Exhibit 99.10b
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THIRD AMENDED AND RESTATED MORTGAGE
LOAN FLOW PURCHASE,
SALE & SERVICING AGREEMENT
dated as of January 1, 2006
between
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ MORTGAGE CAPITAL INC.,
Purchaser
and
PHH MORTGAGE CORPORATION
(formerly known as
CENDANT MORTGAGE CORPORATION),
and
▇▇▇▇▇▇'▇ GATE RESIDENTIAL MORTGAGE TRUST
(formerly known as
CENDANT RESIDENTIAL MORTGAGE TRUST),
Sellers
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TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
Section 1.01 Defined Terms.................................................................................1
ARTICLE II
SALE AND CONVEYANCE OF MORTGAGE LOANS; POSSESSION OF MORTGAGE FILES; BOOKS AND RECORDS;
DELIVERY OF MORTGAGE LOAN DOCUMENTS
Section 2.01 Sale and Conveyance of Mortgage Loans........................................................20
Section 2.02 Possession of Mortgage Files.................................................................21
Section 2.03 Books and Records............................................................................22
Section 2.04 Defective Documents; Delivery of Mortgage Loan Documents.....................................22
Section 2.05 Transfer of Mortgage Loans...................................................................24
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SELLER; REPURCHASE AND SUBSTITUTION;
REVIEW OF MORTGAGE LOANS
Section 3.01 Representations and Warranties of each Seller................................................25
Section 3.02 Representations and Warranties of the Servicer...............................................28
Section 3.03 Representations and Warranties as to Individual Mortgage Loans...............................29
Section 3.04 Repurchase and Substitution..................................................................45
Section 3.05 Removal of Mortgage Loans from Inclusion Under this Agreement Upon an Agency
Transfer, Whole-Loan Transfer or a Securitization Transaction on One or More
Reconstitution Dates.......................................................................47
Section 3.06 Review of Mortgage Loans.....................................................................50
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE
PURCHASER AND CONDITIONS PRECEDENT TO FUNDING
Section 4.01 Representations and Warranties...............................................................51
Section 4.02 Conditions Precedent to Closing..............................................................53
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ARTICLE V
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 5.01 PHH Mortgage to Act as Servicer; Servicing Standards; Additional Documents; Consent
of the Purchaser...........................................................................55
Section 5.02 Collection of Mortgage Loan Payments.........................................................57
Section 5.03 Notice of Specially Serviced Mortgage Loans and Foreclosure Sale.............................57
Section 5.04 Establishment of Collection Account; Deposits in Collection Account..........................58
Section 5.05 Permitted Withdrawals from the Collection Account............................................59
Section 5.06 Establishment of Escrow Accounts; Deposits in Escrow.........................................60
Section 5.07 Permitted Withdrawals From Escrow Accounts...................................................60
Section 5.08 Payment of Taxes, Insurance and Other Charges; Maintenance of Primary Insurance
Policies; Collections Thereunder...........................................................61
Section 5.09 Transfer of Accounts.........................................................................62
Section 5.10 Maintenance of Hazard Insurance..............................................................62
Section 5.11 Maintenance of Mortgage Impairment Insurance Policy..........................................64
Section 5.12 Fidelity Bond; Errors and Omissions Insurance................................................64
Section 5.13 Management of REO Properties.................................................................65
Section 5.14 Sale of Specially Serviced Mortgage Loans and REO Properties.................................66
Section 5.15 Realization Upon Specially Serviced Mortgage Loans and REO Properties........................67
Section 5.16 Investment of Funds in the Collection Account................................................69
Section 5.17 MERS.........................................................................................70
Section 5.18 Pledged Asset Mortgage Loans.................................................................70
Section 5.19 Inspections..................................................................................74
Section 5.20 Transfer of Servicing........................................................................74
Section 5.21 Fair Credit Reporting Act....................................................................76
ARTICLE VI
REPORTS; REMITTANCES; ADVANCES
Section 6.01 Remittances..................................................................................76
Section 6.02 Reporting....................................................................................77
Section 6.03 Monthly Advances by the Servicer.............................................................77
Section 6.04 Non-recoverable Advances.....................................................................78
Section 6.05 Itemization of Servicing Advances............................................................78
Section 6.06 Officers' Certificate........................................................................78
Section 6.07 Compliance with REMIC Provisions.............................................................78
ARTICLE VII
GENERAL SERVICING PROCEDURES
Section 7.01 Enforcement of Due-on-Sale Clauses, Assumption Agreements....................................79
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Section 7.02 Satisfaction of Mortgages and Release of Mortgage Files......................................80
Section 7.03 Servicing Compensation.......................................................................80
Section 7.04 Annual Statement as to Compliance............................................................81
Section 7.05 Annual Independent Certified Public Accountants' Servicing Report or Attestation.............81
Section 7.06 Purchaser's Right to Examine Servicer Records................................................81
ARTICLE VIII
REPORTS TO BE PREPARED BY THE SERVICER
Section 8.01 The Servicer's Reporting Requirements........................................................82
Section 8.02 Financial Statements.........................................................................82
ARTICLE IX
THE SELLERS
Section 9.01 Indemnification; Third Party Claims..........................................................82
Section 9.02 Merger or Consolidation of the Seller........................................................83
Section 9.03 Limitation on Liability of the Sellers and Others............................................84
Section 9.04 Servicer Not to Resign.......................................................................84
ARTICLE X
DEFAULT
Section 10.01 Events of Default............................................................................85
ARTICLE XI
TERMINATION
Section 11.01 Term and Termination.........................................................................87
Section 11.02 Survival.....................................................................................87
ARTICLE XII
GENERAL PROVISIONS
Section 12.01 Successor to the Servicer....................................................................88
Section 12.02 Governing Law; Jurisdiction; Consent to Service of Process...................................88
Section 12.03 Notices......................................................................................89
Section 12.04 Severability of Provisions...................................................................90
Section 12.05 Schedules and Exhibits.......................................................................90
Section 12.06 General Interpretive Principles..............................................................90
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Section 12.07 Waivers and Amendments, Noncontractual Remedies; Preservation of Remedies....................91
Section 12.08 Captions.....................................................................................91
Section 12.09 Counterparts; Effectiveness..................................................................91
Section 12.10 Entire Agreement; Amendment..................................................................91
Section 12.11 Further Assurances...........................................................................91
Section 12.12 Intention of the Seller......................................................................92
Section 12.13 Waiver of Trial by Jury......................................................................92
ARTICLE XIII
COMPLIANCE WITH REGULATION AB
Section 13.01 Intent of the Parties; Reasonableness........................................................92
Section 13.02 Additional Representations and Warranties of the Sellers and the Servicer....................93
Section 13.03 Information to Be Provided by each Seller or the Servicer....................................93
Section 13.04 Servicer Compliance Statement................................................................98
Section 13.05 Report on Assessment of Compliance and Attestation...........................................98
Section 13.06 Use of Subservicers and Subcontractors.......................................................99
Section 13.07 Indemnification; Remedies...................................................................101
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Schedules
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A. Mortgage Loan Schedule
B. Contents of Mortgage File
B-1 Collateral File
B-2 Credit Documents
C. PHH Guide
Exhibits
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Exhibit 2.05 Form of Assignment, Assumption and Recognition Agreement
Exhibit 5.01 Workout Compensation
Exhibit 5.03(a) Report P4DL ? Notice for Specially Serviced Mortgage Loans
Exhibit 5.03(b) Form of Notice of Foreclosure
Exhibit 5.04-1 Form of Collection Account Certification
Exhibit 5.04-2 Form of Collection Account Letter Agreement
Exhibit 5.06-1 Form of Escrow Account Certification
Exhibit 5.06-2 Form of Escrow Account Letter Agreement
Exhibit 6.02(a) Report P-139 - Monthly Statement of Mortgage Accounts
Exhibit 6.02(b) Report S-50Y - Private Pool Detail Report
Exhibit 6.02(c) Report S-213 - Summary of Curtailments Made Remittance Report
Exhibit 6.02(d) Report S-214 - Summary of Paid in Full Remittance Report
Exhibit 6.02(e) Report S-215 - Consolidation of Remittance Report
Exhibit 6.02(f) Report T-62C - Monthly Accounting Report
Exhibit 6.02(g) Report T-62E - Liquidation Report
Exhibit 8.01 Report P-195 - Delinquency Report
Exhibit 9 Form of Officer's Certificate
Exhibit 10 Form of Warranty ▇▇▇▇ of Sale
Exhibit 11 Form of ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Certification
Exhibit 12 Process Guidelines
Exhibit 13 Form of Indemnification and Contribution Agreement
Exhibit 14 Servicing Criteria to be Addressed in Assessment of Compliance
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THIRD AMENDED AND RESTATED MORTGAGE LOAN FLOW
PURCHASE, SALE & SERVICING AGREEMENT
This Third Amended and Restated Mortgage Loan Flow Purchase, Sale &
Servicing Agreement, dated as of January 1, 2006, among ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Mortgage Capital Inc., (the "Purchaser"), PHH Mortgage Corporation (formerly
known as Cendant Mortgage Corporation) ("PHH Mortgage") and ▇▇▇▇▇▇'▇ Gate
Residential Mortgage Trust (formerly known as Cendant Residential Mortgage
Trust) (the "Trust," together with Cendant Mortgage, the "Sellers" and
individually, each a "Seller").
PRELIMINARY STATEMENT
WHEREAS, the Purchaser and the Sellers are parties to that certain
Second Amended and Restated Mortgage Loan Flow Purchase, Sale & Servicing
Agreement, dated as of September 1, 2005 (the "Original Purchase Agreement"),
pursuant to which the Sellers may sell, from time to time, to the Purchaser,
and the Purchaser may purchase, from time to time, from the Sellers, certain
adjustable and fixed rate residential first lien mortgage loans (the "Mortgage
Loans") on a servicing retained basis as described therein, and which shall be
delivered in pools of whole loans on various dates as provided therein (each,
a "Closing Date");
WHEREAS, at the present time, the Purchaser and the Sellers desire
to amend the Original Purchase Agreement to make certain modifications as set
forth herein;
NOW, THEREFORE, in consideration of the premises and mutual
agreements set forth herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the Purchaser
and the Sellers agree as follows
NOW, THEREFORE, in consideration of the mutual agreements
hereinafter set forth, the Purchaser and the Sellers agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01 Defined Terms. Whenever used in this Agreement, the
following words and phrases shall have the following meaning specified in this
Article:
"Acceptance of Assignment and Assumption of Lease Agreement": The
specific agreement creating a first lien on and pledge of the Cooperative
Shares and the appurtenant Proprietary Lease securing a Cooperative Loan.
"Accepted Servicing Practices": With respect to any Mortgage Loan,
those customary mortgage servicing practices of prudent mortgage lending
institutions which service mortgage loans of the same type as such Mortgage
Loan in the jurisdiction where the related Mortgaged Property is located.
"Adjustable Rate Mortgage Loan": A Mortgage Loan purchased pursuant
to this Agreement, the Note Rate of which is adjusted from time to time in
accordance with the terms of the related Mortgage Note.
"Affiliate": When used with reference to a specified Person, any
Person that (i) directly or indirectly controls or is controlled by or is
under common control with the specified Person, (ii) is an officer of, partner
in or trustee of, or serves in a similar capacity with respect to, the
specified person or of which the specified Person is an officer, partner or
trustee, or with respect to which the specified Person serves in a similar
capacity, or (iii) directly or indirectly is the beneficial owner of 10% or
more of any class of equity securities of the specified Person or of which the
specified person is directly or indirectly the owner of 10% or more of any
class of equity securities.
"Agency Transfer": The sale or transfer by Purchaser of some or all
of the Mortgage Loans to ▇▇▇▇▇▇ ▇▇▇ under its "Cash Purchase Program" or its
"MBS Swap Program" (Special Servicing Option) or to ▇▇▇▇▇▇▇ Mac under its
"▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇ Program" or "Gold PC Program", retaining the Servicer as
"servicer thereunder."
"Agreement": This Third Amended and Restated Mortgage Loan Flow
Purchase, Sale & Servicing Agreement between the Purchaser and the Sellers.
"ALTA": The American Land Title Association.
"Appraised Value": With respect to any Mortgaged Property, the
lesser of: (i) the value thereof as determined by an appraisal or a PHH
Mortgage approved AVM (as defined in the PHH Guide) made for the originator of
the Mortgage Loan at the time of origination of the Mortgage Loan by an
appraiser who met the minimum requirements of ▇▇▇▇▇▇ ▇▇▇ and ▇▇▇▇▇▇▇ Mac; or
(ii) the purchase price paid for the related Mortgaged Property by the
Mortgagor with the proceeds of the Mortgage Loan; provided that, in the case
of a Refinanced Mortgage Loan, such value of the Mortgaged Property shall be
based solely upon the value determined by an appraisal made for the originator
of such Refinanced Mortgage Loan at the time of origination of such Refinanced
Mortgage Loan by an appraiser who met the minimum requirements of ▇▇▇▇▇▇ Mae
and ▇▇▇▇▇▇▇ Mac.
"ARM Loan": An "adjustable rate" Mortgage Loan, the Note Rate of
which is subject to periodic adjustment in accordance with the terms of the
Mortgage Note.
"Assignment": An individual assignment of a Mortgage, notice of
transfer or equivalent instrument in recordable form, sufficient under the
laws of the jurisdiction wherein the related Mortgaged Property is located to
reflect of record the sale or transfer of the Mortgage Loan to the Purchaser
or, in the case of a MERS Mortgage Loan, an electronic transmission to MERS,
identifying a transfer of ownership of the related Mortgage to the Purchaser
or its designee.
"Assignment of Proprietary Lease": With respect to a Cooperative
Loan, an assignment of the Proprietary Lease sufficient under the laws of the
jurisdiction wherein the related Cooperative Unit is located to reflect the
assignment of such Proprietary Lease.
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"Assignment of Recognition Agreement": With respect to a Cooperative
Loan, an assignment of the Recognition Agreement sufficient under the laws of
the jurisdiction wherein the related Cooperative Unit is located to reflect
the assignment of such Recognition Agreement.
"AVM": Automated Value Model. Electronic system to calculate the
property value from a provider that has been approved by the Seller.
"Bankruptcy Code": The Bankruptcy Reform Act of 1978 (11 U.S.C.
▇▇.▇▇. 101-1330), as amended, modified, or supplemented from time to time, and
any successor statute, and all rules and regulations issued or promulgated in
connection therewith.
"BPO": A broker's price opinion with respect to a Mortgaged
Property.
"Business Day": Any day other than (i) a Saturday or Sunday, or (ii)
a day on which the Federal Reserve is closed.
"PHH Guide": Shall have the meaning set forth in paragraph 3 of the
Preliminary Statement to this Agreement.
"Closing Date": The date or dates on which the Purchaser from time
to time shall purchase, and the Seller from time to time shall sell, the
Mortgage Loans listed on the related Mortgage Loan Schedule.
"Code": The Internal Revenue Code of 1986, as amended, or any
successor statute thereto.
"Collection Account": The separate trust account or accounts created
and maintained pursuant to Section 5.04 which shall be entitled "PHH Mortgage
Corporation, as servicer and custodian for the Purchaser of Mortgage Loans
under the Third Amended and Restated Mortgage Loan Flow Purchase, Sale &
Servicing Agreement, dated as of January 1, 2006."
"Commission": The United States Securities and Exchange Commission.
"Condemnation Proceeds": All awards or settlements in respect of a
taking of an entire Mortgaged Property or a part thereof by exercise of the
power of eminent domain or condemnation.
"Consent": A document executed by the Cooperative Corporation (i)
consenting to the sale of the Cooperative Unit to the Mortgagor and (ii)
certifying that all maintenance charges relating to the Cooperative Unit have
been paid.
"Control Agreement": With respect to each Pledged Asset Mortgage
Loan, the Pledged Collateral Account Control Agreement between the guarantor
or mortgagor, as applicable, and the related Pledged Asset Servicer, pursuant
to which the guarantor or mortgagor, as applicable, has granted a security
interest in a Securities Account.
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"Convertible Mortgage Loan": Any ARM Loan purchased pursuant to this
Agreement as to which the related Mortgage Note permits the Mortgagor to
convert the Note Rate on such Mortgage Loan to a fixed note rate.
"Cooperative Corporation": With respect to any Cooperative Loan, the
cooperative apartment corporation that holds legal title to the related
Cooperative Project and grants occupancy rights to units therein to
stockholders through Proprietary Leases or similar arrangements.
"Cooperative Lease": With respect to a Cooperative Loan, the lease
with respect to a dwelling unit occupied by the Mortgagor and relating to the
stock allocated to the related dwelling unit.
"Cooperative Lien Search": A search for (a) federal tax liens,
mechanics' liens, lis pendens, judgments of record or otherwise against (i)
the Cooperative Corporation and (ii) the seller of the Cooperative Unit, (b)
filings of Financing Statements and (c) the deed of the Cooperative Project
into the Cooperative Corporation.
"Cooperative Loan": A Mortgage Loan that is secured by a first lien
on and a perfected security interest in Cooperative Shares and the related
Proprietary Lease granting exclusive rights to occupy the related Cooperative
Unit in the building owned by the related Cooperative Corporation.
"Cooperative Project": With respect to any Cooperative Loan, all
real property and improvements thereto and rights therein and thereto owned by
a Cooperative Corporation including without limitation the land, separate
dwelling units and all common elements.
"Cooperative Shares": With respect to any Cooperative Loan, the
shares of stock issued by a Cooperative Corporation and allocated to a
Cooperative Unit and represented by a stock certificates.
"Cooperative Unit": With respect to any Cooperative Loan, a specific
unit in a Cooperative Project.
"Covered Loan": A Mortgage Loan categorized as Covered pursuant to
Appendix E of Standard & Poor's Glossary.
"Credit Documents": Those documents, comprising part of the Mortgage
File, required of the Mortgagor, as described in Section 2 (Specific Loan
Program Guidelines) of the PHH Guide. The Credit Documents are specified on
Schedule B-2 hereto.
"Custodial Agreement": With respect to each Mortgage Loan purchase
hereunder, the applicable Custodial Agreement, among the Purchaser, the
Servicer and the Custodian.
"Custodian": With respect to each Mortgage Loan purchase, the
Custodian named in the applicable Custodial Agreement, or its successor in
interest or assigns or any successor to the Custodian under such Custodial
Agreement as provided therein.
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"Cut-off Date" : The first day of the month in which the respective
Funding Date occurs.
Deemed Material and Adverse Representation: Each representation and
warranty identified as such in Section 3.03 of this Agreement.
"Defect": Shall have the meaning set forth in Section 2.04.
"Defective Mortgage Loan": Shall have the meaning set forth in
Section 3.04.
"Deleted Mortgage Loan": A Mortgage Loan replaced or to be replaced
with a Qualified Substitute Mortgage Loan.
"Delinquent Mortgage Loan": Shall have the meaning set forth in
Section 11.01.
"Depositor": The depositor, as such term is defined in Regulation
AB, with respect to any Securitization Transaction.
"Determination Date": The 15th day of each calendar month,
commencing on the 15th day of the month following the Funding Date, or, if
such 15th day is not a Business Day, the Business Day immediately preceding
such 15th day.
"Due Date": With respect to any Mortgage Loan, the day of the month
on which each Monthly Payment is due thereon, exclusive of any days of grace.
"Due Period": With respect to each Remittance Date, the period
commencing on the second day of the month immediately preceding the month of
such Remittance Date and ending on the first day of the month of such
Remittance Date.
"Eligible Account": One or more accounts (i) that are maintained
with a depository institution the long-term unsecured debt obligations of
which have been rated by each Rating Agency in one of its two highest rating
categories at the time of any deposit therein, (ii) that are trust accounts
with any depository institution held by the depository institution in its
capacity as a corporate trustee, the deposits in which are insured by the FDIC
(to the limits established by the FDIC) and the uninsured deposits in which
are otherwise secured such that the Purchaser has a claim with respect to the
funds in such accounts or a perfected first security interest against any
collateral securing such funds that is superior to claims of any other
depositors or creditors of the depository institution with which such accounts
are maintained. In addition, solely with respect to Mortgage Loans which are
not part of a Securitization Transaction, "Eligible Account" shall include any
accounts that meet the standards established from time to time by ▇▇▇▇▇▇ ▇▇▇
or ▇▇▇▇▇▇▇ Mac, as applicable, for eligible custodial depositories. In the
event that the Mortgage Loans are subject to a Securitization Transaction, the
Servicer agrees that the definition of Eligible Account shall satisfy the
rating requirements established by each Rating Agency which rates any of the
securities issued as part of such Securitization Transaction.
"Environmental Assessment": A "Phase I" environmental assessment of
a Mortgaged Property prepared by an Independent Person who regularly conducts
environmental
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assessments and who has any necessary license(s) required by applicable law
and has at least five years experience conducting environmental assessments.
"Environmental Conditions Precedent to Foreclosure": Shall have the
meaning set forth in Section 5.15.
"Environmental Laws": All federal, state, and local statutes, laws,
regulations, ordinances, rules, judgments, orders, decrees or other
governmental restrictions relating to the environment or to emissions,
discharges or releases of pollutants, contaminants or industrial, toxic or
hazardous substances or wastes into the environment, including ambient air,
surface water, ground water, or land, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of pollutants, contaminants or industrial, toxic or
hazardous substances or wastes or the cleanup or other remediation thereof.
"Escrow Account": The separate trust account or accounts created and
maintained pursuant to Section 5.06 which shall be entitled "PHH Mortgage
Corporation, as servicer for the Purchaser under the Third Amended and
Restated Mortgage Loan Flow Purchase, Sale & Servicing Agreement, dated as of
January 1, 2006, and various mortgagors."
"Escrow Payments": The amounts constituting ground rents, taxes,
assessments, water rates, mortgage insurance premiums, fire and hazard
insurance premiums and other payments required to be escrowed by the Mortgagor
with the mortgagee pursuant to any Mortgage Loan.
"Estoppel Letter": A document executed by the Cooperative
Corporation certifying, with respect to a Cooperative Unit, (i) the
appurtenant Proprietary Lease will be in full force and effect as of the date
of issuance thereof, (ii) the related Stock Certificate was registered in the
Mortgagor's name and the Cooperative Corporation has not been notified of any
lien upon, pledge of, levy of execution on or disposition of such Stock
Certificate, and (iii) the Mortgagor is not in default under the appurtenant
Proprietary Lease and all charges due the Cooperative Corporation have been
paid.
"Event of Default": Any one of the conditions or circumstances
enumerated in Section 10.01.
"Exchange Act": The Securities Exchange Act of 1934, as amended.
"▇▇▇▇▇▇ ▇▇▇": The Federal National Mortgage Association or any
successor organization.
"▇▇▇▇▇▇ Mae Guide": The ▇▇▇▇▇▇ ▇▇▇ Selling Guide and the Servicing
Guide, collectively, in effect on and after the Funding Date.
"FDIC": The Federal Deposit Insurance Corporation or any successor
organization.
"Fidelity Bond": A fidelity bond to be maintained by the Servicer
pursuant to Section 5.12.
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"Financing Statement": A financing statement in the form of a UCC-1
filed pursuant to the relevant state Uniform Commercial Code to perfect a
security interest in the Cooperative Shares and Pledge Instruments.
"Financing Statement Change": A financing statement in the form of a
UCC-3 filed to continue, terminate, release, assign or amend an existing
Financing Statement.
"Foreclosure Profits": As to any Distribution Date or related
Determination Date and any Mortgage Loan, the excess, if any, of Liquidation
Proceeds, Insurance Proceeds and proceeds from any REO Disposition (net of all
amounts reimbursable therefrom pursuant to Section 5.13, Section 5.14 and
Section 5.15) in respect of each Mortgage Loan or REO Property for which a
Cash Liquidation or REO Disposition occurred in the related prepayment period
over the sum of the Unpaid Principal Balance of such Mortgage Loan or REO
Property (determined, in the case of an REO Disposition, in accordance with
Section 5.13, Section 5.14 and Section 5.15) plus accrued and unpaid interest
at the Mortgage Rate on such Unpaid Principal Balance from the Due Date to
which interest was last paid by the Mortgagor to the first day of the month
following the month in which such Cash Liquidation or REO Disposition
occurred.
"▇▇▇▇▇▇▇ Mac": The Federal Home Loan Mortgage Corporation or any
successor organization.
"▇▇▇▇▇▇▇ Mac Servicing Guide": The ▇▇▇▇▇▇▇ Mac/ ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇'
and Servicers' Guide in effect on and after the Funding Date.
"Funding Date": Each date (up to four per month) that Purchaser
purchases Mortgage Loans from the Sellers hereunder.
"Gross Margin": With respect to each ARM Loan, the fixed percentage
added to the Index on each Rate Adjustment Date, as specified in each related
Mortgage Note and listed in the Mortgage Loan Schedule.
"High Cost Loan": A Mortgage Loan (a) covered by the Home Ownership
and Equity Protection Act of 1994, (b) classified as a "high cost home,"
"threshold," "covered," (excluding New Jersey "Covered Home Loans" as that
term was defined in clause (1) of the definition of that term in the New
Jersey Home Ownership Security Act of 2002 that were originated between
November 26, 2003 and July 7, 2004), "high risk home," "predatory" or similar
loan under any other applicable state, federal or local law (or a similarly
classified loan using different terminology under a law imposing heightened
regulatory scrutiny or additional legal liability for residential mortgage
loans having high interest rates, points and/or fees) or (c) a Mortgage Loan
categorized as High Cost pursuant to Appendix E of Standard & Poor's Glossary.
For avoidance of doubt, the parties agree that this definition shall apply to
any law regardless of whether such law is presently, or in the future becomes,
the subject of judicial review or litigation.
"HUD": The United States Department of Housing and Urban
Development, or any successor thereto.
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"Indemnified Party": Each of the Purchaser and any Successor
Servicer and each of their present and former directors, officers, agents,
employees, Affiliates and assignees and each Person, if any, that controls the
Purchaser or Successor Servicer or such Affiliate within the meaning of either
the Securities Act or the Exchange Act.
"Independent": With respect to any specified Person, such Person
who: (i) does not have any direct financial interest or any material indirect
financial interest in the applicable Mortgagor, the Sellers, the Purchaser, or
their Affiliates; and (b) is not connected with the applicable Mortgagor, the
Sellers, the Purchaser, or their respective Affiliates as an officer,
employee, promoter, underwriter, trustee, member, partner, shareholder,
director, or Person performing similar functions.
"Index": With respect to each ARM Loan, the applicable rate index
set forth on the related Mortgage Note.
"Insolvency Proceeding": With respect to any Person: (i) any case,
action, or proceeding with respect to such Person before any court or other
governmental authority relating to bankruptcy, reorganization, insolvency,
liquidation, receivership, dissolution, winding up, or relief of debtors; or
(ii) any general assignment for the benefit of creditors, composition,
marshaling of assets for creditors, or other, similar arrangement in respect
of the creditors generally of such Person or any substantial portion of such
Person's creditors; in any case undertaken under federal, state or foreign
law, including the Bankruptcy Code.
"Insurance Proceeds": Proceeds of any Primary Insurance Policy,
title policy, hazard policy or other insurance policy insuring a Mortgage Loan
or the related Mortgaged Property.
"Legal Documents": Those documents, comprising part of the Mortgage
File, set forth in Schedule B-1 of this Agreement.
"Lender-Paid Mortgage Insurance Rate": With respect to any Mortgage
Loan, the Lender-Paid Mortgage Insurance Rate for any "lender-paid" Primary
Insurance Policy shall be a per annum rate equal to the percentage indicated
on the Mortgage Loan Schedule.
"Lifetime Rate Cap": The provision of each Mortgage Note related to
an Adjustable Rate Mortgage Loan which provides for an absolute maximum Note
Rate thereunder. The Note Rate during the terms of each Adjustable Rate
Mortgage Loan shall not at any time exceed the Note Rate at the time of
origination of such Adjustable Rate Mortgage Loan by more than the amount per
annum set forth on the related Mortgage Loan Schedule.
"Liquidation Proceeds": Amounts, other than Insurance Proceeds and
Condemnation Proceeds, received by the Servicer in connection with the
liquidation of a defaulted Mortgage Loan through trustee's sale, foreclosure
sale or otherwise, other than amounts received following the acquisition of an
REO Property in accordance with the provisions hereof.
"Loan-to-Value Ratio" or "LTV": With respect to any Mortgage Loan,
the original principal balance of such Mortgage Loan divided by the lesser of
the Appraised Value of
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the related Mortgaged Property or the purchase price. The Loan-to-Value Ratio
of any Pledged Asset Mortgage Loan shall be calculated by reducing the
principal balance of such Pledged Asset Mortgage Loan by the amount of the
Original Pledged Asset Requirement with respect to such Mortgage Loan. This is
referred to in the PHH Guide as the effective loan-to- value.
"Losses": Shall have the meaning set forth in Section 9.01.
"MAI Appraiser": With respect to any real property, a member of the
American Institute of Real Estate Appraisers with a minimum of 5 years of
experience appraising real property of a type similar to the real property
being appraised and located in the same geographical area as the real property
being appraised.
"Maximum Rate": With respect to each ARM Loan, the rate per annum
set forth in the related Mortgage Note as the maximum Note Rate thereunder.
The Maximum Rate as to each ARM Loan is set forth on the related Mortgage Loan
Schedule.
"MERS": Mortgage Electronic Registration Systems, Inc., a Delaware
corporation, or any successor in interest thereto.
"MERS Eligible Mortgage Loan": Any Mortgage Loan that under
applicable law and investor requirements is recordable in the name of MERS in
the jurisdiction in which the related Mortgaged Property is located.
"MERS Mortgage Loan": Any Mortgage Loan as to which the related
Mortgage, or an Assignment, has been recorded in the name of MERS, as agent
for the holder from time to time of the Mortgage Note.
"Minimum Rate": With respect to each ARM Loan, the rate per annum
set forth in the related Mortgage Note as the minimum Note Rate thereunder.
The Minimum Rate as to each ARM Loan is set forth on the related Mortgage Loan
Schedule.
"Monthly Advance": The aggregate amount of the advances made by the
Servicer on any Remittance Date pursuant to and as more fully described in
Section 6.03.
"Monthly Payment": The scheduled monthly payment of principal and
interest on a Mortgage Loan which is payable by a Mortgagor under the related
Mortgage Note on each Due Date.
"Monthly Period": Initially, the period from the Funding Date
through to and including the first Record Date during the term hereof, and,
thereafter, the period commencing on the day after each Record Date during the
term hereof and ending on the next succeeding Record Date during the term
hereof (or, if earlier, the date on which this Agreement terminates).
"Mortgage": The mortgage, deed of trust or other instrument securing
a Mortgage Note, which creates a first lien on either (i) with respect to a
Mortgage Loan other than a Cooperative Loan, an unsubordinated estate in fee
simple in real property or (ii) with respect to a Cooperative Loan, the
Proprietary Lease and related Cooperative Shares, which in either case secures
the Mortgage Note.
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"Mortgage File": With respect to a particular Mortgage Loan, those
origination and servicing documents, escrow documents, and other documents as
are specified on Schedule B-1 and B-2 to this Agreement and any additional
documents required to be added to the Mortgage File pursuant to the related
Purchase Price and Terms Letter. These documents shall be stored in a secure
manner using paper or electronic storage.
"Mortgage Loan": Each individual mortgage loan or Cooperative Loan
(including all documents included in the Mortgage File evidencing the same,
all Monthly Payments, Principal Prepayments, Insurance Proceeds, Condemnation
Proceeds, Liquidation Proceeds, and other proceeds relating thereto, and any
and all rights, benefits, proceeds and obligations arising therefrom or in
connection therewith) which is the subject of this Agreement and the related
Purchase Price and Terms Letter. The Mortgage Loans subject to this Agreement
shall be identified on Mortgage Loan Schedules prepared in connection with
each Funding Date.
"Mortgage Loan Schedule": The list of Mortgage Loans identified on
each Funding Date that sets forth the information with respect to each
Mortgage Loan that is specified on Schedule A hereto (as amended from time to
time to reflect the addition of any Qualified Substitute Mortgage Loans and
the withdrawal of any Deleted Mortgage Loans). A Mortgage Loan Schedule will
be prepared for each Funding Date.
"Mortgage Note": The note or other evidence of the indebtedness of a
Mortgagor secured by a Mortgage.
"Mortgaged Property": With respect to a Mortgage Loan, the
underlying property securing repayment of a Mortgage Note.
"Mortgagor": The obligor on a Mortgage Note.
"Negative Amortization": That portion of interest accrued at the
Note Rate in any month which exceeds the Monthly Payment on the related
Mortgage Loan for such month and which, pursuant to the terms of the Mortgage
Note, is added to the principal balance of the Mortgage Loan.
"Non-recoverable Advance": As of any date of determination, any
Monthly Advance or Servicing Advance previously made or any Monthly Advance or
Servicing Advance proposed to be made in respect of a Mortgage Loan which, in
the good faith judgment of the Servicer and in accordance with the servicing
standard set forth in Section 5.01, will not or, in the case of a proposed
advance, would not be ultimately recoverable pursuant to Section 5.05 (3) or
(4) hereof. The determination by the Servicer that it has made a
Non-recoverable Advance or that any proposed advance would constitute a
Non-recoverable Advance shall be evidenced by an Officers' Certificate
satisfying the requirements of Section 6.04 hereof and delivered to the
Purchaser on or before the Determination Date in any month.
"Note Rate": With respect to any Mortgage Loan at any time any
determination thereof is to be made, the annual rate at which interest accrues
thereon.
OCC: Office of the Comptroller of the Currency, or any successor
thereto.
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"Offering Materials": All documents, tapes, or other materials
relating to the Mortgage Loans provided by Seller to Purchaser prior to
Purchaser submitting its bid to purchase the Mortgage loans.
"Officers' Certificate": A certificate signed by (i) the President
or a Vice President and (ii) the Treasurer or the Secretary or one of the
Assistant Treasurers or Assistant Secretaries of the Servicer, and delivered
by the Servicer to the Purchaser as required by this Agreement.
"Original Pledged Asset Requirement": With respect to any Pledged
Asset Mortgage Loan, an amount equal to the Pledged Assets required at the
time of the origination of such Pledged Asset Mortgage Loan. Even though for
other purposes the Original Pledged Asset Requirement may actually exceed
thirty percent (30%) of the original principal balance of a Pledged Asset
Mortgage Loan, solely for purposes of the Required Surety Payment, the
Original Pledged Asset Requirement for a Pledged Asset Mortgage Loan will be
deemed not to exceed thirty percent (30%) of its original principal balance.
"OTS": The Office of Thrift Supervision or any successor thereto.
"Payment Adjustment Date": The date on which Monthly Payments shall
be adjusted. Payment Adjustment Date shall occur on the date which is eleven
months from the first payment date for the Mortgage Loan, unless otherwise
specified in the Mortgage Note, and on each anniversary of such first Payment
Adjustment Date.
"Payoff": With respect to any Mortgage Loan, any payment or recovery
received in advance of the last scheduled Due Date of such Mortgage Loan,
which payment or recovery consists of principal in an amount equal to the
outstanding principal balance of such Mortgage Loan, all accrued and unpaid
prepayment penalties, premiums, and/or interest with respect thereto, and all
other unpaid sums due with respect to such Mortgage Loan.
"Periodic Rate Cap": With respect to each ARM Loan and any Rate
Adjustment Date therefor, the number of basis points that is set forth in the
related Mortgage Loan Schedule and in the related Mortgage Note, which is the
maximum amount by which the Note Rate for such Mortgage Loan may increase or
decrease on such Rate Adjustment Date.
"Periodic Rate Floor": With respect to each Adjustable Rate Mortgage
Loan, the provision of each Mortgage Note which provides for an absolute
maximum amount by which the Mortgage Interest Rate therein may decrease on an
Rate Adjustment Date below the Mortgage Interest Rate previously in effect.
"Permitted Investments": Investments that mature, unless payable on
demand, not later than the Business Day preceding the related Remittance Date;
provided that such investments shall only consist of the following:
(i) direct obligations of, or obligations fully guaranteed as to
principal and interest by, the United States or any agency or
instrumentality thereof, provided such obligations are backed by the full
faith and credit of the United States;
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(ii) repurchase obligations (the collateral for which is held by a
third party) with respect to any security described in clause (i) above,
provided that the long-term unsecured obligations of the party agreeing
to repurchase such obligations are at the time rated by each Rating
Agency in one of its two highest rating categories;
(iii) certificates of deposit, time deposits and bankers'
acceptances of any bank or trust company incorporated under the laws of
the United States or any state, provided that the long-term unsecured
debt obligations of such bank or trust company (or, in the case of the
principal depository institution of a depository institution holding
company, the long-term unsecured debt obligations of the depository
institution holding company) at the date of acquisition thereof have been
rated by each Rating Agency in one of its two highest rating categories;
(iv) commercial paper (having original maturities of not more than
365 days) of any corporation incorporated under the laws of the United
States or any state thereof which on the date of acquisition has been
rated by each Rating Agency in its highest rating category; and
(v) any other demand, money market or time deposit account or
obligation, or interest-bearing or other security or investment,
acceptable to the Purchaser (such acceptance evidenced in writing);
provided further that "Permitted Investments" shall not include any instrument
described hereunder which evidences either the right to receive (a) only
interest with respect to the obligations underlying such instrument or (b)
both principal and interest payments derived from obligations underlying such
instrument and the interest and principal payments with respect to such
instrument provide a yield to maturity at par greater than 120% of the yield
to maturity at par of the underlying obligations.
"Person": Any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political
subdivision thereof.
"Pledge Agreements": Each Control Agreement and Pledged Asset
Agreement for each Pledged Asset Mortgage Loan.
"Pledge Instruments": With respect to each Cooperative Loan, the
Stock Power, the Assignment of the Proprietary Lease, the Assignment of the
Mortgage Note and the Acceptance of Assignment and Assumption of Lease
Agreement.
"Pledged Asset Agreement": With respect to each Pledged Asset
Mortgage Loan, the Pledge Agreement for Securities Account between the related
mortgagor and the related Pledged Asset Servicer pursuant to which such
mortgagor granted a security interest in the related securities and other
financial assets held therein.
"Pledged Asset Mortgage Loan": Each Mortgage Loan as to which
Pledged Assets, in the form of a security interest in the Securities Account
and the financial assets held therein and having a value, as of the date of
origination of such Mortgage Loan, of at least equal
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to the related Original Pledged Asset Requirement, were required to be
provided at the closing thereof, which is subject to the terms of this
Agreement from time to time.
"Pledged Asset Servicer": The entity responsible for administering
and servicing the Pledged Assets with respect to a Pledged Asset Mortgage
Loan.
"Pledged Asset Servicing Agreement": With respect to each Pledged
Asset Mortgage Loan, the Agreement between the related Pledged Asset Servicer
and PHH Mortgage, including any exhibits thereto, pursuant to which such
Pledged Asset Servicer shall service and administer the related Pledged
Assets.
"Pledged Assets": With respect to any Pledged Asset Mortgage Loan,
the related Securities Account and the financial assets held therein subject
to a security interest pursuant to the related Pledged Asset Agreement.
"Prepaid Monthly Payment": Any Monthly Payment received prior to its
scheduled Due Date and which is intended to be applied to a Mortgage Loan on
its scheduled Due Date.
"Prepayment Interest Shortfall Amount": With respect to any Mortgage
Loan that was subject to a voluntary (not including discounted payoffs)
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 related Servicing
Fee for Principal Prepayments in full only) 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.
"Primary Insurance Policy": A policy of primary mortgage guaranty
insurance issued by an insurer acceptable under the Underwriting Guidelines
and qualified to do business in the jurisdiction where the Mortgaged Property
is located, in effect with respect to a Mortgage Loan and as so indicated on
the Mortgage Loan Schedule, or any replacement policy therefor obtained by the
Servicer pursuant to Section 5.08.
"Principal Prepayment": Any payment or other recovery of principal
on a Mortgage Loan (including a Payoff), other than a Monthly Payment or a
Prepaid Monthly Payment which is received in advance of its scheduled Due
Date, including any prepayment penalty or premium thereon, 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
and which is intended to reduce the principal balance of the Mortgage Loan.
"Principal Prepayment Period": The Due Period preceding the related
Remittance Date occurs.
"Proprietary Lease": The lease on a Cooperative Unit evidencing the
possessory interest of the owner of the Cooperative Shares in such Cooperative
Unit.
"PUD": Shall have the meaning set forth in Section 3.03.
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"Purchase Price": As to each Mortgage Loan to be sold hereunder, the
price set forth in the Mortgage Loan Schedule and the related Purchase Price
and Terms Letter.
