EXHIBIT 99.1
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IMPAC FUNDING CORPORATION,
as Master Servicer,
IMPAC CMB TRUST SERIES 2000-2,
as Issuer
and
BANKERS TRUST COMPANY OF CALIFORNIA, N.A.
as Indenture Trustee,
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SERVICING AGREEMENT
Dated as of November 1, 2000
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Mortgage Loans
Impac CMB Trust Series 2000-2
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TABLE OF CONTENTS
PAGE
ARTICLE I
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Definitions
Section 1.01. DEFINITIONS............................................................................1
Section 1.02. OTHER DEFINITIONAL PROVISIONS..........................................................2
Section 1.03. INTEREST CALCULATIONS..................................................................2
ARTICLE II
Representations and Warranties
Section 2.01. REPRESENTATIONS AND WARRANTIES REGARDING THE MASTER SERVICER...........................3
Section 2.02. EXISTENCE..............................................................................4
Section 2.03. ENFORCEMENT OF REPRESENTATIONS AND WARRANTIES..........................................4
ARTICLE III
Administration and Servicing of Mortgage Loans
Section 3.01. MASTER SERVICER TO ASSURE SERVICING....................................................6
Section 3.02. SUBSERVICING AGREEMENTS BETWEEN MASTER SERVICER AND SUBSERVICERS.......................9
Section 3.03. SUCCESSOR SUBSERVICERS................................................................10
Section 3.04. LIABILITY OF THE MASTER SERVICER......................................................10
Section 3.05. ASSUMPTION OR TERMINATION OF SUBSERVICING AGREEMENTS BY INDENTURE TRUSTEE
10
Section 3.06. COLLECTION OF MORTGAGE LOAN PAYMENTS..................................................11
Section 3.07. WITHDRAWALS FROM THE COLLECTION ACCOUNT...............................................13
Section 3.09. ACCESS TO CERTAIN DOCUMENTATION AND INFORMATION REGARDING THE MORTGAGE
LOANS..........................................................................................16
Section 3.10. MAINTENANCE OF PRIMARY INSURANCE POLICIES AND THE RADIAN POLICY; COLLECTION
THEREUNDER.....................................................................................16
Section 3.11. MAINTENANCE OF HAZARD INSURANCE AND FIDELITY COVERAGE.................................17
Section 3.12. DUE-ON-SALE CLAUSES; ASSUMPTION AGREEMENTS...........................................19
Section 3.13. REALIZATION UPON DEFAULTED MORTGAGE LOANS.............................................19
Section 3.14. INDENTURE TRUSTEE TO COOPERATE; RELEASE OF MORTGAGE FILES.............................21
Section 3.15. MASTER SERVICING COMPENSATION.........................................................22
Section 3.16. ANNUAL STATEMENTS OF COMPLIANCE.......................................................23
Section 3.17. ANNUAL INDEPENDENT PUBLIC ACCOUNTANTS' SERVICING REPORT...............................23
Section 3.18. OPTIONAL PURCHASE OF DEFAULTED MORTGAGE LOANS.........................................24
Section 3.19. INFORMATION REQUIRED BY THE INTERNAL REVENUE SERVICE GENERALLY AND REPORTS
OF FORECLOSURES AND ABANDONMENTS OF MORTGAGED PROPERTY.........................................24
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ARTICLE IV
Servicing Certificate
Section 4.01. REMITTANCE REPORTS....................................................................25
Section 4.02. RESERVED..............................................................................25
Section 4.03. RESERVED..............................................................................25
Section 4.04. ADVANCES..............................................................................25
Section 4.05. COMPENSATING INTEREST PAYMENTS........................................................26
ARTICLE V
The Master Servicer
Section 5.01. LIABILITY OF THE MASTER SERVICER......................................................27
Section 5.02. MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE OBLIGATIONS OF, THE MASTER
SERVICER.......................................................................................27
Section 5.03. LIMITATION ON LIABILITY OF THE MASTER SERVICER AND OTHERS.............................27
Section 5.04. MASTER SERVICER NOT TO RESIGN.........................................................28
Section 5.05. DELEGATION OF DUTIES..................................................................28
Section 5.06. MASTER SERVICER TO PAY INDENTURE TRUSTEE'S AND OWNER TRUSTEE'S FEES AND
EXPENSES; INDEMNIFICATION......................................................................29
ARTICLE VI
Default
Section 6.01. SERVICING DEFAULT.....................................................................31
Section 6.02. INDENTURE TRUSTEE TO ACT; APPOINTMENT OF SUCCESSOR....................................34
Section 6.03. NOTIFICATION TO BONDHOLDERS...........................................................35
Section 6.04. WAIVER OF DEFAULTS....................................................................35
ARTICLE VII
Miscellaneous Provisions
Section 7.01. AMENDMENT.............................................................................36
Section 7.02. GOVERNING LAW.........................................................................36
Section 7.03. NOTICES...............................................................................36
Section 7.04. SEVERABILITY OF PROVISIONS............................................................37
Section 7.05. THIRD-PARTY BENEFICIARIES.............................................................37
Section 7.06. COUNTERPARTS..........................................................................38
Section 7.07. EFFECT OF HEADINGS AND TABLE OF CONTENTS..............................................38
Section 7.08. TERMINATION...........................................................................38
Section 7.09. NO PETITION...........................................................................38
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Section 7.10. NO RECOURSE...........................................................................38
ARTICLE VIII
DUTIES OF THE MASTER SERVICER
Section 8.01. ADMINISTRATIVE DUTIES.................................................................38
Section 8.02. RECORDS...............................................................................40
Section 8.03. ADDITIONAL INFORMATION TO BE FURNISHED................................................40
EXHIBIT A - MORTGAGE LOAN SCHEDULE..............................................................................A-1
EXHIBIT B - FORM OF REQUEST FOR RELEASE.........................................................................B-1
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This Servicing Agreement, dated as of November 1, 2000, among
Impac Funding Corporation, as Master Servicer (the "Master Servicer"), Impac CMB
Trust Series 2000-2, as Issuer (the "Issuer") and Bankers Trust Company of
California, N.A., as Indenture Trustee (the "Indenture Trustee").
W I T N E S S E T H T H A T:
WHEREAS, pursuant to the terms of the Mortgage Loan Sale and
Contribution Agreement, IMH Assets Corp. (the "Company" or the "Depositor") will
acquire the Mortgage Loans;
WHEREAS, the Company will create Impac CMB Trust Series
2000-2, a Delaware business trust, and will transfer the Mortgage Loans and all
of its rights under the Mortgage Loan Sale and Contribution Agreement to the
Issuer;
WHEREAS, pursuant to the terms of an Amended and Restated
Trust Agreement dated as of November 27, 2000 (the "Trust Agreement") among the
Company, as depositor, Wilmington Trust Company, as owner trustee (the "Owner
Trustee") and Bankers Trust Company of California, N.A., as certificate
registrar and certificate paying agent, the Company will convey the Mortgage
Loans to the Issuer in exchange for the Certificates (as defined below);
WHEREAS, pursuant to the terms of the Trust Agreement, the
Issuer will issue and transfer to or at the direction of the Depositor, the
Trust Certificates, Series 2000-2 (the "Certificates");
WHEREAS, pursuant to the terms of an Indenture dated as of
November 27, 2000 (the "Indenture") between the Issuer and Bankers Trust Company
of California, N.A. (the "Indenture Trustee"), the Issuer will pledge the
Mortgage Loans and issue and transfer to or at the direction of the Purchaser
the Collateralized Asset-Backed Bonds, Series 2000-2, Class A-1, Class A-2 and
Class B (collectively, the "Bonds"); and
WHEREAS, pursuant to the terms of this Servicing Agreement,
the Master Servicer will service the Mortgage Loans set forth on the Mortgage
Loan Schedule attached hereto as Exhibit A directly or through one or more
Subservicers;
NOW, THEREFORE, in consideration of the mutual covenants
herein contained, the parties hereto agree as follows:
ARTICLE I
Definitions
Section 1.01. DEFINITIONS. For all purposes of this Servicing
Agreement, except as otherwise expressly provided herein or unless the context
otherwise requires, capitalized terms not otherwise defined herein shall have
the meanings assigned to such terms in the Definitions contained in
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Appendix A to the Indenture which is incorporated by reference herein. All other
capitalized terms used herein shall have the meanings specified herein.
Section 1.02. OTHER DEFINITIONAL PROVISIONS. (a) All terms
defined in this Servicing Agreement shall have the defined meanings when used in
any certificate or other document made or delivered pursuant hereto unless
otherwise defined therein.
(b) As used in this Servicing Agreement and in any certificate or other
document made or delivered pursuant hereto or thereto, accounting terms not
defined in this Servicing Agreement or in any such certificate or other
document, and accounting terms partly defined in this Servicing Agreement or in
any such certificate or other document, to the extent not defined, shall have
the respective meanings given to them under generally accepted accounting
principles. To the extent that the definitions of accounting terms in this
Servicing Agreement or in any such certificate or other document are
inconsistent with the meanings of such terms under generally accepted accounting
principles, the definitions contained in this Servicing Agreement or in any such
certificate or other document shall control.
(c) The words "hereof," "herein," "hereunder" and words of similar
import when used in this Servicing Agreement shall refer to this Servicing
Agreement as a whole and not to any particular provision of this Servicing
Agreement; Section and Exhibit references contained in this Servicing Agreement
are references to Sections and Exhibits in or to this Servicing Agreement unless
otherwise specified; and the term "including" shall mean "including without
limitation".
(d) The definitions contained in this Servicing Agreement are
applicable to the singular as well as the plural forms of such terms and to the
masculine as well as the feminine and neuter genders of such terms.
(e) Any agreement, instrument or statute defined or referred to herein
or in any instrument or certificate delivered in connection herewith means such
agreement, instrument or statute as from time to time amended, modified or
supplemented and includes (in the case of agreements or instruments) references
to all attachments thereto and instruments incorporated therein; references to a
Person are also to its permitted successors and assigns.
Section 1.03. INTEREST CALCULATIONS. All calculations of interest
hereunder that are made in respect of the Principal Balance of a Mortgage Loan
shall be made on the basis of a 360-day year consisting of twelve 30-day months,
notwithstanding the terms of the related Mortgage Note and Mortgage.
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ARTICLE II
Representations and Warranties
Section 2.01. REPRESENTATIONS AND WARRANTIES REGARDING THE MASTER
SERVICER. The Master Servicer represents and warrants to the Issuer and for the
benefit of the Indenture Trustee, as pledgee of the Mortgage Loans, the Bond
Insurer and the Bondholders, as of the respective Cut-Off Dates and the Closing
Date, that:
(i) The Master Servicer is a corporation duly
organized, validly existing and in good standing under the laws of the
State of California and has the corporate power to own its assets and
to transact the business in which it is currently engaged. The Master
Servicer is duly qualified to do business as a foreign corporation and
is in good standing in each jurisdiction in which the character of the
business transacted by it or properties owned or leased by it requires
such qualification and in which the failure to so qualify would have a
material adverse effect on the business, properties, assets, or
condition (financial or other) of the Master Servicer or the validity
or enforceability of the Mortgage Loans;
(ii) The Master Servicer has the power and authority to
make, execute, deliver and perform this Servicing Agreement and all of
the transactions contemplated under this Servicing Agreement, and has
taken all necessary corporate action to authorize the execution,
delivery and performance of this Servicing Agreement. When executed and
delivered, this Servicing Agreement will constitute the legal, valid
and binding obligation of the Master Servicer enforceable in accordance
with its terms, except as enforcement of such terms may be limited by
bankruptcy, insolvency or similar laws affecting the enforcement of
creditors' rights generally and by the availability of equitable
remedies;
(iii) The Master Servicer is not required to obtain the
consent of any other Person or any consent, license, approval or
authorization from, or registration or declaration with, any
governmental authority, bureau or agency in connection with the
execution, delivery, performance, validity or enforceability of this
Servicing Agreement, except for such consent, license, approval or
authorization, or registration or declaration, as shall have been
obtained or filed, as the case may be;
(iv) The execution and delivery of this Servicing
Agreement and the performance of the transactions contemplated hereby
by the Master Servicer will not violate any provision of any existing
law or regulation or any order or decree of any court applicable to the
Master Servicer or any provision of the certificate of incorporation or
bylaws of the Master Servicer, or constitute a material breach of any
mortgage, indenture, contract or other agreement to which the Master
Servicer is a party or by which the Master Servicer may be bound; and
(v) No litigation or administrative proceeding of or
before any court, tribunal or governmental body is currently pending
(other than litigation with respect to which pleadings or documents
have been filed with a court, but not served on the Master Servicer),
or to the knowledge of the Master Servicer threatened, against the
Master Servicer
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or any of its properties or with respect to this Servicing Agreement or
the Bonds or the Certificates which, to the knowledge of the Master
Servicer, has a reasonable likelihood of resulting in a material
adverse effect on the transactions contemplated by this Servicing
Agreement.
The foregoing representations and warranties shall survive any
termination of the Master Servicer hereunder.
Section 2.02. EXISTENCE. The Issuer will keep in full effect its
existence, rights and franchises as a business trust under the laws of the State
of Delaware (unless it becomes, or any successor Issuer hereunder is or becomes,
organized under the laws of any other state or of the United States of America,
in which case the Issuer will keep in full effect its existence, rights and
franchises under the laws of such other jurisdiction) and will obtain and
preserve its qualification to do business in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and
enforceability of this Servicing Agreement.
Section 2.03. ENFORCEMENT OF REPRESENTATIONS AND WARRANTIES. The Master
Servicer, on behalf of and subject to the direction of the Indenture Trustee, as
pledgee of the Mortgage Loans, or the Bond Insurer shall enforce the
representations and warranties and related obligations for breaches thereof of
the Seller pursuant to the Mortgage Loan Sale and Contribution Agreement. Upon
the discovery by the Seller, the Master Servicer, the Indenture Trustee, the
Bond Insurer or the Company of a breach of any of the representations and
warranties made in the Mortgage Loan Sale and Contribution Agreement, in respect
of any Mortgage Loan, or upon the occurrence of a Repurchase Event, which
materially and adversely affects the interests of the Bondholders or the
Certificateholders or the Bond Insurer, the party discovering the same shall
give prompt written notice to the other parties. The Master Servicer shall
promptly notify the Seller and request that, pursuant to the terms of the
Mortgage Loan Sale and Contribution Agreement, the Seller either (i) cure such
breach or Repurchase Event in all material respects or (ii) purchase such
Mortgage Loan, in each instance in accordance with the Mortgage Loan Sale and
Contribution Agreement; PROVIDED that the Seller shall, subject to the
conditions set forth in the Mortgage Loan Sale and Contribution Agreement, have
the option to substitute an Eligible Substitute Mortgage Loan or Eligible
Substitute Mortgage Loans for such Mortgage Loan. Monthly Payments due with
respect to Eligible Substitute Mortgage Loans in the month of substitution shall
not be part of the Trust Estate and will be retained by the Master Servicer and
remitted by the Master Servicer to the Seller on the next succeeding Payment
Date. For the month of substitution, distributions to the Payment Account
pursuant to this Agreement will include the Monthly Payment due on a Deleted
Mortgage Loan for such month and thereafter the Seller shall be entitled to
retain all amounts received in respect of such Deleted Mortgage Loan. The Master
Servicer shall amend or cause to be amended the Mortgage Loan Schedule to
reflect the removal of such Mortgage Loan and the substitution of the Eligible
Substitute Mortgage Loans and the Master Servicer shall promptly deliver the
amended Mortgage Loan Schedule to the related Subservicer, the Bond Insurer,
Owner Trustee and Indenture Trustee.
