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EXECUTION COPY
GREENPOINT MORTGAGE SECURITIES INC.,
Sponsor,
GREENPOINT MORTGAGE FUNDING, INC.,
Servicer,
GREENPOINT HOME EQUITY LOAN TRUST 2000-3,
Issuer,
and
BANKERS TRUST COMPANY,
Indenture Trustee
-----------------------
SALE AND SERVICING AGREEMENT
Dated as of December 1, 2000
----------------------
Home Equity Loan Asset-Backed Notes
Series 2000-3
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TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS ....................................................... 1
Section 1.01. Definitions .............................................. 1
Section 1.02. Other Definitional Provisions ............................ 1
Section 1.03. Interest Calculations .................................... 2
ARTICLE II Conveyance of Mortgage Loans; Original Issuance of Notes;
Tax Treatment ................................................ 2
Section 2.01. Conveyance of Mortgage Loans; Retention of Obligation to
Fund Advances Under Credit Line Agreements ............. 2
Section 2.02. Further Encumbrance of Trust Property .................... 6
Section 2.03. Acceptance by Indenture Trustee; Certain Substitution of
Mortgage Loans ......................................... 7
Section 2.04. Representations and Warranties Regarding the Servicer
and the Sponsor ........................................ 8
Section 2.05. Representations and Warranties of the Sponsor Regarding
the Mortgage Loans; Removal of Certain Mortgage Loans .. 11
Section 2.06. Covenants of the Sponsor ................................. 24
Section 2.07. Removal of Mortgage Loans at Election of Issuer .......... 25
Section 2.08. Execution and Authentication of Notes .................... 26
Section 2.09. Tax Treatment ............................................ 26
ARTICLE III Administration and Servicing of Mortgage Loans .................. 27
Section 3.01. The Servicer ............................................. 27
Section 3.02. Collection of Certain Mortgage Loan Payments ............. 28
Section 3.03. Withdrawals from the Collection Account .................. 30
Section 3.04. Maintenance of Hazard Insurance; Property Protection
Expenses ............................................... 30
Section 3.05. Assumption and Modification Agreements ................... 31
Section 3.06. Realization Upon Defaulted Mortgage Loans; Repurchase of
Certain Mortgage Loans ................................. 32
Section 3.07. Indenture Trustee to Cooperate ........................... 32
Section 3.08. Servicing Compensation; Payment of Certain Expenses by
Servicer ............................................... 33
Section 3.09. Annual Statement as to Compliance ........................ 34
Section 3.10. Annual Servicing Report .................................. 34
Section 3.11. Annual Opinion of Counsel ................................ 34
Section 3.12. Access to Certain Documentation and Information Regarding
the Mortgage Loans ..................................... 34
Section 3.13. Maintenance of Certain Servicing Insurance Policies ...... 35
Section 3.14. Reports to the Securities and Exchange Commission ........ 35
Section 3.15. Tax Returns .............................................. 36
Section 3.16. Information Required by the Internal Revenue Service
Generally and Reports of Foreclosures and Abandonments
of Mortgaged Property .................................. 36
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Section 3.17. Reporting Requirements ................................... 36
ARTICLE IV SERVICING CERTIFICATE ............................................ 36
Section 4.01. Servicing Certificate .................................... 36
Section 4.02. Reserved. ................................................ 37
Section 4.03. The Indenture Trustee Remittance Report .................. 37
Section 4.04. Loan Data Remittance Report .............................. 38
Section 4.05. Reserve Fund ............................................. 38
ARTICLE V The Servicer and the Sponsor ...................................... 38
Section 5.01. Liability of the Servicer and the Sponsor ................ 38
Section 5.02. Merger or Consolidation of, or Assumption of the
Obligations of, the Servicer or the Sponsor ............ 38
Section 5.03. Limitation on Liability of the Servicer and Others ....... 38
Section 5.04. Servicer Not to Resign ................................... 39
Section 5.05. Delegation of Duties ..................................... 40
Section 5.06. Indemnification of the Trust by the Servicer ............. 40
Section 5.07. Indemnification of the Trust by the Sponsor .............. 40
Section 5.08. Limitation on Liability of the Sponsor ................... 41
ARTICLE VI Servicing Termination ............................................ 41
Section 6.01. Events of Servicing Termination .......................... 41
Section 6.02. Indenture Trustee to Act; Appointment of Successor ....... 43
Section 6.03. Notification to Noteholders and Residual
Certificateholders ..................................... 44
ARTICLE VII Termination ..................................................... 44
Section 7.01. Termination .............................................. 44
ARTICLE VIII Administrative Duties of the Servicer .......................... 46
Section 8.01. Administrative Duties .................................... 46
Section 8.02. Records .................................................. 48
Section 8.03. Additional Information to be Furnished to the Issuer ..... 48
ARTICLE IX Miscellaneous Provisions ......................................... 48
Section 9.01. Amendment ................................................ 48
Section 9.02. Recordation of Agreement ................................. 49
Section 9.03. Limitation on Rights of Noteholders ...................... 50
Section 9.04. Governing Law ............................................ 50
Section 9.05. Notices .................................................. 50
Section 9.06. Severability of Provisions ............................... 51
Section 9.07. Assignment ............................................... 51
Section 9.08. Third-Party Beneficiaries ................................ 51
Section 9.09. Counterparts ............................................. 51
Section 9.10. Effect of Headings and Table of Contents ................. 51
Section 9.11. Insurance Agreement ...................................... 52
Section 9.12. Nonpetition Covenant ..................................... 52
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EXHIBITS
EXHIBIT A: MORTGAGE LOAN SCHEDULE.........................................A-1
EXHIBIT B: FORM OF OPINION OF COUNSEL.....................................B-1
EXHIBIT C: OFFICER'S CERTIFICATES.........................................C-1
EXHIBIT D: FORM OF CREDIT LINE AGREEMENT..................................D-1
EXHIBIT E: FORM OF MORTGAGE NOTE (SECOND LIEN)............................E-1
EXHIBIT F: FORMS OF CERTIFICATES..........................................F-1
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SALE AND SERVICING AGREEMENT, dated as of December 1, 2000, (the
"Agreement") among GREENPOINT HOME EQUITY LOAN TRUST 2000-3, a Delaware business
trust (the "Issuer" or "Trust"), GREENPOINT MORTGAGE SECURITIES INC., a Delaware
corporation (the "Sponsor"), GREENPOINT MORTGAGE FUNDING, INC., a New York
corporation (the "Servicer"), and BANKERS TRUST COMPANY (the "Indenture
Trustee").
WHEREAS, the Issuer desires to purchase a portfolio of Mortgage
Loans arising in connection with Loan Agreements acquired by GreenPoint Mortgage
Funding, Inc.;
WHEREAS, the Sponsor has purchased such Mortgage Loans from
GreenPoint Mortgage Funding, Inc. and is willing to sell such Mortgage Loans
to the Issuer;
WHEREAS, such Mortgage Loans consist of certain home equity
revolving lines of credit (the "HELOC Mortgage Loans") and certain second lien,
closed-end mortgage loans (the "Closed End Mortgage Loans");
WHEREAS, the Servicer is willing to service all such Mortgage
Loans;
NOW, THEREFORE, in consideration of the promises and mutual
covenants herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. All capitalized terms used in this Agreement and
not otherwise defined herein, shall have the meanings assigned thereto in Annex
A to the Indenture dated as of December 1, 2000, between the Issuer and the
Indenture Trustee, as the same may be amended and supplemented from time to
time.
Section 1.02. Other Definitional Provisions.
(a) All terms defined in this Agreement shall have the defined meanings
when used in any instrument governed hereby and in any certificate or other
document made or delivered pursuant hereto unless otherwise defined therein.
(b) As used in this Agreement, in any instrument governed hereby and in any
certificate or other document made or delivered pursuant hereto or thereto,
accounting terms not defined in this Agreement or in any such instrument,
certificate or other document, and accounting terms partly defined in this
Agreement or in any such instrument, certificate or other document to the extent
not defined, shall have the respective meanings given to them under generally
accepted accounting principles as in effect on the date of this Agreement or any
such instrument, certificate or other document, as applicable. To the extent
that the definitions of accounting terms in this Agreement or in any such
instrument, certificate or other document are inconsistent with the meanings of
such terms under generally accepted accounting principles, the
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definitions contained in this Agreement or in any such instrument, certificate
or other document shall control.
(c) 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 a daily basis using a 365-day year. All calculations of interest on the
Notes shall be made on the basis of the actual number of days in an Interest
Period and a year assumed to consist of 360 days. The calculation of the
Servicing Fee shall be made on the basis of a 360-day year consisting of twelve
30-day months. All dollar amounts calculated hereunder shall be rounded to the
nearest penny with one-half of one penny being rounded down.
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
ORIGINAL ISSUANCE OF NOTES;
TAX TREATMENT
Section 2.01. Conveyance of Mortgage Loans; Retention of Obligation to Fund
Advances Under Credit Line Agreements.
(a) In consideration of the Issuer's delivery to or upon the order of the
Sponsor on the Closing Date of the net proceeds from the sale of the Notes, the
Class S Certificate and the Residual Certificates and the other amounts to be
distributed from time to time to the Sponsor in accordance with the terms of
this Agreement, the Sponsor, concurrently with the execution and delivery of
this Agreement, hereby sells, transfers, assigns, sets over and otherwise
conveys to the Issuer, without recourse (subject to Sections 2.03 and 2.05), all
of its right, title and interest in and to (i) each Mortgage Loan, including its
Principal Balance (including any Additional Balances related thereto) and all
collections in respect thereof received after the Cut-Off Date (excluding
Interest Collection due on or prior to the Cut-Off Date); (ii) property that
secured a Mortgage Loan that is acquired by foreclosure or deed in lieu of
foreclosure; (iii) all of the Sponsor's rights under the Purchase Agreement
(including all representations and warranties of the Servicer contained
therein); (iv) the Sponsor's rights under the hazard insurance policies; (v) the
Reserve Fund; (vi) the Policy; (vii) the Demand Note; and (viii) any proceeds of
the foregoing and all other assets included or to be included in the Trust for
the benefit of Noteholders, the Class S Certificateholders and the Residual
Certificateholders and the Insurer; provided, however, neither the Indenture
Trustee nor the Trust assumes the obligation under any Credit Line Agreement
that provides for the funding of future advances to the Mortgagor thereunder,
and neither the Trust nor the Indenture Trustee shall be obligated or permitted
to fund any such future advances. With respect to the HELOC Mortgage Loans,
Additional Balances shall be part of the related Principal Balance and are
hereby transferred to the Trust on the Closing Date pursuant to this Section
2.01, and therefore part of the Trust Property. On or
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prior to the Closing Date, the Sponsor shall cause the Insurer to deliver the
Policy to the Indenture Trustee for the benefit of the Noteholders. It is the
intention of the Sponsor that the transfer and assignment contemplated by this
Agreement shall constitute a sale of the Mortgage Loans and other Trust Property
from the Sponsor to the Issuer and that such sale should constitute a valid
transfer and assignment of the Mortgage Loans and other Trust Property to the
Issuer and the beneficial interest in and title to the Mortgage Loans and the
other Trust Property shall not be part of the Sponsor's estate in the event of
the filing of a bankruptcy petition by or against the Sponsor under any
bankruptcy law. In the event that, notwithstanding the intent of the Sponsor,
the transfer and assignment contemplated hereby is held not to be a sale, this
Agreement shall constitute a grant of a security interest in the property
referred to in this Section 2.01 for the benefit of the Noteholders, the
Residual Certificateholders and the Insurer. To the extent that the fair market
value of any Additional Balance is greater than the cash consideration paid by
the Issuer for such Additional Balance, the difference between such fair market
value and the amount of such cash consideration shall be deemed to be a capital
contribution made to the Issuer by the Sponsor.
(b) Each of the Servicer and the Sponsor agrees to take or cause to be
taken such actions and execute such documents (including, without limitation,
the filing of all necessary continuation statements for the UCC-1 financing
statements filed in the States of California and Delaware, respectively, which
shall have been filed on or as of the Closing Date) describing the Cut-Off Date
Principal Balances and Additional Balances and naming (i) the Servicer as debtor
and the Sponsor as secured party, and (ii) the Sponsor as debtor and the Issuer
as secured party and any amendments to UCC-1 financing statements required to
reflect a change in the name or corporate structure of the Servicer or the
Sponsor or the filing of any additional UCC-1 financing statements due to the
change in the principal office of the Servicer or the Sponsor (within 10 days of
any event necessitating such filing) as are necessary to perfect and protect the
Noteholders' and the Insurer' interests in each Cut-Off Date Principal Balance
and Additional Balance and the proceeds thereof (other than maintaining
possession by the Indenture Trustee of the Mortgage Loans and the Mortgage
Files).
(c) In connection with such transfer and assignment, the Servicer shall
deliver to the Indenture Trustee the following documents or instruments (each a
"Related Document" and together for each Mortgage Loan, the "Mortgage File")
with respect to each Mortgage Loan on the Closing Date:
(i) with respect to any Closed-End Mortgage Loan, the original
Mortgage Note endorsed in blank or endorsed with the following: "Bankers
Trust Company as Indenture Trustee for the GreenPoint Home Equity Loan
Trust 2000-3", and with respect to any HELOC Mortgage Loan, the original
Credit Line Agreement;
(ii) an original Assignment of Mortgage in blank in recordable
form;
(iii) the original recorded Mortgage or, if, in connection with any
Mortgage Loan, the original recorded Mortgage with evidence of recording
thereon cannot be delivered on or prior to the Closing Date because of a
delay caused by the public recording office where such original Mortgage
has been delivered for recordation or because such original Mortgage has
been lost, the Sponsor shall deliver or cause to be
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delivered to the Indenture Trustee, a true and correct copy of such
Mortgage, together with (i) in the case of a delay caused by the public
recording office, an Officer's Certificate of the Sponsor stating that such
original Mortgage has been dispatched to the appropriate public recording
official or (ii) in the case of an original Mortgage that has been lost, a
certificate by the appropriate county recording office where such Mortgage
is recorded;
(iv) if applicable, the original intervening assignments, if any
("Intervening Assignments"), with evidence of recording thereon, showing a
complete chain of title to the Mortgage from the originator to the
Indenture Trustee or, if any such original Intervening Assignment has not
been returned from the applicable recording office or has been lost, a true
and correct copy thereof, together with (i) in the case of a delay caused
by the public recording office, an Officer's Certificate of the Sponsor
stating that such original Intervening Assignment has been dispatched to
the appropriate public recording official for recordation or (ii) in the
case of an original Intervening Assignment that has been lost, a
certificate by the appropriate county recording office where such Mortgage
is recorded;
(v) either a title policy, a title search or guaranty title with
respect to the related Mortgaged Property;
(vi) the original of any guaranty executed in connection with the
Mortgage Note;
(vii) the original of each assumption, modification, consolidation
or substitution agreement, if any, relating to the Mortgage Loans; and
(viii) any security agreement, chattel mortgage or equivalent
instrument executed in connection with the Mortgage.
The Sponsor hereby confirms to the Indenture Trustee that it has caused the
portions of the Electronic Ledgers relating to the Mortgage Loans as of the
Closing Date to be clearly and unambiguously marked, and has made, or will make,
the appropriate entries in its general accounting records to indicate that such
Mortgage Loans have been transferred to the Trust. The Servicer hereby confirms
to the Indenture Trustee that it has clearly and unambiguously made appropriate
entries in its general accounting records indicating that such Mortgage Loans
constitute part of the Trust and are serviced by it on behalf of the Trust in
accordance with the terms hereof.
(d) Notwithstanding the characterization of the Notes as debt for Federal,
state and local income and franchise tax purposes, the parties hereto intend to
treat the transfer of the Mortgage Loans to the Trust as provided herein as a
sale, for certain non-tax purposes, of all the Sponsor's right, title and
interest in and to the Mortgage Loans, whether now existing or hereafter
created, and the other property described above and all proceeds thereof. In the
event such transfer is deemed not to be a sale for such purposes, the Sponsor
grants to the Trust, a security interest in all of such party's right, title and
interest in, to and under the Mortgage Loans, whether
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now existing or hereafter created, and the other property described above and
all proceeds thereof; and this Agreement shall constitute a security agreement
under applicable law.
(e) Within 90 days following delivery of the Mortgage Files to the
Indenture Trustee pursuant to this Section, the Indenture Trustee shall review
each such Mortgage File to ascertain that all required documents set forth in
this Section 2.01 have been executed and received, and that such documents
relate to the Mortgage Loans identified on the Mortgage Loan Schedule and in so
doing the Indenture Trustee may rely on the purported due execution and
genuineness of any signature thereon. If within such 90-day period the Indenture
Trustee finds any document constituting a part of a Mortgage File not to have
been executed or received or to be unrelated to the Mortgage Loans identified in
said Mortgage Loan Schedule or, if in the course of its review, the Indenture
Trustee determines that such Mortgage File is otherwise defective in any
material respect, the Indenture Trustee shall promptly upon the conclusion of
its review notify the Sponsor and the Insurer, and the Sponsor shall have a
period of 90 days after such notice within which to correct or cure any such
defect.
The Indenture Trustee shall have no responsibility for reviewing any
Mortgage File except as expressly provided in this Section 2.01. In reviewing
any Mortgage File pursuant to this Section, the Indenture Trustee shall have no
responsibility for determining whether any document is valid and binding,
whether the text of any assignment or endorsement is in proper or recordable
form (except, if applicable, to determine if the Indenture Trustee is the
assignee or endorsee), whether any document has been recorded in accordance with
the requirements of any applicable jurisdiction, or whether a blanket assignment
is permitted in any applicable jurisdiction, whether any Person executing any
document is authorized to do so or whether any signature thereon is genuine, but
shall only be required to determine whether a document has been executed, that
it appears to be what it purports to be, and, where applicable, that it purports
to be recorded.
(f) The Sponsor shall take all necessary steps to prepare and submit for
recordation an Assignment or Mortgage in the name of the Indenture Trustee for
each Mortgage Loan within 30 days after the Closing Date.
(g) The Sponsor shall sell, assign, transfer, set over and otherwise convey
without recourse to the Indenture Trustee all right, title and interest of the
Sponsor in and to any Eligible Substitute Mortgage Loan delivered to the
Indenture Trustee on behalf of the Trust by the Sponsor pursuant to Section 2.03
or Section 2.05 hereof and all its right, title and interest to principal
collected and interest accruing on such Eligible Substitute Mortgage Loan on and
after the applicable Substitute Cut-Off Date; provided, however, that the
Sponsor shall reserve and retain all right, title and interest in and to
payments of interest due on such Eligible Substitute Mortgage Loan prior to the
applicable Substitute Cut-Off Date; provided, further, that neither the Trust
nor the Indenture Trustee shall be obligated to fund any future advances to the
related Mortgagor under such Eligible Substitute Mortgage Loan.
In connection with any transfer and assignment of an Eligible Substitute
Mortgage Loan to the Indenture Trustee on behalf of the Trust, the Sponsor
agrees to cause to be delivered to the Indenture Trustee the items described in
Section 2.01(c) on the date of such transfer and
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assignment or, if a later delivery time is permitted by Section 2.01(c), then no
later than such later delivery time.
(h) Each Defective Mortgage Loan that is required to be repurchased or
substituted pursuant to the provisions this Agreement or the Purchase Agreement
shall, upon such repurchase or substitution in accordance with the provisions
hereof, be released from the Trust and from the lien created by the Indenture.
As to each Mortgage Loan released from the Trust in connection with the
repurchase thereof or the conveyance of an Eligible Substitute Mortgage Loan
therefor, the Indenture Trustee will transfer, assign, set over and otherwise
convey without recourse, to or upon the order of the Sponsor, all of its right,
title and interest in and to such released Mortgage Loan and all the Trust's
right title and interest to principal collected and interest accruing on such
released Mortgage Loan on and after the first day of the calendar month in which
such Mortgage Loan is released; provided, however, that the Trust shall reserve
and retain all right, title and interest in and to payments of principal and
interest collected on such released Mortgage Loan prior to such date.
Section 2.02. Further Encumbrance of Trust Property.
