_________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported)
February 5, 1998
STRUCTURED ASSET SECURITIES CORPORATION (as depositor under the Trust
Agreement, dated as of January 1, 1998, providing for the issuance of
Structured Asset Securities Corporation Mortgage Pass-Through
Certificates, Series 1998-1)
Structured Asset Securities Corporation
______________________________________________________
(Exact Name of Registrant as Specified in its Charter)
Delaware 33-99598 74-2440850
---------------------------- ----------- ------------------
(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification No.)
200 Vesey Street
New York, New York 10285
--------------------- -------------
(Address of Principal (Zip Code)
Executive Offices)
Registrant's telephone number, including area code: (212) 526-5594
No Change
-------------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
Item 5. Other Events
____________
A. The Registrant registered issuances of Structured Asset Securities
Corporation Pass-Through Certificates on a delayed or continuous basis
pursuant to Rule 415 under the Securities Act of 1933, as amended (the
"Act"), by a Registration Statement on Form S-3 (Registration File No. 33-
99598) (the "Registration Statement"). Pursuant to the Registration
Statement, the Registrant issued approximately $340,043,200 in aggregate
principal amount of Class A1, Class A2, Class R1 and Class R2 Certificates of
its Structured Asset Securities Corporation Mortgage Pass-Through
Certificates, Series 1998-1 on February 5, 1998. This Current Report on Form
8-K is being filed to satisfy an undertaking, contained in the definitive
Prospectus dated May 21, 1996, as supplemented by the Prospectus Supplement
dated February 3, 1998, to file a copy of the Trust Agreement (as defined
below) executed in connection with the issuance of the Certificates, a form
of which was filed as an exhibit to the Registration Statement.
The Certificates were issued pursuant to a Trust Agreement (the "Trust
Agreement"), attached hereto as Exhibit 4.1, dated as of January 1, 1998,
___________
among Structured Asset Securities Corporation, as depositor (the
"Depositor"), First Union National Bank, as trustee (the "Trustee") and
Norwest Bank Minnesota, National Association, as master servicer (the "Master
Servicer"). The "Certificates" consist of the following classes: Class A1,
Class A2, Class B1, Class B2, Class B3, Class B4, Class R1 and Class R2. The
Certificates evidence all the beneficial ownership interest in a trust fund
that consists primarily of a pool of fixed rate, fully amortizing,
conventional, first lien, residential mortgage loans (the "Mortgage Loans")
with an aggregate outstanding principal balance of approximately $355,136,702
as of January 1, 1998, together with certain other assets. Capitalized terms
used herein and not otherwise defined shall have the meanings assigned to
them in the Trust Agreement.
Item 7. Financial Statements; Pro Forma Financial Information and
_________________________________________________________
Exhibits
________
(a) Not applicable.
(b) Not applicable.
(c) Exhibits:
1.1 Terms Agreement, dated February 3, 1998, between
Structured Asset Securities Corporation and Lehman
Brothers Inc.
4.1 Trust Agreement, dated as of January 1, 1998, among
Structured Asset Securities Corporation, as Depositor,
First Union National Bank, as Trustee, and Norwest Bank
Minnesota, National Association, as Master Servicer.
99.1 Aurora Loan Services, Inc. delinquency and foreclosure
information, incorporated by reference to the
Registrant's Form 8-K dated January 30, 1998, as filed
with the Commission on February 13, 1998.
99.2 Mortgage Loan Sale and Assignment Agreement, dated as of
January 1, 1998, between Lehman Capital, A Division of
Lehman Brothers Holdings Inc., as Seller, and Structured
Asset Securities Corporation, as Purchaser.
99.3 Servicing Agreement, dated as of January 1, 1998, between
Lehman Capital, A Division of Lehman Brothers Holdings
Inc., and Aurora Loan Services, Inc., as servicer.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
STRUCTURED ASSET SECURITIES
CORPORATION
By: /s/ Joseph Kelly
_______________________________
Name: Joseph Kelly
Title: Vice President
Dated: February 20, 1998
EXHIBIT INDEX
_____________
Exhibit No. Description Page No.
___________ ___________ __________
1.1 Terms Agreement, dated February 3, 1998,
1998, between Structured Asset Securities
Corporation and Lehman Brothers Inc.
4.1 Trust Agreement, dated as of January 1,
1998, among Structured Asset Securities
Corporation, as Depositor, First Union
National Bank, as Trustee, and Norwest
Bank Minnesota, National Association, as
Master Servicer.
99.1 Aurora Loan Services, Inc. delinquency
and foreclosure information, incorporated
by reference to the Registrant's Form 8-K
dated January 30, 1998, as filed with the
Commission on February 13, 1998.
99.2 Mortgage Loan Sale and Assignment Agreement,
dated as of January 1, 1998, between Lehman
Capital, A Division of Lehman Brothers
Holdings Inc., as Seller, and Structured
Asset Securities Corporation, as Purchaser.
99.3 Servicing Agreement, dated as of January 1,
1998, between Lehman Capital, A Division of
Lehman Brothers Holdings Inc., and Aurora
Loan Services, Inc., as servicer.
STRUCTURED ASSET SECURITIES CORPORATION
MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 1998-1
TERMS AGREEMENT
Dated: February 3, 1998
To: Structured Asset Securities Corporation, as Depositor under the Trust
Agreement dated as of January 1, 1998 (the "Trust Agreement").
Re: Underwriting Agreement Standard Terms dated as of April 16, 1996 (the
"Standard Terms," and together with this Terms Agreement, the
"Agreement").
Series Designation: Series 1998-1.
Terms of the Series 1998-1 Certificates: Structured Asset Securities
Corporation, Series 1998-1 Mortgage Pass-Through Certificates, Class A1,
Class A2, Class B1, Class B2, Class B3, Class B4, Class R1 and Class R2 (the
"Certificates") will evidence, in the aggregate, the entire beneficial
ownership interest in a trust fund (the "Trust Fund"). The primary assets of
the Trust Fund consist of a pool of adjustable rate, conventional, first lien
residential mortgage loans (the "Mortgage Loans"). Only the Class A1 and
Class A2 Certificates (collectively, the "Senior Certificates") and the Class
R1 and Class R2 Certificates (together with the Senior Certificates, the
"Offered Certificates") are being sold pursuant to the terms hereof.
Registration Statement: File Number 33-99598.
Certificate Ratings: It is a condition of Closing that at the Closing Date
the Class A1, Class R1 and Class R2 Certificates that they be rated "AAA" by
Standard & Poor's Ratings Services, a division of The McGraw-Hill Companies,
Inc. ("S&P") and "Aaa" by Moody's Investors Service, Inc. ("Moody's" and
together with S&P, the "Rating Agencies"); that the Class A2 Certificates be
rated "AAAr" by S&P and "Aaa" by Moody's; that the Class B1 Certificates be
rated "BBB-" or higher by S&P and "Baa2" by Moody's; that the Class B2
Certificates be rated "BB" or higher by S&P; and that the Class B3
Certificates be rated "B" or higher by S&P.
Terms of Sale of Offered Certificates: The Depositor agrees to sell to
Lehman Brothers Inc. (the "Underwriter") and the Underwriter agrees to
purchase from the Depositor, the Offered Certificates in the principal
amounts and prices set forth on Schedule 1 annexed hereto. The purchase
price for the Offered Certificates shall be the Purchase Price Percentage set
forth in Schedule 1 plus accrued interest at the initial interest rate per
annum from and including the Cut-off Date up to, but not including, the
Closing Date.
The Underwriter will offer the Offered Certificates to the public from time
to time in negotiated transactions or otherwise at varying prices to be
determined at the time of sale.
Cut-off Date: January 1, 1998.
Closing Date: 10:00 A.M., New York time, on or about February 5, 1998. On
the Closing Date, the Depositor will deliver the Offered Certificates to the
Underwriter against payment therefor for the account of the Underwriter.
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us a counterpart hereof, whereupon this
instrument along with all counterparts will become a binding agreement
between the Depositor and the Underwriter in accordance with its terms.
LEHMAN BROTHERS INC.
By: /s/ Martin Harding
Name: Martin Harding
Title: Managing Director
Accepted:
STRUCTURED ASSET SECURITIES
CORPORATION
By: /s/ Joseph Kelly
Name: Joseph Kelly
Title: Vice President
Schedule 1
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Initial
Certificate Certificate Purchase
Principal Interest Price
Class Amount(1)
Rate Percentage
Class A1 $340,043,000.00 (2) 100.226%
Class A2 (3) (4) 3.000
Class R1 100.00 (5) 100.000
Class R2 100.00 (5) 100.000
</TABLE>
________________________________
(1) Approximate.
(2) Interest will accrue on the Class A1 Certificates at the applicable per
annum rate described in the Prospectus Supplement.
(3) The Class A2 Certificates will have no Certificate Principal Amount and
will be interest-only Certificates, as described in the Prospectus
Supplement.
(4) Interest will accrue on the Class A2 Certificates at the applicable per
annum rate described in the Prospectus Supplement.
(5) Interest will accrue on the Class R1 and Class R2 Certificates at the
applicable per annum rate described in the Prospectus Supplement.
STRUCTURED ASSET SECURITIES CORPORATION, as Depositor,
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, as Master Servicer,
and
FIRST UNION NATIONAL BANK, as Trustee
___________________________
TRUST AGREEMENT
Dated as of January 1, 1998
___________________________
STRUCTURED ASSET SECURITIES CORPORATION
MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1998-1
TABLE OF CONTENTS
Section Page
ARTICLE I
DEFINITIONS
1.01. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.02. Calculations Respecting Mortgage Loans . . . . . . . . . . . . . . 34
1.03. Calculations Respecting Accrued Interest . . . . . . . . . . . . . 34
ARTICLE II
DECLARATION OF TRUST;
ISSUANCE OF CERTIFICATES
2.01. Creation and Declaration of Trust Fund; Conveyance of
Mortgage Loans . . . . . . . . . . . . . . . . . . . . . . . . . 34
2.02. Acceptance of Trust Fund by Trustee: Review of
Documentation for Trust Fund . . . . . . . . . . . . . . . . . . 38
2.03. Representations and Warranties of the Depositor . . . . . . . . . 40
2.04. Discovery of Breach . . . . . . . . . . . . . . . . . . . . . . . 41
2.05. Repurchase, Purchase or Substitution of Mortgage Loans . . . . . . 42
2.06. Modification of Mortgage Loan . . . . . . . . . . . . . . . . . . 43
2.07. Grant Clause . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
ARTICLE III
THE CERTIFICATES
3.01. The Certificates . . . . . . . . . . . . . . . . . . . . . . . . . 45
3.02. Registration . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
3.03. Transfer and Exchange of Certificates . . . . . . . . . . . . . . 46
3.04. Cancellation of Certificates . . . . . . . . . . . . . . . . . . . 49
3.05. Replacement of Certificates . . . . . . . . . . . . . . . . . . . 49
3.06. Persons Deemed Owners . . . . . . . . . . . . . . . . . . . . . . 50
3.07. Temporary Certificates . . . . . . . . . . . . . . . . . . . . . . 50
3.08. Appointment of Paying Agent . . . . . . . . . . . . . . . . . . . 51
3.09. Book-Entry Certificates . . . . . . . . . . . . . . . . . . . . . 51
ARTICLE IV
ADMINISTRATION OF THE TRUST FUND
4.01. Collection Account . . . . . . . . . . . . . . . . . . . . . . . . 53
4.02. Application of Funds in the Collection Account . . . . . . . . . . 55
4.03. Reports to Certificateholders . . . . . . . . . . . . . . . . . . 57
4.04. Certificate Account . . . . . . . . . . . . . . . . . . . . . . . 60
4.05. Determination of LIBOR . . . . . . . . . . . . . . . . . . . . . . 61
4.06. The Interest Reserve Fund . . . . . . . . . . . . . . . . . . . . 62
ARTICLE V
DISTRIBUTIONS TO HOLDERS OF CERTIFICATES
5.01. Distributions Generally . . . . . . . . . . . . . . . . . . . . . 63
5.02. Distributions from the Certificate Account . . . . . . . . . . . . 64
5.03. Allocation of Realized Losses . . . . . . . . . . . . . . . . . . 67
5.04. Advances by Master Servicer and Trustee . . . . . . . . . . . . . 69
5.05. Distributions of Principal on Redemption Certificates . . . . . . 70
5.06. Compensating Interest Payments . . . . . . . . . . . . . . . . . . 76
5.07. The Certificate Insurance Policy . . . . . . . . . . . . . . . . . 76
ARTICLE VI
CONCERNING THE TRUSTEE; EVENTS OF DEFAULT
6.01. Duties of Trustee . . . . . . . . . . . . . . . . . . . . . . . . 79
6.02. Certain Matters Affecting the Trustee . . . . . . . . . . . . . . 81
6.03. Trustee Not Liable for Certificates . . . . . . . . . . . . . . . 82
6.04. Trustee May Own Certificates . . . . . . . . . . . . . . . . . . . 83
6.05. Eligibility Requirements for Trustee . . . . . . . . . . . . . . . 83
6.06. Resignation and Removal of Trustee . . . . . . . . . . . . . . . . 83
6.07. Successor Trustee . . . . . . . . . . . . . . . . . . . . . . . . 84
6.08. Merger or Consolidation of Trustee . . . . . . . . . . . . . . . . 85
6.09. Appointment of Co-Trustee, Separate Trustee or Custodian . . . . . 85
6.10. Authenticating Agents . . . . . . . . . . . . . . . . . . . . . . 87
6.11. Indemnification of Trustee . . . . . . . . . . . . . . . . . . . . 88
6.12. Fees and Expenses of Trustee . . . . . . . . . . . . . . . . . . . 89
6.13. Collection of Monies . . . . . . . . . . . . . . . . . . . . . . . 89
6.14. Trustee To Act; Appointment of Successor . . . . . . . . . . . . . 89
6.15. Additional Remedies of Trustee Upon Event of Default . . . . . . . 94
6.16. Waiver of Defaults . . . . . . . . . . . . . . . . . . . . . . . . 94
6.17. Notification to Holders . . . . . . . . . . . . . . . . . . . . . 94
6.18. Directions by Certificateholders and Duties of Trustee
During Event of Default . . . . . . . . . . . . . . . . . . . . . 94
6.19. Action Upon Certain Failures of the Master Servicer and
Upon Event of Default . . . . . . . . . . . . . . . . . . . . . . 95
ARTICLE VII
PURCHASE AND TERMINATION
OF THE TRUST FUND
7.01. Termination of Trust Fund Upon Repurchase or Liquidation
of All Mortgage Loans . . . . . . . . . . . . . . . . . . . . . . 95
7.02. Procedure Upon Termination of Trust Fund . . . . . . . . . . . . . 97
7.03. Additional Trust Fund Termination Requirements . . . . . . . . . . 98
ARTICLE VIII
RIGHTS OF CERTIFICATEHOLDERS
8.01. Limitation on Rights of Holders . . . . . . . . . . . . . . . . . 99
8.02. Access to List of Holders . . . . . . . . . . . . . . . . . . . . 100
8.03. Acts of Holders of Certificates . . . . . . . . . . . . . . . . . 101
ARTICLE IX
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
BY THE MASTER SERVICER
9.01. Duties of the Master Servicer . . . . . . . . . . . . . . . . . . 102
9.02. Master Servicer Fidelity Bond and Master Servicer Errors
and Omissions Insurance Policy . . . . . . . . . . . . . . . . . 102
9.03. Master Servicer's Financial Statements and Related
Information . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
9.04. Power to Act; Procedures . . . . . . . . . . . . . . . . . . . . . 103
9.05. Servicing Agreements Between the Master Servicer and
Servicers; Enforcement of Servicers' Obligations . . . . . . . . 105
9.06. Collection of Taxes, Assessments and Similar Items . . . . . . . . 106
9.07. Termination of Servicing Agreements; Successor Servicers . . . . . 107
9.08. Master Servicer Liable for Enforcement . . . . . . . . . . . . . . 107
9.09. No Contractual Relationship Between Servicers and Trustee
or Depositor . . . . . . . . . . . . . . . . . . . . . . . . . . 107
9.10. Assumption of Servicing Agreement by Trustee . . . . . . . . . . . 108
9.11. "Due-on-Sale" Clauses; Assumption Agreements . . . . . . . . . . . 108
9.12. Release of Mortgage Files . . . . . . . . . . . . . . . . . . . . 108
9.13. Documents, Records and Funds in Possession of Master
Servicer To Be Held for Trustee . . . . . . . . . . . . . . . . . 110
9.14. Representations and Warranties of the Master Servicer . . . . . . 111
9.15. Closing Certificate and Opinion . . . . . . . . . . . . . . . . . 114
9.16. Standard Hazard and Flood Insurance Policies . . . . . . . . . . . 114
9.17. Presentment of Claims and Collection of Proceeds . . . . . . . . . 115
9.18. Maintenance of the Primary Mortgage Insurance Policies . . . . . . 115
9.19. Trustee To Retain Possession of Certain Insurance Policies
and Documents . . . . . . . . . . . . . . . . . . . . . . . . . . 116
9.20. Realization Upon Defaulted Mortgage Loans . . . . . . . . . . . . 116
9.21. Compensation to the Master Servicer . . . . . . . . . . . . . . . 116
9.22. REO Property . . . . . . . . . . . . . . . . . . . . . . . . . . . 116
9.23. Preparation of Tax Returns and Other Reports . . . . . . . . . . . 117
9.24. Reports to the Trustee . . . . . . . . . . . . . . . . . . . . . . 118
9.25. Annual Officer's Certificate as to Compliance . . . . . . . . . . 119
9.26. Annual Independent Accountants' Servicing Report . . . . . . . . . 120
9.27. Merger or Consolidation . . . . . . . . . . . . . . . . . . . . . 120
9.28. Resignation of Master Servicer . . . . . . . . . . . . . . . . . . 120
9.29. Assignment or Delegation of Duties by the Master Servicer . . . . 121
9.30. Limitation on Liability of the Master Servicer and Others . . . . 121
9.31. Indemnification; Third-Party Claims . . . . . . . . . . . . . . . 122
ARTICLE X
REMIC ADMINISTRATION
10.01. REMIC Administration . . . . . . . . . . . . . . . . . . . . . . 122
10.02. Prohibited Transactions and Activities . . . . . . . . . . . . . 125
10.03. Indemnification with Respect to Certain Taxes and Loss of
REMIC Status . . . . . . . . . . . . . . . . . . . . . . . . . . 126
10.04. REO Property . . . . . . . . . . . . . . . . . . . . . . . . . . 126
ARTICLE XI
MISCELLANEOUS PROVISIONS . . . . . . . . . . . 128
11.01. Binding Nature of Agreement; Assignment . . . . . . . . . . . . . 128
11.02. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . 128
11.03. Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128
11.04. Voting Rights . . . . . . . . . . . . . . . . . . . . . . . . . . 129
11.05. Provision of Information . . . . . . . . . . . . . . . . . . . . 129
11.06. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . 130
11.07. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130
11.08. Severability of Provisions . . . . . . . . . . . . . . . . . . . 131
11.09. Indulgences; No Waivers . . . . . . . . . . . . . . . . . . . . . 131
11.10. Headings Not To Affect Interpretation . . . . . . . . . . . . . . 131
11.11. Benefits of Agreement . . . . . . . . . . . . . . . . . . . . . . 131
11.12. Special Notices to the Rating Agencies. . . . . . . . . . . . . . 131
11.13. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . 132
11.14. Transfer of Servicing . . . . . . . . . . . . . . . . . . . . . . 132
11.15. Matters Relating to the Certificate Insurance Policy . . . . . . 134
ATTACHMENTS
Exhibit A Forms of Certificates
Exhibit B-1 Form of Trustee Initial Certification
Exhibit B-2 Form of Trustee Interim Certification
Exhibit B-3 Form of Trustee Final Certification
Exhibit B-4 Form of Endorsement
Exhibit C Request for Release of Documents and Receipt
Exhibit D-l Residual Certificate Transfer Affidavit (Transferee)
Exhibit D-2 Residual Certificate Transfer Affidavit (Transferor)
Exhibit E Servicing Agreements
Exhibit F Form of Rule 144A Transfer Certificate
Exhibit G Form of Purchaser's Letter for Institutional Accredited
Investors
Exhibit H Form of ERISA Transfer Affidavit
Exhibit I Monthly Remittance Advice
Exhibit J Monthly Electronic Data Transmission
Exhibit K Custodial Agreements
Exhibit L Form of Certificate Insurance Policy
Exhibit M Insurance Agreement
Schedule A Mortgage Loan Schedule
Schedule B Principal Amount Schedules
This TRUST AGREEMENT, dated as of January 1, 1998 (the "Agreement"), is
by and among STRUCTURED ASSET SECURITIES CORPORATION, a Delaware corporation,
as depositor (the "Depositor"), NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
as master servicer (the "Master Servicer"), and FIRST UNION NATIONAL BANK, a
national banking association with its main office in Charlotte, North
Carolina, as trustee (the "Trustee").
PRELIMINARY STATEMENT
The Depositor has acquired the Mortgage Loans from Lehman Capital, A
Division of Lehman Brothers Holdings Inc. (the "Seller"), and at the Closing
Date is the owner of the Mortgage Loans and the other property being conveyed
by it to the Trustee for inclusion in the Trust Fund. On the Closing Date,
the Depositor will acquire the Certificates from the Trust Fund, as
consideration for its transfer to the Trust Fund of the Mortgage Loans and
the other property constituting the Trust Fund. The Depositor has duly
authorized the execution and delivery of this Agreement to provide for the
conveyance to the Trustee of the Mortgage Loans and the other property
constituting the Trust Fund. All covenants and agreements made by the
Depositor, the Master Servicer and the Trustee herein with respect to the
Mortgage Loans and the other property constituting the Trust Fund are for the
benefit of the Certificate Insurer and the Holders from time to time of the
Certificates. The Depositor and the Master Servicer are entering into this
Agreement, and the Trustee is accepting the Trust Fund created hereby, for
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged.
The following table sets forth the Class designation, Certificate
Interest Rate, initial Class Certificate Principal Amount and minimum
denomination for each Class of Certificates comprising the interests in the
Trust Fund created hereunder.
<TABLE>
<CAPTION>
<S> <C> <C>
Initial Certificate Principal Minimum
Class Designation Certificate Interest Rate Amount Denominations
Class A1 (1) $340,043,200.00 $100,000
Class A2 (2) (3)
Class B1 (4) $5,327,000.00 250,000
Class B2 (4) $3,906,000.00 250,000
Class B3 (4) $2,841,000.00 250,000
Class B4 (4) $3,019,501.66 250,000
Class R1 (5) 100.00 100
Class R2 (5) 100.00 100
</TABLE>
___________________________
(1) The Certificate Interest Rate with respect to any Distribution Date for
the Class A1 Certificates is a per annum variable rate equal to LIBOR
for the related LIBOR Determination Date plus .40%, subject to a maximum
rate of 10.50% per annum, and subject to any LIBOR Rate Shortfalls.
(2) The Certificate Interest Rate with respect to any Distribution Date for
the Class A2 Certificates is a per annum variable rate equal to the
Adjusted Pool Rate for such Distribution Date less the Class A1
Certificate Interest Rate for such date, subject to a minimum rate of
0.00% and a maximum rate equal to the Adjusted Pool Rate for such date.
(3) The Class A2 Certificates will accrue interest on an Aggregate Notional
Amount equal, with respect to any Distribution Date, to the Class
Certificate Principal Amount of the Class A1 Certificates immediately
prior to such Date.
(4) The Certificate Interest Rate with respect to any Distribution Date for
the Class B1, Class B2, Class B3 and Class B4 Certificates is a per
annum variable rate equal to the Pool Rate for such date.
(5) The Certificate Interest Rate with respect to any Distribution Date for
the Class R1 and Class R2 Certificates is a per annum variable rate
equal to the Adjusted Pool Rate for such date.
As of the Cut-off Date, the Mortgage Loans had an aggregate Scheduled
Principal Balance of $355,136,701.66
In consideration of the mutual agreements herein contained, the
Depositor, the Master Servicer and the Trustee hereby agree as follows:
ARTICLE I.
DEFINITIONS
Section 1.01. Definitions. The following words and phrases, unless the
context otherwise requires, shall have the following meanings:
Accepted Servicing Practices: With respect to any Mortgage Loan, as
applicable, either (x) those customary mortgage servicing practices of
prudent mortgage servicing institutions that service or master service
mortgage loans of the same type and quality as such Mortgage Loan in the
jurisdiction where the related Mortgaged Property is located, to the extent
applicable to the Trustee or the Master Servicer (except in its capacity as
successor to a Servicer), or (y) as provided in the applicable Servicing
Agreement, to the extent applicable to any Servicer.
Accountant: A person engaged in the practice of accounting who (except
when this Agreement provides that an Accountant must be Independent) may be
employed by or affiliated with the Depositor or an Affiliate of the
Depositor.
Accretion Directed Certificate: None.
Accretion Termination Date: The earlier of (i) the Credit Support
Depletion Date and (ii) the date on which the Class Certificate Principal
Amount of each Class of Accretion Directed Certificates has been reduced to
zero.
Accrual Amount: As to any Class of Accrual Certificates and any Accrual
Component and each Distribution Date through the Credit Support Depletion
Date, the sum of (x) any amount of Accrued Certificate Interest allocable to
such Class or Component pursuant to Section 5.02(a)(ii) on such Distribution
Date and (y) any Interest Shortfall allocable to such Class or Component
pursuant to Section 5.02(a)(iii) on such Distribution Date. As to any Class
of Accrual Certificates and any Accrual Component and each Distribution Date
after the Credit Support Depletion Date, zero.
Accrual Certificate: None.
Accrual Component: None.
Accrued Certificate Interest: As to any Class of Certificates or
Component and any Distribution Date, the product of the Certificate Interest
Rate or Component Interest Rate for such Class of Certificates or Component
and the outstanding Class Certificate Principal Amount (or Aggregate Notional
Amount) or Component Principal Amount of such Class of Certificates or
Component immediately preceding such Distribution Date, as reduced by (i)
such Class's or Component's pro rata share of the interest portion of any
Excess Losses for such date and, after the Credit Support Depletion Date, any
Realized Losses for such date, but only, in the case of the Insured
Certificates, to the extent that such amounts are not paid as required under
the Certificate Insurance Policy, (ii) such Class's or Component's pro rata
share of any Relief Act Reduction with respect to the related Mortgage Pool
for such date and (iii) any Deferred Interest allocated to such Class or
Component on such date.
Additional Collateral: None.
Adjusted Pool Rate: With respect to any Distribution Date, the Pool
Rate for such date reduced by the Ambac Premium Rate.
Advance: An advance of the aggregate of payments of principal and
interest (net of the applicable Servicing Fee) on one or more Mortgage Loans
that were due on the Due Date in the related Due Period and not received as
of the close of business on the related Determination Date, required to be
made by or on behalf of the Master Servicer and any Servicer (or by the
Trustee) pursuant to Section 5.04.
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 correlative to the foregoing.
Aggregate Ambac Premium: As to any Distribution Date, the sum of (a)
the Ambac Premium for such Distribution Date and (b) the amount of any Ambac
Premium that was not distributed to the Certificate Insurer on any prior
Distribution Date.
Aggregate Master Servicing Compensation: As to any Distribution Date,
the sum of all income and gain realized from the investment of funds in the
Collection Account during the period from and including the Deposit Date in
the calendar month immediately preceding the month in which such Distribution
Date occurs, to but excluding the Deposit Date relating to such Distribution
Date.
Aggregate Notional Amount: With respect to any Class of Notional
Certificates, the aggregate notional amount described in the Preliminary
Statement hereto.
Aggregate Principal Balance: The aggregate of the Scheduled Principal
Balances for all Mortgage Loans at the date of determination.
Aggregate Voting Interests: The aggregate of the Voting Interests of
all the Certificates under this Agreement.
Agreement: This Trust Agreement and all amendments and supplements
hereto.
Ambac Premium: With respect to any Distribution Date, and with respect
to the Certificate Insurance Policy, an amount equal to 1/12th of the product
of (a) the aggregate Class Certificate Principal Amount of the Insured
Certificates as of the immediately preceding Distribution Date (after giving
effect to any distributions of principal to be made on such Distribution
Date) and (b) the Ambac Premium Rate; provided that on the Closing Date the
initial Ambac Premium will be equal to 1/12th of the product of the (i) Ambac
Premium Rate and (ii) the Class Certificate Principal Amount of the Insured
Certificates as of the Cut-off Date.
Ambac Premium Rate: As specified in the Insurance Agreement.
Appraised Value: With respect to any Mortgage Loan, the amount set
forth in an appraisal made in connection with the origination of such
Mortgage Loan as the value of the related Mortgaged Property.
Assignment of Mortgage: An assignment of the Mortgage, notice of
transfer or equivalent instrument, in recordable form, sufficient under the
laws of the jurisdiction wherein the related Mortgaged Property is located to
reflect the sale of the Mortgage to the Trustee, which assignment, notice of
transfer or equivalent instrument may be in the form of one or more blanket
assignments covering the Mortgage Loans secured by Mortgaged Properties
located in the same jurisdiction, if permitted by law; provided, however,
that the Trustee shall not be responsible for determining whether any such
assignment is in recordable form.
Authenticating Agent: Any authenticating agent appointed by the Trustee
pursuant to Section 6.10.
Authorized Officer: Any Person who may execute an Officer's Certificate
on behalf of the Depositor.
Available Distribution Amount: On any Distribution Date and with
respect to each Mortgage Pool, the sum of the following amounts:
(1) the total amount of all cash received by the Master Servicer
through the related Latest Remittance Date and deposited by the Master
Servicer by the Deposit Date for such Distribution Date on the related
Mortgage Loans (including proceeds of any Insurance Policy and any other
credit support relating to such Mortgage Loans), plus all Advances made
by the Master Servicer or any Servicer (or the Trustee) for such
Distribution Date, any Compensating Interest Payment for such date and
any amounts paid by any Servicer in respect of Prepayment Interest
Shortfalls for such date, but not including:
(a) all amounts distributed pursuant to Section 5.02 on prior
Distribution Dates;
(b) all Scheduled Payments of principal and interest
collected but due on a date subsequent to the related Due Period;
(c) all Principal Prepayments received or identified by the
Master Servicer after the related Prepayment Period (together with
any interest payments received with such prepayments to the extent
that they represent the payment of interest accrued on the related
Mortgage Loans for the period subsequent to the related Prepayment
Period);
(d) any other unscheduled collection, including Liquidation
Proceeds and Insurance Proceeds, received by the Master Servicer
after the applicable Prepayment Period; and
(e) all amounts due or reimbursable to the Master Servicer or
any Servicer pursuant to the terms of this Agreement or the
applicable Servicing Agreement; and
(2) any other payment made by the Master Servicer, any Servicer,
the Seller, the Depositor or any other Person with respect to such
Distribution Date (including the Purchase Price with respect to any
Mortgage Loan in the related Mortgage Pool repurchased by the Seller,
the Depositor or any other Person and the purchase price for any
Converted Mortgage Loan purchased from the Trust Fund).
Bankruptcy: As to any Person, the making of an assignment for the
benefit of creditors, the filing of a voluntary petition in bankruptcy,
adjudication as a bankrupt or insolvent, the entry of an order for relief in
a bankruptcy or insolvency proceeding, the seeking of reorganization,
arrangement, composition, readjustment, liquidation, dissolution or similar
relief, or seeking, consenting to or acquiescing in the appointment of a
trustee, receiver or liquidator, dissolution, or termination, as the case may
be, of such Person pursuant to the provisions of either the United States
Bankruptcy Code of 1986, as amended, or any other similar state laws.
Bankruptcy Coverage Termination Date: The Distribution Date on which
the related Bankruptcy Loss Limit has been reduced to zero (or less than
zero).
