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EXECUTION
ASSIGNMENT, ASSUMPTION AND RECOGNITION
AGREEMENT
This is an Assignment, Assumption and Recognition
Agreement (this "AAR Agreement") made as of December 1, 2006, 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 Securitization Corporation Trust 2006-HE2 (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"), which are subject to that certain
Mortgage Loan Servicing Rights Purchase and Servicing Agreement,
dated as of December 1, 2006, between the Assignor and the Company,
as amended by that certain Amendment Reg AB dated as of December 1,
2006 (the "Servicing Agreement"), shall be subject to the terms of
this AAR Agreement. A copy of the relevant servicing provisions of
the Servicing Agreement is attached as Exhibit 2 hereto.
Capitalized terms used herein but not defined shall have the
meanings ascribed to them in the Servicing Agreement.
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 its right,
title, interest and obligations in, to and under the Servicing
Agreement and the Depositor hereby assumes all rights and
obligations with respect to the Assigned Loans under the Servicing
Agreement. 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 Servicing Agreement other than those
set forth on Exhibit l.
Recognition of the Assignee and Assumption by
the Assignee
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2. From and after
the date hereof, the Servicer shall and does hereby recognize that
the Depositor will transfer the Assigned Loans and assign its
rights and obligations under the Servicing Agreement (solely to the
extent set forth herein) and this AAR Agreement to the Assignee
pursuant to a Pooling and Servicing Agreement, dated as of November
1, 2006 (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), OfficeTiger Global Real Estate Services Inc.,
as credit risk manager, the Master Servicer, Citibank, N.A., as
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
Assignor under the Servicing Agreement with respect to the Assigned
Loans and (2) the obligations of the Assignor under Section 7.1 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 Assignor under the Servicing Agreement with
respect to the Assigned Loans and (2) the obligations of the
Assignor under Section 7.1 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 Servicing Agreement, 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 Assignor (insofar as
they relate to the rights, title and interest and, with respect to
obligations of the Assignor, only insofar as they relate to (1) the
covenants of the Assignor under the Servicing Agreement with
respect to the Assigned Loans and (2) the obligations of the
Assignor under Section 7.1 of the Servicing Agreement with respect
to the Assigned Loans) under the Servicing Agreement 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, waive, or otherwise alter any of
the terms or provisions of the Servicing Agreement 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:
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a.
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Attached hereto as Exhibit 2 is a true and
accurate copy of the relevant provisions 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 modified in any respect, nor has any notice of
termination been given thereunder;
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b.
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Assignor has the full right to transfer any and
all of its interests, rights and obligations under the Servicing
Agreement as they relate to the Assigned Loans, free and clear of
any and all claims and encumbrances; and upon transfer to Assignee,
Assignee shall have any and all of Assignor's interests, rights and
obligations under the Servicing Agreement as they relate to the
Assigned Loans, free and clear of any and all claims and
encumbrances;
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c.
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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 Servicing Agreement;
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d.
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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 transfer its interest, rights and obligations
under the Servicing Agreement;
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e.
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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.
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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
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g.
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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.
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4. Assignee warrants
and represents to, and covenants with, Assignor, the Depositor, the
Servicer and the Company as of the date hereof:
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a.
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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.
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b.
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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.
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c.
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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 proceed-ing in equity or at law).
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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:
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a.
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The 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;
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b.
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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 incorporation, as the case may
be, and has all requisite power and authority to perform its
obligations under the Servicing Agreement;
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c.
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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;
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d.
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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;
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e.
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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 the Servicer’s or the Company's ability to
perform its obligations under this AAR Agreement; and
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f.
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The Company hereby represents and warrants, for
the benefit of the Assignor and the Assignee, that the
representations and warranties set forth in Section 3.1 of the
Servicing Agreement, are true and correct in all material respects
as of the date hereof. The Servicer hereby represents and warrants,
for the benefit of the Assignor and the Assignee, that the
representations and warranties set forth in Section 3.2 of the
Servicing Agreement, are true and correct in all material respects
as of the date hereof.
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Amendment of the Servicing Agreement
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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:
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a.
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The definition of "Business Day" in Article 1 is
hereby amended in its entirety to read as follows:
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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.
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b.
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A new definition of "Permitted Investments" is
hereby added to Article 1 immediately following the definition of
"Periodic Rate Cap" to read as follows:
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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;
(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
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(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.
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The following new definitions are hereby added to
Article 1 immediately following the definition of "Qualified
Insurer" to read as follows:
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Rating Agency : Any nationally
recognized statistical rating agency rating the securities issued
in the applicable Pass-Through Transfer.
REMIC : A A real
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.
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d.
