ASSIGNMENT, ASSUMPTION AND RECOGNITION AGREEMENT
This is an Assignment, Assumption and Recognition Agreement (this "AAR
Agreement") made as of January 1, 2007, among HSBC Bank, National Association
(the "Assignor"), HSI Asset Securitization Corporation (the "Assignee"),
CitiMortgage, Inc. as master servicer (the "Master Servicer"), Deutsche Bank
National Trust Company (the "Trustee") not individually but solely as trustee on
behalf of the holders of the HSI Asset Loan Obligation Trust, Series 2007-AR1,
Asset-Backed Certificates and SunTrust Mortgage, Inc. (the "Company").
In consideration of the mutual promises contained herein the parties hereto
agree that the residential mortgage loans (the "Assigned Loans") listed on
Attachment 1 annexed hereto (the "Assigned Loan Schedule") purchased by Assignor
from Company pursuant to the Master Mortgage Loan Purchase and Servicing
Agreement, dated as of November 1, 2006, between Assignor and Company (the
"Purchase Agreement"), shall be subject to the terms of this AAR Agreement.
Capitalized terms used herein but not defined shall have the meanings ascribed
to them in the Purchase Agreement.
Assignment and Assumption
1. Assignor hereby grants, transfers and assigns to Assignee all of the
right, title interest and obligations of Assignor in the Assigned Loans and, as
they relate to the Assigned Loans, all of its right, title, interest and
obligations in, to and under the Purchase Agreement and Assignee hereby assumes
all rights and obligations with respect to the Assigned Loans under the Purchase
Agreement. Assignor specifically reserves and does not assign to Assignee any
right title and interest in, to or under any Mortgage Loans subject to the
Purchase Agreement other than those set forth on Attachment l. The Company shall
service the Assigned Loans in accordance with the Purchase Agreement as modified
by this AAR Agreement.
Recognition of the Company
2. From and after the date hereof, the Company shall and does hereby
recognize that the Assignee will transfer the Assigned Loans and assign its
rights under the Purchase Agreement (solely to the extent set forth herein) and
this AAR Agreement to HSI Asset Loan Obligation Trust 2007-AR1 (the "Trust")
created pursuant to a Pooling and Servicing Agreement, dated as of January 1,
2007 (the "Pooling Agreement"), among the Assignee as Depositor, the Trustee,
the Master Servicer, Citibank, N.A. as Securities Administrator (the "Securities
Administrator") and Xxxxx Fargo Bank, N.A. as custodian (the "Custodian"). The
Company hereby acknowledges and agrees that from and after the date hereof (i)
the Trust will be the owner of the Assigned Loans, (ii) the Company shall look
solely to the Trust for performance of any obligations of the Assignor insofar
as they relate to the enforcement of the representations, warranties and
covenants with respect to the Assigned Loans and the Trust hereby acknowledges
that it has assumed such representations, warranties and covenants and that any
claim by the Company with respect thereto shall be made by written notice to the
Trustee, (iii) the Trust shall have all the rights and remedies available to the
Assignor, insofar as they relate to the Assigned Loans, under the Purchase
Agreement, including,
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without limitation, the enforcement of the document delivery requirements and
remedies with respect to breaches of representations and warranties set forth in
the Purchase Agreement, and shall be entitled to enforce all of the obligations
of the Company thereunder insofar as they relate to the Assigned Loans, and (iv)
all references to the Purchaser (insofar as they relate to the rights, title and
interest and, with respect to obligations of the Purchaser, only insofar as they
relate to the enforcement of the representations, warranties and covenants of
the Company) under the Purchase Agreement insofar as they relate to the Assigned
Loans, shall be deemed to refer to the Trust. The Company and the Assignor shall
have the right to amend, modify, waive, or otherwise alter any of the terms or
provisions of the Purchase Agreement without the joinder of the Assignee;
provided, however, that such amendment, modification, waiver or other alteration
shall not in any way affect the Assigned Loans or the Company's performance
under the Purchase Agreement with respect to the Assigned Loans. The Company
acknowledges that CitiMortgage, Inc. has been appointed as the Master Servicer
of the Assigned Loans pursuant to this AAR Agreement and therefore has the right
to enforce all obligations of the Company as they relate to the Assigned Loans
under the Purchase Agreement and this AAR Agreement.
Representations; Warranties and Covenants
3. Assignor warrants and represents to Assignee, the Master Servicer, the
Trust and Company as of the date hereof:
a. Attached hereto as Attachment 2 is a true and accurate copy of
the Purchase Agreement, which agreement is in full force and
effect as of the date hereof and the provisions of which have not
been waived, amended or modified in any respect, nor has any
notice of termination been given thereunder;
b. Assignor is the lawful owner of the Assigned Loans with full
right to transfer the Assigned Loans and any and all of its
interests, rights and obligations under the Purchase Agreement as
they relate to the Assigned Loans, free and clear of any and all
liens, claims and encumbrances; and upon the transfer of the
Assigned Loans to Assignee as contemplated herein, Assignee shall
have good title to each and every Assigned Loan, as well as any
and all of Assignor's interests, rights and obligations under the
Purchase Agreement as they relate to the Assigned Loans, free and
clear of any and all liens, claims and encumbrances;
c. Assignor has not received notice of, and has no knowledge of, any
offsets, counterclaims or other defenses available to Company
with respect to the Assigned Loans or the Purchase Agreement;
d. Assignor is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its
formation, and has all requisite power and authority to acquire,
own and sell the Assigned Loans;
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e. Assignor has full power and authority to execute, deliver and
perform its obligations under this AAR Agreement, and to
consummate the transactions set forth herein. The consummation of
the transactions contemplated by this AAR Agreement is in the
ordinary course of Assignor's business and will not conflict
with, or result in a breach of, any of the terms, conditions or
provisions of Assignor's charter or by-laws or any legal
restriction, or any material agreement or instrument to which
Assignor is now a party or by which it is bound, or result in the
violation of any law, rule, regulation, order, judgment or decree
to which Assignor or its property is subject. The execution,
delivery and performance by Assignor of this AAR Agreement and
the consummation by it of the transactions contemplated hereby,
have been duly authorized by all necessary action on the part of
Assignor. This AAR Agreement has been duly executed and delivered
by Assignor and, upon the due authorization, execution and
delivery by Assignee and Company, will constitute the valid and
legally binding obligation of Assignor enforceable against
Assignor in accordance with its terms except as enforceability
may be limited by bankruptcy, reorganization, insolvency,
moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally, and by general
principles of equity regardless of whether enforceability is
considered in a proceeding in equity or at law;
f. No material consent, approval, order or authorization of, or
declaration, filing or registration with, any governmental entity
is required to be obtained or made by Assignor in connection with
the execution, delivery or performance by Assignor of this AAR
Agreement, or the consummation by it of the transactions
contemplated hereby; and
g. There is no action, suit, proceeding, investigation or litigation
pending or, to Assignor's knowledge, threatened, which either in
any instance or in the aggregate, if determined adversely to
Assignor, would adversely affect Assignor's execution or delivery
of, or the enforceability of, this AAR Agreement, or the
Assignor's ability to perform its obligations under this AAR
Agreement.
4. Assignee warrants and represents to, and covenants with, Assignor, the
Master Servicer, the Trust and Company as of the date hereof:
a. Assignee is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization and has
all requisite power and authority to acquire and own the Assigned
Loans;
b. Assignee has full power and authority to execute, deliver and
perform its obligations under this AAR Agreement, and to
consummate the transactions set forth herein. The consummation of
the transactions contemplated by this AAR Agreement is in the
ordinary course of
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Assignee's business and will not conflict with, or result in a
breach of, any of the terms, conditions or provisions of
Assignee's organizational documentation or any legal restriction,
or any material agreement or instrument to which Assignee is now
a party or by which it is bound, or result in the violation of
any law, rule, regulation, order, judgment or decree to which
Assignee or its property is subject. The execution, delivery and
performance by Assignee of this AAR Agreement and the
consummation by it of the transactions contemplated hereby, have
been duly authorized by all necessary action on the part of
Assignee. This AAR Agreement has been duly executed and delivered
by Assignee and, upon the due authorization, execution and
delivery by Assignor and Company, will constitute the valid and
legally binding obligation of Assignee enforceable against
Assignee in accordance with its terms except as enforceability
may be limited by bankruptcy, reorganization, insolvency,
moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally, and by general
principles of equity regardless of whether enforceability is
considered in a proceeding in equity or at law;
c. No material consent, approval, order or authorization of, or
declaration, filing or registration with, any governmental entity
is required to be obtained or made by Assignee in connection with
the execution, delivery or performance by Assignee of this AAR
Agreement, or the consummation by it of the transactions
contemplated hereby; and
d. There is no action, suit, proceeding, investigation or litigation
pending or, to Assignee's knowledge, threatened, which either in
any instance or in the aggregate, if determined adversely to
Assignee, would adversely affect Assignee's execution or delivery
of, or the enforceability of, this AAR Agreement, or the
Assignee's ability to perform its obligations under this AAR
Agreement.
5. Company warrants and represents to, and covenants with, Assignor, the
Trust and Assignee as of the date hereof:
a. Attached hereto as Attachment 2 is a true and accurate copy of
the Purchase Agreement, which agreement is in full force and
effect as of the date hereof and the provisions of which have not
been waived, amended or modified in any respect as to the
Assigned Loans, nor has any notice of termination been given
thereunder;
b. Company is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation, and has
all requisite power and authority to perform its obligations
under the Purchase Agreement;
c. Company has full corporate power and authority to execute,
deliver and perform its obligations under this AAR Agreement, and
to consummate the transactions set forth herein. The consummation
of the transactions
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contemplated by this AAR Agreement is in the ordinary course of
Company's business and will not conflict with, or result in a
breach of, any of the terms, conditions or provisions of
Company's organizational documentation or any legal restriction,
or any material agreement or instrument to which Company is now a
party or by which it is bound, or result in the violation of any
law, rule, regulation, order, judgment or decree to which Company
or its property is subject. The execution, delivery and
performance by Company of this AAR Agreement and the consummation
by it of the transactions contemplated hereby, have been duly
authorized by all necessary corporate action on the part of
Company. This AAR Agreement has been duly executed and delivered
by Company, and, upon the due authorization, execution and
delivery by Assignor and Assignee, will constitute the valid and
legally binding obligation of Company, enforceable against
Company in accordance with its terms except as enforceability may
be limited by bankruptcy, reorganization, insolvency, moratorium
or other similar laws now or hereafter in effect relating to
creditors' rights generally, and by general principles of equity
regardless of whether enforceability is considered in a
proceeding in equity or at law;
d. No consent, approval, order or authorization of, or declaration,
filing or registration with, any governmental entity is required
to be obtained or made by Company in connection with the
execution, delivery or performance by Company of this AAR
Agreement, or the consummation by it of the transactions
contemplated hereby;
e. There is no action, suit, proceeding, investigation or litigation
pending or, to Company's knowledge, threatened, which either in
any instance or in the aggregate, if determined adversely to
Company, would adversely affect Company's execution or delivery
of, or the enforceability of, this AAR Agreement, or the
Company's ability to perform its obligations under this AAR
Agreement; and
f. Pursuant to Section 12 of the Purchase Agreement, the Company
hereby represents and warrants, for the benefit of the Assignor,
the Assignee, the Master Servicer and the Trust, that the
representations and warranties set forth in Section 7.01 and 7.02
of the Purchase Agreement (except for those representations and
warranties contained in Sections 7.02(iii), (iv), (xvii) (only
with respect to delinquencies regarding the related Mortgage Loan
and the condition of the related Mortgaged Property), (xix) (only
with respect to encroachments and violations of applicable zoning
law, regulations and ordinances as they relate to the condition
of the related Mortgaged Property after the related Closing
Date), (xxiii), (xxxi) and (xxxvii) therein), are true and
correct as of the date hereof, except that the representation and
warranty set forth in Section 7.02(i) shall, for purposes
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of this AAR Agreement, relate to the Assigned Loan Schedule
attached hereto.
6. The Company hereby acknowledges and agrees that the remedies available
to the Assignor, the Assignee and the Trust (including the Assignee and the
Company acting on the Trust's behalf) in connection with any breach of the
representations and warranties made by the Company set forth in Section 5 hereof
shall be as set forth in Subsection 7.03 of the Purchase Agreement as if they
were set forth herein (including without limitation the repurchase and indemnity
obligations set forth therein).
7. In connection with the transfer of the Assigned Loans hereunder, the
Company agrees that, from and after the date hereof, each Assigned Loan
transferred hereunder will be subject to, and serviced under, the Purchase
Agreement, provided that, solely with respect to the Assigned Loans, the
following modifications shall be made (all capitalized terms used below shall
have the meanings assigned to such terms by this AAR Agreement and such terms
shall be incorporated into the Purchase Agreement to the extent such terms are
not already defined therein):
(i) Section 14.04 shall be amended so that (a) the reference to the
"Purchaser" in the first sentence thereof will be changed to "the Master
Servicer, the Depositor and the Securities Administrator and with written
notice to the Trustee"; and (b) the reference to "Purchaser" in the second
sentence there of will be changed to "Master Servicer and Securities
Administrator";
(ii) Section 14.05 shall be amended so that approval for any
transferring of servicing must be provided in writing by the Master
Servicer, the Depositor, the Securities Administrator and written notice
must be provided to the Trustee in order for such transfer to become
effective;
(iii) Section 15.01 shall be amended so that all references to the
"Purchaser" shall be changed to "Master Servicer";
(iv) Sections 15.02, 16 and 17 shall be amended so that any references
to the "Purchaser" shall be changed to "Master Servicer"; and Section 16
shall be further amended so that the following is added at the end of the
second sentence in the first paragraph: "provided, however, that no such
compensation shall be in excess of that permitted by the Servicer under
this Agreement"
(v) Section 11.01 of Exhibit 9 shall be amended so that (a) the
reference to "Purchaser" in the fifth line of the second paragraph thereof
shall be replaced with "the Master Servicer or the Trustee for the benefit
of the holders of any security issued by the Trust" and (b) the phrase
"effect an exchange or reissuance of such Mortgage Loan under Section 1001
of the Code and cause either any REMIC designation made in connection with
a Pass-Through Transfer to fail to qualify as a REMIC under the Code or the
imposition of any tax on 'prohibited transactions' or 'contributions after
the startup day' under the REMIC provisions of the Code" shall be added
after the word "principal" in the ninth line of the second paragraph
thereof;
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(vi) Section 11.03 of Exhibit 9 shall be amended so that the following
shall be added as the last paragraph thereof:
"In the event that a Mortgage Loan becomes part of a REMIC, and
becomes REO Property, such property shall be disposed of by the
Seller, with the consent of the trustee as required pursuant to this
Agreement, within two (2) years after becoming an REO Property, unless
the Seller provides to the trustee and the Securities Administrator
under such REMIC an opinion of counsel to the effect that the holding
of such REO Property subsequent to two (2) years after its becoming
REO Property, will not result in the imposition of taxes on
"prohibited transactions" as defined in Section 860F of the Code, or
cause the transaction to fail to qualify as a REMIC at any time that
certificates are outstanding. The Seller shall manage, conserve,
protect and operate each such REO Property for the certificateholders
solely for the purpose of its prompt disposition and sale in a manner
which does not cause such property to fail to qualify as "foreclosure
property" within the meaning of Section 860G(a)(8) of the Code, or any
"net income from foreclosure property" which is subject to taxation
under the REMIC provisions of the Code. Pursuant to its efforts to
sell such property, the Seller shall either itself or through an agent
selected by the Seller, protect and conserve such property in the same
manner and to such an extent as is customary in the locality where
such property is located. Additionally, the Seller shall provide the
Purchaser or any master servicer with information sufficient to
perform the tax withholding and reporting related to Sections 1445 and
6050J of the Code."
(vii) [RESERVED]
(viii) Section 11.05 of Exhibit 9 shall be amended so that the phrase
"in excess of the Purchase Price" shall be added after the word "thereon"
in the second line of subsection (xvi);
(ix) Section 11.09 of Exhibit 9 shall be amended so that any consent
for the transfer of the Custodial Account or Escrow Account must be
obtained from the Master Servicer and the Depositor;
(x) Section 11.13 of Exhibit 9 shall be amended as follows:
(a) the first paragraph shall be deleted in its entirety and
replaced with the following "This Section shall apply only to REO
Properties acquired for the account of the Trustee and shall not apply
to any REO Property relating to a Mortgage Loan which was purchased or
repurchased from the Trustee pursuant to any
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provision hereof. In the event that title to any such REO Property is
acquired, the deed or certificate of sale shall be issued to the
Trust, or if not permitted by law, to the Trustee, or its nominee for
the benefit of the holders of any security issued by the Trust." and
(b) the following shall be added as the first sentence to second
paragraph, "the Servicer shall manage, conserve, protect and operate
each REO Property for the Trustee solely for the purpose of its prompt
disposition and sale."
(xi) Sections 11.14, 11.16, 11.17, 11.18 and 11.22 of Exhibit 9 shall
be amended so all references to "Purchaser" made in connection with the
provision of any notice, the disposition of any funds or the requirement of
any consent shall be changed to references to the "Master Servicer";
(xii) Section 11.15 of Exhibit 9 shall be deleted in its entirety and
replaced with the following:
Subsection 11.15 Remittance Reports.
No later than the fifth Business Day of each month, the Servicer shall
furnish to the Master Servicer or its designee an electronic file
containing, and a hard copy of, the monthly data (the "Remittance Report").
The Remittance Report will contain, at a minimum the following -
(i) with respect to each Mortgage Loan and each Monthly Payment,
the amount of such remittance allocable to principal (including a separate
breakdown of any Principal Prepayment, including the date of such
prepayment, and any Prepayment Charges, along with a detailed report of
interest on principal prepayment amounts remitted in accordance with
Subsection 11.04);
(ii) with respect to each Mortgage Loan and each Monthly Payment,
the amount of such remittance allocable to interest;
(iii) with respect to each Mortgage Loan, the amount of servicing
compensation received by the Servicer during the prior distribution period;
(iv) the Stated Principal Balance of each Mortgage Loan and the
aggregate Stated Principal Balance of all Mortgage Loans as of the first
day of the distribution period and the last day of the distribution period;
(v) with respect to each Mortgage Loan, the current Mortgage
Interest Rate;
(vi) with respect to each Mortgage Loan, the aggregate amount of
any Insurance Proceeds, Condemnation Proceeds, Liquidation Proceeds and REO
Disposition Proceeds received during the prior distribution period;
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(vii) the number of Mortgage Loans as of the first day of the
distribution period and the last day of the distribution period;
(viii) with respect to each Mortgage Loan, the Stated Principal
Balance of each Mortgage Loan (a) delinquent as grouped in the following
intervals through final liquidation of such Mortgage Loan: 30 to 59 days,
60 to 89 days, 90 days or more; (b) as to which foreclosure has commenced;
and (c) as to which REO Property has been acquired;
(ix) with respect to each Mortgage Loan, the amount and severity
of any realized loss following liquidation of such Mortgage Loan;
(x) with respect to each Mortgage Loan, the amount of any Monthly
Advances and Nonrecoverable Advances reimbursed to the Servicer with
respect to such Mortgage Loan during the prior distribution period pursuant
to Section 11.05, and the source of funds for such reimbursement, and the
aggregate amount of any Monthly Advances and Nonrecoverable Advances
reimbursed to the Servicer for all Mortgage Loans during the prior
distribution period pursuant to Section 11.05;
(xi) with respect to any Mortgage Loan, a description of any
material modifications, extensions or waivers to the terms, fees, penalties
or payments of such Mortgage Loan during the prior distribution period or
that have cumulatively become material over time;
(xii) a description of any material breach of a representation or
warranty set forth in Subsections 7.01 or 7.02 herein or of any other
breach of a covenant or condition contained herein and the status of any
resolution of such breach;
(xiii) with respect to each Mortgage Loan, the Stated Principal
Balance of any substitute Mortgage Loan provided by the Servicer and the
Stated Principal Balance of any Mortgage Loan that has been replaced by a
substitute Mortgage Loan in accordance with Subsection 7.04; and
(xiv) with respect to each Mortgage Loan, the Stated Principal
Balance of any Mortgage Loan that has been repurchased by the Servicer in
accordance with Subsection 7.05.
The Servicer shall modify the electronic file as requested by the Master
Servicer from time to time to satisfy any reporting needs which may arise
because of regulatory or legal requirements.
On the Business Day following each Determination Date, the Servicer shall
deliver to the Master Servicer or its designee by telecopy (or by such other
means as the Servicer and the Master Servicer may agree from time to time) an
electronic file containing, and a hard copy of, the determination data with
respect to the related Distribution Date, together with such other information
with respect to the Mortgage Loans as the Master Servicer may reasonably require
to allocate distributions made pursuant to this Agreement and provide
appropriate statements with respect to such distributions.
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(xiii) Section 11.16 of Exhibit 9 shall be deleted in its entirety and
replaced with the following:
Subsection 11.16 Statements to the Master Servicer.
Upon request the Servicer shall forward to the Master Servicer or its
designee a statement prepared by the Servicer setting forth the status of
the Custodial Account as of the close of business on such Distribution Date
and showing, for the period covered by such statement sufficient detail to
as to allow the Master Servicer to determine that the account has been
properly balanced and funded.
In addition, not more than 60 days after the end of each calendar
year, the Servicer shall furnish to each Person who was the Master Servicer
at any time during such calendar year, (i) as to the aggregate of
remittances for the applicable portion of such year, an annual statement in
accordance with the requirements of applicable federal income tax law, and
(ii) listing of the principal balances of the Mortgage Loans outstanding at
the end of such calendar year.
The Servicer shall prepare and file any and all tax returns,
information statements or other filings required to be delivered to any
governmental taxing authority or to the Master Servicer pursuant to any
applicable law with respect to the Mortgage Loans and the transactions
contemplated hereby. In addition, the Servicer shall provide the Master
Servicer with such information concerning the Mortgage Loans as is
necessary for the Master Servicer to prepare its federal income tax return
as the Master Servicer may reasonably request from time to time.
(xiv) Section 11.25 shall be amended so that references to the
"Purchaser" in the last sentence thereof are changed to "the Depositor, the
Master Servicer and the Trustee".
Miscellaneous
8. All demands, notices and communications related to the Assigned Loans,
the Agreements and this AAR Agreement shall be in writing and shall be deemed to
have been duly given if personally delivered or mailed by registered mail,
postage prepaid, as follows:
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a. In the case of Company,
SunTrust Mortgage, Inc.
0000 Xxxxxx Xxxxxx
Xxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxxx Xxxxxx-Xxxxxxx
b. In the case of Assignor,
HSBC Bank USA, National Association
Re: HALO 2007-AR1
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Head of MBS Principal Finance
c. In the case of Assignee (or the Trust),
HSI Asset Securitization Corporation
Re: HALO 2007-AR1
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Head MBS Principal Finance
c. In the case of Trustee,
Deutsche Bank National Trust Company
0000 Xx. Xxxxxx Xxxxx
Xxxxx Xxx, Xxxxxxxxxx 00000
d. In the case of the Master Servicer:
CitiMortgage Mortgage, Inc.
0000 Xxxxxx Xxxx.
Xxxxxx, XX 00000
Attention: Master Servicing Division,
Compliance Manager - HALO 2007-AR1
e. In the case of the Securities Administrator:
Citbank, N.A.
000 Xxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Structured Finance Agency and Trust, HALO 2007-AR1
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9. This AAR Agreement shall be construed in accordance with the laws of the
State of New York, without regard to conflicts of law principles, and the
obligations, rights and remedies of the parties hereunder shall be determined in
accordance with such laws.
10. No term or provision of this AAR Agreement may be waived or modified
unless such waiver or modification is in writing and signed by the party against
whom such waiver or modification is sought to be enforced.
11. This AAR Agreement shall inure to the benefit of the successors and
assigns of the parties hereto. Any entity into which Assignor, Assignee or
Company may be merged or consolidated shall without the requirement for any
further writing, be deemed Assignor, Assignee or Company, respectively
hereunder.
12. This AAR Agreement shall survive the conveyance of the Assigned Loans
as contemplated in this AAR Agreement.
13. This AAR Agreement may be executed simultaneously in any number of
counterparts. Each counterpart shall be deemed to be an original and all such
counterparts shall constitute one and the same instrument.
14. In the event that any provision of this AAR Agreement conflicts with
any provision of the Purchase Agreement with respect to the Assigned Loans, the
terms of this AAR Agreement shall control.
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IN WITNESS WHEREOF, the parties hereto have executed this AAR Agreement as
of the day and year first above written.
HSBC BANK USA, NATIONAL ASSOCIATION
Assignor
By:
---------------------------------
Name: Xxx X. Xxxxxxxx
Title: Managing Director #14311
HSI ASSET SECURITIZATION CORPORATION
By:
---------------------------------
Name: Xxxxxx Xxxxx
Title: Vice President
SUNTRUST MORTGAGE, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
DEUTSCHE BANK NATIONAL TRUST COMPANY,
as Trustee
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
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CITIMORTGAGE, INC., as Master
Servicer
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
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ATTACHMENT 1
ASSIGNED LOAN SCHEDULE
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ATTACHMENT 2
PURCHASE AGREEMENT
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MASTER MORTGAGE LOAN PURCHASE AND SERVICING AGREEMENT
SUNTRUST MORTGAGE, INC.
Seller and Servicer
HSBC BANK USA, NATIONAL ASSOCIATION
Initial Purchaser
Dated as of November 1, 2006
First and Second Lien, Fixed and Adjustable Rate Mortgage Loans
TABLE OF CONTENTS
Page
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SECTION 1. Definitions................................................... 1
SECTION 2. Agreement to Purchase......................................... 14
SECTION 3. Mortgage Loan Schedules....................................... 14
SECTION 4. Purchase Price................................................ 14
SECTION 5. Examination of Mortgage Files................................. 15
SECTION 6. Conveyance from Seller to Initial Purchaser................... 16
Subsection 6.01. Conveyance of Mortgage Loans; Possession of
Servicing Files.................................. 16
Subsection 6.02. Books and Records................................... 16
Subsection 6.03. Delivery of Mortgage Loan Documents................. 16
Subsection 6.04. Quality Control Procedures.......................... 17
SECTION 7. Representations, Warranties and Covenants of the Seller:
Remedies for Breach....................................... 17
Subsection 7.01. Representations and Warranties Respecting the
Seller........................................... 17
Subsection 7.02. Representations and Warranties Regarding Individual
Mortgage Loans................................... 20
Subsection 7.03. Remedies for Breach of Representations and
Warranties....................................... 35
Subsection 7.04. Repurchase of Certain Mortgage Loans; Premium
Protection....................................... 37
SECTION 8. Closing...................................................... 38
SECTION 9. Closing Documents............................................ 39
SECTION 10. Costs........................................................ 40
SECTION 11. Servicer's Servicing Obligations............................. 40
SECTION 12. Removal of Mortgage Loans from Inclusion under This
Agreement Upon a Whole Loan Transfer or a Pass-Through
Transfer on One or More Reconstitution Dates.............. 40
SECTION 13. COMPLIANCE WITH REGULATION AB................................ 43
Subsection 13.01. Intent of the Parties; Reasonableness............... 43
Subsection 13.02. Additional Representations and Warranties of the
Seller........................................... 44
Subsection 13.03. Information to Be Provided by the Seller............ 44
Subsection 13.04. Servicer Compliance Statement....................... 50
Subsection 13.05. Report on Assessment of Compliance and Attestation.. 50
Subsection 13.06. Use of Subservicers and Subcontractors.............. 51
Subsection 13.07. Indemnification; Remedies........................... 52
SECTION 14. The Seller and the Servicer.................................. 55
Subsection 14.01. Additional Indemnification by the Seller and the
Servicer......................................... 55
Subsection 14.02. Merger or Consolidation of the Seller and the
Servicer......................................... 55
i
Subsection 14.03. Limitation on Liability of the Seller, the Servicer
and Others....................................... 55
Subsection 14.04. Servicer Not to Resign.............................. 56
Subsection 14.05. No Transfer of Servicing............................ 56
SECTION 15. Default...................................................... 57
Subsection 15.01. Events of Default................................... 57
Subsection 15.02. Waiver of Defaults.................................. 58
SECTION 16. Termination.................................................. 58
SECTION 17. Successor to the Servicer.................................... 59
SECTION 18. Financial Statements......................................... 60
SECTION 19. Mandatory Delivery: Grant of Security Interest............... 60
SECTION 20. Notices...................................................... 61
SECTION 21. Severability Clause.......................................... 61
SECTION 22. Counterparts................................................. 62
SECTION 23. Governing Law................................................ 62
SECTION 24. Intention of the Parties..................................... 62
SECTION 25. Successors and Assigns....................................... 62
SECTION 26. Waivers...................................................... 62
SECTION 27. Exhibits..................................................... 63
SECTION 28. Nonsolicitation.............................................. 63
SECTION 29. General Interpretive Principles.............................. 63
SECTION 30. Reproduction of Documents.................................... 64
SECTION 31. Further Agreements........................................... 64
SECTION 32. Third-Party Beneficiary...................................... 64
SECTION 33. Entire Agreement............................................. 64
ii
EXHIBITS
EXHIBIT 1 SELLER'S OFFICER'S CERTIFICATE
EXHIBIT 2 FORM OF OPINION OF COUNSEL TO THE SELLER
EXHIBIT 3 SECURITY RELEASE CERTIFICATION
EXHIBIT 4 ASSIGNMENT AND CONVEYANCE
EXHIBIT 5 CONTENTS OF EACH MORTGAGE FILE
EXHIBIT 6 CUSTODIAL AGREEMENT
EXHIBIT 7 FORM OF CUSTODIAL ACCOUNT LETTER AGREEMENT
EXHIBIT 8 FORM OF ESCROW ACCOUNT LETTER AGREEMENT
EXHIBIT 9 SERVICING ADDENDUM
EXHIBIT 10 FORM OF ASSIGNMENT AND RECOGNITION AGREEMENT
EXHIBIT 11 FORM OF INDEMNIFICATION AGREEMENT
EXHIBIT 12 FORM OF ANNUAL CERTIFICATION
EXHIBIT 13 MORTGAGE LOAN DOCUMENTS
EXHIBIT 14 UNDERWRITING GUIDELINES OF THE SELLER
EXHIBIT 15 SERVICING CRITERIA TO BE ADDRESSED IN ASSESSMENT OF COMPLIANCE
SCHEDULE I MORTGAGE LOAN SCHEDULE
SCHEDULE II PREPAYMENT CHARGE SCHEDULE
iii
MASTER MORTGAGE LOAN PURCHASE AND SERVICING AGREEMENT
This is an MASTER MORTGAGE LOAN PURCHASE AND SERVICING AGREEMENT (the
"Agreement"), dated as of November 1, 2006, by and between HSBC Bank USA,
National Association, having an office at 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000 (the "Initial Purchaser", and the Initial Purchaser or the Person, if any,
to which the Initial Purchaser has assigned its rights and obligations hereunder
as Purchaser with respect to a Mortgage Loan, and each of their respective
successors and assigns, the "Purchaser"), SUNTRUST MORTGAGE, INC. having an
office at 000 Xxxxxx Xxxxxx, Xxxxxxxx, Xxxxxxxx 00000 (the "Seller" and
"Servicer").
WITNESSETH:
WHEREAS, the Seller desires to sell, from time to time, to the Initial
Purchaser, and the Initial Purchaser desires to purchase, from time to time,
from the Seller, certain conventional, fixed and adjustable rate residential
first and second lien mortgage loans, including the right to any Prepayment
Charges payable by the related Mortgagors as described herein, (the "Mortgage
Loans") as described herein on a servicing-retained basis, and which shall be
delivered in groups of whole loans on various dates as provided herein and in
the related Confirmation (each, a "Closing Date");
WHEREAS, each Mortgage Loan is secured by a mortgage, deed of trust or
other security instrument creating a first or second lien on a residential
dwelling located in the jurisdiction indicated on the Mortgage Loan Schedule for
the related Mortgage Loan Package, which is to be annexed hereto on each Closing
Date as Schedule I;
WHEREAS, the Initial Purchaser, the Seller and the Servicer wish to
prescribe the manner of the conveyance, servicing and control of the Mortgage
Loans; and
WHEREAS, following its purchase of the Mortgage Loans from the Seller,
the Purchaser desires to sell some or all of the Mortgage Loans to one or more
purchasers as a whole loan transfer in a whole loan or participation format or a
public or private mortgage-backed securities transaction;
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 Seller agree
as follows:
SECTION 1. Definitions.
For purposes of this Agreement the following capitalized terms shall
have the respective meanings set forth below.
Accepted Servicing Practices: With respect to any Mortgage Loan, those
mortgage servicing practices (including collection procedures) of prudent
mortgage banking institutions which service mortgage loans of the same type as
such Mortgage Loan in the jurisdiction where the related Mortgaged Property is
located, which are in accordance with Xxxxxx Xxx servicing practices and
procedures for MBS pool mortgages, as defined in the
1
Xxxxxx Mae Guides including future updates, the terms of the Mortgage Loan
Documents and all applicable federal, state and local legal and regulatory
requirements.
Adjustable Rate Mortgage Loan: A Mortgage Loan which provides for the
adjustment of the Mortgage Interest Rate payable in respect thereto.
Adjustment Date: With respect to each Adjustable Rate Mortgage Loan,
the date set forth in the related Mortgage Note on which the Mortgage Interest
Rate on such Adjustable Rate Mortgage Loan is adjusted in accordance with the
terms of the related Mortgage Note.
Agreement: This Master Mortgage Loan Purchase and Servicing Agreement
including all exhibits, schedules, amendments and supplements hereto.
Appraised Value: With respect to any Mortgaged Property, the lesser of
(i) the value thereof as determined by an appraisal made for the originator of
the Mortgage Loan at the time of origination of the Mortgage Loan by an
appraiser who met the minimum requirements of FNMA and FHLMC and the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989, and (ii) the
purchase price paid for the related Mortgaged Property by the Mortgagor with the
proceeds of the Mortgage Loan, provided, however, in the case of a Refinanced
Mortgage Loan, such value of the Mortgaged Property is 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 FNMA and FHLMC and the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989.
Assignment and Conveyance: An assignment and conveyance of the
Mortgage Loans purchased on a Closing Date in the form annexed hereto as Exhibit
4.
Assignment of Mortgage: With respect to each Mortgage Loan which is
not a MERS Loan, an individual assignment of the Mortgage, notice of transfer or
equivalent instrument in recordable form, sufficient under the laws of the
jurisdiction wherein the related Mortgaged Property is located to give record
notice of the sale of the Mortgage to the Purchaser.
Balloon Mortgage Loan: A Mortgage Loan that provided on the date of
origination for an amortization schedule extending beyond its maturity date.
