RESIDENTIAL FLOW INTERIM SERVICING
AND SERVICING RIGHTS PURCHASE AGREEMENT
Between
OCWEN FEDERAL BANK FSB,
Interim Servicer
and
NEW CENTURY MORTGAGE CORPORATION,
Owner
Dated as of March 1, 2001
PERFORMING AND NON-PERFORMING
RESIDENTIAL MORTGAGE LOANS AND REO PROPERTIES
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS .................................................................................. 1
Section 1.1. Definitions ............................................................ 1
Section 1.2. Interpretation of Agreement ............................................ 10
ARTICLE II
TRANSFER OF SERVICING, SERVICING RESPONSIBILITIES AND SERVICING
COMPENSATION .................................................. 11
Section 2.1. Transfer of Servicing Files to Interim Servicer ........................ 11
Section 2.2. Release of Loan Documents .............................................. 13
Section 2.3. Servicing Responsibilities ............................................. 13
Section 2.4. Collection and Resolution Activities ................................... 17
Section 2.5. Servicing Compensation ................................................. 17
Section 2.6. Reconstitution ......................................................... 17
ARTICLE III
DEFAULT MANAGEMENT SERVICES .................................................................. 20
Section 3.1. Default Management Responsibilities .................................... 20
Section 3.2. Foreclosure ............................................................ 20
Section 3.3. Deed in Lieu ........................................................... 21
Section 3.4. Priority; Insurance Claims ............................................. 21
Section 3.5. Bankruptcy of Obligor .................................................. 21
ARTICLE IV
PROPERTY MANAGEMENT AND DISPOSITION SERVICES ............. ................................... 21
Section 4.1. Property Management and Disposition Responsibilities ................... 21
Section 4.2. Environmental Problems ................................................. 22
ARTICLE V
STANDARDS FOR CONDUCT ........................................................................ 22
Section 5.1. Standards of Care and Delegation of Duties ............................. 22
Section 5.2. Transactions with Related Persons ...................................... 23
Section 5.3. Access to Records ...................................................... 23
Section 5.4. Annual Audit ........................................................... 23
ARTICLE VI
BILLING OF AND REPORTS TO OWNER ............................. ................................ 24
Section 6.1. Property Protection Expenses and Property
Improvement Expenses ................................................................ 24
Section 6.2. Remittances and Monthly Report ......................................... 24
Section 6.3. Remittance Upon Termination ............................................ 25
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TABLE OF CONTENTS
Section 6.4. Billing ................................................................ 25
Section 6.5. Missing Document Report ................................................ 26
ARTICLE VII
REPRESENTATIONS AND WARRANTIES ............................................................... 26
Section 7.1. Representations and Warranties of Interim Servicer ..................... 26
Section 7.2. Representations and Warranties of Owner ................................ 27
ARTICLE VIII
SALE OF SERVICING RIGHTS AND RELATED ITEMS ................................................... 29
Section 8.1. Sale of Servicing Rights ............................................... 29
Section 8.2. Sale Date .............................................................. 29
Section 8.3. Evidence of Sale ....................................................... 29
Section 8.4. Purchase Price ......................................................... 29
Section 8.5. Payment of Purchase Price by Interim Servicer .......................... 30
Section 8.6. Notice to Obligors ..................................................... 30
Section 8.7. Notice to Taxing Authorities and Insurance Companies ................... 31
Section 8.8. Tax Contracts .......................................................... 31
Section 8.9. Tax Bills, Insurance Premiums, etc. .................................... 31
Section 8.10. Flood Insurance Audit ................................................. 31
Section 8.11. Payment to Interim Servicer. .......................................... 31
ARTICLE IX
INDEMNIFICATION .............................................................................. 33
Section 9.1. Liabilities to Obligors ................................................ 33
Section 9.2. Interim Servicer's Indemnity of Owner .................................. 33
Section 9.3. Owner's Indemnity of Interim Servicer; Limitation on
Liability of Interim Servicer ....................................................... 34
Section 9.4. Indemnification Procedures ............................................. 36
Section 9.5. Operation of Indemnities ............................................... 37
ARTICLE X
DEFAULT ...................................................................................... 37
Section 10.1. Events of Default ..................................................... 37
Section 10.2. Effect of Transfer .................................................... 39
ARTICLE XI
TERM ......................................................................................... 39
Section 11.1. Term of Agreement ..................................................... 39
Section 11.2. Transfers of Servicing ................................................ 41
Section 11.3. Interim Servicer Not to Resign ........................................ 41
ARTICLE XII
MISCELLANEOUS ................................................................................ 41
Section 12.1. Successors and Assigns; No Third Party Beneficiaries .................. 41
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TABLE OF CONTENTS
Section 12.2. Choice of Law ......................................................... 42
Section 12.3. Notices ............................................................... 42
Section 12.4. Entire Agreement; Amendments; Waivers ................................. 42
Section 12.5. No Joint Venture; Limited Agency ...................................... 43
Section 12.6. Publicity. ............................................................ 43
Section 12.7. Severability; Interpretation .......................................... 43
Section 12.8. Counterparts .......................................................... 43
Section 12.9. Waiver of Jury Trial .................................................. 43
Section 12.10. Limitation of Damages ................................................ 43
EXHIBITS
The following exhibits are incorporated into this Agreement:
EXHIBIT A Monthly Report
EXHIBIT B Servicing File
EXHIBIT C Servicing and Termination Fees EXHIBIT D Form of Pricing Letter
EXHIBIT E Form of ▇▇▇▇ of Sale EXHIBIT F Pricing Matrix EXHIBIT G Warranties
Certificate EXHIBIT H Servicing Transfer Provisions EXHIBIT I
Servicing Standards
RESIDENTIAL FLOW INTERIM SERVICING
AND SERVICING RIGHTS PURCHASE AGREEMENT
This RESIDENTIAL FLOW INTERIM SERVICING AND SERVICING RIGHTS PURCHASE
AGREEMENT (this "Agreement") dated effective as of March 1, 2001, by and between
NEW CENTURY MORTGAGE CORPORATION, a California corporation ("Owner") and OCWEN
FEDERAL BANK FSB, a federally chartered savings bank (the "Interim Servicer").
W I T N E S S E T H:
WHEREAS, Owner (i) owns certain loans and "real estate owned"
properties and (ii) may from time to time originate or buy additional loans for
its own account secured by mortgages and/or deeds of trust;
WHEREAS, Owner and Interim Servicer desire to set forth the terms and
conditions on which Interim Servicer will service and provide management and
disposition services for such mortgage loans and "real estate owned" properties;
NOW, THEREFORE, in consideration for the mutual benefits and
obligations as hereinafter set forth, the parties hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. DEFINITIONS. Capitalized terms used in this Agreement and
not otherwise defined shall have the meanings given to them in this Section 1.1.
"ACCEPTED SERVICING PRACTICES" means, with respect to any Loan or REO
Property, those servicing, collection, resolution or disposition practices that
are undertaken to maximize the net present value to Owner of Owner's investment
in any Loan or REO Property followed with the same care, skill, prudence and
diligence with which Interim Servicer services and administers mortgage loans or
properties held for other portfolios similar to the Loan or REO Property, as the
case may be, and in all cases in compliance with all Requirements (including the
servicing standards set forth on Exhibit I hereto), but without regard to:
1. any relationship that Interim Servicer, any sub-servicer or
any affiliate of Interim Servicer or any other sub-servicer
may have with the related Obligor; or
2. Interim Servicer's or any sub-servicer's right to receive
compensation for its services hereunder or with respect to any
particular transaction; or
3. the ownership, or servicing or management for others, by
Interim Servicer or any sub-servicer, of any other mortgage
loans or property;
provided, however, that to the extent that there is any conflict between such
practices and the terms of this Agreement, such services are performed in
compliance with the terms of this Agreement.
"AGREEMENT" means this Residential Flow Interim Servicing and Servicing
Rights Purchase Agreement as amended, modified or supplemented from time to
time, including all exhibits and schedules hereto.
"ANCILLARY INCOME" means all income (other than prepayment penalties)
from the Loans and Properties to which Interim Servicer is entitled in
connection with the servicing of the Loans (exclusive of the Servicing Fee),
including, without limitation, late charges, insufficient fund fees, assumption
fees, modification fees, fees associated with any repayment plan or forbearance
agreement, fees associated with any discounted payoff, interest on the
Collection Account and Escrow Accounts (but only to the extent that applicable
Requirements or the Loan Documents do not require that such interest be paid to
the applicable Obligor) and all other incidental fees. Interim Servicer shall be
entitled to retain all Ancillary Income.
"ASSOCIATION" means any homeowners' association or condominium
association.
"BALLOON LOAN" means any Loan that by its original terms or by virtue
of any modification provides for an amortization schedule extending beyond its
originally scheduled Maturity Date.
"BALLOON PAYMENT" means, with respect to a Balloon Loan as of any date
of determination, the amount outstanding on the Maturity Date of such Balloon
Loan in excess of the related Monthly Payment.
"BANKRUPTCY CODE" means 11 U.S.C. 101 et. seq., as the same may be
amended, modified or supplemented from time to time.
"▇▇▇▇ OF SALE" means a ▇▇▇▇ of sale with respect to the sale of any
Servicing Rights Package on any date in the form annexed hereto as Exhibit E.
"BUSINESS DAY" means any day other than (a) a Saturday or Sunday or (b)
a day on which banking and savings and loan institutions in the States of
Florida or California are authorized or obligated by law or executive order to
be closed.
"COLLECTION ACCOUNT" means the separate account(s) created pursuant to
Section 2.3(a) of this Agreement, which shall be entitled "Ocwen Federal Bank
FSB, as Interim Servicer, in trust for New Century Mortgage Corporation and its
successors and assigns."
"COLLECTION PERIOD" means with respect to each Distribution Date, the
period commencing on the first day of the month preceding the month of the
Distribution Date and ending on the last day of the month preceding the month of
the Distribution Date.
"CURRENT SERVICER" means Owner or any other servicer, sub-servicer,
document custodian, owner, holder, originator or other Person who has possession
of any document or information constituting a part of a Servicing File prior to
the related Transfer Date.
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"CUSTODIAN" means the custodian appointed by the Owner to hold the Loan
Documents.
"DETERMINATION DATE" means the last day (or if such day is not a
Business Day, the Business Day immediately preceding such day) of the Collection
Period.
"DISPOSITION" means any (a) taking of Mortgaged Property by eminent
domain or condemnation or sale in lieu thereof, (b) the liquidation of a
defaulted Loan through a foreclosure sale, trustee's sale, deed-in-lieu of
foreclosure or otherwise, (c) a sale or assignment of a Loan or REO Property in
accordance with the terms hereof, and/or (d) any other disposition of the Loan
or REO Property whether through a discounted payoff, prepayment, Balloon Payment
or any other similar disposition.
"DISTRIBUTION DATE" means the fifth Business Day of each month.
"ELIGIBLE ACCOUNT" means an account maintained with a depository
institution, (i) whose accounts are insured by the FDIC and (ii) whose (or whose
direct or indirect parent's) long term unsecured debt obligations are rated at
least "A" or better by one of the Rating Agencies.
"ENVIRONMENTAL LIABILITY" shall have the meaning ascribed thereto in
Section 9.3(c).
"ENVIRONMENTAL PROBLEM PROPERTY" means a Property that is in violation
of any environmental law, rule or regulation.
"ESCROW ACCOUNTS" means the separate account(s) created pursuant to
Section 2.3(a) of this Agreement, for the payment of taxes, Association dues,
assessments, Hazard Insurance and Mortgage Insurance premiums, ground rents and
similar items which shall be entitled "Ocwen Federal Bank FSB, as Interim
Servicer, in trust for New Century Mortgage Corporation and its successors and
assigns, and various mortgagors."
"ESCROW PAYMENTS" means amounts required to be paid for taxes,
Association dues, assessments, Hazard Insurance and Mortgage Insurance premiums,
ground rents and similar items and any and all other purposes for which funds
are required to be held in escrow.
"FDIC" means the Federal Deposit Insurance Corporation or any successor
thereto.
"FHLMC" means ▇▇▇▇▇▇▇ Mac (formerly known as the Federal Home Loan
Mortgage Corporation), or any successor thereto.
"FITCH" means Fitch, Inc.
"FLOOD INSURANCE" or "Flood Insurance Policy" means an insurance policy
insuring against flood damage to a Mortgaged Property.
"FNMA" means ▇▇▇▇▇▇ ▇▇▇ (formerly known as the Federal National
Mortgage Association), or any successor thereto.
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"HAZARD INSURANCE" means casualty, fire, hazard, flood, wind, liability
or similar insurance policies relating to a Property.
"HUD" means the United States Department of Housing and Urban
Development.
"INTERIM SERVICER" means Ocwen Federal Bank FSB, a federally chartered
savings bank, its successors in interest and permitted assigns.
"INTERIM SERVICER EVENT OF DEFAULT" shall have the meaning set forth in
Section 10.1.
"LIABILITY" shall have the meaning ascribed thereto in Section 9.2.
"LIQUIDATION PROCEEDS" means cash received in connection with the
liquidation of defaulted Loans, whether through a Disposition or otherwise, net
of the amount of any broker's fees payable in connection with any sale of a REO
Property (but without any deduction for any legal fees or other costs or
expenses).
"LOAN" means a loan, secured by a mortgage or deed of trust on certain
real property, acquired by Owner and for which the servicing is transferred to
Interim Servicer from time to time pursuant to the terms and provisions of
Section 2.1; the term
"LOAN" shall include Performing Loans and Non-Performing Loans.
"LOAN DOCUMENTS" means the promissory note, mortgage or deed of trust,
assignment of mortgage, intervening assignments of mortgage, title insurance
policy or binder, Mortgage Insurance or guaranty agreement and any other
agreement, instrument or other document evidencing or relating to a Loan and any
other agreement, instrument or other document evidencing ownership of a REO
Property.
"MATURITY DATE" means, with respect to any Loan as of any date of
determination, the date on which the last payment of principal is due and
payable under the related promissory note.
"MISSING DOCUMENT REPORT" means the report prepared by Interim Servicer
and delivered to Owner pursuant to Section 6.4.
"MONTHLY COLLECTION AMOUNT" means, for each Distribution Date, all
amounts actually received into Interim Servicer's lock box during the related
Collection Period with respect to the Loans and REO Properties from whatever
source (other than partial payments), minus amounts representing accrued taxes
and insurance premiums not yet due and payable to the applicable taxing
authority or insurer, calculated in accordance with the then current escrow
analysis performed by Interim Servicer in accordance with applicable
Requirements.
"MONTHLY PAYMENT" means with respect to any Loan and any Collection
Period, the scheduled monthly payment of principal and interest, excluding any
Balloon payment, on such Loan which is payable in such Collection Period.
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"MONTHLY REPORT" means the monthly report prepared by Interim Servicer
and delivered to Owner pursuant to Section 6.2.
"MOODY'S" means Moody's Investor's Service Inc.
"MORTGAGE INSURANCE" means any mortgage insurance or guaranty relating
to a Loan issued by a Mortgage Insurer.
"MORTGAGE INSURER" means the Federal Housing Administration as a
mortgage insurer, the United States Department of Veterans Affairs as a mortgage
guarantor and any issuer of private mortgage insurance.
"MORTGAGED PROPERTY" means the real property securing a Loan.
"NON-PERFORMING LOAN" means as of the Determination Date, a Loan for
which any one of the following applies: (a) any Monthly Payment is delinquent at
least two (2) calendar months determined without giving effect to any grace
period permitted by the related Loan Documents; (b) there has been a material
default under the terms and provisions of the Loan Documents, and such material
default is not likely to be cured by Obligor within two (2) calendar months; (c)
as to which Interim Servicer shall have received notice of the foreclosure (or
deed-in-lieu of foreclosure) or proposed foreclosure (or proposed deed-in-lieu
of foreclosure) or exercise of other remedies of any other mortgage or lien on
the Mortgaged Property; (d) as to which the Obligor has entered into or
consented to bankruptcy, appointment of a receiver or conservator or a similar
insolvency or similar proceeding, or the Obligor has become the subject of a
decree or order for such a proceeding which shall have remained in force
undischarged or unstayed for a period of two (2) calendar months; or (e) as to
which the Obligor admits in writing its inability to pay its debts generally as
they become due, files a petition to take advantage of any applicable insolvency
or reorganization statute, makes an assignment for the benefit of its creditors
or voluntarily suspends payments of its obligations.
"Non-Recoverable Advance" shall have the meaning set forth in Section 2.3(b)
below.
"OBLIGOR" means the Person or Persons obligated to make payments of
principal and interest on the Loan, and includes all joint, several or joint and
several obligors and all guarantors other than Mortgage Insurers.
"OWNER" means New Century Mortgage Corporation.
"OWNER EVENT OF DEFAULT" shall have the meaning set forth in Section
10.1.
"PASS-THROUGH TRANSFER" means the sale or transfer of some or all of
the Loans by Owner to a trust to be formed as part of a publicly issued or
privately placed mortgage-backed securities transaction.
"PERFORMING LOAN" means any Loan which is not a Non-Performing Loan as
of the Determination Date.