"Purchase Price and Terms Letter": With respect to any pool of
Mortgage Loans purchased and sold on any Funding Date, the letter agreement or
the electronic loan confirmation between the Purchaser and Seller (including
any exhibits, schedules and attachments thereto), setting forth the terms and
conditions of such transaction and describing the Mortgage Loans to be
purchased by the Purchaser on such Funding Date. A Purchase Price and Terms
Letter may relate to more than one pool of Mortgage Loans to be purchased on
one or more Funding Dates hereunder.
"Purchase Price Percentage": Shall have the meaning set forth in the
related Purchase Price and Terms Letter.
"Purchaser": ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital Inc., or its successor
in interest or any successor under this Agreement appointed as herein
provided.
"Purchaser's Account": The account of the Purchaser at a bank or
other entity most recently designated in a written notice by the Purchaser to
the Sellers as the "Purchaser's Account."
"Qualified Appraiser": An appraiser, duly appointed by the Seller,
who had no interest, direct or indirect in the Mortgaged Property or in any
loan made on the security thereof, and whose compensation was not affected by
the approval or disapproval of the Mortgage Loan, and such appraiser and the
appraisal made by such appraiser both satisfied the requirements of Title XI
of FIRREA and the regulations promulgated thereunder, all as in effect on the
date the Mortgage Loan was originated.
"Qualified Correspondent": Any Person from which the Seller
purchased Mortgage Loans, provided that the following conditions are
satisfied: (i) such Mortgage Loans were originated pursuant to an agreement
between the Seller and such Person that contemplated that such Person would
underwrite mortgage loans from time to time, for sale to the Seller, in
accordance with underwriting guidelines designated by the Seller ("Designated
Guidelines") or guidelines that do not vary materially from such Designated
Guidelines; (ii) such Mortgage Loans were in fact underwritten as described in
clause (i) above and were acquired by the Seller within 180 days after
origination; (iii) either (x) the Designated Guidelines were, at the time such
Mortgage Loans were originated, used by the Seller in origination of mortgage
loans of the same type as the Mortgage Loans for the Seller's own account or
(y) the Designated Guidelines were, at the time such Mortgage Loans were
underwritten, designated by the Seller on a consistent basis for use by
lenders in originating mortgage loans to be purchased by the Seller; and (iv)
the Seller employed, at the time such Mortgage Loans were acquired by the
Seller, pre-purchase or post-purchase quality assurance procedures (which may
involve, among other things, review of a sample of mortgage loans purchased
during a particular time period or through particular channels) designed to
ensure that Persons from which it purchased mortgage loans properly applied
the underwriting criteria designated by the Seller.
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"Qualified Mortgage Insurer": American Guaranty Corporation,
Commonwealth Mortgage Assurance Company, General Electric Mortgage Insurance
Companies, Mortgage Guaranty Insurance Corporation, PMI Mortgage Insurance
Company, Republic Mortgage Insurance Company or United Guaranty Residential
Insurance Corporation.
"Qualified Substitute Mortgage Loan": A Mortgage Loan substituted by
a Seller for a Deleted Mortgage Loan which must, on the date of such
substitution, (i) have an outstanding principal balance, after deduction of
all scheduled payments due and received in the month of substitution (or in
the case of a substitution of more than one Mortgage Loan for a Deleted
Mortgage Loan, an aggregate principal balance), not in excess of the Unpaid
Principal Balance of the Deleted Mortgage Loan and not less than ninety
percent (90%) of the Unpaid Principal Balance of the Deleted Mortgage Loan
(the amount of any shortfall to be distributed by the applicable Seller to the
Purchaser in the month of substitution), (ii) have a remaining term to
maturity not greater than (and not more than one year less than) that of the
Deleted Mortgage Loan, (iii) have a Note Rate not less than (and not more than
one percentage point greater than) the Note Rate of the Deleted Mortgage Loan,
(iv) with respect to each ARM Loan, have a Minimum Rate not less than that of
the Deleted Mortgage Loan, (v) with respect to each ARM Loan, have a Maximum
Rate not less than that of the Deleted Mortgage Loan and not more than two (2)
percentage points above that of the Deleted Mortgage Loan, (vi) with respect
to each ARM Loan, have a Gross Margin not less than that of the Deleted
Mortgage Loan, (vii) with respect to each ARM Loan, have a Periodic Rate Cap
equal to that of the Deleted Mortgage Loan, (viii) have a Loan-to-Value Ratio
at the time of substitution equal to or less than the Loan-to-Value Ratio of
the Deleted Mortgage Loan at the time of substitution, (ix) with respect to
each ARM Loan, have the same Rate Adjustment Date as that of the Deleted
Mortgage Loan, (x) with respect to each ARM Loan, have an Index as provided
herein for all ARM Loans subject to this Agreement, (xi) comply as of the date
of substitution with each representation and warranty set forth in Sections
3.01, 3.02 and 3.03, (xii) be in the same credit grade category as the Deleted
Mortgage Loan, (xiii) have the same prepayment penalty term, (xiv) be current
in the payment of principal and interest; (xv) be secured by a Mortgaged
Property of the same type and occupancy status as secured the Deleted Mortgage
Loan; and (xvi) have payment terms that do not vary in any material respect
from those of the Deleted Mortgage Loan.
"Rate Adjustment Date": With respect to each ARM Loan, the date on
which the Note Rate adjusts.
"Rating Agency": Standard & Poor's Ratings Services, a division of
The ▇▇▇▇▇▇-▇▇▇▇ Companies, ▇▇▇▇▇'▇ Investors Service, Inc., and Fitch, Inc.
"Recognition Agreement": An agreement among a Cooperative
Corporation, a lender and a Mortgagor with respect to a Cooperative Loan
whereby such parties (i) acknowledge that such lender may make, or intends to
make, such Cooperative Loan, and (ii) make certain agreements with respect to
such Cooperative Loan.
"Reconstitution": Any Securitization Transaction or Whole Loan
Transfer.
"Reconstitution Agreements": The agreement or agreements entered
into by the Purchaser, the Servicer, and/or certain third parties on any
Reconstitution Date with respect to
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any or all of the Mortgage Loans in connection with a Securitization
Transaction, Whole-Loan Transfer or an Agency Transfer, including, but not
limited to, (i) an Assignment, Assumption and Recognition Agreement in
substantially the form of Exhibit 2.05 hereof, (ii) a ▇▇▇▇▇▇ ▇▇▇ Mortgage
Selling and Servicing Contract, a Pool Purchase Contract, and any and all
servicing agreements and tri-party agreements reasonably required by ▇▇▇▇▇▇
Mae with respect to a ▇▇▇▇▇▇ ▇▇▇ Transfer, (iii) a Purchase Contract and all
purchase documents associated therewith as set forth in the ▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇' & Servicers' Guide, and any and all servicing agreements and
tri-party agreements reasonably required by ▇▇▇▇▇▇▇ Mac with respect to a
▇▇▇▇▇▇▇ Mac Transfer, and (iv) a Pooling and Servicing Agreement, trust
agreement, assignment and assumption agreements, and/or a subservicing/master
servicing agreement and any related custodial agreement, officers'
certificates, and correspondence and related documents related to a
Securitization Transaction.
"Reconstitution Date": The date or dates on which any or all of the
Mortgage Loans serviced under this Agreement shall be subject to an Agency
Transfer, a Whole Loan Transfer or a Securitization Transaction.
"Record Date": The close of business of the first Business Day of
the month of the related Remittance Date.
"Refinanced Mortgage Loan": A Mortgage Loan that was made to a
Mortgagor who owned the Mortgaged Property prior to the origination of such
Mortgage Loan and the proceeds of which were used in whole or part to satisfy
an existing mortgage.
"Regulation AB": Subpart 229.1100 - Asset Backed Securities
(Regulation AB), 17 C.F.R. ss.ss.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.
"REMIC": A "real estate mortgage investment conduit" within the
meaning of Section 860D of the Internal Revenue Code or any similar tax
vehicle providing for the pooling of assets (such as a Financial Asset
Security Investment Trust).
"Remittance Date": The 18th day of each calendar month, commencing
on the 18th day of the month following the Funding Date, or, if such 18th day
is not a Business Day, then the next Business Day immediately preceding such
18th day.
"Remittance Rate": With respect to each Mortgage Loan, the related
Note Rate minus the Servicing Fee Rate.
"REO Disposition": The final sale by the Servicer of any REO
Property.
"REO Disposition Proceeds": All amounts received with respect to any
REO Disposition.
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"REO Property": A Mortgaged Property acquired by the Servicer on
behalf of the Purchaser as described in Section 5.13.
"Repurchase Price": With respect to any Defective Mortgage Loan, the
price for such repurchase shall be calculated as follows: (a) during the first
year immediately following the Closing Date, an amount equal to the sum of (i)
the product of (x) the Purchase Price Percentage (as adjusted pursuant the
Purchase Price and Terms Letter) and (y) the then outstanding principal
balance of such Defective Mortgage Loan as of the date of such repurchase,
plus (ii) accrued interest on such Defective Mortgage Loan at the applicable
mortgage interest rate from the date to which interest had last been paid
through the date of such repurchase, plus (iii) the amount of any outstanding
advances owed to the Servicer, and (b) thereafter, an amount equal to the sum
of (i) then outstanding principal balance of such Defective Mortgage Loan as
of the date of such repurchase plus (ii) accrued interest thereon at the
mortgage interest rate from the date to which interest had last been paid
through the date of such repurchase, plus (iii) the amount of any outstanding
advances owed to the Servicer. In the event the Purchaser has securitized or
sold the Mortgage Loans, the price for such repurchase shall be as set forth
in clause (b) hereof.
"Required Surety Payment": With respect to any defaulted Pledged
Asset Mortgage Loan for which a claim is payable under the related Surety Bond
under the procedures referred to herein, the lesser of (i) the principal
portion of the realized loss with respect to such Mortgage Loan and (ii) the
excess, if any, of (a) the amount of Pledged Assets required at origination
with respect to such Mortgage Loan (but not more than 30% of the original
principal balance of such Mortgage Loan) over (b) the net proceeds realized by
the related Pledged Asset Servicer from the related Pledged Assets.
"Sale": Shall have the meaning set forth in Section 3.05.
"Scheduled Principal Balance": With respect to any Mortgage Loan,
(i) the outstanding principal balance as of the Funding Date after application
of principal payments due on or before such date whether or not received,
minus (ii) all amounts previously remitted to the Purchaser with respect to
such Mortgage Loan representing (a) payments or other recoveries of principal,
or (b) advances of principal made pursuant to Section 6.03.
"Securities Account": With respect to any Pledged Asset Mortgage
Loans, the account, together with the financial assets held therein, that is
the subject of the related Pledged Asset Agreement.
"Securities Act": The federal Securities Act of 1933, as amended.
"Securitization Transaction": Any transaction involving either (1) a
sale or other transfer of some or all of the Mortgage Loans directly or
indirectly to an issuing entity in connection with an issuance of publicly
offered or privately placed, rated or unrated mortgage-backed securities or
(2) an issuance of publicly offered or privately placed, rated or unrated
securities, the payments on which are determined primarily by reference to one
or more portfolios of residential mortgage loans consisting, in whole or in
part, of some or all of the Mortgage Loans.
-17-
"Security Agreement": The agreement creating a security interest in
the stock allocated to a dwelling unit in the residential cooperative housing
corporation that was pledged to secure such Cooperative Loan and the related
Cooperative Lease.
"Sellers": PHH Mortgage Corporation (formerly known as Cendant
Mortgage Corporation), a New Jersey corporation and ▇▇▇▇▇▇'▇ Gate Residential
Mortgage Trust (formerly known as Cendant Residential Mortgage Trust), a
Delaware statutory trust, or their successors in interest or any successor
under this Agreement appointed as herein provided.
"Seller Information": As defined in Section 13.07(a).
"Servicer": PHH Mortgage Corporation, a New Jersey corporation, or
with respect to Subsection 13.03(c), as defined therein.
"Servicing Advances": All "out of pocket" costs and expenses that
are customary, reasonable and necessary which are incurred by the Servicer in
the performance of its servicing obligations hereunder, including (without
duplication) (i) reasonable attorneys' fees and (ii) the cost of (a) the
preservation, restoration and protection of the Mortgaged Property, (b) any
enforcement or judicial proceedings, including foreclosures, (c) the
servicing, management and liquidation of any Specially Serviced Mortgaged
Loans and/or any REO Property, and (d) compliance with the Servicer's
obligations under Section 5.08.
"Servicing Criteria": The "servicing criteria" set forth in Item
1122(d) of Regulation AB, as such may be amended from time to time.
"Servicing Event": Any of the following events with respect to any
Mortgage Loan: (i) any Monthly Payment being more than 60 days delinquent;
(ii) any filing of an Insolvency Proceeding by or on behalf of the related
Mortgagor, any consent by or on behalf of the related Mortgagor to the filing
of an Insolvency Proceeding against such Mortgagor, or any admission by or on
behalf of such Mortgagor of its inability to pay such Person's debts generally
as the same become due; (iii) any filing of an Insolvency Proceeding against
the related Mortgagor that remains undismissed or unstayed for a period of 60
days after the filing thereof; (iv) any issuance of any attachment or
execution against, or any appointment of a conservator, receiver or liquidator
with respect to, all or substantially all of the assets of the related
Mortgagor or with respect to any Mortgaged Property; (v) any receipt by the
Servicer of notice of the foreclosure or proposed foreclosure of any other
lien on the related Mortgaged Property; (vi) any proposal of a material
modification (as reasonably determined by the Seller) to such Mortgage Loan
due to a default or imminent default under such Mortgage Loan; or (vii) in the
reasonable judgment of the Servicer, the occurrence, or likely occurrence
within 60 days, of a payment default with respect to such Mortgage Loan that
is likely to remain uncured by the related Mortgagor within 60 days
thereafter.
"Servicing Fee": The annual fee, payable monthly to the Servicer out
of the interest portion of the Monthly Payment actually received on each
Mortgage Loan. The Servicing Fee with respect to each Mortgage Loan for any
calendar month (or a portion thereof) shall be 1/12 of the product of (i) the
Unpaid Principal Balance of the Mortgage Loan and (ii) the Servicing Fee Rate
applicable to such Mortgage Loan.
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"Servicing Fee Rate": Unless otherwise specified on the Mortgage
Loan Schedule, (i) with respect to any ARM Loan, 0.375% per annum; provided
that, prior to the first Rate Adjustment Date with respect to any such
Mortgage Loan, such rate may be, at the Servicer's option, not less than 0.25%
per annum; and (ii) with respect to any Mortgage Loan other than an ARM Loan,
0.25% per annum.
"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 written list of servicing officers furnished by the Servicer
to the Purchaser upon request therefor by the Purchaser, as such list may from
time to time be amended.
"Specially Serviced Mortgage Loan": A Mortgage Loan as to which a
Servicing Event has occurred and is continuing.
"Sponsor": The sponsor, as such term is defined in Regulation AB,
with respect to any Securitization Transaction.
"Standard & Poor's": Standard & Poor's Ratings Services, a division
of The McGraw Hill Companies Inc., and any successor thereto.
"Standard & Poor's Glossary": The Standard & Poor's LEVELS(R)
Glossary, as may be in effect from time to time.
"Static Pool Information": Static pool information as described in
Item 1105(a)(1)-(3) and 1105(c) of Regulation AB.
"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
Mortgage Loans but performs one or more discrete functions identified in Item
1122(d) of Regulation AB with respect to Mortgage Loans under the direction or
authority of the Servicer or a 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
Seller under this Agreement or any Reconstitution Agreement that are
identified in Item 1122(d) of Regulation AB.
"Stock Certificate": With respect to a Cooperative Loan, the
certificates evidencing ownership of the Cooperative Shares issued by the
Cooperative Corporation.
"Stock Power": With respect to a Cooperative Loan, an assignment of
the Stock Certificate or an assignment of the Cooperative Shares issued by the
Cooperative Corporation.
"Surety Bond": With respect to each Pledged Asset Mortgage Loan, the
surety bond issued by the related Surety Bond Issuer covering such Pledged
Asset Mortgage Loan.
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"Surety Bond Issuer": With respect to each Pledged Asset Mortgage
Loan, the surety bond issuer for the related Surety Bond covering such Pledged
Asset Mortgage Loan.
"Third-Party Originator": Each Person, other than a Qualified
Correspondent, that originated Mortgage Loans acquired by the Seller.
"Transaction Servicer": As defined in Section 13.03(c).
"Transfer Date": In the event the Servicer is terminated as servicer
of a Mortgage Loan, the date on which the Purchaser, or its designee, shall
receive the transfer of servicing responsibilities with respect to such
Mortgage Loan and begin to perform the servicing of such Mortgage Loans and
the Servicer shall cease all servicing responsibilities.
"Trust Financials": Shall have the meaning set forth in Section 3.01
"Underwriting Guidelines": The underwriting guidelines of the
Seller, a copy of which shall be attached as an exhibit to the related
Assignment and Conveyance.
"Uniform Commercial Code": The Uniform Commercial Code as in effect
on the date hereof in the State of New York; provided that if by reason of
mandatory provisions of law, the perfection or the effect of perfection or non
perfection of the security interest in any collateral is governed by the
Uniform Commercial Code as in effect in a jurisdiction other than New York,
"Uniform Commercial Code" shall mean the Uniform Commercial Code as in effect
in such other jurisdiction for purposes of the provisions hereof relating to
such perfection or effect of perfection or non perfection.
"Unpaid Principal Balance": With respect to any Mortgage Loan, at
any time, the actual outstanding principal balance then payable by the
Mortgagor under the terms of the related Mortgage Note including any
cumulative Negative Amortization.
"Warranty ▇▇▇▇ of Sale": A warranty ▇▇▇▇ of sale with respect to the
Mortgage Loans purchased on a Funding Date in the form annexed hereto as
Exhibit 10.
"Whole Loan Transfer": Any sale or transfer of some or all of the
Mortgage Loans, other than a Securitization Transaction.
ARTICLE II
SALE AND CONVEYANCE OF MORTGAGE LOANS; POSSESSION OF MORTGAGE FILES;
BOOKS AND RECORDS; DELIVERY OF MORTGAGE LOAN DOCUMENTS
Section 2.01 Sale and Conveyance of Mortgage Loans. Seller agrees to
sell and Purchaser agrees to purchase, from time to time, those certain
Mortgage Loans identified in a Mortgage Loan Schedule, at the price and on the
terms set forth herein and in the related Purchase Price and Terms Letter.
Purchaser, on any Funding Date, shall be obligated to purchase only such
Mortgage Loans set forth in the applicable Mortgage Loan Schedule, subject to
the terms and conditions of this Agreement and the related Purchase Price and
Terms Letter.
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Purchaser will purchase Mortgage Loans from Seller, up to four (4)
times per month on such Funding Dates as may be agreed upon by Purchaser and
Seller. The closing shall, at Purchaser's option be either: by telephone,
confirmed by letter or wire as the parties shall agree, or conducted in person
at such place as the parties shall agree. On the Funding Date and subject to
the terms and conditions of this Agreement, each Seller will sell, transfer,
assign, set over and convey to the Purchaser, without recourse except as set
forth in this Agreement, and the Purchaser will purchase, all of the right,
title and interest of the applicable Seller in and to the Mortgage Loans being
conveyed by it hereunder, as identified on the Mortgage Loan Schedule.
Examination of the Mortgage Files may be made by Purchaser or its
designee as follows. No later than 5 Business Days prior to the Funding Date,
Seller will deliver to Purchaser or its custodian, Legal Documents required
pursuant to Schedule B-1. Upon Purchaser's request, Seller shall make the
Credit Documents available in either original paper form or electronic imaged
format to Purchaser for review, at Seller's place of business and during
reasonable business hours. If Purchaser makes such examination prior to the
Funding Date and identifies any Mortgage Loans that do not conform to the PHH
Guide, such Mortgage Loans will be deleted from the Mortgage Loan Schedule at
Purchaser's discretion. Purchaser may, at its option and without notice to
Seller, purchase all or part of the Mortgage Loans without conducting any
partial or complete examination. The fact that Purchaser has conducted or has
failed to conduct any partial or complete examination of the Mortgage Files
shall not affect Purchaser's rights to demand repurchase, substitution or
other relief as provided herein.
On the Funding Date and in accordance with the terms herein,
Purchaser will pay to Seller by 2:00 p.m. Eastern Standard Time, by wire
transfer of immediately available funds, the Purchase Price for the Mortgage
Loans, which shall be calculated in accordance with the terms of the related
Purchase Price and Terms Letter and paid by the Purchaser to the Sellers in
accordance with the instructions to be provided, respectively, by PHH Mortgage
and the Trust. Seller, simultaneously with the payment of the Purchase Price,
shall execute and deliver to Purchaser a Warranty ▇▇▇▇ of Sale with respect to
the Mortgage Loans in the form annexed hereto as Exhibit 10.
Purchaser shall be entitled to all scheduled principal due on and
after the Cut-off Date, all other recoveries of principal collected after the
Cut-off Date and all payments of interest on the Mortgage Loans (minus that
portion of any such payment which is allocable to the period prior to the
Cut-off Date). Notwithstanding the foregoing, on the first Remittance Date
after the Funding Date the Purchaser shall be entitled to receive the interest
accrued from and including the Cut-off Date through and including the day
immediately preceding the Funding Date. The principal balance of each Mortgage
Loan as of the Cut-off Date is determined after application of payments of
principal due on or before the Cut-off Date whether or not collected.
Therefore, payments of scheduled principal and interest prepaid for a due date
beyond the Cut-off Date shall not be applied to the principal balance as of
the Cut-off Date. Such prepaid amounts shall be the property of Purchaser.
Seller shall hold any such prepaid amounts for the benefit of Purchaser for
subsequent remittance by Seller to Purchaser. All scheduled payments of
principal due on or before the Cut-off Date and collected by Servicer after
the Cut-off Date shall belong to Seller.
Section 2.02 Possession of Mortgage Files. Upon the sale of any
Mortgage Loan, the ownership of such Mortgage Loan, including the Mortgage
Note, the Mortgage, the
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contents of the related Mortgage File and all rights, benefits, payments,
proceeds and obligations arising therefrom or in connection therewith, shall
then be vested in the Purchaser, and the ownership of all records and
documents with respect to such Mortgage Loan prepared by or which come into
the possession of the Seller shall immediately vest in the Purchaser and, to
the extent retained by the Seller, shall be retained and maintained, in trust,
by the Seller at the will of the Purchaser in a custodial capacity only. The
contents of such Mortgage File not delivered to the Purchaser are and shall be
held in trust by the Seller for the benefit of the Purchaser as the owner
thereof and the Sellers' possession of the contents of each Mortgage File so
retained is at the will of the Purchaser for the sole purpose of servicing the
related Mortgage Loan, and such retention and possession by the Seller shall
be in a custodial capacity only. Mortgage Files shall be maintained by the
Seller and shall be marked to clearly reflect the sale of the related Mortgage
Loan to the Purchaser. Each Seller shall release from its custody of the
contents of any Mortgage File only in accordance with written instructions
from the Purchaser, except where such release is required as incidental to the
Servicer's servicing of the Mortgage Loans or is in connection with a
repurchase or substitution of any such Mortgage Loan pursuant to Section 3.04.
Any documents released to a Seller or the Servicer in connection
with the foreclosure or servicing of any Mortgage Loan shall be held by such
Person in trust for the benefit of the Purchaser in accordance with this
Section 2.02. Such Person shall return to the Purchaser such documents when
such Person's need therefor in connection with such foreclosure or servicing
no longer exists (unless sooner requested by the Purchaser); provided that, if
such Mortgage Loan is liquidated, then, upon the delivery by a Seller or the
Servicer to the Purchaser of a request for the release of such documents and a
certificate certifying as to such liquidation, the Purchaser shall promptly
release and, to the extent necessary, deliver to such Person such documents.
Section 2.03 Books and Records. The sale of each of its Mortgage
Loans shall be reflected on the applicable Seller's balance sheet and other
financial statements as a sale of assets by the applicable Seller. Each Seller
shall be responsible for maintaining, and shall maintain, a complete set of
books and records for the Mortgage Loans it conveyed to the Purchaser which
shall be clearly marked to reflect the sale of each Mortgage Loan to the
Purchaser and the ownership of each Mortgage Loan by the Purchaser.
Section 2.04 Defective Documents; Delivery of Mortgage Loan
Documents. If, subsequent to the related Funding Date, the Purchaser or either
Seller finds any document or documents constituting a part of a Mortgage File
to be defective or missing in any material respect (in this Section 2.04, a
"Defect"), the party discovering such Defect shall promptly so notify the
other parties. If the Defect pertains to the Mortgage Note or the Mortgage,
then the applicable Seller shall have a period of 60 days within which to
correct or cure any such defect after the earlier of such Seller's discovery
of same or such Seller being notified of same. If such Defect can ultimately
be cured but is not reasonably expected to be cured within such 60-day period,
such Seller shall have such additional time as is reasonably determined by the
Purchaser to cure or correct such Defect, provided that such Seller has
commenced curing or correcting such Defect and is diligently pursuing same;
and provided, however, that in no event shall the cure period be extended
beyond 90 days after notice or discovery of such Defect. If the Defect
pertains to any other document constituting a part of a Mortgage File, then
such Seller shall have
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a period of 60 days within which to correct or cure any such Defect after the
earlier of such Seller's discovery of same or such Seller being notified of
same. If such Defect can ultimately be cured but is not reasonably expected to
be cured within the 60-day period, then such Seller shall have such additional
time as is reasonably determined by the Purchaser to cure or correct such
Defect provided such Seller has commenced curing or correcting such Defect and
is diligently pursuing same; and provided, however, that in no event shall the
cure period be extended beyond 90 days after notice or discovery of such
Defect. PHH Mortgage hereby covenants and agrees that, if any material Defect
cannot be corrected or cured, the related Mortgage Loan shall automatically
constitute, upon the expiration of the applicable cure period described above
and without any further action by any other party, a Defective Mortgage Loan,
whereupon PHH Mortgage shall repurchase such Mortgage Loan by paying to the
Purchaser the Repurchase Price therefor in accordance with Section 3.04.
The applicable Seller will, with respect to each Mortgage Loan to be
purchased by the Purchaser, deliver and release to the Purchaser on the
related Funding Date (or on such earlier date as may be specified in the
related Purchase Price and Terms Letter), the Legal Documents as set forth in
Section 2.01. If the applicable Seller cannot deliver an original Mortgage
with evidence of recording thereon, original assumption, modification and
substitution agreements with evidence of recording thereon or an original
intervening assignment with evidence of recording thereon within the time
periods specified in the preceding sentence, then such Seller shall promptly
deliver to the Purchaser such original Mortgages and original intervening
assignments with evidence of recording indicated thereon upon receipt thereof
from the public recording official, except in cases where the original
Mortgage or original intervening assignments are retained permanently by the
recording office, in which case, such Seller shall deliver a copy of such
Mortgage or intervening assignment, as the case may be, certified to be a true
and complete copy of the recorded original thereof. If the applicable Seller
cannot deliver the original security instrument or if an original intervening
assignment has been lost, then the applicable Seller will deliver a copy of
such security instrument or intervening assignment, certified by the local
public recording official. If the original title policy has been lost, the
applicable Seller will deliver a duplicate original title policy.
If the original Mortgage was not delivered pursuant to the preceding
paragraph, then the applicable Seller shall use its best efforts to promptly
secure the delivery of such originals and shall cause such originals to be
delivered to the Purchaser promptly upon receipt thereof. Notwithstanding the
foregoing, if the original Mortgage, original assumption, modification, and
substitution agreements, the original of any intervening assignment or the
original policy of title insurance is not so delivered to the Purchaser within
180 days following the Funding Date, then, upon written notice by the
Purchaser to PHH Mortgage, the Purchaser may, in its sole discretion, then
elect (by providing written notice to PHH Mortgage) to treat such Mortgage
Loan as a Defective Mortgage Loan, whereupon PHH Mortgage shall repurchase
such Mortgage Loan by paying to the Purchaser the Repurchase Price therefor in
accordance with Section 3.04. It is understood that from time to time certain
local recorder offices become backlogged with document volume. It is agreed
that the Seller will provide an Officers' Certificate to document that the
Seller has performed all necessary tasks to ensure delivery of the required
documentation within 180 days and the delay beyond 180 is caused by the
backlog. If the delay exceeds 240 days, regardless of the backlog the
Purchaser may elect to collect the documents with its own resources with the
reasonable cost and expense to be borne by the Seller.
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The fact that the Purchaser has conducted or failed to conduct any partial or
complete examination of the Mortgage Files shall not affect its right to
demand repurchase or any other remedies provided in this Agreement.
At the Purchaser's request, the Assignments shall be promptly
recorded in the name of the Purchaser or in the name of a Person designated by
the Purchaser in all appropriate public offices for real property records. If
any such Assignment is lost or returned unrecorded because of a defect
therein, then the applicable Seller shall promptly prepare a substitute
Assignment to cure such defect and thereafter cause each such Assignment to be
duly recorded. All recording fees related to such a one-time recordation of
the Assignments to or by a Seller shall be paid by the applicable Seller.
Section 2.05 Transfer of Mortgage Loans. Subject to the provisions
of this Section 2.05, the Purchaser shall have the right, without the consent
of the Sellers, at any time and from time to time, to assign any of the
Mortgage Loans and all or any part of its interest in this Agreement and
designate any person to exercise any rights of the Purchaser hereunder, and
the assignees or designees shall accede to the rights and obligations
hereunder of the Purchaser with respect to such Mortgage Loans. The Sellers
recognize that the Mortgage Loans may be divided into "packages" for resale.
All of the provisions of this Agreement shall inure to the benefit
of the Purchaser and any of its assignees or designees. All references to the
Purchaser shall be deemed to include its assignees or designees. Utilizing
resources reasonably available to the Seller without incurring any cost except
the Seller's overhead and employees' salaries, the applicable Seller shall
cooperate in any such assignment of the Mortgage Loans and this Agreement;
provided that the Purchaser shall bear all costs associated with any such
assignment of the Mortgage Loans and this Agreement other than such Seller's
overhead or employees' salaries.
The Servicer and Purchaser agree that the Servicer shall continue to
remit funds and make available via Servicer's website remittance reports to no
more than four (4) Persons (not including the Servicer or any Affiliate or
transferee thereof) at any given time with respect to any Mortgage Loans sold
on a particular Funding Date.
The Servicer and the Purchaser acknowledge that the Servicer shall
continue to remit payments to the Purchaser on the Remittance Date after the
transfer of the Mortgage Loans, unless the Servicer was notified in writing of
the new record owner of the Mortgage Loans prior to the immediately preceding
Record Date, in which case, the Servicer shall remit to the new record owner
(or trustee or master servicer, as the case may be) of the Mortgage Loans.
Any prospective assignees of the Purchaser who have entered into a
commitment to purchase any of the Mortgage Loans may review and underwrite the
Servicer's servicing and origination operations, upon reasonable prior notice
to the Servicer, and the Servicer shall cooperate with such review and
underwriting to the extent such prospective assignees request information or
documents that are reasonably available and can be produced without
unreasonable expense or effort. The Servicer shall make the Mortgage Files
related to the Mortgage Loans held by the Servicer available at the Servicer's
principal operations center for review by any such prospective assignees
during normal business hours upon reasonable prior
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notice to the Servicer (in no event less than 10 Business Days prior notice).
The Servicer may, in its sole discretion, require that such prospective
assignees sign a confidentiality agreement with respect to such information
disclosed to the prospective assignee which is not available to the public at
large and a release agreement with respect to its activities on the Servicer's
premises.
The Servicer shall keep at its servicing office books and records in
which, subject to such reasonable regulations as it may prescribe, the
Servicer shall note transfers of Mortgage Loans. The Purchaser may, subject to
the terms of this Agreement, sell and transfer, in whole or in part, any or
all of the Mortgage Loans; provided that no such sale and transfer shall be
binding upon the Servicer unless such transferee shall agree in writing to an
Assignment, Assumption and Recognition Agreement, in substantially the form of
Exhibit 2.05 attached hereto, and an executed copy of such Assignment,
Assumption and Recognition Agreement shall have been delivered to the
Servicer. The Servicer shall evidence its acknowledgment of any transfers of
the Mortgage Loans to any assignees of the Purchaser by executing such
Assignment, Assumption and Recognition Agreement. The Servicer shall ▇▇▇▇ its
books and records to reflect the ownership of the Mortgage Loans by any such
assignees, and the previous Purchaser shall be released from its obligations
hereunder accruing after the date of transfer to the extent such obligations
relate to Mortgage Loans sold by the Purchaser. This Agreement shall be
binding upon and inure to the benefit of the Purchaser and the Servicer and
their permitted successors, assignees and designees.
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SELLER;
REPURCHASE AND SUBSTITUTION; REVIEW OF MORTGAGE LOANS
Section 3.01 Representations and Warranties of each Seller. Each
Seller, as to itself, represents, warrants and covenants to the Purchaser that
as of each Funding Date or as of such date specifically provided herein:
(1) Due Organization and Authority. The Seller is a New Jersey
corporation, validly existing, and in good standing under the laws of its
jurisdiction of incorporation or formation and has all licenses necessary to
carry on its business as now being conducted and is licensed, qualified and in
good standing in the states where the 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 Seller. The Seller has corporate power
and authority to execute and deliver this Agreement and to perform its
obligations hereunder; the execution, delivery and performance of this
Agreement (including all instruments of transfer to be delivered pursuant to
this Agreement) by the Seller and the consummation of the transactions
contemplated hereby have been duly and validly authorized; this Agreement has
been duly executed and delivered and constitutes the valid, legal, binding and
enforceable obligation of the Seller, except as enforceability may be limited
by (i) bankruptcy, insolvency, liquidation, receivership, moratorium,
reorganization or other similar laws affecting the enforcement of the rights
of creditors and (ii) general principles of equity, whether enforcement is
sought in a proceeding in equity or at law. All requisite corporate action has
been taken by the Seller to make this Agreement valid and binding upon the
Seller in accordance with its terms;
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(2) No Conflicts. Neither the execution and delivery of this
Agreement, the acquisition or origination of the Mortgage Loans by the Seller,
the sale of the Mortgage Loans to the Purchaser, the consummation of 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 Seller's charter
or by-laws or any legal restriction or any agreement or instrument to which
the Seller 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
Seller or its property is subject, or result in the creation or imposition of
any lien, charge or encumbrance that would have an adverse effect upon any of
its properties pursuant to the terms of any mortgage, contract, deed of trust
or other instrument, or impair the ability of the Purchaser to realize on the
Mortgage Loans, impair the value of the Mortgage Loans, or impair the ability
of the Purchaser to realize the full amount of any insurance benefits accruing
pursuant to this Agreement;
(3) Ability to Perform; Solvency. The Seller 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. The Seller is solvent and the sale
of the Mortgage Loans will not cause the Seller to become insolvent. The sale
of the Mortgage Loans is not undertaken with the intent to hinder, delay or
defraud any of Seller's creditors;
(4) No Material Default. Neither the Seller nor any of its
Affiliates is in material default under any agreement, contract, instrument or
indenture of any nature whatsoever to which the Seller or any of its
Affiliates is a party or by which it (or any of its assets) is bound, which
default would have a material adverse effect on the ability of the Seller to
perform under this Agreement, nor, to the best of the Seller's knowledge, has
any event occurred which, with notice, lapse of time or both, would constitute
a default under any such agreement, contract, instrument or indenture and have
a material adverse effect on the ability of the Seller to perform its
obligations under this Agreement;
(5) Financial Statements. The Seller has delivered to the Purchaser
financial statements as to its last three complete fiscal years and any later
quarter ended more than 60 days prior to the execution of this Agreement. All
such financial statements fairly present the pertinent results of operations
and changes in financial position for each of such periods and the financial
position at the end of each such period of the Seller and its subsidiaries and
have been prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods involved, except as set forth in
the notes thereto. In addition, the Seller has delivered information as to its
loan gain and loss experience in respect of foreclosures and its loan
delinquency experience for the immediately preceding three year period, in
each case with respect to mortgage loans owned by it and such mortgage loans
serviced for others during such period, and all such information so delivered
shall be true and correct in all material respects. There has been no change
in the business, operations, financial condition, properties or assets of the
Seller since the date of the Seller's financial statements that would have a
material adverse effect on its ability to perform its obligations under this
Agreement. The Seller has completed any forms requested by the Purchaser in a
timely manner and in accordance with the provided instructions;
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(6) No Change in Business. There has been no change in the business,
operations, financial condition, properties or assets of the applicable Seller
since (i) in the case of PHH Mortgage, the date of its financial statements
and (ii) in the case of the Trust, the date of delivery of the Trust
Financials, that would have a material adverse effect on the ability of the
applicable Seller to perform its obligations under this Agreement;
(7) No Litigation Pending. There is no action, suit, proceeding or
investigation pending or threatened against the Seller, before any court,
administrative agency or other tribunal asserting the invalidity of this
Agreement, seeking to prevent the consummation of any of the transactions
contemplated by this Agreement or 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 Seller, or in any
material impairment of the right or ability of the Seller to carry on its
business substantially as now conducted, or in any material liability on the
part of the Seller, or which would draw into question the validity of this
Agreement or the Mortgage Loans or of any action taken or to be taken in
connection with the obligations of the Seller contemplated herein, or which
would be likely to impair materially the ability of the Seller to perform
under the terms of this Agreement;
(8) No Consent Required. No consent, approval, authorization or
order is required for the transactions contemplated by this Agreement from any
court, governmental agency or body, or federal or state regulatory authority
having jurisdiction over the Seller is required or, if required, such consent,
approval, authorization or order has been or will, prior to the related
Closing Date, be obtained;
(9) Ordinary Course of Business. The consummation of the
transactions contemplated by this Agreement are in the ordinary course of
business of the Seller, and the transfer, assignment and conveyance of the
Mortgage Notes and the Mortgages by the Seller pursuant to this Agreement are
not subject to the bulk transfer or any similar statutory provisions in effect
in any applicable jurisdiction;
(10) No Brokers. The Seller has not dealt with any broker,
investment banker, agent or other person that may be entitled to any
commission or compensation in connection with the sale of the Mortgage Loans;
(11) No Untrue Information. Neither this Agreement nor any
information, statement, tape, diskette, report, form, or other document
furnished or to be furnished pursuant to this Agreement or any Reconstitution
Agreement or in connection with the transactions contemplated hereby
(including any Securitization Transaction or Whole Loan Transfer) contains or
will contain any untrue statement of fact or omits or will omit to state a
fact necessary to make the statements contained herein or therein not
misleading;
(12) Non-solicitation. The Seller agrees that it shall not solicit
any Mortgagors (in writing or otherwise) to refinance any of the Mortgage
Loans; provided that mass advertising or mailings (such as placing
advertisements on television, on radio, in magazines or in newspapers or
including messages in billing statements) that are not exclusively directed
towards the Mortgagors shall not constitute solicitation and shall not violate
this covenant;
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(13) Privacy. The Seller agrees and acknowledges that as to all
nonpublic personal information received or obtained by it with respect to any
Mortgagor: (a) such information is and shall be held by Seller in accordance
with all applicable law, including but not limited to the privacy provisions
of the ▇▇▇▇▇-▇▇▇▇▇ ▇▇▇▇▇▇ Act, as may be amended from time to time; (b) such
information is in connection with a proposed or actual secondary market sale
related to a transaction of the Mortgagor for purposes of 16 C.F.R.
ss.313.14(a)(3); and (c) Seller is hereby prohibited from disclosing or using
any such information other than to carry out the express provisions of this
Agreement, or as otherwise permitted by applicable law;
(14) Seller's Origination. The Seller's decision to originate any
mortgage loan or to deny any mortgage loan application is an independent
decision based upon the Underwriting Guidelines, and is in no way made as a
result of Purchaser's decision to purchase, or not to purchase, or the price
Purchaser may offer to pay for, any such mortgage loan, if originated; and
(15) Fair Consideration. The consideration received by the Seller
upon the sale of the Mortgage Loans under this Agreement constitutes fair
consideration and reasonably equivalent value for the Mortgage Loans.
