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EXHIBIT 4.3
MASTER SERVICING AGREEMENT
Dated as of __________ __, 1997
among
SEQUOIA MORTGAGE TRUST 199_-_, Issuer
and
___________________________, Master Servicer
and
_____________________________, Trustee
Relating to the Pledged Mortgages
Pledged as Collateral for the Issuer's
Collateralized Mortgage Bonds,
in the Aggregate Initial
Principal Amount of $___________
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TABLE OF CONTENTS
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PRELIMINARY STATEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1. Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2. Mortgage Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
(a) Trustee to Retain Possession of Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
(b) Trustee to Cooperate; Release of Trustee Mortgage Files. . . . . . . . . . . . . . . . . . . . . . . 32
(c) Documents, Records and Funds in Possession of Master Servicer to be Held for Trustee . . . . . . . . 33
(d) Representations, Warranties and Covenants of the Issuer and the Master Servicer. . . . . . . . . . . 34
(e) Covenants of the Master Servicer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
3. General Duties of the Master Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
(a) Master Servicer to Service Pledged Mortgages. . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
(b) Subservicing; Enforcement of the Obligations of Servicers . . . . . . . . . . . . . . . . . . . . . 39
(c) Successor Servicers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
(d) Liability of the Master Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
(e) No Contractual Relationship Between Servicers and the Trustee . . . . . . . . . . . . . . . . . . . 41
(f) Rights of the Issuer and the Trustee in Respect of the Master Servicer. . . . . . . . . . . . . . . 41
(g) Trustee to Act as Master Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
(h) Collection of Pledged Mortgage Payments; Eligible Accounts; Servicing Accounts; Bond Account . . . . 43
(i) Collection of Taxes, Assessments and Similar Items; Escrow Accounts . . . . . . . . . . . . . . . . 47
(j) Access to Certain Documentation and Information Regarding the Pledged Mortgages . . . . . . . . . . 48
(k) Permitted Withdrawals from the Bond Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
(l) Maintenance of Hazard Insurance; Maintenance of Primary Insurance Policies . . . . . . . . . . . . . 50
(m) Enforcement of Due-On-Sale Clauses; Assumption Agreements . . . . . . . . . . . . . . . . . . . . . 52
(n) Realization Upon Defaulted Pledged Mortgages; Purchase of Certain Pledged Mortgages . . . . . . . . 54
(o) Access to Certain Documentation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
(p) Annual Statement as to Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
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TABLE OF CONTENTS (CONT'D)
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(q) Annual Independent Public Accountants' Servicing Statement; Financial Statements. . . . . . . . . . 57
(r) Errors and Omissions Insurance; Fidelity Bonds. . . . . . . . . . . . . . . . . . . . . . . . . . . 58
4. Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
5. Servicing Compensation and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
6. The Master Servicer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
(a) Liabilities of the Master Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
(b) Merger or Consolidation of the Master Servicer. . . . . . . . . . . . . . . . . . . . . . . . . . . 60
(c) Limitation on Liability of the Master Servicer and Others. . . . . . . . . . . . . . . . . . . . . . 60
(d) Limitation on Resignation of the Master Servicer. . . . . . . . . . . . . . . . . . . . . . . . . . 61
7. Servicing Default; Termination and Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
(a) Servicing Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
(b) Trustee to Act; Appointment of Successor. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
(c) Notification to Bondholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
8. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
(a) Term of Master Servicing Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
(b) Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
(c) Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
(d) Inspection and Audit Rights. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
(e) Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
(f) Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
(g) Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
(h) No Joint Venture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
(i) Execution in Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
(j) Limitation of Liability of Wilmington Trust Company . . . . . . . . . . . . . . . . . . . . . . . . 68
(k) Nonpetition Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
SCHEDULE I: Schedule of Pledged Mortgages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-I-1
SCHEDULE II: Representations and Warranties of
the Master Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-II-1
SCHEDULE III: Representations and Warranties as
to the Pledged Mortgages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-III-1
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TABLE OF CONTENTS (CONT'D)
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SCHEDULE IV: Representations and Warranties of
the Issuer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-IV-1
EXHIBITS
EXHIBIT A FORM OF INITIAL CERTIFICATION OF TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
EXHIBIT B FORM OF FINAL CERTIFICATION OF TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-1
EXHIBIT C REQUEST FOR RELEASE
(for Trustee) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C-1
EXHIBIT D REQUEST FOR RELEASE (Pledged Mortgage
Paid in Full, Repurchased and Released) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . D-1
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MASTER SERVICING AGREEMENT
THIS MASTER SERVICING AGREEMENT is made and entered into as of
________ __, 19__, by and among Sequoia Mortgage Trust 199_-_, a statutory
business trust formed under the laws of the State of Delaware (the "Issuer"),
________ _________________, a _______ corporation (the "Master Servicer") and
_______________________________, a _________________ _______ corporation (in
its capacity as trustee under the Indenture referred to below, the "Trustee").
PRELIMINARY STATEMENT
The Issuer was formed for the purpose of issuing bonds secured
by mortgage collateral. The Issuer has entered into a trust indenture, dated
as of ________ __, 19__ (the "Indenture"), between the Issuer and the Trustee,
pursuant to which the Issuer intends to issue its Collateralized Mortgage
Bonds, in the aggregate initial principal amount of $___________ (the "Bonds").
Pursuant to the Indenture, as security for the indebtedness represented by such
Bonds, the Issuer is and will be pledging to the Trustee, or granting the
Trustee a security interest in, among other things, certain Pledged Mortgages,
its rights under this Agreement, the Bond Account, the Distribution Account and
certain Insurance Policies (as each such term is defined herein).
The parties desire to enter into this Agreement to provide,
among other things, for the servicing of the Pledged Mortgages by the Master
Servicer. The Master Servicer acknowledges that, in order further to secure
the Bonds, the Issuer is and will be granting to the Trustee a security
interest in, among other things, its rights under this Agreement, and the
Master Servicer agrees that all covenants and agreements made by the Master
Servicer herein with respect to the Pledged Mortgages shall also be for the
benefit and security of the Trustee and Holders of the Bonds. For its services
hereunder, the Master Servicer will receive a Master Servicing Fee (as defined
herein) with respect to each Pledged Mortgage serviced hereunder.
The Master Servicer has entered into Servicing Agreements (as
defined herein) with Servicers (as defined herein) to perform, as independent
contractors, servicing functions for the Master Servicer with respect to the
Pledged Mortgages. For its services under a Servicing Agreement, each Servicer
will
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receive a Servicing Fee (as defined herein) with respect to each Pledged
Mortgage serviced by it thereunder.
In addition, the Issuer will enter into a Management
Agreement, dated as of the date hereof, with Redwood Trust, Inc. (in such
capacity, the "Manager"), pursuant to which the Manager will conduct certain
operations of the Issuer. Actions by or required of the Issuer hereunder may
be performed on its behalf by the Manager or any sub-manager appointed to act
for the Issuer.
1. Defined Terms.
Except as otherwise specified or as the context may otherwise
require, the following terms have the respective meanings set forth below for
all purposes of this Agreement, and the definitions of such terms are
applicable to the singular as well as the plural forms of such terms and to the
masculine as well as to the feminine and neuter genders of such terms:
"ADJUSTED NET MORTGAGE RATE" means, as to each Pledged
Mortgage and at any time, the per annum rate equal to the Mortgage Rate less
the sum of the Master Servicing Fee Rate and the related Servicing Fee Rate.