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A new paragraph is added at the end of Section
5.2 to read as follows:
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Servicer shall not waive any Prepayment Penalty
with respect to any Mortgage Loan which contains a Prepayment
Penalty which prepays during the term of the penalty. If Servicer
fails to collect the Prepayment Penalty upon any prepayment of any
Mortgage Loan which contains a Prepayment Penalty, Servicer shall
pay the Seller at such time (by deposit to the Custodial Account)
an amount equal to amount of the Prepayment Penalty which was not
collected. Notwithstanding the above, Servicer may waive a
Prepayment Penalty without paying the Seller the amount of the
Prepayment Penalty (i) if the Mortgage Loan is in default and such
waiver would maximize recovery of total proceeds taking into
account the value of such Prepayment Penalty and the related
Mortgage Loan, and the waiver of such Prepayment Penalty is
standard and customary in servicing similar Mortgage Loans
(including the waiver of a Prepayment Penalty in connection with a
refinancing of the Mortgage Loan related to a default or a
reasonably foreseeable default), (ii) if the collection of the
Prepayment Penalty would be in violation of applicable laws, (iii)
if the collection of such Prepayment Penalty would be considered
"predatory" pursuant to written guidance published or issued by any
applicable federal, state or local regulatory authority acting in
its official capacity and having jurisdiction over such matters and
(iv) notwithstanding any state or federal law to the contrary, any
instance when a Mortgage Loan is in foreclosure.
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e.
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The first paragraph of Section 5.4 of the
Servicing Agreement (Establishment of Custodial Accounts; Deposits
in Custodial Accounts) is hereby amended to read as
follows:
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(i)
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Servicer 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 a Custodial Account entitled ‘in trust
for the Trustee on behalf of the HSI Asset Securitization
Corporation Trust 2006-HE2 Trust’, in the form of time
deposit or demand accounts. Servicer shall provide the Seller with
written evidence of the creation of such Custodial Account(s) upon
the request of the Seller;
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(ii)
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by adding a new paragraph at the end of the
section to read as follows:
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"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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f.
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A new Section 5.20 (Compliance with REMIC
Provisions) is hereby added to the Servicing Agreement to read as
follows:
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Section 5.20. 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.
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g.
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Section 6.2(a) is hereby amended by replacing the
reference to "each Remittance Date" with "the eighteenth (18
th ) calendar day (or if such day is not a Business Day,
the immediately following Business Day) of the month of each
Remittance Date."
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h.
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Sections 6.4 and 6.5 are hereby deleted in their
entirety.
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i.
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Section 7.5 (Servicer Not to Resign) is hereby
amended by replacing each reference to "the Seller" with "the
Master Servicer."
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j.
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Section 8.1 (Termination Due to an Event of
Default) is hereby amended by replacing each reference to "the
Seller" with "the Master Servicer."
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k.
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A new Section 9.19 (Amendment) is hereby added to
the Servicing Agreement to read as follows:
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SECTION 9.19. 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(b) of the
pooling and servicing agreement, including the delivery of any
opinion of counsel required therein.
7. All remittances
required to be made by the Servicer to the Seller 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: 3617-2242
Ref: HASCO 2006-HE2 A/C# 106229
8. Pursuant to
Section 6.2(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.
9. 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 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.
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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 HSI Asset Securitization Corporation Trust
2006-HE2, 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 HSI Asset Securitization Corporation Trust
2006-HE2, (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 HSI Asset Securitization Corporation Trust 2006-HE2
(including, but not limited to, any amounts to be paid under the
Servicing Agreement), or be liable for the breach or failure of any
obligation, representation, warranty or covenant made or undertaken
by the HSI Asset Securitization Corporation Trust 2006-HE2 under
this AAR Agreement, the Pooling Agreement or any related
document.
Miscellaneous
10. 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 and Michael
Schloessmann
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
452 Fifth Avenue
New York, New York 10018
Attention: HASCO 2006-HE2
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d. In the case of
Depositor,
HSI Asset Securitization Corporation
452 Fifth Avenue, 10 th Floor
New York, New York 10018
Attention: Head MBS Principal Finance
e. In the case of
the Trustee,
Deutsche Bank National Trust Company
1761 East St. Andrew Place
Santa Ana, California 92705
Attention: Trust Administration - HB06H2
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 -
HE2
Telephone: (469) 220-0916
Facsimile: (469) 220-1572
11. 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.
12. 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.
13. 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.
14. 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.
15. In the event
that any provision of this AAR Agreement conflicts with any
provision of the Servicing Agreement with respect to the Assigned
Loans, the terms of this AAR Agreement shall control.
11
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: /s/ Jon E Voigtman
Name: Jon E. Voigtman
Title: Managing Driector #14311
HSI ASSET SECURITIZATION CORPORATION
Depositor
By: /s/ Andrea Lenox
Name: Andrea Lenox
Title: Vice President
COUNTRYWIDE HOME LOANS, INC.