Bankruptcy Loss Limit: As of the Cut-off Date, $100,000, which amount
shall be reduced from time to time by the amount of Bankruptcy Losses
allocated to the Certificates.
Bankruptcy Losses: With respect to the Mortgage Loans, losses arising
from a proceeding under the United States Bankruptcy Code or any other
similar state law or other proceeding with respect to the Mortgagor of or
Mortgaged Property under a Mortgage Loan, including without limitation any
such loss arising from (a) the difference between (i) the principal amount
that would have been due under the original scheduled payments of principal
and interest due on the related Mortgage Loan and (ii) the value established
in the relevant court with respect to such Mortgaged Property, including
without limitation a Deficient Valuation, or (b) a Debt Service Reduction.
Benefit Plan Opinion: An Opinion of Counsel satisfactory to the Trustee
to the effect that any proposed transfer will not (i) cause the assets of the
Trust Fund to be regarded as plan assets for purposes of the Plan Asset
Regulations or (ii) give rise to any fiduciary duty on the part of the
Depositor or the Trustee.
Blanket Mortgage: The mortgage or mortgages encumbering a Cooperative
Property.
Book-Entry Certificates: Beneficial interests in Certificates
designated as "Book-Entry Certificates" in this Agreement, ownership and
transfers of which shall be evidenced or made through book entries by a
Clearing Agency as described in Section 3.09; provided, that after the
occurrence of a condition whereupon book-entry registration and transfer are
no longer permitted and Definitive Certificates are to be issued to
Certificate Owners, such Book-Entry Certificates shall no longer be
"Book-Entry Certificates." As of the Closing Date, the Class A1 Certificates
constitute Book-Entry Certificates.
BBA: The British Bankers' Association.
Business Day: Any day other than (i) a Saturday or a Sunday, (ii) a day
on which banking institutions in New York, New York or, if other than New
York, the city in which the Corporate Trust Office of the Trustee or the
principal master servicing office of the Master Servicer is located, or (iii)
with respect to any Remittance Date or any Servicer reporting date, the
States specified in the definition of "Business Day" in the applicable
Servicing Agreement, are in each case authorized or obligated by law or
executive order to be closed.
Carryover LIBOR Rate Shortfall: As to any Distribution Date and the
Class A1 Certificates, the amount, if any, by which the aggregate of LIBOR
Rate Shortfalls for such Class for prior Distribution Dates is in excess of
the aggregate amounts distributed to such Class on prior Distribution Dates
from the Interest Reserve Fund in respect of such shortfalls.
Certificate: Any one of the certificates signed and countersigned by
the Trustee in substantially the forms attached hereto as Exhibit A.
Certificate Account: The account maintained by the Trustee in
accordance with the provisions of Section 4.04.
Certificateholder: The meaning provided in the definition of "Holder".
Certificate Insurance Policy: The Certificate Guaranty Insurance Policy
No. AB0157BE dated the Closing Date issued by the Certificate Insurer to the
Trustee for the benefit of the holders of the Insured Certificates.
Certificate Insurance Policy Payments Account: The separate Eligible
Account created and maintained by the Trustee pursuant to Section 5.07(c) in
the name of the Trustee for the benefit of the Insured Certificateholders and
designated "First Union National Bank Certificate Insurance Policy Payments
Account in trust for registered holders of Structured Asset Securities
Corporation Mortgage Pass-Through Certificates, Series 1998-1, Class A1,
Class A2, Class R1 and Class R2". Funds in the Certificate Insurance Policy
Payments Account shall be held in trust for the benefit of the Insured
Certificateholders for the uses and purposes set forth in this Agreement.
Certificate Insurer: Ambac Assurance Corporation, or any successor
thereto, as issuer of the Certificate Insurance Policy.
Certificate Insurer Default: The occurrence and continuance of any of
the following events:
(a) The Certificate Insurer shall have failed to make a payment
required under the Certificate Insurance Policy in accordance with its
terms;
(b) The Certificate Insurer shall have(i) filed a petition or
commenced any case or proceeding under any provision or chapter of the
United States Bankruptcy Code or any other similar federal or state law
STRUCTURED ASSET SECURITIES CORPORATION, as Depositor,
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, as Master Servicer,
and
FIRST UNION NATIONAL BANK, as Trustee
___________________________
TRUST AGREEMENT
Dated as of January 1, 1998
___________________________
STRUCTURED ASSET SECURITIES CORPORATION
MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1998-1
TABLE OF CONTENTS
Section Page
ARTICLE I
DEFINITIONS
1.01. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.02. Calculations Respecting Mortgage Loans . . . . . . . . . . . . . . 34
1.03. Calculations Respecting Accrued Interest . . . . . . . . . . . . . 34
ARTICLE II
DECLARATION OF TRUST;
ISSUANCE OF CERTIFICATES
2.01. Creation and Declaration of Trust Fund; Conveyance of
Mortgage Loans . . . . . . . . . . . . . . . . . . . . . . . . . 34
2.02. Acceptance of Trust Fund by Trustee: Review of
Documentation for Trust Fund . . . . . . . . . . . . . . . . . . 38
2.03. Representations and Warranties of the Depositor . . . . . . . . . 40
2.04. Discovery of Breach . . . . . . . . . . . . . . . . . . . . . . . 41
2.05. Repurchase, Purchase or Substitution of Mortgage Loans . . . . . . 42
2.06. Modification of Mortgage Loan . . . . . . . . . . . . . . . . . . 43
2.07. Grant Clause . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
ARTICLE III
THE CERTIFICATES
3.01. The Certificates . . . . . . . . . . . . . . . . . . . . . . . . . 45
3.02. Registration . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
3.03. Transfer and Exchange of Certificates . . . . . . . . . . . . . . 46
3.04. Cancellation of Certificates . . . . . . . . . . . . . . . . . . . 49
3.05. Replacement of Certificates . . . . . . . . . . . . . . . . . . . 49
3.06. Persons Deemed Owners . . . . . . . . . . . . . . . . . . . . . . 50
3.07. Temporary Certificates . . . . . . . . . . . . . . . . . . . . . . 50
3.08. Appointment of Paying Agent . . . . . . . . . . . . . . . . . . . 51
3.09. Book-Entry Certificates . . . . . . . . . . . . . . . . . . . . . 51
ARTICLE IV
ADMINISTRATION OF THE TRUST FUND
4.01. Collection Account . . . . . . . . . . . . . . . . . . . . . . . . 53
4.02. Application of Funds in the Collection Account . . . . . . . . . . 55
4.03. Reports to Certificateholders . . . . . . . . . . . . . . . . . . 57
4.04. Certificate Account . . . . . . . . . . . . . . . . . . . . . . . 60
4.05. Determination of LIBOR . . . . . . . . . . . . . . . . . . . . . . 61
4.06. The Interest Reserve Fund . . . . . . . . . . . . . . . . . . . . 62
ARTICLE V
DISTRIBUTIONS TO HOLDERS OF CERTIFICATES
5.01. Distributions Generally . . . . . . . . . . . . . . . . . . . . . 63
5.02. Distributions from the Certificate Account . . . . . . . . . . . . 64
5.03. Allocation of Realized Losses . . . . . . . . . . . . . . . . . . 67
5.04. Advances by Master Servicer and Trustee . . . . . . . . . . . . . 69
5.05. Distributions of Principal on Redemption Certificates . . . . . . 70
5.06. Compensating Interest Payments . . . . . . . . . . . . . . . . . . 76
5.07. The Certificate Insurance Policy . . . . . . . . . . . . . . . . . 76
ARTICLE VI
CONCERNING THE TRUSTEE; EVENTS OF DEFAULT
6.01. Duties of Trustee . . . . . . . . . . . . . . . . . . . . . . . . 79
6.02. Certain Matters Affecting the Trustee . . . . . . . . . . . . . . 81
6.03. Trustee Not Liable for Certificates . . . . . . . . . . . . . . . 82
6.04. Trustee May Own Certificates . . . . . . . . . . . . . . . . . . . 83
6.05. Eligibility Requirements for Trustee . . . . . . . . . . . . . . . 83
6.06. Resignation and Removal of Trustee . . . . . . . . . . . . . . . . 83
6.07. Successor Trustee . . . . . . . . . . . . . . . . . . . . . . . . 84
6.08. Merger or Consolidation of Trustee . . . . . . . . . . . . . . . . 85
6.09. Appointment of Co-Trustee, Separate Trustee or Custodian . . . . . 85
6.10. Authenticating Agents . . . . . . . . . . . . . . . . . . . . . . 87
6.11. Indemnification of Trustee . . . . . . . . . . . . . . . . . . . . 88
6.12. Fees and Expenses of Trustee . . . . . . . . . . . . . . . . . . . 89
6.13. Collection of Monies . . . . . . . . . . . . . . . . . . . . . . . 89
6.14. Trustee To Act; Appointment of Successor . . . . . . . . . . . . . 89
6.15. Additional Remedies of Trustee Upon Event of Default . . . . . . . 94
6.16. Waiver of Defaults . . . . . . . . . . . . . . . . . . . . . . . . 94
6.17. Notification to Holders . . . . . . . . . . . . . . . . . . . . . 94
6.18. Directions by Certificateholders and Duties of Trustee
During Event of Default . . . . . . . . . . . . . . . . . . . . . 94
6.19. Action Upon Certain Failures of the Master Servicer and
Upon Event of Default . . . . . . . . . . . . . . . . . . . . . . 95
ARTICLE VII
PURCHASE AND TERMINATION
OF THE TRUST FUND
7.01. Termination of Trust Fund Upon Repurchase or Liquidation
of All Mortgage Loans . . . . . . . . . . . . . . . . . . . . . . 95
7.02. Procedure Upon Termination of Trust Fund . . . . . . . . . . . . . 97
7.03. Additional Trust Fund Termination Requirements . . . . . . . . . . 98
ARTICLE VIII
RIGHTS OF CERTIFICATEHOLDERS
8.01. Limitation on Rights of Holders . . . . . . . . . . . . . . . . . 99
8.02. Access to List of Holders . . . . . . . . . . . . . . . . . . . . 100
8.03. Acts of Holders of Certificates . . . . . . . . . . . . . . . . . 101
ARTICLE IX
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
BY THE MASTER SERVICER
9.01. Duties of the Master Servicer . . . . . . . . . . . . . . . . . . 102
9.02. Master Servicer Fidelity Bond and Master Servicer Errors
and Omissions Insurance Policy . . . . . . . . . . . . . . . . . 102
9.03. Master Servicer's Financial Statements and Related
Information . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
9.04. Power to Act; Procedures . . . . . . . . . . . . . . . . . . . . . 103
9.05. Servicing Agreements Between the Master Servicer and
Servicers; Enforcement of Servicers' Obligations . . . . . . . . 105
9.06. Collection of Taxes, Assessments and Similar Items . . . . . . . . 106
9.07. Termination of Servicing Agreements; Successor Servicers . . . . . 107
9.08. Master Servicer Liable for Enforcement . . . . . . . . . . . . . . 107
9.09. No Contractual Relationship Between Servicers and Trustee
or Depositor . . . . . . . . . . . . . . . . . . . . . . . . . . 107
9.10. Assumption of Servicing Agreement by Trustee . . . . . . . . . . . 108
9.11. "Due-on-Sale" Clauses; Assumption Agreements . . . . . . . . . . . 108
9.12. Release of Mortgage Files . . . . . . . . . . . . . . . . . . . . 108
9.13. Documents, Records and Funds in Possession of Master
Servicer To Be Held for Trustee . . . . . . . . . . . . . . . . . 110
9.14. Representations and Warranties of the Master Servicer . . . . . . 111
9.15. Closing Certificate and Opinion . . . . . . . . . . . . . . . . . 114
9.16. Standard Hazard and Flood Insurance Policies . . . . . . . . . . . 114
9.17. Presentment of Claims and Collection of Proceeds . . . . . . . . . 115
9.18. Maintenance of the Primary Mortgage Insurance Policies . . . . . . 115
9.19. Trustee To Retain Possession of Certain Insurance Policies
and Documents . . . . . . . . . . . . . . . . . . . . . . . . . . 116
9.20. Realization Upon Defaulted Mortgage Loans . . . . . . . . . . . . 116
9.21. Compensation to the Master Servicer . . . . . . . . . . . . . . . 116
9.22. REO Property . . . . . . . . . . . . . . . . . . . . . . . . . . . 116
9.23. Preparation of Tax Returns and Other Reports . . . . . . . . . . . 117
9.24. Reports to the Trustee . . . . . . . . . . . . . . . . . . . . . . 118
9.25. Annual Officer's Certificate as to Compliance . . . . . . . . . . 119
9.26. Annual Independent Accountants' Servicing Report . . . . . . . . . 120
9.27. Merger or Consolidation . . . . . . . . . . . . . . . . . . . . . 120
9.28. Resignation of Master Servicer . . . . . . . . . . . . . . . . . . 120
9.29. Assignment or Delegation of Duties by the Master Servicer . . . . 121
9.30. Limitation on Liability of the Master Servicer and Others . . . . 121
9.31. Indemnification; Third-Party Claims . . . . . . . . . . . . . . . 122
ARTICLE X
REMIC ADMINISTRATION
10.01. REMIC Administration . . . . . . . . . . . . . . . . . . . . . . 122
10.02. Prohibited Transactions and Activities . . . . . . . . . . . . . 125
10.03. Indemnification with Respect to Certain Taxes and Loss of
REMIC Status . . . . . . . . . . . . . . . . . . . . . . . . . . 126
10.04. REO Property . . . . . . . . . . . . . . . . . . . . . . . . . . 126
ARTICLE XI
MISCELLANEOUS PROVISIONS . . . . . . . . . . . 128
11.01. Binding Nature of Agreement; Assignment . . . . . . . . . . . . . 128
11.02. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . 128
11.03. Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128
11.04. Voting Rights . . . . . . . . . . . . . . . . . . . . . . . . . . 129
11.05. Provision of Information . . . . . . . . . . . . . . . . . . . . 129
11.06. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . 130
11.07. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130
11.08. Severability of Provisions . . . . . . . . . . . . . . . . . . . 131
11.09. Indulgences; No Waivers . . . . . . . . . . . . . . . . . . . . . 131
11.10. Headings Not To Affect Interpretation . . . . . . . . . . . . . . 131
11.11. Benefits of Agreement . . . . . . . . . . . . . . . . . . . . . . 131
11.12. Special Notices to the Rating Agencies. . . . . . . . . . . . . . 131
11.13. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . 132
11.14. Transfer of Servicing . . . . . . . . . . . . . . . . . . . . . . 132
11.15. Matters Relating to the Certificate Insurance Policy . . . . . . 134
ATTACHMENTS
Exhibit A Forms of Certificates
Exhibit B-1 Form of Trustee Initial Certification
Exhibit B-2 Form of Trustee Interim Certification
Exhibit B-3 Form of Trustee Final Certification
Exhibit B-4 Form of Endorsement
Exhibit C Request for Release of Documents and Receipt
Exhibit D-l Residual Certificate Transfer Affidavit (Transferee)
Exhibit D-2 Residual Certificate Transfer Affidavit (Transferor)
Exhibit E Servicing Agreements
Exhibit F Form of Rule 144A Transfer Certificate
Exhibit G Form of Purchaser's Letter for Institutional Accredited
Investors
Exhibit H Form of ERISA Transfer Affidavit
Exhibit I Monthly Remittance Advice
Exhibit J Monthly Electronic Data Transmission
Exhibit K Custodial Agreements
Exhibit L Form of Certificate Insurance Policy
Exhibit M Insurance Agreement
Schedule A Mortgage Loan Schedule
Schedule B Principal Amount Schedules
This TRUST AGREEMENT, dated as of January 1, 1998 (the "Agreement"), is
by and among STRUCTURED ASSET SECURITIES CORPORATION, a Delaware corporation,
as depositor (the "Depositor"), NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
as master servicer (the "Master Servicer"), and FIRST UNION NATIONAL BANK, a
national banking association with its main office in Charlotte, North
Carolina, as trustee (the "Trustee").
PRELIMINARY STATEMENT
The Depositor has acquired the Mortgage Loans from Lehman Capital, A
Division of Lehman Brothers Holdings Inc. (the "Seller"), and at the Closing
Date is the owner of the Mortgage Loans and the other property being conveyed
by it to the Trustee for inclusion in the Trust Fund. On the Closing Date,
the Depositor will acquire the Certificates from the Trust Fund, as
consideration for its transfer to the Trust Fund of the Mortgage Loans and
the other property constituting the Trust Fund. The Depositor has duly
authorized the execution and delivery of this Agreement to provide for the
conveyance to the Trustee of the Mortgage Loans and the other property
constituting the Trust Fund. All covenants and agreements made by the
Depositor, the Master Servicer and the Trustee herein with respect to the
Mortgage Loans and the other property constituting the Trust Fund are for the
benefit of the Certificate Insurer and the Holders from time to time of the
Certificates. The Depositor and the Master Servicer are entering into this
Agreement, and the Trustee is accepting the Trust Fund created hereby, for
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged.
The following table sets forth the Class designation, Certificate
Interest Rate, initial Class Certificate Principal Amount and minimum
denomination for each Class of Certificates comprising the interests in the
Trust Fund created hereunder.
<TABLE>
<CAPTION>
<S> <C> <C>
Initial Certificate Principal Minimum
Class Designation Certificate Interest Rate Amount Denominations
Class A1 (1) $340,043,200.00 $100,000
Class A2 (2) (3)
Class B1 (4) $5,327,000.00 250,000
Class B2 (4) $3,906,000.00 250,000
Class B3 (4) $2,841,000.00 250,000
Class B4 (4) $3,019,501.66 250,000
Class R1 (5) 100.00 100
Class R2 (5) 100.00 100
</TABLE>
___________________________
(1) The Certificate Interest Rate with respect to any Distribution Date for
the Class A1 Certificates is a per annum variable rate equal to LIBOR
for the related LIBOR Determination Date plus .40%, subject to a maximum
rate of 10.50% per annum, and subject to any LIBOR Rate Shortfalls.
(2) The Certificate Interest Rate with respect to any Distribution Date for
the Class A2 Certificates is a per annum variable rate equal to the
Adjusted Pool Rate for such Distribution Date less the Class A1
Certificate Interest Rate for such date, subject to a minimum rate of
0.00% and a maximum rate equal to the Adjusted Pool Rate for such date.
(3) The Class A2 Certificates will accrue interest on an Aggregate Notional
Amount equal, with respect to any Distribution Date, to the Class
Certificate Principal Amount of the Class A1 Certificates immediately
prior to such Date.
(4) The Certificate Interest Rate with respect to any Distribution Date for
the Class B1, Class B2, Class B3 and Class B4 Certificates is a per
annum variable rate equal to the Pool Rate for such date.
(5) The Certificate Interest Rate with respect to any Distribution Date for
the Class R1 and Class R2 Certificates is a per annum variable rate
equal to the Adjusted Pool Rate for such date.
As of the Cut-off Date, the Mortgage Loans had an aggregate Scheduled
Principal Balance of $355,136,701.66
In consideration of the mutual agreements herein contained, the
Depositor, the Master Servicer and the Trustee hereby agree as follows:
ARTICLE I.
DEFINITIONS
Section 1.01. Definitions. The following words and phrases, unless the
context otherwise requires, shall have the following meanings:
Accepted Servicing Practices: With respect to any Mortgage Loan, as
applicable, either (x) those customary mortgage servicing practices of
prudent mortgage servicing institutions that service or master service
mortgage loans of the same type and quality as such Mortgage Loan in the
jurisdiction where the related Mortgaged Property is located, to the extent
applicable to the Trustee or the Master Servicer (except in its capacity as
successor to a Servicer), or (y) as provided in the applicable Servicing
Agreement, to the extent applicable to any Servicer.
Accountant: A person engaged in the practice of accounting who (except
when this Agreement provides that an Accountant must be Independent) may be
employed by or affiliated with the Depositor or an Affiliate of the
Depositor.
Accretion Directed Certificate: None.
Accretion Termination Date: The earlier of (i) the Credit Support
Depletion Date and (ii) the date on which the Class Certificate Principal
Amount of each Class of Accretion Directed Certificates has been reduced to
zero.
Accrual Amount: As to any Class of Accrual Certificates and any Accrual
Component and each Distribution Date through the Credit Support Depletion
Date, the sum of (x) any amount of Accrued Certificate Interest allocable to
such Class or Component pursuant to Section 5.02(a)(ii) on such Distribution
Date and (y) any Interest Shortfall allocable to such Class or Component
pursuant to Section 5.02(a)(iii) on such Distribution Date. As to any Class
of Accrual Certificates and any Accrual Component and each Distribution Date
after the Credit Support Depletion Date, zero.
Accrual Certificate: None.
Accrual Component: None.
Accrued Certificate Interest: As to any Class of Certificates or
Component and any Distribution Date, the product of the Certificate Interest
Rate or Component Interest Rate for such Class of Certificates or Component
and the outstanding Class Certificate Principal Amount (or Aggregate Notional
Amount) or Component Principal Amount of such Class of Certificates or
Component immediately preceding such Distribution Date, as reduced by (i)
such Class's or Component's pro rata share of the interest portion of any
Excess Losses for such date and, after the Credit Support Depletion Date, any
Realized Losses for such date, but only, in the case of the Insured
Certificates, to the extent that such amounts are not paid as required under
the Certificate Insurance Policy, (ii) such Class's or Component's pro rata
share of any Relief Act Reduction with respect to the related Mortgage Pool
for such date and (iii) any Deferred Interest allocated to such Class or
Component on such date.
Additional Collateral: None.
Adjusted Pool Rate: With respect to any Distribution Date, the Pool
Rate for such date reduced by the Ambac Premium Rate.
Advance: An advance of the aggregate of payments of principal and
interest (net of the applicable Servicing Fee) on one or more Mortgage Loans
that were due on the Due Date in the related Due Period and not received as
of the close of business on the related Determination Date, required to be
made by or on behalf of the Master Servicer and any Servicer (or by the
Trustee) pursuant to Section 5.04.
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 correlative to the foregoing.
Aggregate Ambac Premium: As to any Distribution Date, the sum of (a)
the Ambac Premium for such Distribution Date and (b) the amount of any Ambac
Premium that was not distributed to the Certificate Insurer on any prior
Distribution Date.
Aggregate Master Servicing Compensation: As to any Distribution Date,
the sum of all income and gain realized from the investment of funds in the
Collection Account during the period from and including the Deposit Date in
the calendar month immediately preceding the month in which such Distribution
Date occurs, to but excluding the Deposit Date relating to such Distribution
Date.
Aggregate Notional Amount: With respect to any Class of Notional
Certificates, the aggregate notional amount described in the Preliminary
Statement hereto.
Aggregate Principal Balance: The aggregate of the Scheduled Principal
Balances for all Mortgage Loans at the date of determination.
Aggregate Voting Interests: The aggregate of the Voting Interests of
all the Certificates under this Agreement.
Agreement: This Trust Agreement and all amendments and supplements
hereto.
Ambac Premium: With respect to any Distribution Date, and with respect
to the Certificate Insurance Policy, an amount equal to 1/12th of the product
of (a) the aggregate Class Certificate Principal Amount of the Insured
Certificates as of the immediately preceding Distribution Date (after giving
effect to any distributions of principal to be made on such Distribution
Date) and (b) the Ambac Premium Rate; provided that on the Closing Date the
initial Ambac Premium will be equal to 1/12th of the product of the (i) Ambac
Premium Rate and (ii) the Class Certificate Principal Amount of the Insured
Certificates as of the Cut-off Date.
Ambac Premium Rate: As specified in the Insurance Agreement.
Appraised Value: With respect to any Mortgage Loan, the amount set
forth in an appraisal made in connection with the origination of such
Mortgage Loan as the value of the related Mortgaged Property.
Assignment of Mortgage: An assignment of the Mortgage, notice of
transfer or equivalent instrument, in recordable form, sufficient under the
laws of the jurisdiction wherein the related Mortgaged Property is located to
reflect the sale of the Mortgage to the Trustee, which assignment, notice of
transfer or equivalent instrument may be in the form of one or more blanket
assignments covering the Mortgage Loans secured by Mortgaged Properties
located in the same jurisdiction, if permitted by law; provided, however,
that the Trustee shall not be responsible for determining whether any such
assignment is in recordable form.
Authenticating Agent: Any authenticating agent appointed by the Trustee
pursuant to Section 6.10.
Authorized Officer: Any Person who may execute an Officer's Certificate
on behalf of the Depositor.
Available Distribution Amount: On any Distribution Date and with
respect to each Mortgage Pool, the sum of the following amounts:
(1) the total amount of all cash received by the Master Servicer
through the related Latest Remittance Date and deposited by the Master
Servicer by the Deposit Date for such Distribution Date on the related
Mortgage Loans (including proceeds of any Insurance Policy and any other
credit support relating to such Mortgage Loans), plus all Advances made
by the Master Servicer or any Servicer (or the Trustee) for such
Distribution Date, any Compensating Interest Payment for such date and
any amounts paid by any Servicer in respect of Prepayment Interest
Shortfalls for such date, but not including:
(a) all amounts distributed pursuant to Section 5.02 on prior
Distribution Dates;
(b) all Scheduled Payments of principal and interest
collected but due on a date subsequent to the related Due Period;
(c) all Principal Prepayments received or identified by the
Master Servicer after the related Prepayment Period (together with
any interest payments received with such prepayments to the extent
that they represent the payment of interest accrued on the related
Mortgage Loans for the period subsequent to the related Prepayment
Period);
(d) any other unscheduled collection, including Liquidation
Proceeds and Insurance Proceeds, received by the Master Servicer
after the applicable Prepayment Period; and
(e) all amounts due or reimbursable to the Master Servicer or
any Servicer pursuant to the terms of this Agreement or the
applicable Servicing Agreement; and
(2) any other payment made by the Master Servicer, any Servicer,
the Seller, the Depositor or any other Person with respect to such
Distribution Date (including the Purchase Price with respect to any
Mortgage Loan in the related Mortgage Pool repurchased by the Seller,
the Depositor or any other Person and the purchase price for any
Converted Mortgage Loan purchased from the Trust Fund).
Bankruptcy: As to any Person, the making of an assignment for the
benefit of creditors, the filing of a voluntary petition in bankruptcy,
adjudication as a bankrupt or insolvent, the entry of an order for relief in
a bankruptcy or insolvency proceeding, the seeking of reorganization,
arrangement, composition, readjustment, liquidation, dissolution or similar
relief, or seeking, consenting to or acquiescing in the appointment of a
trustee, receiver or liquidator, dissolution, or termination, as the case may
be, of such Person pursuant to the provisions of either the United States
Bankruptcy Code of 1986, as amended, or any other similar state laws.
Bankruptcy Coverage Termination Date: The Distribution Date on which
the related Bankruptcy Loss Limit has been reduced to zero (or less than
zero).
Bankruptcy Loss Limit: As of the Cut-off Date, $100,000, which amount
shall be reduced from time to time by the amount of Bankruptcy Losses
allocated to the Certificates.
Bankruptcy Losses: With respect to the Mortgage Loans, losses arising
from a proceeding under the United States Bankruptcy Code or any other
similar state law or other proceeding with respect to the Mortgagor of or
Mortgaged Property under a Mortgage Loan, including without limitation any
such loss arising from (a) the difference between (i) the principal amount
that would have been due under the original scheduled payments of principal
and interest due on the related Mortgage Loan and (ii) the value established
in the relevant court with respect to such Mortgaged Property, including
without limitation a Deficient Valuation, or (b) a Debt Service Reduction.
Benefit Plan Opinion: An Opinion of Counsel satisfactory to the Trustee
to the effect that any proposed transfer will not (i) cause the assets of the
Trust Fund to be regarded as plan assets for purposes of the Plan Asset
Regulations or (ii) give rise to any fiduciary duty on the part of the
Depositor or the Trustee.
Blanket Mortgage: The mortgage or mortgages encumbering a Cooperative
Property.
Book-Entry Certificates: Beneficial interests in Certificates
designated as "Book-Entry Certificates" in this Agreement, ownership and
transfers of which shall be evidenced or made through book entries by a
Clearing Agency as described in Section 3.09; provided, that after the
occurrence of a condition whereupon book-entry registration and transfer are
no longer permitted and Definitive Certificates are to be issued to
Certificate Owners, such Book-Entry Certificates shall no longer be
"Book-Entry Certificates." As of the Closing Date, the Class A1 Certificates
constitute Book-Entry Certificates.
BBA: The British Bankers' Association.
Business Day: Any day other than (i) a Saturday or a Sunday, (ii) a day
on which banking institutions in New York, New York or, if other than New
York, the city in which the Corporate Trust Office of the Trustee or the
principal master servicing office of the Master Servicer is located, or (iii)
with respect to any Remittance Date or any Servicer reporting date, the
States specified in the definition of "Business Day" in the applicable
Servicing Agreement, are in each case authorized or obligated by law or
executive order to be closed.
Carryover LIBOR Rate Shortfall: As to any Distribution Date and the
Class A1 Certificates, the amount, if any, by which the aggregate of LIBOR
Rate Shortfalls for such Class for prior Distribution Dates is in excess of
the aggregate amounts distributed to such Class on prior Distribution Dates
from the Interest Reserve Fund in respect of such shortfalls.
Certificate: Any one of the certificates signed and countersigned by
the Trustee in substantially the forms attached hereto as Exhibit A.
Certificate Account: The account maintained by the Trustee in
accordance with the provisions of Section 4.04.
Certificateholder: The meaning provided in the definition of "Holder".
Certificate Insurance Policy: The Certificate Guaranty Insurance Policy
No. AB0157BE dated the Closing Date issued by the Certificate Insurer to the
Trustee for the benefit of the holders of the Insured Certificates.
Certificate Insurance Policy Payments Account: The separate Eligible
Account created and maintained by the Trustee pursuant to Section 5.07(c) in
the name of the Trustee for the benefit of the Insured Certificateholders and
designated "First Union National Bank Certificate Insurance Policy Payments
Account in trust for registered holders of Structured Asset Securities
Corporation Mortgage Pass-Through Certificates, Series 1998-1, Class A1,
Class A2, Class R1 and Class R2". Funds in the Certificate Insurance Policy
Payments Account shall be held in trust for the benefit of the Insured
Certificateholders for the uses and purposes set forth in this Agreement.
Certificate Insurer: Ambac Assurance Corporation, or any successor
thereto, as issuer of the Certificate Insurance Policy.
Certificate Insurer Default: The occurrence and continuance of any of
the following events:
(a) The Certificate Insurer shall have failed to make a payment
required under the Certificate Insurance Policy in accordance with its
terms;
(b) The Certificate Insurer shall have(i) filed a petition or
commenced any case or proceeding under any provision or chapter of the
United States Bankruptcy Code or any other similar federal or state law
SERVICING AGREEMENT
THIS SERVICING AGREEMENT (this "Agreement"), entered into as of the 1st
day of January, 1998, by and between LEHMAN CAPITAL, A DIVISION OF LEHMAN
BROTHERS HOLDINGS INC., a Delaware corporation ("Lehman Capital"), and AURORA
LOAN SERVICES INC., a Delaware corporation ("the Servicer"), recites and
provides as follows:
RECITALS
WHEREAS, Lehman Capital has conveyed certain Mortgage Loans identified
on Schedule I hereto (the "Serviced Mortgage Loans") on a servicing-retained
basis to Structured Asset Securities Corporation ("SASCO"), which in turn has
conveyed the Serviced Mortgage Loans to First Union National Bank, as trustee
(the "Trustee") under a trust agreement dated as of January 1, 1998 (the
"Trust Agreement"), among the Trustee, Norwest Bank Minnesota, National
Association, as master servicer ("Norwest," and, together with any successor
Master Servicer appointed pursuant to the provisions of the Trust Agreement,
the "Master Servicer") and SASCO.
WHEREAS, Lehman Capital continues to own the servicing rights to the
Serviced Mortgage Loans, and may freely transfer such rights, subject to the
terms hereof.
