MORTGAGE LOAN SERVICING RIGHTS PURCHASE AND SERVICING AGREEMENT

MORTGAGE LOAN SERVICING RIGHTS PURCHASE AND SERVICING AGREEMENT

 

 

This Mortgage Loan Servicing Rights Purchase and Servicing Agreement is dated and effective as of September 1, 2005 (the “Agreement”) among DB Structured Products, Inc., having an address at 60 Wall Street, New York, New York 10005 (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”).

 

 

R E C I T A L S

 

WHEREAS, the Seller from time to time intends to purchase certain residential mortgage loans (the “Mortgage Loans” as hereinafter defined) identified in a Purchase Confirmation (as defined below) pursuant to the terms of certain mortgage loan purchase agreements between the Seller and certain third party sellers on a servicing-released basis;

 

WHEREAS, the Seller desires to sell and transfer to Countrywide from time to time, and Countrywide desires to purchase from the Seller from time to time, all right, title and interest in and to the Servicing Rights (as hereinafter defined) associated with those certain Mortgage Loans upon such terms as are set forth below;

 

WHEREAS, Servicer and the Seller have agreed that Servicer shall service the Mortgage Loans and REO Properties pursuant to this Agreement commencing on the related Servicing Transfer Date (as defined herein).

 

In consideration of the promises and the mutual agreements and undertakings set forth herein, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

 

 

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 Originating and Servicing Practices :  With respect to any Mortgage Loan, procedures (including origination and collection procedures) that comply with applicable federal, state and local law and in accordance with accepted mortgage originating and servicing practices of prudent mortgage lending institutions which originate and 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.

 

ALTA :  The American Land Title Association or any successor thereto.

 

Appraised Value :  With respect to any Mortgaged Property, the lesser of (i) the value thereof as determined by an appraisal made for the originator of the Mortgage Loan at the time of origination of the Mortgage Loan by an appraiser who met the minimum requirements of the Agencies, or (ii) the purchase price paid for the related Mortgaged Property by the Mortgagor with the proceeds of the Mortgage Loan, provided, however, in the case of a refinanced Mortgage Loan, such value of the Mortgaged Property is based solely upon the value determined by an appraisal made for the originator of such refinanced Mortgage Loan at the time of origination of such refinanced Mortgage Loan by an appraiser who met the minimum requirements of the Agencies.

 

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, New York 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.  

 

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.

 

Conventional Mortgage Loan :  A Mortgage Loan that is not insured by the FHA or guaranteed by the VA.

 

Convertible Mortgage Loan :  Any Adjustable Rate Mortgage Loan that contains a provision whereby the Mortgagor is permitted to convert the Mortgage Loan to a fixed-rate mortgage loan in accordance with the terms of the related Mortgage Note.

 

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 :  The eighteenth (18 ^th ) day of the month or if such 18 ^th day is not a Business  Day, the Business Day immediately following such 18 ^th day.

 

Due Date :  The day of the month on which a Monthly Payment is due on a Mortgage Loan, exclusive of any days of grace.

 

Due Period :  With respect to each Remittance Date, the period commencing on the second day of the month preceding the month of the Remittance Date and ending on the first day of the month of the Remittance Date.

 

Eligible Account :  An account or accounts (i) maintained with a depository institution the short term debt obligations of which are rated by Standard & Poor's, a division of McGraw-Hill companies,  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 .

 

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.

 

HUD :  The Department of Housing and Urban Development or any federal agency or official thereof which may from time to time succeed to the functions thereof.

 

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.

 

Interest Only Mortgage Loan :

A Mortgage Loan wherein only monthly payments of interest accruing on the unpaid principal balance of such Mortgage Loan are due for a period of time as set forth on the related Mortgage Note, and the unpaid principal balance is amortized for the remaining term of the Mortgage Loan.

 

Interim Servicing Period :  The period commencing on the Closing Date and terminating on the Servicing Transfer Date.

 

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.

 

Lifetime Rate Cap : The absolute maximum Mortgage Interest Rate payable for a Mortgage Loan, above which the Mortgage Interest Rate shall not be adjusted, as provided in the Mortgage Loan Schedule.

 

Liquidation Proceeds :  Amounts, other than PMI Proceeds, Condemnation Proceeds and Other Insurance Proceeds, received by Countrywide in connection with the liquidation of a defaulted Mortgage Loan through trustee's sale, foreclosure sale or otherwise, other than amounts received following the acquisition of an REO Property pursuant to Section 5.13 .

 

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 PMI Policy with respect to such LPMI Loan.

 

LPMI Loan :  Any Mortgage Loan with respect to which Countrywide is responsible for paying the premium due on the related PMI Policy with the proceeds generated by the LPMI Fee relating to such Mortgage Loan, as set forth on the related Mortgage Loan Schedule.

 

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 or, in the case of an Interest Only Mortgage Loan, as set forth on the related Mortgage Loan Schedule, the scheduled monthly payment of principal and/or interest as set forth in the related Mortgage Note.

 

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 :  With respect to any Mortgage Loan, the file containing the Mortgage Loan Documents.

 

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 or, in the event that the Mortgage has been sent for recordation with the applicable public recording office, a copy thereof certified by the Company or the originator, as applicable, to be a true and correct copy of the original sent for recordation (except for MOM Loans, evidence of the related MIN);

 

(d)

The originals of all intervening assignments of mortgage with evidence of recording thereon or, in the event that any such intervening assignments of mortgage has been sent for recordation with the applicable public recording office, a copy thereof of such intervening assigment of mortgage certified by the Company or the originator, as applicable, to be a true and correct copy of the original sent for recordation (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);

 

(e)

The original or copy of the mortgagee title insurance policy or a copy of the title commitment;

 

(f)

As to any Mortgage Loan which has been the subject of a modification, as indicated on the Mortgage Loan Schedule, the original modification agreement with evidence of recording thereon or, in the event that such modification agreement has been sent for recordation with the applicable public recording office, a copy thereof certified by the Company or the originator, as applicable, to be a true and correct copy of the original sent for recordation;

 

(g)

As to any Mortgage Loan which is the subject of an outstanding modification offer, as indicated on the Mortgage Loan Schedule, a complete and true and correct copy of the modification offer;

 

(h)

As to any Mortgage Loan which has been the subject of an assumption, the original assumption agreement with evidence of recording thereon or, in the event that such assumption agreement has been sent for recordation with the applicable public recording office, a copy thereof certified by the Company or originator, as applicable, to be a true and correct copy of the original sent for recordation;

 

(i)

Any security agreement, chattel mortgage or equivalent instrument executed in connection with the Mortgage; and

 

(j)

The original of any guarantee executed in connection with the related Mortgage Note.

 

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.

 

Nonrecoverable Advance : Any Monthly Advance or Servicing Advance previously made or proposed to be made in respect of a Mortgage Loan or REO Property that, in the good faith business judgment of the Servicer, will not, or, in the case of a proposed Monthly Advance or Servicing Advance, would not be, ultimately recoverable as provided herein.

 

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.

 

Pass-Through Transfer :  The sale or transfer of some or all of the Mortgage Loans by the Seller to a trust to be formed as part of a publicly issued or privately placed mortgage-backed securities transaction.

 

Payment Adjustment Date :  As to each Mortgage Loan, the date on which an adjustment to the Monthly Payment on a Mortgage Note becomes effective.

 

Periodic Rate Cap :  With respect to each Adjustable Rate Mortgage Loan, the provision of a Mortgage Note which provides for an absolute maximum amount by which the Mortgage Interest Rate therein may increase or decrease on an Interest Adjustment Date above the Mortgage Interest Rate previously in effect, equal to the rate set forth in the related Mortgage Loan Schedule, as applicable.

 

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.

 

Premium :  With respect to any Mortgage Loan, the premium paid by Countrywide to the Seller for the related Servicing Rights, which is equal to the product of (a) the related Purchase Price Percentage and (b) the unpaid principal balance of such Mortgage Loan at the time of repurchase.

 

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 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 and is paid by the Mortgagor 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.

Purchase Agreement :  Each agreement pursuant to which the Seller acquires and the Company sells the Mortgage Loans and the Servicing Rights related thereto.  

 

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.

 

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-second (22 ^nd ) day of any month, beginning with the month next following the month in which the related Cut-off Date occurs, or if such twenty-second (22 ^nd ) 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 .

Repurchase Price :  With respect to any Servicing Right, a price equal to the sum of (i) the unpaid principal balance of the related Mortgage Loan, plus (ii) all costs and expenses incurred by Countrywide on account of such Mortgage Loan, including without limitation, any outstanding and unreimbursed Servicing Fees, escrow advances, and any outstanding servicing advances, and any costs and expenses incurred in the enforcement of the Seller’s repurchase obligation hereunder, plus (iii) any costs and damages that may be assessed to Countrywide due to the Mortgage Loan being found to violate a predatory/abusive lending law, plus (iv) if such repurchase occurs within twenty-four (24) months from the related Closing Date, the Premium.