["ADJUSTMENT DATE" means, as to any Pledged Mortgage, the date
on which the related Mortgage Rate adjusts annually after a period of ten years
following origination, in accordance with the terms of the related Mortgage
Note.]
"ADVANCE" means the payment required to be made by the Master
Servicer with respect to any Payment Date pursuant to Section 4, the amount of
any such payment being equal to the aggregate of payments of principal and
interest (net of the Master Servicing Fee and the applicable Servicing Fee and
net of any net income in the case of any REO Property) on the Pledged Mortgages
that were due on the related Due Date and not received as of the close of
business on the related Determination Date, less the aggregate amount of any
such delinquent payments that the Master Servicer has determined would
constitute a Nonrecoverable Advance if advanced.
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"AGREEMENT" means this Master Servicing Agreement, as the same
may be amended or supplemented from time to time.
"AMOUNT HELD FOR FUTURE DISTRIBUTION" means, as to any Payment
Date, the aggregate amount held in the Bond Account at the close of business on
the related Determination Date on account of (i) Principal Prepayments and
Liquidation Proceeds received in the month of such Payment Date and (ii) all
Scheduled Payments due after the related Due Date.
"APPRAISED VALUE" means (i) with respect to a Pledged Mortgage
other than a Refinancing Pledged Mortgage, the lesser of (a) the value of the
Mortgaged Property based upon the appraisal made at the time of the origination
of such Pledged Mortgage and (b) the sales price of the Mortgaged Property at
the time of the origination of such Pledged Mortgage; or (ii) with respect to a
Refinancing Pledged Mortgage, the value of the Mortgaged Property based upon
the appraisal made at the time of the origination of such Refinancing Pledged
Mortgage.
"AVAILABLE FUNDS" means, as to any Payment Date, the sum of
(i) all scheduled installments of interest (net of the related Expense Fees)
and principal due [on the Due Date in the month] in which such Payment Date
occurs and received prior to the related Determination Date, together with any
Advances in respect thereof; (ii) all Insurance Proceeds and all Liquidation
Proceeds for the [month] preceding the month of such Payment Date, net of
unreimbursed expenses incurred in connection with a liquidation or foreclosure
and unreimbursed Advances; (iii) all partial or full prepayments received
during the related Prepayment Period; and (iv) amounts received with respect to
such Payment Date as the Substitution Adjustment Amount or purchase price in
respect to such Payment Date as the Substitution Adjustment Amount or purchase
price in respect of a Deleted Pledged Mortgage or a Pledged Mortgage purchased
by Redwood Trust [or by the Master Servicer] as of such Payment Date, reduced
by amounts in reimbursement for Advances previously made and other amounts as
to which the applicable Servicer or the Master Servicer is entitled to be
reimbursed pursuant to the Master Servicing Agreement.
"BANKRUPTCY CODE" means the United States Bankruptcy Reform
Act of 1978, as amended.
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"BLANKET MORTGAGE" means the mortgage or mortgages encumbering
the Cooperative Property.
"BOND ACCOUNT" means, with respect to the Bonds, the separate
Eligible Account created and maintained by the Master Servicer pursuant to
Section 3(h)(v) with a depository institution in the name of the Master
Servicer for the benefit of the Trustee on behalf of the Bondholders and
designated "_________________________________________ in trust for the
registered holders of Sequoia Mortgage Trust 199_-_ Collateralized Mortgage
Bonds."
"BOND DISTRIBUTION AMOUNT" means, as to any Payment Date, the
sum of (i) the Senior Interest Payment Amount, (ii) the Senior Principal
Payment Amount, (iii) the Class B-1 Interest Payment Amount, (iv) the Class B-1
Principal Payment Amount, (v) the Class B-2 Interest Payment Amount and (vi)
the Class B-2 Principal Payment Amount.
"BONDHOLDER" or "HOLDER" means the Person in whose name a Bond
is registered in the Bond Register (as defined in the Indenture).
"BONDS" mean the Issuer's Collateralized Mortgage Bonds.
"BUSINESS DAY" means any day other than (i) a Saturday or a
Sunday, or (ii) a day on which banking institutions in the City of New York,
New York, the State of California or the city in which the Corporate Trust
Office (as defined in the Indenture) of the Trustee is located are authorized
or obligated by law or executive order to be closed.
"CERTIFICATE INTEREST PAYMENT AMOUNT" means, as to any Payment
Date, one month's interest accrued during the related Interest Accrual Period
at the Certificate Interest Rate on the Invested Amount, subject to reduction
pursuant to Section 3(h)(viii). The Certificate Interest Payment Amount shall
be calculated on the basis of a 360-day year of twelve 30-day months.
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"CERTIFICATE INTEREST RATE" means, for any Interest Accrual
Period beginning prior to the Interest Conversion Date
_____________________.
"CERTIFICATE PAYING AGENT" has the meaning assigned thereto in
the Deposit Trust Agreement.
"CLASS B-1 BOND INTEREST RATE" means, with respect to any
Interest Accrual Period, the annual rate at which interest accrues on the
Subordinated Bonds as specified in such Bonds and in Section 2.03(c) of the
Indenture.
"CLASS B-1 INTEREST CARRYOVER SHORTFALL" means, the amount by
which sum of (i) the interest at the Class B-1 Bond Interest Rate on the Class
B-1 Principal Amount and (ii) the interest at the Class B-1 Bond Interest Rate
on any Class B-1 Principal Carryover Shortfall, on each prior Payment Date,
exceeded the amount actually distributed as interest on such prior Payment
Dates and not subsequently distributed.
"CLASS B-1 INTEREST PAYMENT AMOUNT" means, as of any Payment
Date, the sum of (i) interest at the Class B-1 Bond Interest Rate on the Class
B-1 Principal Amount, (ii) interest at the Class B-1 Bond Interest Rate on any
Class B-1 Principal Carryover Shortfall, (iii) the Class B-1 Interest Carryover
Shortfall and (iv) interest at the Class B-1 Bond Interest Rate on any Class
B-1 Interest Carryover Shortfall.
"CLASS B-1 PERCENTAGE" means, as to any Payment Date, the
percentage equivalent of a fraction the numerator of which is the Class B-1
Principal Amount immediately prior to such date and the denominator of which is
the sum of (i) the Senior Class Principal Amount, (ii) the Class B-1 Principal
Amount, (iii) the Class B-2 Principal Amount and (iv) the Invested Amount, in
each case immediately prior to such date.
"CLASS B-1 PRINCIPAL AMOUNT" means, as of any Payment Date,
the lesser of (i)_the aggregate of the Stated Principal Balances of the Pledged
Mortgages, less the Senior Class Principal Amount immediately prior to such
date, and (ii) the Original Class B-1 Principal Amount reduced by all amounts
previously distributed to holders of the Class B-1 bonds as payments of
principal.
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"CLASS B-1 PRINCIPAL CARRYOVER SHORTFALL" means, as to any
Payment Date, the excess of (i) the Original Class B-1 Principal Amount reduced
by all amounts previously distributed to holders of the Class B-1 Bonds as
payments of principal or Class B-1 Principal Carryover Shortfall, over (ii) the
Class B-1 Principal Amount immediately prior to such date.