(a) Immediately upon the conveyance to the Trust by the Sponsor of any item
of the Trust Property pursuant to Section 2.01, all right, title and interest of
the Sponsor in and to such item of Trust Property shall terminate, and all such
right, title and interest shall vest in the Trust, in accordance with the Trust
Agreement and Sections 3802 and 3805 of the Delaware Business Trust Act (12 Del.
Code, ss. 3801 et seq.).
(b) Immediately upon the vesting of the Trust Property in the Trust, the
Trust shall have the sole right to pledge or otherwise encumber, such Trust
Property. Pursuant to the Indenture and contemporaneously with such property
vesting in the Trust pursuant to (a) above, the Trust shall grant a security
interest in the Trust Property to secure the repayment of the Notes. The
Residual Certificates shall represent the beneficial ownership interest in the
Trust Property, and the Residual Certificateholders shall be entitled to receive
distributions with respect thereto as set forth herein.
(c) Prior to the payment in full on the Notes, the payment of all amounts
due to the Insurer under the Insurance Agreement, the termination of the Policy
(as defined therein) and the surrender of the Policy by the Indenture Trustee to
the Insurer, the Indenture Trustee shall hold the Trust Property on behalf of
the Noteholders and the Insurer. Following the payment in full of the Notes and
the release and discharge of the Indenture, all covenants of the Issuer under
Article III of the Indenture shall, until payment in full of the Residual
Certificates, remain as covenants of the Issuer for the benefit of the Residual
Certificateholders, enforceable by the Residual Certificateholders to the same
extent as such covenants were enforceable by the Noteholders prior to the
discharge of the Indenture. Any rights of the Indenture Trustee under Article
III of the Indenture, following the discharge of the Indenture, shall vest in
the Residual Certificateholders.
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Section 2.03. Acceptance by Indenture Trustee; Certain Substitution of
Mortgage Loans.
(a) The Indenture Trustee shall, at such time as there are no Notes
outstanding and all sums due to (i) the Indenture Trustee or any agent or
counsel thereof pursuant to the Indenture, (ii) the Indenture Trustee pursuant
to this Agreement and (iii) the Insurer pursuant to the Insurance Agreement have
been paid, release any remaining portion of the Trust Property to the Sponsor;
provided, that the release of the Reserve Fund is subject to Section 2.05 of the
Insurance Agreement.
(b) The Trust hereby acknowledges its receipt of the Policy and the
Mortgage Loans, and declares that the Indenture Trustee holds and will hold such
instrument, and to the extent that any documents are delivered to it pursuant to
Section 2.01, will hold such documents, and all amounts received by it
thereunder and hereunder, in trust, upon the terms herein set forth, for the use
and benefit of all present and future Noteholders and the Insurer. If the time
to cure any defect in respect of any Mortgage Loan of which the Indenture
Trustee has notified the Sponsor following the review pursuant to Section 2.01
has expired or if at any time any loss is suffered by the Indenture Trustee on
behalf of the Noteholders or the Insurer, in respect of any Mortgage Loan as a
result of (i) a defect in any document constituting a part of its Mortgage File
or (ii) an Assignment of Mortgage to the Indenture Trustee not having been
recorded as required by Section 2.01, then on the next succeeding Business Day,
the Indenture Trustee shall (i) substitute in lieu of such Mortgage Loan all
Eligible Substitute Mortgage Loans and, deliver the Substitution Amount
applicable thereto to the Servicer for deposit in the Collection Account or (ii)
purchase such Mortgage Loan at a purchase price equal to the Loan Purchase Price
thereof, which purchase price shall be delivered to the Servicer for deposit in
the Collection Account. Upon receipt of any Mortgage Loan or of written
notification signed by a Servicing Officer to the effect that the Loan Purchase
Price in respect of a Defective Mortgage Loan has been deposited into the
Collection Account, then as promptly as practicable, the Indenture Trustee shall
execute such documents and instruments of transfer presented by the Sponsor, in
each case without recourse, representation or warranty, and take such other
actions as shall reasonably be requested by the Sponsor to effect such transfer
by the Trust of such Defective Mortgage Loan pursuant to this Section. It is
understood and agreed that the obligation of the Sponsor to accept a transfer of
a Defective Mortgage Loan and to either convey an Eligible Substitute Mortgage
Loan or to make a deposit of any related Loan Purchase Price into the Collection
Account shall constitute the sole remedy respecting such defect available to
Noteholders and the Indenture Trustee against the Sponsor.
(c) As to any Eligible Substitute Mortgage Loan, the Sponsor shall, if
required to deliver any such Eligible Substitute Mortgage Loan, deliver to the
Indenture Trustee with respect to such Eligible Substitute Mortgage Loan such
documents and agreements as are required to be held by the Indenture Trustee in
accordance with Section 2.01. For any Collection Period during which the Sponsor
substitutes one or more Eligible Substitute Mortgage Loans, the Servicer shall
determine the Substitution Amount which amount shall be deposited by the Sponsor
in the Collection Account at the time of substitution. All amounts received in
respect of the Eligible Substitute Mortgage Loan during the Collection Period in
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which the circumstances giving rise to such substitution occur shall not be a
part of the Trust and shall not be deposited by the Servicer in the Collection
Account. All amounts received by the Servicer during the Collection Period in
which the circumstances giving rise to such substitution occur in respect of any
Defective Mortgage Loan so removed by the Trust shall be deposited by the
Servicer in the Collection Account. Upon such substitution, the Eligible
Substitute Mortgage Loan shall be subject to the terms of this Agreement in all
respects, and the Sponsor shall be deemed (i) to have made with respect to such
Eligible Substitute Mortgage Loan as of the date of substitution, the covenants,
representations and warranties set forth in Section 2.05 and (ii) to have
certified that such Mortgage Loan is an Eligible Substitute Mortgage Loan. The
procedures applied by the Sponsor in selecting each Eligible Substitute Mortgage
Loan shall not be materially adverse to the interests of the Indenture Trustee,
the Noteholders or the Insurer.
The Servicer, promptly following the transfer of a Defective Mortgage Loan
from, or an Eligible Substitute Mortgage Loan to, the Trust pursuant to this
Section, shall amend the Mortgage Loan Schedule and make appropriate entries in
its general account records to reflect such transfer. The Servicer shall,
following such transfer, appropriately mark its records to indicate that it is
no longer servicing such Mortgage Loan on behalf of the Trust. The Sponsor,
promptly following such transfer, shall appropriately mark its Electronic Ledger
and make appropriate entries in its general account records to reflect such
transfer.
Section 2.04. Representations and Warranties Regarding the Servicer and
the Sponsor.
(a) The Servicer represents and warrants to the Indenture Trustee and the
Insurer that as of (i) the Closing Date and (ii) each date on which any Mortgage
Loans are transferred from the Sponsor to the Issuer pursuant to Article II
hereof:
(i) The Servicer is a New York corporation, validly existing and
in good standing under the laws of the State of New York, and has the
corporate power to own its assets and to transact the business in which it
is currently engaged. The 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 any properties owned or
leased by it requires such qualification and in which the failure so to
qualify would have a material adverse effect on the business, properties,
assets, or condition (financial or other) of the Servicer;
(ii) The Servicer has the power and authority to make, execute,
deliver and perform this Agreement and all of the transactions contemplated
under this Agreement, and has taken all necessary corporate action to
authorize the execution, delivery and performance of this Agreement. When
executed and delivered, this Agreement will constitute the legal, valid and
binding obligation of the Servicer enforceable in accordance with its
terms, except as enforcement of such terms may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and by the availability of
equitable remedies;
(iii) The Servicer is not required to obtain the consent of any
other party or any consent, license, approval or authorization from, or
registration or declaration with, any governmental authority, bureau or
agency in connection with the execution, delivery, performance, validity or
enforceability of this Agreement, except for such consent,
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license, approval or authorization, or registration or declaration, as
shall have been obtained or filed, as the case may be, prior to the Closing
Date;
(iv) The execution, delivery and performance of this Agreement by
the Servicer will not violate any provision of any existing law or
regulation or any order or decree of any court applicable to the Servicer
or any provision of the Certificate of Incorporation or Bylaws of the
Servicer, or constitute a material breach of any mortgage, Indenture,
contract or other agreement to which the Servicer is a party or by which
the Servicer may be bound;
(v) No litigation or administrative proceeding of or before any
court, tribunal or governmental body is currently pending, or to the
knowledge of the Servicer threatened, against the Servicer or any of its
properties or with respect to this Agreement or the Notes; and
(vi) The Servicer is solvent and will not be rendered insolvent by
the transactions described herein and, after giving effect to the
transactions described herein, will not be left with an unreasonably small
amount of capital with which to engage in the ordinary course of its
business and the Servicer does not intend to incur, nor does the Servicer
believe that it has incurred, debts beyond its ability to pay as they
mature. The Servicer does not contemplate the commencement of insolvency,
liquidation or consolidation proceedings or the appointment of a receiver,
liquidator, conservator, Indenture Trustee or similar official in respect
of the Servicer or any of its respective assets.
The representations and warranties set forth in this Section 2.04(a) shall
survive the sale and assignment of the Mortgage Loans to the Trust. Upon
discovery of a breach of any representations and warranties which materially and
adversely affects the interests of the Noteholders or the Insurer, the person
discovering such breach shall give written notice within five (5) days of
discovery to the other parties and the Insurer. Within 90 days of its discovery
or its receipt of notice of breach, or, with the prior written consent of a
Responsible Officer of the Indenture Trustee and the Insurer, such longer period
specified in such consent, the Servicer shall cure such breach in all material
respects.
(b) The Sponsor represents and warrants to the Indenture Trustee and the
Insurer that as of (i) the Closing Date and (ii) each date on which any Mortgage
Loans are transferred from the Sponsor to the Issuer pursuant to Article II
hereof:
(i) The Sponsor is a Delaware corporation, validly existing and in
good standing under the laws of the State of Delaware, and has the
statutory power to own its assets and to transact the business in which it
is currently engaged. The Sponsor is duly qualified to do business as a
foreign limited liability company and is in good standing in each
jurisdiction in which the character of the business transacted by it or any
properties owned or leased by it requires such qualification and in which
the failure so to qualify would have a material adverse effect on the
business, properties, assets, or condition (financial or other) of the
Sponsor;
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(ii) The Sponsor has the power and authority to make, execute,
deliver and perform this Agreement and all of the transactions contemplated
under this Agreement, and has taken all necessary corporate action to
authorize the execution, delivery and performance of this Agreement. When
executed and delivered, this Agreement will constitute the legal, valid and
binding obligation of the Sponsor enforceable in accordance with its terms,
except as enforcement of such terms may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and by the availability of
equitable remedies;
(iii) The Sponsor is not required to obtain the consent of any other
party or any consent, license, approval or authorization from, or
registration or declaration with, any governmental authority, bureau or
agency in connection with the execution, delivery, performance, validity or
enforceability of this Agreement;
(iv) The execution, delivery and performance of this Agreement by
the Sponsor will not violate any provision of any existing law or
regulation or any order or decree of any court applicable to the Sponsor or
any provision of the Certificate of Incorporation or bylaws of the Sponsor,
or constitute a material breach of any mortgage, Indenture, contract or
other agreement to which the Sponsor is a party or by which the Sponsor may
be bound;
(v) No litigation or administrative proceeding of or before any
court, tribunal or governmental body is currently pending, or to the
knowledge of the Sponsor threatened, against the Sponsor or any of its
properties or with respect to this Agreement or the Notes; and
(vi) The Sponsor is solvent and will not be rendered insolvent by
the transactions described herein and, after giving effect to the
transactions described herein, will not be left with an unreasonably small
amount of capital with which to engage in the ordinary course of its
business and the Sponsor does not intend to incur, nor does the Sponsor
believe that it has incurred, debts beyond its ability to pay as they
mature. The Sponsor does not contemplate the commencement of insolvency,
liquidation or consolidation proceedings or the appointment of a receiver,
liquidator, conservator, Indenture Trustee or similar official in respect
of the Sponsor or any of its respective assets.
The representations and warranties set forth in this Section 2.04(b) shall
survive the sale and assignment of the Mortgage Loans to the Trust. Upon
discovery of a breach of any representations and warranties which materially and
adversely affects the interests of the Noteholders or the Insurer, the person
discovering such breach shall give prompt written notice to the other parties,
and the Insurer. Within 90 days of its discovery or its receipt of notice of
breach, or, with the prior written consent of a Responsible Officer of the
Indenture Trustee and the Insurer, such longer period specified in such consent,
the Sponsor shall cure such breach in all material respects.
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Section 2.05. Representations and Warranties of the Sponsor Regarding the
Mortgage Loans; Removal of Certain Mortgage Loans.
(a) The Sponsor hereby makes the following representations and warranties
on which the Issuer is deemed to have relied in acquiring the Mortgage Loans and
upon which the Insurer is deemed to rely in issuing the Policy. Such
representations and warranties speak as of the execution and delivery of this
Agreement, as of the Closing Date and as of the applicable Transfer Date with
respect to the Mortgage Loans, but shall survive the sale, transfer, and
assignment of the Mortgage Loans to the Issuer and the pledge thereof to the
Indenture Trustee pursuant to the Indenture,
(i) As of the Closing Date with respect to the Mortgage Loans and
as of the related Transfer Date with respect to any Eligible Substitute
Mortgage Loans and with respect to any HELOC Mortgage Loan, as of the date
any Additional Balance is created, the information set forth in the
Mortgage Loan Schedule for such Mortgage Loans is true and correct in all
material respects;
(ii) Each Mortgage Loan is being serviced by the Servicer;
(iii) The applicable Cut-Off Date Principal Balance has not been
assigned or pledged, and the Sponsor is the sole owner and holder of such
Cut-Off Date Principal Balance free and clear of any and all liens, claims,
encumbrances, participation interests, equities, pledges, charges or
security interests of any nature, and has full right and authority, under
all governmental and regulatory bodies having jurisdiction over the
ownership of the applicable Mortgage Loans, to sell, assign or transfer the
same pursuant to this Agreement, and upon its acquisition of the Mortgage
Loans, the Trust will be the sole owner of the Cut-Off Date Principal
Balance free and clear of any and all liens claims, encumbrances,
participating interests, equities, pledges, charges, or security interests
of any nature;
(iv) Except with respect to liens released immediately prior to the
transfer herein contemplated, each Credit Line Agreement and each Mortgage
Note and related Mortgage has not been assigned or pledged and immediately
prior to the transfer and assignment herein contemplated, the Sponsor held
good, marketable and indefeasible title to, and was the sole owner and
holder of, each Mortgage Loan subject to no liens, charges, mortgages,
claims, participation interests, equities, pledges or security interests of
any nature, encumbrances or rights of others (collectively, a "Lien"); the
Sponsor has full right and authority under all governmental and regulatory
bodies having jurisdiction over the Sponsor, subject to no interest or
participation of, or agreement with, any party, to sell and assign the same
pursuant to this Agreement; and immediately upon the transfers and
assignments herein contemplated, the Sponsor shall have transferred all of
its right, title and interest in and to each Mortgage Loan and the Trust
will hold good, marketable and indefeasible title, to, and be the sole
owner of, each Mortgage Loan subject to no Liens;
(v) As of the Closing Date with respect to the Mortgage Loans and
the applicable Transfer Date with respect to any Eligible Substitute
Mortgage Loans, the
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related Mortgage is a valid and subsisting first or second lien, as set
forth on the Mortgage Loan Schedule with respect to each related Mortgaged
Property, and as of the applicable Cut-Off Date the related Mortgaged
Property is free and clear of all encumbrances and liens having priority
over the first or second lien, as applicable, of such Mortgage except for
liens for (i) real estate taxes and special assessments not yet delinquent;
(ii) any first mortgage loan secured by such Mortgaged Property and
specified on the Mortgage Loan Schedule; (iii) covenants, conditions and
restrictions, rights of way, easements and other matters of public record
as of the date of recording that are acceptable to mortgage lending
institutions generally or specifically reflected in the appraisals; and
(iv) other matters to which like properties are commonly subject which do
not materially interfere with the benefits of the security intended to be
provided by such Mortgage;
(vi) As of the Closing Date with respect to the Mortgage Loans and
the applicable Transfer Date with respect to any Eligible Substitute
Mortgage Loans, there is no valid right of rescission offset, defense
(including the defense of usury) or counterclaim of any obligor under any
Loan Agreement or Mortgage;
(vii) As of the Closing Date with respect to the Mortgage Loans and
the applicable Transfer Date with respect to any Eligible Substitute
Mortgage Loans, there is no delinquent recording or other tax or fee or
assessment lien against any related Mortgaged Property;
(viii) As of the Closing Date with respect to the Mortgage Loans and
the applicable Transfer Date with respect to any Eligible Substitute
Mortgage Loans, there is no proceeding pending or threatened for the total
or partial condemnation of any Mortgaged Property, nor is such a proceeding
currently occurring, and such property is in good repair and is undamaged
by waste, fire, earthquake or earth movement, windstorm, flood, tornado or
other casualty, so as to affect adversely the value of the Mortgaged
Property as security for the Mortgage Loan or the use for which the
premises were intended;
(ix) As of the Closing Date with respect to the Mortgage Loans and
the applicable Transfer Date with respect to any Eligible Substitute
Mortgage Loans, there are no mechanics' or similar liens or claims which
have been filed for work, labor or material affecting the related Mortgaged
Property which are, or may be, liens prior or equal to the lien of the
related Mortgage, except liens which are fully insured against by the title
insurance policy or other title protection referred to in clause (xiv);
(x) No Minimum Monthly Payment is more than 59 days delinquent
(measured on a contractual basis);
(xi) As of the Closing Date with respect to the Mortgage Loans and
the applicable Transfer Date with respect to any Eligible Substitute
Mortgage Loans, for each Mortgage Loan, the related Mortgage File contains
each of the documents and instruments specified to be included therein and
such Mortgage File has been delivered to the Indenture Trustee;
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(xii) The related Loan Agreement and the related Mortgage at
origination complied in all material respects with applicable state and
federal laws and regulations, including, without limitation, usury,
truth-in-lending, real estate settlement procedures, consumer credit
protection, equal credit opportunity, recording or disclosure laws
applicable to the Mortgage Loans and consummation of the transactions
contemplated hereby, including without limitation the receipt of interest,
will not involve the violation or such laws;
(xiii) On the Closing Date with respect to the Mortgage Loans and to
the extent not already included in such filing, on the applicable Transfer
Date with respect to any Eligible Substitute Mortgage Loans, the Sponsor
has filed UCC-1 financing statements with respect to such Mortgage Loans;
(xiv) A lender's policy of title insurance, expressClose.com lender
master protection program (standard mortgage guaranty) or a commitment
(binder) to issue the same or an attorney's certificate or opinion of title
was effective on the date of the origination of each mortgage loan and each
such policy or certificate or opinion of title is valid and remains in full
force and effect;
(xv) As of the Closing Date with respect to the Mortgage Loans and
the applicable Transfer Date with respect to any Eligible Substitute
Mortgage Loans, none of the Mortgaged Properties is a mobile home or a
manufactured housing unit;
(xvi) As of the Cut-Off Date for the Mortgage Loans no more than (a)
0.50% of the Pool I Mortgage Loans (by Pool I Balance), (b) 0.63% of the
Pool II Mortgage Loans (by Pool II Balance) or (c) 2.94% of the Pool III
Mortgage Loans (by Pool III Balance) are secured by Mortgaged Properties
located in one United States postal zip code;
(xvii) The Combined Loan-to-Value Ratio for each Pool I Mortgage Loan
was not in excess of 100%, the Combined Loan-to-Value Ratio for each Pool
II Mortgage Loan was not in excess of 100% and the Combined Loan-to-Value
Ratio for each Pool III Mortgage Loan was not in excess of 100%;
(xviii) Each Pool I Mortgage Loan substantially conforms to all
applicable loan origination standards with respect to loan balances as of
the date of origination set forth by Fannie Mae.
(xix) Each Pool II Mortgage Loan substantially conforms to all
applicable loan origination standards with respect to loan balances as of
the date of origination set forth by Freddie Mac.
