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ASSIGNMENT, ASSUMPTION AND RECOGNITION AGREEMENT
This
is an Assignment, Assumption and Recognition Agreement (this
"AAR
Agreement") made as of January 1, 2007, among HSBC Bank USA,
National
Association (the "Assignor"), HSI Asset Securitization Corporation
(the
"Depositor"), Countrywide Home Loans Servicing LP (the "Servicer")
and
Countrywide Home Loans, Inc. (the "Company"), CitiMortgage, Inc.,
as master
servicer (in such capacity, the "Master Servicer") and Deutsche
Bank National
Trust Company, not individually but solely as trustee on behalf of
the HSI Asset
Loan Obligation Trust 2007-AR1 (the "Assignee").
In
consideration of the mutual promises contained herein the parties
hereto
agree that the residential mortgage loans (the "Assigned Loans")
listed on
Exhibit 1 annexed hereto (the "Assigned Loan Schedule") purchased
by Assignor
from Company pursuant to (a) the Master Mortgage Loan Purchase
Agreement, dated
as of September 1, 2006, between Assignor and Company (the
"Purchase Agreement")
and (b) that certain Servicing Agreement, dated as of September 1,
2006, between
the Assignor and the Company, as amended by that certain Amendment
Reg AB dated
as of September 1, 2006 (the "Servicing Agreement") ((a) and (b)
shall
collectively be referred to herein as the "Purchase and Servicing
Agreements"),
shall be subject to the terms of this AAR Agreement. Capitalized
terms used
herein but not defined shall have the meanings ascribed to them in
the Purchase
Agreement or Servicing Agreement, as applicable.
The
Servicer shall service the Assigned Loans in accordance with
the
Servicing Agreement as modified by this AAR Agreement.
Assignment and Assumption
1.
Assignor hereby grants, transfers and assigns to the Depositor all
of
the right, title, interest and obligations of Assignor in the
Assigned Loans
and, as they relate to the Assigned Loans, all of its right, title,
interest and
obligations in, to and under the Purchase and Servicing Agreements
and the
Depositor hereby assumes all rights and obligations with respect to
the Assigned
Loans under the Purchase and Servicing Agreements. Assignor
specifically
reserves and does not assign to the Depositor any right title and
interest in,
to or under any Mortgage Loans subject to the Purchase and
Servicing Agreements
other than those set forth on Exhibit l.
Recognition of the Assignee and Assumption by the Assignee
2.
From and after the date hereof, each of the Servicer and the
Company
shall and does hereby recognize that the Depositor will transfer
the Assigned
Loans and assign its rights and obligations under the Purchase and
Servicing
Agreements (solely to the extent set forth herein) and this AAR
Agreement to the
Assignee pursuant to a Pooling and Servicing Agreement, dated as of
January 1,
2007 (the "Pooling Agreement"), among the Depositor, Deutsche Bank
National
Trust Company, as trustee (the "Trustee") (including its successors
in interest
and any successor trustees under the Pooling Agreement), the Master
Servicer,
Citibank, N.A., as securities administrator (the "Securities
Administrator") and
Wells Fargo Bank, N.A., as custodian. The Assignee acknowledges
that all such
rights and obligations (insofar as such obligations relate to (1)
the covenants
of the Purchaser under the Purchase and Servicing
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Agreements with respect to the Assigned Loans and (2) the
obligations of the
Purchaser under Section 5.01 of the Servicing Agreement with
respect to the
Assigned Loans) are hereby assumed by the Assignee. The Servicer
hereby
acknowledges and agrees that from and after the date hereof (i) the
Assignee
will be the owner of the Assigned Loans, (ii) the Servicer shall
look solely to
the Assignee for performance of any obligations of the Assignor
insofar as they
relate to (1) the covenants of the Purchaser under the Purchase and
Servicing
Agreements with respect to the Assigned Loans and (2) the
obligations of the
Purchaser under Section 5.01 of the Servicing Agreement with
respect to the
Assigned Loans, (iii) the Assignee shall have all the rights and
remedies
available to the Assignor, insofar as they relate to the Assigned
Loans, under
the Purchase and Servicing Agreements, including, without
limitation, the
enforcement of the document delivery requirements and remedies with
respect to
breaches of representations and warranties set forth in the
Purchase Agreement
or Servicing Agreement, as applicable, and shall be entitled to
enforce all of
the obligations of the Company and the Servicer thereunder insofar
as they
relate to the Assigned Loans, and (iv) all references to the
Purchaser (insofar
as they relate to the rights, title and interest and, with respect
to
obligations of the Purchaser, only insofar as they relate to (1)
the covenants
of the Purchaser under the Purchase and Servicing Agreements with
respect to the
Assigned Loans and (2) the obligations of the Purchaser under
Section 5.01 of
the Servicing Agreement) under the Purchase and Servicing
Agreements insofar as
they relate to the Assigned Loans, shall be deemed to refer to the
Assignee.
None of the Servicer, the Company nor the Assignor shall amend or
agree to
amend, modify, waiver, or otherwise alter any of the terms or
provisions of the
Purchase and Servicing Agreements which amendment, modification,
waiver or other
alteration would in any way affect the Assigned Loans or the
Servicer's
performance under the Servicing Agreement with respect to the
Assigned Loans
without the prior written consent of the Assignee. The Servicer
hereby
acknowledges that CitiMortgage, Inc. has been appointed as the
Master Servicer
of the Assigned Loans pursuant to this AAR Agreement and therefore
has the right
to enforce all obligations of the Servicer, as they relate to the
Assigned
Loans, under the Servicing Agreement and this AAR Agreement.
Notwithstanding the
foregoing, it is understood that the Servicer shall not be
obligated to defend,
indemnify and hold harmless the Master Servicer, the Securities
Administrator,
the Assignee, the Assignor and the Depositor against any losses,
damages,
penalties, fines, forfeitures, judgments and any related costs
including,
without limitation, reasonable and necessary legal fees, solely and
directly
resulting from (i) actions or inactions of the Servicer which were
taken or
omitted upon the instruction or direction of the Master Servicer,
the Securities
Administrator, the Assignee, as applicable, or (ii) the failure of
the Master
Servicer, the Securities Administrator or the Trustee, as
applicable, to perform
the obligations of the Assignee with respect to this AAR Agreement,
or as the
"Owner" or "Purchaser" with respect to the servicing provisions of
the Servicing
Agreement.
Representations; Warranties and Covenants
3.
Assignor warrants and represents to the Depositor, the Servicer,
the
Company and the Assignee as of the date hereof:
a. Attached
hereto as Exhibit 2 is a true and accurate copy of the
Servicing Agreement, which agreement is in full force and
effect
as
of the date hereof and the provisions of which have not been
waived, amended or
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modified in any respect, nor has any notice of termination been
given thereunder;
b. Assignor is
the lawful owner of the Assigned Loans with full
right to transfer the Assigned Loans and any and all of its
interests, rights and obligations under the Purchase and
Servicing Agreement as they relate to the Assigned Loans, free
and clear of any and all liens, claims and encumbrances; and
upon
the transfer of the Assigned Loans to Assignee as contemplated
herein, Assignee shall have good title to each and every
Assigned
Loan, as well as any and all of Assignor's interests, rights
and
obligations under the Purchase and Servicing Agreements as they
relate to the Assigned Loans, free and clear of any and all
liens, claims and encumbrances;
c. Assignor has
not received notice of, and has no knowledge of, any
offsets, counterclaims or other defenses available to the
Servicer or the Company with respect to the Assigned Loans or
the
Purchase and Servicing Agreements;
d. Assignor is a
corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its
formation, and has all requisite power and authority to
acquire,
own and sell the Assigned Loans;
e. Assignor has
full power and authority to execute, deliver and
perform its obligations under this AAR Agreement, and to
consummate the transactions set forth herein. The consummation
of
the transactions contemplated by this AAR Agreement is in the
ordinary course of Assignor's business and will not conflict
with, or result in a breach of, any of the terms, conditions or
provisions of Assignor's charter or by-laws or any legal
restriction, or any material agreement or instrument to which
Assignor is now a party or by which it is bound, or result in
the
violation of any law, rule, regulation, order, judgment or
decree
to which Assignor or its property is subject. The execution,
delivery and performance by Assignor of this AAR Agreement and
the consummation by it of the transactions contemplated hereby,
have been duly authorized by all necessary action on the part
of
Assignor. This AAR Agreement has been duly executed and
delivered
by Assignor and, upon the due authorization, execution and
delivery by Assignee and the parties hereto, will constitute
the
valid and legally binding obligation of Assignor enforceable
against Assignor in accordance with its terms except as
enforceability may be limited by bankruptcy, reorganization,
insolvency, moratorium or other similar laws now or hereafter
in
effect relating to creditors' rights generally, and by general
principles of equity regardless of whether enforceability is
considered in a proceeding in equity or at law;
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f. No material
consent, approval, order or authorization of, or
declaration, filing or registration with, any governmental
entity
is required to be obtained or made by Assignor in connection
with
the execution, delivery or performance by Assignor of this AAR
Agreement, or the consummation by it of the transactions
contemplated hereby; and
g. There is no
action, suit, proceeding, investigation or litigation
pending or, to Assignor's knowledge, threatened, which either
in
any instance or in the aggregate, if determined adversely to
Assignor, would adversely affect Assignor's execution or
delivery
of, or the enforceability of, this AAR Agreement, or the
Assignor's ability to perform its obligations under this AAR
Agreement.
4.
Assignee warrants and represents to, and covenants with, Assignor,
the
Depositor, the Servicer and the Company as of the date hereof:
a. Decision to
Purchase. The Assignee is a sophisticated investor
able to evaluate the risks and merits of the transactions
contemplated hereby, and that it has not relied in connection
therewith upon any statements or representations of the
Assignor
or the Servicer other than those contained in the Servicing
Agreement or this AAR Agreement.
b. Authority.
The Assignee is duly and legally authorized to enter
into this AAR Agreement and to perform its obligations
hereunder
and under the Servicing Agreement.
c.
Enforceability. This AAR Agreement has been duly authorized,
executed and delivered by the Assignee and (assuming due
authorization, execution and delivery thereof by each of the
other parties hereto) constitutes its legal, valid and binding
obligation, enforceable in accordance with its terms, except as
such enforcement may be limited by bankruptcy, insolvency,
reorganization or other similar laws affecting the enforcement
of
creditors' rights generally and by general equitable principles
(regardless of whether such enforcement is considered in a
proceeding in equity or at law).
5.
Each of the Servicer and the Company, as applicable, warrants
and
represents to, and covenants with, the Assignor and the Assignee as
of the date
hereof:
a. The Purchase
and Servicing Agreement is in full force and effect
as of the date hereof and the provisions of which have not been
waived, amended or modified in any respect, nor has any notice
of
termination been given thereunder, except as contemplated
herein;
b. Each of the
Servicer and the Company is duly organized, validly
existing and in good standing under the laws of the
jurisdiction
of its formation or
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incorporation, as the case may be, and has all requisite power
and authority to perform its obligations under the Purchase and
Servicing Agreements;
c. Each of the
Servicer and the Company has full corporate or
limited partnership, as applicable, power and authority to
execute, deliver and perform its obligations under this AAR
Agreement, and to consummate the transactions set forth herein.
The consummation of the transactions contemplated by this AAR
Agreement is in the ordinary course of each of the Servicer's
and
the Company's business and will not conflict with, or result in
a
breach of, any of the terms, conditions or provisions of the
Servicer's or the Company's organizational documentation or any
legal restriction, or any material agreement or instrument to
which the Servicer or the Company is now a party or by which it
is bound, or result in the violation of any law, rule,
regulation, order, judgment or decree to which the Servicer or
the Company or its property is subject, except in such case
where
the conflict, breach or violation would not have a material
adverse effect on the Servicer or the Company or its ability to
perform its obligations under this AAR Agreement. The
execution,
delivery and performance by the Servicer and the Company of
this
AAR Agreement and the consummation by it of the transactions
contemplated hereby, have been duly authorized by all necessary
corporate or limited partnership, as applicable, action on the
part of the Servicer and the Company. This AAR Agreement has
been
duly executed and delivered by the Servicer and the Company,
and,
upon the due
authorization, execution and delivery by Assignor
and Assignee, will constitute the valid and legally binding
obligation of the Servicer and the Company, enforceable against
the Servicer and the Company in accordance with its terms
except
as enforceability may be limited by bankruptcy, reorganization,
insolvency, moratorium or other similar laws now or hereafter
in
effect relating to creditors' rights generally, and by general
principles of equity regardless of whether enforceability is
considered in a proceeding in equity or at law;
d. No consent,
approval, order or authorization of, or declaration,
filing or
registration with, any governmental entity is required
to be obtained or made by the Servicer or the Company in
connection with the execution, delivery or performance by the
Servicer or the Company of this AAR Agreement, or the
consummation by it of the transactions contemplated hereby;
e. There is no
action, suit, proceeding, investigation or litigation
pending or, to the Servicer's or the Company's knowledge,
threatened, which either in any instance or in the aggregate,
if
determined adversely to the Servicer or the Company, would
adversely affect the Servicer's or the Company's execution or
delivery of, or the enforceability of, this AAR Agreement, or
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the Servicer's or the Company's ability to perform its
obligations under this AAR Agreement;
f. The Company
hereby represents and warrants, for the benefit of
the Assignor and the Assignee, that the representations and
warranties set forth in Section 3.01 of the Purchase Agreement,
are true and correct in all material respects as of the date
hereof, and the representations and warranties set forth in
Section 3.02 of the Purchase Agreement are true and correct in
all material respects as of the related Closing Date; and
g. The Servicer
hereby represents and warrants, for the benefit of
the Assignor and the Assignee, that the representations and
warranties set forth in Section 2.01 of the Servicing
Agreement,
are true and correct in all material respects as of the date
hereof.