In connection with the substitution of one or more Eligible Substitute
Mortgage Loans for one or more Deleted Mortgage Loans, the Master Servicer will
determine the amount (such amount, a "Substitution Adjustment Amount"), if any,
by which the aggregate principal balance of all such Eligible Substitute
Mortgage Loans as of the date of substitution is less than the aggregate
principal
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balance of all such Deleted Mortgage Loans (after application of the principal
portion of the Monthly Payments due in the month of substitution that are to be
distributed to the Payment Account in the month of substitution). The Seller
shall pay the Substitution Adjustment Amount to the Master Servicer and the
Master Servicer shall deposit such Substitution Adjustment Amount into the
Collection Account upon receipt.
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ARTICLE III
Administration and Servicing of Mortgage Loans
Section 3.01. MASTER SERVICER TO ASSURE SERVICING. (a) The Master
Servicer shall supervise, or take such actions as are necessary to ensure, the
servicing and administration of the Mortgage Loans and any REO Property in
accordance with this Servicing Agreement and its normal servicing practices,
which generally shall conform to the standards of an institution prudently
servicing mortgage loans for its own account and shall have full authority to do
anything it reasonably deems appropriate or desirable in connection with such
servicing and administration. The Master Servicer may perform its
responsibilities relating to servicing through other agents or independent
contractors, but shall not thereby be released from any of its responsibilities
as hereinafter set forth. The authority of the Master Servicer, in its capacity
as master servicer, and any Subservicer acting on its behalf, shall include,
without limitation, the power to (i) consult with and advise any Subservicer
regarding administration of a related Mortgage Loan, (ii) approve any
recommendation by a Subservicer to foreclose on a related Mortgage Loan, (iii)
supervise the filing and collection of insurance claims and take or cause to be
taken such actions on behalf of the insured Person thereunder as shall be
reasonably necessary to prevent the denial of coverage thereunder, and (iv)
effectuate foreclosure or other conversion of the ownership of the Mortgaged
Property securing a related Mortgage Loan, including the employment of
attorneys, the institution of legal proceedings, the collection of deficiency
judgments, the acceptance of compromise proposals, the filing of claims under
any Primary Insurance Policy and the Radian PMI Policy with respect to any
Non-High CLTV Loan and any other matter pertaining to a delinquent Mortgage
Loan. The authority of the Master Servicer shall include, in addition, the power
on behalf of the Bondholders, the Indenture Trustee, the Bond Insurer or any of
them to (i) execute and deliver customary consents or waivers and other
instruments and documents, (ii) consent to transfer of any related Mortgaged
Property and assumptions of the related Mortgage Notes and Security Instruments
(in the manner provided in this Servicing Agreement) and (iii) collect any
Insurance Proceeds and Liquidation Proceeds. Without limiting the generality of
the foregoing, the Master Servicer and any Subservicer acting on its behalf may,
and is hereby authorized, and empowered by the Indenture Trustee to, execute and
deliver, on behalf of itself, the Bondholders, the Indenture Trustee, the Bond
Insurer or any of them, any instruments of satisfaction, cancellation, partial
or full release, discharge and all other comparable instruments, with respect to
the related Mortgage Loans, the Insurance Policies and the accounts related
thereto, and the Mortgaged Properties. The Master Servicer may exercise this
power in its own name or in the name of a Subservicer.
In accordance with the standards of the preceding paragraph, the Master
Servicer shall advance or cause to be advanced funds as necessary for the
purpose of effecting the payment of taxes and assessments on the Mortgaged
Properties, which advances shall be reimbursable in the first instance from
related collections from the Mortgagors pursuant to Section 3.08, and further as
provided in Section 3.07; provided that the Master Servicer shall not be
obligated to make such advance if, in its good faith judgment, the Master
Servicer determines that such advance to be a Nonrecoverable Advance.
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The relationship of the Master Servicer (and of any successor to the
Master Servicer under this Agreement) to the Indenture Trustee under this
Agreement is intended by the parties to be that of an independent contractor and
not that of a joint venturer, partner or agent.
(b) If the Mortgage relating to a Mortgage Loan did not have a lien
senior to the Mortgage Loan on the related Mortgaged Property as of the related
Cut-off Date, then the Master Servicer, in such capacity, may not consent to the
placing of a lien senior to that of the Mortgage on the related Mortgaged
Property. If the Mortgage relating to a High CLTV Loan had a lien senior to the
High CLTV Loan on the related Mortgaged Property as of the related Cut-Off Date,
then the Master Servicer, in such capacity, may consent to the refinancing of
the prior senior lien, provided that the following requirements are met:
(i) the resulting Combined Loan-to-Value Ratio of such High
CLTV Loan is no higher than the Combined Loan-to-Value Ratio prior to
such refinancing; PROVIDED, HOWEVER, if such refinanced mortgage loan
is a "rate and term" mortgage loan (meaning, the borrower does not
receive any cash from the refinancing), the Combined Loan-to-Value
Ratio may increase to the extent of either (a) the reasonable closing
costs of such refinancing or (b) any decrease in the value of the
related Mortgaged Property, if the borrower is in good standing;
(ii) the interest rate for the loan evidencing the refinanced
senior lien is no higher than the interest rate on the loan evidencing
the existing senior lien immediately prior to the date of such
refinancing; PROVIDED, HOWEVER if the loan evidencing the existing
senior lien prior to the date of refinancing has an adjustable rate and
the loan evidencing the refinanced senior lien has a fixed rate, then
the loan evidencing the refinanced senior lien may be up to 2.0% higher
than the then-current mortgage rate of the loan evidencing the existing
senior lien; and
(iii) the loan evidencing the refinanced senior lien is not
subject to negative amortization.
(c) The Master Servicer or the related Subservicer, as the case may be,
shall be entitled to (A) execute assumption agreements, substitution agreements,
and instruments of satisfaction or cancellation or of full release or discharge,
or any other document contemplated by this Servicing Agreement and other
comparable instruments with respect to the Mortgage Loans and with respect to
the Mortgaged Properties subject to the Mortgages (and the Issuer and the
Indenture Trustee each shall promptly execute any such documents on request of
the Master Servicer and prepared by it) and (B) approve the granting of an
easement thereon in favor of another Person, any alteration or demolition of the
related Mortgaged Property or other similar matters, if it has determined,
exercising its good faith business judgment in the same manner as it would if it
were the owner of the related Mortgage Loan, that the security for, and the
timely and full collectability of, such Mortgage Loan would not be adversely
affected thereby. An assumption pursuant to this Section 3.01 is permitted
solely if the creditworthiness of the prospective purchaser of a Mortgaged
Property meets the same or better underwriting guidelines as those which were
applied to the original borrower and the security for such Mortgage Loan is not
impaired by the assumption. Any fee collected by the Master Servicer or the
related Subservicer for processing such request will be retained by the Master
Servicer or such Subservicer as additional servicing compensation.
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(d) Certain of the Mortgage Notes related to the High CLTV Loans
contain a rider allowing the related Mortgagor to transfer the lien on the
related Mortgaged Property to another, new Mortgaged Property. In the event that
a Mortgagor requests such a transfer, such Mortgage Loan shall remain in the
Trust Fund only if the following requirements are met:
(i) the Combined Loan-to-Value Ratio of the High CLTV Loan
after such transfer must be less than or equal to the original Combined
Loan-to-Value Ratio;
(ii) the Loan-to-Value Ratio of the first lien on the new
Mortgaged Property must be less than or equal to the Loan-to-Value
Ratio of the first lien on the prior Mortgaged Property at the time the
related High CLTV Loan was originated;
(iii) both the original and the new Mortgaged Property
must be a single-family owner occupied property;
(iv) following such transfer, the aggregate Principal Balance
of High CLTV Loans included in the Trust Fund which have been similarly
transferred is equal to 5% or less of the aggregate Principal Balance
of the Mortgage Loans at such time; and
(v) following such transfer, not more than 40% of the
aggregate Principal Balance of the Mortgage Loans will be: (a)
obligations secured by real estate the fair market value of which
equaled at least eighty percent (80%) of the adjusted issue price of
such obligation at the time of origination; or (b) obligations
substantially all of the proceeds of which were used to acquire,
improve or protect an interest in real property that, at the
origination date, was the only security for such obligation.
If such requirements cannot be met, the High CLTV Loan must be purchased from
the Trust Fund at the Repurchase Price in accordance with Section 3.18 hereof.
For purposes of applying the criteria of clause (v) of the preceding
paragraph, "substantially all of the proceeds" shall mean at least sixty-six and
two-thirds percent (66 2/3%) of such proceeds, and the fair market value of real
estate shall first be reduced by the amount of any lien senior to the lien
securing a High CLTV Loan (or reduced proportionately by the amount of any lien
in parity with such lien).
(e) Notwithstanding the provisions of Subsection 3.01(a), the Master
Servicer shall not take any action inconsistent with the interests of the
Indenture Trustee, the Bond Insurer or the Bondholders or with the rights and
interests of the Indenture Trustee, the Bond Insurer or the Bondholders under
this Servicing Agreement.
(f) The Indenture Trustee shall execute and return to the Master
Servicer any limited powers of attorney and other documents in form as provided
to it necessary or appropriate to enable the Master Servicer to service and
administer the related Mortgage Loans and REO Property.
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Section 3.02. SUBSERVICING AGREEMENTS BETWEEN MASTER SERVICER AND
SUBSERVICERS. (a) The Master Servicer may enter into Subservicing Agreements
with Subservicers for the servicing and administration of the Mortgage Loans and
for the performance of any and all other activities of the Master Servicer
hereunder. Each Subservicer shall be either (i) an institution the accounts of
which are insured by the FDIC or (ii) another entity that engages in the
business of originating or servicing mortgage loans comparable to the Mortgage
Loans, and in either case shall be authorized to transact business in the state
or states in which the related Mortgaged Properties it is to service are
situated, if and to the extent required by applicable law to enable the
Subservicer to perform its obligations hereunder and under the Subservicing
Agreement, and in either case shall be a Freddie Mac or Fannie Mae approved
mortgage servicer. Any Subservicing Agreement entered into by the Master
Servicer shall include the provision that such Agreement may be immediately
terminated (x) with cause and without any termination fee by any Master Servicer
hereunder or (y) without cause in which case the Master Servicer shall be
responsible for any termination fee or penalty resulting therefrom. In addition,
each Subservicing Agreement shall provide for servicing of the Mortgage Loans
consistent with the terms of this Servicing Agreement. With the consent of the
Indenture Trustee and the Bond Insurer, the Master Servicer and the Subservicers
may enter into Subservicing Agreements and make amendments to the Subservicing
Agreements or enter into different forms of Subservicing Agreements providing
for, among other things, the delegation by the Master Servicer to a Subservicer
of additional duties regarding the administration of the Mortgage Loans;
provided, however, that any such amendments or different forms shall be
consistent with and not violate the provisions of this Servicing Agreement, and
that no such amendment or different form shall be made or entered into which
could be reasonably expected to be materially adverse to the interests of the
Bond Insurer or the Bondholders, without the consent of the Holders of Bonds
representing not less than a majority of the aggregate Bond Principal Balance of
the Bonds.
The Master Servicer has entered into Subservicing Agreements with the
Initial Subservicers for the servicing and administration of the Mortgage Loans
and may enter into additional Subservicing Agreements with Subservicers
acceptable to the Indenture Trustee and the Bond Insurer for the servicing and
administration of certain of the Mortgage Loans.
(b) As part of its servicing activities hereunder, the Master Servicer,
for the benefit of the Indenture Trustee, the Bond Insurer and the Bondholders,
shall enforce the obligations of each Subservicer under the related Subservicing
Agreement. Such enforcement, including, without limitation, the legal
prosecution of claims, termination of Subservicing Agreements and the pursuit of
other appropriate remedies, shall be in such form and carried out to such an
extent and at such time as the Master Servicer, in its good faith business
judgment, would require were it the owner of the related Mortgage Loans. The
Master Servicer shall pay the costs of such enforcement at its own expense, but
shall be reimbursed therefor only (i) from a general recovery resulting from
such enforcement only to the extent, if any, that such recovery exceeds all
amounts due in respect of the related Mortgage Loan or (ii) from a specific
recovery of costs, expenses or attorneys' fees against the party against whom
such enforcement is directed.
(c) The Master Servicer represents that it has entered into a contract
regarding the sale of sub-servicing rights with respect to the Countrywide Loans
with Countrywide Home Loans, Inc. ("Countrywide") and shall transfer the
subservicing of the Loans from Wendover to Countrywide on or about January 1,
2001. The Indenture Trustee hereby consents to such transfer.
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Section 3.03. SUCCESSOR SUBSERVICERS. The Master Servicer shall be
entitled to terminate any Subservicing Agreement that may exist in accordance
with the terms and conditions of such Subservicing Agreement and without any
limitation by virtue of this Servicing Agreement; PROVIDED, HOWEVER, that upon
termination, the Master Servicer shall either act as servicer of the related
Mortgage Loan or enter into an appropriate contract with a successor Subservicer
acceptable to the Indenture Trustee and the Bond Insurer pursuant to which such
successor Subservicer will be bound by all relevant terms of the related
Subservicing Agreement pertaining to the servicing of such Mortgage Loan.
