breaking out the net interest and
servicing fees advanced is required.
3. Accrued Servicing Fees based upon the Scheduled Principal Balance of
the Mortgage Loan as calculated on a monthly basis. For
documentation, an Amortization Schedule from date of default through
liquidation breaking out the net interest and servicing fees
advanced is required.
4-12. Complete as applicable. Required documentation:
* For taxes and insurance advances - see page 2 of 332 form -
breakdown required showing period of coverage, base tax,
interest, penalty. Advances prior to default require evidence
of servicer efforts to recover advances.
* For escrow advances - complete payment history
(to calculate advances from last positive escrow balance
forward)
* Other expenses - copies of corporate advance history showing
all payments
* REO repairs >$1500 require explanation
* REO repairs >$3000 require evidence of at least 2 bids.
* Short Sale or Charge Off require P&L supporting the decision
and WFB's approved Officer Certificate
* Unusual or extraordinary items may require further
documentation.
13. The total of lines 1 through 12.
Credits:
14-21. Complete as applicable. Required documentation:
* Copy of the HUD 1 from the REO sale. If a 3rd Party Sale, bid
instructions and Escrow Agent/Attorney
Letter of Proceeds Breakdown.
* Copy of EOB for any MI or gov't guarantee
* All other credits need to be clearly defined on the 332 form
22. The total of lines 14 through 21.
Please Note: For HUD/VA loans, use line (18a) for Part A/Initial proceeds
and line (18b) for Part B/Supplemental proceeds.
TOTAL REALIZED LOSS (OR AMOUNT OF ANY GAIN)
23. The total derived from subtracting line 22 from 13. If the amount
represents a realized gain, show the amount in parenthesis ( ).
EXHIBIT 3A: CALCULATION OF REALIZED LOSS/GAIN FORM 332
Prepared by: __________________ Date: _______________
Phone: ________________________ Email Address:__________________
----------------------- ----------------------- ------------------------
Servicer Loan No. Servicer Name Servicer Address
----------------------- ----------------------- ------------------------
▇▇▇▇▇ FARGO BANK, N.A. LOAN NO._____________________________
Borrower's Name: _________________________________________________________
Property Address: ________________________________________________________
LIQUIDATION TYPE: REO SALE 3RD PARTY SALE SHORT SALE CHARGE OFF
WAS THIS LOAN GRANTED A BANKRUPTCY DEFICIENCY OR CRAMDOWN YES NO
If "Yes", provide deficiency or cramdown amount ___________________________
LIQUIDATION AND ACQUISITION EXPENSES:
(1) Actual Unpaid Principal Balance of Mortgage Loan $___________ (1)
(2) Interest accrued at Net Rate ___________ (2)
(3) Accrued Servicing Fees ___________ (3)
(4) Attorney's Fees ___________ (4)
(5) Taxes (see page 2) ___________ (5)
(6) Property Maintenance ___________ (6)
(7) MI/Hazard Insurance Premiums (see page 2) ___________ (7)
(8) Utility Expenses ___________ (8)
(9) Appraisal/BPO ___________ (9)
(10) Property Inspections ___________ (10)
(11) FC Costs/Other Legal Expenses ___________ (11)
(12) Other (itemize) ___________ (12)
Cash for Keys__________________________ ___________ (12)
HOA/Condo Fees_________________________ ___________ (12)
_______________________________________ ___________ (12)
TOTAL EXPENSES $___________ (13)
CREDITS:
(14) Escrow Balance $___________ (14)
(15) HIP Refund ___________ (15)
(16) Rental Receipts ___________ (16)
(17) Hazard Loss Proceeds ___________ (17)
(18) Primary Mortgage Insurance / Gov't Insurance ___________ (18a)
HUD Part A
___________ (18b)
HUD Part B
(19) Pool Insurance Proceeds ___________ (19)
(20) Proceeds from Sale of Acquired Property ___________ (20)
(21) Other (itemize) ___________ (21)
_________________________________________ ___________ (21)
TOTAL CREDITS $___________ (22)
TOTAL REALIZED LOSS (OR AMOUNT OF GAIN) $___________ (23)
ESCROW DISBURSEMENT DETAIL
TYPE PERIOD OF BASE
(TAX/INS.) DATE PAID COVERAGE TOTAL PAID AMOUNT PENALTIES INTEREST
---------- --------- --------- ---------- ------ --------- --------
EXHIBIT O
STANDARD FILE LAYOUT - DELINQUENCY REPORTING
EXHIBIT: STANDARD FILE LAYOUT - DELINQUENCY REPORTING
COLUMN/HEADER NAME DESCRIPTION DECIMAL FORMAT COMMENT
--------------------------- -------------------------------------------------- ------- ---------------------------------------
SERVICER_LOAN_NBR A unique number assigned to a loan by the
Servicer. This may be different than the LOAN_NBR
LOAN_NBR A unique identifier assigned to each loan by the
originator.
CLIENT_NBR Servicer Client Number
SERV_INVESTOR_NBR Contains a unique number as assigned by an
external servicer to identify a group of loans in
their system.