Balloon Payment: With respect to any Balloon Mortgage Loan as of any
date of determination, the Monthly Payment payable on the maturity of such
Mortgage Loan.
Business Day: Any day other than a Saturday or Sunday, or a day on
which banking and savings and loan institutions in the Commonwealth of Virginia
or the State of New York are authorized or obligated by law or executive order
to be closed.
Cash-Out Refinancing: A Refinanced Mortgage Loan the proceeds of which
were in excess of the principal balance of any existing first mortgage on the
related Mortgaged Property and related closing costs, and were used to pay any
such existing first mortgage, related closing costs and subordinate mortgages on
the related Mortgaged Property.
2
Closing Date: The date or dates on which the Initial Purchaser from
time to time shall purchase and the Seller from time to time shall sell to the
Initial Purchaser, the Mortgage Loans listed on the related Mortgage Loan
Schedule with respect to the related Mortgage Loan Package.
Closing Documents: With respect to any Closing Date, the documents
required pursuant to Section 9.
Code: The Internal Revenue Code of 1986, or any successor statute
thereto.
Combined Loan-to-Value Ratio or CLTV: With respect to any Mortgage
Loan as of any date of determination, the ratio on such date of the outstanding
principal amount of the Mortgage Loan and any other mortgage loan which is
secured by a lien on the related Mortgaged Property to the Appraised Value of
the Mortgaged Property.
Commission or SEC: The United States Securities and Exchange
Commission.
Condemnation Proceeds: All awards, compensation and settlements in
respect of a taking of all or part of a Mortgaged Property by exercise of the
power of condemnation or the right of eminent domain.
Confirmation: With respect to any Mortgage Loan Package purchased and
sold on any Closing Date, the letter agreement among the Initial Purchaser, the
Servicer and the 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 Initial Purchaser on such
Closing Date. A Confirmation may relate to more than one Mortgage Loan Package
to be purchased on one or more Closing Dates hereunder.
Convertible Mortgage Loan: A Mortgage Loan that by its terms and
subject to certain conditions contained in the related Mortgage or Mortgage Note
allows the Mortgagor to convert the adjustable Mortgage Interest Rate on such
Mortgage Loan to a fixed Mortgage Interest Rate.
Custodial Account: The separate account or accounts, each of which
shall be an Eligible Account, created and maintained pursuant to this Agreement,
which shall be entitled "SunTrust Mortgage, Inc., as servicer, in trust for the
Purchaser and various Mortgagors, Fixed and Adjustable Rate Mortgage Loans",
established at a financial institution acceptable to the Purchaser. Each
Custodial Account shall be an Eligible Account.
Custodial Agreement: The agreement governing the retention of the
originals of each Mortgage Note, Mortgage, Assignment of Mortgage and other
Mortgage Loan Documents, annexed hereto as Exhibit 6.
Custodian: The custodian under the Custodial Agreement, or its
successor in interest or assigns, or any successor to the Custodian under the
Custodial Agreement, as therein provided.
Cut-off Date: The first day of the month in which the related Closing
Date occurs.
3
Deleted Mortgage Loan: A Mortgage Loan replaced or to be replaced by a
Qualified Substitute Mortgage Loan.
Depositor: The depositor, as such term is defined in Regulation AB,
with respect to any Pass-Through Transfer that is identified as such by notice
in writing to the Servicer.
Determination Date: With respect to each Distribution Date, the
fifteenth (15th) day of the calendar month in which such Distribution Date
occurs or, if such fifteenth (15th) day is not a Business Day, the Business Day
immediately preceding such fifteenth (15th) day.
Distribution Date: The eighteenth (18th) day of each month, commencing
on the eighteenth day of the month next following the month in which the related
Cut-off Date occurs, or if such eighteenth (18th) day is not a Business Day, the
first Business Day immediately preceding such eighteenth (18th) day.
Due Date: With respect to each Mortgage Loan, the day of the calendar
month on which each Monthly Payment is due on such Mortgage Loan (including the
Balloon Payment with respect to a Balloon Mortgage Loan), exclusive of any days
of grace.
Eligible Account: Either (i) an account or accounts maintained with a
federal or state chartered depository institution or trust company the
short-term unsecured debt obligations of which (or, in the case of a depository
institution or trust company that is the principal subsidiary of a holding
company, the short-term unsecured debt obligations of such holding company) are
rated A-1 by S&P or Prime-1 by Moody's (or a comparable rating if another rating
agency is specified by the Initial Purchaser by written notice to the Seller and
Servicer) at the time any amounts are held on deposit therein or (ii) a trust
account or accounts maintained with a federal or state chartered depository
institution or trust company acting in its fiduciary capacity. Eligible Accounts
may bear interest.
Escrow Account: The separate trust account or accounts created and
maintained pursuant to this Agreement which shall be entitled "SunTrust
Mortgage, Inc., as servicer, in trust for the Purchaser and various Mortgagors,
Fixed and Adjustable Rate Mortgage Loans," established at a financial
institution acceptable to the Purchaser. Each Escrow Account shall be an
Eligible Account.
Escrow Payments: The amounts constituting ground rents, taxes,
assessments, water charges, sewer rents, Primary Insurance Policy premiums, fire
and hazard insurance premiums and other payments required to be escrowed by the
Mortgagor with the Mortgagee pursuant to the terms of any Mortgage Note or
Mortgage.
Event of Default: Any one of the events enumerated in Subsection
14.01.
Exchange Act: The Securities Exchange Act of 1934, as amended.
FDIC: The Federal Deposit Insurance Corporation, or any successor
thereto.
FHLMC: Xxxxxxx Mac or any successor thereto.
4
Final Recovery Determination: With respect to any defaulted Mortgage
Loan or any REO Property (other than a Mortgage Loan or REO Property purchased
by the Seller pursuant to this Agreement), a determination made by the Servicer
that all Insurance Proceeds, Liquidation Proceeds and other payments or
recoveries which the Servicer, in its reasonable good faith judgment, expects to
be finally recoverable in respect thereof have been so recovered. The Servicer
shall maintain records, prepared by a servicing officer of the Servicer, of each
Final Recovery Determination.
Fixed Rate Mortgage Loan: A Mortgage Loan with respect to which the
Mortgage Interest Rate set forth in the Mortgage Note is fixed for the term of
such Mortgage Loan.
Flood Zone Service Contract: A transferable contract maintained for
the Mortgaged Property with a nationally recognized flood zone service provider
for the purpose of obtaining the current flood zone status relating to such
Mortgaged Property.
FNMA: Xxxxxx Xxx or any successor thereto.
FNMA Guide(s): The Xxxxxx Mae Selling Guide and the Xxxxxx Xxx
Servicing Guide and all amendments or additions thereto.
Gross Margin: With respect to any Adjustable Rate Mortgage Loan, the
fixed percentage amount set forth in the related Mortgage Note and the related
Mortgage Loan Schedule that is added to the Index on each Adjustment Date in
accordance with the terms of the related Mortgage Note to determine the new
Mortgage Interest Rate for such Mortgage Loan.
HUD: The United States Department of Housing and Urban Development or
any successor thereto.
Index: With respect to any Adjustable Rate Mortgage Loan, the index
identified on the Mortgage Loan Schedule and set forth in the related Mortgage
Note for the purpose of calculating the interest rate thereon.
Initial Closing Date: The Closing Date on which the Initial Purchaser
purchases and the Seller sells the first Mortgage Loan Package hereunder.
Initial Purchaser: HSBC Bank USA, National Association, or any
successor or assign.
Insurance Proceeds: With respect to each Mortgage Loan, proceeds of
insurance policies insuring the Mortgage Loan or the related Mortgaged Property.
Liquidation Proceeds: Amounts, other than Insurance Proceeds and
Condemnation Proceeds, received 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 REO Property.
5
Loan-to-Value Ratio or LTV: With respect to any Mortgage Loan as of
any date of determination, the ratio on such date of the outstanding principal
amount of the Mortgage Loan, to the Appraised Value of the Mortgaged Property.
Master Servicer: With respect to any Pass-Through Transfer, the
"master servicer", if any, specified by the Purchaser and identified in the
related transaction documents.
Maximum Mortgage Interest Rate: With respect to each Adjustable Rate
Mortgage Loan, a rate that is set forth on the related Mortgage Loan Schedule
and in the related Mortgage Note and is the maximum interest rate to which the
Mortgage Interest Rate on such Mortgage Loan may be increased on any Adjustment
Date.
MERS: Mortgage Electronic Registration Systems, Inc., a corporation
organized and existing under the laws of the State of Delaware, or any successor
thereto.
MERS(R) System: The system of recording transfers of Mortgages
electronically maintained by MERS.
MIN: The Mortgage Identification Number of Mortgage Loans registered
with MERS on the MERS(R) System.
Minimum Mortgage Interest Rate: With respect to each Adjustable Rate
Mortgage Loan, a rate that is set forth on the related Mortgage Loan Schedule
and in the related Mortgage Note and is the minimum interest rate to which the
Mortgage Interest Rate on such Mortgage Loan may be decreased on any Adjustment
Date.
MOM Loan: Any Mortgage Loan where MERS acts as the mortgagee of record
of such Mortgage Loan, solely as nominee for the originator of such Mortgage
Loan and its successors and assigns, at the origination thereof.
Monthly Advance: The aggregate of the advances made by the Servicer on
any Distribution Date pursuant to Subsection 11.34.
Monthly Payment: With respect to any Mortgage Loan, the scheduled
combined payment of principal and interest (including any Balloon Payment)
payable by a Mortgagor under the related Mortgage Note on each Due Date.
Moody's: Xxxxx'x Investors Service, Inc. or its successor in interest.
Mortgage: The mortgage, deed of trust or other instrument creating a
first or second lien on Mortgaged Property securing the Mortgage Note.
Mortgage File: The items pertaining to a particular Mortgage Loan
referred to in Exhibit 5 annexed hereto, and any additional documents required
to be added to the Mortgage File pursuant to this Agreement or the related
Confirmation.
Mortgage Interest Rate: With respect to each Fixed Rate Mortgage Loan,
the fixed annual rate of interest provided for in the related Mortgage Note and,
with respect to each
6
Adjustable Rate Mortgage Loan, the annual rate that interest accrues on such
Adjustable Rate Mortgage Loan from time to time in accordance with the
provisions of the related Mortgage Note.
Mortgage Loan: Each first or second lien, residential mortgage loan,
sold, assigned and transferred to the Purchaser pursuant to this Agreement and
the related Confirmation and identified on the Mortgage Loan Schedule annexed to
this Agreement on such Closing Date, which Mortgage Loan includes without
limitation the Mortgage File, the Monthly Payments, Principal Prepayments
(including any Prepayment Charges), Liquidation Proceeds, Condemnation Proceeds,
Insurance Proceeds, REO Disposition proceeds, and all other rights, benefits,
proceeds and obligations arising from or in connection with such Mortgage Loan.
Mortgage Loan Documents: The documents listed in Exhibit 13 hereto
pertaining to any Mortgage Loan.
Mortgage Loan Package: The Mortgage Loans listed on a Mortgage Loan
Schedule, delivered to the Custodian and the Initial Purchaser at least five (5)
Business Days prior to the related Closing Date and attached to the related
Assignment and Conveyance on the related Closing Date.
Mortgage Loan Schedule: With respect to each Mortgage Loan Package,
the schedule of Mortgage Loans to be annexed to the related Assignment and
Conveyance on the related Closing Date for the Mortgage Loan Package delivered
on such Closing Date in electronic form, such schedule setting forth the
following information with respect to each Mortgage Loan in the Mortgage Loan
Package: (1) the Seller's Mortgage Loan identifying number; (2) the Mortgagor's
first and last name; (3) the street address of the Mortgaged Property including
the state and zip code; (4) a code indicating whether the Mortgaged Property is
owner-occupied; (5) the type of Residential Dwelling constituting the Mortgaged
Property; (6) the original months to maturity; (7) the original date of the
Mortgage Loan and the remaining months to maturity from the Cut-off Date, based
on the original amortization schedule; (8) the Loan-to-Value Ratio or Combined
Loan-to-Value Ratio at origination; (9) the Mortgage Interest Rate in effect
immediately following the Cut-off Date; (10) the date on which the first Monthly
Payment was due on the Mortgage Loan; (11) the stated maturity date; (12) the
amount of the Monthly Payment at origination; (13) the amount of the Monthly
Payment as of the Cut-off Date; (14) the last Due Date on which a Monthly
Payment was actually applied to the unpaid Stated Principal Balance; (15) the
original principal amount of the Mortgage Loan and with respect to second liens
the related first lien on the Mortgaged Property; (16) the Stated Principal
Balance of the Mortgage Loan and with respect to second liens the principal
balance of the related first lien on the Mortgaged Property as of the close of
business on the Cut-off Date; (17) with respect to each Adjustable Rate Mortgage
Loan, the first Adjustment Date; (18) with respect to each Adjustable Rate
Mortgage Loan, the Gross Margin; (19) a code indicating the purpose of the loan
(i.e., purchase financing, Rate/Term Refinancing, Cash-Out Refinancing); (20)
with respect to each Adjustable Rate Mortgage Loan, the Maximum Mortgage
Interest Rate under the terms of the Mortgage Note; (21) with respect to each
Adjustable Rate Mortgage Loan, the Minimum Mortgage Interest Rate under the
terms of the Mortgage Note; (22) the Mortgage Interest Rate at origination; (23)
with respect to each Adjustable Rate Mortgage Loan, the Periodic Rate Cap; (24)
with respect to each Adjustable Rate Mortgage Loan, the first Adjustment Date
immediately
7
following the Cut-off Date; (25) with respect to each Adjustable Rate Mortgage
Loan, the Index; (26) the date on which the first Monthly Payment was due on the
Mortgage Loan and, if such date is not consistent with the Due Date currently in
effect, such Due Date; (27) a code indicating the documentation style (i.e.,
full (providing two years employment verification - 2 years W-2's and current
pay stub or 2 years 1040's for self employed borrowers), alternative or
reduced); (28) a code indicating whether the Mortgage Loan is an Adjustable Rate
Mortgage Loan or a Fixed Rate Mortgage Loan; (29) the Appraised Value of the
Mortgaged Property; (30) the sale price of the Mortgaged Property, if
applicable; (31) a code indicating whether the Mortgage Loan is subject to a
Prepayment Charge or penalty; (32) the amount and the term of any Prepayment
Charge or penalty; (33) with respect to each MERS Mortgage Loan, the related
MIN; (34) a code indicating if the Mortgage Loan is a Negative Amortization
Mortgage Loan; (35) a code indicating if the Mortgage Loan is an interest-only
Mortgage Loan and, if so, the term of the interest-only period of such Mortgage
Loan; (36) a code indicating whether the Mortgage Loan is a first or second
lien; (37) a code indicating whether the Mortgage Loan is a Balloon Mortgage
Loan and, if so, the term of the Balloon Mortgage Loan and the amount of the
Balloon Payment scheduled to be due at maturity assuming no Principal
Prepayments; (38) a code indicating whether a borrower is a non-resident alien;
(39) a code indicating whether a borrower is in bankruptcy; (40) the points and
fees charged in connection with the origination of such Mortgage Loan; and (41)
a code indicating if the Mortgage Loan is subject to a Primary Insurance Policy,
and if so, the insurer. With respect to the Mortgage Loan Package in the
aggregate, the Mortgage Loan Schedule shall set forth the following information,
as of the related Cut-off Date: (1) the number of Mortgage Loans; (2) the
current principal balance of the Mortgage Loans; (3) the weighted average
Mortgage Interest Rate of the Mortgage Loans; and (4) the weighted average
maturity of the Mortgage Loans. Schedule I hereto shall be supplemented as of
each Closing Date to reflect the addition of the Mortgage Loan Schedule with
respect to the related Mortgage Loan Package.
Mortgage Note: The original executed note or other evidence of the
Mortgage Loan indebtedness of a Mortgagor.
Mortgaged Property: The Mortgagor's real property securing repayment
of a related Mortgage Note, consisting of a fee simple interest in a single
parcel of real property improved by a Residential Dwelling.
Mortgagee: The mortgagee or beneficiary named in the Mortgage and the
successors and assigns of such mortgagee or beneficiary.
Mortgagor: The obligor on a Mortgage Note, the owner of the Mortgaged
Property and the grantor or mortgagor named in the related Mortgage and such
grantor's or mortgagor's successors in title to the Mortgaged Property.
Negative Amortization: With respect to each Negative Amortization
Mortgage Loan, that portion of interest accrued at the Mortgage Interest Rate in
any month that 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.
8
Negative Amortization Mortgage Loan: Each Mortgage Loan that is
identified on the Mortgage Loan Schedule as a Mortgage Loan that may be subject
to Negative Amortization.
Net Mortgage Rate: With respect to any Mortgage Loan (or the related
REO Property), as of any date of determination, a per annum rate of interest
equal to the then applicable Mortgage Interest Rate for such Mortgage Loan minus
the Servicing Fee Rate.
Officer's Certificate: A certificate signed by the Chairman of the
Board or the Vice Chairman of the Board or a President or a Vice President and
by the Treasurer or the Secretary or one of the Assistant Treasurers or
Assistant Secretaries of the Person on behalf of whom such certificate is being
delivered.
Opinion of Counsel: A written opinion of counsel, who may be salaried
counsel for the Person on behalf of whom the opinion is being given, reasonably
acceptable to each Person to whom such opinion is addressed.
Pass-Through Transfer: Any transaction involving either (1) a sale or
transfer of some or all of the Mortgage Loans directly or indirectly to an
issuing entity in connection with an issuance of publicly offered or privately
placed, rated or unrated mortgage-backed securities or (2) an issuance of
publicly offered or privately placed, rated or unrated securities, the payments
on which are determined primarily by reference to one or more portfolios of
residential mortgage loans consisting, in whole or in part, of some or all of
the Mortgage Loans.
Payment Adjustment Date: With respect to each Negative Amortization
Mortgage Loan, the date on which Monthly Payments shall be adjusted. A Payment
Adjustment Date with respect to a Negative Amortization Mortgage Loan shall
occur on each anniversary date of the first payment date for the Mortgage Loan.
Periodic Rate Cap: With respect to each Adjustable Rate Mortgage Loan
and any Adjustment Date therefor, a number of percentage points per annum that
is set forth in the related Mortgage Loan Schedule and in the related Mortgage
Note, which is the maximum amount by which the Mortgage Interest Rate for such
Adjustable Rate Mortgage Loan may increase (without regard to the Maximum
Mortgage Interest Rate) or decrease (without regard to the Minimum Mortgage
Interest Rate) on such Adjustment Date from the Mortgage Interest Rate in effect
immediately prior to such Adjustment Date.
Person: An individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
Prepayment Charge: With respect to any Mortgage Loan, any prepayment
penalty or premium thereon payable in connection with a Principal Prepayment on
such Mortgage Loan pursuant to the terms of the related Mortgage Note.
Prepayment Charge Schedule: The schedule to be annexed hereto as
Schedule II indicating whether a Mortgage Loan is subject to a Prepayment Charge
and if so, the amount and term of such Prepayment Charge.
9
Primary Insurance Policy: A policy of primary mortgage guaranty
insurance issued by a Qualified Insurer.
Principal Prepayment: Any payment or other recovery of principal on a
Mortgage Loan which is received in advance of its scheduled Due Date, including
any Prepayment Charge, which is not accompanied by an amount of interest
representing scheduled interest due on any date or dates in any month or months
subsequent to the month of prepayment.
Purchase Price: The price paid on the related Closing Date by the
Initial Purchaser to the Seller pursuant to the related Confirmation in exchange
for the Mortgage Loans purchased on such Closing Date as calculated as provided
in Section 4.
Purchaser: The Initial Purchaser or the Person, if any, to which the
Initial Purchaser has assigned its rights and obligations thereunder as
Purchaser with respect to a Mortgage Loan, and each of their respective
successors and assigns.
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.
Qualified Insurer: An insurance company duly qualified as such under
the laws of the states in which the Mortgaged Property is located, duly
authorized and licensed in such states to transact the applicable insurance
business and to write the insurance provided, and approved as an insurer by FNMA
and FHLMC and whose claims paying ability is rated in the two highest rating
categories by the nationally recognized rating agencies with respect to primary
mortgage insurance and in the two highest rating categories by Best's Key Rating
Guide with respect to hazard and flood insurance.
Qualified Substitute Mortgage Loan: A mortgage loan substituted for a
Deleted Mortgage Loan pursuant to the terms of this Agreement which must, on the
date of such substitution, (i) have an outstanding principal balance, after
application of all scheduled payments of principal and interest due during or
prior to the month of substitution, not in excess of the Stated Principal
Balance of the Deleted Mortgage Loan as of the Due Date in the calendar
10
month during which the substitution occurs, (ii) have a Mortgage Interest Rate
not less than (and not more than one percentage point in excess of) the Mortgage
Interest Rate of the Deleted Mortgage Loan, (iii) have a remaining term to
maturity not greater than (and not more than one year less than) that of the
Deleted Mortgage Loan, (iv) have the same Due Date as the Due Date on the
Deleted Mortgage Loan, (v) have a Loan-to-Value Ratio, and in the case of a
second lien Mortgage Loan, a Combined Loan-to-Value Ratio as of the date of
substitution equal to or lower than the Loan-to-Value Ratio or Combined
Loan-to-Value Ratio, as the case may be, of the Deleted Mortgage Loan as of such
date, (vi) conform to each representation and warranty set forth in Subsection
7.02 of this Agreement, (vii) be the same type of mortgage loan (i.e. fixed or
adjustable rate with the same Gross Margin and Index as the Deleted Mortgage
Loan) and (viii) be covered under a Primary Insurance Policy if such Qualified
Substitute Mortgage Loan has a Loan-to-Value Ratio in excess of 80%. In the
event that one or more mortgage loans are substituted for one or more Deleted
Mortgage Loans, the amounts described in clause (i) hereof shall be determined
on the basis of aggregate principal balances, the Mortgage Interest Rates
described in clause (ii) hereof shall be determined on the basis of weighted
average Mortgage Interest Rates and shall be satisfied as to each such mortgage
loan, the terms described in clause (iii) shall be determined on the basis of
weighted average remaining terms to maturity, the Loan-to-Value Ratios, and in
the case of second lien Mortgage Loans the Combined Loan-to-Value Ratios
described in clause (v) hereof shall be satisfied as to each such mortgage loan
and, except to the extent otherwise provided in this sentence, the
representations and warranties described in clause (vii) hereof must be
satisfied as to each Qualified Substitute Mortgage Loan or in the aggregate, as
the case may be.
Rate/Term Refinancing: A Refinanced Mortgage Loan, the proceeds of
which are not in excess of the existing first mortgage loan on the related
Mortgaged Property and related closing costs, and were used exclusively to
satisfy the then existing first mortgage loan of the Mortgagor on the related
Mortgaged Property and to pay related closing costs.
Reconstitution: Any Pass-Through Transfer or Whole Loan Transfer.
Reconstitution Agreement: The agreement or agreements entered into by
the Seller, the Servicer and the Purchaser and/or certain third parties on the
Reconstitution Date or Dates with respect to any or all of the Mortgage Loans
serviced hereunder, in connection with a Whole Loan Transfer or a Pass-Through
Transfer as provided in Section 12.
Reconstitution Date: The date or dates on which any or all of the
Mortgage Loans serviced under this Agreement shall be removed from this
Agreement and reconstituted as part of a Whole Loan Transfer or Pass-Through
Transfer pursuant to Section 12 hereof.
Record Date: With respect to each Distribution Date, the last Business
Day of the month immediately preceding the month in which such Distribution Date
occurs.
Refinanced Mortgage Loan: A Mortgage Loan the proceeds of which were
not used to purchase the related Mortgaged Property.
Regulation AB: Subpart 229.1100 - Asset Backed Securities (Regulation
AB), 17 C.F.R. Sections 229.1100-229.1123, as such may be amended from time to
time, and subject to such
11
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 Code.
REMIC Provisions: Provisions of the federal income tax law relating to
REMICs, which appear in Sections 860A through 860G of the Code, and related
provisions, and proposed, temporary and final regulations and published rulings,
notices and announcements promulgated thereunder, as the foregoing may be in
effect from time to time.
REO Account: The separate trust account or accounts created and
maintained pursuant to this Agreement which shall be entitled "SunTrust
Mortgage, Inc., in trust for the Purchaser, as of [date of acquisition of
title], Fixed and Adjustable Rate Mortgage Loans".
REO Disposition: The final sale by the Servicer of any REO Property.
REO Property: A Mortgaged Property acquired as a result of the
liquidation of a Mortgage Loan.
Repurchase Price: The Repurchase Price for any Mortgage Loan that is
required to be repurchased pursuant to Section 7.04 shall be equal to the sum of
(i) the Stated Principal Balance of such Mortgage Loan plus (ii) interest on
such Stated Principal Balance at the Mortgage Interest Rate from and including
the last Due Date through which interest has been paid by or on behalf of the
Mortgagor to the day immediately prior to the date of repurchase (unless the
Mortgage Loan has been the subject of a Pass-Through Transfer, in which case the
measurement date for accrual of interest on such Stated Principal Balance shall
be the first day of the month following the date of repurchase), less amounts
received in respect of such repurchased Mortgage Loan which are being held in
the Custodial Account for distribution in connection with such Mortgage Loan,
plus (iii) any unreimbursed servicing advances and monthly advances (including
nonrecoverable monthly advances) allocable to such Mortgage Loan paid by any
party other than the Servicer and any unpaid servicing fees allocable to such
Mortgage Loan payable to any party other than Servicer, plus, with respect to a
repurchase pursuant to a breach of the representations and warranties contained
in Sections 7.02(viii), 7.02(xl) and 7.02(lix), (iv) any costs and expenses
incurred by the Purchaser, the servicer, master servicer or any trustee in
respect of the breach or defect giving rise to the repurchase obligation
including, without limitation, any costs and damages incurred by any such party
in connection with any violation by any such Mortgage Loan of any predatory or
abusive lending law.
Residential Dwelling: Any one of the following: (i) a detached
one-family dwelling, (ii) a detached two- to four-family dwelling, (iii) a
one-family dwelling unit in a FNMA eligible condominium project, or (iv) a
detached one-family dwelling in a planned unit development, none of which is a
co-operative, mobile or manufactured home.
Securities Act: The Securities Act of 1933, as amended.
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Servicing Addendum: The terms and conditions attached hereto as
Exhibit 9, which will govern the servicing of the Mortgage Loans by Servicer.
Servicing Advances: All customary, reasonable and necessary
"out-of-pocket" costs and expenses incurred by the Servicer in the performance
of its servicing obligations, including, but not limited to, the cost of (i)
preservation, restoration and repair of a Mortgaged Property, (ii) any
enforcement or judicial proceedings with respect to a Mortgage Loan, including
foreclosure actions and (iii) the management and liquidation of REO Property.
Servicing Criteria: The "servicing criteria" identified as applicable
to Servicer on Exhibit 15 hereto, as it may be amended by the parties from time
to time.
Servicing Fee: With respect to each Mortgage Loan, the amount of the
annual servicing fee the Purchaser shall pay to the Seller, which shall, for
each month, be equal to one-twelfth of the product of (a) the Servicing Fee Rate
and (b) the unpaid principal balance of the Mortgage Loan. Such fee shall be
payable monthly, computed on the basis of the same principal amount and period
respectively on which any related interest payment on a Mortgage Loan is
computed. The obligation of the Purchaser to pay the Servicing Fee is limited
to, and payable solely from, the interest portion (including recoveries with
respect to interest from Liquidation Proceeds and other proceeds, to the extent
permitted by Section 11.05) of related Monthly Payment collected by the Seller,
or as otherwise proved under Section 11.05.
Servicing Fee Rate: The per annum rate at which the Servicing Fee
accrues, which rate shall be specified on the Mortgage Loan Schedule.
Servicing File: With respect to each Mortgage Loan, the file retained
by the Seller consisting of originals of all documents in the Mortgage File,
which are not delivered to the Purchaser, or the Custodian and copies of the
Mortgage Loan Documents set forth in Exhibit 13 hereto.
S&P: Standard & Poor's Ratings Group or its successor in interest.
Stated Principal Balance: As to each Mortgage Loan as of any date of
determination, (i) the principal balance of the Mortgage Loan as of the Cut-off
Date after giving effect to payments of principal due on or before such date,
whether or not collected from the Mortgagor on or before such date, minus (ii)
all amounts previously distributed to the Purchaser with respect to the related
Mortgage Loan representing payments or recoveries of principal, plus (iii) the
cumulative amount of any Negative Amortization.
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.
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Subservicer: Any Person that services Mortgage Loans on behalf of the
Servicer or any Subservicer and is responsible for the performance (whether
directly or through Subservicers or Subcontractors) of a substantial portion of
the material servicing functions required to be performed by the Servicer under
this Agreement or any Reconstitution Agreement that are identified in Item
1122(d) of Regulation AB.
Sub-Servicing Agreement: The written contract between the Servicer and
a Subservicer relating to servicing and administration of certain Mortgage Loans
as provided in Section 11.30 of this Agreement.
Tax Service Contract: A transferable contract maintained for the
Mortgaged Property with a tax service provider for the purpose of obtaining
current information from local taxing authorities relating to such Mortgaged
Property.
Third-Party Originator: Each Person, other than a Qualified
Correspondent, that originated Mortgage Loans acquired by the Seller.
Underwriting Guidelines: The Seller's written underwriting guidelines
attached hereto as Exhibit 14 as in effect with respect to the Mortgage Loans
purchased by Initial Purchaser on the Initial Closing Date, as may be amended,
supplemented or modified from time to time.
Whole Loan Transfer: Any sale or transfer of some or all of the
Mortgage Loans, other than a Pass-Through Transfer.
SECTION 2. Agreement to Purchase.
The Seller agrees to sell, and the Purchaser agrees to purchase, from
time-to-time, Mortgage Loans having an aggregate principal balance on the
related Cut-off Date in an amount as set forth in the related Confirmation, or
in such other amount as agreed by the Purchaser and the Seller as evidenced by
the actual aggregate principal balance of the Mortgage Loans accepted by the
Purchaser on the related Closing Date.
SECTION 3. Mortgage Loan Schedules.
The Seller shall deliver the Mortgage Loan Schedule for a Mortgage
Loan Package to be purchased on a particular Closing Date to the Purchaser at
least five (5) Business Days prior to the related Closing Date.
SECTION 4. Purchase Price.
The Purchase Price for each Mortgage Loan listed on the related
Mortgage Loan Schedule shall be the percentage of par as stated in the related
Confirmation (subject to adjustment as provided therein), multiplied by its
Stated Principal Balance as of the related Cut-off Date. If so provided in the
related Confirmation, portions of the Mortgage Loans shall be priced separately.
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In addition to the Purchase Price as described above, the Initial
Purchaser shall pay to the Seller, at closing, accrued interest on the Stated
Principal Balance of each Mortgage Loan as of the related Cut-off Date at its
Mortgage Interest Rate, net of the Servicing Fee, from the related Cut-off Date
through the day prior to the related Closing Date, both inclusive.
The Purchaser shall own and be entitled to receive with respect to
each Mortgage Loan purchased, (1) all scheduled principal due after the related
Cut-off Date, (2) all other recoveries of principal and any Prepayment Charges
collected after the related Cut-off Date (provided, however, that all scheduled
payments of principal due on or before the related Cut-off Date and collected by
the Seller after the related Cut-off Date shall belong to the Seller), and (3)
all payments of interest on the Mortgage Loans at the Net Mortgage Rate (minus
that portion of any such interest payment that is allocable to the period prior
to the related Cut-off Date). The Stated Principal Balance of each Mortgage Loan
as of the related Cut-off Date is determined after application to the reduction
of principal of payments of principal due on or before the related Cut-off Date
whether or not collected. Therefore, for the purposes of this Agreement,
payments of scheduled principal and interest prepaid for a Due Date beyond the
related Cut-off Date shall not be applied to the principal balance as of the
related Cut-off Date. Such prepaid amounts (minus the applicable Servicing Fee)
shall be the property of the Purchaser. The Seller shall deposit any such
prepaid amounts into the Custodial Account, which account is established for the
benefit of the Purchaser, for remittance by the Seller to the Purchaser on the
first related Distribution Date. All payments of principal and interest, less
the applicable Servicing Fee, due on a Due Date following the related Cut-off
Date shall belong to the Purchaser.
SECTION 5. Examination of Mortgage Files.
In addition to the rights granted to the Initial Purchaser under the
related Confirmation to underwrite the Mortgage Loans and review the Mortgage
Files prior to the Closing Date, prior to the related Closing Date, the Seller,
or Servicer, as applicable, shall, at the Purchaser's option (a) deliver to the
Custodian in escrow, for examination with respect to each Mortgage Loan to be
purchased on such Closing Date, the related Mortgage File, including the
Assignment of Mortgage, pertaining to each Mortgage Loan, or (b) make the
related Mortgage File available to the Initial Purchaser for examination at the
Seller's offices or such other location as shall otherwise be agreed upon by the
Initial Purchaser and the Seller. Such examination may be made by the Initial
Purchaser or its designee at any reasonable time before or after the related
Closing Date. If the Initial Purchaser makes such examination prior to the
related Closing Date and identifies any Mortgage Loans that do not conform to
the terms of the related Confirmation, the terms of this Agreement or the
Underwriting Guidelines, such Mortgage Loans may, at the Initial Purchaser's
option, be rejected for purchase by the Initial Purchaser. If not purchased by
the Initial Purchaser, such Mortgage Loans shall be deleted from the related
Mortgage Loan Schedule. The Initial Purchaser may, at its option and without
notice to the Seller, purchase all or part of any Mortgage Loan Package without
conducting any partial or complete examination. The fact that the Initial
Purchaser has conducted or has determined not to conduct any partial or complete
examination of the Mortgage Files shall not affect the Initial Purchaser's (or
any of its successors') rights to demand repurchase or other relief or remedy
provided for in this Agreement.
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SECTION 6. Conveyance from Seller to Initial Purchaser.
Subsection 6.01. Conveyance of Mortgage Loans; Possession of Servicing
Files.
The Seller, simultaneously with the payment of the Purchase Price,
shall execute and deliver to the Initial Purchaser an Assignment and Conveyance
with respect to the related Mortgage Loan Package in the form attached hereto as
Exhibit 4. The Servicing File retained by the Servicer with respect to each
Mortgage Loan pursuant to this Agreement shall be appropriately identified in
the Servicer's computer system to reflect clearly the sale of such related
Mortgage Loan to the Purchaser. The Purchaser shall be entitled to receive all
Prepayment Charges required to be paid by a Mortgagor under the terms of any
Mortgage Loan. The Servicer shall release from its custody the contents of any
Servicing File retained by it only in accordance with this Agreement, except
when such release is required in connection with a repurchase of any such
Mortgage Loan pursuant to Subsection 7.03 or 7.04.
Subsection 6.02. Books and Records.