"CLASS B-1 PRINCIPAL PAYMENT AMOUNT" means, as to any Payment
Date, the sum of (i) the Class B-1 Percentage of the sum of (a) the principal
portion of the Schedules Payment due on each Pledged Mortgage [on the related
Due Date], (b) the principal portion of the purchase price of each Pledged
Mortgage that was purchased by Redwood Trust or another person pursuant to the
Mortgage Loan Purchase Agreement [or by the Master Servicer in connection with
any optional purchase by the Master Servicer of a defaulted Pledged Mortgage]
as of such Payment Date, (c) the Substitution Adjustment Amount in connection
with any Deleted Pledged Mortgage received with respect to such Payment Date,
(d) any Insurance Proceeds or Liquidation Proceeds allocable to recoveries of
principal of Pledged Mortgages that are not yet Liquidated Pledged Mortgages
received during the related Prepayment Period, (e) with respect to each Pledged
Mortgage that became a Liquidated Pledged Mortgage during the [calendar month]
preceding the month of such Payment Date, the Stated Principal Balance of such
Pledged Mortgage and (f) all partial and full principal prepayments by
borrowers received during the related Prepayment Period and (ii) any Class B-1
Principal Carryover Shortfall.
"CLASS B-2 BOND INTEREST RATE" means, with respect to any
Interest Accrual Period, the annual rate at which interest accrues on the
Subordinated Bonds as specified in such Bonds and in Section 2.03(c) of the
Indenture.
"CLASS B-2 INTEREST CARRYOVER SHORTFALL" means, the amount by
which sum of (i) the interest at the Class B-2 Bond Interest Rate on the Class
B-2 Principal Amount and (ii) the interest at the Class B-2 Bond Interest Rate
on any Class B-2 Principal Carryover Shortfall, on each prior Payment Date,
exceeded the amount actually distributed as interest on such prior Payment
Dates and not subsequently distributed.
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"CLASS B-2 INTEREST PAYMENT AMOUNT" means, as to any Payment
Date, the sum of (i) interest at the Class B-2 Bond Interest Rate on the Class
B-2 Principal Amount, (ii) interest at the Class B-2 Bond Interest Rate on any
Class B-2 Principal Carryover Shortfall, (iii) the Class B-2 Interest Carryover
Shortfall and (iv) interest at the Class B-2 Bond Interest Rate on any Class
B-2 Interest Carryover Shortfall.
"CLASS B-2 PERCENTAGE" means, as to any Payment Date, the
percentage equivalent of a fraction the numerator of which is the Class B-2
Principal Amount immediately prior to such date and the denominator of which is
the sum of (i) the Senior Class Principal Amount, (ii) the Class B-1 Principal
Amount, (iii) the Class B-2 Principal Amount and (iv) the Invested Amount, in
each case immediately prior to such date.
"CLASS B-2 PRINCIPAL AMOUNT" means, as of any Payment Date,
the lesser of (i) the aggregate of the Stated Principal Balances of the Pledged
Mortgages, less the sum of the Senior Class Principal Amount and the Class B-2
Principal Amount, in each case immediately prior to such date, and (i) the
Original Class B-2 Principal Amount reduced by all amounts previously
distributed to holders of the Class B-2 Bonds as payments of principal.
"CLASS B-2 PRINCIPAL CARRYOVER SHORTFALL" means, as to any
Payment Date, the excess of (i) the Original Class B-2 Principal Amount reduced
by all amounts previously distributed to holders of the Class B-2 Bonds as
payments of principal or Class B-2 Principal Carryover Shortfall, over (ii) the
Class B-2 Principal Amount immediately prior to such date.
"CLASS B-2 PRINCIPAL PAYMENT AMOUNT" means, as to any Payment
Date, the sum of (i) the Class B-2 Percentage of the sum of (a) the principal
portion of the Schedules Payment due on each Pledged Mortgage [on the related
Due Date], (b) the principal portion of the purchase price of each Pledged
Mortgage that was purchased by Redwood Trust or another person pursuant to the
Mortgage Loan Purchase Agreement [or by the Master Servicer in connection with
any optional purchase by the Master Servicer of a defaulted Pledged Mortgage]
as of such Payment Date, (c) the Substitution Adjustment Amount in connection
with any Deleted Pledged Mortgage received with respect to such Payment Date,
(d)
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any Insurance Proceeds or Liquidation Proceeds allocable to recoveries of
principal of Pledged Mortgages that are not yet Liquidated Pledged Mortgages
received during the [calendar month] preceding the month of such Payment Date,
(e) with respect to each Pledged Mortgage that became a Liquidated Pledged
Mortgage during the [calendar month] preceding the month of such Payment Date,
the Stated Principal Balance of such Pledged Mortgage and (f) all partial and
full principal prepayments by borrowers received during the related Prepayment
Period and (ii) any Class B-2 Principal Carryover Shortfall.
"CLASS PRINCIPAL AMOUNT" shall have the meaning ascribed
thereto in the Indenture.
"CLOSING DATE" means _______ __, 199__.
"CODE" means the Internal Revenue Code of 1986, including any
successor or amendatory provisions.
"COLLECTION ACCOUNT" means the Eligible Account or Accounts
established and maintained by the Master Servicer in accordance with Section
3(h)(iii).
"COMPANY" means Sequoia Mortgage Funding Corporation, a
Delaware corporation, which, as of the Closing Date, owns all of the
outstanding beneficial interests in the Issuer.
"CONTROLLING CLASS" means the Class A-1 Bonds or, if the Class
A-1 Bonds are no longer Outstanding, the most senior Class of Subordinated
Bonds then Outstanding.
"COOPERATIVE CORPORATION" means the entity that holds title
(fee or an acceptable leasehold estate) to the real property and improvements
constituting the Cooperative Property and which governs the Cooperative
Property, which Cooperative Corporation must qualify as a Cooperative Housing
Corporation under Section 216 of the Code.
"COOPERATIVE LOAN" means any Pledged Mortgage secured by
Cooperative Shares and a Proprietary Lease.
"COOPERATIVE PROPERTY" means the real property and
improvements owned by the Cooperative Corporation, including the
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allocation of individual dwelling units to the holders of the Cooperative
Shares of the Cooperative Corporation.
"COOPERATIVE SHARES" means shares issued by a Cooperative
Corporation.
"COOPERATIVE UNIT" means a single family dwelling located in a
Cooperative Property.
"CUT-OFF DATE" means, with respect to the Pledged Mortgages,
________ __, 199__.
"CUT-OFF DATE POOL PRINCIPAL BALANCE" means $________________.
"CUT-OFF DATE PRINCIPAL BALANCE" means, as to any Pledged
Mortgage, the Stated Principal Balance thereof as of the close of business on
the Cut-off Date.
"DEBT SERVICE REDUCTION" means, with respect to any Pledged
Mortgage, a reduction by a court of competent jurisdiction in a proceeding
under the Bankruptcy Code in the Scheduled Payment for such Pledged Mortgage
which became final and non-appealable, except such a reduction resulting from a
Deficient Valuation or any reduction that results in a permanent forgiveness of
principal.
"DEBT SERVICE REDUCTION PLEDGED MORTGAGE" means any Pledged
Mortgage that became the subject of a Debt Service Reduction.
"DEFECTIVE PLEDGED MORTGAGE" means any Pledged Mortgage
required to be purchased by the Master Servicer pursuant to Section 2(a)
hereof.
"DEFICIENT VALUATION" means, with respect to any Pledged
Mortgage, a valuation by a court of competent jurisdiction of the Mortgaged
Property in an amount less than the then outstanding indebtedness under the
Pledged Mortgage, or any reduction in the amount of principal to be paid in
connection with any Scheduled Payment that results in a permanent forgiveness
of principal, which valuation or reduction results
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from an order of such court which is final and non-appealable in a proceeding
under the Bankruptcy Code.