Amendment of the Servicing Agreement
6.
In connection with the transfer of the Mortgage Loans hereunder,
the
Servicer agrees that, from and after the date hereof, each Mortgage
Loan
transferred hereunder will be subject to, and serviced under, the
Servicing
Agreement, provided that, solely with respect to the Mortgage Loans
transferred
hereunder, the following modifications shall be made:
a. The
definition of "Business Day" in Section 1 is hereby amended
in its entirety to read as follows:
Business Day: Any day other than a Saturday or Sunday, or a
day on which banks and savings and loan institutions in
California, Maryland, Massachusetts, Minnesota, New York or
Texas are authorized
or obligated by law or executive order
to be closed.
b. A new
definition of "Permitted Investments" is hereby added to
Article 1 immediately following the definition of "Periodic
Rate
Cap" to read as follows:
Permitted Investments: Any one or more of the following
obligations or securities acquired at a purchase price of
not greater than par, regardless of whether issued or
managed by the Depositor, the Securities Administrator, the
Assignee or any of their respective affiliates or for which
an affiliate of the any of the foregoing serves as an
advisor:
(i) direct obligations of, or obligations fully
guaranteed as to timely payment of principal and interest
by, the United States or any agency or instrumentality
thereof, provided such obligations are backed by the full
faith and credit of the United States;
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(ii) (A) such depository institution or trust company
or its ultimate parent has a short-term uninsured debt
rating in
one of the two highest available rating categories
of the Rating Agency and (B) any other demand or time
deposit or deposit which is fully insured by the FDIC;
(iii) repurchase obligations with respect to any
security described in clause (i) above and entered into with
a depository institution or trust company (acting as
principal) rated A or higher by the Rating Agency;
(iv) securities bearing interest or sold at a discount
that are issued by any corporation incorporated under the
laws of the United States of America, the District of
Columbia or any State thereof and that are rated by the
Rating Agency in its highest long-term unsecured rating
categories at the time of such investment or contractual
commitment providing for such investment;
(v) commercial paper (including both
non-interest-bearing discount obligations and
interest-bearing obligations) that is rated by the Rating
Agency in its highest short-term unsecured debt rating
available at the time of such investment;
(vi) units of money market funds (which may be 12b-1
funds, as contemplated by the Commission under the
Investment Company Act of 1940) registered under the
Investment Company Act of 1940 including funds managed or
advised by the Assignee or an affiliate thereof having the
highest applicable rating from the Rating Agency; and
(vii) if previously confirmed in writing to the
Securities Administrator, any other demand, money market or
time deposit, or any other obligation, security or
investment, as may be acceptable to the Rating Agency in
writing as a permitted investment of funds backing
securities having ratings equivalent to its highest initial
ratings of the senior certificates;
(viii) provided, however, that no instrument described
hereunder shall evidence either the right to receive (a)
only interest with respect to the obligations underlying
such instrument or (b) both principal and interest payments
derived from obligations underlying such instrument and the
interest and principal payments with respect to such
instrument provide a yield to maturity at par greater than
120% of the yield to maturity at par of the underlying
obligations.
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c. A new
definition of "Rating Agency" is hereby added to Article 1
immediately following the definition of "Qualified Substitute
Mortgage Loan" to read as follows:
Rating Agency: Any nationally recognized statistical rating
agency rating the securities issued in the applicable
Pass-Through Transfer.
d. Section 3.04
of the Servicing Agreement (Establishment of
Custodial Accounts; Deposits in Custodial Accounts) is hereby
amended as follows:
(i) by adding the
words ", entitled 'in trust for the Trustee on
behalf of the HSI Asset Loan Obligation Trust 2007-AR1
Trust'" at the end of the first sentence of the first
paragraph;
(ii) by adding a new paragraph at the end of the section to
read
as follows:
"Funds in the Custodial Account shall, if invested, be
invested in Permitted Investments; provided, however, that
the
Servicer shall be under no obligation or duty to invest
(or otherwise pay interest on) amounts held in the Custodial
Account. All Permitted Investments shall mature or be
subject to redemption or withdrawal no later than one
Business Day prior to the next succeeding Remittance Date
(except that if such Permitted Investment is an obligation
of the Servicer, then such Permitted Investment shall mature
not later than such applicable Remittance Date). Any and all
investment earnings from any such Permitted Investment shall
be for the benefit of the Servicer and shall be subject to
its withdrawal or order from time to time, and shall not be
part of the Trust. The risk of loss of moneys required to be
remitted to the Securities Administrator resulting from such
investments shall be borne by and be the risk of the
Servicer. The Servicer shall deposit the amount of any such
loss in the Custodial Account immediately as realized, but
in no event later than the related Remittance Date."
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e. Section 3.06
of the Servicing Agreement (Establishment of Escrow
Accounts; Deposits in Escrow Accounts) is hereby amended as
follows:
(i) by adding the words ", entitled 'in trust for the Trustee
on
behalf of the HSI Asset Loan Obligation Trust 2007-AR1 Trust'"
after the phrase "demand accounts" in the fourth line of the
first paragraph;
f. Section 3.08
is hereby amended by replacing each reference to
"the Purchaser" with "the Master Servicer."
g. Sections 4.04
and 4.05 are hereby deleted in their entirety.
h. Section 5.04
(Countrywide Not to Resign) is hereby amended by
replacing each reference to "the Purchaser" with "the Master
Servicer."
i. Section 6.01
(Termination Due to an Event of Default) is hereby
amended by replacing each reference to "the Purchaser" with
"the
Master Servicer."
j. Section
6.01(a)(i) is hereby amended to replace the reference to
"two (2) Business Day" with "one (1) Business Day."
k. Section 7.13
(Successor to Countrywide) is hereby amended by
adding the following proviso at the end of the second sentence
of
the first paragraph immediately before the period to read as
follows:
; provided, however, that no such compensation shall be in
excess of that permitted the Servicer under this Agreement.
l. A new Section
7.14 (Amendment) is hereby added to the Servicing
Agreement to read as follows:
SECTION 7.14. Amendment. This Agreement may be amended but
only to the extent such amendment affects the Mortgage Loans
by written agreement signed by the Seller, the Assignee and
the Master Servicer (in furtherance of the Master Servicer's
rights, duties and obligations as Master Servicer for the
Trust). In respect of any such amendment, the Assignee and
the Master Servicer agree to be bound by the requirements
for entering into such amendment provided in Section 12.01
of the pooling and servicing agreement, including the
delivery of any opinion of counsel required therein.
m. Section 2(g)
of Amendment Reg AB is hereby amended by adding the
following subpart:
(vi) The Master Servicer shall be considered a third-party
beneficiary of 2(d), 2(e) and 2(g) of this Amendment Reg AB
(with regard to Section 2(g), solely with respect to
noncompliance
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under 2(d) and 2(e) of this Amendment Reg AB), entitled to
all the rights and benefits hereof as if it were a direct
party to this Agreement
7.
Pursuant to Section 4.02(a) of the Servicing Agreement, the
Servicer
shall furnish to the Master Servicer (i)(a) monthly loan data in a
mutually
agreed-upon format, (b) default loan data in a mutually agreed-upon
format and
(c) information regarding the realized losses and gains in a
mutually
agreed-upon format, (ii) all such information required pursuant to
clause (i)(a)
above on a magnetic tape, electronic mail, or other similar media
reasonably
acceptable to the Master Servicer and the Servicer, and (iii) all
supporting
documentation reasonably necessary and available with respect to
the information
required above. Notwithstanding the foregoing, the Servicer is not
required to
report data relating to prepayment charges or penalties to the
extent such
prepayment charges or penalties are retained by the Servicer.
8.
All remittances required to be made by the Servicer to the
Purchaser
under the Servicing Agreement shall be made to the Securities
Administrator by
wire transfer to the following account, or to such other account as
may be
specified by the Securities Administrator from time to time:
Citibank, N.A.
ABA #021-000-089
Acct Name: Structured Finance Incoming Wire
Acct. No: [__________]
Ref: HALO 2007-AR1 A/C# [__________]
9.
The Company hereby acknowledges and agrees that the remedies
available
to the Assignor and the Assignee in connection with any breach of
the
representations and warranties made by the Company set forth in
Section 5(f)
hereof shall be as set forth in Subsection 3.03 of the Purchase
Agreement as if
they were set forth herein (including without limitation the
repurchase and
indemnity obligations set forth therein).
10.
Notwithstanding any term hereof to the contrary, the execution
and
delivery of this AAR Agreement by the Trustee is solely in its
capacity as
trustee for the HSI Asset Loan Obligation Trust 2007-AR1 ("the
Trust") and not
individually, and any recourse against the Trustee in respect of
any obligations
it may have under or pursuant to the terms of this AAR Agreement
shall be
limited solely to the assets it may hold as trustee of the Trust.
It is
expressly understood and agreed by the parties hereto that (i) this
AAR
Agreement is executed and delivered by the Trustee, not
individually or
personally but solely as trustee on behalf of the Trust, in the
exercise of the
powers and authority conferred and vested in it, (ii) each of
the
representations, undertakings and agreements by the Assignee is
made and
intended for the purpose of binding only the Trust, (iii) nothing
herein
contained shall be construed as creating any liability on the part
of the
Trustee, individually or personally, to perform any covenant
(either express or
implied) contained herein, and all such liability, if any, is
hereby expressly
waived by the parties hereto, and such waiver shall bind any third
party making
a claim by or through one of the parties hereto, and (iv) under no
circumstances
shall the Trustee be personally liable for the payment of any
indebtedness or
expenses of the Trust (including, but not limited to, any amounts
to be paid
under the Purchase and Servicing Agreements), or be liable for
the
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breach or failure of any obligation, representation, warranty or
covenant made
or undertaken by the Trust under this AAR Agreement, the Pooling
Agreement or
any related document.
Miscellaneous
11.
All demands, notices and communications related to the Assigned
Loans,
the Purchase and Servicing Agreements and this AAR Agreement shall
be in writing
and shall be deemed to have been duly given if personally delivered
or mailed by
registered mail, postage prepaid, as follows:
a. In the case
of Company,
Countrywide Home Loans, Inc.
4500 Park Granada
Calabasas, California 91302
Attn: Darren Bigby
b. In the case
of the Servicer,
Countrywide Home Loans Servicing LP
400 Countrywide Way
Simi Valley, California 93065
Attn: John Lindberg, Rachel Meza, Eric Varnen and Yuan Li
c. In the case
of Assignor,
HSBC Bank USA, National Association
Re: HALO 2007-AR1
452 Fifth Avenue
New York, New York 10018
Attention: Head of MBS Principal Finance
d. In the case
of Depositor,
HSI Asset Securitization Corporation
Re: HALO 2007-AR1
452 Fifth Avenue, 10th Floor
New York, New York 10018
Attention: Head of MBS Principal Finance
e. In the case
of the Trustee,
Deutsche Bank National Trust Company
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1761 East St. Andrew Place
Santa Ana, California 92705
Attention: Trust Administration - [__________]
Telephone: (714) 247-6000
Facsimile: (714) 247-6329
f. In the case
of the Master Servicer,
CitiMortgage, Inc.
4000 Regent Blvd.
Irving, Texas 75063
Attention: Master Servicing Division,
Compliance Manager - HALO 2007-AR1
Telephone: (469) 220-0916
Facsimile: (469) 220-1572
12.
This AAR Agreement shall be construed in accordance with the laws
of
the State of New York, without regard to conflicts of law
principles, and the
obligations, rights and remedies of the parties hereunder shall be
determined in
accordance with such laws.
13.
No term or provision of this AAR Agreement may be waived or
modified
unless such waiver or modification is in writing and signed by the
party against
whom such waiver or modification is sought to be enforced.
14.
This AAR Agreement shall inure to the benefit of the successors
and
assigns of the parties hereto. Any entity into which Assignor,
Assignee,
Depositor, Servicer or Company may be merged or consolidated shall
without the
requirement for any further writing, be deemed Assignor, Assignee,
Depositor,
Servicer or Company, respectively hereunder.
15.
This AAR Agreement shall survive the conveyance of the Assigned
Loans
as contemplated in this AAR Agreement.
16.
This AAR Agreement may be executed simultaneously in any number
of
counterparts. Each counterpart shall be deemed to be an original
and all such
counterparts shall constitute one and the same instrument.
17.
In the event that any provision of this AAR Agreement conflicts
with
any provision of the Purchase and Servicing Agreements with respect
to the
Assigned Loans, the terms of this AAR Agreement shall control.
Assignment, Assumption and Recognition Agreement
(Countrywide Home Loans, Inc.)
12
<PAGE>
IN
WITNESS WHEREOF, the parties hereto have executed this AAR
Agreement as
of the day and year first above written.
HSBC BANK USA, NATIONAL ASSOCIATION
Assignor
By:
------------------------------------
Name: Jon E. Voigtman
Title: Managing Director #14311
HSI ASSET SECURITIZATION CORPORATION
Depositor
By:
------------------------------------
Name: Andrea Lenox
Title: Vice President
COUNTRYWIDE HOME LOANS, INC.