WHEREAS, Lehman Capital desires that the Servicer service the Serviced
Mortgage Loans, and the Servicer has agreed to do so, subject to the right of
Lehman Capital to terminate the rights and obligations of the Servicer
hereunder at any time and to the other conditions set forth herein.
WHEREAS, Norwest and any successor Master Servicer shall be obligated,
among other things, to supervise the servicing of the Serviced Mortgage Loans
on behalf of the Trustee, and shall have the right, under certain
circumstances, to terminate the rights and obligations of the Servicer under
this Servicing Agreement.
NOW, THEREFORE, in consideration of the mutual agreements hereinafter
set forth and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, Lehman Capital and the Servicer
hereby agree as follows:
AGREEMENT
1. Definitions. Capitalized terms used and not defined in this
-----------
Agreement, including Exhibit A hereto and any provisions of the Flow
Servicing Agreement dated as of September 1, 1997, between Lehman Capital and
the Servicer (the "Flow Servicing Agreement") incorporated by reference
herein, shall have the meanings ascribed to such terms in the Trust
Agreement.
2. The Servicer agrees, with respect to the Serviced Mortgage Loans,
to perform and observe the duties, responsibilities and obligations that are
to be performed and observed under the provisions of the Flow Servicing
Agreement, except as otherwise provided herein and on Exhibit A hereto, and
that the provisions of the Flow Servicing Agreement, as so modified, are and
shall be a part of this Agreement to the same extent as if set forth herein
in full.
3. Master Servicing; Termination of Servicer. The Servicer, including
-----------------------------------------
any successor servicer hereunder, shall be subject to the supervision of the
Master Servicer, which Master Servicer shall be obligated to ensure that the
Servicer services the Serviced Mortgage Loans in accordance with the
provisions of this Agreement. The Master Servicer, acting on behalf of the
Trustee pursuant to the Trust Agreement, shall have the same rights as the
"Owner" (as defined in the Flow Servicing Agreement) to enforce the
obligations of the Servicer under the Flow Servicing Agreement. The Master
Servicer shall be entitled to terminate the rights and obligations of the
Servicer under this Agreement upon the failure of the Servicer to perform any
of its obligations under this Agreement, as provided in Article IX of the
Flow Servicing Agreement.
In addition, in the event that Lehman Capital transfers the servicing
rights in respect of the Serviced Mortgaged Loans to one or more successor
servicers, the rights and obligations of the Servicer under this Agreement
shall terminate, at the sole option of Lehman Capital, without cause, upon
thirty days written notice to the Servicer, and each successor servicer shall
succeed to the rights and obligations of the Servicer under this Agreement as
of such date. Upon such termination the terminated Servicer shall not be
entitled to the Servicing Fee or any portion thereof, or, except as provided
in the Flow Servicing Agreement, to any other amounts in respect of the
Serviced Mortgage Loans.
The Servicer agrees that, notwithstanding anything to the contrary in
the Flow Servicing Agreement, Lehman Capital is the sole owner of the
servicing rights relating to the Serviced Mortgaged Loans, and the Servicer
shall have no right to transfer the servicing thereof.
4. No Representations. Neither the Servicer nor the Master Servicer
------------------
shall be obligated or required to make any representations and warranties
regarding the Serviced Mortgage Loans in connection with the transactions
contemplated by the Trust Agreement and issuance of the certificates issued
pursuant thereto.
5. Notices. All notices and communications between or among the
-------
parties hereto shall be in writing and shall be deemed received or given when
mailed first-class mail, postage prepaid, addressed to each other party at
its address specified below. Each party may designate to the other parties
in writing, from time to time, other addresses to which notices and
communications hereunder shall be sent.
6. Governing Law. THIS SERVICING AGREEMENT SHALL BE GOVERNED BY, AND
-------------
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK,
NOTWITHSTANDING NEW YORK OR OTHER CHOICE OF LAW RULES TO THE CONTRARY.
7. Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which when so executed shall be deemed to be an
original, but all of which counterparts shall together constitute but one and
the same instrument.
8. Reconstitution. Lehman Capital and the Servicer agree that this
--------------
Agreement is a Reconstitution Agreement, and that the date hereof is the
Reconstitution Date, each as defined in the Flow Servicing Agreement.
9. Notices and Remittances to the Master Servicer. All notices
----------------------------------------------
required to be delivered to the Master Servicer under this Agreement shall be
delivered to the following address:
Norwest Bank Minnesota, National Association
11000 Broken Land Parkway
Columbia, Maryland 21044
Attn: Master Servicing Department, SASCO 98-1
All remittances required to be made to the Master Servicer under this
Agreement shall be made to the following wire account:
Norwest Bank Minnesota, National Association
Minneapolis, Minnesota
ABA#: 091-000-019
Account Name: Corporate Trust Clearing
Account Number: 3970771416
For further credit to: 13372000, SASCO 98-1
10. Errors and Omissions Insurance. The Servicer shall keep in force
------------------------------
during the term of this Agreement a fidelity bond and a policy or policies of
insurance covering errors and omissions in the performance of the Servicer's
obligations under this Agreement. Such fidelity bond and policy or policies
shall be maintained with recognized insurers and shall be in such form and
amount as would permit the Servicer to be qualified as a FNMA or FHLMC
seller-servicer. The Servicer shall be deemed to have complied with this
provision if an affiliate of the Servicer has such errors and omissions and
fidelity bond coverage and, by the terms of such insurance policy or fidelity
bond, the coverage afforded thereunder extends to the Servicer. The Servicer
shall furnish to the Master Servicer a copy of each such bond and insurance
policy if (i) the Master Servicer so requests and (ii) the Servicer is not an
affiliate of Lehman Brothers Inc. at the time of such request.
11. Annual Audit Report. On or before April 30 of each year, beginning
-------------------
with April 30, 1999, Servicer shall cause a firm of independent public
accountants (who may also render other services to Servicer), which is a
member of the American Institute of Certified Public Accountants, to furnish
a statement to Owner, Directing Holder and Master Servicer, to the effect
that such firm has examined certain documents and records for the preceding
fiscal year (or during the period from the date of commencement of such
servicer's duties hereunder until the end of such preceding fiscal year in
the case of the first such certificate) and that, on the basis of such
examination conducted substantially in compliance with the Uniform Single
Attestation Program for Mortgage Bankers, such firm is of the opinion that
Servicer's overall servicing operations have been conducted in compliance
with the Uniform Single Attestation Program for Mortgage Bankers except for
such exceptions that, in the opinion of such firm, the Uniform Single
Attestation Program for Mortgage Bankers requires it to report, in which case
such exceptions shall be set forth in such statement.
12. Annual Officer's Certificate. On or before April 30 of each year,
----------------------------
beginning with April 30, 1999, the Servicer, at its own expense, will deliver
to the Owner and Master Servicer a Servicing Officer's certificate stating,
as to each signer thereof, that (i) a review of the activities of the
Servicer during such preceding fiscal year and of performance under this
Agreement has been made under such officers' supervision, and (ii) to the
best of such officers' knowledge, based on such review, the Servicer has
fulfilled all its obligations under this Agreement for such year, or, if
there has been a default in the fulfillment of all such obligations,
specifying each such default known to such officers and the nature and status
thereof including the steps being taken by the Servicer to remedy such
default.
Executed as of the day and year first above written.
LEHMAN CAPITAL, A DIVISION OF
LEHMAN BROTHERS HOLDINGS INC.
By: /s/ Martin P. Harding
-------------------------------------
Name: Martin P. Harding
Title: Managing Director
AURORA LOAN SERVICES INC.
By: /s/ Leo C. Trautman, Jr.
-------------------------------------
Name: Leo C. Trautman, Jr.
Title: Executive Vice President
EXHIBIT A
Modifications to the Flow Servicing Agreement
1. The words "or in part" are hereby added after the words "a Principal
Prepayment in full" in the definition of "Prepayment Interest Shortfall
Amount" in Article I.
2. The definition of "Qualified Depository" in Article I is hereby deleted
and replaced with the following:
"Any of (i) a depository the accounts of which are insured by the
FDIC and the debt obligations of which are rated AA (or its equivalent)
or better by Moody's and S&P; (ii) the corporate trust department of any
bank the debt obligations of which are rated at least A-1 or its
equivalent by each of Moody's and S&P; or (iii) the Servicer, unless the
Master Servicer is notified by either Moody's or S&P that the
designation of the Servicer as a Qualified Depository will result in a
qualification, withdrawal or downgrade of the then-current rating of any
of the Certificates."
3. The definition of "Remittance Date" in Article I is hereby deleted and
replaced with the following:
"The 18th day (or if such 18th day is not a Business Day, the first
Business Day immediately following) of any month, following the First
Remittance Date."
4. The first sentence of the definition of "Servicing Fee" in Article I is
hereby deleted and replaced with the following: "The servicing fee
shall be an amount equal to one-twelfth the product of (a) for the month
of January 1998, a rate per annum equal to 0.375%, and for the month of
February 1998 and every month thereafter, a rate per annum equal to
0.25%; and (b) the outstanding principal balance of such Mortgage Loan.
The obligations of the Master Servicer to pay the Servicing Fee is
limited to, and the Servicing Fee is payable solely from, the interest
portion (including recoveries with respect to interest from Liquidation
Proceeds to the extent permitted by Section 3.02 of this Agreement) of
such Monthly Payment collected by the Servicer, or as otherwise provided
under this Agreement."
5. The fourth and fifth paragraphs of Section 3.01 are hereby deleted and
replaced with the following paragraph:
"Consistent with the terms of this Agreement, the Servicer may
waive any late payment charge, assumption fee or other fee that may be
collected in the ordinary course of servicing the Mortgage Loans. The
Servicer shall not make any future advances to any obligor under any
Mortgage Loan, and (unless the Mortgagor is in default with respect to
the Mortgage Loan or such default is, in the judgment of the Servicer,
reasonably foreseeable) the Servicer shall not permit any modification
of any material term of any Mortgage Loan, including any modification
that would change the Mortgage Interest Rate, defer or forgive the
payment of principal or interest, reduce or increase the outstanding
principal balance (except for actual payments of principal) or change
the final maturity date on such Mortgage Loan. In the event of any such
modification which permits the deferral of interest or principal
payments on any Mortgage Loan, the Servicer shall, on the Business Day
immediately preceding the Remittance Date in any month in which any such
principal or interest payment has been deferred, make a Monthly Advance
in accordance with Section 4.03, in an amount equal to the difference
between (a) such month's principal and one month's interest at the
Remittance Rate on the unpaid principal balance of such Mortgage Loan
and (b) the amount paid by the Mortgagor. The Servicer shall be
entitled to reimbursement for such advances to the same extent as for
all other advances made pursuant to Section 4.03. Without limiting the
generality of the foregoing, the Servicer shall continue, and is hereby
authorized and empowered, to execute and deliver on behalf of itself and
the Master Servicer, all instruments of satisfaction or cancellation, or
of partial or full release, discharge and all other comparable
instruments, with respect to the Mortgage Loans and with respect to the
Mortgaged Properties. Upon the request of the Servicer, the Master
Servicer shall execute and deliver to the Servicer any powers of
attorney and other documents, furnished to it by the Servicer and
reasonably satisfactory to the Master Servicer, necessary or appropriate
to enable the Servicer to carry out its servicing and administrative
duties under this Agreement."
6. The words "Lehman Capital, A Division of Lehman Brothers Holdings Inc.,
owner of residential Mortgage Loans, Group No. 1997-ALSI, and various
Mortgagors" in the first paragraph of Section 3.03 are hereby deleted
and replaced with the following: "Norwest Bank Minnesota, National
Association, as master servicer for SASCO
1998-1."
7. Section 3.04 is amended by deleting the word "and" at the end of clause
(v), replacing the period at the end of clause (vi) with "; and", and
adding the following immediately following clauses (vii) and (viii):
"(vii) to reimburse itself for Monthly Advances of the Servicer's
funds made pursuant to Section 7.03, it being understood that, in the
case of any such reimbursement, the Servicer's right thereto shall be
prior to the rights of the Trust Fund;
(viii) to reimburse itself for unreimbursed Servicing Advances, and
for any unpaid Servicing Fees, the Servicer's right to reimburse itself
pursuant to this subclause (viii) with respect to any Mortgage Loan
being limited to related Liquidation Proceeds, Condemnation Proceeds,
Insurance Proceeds, REO Disposition Proceeds and other amounts received
in respect of the related REO Property, and such other amounts as may be
collected by the Servicer from the Mortgagor or otherwise relating to
the Mortgage Loan, it being understood that, in the case of any such
reimbursement, the Servicer's right thereto shall be prior to the rights
of the Purchaser;"
8. The words "Lehman Capital, A Division of Lehman Brothers Holdings Inc.,
owner of residential Mortgage Loans, Group No. 1997-ALSI, and various
Mortgagors" in the first paragraph of Section 3.05 are hereby deleted
and replaced with the following: "Norwest Bank Minnesota, National
Association, as master servicer for SASCO
1998-1."
9. All references in Section 3.11 to the disposition of REO Properties
within a two year period are hereby deleted and replaced with a three
year period.
10. The first paragraph of Section 4.01 is hereby deleted and replaced with
the following:
"On each Remittance Date the Servicer shall remit by wire transfer
of immediately available funds to the Master Servicer (a) all amounts
deposited in the Custodial Account as of the close of business on the
Determination Date (net of charges against or withdrawals from the
Custodial Account pursuant to Section 3.04), plus (b) all amounts, if
any, which the Servicer is obligated to distribute pursuant to Section
7.03, minus (c) any amounts attributable to Principal Prepayments
received after the applicable Principal Prepayment Period, which amounts
shall be remitted on the following Remittance Date, together with any
additional interest required to be deposited in the Custodial Account in
connection with such Principal Prepayment in accordance with Section
7.03, and minus (d) any amounts attributable to Monthly Payments
collected but due on a due date or dates subsequent to the first day of
the month in which such Remittance Date occurs, which amounts shall be
remitted on the corresponding Remittance Date next succeeding the Due
Period for such amounts."
11. The third paragraph of Section 5.01 is hereby deleted.
12. The following paragraph is hereby added at the end of Scetion 10.01:
"Neither the Master Servicer nor any successor servicer (including
the Owner and the Master Servicer) shall be liable for any acts or
omissions of the Servicer or any predecessor servicer. In particular,
neither the Master Servicer nor any successor servicer (including the
Owner and the Master Servicer) shall be liable for any servicing errors
or interruptions resulting from any failure of the Servicer to maintain
computer and other information systems that are year-2000 compliant."
13. The following words are hereby added after the words "Attention: Rick
Skogg" in Section 10.06(ii):
"with a copy to:
Aurora Loan Services Inc.
601 Fifth Avenue
P.O. Box 1706
Scottsbluff, Nebraska 69361
Telephone No.: (308) 635-3500
Telecopier No.: (308) 632-4287
Attention: Lee Trautman"
FLOW SERVICING AGREEMENT
between
LEHMAN CAPITAL, A DIVISION OF LEHMAN BROTHERS HOLDINGS INC.
OWNER
and
AURORA LOAN SERVICES INC.
SERVICER
Dated as of September 1, 1997
Residential Adjustable and Fixed Rate Mortgage Loans
Group No. 1997-ALSI
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
ARTICLE II
OWNER'S ENGAGEMENT OF SERVICER TO PERFORM SERVICING RESPONSIBILITIES
Section Page
2.01 Contract for Servicing; Possession
of Servicing Files 13
2.02 Books and Records 13
2.03 Commencement of Servicing Responsibilities 14
2.04 Owner Covenants Regarding Transfer of Servicing 14
2.05 Custodial Agreement 16
ARTICLE III
SERVICING THE MORTGAGE LOANS
3.01 Servicer to Service 18
3.02 Collection of Mortgage Loan Payments 20
3.03 Establishment of and Deposits to
Custodial Account 20
3.04 Permitted Withdrawals From
Custodial Account 21
3.05 Establishment of and Deposits to
Escrow Account 22
3.06 Permitted Withdrawals From Escrow Account 22
3.07 Maintenance of FHA Mortgage Insurance and
VA Guaranty 23
3.08 Notification of Adjustments 23
3.09 Completion and Recordation of Assignment of
Mortgage and FHA and VA Change Notices 24
3.10 Protection of Accounts 24
3.11 Title, Management and Disposition of REO Property 25
3.12 Real Estate Owned Reports 26
ARTICLE IV
PAYMENTS TO OWNER
4.01 Remittances 27
4.02 Statements to Owner 27
4.03 Monthly Advances by Servicer 28
ARTICLE V
GENERAL SERVICING PROCEDURES
5.01 Servicing Compensation 29
5.02 Reimbursement of Servicing Advances 29
ARTICLE VI
REPRESENTATIONS, WARRANTIES AND AGREEMENTS; REMEDIES AND BREACH
6.01 Representations, Warranties and
Agreements of the Servicer 30
6.02 Remedies for Breach of Representations
and Warranties of the Servicer 31
6.03 Representations and Warranties of
the Owner 32
6.04 Remedies for Breach of Representations
and Warranties of the Owner 33
ARTICLE VII
AGENCY TRANSFER; WHOLE LOAN TRANSFER; PASS-THROUGH TRANSFER
7.01 Removal of Mortgage Loans from
Inclusion under this Agreement
upon an Agency Transfer, a Pass-Through
Transfer or a Whole Loan Transfer
on one or more Reconstitution Dates 35
7.02 Additional Indemnification by the
Servicer; Third Party Claims 36
7.03 Monthly Advances, Compensating Interest and
Servicing Fees after Reconstitution 37
7.04 Maintenance of Custodial and Escrow Accounts after Reconstitution37
7.05 Owner's Repurchase and Indemnification Obligations 38
7.06 Termination Fees after Reconstitution 39
7.07 Additional Remittance 39
7.08 Transfer of Servicing Following Reconstitution 40
ARTICLE VIII
THE SERVICER
8.01 Merger or Consolidation of the Servicer 41
8.02 Limitation on Liability of the Servicer
and Others 41
8.03 Limitation on Resignation and Assignment
by the Servicer 41
ARTICLE IX
TERMINATION
9.01 Termination For Cause 42
9.02 Termination Without Cause 43
ARTICLE X
MISCELLANEOUS PROVISIONS
10.01 Successor to the Servicer 45
10.02 Closing 46
10.03 Closing Documents 47
10.04 Costs 48
10.05 Protection of Confidential Information 48
10.06 Notices 48
10.07 Severability Clause 49
10.08 No Personal Solicitation 49
10.09 Counterparts 50
10.10 Place of Delivery and
Governing Law 50
10.11 Further Agreements 50
10.12 Intention of the Parties 50
10.13 Successors and Assigns; Assignment of
Servicing Agreement 51
10.14 Waivers 51
10.15 Exhibits 51
10.16 General Interpretive Principles 51
10.17 Reproduction of Documents 51
EXHIBITS
EXHIBIT A MORTGAGE LOAN SCHEDULE
EXHIBIT B-1 FORM OF ACKNOWLEDGMENT AGREEMENT
EXHIBIT B-2 FORM OF CONFIRMATION AGREEMENT
EXHIBIT C CUSTODIAL ACCOUNT LETTER AGREEMENT
EXHIBIT D ESCROW ACCOUNT LETTER AGREEMENT
EXHIBIT E-1 OFFICER'S CERTIFICATE FOR FIRST CLOSING
EXHIBIT E-2 OFFICER'S CERTIFICATE FOR SUBSEQUENT CLOSINGS
EXHIBIT F FORM OF CUSTODIAL AGREEMENT
EXHIBIT G FORM OF OPINION OF COUNSEL OF THE SERVICER
EXHIBIT H FORM OF COLLATERAL PLEDGE AND SECURITY AGREEMENT
FLOW SERVICING AGREEMENT
This is a Flow Servicing Agreement (the "Agreement"), dated as of
September 1, 1997, by and between Lehman Capital, A Division of Lehman
Brothers Holdings Inc., having an office at Three World Financial Center,
12th Floor, New York, New York 10285 (the "Owner") and Aurora Loan Services
Inc., having an office at 2530 South Parker Road, Aurora, Colorado 80014 (the
"Servicer").
W I T N E S S E T H
WHEREAS, the Owner shall acquire from time to time certain
ownership to and the servicing rights for certain fixed and adjustable rate
first and second lien mortgage loans ("Conventional Loans") and/or certain
FHA insured ("FHA Loans") and VA guaranteed ("VA Loans") mortgage loans from
various third party sellers and servicers thereof (the Conventional Loans,
FHA Loans and VA Loans collectively referred to herein as the "Mortgage
Loans");
WHEREAS, the Owner desires to contract with the Servicer for the
servicing responsibilities associated with the Mortgage Loans and the
Servicer desires to assume the servicing responsibilities to such Mortgage
Loans; and
WHEREAS, the Owner desires to sell some or all of the Mortgage
Loans from time to time (a) to FNMA under its Cash Purchase Program or MBS
SWAP Program (Special Servicing Option) (each a "FNMA Transfer"); or (b) to
FHLMC under its Freddie Mac Cash Program or Gold PC Program (the "FHLMC
Transfer"); or (c) to GNMA under its MBS Swap Program I (the "GNMA
Transfer");or (d) to one or more third party purchasers in one or more whole
loan pools (each a "Whole Loan Transfer"); or (e) directly or indirectly, to
certain trusts to be formed as part of publicly-issued or privately placed,
rated or unrated, mortgage pass-through transactions (each a "Pass-Through
Transfer"), in any or all cases (subject to the terms of this Agreement)
retaining the Servicer to service the Mortgage Loans.
NOW, THEREFORE, in consideration of the mutual agreements
hereinafter set forth, and for other good and reasonable consideration, the
receipt and adequacy of which is hereby acknowledged, the Owner and Servicer
hereby agree as follows:
ARTICLE I
DEFINITIONS
The following terms are defined as follows (except as otherwise
agreed in writing by the parties):
Accepted Servicing Practices: With respect to any Mortgage Loan,
those mortgage servicing practices of prudent mortgage lending institutions
which service mortgage loans of the same type as such Mortgage Loans in the
jurisdiction where the related Mortgaged Property is located.
Acknowledgment Agreement: The document to be executed by the Owner
and the Servicer which document shall amend the Mortgage Loan Schedule
attached as Exhibit A hereto to reflect the addition of Mortgage Loans to
such Exhibit A and which document reflects the addition of Mortgage Loans
which are subject to the terms and conditions of this Agreement.
Act: The National Housing Act, as amended from time to time.
Additional Remittance: With respect to each Mortgage Loan subject
to an Agency Transfer, a Whole Loan Transfer or a Pass-Through Transfer, the
portion of the Reconstituted Servicing Fee received by the Servicer under a
Reconstitution Agreement which amount shall be equal to the difference
between such Reconstituted Servicing Fee and the Servicing Fee set forth
herein, which amount shall be remitted to the Owner or its assigns and shall
be freely transferable by the Owner or its assigns.
Additional Remittance Date: The last Business Day of each month of
the related Remittance Date under the applicable Reconstitution Agreement.
Adjustable Rate Mortgage Loan: A Mortgage Loan serviced pursuant
to this Agreement under which the Mortgage Interest Rate is adjusted from
time to time in accordance with the terms and provisions of the Mortgage
Note.
Agency Transfer: The sale or transfer by Owner of some or all of
the Mortgage Loans to FNMA under its Cash Purchase Program or its MBS Swap
Program (Special Servicing Option) or to FHLMC under its Freddie Mac Cash
Program or Gold PC Program, or to GNMA under its MBS Swap Program, retaining
the Servicer as "servicer" thereunder.
Agreement: This Flow Servicing Agreement and all amendments hereof
and supplements hereto.
Ancillary Income: All income derived from the Mortgage Loans,
other than Servicing Fees, including but not limited to, late charges, fees
received with respect to checks or bank drafts returned by the related bank
for non-sufficient funds, assumption fees, optional insurance administrative
fees and all other incidental fees and charges. The Owner shall retain all
Ancillary Income with the exception of optional insurance and administrative
fees payable as a direct result of the Servicer's efforts.
Applicable Agency: With respect to Conventional Loans, FNMA, and
with respect to FHA Loans or VA Loans, GNMA.
Appraised Value: The value set forth in an appraisal made in
connection with the origination of the related Mortgage Loan as the value of
the Mortgaged Property.
Assignment Fee: The Assignment Fee indicated on the applicable
Acknowledgment Agreement, which fee shall be payable within 30 days following
the later to occur of (i) the completion of the transfer of all of the
applicable Mortgage Loan information onto the Servicer's computer system or
(ii) the receipt by the Owner of an invoice from the Servicer for the
Assignment Fee.
Assignment of Mortgage: An assignment of the Mortgage, notice of
transfer or equivalent instrument in recordable form, sufficient under the
laws of the jurisdiction wherein the related Mortgaged Property is located to
reflect the transfer of the Mortgage to the party indicated therein, which
assignment, notice of transfer or equivalent instrument may be in the form of
one or more blanket assignments covering the Mortgage Loans secured by
Mortgaged Properties located in the same jurisdiction, if permitted by law.
Best Efforts: Efforts determined to be reasonably diligent by the
Owner or Servicer, as the case may be, in its sole discretion. Such efforts
do not require the Owner or Servicer, as the case may be, to enter into any
litigation, arbitration or other legal or quasi-legal proceeding, nor do they
require the Owner or Servicer, as the case may be, to advance or expend fees
or sums of money in addition to those specifically set forth in this
Agreement.
Business Day: Any day other than (i) a Saturday or Sunday, or (ii)
a day on which banking and savings and loan institutions in the State of New
York are authorized or obligated by law or executive order to be closed.
Code: The Internal Revenue Code of 1986, as it may be amended from
time to time or any successor statute thereto, and applicable U.S. Department
of the Treasury regulations issued pursuant thereto.
Collateral Pledge and Security Agreement: With respect to each
Reconstitution Date, the security agreement to be executed by the Owner and
the Servicer, in the form attached hereto as Exhibit H, which agreement shall
serve to create a security interest in favor of the Owner and its assigns in
the servicing rights related to the Mortgage Loans being reconstituted.
Condemnation Proceeds: All awards of settlements in respect of a
Mortgaged Property, whether permanent or temporary, partial or entire, by
exercise of the power of eminent domain or condemnation, to the extent not
required to be released to a Mortgagor in accordance with the terms of the
related Mortgage Loan documents.
Confirmation Agreement: The document to be executed by the Owner
and the Servicer and returned by the Servicer to the Owner in accordance with
Section 10.06 within 5 Business Days of receipt of such document from the
Owner which document shall confirm the Servicer's acceptance of its
engagement to perform servicing responsibilities for the Owner with respect
to additional Mortgage Loans.
Conventional Loan: A conventional residential first or second lien
fixed or adjustable rate Mortgage Loan which is neither FHA insured nor VA
guaranteed.
Costs: For any Person, any claims, losses, damages, penalties,
fines, forfeitures, reasonable and necessary legal fees and related costs,
judgments, and other costs and expenses of such Person.
Custodial Account: The separate account or accounts created and
maintained pursuant to Section 3.03.
Custodial Agreement: The agreement or agreements governing the
retention of original Mortgage Loan documents which shall be substantially
similar in form and substance to the Custodial Agreement attached as Exhibit
F hereto.
Custodian: The Custodian under the related Custodial Agreement
identified in the related Confirmation Agreement and related Acknowledgment
Agreement, or its successors in interest or assigns or any successor to the
related Custodian under the Custodial Agreement as provided therein.
Determination Date: For each month that this Agreement is in
effect, the last Business Day of such month as determined by the Servicer on
a monthly basis.
Delinquent Mortgage Loan: A Mortgage Loan which is more than 89
days delinquent (without regard to any applicable grace period).
Due Date: The day of the month on which the Monthly Payment is due
on a Mortgage Loan, exclusive of any days of grace. With respect to the
Mortgage Loans for which payment from the Mortgagor is due on a day other
than the first day of the month, such Mortgage Loans will be treated as if
the Monthly Payment is due on the first day of the month following the actual
Due Date.
Due Period: With respect to each Remittance Date, the period
commencing on the second day of the month preceding the month of the
Remittance Date and ending on the first day of the month of the Remittance
Date.
Eligible Investments: Any one or more of the obligations and
securities listed below which investment provides for a date of maturity not
later than the Determination Date in each month:
(i) direct obligations of, and obligations fully guaranteed
by, the United States of America, or any agency or
instrumentality of the United States of America the
obligations of which are backed by the full faith and
credit of the United States of America; and
(ii) federal funds, demand and time deposits in, certificates
of deposits of, or bankers' acceptances issued by, any
depository institution or trust company incorporated or
organized under the laws of the United States of America
or any state thereof and subject to supervision and
examination by federal and/or state banking authorities,
so long as at the time of such investment or contractual
commitment providing for such investment the commercial
paper or other short-term debt obligations of such
depository institution or trust company (or, in the case
of a depository institution or trust company which is the
principal subsidiary of a holding company, the commercial
paper or other short-term debt obligations of such
holding company) are rated "P-1" by Moody's Investors
Service, Inc. and the long-term debt obligations of such
holding company) are rated "P-1" by Moody's Investors
Service, Inc. and the long-term debt obligations of such
depository institution or trust company (or, in the case
of a depository institution or trust company which is the
principal subsidiary of a holding company, the long-term
debt obligations of such holding company) are rated at
least "Aa" by Moody's Investors Service, Inc.;
provided, however, that no such instrument shall be an Eligible Investment if
such instrument evidences either (i) a right to receive only interest
payments with respect to the obligations underlying such instrument, or
(ii) both principal and interest payments derived from obligations underlying
such instrument and the principal and interest payments with respect to such
instrument provide a yield to maturity of greater than 120% of the yield to
maturity at par of such underlying obligations.
Errors and Omissions Insurance: Errors and Omissions Insurance to be
maintained by the Servicer pursuant to the FNMA Guides.
Escrow Account: The separate account or accounts created and maintained
pursuant to Section 3.05.
Escrow Payments: With respect to any Mortgage Loan, the amounts constituting
ground rents, taxes, assessments, water rates, sewer rents, municipal
charges, mortgage insurance premiums, fire and hazard insurance premiums,
condominium charges, and any other payments required to be escrowed by the
Mortgagor with the mortgagee pursuant to the Mortgage or any other document.
Event of Default: Any event set forth in Section 9.01.
FDIC: The Federal Deposit Insurance Corporation, or any successor thereto.
FHA: The Federal Housing Administration, an agency within the United States
Department of Housing and Urban Development, or any successor thereto and
including the Federal Housing Commissioner and the Secretary of Housing and
Urban Development where appropriate under the FHA Regulations.
FHA Approved Mortgagee: A corporation or institution approved as a mortgagee
by FHA under the Act, and applicable HUD regulations, and eligible to own and
service mortgage loans such as the FHA Loans.
FHA Assigned Mortgage Loan: A Mortgage Loan that has been in default for
longer than the applicable FHA grace period and respecting which written
notice of an intention to assign has been filed with the FHA, whether or not
such Mortgage Loan has in fact been assigned to the FHA.
FHA Insurance Contract: The contractual obligation of FHA respecting the
insurance of a Mortgage Loan.
FHA Loan: A residential Mortgage Loan which is the subject of an FHA
Insurance Contract as evidenced by a mortgage insurance certificate.
FHA Mortgage Insurance: Mortgage insurance authorized under the Act and
provided by the FHA.
FHA Regulations: Regulations promulgated by HUD under the National Housing
Act, codified in 24 Code of Federal Regulations, and other HUD issuances
relating to FHA Loans, including the related handbooks, circulars, notices
and mortgagee letters.
FHLMC: The Federal Home Loan Mortgage Corporation, or any successor thereto.
Fidelity Bond: A fidelity bond to be maintained by the Servicer pursuant to
the FNMA Guides.