"DELETED PLEDGED MORTGAGE" has the meaning ascribed thereto in
Section 5.
"DEPOSIT TRUST AGREEMENT" means the Amended and Restated
Deposit Trust Agreement, dated as of _______ __, 199__, between the Company and
the Owner Trustee, as such Deposit Trust Agreement may be amended or
supplemented from time to time.
"DETERMINATION DATE" means, as to any Payment Date, the __th
day of the [month] in which such Payment Date occurs or, if such __th day is
not a Business Day, the next succeeding Business Day; provided, however, that
if such next succeeding Business Day is less than two Business Days prior to
the related Payment Date, then the Determination Date shall be the next
Business Day preceding the __th day of such [month].
"DISTRIBUTION ACCOUNT" means the Eligible Account or Accounts
created and maintained with the Trustee pursuant to Section 8.02 of the
Indenture, to which shall be remitted from time to time certain of the funds
the Master Servicer has collected and deposited in the Bond Account with
respect to the Pledged Mortgages, as required hereunder and under the
Indenture.
"DISTRIBUTION ACCOUNT DEPOSIT DATE" means, as to any Payment
Date, [12:30 p.m. Pacific time] on the Business Day immediately preceding such
Payment Date.
"DUE DATE" means the first day of the month.
"DUFF & PHELPS" means Duff & Phelps Credit Rating Company, or
any successor thereto. If Duff & Phelps is designated as a Rating Agency in
the Indenture, for purposes of Section 8(c) the address for notices to Duff &
Phelps shall be Duff & Phelps Credit Rating Company, 55 E. Monroe Street, 35th
Floor, Chicago, Illinois 60603, Attention: MBS Monitoring, or such other
address as Duff & Phelps may hereafter furnish to the Issuer and the Master
Servicer.
"ELIGIBLE ACCOUNT" means any of (i) an account or accounts
maintained with a federal or state chartered depository
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institution or trust company the short-term unsecured debt obligations of which
(or, in the case of a depository institution or trust company that is the
principal subsidiary of a holding company, the debt obligations of such holding
company, but only if Moody's is not a Rating Agency) have the highest
short-term ratings of each Rating Agency at the time any amounts are held on
deposit therein, or (ii) an account or accounts in a depository institution or
trust company in which such accounts are insured by the FDIC or the SAIF (to
the limits established by the FDIC or the SAIF) and the uninsured deposits in
which accounts are otherwise secured such that, as evidenced by an Opinion of
Counsel delivered to the Trustee and to each Rating Agency, the Bondholders
have a claim with respect to the funds in such account or a perfected first
priority security interest against any collateral (which shall be limited to
Permitted Investments) securing such funds that is superior to claims of any
other depositors or creditors of the depository institution or trust company in
which such account is maintained, or (iii) a trust account or accounts
maintained with the trust department of a federal or state chartered depository
institution or trust company, acting in its fiduciary capacity or (iv) any
other account acceptable to each Rating Agency. Eligible Accounts may bear
interest, and may include, if otherwise qualified under this definition,
accounts maintained with the Trustee.
"ESCROW ACCOUNT" means the Eligible Account or Accounts
established and maintained pursuant to Section 3(i) hereof.
"EXCESS PROCEEDS" means, with respect to any Liquidated
Pledged Mortgage, the amount, if any, by which the sum of any Liquidation
Proceeds of such Pledged Mortgage received in the calendar month in which such
Pledged Mortgage became a Liquidated Pledged Mortgage, net of any amounts
previously reimbursed to the Master Servicer as Nonrecoverable Advance(s) with
respect to such Pledged Mortgage pursuant to Section 3(k)(iii), exceeds (a) the
unpaid principal balance of such Liquidated Pledged Mortgage as of the Due Date
in the month in which such Pledged Mortgage became a Liquidated Pledged
Mortgage plus (b) accrued interest at the Mortgage Rate from the Due Date as to
which interest was last paid or advanced (and not reimbursed) to Bondholders up
to the Due Date applicable to the Payment Date immediately following the
calendar month during which such liquidation occurred.
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"EXPENSE RATE" means, as to each Pledged Mortgage, the sum of
the related Servicing Fee Rate, the related Master Servicing Fee Rate and
Trustee Fee Rate.
"FDIC" means the Federal Deposit Insurance Corporation, or any
successor thereto.
"FHLMC" means the Federal Home Loan Mortgage Corporation, a
corporate instrumentality of the United States created and existing under Title
III of the Emergency Home Finance Act of 1970, as amended, or any successor
thereto.
"FIRREA" means the Financial Institutions Reform, Recovery and
Enforcement Act of 1989.
"FITCH" means Fitch Investors Service, L.P., or any successor
thereto. If Fitch is designated as a Rating Agency in the Indenture, for
purposes of Section 8(c) the address for notices to Fitch shall be Fitch
Investors Service, L.P., One State Street Plaza, New York, New York 10004,
Attention: Residential Mortgage Surveillance Group, or such other address as
Fitch may hereafter furnish to the Issuer and the Master Servicer.
"FNMA" means the Federal National Mortgage Association, a
federally chartered and privately owned corporation organized and existing
under the Federal National Mortgage Association Charter Act, or any successor
thereto.
"INDENTURE" means the trust indenture, dated as of the date
hereof, between the Issuer and the Trustee, as such Indenture may be amended or
supplemented from time to time in accordance with its terms.
"INDEPENDENT ACCOUNTANTS" shall have the meaning ascribed to
such term under the Indenture.
"INDEX" means, as to each Pledged Mortgage, the index from
time to time in effect for the adjustment of the Mortgage Rate set forth as
such on the related Mortgage Note.
"INSURANCE POLICY" means, with respect to any Pledged
Mortgage, any insurance policy, including all riders and
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endorsements thereto in effect, including any replacement policy or policies
for any Insurance Policies.
"INSURANCE PROCEEDS" means proceeds paid by an insurer
pursuant to any Insurance Policy, in each case other than any amount included
in such Insurance Proceeds in respect of Insured Expenses.
"INSURED EXPENSES" means expenses covered by an Insurance
Policy or any other insurance policy with respect to the Pledged Mortgages.
"INTEREST ACCRUAL PERIOD" means, with respect to each Class of
Bonds, the Investor Certificate and any Payment Date _______________.
["INTEREST CONVERSION DATE" means, as to the Pledged
Mortgages, the date on which the first Adjustment Date occurs.]
"INVESTED AMOUNT" means, as of any Payment Date, the lesser of
(i) the aggregate of the Stated Principal Balances of the Pledged Mortgages,
less the sum of (x) the Senior Class Principal Amount (y) the Class B-1
Principal Amount and (z) the Class B-2 Principal Amount, in each case
immediately prior to such date, and (ii) the Original Invested Amount reduced
by all amounts previously distributed to the Holder of the Investor Certificate
in reduction of the Invested Amount.