Company
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
COUNTRYWIDE HOME LOANS SERVICING LP
By: Countrywide GP, Inc., its General
Partner Servicer
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Assignment, Assumption and Recognition Agreement
(Countrywide Home Loans, Inc.)
13
<PAGE>
Agreed to and acknowledged by:
DEUTSCHE BANK NATIONAL TRUST COMPANY
not in its individual capacity, but
solely as Trustee on behalf of HSI
Asset Loan Obligation Trust 2007-AR1
under the Pooling Agreement
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
CITIMORTGAGE, INC., as Master Servicer
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
Assignment, Assumption and Recognition Agreement
(Countrywide Home Loans, Inc.)
14
<PAGE>
EXHIBIT 1
ASSIGNED LOAN SCHEDULE
1-1
<PAGE>
EXHIBIT 2
SERVICING AGREEMENT
5-1
<PAGE>
EXECUTION VERSION
SERVICING
AGREEMENT
between
COUNTRYWIDE HOME LOANS INC.
(Countrywide)
and
HSBC BANK USA, NATIONAL ASSOCIATION
(Purchaser)
Dated as of September 1, 2006
Conventional Residential Mortgage Loans
<PAGE>
TABLE OF CONTENT
<TABLE>
<CAPTION>
Page
----
<S>
<C>
ARTICLE I.
DEFINITIONS...................................................
1
ARTICLE II. REPRESENTATIONS AND
WARRANTIES............................... 11
Section 2.01
Representations and Warranties Respecting Countrywide....
11
ARTICLE III. ADMINISTRATION AND SERVICING OF MORTGAGE
LOANS.............. 12
Section 3.01
Countrywide to Act as Servicer...........................
12
Section 3.02
Collection of Mortgage Loan Payments.....................
14
Section 3.03
Realization Upon Defaulted Mortgage Loans................
14
Section 3.04
Establishment of Custodial Accounts; Deposits in
Custodial Accounts.......................................
16
Section 3.05
Permitted Withdrawals From the Custodial Account.........
17
Section 3.06
Establishment of Escrow Accounts; Deposits in Escrow
Accounts.................................................
18
Section 3.07
Permitted Withdrawals From Escrow Account................
18
Section 3.08
Transfer of Accounts.....................................
19
Section 3.09
Payment of Taxes, Insurance and Other Charges;
Maintenance of PMI Policies; Collections Thereunder......
19
Section 3.10
Maintenance of Hazard Insurance..........................
20
Section 3.11
[Reserved]...............................................
21
Section 3.12
Fidelity Bond; Errors and Omissions Insurance............
21
Section 3.13
Title, Management and Disposition of REO Property........
21
Section 3.14
Notification of Adjustments..............................
23
Section 3.15
Notification of Maturity Date............................
23
Section 3.16
Assumption Agreements....................................
23
Section 3.17
Satisfaction of Mortgages and Release of Collateral
Files....................................................
24
Section 3.18
Servicing Compensation...................................
25
Section 3.19
Superior Liens...........................................
25
Section 3.20
Compliance with REMIC Provisions.........................
26
ARTICLE IV. PROVISIONS OF PAYMENTS AND REPORTS TO
PURCHASER.............. 26
Section 4.01
Distributions............................................
26
Section 4.02
Periodic Reports to the Purchaser........................
27
Section 4.03
Monthly Advances by Countrywide..........................
27
Section 4.04
Annual Statement as to Compliance........................
28
Section 4.05
Annual Independent Certified Public Accountants'
Servicing Report.........................................
29
Section 4.06
Purchaser's Access to Countrywide's Records..............
29
ARTICLE V. COVENANTS BY
COUNTRYWIDE...................................... 29
Section 5.01
Indemnification by Countrywide...........................
29
Section 5.02
Merger or Consolidation of Countrywide...................
30
Section 5.03
Limitation on Liability of Countrywide and Others........
30
Section 5.04
Countrywide Not to Resign................................
31
</TABLE>
i
<PAGE>
<TABLE>
<S>
<C>
Section 5.05 No
Transfer of Servicing................................. 31
ARTICLE VI. TERMINATION OF COUNTRYWIDE AS
SERVICER....................... 31
Section 6.01
Termination Due to an Event of Default.
[Under review by HSBC]....................................
31
Section 6.02
Termination by Other Means...............................
33
ARTICLE VII.
MISCELLANEOUS...............................................
34
Section 7.01
Notices..................................................
34
Section 7.02
Exhibits.................................................
35
Section 7.03
General Interpretive Principles..........................
35
Section 7.04
Reproduction of Documents................................
35
Section 7.05
Further Agreements.......................................
36
Section 7.06
Assignment of Mortgage Loans by the Purchaser;
Pass-Through Transfers...................................
36
Section 7.07
Conflicts between Transaction Documents..................
37
Section 7.08
Governing Law............................................
37
Section 7.09
Severability Clause......................................
38
Section 7.10
Successors and Assigns...................................
38
Section 7.11
Confidentiality..........................................
38
Section 7.12
Entire Agreement.........................................
38
Section 7.13
Successor to Countrywide.................................
39
</TABLE>
ii
<PAGE>
SERVICING AGREEMENT
THIS SERVICING AGREEMENT (this "Agreement") dated as of September
1, 2006, is by
and between COUNTRYWIDE HOME LOANS INC., in its capacity as
servicer (
"Countrywide"), and HSBC Bank USA, National Association, and its
permitted
successors and assigns, as Purchaser (the "Purchaser").
PRELIMINARY STATEMENT
WHEREAS, the Purchaser and Countrywide Home Loans, Inc. have
entered into
that certain Master Mortgage Loan Purchase Agreement dated as of
September 1,
2006 between the Purchaser and Countrywide, as seller (the
"Purchase
Agreement"), pursuant to which the Purchaser will purchase and
Countrywide will
sell from time to time, certain conventional Mortgage Loans (as
hereinafter
defined) identified in a Purchase Confirmation;
WHEREAS, Countrywide is in the business of providing primary
servicing of
mortgage loans and owns the right to service the Mortgage Loans
listed on the
Mortgage Loan Schedule (as hereinafter defined);
WHEREAS, Countrywide has agreed to service the Mortgage Loans for
the
Purchaser on the terms and conditions set forth herein; and
WHEREAS, Countrywide and the Purchaser desire to prescribe the
terms and
conditions regarding the management, servicing, and control of such
Mortgage
Loans.
NOW,
THEREFORE, in consideration of the mutual agreements and
covenants
herein contained and other good and valuable consideration, the
receipt and
sufficiency of which are hereby acknowledged, Countrywide and the
Purchaser
agree as follows:
ARTICLE I.
DEFINITIONS
Unless the context requires otherwise, all capitalized terms used
herein
shall have the meanings assigned to such terms in this Article I
unless defined
elsewhere herein. Any capitalized term used but not defined herein
shall have
the meaning specified in the Purchase Agreement. Any capitalized
term used or
defined in a Purchase Confirmation that conflicts with the
corresponding
definition set forth herein shall supersede such term.
Accepted Servicing Practices: With respect to any Mortgage Loan,
those
mortgage servicing practices (including collection procedures) that
(i)
Countywide applies to similar mortgage loans serviced for third
parties or for
its own account, (ii) conform to the customary and usual standards
of practice
of prudent mortgage banking institutions which service mortgage
loans of a
similar type as such Mortgage Loan in the jurisdiction where the
related
Mortgaged Property is located and (iii) are in accordance with
Fannie Mae
servicing practices and procedures for MBS pool mortgages, as
defined in the
applicable Fannie Mae Servicing Guide, the terms of the Collateral
Documents and
all applicable federal, state and local law.
1
<PAGE>
Adjustable Rate Mortgage Loan: Any Mortgage Loan in which the
related
Mortgage Note contains a provision whereby the Mortgage Interest
Rate is
adjusted from time to time in accordance with the terms of such
Mortgage Note.
Agency: Either Fannie Mae or Freddie Mac.
Agreement: This Servicing Agreement, including all exhibits and
supplements
hereto, and all amendments hereof.
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 Purchaser.
Balloon Mortgage Loan: Any Mortgage Loan wherein the Mortgage Note
matures
prior to full amortization and requires a final and accelerated
payment of
principal.
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
California, the
State of New York, or the State of Texas are authorized or
obligated by law or
executive order to be closed.
Cash
Liquidation: Recovery of all cash proceeds by Countrywide with
respect
to the termination of any defaulted Mortgage Loan other than a
Mortgage Loan
which became an REO Property, including any PMI Proceeds, Other
Insurance
Proceeds, Liquidation Proceeds, Condemnation Proceeds and other
payments or
recoveries whether made at one time or over a period of time which
Countrywide
deems to be finally recoverable, in connection with the sale or
assignment of
such Mortgage Loan, trustee's sale, foreclosure sale or
otherwise.
Closing: The consummation of the sale and purchase of each Mortgage
Loan
Package.
Closing Date: The date on which the purchase and sale of the
Mortgage Loans
constituting a Mortgage Loan Package is consummated, as set forth
in the Trade
Confirmation or Purchase Confirmation.
Code: The Internal Revenue Code of 1986, or any successor statute
thereto.
Collateral Documents: The collateral documents pertaining to each
Mortgage
Loan as set forth in Exhibit A of the Purchase Agreement.
Collateral File: With respect to each Mortgage Loan, a file
containing each
of the Collateral Documents.
Condemnation Proceeds: All awards or settlements in respect of a
taking of
an entire Mortgaged Property by exercise of the power of eminent
domain or
condemnation.
Countrywide: Countrywide Home Loans, Inc., or any successor or
assign to
Countrywide under this Agreement as provided herein.
2
<PAGE>
Credit File: The file retained by Countrywide that includes the
mortgage
loan documents pertaining to a Mortgage Loan including copies of
the Collateral
Documents together with the credit documentation relating to the
origination of
such Mortgage Loan, which Credit File may be maintained by
Countrywide on
microfilm or any other comparable medium.
Custodial Account: The account or accounts created and maintained
pursuant
to Section 3.04 herein, each of which shall be an Eligible
Account.
Custodial Agreement: The agreement governing the retention of the
originals
of the Collateral Documents, annexed hereto as Exhibit C to the
Purchase
Agreement.
Custodian: Wells Fargo Bank, National Association, its successor
in
interest or assign, or such other custodian that may be designated
by
Countrywide from time to time.
Determination Date: The Business Day immediately preceding the
related
Remittance Date.
Due
Date: The day of the month on which the Monthly Payment is due on
a
Mortgage Loan, exclusive of any days of grace.
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 Account: An account or accounts (i) maintained with a
depository
institution the short term debt obligations of which are rated by a
nationally
recognized statistical rating agency in one of its two (2) highest
rating
categories at the time of any deposit therein or, (ii) maintained
with an
institution and in a manner acceptable to an Agency.
Escrow Account: The separate trust account or accounts created
and
maintained pursuant to Section 3.06 herein, each of which shall be
an Eligible
Account.
Escrow Payments: The amounts constituting ground rents, taxes,
assessments,
water rates, fire and hazard insurance premiums, flood insurance
premiums, if
applicable, and other payments required to be escrowed by the
Mortgagor with the
Mortgagee pursuant to any Mortgage Loan.
Exchange Act. The Securities Exchange Act of 1934, as amended.
Event of Default: Any one of the conditions or circumstances
enumerated in
Section 6.01 of this Agreement.
Fannie Mae: The Federal National Mortgage Association or any
successor
organization.
Fannie Mae Servicing Guide: The Fannie Mae Servicing Guide and
all
amendments or additions thereto, as applicable.
FDIC: The Federal Deposit Insurance Corporation, or any successor
thereto.
3
<PAGE>
FHA:
The Federal Housing Administration.
Final Recovery Determination: With respect to any defaulted
Mortgage Loan
or any REO Property (other than a Mortgage Loan or REO Property
purchased by
Countrywide pursuant to this Agreement), a determination made by
Countrywide
that all Insurance Proceeds, Liquidation Proceeds and other
payments or
recoveries which Countrywide, in its reasonable good faith
judgment, expects to
be finally recoverable in respect thereof have been so recovered.
Countrywide
shall maintain records, prepared by a servicing officer of
Countrywide, of each
Final Recovery Determination.
Fidelity Bond: A fidelity bond to be maintained by Countrywide
pursuant to
Section 3.12 of this Agreement.
First Lien Mortgage Loan: Any Mortgage Loan secured by a first lien
on the
related Mortgaged Property.
Fixed Rate Mortgage Loan: Any Mortgage Loan wherein the Mortgage
Interest
Rate set forth in the Mortgage Note is fixed for the term of such
Mortgage Loan.
Freddie Mac: The Federal Home Loan Mortgage Corporation or any
successor
organization.
Gross Margin: With respect to each Adjustable Rate Mortgage Loan,
the fixed
percentage amount set forth in the related Mortgage Note, which
amount is added
to the index in accordance with the terms of the related Mortgage
Note to
determine on each Interest Adjustment Date, the Mortgage Interest
Rate for such
Mortgage Loan.
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.
Interest Adjustment Date: With respect to an Adjustable Rate
Mortgage Loan,
the date on which an adjustment to the Mortgage Interest Rate on a
Mortgage Note
becomes effective.