Record title to each Mortgage and the related Mortgage Note as of the
related Closing Date shall be in the name of the Seller, the Servicer, the
Purchaser, the Custodian or one or more designees of the Initial Purchaser, as
the Initial Purchaser shall designate. Notwithstanding the foregoing, beneficial
ownership of each Mortgage and the related Mortgage Note shall be vested solely
in the Purchaser or the appropriate designee of the Purchaser, as the case may
be. All rights arising out of the Mortgage Loans including, but not limited to,
all funds received by the Seller after the related Cut-off Date on or in
connection with a Mortgage Loan as provided in Section 4 shall be vested in the
Purchaser or one or more designees of the Purchaser; provided, however, that all
such funds received on or in connection with a Mortgage Loan as provided in
Section 4 shall be received and held by the Seller in trust for the benefit of
the Purchaser or the assignee of the Purchaser, as the case may be, as the owner
of the Mortgage Loans pursuant to the terms of this Agreement.
It is the express intention of the parties that the transactions
contemplated by this Agreement be, and be construed as, a sale of the Mortgage
Loans by the Seller and not a pledge of the Mortgage Loans by the Seller to the
Purchaser to secure a debt or other obligation of the Seller. Consequently, the
sale of each Mortgage Loan shall be reflected as a sale on the Seller's business
records, tax returns and financial statements.
Subsection 6.03. Delivery of Mortgage Loan Documents.
The Seller or Servicer, as applicable, shall from time to time in
connection with each Closing Date, at least five (5) Business Days prior to such
Closing Date, deliver and release to the Custodian those Mortgage Loan Documents
set forth on Exhibit 13 hereto with respect to each Mortgage Loan to be
purchased and sold on the related Closing Date and set forth on the related
Mortgage Loan Schedule delivered with such Mortgage Loan Documents.
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The Servicer shall provide to each of the Purchaser and the Custodian
a notice containing a list of authorized servicing officers (each, an
"Authorized Representative") for the purpose of giving and receiving notices,
requests and instructions and delivering certificates and documents in
connection with this Agreement. Such notice shall contain the specimen signature
for each Authorized Representative. From time to time, the Servicer may, by
delivering to the others a revised notice, change the information previously
given pursuant to this Section, but each of the parties hereto shall be entitled
to rely conclusively on the then current notice until receipt of a superseding
notice.
The Custodian shall certify its receipt of all such Mortgage Loan
Documents required to be delivered pursuant to this Agreement for the related
Closing Date, as evidenced by the Trust Receipt and Initial Certification of the
Custodian in the form annexed to the Custodial Agreement. The fees and expenses
of the Custodian shall be paid by the Purchaser.
The Servicer shall forward to the Custodian original documents
evidencing an assumption, modification, consolidation or extension of any
Mortgage Loan entered into in accordance with this Agreement within two weeks of
their execution, provided, however, that the Servicer shall provide the
Custodian with a certified true copy of any such document submitted for
recordation within two weeks of its execution, and shall provide the original of
any document submitted for recordation or a copy of such document certified by
the appropriate public recording office to be a true and complete copy of the
original within ninety (90) days of its submission for recordation.
Subsection 6.04. Quality Control Procedures.
The Seller shall have an internal quality control program that
verifies, on a regular basis, the existence and accuracy of the legal documents,
credit documents, property appraisals, and underwriting decisions. Such program
shall include evaluating and monitoring the overall quality of the Seller's loan
production and the servicing activities of the Seller. Such program is to ensure
that the Mortgage Loans are originated and serviced in accordance with Accepted
Servicing Standards and the Underwriting Guidelines; guard against dishonest,
fraudulent, or negligent acts; and guard against errors and omissions by
officers, employees, or other authorized persons.
SECTION 7. Representations, Warranties and Covenants of the Seller:
Remedies for Breach.
Subsection 7.01. Representations and Warranties Respecting the Seller.
(a) The Seller represents, warrants and covenants to the Initial
Purchaser and to any subsequent Purchaser as of the Initial Closing Date and
each subsequent Closing Date or as of such date specifically provided herein or
in the applicable Assignment and Conveyance:
(i) The Seller is a corporation duly organized, validly existing
and in good standing under the laws of Virginia. The Seller has all
licenses necessary to carry out its business as now being conducted, and is
licensed and qualified to transact business in and is in good standing
under the laws of each state in which any Mortgaged Property
17
is located or is otherwise exempt under applicable law from such licensing
or qualification or is otherwise not required under applicable law to
effect such licensing or qualification and no demand for such licensing or
qualification has been made upon the Seller by any such state, and in any
event the Seller is in compliance with the laws of any such state to the
extent necessary to ensure the enforceability of each Mortgage Loan and the
servicing of the Mortgage Loans in accordance with the terms of this
Agreement. No licenses or approvals obtained by the Seller have been
suspended or revoked by any court, administrative agency, arbitrator or
governmental body and no proceedings are pending which might result in such
suspension or revocation;
(ii) The Seller 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 Seller has duly authorized the execution, delivery and
performance of this Agreement, and has duly executed and delivered this
Agreement, and this Agreement, assuming due authorization, execution and
delivery by the Purchaser, constitutes a legal, valid and binding
obligation of the Seller, enforceable against it in accordance with its
terms except as the enforceability thereof may be limited by bankruptcy,
insolvency or reorganization provisions;
(iii) The execution and delivery of this Agreement by the Seller
and the performance of and compliance with the terms of this Agreement by
the Seller, will not violate the Seller's articles of incorporation or
by-laws or constitute a default under or result in a breach or acceleration
of, any material contract, agreement or other instrument to which the
Seller is a party or which may be applicable to the Seller or its assets;
(iv) The Seller is not in violation of, and the execution and
delivery of this Agreement by the Seller and its performance and compliance
with the terms of this Agreement will not constitute a violation with
respect to, any order or decree of any court or any order or regulation of
any federal, state, municipal or governmental agency having jurisdiction
over the Seller or its assets, which violation might have consequences that
would materially and adversely affect the condition (financial or
otherwise) or the operation of the Seller or its assets or might have
consequences that would materially and adversely affect the performance of
its obligations and duties hereunder;
(v) The Seller is an approved seller/servicer for FNMA and FHLMC
in good standing and is a HUD approved mortgagee pursuant to Section 203 of
the National Housing Act. No event has occurred, including but not limited
to a change in insurance coverage, which would make the Seller unable to
comply with FNMA, FHLMC or HUD eligibility requirements or which would
require notification to FNMA, FHLMC or HUD;
(vi) The Seller does not believe, nor does it have any reason or
cause to believe, that it cannot perform each and every covenant by it
contained in this Agreement;
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(vii) The Mortgage Note, the Mortgage, the Assignment of Mortgage
and any other documents required to be delivered with respect to each
Mortgage Loan pursuant to this Agreement, have been delivered to the
Custodian all in compliance with the specific requirements of this
Agreement. With respect to each Mortgage Loan, the Seller is in possession
of a complete Mortgage File in compliance with Exhibit 5, except for such
documents as have been delivered to the Custodian;
(viii) Immediately prior to the payment of the Purchase Price for
each Mortgage Loan, the Seller was the owner of record of the related
Mortgage and the indebtedness evidenced by the related Mortgage Note and
upon the payment of the Purchase Price by the Purchaser, in the event that
the Seller retains record title, the Seller shall retain such record title
to each Mortgage, each related Mortgage Note and the related Mortgage Files
with respect thereto in trust for the Purchaser as the owner thereof and
only for the purpose of servicing and/or supervising the servicing of each
Mortgage Loan;
(ix) There are no actions or proceedings against, or
investigations of, the Seller before any court, administrative agency or
other tribunal (A) that might prohibit its entering into this Agreement,
(B) seeking to prevent the sale of the Mortgage Loans or the consummation
of the transactions contemplated by this Agreement or (C) that might
prohibit or materially and adversely affect the performance by the Seller
of its obligations under, or the validity or enforceability of, this
Agreement;
(x) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by the Seller of, or compliance by the Seller with, this
Agreement or the consummation of the transactions contemplated by this
Agreement, except for such consents, approvals, authorizations or orders,
if any, that have been obtained prior to the related Closing Date;
(xi) 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;
(xii) The transfer of the Mortgage Loans shall be treated as a
sale on the books and records of the Seller, and the Seller has determined
that, and will treat, the disposition of the Mortgage Loans pursuant to
this Agreement for tax and accounting purposes as a sale. The Seller shall
maintain a complete set of books and records for each Mortgage Loan which
shall be clearly marked to reflect the ownership of each Mortgage Loan by
the Purchaser;
(xiii) The consideration received by the Seller upon the sale of
the Mortgage Loans constitutes fair consideration and reasonably equivalent
value for such Mortgage Loans;
19
(xiv) The Seller is solvent and will not be rendered insolvent by
the consummation of the transactions contemplated hereby. The Seller is not
transferring any Mortgage Loan with any intent to hinder, delay or defraud
any of its creditors;
(xv) The information delivered by the Seller to the Purchaser
with respect to the Seller's loan loss, foreclosure and delinquency
experience for the twelve (12) months immediately preceding the Initial
Closing Date on mortgage loans underwritten to the same standards as the
Mortgage Loans and covering mortgaged properties similar to the Mortgaged
Properties, is true and correct in all material respects;
(xvi) Neither this Agreement nor any written statement, report or
other document prepared and furnished or to be prepared and furnished by
the Seller pursuant to this Agreement or in connection with the
transactions contemplated hereby contains any untrue statement of material
fact or omits to state a material fact necessary to make the statements
contained herein or therein not misleading;
(xvii) The Seller is a member of MERS, will comply in all
material respects with the rules and procedures of MERS in connection with
the servicing of the Mortgage Loans that are registered with MERS and is
current in payment of all fees and assessments imposed by MERS; and
(xviii) 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.
Subsection 7.02. Representations and Warranties Regarding Individual
Mortgage Loans.
The Seller hereby represents and warrants to the Initial Purchaser and
to any subsequent Purchaser that, as to each Mortgage Loan, as of the related
Closing Date for such Mortgage Loan:
(i) The information set forth in the related Mortgage Loan
Schedule and the mortgage loan data delivered to the Purchaser are
complete, true and correct;
(ii) The Mortgage Loan is in compliance with all requirements set
forth in the related Confirmation, and the characteristics of the related
Mortgage Loan Package as set forth in the related Confirmation are true and
correct; provided, however, that in the event of any conflict between the
terms of any Confirmation and this Agreement, the terms of this Agreement
shall control;
(iii) All payments required to be made up to the close of
business on the Closing Date for such Mortgage Loan under the terms of the
Mortgage Note have been made; the Seller has not advanced funds, or
induced, solicited or knowingly received any advance of funds from a party
other than the owner of the related Mortgaged Property, directly or
indirectly, for the payment of any amount required by the Mortgage Note or
Mortgage; no Mortgage Loan is thirty (30) or more days delinquent as
20
of the Closing Date and there has been no delinquency, exclusive of any
period of grace, in any payment by the Mortgagor thereunder since the
origination of the Mortgage Loan;
(iv) There are no delinquent taxes, ground rents, water charges,
sewer rents, assessments, insurance premiums, leasehold payments, including
assessments payable in future installments or other outstanding charges
affecting the related Mortgaged Property;
(v) The terms of the Mortgage Note and the Mortgage have not been
impaired, waived, altered or modified in any respect, except by written
instruments, recorded in the applicable public recording office if
necessary to maintain the lien priority of the Mortgage, and which have
been delivered to the Custodian; the substance of any such waiver,
alteration or modification has been approved by the insurer under the
Primary Insurance Policy, if any, and has been approved by the title
insurer, to the extent required by the related policy, and is reflected on
the related Mortgage Loan Schedule. No instrument of waiver, alteration or
modification has been executed, and no Mortgagor has been released, in
whole or in part, except in connection with an assumption agreement
approved by the insurer under the Primary Insurance Policy, if any, and by
the title insurer, to the extent required by the policy, and which
assumption agreement has been delivered to the Custodian and the terms of
which are reflected in the related Mortgage Loan Schedule;
(vi) The Mortgage Note and the Mortgage are not subject to any
right of rescission, set-off, counterclaim or defense, including the
defense of usury, nor will the operation of any of the terms of the
Mortgage Note and the Mortgage, or the exercise of any right thereunder,
render the Mortgage unenforceable, in whole or in part, or subject to any
right of rescission, set-off, counterclaim or defense, including the
defense of usury and no such right of rescission, set-off, counterclaim or
defense has been asserted with respect thereto. Each Prepayment Charge or
penalty with respect to any Mortgage Loan is permissible, enforceable and
collectible under applicable federal, state and local law;
(vii) All buildings upon the Mortgaged Property are insured by a
Qualified Insurer acceptable to FNMA and FHLMC against loss by fire,
hazards of extended coverage and such other hazards as are customary in the
area where the Mortgaged Property is located, pursuant to insurance polices
providing coverage in an amount not less than the greatest of (i) 100% of
the replacement cost of all improvements to the Mortgaged Property, (ii)
either (A) the outstanding principal balance of the Mortgage Loan with
respect to each first lien Mortgage Loan or (B) with respect to each second
lien Mortgage Loan, the sum of the outstanding principal balance of the
related first lien mortgage loan and the outstanding principal balance of
the second lien Mortgage Loan, (iii) the amount necessary to avoid the
operation of any co-insurance provisions with respect to the Mortgaged
Property, and consistent with the amount that would have been required as
of the date of origination in accordance with the Underwriting Guidelines,
or (iv) the amount necessary to fully compensate for any damage or loss to
the improvements that are a part of such property on a replacement cost
basis. All such insurance policies contain a standard mortgagee clause
naming the Servicer, its successors and assigns as mortgagee and all
premiums thereon have been
21
paid. If the Mortgaged Property is in an area identified on a Flood Hazard
Map or Flood Insurance Rate Map issued by the Federal Emergency Management
Agency as having special flood hazards (and such flood insurance has been
made available) a flood insurance policy meeting the requirements of the
current guidelines of the Federal Insurance Administration is in effect
which policy conforms to the requirements of FNMA and FHLMC. The Mortgage
obligates the Mortgagor thereunder to maintain all such insurance at the
Mortgagor's cost and expense, and on the Mortgagor's failure to do so,
authorizes the holder of the Mortgage to maintain such insurance at
Mortgagor's cost and expense and to seek reimbursement therefor from the
Mortgagor;
(viii) Any and all requirements of any federal, state or local
law including, without limitation, usury, truth in lending, real estate
settlement procedures, predatory and abusive lending, fair lending,
consumer credit protection, equal credit opportunity, fair housing or
disclosure laws applicable to the origination and servicing of mortgage
loans of a type similar to the Mortgage Loans and applicable to any
prepayment penalty associated with the Mortgage Loans at origination have
been complied with;
(ix) The Mortgage has not been satisfied, cancelled, 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 satisfaction,
cancellation, subordination, rescission or release;
(x) The Mortgage (including any Negative Amortization which may
arise thereunder) is a valid, existing and enforceable (A) first lien and
first priority security interest with respect to each Mortgage Loan which
is indicated by the Seller to be a first lien (as reflected on the Mortgage
Loan Schedule), or (B) second lien and second priority security interest
with respect to each Mortgage Loan which is indicated by the Seller to be a
second lien (as reflected on the Mortgage Loan Schedule), in either case,
on the Mortgaged Property, including all improvements on the Mortgaged
Property 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 public record
as of the date of recording being acceptable to mortgage lending
institutions generally and specifically referred to in the lender's title
insurance policy delivered to the originator of the Mortgage Loan and which
do not adversely affect the Appraised Value of the Mortgaged Property, (c)
first lien and first priority security interest with respect to each
Mortgage Loan which is indicated by the Seller to be a second lien Mortgage
Loan (as reflected on the Mortgage Loan Schedule); and (d) 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, existing and enforceable first or second
lien and first or second priority security interest (in each case, as
indicated on the Mortgage Loan Schedule) on the property described therein
and the Seller has full right to sell and assign the same to the Purchaser.
The Mortgaged Property was not, as of the date of origination of the
Mortgage Loan, subject to a mortgage, deed
22
of trust, deed to secure debt or other security instrument creating a lien
subordinate to the lien of the Mortgage;
(xi) The Mortgage Note and the related Mortgage are genuine and
each is the legal, valid and binding obligation of the maker thereof,
enforceable in accordance with its terms;
(xii) All parties to the Mortgage Note and the Mortgage had legal
capacity to enter into the Mortgage Loan and to execute and deliver the
Mortgage Note and the Mortgage, and the Mortgage Note and the Mortgage have
been duly and properly executed by such parties. The Mortgagor is a natural
person;
(xiii) The proceeds of the Mortgage Loan have been fully
disbursed to or for the account of the Mortgagor and there is no obligation
for the Mortgagee to advance additional funds 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 have been paid, and the Mortgagor is not
entitled to any refund of any amounts paid or due to the Mortgagee pursuant
to the Mortgage Note or Mortgage;
(xiv) The Seller is the sole legal, beneficial and equitable
owner of the Mortgage Note and the Mortgage and has full right to transfer
and sell the Mortgage Loan to the Purchaser free and clear of any
encumbrance, equity, lien, pledge, charge, claim or security interest;
(xv) 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) in
compliance with any and all applicable "doing business" and licensing
requirements of the laws of the state wherein the Mortgaged Property is
located;
(xvi) The Mortgage Loan is covered by an American Land Title
Association ("ALTA") lender's title insurance policy (which, in the case of
an Adjustable Rate Mortgage Loan has an adjustable rate mortgage
endorsement in the form of ALTA 6.0 or 6.1) acceptable to Xxxxxx Xxx and
Xxxxxxx Mac, issued by a title insurer acceptable to Xxxxxx Xxx and Xxxxxxx
Mac and qualified to do business in the jurisdiction where the Mortgaged
Property is located, insuring (subject to the exceptions contained in
(x)(a), (x)(b) and (x)(d), and with respect to any second lien Mortgage
Loan (x)(c), above) the Seller, its successors and assigns as to the first
or second priority lien (as indicated on the Mortgage Loan Schedule) of the
Mortgage in the original principal amount of the Mortgage Loan (including,
if the Mortgage Loan provides for Negative Amortization, the maximum amount
of Negative Amortization in accordance with the Mortgage) and, with respect
to any Adjustable Rate Mortgage Loan, against any loss by reason of the
invalidity or unenforceability of the lien resulting from the provisions of
the Mortgage providing for adjustment in the Mortgage Interest Rate and
Monthly Payment and Negative Amortization provisions of the Mortgage Note.
Additionally, such lender's title
23
insurance policy affirmatively insures ingress and egress to and from the
Mortgaged Property, and against encroachments by or upon the Mortgaged
Property or any interest therein. The Seller is the sole insured of such
lender's title insurance policy, and such lender's title insurance policy
is in full force and effect and will be in full force and effect upon the
consummation of the transactions contemplated by this Agreement. No claims
have been made under such lender's title insurance 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;
(xvii) There is no default, breach, violation or event of
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 of acceleration, and the Seller has not waived any default, breach,
violation or event of acceleration. With respect to each second lien
Mortgage Loan (i) the first lien mortgage loan is in full force and effect,
(ii) there is no default, breach, violation or event of acceleration under
such first lien mortgage or the related mortgage note, (iii) there is 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 of acceleration under such first lien mortgage or the related
Mortgage, (iv) either (A) the first lien mortgage contains a provision
which allows or (B) applicable law requires, the mortgagee under the second
lien Mortgage Loan to receive notice of, and affords such mortgagee an
opportunity to cure any default by payment in full or otherwise under the
first lien mortgage, (v) the related first lien does not provide for or
permit negative amortization under such first lien Mortgage Loan, and (vi)
either no consent for the Mortgage Loan is required by the holder of the
first lien or such consent has been obtained and is contained in the
Mortgage File;
(xviii) 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 lien) affecting the related
Mortgaged Property which are or may be liens prior to, or equal or
coordinate with, the lien of the related Mortgage;
(xix) All improvements which were considered in determining the
Appraised Value of the related 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, subdivision law or
ordinance;
(xx) The Mortgage Loan was originated by the Seller or by a
savings and loan association, a savings bank, a commercial bank or similar
banking institution which is supervised and examined by a federal or state
authority, or by a mortgagee approved as such by the Secretary of HUD;
(xxi) Principal payments on the Mortgage Loan commenced no more
than sixty (60) days after the proceeds of the Mortgage Loan were
disbursed. The Mortgage Loan bears interest at the Mortgage Interest Rate.
With respect to each
24
Mortgage Loan which is not a Negative Amortization Loan, the Mortgage Note
is payable on the first day of each month in Monthly Payments, which, in
the case of a Fixed Rate Mortgage Loan, are sufficient to fully amortize
the original principal balance over the original term thereof (other than
with respect to a Mortgage Loan identified on the related Mortgage Loan
Schedule as an interest-only Mortgage Loan during the interest-only period
or a Mortgage Loan which is identified on the related Mortgage Loan
Schedule as a Balloon Mortgage Loan) and to pay interest at the related
Mortgage Interest Rate, and, in the case of an Adjustable Rate Mortgage
Loan, are changed on each Adjustment Date, and in any case, are sufficient
to fully amortize the original principal balance over the original term
thereof (other than with respect to a Mortgage Loan identified on the
related Mortgage Loan Schedule as an interest-only Mortgage Loan during the
interest-only period or a Mortgage Loan which is identified on the related
Mortgage Loan Schedule as a Balloon Mortgage Loan) and to pay interest at
the related Mortgage Interest Rate. With respect to each Negative
Amortization Mortgage Loan, the related Mortgage Note requires a Monthly
Payment which is sufficient during the period following each Payment
Adjustment Date, to fully amortize the outstanding principal balance as of
the first day of such period (including any Negative Amortization) over the
then remaining term of such Mortgage Note and to pay interest at the
related Mortgage Interest Rate; provided, that the Monthly Payment shall
not increase to an amount that exceeds 107.5% of the amount of the Monthly
Payment that was due immediately prior to the Payment Adjustment Date;
provided, further, that the payment adjustment cap shall not be applicable
with respect to the adjustment made to the Monthly Payment that occurs in a
year in which the Mortgage Loan has been outstanding for a multiple of five
(5) years and in any such year the Monthly Payment shall be adjusted to
fully amortize the Mortgage Loan over the remaining term. With respect to
each Mortgage Loan identified on the Mortgage Loan Schedule as an
interest-only Mortgage Loan, the interest-only period shall not exceed ten
(10) years (or such other period specified on the Mortgage Loan Schedule)
and following the expiration of such interest-only period, the remaining
Monthly Payments shall be sufficient to fully amortize the original
principal balance over the remaining term of the Mortgage Loan and to pay
interest at the related Mortgage Interest Rate. With respect to each
Balloon Mortgage Loan, the Mortgage Note requires a monthly payment which
is sufficient to fully amortize the original principal balance over the
original term thereof and to pay interest at the related Mortgage Interest
Rate and requires a final Monthly Payment substantially greater than the
preceding monthly payment which is sufficient to repay the remaining unpaid
principal balance of the Balloon Mortgage Loan at the Due Date of such
monthly payment. The Index for each Adjustable Rate Mortgage Loan is as set
forth on the Mortgage Loan Schedule. No Mortgage Loan is a Convertible
Mortgage Loan. No Balloon Mortgage Loan has an original stated maturity of
less than seven (7) years;
(xxii) The origination, servicing and collection practices used
with respect to each Mortgage Note and Mortgage including, without
limitation, the establishment, maintenance and servicing of the Escrow
Accounts and Escrow Payments, if any, since origination, have been in all
respects legal, proper, prudent and customary in the mortgage origination
and servicing industry. The Mortgage Loan has been serviced by the Seller
and any predecessor servicer in accordance with the terms of the Mortgage
Note and Accepted Servicing Practices. With respect to escrow deposits and
Escrow
25
Payments, if any, 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. No escrow deposits or Escrow Payments or other charges or
payments due the Seller have been capitalized under any Mortgage or the
related Mortgage Note and no such escrow deposits or Escrow Payments are
being held by the Seller for any work on a Mortgaged Property which has not
been completed;
(xxiii) The Mortgaged Property is free of damage and waste and in
good repair and there is no proceeding pending for the total or partial
condemnation thereof;
(xxiv) The Mortgage and related Mortgage Note contain customary
and enforceable provisions such as to render the rights and remedies of the
holder thereof adequate for the realization against the Mortgaged Property
of the benefits of the security provided thereby, including, (a) in the
case of a Mortgage designated as a deed of trust, by trustee's sale, and
(b) otherwise by judicial foreclosure. The Mortgaged Property has not been
subject to any bankruptcy proceeding or foreclosure proceeding and the
Mortgagor has not filed for protection under applicable bankruptcy laws.
There is no homestead or other exemption available to the Mortgagor which
would interfere with the right to sell the Mortgaged Property at a
trustee's sale or the right to foreclose the Mortgage. 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;
(xxv) The Mortgage Loan was underwritten in accordance with the
Underwriting Guidelines in effect at the time the Mortgage Loan was
originated which underwriting standards satisfy the standards of FNMA and
FHLMC; and the Mortgage Note and Mortgage are on forms generally acceptable
to prudent investors in the secondary mortgage market;
(xxvi) The Mortgage Note is not and has not been secured by any
collateral except the lien of the corresponding Mortgage on the Mortgaged
Property and the security interest of any applicable security agreement or
chattel mortgage referred to in (x) above;
(xxvii) The Mortgage File contains an appraisal of the related
Mortgaged Property which satisfied the standards of FNMA and FHLMC, was on
appraisal form 1004 or form 2055 with an interior inspection and was made
and 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, whose compensation is not affected by the approval or
disapproval of the Mortgage Loan and who met the minimum qualifications of
FNMA and FHLMC. Each appraisal of the Mortgage Loan was made in accordance
with the relevant provisions of the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989;
26
(xxviii) In the event the Mortgage constitutes a deed of trust, a
trustee, 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;
(xxviii) No Mortgage Loan contains provisions pursuant to which
Monthly Payments are (a) paid or partially paid with funds deposited in any
separate account established by the Seller, the Mortgagor, or anyone on
behalf of the Mortgagor, (b) paid by any source other than the Mortgagor or
(c) contains 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;
(xxix) The Mortgagor has executed a statement to the effect that
the Mortgagor has received all disclosure materials required by applicable
law with respect to the making of fixed rate mortgage loans in the case of
Fixed Rate Mortgage Loans, and adjustable rate mortgage loans in the case
of Adjustable Rate Mortgage Loans and rescission materials with respect to
Refinanced Mortgage Loans, and such statement is and will remain in the
Mortgage File;
(xxx) Reserved;
(xxxi) The Seller has no knowledge of any circumstances or
condition with respect to the Mortgage, the Mortgaged Property, the
Mortgagor or the Mortgagor's credit standing that can reasonably be
expected to cause the Mortgage Loan to be an unacceptable investment, or
cause the Mortgage Loan to become delinquent or adversely affect the value
of the Mortgage Loan;
(xxxiii) [BEGINNING WITH THIS SUBSECTION, THE PARAGRAPH NUMBERS
ARE OFF - THERE ARE TWO (2) XXXIII'S] No Mortgage Loan had an LTV or a CLTV
at origination in excess of 100%. Each Mortgage Loan with an LTV at
origination in excess of 80% is and will be subject to a Primary Insurance
Policy, issued by a Qualified Insurer, which insures that portion of the
Mortgage Loan in excess of the portion of the Appraised Value of the
Mortgaged Property as required by Xxxxxx Xxx. With respect to any Mortgage
Loan which allows Negative Amortization, such Primary Insurance Policy
contains provisions to cover the potential Negative Amortization 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. Any Mortgage subject to any
such Primary Insurance Policy obligates the Mortgagor thereunder to
maintain such insurance and to pay all premiums and charges in connection
therewith. The Mortgage Interest Rate for the Mortgage Loan does not
include any such insurance premium. No Mortgage Loan is subject to a lender
paid primary mortgage insurance policy;
(xxxii) The Mortgaged Property is lawfully occupied under
applicable law; all inspections, licenses and certificates required to be
made or issued with respect to
27
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, have been made or obtained from the appropriate authorities;
(xxxiii) No error, omission, misrepresentation, negligence, fraud
or similar occurrence with respect to a Mortgage Loan has taken place on
the part of the Seller, 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 of
any insurance in relation to such Mortgage Loan;
(xxxiv) The Assignment of Mortgage is in recordable form, except
for the name of the assignee which is blank, and is acceptable for
recording under the laws of the jurisdiction in which the Mortgaged
Property is located;
(xxxvii) Any principal advances made to the Mortgagor prior to
the 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 or second (as indicated on the Mortgage
Loan Schedule) 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 FNMA or FHLMC. The consolidated principal amount
does not exceed the original principal amount of the Mortgage Loan plus any
Negative Amortization;
(xxxviii) 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 Underwriting
Guidelines, FNMA and FHLMC;
(xxxv) The source of the down payment with respect to each
Mortgage Loan has been fully verified by the Seller;
(xxxvi) Interest on each Mortgage Loan is calculated on the basis
of a 360-day year consisting of twelve 30-day months;
(xxxvii) The Mortgaged Property is in material compliance with
all applicable environmental laws pertaining to environmental hazards
including, without limitation, asbestos, and neither the Seller nor the
related Mortgagor, has received any notice of any violation or potential
violation of such law;
(xxxviii) The Seller shall, at its own expense, cause each
Mortgage Loan to be covered by a Tax Service Contract which is assignable
to the Purchaser or its designee; provided however, that if the Seller
fails to purchase such Tax Service Contract, the Seller shall be required
to reimburse the Purchaser for all costs and expenses incurred by the
Purchaser in connection with the purchase of any such Tax Service Contract;
28
(xxxix) Each Mortgage Loan is covered by a Flood Zone Service
Contract which is assignable to the Purchaser or its designee or, for each
Mortgage Loan not covered by such Flood Zone Service Contract, the Seller
agrees to purchase such Flood Zone Service Contract;
(xl) No Mortgage Loan is (a)(1) subject to the provisions of the
Homeownership and Equity Protection Act of 1994 as amended ("HOEPA") or (2)
has an "annual percentage rate" or "total points and fees" (as each such
term is defined under HOEPA) payable by the Mortgagor that equal or exceed
the applicable thresholds defined under HOEPA (as defined in 12 CFR 226.32
(a)(1)(i) and (ii)), (b) a "high cost" mortgage loan, "covered" mortgage
loan, "high risk home" mortgage loan, or "predatory" mortgage loan or any
other comparable term, no matter how defined under any federal, state or
local law, (c) subject to any comparable federal, state or local statutes
or regulations, or any other statute or regulation providing for heightened
regulatory scrutiny or assignee liability to holders of such mortgage
loans, or (d) a High Cost Loan or Covered Loan, as applicable (as such
terms are defined in the current Standard & Poor's LEVELS(R) Glossary
Revised, Appendix E);
(xli) No predatory, abusive, or deceptive lending practices,
including but not limited to, the extension of credit to a Mortgagor
without regard for the Mortgagor's ability to repay the Mortgage Loan and
the extension of credit to a Mortgagor which has no apparent benefit to the
Mortgagor, were employed in connection with the origination of the Mortgage
Loan. Each Mortgage Loan is in compliance with the anti-predatory lending
eligibility for purchase requirements of the Xxxxxx Mae Guides;
(xlii) Except as otherwise reflected on the bid tape for the
related Mortgage Loan Package, the debt-to-income ratio of the related
Mortgagor was not greater than 55% at the origination of the related
Mortgage Loan;
(xliii) No Mortgagor was required to purchase any credit
insurance product (e.g., life, mortgage, disability, 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,
accident, unemployment or health insurance product) or debt cancellation
agreement 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;
(xlviii) The Mortgage Loans were not selected from the
outstanding one- to four-family mortgage loans in the Seller's portfolio as
to which the representations and warranties set forth in this Agreement
could be made at the related Closing Date in a manner so as to affect
adversely the interests of the Purchaser;
(xliv) The Mortgage contains an enforceable provision for the
acceleration of the payment of the unpaid principal balance of the Mortgage
Loan in the
29
event that the Mortgaged Property is sold or transferred without the prior
written consent of the mortgagee thereunder;
(xlv) The Mortgage Loan complies with all applicable consumer
credit statutes and regulations, including, without limitation, the
respective Uniform Consumer Credit Code laws in effect in Alabama,
Colorado, Idaho, Indiana, Iowa, Kansas, Maine, Oklahoma, South Carolina,
Utah, West Virginia and Wyoming, has been originated by a properly licensed
entity, and in all other respects, complies with all of the material
requirements of any such applicable laws;
(xlvi) The information set forth in the Mortgage Loan Schedule as
to Prepayment Charges is complete, true and correct in all material
respects and each Prepayment Charge is permissible, enforceable and
collectable in accordance with its terms upon the Mortgagor's full and
voluntary principal payment under applicable law;
(xlvii) The Mortgage Loan was not prepaid in full prior to the
Closing Date and the Seller has not received notification from a Mortgagor
that a prepayment in full shall be made after the Closing Date;
(xlviii) No Mortgage Loan is secured by cooperative housing,
commercial property or mixed use property;
(xlix) Each Mortgage Loan is eligible for sale in the secondary
market or for inclusion in a Pass-Through Transaction without unreasonable
credit enhancement;
(l) Except as set forth on the related Mortgage Loan Schedule,
none of the Mortgage Loans is subject to a Prepayment Charge. With respect
to any Mortgage Loan that contains a provision permitting imposition of a
premium upon a prepayment prior to maturity: (a) the Mortgage Loan provides
some benefit to the Mortgagor (e.g. a rate or fee reduction) in exchange
for accepting such Prepayment Charge; (b) the Mortgage Loan's originator
had a written policy of offering the Mortgagor, or requiring third-party
brokers to offer the Mortgagor, the option of obtaining a Mortgage Loan
that did not require payment of such a Prepayment Charge; (c) the
Prepayment Charge was adequately disclosed to the Mortgagor pursuant to
applicable state and federal law; (d) the duration of the Prepayment Charge
shall not exceed three (3) years from the date of the Mortgage Note; and
(e) such Prepayment Charge shall not be imposed in any instance where the
Mortgage Loan is accelerated or paid off in connection with the workout of
a delinquent Mortgage or due to the Mortgagor's default, notwithstanding
that the terms of the Mortgage Loan or state or federal law might permit
the imposition of such Prepayment Charge;
(li) The Seller has complied with all applicable anti-money
laundering laws and regulations, including without limitation the Bank
Secrecy Act, as amended by the USA Patriot Act of 2001 (collectively, the
"Anti-Money Laundering Laws"); the Seller has established an anti-money
laundering compliance program as required by the Anti-Money Laundering
Laws, has conducted the requisite due diligence in connection with the
origination of each Mortgage Loan for purposes of the Anti-Money Laundering
30
Laws, including with respect to the legitimacy of the applicable Mortgagor
and the origin of the assets used by the said Mortgagor to purchase the
Mortgaged Property, and maintains, and will maintain, sufficient
information to identify and verify the identification of the applicable
Mortgagor for purposes of the Anti-Money Laundering Laws. No Mortgage Loan
is subject to nullification pursuant to Executive Order 13224 (the
"Executive Order") or the regulations promulgated by the Office of Foreign
Assets Control of the United States Department of the Treasury (the "OFAC
Regulations") or in violation of the Executive Order or the OFAC
Regulations, and no Mortgagor is subject to the provisions of such
Executive Order or the OFAC Regulations or listed as a "specially
designated national or blocked person" for purposes of the OFAC
Regulations;
(lii) The Mortgagor was not 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 than
Mortgagor, taking into account such facts as, without limitation, the
Mortgage Loan's requirements and the Mortgagor's credit history, income,
assets and liabilities. 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. With respect to any Mortgage Loan, the
Mortgagor was assigned the highest credit grade available with respect to a
mortgage loan product offered by such Mortgage Loan's originator, based on
a comprehensive assessment of risk factors, including the Mortgagor's
credit history;
(liii) The methodology used in underwriting the extension of
credit for each Mortgage Loan did not rely solely on the extent of the
Mortgagor's equity in the collateral as the principal determining factor in
approving such extension of credit. The methodology employed objective
criteria such as the Mortgagor's income, assets and liabilities, as they
related to the proposed mortgage payment and, based on such methodology,
the Mortgage Loan's originator made a reasonable determination that at the
time of origination the Mortgagor had the ability to make timely payments
on the Mortgage Loan;
(liv) With respect to each Mortgage Loan, the Seller has fully
and accurately furnished complete information (i.e., favorable and
unfavorable) on the related borrower credit files to Equifax, Experian and
Trans Union Credit Information Company, in accordance with the Fair Credit
Reporting Act and its implementing regulations, on a monthly basis and, for
each Mortgage Loan, the Seller will furnish, in accordance with the Fair
Credit Reporting Act and its implementing regulations, accurate and
complete information on its borrower credit files to Equifax, Experian, and
Trans Union Credit Information Company, on a monthly basis;
(lv) All points and fees related to each Mortgage Loan were
disclosed in writing to the related Borrower in accordance with applicable
state and federal laws and regulations. No related Borrower was charged
"points and fees" (whether or not financed) in an amount greater than (a)
$1,000 or (b) 5% of the principal amount of such loan, whichever is
greater, such 5% limitation is calculated in accordance with Fannie
31
Mae's anti-predatory lending requirements as set forth in the Xxxxxx Mae
Guides. For purposes of this representation, "points and fees" (a) include
origination, underwriting, broker and finder's fees and other charges that
the lender imposed as a condition of making the loan, whether they are paid
to the lender or a third party, and (b) exclude bona fide discount points,
fees paid for actual services rendered in connection with the origination
of the mortgage (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, which miscellaneous
fees and charges, in total, do not exceed 0.25 percent of the loan amount.