"INVESTED AMOUNT PAYMENT" means, as to any Payment Date, the
sum of (i) the Investor Percentage of the sum of (a) the principal portion of
the Scheduled Payment due on each Pledged Mortgage [on the related Due Date],
(b) the principal portion of the purchase price of each Pledged Mortgage that
was purchased by the Redwood Trust or another Person pursuant to the Mortgage
Loan Purchase Agreement as of such Payment Date, (c) the Substitution
Adjustment Amount in connection with any Deleted Pledged Mortgage received with
respect to such Payment Date and (d) any Insurance Proceeds or Liquidation
Proceeds allocable to recoveries of principal of Pledged Mortgages that are not
yet Liquidated Pledged Mortgages received during the [calendar month] preceding
the month of such Payment Date, and (e) all partial and full principal
prepayments by borrowers received during the related Prepayment Period, and
(ii) with respect to each Pledged
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Mortgage that became a Liquidated Pledged Mortgage during the [calendar month]
preceding the month of such Payment Date, the Liquidation Proceeds allocable to
principal received with respect to such Pledged Mortgage, after application of
such amounts pursuant to clause (e) of the definition of Senior Principal
Payment Amount clause (e) of the definition of Class B-1 Principal Payment
Amount and clause (e) of the definition of Class B-2 Principal Payment Amount.
"INVESTOR CERTIFICATE" shall have the meaning ascribed thereto
in the Deposit Trust Agreement.
"INVESTOR PERCENTAGE" means, as of any Payment Date, the
difference between 100% and the sum of the Senior Percentage, the Class B-1
Percentage and the Class B-2 Percentage.
"LIQUIDATED PLEDGED MORTGAGE" means with respect to any
Payment Date, a defaulted Pledged Mortgage (including any REO Property) which
was liquidated in the [calendar month] preceding the month of such Payment Date
and as to which the Master Servicer has certified (in accordance with this
Agreement) that it has received all amounts it expects to receive in connection
with the liquidation of such Pledged Mortgage including the final disposition
of an REO Property.
"LIQUIDATION PROCEEDS" means amounts, including Insurance
Proceeds, received in connection with the partial or complete liquidation of
defaulted Pledged Mortgages, whether through trustee's sale, foreclosure sale
or otherwise or amounts received in connection with any condemnation or partial
release of a Mortgaged Property and any other proceeds received in connection
with an REO Property, less the sum of related unreimbursed Master Servicing
Fees, Servicing Advances and Advances.
"LOAN-TO-VALUE RATIO" means, with respect to any Pledged
Mortgage and as to any date of determination, the fraction (expressed as a
percentage) the numerator of which is the principal balance of the related
Pledged Mortgage at such date of determination and the denominator of which is
the Appraised Value of the related Mortgaged Property.
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"MAINTENANCE" means with respect to any Cooperative Unit, the
rent paid by the Mortgagor to the Cooperative Corporation pursuant to the
Proprietary Lease.
"MARGIN" means as to each Pledged Mortgage, the percentage
amount set forth on the related Mortgage Note added to the Index in calculating
the Mortgage Rate thereon.
"MASTER SERVICER" means _____________________, a _______
corporation, and its successors and assigns, in its capacity as master servicer
hereunder.
"MASTER SERVICER ADVANCE DATE" means as to any Payment Date,
[12:30 p.m. Pacific time] on the Business Day immediately preceding such
Payment Date.
"MASTER SERVICING FEE" means as to each Pledged Mortgage and
any Payment Date, an amount equal to [one month's] interest at the related
Master Servicing Fee Rate on the Stated Principal Balance of such Pledged
Mortgage or, in the event of any payment of interest which accompanies a
Principal Prepayment in Full made by the Mortgagor, interest at the Master
Servicing Fee Rate on the Stated Principal Balance of such Pledged Mortgage for
the period covered by such payment of interest, subject to reduction as
provided in Section 5(a).
"MASTER SERVICING FEE RATE" means with respect to each Pledged
Mortgage, ______% per annum.
"MAXIMUM RATE" means as to any Pledged Mortgage, the maximum
rate set forth on the related Mortgage Note at which interest can accrue on
such Pledged Mortgage.
"MINIMUM RATE" means as to any Pledged Mortgage, the minimum
rate set forth on the related Mortgage Note at which interest can accrue on
such Pledged Mortgage.
"MOODY'S" means Moody's Investors Service, Inc., or any
successor thereto. If Moody's is designated as a Rating Agency in the
Indenture, for purposes of Section 8(c) the address for notices to Moody's
shall be Moody's Investors Service, Inc., 99 Church Street, New York, New York
10007, Attention: [Residential
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Pass-Through Monitoring], or such other address as Moody's may hereafter
furnish to the Issuer and the Master Servicer.
"MORTGAGE" means the mortgage, deed of trust or other
instrument creating a first lien on an estate in fee simple or leasehold
interest in real property securing a Mortgage Note.
"MORTGAGE DOCUMENTS" mean the mortgage documents listed in
Section 2(a)(i) pertaining to a particular Pledged Mortgage and any additional
documents delivered to the Trustee to be added to the Mortgage Documents
pursuant to this Agreement.
"MORTGAGE NOTE" means the original executed note or other
evidence of indebtedness evidencing the indebtedness of a Mortgagor under a
Pledged Mortgage.
"MORTGAGE RATE" means the annual rate of interest borne by a
Mortgage Note from time to time.
"MORTGAGED PROPERTY" means the underlying property securing a
Pledged Mortgage, which, with respect to a Cooperative Loan, is the related
Cooperative Shares and Proprietary Lease.
"MORTGAGOR" means the obligor(s) on a Mortgage Note.
"NET INTEREST SHORTFALL" means, as to any Payment Date, the
amount by which the sum of (i) the amount of interest which would otherwise
have been received with respect to any Pledged Mortgage that was the subject of
a Relief Act Reduction and (ii) any Prepayment Interest Shortfalls, in each
case during the calendar month preceding the month of such Payment Date,
exceeds the sum of (i) the Master Servicing Fee for such period and (ii) the
Certificate Interest Payment Amount, the Invested Amount Payment and the
amounts otherwise payable on such Payment Date to the holder of the Investor
Certificate.
"NET MORTGAGE RATE" means, as to any Pledged Mortgage and
Payment Date, the related Mortgage Rate as of the Due Date in the month
preceding the month of such Payment Date reduced by the related Expense Rate.
"NONRECOVERABLE ADVANCE" means any portion of an Advance or
Servicer Advance previously made or proposed to be
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made by the Master Servicer or the related Servicer, as the case may be, that,
in the good faith judgment of the Master Servicer or such Servicer, will not be
ultimately recoverable by the Master Servicer from the related Mortgagor,
related Liquidation Proceeds or otherwise.
"OFFICER'S CERTIFICATE" means a certificate (i) signed by the
Chairman of the Board, the Vice Chairman of the Board, the President, a
Managing Director, a Vice President (however denominated), an Assistant Vice
President, the Treasurer, the Secretary, or one of the Assistant Treasurers or
Assistant Secretaries of the Master Servicer, or (ii) if provided for in this
Agreement, signed by a Servicing Officer, as the case may be, and delivered to
the Trustee as required by this Agreement.
"OPINION OF COUNSEL" means a written opinion of counsel, who
may be counsel for the Master Servicer, including, in-house counsel, reasonably
acceptable to the Trustee.
"ORIGINAL CLASS B-1 PRINCIPAL AMOUNT" means $____________.
"ORIGINAL CLASS B-2 PRINCIPAL AMOUNT" means $_________.
"ORIGINAL INVESTED AMOUNT" means $____________.
"ORIGINAL PLEDGED MORTGAGE" means the Pledged Mortgage
refinanced in connection with the origination of a Refinancing Pledged
Mortgage.
"ORIGINAL SENIOR CLASS PRINCIPAL AMOUNT" means $______________.