(xx) No selection procedure reasonably believed by the Sponsor to
be adverse to the interests of the Noteholders or the Insurer was utilized
in selecting the Mortgage Loans for sale to the Trust, provided, however,
that the Mortgage Loans were selected from the pool of Mortgage Loans
originated in connection with the Servicer's mortgage loan origination
program;
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(xxi) The Sponsor has not transferred the Mortgage Loans to the
Trust with any intent to hinder, delay or defraud any of its creditors;
(xxii) The Minimum Monthly Payment with respect to any Mortgage Loan
is not less than the interest accrued at the applicable Loan Rate on the
average daily Principal Balance during the interest period relating to the
date on which such Minimum Monthly Payment is due;
(xxiii) As of the Closing Date with respect to the Mortgage Loans and
the applicable Transfer Date with respect to any Eligible Substitute
Mortgage Loans, each Loan Agreement and each Mortgage Loan is genuine and
is a legal, valid, binding and enforceable obligation of the related
Mortgagor, except as the enforceability thereof may be limited by the
bankruptcy, insolvency or similar laws affecting creditors' rights
generally;
(xxiv) As of the Closing Date with respect to the Mortgage Loans and
the applicable Transfer Date with respect to any Eligible Substitute
Mortgage Loans, there has been no default, breach, violation or event of
acceleration of any senior mortgage loan related to a Mortgaged Property
that has not been cured by a party other than the Servicer;
(xxv) The terms of each Mortgage Note and each Mortgage have not
been impaired, altered or modified in any respect, except by a written
instrument which (if such instrument is secured by real property) has been
recorded, if necessary, to protect the interest of the Noteholders and
which has been delivered to the Indenture Trustee. The substance of any
such alteration or modification is reflected on the related Mortgage Loan
Schedule and has been approved by the primary mortgage guaranty insurer, if
any;
(xxvi) The definition of "prime rate" in each Credit Line Agreement
relating to a HELOC Mortgage Loan does not differ materially from the
definition in the form of Credit Line Agreement in Exhibit D;
(xxvii) The weighted average remaining term to maturity of the Pool I
Mortgage Loans on a contractual basis as of the related Cut-Off Date is
approximately 197 months. The weighted average remaining term to maturity
of the Pool II Mortgage Loans on a contractual basis as of the related
Cut-Off Date is approximately 199 months. The weighted average remaining
term to maturity of the Pool III Mortgage Loans on a contractual basis as
of the related Cut-Off Date is approximately 195 months. On each date that
the Loan Rates relating to HELOC Mortgage Loans have been adjusted,
interest rate adjustments on the HELOC Mortgage Loans were made in
compliance with the related Mortgages and Credit Line Agreement and
applicable law. Over the term of each HELOC Mortgage Loan, the Loan Rate
may not exceed the related Loan Rate Cap, if any. With respect to the Pool
I HELOC Mortgage Loans, the weighted average Loan Rate Cap is approximately
18.00%. With respect to the Pool II HELOC Mortgage Loans, the weighted
average Loan Rate Cap is approximately 18.00%. With respect to the Pool III
HELOC Mortgage Loans, the weighted average Loan Rate Cap is approximately
18.00%. With respect to the Pool I HELOC Mortgage Loans, the margins range
between
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0.00% and 7.125% and the weighted average margin is approximately 2.969% as
of the related Cut-Off Date. With respect to the Pool II HELOC Mortgage
Loans, the margins range between 0.00% and 9.00% and the weighted average
margin is approximately 2.88% as of the related Cut-Off Date. With respect
to the Pool III HELOC Mortgage Loans, the margins range between 0.00% and
6.00% and the weighted average margin is approximately 3.117% as of the
related Cut-Off Date. The Loan Rates on the Pool I Mortgage Loans range
between 5.875% and 16.625%, the Loan Rates on the Pool II Mortgage Loans
range between 5.875% and 15.75%, the Loan Rates on the Pool III Mortgage
Loans range between 5.875% and 15.50% and the weighted average Loan Rate is
approximately 9.045% for Pool I , 8.401% for Pool II and 8.028% for Pool
III;
(xxviii) As of the Closing Date with respect to the Mortgage Loans and
the applicable Transfer Date with respect to any Eligible Substitute
Mortgage Loans, each Mortgaged Property consists of a single parcel of real
property with a one-to-four unit single family residence erected thereon,
or an individual condominium unit, planned unit development unit or
townhouse;
(xxix) No more than 33.63% (by Pool I Balance) of the Pool I Mortgage
Loans are secured by real property improved by individual condominium
units, planned development units or two-to-four family residences erected
thereon, and approximately 66.37% (by Pool I Balance) of the Pool I
Mortgage Loans are secured by real property with a one-family residence
erected thereon. No more than 32.15% (by Pool II Balance) of the Pool II
Mortgage Loans are secured by real property improved by individual
condominium units, planned development units or two-to-four family
residences erected thereon, and approximately 67.85% (by Pool II Balance)
of the Pool II Mortgage Loans are secured by real property with a
one-family residence erected thereon. No more than 23.37% (by Pool III
Balance) of the Pool III Mortgage Loans are secured by real property
improved by individual condominium units, planned development units or
two-to-four family residences erected thereon, and approximately 76.63% (by
Pool III Balance) of the Pool III Mortgage Loans are secured by real
property with a one-family residence erected thereon;
(xxx) Each Mortgage Note evidencing a Closed End Mortgage Loan is
comprised of one original promissory note and each such promissory note
constitutes an "instrument" for purposes of Section 9-105(1)(i) of the UCC.
There is no obligation on the part of the Sponsor or any other party to
make payments in addition to those made by the Mortgagor with respect to
the Closed End Mortgage Loans;
(xxxi) The Credit Limits on the Pool I HELOC Mortgage Loans range
between $3,500 and $300,000 with an average of approximately $51,067. The
Credit Limits on the Pool II HELOC Mortgage Loans range between $6,500 and
$250,000 with an average of approximately $56,629. The Credit Limits on the
Pool III HELOC Mortgage Loans range between $30,000 and $650,000 with an
average of approximately $222,037. The Principal Balances on the Pool I
HELOC Mortgage Loans range between $0 and $259,525 with an average of
approximately $38,111. The Principal Balances on the Pool II HELOC Mortgage
Loans range between $0 and $212,000 with an average of approximately
$43,655. The Principal Balances on the Pool III HELOC Mortgage Loans
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range between $0 and $638,566 with an average of approximately $164,965.
The Principal Balances on the Pool I Closed End Mortgage Loans range
between $198 and $125,000 with an average of approximately $36,030. The
Principal Balances on the Pool II Closed End Mortgage Loans range between
$9,200 and $126,300 with an average of approximately $47,050. The Principal
Balances on the Pool III Closed End Mortgage Loans range between $21,017
and $266,993 with an average of approximately $160,526. The average Credit
Limit Utilization Rate (weighted by credit line) of the Pool I HELOC
Mortgage Loans is approximately 74.63% of the Pool II HELOC Mortgage Loans
is approximately 77.09% and of the Pool III HELOC Mortgage Loans is
approximately 74.30%;
(xxxii) Substantially all of the Mortgage Loans are second liens, and
either (A) no consent for each Mortgage Loan was required by the holder of
the related senior lien, if any, prior to the making of such Mortgage Loan
or (B) such consent has been obtained and is contained in the related
Mortgage File;
(xxxiii) This Agreement constitutes a valid transfer and assignment to
the Trust of all right, title and interest of the Sponsor in and to the
Cut-Off Date Principal Balances with respect to the applicable Mortgage
Loans, all monies due or to become due with respect thereto and all
proceeds of such Cut-Off Date Principal Balances with respect to the
Mortgage Loans and such funds as are from time to time deposited in the
Collection Account (excluding any investment earnings thereon) and all
other property specified in the definition of "Trust" as being part of the
corpus of the Trust conveyed to the Trust, and upon payment for the
Additional Balances, will constitute a valid transfer and assignment to the
Indenture Trustee of all right, title and interest of the Sponsor in and to
the Additional Balances, all monies due or to become due with respect
thereto, and all proceeds of such Additional Balances and all other
property specified in the definition of "Trust" relating to the Additional
Balances;
(xxxiv) As of the Closing Date, no Mortgage Loan is the subject of
foreclosure proceedings and, to the best of the Sponsor's knowledge, no
obligor of any of the Mortgage Loans has filed for bankruptcy protection;
(xxxv) The proceeds of each Closed End Mortgage Loan have been fully
disbursed, and there is no obligation on the part of the mortgagee to make
future advances thereunder. Any and all requirements as to completion of
any on-site or off-site improvements and as to disbursements of any escrow
funds therefor have been complied with. All costs, fees and expenses
incurred in making or closing or recording such Closed End Mortgage Loans
were paid;
(xxxvi) Each Mortgage contains customary and enforceable provisions
which render the rights and remedies of the holder thereof adequate for the
realization against the related Mortgaged Property of the benefits of the
security, including (A) in the case of a Mortgage designated as a deed of
trust, by trustee's sale and (B) otherwise by judicial foreclosure. Subject
to applicable state law, there is no homestead or other exemption available
to the Mortgagor which would materially interfere with the rights to sell
the Mortgaged Property at a trustee's sale or the right to foreclose upon
the related Mortgage;
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(xxxvii) As of the Closing Date with respect to the Mortgage Loans and
the applicable Transfer Date with respect to any Eligible Substitute
Mortgage Loan, except for events permissible under Section 2.05(a)(x) of
this Agreement, there is no default, breach, violation or event of
acceleration existing under any Mortgage or the related Mortgage Note and
no event which, with the passage of time or with notice and the expiration
of any grace or cure period, would constitute a default, breach, violation
or event of acceleration; and the Sponsor has not waived any default,
breach, violation or event of acceleration;
(xxxviii) To the best knowledge of the Sponsor, all parties to the
Mortgage Note and the Mortgage had legal capacity to execute the Mortgage
Note and the Mortgage and each Mortgage Note and Mortgage have been duly
and properly executed by such parties; Each Mortgage and Mortgage Note is
the legal, valid and binding obligation of the related Mortgagor and is
enforceable by the Issuer against the Mortgagor in accordance with its
terms, except only as such enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and by law;
(xxxix) As of the Cut-Off Date no more than 0.38% of the Principal
Balance of the Pool I Mortgage Loans, nor more than 0.50% of the Principal
Balance of the Pool II Mortgage Loans nor more than 0.62% of the Principal
Balance of the Pool III Mortgage Loans represents Mortgage Loans with
respect to which the related Mortgagor had a Credit Score of 600 or less at
the time of origination or whose Credit Score was unavailable.
(xl) As of the Closing Date with respect to the Mortgage Loans and
the applicable Transfer Date with respect to any Eligible Substitute
Mortgage Loan, no Mortgagor has been released, in whole or in part, except
in connection with an assumption agreement which has been approved by the
applicable title insurer (to the extent required by such title insurer) and
which is part of the Mortgage File delivered to the Indenture Trustee;
(xli) At the time of origination of each Mortgage Loan, the related
prior lien was not more than 30 days delinquent. Additionally, as of the
Closing Date, no senior mortgage loan on the related Mortgaged Property was
more than 59 days delinquent;
(xlii) All required inspections, licenses and certificates with
respect to the use and occupancy of all occupied portions of all property
securing the Mortgages have been made, obtained or issued, as applicable;
(xliii) If the improvements securing a Mortgage Loan were in a
federally designated special flood hazard area as of the date of
origination, flood insurance to the extent required in Section 3.04 hereof
covers the related Mortgaged Property (either by coverage under the federal
flood insurance program or by coverage by private insurers);
(xliv) With respect to each Mortgage Loan, the related prior lien
does not provide for negative amortization;
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(xlv) With respect to each Mortgage Loan, the maturity date of the
Mortgage Loan is prior to the maturity date of the related prior lien if
such prior lien provides for a balloon payment;
(xlvi) All amounts received after the Cut-Off Date with respect to
the Mortgage Loans to which the Sponsor is not entitled will be deposited
into the Collection Account within one Business Day after the Closing
Date;
(xlvii) Each Pool I Mortgage Loan is secured by a property having an
appraised value as of origination of $2,500,000 or less, each Pool II
Mortgage Loan is secured by a property having an appraised value as of
origination of $3,100,000 or less and each Pool III Mortgage Loan is
secured by a property having an appraised value as of origination of
$8,300,000 or less;
(xlviii) Except for events permissible under this agreement, there are
no defaults in complying with the terms of the Mortgage, and either (1) any
taxes, governmental assessments, insurance premiums, water, sewer and
municipal charges or ground rents which previously became due and owing
have been paid, or (2) an escrow of funds has been established in an amount
sufficient to pay for every such item which remains unpaid and which has
been assessed but is not yet due and payable. There are no defaults in
complying with the terms of any senior mortgage on the related Mortgaged
Property that have not been cured by anyone other than the Servicer, except
for any payment defaults of less than 30 days. Except for payments in the
nature of escrow payments, including without limitation, taxes and
insurance payments, the Sponsor has not advanced funds, or induced,
solicited or knowingly received any advance of funds by a party other than
the Mortgagor, directly or indirectly, for the payment of any amount
required by the Mortgage Note, except for interest accruing from the date
of the Mortgage Note or date of disbursement of the Mortgage proceeds,
whichever is greater, to the day which precedes by one month the Due Date
of the first installment of principal and interest;
(xlix) With respect to each Mortgage Loan, the improvements upon each
Mortgaged Property are covered by a valid and existing hazard insurance
policy with a carrier generally acceptable to the Servicer that provides
for fire and extended coverage representing coverage not less than (a) the
Credit Limit of such HELOC Mortgage Loan or (b) the Cut-Off Date Principal
Balance of such Closed End Mortgage Loan or (c) the maximum insurable value
of the Mortgaged Property;
(l) No misrepresentation of a material fact or fraud in respect
of the origination, modification or amendment of any Mortgage Loan has
taken place on the part of any person, including, without limitation, the
related Mortgagor, any appraiser, any builder or developer or any party
involved in the origination of such Mortgage Loan;
(li) With respect to the Pool I Mortgage Loans, the terms of the
Mortgage Note and the Mortgage have not been impaired, altered or modified
in any material respect, except by a written instrument which has been
recorded or is in the process of
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being recorded, if necessary, to protect the interests of the Noteholders
and which has been or will be delivered to the Indenture Trustee on behalf
of the Trust;
(lii) As of the Cut-Off Date, except as otherwise indicated in the
pool tape, no Mortgage Loan is more than 30 days delinquent in payment of
principal and interest. In addition, none of the Mortgage Loans have been
30 or more days delinquent for two payment periods in the last 12 months;
(liii) With respect to the Pool I Mortgage Loans, approximately
15.22% of the Mortgage Loans, as of the Closing Date, are fixed rate fully
amortizing Mortgage Loans having an original term to maturity from the date
on which the first monthly payment is due of not more than 30 years. Each
Mortgage Note with respect to a fixed rate and balloon Mortgage Note will
provide for a schedule of substantially level and equal Monthly Payments
which are sufficient to amortize fully the principal balance of such
Mortgage Loan over a period of time equal to the amortization period of
such Mortgage Note; provided, however, that certain Mortgage Loans
constituting approximately 6.93% of the aggregate balance of the Mortgage
Loans as of Cut-Off Date are balloon loans that provide for final monthly
payment substantially greater than the preceding monthly payments. All such
balloon loans provide for monthly payment based upon a 30 year amortization
schedule with a final balloon payment no later than the 15th year.
(liv) Except for Mortgage Loans that are delinquent for a time
period less than that set forth in (li) above, there is no default, breach,
violation or event of acceleration existing under any Mortgage or the
related Mortgage Note and no event which, with the passage of time or with
notice and the expiration of any grace or cure period, would constitute a
default, breach, violation or event of acceleration; and neither the
Sponsor, nor any other entity involved in originating or servicing a
Mortgage Loan, has waived any default, breach, violation or event of
acceleration;
(lv) None of the Mortgage Loans are cooperative share mortgages;
(lvi) Each appraisal of a Mortgage Loan that was used to determine
the appraised value of the related Mortgaged Property was conducted
generally in accordance with the Seller's mortgage loan origination
program(s) and customary industry standards and included an assessment of
the fair market value of the related mortgaged property at the time of the
appraisal. The Mortgage File contains an appraisal of the applicable
Mortgaged Property;
(lvii) All individual insurance policies contain a standard mortgagee
clause naming the Sponsor, its successors and assigns, as mortgagee. All
premiums thereon have been paid. Each Mortgage obligates the Mortgagor
thereunder to maintain all such insurance at the Mortgagor's cost and
expense, and upon the Mortgagor's failure to do so, authorizes the holder
of the Mortgage to obtain and maintain such insurance at the Mortgagor's
cost and expense and to seek reimbursement therefor from the Mortgagor;
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(lviii) Any advances made after the date of origination of a Mortgage
Loan but prior to the Cut-Off Date have been consolidated with the
outstanding principal amount secured by the related Mortgage, and the
secured principal amount, as consolidated, bears a single interest rate and
single repayment term reflected on the Mortgage Loan Schedule. The
consolidated principal amount does not exceed the original principal amount
of the related Mortgage Loan;
(lix) No improvement located on or being part of any Mortgaged
Property is in violation of any applicable zoning law or regulation. All
inspections, licenses and certificates required to be made or issued with
respect to all occupied portions of each Mortgaged Property and, with
respect to the use and occupancy of the same, including but not limited to
certificates of occupancy and fire underwriting certificates, have been
made or obtained from the appropriate authorities and such Mortgaged
Property is lawfully occupied under the applicable law and all improvements
which were included for the purpose of determining the appraisal value of
the Mortgaged Property lie wholly within the boundaries and building
restriction lines of such property, and no improvement on adjoining
property encroach upon the Mortgage Property;
(lx) The proceeds of each fixed rate and balloon Mortgage Loan have
been fully disbursed and there is no obligation on the part of the
mortgagee to make future advances thereunder and any and all requirements
as to completion of any on-site or off-site improvements and as to
disbursement of any escrow funds therefor have been complied with. All
costs, fees and expenses incurred in making, closing or recording the
Mortgage Loans were paid and the Mortgagor is not entitled to any refund of
amounts paid or due under the Mortgage Note;
(lxi) No Mortgage Loan has a shared appreciation feature, or other
contingent interest feature;
(lxii) All parties which have had any interest in the Mortgage Loan,
whether as originator, mortgagee, assignee, pledgee or otherwise, are (or,
during the period in which they held and disposed of such interest, were):
(A) organized under the laws of such state, or (B) qualified to do business
in such state, or (C) federal savings and loan associations or national
banks having principal offices in such state, or (D) not doing business in
such state so as to require qualification or licensing, or (E) not
otherwise required or licensed in such state. To the best of Sponsor's
knowledge, all parties which have had any interest in the Mortgage Loan
were in compliance with any and all applicable licensing requirements of
the laws of the state wherein the Mortgaged Property is located or were not
required to be licensed in such state;
(lxiii) Each document or instrument in the related Mortgage File is in
a form generally acceptable to prudent mortgage lenders that regularly
originate or purchase mortgage loans comparable to the Mortgage Loans for
sale to prudent investors in the secondary market that invest in mortgage
loans such as the Mortgage Loans;
(lxiv) Each original Mortgage was recorded and all subsequent
assignments of the original Mortgage (other than the assignment to the
Indenture Trustee) have been
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recorded in the appropriate jurisdictions wherein such recordation is
necessary to perfect the lien thereof as against creditors of the Sponsor,
or is in the process of being recorded;
(lxv) No Mortgage Loan was originated under a buydown plan;
(lxvi) No Mortgage Loan is subject to the requirements of the Home
Ownership and Equity Protection Act of 1994 ("HOEPA") or is in violation of
any state or municipal law comparable to HOEPA;
(lxvii) The Servicer for each Mortgage Loan will accurately and fully
report its borrower credit files to all three credit repositories in a
timely manner;
(lxviii) No proceeds from any Mortgage Loan were used to purchase
single-premium credit insurance policies;
(lxix) No Mortgage Loan has a prepayment penalty term longer than
five years after its origination;
(lxx) Each Mortgage Loan conforms, and all Mortgage Loans in the
aggregate conform, in all material respects, to the descriptions thereof
set forth in the Prospectus Supplement;
(lxxi) Each Mortgage Loan was originated on or after December 23,
1998;
(lxxii) The Sponsor represents and warrants that the Servicer
currently operates or actively participates in an on-going business (A) to
originate single family mortgage loans ("Loans"), and/or (B) to make
periodic purchases of Loans from originators or sellers, and/or (C) to
issue and/or purchase securities or bonds supported by the Loans, a portion
of which Loans are made to borrowers who are:
(a) low-income families (families with incomes of 80% or
less of area median income) living in low-income areas (a
census tract or block numbering area in which the median
income does not exceed 80 percent of the area median
income); or
(b) very low-income families (families with incomes of 60%
or less of area median income).