BORROWER_FIRST_NAME First Name of the Borrower.
BORROWER_LAST_NAME Last name of the borrower.
PROP_ADDRESS Street Name and Number of Property
PROP_STATE The state where the property located.
PROP_ZIP Zip code where the property is located.
BORR_NEXT_PAY_DUE_DATE The date that the borrower's next payment is due MM/DD/YYYY
to the servicer at the end of processing cycle, as
reported by Servicer.
LOAN_TYPE Loan Type (i.e. FHA, VA, Conv)
BANKRUPTCY_FILED_DATE The date a particular bankruptcy claim was filed. MM/DD/YYYY
BANKRUPTCY_CHAPTER_CODE The chapter under which the bankruptcy was filed.
BANKRUPTCY_CASE_NBR The case number assigned by the court to the
bankruptcy filing.
POST_PETITION_DUE_DATE The payment due date once the bankruptcy has been MM/DD/YYYY
approved by the courts
BANKRUPTCY_DCHRG_DISM_DATE The Date The Loan Is Removed From Bankruptcy. MM/DD/YYYY
Either by Dismissal, Discharged and/or a Motion
For Relief Was Granted.
LOSS_MIT_APPR_DATE The Date The Loss Mitigation Was Approved By The MM/DD/YYYY
Servicer
LOSS_MIT_TYPE The Type Of Loss Mitigation Approved For A Loan
Such As;
LOSS_MIT_EST_COMP_DATE The Date The Loss Mitigation /Plan Is Scheduled To MM/DD/YYYY
End/Close
LOSS_MIT_ACT_COMP_DATE The Date The Loss Mitigation Is Actually Completed MM/DD/YYYY
FRCLSR_APPROVED_DATE The date DA Admin sends a letter to the servicer MM/DD/YYYY
with instructions to begin foreclosure
proceedings.
ATTORNEY_REFERRAL_DATE Date File Was Referred To Attorney to Pursue MM/DD/YYYY
Foreclosure
FIRST_LEGAL_DATE Notice of 1st legal filed by an Attorney in a MM/DD/YYYY
Foreclosure Action
FRCLSR_SALE_EXPECTED_DATE The date by which a foreclosure sale is expected MM/DD/YYYY
to occur.
FRCLSR_SALE_DATE The actual date of the foreclosure sale. MM/DD/YYYY
FRCLSR_SALE_AMT The amount a property sold for at the foreclosure 2 No commas(,) or dollar signs ($)
sale.
EVICTION_START_DATE The date the servicer initiates eviction of the MM/DD/YYYY
borrower.
EVICTION_COMPLETED_DATE The date the court revokes legal possession of the MM/DD/YYYY
property from the borrower.
LIST_PRICE The price at which an REO property is marketed. 2 No commas(,) or dollar signs ($)
LIST_DATE The date an REO property is listed at a particular MM/DD/YYYY
price.
COLUMN/HEADER NAME DESCRIPTION DECIMAL FORMAT COMMENT
--------------------------- -------------------------------------------------- ------- ---------------------------------------
OFFER_AMT The dollar value of an offer for an REO property. 2 No commas(,) or dollar signs ($)
OFFER_DATE_TIME The date an offer is received by DA Admin or by MM/DD/YYYY
the Servicer.
REO_CLOSING_DATE The date the REO sale of the property is scheduled MM/DD/YYYY
to close.
REO_ACTUAL_CLOSING_DATE Actual Date Of REO Sale MM/DD/YYYY
OCCUPANT_CODE Classification of how the property is occupied.
PROP_CONDITION_CODE A code that indicates the condition of the
property.
PROP_INSPECTION_DATE The date a property inspection is performed. MM/DD/YYYY
APPRAISAL_DATE The date the appraisal was done. MM/DD/YYYY
CURR_PROP_VAL The current "as is" value of the property based on 2
brokers price opinion or appraisal.
REPAIRED_PROP_VAL The amount the property would be worth if repairs 2
are completed pursuant to a broker's price opinion
or appraisal.
IF APPLICABLE:
DELINQ_STATUS_CODE FNMA Code Describing Status of Loan
DELINQ_REASON_CODE The circumstances which caused a borrower to stop
paying on a loan. Code indicates the reason why
the loan is in default for this cycle.
MI_CLAIM_FILED_DATE Date Mortgage Insurance Claim Was Filed With MM/DD/YYYY
Mortgage Insurance Company.