LTV:
With respect to any Mortgage Loan, the ratio (expressed as a
percentage) of the Stated Principal Balance (or the original
principal balance,
if so indicated) of such Mortgage Loan as of the date of
determination to the
Appraised Value of the related Mortgaged Property.
Late
Collections: With respect to any Mortgage Loan, all amounts
received
during any Due Period, whether as late payments of Monthly Payments
or as
Liquidation Proceeds, Condemnation Proceeds, PMI Proceeds (if
applicable), Other
Insurance Proceeds, proceeds of any REO Disposition or otherwise,
which
represent late payments or collections of Monthly Payments due but
delinquent
for a previous Due Period and not previously recovered.
Lifetime Rate Cap: With respect to each Adjustable Rate Mortgage
Loan, the
absolute maximum Mortgage Interest Rate payable, above which the
Mortgage
Interest Rate shall not be adjusted, as set forth in the related
Mortgage Note
and Mortgage Loan Schedule.
4
<PAGE>
Liquidation Proceeds: Amounts, other than PMI Proceeds,
Condemnation
Proceeds and Other Insurance Proceeds, received by Countrywide in
connection
with the liquidation of a defaulted Mortgage Loan through trustee's
sale,
foreclosure sale or otherwise, other than amounts received
following the
acquisition of an REO Property pursuant to Section 3.13 of this
Agreement.
LPMI
Fee: The portion of the Mortgage Interest Rate relating to an
LPMI
Loan, which is set forth on the related Mortgage Loan Schedule, to
be retained
by Countrywide to pay the premium due on the PMI Policy with
respect to such
LPMI Loan.
LPMI
Loan: Any Mortgage Loan with respect to which Countrywide is
responsible for paying the premium due on the related PMI Policy
with the
proceeds generated by the LPMI Fee relating to such Mortgage Loan,
as set forth
on the related Mortgage Loan Schedule.
MIC:
A mortgage insurance certificate issued by HUD.
Monthly Advance: The advances made or required to be made.
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 lien, in the case of a First
Lien Mortgage
Loan, or a second lien, in the case of a Second Lien Mortgage Loan,
on an
unsubordinated estate in fee simple in real property securing the
Mortgage Note.
Mortgage Interest Rate: The annual rate at which interest accrues
on any
Mortgage Loan and, with respect to an Adjustable Rate Mortgage
Loan, as adjusted
from time to time in accordance with the provisions of the related
Mortgage
Note.
Mortgage Loan: Any mortgage loan that is sold pursuant to this
Agreement,
as evidenced by such mortgage loan's inclusion on the related
Mortgage Loan
Schedule, which mortgage loan includes the Monthly Payments,
Principal
Prepayments, Liquidation Proceeds, Condemnation Proceeds, PMI
Proceeds (if
applicable), Other Insurance Proceeds, REO Disposition proceeds,
and all other
rights, benefits, proceeds and obligations arising from or in
connection with
such Mortgage Loan, excluding the servicing rights relating
thereto. Unless the
context requires otherwise, any reference to the Mortgage Loans in
this
Agreement shall refer to the Mortgage Loans constituting a Mortgage
Loan
Package.
Mortgage Loan Package: The Mortgage Loans sold to the Purchaser
pursuant to
a Purchase Confirmation.
Mortgage Loan Remittance Rate: With respect to each Mortgage Loan,
the
interest rate payable to the Purchaser on each Remittance Date
which shall equal
the Mortgage Interest Rate less the Servicing Fee and the LPMI Fee,
if
applicable.
Mortgage Loan Schedule: With respect to each Mortgage Loan Package,
the
schedule of Mortgage Loans included therein and made a part of the
related
Purchase Confirmation, which
5
<PAGE>
schedule shall include, the following information with respect to
each Mortgage
Loan: (i) Countrywide's loan number identifying such Mortgage Loan;
(ii) the
Mortgage Interest Rate as of the Cut-off Date; (iii) with respect
to any
Adjustable Rate Mortgage Loan, the Gross Margin, the Periodic Rate
Cap, the
Lifetime Rate Cap, the next Interest Adjustment Date, the first
Interest
Adjustment Date, the minimum Mortgage Interest Rate and the Index,
(iv) with
respect to each First Lien Mortgage Loan, the LTV at origination
and, with
respect to each Second Lien Mortgage Loan, the Combined LTV at
origination; (v)
the original term of such Mortgage Loan, (vi) whether such Mortgage
Loan is a
First Lien Mortgage Loan or a Second Lien Mortgage Loan; (vii) the
Mortgagor's
first and last name; (viii) the street address of the Mortgaged
Property
including the city, state and zip code; (ix) a code indicating
whether the
Mortgaged Property is owner-occupied; (x) the type of Residential
Dwelling
constituting the Mortgaged Property; (xi) the original months to
maturity; (xii)
the date on which the first Monthly Payment was due on the Mortgage
Loan;
(xiiii) the stated maturity date; (xiv) the amount of the Monthly
Payment as of
the Cut-off Date; (xv) the last Due Date on which a Monthly Payment
was actually
applied to the unpaid Stated Principal Balance; (xvi) the original
principal
amount of the Mortgage Loan and, with respect to a Second Lien
Mortgage Loan,
the CLTV; (xvii) the Stated Principal Balance of the Mortgage Loan;
(xviii) a
code indicating the purpose of the loan (i.e., purchase financing,
Rate/Term
Refinancing, Cash-Out Refinancing); (xix) the date on which the
first Monthly
Payment was due on the Mortgage Loan and, if such date is not
consistent with
the Due Date currently in effect, such Due Date; (xx) a code
indicating the
documentation style; (xxi) a code indicating whether the Mortgage
Loan is an
Adjustable Rate Mortgage Loan or a Fixed Rate Mortgage Loan; (xxii)
the
Appraised Value of the Mortgaged Property; (xxiii) the sale price
of the
Mortgaged Property, if applicable; (xxiv) a code indicating whether
the Mortgage
Loan is subject to a Prepayment Charge or penalty; (xxv) the amount
and the term
of any Prepayment Charge or penalty; (xxvi) with respect to each
MERS Mortgage
Loan, the related MIN; (xxvii) a code indicating if the Mortgage
Loan is an
interest-only Mortgage Loan and, if so, the term of the
interest-only period of
such Mortgage Loan; (xxix) a code indicating whether the Mortgage
Loan is a
Balloon Mortgage Loan; (xxx) the points and fees charged in
connection with the
origination of such Mortgage Loan as qualified by an Agency flag;
(xxxi) a code
indicating if the Mortgage Loan is subject to an LPMI Policy, and
if so, the
LPMI Fee; and (xxxii) with respect to any PMI Policy or LPMI
Policy, the
provider of such insurance and the coverage percentage of such
insurance.
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.
Mortgagee: The mortgagee or beneficiary named in the Mortgage and
the
successors and assigns of such mortgagee or beneficiary.
Mortgagor: The obligor on a Mortgage Note.
Opinion of Counsel: A written opinion of counsel, who may be an
employee of
the party on behalf of whom the opinion is being given.
6
<PAGE>
Other Insurance Proceeds: Proceeds of any title policy, hazard
policy, pool
policy or other insurance policy covering a Mortgage Loan, to the
extent such
proceeds are not to be applied to the restoration of the related
Mortgaged
Property or released to the Mortgagor in accordance with the
procedures that
Countrywide would follow in servicing mortgage loans held for its
own account.
Pass-Through Transfer: Any transaction involving either (1) a sale
or other
transfer of some or all of the Mortgage Loans directly or
indirectly to an
issuing entity in connection with an issuance of publicly offered
or privately
placed, rated or unrated mortgage-backed securities or (2) an
issuance of
publicly offered or privately placed, rated or unrated securities,
the payments
on which are determined primarily by reference to one or more
portfolios of
residential mortgage loans consisting, in whole or in part, of some
or all of
the Mortgage Loans.
Payment Adjustment Date: As to each Mortgage Loan, the date on
which an
adjustment to the Monthly Payment on a Mortgage Note becomes
effective.
Periodic Rate Cap: With respect to each Adjustable Rate Mortgage
Loan, the
provision of each Mortgage Note which provides for an absolute
maximum amount by
which the Mortgage Interest Rate therein may increase or decrease
on an
Adjustment Date above or below the Mortgage Interest Rate
previously in effect,
equal to the rate set forth on the Mortgage Loan Schedule per
adjustment.
Person: Any individual, corporation, partnership, joint
venture,
association, joint-stock company, trust, limited liability
corporation,
unincorporated organization or government or any agency or
political subdivision
thereof.
Prepayment Charge: With respect to each Mortgage Loan, the fee, if
any,
payable upon the prepayment of principal, in whole or in part, of
such Mortgage
Loan, as set forth in the related Mortgage Note.
Prepayment Interest Shortfall Amount: With respect to any
Remittance Date
and Mortgage Loan that was subject to a Principal Prepayment in
full or in part
during the related Principal Prepayment Period, which Principal
Prepayment was
applied to such Mortgage Loan prior to such Mortgage Loan's Due
Date in such
calendar month, the amount of interest (at the Mortgage Loan
Remittance Rate)
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.
Principal Prepayment: Any payment or other recovery of principal on
a
Mortgage Loan which is received in advance of its scheduled Due
Date (excluding
any Prepayment Charge, unless the related Purchase Confirmation
provides
otherwise), 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.
Principal Prepayment Period:
As to any Remittance Date, the calendar month
preceding the month of distribution.
7
<PAGE>
Purchase Agreement: The Master Mortgage Loan Purchase Agreement,
dated as
of September 1, 2006, by and between the Purchaser and
Countrywide.
Purchase Confirmation: A letter agreement, substantially in the
form of an
exhibit to the Purchase Agreement, executed by Countrywide and the
Purchaser in
connection with the purchase and sale of each Mortgage Loan
Package, which sets
forth the terms relating thereto including a description of the
related Mortgage
Loans (including the Mortgage Loan Schedule), the purchase price
for such
Mortgage Loans, the Closing Date and the Servicing Fee Rate.
Purchaser: The Person identified as the "Purchaser" in the preamble
to this
Agreement or its successor in interest or any successor or assign
to the
Purchaser under this Agreement as herein provided. Any reference to
"Purchaser"
as used herein shall be deemed to include any designee of the
Purchaser, so long
as such designation was made in accordance with the limitations set
forth in
Section 7.06 of this Agreement.
Qualified Insurer: An insurance company duly qualified as such
under the
laws of the states in which the Mortgaged Properties are located,
duly
authorized and licensed in such states to transact the applicable
insurance
business and to write the insurance provided with a rating category
as set forth
in the applicable Underwriting Guidelines.
Qualified Substitute Mortgage Loan: A mortgage loan that must, on
the date
of such substitution, (i) have an unpaid principal balance, after
deduction of
all scheduled payments due in the month of substitution (or if more
than one (1)
mortgage loan is being substituted, an aggregate principal
balance), not in
excess of the unpaid principal balance of the repurchased Mortgage
Loan (the
amount of any shortfall will be deposited in the Custodial Account
by
Countrywide in the month of substitution); (ii) have a Mortgage
Interest Rate
not less than, and not more than 1% greater than, the Mortgage
Interest Rate of
the repurchased Mortgage Loan; (iii) have a remaining term to
maturity not
greater than, and not more than one year less than, the maturity
date of the
repurchased Mortgage Loan; (iv) comply with each representation and
warranty
(respecting individual Mortgage Loans) set forth in Section 3.02
hereof; (v)
shall be the same type of Mortgage Loan (i.e., a Convertible
Mortgage Loan or a
Fixed Rate Mortgage Loan); (vi) have the same Due Date as the Due
Date on the
substituted Mortgage Loan; and (vii) have a LTV, and in the case of
a Second
Lien Mortgage Loan, a Combined LTV Ratio as of the date of
substitution equal to
or lower than the LTV or Combined LTV Ratio of the related
substituted Mortgage
Loan as of such date. In the event that one or more mortgage loans
are
substituted for one or more substituted Mortgage Loans, the amounts
described in
clause (i) hereof shall be determined on the basis of aggregate
principal
balances, the Mortgage Interest Rates described in clause (ii)
hereof shall be
determined on the basis of weighted average Mortgage Interest Rates
and shall be
satisfied as to each such mortgage loan, the terms described in
clause (iii)
shall be determined on the basis of weighted average remaining
terms to
maturity, the LTV, and in the case of Second Lien Mortgage Loans
the Combined
LTV Ratios described in clause (v) hereof shall be satisfied as to
each such
Qualified Substitute Mortgage Loan and, except to the extent
otherwise provided
in this sentence, the representations and warranties described in
clause (iv)
hereof must be satisfied as to each Qualified Substitute Mortgage
Loan or in the
aggregate, as the case may be.
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Reconstitution Date: The date or dates on which any or all of the
Mortgage
Loans serviced under this Agreement shall be removed from this
Agreement and
reconstituted as part of a Pass-Through Transfer or Whole Loan
Transaction
pursuant to Section 7.06 hereof. The Reconstitution Date shall be
such date
which the Purchaser shall designate. On such date, the Mortgage
Loans
transferred shall cease to be covered by this Agreement and
Countrywide's
servicing responsibilities shall cease under this Agreement with
respect to the
related transferred Mortgage Loans.
REMIC: A Areal estate mortgage investment conduit within the
meaning of
Section 860D of the Code.
REMIC Provisions: Provisions of the federal income tax law relating
to
REMICs, which appear in Sections 860A through 860G of the Code, and
related
provisions, and proposed, temporary and final regulations and
published rulings,
notices and announcements promulgated thereunder, as applicable, as
the
foregoing may be in effect from time to time.
