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SERVICING AGREEMENT

Servicing Agreement

SERVICING AGREEMENT | Document Parties: Corporate Trust Services | EMC MORTGAGE CORPORATION | Master Servicer, Wells Fargo Bank, National Association | McGraw-Hill Companies, Inc | Moody's Investors Service, Inc | STRUCTURED ASSET MORTGAGE INVESTMENTS II INC | US BANK NATIONAL ASSOCIATION | Wilmington Trust Company You are currently viewing:
This Servicing Agreement involves

Corporate Trust Services | EMC MORTGAGE CORPORATION | Master Servicer, Wells Fargo Bank, National Association | McGraw-Hill Companies, Inc | Moody's Investors Service, Inc | STRUCTURED ASSET MORTGAGE INVESTMENTS II INC | US BANK NATIONAL ASSOCIATION | Wilmington Trust Company

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Title: SERVICING AGREEMENT
Governing Law: New York     Date: 3/15/2005

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EXHIBIT 99.1

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STRUCTURED ASSET MORTGAGE INVESTMENTS II INC.,

as Depositor

 

U.S. BANK NATIONAL ASSOCIATION,

as Grantor Trustee

 

WELLS FARGO BANK, NATIONAL ASSOCIATION,

as Master Servicer and Securities Administrator

 

and

 

EMC MORTGAGE CORPORATION,

as Seller

 

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SERVICING AGREEMENT

Dated as of February 28, 2005

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Structured Asset Mortgage Investments II. Inc.

Bear Stearns ARM Trust 2005-2,

Mortgage-Backed Notes, Series 2005-2

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TABLE OF CONTENTS

PAGE

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ARTICLE I

Definitions.......................................................................................................2

Section 1.01 Definitions.....................................................................................2

Section 1.02 Other Definitional Provisions...................................................................2

Section 1.03 Representations and Warranties Regarding the Master Servicer....................................3

ARTICLE II

Administration and Servicing of Mortgage Loans....................................................................4

Section 2.01 Master Servicer.................................................................................4

Section 2.02 Monitoring of Servicer..........................................................................5

Section 2.03 Fidelity Bond...................................................................................6

Section 2.04 Power to Act; Procedures........................................................................6

Section 2.05 Due-on-Sale Clauses; Assumption Agreements......................................................6

Section 2.06 Release of Mortgage Files.......................................................................7

Section 2.07 Documents, Records and Funds in Possession of Master Servicer To Be Held for the Grantor Trustee7

Section 2.08 Standard Hazard Insurance and Flood Insurance Policies..........................................8

Section 2.09 Presentment of Claims and Collection of Proceeds................................................9

Section 2.10 Maintenance of the Primary Mortgage Insurance Policies..........................................9

Section 2.11 Grantor Trustee to Retain Possession of Certain Insurance Policies and Documents................9

Section 2.12 Realization Upon Defaulted Mortgage Loans......................................................10

Section 2.13 Compensation for the Master Servicer...........................................................10

Section 2.14 REO Property...................................................................................10

Section 2.15 Annual Officer's Certificate as to Compliance..................................................11

Section 2.16 Annual Independent Accountant's Servicing Report...............................................11

Section 2.17 Reserved.......................................................................................12

Section 2.18 UCC............................................................................................12

Section 2.19 Foreclosure Proceedings, and Optional Purchase of Delinquent and Defaulted Mortgage Loans......12

Section 2.20 Monthly Advances...............................................................................13

Section 2.21 Compensating Interest Payments.................................................................13

ARTICLE III

Accounts.........................................................................................................14

Section 3.01 Protected Accounts.............................................................................14

Section 3.02 Master Servicer Collection Account.............................................................15

Section 3.03 Permitted Withdrawals and Transfers from the Master Servicer Collection Account................17

ARTICLE IV

The Master Servicer..............................................................................................18

Section 4.01 Liabilities of the Master Servicer.............................................................18

Section 4.02 Merger or Consolidation of the Master Servicer.................................................18

 

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TABLE OF CONTENTS

PAGE

Section 4.03 Indemnification of the Grantor Trustee, Owner Trustee, the Master Servicer and the

Securities Administrator.......................................................................18

Section 4.04 Limitations on Liability of the Master Servicer and Others.....................................19

Section 4.05 Master Servicer Not to Resign..................................................................20

Section 4.06 Successor Master Servicer......................................................................20

Section 4.07 Sale and Assignment of Master Servicing........................................................20

ARTICLE V

Default..........................................................................................................22

Section 5.01 Master Servicer Events of Default..............................................................22