(lxxiii) Each Mortgage contains a provision for the acceleration of
the payment of the unpaid principal balance of the related Mortgage Loan in
the event the related Mortgaged Property is sold without the prior consent
of the mortgagee thereunder;
(lxxiv) To the best of Sponsor's knowledge, Pool II does not contain
the first and second lien mortgage loans relating to a single Mortgaged
Property if the aggregate original principal balance of such mortgage loans
exceeds Freddie Mac's loan limits. To the best of Sponsor's knowledge, Pool
II will not result in a violation of Freddie Mac's loan limitations;
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(lxxv) To the best of Seller's knowledge, Pool I does not contain the
first and second lien mortgage loans relating to a single Mortgaged
Property if the aggregate original principal balance of such mortgage loans
exceeds Fannie Mae's loan limits. To the best of Seller's knowledge, Pool I
will not result in a violation of Fannie Mae's loan limitations;
(lxxvi) Each Mortgage Loan was originated substantially in accordance
with Servicer's underwriting criteria, which conform to the underwriting
criteria set forth in the Prospectus Supplement;
(lxxvii) There exists no violation of any local, state or federal
environmental law, rule or regulation in respect of the Mortgaged Property
which violation has or could have a material adverse effect on the market
value of such Mortgaged Property. Sponsor has no knowledge of any pending
action or proceeding directly involving the related Mortgaged Property in
which compliance with any environmental law, rule or regulation is in
issue; and, to the best of Sponsor's knowledge, nothing further remains to
be done to satisfy in full all requirements of each such law, rule or
regulation constituting a prerequisite to the use and enjoyment of such
Mortgaged Property;
(lxxviii) The Sponsor has caused or will cause to be performed any and
ail acts required to be performed to preserve the rights and remedies of
the Indenture Trustee in any insurance policies applicable to the Mortgage
Loans including, without limitation, any necessary notifications of
insurers, assignment of policies or interests therein, and establishments
of co-insured, joint loss payee and mortgagee rights in favor of the
Indenture Trustee;
(lxxix) The related Mortgage Note is not and has not been secured by
any collateral, pledged account or other security except the lien of the
corresponding Mortgage;
(lxxx) There is no obligation on the part of the Sponsor or any other
party to make payments in addition to those made by the Mortgagor;
(lxxxi) With respect to each Mortgage constituting a deed of trust, a
Indenture Trustee, duly qualified under existing law to serve as such, has
been properly designated and currently so serves and is named in such
Mortgage, and no fees or expenses are or will become payable by the
Noteholders or the Trust to the Indenture Trustee under the deed of trust,
except in connection with a Indenture Trustee's sale after default by the
Mortgagor;
(lxxxii) Each Mortgagor has executed a statement to the effect that
such Mortgagor has received all disclosure materials including the notice
of the right of cancellation or rescission required by applicable law with
respect to the making of the Mortgage Loan and any waiver of any right of
cancellation or rescission exercised by the Mortgagor was in accordance
with applicable law and is binding on the Mortgagor.
(lxxxiii) Each of the Mortgaged Properties relating to the
seventy-five Mortgage Loans included in the sample report provided to the
Insurer for which a
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reappraisal is received by the Insurer on or before December 29, 2000,
shall be reappraised for a value that is at least 90% of the original
appraisal that was provided to the Insurer with respect to such Mortgaged
Property; the Insurer shall have the discretion to waive such requirement.
With respect to the representations and warranties set forth in this Section
2.05 that are made to the best of the Sponsor's knowledge or as to which the
Sponsor has no knowledge, if it is discovered by the Sponsor, the Servicer, the
Insurer, or a Responsible Officer of the Indenture Trustee that the substance of
such representation and warranty is inaccurate and such inaccuracy materially
and adversely affects the value of the related Mortgage Loan then,
notwithstanding the Sponsor's lack of knowledge with respect to the substance of
such representation and warranty being inaccurate at the time the representation
or warranty was made, such inaccuracy shall be deemed a breach of the applicable
representation or warranty.
(b) It is understood and agreed that the representations and warranties set
forth in this Section 2.05 shall survive delivery of the respective Mortgage
Files to the Indenture Trustee pursuant to Section 2.01 and the termination of
the rights and obligations of the Servicer pursuant to Section 5.04 or 6.02.
Upon discovery by the Sponsor, the Servicer, the Insurer or a Responsible
Officer of the Indenture Trustee of a breach of any of the foregoing
representations and warranties, without regard to any limitation set forth
therein concerning the knowledge of the Sponsor as to the facts stated therein,
which materially and adversely affects the interests of the Trust or the
Noteholders or the Insurer in the related Mortgage Loans, the party discovering
such breach shall give prompt written notice to the other parties and to the
Insurer. Within 90 days of its discovery or its receipt of notice of such
breach, the Sponsor shall use all reasonable efforts to cure such breach in all
material respects or shall, not later than the Business Day next preceding the
Payment Date in the month following the Collection Period in which any such cure
period expired (or such later date that is acceptable to the Indenture Trustee
or the Insurer as evidenced by their written consents), either (a) accept a
transfer of such Mortgage Loan from the Trust or (b) substitute an Eligible
Substitute Mortgage Loan, each in the same manner and subject to the same
conditions as set forth in Section 2.03; provided, however, that the cure for
any breach of a representation and warranty relating to the characteristics of
the Mortgage Loans in the aggregate shall be a repurchase of or substitution for
only the Mortgage Loans necessary to cause such characteristics to be in
compliance with the related representation and warranty. Upon accepting such
transfer and making any required deposit into the Collection Account or
substitution of an Eligible Substitute Mortgage Loans, as the case may be, the
Sponsor shall be entitled to receive an instrument of assignment or transfer
from the Indenture Trustee to the same extent as set forth in Section 2.03 with
respect to the transfer of Mortgage Loans under that Section. The Insurer shall
be notified of any substitution of an Eligible Substitute Mortgage Loan.
It is understood and agreed that the obligation of the Sponsor to accept a
removal of a Mortgage Loan as to which a breach has occurred and is continuing
and to make any required deposit in the Collection Account or to substitute an
Eligible Substitute Mortgage Loan, as the case may be, shall constitute the sole
remedy against the Sponsor respecting such breach available to Noteholders, the
Indenture Trustee on behalf of Noteholders and the Insurer; provided, however,
that the Sponsor shall defend and indemnify the Indenture Trustee, the Insurer
and the Noteholders against all reasonable costs and expenses, and all losses,
damages,
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claims and liabilities, including reasonable fees and expenses of counsel and
the amount of any settlement entered into with the consent of the Sponsor (such
consent not to be unreasonably withheld), which may be asserted against or
incurred by any of them as a result of any third-party action arising out of any
breach of any such representation and warranty. Notwithstanding the foregoing,
with regard to any breach of the representation and warranty set forth in
Section 2.05(a)(xxxii), the Sponsor shall pay to the Trust the sum of (i) the
amount of the related Principal Balances, plus unpaid accrued interest on each
such Principal Balance at the applicable Loan Rate to the date of payment, (ii)
the amount of any loss suffered by the Noteholders or the Insurer with respect
to the affected Mortgage Loans and (iii) all amounts owing to the Insurer
pursuant to the Insurance Agreement.
The Sponsor does hereby assign to the Trust the benefits of the
representations and warranties made to it with respect to the Mortgage Loans
under the Mortgage Loan Purchase Agreement and the Trust may exercise the rights
with respect thereto relating to a Mortgage Loan, including the right to require
repurchase in the event such Mortgage Loan is not repurchased by the Sponsor
Section 2.06. Covenants of the Sponsor. The Sponsor hereby covenants that:
(a) Security Interests. The Sponsor will not sell, pledge, assign or
transfer to any other Person, or grant, create, incur, assume or suffer to exist
any Lien on any Mortgage Loans, whether now existing or hereafter created, or
any interest therein; the Sponsor will notify the Indenture Trustee and the
Insurer of the existence of any Lien on any Mortgage Loans immediately upon
discovery thereof; and the Sponsor will defend the Trust's right, title and
interest (including the Trust's security interest) in, to and under the Mortgage
Loans, whether now existing or hereafter created, against all claims of third
parties claiming through or under the Sponsor; provided, however, that nothing
in this Section 2.06(a) shall prevent or be deemed to prohibit the Sponsor from
suffering to exist upon any of the Mortgage Loans any Liens for municipal or
other local taxes and other governmental charges if such taxes or governmental
charges shall not at the time be due and payable or if the Sponsor shall
currently be contesting the validity thereof in good faith by appropriate
proceedings and shall have set aside on its books adequate reserves with respect
thereto.
(b) UCC-1 Financing Statements. On the Closing Date with respect to the
Mortgage Loans and, to the extent not already included in such filing, on the
applicable Transfer Date with respect to any Eligible Substitute Mortgage Loans,
the Sponsor will file UCC-1 financing statements with respect to such Mortgage
Loans.
(c) Negative Pledge. The Sponsor hereby agrees not to transfer, assign,
exchange, pledge, finance, hypothecate, grant a security interest in or
otherwise convey the Residual Certificates except in accordance with Sections
5.05 and 6.02 hereof and in accordance with the Insurance Agreement and the
Trust Agreement.
(d) Downgrading. The Sponsor will not engage in any activity which would
result in a downgrading or withdrawal of the ratings on the Notes without regard
to the effect of the Policy.
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(e) Amendment to Certificate of Incorporation. The Sponsor will not amend
its Certificate of Incorporation without prior written notice to the Indenture
Trustee and the Rating Agencies and the prior written consent of the Insurer
which consent shall not be unreasonably withheld.
(f) Principal Place of Business. The Sponsor's principal place of business
is in California, and the Sponsor will not change its principal place of
business without prior written notice to the Indenture Trustee, the Rating
Agencies and the Insurer.
Section 2.07. Removal of Mortgage Loans at Election of Issuer. Subject to
the conditions set forth below and Section 8.2 of the Indenture, the Issuer may,
but shall not be obligated to, require the removal of Mortgage Loans from Pool I
and/or Pool II and/or Pool III, from time to time, as of the close of business
on a Payment Date (each, a "Removal Date"). On the tenth Business Day (the
"Removal Notice Date") prior to the Removal Date designated in such notice, the
Issuer shall give the Indenture Trustee, the Insurer and the Servicer a notice
of the proposed removal that contains a list of the Mortgage Loans to be
removed. Such removal of Mortgage Loans in Pool I, Pool II or Pool III shall be
permitted upon satisfaction of the following conditions:
(i) The applicable Rapid Amortization Period shall not have
commenced;
(ii) On the Removal Date, the related Overcollateralization Amount
(after giving effect to the removal from the applicable Pool of the
Mortgage Loans proposed to be removed) exceeds the related Specified
Overcollateralization Amount;
(iii) The transfer of such Mortgage Loans on any Removal Date during
the related Managed Amortization Period shall not, in the reasonable belief
of the Sponsor, cause a Rapid Amortization Event with respect to the
related Class of Notes to occur or an event which with notice or lapse of
time or both would constitute such a Rapid Amortization Event and a Rapid
Amortization Event has not occurred;
(iv) On or before the Removal Date, the Issuer shall have delivered
to the Indenture Trustee a revised Mortgage Loan Schedule, reflecting the
proposed transfer and the Removal Date, and the Servicer shall have marked
the Electronic Ledger to show that the Mortgage Loans removed are no longer
included in the applicable Pool;
(v) The Issuer shall represent and warrant that no selection
procedures reasonably believed by the Issuer to be adverse to the interests
of the Noteholders or the Insurer were utilized in selecting the Mortgage
Loans to be removed from the applicable Pool;
(vi) In connection with each such removal of Mortgage Loans
pursuant to this Section, each Rating Agency shall have received on or
prior to the related Removal Notice Date notice of such proposed removal of
Mortgage Loans and, prior to the Removal Date, shall have notified the
Indenture Trustee and the Insurer in writing that such removal of Mortgage
Loans would not result in a reduction or withdrawal of its then current
ratings of the Notes, without regard to the Policy; and
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(vii) The Issuer shall have delivered to the Indenture Trustee and
the Insurer an Officer's Certificate certifying that the items set forth in
subparagraphs (i) through (vi), inclusive, have been performed or are true
and correct, as the case may be. The Indenture Trustee and the Insurer may
conclusively rely on such Officer's Certificate, shall have no duty to make
inquiries with regard to the matters set forth therein and shall incur no
liability in so relying.
(viii) The Insurer shall have been given an opportunity to review any
Mortgage Loans proposed to be removed by the Trust.
Upon receiving the requisite information from the Issuer, the Servicer
shall perform in a timely manner those acts required of it, as specified above.
Upon satisfaction of the above conditions, on the Removal Date the Indenture
Trustee shall deliver, or cause to be delivered, to the Issuer the Mortgage File
for each Mortgage Loan being so transferred, and the Indenture Trustee shall
execute and deliver to the Issuer such other documents prepared by the Issuer as
shall be reasonably necessary to remove such Mortgage Loans from the applicable
Pool. Any such removal of Mortgage Loans shall be without recourse,
representation or warranty by or of the Indenture Trustee or the Trust to the
Issuer. The review right given to the Insurer in clause (viii), above, must be
completed prior to the Removal Date.
Section 2.08. Execution and Authentication of Notes. The Indenture Trustee,
on behalf of the Trust, has caused to be executed, authenticated and delivered
to or upon the order of the Sponsor, in exchange for the Trust, concurrently
with the sale, assignment and conveyance to the Indenture Trustee of the Trust,
three classes of Notes in authorized denominations, the Class S Certificates and
the Residual Certificates, evidencing the ownership of the Trust.
Section 2.09. Tax Treatment. It is the intention of the Sponsor and the
Residual Certificateholders that the Notes will be indebtedness of the Sponsor
for federal, state and local income and franchise tax purposes and for purposes
of any other tax imposed on or measured by income. The Sponsor, the Indenture
Trustee and each Noteholder (or Note Owner) by acceptance of its Note (or, in
the case of a Note Owner, by virtue of such Note Owner's acquisition of a
beneficial interest therein) agrees to treat the Notes (or beneficial interest
therein), for purposes of federal, state and local income or franchise taxes and
any other tax imposed on or measured by income, as indebtedness of the Sponsor
secured by the assets of the Trust and to report the transactions contemplated
by this Agreement on all applicable tax returns in a manner consistent with such
treatment. Each Noteholder agrees that it will cause any Note Owner acquiring an
interest in a Note through it to comply with this Agreement as to treatment of
the Notes as indebtedness for federal, state and local income and franchise tax
purposes and for purposes of any other tax imposed on or measured by income. The
Indenture Trustee will prepare and file all tax reports required hereunder
consistent with this Agreement except as may be required by or provided in
Section 3.15.
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ARTICLE III
ADMINISTRATION AND SERVICING
OF MORTGAGE LOANS
SECTION 3.01. THE SERVICER.
(a) The Servicer is hereby authorized to act as agent for the Trust and in
such capacity shall manage, service, administer and make collections on the
Mortgage Loans and perform the other actions under this Agreement. The Servicer
shall service and administer the Mortgage Loans in a manner consistent with the
terms of this Agreement and with general industry practice and shall have full
power and authority, acting alone or through a subservicer, to do any and all
things in connection with such servicing and administration which it may deem
necessary or desirable, it being understood, however, that the Servicer shall at
all times remain responsible to the Indenture Trustee, the Noteholders, the
Residual Certificateholders and the Insurer for the performance of its duties
and obligations hereunder in accordance with the terms hereof. Any amounts
received by any subservicer in respect of a Mortgage Loan shall be deemed to
have been received by the Servicer whether or not actually received by it.
Without limiting the generality of the foregoing, the Servicer shall continue,
and is hereby authorized and empowered by the Trust, to execute and deliver, on
behalf of the Trust, any and all instruments of satisfaction or cancellation, or
of partial or full release or discharge and all other comparable instruments,
with respect to the Mortgage Loans and with respect to the Mortgaged Properties
and to make deposits to and withdrawals from the Collection Account. The
Indenture Trustee and the Owner Trustee shall, upon the written request of a
Servicing Officer, furnish the Servicer with any powers of attorney and other
documents necessary or appropriate to enable the Servicer to carry out its
servicing and administrative duties hereunder. The Servicer in such capacity may
also consent to the placing of a lien senior to that of any Mortgage on the
related Mortgaged Property, provided that
(i) such Mortgage succeeded to a first lien position after the
related Mortgage Loan was conveyed to the Trust and, immediately following
the placement of such senior lien, such Mortgage is in a second lien
position and the outstanding principal amount of the mortgage loan secured
by such subsequent senior lien is no greater than the outstanding principal
amount of the senior mortgage loan secured by the Mortgaged Property as of
the date the related Mortgage Loan was originated; or
(ii) the Mortgage relating to such Mortgage Loan was in a second
lien position as of the Cut-Off Date and the new senior lien secures a
mortgage loan that refinances an existing first mortgage loan and the
outstanding principal amount of the replacement first mortgage loan
immediately following such refinancing is not greater than the outstanding
principal amount of such existing first mortgage loan at the date of
origination of such Mortgage Loan;
provided, further, that such senior lien does not secure a note that provides
for negative amortization.
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The Servicer may also, without prior approval from the Rating Agencies or
the Insurer, increase the Credit Limits on HELOC Mortgage Loans included in Pool
III provided that (i) new appraisals are obtained and the Combined Loan-to-Value
Ratios of the HELOC Mortgage Loans after giving effect to such increase are less
than or equal to the Combined Loan-to-Value Ratios of the Mortgage Loans as of
the Cut-Off Date and (ii) such increases are consistent with the Servicer's
credit and collection policies. No material change or departure from the
Servicer's credit and collection policies with respect to any Mortgage Loans as
in effect as of the Closing Date shall be permitted without the prior written
consent of the Insurer.
In addition, the Servicer may agree to changes in the terms of a Mortgage
Loan at the request of the Mortgagor; provided that (i) such changes do not
materially and adversely affect the interests of Noteholders, Residual
Certificateholders or the Insurer, (ii) such changes are consistent with prudent
and customary business practice as evidenced by a certificate signed by a
Servicing Officer delivered to the Indenture Trustee and the Insurer and (iii)
the Rating Agencies and the Insurer are promptly notified of the changes.
In addition to the foregoing, the Servicer may solicit Mortgagors to change
any other terms of the related Mortgage Loans; provided that such changes (i) do
not materially and adversely affect the interest of Noteholders or the Insurer
and (ii) are consistent with prudent and customary business practice as
evidenced by a certificate signed by a Servicing Officer delivered to the
Indenture Trustee and the Insurer. Nothing herein shall limit the right of the
Servicer to solicit Mortgagors with respect to new loans (including mortgage
loans) that are not Mortgage Loans.
The relationship of the Servicer (and of any successor to the Servicer as
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) In the event that the rights, duties and obligations of the Servicer
are terminated hereunder, any successor to the Servicer in its sole discretion
may, to the extent permitted by applicable law, terminate the existing
subservicer arrangements with any subservicer, without charge, or assume the
terminated Servicer's rights under such subservicing arrangements which
termination or assumption will not violate the terms of such arrangements.
Section 3.02. Collection of Certain Mortgage Loan Payments.