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"PERMITTED INVESTMENTS": means, any one or more of the obligations and
securities listed below which investment provides for a date of maturity not
later than the Distribution Date in each month:
(a) direct obligations of, and obligations fully
guaranteed by, the United States of America, FHLMC, FNMA, the Federal
Home Loan Banks 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;
(b) (i) demand and time deposits in, certificates of
deposit of, bankers acceptances issued by, or federal funds sold by,
any depository institution or trust company (including Interim Servicer
or its agent acting in their respective commercial capacities)
incorporated under the laws of the United States of America or any
state thereof and subject to supervision and examination by federal or
state authorities, so long as, at the time of such investment or
contractual commitment providing for such investment, such depository
institution or trust company or its ultimate parent has a short-term
unsecured debt rating in one of the two highest available rating
categories of S&P and the highest available rating category of Moody's
and provided that each such investment has an original maturity of no
more than 365 days, and (ii) any other demand or time deposit or
deposit which is fully insured by the FDIC;
(c) repurchase obligations with a term not to exceed 30
days with respect to any security described in clause (a) above and
entered into with a depository institution or trust company (acting as
principal) rated "A" or higher by S&P and rated "A2" or higher by
Moody's; provided, however, that collateral transferred pursuant to
such repurchase obligation must be of the type described in clause (a)
above and must (i) be valued daily at current market price plus accrued
interest, (ii) pursuant to such valuation, be equal, at all times, to
at least 105% of the cash transferred by Interim Servicer in exchange
for such collateral, and (iii) be delivered to Interim Servicer, or if
Interim Servicer is supplying the collateral, an agent for Interim
Servicer, in such a manner as to accomplish perfection of a security
interest in the collateral by possession of certificated securities;
(d) 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 which has a short-term unsecured
debt rating in the highest available rating category of each of the
Rating Agencies at the time of such investment;
(e) commercial paper having an original maturity of less
than 180 days and issued by an institution having a short-term
unsecured debt rating in the highest available rating category of each
of the Rating Agencies at the time of such investment;
(f) a guaranteed investment contract approved by each of
the Rating Agencies and Owner and issued by an insurance company or
other corporation having a short-term unsecured debt rating in the
highest available rating category of each of the Rating Agencies at the
time of such investment;
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(g) money market funds having one of the two highest
available rating categories of S&P and the highest available rating
category of Moody's at the time of such investment, which invests only
in other Eligible Investments;
(h) Federal Housing Administration debentures; provided,
that any such investment shall be rated in one of the two highest
ratings categories by each Rating Agency;
(i) FHLMC participation certificates which guaranty
timely payment of principal and interest and senior debt obligations;
(j) consolidated senior debt obligations of any Federal
Home Loan Banks;
(k) FNMA mortgage-backed securities (other than stripped
mortgage securities which are valued greater than par on the portion of
unpaid principal) and senior debt obligations;
(l) federal funds, certificates of deposit time deposits,
and bankers' acceptances (having original maturities of not more than
365 days) of any domestic bank, the short-term debt obligations of
which have been rated F-1+ or better by Fitch, A-1+ or better by S&P
and P-1 by Moody's; or
(m) deposits of any bank or savings and loan association
(the long-term deposit rating of which is Baa3 or better by Moody's and
BBB by each of S&P and Fitch) which has combined capital, surplus and
undivided profits of at least $50,000,000 which deposits are insured by
the FDIC and held up to the limits insured by the FDIC;
provided that all instruments described hereunder shall mature at par on or
prior to the next succeeding Distribution Date unless otherwise provided in this
Agreement and that no instrument described hereunder may be purchased at a price
greater than par if such instrument may be prepaid or called at a price less
than its purchase price prior to stated maturity.
"PERSON" means any individual, corporation, partnership, joint venture,
association, joint stock company, trust, limited liability company,
unincorporated organization or government or agency or political subdivision
thereof.
"PREPAYMENT PENALTY" means, with respect to each Loan, if applicable,
the penalty or premium required to be paid if the Obligor prepays such Loan as
provided in the related Loan Documents.
"PRICING LETTER" The letter agreement substantially in the form of
Exhibit D hereto, executed by Owner and Interim Servicer in connection with the
sale of a Servicing Rights Package that sets forth the terms of such sale,
including a description of the related Loans and the related Purchase Price.
"PROPERTY" means any Mortgaged Property and/or REO Property.
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"PROPERTY IMPROVEMENT EXPENSES" means any costs and expenses for
repairs, replacements or improvements which Interim Servicer deems advisable
under the circumstances, but only to the extent that they:
(a) are paid to Persons who are generally in the business
of providing such goods and services;
(b) are reasonable for the types of goods or services
provided in the geographical area in which such goods or services are
provided;
(c) are designed to maintain or improve the value of a
Property but not immediately necessary to operate it; and
(d) are incurred for the purpose of facilitating the sale
of the related Loan or REO Property and maximizing the proceeds
thereof, including but not limited to the following:
(i) cosmetic improvements such as painting and
landscaping;
(ii) replacement of items which are obsolete or
wearing out but which may not be
dysfunctional; and
(iii) moneys paid to a tenant or buyer for a
purpose similar to a Property Improvement
Expense.
"PROPERTY PROTECTION EXPENSES" means the following costs and expenses,
but only to the extent that they are paid to Persons who are generally in the
business of providing such goods and services and are reasonable for the types
of goods or services provided in the geographical area in which such goods or
services are provided:
(a) utility costs;
(b) payments required under service contracts, including
but not limited to service contracts for heating, ventilation and air
conditioning systems, landscape maintenance, pest extermination,
security, model furniture, swimming pool service, trash removal,
answering service and credit checks;
(c) property management fees;
(d) usual and customary leasing and sales brokerage
expenses and commissions;
(e) permits, licenses and registration fees and costs;
(f) any expense necessary in order to prevent or cure a
breach under a lease, contract or agreement including any debt secured
by a lien which is superior or prior to the lien encumbering the Loan,
if the consequences of failure to prevent or cure could, in the sole
8
judgment of Interim Servicer, have a material adverse effect with
respect to a Loan or Property;
(g) any expense necessary in order to prevent or cure a
material violation of any applicable law, regulation, code or
ordinance;
(h) costs and expenses of brokers' price opinions and
surveys incidental to evaluation, leasing and/or sale of the Loans
and/or Properties;
(i) fees and expenses of attorneys, paralegals,
surveyors, title and escrow companies (including, without limitation,
costs, fees and/or expenses for title insurance premiums, title
searches, escrow fees, recording costs and all costs similar or related
thereto), costs incurred to obtain documents or information for the
Servicing File, and any costs and expenses related to the preparation
and/or recordation of releases of liens or satisfactions of mortgages
(in whole or in part);
(j) property inspections; and
(k) other such reasonable fees and expenses incurred by
Interim Servicer in connection with the enforcement, collection,
foreclosure, management and operation of the REO Property or the
Mortgaged Property, sales of REO Properties (including, without
limitation, the costs and expenses set forth in subsection (i) above
and any and all transfer taxes and other closing costs customarily paid
by the seller in the locale where such sale occurs) and the performance
of its servicing activities.
"RATING AGENCIES" means, collectively, Fitch, ▇▇▇▇▇'▇ and S&P.
"RECONSTITUTION" means the actions required by Section 2.6 in
connection with a Whole Loan Transfer or Pass-Through Transfer.
"RECONSTITUTION AGREEMENT" means the agreement or agreements entered
into by Interim Servicer and Owner and/or certain third parties on the
Reconstitution Date or Dates with respect to any or all of the Loans serviced
hereunder, in connection with a Whole Loan Transfer or a Pass-Through Transfer
as provided in Section 2.6.
"RECONSTITUTION DATE" means the date or dates on which any or all of
the Loans subject to this Agreement shall be removed from this Agreement and
reconstituted as part of a Whole Loan Transfer or Pass-Through Transfer pursuant
to Section 2.6.
"REQUIREMENTS" means all federal, state or local laws, rules and
regulations and any other requirements of any government or agency or
instrumentality thereof applicable to the servicing of the Loans, the management
of the REO Properties or the provision of services hereunder by Interim
Servicer.
"REO PROPERTY" means, (a) as of any Determination Date for the purpose
of calculating the relevant Servicing Fee, and (b) as of the actual date of
acquisition of title for all other purposes: any
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(i) real property owned by Owner and made subject to this Agreement, and (ii)
any Mortgaged Property that was subject to a Loan, after the Mortgaged Property
has been acquired on behalf of Owner pursuant to this Agreement through
foreclosure or similar proceedings, acceptance of deed-in-lieu of foreclosure,
acquisition of title in lieu of foreclosure or the acquisition of title by
operation of law.
"SALE DATE" means the date on which Owner sells to Interim Servicer all
legal and beneficial right, title and interest in and to any Servicing Rights.
"S&P" means Standard & Poor's Rating Group, A Division of The
▇▇▇▇▇▇-▇▇▇▇ Companies, Inc.
"SERVICING ADVANCES" means all amounts advanced by Interim Servicer in
payment of Property Protection Expenses, Escrow Payments and Property
Improvement Expenses.
"SERVICING FEE" means, collectively, the servicing fees set forth on
Exhibit C.
"SERVICING FILE" means with respect to each Loan, the Loan Documents
and information (including any servicing tapes, images and conversion reports)
received from the Current Servicer, provided by Owner (including title company
investigations of matters relating to the Loans and the REO Properties), or
obtained through the efforts of Interim Servicer hereunder. To the extent
reasonably practicable the Servicing File will contain the Loan Documents and
information described in Exhibit B.
"SERVICING PORTFOLIO" means all Loans and REO Properties serviced by
Interim Servicer pursuant to this Agreement.
"SERVICING RIGHTS PACKAGE" The Servicing Rights relating to the Loans
identified on the loan schedule attached to a related Pricing Letter and ▇▇▇▇ of
Sale which Servicing Rights are to be sold to Interim Servicer pursuant to such
Pricing Letter and ▇▇▇▇ of Sale and this Agreement.
"TERMINATION FEE" means the fee, set forth on Exhibit C, paid by Owner
to Interim Servicer.
"TRANSFER DATE" means the date on which Interim Servicer accepts
Owner's request to add a Loan or REO Property to the Servicing Portfolio, in
accordance with Section 2.1.
"WARRANTIES CERTIFICATE" means the certificate to be provided by the
Owner in accordance with Section 8.1.
"WHOLE LOAN TRANSFER" means any sale or transfer of some or all of the
Loans by Owner to a third party, which sale or transfer is not a Pass-Through
Transfer.
SECTION 1.2. INTERPRETATION OF AGREEMENT.
(a) All references in this Agreement to designated
Sections, Articles, Exhibits and Schedules are to the designated
sections and articles of and exhibits and schedules to this Agreement.
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(b) Use of the masculine gender is intended to include
the feminine and neuter genders.
(c) The headings and captions used in this Agreement are
for convenience of reference only and do not define, limit or describe
the scope or intent of the provisions of this Agreement. (d) Terms in
the singular include the plural and vice versa. (e) The terms
"includes" or "including" are intended to be inclusive rather than
exclusive.
ARTICLE II
TRANSFER OF SERVICING, SERVICING RESPONSIBILITIES AND SERVICING
COMPENSATION
SECTION 2.1. TRANSFER OF SERVICING FILES TO INTERIM SERVICER.
(a) The Owner may request that Interim Servicer add a
Loan or an REO Property to the Servicing Portfolio by sending a loan
schedule (or database) identifying the Loan or REO Property and the
pertinent Servicing File to Interim Servicer and designating the Loan
or REO Property as an asset to be serviced hereunder. Interim Servicer
shall be obligated to promptly accept any such Loan or REO Property
which is not in material violation of the Owner's representations and
warranties in Section 7.2 hereof and upon such acceptance it will
become a part of the Servicing Portfolio. In connection with the
transfer of servicing of the Loans to Interim Servicer, the Owner shall
comply with the servicing transfer provisions set forth on Annex I. On
the Transfer Date, Owner shall cause the Current Servicer to transfer
to Interim Servicer the Servicing Files and/or servicing records
necessary to provide current data with respect to each of the Loans and
REO Properties. In the event that not all of the related Servicing
Files and/or necessary servicing records are transferred on the
applicable Transfer Date, thereafter, Interim Servicer, at Owner's
expense, shall use its best efforts to cause the Current Servicer to
transfer to Interim Servicer any Servicing Files and/or servicing
records necessary to provide current data with respect to each Loan and
each REO Property which were not transferred to Interim Servicer on the
applicable Transfer Date. Interim Servicer shall transfer and convert
the Servicing Files to Interim Servicer's system as soon as reasonably
possible from the date of receipt by Interim Servicer of the Servicing
Files and such other documents as are reasonably necessary to service
the Loans and REO Properties from the Current Servicer.
(b) As of each Transfer Date, Owner hereby appoints
Interim Servicer to provide and Interim Servicer hereby assumes and
accepts responsibility for providing the services described herein with
respect to each Loan and REO Property; provided, however, that if a
Servicing File is not complete or contains incorrect information on the
Transfer Date, Interim
11
Servicer shall not be responsible for any failure to provide any service
hereunder, or for any inaction or any action taken hereunder, in each case
related to such incompleteness or incorrectness.
(c) To the extent that Owner holds a transferable, life
of loan tax service contract with TransAmerica or Fidelity National Tax
Service (or other nationally recognized tax service provider) on a Loan
being transferred to the Servicing Portfolio, Owner shall transfer such
contract to Interim Servicer on the Transfer Date. If no such contract
exists or is not transferred, then Interim Servicer shall obtain such a
contract at Owner's sole expense as soon as reasonably possible after
the Transfer Date. Owner also agrees to reimburse Servicer for its
actual cost in obtaining life of loan flood zone determination tracking
from First American Flood Data Services with respect to Loans
transferred to the Servicing Portfolio. Interim Servicer shall obtain,
at Owner's expense, tax reports for any Loans that are Non-Performing
Loans as of the Transfer Date but only if Owner fails to obtain and
deliver such tax report within thirty(30) days following written
request therefor.
(d) Prior to the transfer to Interim Servicer of the
complete Servicing File with respect to a Loan, Interim Servicer shall
not be responsible for the payment of Escrow Payments with respect to
such Loan unless Interim Servicer has actual knowledge of the
existence, amount and due date of such obligations, in which case
Interim Servicer shall determine in accordance with Accepted Servicing
Practices whether or not to make any Escrow Payments within five (5)
Business Days after it has actual knowledge of the existence, amount
and due date of such obligations. In the case of property taxes and
similar items, Interim Servicer shall be deemed not to have knowledge
of the existence, amount and/or due date of such obligations until five
(5) Business Days after receiving a current report with respect to the
Mortgaged Property from a tax service retained by Interim Servicer.
Interim Servicer shall be entitled to rely in all respects on any tax
service report and shall have no liability to Owner if a tax sale
occurs for which Interim Servicer (i) received no notice from the
applicable taxing authority, or (ii) received a report from a tax
service indicating that the taxes were current.
(e) Upon request by Interim Servicer, Owner shall furnish
Interim Servicer with such limited powers of attorney and other
documents prepared by Interim Servicer and reasonably satisfactory in
form and substance to Owner as may be necessary or appropriate to
enable Interim Servicer to liquidate, collect payments against and
otherwise service and manage the Loans and Properties in accordance
with this Agreement. Additionally, Interim Servicer may appoint certain
designated servicing officers in a writing to Owner and such designated
servicing officers shall be authorized to act on behalf of Owner
hereunder. Such list (or any amended list) designating such servicing
officers shall be sufficient so long as it is executed by any officer
of Interim Servicer. All documents so provided to Interim Servicer
shall be held in trust by Interim Servicer on behalf of Owner.
(f) Owner agrees to cooperate fully with Interim Servicer
with respect to all reasonable requests made by Interim Servicer in
connection with the transfer of servicing pursuant to this Section 2.1.
12
(g) Interim Servicer shall have no obligation or
responsibility for preparing or recording mortgage assignments or
filing financing statements with respect to any Loan.
SECTION 2.2. RELEASE OF LOAN DOCUMENTS. From time to time as is
appropriate for the servicing or foreclosure of a Loan or the acquisition of
Mortgaged Properties in lieu of foreclosure or for the making of any claim
against or collection under any Mortgage Insurance policy, Hazard Insurance
policy, other insurance policy, Interim Servicer's fidelity bond, Interim
Servicer's errors and omissions policy, or for purposes of effecting a partial
release of any Mortgaged Property from the lien of the mortgage or for making
any corrections to the mortgage note or the mortgage or other Loan Documents,
Interim Servicer shall deliver to the Custodian, or, if the Owner is acting as
its own custodian, to the Owner, an officer's certificate of Interim Servicer
certifying as to the reason for such release and designating the Loan Documents
requested to be released to Interim Servicer. Owner agrees to cause Custodian to
agree to release to Interim Servicer upon request any Loan Documents relating to
the Loans that are required by Interim Servicer in connection with its servicing
of the Loans and REO Properties.
Within three (3) days of receipt of the foregoing, Owner shall deliver
or cause Custodian to deliver to Interim Servicer the Loan Documents so
requested. Interim Servicer shall cause the Loan Documents so released to be
returned to the Custodian or Owner, as applicable, when the need therefor by
Interim Servicer no longer exists, or at the request of Owner or Custodian
unless the Loan is liquidated and the proceeds thereof are deposited in the
Collection Account. Upon receipt of an Officer's Certificate of Interim Servicer
stating that such Loan was liquidated and the Liquidation Proceeds were
deposited in the Collection Account, the servicing receipt shall be released by
the Custodian or Owner, as applicable, to Interim Servicer.
Interim Servicer shall retain possession of any Loan Documents that
have been released to Interim Servicer by the Custodian or Owner, as applicable,
at all times unless (i) the Loan has been liquidated and the Liquidation
Proceeds relating to the Loan have been deposited in the Collection Account,
(ii) the Loan Documents have 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
Mortgage Property, (iii) Interim Servicer's need therefor no longer exists and
Interim Servicer returns the Loan Documents to the Custodian or Owner, as
applicable, pursuant to the previous paragraph, or (iv) the Owner or Custodian
requests that the Loan Documents be returned.