 

Securitization Agreement : Any agreements relating to the securitization of the Mortgage Loans including, without limitation, any pooling and servicing agreement to be entered into and between the Seller, Countrywide, a Trustee and any master servicer designated by the Seller.

 

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 copies of the Mortgage Loan Documents , all other documents in connection with the origination of a particular Mortgage Loan, all appraisals and/or appraisal reviews and/or any property valuations relating to a Mortgaged Property, 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 admin­istration 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 Prepayment Penalties unless otherwise set forth in the related 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, unless otherwise delineated in the related Transaction Documents; (f) the right to possess and use the Servicing 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.

 

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 such other date mutually agreed upon between Countrywide and the Seller.

 

Stated Principal Balance :  The unpaid principal balance of the Mortgage Loans at the related Cut-off Date.

 

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.

 

Trustee :  Any Person set forth as a trustee in a Securitization Agreement, or any assigns or successors thereto.

 

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.

 

 

ARTICLE II

 

SALE OF THE SERVICING RIGHTS

 

Section 2.1   Agreement of Sale .   The Seller does hereby agree to sell, convey, transfer and assign to Countrywide on the Closing Date all right, title and interest in and to the Servicing Rights relating to the Mortgage Loans, all in accordance with the terms and conditions set forth herein.  As of the Closing Date, the Servicing Rights shall immediately vest with Countrywide and the Seller shall be deemed to have sold, conveyed, transferred and assigned to Countrywide all right, title and interest in and to the Servicing Rights.   

 

Section 2.2   Payment of the Purchase Price .    Except as otherwise set forth in the related Transaction Documents, on the related Closing Date, Countrywide agrees to pay the Seller by wire transfer of immediately available funds to an account designated by the Seller in writing, an amount equal to twenty percent (20%) of the related Purchase Proceeds.  Except as otherwise set forth in the related Transaction Documents, on the later of the related Closing Date or the related Servicing Transfer Date, subject to Countrywide’s receipt of, with respect to each Mortgage Loan and in accordance with this Agreement and Accepted Originating and Servicing Practices, the final servicing transfer tape, all material items in the related Servicing File, any and all funds in any escrow or other account of the Seller or its designee related to such Mortgage Loans, and any and all other deliverables or information necessary to properly board the related Mortgage Loans onto Countrywide’s servicing system, Countrywide agrees to pay the Seller by wire transfer of immediately available funds to an account designated by the Seller in writing, an amount equal to seventy percent (70%) of the related Purchase Proceeds, and Countrywide shall pay the Seller the remainder of the related Purchase Proceeds by wire transfer of immediately available funds to an account designated by the Seller in writing, upon Countrywide’s receipt of all other items not previously delivered to Countrywide with respect to such Mortgage Loans and requested by Countrywide to effectuate the complete transfer of the servicing obligations and Servicing Rights related to such Mortgage Loans.

 

Section 2.3

Examination of Mortgage File by Countrywide .  Prior to the related Closing Date, Countrywide shall have the right to review each Mortgage File related to each Mortgage Loan and, based on its review, decline to purchase the Servicing Rights relating to any Mortgage Loan which Countrywide, in its reasonable discretion, determines not to be in compliance with each of the representations and warranties contemplated hereby. The Seller agrees to deliver a copy of a complete Mortgage File or make available to Countrywide a complete Mortgage File for each Mortgage Loan on or before such date as may be reasonably requested by Countrywide.  The fact that Countrywide has conducted or has failed to conduct any partial or complete examination of the Mortgage Files shall not affect Countrywide’s right to demand repurchase or to avail itself of any other remedy available hereunder.  

 

Section 2.4   Conditions to Closing . Countrywide's obligations hereunder are subject to the fulfillment of the following conditions precedent.  In the event that any of the conditions set forth below are not materially satisfied, Countrywide shall not have any obligation to purchase any of the Servicing Rights related to the Mortgage Loans constituting the related Servicing Rights Package or to pay the Purchase Proceeds as contemplated hereunder and shall instead be entitled, in its reasonable discretion, to terminate this Agreement in its entirety as it relates to such Servicing Rights Package.

 

(a)

Each of the representations and warranties made by the Seller hereunder shall be complete, true and correct in all material respects as of the Closing Date and no event shall have occurred which, with notice or the passage of time, would constitute a default under this Agreement.

 

(b)

Each of the terms and conditions set forth herein which are required to be satisfied on or before the Closing Date shall have been satisfied unless waived by the prejudiced party(ies).

 

(c)

Countrywide shall have had the opportunity to complete a satisfactory due diligence review of the Servicing Rights (including the related Mortgage Loans) unless otherwise set forth in the related Purchase Confirmation.

 

(d) There shall have been no material or adverse change in the composition of the Mortgage Loans for which Countrywide is purchasing the related Servicing Rights as a result of due diligence or for any other reason.

 

(e)  The Seller shall have delivered all financial information relating to the Seller, reasonably necessary to allow Countrywide to assess the creditworthiness of the Seller which such creditworthiness shall be determined in Countrywide's sole and reasonable discretion.

 

(f)  The Seller shall have delivered to Countrywide and Countrywide shall have delivered to the Seller, as applicable, on or before the related Closing Date the following documents:

 

(1)

a fully executed Agreement;

 

(2)

the Mortgage Loan Schedule, which shall include, without limitation, the Stated Principal Balance of each Mortgage Loan;

 

(3)

an executed Funding Schedule, in the form of Exhibit A hereto;

 

(4)

an executed Officer’s Certificate, in the form of Exhibit C hereto;  

 

(5)

such other documents related to the purchase and sale of the Servicing Rights as Countrywide and the Purchaser mutually agree upon, including, without limitation, any opinions of counsel;

 

(6)

an executed Limited Power of Attorney, in the form of Exhibit D hereto;

 

(7)

a fully executed Securitization Agreement, if applicable;

 

(8)

an executed Purchase Confirmation, in the form of Exhibit E hereto; and

 

(9)

a Security Release Certification, in the form of Exhibit F , if applicable.

 

(g)

The document specified in subsections (f)(1) and (f)(4) shall only be required with respect to the initial Closing Date unless Countrywide and the Seller mutually agree to reexecute such documents.

 

(h)

Solely for the initial Closing Date, an executed Officer’s Certificate from Countrywide, in a form reasonably acceptable to the Seller.

 

Section 2.6

Record Title to Servicing Rights .  With respect to any Mortgage Loan registered on the MERS® System, the Seller shall, at its sole cost and expense on or prior to the related Closing Date, cause the MERS® System to reflect that such Servicing Rights related to the Mortgage Loans have been assigned to Countrywide as the sole owner of the beneficial rights to the Servicing Rights related to the Mortgage Loans.

  

 

ARTICLE III

 

REPRESENTATIONS AND WARRANTIES

 

Section 3.1

Representations and Warranties Respecting the Seller . The Seller represents, warrants and covenants to Countrywide that, as of the related Closing Date and the related Servicing Transfer Date:

 

(a)

The Seller is duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation has all licenses necessary to carry on its business as now being conducted and is duly authorized and qualified to transact, in each applicable state, any and all business contemplated by this Agreement or is otherwise exempt under applicable law from such qualification or is otherwise not required under applicable law to effect such qualification and no demand for such qualification has been made upon the Seller by any state having jurisdiction and in any event the Seller is or will be in compliance with the laws of any such state to the extent necessary to insure the enforceability of the transactions, each Mortgage Note, and the sale of the Servicing Rights as contemplated by this Agreement;

 

(b)

The Seller has the full power and authority to perform, and to enter into and consummate, all transactions contemplated by this Agreement.  As of the Closing Date, the Seller has the full power and authority to purchase and hold each Mortgage Loan;

 

(c)

Neither the acquisition of the Mortgage Loans by the Seller, the sale of the Servicing Rights to Countrywide, the consummation of the transactions contemplated hereby, nor the fulfillment of or compliance with the terms and conditions of this Agreement, will conflict with or result in a breach of any of the terms, conditions or provisions of the Seller's charter or bylaws or result in a material breach of any legal restriction or any material agreement or instrument to which the Seller is now a party or by which it is bound, or constitute a material default or result in an acceleration under any of the foregoing, or result in the violation of any material law, rule, regulation, order, judgment or decree to which the Seller or its property is subject;

 

(d)

The Seller of the Mortgage Loans is an approved seller for Fannie Mae.  The Seller is a member of MERS in good standing, is current in the payment of all fees and assessments imposed to the Seller by MERS and has complied in all respects with the rules and procedures of MERS;

 

(e)

 The Seller does not believe, nor does it have any reason or cause to believe, that it cannot perform each and every covenant contained in this Agreement.  Seller is solvent and the sale of the Servicing Rights pursuant to this Agreement will not cause Seller to become insolvent.  The sale of the Servicing Rights is not undertaken with the intent to hinder, delay or defraud any of Seller’s creditors;