All points, fees and charges (including finance charges) whether or not
financed, assessed, collected or to be collected in connection with the
origination and servicing of each Mortgage Loan were disclosed in writing
to the related Mortgagor in accordance with applicable state and federal
laws and regulations;
(lvi) The Seller will transmit full-file credit reporting data
for each Mortgage Loan pursuant to Xxxxxx Xxx Guide Announcement 95-19 and
for each Mortgage Loan, Seller agrees it shall report one of the following
statuses each month as follows: new origination, current, delinquent (30-,
60-, 90-days, etc.), foreclosed, or charged-off;
(lvii) With respect to any Mortgage Loan which is secured by
manufactured housing, if such Mortgage Loans are permitted hereunder, such
Mortgage Loan satisfies the requirements for inclusion in residential
mortgage backed securities transactions rated by Standard & Poor's Ratings
Services, and such manufactured housing will be the principal residence of
the Mortgagor upon the origination of the Mortgage Loan. With respect to
any second lien Mortgage Loan, such lien is on a one- to four-family
residence that is (or will be) the principal residence of the Mortgagor
upon the origination of the second lien Mortgage Loan;
(lviii) Each Mortgage Loan constitutes a "qualified mortgage"
under Section 860G(a)(3)(A) of the Code and Treasury Regulation Section
1.860G-2(a)(1);
(lix) No Mortgage Loan is secured by real property or secured by
a manufactured home located in the state of Georgia unless (x) such
Mortgage Loan was originated prior to October 1, 2002 or after March 6,
2003, or (y) the property securing the Mortgage Loan is not, nor will it
be, occupied by the Mortgagor as the Mortgagor's principal dwelling. No
Mortgage Loan is a "High Cost Home Loan" as defined in the Georgia Fair
Lending Act, as amended (the "Georgia Act"). Each Mortgage Loan that is a
"Home Loan" under the Georgia Act complies with all applicable provisions
of the Georgia Act. No Mortgage Loan secured by owner occupied real
property or an owner occupied manufactured home located in the State of
Georgia was originated (or modified) on or after October 1, 2002 through
and including March 6, 2003;
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(lx) No Mortgage Loan is a "High-Cost" loan as defined under the
New York Banking Law Section 6-1, effective as of April 1, 2003;
(lxi) No Mortgage Loan (a) is secured by property located in the
State of New York; (b) had an unpaid principal balance at origination of
$300,000 or less, and (c) has an application date on or after April 1,
2003, the terms of which Mortgage Loan equal or exceed either the APR or
the points and fees threshold for "high-cost home loans", as defined in
Section 6-1 of the New York State Banking Law;
(lxii) No Mortgage Loan is a "High Cost Home Loan" as defined in
the Arkansas Home Loan Protection Act effective July 16, 2003 (Act 1340 or
2003);
(lxviii) No Mortgage Loan is a "High Cost Home Loan" as defined
in the Kentucky high-cost loan statute effective June 24, 2003 (Ky. Rev.
Stat. Section 360.100);
(lxiii) No Mortgage Loan secured by property located in the State
of Nevada is a "home loan" as defined in the Nevada Assembly Xxxx No. 284;
(lxiv) No Mortgage Loan is a "manufactured housing loan" or "home
improvement home loan" pursuant to the New Jersey Home Ownership Act. No
Mortgage Loan is a "High-Cost Home Loan" or a refinanced "Covered Home
Loan," in each case, as defined in the New Jersey Home Ownership Act
effective November 27, 2003 (N.J.S.A. 46;10B-22 et seq.);
(lxv) No Mortgage Loan is a subsection 10 mortgage under the
Oklahoma Home Ownership and Equity protection Act;
(lxvi) No Mortgage Loan is a "High-Cost Home Loan" as defined in
the New Mexico Home Loan Protection Act effective January 1, 2004 (N.M.
Stat. Xxx. Sections 58-21A-1 et seq.);
(lxxiii) No Mortgage Loan is a "High-Risk Home Loan" as defined
in the Illinois High-Risk Home Loan Act effective January 1, 2004 (815 Ill.
Comp. Stat. 137/1 et seq.);
(lxvii) No Loan that is secured by property located within the
State of Maine meets the definition of a (i) "high-rate, high-fee" mortgage
loan under Article VIII, Title 9-A of the Maine Consumer Credit Code or
(ii) "High-Cost Home Loan" as defined under the Maine House Xxxx 383 X.X.
494, effective as of September 13, 2003;
(lxviii) With respect to any Loan for which a mortgage loan
application was submitted by the Mortgagor after April 1, 2004, no such
Loan secured by Mortgaged Property in the State of Illinois which has a
Loan Interest Rate in excess of 8.0% per annum has lender-imposed fees (or
other charges) in excess of 3.0% of the original principal balance of the
Loan;
(lxix) No Mortgage Loan is a "High Cost Home Mortgage Loan" as
defined in the Massachusetts Predatory Home Loan Practices Act, effective
November 7,
33
2004 (Mass. Xxx. Laws Ch. 183C). No Mortgage Loan secured by a Mortgaged
Property located in the Commonwealth of Massachusetts was made to pay off
or refinance an existing loan or other debt of the related borrower (as the
term "borrower" is defined in the regulations promulgated by the
Massachusetts Secretary of State in connection with Massachusetts House
Xxxx 4880 (2004)) unless either (1) (a) the related Mortgage Interest Rate
(that would be effective once the introductory rate expires, with respect
to Adjustable Rate Mortgage Loans) did or would not exceed by more than
2.25% the yield on United States Treasury securities having comparable
periods of maturity to the maturity of the related Mortgage Loan as of the
fifteenth day of the month immediately preceding the month in which the
application for the extension of credit was received by the related lender
or (b) the Mortgage Loan is an "open-end home loan" (as such term is used
in the Massachusetts House Xxxx 4880 (2004)) and the related Mortgage Note
provides that the related Mortgage Interest Rate may not exceed at any time
the Prime rate index as published in The Wall Street Journal plus a margin
of one percent, or (2) such Mortgage Loan is in the "borrower's interest,"
as documented by a "borrower's interest worksheet" for the particular
Mortgage Loan, which worksheet incorporates the factors set forth in
Massachusetts House Xxxx 4880 (2004) and the regulations promulgated
thereunder for determining "borrower's interest," and otherwise complies in
all material respects with the laws of the Commonwealth of Massachusetts;
(lxxvii) No Loan is a "High Cost Home Loan" as defined by the
Indiana Home Loan Practices Act, effective January 1, 2005 (Ind. Code Xxx.
Sections 24-9-1 et seq.);
(lxxviii) The Mortgagee has not made or caused to be made any
payment in the nature of an "average" or "yield spread premium" to a
mortgage broker or a like Person which has not been fully disclosed to the
Mortgagor;
(lxx) The sale or transfer of the Mortgage Loan by the Seller
complies with all applicable federal, state, and local laws, rules, and
regulations governing such sale or transfer, including, without limitation,
the Fair and Accurate Credit Transactions Act ("FACT Act") and the Fair
Credit Reporting Act, each as may be amended from time to time, and the
Seller has not received any actual or constructive notice of any identity
theft, fraud, or other misrepresentation in connection with such Mortgage
Loan or any party thereto;
(lxxi) With respect to each MOM Loan, a MIN has been assigned by
MERS and such MIN is accurately provided on the Mortgage Loan Schedule. The
related Assignment of Mortgage to MERS has been duly and properly recorded,
or has been delivered for recording to the applicable recording office;
(lxxii) With respect to each MOM Loan, Seller has not received
any notice of liens or legal actions with respect to such Mortgage Loan and
no such notices have been electronically posted by MERS;
(lxxxii) With respect to each Mortgage Loan, (i) if the related
first lien provides for negative amortization, the CLTV was calculated at
the maximum principal balance of such first lien that could result upon
application of such negative amortization
34
feature, and (ii) either no consent for the Mortgage Loan is required by
the holder of the first lien or such consent has been obtained and is
contained in the Mortgage File; and
(lxxxiii) No Mortgagor agreed to submit to arbitration to resolve
any dispute arising out of or relating in any way to the Mortgage Loan
transaction.
(lxxxiv) No Mortgage Loan is subject to mandatory arbitration;
(lxxiii) No Mortgage Loan is secured by a lien on a "condo
hotel;"
(lxxxvi) No Mortgage Loan is secured by manufactured housing,
cooperative housing, commercial property or mixed use property; and
(lxxxvii) Each Mortgage Loan secured by property located within
the Xxxx County, Illinois anti-predatory lending Pilot Program area (i.e.,
ZIP Codes 60620, 60621, 60623, 60628, 60629, 60632, 60636, 60638, 60643 and
60652) complies with the recording requirements outlined in Illinois House
Xxxx 4050 and Senate Xxxx 304 effective September 1, 2006.
Subsection 7.03. Remedies for Breach of Representations and
Warranties.
It is understood and agreed that the representations and warranties
set forth in Subsections 7.01 and 7.02 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 of Mortgage or the examination or lack of examination of any Mortgage
File. Upon discovery by the Seller of a breach of any of the foregoing
representations and warranties which materially and adversely affects the value
of the Mortgage Loans or the interest of the Purchaser (or which materially and
adversely affects the value of a Mortgage Loan or the interests of the Purchaser
in the related Mortgage Loan in the case of a representation and warranty
relating to a particular Mortgage Loan), the Seller shall give prompt written
notice to the Purchaser.
Within 60 days of the earlier of either discovery by the Seller, or
notice to the Seller, of any breach of a representation or warranty which
materially and adversely affects the value of a Mortgage Loan or the Mortgage
Loans or the Purchaser's interest in a Mortgage Loan or the Mortgage Loans, the
Seller shall use its best efforts promptly to cure such breach in all material
respects and, if such breach cannot be cured, the Seller shall, at the
Purchaser's option, repurchase such Mortgage Loan at the Repurchase Price. In
the event that a breach shall involve any representation or warranty set forth
in Subsection 7.01 and such breach cannot be cured within 60 days of the earlier
of either discovery by or notice to the Seller of such breach, all of the
Mortgage Loans shall, at the Purchaser's option, be repurchased by the Seller at
the Repurchase Price. The Seller shall, at the request of the Purchaser and
assuming that Seller has a Qualified Substitute Mortgage Loan, rather than
repurchase the Mortgage Loan as provided above, remove such Mortgage Loan and
substitute in its place a Qualified Substitute Mortgage Loan or Loans; provided
that such substitution shall be effected not later than 120 days after the
related Closing Date. If the Seller has no Qualified Substitute Mortgage Loan,
it shall repurchase the deficient Mortgage Loan. Any repurchase of a Mortgage
Loan(s) pursuant to the
35
foregoing provisions of this Subsection 7.03 shall occur on a date designated by
the Purchaser and shall be accomplished by deposit in the Custodial Account of
the amount of the Repurchase Price for distribution to the Purchaser on the next
scheduled Distribution Date. Notwithstanding anything to the contrary contained
herein, it is understood by the parties hereto that a breach of the
representations and warranties made in Subsections 7.02(viii), (xliv), (xlvii),
(lv), (lvii), (lviii), (lix), (lx), (lxii), (lxiii), (lxiv) or (lxxxii) will be
deemed to materially and adversely affect the value of the related Mortgage Loan
or the interest of the Purchaser therein.
At the time of repurchase of any deficient Mortgage Loan, the
Purchaser and the Seller shall arrange for the reassignment of the repurchased
Mortgage Loan to the Seller and the delivery to the Seller of any documents held
by the Custodian relating to the repurchased Mortgage Loan. In the event the
Repurchase Price is deposited in the Custodial Account, the Seller shall,
simultaneously with such deposit, give written notice to the Purchaser that such
deposit has taken place. Upon such repurchase the related Mortgage Loan Schedule
shall be amended to reflect the withdrawal of the repurchased Mortgage Loan from
this Agreement.
As to any Deleted Mortgage Loan for which the Seller substitutes a
Qualified Substitute Mortgage Loan or Loans, the Seller shall effect such
substitution by delivering to the Purchaser for such Qualified Substitute
Mortgage Loan or Loans the Mortgage Note, the Mortgage, the Assignment of
Mortgage and such other documents and agreements as are set forth in Exhibit 13
hereto, with the Mortgage Note endorsed as required therein. The Seller shall
deposit in the Custodial Account the Monthly Payment less the Servicing Fee due
on such Qualified Substitute Mortgage Loan or Loans in the month following the
date of such substitution. Monthly Payments due with respect to Qualified
Substitute Mortgage Loans in the month of substitution will be retained by the
Seller. For the month of substitution, distributions to the Purchaser will
include the Monthly Payment due on such Deleted Mortgage Loan in the month of
substitution, and the Seller shall thereafter be entitled to retain all amounts
subsequently received by the Seller in respect of such Deleted Mortgage Loan.
The Seller shall give written notice to the Purchaser that such substitution has
taken place and shall amend the Mortgage Loan Schedule to reflect the removal of
such Deleted Mortgage Loan from the terms of this Agreement and the substitution
of the Qualified Substitute Mortgage Loan. Upon such substitution, such
Qualified Substitute Mortgage Loan or Loans shall be subject to the terms of
this Agreement in all respects, and the Seller shall be deemed to have made with
respect to such Qualified Substitute Mortgage Loan or Loans, as of the date of
substitution, the covenants, representations and warranties set forth in
Subsections 7.01 and 7.02.
For any month in which the Seller substitutes one or more Qualified
Substitute Mortgage Loans for one or more Deleted Mortgage Loans, the 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 is
less than the aggregate Stated Principal Balance of all such Deleted Mortgage
Loans (after application of scheduled principal payments due in the month of
substitution). An amount equal to the sum of (x) the product of (i) the amount
of such shortfall and (ii) the purchase price percentage used to calculate the
Purchase Price, as stated in the related Commitment Letter and (y) accrued
interest on the amount of such shortfall to the last day of the month such
substitution occurs, shall be distributed by the Seller in the month of
substitution pursuant to the Servicing Addendum. Accordingly, on the date of
such substitution, the Seller,
36
as applicable, will deposit from its own funds into the Custodial Account an
amount equal to such amount.
In addition to such cure, repurchase and substitution obligation, the
Seller shall indemnify the Initial Purchaser and any subsequent Purchaser and
hold them harmless against any losses, damages, penalties, fines, forfeitures,
reasonable and necessary legal fees and related costs, judgments, and other
costs and expenses resulting from any claim, demand, defense or assertion based
on or grounded upon, or resulting from, a breach of the Seller's representations
and warranties, respectively, contained in this Section 7, including, without
limitation, any loss incurred by the Purchaser of any Prepayment Charge to which
the Purchaser would otherwise be entitled pursuant to this Agreement. It is
understood and agreed that the obligations of the Seller set forth in this
Subsection 7.03 to cure, substitute for or repurchase a defective Mortgage Loan
and to indemnify the Initial Purchaser and any subsequent Purchaser as provided
in this Subsection 7.03 constitute the sole remedies of the Initial Purchaser
and any subsequent Purchaser respecting a breach of the foregoing
representations and warranties.
Any cause of action against the Seller relating to or arising out of
the breach of any representations and warranties made in Subsections 7.01 or
7.02 shall accrue as to any Mortgage Loan upon (i) discovery of such breach by
the Purchaser or notice thereof by the Seller to the Purchaser, and (ii) demand
upon the Seller by the Purchaser for compliance with the relevant provisions of
this Agreement.
In addition to the foregoing, in the event that a breach of any
representation of the Seller materially and adversely affects the interests of
the Purchaser in any Prepayment Charge or the collectability of such Prepayment
Charge, the Seller shall pay the amount of the scheduled Prepayment Charge to
the Purchaser upon the payoff of any related Mortgage Loan, to the extent that
such Prepayment Charge is not collected by Seller.
Subsection 7.04. Repurchase of Certain Mortgage Loans; Premium
Protection.
(a) In the event that (i) the first Due Date for a Mortgage Loan is
prior to the Cut-off Date and the initial Monthly Payment is not made by the
related Mortgagor within thirty (30) days of such Due Date or (ii) the first
Monthly Payment on any Mortgage Loan due following the Cut-off Date is not made
by the related Mortgagor within thirty (30) days of the related Due Date, then,
in each such case, the Seller shall repurchase the affected Mortgage Loans
within five (5) Business Days following receipt of notice from Initial Purchaser
requesting such amount at the Repurchase Price, which shall be paid as provided
for in Subsection 7.03. The Seller shall notify the Purchaser of any such
default under this Subsection 7.04(a) within thirty (30) days of any such
Mortgage Loan becoming thirty (30) days delinquent.
(b) In the event that any Mortgage Loan prepays-in-full within three
(3) months following the related Closing Date, Seller shall remit to the Initial
Purchaser, within thirty (30) days following the receipt of notice from Initial
Purchaser requesting such amount, an amount equal to the product of (i) the
excess of (A) the percentage of par as stated in the related Confirmation as the
purchase price percentage (subject to adjustment as provided therein) over (B)
100%, times (ii) the outstanding principal balance of such Mortgage Loan as of
the Cut-off
37
Date. Such obligation to the Initial Purchaser shall survive any sale or
assignment of the Mortgage Loans by the Initial Purchaser to any third party and
shall be independently enforceable by the Initial Purchaser. Notwithstanding any
contrary provisions hereof, Seller shall have no obligation under this
Subsection (b) with respect to any such prepaid Mortgage Loan, unless the
Initial Purchaser gives written notice to Seller, within sixty (60) days after
such prepayment, requesting that the Seller remit such amount to the Initial
Purchaser.
(c) In the event that any Mortgage Loan is repurchased pursuant to
Section 7.03 or 7.04(a), in addition to its obligations under Section 7.03 and
7.04(a), Seller shall remit to the Initial Purchaser, within thirty (30) days
following the receipt of notice from Initial Purchaser requesting such amount,
an amount equal to the product of (i) the excess of (A) the percentage of par as
stated in the related Confirmation as the purchase price percentage (subject to
adjustment as provided therein) over (B) 100%, times (ii) the outstanding
principal balance of such Mortgage Loan as of the date of repurchase. Such
obligation to the Initial Purchaser shall survive any sale or assignment of the
Mortgage Loans by the Initial Purchaser to any third party and shall be
independently enforceable by the Initial Purchaser. Notwithstanding any contrary
provisions hereof, Seller shall have no obligation to remit such amount with
respect to any such repurchased Mortgage Loan unless the Initial Purchaser gives
written notice to Seller within sixty (60) days after the expiration of the
related cure period, requesting that the Seller remit such amount to the Initial
Purchaser.
SECTION 8. Closing.
The closing for each Mortgage Loan Package shall take place on the
related Closing Date. At the Initial Purchaser's option, the closing shall be
either: by telephone, confirmed by letter or wire as the parties shall agree, or
conducted in person, at such place as the parties shall agree.
The closing for the Mortgage Loans to be purchased on each Closing
Date shall be subject to each of the following conditions:
(a) all of the representations and warranties of the Seller under this
Agreement shall be true and correct as of the related Closing Date and no event
shall have occurred which, with notice or the passage of time, would constitute
a default under this Agreement;
(b) the Initial Purchaser shall have received, or the Initial
Purchaser's attorneys shall have received in escrow, all Closing Documents as
specified in Section 9, in such forms as are agreed upon and acceptable to the
Initial Purchaser, duly executed by all signatories other than the Initial
Purchaser as required pursuant to the terms hereof;
(c) the Seller shall have delivered and released to the Custodian the
Mortgage Loan Documents; and
(d) all other terms and conditions of this Agreement shall have been
complied with.
38
Subject to the foregoing conditions, the Initial Purchaser shall pay
to the Seller on the related Closing Date the Purchase Price, plus accrued
interest pursuant to Section 4, by wire transfer of immediately available funds
to the account designated by the Seller.
SECTION 9. Closing Documents.
(a) On or before the Initial Closing Date, the Seller or Servicer, as
applicable, shall submit to the Initial Purchaser fully executed originals of
the following documents:
1. this Agreement, in four counterparts;
2. a Custodial Account Letter Agreement in the form attached
as Exhibit 7 hereto;
3. as Escrow Account Letter Agreement in the form attached
as Exhibit 8 hereto;
4. a Seller's Officer's Certificate, in the form of Exhibit
1 hereto, including all attachments thereto;
5. an Opinion of Counsel to the Seller and Servicer, in the
form of Exhibit 2 hereto; and
6. the Underwriting Guidelines.
(b) The Closing Documents for the Mortgage Loans to be purchased on
each Closing Date shall consist of fully executed originals of the following
documents:
1. the related Confirmation;
2. the related Mortgage Loan Schedule;
3. a Custodian's Trust Receipt and Initial Certification, as
required under the Custodial Agreement, in a form acceptable to the
Initial Purchaser;
4. an Officer's Certificate, in the form of Exhibit 1-A
hereto, including all attachments thereto;
5. a Servicer's Officer's Certificate, in the form of
Exhibit 1-B hereto, including all attachments thereto;
6. a Security Release Certification, in the form of Exhibit
3 hereto executed by any Person, as requested by the Initial
Purchaser, if any of the Mortgage Loans has at any time been subject
to any security interest, pledge or hypothecation for the benefit of
such Person;
7. a certificate or other evidence of merger or change of
name, signed or stamped by the applicable regulatory authority, if any
of the Mortgage
39
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;
8. any modifications, amendments or supplements to the
Underwriting Guidelines following the Initial Closing Date; and
9. an Assignment and Conveyance in the form of Exhibit 4
hereto; and
10. in the event that the Seller's Underwriting Guidelines
have been modified following delivery to the Initial Purchaser, an
updated copy of such Underwriting Guidelines.
SECTION 10. Costs.
The Purchaser shall pay any commissions due its salesmen and the legal
fees and expenses of its attorneys. All other costs and expenses incurred in
connection with the transfer and delivery of the Mortgage Loans, including
without limitation, fees for title policy endorsements and continuation fees for
recording Assignments of Mortgage, the cost of any recording service for
recording such Assignments of Mortgage, fees for transferring ownership of any
MERS Loans on the MERS System and the Seller's attorney's fees, shall be paid by
the Seller.
SECTION 11. Servicer's Servicing Obligations.
The Seller, as independent contract servicer, shall service and
administer the Mortgage Loans, directly or through one or more Subservicers, in
accordance with the terms and provisions set forth in the Servicing Addendum
attached as Exhibit 9, which Servicing Addendum is incorporated herein by
reference. In addition, with respect to any Mortgage Loan that is not subject to
an assignable "life of loan" Flood Zone Service Contract or Tax Servicer
Contract as of the related Closing Date, the Servicer shall pay the cost
incurred by the Purchaser or its designee to obtain such a contract.
SECTION 12. Removal of Mortgage Loans from Inclusion under This Agreement
Upon a Whole Loan Transfer or a Pass-Through Transfer on One or
More Reconstitution Dates.
The Seller and the Purchaser agree that with respect to some or all of
the Mortgage Loans, the Purchaser may effect either:
(1) one or more Whole Loan Transfers; and/or
(2) one or more Pass-Through Transfers.
With respect to each Whole Loan Transfer or Pass-Through Transfer, as
the case may be, entered into by the Purchaser, the Seller agrees:
40
(1) to cooperate fully with the Purchaser and any prospective
purchaser with respect to all reasonable requests and due
diligence procedures including participating in meetings with
rating agencies, bond insurers and such other parties as the
Purchaser shall designate and participating in meetings with
prospective purchasers of the Mortgage Loans or interests therein
and providing information reasonably requested by such
purchasers;
(2) to execute all Reconstitution Agreements, which may include,
without limitation, an Assignment and Recognition Agreement in
substantially the form attached hereto as Exhibit 10 and an
Indemnification Agreement in substantially the form attached
hereto as Exhibit 11, provided that each of the Seller and the
Purchaser is given an opportunity to review and reasonably
negotiate in good faith the content of such other documents not
specifically referenced or provided for herein;
(3) with respect to any Whole Loan Transfer or Pass-Through Transfer,
or any transfer of servicing with respect to any Mortgage Loans,
the Seller shall make the representations and warranties
regarding the Seller and the Mortgage Loans set forth herein and
such additional representations and warranties as are necessary
to effect such Whole Loan Transfer, Pass-Through Transfer or
servicing transfer, as of the date of the Whole Loan Transfer,
Pass-Through Transfer or servicing transfer, modified to the
extent necessary to accurately reflect the pool statistics of the
Mortgage Loans as of the date of such Whole Loan Transfer,
Pass-Through Transfer or servicing transfer and any events or
circumstances existing subsequent to the related Closing Date(s),
except for those representations and warranties contained in
Sections 7.02(iii), (iv), (xvii) (only with respect to
delinquencies regarding the related Mortgage Loan and condition
of the related Mortgaged Properties), (xix) (only with respect to
encroachments and violations of applicable zoning law,
regulations and ordinances as they relate to the condition of the
related Mortgaged Propeties after the related Closing Date),
(xxiii), (xxxi) and (xxxvii);
(4) to deliver to the Purchaser for inclusion in any prospectus or
other offering material such publicly available information
regarding the Seller's underwriting standards, the Seller, its
financial condition and its mortgage loan delinquency,
foreclosure and loss experience and any additional information
requested by the Purchaser including, without limitation,
information on the Mortgage Loans and the Seller's underwriting
standards, and to deliver to the Purchaser any similar non
public, unaudited financial information, in which case the
Purchaser shall bear the cost of having such information audited
by certified public accountants if the Purchaser desires such an
audit, or as is otherwise reasonably requested by the Purchaser
and which the Seller is capable of providing without unreasonable
effort or expense, and to indemnify the Purchaser and its
affiliates for material misstatements or omissions or any alleged
misstatements or omissions contained in such information;
41
(5) to deliver to the Purchaser and to any Person designated by the
Purchaser, at the Purchaser's expense, such statements and audit
letters of reputable, certified public accountants pertaining to
information provided by the Seller pursuant to clause 4 above as
shall be reasonably requested by the Purchaser;
(6) to deliver to the Purchaser, and to any Person designated by the
Purchaser, such legal documents and in-house Opinions of Counsel
as are customarily delivered by originators or servicers, as the
case may be, and reasonably determined by the Purchaser to be
necessary in connection with Whole Loan Transfers or Pass-Through
Transfers, as the case may be, such in-house Opinions of Counsel
for a Pass-Through Transfer to be in the form reasonably
acceptable to the Purchaser, it being understood that the cost of
any opinions of outside special counsel that may be required for
a Whole Loan Transfer or Pass-Through Transfer, as the case may
be, shall be the responsibility of the Purchaser;
(7) to negotiate and execute one or more subservicing agreements
between the Seller and any master servicer designated by the
Purchaser in its sole discretion after consultation with the
Seller and/or one or more custodial and servicing agreements
among the Purchaser, the Seller and a third party
custodian/trustee designated by the Purchaser in its sole
discretion after consultation with the Seller, in either case for
the purpose of pooling the Mortgage Loans with other Mortgage
Loans for resale or securitization;
(8) in connection with any securitization of any Mortgage Loans, to
negotiate and execute a pooling and servicing agreement, which
pooling and servicing agreement may, at the Purchaser's
direction, contain contractual provisions including, but not
limited to, a 24-day certificate payment delay (54-day total
payment delay), servicer advances of delinquent scheduled
payments of principal and interest through liquidation (unless
deemed non-recoverable) and prepayment interest shortfalls (to
the extent of the monthly servicing fee payable thereto),
servicing and mortgage loan representations and warranties which
in form and substance conform to the representations and
warranties in this Agreement and to secondary market standards
for securities backed by mortgage loans similar to the Mortgage
Loans and such provisions with regard to servicing
responsibilities, investor reporting, segregation and deposit of
principal and interest payments, custody of the Mortgage Loans,
and other covenants as are required by the Purchaser and one or
more nationally recognized rating agencies for "AAA" rated
mortgage pass-through transactions which are "mortgage related
securities" for the purposes of the Secondary Mortgage Market
Enhancement Act of 1984, unless otherwise mutually agreed. If the
Purchaser deems it advisable at any time to pool the Mortgage
Loans with other mortgage loans for the purpose of resale or
securitization, the Seller agrees to execute one or more
subservicing agreements between itself (as servicer) and a master
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servicer designated by the Purchaser at its sole discretion,
and/or one or more servicing agreements among the Seller (as
servicer), the Purchaser and a trustee designated by the
Purchaser at its sole discretion, such agreements in each case
incorporating terms and provisions substantially identical to
those described in the immediately preceding paragraph.
The Purchaser will promptly reimburse any third party costs, including
accountants' and attorneys' fees, incurred by the Seller in connection with any
Whole Loan Transfer or Pass-Through Transfer.
SECTION 13. COMPLIANCE WITH REGULATION AB
Subsection 13.01. Intent of the Parties; Reasonableness.
The Purchaser and the Seller acknowledge and agree that the purpose of
Section 13 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 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). The Seller 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,
any Master Servicer 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 Pass-Through Transfer, the Seller shall cooperate
fully with the Purchaser and the Master Servicer to deliver to the Purchaser and
the Master Servicer (including any of their 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,
the Master Servicer or any Depositor to permit the Purchaser, the Master
Servicer or such Depositor to comply with the provisions of Regulation AB,
together with such disclosures relating to the Seller, 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.
The Purchaser (including any of its assignees or designees) shall
cooperate with the Seller by providing timely notice of requests for information
under these provisions and by reasonably limiting such requests to information
required, in the Purchaser's reasonable judgment, to comply with Regulation AB.
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Subsection 13.02. Additional Representations and Warranties of the
Seller.
(a) The Seller shall be deemed to represent to the Purchaser, to any
Master Servicer and to any Depositor, as of the date on which information is
first provided to the Purchaser, any Master Servicer or any Depositor under
Section 13.03 that, except as disclosed in writing to the Purchaser, such Master
Servicer or such Depositor prior to such date: (i) the Seller 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 Seller; (ii) the Seller 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
Seller as servicer has been disclosed or reported by the Seller; (iv) no
material changes to the Seller'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
Pass-Through Transfer; (v) there are no aspects of the Seller's financial
condition that could have a material adverse effect on the performance by the
Seller 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, any Subservicer or any
Third-Party Originator; and (vii) there are no affiliations or relationships
relating to the Seller, any Subservicer or any Third-Party Originator with
respect to any Pass-Through Transfer and any party thereto identified in writing
to the Seller by the related Depositor of a type described in Item 1119 of
Regulation AB.
(b) If so requested by the Purchaser, any Master Servicer or any
Depositor on any date following the date on which information is first provided
to the Purchaser, any Master Servicer or any Depositor under Section 13.03, the
Seller 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.
Subsection 13.03. Information to Be Provided by the Seller.
In connection with any Pass-Through Transfer the Seller shall (i)
within five 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 (i), (ii), (iii) and (vi) of
this Section, and (ii) as promptly as practicable following notice to or
discovery by the Seller, 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 (iv) of this Section.
(a) If so requested by the Purchaser or any Depositor, the Seller
shall provide such information regarding (i) the Seller, as originator of the
Mortgage Loans (including as an
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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 the Seller, each
Third-Party Originator and each Subservicer; and
(D) a description of any affiliation or relationship between the
Seller, each Third-Party Originator, each Subservicer and any of the
following parties to a Pass-Through Transfer, as such parties are
identified to the Seller by the Purchaser or any Depositor in writing in
advance of such Pass-Through Transfer:
the sponsor;
the depositor;
the issuing entity;
any servicer;
any trustee;
any originator;
any significant obligor;
any enhancement or support provider; and
any other material transaction party.
(b) If so requested by the Purchaser or any Depositor, the Seller
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 Seller, if the 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 by the 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 and shall only relate to periods on or after January 1. 2006.
To the extent that there is reasonably available to the Seller (or Third-Party
Originator) Static Pool Information with respect to more than one mortgage loan
type, the
45
Purchaser or any Depositor shall be entitled to specify whether some or all of
such information shall be provided pursuant to this paragraph. The content of
such Static Pool Information may be in the form customarily provided by the
Seller, and need not be customized for the Purchaser or any Depositor. 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, the 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 the
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
Pass-Through Transfer. 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.
