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EX-99.2
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FORM OF SERVICING AGREEMENT
Dated as of _________ , 20___
among
UNION PLANTERS HOME EQUITY CORP.
as Depositor,
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as Master Servicer,
and
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as Trustee
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Home Equity Mortgage Loans
Pledged under an Indenture dated as of _________ , 20___
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TABLE OF CONTENTS
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ARTICLE 1 DEFINITIONS.............................................................................................1
Section 1.1 Definitions..................................................................................1
Section 1.2 Interest Calculations.......................................................................15
Section 1.3 [Determination of Material Adverse Effect...................................................15
ARTICLE 2 ADMINISTRATION AND SERVICING OF MORTGAGE LOANS.........................................................16
Section 2.1 Servicing Generally.........................................................................16
Section 2.2 Collection of Certain Mortgage Loan Payments; Collateral Proceeds
Account..................................................................................17
Section 2.3 Hazard Insurance Policies...................................................................20
Section 2.4 Enforcement of Due-on-Sale Clauses; Assumption and Modification
Agreements...............................................................................22
Section 2.5 Realization upon Defaulted Mortgage Loans, Options to Purchase Mortgage Loans...............23
Section 2.6 Trustee to Cooperate; Release of Mortgage Loan Files........................................24
Section 2.7 Servicing Compensation; Payment of Certain Expenses by the Master
Servicer[; Compensation Interest].......................................................25
Section 2.8 Annual Statement as to Compliance...........................................................26
Section 2.9 Annual Independent Public Accountants' Servicing Report.....................................26
Section 2.10 Access to Certain Documentation and Information Regarding the
Mortgage Loans..........................................................................27
Section 2.11 Maintenance of Fidelity Bond and Errors and Omissions Policy...............................27
Section 2.12 Notices to the Depositor, the Rating Agencies, the Trustee [and the
Bond Insurer]...........................................................................27
Section 2.13 Reports of Foreclosures and Abandonment of Mortgaged Properties............................28
Section 2.14 Sub-Servicers and Sub-Servicing Agreements.................................................28
Section 2.15 [Servicing for Benefit of the Bond Insurer.................................................29
Section 2.16 Annual Lien Opinions; Bond Redemptions.....................................................29
ARTICLE 3 SERVICER REMITTANCE REPORT.............................................................................29
Section 3.1 Servicer Remittance Report..................................................................29
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ARTICLE 4 MONTHLY ADVANCES AND SERVICING ADVANCES................................................................30
Section 4.1 Monthly Advances; Servicing Advances........................................................30
ARTICLE 5 THE MASTER SERVICER....................................................................................31
Section 5.1 Representations and Warranties of the Master Servicer.......................................31
Section 5.2 Liability of the Master Servicer............................................................33
Section 5.3 Merger or Consolidation of, or Assumption of the Obligations of, the Master Servicer........33
Section 5.4 Limitation on Liability of the Master Servicer and Others...................................33
Section 5.5 Master Servicer Not to Resign...............................................................34
ARTICLE 6 DEFAULT................................................................................................34
Section 6.1 Events of Default...........................................................................34
Section 6.2 Trustee to Act; Appointment of Successor....................................................36
Section 6.3 Notifications to Bondholders................................................................37
Section 6.4 Assumption or Termination of Sub-Servicing Agreements by the
Trustee or any Successor Master Servicer.................................................37
Section 6.5 Payment of Trustee's Fees and Expenses......................................................38
ARTICLE 7 TERMINATION............................................................................................39
Section 7.1 Termination.................................................................................39
ARTICLE 8 MISCELLANEOUS PROVISIONS...............................................................................39
Section 8.1 Amendment...................................................................................39
Section 8.2 Governing Law...............................................................................41
Section 8.3 Notices.....................................................................................41
Section 8.4 Severability of Provisions..................................................................41
Section 8.5 Assignment..................................................................................41
Section 8.6 [Third Party Beneficiary; Rating............................................................41
Section 8.7 Counterparts................................................................................42
Section 8.8 Intention of the Parties....................................................................42
Section 8.9 Waivers and Modifications...................................................................42
Section 8.10 Further Agreements.........................................................................42
Section 8.11 Attorney-in-Fact...........................................................................42
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THIS SERVICING AGREEMENT (this "Agreement"), dated as of _________ ,
20___, among UNION PLANTERS HOME EQUITY CORP., as depositor of its
Collateralized Mortgage Bonds, Series _________ (the "Depositor"),
________________, as master servicer (in such capacity, together with permitted
successors hereunder, the "Master Servicer"), and _______________, not in its
individual capacity but as trustee pursuant to that certain indenture (the
"Indenture"), dated as of _________ , 20___ (the "Trustee"), between the
Depositor and the Trustee, recites and provides as follows:
RECITALS
WHEREAS, the Master Servicer is engaged in the business of servicing
mortgage loans;
WHEREAS, the Depositor desires to pledge to the Trustee certain
residential mortgage loans, identified on Schedule I hereto (the "Mortgage
Loans") in connection with the issuance of the Issuer's Collateralized Mortgage
Bonds, Series _________ (the "Bonds");
WHEREAS, the Depositor desires to contract with the Master Servicer for
the servicing responsibilities associated with the Mortgage Loans and the Master
Servicer desires to assume the servicing responsibilities associated with such
Mortgage Loans; and
WHEREAS, the Depositor, the Master Servicer and the Trustee desire to
execute this Agreement to define each party's rights, duties and obligations
relating to the servicing of the Mortgage Loans.
NOW, THEREFORE, in consideration of the above premises and of the
mutual agreements hereinafter set forth, and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
Depositor, the Master Servicer and the Trustee hereby agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.1 DEFINITIONS.
Whenever used in this Agreement, the following words and phrases,
unless the context otherwise requires, shall have the meanings specified in this
Section 1.1.
"AFFILIATE": With respect to any specified Person, any other Person
controlling or controlled by or under common control with such specified Person.
For the purposes of this definition, "control" when used with respect to any
specified Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise, and the terms "controlling" and
"controlled" have meanings corresponding to the foregoing.
(1)
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"AGGREGATE COLLATERAL VALUE": As defined in the Indenture.
"AGREEMENT": This Servicing Agreement, dated as of _______ , 20___,
among the Depositor, the Master Servicer and the Trustee, and all amendments
hereof and supplements hereto.
"ANCILLARY SERVICING COMPENSATION": Prepayment fees, assumption fees,
fees for insufficient funds, and other items listed on Exhibit C hereto
collected by the Master Servicer from Mortgagors.
"APPRAISAL": A written appraisal of a Mortgaged Property made by an
appraiser holding all state certifications or licenses provided by the state in
which the Mortgaged Property is located, which appraisal must be written, in
form and substance, to FDIC, Fannie Mae and Freddie Mac standards, and must meet
the appraisal standards of the Uniform Standards of Professional Appraisal
Practice.
"APPRAISED VALUE": With respect to any Mortgaged Property, the lesser
of (a) the value thereof as determined by an Appraisal and (b) the purchase
price paid for the related Mortgaged Property by the Mortgagor with the proceeds
of the related Mortgage Loan; provided, however, that in the case of a
Refinanced Mortgage Loan, the Appraised Value of the Mortgaged Property shall be
equal to the value thereof as determined by an Appraisal.
"BASE NET WORTH": For any fiscal quarter at the end of which the Master
Servicer's Net Worth is less than $____________. For any fiscal quarter after
the first fiscal quarter at the end of which the Master Servicer's Net Worth
equals or exceeds $_____________.
"BOND ACCOUNT": The segregated trust account established and maintained
by the Trustee pursuant to Section ____ of the Indenture.
"BOND BALANCE": The aggregate outstanding principal balance of all
Classes of Bonds on any date of determination.
"BONDHOLDER" or "HOLDER": The Person in whose name a Bond is registered
in the Bond Register, except that, solely for the purpose of taking any action
under Article Six or giving any consent pursuant to this Agreement, any Bond
registered in the name of the Depositor or the Master Servicer or any Person
actually known to a Responsible Officer of the Trustee to be an Affiliate of the
Depositor or the Master Servicer shall be deemed not to be outstanding and the
Voting Interest evidenced thereby shall not be taken into account in determining
whether Holders of the requisite Voting Interests necessary to take any such
action or effect any such consent have acted or consented unless the Depositor,
the Master Servicer or any such Person is an owner of record of all of the
Bonds.
["BOND INSURANCE POLICY": The ___________________ Policy (No. ______),
dated _________ ___, 20___, including any endorsements thereto, issued by the
Bond Insurer for the benefit of the Bondholders, pursuant to which the Bond
Insurer guarantees payment of Insured Payments.]
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["BOND INSURER": ________________, a stock insurance company organized
and created under the laws of the State of New York, and any successors
thereto.]
["BOND INSURER DEFAULT": The existence and continuance of any of the
following:
(a) an _____ Payment Default;
(b) entry by a court having jurisdiction in the premises of (1) a
final and nonappealable decree or order for relief in respect of the Bond
Insurer in an involuntary case or proceeding under any applicable United States
federal or state bankruptcy, insolvency, rehabilitation, reorganization or other
similar law or (2) a final and nonappealable decree or order adjudging the Bond
Insurer bankrupt or insolvent, or approving as properly filed a petition seeking
reorganization, rehabilitation, arrangement, adjustment or composition of or in
respect of the Bond Insurer under any applicable United States federal or state
law, or appointing a custodian, receiver, liquidator, rehabilitator, assignee,
trustee, sequestrator or other similar official of the Bond Insurer or of any
substantial part of its property, or ordering the winding-up or liquidation of
its affairs, and the continuance of any such decree or order for relief or any
such other decree or order unstayed and in effect for a period of [__]
consecutive days; or
(c) the commencement by the Bond Insurer of a voluntary case or
proceeding under any applicable United States federal or state bankruptcy,
insolvency, reorganization or other similar law or of any other case or
proceeding to be adjudicated bankrupt or insolvent, or the consent of the Bond
Insurer to the entry of a decree or order for relief in respect of the Bond
Insurer in an involuntary case or proceeding under any applicable United States
federal or state bankruptcy, insolvency case or proceeding against Bond Insurer,
or the filing by the Bond Insurer of a petition or answer or consent seeking
reorganization or relief under any applicable United States federal or state
law, or the consent by the Bond Insurer to the filing of such petition or to the
appointment of or the taking possession by a custodian, receiver, liquidator,
assignee, trustee, sequestrator or similar official of the Bond Insurer or of
any substantial part of its property, or the failure by the Bond Insurer to pay
debts generally as they become due, or the admission by the Bond Insurer in
writing of its inability to pay its debts generally as they become due, or the
taking of corporate action by the Bond Insurer in furtherance of any such
action.
Notwithstanding anything to the contrary contained herein, upon the
existence and continuance of a Bond Insurer Default, the consent by the Bond
Insurer shall not be required for any action or inaction hereunder and the Bond
Insurer shall not have any rights with respect thereto except that the Bond
Insurer shall be entitled to an Opinion of Counsel to the effect that such
amendment does not materially and adversely impair the Bond Insurer's interests
if an amendment is requested while a Bond Insurer Default is continuing.]
["BOND INSURER PARTIES": The Bond Insurer or its respective agents,
representatives, directors, officers or employees.]
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"BOND REGISTER": As defined in the Indenture.
"BONDS": The Depositor's Collateralized Mortgage Bonds, Series ______,
issued pursuant to the Indenture.
"BUSINESS DAY": Any day other than (a) a Saturday or a Sunday or (b) a
day on which banking institutions in the [State of Tennessee, the State of New
York or the State of Delaware] [or the state in which the principal office of
the Bond Insurer is located] are required or authorized by law, executive order
or governmental decree to be closed.
"CLOSING DATE": On or about __________ ___, 20___.
"CODE": The Internal Revenue Code of 1986, as amended, and as may be
further amended from time to time, any successor statutes thereto, and
applicable U.S. Department of Treasury regulations issued pursuant thereto in
temporary or final form and proposed regulations thereunder to the extent that,
by reason of their proposed effective date, such proposed regulations would
apply.
"COLLATERAL PROCEEDS ACCOUNT": As defined in the Indenture.
"COLLECTION PERIOD": As to any Deposit Date, the period beginning on
the first day of the calendar month immediately preceding the month in which
such Deposit Date occurs and ending on the last day of such calendar month.
["COMPENSATING INTEREST": With respect to any Mortgage Loan as to which
a prepayment in whole or in part was received by the Servicer from the related
Mortgagor during a Collection Period, an amount equal to the lesser of (a) the
Monthly Servicing Fee for such Collection Period and (b) the difference between
(1) [__ days] interest at the related Note Rate on the Principal Balance of such
Mortgage Loan (immediately prior to such prepayment) and (2) the amount of
interest actually collected by the Servicer on such Mortgage Loan during the
related Due Period.]
"CUMULATIVE LOSS PERCENTAGE": As of any Payment Date, the percentage
equivalent of the fraction obtained by dividing (1) the principal amount of
cumulative Realized Losses on the Mortgage Loans from the applicable Cut-off
Dates through the end of the related Collection Period by (2) the Initial Pool
Balance.
"CUMULATIVE LOSS RATE TRIGGER": The "Cumulative Loss Rate Trigger"
occurs on a Deposit Date if the Cumulative Loss Percentage exceeds the
percentage specified in the table below for the period in which such Deposit
Date occurs.
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Deposit Dates Cumulative
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from and including to and including Loss Percentage
------------------ ---------------- ---------------
[Date] [Date] %
[Date] [Date] %
[Date] [Date] %
[Date] [Date] %
[Date] thereafter %
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"CUT-OFF DATE": As to any Mortgage Loan, the later of _________ ___,
20___ or the date of origination of such Mortgage Loan.
"DELINQUENCY PERCENTAGE": For any Payment Date, the percentage
equivalent of the fraction obtained by dividing (1) the aggregate of the
Principal Balances of all Mortgage Loans that were [__ days] contractually
delinquent, REO Property, in foreclosure, or for which the related Mortgagor was
in a bankruptcy proceeding or paying a reduced Monthly Payment as a result of a
bankruptcy workout, as of the end of the related Collection Period, by (2) the
aggregate of the Principal Balance of all of the Mortgage Loans as of the
related Determination Date.