Company
By: /s/ Kushal Bhakta
Name: Kushal Bhakta
Title: First Vice President
COUNTRYWIDE HOME LOANS SERVICING LP
By: Countrywide GP, Inc., its General Partner
Servicer
By: /s/ Kushal
Bhakta
Name: Kushal Bhakta
Title: First Vice President
DEUTSCHE BANK NATIONAL TRUST COMPANY
not in its individual capacity, but solely as
Trustee on behalf
of HSI Asset Securitization Corporation Trust 2006-HE2
under the Pooling Agreement
By: /s/ Melissa Wilman
Name: Melissa Wilman
Title: Vice President
CITIMORTGAGE, INC. , as Master
Servicer
By: /s/ Tommy R Harris
Name: Tommy R Harris
Title: Senior Vice President
EXHIBIT l
ASSIGNED LOAN SCHEDULE
1-1
EXHIBIT 2
SERVICING AGREEMENT
2-1
The following are excerpts of the
relevant servicing provisions of:
MORTGAGE LOAN SERVICING RIGHTS
PURCHASE AND SERVICING AGREEMENT
This Mortgage Loan Servicing Rights Purchase and
Servicing Agreement is dated and effective as of December 1, 2006
(the "Agreement"), among HSBC Bank USA, N.A., having an address at
452 Fifth Avenue, New York, NY 10018 (the "Seller"), and
Countrywide Home Loans, Inc., having an address at 4500 Park
Granada, Calabasas, California 91302 ("Countrywide") and
Countrywide Home Loans Servicing LP, having an address at 7105
Corporate Drive, Plano, Texas 75024 (the "Servicer").
ARTICLE I
DEFINITIONS
Unless the context otherwise requires, 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 or defined in a Purchase
Confirmation that conflicts with the corresponding definition set
forth herein shall supercede such term:
Accepted Servicing Practices : With respect to any Mortgage Loan, procedures (including
collection procedures) that comply with applicable federal, state
and local law and that the Seller customarily employs and exercises
in servicing and administering mortgage loans for its own account
and that are in accordance with accepted servicing practices of
prudent mortgage lending institutions which service mortgage loans
of the same type as the Mortgage Loans in the jurisdiction where
the related Mortgaged Property is located.
Adjustable Rate Mortgage Loan or ARM : 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.
Agencies : Both the
Federal National Mortgage Association and Federal Home Loan
Mortgage Corporation.
Agreement : This Mortgage
Loan Servicing Rights Purchase and Servicing Agreement, including
all exhibits and supplements hereto, and all amendments
hereof.
Appraised Value : With
respect to any Mortgage Loan, the value of the related Mortgaged
Property based upon the lesser of (i) the appraisal made for the
originator at the time of origination of the Mortgage Loan and (ii)
the purchase price of the Mortgaged Property at the time of
origination of the Mortgage Loan, provided, however, that with
respect to a refinanced Mortgage Loan in which the Mortgagor
purchased the related Mortgaged Property twelve (12) months or more
prior to the origination date of such refinanced Mortgage Loan,
such value is based solely upon the appraisal made at the time of
origination of such refinanced Mortgage Loan.
Assignment Agreement : An
assignment, assumption and recognition agreement or assignment and
assumption agreement duly executed by and between Seller and
Countrywide with respect to an assignment and assumption agreement
or by and between Seller, Countrywide and the applicable Company
with respect to an assignment, assumption and recognition
agreement, in each case, in the form set forth in Exhibit G
attached hereto.
1
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.
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 States of California or
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 all 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 Servicing Rights
Package.
Closing Date : With
respect to each sale and purchase of a Servicing Rights Package as
contemplated hereunder, the closing date on which the purchase and
sale of the Servicing Rights constituting a Servicing Rights
Package is consummated, as set forth in the related Trade
Confirmation and Purchase Confirmation.
Code : The Internal
Revenue Code of 1986, as it may be amended from time to time or any
successor statute thereto, and applicable U.S. Department of
Treasury regulations issued pursuant thereto.
Company : The Person that
originated or acquired the Mortgage Loans and sold the Mortgage
Loans to the Seller pursuant to a Purchase Agreement. The related
Company will be as defined in the related Assignment
Agreement.
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 : Any entity
which purchases the Servicing Rights pursuant to this Agreement or
its successor in interest or any successor or assign to or designee
of Countrywide under this Agreement as herein provided. Unless the
context requires otherwise, all references to "Countrywide" in this
Agreement shall be deemed to include such successors in interest,
assignees or designees of Countrywide including Countrywide Home
Loans Servicing LP.
Custodial Account : The
account or accounts created and maintained pursuant to
Section 5.4 , each of which shall be an Eligible
Account.