Section 3.04. LIABILITY OF THE MASTER SERVICER. (a) Notwithstanding any
Subservicing Agreement, any of the provisions of this Servicing Agreement
relating to agreements or arrangements between the Master Servicer and a
Subservicer or reference to actions taken through a Subservicer or otherwise,
the Master Servicer shall under all circumstances remain obligated and primarily
liable to the Indenture Trustee, the Bondholders and the Bond Insurer for the
servicing and administering of the Mortgage Loans and any REO Property in
accordance with this Servicing Agreement. The obligations and liability of the
Master Servicer shall not be diminished by virtue of Subservicing Agreements or
by virtue of indemnification of the Master Servicer by any Subservicer, or any
other Person. The obligations and liability of the Master Servicer shall remain
of the same nature and under the same terms and conditions as if the Master
Servicer alone were servicing and administering the related Mortgage Loans. The
Master Servicer shall, however, be entitled to enter into indemnification
agreements with any Subservicer or other Person and nothing in this Servicing
Agreement shall be deemed to limit or modify such indemnification. For the
purposes of this Servicing Agreement, the Master Servicer shall be deemed to
have received any payment on a Mortgage Loan on the date the Subservicer
received such payment; PROVIDED, HOWEVER, that this sentence shall not apply to
the Indenture Trustee as the successor Master Servicer; PROVIDED, FURTHER,
however, that the foregoing provision shall not affect the obligation of the
Master Servicer if it is also the Indenture Trustee to advance amounts which are
not Nonrecoverable Advances.
(b) Any Subservicing Agreement that may be entered into and any
transactions or services relating to the Mortgage Loans involving a Subservicer
in its capacity as such and not as an originator shall be deemed to be between
the Subservicer and the Master Servicer alone, and the Indenture Trustee, the
Bond Insurer and the Bondholders shall not be deemed parties thereto and shall
have no claims, rights, obligations, duties or liabilities with respect to the
Subservicer except as set forth in Section 3.05.
Section 3.05. ASSUMPTION OR TERMINATION OF SUBSERVICING AGREEMENTS BY
INDENTURE TRUSTEE. (a) If the Indenture Trustee or a successor Master Servicer
shall assume the master servicing obligations of the Master Servicer in
accordance with Section 6.02 below, the Indenture Trustee, to the extent
necessary to permit the Indenture Trustee to carry out the provisions of Section
6.02 with respect to the Mortgage Loans, shall succeed to all of the rights and
obligations of the Master Servicer under each of the Subservicing Agreements. In
such event, the Indenture Trustee or its designee as the successor master
servicer shall be deemed to have assumed all of the Master Servicer's rights and
obligations therein and to have replaced the Master Servicer as a party to such
Subservicing Agreements to the same extent as if such Subservicing Agreements
had been assigned to the Indenture Trustee or its designee as a successor master
servicer, except that the Indenture Trustee or its designee as a successor
master servicer shall not be deemed to have assumed any
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obligations or liabilities of the Master Servicer arising prior to such
assumption (other than the obligation to make any Advances) and the Master
Servicer shall not thereby be relieved of any liability or obligations under
such Subservicing Agreements arising prior to such assumption. Nothing in the
foregoing shall be deemed to entitle the Indenture Trustee or its designee as a
successor master servicer at any time to receive any portion of the servicing
compensation provided under Section 3.15 except for such portion as the Master
Servicer would be entitled to receive.
(b) In the event that the Indenture Trustee or a successor Master
Servicer assumes the servicing obligations of the Master Servicer under Section
6.02, upon the reasonable request of the Indenture Trustee or such successor
Master Servicer, the Master Servicer shall at its own expense deliver to the
Indenture Trustee, or to such successor Master Servicer, photocopies of all
documents, files and records, electronic or otherwise, relating to the
Subservicing Agreements and the related Mortgage Loans or REO Property then
being serviced and an accounting of amounts collected and held by it, if any,
and will otherwise cooperate and use its reasonable efforts to effect the
orderly and efficient transfer of the Subservicing Agreements, or
responsibilities hereunder to the Indenture Trustee, or to such successor Master
Servicer.
Section 3.06. COLLECTION OF MORTGAGE LOAN PAYMENTS. (a) The Master
Servicer will coordinate and monitor remittances by Subservicers to it with
respect to the Mortgage Loans in accordance with this Servicing Agreement.
(b) The Master Servicer shall make its best reasonable efforts to
collect or cause to be collected all payments required under the terms and
provisions of the Mortgage Loans and shall follow, and use its best reasonable
efforts to cause Subservicers to follow, collection procedures comparable to the
collection procedures of prudent mortgage lenders servicing mortgage loans for
their own account to the extent such procedures shall be consistent with this
Servicing Agreement. Consistent with the foregoing, the Master Servicer or the
related Subservicer may in its discretion (i) waive or permit to be waived any
late payment charge, prepayment charge, assumption fee, or any penalty interest
in connection with the prepayment of a Mortgage Loan and (ii) suspend or reduce
or permit to be suspended or reduced regular monthly payments for a period of up
to six months, or arrange or permit an arrangement with a Mortgagor for a
scheduled liquidation of delinquencies; provided, however, that the Master
Servicer or the related Subservicer may permit the foregoing only if it
believes, in good faith, that recoveries of Monthly Payments will be maximized;
provided further, however, that Monthly Payments may not be suspended during the
twelve months prior to the final maturity of the Bonds. In the event the Master
Servicer or related Subservicer shall consent to the deferment of the due dates
for payments due on a Mortgage Note, the Master Servicer shall nonetheless make
an Advance or shall cause the related Subservicer to make an advance to the same
extent as if such installment were due, owing and delinquent and had not been
deferred through liquidation of the Mortgaged Property; PROVIDED, HOWEVER, that
the obligation of the Master Servicer or the related Subservicer to make an
Advance shall apply only to the extent that the Master Servicer believes, in
good faith, that such advances are not Nonrecoverable Advances.
(c) Within five Business Days after the Master Servicer has determined
that all amounts which it expects to recover from or on account of a Mortgage
Loan have been recovered and that no further Liquidation Proceeds will be
received in connection therewith, the Master Servicer shall
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provide to the Indenture Trustee a certificate of a Servicing Officer that such
Mortgage Loan became a Liquidated Mortgage Loan as of the date of such
determination.
(d) The Master Servicer shall establish a segregated account in the
name of the Indenture Trustee (the "Collection Account"), which shall be an
Eligible Account, in which the Master Servicer shall deposit or cause to be
deposited any amounts representing payments on and any collections in respect of
the Mortgage Loans due subsequent to the respective Cut-Off Date (other than in
respect of the payments referred to in the following paragraph) within one
Business Day following receipt thereof (or otherwise on or prior to the Closing
Date), including the following payments and collections received or made by it
(without duplication):
(i) all payments of principal, including Principal
Prepayments, of or interest on the Mortgage Loans (including advances
by a Subservicer) received by the Master Servicer directly from
Mortgagors or from the respective Subservicer, net of any portion of
the interest thereof retained by the Subservicer as subservicing fees;
(ii) the aggregate Repurchase Price of the
Mortgage Loans purchased by the Master Servicer pursuant to Section
3.18;
(iii) Net Liquidation Proceeds;
(iv) all proceeds of any Mortgage Loans repurchased by
the Seller pursuant to the Mortgage Loan Sale and Contribution
Agreement, and all Substitution Adjustment Amounts required to be
deposited in connection with the substitution of an Eligible Substitute
Mortgage Loan pursuant to the Mortgage Loan Sale and Contribution
Agreement;
(v) Insurance Proceeds, other than Net
Liquidation Proceeds, resulting from any insurance policy maintained on
a Mortgaged Property;
(vi) any Advance and any Compensating Interest
payments; and
(vii) any other amounts received by the Master Servicer,
including any fees or penalties not retained by a Subservicer, required
to be deposited in the Collection Account pursuant to this Servicing
Agreement.
PROVIDED, HOWEVER, that with respect to each Due Period, the Master Servicer
shall be permitted to retain from payments in respect of interest on the
Mortgage Loans, the Servicing Fee for such Due Period. The foregoing
requirements respecting deposits to the Collection Account are exclusive, it
being understood that, without limiting the generality of the foregoing, the
Master Servicer need not deposit in the Collection Account fees (including
annual fees or assumption fees) or late charge and prepayment penalties, payable
by Mortgagors, each as further described in Section 3.15, or amounts received by
the Subservicer for the accounts of Mortgagors for application towards the
payment of taxes, insurance premiums, assessments and similar items. In the
event any amount not required to be deposited in the Collection Account is so
deposited, the Master Servicer may at any time (prior to being terminated under
this Agreement) withdraw such amount from the Collection Account, any provision
herein to the contrary notwithstanding. The Master Servicer shall keep records
that
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accurately reflect the funds on deposit in the Collection Account that have been
identified by it as being attributable to the Mortgage Loans and shall hold all
collections in the Collection Account for the benefit of the Owner Trustee, the
Indenture Trustee, the Bondholders and the Bond Insurer, as their interests may
appear. The Master Servicer shall remit all Foreclosure Profits to the
Collection Account, to the extent not payable to the related Subservicer.
Funds in the Collection Account may not be invested with, and shall not
be commingled with the Master Servicer's own funds or general assets or with
funds respecting payments on mortgage loans or with any other funds not related
to the Bonds. Funds in the Collection Account shall be invested solely in
Eligible Investments, designated in the name of the Indenture Trustee, which
shall mature not later than the Business Day next preceding the third Business
Day prior to each Payment Date next following the date of such investment and
shall not be sold or disposed of prior to maturity. All income and gain realized
from any such investment shall be for the benefit of the Master Servicer or the
related Subservicer. The amount of any losses incurred with respect to any such
investments shall be deposited in the Collection Account by the Master Servicer.
In the event the Indenture Trustee assumes the responsibilities of the
Master Servicer under this Servicing Agreement upon a Servicing Default under
Section 6.01, the Indenture Trustee shall be entitled to reimburse itself for
Advances pursuant to Sections 3.07(a)(v), (viii) and (ix) prior to reimbursement
of the terminated Master Servicer or any successor Master Servicer.
(e) The Master Servicer will require each Subservicer to hold all funds
constituting collections on the Mortgage Loans, pending remittance thereof to
the Master Servicer, in one or more accounts meeting the requirements of an
Eligible Account, and invested in Eligible Investments, and in the name of the
Indenture Trustee. The Subservicer 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 any other funds. Each Subservicer shall make
remittances to the Master Servicer no later than the eighteenth (18th) day of
each month, commencing on the eighteenth (18th) day of the month next following
the Closing Date, or if such eighteenth (18th) day is not a Business Day, the
first Business Day immediately preceding such eighteenth (18th) day.
Section 3.07. WITHDRAWALS FROM THE COLLECTION ACCOUNT. (a) The Master
Servicer shall, from time to time as provided herein, make withdrawals from the
Collection Account of amounts on deposit therein pursuant to Section 3.06 that
are attributable to the Mortgage Loans for the following purposes (without
duplication):
(i) to deposit in the Payment Account, by the third
Business Day prior to each Payment Date, the Available Funds required
to be distributed as provided in the Indenture on a Payment Date;
(ii) to the extent deposited to the Collection Account,
to reimburse itself or the related Subservicer for previously
unreimbursed expenses incurred in maintaining individual insurance
policies pursuant to Sections 3.10 or 3.11, or Liquidation Expenses,
paid pursuant to Section 3.13 or otherwise reimbursable pursuant to the
terms of this Servicing Agreement, such withdrawal right being limited
to amounts received on the related Mortgage Loans (other than any
Repurchase Price in respect thereof) which represent late
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recoveries of the payments for which such advances were made, or from
related Liquidation Proceeds;
(iii) to pay to itself out of each payment received on
account of interest on a Mortgage Loan as contemplated by Section 3.15,
an amount equal to the related Servicing Fee (to the extent not
retained pursuant to Section 3.06);
(iv) to pay to itself or the Seller, with respect to any
Mortgage Loan or property acquired in respect thereof that has been
purchased or otherwise transferred to the Seller, the Master Servicer
or other entity, all amounts received thereon and not required to be
distributed to Bondholders as of the date on which the related Purchase
Price or Repurchase Price is determined;
(v) to reimburse the Master Servicer or any Subservicer
for any Advance of its own funds or any advance of such Subservicer's
own funds, the right of the Master Servicer or a Subservicer to
reimbursement pursuant to this subclause (v) being limited to amounts
received (including, for this purpose, the Repurchase Price therefor,
Insurance Proceeds and Liquidation Proceeds) which represent late
payments or recoveries of the principal of or interest on such Mortgage
Loan respecting which such Advance or advance was made;
(vi) to reimburse the Master Servicer or any Subservicer
from Insurance Proceeds or Liquidation Proceeds relating to a
particular Mortgage Loan for amounts expended by the Master Servicer or
such Subservicer pursuant to Section 3.13 in good faith in connection
with the restoration of the related Mortgage Property which was damaged
by the Uninsured Cause or in connection with the liquidation of such
Mortgage Loan;
(vii) to pay the Master Servicer or any Subservicer
(payment to any Subservicer to be subject to prior payment to the
Master Servicer of an amount equal to the Servicing Fee), as
appropriate, from Liquidation Proceeds or Insurance Proceeds received
in connection with the liquidation of any Mortgage Loan, the amount
which it or such Subservicer would have been entitled to receive under
subclause (iii) of this Subsection 3.07(a) as servicing compensation on
account of each defaulted Monthly Payment on such Mortgage Loan if paid
in a timely manner by the related Mortgagor, but only to the extent
that the aggregate of Liquidation Proceeds and Insurance Proceeds with
respect to such Mortgage Loan, after any reimbursement to the Master
Servicer or any Subservicer, pursuant to other subclauses of this
Subsection 3.07(a), exceeds the outstanding Principal Balance of such
Mortgage Loan plus accrued and unpaid interest thereon at the related
Mortgage Rate less the Servicing Fee Rate to but not including the date
of payment (in any event, the amount of servicing compensation received
by a Subservicer and the Master Servicer with respect to any defaulted
Monthly Payment shall not exceed the applicable Servicing Fee);
(viii) to reimburse the Master Servicer or any Subservicer
for advances of funds pursuant to Article III, the right to
reimbursement pursuant to this subclause being limited to amounts
received on the related Mortgage Loan (including, for this purpose, the
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Repurchase Price therefor, Insurance Proceeds and Liquidation Proceeds)
which represent late recoveries of the payments for which such advances
were made;
(ix) to reimburse the Master Servicer or any Subservicer
for any Nonrecoverable Advance previously made, and not reimbursed
pursuant to this Subsection 3.07(a);
(x) to deposit in the Payment Account, by the third
Business Day prior to each Payment Date, the Indenture Trustee Fee;
(xi) to withdraw any other amount deposited in the
Collection Account that was not required to be deposited therein
pursuant to Section 3.06;
(xii) to pay Radian the premium with respect to the
Radian PMI Policy;
(xiii) to pay the Owner Trustee the Owner Trustee Fee
and the Bond Insurer the Premium Amount;
(xiv) to reimburse the Master Servicer for costs
associated with the environmental report specified in Section 3.13(e);
and
(xv) clear and terminate the Collection Account
following a termination of the Trust pursuant to Section 8.01 of the
Trust Agreement.