 

(f)

There is no action, suit, proceeding, investigation or litigation pending or, to the best of the Seller’s knowledge, threatened, which either in any one instance or in the aggregate, if determined adversely to the Seller, would adversely affect the sale of the Servicing Rights to Countrywide, Countrywide’s ability to service the Mortgage Loans or the Seller's ability to perform its obligations under this Agreement;

 

(g)

No consent, approval, authorization or order of any court or governmental agency or body is required for the execution, delivery and performance by the Seller of or compliance by the Seller with this Agreement or the terms of the Mortgage Loans, the delivery of the Mortgage Files to Countrywide, the sale of the Servicing Rights to Countrywide or the consummation of the transactions contemplated by this Agreement, or if required, such consent, approval, authorization or order has been obtained prior to the Closing Date;

 

(h)

The consummation of the transactions contemplated by this Agreement are in the ordinary course of business of the Seller, and the transfer, assignment and conveyance of the Servicing Rights by the Seller pursuant to this Agreement are not subject to any bulk transfer or any similar statutory provisions in effect and applicable to this transaction.  There are no sales or use taxes of any kind whatsoever, or expenses, interest or penalties relating thereto, which arise out of or result from the execution and delivery of this Agreement by the Seller or the consummation of the transactions contemplated by this Agreement; and

 

(i)

The sale of each Servicing Right related to such Mortgage Loan shall be reflected on Seller’s balance sheet and other financial statements as a sale of assets by Seller.

 

Section 3.2

Representations and Warranties Regarding Individual Mortgage Loans .  With respect to each Mortgage Loan and the Servicing Rights related thereto and unless otherwise indicated in the related Trade Confirmation and/or Purchase Confirmation, as applicable, the Seller represents and warrants to Countrywide that as of the related Closing Date and the Servicing Transfer Date:

(a)

The information set forth in the Mortgage Loan Schedule, the Transaction Documents, the information provided pursuant to Section 4.3(a) and Section 4.4(a) as of the related Servicing Transfer Date, is complete, true and correct;

 

(b)

All payments required under the terms of the Mortgage Note to be made on or prior to the Closing Date have been made; the Seller has not advanced funds, or induced, solicited or knowingly received any advance of funds from a party other than the owner of the Mortgaged Property subject to the Mortgage, directly or indirectly, for the payment of any amount required under the Mortgage Loan; unless otherwise disclosed in the bid tape at the time of the initial trade and as set forth in the related Mortgage Loan Schedule, there has been no delinquency of thirty (30) days or more in any payment by the Mortgagor thereunder during the last twelve (12) months; no Mortgage Loan is subject to any pending litigation, foreclosure, bankruptcy, insolvency, or reorganization proceeding;

 

(c)

There are no delinquent taxes, water charges, sewer rents, assessments, insurance premiums, leasehold payments, including assessments payable in future installments, or other outstanding charges affecting the related Mortgaged Property;

 

(d)

The terms of the Mortgage Note and the Mortgage have not been impaired, waived, altered or modified in any respect, except by written instruments which are in the Mortgage File and have been or will be recorded, if necessary to protect the interests of Countrywide, and copies of which have been delivered to Countrywide, all in accordance with this Agreement.  The substance of any such waiver, alteration or modification has been approved by the primary mortgage guaranty insurer, if any, and by the title insurer, to the extent required by the related policy, and its terms are reflected on the Mortgage Loan Schedule.  No Mortgagor has been released, in whole or in part, except in connection with an assumption agreement approved by the primary mortgage insurer, if any, and title insurer, to the extent required by the policy, and which assumption agreement is part of the Mortgage File and the terms of which are reflected in the Mortgage Loan Schedule, if executed prior to the related Closing Date;

 

(e)

The Mortgage Note and the Mortgage are not subject to any right of rescission, set-off, counterclaim or defense, including the defense of usury, nor will the operation of any of the terms of the Mortgage Note and the Mortgage, or the exercise of any right thereunder, render the Mortgage unenforceable, in whole or in part, or subject to any right of rescission, set-off, counterclaim or defense, including the defense of usury and no such right of rescission, set-off, counterclaim or defense has been asserted with respect thereto;

 

(f)

All buildings upon, or comprising part of, the Mortgaged Property are insured by an insurer acceptable to the Agencies against loss by fire, hazards of extended coverage and such other hazards as are customary in the area where the Mortgaged Property is located in an amount that is the lesser of the outstanding principal balance of the Mortgage Loan or the replacement cost of the Mortgaged Property, and such insurer is licensed to do business in the state where the Mortgaged Property is located.  All such insurance policies (collectively, the "hazard insurance policy") contain a standard mortgagee clause naming the Seller, its successors and assigns as mortgagee and all premiums thereon have been paid.  If upon origination of the Mortgage Loan, the Mortgaged Property was, or was subsequently deemed to be, in an area identified in the Federal Register by the Federal Emergency Management Agency as having special flood hazards (and such flood insurance has been made available), which require under applicable law that a flood insurance policy meeting the requirements of the current guidelines of the Federal Insurance Administration (or any successor thereto) be obtained, such flood insurance policy is in effect which policy conforms to the requirements of the Agencies.  The Mortgage obligates the Mortgagor thereunder to maintain all such insurance at Mortgagor's cost and expense and, on the Mortgagor's failure to do so, authorizes the holder of the Mortgage to maintain such insurance at Mortgagor's cost and expense and to obtain reimbursement therefor from the Mortgagor.  Each Mortgage Loan has in place a fully-paid life of loan flood certification from an insurer duly licensed and in good standing in the jurisdiction where the Mortgaged Property is located, assigned in care of Countrywide, which provides for notification to Countrywide of changes in designated flood areas which would affect such Mortgage Loan;

 

(g)

Any and all requirements of any federal, state or local law including, without limitation, usury, truth in lending, real estate settlement procedures including, without limitation, the Real Estate Settlement Procedures Act of 1974, as amended, consumer credit and privacy protection, predatory and abusive lending, equal credit opportunity or disclosure laws applicable to the Mortgage Loan have been complied with in all material respects;

 

(h)

The Mortgage has not been satisfied, canceled, subordinated, or rescinded, in whole or in part, and the Mortgaged Property has not been released from the lien of the Mortgage, in whole or in part, nor has any instrument been executed that would effect any such release, cancellation, subordination or rescission;

 

(i)

The Mortgage is a valid, existing and enforceable first lien or second lien, as specified in the related Mortgage Loan Schedule, on the Mortgaged Property, including all improvements on the Mortgaged Property, if any, subject only to (a) the lien of current real property taxes and assessments not yet due and payable, (b) covenants, conditions and restrictions, rights of way, easements and other matters of the public record as of the date of recording being acceptable to mortgage lending institutions generally and specifically referred to in the lender's title insurance policy delivered to the originator of the Mortgage Loan and which do not adversely affect the Appraised Value (as defined in clause (i) of such definition) of the Mortgaged Property, (c) if a second lien, any first mortgage loan secured by the Mortgaged Property, and (d) other matters to which like properties are commonly subject which do not materially interfere with the benefits of the security intended to be provided by the Mortgage or the use, enjoyment, value or marketability of the related Mortgaged Property. The Seller has full right to sell and assign the Servicing Rights to Countrywide;

 

(j)

The Mortgage Note and the related Mortgage are genuine and each is the legal, valid and binding obligation of the maker thereof, enforceable in accordance with its terms, except as the enforceability thereof may be limited by bankruptcy, insolvency or reorganization;

 

(k)

All parties to the Mortgage Note and the Mortgage had the legal capacity to enter into the Mortgage Loan transaction and to execute and deliver the Mortgage Note and the Mortgage, and the Mortgage Note and the Mortgage have been duly and properly executed by such parties;

 

(l)

The proceeds of the Mortgage Loan have been fully disbursed and there is no requirement for future advances thereunder and any and all requirements as to completion of any on-site or off-site improvement and as to disbursements of any escrow funds therefor have been complied with.  All costs, fees and expenses incurred in making or closing the Mortgage Loan and the recording of the Mortgage were paid, and the Mortgagor is not entitled to any refund of any amounts paid or due under the Mortgage Note or Mortgage;

 

(m)

The Seller is the sole owner and holder of the Servicing Rights and is the custodian of the related Escrow Account, if applicable.   The Servicing Rights have neither been assigned nor pledged, and the Seller has good and marketable title thereto, and has full right to transfer and sell the Servicing Rights to Countrywide free and clear of any encumbrance, equity, lien, pledge, charge, claim or security interest and has full right and authority subject to no interest or participation of, or agreement with, any other party, to sell and assign the related Servicing Rights to Countrywide pursuant to the terms of this Agreement;

 

(n)