"ORIGINAL SUBORDINATION AMOUNT" means the sum of the Original
Class B-1 Principal Amount the Original Class B-2 Principal Amount and the
Original Invested Amount.
"OTS" means the Office of Thrift Supervision.
"OUTSTANDING" shall have the meaning ascribed thereto in the
Indenture.
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"OUTSTANDING PLEDGED MORTGAGE" means, as of any Due Date, a
Pledged Mortgage with a Stated Principal Balance greater than zero which was
not the subject of a Principal Prepayment in Full prior to such Due Date and
which did not become a Liquidated Pledged Mortgage prior to such Due Date.
"OWNER TRUSTEE" means ________________________, a Delaware
banking corporation, not in its individual capacity but solely as Owner Trustee
under the Deposit Trust Agreement, until a successor Person shall have become
the Owner Trustee pursuant to the applicable provisions of the Deposit Trust
Agreement, and thereafter "Owner Trustee" shall mean such successor Person.
"PAYMENT DATE" means, with respect to the Bonds and the
Investor Certificate, the __th day of each [calendar month] after the initial
issuance of the Bonds and the Investor Certificate or, if such __th day is not
a Business Day, the next succeeding Business Day, commencing in ________ 199__.
["PERIODIC RATE CAP" means, as to any Pledged Mortgage and any
Adjustment Date, the maximum percentage increase or decrease to the related
Mortgage Rate on any such Adjustment Date, as specified in the related Mortgage
Note.]
"PERMITTED INVESTMENTS" means, at the time, any one or more of
the following obligations and securities.
(i) obligations of the United States or any agency
thereof, provided such obligations are backed by the full faith and credit of
the United States;
(ii) general obligations of or obligations guaranteed by
any state of the United States or the District of Columbia receiving the
highest long-term debt rating of each Rating Agency, or such lower rating which
will not result in a change in the rating assigned to the Bonds by each Rating
Agency;
(iii) commercial paper or finance company paper which is then
receiving the highest commercial or finance company paper rating of each Rating
Agency, or such lower rating as will not result in a change in the rating
assigned to the Bonds by each Rating Agency;
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(iv) certificates of deposit, demand or time deposits, or
bankers' acceptances issued by any depository institution or trust company
incorporated under the laws of the United States or of any state thereof and
subject to supervision and examination by federal and/or state banking
authorities, provided that the commercial paper and/or long-term unsecured debt
obligations of such depository institution or trust company (or in the case of
the principal depository institution in a holding company system, the
commercial paper or long-term unsecured debt obligations of such holding
company, but only if Moody's Investors Service, Inc. ("Moody's") is a Rating
Agency) are then rated one of the two highest long-term and the highest
short-term ratings of each Rating Agency for such securities, or such lower
ratings as will not result in a change in the rating assigned to the Bonds by
each Rating Agency;
(v) demand or time deposits or certificates of deposit
issued by any bank or trust company or savings institution by any bank,
insurance company or other corporation containing, at the time of issuance of
such agreements, such terms and conditions as will not result in a change in
the rating then assigned to the Bonds by each Rating Agency;
(vi) guaranteed reinvestment agreements issued by any
bank, insurance company or other corporation containing, at the time of the
issuance of such agreements, such terms and conditions as will not result in a
change in the rating then assigned to the Bonds by each Rating Agency;
(vii) repurchase obligations with respect to any security
described in clauses (i) and (ii) above, in either case entered into with a
depository institution or trust company (acting as principal) described in
clause (iv) above;
(viii) securities (other than stripped bonds, stripped
coupons or instruments sold at a purchase price in excess of 115% of the face
amount thereof) bearing interest or sold at a discount issued by any corporation
incorporated under the laws of the United States or any state thereof which, at
the time of such investment, have one of the two highest ratings of each Rating
Agency (except if the Rating Agency is Moody's, such rating shall be the highest
commercial paper rating of Moody's for any such securities), or such lower
rating as will not result in a change
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in the rating then assigned to the Bonds by each Rating Agency, as evidenced by
a signed writing delivered by each such Rating Agency;
(ix) interests in any money market fund which at the date
of acquisition of the interests in such fund and throughout the time such
interests are held in such fund has the highest applicable rating by each
applicable Rating Agency or such lower rating as will not result in a change in
the rating then assigned to the Bonds by each Rating Agency;
(x) short term investment funds sponsored by any trust
company or national banking association incorporated under the laws of the
United States or any state thereof which on the date of acquisition has been
rated by each applicable Rating Agency in their respective highest applicable
rating category or such lower rating as will not result in a change assigned to
the Bonds by each Rating Agency; and
(xi) such other investments having a specified stated
maturity and bearing interest or sold at a discount acceptable to each
applicable Rating Agency as will not result in a change in the rating then
assigned to the Bonds by each Rating Agency, as evidenced by a signed writing
delivered by each Rating Agency;
provided, that no such instrument shall be a Permitted Investment if (i) such
instrument evidences the right to receive interest only payments with respect
to the obligations underlying such instrument or (ii) such instrument would
require the Issuer to register as an investment company under the Investment
Company Act of 1940, as amended.
"PERSON" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization
or government, or any agency or political subdivision thereof.
"PLEDGED MORTGAGE" means such of the mortgage loans granted by
the Issuer to the Trustee under the Indenture as security for the Bonds, as
from time to time are held as part of the Trust Estate (including any REO
Property), the mortgage loans so held being identified in the Schedule of
Pledged Mortgages,
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notwithstanding foreclosure or other acquisition of title of the related
Mortgaged Property.
"POOL STATED PRINCIPAL BALANCE" means, as to any Payment Date,
the aggregate of the Stated Principal Balances of the Pledged Mortgages which
were Outstanding Pledged Mortgages on the Due Date in the month preceding the
month of such Payment Date.
"PREPAYMENT INTEREST SHORTFALL" means, as to any Payment Date,
Pledged Mortgage and Principal Prepayment, the amount, if any, by which one
month's interest at the related Mortgage Rate on such Principal Prepayment
exceeds the amount of interest paid in connection with such Principal
Prepayment.
"PREPAYMENT PERIOD" means, as to any Payment Date, the
calendar month preceding the month of such Payment Date.
"PRIMARY INSURANCE POLICY" means each policy of primary
mortgage guaranty insurance or any replacement policy therefor with respect to
any Pledged Mortgage.
"PRINCIPAL PREPAYMENT" means any payment of principal by a
Mortgagor on a Pledged Mortgage that is received in advance of its scheduled
Due Date and is not accompanied by an amount representing scheduled interest
due on any date or dates in any month or months subsequent to the month of
prepayment. Partial Principal Prepayments shall be applied by the Master
Servicer in accordance with the terms of the related Mortgage Note.
"PRINCIPAL PREPAYMENT IN FULL" means any Principal Prepayment
made by a Mortgagor of the entire principal balance of a Pledged Mortgage.
"PROPRIETARY LEASE" means, with respect to any Cooperative
Unit, a lease or occupancy agreement between a Cooperative Corporation and a
holder of related Cooperative Shares.
"PROSPECTUS SUPPLEMENT" means the Prospectus Supplement dated
____________, 199__ relating to the Bonds.
"PUD" means Planned Unit Development.