Loan Documents held by Interim Servicer are and shall be held in trust
by Interim Servicer for the benefit of Owner as the owner thereof and Interim
Servicer's possession of the Loan Documents so retained is at the will of Owner
for the sole purpose of servicing the related Loan, and such retention and
possession by Interim Servicer is in a custodial capacity only. The Loan
Documents with respect to each Loan shall be appropriately marked to clearly
reflect the ownership of such Loan by Owner.
SECTION 2.3. SERVICING RESPONSIBILITIES.
Subject to Accepted Servicing Practices, Interim Servicer shall have
full power and authority to do or cause to be done any and all things in
connection with such servicing and administration
13
which it may deem necessary or desirable. Subject to Section 2.1 and in
accordance with Accepted Servicing Practices, in performing its obligations
hereunder, Interim Servicer shall comply with the following with respect to each
Loan or REO Property, continuously from the date hereof until the date each Loan
or REO Property ceases to be subject to this Agreement:
(a) Interim Servicer shall hold all funds received for
Owner hereunder in trust for Owner in a segregated Collection Account
in accordance with all applicable Requirements. The Collection Account
shall be held at Interim Servicer, or if it is not held at Interim
Servicer, then it must be an Eligible Account. Any amounts held in the
Collection Account may be, but are not required to be, invested by
Interim Servicer in Permitted Investments. Any income on the Collection
Account shall belong to Interim Servicer and may be withdrawn therefrom
in accordance with Sections 6.2 and 6.3. If losses are incurred on
investments in the Collection Account, Interim Servicer promptly shall
deposit, from its own funds without right to reimbursement, the full
amount of such losses. Interim Servicer shall make remittances from the
Collection Account as provided in Sections 6.2 and 6.3. Interim
Servicer shall hold all funds received to cover Escrow Payments in
connection with the Loans in trust for Owner, and the related Obligor
in a segregated Escrow Account (which shall be maintained in accordance
with all applicable Requirements and the terms of the Loan Documents).
Interim Servicer shall disburse such funds from the appropriate Escrow
Accounts as necessary or advisable. Interim Servicer shall also be
authorized to hold all partial payments in the Escrow Account and shall
not be required to deposit same into the Collection Account nor to
remit same to Owner until such time as Interim Servicer applies such
payments to the applicable Loan.
(b) Interim Servicer shall timely determine the amounts
of all required disbursements from the Escrow Accounts and shall make
disbursements as they become due. Interim Servicer shall also determine
whether any delinquency exists in the payment of Escrow Payments and
shall use commercially reasonable efforts to cause such deficient
amounts to be paid by the Obligor. If there are not sufficient funds in
the appropriate Escrow Account to make such payments as they become
due, Interim Servicer shall advance Escrow Payments unless Interim
Servicer determines in its reasonable judgment that an advance pursuant
to this or any other section will not be ultimately recoverable from
late payments, insurance proceeds, Liquidation Proceeds or any other
recovery on such Loan or Property (a "Non-Recoverable Advance"). If
Interim Servicer determines that the Escrow Payment would constitute a
Non-Recoverable Advance, Interim Servicer will not be obligated to make
such advance. Interim Servicer shall provide a spread sheet of any
amounts deemed to be Non-Recoverable Advances on a monthly basis.
Notwithstanding the foregoing, Owner may request that Interim Servicer
make a payment with respect to a Non-Recoverable Advance and Interim
Servicer shall make such payment; provided, however, Owner shall
reimburse Interim Servicer for any such payments within five (5)
Business Days of such payment. Any advances made towards Escrow
Payments shall be deemed to be Servicing Advances. Interim Servicer
shall be entitled to reimbursement of all such Servicing Advances made
pursuant to this Section 2.3 from all amounts subsequently deposited in
the Collection Account. In the event such amounts are not sufficient to
reimburse the Interim Servicer, the Interim Servicer shall submit a
detailed invoice to the Owner for such amounts, which invoice shall be
paid by Owner within five (5) Business Days of receipt.
14
(c) Interim Servicer shall comply with the provisions of
all applicable Requirements and the Loan Documents relating to the
giving of all notices or other communications required to be given by
or on behalf of Owner to any Mortgage Insurer, title insurer or other
insurer or guarantor, as applicable. Where any applicable Requirement
or the Loan Documents require any notice or other communication to be
given to an Obligor, Interim Servicer shall, in the absence of
instructions to the contrary from Owner, give such notice or other
communication to the Obligor.
(d) Except as otherwise prescribed by Accepted Servicing
Practices with respect to any Loans which are not first liens on the
related Mortgaged Properties, Interim Servicer shall, as a Property
Protection Expense if not paid by an Obligor, (i) enforce the Obligor's
obligations under the Loan Documents to cause each Mortgaged Property
to be insured against risks, hazards and liabilities as required by all
applicable Requirements and the Loan Documents, in an amount at least
equal to the unpaid principal balance of the Loan, and (ii) cause each
REO Property to be insured against risks, hazards and liabilities, in
an amount which is at least equal to the lesser of (A) the full
replacement value of the improvements which are a part of such REO
Property, and (B) the outstanding principal balance of the related Loan
at the time it became an REO Property; such insurance shall be obtained
from a financially sound and reputable insurance carrier. Interim
Servicer shall retain copies of all Hazard Insurance policies or
certificates of insurance representing such coverage. Interim Servicer
shall comply with all of the terms of Mortgage Insurance and guarantees
relating to any Loan and shall use its best efforts to maintain such
Mortgage Insurance and guarantees in full force and effect provided
that Interim Servicer has actual knowledge of such insurance or
guaranty. In the event of an insured loss with respect to any Property,
unless Interim Servicer has actual knowledge that the Obligor has filed
such a claim with respect to a Mortgaged Property, Interim Servicer
shall promptly file or cause to be filed a claim on the Hazard
Insurance. In the case of a Mortgaged Property, Interim Servicer shall
apply or disburse all insurance proceeds in accordance with the terms
and provisions of the Loan Documents and all Requirements, and, in the
case of a REO Property, Interim Servicer shall apply or disburse all
insurance proceeds in accordance with the instructions of Owner, in
each case net of any amounts due to Interim Servicer as otherwise
provided herein. Interim Servicer shall be responsible for submitting a
claim under any Mortgage Insurance or other guaranty or insurance on a
timely basis provided that Interim Servicer has actual knowledge of
such insurance or guaranty. Except as otherwise prescribed by Accepted
Servicing Practices with respect to any Loans which are not first liens
on the related Mortgaged Properties, Interim Servicer shall, as a
Property Protection Expense and where the Obligor fails or refuses to
maintain insurance on the Mortgaged Property in accordance with the
applicable Loan Documents (or to pay escrows sufficient therefor, as
the case may be), subject the Mortgaged Properties to the coverage of
its "force-placed" hazard insurance policy with such deductible as
Interim Servicer maintains for similar mortgaged properties serviced
for itself and for others by Interim Servicer. The amount of any
premiums to Interim Servicer resulting from obtaining such coverage
shall be treated as a Property Protection Expense hereunder. The Owner
shall be solely responsible for the amount of the deductible in the
event of any loss and Interim Servicer shall have no liability to Owner
therefor. In the event that the Interim Servicer collects the premium
related to such "force-placed" insurance
15
from the Obligor and previously withdrew such amount from the
Collection Account, the Interim Servicer shall deliver such amount
collected from the Obligor to the Owner.
Subject to the preceding paragraph, Interim Servicer shall
keep in force during the term of this Agreement a fidelity bond and a
policy or policies of insurance covering errors and omissions in the
performance of Interim Servicer's obligations under this Agreement.
Such fidelity bond and policy or policies shall be maintained with
recognized insurers and shall be in such form and amount as would
permit Interim Servicer to be qualified as a FNMA or FHLMC
seller-servicer.
Interim Servicer shall be deemed to have complied with this
provision if an affiliate of Interim Servicer has such errors and
omissions and fidelity bond coverage and, by the terms of such
insurance policy or fidelity bond, the coverage afforded thereunder
extends to Interim Servicer. Interim Servicer shall ensure that Flood
Insurance is maintained on Mortgaged Premises (and REO) that are
identified in the Federal Register by the Federal Emergency Management
Agency as having special flood hazards (and the flood insurance
described below has been made available). Any such Flood Insurance
shall meet the current guidelines of the Federal Insurance
Administration and shall be with a generally acceptable insurance
carrier.
The amount of the Flood Insurance Policy shall equal not less
than the least of (i) the lesser of (a) the unpaid principal balance of
the Loan, plus accrued interest and the aggregate of all Servicing
Advances, and (b) the full insurable value of the Mortgaged Property,
but in each case not less than such amount as is necessary to prevent
the mortgagor and/or the mortgagee from becoming a co-insurer or loss
payee, and (ii) the maximum amount of insurance which was available
under the Flood Disaster Protection Act of 1973.
(e) Interim Servicer shall prepare promptly each report
required by all applicable Requirements including reports to be
delivered to all governmental agencies having jurisdiction over the
servicing of the Loans and the Escrow Accounts, shall execute such
reports or, if Owner must execute such reports, shall deliver such
reports to Owner for execution prior to the date on which such reports
are due and shall file such reports with the appropriate Persons.
Interim Servicer shall timely prepare and deliver to the appropriate
Persons Internal Revenue Service forms 1098, 1099 and 1099A (or any
similar replacement, amended or updated Internal Revenue Service forms)
relating to any Loan for the time period such Loan has been serviced by
Interim Servicer. Owner shall be solely responsible for filing any
other forms including, without limitation and to the extent applicable,
forms 1041 and K-1 or any similar replacement, amended or updated
Internal Revenue Service forms. The reports to be provided under this
subsection shall cover the period through the end of the month
following the termination of this Agreement or, in the case of reports
to be sent to the Internal Revenue Service, the end of the calendar
year following termination of the Agreement. Interim Servicer shall
promptly prepare all reports or other information required to respond
to any inquiry from or give any necessary instructions to any Mortgage
Insurer, provider of Hazard Insurance or other insurer or guarantor,
taxing authority, tax servicer, Association or the Obligor.
16
(f) Interim Servicer shall maintain adequate facilities
and experienced staff to carry out its obligations hereunder.
(g) Interim Servicer shall hold and be responsible for
responding promptly and accurately to all reasonable requests from
Owner, the Obligor or other Persons for information relating to a Loan
or Property or to the Obligor that Interim Servicer is required or
permitted to disclose to such Person, upon compliance by such Person of
any conditions to the release of such information.
(h) Interim Servicer shall cooperate with Owner in
facilitating any financing, securitization or whole loan transfer of
the Loans, including furnishing such reports and information with
respect to the Loans as Owner may reasonably request. Any and all
reasonable third party costs, fees and expenses incurred by Interim
Servicer in connection with the foregoing shall be deemed to be
Servicing Advances and shall be reimbursed by Owner if not previously
withdrawn from the Collection Account, such obligation of Owner to
survive any termination hereof.
SECTION 2.4. COLLECTION AND RESOLUTION ACTIVITIES. Interim
Servicer shall be responsible, continuously from the Transfer Date until the
date each Loan ceases to be subject to this Agreement, for using measures
consistent with the Accepted Servicing Practices to attempt to collect
delinquent payments on each Loan.
SECTION 2.5. SERVICING COMPENSATION. Interim Servicer shall be
entitled each month to the Servicing Fee. If Interim Servicer is retained as
Servicer or Subservicer pursuant to any reconstitution of Loans, the Servicing
Fee shall be pro-rated for any period of less than a full calendar month to the
extent necessary to avoid duplication in payment. In all other cases, the
Servicing Fee shall not be prorated for any period of less than a full calendar
month. In addition, Interim Servicer shall be entitled to retain all Ancillary
Income. Interim Servicer shall not be obligated to deposit any Ancillary Income
into the Collection Account. In the event that Interim Servicer deposits into
the Collection Account any Ancillary Income, Interim Servicer may withdraw such
amount at any time from the Collection Account, any provision herein to the
contrary notwithstanding. In the event that Owner requests that Interim Servicer
perform any mutually agreed upon solicitation activities on behalf of Owner,
Owner shall reimburse Interim Servicer for any and all out-of-pockets costs and
expenses related to such activities.
SECTION 2.6. RECONSTITUTION.
(a) Interim Servicer and Owner agree that with respect to
some or all of the Loans, Owner may effect one or more Whole Loan
Transfers, and/or one or more Pass-Through Transfers. With respect to
each Whole Loan Transfer or Pass-Through Transfer, as the case may be,
entered into by Owner, Interim Servicer agrees:
(i) to cooperate fully with Owner and any prospective
purchaser with respect to all reasonable requests and due
diligence procedures including participating in meetings with
rating agencies, bond insurers and such other parties as Owner
shall
17
designate and participating in meetings with prospective
purchasers of the Loans or interests therein and providing
information reasonably requested by such purchasers;
(ii) to execute all Reconstitution Agreements
provided that each of Interim Servicer and Owner is given an
opportunity to review and reasonably negotiate in good faith
the content of such documents not specifically referenced or
provided for herein;
(iii) to cooperate with Owner and any prospective
purchaser with respect to the preparation (including, but not
limited to, the endorsement, delivery, assignment, and
execution) of Loan Documents and other related documents, with
respect to servicing requirements reasonably requested by the
rating agencies and credit enhancers;
(iv) to negotiate and execute one or more
subservicing agreements between Interim Servicer and Owner
and/or any master servicer which is generally considered to be
a prudent master servicer in the secondary mortgage market,
designated by Owner in its sole discretion after consultation
with Interim Servicer and/or one or more custodial and
servicing agreements among Owner, Interim Servicer and a third
party custodian/trustee which is generally considered to be a
prudent custodian/trustee in the secondary mortgage market
designated by Owner in its sole discretion after consultation
with Interim Servicer, in either case for the purpose of
pooling the Loans with other Loans for resale or
securitization; and
(v) in connection with any securitization of any
Loans, to execute a pooling and servicing agreement, which
pooling and servicing agreement may, at Owner's direction,
contain contractual provisions including, but not limited to,
a customary certificate payment delays, servicer advances of
delinquent scheduled payments of principal and interest
through liquidation (unless deemed non-recoverable) and
prepayment interest shortfalls (to the extent of the monthly
servicing fee payable thereto), servicing representations and
warranties which in form and substance conform to the
representations and warranties in this Agreement and to
secondary market standards for securities backed by Loans
similar to the Loans and such provisions with regard to
servicing responsibilities, investor reporting, segregation
and deposit of principal and interest payments, custody of the
Loans, and other covenants as are required by Owner and one or
more Rating Agencies which are "mortgage related securities"
for the purposes of the Secondary Mortgage Market Enhancement
Act of 1984, unless otherwise mutually agreed. If Owner deems
it advisable at any time to pool the Loans with other Loans
for the purpose of resale or securitization, Interim Servicer
agrees to execute one or more Servicing Agreements between
itself and a master servicer designated by Owner at Owner's
sole discretion, and/or one or more servicing agreements among
Interim Servicer, Owner and a trustee designated by Owner at
Owner's sole discretion, such agreements in each case
incorporating terms and provisions substantially identical to
those described in the immediately preceding paragraph.
18
In the event that Interim Servicer is not the master servicer,
servicer or sub-servicer with respect to a Reconstitution, any and all
reasonable out-of-pocket costs, fees and expenses incurred by Interim
Servicer in connection with the foregoing shall be reimbursed by Owner
after receipt of an invoice therefor in accordance with Section 6.4.
Any execution of a subservicing agreement or pooling and servicing
agreement by the Interim Servicer shall be conditioned on the Interim
Servicer receiving a Servicing Fee pursuant to such agreement in an
amount acceptable to Interim Servicer. All Loans not sold or
transferred pursuant to a Whole Loan Transfer or Pass-Through Transfer
shall be subject to this Agreement and shall continue to be serviced in
accordance with the terms of this Agreement and with respect thereto
this Agreement shall remain in full force and effect.
(b) Notwithstanding any provision to the contrary in this
Agreement, in the event that Interim Servicer is the master servicer,
servicer or sub-servicer with respect to a Reconstitution, Owner agrees
that in such Reconstitution (i) Interim Servicer shall be entitled to
servicing compensation at least as favorable as the servicing
compensation customarily received by Interim Servicer in comparable
transactions, including the Servicing Fees and Ancillary Income
provided for in this Agreement, (ii) the remittance date shall be no
earlier than the Distribution Date and the corresponding Collection
Period shall have the same meaning as provided in this Agreement and
(iii) any servicing performance termination triggers shall be approved
by Interim Servicer in its reasonable discretion. In the event any
terms of the proposed Reconstitution shall materially and adversely
affect the economic terms bargained for by Interim Servicer under this
Agreement, then Owner and Interim Servicer shall renegotiate in good
faith the terms under which Interim Servicer services the Loans to take
into account the effects of the Reconstitution and, if in Interim
Servicer's reasonable judgment a satisfactory adjustment of such terms
is not made, Interim Servicer may resign from the duties imposed by
this Agreement with respect to the related Loans and shall be paid the
Termination Fee with respect to such Loans; provided, however, if such
Reconstitution has criteria substantially similar to the eligibility
criteria set forth on Exhibit F, and Interim Servicer does not
participate in such Reconstitution Interim Servicer shall not be
entitled to the Termination Fee with respect to the related Loans. In
addition, in the event that any Loans are sold in a servicing-released
Whole Loan Transfer, the Owner shall pay the Termination Fee to the
Interim Servicer in connection with such Loans.