First Remittance Date: With respect to each Mortgage Loan, the 10th day of
the month following the month in which the related Transfer Date occurs, or
if such 10th day is not a Business Day, the first Business Day immediately
following such 10th day.
Fixed Rate Mortgage Loan: Any individual Mortgage Loan serviced pursuant to
this Agreement wherein the Mortgage Interest Rate set forth in the Mortgage
Note is fixed for the term of such Mortgage Loan.
FNMA: The Federal National Mortgage Association, or any successor thereto.
FNMA Guides: The FNMA Selling Guide and the FNMA Servicing Guide and all
amendments or additions thereto.
GNMA: The Government National Mortgage Association, or any successor
thereto.
HUD: The Department of Housing and Urban Development, or any federal agency
or official thereof which may from time to time succeed to the functions
thereof with regard to FHA Mortgage Insurance. The term "HUD," for purposes
of this Agreement, is also deemed to include subdivisions thereof such as the
FHA and Government National Mortgage Association.
Initial Transfer Date: The first Transfer Date with respect to servicing of
Mortgage Loans hereunder.
Insurance Proceeds: With respect to each Mortgage Loan, proceeds of
insurance policies insuring the Mortgage Loan or the related Mortgaged
Property including FHA insurance proceeds and/or VA guaranty proceeds.
Liquidation Proceeds: Cash received in connection with the liquidation of a
defaulted Mortgage Loan, whether through the sale or assignment of such
Mortgage Loan, trustee's sale, foreclosure sale or otherwise, or the sale of
the related REO Property, if the Mortgaged Property is acquired in
satisfaction of the Mortgage Loan.
Monthly Advance: With respect to each Remittance Date and each Mortgage
Loan, an amount equal to the Monthly Payment (with the interest portion of
such Monthly Payment adjusted to the Mortgage Loan Remittance Rate) which was
due on the Mortgage Loan, and (i) which was delinquent at the close of
business on the immediately preceding Determination Date and (ii) which was
not the subject of a previous Monthly Advance.
Monthly Payment: The scheduled monthly payment of principal and interest on
a Mortgage Loan.
Mortgage: The mortgage, deed of trust or other instrument securing a
Mortgage Note, which creates a first or second lien on an unsubordinated
estate in fee simple in real property securing the Mortgage Note.
Mortgage Impairment Insurance Policy: A mortgage impairment or blanket
hazard insurance policy as described in the FNMA Guides.
Mortgage Interest Rate: The annual rate of interest borne on a Mortgage
Note.
Mortgage Loan: An individual Mortgage Loan which is the subject of this
Agreement, each Mortgage Loan subject to this Agreement being identified on
the Mortgage Loan Schedule, which Mortgage Loan includes without limitation
the Mortgage Loan documents, the Monthly Payments, Principal Prepayments,
Liquidation Proceeds, Condemnation Proceeds, Insurance Proceeds, REO
Disposition Proceeds, and all other rights, benefits, proceeds and
obligations arising from or in connection with such Mortgage Loan.
Mortgage Loan Remittance Rate: With respect to each Mortgage Loan, the
annual rate of interest remitted to the Owner, which shall be equal to the
Mortgage Interest Rate minus the applicable Servicing Fee.
Mortgage Loan Schedule: A schedule of certain Mortgage Loans setting forth
information with respect to such Mortgage Loans, which schedule supplements
this Agreement and becomes part of Exhibit A hereof on the related Transfer
Date to reflect the addition of such Mortgage Loans to the terms of this
Agreement.
Mortgage Note: The note or other evidence of the indebtedness of a Mortgagor
secured by a Mortgage.
Mortgaged Property: The real property securing repayment of the debt
evidenced by a Mortgage Note.
Mortgagor: The obligor on a Mortgage Note.
Net Sale Proceeds: The proceeds from the sale of REO Property, net of all
expenses incurred by the Servicer in connection with such sale, including,
without limitation, legal fees and expenses, referral fees, brokerage
commissions, conveyance taxes and any other related expense.
Officer's Certificate: A certificate signed by the Chairman of the Board or
the Vice Chairman of the Board or the President or a Vice President or an
assistant Vice President and by the Treasurer or the Secretary or one of the
Assistant Treasurers or Assistant Secretaries of the Owner, and delivered to
the Servicer as required by this Agreement.
Opinion of Counsel: A written opinion of counsel, who may be an employee of
the Servicer, reasonably acceptable to the Owner.
Owner: Lehman Capital, A Division of Lehman Brothers Holdings Inc., or its
successors in interest and assigns.
Pass-Through Transfer: The sale or transfer of some or all of the Mortgage
Loans to a trust to be formed as part of a publicly-issued and/or privately
placed, rated or unrated, mortgage pass-through transaction, retaining the
Servicer as "servicer" (with or without a master servicer) thereunder.
Person: Any individual, corporation, partnership, limited liability company,
joint venture, association, joint-stock company, trust, unincorporated
organization, government or any agency or political subdivision thereof.
PMI Policy: A policy of primary mortgage guaranty insurance issued by a
Qualified Insurer, as required by this Agreement with respect to certain
Mortgage Loans.
Prepayment Interest Shortfall Amount: With respect to any Mortgage Loan that
was subject to a Principal Prepayment in full during any Due Period, which
Principal Prepayment was applied to such Mortgage Loan prior to such Mortgage
Loan's Due Date in such Due Period, the amount of interest (net the related
Reconstituted Servicing Fee) that would have accrued on the amount of such
Principal Prepayment during the period commencing on the date as of which
such Principal Prepayment was applied to such Mortgage Loan and ending on the
day immediately preceding such Due Date, inclusive.
Prime Rate: The prime rate announced to be in effect from time to time, as
published as the average rate in The Wall Street Journal Northeast Edition.
Principal Prepayment: Any payment or other recovery of principal on a
Mortgage Loan which is received in advance of its scheduled Due Date,
including any prepayment penalty or premium thereon and which is not
accompanied by an amount of interest representing scheduled interest due on
any date or dates in any month or months subsequent to the month of
prepayment.
Prior Servicer: Any prior servicer (other than the Servicer) of any or all
of the Mortgage Loans.
Qualified Depository: A depository the accounts of which are insured by the
FDIC and the debt obligations of which are rated in the two highest
categories by Standard & Poor's Ratings Group and Moody's Investors Service,
Inc. and meets such requirements as are necessary for any Reconstitution
Agreement. The Servicer shall be deemed to be a Qualified Depository under
this Agreement so long as it meets the applicable requirements of FNMA.
Qualified Insurer: A mortgage guaranty insurance company duly authorized and
licensed where required by law to transact mortgage guaranty insurance
business and approved as an insurer by FNMA, FHLMC and GNMA.
Reconstitution Agreements: The agreement or agreements entered into by the
Owner, the Servicer, FNMA, FHLMC or GNMA or certain third parties on the
Reconstitution Date(s) with respect to any or all of the Mortgage Loans
serviced hereunder, in connection with a Whole Loan Transfer, a Pass-Through
Transfer or an Agency Transfer as set forth in Section 7.01, including, but
not limited to, (i) a FNMA Mortgage Selling and Servicing Contract, a Pool
Purchase Contract, and any and all servicing agreements and tri-party
agreements reasonably required by FNMA with respect to a FNMA Transfer, (ii)
a Purchase Contract and all purchase documents associated therewith as set
forth in the Freddie Mac Sellers' & Servicers' Guide, and any and all
servicing agreements and tri-party agreements reasonably required by FHLMC
with respect to a FHLMC Transfer, (iii) any and all documents as set forth in
the GNMA Mortgage-Backed Securities Guide, and any and all servicing
agreements and tri-party agreements reasonably required by GNMA with respect
to a GNMA Transfer, (iv) a pooling and servicing agreement and/or a
subservicing/master servicing agreement and related custodial/trust agreement
and related documents with respect to a Pass-Through Transfer and (iv) a
seller's warranties and servicing agreement or a sale and servicing agreement
and related custodial agreement and closing documents with respect to a Whole
Loan Transfer. Such agreement or agreements shall prescribe the rights and
obligations of the Servicer in servicing the related Mortgage Loans and shall
provide for a Reconstituted Servicing Fee to the Servicer, net of any
guarantee fees due FNMA, FHLMC or GNMA, if applicable, at least equal to the
Servicing Fee due the Servicer in accordance with this Agreement or the
Reconstituted Servicing Fee required pursuant to the Reconstitution
Agreement, whichever is greater. The Reconstituted Servicing Fee and the
form of relevant Reconstitution Agreement to be entered into by the Owner
and/or master servicer or trustee and the Servicer with respect to Pass-
Through Transfers and/or Whole Loan Transfers shall be reasonably
satisfactory in form and substance to the Owner and the Servicer (giving due
regard to any rating or master servicing requirements and the provisions of
Section 9.02 hereof) and the representations and warranties and servicing
provisions contained therein shall be substantially similar to those
contained in this Agreement, unless otherwise mutually agreed by the parties.
Reconstitution Date: The date or dates on which any or all of the Mortgage
Loans serviced under this Agreement shall be removed from this Agreement and
reconstituted as part of an Agency Transfer, a Pass-Through Transfer or a
Whole Loan Transfer pursuant to Section 7.01 hereof. On such date or dates,
the Mortgage Loans transferred shall cease to be covered by this Agreement
and the Servicer's servicing responsibilities shall cease under this
Agreement with respect to the related transferred Mortgage Loans, other than
the obligation to remit the Additional Remittance in accordance with the
provisions set forth in Section 7.07 hereof and the right of the Owner to
cause a transfer of the servicing responsibilities to the Mortgage Loans
and/or REO Properties in accordance with Section 7.08 hereof.
Reconstituted Servicing Fee: With respect to each reconstituted Mortgage
Loan that is subject to a Reconstitution Agreement, the monthly fee to which
the Servicer thereunder is entitled, which shall be equal to the servicing
fee specified in the applicable Reconstitution Agreement.
REMIC: A "real estate mortgage investment conduit" within the meaning of
Section 860D of the Code.
Remittance Date: The 10th day (or if such 10th day is not a Business Day,
the first Business Day immediately following) of any month, following the
First Remittance Date.
REO Disposition: The final sale by the Servicer of any REO Property.
REO Disposition Proceeds: All amounts received with respect to an REO
Disposition pursuant to Section 3.11.
REO Property: A Mortgaged Property acquired by the Servicer on behalf of the
Owner through foreclosure or by deed in lieu of foreclosure, pursuant to
Section 3.11.
Servicer: Aurora Loan Services Inc. or its successor in interest or assigns
or any successor to the Servicer under this Agreement as herein provided.
Servicing Advances: All customary, reasonable and necessary "out of pocket"
costs and expenses (including reasonable attorneys' fees and disbursements)
incurred in the performance by the Servicer of its servicing obligations,
including, but not limited to, the cost of (a) the preservation, restoration
and protection of the Mortgaged Property, (b) any enforcement or
administrative or judicial proceedings, including foreclosures, (c) the
management and liquidation of the Mortgaged Property if the Mortgaged
Property is acquired in satisfaction of the Mortgage, (d) taxes, assessments,
water rates, sewer rents and other charges which are or may become a lien
upon the Mortgaged Property, and PMI Policy premiums and fire and hazard
insurance coverage, (e) any losses sustained by the Servicer with respect to
the liquidation of the Mortgaged Property and (f) compliance with the
obligations pursuant to the provisions of the FNMA Guides.
Servicing Fee: With respect to each Mortgage Loan that has not been
removed from this Agreement as part of an Agency Transfer, a Pass-Through
Transfer or a Whole Loan Transfer, and with respect to each Mortgage Loan
that has been removed from this Agreement as part of an Agency Transfer, a
Pass-Through Transfer or a Whole Loan Transfer and subsequently repurchased
by the Owner pursuant to Section 7.05 hereof and again becoming subject to
this Agreement, the servicing fee shall be, with respect to each (i) fixed
rate Mortgage Loan, an amount equal to $10.00 per month; (ii) adjustable rate
Mortgage Loan, an amount equal to $11.00 per month; and (iii) Delinquent
Mortgage Loan, an amount equal to $40.00 per month. Such fee shall be
payable monthly and shall be pro rated for any portion of a month during
which the Mortgage Loan is serviced pursuant to this Agreement.
Servicing File: The items pertaining to a particular Mortgage Loan
including, but not limited to, the computer files, data disks, books,
records, data tapes, notes, and all additional documents generated as a
result of or utilized in originating and/or servicing each Mortgage Loan,
which are held in trust for the Owner by the Servicer.
Servicing Officer: Any officer of the Servicer involved in or responsible
for, the administration and servicing of the Mortgage Loans whose name
appears on a list of servicing officers furnished by the Servicer to the
Owner upon request, as such list may from time to time be amended.
Servicing Rights: Any and all of the following: (a) any and all rights to
service the Mortgage Loans; (b) any payments to or monies received by the
Servicer for servicing the Mortgage Loans; (c) any late fees, penalties or
similar payments with respect to the Mortgage Loans; (d) all agreements or
documents creating, defining or evidencing any such servicing rights to the
extent they relate to such servicing rights and all rights of the Servicer
thereunder; (e) Escrow Payments or other similar payments with respect to the
Mortgage Loans and any amounts actually collected by the Servicer with
respect thereto; (f) all accounts and other rights to payment related to any
of the property described in this paragraph; and (g) any and all documents,
files, records, servicing files, servicing documents, servicing records, data
tapes, computer records, or other information pertaining to the Mortgage
Loans or pertaining to the past, present or prospective servicing of the
Mortgage Loans.
Set-Up Fee: The set-up fee indicated on the applicable Acknowledgment
Agreement, which fee shall be payable within 30 days following the later to
occur of (i) the completion of the transfer of all of the applicable Mortgage
Loan information onto the Servicer's computer system or (ii) the receipt by
the Owner of an invoice from the Servicer for the Set-Up Fee.
Transfer Date: The date or dates upon which the Servicer commences the
servicing responsibilities with respect to Mortgage Loans in accordance with
the terms set forth herein which dates shall be as set forth in the related
Confirmation Agreement and Acknowledgment Agreement.
VA: The Veterans Administration, an agency of the United States of America,
or any successor thereto including the Administrator of Veterans Affairs.
VA Approved Lender: Those lenders which are approved by the VA to act as a
lender in connection with the origination of VA Loans.
VA Loan: A Mortgage Loan which is the subject of a VA Loan Guaranty
Agreement as evidenced by a Loan Guaranty Certificate, or a Mortgage Loan
which is a vendee loan sold by the VA.
VA Loan Guaranty Agreement: The obligation of the United States to pay a
specific percentage of a Mortgage Loan (subject to a maximum amount) upon
default of the Mortgagor pursuant to the Servicemen's Readjustment Act, as
amended.
VA Loan Guaranty Certificate: The certificate evidencing a VA Loan Guaranty
Agreement.
VA Regulations: Regulations promulgated by the Veteran's Administration
pursuant to the Servicemen's Readjustment Act, as amended, codified in 38
Code of Federal Regulations, and other VA issuances relating to VA Loans,
including related Handbooks, Circulars and Notices.
Whole Loan Transfer: The sale or transfer of some or all of the Mortgage
Loans to a third party purchaser in a whole loan transaction pursuant to a
seller's warranties and servicing agreement or a participation and servicing
agreement, retaining the Servicer as "servicer" thereunder.
ARTICLE II
OWNER'S ENGAGEMENT OF SERVICER TO PERFORM SERVICING RESPONSIBILITIES
Section 2.01. Contract for Servicing; Possession of Servicing
Files.
The Owner, by execution and delivery of this Agreement (and the related
Acknowledgment Agreement and Confirmation Agreement), does hereby contract
with the Servicer, subject to the terms of this Agreement, for the servicing
of the Mortgage Loans. On or before each Transfer Date, the Owner shall cause
to be delivered or will use its Best Efforts to cause to be delivered the
Servicing Files with respect to the Mortgage Loans listed on the related
Mortgage Loan Schedule to the Servicer to be held in trust for the Owner
pursuant to this Agreement. On or before each Transfer Date, the Owner
shall, with respect to the Mortgage Loans on the related Mortgage Loan
Schedule, execute and deliver an Acknowledgment Agreement in the form
attached hereto as Exhibit B-1, which Acknowledgment Agreement shall be
executed and delivered simultaneously by the Servicer to the Owner. Each
Servicing File delivered to the Servicer shall be held by the Servicer in
order to service the Mortgage Loans pursuant to this Agreement and are and
shall be held in trust by the Servicer for the benefit of the Owner as the
owner thereof. The Servicer's possession of any portion of the Mortgage Loan
documents shall be at the will of the Owner for the sole purpose of
facilitating servicing of the related Mortgage Loan pursuant to this
Agreement, and such retention and possession by the Servicer shall be in a
custodial capacity only. The ownership of each Mortgage Note, Mortgage, and
the contents of the Servicing File shall be vested in the Owner and the
ownership of all records and documents with respect to the related Mortgage
Loan prepared by or which come into the possession of the Servicer shall
immediately vest in the Owner and shall be retained and maintained, in trust,
by the Servicer at the will of the Owner in such custodial capacity only.
The portion of each Servicing File retained by the Servicer pursuant to this
Agreement shall be segregated from the other books and records of the
Servicer and shall be appropriately marked to clearly reflect the ownership
of the related Mortgage Loan by the Owner. The Servicer shall release from
its custody the contents of any Servicing File retained by it only in
accordance with this Agreement.
Section 2.02. Books and Records.
Record title to each Mortgage and the related Mortgage Note shall, at the
Owner's option, remain in the name of (i) the Servicer or (ii) in the name as
the Owner shall designate. Subject to Section 3.01(a) hereof, the Owner, its
designee or the Servicer shall prepare or cause to be prepared and record or
cause to be recorded any Assignments of Mortgage required pursuant to this
Section 2.02. and shall pay all necessary fees associated with the
preparation and recording of the Assignments of Mortgage. Notwithstanding
the foregoing, the Servicer shall cooperate with the Owner in the Owner's
preparation and recording of any and all Assignments of Mortgage.
Additionally, the Servicer shall prepare and execute, at the direction of the
Owner, any note endorsements in connection with any and all Reconstitution
Agreements. All
rights arising out of the Mortgage Loans shall be vested in the Owner. All
funds received on or in connection with a Mortgage Loan shall be received and
held by the Servicer in trust for the benefit of the Owner as the owner of
the Mortgage Loans pursuant to the terms of this Agreement.
Section 2.03. Commencement of Servicing Responsibilities.
On each Transfer Date, the Owner shall appoint the Servicer to perform, and
the Servicer shall assume and accept such appointment for, all servicing
responsibilities for the related Mortgage Loans on the related Mortgage Loan
Schedule. The engagement of the Servicer to perform the servicing
responsibilities hereunder is not mandatory and is expressly conditioned upon
the acquisition of the related Mortgage Loans by the Owner, the election of
the Owner respecting the engagement of the Servicer to perform the related
servicing responsibilities and the election, in the manner hereinafter set
forth, of the Servicer to accept such transfer.
Upon the Owner's determination in its sole discretion to engage the Servicer
to perform the servicing responsibilities with respect to Conventional Loans,
FHA Loans and/or VA Loans pursuant to the terms of this Agreement, the Owner
shall execute a Confirmation Agreement in the form attached as Exhibit B-2
hereto, and deliver the same to the Servicer. The Owner shall notify the
Servicer by telephone of its determination to transfer such servicing
responsibilities to the Servicer and shall deliver the Confirmation Agreement
to the Servicer within 2 Business Days of such verbal notification. The
Servicer may elect to accept or reject on an all or nothing basis such
engagement to perform the servicing responsibilities with respect to the
additional Conventional Loans, FHA Loans and/or VA Loans by either (i) in the
case of an acceptance, executing the Confirmation Agreement and delivering
the same to the Owner in accordance with Section 10.06 within 5 Business
Days of receipt of such Confirmation Agreement, or (ii) in the case of a
rejection, by written notification thereof delivered to the Owner in
accordance with Section 10.06 within 5 Business Days of receipt of such
Confirmation Agreement.
Section 2.04. Owner Covenants Regarding Transfer of Servicing.
On or before each Transfer Date the Owner shall use its Best Efforts to cause
the Prior Servicer to effectuate and evidence the transfer of the servicing
of the related Mortgage Loans from the Prior Servicer to the Servicer
including the following:
(a) Notice to Mortgagors. The Owner shall use its Best Efforts to
cause the Prior Servicer to mail to the Mortgagor of each Mortgage a letter
advising the Mortgagor of the transfer of the servicing thereof to the
Servicer, in accordance with the relevant provisions of the Cranston-Gonzales
National Affordable Housing Act of 1990, as the same may be amended from time
to time, and the regulations provided in accordance with the Real Estate
Settlement Procedures Act. The Owner shall use its Best Efforts to cause the
Prior Servicer to promptly provide the Servicer with copies of all such
notices.
(b) Notice to Taxing Authorities and Insurance Companies and HUD
(if applicable). The Owner shall use its Best Efforts to cause the Prior
Servicer to transmit to the applicable taxing authorities and insurance
companies (including PMI Policy insurers, if applicable) and/or agents,
notification of the transfer of the servicing to the Servicer and
instructions to deliver all notices, tax bills and insurance statements, as
the case may be, to the Servicer from and after the related Transfer Date.
The Owner shall use its Best Efforts to cause the Prior Servicer to promptly
provide the Servicer with copies of all such notices. With respect to FHA
Loans, in addition to the requirements set forth above, the Owner shall use
its Best Efforts to cause the Prior Servicer to provide notice to HUD on HUD
Form 92080 or such other form prescribed by HUD.
(c) Delivery of Servicing Records. The Owner shall use its Best
Efforts to cause the Prior Servicer to forward to the Servicer all Servicing
Files and any other Mortgage Loan documents in the Prior Servicer's
possession relating to each Mortgage Loan.
(d) Escrow Payments. The Owner shall use its Best Efforts to
cause the Prior Servicer to provide the Servicer with immediately available
funds by wire transfer in the amount of the net Escrow Payments and suspense
balances and all loss draft balances associated with the Mortgage Loans. The
Owner shall use its Best Efforts to cause the Prior Servicer to provide the
Servicer with an accounting statement of Escrow Payments and suspense
balances and loss draft balances sufficient to enable the Servicer to
reconcile the amount of such payment with the accounts of the Mortgage Loans.
Additionally, the Owner shall use its Best Efforts to cause the Prior
Servicer to wire the Servicer the amount of any agency or trustee Mortgage
Loan payments, any prepaid Mortgage Loan payments and all other similar
amounts held by the Prior Servicer.
(e) Payoffs and Assumptions. The Owner shall use its Best Efforts
to cause the Prior Servicer to provide to the Servicer copies of all
assumption and payoff statements generated by the Prior Servicer on the
Mortgage Loans.
(f) Mortgage Payments Received Prior to Transfer Date. The Owner
shall use its Best Efforts to cause the Prior Servicer to apply all payments
received by the Prior Servicer on each Mortgage Loan prior to the related
Transfer Date to the account of the particular Mortgagor.
(g) Mortgage Payments Received After Transfer Date. The Owner
shall use its Best Efforts to cause the Prior Servicer to forward the amount
of any Monthly Payments received by the Prior Servicer after the related
Transfer Date to the Servicer by overnight mail on the date of receipt. The
Owner shall use its Best Efforts to cause the Prior Servicer to notify the
Servicer of the particulars of the payment, which notification requirement
shall be satisfied if the Prior Servicer forwards with its payment sufficient
information to permit appropriate processing of the payment by the Servicer.
The Owner shall use its Best Efforts to cause the Prior Servicer to assume
full responsibility for the necessary and appropriate legal application of
Monthly Payments received by the Prior Servicer after the related Transfer
Date with respect to Mortgage Loans then in foreclosure or bankruptcy;
provided, for purposes of this Agreement, necessary and appropriate legal
application of such Monthly Payments shall include, but not be limited to
endorsement of a Monthly Payment to the Servicer with the particulars of the
payment such as the account number, dollar amount, date received and any
special Mortgagor application instructions.
(h) Reconciliation. The Owner shall use its Best Efforts to cause
the Prior Servicer to, on or before the related Transfer Date, reconcile
principal balances and make any monetary adjustments required by the
Servicer. Any such monetary adjustments will be transferred between the
Prior Servicer and the Servicer as appropriate.
(i) IRS Forms. The Owner shall use its Best Efforts to cause the
Prior Servicer to file all IRS forms 1098, 1099, 1099A or 1041 and K-1, or
any successor forms thereto, which are required to be filed on or before the
related Transfer Date in relation to the servicing and ownership of the
Mortgage Loans for the current calendar year. The Owner shall use its Best
Efforts to cause the Prior Servicer to provide copies of such forms to the
Servicer or the Mortgagors upon request and shall use its Best Efforts to
cause the Prior Servicer to reimburse the Servicer for any costs or penalties
incurred by the Servicer due to the Prior Servicer's failure to comply with
this paragraph.
Section 2.05. Custodial Agreement.
With respect to all Mortgage Loans which become subject to this
Agreement, pursuant to the related Custodial Agreement as identified in the
related Confirmation Agreement and related Acknowledgment Agreement, the
Owner shall deliver and release to the related Custodian on or prior to each
Transfer Date those Mortgage Loan documents required by the Custodial
Agreement with respect to each Mortgage Loan, a list of which is set forth in
Section 2 of the Custodial Agreement. In the event of any conflict,
inconsistency or discrepancy between any of the provisions of this Agreement
and any of the provisions of the Custodial Agreement, the provisions of this
Agreement shall control and be binding upon the Owner and the Servicer.
On or prior to each Transfer Date, the related Custodian shall have
certified its receipt of all Mortgage Loan documents required to be delivered
pursuant to the Custodial Agreement, as evidenced by the trust receipt and
initial certification of the related Custodian in the form annexed to the
Custodial Agreement. The Owner shall be responsible for, as and when due,
any and all initial document review fees, initial and final certification
fees and recertification fees and any costs associated with correcting any
deficiencies identified in connection with such review(s). The Owner shall
be responsible for maintaining the Custodial Agreement and shall pay all
other fees and expenses of the related Custodian including but not limited
to, (i) any and all annual and warehousing fees, (ii) any and all termination
fees in the event the related Custodian is terminated by the Owner, except
that the Servicer shall pay such termination fees in the event the related
Custodian is terminated pursuant to the Servicer's request and (iii) any and
all fees due in connection with the deposit or retrieval of a Mortgage Loan
document or documents (collectively, the "Custodial Fees"). With respect to
any Mortgage Loans which become subject to an Agency Transfer, upon the
request of the Servicer the Owner shall terminate the related Custodian and
be responsible for any related termination fees; provided, however, that the
Servicer shall (A) appoint a successor custodian that meets the requirements
of the related Reconstitution Agreement (such successor custodian may be the
Servicer if permitted under such Reconstitution Agreement) and (B) from and
after the date of such termination be responsible for any and all fees and
expenses of the successor custodian. Notwithstanding the foregoing, in the
event that the Servicer acquires the Servicing Rights to any or all the
Mortgage Loans pursuant to Section 7.01, all Custodial Fees associated with
such Mortgage Loans shall be paid by the Servicer.
The Servicer shall forward to the related Custodian original
documents evidencing an assumption, modification, consolidation or extension
of any Mortgage Loan entered into in accordance with this Agreement within
one week of their execution, provided, however, that the Servicer shall
provide the related Custodian with a certified true copy of any such document
submitted for recordation within one week of its execution, and shall provide
the original of any document submitted for recordation or a copy of such
document certified by the appropriate public recording office to be a true
and complete copy of the original within sixty days of its submission for
recordation. If such copy has not been returned by the applicable recording
office within sixty days of its submission, the Servicer shall notify the
Owner and the related Custodian of such delinquency, demonstrating that the
Servicer has used its Best Efforts to obtain such copy (the "Delinquent
Document"). Upon adequate demonstration of a Best Efforts attempt by the
Servicer to obtain the Delinquent Document, the Owner shall, in its sole
discretion, extend the time period for the receipt of the Delinquent Document
for a reasonable time period by which it is reasonably expected that the
Delinquent Document will be received.
ARTICLE III
SERVICING OF THE MORTGAGE LOANS
Section 3.01 Servicer to Service.
The Servicer, as an independent contractor, shall service and administer the
Mortgage Loans from and after the related Transfer Date and shall have full
power and authority, acting alone, to do any and all things in connection
with such servicing and administration which the Servicer may deem necessary
or desirable, consistent with the terms of this Agreement and with Accepted
Servicing Practices, including taking all actions that a mortgagee is
permitted or required to take by the FHA or VA, with respect to FHA Loans and
VA Loans, as the case may be. Except as set forth in this Agreement, the
Servicer shall service the Mortgage Loans in strict compliance with the
servicing provisions related to the FNMA MBS Program (Special Servicing
Option) of the FNMA Guides, which include, but are not limited to, provisions
regarding the liquidation of Mortgage Loans, the collection of Mortgage Loan
payments, the payment of taxes, insurance and other charges, the maintenance
of hazard insurance, the maintenance of mortgage impairment insurance, the
maintenance of a Fidelity Bond and Errors and Omissions Insurance,
inspections, the restoration of Mortgaged Property, the maintenance of PMI
Policies, insurance claims, the title, management and disposition of REO
Property, permitted withdrawals with respect to REO Property, REO reports,
liquidation reports, and reports of foreclosures and abandonments of
Mortgaged Property, the transfer of Mortgaged Property, the release of
Mortgage Loan documents, annual statements, and examination of records and
facilities. In the event of any conflict, inconsistency or discrepancy
between any of the servicing provisions of this Agreement and any of the
servicing provisions of the FNMA Guides, the provisions of this Agreement
shall control and be binding upon the Owner and the Servicer.
It is understood and agreed that the Owner shall approve all foreclosures for
which approval would be necessary by the Applicable Agency prior to the
commencement of any foreclosure proceedings and that the Owner must approve
any and all advances with respect to foreclosures made by the Servicer in
excess of 20% of the outstanding principal balance of the applicable Mortgage
Loan. In the event that Owner does not disapprove of any such advance or
foreclosure within three (3) days of receipt of notice of such advance or
foreclosure, then the Owner is deemed to have approved such advance or
foreclosure.
Notwithstanding the foregoing paragraph, the Owner and the Servicer hereby
agree as follows:
(a) As per the terms of the applicable Acknowledgment
Agreement, either (i) the Owner or the Owner's designee or (ii) the Servicer,
for an Assignment Fee, shall (A) prepare or cause to be prepared all
Assignments of Mortgage, (B) record or cause to be recorded all Assignments
of Mortgage, (C) shall pay the recording costs associated with the Mortgage
Loans associated with this Acknowledgment Agreement and/or (D) shall track
such Assignments of Mortgage to ensure they have been recorded for the
Assignment Fee set forth on the applicable Acknowledgment Agreement.
(b) The Servicer shall, in accordance with the relevant
provisions of the Cranston-Gonzales National Affordable Housing Act of 1990,
as the same may be amended from time to time, and the regulations provided in
accordance with the Real Estate Settlement Procedures Act, provide notice to
the Mortgagor of each Mortgage of the transfer of the servicing thereto to
the Servicer.
(c) The Servicer shall be responsible for the preparation and
costs associated with notifications to Mortgagors of the assumption of
servicing by the Servicer.
(d) The Owner shall retain all Ancillary Income.
Prior to a Mortgage Loan becoming subject to a Reconstitution Agreement and
consistent with the terms of this Agreement, the Servicer may (i) waive,
modify or vary any term of any Mortgage Loan or (ii) consent to the
postponement of strict compliance with any such term or (iii) in any manner
grant indulgence to any Mortgagor, if such modification would not require the
notification to and/or consent by the Applicable Agency, without the prior
consent of the Owner. Where such notification to and/or consent by the
Applicable Agency is required for any such modification, the Servicer must
first obtain the prior written consent of the Owner before making such
modification. In the event that the Owner does not disapprove of any such
modification within ten (10) days of receipt of a request for consent to such
modification, then the Owner is deemed to have consented to such
modification. Notwithstanding the foregoing, once a Mortgage Loan becomes
subject to a Reconstitution Agreement, the Servicer may not (i) waive, modify
or vary any term of any Mortgage Loan or (ii) consent to the postponement of
strict compliance with any such term or (iii) in any manner grant indulgence
to any Mortgagor without first obtaining the prior written consent of the
applicable Persons required thereunder.