"DELINQUENCY RATE TRIGGER": The Rolling Delinquency Percentage
equalling or exceeding ____% as of any Payment Date.
"DEPOSIT DATE": As to any Payment Date, the ___ day of the month in
which such Payment Date occurs or, if such ___ day is not a Business Day, the
next succeeding Business Day.
"DEPOSITOR": Union Planters Home Equity Corp., as issuer of the Bonds
pursuant to the Indenture.
"DETERMINATION DATE": As to any Deposit Date, the close of business on
the last day of the calendar month preceding the calendar month in which such
Deposit Date occurs.
"DUE PERIOD": As defined in the Indenture.
"ELIGIBLE ACCOUNT": Either (A) a segregated account or accounts
maintained with an institution the deposits of which are insured by the Bank
Insurance Fund or the Savings Association Insurance Fund of the FDIC, the
unsecured and uncollateralized debt obligations of which shall be rated
[_______________________________] and in the highest short-term rating category
by [_______________________], and that is either (1) a federal savings and loan
association duly organized, validly existing and in good standing under the
federal banking laws, (2) an institution duly organized, validly existing and in
good standing under the applicable banking laws of any
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state, (3) a national banking association duly organized, validly existing and
in good standing under the federal banking laws, (4) a principal subsidiary of a
bank holding company [or (5) approved in writing by the ____________] or (B) a
trust account maintained with the trust department of a federal or state
chartered depository institution or trust company, having capital and surplus of
not less than [$_________], acting in its fiduciary capacity, the unsecured and
uncollateralized debt obligations of which shall be rated [_______________]. Any
Eligible Accounts maintained with the Trustee shall conform to the preceding
clause (B).
"ELIGIBLE INVESTMENTS": As defined in the Indenture.
"EVENT OF DEFAULT": As defined in Section 6.1.
"FDIC": The Federal Deposit Insurance Corporation and its successors in
interest.
"FEMA": The Federal Emergency Management Agency and its successors in
interest.
"FANNIE MAE": Fannie Mae and its successors in interest.
"FREDDIE MAC": Freddie Mae (formerly The Federal Home Loan Mortgage
Corporation) and its successors in interest.
["GROSS MARGIN": With respect to any Mortgage Loan, the fixed
percentage amount set forth in the related Mortgage Note, which amount is added
to the Index in accordance with the terms of the related Mortgage Note to
determine the Note Rate.] ["HOME EQUITY LOAN":]
"INDENTURE": The indenture, dated as of ________ , 20___, between the
Depositor and the Trustee pursuant to which the Mortgage Loans and certain other
assets included in the Trust Estate are pledged as collateral for the Bonds, and
any supplements or amendments thereto.
["INDEX": With respect to any Mortgage Loan, the applicable index for
computing the Note Rate as specified in the Mortgage Note. The Index for each
Mortgage Loan shall be _____________.]
"INFORMATION": As defined in Section 3.2.
"INITIAL POOL BALANCE": The aggregate of the Principal Balances of the
Mortgage Loans determined as of their respective Cut-off Dates (after
application of all payments of principal received in respect of any such
Mortgage Loan before such Cut-off Dates), which aggregate amount is
$_____________.
["INSURANCE PROCEEDS": With respect to any Deposit Date, proceeds paid
by any insurer (other than the Bond Insurer) and received by the Master Servicer
during the related Collection Period pursuant to any insurance policy covering a
Mortgage Loan or the related Mortgaged
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Property, including any deductible payable by the Master Servicer with respect
to a blanket insurance policy pursuant to Section 2.3 and the proceeds from any
fidelity bond or errors and omission policy pursuant to Section 2.11, net of any
component thereof covering any expenses incurred by or on behalf of the Master
Servicer and specifically reimbursable under this Agreement.]
["INSURED PAYMENT": As defined in the Indenture.]
["[INSURER] PAYMENT DEFAULT": As defined in the Indenture.]
["JUNIOR LIEN:]
"LIQUIDATED MORTGAGE LOAN": As to any Deposit Date, any Mortgage Loan
(1) as to which the Master Servicer has determined, in accordance with the
servicing procedures specified herein, that all Liquidation Proceeds that it
expects to recover from or on account of such Mortgage Loan have been recovered,
(2) that has been purchased by the Master Servicer pursuant to Section 2.5 on or
prior to such Deposit Date or (3) that has been repurchased by the Seller
pursuant to the Sales Agreement on or prior to such Deposit Date.
"LIQUIDATION EXPENSES": Expenses that are incurred by the Master
Servicer in connection with the liquidation of any Mortgage Loan and not
recovered under any insurance policy or from any Mortgagor. Such expenses with
respect to any Liquidated Mortgage Loan shall include, without limitation, legal
fees and expenses, real estate brokerage commissions, any unreimbursed amount
expended by the Master Servicer pursuant to Section 2.5 respecting the related
Mortgage Loan, and any other related and previously unreimbursed Servicing
Advances.
"LIQUIDATION PROCEEDS": Cash (other than Insurance Proceeds) received
in connection with the liquidation of any Mortgaged Property, whether through
trustee's sale, foreclosure sale, condemnation, taking by eminent domain or
otherwise received in respect of any Mortgage Loan foreclosed upon as described
in Section 2.5 (including, without limitation, proceeds from the rental of the
related Mortgaged Property).
"LIQUIDATION REPORT": A liquidation report in the form of Exhibit E
attached hereto.
"LOAN-TO-VALUE RATIO": With respect to any Mortgage Loan as of its date
of origination, the ratio as of its date of origination borne by the outstanding
principal amount of the Mortgage Loan to the Appraised Value of the related
Mortgaged Property.
"MASTER SERVICER": ________________ or any successor master servicer
appointed as provided pursuant to this Agreement.
"MAXIMUM RATE": With respect to any Mortgage Loan, any absolute maximum
Note Rate set by provisions in the related Mortgage Note.
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["MINIMUM RATE": With respect to any Mortgage Loan, any absolute
minimum Note Rate, set by provisions in the related Mortgage Note, subject to
the initial Note Rate first adjusting to a level in excess of such minimum Note
Rate in accordance with the terms of the Mortgage Note.]
"MONTHLY ADVANCE": As defined in Section 4.1(a).
"MONTHLY PAYMENT": With respect to any Mortgage Note, the amount of
each monthly payment payable by the Mortgagor under such Mortgage Note in
accordance with its terms, including one month's accrued interest on the related
Principal Balance at the then applicable Note Rate, but net of any portion of
such monthly payment that represents late payment charges, prepayment or
extension fees or collections allocable to payments to be made by Mortgagors for
payment of insurance premiums or similar items.
"MONTHLY SERVICING FEE": With respect to any Payment Date, [____ of the
product of the Servicing Fee Rate and the Aggregate Collateral Value of the
Mortgage Loans as of the _____ day of the related Due Period (or, in the case of
the first Collection Period, the Initial Pool Balance).]
["MOODY'S": Moody's Investors Service, Inc. and its successors in
interest.]
"MORTGAGE": The mortgage, deed of trust or other instrument creating a
first lien on an estate in fee simple in real property securing a Mortgage Loan.
"MORTGAGE LOAN": Each of the mortgage loans pledged to the Trustee
pursuant to the Indenture that from time to time comprise part of the Trust
Estate, all of which originally so held being identified in the Mortgage Loan
Schedule attached hereto as Schedule I.
"MORTGAGE LOAN DOCUMENTS": As defined in the Sales Agreement and the
Indenture.
"MORTGAGE LOAN FILE": Either the Servicer Mortgage Loan File or the
Trustee Mortgage Loan File, as applicable.
"MORTGAGE LOAN SCHEDULE": As of any date, the schedule of Mortgage
Loans then subject to this Agreement. [The initial schedule of Mortgage Loans as
of the Cut-off Dates therefor is attached hereto as Schedule I.] The Mortgage
Loan Schedule shall be amended from time to time by the Master Servicer to
reflect the addition of Mortgage Loans to, and the removal of Mortgage Loans
from, the Trust Estate pursuant to the Indenture. [The Mortgage Loan Schedule
shall identify each Mortgage Loan by the Master Servicer's loan number and
address (including the state) of the related Mortgaged Property and shall set
forth as to each Mortgage Loan the initial Loan-to-Value Ratio, the Cut-off
Date, [the Index, the Gross Margin,] the current Monthly Payment amount and the
stated maturity date of the related Mortgage Note. The Mortgage Loan Schedule
shall be delivered to the Trustee in both physical and computer-readable form.
"MORTGAGE NOTE": The note or other instrument evidencing the
indebtedness of a Mortgagor under the related Mortgage Loan.
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"MORTGAGED PROPERTY": The underlying property securing a Mortgage Loan.
"MORTGAGOR": The obligor under a Mortgage Note.
"NET LIQUIDATION PROCEEDS": As to any Mortgage Loan, Liquidation
Proceeds net of Liquidation Expenses. For all purposes of this Agreement, Net
Liquidation Proceeds shall be allocated first to accrued and unpaid interest on
the related Mortgage Loan through the end of the Collection Period in which the
related liquidation occurred, and then to the Principal Balance thereof.
"NET WORTH": For any fiscal quarter, the sum of the Master Servicer's
assets reflected on a balance sheet for such fiscal quarter prepared in
accordance with GAAP consistently applied minus the sum of the Master Servicer's
liabilities required to be shown as such on a balance sheet for such fiscal
quarter prepared in accordance with GAAP consistently applied.
"NONRECOVERABLE ADVANCE": Any Servicing Advance or Monthly Advance
that, in the Master Servicer's reasonable judgment, would not be ultimately
recoverable by the Master Servicer from late collections, Insurance Proceeds or
Liquidation Proceeds on the related Mortgage Loan or otherwise, as evidenced by
an Officer's Certificate delivered to the [Bond Insurer and the] Trustee no
later than the Business Day following the Master Servicer's determination
thereof.
"NOTE RATE": As defined in the Indenture.
"OFFICER'S CERTIFICATE": A certificate signed by the Chairman of the
Board, the Vice Chairman of the Board, the President, Chief Operating Officer or
a Vice President of the Master Servicer or the Depositor, as the case may be,
and delivered to the Trustee, [Bond Insurer] or each Rating Agency, as the case
may be.
"OPINION OF COUNSEL": A written opinion of counsel in form and
substance reasonably acceptable to the Trustee and[, in the case of opinions
delivered to Bond Insurer,] in form and substance reasonably acceptable to it.
Any expense related to obtaining an Opinion of Counsel for an action requested
by a party shall be borne by the party required to obtain such opinion or
seeking to effect the action that requires the delivery of such Opinion of
Counsel.
"ORIGINAL PRINCIPAL AMOUNT": With respect to any Mortgage Loan, the
original principal amount due under the related Mortgage Note as of its date of
origination.
"PAYMENT AHEAD": Any payment remitted by a Mortgagor with respect to a
Mortgage Note during a Due Period in excess of the Monthly Payment due during
such Due Period with respect to such Mortgage Note, which excess sums the
related Mortgagor has instructed the Master Servicer to apply to Monthly
Payments due in one or more subsequent Due Periods. A Monthly Payment that was a
Payment Ahead shall, for purposes of computing certain amounts under this
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Agreement, be deemed to have been received by the Master Servicer on the date in
the related Due Period on which such Monthly Payment would have been due if such
Monthly Payment had not been paid as part of a Payment Ahead.
"PAYMENT DATE": The date of payment on the Bonds pursuant to the
Indenture, which date is the [___] day of each month or, if such day is not a
Business Day, the Business Day immediately following such [___] day, beginning
________ ___, 20___.
"PERCENTAGE INTEREST": With respect to a Bond, the undivided percentage
interest (carried to eight places rounded down) obtained by dividing the
original principal balance of such by Bond by the original principal balance of
all Bonds in the related Series and multiplying the result by 100.
"PERSON": Any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, limited liability company,
unincorporated organization or government or any agency or political subdivision
thereof.
"PRINCIPAL BALANCE": As to any Mortgage Loan and any Determination
Date, the actual outstanding principal amount thereof as of the close of
business on the Determination Date in the preceding month (or, in the case of
the first Determination Date, as of the applicable Cut-off Date) less (1) all
scheduled payments of principal received or advanced in respect of such Mortgage
Loan and due during the related Due Period, (2) all other amounts collected,
received or otherwise recovered in respect of principal on the Mortgage Loans
(including Principal Prepayments, but not including Payments Ahead that are not
allocable to principal for the related Due Period) during or in respect of the
related Collection Period, (3) Net Liquidation Proceeds and Trust Insurance
Proceeds allocable to principal recovered or collected in respect of such
Mortgage Loan during the related Collection Period, (4) the portion of the
Purchase Price allocable to principal to be remitted to the Trustee on or prior
to the next succeeding Deposit Date in connection with a release and removal of
such Mortgage Loan pursuant to the Indenture, to the extent such amount is
actually remitted on or prior to such Deposit Date, and (5) the amount to be
remitted by the Seller to the Trustee on the next succeeding Deposit Date in
connection with a substitution of a Qualified Replacement Mortgage Loan for such
Mortgage Loan pursuant to the Indenture, to the extent such amount is actually
remitted on or prior to such Deposit Date; provided, however, that a Mortgage
Loan that has become a Liquidated Mortgage Loan since the preceding
Determination Date (or, in the case of the first Determination Date, since the
applicable Cut-off Date) will be deemed to have a Principal Balance of zero on
the current Determination Date.
"PRINCIPAL PREPAYMENT": As to any Mortgage Loan and Collection Period,
any payment by a Mortgagor or other recovery in respect of principal on a
Mortgage Loan (including Net Liquidation Proceeds) that, in the case of a
payment by a Mortgagor, is received in advance of its scheduled due date and is
not a Payment Ahead.
"PURCHASE PRICE": As defined in the Indenture.
"RATING AGENCIES": [_____________________________] (each, a "Rating
Agency"). If
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either such agency or a successor is no longer in existence, "Rating Agency"
shall be such nationally recognized statistical credit rating agency, or other
comparable Person, designated by the Master Servicer, notice of which
designation shall be given to the Trustee.