Section 5.02 Grantor Trustee to Act; Appointment of Successor...............................................24

Section 5.03 Notification to Grantor Trust Certificateholders...............................................25

Section 5.04 Waiver of Defaults.............................................................................25

ARTICLE VI

Miscellaneous Provisions.........................................................................................26

Section 6.01 Amendment......................................................................................26

Section 6.02 Recordation of Agreement.......................................................................27

Section 6.03 Governing Law..................................................................................27

Section 6.04 Notices........................................................................................27

Section 6.05 Severability of Provisions.....................................................................28

Section 6.06 Successors and Assigns.........................................................................28

Section 6.07 Article and Section Headings...................................................................28

Section 6.08 Counterparts...................................................................................28

Section 6.09 Notice to Rating Agencies......................................................................28

Section 6.10 Termination....................................................................................29

Section 6.11 No Petition....................................................................................29

Section 6.12 No Recourse....................................................................................29

Section 6.13 Additional Terms Regarding Indenture...........................................................29

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EXHIBITS

Exhibit A......... - Mortgage Loan Schedule

Exhibit B......... - Wells Fargo Servicing Agreement

 

 

 

 

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SERVICING AGREEMENT

Servicing Agreement, dated as of February 28, 2005 (the "Agreement"),

among Structured Asset Mortgage Investments II Inc. a Delaware corporation, as

depositor (the "Depositor"), U.S. Bank National Association, a national banking

association, not in its individual capacity but solely as grantor trustee (the

"Grantor Trustee"), Wells Fargo Bank, National Association ("Wells Fargo"), as

master servicer (in that capacity, the "Master Servicer") and as securities

administrator (in that capacity, the "Securities Administrator") and EMC

Mortgage Corporation, as seller (the "Seller").

PRELIMINARY STATEMENT

On or prior to the Closing Date, the Depositor acquired the Mortgage

Loans from EMC pursuant to the Mortgage Loan Purchase Agreement. The Depositor

will establish Bear Stearns ARM Grantor Trust 2005-2, a New York trust (the

"Grantor Trust") pursuant to a Grantor Trust Agreement, dated as of February 1,

2005. The Depositor will deposit the Mortgage Loans into the Grantor Trust in

exchange for the Class A Grantor Trust Certificates, which will evidence the

entire beneficial ownership interest in the Mortgage Loans (such certificate

being referred to herein as the "Grantor Trust Certificate"). Prior to the

Closing Date, pursuant to a Trust Agreement, as amended and restated on the

Closing Date, the Depositor created Bear Stearns ARM Trust 2005-2, a Delaware

statutory trust, for the purpose of issuing the Owner Trust Certificates (the

"Owner Trust Certificates") in exchange for the Grantor Trust Certificate

pursuant to the Trust Agreement, and the Notes, pursuant to the Indenture.

Pursuant to the Indenture, the Issuer will pledge all of its right, title and

interest in and to the Grantor Trust Certificate and other property acquired

from the Depositor to the Indenture Trustee to secure the Notes issued pursuant

to the Indenture. The Depositor will receive from the Issuer the Owner Trust

Certificates evidencing the entire beneficial ownership interest in the Issuer

and the Notes representing indebtedness of the Issuer.

In consideration of the mutual agreements herein contained, each of the

Depositor, the Master Servicer and the Grantor Trustee undertakes and agrees to

perform its duties hereunder as follows:

 

 

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ARTICLE I

DEFINITIONS

Section 1.01 DEFINITIONS. For all purposes of this Agreement, except as

otherwise expressly provided herein or unless the context otherwise requires,

capitalized terms not otherwise defined herein shall have the meanings assigned

to such terms in the Definitions contained in Appendix A to the Indenture which

is incorporated by reference herein. All other capitalized terms used herein

shall have the meanings specified herein.

Section 1.02 OTHER DEFINITIONAL PROVISIONS. (a) All terms defined in

this Agreement shall have the defined meanings when used in any certificate or

other document made or delivered pursuant hereto unless otherwise defined

therein.

(b) As used in this Agreement and in any certificate or other document

made or delivered pursuant hereto or thereto, accounting terms not defined in

this Agreement or in any such certificate or other document, and accounting

terms partly defined in this Agreement or in any such certificate or other

document, to the extent not defined, shall have the respective meanings given to

them under generally accepted accounting principles. To the extent that the

definitions of accounting terms in this Agreement or in any such certificate or

other document are inconsistent with the meanings of such terms under generally

accepted accounting principles, the definitions contained in this Agreement or

in any such certificate or other document shall control.