Cut-off Date : With
respect to each sale and purchase of a Servicing Rights Package as
contemplated hereunder, the cut-off date as set forth in the
related Purchase Confirmation.
Determination Date : With
respect to each Remittance Date, the fifteenth (15
th ) day of the
calendar month in which such Remittance Date occurs or, if such
fifteenth (15 th
) day is not a Business Day, the Business Day
immediately succeeding.
Due Date : The day of the
month on which a Monthly Payment is due on a Mortgage Loan,
exclusive of any days of grace.
2
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 5.6 , each of which shall be an Eligible
Account.
Escrow Payments : The
amounts held in an Escrow Account which include amounts being held
for payment of taxes, assessments, water rates, fire and hazard
insurance premiums and other payments required to be escrowed by
the Mortgagor pursuant to a Mortgage Loan.
Event of Default : Any
one of the conditions or circumstances enumerated in
Section 8.1 .
FDIC : The Federal
Deposit Insurance Corporation, or any successor thereto.
FHA : The Federal Housing
Administration.
Fannie Mae : The Federal
National Mortgage Association or any successor
organization.
Fidelity Bond : A
fidelity bond to be maintained by Countrywide pursuant to
Section 5.12 .
Final Recovery Determination : With respect to any defaulted Mortgage Loan or any REO
Property (other than a Mortgage Loan or REO Property purchased by
Servicer pursuant to this Agreement), a determination made by
Servicer that all Insurance Proceeds, Liquidation Proceeds and
other payments or recoveries which Servicer, in its reasonable good
faith judgment, expects to be finally recoverable in respect
thereof have been so recovered. Servicer shall maintain records,
prepared by a servicing officer of Servicing, of each Final
Recovery Determination.
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 the Mortgage Interest Rate for such Mortgage
Loan.
Hazardous Substances :
Any substances, materials or waste that are or become regulated
under applicable federal, state or local laws or regulations or
that are classified as hazardous or toxic under federal, state or
local laws or regulations.
Index : With respect to
any Adjustable Rate Mortgage Loan, the index rate as set forth in
the applicable Mortgage Note which is added to the Gross Margin to
determine the Mortgage Interest Rate on each Interest Adjustment
Date.
Interest Adjustment Date : With respect to each Mortgage Loan, the date on which an
adjustment to the Mortgage Interest Rate on a Mortgage Note becomes
effective.
3
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, 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.
Liquidation Proceeds :
Amounts, other than PMI Proceeds, Condemnation Proceeds, Other
Insurance Proceeds and REO Disposition proceeds, received by
Countrywide in connection with the liquidation of a defaulted
Mortgage Loan through trustee's sale, foreclosure sale or
otherwise.
LPMI Fee : With respect
to an LPMI Loan, the LPMI Fee Rate for such LPMI Loan times
the Stated Principal Balance of the LPMI Loan as of the applicable
Cut-off Date.
LPMI Fee Rate : 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 LPMI 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.
LPMI Policy : A policy of
private mortgage guaranty insurance relating to a Mortgage Loan
issued by a Qualified Insurer and paid by the lender.
Loan-to-Value Ratio or LTV : With
respect to any Mortgage Loan, the ratio of the original outstanding
principal amount to the Appraised Value of the Mortgage
Loan.
MERS : Mortgage
Electronic Registration Systems, Inc. or any successor or assign
thereto.
MERS ®
System : The electronic system
of recording transfers of mortgages maintained by MERS.
MIN : The mortgage
identification number issued to each Mortgage Loan registered with
MERS on the MERS® System.
MOM Loan : A Mortgage
Loan that was registered on the MERS® System at the time of
origination thereof and for which MERS appears as the record
mortgagee on the related Mortgage, solely as nominee for the
originator of such Mortgage Loan, and its successors and assigns,
at the origination thereof.
Monthly Advances : The
aggregate of the advances made by Seller on any Remittance Date
pursuant to Section 6.3 of this Agreement.
Monthly Payment : The
scheduled monthly payment of principal and interest on a Mortgage
Loan.
Mortgage : The mortgage,
deed of trust or other such instrument securing a Mortgage Note,
which creates a first lien or second lien, as specified in the
related Mortgage Loan Schedule, on an unsubordinated estate in fee
simple in real property securing the Mortgage Note or a first lien
or second lien, as specified in the related Mortgage Loan Schedule,
upon a leasehold estate of Mortgagor, as the case may
be.
Mortgage File : The file
containing the Mortgage Loan Documents, all other documents in
connection with the origination of a particular Mortgage Loan, and
all appraisals and/or appraisal reviews and/or any property
valuations relating to a Mortgaged Property.
4
Mortgage Interest Rate :
The annual rate at which interest accrues on any Mortgage Loan,
exclusive of any primary mortgage insurance, as adjusted from time
to time in accordance with the provisions of the related Mortgage
Note, if applicable.