"REALIZED LOSS": With respect to any Liquidated Mortgage Loan, the
amount, if any, by which the Principal Balance of such Mortgage Loan and accrued
and unpaid interest thereon (determined as of the Determination Date immediately
prior to such Mortgage Loan becoming a Liquidated Mortgage Loan) exceeds the Net
Liquidation Proceeds, if any, in respect of such Mortgage Loan, which amount
shall in no event exceed the Principal Balance of such Mortgage Loan (determined
as of the Determination Date immediately prior to such Mortgage Loan becoming a
Liquidated Mortgage Loan).
"REFINANCED MORTGAGE LOAN": A Mortgage Loan the proceeds of which were
not used to purchase the related Mortgaged Property.
"REMITTABLE FUNDS": With respect to any Deposit Date, the amount equal
to the aggregate of the following amounts:
(a) all payments in respect of or allocable to interest received
(or deemed to have been received in the case of Payments Ahead) with respect to
the Mortgage Loans and due during the related Due Period and all other interest
payments on or in respect of the Mortgage Loans received by or on behalf of the
Master Servicer during the related Collection Period, net of amounts
representing interest accrued on such Mortgage Loans in respect of any period
prior to the applicable Cut-off Dates, plus [any Compensating Interest payments
made by the Master Servicer and] any net income from related REO Properties
collected during the related Collection Period;
(b) all scheduled payments of principal received (or deemed to
have been received, in the case of Payments Ahead) with respect to the Mortgage
Loans and due during the related Due Period, and all other principal payments
(including Principal Prepayments) received or deemed to have been received
during the related Collection Period;
(c) all Trust Insurance Proceeds and Net Liquidation Proceeds
received during the related Collection Period; and
(d) the amount of Monthly Advances made by the Master Servicer in
respect of such Deposit Date pursuant to Section 4.1(a);
but net of the following amounts:
(1) the Monthly Servicing Fee and any other compensation
payable to the Master Servicer pursuant to Section 2.7 for the related
Collection Period [(except to the extent used to pay Compensating
Interest)] to the extent not previously paid to or retained by the
Master Servicer;
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(2) the aggregate amount of Monthly Advances, if not
theretofore recovered from the Mortgagor on whose behalf such Monthly
Advance was made, from subsequent collections on the related Mortgage
Loan (other than those included in the related Liquidation Expenses or
netted out by the Master Servicer from related Insurance Proceeds);
(3) the aggregate amount of Servicing Advances, if not
theretofore recovered from the Mortgagor on whose behalf such Servicing
Advance was made, from subsequent collections on the related Mortgage
Loan (other than those included in the related Liquidation Expenses or
netted out by the Master Servicer from related Insurance Proceeds);
(4) the aggregate amount of Nonrecoverable Advances not
previously reimbursed to the Master Servicer;
(5) any amount deposited into the Collateral Proceeds
Account that may not be withdrawn therefrom pursuant to a final and
nonappealable order of a United States bankruptcy court of competent
jurisdiction imposing a stay pursuant to Section 362 of the United
States Bankruptcy Code and that would otherwise have been included in
Remittable Funds on such Deposit Date; and
(6) excess Net Liquidation Proceeds as described in the
second paragraph of Section 2.5.
"REO PROPERTY": As defined in Section 4.1(a).
"RESPONSIBLE OFFICER": When used with respect to the Trustee, the
Chairman or Vice Chairman of the Board of Directors or Trustees, the Chairman or
Vice Chairman of the Executive or Standing Committee of the Board of Directors
or Trustees, the President, the Chairman of the Committee on Trust Matters, any
Vice President, the Secretary, any Assistant Secretary, the Treasurer, any
Assistant Treasurer, the Cashier, any Assistant Cashier, any Trust Officer or
Assistant Trust Officer, the Controller and any Assistant Controller or any
other officer of the Trustee customarily performing functions similar to those
performed by any of the above designated officers and to whom, with respect to a
particular matter, such matter is referred because of such officer's knowledge
of and familiarity with the particular subject.
"ROLLING DELINQUENCY PERCENTAGE": As of any Payment Date, the average
of the Delinquency Percentages as of the last day of each of the six (or one,
two, three, four and five in the case of the first five Deposit Dates, as
applicable) most recently ended Collection Periods.
"ROLLING LOSS PERCENTAGE": As of any Payment Date, the percentage
equivalent of a fraction, the numerator of which is the aggregate amount of
Realized Losses incurred during the preceding [__] Collection Periods, and the
denominator of which is the Aggregate Collateral Values of the Mortgage Loans as
of the first day of the [__ th] preceding Collection Period.
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"ROLLING LOSS RATE TRIGGER": The Rolling Loss Percentage equalling or
exceeding ____% as of any Deposit Date on or after the Deposit Date occurring in
____________.
"SALES AGREEMENT": That certain agreement, dated as of _________ ,
20___, between ____________________, as seller, and the Depositor, as purchaser,
pursuant to which the Depositor acquired the Mortgage Loans.
"SELLER": _______________________, as seller of the Mortgage Loans
pursuant to the Sales Agreement.
"SERVICER MORTGAGE LOAN FILE": As to each Mortgage Loan, a file
maintained by the Master Servicer that contains (1) an original hazard insurance
policy (and flood insurance policy, if required pursuant to Section 2.3 hereof)
relating to the underlying Mortgaged Property or a certificate of insurance
issued by the insurer or its agent indicating that a hazard insurance policy
(and flood insurance policy, if required pursuant to Section 2.3 hereof) is in
effect with respect to such Mortgaged Property, (2) the originals of all RESPA
and Regulation Z disclosure statements executed by the related Mortgagors, (3)
the appraisal report made in connection with the origination of the Mortgage
Loan (4) the settlement statement for the purchase and/or refinancing of the
underlying Mortgaged Property by the related Mortgagor under the related
Mortgage Note and Mortgage, (5) the originals of any tax service contracts, (6)
documentation relating to any approvals by the Master Servicer of any
modifications of the original related Mortgage Loan Documents and any releases
of collateral supporting the related Mortgage Loan, together with copies of the
documentation effecting any such modifications or releases, (7) collection
notices or form notices sent to the related Mortgagor, (8) foreclosure
correspondence and legal notifications, if applicable, (9) water and irrigation
company stock certificates, if applicable, and (10) all other documents relating
to such Mortgage Loan which would customarily be maintained in a mortgage loan
file by the Master Servicer in order to service the mortgage loan properly, as
well as any other documents relating to such Mortgage Loan (other than Mortgage
Loan documents) that come into the Master Servicer's possession.
"SERVICER REMITTANCE REPORT": The monthly report prepared by the Master
Servicer and delivered to the parties specified in Section 3.1.
"SERVICING ADVANCES": All reasonable and customary "out-of-pocket"
costs and expenses incurred in the performance by the Master Servicer of its
servicing obligations, including, but not limited to, the cost of (1) the
preservation, restoration and protection of the Mortgaged Properties, including
without limitation advances in respect of real estate taxes and assessments and
insurance premiums on fire, hazard and, if applicable, flood insurance policies,
to the extent not paid by the related Mortgagors, (2) any enforcement or
judicial proceedings with respect to the Mortgage Loans or Mortgaged Properties,
including foreclosures, (3) the management and liquidation of any REO Property
and (4) compliance with the Master Servicer's obligations under Section 2.3
(other than its obligation to deposit in the Collateral Proceeds Account amounts
representing the deductible in respect of any blanket hazard insurance policy).
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"SERVICING FEE RATE": _____%.
"SERVICING OFFICER": Any officer of the Master Servicer involved in, or
responsible for, the administration and servicing of the Mortgage Loans whose
name and specimen signature appear on a list of servicing officers annexed to an
Officer's Certificate furnished to the Trustee by the Master Servicer, as such
list may from time to time be amended.
["STANDARD & POOR'S" OR "S&P": Standard & Poor's Ratings Services, a
Division of The McGraw-Hill Companies, Inc., and its successors in interest.]
"SUB-SERVICER": Any Person, including an Affiliate of the Master
Servicer, with whom the Master Servicer has entered into a Sub-Servicing
Agreement and who satisfies the requirements set forth in Section 2.14 hereof in
respect of the qualification of a Sub-Servicer.
"SUB-SERVICING ACCOUNT": Any segregated trust account, which shall at
all times be an Eligible Account, established and maintained as though it were a
Collateral Proceeds Account pursuant to Section 2.2(b) and entitled
"[Sub-Servicer], in trust for the benefit of Holders of UPMFC Trust
Collateralized Mortgage Bonds, Series ________[, and _____ as Bond Insurer]
Collateral Proceeds Account". References herein to the Collateral Proceeds
Account shall include any Sub-Servicing Account as the context requires.
"SUB-SERVICING AGREEMENT": A written contract between the Master
Servicer and any Sub-Servicer relating to the servicing and/or administration of
certain Mortgage Loans.
"TARGET NET WORTH": As of the end of any fiscal quarter, the lesser of
(1) [$__________] or (ii) the applicable Base Net Worth plus [___] of all
cumulative after tax net income earned by the Master Servicer from the later of
______ ___, 20___ or the date such Base Net Worth was established, through the
end of such quarter.
"TRUST ESTATE": As defined in the Indenture.
"TRUST INSURANCE PROCEEDS": Insurance Proceeds that (1) are applied by
the Master Servicer to reduce the Principal Balance of the related Mortgage Loan
and (2) not applied to the restoration or repair of the related Mortgaged
Property or released to the related Mortgagor in accordance with the Master
Servicer's normal servicing procedures, applicable law or the terms of the
related Mortgage Loan.
"TRUSTEE": ______________________________, [a national banking
association,] and its successors in interest or any successor trustee appointed
as provided pursuant to the Indenture.
"TRUSTEE FEE": The monthly fee of the Trustee, which shall be
determined as set forth in the Indenture.
"TRUSTEE MORTGAGE LOAN FILE": As to each Mortgage Loan, a file
containing all of the related Mortgage Loan Documents.
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"UNDERWRITERS": ______________ and _________________.
"UNDERWRITING AGREEMENT": The underwriting agreement, dated as of
_________ ___, 20___, between the Depositor and the Underwriters.
"VICE PRESIDENT": Any vice president, whether or not designated by a
number or a word or words added before or after the title "vice president".
"VOTING INTEREST": With respect to any provisions hereof providing for
the action, consent or approval of the Holders of all Bonds evidencing specified
Voting Interests in the Trust Estate, the Bondholders will collectively be
entitled to [____] of the aggregate Voting Interests represented by all Bonds.
Voting Interests allocated to the Bonds shall be allocated in proportion to the
Bond Balance. With respect to any provision hereof providing for action, consent
or approval of the Bonds, each Holder of the Bonds will have a Voting Interest
in the Bonds equal to such Holder's Percentage Interest in the Bonds.
SECTION 1.2 INTEREST CALCULATIONS.
All calculations of interest at the Mortgage Loan Rate that are made in
respect of the Principal Balance of a Mortgage Loan, shall be made on a daily
basis using a 360-day year of twelve 30-day months.
SECTION 1.3 [DETERMINATION OF MATERIAL ADVERSE EFFECT.
Whenever a determination is to be made under this Agreement as to whether a
given action, course of conduct, event or set of facts or circumstances could or
would have a material adverse effect on the Trust Estate[, the Bond Insurer] or
any Bondholder (or any similar or analogous determination), such determination
shall be made without giving effect to the insurance provided by the Bond
Insurance Policy.]
ARTICLE 2
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
SECTION 2.1 SERVICING GENERALLY.
(a) General Duties; Licensing. Acting directly or through one or
more Sub-Servicers as provided in Section 2.14, the Master Servicer, as
servicer, shall administer the Mortgage Loans with reasonable care, using that
degree of skill and attention that the Master Servicer exercises with respect to
all comparable mortgage loans that it services for itself or others. The Master
Servicer shall follow its customary standards, policies and procedures in
performing its duties as Master Servicer, to the extent not in conflict with the
provisions of this Agreement. Notwithstanding the appointment of any
Sub-Servicer, the Master Servicer shall remain liable for the performance of all
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of the servicing obligations and responsibilities under this Agreement. The
Master Servicer shall maintain all licenses and qualifications necessary under
the laws of any jurisdiction where Mortgaged Properties are located for it to
perform the servicing obligations hereunder legally. The Master Servicer shall
cause any Sub-Servicer to maintain for it all licenses and qualifications
necessary to perform its servicing obligations in the states where the Mortgaged
Properties to which the applicable Sub-Servicing Agreement relates are located.
The Master Servicer shall cooperate with the Depositor and the Trustee and
furnish to the Depositor and the Trustee such information in its possession as
may be necessary or otherwise reasonably requested to enable the Depositor and
the Trustee to perform their respective tax reporting duties under the
Indenture. The Depositor and the Trustee shall furnish the Master Servicer with
any powers of attorney and other documents necessary or appropriate to enable
the Master Servicer to carry out its servicing and administrative duties
hereunder.
(b) Interest Rate and Monthly Payment Adjustments. The Master
Servicer shall enforce each Mortgage Loan and shall timely calculate, record,
report and apply all Note Rate adjustments in accordance with the related
Mortgage Note. The Master Servicer's records shall, at all times, reflect the
then-current Note Rate and Monthly Payment and the Master Servicer shall timely
notify the Mortgagor of any changes to the Note Rate and the Monthly Payment.
(c) Servicer Authority. Without limiting the generality of the
foregoing, the Master Servicer (1) shall continue, and is hereby authorized and
empowered by the Depositor and the Trustee, to execute and deliver, on behalf of
itself, the Depositor, the Bondholders, [the Bond Insurer] and the Trustee or
any of them, 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 related Mortgaged
Properties and (2) subject to Section 2.5, to institute foreclosure proceedings
or obtain deeds in lieu of foreclosure so as to convert ownership of Mortgaged
Properties into the name of the Trustee pursuant to Section 2.5 of this
Agreement. The Master Servicer may sue to enforce or collect on any of the
Mortgage Loans or any insurance policy covering a Mortgage Loan, in its own name
if possible, or on behalf of the Depositor or the Trustee. If the Master
Servicer commences a legal proceeding to enforce a Mortgage Loan or any such
insurance policy, the Depositor and the Trustee shall thereupon be deemed to
have automatically assigned the Mortgage Loan or the rights under such insurance
policy to the Master Servicer for purposes of collection only. If, however, in
any suit or legal proceeding for enforcement, it is held that the Master
Servicer may not enforce or collect on a Mortgage Loan or any insurance policy
covering a Mortgage Loan on the ground that it is not a real party in interest
or a holder entitled to enforce such Mortgage Loan or such insurance policy, as
the case may be, then the Depositor and the Trustee shall, upon the written
request of a Servicing Officer, execute and return to the Master Servicer such
powers of attorney and other documents as are necessary or appropriate to enable
the Master Servicer to enforce such Mortgage Loan or insurance policy, as the
case may be, and which are prepared by the Master Servicer and submitted to the
Depositor or the Trustee for execution.