In connection with withdrawals pursuant to clauses (ii), (iii), (iv), (v), (vi),
(vii) and (viii), the Master Servicer's entitlement thereto is limited to
collections or other recoveries on the related Mortgage Loan, and the Master
Servicer shall keep and maintain separate accounting, on a Mortgage Loan by
Mortgage Loan basis, for the purpose of justifying any withdrawal from the
Collection Account pursuant to such clauses. Notwithstanding any other provision
of this Servicing Agreement, the Master Servicer shall be entitled to reimburse
itself for any previously unreimbursed expenses incurred pursuant to Section
3.13 or otherwise reimbursable expenses incurred pursuant to the terms of this
Servicing Agreement, but only to the extent of collections or other recoveries
on the related Mortgage Loan.
(b) Notwithstanding the provisions of this Section 3.07, the Master
Servicer may, but is not required to, allow the Subservicers to deduct from
amounts received by them or from the related account maintained by a
Subservicer, prior to deposit in the Collection Account, any portion to which
such Subservicers are entitled as servicing compensation (including income on
Eligible Investments) or reimbursement of any reimbursable Advances or Servicing
Advances made by such Subservicers.
Section 3.08. COLLECTION OF TAXES, ASSESSMENTS AND SIMILAR ITEMS;
SERVICING ACCOUNTS.
(a) The Master Servicer shall establish and maintain or cause the
related Subservicer to establish and maintain, one or more Servicing Accounts.
The Master Servicer or a Subservicer will
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deposit and retain therein all collections from the Mortgagors for the payment
of taxes, assessments, insurance premiums, or comparable items as agent of the
Mortgagors.
(b) The deposits in the Servicing Accounts shall be held in trust by
the Master Servicer or a Subservicer (and its successors and assigns) in the
name of the Indenture Trustee. Such Servicing Accounts shall be Eligible
Accounts and if permitted by applicable law, invested in Eligible Investments
held in trust by the Master Servicer or a Subservicer as described above and
maturing, or be subject to redemption or withdrawal, no later than the date on
which such funds are required to be withdrawn, and in no event later than 45
days after the date of investment; withdrawals of amounts from the Servicing
Accounts may be made only to effect timely payment of taxes, assessments,
insurance premiums, or comparable items, to reimburse the Master Servicer or a
Subservicer for any advances made with respect to such items, to refund to any
Mortgagors any sums as may be determined to be overages, to pay interest, if
required, to Mortgagors on balances in the Servicing Accounts or to clear and
terminate the Servicing Accounts at or any time after the termination of this
Servicing Agreement.
Section 3.09. ACCESS TO CERTAIN DOCUMENTATION AND INFORMATION REGARDING
THE MORTGAGE LOANS. The Master Servicer shall provide, and shall cause any
Subservicer to provide, to the Indenture Trustee, the Owner Trustee and the Bond
Insurer access to the documentation regarding the related Mortgage Loans and REO
Property and to the Bondholders, the FDIC, and the supervisory agents and
examiners of the FDIC access to the documentation regarding the related Mortgage
Loans required by applicable regulations, such access being afforded without
charge but only upon reasonable request and during normal business hours at the
offices of the Master Servicer or the Subservicers that are designated by these
entities; PROVIDED, HOWEVER, that, unless otherwise required by law, the Master
Servicer or the Subservicer shall not be required to provide access to such
documentation if the provision thereof would violate the legal right to privacy
of any Mortgagor; PROVIDED, FURTHER, HOWEVER, that the Indenture Trustee, the
Bond Insurer and the Owner Trustee shall coordinate their requests for such
access so as not to impose an unreasonable burden on, or cause an unreasonable
interruption of, the business of the Master Servicer or any Subservicer. The
Master Servicer and the Subservicers shall allow representatives of the above
entities to photocopy any of the documentation and shall provide equipment for
that purpose at a charge that covers their own actual out-of-pocket costs.
Section 3.10. MAINTENANCE OF PRIMARY INSURANCE POLICIES AND THE RADIAN
POLICY; COLLECTION THEREUNDER. The Master Servicer shall, or shall cause the
related Subservicer to, exercise its best reasonable efforts to maintain and
keep in full force and effect each Primary Insurance Policy by a Qualified
Insurer, or other insurer satisfactory to the Bond Insurer and the Rating
Agencies, with respect to each first lien Non-High CLTV Loan as to which as of
the related Cut-Off Date such a Primary Insurance Policy was in effect (or, in
the case of a Substitute Mortgage Loan, the date of substitution) and the
original principal amount of the related Mortgage Note exceeded 80% of the
Original Value in an amount at least equal to the excess of such original
principal amount over 75% of such Original Value until the principal amount of
any such first lien Mortgage Loan is reduced below 80% of the Original Value or,
based upon a new appraisal, the principal amount of such first lien Mortgage
Loan represents less than 80% of the new appraised value. The Master Servicer
shall, or shall cause the related Subservicer to, effect the timely payment of
the premium on each Primary Insurance Policy. The Master Servicer and the
related Subservicer shall have the power to substitute
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for any Primary Insurance Policy another substantially equivalent policy issued
by another Qualified Insurer, PROVIDED, THAT, such substitution shall be subject
to the condition that (i) it will not cause the ratings on the Bonds to be
downgraded or withdrawn without taking into account the Bond Insurance Policy,
as evidenced by a writing from each Rating Agency, and (ii) the Bond Insurer
shall have consented thereto, which consent shall not be unreasonably withheld.
The Master Servicer shall take all such actions on behalf of the Trust
as are necessary to service, maintain and administer the Radian PMI Policy and
to enforce the Trust's rights under the Radian PMI Policy. The Master Servicer
shall effect the timely payment of the Radian PMI Policy Fee. To the extent the
Mortgagor with respect to a Radian PMI Loan is delinquent, the Master Servicer
shall advance the related Radian PMI Policy Fee as a Servicing Advance. Except
as expressly set forth herein, the Master Servicer shall have full authority on
behalf of the Trust to do anything it reasonably deems appropriate or desirable
in connection with the servicing, maintenance and administration of the Radian
PMI Policy. The Master Servicer shall make its best reasonable efforts to file
all insured claims under the Radian PMI Policy and collect from Radian all
Insurance Proceeds due to the Trust under the Radian PMI Policy. The Master
Servicer shall not take, or permit any Subservicer to take, any action which
would result in non-coverage under the Radian PMI Policy of any loss which, but
for the actions of the Master Servicer or any Subservicer, would have been
covered thereunder. To the extent coverage is available, the Master Servicer
shall keep or cause to be kept in full force and effect the Radian PMI Policy
for the life of the Mortgage Loan. Neither the Master Servicer nor the Indenture
Trustee shall terminate the Radian PMI Policy with respect to any Mortgage Loan,
except in accordance with the terms thereof. The Master Servicer shall cooperate
with Radian and shall use its best efforts to furnish all reasonable aid,
evidence and information in the possession of the Master Servicer or to which
the Master Servicer has access with respect to any Radian PMI Loan.
Section 3.11. MAINTENANCE OF HAZARD INSURANCE AND FIDELITY COVERAGE.
(a) The Master Servicer shall maintain and keep, or cause each Subservicer to
maintain and keep, with respect to each Non-High CLTV Loan and each REO
Property, in full force and effect hazard insurance (fire insurance with
extended coverage) equal to at least the lesser of the Principal Balance of the
Non- High CLTV Loan or the current replacement cost of the Mortgaged Property,
and containing a standard mortgagee clause, PROVIDED, HOWEVER, that the amount
of hazard insurance may not be less than the amount necessary to prevent loss
due to the application of any co-insurance provision of the related policy.
Unless applicable state law requires a higher deductible, the deductible on such
hazard insurance policy may be no more than $1,000 or 1% of the applicable
amount of coverage, whichever is less. In the case of a condominium unit or a
unit in a planned unit development, the required hazard insurance shall take the
form of a multi-peril policy covering the entire condominium project or planned
unit development, in an amount equal to at least 100% of the insurable value
based on replacement cost.
(b) Any amounts collected by the Master Servicer or a Subservicer under
any such hazard insurance policy (other than amounts to be applied to the
restoration or repair of the Mortgaged Property or amounts released to the
Mortgagor in accordance with the Master Servicer's or a Subservicer's normal
servicing procedures, the Mortgage Note, the Security Instrument or applicable
law) shall be deposited initially in a Collection Account, for transmittal to
the Payment Account, subject to withdrawal pursuant to Section 3.07.
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(c) Any cost incurred by a Master Servicer or a Subservicer in
maintaining any such hazard insurance policy shall not be added to the amount
owing under the Non-High CLTV Loan for the purpose of calculating monthly
distributions to Bondholders, notwithstanding that the terms of the Non-High
CLTV Loan so permit. Such costs shall be recoverable by the Master Servicer or a
Subservicer out of related late payments by the Mortgagor or out of Insurance
Proceeds or Liquidation Proceeds or by the Master Servicer from the Repurchase
Price, to the extent permitted by Section 3.07.
(d) No earthquake or other additional insurance is to be required of
any Mortgagor or maintained on property acquired with respect to a Security
Instrument other than pursuant to such applicable laws and regulations as shall
at any time be in force and shall require such additional insurance. When, at
the time of origination of the Non-High CLTV Loan or at any subsequent time, the
Mortgaged Property is located in a federally designated special flood hazard
area, the Master Servicer shall use its best reasonable efforts to cause with
respect to the Non-High CLTV Loans and each REO Property flood insurance (to the
extent available and in accordance with mortgage servicing industry practice) to
be maintained. Such flood insurance shall cover the Mortgaged Property,
including all items taken into account in arriving at the Appraised Value on
which the Non- High CLTV Loan was based, and shall be in an amount equal to the
lesser of (i) the Principal Balance of the related Mortgage Loan and (ii) the
minimum amount required under the terms of coverage to compensate for any damage
or loss on a replacement cost basis, but not more than the maximum amount of
such insurance available for the related Mortgaged Property under either the
regular or emergency programs of the National Flood Insurance Program (assuming
that the area in which such Mortgaged Property is located is participating in
such program). Unless applicable state law requires a higher deductible, the
deductible on such flood insurance may not exceed $1,000 or 1% of the applicable
amount of coverage, whichever is less.
(e) If insurance has not been maintained complying with Subsections
3.11 (a) and (d) and there shall have been a loss which would have been covered
by such insurance had it been maintained, the Master Servicer shall pay, or
cause the related Subservicer to pay, for any necessary repairs.
(f) The Master Servicer shall present, or cause the related Subservicer
to present, claims under any applicable Primary Insurance Policy or the related
hazard insurance or flood insurance policy.
(g) The Master Servicer shall obtain and maintain at its own expense
and for the duration of this Servicing Agreement and shall cause each
Subservicer to obtain and maintain a blanket fidelity bond and an errors and
omissions insurance policy covering such Person's officers, employees and other
persons acting on its behalf in connection with its activities under this
Servicing Agreement or the related Subservicing Agreement. The amount of
coverage shall be at least equal to the coverage maintained by the Master
Servicer acceptable to Fannie Mae or Freddie Mac to service loans for it or
otherwise in an amount as is commercially available at a cost that is generally
not regarded as excessive by industry standards. The Master Servicer shall
promptly notify the Indenture Trustee of any material change in the terms of
such bond or policy. The Master Servicer shall provide annually to the Indenture
Trustee a certificate of insurance that each such bond and policy are in effect.
If any such bond or policy ceases to be in effect, the Master Servicer shall, to
the
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extent possible, give the Indenture Trustee ten days' notice prior to any such
cessation and shall use its reasonable best efforts to obtain a comparable
replacement bond or policy, as the case may be. Any amounts relating to the
Mortgage Loans collected under each such bond or policy shall be deposited
initially in a Collection Account for transmittal to the Payment Account,
subject to withdrawal pursuant to Section 3.07.
Section 3.12. DUE-ON-SALE CLAUSES; ASSUMPTION AGREEMENTS. (a) In any
case in which the Master Servicer is notified by any Mortgagor or Subservicer
that a Mortgaged Property relating to a Mortgage Loan has been or is about to be
conveyed by the Mortgagor, the Master Servicer shall enforce, or shall instruct
such Subservicer to enforce, any due-on-sale clause contained in the related
Security Instrument to the extent permitted under the terms of the related
Mortgage Note and by applicable law. The Master Servicer or the related
Subservicer may repurchase a Mortgage Loan at the Repurchase Price when the
Master Servicer requires acceleration of the Mortgage Loan, but only if the
Master Servicer is satisfied, as evidenced by an Officer's Certificate delivered
to the Indenture Trustee, that either (i) such Mortgage Loan is in default or
default is reasonably foreseeable or (ii) if such Mortgage Loan is not in
default or default is not reasonably foreseeable, such repurchase will have no
adverse tax consequences for the Trust Estate or any Securityholder. If the
Master Servicer reasonably believes that such due-on-sale clause cannot be
enforced under applicable law or if the Mortgage Loan does not contain a
due-on-sale clause, the Master Servicer is authorized, and may authorize any
Subservicer, to consent to a conveyance subject to the lien of the Mortgage, and
to take or enter into an assumption agreement from or with the Person to whom
such property has been or is about to be conveyed, pursuant to which such Person
becomes liable under the related Mortgage Note and unless prohibited by
applicable state law, such Mortgagor remains liable thereon, on condition,
however, that the related Mortgage Loan shall continue to be covered by a hazard
policy and (if so covered before the Master Servicer or the related Subservicer
enters into such agreement) by any Primary Insurance Policy. In connection with
any such assumption, no material term of the related Mortgage Note may be
changed. The Master Servicer shall forward to the Indenture Trustee the original
copy of such assumption agreement, which copy shall be added by the Indenture
Trustee to the related Mortgage File and which 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. A portion, equal to up to
2% of the Principal Balance of the related Mortgage Loan, of any fee or
additional interest collected by the Master Servicer or the related Subservicer
for consenting in any such conveyance or entering into any such assumption
agreement may be retained by the related Subservicer as additional servicing
compensation.
(b) Notwithstanding the foregoing paragraph or any other provision of
this Servicing Agreement, the Master 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 conveyance by the
Mortgagor of the related Mortgaged Property or assumption of a Mortgage Loan
which the Master Servicer reasonably believes it may be restricted by law from
preventing, for any reason whatsoever or if the exercise of such right would
impair or threaten to impair any recovery under any applicable insurance policy.
