WELLS FARGO BANK, N.A., as Servicer and LEHMAN BROTHERS HOLDINGS INC., as Seller and AURORA LOAN SERVICES LLC, as Master Servicer
EXECUTION
XXXXX
FARGO
BANK,
N.A.,
as
Servicer
and
XXXXXX
BROTHERS
HOLDINGS
INC.,
as
Seller
and
AURORA
LOAN
SERVICES
LLC,
as
Master
Servicer
Mortgage
Pass-Through Certificates, Series 2007-1
Dated
as
of February 1, 2007
TABLE
OF CONTENTS
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Page
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ARTICLE
I.
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DEFINITIONS
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2
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ARTICLE
II.
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SELLER’S
ENGAGEMENT OF SERVICER TO PERFORM SERVICING
RESPONSIBILITIES
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Section
2.01.
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Contract
for Servicing; Possession of Servicing Files
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14
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Section
2.02.
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Books
and Records
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14
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ARTICLE
III.
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SERVICING
OF THE MORTGAGE LOANS
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Section
3.01.
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Servicer
to Service
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15
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Section
3.02.
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Collection
and Liquidation of Mortgage Loans
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17
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Section
3.03.
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Establishment
of and Deposits to Custodial Account
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18
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Section
3.04.
|
Permitted
Withdrawals From Custodial Account
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20
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Section
3.05.
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Establishment
of and Deposits to Escrow Account
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21
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Section
3.06.
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Permitted
Withdrawals From Escrow Account
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22
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Section
3.07.
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Notification
of Adjustments
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23
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Section
3.08.
|
(Reserved.)
|
23
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Section
3.09.
|
Payment
of Taxes, Insurance and Other Charges
|
23
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Section
3.10.
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Protection
of Accounts
|
24
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Section
3.11.
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Maintenance
of Hazard Insurance
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24
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|
Section
3.12.
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Maintenance
of Mortgage Impairment Insurance
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26
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Section
3.13.
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Maintenance
of Fidelity Bond and Errors and Omissions Insurance
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26
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Section
3.14.
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Inspections
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27
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Section
3.15.
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Restoration
of Mortgaged Property
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27
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Section
3.16.
|
Maintenance
of PMI and/or LPMI Policy; Claims
|
27
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Section
3.17.
|
Title,
Management and Disposition of REO Property
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29
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Section
3.18.
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Real
Estate Owned Reports
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32
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Section
3.19.
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Liquidation
Reports
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32
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Section
3.20.
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Reports
of Foreclosures and Abandonments of Mortgaged Property
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32
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Section
3.21.
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Prepayment
Charges
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33
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Section
3.22.
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Confidentiality/Protecting
Customer Information
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33
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Section
3.23.
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Credit
Reporting
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33
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-i-
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ARTICLE
IV.
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PAYMENTS
TO MASTER SERVICER
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Section
4.01.
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Remittances
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34
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Section
4.02.
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Statements
to Master Servicer
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35
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Section
4.03.
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Monthly
Advances by Servicer
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36
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Section
4.04.
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Due
Dates Other Than the First of the Month
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36
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ARTICLE
V.
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GENERAL
SERVICING PROCEDURES
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Section
5.01.
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Transfers
of Mortgaged Property
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37
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Section
5.02.
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Satisfaction
of Mortgages and Release of Mortgage Files
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37
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Section
5.03.
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Servicing
Compensation
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38
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Section
5.04.
|
Servicer
Compliance Statement
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38
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Section
5.05.
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Report
on Assessment of Compliance and Attestation
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39
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Section
5.06.
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Inspection
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40
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ARTICLE
VI.
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REPRESENTATIONS,
WARRANTIES AND AGREEMENTS
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Section
6.01.
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Representations,
Warranties and Agreements of the Servicer
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40
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Section
6.02.
|
Remedies
for Breach of Representations and Warranties of the
Servicer
|
42
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Section
6.03.
|
Additional
Indemnification by the Servicer
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43
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Section
6.04.
|
Indemnification
with Respect to Certain Taxes and Loss of REMIC Status
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46
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Section
6.05.
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Purchase
of Distressed Mortgage Loans
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46
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Section
6.06.
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Reporting
Requirements of the Commission and Indemnification
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46
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ARTICLE
VII.
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THE
SERVICER
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Section
7.01.
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Merger
or Consolidation of the Servicer
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47
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Section
7.02.
|
Limitation
on Liability of the Servicer and Others
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47
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Section
7.03.
|
Limitation
on Resignation and Assignment by the Servicer
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48
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Section
7.04.
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Subservicing
Agreements and Successor Subservicer
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49
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-ii-
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ARTICLE
VIII.
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TERMINATION
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Section
8.01.
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Termination
for Cause
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50
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Section
8.02.
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Termination
Without Cause
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52
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Section
8.03.
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(Reserved.)
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53
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Section
8.04.
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Termination
for Distressed Mortgage Loans
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53
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ARTICLE
IX.
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MISCELLANEOUS
PROVISIONS
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Section
9.01.
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Successor
to the Servicer
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54
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Section
9.02.
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Costs
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56
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Section
9.03.
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Protection
of Confidential Information
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56
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Section
9.04.
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Notices
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56
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Section
9.05.
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Severability
Clause
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58
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Section
9.06.
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No
Personal Solicitation
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58
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Section
9.07.
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Counterparts
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59
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Section
9.08.
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Place
of Delivery and Governing Law
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59
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Section
9.09.
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Further
Agreements
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59
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Section
9.10.
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Intention
of the Parties
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59
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Section
9.11.
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Successors
and Assigns; Assignment of Servicing Agreement
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59
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Section
9.12.
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Assignment
by the Seller
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59
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Section
9.13.
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Amendment
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60
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Section
9.14.
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Waivers
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60
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Section
9.15.
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Exhibits
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60
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Section
9.16.
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Intended
Third Party Beneficiaries
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60
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Section
9.17.
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General
Interpretive Principles
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61
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Section
9.18.
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Reproduction
of Documents
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61
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EXHIBITS
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EXHIBIT
A
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MORTGAGE
LOAN SCHEDULE
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EXHIBIT
B
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CUSTODIAL
ACCOUNT CERTIFICATION
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EXHIBIT
C
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ESCROW
ACCOUNT CERTIFICATION
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EXHIBIT
D
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BNC
MORTGAGE LOAN TRUST 2007-1 TRUST AGREEMENT
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EXHIBIT
E
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FORM
OF LOAN LOSS REPORT
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EXHIBIT
F
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FORM
OF CERTIFICATION
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EXHIBIT
G
|
XXXXXX
XXX GUIDE NO. 95-19
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EXHIBIT
H
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SERVICING
CRITERIA TO BE ADDRESSED IN REPORT ON ASSESSMENT OF
COMPLIANCE
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EXHIBIT
I
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TRANSACTION
PARTIES
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EXHIBIT
J
|
FORM
OF ANNUAL OFFICER’S CERTIFICATE
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-iii-
This
SECURITIZATION
SUBSERVICING AGREEMENT
(this
“Agreement”), entered into as of the 1st
day of
February, 2007, by and among XXXXXX BROTHERS HOLDINGS INC., a Delaware
corporation (the “Seller”), XXXXX
FARGO BANK, N.A.
(the
“Servicer”), AURORA
LOAN SERVICES LLC,
as
master servicer (the “Master Servicer”), and acknowledged by U.S. BANK NATIONAL
ASSOCIATION, as trustee (the “Trustee”) under the Trust Agreement (as defined
herein), recites and provides as follows:
WITNESSETH:
WHEREAS,
the Servicer and Xxxxxx Brothers Bank, FSB (the “Bank”) are parties to a flow
servicing agreement, dated as of June 1, 2005 (the “Flow Servicing Agreement”),
pursuant to which the Servicer services certain mortgage loans identified on
Exhibit A hereto (the “Mortgage Loans”);
WHEREAS,
pursuant to an Assignment and Assumption Agreement, dated as of December 1,
2006, (the “Assignment Agreement”), the Seller acquired from the Bank all of the
Bank’s right, title and interest in and to the Mortgage Loans currently serviced
under the Flow Servicing Agreement and assumed for the benefit of the Servicer
and the Bank the rights and obligations of the Bank as owner of the Mortgage
Loans under the Flow Servicing Agreement;
WHEREAS,
on the Closing Date the Seller intends to convey the Mortgage Loans on a
servicing retained basis to Structured Asset Securities Corporation (the
“Depositor”), which in turn has conveyed the Mortgage Loans to the Trustee under
a trust agreement dated as of December 1, 2006 (the “Trust Agreement”), among
the Trustee, the Depositor, the Master Servicer, Xxxxx Fargo Bank, N.A., as
securities administrator (the “Securities Administrator”) and Xxxxxxx Fixed
Income Services Inc., as credit risk manager (the “Credit Risk
Manager”);
WHEREAS,
from time to time certain other of the mortgage loans conveyed by the Depositor
to the Trustee under the Trust Agreement on the Closing Date and serviced by
other servicers may subsequent to the Closing Date be transferred to the
Servicer for servicing under this Agreement, at which date the Mortgage Loan
Schedule set forth at Exhibit A hereto will be amended to include such mortgage
loans which will then be considered “Mortgage Loans” under this
Agreement;
WHEREAS,
the Master Servicer shall be obligated under the Trust Agreement, among other
things, to supervise the servicing of the Mortgage Loans on behalf of the
Trustee, and shall have the right, under certain circumstances, to terminate
the
rights and obligations of the Servicer under this Agreement upon the occurrence
and continuance of an Event of Default as provided herein;
WHEREAS,
multiple classes of certificates (the “Certificates”), including the Class P and
the Class X Certificates, were issued on the Closing Date pursuant to the Trust
Agreement, and an affiliate of the Seller is the initial registered holder
(the
“PX Holder”) of the Class P and Class X Certificates;
WHEREAS,
subsequent to the Closing Date, the PX Holder intends to convey all of its
rights, title and interest in and to the Class P and the Class X Certificates
and all payments and all other proceeds received thereunder to an owner trust
or
other special purpose entity in which it will hold the sole equity interest,
which owner trust or special purpose entity will issue net interest margin
securities (“NIM Securities”) through an indenture trust, such NIM Securities
secured, in part, by the payments on such Certificates (the “NIMS
Transaction”);
WHEREAS,
one or more insurers (collectively, the “NIMS Insurer”) may each issue one or
more insurance policies guaranteeing certain payments under the NIM Securities
to be issued pursuant to the indenture in the NIMS Transaction;
WHEREAS,
in the event there may be two or more individual insurers it is intended that
the rights extended to the NIMS Insurer pursuant to this Agreement be allocated
among two or more individual insurers that issue insurance policies in
connection with the NIMS Transaction through a NIMS Insurance Agreement by
and
among such insurers and the parties hereto;
WHEREAS,
the Seller and the Servicer acknowledge and agree that the Seller will assign
all of its rights and delegate all of its obligations hereunder (excluding
(i)
the Seller’s rights and obligations as owner of the servicing rights relating to
the Mortgage Loans, (ii) its rights to terminate the rights and obligations
of
the Servicer under Section 8.02(iii) hereunder and (iii) its obligations
pursuant to Section 9.02, all of which rights and obligations will remain with
the Seller or be assigned or delegated to the Master Servicer) to the Trustee,
and that each reference herein to the Seller is intended, unless otherwise
specified, to mean the Seller or the Trustee, as assignee, whichever is the
owner of the Mortgage Loans from time to time;
NOW,
THEREFORE, in consideration of the mutual agreements hereinafter set forth
and
for other good and valuable consideration, the receipt and adequacy of which
are
hereby acknowledged, the Seller, the Master Servicer and the Servicer hereby
agree as follows:
ARTICLE
I.
DEFINITIONS
The
following terms are defined as follows:
Accepted
Servicing Practices:
With
respect to any Mortgage Loan, those mortgage servicing practices (i) of prudent
mortgage lending institutions that service mortgage loans of the same type
as
such Mortgage Loans in the jurisdiction where the related Mortgaged Property
is
located and (ii) in accordance with applicable state, local and federal laws,
rules and regulations.
Agreement:
This
Securitization Subservicing Agreement and all amendments hereof and supplements
hereto.
-2-
Ancillary
Income:
All
income derived from the Mortgage Loans (excluding (i) the Xxxxx Fargo Servicing
Fee and (ii) Prepayment Charges attributable to the Mortgage Loans), including
but not limited to interest received on funds deposited in the Custodial Account
or any Escrow Account, late charges, fees received with respect to checks or
bank drafts returned by the related bank for non-sufficient funds, assumption
fees, optional insurance administrative fees and all other incidental fees
and
charges. The Servicer shall retain all Ancillary Income to the extent not
required to be deposited into the Custodial Account.
Assignment
of Mortgage:
An
assignment of the Mortgage, notice of transfer or equivalent instrument in
recordable form, sufficient under the laws of the jurisdiction wherein the
related Mortgaged Property is located to reflect the transfer of the Mortgage
to
the party indicated therein or if the related Mortgage has been recorded in
the
name of MERS or its designee, such actions as are necessary to cause the Seller
or its designee to be shown as the owner of the related Mortgage on the records
of MERS for purposes of the system of recording transfers of beneficial
ownership of mortgages maintained by MERS.
Business
Day:
Any day
other than (i) a Saturday or Sunday, or (ii) a day on which banking and savings
and loan institutions in the States of Colorado, Iowa, Maryland, Minnesota
and
New York are authorized or obligated by law or executive order to be
closed.
Certificateholder:
The
meaning set forth in the Trust Agreement.
Certificates:
Any or
all of the Certificates issued pursuant to the Trust Agreement.
Closing
Date:
February 28, 2007.
Code:
The
Internal Revenue Code of 1986, as it may be amended from time to time or any
successor statute thereto, and applicable U.S. Department of the Treasury
regulations issued pursuant thereto.
Combined
Loan-to-Value Ratio:
As to
any Mortgage Loan at any date of determination, the ratio (expressed as a
percentage) of the principal balance of such Mortgage Loan at the date of
determination, plus the principal balance of any Superior Lien based upon the
most recent information available to the Servicer, to (a) in the case of a
purchase, the lesser of the sales price of the Mortgaged Property and its
appraised value at the time of sale, or (b) in the case of a refinancing or
modification, the appraised value of the Mortgaged Property at the time of
such
refinancing or modification.
Commission:
The
United States
Securities and Exchange Commission.
Condemnation
Proceeds:
All
awards or settlements in respect of a Mortgaged Property, whether permanent
or
temporary, partial or entire, by exercise of the power of eminent domain or
condemnation, to the extent not required to be released to a Mortgagor in
accordance with the terms of the related Mortgage Loan documents.
-3-
Custodial
Account:
The
separate account or accounts created and maintained pursuant to Section
3.03.
Custodial
Agreement:
The
custodial agreement relating to the custody of the Mortgage Loans, between
the
Custodian and the Trustee, as acknowledged by the Depositor, the Securities
Administrator, the Master Servicer and the Servicers, dated as of February
1,
2007.
Custodian:
Deutsche Bank National Trust Company and its successors in interest and
assigns.
Cut-off
Date:
February 1, 2007.
Depositor:
Structured Asset Securities Corporation, a Delaware corporation, or any
successor in interest.
Determination
Date:
With
respect to each Remittance Date, the 15th day of the month in which such
Remittance Date occurs, or, if such 15th day is not a Business Day, the next
succeeding Business Day.
Distressed
Mortgage Loan:
As of
any Determination Date, any Mortgage Loan that is delinquent in payment for
a
period of ninety (90) days or more, without giving effect to any grace period
permitted by the related Mortgage Loan, or for which the Servicer or Trustee
has
accepted a deed in lieu of foreclosure.
Distribution
Date:
Commencing in March 2007, the 25th day of each month (or, if such day is not
a
Business Day, the next succeeding Business Day).
DBRS:
DBRS,
Inc., or any successor in interest.
Due
Date:
The day
of the calendar month on which the Monthly Payment is due on a Mortgage Loan,
exclusive of any days of grace. Pursuant to Section 4.04, with respect to the
Mortgage Loans for which payment from the Mortgagor is due on a day other than
the first day of the month, such Mortgage Loans will be treated as if the
Monthly Payment is due on the first day of the immediately succeeding
month.
Due
Period:
With
respect to each Remittance Date, the period commencing on the second day of
the
month immediately preceding the month of the Remittance Date and ending on
the
first day of the month of the Remittance Date.
Eligible
Deposit Account:
An
account that is maintained with a federal or state-chartered depository
institution or trust company that complies with the definition of Eligible
Institution.
Eligible
Institution:
Any of
the following:
(i) an
institution whose:
-4-
(A) commercial
paper, short-term debt obligations, or other short-term deposits are rated
at
least “A-1+” or long-term unsecured debt obligations are rated at least “AA-” by
S&P, if the amounts on deposit are to be held in the account for no more
than 365 days; or
(B) commercial
paper, short-term debt obligations, demand deposits, or other short-term
deposits are rated at least “A-2” by S&P, if the amounts on deposit are to
be held in the account for no more than 30 days and are not intended to be
used
as credit enhancement. Upon the loss of the required rating set forth in this
clause (i), the accounts shall be transferred immediately to accounts which
have
the required rating. Furthermore, commingling by the Servicer is acceptable
at
the A-2 rating level if the Servicer is a bank, thrift, or depository and
provided the Servicer has the capability to immediately segregate funds and
commence remittance to an Eligible Deposit Account upon a downgrade;
or
(ii) the
corporate trust department of a federal depository institution or
state-chartered depository institution subject to regulations regarding
fiduciary funds on deposit similar to Title 12 of the U.S. Code of Federal
Regulation Section 9.10(b), which, in either case, has corporate trust powers
and is acting in its fiduciary capacity.
Environmental
Problem Property:
A
Mortgaged Property or REO Property that is in violation of any environmental
law, rule or regulation.
Errors
and Omissions Insurance:
Errors
and Omissions Insurance to be maintained by the Servicer in accordance with
Section 3.13.
Escrow
Account:
The
separate account or accounts operated and maintained pursuant to Section
3.05.
Escrow
Payments:
With
respect to any Mortgage Loan, the amounts constituting ground rents, taxes,
assessments, water rates, sewer rents, municipal charges, mortgage insurance
premiums, fire and hazard insurance premiums, condominium charges, and any
other
payments required to be escrowed by the Mortgagor with the mortgagee pursuant
to
the Mortgage or any other document.
Event
of Default:
Any
event set forth in Section 8.01.
Xxxxxx
Xxx:
Xxxxxx
Xxx, or any successor thereto.
Xxxxxx
Mae Guides:
The
Xxxxxx Xxx Xxxxxxx’ Guide and the Xxxxxx Mae Servicers’ Guide and all amendments
or additions thereto.
FDIC:
The
Federal Deposit Insurance Corporation or any successor thereto.
Fidelity
Bond:
A
fidelity bond to be maintained by the Servicer in accordance with Section
3.13.
-5-
Fitch:
Fitch,
Inc., or any successor in interest.
Xxxxxxx
Mac:
Xxxxxxx
Mac, or any successor thereto.
General
Servicing Fee:
With
respect to each Due Period and any Mortgage Loan, an amount equal to one-twelfth
the product of (i) the General Servicing Fee Rate and (ii) the outstanding
principal balance of such Mortgage Loan as of the related Determination Date.
The General Servicing Fee is payable solely from the interest portion (including
recoveries with respect to interest from Liquidation Proceeds, Condemnation
Proceeds and Insurance Proceeds to the extent permitted by Section 3.04 of
this
Agreement) of such Monthly Payments collected by the Servicer, or as otherwise
provided under this Agreement.
General
Servicing Fee Rate:
0.50%
per annum.
Holder:
The
meaning set forth in the Trust Agreement.
Insurance
Proceeds:
With
respect to each Mortgage Loan, proceeds of insurance policies insuring the
Mortgage Loan or the related Mortgaged Property, including the proceeds of
any
hazard or flood insurance policy, LPMI Policy or PMI Policy.
Liquidation
Proceeds: Cash
received in connection with the liquidation of a defaulted Mortgage Loan,
whether through the sale or assignment of such Mortgage Loan, trustee’s sale,
foreclosure sale or otherwise, or the sale of the related REO Property, if
the
Mortgaged Property is acquired in satisfaction of the Mortgage
Loan.
LPMI
Loan:
A
Mortgage Loan with a LPMI Policy.
LPMI
Policy:
A
policy of primary mortgage guaranty insurance issued by a Qualified Insurer
pursuant to which the related premium is to be paid by the Master Servicer
or
the Trustee from payments of interest made by the Mortgagor in an amount as
is
set forth in the related Mortgage Loan Schedule. An LPMI Policy shall also
include any policy of primary mortgage guaranty insurance issued by a Qualified
Insurer that is purchased by the Seller with respect to some or all of the
Mortgage Loans.
Master
Servicer:
Aurora
Loan Services LLC, or any successor in interest, or if any successor master
servicer shall be appointed as provided in the Trust Agreement, then such
successor master servicer.
MERS:
Mortgage Electronic Registration Systems, Inc., a corporation organized and
existing under the laws of the State of Delaware, or any successor
thereto.
MERS
Mortgage Loan:
Any
Mortgage Loan registered with MERS on the MERS System.
MERS
System:
The
system of recording transfers of mortgages electronically maintained by
MERS.
-6-
Monthly
Advance:
With
respect to each Remittance Date and each Mortgage Loan (other than a Simple
Interest Mortgage Loan), an amount equal to the Monthly Payment (with the
interest portion of such Monthly Payment adjusted to the Mortgage Loan
Remittance Rate) that was due on the Mortgage Loan on the Due Date in the
related Due Period, and that (i) was delinquent at the close of business on
the
related Determination Date and (ii) was not the subject of a previous Monthly
Advance, but only to the extent that such amount is expected, in the reasonable
judgment of the Servicer, to be recoverable from collections or other recoveries
in respect of such Mortgage Loan. With respect to each Remittance Date and
each
Simple Interest Mortgage Loan, an amount equal to the interest accrued on such
Mortgage Loan through the related Due Date, but not received as of the close
of
business on the last day of the related Due Period (net of the applicable
Servicing Fee), but only to the extent that such amount is expected, in the
reasonable judgment of the Servicer, to be recoverable from collections or
other
recoveries in respect of such Simple Interest Mortgage Loan. To the extent
that
the Servicer determines that any such amount is not recoverable from collections
or other recoveries in respect of such Mortgage Loan, such determination shall
be evidenced by an Officer’s Certificate of a Servicing Officer delivered to the
Master Servicer and the NIMS Insurer setting forth such determination and the
procedures and considerations of the Servicer forming the basis of such
determination.
Monthly
Payment:
The
scheduled monthly payment of principal and interest on a Mortgage
Loan.
Moody’s:
Xxxxx’x
Investors Service, Inc. or any successor in interest.
Mortgage:
The
mortgage, deed of trust or other instrument securing a Mortgage Note, which
creates a first or second lien on an unsubordinated estate in fee simple in
real
property securing the Mortgage Note.
Mortgage
Impairment Insurance Policy:
A
mortgage impairment or blanket hazard insurance policy to be maintained by
the
Servicer in accordance with Section 3.12.
Mortgage
Interest Rate:
The
annual rate of interest borne on a Mortgage Note after giving effect to any
applicable Relief Act Reduction.
Mortgage
Loan:
An
individual mortgage loan that is the subject of this Agreement and identified
on
the related Mortgage Loan Schedule, which may be a first lien Mortgage Loan
or a
subordinate lien Mortgage Loan and which Mortgage Loan includes without
limitation the Mortgage Loan documents, the Monthly Payments, Principal
Prepayments, Liquidation Proceeds, Condemnation Proceeds, Insurance Proceeds,
REO Disposition Proceeds, and all other rights, benefits, proceeds and
obligations arising from or in connection with such Mortgage Loan.
Mortgage
Loan Remittance Rate:
With
respect to each Mortgage Loan, the annual rate of interest remitted to the
Master Servicer, which shall be equal to the Mortgage Interest Rate minus the
General Servicing Fee Rate.
Mortgage
Loan Schedule:
A
schedule of the Mortgage Loans attached hereto as Exhibit A setting forth
information with respect to such Mortgage Loans as agreed to by the Seller,
the
Servicer and the Master Servicer, including but not limited to (i) a data field
indicating whether such Mortgage Loan is insured under a PMI Policy or LPMI
Policy and identifying the related Qualified Insurer, (ii) a Prepayment Charge
Schedule, (iii) a data field indicating the Custodian, (iv) a data field
indicating the Xxxxx Fargo Servicing Fee Rate, (v) a data field indicating
whether the Mortgage Loan is subject to an early payment default repurchase
obligation, and (vi) a data field designated “DSI” indicating whether such
Mortgage Loan is a Simple Interest Mortgage Loan.