All parties which have had any interest in the Mortgage, whether as mortgagee, assignee, pledgee or otherwise, are (or, during the period in which they held and disposed of such interest, were) (a) in compliance with any and all applicable licensing requirements of the laws of the state wherein the Mortgaged Property is located, and (b) (i) organized under the laws of such state, or (ii) qualified to do business in such state, or (iii) a federal savings and loan association or national bank having principal offices in such state, or (iv) not deemed to be doing business in such state under applicable law;

 

(o)

The Mortgage Loan is covered by an ALTA lender's title insurance policy acceptable to the Agencies, issued by a title insurer acceptable to the Agencies and qualified to do business in the jurisdiction where the Mortgaged Property is located, insuring (subject to the exceptions contained in (i)(a), (b) and (c) above) the Seller, its successors and assigns as to the first priority or second priority lien of the Mortgage, as applicable, in the original principal amount of the Mortgage Loan (or, in the case of any Mortgage Loan that allows for negative amortization or is an ARM with a potential for negative amortization, the original principal amount of such Mortgage Loan, plus the maximum possible increase in such original principal amount due to negative amortization) and against any loss by reason of the invalidity or unenforceability of the lien resulting from the provisions of the Mortgage Note and/or Mortgage providing for adjustment in the Mortgage Interest Rate and Monthly Payment.  Additionally, such lender's title insurance policy affirmatively insures ingress and egress, and against encroachments by or upon the Mortgaged Property or any interest therein.  The Seller is the sole insured of such lender's title insurance policy, and such lender's title insurance policy is in full force and effect and will be in full force and effect upon the consummation of the transactions contemplated by this Agreement.  No claims have been made under such lender's title insurance policy, and no prior holder of the related Mortgage, including the Seller, has done, by act or omission, anything which would impair the coverage of such lender's title insurance policy;

 

(p)

There is no default, breach, violation or event of acceleration existing under the Mortgage or the Mortgage Note and no event which, with the passage of time or with notice and the expiration of any grace or cure period, would constitute a default, breach, violation or event of acceleration, and the Seller has not waived any default, breach, violation or event of acceleration;

 

(q)

There are no mechanics' or similar liens or claims which have been filed for work, labor or material (and no rights are outstanding that under law could give rise to such lien) affecting the related Mortgaged Property which are or may be liens prior to or equal with, the lien of the related Mortgage;

 

(r)

As of the date of origination of the Mortgage Loan, all improvements which were considered in determining the Appraised Value (as defined in clause (i) of said definition) of the related Mortgaged Property lay wholly within the boundaries and building restriction lines of the Mortgaged Property, and no improvements on adjoining properties encroach upon the Mortgaged Property;

 

(s)

Each Mortgage Loan was originated by a savings and loan association, savings bank, commercial bank, credit union, insurance company, or mortgage banking company which is supervised and examined by a federal or state authority, or by a mortgage originator approved by the Secretary of Housing and Urban Development pursuant to Sections 2.03 and 2.11 of the National Housing Act;

 

(t)

The origination, servicing and collection practices with respect to each Mortgage Note and Mortgage including, without limitation, the establishment, maintenance and servicing of the Escrow Accounts and Escrow Payments, if any, since origination, have been conducted in all respects in accordance with the terms of the Mortgage Note and in compliance with all applicable laws and regulations and, unless otherwise required by law, in accordance with the proper, prudent and customary practices in the mortgage origination and servicing business.  With respect to the Escrow Accounts and Escrow Payments, if any, all such payments are in the possession or under the control of the Seller and there exists no deficiencies in connection therewith for which customary arrangements for repayment thereof have not been made.  No escrow deposits or Escrow Payments or other charges or payments due the Seller have been capitalized under any Mortgage or the related Mortgage Note.  All Mortgage Interest Rate adjustments have been made in strict compliance with state and federal law and the terms of the related Mortgage Note.  Any interest required to be paid pursuant to state and local law has been properly paid and credited;

 

(u)

The Mortgaged Property is undamaged by waste, earthquake or earth movement, windstorm, flood, tornado or other casualty, so as to affect adversely the value of the Mortgaged Property as security for the Mortgage Loan or the use for which the premises were intended and there is no proceeding pending or, to the best of the Seller’s knowledge, threatened for the total or partial condemnation thereof nor is such a proceeding currently occurring;

 

(v)

The Mortgage and related Mortgage Note contains customary and enforceable provisions to render the rights and remedies of the holder thereof adequate for the realization against the Mortgaged Property of the benefits of the security intended to be provided thereby, including, (a) in the case of a Mortgage designated as a deed of trust, by trustee's sale, and (b) otherwise by judicial foreclosure.  There is no other exemption available to the Mortgagor which would interfere with the right to sell the Mortgaged Property at a trustee's sale or the right to foreclose the Mortgage.  The Mortgagor has not notified the Seller and the Seller has no knowledge of any relief requested or allowed to the Mortgagor under the Servicemembers Civil Relief Act, as amended;

 

(w)

The Mortgage Note is not and has not been secured by any collateral except the lien of the applicable Mortgage;

 

(x)

The Servicing File contains an appraisal of the related Mortgaged Property signed prior to the approval of the Mortgage Loan application by an appraiser who meets the minimum requisite qualifications of the Agencies for appraisers, duly appointed by the originator, who had no interest, direct or indirect, in the Mortgaged Property or in any loan made on the security thereof, and whose compensation is not affected by the approval or disapproval of the Mortgage Loan; the appraisal is in a form acceptable to the Agencies, with such riders as are acceptable to the Agencies; such appraisal was conducted in compliance with all applicable laws and regulations and in accordance with the proper, prudent and customary practices in the appraisal business;

 

(y)

In the event the Mortgage constitutes a deed of trust, a trustee, duly qualified under applicable law to serve as such, has been properly designated and currently so serves and is named in the Mortgage, and no fees or expenses are or will become payable by Countrywide to the trustee under the deed of trust, except in connection with a trustee's sale after default by the Mortgagor;

 

(z)

[Reserved];

 

(aa)

The Mortgagor has executed one or more statements to the effect that the Mortgagor has received all disclosure materials required by applicable law with respect to the making of the Mortgage Loan.  All such statements are in the Servicing File;

 

(bb)

No Mortgage Loan was made in connection with (a) the construction or rehabilitation of a Mortgaged Property or (b) facilitating the trade-in or exchange of a Mortgaged Property;

 

(cc)

If any Mortgage Loan is indicated in the Transaction Documents as having a Primary Mortgage Insurance Policy, such policy provides coverage in an amount at least equal to that which would be required by the Agencies if such Mortgage Loan was being delivered for sale to, and securitization by, the Agencies.    With respect to any Mortgage Loan which allows negative amortization, such Primary Mortgage Insurance Policy shall contain provisions to cover the potential negative amortization of such Mortgage Loan.  All provisions of any Primary Mortgage Insurance Policy have been and are being complied with, such policy is in full force and effect, and all premiums due thereunder have been paid.  Any Mortgage subject to any such Primary Mortgage Insurance Policy obligates the Mortgagor thereunder to maintain such insurance and to pay all premiums and charges in connection therewith.  The Mortgage Interest Rate for the Mortgage Loan is exclusive of any such insurance premium;

 

(dd)

The Mortgaged Property is lawfully occupied under applicable law and all inspections, licenses and certificates required to be made or issued with respect to all occupied portions of the Mortgaged Property and, with respect to the use and occupancy of the same, including but not limited to certificates of occupancy, have been made or obtained from the appropriate authorities;

 

(ee)

No action has been taken or failed to be taken, no event has occurred and no state of facts exists or has existed on or prior to the related Closing Date (whether or not known to the Seller on or prior to such date) which has resulted or will result in an exclusion from, denial of, or defense to coverage under any Primary Mortgage Insurance Policy (including, without limitation, any exclusions, denials or defenses which would limit or reduce the availability of the timely payment of the full amount of the loss otherwise due thereunder to the insured) whether arising out of actions, representations, errors, omissions, negligence or fraud of the Seller, the related Mortgagor or any party involved in the application for such coverage, including the appraisal, plans and specifications and other exhibits or documents submitted therewith to the insurer under such insurance policy, or for any other reason under such coverage, but not including the failure of such insurer to pay by reason of such insurer's breach of such insurance policy or such insurer's financial inability to pay;

 

(ff)

The Assignment of Mortgage is in recordable form and is acceptable for recording under the laws of the jurisdiction in which the Mortgaged Property is located, and with respect to any Mortgage Loan registered with the MERS® System, the Seller has complied in all respects with the rules and procedures of MERS in connection with the transfer to Countrywide of the servicing rights as registered by the MERS® System, as of the Closing Date, and the Servicing Rights as registered by the MERS® System, as of the Servicing Transfer Date, of such Mortgage Loans;

 

(gg)