Section 3.02 Representations and Warranties of the Servicer. The
Servicer represents, warrants and covenants to the Purchaser that as of the
Funding Date or as of such date specifically provided herein:
(1) Ability to Service. Servicer has 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 duly qualified, licensed,
registered and otherwise authorized under all applicable federal, state and
local laws, and regulations, if applicable, meets the minimum capital
requirements set forth by HUD, the OTS, the OCC or the FDIC, if applicable,
and is in good standing to enforce, originate, sell mortgage loans to, and
service mortgage loans in the jurisdiction wherein the Mortgaged Properties
are located;
(2) No Litigation Pending. There is no action, suit, proceeding or
investigation pending or threatened against the Servicer, before any court,
administrative agency or other tribunal asserting the invalidity of this
Agreement, seeking to prevent the consummation of any of the transactions
contemplated by this Agreement or 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 in
any material impairment of the right or ability of the Servicer to carry on
its business substantially as now conducted, or in any material liability on
the part of the Servicer, or which would draw into question the validity of
this Agreement or the Mortgage Loans 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;
(3) Collection Practices. The collection practices used by the
Servicer with respect to each Mortgage Note and Mortgage have been in all
respects legal, proper and prudent in the mortgage servicing business;
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(4) MERS. The Servicer is a member of MERS in good standing, and
will comply in all material respects with the rules and procedures of MERS in
connection with the servicing of the MERS Mortgage Loans for as long as such
Mortgage Loans are registered with MERS;
(5) Non-solicitation. The Servicer agrees that it shall not solicit
any Mortgagors (in writing or otherwise) to refinance any of the Mortgage
Loans; provided that mass advertising or mailings (such as placing
advertisements on television, on radio, in magazines or in newspapers or
including messages in billing statements) that are not exclusively directed
towards the Mortgagors shall not constitute solicitation and shall not violate
this covenant;
(6) Privacy. The Servicer agrees and acknowledges that as to all
nonpublic personal information received or obtained by it with respect to any
Mortgagor: (a) such information is and shall be held by Servicer in accordance
with all applicable law, including but not limited to the privacy provisions
of the ▇▇▇▇▇-▇▇▇▇▇ Bliley Act, as may be amended from time to time; (b) such
information is in connection with a proposed or actual secondary market sale
related to a transaction of the Mortgagor for purposes of 16 ▇.▇.▇.▇▇.
313.14(a)(3); and (c) Servicer is hereby prohibited from disclosing or using
any such information other than to carry out the express provisions of this
Agreement, or as otherwise permitted by applicable law; and
(7) Reasonable Servicing Fee. The Servicer acknowledges and agrees
that the Servicing Fee represents reasonable compensation for performing such
services and that the entire Servicing Fee shall be treated by the Servicer,
for accounting and tax purposes, as compensation for the servicing and
administration of the Mortgage Loans pursuant to this Agreement.
Section 3.03 Representations and Warranties as to Individual
Mortgage Loans. With respect to each Mortgage Loan, the applicable Seller
hereby makes the following representations and warranties to the Purchaser on
which the Purchaser specifically relies in purchasing such Mortgage Loan. Such
representations and warranties speak as of the Funding Date unless otherwise
indicated, but shall survive any subsequent transfer, assignment or conveyance
of such Mortgage Loans:
(1) Mortgage Loans as Described. Such Mortgage Loan complies with
the terms and conditions set forth herein, and all of the information set
forth in the related Mortgage Loan Schedule is complete, true and correct;
(2) Delivery to the Custodian. The Mortgage Note, the Mortgage, the
Assignment and any other documents required to be delivered with respect to
each Mortgage Loan pursuant to the Custodial Agreement, shall be delivered to
the Custodian all in compliance with the specific requirements of the
Custodial Agreement. With respect to each Mortgage Loan, the Seller will be in
possession of a complete Mortgage File in compliance with Exhibit 2 hereto,
except for such documents as will be delivered to the Custodian;
(3) Owner of Record. The Seller is the owner of record of each
Mortgage and the indebtedness evidenced by each Mortgage Note, except for the
Assignments of Mortgage
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which have been sent for recording, and upon recordation the Seller will be
the owner of record of each Mortgage and the indebtedness evidenced by each
Mortgage Note, and upon the sale of the Mortgage Loans to the Purchaser, the
Seller will retain the Mortgage Files with respect thereto in trust only for
the purpose of servicing and supervising the servicing of each Mortgage Loan;
(4) Payments Current. All payments required to be made up to the
related Closing Date for the Mortgage Loan under the terms of the Mortgage
Note have been made and credited. No payment required under the Mortgage Loan
is 30 days or more delinquent nor has any payment under the Mortgage Loan been
30 days or more delinquent at any time since the origination of the Mortgage
Loan;
(5) No Outstanding Charges. There are no defaults in complying with
the terms of the Mortgage, and all taxes, governmental assessments, insurance
premiums, water, sewer and municipal charges, leasehold payments or ground
rents which previously became due and owing have been paid, or an escrow of
funds has been established in an amount sufficient to pay for every such item
which remains unpaid and which has been assessed but is not yet due and
payable. The Seller has not advanced funds, or induced, solicited or knowingly
received any advance of funds by a party other than the Mortgagor, directly or
indirectly, for the payment of any amount required under the Mortgage Loan,
except for interest accruing from the date of the Mortgage Note or date of
disbursement of the Mortgage Loan proceeds, whichever is earlier, to the day
which precedes by one month the related Due Date of the first installment of
principal and interest;
(6) Original Terms Unmodified. The terms of the Mortgage Note and
Mortgage have not been impaired, waived, altered or modified in any respect,
from the date of origination except by a written instrument which has been
recorded, if necessary to protect the interests of the Purchaser, and which
has been delivered to the Custodian or to such other Person as the Purchaser
shall designate in writing, and the terms of which are reflected in the
related Mortgage Loan Schedule. The substance of any such waiver, alteration
or modification has been approved by the issuer of any related Primary
Insurance Policy and the title insurer, if any, to the extent required by the
policy, and its terms are reflected on the related Mortgage Loan Schedule, if
applicable. No Mortgagor has been released, in whole or in part, except in
connection with an assumption agreement, approved by the issuer of any related
Primary Insurance Policy and the title insurer, to the extent required by the
policy, and which assumption agreement is part of the Mortgage File delivered
to the Custodian or to such other Person as the Purchaser shall designate in
writing and the terms of which are reflected in the related Mortgage Loan
Schedule;
(7) No Defenses. The Mortgage Loan is not subject to any right of
rescission, set-off, counterclaim or defense, including without limitation the
defense of usury, nor will the operation of any of the terms of the Mortgage
Note or the Mortgage, or the exercise of any right thereunder, render either
the Mortgage Note or the Mortgage unenforceable, in whole or in part, or
subject to any right of rescission, set-off, counterclaim or defense,
including without limitation the defense of usury, and no such right of
rescission, set-off, counterclaim or defense has been asserted with respect
thereto;
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(8) Hazard Insurance. Pursuant to the terms of the Mortgage, all
buildings or other improvements upon the Mortgaged Property are insured by a
generally acceptable insurer against loss by fire, hazards of extended
coverage and such other hazards as are provided for in the Underwriting
Guidelines. If required by the National Flood Insurance Act of 1968, as
amended, each Mortgage Loan is covered by a flood insurance policy meeting the
requirements of the current guidelines of the Federal Insurance Administration
as in effect which policy conforms with the Underwriting Guidelines. All
individual insurance policies contain a standard mortgagee clause naming the
Seller and its successors and assigns as mortgagee, and all premiums thereon
have been paid. The Mortgage obligates the Mortgagor thereunder to maintain
the hazard insurance policy at the Mortgagor's cost and expense, and on the
Mortgagor's failure to do so, authorizes the holder of the Mortgage to obtain
and maintain such insurance at such Mortgagor's cost and expense, and to seek
reimbursement therefor from the Mortgagor. Where required by state law or
regulation, the Mortgagor has been given an opportunity to choose the carrier
of the required hazard insurance, provided the policy is not a "master" or
"blanket" hazard insurance policy covering a condominium, or any hazard
insurance policy covering the common facilities of a planned unit development.
The hazard insurance policy is the valid and binding obligation of the
insurer, is in full force and effect, and will be in full force and effect and
inure to the benefit of the Purchaser upon the consummation of the
transactions contemplated by this Agreement. The Seller has not engaged in,
and has no knowledge of the Mortgagor's having engaged in, any act or omission
which would impair the coverage of any such policy, the benefits of the
endorsement provided for herein, or the validity and binding effect of either
including, without limitation, no unlawful fee, commission, kickback or other
unlawful compensation or value of any kind has been or will be received,
retained or realized by any attorney, firm or other person or entity, and no
such unlawful items have been received, retained or realized by the Seller;
(9) Compliance with Applicable Laws. Any and all requirements of any
federal, state or local law including, without limitation, usury,
truth-in-lending, real estate settlement procedures, consumer credit
protection, predatory and abusive lending, equal credit opportunity and
disclosure laws applicable to the Mortgage Loan, including, without
limitation, any provisions relating to a Prepayment Penalty, have been
complied with, the consummation of the transactions contemplated hereby will
not involve the violation of any such laws or regulations, and the Seller
shall maintain in its possession, available for the Purchaser's inspection,
and shall deliver to the Purchaser upon demand, evidence of compliance with
all such requirements. This representation and warranty is a Deemed Material
and Adverse Representation;
(10) No Satisfaction of Mortgage. The Mortgage has not been
satisfied, canceled, subordinated or rescinded, in whole or in part, and the
Mortgaged Property has not been released from the lien of the Mortgage, in
whole or in part, nor has any instrument been executed that would effect any
such release, cancellation, subordination or rescission. The Seller has not
waived the performance by the Mortgagor of any action, if the Mortgagor's
failure to perform such action would cause the Mortgage Loan to be in default,
nor has the Seller waived any default resulting from any action or inaction by
the Mortgagor;
(11) Valid First Lien. The Mortgage is a valid, subsisting,
enforceable and perfected, first lien on the Mortgaged Property, including all
buildings and improvements on the
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Mortgaged Property and all installations and mechanical, electrical, plumbing,
heating and air conditioning systems located in or annexed to such buildings,
and all additions, alterations and replacements made at any time with respect
to the foregoing. The lien of the Mortgage is subject only to:
(a) the lien of current real property taxes and assessments not yet
due and payable;
(b) covenants, conditions and restrictions, rights of way, easements
and other matters of the public record as of the date of recording
acceptable to prudent mortgage lending institutions generally and
specifically referred to in the lender's title insurance policy delivered
to the originator of the Mortgage Loan and (a) specifically referred to
or otherwise considered in the appraisal made for the originator of the
Mortgage Loan or (b) which do not adversely affect the Appraised Value of
the Mortgaged Property set forth in such appraisal; and
(c) other matters to which like properties are commonly subject
which do not materially interfere with the benefits of the security
intended to be provided by the Mortgage or the use, enjoyment, value or
marketability of the related Mortgaged Property.
Any security agreement, chattel mortgage or equivalent document
related to and delivered in connection with the Mortgage Loan establishes and
creates a valid, subsisting, enforceable and perfected first lien and first
priority security interest on the property described therein and the Seller
has full right to sell and assign the same to the Purchaser.
With respect to any Cooperative Loan, the related Mortgage is a
valid, subsisting and enforceable first priority security interest on the
related cooperative shares securing the Mortgage Note, subject only to (a)
liens of the related residential cooperative housing corporation for unpaid
assessments representing the Mortgagor's pro rata share of the related
residential cooperative housing corporation's payments for its blanket
mortgage, current and future real property taxes, insurance premiums,
maintenance fees and other assessments to which like collateral is commonly
subject and (b) other matters to which like collateral is commonly subject
which do not materially interfere with the benefits of the security interest
intended to be provided by the related Security Agreement;
(12) Validity of Mortgage Documents. The Mortgage Note and the
Mortgage and any other agreement executed and delivered by a Mortgagor in
connection with a Mortgage Loan are genuine, and each is the legal, valid and
binding obligation of the maker thereof enforceable in accordance with its
terms. All parties to the Mortgage Note, the Mortgage and any other such
related agreement had legal capacity to enter into the Mortgage Loan and to
execute and deliver the Mortgage Note, the Mortgage and any such agreement,
and the Mortgage Note, the Mortgage and any other such related agreement have
been duly and properly executed by other such related parties. No fraud,
error, omission, misrepresentation, negligence or similar occurrence with
respect to a Mortgage Loan has taken place on the part of the Seller in
connection with the origination of the Mortgage Loan or in the application of
any insurance in relation to such Mortgage Loan. The documents, instruments
and agreements submitted for loan
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underwriting were not falsified and contain no untrue statement of material
fact or omit to state a material fact required to be stated therein or
necessary to make the information and statements therein not misleading. No
fraud, error, omission, misrepresentation, negligence or similar occurrence
with respect to a Mortgage Loan has taken place on the part of any Person,
including without limitation, the Mortgagor, any appraiser, any builder or
developer, or any other party involved in the origination of the Mortgage Loan
or in the application for any insurance in relation to such Mortgage Loan. The
Seller has reviewed all of the documents constituting the Servicing File and
has made such inquiries as it deems necessary to make and confirm the accuracy
of the representations set forth herein;
(13) Valid Execution of Documents. All parties to the Mortgage Note
and the Mortgage related to such Mortgage Loan had legal capacity to enter
into such Mortgage Loan and to execute and deliver the related Mortgage Note
and the related Mortgage and the related Mortgage Note and the related
Mortgage have been duly and properly executed by such parties; with respect to
each Cooperative Loan, all parties to the Mortgage Note and the Mortgage Loan
had legal capacity to execute and deliver the Mortgage Note, the Acceptance of
Assignment and Assumption of Lease Agreement, the Proprietary Lease, the Stock
Power, the Recognition Agreement, the Financing Statement and the Assignment
of Proprietary Lease and such documents have been duly and properly executed
by such parties; each Stock Power (i) has all signatures guaranteed or (ii) if
all signatures are not guaranteed, then such Cooperative Shares will be
transferred by the stock transfer agent of the Cooperative Corporation if the
Seller undertakes to convert the ownership of the collateral securing the
related Cooperative Loan;
(14) Full Disbursement of Proceeds. The Mortgage Loan has been
closed and the proceeds of the Mortgage Loan have been fully disbursed and
there is no requirement for future advances thereunder, and any and all
requirements as to completion of any on-site or off-site improvement and as to
disbursements of any escrow funds therefor have been complied with. All costs,
fees and expenses incurred in making or closing the Mortgage Loan and the
recording of the Mortgage were paid, and the Mortgagor is not entitled to any
refund of any amounts paid or due under the Mortgage Note or Mortgage;
(15) Ownership. The Seller is the sole owner of record and holder of
the Mortgage Loan and the indebtedness evidenced by each Mortgage Note and
upon the sale of the Mortgage Loans to the Purchaser, the Seller will retain
the Mortgage Files or any part thereof with respect thereto not delivered to
the Custodian, the Purchaser or the Purchaser's designee, in trust only for
the purpose of servicing and supervising the servicing of each Mortgage Loan.
The Mortgage Loan is not assigned or pledged, and the Seller has good,
indefeasible and marketable title thereto, and has full right to transfer and
sell the Mortgage Loan to the Purchaser free and clear of any encumbrance,
equity, participation interest, lien, pledge, charge, claim or security
interest, and has full right and authority subject to no interest or
participation of, or agreement with, any other party, to sell and assign each
Mortgage Loan pursuant to this Agreement and following the sale of each
Mortgage Loan, the Purchaser will own such Mortgage Loan free and clear of any
encumbrance, equity, participation interest, lien, pledge, charge, claim or
security interest. The Seller intends to relinquish all rights to possess,
control and monitor the Mortgage Loan. After the related Closing Date, the
Seller will have no right to modify or alter the terms of the sale of the
Mortgage Loan and the Seller will have no obligation or right to repurchase
the Mortgage Loan or substitute another Mortgage Loan, except as provided in
this Agreement;
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(16) Doing Business. All parties which have had any interest in the
Mortgage Loan, whether as mortgagee, assignee, pledgee or otherwise, are (or,
during the period in which they held and disposed of such interest, were) (1)
in compliance with any and all applicable licensing requirements of the laws
of the state wherein the Mortgaged Property is located, and (2) either (i)
organized under the laws of such state, or (ii) qualified to do business in
such state, or (iii) a federal savings and loan association, a savings bank or
a national bank having a principal office in such state, or (3) not doing
business in such state;
(17) Title Insurance. With respect to a Mortgage Loan which is not a
Cooperative Loan, the Mortgage Loan is covered by an ALTA lender's title
insurance policy or other generally acceptable form of policy or insurance
acceptable under the Underwriting Guidelines and each such title insurance
policy is issued by a title insurer acceptable under the Underwriting
Guidelines and qualified to do business in the jurisdiction where the
Mortgaged Property is located, insuring the Seller, its successors and
assigns, as to the first priority lien of the Mortgage in the original
principal amount of the Mortgage Loan (or to the extent a Mortgage Note
provides for negative amortization, the maximum amount of negative
amortization in accordance with the Mortgage), subject only to the exceptions
contained in clauses (a) and (b) of paragraph (11) of this Subsection 3.03,
and in the case of Adjustable Rate Mortgage Loans, against any loss by reason
of the invalidity or unenforceability of the lien resulting from the
provisions of the Mortgage providing for adjustment to the Note Rate and
Monthly Payment. Where required by state law or regulation, the Mortgagor has
been given the opportunity to choose the carrier of the required mortgage
title insurance. Additionally, such lender's title insurance policy
affirmatively insures ingress and egress, and against encroachments by or upon
the Mortgaged Property or any interest therein. The Seller, its successor and
assigns, are the sole insureds of such lender's title insurance policy, and
such lender's title insurance policy is valid and remains in full force and
effect and will be in force and effect upon the consummation of the
transactions contemplated by this Agreement. No claims have been made under
such lender's title insurance policy, and no prior holder of the related
Mortgage, including the Seller, has done, by act or omission, anything which
would impair the coverage of such lender's title insurance policy, including
without limitation, no unlawful fee, commission, kickback or other unlawful
compensation or value of any kind has been or will be received, retained or
realized by any attorney, firm or other person or entity, and no such unlawful
items have been received, retained or realized by the Seller;
(18) No Defaults. Other than payments due but not yet 30 days or
more delinquent, there is no default, breach, violation or event which would
permit acceleration existing under the Mortgage or the Mortgage Note and no
event which, with the passage of time or with notice and the expiration of any
grace or cure period, would constitute a default, breach, violation or event
which would permit acceleration, and neither the Seller nor any of its
affiliates nor any of their respective predecessors, have waived any default,
breach, violation or event which would permit acceleration;
(19) No Mechanics' Liens. There are no mechanics' or similar liens
or claims which have been filed for work, labor or material (and no rights are
outstanding that under law could give rise to such liens) affecting the
related Mortgaged Property which are or may be liens prior to, or equal or
coordinate with, the lien of the related Mortgage;
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(20) Location of Improvements; No Encroachments. All improvements
which were considered in determining the Appraised Value of the Mortgaged
Property lay wholly within the boundaries and building restriction lines of
the Mortgaged Property, and no improvements on adjoining properties encroach
upon the Mortgaged Property. No improvement located on or being part of the
Mortgaged Property is in violation of any applicable zoning law or regulation;
(21) Origination; Payment Terms. The Mortgage Loan was originated by
a mortgagee approved by the Secretary of Housing and Urban Development
pursuant to Sections 203 and 211 of the National Housing Act, a savings and
loan association, a savings bank, a commercial bank, credit union, insurance
company or other similar institution which is supervised and examined by a
federal or state authority. Principal payments on the Mortgage Loan commenced
no more than seventy days after funds were disbursed in connection with the
Mortgage Loan. The Note Rate as well as, in the case of an Adjustable Rate
Mortgage Loan, the Lifetime Rate Cap and the Periodic Rate Cap and the
Periodic Rate Floor are as set forth on the related Mortgage Loan Schedule.
The Note Rate is adjusted, with respect to Adjustable Rate Mortgage Loans, on
each Rate Adjustment Date to equal the Index plus the Gross Margin (rounded up
or down to the nearest 0.125%), subject to the Periodic Rate Cap. The Mortgage
Note is payable in equal monthly installments of principal and interest, which
installments of interest, with respect to Adjustable Rate Mortgage Loans, are
subject to change due to the adjustments to the Note Rate on each Rate
Adjustment Date, with interest calculated and payable in arrears, sufficient
to amortize the Mortgage Loan fully by the stated maturity date, over an
original term of not more than fifteen years from commencement of
amortization. Unless otherwise specified on the related Mortgage Loan
Schedule, the Mortgage Loan is payable on the first day of each month. The
Mortgage Loan by its original terms or any modification thereof, does not
provide for amortization beyond its scheduled maturity date;
(22) Due-On-Sale. With respect to each Fixed Rate Mortgage Loan, the
Mortgage contains an enforceable provision for the acceleration of the payment
of the unpaid principal balance of the Mortgage Loan in the event that the
Mortgaged Property is sold or transferred without the prior written consent of
the mortgagee thereunder;
(23) Prepayment Penalty. No Mortgage Loan is subject to any
prepayment penalty. This representation and warranty is a Deemed Material and
Adverse Representation;
(24) Mortgaged Property Undamaged; No Condemnation Proceedings.
There is no proceeding pending or threatened for the total or partial
condemnation of the Mortgaged Property. The Mortgaged Property is undamaged by
waste, fire, earthquake or earth movement, windstorm, flood, tornado or other
casualty so as to affect adversely the value of the Mortgaged Property as
security for the Mortgage Loan or the use for which the premises were intended
and each Mortgaged Property is in good repair. There have not been any
condemnation proceedings with respect to the Mortgaged Property and the Seller
has no knowledge of any such proceedings in the future;
(25) Customary Provisions. The Mortgage contains customary and
enforceable provisions such as to render the rights and remedies of the holder
thereof adequate for the realization against the Mortgaged Property of the
benefits of the security provided thereby,
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including, (i) in the case of a Mortgage designated as a deed of trust, by
trustee's sale, and (ii) otherwise by judicial foreclosure. Upon default by a
Mortgagor on a Mortgage Loan and foreclosure on, or trustee's sale of, the
Mortgaged Property pursuant to the proper procedures, the holder of the
Mortgage Loan will be able to deliver good and merchantable title to the
Mortgaged Property. There is no homestead or other exemption available to a
Mortgagor which would interfere with the right to sell the Mortgaged Property
at a trustee's sale or the right to foreclose the Mortgage, subject to
applicable federal and state laws and judicial precedent with respect to
bankruptcy and right of redemption or similar law;
(26) Conformance with Agency and Underwriting Guidelines. The
Mortgage Loan was underwritten in accordance with the Underwriting Guidelines
(a copy of which is attached to the related Assignment and Conveyance as
Exhibit C). The Mortgage Note and Mortgage are on forms acceptable to ▇▇▇▇▇▇▇
Mac or ▇▇▇▇▇▇ Mae and no representations have been made to a Mortgagor that
are inconsistent with the mortgage instruments used;
(27) Appraisal. The Mortgage File contains an appraisal of the
related Mortgaged Property signed prior to the approval of the Mortgage Loan
application by a Qualified Appraiser, duly appointed by the Seller, who had no
interest, direct or indirect in the Mortgaged Property or in any loan made on
the security thereof, and whose compensation is not affected by the approval
or disapproval of the Mortgage Loan, and the appraisal and appraiser both
satisfy the requirements of ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac and Title XI of the
Financial Institutions Reform, Recovery, and Enforcement Act of 1989 and the
regulations promulgated thereunder, all as in effect on the date the Mortgage
Loan was originated;
(28) Deeds of Trust. In the event the Mortgage constitutes a deed of
trust, a trustee, authorized and duly qualified under applicable law to serve
as such, has been properly designated and currently so serves and is named in
the Mortgage, and no fees or expenses are or will become payable by the
Purchaser to the trustee under the deed of trust, except in connection with a
trustee's sale after default by the Mortgagor;
(29) LTV, Primary Insurance Policy. No Mortgage Loan has an LTV
greater than 100%. Any Mortgage Loan that had at the time of origination an
LTV in excess of 80% is insured as to payment defaults by a Primary Insurance
Policy. Any Primary Insurance Policy in effect covers the related Mortgage
Loan for the life of such Mortgage Loan. All provisions of such Primary
Insurance Policy have been and are being complied with, such policy is in full
force and effect, and all premiums due thereunder have been paid. No action,
inaction, or event has occurred and no state of facts exists that has, or will
result in the exclusion from, denial of, or defense to coverage. Any Mortgage
Loan subject to a Primary Insurance Policy obligates the Mortgagor thereunder
to maintain the Primary Insurance Policy and to pay all premiums and charges
in connection therewith. The Note Rate for the Mortgage Loan as set forth on
the related Mortgage Loan Schedule is net of any such insurance premium;
(30) Occupancy of the Mortgaged Property. As of the related Closing
Date the Mortgaged Property is lawfully occupied under applicable law. All
inspections, licenses and certificates required to be made or issued with
respect to all occupied portions of the Mortgaged Property and, with respect
to the use and occupancy of the same, including but not limited to
certificates of occupancy and fire underwriting certificates, have been made
or obtained from the
-36-
appropriate authorities. Unless otherwise specified on the related Mortgage
Loan Schedule, the Mortgagor represented at the time of origination of the
Mortgage Loan that the Mortgagor would occupy the Mortgaged Property as the
Mortgagor's primary residence;
(31) Supervision and Examination by a Federal or State Authority.
Each Mortgage Loan either was (a) closed in the name of the PHH Mortgage, or
(b) closed in the name of another entity that is either a savings and loan
association, a savings bank, a commercial bank, credit union, insurance
company or an institution which is supervised and examined by a federal or
state authority, or a mortgagee approved by the Secretary of Housing and Urban
Development pursuant to Sections 203 and 211 of the National Housing Act (a
"HUD Approved Mortgagee"), and was so at the time such Mortgage Loan was
originated (PHH Mortgage or such other entity, the "Originator") or (c) closed
in the name of a loan broker under the circumstances described in the
following sentence. If such Mortgage Loan was originated through a loan
broker, such Mortgage Loan met the Originator's underwriting criteria at the
time of origination and was originated in accordance with the Originator's
policies and procedures and the Originator acquired such Mortgage Loan from
the loan broker contemporaneously with the origination thereof. The Mortgage
Loans that the Trust is selling to Purchaser were originated by or on behalf
of PHH Mortgage and subsequently assigned to the Trust;
(32) Adjustments. All of the terms of the related Mortgage Note
pertaining to interest rate adjustments, payment adjustments and adjustments
of the outstanding principal balance, if any, are enforceable and such
adjustments will not affect the priority of the lien of the related Mortgage;
all such adjustments on such Mortgage Loan have been made properly and in
accordance with the provisions of such Mortgage Loan;
(33) Insolvency Proceedings; Servicemembers Civil Relief Act. To the
best of the Seller's knowledge, the related Mortgagor is not the subject of
any Insolvency Proceeding;
(34) Servicemembers Civil Relief Act. The Mortgagor has not notified
the Seller, and the Seller has no knowledge of any relief requested or allowed
to the Mortgagor under the Servicemembers Civil Relief Act or other similar
state statute;
(35) ▇▇▇▇▇▇ Mae/▇▇▇▇▇▇▇ Mac Documents. Such Mortgage Loan was closed
on standard ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac documents or on such documents otherwise
acceptable to them;
(36) No Buydown Provisions; No Graduated Payments or Contingent
Interests. The Mortgage Loan does not contain provisions pursuant to which
Monthly Payments are paid or partially paid with funds deposited in any
separate account established by the Seller, the Mortgagor, or anyone on behalf
of the Mortgagor, or paid by any source other than the Mortgagor nor does it
contain any other similar provisions which may constitute a "buydown"
provision. The Mortgage Loan is not a graduated payment mortgage loan and the
Mortgage Loan does not have a shared appreciation or other contingent interest
feature;
(37) Recordation. Each original Mortgage was recorded and all
subsequent assignments of the original Mortgage (other than the assignment to
the Purchaser) have been
-37-
recorded in the appropriate jurisdictions wherein such recordation is
necessary to perfect the lien thereof as against creditors of the Seller, or
is in the process of being recorded;
(38) Consolidation of Future Advances. Any future advances made to
the Mortgagor prior to the applicable Cut-off Date have been consolidated with
the outstanding principal amount secured by the Mortgage, and the secured
principal amount, as consolidated, bears a single interest rate and single
repayment term. The lien of the Mortgage securing the consolidated principal
amount is expressly insured as having first lien priority by a title insurance
policy, an endorsement to the policy insuring the mortgagee's consolidated
interest or by other title evidence acceptable to ▇▇▇▇▇▇ Mae and ▇▇▇▇▇▇▇ Mac.
The consolidated principal amount does not exceed the original principal
amount of the Mortgage Loan;
(39) Balloon Loans. Unless otherwise disclosed in the Offering
Materials or the Mortgage Loan Schedule, no Mortgage Loan has a balloon
payment feature. With respect to any Mortgage Loan with a balloon payment
feature, the Mortgage Note is payable in Monthly Payments based on a thirty
year amortization schedule and has a final Monthly Payment substantially
greater than the proceeding Monthly Payment which is sufficient to amortize
the remaining principal balance of the Mortgage Loan;
(40) Condominium Units/PUDs. If the residential dwelling on the
Mortgaged Property is a condominium unit or a unit in a planned unit
development (other than a de minimis planned unit development) such
condominium or planned unit development project meets the eligibility
requirements of the PHH Guide;
(41) Predatory Lending Regulations. No Mortgage Loan is a High Cost
Loan. No Mortgage Loan is covered by the Home Ownership and Equity Protection
Act of 1994 and no Mortgage Loan is in violation of any comparable state or
local law. The Mortgaged Property is not located in a jurisdiction where a
breach of this representation with respect to the related Mortgage Loan may
result in additional assignee liability to the Purchaser, as determined by
Purchaser in its reasonable discretion. This representation and warranty is a
Deemed Material and Adverse Representation;
(42) No Rehabilitation Loan. Unless otherwise disclosed in the
Offering Materials or the Mortgage Loan Schedule, no Mortgage Loan was made in
connection with (a) the construction or rehabilitation of a Mortgaged Property
or (b) facilitating the trade-in or exchange of a Mortgaged Property;
(43) No Adverse Conditions. The Seller has no knowledge of any
circumstances or condition with respect to the Mortgage, the Mortgage Property
(or with respect to a Cooperative Loan, the Acceptance of Assignment and
Assumption of Lease Agreement, the Cooperative Unit or the Cooperative
Project), the Mortgagor or the Mortgagor's credit standing that can reasonably
be expected to cause the Mortgage Loan to be an unacceptable investment, cause
the Mortgage Loan to become delinquent, or adversely affect the value of the
Mortgage Loan;
(44) Scheduled Interest. Interest on each Mortgage Loan is
calculated on the basis of a 360-day year consisting of twelve 30-day months;
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(45) No Violation of Environmental Laws. To the best of the Seller's
knowledge, there is no pending action or proceeding directly involving the
Mortgaged Property in which compliance with any environmental law, rule or
regulation is an issue; there is no violation of any environmental law, rule
or regulation with respect to the Mortgage Property; and nothing further
remains to be done to satisfy in full all requirements of each such law, rule
or regulation constituting a prerequisite to use and enjoyment of said
property;
(46) Negative Amortization. Unless otherwise disclosed in the
Offering Materials or the Mortgage Loan Schedule, no Mortgage Loan is subject
to negative amortization;
(47) Cooperative Lien Search. With respect to each Cooperative Loan,
a Cooperative Lien Search has been made by a company competent to make the
same which company is acceptable to ▇▇▇▇▇▇ Mae and qualified to do business in
the jurisdiction where the Cooperative Unit is located;
(48) Cooperative Loan - Proprietary Lease. With respect to each
Cooperative Loan, (i) the terms of the related Proprietary Lease is longer
than the terms of the Cooperative Loan, (ii) there is no provision in any
Proprietary Lease which requires the Mortgagor to offer for sale the
Cooperative Shares owned by such Mortgagor first to the Cooperative
Corporation, (iii) there is no prohibition in any Proprietary Lease against
pledging the Cooperative Shares or assigning the Proprietary Lease and (iv)
the Recognition Agreement is on a form of agreement published by the Aztech
Document Systems, Inc. or includes provisions which are no less favorable to
the lender than those contained in such agreement;
(49) Cooperative Loan - UCC Financing Statement. With respect to
each Cooperative Loan, each original UCC financing statement, continuation
statement or other governmental filing or recordation necessary to create or
preserve the perfection and priority of the first priority lien and security
interest in the Cooperative Shares and Proprietary Lease has been timely and
properly made. Any security agreement, chattel mortgage or equivalent document
related to the Cooperative Loan and delivered to the Mortgagor or its designee
establishes in the Mortgagor a valid and subsisting perfected first lien on
and security interest in the Mortgaged Property described therein, and the
Mortgagor has full right to sell and assign the same;
(50) Cooperative Loan- Acceptance of Assignment and Assumption of
Lease Agreement. With respect to each Cooperative Loan, each Acceptance of
Assignment and Assumption of Lease Agreement contains enforceable provisions
such as to render the rights and remedies of the holder thereof adequate for
the realization of the benefits of the security provided thereby. The
Acceptance of Assignment and Assumption of Lease Agreement contains an
enforceable provision for the acceleration of the payment of the Unpaid
Principal Balance of the Mortgage Note in the event the Cooperative Unit is
transferred or sold without the consent of the holder thereof;
(51) Imaging. Each imaged document represents a true, complete, and
correct copy of the original document in all respects, including, but not
limited to, all signatures conforming with signatures contained in the
original document, no information having been added or deleted, and no imaged
document having been manipulated or altered in any manner.
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Each imaged document is clear and legible, including, but not limited to,
accurate reproductions of photographs. No original documents have been or will
be altered in any manner;
(52) Qualified Mortgage. The Mortgage Loan is a qualified mortgage
under Section 860G(a)(3) of the Code;
(53) No Adverse Selection. The Seller used no adverse selection
procedures in selecting the Mortgage Loans among the outstanding first lien
residential mortgagee loans owned by it which were available for inclusion in
the Mortgage Loans;
(54) Leaseholds. If the Mortgage Loan is secured by a long-term
residential lease, (1) the lessor under the lease holds a fee simple interest
in the land; (2) the terms of such lease expressly permit the mortgaging of
the leasehold estate, the assignment of the lease without the lessor's consent
and the acquisition by the holder of the Mortgage of the rights of the lessee
upon foreclosure or assignment in lieu of foreclosure or provide the holder of
the Mortgage with substantially similar protections; (3) the terms of such
lease do not (a) allow the termination thereof upon the lessee's default
without the holder of the Mortgage being entitled to receive written notice
of, and opportunity to cure, such default, (b) allow the termination of the
lease in the event of damage or destruction as long as the Mortgage is in
existence, (c) prohibit the holder of the Mortgage from being insured (or
receiving proceeds of insurance) under the hazard insurance policy or policies
relating to the Mortgaged Property or (d) permit any increase in rent other
than pre-established increases set forth in the lease; (4) the original term
of such lease is not less than 15 years; (5) the term of such lease does not
terminate earlier than five years after the maturity date of the Mortgage
Note; and (6) the Mortgaged Property is located in a jurisdiction in which the
use of leasehold estates in transferring ownership in residential properties
is a widely accepted practice;
(55) Assumability. With respect to each Adjustable Rate Mortgage
Loan, the Mortgage Loan Documents provide that after the related first Rate
Adjustment Date, a related Mortgage Loan may only be assumed if the party
assuming such Mortgage Loan meets certain credit requirements stated in the
Mortgage Loan Documents;
(56) Disclosure Materials. The Mortgagor has executed a statement to
the effect that the Mortgagor has received all disclosure materials required
by, and the Seller has complied with, all applicable law with respect to the
making of the Mortgage Loans. The Seller shall maintain such statement in the
Mortgage File;
(57) No Defense to Insurance Coverage. No action has been taken or
failed to be taken, no event has occurred and no state of facts exists or has
existed on or prior to the related Funding Date (whether or not known to the
Seller on or prior to such date) which has resulted or will result in an
exclusion from, denial of, or defense to coverage under any primary mortgage
insurance (including, without limitation, any exclusions, denials or defenses
which would limit or reduce the availability of the timely payment of the full
amount of the loss otherwise due thereunder to the insured), provided this
shall not include the failure of such insurer to pay by reason of such
insurer's breach of such insurance policy or such insurer's financial
inability to pay;
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(58) Prior Servicing. Each Mortgage Loan has been serviced in
compliance with Accepted Servicing Practices;
(59) Credit Information. As to each consumer report (as defined in
the Fair Credit Reporting Act, Public Law 91-508) or other credit information
furnished by the Seller to the Purchaser, that Seller has full right and
authority and is not precluded by law or contract from furnishing such
information to the Purchaser and the Purchaser is not precluded from
furnishing the same to any subsequent or prospective purchaser of such
Mortgage. The Seller has and shall in its capacity as servicer, for each
Mortgage Loan, fully furnished, 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 Equifax, Experian
and Trans Union Credit Information Company (three of the credit repositories),
on a monthly basis. This representation and warranty is a Deemed Material and
Adverse Representation;
(60) Convertible Loans. With respect to ARM Loans, unless otherwise
set forth in the Mortgage Loan Schedule, the Mortgage Loan is not a
Convertible Mortgage Loan;
(61) Type of Mortgaged Property. With respect to a Mortgage Loan
that is not a Cooperative Loan and is not secured by an interest in a
leasehold estate, the Mortgaged Property is a fee simple estate that consists
of a single parcel of real property with a detached single family residence
erected thereon, or a two- to four-family dwelling, or an individual
residential condominium unit in a condominium project, or an individual unit
in a planned unit development, or an individual unit in a residential
cooperative housing corporation; provided, however, that any condominium unit,
planned unit development or residential cooperative housing corporation shall
conform with the Underwriting Guidelines. No portion of the Mortgaged Property
(or underlying Mortgaged Property, in the case of a Cooperative Loan) is used
for commercial purposes, and since the date of origination, no portion of the
Mortgaged Property has been used for commercial purposes; provided, that
Mortgaged Properties which contain a home office shall not be considered as
being used for commercial purposes as long as the Mortgaged Property has not
been altered for commercial purposes and is not storing any chemicals or raw
materials other than those commonly used for homeowner repair, maintenance
and/or household purposes. None of the Mortgaged Properties are Manufactured
Homes, log homes, mobile homes, geodesic domes or other unique property types.
This representation and warranty is a Deemed Material and Adverse
Representation;
(62) No Additional Collateral. The Mortgage Note is not and has not
been secured by any collateral except the lien of the corresponding Mortgage
and the security interest of any applicable security agreement or chattel
mortgage referred to in clause (j) above;
(63) Acceptable Investment. There are no circumstances or conditions
with respect to the Mortgage, the Mortgaged Property, the Mortgagor, the
Mortgage File or the Mortgagor's credit standing that can reasonably be
expected to cause private institutional investors who invest in prime mortgage
loans similar to the Mortgage Loan to regard the Mortgage Loan as an
unacceptable investment, cause the Mortgage Loan to become delinquent, or
adversely affect the value or marketability of the Mortgage Loan, or cause the
Mortgage Loan to prepay during any period materially faster or slower than the
mortgage loans originated by the Seller generally. No Mortgaged Property is
located in a state, city, county or other local
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jurisdiction which the Buyer has determined in its sole good faith discretion
would cause the related Mortgage Loan to be ineligible for whole loan sale or
securitization in a transaction consistent with the prevailing sale and
securitization industry (including, without limitation, the practice of the
rating agencies) with respect to substantially similar mortgage loans;
(64) Transfer of Mortgage Loans. The Assignment (except with respect
to any Mortgage that has been recorded in the name of MERS or its designee)
with respect to each Mortgage Loan is in recordable form and is acceptable for
recording under the laws of the jurisdiction in which the Mortgaged Property
is located;
(65) Collection Practices; Escrow Deposits; Interest Rate
Adjustments. The origination, servicing and collection practices used by the
Seller with respect to the Mortgage Loan have been in all respects in
compliance with Accepted Servicing Practices, applicable laws and regulations,
and have been in all respects legal and proper. With respect to escrow
deposits and Escrow Payments, all such payments are in the possession of, or
under the control of, the Seller and there exist no deficiencies in connection
therewith for which customary arrangements for repayment thereof have not been
made. All Escrow Payments have been collected in full compliance with state
and federal law and the provisions of the related Mortgage Note and Mortgage.
An escrow of funds is not prohibited by applicable law and has been
established in an amount sufficient to pay for every item that remains unpaid
and has been assessed but is not yet due and payable. No escrow deposits or
Escrow Payments or other charges or payments due the Seller have been
capitalized under the Mortgage or the Mortgage Note. All Note Rate adjustments
have been made in strict compliance with state and federal law and the terms
of the related Mortgage and Mortgage Note on the related Rate Adjustment Date.