-7-
Mortgage
Note:
The
note or other evidence of the indebtedness of a Mortgagor secured by a
Mortgage.
Mortgaged
Property:
The
real property securing repayment of the debt evidenced by a Mortgage
Note.
Mortgagor:
The
obligor on a Mortgage Note.
Net
Simple Interest Excess:
With
respect to any Distribution Date, the excess, if any, of (a) the amount of
the
payments received by the Servicer in the related Due Period allocable to
interest in respect of Simple Interest Mortgage Loans, calculated in accordance
with the Simple Interest Method, net of the related General Servicing Fees,
over
(b) 30 days’ interest at the Net Mortgage Rate as of the first day of the
related Due Period, as determined by the Servicer, on the principal balance
of
such Simple Interest Mortgage Loan for such Distribution Date.
Net
Simple Interest Shortfall:
With
respect to any Distribution Date, the excess, if any, of (a) 30 days’ interest
at the Net Mortgage Rate of the Simple Interest Mortgage Loan as of the first
day of the related Due Period, as determined by the Servicer, on the principal
balance of such Simple Interest Mortgage Loan for such Remittance Date, over
(b)
the amount of the payments received by the Servicer in the related Due Period
allocable to interest in respect of such Simple Interest Mortgage Loans,
calculated in accordance with the Simple Interest Method, net of the related
Servicing Fees.
NIM
Securities:
As
defined in the seventh Recital to this Agreement.
NIMS
Insurer:
As
defined in the eighth Recital to this Agreement. As of the Closing Date, no
NIMS
Insurer has been engaged. In the event a NIMS Insurer is engaged after the
Closing Date, the Master Servicer shall promptly notify the Servicer as provided
in Section 9.04 hereunder.
NIMS
Transaction:
As
defined in the seventh Recital to this Agreement.
Officer’s
Certificate:
A
certificate signed by the Chairman of the Board or the Vice Chairman of the
Board or the President, or a Vice President or an assistant Vice President
and
by the Treasurer, the Secretary or one of the Assistant Treasurers or Assistant
Secretaries of the Servicer, and delivered to the Seller, the Master Servicer,
Trustee and/or the NIMS Insurer as required by this Agreement.
-8-
Opinion
of Counsel:
A
written opinion of counsel, who may be an employee of the Servicer, reasonably
acceptable to the Seller, the Trustee, the Master Servicer and/or the NIMS
Insurer, but which must be an independent outside counsel with respect to any
such opinion of counsel concerning all federal income tax matters. An
independent outside counsel’s Opinion of Counsel shall be obtained at the
expense of the party requesting such Opinion of Counsel but shall be obtained
at
the expense of the Trust Fund if the Trustee is requesting such
opinion.
Participating
Entity:
Any
Person “participating in the servicing function” within the meaning of Item 1122
of Regulation AB.
Person:
Any
individual, corporation, partnership, joint venture, association, limited
liability company, joint-stock company, trust, unincorporated organization,
government or any agency or political subdivision thereof.
PMI
Policy:
A
policy of primary mortgage guaranty insurance issued by a Qualified Insurer,
including any bulk policy acquired in respect of the Mortgage Loans, as required
by this Agreement with respect to certain Mortgage Loans.
Prepayment
Charge:
With
respect to any Mortgage Loan and Remittance Date, the charges or premiums,
as
specified in the Prepayment Charge Schedule, if any, due in connection with
a
full or partial prepayment of such Mortgage Loan during the immediately
preceding Principal Prepayment Period in accordance with the terms
thereof.
Prepayment
Charge Schedule:
A data
field in the Mortgage Loan Schedule attached hereto as Exhibit A which sets
forth the amount or method of calculation of the Prepayment Charge and the
term
during which such Prepayment Charge is imposed with respect to a Mortgage
Loan.
Prepayment
Interest Shortfall Amount:
With
respect to any Mortgage Loan that was subject to a Principal Prepayment in
full
or in part during any Due Period, which Principal Prepayment was applied to
such
Mortgage Loan prior to such Mortgage Loan’s Due Date in such Due Period, the
amount of interest (net of the General Servicing Fee) that would have accrued
on
the amount of such Principal Prepayment during the period commencing on the
date
as of which such Principal Prepayment was applied to such Mortgage Loan and
ending on the day immediately preceding such Due Date, inclusive.
Prime
Rate:
The
prime rate published from time to time, as published as the average rate in
The
Wall Street Journal.
Principal
Prepayment:
Any
payment or other recovery of principal on a Mortgage Loan, including any payment
or other recovery of principal in connection with repurchase of a Mortgage
Loan
by the Seller, the Servicer, the NIMS Insurer, or any other Person, which is
received in advance of its scheduled Due Date, including any Prepayment Charge
or premium thereon and which is not accompanied by an amount of interest
representing scheduled interest due on any date or dates in any month or months
subsequent to the month of prepayment.
-9-
Principal
Prepayment Period:
With
respect to the Mortgage Loans and any Principal Prepayment in full, the period
that commences on and includes the 14th day of the month immediately preceding
the month in which such Remittance Date occurs and ends on and includes the
13th
day of the month in which such Remittance Date occurs (except in the case of
the
March 2007 Distribution Date, for which the related Prepayment Period shall
be
from February 1, 2007 through March 14, 2007).
Prior
Servicer:
Any
servicer of mortgage loans which by reason of Servicing Transfer become Mortgage
Loans under the Agreement.
Purchase
Price:
With
respect to any Distressed Mortgage Loan or REO Property to be purchased by
the
NIMS Insurer pursuant to Section 6.05, an amount equal to the sum of (i) 100%
of
the principal balance thereof as of the date of purchase, (ii) accrued interest
on such principal balance at the applicable mortgage interest rate in effect
from time to time to the due date as to which interest was last covered by
a
payment by the Mortgagor or a Monthly Advance by the Servicer or Master Servicer
and (iii) any unreimbursed Servicing Advances, Monthly Advances and any unpaid
General Servicing Fees allocable to such Distressed Mortgage Loan or REO
Property.
Qualified
Insurer:
A
mortgage guaranty insurance company duly authorized and licensed where required
by law to transact mortgage guaranty insurance business and approved as an
insurer by Xxxxxx Xxx or Xxxxxxx Mac.
Rating
Agency:
Each of
DBRS, Xxxxx’x, Fitch and S&P or their successors. If such agencies or their
successors are no longer in existence, “Rating Agencies” shall be such
nationally recognized statistical rating agencies, or other comparable person,
agreed upon and designated by the Seller, notice of which designation shall
be
given to the Trustee, the NIMS Insurer, the Master Servicer and the
Servicer.
Regulation
AB:
Subpart
229.1100 - Asset Backed Securities (Regulation AB), 17 C.F.R.
§§229.1100-229.1123, as such may be amended from time to time, and subject to
such clarification and interpretation as have been provided by the Commission
in
the adopting release (Asset-Backed Securities, Securities Act Release No.
33-8518, 70 Fed. Reg. 1,506, 1,531 (Jan. 7, 2005)) or by the staff of the
Commission, or as may be provided by the Commission or its staff from time
to
time.
Relief
Act Reduction:
With
respect to any Mortgage Loan as to which there has been a reduction in the
amount of the interest collectible thereon as a result of the application of
the
Servicemembers Civil Relief Act or similar state or local law, any amount by
which interest collectible on such Mortgage Loan for the Due Date in the related
Due Period is less than the interest accrued thereon for the applicable
one-month period at the Mortgage Interest Rate without giving effect to such
reduction.
REMIC:
A “real
estate mortgage investment conduit” within the meaning of Section 860D of the
Code.
-10-
Remittance
Date:
With
respect to each Distribution Date, the 18th day (or if such 18th day is not
a
Business Day, the first Business Day immediately following) of the month in
which such Distribution Date occurs.
REO
Disposition:
The
final sale by the Servicer of any REO Property.
REO
Disposition Proceeds:
All
amounts received with respect to an REO Disposition pursuant to Section
3.17.
REO
Property:
A
Mortgaged Property acquired by the Servicer on behalf of the Trustee through
foreclosure or by deed in lieu of foreclosure, as described in Section
3.17.
Residual
Certificate:
The
Class R Certificate.
S&P:
Standard & Poor’s Ratings Services, a Division of The XxXxxx-Xxxx Companies,
Inc. or any successor in interest.
Securities
Administrator:
Xxxxx
Fargo Bank, N.A. or its successor in interest.
Seller:
Xxxxxx
Brothers Holdings Inc. or its successor in interest or assigns.
Seller
Remittance Amount:
With
respect to each Due Period and any Mortgage Loan, an amount equal to one-twelfth
the product of (a) the Seller Remittance Rate and (b) the outstanding principal
balance of the Mortgage Loan as of the related Determination Date. The
obligation of the Servicer to pay the Seller Remittance Amount with respect
to a
Mortgage Loan is limited to, and the Seller Remittance Amount is payable solely
from, the interest portion (including recoveries with respect to interest from
Liquidation Proceeds, Condemnation Proceeds and Insurance Proceeds to the extent
permitted by Section 3.04 of this Agreement) of the Monthly Payments collected
by the Servicer with respect to such Mortgage Loan, or as otherwise provided
under this Agreement. The Seller Remittance Amount with respect to a Mortgage
Loan shall not be reduced by any Prepayment Interest Shortfall incurred with
respect to the Mortgage Loan. The Master Servicer shall have no obligation
to
monitor or enforce the obligation of the Servicer to remit payment of the Seller
Remittance Amount to the Seller.
Seller
Remittance Rate:
With
respect to each Mortgage Loan, the difference between the General Servicing
Fee
Rate and the Xxxxx Fargo Servicing Fee Rate.
Servicer:
Xxxxx
Fargo Bank, N.A., or its successor in interest or assigns or any successor
to
the Servicer under this Agreement as herein provided.
Servicing
Advances:
All
customary, reasonable and necessary “out of pocket” costs and expenses
(including reasonable attorneys’ fees and disbursements) incurred in the
performance by the Servicer of its servicing obligations, including, but not
limited to, the cost of (a) the preservation, restoration and protection of
the
Mortgaged Property, (b) any enforcement of administrative or judicial
proceedings, including foreclosures, (c) the management and liquidation of
the
Mortgaged Property if the Mortgaged Property is acquired in satisfaction of
the
Mortgage, (d) taxes, assessments, water rates, sewer rents and other charges
which are or may become a lien upon the Mortgaged Property, PMI Policy premiums
and fire and hazard insurance coverage, (e) any
losses sustained by the Servicer with respect to the liquidation of the
Mortgaged Property, (f) compliance with the obligations pursuant to the
provisions of the Xxxxxx Mae Guides, (g) penalties or late fees that were
advanced by the Servicer but which did not arise out of strict compliance with
this Agreement and (h) expenses incurred as a result of Prior Servicer
errors.
-11-
Servicing
File:
The
items pertaining to a particular Mortgage Loan including, but not limited to,
the computer files, data disks, books, records, data tapes, notes, and all
additional documents generated as a result of or utilized in originating and/or
servicing each Mortgage Loan, which are delivered to or generated by the
Servicer and held in trust for the Trustee by the Servicer.
Servicing
Officer:
Any
officer of the Servicer involved in or responsible for, the administration
and
servicing of the Mortgage Loans whose name appears on a list of servicing
officers furnished by the Servicer to the Master Servicer upon request, as
such
list may from time to time be amended.
Servicing
Transfer:
Any
transfer of servicing by the Prior Servicer of Mortgage Loans to the Servicer
under this Agreement.
Servicing
Transfer Date:
The
date on which a Servicing Transfer occurs.
Simple
Interest Method:
The
method of allocating a payment to principal and interest, pursuant to which
the
portion of such payment that is allocated to interest is equal to the product
of
the applicable rate of interest multiplied by the unpaid principal balance
multiplied by the period of time elapsed since the preceding payment of interest
was made and divided by either 360 or 365, as specified in the related Mortgage
Note and the remainder of such payment is allocated to principal.
Simple
Interest Mortgage Loan:
Those
simple interest loans as noted on the Mortgage Loan Schedule under the data
field designated “DSI.”
Special
Servicer:
The
person designated by the Seller (with the prior written consent of the Trustee,
the Master Servicer and the NIMS Insurer) to assume the servicing of Distressed
Mortgage Loans pursuant to Section 8.04 hereof.
Subcontractor:
Any
vendor, subcontractor or other
Person
that is not responsible for the overall servicing (as “servicing” is commonly
understood by participants in the mortgage-backed securities market) of the
Mortgage Loans but performs one or more discrete functions identified in Item
1122(d) of Regulation AB with respect to the Mortgage Loans under the direction
or authority of the Servicer or a related Subservicer.
Subservicer:
Any
Person that services Mortgage Loans on behalf of the Servicer or any Subservicer
and is responsible for the performance (whether directly or through Subservicers
or Subcontractors) of a substantial portion of the material servicing functions
required to be performed by the Servicer under this Agreement that are
identified in Item 1122(d) of Regulation AB.
-12-
Superior
Lien:
With
respect to any Mortgage Loan, any other mortgage loan relating to the
corresponding Mortgaged Property which creates a lien on the Mortgaged Property
which is senior to the Mortgage Loan.
Termination
Fee:
The
amount that the Seller shall be required to pay to the Servicer as liquidated
damages as a result of the Seller terminating this Agreement without cause
with
respect to some or all of the Mortgage Loans pursuant to Section 8.02 hereof.
Termination
Fee Percentage:
Means
(i) 0.75% for any termination during the first year following the Servicing
Transfer Date, (ii) 0.50% for any termination during the second year following
the Closing Date, (iii) 0.25% for any termination during the third year
following the Servicing Transfer Date and (iv) no fee (0.00%) for any
termination at any time after the third anniversary of the Servicing Transfer
Date.
Trigger
Event:
Not
applicable.
Trust
Agreement:
The
Trust Agreement dated as of February 1, 2007, among
the
Trustee, the Master Servicer, the Securities Administrator, the Depositor and
the Credit Risk Manager.
Trust
Fund:
The
trust fund established by the Trust Agreement, the assets of which consist
of
the Mortgage Loans and any other assets as set forth therein.
Trustee:
U.S.
Bank National Association, or any successor in interest, or if any successor
trustee or co-trustee shall be appointed as provided in the Trust Agreement,
then such successor trustee or such co-trustee, as the case may be.
Xxxxx
Fargo Servicing Fee:
With
respect to each Due Period and any Mortgage Loan, an amount equal to the sum
of
(a) one-twelfth the product of (i) the Xxxxx Fargo Servicing Fee Rate and
(ii) the outstanding principal balance of such Mortgage Loan as of the
related Determination Date. The Xxxxx Fargo Servicing Fee is payable solely
from
the interest portion (including recoveries with respect to interest from
Liquidation Proceeds, Insurance Proceeds or Condemnation Proceeds to the extent
permitted by Section 3.04 of this Agreement) of such Monthly Payments collected
by the Servicer, or as otherwise provided under this Agreement.
Xxxxx
Fargo Servicing Fee Rate:
For
each Mortgage Loan, the per annum rate set forth in the Mortgage Loan Schedule
under the data field “Sub-Servicing Fee Rate.”
Any
capitalized terms used and not defined in this Agreement shall have the meanings
ascribed to such terms in the Trust Agreement.
-13-
ARTICLE
II.
SELLER’S
ENGAGEMENT OF SERVICER TO PERFORM SERVICING
RESPONSIBILITIES
Section
2.01. Contract
for Servicing; Possession of Servicing Files.
The
Seller, by execution and delivery of this Agreement, does hereby contract with
the Servicer as an independent contractor, subject to the terms of this
Agreement, for the servicing of the Mortgage Loans. On or before the Servicing
Transfer Date the Seller shall cause the Prior Servicer to deliver to the
Servicer the Servicing Files with respect to the Mortgage Loans listed on the
Mortgage Loan Schedule. The Servicer shall maintain a Servicing File with
respect to each Mortgage Loan in order to service such Mortgage Loans pursuant
to this Agreement and each Servicing File delivered to the Servicer shall be
held in trust by the Servicer for the benefit of the Trustee; provided,
however,
that the
Servicer shall have no liability for any Servicing Files (or portions thereof)
not delivered by the Seller. The Servicer’s possession of any portion of the
Mortgage Loan documents shall be at the will of the Trustee for the sole purpose
of facilitating servicing of the related Mortgage Loan pursuant to this
Agreement, and such retention and possession by the Servicer shall be in a
custodial capacity only. The ownership of each Mortgage Note, Mortgage, and
the
contents of the Servicing File shall be vested in the Trustee and the ownership
of all records and documents with respect to the related Mortgage Loan prepared
by or which come into the possession of the Servicer shall immediately vest
in
the Trustee and shall be retained and maintained, in trust, by the Servicer
at
the will of the Trustee in such custodial capacity only. The portion of each
Servicing File retained by the Servicer pursuant to this Agreement shall be
appropriately marked to clearly reflect the ownership of the related Mortgage
Loan by the Trustee. The Servicer shall release from its custody the contents
of
any Servicing File retained by it only in accordance with this
Agreement.
Section
2.02. Books
and Records.
(a) Subject
to Section 3.01(a) hereof, as soon as practicable after the Closing Date or
the
date on which a Qualifying Substitute Mortgage Loan is delivered pursuant to
Section 2.05 of the Trust Agreement, as applicable (but in no event more than
90
days thereafter except to the extent delays are caused by the applicable
recording office), the Servicer, at the expense of the Seller, shall cause
the
Mortgage or Assignment of Mortgage, as applicable, with respect to each MERS
Eligible Mortgage Loan, to be properly recorded in the name of MERS in the
public recording office in the applicable jurisdiction, or shall ascertain
that
such have previously been so recorded.
(b) Subject
to Section 3.01(a) hereof, an Assignment of Mortgage in favor of the Trustee
shall be recorded as to each Mortgage Loan. The form of such assignment shall
be: “U.S. Bank National Association, as Trustee of BNC Mortgage Loan Trust
2007-1, without recourse.” Subject to the preceding sentence, as soon as
practicable after the Closing Date (but in no event more than 90 days thereafter
except to the extent delays are caused by the applicable recording office),
the
Servicer, at the expense of the Seller, shall cause to be properly recorded
in
each public recording office where such Non-MERS Eligible Mortgage Loans are
recorded each Assignment of Mortgage. Notwithstanding the foregoing, the
Servicer shall not cause to be recorded any Assignment which relates to a
Mortgage Loan in a jurisdiction where the Rating Agencies do not require
recordation.
-14-
(c) Additionally,
the Servicer shall prepare and execute any note endorsements relating to any
of
the Non-MERS Mortgage Loans.
(d) All
rights arising out of the Mortgage Loans shall be vested in the Trustee, subject
to the Servicer’s right to service and administer the Mortgage Loans hereunder
in accordance with the terms of this Agreement. All funds received on or in
connection with a Mortgage Loan, other than the Xxxxx Fargo Servicing Fee and
other compensation and reimbursement to which the Servicer is entitled as set
forth herein, including but not limited to Section 5.03 below, shall be received
and held by the Servicer in trust for the benefit of the Trustee pursuant to
the
terms of this Agreement.
The
Servicer shall forward to the Custodian original documents evidencing an
assumption, modification, consolidation or extension of any Mortgage Loan
entered into in accordance with Section 3.01 within one week of their execution;
provided,
however,
that
the Servicer shall provide the Custodian with a certified true copy of any
such
document submitted for recordation within one week of its execution, and shall
provide the original of any document submitted for recordation or a copy of
such
document certified by the appropriate public recording office to be a true
and
complete copy of the original within 120 days of its submission for
recordation.
In
the
event that new, replacement, substitute or additional stock certificates are
issued with respect to existing Cooperative Shares, the Servicer immediately
shall deliver to the Custodian the new stock certificates, together with the
related stock powers in blank. Such new stock certificates shall be subject
to
the related Security Agreement and shall be subject to all of the terms,
covenants and conditions of this Agreement.
(e) Any
out-of-pocket costs incurred by the Servicer pursuant to this Section 2.02
and
Section 3.01(a), including any recording or other fees in connection with the
Servicer’s obtaining the necessary powers of attorney (and which are specified
herein to be an expense of the Seller) shall be reimbursed to the Servicer
by
the Seller within five (5) Business Days of receipt by the Seller of an invoice
for reimbursement. Neither the Trustee nor the Trust Fund shall have any
obligation to reimburse the Seller for any such reimbursement made to the
Servicer.
ARTICLE
III.
SERVICING
OF THE MORTGAGE LOANS
Section
3.01. Servicer
to Service.
The
Servicer, as an independent contractor, shall service and administer the
Mortgage Loans from and after the Closing Date and/or the Servicing Transfer
Date, as applicable, and shall have full power and authority, acting alone
or
through the utilization of a Subservicer or Subcontractor, to do any and all
things in connection with such servicing and administration which the Servicer
may deem necessary or desirable, consistent with the terms of this Agreement
and
with Accepted Servicing Practices. The Servicer shall service the Mortgage
Loans
in accordance with the guidelines of the applicable agency guides and shall
comply with the rules and regulations of the applicable agency. The Servicer
shall be responsible for any and all acts of a Subservicer or Subcontractor
and
the Servicer’s utilization of such Subservicer or Subcontractor shall in no way
relieve the liability of the Servicer under this Agreement.
-15-
(a) The
Servicer shall (A) record or cause to be recorded the Mortgage or the Assignment
of Mortgage, as applicable, with respect to all MERS Eligible Mortgage Loans,
in
the name of MERS, or shall ascertain that such have previously been so recorded;
(B) prepare or cause to be prepared all Assignments of Mortgage with respect
to
all Non-MERS Eligible Mortgage Loans; (C) prepare for recording or cause to
be
recorded, subject to Section 2.02(b) hereof, all Assignments of Mortgage with
respect to Non-MERS Mortgage Loans in the name of the Trust; (D) pay the
recording costs pursuant to Section 2.02 hereof; and/or (E) track such Mortgages
and Assignments of Mortgage to ensure they have been recorded. The Servicer
shall be entitled to be paid by the Seller, on behalf of the Depositor, its
out-of-pocket costs for the preparation and recordation of the Mortgages and
Assignments of Mortgage. After the expenses of such recording costs pursuant
to
Section 2.02 hereof shall have been paid by the Servicer, the Servicer shall
submit to the Seller a reasonably detailed invoice for reimbursement of
recording costs it incurred hereunder. The Seller, upon receipt of an invoice,
shall reimburse the Servicer within five (5) Business Days.
(b) Consistent
with the terms of this Agreement, the Servicer may waive, modify or vary any
term of any Mortgage Loan or consent to the postponement of strict compliance
with any such term or in any manner grant indulgence to any Mortgagor if in
the
Servicer’s reasonable and prudent determination such waiver, modification,
postponement or indulgence is not materially adverse to the Trust Fund;
provided,
however,
that
unless the Servicer has obtained the prior written consent of the Master
Servicer and the NIMS Insurer, the Servicer shall not permit any modification
with respect to any Mortgage Loan that would change the Mortgage Interest Rate
(except for modifications relating to Relief Act Reductions), defer or forgive
the payment of principal or interest (except for (i) actual payments of
principal and (ii) the case in which the Servicer permits a Mortgagor to sell
the related Mortgaged Property for an amount less than the outstanding
principal balance of the Mortgage Loan and accepts such proceeds as full
satisfaction of the related Mortgage Loan) or change the final maturity date
on
such Mortgage Loan. In the event of any such modification which permits the
deferral of interest or principal payments on any Mortgage Loan, the Servicer
shall, on the Business Day immediately preceding the Remittance Date in any
month in which any such principal or interest payment has been deferred, make
a
Monthly Advance in accordance with Section 4.03, in an amount equal to the
difference between (a) such month’s principal and one month’s interest at the
Mortgage Loan Remittance Rate on the unpaid principal balance of such Mortgage
Loan and (b) the amount paid by the Mortgagor. The Servicer shall be entitled
to
reimbursement for such advances to the same extent as for all other advances
made pursuant to Section 3.04. Without limiting the generality of the foregoing,
the Servicer shall continue, and is hereby authorized and empowered, to execute
and deliver on behalf of itself and the Trustee, all instruments of satisfaction
or cancellation, or of partial or full release, discharge and all other
comparable instruments, with respect to the Mortgage Loans and with respect
to
the Mortgaged Properties; provided,
however,
that
upon the full release or discharge, the Servicer shall notify the Custodian
of
the related Mortgage Loan of such full release or discharge. Upon the reasonable
request of the Servicer, the Trustee shall execute and deliver to the Servicer
with any powers of attorney and other documents, furnished to it by the Servicer
and reasonably satisfactory to the Trustee, necessary or appropriate to enable
the Servicer to carry out its servicing and administrative duties under this
Agreement; provided,
however, that
the
Trustee shall not be liable for the actions of the Servicer under such powers
of
attorney unless such actions of the Servicer are performed at, and in accordance
with, the written direction of the Trustee. Promptly after the execution of
any
assumption, modification, consolidation or extension of any Mortgage Loan,
the
Servicer shall forward to the Master Servicer copies of any documents evidencing
such assumption, modification, consolidation or extension. Notwithstanding
anything to the contrary contained in this Servicing Agreement, the Servicer
shall not make or permit any modification, waiver or amendment of any term
of
any Mortgage Loan that would cause any REMIC created under the Trust Agreement
to fail to qualify as a REMIC or result in the imposition of any tax under
Section 860F(a) or Section 860G(d) of the Code.