(c) The Owner hereby agrees that, in the event that the
Owner sells any Loans either in a whole loan or pass-through format
with the ownership of the Servicing Rights retained by the Owner, then,
prior to selling the Servicing Rights to any successor servicer, the
Owner shall first offer the Interim Servicer the right to purchase the
Servicing Rights attributable to such Loans on the same terms and
conditions as those contained in any bona fide offer from any third
party (the events described above, each an "Offer"). The Offer from the
Owner to the Interim Servicer shall describe the material terms and
conditions of the Offer. The Interim Servicer shall have until 5:00 pm
New York time on the second Business Day from receipt of the Offer to
accept the Offer, and shall exercise such right by notifying the Owner
of its election to purchase the Servicing Rights attributable to such
Loans which are subject to such Offer, on the date specified by the
Owner or on a later date if agreed by Owner and Interim Servicer.
Failure of the Interim Servicer to notify the Owner by the
19
aforementioned time shall be deemed to be a rejection by Interim
Servicer with respect to such Offer and such Loans.
ARTICLE III
DEFAULT MANAGEMENT SERVICES
SECTION 3.1. DEFAULT MANAGEMENT RESPONSIBILITIES. Without limiting
the generality of Section 2.3, Interim Servicer is hereby authorized and
empowered by Owner to take the following actions, without limitation (in each
case, in accordance with Accepted Servicing Practices): (i) prepare, execute and
deliver, on behalf of Owner at its expense, any and all financing statements,
continuation statements and other documents or instruments necessary to maintain
the lien on each Mortgaged Property and related collateral; and modifications,
waivers (including, without limitation, waivers of any late payment charge in
connection with any delinquent payment on a Loan), consents, amendments,
discounted payoff agreements, forbearance agreements, cash management agreements
or consents to or with respect to any documents contained in the related
Servicing File; and any and all instruments of satisfaction or cancellation, or
of partial or full release or discharge, and all other instruments comparable to
any of the types of instruments described in this subsection (i), and (ii)
institute and prosecute judicial and non-judicial foreclosures, suits on
promissory notes, indemnities, guaranties or other Loan Documents, actions for
equitable and/or extraordinary relief (including, without limitation, actions
for temporary restraining orders, injunctions, and appointment of receivers),
suits for waste, fraud and any and all other tort, contractual and/or other
claims of whatever nature, and to appear in and file on behalf of Owner such
pleadings or documents as may be necessary or advisable in any bankruptcy
action, state or federal suit or any other action.
SECTION 3.2. FORECLOSURE. If Interim Servicer reasonably
determines that foreclosure is appropriate with respect to a Loan (including if
it determines that foreclosure is appropriate in conjunction with or as an
alternative to collection efforts and default management services hereunder),
Interim Servicer shall retain an attorney and supervise the conduct of the
foreclosure proceeding. The actions described herein shall be taken by Interim
Servicer in accordance with Accepted Servicing Practices. If the Property is
acquired in the foreclosure proceeding, Interim Servicer may acquire the
Property in the name of Owner or its designee, and Interim Servicer shall
commence providing property management and disposition services as provided in
Section 4.1. Notwithstanding anything to the contrary contained herein, in the
event Interim Servicer has reasonable cause to believe that a Property is an
Environmental Problem Property as described in Section 4.2 hereof, Interim
Servicer shall notify Owner of the existence of the Environmental Problem
Property, describe such problem, make a recommendation to Owner regarding
handling the Property and carry out the recommendation unless otherwise directed
by Owner in writing within five (5) days after Owner's receipt (or deemed
receipt) of such notice in accordance with the terms and provisions of Section
12.3 below. In no event will Interim Servicer be required to acquire record
title to an Environmental Problem Property. If Interim Servicer elects to
proceed with a foreclosure in accordance with the laws of the state where the
Mortgaged Property is located, Interim Servicer shall not be required to pursue
a deficiency judgment against the related Obligor or any other liable party if
the laws of the state do not permit such a deficiency judgment after such
foreclosure or if Interim Servicer determines in its reasonable judgment that
the likely recovery if a deficiency judgment is
20
obtained will not be sufficient to warrant the cost, time, expense and/or
exposure of pursuing the deficiency judgment.
SECTION 3.3. DEED IN LIEU. If Interim Servicer pursues a deed in lieu
of foreclosure pursuant to the authority granted to Interim Servicer by the
terms and provisions of Section 3.1 above, Interim Servicer will retain counsel
to prepare appropriate documentation, execute and deliver such documentation on
behalf of Owner and may enter into an agreement with Obligor regarding payment
of any deficiency. The actions described herein shall be taken by Interim
Servicer in accordance with Accepted Servicing Practices or otherwise with the
consent of Owner. Title to such Property may be taken in the name of Owner or
its designee. Notwithstanding anything to the contrary contained herein, in
connection with a deed in lieu of foreclosure, in the event Interim Servicer has
reasonable cause to believe that a Property is an Environmental Problem Property
as described in Section 4.2 hereof, Interim Servicer shall notify Owner of the
existence of the Environmental Problem Property, describe such problem, make a
recommendation to Owner regarding handling the Property and carry out the
recommendation unless otherwise directed by Owner in writing within five (5)
days after Owner's receipt (or deemed receipt) of such notice in accordance with
the terms and provisions of Section 12.3 below. In no event will Interim
Servicer be required to acquire record title to an Environmental Problem
Property. Interim Servicer will provide the services described in Section 4.1
with respect to each Property for which a deed in lieu of foreclosure is
received by Interim Servicer.
SECTION 3.4. PRIORITY; INSURANCE CLAIMS. Interim Servicer will be
responsible for retaining counsel on behalf of Owner to advise Interim Servicer
whether any proposed relief for the Obligor pursuant to this Section 3.4 will
adversely affect claims against any other Obligor or the priority of the lien
securing the Loan. Interim Servicer will be responsible for determining that
such relief will not adversely affect any applicable Mortgage Insurance or other
guaranty. Interim Servicer shall consider the effect of such relief on the
priority of the lien, claims against other Obligors and the effect on Mortgage
Insurance or other guarantees in acting hereunder.
SECTION 3.5. BANKRUPTCY OF OBLIGOR. If Interim Servicer has actual
knowledge that an Obligor is the subject of a proceeding under the Bankruptcy
Code or any other similar law, has made an assignment for the benefit of
creditors or has had a receiver or custodian appointed for its property, Interim
Servicer shall retain an attorney to pursue claims to payment on the Loan and
foreclosure on the Property. If the Property is acquired in an insolvency
proceeding, it shall be acquired in the name of Owner or its designee.
ARTICLE IV PROPERTY MANAGEMENT
AND DISPOSITION SERVICES
SECTION 4.1. PROPERTY MANAGEMENT AND DISPOSITION RESPONSIBILITIES. With
respect to each REO Property made subject to this Agreement and with respect to
each Mortgaged Property that becomes an REO Property, Interim Servicer shall, in
accordance with Accepted Servicing Practices, provide property management and
disposition services with respect to such REO Property, including analysis of
sale potential of such REO Property, collection of rents, property management
(including maintenance and repairs to such REO Property to render it salable),
Escrow Account administration for payment of Escrow Payments and property sales.
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SECTION 4.2. ENVIRONMENTAL PROBLEMS. If Interim Servicer hereafter
becomes aware that a Property is an Environmental Problem Property, Interim
Servicer will notify Owner of the existence of the Environmental Problem
Property. Additionally, Interim Servicer shall set forth in such notice a
description of such problem, a recommendation to Owner relating to the proposed
action regarding the Environmental Problem Property and Interim Servicer shall
carry out the recommendation set forth in such notice unless otherwise directed
by Owner in writing within five (5) days after Owner's receipt (or deemed
receipt) of such notice in accordance with the terms and provisions of Section
12.3 below. If Interim Servicer has reason to believe that a Property is an
Environmental Problem Property (e.g., Interim Servicer obtains a broker's price
opinion which reveals the potential for such problem), Interim Servicer will not
accept a deed-in-lieu of foreclosure upon any such Property without first
obtaining a preliminary environmental investigation for the Property
satisfactory to Owner.
ARTICLE V
STANDARDS FOR CONDUCT
SECTION 5.1. STANDARDS OF CARE AND DELEGATION OF DUTIES.
(a) The obligation of Interim Servicer to perform its
duties under this Agreement, including any duty to obtain or verify
information, will be satisfied so long as Interim Servicer acts in a
manner consistent with Accepted Servicing Practices. Interim Servicer
shall not be responsible for the form, substance, validity, perfection,
priority, effectiveness or enforceability of any documents in the
Servicing File on the Transfer Date or on the date that it obtains such
documents from the Current Servicer. Interim Servicer shall not sell,
transfer, or otherwise dispose of any REO Property without the prior
written consent of Owner to the extent that the sale, transfer or other
disposition of same shall result in a loss equal or greater than the
lesser of $100,000 or 45% of the unpaid principal balance of the
related Loan.
(b) In the performance of its duties and obligations
under this Agreement, Interim Servicer may act directly or through
agents, vendors, service providers, independent counsel, accountants
and other independent professional Persons, or it may delegate the
performance of functions and consult with agents, independent counsel
and other independent Persons; provided, however, that no such
delegation shall relieve Interim Servicer from any of its obligations
hereunder. Additionally, in the event that Interim Servicer believes
that it is unable to comply with the requirements of Section 5.1(a)
with respect to any particular Loan or REO Property as a result of
Interim Servicer's relationship with an Obligor or some other reason
which would cause Interim Servicer to be in violation of Accepted
Servicing Practices, it may enter into an agreement whereby another
party (with the consent of the Owner, which consent shall not be
unreasonably withheld) shall perform Interim Servicer's duties with
respect to such Loan or REO Property. In such event, so long as such
other party performs such duties on behalf of Interim Servicer, in
accordance with the other terms and provisions of this Agreement, then
Interim Servicer shall be deemed to be in compliance therewith.
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(c) Interim Servicer shall be entitled to rely upon any
notice, document, correspondence, request, directives or other
communication received by it from Owner that Interim Servicer believes
to be genuine and to have been signed or presented by an authorized
officer or representative of Owner, and shall not be obligated to
inquire as to the authority or power of any Person so executing or
presenting any notice, document, correspondence, request, directive or
other communication or as to the truthfulness of any statements
therein.
SECTION 5.2. TRANSACTIONS WITH RELATED PERSONS. In carrying out its
obligations and duties under this Agreement, Interim Servicer may contract with
its affiliates, provided that all Persons with whom Interim Servicer may
contract, enter into arrangements with or otherwise deal with, shall be engaged
on a commercially reasonable arm's-length basis and at competitive rates of
compensation. Nothing contained in this Agreement will prevent Interim Servicer
or its affiliates from engaging in other businesses or from acting in a similar
capacity for any other Person even though such Person may engage in business
activities similar to those of Owner or its affiliates.
SECTION 5.3. ACCESS TO RECORDS.
(a) To the extent required by this Agreement, Interim
Servicer will establish and maintain a system of (i) records of
operational information relating to the collection of Loans, the
conduct of default management services and the administration,
management, servicing, repair, maintenance, rental, sale or other
disposition of Loans and Properties and (ii) books and accounts, which
shall be maintained in accordance with customary business practices, of
financial information relating to the Loans and the Properties.
Information may be maintained on a computer or electronic system.
(b) If Owner provides reasonable notice, Owner and its
respective accountants, attorneys, agents or designees may examine
Interim Servicer's books and records relating to the Loans and the
Properties during normal business hours of Interim Servicer at Owner's
expense. Any proprietary or confidential information, as determined by
Interim Servicer shall be provided only subject to the terms of this
Agreement. Owner shall provide to Interim Servicer a copy of any report
generated in connection with any such examination. In addition, Interim
Servicer shall provide to Owner any other information, related to the
Loans and Properties, reasonably requested by Owner.
SECTION 5.4. ANNUAL AUDIT. On or before April 30 of each year,
beginning with April 30, 2002, Interim Servicer shall furnish a statement to
Owner, prepared by a firm of independent public accountants (who may also render
other services to Interim Servicer), which is a member of the American Institute
of Certified Public Accountants, to the effect that such firm has examined
certain documents and records for the preceding calendar year (or during the
period from the date of commencement of such servicer's duties hereunder until
the end of such preceding calendar year in the case of the first such
certificate) and that, on the basis of such examination conducted substantially
in compliance with the Uniform Single Attestation Program for Mortgage Bankers,
such firm is of the opinion that Interim Servicer's overall servicing operations
have been conducted in compliance with the Uniform Single Attestation Program
for Mortgage Bankers except for such exceptions that, in the opinion of such
firm, the Uniform Single Attestation Program for Mortgage Bankers requires it to
report, in which case such exceptions shall be set forth in such statement. On
each Remittance
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Date Interim Servicer shall certify to Owner that the servicing standards set
forth in Exhibit I were complied with during the preceding month and setting
forth any respect in which such standards were not complied with.
ARTICLE VI
BILLING OF AND REPORTS TO OWNER
SECTION 6.1. PROPERTY PROTECTION EXPENSES AND PROPERTY IMPROVEMENT
EXPENSES. To the extent no funds remain on deposit in the Collection Account to
pay Property Protection Expenses and/or Property Improvement Expenses, Interim
Servicer shall advance such amounts; provided, however, that Interim Servicer
shall not be obligated to make any such advance if Interim Servicer determines
in its reasonable judgment that such advance will be a Non-Recoverable Advance.
Any advances made towards Property Protection Expenses and/or Property
Improvement Expenses shall be deemed to be Servicing Advances. Interim Servicer
shall provide a spread sheet of any amounts deemed to be Non-Recoverable
Advances on a monthly basis. Notwithstanding the foregoing, Owner may request
that Interim Servicer make a payment with respect to a Non-Recoverable Advance
and Interim Servicer shall make such payment; provided, however, Owner shall
reimburse Interim Servicer for any such payments within five (5) Business Days
of such payment. Interim Servicer shall be entitled to reimbursement of all such
Servicing Advances made pursuant to this Section 6.1 from all amounts
subsequently deposited in the Collection Account. In the event such amounts are
not sufficient to reimburse the Interim Servicer, the Interim Servicer shall
submit a detailed invoice to the Owner for such amounts, which invoice shall be
paid by Owner within five (5) Business Days of receipt. To the extent that
Interim Servicer has previously withdrawn funds from the Collection Account to
pay for third party costs relating to loan modifications and Interim Servicer
thereafter recovers cash from the Obligor for such amounts, Interim Servicer
shall deposit such recovered cash into the Collection Account.
SECTION 6.2. REMITTANCES AND MONTHLY REPORT. Two (2) Business Days
prior to each Distribution Date, Interim Servicer shall submit a Monthly Report
in electronic format substantially in the form set forth on Exhibit A hereto (or
in such other form and manner as may be hereafter mutually agreed upon by Owner
and Interim Servicer), showing all collections of interest and principal (from
whatever source) on the Loans and all collections in respect of the Properties
(including sale proceeds and rental payments) during the related Collection
Period as well as the amounts, and a detailed description of all Servicing
Advances incurred during the related Collection Period and all distributions
from the Collection Account since the preceding Distribution Date. On each
Distribution Date Interim Servicer shall withdraw the Monthly Collection Amount
from the Collection Account and distribute the amount withdrawn in the following
priority:
(a) to refund to any Obligor any funds determined to be
in excess of the amounts required under the terms of the related Loan
Documents;
(b) to pay itself the Servicing Fee earned per Loan or
REO Property during the related Collection Period and to pay itself all
Ancillary Income earned during the related Collection Period (to the
extent deposited into the Collection Account);
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(c) to reimburse itself for Servicing Fees and Ancillary
Income earned during Collection Periods prior to the related Collection
Period, to the extent not previously paid or reimbursed;
(d) to reimburse itself for Servicing Advances made
during the related Collection Period;
(e) to reimburse itself for Servicing Advances made
during Collection Periods prior to the related Collection Period, to
the extent not previously reimbursed; and
(f) to Owner. Amounts payable to Owner shall be paid by
wire transfer in immediately available funds (by 4:00 p.m., eastern
time on the day of transfer) to an account designated by Owner.
SECTION 6.3. REMITTANCE UPON TERMINATION.
Upon the termination of this Agreement, Interim Servicer shall withdraw all
funds from the Collection Account and shall distribute such funds in the
following priority:
(a) to refund to any Obligor any funds determined to be
in excess of the amounts required under the terms of the related Loan
Documents;
(b) to reimburse itself for all unpaid Servicing Fees,
Servicing Advances and Ancillary Income; and
(c) to Owner.
Amounts payable to Owner shall be paid by wire transfer in immediately available
funds (by 4:00 p.m., eastern time on the day of transfer) to an account
designated by Owner.
SECTION 6.4. BILLING. If the Monthly Collection Amount on any
Distribution Date is insufficient to pay or reimburse Interim Servicer for any
of the items payable to Interim Servicer in Section 6.2(b) through Section
6.2(e) incurred, accrued or earned through the end of the related Collection
Period, or if funds in the Collection Account upon the termination of this
Agreement are insufficient to reimburse Interim Servicer for any items in
Section 6.3(b), Interim Servicer shall indicate in a Monthly Report or other
written statement to Owner the sum of such amount that remains outstanding,
which amounts shall be paid to Interim Servicer by Owner within five (5) days
after the date Interim Servicer sends such notice to Owner, such obligation to
survive any termination of this Agreement.
SECTION 6.5. MISSING DOCUMENT REPORT. In addition to the Monthly
Report, Interim Servicer shall provide to Owner a report (the "Missing Document
Report") with respect to a Loan within forty-five (45) days after the related
Transfer Date, which Missing Document Report shall include a listing (to Interim
Servicer's then current, actual knowledge) with respect to each Loan and REO
Property of all missing documents reasonably necessary to service such Loan or
REO Property.