Mortgage Loan : A
mortgage loan identified in a Mortgage Loan Schedule and related to
the Servicing Rights purchased by Countrywide pursuant to this
Agreement.
Mortgage Loan Documents :
The following documents pertaining to any Mortgage Loan:
(a) The original
Mortgage Note bearing all intervening endorsements, endorsed "Pay
to the order of ____________ without recourse" and signed in the
name of the Seller by an authorized officer;
(b) The original
Assignment of Mortgage for each Mortgage Loan [in blank] or, in the
event that the Seller has sent such Assignment of Mortgage for
recordation with the applicable public recording office, a copy
thereof certified by the Seller to be a true and correct copy of
the original sent for recordation (except for Mortgage Loans
registered with the MERS® System);
(c) The original
Mortgage (or certified copy thereof) with evidence of recording
thereon (except for MOM Loans, evidence of the related
MIN);
(d) The originals of
all intervening assignments of mortgage with evidence of recording
thereon (except for Mortgage Loans registered with the MERS®
System, in which case, the originals of all intervening assignments
of mortgage with evidence of recording thereon from the originator
to MERS); and
(e) The original
mortgagee title insurance policy.
Mortgage Loan Remittance Rate
: With respect to each Mortgage Loan, the interest
rate payable to Seller on each Remittance Date which shall equal
the Mortgage Interest Rate less the Servicing Fee Rate and the LPMI
Fee Rate, if applicable.
Mortgage Loan Schedule :
With respect to each Servicing Rights Package, the schedule of
Mortgage Loans included therein and made a part of the related
Purchase Confirmation as Exhibit A thereto.
Mortgage Note : The note
or other evidence of the indebtedness of a Mortgagor secured by a
Mortgage.
Mortgaged Property : The
real property securing repayment of the debt evidenced by a
Mortgage Note.
Mortgagor : An 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.
Other Insurance Proceeds : Proceeds of any title policy, hazard policy, pool policy or
other insurance policy covering a Mortgage Loan, other than the PMI
Policy, if any, 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.
Payment Adjustment Date :
As to each Mortgage Loan, the date on which an adjustment to the
Monthly Payment on a Mortgage Note becomes effective.
5
Person : Any individual,
corporation, partnership, limited liability company, joint venture,
association, joint-stock company, trust, unincorporated
organization or government or any agency or political subdivision
thereof.
PMI Policy : A policy of
private mortgage guaranty insurance relating to a Mortgage Loan and
issued by a Qualified Insurer.
PMI Proceeds : Proceeds
of any PMI Policy.
Prepayment Interest Excess : The interest collected by Countrywide with respect to any
Mortgage Loan serviced by Countrywide as to which a Principal
Prepayment in full or in part occurs from the 1
st day of the month
through the 15 th
day of the month in which such Remittance Date
occurs and that represents interest that accrues from the 1
st day of such
month to the date of such Principal Prepayment.
Prepayment Interest Shortfall Amount
: With respect to any Mortgage Loan that was subject
to a Principal Prepayment in full or in part during the period
beginning on the first day of the Principal Prepayment Period
through the last day of the month preceding the month in which the
Remittance Date occurs, which Principal Prepayment was applied to
the unpaid principal balance of the Mortgage Loan prior to such
Mortgage Loan's Due Date, the amount of interest (at the Mortgage
Loan Remittance Rate) commencing on the date as of which such
Principal Prepayment was applied to such Mortgage Loan and ending
on the last day of the calendar month in which the related
Prepayment Period begins, inclusive.
Prepayment Penalty : Any
penalty required to be paid by the Mortgagor with respect to a
Principal Prepayment.
Principal Prepayment :
Any payment or other recovery of principal on a Mortgage Loan which
is received in advance of its scheduled Due Date, including any
Prepayment Penalty or premium thereon, 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 period from and including the
sixteenth (16 th
) calendar day of the month preceding the month in
which such Remittance Date occurs to and including the fifteenth
(15 th )
calendar day of the month in which such Remittance Date
occurs.
Prior Servicer : Any
Person that was the servicer of any Mortgage Loan before the
Servicer became the servicer of such Mortgage Loan.
Purchase Agreement : Each
agreement pursuant to which the Seller acquires and the Company
sells the Mortgage Loans and the Servicing Rights related thereto.
The Purchase Agreement will be as defined in the related Assignment
Agreement.
Purchase Confirmation :
Those certain purchase confirmations substantially in the form of
Exhibit E hereto, executed by the Seller and Countrywide in
connection with the purchase and sale of each Servicing Rights
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 Servicing Rights
related to the Mortgage Loans, the Closing Date, the Cut-off Date
and the Servicing Transfer Date.