-16-
The
Servicer is authorized, without the prior approval of the Trustee, to consent
to
the refinancing of any Superior Lien on Mortgaged Property, provided that (i)
the resulting Combined Loan-to-Value Ratio of such mortgage loan is no higher
than the Combined Loan-to-Value Ratio prior to such refinancing; (ii) the
interest rate, or in the case of any Superior Lien which is an adjustable rate
mortgage loan, the applicable Maximum Rate which can be charged under the
related Mortgage Note is no more than 2.00% higher than the interest rate or
the
Maximum Rate, as the case may be, on the mortgage loan evidencing the existing
Superior Lien immediately prior to the date of such refinancing; (iii) the
mortgage loan evidencing the Superior Lien is not subject to negative
amortization and (iv) the Monthly Payment on the mortgage loan evidencing the
existing Superior Lien has not increased since the Due Date immediately prior
to
the date of such refinancing.
The
Servicer shall not without the Trustee’s written consent: (i) initiate any
action, suit or proceedings solely under the Trustee’s name without indicating
the Servicer’s, representative capacity or (ii) take any action with the intent
to cause, and which actually does cause, the Trustee to be registered to do
business in any state. The Servicer shall indemnify the Trustee for any and
all
costs, liabilities and expenses incurred by the Trustee in connection with
the
negligent or willful misuse of such powers of attorney by the
Servicer.
In
servicing and administering the Mortgage Loans, the Servicer shall employ
procedures (including collection procedures) and exercise the same care that
it
would employ and exercise in servicing and administering similar mortgage loans
for its own account, giving due consideration to Accepted Servicing Practices
where such practices do not conflict with the requirements of this
Agreement.
Section
3.02. Collection
and Liquidation of Mortgage Loans.
Continuously
from the Closing Date and/or the Servicing Transfer Date, as applicable, until
the date each Mortgage Loan ceases to be subject to this Agreement, the Servicer
shall proceed diligently to collect all payments due under each of the Mortgage
Loans when the same shall become due and payable and shall take special care
in
ascertaining and estimating Escrow Payments and all other charges that will
become due and payable with respect to the Mortgage Loans and each related
Mortgaged Property, to the end that the installments payable
by the Mortgagors will be sufficient to pay such charges as and when they become
due and payable.
The Servicer shall also apply payments of interest and principal against any
Simple Interest Mortgage Loans using the Simple Interest Method.
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The
Servicer shall use its best efforts, consistent with the procedures that the
Servicer would use in servicing similar mortgage loans for its own account,
to
foreclose upon or otherwise comparably convert the ownership of such Mortgaged
Properties as come into and continue in default and as to which no satisfactory
arrangements can be made for collection of delinquent payments pursuant to
Section 3.01. The Servicer shall use its best efforts to realize upon defaulted
Mortgage Loans in such a manner as will maximize the receipt
of principal and interest by the Trustee, taking into account, among other
things, the timing of foreclosure proceedings. The foregoing is subject to
the
provisions that, in any case in which Mortgaged Property shall have suffered
damage, the Servicer shall not be required to expend its own funds toward the
restoration of such property unless it shall determine in its discretion (i)
that such restoration will increase the proceeds of liquidation of the related
Mortgage Loan to the Master Servicer after reimbursement to itself for such
expenses, and (ii) that such expenses will be recoverable by the Servicer
through Insurance Proceeds or Liquidation Proceeds from the related Mortgaged
Property. In the event that any payment due under any Mortgage Loan and not
postponed pursuant to Section 3.01 is not paid when the same becomes due and
payable, or in the event the Mortgagor fails to perform any other covenant
or
obligation under the Mortgage Loan and such failure continues beyond any
applicable grace period, the Servicer shall take such action as (1) the Servicer
would take for other institutional investors under similar circumstances with
respect to a similar mortgage loan, (2) shall be consistent with Accepted
Servicing Practices, (3) the Servicer shall determine prudently to be in the
best interest of the Trust Fund, and (4) is consistent with any related PMI
Policy or LPMI Policy. In the event that any
payment due under any Mortgage Loan is not postponed pursuant to Section 3.01
and remains delinquent for a period of ninety (90) days or any other default
continues for a period of ninety (90) days beyond the expiration of any grace
or
cure period, the Servicer shall commence foreclosure proceedings. In
such connection, the Servicer shall be responsible for advancing all costs
and
expenses incurred by it in any such proceedings; provided,
however,
that it
shall be entitled to reimbursement thereof from the related Mortgaged Property,
as contemplated in Section 3.04.
Section
3.03. Establishment
of and Deposits to Custodial Account.
The
Servicer shall segregate and hold all funds collected and received pursuant
to
the Mortgage Loans separate and apart from any of its own funds and general
assets and shall establish and maintain one or more Custodial Accounts, in
the
form of time deposit or demand accounts, titled “Xxxxx Fargo Bank, N.A. in trust
for U.S. Bank National Association, as Trustee for the BNC Mortgage Loan Trust
2007-1.” The Custodial Account shall be an Eligible Deposit Account established
with an Eligible Institution. Funds deposited in the Custodial Account may
be
drawn on by the Servicer in accordance with Section 3.04. The creation of any
Custodial Account shall be evidenced by a certification in the form of Exhibit
B
hereto. A copy of such certification shall be furnished to the Master Servicer
no later than 30 days after the Closing Date (and to the NIMS Insurer upon
request).
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The
Servicer shall deposit in the Custodial Account within two (2) Business Days
of
receipt and retain therein, the following collections received by the Servicer
and payments made by the Servicer after the Cut-off Date (other than scheduled
payments of principal and interest due on or before the Cut-off Date) or the
Servicing Transfer Date, as applicable:
(i) all
payments on account of principal on the Mortgage Loans, including all Principal
Prepayments;
(ii) all
payments on account of interest on the Mortgage Loans adjusted to the Mortgage
Loan Remittance Rate;
(iii) all
Prepayment Charges;
(iv) all
Liquidation Proceeds;
(v) all
Insurance Proceeds including amounts required to be deposited pursuant to
Section 3.11 (other than proceeds to be held in the Escrow Account and applied
to the restoration and repair of the Mortgaged Property or released to the
Mortgagor in accordance with the related Mortgage Loan documents and Accepted
Servicing Practices);
(vi) all
Condemnation Proceeds that are not applied to the restoration or repair of
the
Mortgaged Property or released to the Mortgagor in accordance with the related
Mortgage Loan documents and Accepted Servicing Practices;
(vii) any
amount required to be deposited in the Custodial Account pursuant to this
Agreement;
(viii) with
respect to each Principal Prepayment in full or in part, the Prepayment Interest
Shortfall Amount, if any, for the month of distribution. Such deposit shall
be
made from the Servicer’s own funds without reimbursement therefor up to a
maximum amount per month of the General Servicing Fee actually received for
such
month for the Mortgage Loans;
(ix) all
Monthly Advances made by the Servicer pursuant to Section 4.03;
(x) any
amounts received from the seller of a Mortgage Loan or any other person giving
representations and warranties with respect to the Mortgage Loan, in connection
with the repurchase of any Mortgage Loan;
(xi) any
amounts required to be deposited by the Servicer pursuant to Section 3.11 in
connection with the deductible clause in any blanket hazard insurance policy;
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(xii) any
amounts received with respect to or related to any REO Property or REO
Disposition Proceeds;
(xiii) any
amounts required to be deposited by the Servicer pursuant to Section 3.16 in
connection with any unpaid claims that are a result of a breach by the Servicer
or any Subservicer of the obligations hereunder or under the terms of a PMI
Policy;
(xiv) any
amounts received by the Servicer under a PMI or LPMI Policy; and
(xv) the
Seller Remittance Amount.
The
Servicer shall also deposit from its own funds into the Custodial Account,
without the right to reimbursement, except from Net Simple Interest Excess,
an
amount equal to any Net Simple Interest Shortfall (to the extent not offset
by
Net Simple Interest Excess) for the related Due Period and remit such funds
to
the Master Servicer pursuant to Section 4.01.
The
foregoing requirements for deposit into the Custodial Account shall be
exclusive, it being understood and agreed that, without limiting the generality
of the foregoing, payments in the nature of the Xxxxx Fargo Servicing Fee and
Ancillary Income need not be deposited by the Servicer into the Custodial
Account. Any interest paid on funds deposited in the Custodial Account by the
depository institution shall accrue to the benefit of the Servicer and the
Servicer shall be entitled to retain and withdraw such interest from the
Custodial Account pursuant to Section 3.04. Additionally, any other benefit
derived from the Custodial Account associated with the receipt, disbursement
and
accumulation of principal, interest, taxes, hazard insurance, mortgage
insurance, etc. shall accrue to the Servicer.
Section
3.04. Permitted
Withdrawals From Custodial Account.
The
Servicer shall, from time to time, withdraw funds from the Custodial Account
for
the following purposes:
(i) to
make
payments to the Master Servicer in the amounts and in the manner provided for
in
Section 4.01;
(ii) to
deposit the Seller Remittance Amount into the collection account maintained
by
the Master Servicer for payment by the Master Servicer to the Seller on the
next
succeeding Distribution Date;
(iii) in
the
event the Servicer has elected not to retain the Xxxxx Fargo Servicing Fee
out
of any Mortgagor payments on account of interest or other recovery of interest
with respect to a particular Mortgage Loan (including late collections of
interest on such Mortgage Loan, or interest portions of Insurance Proceeds,
Liquidation Proceeds or Condemnation Proceeds) prior to the deposit of such
Mortgagor payment or recovery in the Custodial Account, to pay to itself the
related Xxxxx Fargo Servicing Fee from all such Mortgagor payments on account
of
interest or other such recovery for interest with respect to that Mortgage
Loan;
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(iv) following
the liquidation of a Mortgage Loan, to reimburse itself for unreimbursed Monthly
Advances and Servicing Advances, the Servicer’s right to reimburse itself
pursuant to this subclause (iii) with respect to any Mortgage Loan being limited
to related Liquidation Proceeds, Condemnation Proceeds, Insurance Proceeds,
REO
Disposition Proceeds and other amounts received in respect of the related REO
Property, and such other amounts as may be collected by the Servicer from the
Mortgagor or otherwise relating to such Mortgage Loan, it being understood
that,
in the case of any such reimbursement, the Servicer’s right thereto shall be
prior to the rights of the Trust Fund;
(v) to
first
reimburse itself for any unpaid Xxxxx Fargo Servicing Fees and then to reimburse
the Seller for any unpaid Seller Remittance Amount not paid pursuant to clause
(ii), the Servicer’s and/or the Seller’s right to reimbursement pursuant to this
subclause (v) with respect to any Mortgage Loan being limited to related
Liquidation Proceeds, Condemnation Proceeds, Insurance Proceeds, REO Disposition
Proceeds and other amounts received in respect of the related REO Property,
and
such other amounts as may be collected by the Servicer from the Mortgagor or
otherwise relating to the Mortgage Loan, it being understood that, in the case
of any such reimbursement, the Servicer’s and /or the Seller’s right thereto
shall be prior to the rights of the Trust Fund;
(vi) to
reimburse itself for remaining unreimbursed Servicing Advances and unpaid Xxxxx
Fargo Servicing Fees with respect to any defaulted Mortgage Loan as to which
the
Servicer has determined that all amounts that it expects to recover on behalf
of
the Trust Fund from or on account of such Mortgage Loan have been
recovered;
(vii) to
pay
the Seller for any unrecovered Seller Remittance Amount from amounts on deposit
in the Custodial Account, to the extent not paid pursuant to clauses (ii) or
(v)
above;
(viii) to
pay
itself interest on funds deposited in the Custodial Account;
(ix) to
transfer funds to another Eligible Institution in accordance with Section 3.11
hereof;
(x) to
withdraw funds deposited in error;
(xi) to
clear
and terminate the Custodial Account upon the termination of this Agreement;
and
(xii) to
pay
itself an amount equal to the Net Simple Interest Excess for the related Due
Period to the extent not offset by Net Simple Interest Shortfalls.
Section
3.05. Establishment
of and Deposits to Escrow Account.
The
Servicer shall segregate and hold all funds collected and received pursuant
to a
Mortgage Loan constituting Escrow Payments separate and apart from any of its
own funds and general assets and
shall establish and maintain one or more Escrow Accounts, in the form of time
deposit or demand accounts, titled, “Xxxxx Fargo Bank, N.A. in trust for U.S.
Bank National Association, as Trustee for the BNC Mortgage Loan Trust 2007-1
and
various mortgagors.” The Escrow Accounts shall be Eligible Deposit Accounts
established with an Eligible Institution. Funds deposited in the Escrow Account
may be drawn on by the Servicer in accordance with Section 3.06. The creation
of
any Escrow Account shall be evidenced by a certification in the form of Exhibit
C hereto. A copy of such certification shall be furnished to the Master Servicer
no later than 30 days after the Closing Date (and to the NIMS Insurer upon
request).
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The
Servicer shall deposit in the Escrow Account or Accounts within two (2) Business
Days of the Servicer’s receipt, and retain therein:
(i) all
Escrow Payments collected on account of the Mortgage Loans, for the purpose
of
effecting timely payment of any such items as required under the terms of this
Agreement; and
(ii) all
amounts representing Insurance Proceeds or Condemnation Proceeds which are
to be
applied to the restoration or repair of any Mortgaged Property.
The
Servicer shall make withdrawals from the Escrow Account only to effect such
payments as are required under this Agreement, as set forth in Section 3.06.
The
Servicer shall be entitled to retain any interest paid on funds deposited in
the
Escrow Account by the depository institution, other than interest on escrowed
funds required by law to be paid to the Mortgagor. To the extent required by
law, the Servicer shall pay interest on escrowed funds to the Mortgagor
notwithstanding that the Escrow Account may be non-interest bearing or that
interest paid thereon is insufficient for such purposes.
Section
3.06. Permitted
Withdrawals From Escrow Account.
Withdrawals
from the Escrow Account or Accounts may be made by the Servicer
only:
(i) to
effect
timely payments of ground rents, taxes, assessments, water rates, mortgage
insurance premiums, condominium charges, fire and hazard insurance premiums
or
other items constituting Escrow Payments for the related Mortgage;
(ii) to
reimburse the Servicer for any Servicing Advance made by the Servicer with
respect to a related Mortgage Loan, but only from amounts received on the
related Mortgage Loan which represent late collections of Escrow Payments
thereunder;
(iii) to
refund
to any Mortgagor any funds found to be in excess of the amounts required under
the terms of the related Mortgage Loan;
(iv) to
the
extent permitted by applicable law, for transfer to the Custodial Account and
application to reduce the principal balance of the Mortgage Loan in accordance
with the terms of the related Mortgage and Mortgage Note;
(v) for
application to restoration or repair of the Mortgaged Property in accordance
with Section 3.15;
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(vi) to
pay to
the Servicer, or any Mortgagor to the extent required by law, any interest
paid
on the funds deposited in the Escrow Account;
(vii) to
withdraw funds deposited in error; and
(viii) to
clear
and terminate the Escrow Account on the termination of this
Agreement.
The
Servicer will be responsible for the administration of the Escrow Accounts
and
will be obligated to make Servicing Advances to the Escrow Account in respect
of
its obligations under this Section 3.06, reimbursable from the Escrow Accounts
or Custodial Account to the extent not collected from the related Mortgagor,
anything to the contrary notwithstanding, when and as necessary to avoid the
lapse of insurance coverage on the Mortgaged Property, or which the Servicer
knows, or in the exercise of the required standard of care of the Servicer
hereunder should know, is necessary to avoid the loss of the Mortgaged Property
due to a tax sale or the foreclosure as a result of a tax lien. If any such
payment has not been made and the Servicer receives notice of a tax lien with
respect to the Mortgage being imposed, the Servicer will, within ten (10)
Business Days of such notice, advance or cause to be advanced funds necessary
to
discharge such lien on the Mortgaged Property.
Section
3.07. Notification
of Adjustments.
With
respect to each adjustable rate Mortgage Loan, the Servicer shall adjust the
Mortgage Interest Rate on the related interest rate adjustment date and shall
adjust the Monthly Payment on the related mortgage payment adjustment date,
if
applicable, in compliance with the requirements of applicable law and the
related Mortgage and Mortgage Note. The Servicer shall execute and deliver
any
and all necessary notices required under applicable law and the terms of the
related Mortgage Note and Mortgage regarding the Mortgage Interest Rate and
Monthly Payment adjustments. The Servicer shall promptly, upon written request
therefor, deliver to the Master Servicer such notifications and any additional
applicable data regarding such adjustments and the methods used to calculate
and
implement such adjustments. Upon the discovery by the Servicer or the receipt
of
notice from the Master Servicer that the Servicer has failed to adjust a
Mortgage Interest Rate or Monthly Payment in accordance with the terms of the
related Mortgage Note, the Servicer shall immediately deposit in
the Custodial Account from its own funds the amount of any interest loss or
deferral caused the Seller thereby.
Section
3.08. (Reserved.)
Section
3.09. Payment
of Taxes, Insurance and Other Charges.
(a) With
respect to each Mortgage Loan which provides for Escrow Payments, the Servicer
shall maintain accurate records of those escrowed items which are or may become
a lien upon the Mortgaged Property and the status of fire and hazard insurance
coverage and shall obtain, from time to time, all bills for the payment of
such
charges (including renewal premiums) (“Property
Charges”)
and
shall effect payment thereof prior to the applicable penalty or termination
date, employing for such purpose deposits of the Mortgagor in the Escrow Account
which shall have been estimated and accumulated by the Servicer in amounts
sufficient for such purposes, as allowed under the terms of the Mortgage. The
Servicer assumes full responsibility for the timely payment of all such bills
and shall effect timely payment of all such charges irrespective of each
Mortgagor’s faithful performance in the payment of same or the making of the
Escrow Payments, and the Servicer shall make advances from its own funds to
effect such payments.
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(b) To
the
extent that a Mortgage Loan does not provide for Escrow Payments, the Servicer
shall make advances from its own funds to effect payment
of all Property Charges upon receipt of notice of any failure to pay on the
part
of the Mortgagor, or at such other time as the Servicer determines to be in
the
best interest of the Trust Fund, provided that in any event the Servicer shall
pay such charges on or before the earlier of (a) any date by which payment
is
necessary to preserve the lien status of the Mortgage or (b) the date which
is
ninety days after the date on which such charges first became due. The Servicer
shall pay any late fee or penalty which is payable due to any delay in payment
of any Property Charge after the earlier to occur of (a) the date on which
the
Servicer receives notice of the failure of the Mortgagor to pay such Property
Charge or (b) the date which is ninety days after the date on which such charges
first became due.
Section
3.10. Protection
of Accounts.
The
Servicer may transfer the Custodial Account or any Escrow Account to a different
Eligible Institution from time to time and shall give notice to the Master
Servicer of any change in the location of the Custodial Account no later than
30
days after any such transfer is made and deliver to the Master Servicer, upon
request, a certification notice in the form of Exhibit B or Exhibit C, as
applicable, with respect to such Eligible Institution; provided
that in
the event the Custodial Account or any Escrow Account is held in a depository
institution or trust company that ceases to be an Eligible Institution, the
Servicer shall transfer such Custodial Account or Escrow Account, as the case
may be, to an Eligible Institution.
The
Servicer shall bear any expenses, losses or damages sustained by the Master
Servicer or the Trustee if the Custodial Account and/or the Escrow Account
are
not demand deposit accounts.
Section
3.11. Maintenance
of Hazard Insurance.
The
Servicer shall cause to be maintained for each Mortgage Loan hazard insurance
such that all buildings upon the Mortgaged Property are insured by a generally
acceptable insurer acceptable under Xxxxxx Xxx or Xxxxxxx Mac guidelines against
loss by fire, hazards of extended coverage and such other hazards as are
customary in the area where the Mortgaged Property is located, in an amount
which is at least equal to the lesser of (i) the replacement value of the
improvements securing such Mortgage Loan and (ii) the greater of (a) the
outstanding principal balance of the Mortgage Loan and (b) an amount such that
the proceeds thereof shall be sufficient to prevent the Mortgagor or the loss
payee from becoming a co-insurer.
If
upon origination of the Mortgage Loan, the related Mortgaged Property was
located in an area identified in the Federal Register by the Flood Emergency
Management Agency as having special flood hazards (and such flood insurance
has
been made available) a flood insurance policy meeting the requirements of the
current guidelines of the Federal Insurance Administration is in effect with
a
generally acceptable insurance carrier acceptable to Xxxxxx Mae or Xxxxxxx
Mac
in an amount representing coverage equal to the lesser of (i) the minimum amount
required, under the terms of coverage, to compensate for any damage or loss
on a
replacement cost basis (or the unpaid balance of the mortgage if replacement
cost coverage is not available for the type of building insured) and (ii) the
maximum amount of insurance which is available under the Flood Disaster
Protection Act of 1973, as amended. If at any time during the term of the
Mortgage Loan, the Servicer determines in accordance with applicable law and
pursuant to the Xxxxxx Mae Guides that a Mortgaged Property is located in a
special flood hazard area and is not covered by flood insurance or is covered
in
an amount less than the amount required by the Flood Disaster Protection Act
of
1973, as amended, the Servicer shall notify the related Mortgagor that the
Mortgagor must obtain such flood insurance coverage, and if said Mortgagor
fails
to obtain the required flood insurance coverage within forty-five (45) days
after such notification, the Servicer shall immediately force place the required
flood insurance on the Mortgagor’s behalf.
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If
a Mortgage Loan is secured by a unit in a condominium project, the Servicer
shall verify that the coverage required of the owner’s association, including
hazard, flood, liability and fidelity coverage, is being maintained in
accordance with, at a minimum, the then current Xxxxxx Xxx or Xxxxxxx Mac
requirements.
In
the event that the Master Servicer or the Servicer shall determine that the
Mortgaged Property should be insured against loss or damage by hazards and
risks
not covered by the insurance required to be maintained by the Mortgagor pursuant
to the terms of the Mortgage, the Servicer shall communicate and consult with
the Mortgagor with respect to the need for such insurance and bring to the
Mortgagor’s attention the desirability of protection of the Mortgaged
Property.
All
policies required hereunder shall name the Servicer as loss payee and shall
be
endorsed with standard or union mortgagee clauses, without contribution, which
shall provide for at least 30 days prior written notice of any cancellation,
reduction in amount or material change in coverage.
The
Servicer shall not interfere with the Mortgagor’s freedom of choice in selecting
either his insurance carrier or agent, provided,
however,
that
the Servicer shall not accept any such insurance policies from insurance
companies unless such companies are acceptable to Xxxxxx Mae or Xxxxxxx Mac
and
are licensed to do business in the jurisdiction in which the Mortgaged Property
is located. The Servicer shall determine that such policies provide sufficient
risk coverage and amounts, that they insure the property owner, and that they
properly describe the property address. The Servicer shall furnish to the
Mortgagor a formal notice of expiration of any such insurance in sufficient
time
for the Mortgagor to arrange for renewal coverage by the expiration
date.
Pursuant
to Section 3.03, any amounts collected by the Servicer under any such policies
(other than amounts to be deposited in the Escrow Account and applied to the
restoration or repair of the related Mortgaged Property, or property acquired
in
liquidation of the Mortgage Loan, or to be released to the Mortgagor, in
accordance with the Servicer’s normal servicing procedures as specified in
Section 3.15) shall be deposited in the Custodial Account subject to withdrawal
pursuant to Section 3.04.
-25-
Notwithstanding
anything set forth in the preceding paragraph, the Servicer agrees to indemnify
the Trustee, the NIMS Insurer, the Certificateholders, the Master Servicer
and
the Trust Fund for any claims, losses, damages, penalties, fines, forfeitures,
legal fees and related costs, judgments and any other costs, fees and expenses
that any such indemnified party may sustain in any way related to the failure
of
the Mortgagor (or the Servicer) to maintain hazard insurance or flood insurance
with respect to the related Mortgaged Property which complies with the
requirements of this section.