If, pursuant to the terms of the Mortgage Note, another index was selected for
determining the Note Rate, the same index was used with respect to each
Mortgage Note which required a new index to be selected, and such selection
did not conflict with the terms of the related Mortgage Note. The Seller
executed and delivered any and all notices required under applicable law and
the terms of the related Mortgage Note and Mortgage regarding the Note Rate
and the Monthly Payment adjustments. Any interest required to be paid pursuant
to state, federal and local law has been properly paid and credited;
(66) Conversion to Fixed Interest Rate. The Mortgage Loan does not
contain a provision whereby the Mortgagor is permitted to convert the Note
Rate from an adjustable rate to a fixed rate;
(67) Other Insurance Policies; No Defense to Coverage. No action,
inaction or event has occurred and no state of facts exists or has existed on
or prior to the Closing Date that has resulted or will result in the exclusion
from, denial of, or defense to coverage under any applicable hazard insurance
policy, Primary Insurance Policy or bankruptcy bond (including, without
limitation, any exclusions, denials or defenses which would limit or reduce
the availability of the timely payment of the full amount of the loss
otherwise due thereunder to the insured), irrespective of the cause of such
failure of coverage. The Seller has caused or will cause to be performed any
and all acts required to preserve the rights and remedies of the Purchaser in
any insurance policies applicable to the Mortgage Loans including, without
limitation, any necessary notifications of insurers, assignments of policies
or interests therein, and establishments of coinsured, joint loss payee and
mortgagee rights in favor of the Purchaser.
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In connection with the placement of any such insurance, no commission, fee, or
other compensation has been or will be received by the Seller or by any
officer, director, or employee of the Seller or any designee of the Seller or
any corporation in which the Seller or any officer, director, or employee had
a financial interest at the time of placement of such insurance;
(68) Construction or Rehabilitation of Mortgaged Property. No
Mortgage Loan was made in connection with the construction (other than a
"construct-to-perm" loan) or rehabilitation of a Mortgaged Property or
facilitating the trade-in or exchange of a Mortgaged Property;
(69) Escrow Analysis. If applicable, with respect to each Mortgage,
the Seller has within the last twelve months (unless such Mortgage was
originated within such twelve month period) analyzed the required Escrow
Payments for each Mortgage and adjusted the amount of such payments so that,
assuming all required payments are timely made, any deficiency will be
eliminated on or before the first anniversary of such analysis, or any overage
will be refunded to the Mortgagor, in accordance with RESPA and any other
applicable law;
(70) Leaseholds. If the Mortgage Loan is secured by a leasehold
estate, (1) the ground lease is assignable or transferable; (2) the ground
lease will not terminate earlier than five years after the maturity date of
the Mortgage Loan; (3) the ground lease does not provide for termination of
the lease in the event of lessee's default without the mortgagee being
entitled to receive written notice of, and a reasonable opportunity to cure
the default; (4) the ground lease permits the mortgaging of the related
Mortgaged Property; (5) the ground lease protects the mortgagee's interests in
the event of a property condemnation; (6) all ground lease rents, other
payments, or assessments that have become due have been paid; and (7) the use
of leasehold estates for residential properties is a widely accepted practice
in the jurisdiction in which the Mortgaged Property is located;
(71) Single-premium credit life insurance policy. No Mortgagor was
required to purchase any single premium credit insurance policy (e.g., life,
mortgage, disability, property, accident, unemployment or health insurance
product) or debt cancellation agreement as a condition of obtaining the
extension of credit. No Mortgagor obtained a prepaid single premium credit
insurance policy (e.g., life, mortgage, disability, property, accident,
unemployment, mortgage or health insurance) in connection with the origination
of the Mortgage Loan. No proceeds from any Mortgage Loan were used to purchase
single premium credit insurance policies or debt cancellation agreements as
part of the origination of, or as a condition to closing, such Mortgage Loan.
This representation and warranty is a Deemed Material and Adverse
Representation;
(72) Tax Service Contract. Each Mortgage Loan is covered by a paid
in full, life of loan, tax service contract issued by First American Real
Estate Tax Service, and such contract is transferable;
(73) Origination. No predatory or deceptive lending practices,
including, without limitation, the extension of credit without regard to the
ability of the Mortgagor to repay and the extension of credit which has no
apparent benefit to the Mortgagor, were employed in the origination of the
Mortgage Loan;
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(74) Cooperative Loans. With respect to a Mortgage Loan that is a
Cooperative Loan, the stock that is pledged as security for the Mortgage Loan
is held by a person as a tenant-stockholder (as defined in Section 216 of the
Code) in a cooperative housing corporation (as defined in Section 216 of the
Code);
(75) Mortgagor Bankruptcy. On or prior to the date 60 days after the
related Closing Date, the Mortgagor has not filed and will not file a
bankruptcy petition or has not become the subject and will not become the
subject of involuntary bankruptcy proceedings or has not consented to or will
not consent to the filing of a bankruptcy proceeding against it or to a
receiver being appointed in respect of the related Mortgaged Property;
(76) No Prior Offer. The Mortgage Loan has not previously been
offered for sale;
(77) Georgia Fair Lending Act. There is no Mortgage Loan that was
originated (or modified) on or after October 1, 2002 and before March 7, 2003
which is secured by property located in the State of Georgia. There is no
Mortgage Loan that was originated on or after March 7, 2003 that is a "high
cost home loan" as defined under the Georgia Fair Lending Act. This
representation and warranty is a Deemed Material and Adverse Representation;
(78) No Arbitration. No Mortgagor with respect to any Mortgage Loan
originated on or after August 1, 2004 agreed to submit to arbitration to
resolve any dispute arising out of or relating in any way to the mortgage loan
transaction. This representation and warranty is a Deemed Material and Adverse
Representation;
(79) Flood Service Contract. Each Mortgage Loan is covered by a paid
in full, life of loan, flood service contract issued by First American Real
Estate Tax Service or Fidelity, and such contract is transferable;
(80) Origination Practices/No Steering. No Mortgagor was encouraged
or required to select a mortgage loan product offered by the Mortgage Loan's
originator which is a higher cost product designed for less creditworthy
borrowers, unless at the time of the Mortgage Loan's origination, such
Mortgagor did not qualify taking into account credit history and
debt-to-income ratios for a lower-cost credit product then offered by the
Mortgage Loan's originator or any affiliate of the Mortgage Loan's originator.
If, at the time of loan application, the Mortgagor may have qualified for a
lower-cost credit product then offered by any mortgage lending affiliate of
the Mortgage Loan's originator, the Mortgage Loan's originator referred the
Mortgagor's application to such affiliate for underwriting consideration. This
representation and warranty is a Deemed Material and Adverse Representation;
(81) Underwriting Methodology. The methodology used in underwriting
the extension of credit for each Mortgage Loan employs, in part, objective
mathematical principles which relate the Mortgagor's income, assets and
liabilities to the proposed payment and such underwriting methodology does not
rely on the extent of the Mortgagor's equity in the collateral as the
principal determining factor in approving such credit extension. Such
underwriting methodology confirmed that at the time of origination
(application/approval) the Mortgagor had
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a reasonable ability to make timely payments on the Mortgage Loan. This
representation and warranty is a Deemed Material and Adverse Representation;
(82) Points and Fees. No Mortgagor was charged "points and fees"
(whether or not financed) in an amount greater than (i) $1,000, or (ii) 5% of
the principal amount of such Mortgage Loan, whichever is greater. For purposes
of this representation, such 5% limitation is calculated in accordance with
▇▇▇▇▇▇ Mae's anti-predatory lending requirements as set forth in the ▇▇▇▇▇▇
Mae Guides and "points and fees" (x) include origination, underwriting, broker
and finder fees and charges that the mortgagee imposed as a condition of
making the Mortgage Loan, whether they are paid to the mortgagee or a third
party; and (y) exclude bona fide discount points, fees paid for actual
services rendered in connection with the origination of the Mortgage Loan
(such as attorneys' fees, notaries fees and fees paid for property appraisals,
credit reports, surveys, title examinations and extracts, flood and tax
certifications, and home inspections), the cost of mortgage insurance or
credit-risk price adjustments, the costs of title, hazard, and flood insurance
policies, state and local transfer taxes or fees, escrow deposits for the
future payment of taxes and insurance premiums, and other miscellaneous fees
and charges that, in total, do not exceed 0.25% of the principal amount of
such Mortgage Loan. This representation and warranty is a Deemed Material and
Adverse Representation; and
(83) Fees Charges. All points, fees and charges (including finance
charges) and whether or not financed, assessed, collected or to be collected
in connection with the origination and servicing of each Mortgage Loan have
been disclosed in writing to the Mortgagor in accordance with applicable state
and federal law and regulation. This representation and warranty is a Deemed
Material and Adverse Representation.
Section 3.04 Repurchase and Substitution. It is understood and
agreed that the representations and warranties set forth in Sections 3.01,
3.02 and 3.03 shall survive the sale of the Mortgage Loans to the Purchaser
and shall inure to the benefit of the Purchaser, notwithstanding any
restrictive or qualified endorsement on any Mortgage Note or Assignment or the
examination of any Mortgage File.
Upon discovery by either of the Sellers or the Purchaser of a breach
of any of the representations and warranties contained in Sections 3.01, 3.02
or 3.03 that materially and adversely affects the interest of the Purchaser
(or that materially and adversely affects the interests of the Purchaser in
the related Mortgage Loan, in the case of a representation or warranty
relating to a particular Mortgage Loan), the party discovering such breach
shall give prompt written notice to the other.
Unless permitted a greater period of time to cure as set forth in
Section 2.04, the applicable Seller shall have a period of 60 days from the
earlier of either discovery by or receipt of written notice from the Purchaser
to the Seller of any breach of any of the representations and warranties
contained in Sections 3.01, 3.02 or 3.03 that materially and adversely affects
the interest of the Purchaser (or that materially and adversely affects the
interests of the Purchaser in the related Mortgage Loan, in the case of a
representation or warranty relating to a particular Mortgage Loan) (a
"Defective Mortgage Loan"; provided that "Defective Mortgage Loan" shall also
include (a) any Mortgage Loan treated or designated as such in accordance with
Section 2.04 and (b) any Mortgage Loan regarding which the Mortgagor fails to
make the first
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regularly scheduled payment of principal and interest within 30 days of its
Due Date) within which to correct or cure such breach. If such breach can
ultimately be cured but is not reasonably expected to be cured within the
60-day period, then the applicable Seller shall have such additional time, if
any, as is reasonably determined by the Purchaser to cure such breach,
provided that the Seller has commenced curing or correcting such breach and is
diligently pursuing same. Notwithstanding anything to the contrary contained
herein, (i) within sixty (60) days after the earlier of either discovery by,
or notice to, the Seller of any breach of the representation and warranty set
forth in clause (52) of Subsection 3.03, the Seller shall repurchase such
Mortgage Loan at the Repurchase Price and (ii) any breach of a Deemed Material
and Adverse Representation shall automatically be deemed to materially and
adversely affect the value of the Mortgage Loans or the interest of the
Purchaser therein. Each Seller hereby covenants and agrees with respect to
each Mortgage Loan conveyed by it that, if any breach relating thereto cannot
be corrected or cured within the applicable cure period or such additional
time, if any, as is reasonably determined by the Purchaser, then such Seller
shall, at the direction of the Purchaser, repurchase the Defective Mortgage
Loan at the applicable Repurchase Price. Notwithstanding anything to the
contrary contained herein, if the first regularly scheduled payment of
principal and interest due under any Mortgage Loan has been delinquent more
than 30 days, the Purchaser may, by written notice to the applicable Seller,
require that the Seller repurchase the related Mortgage Loan. However, if the
Seller provides evidence that the delinquency was due to a servicing setup
error, no repurchase shall be required. Within 10 Business Days following the
delivery of any such written notice from the Purchaser, the applicable Seller
shall repurchase the specified Mortgage Loan by paying the Repurchase Price
therefor by wire transfer of immediately available funds directly to the
Purchaser's Account.
Except with respect to any breach of the representation and warranty
set forth in clause (52) of Subsection 3.03, the applicable Seller may, at its
option and assuming that such Seller has a Qualified Substitute Mortgage Loan
or Qualified Substitute Mortgage Loans, rather than repurchase the Mortgage
Loan as provided above, remove such Mortgage Loan ("Deleted Mortgage Loan")
and substitute in its place a Qualified Substitute Mortgage Loan or Qualified
Substitute Mortgage Loans, provided that no such substitution shall be
effected after the Mortgage Loan has been conveyed as part of a Sale
transaction as described in Section 3.05 hereof and no such substitution shall
be effected more than 180 days after the related Funding Date. If the
applicable Seller has no Qualified Substitute Mortgage Loan, it shall
repurchase the Defective Mortgage Loan.
As to any Deleted Mortgage Loan for which the applicable Seller
substitutes a Qualified Substitute Mortgage Loan or Qualified Substitute
Mortgage Loans, the applicable Seller shall effect such substitution by
delivering to the Purchaser or its designee for such Qualified Substitute
Mortgage Loan or Qualified Substitute Mortgage Loans the Legal Documents as
are required by Section 2. In the event of a repurchase or substitution, the
Seller shall, simultaneously with such reassignment, give written notice (by
telecopier, electronically or otherwise) to the Purchaser that such repurchase
or substitution has taken place, amend the related Mortgage Loan Schedule to
reflect the withdrawal of the Deleted Mortgage Loan from this Agreement, and,
in the case of substitution, identify the Qualified Substitute Mortgage Loan
or Qualified Substitute Mortgage Loans and amend the related Mortgage Loan
Schedule to reflect the addition of such Qualified Substitute Mortgage Loan or
Qualified Substitute Mortgage
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Loans to this Agreement. Upon such substitution, such Qualified Substitute
Mortgage Loan or Qualified Substitute Mortgage Loans shall be subject to the
terms of this Agreement in all respects, and the applicable Seller shall be
deemed to have made with respect to such Qualified Substitute Mortgage Loan or
Qualified Substitute Mortgage Loans, as of the date of substitution, the
covenants, representations and warranties set forth in Sections 3.01, 3.02 and
3.03. The Seller shall effect such substitution by delivering to the Custodian
for such Qualified Substitute Mortgage Loan the documents required by Section
2.03, with the Mortgage Note endorsed as required by Section 2.03. No
substitution will be made in any calendar month after the Determination Date
for such month.
For any month in which the applicable Seller substitutes one or more
Qualified Substitute Mortgage Loans for one or more Deleted Mortgage Loans,
the applicable Seller will determine the amount (if any) by which the
aggregate principal balance of all such Qualified Substitute Mortgage Loans as
of the date of substitution (after application of scheduled principal payments
due in the month of substitution which have been received or as to which an
advance has been made) is less than the aggregate outstanding principal
balance of all such Deleted Mortgage Loans. The amount of such shortfall shall
be paid by the applicable Seller on the date of such substitution) by wire
transfer of immediately available funds directly to the Purchaser's Account.
Any repurchase of a Defective Mortgage Loan required hereunder shall
be accomplished by payment of the applicable Repurchase Price within 3
Business Days of expiration of the applicable time period referred to above in
paragraph 3.04 by wire transfer of immediately available funds directly to the
Purchaser's Account. It is understood and agreed that the obligations of a
Seller (a) set forth in this Section 3.04 to cure any breach of such Seller's
representations and warranties contained in Sections 3.01, 3.02 and 3.03 or to
repurchase the Defective Mortgage Loan or Defective Mortgage Loans and (b) set
forth in Section 9.01 to indemnify the Indemnified Parties in connection with
any breach of a Seller's representations and warranties contained in Sections
3.01, 3.02 and 3.03 shall constitute the sole remedies of the Purchaser
respecting a breach of such representations and warranties.
The parties further agree that, in recognition of the Trust's rights
against PHH Mortgage with respect to the Mortgage Loans acquired by it from
PHH Mortgage and conveyed to the Purchaser hereunder, the Purchaser shall have
the right to cause PHH Mortgage to repurchase directly any Defective Mortgage
Loan (other than as a result of a breach by the Trust of Section 3.03(3) or
3.03(16) hereof, in which case the Purchaser shall have the right to cause the
Trust to repurchase directly the Defective Mortgage Loan) acquired hereunder
by the Purchaser from the Trust.
Section 3.05 Removal of Mortgage Loans from Inclusion Under this
Agreement Upon an Agency Transfer, Whole-Loan Transfer or a Securitization
Transaction on One or More Reconstitution Dates. Without incurring undue
effort or any cost except the Seller's overhead or employees' salaries, each
Seller shall take reasonable steps to assist the Purchaser, if the Purchaser
so requests by 15 days' advance written notice to the related Seller or
Sellers (it is agreed that electronic mail shall be considered valid
notification if not followed by verbal communication by the Purchaser to the
related Seller or Sellers), in re-selling the Mortgage
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Loans in (i) an Agency Transfer, (ii) a Whole Loan Transfer or (iii) a
Securitization Transaction (each, a "Sale") in each case retaining the
Servicer as the servicer or subservicer thereof, or as applicable the
"seller/servicer."
Unless otherwise agreed to between the Purchaser and the Servicer,
the Purchaser shall give the Servicer 15 days notice of any Sale. The Servicer
shall cooperate with the Purchaser in connection with each Sale in accordance
with this Section. In connection therewith the Servicer shall:
(1) negotiate in good faith and timely execute any Reconstitution
Agreements, required by Purchaser to effectuate the foregoing; provided such
agreements create no materially greater obligation or cost on the part of the
Servicer than otherwise set forth in this Agreement;
(2) represent to the Purchaser, the depositor, the trustee, and the
initial purchaser of the securities issued in connection with any Sale that:
(1) that the Servicer has serviced the Mortgage Loans in accordance with the
terms of this Agreement, and has otherwise complied with all covenants and
obligations hereunder, and (2) that the Servicer has taken no action that
would, nor omitted to take any required action the omission of which would,
have the effect of impairing any mortgage insurance or guarantee on the
Mortgage Loans. The Servicer also agrees to represent the accuracy of any
information provided to the Purchaser by the Servicer for inclusion in any
prospectus supplement, offering memorandum or term sheet prepared in
connection with any Sale;
(3) provide as applicable:
(a) any and all information regarding delinquencies and defaults
with respect to Servicer's Mortgage Loan portfolio and appropriate
verification of information which may be reasonably available to the
Servicer, whether through letters of its auditors and counsel or
otherwise, as the Purchaser shall request;
(b) such additional statements, certificates or other similar
documents of the Servicer or reports from the Servicer's accountants in
connection with a Securitization Transaction and in substance as required
by applicable law; and
(c) such additional representations, warranties, covenants, opinions
of counsel, letters from auditors, financial description of the Servicer
as servicer for inclusion in any offering documents to be distributed to
potential investors in connection with a Sale with respect to the
Mortgage Loans, and certificates of public officials or officers of the
Servicer as are reasonably believed necessary by the trustee, any Rating
Agency, the Purchaser, as the case may be, in connection with such Sale.
The Purchaser shall pay all third party costs associated with the
preparation of such information;
(4) enter into any other servicing, custodial or other similar
agreements, that are consistent with the provisions of this Agreement, and
which contain such provisions as are customary in securitizations rated "AAA"
(including a securitization involving a REMIC);
(5) restate the representations and warranties contained in Article
III hereof as of the closing date of such Sale; provided, however, that with
respect to the representations and
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warranties set forth in Section 3.03 (4), (20), (21), (25), (31), and (58),
the Seller or Servicer may make such additional qualifications as are
reasonably necessary to make such representations and warranties accurate at
the time of such restatement;
(6) provide such opinions of counsel as are customary in such
transactions, provided, however, that any opinion of outside counsel shall be
provided at Purchaser's expense;
(7) to execute, deliver and satisfy all conditions set forth in any
indemnity agreement required by the Purchaser or any participant in such Sale,
including, without limitation, an Indemnification and Contribution Agreement
in substantially the form attached hereto as Exhibit 13; and
(8) provide ▇▇▇▇▇▇▇▇-▇▇▇▇▇ certification in the form of Exhibit 11.
In connection with a Securitization Transaction, the Purchaser may
be required to engage a master servicer or trustee to determine the allocation
of payments to and make remittances to the certificateholders, at the
Purchaser's sole cost and expense. In the event that a master servicer or
trustee is requested by the Purchaser to determine the allocation of payments
and to make remittances to the certificateholders, the Servicer agrees to
service the Mortgage Loans in accordance with the reasonable and customary
requirements of such Securitization Transaction, which may include the
Servicer's acting as a subservicer in a master servicing arrangement. With
respect to the then owners of the Mortgage Loans, the Servicer shall
thereafter deal solely with such master servicer or trustee, as the case may
be with respect to such Mortgage Loans which are subject to the Securitization
Transaction and shall not be required to deal with any other party with
respect to such Mortgage Loans. The cost of such Securitization Transaction
shall be borne by the Purchaser, other than the Seller's overhead or
employees' salaries.
The Servicer shall indemnify each Indemnified Party and hold each of
them harmless from and against any losses, damages, liabilities, penalties,
fines, forfeitures, reasonable and necessary legal fees and related costs,
judgments, and any other costs, fees and expenses that each of them may
sustain arising from any false statements or omissions with respect to
information provided by or on behalf of the Servicer in connection with any
Sale.
In the event the Purchaser has elected to have the Servicer hold
record title to the Mortgages, prior to a Reconstitution Date the Servicer or
its designee shall prepare an Assignment of the Mortgage in blank from the
Servicer, acceptable to ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac, as applicable, the trustee
or such third party, as the case may be, for each Mortgage Loan that is part
of a Sale and shall pay all preparation and recording costs associated
therewith. The Servicer shall execute each Assignment of the Mortgage, track
such Assignments of the Mortgage to ensure they have been recorded and deliver
them as required by ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac, as applicable, the trustee or
such third party, as the case may be, upon the Servicer's receipt thereof.
Additionally, the Servicer shall prepare and execute, at the direction of the
Purchaser, any note endorsements in connection with any and all Reconstitution
Agreements.
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All Mortgage Loans not sold or transferred pursuant to a Sale shall
remain subject to this Agreement.
With respect to any Mortgage Loans sold in a Securitization
Transaction where the Servicer remains as the servicer, the Servicer agrees
that on or before March 1st each year following the year such Securitization
Transaction occurs, the Servicer shall deliver to the depositor and the
trustee, a certification in the form attached as Exhibit 11 hereto, executed
by a senior officer of the Servicer in charge of servicing for use in
connection with any Form 10-K to be filed with the Securities and Exchange
Commission with respect to the securitization trust. The obligation to provide
such certification will terminate to the extent the related securitization
trust's obligation to file reports under the Exchange Act terminates. The
Servicer shall indemnify and hold harmless the Indemnified Parties from and
against any losses, damages, penalties, fines, forfeitures, reasonable and
necessary legal fees and related costs, judgments and other costs and expenses
arising out of or based upon any breach of the Servicer's obligations under
this paragraph or the Servicer's material misstatement or omission, bad faith
or willful misconduct in connection therewith.
Notwithstanding any provisions of this Agreement to the contrary,
all Mortgage Loans sold or transferred to ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac shall be
serviced in accordance with the ▇▇▇▇▇▇ Mae Guide or the ▇▇▇▇▇▇▇ Mac Servicing
Guide, as applicable, as the same may be amended from time to time. The
Servicer further agrees that it will service the related Mortgage Loans in
accordance with the terms of any ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac requirements which
are in addition to those set forth in the ▇▇▇▇▇▇ Mae Guide or the ▇▇▇▇▇▇▇ Mac
Servicing Guide. The Servicer acknowledges that the Purchaser may from to time
sell or transfer certain of the Mortgage Loans to ▇▇▇▇▇▇ Mae and/ or ▇▇▇▇▇▇▇
Mac or deliver certain securities secured by the Mortgage Loans to ▇▇▇▇▇▇ Mae
or ▇▇▇▇▇▇▇ Mac to be guaranteed. In the event such sale or delivery occurs,
the Servicer agrees that it shall deliver to ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac, all
reports, certificates, and other documentation required by each such agency
and that it shall remit to ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac, as applicable, all
amounts required to be remitted in accordance with such agency's guaranty
program. The Purchaser and the Servicer agree that any Mortgage Loans sold by
the Purchaser to ▇▇▇▇▇▇ Mae, will be managed in accordance with the Process
Guidelines set forth in Exhibit 12 hereto. The Servicer acknowledges that the
requirements of the Process Guidelines are in addition to the Servicer's
obligations to service the Loans in accordance with the ▇▇▇▇▇▇ ▇▇▇ Guide and
Accepted Servicing Practices.
Section 3.06 Review of Mortgage Loans. From the related Funding Date
until the date 30 days after the related Funding Date, the Purchaser shall
have the right to review the Mortgage Files and obtain BPOs on the Mortgaged
Properties relating to the Mortgage Loans purchased on the related Funding
Date, with the results of such BPO reviews to be communicated to the Seller
for a period up to 30 days after the related Funding Date. In addition, the
Purchaser shall have the right to reject any Mortgage Loan which in the
Purchaser's sole determination (i) fails to conform to the PHH Guide, (ii) is
not an acceptable credit risk, or (iii) the value which based on the related
BPO varies by more than plus or minus 15% from the lesser of (A) the original
appraised value of the Mortgaged Property or (B) the purchase price of the
Mortgaged Property. In the event the Purchaser so rejects any Mortgage Loan,
the Seller shall repurchase the rejected Mortgage Loan at the Repurchase Price
in the manner prescribed in Section 3.04 upon receipt of notice from the
Purchaser of the rejection of such Mortgage Loan.
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Any rejected Mortgage Loan shall be removed from the related Mortgage Loan
Schedule. The Seller shall make available all files required by Purchaser in
order to complete its review. To the extent that during the course of the
Purchaser's initial review, the Purchaser discovers that the Mortgage Loans do
not otherwise comport with the terms of the PHH Guide or this Agreement, the
Purchaser shall have the right to carry out additional due diligence reviews,
which additional due diligence shall be at the expense of the Seller.
Purchaser's decision to increase its level of due diligence review or obtain
additional BPO's or other property evaluations is at its sole discretion. The
additional reviews may be for any reason including but not limited to credit
quality, property valuations, and data integrity. Any review performed by the
Purchaser prior to the related Funding Date shall not limit the Purchaser's
rights or the Seller's obligations under this Section.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE
PURCHASER AND CONDITIONS PRECEDENT TO FUNDING
Section 4.01 Representations and Warranties.
The Purchaser represents, warrants and covenants to the Seller that
as of each Funding Date or as of such date specifically provided herein:
(1) Due Organization. The Purchaser is an entity duly organized,
validly existing and in good standing under the laws of its jurisdiction of
organization, and has all licenses necessary to carry on its business now
being conducted and is licensed, qualified and in good standing under the laws
of each state where a Mortgaged Property is located or is otherwise exempt
under applicable law from such qualification or is otherwise not required
under applicable law to effect such qualification; no demand for such
qualification has been made upon the Purchaser by any state having
jurisdiction and in any event the Purchaser is or will be in compliance with
the laws of any such state to the extent necessary to enforce each Mortgage
Loan.
(2) Due Authority. The Purchaser had the full power and authority
and legal right to acquire the Mortgage Loans that it acquired. The Purchaser
has the full power and authority to hold each Mortgage Loan, to sell each
Mortgage Loan and to execute, deliver and perform, and to enter into and
consummate, all transactions contemplated by this Agreement. The Purchaser has
duly authorized the execution, delivery and performance of this Agreement, has
duly executed and delivered this Agreement, and this Agreement, assuming due
authorization, execution and delivery by the Seller, constitutes a legal,
valid and binding obligation of the Purchaser, enforceable against it in
accordance with its terms, subject to applicable bankruptcy, reorganization,
receivership, conservatorship, insolvency, moratorium and other laws relating
to or affecting creditors' rights generally or the rights of creditors of
banks and to the general principles of equity (whether such enforceability is
considered in a proceeding in equity or at law);
(3) No Conflict. None of the execution and delivery of this
Agreement, the acquisition or origination, as applicable, of the Mortgage
Loans by the Purchaser, the purchase of
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the Mortgage Loans, the consummation of the transactions contemplated hereby,
or 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 Purchaser's organizational documents and
bylaws or any legal restriction or any agreement or instrument to which the
Purchaser is now a party or by which it is bound, or constitute a default or
result in an acceleration under any of the foregoing, or result in the
violation of any law, rule, regulation, order, judgment or decree to which the
Purchaser or its property is subject, or impair the ability of the Purchaser
to realize on the Mortgage Loans, or impair the value of the Mortgage Loans;
(4) Ability to Perform. The Purchaser 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;
(5) No Material Default. The Purchaser is not in material default
under any agreement, contract, instrument or indenture of any nature
whatsoever to which the Purchaser is a party or by which it (or any of its
assets) is bound, which default would have a material adverse effect on the
ability of the Purchaser to perform under this Agreement, nor, to the best of
the Purchaser's knowledge, has any event occurred which, with notice, lapse of
time or both would constitute a default under any such agreement, contract,
instrument or indenture and have a material adverse effect on the ability of
the Purchaser to perform its obligations under this Agreement;
(6) No Change in Business. There has been no change in the business,
operations, financial condition, properties or assets of the Purchaser since
the date of the Purchaser's financial statements that would have a material
adverse effect on the ability of the Purchaser to perform its obligations
under this Agreement;
(7) Litigation Pending. There is no action, suit, proceeding or
investigation pending against the Purchaser, which, either in any one instance
or in the aggregate, if determined adversely to the Purchaser would adversely
affect the Purchaser's ability to purchase the Mortgage Loans;
(8) Broker. The Purchaser 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.
(9) 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 Purchaser of or compliance by the
Purchaser with this Agreement, the purchase of the Mortgage Loans from the
Seller or the consummation of the transactions contemplated by this Agreement
or, if required, such approval has been obtained prior to the Funding Date;
(10) Ordinary Course of Business. The consummation of the
transactions contemplated by this Agreement is in the ordinary course of
business of the Purchaser;
(11) Non-Petition Agreement. The Purchaser covenants and agrees that
it shall not, prior to the date which is one year and one day (or if longer,
the applicable preference period then in effect) after the payment in full of
all rated obligations of ▇▇▇▇▇▇'▇ Gate Residential Mortgage Trust, acquiesce,
petition or otherwise, directly or indirectly, invoke or cause ▇▇▇▇▇▇'▇
-▇▇-
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ Mortgage Trust to invoke the process of any governmental
authority for the purpose of commencing or sustaining a case against ▇▇▇▇▇▇'▇
Gate Residential Mortgage Trust under any federal or state bankruptcy,
insolvency or similar law or appointing a receiver, liquidator, assignee,
trustee, custodian, sequestrator, or other similar official of ▇▇▇▇▇▇'▇ Gate
Residential Mortgage Trust. This covenant and agreement shall be binding upon
the Purchaser and any assignee or transferee of the Purchaser;
(12) No Untrue Information. Neither this Agreement nor any statement
or instrument furnished or to be furnished pursuant to this Agreement contains
or will contain any materially untrue statement of fact or omits or will omit
to state a fact necessary to make the statements contained therein not
misleading;
(13) Non-solicitation. The Purchaser agrees that it shall not
solicit any Mortgagors (in writing or otherwise) to refinance any of the
Mortgage Loans; provided that mass advertising or mailings (such as placing
advertisements on television, on radio, in magazines or in newspapers or
including messages in billing statements) that are not exclusively directed
towards the Mortgagors shall not constitute solicitation and shall not violate
this covenant;
(14) Privacy. Purchaser agrees and acknowledges that as to all
nonpublic personal information received or obtained by it with respect to any
Mortgagor: (a) such information is and shall be held by Purchaser in
accordance with all applicable law, including but not limited to the privacy
provisions of the ▇▇▇▇▇-▇▇▇▇▇ ▇▇▇▇▇▇ Act, as may be amended from time to time;
(b) such information is in connection with a proposed or actual secondary
market sale related to a transaction of the Mortgagor for purposes of 16
C.F.R.ss.313.14(a)(3); and (c) Purchaser is hereby prohibited from disclosing
or using any such information other than to carry out the express provisions
of this Agreement, or as otherwise permitted by applicable law; and
(15) MERS. The Purchaser is a member of MERS in good standing, and
will comply in all material respects with the rules and procedures of MERS in
connection with the Purchaser's performance of its obligations under this
Agreement with respect to the Mortgage Loans, for as long as such Mortgage
Loans are registered with MERS.
Section 4.02 Conditions Precedent to Closing. Each purchase of
Mortgage Loans hereunder shall be subject to each of the following conditions:
(a) All of the representations and warranties of the Seller under
the PHH Guide, and of the Sellers and Purchaser under this Agreement
shall be true and correct as of the related Funding Date, and no event
shall have occurred which, with notice or the passage of time, would
constitute an Event of Default under this Agreement or under the PHH
Guide;
(b) On or before the each Funding Date, the Seller shall submit to
the Purchaser fully executed originals of the following documents:
(i) this Agreement, in four counterparts;
(ii) the Custodial Agreement, in four counterparts;
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(iii) an Officers' Certificate, in the form of Exhibit 9 hereto,
including all attachments thereto;
(iv) an Opinion of Counsel to the Seller;
(v) a certificate or other evidence of merger or change of name,
signed or stamped by the applicable regulatory authority, if any, which
states that the Mortgage Loans were acquired by the Seller by merger or
acquired or originated by the Seller while conducting business under a
name other than its present name, if applicable;
(vi) the related Purchase Price and Terms Letter, together with the
related Mortgage Loan Schedule;
(c) The closing documents for the Mortgage Loans to be purchased on
each Funding Date shall consist of fully executed originals of the
following documents:
(i) the related Purchase Price and Terms Letter together with the
related Mortgage Loan Schedule;
(ii) this Agreement, as originally executed (subject to amendments),
in four counterparts;
(iii) the Custodial Agreement, as originally executed (subject to
amendments), in four counterparts;
(iv) an Officers' Certificate, in the form of Exhibit 9 hereto, as
originally executed (subject to amendments), including all attachments
thereto;
(v) an Opinion of Counsel to the Seller (to the extent requested by
the Seller with respect to a specific sale of Mortgage Loans);
(vi) the related Mortgage Loan Schedule, one copy to be attached to
each counterpart of this Agreement, and to each counterpart of the
related Custodial Agreement; and
(vii) an Assignment, Assumption and Recognition Agreement, in the
form of Exhibit 2.05 hereto.
(d) All other terms and conditions of this Agreement and the
Purchase Price and Terms Letter shall have been complied with.
Subject to the foregoing conditions, Purchaser shall pay to Seller
on each Funding Date the applicable Purchase Price as provided herein.
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ARTICLE V
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 5.01 PHH Mortgage to Act as Servicer; Servicing Standards;
Additional Documents; Consent of the Purchaser. (1) The Servicer, as
independent contract servicer, shall service and administer the Mortgage Loans
and REO Property from and after each Funding Date in accordance with the terms
and provisions of the Mortgage Loans, applicable law and the terms and
provisions of this Agreement for and on behalf of, and in the best interests
of, the Purchaser (without taking into account any relationship the Servicer
may have with any Mortgagor or other Person, the participation, if any, of the
Servicer in any financing provided in connection with the sale of any
Mortgaged Property, or the Servicer's obligation to advance any expenses or
incur any costs in the performance of its duties hereunder) in accordance with
a standard that is not less than the higher of (a) the same care, skill,
prudence and diligence with which it services similar assets held for its own
or its Affiliates' account and (b) the same care, skill, prudence and
diligence with which it services similar assets for third party institutional
investors, in each case giving due consideration to customary and usual
standards of practice of prudent institutional mortgage loan servicers
utilized with respect to mortgage loans comparable to the Mortgage Loans.
Subject to the foregoing standards, in connection with such servicing and
administration, the Servicer shall seek to maximize the timely recovery of
principal and interest on the Mortgage Notes; provided that nothing contained
herein shall be construed as an express or implied guarantee by the Servicer
of the collectibility of payments on the Mortgage Loans or shall be construed
as impairing or adversely affecting any rights or benefits specifically
provided by this Agreement to the Seller, including with respect to Servicing
Fees.
In the event that any of the Mortgage Loans included on the Mortgage
Loan Schedule for a particular Funding Date are Pledged Asset Mortgage Loans,
such Pledged Asset Mortgage Loans will be serviced in accordance with Section
5.18 hereof.
(2) To the extent consistent with Section 5.01(1) and further
subject to any express limitations set forth in this Agreement, the Servicer
(acting alone or, solely in the circumstances permitted hereunder, acting
through a subservicer) shall have full power and authority to do or cause to
be done any and all things that it may deem necessary or desirable in
connection with such servicing and administration, including the power and
authority (a) to execute and deliver, on behalf of the Purchaser, customary
consents or waivers and other instruments and documents (including estoppel
certificates), (b) to consent to transfers of any Mortgaged Property and
assumptions of the Mortgage Notes and related Mortgages, (c) to submit claims
to collect any Insurance Proceeds and Liquidation Proceeds, (d) to consent to
the application of any Insurance Proceeds or Condemnation Proceeds to the
restoration of the applicable Mortgaged Property or otherwise, (e) to bring an
action in a court of law, including an unlawful detainer action, to enforce
rights of the Purchaser with respect to any Mortgaged Property, (f) to execute
and deliver, on behalf of the Purchaser, documents relating to the management,
operation, maintenance, repair, leasing, marketing and sale of any Mortgaged
Property or any REO Property, and (g) to effectuate foreclosure or other
conversion of the ownership of the Mortgaged Property securing any Mortgage
Loan; provided that the Servicer shall not take any action not provided for in
this Agreement that is materially inconsistent with or materially prejudices
the interest of the Purchaser in any Mortgage Loan or under this
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Agreement. If reasonably requested by the Servicer, the Purchaser shall
furnish the Servicer with any powers of attorney and other documents
reasonably necessary or appropriate to enable the Servicer to service and
administer the Mortgage Loans and the REO Properties, including documents
relating to the foreclosure, receivership, management, operation, maintenance,
repair, leasing, marketing and sale (in foreclosure or otherwise) of any
Mortgaged Property or any REO Property. Nothing contained in this Agreement
shall limit the ability of the Servicer to lend money to (whether on a secured
or unsecured basis), and otherwise generally engage in any kind of business or
dealings with, any Mortgagor as though the Servicer were not a party to this
Agreement or to the transactions contemplated hereby.
(3) Notwithstanding anything to the contrary contained herein:
(a) the Servicer acknowledges that the Purchaser will retain title
to, and ownership of, the Mortgage Loans and the REO Properties and that
the Servicer does not hereby acquire any title to, security interest in,
or other rights of any kind in or to any Mortgage Loan or REO Property or
any portion thereof;
(b) the Servicer shall not file any lien or any other encumbrance
on, exercise any right of setoff against, or attach or assert any claim
in or on any Mortgage Loan or REO Property, unless authorized pursuant to
a judicial or administrative proceeding or a court order;
(c) the Servicer shall, in servicing the Mortgage Loans, follow and
comply with the servicing guidelines established by ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇
Mac, as applicable, provided that the Servicer shall specifically notify
the Purchaser in writing and obtain the Purchaser's written consent prior
to the Servicer taking any of the following actions: (1) modifying,
amending or waiving any of the financial terms of, or making any other
material modifications to, a Mortgage Loan, except the Servicer may be
permitted to do so in the event of a Specially Serviced Mortgage Loan or,
upon the Mortgagor's request, accept a principal prepayment and
re-amortize the then remaining principal balance over the then remaining
term of the loan (resulting in a lower scheduled monthly payment but no
change in the maturity date); (2) selling any Specially Serviced Mortgage
Loan; (3) making, with respect to any Specially Serviced Mortgage Loan or
REO Property, Servicing Advances provided that the Servicer shall not be
required to so advise the Purchaser to the extent that each related
Servicing Advance as to the related Mortgaged Property or REO Property is
in the best interests of the Purchaser or other owner of the Mortgage
Loan and that are deemed to be recoverable by the Servicer; (4) forgiving
principal or interest on, or permitting to be satisfied at a discount,
any Mortgage Loan except in the event of a Specially Serviced Mortgage
Loan; (5) accepting substitute or additional collateral, or releasing any
collateral, for a Mortgage Loan. If the Purchaser has not approved or
rejected in writing any proposed action(s) recommended by the Servicer to
be taken hereunder within 5 Business Days of the date such recommendation
is made, then the Purchaser shall be deemed to have rejected such
recommended action(s) and the Servicer shall not take any such action(s);
(d) the Servicer shall notify the Purchaser of any modification,
waiver or amendment of any term of any Mortgage Loan and the date thereof
and shall deliver to
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the Purchaser, for deposit in the related Mortgage File, an original
counterpart of the agreement relating to such modification, waiver or
amendment promptly following the execution thereof;
(e) in accordance with the ▇▇▇▇▇▇ Mae Guide and the ▇▇▇▇▇▇▇ Mac
Servicing Guide, the Servicer shall be entitled to workout compensation
as it relates to repayment plans, loan modifications, short-sales and
deed-in lieu of foreclosure as evidenced in Exhibit 5.01;
(f) the Servicer shall remain primarily liable for the full
performance of its obligations hereunder notwithstanding any appointment
by the Servicer of a subservicer or subservicers hereunder; and
(g) the Purchaser may at any time and from time to time, in its sole
discretion, terminate the Servicer's servicing obligations hereunder with
respect to (1) any REO Property upon 10 Business Days written notice to
the Servicer, or (2) any Mortgage Loan that, in accordance with the
Purchaser's internal credit classification criteria, has been classified
as "doubtful" or a "loss," upon 30 calendar days written notice to the
Servicer, and Purchaser shall in each case reimburse Servicer all Monthly
Advances and take all necessary steps to assume such servicing. Upon the
effectiveness of any such termination of the Servicer's servicing
obligations with respect to any such REO Property or Mortgage Loan, the
Servicer shall deliver all agreements, documents, and instruments related
thereto to the Purchaser, in accordance with applicable law.