Section 3.13. REALIZATION UPON DEFAULTED MORTGAGE LOANS. (a) The
Master Servicer shall, or shall direct the related Subservicer to, foreclose
upon or otherwise comparably convert the ownership of properties securing any
Non-High CLTV Loans that come into and continue in default
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and as to which no satisfactory arrangements can be made for collection of
delinquent payments pursuant to Section 3.06, except that the Master Servicer
shall not, and shall not direct the related Subservicer to, foreclose upon or
otherwise comparably convert a Mortgaged Property if there is evidence of toxic
waste or other environmental hazards thereon unless the Master Servicer follows
the procedures in Subsection (e) below.
(b) With respect to such of the High CLTV Loans as come into
and continue in default, the Master Servicer shall, or shall direct the related
Subservicer to decide whether to (i) foreclose upon the Mortgaged Properties
securing such High CLTV Loans, (ii) write off the unpaid principal balance of
the High CLTV Loans as bad debt, (iii) take a deed in lieu of foreclosure, (iv)
accept a short sale, (v) arrange for a repayment plan, (vi) agree to a
modification in accordance with this Servicing Agreement, or (vii) take an
unsecured note, in the case of (i) and (ii) subject to the rights of any related
first lien holder, except that the Master Servicer shall not, and shall not
direct the related Subservicer to, foreclose upon or otherwise comparably
convert a Mortgaged Property if the Master Servicer has actual knowledge that
any Mortgaged Property is affected by hazardous or toxic wastes or other
substances and the acquisition or such property would not be commercially
reasonable, which determination shall be made in accordance with the procedures
in Subsection (e) below; and provided, that the Master Servicer may not modify
more than 10% (by current Principal Balance) of the High CLTV Loans without the
consent of the Bond Insurer; and provided further, that the Master Servicer may
not take an unsecured note pursuant to clause (vii) above for more than 10% (by
current Principal Balance) of the High CLTV Loans without the consent of the
Bond Insurer. In connection with such decision, the Master Servicer shall follow
such practices (including, in the case of any default on a related senior
mortgage loan, the advancing of funds to correct such default if deemed to be
appropriate by the Master Servicer) and procedures as it shall deem necessary or
advisable and as shall be normal and usual in its general mortgage servicing
activities (including any analysis and decisions regarding whether to realize a
gain or loss pursuant to Section 1001 of the Code); PROVIDED that the Master
Servicer shall not be liable in any respect hereunder if the Master Servicer is
acting in connection with any such foreclosure or attempted foreclosure which is
not completed or other conversion in a manner that is consistent with the
provisions of this Servicing Agreement.
(c) In connection with such foreclosure or other conversion,
the Master Servicer in conjunction with the related Subservicer, if any, shall
use its best reasonable efforts to preserve REO Property and to realize upon
defaulted Mortgage Loans in such manner (including short sales) as to maximize
the receipt of principal and interest by the Bondholders, taking into account,
among other things, the timing of foreclosure and the considerations set forth
in Subsection 3.13(d). The foregoing is subject to the proviso that the Master
Servicer shall not be required to expend its own funds in connection with any
foreclosure or towards the restoration of any property unless it determines in
good faith (i) that such restoration or foreclosure will increase the proceeds
of liquidation of the Mortgage Loan to Bondholders after reimbursement to itself
for such expenses and (ii) that such expenses will be recoverable to it either
through Liquidation Proceeds (respecting which it shall have priority for
purposes of reimbursements from the Collection Account pursuant to Section 3.07)
or through Insurance Proceeds (respecting which it shall have similar priority).
The Master Servicer shall be responsible for all other costs and expenses
incurred by it in any such proceedings; PROVIDED, HOWEVER, that it shall be
entitled to reimbursement thereof (as well as its normal servicing
compensation), and in respect of any Subservicer only, to receive Foreclosure
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Profits as additional servicing compensation to the extent that transfers or
withdrawals from the Collection Account with respect thereto are permitted under
Section 3.07. Any income from or other funds (net of any income taxes) generated
by REO Property shall be deemed for purposes of this Servicing Agreement to be
Insurance Proceeds.
(d) The Trust Estate shall not acquire any real property (or any
personal property incident to such real property) except in connection with a
default or reasonably foreseeable default of a Mortgage Loan. In the event that
the Trust Estate acquires any real property (or personal property incident to
such real property) in connection with a default or imminent default of a
Mortgage Loan, such property shall be disposed of by the Master Servicer (or its
agent) on behalf of the Trust Estate within two years after its acquisition by
the Trust Estate.
(e) With respect to any Mortgage Loan as to which the Master Servicer
or a Subservicer has received notice of, or has actual knowledge of, the
presence of any toxic or hazardous substance on the Mortgaged Property, the
Master Servicer shall promptly notify the Indenture Trustee, the Owner Trustee
and the Bond Insurer and shall act in accordance with any such directions and
instructions provided by the Bond Insurer, or if a Bond Insurer Default exists,
by the Indenture Trustee, as pledgee of the Issuer. Notwithstanding the
preceding sentence of this Section 3.13(e), with respect to any Mortgage Loan
described in such sentence, the Master Servicer shall, if requested by the Bond
Insurer, obtain and deliver to the Issuer, the Indenture Trustee and the Bond
Insurer an environmental audit report prepared by a Person who regularly
conducts environmental audits using customary industry standards, a copy of
which shall be delivered to the Issuer and the Indenture Trustee. The Master
Servicer shall be entitled to reimbursement for such report pursuant to Section
3.07. If the Bond Insurer or Indenture Trustee, as applicable, has not provided
directions and instructions to the Master Servicer in connection with any such
Mortgage Loan within 30 days of a request by the Master Servicer for such
directions and instructions, then the Master Servicer shall take such action as
it deems to be in the best economic interest of the Trust Estate (other than
proceeding against the Mortgaged Property) and is hereby authorized at such time
as it deems appropriate to release such Mortgaged Property from the lien of the
related Mortgage. The parties hereto acknowledge that the Master Servicer shall
not obtain on behalf of the Issuer a deed as a result or in lieu of foreclosure,
and shall not otherwise acquire possession of or title to, or commence any
proceedings to acquire possession of or title to, or take any other action with
respect to, any Mortgage Property, if the Owner Trustee or the Indenture Trustee
could reasonably be considered to be a responsible party for any liability
arising from the presence of any toxic or hazardous substance on the Mortgaged
Property, unless the Owner Trustee or the Indenture Trustee has been indemnified
to its reasonable satisfaction against such liability.
Section 3.14. INDENTURE TRUSTEE TO COOPERATE; RELEASE OF MORTGAGE
FILES. (a) Upon payment in full of any Mortgage Loan or the receipt by the
Master Servicer of a notification that payment in full will be escrowed in a
manner customary for such purposes, the Master Servicer will immediately notify
the Indenture Trustee by a certification signed by a Servicing Officer in the
form of the request for release (the "Request for Release") attached hereto as
Exhibit B (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 Payment Account have been or will be so
deposited) and shall request delivery to the Master Servicer or Subservicer, as
the case may be, of the Mortgage File. Upon receipt of such certification and
request, the Custodian shall release the related Mortgage File
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to the Master Servicer or Subservicer and execute and deliver to the Master
Servicer, without recourse, the request for reconveyance, deed of reconveyance
or release or satisfaction of mortgage or such instrument releasing the lien of
the Security Instrument (furnished by the Master Servicer), together with the
Mortgage Note with written evidence of cancellation thereon.
(b) From time to time as is appropriate, for the servicing or
foreclosure of any Mortgage Loan or collection under an insurance policy, the
Master Servicer may deliver to the Custodian a Request for Release signed by a
Servicing Officer on behalf of the Master Servicer in substantially the form
attached as Exhibit B hereto. Upon receipt of the Request for Release, the
Indenture Trustee shall deliver the Mortgage File or any document therein to the
Master Servicer or Subservicer, as the case may be, as bailee for the Indenture
Trustee.
(c) The Master Servicer shall cause each Mortgage File or any document
therein released pursuant to Subsection 3.14(b) to be returned to the Indenture
Trustee, when the need therefor no longer exists, and in any event within 21
days of the Master Servicer's receipt thereof, unless the Mortgage Loan has
become a Liquidated Mortgage Loan and the Liquidation Proceeds relating to the
Mortgage Loan have been deposited in the Collection Account or such Mortgage
File is being used to pursue foreclosure or other legal proceedings. Prior to
return of a Mortgage File or any document to the Indenture Trustee, the Master
Servicer, the related insurer or Subservicer to whom such file or document was
delivered shall retain such file or document in its respective control as bailee
for the Indenture Trustee unless 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, to initiate or pursue legal action or other proceedings for the
foreclosure of the Mortgaged Property either judicially or non- judicially, and
the Master Servicer has delivered to the Indenture Trustee 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. If a Mortgage Loan becomes a Liquidated Mortgage Loan, the
Indenture Trustee shall deliver the Request for Release with respect thereto to
the Master Servicer and upon deposit of the related Liquidation Proceeds in the
Collection Account.
(d) The Indenture Trustee shall execute and deliver to the Master
Servicer any court pleadings, requests for trustee's sale or other documents
necessary to (i) the foreclosure or trustee's sale with respect to a Mortgaged
Property; (ii) any legal action brought to obtain judgment against any Mortgagor
on the Mortgage Note or Security Instrument; (iii) obtain a deficiency judgment
against the Mortgagor; or (iv) enforce any other rights or remedies provided by
the Mortgage Note or Security Instrument or otherwise available at law or
equity. Together with such documents or pleadings the Master Servicer shall
deliver to the Indenture Trustee a certificate of a Servicing Officer in which
it requests the Indenture Trustee to execute the pleadings or documents. The
certificate shall certify and explain the reasons for which the pleadings or
documents are required. It shall further certify that the Indenture Trustee's
execution and delivery of the pleadings or documents will not invalidate any
insurance coverage under the insurance policies or invalidate or otherwise
affect the lien of the Security Instrument, except for the termination of such a
lien upon completion of the foreclosure or trustee's sale.
Section 3.15. MASTER SERVICING COMPENSATION. (a) As compensation
for its activities hereunder, the Master Servicer shall be entitled to receive
the Servicing Fee from full payments of
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accrued interest on each Mortgage Loan. The Master Servicer shall be solely
responsible for paying any and all fees with respect to a Subservicer and the
Trust Estate shall not bear any fees, expenses or other costs directly
associated with any Subservicer.
(b) The Master Servicer or the related Subservicer may retain
additional servicing compensation in the form of prepayment charges, if any, a
portion of the assumption fees up to 2% of the Principal Balance of the related
Mortgage Loan, tax service fees, fees for statement of account or payoff, late
payment charges, or otherwise, to the extent such fees are collected from the
related Mortgagors or, with respect to a Liquidated Mortgage Loan, to the extent
such fees have accrued. The Master Servicer shall be required to pay all
expenses it incurs in connection with servicing activities under this Servicing
Agreement and shall not be entitled in connection with servicing activities
under this Servicing Agreement to reimbursement except as provided in this
Servicing Agreement. Expenses to be paid by the Master Servicer under this
Subsection 3.15(b) shall include payment of the expenses of the accountants
retained pursuant to Section 3.17.
Section 3.16. ANNUAL STATEMENTS OF COMPLIANCE. Within 120 days after
December 31 of each year, commencing December 2000, the Master Servicer at its
own expense shall deliver to the Indenture Trustee, with a copy to the Bond
Insurer and the Rating Agencies, an Officer's Certificate stating, as to the
signer thereof, that (i) a review of the activities of the Master Servicer
during the preceding calendar year and of performance under this Servicing
Agreement has been made under such officer's supervision, (ii) to the best of
such officer's knowledge, based on such review, the Master Servicer has
fulfilled all its obligations under this Servicing Agreement for such year, or,
if there has been a default in the fulfillment of any such obligation,
specifying each such default known to such officer and the nature and status
thereof including the steps being taken by the Master Servicer to remedy such
default; (iii) a review of the activities of each Subservicer during the
Subservicer's most recently ended calendar year on or prior to such December 31
and its performance under its Subservicing Agreement has been made under such
officer's supervision; and (iv) to the best of the Servicing Officer's
knowledge, based on his review and the certification of an officer of the
Subservicer (unless the Servicing Officer has reason to believe that reliance on
such certification is not justified), either each Subservicer has performed and
fulfilled its duties, responsibilities and obligations under this Servicing
Agreement and its Subservicing Agreement in all material respects throughout the
year, or, if there has been a default in performance or fulfillment of any such
duties, responsibilities or obligations, specifying the nature and status of
each such default known to the Servicing Officer. Copies of such statements
shall be provided by the Master Servicer to the Bondholders upon request or by
the Indenture Trustee at the expense of the Master Servicer should the Master
Servicer fail to provide such copies.
Section 3.17. ANNUAL INDEPENDENT PUBLIC ACCOUNTANTS' SERVICING REPORT.
(a) Within 120 days after December 31 of each year, commencing December 2000,
the Master Servicer, at its expense, shall cause a firm of Independent public
accountants who are members of the American Institute of Certified Public
Accountants and who are KPMG LLP (or a successor thereof) or are otherwise
acceptable to the Bond Insurer to furnish a statement to the Master Servicer,
which will be provided to the Indenture Trustee, the Bond Insurer and the Rating
Agencies, to the effect that, in connection with the firm's examination of the
Master Servicer's financial statements as of the end of such calendar year,
nothing came to their attention that indicated that the Master Servicer was not
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in compliance with Sections 3.06, 3.07 and 3.08 except for (i) such exceptions
as such firm believes to be immaterial and (ii) such other exceptions as are set
forth in such statement.
(b) Within 120 days after December 31 of each year, commencing
December 2000, the Master Servicer, at its expense, shall or shall cause each
Subservicer to cause a nationally recognized firm of independent certified
public accountants to furnish to the Master Servicer or such Subservicer a
report stating that (i) it has obtained a letter of representation regarding
certain matters from the management of the Master Servicer or such Subservicer
which includes an assertion that the Master Servicer or such Subservicer has
complied with certain minimum mortgage loan servicing standards (to the extent
applicable to residential mortgage loans) identified in the Uniform Single
Attestation Program for Mortgage Bankers established by the Mortgage Bankers
Association of America with respect to the servicing of first and second lien
conventional single family mortgage loans during the most recently completed
calendar year and (ii) on the basis of an examination conducted by such firm in
accordance with standards established by the American Institute of Certified
Public Accountants, such representation is fairly stated in all material
respects, subject to such exceptions and other qualifications that may be
appropriate. Immediately upon receipt of such report, the Master Servicer shall
or shall cause each Subservicer to furnish a copy of such report to the
Indenture Trustee, the Rating Agencies and the Bond Insurer.