(a) Servicer shall make reasonable efforts to collect all payments called
for under the terms and provisions of the Mortgage Loans, and shall, to the
extent such procedures shall be consistent with this Agreement, follow such
collection procedures as it follows with respect to home equity loans in its
servicing portfolio comparable to the Mortgage Loans. Consistent with the
foregoing, and without limiting the generality of the foregoing, the Servicer
may in its discretion (i) waive any late payment charge or any assumption fees
or other fees which may be collected in the ordinary course of servicing such
Mortgage Loans and (ii) arrange with a Mortgagor a schedule for the payment of
interest due and unpaid; provided that such arrangement is consistent with the
Servicer's policies with respect to the Mortgage Loans it owns or services;
provided, further, that notwithstanding such arrangement such Mortgage Loans
will
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be included in the information regarding delinquent Mortgage Loans set forth in
the Servicing Certificate and monthly statement to Noteholders pursuant to
Section 4.01.
(b) The Servicer shall on the Closing Date deposit into the Collection
Account any amounts representing payments on, and any collections in respect of,
the Mortgage Loans received after the related Cut-Off Date and prior to the
Closing Date (exclusive of payments in respect of accrued interest due on or
prior to such Cut-Off Date) and thereafter the Servicer, or the Sponsor, as the
case may be, shall deposit into the Collection Account within one Business Day
following receipt thereof the following payments and collections received or
made by it (without duplication):
(i) all collections on and in respect of the Mortgage Loans;
(ii) the amounts, if any, deposited to the Collection Account pursuant
to Section 3.04;
(iii) Net Liquidation Proceeds;
(iv) Insurance Proceeds (including, for this purpose, any amount
required to be credited by the Servicer pursuant to the last sentence of
Section 3.04 and excluding the portion thereof, if any, that has been
applied to the restoration or repair of the related Mortgaged Property or
released to the related Mortgagor in accordance with the normal servicing
procedures of the Servicer);
(v) any amounts required to be deposited therein pursuant to Section
7.01;
(vi) any amounts drawn under the Policy pursuant to Section 8.4(d) of
the Indenture; and
(vii) any amounts drawn pursuant to the Demand Note;
provided, however, that with respect to each Collection Period, the Servicer
shall be permitted to retain from payments in respect of interest on the
Mortgage Loans, the Servicing Fee for such Collection Period. The foregoing
requirements respecting deposits to the Collection Account are exclusive, it
being understood that, without limiting the generality of the foregoing, the
Servicer need not deposit in the Collection Account amounts representing
Foreclosure Profits, fees (including annual fees) or late charge penalties
payable by Mortgagors, or amounts received by the Servicer for the accounts of
Mortgagors for application towards the payment of taxes, insurance premiums,
assessments, excess pay off amounts and similar items. The Servicer shall remit
all Foreclosure Profits to the Sponsor.
The Indenture Trustee shall hold amounts deposited in the Collection
Account as Indenture Trustee for the Noteholders and the Insurer. The Servicer
shall notify the Indenture Trustee and the Insurer in writing on each
Determination Date of the amount of payments and collections in the Collection
Account allocable to Interest Collections and Principal Collections for the
related Payment Date. Following such notification, the Servicer shall be
entitled to withdraw from the Collection Account and retain any amounts that
constitute income and gain realized from the investment of such payments and
collections.
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At the direction of the Servicer, the Indenture Trustee shall invest funds
in the Collection Account in Eligible Investments. All income and gain realized
from any investment in Eligible Investments of funds in the Collection Account
shall be for the benefit of the Servicer and shall be subject to its withdrawal
from time to time. The amount of any losses incurred in respect of the principal
amount of any such investments shall be deposited in the Collection Account by
the Servicer out of its own funds immediately as realized.
Section 3.03. Withdrawals from the Collection Account. From time
to time, withdrawals may be made from the Collection Account by the Servicer
for the following purposes:
(i) If not received by the Servicer pursuant to Section 3.02(b), to
the Servicer as payment for its Servicing Fee pursuant to Section 3.08;
(ii) To pay to the Servicer amounts on deposit in the Collection
Account that are not to be included in the distributions and payments
pursuant to Section 8.7 of the Indenture to the extent provided by the
second to the last and the last paragraph of Section 3.02(b);
(iii) To make or to permit the Paying Agent to make distributions and
payments pursuant to Section 8.7 of the Indenture;
(iv) Prior to the Collection Period preceding the commencement of the
Rapid Amortization Period, to pay to the Sponsor the amount of any
Additional Balances as and when created during the related Collection
Period; provided, that the aggregate amount so paid to the Sponsor in
respect of Additional Balances at any time during any Collection Period
shall not exceed the amount of Principal Collections theretofore received
for such Collection Period;
(v) To pay to the Servicer any Liquidation Expenses not reimbursed
prior to the deposit of Net Liquidation Proceeds to the Collection Account;
(vi) Upon termination of the Trust, to make any payments required by
Section 7.01.
If the Servicer deposits in the Collection Account any amount not required
to be deposited therein or any amount in respect of payments by Mortgagors made
by checks subsequently returned for insufficient funds or other reason for
non-payment it may at any time withdraw such amount from the Collection Account,
and any such amounts shall not be included in the amounts to be deposited in the
Collection Account pursuant to Section 3.02(b), any provision herein to the
contrary notwithstanding.
Section 3.04. Maintenance of Hazard Insurance; Property Protection
Expenses. The Servicer shall cause to be maintained for each Mortgage Loan
hazard insurance naming the Servicer or the related subservicer as loss payee
thereunder providing extended coverage in an amount which is at least equal to
the lesser of (i) the maximum insurable value of the improvements securing such
Mortgage Loan from time to time or (ii) the combined principal balance owing on
such Mortgage Loan and any mortgage loan senior to such Mortgage Loan
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from time to time. The Servicer shall also maintain on property acquired upon
foreclosure, or by deed in lieu of foreclosure, hazard insurance with extended
coverage in an amount which is at least equal to the lesser of (i) the maximum
insurable value from time to time of the improvements which are a part of such
property or (ii) the combined principal balance owing on such Mortgage Loan and
any mortgage loan senior to such Mortgage Loan at the time of such foreclosure
or deed in lieu of foreclosure plus accrued interest and the good-faith estimate
of the Servicer of related Liquidation Expenses to be incurred in connection
therewith. Amounts collected by the Servicer under any such policies shall be
deposited in the Collection Account to the extent called for by Section 3.02. In
cases in which any Mortgaged Property is located in a federally designated flood
area, the hazard insurance to be maintained for the related Mortgage Loan shall
include flood insurance. All such flood insurance shall be in such amounts as
are required under applicable guidelines of the Federal Flood Emergency Act. The
Servicer shall be under no obligation to require that any Mortgagor maintain
earthquake or other additional insurance and shall be under no obligation itself
to maintain any such additional insurance on property acquired in respect of a
Mortgage Loan, other than pursuant to such applicable laws and regulations as
shall at any time be in force and as shall require such additional insurance. If
the Servicer shall obtain and maintain a blanket policy consistent with prudent
industry standards insuring against hazard losses on all of the Mortgage Loans
in an aggregate amount prudent under industry standards, it shall (a)
conclusively be deemed to have satisfied its obligations as set forth in the
first sentence of this Section 3.04 and (b) if there shall have been a loss
which would have been covered by such policy, deposit in the Collection Account
without right of reimbursement, as the case may be, the amount not otherwise
payable under the blanket policy because of any deductible clause.
Section 3.05. Assumption and Modification Agreements. In any case in which
a Mortgaged Property has been or is about to be conveyed by the Mortgagor, the
Servicer shall exercise its right to accelerate the maturity of such Mortgage
Loan consistent with the then current practice of the Servicer and without
regard to the inclusion of such Mortgage Loan in the Trust. If it elects not to
enforce its right to accelerate or if it is prevented from doing so by
applicable law, the Servicer (so long as such action conforms with the
underwriting standards generally acceptable in the industry at the time for new
origination) is authorized to take or enter into an assumption and modification
agreement from or with the Person to whom such Mortgaged Property has been or is
about to be conveyed, pursuant to which such Person becomes liable under the
Loan Agreement and, to the extent permitted by applicable law, the Mortgagor
remains liable thereon. The Servicer shall notify the Indenture Trustee that any
assumption and modification agreement has been completed by delivering to the
Indenture Trustee an Officer's Certificate signed by a Servicing Officer
certifying that such agreement is in compliance with this Section 3.05 and by
forwarding to the Indenture Trustee the original copy of such assumption and
modification agreement. Any such assumption and modification agreement shall,
for all purposes, be considered a part of the related Mortgage File to the same
extent as all other documents and instruments constituting a part thereof. No
change in the terms of the related Loan Agreement may be made by the Servicer in
connection with any such assumption to the extent that such change would not be
permitted to be made in respect of the original Loan Agreement pursuant to the
fourth paragraph of Section 3.01(a). Any fee collected by the Servicer for
entering into any such agreement will be retained by the Servicer as additional
servicing compensation.
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Section 3.06. Realization Upon Defaulted Mortgage Loans; Repurchase of
Certain Mortgage Loans. The Servicer shall foreclose upon or otherwise
comparably convert to ownership Mortgaged Properties securing such of the
Mortgage Loans as come into and continue in default when, in the opinion of the
Servicer based upon the practices and procedures referred to in the following
sentence, no satisfactory arrangements can be made for collection of delinquent
payments pursuant to Section 3.02; provided, that if the Servicer has knowledge
or reasonably believes that any Mortgaged Property is affected by hazardous or
toxic wastes or substances and that the acquisition of such Mortgaged Property
would not be commercially reasonable, then the Servicer will not cause the Trust
to acquire title to such Mortgaged Property in a foreclosure or similar
proceeding. In connection with such foreclosure or other conversion, the
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)
and procedures as it shall deem necessary or advisable and as shall be normal
and usual in its general mortgage servicing activities. The foregoing is subject
to the proviso that the Servicer shall not be required to incur any Liquidation
Expenses or to otherwise expend its own funds in connection with any foreclosure
or towards the correction of any default on a related senior mortgage loan or
restoration of any property unless it shall determine that such expenditure will
increase Net Liquidation Proceeds.
In the event that title to any Mortgaged Property is acquired in
foreclosure or by deed in lieu of foreclosure, the deed or certificate of sale
shall be issued to the Indenture Trustee, or to its nominee on behalf of the
Trust.
The Servicer, in its sole discretion, shall have the right but not the
obligation to purchase for its own account from the Trust any Mortgage Loan
which is 91 days or more delinquent. The Servicer shall notify the Insurer in
writing of any such purchase. The price for any Mortgage Loan purchased
hereunder (which shall be at a purchase price equal to the Loan Purchase Price
thereof), shall be deposited in the Collection Account and the Indenture
Trustee, upon receipt of a certificate from the Servicer in the form of Exhibit
C-1 hereto, shall release or cause to be released to the Servicer the related
Mortgage File and shall execute and deliver such instruments of transfer or
assignment prepared by the Servicer, in each case without recourse,
representation or warranty, as shall be necessary to vest in the purchaser of
such Mortgage Loans any Mortgage Loans released pursuant hereto and the Servicer
shall succeed to all the Indenture Trustee's right, title and interest in and to
such Mortgage Loans and all security and documents related thereto. Such
assignment shall be an assignment outright and not for security. The Servicer
shall thereupon own such Mortgage Loans, and all security and documents, free of
any further obligation to the Indenture Trustee, the Insurer, the Noteholders or
the Residual Certificateholders with respect thereto.
Section 3.07. Indenture Trustee to Cooperate. On or before each Payment
Date, the Servicer will notify the Indenture Trustee of the payment in full of
the Principal Balance of any Mortgage Loan during the preceding Collection
Period, which notification shall be by a certification (which certification
shall include a statement to the effect that all amounts received in connection
with such payment which are required to be deposited in the Collection Account
pursuant to Section 3.02 have been so deposited or credited) of a Servicing
Officer. Upon any such payment in full, the Servicer is authorized to execute,
pursuant to the authorization contained in Section 3.01, if the assignments of
Mortgage have been recorded as required
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hereunder, an instrument of satisfaction regarding the related Mortgage, which
instrument of satisfaction shall be recorded by the Servicer if required by
applicable law and be delivered to the Person entitled thereto. It is understood
and agreed that no expenses incurred in connection with such instrument of
satisfaction or transfer shall be reimbursed from amounts deposited in the
Collection Account. If the Indenture Trustee is holding the Mortgage Files, from
time to time and as appropriate for the servicing or foreclosure of any Mortgage
Loan, or in connection with the payment in full of the Principal Balance of any
Mortgage Loan, the Indenture Trustee shall, upon request of the Servicer and
delivery to the Indenture Trustee of a Request for Release substantially in the
form attached hereto as Exhibit C signed by a Servicing Officer, release the
related Mortgage File to the Servicer and the Indenture Trustee shall execute
such documents, in the forms provided by the Servicer, as shall be necessary to
the prosecution of any such proceedings or the taking of other servicing
actions. Such trust receipt shall obligate the Servicer to return the Mortgage
File to the Indenture Trustee when the need therefor by the Servicer no longer
exists unless the Mortgage Loan shall be liquidated, in which case, upon receipt
of a certificate of a Servicing Officer similar to that hereinabove specified,
the trust receipt shall be released by the Indenture Trustee.
In order to facilitate the foreclosure of the Mortgage securing any
Mortgage Loan that is in default following recordation of the Assignments of
Mortgage in accordance with the provisions hereof, the Indenture Trustee shall,
if so requested in writing by the Servicer, execute an appropriate assignment in
the form provided to the Indenture Trustee by the Servicer to assign such
Mortgage Loan for the purpose of collection to the Servicer or to the related
subservicer (any such assignment shall unambiguously indicate that the
assignment is for the purpose of collection only), and, upon such assignment,
the Servicer will thereupon bring all required actions in its own name and
otherwise enforce the terms of the Mortgage Loan and deposit the Net Liquidation
Proceeds, exclusive of Foreclosure Profits, received with respect thereto in the
Collection Account. In the event that all delinquent payments due under any such
Mortgage Loan are paid by the Mortgagor and any other defaults are cured, then
the Servicer shall, within two Business Days, reassign such Mortgage Loan to the
Indenture Trustee and return the related Mortgage File to the place where it was
being maintained. The Residual Certificateholders shall be deemed to have
repurchased the ownership interest in any Liquidated Mortgage Loan in Pool I
beneficially held by Holders of the Class A-1 Certificates. After such
repurchase, the Servicer, if requested by such Residual Certificateholders and
if offered suitable indemnification and reimbursement for expenses, is
authorized to seek a deficiency judgment if permitted by law against the
Mortgagor under such Liquidated Mortgage Loan on behalf of the Residual
Certificateholders to the extent of any Liquidation Loss Amount.
Section 3.08. Servicing Compensation; Payment of Certain Expenses by
Servicer. The Servicer shall be entitled to receive the Servicing Fee pursuant
to Section 3.03 as compensation for its services in connection with servicing
the Mortgage Loans. Moreover, additional servicing compensation in the form of
late payment charges or other receipts not required to be deposited in the
Collection Account (other than Foreclosure Profits) shall be retained by the
Servicer. The Servicer shall be required to pay all expenses incurred by it in
connection with its activities hereunder (including payment of all other fees
and expenses not expressly stated hereunder to be for the account of the
Noteholders and the Residual Certificateholders) and shall not be entitled to
reimbursement therefor except as specifically
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provided herein. Liquidation Expenses are reimbursable to the Servicer solely
from related Liquidation Proceeds.
Section 3.09. Annual Statement as to Compliance.
(a) The Servicer will deliver to the Indenture Trustee, the Insurer and the
Rating Agencies, on or before March 31 of each year, beginning March 31, 2001,
an Officer's Certificate stating that (i) a review of the activities of the
Servicer during the preceding fiscal year (or such shorter period as is
applicable in the case of the first report) and of its performance under this
Agreement has been made under such officer's supervision and (ii) to the best of
such officer's knowledge, based on such review, the Servicer has fulfilled all
of its material obligations under this Agreement throughout such fiscal 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.
(b) The Servicer shall deliver to the Indenture Trustee, the Insurer and
each of the Rating Agencies, promptly after having obtained knowledge thereof,
but in no event later than five Business Days thereafter, written notice by
means of an Officer's Certificate of any event which with the giving of notice
or the lapse of time or both, would become an Event of Servicing Termination.
Section 3.10. Annual Servicing Report. On or before March 31 of each year,
beginning March 31, 2001, the Servicer, at its expense, shall cause a firm of
nationally recognized independent public accountants (who may also render other
services to the Servicer) to furnish a report to the Indenture Trustee, the
Insurer and each Rating Agency to the effect that such firm has examined certain
documents and records relating to the servicing of mortgage loans during the
most recent fiscal year then ended under pooling and servicing agreements
(substantially similar to this Agreement, including this Agreement), that such
examination was conducted substantially in compliance with the audit guide for
audits of non-supervised mortgagees approved by the Department of Housing and
Urban Development for use by independent public accountants (to the extent that
the procedures in such audit guide are applicable to the servicing obligations
set forth in such agreements) and that such examination has disclosed no items
of noncompliance with the provisions of this Agreement which, in the opinion of
such firm, are material, except for such items of noncompliance as shall be set
forth in such report.
Section 3.11. Annual Opinion of Counsel. On or before March 31 of each
year, beginning March 31, 2001, the Sponsor, at its expense, shall deliver to
the Indenture Trustee and the Insurer the applicable Opinion of Counsel
specified in Exhibit B hereto.
Section 3.12. Access to Certain Documentation and Information Regarding
the Mortgage Loans.
(a) Servicer shall provide to the Indenture Trustee, the Insurer, any
Noteholders that are federally insured savings and loan associations, the Office
of Thrift Supervision, successor to the Federal Home Loan Bank Board, the FDIC
and the supervisory agents and examiners of the Office of Thrift Supervision
access to the documentation regarding the Mortgage Loans required
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by applicable regulations of the Office of Thrift Supervision and the FDIC
(acting as operator of the SAIF or the BIF), such access being afforded without
charge but only upon reasonable request and during normal business hours at the
offices of the Servicer. Nothing in this Section 3.12 shall derogate from the
obligation of the Servicer to observe any applicable law prohibiting disclosure
of information regarding the Mortgagors and the failure of the Servicer to
provide access as provided in this Section 3.12 as a result of such obligation
shall not constitute a breach of this Section 3.12.
(b) The Servicer shall supply information in such form as the Indenture
Trustee shall reasonably request to the Indenture Trustee and the Paying Agent,
on or before the start of the Determination Date preceding the related Payment
Date, as is required in the Indenture Trustee's reasonable judgment to enable
the Paying Agent or the Indenture Trustee, as the case may be, to make required
distributions and to furnish the required reports to Noteholders and to make any
claim under the Policy.
Section 3.13. Maintenance of Certain Servicing Insurance Policies. The
Servicer shall maintain, at its own expense, a blanket fidelity bond (the
"Fidelity Bond") and an errors and omissions insurance policy, with broad
coverage with financially responsible companies on all officers, employees, or
other persons acting in any capacity with regard to the Mortgage Loans to handle
funds, money, documents and papers relating to the Mortgage Loans. The Fidelity
Bond and errors and omissions insurance policy shall be in the form of the
Mortgage Banker's Blanket Bond and shall protect and insure the Servicer against
losses, including forgery, theft, embezzlement, fraud, errors and omissions and
negligent acts of such persons. Such Fidelity Bond shall also protect and insure
the Servicer against losses in connection with the failure to maintain any
insurance policies required pursuant to this Agreement and the release or
satisfaction of a Mortgage Loan without having obtained payment in full of the
indebtedness secured thereby. No provision of this Section 3.13 requiring the
Fidelity Bond and errors and omissions insurance policy shall diminish or
relieve the Servicer from its duties and obligations as set forth in this
Agreement. The minimum coverage under any such bond and insurance policy shall
be at least equal to the corresponding amounts required by Freddie Mac in
Freddie Mac's Seller/Servicer's Guide. Upon request of the Indenture Trustee,
the Servicer shall cause to be delivered to the Indenture Trustee a certified
true copy of the Fidelity Bond and errors and omissions insurance policy and a
statement from the surety and the insurer that such Fidelity Bond and errors and
omissions insurance policy shall in no event be terminated or materially
modified without thirty days' prior written notice to the Indenture Trustee.