Section 5.02 Collection of Mortgage Loan Payments. Continuously from
the date hereof until the principal and interest on all Mortgage Loans are
paid in full, the Servicer will proceed diligently to collect all payments due
under each Mortgage Loan when the same shall become due and payable and shall,
to the extent such procedures shall be consistent with this Agreement and the
terms and provisions of any related Primary Insurance Policy, follow such
collection procedures as it follows with respect to mortgage loans comparable
to the Mortgage Loans, which procedures shall in any event comply with the
servicing standards set forth in Section 5.01. Furthermore, the Servicer shall
ascertain and estimate annual ground rents, taxes, assessments, fire and
hazard insurance premiums, mortgage insurance premiums, and all other charges
that, as provided in the Mortgages, will become due and payable 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.
Section 5.03 Notice of Specially Serviced Mortgage Loans and
Foreclosure Sale. (a) The Servicer shall, within five (5) calendar days
following each Record Date, deliver to the Purchaser monthly reports
substantially in the form of Exhibit 5.03(a) with respect to all Specially
Serviced Mortgage Loans. The Servicer shall, within one (1) Business Day
following the occurrence of any foreclosure sale with respect to any Mortgaged
Property, deliver to the Purchaser a notice of foreclosure sale substantially
in the form of Exhibit 5.03(b).
(b) 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.
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Section 5.04 Establishment of Collection Account; Deposits in
Collection Account. The Servicer shall segregate and hold all funds collected
and received pursuant to each Mortgage Loan separate and apart from any of its
own funds and general assets and shall establish and maintain one or more
Collection Accounts, in the form of time deposit or demand accounts. Any funds
deposited in the Collection Account shall at all times be fully insured to the
full extent permitted under applicable law. The creation of any Collection
Account shall be evidenced by a certification in the form of Exhibit 5.04-1
attached hereto, in the case of an account established with the Servicer, or a
letter agreement in the form of Exhibit 5.04-2 attached hereto, in the case of
an account held by a depository other than the Servicer. In either case, a
copy of such certification or letter agreement shall be furnished to the
Purchaser.
The Servicer shall deposit in the Collection Account, within two
Business Days of receipt (or as otherwise required pursuant to this Agreement
in the case of clauses (8), (9) and (10) of this Section 5.04) and retain
therein the following payments and collections received or made by it
subsequent to each Funding Date, or received by it prior to the Funding Date
but allocable to a period subsequent thereto, other than in respect of
principal and interest on the Mortgage Loans due on or before the Funding
Date:
(1) all payments on account of principal, including Principal
Prepayments, on the Mortgage Loans;
(2) all payments on account of interest less the Servicing Fee on
the Mortgage Loans;
(3) all Liquidation Proceeds;
(4) all REO Proceeds;
(5) all Insurance Proceeds, including amounts required to be
deposited pursuant to Sections 5.10 and 5.11, other than proceeds to be held
in the Escrow Account and applied to the restoration or repair of the
Mortgaged Properties or released to the applicable Mortgagors in accordance
with the Servicer's normal servicing procedures, the related Mortgages or
applicable law;
(6) all Condemnation Proceeds affecting any Mortgaged Property which
are not released to a Mortgagor in accordance with the Servicer's normal
servicing procedures, the related Mortgage or applicable law;
(7) any Monthly Advances in accordance with Section 6.03;
(8) any amounts required to be deposited by the Servicer pursuant to
Section 5.11 in connection with the deductible clause in any blanket hazard
insurance policy, such deposit to be made from the Servicer's own funds
without reimbursement therefor;
(9) any amounts required to be deposited by the Servicer pursuant to
Section 5.16 in connection with any losses on Permitted Investments; and
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(10) any amounts required to be deposited in the Collection Account
pursuant to Sections 7.01 or 7.02 or otherwise pursuant to the terms hereof.
The foregoing requirements for deposit in the Collection Account
shall be exclusive, it being understood and agreed that, without limiting the
generality of the foregoing, payments in the nature of servicing fees, late
payment charges and assumption fees, to the extent permitted by Section 7.01,
need not be deposited by the Servicer in the Collection Account and shall be
retained by the Servicer as additional compensation.
Section 5.05 Permitted Withdrawals from the Collection Account. The
Servicer may, from time to time in accordance with the provisions hereof,
withdraw amounts from the Collection Account for the following purposes
(without duplication):
(1) to reimburse itself for unreimbursed Monthly Advances and
Servicing Advances that the Servicer has determined to be Non-Recoverable
Advances as provided in Section 6.04;
(2) to make payments to the Purchaser in the amounts, at the times
and in the manner provided for in Section 6.01;
(3) to reimburse itself for Monthly Advances, the Servicer's right
to reimburse itself pursuant to this Subsection (3) being limited to amounts
received on the related Mortgage Loan which represent late payments of
principal and/or interest with respect to which any such Monthly Advance was
made;
(4) to reimburse itself for unreimbursed Servicing Advances and for
unreimbursed Monthly Advances, the Servicer's right to reimburse itself
pursuant to this Subsection (4) with respect to any Mortgage Loan being
limited to related Liquidation Proceeds, Condemnation Proceeds, Insurance
Proceeds 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 such reimbursement, the Servicer's right thereto shall be
prior to the rights of the Purchaser, except that, where a Seller or the
Servicer is required to repurchase (or substitute a Qualified Substitute
Mortgage Loan for) a Mortgage Loan pursuant to Sections 2.04, 3.04 and/or
7.02, the Servicer's right to such reimbursement shall be subsequent and
subordinate to the payment to the Purchaser of the applicable Repurchase Price
(or delivery of a Qualified Substitute Mortgage Loan) and all other amounts
required to be paid to the Purchaser with respect to such Mortgage Loan;
(5) to pay to itself as additional servicing compensation any
interest earned on funds in the Collection Account (all such interest to be
withdrawn monthly not later than each Remittance Date), and any prepayment
penalties or premiums relating to any Principal Prepayments; provided that no
such amounts shall be payable as servicing compensation to the extent they
relate to a Mortgage Loan with respect to which a default, breach, violation,
or event of acceleration exists or would exist but for the lapse of time, the
giving of notice, or both;
(6) to pay to itself with respect to each Mortgage Loan that has
been repurchased pursuant to Sections 2.04, 3.04 and/or 7.02 all amounts
received thereon and not
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distributed as of the date on which the related Repurchase Price is determined
(except to the extent that such amounts constitute part of the Repurchase
Price to be remitted to the Purchaser);
(7) to remove any amounts deposited into the Collection Account in
error; and
(8) to clear and terminate the Collection Account upon the
termination of this Agreement, with any funds contained therein to be
distributed in accordance with the terms of this Agreement.
The Servicer shall keep and maintain a separate, detailed
accounting, on a Mortgage Loan-by-Mortgage Loan basis, for the purpose of
justifying any withdrawal from the Collection Account pursuant to this
Section. All funds required to be deposited in the Collection Account shall be
held in trust for the Purchaser until withdrawn in accordance with this
Section 5.05.
Section 5.06 Establishment of Escrow Accounts; Deposits in Escrow.
The Servicer shall segregate and hold all funds collected and received
pursuant to each Mortgage Loan which constitute Escrow Payments separate and
apart from any of its own funds and general assets and shall establish and
maintain one or more Escrow Accounts, in the form of time deposit or demand
accounts. Any funds deposited in the Escrow Accounts shall at all times be
fully insured to the full extent permitted under applicable law. The creation
of any Escrow Account shall be evidenced by a certification in the form shown
on Exhibit 5.06-1 attached hereto, in the case of an account established with
the Servicer, or a letter agreement in the form shown on Exhibit 5.06-2
attached hereto, in the case of an account held by a depository other than the
Servicer, such depository having been consented to by the Purchaser. In either
case, a copy of such certification or letter agreement shall be furnished to
the Purchaser.
The Servicer shall deposit in each Escrow Account within two
Business Days of receipt, and retain therein, (i) all Escrow Payments
collected on account of the related Mortgage Loans for the purpose of
effecting timely payment of any such items as required under the terms of this
Agreement, and (ii) all Insurance Proceeds which are to be applied to the
restoration or repair of any Mortgaged Property. The Servicer shall make
withdrawals therefrom only to effect such payments as are required under
Sections 5.07 and/or 5.08. 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 and, to the extent required by law, the Servicer shall pay
interest on escrowed funds to the Mortgagor notwithstanding that the Escrow
Account is non-interest bearing or that interest paid thereon is insufficient
for such purposes, without any right of reimbursement therefor.
Section 5.07 Permitted Withdrawals From Escrow Accounts. Withdrawals
from any Escrow Account may be made by the Servicer only (i) to effect timely
payments of ground rents, taxes, assessments, hazard insurance premiums,
Primary Insurance Policy premiums, if applicable, and comparable 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 that represent late payments or collections of Escrow Payments
thereunder, (iii) to refund to the Mortgagor any funds as may be determined to
be overages, (iv) if permitted by applicable law, for transfer to the
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Collection Account in accordance with the terms of this Agreement, (v) for
application to the restoration or repair of the Mortgaged Property in
accordance with the terms of the related Mortgage Loan, (vi) to pay to the
Servicer, or to the Mortgagor to the extent required by law, any interest paid
on the funds deposited in the Escrow Account, (vii) to reimburse a Mortgagor
in connection with the making of the Payoff of the related Mortgage Loan or
the termination of all or part of the escrow requirement in connection with
the Mortgage Loan, (viii) to remove any amounts deposited into the Escrow
Account in error; or (ix) to clear and terminate the Escrow Account on the
termination of this Agreement.
Section 5.08 Payment of Taxes, Insurance and Other Charges;
Maintenance of Primary Insurance Policies; Collections Thereunder. With
respect to each Mortgage Loan, the Servicer shall maintain accurate records
reflecting the status of ground rents, taxes, assessments, and other charges
which are or may become a lien upon the Mortgaged Property and the status of
Primary Insurance Policy premiums and fire and hazard insurance coverage and
shall obtain, from time to time, all bills for the payment of such charges,
including renewal premiums, and shall effect payment thereof prior to the
applicable penalty or termination date and at a time appropriate for securing
maximum discounts allowable, employing for such purpose deposits of the
Mortgagor in the Escrow Account which shall have been estimated and
accumulated by the Servicer in amounts sufficient for such purposes, as
allowed under the terms of the Mortgage and applicable law. If a Mortgage does
not provide for Escrow Payments, then the Servicer shall require that any such
payments be made by the Mortgagor at the time they first become due. The
Servicer assumes full responsibility for the timely payment of all such bills
and shall effect timely payments of all such bills irrespective of the
Mortgagor's faithful performance in the payment of same or the making of the
Escrow Payments and shall make advances from its own funds to effect such
payments but shall be entitled to reimbursement thereof in accordance with the
terms of this Agreement.
The Servicer shall maintain in full force and effect a Primary
Insurance Policy, conforming in all respects to the description set forth in
Section 3.03(30), issued by an insurer described in that Section, with respect
to each Mortgage Loan for which such coverage is required. Such coverage will
be maintained until the Loan-to-Value Ratio of the related Mortgage Loan is
reduced to 75% or less in the case of a Mortgage Loan having a Loan-to-Value
Ratio at origination in excess of 80% or until such time, if any, as such
insurance is required to be released in accordance with the provisions of
applicable law including, but not limited to, the Homeowners Protection Act of
1998. The Servicer shall assure that all premiums due under any Primary
Insurance Policy are paid in a timely manner, but, shall be entitled to
reimbursement pursuant to the terms of this Agreement for premiums paid by the
Servicer on behalf of any Mortgagor who is obligated to pay such premiums but
fails to do so. The Servicer shall not cancel or refuse to renew any Primary
Insurance Policy in effect on the related Funding Date that is required to be
kept in force under this Agreement unless a replacement Primary Insurance
Policy for such canceled or nonrenewed policy is obtained from and maintained
with an insurer that satisfies the standards set forth in Section 3.03(30).
The Servicer shall not take any action which would result in noncoverage under
any applicable Primary Insurance Policy of any loss which, but for the actions
of the Servicer, would have been covered thereunder. In connection with any
assumption or substitution agreement entered into or to be entered into
pursuant to Section 7.01, the Servicer shall promptly notify the insurer under
the related Primary Insurance Policy, if any, of such assumption or
substitution of liability in accordance with the terms of such
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policy and shall take all actions which may be required by such insurer as a
condition to the continuation of coverage under the Primary Insurance Policy.
If such Primary Insurance Policy is terminated as a result of such assumption
or substitution of liability, then the Servicer shall obtain, and, except as
otherwise provided above, maintain, a replacement Primary Insurance Policy as
provided above.
In connection with its activities as servicer, the Servicer agrees
to prepare and present, on behalf of itself and the Purchaser, claims to the
insurer under any Primary Insurance Policy in a timely fashion in accordance
with the terms of such policies and, in this regard, to take such action as
shall be necessary to permit recovery under any Primary Insurance Policy
respecting a defaulted Mortgage Loan. Pursuant to Section 5.04, any amounts
collected by the Servicer under any Primary Insurance Policy shall be
deposited in the Collection Account, subject to withdrawal in accordance with
Section 5.05.
Purchaser, in its sole discretion, at any time, may (i) either
obtain an additional Primary Insurance Policy on any Mortgage Loan which
already has a Primary Insurance Policy in place, or (ii) obtain a Primary
Insurance Policy for any Mortgage Loan which does not already have a Primary
Insurance Policy in place. Upon the mutual agreement of the Purchaser and the
Servicer, such Primary Insurance Policy will be administered by the Servicer
in accordance with the terms of this Agreement or any Reconstitution
Agreement.
Section 5.09 Transfer of Accounts. The Servicer may transfer the
Collection Account or any Escrow Account to a different depository institution
from time to time; provided that (i) no such transfer shall be made unless all
certifications or letter agreements required under Section 5.04 or Section
5.06, as applicable, have been executed and delivered by the parties thereto;
and (ii) concurrently upon any such transfer, the Servicer shall give written
notice thereof to the Purchaser. Notwithstanding anything to the contrary
contained herein, the Collection Account and each Escrow Account shall at all
times constitute Eligible Accounts.
Section 5.10 Maintenance of Hazard Insurance. The Servicer shall
cause to be maintained for each Mortgage Loan fire and hazard insurance with
extended coverage as is customary in the area where the Mortgaged Property is
located in an amount that is at least equal to the lesser of (a) the maximum
insurable value of the improvements securing such Mortgage Loan and (b) the
greater of (1) the Unpaid Principal Balance of such Mortgage Loan or (2) an
amount such that the proceeds thereof shall be sufficient to prevent the
Mortgagor and/or the loss payee from becoming a co insurer.
If any Mortgaged Property is in an area identified by the Federal
Emergency Management Agency as having special flood hazards and such flood
insurance has been made available, then the Servicer will cause to be
maintained a flood insurance policy meeting the requirements of the current
guidelines of the Federal Insurance Administration with a generally acceptable
insurance carrier rated "A" or better in Best's or in accordance with then
current ▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇ Mac, GNMA or VA guidelines, as applicable, in an
amount representing coverage not less than the lesser of (a) the minimum
amount required, under the terms of coverage, to compensate for any damage or
loss on a replacement cost basis (or the outstanding principal balance of the
related Mortgage Loan if replacement cost coverage is not available for the
type of building insured) or (b) the maximum amount of insurance which is
available under
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the Flood Disaster Protection Act of 1973, as amended (assuming that the area
in which such Mortgaged Property is located is participating in such program).
If at any time during the term of the Mortgage Loan, the Servicer determines
in accordance with applicable law and pursuant to the then current ▇▇▇▇▇▇ Mae
or ▇▇▇▇▇▇▇ Mac guidelines, as applicable, 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.
The Servicer shall also maintain on each REO Property fire, hazard
and liability insurance, and to the extent required and available under the
Flood Disaster Protection Act of 1973, as amended, flood insurance with
extended coverage in an amount which is at least equal to the lesser of (a)
the maximum insurable value of the improvements which are a part of such
property and (b) the outstanding principal balance of the related Mortgage
Loan at the time it became an REO Property plus accrued interest at the Note
Rate and related Servicing Advances.
All such policies shall be endorsed with standard mortgagee clauses
with loss payable to the Servicer, or upon request to the Purchaser, and shall
provide for at least 30 days prior written notice of any cancellation,
reduction in the amount of, or material change in, coverage to the Servicer.
The Servicer shall not interfere with the Mortgagor's freedom of choice in
selecting either his insurance carrier or agent, provided that the Servicer
shall not accept any such insurance policies from insurance companies unless
such companies (a) currently reflect (1) a general policyholder's rating of B+
or better and a financial size category of III or better in Best's Key Rating
Guide, or (2) a general policyholder's rating of "A" or "A-" or better in
Best's Key Rating Guide, and (b) are licensed to do business in the state
wherein the related Mortgaged Property is located. Notwithstanding the
foregoing, the Servicer may accept a policy underwritten by Lloyd's of London
or, if it is the only coverage available, coverage under a state's Fair Access
to Insurance Requirement (FAIR) Plan. If a hazard policy becomes in danger of
being terminated, or the insurer ceases to have the ratings noted above, the
Servicer shall notify the Purchaser and the related Mortgagor, and shall use
its best efforts, as permitted by applicable law, to obtain from another
qualified insurer a replacement hazard insurance policy substantially and
materially similar in all respects to the original policy. In no event,
however, shall a Mortgage Loan be without a hazard insurance policy at any
time, subject only to Section 5.11.
Pursuant to Section 5.04, 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 Mortgaged Property or
REO Property, or released to the Mortgagor in accordance with the Servicer's
normal servicing procedures, shall be deposited in the Collection Account
within two Business Days of receipt, subject to withdrawal in accordance with
Section 5.05. Any cost incurred by the Servicer in maintaining any such
insurance shall not, for the purpose of calculating remittances to the
Purchaser, be added to the Unpaid Principal Balance of the related Mortgage
Loan, notwithstanding that the terms of such Mortgage Loan so permit.
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If a Mortgage 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 the PHH Guide (with respect to any loans originated in
connection with PHH Mortgage's non-warrantable condominium program) or the
applicable ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac guidelines, and secure from the owner's
association its agreement to notify the Servicer promptly of any change in the
insurance coverage or of any condemnation or casualty loss that may have a
material effect on the value of the Mortgaged Property as security.
It is understood and agreed that no earthquake or other additional
insurance need be required by the Servicer of the Mortgagor or maintained on
property acquired in respect of the Mortgage Loan, other than pursuant to such
applicable laws and regulations as shall at any time be in force and as shall
require such additional insurance.
Section 5.11 Maintenance of Mortgage Impairment Insurance Policy. If
the Servicer obtains and maintains a blanket policy issued by an issuer that
has a Best's Key rating of A+ insuring against hazard losses on all of the
Mortgage Loans, then, to the extent such policy provides coverage in an amount
equal to the amount required pursuant to Section 5.10 and otherwise complies
with all other requirements of Section 5.10, it shall conclusively be deemed
to have satisfied its obligations as set forth in Section 5.10, it being
understood and agreed that such policy may contain a deductible clause, in
which case the Servicer shall, if there shall not have been maintained on the
related Mortgaged Property or REO Property a policy complying with Section
5.10 and there shall have been one or more losses which would have been
covered by such policy, deposit in the Collection Account the amount not
otherwise payable under the blanket policy because of such deductible clause;
provided that the Servicer shall not be entitled to obtain reimbursement
therefor. In connection with its activities as servicer of the Mortgage Loans,
the Servicer agrees to prepare and present, on behalf of the Purchaser, claims
under any such blanket policy in a timely fashion in accordance with the terms
of such policy. Upon request of the Purchaser, the Servicer shall cause to be
delivered to the Purchaser a certified true copy 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
Purchaser.
Section 5.12 Fidelity Bond; Errors and Omissions Insurance. The
Servicer shall maintain, at its own expense, a blanket fidelity bond and an
errors and omissions insurance policy, with broad coverage with responsible
companies that would meet the requirements of ▇▇▇▇▇▇ Mae and ▇▇▇▇▇▇▇ Mac on
all officers, employees or other Persons acting in any capacity with regard to
the Mortgage Loans to handle funds, money, documents and papers relating to
the Mortgage Loans. The Fidelity Bond and errors and omissions insurance shall
be in the form of the "Mortgage Banker's Blanket Bond" and shall protect and
insure the Servicer against losses, including losses arising by virtue of any
Mortgage Loan not being satisfied in accordance with the procedures set forth
in Section 7.02 and/or losses resulting from or arising in connection with
forgery, theft, embezzlement, fraud, errors and omissions and negligent acts
of or by such Persons. Such Fidelity Bond shall also protect and insure the
Servicer against losses in connection with the failure to maintain any
insurance policies required pursuant to this Agreement and the release or
satisfaction of a Mortgage Loan without having obtained payment in full of the
indebtedness secured thereby. No provision of this Section 5.12 requiring the
Fidelity Bond and errors and omissions insurance shall diminish or relieve the
Servicer from its
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duties and obligations as set forth in this Agreement. The minimum coverage
under any such bond and insurance policy shall be at least equal to the
corresponding amounts required by ▇▇▇▇▇▇ Mae in the ▇▇▇▇▇▇ ▇▇▇ Guide and by
▇▇▇▇▇▇▇ Mac in the ▇▇▇▇▇▇▇ Mac Servicing Guide. The Servicer shall cause to be
delivered to the Purchaser upon request: (i) a certified true copy of the
Fidelity Bond and insurance policy; (ii) a written statement from the surety
and the insurer that such Fidelity Bond or insurance policy shall in no event
be terminated or materially modified without 30 days' prior written notice to
the Purchaser; and (iii) written evidence reasonably satisfactory to the
Purchaser that such Fidelity Bond or insurance policy provides that the
Purchaser is a beneficiary or loss payee thereunder.
Section 5.13 Management of REO Properties If title to any Mortgaged
Property is acquired in foreclosure or by deed in lieu of foreclosure (each,
an "REO Property"), the deed or certificate of sale shall be taken in the name
of the Purchaser or the Person (which may be the Servicer for the benefit of
the Purchaser) designated by the Purchaser, or in the event the Purchaser
notifies the Servicer that the Purchaser or such Person 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 Purchaser from an attorney duly licensed to
practice law in the state where the REO Property is located. The Servicer
(acting alone or through a subservicer), on behalf of the Purchaser, shall,
subject to Section 5.01(3)(c), dispose of any REO Property pursuant to Section
5.14. Unless an appraisal prepared by an MAI Appraiser who is Independent in
accordance with the provisions of 12 C.F.R. ss.225.65 shall have been obtained
in connection with the acquisition of such REO Property, promptly following
any acquisition by the Purchaser (through the Servicer) of an REO Property,
the Servicer shall obtain a narrative appraisal thereof (at the expense of the
Purchaser) in order to determine the fair market value of such REO Property.
The Servicer shall also cause each REO Property to be inspected promptly upon
the acquisition of title thereto and shall cause each REO Property to be
inspected at least annually thereafter, and Servicer shall be entitled to be
reimbursed for expenses in connection therewith in accordance with this
Agreement. The Servicer shall make or cause to be made a written report of
each such inspection. Such reports shall be retained in the Mortgage File and
copies thereof shall be forwarded by the Servicer to the Purchaser. The
Servicer shall also furnish to the Purchaser the applicable reports required
under Section 8.01.
Notwithstanding anything to the contrary contained herein, if a
REMIC election has been or is to be made with respect to the arrangement under
which the Mortgage Loans and the REO Properties are held, then the Servicer
shall manage, conserve, protect and operate each REO Property in a manner that
does not cause such REO Property to fail to qualify as "foreclosure property"
within the meaning of Section 860G(a)(8) of the Code or result in the receipt
by such REMIC of any "income from non-permitted assets" within the meaning of
Section 860F(a)(2)(B) or any "net income from foreclosure property" within the
meaning of Section 860G (c)(2) of the Code (or comparable provisions of any
successor or similar legislation).
The Servicer shall deposit and hold all revenues and funds collected
and received in connection with the operation of each REO Property in the
Collection Account, and the
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Servicer shall account separately for revenues and funds received or expended
with respect to each REO Property.
The Servicer shall have full power and authority, subject only to
the specific requirements and prohibitions of this Agreement (and, in
particular, Section 5.01(3)(c)), to do any and all things in connection with
any REO Property as are consistent with the servicing standards set forth in
Section 5.01. In connection therewith, the Servicer shall deposit or cause to
be deposited within two (2) Business Day of receipt in the Collection Account
all revenues and collections received or collected by it with respect to each
REO Property, including all proceeds of any REO Disposition. Subject to
Section 5.15, the Servicer shall withdraw (without duplication) from the
Collection Account, but solely from the revenues and collections received or
collected by it with respect to a specific REO Property, such funds necessary
for the proper operation, management and maintenance of such REO Property,
including the following:
(1) all insurance premiums due and payable in respect of such REO
Property;
(2) all real estate taxes and assessments in respect of such REO
Property that may result in the imposition of a lien thereon;
(3) all customary and reasonable costs and expenses necessary to
maintain, repair, appraise, evaluate, manage or operate such REO Property
(including the customary and reasonable costs incurred by any "managing agent"
retained by the Servicer in connection with the maintenance, management or
operation of such REO Property);
(4) all reasonable costs and expenses of restoration improvements,
deferred maintenance and tenant improvements; and
(5) all other reasonable costs and expenses, including reasonable
attorneys' fees, that the Servicer may suffer or incur in connection with its
performance of its obligations under this Section (other than costs and
expenses that the Servicer is expressly obligated to bear pursuant to this
Agreement).
To the extent that amounts on deposit in the Collection Account are
insufficient for the purposes set forth in clauses (1) through (5) above, the
Servicer shall, subject to Section 6.04, advance the amount of funds required
to cover the shortfall with respect thereto. The Servicer shall promptly
notify the Purchaser in writing of any failure by the Servicer to make a
Servicing Advance of the type specified in clauses (1) or (2) above
(irrespective of whether such Servicing Advance is claimed to be
non-recoverable by the Servicer pursuant to Section 6.04).
Following the consummation of an REO Disposition, the Servicer shall
remit to the Purchaser, in accordance with Section 6.01, any proceeds from
such REO Disposition in the Collection Account following the payment of all
expenses and Servicing Advances relating to the subject REO Property.
Section 5.14 Sale of Specially Serviced Mortgage Loans and REO
Properties. The Servicer shall offer to sell any REO Property in the manner
that is in the best interests of the Purchaser or other owner of the REO, but
no later than the time determined by the Servicer to be
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sufficient to result in the sale of such REO Property on or prior to the time
specified in Section 5.15. In accordance with the servicing standards set
forth in Section 5.01, the Servicer or designated agent of the Servicer shall
solicit bids and offers from Persons for the purchase of any Specially
Serviced Mortgage Loan or REO Property.
The Servicer shall act on behalf of the Purchaser in negotiating and
taking any other action necessary or appropriate in connection with the sale
of any Specially Serviced Mortgage Loan or REO Property, including the
collection of all amounts payable in connection therewith. The Servicer shall
manage and negotiate terms of sale on Specially Serviced Mortgage Loans or REO
Properties with the same care, skill, prudence and diligence with which
Servicer manages its own REO Properties. The proceeds of any sale after
deduction of the expenses of such sale incurred in connection therewith shall
be promptly deposited in (a) if such sale is an REO Disposition, in the
Collection Account in accordance with Section 5.13 and (b) in any other
circumstance, the Collection Account in accordance with Section 5.04.
Section 5.15 Realization Upon Specially Serviced Mortgage Loans and
REO Properties. The Servicer shall foreclose upon or otherwise comparably
convert the ownership of properties securing such of the Specially Serviced
Mortgage Loans as come into and continue in default and as to which (a) in the
reasonable judgment of the Servicer, no satisfactory arrangements can, in
accordance with prudent lending practices, be made for collection of
delinquent payments pursuant to Section 5.01 and (b) such foreclosure or other
conversion is otherwise in accordance with Section 5.01. Prior to commencing
foreclosure proceedings, the Servicer shall notify the Purchaser in writing of
the Servicer's intention to do so. The Servicer shall not be required to
expend its own funds in connection with any foreclosure or towards the
restoration, repair, protection or maintenance of any property unless it shall
determine that such expenses will be recoverable to it as Servicing Advances
either through Liquidation Proceeds or through Insurance Proceeds (in
accordance with Section 5.05) or from any other source relating to the
Specially Serviced Mortgage Loan. The Servicer shall be required to advance
funds for all other costs and expenses incurred by it in any such foreclosure
proceedings; provided that it shall be entitled to reimbursement thereof from
the proceeds of liquidation of the related Mortgaged Property, as contemplated
by Section 5.05.
Upon any Mortgaged Property becoming an REO Property, the Servicer
shall promptly notify the Purchaser thereof, specifying the date on which such
Mortgaged Property became an REO Property. Pursuant to its efforts to sell
such REO Property, the Servicer shall, either itself or through an agent
selected by it, protect and conserve such REO Property in accordance with the
servicing standards set forth in Section 5.01 and may, subject to Section
5.01(3)(c) and incident to its conservation and protection of the interests of
the Purchaser, rent the same, or any part thereof, for the period to the sale
of such REO Property.
Notwithstanding anything to the contrary contained herein, the
Purchaser shall not, and the Servicer shall not on the Purchaser's behalf,
acquire any real property (or personal property incident to such real
property) except in connection with a default or a default that is imminent on
a Mortgage Loan. If the Purchaser acquires any real property (or personal
property incident to such real property) in connection with such a default,
then such property shall be disposed of by the Servicer in accordance with
this Section and Section 5.14 as soon as possible
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but in no event later than 3 years after its acquisition by the Servicer on
behalf of the Purchaser, unless the Servicer obtains, at the expense of the
Purchaser, in a timely fashion an extension from the Internal Revenue Service
for an additional specified period.
Any recommendation of the Servicer to foreclose on a defaulted
Mortgage Loan shall be subject to a determination by the Servicer that the
proceeds of such foreclosure would exceed the costs and expenses of bringing
such a proceeding. If the Servicer determines that the proceeds of such
foreclosure would not exceed the costs and expenses of bringing such a
proceeding, the Servicer will request the Purchaser to allow Servicer to
pursue a Deed in Lieu of Foreclosure or recommend to the Purchaser to perform
a charge-off of the remaining principal balance, delinquent interest and any
and all fees and/or expenses the Servicer has advanced or incurred through
Customary Servicing Procedures. The income earned from the management of any
REO Property, net of reimbursement to the Servicer for Servicing Advances,
incurred with respect to such REO Property under Section 5.13, shall be
applied to the payment of the costs and expenses set forth in Section 5.13(4),
with any remaining amounts to be promptly deposited in the Collection Account
in accordance with Section 5.13.
If, in the exercise of its servicing obligations with respect to any
Mortgaged Property hereunder, the Servicer deems it is necessary or advisable
to obtain an Environmental Assessment, then the Servicer shall so obtain an
Environmental Assessment, it being understood that all reasonable costs and
expenses incurred by the Servicer in connection with any such Environmental
Assessment (including the cost thereof) shall be deemed to be Servicing
Advances recoverable by the Servicer pursuant to Section 5.13(4). Upon
completion of the inspection, the Seller shall promptly provide a written
Environmental Assessment report to the Purchaser. Such Environmental
Assessment shall (a) assess whether (1) such Mortgaged Property is in material
violation of applicable Environmental Laws or (2) after consultation with an
environmental expert, taking the actions necessary to comply with applicable
Environmental Laws is reasonably likely to produce a greater recovery on a net
present value basis than not taking such actions, and (b) identify whether (1)
any circumstances are present at such Mortgaged Property relating to the use,
management or disposal of any hazardous materials for which investigation,
testing, monitoring, containment, clean-up or re mediation could be required
under any federal, state or local law or regulation, or (2) if such
circumstances exist, after consultation with an environmental expert, taking
such actions is reasonably likely to produce a greater recovery on a present
value basis than not taking such actions. (The conditions described in the
immediately preceding clauses (a) and (b) shall be referred to herein as
"Environmental Conditions Precedent to Foreclosure.") If any such
Environmental Assessment so warrants, the Servicer is hereby authorized to and
shall perform such additional environmental testing as it deems necessary and
prudent to establish the satisfaction of the foregoing Environmental
Conditions Precedent to Foreclosure or to proceed as set forth below (such
additional testing thereafter being included in the term "Environmental
Assessment").
If an Environmental Assessment deemed necessary or advisable by the
Servicer in accordance with this Section 5.15 establishes that any of the
Environmental Conditions Precedent to Foreclosure is not satisfied with
respect to any Mortgaged Property, but the Servicer in good faith reasonably
believes that it is in the best economic interest of the Purchaser to proceed
against such Mortgaged Property and, if title thereto is acquired, to take
such remedial, corrective or other action with respect to the unsatisfied
condition or conditions as may be
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prescribed by applicable law to satisfy such condition or conditions, then the
Servicer shall so notify the Purchaser. If, pursuant to Section 5.01(3)(c),
the Purchaser has notified the Servicer in writing to proceed against such
Mortgaged Property, then the Servicer shall so proceed. The cost of any
remedial, corrective or other action contemplated by the preceding sentence in
respect of any of the Environmental Conditions Precedent to Foreclosure that
is not satisfied shall not be an expense of the Servicer and the Servicer
shall not be required to expend or risk its own funds or otherwise incur any
financial liability in connection with any such action.
If an Environmental Assessment deemed necessary or advisable by the
Servicer in accordance with this Section 5.15 establishes that any of the
Environmental Conditions Precedent to Foreclosure is not satisfied with
respect to any Mortgaged Property and, in accordance with Section 5.01(3)(c),
the Purchaser elects or is deemed to have elected not to proceed against such
Mortgaged Property, then the Servicer shall, subject to Section 5.01(3)(c),
take such action as it deems to be in the best economic interest of the
Purchaser (other than proceeding against the Mortgaged Property or directly or
indirectly becoming the owner or operator thereof) as determined in accordance
with the servicing standard set forth in Section 5.01 and is hereby authorized
at such time as it deems appropriate to release such Mortgaged Property from
the lien of the related Mortgage.
Prior to the Servicer taking any action with respect to the use,
management or disposal of any hazardous materials on any Mortgaged Property,
the Servicer shall request the approval of the Purchaser in accordance with
Section 5.01(3)(c) and, if such action is approved by the Purchaser, (a) keep
the Purchaser apprised of the progress of such action; and (b) take such
action in compliance with all applicable Environmental Laws.
Section 5.16 Investment of Funds in the Collection Account. The
Servicer may direct any depository institution which holds the Collection
Account to invest the funds in the Collection Account in one or more Permitted
Investments bearing interest. Any such Permitted Investment shall be made in
the name of the Servicer in trust for the benefit of the Purchaser. All such
Permitted Investments shall be held to maturity, unless payable on demand. In
the event amounts on deposit in the Collection Account are at any time
invested in a Permitted Investment payable on demand, the Servicer shall:
(a) consistent with any notice required to be given thereunder,
demand that payment thereon be made on the last day such Permitted
Investment may otherwise mature hereunder in an amount equal to the
lesser of (1) all amounts then payable thereunder and (2) the amount
required to be withdrawn on such date; and
(b) demand payment of all amounts due thereunder promptly upon
determination by the Servicer or notice from the Purchaser that such
Permitted Investment would not constitute a Permitted Investment in
respect of funds thereafter on deposit in the Collection Account.
All income and gain realized from investment of funds deposited in
the Collection Account shall be for the benefit of the Servicer and shall be
subject to its withdrawal in accordance with Section 5.05. The Servicer shall,
out of its own funds, deposit in the Collection
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Account the amount of any loss incurred in respect of any Permitted Investment
immediately upon realization of such loss.
Except as otherwise expressly provided in this Agreement, if any
default occurs in the making of a payment due under any Permitted Investment,
or if a default occurs in any other performance required under any Permitted
Investment, the Purchaser may elect to take such action, or instruct the
Servicer to take such action, as may be appropriate to enforce such payment or
performance, including the institution and prosecution of appropriate
proceedings, at the expense of the Servicer.
Section 5.17 MERS. In the case of each MERS Mortgage Loan, the
Servicer shall, as soon as practicable after the Purchaser's request (but in
no event more than 30 days thereafter with respect to each Mortgage Loan that
was a MERS Mortgage Loan as of the Funding Date, or 90 days thereafter with
respect to each Mortgage Loan that was a MERS Eligible Mortgage Loan as of the
Funding Date and subsequent to the Funding Date becomes a MERS Mortgage Loan),
the Servicer shall take such actions as are necessary to cause the Purchaser
to be clearly identified as the owner of each MERS Mortgage Loan on the
records of MERS for purposes of the system of recording transfers of
beneficial ownership of mortgages maintained by MERS. Each of the Purchaser
and the Servicer shall maintain in good standing its membership in MERS. In
addition, each of the Purchaser and the Servicer shall comply with all rules,
policies and procedures of MERS, including the Rules of Membership, as
amended, and the MERS Procedures Manual, as amended. With respect to all MERS
Mortgage Loans serviced hereunder, the Servicer shall promptly notify MERS as
to any transfer of beneficial ownership or release of any security interest in
such Mortgage Loans. The Servicer shall cooperate with the Purchaser and any
successor owner or successor servicer to the extent necessary to ensure that
any transfer of ownership or servicing is appropriately reflected on the MERS
system.
Section 5.18 Pledged Asset Mortgage Loans
(a) Representations of Servicer:
(1) Servicer hereby represents and warrants to Purchaser that
prior to its assignment to Purchaser of the security interest in and to
any Pledged Assets set forth in Section 5.18(b) hereof, Servicer had a
first priority perfected security interest in each Securities Account,
and/or, if necessary to perfect a first priority security interest in
each asset contained in such Securities Account, a first priority
perfected security interest in each such asset contained in such
Securities Account and following Servicer's assignment of the Pledged
Asset Agreements and such security interest in and to any Pledged Assets,
Purchaser has a first priority perfected security interest in each
Securities Account, and/or, if necessary to perfect a first priority
security interest in each asset contained in such Securities Account, a
perfected first priority security interest in each such asset contained
in such Securities Account. Servicer hereby represents and warrants to
Purchaser that prior to the related Pledged Asset Servicer's assignment
to the Servicer of the security interest in and to any Pledged Assets,
the related Pledged Asset Servicer had a first priority perfected
security interest in each Securities Account, and/or, if necessary to
perfect a first priority security interest in each asset contained
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in such Securities Account, a first priority perfected security interest
in each such asset contained in such Securities Account and following
such Pledged Asset Servicer's assignment of the Pledged Asset Agreements
and such security interest in and to any Pledged Assets, the Servicer had
a first priority perfected security interest in each Securities Account,
and/or, if necessary to perfect a first priority security interest in
each asset contained in such Securities Account, a perfected first
priority security interest in each such asset contained in such
Securities Account.
(2) Servicer represents and warrants to Purchaser that each
Pledged Asset Mortgage Loan is insured under the terms and provisions of
a Surety Bond subject to the limitations set forth therein. Servicer
covenants that within 2 Business Days after the Funding Date for any
purchase of Pledged Asset Mortgage Loans, Servicer will deliver to each
Surety Bond Issuer any instrument required to be delivered under the
related Surety Bond, executed by the necessary parties, and that all
other requirements for transferring coverage under the related Surety
Bonds in respect of such Pledged Asset Mortgage Loans to the Purchaser
shall be complied with. Servicer shall indemnify each Indemnified Party
and hold it harmless against any and all claims, losses, damages,
penalties, fines, forfeitures, reasonable and necessary legal fees and
related costs, judgments, and any other costs, fees and expenses that are
related to or arise from the non-payment of Required Surety Payments with
respect to the Pledged Asset Mortgage Loans purchased by Purchaser from
applicable Seller under this Agreement. The indemnification obligation
provided in this subparagraph 2 with respect to each Pledged Asset
Mortgage Loan shall expire upon receipt by the related Surety Bond Issuer
of the necessary documentation referred to in this paragraph, signed by
the appropriate parties thereto.