Any future advances made to the Mortgagor prior to the related Closing Date have been consolidated with the outstanding principal amount secured by the Mortgage, and the secured principal amount, as consolidated, bears a single interest rate and single repayment term.  The lien of the Mortgage securing the consolidated principal amount is expressly insured as having first lien or second lien priority, as applicable, by a title insurance policy, an endorsement to the policy insuring the mortgagee's consolidated interest or by other title evidence acceptable to the Agencies.  The consolidated principal amount does not exceed the original principal amount of the Mortgage Loan;

 

(hh)

If the Mortgaged Property is a condominium unit or a planned unit development, such condominium or planned unit development project meets the eligibility requirements of the Agencies and/or the underwriting guidelines of the Company;

 

(ii)

The Mortgage Note and Mortgage are on forms generally acceptable to the Agencies;

(jj)

The Mortgaged Property is located in the state indicated on the Mortgage Loan Schedule, and consists of a single parcel of real property with a detached single family residence erected thereon, or an individual condominium unit, or a 2-4 family dwelling or an individual unit in a planned unit development, none of which is a mobile home or manufactured dwelling;

 

(kk)

With respect to each Mortgage Loan  with a Mortgaged Property subject to a ground lease:

 

(1)

The Mortgagor is the owner of a valid and subsisting leasehold interest under the ground lease;

 

(2)

The ground lease is in full force and effect, unmodified and not supplemented by any writing or otherwise;

 

(3)

The Mortgagor is not in default under any of the terms of the ground lease and there are no circumstances which, with the passage of time or the giving of notice or both, would constitute an event of default thereunder;

 

(4)

The Mortgagor under the ground lease is not in default under any of the terms or provisions thereof on the part of the Mortgagor to be observed or performed;

 

(5)

The term of the ground lease exceeds the maturity date of the related Mortgage Loan by at least ten years;

 

(6)

The ground lease or a memorandum thereof has been recorded and by its terms permits the leasehold estate to be mortgaged.  The ground lease grants any leasehold mortgagee standard protection necessary to protect the security of a leasehold mortgagee;

 

(7)

The ground lease does not contain any default provisions that could give rise to forfeiture or termination of the ground lease except for the non-payment of the ground lease rents;

 

(8)

The execution, delivery and performance of the Mortgage do not require the consent (other than those consents which have been obtained and are in full force and effect) under, and will not contravene any provision of or cause a default under, the ground lease;

 

(9)

The ground lease provides that the leasehold can be transferred, mortgaged and sublet an unlimited number of times either without restriction or on payment of a reasonable fee and delivery of reasonable documentation to the lessor.

 

(ll)

The Mortgage contains a provision for the acceleration of the payment of the unpaid principal balance of the Mortgage Loan in the event that the Mortgaged Property is sold or transferred without the prior written consent of the mortgagee thereunder;

 

(mm)

[Reserved];

 

(nn)

Each Mortgage Loan is covered by a valid and transferable tax service contract which may be assigned without the payment of any fee by Countrywide;

 

(oo)

Except with respect to any Interest Only Mortgage Loan as set forth on the related Mortgage Loan Schedule, each Mortgage Loan requires Monthly Payments sufficient to fully amortize the original principal balance of the Mortgage Loan over the original term of the Mortgage Loan as set forth in the related Mortgage Note and each Monthly Payment is due on the first day of each month, unless otherwise disclosed on the related Mortgage Loan Schedule and the related bid tape. With respect to each Interest Only Mortgage Loan as set forth on the Mortgage Loan Schedule, after the initial interest only period as set forth on the related Mortgage Note, such Interest Only Mortgage Loan requires monthly payments sufficient to fully amortize the unpaid principal balance of the Mortgage Loan over the remaining term of the Mortgage Loan.  Unless indicated in the Mortgage Loan Schedule otherwise, no Mortgage Loan has negatively amortized nor shall any Mortgage Loan have any negative amortization after the related Closing Date and with respect to such Mortgage Loans identified on the related Mortgage Loan Schedule as having negative amortization, the related Mortgage Note requires a Monthly Payment which is sufficient during the period following each Interest Adjustment Date, to fully amortize the outstanding principal balance as of the first day of the period over the then remaining term of such Mortgage Note and to pay interest at the related Mortgage Interest Rate.  The Mortgage Interest Rate for each Adjustable Rate Mortgage Loan adjusts annually in accordance with the related Mortgage Note.  Unless indicated in the Mortgage Loan Schedule otherwise, none of the Adjustable Rate Mortgage Loans contain a provision allowing the Mortgagor to convert the Mortgage Note from an adjustable rate mortgage loan to a Fixed Rate Mortgage Loan. With respect to any Mortgage Loan which has been converted from an Adjustable Rate Mortgage Loan into a Fixed Rate Mortgage Loan, such conversion was done in strict accordance with the terms of the related Mortgage Note.   The principal and interest due on each Mortgage Loan is calculated pursuant to the standard amortization (30/360 day interest accrual) method;

 

(pp)

Each Mortgage Loan conforms to, and at the time of origination was underwritten in accordance with the Company’s applicable underwriting guidelines which have been provided by the Seller to Countrywide;

 

(qq)

As of the related Closing Date, the Seller shall have received no notice that either a Mortgage Loan will be paid in full (whether by virtue of a demand statement or otherwise) or that any Mortgagor has elected to convert the related Convertible Mortgage Loan into a Fixed Rate Mortgage Loan in accordance with the terms of the related Mortgage Note;

 

(rr)

None of the Mortgage Loans are (a) subject to, covered by or in violation of the Home Ownership and Equity Protection Act of 1994 (“HOEPA”), (b) classified as “high cost,” “covered,” “high risk home”, “threshold,” or “predatory” loans under any other applicable state, federal or local law, including any predatory or abusive lending laws (or similarly classified loans using different terminology under a law imposing heightened scrutiny or additional legal liability for residential mortgage loans having high interest rates, points and/or fees) or (c) in violation of any state or local law or ordinance similar to HOEPA;

 

(ss)

No Mortgage Loan contains provisions pursuant to which Monthly Payments are (a) paid or partially paid with funds deposited in any separate account established by the Seller, the Mortgagor, or anyone on behalf of the Mortgagor.   The Mortgage Loan is not a graduated payment mortgage loan and the Mortgage Loan does not have a shared appreciation or other contingent interest feature; none of the Mortgage Loans is currently subject to a completion escrow unless otherwise set forth in the related Transaction Documents, and with respect to each Mortgage Loan which was subject to a completion escrow, all appropriate forms were delivered and are contained in the Mortgage File, including, without limitation, Agency Form 442;  

 

(tt)

Each Mortgage Loan which is an “equity loan” within the meaning of Section 50(a)(6), Article XVI of the Texas Constitution complies with all applicable Texas state laws and regulations;

 

(uu)

No error, omission, misrepresentation, negligence, fraud (including identity theft) or similar occurrence with respect to a Mortgage Loan has taken place on the part of the Mortgagor, Seller or any other person, including, without limitation, any appraiser, any builder or developer, or any other party involved in the origination of the Mortgage Loan or in the application of any insurance in relation to such Mortgage Loan; no predatory or deceptive lending practices, including, without limitation, the extension of credit without regard to the ability of the borrower to repay and the extension of credit which has no apparent benefit to the borrower, were employed in the origination of the Mortgage Loan;

 

(vv)

Any agreement with any servicer of the Mortgage Loans provides for the termination of the servicer on or prior to the related Servicing Transfer Date without the payment of any termination fee or other expense by Countrywide;

 

(ww)

No Mortgage Loan which is a “home loan” as defined in the Georgia Fair Lending Act (the "Act") was originated, brokered, solicited, processed, placed, negotiated, or offered on or after October 1, 2002 and prior to March 7, 2003, and no Mortgage Loan is a "high-cost home loan" as defined in the Act;

 

(xx)

There is no pending action or proceeding directly involving the Mortgaged Property in which compliance with any environmental law, rule or regulation is an issue; there is no violation of any environmental law, rule or regulation with respect to the Mortgage Property;

 

(yy)

The Mortgaged Property is in material compliance with all applicable environmental laws pertaining to environmental hazards including, without limitation, asbestos, and neither the Seller, the Company nor, to the Seller’s knowledge, the related Mortgagor, has received any notice of any violation or potential violation of such law;

 

(zz)

None of the proceeds of the Mortgage Loan were used to finance single-premium credit insurance policies by the Seller;

 

(aaa)

With respect to each Mortgage Loan that has a prepayment penalty feature, each such prepayment penalty is enforceable and each prepayment penalty is permitted pursuant to federal, state and local law.  No Mortgage Loan will impose a prepayment penalty for a term in excess of five years from the date such Mortgage Loan was originated;

 

(bbb)

The Mortgagor is one or more natural persons and/or trustees for an Illinois land trust or a trustee under a “living trust” and such “living trust” is in compliance with Fannie Mae guidelines for such trusts.  Either the Mortgagor is a natural person or the related co-borrower or guarantor is a natural person;

 

(ccc)

[Reserved];

 

(ddd)

 The Seller has not received any actual notice of any identity theft, fraud, or other misrepresentation in connection with such Mortgage Loan or any party thereto .