Purchase Price : The
purchase price to be paid by Countrywide for the Servicing Rights
related to the Mortgage Loans which, unless otherwise specified in
the Purchase Confirmation, shall equal the product of (i) the
Purchase Price Percentage, times (ii) the Stated Principal Balance
of the Mortgage Loans.
Purchase Price Percentage : The purchase price percentage set forth in the related
Purchase Confirmation.
6
Purchase Proceeds : The
purchase proceeds to be paid by Countrywide for the Servicing
Rights constituting each Servicing Rights Package, as set forth in
a funding schedule in the form of Exhibit A
hereto.
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, which
insurer is approved in such capacity by an Agency.
Remittance Date : The
twenty-first (21 st
) day of any month, beginning with the month next
following the month in which the related Cut-off Date occurs, or if
such twenty-first (21 st
) day is not a Business Day, the first Business Day
immediately preceding.
REO Disposition : The
final sale by Countrywide of any REO Property or the transfer of
the management of such REO Property to Countrywide as set forth in
Section 5.13 .
REO Property : A
Mortgaged Property acquired by Countrywide on behalf of the Seller
as described in Section 5.13 .
Servicer : Countrywide
Home Loans Servicing LP or its successor in interest or any
successor or assign to or designee of Countrywide Home Loans
Servicing LP under this Agreement.
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 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 5.9 .
Servicing Fee : The
monthly amount Countrywide shall be entitled to retain as its
servicing fee, in addition to all other amounts to which
Countrywide is entitled. The Servicing Fee as set forth in the
related Trade Confirmation.
Servicing Fee Rate : With
respect to any Mortgage Loan, the rate per annum set forth in the
applicable Trade Confirmation and/or the Purchase
Confirmation.
Servicing File : The file
retained by Countrywide that includes the mortgage loan documents
pertaining to a Mortgage Loan including copies of the Mortgage Loan
Documents together with the credit documentation relating to the
origination of such Mortgage Loan, and all documents, files and
other information reasonably necessary to service the Mortgage
Loans which Servicing File may be maintained by Countrywide on
microfilm or any other comparable medium.
Servicing Officer : Any
officer of Countrywide involved in, or responsible for, the
admin-istration and servicing of the Mortgage Loans whose name
appears on a list of servicing officers furnished by Countrywide to
the Seller upon request, as such list may from time to time be
amended.
Servicing Rights : The
rights to service the Mortgage Loans, which rights shall include,
without limitation: (a) the right to receive all amounts payable
with respect to the Mortgage Loans and to retain any interest
income relating thereto; (b) the right to receive and retain the
Servicing Fee, late fees, assumption fees, penalties, or similar
payments with respect to the Mortgage Loans, excluding all
Prepayment Penalties or other similar charges, unless otherwise set
forth in the Transaction Documents; (c) all custodial rights to
service the Escrow Payments and Escrow Accounts with respect to the
Mortgage Loans, including, but not limited to, the right to retain
any interest income relating thereto; (d) all custodial rights to
service any accounts and payments related to the Mortgaged Property
with respect to the Mortgage Loans, including, but not limited to,
the right to retain any interest income relating thereto; (e) all
rights to "clean-up calls" or other rights of termination with
respect to the Mortgage Loans; (f) the right to possess and use the
Mortgage Files relating to the Mortgage Loans or pertaining to the
past, present or prospective servicing of the Mortgage Loans; (g)
all rights of the Seller under any agreement or document that
creates, defines or evidences the right to service the Mortgage
Loans; and (h) all rights, powers and privileges incidental to the
foregoing.
7
Servicing Rights Package : The Servicing Rights sold to Countrywide pursuant to a
Purchase Confirmation and identified on a Mortgage Loan
Schedule.
Servicing Transfer Date :
With respect to each sale and purchase of Servicing Rights as
contemplated hereunder, the servicing transfer date as set forth in
the related Purchase Confirmation or Trade Confirmation, or such
other date as mutually agreed upon between Countrywide and
Seller.
Stated Principal Balance : The unpaid principal balance of the Mortgage Loans at the
related Cut-off Date, after application of scheduled payments of
principal due on or before the Cut-off Date, whether or not
collected.
Trade Confirmation : A
letter agreement executed by and between Countrywide and the Seller
prior to the applicable Closing Date confirming the general terms
and conditions of a prospective transaction contemplated herein and
identifying certain loan characteristics of the Servicing Rights
constituting the Servicing Rights Package to be purchased
hereunder.
Transaction Documents :
The Trade Confirmation, the Purchase Confirmation and this
Agreement.
Underwriting Guidelines :
Credit underwriting guidelines that are consistent with
investor-quality mortgage loans and with generally accepted
industry underwriting standards for sub-prime or prime mortgage
loans, as applicable, unless otherwise set forth in the related
Trade Confirmation and/or Purchase Confirmation.
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.