The Master Servicer, on behalf of the Depositor, the Bondholders [and
the Bond Insurer,]
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shall prepare, execute, deliver and take all actions reasonably necessary to
protect the Trust Estate pursuant to Section 3.5 of the Indenture and shall, on
behalf of the Depositor, execute and deliver and take any additional actions as
shall be deemed necessary to effect the administrative obligations of the
Depositor under the Indenture.
The Master Servicer may agree to modify, waive or amend any term of any
Mortgage Loan in a manner consistent with the servicing standard described in
Section 2.1(a) herein so long as the modification, waiver or amendment will not
(i) affect the amount or timing of any scheduled payments of principal or
interest on the Mortgage Loan or (ii) in its judgment, materially impair the
security for the Mortgage Loan or reduce the likelihood of timely payment of
amounts due thereon. The Master Servicer also may agree to any modification,
waiver or amendment that would so affect or impair the payments on, or the
security for, a Mortgage Loan if, (i) in its judgment, a material default on the
Mortgage Loan has occurred or a payment default is imminent and (ii) in its
judgment, such modification, waiver or amendment is reasonably likely to produce
a greater recovery on a present value basis than would liquidation. The Master
Servicer promptly shall notify the Trustee in the event of any modification,
waiver or amendment of any Mortgage Loan.
(d) Independent Contractor Relationship. The relationship of the
Master Servicer to the Depositor and the 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.
SECTION 2.2 COLLECTION OF CERTAIN MORTGAGE LOAN PAYMENTS;
COLLATERAL PROCEEDS ACCOUNT.
(a) Collection Procedures. The Master Servicer shall, to the
extent such procedures shall be consistent with this Agreement, follow such
collection procedures as it follows from time to time with respect to mortgage
loans in its servicing portfolio that are comparable to the Mortgage Loans. A
summary of the Master Servicer's collection procedures is attached hereto as
Exhibit D. A written copy of any such amendment or modification shall be
furnished to the Trustee. Consistent with the foregoing, the Master Servicer may
in its discretion (1) waive any assumption fees, late payment charges, charges
for checks returned for insufficient funds, prepayment fees, if any, or other
fees that may be collected in the ordinary course of servicing the Mortgage
Loans, (2) if a Mortgagor is in default or appears about to be in default
because of a Mortgagor's financial condition, arrange with the Mortgagor a
schedule for the payment of delinquent payments due on the related Mortgage Loan
or (3) modify payments of monthly principal and interest on any Mortgage Loan
becoming subject to the terms of the Soldiers' and Sailors' Civil Relief Act of
1940, as amended (the "Relief Act"), in accordance with the Master Servicer's
general policies for comparable mortgage loans subject to the Relief Act;
provided, however, that the Master Servicer shall not, [without the prior
written consent of the Bond Insurer,] permit any waiver, modification or
variance of a Mortgage Loan that would (1) change the Note Rate, (2) forgive the
payment of any principal or interest, (3) impair the priority of the lien
represented by the related Mortgage or (4) extend the final maturity date of the
Mortgage Loan beyond _______ 20___, in any case except to the extent required
under the Relief Act. The Master Servicer will not consent to the placement
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of a deed of trust or mortgage, as applicable, on any Mortgaged Property that
has a priority equal to or higher than the lien securing the related Mortgage
Loan unless such Mortgage Loan is prepaid in full. No partial release of a
Mortgage Loan shall be made if it would cause the Loan-to-Value Ratio of the
Mortgage Loan (taking into account the partial release) to be higher than the
Loan-to-Value Ratio of the Mortgage Loan at origination.
(b) Collateral Proceeds Account. The Master Servicer shall
establish and maintain, or cause to be established and maintained, one or more
Eligible Accounts that in the aggregate are the Collateral Proceeds Account. At
the Master Servicer's option, amounts held in the Collateral Proceeds Account
shall be invested by the depository institution or trust company then
maintaining the account at the written direction of the Master Servicer in
Eligible Investments that mature not later than the Deposit Date next succeeding
the date of investment. The Master Servicer shall not retain any cash or
investment in the Collateral Proceeds Account for a period in excess of [12]
months and cash therein shall be considered transferred on a first-in, first-out
basis to the Trustee for inclusion in the Bond Account, as described in Section
2.2(d). All net income and gain realized from any such investment shall be for
the benefit of the Master Servicer as additional servicing compensation and
shall be subject to its withdrawal or order from time to time. Any losses
realized in connection with any such investment shall be for the account of the
Master Servicer and the Master Servicer shall deposit or cause to be deposited
the amount of such loss (to the extent not offset by income from other
investments) in the Collateral Proceeds Account immediately upon the realization
of such loss and shall have no right to reimbursement therefor. Any benefit
resulting from deposits, maintenance or investment of funds in the Collateral
Proceeds Account shall be for the Master Servicer's benefit.
(c) Deposits to Collateral Proceeds Account. Subject to the last
paragraph of this Section 2.2(c), the Master Servicer shall deposit in the
Collateral Proceeds Account each of the following payments on and collections in
respect of the Mortgage Loans as soon as practicable, but in no event later than
the close of business on the second Business Day after its receipt thereof:
(i) all payments in respect of or allocable to interest
on the Mortgage Loans (including any net income from REO Properties),
net of the Monthly Servicing Fees attributable to such payments;
(ii) all collections of principal on or with respect to
the Mortgage Loans;
(iii) all Payments Ahead;
(iv) all Net Liquidation Proceeds; and
(v) all Trust Insurance Proceeds (including, for this
purpose, any amounts required to be credited by the Servicer pursuant
to the last sentence of Section 2.3).
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in any case net of its Monthly Servicing Fees, Ancillary Servicing Compensation,
and reimbursable outstanding Servicing Advances and Monthly Advances, to the
extent the Master Servicer's automated system deducts such amounts from
collected funds prior to deposit of such collected funds into the Collateral
Proceeds Account.
The Master Servicer shall replace all amounts previously withdrawn from
the Collateral Proceeds Account and applied by the Master Servicer towards the
payment of a Monthly Advance pursuant to Section 4.1(a) or towards the payment
of a Servicing Advance pursuant to Section 4.1(b) by depositing into the
Collateral Proceeds Account on or prior to the Deposit Date immediately
following such withdrawal an amount equal to the total of all such amounts so
applied since the immediately preceding Deposit Date.
The foregoing requirements respecting deposits to the Collateral
Proceeds Account are exclusive, it being understood that, without limiting the
generality of the foregoing, the Master Servicer need not deposit in the
Collateral Proceeds Account amounts representing fees, late payment charges,
charges for checks returned for insufficient funds, prepayment fees, if any, or
extension or other administrative charges paid by Mortgagors or amounts received
by the Master Servicer for the account of Mortgagors for application towards the
payment of taxes, insurance premiums, assessments and similar items. The amounts
deposited in the Collateral Proceeds Account are subject to withdrawal by the
Master Servicer, from time to time, (1) to make transfers to the Trustee for
deposit into the Bond Account pursuant to Section 2.2(d), (2) to pay itself the
Monthly Servicing Fee, to the extent not already paid to or retained by the
Master Servicer, pursuant to Section 2.7, Ancillary Servicing Compensation, and
investment income on Permitted Investments, (3) to make Servicing Advances or to
reimburse itself for Servicing Advances, as applicable, in either case in
accordance with Section 4.1(b), (4) to make Monthly Advances in accordance with
Section 4.1(a) or to reimburse itself for payments of Monthly Advances as
described in Section 4.1(a), and (5) to clear and terminate the Collateral
Proceeds Account. In addition, if the Master Servicer deposits in the Collateral
Proceeds Account any amount not required to be so deposited 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 Collateral Proceeds Account, any provision herein to the
contrary notwithstanding.
Upon such terms as [the Bond Insurer and] the Rating Agencies may
approve, the Master Servicer may make the deposits to the Collateral Proceeds
Account referred to in Section 2.2(c) on a later day than the [_____ Business
Day] after receipt of the amounts required to be so deposited, which terms and
later day shall be specified [by the Bond Insurer and] the Rating Agencies and
confirmed to the Trustee and the Master Servicer in writing; provided, however,
that in any event such amounts shall be deposited into the Collateral Proceeds
Account no later than the next succeeding Deposit Date.
(d) Remittances to Trustee. At or before [______] time on each
Deposit Date, the Master Servicer shall withdraw from the Collateral Proceeds
Account all amounts on deposit
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therein that constitute any portion of Remittable Funds for the related Deposit
Date (including any amounts therein that are being held for remittance on a
subsequent Deposit Date and are applied toward the Monthly Advance for the
related Deposit Date pursuant to Section 4.1(a)) and remit such amounts to the
Trustee for deposit into the Bond Account. In addition, any amounts required
pursuant to the Indenture to be deposited into the Bond Account in connection
with a purchase of any Mortgage Loans by the Master Servicer pursuant to the
Indenture and any other amounts (including Monthly Advances [and Compensating
Interest] for such Deposit Date) required by this Agreement to be deposited by
the Master Servicer with the Trustee shall be remitted to the Trustee for
deposit into the Bond Account on the applicable Deposit Date.
In the event that the Master Servicer does not remit all Remittable
Funds for the related Payment Date on the Deposit Date, the Master Servicer also
shall pay to the Trustee on demand, for its own account and not for the account
of the Bondholders, an amount equal to the income that the Trustee would have
received on the investment of such funds in Eligible Investments, as reasonably
calculated by the Trustee, from the Deposit Date until the date that such
Remittable Funds have been remitted to the Trustee.
SECTION 2.3 HAZARD INSURANCE POLICIES.
[The Master Servicer shall cause to be maintained for each Mortgage
Loan (including any Mortgage Loan as to which the related Mortgaged Property has
been acquired on behalf of the Trustee upon foreclosure, by deed in lieu of
foreclosure or comparable conversion), hazard insurance (including flood
insurance coverage, if obtainable, to the extent such property is located in a
federally designated flood area in such amount as is required under applicable
FEMA guidelines) with extended coverage in an amount that is not less than the
lesser of (1) the maximum insurable value from time to time of the improvements
that are a part of such property or a replacement cost basis, or (2) the
principal balance of such Mortgage Loan, determined in the case of a Mortgage
Loan that has been foreclosed at the time of such foreclosure; provided,
further, that such hazard insurance shall be in an amount not less than such
amount as is necessary to avoid the application of any coinsurance clause
contained in the related hazard insurance policy. Each such hazard insurance
policy shall contain a standard mortgagee loss payable clause naming the
originator, its successors and assigns, as mortgagee. The Master 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. Amounts
collected by the Master Servicer under any such policies shall be deposited into
the Collateral Proceeds Account in accordance with Section 2.2 to the extent
that they constitute Net Liquidation Proceeds or Trust Insurance Proceeds. If
the Master Servicer shall obtain and maintain a blanket policy, issued by an
insurer acceptable to each Rating Agency [and the Bond Insurer], insuring
against such hazard losses, it shall conclusively be deemed to have satisfied
its obligations as set forth in the first sentence of this Section, it being
understood and agreed that such policy may contain a deductible clause that is
in form and substance consistent with standard industry practice, in which case
the
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Master Servicer shall, in the event that there shall not have been maintained on
the related Mortgaged Property a policy complying with the first sentence of
this Section 2.3, and there shall have been a loss that would have been covered
by such policy, deposit in the Collateral Proceeds Account in accordance with
Section 2.2 the amount not otherwise payable under the blanket policy because of
such deductible clause from its own funds, and such amount shall not be
reimbursable to the Master Servicer.]
SECTION 2.4 ENFORCEMENT OF DUE-ON-SALE CLAUSES; ASSUMPTION AND
MODIFICATION AGREEMENTS.
In any case in which property subject to a Mortgage is voluntarily
conveyed by the Mortgagor, the Master Servicer may enter into an assumption
agreement 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 related
Mortgage Note and, to the extent permitted by applicable law or the related
mortgage documents, the Mortgagor remains liable thereon. [The Master Servicer
shall not enter into any assumption agreement which modifies the Note Rate or
payment terms of the Mortgage Note without the consent of the Bond Insurer.] If
the Person to whom such Mortgaged Property has been or is about to be conveyed
satisfies the Master Servicer's then-current underwriting standards as to
borrower creditworthiness for mortgage loans similar to the Mortgage Loans and
is in the same Seller credit rating category as that which was assigned to the
borrower under the Mortgage Loan being replaced, the Master Servicer may enter
into a substitution of liability agreement with such person, under which the
previous Mortgagor is released from liability thereon and the transferee is
substituted as a Mortgagor and becomes liable under the Mortgage Note. The
Master Servicer shall not permit an assumption agreement or a substitution of
liability agreement with respect to a Mortgage Loan unless permitted by
applicable law and unless the Master Servicer determines that such action would
not materially increase the risk of default or delinquency on such Mortgage Loan
or materially impair the security for such Mortgage Loan. The Master Servicer
will not enter into any assumption agreement or substitution of liability
agreement unless such agreement complies with the Master Servicer's standard
servicing procedures and the Master Servicer would enter into such agreement
with respect to a mortgage loan in its own portfolio. The Master Servicer shall
notify the Trustee that any assumption agreement or substitution of liability
agreement has been completed and the Master Servicer shall forward to the
Trustee the original of such assumption agreement or substitution of liability
agreement. Such assumption agreement or substitution of liability agreement
shall, for all purposes, be considered a part of the related Mortgage Loan File
to the same extent as all other documents and instruments constituting a part
thereof. In connection with any such agreement, the Note Rate shall not be
reduced (but may be increased), the Principal Balance of such Mortgage Loan
shall not be changed and the term of such Mortgage Loan will not be extended
beyond the existing term of such Mortgage Loan. Any fee collected by the Master
Servicer for entering into any such agreement shall be retained by the Master
Servicer as Ancillary Servicing Compensation.