Section 3.18. OPTIONAL PURCHASE OF DEFAULTED MORTGAGE LOANS. The Master
Servicer may, but is not obligated to, repurchase any Mortgage Loan delinquent
in payment for a period of 90 days or longer for a price equal to the Repurchase
Price therefor. In addition, the Master Servicer must repurchase any Mortgage
Loan which does not satisfy the requirements of 3.01(d) at a price equal to the
Repurchase Price. Any such purchase shall be accomplished as provided in
Subsection 2.03 hereof. Notwithstanding the foregoing, the Indenture Trustee,
whether acting as Indenture Trustee or in the capacity of successor Master
Servicer, shall have no obligation hereunder or under any other Basic Document
to repurchase any Mortgage Loan.
Section 3.19. INFORMATION REQUIRED BY THE INTERNAL REVENUE SERVICE
GENERALLY AND REPORTS OF FORECLOSURES AND ABANDONMENTS OF MORTGAGED PROPERTY.
The Master Servicer shall prepare and deliver all federal and state information
reports when and as required by all applicable state and federal income tax
laws. In particular, with respect to the requirement under Section 6050J of the
Code to the effect that the Master Servicer or Subservicer shall make reports of
foreclosures and abandonments of any mortgaged property for each year beginning
in 2000, the Master Servicer or Subservicer shall file reports relating to each
instance occurring during the previous calendar year in which the Master
Servicer (i) acquires an interest in any Mortgaged Property through foreclosure
or other comparable conversion in full or partial satisfaction of a Mortgage
Loan, or (ii) knows or has reason to know that any Mortgaged Property has been
abandoned. The reports from the Master Servicer or Subservicer shall be in form
and substance sufficient to meet the reporting requirements imposed by Section
6050J, Section 6050H (reports relating to mortgage interest received) and
Section 6050P of the Code (reports relating to cancellation of indebtedness).
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ARTICLE IV
Servicing Certificate
Section 4.01. REMITTANCE REPORTS. On the Business Day following each
Determination Date, the Master Servicer shall deliver to the Indenture Trustee a
report, prepared as of the close of business on the Determination Date (the
"Remittance Report"), in the form of a magnetic tape or disk or such other
method as to which the Master Servicer and Indenture Trustee shall agree. The
Remittance Report and any written information supplemental thereto shall include
such information with respect to the Mortgage Loans that is reasonably available
to the Master Servicer and that is required by the Indenture Trustee for
purposes of making the calculations and providing the reports referred to in the
Indenture, as set forth in written specifications or guidelines issued by the
Indenture Trustee from time to time.
In addition, prior to each Payment Date, the Master Servicer shall
determine the total amount of Realized Losses, if any, that resulted from any
Cash Liquidation, Debt Service Reduction, Deficient Valuation or REO Disposition
that occurred during the related Collection Period and the total amount of
Realized Losses incurred due to a High CLTV Loan being 180 days or more
delinquent. The amount of each Realized Loss shall be evidenced by an Officer's
Certificate delivered to the Indenture Trustee and the Bond Insurer with the
related Remittance Report in the month following the month during which the High
CLTV Loan becomes 180 days delinquent.
The determination by the Master Servicer of such amounts shall, in the
absence of obvious error, be presumptively deemed to be correct for all purposes
hereunder and the Owner Trustee and Indenture Trustee shall be protected in
relying upon the same without any independent check or verification. The
Indenture Trustee shall have no obligation to recompute, recalculate or verify
any information provided to it by the Master Servicer.
Section 4.02. RESERVED.
Section 4.03. RESERVED.
Section 4.04. ADVANCES. If any Monthly Payment on a Mortgage Loan
(other than Balloon Payments) that was due on the immediately preceding Due Date
(with respect to a Non-High CLTV Loan) or due during the related Collection
Period (with respect to a High CLTV Loan) and delinquent on the Determination
Date is delinquent other than as a result of application of the Relief Act, the
Master Servicer will deposit in the Collection Account not later than the third
Business Day immediately preceding the related Payment Date an amount equal to
such Monthly Payment (with respect to a Non-High CLTV Loan) or the interest
portion of such Monthly Payment (with respect to a High CLTV Loan) net of the
related Servicing Fee and Radian PMI Policy Fee for such Mortgage Loan, except
to the extent the Master Servicer or the related Subservicer determines any such
advance to be nonrecoverable from Liquidation Proceeds, Insurance Proceeds or
future payments on any Mortgage Loan. Subject to the foregoing and in the
absence of such a determination, the Master Servicer shall continue to make such
advances through the date that the related Mortgaged Property has, in the
judgment of the Master Servicer, been completely liquidated. No later than the
fourth Business Day preceding each Payment Date, the Master Servicer shall
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present an Officer's Certificate to the Indenture Trustee and the Bond Insurer
with respect to the Mortgage Loans, (i) stating that the Master Servicer elects
not to make an Advance in a stated amount and (ii) detailing the reason it deems
the advance to be a Nonrecoverable Advance. The Master Servicer will include in
the Remittance Report a list of each Non-High CLTV Loan or High CLTV Loan for
which it does not make an Advance in accordance with this Section.
Such Advances may be made in whole or in part from funds in the
Collection Account being held for future distribution or withdrawal on or in
connection with Payment Dates in subsequent months. Any funds being held for
future distribution to Securityholders and so used shall be replaced by the
Master Servicer from its own funds by deposit in the Collection Account on or
before the fourth Business Day preceding any Payment Date to the extent that
funds in the Collection Account with respect to such Payment Date shall be less
than payments to Securityholders required to be made on such date.
Section 4.05. COMPENSATING INTEREST PAYMENTS. The Master Servicer shall
deposit in the Collection Account not later than the third Business Day
preceding the Payment Date an amount equal to the Compensating Interest for the
related Determination Date. The Master Servicer shall not be entitled to any
reimbursement of any Compensating Interest payment.
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ARTICLE V
The Master Servicer
Section 5.01. LIABILITY OF THE MASTER SERVICER. The Master Servicer
shall be liable in accordance herewith only to the extent of the obligations
specifically imposed upon and undertaken by the Master Servicer herein.
Section 5.02. MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE
OBLIGATIONS OF, THE MASTER SERVICER. Any corporation into which the Master
Servicer may be merged or converted or with which it may be consolidated, or any
corporation resulting from any merger, conversion or consolidation to which the
Master Servicer shall be a party, or any corporation succeeding to the business
of the Master Servicer, shall be the successor of the Master 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 to
the Master Servicer shall be qualified to sell mortgage loans to and service
mortgage loans for Fannie Mae or Freddie Mac.
The Master Servicer may assign its rights and delegate its duties and
obligations under this Servicing Agreement; PROVIDED, that the Person accepting
such assignment or delegation shall be a Person which is qualified to service
mortgage loans on behalf of Fannie Mae or Freddie Mac, is reasonably
satisfactory to the Indenture Trustee (as pledgee of the Mortgage Loans) and the
Company (in its sole discretion) and the Bond Insurer, is willing to service the
Mortgage Loans and executes and delivers to the Indenture Trustee and the
Company an agreement, in form and substance reasonably satisfactory to the Bond
Insurer, the Indenture Trustee and the Company, which contains an assumption by
such Person of the due and punctual performance and observance of each covenant
and condition to be performed or observed by the Master Servicer under this
Servicing Agreement; PROVIDED, FURTHER, that each Rating Agency's rating of the
Bonds in effect immediately prior to such assignment and delegation will not be
qualified, reduced, or withdrawn as a result of such assignment and delegation
(as evidenced by a letter to such effect from each Rating Agency) or considered
to be below investment grade without taking into account the Bond Insurance
Policy.
Section 5.03. LIMITATION ON LIABILITY OF THE MASTER SERVICER AND
OTHERS. Neither the Master Servicer nor any of the directors or officers or
employees or agents of the Master Servicer shall be under any liability to the
Company, the Issuer, the Owner Trustee, the Indenture Trustee or the Bondholders
for any action taken or for refraining from the taking of any action in good
faith pursuant to this Servicing Agreement, PROVIDED, HOWEVER, that this
provision shall not protect the Master Servicer or any such Person against any
liability which would otherwise be imposed by reason of its willful misfeasance,
bad faith or gross negligence in the performance of its duties hereunder or by
reason of its reckless disregard of its obligations and duties hereunder. The
Master Servicer and any director or officer or employee or agent of the Master
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 Master Servicer and any director or officer or employee or agent of the
Master Servicer shall be indemnified by the Company and held harmless against
any loss, liability or expense incurred in connection with any legal action
relating to this Servicing Agreement or the Bonds, including any amount paid to
the Owner Trustee or the Indenture
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Trustee pursuant to Section 5.06(b), other than any loss, liability or expense
related to any specific Mortgage Loan or Mortgage Loans (except as any such
loss, liability or expense shall be otherwise reimbursable pursuant to this
Servicing Agreement) and any loss, liability or expense incurred by reason of
its willful misfeasance, bad faith or gross negligence in the performance of its
duties hereunder or by reason of its reckless disregard of its obligations and
duties hereunder. The Master Servicer shall not be under any obligation to
appear in, prosecute or defend any legal action which is not incidental to its
duties to service the Mortgage Loans in accordance with this Servicing
Agreement, and which in its opinion may involve it in any expense or liability;
PROVIDED, HOWEVER, that the Master Servicer may in its sole discretion undertake
any such action which it may deem necessary or desirable in respect of this
Servicing Agreement, and the rights and duties of the parties hereto and the
interests of the Securityholders hereunder. In such event, the reasonable legal
expenses and costs of such action and any liability resulting therefrom shall be
expenses, costs and liabilities of the Company, and the Master Servicer shall be
entitled to be reimbursed therefor. The Master Servicer's right to indemnity or
reimbursement pursuant to this Section 5.03 shall survive any resignation or
termination of the Master Servicer pursuant to Section 5.04 or 6.01 with respect
to any losses, expenses, costs or liabilities arising prior to such resignation
or termination (or arising from events that occurred prior to such resignation
or termination).
Section 5.04. MASTER SERVICER NOT TO RESIGN. Subject to the provisions
of Section 5.02, the Master Servicer shall not resign from the obligations and
duties hereby imposed on it except (i) upon determination that the performance
of its obligations or duties hereunder are no longer permissible under
applicable law or (ii) upon satisfaction of the following conditions: (a) the
Master Servicer has proposed a successor servicer to the Company, the Bond
Insurer and the Indenture Trustee in writing and such proposed successor
servicer is reasonably acceptable to the Company and the Indenture Trustee; (b)
each Rating Agency shall have delivered a letter (obtained by and at the expense
of the Master Servicer) to the Company, the Bond Insurer and the Indenture
Trustee prior to the appointment of the successor servicer stating that the
proposed appointment of such successor servicer as Master Servicer hereunder
will not result in the reduction or withdrawal of the then current rating of the
Bonds or the then current rating of the Bonds without taking into account the
Bond Insurance Policy; and (c) such proposed successor servicer is acceptable to
the Bond Insurer, as evidenced by a letter to the Company and the Indenture
Trustee; PROVIDED, HOWEVER, that no such resignation by the Master Servicer
shall become effective until such successor servicer or, in the case of (i)
above, the Indenture Trustee, as pledgee of the Mortgage Loans, shall have
assumed the Master Servicer's responsibilities and obligations hereunder or
another successor Master Servicer has been appointed in accordance with Section
6.02. Any such resignation shall not relieve the Master Servicer of
responsibility for any of the obligations specified in Sections 6.01 and 6.02 as
obligations that survive the resignation or termination of the Master Servicer.
The Master Servicer shall have no claim (whether by subrogation or otherwise) or
other action against any Bondholder or the Bond Insurer for any amounts paid by
the Master Servicer pursuant to any provision of this Servicing Agreement. Any
such determination permitting the resignation of the Master Servicer shall be
evidenced by an Opinion of Counsel to such effect delivered to the Indenture
Trustee and the Bond Insurer.
Section 5.05. DELEGATION OF DUTIES. In the ordinary course of
business, the Master Servicer at any time may delegate any of its duties
hereunder to any Person, including any of its Affiliates, who agrees to conduct
such duties in accordance with standards comparable to those with which the
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Master Servicer complies pursuant to Section 3.01. Such delegation shall not
relieve the Master Servicer of its liabilities and responsibilities with respect
to such duties and shall not constitute a resignation within the meaning of
Section 5.04.
Section 5.06. MASTER SERVICER TO PAY INDENTURE TRUSTEE'S AND OWNER
TRUSTEE'S FEES AND EXPENSES; INDEMNIFICATION. (a) The Master Servicer covenants
and agrees to pay to the Owner Trustee, the Indenture Trustee and any co-trustee
of the Indenture Trustee from time to time, and the Owner Trustee, the Indenture
Trustee and any such co-trustee shall be entitled to, reasonable compensation
(which shall not be limited by any provision of law in regard to the
compensation of a trustee of an express trust) for all services rendered by each
of them in the execution of the trusts created under the Trust Agreement, the
Indenture or any other Basic Document and in the exercise and performance of any
of the powers and duties under the Trust Agreement or the Indenture, as the case
may be, of the Owner Trustee, the Indenture Trustee and any co-trustee of the
Indenture Trustee, and the Master Servicer will pay or reimburse (i) the
Indenture Trustee and any co-trustee upon request for all reasonable expenses,
disbursements and advances incurred or made by the Indenture Trustee or any
co-trustee of the Indenture Trustee in accordance with any of the provisions of
this Servicing Agreement or any other Basic Document except any such expense,
disbursement or advance as may arise from its negligence or bad faith and (ii)
the Owner Trustee upon request for all reasonable expenses, disbursements and
advances incurred or made by the Owner Trustee in accordance with any of the
provisions of this Servicing Agreement except any such expense, disbursement or
advance as may arise from its willful misconduct, gross negligence or bad faith
or grossly negligent failure to act.