(3) Servicer represents and warrants that the assignment of
rights to Purchaser under each Surety Bond, as described herein, will not
result in Purchaser assuming any obligations or liabilities of Servicer
with respect thereto.
(4) Servicer represents and warrants that each Pledged Asset
Servicing Agreement and the Pledge Agreements are in full force and
effect as of the Funding Date and their provisions have not been waived,
amended or modified in any respect, nor has any notice of termination
been given thereunder. Servicer represents to Purchaser that as of the
Funding Date, neither Servicer nor any Pledged Asset Servicer is in
default under the related Pledged Asset Servicing Agreement.
(b) Assignment of Security Interest.
(1) With respect to each Pledged Asset Mortgage Loan sold to
Purchaser under this Agreement, the Servicer hereby assigns to the
Purchaser its security interest in and to any related Pledged Assets, all
of its rights in each related Pledge Agreement, its right to receive
amounts due or to become due in respect of any related Pledged Assets and
its rights as beneficiary under the related Surety Bond in respect of any
Pledged Asset Mortgage Loans.
(c) Servicing of Pledged Assets.
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(1) The parties acknowledge that pursuant to each Pledged Asset
Servicing Agreement between Servicer and the related Pledged Asset
Servicer, the Securities Accounts and other Pledged Assets in which
Purchaser shall (pursuant to the terms of this Agreement) have a security
interest, shall continue to be maintained and serviced by such Pledged
Asset Servicer. Servicer represents and warrants that the terms of each
Pledged Asset Servicing Agreement are not inconsistent with any of the
provisions of this Agreement. Subject to Subsection (c)(2) below, the
Servicer shall service and administer the Securities Accounts and other
Pledged Assets, in accordance with (i) prudent business practices and
procedures employed in the industry to administer securities accounts and
additional collateral similar to that securing the Pledged Asset Mortgage
Loans; (ii) the terms of the related Pledge Agreements; and (iii) the
terms of this Agreement. Servicer's obligations under this Section
5.18(c) will be subject to the provisions of Section 9.04 hereof.
(2) Notwithstanding any other provision of this Agreement to
the contrary, except as provided below in this Subsection (c)(2), the
Servicer shall have no duty or obligation to service and administer the
Pledged Assets, and the Servicer shall not be deemed to be the Pledged
Asset Servicer with respect to any Pledged Asset Mortgage Loan, unless
and until the related Pledged Asset Servicer's obligations to administer
the Pledged Asset as provided in the related Pledged Asset Servicing
Agreement have been terminated with respect to such Pledged Asset
Mortgage Loans sold hereunder, in which case the Servicer shall be bound
to service and administer the related Pledged Assets and the related
Surety Bond in accordance with the provisions of this Agreement and the
related Pledge Agreements, from the date of such termination. The
Servicer shall enforce the obligations of each Pledged Asset Servicer to
service and administer the Pledged Assets as provided in the related
Pledged Asset Servicing Agreement, and shall take appropriate action
thereunder if any Pledged Asset Servicer fails to substantially comply
with its obligations to administer the Pledged Assets. Such enforcement,
including without limitation, the legal prosecution of claims,
termination of the related Pledged Asset Servicing Agreement with respect
to the related Pledged Asset Mortgage Loans, and the pursuit of other
appropriate remedies, shall be carried out as the Servicer, in its good
faith business judgment, would require were it the owner of the related
Securities Accounts and other Pledged Assets. Without in any way limiting
any other remedies set forth herein, Servicer shall indemnify each
Indemnified Party hold it harmless against any and all Losses that arise
with respect to Pledged Asset Mortgage Loans purchased by Purchaser from
Servicer hereunder, provided that (i) such Losses are caused by the
related Pledged Asset Servicer's failure to administer the Pledged Assets
as provided in the related Pledged Asset Servicing Agreement and in a
manner consistent with the standard set forth in Subsection (c)(1) above,
(ii) the indemnification contained in this Subsection (c)(2) will in no
event exceed the Original Pledged Asset Requirement for the related
Pledged Asset Mortgage Loan, and (iii) such indemnification liability
shall be offset to the extent that the Losses are covered by a Required
Surety Payment.
(3) The related Pledged Asset Servicer shall use its best
reasonable efforts to realize upon any related Pledged Assets for such of
the Pledged Asset Mortgage Loans as come into and continue in default and
as to which no satisfactory arrangements can be made for collection of
delinquent payments; provided that the related Pledged
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Asset Servicer shall not obtain title to any such Pledged Assets as a
result of or in lieu of the disposition thereof or otherwise; and
provided further that (i) the related Pledged Asset Servicer shall not
proceed with respect to such Pledged Assets in any manner that would
impair the ability to recover against the related Mortgaged Property, and
(ii) the Servicer shall proceed with any acquisition of REO Property in a
manner that preserves the ability to apply the proceeds of such Pledged
Assets against amounts owed under the defaulted Mortgage Loan. Any
proceeds realized from such Pledged Assets (other than amounts to be
released to the Mortgagor or the related guarantor in accordance with
procedures that the Servicer would follow in servicing loans held for its
own account, subject to the terms and conditions of the related Mortgage
and Mortgage Note and to the terms and conditions of any security
agreement, guarantee agreement, mortgage or other agreement governing the
disposition of the proceeds of such Pledged Assets) shall be deposited in
the Collection Account, subject to withdrawal pursuant to Section 5.05
hereof; provided, that such proceeds shall not be so deposited if the
Required Surety Payment in respect of such Pledged Asset Mortgage Loan
has been deposited in the Collection Account or otherwise paid to the
Purchaser (except to the extent of any such proceeds taken into account
in calculating the amount of the Required Surety Payment).
(4) Servicer's obligations to administer the Securities
Accounts shall terminate upon termination of the related Pledged Asset
Agreement. Purchaser acknowledges coverage under the terms and provisions
of the related Surety Bond as to any particular Pledged Asset Mortgage
Loan shall terminate upon termination of the related Pledged Asset
Agreement; provided, however, that such termination shall not affect
claims arising under this Agreement or the related Surety Bond prior to
the date of termination of the related Pledged Asset Agreement.
(5) The Pledged Asset Servicer with respect to each Pledged
Asset Mortgage Loan may, without the consent of the Purchaser, amend or
modify a Pledged Asset Agreement in any non-material respect to reflect
administrative or account changes, provided that the same are consistent
with the PHH Guide.
(d) Surety Bonds.
(1) If a Required Surety Payment is payable pursuant to the
related Surety Bond with respect to any Pledged Asset Mortgage Loan, as
determined by the Servicer, the related Pledged Asset Servicer shall so
notify the related Surety Bond Issuer promptly. The Servicer shall cause
the prompt completion of any necessary documentation relating to the
related Surety Bond and shall cause the prompt submission of such
documentation to the related Surety Bond Issuer as a claim for a required
surety. The Purchaser shall execute such documentation if requested by
the related Pledged Asset Servicer.
(2) In the event that the Servicer receives a Required Surety
Payment from a Surety Bond Issuer on behalf of the Purchaser, the
Servicer shall deposit such Required Surety Payment in the Collection
Account and shall distribute such Required Surety Payment, or the
proceeds thereof, in accordance with the provisions hereof applicable to
Insurance Proceeds.
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(3) Purchaser will cooperate with Servicer to transfer to
Purchaser the coverage of each Surety Bond in respect of the related
Pledged Asset Mortgage Loans.
Section 5.19 Inspections. The Servicer shall inspect the Mortgaged
Property as often as deemed necessary by the Servicer to assure itself that
the value of the Mortgaged Property is being preserved. In addition, if any
Mortgage Loan is more than 60 days delinquent, the Servicer shall immediately
inspect the Mortgaged Property and shall conduct subsequent inspections in
accordance with Accepted Servicing Practices or as may be required by the
primary mortgage insurer or guarantor. The Servicer shall keep a written
report of each such inspection.
Section 5.20 Transfer of Servicing. On the related Transfer Date, if
any, the Purchaser, or its designee, shall assume all servicing
responsibilities related to, and the Servicer shall cease all servicing
responsibilities related to, the related Mortgage Loans subject to the
servicing transfer or such Transfer Date. On or prior to the related Transfer
Date, the Servicer shall, at its sole cost and expense, take such steps as may
be necessary or appropriate to effectuate and evidence the transfer of the
servicing of the related Mortgage Loans to the Purchaser, or its designee,
including but not limited to the following:
(1) Notice to Mortgagors. The Servicer shall mail to the Mortgagor
of each related Mortgage Loan a letter advising such Mortgagor of the transfer
of the servicing of the related Mortgage Loan to the Purchaser, or its
designee, in accordance with the ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ National Affordable Housing
Act of 1990, as amended; provided, however, the content and format of the
letter shall have the prior approval of the Purchaser. The Servicer shall
provide the Purchaser with copies of all such related notices no later than
the related Transfer Date.
(2) Notice to Taxing Authorities and Insurance Companies. The
Servicer shall transmit to the applicable taxing authorities and insurance
companies (including primary mortgage insurance policy insurers, if
applicable) and/or agents, notification of the transfer of the servicing to
the Purchaser, or its designee, and instructions to deliver all notices, tax
bills and insurance statements, as the case may be, to the Purchaser or its
designee from and after the related Transfer Date. The Servicer shall provide
the Purchaser with copies of all such notices no later than the related
Transfer Date.
(3) Delivery of Servicing Records. The Servicer shall forward to the
Purchaser, or its designee, all servicing records and the Mortgage Files in
the Servicer's possession relating to each related Mortgage Loan.
(4) Escrow Payments. The Servicer shall provide to the Purchaser, or
its designee, in immediately available funds by wire transfer an amount equal
to the balance in the related Escrow Account net of all Escrow Payments,
suspense balances, servicing advances and loss draft balances associated with
the related Mortgage Loans. The Servicer shall provide the Purchaser with an
accounting statement, in electronic format reasonably acceptable to the
Purchaser, of Escrow Payments, servicing advances, suspense balances and loss
draft balances sufficient to enable the Purchaser to reconcile the amount of
such payment with the accounts related to the Mortgage Loans. Additionally,
the Servicer shall wire transfer to the Purchaser the
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amount of any agency, trustee or prepaid Mortgage Loan payments and all other
similar amounts held by the Servicer.
(5) Payoffs and Assumptions. For a period of thirty days after the
Transfer Date, the Servicer shall promptly deliver to the Purchaser, or its
designee, within a reasonable time period, copies of all assumption and payoff
statements generated by the Servicer on the related Mortgage Loans prior to
the related Transfer Date.
(6) Mortgage Payments Received Prior to Transfer Date. Prior to the
related Transfer Date all payments received by the Servicer on each related
Mortgage Loan shall be properly applied by the Servicer to the account of the
each related Mortgagor.
(7) Mortgage Payments Received after Transfer Date. For a period of
sixty days after the Transfer Date any related Monthly Payments received by
the Servicer shall be forwarded to the Purchaser by overnight mail on the date
of receipt. After the initial sixty day period such payments may be delivered
by regular mail or such other method(s) as may be agreed to by the parties.
The Servicer shall notify the Purchaser of the particulars of the payments,
which notification requirement shall be satisfied if the Servicer forwards
with its payment sufficient information to permit appropriate processing of
the payment by the Purchaser.
(8) Misapplied Payments. Misapplied payments shall be processed as
follows:
(i) All parties shall cooperate in correcting misapplication errors;
(ii) The party receiving notice of a misapplied payment occurring
prior to the related Transfer Date and discovered after such Transfer
Date shall immediately notify the other party;
(iii) If a misapplied payment received prior to the related Transfer
Date cannot be identified and such misapplied payment has resulted in a
shortage in a Collection Account or Escrow Account, the Servicer shall be
liable for the amount of such shortage. The Servicer shall reimburse the
Purchaser for the amount of such shortage within thirty (30) days after
receipt of written demand therefor from the Purchaser;
(iv) If a misapplied payment received prior to the related Transfer
Date caused the payment to be incorrectly calculated as the result of an
inaccurate outstanding principal balance, a check shall be issued to the
party shorted by the improper payment application within five (5)
Business Days after notice thereof by the other party; and
(1) Any check issued under the provisions of this Section 5.20(8)
shall be accompanied by a statement indicating the corresponding
Servicer, the Mortgage Loan identification number and an explanation of
the allocation of any such payments.
(9) Books and Records. On the related Transfer Date, the books,
records and accounts of the Servicer with respect to the related Mortgage
Loans shall be delivered in accordance with all applicable Purchaser
requirements.
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(10) Reconciliation. The Servicer shall, on or before the related
Transfer Date, reconcile principal balances and make any monetary adjustments
required by the Purchaser. Any such monetary adjustments will be transferred
between the Servicer and the Purchaser as appropriate.
(11) IRS Forms. The Servicer shall or shall file all IRS forms 1099,
1099A, 1098 or 1041 and K-1 which are required to be filed on or before the
related Transfer Date in relation to the servicing and ownership of the
related Mortgage Loans. The Servicer shall provide copies of such forms to the
Purchaser upon request and shall reimburse the Purchaser for any costs or
penalties incurred by the Purchaser due to the Servicer's failure to comply
with this paragraph.
Section 5.21 Fair Credit Reporting Act. For each Mortgage Loan, the
Servicer shall 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 Equifax, Experian,
and Trans Union Credit Information Company, or their successors, on a monthly
basis. The Servicer shall provide evidence of such monthly reporting to the
Purchaser upon request.
ARTICLE VI
REPORTS; REMITTANCES; ADVANCES
Section 6.01 Remittances. (1) On each Remittance Date, the Servicer
shall remit to the Purchaser (a) all amounts credited to the Collection
Account as of the close of business on the last day of the related Due Period
(including (1) the amount of any Principal Prepayment, together with interest
thereon at the related Remittance Rate to the end of the month in which
prepayment of the related Mortgage Loan occurs except when such Principal
Prepayment is received on the last day of the related Due Period in which case
interest calculated at the related Remittance Rate to the end of the month in
which prepayment of the related Mortgage Loan occurs shall not be remitted,
(2) all proceeds of any REO Disposition net of amounts payable to the Servicer
pursuant to Section 5.13, (3) prior to the occurrence of any Securitization
Transaction with respect to the Mortgage Loans, any Foreclosure Profits and
(4) after the occurrence of a Securitization Transaction, Foreclosure Profits
shall be distributed to the related trustee or as otherwise directed in the
related Reconstitution Agreements), net of charges against or withdrawals from
the Collection Account in accordance with Section 5.05, which charges against
or withdrawals from the Collection Account the Servicer shall make solely on
such Remittance Date, plus (b) all Monthly Advances, if any, which the
Servicer is obligated to remit pursuant to Section 6.03; provided that the
Servicer shall not be required to remit, until the next following Remittance
Date, any amounts attributable to Monthly Payments collected but due on a Due
Date or Dates subsequent to the related Due Period.
(2) All remittances made to the Purchaser on each Remittance Date
will be made to the Purchaser by wire transfer of immediately available funds
accordingly to the instructions that will be provided by Purchaser to the
Servicer.
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(3) With respect to any remittance received by the Purchaser after
the Business Day on which such payment was due, the Servicer shall pay to the
Purchaser interest on any such late payment at an annual rate equal to
One-month LIBOR (as published in the Wall Street Journal) plus 200 basis
points, but in no event greater than the maximum amount permitted by
applicable law. Such interest shall be paid by the Servicer to the Purchaser
on the date such late payment is made and shall cover the period commencing
with the Business Day on which such payment was due and ending with the
Business Day on which such payment is made, both inclusive. Such interest
shall be remitted along with such late payment. Neither the payment by the
Servicer nor the acceptance by the Purchaser of any such interest shall be
deemed an extension of time for payment or a waiver by the Purchaser of any
Event of Default.
Section 6.02 Reporting. On or before the 5th Business Day of each
month during the term hereof, the Servicer shall deliver to the Purchaser
monthly accounting reports in the form of Exhibits 6.02(a) through 6.02(g)
attached hereto with respect to the most recently ended Due Period. Such
monthly accounting reports shall include information as to the aggregate
Unpaid Principal Balance of all Mortgage Loans, the scheduled amortization of
all Mortgage Loans, any delinquencies and the amount of any Principal
Prepayments as of the most recently ended Record Date. Such monthly reports
shall be available by the Servicer for the Purchaser on Servicer's secured web
site. The Servicer shall provide training, secured access and password(s) to
the Purchaser on the operation of the website.
Utilizing resources reasonably available to the Servicer and to the
extent the requested data is contained within the Servicer's electronic
systems without incurring any cost except the Servicer's overhead and
employees' salaries, the Servicer shall furnish to the Purchaser during the
term of this Agreement such periodic, special or other reports, information or
documentation, whether or not provided for herein, as shall be reasonably
requested by the Purchaser with respect to Mortgage Loans or REO Properties
(provided, the Purchaser shall have given the Servicer reasonable notice and
opportunity to prepare such reports, information or documentation), including
any reports, information or documentation reasonably required to comply with
any regulations of any governmental agency or body having jurisdiction over
the Purchaser, all such reports or information to be as provided by and in
accordance with such applicable instructions and directions as the Purchaser
may reasonably request. If any of such reports are not customarily prepared by
the Servicer or require that the Servicer program data processing systems to
create the reports, then the Purchaser shall pay to the Servicer a fee
mutually agreed to by the Purchaser and the Servicer taking into account the
Servicer's actual time and cost in preparing such reports. The Servicer agrees
to execute and deliver all such instruments and take all such action as the
Purchaser, from time to time, may reasonably request in order to effectuate
the purposes and to carry out the terms of this Agreement.
Section 6.03 Monthly Advances by the Servicer. (1) Not later than
the close of business on the Business Day immediately preceding each
Remittance Date, the Servicer shall deposit in the Collection Account an
amount equal to all Monthly Payments not previously advanced by the Servicer
(with interest adjusted to the Remittance Rate) that were due on a Mortgage
Loan and delinquent at the close of business on the related Determination
Date. The Servicer may reduce the total amount to be deposited in the
Collection Account as required by the foregoing sentence by the amount of
funds in the Collection Account which represent Prepaid Monthly Payments;
provided, however, that after any Securitization Transaction, the
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Servicer or its parent must meet the criteria of the Rating Agencies at the
time that the Servicer proposes to use Prepaid Monthly Payments for the making
of any Monthly Advances from such funds.
(2) The Servicer's obligations to make Monthly Advances as to any
Mortgage Loan will continue through the last Monthly Payment due prior to the
payment in full of the Mortgage Loan, or through the Remittance Date prior to
the Remittance Date for the remittance of all Liquidation Proceeds and other
payments or recoveries (including Insurance Proceeds or Condemnation Proceeds)
with respect to the Mortgage Loan; provided that such obligation shall cease
if the Servicer furnishes to the Purchaser an Officers' Certificate evidencing
the determination by the Servicer in accordance with Section 6.04 that an
advance with respect to such Mortgage Loan would constitute a Non-recoverable
Advance.
(3) On the Business Day prior to the Remittance Date, the Servicer
shall deposit into the Collection Account payments on account of Prepayment
Interest Shortfall Amount in an aggregate amount equal to the lesser of (i)
the aggregate amount of Prepayment Interest Shortfall Amount for the related
Remittance Date resulting solely from Principal Prepayments during the related
Due Period, and (ii) the total amount of the servicing compensation that would
be payable to the Servicer if no Principal Prepayment was made during the Due
Period related to such Remittance Date. Such payments shall be deposited into
the Collection Account.
Section 6.04 Non-recoverable Advances. The determination by the
Servicer that it has made a Non-recoverable Advance or that any Monthly
Advance or Servicing Advance, if made, would constitute a Non-recoverable
Advance shall be evidenced by an Officers' Certificate delivered to the
Purchaser detailing the reasons for such determination.
Section 6.05 Itemization of Servicing Advances. The Servicer shall
provide the Purchaser with an itemization of all Servicing Advances incurred
or made by the Servicer hereunder as the Purchaser may from time to time
reasonably request.
Section 6.06 Officers' Certificate. The Seller shall deliver to the
Purchaser an Officers' Certificate in the form attached hereto as Exhibit 9 on
the Initial Funding Date and upon Purchaser's reasonable request thereafter.
Section 6.07 Compliance with REMIC Provisions. If a REMIC election
has been made with respect to the arrangement under which the Mortgage Loans
and REO Property are held, the Servicer shall not take any action, cause the
REMIC to take any action or fail to take (or fail to cause to be taken) any
action, that under the REMIC Provisions, if taken or not taken, as the case
may be, could (i) endanger the status of the REMIC as a REMIC or (ii) result
in the imposition of a tax upon the REMIC (including but not limited to the
tax on "prohibited transactions" as defined in Section 860(a)(2) of the Code
and the tax on "contributions" to a REMIC set forth in Section 860(D) of the
Code) unless the Servicer has received an Opinion of Counsel (at the expense
of the party seeking to take such action) to the effect that the contemplated
action will not endanger such REMIC status or result in the imposition of any
tax on the REMIC.
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ARTICLE VII
GENERAL SERVICING PROCEDURES
Section 7.01 Enforcement of Due-on-Sale Clauses, Assumption
Agreements. (1) The Servicer will, to the extent it has knowledge of any
conveyance or prospective conveyance by any Mortgagor of the Mortgaged
Property (whether by absolute conveyance or by contract of sale, and whether
or not the Mortgagor remains or is to remain liable under the Mortgage Note
and/or the Mortgage), exercise its rights to accelerate the maturity of such
Mortgage Loan under any "due-on-sale" clause applicable thereto; provided that
the Servicer shall not exercise any 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 Primary Insurance Policy, if any.
(1) If the Servicer is prohibited from enforcing such "due-on-sale"
clause, then the Servicer will attempt to enter into an assumption agreement
with the Person to whom the Mortgaged Property has been conveyed or is
proposed to be conveyed, pursuant to which such Person becomes liable under
the Mortgage Note and, to the extent permitted by applicable state law, the
Mortgagor remains liable thereon. (For purposes of this Section 7.01, the term
"assumption" is deemed to also include a sale of the Mortgaged Property
subject to the Mortgage that is not accompanied by an assumption or
substitution of liability agreement.)
(2) If the Servicer receives a request for any Mortgage Loan to be
assumed, then the Servicer shall inquire into the creditworthiness of the
proposed transferee and shall use the same underwriting criteria for approving
the credit of the proposed transferee that are used with respect to
underwriting mortgage loans of the same type as the Mortgage Loans. Where an
assumption is allowed, the Servicer, with the prior written consent of the
primary mortgage insurer, if any, and subject to the conditions of Section
7.01(3), shall, and is hereby authorized to, enter into a substitution of
liability agreement with the Person to whom the Mortgaged Property is proposed
to be conveyed pursuant to which the original mortgagor is released from
liability and such Person is substituted as mortgagor and becomes liable under
the related Mortgage Note. Any such substitution of liability agreement shall
be in lieu of an assumption agreement. In no event shall the Note Rate, the
amount of the Monthly Payment or the final maturity date be changed. The
Servicer shall notify the Purchaser that any such substitution of liability or
assumption agreement has been completed by forwarding to the Purchaser the
original of any such substitution of liability or assumption agreement, which
document shall be added to the related Purchaser's Mortgage File and shall,
for all purposes, be considered a part of such Purchaser's Mortgage File to
the same extent as all other documents and instruments constituting a part
thereof. Any fee collected by the Servicer for entering into an assumption or
substitution of liability agreement shall be retained by the Servicer as
additional compensation for servicing the Mortgage Loans.
If the credit of the proposed transferee does not meet such
underwriting criteria, then the Servicer shall, to the extent permitted by the
Mortgage or the Mortgage Note and by applicable law, accelerate the maturity
of the Mortgage Loan.
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Section 7.02 Satisfaction of Mortgages and Release of Mortgage
Files. Upon the payment in full of any Mortgage Loan, the Servicer will
immediately notify the Purchaser by a certification of a Servicing Officer,
which certification shall include a statement to the effect that all amounts
received or to be received in connection with such payment which are required
to be deposited in the Collection Account pursuant to Section 5.04 have been
or will be so deposited and shall request delivery to it of the Purchaser's
Mortgage File held by the Purchaser. Upon receipt of such certification and
request, the Purchaser shall promptly release the related mortgage documents
to the Servicer and the Servicer shall promptly prepare and process any
satisfaction or release. No expense incurred in connection with any instrument
of satisfaction or deed of reconveyance shall be chargeable to the Collection
Account.
If the Servicer satisfies or releases a Mortgage without having
obtained payment in full of the indebtedness secured by the Mortgage, or
should it otherwise take such action which results in a reduction of the
coverage under the Primary Insurance Policy, if any, then the Servicer shall
promptly give written notice thereof to the Purchaser, and, within 10 Business
Days following written demand therefor from the Purchaser to the Servicer, the
Servicer shall repurchase the related Mortgage Loan by paying to the Purchaser
the Repurchase Price therefor by wire transfer of immediately available funds
directly to the Purchaser's Account.
From time to time and as appropriate for the servicing or
foreclosure of the Mortgage Loan, including for this purpose collection under
any Primary Insurance Policy, the Purchaser shall, upon request of the
Servicer and delivery to the Purchaser of a servicing receipt signed by a
Servicing Officer, release the Purchaser's Mortgage File held by the Purchaser
to the Servicer. Such servicing receipt shall obligate the Servicer to return
the related mortgage documents to the Purchaser when the need therefor by the
Servicer no longer exists, unless the Mortgage Loan has been liquidated and
the Liquidation Proceeds relating to the Mortgage Loan have been deposited in
the Collection Account or the Purchaser's Mortgage File or such document has
been delivered to an attorney, or to a public trustee or other public official
as required by law, for purposes of initiating or pursuing legal action or
other proceedings for the foreclosure of the Mortgaged Property either
judicially or nonjudicially, and the Servicer has delivered to the Purchaser a
certificate of a Servicing Officer certifying as to the name and address of
the Person to which such Purchaser's Mortgage File or such document was
delivered and the purpose or purposes of such delivery. Upon receipt of a
certificate of a Servicing Officer stating that such Mortgage Loan was
liquidated and the Liquidation Proceeds were deposited in the Collection
Account, the servicing receipt shall be released by the Purchaser to the
Servicer.
Section 7.03 Servicing Compensation. As compensation for its
services hereunder, the Servicer shall be entitled to retain from interest
payments on the Mortgage Loans the amount provided for as the Servicing Fee.
The Servicing Fee in respect of a Mortgage Loan for a particular month shall
become payable only upon the receipt by the Servicer from the Mortgagor of the
full Monthly Payment in respect of such Mortgage Loan. Additional servicing
compensation in the form of assumption fees, as provided in Section 7.01, late
payment charges and other servicer compensation for modifications, short sales
as provided in Section 5.01(e), and other shall be retained by the Servicer to
the extent not required to be deposited in the Collection Account. In the
event that Liquidation Proceeds, Insurance Proceeds and proceeds from any REO
Disposition exceeds the Unpaid Principal Balance of such Mortgage Loan plus
unpaid interest accrued thereon at a per annum rate equal to the related
Remittance Rate, the
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Servicer shall be entitled to retain therefrom and pay to itself any Servicing
Fee, Monthly Advances and Servicing Advances considered to be accrued but
unpaid. 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 therefor except as specifically provided for herein.
Section 7.04 Annual Statement as to Compliance. The Servicer shall
deliver to the Purchaser on or before March 10, 2006, an Officer's Certificate
stating that (1) a review of the activities of the Servicer during the
preceding calendar year and if performance under this Agreement has been made
under such officer's supervision, and (2) to the best of such officer's
knowledge, based on such review, the Servicer has fulfilled all its
obligations under this Agreement throughout such year, or, if there has been a
default in the fulfillment of any such obligation, specifying each such
default known to such officer and the nature and status thereof and the action
being taken by the Servicer to cure such default.
Section 7.05 Annual Independent Certified Public Accountants'
Servicing Report or Attestation. On or before March 10, 2006, the Servicer, at
its expense, shall cause a firm of independent public accountants which is a
member of the American Institute of Certified Public Accountants to furnish a
statement to the Purchaser to the effect that such firm has, with respect to
the Servicer's overall servicing operations, examined such operations in
accordance with the requirements of the Uniform Single Attestation Program for
Mortgage Bankers, stating such firm's conclusions relating thereto.
Section 7.06 Purchaser's Right to Examine Servicer Records. The
Purchaser shall have the right to examine and audit, during business hours or
at such other times as are reasonable under applicable circumstances, upon 10
days advance notice any and all of (i) the credit and other loan files
relating to the Mortgage Loans or the Mortgagors, (ii) any and all books,
records, documentation or other information of the Servicer (whether held by
the Servicer or by another) relating to the servicing of the Mortgage Loans
and (iii) any and all books, records, documentation or other information of
the Servicer (whether held by the Servicer or by another) that are relevant to
the performance or observance by the Servicer of the terms, covenants or
conditions of this Agreement. In particular, the Servicer shall maintain in
its possession, available for inspection by the Purchaser, or its designee and
shall deliver to the Purchaser upon demand, evidence of compliance with all
federal, state and local laws, rules and regulations, and requirements of
▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac, as applicable, to the extent the Seller is required
by law or Accepted Servicing Practices to maintain such evidence. The Servicer
shall be obligated to make the foregoing information available to the
Purchaser at the site where such information is stored; provided that the
Purchaser shall be required to pay all reasonable costs and expenses incurred
by the Servicer in making such information available. To the extent that
original documents are not required for purposes of realization of Liquidation
Proceeds or Insurance Proceeds, documents maintained by the Servicer may be in
the form of microfilm or microfiche or such other reliable means of recreating
original documents, including but not limited to, optical imagery techniques
so long as the Servicer complies with the requirements of the ▇▇▇▇▇▇ Mae
Guide, as amended from time to time.
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ARTICLE VIII
REPORTS TO BE PREPARED BY THE SERVICER
Section 8.01 The Servicer's Reporting Requirements. Electronic
Format. If requested by the Purchaser, the Servicer shall supply any and all
information regarding the Mortgage Loans and the REO Properties, including all
reports required to be delivered pursuant to Section 5.03, Section 6.02 and
this Section 8.01, to the Purchaser in electronic format reasonably acceptable
to Purchaser, unless otherwise limited by the servicing system utilized by the
Servicer.
Section 8.02 Financial Statements. The Servicer understands that, in
connection with marketing the Mortgage Loans, the Purchaser may make available
to any prospective purchaser of the Mortgage Loans the Servicer's audited
financial statements for the two fiscal years immediately preceding any Sale
of the Mortgage Loans, together with any additional statements required
pursuant to the next sentence. During the term hereof, the Servicer will
deliver to the Purchaser audited financial statements for each of its fiscal
years following the Funding Date and all other financial statements prepared
following the Funding Date to the extent any such statements are available
upon request to the public at large.
The Servicer also agrees to make available upon reasonable notice
and during normal business hours to any prospective purchasers of the Mortgage
Loans a knowledgeable financial or accounting officer for the purpose of
answering questions respecting recent developments affecting the Servicer or
the financial statements of the Servicer which may affect, in any material
respect, the Servicer's ability to comply with its obligations under this
Agreement, and to permit any prospective purchasers upon reasonable notice and
during normal business hours to inspect the Servicer's servicing facilities
for the purpose of satisfying such prospective purchasers that the Servicer
has the ability to service the Mortgage Loans in accordance with this
Agreement.
ARTICLE IX
THE SELLERS
Section 9.01 Indemnification; Third Party Claims(1) . Each Seller
and Servicer shall indemnify and hold harmless the Purchaser and any Successor
Servicer and each of their present and former directors, officers, agents,
employees, Affiliates and assignees and each Person, if any, that controls the
Purchaser or Successor Servicer or such Affiliate within the meaning of either
the Securities Act or the Exchange Act (each, an "Indemnified Party"), from
and against any costs, damages, expenses (including reasonable attorneys' fees
and costs, irrespective of whether or not incurred in connection with the
defense of any actual or threatened action, proceeding, or claim), fines,
forfeitures, injuries, liabilities or losses ("Losses") suffered or sustained
in any way by any such Person, no matter how or when arising (including Losses
incurred or sustained in connection with any judgment, award, settlement or
repurchase hereunder), in connection with or relating to the Seller's or
Servicer's failure (i) to observe and perform any or all of the Seller's or
Servicer's duties, obligations, covenants, agreements, warranties or
representations contained in this Agreement or in the Purchase Price and Terms
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Agreement or (ii) to comply with all applicable requirements contained in this
Agreement or the Purchase Price and Terms Agreement with respect to the
servicing of the Mortgage Loan, provided, however, in the case of both of the
preceding clauses (i) and (ii), PHH Mortgage shall have no obligation to
indemnify an Indemnified Party for a breach by the Trust of the Trust's
representations contained in Sections 3.01, 3.03(3) or 3.03(16) hereof. In the
event of a breach by the Trust of the Trust's representations in Section 3.01,
3.03(3) or 3.03(16), the Indemnified Party's sole right to indemnification
shall be from the Trust. The applicable Seller shall immediately (i) notify
the Purchaser if a claim is made by a third party with respect to this
Agreement, any Reconstitution Agreement, any Mortgage Loan and/or any REO
Property (and shall promptly notify the trustee with respect to any claim made
by a third party with respect to any Reconstitution Agreement) (ii) assume
(with the prior written consent of the Purchaser) the defense of any such
claim and pay all expenses in connection therewith, including attorneys' fees,
and (iii) promptly pay, discharge and satisfy any judgment, award, or decree
that may be entered against it or the Purchaser in respect of such claim. The
applicable Seller shall follow any written instructions received from the
Purchaser in connection with such claim. Nothing contained herein shall
prohibit the Purchaser, at its expense, from retaining its own counsel to
assist in any such proceedings or to observe such proceedings; provided that
neither Seller shall be obligated to pay or comply with any settlement to
which it has not consented. The Seller agrees that it will not enter into any
settlement of any such claim without the consent of the Purchaser. In addition
to the obligations of the Seller set forth in this Section 9.01, the Purchaser
may pursue any and all remedies otherwise available at law or in equity,
including, but not limited to, the right to seek damages. The Servicer shall
be reimbursed from amounts on deposit in the Collection Account for all
amounts advanced by it pursuant to the second preceding sentence except when
the claim in any way relates to the Servicer's indemnification pursuant to
this Section 9.01.
Notwithstanding anything to the contrary contained herein, in no
event shall a termination of this Agreement or the Servicer hereunder
terminate any indemnification obligations of the Servicer or each Seller under
this Agreement, which obligations shall survive any such termination.
Section 9.02 Merger or Consolidation of the Seller. Each Seller will
keep in full effect its existence, rights and franchises as a corporation or a
Delaware statutory trust, as applicable, under the laws of the state of its
organization and will 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 a Seller may be merged or consolidated, or any
corporation resulting from any merger, conversion or consolidation (including
by means of the sale of all or substantially all of such Seller's assets to
such Person) to which the Seller shall be a party, or any Person succeeding to
the business of the Seller, shall be the successor of the Seller 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 that, unless otherwise consented to by the Purchaser, the successor
or surviving Person, in the case of a merger or consolidation, etc. of the
Servicer, shall be an institution qualified to service mortgage loans on
behalf of ▇▇▇▇▇▇ ▇▇▇ and ▇▇▇▇▇▇▇ Mac in accordance with the requirements of
Section 3.02(1),
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shall not cause a rating on any security backed by a Mortgage Loan to be
downgraded and shall satisfy the requirements of Section 12.01 with respect to
the qualifications of a successor to such Seller.
Section 9.03 Limitation on Liability of the Sellers and Others.
Neither the Sellers nor any of the officers, employees or agents of the
Sellers shall be under any liability to the Purchaser for any action taken or
for refraining from the taking of any action in good faith pursuant to this
Agreement or pursuant to the express written instructions of the Purchaser, or
for errors in judgment made in good faith; provided that this provision shall
not protect the Sellers or any such Person against any breach of warranties or
representations made herein, or failure to perform its obligations in
compliance with any standard of care set forth in this Agreement, or any
liability which would otherwise be imposed by reasons of willful misfeasance,
bad faith, negligence or any breach in the performance of the obligations and
duties hereunder. The Sellers and any officer, employee or agent of the
Sellers may rely in good faith on any document of any kind reasonably believed
by the Sellers or such Person to be genuine and prima facie properly executed
and submitted by any Person respecting any matters arising hereunder.
The Sellers shall not be under any obligation to appear in,
prosecute or defend any legal action that is not incidental to their duties
hereunder and which in their opinion may involve them in any expense or
liability; provided that the Sellers may in their discretion undertake any
such action that it may deem necessary or desirable in respect of this
Agreement and the rights and duties of the parties hereto. In such event, the
legal expenses and costs of such action and any liability resulting therefrom
shall be expenses, costs and liabilities for which the Sellers shall be
entitled to be reimbursed therefor out of the Collection Account. This
indemnity shall survive the termination of this Agreement.
Section 9.04 Servicer Not to Resign. With respect to the retention
by PHH Mortgage of the servicing of the Mortgage Loans and the REO Properties
hereunder, PHH Mortgage acknowledges that the Purchaser has acted in reliance
upon PHH Mortgage's independent status, the adequacy of its servicing
facilities, plan, personnel, records and procedures, its integrity, reputation
and financial standing and the continuance thereof. Consequently, PHH Mortgage
shall not assign the servicing rights retained by it hereunder to any third
party nor resign from the obligations and duties hereby imposed on it except
(i) with the approval of the Purchaser, such approval not to be unreasonably
withheld, or (ii) 3 Business Days following any determination that its duties
hereunder are no longer permissible under applicable law and such incapacity
cannot be cured by PHH Mortgage. Any determination permitting the transfer of
the servicing rights or the resignation of PHH Mortgage under Subsection (ii)
hereof shall be evidenced by an opinion of counsel to such effect delivered to
the Purchaser, which opinion of counsel shall be in form and substance
reasonably acceptable to the Purchaser.
Without in any way limiting the generality of this Section 9.04, in
the event that the Seller either shall sell or otherwise dispose of all or
substantially all of its property or assets (including its rights hereunder),
without the prior written consent of the Purchaser, which consent shall not be
unreasonably withheld, then the Purchaser shall have the right to terminate
this Agreement upon notice given as set forth in Section 10.01, without any
payment of any penalty or damages and without any liability whatsoever to the
Servicer or any third party;
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provided however, that in the event a sale or merger as described above occurs
without notice to the Seller or the Purchaser, the Purchaser agrees that upon
its receipt of notice of such sale or merger, it will review fully all
information provided by the Purchaser regarding the successor servicer,
including information regarding the adequacy of its servicing facilities,
personnel, records and procedures, its integrity, reputation and financial
standing, prior to making any determination to terminate this Agreement. In
the event that such successor servicer is not acceptable to the Purchaser, the
Purchaser shall have the right to terminate in its sole discretion, the
successor servicer's rights under this servicing agreement.