Without limiting the generality of the foregoing, the Servicer shall
continue, and is hereby authorized and empowered, to execute and deliver on
behalf of itself and the Owner, all instruments of satisfaction or
cancellation, or of partial or full release, discharge and all other
comparable instruments, with respect to the Mortgage Loans and with respect
to the Mortgaged Properties. If reasonably required by the Servicer, the
Owner shall furnish the Servicer with any powers of attorney and other
documents necessary or appropriate to enable the Servicer to carry out its
servicing and administrative duties under this Agreement.
In servicing and administering the FHA Loans and VA Loans, the Servicer shall
comply strictly with the National Housing Act and the FHA Regulations, the
Servicemen's Readjustment Act, the VA Regulations and administrative
guidelines issued thereunder or pursuant thereto, and, to the extent
permitted hereunder, promptly discharge all of the obligations of the
mortgagee thereunder and under each Mortgage including the payment of any
fees, premiums and charges and the timely giving of notices.
In servicing and administering the Mortgage Loans, the Servicer shall employ
procedures (including collection procedures) and exercise the same care that
it customarily employs and exercises in servicing and administering mortgage
loans for its own account, giving due consideration to Accepted Servicing
Practices where such practices do not conflict with the requirements of this
Agreement, the FNMA Guides, the FHA Regulations and the VA Regulations, and
the Owner's reliance on the Servicer.
Section 3.02 Collection of Mortgage Loan Payments.
Continuously from the related Transfer Date until the date each Mortgage Loan
ceases to be subject to this Agreement, the Servicer shall proceed diligently
to collect all payments due under each of the Mortgage Loans when the same
shall become due and payable and shall take special care in ascertaining and
estimating Escrow Payments and all other charges that will become due and
payable with respect to the Mortgage Loans and each related Mortgaged
Property, to the end that the installments payable by the Mortgagors will be
sufficient to pay such charges as and when they become due and payable.
Section 3.03 Establishment of and Deposits to Custodial Account.
The Servicer shall segregate and hold all funds collected and received
pursuant to the Mortgage Loans separate and apart from any of its own funds
and general assets and shall establish and maintain one or more Custodial
Accounts, in the form of time deposit or demand accounts, titled "Aurora Loan
Services Inc., in trust for Lehman Capital, A Division of Lehman Brothers
Holdings Inc., owner of Residential Mortgage Loans, Group No. 1997-ALSI, and
various Mortgagors". The Custodial Account shall be established with a
Qualified Depository. Any funds deposited in the Custodial Account may be
invested in Eligible Investments subject to the provisions of Section 3.10
hereof. Funds deposited in the Custodial Account may be drawn on by the
Servicer in accordance with Section 3.04. The creation of any Custodial
Account shall be evidenced by a letter agreement in the form of Exhibit C. A
copy of such certification or letter agreement shall be furnished to the
Owner and, upon request, to any subsequent owner of the Mortgage Loans.
The Servicer shall deposit in the Custodial Account on a daily basis, and
retain therein, the following collections received by the Servicer and
payments made by the Servicer after the related Transfer Date:
(i) all payments on account of principal on the Mortgage Loans,
including all Principal Prepayments;
(ii) all payments on account of interest on the Mortgage Loans
adjusted to the Mortgage Loan Remittance Rate;
(iii) all Liquidation Proceeds;
(iv) all Insurance Proceeds;
(v)
(vi)(vii) (i) all Ancillary Income;
(viii) all Condemnation Proceeds that are not applied to the
restoration or repair of the Mortgaged Property or released to the Mortgagor;
(ix) any amount required to be deposited in the Custodial Account;
(x) any amounts required to be deposited by the Servicer in
connection with the deductible clause in any blanket hazard insurance policy;
and
(xi) any amounts received with respect to or related to any REO
Property or REO Disposition Proceeds.
Any interest paid on funds deposited in the Custodial Account by the
depository institution shall accrue to the benefit of the Servicer and the
Servicer shall be entitled to retain and withdraw such interest from the
Custodial Account pursuant to Section 3.04. Additionally, any other benefit
derived from the Custodial Account associated with the receipt, disbursement
and accumulation of principal, interest, taxes, hazard insurance, mortgage
insurance, etc. shall accrue to the Servicer.
Section 3.04 Permitted Withdrawals From Custodial Account.
The Servicer shall, from time to time, withdraw funds from the Custodial
Account for the following purposes:
(i) to make payments to the Owner in the amounts and in the
manner provided for in Section 4.01;
(i) in the event the Servicer has elected not to retain the
Servicing Fee out of any Mortgagor payments on account of interest or other
recovery of interest with respect to a particular Mortgage Loan (including
late collections of interest on such Mortgage Loan, or interest portions of
Insurance Proceeds or Liquidation Proceeds) prior to the deposit of such
Mortgagor payment or recovery in the Custodial Account, to pay to itself the
related Servicing Fee from all such Mortgagor payments on account of interest
or other such recovery for interest with respect to that Mortgage Loan;
(i) to pay itself interest on funds deposited in the Custodial
Account;
(ii) to clear and terminate the Custodial Account upon the
termination of this Agreement;
(iii) to transfer funds to another Qualified Depository in
accordance with Section 3.10 hereof; and
(iv) to invest funds in certain Eligible Investments in
accordance with Section 3.10 hereof.
(v)
(vi)(vii)
Section 3.05 Establishment of and Deposits to Escrow Account.
The Servicer shall segregate and hold all funds collected and received
pursuant to a Mortgage Loan constituting Escrow Payments separate and apart
from any of its own funds and general assets and shall establish and maintain
one or more Escrow Accounts, in the form of time deposit or demand accounts,
titled, "Aurora Loan Services Inc., in trust for Lehman Capital, A Division
of Lehman Brothers Holdings Inc., owner of Residential Mortgage Loans, Group
No. 1997-ALSI, and various Mortgagors". The Escrow Accounts shall be
established with a Qualified Depository in a manner that shall provide
maximum available insurance thereunder. Funds deposited in the Escrow
Account may be drawn on by the Servicer in accordance with Section 3.06. The
creation of any Escrow Account shall be evidenced by a letter agreement in
the form of Exhibit D. A copy of such certification or letter agreement
shall be furnished to the Owner and, upon request, to any subsequent owner of
the Mortgage Loans.
The Servicer shall deposit in the Escrow Account or Accounts on a daily
basis, and retain therein:
(i)
all Escrow Payments collected on account of the Mortgage Loans, for the
purpose of effecting timely payment of any such items as required under the
terms of this Agreement; and
(ii)
all amounts representing Insurance Proceeds or Condemnation Proceeds which
are to be applied to the restoration or repair of any Mortgaged Property.
The Servicer shall make withdrawals from the Escrow Account only to effect
such payments as are required under this Agreement, as set forth in Section
3.06. The Servicer shall retain any interest paid on funds deposited in the
Escrow Account by the depository institution, other than interest on escrowed
funds required by law to be paid to the Mortgagor. Additionally, any other
benefit derived from the Escrow Account associated with the receipt,
disbursement and accumulation of principal, interest, taxes, hazard
insurance, mortgage insurance, etc. shall accrue to the Servicer. To the
extent required by law, the Servicer shall pay interest on escrowed funds to
the Mortgagor notwithstanding that the Escrow Account may be non-interest
bearing or that interest paid thereon is insufficient for such purposes.
Section 3.06 Permitted Withdrawals From Escrow Account.
Withdrawals from the Escrow Account or Accounts may be made by the Servicer
only:
(i) to effect timely payments of ground rents, taxes,
assessments, water rates, sewer rents, mortgage insurance premiums,
condominium charges, fire and hazard insurance premiums or other items
constituting Escrow Payments for the related Mortgage;
(ii)(iii) (i) to refund to any Mortgagor any funds found
to be in excess of the amounts required under the terms of the related
Mortgage Loan;
(iv) for transfer to the Custodial Account and application to
reduce the principal balance of the Mortgage Loan in accordance with the
terms of the related Mortgage and Mortgage Note;
(v) for application to restoration or repair of the Mortgaged
Property in accordance with the FNMA Guides;
(vi) for transfer to the Custodial Account of fire and hazard
insurance proceeds and Escrow Payments with respect to any FHA Loan or VA
Loan, where the FHA or the VA, respectively, has directed application of
funds as a credit against the proceeds of the FHA Insurance Contract or VA
Loan Guaranty Agreement;
(vii) to pay to the Servicer, or any Mortgagor to the extent
required by law, any interest paid on the funds deposited in the Escrow
Account; and
(viii) to clear and terminate the Escrow Account on the termination
of this Agreement.
Section 3.07 Maintenance of FHA Mortgage Insurance and VA
Guaranty.
With respect to FHA Loans and VA Loans, the Servicer shall maintain and keep
the FHA Mortgage Insurance and the VA Guaranty, respectively, in full force
and effect throughout the term of this Agreement and discharge its
obligations arising out of FHA Mortgage Insurance and the VA Guaranty
Certificate. The Servicer hereby agrees that it shall be liable to the Owner
for any loss, liability or expense incurred by the Owner by reason of any FHA
Mortgage Insurance or VA Guaranty being voided, reduced, released or
adversely affected by reason of the negligence or willful misconduct of the
Servicer. The Servicer will service and administer the Mortgage Loans in
accordance with the obligations of mortgagees under the Act and the
applicable regulations thereunder and under the Servicemen's Readjustment Act
and VA Regulations and will discharge all obligations of the mortgagee under
each Mortgage Loan including, with respect to FHA Loans and VA Loans, paying
all FHA and VA insurance premiums, fees or charges, as required, and, subject
to the right to assign the Mortgage Loan to the FHA or VA, as the case may
be, will take all action reasonably necessary to preserve the lien of such
Mortgage, including, the defense of actions to challenge or foreclose such
lien.
Section 3.08 Notification of Adjustments.
With respect to each Adjustable Rate Mortgage Loan, the Servicer shall adjust
the Mortgage Interest Rate on the related interest rate adjustment date and
shall adjust the Monthly Payment on the related mortgage payment adjustment
date, if applicable, in compliance with the requirements of applicable law
and the related Mortgage and Mortgage Note. The Servicer shall execute and
deliver any and all necessary notices required under applicable law and the
terms of the related Mortgage Note and Mortgage regarding the Mortgage
Interest Rate and Monthly Payment adjustments. The Servicer shall promptly,
upon written request therefor, deliver to the Owner such notifications and
any additional applicable data regarding such adjustments and the methods
used to calculate and implement such adjustments. Upon the discovery by the
Servicer or the receipt of notice from the Owner that the Servicer has failed
to adjust a Mortgage Interest Rate or Monthly Payment in accordance with the
terms of the related Mortgage Note, the Servicer shall immediately deposit in
the Custodial Account from its own funds the amount of any interest loss or
deferral caused the Owner thereby.
Section 3.09 Completion and Recordation of
Assignments of Mortgage and FHA and VA
Change Notices.
To the extent permitted by applicable law, each of the Assignments of
Mortgage is subject to recordation in all appropriate public offices for real
property records in all the counties or other comparable jurisdictions in
which any or all of the Mortgaged Properties are situated, and in any other
appropriate public recording office or elsewhere, such recordation to be
effected (subject to Section 3.01(a)) at either the Servicer's, Owner's or
its designee's expense. At the Owner's direction, the Servicer shall cause
the endorsements on the Mortgage Note, the Assignments of Mortgage (subject
to Section 3.01(a)), the assignment of security agreement and the HUD form
92080 Mortgage Record Change with respect to all FHA Loans to be completed,
and shall give notice to the VA of a transfer of insurance credits, if
applicable, with respect to VA Loans on the form prescribed by the VA.
Section 3.10 Protection of Accounts.
______________________
The Servicer may transfer the Custodial Account or the Escrow Account to a
different Qualified Depository from time to time. Such transfer shall be
made only upon obtaining the consent of the Owner, which consent shall not be
withheld unreasonably.
The Servicer shall bear any expenses, losses or damages sustained by the
Owner if the Custodial Account and/or the Escrow Account are not demand
deposit accounts.
Amounts on deposit in the Custodial Account and the Escrow Account may at the
option of the Servicer be invested in Eligible Investments; provided that in
the event that amounts on deposit in the Custodial Account or the Escrow
Account exceed the amount fully insured by the FDIC (the "Insured Amount")
the Servicer shall be obligated to invest the excess amount over the Insured
Amount in Eligible Investments on the same Business Day as such excess amount
becomes present in the Custodial Account or the Escrow Account. Any such
Eligible Investment shall mature no later than the Determination Date next
following the date of such Eligible Investment, provided, however, that if
such Eligible Investment is an obligation of a Qualified Depository (other
than the Servicer) that maintains the Custodial Account or the Escrow
Account, then such Eligible Investment may mature on such Remittance Date.
Any such Eligible Investment shall be made in the name of the Servicer in
trust for the benefit of the Owner. All income on or gain realized from any
such Eligible Investment shall be for the benefit of the Servicer and may be
withdrawn at any time by the Servicer. Any losses incurred in respect of any
such investment shall be deposited in the Custodial Account or the Escrow
Account, by the Servicer out of its own funds immediately as realized.
Section 3.11 Title, Management and Disposition of REO Property.
In the event that title to any Mortgaged Property is acquired in foreclosure
or by deed in lieu of foreclosure, the deed or certificate of sale shall be
taken in the name of the Owner, or in the event the Owner is not authorized
or permitted to hold title to real property in the state where the REO
Property is located, or would be adversely affected under the "doing
business" or tax laws of such state by so holding title, the deed or
certificate of sale shall be taken in the name of such Person or Persons as
shall be consistent with an Opinion of Counsel obtained by the Servicer from
any attorney duly licensed to practice law in the state where the REO
Property is located. The Person or Persons holding such title other than the
Owner shall acknowledge in writing that such title is being held as nominee
for the Owner.
The Servicer shall manage, conserve, protect and operate each REO Property
for the Owner solely for the purpose of its prompt disposition and sale. The
Servicer, either itself or through an agent selected by the Servicer, shall
manage, conserve, protect and operate the REO Property in the same manner
that it manages, conserves, protects and operates other foreclosed property
for its own account, and in the same manner that similar property in the same
locality as the REO Property is managed. The Servicer shall attempt to sell
the same (and may temporarily rent the same for a period not greater than one
year, except as otherwise provided below) on such terms and conditions as the
Servicer deems to be in the best interest of the Owner.
The Servicer shall use its best efforts to dispose of the REO Property as
soon as possible and shall sell such REO Property in any event within two
years after title has been taken to such REO Property, unless (a) a REMIC
election has not been made with respect to the arrangement under which the
Mortgage Loans and the REO Property are held, and (b) the Servicer
determines, and gives an appropriate notice to the Owner to such effect, that
a longer period is necessary for the orderly liquidation of such REO
Property. If a period longer than two years is permitted under the foregoing
sentence and is necessary to sell any REO Property, (i) the Servicer shall
report monthly to the Owner as to the progress being made in selling such REO
Property and (ii) if, with the written consent of the Owner, a purchase money
mortgage is taken in connection with such sale, such purchase money mortgage
shall name the Servicer as mortgagee, and such purchase money mortgage shall
not be held pursuant to this Agreement, but instead a separate participation
agreement among the Servicer and Owner shall be entered into with respect to
such purchase money mortgage. Notwithstanding anything herein to the
contrary, the Servicer shall not be required to provide financing for the
sale of any REO Property.
The Servicer shall also maintain on each REO Property fire and hazard
insurance with extended coverage in amount which is at least equal to the
maximum insurable value of the improvements which are a part of such
property, liability insurance and, to the extent required and available under
the Flood Disaster Protection Act of 1973, as amended, flood insurance in the
amount required above.
Subject to the approval of the Owner as described in this paragraph, the
disposition of REO Property shall be carried out by the Servicer at such
price, and upon such terms and conditions, as the Servicer deems to be in the
best interests of the Owner. Prior to acceptance by the Servicer of an offer
to sell any REO Property, the Servicer shall notify the Owner of such offer
in writing which notification shall set forth all material terms of said
offer (each a "Notice of Sale"). The Owner shall be deemed to have approved
the sale of any REO Property unless the Owner notifies the Servicer in
writing, within 1 Business Day after its receipt of the related Notice of
Sale, that it disapproves of the related sale. With respect to any REO
Property, upon a REO Disposition, the Servicer shall be entitled to retain
from REO Disposition Proceeds a disposition fee equal to the lesser of (A)
1.5% of the Net Sale Proceeds or (B) $1,250; provided, however, that (1) in
the event that the REO Disposition Proceeds exceed $25,000, such disposition
fee shall not be less than $500 and (2) in the event that the REO Disposition
Proceeds are $25,000 or less, such disposition fee shall be equal to $250.
The proceeds of sale of the REO Property shall be promptly deposited in the
Custodial Account. After the expenses of such disposition shall have been
paid, the Servicer shall submit a reasonably detailed invoice for
reimbursement of Servicing Advances it incurred thereunder. Such invoice
shall be submitted on a monthly basis according to Section 5.02 hereof.
The Servicer shall withdraw the Custodial Account funds necessary for the
proper operation, management and maintenance of the REO Property, including
the cost of maintaining any hazard insurance pursuant to the FNMA Guides.
The Servicer shall make monthly distributions on each Remittance Date to the
Owner of the net cash flow from the REO Property (which shall equal the
revenues from such REO Property net of the expenses described in this Section
3.11 and of any reserves reasonably required from time to time to be
maintained to satisfy anticipated liabilities for such expenses).
Section 3.12 Real Estate Owned Reports.
Together with the statement furnished pursuant to Section 4.02, the Servicer
shall furnish to the Owner on or before the Remittance Date each month a
statement with respect to any REO Property covering the operation of such REO
Property for the previous month and the Servicer's efforts in connection with
the sale of such REO Property and any rental of such REO Property incidental
to the sale thereof for the previous month. That statement shall be
accompanied by such other information as the Owner shall reasonably request.
ARTICLE IV
PAYMENTS TO OWNER
Section 4.01 Remittances.
On each Remittance Date the Servicer shall remit by wire transfer of
immediately available funds to the Owner all amounts deposited in the
Custodial Account as of the close of business on the Determination Date (net
of charges against or withdrawals from the Custodial Account pursuant to
Section 3.04).
With respect to any remittance received by the Owner after the Business Day
on which such payment was due, the Servicer shall pay to the Owner interest
on any such late payment at an annual rate equal to the Prime Rate, adjusted
as of the date of each change, plus two percentage points, but in no event
greater than the maximum amount permitted by applicable law. Such interest
shall be deposited in the Custodial Account by the Servicer on the date such
late payment is made and shall cover the period commencing with the day
following such Business Day and ending with the Business Day on which such
payment is made, both inclusive. Such interest shall be remitted along with
the distribution payable on the next succeeding Remittance Date. The payment
by the Servicer of any such interest shall not be deemed an extension of time
for payment or a waiver of any Event of Default by the Servicer.
Section 4.02 Statements to Owner.
Not later than the Remittance Date, the Servicer shall furnish to the Owner
(a) a monthly remittance advice containing such information in the form of
FNMA form 2010 or such other form as shall be required by the FNMA Guides or
by the Owner as to the accompanying remittance and the period ending on the
preceding Determination Date and (b) all such information required pursuant
to clause (a) above on a magnetic tape or other similar media reasonably
acceptable to Owner.
In addition, not more than 60 days after the end of each calendar year,
commencing December 31, 1997, the Servicer shall furnish to each Person who
was an Owner of the Mortgage Loans at any time during such calendar year as
required by applicable law or if not required by applicable law, at the
request of the Owner as to the aggregate of remittances for the applicable
portion of such year.
Such obligation of the Servicer shall be deemed to have been satisfied to the
extent that substantially comparable information shall be provided by the
Servicer pursuant to any requirements of the Internal Revenue Code as from
time to time are in force.
Beginning with calendar year 1998, the Servicer shall prepare and file any
and all tax returns, information statements or other filings for the portion
of the tax year 1997 and the portion of subsequent tax years for which the
Servicer has serviced some or all of the Mortgage Loans hereunder as such
returns, information statements or other filings are required to be delivered
to any governmental taxing authority or to the Owner pursuant to any
applicable law with respect to the Mortgage Loans and the transactions
contemplated hereby. In addition, the Servicer shall provide the Owner with
such information concerning the Mortgage Loans as is necessary for the Owner
to prepare its federal income tax return as the Owner may reasonably request
from time to time.
Section 4.03 Monthly Advances by Servicer.
Subject to Section 7.03, the Servicer shall have no obligation to advance any
amounts constituting delinquent principal and interest payments with respect
to the Mortgage Loans.
ARTICLE V
GENERAL SERVICING PROCEDURES
Section 5.01 Servicing Compensation.
As consideration for servicing the Mortgage Loans subject to this Agreement,
the Servicer shall retain the relevant Servicing Fee for each Mortgage Loan
remaining subject to this Agreement during any month. Such Servicing Fee
shall be payable monthly.
The Servicer shall be required to pay all expenses incurred by it in
connection with its servicing activities hereunder and shall not be entitled
to reimbursement thereof except as specifically provided for herein.
In addition to the servicing compensation that the Servicer shall receive
pursuant to this Section 5.01, the Owner reserves the right, but not the
obligation, to pay to the Servicer, in the Owner's sole discretion, an
incentive fee based upon the quality level at which the Servicer performs its
obligations pursuant to this Agreement. Such incentive fee shall be payable,
if any, in an amount and at a time specified by the Owner in its sole
discretion.
Section 5.02 Reimbursement of Servicing Advances.
The Owner shall reimburse the Servicer for Servicing Advances on a monthly
basis within 10 Business Days following the receipt from the Servicer of
reasonably detailed written invoices for any Servicing Advances along with
reasonably detailed supporting documentation in connection therewith. The
Servicer shall deliver such invoices and documentation, upon the request of
the Owner, at the time it delivers statements to the Owner in accordance with
Section 4.02 hereof.
ARTICLE VI
REPRESENTATIONS, WARRANTIES
AND AGREEMENTS
Section 6.01. Representations, Warranties and Agreements of the
Servicer.
The Servicer, as a condition to the consummation of the transactions
contemplated hereby, hereby makes the following representations and
warranties to the Owner as of each Transfer Date:
Due Organization and Authority. The Servicer is a corporation duly
organized, validly existing and in good standing under the laws of the state
of Delaware and has all licenses, or is in the process of obtaining all
licenses (which in any event will be received by December 31, 1997),
necessary to carry on its business as now being conducted and is licensed,
qualified and in good standing in each state where a Mortgaged Property is
located if the laws of such state require licensing or qualification in order
to conduct business of the type conducted by the Servicer, and in any event
the Servicer is in compliance with the laws of any such state to the extent
necessary to ensure the enforceability of the terms of this Agreement; the
Servicer has the full power and authority to execute and deliver this
Agreement and to perform 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 Servicer and the consummation of
the transactions contemplated hereby have been duly and validly authorized;
this Agreement evidences the valid, binding and enforceable obligation of the
Servicer and all requisite action has been taken by the Servicer to make this
Agreement valid and binding upon the Servicer in accordance with its terms;
Ordinary Course of Business. The consummation of the transactions
contemplated by this Agreement are in the ordinary course of business of the
Servicer;
No Conflicts. Neither the execution and delivery of this Agreement, the
acquisition of the servicing responsibilities by the Servicer or the
transactions contemplated hereby, nor the fulfillment of or compliance with
the terms and conditions of this Agreement, will conflict with or result in a
breach of any of the terms, conditions or provisions of the Servicer's
organizational documents or any legal restriction or any agreement or
instrument to which the Servicer is now a party or by which it is bound, or
constitute a default or result in an acceleration under any of the foregoing,
or result in the violation of any law, rule, regulation, order, judgment or
decree to which the Servicer or its property is subject, or impair the
ability of the Servicer to service the Mortgage Loans, or impair the value of
the Mortgage Loans;
Ability to Perform. The Servicer does not believe, nor does it have any
reason or cause to believe, that it cannot perform each and every covenant
contained in this Agreement;
No Litigation Pending. There is no action, suit, proceeding or investigation
(a)(b)(c)pending or threatened against the Servicer which, either in any one
instance or in the aggregate, may result in any material adverse change in
the business, operations, financial condition, properties or assets of the
Servicer, or in any material impairment of the right or ability of the
Servicer to carry on its business substantially as now conducted, or in any
material liability on the part of the Servicer, or which would draw into
question the validity of this Agreement or of any action taken or to be taken
in connection with the obligations of the Servicer contemplated herein, or
which would be likely to impair materially the ability of the Servicer to
perform under the terms of this Agreement;
No Consent Required. No consent, approval, authorization or order of any
court or governmental agency or body is required for the execution, delivery
and performance by the Servicer of or compliance by the Servicer with this
Agreement, or if required, such consent, approval, authorization or order
will be obtained prior to December 31, 1997;
Ability to Service. The Servicer is or will be prior to December 31, 1997 an
FHA Approved Mortgagee, a VA Approved Lender and an approved seller/servicer
of conventional residential mortgage loans for FNMA, FHLMC or GNMA, with the
facilities, procedures, and experienced personnel necessary for the sound
servicing of mortgage loans of the same type as the Mortgage Loans. The
Servicer is or will be prior to December 31, 1997 in good standing to service
mortgage loans for the FHA and the VA and either FNMA, FHLMC or GNMA;
No Untrue Information. Neither this Agreement nor any statement, report or
other document furnished or to be furnished pursuant to this Agreement or in
connection with the transactions contemplated hereby contains any untrue
statement of fact or omits to state a fact necessary to make the statements
contained therein not misleading; and
No Commissions to Third Parties. The Servicer has not dealt with any broker
or agent or anyone else who might be entitled to a fee or commission in
connection with this transaction other than the Owner.
Section 6.02. Remedies for Breach of Representations and
Warranties of the Servicer.
It is understood and agreed that the representations and warranties set forth
in Section 6.01 shall survive the engagement of the Servicer to perform the
servicing responsibilities as of each Transfer Date hereunder and the
delivery of the Servicing Files to the Servicer and shall inure to the
benefit of the Owner. Upon discovery by either the Servicer or the Owner of
a breach of any of the foregoing representations and warranties which
materially and adversely affects the ability of the Servicer to perform its
duties and obligations under this Agreement or otherwise materially and
adversely affects the value of the Mortgage Loans, the Mortgaged Property or
the priority of the security interest on such Mortgaged Property or the
interest of the Owner, the party discovering such breach shall give prompt
written notice to the other.
Within 60 days of the earlier of either discovery by or notice to the
Servicer of any breach of a representation or warranty set forth in Section
6.01 which materially and adversely affects the ability of the Servicer to
perform its duties and obligations under this Agreement or otherwise
materially and adversely affects the value of the Mortgage Loans, the
Mortgaged Property or the priority of the security interest on such Mortgaged
Property, the Servicer shall use its Best Efforts promptly to cure such
breach in all material respects and, if such breach cannot be cured, the
Servicer shall, at the Owner's option, assign the Servicer's rights and
obligations under this Agreement (or respecting the affected Mortgage Loans)
to a successor servicer, subject to the approval of the Owner, which approval
shall be in the Owner's sole discretion. Such assignment shall be made in
accordance with Sections 10.01 and 10.02.
In addition, the Servicer shall indemnify the Owner and hold it harmless
against any Costs resulting from any claim, demand, defense or assertion
based on or grounded upon, or resulting from, a breach of the Servicer
representations and warranties contained in this Agreement. It is understood
and agreed that the remedies set forth in this Section 6.02 constitute the
sole remedies of the Owner respecting a breach of the foregoing
representations and warranties.
Any cause of action against the Servicer relating to or arising out of the
breach of any representations and warranties made in Section 6.01 shall
accrue upon (i) discovery of such breach by the Servicer or notice thereof by
the Owner to the Servicer, (ii) failure by the Servicer to cure such breach
within the applicable cure period, and (iii) demand upon the Servicer by the
Owner for compliance with this Agreement.
Section 6.03. Representations and Warranties of the Owner.
The Owner, as a condition to the consummation of the transactions
contemplated hereby, makes the following representations and warranties to
the Servicer as of each Transfer Date:
(a) Due Organization and Authority. The Owner is a Delaware corporation
duly organized, validly existing and in good standing under the laws of the
state of its incorporation and has all licenses necessary to carry on its
business as now being conducted; the Owner has the full corporate power and
authority to execute and deliver this Agreement and to perform in accordance
herewith; the execution, delivery and performance of this Agreement by the
Owner and the consummation of the transactions contemplated hereby have been
duly and validly authorized; this Agreement evidences the valid, binding and
enforceable obligation of the Owner; and all requisite corporate action has
been taken by the Owner to make this Agreement valid and binding upon the
Owner in accordance with its terms;
(b) Ordinary Course of Business. The consummation of the transactions
contemplated by this Agreement are in the ordinary course of business of the
Owner;
(c) No Conflicts. Neither the execution and delivery of this Agreement, the
conveyance of the servicing responsibilities to the Servicer or the
transactions contemplated hereby, nor the fulfillment of or compliance with
the terms and conditions of this Agreement, will conflict with or result in a
breach of any of the terms, conditions or provisions of the Owner's charter
or by-laws or any legal restriction or any agreement or instrument to which
the Owner is now a party or by which it is bound, or constitute a default or
result in an acceleration under any of the foregoing, or result in the
violation of any law, rule, regulation, order, judgment or decree to which
the Owner or its property is subject, or impair the value of the servicing
contract consummated hereby;
(d) Ability to Perform. The Owner does not believe, nor does
it have any reason or cause to believe, that it cannot perform each and every
covenant contained in this Agreement;
(e) No Litigation Pending. There is no action, suit,
proceeding or investigation pending or threatened against the Owner which,
either in any one instance or in the aggregate, may result in any material
adverse change in the business, operations, financial condition, properties
or assets of the Owner, or in any material impairment of the right or ability
of the Owner to carry on its business substantially as now conducted, or in
any material liability on the part of the Owner, or which would draw into
question the validity of this Agreement or of any action taken or to be taken
in connection with the obligations of the Owner contemplated herein, or which
would be likely to impair materially the ability of the Owner to perform
under the terms of this Agreement;
(f) No Consent Required. No consent, approval, authorization
or order of any court or governmental agency or body is required for the
execution, delivery and performance by the Owner of or compliance by the
Owner with this Agreement, or if required, such approval has been obtained
prior to each Transfer Date;
(g) Ownership. The Owner is the sole owner and holder of the
Mortgage Loans. With respect to each Mortgage Loan which becomes subject to
this Agreement on a Transfer Date, the servicing responsibilities contracted
for as of the relevant Transfer Date have not been assigned or pledged, and,
the Owner has good and marketable interest therein, and has full right to
transfer the servicing responsibilities to the Servicer free and clear of any
encumbrance, equity, interest, lien, pledge, charge, claim or security
interest, and has full right and authority subject to no interest, or
agreement with, any other party, (other than any notice required by law,
regulation or otherwise, to be delivered to the Mortgagors) to assign the
servicing responsibilities pursuant to this Agreement; and
(h) No Commissions to Third Parties. The Owner has not dealt
with any broker or agent or anyone else who might be entitled to a fee or
commission in connection with this transaction other than the Servicer.
Section 6.04. Remedies for Breach of Representations and
Warranties of the Owner.