In the event the Master Servicer does not approve an assumption of a
Mortgage Loan as described above, the Master Servicer will enforce any related
due-on-sale clause to the extent
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permitted by the related Mortgage Note and Mortgage and by all applicable laws
and regulations, but only to the extent the Master Servicer does not believe
that such enforcement will (1) adversely affect or jeopardize coverage under any
related insurance policy, (2) result in legal action by the Mortgagor, or (3)
materially increase the risk of default or delinquency on, or materially impair
the security for, such Mortgage Loan.
Notwithstanding the foregoing paragraph of this Section 2.4 or any
other provision of this Agreement, the Master Servicer shall not be deemed to be
in default, breach or any other violation of its obligations hereunder by
reasons of any assumption of a Mortgage Loan, or transfer of any Mortgaged
Property without the assumption thereof, by operation of law or any assumption
or transfer that the Master Servicer reasonably believes it may be restricted by
law from preventing, for any reason whatsoever.
SECTION 2.5 REALIZATION UPON DEFAULTED MORTGAGE LOANS, OPTIONS TO
PURCHASE MORTGAGE LOANS.
The Master Servicer, on behalf of and as the agent of the Indenture
Trustee, shall foreclose upon or otherwise comparably convert the ownership of
Mortgaged Properties securing such of the Mortgage Loans as come into and
continue in default and as to which no satisfactory arrangements can be made for
collection of delinquent payments pursuant to Section 2.2(a) into the name of
the Trustee; provided, however, that if the Master Servicer has actual knowledge
or reasonably believes that any Mortgaged Property is affected by hazardous or
toxic wastes or substances, then the Master Servicer will cause to be undertaken
an environmental inspection of the Mortgaged Property that complies with Fannie
Mae's selling and servicing guide applicable to single family homes and its
servicing procedures. If the environmental inspection reveals any potentially
hazardous substances, the Master Servicer will notify the Trustee [and the Bond
Insurer], and the Master Servicer will not foreclose or accept a deed in lieu of
foreclosure on the Mortgaged Property without the consent of the Trustee [and
the Bond Insurer]. In connection with such foreclosure or other conversion, the
Master Servicer shall follow such practices and procedures as it shall deem
necessary or advisable and as shall be normal and usual in its general first
lien one- to four-family mortgage loan servicing activities. The foregoing is
subject to the proviso that the Master Servicer shall not be required to expend
its own funds in connection with any foreclosure or restoration of any Mortgaged
Property unless, in the reasonable judgment of the Master Servicer, such
foreclosure, correction or restoration will increase Net Liquidation Proceeds
(taking into account the reimbursement of such expenses to the Master Servicer
and any unreimbursed Servicing Advances and Monthly Advances made or expected to
be made with respect to such Mortgage Loan).
To the extent the Net Liquidation Proceeds derived from any such
foreclosure or conversion exceed the Principal Balance of the related Mortgage
Loan and accrued interest thereon at the applicable Note Rate through the
Determination Date during the Collection Period in which such foreclosure or
conversion occurs (net of any Monthly Advances or Servicing Advances made by the
Master Servicer with respect to such Mortgage Loan and that were unreimbursed
prior to the receipt of such Net Liquidation Proceeds), such excess shall be
paid directly to the Master Servicer
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as additional Servicing Compensation and shall be free from the lien of the
Indenture.
The Master Servicer must determine, as to each defaulted Mortgage Loan,
when such Mortgage Loan has become a Liquidated Mortgage Loan.
The Master Servicer, at its sole option, may purchase from the Trust
Estate on any Deposit Date any Mortgage Loan as to which the related Mortgagor
has failed to make full Monthly Payments as required under the related Mortgage
Note for three consecutive months at any time following the applicable Cut-off
Date and prior to such Deposit Date at a price equal to the Purchase Price by
transferring such amount to the Trustee for deposit into the Bond Account on
such Deposit Date pursuant to Section 2.2; provided, however, that the Aggregate
Collateral Values of the Mortgage Loans purchased by the Master Servicer
pursuant to the exercise of the option granted in this sentence shall not exceed
[___] of the Initial Pool Balance, unless otherwise approved by the [Bond
Insurer]. On any Deposit Date following the Determination Date as of which the
aggregate of the Principal Balances of the Mortgage Loans is equal to or less
than [___] of the Initial Pool Balance, if the Depositor shall not have elected
to redeem the Bonds pursuant to the Indenture, the Master Servicer, in its sole
discretion, may purchase from the Trust Estate all, but not less than all, of
the Mortgage Loans then included in the Trust Estate at a price equal to the
Purchase Price for each such Mortgage Loan by transferring such amount to the
Trustee for deposit in the Bond Account on such Deposit Date pursuant to Section
2.2. Upon the receipt by the Trustee of the Purchase Price for any Mortgage Loan
as to which the Master Servicer has exercised its option to purchase pursuant to
this paragraph, the Trustee shall release to the Master Servicer the Mortgage
Loan File pertaining to each such Mortgage Loan and the Trustee and the
Depositor shall execute and deliver such instruments of transfer and all other
documents furnished by the Master Servicer as are necessary to transfer their
respective interests in such Mortgage Loans to the Master Servicer. For purposes
of this Agreement, any purchase effected in accordance with this paragraph shall
be deemed to be a prepayment of each Mortgage Loan so purchased.
In the event that title to any Mortgaged Property is acquired as REO
Property by the Trustee in foreclosure or by deed in lieu of foreclosure, the
deed or certificate of sale shall be issued to the Trustee, or to its nominee,
on behalf of the Bondholders [and the Bond Insurer], and the Master Servicer
shall manage, conserve, protect and operate each such REO Property for the
Bondholders solely for the purpose of its prompt disposition and sale. The
Master Servicer shall use its best efforts to dispose of each such REO Property
as expeditiously as possible consistent with the goal of maximizing Net
Liquidation Proceeds (taking into account any unreimbursed Servicing Advances
and Monthly Advances made or expected to be made with respect to such REO
Property). None of the Depositor, the Trustee or the Master Servicer, acting on
behalf of the Trust Estate, shall provide financing from the Trust Estate to any
purchaser of any such REO Property.
SECTION 2.6 TRUSTEE TO COOPERATE; RELEASE OF MORTGAGE LOAN FILES.
(a) Upon the payment in full of the principal balance of any
Mortgage Loan, the Master Servicer shall notify the Trustee by a certification
in the form of Exhibit B hereto (a "Request for
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Release") (which certification shall include a statement to the effect that all
amounts received in connection with such payment which are required to be
deposited to the Collateral Proceeds Account pursuant to Section 2.2 have been
so deposited) of a Servicing Officer. Such notification shall be made each month
at the time that the Master Servicer delivers its Servicer Remittance Report to
the Depositor and the Trustee pursuant to Section 3.1. Upon any such payment in
full, the Master Servicer is authorized to procure a deed of full reconveyance
covering the related Mortgaged Property encumbered by such Mortgage, which deed,
except as otherwise provided in applicable law, shall be recorded in the office
of the County Recorder in which the Mortgage is recorded, or, as the case may
be, to procure an instrument of satisfaction or, if the related Mortgagor so
requests, an assignment without recourse, in each case prepared by the Master
Servicer at its expense and executed by the Trustee, which deed of reconveyance,
instrument of satisfaction or assignment shall be delivered by the Master
Servicer to the Person entitled thereto, it being understood and agreed that no
expenses incurred in connection with such deed of reconveyance, assignment or
instrument of satisfaction shall be reimbursed from amounts at the time on
deposit in the Collateral Proceeds Account.
(b) From time to time and as appropriate for the servicing or
foreclosure of any Mortgage Loan or to effect a partial release of any Mortgaged
Property from the lien of the related Mortgage, the Master Servicer shall
deliver to the Trustee a Request for Release requesting the related Trustee
Mortgagee Loan File or specified documents included therein. The Trustee shall,
within five Business Days after its receipt of such Request for Release, release
the related Mortgage Loan File or the specified documents to the Master
Servicer. Any such Request for Release shall obligate the Master Servicer to
return each and every document previously requested from the Mortgage Loan File
to the Trustee by the twenty-first day following the release thereof, unless (1)
the Mortgage Loan has been liquidated and the Net Liquidation Proceeds relating
to the Mortgage Loan have been deposited in the Collateral Proceeds Account or
the Bond Account or (2) the Mortgage Loan File or such document has been
delivered to an attorney, or to a public trustee or other public official as
required by law, for the purposes of initiating or pursuing legal action or
other proceedings for the foreclosure of the Mortgaged Property either
judicially or non-judicially, and the Master Servicer has delivered to the
Trustee a certificate of the Master Servicer certifying as to the name and
address of the Person to which such Mortgage Loan File or such document was
delivered and the purpose or purposes of such delivery. Upon receipt of an
officer's certificate of the Master Servicer stating that such Mortgage Loan was
liquidated and that all amounts received or to be received in connection with
such liquidation which are required to be deposited into the Collateral Proceeds
Account or the Bond Account have been so deposited, or that such Mortgage Loan
has become an REO Property (each, a "Servicing Officer's Certificate"), the
Request for Release shall be released by the Trustee to the Master Servicer.
(c) Upon receipt of a Servicing Officer's Certificate, the Trustee
shall execute any documents prepared by the Master Servicer and delivered to it
as necessary or appropriate to enable the Master Servicer to perform its
obligations hereunder, including, without limitation, documents to enable the
Master Servicer to convey title to a Mortgaged Property to the Mortgagor or its
designee upon payment of the Mortgage Loan in full or to convey title to an REO
Property to the
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purchaser thereof, or to convey title to a Mortgaged Property into the name of
the Trustee pursuant to Section 2.5.
SECTION 2.7 SERVICING COMPENSATION; PAYMENT OF CERTAIN EXPENSES
BY THE MASTER SERVICER[; COMPENSATION INTEREST].
On each Deposit Date, the Master Servicer shall be entitled to receive,
by withdrawal by the Master Servicer from the Collateral Proceeds Account, out
of collections of interest on the Mortgage Loans for the related Collection
Period, as servicing compensation for such Collection Period, the Monthly
Servicing Fee, to the extent not retained by the Master Servicer from amounts
remitted to the Collateral Proceeds Account pursuant to Section 2.2(c)(i). The
Master Servicer shall also be entitled to retain any Ancillary Servicing
Compensation when received.
[The Servicer shall pay Compensating Interest to the Trustee on behalf
of the Bondholders out of the related Monthly Servicing Fee on each Deposit
Date, to the extent of the amount of the Monthly Servicing Fee, and shall not be
entitled to reimbursement therefor. The Master Servicer shall be required to pay
all expenses incurred by it in connection with its activities hereunder
(including payment of the fees and expenses relating to the Annual Independent
Public Accountant's Servicing Report described in Section 2.9, and all other
fees and expenses not otherwise expressly stated hereunder for the account of
the Bondholders) and shall not be entitled to reimbursement therefor except as
specifically provided herein.]
SECTION 2.8 ANNUAL STATEMENT AS TO COMPLIANCE.
(a) The Master Servicer will deliver to the Depositor, the
Trustee, [the Bond Insurer] and each Rating Agency, with a copy to each of the
Underwriters, on or before [________] of each year, beginning with [__________]
an Officer's Certificate of the Master Servicer substantially in the form set
forth in Exhibit A hereto stating that (1) a review of the activities of the
Master Servicer during the preceding calendar year (or since the Closing Date in
the case of the first such statement) and of its performance under this
Agreement has been made under such officer's supervision and (2) to the best of
such officer's knowledge, based on such review, the Master Servicer has
fulfilled all its material obligations under this Agreement throughout such year
(or since the Closing Date in the case of the first such statement), 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 Master Servicer shall deliver to the Depositor and the
Trustee, with a copy to [the Bond Insurer,] each Rating Agency and each of the
Underwriters, promptly after having obtained knowledge thereof, but in no event
later than [___] Business Days thereafter, written notice by means of an
Officer's Certificate of any event that with the giving of notice or the lapse
of time, or both, would become an Event of Default.
SECTION 2.9 ANNUAL INDEPENDENT PUBLIC ACCOUNTANTS' SERVICING
REPORT.
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On or before [__________] of each year, beginning with [___________]
the Master Servicer at its expense shall cause a firm of nationally recognized
independent public accountants (who may also render other services to the Master
Servicer) to furnish a report to the Depositor, the Trustee, [the Bond Insurer]
and each Rating Agency, with a copy to each of the Underwriters, to the effect
that such firm has examined certain documents and records relating to the
servicing activities of the Master Servicer for the period covered by such
report, and that such examination, which has been conducted substantially in
compliance with the Uniform Single Attestation Program for Mortgage Bankers (to
the extent that the procedures in such audit guide are applicable to the
servicing obligations set forth in this Agreement), has disclosed no exceptions
or errors in records relating to the servicing activities of the Master Servicer
that, in the opinion of such firm, are material, except for such exceptions as
shall be set forth in such report.
SECTION 2.10 ACCESS TO CERTAIN DOCUMENTATION AND INFORMATION
REGARDING THE MORTGAGE LOANS.
(a) The Master Servicer shall provide to Bondholders that are
federally insured savings associations and the FDIC and its supervisory agents
and examiners access to the documentation regarding the Mortgage Loans required
by applicable regulations of the Office of Thrift Supervision, and to the
Depositor, the Trustee [and the Bond Insurer] and their respective agents all
documentation relating to the Mortgage Loans that is in the possession of the
Master Servicer, such access being afforded without charge but only upon
reasonable request and during normal business hours at the offices of the Master
Servicer. Nothing in this Section 2.10(a) shall derogate from the obligation of
the Master Servicer to observe any applicable law prohibiting disclosure of
information regarding the Mortgagors, and the failure of the Master Servicer to
provide access as provided in this Section as a result of such obligation shall
not constitute a breach of this Section.
(b) The Master Servicer shall supply information to the Trustee,
upon reasonable advance notice, in such form as the Trustee shall reasonably
request, as is required in the Trustee's reasonable judgment to enable the
Trustee to make required payments and to furnish the certificates, statements
and reports to Bondholders [and the Bond Insurer] as required of the Trustee
pursuant to the Indenture, it being understood that the Master Servicer is
responsible for supplying information concerning the Mortgage Loans and not for
any other information, including, without limitation, calculation of payments
due on the Bonds. [The Master Servicer shall also supply information upon
reasonable advance notice, in such form as the Bond Insurer shall reasonably
request, as is reasonably requested by the Bond Insurer to enable the Bond
Insurer to monitor the performance of the Mortgage Loans.]