VA : The Department of
Veterans Affairs, or any successor thereto.
ARTICLE V
ADMINISTRATION AND SERVICING OF
MORTGAGE LOANS
Section 5.1 Servicer to Act
as Servicer . Servicer, as independent
contract servicer, shall service and administer Mortgage Loans 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 Servicer may deem necessary or desirable and
consistent with the terms of this Agreement. In servicing and
administering the Mortgage Loans, Servicer shall employ procedures
in accordance with Accepted Servicing Practices. Countrywide shall
be responsible for any and all acts of Servicer and any
subcontractor employed by Countrywide or Servicer, and the
utilization of a subservicer or a subcontractor contracted by
Countrywide or Servicer shall in no way relieve liability of either
Countrywide or Servicer under this Agreement.
8
In accordance with the terms of this Agreement,
Servicer 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 Servicer's
reasonable and prudent determination such waiver, modification,
postponement or indulgence is not materially adverse to the Seller;
provided, however, that Servicer 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), result in the denial of coverage under a PMI
Policy, defer or forgive the payment of any principal or interest
payments, reduce the outstanding principal amount (except for
actual payments of principal), make future advances or extend the
final maturity date on such Mortgage Loan without the Seller's
consent. Servicer 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 Servicer determines in its reasonable
discretion, that default is imminent and if Servicer determines
that granting such forbearance or suspension is in the best
interest of the Seller. If any modification, forbearance or
suspension permitted hereunder allows the deferral of interest or
principal payments on any Mortgage Loan, Servicer 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 6.3 of this Agreement. Without limiting
the generality of the foregoing, Servicer shall continue, and is
hereby authorized and empowered to execute and deliver on behalf of
itself and the Seller, 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 Servicer, the Seller shall furnish Servicer with any powers of
attorney and other documents necessary or appropriate to enable
Servicer to carry out its servicing and administrative duties under
this Agreement.
Servicer 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
and included in a security, that is a REMIC, Servicer 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 Servicer 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.
Servicer shall monitor the Mortgage Loans on an
ongoing basis, in compliance with applicable regulations
promulgated by the Office of Foreign Assets Control of the United
States Department of the Treasury (the "OFAC
Regulations").
Section 5.2 Collection of
Mortgage Loan Payments . Servicer shall
collect all payments due under each Mortgage Loan in accordance
with Accepted Servicing Practices. Further, Servicer 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 5.3 Realization Upon
Defaulted Mortgage Loans . Servicer
shall use reasonable efforts 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. Servicer shall use reasonable efforts to
realize upon defaulted Mortgage Loans, in such manner as will
maximize the receipt of principal and interest by the Seller,
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,
Servicer shall not be required to expend its own funds toward the
restoration of such 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 Seller after
reimbursement to itself for such expenses, and (ii) that such
expenses will be recoverable by Servicer through PMI Proceeds,
Other Insurance Proceeds or Liquidation Proceeds from the related
Mortgaged Property. Servicer shall notify the Seller in writing of
the commencement of foreclosure proceedings. Such notice may be
contained in the reports prepared by Servicer and delivered to the
Seller pursuant to the terms and conditions of this Agreement.
Servicer 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.
9
Notwithstanding the foregoing provisions of this
Section 5.3 or any other provision of this Agreement, with respect
to any Mortgage Loan as to which Servicer has received actual
notice of, or has actual knowledge of, the presence of any toxic or
hazardous substance on the related Mortgaged Property, Servicer
shall not, on behalf of the Seller, 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 Seller 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 Servicer 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:
(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 Seller
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 Seller to take such actions with respect
to the affected Mortgaged Property.
The cost of the environmental audit report
contemplated by this Section 5.3 shall be advanced by Servicer,
subject to Servicer’s right to be reimbursed therefor from
the Custodial Account.
If Servicer determines, as described above, that
it is in the best economic interest of the Seller 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 Servicer shall take such action as it deems to be in the best
economic interest of the Servicer, provided, however, that Servicer
shall not proceed with such clean-up, remediation, 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 Servicer 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 Servicer,
subject to Servicer’s right to be reimbursed therefor from
the Custodial Account.
Proceeds received in connection with any Final
Recovery Determination, as well as any recovery resulting from a
partial collection of Other Insurance Proceeds or Liquidation
Proceeds in respect of any Mortgage Loan, will be applied in the
following order of priority: first, to reimburse Servicer for any
related unreimbursed Servicing Advances, pursuant to Section 3.5;
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 Servicer 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 Servicer pursuant to Section 5.5.
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Section 5.4 Establishment of
Custodial Accounts; Deposits in Custodial Accounts
. Servicer 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. Servicer shall provide the
Seller with written evidence of the creation of such Custodial
Account(s) upon the request of the Seller.