(c) If so requested by the Purchaser or any Depositor, the Seller
shall provide such information regarding the Seller, as servicer of the Mortgage
Loans, and each Subservicer (each of the Seller and each Subservicer, for
purposes of this paragraph, a "Servicer"), as is requested for the purpose of
compliance with Items 1108, 1117 and 1119 of Regulation AB. Such information
shall include, at a minimum:
(A) the Servicer's form of organization;
(B) a description of how long the Servicer has been servicing
residential mortgage loans; a general discussion of the Servicer's
experience in servicing assets of any type as well as a more detailed
discussion of the Servicer's experience in, and procedures for, the
servicing function it will perform under this Agreement and any
46
Reconstitution Agreements; information regarding the size, composition
and growth of the Servicer's portfolio of residential mortgage loans
of a type similar to the Mortgage Loans and information on factors
related to the 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 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 Pass-Through Transfer;
2. the extent of outsourcing the 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
Servicer as a servicer during the three-year period immediately
preceding the related Pass-Through Transfer;
4. whether the 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 Pass-Through Transfer to the
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;
(D) information regarding the Servicer's financial condition, to
the extent that there is a material risk that an adverse financial event or
circumstance involving the Servicer could have a material adverse effect on
the performance by the Seller of its servicing obligations under this
Agreement or any Reconstitution Agreement;
(E) information regarding advances made by the Servicer on the
Mortgage Loans and the Servicer's overall servicing portfolio of
residential mortgage loans for the three-year period immediately preceding
the related Pass-Through Transfer, which may be limited to a statement by
an authorized officer of the Servicer to the effect that the 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,
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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 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 Servicer's processes for handling
delinquencies, losses, bankruptcies and recoveries, such as through
liquidation of mortgaged properties, sale of defaulted mortgage loans or
workouts;
(H) information as to how the 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;
(I) a description of any material legal or governmental
proceedings pending (or known to be contemplated) against the Servicer; and
(J) a description of any affiliation or relationship between the
Servicer and any of the following parties to a Pass-Through Transfer, as
such parties are identified to the Servicer by the Purchaser or any
Depositor in writing in advance of such Pass-Through Transfer:
the sponsor;
the depositor;
the issuing entity;
any servicer;
any trustee;
any originator;
any significant obligor;
any enhancement or support provider; and
any other material transaction party.
(d) If so requested by the Purchaser, any Master Servicer or any
Depositor for the purpose of satisfying its reporting obligation under the
Exchange Act with respect to any class of asset-backed securities, the Seller
shall (or shall cause each Subservicer and Third-Party Originator to) (i)
provide prompt notice to the Purchaser, any Master Servicer and any Depositor in
writing of (A) any material litigation or governmental proceedings pending
against the Seller, any Subservicer or any Third-Party Originator, (B) any
affiliations or relationships that develop following the closing date of a
Pass-Through Transfer between the Seller, any Subservicer or any Third-Party
Originator and any of the parties specified in clause (d) of paragraph (i) of
this Section (and any other parties identified in writing by the requesting
party) with respect to such Pass-Through Transfer, (C) any Event of Default
under the terms of this Agreement or any Reconstitution Agreement, (D) any
merger, consolidation or sale of substantially all of the assets of the Seller,
and (E) the Seller's entry into an agreement with a Subservicer or Subcontractor
to perform or assist in the performance of any of the Servicer's obligations
under this Agreement or
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any Reconstitution Agreement 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 Seller or any Subservicer
as servicer or subservicer under this Agreement or any Reconstitution Agreement
by any Person (i) into which the Seller or such Subservicer may be merged or
consolidated, or (ii) which may be appointed as a successor to the Seller or any
Subservicer, the Seller 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 Seller, as servicer, is
obligated to provide pursuant to other provisions of this Agreement, if so
requested by the Purchaser or any Depositor, the Seller shall provide such
additional information as such party may reasonably request, including evidence
of the authorization of the person signing any certification or statement,
financial information and reports, and such other information related to the
Seller or any Subservicer or the Seller or such Subservicer's performance
hereunder and such information regarding the performance or servicing of the
Mortgage Loans as is reasonably required to facilitate preparation of
distribution reports in accordance with Item 1121 of Regulation AB. 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 not less than ten Business Days following such
request.
(g) In addition to such information as the Seller, as servicer, is
obligated to provide pursuant to other provisions of this Agreement, not later
than ten days prior to the deadline for the filing of any distribution report on
Form 10-D in respect of any Pass-Through Transfer that includes any of the
Mortgage Loans serviced by the Seller or any Subservicer, the Seller or such
Subservicer, as applicable, shall provide to the party responsible for filing
such report (including, if applicable, the Master Servicer) notice of the
occurrence of any of the following events along with all information, data, and
materials related thereto as may be required to be included in the related
distribution report on Form 10-D (as specified in the provisions of Regulation
AB referenced below):
A any material modifications, extensions or waivers of pool asset
terms, fees, penalties or payments during the distribution period or that
have cumulatively become material over time (Item 1121(a)(11) of Regulation
AB);
B material breaches of pool asset representations or warranties or
transaction covenants (Item 1121(a)(12) of Regulation AB); and
C information regarding new asset-backed securities issuances backed
by the same pool assets, any pool asset changes (such as, additions,
substitutions or repurchases), and any material changes in origination,
underwriting or other criteria for acquisition or selection of pool assets
(Item 1121(a)(14) of Regulation AB).
49
(h) If so requested by the Purchaser or any Depositor for the purpose
of satisfying its reporting obligations under the Exchange Act pursuant to Item
1111 of Regulation AB, the Seller shall (or shall cause each Third-Party
Originator to) provide the historical delinquency experience of the Mortgage
Loans sold to the Initial Purchaser since the origination of such Mortgage Loan,
which historical delinquency experience shall be presented in a manner to
indicate (a) the longest period of delinquency of the Mortgage Loans since the
origination of such Mortgage Loans and (b) the greatest incidence of delinquency
for each Mortgage Loan since its origination in groupings of "never delinquent",
30-, 60-, 90-days etc. (each such grouping, a "Bucket"), which Buckets shall
indicate the aggregate number of Mortgage Loans in such Bucket and the aggregate
principal balance of such Mortgage Loans.
Subsection 13.04. Servicer Compliance Statement.
On or before March 5 of each calendar year, commencing in 2007, the
Seller shall deliver to the Purchaser, any Master Servicer and any Depositor a
statement of compliance addressed to the Purchaser and such Depositor and signed
by an authorized officer of the Seller, to the effect that (i) a review of the
Seller'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 officer's knowledge, based
on such review, the Seller 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.
Subsection 13.05. Report on Assessment of Compliance and Attestation.
(a) On or before March 5 of each calendar year, commencing in 2007,
the Seller shall:
1 deliver to the Purchaser, any Master Servicer and any Depositor a
report (in form and substance reasonably satisfactory to the Purchaser,
such Master Servicer and such Depositor) regarding the Seller'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, such Master Servicer and such Depositor and signed by an
authorized officer of the Seller, and shall address each of the Servicing
Criteria mutually agreed to between the Seller and the Purchaser;
2 deliver to the Purchaser, any Master Servicer and any Depositor a
report of a registered public accounting firm reasonably acceptable to the
Purchaser, such Master Servicer and such Depositor that attests to, and
reports on, the assessment of compliance made by the Seller 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;
50
3 cause each Subservicer, and each Subcontractor determined by the
Seller pursuant to Section 13.06(ii) to be "participating in the servicing
function" within the meaning of Item 1122 of Regulation AB, to deliver to
the Purchaser, any Master Servicer and any Depositor an assessment of
compliance and accountants' attestation as and when provided in paragraphs
(i) and (ii) of this Section; and
4 if requested by the Purchaser or any Depositor not later than
February 1 of the calendar year in which such certification is to be
delivered, 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 Xxxxxxxx-Xxxxx Act of 2002) on
behalf of an asset-backed issuer with respect to a Pass-Through Transfer a
certification in the form attached hereto as Exhibit 14.
The Seller acknowledges that the parties identified in clause (i)(4) above may
rely on the certification provided by the Seller 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 (i)(4) 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 Section 13.05(i)(1) shall address each of the Servicing Criteria specified on
a certification substantially in the form of Exhibit 15 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
Section 13.05(i)(3) need not address any elements of the Servicing Criteria
other than those specified by the Seller pursuant to Section 13.06.
Subsection 13.06. Use of Subservicers and Subcontractors.
The Seller shall not hire or otherwise utilize the services of any
Subservicer to fulfill any of the obligations of the Seller as servicer under
this Agreement or any Reconstitution Agreement unless the Seller complies with
the provisions of paragraph (i) of this Section. The Seller 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 Seller as servicer under this Agreement or
any Reconstitution Agreement unless the Seller complies with the provisions of
paragraph (ii) of this Section.
(a) It shall not be necessary for the Seller to seek the consent of
the Purchaser or any Depositor to the utilization of any Subservicer. The Seller
shall cause any Subservicer used by the Seller (or by any Subservicer) for the
benefit of the Purchaser and any Depositor to comply with the provisions of this
Section and with Sections 13.02, 13.03(iii), (v), (vi) and (vii), 13.04, 13.05
and 13.07 of this Agreement to the same extent as if such Subservicer were the
Seller, and to provide the information required with respect to such Subservicer
under Section 13.03(iv) of this Agreement. The Seller shall be responsible for
obtaining from each Subservicer and delivering to the Purchaser and any
Depositor any servicer compliance statement required to
51
be delivered by such Subservicer under Section 13.04, any assessment of
compliance and attestation required to be delivered by such Subservicer under
Section 13.05 and any certification required to be delivered to the Person that
will be responsible for signing the Sarbanes Certification under Section 13.05
as and when required to be delivered.
(b) It shall not be necessary for the Seller to seek the consent of
the Purchaser or any Depositor to the utilization of any Subcontractor. The
Seller shall promptly upon request provide to the Purchaser, any Master Servicer
and any Depositor (or any designee of the Depositor, such as an administrator) a
written description (in form and substance satisfactory to the Purchaser, such
Master Servicer and such Depositor) of the role and function of each
Subcontractor utilized by the Seller 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 Seller shall cause any such Subcontractor used by the Seller
(or by any Subservicer) for the benefit of the Purchaser and any Depositor to
comply with the provisions of Sections 13.05 and 13.07 of this Agreement to the
same extent as if such Subcontractor were the Seller. The Seller 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 Section 13.05, in each case
as and when required to be delivered.
Subsection 13.07. Indemnification; Remedies.
(a) The Seller shall indemnify the Purchaser, each affiliate of the
Purchaser, any Master Servicer and each of the following parties participating
in a Pass-Through Transfer: 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 Pass-Through Transfer, 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 Pass-Through Transfer; 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, agents and affiliates of each
of the foregoing and of the Depositor (each, an "Indemnified Party"), and shall
hold each of them harmless from and against any claims, 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, data,
accountants' letter or other material provided in written or electronic
form under this Section 13 by or on behalf of the Seller, or provided under
this Section 13 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
52
to be stated in the Seller Information or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided, by way of clarification, that clause (B) of
this paragraph shall be construed solely by reference to the 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 the Seller, 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 Section 13, including any failure by the Seller to
identify pursuant to Section 13.06(ii) any Subcontractor "participating in
the servicing function" within the meaning of Item 1122 of Regulation AB;
or
(iii) any breach by the Seller of a representation or warranty
set forth in Section 13.02(i) or in a writing furnished pursuant to Section
13.02(ii) and made as of a date prior to the closing date of the related
Pass-Through Transfer, to the extent that such breach is not cured by such
closing date, or any breach by the Seller of a representation or warranty
in a writing furnished pursuant to Section 13.02(ii) to the extent made as
of a date subsequent to such closing date; or
(iv) the negligence, bad faith or willful misconduct of the
Seller in connection with its performance under this Section 13.
If the indemnification provided for herein is unavailable or
insufficient to hold harmless an Indemnified Party, then the Seller agrees that
it shall contribute to the amount paid or payable by such Indemnified Party as a
result of any claims, losses, damages or liabilities incurred by such
Indemnified Party in such proportion as is appropriate to reflect the relative
fault of such Indemnified Party on the one hand and the Seller on the other.
In the case of any failure of performance described in clause (a)(ii)
of this Section, the Seller shall promptly reimburse the Purchaser, any
Depositor, as applicable, and each Person responsible for the preparation,
execution or filing of any report required to be filed with the Commission with
respect to such Pass-Through Transfer, 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 Pass-Through Transfer, for all costs reasonably incurred by each such
party in order to obtain the information, report, certification, accountants'
letter or other material not delivered as required by the Seller, any
Subservicer, any Subcontractor or any Third-Party Originator.
This indemnification shall survive the termination of this Agreement
or the termination of any party to this Agreement.
(b) (i) Any failure by the Seller, 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 Section
13, or any breach by the Seller of a representation or warranty set forth in
Section 13.02(i) or in a writing furnished pursuant to Section 13.02(ii) and
made as of a date prior to the closing date of the related Pass-Through
53
Transfer, to the extent that such breach is not cured by such closing date, or
any breach by the Seller of a representation or warranty in a writing furnished
pursuant to Section 13.02(ii) 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 Seller under this Agreement and any
applicable Reconstitution Agreement, and shall entitle the Purchaser, Master
Servicer or Depositor, as applicable, in its sole discretion to terminate the
rights and obligations of the Seller as servicer under this Agreement and/or any
applicable Reconstitution Agreement without payment (other than for payment of
Servicing Fees and unreimbursed Servicing Advances and Monthly Advances owed to
the Company thereunder at the time of such termination) (notwithstanding
anything in this Agreement or any applicable Reconstitution Agreement to the
contrary) of any compensation to the Seller; 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 Seller as servicer, such provision shall be given effect.
(ii) Any failure by the Seller, any Subservicer or any
Subcontractor to deliver any information, report, certification or
accountants' letter when and as required under Section 13.04 or 13.05,
including (except as provided below) any failure by the Seller to identify
pursuant to Section 13.06(ii) any Subcontractor "participating in the
servicing function" within the meaning of Item 1122 of Regulation AB, which
continues unremedied for five (5) 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
Seller under this Agreement and any applicable Reconstitution Agreement,
and shall entitle the Purchaser, any Master Servicer or Depositor, as
applicable, in its sole discretion to terminate the rights and obligations
of the Seller 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 Seller; 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 Seller as servicer, such
provision shall be given effect.
Neither the Purchaser nor any Depositor shall be entitled to terminate
the rights and obligations of the Seller pursuant to this subparagraph
(b)(ii) if a failure of the Seller to identify a Subcontractor
"participating in the servicing function" within the meaning of Item 1122
of Regulation AB was attributable solely to the role or functions of such
Subcontractor with respect to mortgage loans other than the Mortgage Loans.
(iii) The Seller 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 Seller 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
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otherwise, whether in equity or at law, such as an action for damages,
specific performance or injunctive relief.
SECTION 14. The Seller and the Servicer.
Subsection 14.01. Additional Indemnification by the Seller and the
Servicer.
In addition to the indemnification provided in Subsection 7.03, the
Seller and the Servicer shall indemnify the Initial Purchaser and any subsequent
Purchaser and hold them 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 the Initial
Purchaser and any subsequent Purchaser may sustain in any way related to the
failure of the Seller or the Servicer to perform its obligations under this
Agreement including but not limited to its obligation to service and administer
the Mortgage Loans in strict compliance with the terms of this Agreement or any
Reconstitution Agreement entered into pursuant to Section 12.
Subsection 14.02. Merger or Consolidation of the Seller and the
Servicer.
The Seller and the Servicer shall each keep in full force and effect
its existence, rights and franchises as a corporation under the laws of the
state of its incorporation except as permitted herein, and shall obtain and
preserve its qualification to do business as a foreign corporation in each
jurisdiction in which such qualification is or shall be necessary to protect the
validity and enforceability of this Agreement or any of the Mortgage Loans, and
to enable the Seller and the Servicer to perform its duties under this
Agreement.
Any Person into which the Seller or the Servicer may be merged or
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Seller or the Servicer shall be a party, or any
Person succeeding to the business of the Seller or the Servicer, shall be the
successor of the Seller or the Servicer hereunder, without the execution or
filing of any paper or any further act on the part of any of the parties hereto,
anything herein to the contrary notwithstanding; provided, however, that the
successor or surviving Person shall be (i) an institution whose deposits are
insured by FDIC or a company whose business is the origination and servicing of
mortgage loans, (ii) have a GAAP net worth of not less than $25,000,000 and
(iii) be a FNMA or FHLMC approved seller/servicer and shall satisfy any
requirements of Section 16 with respect to the qualifications of a successor to
the Seller.
Subsection 14.03. Limitation on Liability of the Seller, the Servicer
and Others.
Neither the Seller, the Servicer nor any of the officers, employees or
agents of the Seller or the Servicer shall be under any liability to the
Purchaser for any action taken or for refraining from the taking of any action
in good faith in connection with the servicing of the Mortgage Loans pursuant to
this Agreement, or for errors in judgment; provided, however, that this
provision shall not protect the Seller or the Servicer or any such person
against any breach of warranties or representations made herein, or failure to
perform its obligations in strict compliance with any standard of care set forth
in this Agreement, or any liability which would
55
otherwise be imposed by reason of any breach of the terms and conditions of this
Agreement. The Seller, the Servicer and any officer, employee or agent of the
Seller or the Servicer may rely in good faith on any document of any kind prima
facie properly executed and submitted by any Person respecting any matters
arising hereunder. The Seller and the Servicer shall not be under any obligation
to appear in, prosecute or defend any legal action which is not incidental to
its obligation to sell or duty to service the Mortgage Loans in accordance with
this Agreement and which in its opinion may result in its incurring any expenses
or liability; provided, however, that the Seller or the Servicer may, with the
consent of the Purchaser, undertake any such action which it may deem necessary
or desirable in respect to this Agreement and the rights and duties of the
parties hereto. In such event, the legal expenses and costs of such action and
any liability resulting therefrom shall be expenses, costs and liabilities for
which the Purchaser shall be liable, the Seller and the Servicer shall be
entitled to reimbursement therefor from the Purchaser upon written demand except
when such expenses, costs and liabilities incurred in performing the Seller's or
the Servicer's indemnification obligations under Subsections 7.03 or 14.01.
Subsection 14.04. Servicer Not to Resign.
Except as permitted under Subsection 14.02, the Servicer shall not
assign this Agreement or resign from the obligations and duties hereby imposed
on it except by mutual written consent of the Servicer and the Purchaser or upon
the determination that its servicing duties hereunder are no longer permissible
under applicable law and such incapacity cannot be cured by the Servicer in
which event the Servicer may resign as servicer. Any such determination
permitting the resignation of the Servicer as servicer shall be evidenced by an
Opinion of Counsel to such effect delivered to the Purchaser, which Opinion of
Counsel shall be in form and substance acceptable to the Purchaser, and which
shall be provided at the cost of the Servicer. No such resignation shall become
effective until a successor shall have assumed the Servicer's responsibilities
and obligations hereunder in the manner provided in Section 17.
Subsection 14.05. No Transfer of Servicing.
The Servicer acknowledges that the Purchaser has acted in reliance
upon the Servicer's independent status, the adequacy of its servicing
facilities, plan, personnel, records and procedures, its integrity, reputation
and financial standing and the continuance thereof. Without in any way limiting
the generality of this Section and, except as permitted under Subsections 13.06,
14.02 and 14.04, the Servicer shall not either assign this Agreement or the
servicing hereunder or delegate its rights or duties hereunder or any portion
thereof, or sell or otherwise dispose of all or substantially all of its
property or assets, without the prior written approval of the Purchaser, which
consent will not be unreasonably withheld.
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SECTION 15. Default.
Subsection 15.01. Events of Default.
In case one or more of the following Events of Default by the Servicer
shall occur and be continuing, that is to say:
(i) 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 two (2) Business Days after the date
upon which written notice of such failure, requiring the same to be
remedied, shall have been given to the Servicer by the Purchaser; or
(ii) failure on the part of the Seller or the Servicer duly to
observe or perform in any material respect any other of the covenants or
agreements on the part of the Seller or the Servicer set forth in this
Agreement which continues unremedied for a period of thirty (30) days
(except that such number of days shall be fifteen (15) in the case of a
failure to pay any premium for any insurance policy required to be
maintained under this Agreement) after the date on which written notice of
such failure, requiring the same to be remedied, shall have been given to
the Seller or the Servicer by the Purchaser or by the Custodian; or
(iii) a decree or order of a court or agency or supervisory
authority having jurisdiction for the appointment of a conservator or
receiver or liquidator in any insolvency, bankruptcy, readjustment of debt,
marshalling of assets and liabilities or similar proceedings, or for the
winding up or liquidation of its affairs, shall have been entered against
the Seller or the Servicer and such decree or order shall have remained in
force undischarged or unstayed for a period of sixty (60) days; or
(iv) the Seller or the Servicer shall consent to the appointment
of a conservator or receiver or liquidator in any insolvency, bankruptcy,
readjustment of debt, marshalling of assets and liabilities or similar
proceedings of or relating to the Seller or the Servicer or of or relating
to all or substantially all of its property; or
(v) the Seller or the Servicer shall admit in writing its
inability to pay its debts generally as they become due, file a petition to
take advantage of any applicable insolvency or reorganization statute, make
an assignment for the benefit of its creditors, or voluntarily suspend
payment of its obligations; or
(vi) failure by the Seller or the Servicer to be in compliance
with the "doing business" or licensing laws of any jurisdiction where a
Mortgaged Property is located; or
(vii) the Servicer ceases at any point to meet the qualifications
of either a FNMA or FHLMC seller/servicer, or the Servicer is not eligible
to act as servicer or master servicer for mortgage loans subject to
residential mortgage backed securities
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transactions rated by any nationally recognized rating agency or is
eligible to act as such only with enhanced credit support, or the Seller's
credit rating is reduced below average by any nationally recognized rating
agency; or
(viii) the Servicer attempts to assign its right to servicing
compensation hereunder or the Seller or the Servicer attempts, without the
consent of the Purchaser, to sell or otherwise dispose of all or
substantially all of its property or assets or to assign this Agreement or
the servicing responsibilities hereunder or to delegate its duties
hereunder or any portion thereof except as permitted under Subsections
13.06, 14.02 and 14.04;
(ix) Seller's membership in MERS is terminated for any reason and
any of the Mortgage Loans then serviced by the Seller are MERS Mortgage
Loans; or
(x) the Servicer fails to duly perform, within the required time
period, its obligations under Section 13 or Sections 11.23 or 11.24 of the
Servicing Addendum, which failure continues unremedied for a period of
three (3) days after the date on which written notice of such failure,
requiring the same to be remedied, shall have been given to the Servicer by
any party to this Agreement or by any master servicer responsible for
master servicing the Mortgage Loans pursuant to a securitization of such
Mortgage Loans.
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 Seller or the
Servicer, as applicable, 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 Servicer as
servicer under this Agreement. On or after the receipt by the Seller or the
Servicer , as applicable of such written notice, all authority and power of the
Servicer to service the Mortgage Loans under this Agreement shall on the date
set forth in such notice pass to and be vested in the successor appointed
pursuant to Section 17.
Subsection 15.02. Waiver of Defaults.
The Purchaser may waive any default by the Seller in the performance
of its obligations hereunder and its consequences. Upon any such waiver of a
past default, such default shall cease to exist, and any Event of Default
arising therefrom shall be deemed to have been remedied for every purpose of
this Agreement. No such waiver shall extend to any subsequent or other default
or impair any right consequent thereon except to the extent expressly so waived.
SECTION 16. Termination.
The respective obligations and responsibilities of the Seller, as
servicer, shall terminate upon the distribution to the Purchaser of the final
payment or liquidation with respect to the last Mortgage Loan (or advances of
same by the Seller) or the disposition of all property acquired upon foreclosure
or deed in lieu of foreclosure with respect to the last Mortgage Loan and the
remittance of all funds due hereunder unless terminated with respect to all or a
portion of the Mortgage Loans on an earlier date pursuant to Section 15. Upon
written request from the
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Purchaser in connection with any such termination, the Servicer shall prepare,
execute and deliver, any and all documents and other instruments, place in the
Purchaser's possession all Mortgage Files, and do or accomplish all other acts
or things necessary or appropriate to effect the purposes of such notice of
termination, whether to complete the transfer and endorsement or assignment of
the Mortgage Loans and related documents, including any transfers on the MERS
System, or otherwise, at the Servicer's sole expense. The Servicer agrees to
cooperate with the Purchaser and such successor in effecting the termination of
the Servicer's responsibilities and rights hereunder as servicer, including,
without limitation, the transfer to such successor for administration by it of
all cash amounts which shall at the time be credited by the Servicer to the
Custodial Account, REO Account or Escrow Account or thereafter received with
respect to the Mortgage Loans.
SECTION 17. Successor to the Servicer.
Prior to termination of Servicer's responsibilities and duties under
this Agreement pursuant to Section 14 or 15, 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 which shall
succeed to all rights and assume all of the responsibilities, duties and
liabilities of the Servicer as servicer under this Agreement. In connection with
such appointment and assumption, the Purchaser may make such arrangements for
the compensation of such successor out of payments on Mortgage Loans as it and
such successor shall agree. In the event that the Servicer's duties,
responsibilities and liabilities as servicer under this Agreement should be
terminated pursuant to the aforementioned Sections, the Servicer shall discharge
such duties and responsibilities during the period from the date it acquires
knowledge of such termination until the effective date thereof with the same
degree of diligence and prudence which it is obligated to exercise under this
Agreement, and shall take no action whatsoever that might impair or prejudice
the rights or financial condition of the Purchaser or such successor. The
termination of the Servicer as servicer pursuant to the aforementioned Sections
shall not become effective until a successor shall be appointed pursuant to this
Section 16 and shall in no event relieve the Seller and the Servicer of the
representations and warranties made pursuant to Subsections 7.01 and 7.02 and
the remedies available to the Purchaser under Subsection 7.03 or 7.04, it being
understood and agreed that the provisions of such Subsections 7.01, 7.02, 7.03,
7.04 and 14.01 shall be applicable to the Seller and Servicer notwithstanding
any such resignation or termination of the Servicer, or the termination of this
Agreement.
Any successor appointed as provided herein shall execute, acknowledge
and deliver to the Servicer and to the Purchaser an instrument accepting such
appointment, whereupon such successor shall become fully vested with all the
rights, powers, duties, responsibilities, obligations and liabilities of the
Servicer, with like effect as if originally named as a party to this Agreement
provided, however, that such successor shall not assume, and Servicer shall
indemnify such successor for, any and all liabilities arising out of the
Servicer's acts as servicer. Any termination of the Servicer as servicer
pursuant to Section 15 or 16 shall not affect any claims that the Purchaser may
have against the Servicer arising prior to any such termination or resignation
or remedies with respect to such claims.
The Servicer shall timely deliver to the successor the funds in the
Custodial Account, the REO Account and the Escrow Account and the Servicing
Files and Mortgage Files
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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 liabilities of the Servicer as servicer,
including making any transfers on the MERS System. The successor shall make
appropriate arrangements to reimburse the Servicer for amounts the Servicer
actually expended as servicer pursuant to this Agreement which the successor is
entitled to retain hereunder and to which the Servicer would have been entitled
pursuant to this Agreement but for the appointment of the successor servicer.
SECTION 18. Financial Statements.
The Seller understands that in connection with the Purchaser's
marketing of the Mortgage Loans, the Purchaser may make available to prospective
purchasers the Seller's financial statements for the most recently completed
three (3) fiscal years respecting which such statements are available. The
Seller also shall make available any comparable interim statements to the extent
any such statements have been prepared by the Seller (and are available upon
request to members or stockholders of the Seller or the public at large). The
Seller, if it has not already done so, agrees to furnish promptly to the
Purchaser copies of the statements specified above. The Seller also shall make
available information on its servicing performance with respect to mortgage
loans serviced for others, including delinquency ratios.
The Seller also agrees to allow access to knowledgeable financial,
accounting, origination and servicing officers of the Seller for the purpose of
answering questions asked by any prospective purchaser regarding recent
developments affecting the Seller, its loan origination or servicing practices
or the financial statements of the Seller.
SECTION 19. Mandatory Delivery: Grant of Security Interest.
The sale and delivery of each Mortgage Loan on or before the related
Closing Date is mandatory from and after the date of the execution of the
related Confirmation, it being specifically understood and agreed that each
Mortgage Loan is unique and identifiable on the date hereof and that an award of
money damages would be insufficient to compensate the Initial Purchaser for the
losses and damages incurred by the Initial Purchaser (including damages to
prospective purchasers of the Mortgage Loans) in the event of the Seller's
failure to deliver each of the related Mortgage Loans or one or more Mortgage
Loans otherwise acceptable to the Initial Purchaser on or before the related
Closing Date. The Seller hereby grants to the Initial Purchaser a lien on and a
continuing security interest in each Mortgage Loan and each document and
instrument evidencing each such Mortgage Loan to secure the performance by the
Seller of its obligation hereunder, and the Seller agrees that it holds such
Mortgage Loans in custody for the Initial Purchaser subject to the Initial
Purchaser's (i) right to reject any Mortgage Loan under the terms of this
Agreement and the related Confirmation, and (ii) obligation to pay the related
Purchase Price for the Mortgage Loans. 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 at law or in equity and all such
rights and remedies may be exercised concurrently, independently or
successively.
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SECTION 20. Notices.
All demands, notices and communications hereunder shall be in writing
and shall be deemed to have been duly given if mailed, by registered or
certified mail, return receipt requested, or, if by other means, when received
by the other party at the respective address as follows:
(1) if to the Purchaser:
HSBC Bank USA, National Association
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxx Xxxxxxxxxx
(2) if to the Seller:
SunTrust Mortgage, Inc.
000 Xxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attn: Xxx Xxxxxxx
(3) if to the Servicer
SunTrust Mortgage, Inc.
0000 Xxxxxx Xxxxxx, Xxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxxx Xxxxxx-Xxxxxxx
or such other address as may hereafter be furnished to the other party by like
notice. Any such demand, notice or communication hereunder shall be deemed to
have been received on the date delivered to or received at the premises of the
addressee (as evidenced, in the case of registered or certified mail, by the
date noted on the return receipt).
SECTION 21. Severability Clause.
Any part, provision, representation or warranty of this Agreement that
is prohibited or which is held to be void or unenforceable shall be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof. Any part, provision, representation or warranty of
this Agreement which is prohibited or unenforceable or is held to be void or
unenforceable in any jurisdiction shall be ineffective, as to such jurisdiction,
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction as to any Mortgage Loan shall not invalidate or render
unenforceable such provision in any other jurisdiction. To the extent permitted
by applicable law, the parties hereto waive any provision of law that prohibits
or renders void or unenforceable any provision hereof. If the invalidity of any
part, provision, representation or warranty of this Agreement shall deprive any
party of the economic benefit intended to be conferred by this Agreement, the
parties shall negotiate, in good-faith, to develop a structure the economic
effect of which is nearly as possible the same as the economic effect of this
Agreement without regard to such invalidity.
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SECTION 22. Counterparts.
This Agreement may be executed simultaneously in any number of
counterparts. Each counterpart shall be deemed to be an original, and all such
counterparts shall constitute one and the same instrument.
SECTION 23. Governing Law.
The Agreement shall be construed in accordance with the laws of the
State of New York without regard to any conflicts of law provisions and the
obligations, rights and remedies of the parties hereunder shall be determined in
accordance with the laws of the State of New York, except to the extent
preempted by Federal law.
SECTION 24. Intention of the Parties.
It is the intention of the parties that the Initial Purchaser is
purchasing, and the Seller is selling, the Mortgage Loans and not a debt
instrument of the Seller or another security. Accordingly, the parties hereto
each intend to treat the transaction for Federal income tax purposes as a sale
by the Seller, and a purchase by the Purchaser, of the Mortgage Loans. The
Initial Purchaser shall have the right to review the Mortgage Loans and the
related Mortgage Loan Files to determine the characteristics of the Mortgage
Loans which shall affect the Federal income tax consequences of owning the
Mortgage Loans and the Seller shall cooperate with all reasonable requests made
by the Initial Purchaser in the course of such review.
SECTION 25. Successors and Assigns.
This Agreement shall bind and inure to the benefit of and be
enforceable by the Seller, the Servicer and the Purchaser and the respective
successors and assigns of the Seller, the Servicer and the Purchaser. The
Purchaser may assign this Agreement to any Person to whom any Mortgage Loan is
transferred whether pursuant to a sale or financing and to any Person to whom
the master servicing of any Mortgage Loan is sold or transferred. Upon any such
assignment, the Person to whom such assignment is made shall succeed to all
rights and obligations of the Purchaser under this Agreement to the extent of
the related Mortgage Loan or Mortgage Loans and this Agreement, to the extent of
the related Mortgage Loan or Loans, shall be deemed to be a separate and
distinct Agreement between the Seller, the Servicer and such Purchaser, and a
separate and distinct Agreement between the Seller, the Servicer and each other
Purchaser to the extent of the other related Mortgage Loan or Loans. In the
event that this Agreement is assigned to any Person to whom the master servicing
of any Mortgage Loan is sold or transferred, the rights and benefits under this
Agreement that inure to the Purchaser shall inure to the benefit of both the
Person to whom such Mortgage Loan is transferred and the Person to whom the
master servicing of such Mortgage Loan has been transferred; provided that, the
right to require a Mortgage Loan to be repurchased by the Seller pursuant to
Subsection 7.03 or 7.04 shall be retained solely by the Purchaser. This
Agreement shall not be assigned, pledged or hypothecated by the Seller or the
Servicer to a third party without the consent of the Purchaser, except as
permitted in Subsections 14.02 and 14.04.
SECTION 26. Waivers.
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No term or provision of this Agreement may be waived or modified
unless such waiver or modification is in writing and signed by the party against
whom such waiver or modification is sought to be enforced.
SECTION 27. Exhibits.
The exhibits to this Agreement are hereby incorporated and made a part
hereof and are an integral part of this Agreement.
SECTION 28. Nonsolicitation.
The Seller and the Servicer covenant and agree that they will not take
any action or permit or cause any action to be taken by any of its agents, to
personally, by telephone, mail e-mail or otherwise, solicit the Mortgagor under
any Mortgage Loan to refinance the Mortgage Loan, in whole or in part or provide
information to any other entity to solicit the refinancing of any Mortgage Loan
in whole or in part; provided that, the foregoing shall not preclude the Seller
or the Servicer from engaging in solicitations to the general public by
newspaper, radio, television or other media which are not directed toward the
Mortgagors or from refinancing the Mortgage Loan of any Mortgagor who, without
solicitation, contacts the Seller or the Servicer to request the refinancing of
the related Mortgage Loan.
SECTION 29. General Interpretive Principles.