ARTICLE X
DEFAULT
Section 10.01 Events of Default. In case one or more of the
following events shall occur and be continuing:
(1) any failure by the Servicer to remit to the Purchaser any
payment required to be made under the terms of this Agreement which continues
unremedied for a period of 3 Business Days unless such failure to remit is due
to a cause beyond the Servicer's control, including an act of God, act of
civil, military or governmental authority, fire, epidemic, flood, blizzard,
earthquake, riot, war, or sabotage, provided that the Servicer gives the
Purchaser notice of such cause promptly and uses its reasonable efforts to
correct such failure to remit and does so remit within 2 Business Days
following the end of the duration of the cause of such failure to remit;
(2) any failure on the part of a Seller/Servicer duly to observe or
perform in any material respect any of the covenants or agreements on the part
of such Seller/Servicer set forth in this Agreement which continues unremedied
for a period of 30 days (or, in the case of (i) the annual statement of
compliance required under Section 7.04, (ii) the annual independent public
accountants' servicing report or attestation required under Section 7.05, or
(iii) the certification required under Section 3.05 in the form of Exhibit 11,
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 applicable
Seller/Servicer by the Purchaser; provided that such 30-day period shall not
begin with respect to any failure to cure, repurchase or substitute in
accordance with Sections 2.04 and/or 3.04 until the expiration of the cure
periods provided for in Sections 2.04 and/or 3.04, as applicable;
(3) any filing of an Insolvency Proceeding by or on behalf of a
Seller/Servicer, any consent by or on behalf of a Seller/Servicer to the
filing of an Insolvency Proceeding against it, or any admission by or on
behalf of a Seller/Servicer of its inability to pay its debts generally as the
same become due, suspension of a Seller/Servicer's payment obligations or
cessation of the Servicer's normal business operations for three Business Days
(as a result of an occurrence specific to the Servicer);
(4) any filing of an Insolvency Proceeding against a Seller/Servicer
that remains undismissed or unstayed for a period of 60 days after the filing
thereof;
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(5) any issuance of any attachment or execution against, or any
appointment of a conservator, receiver or liquidator with respect to, all or
substantially all of the assets of a Seller/Servicer;
(6) any failure or inability of PHH Mortgage to be eligible to
service Mortgage Loans for ▇▇▇▇▇▇ ▇▇▇, or ▇▇▇▇▇▇▇ Mac;
(7) any sale, transfer, assignment, or other disposition by a
Seller/Servicer of all or substantially all of its property or assets to a
Person who does not meet the qualifications enumerated or incorporated by
reference into Section 9.02, any assignment by a Seller/Servicer of this
Agreement or any of a Seller's/Servicer's rights or obligations hereunder
except in accordance with Section 9.04, or any action taken or omitted to be
taken by a Seller/Servicer in contemplation or in furtherance of any of the
foregoing, without the consent of the Purchaser;
(8) any failure by the Seller to be in compliance with applicable
"doing business" or licensing laws of any jurisdiction where Mortgaged
Property is located; or
(9) the failure of the Servicer to maintain a minimum net worth of
$25,000,000;
then, and in each and every such case, so long as an Event of Default shall
not have been remedied, the Purchaser, by notice in writing to the Sellers
may, in addition to whatever rights the Purchaser may have at law or in equity
to damages, including injunctive relief and specific performance, terminate
all the rights and obligations of the Sellers under this Agreement and in and
to the Mortgage Loans and the proceeds thereof subject to Section 12.01,
without the Purchaser's incurring any penalty or fee of any kind whatsoever in
connection therewith; provided that, upon the occurrence of an Event of
Default under Subsection (3), (4) or (5) of this Section 10.01, this Agreement
and all authority and power of the Sellers hereunder (whether with respect to
the Mortgage Loans, the REO Properties or otherwise) shall automatically
cease. On or after the receipt by the Sellers of such written notice, all
authority and power of the Sellers under this Agreement (whether with respect
to the Mortgage Loans or otherwise) shall cease. Notwithstanding the
occurrence of an Event of Default, the Sellers or the Servicer, as applicable,
shall be entitled to all amounts due to such party and remaining unpaid on
such date of termination.
If any of the Mortgage Loans are MERS Mortgage Loans, in connection
with the termination or resignation (as described in Section 9.04) of the
Servicer hereunder, either (i) the successor servicer shall represent and
warrant that it is a member of MERS in good standing and shall agree to comply
in all material respects with the rules and procedures of MERS in connection
with the servicing of the MERS Mortgage Loans, or (ii) the predecessor
servicer shall cooperate with the successor servicer either (x) in causing
MERS to execute and deliver an assignment of Mortgage in recordable form to
transfer the Mortgage from MERS to the Purchaser and to execute and deliver
such other notices, documents and other instruments as may be necessary to
effect a transfer of such Mortgage Loan or servicing of such Mortgage Loan on
the MERS system to the successor servicer or (y) in causing MERS to designate
on the MERS system the successor servicer as the servicer of such Mortgage
Loan.
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ARTICLE XI
TERMINATION
Section 11.01 Term and Termination (1) The servicing obligations of
the Servicer under this Agreement may be terminated as provided in Section
10.01 hereof.
(2) In any case other than as provided under Subsection (1) hereof,
the respective obligations and responsibilities of the Sellers hereunder shall
terminate upon: (a) the later of the final payment or other liquidation (or
any advance with respect thereto) of the last Mortgage Loan or the disposition
of all REO Property and the remittance of all funds due hereunder; or (b) the
mutual written consent of the Sellers and the Purchaser.
(3) Upon any termination of this Agreement or the servicing
obligations of the Servicer hereunder, then the Servicer shall prepare,
execute and deliver all agreements, documents and instruments, including all
Servicer Mortgage Files, and do or accomplish all other acts or things
necessary or appropriate to effect such termination, all at the Servicer's
sole expense. In any such event, the Servicer agrees to cooperate with the
Purchaser in effecting the termination of the Servicer's servicing
responsibilities hereunder, including the transfer to the Purchaser or its
designee for administration by it of all cash amounts which shall at the time
be contained in, or credited by the Servicer to, the Collection Account and/or
the Escrow Account or thereafter received with respect to any Mortgage Loan or
REO Property.
(4) Notwithstanding and in addition to the foregoing, in the event
that (i) a Mortgage Loan becomes delinquent for a period of 91 days or more (a
"Delinquent Mortgage Loan") or (ii) a Mortgage Loan becomes an REO Property,
the Purchaser may at its election terminate this Agreement with respect to
such Delinquent Mortgage Loan or REO Property upon 30 days' written notice to
the Servicer; provided that, upon termination of the Agreement with respect to
such Delinquent Mortgage Loan or REO Property, the Purchaser shall reimburse
the Servicer for all outstanding Servicing Advances, Monthly Advances and
Servicing Fees.
Section 11.02 Survival. Notwithstanding anything to the contrary
contained herein, the representations and warranties of the parties contained
herein and in any certificate or other instrument delivered pursuant hereto,
as well as the other covenants hereof (including those set forth in Section
9.01) that, by their terms, require performance after the termination by this
Agreement, shall survive the delivery and payment for the Mortgage Loans on
each Funding Date as well as the termination of this Agreement and shall inure
to the benefit of the parties, their successors and assigns. Sellers further
agree that the representations, warranties and covenants made by Sellers
herein and in any certificate or other instrument delivered pursuant hereto
shall be deemed to be relied upon by Purchaser notwithstanding any
investigation heretofore made by Purchaser or on Purchaser's behalf.
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ARTICLE XII
GENERAL PROVISIONS
Section 12.01 Successor to the Servicer. Upon the termination of the
Servicer's servicing responsibilities and duties under this Agreement pursuant
to Sections 9.04, 10.01, or 11.01, the Purchaser shall (i) succeed to and
assume all of the Servicer's responsibilities, rights, duties and obligations
under this Agreement or (ii) appoint a successor servicer which shall succeed
to all rights and assume all of the responsibilities, duties and liabilities
of the Servicer under this Agreement prior to the termination of the
Servicer's responsibilities, duties and liabilities under this Agreement. If
the Servicer's duties, responsibilities and liabilities under this Agreement
should be terminated pursuant to the aforementioned Sections, then the
Servicer shall continue to discharge such duties and responsibilities during
the period from the date it acquires knowledge of such termination until the
effective date thereof (if applicable) all on the terms and conditions
contained herein and shall take no action whatsoever that might impair or
prejudice the rights or financial condition of its successor. The termination
of the Servicer's servicing responsibilities pursuant to any of the
aforementioned Sections shall not, among other things, relieve the Servicer of
its obligations pursuant to Section 2.04 and/or 7.02, the representations and
warranties or other obligations set forth in Sections 2.04, 3.01, 3.02 and
3.03 and the remedies available to the Purchaser under the various provisions
of this Agreement. In addition, such termination or resignation shall not
affect any claims that the Purchaser may have against the Servicer arising
prior to any such termination or resignation.
Any successor appointed as provided herein shall execute,
acknowledge and deliver to the Servicer and to the Purchaser an instrument
accepting such appointment, wherein the successor shall make the
representations and warranties set forth in Section 3.02, 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.
The Servicer shall promptly deliver to the successor the funds in
the Collection Account and the Escrow Account and the Mortgage Files and
related documents and statements held by it hereunder and the Servicer shall
account for all funds. The Servicer shall execute and deliver such instruments
and do such other things all as may reasonably be required to more fully and
definitely vest and confirm in the successor all such rights, powers, duties,
responsibilities, obligations and liability of the Servicer. The successor
shall make such arrangements as it may deem appropriate to reimburse the
Servicer for unrecovered Servicing Advances which the successor retains
hereunder and which could otherwise have been recovered by the Servicer
pursuant to this Agreement but for the appointment of the successor Servicer.
Section 12.02 Governing Law; Jurisdiction; Consent to Service of
Process. This Agreement is to be governed by, and construed in accordance with
the internal laws of the State of New York without giving effect to principals
of conflicts of laws. The obligations, rights, and remedies of the parties
hereunder shall be determined in accordance with such laws. Each of the
Purchaser and the Servicer irrevocably (i) submits to the exclusive
jurisdiction of the courts of the state of New York and the federal courts of
the United States of America for the Southern District of New York for the
purpose of any action or proceeding relating to this agreement;
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(ii) waives, to the fullest extent permitted by law, the defense of an
inconvenient forum in any action or proceeding in any such court; and (iii)
consents to service of process upon it by mailing a copy thereof by certified
mail addressed to it as provided for notices hereunder.
Section 12.03 Notices. Any notices or other communications permitted
or required hereunder shall be in writing and shall be deemed conclusively to
have been given if personally delivered, sent by courier with delivery against
signature therefor, mailed by registered mail, postage prepaid, and return
receipt requested or transmitted by telex, telegraph or telecopier and
confirmed by a similar writing mailed or sent by courier as provided above, to
the address set forth below:
(a) if to the Purchaser:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital Inc.
1221 Avenue of the ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ - Whole Loan Operations Manager
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Email: ▇▇▇▇▇.▇▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
with copies to:
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ - Servicing Oversight
▇▇▇▇ ▇-▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Email: ▇▇▇▇.▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ - RFPG ▇▇▇▇ ▇▇▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ Fax:
▇▇▇-▇▇▇-▇▇▇▇
Email: ▇▇▇▇▇.▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
(b) if to PHH Mortgage:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
PHH Mortgage Corporation - Vice President, Secondary Marketing
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇
▇▇. ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Fax: [____________]
Email: [______________]
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(b) if to ▇▇▇▇▇▇'▇ Gate Residential Mortgage Trust::
c/o PHH Mortgage Corporation, as Administrator
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ PHH Mortgage Corporation - Vice President,
Secondary Marketing
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇.
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Fax: [____________]
Email: [______________]
or such other address as may hereafter be furnished to the other
party by like notice.
Section 12.04 Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, the invalidity of any such covenant,
agreement, provision or term of this Agreement shall in no way affect the
validity or enforceability of the other provisions of this Agreement.
Section 12.05 Schedules and Exhibits. The schedules and exhibits
that are attached to this Agreement are hereby incorporated herein and made a
part hereof by this reference.
Section 12.06 General Interpretive Principles. For purposes of this
Agreement, except as otherwise expressly provided or unless the context
otherwise requires:
(1) 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;
(2) any reference in this Agreement to this Agreement or any other
agreement, document, or instrument shall be a reference to this Agreement or
any other such agreement, document, or instrument as the same has been
amended, modified, or supplemented in accordance with the terms hereof and
thereof (as applicable);
(3) accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting principles;
(4) 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, unless the context shall otherwise require;
(5) 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;
(6) a reference to a "day" shall be a reference to a calendar day;
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(7) 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
(8) the terms "include" and "including" shall mean without
limitation by reason of enumeration.
Section 12.07 Waivers and Amendments, Noncontractual Remedies;
Preservation of Remedies. This Agreement may be amended, superseded, canceled,
renewed or extended and the terms hereof may be waived, only by a written
instrument signed by authorized representatives of the parties or, in the case
of a waiver, by an authorized representative of the party waiving compliance.
No such written instrument shall be effective unless it expressly recites that
it is intended to amend, supersede, cancel, renew or extend this Agreement or
to waive compliance with one or more of the terms hereof, as the case may be.
No delay on the part of any party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof, nor shall any waiver on the part
of any party of any such right, power or privilege, or any single or partial
exercise of any such right, power or privilege, preclude any further exercise
thereof or the exercise of any other such right, power or privilege. The
rights and remedies herein provided are cumulative and are not exclusive of
any rights or remedies that any party may otherwise have at law or in equity.
Section 12.08 Captions. All section titles or captions contained in
this Agreement or in any schedule or exhibit annexed hereto or referred to
herein, and the table of contents to this Agreement, are for convenience only,
shall not be deemed a part of this Agreement and shall not affect the meaning
or interpretation of this Agreement.
Section 12.09 Counterparts; Effectiveness. This Agreement may be
executed by the parties hereto in separate counterparts, each of which when so
executed and delivered shall be an original, but all such counterparts shall
together constitute one and the same instrument. This Agreement shall become
effective as of the date first set forth herein upon the due execution and
delivery of this Agreement by each of the parties hereto.
Section 12.10 Entire Agreement; Amendment. This Agreement (including
the schedules and exhibits annexed hereto or referred to herein), together
with the PHH Guide, contains the entire agreement between the parties hereto
with respect to the transactions contemplated hereby and supersedes all prior
agreements, written or oral, with respect thereto. No amendment, modification
or alteration of the terms or provisions of this Agreement shall be binding
unless the same shall be in writing and duly executed by the authorized
representatives of the parties hereto.
Section 12.11 Further Assurances. Each party hereto shall take such
additional action as may be reasonably necessary to effectuate this Agreement
and the transactions contemplated hereby. The Sellers will promptly and duly
execute and deliver to the Purchaser such documents and assurances and take
such further action as the Purchaser may from time to time reasonably request
in order to carry out more effectively the intent and purpose of this
Agreement and to establish and protect the rights and remedies created or
intended to be created in favor of the Purchaser.
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Section 12.12 Intention of the Seller. Each Seller intends that the
conveyance of such Seller's right, title and interest in and to the Mortgage
Loans to the Purchaser shall constitute a sale and not a pledge of security
for a loan. If such conveyance is deemed to be a pledge of security for a
loan, however, the applicable Seller intends that the rights and obligations
of the parties to such loan shall be established pursuant to the terms of this
Agreement. Each Seller also intends and agrees that, in such event, (i) the
applicable Seller shall be deemed to have granted to the Purchaser and its
assigns a first priority security interest in such Seller's entire right,
title and interest in and to the Mortgage Loans, all principal and interest
received or receivable with respect to the Mortgage Loans, all amounts held
from time to time in the accounts mentioned pursuant to this Agreement and all
reinvestment earnings on such amounts, together with all of the applicable
Seller's right, title and interest in and to the proceeds of any title, hazard
or other insurance policies related to such Mortgage Loans and (ii) this
Agreement shall constitute a security agreement under applicable law. All
rights and remedies of the Purchaser under this Agreement are distinct from,
and cumulative with, any other rights or remedies under this Agreement or
afforded by law or equity and all such rights and remedies may be exercised
concurrently, independently or successively.
Section 12.13 Waiver of Trial by Jury. THE SELLER AND THE PURCHASER
EACH KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY OF ANY
DISPUTE ARISING UNDER OR RELATING TO THIS AGREEMENT.
ARTICLE XIII
COMPLIANCE WITH REGULATION AB
Section 13.01 Intent of the Parties; Reasonableness. The Purchaser,
each Seller and the Servicer acknowledges and agrees that the purpose of
Article XIII of this Agreement is to facilitate compliance by the Purchaser
and any Depositor with the provisions of Regulation AB and related rules and
regulations of the Commission. Although Regulation AB is applicable by its
terms only to offerings of asset-backed securities that are registered under
the Securities Act, the Seller and the Servicer acknowledges that investors in
privately offered securities may require that the Purchaser or any Depositor
provide comparable disclosure in unregistered offerings. References in this
Agreement to compliance with Regulation AB include provision of comparable
disclosure in private offerings.
Neither the Purchaser nor any 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). Each Seller and 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 Purchaser or any Depositor in good faith for delivery of
information under these provisions on the basis of evolving interpretations of
Regulation AB. In connection with any Securitization Transaction, the Sellers
and the Servicer shall cooperate fully
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with the Purchaser to deliver to the Purchaser (including any of its assignees
or designees) and any Depositor, any and all statements, reports,
certifications, records and any other information necessary in the good faith
determination of the Purchaser or any Depositor to permit the Purchaser or
such Depositor to comply with the provisions of Regulation AB, together with
such disclosures relating to the Sellers, the Servicer, any Subservicer, any
Third-Party Originator and the Mortgage Loans, or the servicing of the
Mortgage Loans, reasonably believed by the Purchaser or any Depositor to be
necessary in order to effect such compliance.
Section 13.02 Additional Representations and Warranties of the
Sellers and the Servicer.
(a) Each Seller and/or the Servicer, as applicable, as to itself,
shall be deemed to represent to the Purchaser and to any Depositor, as of
the date on which information is first provided to the Purchaser or any
Depositor under Subsection 13.03 that, except as disclosed in writing to
the Purchaser or such Depositor prior to such date: (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 such Servicer;
(iv) no material changes to the Servicer's policies or procedures with
respect to the servicing function it will perform under this Agreement
and any Reconstitution Agreement for mortgage loans of a type similar to
the Mortgage Loans have occurred during the three-year period immediately
preceding the related Securitization Transaction; (v) there are no
aspects of the Servicer's financial condition that could have a material
adverse effect on the performance by such Servicer of its servicing
obligations under this Agreement or any Reconstitution Agreement; (vi)
there are no material legal or governmental proceedings pending (or known
to be contemplated) against the Seller, the Servicer, any Subservicer or
any Third-Party Originator; and (vii) there are no affiliations,
relationships or transactions relating to any Seller, the Servicer, any
Subservicer or any Third-Party Originator with respect to any
Securitization Transaction and any party thereto identified by the
related Depositor of a type described in Item 1119 of Regulation AB.
(b) If so requested by the Purchaser or any Depositor on any date
following the date on which information is first provided to the
Purchaser or any Depositor under Subsection 13.03, each Seller and the
Servicer shall, within five Business Days following such request, confirm
in writing the accuracy of the representations and warranties set forth
in paragraph (a) of this Section 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.
Section 13.03 Information to Be Provided by each Seller or the
Servicer. In connection with any Securitization Transaction, the Sellers or
the Servicer shall (i) within five
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Business Days following request by the Purchaser or any Depositor, provide to
the Purchaser and such Depositor (or, as applicable, cause each Third-Party
Originator and each Subservicer to provide), in writing and in form and
substance reasonably satisfactory to the Purchaser and such Depositor, the
information and materials specified in paragraphs (a), (b), (c) and (f) of
this Section, and (ii) as promptly as practicable following notice to or
discovery by any Seller or the Servicer, provide to the Purchaser and any
Depositor (in writing and in form and substance reasonably satisfactory to the
Purchaser and such Depositor) the information specified in paragraph (d) of
this Section.
(a) If so requested by the Purchaser or any Depositor, the Sellers
shall provide such information regarding (i) each Seller, as originator
of the Mortgage Loans (including as an acquirer of Mortgage Loans from a
Qualified Correspondent), or (ii) each Third-Party Originator, and (iii)
as applicable, each Subservicer, as is requested for the purpose of
compliance with Items 1103(a)(1), 1105, 1110, 1117 and 1119 of Regulation
AB. Such information shall include, at a minimum:
(A) the originator's form of organization;
(B) a description of the originator's origination program and
how long the originator has been engaged in originating residential
mortgage loans, which description shall include a discussion of the
originator's experience in originating mortgage loans of a similar
type as the Mortgage Loans; information regarding the size and
composition of the originator's origination portfolio; and
information that may be material, in the good faith judgment of the
Purchaser or any Depositor, to an analysis of the performance of the
Mortgage Loans, including the originators' credit-granting or
underwriting criteria for mortgage loans of similar type(s) as the
Mortgage Loans and such other information as the Purchaser or any
Depositor may reasonably request for the purpose of compliance with
Item 1110(b)(2) of Regulation AB;
(C) a description of any material legal or governmental
proceedings pending (or known to be contemplated) against each
Seller, each Third-Party Originator and each Subservicer; and
(D) a description of any affiliation or relationship between
each Seller, each Third-Party Originator, each Subservicer and any
of the following parties to a Securitization Transaction, as such
parties are identified to the Sellers, by the Purchaser or any
Depositor in writing in advance of such Securitization Transaction:
(1) the sponsor;
(2) the depositor;
(3) the issuing entity;
(4) any servicer;
(5) any trustee;
(6) any originator;
(7) any significant obligor;
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(8) any enhancement or support provider; and
(9) any other material transaction party.
(b) If so requested by the Purchaser or any Depositor, the Sellers
shall provide (or, as applicable, cause each Third-Party Originator to
provide) Static Pool Information with respect to the mortgage loans (of a
similar type as the Mortgage Loans, as reasonably identified by the
Purchaser as provided below) originated by (i) the Sellers, if any Seller
is an originator of Mortgage Loans (including as an acquirer of Mortgage
Loans from a Qualified Correspondent), and/or (ii) each Third-Party
Originator. Such Static Pool Information shall be prepared in form and
substance reasonably satisfactory to the Purchaser, by each Seller (or
Third-Party Originator) on the basis of its reasonable, good faith
interpretation of the requirements of Item 1105(a)(1)-(3) of Regulation
AB. To the extent that there is reasonably available to the Sellers (or
Third-Party Originator) Static Pool Information with respect to more than
one mortgage loan type, the Purchaser or any Depositor shall be entitled
to specify whether some or all of such information shall be provided
pursuant to this paragraph. Such Static Pool Information for each vintage
origination year or prior securitized pool, as applicable, shall be
presented in increments no less frequently than quarterly over the life
of the mortgage loans included in the vintage origination year or prior
securitized pool. The most recent periodic increment must be as of a date
no later than 135 days prior to the date of the prospectus or other
offering document in which the Static Pool Information is to be included
or incorporated by reference. The Static Pool Information shall be
provided in an electronic format that provides a permanent record of the
information provided, such as a portable document format (pdf) file, or
other such electronic format reasonably required by the Purchaser or the
Depositor, as applicable.
Promptly following notice or discovery of a material error in Static
Pool Information provided pursuant to the immediately preceding paragraph
(including an omission to include therein information required to be provided
pursuant to such paragraph), the Seller shall provide corrected Static Pool
Information to the Purchaser or any Depositor, as applicable, in the same
format in which Static Pool Information was previously provided to such party
by the Seller.
If so requested by the Purchaser or any Depositor, each Seller shall
provide (or, as applicable, cause each Third-Party Originator to provide), at
the expense of the requesting party (to the extent of any additional
incremental expense associated with delivery pursuant to this Agreement), such
agreed-upon procedures letters of certified public accountants reasonably
acceptable to the Purchaser or Depositor, as applicable, pertaining to Static
Pool Information relating to prior securitized pools for securitizations
closed on or after January 1, 2006 or, in the case of Static Pool Information
with respect to such Seller's or Third-Party Originator's originations or
purchases, to calendar months commencing January 1, 2006, as the Purchaser or
such Depositor shall reasonably request. Such letters shall be addressed to
and be for the benefit of such parties as the Purchaser or such Depositor
shall designate, which may include, by way of example, any Sponsor, any
Depositor and any broker dealer acting as underwriter, placement agent or
initial purchaser with respect to a Securitization Transaction. Any such
statement or letter may take the form of a standard, generally applicable
document accompanied by a reliance letter authorizing reliance by the
addressees designated by the Purchaser or such Depositor.
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(c) If so requested by the Purchaser or any Depositor, the Servicer
shall provide such information regarding the Servicer, as servicer of the
Mortgage Loans, and each Subservicer (the Servicer and each Subservicer,
for purposes of this paragraph, a "Transaction Servicer"), as is
requested for the purpose of compliance with Item 1108 of Regulation AB.
Such information shall include, at a minimum:
(A) the Transaction Servicer's form of organization;
(B) a description of how long the Transaction Servicer has been
servicing residential mortgage loans; a general discussion of the
Transaction Servicer's experience in servicing assets of any type as well
as a more detailed discussion of the Transaction Servicer's experience
in, and procedures for, the servicing function it will perform under this
Agreement and any Reconstitution Agreements; information regarding the
size, composition and growth of the Transaction Servicer's portfolio of
residential mortgage loans of a type similar to the Mortgage Loans and
information on factors related to the Transaction Servicer that may be
material, in the good faith judgment of the Purchaser or any Depositor,
to any analysis of the servicing of the Mortgage Loans or the related
asset-backed securities, as applicable, including, without limitation:
(1) whether any prior securitizations of mortgage loans of a
type similar to the Mortgage Loans involving the Transaction
Servicer have defaulted or experienced an early amortization or
other performance triggering event because of servicing during the
three-year period immediately preceding the related Securitization
Transaction;
(2) the extent of outsourcing the Transaction Servicer
utilizes;
(3) whether there has been previous disclosure of material
noncompliance with the applicable servicing criteria with respect to
other securitizations of residential mortgage loans involving the
Transaction Servicer as a servicer during the three-year period
immediately preceding the related Securitization Transaction;
(4) whether the Transaction Servicer has 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; and
(5) such other information as the Purchaser or any Depositor
may reasonably request for the purpose of compliance with Item
1108(b)(2) of Regulation AB;
(C) a description of any material changes during the three-year
period immediately preceding the related Securitization Transaction
to the Transaction Servicer's policies or procedures with respect to
the servicing function it will perform under this Agreement and any
Reconstitution Agreements for mortgage loans of a type similar to
the Mortgage Loans;
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(D) information regarding the Transaction Servicer's financial
condition, to the extent that there is a material risk that an
adverse financial event or circumstance involving the Transaction
Servicer could have a material adverse effect on the performance by
the Servicer of its servicing obligations under this Agreement or
any Reconstitution Agreement;
(E) information regarding advances made by the Transaction
Servicer on the Mortgage Loans and the Transaction Servicer's
overall servicing portfolio of residential mortgage loans for the
three-year period immediately preceding the related Securitization
Transaction, which may be limited to a statement by an authorized
officer of the Transaction Servicer to the effect that the
Transaction Servicer has made all advances required to be made on
residential mortgage loans serviced by it during such period, or, if
such statement would not be accurate, information regarding the
percentage and type of advances not made as required, and the
reasons for such failure to advance;
(F) a description of the Transaction Servicer's processes and
procedures designed to address any special or unique factors
involved in servicing loans of a similar type as the Mortgage Loans;
(G) a description of the Transaction Servicer's processes for
handling delinquencies, losses, bankruptcies and recoveries, such as
through liquidation of mortgaged properties, sale of defaulted
mortgage loans or workouts; and
(H) information as to how the Transaction Servicer defines or
determines delinquencies and charge-offs, including the effect of
any grace period, re-aging, restructuring, partial payments
considered current or other practices with respect to delinquency
and loss experience.
(d) If so requested by the Purchaser or any Depositor for the
purpose of satisfying its reporting obligation under the Exchange Act
with respect to any class of asset-backed securities, each Seller and the
Servicer shall (or shall cause each Subservicer and Third-Party
Originator to) (i) notify the Purchaser and any Depositor in writing of
(A) any material litigation or governmental proceedings pending against
such Seller or the Servicer, any Subservicer or any Third-Party
Originator and (B) any affiliations or relationships that develop
following the closing date of a Securitization Transaction between such
Seller or the Servicer, any Subservicer or any Third-Party Originator and
any of the parties specified in clause (D) of paragraph (a) of this
Section (and any other parties identified in writing by the requesting
party) with respect to such Securitization Transaction, and (ii) provide
to the Purchaser and any Depositor a description of such proceedings,
affiliations or relationships.
(e) As a condition to the succession to the Servicer or any
Subservicer as servicer or subservicer under this Agreement or any
Reconstitution Agreement by any
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Person (i) into which the Servicer or such Subservicer may be merged or
consolidated, or (ii) which may be appointed as a successor to the
Servicer or any Subservicer, the Servicer shall provide to the Purchaser
and any Depositor, at least 15 calendar days prior to the effective date
of such succession or appointment, (x) written notice to the Purchaser
and any Depositor of such succession or appointment and (y) in writing
and in form and substance reasonably satisfactory to the Purchaser and
such Depositor, all information reasonably requested by the Purchaser or
any Depositor in order to comply with its reporting obligation under Item
6.02 of Form 8-K with respect to any class of asset-backed securities.
(f) In addition to such information as the Servicer, as servicer, is
obligated to provide pursuant to other provisions of this Agreement, if
so requested by the Purchaser or any Depositor, the Servicer shall
provide such information regarding the performance or servicing of the
Mortgage Loans as is reasonably required by the Purchaser or any
Depositor to facilitate preparation of distribution reports in accordance
with Item 1121 of Regulation AB and to permit the Purchaser or such
Depositor to comply with the provisions of Regulation AB relating to
Static Pool Information regarding the performance of the Mortgage Loans
on the basis of the Purchaser's or such Depositor's reasonable, good
faith interpretation of the requirements of Item 1105(a)(1)-(3) of
Regulation AB (including without limitation as to the format and content
of such Static Pool Information). Such information shall be provided
concurrently with the monthly reports otherwise required to be delivered
by the Servicer under this Agreement commencing with the first such
report due in connection with the applicable Securitization Transaction.
Section 13.04 Servicer Compliance Statement. On or before March 1 of
each calendar year, commencing in 2007, the Servicer shall deliver to the
Purchaser and any Depositor a statement of compliance addressed to the
Purchaser and such Depositor and signed by an authorized officer of the
Servicer, 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 and any applicable Reconstitution
Agreement during such period has been made under such officer's supervision,
and (ii) to the best of such officers' knowledge, based on such review, the
Servicer has fulfilled all of its obligations under this Agreement and any
applicable Reconstitution 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.
Section 13.05 Report on Assessment of Compliance and Attestation.
(a) On or before March 1 of each calendar year, commencing in 2007, the
Servicer shall:
(i) deliver to the Purchaser and any Depositor a report (in form and
substance reasonably satisfactory to the Purchaser and such 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 Exchange Act and Item 1122 of
Regulation AB. Such report shall be addressed to the Purchaser and such
Depositor and signed by an authorized officer of the Servicer, and shall
address each of
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the Servicing Criteria specified on a certification substantially in the
form of Exhibit 14 hereto delivered to the Purchaser concurrently with
the execution of this Agreement;
(ii) deliver to the Purchaser and any Depositor a report of a
registered public accounting firm reasonably acceptable to the Purchaser
and such 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 and the Exchange
Act;
(iii) cause each Subservicer, and each Subcontractor determined by
the Servicer pursuant to Subsection 13.06(b) to be "participating in the
servicing function" within the meaning of Item 1122 of Regulation AB, to
deliver to the Purchaser and any Depositor an assessment of compliance
and accountants' attestation as and when provided in paragraphs (a) and
(b) of this Section; and
(iv) deliver to the Purchaser, any Depositor 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 ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002)
on behalf of an asset-backed issuer with respect to a Securitization
Transaction a certification in the form attached hereto as Exhibit 11.
Each Seller 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 Purchaser nor any 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 an
issuing entity whose asset pool includes Mortgage Loans.
(b) Each assessment of compliance provided by a Subservicer pursuant
to Subsection 13.05(a)(i) shall address each of the Servicing Criteria
specified on a certification substantially in the form of Exhibit 14
hereto delivered to the Purchaser concurrently with the execution of this
Agreement or, in the case of a Subservicer subsequently appointed as
such, on or prior to the date of such appointment. An assessment of
compliance provided by a Subcontractor pursuant to Subsection
13.05(a)(iii) need not address any elements of the Servicing Criteria
other than those specified by the Servicer pursuant to Subsection 13.06.
Section 13.06 Use of Subservicers and Subcontractors.
The Servicer shall not hire or otherwise utilize the services of any
Subservicer to fulfill any of the obligations of the Servicer as servicers
under this Agreement or any Reconstitution Agreement unless the Servicer
complies with the provisions of paragraph (a) of this Section. 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 or any Reconstitution Agreement unless the
Servicer complies with the provisions of paragraph (b) of this Section.
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(a) The Servicer shall not hire or otherwise utilize the services of
any Subservicer with respect to the Mortgage Loans without giving the
Purchaser or its designee fifteen (15) calendar days' advance written
notice of the effective date of such hiring or utilization of a
Subservicer, followed by written confirmation of such hiring or
utilization of a Subservicer on the effective date of such engagement and
indicating the circumstances surrounding such hiring or utilization. Any
notices required by this Subsection 13.06(a) shall be sent via telecopier
or certified or registered mail to the addresses set forth below: ▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇, Servicer Oversight Group, ▇▇▇▇ ▇-▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, Telecopy: ▇▇▇-▇▇▇-▇▇▇▇, and emailed to:
▇▇▇▇▇_▇▇▇▇▇▇▇▇_▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, with a copy to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
Cadwalader, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇, LLP, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇▇▇, Telecopy: ▇▇▇-▇▇▇-▇▇▇▇, Email: ▇▇▇▇▇▇▇.▇▇▇▇▇▇@▇▇▇.▇▇▇
(or such other address as such Person may otherwise specify to Servicer).
The Servicer shall cause any Subservicer used by the Servicer (or by any
Subservicer) for the benefit of the Purchaser and any Depositor to comply
with the provisions of this Section and with Subsections 13.02, 13.03(c)
and (e), 13.04, 13.05 and 13.07 of this Agreement to the same extent as
if such Subservicer were the Servicer, and to provide the information
required with respect to such Subservicer under Subsection 13.03(d) of
this Agreement. The Servicer shall be responsible for obtaining from each
Subservicer and delivering to the Purchaser and any Depositor any
servicer compliance statement required to be delivered by such
Subservicer under Subsection 13.04, any assessment of compliance and
attestation required to be delivered by such Subservicer under Subsection
13.05 and any certification required to be delivered to the Person that
will be responsible for signing the Sarbanes Certification under
Subsection 13.05 as and when required to be delivered.
(b) It shall not be necessary for the Servicer to seek the consent
of the Purchaser or any Depositor to the utilization of any
Subcontractor. The Servicer shall promptly upon request provide to the
Purchaser and any Depositor (or any designee of the Depositor, such as a
master servicer or administrator) a written description (in form and
substance satisfactory to the Purchaser and such Depositor) of the role
and function of each Subcontractor utilized by the Servicer or any
Subservicer, specifying (i) the identity of each such Subcontractor, (ii)
which (if any) of such Subcontractors are "participating in the servicing
function" within the meaning of Item 1122 of Regulation AB, and (iii)
which elements of the Servicing Criteria will be addressed in assessments
of compliance provided by each Subcontractor identified pursuant to
clause (ii) of this paragraph.
As a condition to the utilization of any Subcontractor determined to
be "participating in the servicing function" within the meaning of Item 1122
of Regulation AB, the Servicer shall cause any such Subcontractor used by the
Servicer (or by any Subservicer) for the benefit of the Purchaser and any
Depositor to comply with the provisions of Subsections 13.05 and 13.07 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 the Purchaser and any Depositor any assessment of compliance and
attestation required to be delivered by such Subcontractor under Subsection
13.05, in each case as and when required to be delivered.
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Section 13.07 Indemnification; Remedies.
(a) Each Seller and the Servicer shall indemnify the Purchaser, each
affiliate of the Purchaser, and each of the following parties
participating in a Securitization Transaction: each sponsor and issuing
entity; each Person responsible for the preparation, execution or filing
of any report required to be filed with the Commission with respect to
such Securitization Transaction, 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 Securitization Transaction; each broker dealer acting as
underwriter, placement agent or initial purchaser, each Person who
controls any of such parties or 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:
(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 XIII by or on behalf of any Seller or the Servicer, or
provided under this Article XIII by or on behalf of any Subservicer,
Subcontractor or Third-Party Originator (collectively, the "Seller
Information"), or (B) the omission or alleged omission to state in the
Seller Information a material fact required to be stated in the Seller
Information or necessary in order to make the statements therein, in
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 Seller Information and not
to any other information communicated in connection with a sale or
purchase of securities, without regard to whether the Seller Information
or any portion thereof is presented together with or separately from such
other information;
(ii) any failure by any Seller, the Servicer, any Subservicer, any
Subcontractor or any Third-Party Originator to deliver any information,
report, certification, accountants' letter or other material when and as
required under this Article XIII, including any failure by the Servicer
to identify pursuant to Subsection 13.06(b) any Subcontractor
"participating in the servicing function" within the meaning of Item 1122
of Regulation AB; or
(iii) any breach by any Seller or the Servicer of a representation
or warranty set forth in Subsection 13.02(a) or in a writing furnished
pursuant to Subsection 13.02(b) and made as of a date prior to the
closing date of the related Securitization Transaction, to the extent
that such breach is not cured by such closing date, or any breach by any
Seller or the Servicer of a representation or warranty in a writing
furnished pursuant to Subsection 13.02(b) to the extent made as of a date
subsequent to such closing date.
In the case of any failure of performance described in clause
(a)(ii) of this Section, the Sellers and the Servicer shall promptly reimburse
the Purchaser, any Depositor, as
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applicable, and each Person responsible for the preparation, execution or
filing of any report required to be filed with the Commission with respect to
such Securitization Transaction, 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 Securitization 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 any Seller,
the Servicer, any Subservicer, any Subcontractor or any Third-Party
Originator.
(b) (i) Any failure by any Seller, the Servicer, any Subservicer,
any Subcontractor or any Third-Party Originator to deliver any
information, report, certification, accountants' letter or other material
when and as required under this Article XIII, or any breach by any Seller
or the Servicer of a representation or warranty set forth in Subsection
13.02(a) or in a writing furnished pursuant to Subsection 13.02(b) and
made as of a date prior to the closing date of the related Securitization
Transaction, to the extent that such breach is not cured by such closing
date, or any breach by any Seller or the Servicer of a representation or
warranty in a writing furnished pursuant to Subsection 13.02(b) to the
extent made as of a date subsequent to such closing 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 Sellers and the Servicer under this Agreement
and any applicable Reconstitution Agreement, and shall entitle the
Purchaser or Depositor, as applicable, in its sole discretion to
terminate the rights and obligations of the Sellers and the Servicer
under this Agreement and/or any applicable Reconstitution Agreement
without payment (notwithstanding anything in this Agreement or any
applicable Reconstitution Agreement to the contrary) of any compensation
to the Sellers or the Servicer; provided that to the extent that any
provision of this Agreement and/or any applicable Reconstitution
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 Subsection 13.04 or
13.05, including (except as provided below) any failure by the
Servicer to identify pursuant to Subsection 13.06(b) 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 any applicable Reconstitution
Agreement, and shall entitle the Purchaser or Depositor, as
applicable, in its sole discretion to terminate the rights and
obligations of the Servicer as servicer under this Agreement and/or
any applicable Reconstitution 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 and/or any applicable Reconstitution
Agreement expressly provides for the survival of certain rights or
obligations following termination of the Servicer as servicer, such
provision shall be given effect.
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Neither the Purchaser nor any 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.
The Sellers and the Servicer shall promptly reimburse the Purchaser
(or any designee of the Purchaser, such as a master servicer) and any
Depositor, as applicable, for all reasonable expenses incurred by the
Purchaser (or such designee) or such 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
Purchaser or any Depositor may have under other provisions of this
Agreement and/or any applicable Reconstitution Agreement or otherwise,
whether in equity or at law, such as an action for damages, specific
performance or injunctive relief.
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IN WITNESS WHEREOF, the Sellers and the Purchaser have caused their
names to be signed hereto by their respective officers as of the date first
written above.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ MORTGAGE CAPITAL INC.
By: _________________________________________
Name:
Title:
PHH MORTGAGE CORPORATION (formerly
known as CENDANT
MORTGAGE CORPORATION)
By: _________________________________________
Name:
Title:
▇▇▇▇▇▇'▇ GATE RESIDENTIAL MORTGAGE TRUST
(formerly known as CENDANT RESIDENTIAL
MORTGAGE TRUST)
By: PHH Mortgage Corporation, as
Administrator
By: _________________________________________
Name:
Title:
SCHEDULE A
MORTGAGE LOAN SCHEDULE
A-1
SCHEDULE B-1
CONTENTS OF PURCHASER'S MORTGAGE FILE
With respect to each Mortgage Loan, the Purchaser's Mortgage File
shall include each of the following items, which shall be available for
inspection by the Purchaser, and which shall be retained by the applicable
Seller or delivered to the Purchaser pursuant to the provisions of the Third
Amended and Restated Mortgage Loan Flow Purchase, Sale & Servicing Agreement.
To be Delivered 5 days prior to Funding Date:
---------------------------------------------
1. The original Mortgage Note bearing all intervening endorsements,
endorsed, at the direction of the Purchaser either (1) "Pay to the order
of "-------," without recourse," or (2) in blank and signed in the name
of the applicable Seller by an authorized officer. To the extent that
there is no space on the face of the Mortgage Notes for endorsements, the
endorsement may be contained on an allonge, if state law so allows and
the Purchaser is so advised by the Seller that state law so allows. If
the Mortgage Loan was acquired by the Seller in a merger, the endorsement
must be by "[Seller], successor by merger to [name of predecessor]." If
the Mortgage Loan was acquired or originated by the Seller while doing
business under another name, the endorsement must be by "[Seller],
formerly known as [previous name]."