(c) The words "hereof," "herein," "hereunder" and words of similar

import when used in this Agreement shall refer to this Agreement as a whole and

not to any particular provision of this Agreement; Section and Exhibit

references contained in this Agreement are references to Sections and Exhibits

in or to this Agreement unless otherwise specified; and the term "including"

shall mean "including without limitation".

(d) The definitions contained in this Agreement are applicable to the

singular as well as the plural forms of such terms and to the masculine as well

as the feminine and neuter genders of such terms.

(e) Any agreement, instrument or statute defined or referred to herein

or in any instrument or certificate delivered in connection herewith means such

agreement, instrument or statute as from time to time amended, modified or

supplemented and includes (in the case of agreements or instruments) references

to all attachments thereto and instruments incorporated therein; references to a

Person are also to its permitted successors and assigns.

 

 

 

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Section 1.03 REPRESENTATIONS AND WARRANTIES REGARDING THE MASTER

SERVICER. The Master Servicer represents and warrants to the Grantor Trustee,

for the benefit of the Grantor Trust Certificateholders, to the Indenture

Trustee, for the benefit of the Noteholders, to the Issuer, as pledgee of the

Grantor Trust Certificate, and to the Owner Trustee, on behalf of the Holder of

the Owner Trust Certificate, as of the Cut-off Date, as follows:

(i) The Master Servicer is a national banking association duly

organized, validly existing and in good standing under the laws of the United

States of America and has the corporate power to own its assets and to transact

the business in which it is currently engaged. The Master Servicer is duly

qualified to do business as a foreign corporation and is in good standing in

each jurisdiction in which the character of the business transacted by it or

properties owned or leased by it requires such qualification and in which the

failure to so qualify would have a material adverse effect on the business,

properties, assets, or condition (financial or other) of the Master Servicer or

the validity or enforceability of this Agreement;

(ii) The Master Servicer has the power and authority to make,

execute, deliver and perform this Agreement and all of the transactions

contemplated under this Agreement, and has taken all necessary corporate action

to authorize the execution, delivery and performance of this Agreement. When

executed and delivered, this Agreement will constitute the legal, valid and

binding obligation of the Master Servicer enforceable in accordance with its

terms, except as enforcement of such terms may be limited by bankruptcy,

insolvency or similar laws affecting the enforcement of creditors' rights

generally and by the availability of equitable remedies;

(iii) The Master Servicer is not required to obtain the

consent of any other Person or any consent, license, approval or authorization

from, or registration or declaration with, any governmental authority, bureau or

agency in connection with the execution, delivery, performance, validity or

enforceability of this Agreement, except for such consent, license, approval or

authorization, or registration or declaration, as shall have been obtained or

filed, as the case may be;

(iv) The execution and delivery of this Agreement and the

performance of the transactions contemplated hereby by the Master Servicer will

not violate any provision of any existing law or regulation or any order or

decree of any court applicable to the Master Servicer or any provision of the

certificate of incorporation or bylaws of the Master Servicer, or constitute a

material breach of any mortgage, indenture, contract or other agreement to which

the Master Servicer is a party or by which the Master Servicer may be bound; and

(v) No litigation or administrative proceeding of or before

any court, tribunal or governmental body is currently pending (other than

litigation with respect to which pleadings or documents have been filed with a

court, but not served on the Master Servicer), or to the knowledge of the Master

Servicer threatened, against the Master Servicer or any of its properties or

with respect to this Agreement or the Grantor Trust Certificate which, to the

knowledge of the Master Servicer, has a reasonable likelihood of resulting in a

material adverse effect on the transactions contemplated by this Agreement.

The foregoing representations and warranties shall survive any

termination of the Master Servicer hereunder.

 

 

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ARTICLE II

ADMINISTRATION AND SERVICING OF MORTGAGE LOANS

Section 2.01 MASTER SERVICER. The Master Servicer shall supervise,

monitor and oversee the obligations of the Servicer to service and administer

the Mortgage Loans in accordance with the terms of the Wells Fargo Servicing

Agreement and shall have full power and authority to do any and all things which

it may deem necessary or desirable in connection with such master servicing and

administration. In performing its obligations hereunder, the Master Servicer

shall act in a manner consistent with Accepted Master Servicing Practices.