Section 3.14. Reports to the Securities and Exchange Commission. The
Indenture Trustee shall, on behalf of the Trust, cause to be filed with the
Securities and Exchange Commission any periodic reports required to be filed
under the provisions of the Securities Exchange Act of 1934, as amended, and the
rules and regulations of the Securities and Exchange Commission thereunder. Upon
the request of the Indenture Trustee, each of the Servicer and the Sponsor shall
cooperate with the Indenture Trustee in the preparation of any such report and
shall provide to the Indenture Trustee in a timely manner all such information
or documentation as the Indenture Trustee may reasonably request in connection
with the performance of its duties and obligations under this Section.
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Section 3.15. Tax Returns. In accordance with Section 2.09 hereof, the
Servicer shall prepare and file any Federal, State or local income and franchise
tax return for the Trust as well as any other applicable return and apply for a
taxpayer identification number on behalf of the Trust as provided in Article V
of the Trust Agreement, including, without limitation, forms 1099 and 1065. The
Sponsor shall treat the Mortgage Loans as its property for all Federal, State or
local tax purposes and shall report all income earned thereon (including amounts
payable as fees to the Servicer) as its income for income tax purposes. In the
event the Trust shall be required pursuant to an audit or administrative
proceeding or change in applicable regulations to file Federal, State or local
tax returns, the Servicer shall prepare and file or shall cause to be prepared
and filed any tax returns required to be filed by the Trust; the Indenture
Trustee shall promptly sign such returns and deliver such returns after
signature to the Servicer and such returns shall be filed by the Servicer. The
Indenture Trustee shall also prepare or shall cause to be prepared all tax
information required by law to be distributed to Noteholders. In no event shall
the Indenture Trustee or the Servicer be liable for any liabilities, costs or
expenses of the Trust, the Noteholders, the Residual Certificateholders or the
Note Owners arising under any tax law, including, without limitation, Federal,
state or local income and franchise or excise taxes or any other tax imposed on
or measured by income (or any interest or penalty with respect thereto or
arising from a failure to comply therewith).
Section 3.16. Information Required by the Internal Revenue Service
Generally and Reports of Foreclosures and Abandonments of Mortgaged Property.
The 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 Servicer shall make reports of foreclosures and abandonments
of any mortgaged property for each year beginning in 2000, the Servicer shall
file reports relating to each instance occurring during the previous calendar
year in which the Servicer (i) on behalf of the Indenture Trustee 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 Servicer shall be in form and substance sufficient to meet the
reporting requirements imposed by Section 6050J.
Section 3.17. Reporting Requirements. For each Mortgage Loan, the Servicer
will accurately and fully report its borrower credit files to each of Equifax
Credit Information Services, Inc., TransUnion, LLC and Experion Information
Solution, Inc. (or their successors) in a timely manner on a monthly basis.
ARTICLE IV
SERVICING CERTIFICATE
Section 4.01. Servicing Certificate. Not later than seven (7) Business Days
prior to the Payment Date, the Servicer shall deliver to the Indenture Trustee,
a Servicing Certificate (in written form or the form of computer readable media
or such other form as may be agreed to by the Indenture Trustee and the
Servicer), together with an Officer's Certificate to the effect that such
Servicing Certificate is true and correct in all material respects, stating the
related
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Collection Period, Payment Date, the series number of the Notes, the date of
this Agreement, and:
(i) the aggregate amount of collections received on the Mortgage Loans
on or prior to the Determination Date in respect of such Collection Period;
(ii) the aggregate amount of (a) Interest Collections and (b)
Principal Collections for such Collection Period;
(iii) the Principal Collections for such Payment Date, separately
stating the components thereof;
(iv) any accrued and unpaid Servicing Fees for previous Collection
Periods and the Servicing Fee for such Collection Period;
(v) the related Pool Balance for each Pool as of the end of the
preceding Collection Period and as of the end of the second preceding
Collection Period;
(vi) the aggregate amount of Additional Balances created during the
previous Collection Period;
(vii) by Pool and in the aggregate, the number and aggregate Principal
Balances of Mortgage Loans (A) as to which the Minimum Monthly Payment is
delinquent for 30-59 days, 60-89 days, 90-119 days, 120-149 days, 150-179
days and 180 or more days respectively and (B) that have become REO, in
each case as of the end of the preceding Collection Period; (C) as to which
foreclosure proceedings have been commenced, and (D) in bankruptcy and
delinquent as of the close of business on the last day of the calendar
month preceding such Distribution Date;
(viii) the amount to be paid to the Servicer pursuant to Section
8.7(d)(xi) of the Indenture;
(ix) the number and Principal Balances of any Mortgage Loans removed
to the Sponsor pursuant to Section 2.07;
The Indenture Trustee shall conclusively rely upon the information
contained in a Servicing Certificate for purposes of making distributions
pursuant to Section 8.7 of the Indenture, shall have no duty to inquire into
such information and shall have no liability in so relying. The format and
content of the Servicing Certificate may be modified by the mutual agreement of
the Servicer, the Indenture Trustee and the Insurer. The Servicer shall give
notice of any such change to the Rating Agencies.
Section 4.02. Reserved.
Section 4.03. The Indenture Trustee Remittance Report. On each
Determination Date by noon Eastern Standard time, the Indenture Trustee shall
furnish a report (the "Indenture Trustee Remittance Report") in the form
attached as Exhibit F-1 to this Agreement (together with a statement containing
the information that is required to be included in the statement to be
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prepared by the Indenture Trustee pursuant to Section 4.03) to the Insurer by
electronic medium as agreed to by the Indenture Trustee and the Insurer.
Section 4.04. Loan Data Remittance Report. On the seventh Business Day
before each Payment Date (the "Loan Data Remittance Date") by noon Eastern
Standard time, the Servicer shall furnish a report (the "Loan Data Remittance
Report") in the form attached as Exhibit F-2 to this Agreement to the Insurer
and the Indenture Trustee by electronic medium as agreed to by the Servicer, the
Indenture Trustee and the Insurer.
Section 4.05. Reserve Fund.
(a) Amounts on deposit in the Reserve Fund will, at the direction of the
Servicer, be invested in Eligible Investments maturing no later than the day
before the next Payment Date or on such Payment Date if approved by the Rating
Agencies and the Insurer.
All income and gain realized from any investment of funds in the Reserve
Fund shall be considered part of the Reserve Fund until released pursuant to the
Indenture. Following that point all earnings shall go to the Sponsor. The
Sponsor will report for Federal, state and local income tax purposes the income,
if any, represented by the Reserve Fund.
(b) Following the termination of the Trust pursuant to Section 7.01
hereof, the Indenture Trustee shall withdraw all amounts then on deposit in
the Reserve Fund pursuant to the Indenture.
ARTICLE V
THE SERVICER AND THE SPONSOR
Section 5.01. Liability of the Servicer and the Sponsor. The Servicer shall
be liable in accordance herewith only to the extent of the obligations
specifically imposed upon and undertaken by the Servicer herein. The Sponsor
shall be liable in accordance herewith only to the extent of the obligations
specifically imposed upon and undertaken by the Sponsor.
Section 5.02. Merger or Consolidation of, or Assumption of the Obligations
of, the Servicer or the Sponsor. Any corporation into which the Servicer or the
Sponsor may be merged or consolidated, or any corporation resulting from any
merger, conversion or consolidation to which the Servicer or the Sponsor shall
be a party, or any corporation succeeding to the business of the Servicer or the
Sponsor, shall be the successor of the Servicer or the Sponsor, as the case may
be, 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.
Section 5.03. Limitation on Liability of the Servicer and Others. Neither
the Servicer nor any of the directors or officers or employees or agents of the
Servicer shall be under any liability to the Trust or the Noteholders or
Residual Certificateholders for any action taken or for refraining from the
taking of any action by the Servicer in good faith pursuant to this Agreement,
or for errors in judgment; provided, however, that this provision shall not
protect the Servicer or any such Person against any breach of representations
and warranties made herein, or
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against any specific liability imposed on the Servicer for a breach of its
servicing under this Agreement or against liability which would otherwise be
imposed by reason of willful misfeasance, bad faith or negligence in the
performance of duties of the Servicer or by reason of reckless disregard of
obligations and duties of the Servicer hereunder. The Servicer and any director
or officer or employee or agent of the Servicer may rely in good faith on any
document of any kind prima facie properly executed and submitted by any Person
respecting any matters arising hereunder. The Servicer and any director or
officer or employee or agent of the Servicer shall be indemnified by the Trust
and held harmless against any loss, liability or expense incurred in connection
with any legal action relating to this Agreement or the Notes, other than any
loss, liability or expense related to any specific Mortgage Loan (except as any
such loss, liability or expense shall be otherwise reimbursable pursuant to this
Agreement) and any loss, liability or expense incurred by reason of its willful
misfeasance, bad faith or negligence, breach of representations and warranties
made herein, or against any specific liability imposed on the Servicer for a
breach of its servicing under this Agreement or against in the performance of
duties hereunder or by reason of its reckless disregard of obligations and
duties hereunder. The Servicer shall not be under any obligation to appear in,
prosecute or defend any legal action which is not incidental to duties to
service the Mortgage Loans in accordance with this Agreement, and which in its
opinion may involve it in any expense or liability; provided, however, that the
Servicer may in its sole discretion undertake any such action which it may deem
necessary or desirable in respect of this Agreement, and the rights and duties
of the parties hereto and the interests of the Noteholders and Residual
Certificateholders 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 Trust and the Servicer shall only be entitled to be
reimbursed therefor pursuant to Section 8.7(d)(xi) of the Indenture. The
Servicer's right to indemnity or reimbursement pursuant to this Section 5.03
shall survive any resignation or termination of the 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. Servicer Not to Resign. Subject to the provisions of Section
5.02, the 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 are in material conflict by reason of applicable law with any other
activities carried on by it or its subsidiaries or Affiliates, the other
activities of the Servicer so causing such a conflict being of a type and nature
carried on by the Servicer or its subsidiaries or Affiliates at the date of this
Agreement or (ii) upon satisfaction of the following conditions: (a) the
Servicer has proposed a successor servicer to the Indenture Trustee and the
Insurer in writing and such proposed successor servicer is reasonably acceptable
to the Indenture Trustee; (b) each Rating Agency shall have delivered a letter
to the Indenture Trustee and the Insurer prior to the appointment of the
successor servicer stating that the proposed appointment of such successor
servicer as Servicer hereunder will not result in the qualification, reduction
or withdrawal of the then current rating of the Notes without regard to the
Policy; and (c) such proposed successor servicer is reasonably acceptable to the
Insurer, as evidenced by a letter from each to the Indenture Trustee; provided,
however, that no such resignation by the Servicer shall become effective until
the Indenture Trustee or successor servicer designated by the Servicer as
provided above shall have assumed the Servicer's responsibilities and
obligations hereunder or the Indenture Trustee shall have designated a successor
servicer in accordance with Section 6.02.
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Any such resignation shall not relieve the 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 Servicer. Any such determination
permitting the resignation of the Servicer pursuant to clause (i) above shall be
evidenced by an Opinion of Counsel to such effect delivered to the Indenture
Trustee and the Insurer. The Servicer shall have no claim (whether by
subrogation or otherwise) or other action against any Noteholder or Residual
Certificateholder for any amounts paid by the Servicer pursuant to any provision
of this Agreement.
Section 5.05. Delegation of Duties. In the ordinary course of business, the
Servicer at any time may delegate any of its duties hereunder to any Person,
including any of its Affiliates, or any subservicer referred to in Section 3.01,
who agrees to conduct such duties in accordance with standards comparable to
those with which the Servicer complies pursuant to Section 3.01. Such delegation
shall not relieve the Servicer of its liabilities and responsibilities with
respect to such duties and shall not constitute a resignation within the meaning
of Section 5.04. The Servicer's delegation of any of its duties hereunder to any
subservicer shall be subject to the prior approval of the Insurer. The Servicer
shall terminate its delegation of any of its duties hereunder to any subservicer
at the Insurer's reasonable request.
Section 5.06. Indemnification of the Trust by the Servicer. The Servicer
shall indemnify and hold harmless the Trust, the Owner Trustee and the Indenture
Trustee from and against any loss, liability, expense, damage or injury suffered
or sustained by reason of the Servicer's activities or omissions in servicing or
administering the Mortgage Loans that are not in accordance with this Agreement,
including, but not limited to, any judgment, award, settlement, reasonable
attorneys' fees and other costs or expenses incurred in connection with the
defense of any actual or threatened action, proceeding or claim. Any such
indemnification shall not be payable from the assets of the Trust. The
provisions of this indemnity shall run directly to and be enforceable by an
injured party subject to the limitations hereof. The provisions of this Section
5.06 shall survive termination of this Agreement.
Section 5.07. Indemnification of the Trust by the Sponsor. Notwithstanding
anything to the contrary contained herein, the Sponsor (i) agrees to be liable
directly to the injured party for the entire amount of any losses, claims,
damages, liabilities and expenses of the Trust (other than those attributable to
a Noteholder as a result of defaults on the Mortgage Loans) to the extent that
the Sponsor would be liable if the Trust were a partnership under the Delaware
Revised Uniform Limited Partnership Act in which the Sponsor was a general
partner and (ii) shall indemnify and hold harmless the Trust, the Owner Trustee
and the Indenture Trustee from and against any loss, liability, expense, damage,
claim or injury (other than those attributable to a Noteholder as a result of
defaults on the Mortgage Loans) arising out of or based on this Agreement by
reason of any acts, omissions, or alleged acts or omissions arising out of
activities of the Trust, the Owner Trustee or the Indenture Trustee, or the
actions of the Servicer, including, but not limited to, amounts payable to the
Servicer pursuant to Section 5.03, any judgment, award, settlement, reasonable
attorneys' fees and other costs or expenses incurred in connection with the
defense of any actual or threatened action, proceeding or claim; provided that
the Sponsor shall not indemnify the Owner Trustee or the Indenture Trustee (but
shall indemnify any other injured party) if such loss, liability, expense,
damage or injury is due to the Owner Trustee's or the Indenture Trustee's
willful malfeasance, bad faith or negligence, breach of representations and
warranties made herein, or against any specific liability imposed on the
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Owner Trustee or Indenture Trustee for a breach of its obligations hereunder.
The provisions of this indemnity shall run directly to and be enforceable by an
injured party subject to the limitations hereof.
Section 5.08. Limitation on Liability of the Sponsor. None of the directors
or officers or employees or agents of the Sponsor shall be under any liability
to the Trust, the Owner Trustee or the Indenture Trustee, the Noteholders or the
Residual Certificateholders, it being expressly understood that all such
liability is expressly waived and released as a condition of, and as
consideration for, the execution of this Agreement and the issuance of the
Notes; provided, however, that this provision shall not protect any such Person
against any liability which would otherwise be imposed by reason of willful
misfeasance, bad faith, negligence or breach of representations and warranties
made herein, or against any specific liability imposed on such Person in the
performance of the duties hereunder. Except as provided in Section 5.07, the
Sponsor shall not be under any liability to the Trust, the Owner Trustee or the
Indenture Trustee or the Noteholders or Residual Certificateholders for any
action taken or for refraining from the taking of any action in its capacity as
Sponsor pursuant to this Agreement whether arising from express or implied
duties under this Agreement; provided, however, that this provision shall not
protect the Sponsor against any liability which would otherwise be imposed by
reason of willful misfeasance, bad faith or negligence in the performance of its
duties or by reason of reckless disregard of its obligations and duties
hereunder. The Sponsor and any director or officer or employee or agent of the
Sponsor 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.
ARTICLE VI
SERVICING TERMINATION
Section 6.01. Events of Servicing Termination. If any one of the following
events ("Events of Servicing Termination") shall occur and be continuing:
(i) Any failure by the Servicer to deposit in the Collection Account
any deposit required to be made under the terms of this Agreement which
continues unremedied for a period of one Business Day after the date upon
which written notice of such failure shall have been given to the Servicer
by the Indenture Trustee or to the Servicer and the Indenture Trustee by
the Insurer or Holders of Notes evidencing more than 25% of the Principal
Balance of the Notes instruct otherwise; or
(ii) Failure on the part of the Servicer duly to observe or perform in
any material respect any other covenants or agreements of the Servicer set
forth in the Notes or in this Agreement, which failure continues unremedied
for a period of 15 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 Servicer by
the Indenture Trustee or to the Servicer and the Indenture Trustee by the
Insurer or the Holders of Notes evidencing more than 25% of the Principal
Balance of the Notes; or
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(iii) The entry against the Servicer of a decree or order by a court
or agency or supervisory authority having jurisdiction in the premises for
the appointment of a Indenture Trustee, conservator, receiver or liquidator
in any insolvency, conservatorship, receivership, readjustment of debt,
marshalling 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 consent by the Servicer to the appointment of a Indenture
Trustee, conservator, receiver or liquidator in any insolvency,
conservatorship, receivership, readjustment of debt, marshalling of assets
and liabilities or similar proceedings of or relating to the Servicer or of
or relating to substantially all of its property; or the Servicer shall
admit in writing its inability to pay its debts generally as they become
due, file a petition to take advantage of any applicable insolvency or
reorganization statute, make an assignment for the benefit of its
creditors, or voluntarily suspend payment of its obligations;
(v) the occurrence of an Event of Servicer Termination under the
Insurance Agreement;
then, and in each and every such case, so long as an Event of Servicing
Termination shall not have been remedied by the Servicer, either the Indenture
Trustee, the Insurer or the Holders of Notes evidencing more than 50% of the
Outstanding Amount of the Notes, in each case with the consent of the Insurer,
by notice then given in writing to the Servicer (and to the Indenture Trustee if
given by the Insurer or the Holders of Notes) may terminate all of the rights
and obligations of the Servicer as servicer under this Agreement. Upon the
occurrence of a Servicer Termination Delinquency Rate Trigger or Servicer
Termination Loss Trigger as those terms are defined in the Insurance Agreement,
the Insurer may, in its reasonable discretion, terminate all of the rights and
obligations of the Servicer pursuant to the terms hereof. Any such notice to the
Servicer shall also be given to each Rating Agency and the Insurer. On or after
the receipt by the Servicer of such written notice, all authority and power of
the Servicer under this Agreement, whether with respect to the Notes 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 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. The Servicer agrees to cooperate with the
Indenture Trustee in effecting the termination of the responsibilities and
rights of the Servicer hereunder, including, without limitation, the transfer to
the Indenture Trustee for the administration by it of all cash amounts that
shall at the time be held by the Servicer to be deposited by it in the
Collection Account, or that have been deposited by the Servicer in the
Collection Account or thereafter received by the Servicer with respect to the
Mortgage Loans. All reasonable costs and expenses (including attorneys' fees)
incurred in connection with amending this Agreement to reflect such succession
as Servicer pursuant to this Section 6.01 shall be paid by the predecessor
Servicer (or if the predecessor Servicer is the Indenture Trustee, the initial
Servicer) upon presentation of reasonable documentation of such costs and
expenses.
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Notwithstanding the foregoing, a delay in or failure of performance under
Section 6.01(i) for a period of one Business Day or under Section 6.01(ii) for a
period of 15 days, shall not constitute an Event of Servicing Termination if
such delay or failure could not be prevented by the exercise of reasonable
diligence by the 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 or floods. The preceding sentence shall not relieve the Servicer
from using its best efforts to perform its respective obligations in a timely
manner in accordance with the terms of this Agreement and the Servicer shall
provide the Indenture Trustee, the Sponsor, the Insurer and the Noteholders and
Residual Certificateholders with an Officer's Certificate giving prompt notice
of such failure or delay by it, together with a description of its efforts to so
perform its obligations. The Servicer shall immediately notify the Indenture
Trustee and the Insurer in writing of any Events of Servicing Termination.
Section 6.02. Indenture Trustee to Act; Appointment of Successor.
(a) On and after the time the Servicer receives a notice of termination
pursuant to Section 6.01 or resigns pursuant to Section 5.04, the Indenture
Trustee shall be the successor in all respects to the Servicer in its capacity
as servicer under this 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 Servicer by the terms and provisions hereof.