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The Interim Servicer shall deliver a Missing Document Report to the Owner at the
end of each calendar quarter with respect to each Loan and REO Property subject
to this Agreement. For the purposes of this Section 6.5, the phrase "to Interim
Servicer's then current, actual knowledge" shall mean that Interim Servicer
shall be responsible for examining the Servicing File presented to Interim
Servicer by Owner or the Current Servicer and verifying that each such Servicing
File contains Loan Documents customary for the type of Loan; Interim Servicer
shall have no responsibility for determining whether there are particular
missing documents if the documents presented to Interim Servicer do not disclose
the existence of such missing document. Owner shall cure, or shall cause the
Current Servicer to cure, any such deficiencies as soon as reasonably possible
following receipt of the Missing Document Report. After Interim Servicer has
delivered to Owner the notice referred to in this Section 6.5, regarding missing
documents, Interim Servicer shall not be responsible for any failure to perform
any action related to such Loan to the extent Interim Servicer is impaired by
the absence of such document(s). Moreover, if Owner has not cured any document
deficiency within 30 days following receipt of the Missing Document Report, and
such document is reasonably necessary to service such Loan or REO Property, then
Interim Servicer may, but is not obligated to, cure such deficiency. All
out-of-pocket expenses incurred by Interim Servicer in connection with such cure
shall constitute Servicing Advances.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
SECTION 7.1. REPRESENTATIONS AND WARRANTIES OF INTERIM SERVICER.
Interim Servicer, as a condition to the consummation of the transactions
contemplated hereby, hereby makes the following representations and warranties
to Owner as of the initial Transfer Date:
(a) ORGANIZATION AND GOOD STANDING; LICENSING. Interim
Servicer is a federal savings association duly organized, validly
existing and in good standing under the laws of the United States of
America and has the power and authority to own its assets and to
transact the business in which it is currently engaged. Interim
Servicer is duly qualified to do business as a foreign corporation and
is in good standing in each jurisdiction in which the character of the
business transacted by it or properties owned, or leased or serviced by
it requires such qualification (except where there is an appropriate
statutory exemption applicable to Interim Servicer or the failure so to
qualify would not have a material adverse effect on the business,
properties, assets or financial condition of Interim Servicer or
Owner).
(b) AUTHORIZATION: BINDING OBLIGATIONS. Interim Servicer
has the power and authority to make, execute, deliver and perform this
Agreement, including all instruments of transfer to be delivered
pursuant to this Agreement, and perform all of the transactions
contemplated to be performed by it under this Agreement, and has taken
all necessary action to authorize the execution, delivery and
performance of this Agreement. When executed and delivered, this
Agreement will constitute the legal, valid and binding obligation of
Interim Servicer enforceable against it in accordance with its terms,
except as enforcement may be limited by bankruptcy, insolvency or
similar laws affecting the enforcement of creditors' rights generally
and by the availability of equitable remedies.
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(c) No Consent Required. Interim Servicer is not required
to obtain the consent of any other party or any consent, license,
approval or authorization from, or registration or declaration with,
any governmental authority, bureau or agency in connection with the
execution, delivery, performance, validity or enforceability of this
Agreement, except such as have been obtained or made or as to which the
failure to obtain or make will not materially adversely affect the
ability of Interim Servicer to perform its obligations hereunder.
(d) No Violations. The execution, delivery and
performance of this Agreement by Interim Servicer will not violate any
provision of any existing law or regulation or any order or decree of
any court applicable to Interim Servicer, except for violations that
will not adversely affect Interim Servicer's ability to perform its
obligations hereunder, or the charter or by-laws of Interim Servicer,
or constitute a material breach of any mortgage, indenture, contract or
other agreement to which Interim Servicer is a party or by which
Interim Servicer may be bound.
(e) Litigation. No litigation or administrative
proceeding of or before any court, tribunal or governmental body is
currently pending or to the knowledge of Interim Servicer threatened,
against Interim Servicer or any of its properties or with respect to
this Agreement, which if adversely determined, would have a material
adverse effect on the transactions contemplated by this Agreement.
(f) FNMA or FHLMC Approved. Interim Servicer is an
approved seller/servicer for FNMA or FHLMC in good standing. No event
has occurred that would make Interim Servicer unable to comply with
FNMA or FHLMC eligibility requirements, would require notification to
FNMA or FHLMC, or, with notification to FNMA or FHLMC, would result in
a breach of the representation made in the preceding sentence.
SECTION 7.2. REPRESENTATIONS AND WARRANTIES OF OWNER. Owner, as a
condition to the consummation of the transactions contemplated hereby, hereby
makes the following representations and warranties to Interim Servicer as of the
initial Transfer Date:
(a) ORGANIZATION AND GOOD STANDING; LICENSING. Owner is a
corporation duly organized, validly existing and in good standing under
the laws of the State of California and has the power and authority to
own its assets and to transact the business in which it is currently
engaged. Owner is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction in which the
character of the business transacted by it or properties owned or
leased by it requires such qualification (except where there is an
appropriate statutory exemption applicable to Owner or the failure so
to qualify would not have a material adverse effect on the business,
properties, assets or condition (financial or otherwise) of Owner or
Interim Servicer).
(b) AUTHORIZATION: BINDING OBLIGATIONS. Owner has the
power and authority to make, execute, deliver and perform this
Agreement (including all instruments of transfer to be delivered
pursuant to this Agreement) and perform all of the transactions
contemplated to be performed by it under this Agreement, and has taken
all necessary action to authorize the execution, delivery and
performance of this Agreement. When executed and delivered, this
27
Agreement will constitute the legal, valid and binding obligation of
Owner enforceable in accordance with its terms, except as enforcement
may be limited by bankruptcy, insolvency or similar laws affecting the
enforcement of creditors' rights generally and by the availability of
equitable remedies.
(c) NO CONSENT REQUIRED. Owner is not required to obtain
the consent of any other party or any consent, license, approval or
authorization from, or registration or declaration with, any
governmental authority, bureau or agency in connection with the
execution, delivery, performance, validity or enforceability of this
Agreement, except such as have been obtained or made.
(d) NO VIOLATIONS. The execution, delivery and
performance of this Agreement by Owner will not violate any provision
of any existing law or regulation or any order or decree of any court
applicable to Owner or any affiliate of Owner, or constitute a material
breach of any mortgage, indenture, contract or other agreement to which
Owner is a party or by which Owner may be bound.
(e) LITIGATION. No litigation or administrative
proceeding of or before any court, tribunal or governmental body is
currently pending or to the knowledge of Owner threatened, against
Owner or any of its properties or with respect to this Agreement, which
if adversely determined would have a material adverse effect on the
transactions contemplated by this Agreement.
(f) HOLDER OF NOTES. The Owner is the owner and holder
of the notes evidencing the debt under the Loans (with each note
endorsed to Owner), and is the beneficiary or mortgagee of record of
the mortgage or deed of trust securing such Loans.
(g) COMPLIANCE WITH LAWS. Each Loan has been originated
and serviced in material compliance with all applicable federal, state
and local laws and regulations and consistent in all material respects
with all the requirements of this Agreement and the terms of the Loans
and all related Loan Documents.
(h) LOAN SCHEDULE CORRECT. The information set forth on
any Loan schedule or data base, and on any updates thereof or other
document, instrument or schedule furnished to the Interim Servicer by
the Owner or one of its affiliates pursuant to, or prior to and in
connection with, this Agreement is accurate and complete in all
material respects.
(i) DOCUMENTATION COMPLETE. All documentation with
respect to the servicing of the Loans has been properly and accurately
completed in all material respects and executed, and all documents
required hereby or by the Requirements to be in the custodial file
maintained by the Custodian or the Servicing File are contained
therein.
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ARTICLE VIII
SALE OF SERVICING RIGHTS AND RELATED ITEMS
SECTION 8.1. SALE OF SERVICING RIGHTS. Subject to, and upon the terms
and conditions set forth in this Article VIII, from time to time, the Owner
shall, as hereinafter provided, sell, transfer and assign to the Interim
Servicer all right, title, interest and obligation in and to (i) the related
Servicing Rights Package attributable to a specified pool of Loans, including,
without limitation, ownership of (i) the right to receive a servicing fee in an
amount specified in the related Pricing Letter and all Ancillary Income on the
Loan; (ii) the related Collection Accounts; (iii) the related Escrow Accounts;
and (iv) the related Servicing Files. Such offer and sale shall be subject to,
and made in accordance with the terms of this Article VIII. The Owner
acknowledges and agrees that, not later than December 31, 2002, it shall offer
to the Interim Servicer Servicing Rights relating to Loans with an aggregate
principal balance of not less than $3,000,000,000 as further described in the
Sale of Servicing Rights Commitment letter agreement between the Owner and the
Interim Servicer dated as of February 28, 2001.
Interim Servicer and Owner shall enter into a Pricing Letter with
respect to each Servicing Rights Package to be sold hereunder not later than
thirty (30) days prior to the proposed Sale Date, or such lesser period agreed
upon by Interim Servicer and Owner. On each Sale Date Owner shall deliver to
Interim Servicer a ▇▇▇▇ of Sale evidencing the sale of the related Servicing
Rights Package hereunder as of such Sale Date and a Warranties Certificate
pursuant to which the Owner makes the representations and warranties and
provides the indemnities specified on Exhibit G hereto.
SECTION 8.2. SALE DATE. On the Sale Date, Owner shall transfer and
assign to Interim Servicer, and Interim Servicer shall assume from Owner, all of
Owner's right, title and interest in and to the (i) Servicing Rights and all
rights related thereto, including, without limitation, the right to receive the
servicing fees with respect to the Loans and all Ancillary Income; (ii)
Collection Accounts (if any); (iii) Escrow Accounts (if any); and (iv) Servicing
Files. Following the Sale Date, the Interim Servicer shall service the Loans
pursuant to the terms of a reconstitution agreement entered into pursuant to
Section 2.6 of this Agreement.
SECTION 8.3. EVIDENCE OF SALE. Prior to the Sale Date with respect to a
Servicing Rights Package, Interim Servicer and Owner shall execute and deliver
the documents required in connection with the transfer of the related Servicing
Rights, in form and substance satisfactory to Interim Servicer in the exercise
of its reasonable discretion. Interim Servicer and Owner, subject to the terms
of this Agreement, shall also execute and deliver such other instruments or
documents as Interim Servicer and Owner shall reasonably determine are necessary
to evidence the transactions contemplated hereby.
SECTION 8.4. PURCHASE PRICE. With respect to each transfer and sale of
a Servicing Rights Package, Interim Servicer shall pay to Owner, an amount equal
to the product of the related purchase price percentage determined in accordance
with the Pricing Matrix (including the eligibility criteria) attached hereto as
Exhibit F (the "Purchase Price Percentage") multiplied by the aggregate
outstanding principal balance, as of the Sale Date, of the Loans. In the event
that the Purchase Price Percentage is equal to, or greater than 0.50%, Interim
Servicer shall be obligated to purchase the Servicing Rights, subject to
verification by Interim Servicer that such Loans were originated in
29
accordance with Owner's then current origination practices which shall not be
materially different from those standards existing as of the date of this
Agreement.
SECTION 8.5. PAYMENT OF PURCHASE PRICE BY INTERIM SERVICER. With
respect to each Servicing Rights Package, Interim Servicer shall pay the
Purchase Price to Owner as follows:
(i) 90% of the estimated respective Purchase Price shall
be paid on the respective Sale Date; and
(ii) the remainder of the respective Purchase Price shall
be paid upon the delivery of all Servicing Files and related materials
to evidence the ownership of the Servicing Rights by the Interim
Servicer.
The payment which is due on the respective Sale Date will be based on
an estimate. Any adjustment to such payment will be based on information
available as of the respective Sale Date and will be made within 15 Business
Days of the respective Sale Date. The Purchase Price shall be further adjusted
as follows:
(a) PAYOFF LOANS. Within sixty (60) days after the Sale
Date, Interim Servicer shall (i) provide Owner with a
schedule of all Loans which have been prepaid in full
prior to such sixtieth day and (ii) Owner shall pay
Interim Servicer an amount equal to the Purchase
Price Percentage multiplied by the aggregate
outstanding principal balance of the Loans which
prepaid in full within sixty days after the related
Sale Date with respect to such Loans that were
refinanced by Owner.
(b) ADJUSTMENTS BASED ON ERRORS. If, subsequent to the
payment of the Purchase Price or the payment of any
other amounts due under this Agreement to either
party, the principal on which the Purchase Price with
respect to a Loan was based is found to be in error,
or if, for any other reason, the Purchase Price or
such other amounts are found to be in error, within
five Business Days after the receipt of information
sufficient to provide notice that payment is due, the
party benefitting from the error shall pay to the
other party an amount sufficient to correct and
reconcile the Purchase Price or such other amounts
and shall provide the other party with a
reconciliation statement and such other documentation
sufficient to reasonably satisfy the other party
concerning the accuracy of such reconciliation.
SECTION 8.6. NOTICE TO OBLIGORS. Not less than 15 days prior to the
related Sale Date, Interim Servicer, at the cost and expense of the Owner, shall
deliver to each related Obligor a letter advising the Obligor of the transfer of
the related Servicing Rights contemplated herein. Such letter shall comply in
all material respects with all Requirements, including, without limitation, the
federal Real Estate Settlement Procedures Act, as amended, and Regulation X, as
amended. At its sole cost and expense, following the related Sale Date, Interim
Servicer shall deliver to each related Obligor a similar letter in accordance
with the Requirements. Interim Servicer shall submit a detailed invoice
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to the Owner for such amounts, which invoice shall be paid by Owner within five
(5) Business Days of receipt.
SECTION 8.7. NOTICE TO TAXING AUTHORITIES AND INSURANCE COMPANIES. Not
less than 15 days prior to the related Sale Date, Interim Servicer, at the cost
and expense of the Owner, shall deliver written notices of the transfer of the
related Servicing Rights contemplated herein to each applicable taxing authority
and insurance company. Such notices shall instruct such entities to deliver,
from and after the related Sale Date, all applicable payments, notices, bills,
statements, records, files and other documents to Interim Servicer. All such
notices sent to hazard, flood, earthquake, private mortgage guarantee and other
insurers shall comply with the requirements of the applicable master policies
and shall instruct such insurers to change the mortgagee clause to "Ocwen
Federal Bank FSB, its successors and assigns" or as otherwise required under
applicable Requirements. Owner shall be responsible for the cost of preparing
and delivering the notices described in this Section. Interim Servicer shall
submit a detailed invoice to the Owner for such amounts, which invoice shall be
paid by Owner within five (5) Business Days of receipt.
SECTION 8.8. TAX CONTRACTS. On the related Sale Date, Owner shall
assign to Interim Servicer "life-time" or "life-of-loan," fully paid assignable
tax contracts with Transamerica, Fidelity National Tax Service or another
nationally recognized tax service provider for each Loan to the extent not
previously assigned.
SECTION 8.9. TAX BILLS, INSURANCE PREMIUMS, ETC. For a period of 60
days following the Sale Date for a Servicing Rights Package, Owner shall
immediately forward, or cause to be forwarded, to Interim Servicer by overnight
mail any ▇▇▇▇ that Owner receives in connection with any applicable Mortgage
Loan, including, without limitation, tax bills and bills for hazard, flood,
earthquake or private mortgage insurance premiums. After 60 days following the
related Sale Date, Owner shall immediately forward, or cause to be forwarded,
such bills to Interim Servicer by first class mail.
SECTION 8.10. FLOOD INSURANCE AUDIT. Owner shall assign to Interim
Servicer, on the Sale Date for a Servicing Rights Package, certified and
guaranteed assignable flood insurance contracts for each applicable Mortgage
Loan with Flood Data Services, Inc. ("FDSI") to the extent not previously
assigned. Owner will reimburse Interim Servicer $16.00 per Mortgage Loan for
each Mortgage Loan transferred without an FDSI flood contract.
SECTION 8.11. PAYMENT TO INTERIM SERVICER.
(a) Owner shall be obligated to pay Interim Servicer $2.1
million no later than December 31, 2002 (the "Obligation") in
connection with its obligation to sell servicing rights to the Interim
Servicer hereunder. For so long as any amount with respect to the
Obligation remains outstanding, upon the sale of any Servicing Rights,
as contemplated hereby, to the extent that the Purchase Price
Percentage exceeds 0.50% (such excess herein referred to as the
"Pay-down Amount") Interim Servicer shall pay to Owner the purchase
price based on a Purchase Price Percentage of 0.50% (by wire transfer
in immediately available funds) and apply the Pay-down Amount to the
repayment of the Obligation. Except as provided in the previous
sentence, until the aggregate outstanding principal balance (in each
case calculated as of the date of transfer of the related Servicing
Rights) of all Loans
for which Servicing Rights have been sold by Owner to Interim Servicer
(such amount, the "Loan Balance") is equal to $3 billion (the
"Threshold Amount"), Owner shall not be permitted to make cash payments
to reduce the Obligation. At such time as the Loan Balance is equal to
the Threshold Amount, Owner shall have the option, in its sole
discretion, to pay the remaining outstanding balance of the Obligation
after giving effect to payments by Owner and application of any
Pay-down Amounts. In the event that the Loan Balance is less than the
Threshold Amount on December 31, 2002, Owner shall be immediately
obligated to pay the remaining outstanding balance of the Obligation
(by wire transfer in immediately available funds), if any, after giving
effect to payments by Owner and application of any Pay-down Amounts. In
the event that the Loan Balance is less than the Threshold Amount and
the Obligation has been satisfied, Owner shall be entitled to receive
the full purchase price based upon the Purchase Price Percentage
(without discount or reduction of any kind), and Interim Servicer shall
pay the same, by wire transfer in immediately available funds, upon the
sale of any Servicing Rights, as contemplated hereby.