SECTION 2.11 MAINTENANCE OF FIDELITY BOND AND ERRORS AND OMISSIONS
POLICY.
The Master Servicer shall during the term of its service as Master
Servicer maintain in force a (1) policy or policies of insurance covering errors
and omissions in the performance of its obligations as Master Servicer hereunder
and (2) fidelity bond in respect of its officers, employees and agents, in each
case having coverage amounts deemed by the Master Servicer to be adequate to its
operations.
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SECTION 2.12 NOTICES TO THE DEPOSITOR, THE RATING AGENCIES, THE
TRUSTEE [AND THE BOND INSURER].
In addition to the other notices required to be given to the Depositor,
the Rating Agencies, the Trustee, [the Bond Insurer] and the Underwriters by the
provisions of this Agreement, the Master Servicer shall give prompt notice to
the Depositor, each Rating Agency, the Trustee [and the Bond Insurer] of (1) any
amendment to this Agreement, (2) the occurrence of an Event of Default and (3)
the purchase of any Mortgage Loan pursuant to Section 2.1 or 2.5 by the Master
Servicer, as the case may be.
SECTION 2.13 REPORTS OF FORECLOSURES AND ABANDONMENT OF MORTGAGED
PROPERTIES.
On or before [__________] of each year beginning in 20___, the Master
Servicer shall file the reports of foreclosures and abandonments of any
Mortgaged Property required by Code Section 6050J with the Internal Revenue
Service and provide a copy of such filing to the Trustee. The reports from the
Master Servicer shall be in form and substance sufficient to meet the reporting
requirements imposed by such Section 6050J.
SECTION 2.14 SUB-SERVICERS AND SUB-SERVICING AGREEMENTS.
(a) The Master Servicer may enter into Sub-Servicing Agreements
for any servicing and administration of Mortgage Loans with any institution that
is acceptable to [the Bond Insurer and] the Indenture Trustee and that is in
compliance with the laws of each state necessary to enable it to perform its
obligations under such Sub-Servicing Agreement. [The Master Servicer shall give
notice to the Bond Insurer of the appointment of any Sub-Servicer.] The Master
Servicer shall not enter into any Sub-Servicing Agreement that does not provide
for the servicing of the Mortgage Loans specified therein on a basis consistent
with the terms of this Agreement or that otherwise violates the provisions of
this Agreement. The Master Servicer may enter into, and make amendments to, any
Sub-Servicing Agreement or enter into different forms of Sub-Servicing
Agreements; provided, however, that any such amendments or forms shall be
consistent with and not violate the provisions of this Agreement.
(b) For purposes of this Agreement the Master Servicer shall be
deemed to have received payments on Mortgage Loans when any Sub-Servicer has
received such payments. With respect to the Master Servicer's obligations under
Section 2.1 to make deposits into the Collateral Proceeds Account, the Master
Servicer shall be deemed to have made such deposits when any Sub-Servicer has
made such deposits into a Sub-Servicing Account if permitted by the related
Sub-Servicing Agreement.
(c) Any Sub-Servicing Agreement and any other transactions or
services relating to the Mortgage Loans involving a Sub-Servicer shall be deemed
to be between the Sub-Servicer and the
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Master Servicer alone [and the Bond Insurer] and the Trustee shall not be deemed
parties thereto and shall have no claims, rights, obligations, duties or
liabilities with respect to any Sub-Servicer, except that the Trustee shall have
such claims or rights that arise as a result of any funds held by a Sub-Servicer
in trust for or on behalf of the Trust Estate, the Bondholders [and the Bond
Insurer]. Notwithstanding the execution of any Sub-Servicing Agreement, the
Master Servicer shall not be relieved of any liability hereunder and shall
remain obligated and liable for the servicing and administration of the Mortgage
Loans.
SECTION 2.15 [SERVICING FOR BENEFIT OF THE BOND INSURER.
Provided there does not exist a Bond Insurer Default, the Master
Servicer hereby acknowledges and agrees that it shall service and administer the
Mortgage Loans and any REO Properties, and shall maintain the Collateral
Proceeds Account for the benefit of the Bondholders and for the benefit of the
Bond Insurer, and all references in this Agreement to the benefit of or actions
on behalf of the Bondholders shall be deemed to include the Bond Insurer.
All notices, statements, reports, certificates or opinions required by
this Agreement to be sent to any other party hereto or to the Bondholders shall
also be sent to the Bond Insurer.]
SECTION 2.16 ANNUAL LIEN OPINIONS; BOND REDEMPTIONS.
(a) The Master Servicer shall procure, at its own expense, the
Opinions of Counsel required to be delivered annually to the Trustee pursuant to
Section 9.6 of the Indenture, to the extent that the Depositor fails to do so.
(b) In the event the Depositor exercises its right to redeem the
Bonds pursuant to Article Eleven of the Indenture, the Master Servicer shall, at
its own expense, prepare all documents necessary for the Depositor to sign in
connection with such redemption, and deposit amounts required to be deposited by
the Depositor in connection with such redemption, and shall advise the Depositor
as to the actions it must take in accordance with the Indenture in order to
effect such redemption. The Depositor shall follow all such directions of the
Master Servicer.
ARTICLE 3
SERVICER REMITTANCE REPORT
SERVICER REMITTANCE REPORT.
Not later than the [______] Business Day prior to each Deposit Date,
the Master Servicer shall deliver to the Depositor, the Trustee, [the Bond
Insurer] and each of the Underwriters a computer-readable magnetic tape (the
"Tape" for such month) and a series of hard copy reports generally including the
same information included on the Tape (the "Report," and, together with the
Tape, the "Servicer Remittance Report" for such month) detailing the payments
and collections received in respect of the Mortgage Loans during the immediately
preceding Collection Period.
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The Servicer Remittance Report shall include loan-by-loan information that
specifies account number, borrower name, outstanding principal balance and
activity for the preceding Collection Period and Due Period, as applicable, and
any other information sufficient to enable the Trustee to report the items
specified in Section 12.9 in the Indenture, as well as the information set forth
on Exhibit E hereto as to Mortgage Loans that became Liquidated Mortgage Loans
during the related Collection Period, and may be delivered in a separate report
in the form of [__________] hereto or as part of the Servicer Remittance Report.
The Servicer shall only be required to report information concerning the
Mortgage Loans, and shall not be required to calculate any required payments on
the Bonds [or to the Bond Insurer].
ARTICLE 4
MONTHLY ADVANCES AND SERVICING ADVANCES
SECTION 4.1 MONTHLY ADVANCES; SERVICING ADVANCES.
(a) [Monthly Advances. On or before each Deposit Date, the Master
Servicer will transfer to the Trustee for deposit in the Bond Account, in same
day funds, an amount (a "Monthly Advance") equal to the sum of (1) with respect
to all Mortgage Loans for which the Monthly Payment due on the [_____] day of
the month in which the Deposit Date occurs has not yet been paid, the amount of
such late Monthly Payment (net of the Monthly Servicing Fee attributable to such
Mortgage Loan), plus (2) with respect to each Mortgaged Property that was
acquired in foreclosure or similar action (each, an "REO Property") during or
prior to the related Collection Period and as to which a final sale did not
occur during the related Collection Period, an amount equal to the excess, if
any, of the Monthly Payment that would have been due on the related Mortgage
Loan (net of the Monthly Servicing Fee attributable to such REO Property) over
the net income from such REO Property transferred to the Bond Account for such
Payment Date; provided, however, that in no case will the Master Servicer be
required to make advances with respect to any period following the final due
date with respect to any Mortgage Loan.] All or a portion of any Monthly Advance
required to be made on a Deposit Date may be paid out of amounts on deposit in
the Collateral Proceeds Account that are not required to be transferred on such
Deposit Date to the Trustee for deposit into the Bond Account as any portion of
Remittable Funds for the related Deposit Date; provided, however, that the
Master Servicer shall be required to replace any such amounts by deposit into
the Collateral Proceeds Account on or before the next Deposit Date and the
amount of such deposit shall thereafter be considered a Monthly Advance for
purposes of reimbursement under this Agreement.
The Master Servicer may recover Monthly Advances, if not theretofore
recovered from the Mortgagor on whose behalf such Monthly Advance was made, from
collections on the related Mortgage Loan, including Liquidation Proceeds,
Insurance Proceeds and such other amounts as may be collected by the Master
Servicer from the Mortgagor or otherwise relating to the Mortgage Loan. In
addition, if the Master Servicer determines, in its good faith business
judgment, that a previously made Monthly Advance has become a Nonrecoverable
Advance, the Master Servicer may reimburse itself for such Nonrecoverable
Advances from amounts on deposit in the Collateral
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Proceeds Account, regardless of whether such amounts are attributable to such
Mortgage Loan. Notwithstanding anything herein to the contrary, no Monthly
Advance need be made hereunder if such Monthly Advance would, if made,
constitute a Nonrecoverable Advance.
(b) Servicing Advances. The Master Servicer shall from time to
time during the term of this Agreement make such Servicing Advances as the
Master Servicer shall deem appropriate or advisable under the circumstances and
are required pursuant to the terms of this Agreement. Servicing Advances may be
paid by the Master Servicer out of amounts on deposit in the Collateral Proceeds
Account from time to time; provided, however, that the Master Servicer shall be
required to replace any such amounts by deposit into the Collateral Proceeds
Account on or before the first Deposit Date occurring after the payment of a
Servicing Advance with such amounts, and the amount of such deposit shall
thereafter be considered a Servicing Advance for purposes of reimbursement under
this Agreement. All Servicing Advances made by the Master Servicer shall be
reimbursable from collections or recoveries relating to the Mortgage Loans in
respect of which such Servicing Advances have been made including Liquidation
Proceeds and Insurance Proceeds, and such other amounts as may be collected by
the Master Servicer from the Mortgagor, or from other amounts on deposit in the
Collateral Proceeds Account after the Master Servicer shall have determined, in
its good faith business judgment that such Servicing Advance has become a
Nonrecoverable Advance. Notwithstanding anything herein to the contrary, no
Servicing Advances need be made hereunder if such Servicing Advance would, if
made, constitute a Nonrecoverable Advance.
ARTICLE 5
THE MASTER SERVICER
SECTION 5.1 REPRESENTATIONS AND WARRANTIES OF THE MASTER
SERVICER.
(a) The Master Servicer hereby represents and warrants to the
Depositor, the Trustee, [the Bond Insurer] and the Bondholders that, as of the
Closing Date:
(i) The Master Servicer is a [corporation] duly
organized, validly existing and in good standing under the laws of [the
State of __________]. The Master Servicer is in compliance with the
laws of each state in which it is acting as Master Servicer with
respect to a Mortgage Loan to the extent necessary to perform all
servicing obligations with respect to the related Mortgaged Property
hereunder. The Master Servicer has the power and authority to execute
and deliver this Agreement and to perform its obligations in accordance
herewith. The execution, delivery and performance of this Agreement
(including all instruments of transfer to be delivered pursuant to this
Agreement) by the Master Servicer and the consummation of the
transactions contemplated hereby have been duly and validly authorized
by all necessary corporate action. This Agreement evidences the valid
and binding obligation of the Master Servicer enforceable against the
Master Servicer in accordance with its terms, subject to the effect of
bankruptcy, insolvency, reorganization, moratorium and other similar
laws relating to or affecting creditors' rights generally or the
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application of equitable principles in any proceeding, whether at law
or in equity. The consummation of the transactions contemplated hereby
will not result in the breach of any terms or provisions of the
articles of incorporation or by-laws of the Master Servicer or result
in the breach of any term or provision of, or conflict with or
constitute a default under or result in the acceleration of any
obligation under, any material agreement, indenture or loan or credit
agreement or other material instrument to which the Master Servicer or
its property is subject, or result in the violation of any law, rule,
regulation, order, judgment or decree to which the Master Servicer or
its property is subject.
(ii) All actions, approvals, consents, waivers,
exemptions, variances, franchises, orders, permits, authorizations,
rights and licenses required to be taken, given or obtained, as the
case may be, by or from any federal, state or other governmental
authority or agency, that are necessary in connection with the
execution and delivery by the Master Servicer of this Agreement, have
been duly taken, given or obtained, as the case may be, are in full
force and effect, are not subject to any pending proceedings
(administrative, judicial or otherwise) with respect to which the time
within which any appeal therefrom may be taken or review thereof may be
obtained has expired or no review thereof may be obtained or appeal
therefrom taken, and are adequate to authorize the consummation of the
transactions contemplated by this Agreement on the part of the Master
Servicer and the performance by the Master Servicer of its obligations
under this Agreement.
(iii) There is no action, suit, proceeding or investigation
pending or, to the best of the Master Servicer's knowledge, threatened
against the Master Servicer that, either in any one instance or in the
aggregate, should reasonably be expected to result in any material
adverse change in the business, operations, financial condition,
properties or assets of the Master Servicer or in any material
impairment of the right or ability of the Master Servicer to carry on
its business substantially as now conducted, or in any material
liability on the part of the Master Servicer or that would draw into
question the validity of this Agreement or the Mortgage Loans or of any
action taken or to be taken in connection with the obligations of the
Master Servicer contemplated herein, or that should be reasonably
expected to impair the ability of the Master Servicer to perform under
the terms of this Agreement.
(iv) The Master Servicer is not in default with respect to
any order or decree of any court or any order, regulation or demand of
any federal, state, municipal or governmental agency, which default
should reasonably be expected to have consequences that would
materially and adversely affect the condition (financial or other) or
operations of the Master Servicer or its properties or to have
consequences that should reasonably be expected to adversely affect its
performance hereunder.
(v) The collection practices used by the Master Servicer
are in all material respects legal and customary in the non-conforming
mortgage loan servicing business.
(vi) Upon discovery by any party hereto of a breach of any
of the foregoing
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representations and warranties that materially and adversely affects
the interests of the Bondholders, the party discovering such breach
shall give prompt written notice to the other parties hereto [and the
Bond Insurer]. Within [___] days of its discovery or its receipt of
notice of breach, the Master Servicer shall cure such breach in all
material respects.