Remittance Date: The eighteenth (18th) day of any month, beginning
with the
month next following the month in which the related Cut-off Date
occurs, or if
such eighteenth (18th) day is not a Business Day, the first
Business Day
immediately following.
REO
Disposition: The final sale by Countrywide of any REO Property or
the
transfer of the management of such REO Property to the Purchaser as
set forth in
Section 3.13 of this Agreement.
REO
Property: A Mortgaged Property acquired by Countrywide on behalf of
the
Purchaser as described in Section 3.13 of this Agreement.
Repurchase Price: With respect to any Mortgage Loan, a price equal
to (i)
the Stated Principal Balance of the Mortgage Loan plus (ii)
interest on such
Stated Principal Balance at the Mortgage Loan Remittance Rate from
the last date
through which interest has been paid and distributed to the
Purchaser to the
date of repurchase, less amounts received or advanced in respect of
such
repurchased Mortgage Loan which such amounts are being held in the
Custodial
Account for distribution in the month of repurchase, plus (iii) any
costs and
expenses incurred by the Purchaser in respect of a material breach
of Section
3.01 or 3.02 of this Agreement, including without limitation, any
costs and
damages incurred by the Purchaser, the servicer, master servicer or
any trustee
for any costs and damages incurred by any such party in connection
with a
violation by any such Mortgage Loan of any applicable
anti-predatory or abusive
lending law.
Second Lien Mortgage Loan: A Mortgage Loan secured by a second lien
on the
related Mortgaged Property.
Securities Act: The Securities Act of 1933, as amended.
Seller: Countrywide Home Loans, Inc.
Servicing Advances: All customary, reasonable and necessary "out of
pocket"
costs and expenses incurred in the performance by Countrywide of
its servicing
obligations, including the
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cost of (i) the preservation, restoration and protection of the
Mortgaged
Property, (ii) any enforcement or judicial proceedings, including
foreclosures,
(iii) the management and liquidation of the REO Property and (iv)
compliance
with the obligations under this Agreement including Section 3.09
hereof.
Servicing Fee: With respect to each Mortgage Loan, the amount of
the annual
fee the Purchaser shall pay to Countrywide, which shall, for a
period of one
full month, be equal to one-twelfth of the product of (i) the
Servicing Fee Rate
and (ii) the Stated Principal Balance of such Mortgage Loan. Such
fee shall be
payable monthly, computed on the basis of the same principal amount
and period
respecting which any related interest payment on a Mortgage Loan is
computed.
The obligation of the Purchaser to pay the Servicing Fee is limited
to, and the
Servicing Fee is payable solely from, the interest portion
(including recoveries
with respect to interest from Liquidation Proceeds and other
proceeds) of such
Monthly Payment collected by Countrywide, or as otherwise provided
herein.
Subject to the foregoing, and with respect to each Mortgage Loan,
Countrywide
shall be entitled to receive its Servicing Fee through the
disposition of any
related REO Property and the Servicing Fee payable with respect to
any REO
Property shall be based on the Stated Principal Balance of the
related Mortgage
Loan at the time of foreclosure.
Servicing Fee Rate: With respect to any Mortgage Loan, the rate per
annum
set forth in the applicable Trade Confirmation or Purchase
Confirmation.
Servicing LP: Countrywide Home Loans Servicing LP, a Texas
limited
partnership, and its successors and assigns.
Servicing Officer: Any officer of Countrywide involved in, or
responsible
for, the administration and servicing of the Mortgage Loans whose
name appears
on a list of servicing officers furnished by Countrywide to
Purchaser upon
request, as such list may from time to time be amended.
Stated Principal Balance: With respect to each Mortgage Loan as of
any date
of determination: (i) the unpaid principal balance of the Mortgage
Loan at the
Cut-off Date after giving effect to payments of principal due on or
before such
date, whether or not received, minus (ii) all amounts previously
distributed to
the Purchaser with respect to the related Mortgage Loan
representing payments or
recoveries of principal or advances in lieu thereof.
Trade Confirmation: A letter agreement substantially in the form of
an
exhibit attached to the Purchase Agreement executed by Countrywide
and the
Purchaser prior to the applicable Closing Date confirming the terms
of a
prospective purchase and sale of a Mortgage Loan Package.
Transaction Documents: With respect to any Mortgage Loan, the
related Trade
Confirmation, the related Purchase Confirmation, this Agreement and
the Purchase
Agreement.
Updated LTV: With respect to any Mortgage Loan, the outstanding
principal
balance of such Mortgage Loan as of the date of determination
divided by the
value of the related Mortgaged Property as determined by a recent
appraisal of
the Mortgaged Property.
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Whole Loan Transfer: The sale or transfer by the Purchaser of some
or all
of the Mortgage Loans, other than in a Pass-Through Transfer.
ARTICLE II.
REPRESENTATIONS AND WARRANTIES
SECTION 2.01 REPRESENTATIONS AND WARRANTIES RESPECTING
COUNTRYWIDE.
Countrywide represents, warrants and covenants to the Purchaser
that, as of
each Closing Date:
(a) Countrywide is duly organized, validly existing and in good
standing under the laws of the jurisdiction in which it is
organized and is
qualified and licensed to transact business in and is in good
standing under the
laws of each state where each Mortgaged Property is located to the
extent
necessary to ensure the enforceability of each Mortgage Loan and
the servicing
of the Mortgage Loan in accordance with the terms of this Agreement
and no
demand for such licensing or qualification has been made upon
Countrywide by any
such state.
(b) Countrywide has the full power and authority to (i) perform
and
enter into and consummate all transactions contemplated by this
Agreement and
(ii) to service each Mortgage Loan. Countrywide has duly authorized
the
execution, delivery and performance of this Agreement, has duly
executed and
delivered this Agreement, and this Agreement, assuming due
authorization,
execution and delivery by the Purchaser, constitutes a legal, valid
and binding
obligation of Countrywide, enforceable against it in accordance
with its terms
except as the enforceability thereof may be limited by bankruptcy,
insolvency or
reorganization;
(c) Neither the servicing of the Mortgage Loans for the Purchaser,
the
consummation of 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
Countrywide's organizational documents or result in a material
breach of any
legal restriction or any material agreement or instrument to which
Countrywide
is now a party or by which it is bound, or constitute a material
default or
result in an acceleration under any of the foregoing, or result in
the violation
of any material law, rule, regulation, order, judgment or decree to
which
Countrywide or its property is subject;
(d) Countrywide is an approved servicer for each Agency in good
standing. No event has occurred, including a change in insurance
coverage, which
would make Countrywide unable to comply with Fannie Mae or Freddie
Mac
eligibility requirements;
(e) There is no action, suit, proceeding, investigation or
litigation
pending or, to Countrywide's knowledge, threatened, which either in
any one
instance or in the aggregate, if determined adversely to
Countrywide would
materially and adversely affect the servicing of the Mortgage Loans
to the
Purchaser or Countrywide's ability to perform its obligations under
this
Agreement;
(f) No consent, approval, authorization or order of any court
or
governmental agency or body is required for the execution, delivery
and
performance by Countrywide of, or
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compliance by Countrywide, with this Agreement or the consummation
of the
transactions contemplated by this Agreement, or if required, such
consent,
approval, authorization or order has been obtained prior to the
related Closing
Date;
(g) The execution and delivery of this Agreement by Countrywide
and
its performance and compliance with the terms of this Agreement
will not
constitute a violation with respect to, any order or decree of any
court or any
order or regulation of any federal, state, municipal or
governmental agency
having jurisdiction over Countrywide or its assets, which violation
would
materially and adversely affect the performance of its obligations
and duties
hereunder;
(h) Countrywide 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;
(i) The consummation of the transactions contemplated by this
Agreement are in the ordinary course of business of
Countrywide;
(j) Countrywide acknowledges and agrees that the Servicing Fee
represents reasonable compensation for performing such services and
that the
entire Servicing Fee shall be treated by Countrywide, for
accounting and tax
purposes, as compensation for the servicing and administration of
the Mortgage
Loans pursuant to this Agreement;
(k) Neither this Agreement nor any written statement, report or
other
document prepared and furnished by Countrywide pursuant to this
Agreement or in
connection with the transactions contemplated hereby contains any
untrue
statement of material fact or omits to state a material fact
necessary to make
the statements contained herein or therein not misleading; and
(l) Countrywide is a member of MERS, and is current in payment of
all
fees and assessments imposed by MERS.
ARTICLE III.
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
SECTION 3.01 COUNTRYWIDE TO ACT AS SERVICER.
Countrywide, as an independent contract servicer, shall service
and
administer Mortgage Loans sold pursuant to this Agreement in
accordance with the
terms of this Agreement and shall have full power and authority,
acting alone,
to do or cause to be done any and all things, in connection with
such servicing
and administration, that Countrywide may deem necessary or
desirable and
consistent with the terms of this Agreement. In servicing and
administering the
Mortgage Loans, Countrywide shall employ procedures in accordance
with Accepted
Servicing Practices. Countrywide shall be responsible for any and
all acts of a
subservicer and a subcontractor, and the utilization of a
subservicer or a
subcontractor contracted by Countrywide shall in no way relieve the
liability of
Countrywide under this Agreement.
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<PAGE>
Consistent with the terms of this Agreement, Countrywide may waive,
modify
or vary any term of any Mortgage Loan or consent to the
postponement of strict
compliance with any such term or in any manner grant indulgence to
any Mortgagor
if in Countrywide's reasonable and prudent determination such
waiver,
modification, postponement or indulgence is not materially adverse
to the
Purchaser; provided, however, that Countrywide shall not permit any
modification
with respect to any Mortgage Loan that would decrease the Mortgage
Interest Rate
(other than by adjustments required by the terms of the Mortgage
Note), forgive
the payment thereof or of any principal or interest payments,
reduce the
outstanding principal amount (except for actual payments of
principal) or extend
the final maturity date on such Mortgage Loan without the
Purchaser's consent.
Countrywide may permit forbearance or allow for suspension of
Monthly Payments
for up to one hundred and eighty (180) days if the Mortgagor is in
default or
Countrywide determines in its reasonable discretion, that default
is imminent
and if Countrywide determines that granting such forbearance or
suspension is in
the best interest of the Purchaser. If any modification,
forbearance or
suspension permitted hereunder allows the deferral of interest or
principal
payments on any Mortgage Loan, Countrywide shall include in each
remittance for
any month in which any such principal or interest payment has been
deferred
(without giving effect to such modification, forbearance or
suspension) an
amount equal to such month's principal and one (1) month's interest
at the
Mortgage Loan Remittance Rate on the then unpaid principal balance
of the
Mortgage Loan and shall be entitled to reimbursement for such
advances only to
the same extent as for Monthly Advances made pursuant to Section
4.03 of this
Agreement. Without limiting the generality of the foregoing,
Countrywide shall
continue, and is hereby authorized and empowered to execute and
deliver on
behalf of itself and the Purchaser, all instruments of satisfaction
or
cancellation, or of partial or full release, discharge and all
other comparable
instruments, with respect to the Mortgage Loans and with respect to
the
Mortgaged Property. If reasonably required by Countrywide, the
Purchaser shall
furnish Countrywide with any powers of attorney and other documents
necessary or
appropriate to enable Countrywide to carry out its servicing and
administrative
duties under this Agreement.
Countrywide or its designee will furnish, with respect to each
Mortgage
Loan, in accordance with the Fair Credit Reporting Act and its
implementing
regulations, accurate and requisite information on its borrower
credit files to
Equifax Credit Information Service, Inc., Experian Information
Solution, Inc.,
and Trans Union, LLC, on a monthly basis. Countrywide will also
comply in all
material respects with the rules and procedures of MERS in
connection with the
servicing of the Mortgage Loans that are registered with MERS.
If
the Mortgage Loans or any REO Properties are included in a
Pass-Through
Transfer or transferred to an Agency (an "Agency Transfer"), that
is a REMIC,
Countrywide shall not take any action or fail to take any action
that could
materially and adversely affect the status of any REMIC related to
the Mortgage
Loans, or impose upon the REMIC a tax on prohibited transactions
or
contributions, unless Countrywide has received an Opinion of
Counsel (at the
expense of the party seeking to take such action) to the effect
that the
contemplated action will not materially and adversely affect such
REMIC status
or result in the imposition of any tax on the REMIC.
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<PAGE>
Countrywide shall monitor the Mortgage Loans on an ongoing basis,
in
compliance with the regulations promulgated by the Office of
Foreign Assets
Control of the United States Department of the Treasury (the
"OFAC
Regulations").
SECTION 3.02
COLLECTION OF MORTGAGE LOAN PAYMENTS.
Countrywide shall collect all payments due under each Mortgage Loan
in
accordance with Accepted Servicing Practices. Further, Countrywide
shall take
care in ascertaining and estimating annual ground rents, taxes,
assessments,
water rates, fire and hazard insurance premiums, and all other
charges that are
required to be escrowed in accordance with Accepted Servicing
Practices.
SECTION 3.03 REALIZATION UPON DEFAULTED MORTGAGE LOANS.