Notwithstanding the above, if the Indenture Trustee becomes the Servicer
hereunder, it shall have no responsibility or obligation (i) of repurchase or
substitution with respect to any Mortgage Loan, (ii) with respect to any
representation or warranty of the Servicer, and (iii) for any act or omission of
either a predecessor or successor Servicer other than the Indenture Trustee. As
compensation therefor, the Indenture Trustee shall be entitled to such
compensation as the Servicer would have been entitled to hereunder if no such
notice of termination had been given. In addition, the Indenture Trustee will be
entitled to compensation with respect to its expenses in connection with
conversion of certain information, documents and record keeping, as provided in
Sections 6.7 and 6.8 of the Indenture. Notwithstanding the above, (i) if the
Indenture Trustee is unwilling to act as successor Servicer, or (ii) if the
Indenture Trustee is legally unable so to act, the Indenture Trustee may with
the consent of the Insurer (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 or home equity loan servicer with all
licenses and permits required to perform its obligations under this Agreement
and having a net worth of not less than $15,000,000 as the successor to the
Servicer hereunder in the assumption of all or any part of the responsibilities,
duties or liabilities of the Servicer hereunder; provided that any such
successor Servicer shall be acceptable to the Insurer, as evidenced by its prior
written consent, which consent shall not be unreasonably withheld; and provided,
further, that the appointment of any such successor Servicer will not result in
the qualification, reduction or withdrawal of the ratings assigned to the Notes
by the Rating Agencies without regard to the Policy. Pending appointment of a
successor to the Servicer hereunder, unless the Indenture Trustee is prohibited
by law from so acting, 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 Servicer would otherwise
have received pursuant to Section 3.08 (or such lesser
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compensation as the Indenture Trustee and such successor shall agree). The
Indenture Trustee and such successor shall take such action, consistent with
this Agreement, as shall be necessary to effectuate any such succession.
(b) Any successor, including the Indenture Trustee, to the 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 Noteholders and
Residual Certificateholders and the Insurer and (ii) maintain in force a policy
or policies of insurance covering errors and omissions in the performance of its
obligations as Servicer hereunder and a fidelity bond in respect of its
officers, employees and agents to the same extent as the Servicer is so required
pursuant to Section 3.13. The appointment of a successor Servicer shall not
affect any liability of the predecessor Servicer which may have arisen under
this Agreement prior to its termination as Servicer (including, without
limitation, any deductible under an Insurance Policy pursuant to Section 3.04),
nor shall any successor Servicer be liable for any acts or omissions of the
predecessor Servicer or for any breach by such Servicer of any of its
representations or warranties contained herein.
Section 6.03. Notification to Noteholders and Residual Certificateholders.
Upon any termination or appointment of a successor to the Servicer pursuant to
this Article VI or Section 5.04, the Indenture Trustee shall give prompt written
notice thereof to the Noteholders and Residual Certificateholders (at their
respective addresses appearing in the Note Register and in the Residual
Certificate Register), the Insurer and each Rating Agency.
ARTICLE VII
TERMINATION
Section 7.01. Termination.
(a) The respective obligations and responsibilities of the Servicer, the
Sponsor and the Indenture Trustee created hereby (other than the obligation of
the Indenture Trustee to make certain payments to Noteholders after the final
Payment Date and the obligation of the Servicer to send certain notices as
hereinafter set forth) shall terminate upon the last action required to be taken
by the Indenture Trustee on the final Payment Date pursuant to this Article VII
following the later of (A) the Payment Date following payment in full of all
amounts owing to the Insurer and (B) the earliest of (i) the transfer, under the
conditions specified in Section 7.01(b), to the Sponsor of the Noteholders'
interest in each Mortgage Loan and all property acquired in respect of any
Mortgage Loans remaining in each of Pool I, Pool II and Pool III, (ii) the day
following the Payment Date on which the distribution made to Noteholders has
reduced the Class A-1 Note Principal Balance, the Class A-2 Note Principal
Balance and the Class A-3 Note Principal Balance to zero and no other amounts
are owed to the Noteholders hereunder, and no other amounts are owed to the
Insurer pursuant to the Insurance Agreement and Section 8.7 of the Indenture,
(iii) the final payment or other liquidation of the last Mortgage Loan remaining
in the Trust (including, without limitation, the disposition of the Mortgage
Loans pursuant to Section 5.4 of the Indenture) or the disposition of all
property acquired upon foreclosure or deed in lieu of foreclosure of any
Mortgage Loan and (iv) the Payment Date in January 2027; provided, however, that
in no event shall the trust created hereby continue beyond the expiration of 21
years from the date of death of the last surviving descendants of Joseph P.
Kennedy, the late
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ambassador of the United States to the Court of St. James, living on the date
hereof. Upon termination in accordance with clause (a)(B)(i) of this Section
7.01, the Indenture Trustee shall execute such documents and instruments of
transfer presented by the Sponsor, in each case without recourse, representation
or warranty, and take such other actions as the Sponsor may reasonably request
to effect the transfer of the Mortgage Loans to the Sponsor.
(b) (i) (i) The Sponsor shall have the right to effect the transfer to the
Sponsor of each Pool I Mortgage Loan on any Payment Date on or after the
Payment Date immediately prior to which the Class A-1 Note Principal
Balance is less than or equal to ten percent (10%) of the Original Class
A-1 Note Principal Balance. If the Sponsor elects to exercise its right it
will notify the Issuer, the Servicer, the Indenture Trustee and the Insurer
no later than thirty-five (35) days prior to the Payment Date on which the
transfer is to take place. The Indenture Trustee will make the transfer on
such Payment Date subject to Section 7.01(d) and provided that the
Redemption Price for the Class A-1 Notes has been deposited with it not
less than five (5) Business Days prior to such Payment Date.
(ii) The Sponsor shall have the right to effect the transfer to the
Sponsor of each Pool II Mortgage Loan on any Payment Date on or after the
Payment Date immediately prior to which the Class A-2 Note Principal
Balance is less than or equal to ten percent (10%) of the Original Class
A-2 Note Principal Balance. If the Sponsor elects to exercise its right it
will notify the Issuer, the Servicer, the Indenture Trustee and the Insurer
no later than thirty-five (35) days prior to the Payment Date on which the
transfer is to take place. The Indenture Trustee will make the transfer on
such Payment Date subject to Section 7.01(d) and provided that the
Redemption Price for the Class A-2 Notes has been deposited with it not
less than five (5) Business Days prior to such Payment Date.
(iii) The Sponsor shall have the right to effect the transfer to the
Sponsor of each Pool III Mortgage Loan on any Payment Date on or after the
Payment Date immediately prior to which the Class A-3 Note Principal
Balance is less than or equal to ten percent (10%) of the Original Class
A-3 Note Principal Balance. If the Sponsor elects to exercise its right it
will notify the Issuer, the Servicer, the Indenture Trustee and the Insurer
no later than thirty-five (35) days prior to the Payment Date on which the
transfer is to take place. The Indenture Trustee will make the transfer on
such Payment Date subject to Section 7.01(d) and provided that the
Redemption Price for the Class A-3 Notes has been deposited with it not
less than five (5) Business Days prior to such Payment Date.
(c) The Sponsor, at its expense, shall prepare and deliver to the Indenture
Trustee for execution, at the time the related Mortgage Loans are to be released
to the Sponsor, appropriate documents assigning each such Mortgage Loan from the
Indenture Trustee to the Sponsor and shall promptly record such assignments.
(d) The Sponsor shall not exercise its right to repurchase the Mortgage
Loans in a Pool pursuant to Section 7.01(b) hereof if (a) such repurchase would
result in a draw on the Policy, without the consent of the Insurer, which
consent shall not be unreasonably withheld, (b)
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any reimbursement due to the Insurer would not be fully satisfied pursuant to
the repurchase, or (c) the Overcollateralization Amount for the other Pools at
such time does not at least equal the Specified Overcollateralization Amount for
each such Pool (unless the Insurer waives such requirement).
ARTICLE VIII
ADMINISTRATIVE DUTIES OF THE SERVICER
Section 8.01. Administrative Duties.
(a) Duties with Respect to the Indenture. The Servicer shall perform all
its duties and the duties of the Issuer under the Indenture. In addition, the
Servicer shall consult with the Owner Trustee as the Servicer deems appropriate
regarding the duties of the Issuer under the Indenture. The 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
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 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 Servicer set forth in this
Agreement or any of the Basic Documents, the 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 Agreement or any of the Basic Documents or under
state and federal tax and securities laws, and at the request of the Owner
Trustee shall take all appropriate action that it is the duty of the Issuer
to take pursuant to this Agreement or any of the Basic Documents,
including, without limitation, pursuant to Sections 2.6 and 2.11 of the
Trust Agreement. In accordance with the directions of the Issuer or the
Owner Trustee, the Servicer shall administer, perform or supervise the
performance of such other activities in connection with the Mortgage Loans
(including the Basic Documents) as are not covered by any of the foregoing
provisions and as are expressly requested by the Issuer or the Owner
Trustee and are reasonably within the capability of the Servicer.
(ii) Notwithstanding anything in this Agreement or any of the Basic
Documents to the contrary, the Servicer shall be responsible for promptly
notifying the Owner Trustee and the Indenture Trustee and the Insurer in
the event that any withholding tax is imposed on the Issuer's payments (or
allocations of income) to a Residual Certificateholder (as defined in the
Trust Agreement) as contemplated by this Agreement. Any such notice shall
be in writing and specify the amount of any
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withholding tax required to be withheld by the Owner Trustee or the
Indenture Trustee pursuant to such provision.
(iii) Notwithstanding anything in this Agreement or the Basic
Documents to the contrary, the Servicer shall be responsible for
performance of the duties of the Issuer or the Sponsor set forth in Section
5.1(a), (b), (c) and (d) of the Trust Agreement with respect to, among
other things, accounting and reports to Residual Certificateholders (as
defined in the Trust Agreement).
(iv) The Servicer shall perform the duties of the Sponsor specified in
Section 11.2 of the Trust Agreement required to be performed in connection
with the resignation or removal of the Owner Trustee, and any other duties
expressly required to be performed by the Servicer under this Agreement or
any of the Basic Documents.
(v) In carrying out the foregoing duties or any of its other
obligations under this Agreement, the 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 Servicer's
opinion, no less favorable to the Issuer in any material respect.
(c) Non-Ministerial Matters. With respect to matters that in the reasonable
judgment of the Servicer are non-ministerial, the Servicer shall not take any
action pursuant to this Article VIII unless within a reasonable time before the
taking of such action, the Servicer shall have notified the Owner Trustee and
the Insurer of the proposed action and the Owner Trustee and the Insurer 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 Note Registrars, successor Paying
Agents and successor Indenture Trustees pursuant to the Indenture or the
appointment of successor Servicers or the consent to the assignment by the
Note Registrar, Paying Agent or Indenture Trustee of its obligations under
the Indenture; and
(E) the removal of the Indenture Trustee.
(d) Exceptions. Notwithstanding anything to the contrary in this Agreement,
except as expressly provided herein or in the other Basic Documents, the
Servicer, in its capacity hereunder, shall not be obligated to, and shall not,
(1) make any payments to the Noteholders or Residual Certificateholders under
the Basic Documents, (2) sell the Trust Property pursuant to Section 5.4 of the
Indenture, (3) take any other action that the Issuer directs the Servicer not to
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take on its behalf or (4) in connection with its duties hereunder assume any
indemnification obligation of any other Person.
(e) The Indenture Trustee or any successor Servicer shall not be
responsible for any obligations or duties of the Servicer under Section 8.01.
Section 8.02. Records. The Servicer shall maintain appropriate books of
account and records relating to services performed under this Agreement, which
books of account and records shall be accessible for inspection by the Issuer
and the Indenture Trustee at any time during normal business hours.
Section 8.03. Additional Information to be Furnished to the Issuer. The
Servicer shall furnish to the Issuer and the Indenture Trustee from time to time
such additional information regarding the Mortgage Loans as the Issuer and the
Indenture Trustee shall reasonably request.
ARTICLE IX
MISCELLANEOUS PROVISIONS
Section 9.01. Amendment. This Agreement may be amended from time to time by
agreement among the Sponsor, the Servicer, and the Indenture Trustee, in each
case without notice to or the consent of any of the Noteholders or Residual
Certificateholders, but only with the consent of the Insurer (which consent
shall not be unreasonably withheld), (i) to cure any ambiguity, (ii) to correct
any defective provisions or to correct or supplement any provisions herein that
may be inconsistent with any other provisions herein, (iii) to add to the duties
of the Sponsor or the Servicer, (iv) to add any other provisions with respect to
matters or questions arising under this Agreement or the Policy, as the case may
be, which shall not be inconsistent with the provisions of this Agreement, (v)
to add or amend any provisions of this Agreement as required by any Rating
Agency or any other nationally recognized statistical rating organization in
order to maintain or improve any rating of the Notes (it being understood that,
after obtaining the ratings in effect on the Closing Date, neither the Indenture
Trustee, the Sponsor nor the Servicer is obligated to obtain, maintain or
improve any such rating) or (vi) to comply with any requirement imposed by the
Code; provided, however, that such action shall not, as evidenced by an Opinion
of Counsel, materially and adversely affect the interests of any Noteholder or
any Residual Certificateholder, or the Insurer; and provided, further, that the
amendment shall be deemed not to adversely affect in any material respect the
interests of the Noteholders and the Residual Certificateholders and no opinion
referred to in the preceding proviso shall be required to be delivered if the
Person requesting the amendment obtains a letter from each Rating Agency stating
that the amendment would not result in the downgrading or withdrawal of the
respective ratings then assigned to the Notes without regard to the Policy.
This Agreement also may be amended from time to time by agreement among
the Servicer, the Sponsor and the Indenture Trustee, with the consent of the
Insurer and the Holders of the Notes evidencing more than 50% of the Outstanding
Amount of the Notes and the Holders of the Residual Certificates evidencing more
than 50% of the percentage interest in the Residual Certificates (which consent
of such Holders of Notes and Residual Certificates given pursuant to
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this Section 9.01 or pursuant to any other provision of this Agreement shall be
conclusive and binding on such Holder and all future Holders of such securities
and of any security issued upon the transfer thereof or in exchange thereof or
in lieu thereof whether or not notation of such consent is made upon the
security) for the purpose of adding any provisions to or changing in any manner
or eliminating any of the provisions of this Agreement or of modifying in any
manner the rights of the Noteholders or the Residual Certificateholders;
provided, however, that no such amendment shall (i) reduce in any manner the
amount of, or delay the timing of, payments on the Notes or distributions or
payments under the Policy which are required to be made on any Note without the
consent of the Holder of such Note or (ii) reduce the aforesaid percentage
required to consent to any such amendment, without the consent of the Holders of
all then outstanding Notes and Residual Certificates or (iii) adversely affect
in any material respect the interests of the Insurer.
Following the execution and delivery of any such amendment hereto or to
the Policy, either the Sponsor, if the Sponsor requested the amendment, or the
Servicer, if the Servicer requested the amendment, shall reimburse the Insurer
for the reasonable out-of-pocket costs and expenses incurred by each in
connection with such amendment.
Prior to the execution of any such amendment, the party hereto requesting
any such amendment shall furnish written notification of the substance of such
amendment to each Rating Agency. In addition, promptly after the execution of
any such amendment made with the consent of the Noteholders, the Indenture
Trustee shall furnish written notification of the substance of such amendment to
each Noteholder and fully executed original counterparts of the instruments
effecting such amendment to the Insurer.
It shall not be necessary for the consent of Noteholders under this
Section 9.01 to approve the particular form of any proposed amendment or
consent, but it shall be sufficient if such consent shall approve the substance
thereof. The manner of obtaining such consents and of evidencing the
authorization of the execution thereof by Noteholders and Residual
Certificateholders shall be subject to such reasonable requirements as the
Indenture Trustee may prescribe.
In executing any amendment permitted by this Section 9.01, the Indenture
Trustee shall be entitled to receive, and shall be fully protected in relying
upon, an Opinion of Counsel stating that such amendment is authorized or
permitted hereby and that all conditions precedent to the execution and delivery
of such amendment have been satisfied. The Indenture Trustee may, but shall not
be obligated to, enter into any such amendment which affects the Indenture
Trustee's own rights, duties or immunities under this Agreement or otherwise.
Section 9.02. Recordation of Agreement. This Agreement is subject to
recordation in all appropriate public offices for real property records in all
the counties or other comparable jurisdictions in which any or all of the
properties subject to the Mortgages are situated, and in any other appropriate
public recording office or elsewhere, such recordation to be effected by the
Indenture Trustee, but only upon direction of Noteholders accompanied by an
Opinion of Counsel to the effect that such recordation materially and
beneficially affects the interests of Noteholders. The Noteholders requesting
such recordation shall bear all costs and expenses of
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such recordation. The Indenture Trustee shall have no obligation to ascertain
whether such recordation so affects the interests of the Noteholders.
For the purpose of facilitating the recordation of this Agreement as
herein provided and for other purposes, this Agreement may be executed
simultaneously in any number of counterparts, each of which counterparts shall
be deemed to be an original, and such counterparts shall constitute but one and
the same instrument.
Section 9.03. Limitation on Rights of Noteholders. No Noteholder shall have
any right to vote (except as provided in Sections 6.01, 7.01, and 9.01 herein
and Section 5.4 of the Indenture) or in any manner otherwise control the
operation and management of the Trust, or the obligations of the parties hereto,
nor shall anything herein set forth, or contained in the terms of the Notes, be
construed so as to constitute the Noteholders from time to time as partners or
members of an association; nor shall any Noteholder be under any liability to
any third person by reason of any action taken by the parties to this Agreement
pursuant to any provision hereof.
No Noteholder shall have any right by virtue or by availing itself of any
provisions of this Agreement to institute any suit, action or proceeding in
equity or at law upon or under or with respect to this Agreement, unless such
Holder previously shall have given to the Indenture Trustee a written notice of
default and of the continuance thereof, as hereinbefore provided, and unless
also the Holders of Notes evidencing more than 50% of the Outstanding Amount of
the Notes shall have made written request upon the Indenture Trustee to
institute such action, suit or proceeding in its own name as Indenture Trustee
hereunder and shall have offered to the Indenture Trustee such reasonable
indemnity as it may require against the costs, expenses and liabilities to be
incurred therein or thereby, and the Indenture Trustee, for 60 days after its
receipt of such notice, request and offer of indemnity, shall have neglected or
refused to institute any such action, suit or proceeding; it being understood
and intended, and being expressly covenanted by each Noteholder with every other
Noteholder and the Indenture Trustee, that no one or more Holders of Notes shall
have any right in any manner whatever by virtue or by availing itself or
themselves of any provisions of this Agreement to affect, disturb or prejudice
the rights of the Holders of any other of the Notes, or to obtain or seek to
obtain priority over or preference to any other such Holder, or to enforce any
right under this Agreement, except in the manner herein provided and for the
equal, ratable and common benefit of all Noteholders. For the protection and
enforcement of the provisions of this Section 9.03, each and every Noteholder
and the Indenture Trustee shall be entitled to such relief as can be given
either at law or in equity.
By accepting its Certificate, each Noteholder agrees that unless a Insurer
Default exists, the Insurer shall have the right to exercise all rights of the
Noteholder under this Agreement without any further consent of the Noteholder.
Section 9.04. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS
AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH
SUCH LAWS.
Section 9.05. Notices. All demands, notices and communications hereunder
shall be in writing and shall be deemed to have been duly given if personally
delivered at or mailed by
50
<PAGE>
certified mail, return receipt requested, to (a) in the case of the Sponsor,
GreenPoint Mortgage Securities Inc., 700 Larkspur Landing Circle, Suite 250,
Larkspur, California 94939, Attention: Peter T. Paul, (b) in the case of the
Servicer, GreenPoint Mortgage Funding, Inc., 1100 Larkspur Landing Circle, Suite
101, Larkspur, California 94939, Attention: Gilbert MacQuarrie, (c) in the case
of the Indenture Trustee, at the Corporate Trust Office, (d) in the case of the
Insurer, Financial Guaranty Insurance Company, 115 Broadway, New York, New York
10006, Attention: Research and Risk Management GreenPoint Home Equity Loan
Trust--2000-3 (telecopy number (212) 312-3225), (e) in the case of Moody's,
Residential Loan Monitoring Group, 4th Floor, 99 Church Street, New York, New
York 10007, and (f) in the case of Standard & Poor's, 55 Water Street, New York,
New York 10041, 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 Noteholder shall be given by first class
mail, postage prepaid, at the address of such Holder as shown in the Note
Register. Any notice so mailed within the time prescribed in this Agreement
shall be conclusively presumed to have been duly given, whether or not the
Noteholder or Residual Certificateholder 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 best 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 9.06. Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions or
terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or of the Notes or the
rights of the Holders thereof.