It is understood and agreed that the representations and warranties set forth
in Section 6.03 shall survive the engagement of the Servicer to perform the
servicing responsibilities as of each Transfer Date and the delivery of the
Servicing Files to the Servicer and shall inure to the benefit of the
Servicer. Upon discovery by either the Servicer or the Owner of a breach of
any of the foregoing representations and warranties which materially and
adversely affects the value of the servicing contract established herein or
the interest of the Servicer, the party discovering such breach shall give
prompt written notice to the other.
Within 60 days of the earlier of either discovery by or notice to the Owner
of any breach of a representation or warranty set forth in Section 6.03 which
materially and adversely affects the value of the servicing contract, the
Owner shall use its Best Efforts promptly to cure such breach in all material
respects.
The Owner shall indemnify the Servicer and hold it harmless against any Costs
resulting from any claim, demand, defense or assertion based on or grounded
upon, or resulting from, (i) a breach of the Owner representations and
warranties contained in this Agreement; (ii) actions or omissions of a Prior
Servicer; and (iii) the failure of the Owner to cause any event to occur
which requires its "Best Efforts" under this Agreement. It is understood and
agreed that the obligation of the Owner to indemnify the Servicer pursuant to
this Section 6.04 constitutes the sole remedy of the Servicer respecting a
breach of the foregoing representation and warranties.
Any cause of action against the Owner relating to or arising out of the
breach of any representations and warranties made in Section 6.03 shall
accrue upon (i) discovery of such breach by the Owner or notice thereof by
the Servicer to the Owner, (ii) failure by the Owner to cure such breach
within the applicable cure period, and (iii) demand upon the Owner by the
Servicer for compliance with this Agreement.
ARTICLE VII
AGENCY TRANSFER; WHOLE LOAN TRANSFER; PASS-THROUGH TRANSFER
Section 7.01. Removal of Mortgage Loans from Inclusion Under this
Agreement Upon an Agency Transfer, a Pass-Through
Transfer or a Whole Loan Transfer on One or More
Reconstitution Dates.
The Owner and the Servicer agree that with respect to some or all of the
Mortgage Loans, from time to time the Owner may, in its sole discretion
choose to reconstitute a portion or all of the Mortgage Loans effecting any
of the following:
(1)
An Agency Transfer, and/or
(2)
A Whole Loan Transfer, and/or
(3)
A Pass-Through Transfer.
In connection with the foregoing, the Owner shall offer to sell the Servicing
Rights to the Servicer at a price specified by the Owner with respect to the
affected Mortgage Loans (each offer a "Purchase Offer"). The Servicer shall,
upon receipt of a Purchase Offer, have three (3) Business Days to accept the
terms of such Purchase Offer (the "Acceptance Period"). If the Servicer
fails to accept the Purchase Offer by the expiration of the Acceptance
Period, the Purchase Offer shall be deemed rejected by the Servicer and the
Owner shall have the right to offer the Servicing Rights to any third party
upon comparable terms. Subject to Section 10.01, on the related
Reconstitution Date, the Mortgage Loans transferred shall cease to be covered
by this Agreement, except with respect to the obligation to remit the
Additional Remittance in accordance with the provisions set forth herein and
the right of the Owner to cause a transfer of the servicing responsibilities
with respect to the Mortgage Loans and/or REO Properties in accordance with
Sections 7.07 and 7.08, respectively.
The Servicer shall cooperate with the Owner in connection with any Agency
Transfer, Pass-Through Transfer or Whole Loan Transfer contemplated by the
Owner pursuant to this Section 7.01. In that connection, the Servicer shall
(a) execute any Reconstitution Agreement within a reasonable period of time
after receipt thereof which time shall be sufficient for the Servicer and
Servicer's counsel to review such Reconstitution Agreement, but such time
shall not exceed ten (10) Business Days after such receipt, and (b) provide
to FNMA, FHLMC, GNMA, the trustee or a third party purchaser, as the case may
be, subject to any Reconstitution Agreement and/or the Owner: (i) any and all
information and appropriate verification of information which may be
reasonably available to the Servicer, whether through letters of its auditors
and counsel or otherwise, as the Owner shall reasonably request; and (ii)
such additional representations, warranties, covenants, opinions of counsel,
letters from auditors, and certificates of public officials or officers of
the Servicer as are reasonably believed necessary by FNMA, FHLMC, GNMA, the
trustee, such third party purchaser, any master servicer, any rating agency
or the Owner, as the case may be, in connection with such transactions.
Prior to incurring any out-of-pocket expenses pursuant to this paragraph, the
Servicer shall notify the Owner in writing of the estimated amount of such
expense. The Owner shall reimburse the Servicer for any such expense
following its receipt of appropriate details thereof.
In accordance with Section 3.01(a) hereof, as per the terms of the applicable
Acknowledgment Agreement, either (i) the Owner or the Owner's designee or
(ii) the Servicer, for an Assignment Fee, shall (A) prepare or cause to be
prepared and record or cause to be recorded all Assignments of Mortgage in
blank from the then mortgagee of record, acceptable to FNMA, FHLMC, GNMA, the
trustee or such third party, as the case may be, for each Mortgage Loan that
is part of an Agency Transfer, Whole Loan Transfer or Pass-Through Transfer
and shall pay the recording costs associated therewith and/or (B) shall track
such Assignments of Mortgage to ensure they have been recorded and deliver
them as required by FNMA, FHLMC, GNMA, the trustee or such third party, as
the case may be, upon the Servicer's receipt thereof. Additionally, the
Servicer shall prepare and execute, at the direction of the Owner, any note
endorsements in connection with any and all Reconstitution Agreements.
With respect to FHA Loans, prior to the related Reconstitution Date, the
Servicer shall prepare a HUD form 92080 Mortgage Record Change for each FHA
Loan. With respect to each VA Loan, prior to the related Reconstitution
Date, if applicable, the Servicer shall give notice to the VA of a transfer
of insurance credits with respect thereto.
All Mortgage Loans not sold or transferred pursuant to an Agency Transfer,
Pass-Through Transfer or Whole Loan Transfer shall be subject to this
Agreement and shall continue to be serviced in accordance with the terms of
this Agreement and with respect thereto this Agreement shall remain in full
force and effect.
Section 7.02. Additional Indemnification by the Servicer; Third
Party Claims.
The Servicer shall indemnify the Owner and hold it harmless against any and
all Costs that the Owner may sustain in any way related to (i) the failure of
the Servicer to perform its duties and service the Mortgage Loans in material
compliance with the terms of this Agreement or any Reconstitution Agreement
entered into pursuant to Section 7.01 or (ii) the failure of the Servicer to
cause any event to occur which requires its "Best Efforts" under this
Agreement. The Servicer shall immediately notify the Owner if a claim is
made by a third party with respect to this Agreement or any Reconstitution
Agreement or the Mortgage Loans, shall promptly notify FNMA, FHLMC, GNMA, the
trustee or other relevant third party with respect to any claim made by a
third party with respect to any Reconstitution Agreement, assume (with the
prior written consent of the Owner) the defense of any such claim and pay all
expenses in connection therewith, including counsel fees, promptly pay,
discharge and satisfy any judgment or decree which may be entered against it
or the Owner in respect of such claim and follow any written instructions
received from the Owner in connection with such claim. The Owner promptly
shall reimburse the Servicer for all amounts advanced by it pursuant to the
preceding sentence except when the claim is in any way related to the
Servicer's indemnification pursuant to Section 6.02, or the failure of the
Servicer to service and administer the Mortgage Loans in material compliance
with the terms of this Agreement or any Reconstitution Agreement. In the
event a dispute arises between the Servicer and the Owner with respect to any
of the rights and obligations of the parties pursuant to this Agreement, and
such dispute is adjudicated in a court of law, by an arbitration panel or any
other judicial process, then the losing party shall indemnify and reimburse
the winning party for all attorney's fees and other costs and expenses
related to the adjudication of said dispute.
Section 7.03 Monthly Advances, Compensating Interest and
Servicing Fees after Reconstitution.
Notwithstanding anything contained herein to the contrary, in connection with
(a) a Pass-Through Transfer, the Servicer shall make Monthly Advances through
the Remittance Date immediately preceding the distribution of all Liquidation
Proceeds and other payments or recoveries (including Insurance Proceeds and
Condemnation Proceeds) with respect to the related Mortgage Loans or such
earlier time period as set forth in the related Reconstitution Agreement, (b)
an Agency Transfer, the Servicer shall make Monthly Advances as required by
FNMA, FHLMC or GNMA, as applicable, and (c) a Whole Loan Transfer, the
Servicer shall make Monthly Advances through the Remittance Date immediately
preceding the date that such Mortgage Loan becomes REO Property.
Notwithstanding anything contained herein to the contrary, in connection with
a Reconstitution Agreement, the Servicing Fee as set forth on the applicable
Acknowledgment Agreement and/or Confirmation Agreement of each reconstituted
Mortgage Loan shall be changed upon reconstitution to the Reconstituted
Servicing Fee.
Notwithstanding anything contained herein to the contrary, following a
Reconstitution Agreement, with respect to each Principal Prepayment of
reconstituted Mortgage Loans, the Servicer shall deposit in the Custodial
Account on a daily basis, and retain therein the Prepayment Interest
Shortfall Amount, if any, for the month of distribution. Such deposit shall
be made from the Servicer's own funds, without reimbursement therefor;
Section 7.04 Maintenance of Custodial and Escrow Accounts after
Reconstitution.
Notwithstanding anything herein to the contrary, in connection with (a) a
Pass-Through Transfer, the Servicer shall maintain Custodial Accounts and
Escrow Accounts in accordance with the related master servicer's
requirements, and pursuant to the related Reconstitution Agreement, (b) an
Agency Transfer, the Servicer shall maintain Custodial Accounts and Escrow
Accounts in accordance with the requirements of FNMA, FHLMC or GNMA, as
applicable, and (c) a Whole Loan Transfer, the Servicer shall maintain
Custodial Accounts and Escrow Accounts in accordance with terms that are
substantially similar to the terms of this Agreement. For purposes of this
paragraph, the obligation to maintain Custodial Accounts and Escrow Accounts
includes the obligation of the Servicer to remove amounts from such accounts
that exceed the amount fully insured by the FDIC, if required by the
applicable investor. In connection with any Pass-Through Transfer, Agency
Transfer, or Whole Loan Transfer the Servicer shall be obligated to maintain
the related Custodial Accounts and Escrow Accounts with such institutions
required by the applicable investor, which institutions might not include the
Servicer.
Section 7.05. Owner's Repurchase and Indemnification Obligations.
Upon receipt by the Servicer of notice from FNMA, FHLMC, GNMA or other such
third party purchaser of a breach of any Owner representation or warranty
contained in any Reconstitution Agreement or a request by FNMA, FHLMC, GNMA,
the trustee or such third party purchaser, as the case may be, for the
repurchase of any Mortgage Loan transferred to FNMA, FHLMC or GNMA pursuant
to an Agency Transfer or to a trustee pursuant to a Pass-Through Transfer or
to a third party purchaser pursuant to a Whole Loan Transfer, the Servicer
shall promptly notify the Owner of same and shall, at the direction of the
Owner, use its Best Efforts to cure and correct any such breach and to
satisfy the requests or concerns of FNMA, FHLMC, GNMA, the trustee or the
third party purchaser related to such deficiencies of the related Mortgage
Loans transferred to FNMA, FHLMC, GNMA, the trustee or other such third party
purchaser.
The Owner shall repurchase from the Servicer any Mortgage Loan transferred to
FNMA, FHLMC or GNMA pursuant to an Agency Transfer or to a trustee pursuant
to a Pass-Through Transfer or to a third party purchaser pursuant to a Whole
Loan Transfer with respect to which the Servicer has been required by FNMA,
FHLMC, GNMA, the trustee or such third party purchaser to repurchase due to a
breach of a representation or warranty made by the Owner with respect to the
Mortgage Loans, or the servicing thereof prior to the related Transfer Date
to FNMA, FHLMC, GNMA, the trustee or any third party purchaser in any
Reconstitution Agreement and not due to a breach of the Servicer's
obligations thereunder or pursuant to this Agreement. The repurchase price
to be paid by the Owner to the Servicer shall equal that repurchase price
paid by the Servicer to FNMA, FHLMC, GNMA, the trustee or the third party
purchaser plus all reasonable costs and expenses borne by the Servicer in
connection with the cure of said breach of a representation or warranty made
by the Owner and in connection with the repurchase of such Mortgage Loan from
FNMA, FHLMC, GNMA, the trustee or the third party purchaser, including, but
not limited to, reasonable and necessary attorneys' fees.
At the time of repurchase, the Custodian and the Servicer shall arrange for
the reassignment of the repurchased Mortgage Loan to the Owner according to
the Owner's instructions and the delivery to the Custodian of any documents
held by FNMA, FHLMC, GNMA, the trustee or other relevant third party
purchaser with respect to the repurchased Mortgage Loan pursuant to the
related Reconstitution Agreement. In the event of a repurchase, the Servicer
shall, simultaneously with such reassignment, give written notice to the
Owner that such repurchase has taken place, and amend the Mortgage Loan
Schedule to reflect the addition of the repurchased Mortgage Loan to this
Agreement. In connection with any such addition, the Servicer and the Owner
shall be deemed to have made as to such repurchased Mortgage Loan the
representations and warranties set forth in this Agreement except that all
such representations and warranties set forth in this Agreement shall be
deemed made as of the date of such repurchase.
Section 7.06. Termination Fees after Reconstitution.
In the event that the Servicer acquires the Servicing Rights pursuant to
Section 7.01 hereof, the Servicer shall be entitled to the Reconstituted
Termination Fee (as defined below) set forth in the applicable Reconstitution
Agreement. In all other cases, the Servicer and the Owner hereby agree and
acknowledge that the Owner is the sole owner of the Servicing Rights. In the
event that any Reconstitution Agreement provides for a payment of a
termination fee (a "Reconstituted Termination Fee") to the Servicer upon the
termination of the Servicer as the servicer or as the applicable
"seller/servicer" thereunder, the Servicer shall (a) notify the Owner, in
writing, upon receipt of notice that the Servicer will be terminated as
servicer or "seller/servicer" under such Reconstitution Agreement, and (b)
promptly remit to the Owner by wire transfer of immediately available funds
the amount of the related Reconstituted Termination Fee if it is received by
the Servicer. Upon receipt by the Owner of the Reconstituted Termination
Fee, the Owner shall remit to the Servicer, within 10 Business Days, the
applicable Termination Fee due to the Servicer, if any, pursuant to Section
9.02 hereof. In addition, the Servicer shall not modify, amend or waive the
right to receive a Reconstituted Termination Fee under any Reconstitution
Agreement without first obtaining the written consent of the Owner which
consent may be withheld by the Owner in its sole discretion. The provisions
of this Section 7.06 shall survive the termination of this Agreement.
Section 7.07. Additional Remittance.
From the applicable Reconstituted Servicing Fee, the Servicer shall retain an
amount equal to the Servicing Fee and shall remit the Additional Remittance
to the Owner on the Additional Remittance Date. In connection therewith, the
Owner and the Servicer shall agree upon a mutually acceptable monthly report
to be sent to the Owner or its assigns thereof on or prior to the related
Additional Remittance Date. The right to receive the Additional Remittance
shall be freely transferable by the Owner and shall be secured by a
collateral pledge of the servicing rights associated with the Mortgage Loans
being reconstituted.
On each Reconstitution Date, the Owner and the Servicer hereby agree to
execute a Collateral Pledge and Security Agreement in form and substance
reasonably acceptable to both the Owner and the Servicer and such other
agreements and UCC-1's as shall reasonably be required to perfect the Owner's
security interest with respect to the servicing rights related to the
Mortgage Loans being reconstituted.
With respect to the Mortgage Loans subject to one or more Agency Transfers,
Whole Loan Transfers or Pass-Through Transfers, in the event that any party
to the Reconstitution Agreement other than the Owner disapproves or
terminates the Servicer and selects another servicer to replace the Servicer,
then from and after the date of substitution, neither the Servicer nor any
successor servicer hereunder shall be under any obligation to remit to the
Owner or its assigns any Additional Remittance accruing after the date of
substitution. Notwithstanding the foregoing, in the event that the Servicer
is terminated without cause under any Reconstitution Agreement, the Owner
shall be entitled to receive the sum of all fees, amounts or compensation
received by the Servicer under the applicable Reconstitution Agreement in
connection with a termination without cause. Additionally, in the event that
the Servicer is terminated as a consequence of a breach under any applicable
Reconstitution Agreement, the Servicer shall be liable to the Owner for any
actual and consequential damages which the Owner may sustain as a consequence
of any such termination; provided, however, that the Servicer shall not be
obligated to pay such damages to the Owner if the Servicer's termination is
directly related to the quality or suitability of the Mortgage Loans subject
to any Reconstitution Agreement. In the event that the Servicer judicially
contests any termination under a Reconstitution Agreement as a wrongful
termination thereunder, the Servicer shall not be obligated to pay damages to
the Owner until such time as a judicial determination on such claim is made,
provided that the Servicer shall diligently pursue such claim. In the event
that the Servicer continues to receive its Servicing Fee under a
Reconstitution Agreement during the time in which it is contesting a
termination as wrongful, the Servicer shall continue to be obligated to pay
the Additional Remittance to the Owner. Notwithstanding the fact that the
Servicer's obligation to pay damages if it contests a termination under a
Reconstitution Agreement as wrongful shall be delayed until a judicial
determination is made, such damages will nevertheless accrue as of the date
of termination.
Section 7.08. Transfer of Servicing Following Reconstitution.
Following a reconstitution of Mortgage Loans or REO Properties, the Owner
shall have the right, in its sole discretion, to cause the Servicer at any
time under any Reconstitution Agreement to transfer the servicing
responsibilities and duties associated therewith to the Owner or any designee
of the Owner; provided, however, that (i) the Owner shall provide the
Servicer with 30 days prior written notice, (ii) such transfer shall be
subject to the approval of the Applicable Agency, trustee, master servicer or
rating agency with respect to Agency Transfers, Pass-Through Transfers or any
relevant third party purchaser with respect to Whole Loan Transfers, (iii)
the costs associated with the transfer of servicing pursuant to this Section
7.08 shall not be borne by the Servicer and (iv) the Servicer shall be
entitled to the Termination Fee as set forth in Section 9.02. The Servicer
agrees to cooperate with the Owner in such transfer of servicing
responsibilities and shall comply with the termination procedures set forth
in Sections 9.01 and 10.01 hereof.
ARTICLE VIII
THE SERVICER
Section 8.01. Merger or Consolidation of the Servicer.
The Servicer shall keep in full effect its existence, rights and franchises
as a corporation, and shall obtain and preserve its qualification to do
business as a foreign entity in each jurisdiction in which such qualification
is or shall be necessary to protect the validity and enforceability of this
Agreement or any of the Mortgage Loans and to perform its duties under this
Agreement.
Any Person into which the Servicer may be merged or consolidated, or any
corporation resulting from any merger, conversion or consolidation to which
the Servicer shall be a party, or any Person succeeding to the business of
the Servicer, shall be the successor of the Servicer hereunder, without the
execution or filing of any paper or any further act on the part of any of the
parties hereto, anything herein to the contrary notwithstanding, provided,
however, that the successor or surviving Person shall be an institution (i)
having anet worth ofnot less than$25,000,000, and (ii)which is aFNMA-, FHLMC-
, and GNMA-approved servicer in good standing and an FHA approved Mortgagee
and a VA Approved Lender.
Section 8.02 Limitation on Liability of the Servicer and Others.
Neither the Servicer nor any of the directors, officers, employees or agents
of the Servicer shall be under any liability to the Owner for any action
taken or for refraining from the taking of any action in good faith pursuant
to this Agreement, or for errors in judgment, provided, however, that this
provision shall not protect the Servicer or any such person against any
breach of warranties or representations made herein, or failure to perform
its obligations in strict compliance with any standard of care set forth in
this Agreement, or any liability which would otherwise be imposed by reason
of any breach of the terms and conditions of this Agreement. The Servicer and
any director, officer, employee or agent of the Servicer may rely in good
faith on any document of any kind prima facie properly executed and submitted
by any Person respecting any matters arising hereunder. The Servicer shall
not be under any obligation to appear in, prosecute or defend any legal
action which is not incidental to its duties to service the Mortgage Loans in
accordance with this Agreement and which in its opinion may involve it in any
expense or liability, provided, however, that the Servicer may, with the
consent of the Owner, undertake any such action which it may deem necessary
or desirable in respect of this Agreement and the rights and duties of the
parties hereto. In such event, the Servicer shall be entitled to
reimbursement from the Owner for the reasonable legal expenses and costs of
such action.
Section 8.03 Limitation on Resignation and Assignment by the
Servicer.
The Owner has entered into this Agreement with the Servicer and subsequent
transferees of the Owner will purchase the Mortgage Loans in reliance upon
the independent status of the Servicer, and the representations as to the
adequacy of its servicing facilities, plant, personnel, records and
procedures, its integrity, reputation and financial standing, and the
continuance thereof. Therefore, the Servicer shall not assign this Agreement
or the servicing responsibilities hereunder or delegate its rights or duties
hereunder or any portion hereof or sell or otherwise dispose of all or
substantially all of its property or assets without the prior written consent
of the Owner, which consent shall be granted or withheld in the sole
discretion of the Owner.
The Servicer shall not resign from the obligations and duties hereby imposed
on it except by mutual consent of the Servicer and the Owner or upon the
determination that its duties hereunder are no longer permissible under
applicable law and such incapacity cannot be cured by the Servicer. Any such
determination permitting the resignation of the Servicer shall be evidenced
by an Opinion of Counsel to such effect delivered to the Owner which Opinion
of Counsel shall be in form and substance acceptable to the Owner. No such
resignation shall become effective until a successor shall have assumed the
Servicer's responsibilities and obligations hereunder in the manner provided
in Section 10.01.
Without in any way limiting the generality of this Section 8.03, in the event
that the Servicer either shall assign this Agreement or the servicing
responsibilities hereunder or delegate its duties hereunder or any portion
thereof or sell or otherwise dispose of all or substantially all of its
property or assets, without the prior written consent of the Owner, then the
Owner shall have the right to terminate this Agreement upon notice given as
set forth in Section 9.01, without any payment of any penalty or damages and
without any liability whatsoever to the Servicer or any third party.
ARTICLE IX
TERMINATION
Section 9.01. Termination for Cause.
(a) This Agreement shall be terminable at the sole option of
the Owner, if any of the following events of default exist on the part of the
Servicer:
(i) any failure by the Servicer to remit to the Owner any payment required
to be made under the terms of this Agreement which continues unremedied for a
period of two Business Days after the date upon which written notice of such
failure, requiring the same to be remedied, shall have been given to the
Servicer by the Owner; or
(ii) failure by the Servicer duly to observe or perform in any material
respect any other of the covenants or agreements on the part of the Servicer
set forth in this Agreement which continues unremedied for a period of 30
days; or
(iii) failure by the Servicer to maintain its license to do business or
service residential mortgage loans in any jurisdiction where the Mortgaged
Properties are located; or
(iv) a decree or order of a court or agency or supervisory authority having
jurisdiction for the appointment of a conservator or receiver or liquidator
in any insolvency, readjustment of debt, including bankruptcy, marshaling of
assets and liabilities or similar proceedings, or for the winding-up or
liquidation of its affairs, shall have been entered against the Servicer and
such decree or order shall have remained in force undischarged or unstayed
for a period of 60 days; or
(v) the Servicer shall consent to the appointment of a conservator or
receiver or liquidator in any insolvency, readjustment of debt, marshaling of
assets and liabilities or similar proceedings of or relating to the Servicer
or of or relating to all or substantially all of its property; or
(vi) the Servicer shall admit in writing its inability to pay its debts
generally as they become due, file a petition to take advantage of any
applicable insolvency, bankruptcy or reorganization statute, make an
assignment for the benefit of its creditors, voluntarily suspend payment of
its obligations or cease its normal business operations for three Business
Days; or
(vii) the Servicer ceases to meet the qualifications of a FNMA, FHLMC or GNMA
lender/servicer or ceases to be an FHA Approved Mortgagee or ceases to be a
VA Approved Lender; or
(viii) the Servicer attempts, without the consent of the Owner, to assign the
servicing of the Mortgage Loans or its right to servicing compensation
hereunder or the Servicer attempts, without the consent of the Owner, to sell
or otherwise dispose of all or substantially (i) (ii) (iii)all of
its property or assets or to assign this Agreement or the servicing
responsibilities hereunder or to delegate its duties hereunder or any portion
t h e r e o f ; o r
(ix) the Company fails to maintain a minimum net worth of $25,000,000.
In each and every such case, so long as an event of default shall not have
been remedied, in addition to whatever rights the Owner may have at law or
equity to damages, including injunctive relief and specific performance, the
Owner, by notice in writing to the Servicer, may terminate all the rights and
obligations of the Servicer under this Agreement and in and to the servicing
contract established hereby and the proceeds thereof.
Upon receipt by the Servicer of such written notice, all authority and power
of the Servicer under this Agreement, whether with respect to the Mortgage
Loans or otherwise, shall pass to and be vested in a successor servicer
appointed by the Owner. Upon written request from the Owner, the Servicer
shall prepare, execute and deliver to the successor entity designated by the
Owner any and all documents and other instruments, place in such successor's
possession all Servicing Files, and do or cause to be done all other acts or
things necessary or appropriate to effect the purposes of such notice of
termination, including but not limited to the transfer and endorsement or
assignment of the Mortgage Loans and related documents, at the Servicer's
sole expense. The Servicer shall cooperate with the Owner and such successor
in effecting the termination of the Servicer's responsibilities and rights
hereunder, including without limitation, the transfer to such successor for
administration by it of all cash amounts which shall at the time be credited
by the Servicer to the Custodial Account or Escrow Account or thereafter
received with respect to the Mortgage Loans.
By a written notice, the Owner may waive any default by the Servicer in the
performance of its obligations hereunder and its consequences. Upon any
waiver of a past default, such default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been remedied for every
purpose of this Agreement. No such waiver shall extend to any subsequent or
other default or impair any right consequent thereon except to the extent
expressly so waived.
Section 9.02. Termination Without Cause.
This Agreement shall terminate upon: (i) the later of (a) the distribution
of the final payment or liquidation proceeds on the last Mortgage Loan to the
Owner (or advances by the Servicer for the same), and (b) the disposition of
all REO Property acquired upon foreclosure of the last Mortgage Loan and the
remittance of all funds due hereunder, or (ii) mutual consent of the Servicer
and the Owner in writing. Any such notice of termination shall be in writing
and delivered to the Servicer by registered mail to the address set forth at
the beginning of this Agreement. The Owner and the Servicer shall comply
with the termination procedures set forth in Sections 9.01 and 10.01 hereof.
In the event that Servicer is terminated as servicer pursuant Sections 7.06,
7.08 and 9.02(ii), it shall be entitled to a termination fee (the
"Termination Fee") equal to $10 per Mortgage Loan then being serviced
pursuant to this Agreement.
ARTICLE X
MISCELLANEOUS PROVISIONS
Section 10.01 Successor to the Servicer.
Simultaneously with the termination of the Servicer's responsibilities and
duties under this Agreement pursuant to Sections 6.02, 8.03, 9.01 or 9.02,
the Owner shall (i) succeed to and assume all of the Servicer's
responsibilities, rights, duties and obligations under this Agreement, or
(ii) appoint a successor having the characteristics set forth in clauses (i)
and (ii) of Section 8.01 and which shall succeed to all rights and assume all
of the responsibilities, duties and liabilities of the Servicer under this
Agreement simultaneously with the termination of the Servicer's
responsibilities, duties and liabilities under this Agreement. Any successor
to the Servicer shall be an FHA Approved Mortgagee and a VA Approved Lender.
In addition, with respect to all FHA Loans serviced hereunder, the Servicer
shall provide notice of such change in servicers to HUD on HUD form 92080 or
such other form as prescribed by HUD, at least 10 days prior to such transfer
of servicing. In connection with such appointment and assumption, the Owner
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
Servicer under this Agreement without the consent of the Owner. In the event
that the Servicer's duties, responsibilities and liabilities under this
Agreement should be terminated pursuant to the aforementioned sections, the
Servicer shall discharge such duties and responsibilities during the period
from the date it acquires knowledge of such termination until the effective
date thereof with the same degree of diligence and prudence which it is
obligated to exercise under this Agreement, and shall take no action
whatsoever that might impair or prejudice the rights or financial condition
of its successor. The resignation or removal of the Servicer pursuant to the
aforementioned sections shall not become effective until a successor shall be
appointed pursuant to this Section 10.01 and shall in no event relieve the
Servicer of the representations and warranties made pursuant to Sections 6.01
and the remedies available to the Owner under Section 6.02 and 7.02, it being
understood and agreed that the provisions of such Sections 6.01, 6.02 and
7.02 shall be applicable to the Servicer notwithstanding any such resignation
or termination of the Servicer, or the termination of this Agreement.
Within a reasonable period of time, but in no event longer than 30 days of
the appointment of a successor entity by the Owner, the Servicer shall
prepare, execute and deliver to the successor entity any and all documents
and other instruments, place in such successor's possession all Servicing
Files, and do or cause to be done all other acts or things necessary or
appropriate to effect the purposes of such notice of termination, including
but not limited to the transfer and endorsement of the Mortgage Notes and
related documents, and the preparation and recordation of Assignments of
Mortgage, at the discretion of the Owner and, at the Owner's sole expense.
The Servicer shall cooperate with the Owner and such successor in effecting
the termination of the Servicer's responsibilities and rights hereunder and
the transfer of servicing responsibilities to the successor servicer,
including without limitation, the transfer to such successor for
administration by it of all cash amounts which shall at the time be credited
by the Servicer to the Custodial Account or Escrow Account or thereafter
received with respect to the Mortgage Loans.
Any successor appointed as provided herein shall execute, acknowledge and
deliver to the Servicer and to the Owner an instrument accepting such
appointment, wherein the successor shall make the representations and
warranties set forth in Section 6.01, whereupon such successor shall become
fully vested with all the rights, powers, duties, responsibilities,
obligations and liabilities of the Servicer, with like effect as if
originally named as a party to this Agreement. Any termination or
resignation of the Servicer or termination of this Agreement pursuant to
Sections 6.02, 8.03, 9.01 or 9.02 shall not affect any claims that the Owner
may have against the Servicer arising out of the Servicer's actions or
failure to act prior to any such termination or resignation.
The Servicer shall deliver promptly to the successor servicer the funds in
the Custodial Account and Escrow Account and all Mortgage Loan documents and
related documents and statements held by it hereunder and the Servicer shall
account for all funds and shall execute and deliver such instruments and do
such other things as may reasonably be required to more fully and
definitively vest in the successor all such rights, powers, duties,
responsibilities, obligations and liabilities of the Servicer.
Upon a successor's acceptance of appointment as such, the Servicer shall
notify by mail the Owner of such appointment in accordance with the
procedures set forth in Section 10.06.
Section 10.02. Closing.
Each closing for the engagement of the Servicer to perform the servicing
responsibilities respecting Mortgage Loans shall take place on the related
Transfer Date. At the Owner's option, the closing shall be either: by
telephone, confirmed by letter or wire as the parties shall agree; or
conducted in person, at such place as the parties shall agree.
Each closing shall be subject to each of the following conditions:
a) all of the representations and warranties of the
Servicer and the Owner under this Agreement shall be
true and correct as of each Transfer Date and no
event shall have occurred which, with notice or the
passage of time, would constitute a default under
this Agreement;
b) the Owner and Servicer each shall have received, or
the Owner's attorneys shall have received in escrow,
(i) with respect to the Initial Transfer Date, all
Closing Documents as specified in Section 10.03
hereof, and (ii) with respect to all Transfer Dates,
the Closing Documents specified in (b), (c) and (i)
of Section 10.03 hereof, in such forms as are agreed
upon and acceptable to the Servicer and the Owner,
duly executed by all signatories as required
pursuant to the respective terms thereof; and
c) all other terms and conditions of this Agreement
shall have been complied with and no default or
Event of Default under this Agreement shall have
occurred and be continuing for a period of 30 days
or more prior to the related Transfer Date.