For purposes of this Agreement, except as otherwise expressly provided
or unless the context otherwise requires:
(a) the terms defined in this Agreement have the meanings assigned to
them in this Agreement and include the plural as well as the singular, and the
use of any gender herein shall be deemed to include the other gender;
(b) accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting principles;
(c) references herein to "Articles," "Sections," "Subsections,"
"Paragraphs," and other Subdivisions without reference to a document are to
designated Articles, Sections, Subsections, Paragraphs and other subdivisions of
this Agreement;
(d) reference to a Subsection without further reference to a Section
is a reference to such Subsection as contained in the same Section in which the
reference appears, and this rule shall also apply to Paragraphs and other
subdivisions;
(e) the words "herein," "hereof," "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
provision; and
(f) the term "include" or "including" shall mean without limitation by
reason of enumeration.
63
SECTION 30. Reproduction of Documents.
This Agreement and all documents relating thereto, including, without
limitation, (a) consents, waivers and modifications which may hereafter be
executed, (b) documents received by any party at the closing, and (c) financial
statements, certificates and other information previously or hereafter
furnished, may be reproduced by any photographic, photostatic, microfilm,
micro-card, miniature photographic or other similar process. The parties agree
that any such reproduction shall be admissible in evidence as the original
itself in any judicial or administrative proceeding, whether or not the original
is in existence and whether or not such reproduction was made by a party in the
regular course of business, and that any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in evidence.
SECTION 31. Further Agreements.
The Seller, the Servicer and the Purchaser each agree to execute and
deliver to the other such reasonable and appropriate additional documents,
instruments or agreements as may be necessary or appropriate to effectuate the
purposes of this Agreement.
SECTION 32. Third-Party Beneficiary.
Each Master Servicer shall be considered a third-party beneficiary of
this Agreement, entitled to all the rights and benefits hereunder as if it were
a direct party to this Agreement.
SECTION 33. Entire Agreement.
This Agreement, the Confirmation and the exhibits and schedules hereto
constitute the entire agreement and understanding of the parties with respect to
the matters and transactions contemplated by this Agreement and, except to the
extent otherwise set forth in writing, supersedes any prior agreement and
understandings with respect to those matters and transactions. In the event of
any contradiction, conflict or inconsistency between the terms and provisions of
this Agreement and the terms and provisions of any Confirmation, the terms and
provisions of such Confirmation will govern.
64
IN WITNESS WHEREOF, the Seller, the Servicer and the Purchaser have
caused their names to be signed hereto by their respective officers thereunto
duly authorized as of the date first above written.
SUNTRUST MORTGAGE, INC.
(Seller and Servicer)
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
HSBC BANK USA, NATIONAL ASSOCIATION
(Initial Purchaser)
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
EXHIBIT 1
SELLER'S OFFICER'S CERTIFICATE
I, ________________________, hereby certify that I am the duly elected
______________ of [Seller], a __________________ (the "Seller"), and further
certify, on behalf of the Seller as follows:
1. Attached hereto as Attachment I are a true and correct copy of
the Certificate of Incorporation and by-laws of the Seller as are
in full force and effect on the date hereof.
2. No proceedings looking toward merger, liquidation, dissolution or
bankruptcy of the Seller are pending or contemplated.
3. Each person who, as an officer or attorney-in-fact of the Seller,
signed (a) the Master Mortgage Loan Purchase and Servicing
Agreement (the "Purchase Agreement"), dated as of ____________,
2006, by and among the Seller, the Servicer and HSBC Bank USA,
National Association (the "Purchaser"); (b) the Confirmation,
dated _____________ 2006, between the Seller and the Purchaser
(the "Confirmation"); and (c) any other document delivered prior
hereto or on the date hereof in connection with the sale and
servicing of the Mortgage Loans in accordance with the Purchase
Agreement and the Confirmation was, at the respective times of
such signing and delivery, and is as of the date hereof, duly
elected or appointed, qualified and acting as such officer or
attorney-in-fact, and the signatures of such persons appearing on
such documents are their genuine signatures.
4. Attached hereto as Attachment II is a true and correct copy of
the resolutions duly adopted by the board of directors of the
Seller on ________________, 2006 (the "Resolutions") with respect
to the authorization and approval of the sale and servicing of
the Mortgage Loans; said Resolutions have not been amended,
modified, annulled or revoked and are in full force and effect on
the date hereof.
5. Attached hereto as Attachment III is a Certificate of Good
Standing of the Seller dated ______________, 2006. No event has
occurred since ___________________, 2006 which has affected the
good standing of the Seller under the laws of the State of
___________.
6. All of the representations and warranties of the Seller contained
in Subsections 7.01 and 7.02 of the Purchase Agreement were true
and correct in all material respects as of the date of the
Purchase Agreement and are true and correct in all material
respects as of the date hereof.
Exh 1-A-1
7. The Seller has performed all of its duties and has satisfied all
the material conditions on its part to be performed or satisfied
prior to the related Closing Date pursuant to the Purchase
Agreement and the related Confirmation.
All capitalized terms used herein and not otherwise defined shall have
the meaning assigned to them in the Purchase Agreement.
Exh 1-A-2
IN WITNESS WHEREOF, I have hereunto signed my name and affixed the
seal of the Seller.
Dated:
--------------------------
[Seal]
[SELLER]
(Seller)
By:
------------------------------------
Name:
----------------------------------
Title: Vice President
I, _______________________, Secretary of the Seller, hereby certify
that _________________________ is the duly elected, qualified and acting Vice
President of the Seller and that the signature appearing above is his genuine
signature.
IN WITNESS WHEREOF, I have hereunto signed my name.
Dated:
--------------------------
[Seal]
[SELLER]
(Seller)
By:
------------------------------------
Name:
----------------------------------
Title: [Assistant] Secretary
Exh 1-A-3
EXHIBIT 2
[FORM OF OPINION OF COUNSEL TO THE SELLER AND THE SERVICER]
_________________________
(Date)
HSBC Bank USA, National Association
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Re: Master Mortgage Loan Purchase and Servicing Agreement, dated
as of [Month] 1, 2006
Gentlemen:
I am Senior Counsel to [SELLER], a __________________ (the "Seller"
and "Servicer"), and I am delivering this opinion in my capacity as Senior
Counsel to Seller and Servicer in connection with the sale of certain mortgage
loans by the Seller to HSBC Bank USA, National Association (the "Purchaser")
pursuant to (i) a Master Mortgage Loan Purchase and Servicing Agreement, dated
as of [Month] 1, 2006, among the Seller, the Servicer and the Purchaser (the
"Purchase Agreement") and the Confirmation, dated [Month], 2006, among the
Seller, the Servicer and the Purchaser (the "Confirmation"). Capitalized terms
not otherwise defined herein have the meanings set forth in the Purchase
Agreement.
In connection with rendering this opinion letter, I, or attorneys
working under my direction, have examined, among other things, originals,
certified copies or copies otherwise identified to my satisfaction as being true
copies of the following:
A. The Purchase Agreement;
B. The Confirmation;
C. The Seller's Articles of Incorporation and By-Laws, as amended to
date;
D. The Servicer's Articles of Incorporation and By-Laws, as amended
to date;
E. Resolutions adopted by the board of directors of the Seller
relating to the transactions covered by this opinion (the
"Seller's Board Resolutions"); and
F. Resolutions adopted by the board of directors of the Servicer
relating to the transactions covered by this opinion (the
"Servicer's Board Resolutions").
For the purpose of rendering this opinion, I have made such
documentary, factual and legal examinations as I deemed necessary under the
circumstances. As to factual matters, I have relied upon statements,
certificates and other assurances of public officials and of officers
Exh 2-1
and other representatives of the Seller, and upon such other certificates as I
deemed appropriate, which factual matters have not been independently
established or verified by me. I have also assumed, among other things, the
genuineness of all signatures, the legal capacity of all natural persons, the
authenticity of all documents submitted to me as originals, and the conformity
to original documents of all documents submitted to me as copies and the
authenticity of the originals of such copied documents.
On the basis of and subject to the foregoing examination, and in
reliance thereon, and subject to the assumptions, qualifications, exceptions and
limitations expressed herein, I am of the opinion that:
1. The Seller and the Servicer have been duly incorporated and are
validly existing and in good standing under the laws of the State of [ - ] with
corporate power and authority to own their properties and conduct their business
as presently conducted by them. The Seller and the Servicer have the corporate
power and authority to service the Mortgage Loans, and to execute, deliver, and
perform their obligations under the Purchase Agreement and the Confirmation
(sometimes collectively, the "Agreements").
2. The Purchase Agreement and the Confirmation have been duly and
validly authorized, executed and delivered by the Seller and the Servicer.
3. The Purchase Agreement and the Confirmation constitute valid, legal
and binding obligations of the Seller and the Servicer, enforceable against the
Seller and the Servicer in accordance with their respective terms.
4. No consent, approval, authorization or order of any state or
federal court or government agency or body is required for the execution,
delivery and performance by the Seller of the Purchase Agreement and the
Confirmation, or the consummation of the transactions contemplated by the
Purchase Agreement and the Confirmation, except for those consents, approvals,
authorizations or orders which previously have been obtained.
5. Neither the servicing of the Mortgage Loans by the Servicer as
provided in the Purchase Agreement and the Confirmation, nor the fulfillment by
the Seller or the Servicer of the terms of or the consummation of any other
transactions contemplated in the Purchase Agreement and the Confirmation will
result in a breach of any term or provision of the certificate of incorporation
or by-laws of the Seller or the Servicer, or, to my knowledge, will conflict
with, result in a breach or violation of, or constitute a default under, (i) the
terms of any indenture or other agreement or instrument known to me to which the
Seller or the Servicer are parties or by which they are bound, (ii) any State of
[ - ] or federal statute or regulation applicable to the Seller or the Servicer,
or (iii) any order of any State of [ - ] or federal court, regulatory body,
administrative agency or governmental body having jurisdiction over the Seller
or the Servicer, except in any such case where the default, breach or violation
would not have a material adverse effect on the Seller or the Servicer or its
ability to perform its obligations under the Purchase Agreement.
6. There is no action, suit, proceeding or investigation pending or,
to my knowledge, threatened against the Seller or the Servicer which, in my
judgment, either in any
Exh 2-2
one instance or in the aggregate, would draw into question the validity of the
Purchase Agreement or which would be likely to impair materially the ability of
the Seller or the Servicer to perform under the terms of the Purchase Agreement.
7. The sale of each Mortgage Note and Mortgage as and in the manner
contemplated by the Purchase Agreement is sufficient fully to transfer to the
Purchaser all right, title and interest of the Seller thereto as noteholder and
mortgagee.
The opinions above are subject to the following additional
assumptions, exceptions, qualifications and limitations:
A. I have assumed that all parties to the Agreements other than the
Seller and the Servicer have all requisite power and authority to execute,
deliver and perform their respective obligations under each of the Agreements,
and that the Agreements have been duly authorized by all necessary corporate
action on the part of such parties, have been executed and delivered by such
parties and constitute the legal, valid and binding obligations of such parties.
B. My opinion expressed in paragraphs 3 and 7 above is subject to the
qualifications that (i) the enforceability of the Agreements may be limited by
the effect of laws relating to (1) bankruptcy, reorganization, insolvency,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights generally, including, without limitation, the effect of
statutory or other laws regarding fraudulent conveyances or preferential
transfers, and (2) general principles of equity upon the specific enforceability
of any of the remedies, covenants or other provisions of the Agreements and upon
the availability of injunctive relief or other equitable remedies and the
application of principles of equity (regardless of whether such enforceability
is considered in a proceeding in equity or at law) as such principles relate to,
limit or affect the enforcement of creditors' rights generally and the
discretion of the court before which any proceeding for such enforcement may be
brought; and (ii) I express no opinion herein with respect to the validity,
legality, binding effect or enforceability of (a) provisions for indemnification
in the Agreements to the extent such provisions may be held to be unenforceable
as contrary to public policy or (b) Section 18 of the Purchase Agreement.
C. I have assumed, without independent check or certification, that
there are no agreements or understandings among the Seller, the Servicer, the
Purchaser and any other party which would expand, modify or otherwise affect the
terms of the documents described herein or the respective rights or obligations
of the parties thereunder.
Exh 2-3
I am admitted to practice in the State of [State] and I render no
opinion herein as to matters involving the laws of any jurisdiction other than
the State of [ - ] and the Federal laws of the United States of America.
Very truly yours,
As Senior Counsel for [Seller and
Servicer]
Exh 2-4
EXHIBIT 3
SECURITY RELEASE CERTIFICATION
I. Release of Security Interest
___________________________, hereby relinquishes any and all right,
title and interest it may have in and to the Mortgage Loans described in Exhibit
A attached hereto upon purchase thereof by HSBC Bank USA, National Association
from the Seller named below pursuant to that certain Master Mortgage Loan
Purchase and Servicing Agreement, dated as of [Month] 1, 2006, as of the date
and time of receipt by ______________________________ of $__________ for such
Mortgage Loans (the "Date and Time of Sale"), and certifies that all notes,
mortgages, assignments and other documents in its possession relating to such
Mortgage Loans have been delivered and released to the Seller named below or its
designees as of the Date and Time of Sale.
Name and Address of Financial Institution
(Name)
-------------------------------------
(Address)
-------------------------------------
By:
---------------------------------
Exh 3-1
II. Certification of Release
The Seller named below hereby certifies to HSBC Bank USA, National
Association that, as of the Date and Time of Sale of the above mentioned
Mortgage Loans to HSBC Bank USA, National Association, the security interests in
the Mortgage Loans released by the above named corporation comprise all security
interests relating to or affecting any and all such Mortgage Loans. The Seller
warrants that, as of such time, there are and will be no other security
interests affecting any or all of such Mortgage Loans.
[SELLER]
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Exh 3-2
EXHIBIT 4
ASSIGNMENT AND CONVEYANCE
On this _______ day of ________, 2006, [SELLER] ("Seller") as the
Seller under that certain Master Mortgage Loan Purchase and Servicing Agreement,
dated as of [Month] 1, 2006 (the "Agreement") does hereby sell, transfer,
assign, set over and convey to HSBC Bank USA, National Association 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 servicing rights thereto, Mortgage Files and all rights and obligations
arising under the documents contained therein including, subject to the terms of
the Agreement, the right to any Prepayment Charges payable with respect thereto.
Pursuant to Subsection 6.03 of the Agreement, the Seller has delivered to the
Custodian the documents for each Mortgage Loan to be purchased as set forth in
Exhibit 13 to the Agreement. The contents of each related Servicing File
required to be retained by the Seller to service the Mortgage Loans pursuant to
the Agreement and thus 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. The
Seller's possession of any portion of each such Servicing 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
the Seller shall be in a custodial capacity only. The ownership of each Mortgage
Note, Mortgage, and the contents of the Mortgage File and Servicing 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 the Seller shall immediately vest in the Purchaser and shall be
retained and maintained, in trust, by the Seller at the will of the Purchaser in
such custodial capacity only.
The Seller confirms to the Purchaser that the representation and
warranties set forth in Subsections 7.01 and 7.02 of the Agreement are true and
correct with respect to the Seller and the Mortgage Loans listed on the Mortgage
Loan Schedule attached hereto as of the date hereof, and that all statements
made in the Seller's Officer's Certificates and all Attachments thereto remain
complete, true and correct in all respects as of the date hereof, and that the
Mortgage Loan characteristics identified on the attached Schedule are true and
correct as of the date hereof.
Capitalized terms used herein and not otherwise defined shall have the
meanings set forth in the Agreement.
[SELLER],
Seller
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Exh 4-1
EXHIBIT 5
CONTENTS OF EACH MORTGAGE FILE
With respect to each Mortgage Loan, the Mortgage File shall include
each of the following items, which shall be available for inspection by the
Purchaser and which shall be retained by the Seller or delivered to the
Custodian:
1. Mortgage Loan Documents.
2. Residential loan application.
3. Mortgage Loan closing statement.
4. Verification of employment and income.
5. Verification of acceptable evidence of source and amount of
downpayment.
6. Credit report on Mortgagor.
7. Residential appraisal report.
8. Photograph of the Mortgaged Property.
9. Survey of the Mortgaged Property.
10. Copy of each instrument necessary to complete identification of
any exception set forth in the exception schedule in the title
policy, i.e., map or plat, restrictions, easements, sewer
agreements, home association declarations, etc.
11. All required disclosure statements and statement of Mortgagor
confirming receipt thereof.
12. If available, termite report, structural engineer's report, water
potability and septic certification.
13. Sales Contract, if applicable.
14. Hazard insurance policy.
15. Tax receipts, insurance premium receipts, ledger sheets, payment
history from date of origination, insurance claim files,
correspondence, current and historical computerized data files,
and all other processing, underwriting and closing papers and
records which are customarily contained in a mortgage loan file
and which are required to document the Mortgage Loan or to
service the Mortgage Loan.
Exh 5-1
16. Amortization schedule, if available.
17. Payment history for Mortgage Loans that have been closed for more
than 90 days.
18. Flood insurance policy, if applicable.
19. Tax Service Contract.
20. Flood Service Contract.
Exh 5-2
EXHIBIT 6
CUSTODIAL AGREEMENT
Exh 6-1
EXHIBIT 7
CUSTODIAL ACCOUNT LETTER AGREEMENT
________________________ __, 2006
To: __________________________________
(the "Depository")
As Seller under the Master Mortgage Loan Purchase and Servicing
Agreement, dated as of [Month] 1, 2006, we hereby authorize and request you to
establish an account, as a Custodial Account, to be designated as "[SELLER] in
trust for the Purchaser and various Mortgagors, Fixed and Adjustable Rate
Mortgage Loans." All deposits in the account shall be subject to withdrawal
therefrom by order signed by the Seller. You may refuse any deposit which would
result in violation of the requirement that the account be fully insured as
described below. This letter is submitted to you in duplicate. Please execute
and return one original to us.
[SELLER]
(Seller)
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Date:
----------------------------------
Exh 7-1
The undersigned, as Depository, hereby certifies that the
above-described account has been established under Account Number ___________ at
the office of the Depository indicated above, and agrees to honor withdrawals on
such account as provided above. The full amount deposited at any time in the
account will be insured by the Federal Deposit Insurance Corporation through the
Bank Insurance Fund ("BIF") or the Savings Association Insurance Fund ("SAIF").
(Depository)
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Date:
----------------------------------
Exh 7-2
EXHIBIT 8
ESCROW ACCOUNT LETTER AGREEMENT
________________, 2006
To: __________________________________
(the "Depository")
As Seller under the Master Mortgage Loan Purchase and Servicing
Agreement, dated as of [Month] 1, 2006, we hereby authorize and request you to
establish an account, as an Escrow Account, to be designated as "[SELLER] in
trust for the Purchaser and various Mortgagors, Fixed and Adjustable Rate
Mortgage Loans." All deposits in the account shall be subject to withdrawal
therefrom by order signed by the Seller. You may refuse any deposit which would
result in violation of the requirement that the account be fully insured as
described below. This letter is submitted to you in duplicate. Please execute
and return one original to us.
[SELLER]
(Seller)
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Date:
----------------------------------
Exh 8-1
The undersigned, as Depository, hereby certifies that the
above-described account has been established under Account Number ___________ at
the office of the Depository indicated above, and agrees to honor withdrawals on
such account as provided above. The full amount deposited at any time in the
account will be insured by the Federal Deposit Insurance Corporation through the
Bank Insurance Fund ("BIF") or the Savings Association Insurance Fund ("SAIF").
(Depository)
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Date:
----------------------------------
Exh 8-2
EXHIBIT 9
SERVICING ADDENDUM
Subsection 11.01 Seller to Act as Servicer.
The Seller, as independent contract servicer, shall service and administer
the Mortgage Loans in accordance with Accepted Servicing Practices and this
Agreement and shall have full power and authority, acting alone, to do or cause
to be done any and all things in connection with such servicing and
administration which the Seller may deem necessary or desirable and consistent
with the terms of this Agreement. The Seller shall be responsible for any and
all acts of a Subservicer and a Subcontractor, and the Seller's utilization of a
Subservicer or a Subcontractor shall in no way relieve the liability of the
Seller under this Agreement.
Consistent with the terms of this Agreement, the Servicer may waive, modify
or vary any term of any Mortgage Loan or consent to the postponement of strict
compliance with any such term or in any manner grant indulgence to any Mortgagor
if in the Servicer's reasonable and prudent determination such waiver,
modification, postponement or indulgence is not materially adverse to the
Purchaser; provided, however, that the Servicer shall not permit any
modification with respect to any Mortgage Loan that would change the Mortgage
Interest Rate, defer or forgive the payment thereof or of any principal or
interest payments, reduce the outstanding principal amount (except for actual
payments of principal), make additional advances of additional principal or
extend the final maturity date on such Mortgage Loan. Without limiting the
generality of the foregoing, the Servicer shall continue, and is hereby
authorized and empowered, to execute and deliver on behalf of itself, and the
Purchaser, all instruments of satisfaction or cancellation, or of partial or
full release, discharge and all other comparable instruments, with respect to
the Mortgage Loans and with respect to the Mortgaged Property. If reasonably
required by the Servicer, the Purchaser shall furnish the Servicer with any
powers of attorney and other documents necessary or appropriate to enable the
Servicer to carry out its servicing and administrative duties under this
Agreement.
If applicable, the Servicer shall notify MERS of the ownership interest of
the Purchaser in each MOM Loan through the MORNET system or MIDANET system, as
applicable, or any other comparable system acceptable to MERS. At any time
during the term of this Agreement, the Purchaser may direct the Servicer to
cause any MOM Loan to be deactivated from the MERS System.
In servicing and administering the Mortgage Loans, the Servicer shall
employ procedures including collection procedures and exercise the same care
that it customarily employs and exercises in servicing and administering
mortgage loans for its own account giving due consideration to accepted mortgage
servicing practices of prudent lending institutions and the Purchaser's reliance
on the Servicer.
The Seller will furnish, with respect to each Mortgage Loan, in accordance
with the Fair Credit Reporting Act and its implementing regulations, accurate
and complete information on its borrower credit files to Equifax, Experian, and
Trans Union Credit Information Company, on a monthly basis.
Exh 9-1
The Servicer has in place, and will maintain throughout the term of this
Agreement, a procedure by which it confirms, on an ongoing basis, that no
Mortgage Loan is subject to nullification pursuant to Executive Order 13224 (the
"Executive Order") or regulations promulgated by the Office of Foreign Assets
Control of the United States Department of the Treasury (the "OFAC Regulations")
or in violation of the Executive Order or the OFAC Regulations, and no Mortgagor
is subject to the provisions of such Executive Order or the OFAC Regulations or
listed as a "specially designated national or blocked person" for purposes of
the OFAC Regulations.
Subsection 11.02 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 shall 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 and held for its own account. Further,
the Servicer shall take special care in ascertaining and estimating annual
ground rents, taxes, assessments, water rates, fire and hazard insurance
premiums, mortgage insurance premiums, and all other charges that, as provided
in the Mortgage, 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.
The Seller shall not waive any Prepayment Charge with respect to any
Mortgage Loan which contains a Prepayment Charge which prepays during the term
of the charge. If the Seller fails to collect the Prepayment Charge upon any
prepayment of any Mortgage Loan which contains a Prepayment Charge, the Seller
shall pay the Purchaser at such time (by deposit to the Custodial Account) an
amount equal to the amount of the Prepayment Charge which was not collected.
Notwithstanding the above, the Seller may waive (and shall waive, in the case of
(v) below) a Prepayment Charge without paying the Purchaser the amount of the
Prepayment Charge (i) if the Mortgage Loan is in default (defined as 61 days or
more delinquent) and such waiver would maximize recovery of total proceeds
taking into account the value of such Prepayment Charge and the related Mortgage
Loan, (ii) if the prepayment is not a result of a refinancing by the Seller or
any of its affiliates and the Mortgage Loan is foreseen to be in default and
such waiver would maximize recovery of total proceeds taking into account the
value of such Prepayment Charge and the related Mortgage Loan, (iii) if the
collection of the Prepayment Charge would be in violation of applicable laws,
(iv) if the collection of such Prepayment Charge would be considered "predatory"
pursuant to written guidance published or issued by any applicable federal,
state or local regulatory authority acting in its official capacity and having
jurisdiction over such matters and (v) notwithstanding any state or federal law
to the contrary, any instance when a Mortgage Loan is in foreclosure. The Seller
hereby acknowledges that for the purposes of the preceding sentence, (i) the law
applicable to the enforcement of prepayment penalties and charges is the law
applicable to the related originator of the Mortgage Loans and (ii) state laws
prohibiting or limiting prepayment penalties or charges are preempted and
thereby inapplicable if the related originator of the mortgage loans is a
federal association or federal bank or an operating subsidiary of such
institution. In the event the Seller determines that (i) the foregoing
acknowledgement is no longer accurate and (ii) applicable state law would
Exh 9-2
prevent it from fully enforcing prepayment penalties or charges, the Seller
shall (i) provide prompt notice to such effect to the Purchaser and (ii) provide
a written opinion of counsel from a nationally recognized law firm experienced
in regulatory matters concluding that fully enforcing prepayment penalties or
charges would violate applicable law.
Subsection 11.03 Realization Upon Defaulted Mortgage Loans.
(a) The Servicer shall use its best efforts, consistent with the procedures
that the Servicer would use in servicing loans for its own account, to foreclose
upon or otherwise comparably convert the ownership of such Mortgaged Properties
as come into and continue in default and as to which no satisfactory
arrangements can be made for collection of delinquent payments pursuant to
Subsection 11.01. The Servicer shall use its best efforts to realize upon
defaulted Mortgage Loans in such a manner as will maximize the receipt of
principal and interest by the Purchaser, taking into account, among other
things, the timing of foreclosure proceedings. The foregoing is subject to the
provisions that, in any case in which Mortgaged Property shall have suffered
damage, the Servicer shall not be required to expend its own funds toward the
restoration of such property in excess of $2,000 unless it shall determine in
its discretion (i) that such restoration will increase the proceeds of
liquidation of the related Mortgage Loan to Purchaser after reimbursement to
itself for such expenses, and (ii) that such expenses will be recoverable by the
Servicer through Insurance Proceeds or Liquidation Proceeds from the related
Mortgaged Property, as contemplated in Subsection 11.05. In the event that any
payment due under any Mortgage Loan is not paid when the same becomes due and
payable, or in the event the Mortgagor fails to perform any other covenant or
obligation under the Mortgage Loan and such failure continues beyond any
applicable grace period, the Servicer shall take such action as it shall deem to
be in the best interest of the Purchaser. In the event that any payment due
under any Mortgage Loan remains delinquent for a period of 90 days or more, the
Servicer shall commence foreclosure proceedings, provided that prior to
commencing foreclosure proceedings, the Servicer shall notify the Purchaser in
writing of the Servicer's intention to do so, and the Servicer shall not
commence foreclosure proceedings if the Purchaser objects to such action within
ten (10) Business Days of receiving such notice. The Servicer shall notify the
Purchaser in writing of the commencement of foreclosure proceedings. In such
connection, the Servicer shall be responsible for all costs and expenses
incurred by it in any such proceedings; provided, however, that it shall be
entitled to reimbursement thereof from the related Mortgaged Property, as
contemplated in Subsection 11.05.
(b) Notwithstanding the foregoing provisions of this Subsection 11.03, with
respect to any Mortgage Loan as to which the Servicer has received actual notice
of, or has actual knowledge of, the presence of any toxic or hazardous substance
on the related Mortgaged Property the Servicer shall not either (i) obtain title
to such Mortgaged Property as a result of or in lieu of foreclosure or
otherwise, or (ii) otherwise acquire possession of, or take any other action,
with respect to, such Mortgaged Property if, as a result of any such action, the
Purchaser would be considered to hold title to, to be a mortgagee-in-possession
of, or to be an owner or operator of such Mortgaged Property within the meaning
of the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended from time to time, or any comparable law, unless the Servicer
has also previously determined, based on its reasonable judgment and a prudent
report prepared by a Person who regularly conducts environmental audits using
customary industry standards, that:
Exh 9-3
(1) such Mortgaged Property is in compliance with applicable
environmental laws or, if not, that it would be in the best economic
interest of the Purchaser to take such actions as are necessary to
bring the Mortgaged Property into compliance therewith; and
(2) there are no circumstances present at such Mortgaged Property
relating to the use, management or disposal of any hazardous
substances, hazardous materials, hazardous wastes, or petroleum-based
materials for which investigation, testing, monitoring, containment,
clean-up or remediation could be required under any federal, state or
local law or regulation, or that if any such materials are present for
which such action could be required, that it would be in the best
economic interest of the Purchaser to take such actions with respect
to the affected Mortgaged Property.
The cost of the environmental audit report contemplated by this Subsection
11.03 shall be advanced by the Servicer, subject to the Servicer's right to be
reimbursed therefor from the Custodial Account as provided in Subsection
11.05(v).
If the Servicer determines, as described above, that it is in the best
economic interest of the Purchaser to take such actions as are necessary to
bring any such Mortgaged Property into compliance with applicable environmental
laws, or to take such action with respect to the containment, clean-up or
remediation of hazardous substances, hazardous materials, hazardous wastes, or
petroleum-based materials affecting any such Mortgaged Property, then the
Servicer shall take such action as it deems to be in the best economic interest
of the Purchaser. The cost of any such compliance, containment, cleanup or
remediation shall be advanced by the Servicer, subject to the Servicer's right
to be reimbursed therefor from the Custodial Account as provided in Subsection
11.05(v).
(c) Proceeds received in connection with any Final Recovery Determination,
as well as any recovery resulting from a partial collection of Insurance
Proceeds or Liquidation Proceeds in respect of any Mortgage Loan, will be
applied in the following order of priority: first, to reimburse the Servicer for
any related unreimbursed Servicing Advances, pursuant to Subsection 11.05(iii);
second, to accrued and unpaid interest on the Mortgage Loan, to the date of the
Final Recovery Determination, or to the Due Date prior to the Distribution Date
on which such amounts are to be distributed if not in connection with a Final
Recovery Determination; and third, as a recovery of principal of the Mortgage
Loan. If the amount of the recovery so allocated to interest is less than the
full amount of accrued and unpaid interest due on such Mortgage Loan, the amount
of such recovery will be allocated by the Servicer as follows: first, to unpaid
Servicing Fees; and second, to the balance of the interest then due and owing.
The portion of the recovery so allocated to unpaid Servicing Fees shall be
reimbursed to the Servicer pursuant to Subsection 11.05(iii).
(d) Notwithstanding anything to the contrary contained herein, the
Purchaser may, at the Purchaser's sole option, terminate the Servicer as
servicer of any Mortgage Loan which becomes ninety (90) days or greater
delinquent in payment of a scheduled Monthly Payment, without payment of any
termination fee with respect thereto, provided that the Servicer shall on the
date said termination takes effect be reimbursed for any unreimbursed Monthly
Advances of
Exh 9-4
the Servicer's funds made pursuant to Subsection 11.21 and any unreimbursed
Servicing Advances and Servicing Fees relating to such delinquent Mortgage Loan
notwithstanding anything to the contrary set forth in Subsection 11.05. In the
event of any such termination, the provisions of Section 17 hereof shall apply
to said termination and the transfer of servicing responsibilities with respect
to such delinquent Mortgage Loan to the Purchaser or its designee.
Subsection 11.04 Establishment of Custodial Accounts; Deposits in Custodial
Accounts.
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 Custodial Accounts,
in the form of time deposit or demand accounts. The creation of any Custodial
Account shall be evidenced by a Custodial Account Letter Agreement in the form
of Exhibit 7.
The Servicer shall deposit in the Custodial Account on a daily basis, and
retain therein the following payments and collections received by it subsequent
to the Cut-off Date, or received by it prior to the Cut-off Date but allocable
to a period subsequent thereto, other than in respect of principal and interest
on the Mortgage Loans due on or before the Cut-off Date:
(i) all payments on account of principal on the Mortgage Loans;
(ii) all payments on account of interest on the Mortgage Loans;
(iii) all Liquidation Proceeds;
(iv) all Insurance Proceeds including amounts required to be deposited
pursuant to Subsections 11.10 and 11.11, other than proceeds to be held in
the Escrow Account and applied to the restoration or repair of the
Mortgaged Property or released to the Mortgagor in accordance with the
Servicer's normal servicing procedures, the loan documents or applicable
law;
(v) all Condemnation Proceeds affecting any Mortgaged Property which
are not released to the Mortgagor in accordance with the Servicer's normal
servicing procedures, the loan documents or applicable law;
(vi) all Monthly Advances;
(vii) all proceeds of any Mortgage Loan repurchased in accordance with
Subsections 7.03 and 7.04 and all amounts required to be deposited by the
Servicer in connection with shortfalls in principal amount of Qualified
Substitute Mortgage Loans pursuant to Subsection 7.03;
(viii) any amounts required to be deposited by the Servicer pursuant
to Subsection 11.11 in connection with the deductible clause in any blanket
hazard insurance policy. Such deposit shall be made from the Servicer's own
funds, without reimbursement therefor;
Exh 9-5
(ix) any amounts required to be deposited by the Servicer in
connection with any REO Property pursuant to Subsection 11.13;
(x) any amounts required to be deposited in the Custodial Account
pursuant to Subsections 11.19 or 11.20; and
(xi) with respect to each Principal Prepayment in full, an amount (to
be paid by the Seller out of its own funds without reimbursement therefor)
which, when added to all amounts allocable to interest received in
connection with such Principal Prepayment, equals one month's interest on
the amount of principal so prepaid at the Mortgage Interest Rate, provided,
however, that in no event shall the aggregate of deposits made by the
Servicer pursuant to this clause (xi) exceed the aggregate amount of the
Servicer's servicing compensation in the calendar month in which such
deposits are required.
The foregoing requirements for deposit in the Custodial Account shall be
exclusive, it being understood and agreed that, without limiting the generality
of the foregoing, payments in the nature of late payment charges and assumption
fees, to the extent permitted by Subsection 11.01, need not be deposited by the
Servicer in the Custodial Account. Such Custodial Account shall be an Eligible
Account. Any interest or earnings on funds deposited in the Custodial Account by
the depository institution shall accrue to the benefit of the Servicer and the
Servicer shall be entitled to retain and withdraw such interest from the
Custodial Account pursuant to Subsection 11.05(iii). The Servicer shall give
notice to the Purchaser of the location of the Custodial Account when
established and prior to any change thereof.
Subsection 11.05 Permitted Withdrawals From the Custodial Account.