Servicer shall deposit in the Custodial Account
within two (2) Business Days, and retain therein, the following
payments and collections received or made by it:
(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
and Other Insurance Proceeds, including amounts required to be
deposited pursuant to Sections 5.8 , 5.10 and
5.11 , other than proceeds to be applied to the restoration
or repair of the Mortgaged Property or released to the Mortgagor in
accordance with Servicer'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 Servicer's normal servicing
procedures, the loan documents or applicable law;
(f) all Monthly
Advances;
(g) any amounts
required to be deposited by Servicer pursuant to Section
5.10 in connection with the deductible clause in any blanket
hazard insurance policy (such deposit shall be made from Servicer'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 Servicer's own funds, without
reimbursement therefor up to a maximum amount per month equal to
the lesser of (a) one-twelfth of the product of (i) 0.25% 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); and
(j) any amounts
required to be deposited by Servicer in connection with any REO
Property pursuant to Section 5.13 and any amounts required
to be deposited pursuant to Section 5.14 and Section
5.17 .
The foregoing requirements for deposit in the
Custodial Account are exclusive. The Seller understands and agrees
that, without limiting the generality of the foregoing, payments in
the nature of late payment charges, prepayment penalties and
assumption fees (to the extent permitted by Section 5.16 )
need not be deposited by Servicer in the Custodial Account. Any
interest paid by the depository institution on funds deposited in
the Custodial Account shall accrue to the benefit of Servicer and
Servicer shall be entitled to retain and withdraw such interest
from the Custodial Account pursuant to Section 5.5(d)
.
Notwithstanding anything to the contrary
contained in this Agreement, Servicer shall not be be obligated to
deposit in the Custodial Account any amounts due to a shortfall in
a Monthly Payment made by a Mortgagor entitled to relief under the
Servicemembers Civil Relief Act.
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Section 5.5 Permitted
Withdrawals From the Custodial Account . Servicer may, from time to time, withdraw funds from the
Custodial Account for the following purposes:
(a) to make payments
to the Seller in the amounts and in the manner provided for in
Sections 6.1 and 6.3 ;
(b) to reimburse
itself for Monthly Advances (Servicer's reimbursement for Monthly
Advances shall be limited to amounts received on the related
Mortgage Loan) which represent Late Collections, net of the related
Servicing Fee and LPMI Fee, if applicable. Servicer's right to
reimbursement hereunder shall be prior to the rights of the Seller.
Notwithstanding the foregoing, Servicer 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 Seller;
(c) to reimburse
itself for unreimbursed Servicing Advances and any unpaid Servicing
Fees (Servicer'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 Servicer may reimburse itself for
Servicing Advances and 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
Seller;
(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, and (iii) the
Prepayment Interest Excess, if any;
(e) to pay to
itself, with respect to each Mortgage Loan that has been
repurchased pursuant to Section 3.3 or otherwise, all
amounts received but not distributed as of the date on which the
related Repurchase Price is determined;
(f) to pay any
amount required to be paid pursuant to Section 5.13 related to any
REO Property, it being understood that, in the case of any such
expenditure or withdrawal related to a particular REO Property, the
amount of such expenditure or withdrawal from the Custodial Account
shall be limited to amounts on deposit in the Custodial Account
with respect to the related REO Property;
(g) to reimburse
itself for any amounts deposited in the Custodial Account in error;
and
(h) to clear and
terminate the Custodial Account upon the termination of this
Agreement.
Section 5.6 Establishment of
Escrow Accounts; Deposits in Escrow Accounts
. Servicer 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. Servicer shall
provide the Seller with written evidence of the creation of such
Escrow Account(s) upon the request of the Seller.
Servicer 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, and (b) all
Other Insurance Proceeds that are to be applied to the restoration
or repair of any Mortgaged Property. Servicer shall make
withdrawals therefrom only to effect such payments as are required
under this Agreement, and for such other purposes in accordance
with Section 5.7 . Servicer 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. Servicer 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.
12
Section 5.7 Permitted
Withdrawals From Escrow Account .
Servicer 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 Servicer for any Servicing
Advance made by Servicer with respect to a related Mortgage Loan;
provided, however, that such reimbursement shall only be made from
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
Servicer, 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.
Section 5.8 Transfer of
Accounts . Servicer 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 at all times be Eligible Account and the
Servicer shall notify the Seller in writing within a reasonable
period of time after such transfer has taken place.
Section 5.9 Payment of Taxes,
Insurance and Other Charges; Maintenance of PMI Policies;
Collections Thereunder . With respect
to each Mortgage Loan, Servicer 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) primary mortgage insurance premiums;
(c) with respect to Mortgage Loans insured by the FHA, mortgage
insurance premiums, and (d) fire and hazard insurance premiums.
Servicer 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 Servicer in amounts sufficient for suc
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