Section
3.12. Maintenance
of Mortgage Impairment Insurance.
In
the event that the Servicer shall obtain and maintain a blanket policy insuring
against losses arising from fire and hazards covered under extended coverage
on
all of the Mortgage Loans, then, to the extent such policy provides coverage
in
an amount equal to the amount required pursuant to Section 3.11 and otherwise
complies with all other requirements of Section 3.11, it shall conclusively
be
deemed to have satisfied its obligations as set forth in Section 3.11. Any
amounts collected by the Servicer under any such policy relating to a Mortgage
Loan shall be deposited in the Custodial Account subject to withdrawal pursuant
to Section 3.04. Such policy may contain a deductible clause, in which case,
in
the event that there shall not have been maintained on the related Mortgaged
Property a policy complying with Section 3.11, and there shall have been a
loss
which would have been covered by such policy, the Servicer shall deposit in
the
Custodial Account at the time of such loss the amount not otherwise payable
under the blanket policy because of such deductible clause, such amount to
deposited from the Servicer’s funds, without reimbursement therefor. Upon
request of the Master Servicer, the Trustee or the NIMS Insurer, the Servicer
shall cause to be delivered to such person a certificate of insurance of such
policy and a statement from the insurer thereunder that such policy shall in
no
event be terminated or materially modified without 30 days’ prior written notice
to the Master Servicer, the Trustee and the NIMS Insurer.
Section
3.13. Maintenance
of Fidelity Bond and Errors and Omissions Insurance.
The
Servicer shall maintain with responsible companies, at its own expense, a
blanket Fidelity Bond and an Errors and Omissions Insurance Policy, with broad
coverage on all officers, employees or other persons acting in any capacity
requiring such persons to handle funds, money, documents or papers relating
to
the Mortgage Loans (“Servicer
Employees”).
Any
such Fidelity Bond and Errors and Omissions Insurance Policy shall be in the
form of the Mortgage Banker’s Blanket Bond and shall protect and insure the
Servicer against losses, including forgery, theft, embezzlement, fraud, errors
and omissions and negligent acts of such Servicer Employees. Such Fidelity
Bond
and Errors and Omissions Insurance Policy also shall protect and insure the
Servicer against losses in connection with the release or satisfaction of a
Mortgage Loan without having obtained payment in full of the indebtedness
secured thereby. No provision of this Section 3.13 requiring such Fidelity
Bond
and Errors and Omissions Insurance Policy shall diminish or relieve the Servicer
from its duties and obligations as set forth in this Agreement. The minimum
coverage under any such bond and insurance policy shall be at least equal to
the
corresponding amounts required by the Xxxxxx Xxx Guides or by Xxxxxxx Mac in
the
Xxxxxxx Xxx Xxxxxxx’ & Servicers’ Guide, or as otherwise acceptable to
Xxxxxx Mae and Xxxxxxx Mac. Upon the request of the Master Servicer, the Trustee
or the NIMS Insurer, the Servicer shall cause to be delivered to such party
a
certificate of insurance for such fidelity bond and insurance policy and a
statement from the surety and the insurer that such fidelity bond and insurance
policy shall in no event be terminated or materially modified without 30 days’
prior written notice to the Master Servicer, the Trustee and the NIMS
Insurer.
-26-
Section
3.14. Inspections.
The
Servicer shall inspect the Mortgaged Property as often as deemed necessary
by
the Servicer in accordance with Accepted Servicing Practices to assure itself
that the value of the Mortgaged Property is being preserved. In addition, if
any
Mortgage Loan is more than 45 days delinquent, the Servicer promptly shall
inspect the Mortgaged Property and shall conduct subsequent inspections in
accordance with Accepted Servicing Practices or as may be required by the
primary mortgage guaranty insurer. Upon request, the Servicer shall produce
an
electronic report of each such inspection.
Section
3.15. Restoration
of Mortgaged Property.
The
Servicer need not obtain the approval of the Master Servicer or the Trustee
prior to releasing any Insurance Proceeds or Condemnation Proceeds to the
Mortgagor to be applied to the restoration or repair of the Mortgaged Property
if such release is in accordance with Accepted Servicing Practices. For claims
greater than $15,000, at a minimum, the Servicer shall comply with the following
conditions in connection with any such release of Insurance Proceeds or
Condemnation Proceeds:
(i) the
Servicer shall receive satisfactory independent verification of completion
of
repairs and issuance of any required approvals with respect thereto;
(ii) the
Servicer shall take all steps necessary to preserve the priority of the lien
of
the Mortgage, including, but not limited to requiring waivers with respect
to
mechanics’ and materialmen’s liens;
(iii) the
Servicer shall verify that the Mortgage Loan is not in default; and
(iv) pending
repairs or restoration, the Servicer shall place the Insurance Proceeds or
Condemnation Proceeds in the Escrow Account.
Section
3.16. Maintenance
of PMI and/or LPMI Policy; Claims.
(a) The
Servicer shall comply with all provisions of applicable state and federal law
relating to the cancellation of, or collection of premiums with respect to,
PMI
Policies, including, but not limited to, the provisions of the Homeowners
Protection Act of 1998, and all regulations promulgated thereunder, as amended
from time to time. The Servicer shall be obligated to make premium payments
with
respect to PMI Policies required to be maintained by the Mortgagor rather than
the Seller, if the Mortgagor is required but fails to pay any PMI Policy
premium, which shall be paid from the Servicer’s own funds. The Servicer shall
not be required to make any premium payments with respect to LPMI Policies.
Any
premium payments made by the Servicer from its own funds pursuant to this
Section 3.16(a) shall be recoverable by the Servicer as a Servicing Advance,
subject to the reimbursement provisions of Section 3.04(iv).
-27-
With
respect to each Mortgage Loan (other than LPMI Loans) with a loan-to-value
ratio
at origination in excess of 80%, the Servicer shall maintain or cause the
Mortgagor to maintain (to the extent that the Mortgage Loan requires the
Mortgagor to maintain such insurance) in full force and effect a PMI Policy,
and
shall pay or shall cause the Mortgagor to pay the premium thereon on a timely
basis, until the loan-to-value of such Mortgage Loan is reduced to 78% or the
PMI Policy is otherwise terminated pursuant to the Homeowners Protection Act
of
1998, 12 USC §4901, et seq. In the event that such PMI Policy shall be
terminated, the Servicer shall obtain from another Qualified Insurer a
comparable replacement policy, with a total coverage equal to the remaining
coverage of such terminated PMI Policy, at substantially the same fee level.
The
Servicer shall not take any action which would result in noncoverage under
any
applicable PMI Policy of any loss which, but for the actions of the Servicer
would have been covered thereunder. In connection with any assumption or
substitution agreements entered into or to be entered into with respect to
a
Mortgage Loan, the Servicer shall promptly notify the insurer under the related
PMI Policy, if any, of such assumption or substitution of liability in
accordance with the terms of such PMI Policy and shall take all actions which
may be required by such insurer as a condition to the continuation of coverage
under such PMI Policy. If such PMI Policy is terminated as a result of such
assumption or substitution of liability, the Servicer shall obtain a replacement
PMI Policy as provided above.
(b) With
respect to each Mortgage Loan covered by a PMI Policy or LPMI Policy, the
Servicer shall take all such actions on behalf of the Trustee as are necessary
to service, maintain and administer the related Mortgage Loan in accordance
with
such Policy and to enforce the rights under such Policy. Except as expressly
set
forth herein, the Servicer shall have full authority on behalf of the Trust
Fund
to do anything it deems appropriate or desirable in connection with the
servicing, maintenance and administration of such Policy; provided
that
the
Servicer shall not take any action to permit any modification or assumption
of a
Mortgage Loan covered by an LPMI Policy or PMI Policy, or take any other action
with respect to such Mortgage Loan, which would result in non-coverage under
such Policy of any loss which, but for actions of any Servicer or the
Subservicer, would have been covered thereunder. If the Qualified Insurer fails
to pay a claim under an LPMI Policy or PMI Policy solely as a result of a breach
by the Servicer or Subservicer of its obligations hereunder or under such
Policy, the Servicer shall be required to deposit in the Custodial Account
on or
prior to the next succeeding Remittance Date an amount equal to such unpaid
claim from its own funds without any rights to reimbursement from the Trust
Fund. The Servicer shall cooperate with the Qualified Insurers and shall furnish
all reasonable evidence and information in the possession of the Servicer to
which the Servicer has access with respect to the related Mortgage Loan;
provided,
however,
notwithstanding anything to the contrary contained in any LPMI Policy or PMI
Policy, the Servicer shall not be required to submit any reports to the related
Qualified Insurer until a reporting date that is at least 15 days after the
Servicer has received sufficient loan level information from the Seller to
appropriately code its servicing systems in accordance with the Qualified
Insurer’s requirements.
-28-
(c) In
connection with its activities as servicer, the Servicer agrees to prepare
and
present, on behalf of itself and the Trustee, claims to the Qualified Insurer
under any PMI Policy or LPMI Policy in a timely fashion in accordance with
the
terms of such PMI Policy or LPMI Policy and, in this regard, to take such action
as shall be necessary to permit recovery under any PMI Policy or LPMI Policy
respecting a defaulted Mortgage Loan. Any amounts collected by the Servicer
under any PMI Policy or LPMI Policy shall be deposited in the Custodial Account
pursuant to Section 3.03(xiv), subject to withdrawal pursuant to Section
3.04.
(d) Upon
request by the Servicer, the Trustee shall furnish the Servicer with any powers
of attorney and other documents (within three (3) Business Days upon request
from the Servicer) in form as provided to it by the Servicer (and mutually
acceptable to the Trustee and the Servicer) necessary or appropriate to enable
the Servicer to service and administer any PMI or LPMI Policy; provided,
however,
that the
Trustee shall not be liable for the actions of the Servicer under such power
of
attorney unless such actions of the Servicer are performed at, and in accordance
with, the written direction of the Trustee.
(e) The
Servicer shall deposit into the Custodial Account pursuant to Section 3.03(xiv)
hereof, all Insurance Proceeds received under the terms of a PMI Policy or
a
LPMI Policy.
(f) Notwithstanding
the provisions of (a) and (b) above, the Servicer shall not take any action
in
regard to any PMI Policy or LPMI Policy inconsistent with the interests of
the
Trustee or the Certificateholders or with the rights and interests of the
Trustee or the Certificateholders under this Agreement.
Section
3.17. Title,
Management and Disposition of REO Property.
In
the event that title to any Mortgaged Property is acquired in foreclosure or
by
deed in lieu of foreclosure, the deed or certificate of sale shall be taken
in
the name of the Trustee or its nominee in trust for the benefit of the
Certificateholders, or in the event the Trustee is not authorized or permitted
to hold title to real property in the state where the REO Property is located,
or would be adversely affected under the “doing business” or tax laws of such
state by so holding title, the deed or certificate of sale shall be taken in
the
name of such Person or Persons as shall be consistent with an Opinion of Counsel
obtained by the Servicer from any attorney duly licensed to practice law in
the
state where the REO Property is located. The Person or Persons holding such
title other than the Trustee shall acknowledge in writing that such title is
being held as nominee for the Trustee.
-29-
The
Servicer shall manage, conserve, protect and operate each REO Property for
the
Trustee solely for the purpose of its prompt disposition and sale. The Servicer,
either itself or through an agent selected by the Servicer, shall manage,
conserve, protect and operate the REO Property in the same manner that it
manages, conserves, protects and operates other foreclosed property for its
own
account, and in the same manner that similar property in the same locality
as
the REO Property is managed. The Servicer shall attempt to sell the same (and
may temporarily rent the same for a period not greater than one year, except
as
otherwise provided below) on such terms and conditions as the Servicer deems
to
be in the best interest of the Trustee and the Certificateholders.
If
the Servicer hereafter becomes aware that a Mortgaged Property is an
Environmental Problem Property, the Servicer will notify the Master Servicer
and
the NIMS Insurer of the existence of the Environmental Problem Property.
Additionally, the Servicer shall set forth in such notice a description of
such
problem, a recommendation to the Master Servicer and the NIMS Insurer relating
to the proposed action regarding the Environmental Problem Property, and the
Servicer shall carry out the recommendation set forth in such notice unless
otherwise directed by the Master Servicer or the NIMS Insurer in writing within
five (5) days after its receipt (or deemed receipt) of such notice in accordance
with the terms and provisions of Section 9.04 below. The Master Servicer shall
be provided a copy of the NIMS Insurer’s instructions to the Servicer.
Notwithstanding the foregoing, the Servicer shall obtain the Master Servicer’s
and the NIMS Insurer’s written consent to any expenditures proposed to remediate
Environmental Problem Properties or to defend any claims associated with
Environmental Problem Properties if such expenses, in the aggregate, are
expected to exceed $100,000. Failure to provide written notice of disapproval
of
the expenditure within five (5) days of receipt (or deemed receipt) of such
request for prepaid expenditures shall be deemed an approval of such
expenditure. The Master Servicer shall be provided with a copy of the NIMS
Insurer’s instructions to the Servicer. If the Servicer has received reliable
instructions to the effect that a Property is an Environmental Problem Property
(e.g., Servicer obtains a broker’s price opinion which reveals the potential for
such problem), the 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 the Master Servicer or the NIMS
Insurer.
In
the event that the Trust Fund acquires any REO Property in connection with
a
default or imminent default on a Mortgage Loan, the Servicer shall dispose
of
such REO Property not later than the end of the third taxable year after the
year of its acquisition by the Trust Fund unless the Servicer has applied for
and received a grant of extension from the Internal Revenue Service (and provide
a copy of the same to the NIMS Insurer and the Master Servicer) to the effect
that, under the REMIC Provisions and any relevant proposed legislation and
under
applicable state law, the applicable Trust REMIC may hold REO Property for
a
longer period without adversely affecting the REMIC status of such REMIC or
causing the imposition of a federal or state tax upon such REMIC. If the
Servicer has received such an extension (and provided a copy of the same to
the
NIMS Insurer and the Master Servicer), then the Servicer shall continue to
attempt to sell the REO Property for its fair market value for such period
longer than three years as such extension permits (the “Extended Period”). If
the Servicer has not received such an extension and the Servicer is unable
to
sell the REO Property within the period ending three months before the end
of
such third taxable year after its acquisition by the Trust Fund or if the
Servicer has received such an extension, and the Servicer is unable to sell
the
REO Property within the period ending three months before the close of the
Extended Period, the Servicer shall, before the end of the three-year period
or
the Extended Period, as applicable, (i) purchase such REO Property at a price
equal to the REO Property’s fair market value, as acceptable to the NIMS Insurer
or (ii) auction the REO Property to the highest bidder (which may be the
Servicer) in an auction reasonably designed to produce a fair price prior to
the
expiration of the three-year period or the Extended Period, as the case may
be.
The Trustee shall sign any document or take any other action reasonably
requested by the Servicer which would enable the Servicer, on behalf of the
Trust Fund, to request such grant of extension.
-30-
Notwithstanding
any other provisions of this Agreement, no REO Property acquired by the Trust
Fund shall be rented (or allowed to continue to be rented) or otherwise used
by
or on behalf of the Trust Fund in such a manner or pursuant to any terms that
would: (i) cause such REO Property to fail to qualify as “foreclosure property”
within the meaning of Section 860G(a)(8) of the Code; or (ii) subject any Trust
REMIC to the imposition of any federal income taxes on the income earned from
such REO Property, including any taxes imposed by reason of Sections 860F or
860G(c) of the Code, unless the Servicer has agreed to indemnify and hold
harmless the Trust Fund and the NIMS Insurer with respect to the imposition
of
any such taxes.
The
disposition of REO Property shall be carried out by the Servicer at such price,
and upon such terms and conditions, as the Servicer deems to be in the best
interests of the Trust Fund. Notwithstanding the previous sentence, prior to
acceptance by the Servicer of an offer to sell any REO Property for a sale
price
that is less than 90% of the unpaid principal balance of the related Mortgage
Loan, the Servicer shall notify the Master Servicer and the NIMS Insurer of
such
offering in writing which notification shall set forth all material terms of
said offer (each a “Notice of Sale”). The Master Servicer and/or the NIMS
Insurer shall be deemed to have approved the sale of any REO Property unless
it
notifies the Servicer in writing within two (2) Business Days after its receipt
of the related Notice of Sale, that it disapproves of the related sale, in
which
case the Servicer shall not proceed with such sale. The proceeds of sale of
the
REO Property shall be promptly deposited in the Custodial Account.
The
Servicer shall also maintain on each REO Property fire and hazard insurance
with
extended coverage in amount which is at least equal to the maximum insurable
value of the improvements which are a part of such property, liability insurance
and, to the extent required and available under the Flood Disaster Protection
Act of 1973, as amended, flood insurance in the amount required above.
The
proceeds of sale of the REO Property shall be promptly deposited in the
Custodial Account. As soon as practical thereafter the expenses of such sale
shall be paid and the Servicer shall reimburse itself for any related
unreimbursed Servicing Advances, unpaid Xxxxx Fargo Servicing Fees and
unreimbursed advances made pursuant to this Section or Section 4.03 and pay
the
Seller any unpaid Seller Remittance Amount to the extent not previously paid
pursuant to Section 3.04.
-31-
The
Servicer shall make advances of all funds necessary for the proper operation,
management and maintenance of the REO Property, including the cost of
maintaining any hazard insurance pursuant to Section 3.11, such advances to
be
reimbursed from the disposition or liquidation proceeds of the REO Property.
The
Servicer shall make monthly distributions on each Remittance Date to the Master
Servicer of the net cash flow from the REO Property (which shall equal the
revenues from such REO Property net of the expenses described in this Section
3.17 and of any reserves reasonably required from time to time to be maintained
to satisfy anticipated liabilities for such expenses).
As
an alternative to permitting a modification or effectuating a foreclosure or
other conversion of the ownership of a Mortgaged Property, the Master Servicer
may, at its option and as provided in the Trust Agreement, purchase any Mortgage
Loan that has become one hundred and twenty (120) days or more delinquent in
payment; provided,
however,
that
(i) such Mortgage Loan has not been purchased by the NIMS Insurer pursuant
to
Section 6.05 become subject to a special servicing agreement pursuant to Section
8.04, (ii) the Master Servicer promptly notifies the Servicer of its intention
to purchase any such delinquent Mortgage Loan and (iii) the Master Servicer
shall exercise any such option to purchase a Mortgage Loan within sixty (60)
days after any such Mortgage Loan has become one hundred (120) days delinquent.
No Termination Fee shall be payable to the Servicer upon termination pursuant
to
this paragraph.
Section
3.18. Real
Estate Owned Reports.
Together
with the statement furnished pursuant to Section 4.02, the Servicer shall
furnish to the Master Servicer and the NIMS Insurer on or before the Remittance
Date in each month a statement with respect to any REO Property covering the
operation of such REO Property for the previous month and the Servicer’s efforts
in connection with the sale of such REO Property and any rental of such REO
Property incidental to the sale thereof for the previous month. That statement
shall be accompanied by such other information as either the Master Servicer
or
the NIMS Insurer shall reasonably request.
Section
3.19. Liquidation
Reports.
Upon
the foreclosure sale of any Mortgaged Property or the acquisition thereof by
the
Trustee pursuant to a deed in lieu of foreclosure, the Servicer shall submit
to
the Trustee and the Master Servicer a liquidation report with respect to such
Mortgaged Property. In addition, the Servicer shall provide the Master Servicer
a report setting forth Servicing Advances and other expenses incurred in
connection with the liquidation of any Mortgage Loan.
Section
3.20. Reports
of Foreclosures and Abandonments of Mortgaged Property.
Following
the foreclosure sale or abandonment of any Mortgaged Property, the Servicer
shall report such foreclosure or abandonment as required pursuant to Section
6050J of the Code.
-32-
Section
3.21. Prepayment
Charges.
The
Servicer or any designee of the Servicer shall not waive any Prepayment Charge
with respect to any Mortgage Loan which contains a Prepayment Charge which
prepays during the term of the charge, except as set forth herein. If the
Servicer or its designee fails to collect the Prepayment Charge upon any
prepayment of any Mortgage Loan which contains a Prepayment Charge pursuant
to
this Agreement, the Servicer shall pay the Trust Fund at such time (by deposit
to the Custodial Account) an amount equal to the amount of the Prepayment Charge
which was not collected. Notwithstanding the above, the Servicer or its designee
may waive (and shall waive, in the case of (iii) below) a Prepayment Charge
without paying the Trust Fund the amount of the Prepayment Charge if: (i) the
Mortgage Loan is in default (defined as 61 days or more delinquent) and such
waiver would maximize recovery of total proceeds, taking into account the value
of such Prepayment Charge and the related Mortgage Loan; (ii) if the prepayment
is not a result of a refinance by the Servicer or any of its affiliates and
the
Mortgage Loan is foreseen to be in default and such waiver would maximize
recovery of total proceeds taking into account the value of such Prepayment
Charge and the related Mortgage Loan; (iii) the collection of the Prepayment
Charge would be in violation of applicable laws
or (iv) notwithstanding any state or federal law to the contrary, any Prepayment
Charge in any instance when a Mortgage Loan is accelerated or paid off in
connection with the workout or foreclosure of a delinquent Mortgage
Loan.
Section
3.22. Confidentiality/Protecting
Customer Information.
Each
party agrees that it shall comply with all applicable laws and regulations
regarding the privacy or security of Customer Information shall maintain
appropriate administrative, technical and physical safeguards to protect the
security, confidentiality and integrity of Customer Information, including,
if
applicable, maintaining security measures designed to meet the Interagency
Guidelines Establishing Standards for Safeguarding Customer Information, 66
Fed.
Reg. 8616 and complying with the privacy regulations under Title V of the
Xxxxx-Xxxxx-Xxxxxx Act, 15 U.S.C. § 6801 et seq., and the rules promulgated
thereunder. For purposes of this Section, “Customer Information” means any
personal information concerning a Mortgagor that is disclosed by one party
to
this Agreement to the other.
Section
3.23. Credit
Reporting.
For
each Mortgage Loan, the Servicer shall accurately and fully furnish, in
accordance with the Fair Credit Reporting Act and its implementing regulations,
accurate and complete information (e.g., favorable and unfavorable) on its
borrower credit files to each of the following credit repositories: Equifax
Credit Information Services, Inc., Trans Union, LLC and Experian Information
Solution, Inc., on a monthly basis. In addition, with respect to any Mortgage
Loan serviced for a Xxxxxx Mae pool, the Servicer shall transmit full credit
reporting data to each of such credit repositories in accordance with Xxxxxx
Xxx
Guide Announcement 95-19 (November 20, 1995), a copy of which is attached hereto
as Exhibit G, reporting each of the following statuses, each month with respect
to a Mortgage Loan in a Xxxxxx Mae pool: New origination, current, delinquent
(30-60-90-days, etc) foreclosed or charged off.
-33-
ARTICLE
IV.
PAYMENTS
TO MASTER
SERVICER
Section
4.01. Remittances.
On
each Remittance Date, no later than 5:00 p.m. New York City time, the Servicer
shall remit on a scheduled/scheduled basis by wire transfer of immediately
available funds to the Master Servicer (a) all amounts deposited in the
Custodial Account as of the close of business on the last day of the related
Due
Period (net of charges against or withdrawals from the Custodial Account
pursuant to Section 3.04), plus
(b) all
Monthly Advances, if any, which the Servicer is obligated to make pursuant
to
Section 4.03, plus
(c) the
amount of any Net Simple Interest Shortfall not offset by Net Simple Interest
Excess for the related Due Period, minus
(d) any
amounts attributable to Principal Prepayments, Liquidation Proceeds, Insurance
Proceeds, Condemnation Proceeds or REO Disposition Proceeds received after
the
applicable Principal Prepayment Period, which amounts shall be remitted on
the
following Remittance Date, together with any additional interest required to
be
deposited in the Custodial Account in connection with such Principal Prepayment
in accordance with Section 3.03(vii), and minus
(e) any
amounts attributable to Monthly Payments collected but due on a Due Date or
Due
Dates subsequent to the first day of the month in which such Remittance Date
occurs, which amounts shall be remitted on the Remittance Date next succeeding
the Due Date related to such Monthly Payment.
With
respect to any remittance received by the Master Servicer after the Business
Day
on which such payment was due, the Servicer shall pay to the Master Servicer
interest on any such late payment at an annual rate equal to the Prime Rate,
adjusted as of the date of each change, plus three percentage points, but in
no
event greater than the maximum amount permitted by applicable law. Such interest
shall be deposited in the Custodial Account by the Servicer on the date such
late payment is made and shall cover the period commencing with the day
following such second Business Day and ending with the Business Day on which
such payment is made, both inclusive. Such interest shall be remitted along
with
the distribution payable on the next succeeding Remittance Date. The payment
by
the Servicer of any such interest shall not be deemed an extension of time
for
payment or a waiver of any Event of Default by the Trustee or the Master
Servicer.