(b) The Master Servicer agrees to indemnify the Indenture Trustee and
the Owner Trustee for, and to hold the Indenture Trustee and the Owner Trustee,
as the case may be, harmless against, any claim, tax, penalty, loss, liability
or expense of any kind whatsoever, incurred without negligence (gross negligence
in the case of the Owner Trustee) or willful misconduct on its part, arising out
of, or in connection with, the failure by the Master Servicer to perform its
duties in compliance with this Servicing Agreement, including the costs and
expenses (including reasonable legal fees and expenses) of defending itself
against any claim in connection with the exercise or performance of any of its
powers or duties under any Basic Document, provided that:
(i) with respect to any such claim, the Indenture
Trustee or Owner Trustee, as the case may be, shall have given the
Master Servicer written notice thereof promptly after the Indenture
Trustee or Owner Trustee, as the case may be, shall have actual
knowledge thereof; it being understood that failure to give such notice
shall not relieve the Master Servicer of its indemnification
obligations hereunder;
(ii) while maintaining control over its own defense, the
Company, the Indenture Trustee or Owner Trustee, as the case may be,
shall cooperate and consult fully with the Master Servicer in preparing
such defense; and
(iii) notwithstanding anything in this Servicing
Agreement to the contrary, the Master Servicer shall not be liable for
settlement of any claim by the Indenture Trustee or the Owner Trustee,
as the case may be, entered into without the prior consent of the
Master Servicer, which consent shall not be unreasonably withheld.
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(c) The Master Servicer agrees to indemnify the Owner Trustee for, and
to hold the Owner Trustee, harmless against, any claim, tax, penalty, loss,
liability or expense of any kind whatsoever, in connection with the Owner
Trustee's duties under any of the Basic Documents, except to the extent that
such claim, tax, penalty, loss liability or expense is (i) caused by the Owner
Trustee's own willful misconduct, gross negligence or bad faith or grossly
negligent failure to act or (ii) incurred as a result of the inaccuracy of any
representation or warranty contained in Section 6.03 of the Trust Agreement
expressly made by the Owner Trustee.
(d) No termination of this Servicing Agreement or the resignation or
removal of the Owner Trustee or the Indenture Trustee shall affect the
obligations created by this Section 5.06 of the Master Servicer to indemnify the
Indenture Trustee and the Owner Trustee under the conditions and to the extent
set forth herein. This section shall survive the termination of this Servicing
Agreement and the resignation or removal of the Master Servicer. Any amounts to
be paid by the Master Servicer pursuant to this Subsection may not be paid from
the Trust Estate.
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ARTICLE VI
Default
Section 6.01. SERVICING DEFAULT. If any one of the following
events (each, a "Servicing Default") shall occur and be continuing:
(i) Any failure by the Master Servicer to deposit in
the Collection Account or Payment Account any deposit required to be
made under the terms of this Servicing Agreement, including any
Advances and Compensating Interest (other than Servicing Advances),
which continues unremedied for a period of one (1) Business Day after
the date upon which written notice of such failure shall have been
given to the Master Servicer by the Company, the Issuer or the
Indenture Trustee or to the Master Servicer, the Company, the Issuer
and the Indenture Trustee by the Bond Insurer; or
(ii) Failure on the part of the Master Servicer duly to
observe or perform in any material respect any other covenants or
agreements of the Master Servicer (including Servicing Advances) set
forth in the Bonds or in this Servicing Agreement, which failure, in
each case, materially and adversely affects the interests of
Bondholders or the Bond Insurer and which continues unremedied for a
period of 30 days after the date on which written notice of such
failure, requiring the same to be remedied, and stating that such
notice is a "Notice of Default" hereunder, shall have been given to the
Master Servicer by the Company, the Issuer or the Indenture Trustee or
to the Master Servicer, the Company, the Issuer and the Indenture
Trustee by the Bond Insurer; or
(iii) The entry against the Master Servicer of a decree
or order by a court or agency or supervisory authority having
jurisdiction in the premises for the appointment of a trustee,
conservator, receiver or liquidator in any insolvency, conservatorship,
receivership, readjustment of debt, marshaling of assets and
liabilities or similar proceedings, or for the winding up or
liquidation of its affairs, and the continuance of any such decree or
order unstayed and in effect for a period of 60 consecutive days; or
(iv) The Master Servicer shall voluntarily go into
liquidation, consent to the appointment of a conservator, receiver,
liquidator or similar person in any insolvency, readjustment of debt,
marshaling of assets and liabilities or similar proceedings of or
relating to the Master Servicer or of or relating to all or
substantially all of its property, or a decree or order of a court,
agency or supervisory authority having jurisdiction in the premises for
the appointment of a conservator, receiver, liquidator or similar
person in any insolvency, readjustment of debt, marshaling of assets
and liabilities or similar proceedings, or for the winding-up or
liquidation of its affairs, shall have been entered against the Master
Servicer and such decree or order shall have remained in force
undischarged, unbonded or unstayed for a period of 60 days; or the
Master 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
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(v) Any failure by the Seller (so long as the Seller is
the Master Servicer) or the Master Servicer, as the case may be, to pay
when due any amount payable by it under the terms of the Insurance
Agreement which continues unremedied for a period of three (3) Business
Days after the date upon which written notice of such failure shall
have been given to the Seller (so long as the Seller is the Master
Servicer) or the Master Servicer, as the case may be; or
(vi) Failure on the part of the Seller or the Master
Servicer to duly perform in any material respect any covenant or
agreement set forth in the Insurance Agreement, which failure continues
unremedied for a period of 30 days (5 days in the event of a failure to
enforce the Radian PMI Policy) 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 Master Servicer (with a copy to the
Indenture Trustee), as the case may be, by the Bond Insurer; or
(vii) The occurrence of any of the following additional
events: (1) with respect to any Payment Date, the aggregate Cumulative
Loss Percentage with respect to the Mortgage Loans over the prior
twelve months is more than 1.00% of the aggregate Principal Balance of
the Mortgage Loans as of the first day of the first month of such
twelve month period; or (2) the Rolling Delinquency Percentage with
respect to the Mortgage Loans for any Payment Date is more than 4.50%.
then, (a) and in every such case, other than that set forth in (v), (vi) or
(vii) hereof, so long as a Servicing Default shall not have been remedied by the
Master Servicer, either the Issuer, subject to the direction of the Indenture
Trustee as pledgee of the Mortgage Loans, with the consent of the Bond Insurer,
or the Bond Insurer, or if a Bond Insurer Default exists, the holders of at
least 51% of the aggregate Bond Principal Balance of each Class of Bonds, by
notice then given in writing to the Master Servicer (and to the Indenture
Trustee and the Issuer if given by the Bond Insurer) or (b) in the case of the
events set forth in (v), (vi) or (vii) hereof, the Bond Insurer or, if a Bond
Insurer Default exists, the holders of at least 51% of the aggregate Bond
Principal Balance of each Class of Bonds may, by notice to the Master Servicer,
terminate all of the rights and obligations of the Master Servicer as servicer
under this Servicing Agreement other than its right to receive servicing
compensation and expenses for servicing the Mortgage Loans hereunder during any
period prior to the date of such termination and the Issuer, subject to the
direction of the Indenture Trustee as pledgee of the Mortgage Loans, with the
consent of the Bond Insurer, or the Bond Insurer may exercise any and all other
remedies available at law or equity; provided, however, that the successor to
the Master Servicer appointed pursuant to Section 6.02 shall have accepted the
duties of Master Servicer effective upon the resignation or termination of the
Master Servicer. Any such notice to the Master Servicer shall also be given to
each Rating Agency, the Bond Insurer, the Company and the Issuer. On or after
the receipt by the Master Servicer of such written notice, all authority and
power of the Master Servicer under this Servicing Agreement, whether with
respect to the Bonds or the Mortgage Loans or otherwise, shall pass to and be
vested in the Indenture Trustee, pursuant to and under this Section 6.01; and,
without limitation, the Indenture Trustee is hereby authorized and empowered to
execute and deliver, on behalf of the Master Servicer, as attorney-in-fact or
otherwise, any and all documents and other instruments, and to 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 of each
Mortgage Loan and related documents, or otherwise.
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Notwithstanding the foregoing, the parties hereto and the Securityholders by
their acceptance of any Security, acknowledge and agree that there will be a
period of transition before the actual servicing functions can be fully
transferred to the Indenture Trustee, as successor Master Servicer, or to a
successor Master Servicer appointed by the Indenture Trustee pursuant to the
provisions hereof; provided, that the Indenture Trustee shall use its reasonable
best efforts to succeed to the actual servicing functions or find a successor
Master Servicer as soon as possible but no later than 90 days after such
termination. The Master Servicer agrees to cooperate with the Indenture Trustee
in effecting the termination of the responsibilities and rights of the Master
Servicer hereunder, including, without limitation, the transfer to the Indenture
Trustee or the successor Master Servicer for administration by it of (i) the
property and amounts which are then or should be part of the Trust Fund or which
thereafter become part of the Trust Estate; (ii) originals or copies of all
documents of the Master Servicer reasonably requested by the Indenture Trustee
to enable it to assume the Master Servicer's duties thereunder; (iii) the rights
and obligations of the Master Servicer under the Subservicing Agreements with
respect to the Mortgage Loans; (iv) all cash amounts which shall at the time be
deposited by the Master Servicer or should have been deposited to the Collection
or the Payment Account or thereafter be received with respect to the Mortgage
Loans; and (v) all costs or expenses associated with the complete transfer of
all servicing data and the completion, correction or manipulation of such
servicing data as may be required by the Indenture Trustee or any successor
Master Servicer to correct any errors or insufficiencies in the servicing data
or otherwise to enable the Indenture Trustee or successor Master Servicer to
service the Mortgage Loans properly and effectively. All reasonable costs and
expenses (including, but not limited to, attorneys' fees) incurred in connection
with the succession as Master Servicer, including amending this Servicing
Agreement to reflect such succession as Master Servicer pursuant to this Section
6.01 shall be paid by the predecessor Master Servicer (or if the predecessor
Master Servicer is the Indenture Trustee, the initial Master Servicer) upon
presentation of reasonable documentation of such costs and expenses, and if not
so paid by the predecessor Master Servicer, shall be reimbursed by the Trust
pursuant to Section 3.05(b)(x) of the Indenture.
Notwithstanding any termination of the activities of the Master
Servicer hereunder, the Master Servicer shall be entitled to receive, out of any
late collection of a payment on a Mortgage Loan which was due prior to the
notice terminating the Master Servicer's rights and obligations hereunder and
received after such notice, that portion to which the Master Servicer would have
been entitled pursuant to Sections 3.07 and 3.15 as well as its Servicing Fee in
respect thereof, and any other amounts payable to the Master Servicer hereunder
the entitlement to which arose prior to the termination of its activities
hereunder.
Notwithstanding the foregoing, a delay in or failure of performance
under Section 6.01(i) after the applicable grace periods specified in such
Section, shall not constitute a Servicing Default if such delay or failure could
not be prevented by the exercise of reasonable diligence by the Master Servicer
and such delay or failure was caused by an act of God or the public enemy, acts
of declared or undeclared war, public disorder, rebellion or sabotage,
epidemics, landslides, lightning, fire, hurricanes, earthquakes, floods or
similar causes. The preceding sentence shall not relieve the Master Servicer
from using reasonable efforts to perform its respective obligations in a timely
manner in accordance with the terms of this Servicing Agreement and the Master
Servicer shall provide the Indenture Trustee, the Bond Insurer and the
Bondholders with notice of such failure or delay by it, together with a
description of its efforts to so perform its obligations. The Master
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Servicer shall immediately notify the Indenture Trustee, the Bond Insurer and
the Owner Trustee in writing of any Servicing Default.
Section 6.02. INDENTURE TRUSTEE TO ACT; APPOINTMENT OF SUCCESSOR. (a)
Within 90 days of the time the Master Servicer receives a notice of termination
pursuant to Section 6.01 or sends a notice pursuant to clause (i) of Section
5.04, the Indenture Trustee on behalf of the Bondholders and the Bond Insurer,
or other successor appointed in accordance with this Section 6.02, shall be the
successor in all respects to the Master Servicer in its capacity as servicer
under this Servicing Agreement and the transactions set forth or provided for
herein and shall be subject to all the responsibilities, duties and liabilities
relating thereto placed on the Master Servicer by the terms and provisions
hereof, including but not limited to the provisions of Article VIII. Nothing in
this Servicing Agreement shall be construed to permit or require the Indenture
Trustee or any other successor Master Servicer to (i) succeed to the
responsibilities, duties and liabilities of the initial Master Servicer in its
capacity as the Seller under the Mortgage Loan Sale and Contribution Agreement,
(ii) be responsible or accountable for any act or omission of the Master
Servicer prior to the effectiveness of the Master Servicer's termination
hereunder, (iii) require or obligate the Indenture Trustee, in its capacity as
successor Master Servicer, to purchase, repurchase or substitute any Mortgage
Loan, (iv) fund any losses on any Eligible Investment directed by any other
Master Servicer, or (v) be responsible for the representations and warranties of
the Master Servicer; PROVIDED, HOWEVER, that the Indenture Trustee, as successor
Master Servicer, shall be required to make any Advances to the extent that the
Master Servicer failed to make such Advances, to the extent such Advance is not
determined by the Indenture Trustee to be nonrecoverable. As compensation
therefor, the Indenture Trustee shall be entitled to such compensation as the
Master Servicer would have been entitled to hereunder if no such notice of
termination had been given. Notwithstanding the above, (i) if the Indenture
Trustee is unwilling to act as successor Master Servicer, or (ii) if the
Indenture Trustee is legally unable so to act, the Indenture Trustee on behalf
of the Bondholders and the Bond Insurer may (in the situation described in
clause (i)) or shall (in the situation described in clause (ii)) appoint or
petition a court of competent jurisdiction to appoint any established housing
and home finance institution, bank or other mortgage loan servicer having a net
worth of not less than $10,000,000 as the successor to the Master Servicer
hereunder in the assumption of all or any part of the responsibilities, duties
or liabilities of the Master Servicer hereunder; PROVIDED, that any such
successor Master Servicer shall be acceptable to the Bond Insurer, as evidenced
by the Bond Insurer's prior written consent and provided further that the
appointment of any such successor Master Servicer will not result in the
qualification, reduction or withdrawal of the ratings assigned to the Bonds by
the Rating Agencies without taking the Bond Insurance Policy into account.
Pending appointment of a successor to the Master Servicer hereunder, unless the
Indenture Trustee is prohibited by law from so acting or is unwilling to act as
such, the Indenture Trustee shall act in such capacity as hereinabove provided.