Section 10.03. Closing Documents.
The Closing Documents shall consist of fully executed originals of the
following documents:
with respect to the Initial Transfer Date, this
Agreement;
a) with respect to the Initial Transfer Date, the
Mortgage Loan Schedule, with one copy to be attached
to each counterpart of this Agreement as Exhibit A,
and with respect to each subsequent Transfer Date, a
Mortgage Loan Schedule reflecting the additional
Mortgage Loans to be serviced by the Servicer and a
cumulative Mortgage Loan Schedule, reflecting all
Mortgage Loans being serviced by the Servicer from
the Initial Transfer Date up to, and including, the
related subsequent Transfer Date;
b) with respect to each subsequent Transfer Date, an
Acknowledgment Agreement in the form of Exhibit B-1
hereto;
c) with respect to the Initial Transfer Date, a
Custodial Account Letter Agreement in the form of
Exhibit C hereto;
d) with respect to the Initial Transfer Date, an Escrow
Account Letter Agreement in the form of Exhibit D
hereto;
e) with respect to the Initial Transfer Date, an
Officer's Certificate of the Servicer, in the form
of Exhibit E-1 hereto, including all attachments
thereto, and with respect to subsequent Transfer
Dates, in the event that any item contained in the
most recent Officer's Certificate becomes untrue or
at the request of the Owner, an Officer's
Certificate in the form of Exhibit E-2 hereto,
including all attachments thereto;
f) an Opinion of Counsel delivered following the
Initial Transfer Date upon the request of the Owner,
in the form of Exhibit G hereto;
g) with respect to the Initial Transfer Date, a
Custodial Agreement;
a) a) and
h) with respect to each Transfer Date, a trust receipt
and initial certification of the related Custodian,
as required under the Custodial Agreement.
Section 10.04. Costs.
The Owner shall pay any commissions due its salesmen and the legal fees and
expenses of its attorneys. Costs and expenses incurred in connection with
the transfer of the servicing responsibilities, including fees for delivering
Servicing Files, shall be paid by the Owner. Subject to Section 3.01(a) the
Owner, its designee or the Servicer shall pay the costs associated with the
preparation, delivery and recording of Assignments of Mortgages required on
each Reconstitution Date.
Section 10.05. Protection of Confidential Information.
The Servicer shall keep confidential and shall not divulge to any party,
without the Owner's prior written consent, the purchase price paid by the
Owner for the Mortgage Loans and any information pertaining to the Mortgage
Loans or any borrower thereunder, except to the extent that it is appropriate
for the Servicer to do so in working with legal counsel, auditors, taxing
authorities or other governmental agencies.
Section 10.06. Notices.
All demands, notices and communications hereunder shall be in writing and
shall be deemed to have been duly given if sent by facsimile or mailed by
overnight courier, addressed as follows (or such other address as may
hereafter be furnished to the other party by like notice):
(i) if to the Owner:
Lehman Capital, A Division of
Lehman Brothers Holdings Inc.
Three World Financial Center
New York, New York 10285
Attention: Manager, Contract Finance
Telecopier No.: (212) 528-6659
Telephone No.: (212) 526-5837
(ii) if to the Servicer:
Aurora Loan Services Inc.
2530 South Parker Road
Aurora, Colorado 80014
Telecopier No.: (303) 338-2289
Telephone No.: (303) 745-3661
Attention: Rick Skogg
Any such demand, notice or communication hereunder shall be deemed to have
been received on the date delivered to or received at the premises of the
addressee.
Section 10.07. Severability Clause.
Any part, provision, representation or warranty of this Agreement which is
prohibited or which is held to be void or unenforceable shall be ineffective
to the extent of such prohibition or unenforceability without invalidating
the remaining provisions hereof. Any part, provision, representation or
warranty of this Agreement which is prohibited or unenforceable or is held to
be void or unenforceable in any jurisdiction shall be ineffective, as to such
jurisdiction, to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction as to any Mortgage Loan shall not
invalidate or render unenforceable such provision in any other jurisdiction.
To the extent permitted by applicable law, the parties hereto waive any
provision of law which prohibits or renders void or unenforceable any
provision hereof. If the invalidity of any part, provision, representation
or warranty of this Agreement shall deprive any party of the economic benefit
intended to be conferred by this Agreement, the parties shall negotiate, in
good-faith, to develop a structure the economic effect of which is as close
aspossibletotheeconomic effectofthisAgreement withoutregardtosuch invalidity.
Section 10.08. No Personal Solicitation.
From and after each related Transfer Date, the Servicer hereby agrees that it
will not take any action or permit or cause any action to be taken by any of
its agents or affiliates, or by any independent contractors on the Servicer's
behalf, to personally, by telephone or mail, solicit the borrower or obligor
under any Mortgage Loan (on a targeted basis) for any purposes of prepayment,
refinancing or modification of the related Mortgage Loan, provided, however,
that this limitation shall not prohibit Servicer from soliciting such
Mortgagor for purposes of prepayment, refinance or modification of any loan
owned or serviced by Servicer other than a Mortgage Loan. It is understood
and agreed that, among other marketing activities, promotions undertaken by
Servicer which are directed of the general public at large or which are
directed generally to a segment of the then existing customers of Servicer or
any of its direct or indirect subsidiaries (including, without limitation,
the mailing of promotional materials to Servicer's deposit customers by
inserting such materials into customer account statements, mass mailings
based on commercially acquired mailing lists and newspaper, radio and
television advertisements) shall not constitute solicitation under this
section. In the event the Servicer does refinance any Mortgage Loan as a
result of a violation of the requirements set forth in this Section 10.08,
Servicer hereby agrees to pay to Owner an amount equal to the difference, if
any, between the amount that the Owner would have received if it had sold the
Mortgage Loan to a third party, and the proceeds received by the Owner as
result of such refinancing.
Section 10.09. 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 10.10. Place of Delivery and Governing Law.
This Agreement shall be deemed in effect when a fully executed counterpart
thereof is received by the Owner in the State of New York and shall be deemed
to have been made in the State of New York. The Agreement shall be construed
in accordance with the laws of the State of New York and the obligations,
rights and remedies of the parties hereunder shall be determined in
accordance with the laws of the State of New York, except to the extent
preempted by Federal law.
Section 10.11. Further Agreements.
The Owner and the Servicer 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 10.12. Intention of the Parties.
It is the intention of the parties that the Owner is conveying, and the
Servicer is receiving only a contract for servicing the Mortgage Loans.
Accordingly, the parties hereby acknowledge that the Owner remains the sole
and absolute owner of the Mortgage Loans and all rights related thereto.
Section 10.13. Successors and Assigns; Assignment of Servicing
Agreement.
This Agreement shall bind and inure to the benefit of and be enforceable by
the Servicer and the Owner and the respective successors and assigns of the
Servicer and the Owner. This Agreement shall not be assigned, pledged or
hypothecated by the Servicer to a third party without the prior written
consent of the Owner, which consent shall be given at the sole discretion of
the Owner.
Section 10.14. Waivers.
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 10.15. Exhibits.
The exhibits to this Agreement are hereby incorporated and made a part hereof
and are an integral part of this Agreement.
Section 10.16. General Interpretive Principles.
For purposes of this Agreement, except as otherwise expressly provided or
unless the context otherwise requires:
(a) the terms defined in this Agreement have the meanings
assigned to them in this Agreement and include the plural as well as the
singular, and the use of any gender herein shall be deemed to include the
other gender;
(b) accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles;
(c) references herein to "Articles", "Sections",
"Subsections", "Paragraphs", and other subdivisions without reference to a
document are to designated Articles, Sections, Subsections, Paragraphs and
other subdivisions of this Agreement;
(d) a reference to a Subsection without further reference to
a Section is a reference to such Subsection as contained in the same Section
in which the reference appears, and this rule shall also apply to Paragraphs
and other subdivisions;
(e) the words "herein", "hereof", "hereunder" and other words
of similar import refer to this Agreement as a whole and not to any
particular provision; and
(f) the term "include" or "including" shall mean by reason of
enumeration.
Section 10.17. Reproduction of Documents.
This Agreement and all documents relating thereto, including, without
limitation, (a) consents, waivers and modifications which may hereafter be
executed, (b) documents received by any party at the closing, and (c)
financial statements, certificates and other information previously or
hereafter furnished, may be reproduced by any photographic, photostatic,
microfilm, micro-card, miniature photographic or other similar process. The
parties agree that any such reproduction shall be admissible in evidence as
the original itself in any judicial or administrative proceeding, whether or
not the original is in existence and whether or not such reproduction was
made by a party in the regular course of business, and that any enlargement,
facsimile or further reproduction of such reproduction shall likewise be
admissible in evidence.
IN WITNESS WHEREOF, the Servicer and the Owner have caused their names to be
signed hereto by their respective officers thereunto duly authorized as of
the date first above written.
LEHMAN CAPITAL, A DIVISION OF LEHMAN BROTHERS HOLDINGS INC.
(Owner)
By: /s/ Jack E. Desens
Name: Jack E. Desens
Title: Senior Vice President
AURORA LOAN SERVICES INC.
(Servicer)
By: /s/ Rick W. Skogg
Name: Rick W. Skogg
Title: President
EXHIBIT A
MORTGAGE LOAN SCHEDULE
(to be provided)
EXHIBIT B-1
ACKNOWLEDGMENT AGREEMENT
On this ____ day of ____________, 199_, Lehman Capital, A Division of Lehman
Brothers Holdings Inc. (the "Owner") as the Owner under that certain Flow
Servicing Agreement dated as of September 1, 1997, (the "Agreement"), does
hereby transfer to Aurora Loan Services Inc. (the "Servicer") as Servicer
under the Agreement, the servicing responsibilities related to the Mortgage
Loans listed on the Mortgage Loan Schedule attached hereto as Exhibit A. The
Servicer hereby accepts the servicing responsibilities transferred hereby and
on the date hereof assumes all servicing responsibilities related to the
Mortgage Loans identified on the attached Mortgage Loan Schedule all in
accordance with the Agreement. The contents of each Servicing File required
to be delivered to service the Mortgage Loans pursuant to the Agreement have
been or shall be delivered to the Servicer by the Owner in accordance with
the terms of the Agreement.
With respect to the Mortgage Loans made subject to the Agreement hereby, the
Transfer Date shall be ___________________.
The Custodial Files shall be held by __________________ ("_____________")
pursuant to that certain Custodial Agreement dated as of _________ __, 199_,
among the Owner, the Servicer and ________________.
All other terms and conditions of this transaction shall be governed by the
Agreement.
The Set-Up Fee per Mortgage Loan shall be: $________
Th Termination Fee per Mortgage Loan shall be: $________
The Servicer shall, as indicated below, (i) prepare or cause to be prepared
all Assignments of Mortgage, (ii) record or cause to be recorded all
Assignments of Mortgage, (iii) shall pay the recording costs associated with
the Mortgage Loans associated with this Acknowledgment Agreement and (iv)
shall track such Assignments of Mortgage to ensure they have been recorded
for the Assignment Fee per Mortgage Loan indicated below:
Check the appropriate box: (Check only one box)
All items (i) through (iv) above $_____ plus recording costs.
All items (i) through (iv) above $_____ (which fee includes recording
costs).
Only item (iv) above $_____.
None of the above.
Capitalized terms used herein and not otherwise defined shall have the
meanings set forth in the Agreement.
This Acknowledgment 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.
IN WITNESS WHEREOF, the Owner and the Servicer have caused their names to be
signed hereto by their respective officers thereunto duly authorized as of
the day and year first above written.
OWNER:
LEHMAN CAPITAL, A DIVISION OF LEHMAN BROTHERS
HOLDINGS INC.
By:
Name:
Title:
SERVICER:
AURORA LOAN SERVICES INC.
By:
Name:
Title:
EXHIBIT B-2
CONFIRMATION AGREEMENT
On this ____ day of ____________, 199_, Lehman Capital, A Division of Lehman
Brothers Holdings Inc. (the "Owner") as the Owner under that certain Flow
Servicing Agreement dated as of September 1, 1997, (the "Agreement"), does
hereby express its intention to transfer to Aurora Loan Services Inc. (the
"Servicer") as Servicer under the Agreement, the servicing responsibilities
related to the Mortgage Loans listed on the Mortgage Loan Schedule attached
hereto on ___________ (the "Transfer Date").
The Servicer hereby agrees to accept on the Transfer Date the servicing
responsibilities related to the Mortgage Loans identified on the attached
Mortgage Loan Schedule and shall begin to service such Mortgage Loans on the
Transfer Date in accordance with the provisions of the Agreement.
The Custodial Files shall be held by __________________ ("_____________")
pursuant to that certain Custodial Agreement dated as of _________ __, 199_,
among the Owner, the Servicer and ________________.
All other terms and conditions of this transaction shall be governed by the
Agreement.
The Set-Up Fee per Mortgage Loan shall be: $________
Th Termination Fee per Mortgage Loan shall be: $________
The Servicer shall, as indicated below, (i) prepare or cause to be prepared
all Assignments of Mortgage, (ii) record or cause to be recorded all
Assignments of Mortgage, (iii) shall pay the recording costs associated with
the Mortgage Loans associated with this Acknowledgment Agreement and (iv)
shall track such Assignments of Mortgage to ensure they have been recorded
for the Assignment Fee per Mortgage Loan indicated below:
Check the appropriate box: (Check only one box)
All items (i) through (iv) above $_____ plus recording costs.
All items (i) through (iv) above $_____ (which fee includes recording
costs).
Only item (iv) above $_____
Capitalized terms used herein and not otherwise defined shall have the
meanings set forth in the Agreement.
This Confirmation 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.
IN WITNESS WHEREOF, the Owner and the Servicer have caused their names to be
signed hereto by their respective officers thereunto duly authorized as of
the day and year first above written.
OWNER:
LEHMAN CAPITAL, A DIVISION OF LEHMAN BROTHERS HOLDINGS INC.
By:
Name:
Title:
SERVICER:
AURORA LOAN SERVICES INC.
By:
Name:
Title:
EXHIBIT C
CUSTODIAL ACCOUNT LETTER AGREEMENT
_______ __, 199_
To: ___________________________
___________________________
___________________________
(the "Depository")
As Servicer under the Flow Servicing Agreement, dated as of September 1, 1997
(the "Agreement"), we hereby authorize and request you to establish an
account, as a Custodial Account pursuant to Section 3.03 of the Agreement, to
be designated as "Aurora Loan Services Inc., in trust for Lehman Capital, A
Division of Lehman Brothers Holdings Inc., owner of Residential Mortgage
Loans, Group No. 1997-ALSI, and various Mortgagors." All deposits in the
account shall be subject to withdrawal therefrom by order signed by the
Servicer. This letter is submitted to you in duplicate. Please execute and
return one original to us.
AURORA LOAN SERVICES INC.
By:
Name:
Title:
The undersigned, as Depository, hereby certifies that the above described
account has been established under Account Number __________, at the office
of the Depository indicated above, and agrees to honor withdrawals on such
account as provided above.
Depository
By:
Name:
Title:
Date:
EXHIBIT D
ESCROW ACCOUNT LETTER AGREEMENT
_______ ___, 199_
To:
(the "Depository")
As servicer under the Flow Servicing Agreement, dated as of September 1, 1997
(the "Agreement"), we hereby authorize and request you to establish an
account, as an Escrow Account pursuant to Section 3.05 of the Agreement, to
be designated as "Aurora Loan Services Inc., in trust for Lehman Capital, A
Division of Lehman Brothers Holdings Inc., owner of Residential Mortgage
Loans, Group No. 1997-ALSI, and various Mortgagors." All deposits in the
account shall be subject to withdrawal therefrom by order signed by the
Servicer. This letter is submitted to you in duplicate. Please execute and
return one original to us.
AURORA LOAN SERVICES INC.
By:
Name:
Title:
The undersigned, as Depository, hereby certifies that the above described
account has been established under Account Number ______, at the office of
the Depository indicated above, and agrees to honor withdrawals on such
account as provided above.
Depository
By:
Name:
Title:
Date:
EXHIBIT E-1
OFFICER'S CERTIFICATE
I, ____________________, hereby certify that I am the duly elected (Vice)
President of Aurora Loan Services Inc., a corporation organized under the
laws of the State of Delaware, (the "Company") and further as follows:
1. Attached hereto as Exhibit 1 is a true, correct and
complete copy of the Articles of Incorporation of the Company which
is in full force and effect on the date hereof and which has been
in effect without amendment, waiver, rescission or modification
since ____________.
2. Attached hereto as Exhibit 2 is a true, correct and
complete copy of the bylaws of the Company which are in effect on
the date hereof and which have been in effect without amendment,
waiver, rescission or modification.
3. Attached hereto as Exhibit 3 is an original certificate
of good standing of the Company, issued within ____ days of the
date hereof, and no event has occurred since the date thereof which
would impair such standing.
4. Attached hereto as Exhibit 4 is a true, correct and
complete copy of a Certificate of an Assistant secretary of the
Company setting forth the Officers of the Company authorizes by a
committee of the Company's Board of Directors to execute and
deliver the Flow Servicing Agreement, dated as of September 1, 1997
(the "Agreement"), by and between the Company and Lehman Capital, A
Division of Lehman Brothers Holdings Inc. (the "Owner"), and such
authorities are in effect on the date hereof and have been in
effect without amendment, waiver rescission or modification.
5. To the best of my knowledge, either (i) no consent,
approval, authorization or order of any court or governmental
agency or body is required for the execution, delivery and
performance by the Company of or compliance by the Company with the
Agreement or the consummation of the transactions contemplated by
the Agreement; or (ii) any required consent, approval,
authorization or order has been obtained by the Company.
6. To the best of my knowledge, neither the consummation of
the transactions contemplated by, nor the fulfillment of the terms
of the Agreement, conflicts or will conflict with or results or
will result in a breach of or constitutes or will constitute a
default under the charter or by-laws of the Company, the terms of
any indenture or other agreement or instrument to which the Company
is a party or by which it is bound or to which it is subject, or
any statute or order, rule, regulations, writ, injunction or decree
of any court, governmental authority or regulatory body to which
the Company is subject or by which it is bound.
7. To the best of my knowledge, there is no action, suit,
proceeding or investigation pending or threatened against the
Company which, in my judgment, either
in any one instance or in the aggregate, may result in any material
adverse change in the business, operations, financial condition,
properties or assets of the Company or in any material impairment
of the right or ability of the Company to carry on its business
substantially as now conducted or in any material liability on the
part of the Company or which would draw into question the validity
of the Agreement or of any action taken or to be taken in
connection with the transactions contemplated hereby, or which
would be likely to impair materially the ability of the Company to
perform under the terms of the Agreement.
8. Each person listed on Exhibit 5 attached hereto who, as
an officer or representative of the Company, signed the Agreement
and any other document delivered prior hereto or on the date hereof
in connection with the Agreement, was, at the respective times of
such signing and delivery, and is now, a duly elected or appointed,
qualified and acting officer or representative of the Company, who
holds the office set forth opposite his or her name on Exhibit 5,
and the signatures of such persons appearing on such documents are
their genuine signatures.
9. The Company is duly authorized to engage in the
transactions described and contemplated in the Agreement.
IN WITNESS WHEREOF, I have hereunto signed my name.
Dated: September __, 1997
AURORA LOAN SERVICES INC.
By:
Name:
Title:
IN WITNESS WHEREOF, I have hereunto signed my name and affixed the seal of
the Company.
Dated: By:
Name:
(Seal)
Title: (Vice) President
I, ________________________, an (Assistant) Secretary of Aurora Loan Services
Inc., hereby certify that ____________ is the duly elected, qualified and
acting (Vice) President of the Company and that the signature appearing above
is (her) (his) genuine signature.
IN WITNESS WHEREOF, I have hereunto signed my name.
Dated: By:
Name:
(Seal)
Title: (Vice) President
EXHIBIT 4 to
Company's Officer's Certificate
Name Title Signature
EXHIBIT E-2
COMPANY'S OFFICER'S CERTIFICATE
I, ____________________, hereby certify that I am the duly elected (Vice)
President of Aurora Loan Services Inc., a corporation organized under the
laws of the State of Delaware, (the "Company") and further as follows:
1. The charter of the Company in the form attached to that
certain Company's Officer's Certificate dated September __, 1997 by
____________ is in full force and effect on the date hereof and has been in
effect without amendment, waiver, rescission or modification.
2. The bylaws of the Company in the form attached to that
certain Company's Officer's Certificate dated ____________ by ____________
are in effect on the date hereof and have been in effect without amendment,
waiver, rescission or modification.
3. Since the last date of issuance of a certificate of good
standing of the Company in the form attached to that certain Company's
Officer's Certificate dated ____________ by ____________, no event has
occurred since the date thereof which would impair such standing.
4. The resolutions of the Board of Directors of the Company
in the form attached to that certain Company's Officer's Certificate dated
____________ by ____________ are in effect on the date hereof and have been
in effect without amendment, waiver, rescission or modification.
5. To the best of my knowledge, neither the consummation of
the transactions contemplated by, nor the fulfillment of the terms of the
Flow Servicing Agreement dated as of September 1, 1997, by and between Lehman
Capital, A Division of Lehman Brothers Holdings Inc. and the Company,
conflicts or will conflict with or results or will result in a breach of or
constitutes or will constitute a default under the charter or by-laws of the
Company, the terms of any indenture or other agreement or instrument to which
the Company is a party or by which it is bound or to which it is subject, or
any statute or order, rule, regulations, writ, injunction or decree of any
court, governmental authority or regulatory body to which the Company is
subject or by which it is bound.
6. To the best of my knowledge, there is no action, suit,
proceeding or investigation pending or threatened against the Company which,
in my judgment, either in any one instance or in the aggregate, may result in
any material adverse change in the business, operations, financial condition,
properties or assets or the Company or in any material impairment of the
right or ability of the Company to carry on its business substantially as now
conducted or in any material liability on the part of the Company or which
would draw into question the validity of the Agreement or of any action taken
or to be taken in connection with the transactions contemplated hereby, or
which would be likely to impair materially the ability of the Company to
perform under the terms of the Agreement.
7. The Company is not currently in material breach of any
representation
or warranty, or in material default under any provision of the Agreement.
8. The Company is duly authorized to engage in the
transactions described and contemplated in the Agreement.
IN WITNESS WHEREOF, I have hereunto signed my name and affixed the seal of
the Company.
Dated:
(Seal) AURORA LOAN SERVICES INC.
By:
Name:
Title:
I, ________________________, an (Assistant) Secretary of Aurora Loan Services
Inc., hereby certify that ____________ is the duly elected, qualified and
acting (Vice) President of Aurora Loan Services Inc. and that the signature
appearing above is (her) (his) genuine signature.
IN WITNESS WHEREOF, I have hereunto signed my name.
Dated: By:
Name:
(Seal)
Title: (Assistant) Secretary
EXHIBIT F
FORM OF CUSTODIAL AGREEMENT
(Intentionally omitted)
EXHIBIT G
FORM OF OPINION OF COUNSEL TO THE SERVICER
(date)
Lehman Capital, A Division of
Lehman Brothers Holdings Inc.
Three World Financial Center
New York, New York 10285
Ladies and Gentlemen:
You have requested my opinion, as Legal Counsel to Aurora Loan Services Inc.
(the "Servicer"), with respect to certain matters in connection with the
servicing by the Servicer of the Mortgage Loans pursuant to that certain Flow
Servicing Agreement, by and between the Servicer and Lehman Capital, A
Division of Lehman Brothers Holdings Inc. (the "Owner"), dated as of
September 1, 1997, (the "Flow Servicing Agreement"). Capitalized terms not
otherwise defined herein have the meanings set forth in the Flow Servicing
Agreement.
I have examined the following documents:
1. the Flow Servicing Agreement; and
2. such other documents, records and papers as I have deemed
necessary and relevant as a basis for this opinion.
To the extent I have deemed necessary and proper, I have relied upon the
representations and warranties of the Servicer contained in the Flow
Servicing Agreement. I have assumed the authenticity of all documents
submitted to me as originals, the genuineness of all signatures, the legal
capacity of natural persons and the conformity to the originals of all
documents.
Subject to the foregoing, it is my opinion that:
1.
The Servicer is a duly organized, validly existing corporation in good
standing under the laws of the state Delaware and is
authorized to service and administer the Mortgage Loans in
the states where the Mortgaged Properties are located.
2.
The Servicer has the power to engage in the transactions contemplated by the
Flow Servicing Agreement and all requisite power, authority
and legal right to execute and deliver the Flow Servicing
Agreement, and to perform and observe the terms and
conditions of such instrument.
3.
The Flow Servicing Agreement has been duly authorized, executed and delivered
by the Servicer and is a legal, valid and binding agreement
enforceable in accordance with its respective terms against
the Servicer, subject to bankruptcy laws and other similar
laws of general application affecting rights of creditors
and subject to the application of the rules of equity,
including those respecting the availability of specific
performance.
4.
Either (i) no consent, approval, authorization or order of any court or
governmental agency or body is required for the execution,
delivery and performance by the Servicer of or compliance by
the Servicer with the Flow Servicing Agreement, or the
servicing of the Mortgage Loans or the consummation of the
transactions contemplated by the Flow Servicing Agreement;
or (ii) any required consent, approval, authorization or
order has been obtained by the Servicer.
5.
Neither the consummation of the transactions contemplated by, nor the
fulfillment of the terms of, the Flow Servicing Agreement
conflicts or will conflict with or results or will result in
a breach of, or constitutes or will constitute a default
under, the organization documents of the Servicer, the terms
of any material indenture or other agreement or instrument
to which the Servicer is a party or by which it is bound or
to which it is subject, or violates any statute or order,
rule, regulations, writ, injunction or decree of any court,
governmental authority or regulatory body to which the
Servicer is subject or by which it is bound.
6.
There is no action, suit, proceeding or investigation pending or, to the best
of my knowledge, threatened against the Servicer which, in
my judgment, either in any one instance or in the aggregate,
may result in any material adverse change in the business,
operations, financial condition, properties or assets of the
Servicer or in any material impairment of the right or
ability of the Servicer to carry on its business
substantially as now conducted or in any material liability
on the part of the Servicer or which would draw into
question the validity of the Flow Servicing Agreement or of
any action taken or to be taken in connection with the
transactions contemplated thereby, or which would be likely
to impair materially the ability of the Servicer to perform
under the terms of the Flow Servicing Agreement.
This opinion is given to you for your sole benefit, and no other person or
entity is entitled to rely hereon except that the purchaser or purchasers to
which you resell the Mortgage Loans may rely on this opinion as if it were
addressed to them as of its date, provided that the Servicer remains the
servicer of the Mortgage Loans under the Flow Servicing Agreement.
Very truly yours,
Name
Legal Counsel
EXHIBIT H
FORM OF COLLATERAL PLEDGE AND SECURITY AGREEMENT
COLLATERAL PLEDGE AND SECURITY AGREEMENT, dated as of _________ __, 199_, by
and between Aurora Loan Services Inc. ("Pledgor") and Lehman Capital, A
Division of Lehman Brothers Holdings Inc. ("Pledgee").
WHEREAS, heretofore Pledgor and Pledgee executed that certain Flow Servicing
Agreement, dated as of September 1, 1997 (the "Servicing Agreement");
WHEREAS, heretofore Pledgee sold certain of the mortgage loans which had been
subject to the Servicing Agreement to the (Third Party Purchaser)
("Purchaser") pursuant to that certain (Purchase Agreement) (the "Purchase
Agreement"), dated as of _________ __, 199_, by and between Pledgee and
Purchaser, which mortgage loans are listed on Exhibit A attached hereto (the
"Mortgage Loans");
WHEREAS, pursuant to the Purchase Agreement, Pledgor has been retained to
service the Mortgage Loans sold to Purchaser;
WHEREAS, Section 7.07 of the Servicing Agreement obligates Pledgor to remit
to Pledgee the amount of the monthly servicing fee received by Pledgor with
respect to each Mortgage Loan under the Purchase Agreement in excess of the
monthly servicing fee which had been received by Pledgor from Pledgee with
respect to each Mortgage Loan previously subject to the Servicing Agreement
and sold to Purchaser (the "Additional Remittance"), and in connection
therewith, obligates Pledgor to send to Pledgee a monthly report;
WHEREAS, Section 7.08 of the Servicing Agreement permits Pledgee to cause
Pledgor at any time under any Reconstitution Agreement to transfer the
servicing responsibilities and duties associated therewith to Pledgee or any
designee of Pledgee, and in connection therewith, obligates Pledgor to
cooperate with Pledgee in such transfer;
WHEREAS, Pledgor's obligations to (i) remit to Pledgee the Additional
Remittance, (ii) deliver a monthly report in connection with the Additional
Remittance and (iii) cooperate with Pledgor in connection with any transfer
of servicing responsibilities and duties;
WHEREAS, Pledgor desires to pledge to Pledgee all its right, title and
interest in and to the Servicing Rights (as defined below) with respect to
each Mortgage Loan.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiencyof whicharehereby acknowledged,Pledgor andPledgee agreeas follows:
1. Pledgor hereby grants, pledges, conveys, transfers and
assigns to Pledgee a first priority security interest in and pledge of all
its right title and interest in and to any and all of the following: (i) all
rights to service the Mortgage Loans; (ii) any payments to or monies received
by Pledgor for servicing the Mortgage Loans; (iii) all Ancillary Income or
similar payments retained by Pledgor with respect to the Mortgage Loans; (iv)
all agreements or documents creating, defining or evidencing any of the
servicing rights related to the Mortgage Loans; (v) Escrow Payments or other
similar payments with respect to the Mortgage Loans and any amounts actually
collected by Pledgor with respect thereto; (vi) all accounts and other rights
to payments related to any of the property described in this paragraph; and
(vii) possession and use of any and all Servicing Files pertaining to the
Mortgage Loans or pertaining to the past, present or prospective servicing of
the Mortgage Loans (items (a) through (g) are collectively referred to herein
as the "Servicing Rights").
2. Pledgor covenants and agrees that:
(a) No sale, transfer, assignment, hypothecation or
pledge of the Servicing Rights shall be made by Pledgor
except in full compliance with all applicable laws,
rules, regulations and orders, and then only after
Pledgor has first received the prior written consent of
Pledgee to such sale; and
(b) The Pledgee's counsel will, deliver, file, record
and prepare for execution by the Pledgor such UCC-1
financing statements, further agreements, instruments and
documents as Pledgee may require to impose, perfect and
protect the security interest created and granted by this
Collateral Pledge and Security Agreement.
3. Each of the following shall constitute an event of
default hereunder:
(i) failure by Pledgor to remit to Pledgee the
Additional Remittance in accordance with Section 7.07 of
the Servicing Agreement, which failure continues for a
period of five (5) Business Days after the date upon
which written notice of such failure, requiring the same
to be remedied, shall have been given to Pledgor by
Pledgee;
(ii) failure by Pledgor to provide Pledgee with a monthly
report in connection with the Additional Remittance in
accordance with Section 7.07 of the Servicing Agreement,
which failure continues unremedied for a period of thirty
(30) days after the date on which written notice of such
failure, requiring the same to be remedied, shall have
been given to Pledgor by Pledgee; and
(iii) failure by Pledgor to cooperate with Pledgee in the
transfer of servicing responsibilities and duties to
Pledgee or any designee of Pledgee in accordance with
Section 7.08 of the Servicing Agreement, which failure
continues unremedied for a period of thirty (30) days
after the date on which written notice of such failure,
requiring the same to be remedied, shall have been given
to Pledgor by Pledgee.