All
remittances required to be made to the Master Servicer shall be made to the
following wire account or to such other account as may be specified by the
Master Servicer from time to time:
Bank
of
New York
ABA#:
000-000-000
Account
Name: Aurora Loan Services LLC
Master
Servicing Payment Clearing Account
Account
Number: 8900620730
Beneficiary:
Aurora Loan Services LLC
For
further credit to: BNC 2007-1
-34-
Section
4.02. Statements
to Master Servicer.
(a) Not
later than the tenth (10th) calendar day of each month (or if such calendar
day
is not a Business Day, the immediately preceding Business Day), the Servicer
shall furnish to the Master Servicer an electronic monthly remittance advice
in
the Fidelity (or any successor thereto) S50Y format (or in such other formats
mutually agreed to between the Servicer and the Master Servicer), such advice
relating to the period ending on the last day of the preceding calendar month
and a monthly loan loss report in the format set forth in Exhibit E hereto;
provided however, the information provided pursuant to Exhibit E shall be
limited to that which is readily available to the Servicer and is mutually
agreed to between the Servicer and the Master Servicer. The format of this
monthly reporting may be amended from time to time to the extent necessary
to
comply with applicable law. In connection with prepayments in full, the Servicer
will use its best efforts to deliver to the Master Servicer by the 15th calendar
day of each month, but in no event later than the 17th day of each month, a
monthly payoff remittance advice.
Such
monthly remittance advice shall also be accompanied by a supplemental report
provided to the Master Servicer which includes on an aggregate basis for the
previous Due Period (i) the amount of claims filed on any LPMI Policy, (ii)
the
amount of any claim payments made on any LPMI Policy, (iii) the amount of claims
denied or curtailed on any LPMI Policy and (iv) policies cancelled with respect
to those Mortgage Loans covered by any LPMI Policy purchased by the Seller
on
behalf of the Trust Fund.
(b) The
Servicer shall prepare and file any and all usual and customary tax returns,
information statements or other filings required to be delivered to any
governmental taxing authority, the Securities Administrator or its designee
pursuant to any applicable law with respect to the Mortgage Loans and the
transactions contemplated hereby. In addition, the Servicer shall provide the
Securities Administrator with such information concerning the Mortgage Loans
as
is necessary for such Securities Administrator to prepare federal income tax
returns as the Securities Administrator may reasonably request from time to
time. Such obligation of the Servicer shall be deemed satisfied to the extent
that substantially comparable information has been provided by the Servicer
throughout the calendar year.
(c) If
requested by the Master Servicer, the Securities Administrator, or the
Depositor, the Servicer shall promptly notify the Master Servicer, the
Securities Administrator, and the Depositor (i) of any legal proceedings pending
against the Servicer of the type described in Item 1117 (§ 229.1117) of
Regulation AB and (ii) if the Servicer shall become (but only to the extent
not
previously disclosed to the Master Servicer and the Depositor) at any time
an
affiliate of any of the parties listed on Exhibit I to this
Agreement.
For
the purpose of satisfying the reporting obligations under the Exchange Act
with
respect to the issuance of asset-backed securities, the Servicer shall provide
to the Master Servicer, the Securities Administrator, and the Depositor prompt
notice of the occurrence of any of the following: any event of default under
the
terms of this Agreement, any merger, consolidation or sale of substantially
all
of the assets of the Servicer, the Servicer’s engagement of any Subservicer,
Subcontractor or vendor to perform or assist in the performance of any of the
Servicer’s obligations under this Agreement, any material litigation involving
the Servicer, and any affiliation or other significant relationship between
the
Servicer and other transaction parties.
-35-
(d) Not
later than the tenth calendar day of each month (or if such calendar day is
not
a Business Day, the immediately preceding Business Day), the Servicer shall
provide to the Master Servicer, the Securities Administrator, and the Depositor
notice of the occurrence of any material modifications, extensions or waivers
of
terms, fees, penalties or payments relating to the Mortgage Loans during the
related Due Period.
Section
4.03. Monthly
Advances by Servicer.
On
the Business Day immediately preceding each Remittance Date, the Servicer shall
deposit in the Custodial
Account from its own funds or from amounts held for future distribution, or
both, an amount equal to all Monthly Payments (with interest adjusted to the
Mortgage Loan Remittance Rate) which were due on the Mortgage Loans during
the
applicable Due Period and which were delinquent at the close of business on
the
immediately preceding Determination Date. In the case of Simple Interest
Mortgage Loans the preceding sentence shall only apply to that portion of the
Monthly Payment attributable to interest. Any amounts held for future
distribution and so used shall be replaced by the Servicer by deposit in the
Custodial Account on or before any future Remittance Date if funds in the
Custodial Account on such Remittance Date shall be less than remittances to
the
Master Servicer required to be made on such Remittance Date. The Servicer shall
keep appropriate records of such amounts and will provide such records to the
Master Servicer and the NIMS Insurer upon reasonable request.
The
Servicer’s obligation to make such Monthly Advances as to any Mortgage Loan will
continue through the last Monthly Payment due prior to the payment in full
of
the Mortgage Loan, or through the last Remittance Date prior to the Remittance
Date for the distribution of all Liquidation Proceeds and other payments or
recoveries (including Insurance Proceeds and Condemnation Proceeds) with respect
to the related Mortgage Loan.
Section
4.04. Due
Dates Other Than the First of the Month.
Mortgage
Loans having Due Dates other than the first day of a month shall be accounted
for as described in this Section 4.04. Any payment due on a day other than
the
first day of each month shall be considered due on the first day of the month
following the month in which that payment is due as if such payment were due
on
the first day of
said month. For example, a payment due on February 15 shall be considered
to be due on March 1. Any payment collected on a Mortgage Loan after the
Cut-off Date shall be deposited in the Custodial Account. For Mortgage Loans
with Due Dates on the first day of a month, deposits to the Custodial Account
begin with the payment due on the first of the month following the Cut-off
Date.
-36-
ARTICLE
V.
GENERAL
SERVICING PROCEDURES
Section
5.01. Transfers
of Mortgaged Property.
The
Servicer shall use its best efforts to enforce any “due-on-sale” provision
contained in any Mortgage or Mortgage Note and to deny assumption by the person
to whom the Mortgaged Property has been or is about to be sold whether by
absolute conveyance or by contract of sale, and whether or not the Mortgagor
remains liable on the Mortgage and the Mortgage Note. When the Mortgaged
Property has been conveyed by the Mortgagor, the Servicer shall, to the extent
it has knowledge of such conveyance, exercise its rights to accelerate the
maturity of such Mortgage Loan under the “due-on-sale” clause applicable
thereto, provided,
however,
that
the Servicer shall not exercise such rights if prohibited by law from doing
so
or if the exercise of such rights would impair or threaten to impair any
recovery under the related PMI Policy or LPMI Policy, if any.
If
the
Servicer reasonably believes it is unable under applicable law to enforce such
“due-on-sale” clause, the Servicer shall enter into (i) an assumption and
modification agreement with the person to whom such property has been conveyed,
pursuant to which such person becomes liable under the Mortgage Note and the
original Mortgagor remains liable thereon or (ii) in the event the Servicer
is
unable under applicable law to require that the original Mortgagor remain liable
under the Mortgage Note and the Servicer has the prior consent of the primary
mortgage guaranty insurer, a substitution of liability agreement with the seller
of the Mortgaged Property pursuant to which the original Mortgagor is released
from liability and the seller of the Mortgaged Property is substituted as
Mortgagor and becomes liable under the Mortgage Note. If an assumption fee
is
collected by the Servicer for entering into an assumption agreement, such fee
will be retained by the Servicer as additional servicing compensation. In
connection with any such assumption, none of the Mortgage Interest Rate borne
by
the related Mortgage Note, the term of the Mortgage Loan or the outstanding
principal amount of the Mortgage Loan shall be changed.
To
the
extent that any Mortgage Loan is assumable, the Servicer shall inquire
diligently into the creditworthiness of the proposed transferee, and shall
use
the underwriting criteria for approving the credit of the proposed transferee
which are used by the Servicer, its affiliates or Xxxxxx Xxx with respect to
underwriting mortgage loans of the same type as the Mortgage Loans. If the
credit of the proposed transferee does not meet such underwriting criteria,
the
Servicer diligently shall, to the extent permitted by the Mortgage or the
Mortgage Note and by applicable law, accelerate the maturity of the Mortgage
Loan.
Section
5.02. Satisfaction
of Mortgages and Release of Mortgage Files.
Upon
the payment in full of any Mortgage Loan, or the receipt by the Servicer of
a
notification that payment in full will be escrowed in a manner customary for
such purposes, the Servicer shall notify the Master Servicer in the Monthly
Remittance Advice as provided in Section 4.02, and may request the release
of any Mortgage Loan Documents from the Seller in accordance with this
Section 5.02 hereof.
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If
the Servicer satisfies or releases a Mortgage without first having obtained
payment in full of the indebtedness secured by the Mortgage other than a
modification or liquidation of the Mortgaged Property pursuant to the terms
of
this Agreement or should the Servicer otherwise prejudice any rights the Seller,
the Trustee or the Trust Fund may have under the mortgage instruments, the
Servicer shall deposit into the Custodial Account the entire outstanding
principal balance, plus all accrued interest on such Mortgage Loan, on the
day
preceding the Remittance Date in the month following the date of such release.
The Servicer shall maintain the Fidelity Bond and Errors and Omissions Insurance
Policy as provided for in Section 3.13 insuring the Servicer against any
loss it may sustain with respect to any Mortgage Loan not satisfied in
accordance with the procedures set forth herein.
Section
5.03. Servicing
Compensation.
As
consideration for servicing the Mortgage Loans subject to this Agreement, the
Servicer shall retain the relevant Xxxxx Fargo Servicing Fee for each Mortgage
Loan remaining subject to this Agreement during any month or part thereof.
Such
Xxxxx Fargo Servicing Fee shall be payable monthly. Additional servicing
compensation in the form of Ancillary Income shall be retained by the Servicer
and is not required to be deposited in the Custodial Account. The obligation
of
the Seller to pay the Xxxxx Fargo Servicing Fee is limited to, and the Xxxxx
Fargo Servicing Fee is payable solely from, the interest portion (including
recoveries with respect to interest from Liquidation Proceeds) of such Monthly
Payment collected by the Servicer. The aggregate Xxxxx Fargo Servicing Fees
for
any month with respect to the Mortgage Loans shall be reduced by the aggregate
Prepayment Interest Shortfall Amount for such month. The Servicer shall be
obligated to pay the aggregate Prepayment Interest Shortfall Amount for any
month to the extent not covered by the aggregate Xxxxx Fargo Servicing Fees
for
such month up to a maximum of the aggregate General Servicing Fees for such
month. The Servicer shall be entitled to recover any unpaid Xxxxx Fargo
Servicing Fee and the Seller shall be entitled to recover the Seller Remittance
Amount, to the extent not remitted, out of Insurance Proceeds, Condemnation
Proceeds, REO Disposition Proceeds or Liquidation Proceeds or other amounts
on
deposit in the Custodial Account, to the extent permitted in Section 3.04 and
out of amounts derived from the operation and sale of an REO Property to the
extent permitted by Section 3.17.
The
Servicer shall be required to pay all expenses incurred by it in connection
with
its servicing activities hereunder and shall not be entitled to reimbursement
thereof except as specifically provided for herein.
Section
5.04. Servicer
Compliance Statement.
On
or before March 1st of each calendar year, commencing in 2007, the Servicer
shall deliver to the Master Servicer, the Depositor and the Securities
Administrator a Servicing Officer’s certificate in a mutually agreed upon
format, addressed to the Master Servicer and the Depositor and signed by an
authorized Servicing Officer, to the effect that (i) a review of the Servicer’s
activities during the immediately preceding calendar year (or applicable portion
thereof) and of its performance under this Agreement during such period has
been
made under such Servicing Officer’s supervision, and (ii) to the best of such
Servicing Officer’s knowledge, based on such review, the Servicer has fulfilled
all of its obligations under this Agreement in all material respects throughout
such calendar year (or applicable portion thereof) or, if there has been a
failure to fulfill any such obligation in any material respect, specifically
identifying each such failure known to such officer and the nature and the
status thereof.
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Section
5.05. Report
on Assessment of Compliance and Attestation.
(a) On
or before March 1st of each calendar year, commencing in 2007, the Servicer
shall:
(i) deliver
to the Master Servicer, the Depositor and the Securities Administrator a report
(in form and substance reasonably satisfactory to the Master Servicer and the
Depositor) regarding the Servicer’s assessment of compliance with the Servicing
Criteria during the immediately preceding calendar year, as required under
Rules
13a-18 and 15d-18 of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”) and Item 1122 of Regulation AB. Such report shall be addressed
to the Master Servicer and the Depositor and signed by an authorized officer
of
the Servicer, and shall address all of the Servicing Criteria specified in
Exhibit H;
(ii) deliver
to the Master Servicer, the Depositor and the Securities Administrator a report
of a registered public accounting firm reasonably acceptable to the Master
Servicer and the Depositor that attests to, and reports on, the assessment
of
compliance made by the Servicer and delivered pursuant to the preceding
paragraph. Such attestation shall be in accordance with Rules 1-02(a)(3) and
2-02(g) of Regulation S-X under the Securities Act of 1933, as amended (the
“Securities Act”) and the Exchange Act;
(iii) cause
each Subservicer, and each Subcontractor determined by the Servicer pursuant
to
Section 7.04(c) to be “participating in the servicing function” within the
meaning of Item 1122 of Regulation AB, to deliver to the Master Servicer, the
Depositor and the Securities Administrator an assessment of compliance and
accountants’ attestation as and when provided in paragraphs (a) and (b) of this
Section; and
(iv) if
requested by the Master Servicer, the Depositor or the Securities Administrator
not later than February 28th of the calendar year in which such certification
is
to be delivered, deliver to the Master Servicer, the Depositor, the Securities
Administrator and any other Person that will be responsible for signing the
certification (a “Sarbanes Certification”) required by Rules 13a-14(d) and
15d-14(d) under the Exchange Act (pursuant to Section 302 of the Xxxxxxxx-Xxxxx
Act of 2002 (“Xxxxxxxx-Xxxxx”)) on behalf of the Trust Fund with respect to the
transaction relating to this Agreement a certification in the form attached
hereto as Exhibit F.
The
Servicer acknowledges that the parties identified in clause (a)(iv) above may
rely on the certification provided by the Servicer pursuant to such clause
in
signing a Sarbanes Certification and filing such with the Commission. Neither
the Master Servicer nor the Depositor will request delivery of a certification
under clause (a)(iv) above unless a Depositor is required under the Exchange
Act
to file an annual report on Form 10-K with respect to the Trust
Fund.
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(b) In
the
case of a Subservicer appointed subsequent to this Agreement, each assessment
of
compliance provided by such Subservicer pursuant to Section 5.05(a)(i) shall
address all of the Servicing Criteria specified in Exhibit H hereto on or prior
to the date of such appointment. An assessment of compliance provided by a
Subcontractor pursuant to Section 5.05(a)(iii) need not address any elements
of
the Servicing Criteria other than those specified by the Servicer pursuant
to
Section 7.04.
Section
5.06. Inspection.
The
Servicer shall provide the Trustee, the Master Servicer and the NIMS Insurer,
upon reasonable advance notice, during normal business hours, access to all
records maintained by the Servicer in respect of its rights and obligations
hereunder and access to officers of the Servicer responsible for such
obligations. Upon request, the Servicer shall furnish to the Trustee, the Master
Servicer and the NIMS Insurer its most recent publicly available financial
statements and such other information relating to its capacity to perform its
obligations under this Agreement.
ARTICLE
VI.
REPRESENTATIONS,
WARRANTIES AND AGREEMENTS
Section
6.01. Representations,
Warranties and Agreements of the Servicer.
The
Servicer, as a condition to the consummation of the transactions contemplated
hereby, hereby makes the following representations and warranties to the Seller,
the Master Servicer, the Depositor and the Trustee, as of the Closing Date
and
each Servicing Transfer Date:
(a) Due
Organization and Authority.
The
Servicer is a national banking association duly organized, validly existing
and
in good standing under the laws of the jurisdiction of its formation and has
all
licenses necessary to carry on its business as now being conducted and is
licensed, qualified and in good standing in each state where a Mortgaged
Property is located if the laws of such state require licensing or qualification
in order to conduct business of the type conducted by the Servicer, and in
any
event the Servicer is in compliance with the laws of any such state to the
extent necessary to ensure the enforceability of the terms of this Agreement;
the Servicer has the full corporate power and authority to execute and deliver
this Agreement and to perform in accordance herewith; the execution, delivery
and performance of this Agreement (including all instruments of transfer to
be
delivered pursuant to this Agreement) by the Servicer and the consummation
of
the transactions contemplated hereby have been duly and validly authorized;
this
Agreement evidences the valid, binding and enforceable obligation of the
Servicer and all requisite corporate action has been taken by the Servicer
to
make this Agreement valid and binding upon the Servicer in accordance with
its
terms;
(b) Ordinary
Course of Business.
The
consummation of the transactions contemplated by this Agreement are in the
ordinary course of business of the Servicer;
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(c) No
Conflicts.
Neither
the execution and delivery of this Agreement, the acquisition of the servicing
responsibilities by the Servicer or the transactions contemplated hereby, nor
the fulfillment of or compliance with the terms and conditions of this
Agreement, will conflict with or result in a breach of any of the terms,
conditions or provisions of the Servicer’s charter or by-laws or any legal
restriction or any agreement or instrument to which the Servicer is now a party
or by which it is bound, or constitute a default or result in an acceleration
under any of the foregoing, or result in the violation of any law, rule,
regulation, order, judgment or decree to which the Servicer or its property
is
subject, or impair the ability of the Servicer to service the Mortgage Loans,
or
impair the value of the Mortgage Loans;
(d) Ability
to Perform.
The
Servicer does not believe, nor does it have any reason or cause to believe,
that
it cannot perform each and every covenant contained in this
Agreement;
(e) No
Litigation Pending.
There
is no action, suit, proceeding or investigation pending or threatened against
the Servicer or any Subservicer which, either in any one instance or in the
aggregate, may result in any material adverse change in the business,
operations, financial condition, properties or assets of the Servicer or any
Subservicer, or in any material impairment of the right or ability of the
Servicer or any Subservicer to carry on its business substantially as now
conducted, or in any material liability on the part of the Servicer or any
Subservicer, or which would draw into question the validity of this Agreement
or
of any action taken or to be taken in connection with the obligations of the
Servicer contemplated herein, or which would be likely to impair materially
the
ability of the Servicer to perform under the terms of this
Agreement;
(f) No
Consent Required.
No
consent, approval, authorization or order of any court or governmental agency
or
body is required for the execution, delivery and performance by the Servicer
of
or compliance by the Servicer with this Agreement, or if required, such approval
has been obtained prior to the Closing Date or the related Servicing Transfer
Date, as applicable;
(g) No
Default.
The
Servicer is not in default, and no event or condition exists that after the
giving of notice or lapse of time or both, would constitute an event of default
under any material mortgage, indenture, contract, agreement, judgment, or other
undertaking, to which the Servicer is a party or which purports to be binding
upon it or upon any of its assets, which default could impair materially the
ability of the Servicer to perform under the terms of this
Agreement;
(h) Ability
to Service.
The
Servicer is an approved seller/servicer of conventional residential mortgage
loans for Xxxxxx Xxx and Xxxxxxx Mac, with the facilities, procedures and
experienced personnel necessary for the sound servicing of mortgage loans of
the
same type as the Mortgage Loans. The Servicer is in
good
standing to service mortgage loans for either Xxxxxx Mae or Xxxxxxx Mac, and
no
event has occurred, including but not limited to a change in insurance coverage,
which would make the Servicer unable to comply with either Xxxxxx Mae or Xxxxxxx
Mac eligibility requirements or which would require notification to either
of
Xxxxxx Mae or Xxxxxxx Mac;
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(i) No
Untrue Information.
Neither
this Agreement nor any statement, report or other document furnished or to
be
furnished pursuant to this Agreement or in connection with the transactions
contemplated hereby contains any untrue statement of fact or omits to state
a
fact necessary to make the statements contained therein not misleading;
(j) No
Commissions to Third Parties.
The
Servicer has not dealt with any broker or agent or anyone else who might be
entitled to a fee or commission in connection with this transaction other than
the Seller; and
(k) Fair
Credit Reporting Act.
To the
extent that the Servicer has serviced a Mortgage Loan in the sixty (60) day
period prior to the Closing Date or the applicable Servicing Transfer Date.
The
Servicer has fully furnished, in accordance with the Fair Credit Reporting
Act
and its implementing regulations and all other applicable laws, accurate and
complete information (e.g., favorable and unfavorable) on its borrower credit
files to Equifax, Experian and Trans Union Credit Information Company (three
of
the credit repositories) on a monthly basis.
(l) Additional
Representations and Warranties of the Servicer.
Except
as disclosed in writing to the Seller, the Master Servicer, the Depositor and
the Trustee prior to the Closing Date or the related Servicing Transfer Date,
as
applicable: (i) the Servicer is not aware and has not received notice that
any
default, early amortization or other performance triggering event has occurred
as to any other securitization due to any act or failure to act of the Servicer;
(ii) the Servicer has not been terminated as servicer in a residential mortgage
loan securitization, either due to a servicing default or to application of
a
servicing performance test or trigger; (iii) no material noncompliance with
the
applicable servicing criteria with respect to other securitizations of
residential mortgage loans involving the Servicer as servicer has been disclosed
or reported by the Servicer; (iv) no material changes to the Servicer’s policies
or procedures with respect to the servicing function it will perform under
this
Agreement for mortgage loans of a type similar to the Mortgage Loans have
occurred during the three-year period immediately preceding the Closing Date
or
the related Servicing Transfer Date, as applicable; (v) there are no aspects
of
the Servicer’s financial condition that could have a material adverse effect on
the performance by the Servicer of its servicing obligations under this
Agreement and (vi) there are no affiliations, relationships or transactions
relating to the Servicer or any Subservicer with any party listed on Exhibit
I
hereto of a type described in Item 1119 of Regulation AB.
Section
6.02. Remedies
for Breach of Representations and Warranties of the Servicer.
(a) It
is understood and agreed that the representations and warranties set forth
in
Section 6.01
shall survive the engagement of the Servicer to perform the servicing
responsibilities as of the Closing Date or the related Servicing Transfer Date
hereunder and the delivery of the Servicing Files to the Servicer and shall
inure to the benefit of the Seller, Master Servicer, the NIMS Insurer, the
Depositor and the Trustee. Upon discovery by either the Servicer, the Master
Servicer, the Seller, the Depositor, the NIMS Insurer or the Trustee of a breach
of any of the foregoing representations and warranties which materially and
adversely affects the ability of the Servicer to perform its duties and
obligations under this Agreement or otherwise materially and adversely affects
the value of the Mortgage Loans, the Mortgaged Property or the priority of
the
security interest on such Mortgaged Property or the interests of the Master
Servicer, the NIMS Insurer or the Trustee, the party discovering such breach
shall give prompt written notice to the other.
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(b) Within
60 days of the earlier of either discovery by or notice to the Servicer of
any
breach of a representation or warranty set forth in Section 6.01 which
materially and adversely affects the ability of the Servicer to perform its
duties and obligations under this Agreement or otherwise materially and
adversely affects the value of the Mortgage Loans, the Mortgaged Property or
the
priority of the security interest on such Mortgaged Property, the Servicer
shall
use its best efforts promptly to cure such breach in all material respects
and,
if such breach cannot be cured, the Servicer shall, at the Trustee’s, the Master
Servicer’s or the NIMS Insurer’s option, assign the Servicer’s rights and
obligations under this Agreement (or respecting the affected Mortgage Loans)
to
a successor servicer. Such assignment shall be made in accordance with Sections
8.01 and 8.02.
(c) If
so requested by the Master Servicer or the Depositor on any date following
the
date on which information is first provided to the Master Servicer or the
Depositor, the Servicer shall, within five Business Days following such request,
confirm in writing the accuracy of the representations and warranties set forth
in Section 6.01(l) or, if any such representation and warranty is not accurate
as of the date of such request, provide reasonably adequate disclosure of the
pertinent facts, in writing, to the requesting party.
(d) In
addition, the Servicer shall indemnify the Seller, the Master Servicer, the
Trustee and the NIMS Insurer (and each of their respective directors, officers,
employees and agents) and the Trust Fund, and hold each of them harmless against
any losses, damages, penalties, fines, forfeitures, reasonable and necessary
legal fees and related costs, judgments, and other costs and expenses resulting
from any claim, demand, defense or assertion based on or grounded upon, or
resulting from, a breach of the Servicer’s representations and warranties
contained in Section 6.01.