In connection with such appointment and assumption, the successor shall be
entitled to receive compensation out of payments on Mortgage Loans in an amount
equal to the compensation which the Master Servicer would otherwise have
received pursuant to Section 3.15 (or such lesser compensation as the Indenture
Trustee and such successor shall agree). The appointment of a successor Master
Servicer shall not affect any liability of the predecessor Master Servicer which
may have arisen under this Servicing Agreement prior to its termination as
Master Servicer (including, without limitation, the obligation to purchase
Mortgage Loans pursuant to Section 3.01, to pay any deductible under an
insurance policy pursuant to Section 3.11 or to indemnify the Indenture Trustee
pursuant to Section 5.06), nor shall any successor Master
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Servicer be liable for any acts or omissions of the predecessor Master Servicer
or for any breach by such Master Servicer of any of its representations or
warranties contained herein or in any related document or agreement. The
Indenture Trustee, the Custodian and such successor shall take such action,
consistent with this Servicing Agreement, as shall be necessary to effectuate
any such succession.
(b) Any successor, including the Indenture Trustee on behalf of the
Bondholders, to the Master Servicer as servicer shall during the term of its
service as servicer (i) continue to service and administer the Mortgage Loans
for the benefit of the Securityholders and the Bond Insurer, (ii) maintain in
force a policy or policies of insurance covering errors and omissions in the
performance of its obligations as Master Servicer hereunder and a fidelity bond
in respect of its officers, employees and agents to the same extent as the
Master Servicer is so required pursuant to Section 3.11(g).
(c) Any successor Master Servicer, including the Indenture Trustee on
behalf of the Bondholders, shall not be deemed to be in default or to have
breached its duties hereunder if the predecessor Master Servicer shall fail to
deliver any required deposit to the Collection Account or otherwise cooperate
with any required servicing transfer or succession hereunder.
(d) Notwithstanding anything else herein to the contrary, in no event
shall the Indenture Trustee be liable for any servicing fee or any differential
in the amount of the servicing fee paid hereunder and the amount necessary to
induce any successor Servicer to act as a successor Servicer under this
Servicing Agreement and the transactions set forth or provided for herein.
Section 6.03. NOTIFICATION TO BONDHOLDERS. Upon any termination or
appointment of a successor to the Master Servicer pursuant to this Article VI or
Section 5.04, the Indenture Trustee shall give prompt written notice thereof to
the Bondholders, the Bond Insurer, the Owner Trustee, the Company, the Issuer
and each Rating Agency.
Section 6.04. WAIVER OF DEFAULTS. The Indenture Trustee shall transmit
by mail to all Bondholders and the Bond Insurer, within 10 days after the
occurrence of any Servicing Default known to the Indenture Trustee, unless such
Servicing Default shall have been cured, notice of each such Servicing Default
hereunder known to a Responsible Officer of the Indenture Trustee. The Bond
Insurer or if a Bond Insurer Default exists, the holders of at least 51% of the
aggregate Bond Principal Balance of the Bonds may waive any default by the
Master Servicer in the performance of its obligations hereunder and the
consequences thereof, except a default in the making of or the causing to be
made any required distribution on the Bonds. Upon any such waiver of a past
default, such default shall be deemed to cease to exist, and any Servicing
Default arising therefrom shall be deemed to have been timely remedied for every
purpose of this Servicing 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. The Master Servicer shall give notice of any such
waiver to the Rating Agencies.
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ARTICLE VII
Miscellaneous Provisions
Section 7.01. AMENDMENT. This Servicing Agreement may be amended from
time to time by the parties hereto, provided that any amendment be accompanied
by a letter from the Rating Agencies that the amendment will not result in the
downgrading or withdrawal of the rating then assigned to the Bonds or the rating
then assigned to the Bonds without taking into account the Bond Insurance
Policy, and the consent of the Bond Insurer and the Indenture Trustee.
Section 7.02. GOVERNING LAW. THIS SERVICING AGREEMENT SHALL BE
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND
REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH
LAWS.
Section 7.03. NOTICES. All demands, notices and communications
hereunder shall be in writing and shall be deemed to have been duly given if
when delivered to:
(a) in the case of the Master Servicer: Impac Funding Corporation
1401 Dove Street
Newport Beach, CA 92660
Attention: General Counsel
(b) in the case of the Bond Insurer: Ambac Assurance Corporation
One State Street Plaza
New York, NY 10004
Attention: Consumer Asset-Backed
Securities Group
(c) in the case of Rating Agencies: Moody's Investors Service, Inc.
4th Floor
99 Church Street
New York, NY 10007
Attention: Residential Mortgage
Monitoring Unit
Standard & Poor's, a division of
The McGraw-Hill Companies, Inc.
55 Water Street - 41st Floor,
New York, New York 10041
Attention: Asset Backed
Surveillance Group
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(d) in the case of the Owner Trustee,
the Corporate Trust Office: Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
Attention: Corporate Trust
Administration
(e) in the case of the Issuer,
to Impac CMB Trust Series 2000-2: c/o IMH Assets Corp.
1401 Dove Street
Newport Beach, California 92660
Attention: General Counsel
(f) in the case of the Indenture
Trustee: to its Corporate Trust Office, with a
copy to Bankers Trust Company of
California, N.A.
1761 East St. Andrew Place
Santa Ana, California 92705
Attention: Impac CMB Trust Series
2000-2
or, as to each party, at such other address as shall be designated by such party
in a written notice to each other party. Any notice required or permitted to be
mailed to a Bondholder shall be given by first class mail, postage prepaid, at
the address of such Bondholder as shown in the Bond Register. Any notice so
mailed within the time prescribed in this Servicing Agreement shall be
conclusively presumed to have been duly given, whether or not the Bondholder
receives such notice. Any notice or other document required to be delivered or
mailed by the Indenture Trustee to any Rating Agency shall be given on a
reasonable efforts basis and only as a matter of courtesy and accommodation and
the Indenture Trustee shall have no liability for failure to deliver such notice
or document to any Rating Agency.
Section 7.04. SEVERABILITY OF PROVISIONS. If any one or more of the
covenants, agreements, provisions or terms of this Servicing 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 Servicing Agreement and shall in no way
affect the validity or enforceability of the other provisions of this Servicing
Agreement or of the Bonds or the rights of the Bondholders thereof.
Section 7.05. THIRD-PARTY BENEFICIARIES. This Servicing Agreement will
inure to the benefit of and be binding upon the parties hereto, the Bondholders,
the Bond Insurer, the Owner Trustee, the Indenture Trustee and their respective
successors and permitted assigns. Except as otherwise provided in this Servicing
Agreement, no other Person will have any right or obligation hereunder. The
Indenture Trustee shall have the right to exercise all rights of the Issuer
under this Agreement.
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Section 7.06. COUNTERPARTS. This instrument may be executed in
any number of counterparts, each of which so executed shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same instrument.
Section 7.07. EFFECT OF HEADINGS AND TABLE OF CONTENTS. The
Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
Section 7.08. TERMINATION. The respective obligations and
responsibilities of the Master Servicer and the Issuer created hereby shall
terminate upon the satisfaction and discharge of the Indenture pursuant to
Section 4.10 thereof.
Section 7.09. NO PETITION. The Master Servicer, by entering into this
Servicing Agreement, hereby covenants and agrees that it will not at any time
institute against the Issuer, or join in any institution against the Issuer, any
bankruptcy proceedings under any United States federal or state bankruptcy or
similar law in connection with any obligations of the Issuer. This section shall
survive the termination of this Servicing Agreement by one year.
Section 7.10. NO RECOURSE. The Master Servicer acknowledges that no
recourse may be had against the Issuer, except as may be expressly set forth in
this Servicing Agreement.
ARTICLE VIII
DUTIES OF THE MASTER SERVICER
Section 8.01. ADMINISTRATIVE DUTIES. (a) DUTIES WITH RESPECT
TO THE INDENTURE. The Master Servicer shall perform all its duties and the
duties of the Issuer under the Indenture. In addition, the Master Servicer shall
consult with the Owner Trustee as the Master Servicer deems appropriate
regarding the duties of the Issuer under the Indenture. The Master Servicer
shall monitor the performance of the Issuer and shall advise the Owner Trustee
when action is necessary to comply with the Issuer's duties under the Indenture.
The Master Servicer shall prepare for execution by the Issuer or shall cause the
preparation by other appropriate Persons of all such documents, reports,
filings, instruments, certificates and opinions as it shall be the duty of the
Issuer to prepare, file or deliver pursuant to the Indenture. In furtherance of
the foregoing, the Master Servicer shall take all necessary action that is the
duty of the Issuer to take pursuant to the Indenture.
(b) DUTIES WITH RESPECT TO THE ISSUER.
(i) In addition to the duties of the Master
Servicer set forth in this Servicing Agreement or any of the Basic Documents,
the Master Servicer shall perform such calculations and shall prepare for
execution by the Issuer or the Owner Trustee or shall cause the preparation by
other appropriate Persons of all such documents, reports, filings, instruments,
certificates and opinions as it shall be the duty of the Issuer or the Owner
Trustee to prepare, file or deliver pursuant to this Servicing Agreement or any
of the Basic Documents or under state and federal tax and securities laws, and
at the request of the Owner Trustee, the Indenture Trustee or the
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Bond Insurer shall take all appropriate action that it is the duty of the Issuer
to take pursuant to this Servicing Agreement or any of the Basic Documents. In
accordance with the directions of the Issuer, the Bond Insurer or the Owner
Trustee, the Master Servicer shall administer, perform or supervise the
performance of such other activities in connection with the Bonds (including the
Basic Documents) as are not covered by any of the foregoing provisions and as
are expressly requested by the Issuer, the Bond Insurer, the Indenture Trustee
or the Owner Trustee.
(ii) Notwithstanding anything in this Servicing
Agreement or any of the Basic Documents to the contrary, the Master Servicer
shall be responsible for promptly notifying the Owner Trustee and the Bond
Insurer in the event that any withholding tax is imposed on the Issuer's
payments (or allocations of income) to an Owner (as defined in the Trust
Agreement) as contemplated in Section 5.03 of the Trust Agreement. Any such
notice shall be in writing and specify the amount of any withholding tax
required to be withheld by the Owner Trustee pursuant to such provision.
(iii) In carrying out the foregoing duties or any
of its other obligations under this Servicing Agreement, the Master Servicer may
enter into transactions with or otherwise deal with any of its Affiliates;
PROVIDED, HOWEVER, that the terms of any such transactions or dealings shall be
in accordance with any directions received from the Issuer and shall be, in the
Master Servicer's opinion, no less favorable to the Issuer in any material
respect than with terms made available to unrelated third-parties.
(c) TAX MATTERS. The Master Servicer shall prepare, on behalf
of the Owner Trustee, financial statements and such annual or other reports of
the Issuer as are necessary for preparation by the Indenture Trustee of tax
returns and information reports as provided in Section 5.03 of the Trust
Agreement, including without limitation Form 1099.
(d) NON-MINISTERIAL MATTERS. With respect to matters that in
the reasonable judgment of the Master Servicer are non-ministerial, the Master
Servicer shall not take any action pursuant to this Article VIII unless within a
reasonable time before the taking of such action, the Master Servicer shall have
notified the Owner Trustee, the Bond Insurer and the Indenture Trustee of the
proposed action and the Owner Trustee, the Bond Insurer and, with respect to
items (A), (B), (C) and (D) below, the Indenture Trustee shall not have withheld
consent or provided an alternative direction. For the purpose of the preceding
sentence, "non-ministerial matters" shall include:
(A) the amendment of or any supplement to the
Indenture;
(B) the initiation of any claim or lawsuit by the
Issuer and the compromise of any action, claim or lawsuit
brought by or against the Issuer (other than in connection
with the collection of the Mortgage Loans);
(C) the amendment, change or modification of
this Agreement or any of the Basic Documents;
(D) the appointment of successor Certificate
Paying Agents and successor Indenture Trustees pursuant to
the Indenture or the appointment of successor
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Servicers or the consent to the assignment by the Certificate
Registrar, Paying Agent or Indenture Trustee of its
obligations under the Indenture; and
(E) the removal of the Indenture Trustee.
Section 8.02. RECORDS. The Master Servicer shall maintain
appropriate books of account and records relating to services performed under
this Servicing Agreement, which books of account and records shall be accessible
for inspection by the Issuer, the Indenture Trustee and the Bond Insurer at any
time during normal business hours.
Section 8.03. ADDITIONAL INFORMATION TO BE FURNISHED. The
Master Servicer shall furnish to the Issuer, the Indenture Trustee and the Bond
Insurer from time to time such additional information regarding the Mortgage
Loans and the Bonds as the Issuer, the Indenture Trustee or the Bond Insurer
shall reasonably request.
40
<PAGE>
IN WITNESS WHEREOF, the Master Servicer, the Issuer and the Indenture
Trustee have caused this Servicing Agreement to be duly executed by their
respective officers or representatives all as of the day and year first above
written.
IMPAC FUNDING CORPORATION,
as Master Servicer
By:
------------------------------------
Name: Lisa Duehring
Title: Vice President
IMPAC CMB TRUST SERIES 2000-2,
as Issuer
Wilmington Trust Company, not in its
capacity but solely as Owner Trustee
By:
------------------------------------
Name: James P. Lawler
Title: Vice President
BANKERS TRUST COMPANY OF
CALIFORNIA, N.A.
as Indenture Trustee
By:
------------------------------------
Name:
Title:
<PAGE>
Acknowledged and agreed with respect to Section 5.03 hereof:
IMH ASSETS CORP.
--------------------
By: Lisa Duehring
Title: Vice President
<PAGE>
EXHIBIT A
MORTGAGE LOAN SCHEDULE
(provided upon request)
<PAGE>
EXHIBIT B
FORM OF REQUEST FOR RELEASE
DATE:
TO:
RE: REQUEST FOR RELEASE OF DOCUMENTS
In connection with your administration of the Mortgage Loans, we request the
release of the Mortgage File described below.
Servicing Agreement Dated:
Series #:
Account #:
Pool #:
Loan #:
Borrower Name(s):
Reason for Document Request: (circle one) Mortgage Loan Prepaid in Full
Other
Mortgage Loan Repurchased
Please deliver the Mortgage File to:
-----------------------------------
-----------------------------------------------------------------------
"We hereby certify that all amounts received or to be received in connection
with such payments which are required to be deposited have been or will be so
deposited as provided in the Servicing Agreement."
-------------------------------------
[Name of Master Servicer]
Authorized Signature
******************************************************************
TO CUSTODIAN: Please acknowledge this request, and check off documents being
enclosed with a copy of this form. You should retain this form for your files in
accordance with the terms of the Servicing Agreement.
Enclosed Documents: [ ] Promissory Note
[ ] Primary Insurance Policy
[ ] Mortgage or Deed of Trust
[ ] Assignment(s) of Mortgage or
Deed of Trust
[ ] Title Insurance Policy
[ ] Other:
-------------------
------------------------
Name
------------------------
Title
------------------------
Date
B-1