Furthermore, the Master Servicer shall oversee and consult with the Servicer as

necessary from time-to-time to carry out the Master Servicer's obligations

hereunder, shall receive, review and evaluate all reports, information and other

data provided to the Master Servicer by the Servicer and shall cause the

Servicer to perform and observe the covenants, obligations and conditions to be

performed or observed by such Servicer under the Wells Fargo Servicing

Agreement. The Master Servicer shall independently and separately monitor the

Servicer's servicing activities with respect to the Mortgage Loans, reconcile

the results of such monitoring with such information provided in the previous

sentence on a monthly basis and coordinate corrective adjustments to the

Servicer's and Master Servicer's records, and based on such reconciled and

corrected information, the Master Servicer shall provide such information to the

Securities Administrator as shall be necessary in order for it to prepare the

statements specified in the Grantor Trust Agreement and the Indenture, and

prepare any other information and statements required to be forwarded by the

Master Servicer hereunder. The Master Servicer shall reconcile the results of

its Mortgage Loan monitoring with the actual remittances of the Servicer

pursuant to the Wells Fargo Servicing Agreement. Notwithstanding anything in

this Agreement or the Wells Fargo Servicing Agreement to the contrary, the

Master Servicer shall have no duty or obligation to supervise, monitor or

oversee the activities of the Servicer or to enforce the obligations of the

Servicer under the Wells Fargo Servicing Agreement with respect to any Pledged

Assets securing any Pledged Asset Loan, including, without limitation, the

collection of any amounts owing to the Grantor Trust in respect thereof.

The Grantor Trustee shall furnish the Servicer and the Master Servicer

with any powers of attorney and other documents in form as provided to it

necessary or appropriate to enable the Servicer and the Master Servicer to

service and administer the related Mortgage Loans and REO Property. The Grantor

Trustee shall not be liable for the Servicer's or the Master Servicer's use or

misuse of such powers of attorney.

The Grantor Trustee shall provide access to the records and

documentation in possession of the Grantor Trustee regarding the related

Mortgage Loans and REO Property and the servicing thereof to the Noteholders,

the FDIC, and the supervisory agents and examiners of the FDIC, such access

being afforded only upon reasonable prior written request and during normal

business hours at the office of the Grantor Trustee. The Grantor Trustee shall

allow representatives of the above entities to photocopy any of the records and

documentation and shall provide equipment for that purpose at a charge that

covers the Grantor Trustee's actual costs.

The Grantor Trustee shall execute and deliver to the Servicer or the

Master Servicer, as applicable based on the requesting party, any court

pleadings, requests for trustee's sale or other documents necessary or

reasonably desirable to (i) the foreclosure or trustee's sale with respect to a

Mortgaged Property; (ii) any legal action brought to obtain judgment against any

Mortgagor on the Mortgage Note or Security Instrument; (iii) obtain a deficiency

judgment against the Mortgagor; or (iv) enforce any other rights or remedies

provided by the Mortgage Note or Security Instrument or otherwise available at

law or equity.

 

 

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Section 2.02 MONITORING OF SERVICER. (a) The Master Servicer shall be

responsible for reporting to the Grantor Trustee and the Depositor the

compliance by the Servicer with its duties under the Wells Fargo Servicing

Agreement. In the review of the Servicer's activities, the Master Servicer may

rely upon an officer's certificate of the Servicer (or similar document signed

by an officer of the Servicer) with regard to such Servicer's compliance with

the terms of the Wells Fargo Servicing Agreement. In the event that the Master

Servicer, in its judgment, determines that the Servicer should be terminated in

accordance with the Wells Fargo Servicing Agreement, or that a notice should be

sent pursuant to the Wells Fargo Servicing Agreement with respect to the

occurrence of an event that, unless cured, would constitute grounds for such

termination, the Master Servicer shall notify the Depositor and the Grantor

Trustee thereof in writing. Pursuant to its receipt of such written notification

from the Master Servicer, the Grantor Trustee shall issue such notice of

termination to the Servicer or take such other action as it deems appropriate.

(b) In the event that the Servicer fails to perform its obligations in

accordance with the Wells Fargo Servicing Agreement, subject to the preceding

paragraph, the Grantor Trustee shall terminate the rights and obligations of the

Servicer and enter into a new Servicing Agreement with a successor Servicer

selected by the Grantor Trustee; provided, however, it is understood and

acknowledged by the parties hereto that there will be a period of transition

(not to exceed 90 days) before the actual servicing functions can be fully

transferred to such successor Servicer. Such enforcement, including, without

limitation, the legal prosecution of claims, termination of the Wells Fargo

Servicing Agreement and the pursuit of other appropriate remedies, shall be in

such form and carried out to such an extent and at such time as the Grantor

Trustee, in its good faith business judgment, would require were it the owner of

the related Mortgage Loans. The Grantor Trustee shall pay the costs of such

enforcement at its own expense, provided that the Grantor Trustee shall not be

required to prosecute or defend any legal action except to the extent that the

Grantor Trustee shall have received reasonable indemnity for its costs and

expenses in pursuing such action. Nothing herein shall impose any obligation on

the part of the Grantor Trustee to assume or succeed to the duties or

obligations of the Servicer or the Master Servicer.