(e) Any
cause of action against the Servicer relating to or arising out of the breach
of
any representations and warranties made in Section 6.01 shall accrue upon (i)
discovery of such breach by the Servicer or notice thereof by the Master
Servicer, the Depositor or the Trustee to the Servicer, (ii) failure by the
Servicer to cure such breach within the applicable cure period, and (iii) demand
upon the Servicer by the Master Servicer, the NIMS Insurer or the Trustee for
compliance with this Agreement.
Section
6.03. Additional
Indemnification by the Servicer.
(a) The
Servicer shall indemnify Xxxxxx Brothers Holdings Inc., the Master Servicer,
the
Securities Administrator, each broker dealer acting as underwriter, placement
agent or initial purchaser, each Person who controls any of such parties and
the
Depositor (within the meaning of Section 15 of the Securities Act and Section
20
of the Exchange Act); and the respective present and former directors, officers,
employees and agents of each of the foregoing and of the Depositor, and shall
hold each of them harmless from and against any losses, damages, penalties,
fines, forfeitures, legal fees and expenses and related costs, judgments, and
any other costs, fees and expenses that any of them may sustain arising out
of
or based upon:
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(i) (A) any
untrue statement of a material fact contained or alleged to be contained in
any
information, report, certification, accountants’ letter or other material
provided in written or electronic form under this Article 6.03 by or on behalf
of the Servicer, or provided under this Article 6.03 by or on behalf of any
Subservicer or Subcontractor (collectively, the “Servicer Information”), or (B)
the omission or alleged omission to state in the Servicer Information a material
fact required to be stated in the Servicer Information or necessary in order
to
make the statements therein, in the light of the circumstances under which
they
were made, not misleading; provided, by way of clarification, that clause (B)
of
this paragraph shall be construed solely by reference to the Servicer
Information and not to any other information communicated in connection with
a
sale or purchase of securities, without regard to whether the Servicer
Information or any portion thereof is presented together with or separately
from
such other information;
(ii) any
failure by the Servicer, any Subservicer or any Subcontractor to
deliver any information, report, certification, accountants’ letter or other
material when and as required under this Article 6.03, including any failure
by
the Servicer to identify pursuant to Section 7.04(c) any Subcontractor
“participating in the servicing function” within the meaning of Item 1122 of
Regulation AB;
(iii) any
breach by the Servicer of a representation or warranty set forth in Section
6.01(l) or in a writing furnished pursuant to Section 6.01(l) and made as of
a
date prior to the Servicing Transfer Date, to the extent that such breach is
not
cured by the Servicing Transfer Date, or any breach by the Servicer of a
representation or warranty in a writing furnished pursuant to Section 6.01(l)
to
the extent made as of a date subsequent to the Servicing Transfer Date;
(iv) any
failure by the Servicer, any Subservicer or any Subcontractor to deliver any
information, report, certification, accountants’ letter or other material when
and as required under this Agreement, including any report under Sections 5.04
or 5.05 or any failure by the Servicer to identify pursuant to Section 7.04(c)
any Subcontractor that is a Participating Entity; or
(v) the
failure of the Servicer to perform its duties and service the Mortgage Loans
in
material compliance with the terms of this Agreement.
In
the
case of any failure of performance described in clause (a)(ii) of this Section,
the Servicer shall promptly reimburse the Master Servicer, the Depositor, as
applicable, and each Person responsible for the preparation, execution or filing
of any report required to be filed with the Commission with respect to the
transaction relating to this Agreement, or for execution of a certification
pursuant to Rule 13a-14(d) or Rule 15d-14(d) under the Exchange Act with respect
to such transaction, for all costs reasonably incurred by each such party in
order to obtain the information, report, certification, accountants’ letter or
other material not delivered as required by the Servicer, any Subservicer or
any
Subcontractor.
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(b) (i) Any
failure by the Servicer, any Subservicer or any Subcontractor to deliver any
information, report, certification, accountants’ letter or other material when
and as required under this Article 6.03, or any breach by the Servicer of a
representation or warranty set forth in Section 6.01(l) or in a writing
furnished pursuant to Section 6.02(c) and made as of a date prior to the
Servicing Transfer Date, to the extent that such breach is not cured by the
Servicing Transfer Date, or any breach by the Servicer of a representation
or
warranty in a writing furnished pursuant to Section 6.02(c) to the extent made
as of a date subsequent to the Servicing Transfer Date, shall, except as
provided in clause (ii) of this paragraph, immediately and automatically,
without notice or grace period, constitute an Event of Default with respect
to
the Servicer under this Agreement, and shall entitle the Master Servicer or
Depositor, as applicable, in its sole discretion to terminate the rights and
obligations of the Servicer as servicer under this Agreement without payment
(notwithstanding anything in this Agreement) of any compensation to the
Servicer; provided that to the extent that any provision of this Agreement
expressly provides for the survival of certain rights or obligations following
termination of the Servicer as servicer, such provision shall be given
effect.
(ii) Any
failure by the Servicer, any Subservicer or any Subcontractor to deliver any
information, report, certification or accountants’ letter when and as required
under Section 5.04 or 5.05, including (except as provided below) any failure
by
the Servicer to identify pursuant to Section 7.04(c) any Subcontractor
“participating in the servicing function” within the meaning of Item 1122 of
Regulation AB, which continues unremedied for ten calendar days after the date
on which such information, report, certification or accountants’ letter was
required to be delivered shall constitute an Event of Default with respect
to
the Servicer under this Agreement, and shall entitle the Master Servicer or
Depositor, as applicable, in its sole discretion to terminate the rights and
obligations of the Servicer as servicer under this Agreement without payment
(notwithstanding anything in this Agreement to the contrary) of any compensation
to the Servicer; provided that to the extent that any provision of this
Agreement expressly provides for the survival of certain rights or obligations
following termination of the Servicer as servicer, such provision shall be
given
effect.
Neither
the Master Servicer nor the Depositor shall be entitled to terminate the rights
and obligations of the Servicer pursuant to this subparagraph (b)(ii) if a
failure of the Servicer to identify a Subcontractor “participating in the
servicing function” within the meaning of Item 1122 of Regulation AB was
attributable solely to the role or functions of such Subcontractor with respect
to mortgage loans other than the Mortgage Loans.
(iii) The
Servicer shall promptly reimburse the Master Servicer (or any designee of the
Master Servicer, such as a master servicer) and the Depositor, as applicable,
for all reasonable expenses incurred by the Master Servicer (or such designee)
or the Depositor, as such are incurred, in connection with the termination
of
the Servicer as servicer and the transfer of servicing of the Mortgage Loans
to
a successor servicer. The provisions of this paragraph shall not limit whatever
rights the Master Servicer or the Depositor may have under other provisions
of
this Agreement or otherwise, whether in equity or at law, such as an action
for
damages, specific performance or injunctive relief.
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Section
6.04. Indemnification
with Respect to Certain Taxes and Loss of REMIC Status.
In
the event that any REMIC fails to qualify as a REMIC, loses its status as a
REMIC, or incurs federal, state or local taxes as a result of a prohibited
transaction or prohibited contribution under the REMIC Provisions due to the
negligent performance by the Servicer of its duties and obligations set forth
herein, the Servicer shall indemnify the Holder of the related Residual
Certificate, the Master Servicer, the Trustee, the Securities Administrator,
the
NIMS Insurer (and each of their respective directors, officers, employees and
agents) and the Trust Fund against any and all losses, claims, damages,
liabilities or expenses (“Losses”) resulting from such negligence; provided,
however,
that the
Servicer shall not be liable for any such Losses attributable to the action
or
inaction of the Trustee, the Master Servicer, the Depositor or the Holder of
such Residual Certificate, as applicable, nor for any such Losses resulting
from
misinformation provided by the Holder of such Residual Certificate on which
the
Servicer has relied. The foregoing shall not be deemed to limit or restrict
the
rights and remedies of the Holder of such Residual Certificate, the Trustee
and
the Trust Fund or the NIMS Insurer now or hereafter existing at law or in equity
or otherwise. Notwithstanding the foregoing, however, in no event shall the
Servicer have any liability (1) for any action or omission that is taken in
accordance with and in compliance with the express terms of, or which is
expressly permitted by the terms of, this Agreement, (2) for any Losses other
than arising out of a negligent performance by the Servicer of its duties and
obligations set forth herein, (3) for any special or consequential damages
to
Certificateholders (in addition to payment of principal and interest on the
Certificates) and (4) if actions taken by the Servicer are at, and in accordance
with, the written request or written approval of the Master Servicer or the
Trustee.
Section
6.05. Purchase
of Distressed Mortgage Loans.
The
NIMS Insurer may, at its option, purchase a Distressed Mortgage Loan;
provided,
however,
prior
to any such purchase, the Servicer shall be required to continue to make Monthly
Advances with respect to such Distressed Mortgage Loans pursuant to Section
4.03. Any such purchase shall be accomplished by remittance to the Master
Servicer of the Purchase Price for the Distressed Mortgage Loan for deposit
into
the Collection Account established by the Master Servicer pursuant to the Trust
Agreement. The Trustee and the Servicer shall immediately effectuate the
conveyance of the purchased Distressed Mortgage Loan to the NIMS Insurer
exercising the purchase option, including prompt delivery of the Servicing
File
and all related documentation to the applicable NIMS Insurer.
Section
6.06. Reporting
Requirements of the Commission and Indemnification.
The
Servicer, the Master Servicer and the Trustee acknowledge and agree that the
purpose of Sections 4.02(c) and (d), 5.04, 5.05, 6.01(l), 6.03 and 7.04 of
this
Agreement is to facilitate compliance by the Trustee, the Securities
Administrator, the Master Servicer and the Depositor with the provisions of
Regulation AB and related rules and regulations of the Commission. Neither
the
Master Servicer nor the Depositor shall exercise its right to request delivery
of information or other performance under these provisions other than in good
faith, or for purposes other than compliance with the Securities Act, the
Exchange Act and the rules and regulations of the Commission thereunder (or
the
provision in a private offering of disclosure comparable to that required under
the Securities Act). The Servicer acknowledges that interpretations of the
requirements of Regulation AB may change over time, whether due to interpretive
guidance provided by the Commission or its staff, consensus among participants
in the asset-backed securities markets, advice of counsel, or otherwise, and
agrees to comply with requests made by the Master Servicer or the Depositor
in
good faith for delivery of information under these provisions on the basis
of
evolving interpretations of Regulation AB. In connection with the transaction
relating to this Agreement, the Servicer shall cooperate fully with the Master
Servicer to deliver to the Master Servicer (including any of its assignees
or
designees) and the Depositor, any and all statements, reports, certifications,
records and any other information necessary in the good faith determination
of
the Master Servicer or the Depositor to permit the Master Servicer or the
Depositor to comply with the provisions of Regulation AB, together with such
disclosures relating to the Servicer, any Subservicer and the Mortgage Loans,
or
the servicing of the Mortgage Loans, reasonably believed by the Master Servicer
or the Depositor to be necessary in order to effect such
compliance.
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The
Master Servicer (including any of its assignees or designees) shall cooperate
with the Servicer by providing timely notice of requests for information under
these provisions and by reasonably limiting such requests to information
required, in the Master Servicer’s reasonable judgment, to comply with
Regulation AB.
ARTICLE
VII.
THE
SERVICER
Section
7.01. Merger
or Consolidation of the Servicer.
The
Servicer shall keep in full effect its existence, rights and franchises as
a
national banking association, and shall obtain and preserve its qualification
to
do business as a foreign entity in each jurisdiction in which such qualification
is or shall be necessary to protect the validity and enforceability of this
Agreement or any of the Mortgage Loans and to perform its duties under this
Agreement.
Any
Person into which the Servicer may be merged or consolidated, or any corporation
resulting from any merger, conversion or consolidation to which the Servicer
shall be a party, or any Person succeeding to the business of the Servicer,
shall be the successor of the Servicer hereunder, without the execution or
filing of any paper or any further act on the part of any of the parties hereto,
anything herein to the contrary notwithstanding, provided,
however,
that
the successor or surviving Person shall be an institution (i) having a net
worth
of not less than $25,000,000, and (ii) which is a Xxxxxx Xxx- and Xxxxxxx
Mac-approved servicer in good standing.
Section
7.02. Limitation
on Liability of the Servicer and Others.
Neither
the Servicer nor any of the directors, officers, employees or agents of the
Servicer shall be under any liability to the Master Servicer, the NIMS Insurer,
the Depositor or the Trustee for any action taken or for refraining from the
taking of any action in good faith pursuant to this Agreement, or for errors
in
judgment; provided,
however,
that
this provision shall not protect the Servicer or any such person against any
breach of warranties or representations made herein, or failure to perform
its
obligations in strict compliance with any standard of care set forth in this
Agreement, or any liability which would otherwise be imposed by reason of any
breach of the terms and conditions of this Agreement. The Servicer and any
director, officer, employee or agent of the Servicer may rely in good faith
on
any document of any kind prima facie properly executed and submitted by any
Person respecting any matters arising hereunder. The Servicer shall not be
under
any obligation to appear in, prosecute or defend any legal action which is
not
incidental to its duties to service the Mortgage Loans in accordance
with this Agreement and which in its opinion may involve it in any expense
or
liability,
provided,
however,
that
the Servicer may undertake any such action which it may deem necessary or
desirable in respect of this Agreement and the rights and duties of the parties
hereto. In such event, the Servicer shall be entitled to reimbursement from
the
Trust Fund for the reasonable legal expenses and costs of such
action.
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Section
7.03. Limitation
on Resignation and Assignment by the Servicer.
This
Agreement has been entered into with the Servicer in reliance upon the
independent status of the Servicer, and the representations as to the adequacy
of its servicing facilities, plant, personnel, records and procedures, its
integrity, reputation and financial standing, and the continuance thereof.
Therefore, except as expressly provided in this Section 7.03 and Sections 7.01
and 7.04, the Servicer shall neither assign its rights under this Agreement
or
the servicing hereunder nor delegate its duties hereunder or any portion
thereof, or sell or otherwise dispose of all or substantially all of its
property or assets without, in each case, the prior written consent of the
Seller, the Master Servicer, the Trustee and the NIMS Insurer which consent,
in
the case of an assignment of rights or delegation of duties, shall be granted
or
withheld in the discretion of the Seller, the Master Servicer, Trustee and
the
NIMS Insurer and which consent, in the case of a sale or disposition of all
or
substantially all of the property or assets of the Servicer, shall not be
unreasonably withheld by any of them; provided
that in
each case, there must be delivered to the Seller, the Master Servicer, the
Trustee and the NIMS Insurer a letter from each Rating Agency to the effect
that
such transfer of servicing or sale or disposition of assets will not result
in a
qualification, withdrawal or downgrade of the then-current rating of any of
the
Certificates or the NIM Securities to be issued in the NIMS Transaction.
Notwithstanding the foregoing, the Servicer, without the consent of the Seller,
the Master Servicer, the Trustee or the NIMS Insurer, may retain a Subservicer
or Subcontractor to perform certain servicing and loan administration functions,
including without limitation, hazard insurance administration, tax payment
and
administration, flood certification and administration, collection services
and
similar functions; provided
that the
retention of such Subservicers or Subcontractors by Servicer shall not limit
the
obligation of the Servicer to service the Mortgage Loans pursuant to the terms
and conditions of this Agreement.
The
Servicer shall not resign from the obligations and duties hereby imposed on
it
except by mutual consent of the Servicer, the Master Servicer, the Trustee
and
the NIMS Insurer or upon the determination that its duties hereunder are no
longer permissible under applicable law and such incapacity cannot be cured
by
the Servicer. Any such determination permitting the resignation of the Servicer
shall be evidenced by an Opinion of Counsel to such effect delivered to the
Seller, the Master Servicer, the Trustee and the NIMS Insurer, which Opinion
of
Counsel shall be in form and substance reasonably acceptable to each of them.
No
such resignation shall become effective until a successor shall have assumed
the
Servicer’s responsibilities and obligations hereunder in the manner provided in
Section 8.01.
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Without
in any way limiting the generality of this Section 7.03, in the event that
the
Servicer either shall assign this Agreement or the servicing responsibilities
hereunder or delegate its duties hereunder or any portion thereof or sell or
otherwise dispose of all or substantially all of its property or assets, except
to the extent permitted by and in accordance with this Section 7.03 and Sections
7.01 and 7.04, without the prior written consent of the Seller, the Master
Servicer, the Trustee and the NIMS Insurer, then such parties shall have the
right to terminate this Agreement upon notice given as set forth in Section
8.01, without any payment of any penalty or damages and without any liability
whatsoever to the Servicer or any third party.
Section
7.04. Subservicing
Agreements and Successor Subservicer.
(a) The
Servicer shall not hire or otherwise utilize the services of any Subservicer
to
fulfill any of the obligations of the Servicer as servicer under this Agreement
unless the Servicer complies with the provisions of paragraph (b) of this
Section 7.04 and the proposed Subservicer (i) is an institution which is an
approved Xxxxxx Xxx or Xxxxxxx Mac Seller/Servicer as indicated in writing
and
(ii) represents and warrants that it is in compliance with the laws of each
state as necessary to enable it to perform its obligations under such
subservicing agreement. The Servicer shall not hire or otherwise utilize the
services of any Subcontractor, and shall not permit any Subservicer to hire
or
otherwise utilize the services of any Subcontractor, to fulfill any of the
obligations of the Servicer as servicer under this Agreement unless the Servicer
complies with the provisions of paragraph (c) of this Section 7.04.
(b) It
shall
not be necessary for the Servicer to seek the consent of the Master Servicer
and
the Depositor to the utilization of any Subservicer. For purposes of this
Agreement, the Servicer shall be deemed to have received payments on Mortgage
Loans immediately upon receipt by any Subservicer of such payments. Each
subservicing agreement shall provide that a successor Servicer shall have the
option to terminate such agreement without payment of any fees if the
predecessor Servicer is terminated or resigns. The Servicer shall cause any
Subservicer used by the Servicer (or by any Subservicer) to comply with the
provisions of this Section 7.04 and with Sections 4.02(c), 5.04, 5.05(a),
5.05(b) (and shall amend, with the consent of the parties hereto, Exhibit H
to
reflect such Subservicer’s assessment and attestation of compliance with the
Servicing Criteria), 6.01(l) and 6.03 and Exhibit H of this Agreement to the
same extent as if such Subservicer were the Servicer. The Servicer shall be
responsible for obtaining from each Subservicer and delivering to the Master
Servicer and the Depositor any servicer compliance statement required to be
delivered by such Subservicer under Section 5.04, any reports on assessment
of
compliance and attestation required to be delivered by such Subservicer under
Section 5.05 and any certification required to be delivered under 5.05 to the
Person that will be responsible for signing the Sarbanes Certification under
Section 5.05 as and when required to be delivered hereunder.
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(c) It
shall
not be necessary for the Servicer to seek the consent of the Master Servicer
and
the Depositor to the utilization of any Subcontractor. The Servicer shall
promptly upon request provide the Master Servicer and the Depositor a written
description (in form and substance satisfactory to the Master Servicer and
the
Depositor) of the role and function of each Subcontractor utilized by the
Servicer or any Subservicer, specifying (A) the identity of each such
Subcontractor, (B) which (if any) of such Subcontractors are Participating
Entities, and (C) which elements of the servicing criteria set forth under
Item
1122(d) of Regulation AB will be addressed in assessments of compliance provided
by each Subcontractor identified pursuant to clause (B) of this
paragraph.
As
a condition to the utilization of any Subcontractor determined to be a
Participating Entity, the Servicer shall cause any such Subcontractor used
by
the Servicer (or by any Subservicer) for the benefit of the Master Servicer
and
the Depositor to comply with the provisions of Sections 4.02(c), 5.04, 5.05,
6.01(l) and 6.03 and Exhibit H of this Agreement to the same extent as if such
Subcontractor were the Servicer. The Servicer shall be responsible for obtaining
from each Subcontractor and delivering to Master Servicer and the Depositor
any
assessment of compliance and attestation required to be delivered by such
Subcontractor under Sections 5.04 and 5.05, in each case as and when required
to
be delivered.
ARTICLE
VIII.
TERMINATION
Section
8.01. Termination
for Cause.
(a) Any
of the following occurrences shall constitute an event of default (each, an
“Event of Default”) on the part of the Servicer:
(i) any
failure by the Servicer to remit to the Master Servicer any payment required
to
be made under the terms of this Agreement which continues unremedied for a
period of two (2) Business Days after the date upon which written notice of
such
failure, requiring the same to be remedied, shall have been given to the
Servicer by the Master Servicer or the NIMS Insurer; or
(ii) any
failure by the Servicer to duly perform, within the required time period, its
obligations to provide any certifications required pursuant to Sections 5.04
or
5.05 (including with respect to such certifications required to be provided
by
any Subservicer or Subcontractor pursuant to Section 7.04), except as provided
below, which failure continues unremedied for a period of ten (10) days from
the
date of delivery required with respect to such certification; or
(iii) except
with respect to those items listed in clause (ii) above, any failure by the
Servicer to duly perform, within the required time period, its obligations
to
provide any other information, data or materials required to be provided
hereunder pursuant to Sections 4.02(c), 4.02(d), 6.01(l) and 7.04 (except as
provided below), including any items required to be included in any Exchange
Act
report; or
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(iv) failure
by the Servicer duly to observe or perform in any material respect any other
of
the covenants or agreements on the part of the Servicer set forth in this
Agreement which continues unremedied for a period of five (5) days after the
date on which written notice of such failure, requiring the same to be remedied,
shall have been given to the Servicer by the Master Servicer or the NIMS
Insurer; or
(v) failure
by the Servicer to maintain its license to do business or service residential
mortgage loans in any jurisdiction where the Mortgaged Properties are located;
or
(vi) a
decree
or order of a court or agency or supervisory authority having jurisdiction
for
the appointment of a conservator or receiver or liquidator in any insolvency,
readjustment of debt, including bankruptcy, marshalling of assets and
liabilities or similar proceedings, or for the winding-up or liquidation of
its
affairs, shall have been entered against the Servicer and such decree or order
shall have remained in force undischarged or unstayed for a period of 60 days;
or
(vii) the
Servicer shall consent to the appointment of a conservator or receiver or
liquidator in any insolvency, readjustment of debt, marshalling of assets and
liabilities or similar proceedings of or relating to the Servicer or of or
relating to all or substantially all of its property; or
(viii) the
Servicer 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,
bankruptcy or reorganization statute, make an assignment for the benefit of
its
creditors, voluntarily suspend payment of its obligations or cease its normal
business operations for three Business Days; or
(ix) the
Servicer ceases to meet the requirements of a Xxxxxx Xxx or Xxxxxxx Mac
lender/servicer; or
(x) the
Servicer attempts to assign the servicing of the Mortgage Loans or its right
to
servicing compensation hereunder or the Servicer attempts to sell or otherwise
dispose of all or substantially all of its property or assets or to assign
this
Agreement or the servicing responsibilities hereunder or to delegate its duties
hereunder or any portion thereof in a manner not permitted under this Agreement;
or
(xi) if
(x)
any of the Rating Agencies reduces or withdraws the rating of any of the
Certificates due to a reason attributable to the Servicer or (y) the Servicer’s
residential primary servicer rating for servicing of subprime loans issued
by
any of the Rating Agencies is reduced to “below average” or withdrawn;
or
(xii) the
net
worth of the Servicer shall be less than $25,000,000.
In
each
and every such case, so long as an Event of Default shall not have been
remedied, in addition to whatsoever rights the Master Servicer, the Trustee
or
the NIMS Insurer may have at law or equity to damages, including injunctive
relief and specific performance, the Master Servicer, the Trustee or the NIMS
Insurer, by notice in writing to the Servicer, may terminate all the rights
and
obligations of the Servicer under this Agreement and in and to the servicing
contract established hereby and the proceeds thereof. The rights and obligations
of the Servicer pursuant to subparagraphs (a)(ii) and (iii) above shall not
be
terminated if a failure of the Servicer to identify a Subcontractor as a
Participating Entity was attributable solely to the role or functions of such
Subcontractor with respect to mortgage loans other than the Mortgage
Loans.