 

Section 3.3

Remedies for Breach of Representations and Warranties . The representations and warranties set forth in Sections 3.1 and 3.2 shall survive the sale of the Servicing Rights related to the Mortgage Loans to Countrywide and shall inure to the benefit of Countrywide, notwithstanding any restrictive or qualified endorsement on any Mortgage Note or Assignment of Mortgage or the examination or failure to examine any Mortgage File.  Furthermore, the absence of the Seller in either the chain of title or endorsement shall in no way limit Countrywide’s recourse against the Seller as provided in this Section 3.3 for a breach of one or more of the Seller’s representations and warranties made herein.    Upon discovery by either the Seller or Countrywide of a breach of any of the foregoing representations and warranties which materially and adversely affects the value of one or more of the Mortgage Loans or the Servicing Rights related to the Mortgage Loans and Countrywide’s interest therein, the party discovering such breach shall give prompt written notice to the other.  Without in any way limiting the generality of the foregoing, any repurchase request made under any Securitization Agreement with respect to any Mortgage Loan shall be deemed to be conclusive evidence of the Seller’s breach of one or more of its representations and warranties made by it hereunder and shall further be deemed to materially and adversely affect the value of any such Mortgage Loan and the Servicing Rights related to such Mortgage Loan, provided, however, that such repurchase request relates to one or more of the representations and warranties set forth herein.

 

Upon discovery by either the Seller or Countrywide of a breach of any of the foregoing representations and warranties which materially and adversely affects the value, the marketability or enforceability of one or more of the Mortgage Loans or Countrywide’s interest therein, the party discovering such breach shall give prompt written notice to the other.  The Seller shall have a period of ninety (90) days from the earlier of the discovery of a breach by the Seller or the receipt by the Seller of notice of a breach within which to correct or cure such breach.  If any such breach cannot be corrected or cured within such ninety (90) day period, the Seller shall not later than ninety (90) days after its discovery or its receipt of notice of such breach repurchase the Servicing Rights related to such Mortgage Loan from Countrywide at the Repurchase Price.  

 

In the event of a repurchase of the Servicing Rights by the Seller, at the time of repurchase, Countrywide and the Seller shall arrange for the reassignment of the repurchased Servicing Rights to the Seller.  The Seller shall, simultaneously with such reassignment, give written notice to Countrywide that such repurchase has taken place.  The Servicer shall continue to service a Mortgage Loan on behalf of the Seller if the related Servicing Rights are repurchased by the Seller pursuant to this Section 3.3 for a period of no more than thirty (30) days after the date of repurchase (upon the request of the Seller, such thirty (30) day period may be extended by the Servicer in its sole discretion).

 

 

In addition to the other repurchase rights provided herein, in the event the Seller repurchases a Mortgage Loan or is required to repurchase a Mortgage Loan pursuant to any Securitization Agreement or otherwise, then Countrywide may rescind its purchase of the Servicing Rights affected by such repurchase, and the Seller shall, at Countrywide’s sole option, repurchase the affected Servicing Rights from Countrywide for an amount equal to the Repurchase Price.  The Servicer shall continue to service a Mortgage Loan on behalf of the Seller if the related Servicing Rights are repurchased by the Seller pursuant to this paragraph for a period of no more than thirty (30) days after the date of repurchase (upon the request of the Seller, such thirty (30) day period may be extended by the Servicer in its sole discretion).

 

 

Any cause of action against the Seller relating to or arising out of the breach of any representations and warranties made in Sections 3.1 or 3.2 shall accrue as to any Mortgage Loan upon (i) discovery of such breach by Countrywide or notice thereof by the Seller to Countrywide, (ii) failure by the Seller to cure such breach or repurchase such Mortgage Loan as specified above, and (iii) demand upon the Seller by Countrywide for compliance with the relevant provisions of this Agreement.

 

Section 3.4

Indemnification .  

 

In addition to the repurchase and reimbursement obligations set forth in Section 3.3 , the Seller shall defend and indemnify Countrywide and hold it harmless against any losses, damages, penalties, fines, forfeitures, judgments and any related costs including, without limitation, reasonable and necessary legal fees, resulting from any claim, demand, defense or liability based upon or arising out of  the origination, purchase, receiving, processing, funding or servicing any Mortgage Loan, or from any assertion based on, grounded upon or resulting from a breach or alleged breach of any of the Seller’s representations and warranties contained in this Article III .

 

Section 3.5

Representations and Warranties of the Servicer .

 

The Servicer represents, warrants and covenants to the Seller that as of each Servicing Transfer Date:

 

(a)

The Servicer is a duly organized, validly existing corporation in good standing under the laws of the jurisdiction of its formation and is qualified to transact business in, is in good standing under the laws of, and possesses all licenses necessary for the conduct of its business in, each state in which any Mortgaged Property is located or is otherwise exempt or not required under applicable law to effect such qualification or license and no demand for such qualification or license has been made upon the Servicer by any such state;

 

(b)

The Servicer has full power and authority to execute, deliver and perform, and to enter into and consummate all transactions contemplated by this Agreement and to conduct its business as presently conducted, has duly authorized the execution, delivery and performance of this Agreement, has duly executed and delivered this Agreement, and this Agreement, assuming due authorization, execution and delivery by the Seller, constitutes a legal, valid and binding obligation of the Servicer, enforceable against it in accordance with its terms subject to bankruptcy laws and other similar laws of general application affecting rights of creditors and subject to the application of the rules of equity, including those respecting the availability of specific performance;

 

 

(c)

None of the execution and delivery of this Agreement, the consummation of the transactions contemplated thereby and hereby, or the fulfillment of or compliance with the terms and conditions of this Agreement will conflict with, or violate, any of the terms, conditions or provisions of the Servicer’s certificate of limited partnership or limited partnership agreement or materially conflict with or result in a material breach of any of the terms, conditions or provisions of any legal restriction or any material agreement or instrument to which the Servicer is now a party or by which it or its assets is or are bound or may be bound, or constitute a default or result in an acceleration under any of the forgoing, or result in the violation of any material law, rule, regulation, order, judgment or decree to which the Servicer or its property is subject;

 

(d)

The Servicer is not in violation of, and the execution and delivery of this Agreement by the Servicer and its performance and compliance with the terms of this Agreement will not constitute or result in the violation of any judgment, order or decree of any court or any, law, rule, regulation, order or decree of any federal, state, municipal or governmental agency having jurisdiction over the Servicer or its assets, which violation might have consequences that would materially and adversely affect the condition (financial or otherwise) or the operation of the Servicer or its assets or might have consequences that would materially and adversely affect the performance of its obligations and duties hereunder;

 

(e)

There are no actions or proceedings pending or, to the Servicer’s knowledge, threatened with respect to the Servicer before any court, administrative agency or other tribunal (A) that prohibit its entering into this Agreement, (B) seeking to prevent the consummation of the transactions contemplated by this Agreement, (C) that shall adversely affect the execution, delivery, validity or enforceability, or the performance by the Servicer of its obligations under, this Agreement or (D) which are reasonably likely to have a material adverse effect on the financial condition of the Servicer;

 

(f)

No consent, approval, authorization or order of any court or governmental agency or body is required for the execution, delivery and performance by the Servicer of or compliance by the Servicer with this Agreement or the consummation of the transactions contemplated by this Agreement except for consents, approvals, authorizations and orders which have been obtained prior to the related Servicing Transfer Date;

 

(g)

The Servicer is approved servicer for Fannie Mae and Freddie Mac , and no event has occurred, including but not limited to a change in insurance coverage, which would make the Servicer unable to comply with eligibility requirements or which would require notification to either Fannie Mae or Freddie Mac;

 

(h)

The Servicer does not believe, nor does it have any reason or cause to believe, that it cannot perform each and every covenant contained in this Agreement.