MI_CLAIM_AMT Amount of Mortgage Insurance Claim Filed No commas(,) or dollar signs ($)
MI_CLAIM_PAID_DATE Date Mortgage Insurance Company Disbursed Claim MM/DD/YYYY
Payment
MI_CLAIM_AMT_PAID Amount Mortgage Insurance Company Paid On Claim 2 No commas(,) or dollar signs ($)
POOL_CLAIM_FILED_DATE Date Claim Was Filed With Pool Insurance Company MM/DD/YYYY
POOL_CLAIM_AMT Amount of Claim Filed With Pool Insurance Company 2 No commas(,) or dollar signs ($)
POOL_CLAIM_PAID_DATE Date Claim Was Settled and The Check Was Issued By MM/DD/YYYY
The Pool Insurer
POOL_CLAIM_AMT_PAID Amount Paid On Claim By Pool Insurance Company 2 No commas(,) or dollar signs ($)
FHA_PART_A_CLAIM_FILED_DATE Date FHA Part A Claim Was Filed With HUD MM/DD/YYYY
FHA_PART_A_CLAIM_AMT Amount of FHA Part A Claim Filed 2 No commas(,) or dollar signs ($)
FHA_PART_A_CLAIM_PAID_DATE Date HUD Disbursed Part A Claim Payment MM/DD/YYYY
FHA_PART_A_CLAIM_PAID_AMT Amount HUD Paid on Part A Claim 2 No commas(,) or dollar signs ($)
FHA_PART_B_CLAIM_FILED_DATE Date FHA Part B Claim Was Filed With HUD MM/DD/YYYY
FHA_PART_B_CLAIM_AMT Amount of FHA Part B Claim Filed 2 No commas(,) or dollar signs ($)
FHA_PART_B_CLAIM_PAID_DATE Date HUD Disbursed Part B Claim Payment MM/DD/YYYY
FHA_PART_B_CLAIM_PAID_AMT Amount HUD Paid on Part B Claim 2 No commas(,) or dollar signs ($)
VA_CLAIM_FILED_DATE Date VA Claim Was Filed With the Veterans Admin MM/DD/YYYY
VA_CLAIM_PAID_DATE Date Veterans Admin. Disbursed VA Claim Payment MM/DD/YYYY
VA_CLAIM_PAID_AMT Amount Veterans Admin. Paid on VA Claim 2 No commas(,) or dollar signs ($)
EXHIBIT 2: STANDARD FILE CODES - DELINQUENCY REPORTING
The LOSS MIT TYPE field should show the approved Loss Mitigation Code as
follows:
o ASUM- Approved Assumption
o BAP- Borrower Assistance Program
o CO- Charge Off
o DIL- Deed-in-Lieu
o FFA- Formal Forbearance Agreement
o MOD- Loan Modification
o PRE- Pre-Sale
o SS- Short Sale
o MISC- Anything else approved by the PMI or Pool Insurer
NOTE: ▇▇▇▇▇ Fargo Bank will accept alternative Loss Mitigation Types to those
above, provided that they are consistent with industry standards. If Loss
Mitigation Types other than those above are used, the Servicer must supply ▇▇▇▇▇
Fargo Bank with a description of each of the Loss Mitigation Types prior to
sending the file.
The OCCUPANT CODE field should show the current status of the property code as
follows:
o Mortgagor
o Tenant
o Unknown
o Vacant
The PROPERTY CONDITION field should show the last reported condition of the
property as follows:
o Damaged
o Excellent
o Fair
o Gone
o Good
o Poor
o Special Hazard
o Unknown
EXHIBIT 2: STANDARD FILE CODES - DELINQUENCY REPORTING, CONTINUED
The FNMA DELINQUENT REASON CODE field should show the Reason for Delinquency as
follows:
DELINQUENCY
CODE DELINQUENCY DESCRIPTION
----------- -----------------------
001 FNMA-Death of principal mortgagor
002 FNMA-Illness of principal mortgagor
003 FNMA-Illness of mortgagor's family member
004 FNMA-Death of mortgagor's family member
005 FNMA-Marital difficulties
006 FNMA-Curtailment of income
007 FNMA-Excessive Obligation
008 FNMA-Abandonment of property
009 FNMA-Distant employee transfer
011 FNMA-Property problem
012 FNMA-Inability to sell property
013 FNMA-Inability to rent property
014 FNMA-Military Service
015 FNMA-Other
016 FNMA-Unemployment
017 FNMA-Business failure
019 FNMA-Casualty loss
022 FNMA-Energy environment costs
023 FNMA-Servicing problems
026 FNMA-Payment adjustment
027 FNMA-Payment dispute
029 FNMA-Transfer of ownership pending
030 FNMA-Fraud
031 FNMA-Unable to contact borrower
INC FNMA-Incarceration
EXHIBIT 2: STANDARD FILE CODES - DELINQUENCY REPORTING, CONTINUED
The FNMA DELINQUENT STATUS CODE field should show the Status of Default as
follows:
STATUS CODE STATUS DESCRIPTION
----------- ------------------
09 Forbearance
17 Pre-foreclosure Sale Closing Plan Accepted
24 Government Seizure
26 Refinance
27 Assumption
28 Modification
29 Charge-Off
30 Third Party Sale
31 Probate
32 Military Indulgence
43 Foreclosure Started
44 Deed-in-Lieu Started
49 Assignment Completed
61 Second Lien Considerations
62 Veteran's Affairs-No Bid
63 Veteran's Affairs-Refund
64 Veteran's Affairs-Buydown
65 Chapter 7 Bankruptcy
66 Chapter 11 Bankruptcy
67 Chapter 13 Bankruptcy
SCHEDULE I
LIST OF DISPUTED LOANS