4. Upon the occurrence of an event of default as
hereinabove set forth, (i) Pledgee may, at its option, notify Pledgor that
the assignment herein has become effective and, upon the sending of such
notice, the Servicing Rights shall be deemed absolutely assigned to Pledgee
without the need for any further documentation; (ii) Pledgee shall have all
rights and remedies of a secured party under the Uniform Commercial Code;
(iii) Pledgee shall have the right to sell and transfer the Servicing Rights
by any means and upon any terms Pledgee deems necessary or desirable; (iv)
Pledgee shall be entitled to such injunctive relief as may be granted by any
court having equitable jurisdiction over the Servicing Rights; and (v)
Pledgor hereby appoints Pledgee its attorney-in-fact to endorse any other
document or instrument necessary to permit Pledgee to realize upon the
Servicing Rights.
5. Each remedy granted in Paragraph 4 above shall not be
deemed exclusive of any other such remedy.
6. This Collateral Pledge and Security Agreement shall
terminate upon the termination of the obligation of Pledgee to remit the
Additional Remittance in accordance with Section 7.07 of the Servicing
Agreement.
7. This Collateral Pledge and Security Agreement contains
the full understanding of the parties in respect of the subject matter
hereof, and may not be amended, altered, discharged or terminated, except by
another agreement in writing, signed by the party sought to be charged
therewith.
8. This Collateral Pledge and Security Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and permitted assigns.
9. Capitalized terms used herein but not otherwise defined
shall have the meanings set forth in the Servicing Agreement.
10. This Collateral Pledge and Security Agreement shall be
construed in accordance with the laws of the State of New York.
IN WITNESS WHEREOF, the parties have caused this Collateral Pledge and
Security Agreement to be executed by their duly authorized officers as of the
date first above written.
LEHMAN CAPITAL, A DIVISION OF LEHMAN
BROTHERS HOLDINGS INC.
Pledgee
By:___________________________
Name:_________________________
Title:________________________
AURORA LOAN SERVICES INC.
Pledgor
By:___________________________
Name:_________________________
Title:________________________
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
LEHMAN CAPITAL,
A DIVISION OF LEHMAN BROTHERS HOLDINGS INC.
SELLER
and
STRUCTURED ASSET SECURITIES CORPORATION
PURCHASER
MORTGAGE LOAN SALE AGREEMENT
Dated as of January 1, 1998
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
MORTGAGE LOAN SALE AGREEMENT
TABLE OF CONTENTS
Page
----
ARTICLE I
CONVEYANCE OF MORTGAGE LOANS
Section 1.01. Sale of Mortgage Loans . . . . . . . . . . . . . . . . . . .
Section 1.02. Delivery of Documents . . . . . . . . . . . . . . . . . . .
Section 1.03. Review of Documentation . . . . . . . . . . . . . . . . . .
Section 1.04. Representations and Warranties of
Lehman Capital . . . . . . . . . . . . . . . . . . . . . . .
Section 1.05. Grant Clause . . . . . . . . . . . . . . . . . . . . . . . .
Section 1.06. Assignment by Depositor . . . . . . . . . . . . . . . . . .
ARTICLE II
MISCELLANEOUS PROVISIONS
Section 2.01. Binding Nature of Agreement; Assignment . . . . . . . . . .
Section 2.02. Entire Agreement . . . . . . . . . . . . . . . . . . . . . .
Section 2.03. Amendment . . . . . . . . . . . . . . . . . . . . . . . . .
Section 2.04. Governing Law . . . . . . . . . . . . . . . . . . . . . . .
Section 2.05. Severability of Provisions . . . . . . . . . . . . . . . . .
Section 2.06. Indulgences; No Waivers . . . . . . . . . . . . . . . . . .
Section 2.07. Headings Not To Affect Interpretation . . . . . . . . . . .
Section 2.08. Benefits of Agreement . . . . . . . . . . . . . . . . . . .
Section 2.09. Counterparts . . . . . . . . . . . . . . . . . . . . . . . .
SCHEDULES
SCHEDULE A Mortgage Loan Schedule
EXHIBIT A Servicing Agreements
This MORTGAGE LOAN SALE AGREEMENT is executed by and between Lehman
Brothers Holdings Inc., doing business as Lehman Capital, A Division of
Lehman Brothers Holdings Inc. ("Lehman Capital"), and Structured Asset
Securities Corporation (the "Depositor"), dated of the 1st day of January,
1998.
All capitalized terms not defined herein shall have the same meanings
assigned to such terms in that certain Trust Agreement (the "Trust
Agreement"), dated as of January 1, 1998, among the Depositor, Norwest Bank
Minnesota, National Association, as master servicer, and First Union National
Bank, as trustee (the "Trustee").
W I T N E S S E T H:
WHEREAS, Lehman Capital desires to sell, without recourse, all of its
right, title and interest (except as specified herein) in and to certain
mortgage loans identified on the Mortgage Loan Schedule attached hereto as
Exhibit A (the "Mortgage Loans") to the Depositor; and
WHEREAS, Lehman Capital and the Depositor acknowledge and agree that the
Depositor will assign all of its rights and delegate all of its obligations
hereunder to the Trustee, and that each reference herein to the Depositor is
intended, unless otherwise specified, to mean the Depositor or the Trustee,
as assignee, whichever is the holder of the Mortgage Loans from time to time.
NOW, THEREFORE, in consideration of the mutual agreements herein set
forth, and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, Lehman Capital and the Depositor
agree as follows:
ARTICLE I
CONVEYANCE OF MORTGAGE LOANS
Section 1.01. Sale of Mortgage Loans. Concurrently with the execution
----------------------
and delivery of this Agreement, Lehman Capital does hereby transfer, assign,
set over, deposit with and otherwise convey to the Depositor, without
recourse, all the right, title and interest of Lehman Capital in and to the
Mortgage Loans identified on Schedule A hereto, having an aggregate principal
balance as of the Cut-off Date of $355,136,702. Such conveyance includes,
without limitation, the right to all distributions of principal and interest
received on or with respect to the Mortgage Loans on and after January 1, 1998
(other than payments of principal and interest due on or before such date),
the proceeds of any REO Property, all rights under any Insurance Policies
related to the Mortgage Loans and any rights of Lehman Capital under any of
the agreements pursuant to which it purchased such Mortgage Loans to the
extent of such Mortgage Loans, Lehman Capital's security interest in any
collateral pledged to secure the Mortgage Loans, including the Mortgaged
Properties, and all rights of Lehman Capital to enforce the obligations of
each Servicer under the related Servicing Agreement and to exercise such
remedies as are provided therein, but does not include the servicing rights
with respect to the Mortgage Loans. To the extent that Lehman Capital owns
such servicing rights, Lehman Capital retains ownership of such servicing
rights and may transfer such rights to one or more successor servicers at any
time, subject to the conditions set forth in the Trust Agreement. Concurrently
with the execution hereof, the Depositor tenders the purchase price of the
Mortgage Loans of $355,136,702 (including accrued interest).
Section 1.02. Delivery of Documents. (a) In connection with such
---------------------
transfer and assignment of the Mortgage Loans hereunder, Lehman Capital does
hereby deliver to the Depositor the following documents or instruments with
respect to each Mortgage Loan (each a "Mortgage File") so transferred and
assigned:
(i) with respect to each Mortgage Loan, the original Mortgage Note
endorsed without recourse in proper form to the order of the Depositor
or its designee, or in blank (in each case, with all necessary
intervening endorsements as applicable);
(ii) the original of any guarantee executed in connection with the
Mortgage Note, assigned to the Depositor or its designee;
(iii) with respect to any Mortgage Loan other than a Cooperative
Loan, the original recorded Mortgage with evidence of recording
indicated thereon. If, in connection with any Mortgage Loan, Lehman
Capital cannot deliver the Mortgage with evidence of recording thereon
on or prior to the Closing Date because of a delay caused by the public
recording office where such Mortgage has been delivered for recordation
or because such Mortgage has been lost, Lehman Capital shall deliver or
cause to be delivered to the Depositor (or its custodian), in the case
of a delay due to recording, a true copy of such Mortgage, pending
delivery of the original thereof, together with an Officer's Certificate
of Lehman Capital certifying that the copy of such Mortgage delivered to
the Depositor (or its custodian) is a true copy and that the original of
such Mortgage has been forwarded to the public recording office, or, in
the case of a Mortgage that has been lost, a copy thereof (certified as
provided for under the laws of the appropriate jurisdiction) and a
written Opinion of Counsel acceptable to the Depositor or its designee
that an original recorded Mortgage is not required to enforce the
Depositor's interest in the Mortgage Loan;
(iv) the original of each assumption, modification or substitution
agreement, if any, relating to the Mortgage Loans, or, as to any
assumption, modification or substitution agreement which cannot be
delivered on or prior to the Closing Date because of a delay caused by
the public recording office where such assumption, modification or
substitution agreement has been delivered for recordation, a photocopy
of such assumption, modification or substitution agreement, pending
delivery of the original thereof, together with an Officer's Certificate
of Lehman Capital certifying that the copy of such assumption,
modification or substitution agreement delivered to the Depositor (or
its custodian) is a true copy and that the original of such agreement
has been forwarded to the public recording office;
(v) with respect to any Mortgage Loan other than a Cooperative Loan,
the original Assignment of Mortgage for each Mortgage Loan;
(vi) if applicable, such original intervening assignments of the
Mortgage, notice of transfer or equivalent instrument (each, an
"Intervening Assignment"), as may be necessary to show a complete chain
of assignment from the originator, or, in the case of an Intervening
Assignment that has been lost, a written Opinion of Counsel acceptable
to the Depositor that such original Intervening Assignment is not
required to enforce the Depositor's interest in the Mortgage Loans;
(vii) the original Primary Mortgage Insurance Policy or certificate,
if private mortgage guaranty insurance is required;
(viii) with respect to any Mortgage Loan other than a Cooperative
Loan, the original mortgagee title insurance policy or attorney's
opinion of title and abstract of title;
(ix) the original of any security agreement, chattel mortgage or
equivalent executed in connection with the Mortgage or as to any
security agreement, chattel mortgage or their equivalent that cannot be
delivered on or prior to the Closing Date because of a delay caused by
the public recording office where such document has been delivered for
recordation, a photocopy of such document, pending delivery of the
original thereof, together with an Officer's Certificate of Lehman
Capital certifying that the copy of such security agreement, chattel
mortgage or their equivalent delivered to the Depositor (or its
custodian) is a true copy and that the original of such document has
been forwarded to the public recording office;
(x) with respect to any Cooperative Loan, the Cooperative Loan
Documents; and
(xi) in connection with any pledge of Additional Collateral, the
original additional collateral pledge and security agreement executed in
connection therewith, assigned to the Depositor.
(b) Assignments of Mortgage shall be recorded; provided, however, that
such Assignments need not be recorded if, in the Opinion of Counsel (which
must be Independent counsel), obtained at the expense of Lehman Capital,
acceptable to the Depositor or its designee, recording in such states is not
required to protect the Depositor's interest in the related Mortgage Loans.
(c) In instances where a Title Insurance Policy is required to be
delivered to the Depositor (or its custodian) under clause (b)(viii) above
and is not so delivered, Lehman Capital will provide a copy of such Title
Insurance Policy to the Depositor as promptly as practicable after the
execution and delivery hereof, but in any case within 180 days of the Closing
Date.
(d) For Mortgage Loans (if any) that have been prepaid in full after the
Cut-off Date and prior to the Closing Date, Lehman Capital, in lieu of
delivering the above documents, herewith delivers to the Depositor an
Officer's Certificate which shall include a statement to the effect that all
amounts received in connection with such prepayment that are required to be
deposited in the account maintained by the Master Servicer for such purpose
have been so deposited. All original documents that are not delivered to the
Depositor (or its custodian) shall be held by the Master Servicer in trust
for the benefit of the Depositor.
Section 1.03. Review of Documentation. The Depositor, by execution and
-----------------------
delivery hereof, acknowledges receipt of the Mortgage Files pertaining to the
Mortgage Loans listed on the Mortgage Loan Schedule, subject to review thereof
by the Depositor or its custodian. Lehman Capital shall be required to
cooperate with the Depositor in curing any Material Defect identified by the
Trustee pursuant to the Trust Agreement. If such Material Defect is not cured,
Lehman Capital shall, if a loss has been incurred with respect to such
Mortgage Loan that would, if such Mortgage Loan were not purchased from the
Trust Fund, constitute a Realized Loss, and such loss is attributable to the
failure of the Depositor or Lehman Capital to cure such Material Defect,
repurchase the related Mortgage Loan from the Depositor at the applicable
Purchase Price. A loss shall be deemed to be attributable to the failure of
the Depositor or Lehman Capital to cure a Material Defect if, as determined
by the Depositor, absent such Material Defect, such loss would not have been
incurred. Within the two year period following the Closing Date, Lehman
Capital may, in lieu of repurchasing a Mortgage Loan pursuant to this Section
3, substitute for such Mortgage Loan a Qualifying Substitute Mortgage Loan
subject to the provisions of Section 2.05 of the Trust Agreement.
Section 1.04. Representations and Warranties of Lehman Capital. Lehman
------------------------------------------------
Capital hereby represents and warrants to the Depositor that as of the date
hereof:
(a) Lehman Capital is a corporation duly organized, validly existing
and in good standing under the laws governing its creation and existence
and has full corporate power and authority to own its property, to carry
on its business as presently conducted, and to enter into and perform
its obligations under this Agreement;
(b) the execution and delivery by Lehman Capital of this Agreement
have been duly authorized by all necessary corporate action on the part
of Lehman Capital; neither the execution and delivery of this Agreement,
nor the consummation of the transactions herein contemplated, nor
compliance with the provisions hereof, will conflict with or result in a
breach of, or constitute a default under, any of the provisions of any
law, governmental rule, regulation, judgment, decree or order binding on
Lehman Capital or its properties or the certificate of incorporation or
bylaws of Lehman Capital;
(c) the execution, delivery and performance by Lehman Capital of
this Agreement and the consummation of the transactions contemplated
hereby do not require the consent or approval of, the giving of notice
to, the registration with, or the taking of any other action in respect
of, any state, federal or other governmental authority or agency, except
such as has been obtained, given, effected or taken prior to the date
hereof;
(d) this Agreement has been duly executed and delivered by Lehman
Capital and, assuming due authorization, execution and delivery by the
Depositor, constitutes a valid and binding obligation of Lehman Capital
enforceable against it in accordance with its terms except as such
enforceability may be subject to (A) applicable bankruptcy and
insolvency laws and other similar laws affecting the enforcement of the
rights of creditors generally and (B) general principles of equity
regardless of whether such enforcement is considered in a proceeding in
equity or at law;
(e) there are no actions, suits or proceedings pending or, to the
knowledge of Lehman Capital, threatened or likely to be asserted against
or affecting Lehman Capital, before or by any court, administrative
agency, arbitrator or governmental body (A) with respect to any of the
transactions contemplated by this Agreement or (B) with respect to any
other matter which in the commercially reasonable judgment of Lehman
Capital will be determined adversely to Lehman Capital and will if
determined adversely to Lehman Capital materially and adversely affect
it or its business, assets, operations or condition, financial or
otherwise, or adversely affect its ability to perform its obligations
under this Agreement;
(f) upon delivery of the Mortgage Loans to the Depositor hereunder,
as to each, that:
(i) The information set forth with respect to the Mortgage Loans
on the Mortgage Loan Schedule provides an accurate listing of the
Mortgage Loans, and the information with respect to each Mortgage
Loan on the Mortgage Loan Schedule is true and correct in all
material respects at the date or dates respecting which such
information is given;
(ii) As of the Closing Date, no Mortgage Loan was more than two
Scheduled Payments delinquent as of January 1, 1998;
(iii) All taxes, governmental assessments, insurance premiums,
water, sewer and municipal charges, leasehold payments or ground
rents which previously became due and owing have been paid or an
escrow of funds has been established in an amount sufficient to pay
for every such item that remains unpaid and that has been assessed
but is not yet due and payable;
(iv) Each Mortgage evidences a valid, subsisting and enforceable
first lien on the related Mortgaged Property. The lien of the
Mortgage is subject only to: (1) liens of current real property
taxes and assessments not yet due and payable and, if the related
Mortgaged Property is a condominium unit, any lien for common
charges permitted by statute, (2) covenants, conditions and
restrictions, rights of way, easements and other matters of public
record as of the date of recording of such Mortgage acceptable to
mortgage lending institutions in the area in which the related
Mortgaged Property is located and specifically referred to in the
lender's Title Insurance Policy or attorney's opinion of title and
abstract of title delivered to the originator of such Mortgage Loan,
and (3) such other matters to which like properties are commonly
subject which do not, individually or in the aggregate, materially
interfere with the benefits of the security intended to be provided
by the Mortgage. Any security agreement, chattel mortgage or
equivalent document related to, and delivered to the Depositor in
connection with, a Mortgage Loan establishes a valid, subsisting and
enforceable first lien on the property described therein and Lehman
Capital has full right to sell and assign the same to the Depositor;
(v) Immediately prior to the transfer and assignment of the
Mortgage Loans to the Depositor, Lehman Capital was the sole owner
of record and holder of each Mortgage Loan, and Lehman Capital had
good and marketable title thereto, and has full right to transfer
and sell each Mortgage Loan to the Depositor free and clear, except
as described in paragraph (iv) above, of any encumbrance, equity
participation interest, lien, pledge, charge, claim or security
interest, and had full right and authority, subject to no interest
or participation of, or agreement with, any other party, to sell and
assign each Mortgage Loan pursuant to this Agreement;
(vi) Each manufactured home securing a Mortgage Loan satisfies,
at a minimum, the definition of "manufactured home" in Section
603(6) of the National Manufactured Housing Construction and Safety
Standards Act of 1974, as amended, has a minimum of 400 square feet
of living space, has a minimum width in excess of 102 inches and is
of a kind customarily used at a fixed location;
(vii) Each Mortgage Loan was originated by a savings and loan
association, savings bank, commercial bank, credit union, insurance
company, or similar institution which is supervised and examined by
a Federal or State authority, or by a mortgagee approved by the
Secretary of Housing and Urban Development pursuant to sections 203
and 211 of the National Housing Act;
(viii) Each Mortgage Loan is a "qualified mortgage" within the
meaning of Section 860G of the Code and Treas. Reg. Section1.860G-2;
(ix) Each Mortgage Loan had a Loan-to-Value Ratio at origination
(or, if the Mortgage Loan has been the subject of a "significant
modification" since origination, other than as a result of a default
or reasonably foreseeable default, as of the date of modification)
or as of the Cut-off Date less than or equal to 125%;
(x) No Mortgage Loan is subject to any right of rescission, set-
off, counterclaim or defense, including the defense of usury, nor
will the operation of any of the terms of any Mortgage Note or
Mortgage, or the exercise of any right thereunder, render either the
Mortgage Note or the Mortgage unenforceable in whole or in part, or
subject to any right of rescission, set-off, counterclaim or
defense, including the defense of usury, and no such right of
rescission, set-off, counterclaim or defense has been asserted with
respect thereto;
(xi) Each Mortgage Loan at the time it was made complied in all
material respects with applicable state and federal laws and
regulations, including, without limitation, usury, equal credit
opportunity, consumer credit, truth-in-lending and disclosure laws;
(xii) Other than with respect to those Mortgage Loans which have
missing mortgage loan documentation, which Mortgage Loans comprise
no more than 4.40% of the Mortgage Loans (by Aggregate Scheduled
Principal Balance), with respect to each Mortgage Loan, a lender's
title insurance policy, issued in standard American Land Title
Association or California Land Title Association form, or other form
acceptable in a particular jurisdiction, by a title insurance
company authorized to transact business in the state in which the
related Mortgaged Property is situated, together with a condominium
endorsement, if applicable, in an amount at least equal to the
original principal balance of such Mortgage Loan insuring the
mortgagee's interest under the related Mortgage Loan as the holder
of a valid first mortgage lien of record on the real property
described in the Mortgage was valid and in full force and effect on
the date of the origination of such Mortgage Loan and as of the
Closing Date;
(xiii) Each Mortgage and Mortgage Note is the legal, valid and
binding obligation of the related Mortgagor and is enforceable in
accordance with its terms, except only as such enforcement may be
limited by bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting the enforcement of creditors' rights
generally and by general principles of equity (whether considered in
a proceeding or action in equity or at law), and all parties to each
Mortgage Loan and the Mortgagee had full legal capacity to execute
all Mortgage Loan documents and to convey the estate therein
purported to be conveyed;
(xiv) The terms of the Mortgage Loan and the Mortgage have not
been impaired, altered or modified in any material respect, except
by a written instrument which has been recorded or is in the process
of being recorded, if necessary, to protect the interests of the
Certificateholders and the Certificate Insurer and which has been or
will be delivered to the Trustee. The substance of any such
alteration or modification is reflected on the related Mortgage Loan
Schedule and was approved, if required, by the related primary
mortgage guaranty insurer, if any. Other than with respect to those
Mortgage Loans which have missing mortgage loan documentation, which
Mortgage Loans comprise no more than 3.20% of the Mortgage Loans (by
Aggregate Scheduled Principal Balance), with respect to each
Mortgage Loan, each original Mortgage was recorded, and all
subsequent assignments of the original Mortgage have been recorded
in the appropriate jurisdictions wherein such recordation is
necessary to perfect the lien thereof as against creditors of Lehman
Capital, or are in the process of being recorded;
(xv) No instrument of release or waiver has been executed in
connection with the Mortgage Loan, and no Mortgagor has been
released, in whole or in part;
(xvi) There is no proceeding pending or, to the best of Lehman
Capital's knowledge, threatened for the total or partial
condemnation of any Mortgaged Property, nor is such a proceeding
currently occurring, and such property is undamaged by waste, fire,
earthquake or earth movement, windstorm, flood, tornado or other
casualty, so as to affect adversely the value of the Mortgaged
Property as security for the Mortgage Loan or the use for which the
premises were intended;
(xvii) To the best of Lehman Capital's knowledge, all of the
improvements which were included for the purpose of determining the
appraised value of the Mortgaged Property lie wholly within the
boundaries and building restriction lines of such property, and no
improvements on adjoining properties encroach upon the Mortgaged
Property;
(xviii) To the best of Lehman Capital's knowledge, no
improvement located on or being part of the Mortgaged Property is in
violation of any applicable zoning law or regulation. To the best
of Lehman Capital's knowledge, all inspections, licenses and
certificates required to be made or issued with respect to all
occupied portions of the Mortgaged Property and, with respect to the
use and occupancy of the same, including but not limited to
certificates of occupance and fire underwriting certificates, have
been made or obtained from the appropriate authorities and the
Mortgaged Property is lawfully occupied under applicable law;
(xix) The proceeds of each Mortgage Loan have been fully
disbursed, and there is no obligation on the part of the mortgagee
to make future advances thereunder. Any and all requirements as to
completion of any on-site or off-site improvements and as to
disbursement of any escrow funds therefor have been complied with.
All costs, fees and expenses incurred in making or closing or
recording the Mortgage Loans were paid;
(xx) Each Mortgage Note is not and has not been secured by any
collateral, pledged account or other security except the lien of the
corresponding Mortgage;
(xxi) No Mortgage Loan was originated under a buydown plan;
(xxii) Each Mortgage contains a customary provision for the
acceleration of the payment of the unpaid principal balance of the
Mortgage Loan in the event the related security for the Mortgage
Loan is sold without the prior consent of the mortgagee thereunder;
(xxiii) Any future advances made prior to the Cut-Off Date have
been consolidated with the outstanding principal amount secured by
the Mortgage, and the secured principal amount, as consolidated,
bears a single interest rate and single repayment term reflected on
the related Mortgage Loan Schedule. The consolidated principal
amount does not exceed the original principal amount of the Mortgage
Loan. The Mortgage Note does not permit or obligate Lehman Capital
to make future advances to the Mortgagor at the option of the
Mortgagor;
(xxiv) Each Mortgage contains customary and enforceable
provisions which render the rights and remedies of the holder
thereof adequate for the realization against the Mortgaged Property
of the benefits of the security, including, (a) in the case of a
Mortgage designated as a deed of trust, by trustee's sale, and (b)
otherwise by judicial or non-judicial foreclosure. There is no
homestead or other exemption available to the Mortgagor which would
materially interfere with the right to sell the Mortgaged Property
at a trustee's sale or the right to foreclose the Mortgage except as
set forth in the Prospectus;
(xxv) There is no default, breach, violation or event of
acceleration existing under any Mortgage or the related Mortgage
Note and no event which, with the passage of time or with notice and
the expiration of any grace or cure period, would constitute a
default, breach, violation or event of acceleration; and Lehman
Capital has not waived any default, breach, violation or event of
acceleration;
(xxvi) All parties to the Mortgage Note and the Mortgage had
legal capacity to execute the Mortgage Note and the Mortgage and
each Mortgage Note and Mortgage have been duly and properly executed
by such parties;
(xxvii) All amounts received after the Cut-Off Date with respect
to the Mortgage Loans to which Lehman Capital is not entitled have
been deposited into the Collection Account and are, as of the
Closing Date in the Collection Account;
(xxviii) The Mortgage Loans were not selected by Lehman Capital
for inclusion in the Trust Fund on any basis intended to adversely
affect the Trust Fund or the Certificate Insurer; and
(xxix) Each hazard insurance policy required to be maintained
under Section 9.16 of the Trust Agreement with respect to the
Mortgage Loan is a valid, binding, enforceable and subsisting
insurance policy of its respective kind and is in full force and
effect.
It is understood and agreed that the representations and warranties set
forth herein survive delivery of the Mortgage Files and the Assignment of
Mortgage of each Mortgage Loan to the Depositor, and survive the subsequent
assignment of this Agreement to the Trustee pursuant to Section 1.06 hereof.
Upon discovery by either Lehman Capital or the Depositor of a breach of any
of the foregoing representations and warranties that adversely and materially
affects the value of the related Mortgage Loan, the party discovering such
breach shall give prompt written notice to the other party. Within 90 days
of the discovery of breach with respect to the representations and warranties
given to the Depositor, Lehman Capital shall either (a) cure such breach in
all material respects, (b) repurchase such Mortgage Loan or any property
acquired in respect thereof from the Depositor at the applicable Purchase
Price or (c) within the two year period following the Closing Date,
substitute a Qualifying Substitute Mortgage Loan for the affected Mortgage
Loan.
Section 1.05. Grant Clause. It is intended that the conveyance of
------------
Lehman Capital's right, title and interest in and to Mortgage Loans and other
property conveyed pursuant to this Agreement shall constitute, and shall be
construed as, a sale of such property and not a grant of a security interest
to secure a loan. However, if such conveyance is deemed to be in respect of a
loan, it is intended that: (1) the rights and obligations of the parties shall
be established pursuant to the terms of this Agreement; (2) Lehman Capital
hereby grants to the Depositor a first priority security interest in all of
Lehman Capital's right, title and interest in, to and under, whether now
owned or hereafter acquired, such Mortgage Loans and other property; and (3)
this Agreement shall constitute a security agreement under applicable law.
Section 1.06 Assignment by Depositor. The Depositor shall have the
-----------------------
right, upon notice to but without the consent of Lehman Capital, to assign, in
whole or in part, its interest under this Agreement, with respect to the
Mortgage Loans to the Trustee, and the Trustee then shall succeed to all rights
of the Depositor under this Agreement. All references to the Depositor in this
Agreement shall be deemed to include its assignee or designee, specifically
including the Trustee.
ARTICLE II
MISCELLANEOUS PROVISIONS
Section 2.01. Binding Nature of Agreement; Assignment. This Agreement
---------------------------------------
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns.
Section 2.02. Entire Agreement. This Agreement contains the entire
----------------
agreement and understanding among the parties hereto with respect to the
subject matter hereof, and supersedes all prior and contemporaneous
agreements, understandings, inducements and conditions, express or implied,
oral or written, of any nature whatsoever with respect to the subject matter
hereof. The express terms hereof control and supersede any course of
performance and/or usage of the trade inconsistent with any of the terms
hereof.
Section 2.03. Amendment. (a) This Agreement may be amended from time
---------
to time by Lehman Capital and the Depositor, without notice to or the consent
of any of the Holders, (i) to cure any ambiguity, (ii) to cause the provisions
herein to conform to or be consistent with or in furtherance of the statements
made with respect to the Certificates, the Trust Fund, the Trust Agreement or
this Agreement in any Offering Document; or to correct or supplement any
provision herein which may be inconsistent with any other provisions herein,
(iii) to make any other provisions with respect to matters or questions arising
under this Agreement or (iv) to add, delete, or amend any provisions to the
extent necessary or desirable to comply with any requirements imposed by the
Code and the REMIC Provisions. No such amendment effected pursuant to clause
(iii) of the preceding sentence shall adversely affect in any material
respect the interests of any Holder. Any such amendment shall be deemed not
to adversely affect in any material respect any Holder or the Certificate
Insurer, if the Trustee receives written confirmation from each Rating Agency
that such amendment will not cause such Rating Agency to reduce the then
current rating assigned to the Certificates (without taking into account the
Certificate Insurance Policy) (and any Opinion of Counsel requested by the
Trustee in connection with any such amendment may rely expressly on such
confirmation as the basis therefor).
(b) This Agreement may also be amended from time to time by Lehman
Capital and the Depositor with the consent of the Certificate Insurer and the
Holders of not less than 66-2/3% of the Class Certificate Principal Amount
(or Aggregate Notional Amount) of each Class of Certificates affected thereby
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; provided, however, that no such amendment
may (i) reduce in any manner the amount of, or delay the timing of, payments
received on Mortgage Loans which are required to be distributed on any
Certificate without, the consent of the Holder of such Certificate or (ii)
reduce the aforesaid percentages of Class Certificate Principal Amount (or
Aggregate Notional Amount) of Certificates of each Class, the Holders of
which are required to consent to any such amendment without the consent of
the Holders of 100% of the Class Certificate Principal Amount (or Aggregate
Notional Amount) of each Class of Certificates affected thereby.
(c) It shall not be necessary for the consent of Holders under this
Section 2.03 to approve the particular form of any proposed amendment, 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 Holders shall be subject to such reasonable regulations
as the Trustee may prescribe.
Section 2.04. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
-------------
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AND THE OBLIGATIONS, RIGHTS
AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH
SUCH LAWS WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES APPLIED IN NEW YORK.
Section 2.05. 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.
Section 2.06. Indulgences; No Waivers. Neither the failure nor any
-----------------------
delay on the part of a party to exercise any right, remedy, power or privilege
under this Agreement shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, remedy, power or privilege preclude any other or
further exercise of the same or of any other right, remedy, power or
privilege, nor shall any waiver of any right, remedy, power or privilege with
respect to any occurrence be construed as a waiver of such right, remedy,
power or privilege with respect to any other occurrence. No waiver shall be
effective unless it is in writing and is signed by the party asserted to have
granted such waiver.
Section 2.07. Headings Not to Affect Interpretation. The headings
-------------------------------------
contained in this Agreement are for convenience of reference only, and they
shall not be used in the interpretation hereof.
Section 2.08. Benefits of Agreement. Nothing in this Agreement,
---------------------
express or implied, shall give to any Person, other than the parties to this
Agreement and their successors hereunder, any benefit or any legal or equitable
right, power, remedy or claim under this Agreement.
Section 2.09. Counterparts. This Agreement may be executed in one or
------------
more counterparts, each of which shall be deemed to be an original, and all of
which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, Lehman Capital and the Depositor have caused their
names to be signed hereto by their respective duly authorized officers as of
the date first above written.
LEHMAN CAPITAL, A DIVISION OF LEHMAN
BROTHERS HOLDINGS INC.
By: /s/ Martin P. Harding
------------------------------
Name: Martin P. Harding
Title: Managing Director
STRUCTURED ASSET SECURITIES CORPORATION
By: /s/ Joseph Kelly
------------------------------
Name: Joseph Kelly
Title: Vice President
SCHEDULE A
----------
MORTGAGE LOAN SCHEDULE
EXHIBIT A
---------
SERVICING AGREEMENTS