(b) Change of Control. In the event that (i) any
"person," as such term is used in Sections 13(d) and 14(d) of the
Securities and Exchange Act of 1934, as amended (the "Exchange Act") (a
"Person"), is or becomes the "beneficial owner," as defined in Rule
13d-3 under the Exchange Act (a "Beneficial Owner"), directly or
indirectly, of securities of Owner's parent, New Century Financial
Corporation ("NCFC") representing 51% or more of the combined voting
power of NCFC's then outstanding voting securities; provided however
that such Person was not the Beneficial Owner of securities of NCFC
representing 30% or more of the combined voting power of NCFC's
outstanding voting securities as of the date of this Agreement, or (ii)
the individuals who, as of the date of this Agreement, are member of
the Board of Directors of NCFC, cease for any reason to constitute at
least a majority of the Board of Directors of NCFC, then in either the
case of (i) or (ii), Owner shall have the option, in its sole
discretion, to pay the remaining outstanding balance of the Obligation
after giving effect to payments by Owner and application of any
Pay-down Amounts, notwithstanding anything to the contrary contained
herein.
(c) Maintenance of Records. Interim Servicer shall
maintain a schedule listing the Loan Balance. Interim Servicer shall
maintain a schedule that sets forth the Obligation and reflects
application of payments relating thereto,00 including without limita-
tion, application of any Pay-down Amounts. At the request of Owner,
Interim Servicer shall cause any such records to be made available to
Owner, and shall answer any questions Owner may have, and provide any
supporting information Owner may reasonably require, with regard to
such records.
SECTION 8.12. TERMINATION OF ARTICLE VIII OBLIGATIONS. Notwithstanding
any other provision in this Agreement providing for an earlier termination and
except as provided in Article XI, the provisions in this Article VIII shall
expire by their terms with no action on the part of Owner or Interim Servicer,
and become null and void and of no further force and effect upon the earlier of
(i) December 31, 2002; provided that the Obligation has been satisfied, and (ii)
the date on which the Threshold Amount has been reached and the Obligation has
been satisfied.
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ARTICLE IX
INDEMNIFICATION
SECTION 9.1. LIABILITIES TO OBLIGORS. No liability to any Obligor under
any of the Loans or Properties arising out of any act or omission to act of any
servicer, sub-servicer, owner, holder or originator of the Loans or Properties
prior to the Transfer Date is assumed by Interim Servicer under or as a result
of this Agreement and the transactions contemplated hereby and, to the maximum
extent permitted and valid under mandatory provisions of law, Interim Servicer
expressly disclaims such assumption.
SECTION 9.2. INTERIM SERVICER'S INDEMNITY OF OWNER.
(a) Interim Servicer shall defend and indemnify Owner
against any and all claims, losses, damages, liabilities, judgments,
penalties, fines, forfeitures, reasonable legal fees and expenses, and
any and all related costs and/or expenses of litigation, administrative
and/or regulatory agency proceedings, and any other costs, fees and
expenses, suffered or incurred by Owner (each, a "Liability") arising
out of or resulting from third party claims or actions that were caused
by or resulted from (i) a breach of any of Interim Servicer's
representations and warranties contained in this Agreement, (ii) the
failure of Interim Servicer to perform its duties in accordance with
the terms of this Agreement, (iii) any breach by Interim Servicer or
Interim Servicer's directors, officers, employees, agents, invitees or
representatives of Interim Servicer's obligations under Section 9.2(b)
below or (iv) any actions or omissions of Interim Servicer, as servicer
hereunder, in respect of any Loan or REO Property following the related
Transfer Date for such Loan or REO Property. Interim Servicer shall not
be liable to Owner, however, with respect to action taken, or for
refraining from taking any action, with respect to any Loan or REO
Property at and in conformity with the direction of Owner (for this
purpose, the terms of this Agreement are directions of Owner), or for
any Liability caused by or resulting from a delay occasioned by Owner's
objection to a proposal by Interim Servicer hereunder, or for any
Liability caused by or resulting from Owner's breach of a
representation or warranty herein or for any Liability incurred by
reason of Owner's willful misfeasance, bad faith or negligence in
acting or refraining from acting or any failure of performance or as a
result of a breach of any representations, warranties or covenants made
by Owner hereunder. In any event, Interim Servicer shall not have any
liability or obligations for any actions of any prior servicer,
sub-servicer, originator, holder or owner, or any successor servicer,
of the Loans or Properties.
(b) It is understood and agreed that during the term of
this Agreement Interim Servicer may have access to certain of Owner's
confidential and proprietary information including, without limitation,
Owner's computer systems and models, secure web site, investor
reporting systems, default management systems and procedures, and other
proprietary systems and procedures (the "Confidential Information").
The term "Confidential Information" does not include information which
becomes generally available to the public other than as a result of
disclosure by Interim Servicer or its representatives, or which is
independently developed by Owner without the use of or reference to any
of the Confidential Information, but shall be deemed to include any
passwords or identification codes, access codes, modem dial-up numbers
and similar items. The Interim Servicer shall keep confidential
32
and shall not divulge to any party other than an officer, director,
partner, employee, agent, contractor, advisor or attorney of Interim
Servicer or its affiliate, auditors, regulators, lenders or potential
lenders who has a need to know, without Owner's prior written consent,
any Confidential Information. Additionally, Interim Servicer shall only
permit its officers and employees to perform procedures on Owner's
system which are specifically authorized by Owner. The Confidential
Information shall not be used or duplicated by Interim Servicer for any
purpose other than those purposes specified by Owner. Interim Servicer
further agrees that the Confidential Information will not be used by it
or its directors, officers, employees, invitees, agents or
representatives, including, but not limited to outside counsel, in any
way detrimental to Owner, as determined in the reasonable judgment of
Owner. In the event that Interim Servicer is requested or required (by
oral questions, interrogatories, requests for information or documents,
subpoena, civil investigative demand or similar process) to disclose
any Confidential Information, it is agreed that Interim Servicer will
provide Owner with prompt notice of such request(s) so that Owner may
seek an appropriate protective order and/or waive compliance with the
provisions of this subsection, in Owner's sole and absolute discretion.
Interim Servicer acknowledges that Owner will incur irreparable damage
if Interim Servicer should breach the terms and provisions of this
subsection. Accordingly, if Interim Servicer or Interim Servicer's
directors, officers, employees, invitees, agents or representatives
breaches or threatens to breach any of the provisions of this
subsection, Owner shall be entitled, without prejudice, to all the
rights and remedies available to it, including a temporary restraining
order and an injunction restraining any breach of the provisions of
this subsection (without any bond or other security being required
therefor).
SECTION 9.3. OWNER'S INDEMNITY OF INTERIM SERVICER; LIMITATION ON
LIABILITY OF INTERIM SERVICER.
(a) Owner shall defend and indemnify Interim Servicer
against any Liability arising from (i) third party claims or actions
incurred in connection with any legal action relating to this
Agreement, other than any loss, liability or expense incurred by reason
of willful misfeasance, bad faith or negligence in the performance of
Interim Servicer's duties hereunder, or any failure of performance or
as a result of a breach of any representations, warranties or covenants
made by Interim Servicer hereunder, (ii) third party claims or actions
that were caused by or resulted from (A) any actions or omissions in
respect of any Loan or REO Property of any prior servicer,
sub-servicer, owner or originator of a Loan or REO Property, and/or (B)
taking any action, or refraining from taking any action, with respect
to any Loan or REO Property at and in conformity with this Agreement or
the direction of Owner, and/or (iii) any Environmental Liability (as
defined in Section 9.3(c) below); provided that Interim Servicer has
complied with Section 4.2 of this Agreement, (iv) any breach by Owner
or Owner's directors, officers, employees, agents, invitees or
representatives of Owner's obligations under Section 9.3(d) below, and
(v) any and all claims, losses, damages, liabilities, judgments,
penalties, fines, forfeitures, reasonable legal fees and expenses, and
any and all related costs and/or expenses of litigation, administrative
and/or regulatory agency proceedings, and any other costs, fees and
expenses, suffered or incurred by Interim Servicer relating to the
failure or refusal of Owner or any trustee or custodian in possession
of original Loan Documents to timely provide to Interim Servicer the
originals of any Loan Documents
33
in order to allow Interim Servicer sufficient time to timely process
satisfactions, payoffs and releases. (b) Neither Interim Servicer nor
any directors, officers, employees or agents of Interim Servicer shall
be liable to Owner for any action taken or for refraining from taking
any action in good faith pursuant to this Agreement or for errors in
judgment; provided, however, that this provision shall not protect
Interim Servicer against any liability caused by Interim Servicer that
would otherwise be imposed due to the material breach of any of the
terms of this Agreement. Interim Servicer may rely in good faith on any
document of any kind prima facie properly executed and submitted to
Interim Servicer respecting any matters arising hereunder and shall not
be liable for taking any action or refraining from taking any action in
good faith reliance thereon, pursuant to this Agreement.
(c) The term "Environmental Liability" shall mean any
and all claims, losses, damages, liabilities, judgments, penalties,
fines, forfeitures, reasonable legal fees and expenses, and any and all
related costs and/or expenses of litigation, administrative and/or
regulatory agency proceedings, and any other costs, fees and expenses,
suffered or incurred by Interim Servicer arising out of or resulting
from the introduction of such materials on any Property before and/or
after the date hereof, including, without limitation, (a) any liability
under or on account of the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. Section 9601 et seq., as the
same may be amended from time to time, and/or any other federal or
state environmental laws, and specifically including, without
limitation, any liability relating to asbestos and asbestos containing
materials, polychlorinated biphenyls, radon gas, petroleum and
petroleum products, urea formaldehyde and any substances classified as
being "in inventory", "usable work in process" or similar
classification which would, if classified as unusable, be included in
the foregoing definition, including the assertion of any lien
thereunder, (b) claims brought by third parties for loss or damage
incurred or sustained subsequent to the date hereof, and (c) liability
with respect to any other matter affecting the Property within the
jurisdiction of the federal Environmental Protection Agency or state
environmental regulatory agencies pursuant to any state laws, and in
the regulations adopted pursuant to any of said laws; provided,
however, that the indemnity for Environmental Liability shall not be
effective with respect to any liability directly and solely caused by
Interim Servicer that would otherwise be imposed by reason of Interim
Servicer's willful misfeasance or bad faith in the performance of or
failure to perform duties hereunder.
(d) It is understood and agreed that during the term of
this Agreement Owner may have access to certain of Interim Servicer's
confidential and proprietary information including, without limitation,
Interim Servicer's computer systems and models, secure web site,
investor reporting systems, default management systems and procedures,
and other proprietary systems and procedures (the "Confidential
Information"). The term "Confidential Information" does not include
information which becomes generally available to the public other than
as a result of disclosure by Owner or its representatives, or which is
independently developed by Interim Servicer without the use of or
reference to any of the Confidential Information, but shall be deemed
to include the Servicing Fees contained herein and any passwords or
identification codes, access codes, modem dial-up numbers and similar
items. The Owner shall keep confidential and shall not divulge to any
party other than an officer,
34
director, partner, employee, agent, contractor, advisor or attorney of
Owner or its affiliate, auditors, regulators, lenders or potential
lenders who has a need to know, without Interim Servicer's prior
written consent, any Confidential Information. Additionally, Owner
shall only permit its officers and employees to perform procedures on
Interim Servicer's system which are specifically authorized by Interim
Servicer. The Confidential Information shall not be used or duplicated
by Owner for any purpose other than those purposes specified by Interim
Servicer. Owner further agrees that the Confidential Information will
not be used by it or its directors, officers, employees, invitees,
agents or representatives, including, but not limited to outside
counsel, in any way detrimental to Interim Servicer, as determined in
the reasonable judgment of Interim Servicer. In the event that Owner is
requested or required (by oral questions, interrogatories, requests for
information or documents, subpoena, civil investigative demand or
similar process) to disclose any Confidential Information, it is agreed
that Owner will provide Interim Servicer with prompt notice of such
request(s) so that Interim Servicer may seek an appropriate protective
order and/or waive compliance with the provisions of this subsection,
in Interim Servicer's sole and absolute discretion. Owner acknowledges
that Interim Servicer will incur irreparable damage if Owner should
breach the terms and provisions of this subsection. Accordingly, if
Owner or Owner's directors, officers, employees, invitees, agents or
representatives breaches or threatens to breach any of the provisions
of this subsection, Interim Servicer shall be entitled, without
prejudice, to all the rights and remedies available to it, including a
temporary restraining order and an injunction restraining any breach of
the provisions of this subsection (without any bond or other security
being required therefor).
SECTION 9.4. INDEMNIFICATION PROCEDURES. If, for so long as this
Agreement is in effect, a party entitled to indemnification hereunder
("Indemnified Party") has actual notice or knowledge of any claim or loss for
which indemnification by an indemnifying party hereunder ("Indemnifying Party")
is asserted, the Indemnified Party shall give to the Indemnifying Party written
notice within such time as is reasonable under the circumstances, describing
such claim or loss in reasonable detail. In the event that a demand or claim for
indemnification is made hereunder with respect to losses the amount or extent of
which is not yet known or certain, the notice of demand for indemnification
shall so state, and, where practicable, shall include an estimate of the amount
of the losses.
(a) Unless applicable law mandates a cure within a shorter
period of time, the Indemnifying Party shall have 30 calendar days from
the date of receipt by Indemnifying Party of written notice of a breach
of the Indemnifying Party's representations within which to cure such
breach, or if such breach cannot be cured within 30 days but
Indemnifying Party has commenced efforts to cure, then the Indemnifying
Party shall have 60 calendar days from the date of such notice to cure
such breach. In the event a breach is cured by the Indemnifying Party,
the Indemnifying Party shall execute a written acknowledgment of the
cure in such form as is approved or provided by the Indemnified Party.
(b) In the case of actual notice of indemnification
hereunder involving any litigation, arbitration or legal proceeding,
the Indemnifying Party shall have responsibility to, and shall employ
counsel acceptable to the Indemnified Party, and shall assume all
expense with respect to, the defense or settlement of such claim;
provided however, that:
35
(i) the Indemnified Party shall be entitled to
participate in the defense of such claim and to
employ counsel at its own expense to assist in the
handling of such claim; and
(ii) the Indemnifying Party shall obtain the prior written
approval of the Indemnified Party before entering
into any settlement of such claim or ceasing to
defend against such claim if, pursuant to or as a
result of such settlement or cessation, (1)
injunctive or other relief (excepting the payment of
money damages) would be imposed against any
Indemnified Party which could materially interfere
with the business, operations, assets, conditions
(financial or otherwise) or prospects of the
Indemnified Party, or (2) the settlement of cessation
shall result in an indemnification obligation of the
Indemnifying Party that, in the reasonable judgment
of the Indemnified Party, cannot be fulfilled by the
Indemnifying Party in accordance with the terms of
this Agreement. If the Indemnifying Party does not
provide to the Indemnified Party, within fifteen (15)
days after receipt of a notice of indemnification, a
written acknowledgment that the Indemnifying Party
shall assume responsibility for the defense or
settlement of such claim as provided in this Section
10.8, the Indemnified Party shall have the right to
defend and settle the claim n such manner as it may
deem appropriate at the cost and expense of the
Indemnifying Party, and the Indemnifying Party shall
promptly reimburse the Indemnified Party therefor in
accordance with this Agreement.
SECTION 9.5. OPERATION OF INDEMNITIES. If any Person has made any
indemnity payments to any other Person pursuant to this Article VIII and such
other Person thereafter collects any of such amounts from others, such other
Person will repay such amounts collected, together with any interest collected
thereon. The provisions of this Article VIII shall survive any termination of
this Agreement, the liquidation of any Loan, or the transfer or assignment by
Owner to another Person of any Loan or REO Property or any interest in any Loan
or REO Property.
ARTICLE X
DEFAULT
SECTION 10.1. EVENTS OF DEFAULT. The following shall constitute
"Interim Servicer Events of Default" hereunder by Interim Servicer:
(a) any failure by Interim Servicer to make any deposit
or payment, or to remit any payment, required to be made under the
terms of this Agreement which continues unremedied for a period of
three (3) Business Days after the date upon which such deposit, payment
or remittance was to be made; or
(b) immediately, and without notice or action on the part
of Owner, upon the entry of a decree or order of a court or agency or
supervisory authority having jurisdiction in the premises in an
involuntary case under any present or future federal or state
bankruptcy,
36
insolvency or similar law or appointing a conservator or receiver or
liquidator in any insolvency, readjustment of debt, marshaling of
assets and liabilities or similar proceedings, or for the winding-up or
liquidation of its affairs, shall have been entered against Interim
Servicer and such decree or order shall have remained in force
undischarged or unstayed for a period of sixty (60) days; or
(c) immediately, and without notice or action on the part
of Owner, upon the Interim Servicer's consent to the appointment of a
trustee, conservator or receiver or liquidator in any insolvency,
readjustment of debt, marshaling of assets and liabilities or similar
proceedings of or relating to Interim Servicer or of or relating to all
or substantially all of the property of Interim Servicer; or
(d) immediately, and without notice or action on the part
of Owner upon Interim Servicer admitting 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 take any action in furtherance of the
foregoing; or
(e) Interim Servicer assigns or attempts to assign its
rights to the servicing compensation hereunder or attempts to assign
this Agreement or the servicing responsibilities hereunder without the
consent of Owner except as otherwise expressly permitted by the other
terms and provisions of this Agreement; or
(f) Interim Servicer shall cease to be an approved
servicer for FHLMC and shall cease to be an approved servicer for FNMA;
or
(g) Interim Servicer shall cease to maintain an "above
average" servicer rating with both S&P and ▇▇▇▇▇'▇; or
(h) failure on the part of Interim Servicer duly to
observe or perform in any material respect any other of the covenants
or agreements on the part of Interim Servicer 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 Interim Servicer by
Owner.