The Servicer may, from time to time, withdraw from the Custodial Account
for the following purposes:
(xii) to make distributions to the Purchaser in the amounts and in the
manner provided for in Subsection 11.14;
(xiii) to reimburse itself for Monthly Advances, the Servicer's right
to reimburse itself pursuant to this subclause (ii) being limited to
amounts received on the related Mortgage Loan which represent late
collections (net of the related Servicing Fees) respecting which any such
advance was made it being understood that, in the case of such
reimbursement, the Servicer's right thereto shall be prior to the rights of
Purchaser, except that, where the Servicer is required to repurchase a
Mortgage Loan, pursuant to Subsection 7.03 or 7.04, the Servicer's right to
such reimbursement shall be subsequent to the payment to the Purchaser of
the Repurchase Price pursuant to Subsection 7.03 or 7.04, and all other
amounts required to be paid to the Purchaser with respect to such Mortgage
Loans;
(xiv) to reimburse itself for unreimbursed Servicing Advances, the
Servicer's right to reimburse itself pursuant to this subclause (ii) 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
Exh 9-6
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 the Servicer is required
to repurchase a Mortgage Loan, pursuant to Subsection 7.03 or Subsection
7.04, the Servicer's right to such reimbursement shall be subsequent to the
payment to the Purchaser of the Repurchase Price pursuant to Subsection
7.03 or Subsection 7.04 and all other amounts required to be paid to the
Purchaser with respect to such Mortgage Loans;
(xv) to pay to itself pursuant to Subsection 11.21 as servicing
compensation (a) any interest earned on funds in the Custodial Account (all
such interest to be withdrawn monthly not later than each Distribution
Date), and (b) the Servicing Fee from that portion of any payment or
recovery as to interest on a particular Mortgage Loan;
(xvi) to pay to itself with respect to each Mortgage Loan that has
been repurchased pursuant to Subsection 7.03 or Subsection 7.04 all amounts
received thereon and not distributed as of the date on which the related
Repurchase Price is determined;
(xvii) to reimburse the Servicer for any Monthly Advance previously
made which the Servicer has determined to be a nonrecoverable monthly
advance
(xviii) to pay, or to reimburse the Servicer for advances in respect
of, expenses incurred in connection with any Mortgage Loan pursuant to
Subsection 11.03(b), but only to the extent of amounts received in respect
of the Mortgage Loans to which such expense is attributable; and
(xix) to clear and terminate the Custodial Account on the termination
of this Agreement.
The Servicer shall keep and maintain separate accounting, on a Mortgage
Loan by Mortgage Loan basis, for the purpose of justifying any withdrawal from
the Custodial Account pursuant to such subclauses (ii) - (vii) above. The
Servicer shall provide written notification in the form of an Officers'
Certificate to the Purchaser, on or prior to the next succeeding Distribution
Date, upon making any withdrawals from the Custodial Account pursuant to
subclause (vi) above.
Subsection 11.06 Establishment of Escrow Accounts; Deposits in Escrow
Accounts.
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. The creation of any Escrow Account shall be evidenced by Escrow
Account Letter Agreement in the form of Exhibit 8.
The Servicer shall deposit in the Escrow Account or Accounts on a daily
basis, and retain therein, (i) all Escrow Payments collected on account of the
Mortgage Loans, for the purpose of effecting timely payment of any such items as
required under the terms of this Agreement, 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
Exh 9-7
required under this Agreement, and for such other purposes as shall be as set
forth or in accordance with Subsection 11.08. 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.
Subsection 11.07 Permitted Withdrawals From Escrow Account.
Withdrawals from the Escrow Account may be made by the Servicer (i) to
effect timely payments of ground rents, taxes, assessments, water rates, hazard
insurance premiums, Primary Insurance Policy premiums, if applicable, and
comparable items, (ii) to reimburse the Servicer for any Servicing Advance made
by the Servicer with respect to a related Mortgage Loan but only from amounts
received on the related Mortgage Loan which represent late payments or
collections of Escrow Payments thereunder, (iii) to refund to the Mortgagor any
funds as may be determined to be overages, (iv) for transfer to the Custodial
Account in accordance with the terms of this Agreement, (v) for application to
restoration or repair of the Mortgaged Property, (vi) to pay to the Servicer, or
to the Mortgagor to the extent required by law, any interest paid on the funds
deposited in the Escrow Account, or (vii) to clear and terminate the Escrow
Account on the termination of this Agreement.
Subsection 11.08 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, water rates
and other charges which are or may become a lien upon the Mortgaged Property and
the status of Primary Insurance Policy and fire and hazard insurance coverage
and shall obtain, from time to time, all bills for the payment of such charges,
including insurance 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. To the extent that the Mortgage does
not provide for Escrow Payments, the Servicer shall determine that any such
payments are 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.
The Seller shall maintain in full force and effect, a Primary Insurance
Policy, issued by a Qualified Insurer, with respect to each Mortgage Loan for
which such coverage is required. Such coverage shall be maintained until the
Loan-to-Value Ratio of the related Mortgage Loan is reduced to that amount for
which Xxxxxx Xxx no longer requires such insurance to be maintained. The Seller
will not cancel or refuse to renew any Primary Insurance Policy in effect on the
Closing Date that is required to be kept in force under this Agreement unless a
Exh 9-8
replacement Primary Insurance Policy for such cancelled or non- renewed policy
is obtained from and maintained with a Qualified Insurer. The Seller shall not
take any action which would result in non-coverage under any applicable Primary
Insurance Policy of any loss which, but for the actions of the Seller, would
have been covered thereunder. In connection with any assumption or substitution
agreement entered into or to be entered into pursuant to Subsection 11.19, the
Seller 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 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, the Seller shall obtain a
replacement Primary Insurance Policy as provided above.
In connection with its activities as servicer, the Seller 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 Subsection 11.04, any amounts collected by the Seller
under any Primary Insurance Policy shall be deposited in the Custodial Account,
subject to withdrawal pursuant to Subsection 11.05.
Subsection 11.09 Transfer of Accounts.
The Servicer may transfer the Custodial Account or the Escrow Account to a
different depository institution from time to time. Such transfer shall be made
only upon obtaining the consent of the Purchaser, which consent shall not be
unreasonably withheld. In any case, the Custodial Account and Escrow Account
shall be Eligible Accounts.
Subsection 11.10 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 which is at least equal to the lesser
of (i) the amount necessary to fully compensate for any damage or loss to the
improvements which are a part of such property on a replacement cost basis or
(ii) the outstanding principal balance of the Mortgage Loan (including any
cumulative related Negative Amortization) plus with respect to any second lien
Mortgage Loan, the outstanding principal balance of the related first lien
mortgage loan (including any cumulative related Negative Amortization), in each
case in an amount not less than such amount as is necessary to prevent the
Mortgagor and/or the Mortgagee from becoming a co-insurer. If the Mortgaged
Property is in an area identified on a Flood Hazard Boundary Map or Flood
Insurance Rate Map issued by the Flood Emergency Management Agency as having
special flood hazards and such flood insurance has been made available, 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, in an amount representing
coverage not less than the lesser of (i) the outstanding principal balance of
the Mortgage Loan (plus, if the Mortgage Loan provides for negative
amortization, the maximum amount of Negative Amortization in accordance with the
Mortgage)or (ii) the maximum amount of insurance which is available under the
National Flood Insurance Act of 1968 or the Flood
Exh 9-9
Disaster Protection Act of 1973, as amended. The Servicer also shall maintain on
any REO Property, fire and hazard insurance with extended coverage in an amount
which is at least equal to the lesser of (i) the maximum insurable value of the
improvements which are a part of such property and (ii) the outstanding
principal balance of the related Mortgage Loan (including any cumulative related
Negative Amortization) at the time it became an REO Property plus accrued
interest at the Mortgage Interest Rate and related Servicing Advances, liability
insurance and, to the extent required and available under the National Flood
Insurance Act of 1968 or the Flood Disaster Protection Act of 1973, as amended,
flood insurance in an amount as provided above. Pursuant to Subsection 11.04,
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 Custodial Account, subject to withdrawal pursuant to Subsection 11.05.
Any cost incurred by the Servicer in maintaining any such insurance shall not,
for the purpose of calculating distributions 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. 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. 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
thirty (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, however, that the Servicer shall not
accept any such insurance policies from insurance companies unless such
companies currently reflect a General Policy Rating of A:VI or better in Best's
Key Rating Guide, are acceptable to Xxxxxx Mae and Xxxxxxx Mac and are licensed
to do business in the state wherein the property subject to the policy is
located.
Subsection 11.11 Maintenance of Mortgage Impairment Insurance Policy.
In the event that the Servicer shall obtain and maintain a mortgage
impairment or blanket policy issued by an issuer that has a Best's Key Rating
Guide rating of A:VI insuring against hazard losses on all of Mortgaged
Properties securing the Mortgage Loans, then, to the extent such policy provides
coverage in an amount equal to the amount required pursuant to Subsection 11.10
and otherwise complies with all other requirements of Subsection 11.10, the
Servicer shall conclusively be deemed to have satisfied its obligations as set
forth in Subsection 11.10, it being understood and agreed that such policy may
contain a deductible clause, in which case the Servicer shall, in the event that
there shall not have been maintained on the related Mortgaged Property or REO
Property a policy complying with Subsection 11.10, and there shall have been one
or more losses which would have been covered by such policy, deposit in the
Custodial Account the amount not otherwise payable under the blanket policy
because of such deductible clause. In connection with its activities as servicer
of the Mortgage Loans, the 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
Exh 9-10
from the insurer thereunder that such policy shall in no event be terminated or
materially modified without thirty (30) days prior written notice to the
Purchaser.
Subsection 11.12 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 FNMA or FHLMC 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 forgery, theft, embezzlement, fraud, errors
and omissions and negligent acts of 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 and satisfaction of a Mortgage Loan without having obtained payment in
full of the indebtedness secured thereby. No provision of this Subsection 11.12
requiring the fidelity bond and errors and omissions insurance shall diminish or
relieve the Servicer from its duties and obligations as set forth in this
Agreement. The minimum coverage under any such bond and insurance policy shall
be at least equal to the corresponding amounts required by FNMA in the FNMA
Servicing Guide or by FHLMC in the FHLMC Seller' and Servicers' Guide. Upon
request of the Purchaser, the Servicer shall cause to be delivered to the
Purchaser a certified true copy of the fidelity bond and insurance policy and a
statement from the surety and the insurer that such fidelity bond or insurance
policy shall in no event be terminated or materially modified without thirty
days' prior written notice to the Purchaser.
Subsection 11.13 Title, Management and Disposition of REO Property.
In the event that title to the Mortgaged Property is acquired in
foreclosure or by deed in lieu of foreclosure, the deed or certificate of sale
shall be taken in the name of the person designated by the Purchaser, or in the
event 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 Servicer from
an attorney duly licensed to practice law in the state where the REO Property is
located. Any Person or Persons holding such title other than the Purchaser shall
acknowledge in writing that such title is being held as nominee for the benefit
of the Purchaser.
The Seller shall either itself or through an agent selected by the Seller,
manage, conserve, protect and operate each REO Property (and may temporarily
rent the same) in the same manner that it manages, conserves, protects and
operates other foreclosed property for its own account, and in the same manner
that similar property in the same locality as the REO Property is managed. If a
REMIC election is or is to be made with respect to the arrangement under which
the Mortgage Loans and any REO Property are held, the Seller shall manage,
conserve, protect and operate each REO Property in a manner which 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
Exh 9-11
Section 860F(a)(2)(B) of the Code or any "net income from foreclosure property"
within the meaning of Section 860G(c)(2) of the Code. The Seller shall cause
each REO Property to be inspected promptly upon the acquisition of title thereto
and shall cause each REO Property to be inspected at least monthly thereafter.
The Seller 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 Seller to the Purchaser. The Seller shall use
its best efforts to dispose of the REO Property as soon as possible and shall
sell such REO Property in any event within one year after title has been taken
to such REO Property, unless the Seller determines, and gives appropriate notice
to the Purchaser, that a longer period is necessary for the orderly liquidation
of such REO Property. If a period longer than one year is necessary to sell any
REO property, (i) the Seller shall report monthly to the Purchaser as to the
progress being made in selling such REO Property and (ii) if, with the written
consent of the Purchaser, a purchase money mortgage is taken in connection with
such sale, such purchase money mortgage shall name the Seller as mortgagee, and
a separate servicing agreement between the Seller and the Purchaser shall be
entered into with respect to such purchase money mortgage. Notwithstanding the
foregoing, if a REMIC election is made with respect to the arrangement under
which the Mortgage Loans and the REO Property are held, such REO Property shall
be disposed of before the close of the third taxable year following the taxable
year in which the Mortgage Loan became an REO Property, unless the Seller
provides to the trustee under such REMIC an opinion of counsel to the effect
that the holding of such REO Property subsequent to the close of the third
taxable year following the taxable year in which the Mortgage Loan became an REO
Property, will not result in the imposition of taxes on "prohibited
transactions" as defined in Section 860F of the Code, or cause the transaction
to fail to qualify as a REMIC at any time that certificates are outstanding.
Seller shall manage, conserve, protect and operate each such REO Property for
the certificateholders solely for the purpose of its prompt disposition and sale
in a manner which does not cause such property to fail to qualify as
"foreclosure property" within the meaning of Section 860F(a)(2)(E) of the Code,
or any "net income from foreclosure property" which is subject to taxation under
the REMIC provisions of the Code. Pursuant to its efforts to sell such property,
the Seller shall either itself or through an agent selected by Seller, protect
and conserve such property in the same manner and to such an extent as is
customary in the locality where such property is located. Additionally, Seller
shall perform the tax withholding and reporting related to Sections 1445 and
6050J of the Code.
With respect to each REO Property, the Seller shall segregate and hold all
funds collected and received in connection with the operation of the REO
Property separate and apart from its own funds or general assets and shall
establish and maintain a separate REO Account for each REO Property in the form
of a non-interest bearing demand account, unless an Opinion of Counsel is
obtained by the Seller to the effect that the classification as a grantor trust
or REMIC for federal income tax purposes of the arrangement under which the
Mortgage Loans and the REO Property are held will not be adversely affected by
holding such funds in another manner. Each REO Account shall be established with
the Seller or, with the prior consent of the Purchaser, with a commercial bank,
a mutual savings bank or a savings association. The creation of any REO Account
shall be evidenced by a letter agreement substantially in the form of the
Custodial Account Letter Agreement attached as Exhibit 7 hereto. An original of
such letter agreement shall be furnished to any Purchaser upon request.
Exh 9-12
The Seller shall deposit or cause to be deposited, on a daily basis in each
REO Account all revenues received with respect to the related REO Property and
shall withdraw therefrom funds necessary for the proper operation, management
and maintenance of the REO Property, including the cost of maintaining any
hazard insurance pursuant to Subsection 11.10 hereof and the fees of any
managing agent acting on behalf of the Seller. The Seller shall not be entitled
to retain interest paid or other earnings, if any, on funds deposited in such
REO Account. On or before each Determination Date, the Seller shall withdraw
from each REO Account and deposit into the Custodial Account the net income from
the REO Property on deposit in the REO Account.
The Seller shall furnish to the Purchaser on each Distribution Date, an
operating statement for each REO Property covering the operation of each REO
Property for the previous month. Such operating statement shall be accompanied
by such other information as the Purchaser shall reasonably request. Together
with such statement, the Seller shall furnish to the Purchaser a statement
covering the Seller's efforts in connection with the sale of such REO Property
and any rental of such REO Property incidental to the sale thereof for the
previous month.
Each REO Disposition shall be carried out by the Seller at such price and
upon such terms and conditions as the Seller deems to be in the best interest of
the Purchaser only with the prior written consent of the Purchaser. If as of the
date title to any REO Property was acquired by the Seller there were outstanding
unreimbursed Servicing Advances with respect to the REO Property, the Servicer,
upon an REO Disposition of such REO Property, shall be entitled to reimbursement
for any related unreimbursed Servicing Advances from proceeds received in
connection with such REO Disposition. The proceeds from the REO Disposition, net
of any payment to the Seller as provided above, shall be deposited in the REO
Account and shall be transferred to the Custodial Account on the Determination
Date in the month following receipt thereof for distribution on the succeeding
Distribution Date in accordance with Subsection 11.14.
Subsection 11.14 Distributions.
On each Distribution Date, the Servicer shall distribute to the Purchaser
all amounts credited to the Custodial Account as of the close of business on the
preceding Determination Date, net of charges against or withdrawals from the
Custodial Account pursuant to Subsection 11.05; plus(ii) all Monthly Advances,
if any, which the Seller is obligated to distribute pursuant this Agreement,
minus (iii) any amounts attributable to Principal Prepayments received after the
last day of the calendar month immediately preceding the related Distribution
Date and (iv) any amounts attributable to Monthly Prepayments collected but due
on a Due Date or Dates subsequent to the preceding Determination Date.
All distributions made to the Purchaser on each Distribution Date will be
made to the Purchaser of record on the preceding Record Date, and shall be based
on the Mortgage Loans owned and held by the Purchaser, and shall be made by wire
transfer of immediately available funds to the account of the Purchaser at a
bank or other entity having appropriate facilities therefor, if the Purchaser
shall have so notified the Servicer or by check mailed to the address of the
Purchaser.
Exh 9-13
With respect to any remittance received by the Purchaser on or after the
second Business Day following 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 the rate of interest as is publicly announced from time to
time at its principal office by JPMorgan Chase Bank, New York, New York, as its
prime lending rate, adjusted as of the date of each change, plus three (3)
percentage points, but in no event greater than the maximum amount permitted by
applicable law. Such interest shall be paid by the Servicer to the Purchaser on
the date such late payment is made and shall cover the period commencing with
the day following such second Business Day and ending with the Business Day on
which such payment is made, both inclusive. Such interest shall be remitted
along with such late payment. The payment by the Servicer of any such interest
shall not be deemed an extension of time for payment or a waiver of any Event of
Default by the Servicer.
Subsection 11.15 Remittance Reports.
No later than the fifth Business Day of each month, the Servicer shall
furnish to the Purchaser or its designee an electronic file containing, and a
hard copy of, the monthly data (the "Remittance Report"). On the Business Day
following each Determination Date, the Servicer shall deliver to the Purchaser
or its designee by telecopy (or by such other means as the Servicer and the
Purchaser may agree from time to time) an electronic file containing, and a hard
copy of, the determination data with respect to the related Distribution Date,
together with such other information with respect to the Mortgage Loans as the
Purchaser may reasonably require to allocate distributions made pursuant to this
Agreement and provide appropriate statements with respect to such distributions.
On the same date, the Servicer shall forward to the Purchaser by overnight mail
a computer readable magnetic tape containing the information set forth in the
Remittance Report with respect to the related Distribution Date. The Servicer
shall modify the electronic file as requested by the Purchaser from time to time
to comply with the preceding sentence.
Subsection 11.16 Statements to the Purchaser.
Not later than fifteen (15) days after each Distribution Date, the Servicer
shall forward to the Purchaser or its designee a statement prepared by the
Servicer setting forth the status of the Custodial Account as of the close of
business on such Distribution Date and showing, for the period covered by such
statement, the following:
(xx) with respect to each Mortgage Loan and each Monthly Payment, the
amount of such remittance allocable to principal (including a separate
breakdown of any Principal Prepayment, including the date of such
prepayment, and any Prepayment Charges, along with a detailed report of
interest on principal prepayment amounts remitted in accordance with
Subsection 11.04);
(xxi) with respect to each Mortgage Loan and each Monthly Payment, the
amount of such remittance allocable to interest;
(xxii) with respect to each Mortgage Loan, the amount of servicing
compensation received by the Servicer during the prior distribution period;
Exh 9-14
(xxiii) the Stated Principal Balance of each Mortgage Loan and the
aggregate Stated Principal Balance of all Mortgage Loans as of the first
day of the distribution period and the last day of the distribution period;
(xxiv) with respect to each Mortgage Loan, the current Mortgage
Interest Rate;
(xxv) with respect to each Mortgage Loan, the aggregate amount of any
Insurance Proceeds, Condemnation Proceeds, Liquidation Proceeds and REO
Disposition Proceeds received during the prior distribution period;
(xxvi) the number of Mortgage Loans as of the first day of the
distribution period and the last day of the distribution period;
(xxvii) with respect to each Mortgage Loan, the Stated Principal
Balance of each Mortgage Loan (a) delinquent as grouped in the following
intervals through final liquidation of such Mortgage Loan: 30 to 59 days,
60 to 89 days, 90 days or more; (b) as to which foreclosure has commenced;
and (c) as to which REO Property has been acquired;
(xxviii) with respect to each Mortgage Loan, the amount and severity
of any realized loss following liquidation of such Mortgage Loan;
(xxix) with respect to each Mortgage Loan, the amount of any Monthly
Advances and Nonrecoverable Advances reimbursed to the Servicer with
respect to such Mortgage Loan during the prior distribution period pursuant
to Section 11.05, and the source of funds for such reimbursement, and the
aggregate amount of any Monthly Advances and Nonrecoverable Advances
reimbursed to the Servicer for all Mortgage Loans during the prior
distribution period pursuant to Section 11.05;
(xxx) with respect to any Mortgage Loan, a description of any material
modifications, extensions or waivers to the terms, fees, penalties or
payments of such Mortgage Loan during the prior distribution period or that
have cumulatively become material over time;
(xxxi) a description of any material breach of a representation or
warranty set forth in Subsections 7.01 or 7.02 herein or of any other
breach of a covenant or condition contained herein and the status of any
resolution of such breach;
(xxxii) with respect to each Mortgage Loan, the Stated Principal
Balance of any substitute Mortgage Loan provided by the Servicer and the
Stated Principal Balance of any Mortgage Loan that has been replaced by a
substitute Mortgage Loan in accordance with Subsection 7.04; and
(xxxiii) with respect to each Mortgage Loan, the Stated Principal
Balance of any Mortgage Loan that has been repurchased by the Servicer in
accordance with Subsection 7.05.
Exh 9-15
In addition, not more than 60 days after the end of each calendar
year, the Servicer shall furnish to each Person who was the Purchaser at any
time during such calendar year, (i) as to the aggregate of remittances for the
applicable portion of such year, an annual statement in accordance with the
requirements of applicable federal income tax law, and (ii) listing of the
principal balances of the Mortgage Loans outstanding at the end of such calendar
year.
The Servicer shall prepare and file any and all tax returns,
information statements or other filings required to be delivered to any
governmental taxing authority or to any Purchaser pursuant to any applicable law
with respect to the Mortgage Loans and the transactions contemplated hereby. In
addition, the Servicer shall provide the Purchaser with such information
concerning the Mortgage Loans as is necessary for the Purchaser to prepare its
federal income tax return as any Purchaser may reasonably request from time to
time.
Subsection 11.17 Real Estate Owned Reports.
Together with the statement furnished pursuant to Subsection 11.02, with
respect to any REO Property, the Servicer shall furnish to the Purchaser a
statement covering the Servicer's efforts in connection with the sale of such
REO Property and any rental of such REO Property incidental to the sale thereof
for the previous month, together with the operating statement. Such statement
shall be accompanied by such other information as the Purchaser shall reasonably
request.
Subsection 11.18 Liquidation Reports.
Upon the foreclosure sale of any Mortgaged Property or the acquisition
thereof by the Purchaser pursuant to a deed-in-lieu of foreclosure, the Servicer
shall submit to the Purchaser a liquidation report with respect to such
Mortgaged Property.
Subsection 11.19 Assumption Agreements.
The Servicer shall, 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, however, 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. If the Servicer reasonably
believes it is unable under applicable law to enforce such "due-on-sale" clause,
the Servicer shall enter into an assumption agreement with the person to whom
the Mortgaged Property has been conveyed or is proposed to be conveyed, pursuant
to which such person becomes liable under the Mortgage Note and, to the extent
permitted by applicable state law, the Mortgagor remains liable thereon. Where
an assumption is allowed pursuant to this Subsection 11.19, the Servicer, with
the prior written consent of the insurer under the Primary Insurance Policy, if
any, is authorized to enter into a substitution of liability agreement with the
person to whom the Mortgaged Property has been conveyed or is proposed to be
conveyed pursuant to which the original Mortgagor is released from liability and
such Person
Exh 9-16
is substituted as Mortgagor and becomes liable under the related Mortgage Note.
Any such substitution of liability agreement shall be in lieu of an assumption
agreement.
In connection with any such assumption or substitution of liability, the
Servicer shall follow the underwriting practices and procedures of prudent
mortgage lenders in the state in which the related Mortgaged Property is
located. With respect to an assumption or substitution of liability, the
Mortgage Interest Rate, the amount of the Monthly Payment, and the final
maturity date of such Mortgage Note may not 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 Mortgage File and shall, for all purposes, be considered a
part of such Mortgage File to the same extent as all other documents and
instruments constituting a part thereof. Any fee collected by the Servicer for
entering into an assumption or substitution of liability agreement in excess of
1% of the outstanding principal balance of the Mortgage Loan shall be deposited
in the Custodial Account pursuant to Subsection 11.04.
Notwithstanding the foregoing paragraphs of this Subsection or any other
provision of this Agreement, the Servicer shall not be deemed to be in default,
breach or any other violation of its obligations hereunder by reason of any
assumption of a Mortgage Loan by operation of law or any assumption which the
Servicer may be restricted by law from preventing, for any reason whatsoever.
For purposes of this Subsection 11.19, 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.
Subsection 11.20 Satisfaction of Mortgages and Release of Mortgage Files.
Upon the payment in full of any Mortgage Loan, or the receipt by the
Servicer of a notification that payment in full will be escrowed in a manner
customary for such purposes, the Servicer will immediately notify the Purchaser
by a certification of a servicing officer of the Servicer (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 Custodial Account pursuant to Subsection 11.04
have been or will be so deposited, and shall request execution of any document
necessary to satisfy the Mortgage Loan and delivery to it of the portion of the
Mortgage File held by the Purchaser or the Purchaser's designee. Upon receipt of
such certification and request, the Purchaser, shall promptly release the
related mortgage documents to the Servicer and the Servicer shall 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
Custodial Account or the Purchaser.
In the event the Servicer satisfies or releases a Mortgage without having
obtained payment in full of the indebtedness secured by the Mortgage or should
it otherwise prejudice any right the Purchaser may have under the mortgage
instruments, the Servicer, upon written demand, shall remit to the Purchaser the
then outstanding principal balance of the related Mortgage Loan by deposit
thereof in the Custodial Account. The Servicer shall maintain the fidelity bond
insuring the Servicer against any loss it may sustain with respect to any
Mortgage Loan not satisfied in accordance with the procedures set forth herein.
Exh 9-17
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 requested portion of the Mortgage File held by the Purchaser or the
Custodian 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 Custodial Account or the Mortgage File or such document has been delivered
to an attorney, or to a public trustee or other public official as required by
law, for purposes of initiating or pursuing legal action or other proceedings
for the foreclosure of the Mortgaged Property, either judicially or
non-judicially, and the 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 Mortgage File or such document was delivered and the purpose or purposes of
such delivery. Upon receipt of a certificate of a Servicing Officer stating that
such Mortgage Loan was liquidated, the servicing receipt shall be released by
the Purchaser to the Servicer.
Subsection 11.21 Servicing Compensation.
As compensation for its services hereunder, the Servicer shall, subject to
Subsection 11.04(xi), be entitled to withdraw from the Custodial Account or to
retain from interest payments on the Mortgage Loans the amounts provided for as
the Servicer's Servicing Fee. Additional servicing compensation in the form of
assumption fees, as provided in Subsection 11.19, and late payment charges and
similar ancillary servicing compensation shall be retained by the Servicer to
the extent not required to be deposited in the Custodial Account. The Servicer
shall not be permitted to retain any portion of the Prepayment Charges collected
on the Mortgage Loans, which Prepayment Charges shall be remitted to the
Purchaser. 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.
Subsection 11.22 Notification of Adjustments.
On each Adjustment Date, the Servicer shall make interest rate adjustments
for each Adjustable Rate Mortgage Loan in compliance with the requirements of
the related Mortgage and Mortgage Note. The Servicer shall execute and deliver
the notices required by each Mortgage and Mortgage Note regarding interest rate
adjustments. The Servicer also shall provide timely notification to the
Purchaser of all applicable data and information regarding such interest rate
adjustments and the Servicer's methods of implementing such interest rate
adjustments. Upon the discovery by the Servicer or the Purchaser that the
Servicer has failed to adjust a Mortgage Interest Rate or a Monthly Payment
pursuant to the terms of the related Mortgage Note and Mortgage, the Servicer
shall immediately deposit in the Custodial Account from its own funds the amount
of any interest loss caused thereby without reimbursement therefor.
Exh 9-18
Subsection 11.23 Annual Statement as to Compliance; Annual Certification.
(e) The Servicer will deliver to the Purchaser, not later than March 5 of
each fiscal year, beginning in 2007, an Officers' Certificate (an "Annual
Statement of Compliance") stating, as to each signatory thereof, that (i) a
review of the activities of the Servicer during the preceding year and of its
performance under this Agreement or other applicable servicing agreement during
such period has been made under such officer's supervision and (ii) to the best
of such officer's knowledge, based on such review, the Servicer has fulfilled
all of its obligations under this Agreement or other applicable servicing
agreement in all material respects throughout such year, or, if there has been a
failure to fulfill any such obligation in any material respect, specifying each
such failure known to such officer and the nature and status thereof. Copies of
such statement shall be provided by the Purchaser to any Person identified as a
prospective purchaser of the Mortgage Loans. The Purchaser shall notify the
Servicer prior to providing any such copies. In the event that the Servicer has
delegated any servicing responsibilities with respect to the Mortgage Loans to a
Subservicer, the Servicer shall deliver an officer's certificate of such
Subservicer as described above as to such Subservicer as and when required with
respect to the Servicer. Notwithstanding the foregoing, the Servicer's
obligation to deliver an Annual Statement of Compliance under Subsection (a), as
to the Servicer or any Subservicer, shall be satisfied if an Annual Statement of
Compliance is delivered in compliance with Section 13.04 of this Agreement for
such fiscal year with respect to that entity.
(f) With respect to any Mortgage Loans that are subject to a Pass-Through
Transfer or other securitization transaction, by March 5 of each calendar year,
beginning in 2007, an officer of the Servicer shall execute an Officer's
Certificate (an "Annual Certification") and deliver it to the Purchaser, any
master servicer which is master servicing loans in connection with such
transaction (a "Master Servicer") and any related depositor (a "Depositor") for
the benefit of each such entity and such entity's affiliates and the officers,
directors and agents of any such entity and such entity's affiliates, in the
form attached hereto as Exhibit 12. Such Officer's Certificate shall not be
provided to any other Person unless the Purchaser first notifies the Servicer of
its intention to do so. In the event that the Servicer has delegated any
servicing responsibilities with respect to the Mortgage Loans to a Subservicer,
the Servicer shall deliver an officers' certificate of such Subservicer as
described above as to such Subservicer as and when required with respect to the
Servicer. Notwithstanding the foregoing, the Servicer's obligation to deliver an
Annual Certification under this Subsection (b), as to the Servicer or any
Subservicer, shall be satisfied if an Annual Statement of Compliance is
delivered in compliance with Section 13.05(a) of this Agreement for such fiscal
year with respect to that entity.
Subsection 11.24 Annual Accountants' Attestation Report.
The Servicer will deliver to the Purchaser, not later than March 5 of each
fiscal year, beginning in 2007, a report (an "Attestation Report") from a
registered public accounting firm reasonably acceptable to Purchaser that
attests to, and reports on, the assessment of compliance made by the Servicer
and delivered pursuant Section 11.23(b) above. Notwithstanding the foregoing,
the Servicer's obligation to deliver an Attestation Report under this Section,
as to the Servicer or any Subservicer, shall be satisfied if an Attestation
Report is delivered in compliance with Section 13.05(a) of this Agreement for
such fiscal year.
Exh 9-19
Subsection 11.25 Access to Certain Documentation.
The Servicer shall provide to the Office of Thrift Supervision, the FDIC
and any other federal or state banking or insurance regulatory authority that
may exercise authority over the Purchaser access to the documentation regarding
the Mortgage Loans serviced by the Servicer required by applicable laws and
regulations. Such access shall be afforded without charge, but only upon
reasonable request and during normal business hours at the offices of the
Servicer. In addition, access to the documentation will be provided to the
Purchaser and any Person identified to the Servicer by the Purchaser without
charge, upon reasonable request during normal business hours at the offices of
the Servicer.
Subsection 11.26 Reports and Returns to be Filed by the Servicer.
The Servicer shall file information reports with respect to the receipt of
mortgage interest received in a trade or business, reports of foreclosures and
abandonments of any Mortgaged Property and information returns relating to
cancellation of indebtedness income with respect to any Mortgaged Property as
required by Sections 6050H, 6050J and 6050P of the Code. Such reports shall be
in form and substance sufficient to meet the reporting requirements imposed by
such Sections 6050H, 6050J and 6050P of the Code.
Subsection 11.27 Superior Liens.
With respect to each second lien Mortgage, the Seller shall, for the
protection of the Purchaser's interest, file (or cause to be filed) of record a
request for notice of any action by a superior lienholder where permitted by
local law and whenever applicable state law does not require that a junior
lienholder be named as a party defendant in foreclosure proceedings in order to
foreclose such junior lienholder's equity of redemption. The Seller shall also
notify any superior lienholder in writing of the existence of the Mortgage Loan
and request notification of any action (as described below) to be taken against
the Borrower or the Mortgaged Property by the superior lienholder.
If the Seller is notified that any superior lienholder has accelerated or
intends to accelerate the obligations secured by the superior lien, or has
declared or intends to declare a default under the superior mortgage or the
promissory note secured thereby, or has filed or intends to file an election to
have the Mortgaged Property sold or foreclosed, the Seller shall take whatever
actions are necessary to protect the interests of the Purchaser, and/or to
preserve the security of the related Mortgage Loan, subject to any requirements
applicable to real estate mortgage investment conduits pursuant to the Internal
Revenue Code. The Seller shall make a Servicing Advance of the funds necessary
to cure the default or reinstate the superior lien if the Seller determines that
such Servicing Advance is in the best interests of the Purchaser. The Seller
shall not make such a Servicing Advance except to the extent that it determines
that such advance would not be a Nonrecoverable Servicing Advance from
Liquidation Proceeds on the related Mortgage Loan. The Seller shall thereafter
take such action as is necessary to recover the amount so advanced.
Exh 9-20
Subsection 11.28 Reserved.
Subsection 11.29 Use of Subservicers and Subcontractors.