-51-
Upon
receipt by the Servicer of such written notice, all authority and power of
the
Servicer under this Agreement, whether with respect to the Mortgage Loans or
otherwise, shall pass to and be vested in a successor servicer appointed by
the
Trustee or the Master Servicer, as the case may be, with the consent of the
other party and the NIMS Insurer. Upon written request from the Master Servicer,
the Servicer shall prepare, execute and deliver to the successor entity
designated by the Master Servicer any and all documents and other instruments,
place in such successor’s possession all Servicing Files, and do or cause to be
done all other acts or things necessary or appropriate to effect the purposes
of
such notice of termination, including but not limited to the transfer and
endorsement or assignment of the Mortgage Loans and related documents, at the
Servicer’s sole expense. The Servicer shall cooperate with the Seller, the
Master Servicer, the NIMS Insurer, the Trustee and such successor in effecting
the termination of the Servicer’s responsibilities and rights hereunder,
including without limitation, the transfer to such successor for administration
by it of all cash amounts which shall at the time be credited by the Servicer
to
the Custodial Account or Escrow Account or thereafter received with respect
to
the Mortgage Loans.
By
a
written notice, the Trustee or the Master Servicer, with the consent of the
other parties and the NIMS Insurer, may waive any default by the Servicer in
the
performance of its obligations hereunder and its consequences. Upon any waiver
of a past default, such default shall cease to exist, and any Event of Default
arising therefrom shall be deemed to have been remedied for every purpose of
this Agreement. No such waiver shall extend to any subsequent or other default
or impair any right consequent thereon except to the extent expressly so
waived.
Section
8.02. Termination
Without Cause.
This
Agreement shall terminate upon: (i) the later of (a) the distribution of the
final payment or Liquidation Proceeds on the last Mortgage Loan to the Master
Servicer (or advances by the Servicer for the same), and (b) the disposition
of
all REO Property acquired upon foreclosure of the last Mortgage Loan and the
remittance of all funds due hereunder, or (ii) mutual consent of the Servicer,
the Seller and the Master Servicer in writing, provided
such
termination is also acceptable to the Rating Agencies and the NIMS Insurer
or
(iii) with respect to some or all of the Mortgage Loans, at the sole option
of
the Seller, without cause, upon 60 days’ written notice. Any such notice of
termination shall be in writing and delivered to the Trustee, the Master
Servicer, the NIMS Insurer and the Servicer by registered mail to the address
set forth
in
Section 9.04 of this Agreement. The Servicer shall comply with the termination
procedures set forth in Sections 8.01, 8.02 and 9.01 hereof.
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In
the
event the Seller terminates the Servicer without cause with respect to some
or
all of the Mortgage Loans, the Seller shall be required to pay to the Servicer
a
Termination Fee in an amount equal to the product of (i) the Termination Fee
Percentage and (ii) the outstanding principal balance of the terminated Mortgage
Loans as of the date of such termination.
Section
8.03. (Reserved.)
Section
8.04. Termination
for Distressed Mortgage Loans.
(a) Subject
to the requirements set forth in this Section 8.04, the Seller may terminate
this Agreement with the prior consent of the Trustee, the NIMS Insurer and
the
Master Servicer, with respect to the servicing of those Mortgage Loans that
are
determined to be Distressed Mortgage Loans and in such event servicing of such
Mortgage Loans shall be transferred to the Special Servicer. The appointment
of
a Special Servicer by the Seller and the execution of a special servicing
agreement between the Seller and the Special Servicer shall be subject to the
consent of the Trustee, the Master Servicer and the NIMS Insurer and the receipt
of confirmation from the Rating Agencies that the transfer of servicing to
the
Special Servicer shall not result in a reduction of any rating previously given
by such Rating Agency to any Certificate or the NIM Securities. Any monthly
fee
paid to the Special Servicer in connection with any Mortgage Loan serviced
by
such Special Servicer shall not exceed one-twelfth of the product of
(a) 0.50% and (b) the outstanding principal balance of such Mortgage Loan.
All unreimbursed Xxxxx Fargo Servicing Fees, Servicing Advances and Monthly
Advances owing to the Servicer relating to such Distressed Mortgage Loans shall
be reimbursed and paid to the Servicer by the successor Special Servicer upon
such transfer to the Special Servicer. Any unpaid Seller Remittance Amount
relating to such Distressed Mortgage Loans shall be paid to the Master Servicer
by the successor Special Servicer for release to the Seller on the next
succeeding Distribution Date.
(b) All
reasonable costs and expenses incurred in connection with a transfer of
servicing to the Special Servicer including, without limitation, the costs
and
expenses of the Trustee or any other Person in connection with such transfer
including the transfer of the Servicing Files and the other necessary data
to
the Special Servicer, shall be paid by the Seller from its own funds without
reimbursement. The Seller shall be responsible for the delivery of all required
transfer notices and will send a copy of the transfer notice to the
Trustee.
(c) Notwithstanding
the foregoing provisions of this Section 8.04, the NIMS Insurer may, at its
option, withhold their consent to the transfer of a Distressed Mortgage Loan
to
a Special Servicer and elect to purchase such Distressed Mortgage Loan at a
price equal to its Purchase Price. Prior to such purchase, the Servicer shall
be
required to continue to make Monthly Advances with respect to such Distressed
Mortgage Loan pursuant to Section 4.03. Any such purchase of a Distressed
Mortgage Loan shall be accomplished by remittance to the Master Servicer for
deposit in the Collection Account established pursuant to Section 4.01 of the
Trust Agreement of the amount of the Purchase Price. The Servicer on behalf
of
the Trustee shall take reasonable steps to effectuate the transfer of servicing
of such Distressed Mortgage Loan to the NIMS Insurer to the extent necessary,
including the prompt delivery of all Servicing Files and other related
documentation to the NIMS Insurer or its designee.
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(d) No
Termination Fee shall be payable to the Servicer upon a termination pursuant
to
this Section 8.04.
ARTICLE
IX.
MISCELLANEOUS
PROVISIONS
Section
9.01. Successor
to the Servicer.
Simultaneously
with the termination of the Servicer’s responsibilities and duties under this
Agreement (a) pursuant to Sections 6.02, 7.03, 8.01 or 8.02(ii), the Master
Servicer shall (i) within 90 days of the Servicer’s notice of such termination,
succeed to and assume all of the Servicer’s responsibilities, rights, duties and
obligations under this Agreement, or (ii) appoint a successor having the
characteristics set forth in clauses (i) and (ii) of Section 7.01 and which
shall succeed to all rights and assume all of the responsibilities, duties
and
liabilities of the Servicer under this Agreement simultaneously with the
termination of the Servicer’s responsibilities, duties and liabilities under
this Agreement; or (b) pursuant to a termination under Section 8.02(iii) or
Section 8.04, the Seller shall appoint a successor having the characteristics
set forth in clauses (i) and (ii) of Section 7.01 and which shall succeed to
all
rights and assume all of the responsibilities, duties and liabilities of the
Servicer under this Agreement simultaneously with the termination of the
Servicer’s responsibilities, duties and liabilities under this Agreement. Any
successor to the Servicer shall be subject to the approval of the Master
Servicer and the NIMS Insurer. Any approval of a successor servicer by the
Master Servicer and the NIMS Insurer and, to the extent required by the Trust
Agreement, the Trustee, shall, if the successor servicer is not at that time
a
servicer of other Mortgage Loans for the Trust Fund, be conditioned upon the
receipt by the Master Servicer, the NIMS Insurer, the Seller and the Trustee
of
a letter from each Rating Agency to the effect that such transfer of servicing
will not result in a qualification, withdrawal or downgrade of the then-current
rating of any of the Certificates or the NIM Securities to be issued in the
NIMS
Transaction. In connection with such appointment and assumption, the Master
Servicer or the Seller, as applicable, may make such arrangements for the
compensation of such successor out of payments on Mortgage Loans as it and
such
successor shall agree; provided,
however,
that no
such compensation shall be in excess of that permitted the Servicer under this
Agreement. In the event that the Servicer’s duties, responsibilities and
liabilities under this Agreement should be terminated pursuant to the
aforementioned sections, the Servicer shall discharge such duties and
responsibilities during the period from the date it acquires knowledge of such
termination until the effective date thereof with the same degree of diligence
and prudence which it is obligated to exercise under this Agreement, and shall
take no action whatsoever that might impair or prejudice the rights or financial
condition of its successor. The resignation or removal of the Servicer pursuant
to the aforementioned sections shall not become effective until a successor
shall be appointed pursuant to this Section 9.01 and shall in no event relieve
the Servicer of the representations and warranties made pursuant to Section
6.01
and the remedies available to the Master Servicer, the Trustee, the NIMS Insurer
and the Seller under Sections 6.02, 6.03 and 6.04, it being understood and
agreed that the provisions of such Sections 6.01, 6.02, 6.03 and 6.04 shall
be
applicable to the Servicer notwithstanding any such resignation or termination
of the Servicer, or the termination of this Agreement. Neither the Master
Servicer, in its capacity as successor servicer, nor any other successor
servicer shall be responsible for the lack of information and/or documents
that
are not transferred to it by the Servicer and that it cannot otherwise obtain
through reasonable efforts.
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Within
a
reasonable period of time, but in no event longer than 90 days following notice
of termination pursuant to Section 8.02(iii) or 30 days following notice of
termination pursuant to Sections 8.01 or 8.02(ii), the Servicer shall prepare,
execute and deliver to the successor entity any and all documents and other
instruments, place in such successor’s possession all Servicing Files, and do or
cause to be done all other acts or things necessary or appropriate to effect
the
purposes of such notice of termination, including but not limited to the
transfer of any Mortgage Notes and the related documents. The Servicer shall
cooperate with the Trustee, the Master Servicer or the Seller, as applicable,
and such successor in effecting the termination of the Servicer’s
responsibilities and rights hereunder and the transfer of servicing
responsibilities to the successor Servicer, including without limitation, the
transfer to such successor for administration by it of all cash amounts which
shall at the time be credited by the Servicer to the Custodial Account or Escrow
Account or thereafter received with respect to the Mortgage Loans.
Any
successor appointed as provided herein shall execute, acknowledge and deliver
to
the Trustee, the Servicer, the Master Servicer, the NIMS Insurer and the Seller
an instrument (i) accepting such appointment, wherein the successor shall make
the representations and warranties set forth in Section 6.01 and provide for
the
same remedies set forth in Sections 6.02, 6.03 and 6.04 herein and (ii) an
assumption of the due and punctual performance and observance of each covenant
and condition to be performed and observed by the Servicer under this Agreement,
whereupon such successor shall become fully vested with all the rights, powers,
duties, responsibilities, obligations and liabilities of the Servicer, with
like
effect as if originally named as a party to this Agreement. Any termination
or
resignation of the Servicer or termination of this Agreement pursuant to
Sections 6.02, 7.03, 8.01, 8.02 or 8.04 shall not affect any claims that the
Seller, the Master Servicer, the NIMS Insurer or the Trustee may have against
the Servicer arising out of the Servicer’s actions or failure to act prior to
any such termination or resignation. In addition, in the event any successor
servicer is appointed pursuant to Section 8.02(iii) of this Agreement, such
successor servicer must satisfy the conditions relating to the transfer of
servicing set forth in the Trust Agreement.
The
Servicer shall deliver promptly to the successor servicer the funds in the
Custodial Account and Escrow Account and all Mortgage Loan documents and related
documents and statements held by it hereunder and the Servicer shall account
for
all funds and shall execute and deliver such instruments and do such other
things as may reasonably be required to more fully and definitively vest in
the
successor all such rights, powers, duties, responsibilities, obligations and
liabilities of the Servicer.
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Upon
a
successor’s acceptance of appointment as such, it shall notify the Trustee, the
Seller and Master Servicer, the NIMS Insurer and the Depositor of such
appointment in accordance with the procedures set forth in Section
9.04.
Section
9.02. Costs.
The
Seller shall pay the legal fees and expenses of its attorneys. Costs and
expenses incurred in connection with the transfer of the servicing
responsibilities, including fees for delivering Servicing Files, shall be paid
by (i) the terminated or resigning servicer if such termination or resignation
is a result of an occurrence of a termination event under Section 8.01, (ii)
the
related Seller if such termination is pursuant to Section 8.02(iii) and (iii)
in
all other cases by the Trust Fund. Subject to Section 2.02, the Seller, on
behalf of the Depositor, shall pay the costs associated with the preparation,
delivery and recording of Assignments of Mortgages by the Seller or the Seller’s
designee.
Section
9.03. Protection
of Confidential Information.
The
Servicer shall keep confidential and shall not divulge to any party, without
the
Seller’s prior written consent, any nonpublic information pertaining to the
Mortgage Loans or any borrower thereunder, except to the extent that it is
appropriate for the Servicer
to do so in working with legal counsel, auditors, taxing authorities or other
governmental agencies.
Section
9.04. Notices.
All
demands, notices and communications hereunder shall be in writing and shall
be
deemed to have been duly given if mailed by overnight courier, addressed as
follows (or such other address as may hereafter be furnished to the other party
by like notice):
(i) if
to the
Seller:
Xxxxxx
Brothers Holdings Inc.
000
Xxxxxxx Xxxxxx, 0xx
Xxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Attention:
Mortgage Finance, BNC 2007-1
Telephone:
(000) 000-0000
Facsimile:
(000) 000-0000
(ii) if
to the
Servicer:
Xxxxx
Fargo Bank, N.A.
1
Home
Campus
Xxx
Xxxxxx, Xxxx 00000-0000
Attention:
Xxxx X. Xxxxx - MAC X2302-033
Telephone:
(000) 000-0000
Facsimile:
(000) 000-0000
-56-
with
a
copy to:
Xxxxx
Fargo Bank, N.A.
1
Home
Campus
Xxx
Xxxxxx, Xxxx 00000-0000
Attention:
General Counsel - MAC X2401-06T
Telephone:
(000) 000-0000
Facsimile:
(000) 000-0000
(iii) if
to the
Master Servicer:
Aurora
Loan Services LLC
00000
Xxxx Xxxxxxx Xxxxx
Xxxxxxxxx,
Xxxxxxxx 00000
Attention:
Xxxxx X Xxxxxxx
Telephone:
(000) 000-0000
Facsimile:
(000) 000-0000
(iv) if
to the
Securities Administrator:
Xxxxx
Fargo Bank, N.A.
X.X.
Xxx
00
Xxxxxxxx,
XX 00000
Attention:
Client Service Manager, BNC 2007-1
(or,
in
the case of overnight deliveries,
0000
Xxx
Xxxxxxxxx Xxxx
Xxxxxxxx,
Xxxxxxxx 21045)
Telephone:
(000) 000-0000
Facsimile:
(000) 000-0000
(v) if
to the
Trustee:
U.S.
Bank
National Association
Xxx
Xxxxxxx Xxxxxx
0xx
Xxxxx
Xxxxxx,
XX 00000
Telephone:
(000) 000-0000
Facsimile:
(000) 000-0000
Attention:
Xxxxx Xxxxxxxxx
(vi) if
to the
NIMS Insurer:
as
provided in the Trust Agreement.
-57-
(vii) if
to the
Credit Risk Manager:
Xxxxxxx
Fixed Income Services Inc.
0000
Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx,
Xxxxxxxx 00000
Attention:
General Counsel (BNC 2007-1)
Telephone:
(000) 000-0000
Facsimile:
(000) 000-0000
Any
such
demand, notice or communication hereunder shall be deemed to have been received
on the date delivered to or received at the premises of the addressee.
Notwithstanding anything to the contrary in this Agreement, the Servicer shall
not be obligated to provide notices pursuant to this Agreement to any NIMS
Insurer until 30 days after the Servicer has received notice of the appointment
of such NIMS Insurer (including the NIMS Insurer’s name, address, telephone
number and facsimile number).
Section
9.05. Severability
Clause.
Any
part, provision, representation or warranty of this Agreement which is
prohibited or which is held to be void or unenforceable shall
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof. Any part, provision,
representation or warranty of this Agreement which is prohibited or
unenforceable or is held to be void or unenforceable in any jurisdiction shall
be ineffective, as to such jurisdiction, to the extent of such prohibition
or
unenforceability without invalidating the remaining provisions hereof, and
any
such prohibition or unenforceability in any jurisdiction as to any Mortgage
Loan
shall not invalidate or render unenforceable such provision in any other
jurisdiction. To the extent permitted by applicable law, the parties hereto
waive any provision of law which prohibits or renders void or unenforceable
any
provision hereof. If the invalidity of any part, provision, representation
or
warranty of this Agreement shall deprive any party of the economic benefit
intended to be conferred by this Agreement, the parties shall negotiate, in
good-faith, to develop a structure the economic effect of which is as close
as
possible to the economic effect of this Agreement without regard to such
invalidity.
Section
9.06. No
Personal Solicitation.
From
and after the Servicing Transfer Date, the Servicer hereby agrees that it will
not take any action or permit or cause any action to be taken by any of its
agents or affiliates, or by any independent contractors on the Servicer’s
behalf, to personally,
by telephone or mail, solicit the borrower or obligor under any related Mortgage
Loan to refinance a Mortgage Loan, in whole or in part, without the prior
written consent of the Trustee. Notwithstanding the foregoing, it is
understood
and agreed that promotions undertaken by the Servicer or any affiliate of the
Servicer which are directed to the general public at large, including, without
limitation, mass mailing based on commercially acquired mailing lists,
newspaper, radio and television advertisements shall not constitute solicitation
under this Section 9.06.
Notwithstanding anything to the contrary, this Section 9.06 shall not prohibit
the Servicer or its agents or affiliates from servicing the refinancing needs
or
other financial needs of a Mortgagor who without solicitation, contacts the
Servicer or its agents or affiliates directly.
-58-
Section
9.07. Counterparts.
This
Agreement may be executed simultaneously in any number of counterparts. Each
counterpart shall be deemed to be an original, and all such counterparts shall
constitute one and the same instrument.
Section
9.08. Place
of Delivery and Governing Law.
This
Agreement shall be deemed in effect when a fully executed counterpart thereof
is
received by the Seller in the State of New York and shall be deemed to have
been
made in the State of New York. THIS
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE
STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS (OTHER
THAN SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW), AND THE OBLIGATIONS, RIGHTS
AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH
SUCH LAWS.
Section
9.09. Further
Agreements.
The
Seller and the Servicer each agree to execute and deliver to the other such
reasonable and appropriate additional documents, instruments or agreements
as
may be necessary or appropriate to effectuate the purposes of this
Agreement.
Section
9.10. Intention
of the Parties.
It
is the intention of the parties that the Seller is conveying, and the Servicer
is receiving only a contract for servicing the Mortgage Loans. Accordingly,
the
parties hereby acknowledge that the Trust Fund remains the sole and absolute
owner of the Mortgage Loans (other than the servicing rights) and all rights
related thereto.
Section
9.11. Successors
and Assigns; Assignment of Servicing Agreement.
This
Agreement shall bind and inure to the benefit of and be enforceable by the
Servicer, the Seller, the NIMS Insurer and the Master Servicer and their
respective successors and assigns. This Agreement shall not be assigned, pledged
or hypothecated by the Servicer to a third party except in accordance with
Section 7.03 and shall not be assigned, pledged or hypothecated by the Seller
without the prior written consent of the NIMS Insurer except as to the extent
provided in Section 9.12.
Section
9.12. Assignment
by the Seller.
The
Seller shall assign (exclusive of the Seller’s rights arising under Section 8.02
or the Servicer’s rights under Sections 8.02(iii)), its interest under this
Agreement to the Depositor, which in turn shall assign such rights to the
Trustee, and the Trustee then shall succeed to all rights of the Seller under
this Agreement.
-59-
Section
9.13. Amendment.
This
Agreement may be amended from time to time by the Servicer and the Seller,
with
(i) the prior written consent of the Trustee and the NIMS Insurer and (ii)
the
written agreement signed by the Master Servicer, the Seller and the Servicer;
provided
that the
party requesting such amendment shall, at its own expense, provide the Trustee,
the NIMS Insurer, the Master Servicer and the Seller with an Opinion of Counsel
that such amendment will not materially adversely affect the interest of the
Certificateholders in the Mortgage Loans or the NIM Securities to be issued
in
the NIMS Transaction. Any such amendment shall be deemed not to adversely affect
in any material respect any the interest of the Certificateholders in the
Mortgage Loans or the NIM Securities to be issued in the NIMS Transaction,
if
the Trustee receives written confirmation from each Rating Agency that such
amendment will not cause such Rating Agency to reduce, qualify or withdraw
the
then current rating assigned to the Certificates and the NIM Securities (and
any
Opinion of Counsel received by the Trustee, the NIMS Insurer, the Master
Servicer and the Seller in connection with any such amendment may rely expressly
on such confirmation as the basis therefor);
provided, however,
this
Agreement may be amended by the Servicer, the Seller, the Master Servicer and
the Trustee from time to time without the delivery of an Opinion of Counsel
described above to the extent necessary, in the judgment of the Seller and
its
counsel, to comply with any rules promulgated by the Commission and any
interpretations thereof by the staff of the Commission.
Section
9.14. Waivers.
No
term or provision of this Agreement may be waived or modified unless such waiver
or modification is in writing and signed by the party against whom such waiver
or modification is sought to be enforced and is consented to by the NIMS
Insurer.
Section
9.15. Exhibits.
The
exhibits to this Agreement are hereby incorporated and made a part hereof and
are an integral part of this Agreement.
Section
9.16. Intended
Third Party Beneficiaries.
Notwithstanding
any provision herein to the contrary, the parties to this Agreement agree that
it is appropriate, in furtherance of the intent of such parties as set forth
herein, that the Securities Administrator and the Depositor receive the benefit
of the provisions of this Agreement as intended third party beneficiaries of
this Agreement to the extent of such provisions. The Servicer shall have the
same obligations to the Securities Administrator and the Depositor as if they
were parties to this Agreement, and the Securities Administrator and the
Depositor shall have the same rights and remedies to enforce the provisions
of
this Agreement as if they were parties to this Agreement. The Servicer shall
only take direction from the Master Servicer (if direction by the Master
Servicer is required under this Agreement) unless otherwise directed by this
Agreement or the Credit Risk Management Agreement. Notwithstanding the
foregoing, all rights of the Securities Administrator, the Depositor (other
than
the right to indemnification) and all rights and obligations of the Master
Servicer hereunder (other than the right to indemnification) shall terminate
upon the termination of the Trust Fund pursuant to the Trust
Agreement.
-60-
Section
9.17. General
Interpretive Principles.
For
purposes of this Agreement, except as otherwise expressly provided or unless
the
context otherwise requires:
(a) the
terms defined in this Agreement have the meanings assigned to them in this
Agreement and include the plural as well as the singular, and the use of any
gender herein shall be deemed to include the other gender;
(b) accounting
terms not otherwise defined herein have the meanings assigned to them in
accordance with generally accepted accounting principles;
(c) references
herein to “Articles,” “Sections,” “Subsections,” “Paragraphs,” and other
subdivisions without reference to a document are to designated Articles,
Sections, Subsections, Paragraphs and other subdivisions of this
Agreement;
(d) a
reference to a Subsection without further reference to a Section is a reference
to such Subsection as contained in the same Section in which the reference
appears, and this rule shall also apply to Paragraphs and other
subdivisions;
(e) the
words “herein,” “hereof,” “hereunder” and other words of similar import refer to
this Agreement as a whole and not to any particular provision; and
(f) the
term “include” or “including” shall mean by reason of enumeration.
Section
9.18. Reproduction
of Documents.
This
Agreement and all documents relating thereto, including, without limitation,
(a)
consents, waivers and modifications which may hereafter be executed, (b)
documents received by any party at the closing, and (c) financial statements,
certificates and other information previously or hereafter furnished, may be
reproduced by any photographic, photostatic, microfilm, micro-card, miniature
photographic or other similar process. The parties agree that any such
reproduction shall be admissible in evidence
as the original itself in any judicial or administrative proceeding, whether
or
not the original is in existence and whether or not such reproduction was made
by a party in the regular course of business, and that any enlargement,
facsimile or further reproduction of such reproduction shall likewise be
admissible in evidence.
-61-
IN
WITNESS WHEREOF, the Servicer, the Seller and the Master Servicer have caused
their names to be signed hereto by their respective officers thereunto duly
authorized as of the date first above written.
|
XXXXXX
BROTHERS HOLDINGS INC.,
as
Seller
|
||
| |
|
|
| By: | /s/ Xxxxx Xxx | |
|
Name: Xxxxx Xxx |
||
| Title: Authorized Signatory | ||
|
XXXXX
FARGO BANK, N.A.,
as
Servicer
|
||
| |
|
|
| By: | /s/ Xxxxxx XxXxxxxx | |
|
Name: Xxxxxx XxXxxxxx |
||
| Title: Vice President | ||
|
AURORA
LOAN SERVICES LLC,
as
Master Servicer
|
||
| |
|
|
| By: | /s/ Xxxxx X. Xxxxxxx | |
|
Name: Xxxxx X. Xxxxxxx |
||
| Title: Senior Vice President | ||
| Acknowledged by: | |||
|
U.S.