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"PURCHASE PRICE" means, with respect to any Pledged Mortgage
required to be purchased by the Master Servicer pursuant to Section 2(a)(ii) or
2(d)(iv) or purchased at the option of the Master Servicer pursuant to Section
3(n), an amount equal to the sum of (i) 100% of the unpaid principal balance of
the Pledged Mortgage on the date of such purchase, and (ii) accrued interest
thereon at the applicable Mortgage Rate (or at the applicable Adjusted Net
Mortgage Rate if the purchaser is the Master Servicer) from the date through
which interest was last paid by the Mortgagor to the Due Date in the month in
which the Purchase Price is to be distributed to Bondholders and the holder of
the Investor Certificate.
"QUALIFIED INSURER" means a mortgage guaranty insurance
company duly qualified as such under the laws of the state of its principal
place of business and each state having jurisdiction over such insurer in
connection with the insurance policy issued by such insurer, duly authorized
and licensed in such states to transact a mortgage guaranty insurance business
in such states and to write the insurance provided by the insurance policy
issued by it, approved as a FNMA- or FHLMC-approved mortgage insurer or having
a claims paying ability rating of at least "AA" or equivalent rating by a
nationally recognized statistical rating organization. Any replacement insurer
with respect to a Pledged Mortgage must have at least as high a claims paying
ability rating as the insurer it replaces had on the Closing Date.
"RATING AGENCY" shall mean each of the Rating Agencies
specified in the Indenture. If either such organization or a successor is no
longer in existence, "Rating Agency" shall be such nationally recognized
statistical rating organization, or other comparable Person, as is designated
by the Issuer, notice of which designation shall be given to the Trustee.
References herein to a given rating or rating category of a Rating Agency shall
mean such rating category without giving effect to any modifiers.
"REALIZED LOSS" means, with respect to each Liquidated Pledged
Mortgage, an amount (not less than zero or more than the Stated Principal
Balance of the Pledged Mortgage) as of the date of such liquidation, equal to
(i) the Stated Principal Balance of the Liquidated Pledged Mortgage as of the
date of such
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liquidation, plus (ii) interest at the Net Mortgage Rate from the Due Date as
to which interest was last paid or advanced (and not reimbursed) to Bondholders
up to the Due Date in the month in which Liquidation Proceeds are required to
be distributed on the Stated Principal Balance of such Liquidated Pledged
Mortgage from time to time, minus (iii) the Liquidation Proceeds, if any,
received during the month in which such liquidation occurred, to the extent
applied as recoveries of interest at the Adjusted Net Mortgage Rate and to
principal of the Liquidated Pledged Mortgage. With respect to each Pledged
Mortgage which has become the subject of a Deficient Valuation, if the
principal amount due under the related Mortgage Note has been reduced, the
difference between the principal balance of the Pledged Mortgage outstanding
immediately prior to such Deficient Valuation and the principal balance of the
Pledged Mortgage as reduced by the Deficient Valuation. With respect to each
Pledged Mortgage which has become the subject of a Debt Service Reduction and
any Payment Date, the amount, if any, by which the principal portion of the
related Scheduled Payment has been reduced.
"RECOGNITION AGREEMENT" means, with respect to any Cooperative
Loan, an agreement between the Cooperative Corporation and the originator of
such Pledged Mortgage which establishes the rights of such originator in the
Cooperative Property.
"REFINANCING PLEDGED MORTGAGE" means any Pledged Mortgage
originated in connection with the refinancing of an existing mortgage loan.
"RELIEF ACT" means the Soldiers' and Sailors' Civil Relief Act
of 1940, as amended.
"RELIEF ACT REDUCTIONS" means, with respect to any Payment
Date and any Pledged Mortgage as to which there has been a reduction in the
amount of interest collectible thereon for the most recently ended calendar
month as a result of the application of the Relief Act, the amount, if any, by
which (i) interest collectible on such Pledged Mortgage for the most recently
ended calendar month is less than (ii) interest accrued thereon for such month
pursuant to the Mortgage Note.
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"REO PROPERTY" means a Mortgaged Property acquired by the
Trust Estate through foreclosure or deed-in-lieu of foreclosure in connection
with a defaulted Pledged Mortgage.
"REPLACEMENT PLEDGED MORTGAGE" means a Pledged Mortgage
substituted by the Master Servicer for a Deleted Pledged Mortgage which must,
on the date of such substitution, as confirmed in a Request for Release,
substantially in the form of Exhibit C, (i) have a principal balance, after
deduction of the principal portion of the Scheduled Payment due in the month of
substitution, not in excess of, and not more than __% less than, the Stated
Principal Balance of the Deleted Pledged Mortgage; (ii) be accruing interest at
a rate no lower than and not more than __% per annum higher than, that of the
Deleted Pledged Mortgage; (iii) have a Loan-to-Value Ratio no higher than that
of the Deleted Pledged Mortgage; (iv) have a Mortgage Rate not lower than, and
not more than ___% per annum higher than that of the Deleted Pledged Mortgage;
(v) have a remaining term to maturity no greater than (and not more than
_______ less than that of the Deleted Pledged Mortgage; and (vi) comply with
each representation and warranty set forth in Section 2(d)(ii).
"REQUEST FOR RELEASE" means the Request for Release submitted
by the Master Servicer to the Trustee, substantially in the form of Exhibits C
and D, as appropriate.
"REQUIRED INSURANCE POLICY" means with respect to any Pledged
Mortgage, any insurance policy that is required to be maintained from time to
time under this Agreement.
"SAIF" means the Savings Association Insurance Fund, or any
successor thereto.
"S&P" means Standard & Poor's Ratings Group, a division of
McGraw-Hill Inc. If S&P is designated as a Rating Agency in the Indenture, for
purposes of Section 8(c) the address for notices to S&P shall be Standard &
Poor's Ratings Group, 26 Broadway, 15th Floor, New York, New York 10004,
Attention: Mortgage Surveillance Monitoring, or such other address as S&P may
hereafter furnish to the Issuer and the Master Servicer.
"SCHEDULE OF PLEDGED MORTGAGES" means the schedule attached
hereto as Schedule A listing the Pledged Mortgages to be
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serviced by the Master Servicer pursuant to this Agreement (as from time to
time amended by the Master Servicer to reflect the addition of Replacement
Pledged Mortgages and the deletion of Deleted Pledged Mortgages pursuant to the
provisions of this Agreement and Section 8.04 of the Indenture) pledged to the
Trustee as part of the Trust Estate and from time to time subject to this
Agreement and the Indenture, setting forth the following information with
respect to each Pledged Mortgage:
(i) the loan number;
(ii) the Mortgagor's name and the street address of the
Mortgaged Property, including the zip code;
(iii) the maturity date;
(iv) the original principal balance;
(v) the Cut-off Date Principal Balance;
(vi) the first payment date of the Pledged Mortgage;
(vii) the Scheduled Payment in effect as of the Cut-off
Date;
(viii) the Loan-to-Value Ratio at origination;
(ix) a code indicating whether the residential dwelling at
the time of origination was represented to be owner-occupied;
(x) a code indicating whether the residential dwelling is
either (a) a detached single family dwelling, (b) a dwelling in a PUD,
(c) a condominium unit, (d) a two- to four-unit residential property
or (e) a Cooperative Unit;
(xi) the Mortgage Rate in effect as of the Cut-off Date;
(xii) the Master Servicing Fee Rate;
(xiii) the Maximum Rate and the Minimum Rate;
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(xiv) the Periodic Rate Cap;
(xv) the Adjustment Date;
(xvi) the Margin;
(xvii) the purpose for the Pledged Mortgage; and
(xviii) the type of documentation program pursuant to which
the Pledged Mortgage was originated.