The following shall constitute "Owner Events of Default" hereunder by Owner:
(a) any failure by Owner to make any payment required
to be made by Owner to Interim Servicer under the terms of this
Agreement which continues unremedied for a period of three (3) Business
Days after the date upon which written notice of such failure,
requiring the same to be remedied, shall have been given to Owner by
Interim Servicer; or
(b) failure on the part of Owner duly to observe or
perform in any material respect any other of the covenants or
agreements on the part of Owner set forth in this Agreement which
continues unremedied for a period of thirty (30) days after the date on
which written
37
notice of such failure, requiring the same to be remedied, shall have
been given to Owner by Interim Servicer; or
(c) a decree or order of a court or agency or supervisory
authority having jurisdiction in the premises in an involuntary case
under any present or future federal or state bankruptcy, insolvency or
similar law or appointing a conservator or receiver or liquidator in
any insolvency, readjustment of debt, marshaling of assets and
liabilities or similar proceedings, or for the winding-up or
liquidation of its affairs, shall have been entered against Owner and
such decree or order shall have remained in force undischarged or
unstayed for a period of sixty (60) days; or
(d) Owner shall consent to the appointment of a trustee,
conservator or receiver or liquidator in any insolvency, readjustment
of debt, marshaling of assets and liabilities or similar proceedings of
or relating to Owner or of or relating to all or substantially all of
the property of Owner; or
(e) Owner 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 take any action in furtherance of the
foregoing.
SECTION 10.2. EFFECT OF TRANSFER. After the effective date of the
termination of servicing duties pursuant to Section 11.1, Interim Servicer shall
have no further obligations hereunder other than under Article IX or Article XI;
provided that the obligations under Article VIII shall continue in full force
and effect.
ARTICLE XI
TERM
SECTION 11.1. TERM OF AGREEMENT.
(a) This Agreement shall terminate upon the distribution
of the final payment or Liquidation Proceeds on the last Loan or REO
Property subject to this Agreement.
(b) If Owner fails to perform any of its obligations which
would result, after expiration of the applicable notice and cure or
grace period (if applicable), in an Owner Event of Default hereunder or
is in breach of its representations and warranties hereunder or if
Interim Servicer fails to perform any of its obligations which would
result, after expiration of the applicable notice and cure or grace
period (if applicable), in a Interim Servicer Event of Default
hereunder, the non-breaching party may terminate this Agreement by
written notice to the other party, specifying the effective date of
such termination and instructions with respect to the Servicing Files
and Loan Documents except for breaches of Sections 10.1(c), (d) and (e)
in which case termination shall be effective immediately without notice
or action on the part of Owner. Interim Servicer shall do all things
necessary or appropriate to effect the purposes of such termination and
the transfer of servicing, provided that the breaching
38
party shall pay all costs and expenses related to the transfer of
servicing. On or after the receipt by Interim Servicer of such written
notice, all authority and power of Interim Servicer under this
Agreement, whether with respect to the Loans or Properties shall
terminate effective as of the date specified in such written notice. If
Owner fails to perform any of its obligations which would result, after
expiration of the applicable notice and cure or grace period (if
applicable), in an Owner Event of Default hereunder or is in breach of
its representations and warranties hereunder or if Interim Servicer
fails to perform any of its obligations which would result, after
expiration of the applicable notice and cure or grace period (if
applicable), in a Interim Servicer Event of Default hereunder, the
non-breaching party may also pursue whatever rights it may have at law
or in equity to damages, including injunctive relief and specific
performance. To the extent that Owner fails to perform any of its
obligations which would result, after expiration of the applicable
notice and cure or grace period (if applicable), in an Owner Event of
Default hereunder or is in breach of its representations and warranties
hereunder, Interim Servicer shall not be liable nor responsible for any
ramifications which result therefrom; Owner acknowledges that such
failure and/or breach may impair Interim Servicer's ability to perform
hereunder (e.g., if Owner is not qualified to do business in a
particular jurisdiction, this may impair Interim Servicer's ability to
service the Loans and/or Properties in such jurisdiction). To the
extent that Interim Servicer fails to perform any of its obligations
which would result, after expiration of the applicable notice and cure
or grace period (if applicable), in a Interim Servicer Event of Default
hereunder or is in breach of its representations and warranties
hereunder, Owner shall not be liable nor responsible for any
ramifications which result therefrom. Notwithstanding anything herein
to the contrary in this Section 11.1, Interim Servicer shall not
terminate this Agreement upon less than ninety (90) days prior written
notice.
(c) This Agreement may also be terminated by Owner with
respect to one or more Loans or REO Properties at its election at any
time upon thirty (30) days' prior written notice for any reason in
accordance with Exhibit C; provided, however, that the Owner shall pay
Interim Servicer the Termination Fee and any related reasonable
out-of-pocket servicing transfer costs. The Termination Fee shall be
waived in the event (i) the subject Loans are securitized and the
Interim Servicer or one of its affiliates becomes the servicer of the
Loans under the securitization, or (ii) the subject Loans are the
subject of a whole loan sale servicing-retained and the Interim
Servicer or one of its affiliates becomes the servicer of the Loans
after the transfer, provided that in such whole loan transfer Interim
Servicer approves of the entity to whom the Loans are being sold and of
any new servicing agreement to be entered into. No Termination Fee will
be required if Owner terminates Interim Servicer in connection with a
Interim Servicer Event of Default.
(d) This Agreement may also be terminated by Interim
Servicer without cause (i) with respect to Loans being serviced by
Interim Servicer hereunder (i.e., which, as of the date of the sending
of the notice, are already being serviced under this agreement), upon
the sending of 90 days' written notice to Owner, and/or (ii) with
respect to the adding of any new Loans hereunder (i.e., which, as of
the date of the sending of the notice, are not being serviced under
this Agreement), upon the sending of 90 days' written notice to Owner;
provided that, the effective date of such termination shall not be
earlier than the date which is twelve (12) months following the date of
this Agreement. Additionally, upon a change of
39
control of Owner, Interim Servicer may terminate this Agreement upon
the sending of 90 days' prior written notice to the Owner which
termination may be effective prior to the expiration of twelve (12)
months following the date of this Agreement. For the purposes of this
subsection, "control" shall have the meaning set forth in Section
8.11(b). With respect to any termination pursuant to this Section
11.1(d), Interim Servicer shall pay all customary and reasonable
expenses related to the transfer of the Loans and REO Properties (if
any) to a successor servicer and shall not be entitled to any
Termination Fees with respect to such Loans and REO Properties;
provided, however, Owner shall reimburse Interim Servicer for all
outstanding Servicing Advances on the date of such transfer. The
obligations of the Interim Servicer and Owner pursuant to Article VIII
shall be terminated in the event that the Interim Servicer exercises
its rights pursuant to this Section 11.1(d).
(e) Notwithstanding any provision of this Agreement to the
contrary (other than Section 11.1(d)), the termination of this
Agreement by either the Owner or the Interim Servicer shall not limit
or relieve either party of its obligations pursuant to Article VIII of
this Agreement and such termination shall have no effect on any
Servicing Rights which have been sold to the Interim Servicer prior to
the date of such termination.
SECTION 11.2. TRANSFERS OF SERVICING. Except as provided in this
Agreement, Interim Servicer shall not pledge or assign this Agreement or its
rights to the Servicing Fee or transfer the servicing hereunder or delegate its
rights or duties hereunder without the prior written approval of Owner.
SECTION 11.3. INTERIM SERVICER NOT TO RESIGN. Interim Servicer shall
not resign from the obligations and duties imposed on Interim Servicer by this
Agreement, except (i) as set forth in Section 11.1 above, (ii) by mutual consent
of Interim Servicer and Owner, or (iii) upon the determination that Interim
Servicer's duties hereunder are no longer permissible under applicable law and
such incapacity cannot be cured by Interim Servicer. Any determination under
clause (iii) above shall be evidenced by an opinion of counsel to such effect
delivered to Owner in form and substance reasonably acceptable to Owner. No
resignation shall become effective until Owner or its designee shall have
assumed Interim Servicer's responsibilities and obligations hereunder.
ARTICLE XII
MISCELLANEOUS
SECTION 12.1. SUCCESSORS AND ASSIGNS; NO THIRD PARTY BENEFICIARIES.
This Agreement will inure to the benefit of and be binding upon the parties
hereto and their successors and permitted assigns. This Agreement may not be
assigned by either party without the written consent of the other party. This
Agreement is not intended to confer on any person other than the parties hereto
and their successors and assigns any rights, obligations, remedies or
liabilities. Section
12.2. CHOICE OF LAW. This Agreement is made under and shall be governed
by and construed under the laws of Florida.
SECTION 12.3. NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed given and received: (a) upon receipt if
delivered personally (unless subject to
40
clause (b)) or if mailed by registered or certified mail return receipt
requested, postage prepaid; (b) at 5:00 p.m. local time on the business day
after dispatch if sent by a nationally recognized overnight courier; or (c) upon
the completion of transmission (which is confirmed by telephone or by a
statement generated by the transmitting machine) if transmitted by telecopy or
other means of facsimile which provides immediate or near immediate transmission
to compatible equipment in the possession of the recipient, in any case to the
parties at the following addresses or telecopy numbers (or at such other address
or telecopy number for a party as will be specified by like notice):
If to Interim Servicer:
Ocwen Federal Bank FSB
The Forum
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Secretary
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation Number: (▇▇▇) ▇▇▇-▇▇▇▇
If to Owner:
New Century Mortgage Corporation
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation Number: (▇▇▇) ▇▇▇-▇▇▇▇
Any change of address must be in writing.
SECTION 12.4. ENTIRE AGREEMENT; AMENDMENTS; WAIVERS. This Agreement
constitutes the entire agreement between the parties with respect to the
transactions contemplated hereby and supersedes all prior agreements (or
contemporaneous oral agreements) of the parties with respect thereto. This
Agreement may be amended only in writing signed by the party against whom such
amendment is sought to be enforced. Each of Interim Servicer or Owner may, by
written notice to the other, extend the time for or waive the performance of any
of the obligations of such other hereunder. The waiver by any party hereto of a
breach of this Agreement shall not operate or be construed as a waiver of any
other or subsequent breach. No delay, omission or act by a party shall be deemed
a waiver of such party's rights, powers or remedies. No course of dealing
between the parties hereto shall operate as a waiver of any provision hereof.
SECTION 12.5. NO JOINT VENTURE; LIMITED AGENCY. The services provided
by Interim Servicer are in each case those of an independent contractor
providing a service. Nothing contained in this Agreement: (i) shall constitute
Interim Servicer and Owner as members of any partnership, joint venture,
association, syndicate, unincorporated business or other separate entity, (ii)
shall be construed to impose any liability as such on Interim Servicer or Owner
or (iii) shall, except as otherwise expressly provided in this Agreement as to
Interim Servicer, constitute a general or limited
41
agency or be deemed to confer on it any express, implied or apparent authority
to incur any obligation or liability on behalf of the other.
SECTION 12.6. PUBLICITY. No publicity regarding the transactions
contemplated by this Agreement shall be made without the prior written approval
of the parties hereto, except as may be required by applicable law upon the
advice of counsel.
SECTION 12.7. SEVERABILITY; INTERPRETATION. If any provision hereof is
invalid, illegal or unenforceable, the remaining provisions shall not be
affected or impaired thereby. No provision of this Agreement shall be construed
against or interpreted to the disadvantage of any party hereto by any court or
other authority by reason of such party having or being deemed to have
structured, dictated or drafted such provision. The parties hereto acknowledge
that no other agreement entered into by Interim Servicer for the provision of
servicing, default management services and property management and disposition
services shall be used or referred to in construing the provisions of this
Agreement.
SECTION 12.8. COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
taken together shall constitute one and the same instrument.
SECTION 12.9. WAIVER OF JURY TRIAL. EACH PARTY HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY, WAIVES (TO THE EXTENT PERMITTED BY APPLICABLE
LAW) ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY OF ANY DISPUTE ARISING UNDER OR
RELATING TO THIS AGREEMENT AND AGREES THAT ANY SUCH DISPUTE SHALL BE TRIED
BEFORE A JUDGE SITTING WITHOUT A JURY.
SECTION 12.10. LIMITATION OF DAMAGES. NOTWITHSTANDING ANYTHING
CONTAINED HEREIN TO THE CONTRARY, THE PARTIES AGREE THAT NEITHER PARTY SHALL BE
LIABLE TO THE OTHER FOR ANY SPECIAL, CONSEQUENTIAL OR PUNITIVE DAMAGES
WHATSOEVER, WHETHER IN CONTRACT, TORT (INCLUDING NEGLIGENCE AND STRICT
LIABILITY) OR ANY OTHER LEGAL OR EQUITABLE PRINCIPLE.
42
IN WITNESS WHEREOF, this Agreement has been executed by the parties
hereto effective as of the date first written above.
OWNER:
NEW CENTURY MORTGAGE CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
----------------------------------
Title: EVP
----------------------------------
INTERIM SERVICER:
OCWEN FEDERAL BANK FSB
By: /s/ [ILLEGIBLE]
----------------------------------
Name:
----------------------------------
Title:
----------------------------------
43
EXHIBIT A
MONTHLY REPORT
EXHIBIT B
SERVICING FILE
1. Copy of Note and any riders executed in connection with such Note.
2. Copy of Mortgage or Deed of Trust.
3. Copy of Mortgagee's Title Policy or Attorney's Title Opinion.
4. Copy of Assignment of the mortgage or deed of trust to Owner or in blank.
5. Hazard insurance policy.
6. Copy of Mortgage insurance or guaranty agreement, if applicable.
7. Copy of Deed with respect to any REO Property.
8. Any correspondence by and between the Current Servicer and the Obligor.
9. Any broker's price opinion and/or any appraisal relating to the Property.
10. Original of the tax service contract.
11. Originals of all RESPA and TILA disclosure statements executed by the
Obligor.
12. Settlement Statement.
13. Loan Application and credit reports, verification of employment, tax
returns.
14. Documentation relating to any release of collateral.
EXHIBIT C
SERVICING AND TERMINATION FEES
[Intentionally Omitted]
44
EXHIBIT D
FORM OF PRICING LETTER
[NEW CENTURY MORTGAGE CORPORATION LETTERHEAD]
[Date]
Ocwen Federal Bank FSB
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Mr. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Vice President
Re: PRICING LETTER
Gentlemen and Ladies:
This letter agreement (the "Pricing Letter") between Ocwen Federal Bank
FSB ("Ocwen") and New Century Mortgage Corporation (the "Owner") sets forth our
agreement pursuant to which Owner is selling, and Ocwen is purchasing, the right
to service those certain mortgage loans identified in Exhibit A hereto and more
particularly described herein (the "Loans").
The sale of the servicing rights attributable to the Mortgage Loans as
contemplated herein shall be governed by that certain Residential Flow Interim
Servicing Agreement and Servicing Rights Purchase Agreement dated as of March 1,
2001, between Ocwen and Owner (as such may be amended from time to time, the
"Agreement").
All exhibits hereto are incorporated herein in their entirety. In the
event there exists any inconsistency between the Agreement and this Pricing
Letter, the latter shall be controlling notwithstanding anything contained in
the Agreement to the contrary. All capitalized terms used herein and not
otherwise defined herein shall have the meanings assigned to such terms in the
Agreement.
1. ASSIGNMENT AND CONVEYANCE OF SERVICING RIGHTS. Upon Ocwen's
payment of the Purchase Price in accordance with Article VIII
of the Agreement, Owner shall sell, transfer, assign and
convey to Ocwen, subject to the terms of this Pricing Letter
and the Agreement, all of the right, title and interest of
Owner in and to the Servicing Rights attributable to the
Loans.
2. DEFINED TERMS. As used in the Agreement, the following defined
terms shall have meanings set forth below.
(a) SALE DATE: [DATE].
(b) CUT-OFF DATE: [DATE], or such date mutually agreed to
by the parties.
45
(c) CUT-OFF DATE BALANCE: $________________.
(d) TRANSFER DATE: [DATE], or such mutually agreed to by
the parties.
(e) PURCHASE PRICE PERCENTAGE: ___________ basis points
(____%).
(f) PURCHASE PRICE: $_______________.
(g) PURCHASE PROCEEDS: With respect to each Mortgage
Loan, the sum of (a) the product of (i) the Cut-off
Date Balance of such Mortgage Loan, and (ii)_the
Purchase Price Percentage. The Purchase Price owing
to Owner shall be paid by wire transfer to the
account:
(h) SERVICING FEE RATE: [__________ basis points
(______%).]
Kindly acknowledge your agreement to the terms of this Pricing Letter by signing
in the appropriate space below and returning this Pricing Letter to the
undersigned. Telecopy signatures shall be deemed valid and binding to the same
extent as the original.
Very Truly Yours,
NEW CENTURY MORTGAGE CORPORATION
as Owner
By:
-----------------------------------
Name:
-----------------------------------
Title:
-----------------------------------
ACKNOWLEDGED AND AGREED
OCWEN FEDERAL BANK FSB
as Purchaser
By:
-------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
▇▇
▇▇▇▇▇▇▇ ▇
▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇
▇▇ this ___ day of ___________, ____, New Century Mortgage Corporation
("Assignor") does hereby sell, transfer, assign, set over and convey to Ocwen
Federal Bank FSB, without recourse, all of the right, title and interest of the
Assignor in and to the Servicing Rights attributable to the mortgage loans
identified on the Loan Schedule attached hereto as Exhibit One (the "Loans").
Capitalized terms used herein but not otherwise defined shall have the meanings
provided in the Residential Flow Interim Servicing Agreement and Servicing
Rights Purchase Agreement, dated as of the 1 day of March, 2001, by and between
Ocwen Federal Bank FSB and st the Assignor.