BANK NATIONAL ASSOCIATION,
as
Trustee
|
|||
| By: /s/ Xxxxx X. X'Xxxxx | |||
|
Name: Xxxxx X. X'Xxxxx |
|||
|
Title:
Vice
President
|
EXHIBIT
A
MORTGAGE
LOAN SCHEDULE
(Including
Prepayment Charge Schedule)
[To
be
retained in a separate closing binder entitled “BNC Mortgage Loan Trust 2007-1
Mortgage
Loan Schedules” at Xxxxxx Xxxxxx LLP]
Exhibit
A
EXHIBIT
B
CUSTODIAL
ACCOUNT CERTIFICATION
_____________
__, ____
Xxxxx
Fargo Bank, N.A. hereby certifies that it has established the account described
below as a Custodial Account pursuant to Section 3.03 of the Subservicing
Securitization Agreement, dated as of February 1, 2007.
| Title of Account: | “Xxxxx Fargo Bank, N.A. in trust for U.S. Bank National Association, as Trustee for the BNC Mortgage Loan Trust 2007-1.” |
Account
Number: ______________________.
|
Address
of office or branch of
|
_________________________________ | |
|
the
Servicer at which account
|
_________________________________ | |
|
is
maintained:
|
_________________________________ |
|
Xxxxx
Fargo Bank, N.A.,
Servicer
|
||
| |
|
|
| By: | ||
|
|
||
| Name: | ||
|
|
||
| Title: | ||
|
|
||
| Date: | ||
|
|
||
Exhibit
B
EXHIBIT
C
ESCROW
ACCOUNT CERTIFICATION
_____________
___, ____
Xxxxx
Fargo Bank, N.A. hereby certifies that it has established the account described
below as an Escrow Account pursuant to Section 3.05 of the Subservicing
Securitization Agreement, dated as of February 1, 2007.
| Title of Account: | “Xxxxx Fargo Bank, N.A. in trust for U.S. Bank National Association, as Trustee for the BNC Mortgage Loan Trust 2007-1 and various mortgagors.” |
Account
Number: ______________________.
|
Address
of office or branch of
|
_________________________________ | |
|
the
Servicer at which account
|
_________________________________ | |
|
is
maintained:
|
_________________________________ |
|
Xxxxx
Fargo Bank, N.A.,
Servicer
|
||
| |
|
|
| By: | ||
|
|
||
| Name: | ||
|
|
||
| Title: | ||
|
|
||
| Date: | ||
|
|
||
Exhibit
C
EXHIBIT
D
BNC
MORTGAGE LOAN TRUST 2007-1 TRUST AGREEMENT
Exhibit
D
EXHIBIT
E
FORM
OF LOAN LOSS REPORT
|
Final
Report Field Heading
|
Definition
|
Format
|
||
|
Servicer
Cut Off Date
|
Reporting
cycle cut off date
|
DATE(MM/DD/YYYY)
|
||
|
Servicer
Loan Number
|
Individual
number that uniquely identifies loan as defined by
servicer.
|
VARCHAR2(15)
|
||
|
Investor
Loan Number
|
Individual
number that uniquely identifies loan as defined by Aurora Master
Servicing.
|
NUMBER(9)
|
||
|
Servicer
Customer Number
|
Unique
number assigned to each servicer
|
NUMBER(3)
|
||
|
Investor
ID
|
Unique
number assigned to a group of loans in the servicing system.
|
NUMBER
(10,2)
|
||
|
Resolution
Type
|
Description
of the process to resolve the delinquency. Ex. Foreclosure, Short
Sale,
Third Party Sale, Deed In Lieu, etc.
|
VARCHAR2(15)
|
||
|
Resolution
Date
|
Date
the process described in Resolution Type was completed.
|
DATE(MM/DD/YYYY)
|
||
|
Liquidation
Date
|
Date
the loan was liquidated on the servicers servicing system.
|
DATE(MM/DD/YYYY)
|
||
|
REO
Sale Date
|
Actual
date that the sale of the REO property closed escrow.
|
DATE(MM/DD/YYYY)
|
||
|
Title
Date
|
Date
clear title was recorded.
|
DATE(MM/DD/YYYY)
|
||
|
MI
Percent
|
Percent
of coverage provided by the PMI company in the event of loss on a
defaulted loan.
|
NUMBER(6,5)
|
||
|
First
Legal Date
|
Actual
date that foreclosure counsel filed the first legal action as defined
by
state statute.
|
DATE(MM/DD/YYYY)
|
||
|
Bankruptcy
1 Filing Date
|
Actual
date the bankruptcy petition is filed with the court.
|
DATE(MM/DD/YYYY)
|
||
|
Bankruptcy
1 Relief Date
|
Actual
date the Discharge, Dismissal or Relief Order is entered in the bankruptcy
docket.
|
DATE(MM/DD/YYYY)
|
||
|
Bankruptcy
2 Filing Date
|
Actual
date the bankruptcy petition is filed with the court.
|
DATE(MM/DD/YYYY)
|
||
|
Bankruptcy
2 Relief Date
|
Actual
date the Discharge, Dismissal or Relief Order is entered in the bankruptcy
docket.
|
DATE(MM/DD/YYYY)
|
Exhibit
E-1
|
Final
Report Field Heading
|
Definition
|
Format
|
||
|
Foreclosure
Fees
|
Amount
paid to the Foreclosure Attorney for performing his
service.
|
NUMBER(10,2)
|
||
|
Foreclosure
Costs
|
Amount
incurred as part of the foreclosure process.
|
NUMBER(10,2)
|
||
|
Bankruptcy
Costs
|
Amount
incurred related to a bankruptcy filing involving the borrower or
subject
property.
|
NUMBER(10,2)
|
||
|
Eviction
Costs
|
Amount
incurred related to the eviction process.
|
NUMBER(10,2)
|
||
|
Appraisal
Costs
|
Amount
incurred to acquire a value for the subject property.
|
NUMBER(10,2)
|
||
|
Preservation
Costs
|
Amount
incurred to preserve and secure the property.
|
NUMBER(10,2)
|
||
|
Utility
Costs
|
Amount
incurred for utilities at the property.
|
NUMBER(10,2)
|
||
|
HOA
Costs
|
Amount
paid to the Home Owners Association to maintain the property
dues.
|
NUMBER(10,2)
|
||
|
Other
Costs
|
Amount
of Miscellaneous Expenses incurred during the default
process.
|
NUMBER(10,2)
|
||
|
Interest
on Advances
|
Interest
paid by HUD/VA or MI on the amounts advanced related to the liquidation
of
the property.
|
NUMBER(10,2)
|
||
|
Hazard
Refunds
|
Amount
of refunds of Hazard Premiums paid.
|
NUMBER(10,2)
|
||
|
Real
Estate Taxes
|
Amount
of any taxes paid during the default process.
|
NUMBER(10,2)
|
||
|
Hazard
Premiums
|
Amount
paid for Hazard Insurance on the property held as collateral for
the
mortgage.
|
NUMBER(10,2)
|
||
|
MI
Premiums
|
Amount
paid for Mortgage Insurance related to the mortgage loan.
|
NUMBER(10,2)
|
||
|
Other
Escrow
|
Miscellaneous
Expenses incurred from the escrow account during the default
process.
|
NUMBER(10,2)
|
||
|
Sales
Proceeds
|
Funds
received in connection with the sale of the property held as collateral
for the mortgage loan (Positive Number).
|
NUMBER(10,2)
|
Exhibit
E-2
|
Final
Report Field Heading
|
Definition
|
Format
|
||
|
Initial
Claim Proceeds
|
Funds
received in connection with the conveyance of the property to the
insuring
agency (Positive Number).
|
NUMBER(10,2)
|
||
|
Final
Claim Proceeds
|
Claim
funds received from the insuring agency (HUD/VA).
|
NUMBER(10,2)
|
||
|
Other
Proceeds
|
Miscellaneous
funds received in connection with the property held as collateral
for the
mortgage loan (Positive Number).
|
NUMBER(10,2)
|
||
|
Escrow
Balance
|
Any
positive balance remaining in the escrow account.
|
NUMBER(10,2)
|
||
|
Replacement
Reserve Bal
|
Amount
of funds held in the Replacement Reserve account (Positive
Number).
|
NUMBER(10,2)
|
||
|
Restricted
Escrow Bal
|
Amount
of funds held in the Restricted Escrow account.
|
NUMBER(10,2)
|
||
|
Suspense
Balance
|
Amount
of funds held in the Suspense account (Positive Number).
|
NUMBER(10,2)
|
||
|
Servicer
Retained Loss
|
The
total amount of the Gross Final Actual (Loss)/Gain the servicer will
take,
due to Interest/Expense Curtailments by HUD/VA (This would include
Advances not claimed to HUD/VA or MI due to servicer error) (Positive
Number).
|
NUMBER(10,2)
|
Exhibit
E-3
EXHIBIT
F
FORM
OF ANNUAL CERTIFICATION
|
Re:
|
The
Securitization Subservicing Agreement dated as of February 1, 2007
(the
“Agreement”), by and among Xxxxxx Brothers Holdings Inc., Xxxxx Fargo
Bank, N.A., as servicer (the “Servicer”) and Aurora Loan Services LLC (the
“Master Servicer”), and acknowledged by U.S. Bank National Association, as
Trustee (the “Trustee”)
|
I,
[identify the certifying individual], the [title] of the Servicer, certify
to
the Master Servicer and Structured Asset Securities Corporation (the
“Depositor”), and their officers, with the knowledge and intent that they will
rely upon this certification, that:
(1) I
have
reviewed the servicer compliance statement of the Servicer provided in
accordance with Item 1123 of Regulation AB (the “Compliance Statement”), the
report on assessment of the Servicer’s compliance with the servicing criteria
set forth in Item 1122(d) of Regulation AB (the “Servicing Criteria”), provided
in accordance with Rules 13a-18 and 15d-18 under Securities Exchange Act of
1934, as amended (the “Exchange Act”) and Item 1122 of Regulation AB (the
“Servicing Assessment”), the registered public accounting firm’s attestation
report provided in accordance with Rules 13a-18 and 15d-18 under the Exchange
Act and Section 1122(b) of Regulation AB (the “Attestation Report”), and all
servicing reports, officer’s certificates and other information relating to the
servicing of the Mortgage Loans by the Servicer during 200[ ] that were
delivered by the Servicer to any of the Depositor and the Master Servicer
pursuant to the Agreement (collectively, the “Servicer Servicing
Information”);
(2) Based
on
my knowledge, the Servicer Servicing Information, taken as a whole, does not
contain any untrue statement of a material fact or omit to state a material
fact
necessary to make the statements made, in the light of the circumstances under
which such statements were made, not misleading with respect to the period
of
time covered by the Servicer Servicing Information;
(3) Based
on
my knowledge, all of the Servicer Servicing Information required to be provided
by the Servicer under the Agreement has been provided to the Depositor and
the
Master Servicer;
(4) I
am
responsible for reviewing the activities performed by the Servicer as servicer
under the Agreement, and based on my knowledge and the compliance review
conducted in preparing the Compliance Statement and except as disclosed in
the
Compliance Statement, the Servicing Assessment or the Attestation Report, the
Servicer has fulfilled its obligations under the Agreement in all material
respects; and
Exhibit
F-1
(5) The
Compliance Statement required to be delivered by the Servicer pursuant to the
Agreement, and the Servicing Assessment and Attestation Report required to
be
provided by the Servicer and by any Subservicer or Subcontractor pursuant to
the
Agreement, have been provided to the Depositor and the Master Servicer. Any
material instances of noncompliance described in such reports have been
disclosed to the Depositor and the Master Servicer. Any material instance of
noncompliance with the Servicing Criteria has been disclosed in such
reports.
| Date: | ||
|
|
||
| By: | ||
|
Name: |
||
| Title: | ||
Exhibit
F-2
EXHIBIT
G
XXXXXX
XXX GUIDE NO. 95-19
Exhibit
G-1
XXXXXX
MAE GUIDE 95-19
ANNOUNCEMENT
Reference
· Selling This
announcement amends the guide(s) indicated.
· Servicing Please
keep it for reference until we issue a formal change.
Subject
“Full-File”
Reporting to Credit Repositories
Part
IV,
Section 107, of the servicing Guide currently requires servicers to report
only
90-day delinquencies to the four major credit repositories. To ensure that
the
repositories have up-to-date information for both servicing and origination
activity, we have decided to begin requiring—as of the month ending March 31,
1996—servicers to provide the credit repositories a “full-file” status report
for the mortgages they service for us.
“Full-file”
reporting requires that servicers submit a monthly report to each of the credit
repositories to describe the exact status for each mortgage they service for
us.
The status reported generally should be the one in effect as of the last
business day of each month. Servicers may, however, use a slightly later cut-off
date—for example, at the and of the first week of a month—to assure that payment
corrections, returned checks, and other adjustments related to the previous
month’s activity can be appropriately reflected in their report for that month.
Statuses that must be reported for any given mortgage include the following:
new
origination, current, delinquent (30-, 60-, 90-days, etc.), foreclosed, and
charged-off. (The credit repositories will provide the applicable codes for
reporting these statuses to them.) A listing of each of the major repositories
to which “full-file” status reports must be sent is attached.
Servicers
are responsible for the complete and accurate reporting of mortgage status
information to the repositories and for resolving any disputes that arise about
the information they report. Servicers must respond promptly to any inquiries
from borrowers regarding specific mortgage status information about them that
was reported to the credit repositories.
Servicers
should contact their Customer Account Team in their lead Xxxxxx Xxx regional
office if they have any questions about this expanded reporting
requirement.
Xxxxxx
X. Engeletad
Senior
Vice President - Mortgage and Lender Standards
11/20/95
Exhibit
G-2
XXXXXX
XXX GUIDE 95-19
ATTACHMENT
1
ANNOUNCEMENT
Major
Credit Repositories
A
"full-file" status report for each mortgage serviced for Xxxxxx Mae must be
sent
to the following repositories each month (beginning with the month ending March
31, 1996):
|
Company
|
Telephone
Number
|
|
|
Consumer
Credit Associates, Inc
000
Xxxxxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx,
Xxxxx 00000-0000
|
Call
(000) 000-0000, either extension 150, 101, or 112, for all
inquiries.
|
|
|
Equifax
|
Members
that have an account number may call their local sales representative
for
all inquiries; lenders that need to set up an account should call
(000)
000-0000 and select the customer assistance option.
|
|
|
TRW
Information Systems & Services
000
XXX Xxxxxxx
Xxxxx,
Xxxxx 00000
|
Call
(000) 000-0000 for all inquiries, current members should select option
3;
lenders that need to set up an account should select
Option 4.
|
|
|
Trans
Union Corporation
000
Xxxx Xxxxx
Xxxxxxx,
Xxxxxxxx 00000
|
Call
(000) 000-0000 to get the name of the local bureau to contact about
setting up an account or obtaining other
information.
|
11/20/95
Exhibit
G-3
EXHIBIT
H
SERVICING
CRITERIA TO BE ADDRESSED IN
REPORT
ON ASSESSMENT OF COMPLIANCE
The
Servicer shall address, at a minimum, the criteria identified as below as
“Applicable Servicing Criteria,” as identified by a xxxx in the column titled
“Applicable Servicing Criteria:”
|
Servicing
Criteria
|
||||
|
Reference
|
Criteria
|
Applicable
Servicing Criteria
|
||
|
|
General
Servicing Considerations
|
|
||
|
1122(d)(1)(i)
|
Policies
and procedures are instituted to monitor any performance or other
triggers
and events of default in accordance with the transaction
agreements.
|
X
|
||
|
1122(d)(1)(ii)
|
If
any material servicing activities are outsourced to third parties,
policies and procedures are instituted to monitor the third party’s
performance and compliance with such servicing activities.
|
X
|
||
|
1122(d)(1)(iii)
|
Any
requirements in the transaction agreements to maintain a back-up
servicer
for the mortgage loans are maintained.
|
|||
|
1122(d)(1)(iv)
|
A
fidelity bond and errors and omissions policy is in effect on the
party
participating in the servicing function throughout the reporting
period in
the amount of coverage required by and otherwise in accordance with
the
terms of the transaction agreements.
|
X
|
||
|
|
Cash
Collection and Administration
|
|||
|
1122(d)(2)(i)
|
Payments
on mortgage loans are deposited into the appropriate custodial bank
accounts and related bank clearing accounts no more than two business
days
following receipt, or such other number of days specified in the
transaction agreements.
|
X
|
||
|
1122(d)(2)(ii)
|
Disbursements
made via wire transfer on behalf of an obligor or to an investor
are made
only by authorized personnel.
|
X
|
||
|
1122(d)(2)(iii)
|
Advances
of funds or guarantees regarding collections, cash flows or distributions,
and any interest or other fees charged for such advances, are made,
reviewed and approved as specified in the transaction
agreements.
|
X
|
||
|
1122(d)(2)(iv)
|
The
related accounts for the transaction, such as cash reserve accounts
or
accounts established as a form of overcollateralization, are separately
maintained (e.g., with respect to commingling of cash) as set forth
in the
transaction agreements.
|
X
|
||
|
1122(d)(2)(v)
|
Each
custodial account is maintained at a federally insured depository
institution as set forth in the transaction agreements. For purposes
of
this criterion, “federally insured depository institution” with respect to
a foreign financial institution means a foreign financial institution
that
meets the requirements of Rule 13k-1(b)(1) of the Securities Exchange
Act.
|
X
|
||
|
1122(d)(2)(vi)
|
Unissued
checks are safeguarded so as to prevent unauthorized
access.
|
X
|
||
|
1122(d)(2)(vii)
|
Reconciliations
are prepared on a monthly basis for all asset-backed securities related
bank accounts, including custodial accounts and related bank clearing
accounts. These reconciliations are (A) mathematically accurate;
(B)
prepared within 30 calendar days after the bank statement cutoff
date, or
such other number of days specified in the transaction agreements;
(C)
reviewed and approved by someone other than the person who prepared
the
reconciliation; and (D) contain explanations for reconciling items.
These
reconciling items are resolved within 90 calendar days of their original
identification, or such other number of days specified in the transaction
agreements.
|
X
|
||
Exhibit
H-1
|
Servicing
Criteria
|
||||
|
Reference
|
Criteria
|
Applicable
Servicing Criteria
|
||
|
|
Investor
Remittances and Reporting
|
|||
|
1122(d)(3)(i)
|
Reports
to investors, including those to be filed with the Commission, are
maintained in accordance with the transaction agreements and applicable
Commission requirements. Specifically, such reports (A) are prepared
in
accordance with timeframes and other terms set forth in the transaction
agreements; (B) provide information calculated in accordance with
the
terms specified in the transaction agreements; (C) are filed with
the
Commission as required by its rules and regulations; and (D) agree
with
investors’ or the trustee’s records as to the total unpaid principal
balance and number of mortgage loans serviced by the
Servicer.
|
X
|
||
|
1122(d)(3)(ii)
|
Amounts
due to investors are allocated and remitted in accordance with timeframes,
distribution priority and other terms set forth in the transaction
agreements.
|
X
|
||
|
1122(d)(3)(iii)
|
Disbursements
made to an investor are posted within two business days to the Servicer’s
investor records, or such other number of days specified in the
transaction agreements.
|
X
|
||
|
1122(d)(3)(iv)
|
Amounts
remitted to investors per the investor reports agree with cancelled
checks, or other form of payment, or custodial bank
statements.
|
X
|
||
|
|
Pool
Asset Administration
|
|||
|
1122(d)(4)(i)
|
Collateral
or security on mortgage loans is maintained as required by the transaction
agreements or related mortgage loan documents.
|
X
|
||
|
1122(d)(4)(ii)
|
Mortgage
loan and related documents are safeguarded as required by the transaction
agreements
|
X
|
||
|
1122(d)(4)(iii)
|
Any
additions, removals or substitutions to the asset pool are made,
reviewed
and approved in accordance with any conditions or requirements in
the
transaction agreements.
|
X
|
||
|
1122(d)(4)(iv)
|
Payments
on mortgage loans, including any payoffs, made in accordance with
the
related mortgage loan documents are posted to the Servicer’s obligor
records maintained no more than two business days after receipt,
or such
other number of days specified in the transaction agreements, and
allocated to principal, interest or other items (e.g., escrow) in
accordance with the related mortgage loan documents.
|
X
|
||
|
1122(d)(4)(v)
|
The
Servicer’s records regarding the mortgage loans agree with the Servicer’s
records with respect to an obligor’s unpaid principal
balance.
|
X
|
||
|
1122(d)(4)(vi)
|
Changes
with respect to the terms or status of an obligor's mortgage loans
(e.g.,
loan modifications or re-agings) are made, reviewed and approved
by
authorized personnel in accordance with the transaction agreements
and
related pool asset documents.
|
X
|
||
|
1122(d)(4)(vii)
|
Loss
mitigation or recovery actions (e.g., forbearance plans, modifications
and
deeds in lieu of foreclosure, foreclosures and repossessions, as
applicable) are initiated, conducted and concluded in accordance
with the
timeframes or other requirements established by the transaction
agreements.
|
X
|
||
|
1122(d)(4)(viii)
|
Records
documenting collection efforts are maintained during the period a
mortgage
loan is delinquent in accordance with the transaction agreements.
Such
records are maintained on at least a monthly basis, or such other
period
specified in the transaction agreements, and describe the entity’s
activities in monitoring delinquent mortgage loans including, for
example,
phone calls, letters and payment rescheduling plans in cases where
delinquency is deemed temporary (e.g., illness or
unemployment).
|
X
|
||
|
1122(d)(4)(ix)
|
Adjustments
to interest rates or rates of return for mortgage loans with variable
rates are computed based on the related mortgage loan
documents.
|
X
|
||
Exhibit
H-2
|
Servicing
Criteria
|
||||
|
Reference
|
Criteria
|
Applicable
Servicing Criteria
|
||
|
1122(d)(4)(x)
|
Regarding
any funds held in trust for an obligor (such as escrow accounts):
(A) such
funds are analyzed, in accordance with the obligor’s mortgage loan
documents, on at least an annual basis, or such other period specified
in
the transaction agreements; (B) interest on such funds is paid, or
credited, to obligors in accordance with applicable mortgage loan
documents and state laws; and (C) such funds are returned to the
obligor
within 30 calendar days of full repayment of the related mortgage
loans,
or such other number of days specified in the transaction
agreements.
|
X
|
||
|
1122(d)(4)(xi)
|
Payments
made on behalf of an obligor (such as tax or insurance payments)
are made
on or before the related penalty or expiration dates, as indicated
on the
appropriate bills or notices for such payments, provided that such
support
has been received by the servicer at least 30 calendar days prior
to these
dates, or such other number of days specified in the transaction
agreements.
|
X
|
||
|
1122(d)(4)(xii)
|
Any
late payment penalties in connection with any payment to be made
on behalf
of an obligor are paid from the servicer’s funds and not charged to the
obligor, unless the late payment was due to the obligor’s error or
omission.
|
X
|
||
|
1122(d)(4)(xiii)
|
Disbursements
made on behalf of an obligor are posted within two business days
to the
obligor’s records maintained by the servicer, or such other number of days
specified in the transaction agreements.
|
X
|
||
|
1122(d)(4)(xiv)
|
Delinquencies,
charge-offs and uncollectible accounts are recognized and recorded
in
accordance with the transaction agreements.
|
X
|
||
|
1122(d)(4)(xv)
|
Any
external enhancement or other support, identified in Item 1114(a)(1)
through (3) or Item 1115 of Regulation AB, is maintained as set forth
in
the transaction agreements.
|
|||
Exhibit
H-3
EXHIBIT
I
TRANSACTION
PARTIES
|
Trustee
|
U.S.
Bank National Association
|
|
Securities
Administrator
|
Xxxxx
Fargo Bank, N.A.
|
|
Master
Servicer
|
Aurora
Loan Services, LLC
|
|
Credit
Risk Manager
|
Xxxxxxx
Fixed Income Services Inc.
|
|
PMI
Insurer(s)
|
PMI
Mortgage Insurance Co. and Mortgage Guaranty Insurance
Corporation
|
|
Interest
Rate Swap Counterparty
|
Xxxxxx
Brothers Special Financing Inc.
|
|
Interest
Rate Cap Counterparty
|
Xxxxxx
Brothers Special Financing Inc.
|
|
Servicer(s)
|
JPMorgan
Chase Bank, National Association, Option One Mortgage Corporation
and
Xxxxx Fargo Bank, N.A.
|
|
Originator(s)
|
BNC
Mortgage, Inc.
|
|
Custodian(s)
|
Deutsche
Bank National Trust Company
|
|
Seller
|
Xxxxxx
Brothers Holdings Inc.
|
Exhibit
I