SECTION 5.2 LIABILITY OF THE MASTER SERVICER.
The Master Servicer shall be liable in accordance herewith only to the
extent of the obligations specifically imposed upon and undertaken by the Master
Servicer herein.
SECTION 5.3 MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE
OBLIGATIONS OF, THE MASTER SERVICER.
Any corporation or other entity (1) into which the Master Servicer may
be merged or consolidated, (2) that may result from any merger, conversion or
consolidation to which the Master Servicer shall be a party, or (3) that may
succeed to all or substantially all of the business of the Master Servicer,
which corporation or other entity shall be the successor to the Master Servicer
under this Agreement without the execution or filing of any document or any
further act by any of the parties to this Agreement; provided that if the Master
Servicer is not the surviving entity, or if the assumption by the surviving
entity is not effective by operation of law, then the surviving entity shall
execute and deliver to the Depositor and the Trustee an agreement of assumption
to perform every obligation of the Master Servicer hereunder and provided
further that if the surviving entity is not the Master Servicer, the surviving
entity must (A) have a net worth of not less than [$_________], [(B) be
acceptable to the Bond Insurer and] (C) each Rating Agency must have issued
written confirmation that the succession of such successor will not result in a
downgrading of the implied rating then assigned by such Rating Agency to the
Bonds [(without taking into account the Bond Insurance Policy)].
SECTION 5.4 LIMITATION ON LIABILITY OF THE MASTER SERVICER AND
OTHERS.
Neither the Master Servicer nor any of its directors, officers,
employees or agents shall be under any liability to the Depositor, the Trustee,
the Trust Estate, [the Bond Insurer] or the Bondholders for any action taken or
for refraining from the taking of any action by the Master Servicer in good
faith pursuant to this Agreement, or for errors in judgment; provided, however,
that this provision shall not protect the Master Servicer or any such person
against any breach of warranties or representations made herein or against any
liability that would otherwise be imposed by reason of willful misfeasance, bad
faith or negligence in the performance of the duties of the Master Servicer or
by reason of reckless disregard of the obligations and duties of the Master
Servicer hereunder. The Depositor, the Master Servicer and any director,
officer, employee or agent of the Depositor or the Master Servicer may rely in
good faith on any document of any kind prima facie properly executed and
submitted by any Person respecting any matters arising hereunder. The Master
Servicer shall not be under any obligation to appear in, prosecute or defend
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<PAGE> 36
any legal action that is not incidental to its duties to service the Mortgage
Loans in accordance with this Agreement, and that in its opinion may involve it
in any expense or liability.
SECTION 5.5 MASTER SERVICER NOT TO RESIGN.
Subject to the provisions of Section 5.3 regarding the merger or
consolidation of the Master Servicer into or with another entity, the Master
Servicer shall not resign from the obligations and duties hereby imposed on it
except upon determination that the performance of its duties or obligations
hereunder is no longer permissible under applicable law or regulation or are in
material conflict by reason of applicable law or regulation with any other
activities carried on by it at the date of this Agreement. Any such
determination permitting the resignation of the Master Servicer pursuant to this
Section shall be evidenced by an Opinion of Counsel to such effect delivered to
the Depositor, the Trustee [and the Bond Insurer] obtained by the Master
Servicer at its own expense. No resignation pursuant to this Section 5.5(a)
shall become effective until the Trustee or a successor servicer shall have
assumed the responsibilities and obligations of the Master Servicer in
accordance with Section 6.2 or (b) shall relieve the Master Servicer of
responsibility for any obligations pursuant to this Agreement that specifically
survive the resignation or termination of the Master Servicer. Each of the
Rating Agencies shall be given written notice of a resignation of the Master
Servicer pursuant to this Section.
Notwithstanding the foregoing, the Master Servicer may resign effective
upon its appointment of a successor the appointment of whom has been approved by
the [Bond Insurer and] the Trustee in writing, but only if each Rating Agency
shall have confirmed in writing that the appointment of such successor will not
result in the downgrading of the then-current implied ratings assigned by them
to the Bonds [(without taking into account the Bond Insurance Policy)].
ARTICLE 6
DEFAULT
SECTION 6.1 EVENTS OF DEFAULT.
If any one of the following events (each an "Event of Default") shall
occur and be continuing:
(a) Any failure by the Master Servicer to (1) make a required
Monthly Advance on the related Deposit Date or (2) deposit into the Collateral
Proceeds Account or transfer to the Trustee for deposit in the Bond Account any
other amount required to be deposited therein under this Agreement on the
related Deposit Date, which failure, in the case of only clause (2) hereof, is
not remedied by the close of business on the Business Day after the date upon
which written notice of such failure shall have been given to the Master
Servicer by the Trustee [or the Bond Insurer] or to the Master Servicer, [the
Bond Insurer] and the Trustee by Holders of Bonds evidencing Voting Interests
represented by all Bonds aggregating not less than [___];
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<PAGE> 37
(b) Failure on the part of the Master Servicer duly to observe or
perform in any material respect any other covenants or agreements of the Master
Servicer set forth in this Agreement or in the Sales Agreement, which failure
(1) materially and adversely affects the Bondholders [or the Bond Insurer] and
(2) continues unremedied for a period of [___] days after the date on which
written notice of such failure (which notice shall refer specifically to this
Section), requiring the same to be remedied, shall have been given to the Master
Servicer by the Trustee[, at the direction of the Bond Insurer, or by the Bond
Insurer, or, with the consent of the Bond Insurer, to the Master Servicer by the
Holders of Bonds evidencing Voting Interests represented by all Bonds
aggregating not less than ____].
(c) The entry against the Master Servicer of a decree or order by
a court or agency or supervisory authority having jurisdiction in the premises
for the appointment of a trustee, conservator, receiver or liquidator in any
insolvency, 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 [___] consecutive days;
(d) The consent by the Master Servicer to the appointment of a
trustee, conservator or receiver or liquidator in any bankruptcy, insolvency,
readjustment of debt, marshalling of assets and liabilities or similar
proceedings of or relating to the Master Servicer or of or relating to
substantially all of its property; or the admission by the Master Servicer in
writing of its inability to pay its debts generally as they become due, the
Master Servicer's filing of a petition to take advantage of any applicable
bankruptcy, insolvency or reorganization statute, the Master Servicer's making
of an assignment for the benefit of its creditors, or the Master Servicer's
voluntary suspension of payment of its obligations;
(e) The occurrence of a Delinquency Rate Trigger, a Cumulative
Loss Rate Trigger or a Rolling Loss Rate Trigger;
(f) The Master Servicer's Net Worth as of the end of any fiscal
quarter, commencing with the fiscal quarter ended _________ ___, 20___, being
less than the Target Net Worth for such quarter; provided, however, that this
default test shall not apply to any quarter ended after _________ ___, 20___; or
(g) Breach by the Master Servicer in any material respect of any
of its representations and warranties made herein or in the Sales Agreement (not
including Section 4(b) thereof), or in any certificate delivered pursuant hereto
or thereto, and the failure of the Master Servicer to cure such breach in all
material respects within [___] days after the notice of such breach shall have
been given to the Master Servicer by the Depositor, the Trustee [or the Bond
Insurer];
then, and in each and every such case, so long as such Event of Default shall
not have been remedied by the Master Servicer, [either (1) the Bond Insurer or
(2) with the prior written consent of the Bond Insurer,] either the Trustee or
the Holders of Bonds evidencing Voting Interests represented by all Bonds
aggregating not less than [___], by notice then given in writing to the
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<PAGE> 38
Master Servicer with a copy to [the Bond Insurer and to] the Trustee, may
terminate all of the rights, responsibilities and obligations of the Master
Servicer as servicer under this Agreement. On or after the receipt by the Master
Servicer of such written notice, all authority and power of the Master Servicer
under this Agreement, whether with respect to the Mortgage Loans or otherwise,
shall pass to and be vested in the Trustee (unless a successor Master Servicer
has been appointed pursuant to Section 6.2) pursuant to and under this Section
and, without limitation, the Trustee or successor Master Servicer 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 the Mortgage Notes and related documents, or otherwise. The
Master Servicer agrees to cooperate with the Trustee in effecting the
termination of its responsibilities and rights as Master Servicer hereunder,
including, without limitation, the transfer to the Trustee or successor Master
Servicer for the administration by it of all cash amounts that shall at the time
be held by the Master Servicer that have been deposited by the Master Servicer
in the Collateral Proceeds Account or transferred to the Trustee for deposit
into the Bond Account or thereafter received by the Master Servicer with respect
to the Mortgage Loans.
The Trustee shall notify the Master Servicer in writing immediately
upon its becoming aware of a default described in Section 6.1(a).
All reasonable costs and expenses (including attorneys' fees) incurred
in connection with transferring the Servicer Mortgage Loan Files to a successor
Master Servicer, amending this Agreement to reflect the appointment of a
successor as Master Servicer pursuant to this Section 6.1 or otherwise in
connection with the assumption by a successor Master Servicer of the duties of
the predecessor Master Servicer hereunder shall be paid by the predecessor
Master Servicer upon presentation of reasonable documentation of such costs and
expenses.
SECTION 6.2 TRUSTEE TO ACT; APPOINTMENT OF SUCCESSOR.
On and after the time the Master Servicer receives a notice of
termination pursuant to Section 6.1, the Trustee shall appoint a successor
Master Servicer meeting the criteria described below and, if it does not appoint
a successor, or until the successor's appointment takes effect, the Trustee
shall be the successor in all respects to the Master 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 Master Servicer by the terms and provisions
hereof, including without limitation, the obligation to make Monthly Advances
[and to pay Compensating Interest]. As compensation therefor, the Trustee shall
be entitled to such compensation as the Master Servicer would have been entitled
to hereunder if no such notice of termination had been given. In the event the
Trustee fails to appoint a successor Master Servicer, and the Trustee is
unwilling or legally unable to act as successor Master Servicer itself, it may
petition a court of competent jurisdiction to appoint, any established housing
and home finance institution or any institution that regularly services
residential mortgage loans that is then servicing
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<PAGE> 39
a residential mortgage loan portfolio and having all licenses, permits and
approvals required by applicable law, and having a net worth of not less than
[$__________], as the successor to the Master Servicer hereunder in the
assumption of all or any part of the responsibilities, duties or liabilities of
the Master Servicer hereunder; [provided that any such successor Master Servicer
(other than the Trustee) shall be acceptable to the Bond Insurer, which
acceptance shall not be unreasonably withheld and] provided further that the
appointment of any such successor Master Servicer will not result in the
qualification, reduction or withdrawal of the implied rating assigned to the
Bonds by any Rating Agency, [without taking into account the existence of the
Bond Insurance Policy]. Pending appointment of a successor to the Master
Servicer hereunder, unless the Trustee is prohibited by law from so acting, the
Trustee shall act in such capacity as hereinabove provided. In connection with
such appointment and assumption, the Trustee may make such arrangements for the
compensation of such successor out of payments on Mortgage Loans as it and such
successor shall agree; provided, however, that no such compensation shall be in
excess of that permitted the Master Servicer hereunder. The Trustee and such
successor shall take such action, consistent with this Agreement, as shall be
necessary to effect any such succession. The appointment of a successor Master
Servicer shall not affect any liability of the predecessor Master Servicer that
may have arisen under this Agreement prior to its termination as Master
Servicer, nor shall any successor Master Servicer be liable for any acts or
omissions of the predecessor Master Servicer or for any breach by such Master
Servicer or the Depositor of any of its representations or warranties contained
herein or in any related document or agreement. Each of the Rating Agencies
shall be given written notice of the appointment of a successor Master Servicer
pursuant to this Section.
SECTION 6.3 NOTIFICATIONS TO BONDHOLDERS.
Upon any termination or appointment of a successor to the Master
Servicer pursuant to this Article Six, the Trustee shall give prompt written
notice thereof to Bondholders at their respective addresses appearing in the
Bond Register, the Depositor, [the Bond Insurer] and to each Rating Agency.
Within [___] days of obtaining actual knowledge of the occurrence of
any Event of Default that remains uncured, the Trustee shall transmit by mail to
all Bondholders notice of such Event of Default.
SECTION 6.4 ASSUMPTION OR TERMINATION OF SUB-SERVICING AGREEMENTS
BY THE TRUSTEE OR ANY SUCCESSOR MASTER SERVICER.
Upon the termination of the Master Servicer as servicer under this
Agreement, the Trustee as successor to the Master Servicer hereunder or any
other successor to the Master Servicer hereunder may, subject to the terms of
any Sub-Servicing Agreement, in its sole and absolute discretion elect to assume
or terminate any Sub-Servicing Agreement then in force and effect between the
Master Servicer and the Sub-Servicer. Notwithstanding the foregoing, any
termination fee due to a Sub-Servicer because of its termination by the Trustee
hereunder shall be the
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<PAGE> 40
responsibility of the terminated Master Servicer and not the Trustee. Upon the
assumption of any Sub-Servicing Agreement, the terminated Master Servicer agrees
to deliver to the assuming party any and all documents and records relating to
the applicable Sub-Servicing Agreement and an accounting of amounts collected
and held by it and otherwise use its best reasonable efforts to effectuate the
orderly transfer of the Sub-Servicing Agreement.
SECTION 6.5 PAYMENT OF TRUSTEE'S FEES AND EXPENSES.
(a) On each Payment Date, the Trustee will be entitled to retain
its Trustee Fee from amounts deposited into the Bond Account on the related
Deposit Date. The Trustee Fee constitutes compensation for all services rendered
by the Trustee in the exercise and performance of any of the powers and duties
hereunder or under the Indenture. The Trustee does not and will not have any
lien on the Trust Estate for payment of any such fees or expenses.
(b) The Master Servicer shall pay or reimburse the Trustee, from
its own funds, upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Trustee in accordance with any of the
provisions of this Agreement and the Indenture, (including but not limited to
the reasonable compensation and the expenses and disbursements of its counsel
and of all persons not regularly in its employ) except any such expense,
disbursement or advance as may arise from its negligence or bad faith or that is
otherwise reimbursed to the Trustee, and except for routine, recurring or
nominal expenses, disbursements and advances; provided, however, that the
Trustee shall not refuse to perform any of its duties hereunder or under the
Indenture solely as a result of the failure of the Master Servicer to pay or
reimburse such expenses, disbursements or advances.