Section 9.07. Assignment. Notwithstanding anything to the contrary
contained herein, except as provided in Sections 5.02 and 5.04, this Agreement
may not be assigned by the Sponsor or the Servicer without the prior written
consent of the Insurer and Holders of the Notes evidencing Percentage Interests
aggregating not less than 66%.
Section 9.08. Third-Party Beneficiaries. This Agreement will inure to the
benefit of and be binding upon the parties hereto, the Residual
Certificateholders, the Note Owners or the Insurer and their respective
successors and permitted assigns. Except as otherwise provided in this
Agreement, no other Person will have any right or obligation hereunder.
Section 9.09. 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 9.10. 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.
51
<PAGE>
Section 9.11. Insurance Agreement. The Indenture Trustee is authorized and
directed to execute and deliver the Insurance Agreement and to perform the
obligations of the Indenture Trustee thereunder.
Section 9.12. Nonpetition Covenant. Until one year plus one day shall have
elapsed since the termination of the Trust in accordance with Section 7.01, none
of the Sponsor, the Company, the Servicer, nor the Indenture Trustee shall
petition or otherwise invoke the process of any court or government authority
for the purpose of commencing or sustaining a case against the Sponsor or the
Trust under any federal or state bankruptcy, insolvency or similar law or
appointing a receiver, liquidator, assignee, Indenture Trustee, custodian,
sequestrator or other similar official of the Sponsor or the Trust or any
substantial part of its property, or ordering the winding up or liquidation of
the affairs of the Sponsor or the Trust.
52
<PAGE>
IN WITNESS WHEREOF, the Sponsor, the Servicer and the Indenture Trustee
have caused this Agreement to be duly executed by their respective officers all
as of the day and year first above written.
GREENPOINT MORTGAGE SECURITIES INC.,
as Sponsor
By: /s/ Nathan Hieter
---------------------------------
Name: Nathan Hieter
Title: Vice President
GREENPOINT MORTGAGE FUNDING, INC.,
as Company and Servicer
By: /s/ Peter Hill
---------------------------------
Name: Peter Hill
Title: Senior Vice President
BANKERS TRUST COMPANY,
as Indenture Trustee
By: /s/ Barbara Campbell
---------------------------------------
Name: Barbara J. Campbell
Title: Assistant Secretary
GREENPOINT HOME EQUITY LOAN TRUST 2000-3,
as Issuer
By: Wilmington Trust Company, not in
its individual capacity but solely as
Owner
Indenture Trustee
By: /s/ W. Chris Sponenberg
---------------------------------
Name: W. Chris Sponenberg
Title: Assistant Vice President
[Sale and Servicing Agreement]
<PAGE>
EXHIBIT A
MORTGAGE LOAN SCHEDULE
[On file with Indenture Trustee]
A-1
<PAGE>
EXHIBIT B
FORM OF OPINION OF COUNSEL
WITH RESPECT TO SECTION 3.11 OF THE
SALE AND SERVICING AGREEMENT
The opinions set forth below may be subject to all the qualifications,
assumptions, limitations and exceptions taken or made in the opinions of counsel
to the Company delivered on the Closing Date. Unless otherwise indicated, all
capitalized terms used herein shall have the meanings ascribed to them in the
Sale and Servicing Agreement dated as of December 1, 2000 among GreenPoint
Mortgage Funding, Inc. (the "Company" and the "Servicer"), GreenPoint Mortgage
Securities Inc. (the "Sponsor") and Bankers Trust Company, as Indenture Trustee.
Terms used but not defined herein shall have the meaning given to such terms in
the above-referenced Sale and Servicing Agreement.
The Indenture Trustee has a valid perfected first priority security
interest with respect to the Sponsor's right, title and interest in and to the
Mortgage Loans (including all Eligible Substitute Mortgage Loans).
B-1
<PAGE>
EXHIBIT C-1
OFFICER'S CERTIFICATE
REQUEST BY THE SERVICER FOR PERMANENT
RELEASE OF MORTGAGE LOANS AND MORTGAGE FILES
--------------------------------------------
TO: Bankers Trust Company,
as Indenture Trustee
123 Washington Street
New York, New York 10006
Attention: Corporate Trust Office
Gentlemen:
In connection with the payment in full of the Mortgage Loans held by you as
Indenture Trustee, under the Sale and Servicing Agreement dated as of December
1, 2000 among GreenPoint Mortgage Funding, Inc., as Servicer, GreenPoint
Mortgage Securities Inc., as Sponsor, and you, as Indenture Trustee, the
undersigned requests the release of the Mortgage Loans and the Mortgage Files
for the Mortgage Loans identified in the schedule attached to this Request.
The undersigned hereby certifies that any and all payments received on the
Mortgage Loans identified in the schedule attached to this Request which are
required to be deposited in the Collection Account pursuant to Section 3.02 of
such Sale and Servicing Agreement have been so deposited.
GREENPOINT MORTGAGE FUNDING, INC.,
as Servicer
By:
---------------------------------------
Name:
---------------------------------
Title:
--------------------------------
Date:
---------------------------------
ACKNOWLEDGED BY:
BANKERS TRUST COMPANY,
as Indenture Trustee
By:
---------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Date:
----------------------------------
C-1-1
<PAGE>
EXHIBIT C-2
OFFICER'S CERTIFICATE
REQUEST BY THE SERVICER FOR TEMPORARY
RELEASE OF MORTGAGE LOANS AND MORTGAGE FILES
--------------------------------------------
TO: Bankers Trust Company,
as Indenture Trustee
123 Washington Street
New York, New York 10006
Attention: Corporate Trust Office
Gentlemen:
In connection with the administration of the Mortgage Loans held by you as
Indenture Trustee, under the Sale and Servicing Agreement dated as of December
1, 2000 among GreenPoint Mortgage Funding, Inc., as Servicer, GreenPoint
Mortgage Securities Inc., as Sponsor, and you, as Indenture Trustee, the
undersigned requests the temporary release of the Mortgage Loans and the related
Mortgage Files for the Mortgage Loans identified in the schedule attached to
this Request.
GREENPOINT MORTGAGE FUNDING, INC.,
as Servicer
By:
---------------------------------------
Name:
---------------------------------
Title:
--------------------------------
Date:
---------------------------------
ACKNOWLEDGED BY:
BANKERS TRUST COMPANY,
as Indenture Trustee
By:
---------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Date:
----------------------------------
C-2-1
<PAGE>
EXHIBIT D
FORM OF CREDIT LINE AGREEMENT
D-1
<PAGE>
EXHIBIT E
FORM OF MORTGAGE NOTE FOR
CLOSED END MORTGAGE LOANS
E-1
<PAGE>
EXHIBIT F-1
FORM OF CERTIFICATE:
BOND SUMMARY REPORTING
<TABLE>
<CAPTION>
DETAIL RECORD FIELDS: File Name: T0nnMMYY.BND
--------------------------------------------------------------------------------------
Field Name Fld Format Field Definition
Nbr Position
--------------------------------------------------------------------------------------
<S> <C> <C>
Series # (Deal 1 10 (x) 001-010 As defined by issuer or as assigned - T0nn
Identifier)
--------------------------------------------------------------------------------------
Blank 1 (x) 011
--------------------------------------------------------------------------------------
Class # 2 2 (x) 012-013 As assigned or determined by issuer.
Input default value if not applicable.
--------------------------------------------------------------------------------------
Blank 5 (x) 014-018
--------------------------------------------------------------------------------------
CUSIP # 3 9 (x) 019-027 If not available, Input default value.
--------------------------------------------------------------------------------------
Blank 1 (x) 028
--------------------------------------------------------------------------------------
Coupon - 4 6.3 029-034 Bond Coupon Rate
Current
Pass-through
Rate
--------------------------------------------------------------------------------------
Blank 1 (x) 035
--------------------------------------------------------------------------------------
Original Face 5 13.2 036-048 Par Value, original issue amount, of Class
Value
--------------------------------------------------------------------------------------
Blank 1 (x) 049
--------------------------------------------------------------------------------------
Beginning 6 13.2 050-062 Beginning Class UPB as of beginning of
Unpaid cycle
Principal
Balance
--------------------------------------------------------------------------------------
Blank 1 (x) 063
--------------------------------------------------------------------------------------
Principal 7 13.2 064-076 Dollar amount of class principal payment
payment amount
--------------------------------------------------------------------------------------
Blank 1 (x) 077
--------------------------------------------------------------------------------------
Interest 8 13.2 078-090 Dollar amount of class interest payment
payment amount
--------------------------------------------------------------------------------------
Blank 1 (x) 091
--------------------------------------------------------------------------------------
Total 9 13.2 092-104 Dollar amount of principal & interest
Distribution payment
--------------------------------------------------------------------------------------
Blank 1 (x) 105
--------------------------------------------------------------------------------------
Deferred 10 13.2 106-118 Dollar amount of overcollateralization
Interest (Difference between security principal
and mortgage principal balances applied
this period. This can include non-cash
allocations)
--------------------------------------------------------------------------------------
Blank 1 (x) 119
--------------------------------------------------------------------------------------
Principal Loss 11 13.2 120-132 Dollar amount of principal losses applied
this period
--------------------------------------------------------------------------------------
Blank 1 (x) 133
--------------------------------------------------------------------------------------
Interest Loss 12 13.2 134-146 Dollar amount of interest losses applied
this period
--------------------------------------------------------------------------------------
Blank 1 (x) 147
--------------------------------------------------------------------------------------
Ending Unpaid 13 13.2 148-160 Ending Class UPB as of beginning of cycle
Principal
Balance
--------------------------------------------------------------------------------------
Blank 1 (x) 161
--------------------------------------------------------------------------------------
Principal 14 9.7 162-170 Factor representing the principal payment
Distribution divided by the Original UPB of the
Factor class.
--------------------------------------------------------------------------------------
Blank 1 (x) 171
--------------------------------------------------------------------------------------
Interest 15 9.7 172-180 Factor representing the interest payment
Distribution divided by the Original UPB of the class.
Factor
--------------------------------------------------------------------------------------
</TABLE>
F-1-1
<PAGE>
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------
Field Name Fld Format Field Definition
Nbr Position
--------------------------------------------------------------------------------------
<S> <C> <C>
Blank 1 (x) 181
--------------------------------------------------------------------------------------
Prepayment 16 9.7 182-190 If loans were prepaid and an interest
Interest shortfall arose in this period, it should
Shortfall be entered in this field. If not
applicable, a zero should be used.
--------------------------------------------------------------------------------------
Blank 1 (x) 191
--------------------------------------------------------------------------------------
Total 17 9.7 192-200 Factor representing the combined
Distribution principal and interest payment divided by
Factor the Original UPB of the class.
--------------------------------------------------------------------------------------
Blank 1 (x) 201
--------------------------------------------------------------------------------------
Deferred 18 9.7 202-210 Factor representing any increase in
Interest Factor residual class due to credit enhancement
requirements. This is determined by
dividing the increase amount by the
original UPB.
--------------------------------------------------------------------------------------
Blank 1 (x) 211
--------------------------------------------------------------------------------------
Ending 19 9.7 212-220 Ending UPB divided by original UPB.
Principal
Balance Factor
--------------------------------------------------------------------------------------
Blank 1 (x) 221
--------------------------------------------------------------------------------------
Remaining 20 13.2 222-234 If interest should be due, but not
Unpaid Interest received on a given amount, then that
amount should be entered.
--------------------------------------------------------------------------------------
</TABLE>
F-1-2
<PAGE>
EXHIBIT F-2
FORM OF CERTIFICATE:
LOAN LEVEL REPORTING
<TABLE>
<CAPTION>
DETAIL RECORD FIELDS: File Name: T0##MMYY.LNS
---------------------------------------------------------------------------------------
Data: Field Format Definition
T0nnMMYY.LNS Nbr
<S> <C> <C>
---------------------------------------------------------------------------------------
Servicer Loan No. 1 13(X) Unique loan number assigned to the mortgage by
the Seller/Servicer
---------------------------------------------------------------------------------------
Blank 1(x)
---------------------------------------------------------------------------------------
Due Date of Last 2 YYYYMMDD Due Date of last full payment received from the
Paid borrower.
Installment
(DDLPI)
---------------------------------------------------------------------------------------
Blank 1(x)
---------------------------------------------------------------------------------------
Last Payment 3 YYYYMMDD Receipt Date of the last fully paid monthly
Received Date installment of principal, interest, and escrow
(LPRD) (if any) that was received from the borrower.
Note: Dates of partial payments should not
be entered here. {Data is when payment was
actually received from the borrower) If this
information is not available, then populate
the field with the default value of
19000101.
---------------------------------------------------------------------------------------
Blank 1(x)
---------------------------------------------------------------------------------------
Unpaid Principal 4 13.2 Unpaid Principal balance as of the end of the
Balance (UPB) current period
100%
---------------------------------------------------------------------------------------
Blank 1(x)
---------------------------------------------------------------------------------------
Interest Paid 5 13.2 Gross / Coupon Interest payment amount
---------------------------------------------------------------------------------------
Blank 1(x)
---------------------------------------------------------------------------------------
Principal Paid 6 13.2 Total principal paid down on the mortgage
balance.
* For approved payment reversals or
principal applied incorrectly in a prior
cycle the amount of negative principal to
bring the mortgage balance in line with
the correct UPB reported.
---------------------------------------------------------------------------------------
Blank 1(x)
---------------------------------------------------------------------------------------
Draw Amount 7 13.2 Total draws made against the line of credit for
the current month
---------------------------------------------------------------------------------------
Blank 1(x)
---------------------------------------------------------------------------------------
</TABLE>
F-2-1
<PAGE>
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------
Data: Field Format Definition
T0nnMMYY.LNS Nbr
<S> <C> <C>
---------------------------------------------------------------------------------------
Exception Code 8 2(x) This field should contain an
exception code only when exception activity
occurs for that period, otherwise this field
should contain a 0.
DEFAULT VALUE IS 0.
40 Inactivate loan, deemed the loan
non-recoverable
60 Payoff - mortgage matured
61 Payoff - mortgage prepaid
65 Payoff - mortgage repurchased
69 Payoff - mortgage liquidated
70 Transfer to REO (status change exception)
72 Foreclosure (change of status from Active
to Foreclosure)
80 Substituted Loan - Loan is added as a
substitute for another loan
81 Reinstated Loan - Loan was previously
delinquent, but the borrower has
brought it current.
90 Loan Modified - This is an exceptional
activity code which is reserved for
future use. Modifications typically
require repurchase from the trust
prior to modifying the loan.
---------------------------------------------------------------------------------------
Blank 1(x)
---------------------------------------------------------------------------------------
Exception Date 9 YYYYMMDD Date the exception occurred.
If an exception has not occurred, this field
should contain the default value of
19000101.
---------------------------------------------------------------------------------------
Blank 1(x)
---------------------------------------------------------------------------------------
Mortgage Note 10 6.3 Rate associated with the borrower's scheduled
Rate payment
---------------------------------------------------------------------------------------
Blank 1(x)
---------------------------------------------------------------------------------------
Mortgage P&I 11 13.2 Principal and interest portion of the borrowers
Amount minimum installment. Note: 100% of the
principal and interest amount should be
entered in this field, including servicing
and guarantee fees.
---------------------------------------------------------------------------------------
Blank 1(x)
---------------------------------------------------------------------------------------
Realized Losses 12 13.2 Amount of realized losses for that period. This
field will also include any supplemental claims
or proceeds for loans liquidated in a previous
cycle.
---------------------------------------------------------------------------------------
Blank 1(x)
---------------------------------------------------------------------------------------
Cumulative 13 13.2 Total principal payments advanced by the Servicer
Principal and not repaid by the borrower.
Advances NOT APPLICABLE--DO NOT REPORT
---------------------------------------------------------------------------------------
Blank 1(x)
---------------------------------------------------------------------------------------
Interest 14 13.2 Amount of interest payment advanced by the
Advances Servicer for that period.
NOT APPLICABLE--DO NOT REPORT
---------------------------------------------------------------------------------------
Blank 1(x)
---------------------------------------------------------------------------------------
Loan Status 15 1(X) Pertains to activity in the prior reporting cycle.
0 - Active
4 - Foreclosure
5 - REO
6 - Closed (PAYOFFS & REPURCHASES)
9 - Bankruptcy (OVERRIDES Active Status)
Note: 30,60 & 90 day delinquency status will be
derived from the DDLPI field.
---------------------------------------------------------------------------------------
Blank 1(x)
---------------------------------------------------------------------------------------
Subservicer No. 16 6 Subservicer ID# - 6 digits
---------------------------------------------------------------------------------------
Blank 1(x)
---------------------------------------------------------------------------------------
Actual Loan 17 13.2 Actual loan balance outstanding from the borrower.
Balance
---------------------------------------------------------------------------------------
Blank 1(x)
---------------------------------------------------------------------------------------
</TABLE>
F-2-2
<PAGE>
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------
Data: Field Format Definition
T0nnMMYY.LNS Nbr
<S> <C> <C>
---------------------------------------------------------------------------------------
Next Interest 18 YYYYMMDD Applies only to ARM loans and reflects the next
Rate Change Date pending interest rate adjustment date. Default is
19000101. Since loans adjust monthly, only
report the first adjustment date for loans
with teaser period.
---------------------------------------------------------------------------------------
Blank 1(x)
---------------------------------------------------------------------------------------
Next Interest 19 YYYYMMDD Applies only to payment capped ARM loans and
Payment Change reflects the next pending payment adjustment
Date date. Default is 19000101.
---------------------------------------------------------------------------------------
Blank 1(x)
---------------------------------------------------------------------------------------
Index Value at 20 6.3 The index rate used in determining the ARM coupon.
Reset Date Default value is 0 for an ARM loan if the index
is not changing in the current period. Also
populate 0 if the loan is a fixed rate loan.
---------------------------------------------------------------------------------------
Blank 1(x)
---------------------------------------------------------------------------------------
Next Mortgage 21 6.3 Should be populated in advance of the rate
Rate expected at adjustment Default value is 0 for an ARM loan
reset date if the rate is not changing. Default value is 0
if the loan is a fixed rate loan.
---------------------------------------------------------------------------------------
Blank 1(x)
---------------------------------------------------------------------------------------
Collateral Group 22 2 This is a collateral grouping number for whole
No. # loan directed collateral deals. Default value is
0. Report the HELOCs and Fixed Rates separately.
---------------------------------------------------------------------------------------
Blank 1(x)
---------------------------------------------------------------------------------------
Current 23 13.2 The current amount of cashflow applied to the
Arrearage Paid arrearage balance. Applies to loans that have
been or are currently in default. Default value
is 0.
---------------------------------------------------------------------------------------
Blank 1(x)
---------------------------------------------------------------------------------------
Outstanding 24 13.2 The total amount of outstanding interest accrued
Arrearage Balance under forbearance period, after current arrearage
payment. Default value is 0.
---------------------------------------------------------------------------------------
Blank 1(x)
---------------------------------------------------------------------------------------
Loan Number 25 13(X) Loan number assigned to the mortgage by ___.
Used for disclosure.
---------------------------------------------------------------------------------------
Blank 1(x)
---------------------------------------------------------------------------------------
Prepayment 26 13.2 The borrowers penalty payment for prepaying his
Premium Amount mortgage. This amount is allocated in aggregate
as a directed collateral amount to a specific
bond. Default value is 0.
---------------------------------------------------------------------------------------
</TABLE>
The Notes:
o File must be a text file (either space or tab delimited).
o Any dates should be in YYYYMMDD format. They should not contain
slashes (/) or dashes (-).
o Number fields should NOT include commas.
o Any negative number should be denoted by a "-" in front of the number,
do not put the "-" after the number or use parentheses.
F-2-3