(a) Foreclosure. Countrywide shall act in accordance with
Accepted
Servicing Practices, to foreclose upon or otherwise comparably
convert the
ownership of properties securing such of the Mortgage Loans as come
into and
continue in default and as to which no satisfactory arrangements
can be made for
collection of delinquent payments. Countrywide shall use reasonable
efforts to
realize upon defaulted Mortgage Loans, in such manner as will
maximize the
receipt of principal and interest by the Purchaser, taking into
account, among
other things, the timing of foreclosure proceedings. The foregoing
is subject to
the provisions that, in any case in which Mortgaged Property shall
have suffered
damage, Countrywide shall not be required to expend its own funds
toward the
restoration of such Mortgaged Property unless it shall determine in
its
discretion (i) that such restoration will increase the proceeds of
liquidation
of the related Mortgage Loan to the Purchaser after reimbursement
to itself for
such expenses, and (ii) that such expenses will be recoverable by
Countrywide
through PMI Proceeds, Other Insurance Proceeds or Liquidation
Proceeds from the
related Mortgaged Property. Countrywide shall notify the Purchaser
in writing of
the commencement of foreclosure proceedings. Such notice may be
contained in the
reports prepared by Countrywide and delivered to the Purchaser
pursuant to the
terms and conditions of this Agreement. Countrywide shall be
responsible for all
costs and expenses incurred by it in any foreclosure proceedings;
provided,
however, that it shall be entitled to reimbursement thereof from
proceeds from
the related Mortgaged Property.
(b) Notwithstanding the foregoing provisions of this Section 3.03
or
any other provision of this Agreement, with respect to any Mortgage
Loan as to
which Countrywide has received actual notice of, or has actual
knowledge of, the
presence of any toxic or hazardous substance on the related
Mortgaged Property,
Countrywide shall not, on behalf of the Purchaser, either (i)
obtain title to
such Mortgaged Property as a result of or in lieu of foreclosure or
otherwise,
or (ii) otherwise acquire possession of, or take any other action,
with respect
to, such Mortgaged Property if, as a result of any such action, the
Purchaser
would be considered to hold title to, to be a
"mortgagee-in-possession" of, or
to be an "owner" or "operator" of such Mortgaged Property within
the meaning of
the Comprehensive Environmental Response, Compensation and
Liability Act of
1980, as amended from time to time, or any comparable law, unless
Countrywide
has also previously determined, based on its reasonable judgment
and a report
prepared by a Person who regularly conducts environmental audits
using customary
industry standards, that:
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<PAGE>
(1) such Mortgaged Property is in compliance with applicable
environmental laws or, if not, that it would be in the best
economic
interest of the Purchaser to take such actions as are necessary
to
bring the Mortgaged Property into compliance therewith; and
(2) there are no circumstances present at such Mortgaged
Property
relating to the use, management or disposal of any hazardous
substances, hazardous materials, hazardous wastes, or
petroleum-based
materials for which investigation, testing, monitoring,
containment,
clean-up or remediation could be required under any federal, state
or
local law or regulation, or that if any such materials are present
for
which such action could be required, that it would be in the
best
economic interest of the Purchaser to take such actions with
respect
to the affected Mortgaged Property.
The
cost of the environmental audit report contemplated by this
Section
3.03 shall be advanced by Countrywide, subject to Countrywide's
right to be
reimbursed therefor from the Custodial Account.
If
Countrywide determines, as described above, that it is in the
best
economic interest of the Purchaser to take such actions as are
necessary to
bring any such Mortgaged Property into compliance with applicable
environmental
laws, or to take such action with respect to the containment,
clean-up or
remediation of hazardous substances, hazardous materials, hazardous
wastes, or
petroleum-based materials affecting any such Mortgaged Property,
then
Countrywide shall take such action as it deems to be in the best
economic
interest of the Purchaser, provided, however, that Countrywide
shall not proceed
with foreclosure or acceptance of a deed in lieu of foreclosure if
the estimated
costs of the environmental clean up, as estimated in the
environmental audit
report, together with the Servicing Advances and Monthly Advances
made by
Countrywide and the estimated costs of foreclosure or acceptance of
a deed in
lieu of foreclosure exceeds the estimated value of the Mortgaged
Property. The
cost of any such compliance, containment, cleanup or remediation
shall be
advanced by Countrywide, subject to Countrywide's right to be
reimbursed
therefor from the Custodial Account.
(c) Proceeds received in connection with any Final Recovery
Determination, as well as any recovery resulting from a partial
collection of
Insurance Proceeds or Liquidation Proceeds in respect of any
Mortgage Loan, will
be applied in the following order of priority: first, to reimburse
Countrywide
for any related unreimbursed Servicing Advances, pursuant to
Section 3.05(c);
second, to accrued and unpaid interest on the Mortgage Loan, to the
date of the
Final Recovery Determination, or to the Due Date prior to the
Remittance Date on
which such amounts are to be distributed if not in connection with
a Final
Recovery Determination; and third, as a recovery of principal of
the Mortgage
Loan. If the amount of the recovery so allocated to interest is
less than the
full amount of accrued and unpaid interest due on such Mortgage
Loan, the amount
of such recovery will be allocated by Countrywide as follows:
first, to unpaid
Servicing Fees; and second, to the balance of the interest then due
and owing.
The portion of the recovery so allocated to unpaid Servicing Fees
shall be
reimbursed to Countrywide pursuant to Section 3.05(c).
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<PAGE>
SECTION 3.04 ESTABLISHMENT OF CUSTODIAL ACCOUNTS; DEPOSITS IN
CUSTODIAL
ACCOUNTS.
Countrywide shall segregate and hold all funds collected and
received
pursuant to each Mortgage Loan separate and apart from any of its
own funds and
general assets and shall establish and maintain one (1) or more
Custodial
Accounts, in the form of time deposit or demand accounts.
Countrywide shall
provide the Purchaser with written evidence of the creation of the
Custodial
Account upon request.
Countrywide shall deposit in
the Custodial Account within two (2) Business
Days, and retain therein, the following payments and collections
received or
made by it subsequent to the Cut-off Date, or received by it prior
to the
Cut-off Date but allocable to a period subsequent thereto, other
than in respect
of principal and interest on the Mortgage Loans due on or before
the Cut-off
Date:
(a) all payments on account of principal, including Principal
Prepayments, on the Mortgage Loans;
(b) all payments on account of interest on the Mortgage Loans,
adjusted to the Mortgage Loan Remittance Rate;
(c) all proceeds from a Cash Liquidation;
(d) all PMI Proceeds, Other Insurance Proceeds, including
amounts
required to be deposited pursuant to Sections 3.08 and 3.10 of this
Agreement,
other than proceeds to be held in Escrow Account and applied to the
restoration
or repair of the Mortgaged Property or released to the Mortgagor in
accordance
with Countrywide's normal servicing procedures, the loan documents
or applicable
law;
(e) all Condemnation Proceeds affecting any Mortgaged Property
that
are not released to the Mortgagor in accordance with Countrywide's
normal
servicing procedures, the loan documents or applicable law;
(f) all Monthly Advances;
(g) all proceeds of any Mortgage Loan repurchased in accordance
with
Section 3.03 or 3.04 of the Purchase Agreement, and any amount
required to be
deposited by Countrywide in connection with any shortfall in
principal amount of
the Qualified Substitute Mortgage Loans and the repurchased
Mortgage Loans as
required pursuant to Section 3.03 of the Purchase Agreement;
(h) any amounts required to be deposited by Countrywide pursuant
to
Section 3.10 of this Agreement in connection with the deductible
clause in any
blanket hazard insurance policy (such deposit shall be made from
Countrywide's
own funds, without reimbursement therefor);
(i) the Prepayment Interest Shortfall Amount, if any, for the month
of
distribution (such deposit shall be made from Countrywide's own
funds, without
reimbursement therefor up to a maximum amount per month equal to
the lesser of
one half of (a) one-twelfth of
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the product of (i) the Servicing Fee Rate and (ii) the Stated
Principal Balance
of such Mortgage Loans, or (b) the aggregate Servicing Fee actually
received for
such month for the Mortgage Loans);
(j) any amounts required to be deposited by Countrywide in
connection
with any REO Property pursuant to Section 3.13 of this Agreement;
and
(k) any amounts required to be deposited in the Custodial
Account
pursuant to Sections 3.17.
The
foregoing requirements for deposit in the Custodial Account are
exclusive. The Purchaser understands and agrees that, without
limiting the
generality of the foregoing, payments in the nature of late payment
charges,
Prepayment Charges and assumption fees (to the extent permitted by
Section 3.16
of this Agreement) shall not be deposited by Countrywide in the
Custodial
Account. Any interest or earnings paid by the depository
institution on funds
deposited in the Custodial Account shall accrue to the benefit of
Countrywide
and Countrywide shall be entitled to retain and withdraw such
interest from the
Custodial Account pursuant to Section 3.05(d) of this
Agreement.
SECTION 3.05 PERMITTED WITHDRAWALS FROM THE CUSTODIAL ACCOUNT.
Countrywide may, from time to time, withdraw funds from the
Custodial
Account for the following purposes:
(a) to make payments to the Purchaser in the amounts and in the
manner
provided for in Sections 4.01 and 4.03 of this Agreement;
(b) to reimburse itself for Monthly Advances (Countrywide's
reimbursement for Monthly Advances shall be limited to amounts
received on the
related Mortgage Loan (or to amounts received on the Mortgage Loans
as a whole
if the Monthly Advance is made due to a shortfall in a Monthly
Payment made by a
Mortgagor entitled to relief under the Soldiers' and Sailors' Civil
Relief Act
of 1940) which represent Late Collections, net of the related
Servicing Fee and
the LPMI Fee, if applicable. Countrywide's right to reimbursement
hereunder
shall be prior to the rights of the Purchaser, except that, where
Countrywide is
required to repurchase a Mortgage Loan pursuant to Section 3.03 or
3.04 of the
Purchase Agreement, Countrywide's right to such reimbursement shall
be
subsequent to the payment to the Purchaser of the Repurchase Price
and all other
amounts required to be paid to the Purchaser with respect to such
Mortgage
Loans. Notwithstanding the foregoing, Countrywide may reimburse
itself for
Monthly Advances from any funds in the Custodial Account if it has
determined
that such funds are nonrecoverable advances or if all funds, with
respect to the
related Mortgage Loan, have previously been remitted to the
Purchaser).
(c) to reimburse itself for unreimbursed Servicing Advances and
any
unpaid Servicing Fees (Countrywide's reimbursement for Servicing
Advances and/or
Servicing Fees hereunder with respect to any Mortgage Loan shall be
limited to
proceeds from Cash Liquidation, Liquidation Proceeds, Condemnation
Proceeds, PMI
Proceeds and Other Insurance Proceeds; provided, however, that
Countrywide may
reimburse itself for Servicing Advances and
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<PAGE>
Servicing Fees from any funds in the Custodial Account if all
funds, with
respect to the related Mortgage Loan, have previously been remitted
to the
Purchaser;
(d) to pay to itself as servicing compensation (i) any interest
earned
on funds in the Custodial Account (all such interest to be
withdrawn monthly not
later than each Remittance Date), and (ii) the Servicing Fee and
the LPMI Fee,
if applicable, from that portion of any payment or recovery of
interest on a
particular Mortgage Loan;
(e) to pay to itself, with respect to each Mortgage Loan that has
been
repurchased pursuant to Section 3.03 or 3.04 of the Purchase
Agreement, all
amounts received but not distributed as of the date on which the
related
Repurchase Price is determined;
(f) to reimburse itself for any amounts deposited in the
Custodial
Account in error; and
(g) to clear and terminate the Custodial Account upon the
termination
of this Agreement.
SECTION 3.06 ESTABLISHMENT OF ESCROW ACCOUNTS; DEPOSITS IN ESCROW
ACCOUNTS.
Countrywide shall segregate and hold all funds collected and
received
pursuant to each Mortgage Loan which constitute Escrow Payments
separate and
apart from any of its own funds and general assets and shall
establish and
maintain one (1) or more Escrow Accounts in the form of time
deposit or demand
accounts, which accounts shall be Eligible Accounts. Countrywide
shall provide
the Purchaser with written evidence of the creation of such Escrow
Account(s)
upon request.
Countrywide shall deposit in the Escrow Account(s) within two (2)
Business
Days, and retain therein, (a) 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 (b) all Other
Insurance Proceeds
that are to be applied to the restoration or repair of any
Mortgaged Property.
Countrywide shall make withdrawals therefrom only to effect such
payments as are
required under this Agreement, and for such other purposes in
accordance with
Section 3.07 of this Agreement. Countrywide shall be entitled to
retain any
interest paid by the depository institution on funds deposited in
the Escrow
Account except interest on escrowed funds required by law to be
paid to the
Mortgagor. Countrywide shall pay Mortgagor interest on the escrowed
funds at the
rate required by law notwithstanding that the Escrow Account is
non-interest
bearing or the interest paid by the depository institution thereon
is
insufficient to pay the Mortgagor interest at the rate required by
law.
SECTION 3.07 PERMITTED WITHDRAWALS FROM ESCROW ACCOUNT.