(c) To the extent that the costs and expenses of the Grantor Trustee

related to any termination of the Servicer, appointment of a successor servicer

or the transfer and assumption of servicing by a successor Servicer with respect

to the Wells Fargo Servicing Agreement (including, without limitation, (i) all

legal costs and expenses and all due diligence costs and expenses associated

with an evaluation of the potential termination of the Servicer as a result of

an event of default by the Servicer and (ii) all costs and expenses associated

with the complete transfer of servicing, including all servicing files and all

servicing data and the completion, correction or manipulation of such servicing

data as may be required by the successor servicer to correct any errors or

insufficiencies in the servicing data or otherwise to enable the successor

service to service the Mortgage Loans in accordance with the Wells Fargo

Servicing Agreement) are not fully and timely reimbursed by the terminated

Servicer, the Grantor Trustee shall be entitled to reimbursement of such costs

and expenses from the Master Servicer Collection Account.

(d) The Master Servicer shall require the Servicer to comply with the

remittance requirements and other obligations set forth in the Wells Fargo

Servicing Agreement.

 

 

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(e) If the Grantor Trustee acts as Servicer, it will not assume

liability for the representations and warranties of the Servicer, if any, that

it replaces.

Section 2.03 FIDELITY BOND. The Master Servicer, at its expense, shall

maintain in effect a blanket fidelity bond and an errors and omissions insurance

policy, affording coverage with respect to all directors, officers, employees

and other Persons acting on such Master Servicer's behalf, and covering errors

and omissions in the performance of the Master Servicer's obligations hereunder.

The errors and omissions insurance policy and the fidelity bond shall be in such

form and amount generally acceptable for entities serving as master servicers or

trustees.

Section 2.04 POWER TO ACT; PROCEDURES. The Master Servicer shall master

service the Mortgage Loans and shall have full power and authority to do any and

all things that it may deem necessary or desirable in connection with the master

servicing and administration of the Mortgage Loans, including but not limited to

the power and authority (i) to execute and deliver, on behalf of the Grantor

Trust Certificateholders and the Grantor Trustee, customary consents or waivers

and other instruments and documents, (ii) to consent to transfers of any

Mortgaged Property and assumptions of the Mortgage Notes and related Mortgages,

(iii) to collect any Insurance Proceeds and Liquidation Proceeds, and (iv) to

effectuate foreclosure or other conversion of the ownership of the Mortgaged

Property securing any Mortgage Loan, in each case, in accordance with the

provisions of this Agreement and the Wells Fargo Servicing Agreement, as

applicable. The Grantor Trustee shall furnish the Servicer or the Master

Servicer, upon written request from a Servicing Officer, with any powers of

attorney empowering the Master Servicer or the Servicer to execute and deliver

instruments of satisfaction or cancellation, or of partial or full release or

discharge, and to foreclose upon or otherwise liquidate Mortgaged Property, and

to appeal, prosecute or defend in any court action relating to the Mortgage

Loans or the Mortgaged Property, in accordance with the Wells Fargo Servicing

Agreement and this Agreement, and the Grantor Trustee shall execute and deliver

such other documents, as the Master Servicer may request, to enable the Master

Servicer to master service and administer the Mortgage Loans and carry out its

duties hereunder, in each case in accordance with Accepted Master Servicing

Practices (and the Grantor Trustee shall have no liability for use or misuse of

any such powers of attorney by the Master Servicer or the Servicer). If the

Master Servicer or the Grantor Trustee has been advised that it is likely that

the laws of the state in which action is to be taken prohibit such action if

taken in the name of the Grantor Trustee or that the Grantor Trustee would be

adversely affected under the "doing business" or tax laws of such state if such

action is taken in its name, the Master Servicer shall join with the Grantor

Trustee in the appointment of a co-trustee pursuant to the Grantor Trust

Agreement. In the performance of its duties hereunder, the Master Servicer shall

be an independent contractor and shall not, except in those instances where it

is taking action in the name of the Issuer or the Grantor Trustee, be deemed to

be the agent of the Issuer or the Grantor Trustee.