 

 

Section 3.6

Representations and Warranties of Countrywide .  Countrywide represents, warrants and covenants to the Seller that as of each Servicing Transfer Date or as of such date specifically provided herein:

 

(a)

Countrywide is a duly organized, validly existing corporation in good standing under the laws of the jurisdiction of its incorporation and is qualified to transact business in, and possesses all licenses necessary for the conduct of its business in, each applicable state or is otherwise exempt or not required under applicable law to effect such qualification or license and no demand for such qualification or license has been made upon Countrywide by any such state, and in any event Countrywide is and will remain in compliance with the laws of each such State to the extent necessary to ensure the enforceability of each Mortgage Loan and the purchase of the Servicing Rights in accordance with the terms of this Agreement;

 

(b)

Countrywide has full power and authority to execute, deliver and perform, and to enter into and consummate all transactions contemplated by this Agreement and to conduct its business as presently conducted, has duly authorized the execution, delivery and performance of this Agreement, has duly executed and delivered this Agreement, and this Agreement, assuming due authorization, execution and delivery by the Seller, constitutes a legal, valid and binding obligation of Countrywide, enforceable against it in accordance with its terms subject to bankruptcy laws and other similar laws of general application affecting rights of creditors and subject to the application of the rules of equity, including those respecting the availability of specific performance;

 

(c)

None of the execution and delivery of this Agreement, the consummation of the transactions contemplated thereby and hereby, or the fulfillment of or compliance with the terms and conditions of this Agreement will conflict with or result in a material  breach of any of the terms, conditions or provisions of Countrywide’s charter or by-laws or materially conflict with or result in a material breach of any of the terms, conditions or provisions of any legal restriction or any material agreement or instrument to which Countrywide is now a party or by which it is bound, or constitute a default or result in an acceleration under any of the forgoing;

 

(d)

The execution and delivery of this Agreement by Countrywide and its performance and compliance with the terms of this Agreement will not constitute or result in the violation of any judgment, order or decree of any material law, rule, regulation, order or decree of any federal, state, municipal or governmental agency having jurisdiction over Countrywide ;

 

(e)

There is no action or proceeding pending or, to the best of Countrywide’s knowledge, threatened with respect to Countrywide before any court, administrative agency or other tribunal (A) that prohibit its entering into this Agreement, (B) seeking to prevent the consummation of the transactions contemplated by this Agreement, (C) that shall materially and adversely affect the execution, delivery, validity or enforceability, or the performance by Countrywide of its obligations under, this Agreement or (D) which shall have a material adverse effect on the financial condition of Countrywide;

 

(f)

No consent, approval, authorization or order of any court or governmental agency or body is required for the execution, delivery and performance by Countrywide of or compliance by Countrywide with this Agreement or the consummation of the transactions contemplated by this Agreement except for consents, approvals, authorizations and orders which have been obtained prior to the related Servicing Transfer Date; and

 

(g)

Countrywide does not believe, nor does it have any reason or cause to believe, that it cannot perform each and every covenant contained in this Agreement.

 

Section 3.7

Indemnification by Countrywide .

 

Countrywide shall indemnify the Seller and hold it harmless against any and all claims, losses, damages, penalties, fines, forfeitures, reasonable and necessary attorneys’ fees and related costs, judgments, and any other costs, fees and expenses that result from a breach of a representation or warranty set forth in Section 3.6 .

 

ARTICLE IV

 

INTERIM SERVICING AND TRANSFER OF SERVICING RIGHTS

 

Section 4.1

Interim Servicing .  

 

(a)

Subservicer .  Countrywide acknowledges that the Mortgage Loans shall be serviced by a third party (a “Subservicer”) on behalf of the Seller.  Consequently, with respect to any Mortgage Loan serviced by a Subservicer, any reference to the “Seller” in Article IV and Article V of this Agreement, as appropriate, shall be deemed to refer to such Subservicer, acting at the direction of the Seller; however, it being understood that the Seller shall remain primarily responsible for each covenant and representation of Seller contained within this Agreement.

 

(b)

General .   The Servicing Rights will be purchased by Countrywide and sold by the Seller on the related Closing Date. From the related Closing Date to the Servicing Transfer Date, the Seller shall interim service the Mortgage Loans in accordance with all federal, state and local laws, Accepted Servicing Practices, the terms of the Purchase Agreement and, if applicable, the terms of the Securitization Agreement. Without limiting the generality of the foregoing, the Seller shall not take, or fail to take, any action which would result in Countrywide’s interest in the Servicing Rights being adversely affected.

 

(c)

Reporting and Remittance .  Within five (5) Business Days, or such other period to be mutually agreed upon by the Seller and Countrywide, following the conclusion of each calendar month reporting and remittance cycle occurring during the Interim Servicing Period (each, a “Reporting Cycle”), if any, the Seller shall forward to Countrywide with respect to the Mortgage Loans a remittance report in an electronic format acceptable to Countrywide and the Servicer, and a trial balance as of the end of each such Reporting Cycle, which remittance report and trial balance shall include information relating to all payment and other activity on the Mortgage Loans.  With respect to any payments of principal or interest (including all prepayments) received, or applied to any Mortgagor’s account, by the Seller during the Interim Servicing Period (or prior to the Closing Date, if any such payments were not reflected in the calculation of the Purchase Proceeds), the Seller shall remit to Countrywide all such payments of principal and interest on the Mortgage Loans no later than the fifth (5th) Business Day of the month following the conclusion of each Reporting Cycle, or such other period to be mutually agreed upon by the Seller and Countrywide, and, with respect to the month in which the related Servicing Transfer Date occurs, no later than the fifth (5th) Business Day thereafter, or such other period to be mutually agreed upon by the Seller and Countrywide.

 

Section 4.2

Transfer of Servicing .  The Seller agrees to act reasonably, in good faith and in accordance with all applicable laws and regulations and to do all things necessary to effect the transfer of the Servicing Rights to the Servicer as Countrywide’s designee on the related Servicing Transfer Date including, without limitation, complying with all instructions provided by Servicer and Countrywide relating to the transfer of the Servicing Rights and complying with all applicable federal, state and local laws.  With respect to each Mortgage Loan registered with the MERS® System, the Seller shall, by the Servicing Transfer Date, cause the MERS® System to reflect Countrywide as the sole owner of the Servicing Rights related to such Mortgage Loans.

 

Section 4.3

Obligations of the Seller prior to the Servicing Transfer Date .  Without limiting the generality of Section 4.2 , the Seller shall take, or cause to be taken, the following actions with respect to the Mortgage Loans prior to the related Servicing Transfer Date (or within such time as may otherwise be specified below) in order to effect the transfer of the Servicing Rights to Countrywide on the related Servicing Transfer Date:

 

(a)

Preliminary Test Tape .  On or prior to the related Closing Date, the Seller shall forward or cause to be forwarded to Countrywide a preliminary test tape (including master file, escrow file, payee file, ARM master file, ARM history, all HMDA data required by the Agencies, name, address, and telephone number of first lien holder and loan number of first lien with respect to any second lien Mortgage Loans, etc.) containing all of the Mortgage Loans as of the date mutually agreed upon by the Seller and Countrywide.  The preliminary test tape shall include all field descriptions and record layouts;

 

(b)

Notice to Hazard Insurers .  The Seller shall inform by written notice all hazard insurance companies and/or their agents of the transfer and request a change in the loss payee mortgage endorsement clause to Countrywide’s name.  The Seller shall provide Countrywide with a copy of the notification letter and an officer’s written certification that all hazard insurance companies have been notified by an identical letter;

 

(c)

Notice to Mortgage Insurance Companies .  The Seller shall inform by written notice all mortgage insurance companies providing any Primary Mortgage Insurance Policy of the change in insured's name on each such policy to Countrywide’s name. The Seller shall provide Countrywide with a copy of one notification letter and an officer's written certification that all such mortgage insurance companies have been notified by an identical letter;

 

(d)

Tax Service Contracts .  The Seller shall have obtained a life of loan, transferable real estate tax service contract with a tax service company reasonably acceptable to Countrywide on all of the Mortgage Loans and shall assign all such contracts to Countrywide or , in the alternative, the Seller shall notify Countrywide as to any Mortgage Loans for which it has not procured the requisite contract and shall pay to Countrywide a fee for each such Mortgage Loan equal to the fee or premium that is customarily charged for each such contract, as determined by Countrywide in its reasonable discretion;

 

(e)

Flood Certifications .  The Seller shall have obtained a life of loan, transferable flood certification contract for each Mortgage Loan and shall assign all such contracts to Countrywide or , in the alternative, the Seller shall notify Countrywide as to any Mortgage Loans for which it has not procured the flood certification referenced above and shall pay to Countrywide a fee for each such Mortgage Loan equal to the fee that is customarily charged for each such contract, as determined by Countrywide in its reasonable discretion;

 

(f)

Notice to Mortgagors .  The Seller shall, no later than fifteen (15) days prior to the related Servicing Transfer Date, inform in writing all Mortgagors of the change in servicer from the Seller to Countrywide, all in accordance with applicable law.  The Seller shall obtain Countrywide’s approval of the form of such notifications prior to their mailing.  The Seller acknowledges that Countrywide’s review of this notice shall not be a review for statutory or regulatory compliance purposes, and that the Seller shall have the sole responsibility for such compliance.  The Seller shall provide Countrywide with a copy of one notification letter and an officer’s written certification that all Mortgagors have been notified by an identical letter;

 

(g)