Countrywide may, from time to time, withdraw funds from the
Escrow
Account(s) for the following purposes: (a) to effect timely
payments of ground
rents, taxes, assessments, water rates, mortgage insurance
premiums, PMI Policy
premiums, if applicable, and comparable items; (b) to reimburse
Countrywide for
any Servicing Advance made by Countrywide with respect to a related
Mortgage
Loan; provided, however, that such reimbursement shall only be made
from
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amounts received on the related Mortgage Loan that represent late
payments or
collections of Escrow Payments thereunder; (c) to refund to the
Mortgagor any
funds as may be determined to be overages; (d) for transfer to the
Custodial
Account in accordance with the terms of this Agreement; (e) for
application to
restoration or repair of the Mortgaged Property; (f) to pay to
Countrywide, or
to the Mortgagors to the extent required by law, any interest paid
on the funds
deposited in the Escrow Account; (g) to reimburse itself for any
amounts
deposited in the Escrow Account in error; or (h) to clear and
terminate the
Escrow Account on the termination of this Agreement. As part of its
servicing
duties, Countrywide shall pay to the Mortgagors interest on funds
in Escrow
Account, to the extent required by law, and to the extent that
interest earned
on funds in the Escrow Account is insufficient, shall pay such
interest from its
own funds, without any reimbursement therefor.
SECTION 3.08 TRANSFER OF ACCOUNTS.
Countrywide may transfer the Custodial Account or the Escrow
Account to a
different depository institution from time to time provided that
such Custodial
Account and Escrow Account shall be Eligible Accounts and
Countrywide shall
notify the Purchaser in writing within a reasonable period of time
after such
transfer has taken place.
SECTION 3.09 PAYMENT OF TAXES, INSURANCE AND OTHER CHARGES;
MAINTENANCE OF
PMI POLICIES; COLLECTIONS THEREUNDER.
With
respect to each Mortgage Loan, Countrywide shall maintain
accurate
records reflecting the status of (a) ground rents, taxes,
assessments, water
rates and other charges that are or may become a lien upon the
Mortgaged
Property; (b) PMI Policy premiums and (c) fire and hazard insurance
premiums.
Countrywide shall obtain, from time to time, all bills for the
payment of such
charges, including renewal premiums, and shall effect payment
thereof prior to
the applicable penalty or termination date and at a time
appropriate for
securing maximum discounts allowable using Escrow Payments which
shall have been
estimated and accumulated by Countrywide in amounts sufficient for
such
purposes. To the extent that the Mortgage does not provide for
Escrow Payments,
Countrywide shall determine that any such payments are made by the
Mortgagor at
the time they first become due. Countrywide assumes full
responsibility for the
timely payment of all such bills and shall effect timely payments
of all such
bills, irrespective of the Mortgagor's faithful performance in the
payment of
same or the making of the Escrow Payments, and shall make advances
from its own
funds to effect such payments.
Countrywide will maintain in full force and effect, a PMI Policy
conforming
in all respects to the description set forth in Section 3.02(v) of
the Purchase
Agreement, issued by an insurer described in that Section, with
respect to each
Mortgage Loan for which such coverage is herein required. Such
coverage will be
maintained until the LTV or the Updated LTV of the related Mortgage
Loan is
reduced to 80% or less in the case of a Mortgage Loan having a LTV
at
origination in excess of 80% or Countrywide, as applicable, will
not cancel or
refuse to renew any PMI Policy in effect on the Closing Date that
is required to
be kept in force under this Agreement unless a replacement PMI
Policy is
obtained from and maintained with an insurer approved by an Agency.
Countrywide
shall not take any action that would result in non-coverage under
any applicable
PMI Policy of any loss that, but for the actions of Countrywide
would have been
covered thereunder. In connection with any assumption or
substitution
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agreement entered into or to be entered into pursuant to Section
3.16 herein,
Countrywide shall promptly notify the insurer under the related PMI
Policy, if
any, of such assumption or substitution of liability in accordance
with the
terms of such policy and shall take all actions that may be
required by such
insurer as a condition to the continuation of coverage under the
PMI Policy. If
such PMI Policy is terminated as a result of such assumption or
substitution of
liability, Countrywide shall obtain a replacement PMI Policy as
provided above.
Unless otherwise provided in the related Purchase Confirmation, no
Mortgage
Loan has in effect as of the Closing Date any mortgage pool
insurance policy or
other credit enhancement, except for any PMI Policy and the
insurance or
guarantee relating thereto, as applicable (excluding such
exception, the "Credit
Enhancement"), and Countrywide shall not be required to take into
consideration
the existence of any such Credit Enhancement for the purposes of
performing its
servicing obligations hereunder. If the Purchaser shall at any time
after the
related Closing Date notify Countrywide in writing of its desire to
obtain any
such Credit Enhancement, the Purchaser and Countrywide shall
thereafter
negotiate in good faith for the procurement and servicing of such
Credit
Enhancement.
In
connection with its activities as servicer, Countrywide agrees
to
prepare and present, on behalf of itself, and the Purchaser, claims
to the
insurer under any PMI Policy in a timely fashion in accordance with
the terms of
such PMI Policy and Acceptable Servicing Practices. Pursuant to
Subsection 3.04,
PMI Proceeds shall be deposited in the Custodial Account.
SECTION 3.10 MAINTENANCE OF HAZARD INSURANCE.
Countrywide shall cause to be maintained, for each Mortgage Loan,
fire and
hazard insurance with extended coverage as is customary in the area
where the
Mortgaged Property is located in an amount set forth in the
Underwriting
Guidelines. If the Mortgaged Property is in an area identified in
the Federal
Register by the Flood Emergency Management Agency as having special
flood
hazards and such flood insurance has been made available,
Countrywide shall
cause to be maintained a flood insurance policy meeting the
requirements of the
current guidelines of the National Flood Insurance Administration
program (or
any successor thereto) with a Qualified Insurer and with coverage
set forth in
the Underwriting Guidelines. Countrywide shall also maintain on REO
Property,
(1) fire and hazard insurance with extended coverage in an amount
that is not
less than (i) the maximum insurable value of the improvements that
are a part of
such property and (ii) the unpaid principal balance of the related
Mortgage Loan
(including any cumulative related Negative Amortization) at the
time it became
an REO Property plus accrued interest at the Mortgage Interest Rate
and related
Servicing Advances, liability insurance and, to the extent required
and
available under the National Flood Insurance Act of 1968 or the
Flood Disaster
Protection Act of 1973, as amended, flood insurance in an amount as
provided
above; (2) liability insurance; and (3) to the extent required and
available
under the National Flood Insurance Reform Act of 1994, flood
insurance in an
amount as provided above. Countrywide shall deposit in the
Custodial Account all
amounts collected under any such policies except (A) amounts to be
deposited in
the Escrow Account and applied to the restoration or repair of the
Mortgaged
Property or REO Property and (B) amounts to be released to the
Mortgagor in
accordance with Countrywide's normal servicing procedures. The
Purchaser
understands and agrees that no earthquake or other additional
insurance on
property acquired in respect of the Mortgage Loan shall be
maintained by
Countrywide or Mortgagor. All such policies shall be
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endorsed with standard mortgagee clauses with loss payable to
Countrywide and
shall provide for at least thirty (30) days prior written notice to
Countrywide
of any cancellation, reduction in the amount of coverage or
material change in
coverage. Countrywide shall not interfere with the Mortgagor's
freedom of choice
in selecting either the insurance carrier or agent; provided,
however, that
Countrywide shall only accept insurance policies from a Qualified
Insurer.
SECTION 3.11 [RESERVED].
SECTION 3.12 FIDELITY
BOND; ERRORS AND OMISSIONS INSURANCE.
Countrywide shall cause to be maintained a blanket Fidelity Bond
and an
errors and omissions insurance policy with responsible companies
with broad
coverage of all officers, employees or other persons acting in any
capacity with
regard to the Mortgage Loan who handle funds, money, documents or
papers
relating to the Mortgage Loan. The Fidelity Bond and errors and
omissions
insurance shall be in the form of the Mortgage Banker's Blanket
Bond and shall
protect and insure Countrywide against losses, including forgery,
theft,
embezzlement, fraud, errors and omissions and negligent acts of its
officers,
employees and agents. Such Fidelity Bond shall also protect and
insure
Countrywide against losses in connection with the failure to
maintain any
insurance policies required pursuant to this Agreement and the
release or
satisfaction of a Mortgage Loan without having obtained payment in
full of the
indebtedness secured thereby. No provision of this Section 3.12
shall diminish
or relieve Countrywide from its duties and obligations as set forth
in this
Agreement. The minimum coverage under any such Fidelity Bond and
errors and
omissions insurance policy shall be at least equal to the
corresponding amounts
required by an Agency for an approved seller/servicer. Upon request
of the
Purchaser, Countrywide shall provide to the Purchaser a certificate
of insurance
which certifies coverage of such Fidelity Bond and errors and
omissions
insurance policy under this Section 3.12.
SECTION 3.13 TITLE, MANAGEMENT AND DISPOSITION OF REO PROPERTY.
(a) Title. In the event that title to the Mortgaged Property is
acquired in foreclosure or by deed in lieu of foreclosure, the deed
or
certificate of sale shall be taken in the name of Countrywide for
the benefit of
the Purchaser, or in the event the Purchaser 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(s) as shall be consistent with an Opinion of Counsel
obtained by
Countrywide from an attorney duly licensed to practice law in the
state where
the REO Property is located. Any Person(s) holding such title other
than the
Purchaser shall acknowledge in writing that such title is being
held as nominee
for the benefit of the Purchaser.
(b) Management.
Countrywide shall either itself or through an agent selected by
Countrywide, manage, conserve, protect and operate each REO
Property in the same
manner that it manages, conserves, protects and operates other
foreclosed
property for its own account, and in accordance with Accepted
Servicing
Practices. Countrywide shall cause each REO Property to be
inspected
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promptly upon the acquisition of title thereto and shall cause each
REO Property
to be inspected at least annually thereafter or more frequently as
required by
the circumstances. Countrywide shall make or cause to be made a
written report
of each such inspection. Such reports shall be retained in the
Credit File and
copies thereof shall be forwarded by Countrywide to the Purchaser
within five
(5) days of the Purchaser's request therefore. Countrywide shall
attempt to sell
the REO Property (and may temporarily rent the same) on such terms
and
conditions as Countrywide deems to be in the best interest of the
Purchaser.
Countrywide shall deposit, or cause to be deposited, within two (2)
Business
Days of receipt, in each REO Account all revenues received with
respect to each
REO Property and shall withdraw therefrom funds necessary for the
proper
operation, management and maintenance of each REO Property,
including the cost
of maintaining any hazard insurance pursuant to Section 3.10 hereof
and the fees
of any managing agent acting on behalf of Countrywide.
Notwithstanding anything
contained in this Agreement to the contrary, upon written notice to
Countrywide,
the Purchaser may elect to assume the management and control of any
REO
Property; provided, however, that prior to giving effect to such
election, the
Purchaser shall reimburse Countrywide for all previously
unreimbursed or unpaid
Monthly Advances, Servicing Advances and Servicing Fees related to
such REO
Property.
(c) Disposition.
Subject to the following paragraph, Countrywide shall use its best
efforts
to dispose of each REO Property as soon as possible and shall sell
each REO
Property no later than one (1) year after title to such REO
Property has been
obtained, unless Countrywide determines, and gives an appropriate
notice to the
Purchaser, that a longer period is necessary for the orderly
disposition of any
REO Property. If a period longer than one (1) year is necessary to
sell any REO
Property, Countrywide shall report monthly to the Purchaser as to
the progress
being made in selling such REO Property. Notwithstanding the
foregoing, if a
REMIC election is made with respect to the arrangement under which
the REO
Property is held, such REO Property shall be disposed of before the
close of the
third taxable year following the taxable year in which the Mortgage
Loan became
an REO Property, unless Countrywide provides to the Purchaser under
such REMIC
an Opinion of Counsel to the effect that the holding of such REO
Property
subsequent to the close of the third taxable year following the
taxable year in
which the Mortgage Loan became an REO Property, will not result in
the
imposition of taxes on "prohibited transactions" as defined in
Section 860F of
the Code, or cause the transaction to fail to qualify as a REMIC at
any time
that certificates are outstanding. Additionally, Countrywide shall
perform the
tax withholding and reporting as required by 6050J of the Code.
Each
REO Disposition shall be carried out by Countrywide at such price
and
upon such terms and conditions as Countrywide deems to be in a
manner that
maximizes the net present value of the recovery to the Purchaser.
If, as of the
date title to any REO Property was acquired by Countrywide there
were
outstanding unreimbursed Servicing Advances, Monthly Advances or
Servicing Fees
with respect to the REO Property or the related Mortgage Loan,
Countrywide upon
an REO Disposition of such REO Property, shall be entitled to
reimbursement for
any related unreimbursed Servicing Advances, Monthly Advances and
Servicing Fees
from proceeds received in connection with such REO Disposition. The
proceeds
from the REO Disposition, net
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of any payment to Countrywide as provided above, shall be deposited
in the
Custodial Account and distributed to the Purchaser in accordance
with Section
4.01 of this Agreement.
SECTION 3.14 NOTIFICATION OF ADJUSTMENTS.
With
respect to each Adjustable Rate Mortgage Loan, Countrywide
shall
adjust the Mortgage Interest Rate on the related Interest
Adjustment Date and
shall adjust the Monthly Payment on the related Payment Adjustment
Date in
compliance with the requirements of applicable law and the related
Mortgage and
Mortgage Note. If, pursuant to the terms of the Mortgage Note,
another index is
selected for determining the Mortgage Interest Rate because the
original index
is no longer available, the same index will be used with respect to
each
Mortgage Note which requires a new index to be selected, provided
that such
selection does not conflict with the terms of the related Mortgage
Note.
Countrywide 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 the Monthly Payment
adjustments.