Section 2.05 DUE-ON-SALE CLAUSES; ASSUMPTION AGREEMENTS. To the extent

provided in the Wells Fargo Servicing Agreement, to the extent Mortgage Loans

contain enforceable due-on-sale clauses, the Master Servicer shall cause the

Servicer to enforce such clauses in accordance with the Wells Fargo Servicing

Agreement. If applicable law prohibits the enforcement of a due-on-sale clause

or such clause is otherwise not enforced in accordance with the Wells Fargo

Servicing Agreement, and, as a consequence, a Mortgage Loan is assumed, the

original

 

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Mortgagor may be released from liability in accordance with the Wells Fargo

Servicing Agreement.

Section 2.06 RELEASE OF MORTGAGE FILES. (a) Upon becoming aware of the

payment in full of any Mortgage Loan, or the receipt by the Servicer of a

notification that payment in full has been escrowed in a manner customary for

such purposes for payment to Grantor Trust Certificateholders on the next

Payment Date, the Servicer will, if required under the Wells Fargo Servicing

Agreement, promptly furnish to the Grantor Trustee two copies of a certification

substantially in the form of Exhibit Four to the Custodial Agreement signed by a

Servicing Officer or in a mutually agreeable electronic format which will, in

lieu of a signature on its face, originate from a Servicing Officer (which

certification shall include a statement to the effect that all amounts received

in connection with such payment that are required to be deposited in the

Protected Account maintained by the Servicer pursuant to the Wells Fargo

Servicing Agreement have been so deposited) and shall request that the Grantor

Trustee deliver or cause the Custodian to deliver to the Servicer the related

Mortgage File. Upon receipt of such certification and request, the Grantor

Trustee shall promptly release or cause the Custodian to release the related

Mortgage File to the Servicer and the Grantor Trustee shall have no further

responsibility with regard to such Mortgage File. Upon any such payment in full,

the Servicer is authorized, to give, as agent for the Grantor Trustee, as the

mortgagee under the Mortgage that secured the Mortgage Loan, an instrument of

satisfaction (or assignment of mortgage without recourse) regarding the

Mortgaged Property subject to the Mortgage, which instrument of satisfaction or

assignment, as the case may be, shall be delivered to the Person or Persons

entitled thereto against receipt therefor of such payment, it being understood

and agreed that no expenses incurred in connection with such instrument of

satisfaction or assignment, as the case may be, shall be chargeable to the

Protected Account.

(b) From time to time and as appropriate for the servicing or

foreclosure of any Mortgage Loan and in accordance with the Wells Fargo

Servicing Agreement, the Grantor Trustee shall execute such documents as shall

be prepared and furnished to the Grantor Trustee by the Servicer or the Master

Servicer (in form reasonably acceptable to the Grantor Trustee) and as are

necessary to the prosecution of any such proceedings. The Grantor Trustee shall,

upon the request of the Servicer or the Master Servicer, and delivery to the

Grantor Trustee, of two copies of a request for release signed by a Servicing

Officer substantially in the form of Exhibit Four to the Custodial Agreement (or

in a mutually agreeable electronic format which will, in lieu of a signature on

its face, originate from a Servicing Officer), release or cause the Custodian to

release the related Mortgage File held in its or the Custodian's possession or

control to the Servicer or the Master Servicer, as applicable. The Servicer or

the Master Servicer shall be obligated to return the Mortgage File to the

Grantor Trustee or the Custodian when the need therefor by the Servicer or the

Master Servicer, as it reasonably determines, no longer exists unless the

Mortgage Loan shall be liquidated, in which case, upon receipt of a certificate

of a Servicing Officer similar to that hereinabove specified, the Mortgage File

shall be released by the Grantor Trustee or the Custodian to the Servicer or the

Master Servicer.

Section 2.07 DOCUMENTS, RECORDS AND FUNDS IN POSSESSION OF MASTER

SERVICER TO BE HELD FOR THE GRANTOR Trustee. (a) The Master Servicer shall

transmit and the Servicer (to the extent required by the Wells Fargo Servicing

Agreement) shall transmit to the Grantor Trustee such documents and instruments

coming into the possession of the Master Servicer or the

 