Payment of Real Estate Taxes .  The Seller shall make or cause to be made all payments of all real estate taxes on the Mortgage Loans which (i) will be delinquent on or prior to the related Servicing Transfer Date, (ii) are required to be paid within thirty (30) days after the related Servicing Transfer Date to receive a discount, or (iii) will be delinquent within thirty (30) days after the related Servicing Transfer Date.  If tax bills have not been received by the Seller by the related Servicing Transfer Date on any Mortgage Loans subject to this subsection, the Seller shall obtain and pay all tax bills subsequent to the related Servicing Transfer Date and Countrywide will promptly reimburse the Seller upon receipt from the Seller of documentation evidencing such payment.  On non-impounded accounts, the Seller shall ensure that all taxes which would otherwise be delinquent by the related Servicing Transfer Date, if not paid by such date, have been paid.  With respect to each of the Mortgage Loans which do not have an impound or escrow account maintained for the payment of taxes and insurance, the Seller shall hold harmless and indemnify Countrywide against any and all costs, expenses, penalties, fines, damages and judgments of whatever kind arising from the Seller’s failure to pay, or cause to be paid, any delinquent taxes or tax penalties outstanding as of the related Servicing Transfer Date;

 

(h)

Payment of Insurance Premiums .  The Seller shall pay all hazard and flood insurance and Primary Mortgage Insurance Policy premiums required to be paid prior to the Servicing Transfer Date or within thirty (30) days after the Servicing Transfer Date on all impounded accounts relating to the Mortgage Loans and shall ensure that all premiums required to be paid prior to the Servicing Transfer Date by the Mortgagors on non-impounded accounts have been paid.  With respect to any Mortgage Loan subject to force-placed insurance, the Seller shall maintain such insurance, which shall be in full force and effect through thirty (30) days after the Servicing Transfer Date.  With respect to each of the Mortgage Loans which do not have an impound or escrow account maintained for the payment of taxes and insurance, the Seller shall hold harmless and indemnify Countrywide against any and all costs, expenses, penalties, fines, damages and judgments of whatever kind arising from the Seller’s failure to ensure that the related Mortgagor is maintaining adequate insurance coverage on the Mortgaged Property at all times prior to the Servicing Transfer Date in accordance with the terms of the any document contained in the Mortgage File or any applicable law or regulation including, without limitation, adequate flood insurance coverage for all Mortgaged Properties located within an "A" or "V" flood hazard area;

 

(i)

ARM Adjustments .  With respect to each Adjustable Rate Mortgage Loan whose index value for any Interest Adjustment Date is available on or prior to the related Servicing Transfer Date, the Seller shall make all such adjustments and shall inform the related Mortgagors of such adjustments;

 

(j)

Notice to Sub-servicers .  On or prior to the related Closing Date, the Seller shall inform by written notice all sub-servicers who perform servicing obligations with respect to the Mortgage Loans of the sale of the Mortgage Loans to Countrywide and of the transfer of the Servicing Rights to Countrywide on the related Servicing Transfer Date. The Seller shall provide Countrywide with a copy of the notification letter and an officer’s certification that all sub-servicers have been notified by an identical letter; and

 

(k)

Mortgage Loans in Litigation .  On or prior to the related Servicing Transfer Date, the Seller shall (i) deliver written notification to Countrywide of any Mortgage Loan in litigation (including, without limitation, bankruptcy and foreclosure proceedings) as of the Servicing Transfer Date, including in such written notification the names and addresses of all parties involved in such litigation and all documents related to such litigation, (ii) if requested by Countrywide, notify the clerk of the court and all counsel of record involved in such litigation that ownership of such Mortgage Loan has been transferred to Countrywide, and (iii) if requested by Countrywide, cooperate with Countrywide and cause the filing of appropriate court documents to substitute Countrywide’s attorney for the Seller’s attorney and remove the Seller as a party to the litigation and substitute Countrywide as the real party in interest.

 

Section 4.4

Obligations of the Seller after the Servicing Transfer Date .  Without limiting the generality of Section 4.2 , the Seller shall take, or cause to be taken, the following actions with respect to the Mortgage Loans within three (3) Business Days following the related Servicing Transfer Date (or within such time as may otherwise be specified below):

 

(a)

Tape .  The Seller shall furnish to Countrywide all available computer or like records requested by Countrywide reflecting the status of payments, balances and other pertinent information with respect to the Mortgage Loans as of the related Servicing Transfer Date (including, without limitation, (i) master file, (ii) escrow file, (iii) payee file, which includes comprehensive tax and insurance information identifying payee, payee address, next payment due date, next amount payable and policy number/parcel number, (iv) ARM master file, (v) ARM history, (vi) name, address, and telephone number of first lien holder and loan number of first lien with respect to any second lien Mortgage Loans, and (vii) all HMDA data required by the Agencies).  Such records shall include magnetic tapes reflecting all computer files maintained on the Mortgage Loans and shall include hard copy trial balance reports as specifically requested by Countrywide;

 

(b)

Servicing File .  If the Seller has not already done so, the Seller shall have forwarded a complete Servicing File with respect to each Mortgage Loan;

 

(c)

Accounting Reports .  The Seller shall furnish to Countrywide copies of all accounting reports relating to the Mortgage Loans as of the related Servicing Transfer Date including, without limitation, a trial balance and reports of collections, delinquencies, prepaids, curtailments, escrow payments, escrow balances, partial payments, partial payment balances and other like information with respect to the Mortgage Loans;

 

(d)

Other Documentation .  The Seller shall provide Countrywide any and all further documents reasonably required by Countrywide in order to fully transfer to Countrywide possession of all tangible evidence of the Servicing Rights and escrow, impound and trust funds transferred hereunder;

 

(e)

Transfer of Escrow Funds and Other Proceeds .  The Seller shall transfer to Countrywide, by wire transfer to the account designated by Countrywide, an amount equal to the sum of (i) the Net Escrow Payments, (ii) all undistributed insurance loss draft funds, (iii) all unapplied funds received by the Seller, (iv) all unapplied interest on escrow balances accrued through the related Servicing Transfer Date, (v) all buydown funds held by the Seller as of the related Servicing Transfer Date, and (vi) all other amounts held by the Seller with respect to the Mortgage Loans as of the related Servicing Transfer Date for which the Seller is not entitled to retain (collectively, the “Escrow Proceeds”).  Within five (5) Business Days following Countrywide’s receipt of the Escrow Proceeds, the Seller and Countrywide shall resolve any discrepancies between the Seller’s accounting statement and Countrywide’s reconciliation with respect thereto.  No later than ten (10) Business Days following the related Servicing Transfer Date, the Seller or Countrywide, as the case may be, shall transfer to the other, by wire transfer to the designated account, any amounts to which the other party is entitled; and

 

(f)

Mortgage Payments Received After Servicing Transfer Date .  The Seller shall promptly forward to Countrywide any payment received by it after the related Servicing Transfer Date with respect to any of the Mortgage Loans, whether such payment is in the form of principal, interest, taxes, insurance, loss drafts, insurance refunds, etc., in the original form received, unless such payment has been received in cash or by the Seller’s lock box facility, in which case the Seller shall forward such payment in a form acceptable to Countrywide.  The Seller shall notify Countrywide of the particulars of the payment, which notification shall set forth sufficient information to permit timely and appropriate processing of the payment by Countrywide.

 

 

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 and in accordance with all applicable laws, rules and regulations. In servicing and administering the Mortgage Loans, Servicer shall employ procedures and exercise the same care that it customarily employs and exercises in servicing and administering mortgage loans for its own account giving due consideration to customary and usual standards of practice of prudent mortgage servicers.  

 

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  in the best interest of 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 shall not waive any Prepayment Penalty in the event of a Principal Prepayment in full or in part of a Mortgage Loan, which is required by the terms of the related Mortgage Note unless, (i) such waiver is standard and customary in servicing similar Mortgage Loans and such waiver is related to a default or reasonably foreseeable default and would, in the reasonable judgment of such Servicer, maximize recovery of total proceeds taking into account the value of such Prepayment Penalty and the related Mortgage Loan and, if such waiver is made in connection with a refinancing of the related Mortgage Loan, such refinancing is related to a default or a reasonably foreseeable default, (ii) such Prepayment Penalty is unenforceable in accordance with applicable law or the collection of such related Prepayment Penalty would otherwise violate applicable law, or (iii) 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. Notwithstanding any provision in this Agreement to the contrary, in the event the Prepayment Penalty payable under the terms of the Mortgage Note is less than the amount of the Prepayment Penalty set forth in the Mortgage Loan Schedule or other information provided to Servicer, Servicer shall not have any liability or obligation with respect to such difference, and in addition shall not have any liability or obligation to pay the amount of any uncollected Prepayment Penalty if the failure to collect such amount is the direct result of inaccurate or incomplete information on the related Mortgage Loan Schedule. If the Servicer waives or does not collect all or a portion of a Prepayment Charge relating to a Principal Prepayment in full or in part due to any action or omission of the Servicer, other than as provided above, the Seller shall deposit the amount of such Prepayment Charge (or such portion thereof as had been waived for deposit) into the Custodial Account for distribution in accordance with the terms of this Agreement. 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 rem