Assignor hereby represents and warrants that Assignor is the sole legal,
beneficial and equitable owner of the Servicing Rights related to the Loans and
has full power and authority to transfer and sell the Servicing Rights related
to the Loans to Ocwen Federal Bank FSB free and clear of any encumbrance,
equity, lien, pledge, charge, claim or security interest in the Servicing
Rights. This ▇▇▇▇ of Sale shall be governed by, and construed in accordance
with, the laws of the State of Florida.
NEW CENTURY MORTGAGE CORPORATION
By:
-------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
47
EXHIBIT F
PRICING MATRIX
[Intentionally Omitted]
48
EXHIBIT G
FORM OF WARRANTIES CERTIFICATE
[NEW CENTURY MORTGAGE CORPORATION LETTERHEAD]
[Date]
Ocwen Federal Bank FSB
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Mr. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Vice President
Re: Residential Flow Interim Servicing and Servicing Rights Purchase
Agreement, dated as of March 1, 2001, between Ocwen Federal Bank FSB
and New Century Mortgage Corporation (the "Agreement")
Ladies and Gentlemen:
This certificate is provided to the Interim Servicer pursuant to
Section 8.1 of the above referenced Agreement. The Owner hereby certifies that
(i) the representations and warranties set forth in Section 7.2 of the Agreement
with respect to the Loans identified on Schedule One hereto are true and correct
as of the date hereof and (ii) the Owner's obligations set forth in Section 9.3
shall be effective with respect to such Loans as of the date hereof.
Capitalized terms used herein and not otherwise defined have the
meanings set forth in the Agreement.
Very truly yours,
NEW CENTURY MORTGAGE CORPORATION
By:
------------------------------------
Name:
------------------------------------
Title:
------------------------------------
49
EXHIBIT H
SERVICING TRANSFER REQUIREMENTS
The Owner shall take the following actions or shall agree to take the
following actions, at the Owner's expense, in connection with the transfer of
servicing of each Loan and REO Property to Interim Servicer, it being understood
by the parties hereto that the following actions may be undertaken by the
Owner's designee:
1. PRIOR TO RELATED TRANSFER DATE:
(a) The Owner shall inform the applicable hazard, flood,
earthquake, private mortgage and any other insurance companies and/or
their agents providing insurance with respect to the Loan of the
transfer and request a change in the loss payee mortgage endorsement
clause to Interim Servicer's name. With respect to each Loan which is
covered by a force placed insurance policy, the Owner shall cause such
policy to be canceled as of the Transfer Date, and Interim Servicer
shall cause such insurance to be provided by its force placed carrier
as of such Transfer Date.
(b) The Owner shall obtain a transferable life-of-loan
real estate tax service contract on the Loan with TransAmerica or
Fidelity National Tax Service (or other nationally recognized tax
service provider) to the extent such contract is not already in place,
and shall assign and transfer such contract to Interim Servicer at no
expense to Interim Servicer; provided that, if the Owner does not
obtain such a contract, Interim Servicer shall have the right to
purchase such a contract and shall be entitled to total reimbursement
from the Owner for the cost thereof. On a monthly basis, the Interim
Servicer shall (i) submit an invoice to the Owner for such costs or
(ii) net such costs from the Monthly Collection Amount prior to
distributing such funds in accordance with Section 6.2 of the
Agreement.
(c) The Owner shall, no later than fifteen (15) days
prior to the Transfer Date, inform the Obligor of the change in
servicer from the Owner to Interim Servicer by written notice in
accordance with applicable law; provided, however, the content and
format of such letter shall have the prior approval of Interim
Servicer. The Owner shall promptly provide Interim Servicer with a copy
of all such notices.
(d) Upon reasonable prior request by Interim Servicer,
the Owner shall permit review by Interim Servicer of the Owner's
servicing records and loan records on the premises of the Owner during
normal business hours.
(e) The Owner shall pay all private mortgage insurance
premiums, if any, and all hazard, flood and other insurance premiums
for insurance covering the Loan, and real estate taxes for which bills
have been received prior to the Transfer Date on the Loan with
impound/escrow accounts, to the extent such premiums or taxes would be
delinquent if unpaid within thirty (30) days after the Transfer Date.
The Owner will send to Interim Servicer, and Interim Servicer will pay,
any bills received on or after the Transfer Date and
any such bills received prior to such Transfer Date which the Owner is not
required to pay pursuant to this subparagraph.
(f) The Owner shall deliver to Interim Servicer available
computer or like records reflecting the status of payments, balances
and other pertinent information on the Loan as of the Transfer Date
(such information shall include, but not be limited to, comprehensive
tax and insurance information for the Loan, identifying payee, payee
address, next payment due date, next amount payable, policy
number/parcel number). Such records shall include electronic
transmissions reflecting all computer files maintained by the Owner
with respect to the Loan, shall include hard copy trial balance reports
and schedules if requested. Such records (1) shall be in a format and
storage medium acceptable for conversion to Interim Servicer's
servicing computer system, and (2) shall be delivered no later than the
Transfer Date.
(g) A hard copy of the Servicing File for the Loan,
consisting of all documents available to the Owner with respect to such
Loan, including original credit files held by the Owner, shall be
delivered to Interim Servicer at least three (3) business day prior to
the Transfer Date. In addition, upon Interim Servicer's reasonable
request, the Owner shall assist Interim Servicer in all reasonable
respects in Interim Servicer's efforts to obtain any additional
documents or information necessary to enable Interim Servicer to
service the Loan in accordance with the provisions of this Agreement.
The Owner shall be responsible for curing all document deficiencies
necessary to properly service the Loan. If the deficiency has not been
cured in a timely manner and is preventing the proper servicing of the
Loan, Interim Servicer may cure such deficiencies and shall be
reimbursed by the Owner for costs incurred in connection therewith. On
a monthly basis, the Interim Servicer shall (i) submit an invoice to
the Owner for such costs or (ii) net such costs from the Monthly
Collection Amount prior to distributing such funds in accordance with
Section 6.2 of the Agreement.
(h) With respect to a Loan for which the Obligor is in
bankruptcy, the Owner shall provide Interim Servicer with the following
information: attorney name, address and phone number, foreclosure
status, bankruptcy status and bankruptcy case number, filing date and
chapter. In addition, the Owner shall notify the bankruptcy trustee
with respect to the Loan of the change in servicer from the Owner to
Interim Servicer and shall provide Interim Servicer with copies of such
notices.
2. AFTER THE RELATED TRANSFER DATE:
(a) Within one (1) Business Day after the Transfer Date,
the Owner will deliver to Interim Servicer reports setting forth all
Loan escrow/impound balances as of the Transfer Date, reporting all
unposted payments and unearned fees which are deemed collected as of
the Transfer Date, and including a reconciliation of such
escrow/impound balances.
(b) Within three (3) Business Days after the Transfer
Date, the Owner will deliver to Interim Servicer the related Loan
history in bulk or electronically. In addition, the Owner shall make
the Loan history available to the related Obligor upon request made
during the 12 months following the Transfer Date.
2
(c) The Owner shall deliver to Interim Servicer any
correspondence received by the Owner relating to the Loan after the
Transfer Date, such as tax bills, insurance bills, borrower letters and
the like. Such items shall be forwarded to Interim Servicer via
overnight courier within three (3) Business Days following the day on
which the correspondence is received by the Owner.
(d) The Owner shall deliver to Interim Servicer any
payments
on the Loan received by the Owner from the related Obligor following
the Transfer Date. The Owner shall forward any such payment to Interim
Servicer via overnight courier within two (2) Business Days after the
Owner's receipt thereof.
(e) The Owner shall prepare and send Internal Revenue
Service Form 1098 and 1099 to the Obligor for the period from the first
day of the calendar year in which such Transfer Date occurs through
such Transfer Date.
(f) No later than one (1) Business Day after the Transfer
Date, the Owner shall deliver to Interim Servicer, copies of all
investor cut-off or accounting reports submitted by the Owner relating
to the Loan as of the Transfer Date, including a trial balance and
reports of collections, delinquencies, prepayments, curtailments,
escrow payments, escrow balances, partial payments, partial payment
balances and other like information on the Loan.
(g) The Owner shall prepare and deliver the monthly
servicing reports to Interim Servicer for the month in which the
Transfer Date occurs and shall timely provide Interim Servicer with
required information regarding collection activity necessary for
Interim Servicer to prepare the such monthly reports for subsequent
months.
3
EXHIBIT I
SERVICING STANDARDS
Subject to the ramp-up time set forth in paragraph F below, the compliance
calculations set forth in paragraph G below and the cure periods set forth in
paragraph H below, the following servicing performance standards (the
"Performance Standards") shall be applicable to Purchaser:
A. Outbound Calling and Collection Calls. As further described below,
telephone calls to borrowers are to be made by Interim Servicer
according to the following schedule relating to Mortgage Loans for
which bankruptcy or foreclosure actions have not been commenced:
1. Welcome Calls: At least three attempts during the first 30
days following the Transfer Date.(1)
2. Collection Calls, 5th through the 18th day of the month: At
least one attempt every other Business Day at a 25% Right
Party Contact rate. (1)(2)(3)
3. Collection Calls, After the 18th day of month: At least two
attempts every other business day at a 25% Right Party Contact
rate. (1)(2)3
A further explanation of the Interim Servicer's Calling Program is as
follows:
WELCOME CALLS. Welcome calls will be made regardless of the borrower's
delinquency status. However, if a borrower is delinquent in the first
month following the Transfer Date, the Welcome Call will be made as
part of the calling programs described below for Collection Calls.
COLLECTION CALLS - 5TH THROUGH THE 18TH DAY OF THE MONTH. These calls
are made for all Mortgage Loans that are past due between the 5th and
18th day of the month, except for loans that are screened out from such
calls for reasons including, but not limited to: bankruptcies, interim
payments in the first 30 days after transfer, loans for which the
historical average payment date is before the 18th of the month and
loans for which borrowers have requested in writing that Interim
Servicer not contact them.
COLLECTION CALLS - AFTER THE 18TH DAY OF THE MONTH BUT NOT YET IN
FORECLOSURE. These calls are made for all Mortgage Loans that are
delinquent after the 18th day of the month, except for loans that are
screened out from such calls for reasons including, but not limited to:
bankruptcies, loans in foreclosure and loans for which borrowers have
requested in writing that Interim Servicer not contact them.
----------
(1) An "attempt" shall include, at a minimum, an actual dialing of an
outbound call to the borrower's telephone (1) number. Once a Right
Party Contact has been made, calls will cease for up to 7 days. For
purposes of defining (2) "Business Day", for the Performance Standards
Fridays will be deemed to include Friday, Saturday and Sunday.
(2) "Right Party Contact" means contact with an obligor (a signer of the
Mortgage Note), or, where applicable,
(3) the obligor's legal guardian or attorney-in-fact with respect to the
loan.
1
B. WRITTEN CORRESPONDENCE. Interim Servicer will prepare and deliver the
following written correspondence:
1. EARLY LATE NOTICES: Interim Servicer will mail a late notice
to all borrowers once they are 5 days past their due date,
except for the following loans that are screened out for such
written correspondence for reasons including, but not limited
to: bankruptcies, interim payments in the first 30 days after
transfer and loans for which the historical average payment
date is before the 18th day of delinquency.
2. LETTER OF INTENT: Interim Servicer will mail a letter of
intent to foreclose on the 20th day of delinquency.
3. DEMANDS: When applicable, Interim Servicer will send a demand
letter via certified mail on or about the 35th day of
delinquency.
C. FORECLOSURE TIMELINES.
1. For Mortgage Loans in foreclosure, Interim Servicer will,
subject to paragraph 2 below, not exceed 105% of the following
▇▇▇▇▇▇▇ Mac foreclosure timelines measured in the aggregate on
a rolling three month weighted average basis, by loan count
across all states. These timelines may be amended from time to
time as ▇▇▇▇▇▇▇ Mac amends its published timelines.
FORECLOSURE TIMELINES
State Days to Foreclosure State Days to Foreclosure
----- ------------------- ----- -------------------
AK 136 MT 202
AL 75 NC 119
AR 116 ND 150
AZ ▇▇▇ ▇▇ ▇▇▇
▇▇ 126 NH 78
CO 104 NJ 274
CT 176 NM 192
DC 91 NV ▇▇▇
▇▇ ▇▇▇ ▇▇ 336(1)
FL 151 OH 252
GA 67 OK 217
HI 167 OR 173
IA 212 PA 282
ID 187 PR 375
IL 287 RI 83
IN 253 SC 189
KS 180 SD 203
KY 194 TN 72
LA 216 TX 60
MA 83 UT 164
MD 47 VA 71
ME 330 VT 357
MI 75 WA 156
MN 100 WI 310
MO 77 WV 61
MS 85 WY 93
(1) For New York City 425 days
2
2. Excluded from the calculation in Paragraph 1 are Mortgage
Loans for which there is not sufficient documentation in the
file for commencement or continuation of foreclosure
activities as well as ▇▇▇▇▇▇▇ Mac allowable hold times.
Interim Servicer will deliver to the Servicer a list of
Mortgage Loans for which necessary documentation is missing on
a monthly basis. Additionally, on or before the Transfer Date
Seller will provide Interim Servicer with, or cause Interim
Servicer to be provided with, a list of Mortgage Loans with
missing documentation. Upon the receipt of the documentation,
the applicable loans will be included in the foreclosure
timeline calculation beginning at that time.
D. PRE-FORECLOSURE RESOLUTION RATE
1. A "Pre-foreclosure Resolution" will be obtained for at least
55% of the Mortgage Loans (by number of Mortgage Loans) for
which foreclosure actions have commenced (a "Defaulted
Mortgage Loan"), measured on a rolling three month average
basis.
2. A "Pre-foreclosure Resolution" shall mean any of the
following: i. Full reinstatement - means any Defaulted
Mortgage Loan for which the borrower brings the Mortgage Loan
back to a contractually current status either through a lump
sum payment or otherwise consistent with the terms of the
related Pooling and Servicing Agreement and has made three
consecutive timely payments subsequent to bringing such
Mortgage Loan's status current.
ii. Full payoff - means any Defaulted Mortgage Loan which
is paid in full and such payment in full is received
by Interim Servicer in full satisfaction of the
indebtedness owed under the applicable Mortgage Note.
iii. Shortfall payoff - means a Defaulted Mortgage Loan
for which a final payment in an amount less than the
indebtedness owed under the applicable Mortgage Note
is made consistent with the terms of the related
Pooling and Servicing Agreement and such payment is
received by Interim Servicer in full satisfaction of
such indebtedness.
iv. Deed-in-Lieu of Foreclosure - means a Defaulted
Mortgage Loan for which title to the Mortgaged
Property is taken back by Interim Servicer through
deed in lieu of foreclosure and the resulting REO
Property is liquidated consistent with the terms of
the related Pooling and Servicing Agreement.
v. Modification (subject to REMIC restrictions) - means
a Defaulted Mortgage Loan which is modified in a
manner consistent with the related Pooling and
Servicing Agreement and for which the Borrower has
made three consecutive payments consistent with the
terms of such Mortgage Loan as so modified.
vi. Forbearance Plan - means a Defaulted Mortgage Loan
for which a borrower has made three consecutive
payments in accordance with a forbearance plan
entered into by the borrower.
vii. Take-out at Foreclosure Sale - means the Mortgaged
Property related to a Defaulted Mortgage Loan that is
purchased at a foreclosure sale by a party other than
Interim Servicer (or by Interim Servicer on behalf of
the owner of the loan) in a manner consistent with
the related Pooling and Servicing Agreement.
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E. REO SALES
1. With respect to those REO Properties that are being managed by
the Interim Servicer, are not in eviction status and have a
marketable title, Interim Servicer will sell at least 12.5% of
such REO Properties (by number of Mortgage Loans) on a monthly
basis and obtain "average net proceeds" of at least 87% of the
low market value reflected in the applicable broker's
indication of value, in each case measured on a rolling 3
month average basis.
2. "Average net proceeds" - means proceeds from sale after
brokerage costs and closing costs.
F. RAMP-UP TIME
Interim Servicer shall endeavor to meet the Performance Standards
contained herein as soon as possible after the Transfer Date, but shall not be
considered to be in default under the this Agreement unless it fails a
performance standard starting during the applicable period reflected in the
table below. For those performance standards measured on an average or weighted
average three-month rolling basis, Interim Servicer shall not be considered in
default under the this Agreement unless it fails such performance standard after
completion of the applicable three-month period.
RAMP-UP PERIODS
Applies Applies
Performance Standard first 90 Days After 90 Days
-------------------- ------------- -------------
Welcome Call Attempts Yes N/A
1-18 Day Call Attempts Yes Yes
1-18 Day Right Party Hits No Yes
18+ Day Call Attempts Yes Yes
18+ Day Right Party Hits No Yes
Written Correspondence (All) Yes Yes
Pre-foreclosure Resolution Rate Yes Yes
Foreclosure Timelines No Yes
REO Liquidation Rate No Yes
REO Proceeds Yes Yes
G. COMPLIANCE
CALCULATIONS For calculations of compliance of the Performance
Standards set forth in paragraphs A and B, the Interim Servicer will be deemed
to be in compliance of the standards if the Interim Servicer is meeting the
applicable standard in at least 90% of the cases.
H. CURE PERIODS
If the Interim Servicer is not in compliance with the Performance
Standards and notice is given by the Owner, then the Interim Servicer will have
30 days to cure such breach. After the 30 day cure period, if the Interim
Servicer is now meeting the applicable standard subject to the compliance
calculation, then the Interim Servicer will be deemed to be in full compliance.
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