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Servicer from time to time as are required by the terms hereof, or in the case

of the Servicer, the Wells Fargo Servicing Agreement, to be delivered to the

Grantor Trustee. Any funds received by the Master Servicer or by the Servicer in

respect of any Mortgage Loan or which otherwise are collected by the Master

Servicer or by the Servicer as Liquidation Proceeds or Insurance Proceeds in

respect of any Mortgage Loan shall be held for the benefit of the Depositor and

the Grantor Trustee subject to the Master Servicer's right to retain or withdraw

from the Master Servicer Collection Account the Master Servicer Compensation and

other amounts provided in this Agreement and the right of the Servicer to retain

its Servicing Fee and other amounts as provided in the Wells Fargo Servicing

Agreement. The Master Servicer shall, and (to the extent provided in the Wells

Fargo Servicing Agreement) shall cause the Servicer to, provide access to

information and documentation regarding the Mortgage Loans to the Issuer, the

Grantor Trustee, and their respective agents and accountants at any time upon

reasonable request and during normal business hours, and to Grantor Trust

Certificateholders that are savings and loan associations, banks or insurance

companies, the Office of Thrift Supervision, the FDIC and the supervisory agents

and examiners of such Office and Corporation or examiners of any other federal

or state banking or insurance regulatory authority if so required by applicable

regulations of the Office of Thrift Supervision or other regulatory authority,

such access to be afforded without charge but only upon reasonable request in

writing and during normal business hours at the offices of the Master Servicer

designated by it. In fulfilling such a request the Master Servicer shall not be

responsible for determining the sufficiency of such information.

(b) All Mortgage Files and funds collected or held by, or under the

control of, the Master Servicer, in respect of any Mortgage Loans, whether from

the collection of principal and interest payments or from Liquidation Proceeds

or Insurance Proceeds, shall be held by the Master Servicer for and on behalf of

the Grantor Trustee and the Grantor Trust Certificateholders and shall be and

remain the sole and exclusive property of the Grantor Trustee; provided,

however, that the Master Servicer and the Servicer shall be entitled to set off

against, and deduct from, any such funds any amounts that are properly due and

payable to the Master Servicer or the Servicer under this Agreement or the Wells

Fargo Servicing Agreement.

Section 2.08 STANDARD HAZARD INSURANCE AND FLOOD INSURANCE POLICIES.

(a) For each Mortgage Loan, the Master Servicer shall enforce any obligation of

the Servicer under the Wells Fargo Servicing Agreement to maintain or cause to

be maintained standard fire and casualty insurance and, where applicable, flood

insurance, all in accordance with the provisions of the Wells Fargo Servicing

Agreement. It is understood and agreed that such insurance shall be with

insurers meeting the eligibility requirements set forth in the Wells Fargo

Servicing Agreement and that no earthquake or other additional insurance is to

be required of any Mortgagor or to be maintained on property acquired in respect

of a defaulted loan, other than pursuant to such applicable laws and regulations

as shall at any time be in force and as shall require such additional insurance.

(b) Pursuant to Section 3.01, any amounts collected by the Servicer or

the Master Servicer, under any insurance policies (other than amounts to be

applied to the restoration or repair of the property subject to the related

Mortgage or released to the Mortgagor in accordance with the Wells Fargo

Servicing Agreement) shall be deposited into the Master Servicer Collection

Account, subject to withdrawal pursuant to the Indenture. Any cost incurred by

the Master Servicer or the Servicer in maintaining any such insurance if the

Mortgagor defaults in its

 

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obligation to do so shall be added to the amount owing under the Mortgage Loan

where the terms of the Mortgage Loan so permit; provided, however, that the

addition of any such cost shall not be taken into account for purposes of

calculating the distributions to be made to Grantor Trust Certificateholders and

shall be recoverable by the Master Servicer or such Servicer pursuant to the

Indenture.

Section 2.09 PRESENTMENT OF CLAIMS AND COLLECTION OF PROCEEDS. The

Master Servicer shall (to the extent provided in the Wells Fargo Servicing

Agreement) cause the Servicer to prepare and present on behalf of the Depositor,

the Grantor Trustee and the Grantor Trust Certificateholders all claims under

the Insurance Policies and take such actions (including the negotiation,

settlement, compromise or enforcement of the insured's claim) as shall be

necessary to realize recovery under such policies. Any proceeds disbursed to the

Master Servicer (or disbursed to the Servicer and remitted to the Master

Servicer) in respect of such policies, bonds or contracts shall be promptly

deposited in the Master Servicer Collection Account upon receipt, except that

any amounts realized that are to be applied to the repair or restoration of the

related Mortgaged Property as a condition precedent to the presentation of

claims on the related Mortgage Loan to the insurer under any applicable

Insurance Policy need not be so deposited (or remitted).

Section 2.10 MAINTENANCE OF THE PRIMARY MORTGAGE INSURANCE POLICIES.