(c) The Master Servicer agrees to indemnify the Trustee, and its
agents, directors, employees and officers (each an "Indemnified Party") from,
and hold it harmless against, any and all losses and liabilities, damages,
claims or expenses (including reasonable attorneys' fees, expenses and
disbursements), incurred or in connection with this Agreement, the Indenture or
the Bonds, including, but not limited to, any such loss, liability or expense
incurred, arising in respect of or in connection with any legal action against
the Trust Estate, the Depositor or the Trustee or any director, officer,
employee or agent thereof, or the performance of any of the Trustee's duties
hereunder (except in the event it assumes the duties and obligations of the
Servicer hereunder as the result of an Event of Default) or the Indenture, other
than any loss, liability or expense incurred by reason of the negligence, bad
faith or intentional misconduct of the Trustee. Notwithstanding the generality
of the foregoing, if any action, suit or other proceeding is brought against an
Indemnified Party for which the Indemnified Party seeks indemnification
hereunder, the Indemnified Party shall promptly notify the Master Servicer of
the commencement thereof, whereupon the Master Servicer will be entitled to
participate therein, and to assume the defense thereof, with counsel selected by
the Master Servicer and reasonably satisfactory to such Indemnified Party,
provided, that, if in the Indemnified Party's reasonable judgment the
Indemnified Party has any claims or defenses that conflict with or differ from
the interests of the Master Servicer, the Indemnified Party shall be entitled to
select counsel of its choosing and pursue such claims and defenses separately
and all
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<PAGE> 41
related costs, expenses and liabilities associated with such separate claims or
defenses will continue to be covered by the Master Servicer's indemnification
obligation hereunder. The Master Servicer shall not be entitled to settle any
proceeding without the consent of any Indemnified Party with any right of
indemnification hereunder with respect to such proceeding except upon such terms
as will provide each such Indemnified Party reasonable assurance of full
indemnity hereunder.
(d) This Section 6.5 shall survive the termination of this
Agreement or the resignation or removal of the Trustee or the Master Servicer as
regards rights accrued prior to such resignation or removal.
(e) Amounts required to be paid by the Master Servicer to the
Trustee under subsections (b) and (c) above shall be paid by the Master Servicer
out of its own funds, and shall not be reimbursable to the Master Servicer from
the Collateral Proceeds Account or netted by the Master Servicer out of funds it
is required to deposit into the Collateral Proceeds Account.
ARTICLE 7
TERMINATION
SECTION 7.1 TERMINATION.
Except as otherwise specifically set forth herein, the obligations and
responsibilities of the Master Servicer shall terminate upon the earliest to
occur of (1) the final payment or other liquidation of the Mortgage Loans and
the disposition of all REO Properties and the remittance of all funds due
hereunder with respect to such Mortgage Loans and REO Properties and (2) the
satisfaction and discharge of the indebtedness evidenced by the Bonds [and the
payment of all amounts due the Bond Insurer under the Indenture].
ARTICLE 8
MISCELLANEOUS PROVISIONS
SECTION 8.1 AMENDMENT.
This Agreement may be amended from time to time by the Master Servicer,
the Depositor and the Trustee, without the consent of any of the Bondholders
[but only with the prior written consent of the Bond Insurer (which consent
shall not be unreasonably withheld)], (1) to cure any error or any ambiguity or
to correct or supplement any provisions herein which may be inconsistent with
any other provisions herein, or (2) to comply with the requirements of the Code;
provided that in all such cases the Trustee shall have received written
confirmation from each Rating Agency that any such modifications to this
Agreement will not result in a qualification, reduction or withdrawal of the
implied rating assigned to the Bonds by such Rating Agency [(without taking into
account the Bond Insurance Policy)]; provided, further, that in all such cases
such action shall not, as evidenced by an Opinion of Counsel furnished by and at
the expense of the party requesting such amendment, adversely affect in any
material respect the interests of any Bondholder [or the Bond Insurer].
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This Agreement may also be amended from time to time by the Master
Servicer, the Depositor and the Trustee, with the consent of the [Bond Insurer
(which consent shall not be unreasonably withheld) and the] Holders of Bonds
evidencing Voting Interests of the Bonds affected thereby aggregating greater
than [___], 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 Holders of Bonds of such Bonds; provided,
however, that no such amendment shall (1) reduce in any manner the amount of, or
delay the timing of, collections of payments on Mortgage Loans or payments which
are required to be deposited into the Bond Account without the consent of all
Bondholders or (2) reduce the aforesaid percentage of the Bonds the Holders of
which are required to consent to any such amendment, without the consent of the
Holders of all Bonds then outstanding.
Promptly after the execution of any such amendment or consent pursuant
to the second preceding paragraph, the Trustee shall furnish written
notification of the substance of such amendment to each Bondholder and an
executed copy of such amendment to each Rating Agency, with a copy to each of
the Underwriters.
It shall not be necessary for the consent of Bondholders under this
Section 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 Bondholders shall be subject to such reasonable
requirements as the Trustee may prescribe.
Prior to the execution of any amendment to this Agreement, the Trustee
[and the Bond Insurer] shall be entitled to receive and rely upon an Opinion of
Counsel furnished by and at the expense of the party requesting such amendment
stating that the execution of such amendment is authorized or permitted by this
Agreement. The Trustee may, but shall not be obligated to, enter into any such
amendment that affects the Trustee's own rights, duties or immunities under this
Agreement.
SECTION 8.2 GOVERNING LAW.
This Agreement shall be construed in accordance with the laws of the
[______________] (without regard to conflict of laws principles and the
application of the laws of any other jurisdiction), and the obligations, rights
and remedies of the parties hereunder shall be determined in accordance with
such laws.
SECTION 8.3 NOTICES.
All demands, notices and communications hereunder shall be in writing
and shall be deemed to have been duly given when delivered to (a) in the case of
the Depositor in care of
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___________________________________________________; (b) in the case of the
Master Servicer, at _____________________________________________________; (c)
in the case of the Trustee, at its Corporate Trust Office at
____________________________________; (d) in the case of the Bond Insurer,
____________________________________________; (e) in the case of
[__________________________________________________________________, or, as to
each party,] at such other address as shall be designated by such party in a
written notice to each other party; and (g) in the case of the Underwriters, to
the respective addresses specified in the Underwriting Agreement. Any notice
required or permitted to be mailed to a Bondholder shall be given by first class
mail, postage prepaid, at its address shown in the Bond 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 Bondholder receives such
notice. Any notice or other document required to be delivered or mailed by the
Trustee to any Rating Agency shall be given on a best efforts basis and only as
a matter of courtesy and accommodation and the Trustee shall have no liability
for failure to deliver such notice or document to any such Rating Agency.
SECTION 8.4 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 Bonds or the rights of the Holders thereof.
SECTION 8.5 ASSIGNMENT.
Notwithstanding anything to the contrary contained herein, except as
provided in Sections 5.3 and 5.5, this Agreement may not be assigned by the
Depositor or the Master Servicer without the prior written consent of [the Bond
Insurer and] the Holders of Bonds evidencing not less than [___] of the Voting
Interests of all Bonds.
SECTION 8.6 [THIRD PARTY BENEFICIARY; RATING.
(a) The Bond Insurer is an intended third-party beneficiary of
this Agreement. This Agreement shall be binding upon and inure to the benefit of
the Bond Insurer; provided that, notwithstanding the foregoing, for so long as a
Bond Insurer Default is continuing, the Bondholders shall succeed to the Bond
Insurer's rights hereunder. Without limiting the generality of the foregoing,
all covenants and agreements in this Agreement that expressly confer rights upon
the Bond Insurer shall be for the benefit of and run directly to the Bond
Insurer, and the Bond Insurer shall be entitled to rely on and enforce such
covenants to the same extent as if it were a party to this Agreement.
(b) In the event the rating of the Bond Insurer by any of the
Rating Agencies is reduced to a rating that is below "investment grade" (as that
term is then commonly used), the Servicer
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shall, at its own expense, seek to obtain ratings of the Bonds (apart from the
rating related to the Bond Insurance Policy) from such Rating Agency.]
SECTION 8.7 COUNTERPARTS.
This Agreement may be executed simultaneously in any number of
counterparts. Each counterpart shall be deemed to be an original, and all such
counterparts shall constitute one and the same instrument.
SECTION 8.8 INTENTION OF THE PARTIES.
It is the intention of the parties that the Depositor is conveying, and
the Master Servicer is receiving, only a contract for servicing and
administering the Mortgage Loans. Accordingly, the parties hereby acknowledge
that the Trustee remains the sole and absolute record holder of the Mortgage
Loans and all rights related thereto.
SECTION 8.9 WAIVERS AND MODIFICATIONS.
No term or provision of this Agreement may be waived or modified unless
such waiver or modification is in writing and signed by the party against whom
such waiver or modification is sought to be enforced.
SECTION 8.10 FURTHER AGREEMENTS.
The Master Servicer and the Depositor each agree to execute and deliver
to the other such reasonable and appropriate additional documents, instruments
or agreements as may be necessary or appropriate to effectuate the purposes of
this Agreement.
SECTION 8.11 ATTORNEY-IN-FACT.
The Depositor hereby designates the Master Servicer its agent and
attorney-in-fact to execute any financing statement, continuation statement or
other instrument required pursuant to this Agreement or the Indenture.
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<PAGE> 45
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers, all as of the day and year first
above written.
UNION PLANTERS HOME EQUITY CORP.,
as Depositor
By:
-----------------------------------------
Authorized Signatory
-----------------------------------------
AS MASTER SERVICER
By:
-----------------------------------------
Name:
Title:
-----------------------------------------
AS TRUSTEE AND NOT IN ITS
INDIVIDUAL CAPACITY
By:
-----------------------------------------
Name:
Title:
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<PAGE> 46
Schedule I
Mortgage Loan Schedule
[on file with the Trustee and the Master Servicer]
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<PAGE> 47
Exhibit A-1
EXHIBIT A
FORM OF ANNUAL STATEMENT AS TO COMPLIANCE
The undersigned, ________________________, of ________________________
(the "Master Servicer"), in its capacity as Master Servicer under that certain
Servicing Agreement dated as of __________ , 20___ (the "Servicing Agreement")
among Union Planters Home Equity Corp., as Depositor, ____________________, as
Master Servicer, and __________________, National Association, as Trustee, does
hereby certify pursuant to Section 2.8 of the Servicing Agreement that as of the
___ day of ____________, 20__:
(a) review of the activities of the Servicer for the year ended
[______________] and of its performance under the Servicing
Agreement has been made under my supervision, and
(b) to the best of my knowledge, based on such review, the
Servicer has fulfilled all of its material obligations under
the Servicing Agreement throughout such year.
IN WITNESS WHEREOF, I have hereunto signed my name as of this ____ day
of ___________, 20__.
-----------------------------------------
Name:
Title:
<PAGE> 48
EXHIBIT B
REQUEST FOR RELEASE OF DOCUMENTS AND RECEIPT
TO: [Trustee]
[Address]
[Address]
RE: Servicing Agreement, dated as of ____________ , 20___, among
Union Planters Home Equity Corp. (the "Depositor"),
_________________________, as Master Servicer, and
_________________, [National Association,] as Trustee (the
"Servicing Agreement")
In connection with the administration of the Mortgage Loans held by you
as the Trustee, we request the release and acknowledge receipt of the Mortgage
Loan File [specify documents if only a partial Mortgage Loan File is being
released) for the Mortgage Loan described below, for the reason indicated.
Mortgagor's Name and Address & Zip Code:
Mortgage Loan Number:
Reason for Requesting Documents (check one)
_____ 1. Mortgage Loan Paid in Full. (The Master Servicer hereby
certifies that all amounts received in connection therewith
have been deposited into the Collateral Proceeds Account as
provided in the Servicing Agreement.)
_____ 2. Mortgage Loan in Foreclosure.
_____ 3. Substitution of Qualified Replacement Mortgage Loan.
_____ 4. Mortgage Loan Liquidated by _________________. (The Master
Servicer hereby certifies that all proceeds of foreclosure,
insurance, condemnation or other liquidation have been finally
received.)
_____ 5. Other (explain). ________________________________________
Exhibit B - Page 1
<PAGE> 49
If item 1, 3 or 4 above is checked, and if all or part of the Mortgage Loan File
was previously released to us, please release to us our previous request and
receipt on file with you, as well as any additional documents in your possession
relating to the specified Mortgage Loan.
If item 1, 3 or 4 above is checked, and if all or part of the Mortgage Loan File
was previously released to us, please release to us our previous request and
receipt on file with you, as well as any additional documents in your possession
relating to the specified Mortgage Loan.
If item 2 or 5 is checked, upon our return of all of the above
documents to you as the Trustee, please acknowledge your receipt by signing in
the space indicated below, and returning this form.
Capitalized terms used herein but not defined herein have the meanings
ascribed to them in the Servicing Agreement or in the Indenture.
-----------------------------------------
AS MASTER SERVICER
By:
-------------------------------------
Name:
------------------------------
Title:
------------------------------
Date:
-------------------------------
Acknowledgment of Documents returned to the Trustee:
-----------------------------------------
AS TRUSTEE
By:
-------------------------------------
Name:
------------------------------
Title:
------------------------------
Date:
-------------------------------
Exhibit B - Page 2
<PAGE> 50
EXHIBIT E
FORM OF LIQUIDATION REPORT
Customer Name:
Account Number:
Original Principal Balance:
1. Type of Liquidation (REO disposition/charge-off/short pay-off)
Date last paid
Date of foreclosure
Date of REO
Date of REO Disposition
Property Sale Price/Estimated Market Value of disposition
2. Liquidation Proceeds $____________
Principal Prepayment _____________
Property Sale Proceeds _____________
Insurance Proceeds _____________
Other (itemize) _____________
Total Proceeds $____________
3. Liquidation Expenses
Servicing Advances $____________
Delinquency Advances _____________
Monthly Advances _____________
Servicing Fees _____________
Other Servicing Compensation _____________
Total Advances $____________
4. Net Liquidation Proceeds $____________ (Item 2 minus Item 3)
5. Principal Balance of Mortgage Loan $____________
6. Loss, if any (Item 5 minus Item 4) $____________
Exhibit B - Page 3