The Servicer may arrange for the subservicing of any Mortgage Loan by a
Subservicer pursuant to a Sub-Servicing Agreement; provided that such
sub-servicing arrangement and the terms of the related Sub-Servicing Agreement
must provide for the servicing of such Mortgage Loans in a manner consistent
with the servicing arrangements contemplated hereunder. Each Subservicer shall
be (i) authorized to transact business in the state or states where the related
Mortgaged Properties it is to service are situated, if and to the extent
required by applicable law to enable the Subservicer to perform its obligations
hereunder and under the Sub-Servicing Agreement and (ii) a Xxxxxxx Mac or Xxxxxx
Mae approved mortgage servicer. Notwithstanding the provisions of any
Sub-Servicing Agreement, any of the provisions of this Agreement relating to
agreements or arrangements between the Servicer or a Subservicer or reference to
actions taken through the Servicer or otherwise, the Servicer shall remain
obligated and liable to the Purchaser and its successors and assigns for the
servicing and administration of the Mortgage Loans in accordance with the
provisions of this Agreement without diminution of such obligation or liability
by virtue of such Sub-Servicing Agreements or arrangements or by virtue of
indemnification from the Subservicer and to the same extent and under the same
terms and conditions as if the Servicer alone were servicing and administering
the Mortgage Loans. Every Sub-Servicing Agreement entered into by the Servicer
shall contain a provision giving the successor servicer the option to terminate
such agreement in the event a successor servicer is appointed. All actions of
each Subservicer performed pursuant to the related Sub-Servicing Agreement shall
be performed as an agent of the Servicer with the same force and effect as if
performed directly by the Servicer.
For purposes of this Agreement, the Servicer shall be deemed to have
received any collections, recoveries or payments with respect to the Mortgage
Loans that are received by a Subservicer regardless of whether such payments are
remitted by the Subservicer to the Servicer.
Subsection 11.30. Successor Subservicers
Any Sub-Servicing Agreement shall provide that the Seller shall be entitled
to terminate any Sub-Servicing Agreement and to either itself directly service
the related Mortgage Loans or enter into a Sub-Servicing Agreement with a
successor Subservicer which qualifies under Subsection 11.35. Any Sub-Servicing
Agreement shall include the provision that such agreement may be immediately
terminated by any successor to the Seller without fee, in accordance with the
terms of this Agreement, in the event that the Seller (or any successor to the
Seller) shall, for any reason, no longer be the servicer of the related Mortgage
Loans (including termination due to an Event of Default).
Subsection 11.31 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 Seller 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
Exh 9-21
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 860F(a)(2) of the Code and the tax on "contributions" to a REMIC set
forth in Section 860G(d) of the Code) unless the Seller 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 such tax.
Subsection 11.32 Monthly Advances by the Servicer.
(g) Not later than the close of business on the Business Day preceding each
Distribution Date, the Servicer shall deposit in the Custodial Account an amount
equal to all payments not previously advanced by the Servicer, whether or not
deferred pursuant to Subsection 11.01, of principal (due after the Cut-off Date)
and interest not allocable to the period prior to the Cut-off Date, at the
Mortgage Interest Rate net of the Servicing Fee, which were due on a Mortgage
Loan and delinquent at the close of business on the related Determination Date.
The obligation of the Servicer to make such Monthly Advances is mandatory,
notwithstanding any other provision of this Agreement, and, with respect to any
Mortgage Loan or REO Property, shall continue until a Final Recovery
Determination in connection therewith; provided that, notwithstanding anything
herein to the contrary, no Monthly Advance shall be required to be made
hereunder by the Servicer if such Monthly Advance would, if made, constitute a
Nonrecoverable Monthly Advance. The determination by the Servicer that it has
made a Nonrecoverable Monthly Advance or that any proposed Monthly Advance, if
made, would constitute a Nonrecoverable Monthly Advance, shall be evidenced by
an Officers' Certificate delivered to the Purchaser.
Subsection 11.33 No Contractual Relationship Between Subservicer and
Purchaser.
Any Sub-Servicing Agreement and any other transactions or services relating
to the Mortgage Loans involving a Subservicer shall be deemed to be between the
Subservicer and the Seller alone and the Purchaser shall not be deemed a party
thereto and shall have no claims, rights, obligations, duties or liabilities
with respect to any Subservicer except as set forth in Subsection 11.34.
Subsection 11.34 Assumption or Termination of Sub-Servicing Agreement by
Successor Servicer.
In connection with the assumption of the responsibilities, duties and
liabilities and of the authority, power and rights of the Seller hereunder by a
successor servicer pursuant to this Agreement, it is understood and agreed that
the Seller's rights and obligations under any Sub-Servicing Agreement then in
force between the Seller and a Subservicer shall be assumed simultaneously by
such successor servicer without act or deed on the part of such successor
servicer; provided, however, that any successor servicer may terminate the
Subservicer.
The Seller shall, upon the reasonable request of the Purchaser, but at its
own expense, deliver to the assuming party documents and records relating to
each Sub-Servicing Agreement
Exh 9-22
and an accounting of amounts collected and held by it and otherwise use its best
efforts to effect the orderly and efficient transfer of the Sub-Servicing
Agreements to the assuming party.
Exh 9-23
EXHIBIT 10
FORM OF
FORM OF ASSIGNMENT, ASSUMPTION AND RECOGNITION AGREEMENT
This is an Assignment, Assumption and Recognition Agreement (this "AAR
Agreement") made as of ________, 200_, among HSBC Bank, National Association
(the "Assignor"), ____________________ (the "Assignee") [not individually but
solely as trustee on behalf of the holders of the ___________, Series ____,
Asset-Backed Certificates] and _______________ (the "Company").
In consideration of the mutual promises contained herein the parties hereto
agree that the residential mortgage loans (the "Assigned Loans") listed on
Attachment 1 annexed hereto (the "Assigned Loan Schedule") purchased by Assignor
from Company pursuant to (a) the Master Mortgage Loan Purchase and Servicing
Agreement, dated as of ________, 200_, between Assignor and Company (the
"Purchase Agreement"), shall be subject to the terms of this AAR Agreement.
Capitalized terms used herein but not defined shall have the meanings ascribed
to them in the Purchase Agreement.
Assignment and Assumption
1. Assignor hereby grants, transfers and assigns to Assignee all of the
right, title and interest of Assignor in the Assigned Loans and, as they relate
to the Assigned Loans, all of its right, title and interest in, to and under the
Purchase Agreement. Assignor specifically reserves and does not assign to
Assignee any right title and interest in, to or under any Mortgage Loans subject
to the Purchase Agreement other than those set forth on Attachment 1.
Recognition of the Company
2. [For Pass-Through Transfers include this sentence: From and after the
date hereof, the Company shall and does hereby recognize that the Assignee will
transfer the Mortgage Loans and assign its rights under the Purchase Agreement
(solely to the extent set forth herein) and this AAR Agreement to
______________________________ (the "Trust") created pursuant to a Pooling and
Servicing Agreement, dated as of ___________, 200__ (the "Pooling Agreement"),
among the Assignee as trustee (including its successors in interest and any
successor trustees under the Pooling Agreement), the Assignor and
_________________________, as servicer (including its successors in interest and
any successor servicer under the Pooling Agreement, the "Servicer").] The
Company hereby acknowledges and agrees that from and after the date hereof (i)
the [Trust][Assignee] will be the owner of the Mortgage Loans, (ii) the Company
shall look solely to the [Trust][Assignee] for performance of any obligations of
the Assignor insofar as they relate to the enforcement of the representations,
warranties and covenants with respect to the Mortgage Loans, (iii) the
[Assignee][Trust (including the Assignee and the Servicer acting on the Trust's
behalf)] shall have all the rights and remedies available to the Assignor,
insofar as they relate to the Mortgage Loans, under the Purchase Agreement,
including, without limitation, the enforcement of the document delivery
requirements and remedies with respect to breaches of representations and
warranties set forth in
Exh 10-1
the Purchase Agreement, and shall be entitled to enforce all of the obligations
of the Company thereunder insofar as they relate to the Mortgage Loans, and (iv)
all references to the Purchaser (insofar as they relate to the rights, title and
interest and, with respect to obligations of the Purchaser, only insofar as they
relate to the enforcement of the representations, warranties and covenants of
the Company) under the Purchase Agreement insofar as they relate to the Mortgage
Loans, shall be deemed to refer to the [Assignee] [Trust (including the Assignee
and the Servicer acting on the Trust's behalf)]. Neither the Company nor the
Assignor shall amend or agree to amend, modify, waive, or otherwise alter any of
the terms or provisions of the Purchase Agreement which amendment, modification,
waiver or other alteration would in any way affect the Mortgage Loans or the
Company's performance under the Purchase Agreement with respect to the Mortgage
Loans without the prior written consent of the Assignee.
Representations; Warranties and Covenants
3. Assignor warrants and represents to Assignee and Company as of the date
hereof:
a. Attached hereto as Attachment 2 is a true and accurate copy of
the Purchase Agreement, which agreement is in full force and
effect as of the date hereof and the provisions of which have not
been waived, amended or modified in any respect as to the
Assigned Loans, nor has any notice of termination been given
thereunder;
b. Assignor is the lawful owner of the Assigned Loans with full
right to transfer the Assigned Loans and any and all of its
interests, rights and obligations under the Purchase Agreement as
they relate to the Assigned Loans, free and clear of any and all
liens, claims and encumbrances; and upon the transfer of the
Assigned Loans to Assignee as contemplated herein, Assignee shall
have good title to each and every Assigned Loan, as well as any
and all of Assignor's interests, rights and obligations under the
Purchase Agreement as they relate to the Assigned Loans, free and
clear of any and all liens, claims and encumbrances;
c. Assignor has not received notice of, and has no knowledge of, any
offsets, counterclaims or other defenses available to Company
with respect to the Assigned Loans or the Purchase Agreement;
d. Assignor is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its
formation, and has all requisite power and authority to acquire,
own and sell the Assigned Loans;
e. Assignor has full power and authority to execute, deliver and
perform its obligations under this AAR Agreement, and to
consummate the transactions set forth herein. The consummation of
the transactions contemplated by this AAR Agreement is in the
ordinary course of Assignor's business and will not conflict
with, or result in a breach of, any of the terms, conditions or
provisions of Assignor's charter or by-laws or any legal
restriction, or any material agreement or instrument to which
Exh 10-2
Assignor is now a party or by which it is bound, or result in the
violation of any law, rule, regulation, order, judgment or decree
to which Assignor or its property is subject. The execution,
delivery and performance by Assignor of this AAR Agreement and
the consummation by it of the transactions contemplated hereby,
have been duly authorized by all necessary action on the part of
Assignor. This AAR Agreement has been duly executed and delivered
by Assignor and, upon the due authorization, execution and
delivery by Assignee and Company, will constitute the valid and
legally binding obligation of Assignor enforceable against
Assignor in accordance with its terms except as enforceability
may be limited by bankruptcy, reorganization, insolvency,
moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally, and by general
principles of equity regardless of whether enforceability is
considered in a proceeding in equity or at law;
f. No material consent, approval, order or authorization of, or
declaration, filing or registration with, any governmental entity
is required to be obtained or made by Assignor in connection with
the execution, delivery or performance by Assignor of this AAR
Agreement, or the consummation by it of the transactions
contemplated hereby; and
g. There is no action, suit, proceeding, investigation or litigation
pending or, to Assignor's knowledge, threatened, which either in
any instance or in the aggregate, if determined adversely to
Assignor, would adversely affect Assignee's execution or delivery
of, or the enforceability of, this AAR Agreement, or the
Assignor's ability to perform its obligations under this AAR
Agreement.
4. Assignee warrants and represents to, and covenants with, Assignor and
Company as of the date hereof:
a. Assignee is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization and has
all requisite power and authority to acquire and [own] [hold] the
Assigned Loans [as trustee on behalf of the Trust];
b. Assignee has full power and authority to execute, deliver and
perform its obligations under this AAR Agreement, and to
consummate the transactions set forth herein. The consummation of
the transactions contemplated by this AAR Agreement is in the
ordinary course of Assignee's business and will not conflict
with, or result in a breach of, any of the terms, conditions or
provisions of Assignee's organizational documentation or any
legal restriction, or any material agreement or instrument to
which Assignee is now a party or by which it is bound, or result
in the violation of any law, rule, regulation, order, judgment or
decree to which Assignee or its property is subject. The
execution, delivery and performance by Assignee of this AAR
Agreement and the
Exh 10-3
consummation by it of the transactions contemplated hereby, have
been duly authorized by all necessary action on the part of
Assignee. This AAR Agreement has been duly executed and delivered
by Assignee and, upon the due authorization, execution and
delivery by Assignor and Company, will constitute the valid and
legally binding obligation of Assignee enforceable against
Assignee in accordance with its terms except as enforceability
may be limited by bankruptcy, reorganization, insolvency,
moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally, and by general
principles of equity regardless of whether enforceability is
considered in a proceeding in equity or at law;
c. No material consent, approval, order or authorization of, or
declaration, filing or registration with, any governmental entity
is required to be obtained or made by Assignee in connection with
the execution, delivery or performance by Assignee of this AAR
Agreement, or the consummation by it of the transactions
contemplated hereby; and
d. There is no action, suit, proceeding, investigation or litigation
pending or, to Assignee's knowledge, threatened, which either in
any instance or in the aggregate, if determined adversely to
Assignee, would adversely affect Assignee's execution or delivery
of, or the enforceability of, this AAR Agreement, or the
Assignee's ability to perform its obligations under this AAR
Agreement.
5. Company warrants and represents to, and covenants with, Assignor and
Assignee as of the date hereof:
a. Attached hereto as Attachment 2 is a true and accurate copy of
the Purchase Agreement, which agreement is in full force and
effect as of the date hereof and the provisions of which have not
been waived, amended or modified in any respect as to the
Assigned Loans, nor has any notice of termination been given
thereunder;
b. Company is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation, and has
all requisite power and authority to perform its obligations
under the Purchase Agreement;
c. Company has full corporate power and authority to execute,
deliver and perform its obligations under this AAR Agreement, and
to consummate the transactions set forth herein. The consummation
of the transactions contemplated by this AAR Agreement is in the
ordinary course of Company's business and will not conflict with,
or result in a breach of, any of the terms, conditions or
provisions of Company's organizational documentation or any legal
restriction, or any material agreement or instrument to which
Company is now a party or by which it is bound, or result in the
violation of any law, rule, regulation, order, judgment or decree
to which Company or its property is subject. The execution,
Exh 10-4
delivery and performance by Company of this AAR Agreement and the
consummation by it of the transactions contemplated hereby, have
been duly authorized by all necessary corporate action on the
part of Company. This AAR Agreement has been duly executed and
delivered by Company, and, upon the due authorization, execution
and delivery by Assignor and Assignee, will constitute the valid
and legally binding obligation of Company, enforceable against
Company in accordance with its terms except as enforceability may
be limited by bankruptcy, reorganization, insolvency, moratorium
or other similar laws now or hereafter in effect relating to
creditors' rights generally, and by general principles of equity
regardless of whether enforceability is considered in a
proceeding in equity or at law;
d. No consent, approval, order or authorization of, or declaration,
filing or registration with, any governmental entity is required
to be obtained or made by Company in connection with the
execution, delivery or performance by Company of this AAR
Agreement, or the consummation by it of the transactions
contemplated hereby;
e. There is no action, suit, proceeding, investigation or litigation
pending or, to Company's knowledge, threatened, which either in
any instance or in the aggregate, if determined adversely to
Company, would adversely affect Company's execution or delivery
of, or the enforceability of, this AAR Agreement, or the
Company's ability to perform its obligations under this AAR
Agreement; and
f. Pursuant to Section 12 of the Purchase Agreement, the Company
hereby represents and warrants, for the benefit of the Assignor,
the Assignee [and the Trust,] that the representations and
warranties set forth in Section 7.01 and 7.02 of the Purchase
Agreement (except for those representations and warranties
contained in Sections 7.02(iii), (iv), (xvii) (only with respect
to delinquencies regarding the related Mortgage Loan and the
condition of the related Mortgaged Property), (xix) (only with
respect to encroachments and violations of applicable zoning law,
regulations and ordinances as they relate to the condition of the
Related Mortgaged Property after the related Closing Date),
(xxiii), (xxxi) and (xxxvii) therein) are true and correct as of
the date hereof, except that the representation and warranty set
forth in Section 7.02(i) shall, for purposes of this AAR
Agreement, relate to the Mortgage Loan Schedule attached hereto.
[Additional Representations and Warranties Necessary for
Securitization]
6. The Company hereby acknowledges and agrees that the remedies available
to the Assignor, the Assignee [and the Trust (including the Assignee and the
Servicer acting on the Trust's behalf)] in connection with any breach of the
representations and warranties made by the Company set forth in Section 4 hereof
shall be as set forth in Subsection 7.03 of the Purchase
Exh 10-5
Agreement as if they were set forth herein (including without limitation the
repurchase and indemnity obligations set forth therein).
7. [Notwithstanding any term hereof to the contrary, the execution and
delivery of this AAR Agreement by the Assignee is solely in its capacity as
trustee for the Trust and not individually, and any recourse against the
Assignee in respect of any obligations it may have under or pursuant to the
terms of this AAR Agreement shall be limited solely to the assets it may hold as
trustee of the Trust.]
Miscellaneous
8. All demands, notices and communications related to the Assigned Loans,
the Agreements and this AAR Agreement shall be in writing and shall be deemed to
have been duly given if personally delivered or mailed by registered mail,
postage prepaid, as follows:
a. In the case of Company,
[Company]
____________________
____________________, ___________ ______
Attn: _____________
b. In the case of Assignor,
HSBC Bank USA, National Association
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: [__________]
c. In the case of Assignee,
[Assignee]
____________________
____________________, ___________ ______
Attn: _____________
9. This AAR Agreement shall be construed in accordance with the laws of the
State of New York, without regard to conflicts of law principles, and the
obligations, rights and remedies of the parties hereunder shall be determined in
accordance with such laws.
10. No term or provision of this AAR Agreement may be waived or modified
unless such waiver or modification is in writing and signed by the party against
whom such waiver or modification is sought to be enforced.
11. This AAR Agreement shall inure to the benefit of the successors and
assigns of the parties hereto. Any entity into which Assignor, Assignee or
Company may be merged or
Exh 10-6
consolidated shall without the requirement for any further writing, be deemed
Assignor, Assignee or Company, respectively hereunder.
12. This AAR Agreement shall survive the conveyance of the Assigned Loans
as contemplated in this AAR Agreement.
13. This AAR Agreement may be executed simultaneously in any number of
counterparts. Each counterpart shall be deemed to be an original and all such
counterparts shall constitute one and the same instrument.
14. In the event that any provision of this AAR Agreement conflicts with
any provision of the Purchase Agreement with respect to the Assigned Loans, the
terms of this AAR Agreement shall control.
Exh 10-7
IN WITNESS WHEREOF, the parties hereto have executed this AAR Agreement as
of the day and year first above written.
HSBC BANK USA, NATIONAL ASSOCIATION
Assignor
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
[ASSIGNEE]
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
[COMPANY]
Company
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
Exh 10-8
ATTACHMENT 1
ASSIGNED LOAN SCHEDULE
Xxx 00-0
XXXXXXXXXX 0
XXXXXXXX XXXXXXXXX
Xxx 10-10
EXHIBIT 11
FORM OF INDEMNIFICATION AGREEMENT
This Indemnification Agreement (the "Agreement"), dated as of _______, 200_
(the "Settlement Date"), by and between HSBC Asset Securitization Corp., a
Delaware corporation (such entity, and its successors and assigns, being
referred to herein as the "Depositor") and [COMPANY] (the "Company").
The Depositor and the Company hereby recite and agree as follows:
RECITALS
1. HSBC Bank USA, National Association (the "Seller") has purchased certain
[adjustable]-rate, [first] lien mortgage loans (the "Mortgage Loans") from the
Company and intends to transfer all of its right, title and interest in and to
the Mortgage Loans to the _______________ (the "Trust") pursuant to the terms of
a Pooling and Servicing Agreement, dated as of ________, 200_ (the "Pooling and
Servicing Agreement"), by and among the Seller, the Depositor, _________ as
[master] servicer and ___________, as trustee of the Trust (the "Trustee").
2. In exchange for the Mortgage Loans, the Trust shall issue to the Seller
___________________________, Series _____, Asset-Backed Certificates (the
"Certificates") pursuant to the terms of the Pooling and Servicing Agreement.
3. In accordance with an Underwriting Agreement, dated ________, 200_ (the
"Underwriting Agreement"), the Depositor will sell to HSBC Securities (USA),
Inc. (the "Underwriter") the Certificates.
4. The Certificates will be offered and sold by the Underwriter pursuant to
the terms and conditions of the Underwriting Agreement, through the use of a
prospectus supplement to be dated as of the date of its printing but not later
than the Settlement Date (the "Prospectus Supplement") and a related prospectus
dated ________, 200_, (the "Base Prospectus" and together with the Prospectus
Supplement, the "Prospectus").
AGREEMENT
NOW THEREFORE, in consideration of the mutual promises herein made and
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties hereto hereby agree as follows:
1. Representations and Warranties.
(h) The Company hereby represents and warrants to the Depositor, as of
the date of this Agreement, that:
Exh 11-1
(i) the Company has been duly organized and is validly existing
and in good standing as a [corporation] under the laws of the State of
__________, with full power and authority to enter into and perform its
obligations under this Agreement; and
(ii) this Agreement has been duly authorized, executed and
delivered by the Company and constitutes a legal, valid and binding
agreement of the Company, enforceable against it in accordance with its
terms, subject to (A) bankruptcy, insolvency, receivership, conservatorship
or other similar laws affecting creditors' rights generally, (B) general
principles of equity regardless of whether enforcement is sought in a
proceeding in equity or at law, and (C) public policy considerations
limiting the enforceability of provisions of this Agreement that purport to
provide indemnification from liabilities under applicable securities laws.
(i) The Company represents and warrants to the Depositor that as of
the Settlement Date:
(i) the information set forth in the Prospectus Supplement under
[TO BE DETERMINED], (such information, the "Company Information") does not
contain an untrue statement of a material fact; and
(ii) [the Company Information does not omit or fail to state any
material fact required to be stated therein, or necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading.][HSBC to confirm with securitization counsel]
(j) The Depositor hereby represents and warrants to the Company that
as of the date of this Agreement:
(i) it is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and has full
corporate power and authority to enter into and perform its obligations
under this Agreement; and
(ii) this Agreement has been duly authorized, executed and
delivered by the Depositor and constitutes the legal, valid and binding
agreement of the Depositor enforceable against the Depositor in accordance
with its terms, subject to (A) bankruptcy, insolvency, receivership,
conservatorship, reorganization, moratorium or other similar laws affecting
creditors' rights generally, (B) general principals of equity regardless of
whether enforcement is sought in a proceeding in equity or at law, and (C)
public policy considerations limiting the enforceability of provisions of
this Agreement that purport to provide indemnification from penalties under
applicable securities laws.
2. Indemnification.
(k) Company (also referred to herein as the "Indemnifying Party")
agrees to indemnify and hold harmless the Depositor and each of its directors
and officers and affiliates and each person, if any, who controls the Depositor
within the meaning of Section 15 of the
Exh 11-2
Securities Act of 1933, as amended (the "Securities Act"), or Section 20 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), (the
"Indemnified Party") and any assignee thereof, against any and all actual
losses, claims, expenses, damages or liabilities to which the Depositor or any
such director, officer or controlling person may become subject, under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon (x)
any untrue statement of any material fact contained in the Company Information
or omission to state therein, a material fact required to be stated therein or
necessary to make the statements made therein, in light of the circumstances
under which such statements were made, not misleading (in each case, regardless
of whether a final judgment has been entered by a finder of fact) or (y) any
material misstatement or omission contained in the Prospectus Supplement
regarding information or statistics therein regarding the Mortgage Loans [based
on information correctly derived by the Depositor or its affiliates and included
in the Prospectus Supplement which results or arises] from information actually
provided in writing to the Depositor or its affiliates by Company; and will
promptly upon request reimburse any such reasonable legal or other expenses
reasonably incurred by the Depositor or any such director, officer or
controlling person in connection with investigating or defending any such loss,
claim, damage, liability or action. This indemnity agreement will be in addition
to any liability which Company may otherwise have.[HSBC to confirm with
securitization counsel]
(l) Promptly after receipt by the Indemnified Party under this Section
2 of notice of the commencement of any action described therein, the Indemnified
Party will, if a claim in respect thereof is to be made against the Indemnifying
Party under this Section 2, notify the Indemnifying Party of the commencement
thereof, but the omission so to notify the Indemnifying Party will not relieve
the Indemnifying Party from any liability that it may have to the Indemnified
Party under this Agreement, except to the extent that such failure or delay in
notification materially prejudices the Indemnifying Party's defense of such
action or proceeding, and shall in no event relieve the Indemnifying Party from
any other obligation or liability which it may have to any Indemnified Person
otherwise than under this Agreement or with respect to any other action or
proceeding. In case any such action is brought against the Indemnified Party,
and it notifies the Indemnifying Party of the commencement thereof, the
Indemnifying Party will be entitled to participate therein, and, to the extent
that it may wish to do so, jointly with any other Indemnifying Party similarly
notified, to assume the defense thereof, with counsel reasonably satisfactory to
the Indemnified Party, and, after notice from the Indemnifying Party to the
Indemnified Party under this Section 2, the Indemnifying Party shall not be
liable for any legal or other expenses subsequently incurred by the Indemnified
Party in connection with the defense thereof other than reasonable out-of-pocket
costs of investigation.
(m) The 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 the Indemnified
Party unless: (i) the employment thereof has been specifically authorized by the
Indemnifying Party; (ii) the Indemnifying Party shall have been advised by such
counsel that there may be one or more legal defenses available to the
Indemnified Party which are different from or additional to those available to
the Indemnifying Party and in the reasonable judgment of such counsel it is
advisable for the Indemnified Party to
Exh 11-3
employ separate counsel (iii) a conflict exists between the Indemnified Party
and the Indemnifying Party (in which case the Indemnifying Party will not have
the right to direct the defense of such action on behalf of the Indemnified
Party) or (iv) 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 the 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 the 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 the Indemnified Party, which firm
shall be designated in writing by the Depositor or any of the Depositor's
directors, officers or controlling persons.
(n) The Indemnified Party, as a condition of the indemnity agreements
contained herein, shall use its best efforts to cooperate with the Indemnifying
Party in the defense of any such action or claim. The Indemnifying Party shall
not 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 the
Indemnified Party from and against any loss or liability (to the extent set
forth herein as applicable) by reason of such settlement or judgment.
3. Successors and Assigns, Additional Information. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns. No party hereto may assign either this Agreement or any
of its rights, interests or obligations hereunder without the prior written
approval of the other parties hereto.
4. Representations and Indemnities to Survive. The respective agreements,
representations, warranties, covenants, indemnities and other statements of the
Depositor and the Company and their respective officers set forth in or made
pursuant to this Agreement will remain in full force and effect, regardless of
any investigation made by or on behalf of the Depositor or the Company and will
survive delivery of and payment for the Certificates. The provisions of Section
4 hereof shall survive the termination or cancellation of this Agreement.
5. Notices. All demands, notices and communications hereunder shall be in
writing, shall be effective only upon receipt and shall, if sent to the
Depositor, be addressed to it at 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Attention: President, with a copy to General Counsel; or, if sent to the
Company, be addressed to it at, [ADDRESS], Attn: [_________].
6. Miscellaneous. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York. Neither this Agreement nor
any term hereof may be changed, waived, discharged or terminated except by a
writing signed by the party against whom enforcement of such change, waiver,
discharge or termination is sought. This Agreement may be signed in any number
of counterparts, each of which shall be deemed an original, which taken
Exh 11-4
together shall constitute one and the same instrument. This Agreement supersedes
all prior or contemporaneous agreements and understandings relating to the
subject matter hereof.
7. Severability of Provisions. If any one or more of the covenants,
agreements, provisions or terms of this Agreement shall be for any reason
whatsoever held invalid, then such covenants, agreements, provisions or terms
shall be deemed severable from the remaining covenants, agreements, provisions
or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement.
Exh 11-5
IN WITNESS WHEREOF, the Depositor and the Company have caused this
Agreement to be duly executed by their respective officers as of the day and
year first above written.
HSBC ASSET SECURITIZATION CORP.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
[COMPANY]
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Exh 11-6
EXHIBIT 12
FORM OF ANNUAL CERTIFICATION
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:
(i) I have reviewed the servicer compliance statement of the
Company provided in accordance with Item 1123 of Regulation AB and
applicable to the Company as reflected on Exhibit 15 of the Agreement (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 to the [Depositor] [Master Servicer] [Securities Administrator]
[Trustee] pursuant to the Agreement (collectively, the "Company Servicing
Information");
(ii) 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;
(iii) 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];
(iv) 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
Exh 12-1
(v) 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
[Depositor] [Master Servicer]. Any material instance of noncompliance with
the Servicing Criteria has been disclosed in such reports.
[COMPANY]
(Servicer)
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Date:
----------------------------------
Exh 12-2
EXHIBIT 13
MORTGAGE LOAN DOCUMENTS
(o) the original Mortgage Note bearing all intervening endorsements
necessary to show a complete chain of endorsements from the
original payee, endorsed in blank, "Pay to the order of
_____________, without recourse", and, if previously endorsed,
signed in the name of the last endorsee by a duly qualified
officer of the last endorsee. If the Mortgage Loan was acquired
by the last endorsee in a merger, the endorsement must be by
"[name of last endorsee], successor by merger to [name of
predecessor]". If the Mortgage Loan was acquired or originated by
the last endorsee while doing business under another name, the
endorsement must be by "[name of last endorsee], formerly known
as [previous name]";
(p) the original Assignment of Mortgage for each Mortgage Loan, in
form and substance acceptable for recording. The Mortgage shall
be assigned, with assignee's name left blank. If the Mortgage
Loan was acquired by the last assignee in a merger, the
Assignment of Mortgage must be made by "[name of last assignee],
successor by merger to [name of predecessor]". If the Mortgage
Loan was acquired or originated by the last assignee while doing
business under another name, the Assignment of Mortgage must be
by "[name of last assignee], formerly known as [previous name];
(q) the original of each guarantee executed in connection with the
Mortgage Note, if any;
(r) the original recorded Mortgage, with evidence of recording
thereon. If in connection with any Mortgage Loan, the Seller has
not delivered or caused to be delivered the original Mortgage
with evidence of recording thereon on or prior to the related
Closing 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
Seller shall deliver or cause to be delivered to the Custodian,
(i) in the case of a delay caused by the public recording office,
a copy of such Mortgage certified by the Seller, escrow agent,
title insurer or closing attorney to be a true and complete copy
of the original recorded Mortgage and (ii) in the case 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;
(s) originals or a certified copy of each modification agreement, if
any;
Exh 13-1
(t) the originals of all intervening assignments of mortgage with
evidence of recording thereon evidencing a complete chain of
ownership from the originator of the Mortgage Loan to the last
assignee, or if any such intervening assignment of mortgage has
not been returned from the applicable public recording office or
has been lost or if such public recording office retains the
original recorded intervening assignments of mortgage, a
photocopy of such intervening assignment of mortgage, together
with (i) in the case of a delay caused by the public recording
office, an Officer's Certificate of the Seller, escrow agent,
closing attorney or the title insurer insuring the Mortgage
stating that such intervening assignment of mortgage has been
delivered to the appropriate public recording office for
recordation and that such original recorded intervening
assignment of mortgage or a copy of such intervening assignment
of mortgage certified by the appropriate public recording office
to be a true and complete copy of the original recorded
intervening assignment of mortgage will be promptly delivered to
the Custodian upon receipt thereof by the party delivering the
Officer's Certificate or by the Seller; or (ii) in the case of an
intervening assignment of mortgage where a public recording
office retains the original recorded intervening assignment of
mortgage or in the case where an intervening assignment of
mortgage is lost after recordation in a public recording office,
a copy of such intervening assignment of mortgage with recording
information thereon certified by such public recording office to
be a true and complete copy of the original recorded intervening
assignment of mortgage;
(u) if the Mortgage Note, the Mortgage, any Assignment of Mortgage or
any other related document has been signed by a Person on behalf
of the Mortgagor, the copy of the power of attorney or other
instrument that authorized and empowered such Person to sign;
(v) the original lender's title insurance policy (or a marked title
insurance commitment, in the event that an original lender's
title insurance policy has not yet been issued) in the form of an
ALTA mortgage title insurance policy, containing each of the
endorsements required by FNMA and insuring the Purchaser and its
successors and assigns as to the first priority lien of the
Mortgage in the original principal amount of the Mortgage Loan;
and
(w) original of any security agreement, chattel mortgage or
equivalent document executed in connection with the Mortgage, if
any.
Exh 13-2
EXHIBIT 14
UNDERWRITING GUIDELINES
Exh 14-1
EXHIBIT 15
SERVICING CRITERIA TO BE ADDRESSED IN ASSESSMENT OF COMPLIANCE
The assessment of compliance to be delivered by [the Servicer] [Name of
Subservicer] shall address, at a minimum, the criteria identified as below as
"Applicable Servicing Criteria":
SERVICING CRITERIA APPLICABLE
------------------------------------------------------------ SERVICING
REFERENCE CRITERIA CRITERIA
---------------- ----------------------------------------- ----------
GENERAL SERVICING CONSIDERATIONS
1122(d)(1)(i) Policies and procedures are instituted to X
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 X
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 X
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 X
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 X
behalf of an obligor or to an investor
are made only by authorized personnel.
1122(d)(2)(iii) Advances of funds or guarantees regarding X
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.
1122(d)(2)(iv) The related accounts for the transaction, X
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 X
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.
Exh 15-1
SERVICING CRITERIA APPLICABLE
------------------------------------------------------------ SERVICING
REFERENCE CRITERIA CRITERIA
---------------- ----------------------------------------- ----------
1122(d)(2)(vi) Unissued checks are safeguarded so as to X
prevent unauthorized access.
1122(d)(2)(vii) Reconciliations are prepared on a monthly X
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 X
1122(d)(3)(i) Reports to investors, including those to X
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.
1122(d)(3)(ii) Amounts due to investors are allocated X
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 X
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 X
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 X
is maintained as required by the
transaction agreements or related
mortgage loan documents.
1122(d)(4)(ii) Mortgage loan and related documents are X
safeguarded as required by the
transaction agreements
1122(d)(4)(iii) Any additions, removals or substitutions X
to the asset pool are made, reviewed and
approved in accordance with any
conditions or requirements in the
transaction agreements.
Exh 15-2
SERVICING CRITERIA APPLICABLE
------------------------------------------------------------ SERVICING
REFERENCE CRITERIA CRITERIA
---------------- ----------------------------------------- ----------
1122(d)(4)(iv) Payments on mortgage loans, including any X
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 X
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 X
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.
1122(d)(4)(vii) Loss mitigation or recovery actions X
(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 X
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 X
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 X
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 X
(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
Exh 15-3
SERVICING CRITERIA APPLICABLE
------------------------------------------------------------ SERVICING
REFERENCE CRITERIA CRITERIA
---------------- ----------------------------------------- ----------
these dates, or such other number of days
specified in the transaction agreements.
1122(d)(4)(xii) Any late payment penalties in connection X
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.
1122(d)(4)(xiii) Disbursements made on behalf of an X
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 X
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.
[SERVICER] [NAME OF SUBSERVICER]
Date:
----------------------------------
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Exh 15-4