(a) The Master Servicer shall not take, or permit the Servicer (to the extent

such action is prohibited under the Wells Fargo Servicing Agreement) to take,

any action that would result in noncoverage under any applicable Primary

Mortgage Insurance Policy of any loss which, but for the actions of the Master

Servicer or the Servicer, would have been covered thereunder. The Master

Servicer shall use its best reasonable efforts to cause the Servicer (to the

extent required under the Wells Fargo Servicing Agreement) to keep in force and

effect (to the extent that the Mortgage Loan requires the Mortgagor to maintain

such insurance), primary mortgage insurance applicable to each Mortgage Loan in

accordance with the provisions of this Agreement and the Wells Fargo Servicing

Agreement, as applicable. The Master Servicer shall not, and shall not permit

the Servicer (to the extent required under the Wells Fargo Servicing Agreement)

to, cancel or refuse to renew any such Primary Mortgage Insurance Policy that is

in effect at the date of the initial issuance of the Mortgage Note and is

required to be kept in force hereunder except in accordance with the provisions

of this Agreement and the Wells Fargo Servicing Agreement, as applicable.

(b) The Master Servicer agrees to cause the Servicer (to the extent

required under the Wells Fargo Servicing Agreement) to present, on behalf of the

Depositor, the Grantor Trustee and the Grantor Trust Certificateholders, claims

to the insurer under any Primary Mortgage Insurance Policies and, in this

regard, to take such reasonable action as shall be necessary to permit recovery

under any Primary Mortgage Insurance Policies respecting defaulted Mortgage

Loans. Pursuant to the Indenture, any amounts collected by the Master Servicer

or the Servicer under any Primary Mortgage Insurance Policies shall be deposited

in the Master Servicer Collection Account, subject to withdrawal pursuant to the

Indenture.

Section 2.11 GRANTOR TRUSTEE TO RETAIN POSSESSION OF CERTAIN INSURANCE

POLICIES AND DOCUMENTS. The Grantor Trustee shall retain or shall cause the

Custodian to retain possession and custody of the originals (to the extent

available) of any Primary Mortgage Insurance Policies, or certificate of

insurance if applicable, and any certificates of renewal as to the

 

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<PAGE>

foregoing as may be issued from time to time as contemplated by this Agreement.

Until all amounts distributable in respect of the Grantor Trust Certificates

have been distributed in full and the Grantor Trust Agreement has been

terminated in accordance with the Grantor Trust Agreement, the Grantor Trustee

shall also retain, or shall cause the Custodian to retain, possession and

custody of each Mortgage File in accordance with and subject to the terms and

conditions of this Agreement. The Master Servicer shall promptly deliver or

cause to be delivered to the Grantor Trustee upon the execution or receipt

thereof the originals of any Primary Mortgage Insurance Policies, any

certificates of renewal, and such other documents or instruments that constitute

portions of the Mortgage File that come into the possession of the Master

Servicer from time to time.

Section 2.12 REALIZATION UPON DEFAULTED MORTGAGE LOANS. For each

Mortgage Loan that comes into and continues in default and as to which no

satisfactory arrangements can be made for collection of delinquent payments, the

Master Servicer shall cause the Servicer (to the extent required under and

subject to the provisions of the Wells Fargo Servicing Agreement and subject to

the provisions of Section 2.19 hereof) to foreclose upon, repossess or otherwise

comparably convert the ownership of Mortgaged Properties securing such of the

Mortgage Loans, as come and continue to be in default and as to which no

satisfactory arrangements can be made for collection of delinquent payments, all

in accordance with the Wells Fargo Servicing Agreement.

Section 2.13 COMPENSATION FOR THE MASTER SERVICER. On each Payment Date

the Master Servicer shall be entitled to all income and gain realized for a

period of two (2) Business Days from any investment of funds in the Master

Servicer Collection Account, pursuant to Article III, for the performance of its

activities hereunder (the "Master Servicer Compensation"). The remainder of such

investment income shall be payable to the Holders of the Class B Grantor Trust

Certificate as set forth in the Grantor Trust Agreement. Servicing compensation

in the form of assumption fees, if any, late payment charges, as collected, if

any, or otherwise (but not including any prepayment premium or penalty) shall be

retained by the Servicer and shall not be deposited in the Protected Account.

Moreover, additional servicing compensation in the form of investment income on

amounts in the Protected Account and other receipts not required to be deposited

in the Protected Account as specified in Section 3.01 shall be retained by the

Servicer. The Master Servicer shall be required to pay all expenses incurred by

it in connection with its activities hereunder and, in addition the fees of the

Grantor Trustee, Indenture Trustee and any Custodian as ag


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