2. If the Mortgage Loan is not a MERS Mortgage Loan, the original
Assignment for each Mortgage Loan, in form and substance acceptable for
recording. The Mortgage shall be assigned, at the direction of the
Purchaser either (1) to "---------" or (2) with assignee's name left
blank. The Assignment must be duly recorded only on the direction of the
Purchaser. If the Mortgage Loan was acquired by the applicable Seller in
a merger, the Assignment must be made by "PHH Mortgage Corporation,
successor by merger to [name of predecessor]." If the Mortgage Loan was
acquired or originated by the Seller while doing business under another
name or under an assumed name, the Assignment must be by "PHH Mortgage
Corporation formerly known as [previous name] or [PHH Mortgage
Corporation dba ______________, ] respectively.
3. With respect to each Additional Collateral Mortgage Loan, a copy
of the related Pledge Agreement.
4. With respect to each Additional Collateral Mortgage Loan, a copy
of the UCC-1, to the extent the additional collateral servicer was
required to deliver such UCC-1 to the Servicer, and an original form
UCC-3, if applicable, to the extent the additional collateral servicer
was required to deliver such UCC-3 to the Servicer, together with a copy
of the applicable notice of assignment to and acknowledgment by the
additional collateral servicer.
5. With respect to each Cooperative Loan, the original stock
certificate and related stock power, in blank, executed by the Mortgagor
with such signature guaranteed and original stock power, in blank
executed by the Seller provided, that if the Seller
B-1-1
delivers a certified copy, the Seller shall deliver the original stock
certificate and stock powers to the Custodian on or prior to the date
which is 120 days after the related Funding Date.
To be delivered within 120 days after the related Funding Date:
1. The original Mortgage with evidence of recording thereon. If in
connection with any Mortgage Loan, the applicable Seller cannot deliver
or cause to be delivered the original Mortgage with evidence of recording
thereon on or prior to the Funding Date because of a delay caused by the
public recording office where such Mortgage has been delivered for
recordation or because such Mortgage has been lost or because such public
recording office retains the original recorded Mortgage, the applicable
Seller shall deliver or cause to be delivered to the Custodian, a
photocopy of such Mortgage, together with (i) in the case of a delay
caused by the public recording office, an Officers' Certificate of the
applicable Seller (or certified by the title company, escrow agent, or
closing attorney) stating that such Mortgage has been dispatched to the
appropriate public recording office for recordation and that the original
recorded Mortgage or a copy of such Mortgage certified by such public
recording office to be a true and complete copy of the original recorded
Mortgage will be promptly delivered to the Custodian upon receipt thereof
by the applicable Seller; or (ii) in the case of a Mortgage where a
public recording office retains the original recorded Mortgage or in the
case where a Mortgage is lost after recordation in a public recording
office, a copy of such Mortgage certified by such public recording office
to be a true and complete copy of the original recorded Mortgage.
2. To the extent applicable, the original of each power of attorney,
surety agreement or guaranty agreement with respect to such Mortgage
Loan.
3. Originals of any executed intervening assignments of the
Mortgage, with evidence of recording thereon or, if the original
intervening assignment has not yet been returned from the recording
office, a copy of such assignment certified by the applicable Seller to
be a true copy of the original of the assignment which has been sent for
recording in the appropriate jurisdiction in which the Mortgaged Property
is located.
4. Originals of all assumption, modification and substitution
agreements, if any, or, if the originals of any such assumption,
modification and substitution agreements have not yet been returned from
the recording office, a copy of such instruments certified by the
applicable Seller to be a true copy of the original of such instruments
which have been sent for recording in the appropriate jurisdictions in
which the Mortgaged Properties are located.
5. The original mortgagee policy of title insurance or, in the event
such original title policy is unavailable, a certified true copy of the
related policy binder or commitment for title certified to be true and
complete by the title insurance company, in each case, including an
Environmental Protection Agency Endorsement and an adjustable-rate
endorsement.
B-1-2
6. With respect to each Cooperative Loan, the original Recognition
Agreement and the original Assignment of Recognition Agreement.
7. With respect to each Cooperative Loan, an Estoppel Letter and/or
Consent.
8. With respect to each Cooperative Loan, the Cooperative Lien
Search.
9. With respect to each Cooperative Loan, the guaranty of the
Mortgage Note and Cooperative Loan, if any.
10. With respect to each Cooperative Loan, the original of any
security agreement or similar document executed in connection with the
Cooperative Loan.
11. With respect to each Cooperative Loan, the original Proprietary
Lease and the Assignment of Proprietary Lease executed by the Mortgagor
in blank or if the Proprietary Lease has been assigned by the Mortgagor
to the Seller, then the Seller must execute an assignment of the
Assignment of Proprietary Lease in blank.
12. With respect to each Cooperative Loan, the recorded state and
county Financing Statements and Financing Statement Changes.
From time to time, the Sellers shall forward to the Custodian
additional original documents pursuant to the Agreement or additional
documents evidencing an assumption, modification, consolidation or extension
of a Mortgage Loan approved by the Sellers, in accordance with the Agreement.
All such mortgage documents held by the Custodian as to each Mortgage Loan
shall constitute the "Custodial File."
B-1-3
PHH Mortgage Corporation
Mortgage File Cover Sheet: Credit Documents
(Schedule B-2)
Prepared by:_________________________ Phone: _____________
Location: PHH Mortgage Corporation Fax: ________________
Borrower Name: ___________________
Loan Number: ___________________
_____________________________________________________________________________
General :
_______ 1. Mortgage File Cover Sheet Checklist - Inside File
_______ 2. Borrower's Authorization to Obtain Information
(Original)
_______ 3. ▇▇▇▇▇▇ ▇▇▇ 1008(original) or Underwriter's Worksheet
(CUW2)
Applications:
_______ 4. Final Signed Typed Loan Application (Form 1003 or
personal profile)
______ 5. Initial Signed Loan Application (personal profile,
handwritten or typed)
Credit Documentation:
______ 6. Credit Report(s), Merged In-file or RMCR) (original
or photocopy)
______ 7. Borrower's explanations (credit, employment, etc.,
if applicable)
_______ 8. VOM(s) or other form of verification(s) on all
mortgages (not required on Aus scored loans)
______ 9. Separation agreement, divorce decree (if applicable)
_______ 10. Miscellaneous Credit Documents (if applicable)
Employment/Income Documentation:
_______ 11. Copy or Original initial VOE(s); OR
_______ 12. Paystubs dated with 30 days of closing; OR
_______ 13. IRS Form W-2's Original or Copy (for wage earner); OR
_______ 14. IRS Form 1040's, 1120's, 1065's, etc. (2 years
for self-employed);
_______ 15. Leases (if applicable)
_______ 16. All documentation required to support Borrower's cash
flow for loans Originated.
Asset Documentation:
B-2-1
_______ 17. Copy or Original VOD(s) or source of funds to close
(if applicable)
_______ 18. Gift Letter (if applicable) (original)
_______ 19. Verification of original purchase price, real estate
sales contract, or HUD-1 on first mortgage (if
applicable)
Property Documentation:
_______ 20. Appraisal, including original photos of subject and
comps. (original)
_______ 21. Review Appraisal or second full Appraisal (if
required) (original)
_______ 22. 442 Final Inspection
_______ 23. Copy or Original Contract of Sale
_______ 24. Miscellaneous
B-2-2
SCHEDULE C
PHH GUIDE
C-1
EXHIBIT 2.05
FORM OF ASSIGNMENT, ASSUMPTION AND RECOGNITION AGREEMENT
THIS ASSIGNMENT, ASSUMPTION AND RECOGNITION AGREEMENT (this
"Assignment"), dated of _________ __, 200[_], is entered into among
[_________________], a ___________________ (the "Assignee"),
[______________________] (the "Assignor"), [PHH Mortgage Corporation]
[▇▇▇▇▇▇'▇ Gate Residential Mortgage Trust] (the "Seller"), with PHH Mortgage
Corporation, as the servicer (the "Servicer").
RECITALS
WHEREAS the Assignor, the Seller and the Servicer have entered into
a certain Third Amended and Restated Mortgage Loan Flow Purchase, Sale and
Servicing Agreement, dated as of January 1, 2006 (as amended or modified to
the date hereof, the "Agreement"), pursuant to which the Assignor has acquired
certain Mortgage Loans pursuant to the terms of the Agreement and Servicer has
agreed to service such Mortgage Loans; and
WHEREAS the Assignee has agreed, on the terms and conditions
contained herein, to purchase from the Assignor all of the Mortgage Loans (the
"Specified Mortgage Loans") which are subject to the provisions of the
Agreement and are listed on the mortgage loan schedule attached as Exhibit I
hereto (the "Specified Mortgage Loan Schedule");
NOW, THEREFORE, in consideration of the mutual promises contained
herein and other good and valuable consideration (the receipt and sufficiency
of which are hereby acknowledged), the parties agree as follows:
1. Assignment and Assumption
(a) On and of the date hereof, the Assignor hereby sells, assigns
and transfers to the Assignee all of its right, title and interest in the
Specified Mortgage Loans and all rights related thereto as provided under the
Agreement to the extent relating to the Specified Mortgage Loans, the Assignee
hereby accepts such assignment from the Assignor and hereby agrees to the
release of the Assignor from any obligations under the Agreement, to the
extent of the Specified Mortgage Loans, from the date hereof, and the Seller
hereby acknowledges such assignment, assumption and release.
(b) On and as of the date hereof, the Assignor represents and
warrants to the Assignee that the Assignor has not taken any action that would
serve to impair or encumber the Assignee's ownership interest in the Specified
Mortgage Loans since the date of the Assignor's acquisition of the Specified
Mortgage Loans.
2. Recognition of Purchaser
From and after the date hereof, both the Assignee and the Seller
shall note the transfer of the Specified Mortgage Loans to the Assignee in
their respective books and records
Exh. 2.05-1
and shall recognize the Assignee as the owner of the Specified Mortgage Loans,
and Servicer shall service the Specified Mortgage Loans for the benefit of the
Assignee pursuant to the Agreement, the terms of which are incorporated herein
by reference. It is the intention of the Seller, the Servicer, the Assignee
and the Assignor that (a) the Assignee fully enjoy all of the rights and
benefits enjoyed by the Assignor under the Agreement as if the Assignee were a
party thereto and (b) the Assignment shall be binding upon and inure to the
benefit of the Assignee and the Assignor and their successors and assigns.
3. Representations and Warranties
(a) The Assignee represents and warrants that it is a sophisticated
investor able to evaluate the risks and merits of the transactions
contemplated hereby, and that it has not relied in connection therewith upon
any statements or representations of the Seller or the Assignor other than
those contained in the Agreement or this Assignment.
(b) Each of the parties hereto represents and warrants that it is
duly and legally authorized to enter into this Assignment.
(c) Each of the parties hereto represents and warrants that this
Assignment has been duly authorized, executed and delivered by it and
(assuming due authorization, execution and delivery thereof by each of the
other parties hereto) constitutes its legal, valid and binding obligation,
enforceable against it in accordance with its terms, except as such
enforcement may be limited by bankruptcy, insolvency, reorganization or other
similar laws affecting the enforcement of creditors' rights generally and by
general equitable principles (regardless of whether such enforcement is
considered in a proceeding in equity or at law).
4. Continuing Effect
Except as contemplated hereby, the Agreement shall remain in full
force and effect in accordance with its terms.
5. Governing Law
This Assignment and the rights and obligations hereunder shall be
governed by and construed in accordance with the internal laws of the State of
New York.
6. Notices
Any notices or other communications permitted or required under the
Agreement to be made to the Assignee shall be made in accordance with the
terms of the Agreement and shall be sent to the Assignee as follows:
[_____________________], or to such other address as may hereafter be
furnished by the Assignee to the parties in accordance with the provisions of
the Agreement.
Exh. 2.05-2
7. Counterparts
This Assignment may be executed in counterparts, each of which when
so executed shall be deemed to be an original and all of which when taken
together shall constitute one and the same instrument.
8. Definitions
Any capitalized term used but not defined in this Assignment has the
same meaning as in the Agreement.
[Assignment continues with signature page]
Exh. 2.05-3
IN WITNESS WHEREOF, the parties hereto have executed this Assignment
the day and year first above written.
ASSIGNOR:
[------------------]
By: ________________________________
Name:
Title:
SELLER:
[PHH MORTGAGE CORPORATION]
[▇▇▇▇▇▇'▇ GATE RESIDENTIAL
MORTGAGE TRUST]
By: ________________________________
Name:
Title:
ASSIGNEE:
By: ________________________________
Name:
Title:
SERVICER:
PHH MORTGAGE CORPORATION
By: ________________________________
Name:
Title:
Exh. 2.05-4
EXHIBIT 5.01
WORKOUT COMPENSATION
Exh. 5.01-1
EXHIBIT 5.03(a)
REPORT P4DL~ NOTICE FOR SPECIALLY SERVICED MORTGAGE LOANS
Exh. 5.03(a)-1
EXHIBIT 5.03(b)
FORM OF NOTICE OF FORECLOSURE
Exh. 5.03(b)-1
EXHIBIT 5.04-1
FORM OF COLLECTION ACCOUNT CERTIFICATION
Exh. 5.04-1-1
EXHIBIT 5.04-2
FORM OF COLLECTION ACCOUNT LETTER AGREEMENT
Exh. 5.04-2-1
EXHIBIT 5.06-1
FORM OF ESCROW ACCOUNT CERTIFICATION
Exh. 5.06-1-1
EXHIBIT 5.06-2
FORM OF ESCROW ACCOUNT LETTER AGREEMENT
Exh. 5.06-2-1
EXHIBIT 6.02(a)
REPORT P-139 - MONTHLY STATEMENT OF MORTGAGE ACCOUNTS
Exh. 6.02(a)-1
EXHIBIT 6.02(b)
REPORT S-50Y - PRIVATE POOL DETAIL REPORT
Exh. 6.02(b)-1
EXHIBIT 6.02(c)
REPORT S-213 - SUMMARY OF CURTAILMENTS MADE REMITTANCE REPORT
Exh. 6.02(c)-1
EXHIBIT 6.02(d)
REPORT S-214 - SUMMARY OF PAID IN FULL REMITTANCE REPORT
Exh. 6.02(d)-1
EXHIBIT 6.02(e)
REPORT S-215 - CONSOLIDATION OF REMITTANCE REPORT
Exh. 6.02(e)-1
EXHIBIT 6.02(f)
REPORT T-62C - MONTHLY ACCOUNTING REPORT
Exh. 6.02(f)-1
EXHIBIT 6.02(g)
REPORT T-62E - LIQUIDATION REPORT
Exh. 6.02(g)-1
EXHIBIT 8.01
REPORT P-195 - DELINQUENCY REPORT
Exh. 8.01-1
EXHIBIT 9
FORM OF OFFICER'S CERTIFICATE
Exh. 9-1
EXHIBIT 10
FORM OF WARRANTY ▇▇▇▇ OF SALE
On this _______ day of ________, 200__, [PHH Mortgage Corporation]
[▇▇▇▇▇▇'▇ Gate Residential Mortgage Trust] ("Seller") as the Seller under that
certain Third Amended and Restated Mortgage Loan Flow Purchase, Sale &
Servicing Agreement, dated as of January 1, 2006 (the "Agreement") does hereby
sell, transfer, assign, set over and convey to [______________] as Purchaser
under the Agreement, without recourse, but subject to the terms of the
Agreement, all rights, title and interest of the Seller in and to the Mortgage
Loans listed on the Mortgage Loan Schedule attached hereto, together with the
related Mortgage Files and all rights and obligations arising under the
documents contained therein. Pursuant to Section 2.01 of the Agreement, the
Seller has delivered to the Purchaser or its custodian the Legal Documents for
each Mortgage Loan to be purchased as set forth in the Agreement. The contents
of each related Mortgage File required to be retained by PHH Mortgage
Corporation ("PHH Mortgage") to service the Mortgage Loans pursuant to the
Agreement and thus not delivered to the Purchaser are and shall be held in
trust by PHH Mortgage for the benefit of the Purchaser as the owner thereof.
PHH Mortgage's possession of any portion of each such Mortgage File is at the
will of the Purchaser for the sole purpose of facilitating servicing of the
related Mortgage Loan pursuant to the Agreement, and such retention and
possession by PHH Mortgage shall be in a custodial capacity only. The
ownership of each Mortgage Note, Mortgage, and the contents of the Mortgage
File and Mortgage File is vested in the Purchaser and the ownership of all
records and documents with respect to the related Mortgage Loan prepared by or
which come into the possession of PHH Mortgage shall immediately vest in the
Purchaser and shall be retained and maintained, in trust, by PHH Mortgage at
the will of the Purchaser in such custodial capacity only.
The Seller confirms to the Purchaser that the representations and
warranties set forth in Sections 3.01, 3.02 and 3.03 of the Agreement are true
and correct as of the date hereof, and that all statements made in the
Sellers' Officer's Certificate and all attachments thereto remain complete,
true and correct in all respects as of the date hereof.
Capitalized terms used herein and not otherwise defined shall have
the meanings set forth in the Agreement.
Exh. 10-1
[PHH MORTGAGE CORPORATION]
[▇▇▇▇▇▇'▇ GATE RESIDENTIAL
MORTGAGE TRUST]
(Seller)
By: _______________________________
Name:
Title:
-2-
EXHIBIT 11
FORM OF ▇▇▇▇▇▇▇▇-▇▇▇▇▇ CERTIFICATION
Re: The [ ] agreement dated as of [ ], 200[ ] (the "Agreement"), among
------------------------------------------------------------------
[IDENTIFY PARTIES]
------------------
I, ________________________________, the _______________________ of
[NAME OF COMPANY], certify to [the Purchaser], [the Depositor], and the
[Master Servicer] [Securities Administrator] [Trustee], 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 Company
provided in accordance with Item 1123 of Regulation AB (the "Compliance
Statement"), the report on assessment of the Company'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 Company during 200[ ] that
were delivered by the Company to the [Depositor] [Master Servicer]
[Securities Administrator] [Trustee] pursuant to the Agreement
(collectively, the "Company Servicing Information");
2. Based on my knowledge, the Company 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 Company
Servicing Information;
3. Based on my knowledge, all of the Company Servicing Information
required to be provided by the Company under the Agreement has been
provided to the [Depositor] [Master Servicer] [Securities Administrator]
[Trustee];
4. I am responsible for reviewing the activities performed by the
Company 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 Company has fulfilled its obligations
under the Agreement in all material respects; and
5. The Compliance Statement required to be delivered by the Company
pursuant to the Agreement, and the Servicing Assessment and Attestation
Report required to be provided by the Company and by any Subservicer or
Subcontractor pursuant to the Agreement, have been provided to the
[Depositor] [Master Servicer]. Any material instances of noncompliance
described in such reports have been disclosed to the
▇▇▇. ▇▇-▇
[▇▇▇▇▇▇▇▇▇] [Master Servicer]. Any material instance of noncompliance
with the Servicing Criteria has been disclosed in such reports.
Date:_____________________________
By: ______________________________
Name:
Title:
▇▇▇. ▇▇-▇
EXHIBIT 12
PROCESS GUIDELINES
I. Contract
The Purchaser must provide the Company with an Assignment &
Assumption Agreement or similar notice with respect to a transfer to ▇▇▇▇▇▇
Mae no less than five (5) Business Days prior to the last Business Day of the
month of transfer. Such document will confirm that the Mortgage Loans will be
serviced in accordance with the ▇▇▇▇▇▇ ▇▇▇ Guide. Such document must also
confirm that Mortgage Loans were sold to ▇▇▇▇▇▇ Mae under the special
servicing option.
II. Requirements for ▇▇▇▇▇▇ ▇▇▇ sales
A. The Servicing Fee less the ▇▇▇▇▇▇ Mae guaranty fee (the "Net
Servicing Fee") under the ▇▇▇▇▇▇ ▇▇▇ sale must be equal to or
greater than the current Servicing Fee being paid to the Servicer by
the Purchaser. Should the Net Servicing Fee exceed the current
Servicing Fee, any excess will be retained by the Servicer.
B. Preparation and recording of any Assignments of Mortgage with
respect to the Mortgage Loans, other than as required by the
underlying Purchase, Sale & Servicing Agreement, will be the
responsibility of the Purchaser.
C. Information required to transfer the loans into ▇▇▇▇▇▇ Mae must be
received no less than five (5) Business Days prior to the last
Business Day of the transaction month.
D. Information regarding the transfer of the loans must be in an Excel
file format with the following data fields:
(i) servicer number; (ii) PHH Mortgage loan number; (iii) balance
sold to ▇▇▇▇▇▇ ▇▇▇; (iv) Pass-through rate; (v) interest rate; (vi)
interest rate net of the servicing fee rate and guarantee fee rate;
(vii) ▇▇▇▇▇▇ Mae loan number; (viii) contract or pool number; (ix)
if the transaction is an "actual/actual" sale - contract number; and
(x) if the transaction is an "actual/actual" sale - date of first
payment to ▇▇▇▇▇▇ ▇▇▇.
E. Balances must be verified with the Servicer before any Mortgage Loan
is sold to ▇▇▇▇▇▇ Mae.
F. The servicer number used to deliver any Mortgage Loan to ▇▇▇▇▇▇ ▇▇▇
must be approved by the Servicer before such Mortgage Loan is sold.
The Servicer will assess a $500 correction penalty for each pool
sold under a different seller/servicer number than what was
provided.
▇▇▇. ▇▇-▇
▇. Final purchase advices and/or the 2006 forms must be received by the
Servicer prior to the last Business Day of the transaction month.
H. Purchaser must provide name and contact information of individual
authorized to discuss the sale terms. Investor name and broker names
need to be provided to the Servicer.
III. Fees
Should the Purchaser sell loans to ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac
(standard, not REMIC), an additional setup fee may be charged. The Servicer
will establish one investor number on each of the Servicer's related Alltel
clients for the those Mortgage Loans sold by Purchaser to ▇▇▇▇▇▇ Mae.
IV. Process Guidelines
A. Monthly reporting to the Purchaser on the status of loans will be
limited to existing Alltel delinquency and trial balance reports.
Reports will be as of each month-end and will be provided to the
Purchaser no later than the twenty (20) days following the related
month-end. The Purchaser will provide contact information for
monthly reporting, repurchase funding and claim settlement
processes.
B. For any Mortgage Loans required to be repurchased by the Purchaser
from ▇▇▇▇▇▇ ▇▇▇ due to mortgagor credit defaults (rather than
administrative, legal or documentation issues), the Servicer will
notify the Purchaser of the total amount due to ▇▇▇▇▇▇ Mae for the
Mortgage Loan to be repurchased no later than the 3rd Business Day
prior to the end of the month of repurchase. The Purchaser will
remit same amount, plus a $100 repurchase processing fee to the
Servicer no later than the last Business Day of the repurchase
month. A late remittance penalty of prime + 2% will be assessed from
the date such remittance was due through the date such remittance
was actually made.
C. Wiring instructions for repurchases by the Purchaser:
[ ]
Account Number: [ ]
Account Name: [ ]
ATTN: [ ], ▇▇▇▇▇▇ ▇▇▇
Telephone: [ ]
D. An additional investor number will be established for Mortgage Loans
repurchased by the Purchaser. Such investor number will be
actual/actual remittance with month-end cutoff. Reports and
remittances will be due on the tenth calendar day of each month.
Exh. 12-2
EXHIBIT 13
FORM OF INDEMNIFICATION AND CONTRIBUTION AGREEMENT
This INDEMNIFICATION AND CONTRIBUTION AGREEMENT ("Agreement"), dated
as of [_______], 200_, among [________________] (the "Depositor"), a
[______________] corporation (the "Depositor"), ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage
Capital Inc., a New York corporation ("▇▇▇▇▇▇") and [_____________], a
[_______________] (the "Seller").
W I T N E S S E T H:
WHEREAS, the Depositor is acting as depositor and registrant with
respect to the Prospectus, dated [________________], and the Prospectus
Supplement to the Prospectus, [________________] (the "Prospectus
Supplement"), relating to [________________] Certificates (the "Certificates")
to be issued pursuant to a Pooling and Servicing Agreement, dated as of
[________________] (the "P&S"), among the Depositor, as depositor,
[________________], as servicer (the "Servicer"), and [________________], as
trustee (the "Trustee");
WHEREAS, as an inducement to the Depositor to enter into the P&S,
and [____________________] (the "Underwriter[s]") to enter into the
Underwriting Agreement, dated [____________________] (the "Underwriting
Agreement"), between the Depositor and the Underwriter[s], and
[_______________] (the "Initial Purchaser[s]") to enter into the Certificate
Purchase Agreement, dated [____________] (the "Certificate Purchase
Agreement"), between the Depositor and the Initial Purchaser[s], Seller has
agreed to provide for indemnification and contribution on the terms and
conditions hereinafter set forth;
WHEREAS, ▇▇▇▇▇▇ purchased from Seller certain of the Mortgage Loans
underlying the Certificates (the "Mortgage Loans") pursuant to a Third Amended
and Restated Flow Purchase, Sale and Servicing Agreement, dated as of [DATE]
(the "Sale and Servicing Agreement"), by and between ▇▇▇▇▇▇ and Seller; and
WHEREAS, pursuant to Subsection 3.05 of the Sale and Servicing
Agreement, the Seller has agreed to indemnify the Depositor, ▇▇▇▇▇▇, the
Underwriter[s], the Initial Purchaser[s] and their respective affiliates,
present and former directors, officers, employees and agents.
NOW THEREFORE, in consideration of the agreements contained herein,
and other valuable consideration the receipt and sufficiency of which are
hereby acknowledged, the Depositor, ▇▇▇▇▇▇ and the Seller agree as follows:
1. Indemnification and Contribution.
(a) The Seller agrees to indemnify and hold harmless the
Depositor, ▇▇▇▇▇▇, the Underwriter[s], the Initial Purchaser[s] and their
respective affiliates and their respective present and former directors,
officers, employees and agents and each person, if any, who
Exh. 13-1
controls the Depositor, ▇▇▇▇▇▇, the Underwriter[s] , the Initial Purchaser[s]
or such affiliate within the meaning of either Section 15 of the Securities
Act of 1933, as amended (the "1933 Act"), or Section 20 of the Securities
Exchange Act of 1934, as amended (the "1934 Act"), against any and all losses,
claims, damages or liabilities, joint or several, to which they or any of them
may become subject under the 1933 Act, the 1934 Act or other federal or state
statutory law or regulation, at common law or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise
out of or are based in whole or in part upon any untrue statement or alleged
untrue statement of a material fact contained in the Prospectus Supplement,
the Offering Circular, the ABS Informational and Computational Materials or in
the Free Writing Prospectus or any omission or alleged omission to state in
the Prospectus Supplement, the Offering Circular, the ABS Informational and
Computational Materials or in the Free Writing Prospectus a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances in which they were made, not misleading, or any
such untrue statement or omission or alleged untrue statement or alleged
omission made in any amendment of or supplement to the Prospectus Supplement,
the Offering Circular, the ABS Informational and Computational Materials or
the Free Writing Prospectus and agrees to reimburse the Depositor, ▇▇▇▇▇▇, the
Underwriter[s], the Initial Purchaser[s] or such affiliates and each such
officer, director, employee, agent and controlling person promptly upon demand
for any legal or other expenses reasonably incurred by any of them in
connection with investigating or defending or preparing to defend against any
such loss, claim, damage, liability or action as such expenses are incurred;
provided, however, that Seller shall be liable in any such case only to the
extent that any such loss, claim, damage, liability or action arises out of,
or is based upon, any untrue statement or alleged untrue statement or omission
or alleged omission made in reliance upon and in conformity with the Seller
Information. The foregoing indemnity agreement is in addition to any liability
which Seller may otherwise have to the Depositor, ▇▇▇▇▇▇, the Underwriter[s],
the Initial Purchaser[s] their affiliates or any such director, officer,
employee, agent or controlling person of the Depositor, ▇▇▇▇▇▇, the
Underwriter[s], the Initial Purchaser[s] or their respective affiliates.
As used herein:
"Seller Information" means any information relating to Seller, the
Mortgage Loans and/or the underwriting guidelines relating to the Mortgage
Loans set forth in the Prospectus Supplement, the Offering Circular, the ABS
Informational and Computational Materials or the Free Writing Prospectus [and
static pool information regarding mortgage loans originated or acquired by the
Seller [and included in the Prospectus Supplement, the Offering Circular, the
ABS Informational and Computational Materials or the Free Writing Prospectus]
[incorporated by reference from the website located at ______________].
"Free Writing Prospectus" means any written communication that
constitutes a "free writing prospectus," as defined in Rule 405 under the 1933
Act.
"ABS Informational and Computational Material" means any written
communication as defined in Item 1101(a) of Regulation AB under the 1933 Act
and the 1934 Act, as amended from time to time.
"Offering Circular" means the offering circular, dated [__________]
relating to the private offering of the [_______________] Certificates.
Exh. 13-2
(b) Promptly after receipt by any indemnified party under this
Section 1 of notice of any claim or the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made against
any indemnifying party under this Section 1, notify the indemnifying party in
writing of the claim or the commencement of that action; provided, however,
that the failure to notify an indemnifying party shall not relieve it from any
liability which it may have under this Section 1 except to the extent it has
been materially prejudiced by such failure; and provided, further, however,
that the failure to notify any indemnifying party shall not relieve it from
any liability which it may have to any indemnified party otherwise than under
this Section 1.
If any such claim or action shall be brought against an indemnified
party, and it shall notify the indemnifying party thereof, the indemnifying
party shall be entitled to participate therein and, to the extent that it
wishes, jointly with any other similarly notified indemnifying party, to
assume the defense thereof with counsel reasonably satisfactory to the
indemnified party. After notice from the indemnifying party to the indemnified
party of its election to assume the defense of such claim or action, except as
provided in the following paragraph, the indemnifying party shall not be
liable to the indemnified party under this Section 1 for any legal or other
expenses subsequently incurred by the indemnified party in connection with the
defense thereof other than reasonable costs of investigation.
Any indemnified party shall have the right to employ separate
counsel in any such action and to participate in the defense thereof, but the
fees and expenses of such counsel shall be at the expense of such indemnified
party unless: (i) the employment thereof has been specifically authorized by
the indemnifying party in writing; (ii) such indemnified party shall have been
advised by such counsel that there may be one or more legal defenses available
to it which are different from or additional to those available to the
indemnifying party and in the reasonable judgment of such counsel it is
necessary or appropriate for such indemnified party to employ separate
counsel; or (iii) the indemnifying party has failed to assume the defense of
such action and employ counsel reasonably satisfactory to the indemnified
party, in which case, if such indemnified party notifies the indemnifying
party in writing that it elects to employ separate counsel at the expense of
the indemnifying party, the indemnifying party shall not have the right to
assume the defense of such action on behalf of such indemnified party, it
being understood, however, the indemnifying party shall not, in connection
with any one such action or separate but substantially similar or related
actions in the same jurisdiction arising out of the same general allegations
or circumstances, be liable for the reasonable fees and expenses of more than
one separate firm of attorneys (in addition to local counsel) at any time for
all such indemnified parties.
Each indemnified party, as a condition of the indemnity agreements
contained in this Section 1, shall cooperate with the indemnifying party in
the defense of any such action or claim. No indemnifying party shall be liable
for any settlement of any such action effected without its written consent
(which consent shall not be unreasonably withheld), but if settled with its
written consent or if there be a final judgment for the plaintiff in any such
action, the indemnifying party agrees to indemnify and hold harmless any
indemnified party from and against any loss or liability by reason of such
settlement or judgment.
Notwithstanding the foregoing sentence, if at any time an
indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for reasonable fees and
▇▇▇. ▇▇-▇
expenses of counsel, the indemnifying party agrees that it shall be liable for
any settlement of any proceeding effected without its written consent if (i)
such settlement is entered into more than 30 days after receipt by such
indemnifying party of the aforesaid request and (ii) such indemnifying party
shall not have reimbursed the indemnified party in accordance with such
request prior to the date of such settlement.
(a) If the indemnification provided for in this Section 1 is
unavailable to an indemnified party, then the indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims, damages
or liabilities, in such proportion as is appropriate to reflect the relative
fault of the indemnifying party and the indemnified party, respectively, in
connection with the statements or omissions that result in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative fault of the indemnified party and indemnifying
party shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by
such parties and their relative knowledge, access to information and
opportunity to correct or prevent such statement or omission and any other
equitable considerations.
(b) The indemnity and contribution agreements contained in this
Section 1 and the representations and warranties set forth in Section 2 shall
remain operative and in full force and effect regardless of (i) any
termination of this Agreement, (ii) any investigation made by the Depositor,
▇▇▇▇▇▇, the Underwriter[s], the Initial Purchaser[s], their respective
affiliates, directors, officers, employees or agents or any person controlling
the Depositor, ▇▇▇▇▇▇, the Underwriter[s], the Initial Purchaser[s] or any
such affiliate, and (iii) acceptance of and payment for any of the Offered
Certificates or Private Certificates.
2. Representations and Warranties. Seller represents and
warrants that:
(i) Seller is validly existing and in good standing under the laws
of its jurisdiction of formation or incorporation, as applicable, and has
full power and authority to own its assets and to transact the business
in which it is currently engaged. Seller is duly qualified to do business
and is in good standing in each jurisdiction in which the character of
the business transacted by it or any properties owned or leased by it
requires such qualification and in which the failure so to qualify would
have a material adverse effect on the business, properties, assets or
condition (financial or otherwise) of Seller;
(ii) Seller is not required to obtain the consent of any other
person or any consent, license, approval or authorization from, or
registration or declaration with, any governmental authority, bureau or
agency in connection with the execution, delivery, performance, validity
or enforceability of this Agreement;
(iii) the execution, delivery and performance of this Agreement by
Seller will not violate any provision of any existing law or regulation
or any order decree of any court applicable to Seller or any provision of
the charter or bylaws of Seller, or constitute a material breach of any
mortgage, indenture, contract or other agreement to which Seller is a
party or by which it may be bound;
Exh. 13-4
(iv) (a) no proceeding of or before any court, tribunal or
governmental body is currently pending or, (b) to the knowledge of
Seller, threatened against Seller or any of its properties or with
respect to this Agreement or the Offered Certificates, in either case,
which would have a material adverse effect on the business, properties,
assets or condition (financial or otherwise) of Seller;
(v) Seller has full power and authority to make, execute, deliver
and perform this Agreement and all of the transactions contemplated
hereunder, and has taken all necessary corporate action to authorize the
execution, delivery and performance of this Agreement. When executed and
delivered, this Agreement will constitute the legal, valid and binding
obligation of each of Seller enforceable in accordance with its terms,
except as such enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally, by the availability of
equitable remedies, and by limitations of public policy under applicable
securities law as to rights of indemnity and contribution thereunder; and
(vi) this Agreement has been duly executed and delivered by Seller.
3. Notices. All communications hereunder will be in writing and
effective only on receipt, and, if sent to Seller, will be mailed, delivered
or faxed or emailed and confirmed by mail [______________________]; if sent to
▇▇▇▇▇▇, ▇▇▇▇ be mailed, delivered or faxed or emailed and confirmed by mail to
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital Inc., ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ - Whole Loans Operations Manager, Fax: [_______],
Email: ▇▇▇▇▇.▇▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, with copies to (i) ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ - Legal Counsel, Securities, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Fax [_____], Email:
▇▇▇▇▇▇▇▇.▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, and (ii) ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ -
SPG Finance, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇, Fax [_____],Email: ▇▇▇▇▇▇.▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇; if to the
Depositor, will be mailed, delivered or telegraphed and confirmed to
[____________________]; or if to the Underwriter[s], will be mailed, delivered
or telegraphed and confirmed to [_____________________]; or if to the Initial
Purchaser[s], will be mailed, delivered or telegraphed and confirmed to
[_____________________].
4. Miscellaneous. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of New York without giving effect to
the conflict of laws provisions thereof. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their successors and
assigns and the controlling persons referred to herein, and no other person
shall have any right or obligation hereunder. Neither this Agreement nor any
term hereof may be changed, waived, discharged or terminated orally, but only
by an instrument in writing signed by the party against whom enforcement of
the change, waiver, discharge or termination is sought. This Agreement may be
executed in counterparts, each of which when so executed and delivered shall
be considered an original, and all such counterparts shall constitute one and
the same instrument. Capitalized terms used but not defined herein shall have
the meanings provided in the P&S.
[SIGNATURE PAGE FOLLOWS]
Exh. 13-5
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective officers hereunto duly authorized, this
__th day of [_____________].
[DEPOSITOR]
By: ________________________________
Name:
Title:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ MORTGAGE CAPITAL INC.
By: _________________________________
Name:
Title:
[SELLER]
By: _________________________________
Name:
Title:
▇▇▇. ▇▇-▇
▇▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ TO BE ADDRESSED IN ASSESSMENT OF COMPLIANCE
The assessment of compliance to be delivered by [the SELLER]
[Name of Subservicer] shall address, at a minimum, the criteria identified as
below as "Applicable Servicing Criteria":
----------------------------------------------------------------------------------------------------------------------
Applicable
Servicing Criteria Servicing Criteria
----------------------------------------------------------------------------------------------------------------------
Reference 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.
----------------------------------------------------------------------------------------------------------------------
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.
----------------------------------------------------------------------------------------------------------------------
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.
----------------------------------------------------------------------------------------------------------------------
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.
----------------------------------------------------------------------------------------------------------------------
1122(d)(2)(ii) Disbursements made via wire transfer on behalf of an
obligor or to an investor are made only by authorized
personnel.
----------------------------------------------------------------------------------------------------------------------
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.
----------------------------------------------------------------------------------------------------------------------
Exh. 14-1
----------------------------------------------------------------------------------------------------------------------
Applicable
Servicing Criteria Servicing Criteria
----------------------------------------------------------------------------------------------------------------------
Reference Criteria
----------------------------------------------------------------------------------------------------------------------
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.
----------------------------------------------------------------------------------------------------------------------
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.
----------------------------------------------------------------------------------------------------------------------
1122(d)(2)(vi) Unissued checks are safeguarded so as to prevent unauthorized
access.
----------------------------------------------------------------------------------------------------------------------
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.
----------------------------------------------------------------------------------------------------------------------
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.
----------------------------------------------------------------------------------------------------------------------
Exh. 14-2
----------------------------------------------------------------------------------------------------------------------
Applicable
Servicing Criteria Servicing Criteria
----------------------------------------------------------------------------------------------------------------------
Reference Criteria
----------------------------------------------------------------------------------------------------------------------
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.
----------------------------------------------------------------------------------------------------------------------
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.
----------------------------------------------------------------------------------------------------------------------
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.
----------------------------------------------------------------------------------------------------------------------
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.
----------------------------------------------------------------------------------------------------------------------
1122(d)(4)(ii) Mortgage loan and related documents are safeguarded as required by
the transaction agreements
----------------------------------------------------------------------------------------------------------------------
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.
----------------------------------------------------------------------------------------------------------------------
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.
----------------------------------------------------------------------------------------------------------------------
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.
----------------------------------------------------------------------------------------------------------------------
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.
----------------------------------------------------------------------------------------------------------------------
Exh. 14-3
----------------------------------------------------------------------------------------------------------------------
Applicable
Servicing Criteria Servicing Criteria
----------------------------------------------------------------------------------------------------------------------
Reference Criteria
----------------------------------------------------------------------------------------------------------------------
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.
----------------------------------------------------------------------------------------------------------------------
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).
----------------------------------------------------------------------------------------------------------------------
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.
----------------------------------------------------------------------------------------------------------------------
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.
----------------------------------------------------------------------------------------------------------------------
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.
----------------------------------------------------------------------------------------------------------------------
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.
----------------------------------------------------------------------------------------------------------------------
Exh. 14-4
----------------------------------------------------------------------------------------------------------------------
Applicable
Servicing Criteria Servicing Criteria
----------------------------------------------------------------------------------------------------------------------
Reference Criteria
----------------------------------------------------------------------------------------------------------------------
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.
----------------------------------------------------------------------------------------------------------------------
1122(d)(4)(xiv) Delinquencies, charge-offs and uncollectible accounts are
recognized and recorded in accordance with the transaction
agreements.
----------------------------------------------------------------------------------------------------------------------
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.
----------------------------------------------------------------------------------------------------------------------
[NAME OF SELLER] [NAME OF SUBSERVICER]
Date:____________________________________
By: _____________________________________
Name:
Title:
▇▇▇. ▇▇-▇