Countrywide shall promptly, upon the written request therefor,
deliver to the
Purchaser such notifications and any additional applicable data
regarding such
adjustments and the methods used to calculate and implement such
adjustments.
Upon the discovery by Countrywide or the Purchaser that Countrywide
has failed
to adjust a Mortgage Interest Rate or a Monthly Payment pursuant to
the terms of
the related Mortgage Note and Mortgage, Countrywide shall
immediately deposit in
the Custodial Account, from its own funds, the amount of any
interest loss
caused the Purchaser thereby without reimbursement therefor.
SECTION 3.15 NOTIFICATION OF MATURITY DATE.
With
respect to each Balloon Mortgage Loan, Countrywide shall execute
and
deliver to the Mortgagor any and all necessary notices required
under applicable
law and the terms of the related Mortgage Note and Mortgage
regarding the
maturity date and final balloon payment.
SECTION 3.16 ASSUMPTION AGREEMENTS.
Countrywide shall, to the extent it has knowledge of any conveyance
or
prospective conveyance by any Mortgagor of the Mortgaged Property
(whether by
absolute conveyance or by contract of sale, and whether or not the
Mortgagor
remains or is to remain liable under the Mortgage Note and/or the
Mortgage),
exercise its rights to accelerate the maturity of such Mortgage
Loan under any
"due-on-sale" clause to the extent permitted by law; provided,
however, that
Countrywide shall not exercise any such right if prohibited from
doing so by law
or the terms of the Mortgage Note or if the exercise of such right
would impair
or threaten to impair any recovery under the related PMI Policy, if
any. If
Countrywide reasonably believes it is unable under applicable law
to enforce
such "due-on-sale" clause, Countrywide shall enter into an
assumption agreement
with the Person to whom the Mortgaged Property has been conveyed or
is proposed
to be conveyed, pursuant to which such Person becomes liable under
the Mortgage
Note and, to the extent permitted by applicable state law, the
Mortgagor remains
liable thereon. Where an assumption is allowed pursuant to this
Section 3.16,
the Purchaser authorizes Countrywide, with the prior written
consent of the
insurer under the related PMI Policy, if any, to enter into a
substitution of
liability agreement with the Person to whom the Mortgaged Property
has been
conveyed or is proposed to be conveyed pursuant to which the
original
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Mortgagor is released from liability and such Person is substituted
as Mortgagor
and becomes liable under the related Mortgage Note. Any such
substitution of
liability agreement shall be in lieu of an assumption
agreement.
In
connection with any such assumption or substitution of
liability,
Countrywide shall follow the underwriting practices and procedures
employed by
Countrywide for mortgage loans originated by Countrywide for its
own account in
effect at the time such assumption or substitution is made. With
respect to an
assumption or substitution of liability, the Mortgage Interest Rate
borne by the
related Mortgage Note, the term of the Mortgage Loan, the
outstanding principal
amount of the Mortgage Loan and the final maturity date of such
Mortgage Loan
shall not be changed. Countrywide shall notify the Purchaser that
any such
substitution of liability or assumption agreement has been
completed by
forwarding to the Purchaser or its designee the original of any
such
substitution of liability or assumption agreement, which document
shall be added
to the related Collateral File and shall, for all purposes, be
considered a part
of such Collateral File to the same extent as all other documents
and
instruments constituting a part thereof.
Notwithstanding anything to the contrary contained herein,
Countrywide
shall not be deemed to be in default, breach or any other violation
of its
obligations hereunder by reason of any assumption of a Mortgage
Loan by
operation of law or any assumption that Countrywide may be
restricted by law
from preventing, for any reason whatsoever. For purposes of this
Section 3.16,
the term "assumption" is deemed to also include a sale of the
Mortgaged Property
subject to the Mortgage that is not accompanied by an assumption or
substitution
of liability agreement.
SECTION 3.17 SATISFACTION OF MORTGAGES AND RELEASE OF COLLATERAL
FILES.
Upon
the payment in full of any Mortgage Loan, or the receipt by
Countrywide of a notification that payment in full will be escrowed
in a manner
customary for such purposes, Countrywide shall immediately notify
the Purchaser.
Such notice shall include a statement to the effect that all
amounts received or
to be received in connection with such payment, which are required
to be
deposited in the Custodial Account pursuant to Section 3.04 of this
Agreement,
have been or will be so deposited and shall request delivery to it
of the
portion of the Collateral File held by the Purchaser. Upon receipt
of such
notice and request, the Purchaser, or the Custodian, shall within
five (5)
Business Days release or cause to be released to Countrywide the
related
Collateral Documents and Countrywide shall prepare and process any
satisfaction
or release. In the event that the Purchaser or the Custodian fails
to release or
cause to be released to Countrywide the related Collateral
Documents within five
(5) Business Days of Countrywide's request therefor, the Purchaser
shall be
liable to Countrywide for any additional expenses or costs,
including, but not
limited to, outsourcing fees and penalties, incurred by Countrywide
resulting
from such failure. No expense incurred in connection with any
instrument of
satisfaction or deed of reconveyance shall be chargeable to the
Custodial
Account.
In
the event Countrywide satisfies or releases a Mortgage without
having
obtained payment in full of the indebtedness secured by the
Mortgage or should
it otherwise prejudice any right the Purchaser may have under the
mortgage
instruments, Countrywide, upon written demand, shall remit to the
Purchaser the
then unpaid principal balance of the related Mortgage
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Loan by deposit thereof in the Custodial Account. Countrywide shall
maintain the
Fidelity Bond insuring Countrywide against any loss it may sustain
with respect
to any Mortgage Loan not satisfied in accordance with the
procedures set forth
herein.
From
time to time and as appropriate for the service or foreclosure of
a
Mortgage Loan, including for the purpose of collection under any
PMI Policy, the
Purchaser shall, within five (5) Business Days of Countrywide's
request and
delivery to the Custodian of a servicing receipt signed by a
Servicing Officer,
release or cause to be released to Countrywide the portion of the
Collateral
File held by the Purchaser or its designee. Pursuant to the
servicing receipt,
Countrywide shall be obligated to return to the Purchaser the
related Collateral
File when Countrywide no longer needs such file, unless the
Mortgage Loan has
been liquidated and the Liquidation Proceeds relating to the
Mortgage Loan have
been deposited in the Custodial Account or the Collateral File or
such document
has been delivered to an attorney, or to a public trustee or other
public
official as required by law, for purposes of initiating or pursuing
legal action
or other proceedings for the foreclosure of the Mortgaged Property
either
judicially or non-judicially. In the event that the Purchaser or
the Custodian
fails to release or cause to be released to Countrywide the related
Collateral
Documents within five (5) Business Days of Countrywide's request
therefor, the
Purchaser shall be liable to Countrywide for any additional
expenses or costs,
including, but not limited to, outsourcing fees and penalties,
incurred by
Countrywide resulting from such failure. Upon receipt of notice
from Countrywide
stating that such Mortgage Loan was liquidated, the Purchaser shall
release
Countrywide from its obligations under the related servicing
receipt.
SECTION 3.18 SERVICING COMPENSATION.
As
compensation for its services hereunder, Countrywide shall be
entitled
to withdraw from the Custodial Account the amount of its Servicing
Fee. The
Servicing Fee shall be payable monthly and shall be computed on the
basis of the
unpaid principal balance and for the period respecting which any
related
interest payment on a Mortgage Loan is received. The obligation of
the Purchaser
to pay the Servicing Fee is limited to, and payable solely from,
the interest
portion (including recoveries with respect to interest from
Liquidation
Proceeds, to the extent permitted by Section 3.05) of such Monthly
Payments.
Additional servicing compensation in the form of assumption fees
(as
provided in Section 3.16 of this Agreement), Prepayment Charges,
late payment
charges and other ancillary fees shall be retained by Countrywide
to the extent
not required to be deposited in the Custodial Account. Countrywide
shall be
required to pay all expenses incurred by it in connection with its
servicing
activities hereunder and shall not be entitled to reimbursement
therefor except
as specifically provided herein.
SECTION 3.19 SUPERIOR LIENS.
In
the event that Countrywide has reasonable cause to believe or has
been
notified that either a senior or junior lien is in default,
Countrywide shall
attempt to determine the status of the related senior lien, if
applicable.
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If
Countrywide discovers, upon investigation of the status of the
senior
lien pursuant to the previous paragraph, that any superior
lienholder has
accelerated or intends to accelerate the obligations secured by the
first lien,
or has declared or intends to declare a default under the mortgage
or promissory
note secured thereby, or has filed or intends to file an election
to have the
related Mortgaged Property sold or foreclosed, Countrywide shall
take, on behalf
of the Purchaser, whatever actions are necessary to protect the
interests of the
Purchaser in accordance with Accepted Servicing Practices,
including advancing
an amount that is greater than the then outstanding principal
balance of the
related Second Lien Mortgage Loan. Notwithstanding anything to the
contrary set
forth herein, Countrywide shall not be required to make any
Servicing Advance
(including those contemplated in this Section 3.19) if it
determines in its
reasonable good faith judgment that such Servicing Advance would
not be
recoverable pursuant to the Agreement.
SECTION 3.20 COMPLIANCE WITH REMIC PROVISIONS.
If a
REMIC election has been made with respect to the arrangement
under
which the Mortgage Loans and REO Property are held, Countrywide
shall not take
any action, cause the REMIC to take any action or fail to take (or
fail to cause
to be taken) any action that, under the REMIC Provisions, if taken
or not taken,
as the case may be, could (i) materially and adversely affect the
status of the
REMIC as a REMIC or (ii) result in the imposition of a tax upon the
REMIC
(including but not limited to the tax on "prohibited transactions"
as defined in
Section 860F(a)(2) of the Code and the tax on "contributions" to a
REMIC set
forth in Section 860G(d) of the Code) unless Countrywide has
received an Opinion
of Counsel (at the expense of the party seeking to take such
action) to the
effect that the contemplated action will not endanger such REMIC
status or
result in the imposition of any such tax.
ARTICLE IV.
PROVISIONS OF PAYMENTS AND REPORTS TO PURCHASER
SECTION 4.01 DISTRIBUTIONS.
On
each Remittance Date, Countrywide shall distribute to the Purchaser
(a)
all amounts credited to the Custodial Account as of the close of
business on the
preceding Determination Date, net of charges against or withdrawals
from the
Custodial Account pursuant to Section 3.05 hereof; plus (b) all
Monthly
Advances, if any, that Countrywide is obligated to distribute
pursuant to
Section 4.03 of this Agreement; minus (c) any amounts attributable
to Principal
Prepayments received after the related Principal Prepayment Period;
minus (d)
any amounts attributable to Monthly Payments collected but due on a
Due Date or
Dates subsequent to the preceding Determination Date. It is
understood that, by
operation of Section 3.04 hereof, the remittance on the first
Remittance Date is
to include principal collected after the Cut-off Date through the
preceding
Determination Date plus interest, adjusted to the Mortgage Loan
Remittance Rate,
collected through such Determination Date exclusive of any portion
thereof
allocable to the period prior to the Cut-off Date, with the
adjustments
specified in (b), (c) and (d) above.
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All
distributions made to the Purchaser on each Remittance Date will
be
made to the Purchaser and shall be based on the Mortgage Loans
owned and held by
the Purchaser, and shall be made by wire transfer of immediately
available funds
to the account of the Purchaser.
With
respect to any remittance received by the Purchaser on or after
the
first Business Day following the Business Day on which such payment
was due,
Countrywide shall pay to the Purchaser interest on any such late
payment at an
annual rate equal to the rate of interest as is publicly announced
from time to
time at its principal office by JPMorgan Chase Bank, New York, New
York, as its
prime lending rate, adjusted as of the date of each change, plus
two percentage
points, but in no event greater than the maximum amount permitted
by applicable
law. Such interest shall be paid by Countrywide to the Purchaser on
the date
such late payment is made and shall cover the period commencing
with the day
following such second Business Day and ending with the Business Day
on which
such payment is made. Such interest shall be remitted along with
such late
payment. The payment by Countrywide of any such interest shall not
be deemed an
extension of time for payment or a waiver of any Event of Default
by
Countrywide.
SECTION 4.02 PERIODIC REPORTS TO THE PURCHASER.
(a) Monthly Reports. Not later than each Remittance Date,
Countrywide
will furnish to the Purchaser a monthly report ("Monthly Remittance
Advice") in
an electronic form mutually agreeable to the Purchaser and
Countrywide as to the
upcoming remittance and the related Due Period
(b) Miscellaneous Reports. Upon the foreclosure sale of any
Mortgaged
Property or the acquisition thereof by the Purchaser pursuant to a
deed-in-lieu
of foreclosure, Countrywide shall submit to the Purchaser a
liquidation report
with respect to such Mortgaged Property, which report may be
included with any
other reports prepared by Countrywide and delivered to the
Purchaser pursuant to
the terms and conditions of this Agreement. With respect to any REO
Property,
and upon the request of the Purchaser, Countrywide shall furnish to
the
Purchaser a statement describing Countrywide's efforts during the
previous month
in connection with the sale of such REO Property, including any
rental of such
REO Property incidental to the sale thereof and an operating
statement.
Countrywide shall also provide the Purchaser with such information
concerning
the Mortgage Loans as is necessary for the Purchaser to prepare its
federal
income tax return and as the Purchaser may reasonably request from
time to time.
The Purchaser agrees to pay for all reasonable out-of-pocket
expenses incurred
by Countrywide in connection with c