Such schedule shall also set forth (a) the total of the amounts described under
(v) and (vii) above and (b) the weighted average, weighted on the basis of the
Cut-off Date Principal Balance, of the amounts described under (xi) and (xii)
above, in each case for all of the Pledged Mortgages.
"SCHEDULED PAYMENT" means the scheduled [monthly payment] on a
Pledged Mortgage due on any Due Date allocable to principal and/or interest on
such Pledged Mortgage which, unless otherwise specified herein, shall give
effect to any related Debt Service Reduction and any Deficient Valuation that
affects the amount of the monthly payment due on such Pledged Mortgage.
"SECURITY AGREEMENT" means with respect to any Cooperative
Loan, the agreement between the owner of the related Cooperative Shares and the
originator of the related Mortgage Note, which defines the terms of the
security interest in such Cooperative Shares and the related Proprietary Lease.
"SENIOR BOND INTEREST RATE" means, with respect to any
Interest Accrual Period, the annual rate at which interest accrues on the
Senior Bonds as specified in such Bonds in Section 2.03(c) of the Indenture.
"SENIOR BONDS" means the Class A-1 Bonds.
"SENIOR CLASS PRINCIPAL AMOUNT" means, as of any Payment Date,
the Original Senior Class Principal Amount reduced by all amounts previously
distributed to Holders of the Senior Bonds as payments of principal.
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"SENIOR INTEREST PAYMENT AMOUNT" means, as to any Payment
Date, the sum of (i) [one month's] interest accrued during the related Interest
Accrual Period at the Senior Bond Interest Rate on the Senior Class Principal
Amount, subject to reduction pursuant to Section 5 and (ii) the sum of the
amounts, if any, by which the amounts described in clause (i) above on each
prior Payment Date exceeded the amount actually distributed as interest on such
prior Payment Dates and not subsequently distributed.
"SENIOR PERCENTAGE" means, as to any Payment Date, the
percentage equivalent of a fraction the numerator of which is the Senior Class
Principal Amount immediately prior to such date and the denominator of which is
the sum of (i) the Senior Class Principal Amount, (ii) the Class B-1 Principal
Amount (iii) the Class B-2 Principal Amount and (iv) the Invested Amount, in
each case immediately prior to such date.
"SENIOR PRINCIPAL PAYMENT AMOUNT" means, as to any Payment
Date, the Senior Percentage of the sum of (a) the principal portion of each
Scheduled Payment due on each Pledged Mortgage [on the related Due Date], (b)
the principal portion of the purchase price of each Pledged Mortgage that was
purchased by Redwood Trust or another Person pursuant to the Mortgage Loan
Purchase Agreement [or any optional purchase by the Master Servicer of a
defaulted Pledged Mortgage] as of such Payment Date, (c) the Substitution
Adjustment Amount in connection with any Deleted Pledged Mortgages received
with respect to such Payment Date (d) any Insurance Proceeds or Liquidation
Proceeds allocable to recoveries of principal of Pledged Mortgages that are not
yet Liquidated Pledged Mortgages received during the [calendar month] preceding
the month of such Payment Date, (e) with respect to any Pledged Mortgages that
became a Liquidated Pledged Mortgages during the [calendar month] preceding the
month of such Payment Date, the Stated Principal Balance of such Pledged
Mortgage and (f) all partial and full principal prepayments by borrowers
received during the related Prepayment Period.
"SEQUOIA" means Sequoia Mortgage Funding Corporation, a
Delaware corporation, and its successors and assigns.
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"SERVICER" means any person with which the Master Servicer has
entered into a Servicing Agreement for the servicing of all or a portion of the
Pledged Mortgages pursuant to Section 3(b).
"SERVICER ADVANCE" means the meaning ascribed to such term in
Section 3(h)(iv).
"SERVICING ACCOUNT" means the separate Eligible Account or
Accounts created and maintained pursuant to Section 3(h)(ii).
"SERVICING ADVANCES" means all customary, reasonable and
necessary "out of pocket" costs and expenses incurred in the performance by the
Master Servicer of its servicing obligations, including, but not limited to,
the cost of (i) the preservation, restoration and protection of a Mortgaged
Property, (ii) any expenses reimbursable to the Master Servicer pursuant to
Section 3(n) and any enforcement or judicial proceedings, including
foreclosures, (iii) the management and liquidation of any REO Property and (iv)
compliance with the obligations under Section 3(l).
"SERVICING AGREEMENT" means any agreement between the Master
Servicer and the related Servicer relating to servicing and/or administration
of certain Pledged Mortgages as provided in Section 3(b).
"SERVICING DEFAULT" means a servicing default as described
under Section 7(a) of this Agreement.
"SERVICING FEE" means, as to each Pledged Mortgage and any
Payment Date, an amount equal to one month's interest at the applicable
Servicing Fee Rate on the Stated Principal Balance of such Pledged Mortgage.
"SERVICING FEE RATE" means, with respect to any Pledged
Mortgage, the per annum rate set forth in the Schedule of Pledged Mortgages for
such Pledged Mortgage.
"SERVICING OFFICER" means any officer of the Master Servicer
involved in, or responsible for, the administration and servicing of the
Pledged Mortgage whose name and facsimile signature appear on a list of
servicing officers furnished to the
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Trustee by the Master Servicer on the Closing Date pursuant to this Agreement,
as such list may from time to time be amended.
"STATED PRINCIPAL BALANCE" means, as to any Pledged Mortgage
and Due Date, the unpaid principal balance of such Pledged Mortgage as of such
Due Date as specified in the amortization schedule at the time relating thereto
(before any adjustment to such amortization schedule by reason of any
moratorium or similar waiver or grace period) after giving effect to any
previous partial Principal Prepayments and Liquidation Proceeds allocable to
principal (other than with respect to any Liquidated Pledged Mortgage) and to
the payment of principal due on such Due Date and irrespective of any
delinquency in payment by the related Mortgagor.
"SUBORDINATED BONDS" means the Class B-1 Bonds and the Class
B-2 Bonds.
"SUBSTITUTION ADJUSTMENT AMOUNT" has the meaning ascribed to
such term pursuant to Section 2(d)(iv).
"TRUST ESTATE" shall have the meaning ascribed to such term in
the Indenture.
"TRUSTEE FEE" means, as to any Payment Date, the fee payable
to the Trustee pursuant to Section 6.07(1) of the Indenture, in an amount equal
to one-twelfth of the Trustee Fee Rate multiplied by the Pool Stated Principal
Balance with respect to such Payment Date.
"TRUSTEE FEE RATE" means, with respect to each Pledged
Mortgage, the per annum rate agreed upon in writing on or prior to the Closing
Date by the Trustee and the Issuer.
"TRUSTEE MORTGAGE FILE" means, with respect to each Pledged
Mortgage, the original documents and instruments relating thereto to be
retained in the custody and possession of the Trustee, as set forth and
enumerated in Section 2(a) of this Agreement.
"WITHDRAWAL DATE" means the __th day of each month, or if such
day is not a Business Day, the next preceding Business Day.
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2. Mortgage Documents.
(a) Trustee to Retain Possession of Documents.
(i) Concurrently with the execution and delivery
hereof, the Issuer has pledged, transferred and assigned to the Trustee for the
benefit of the Bondholders, as collateral for the payment of principal and
interest on the Bonds, all right, title and interest of the Issuer in and to
the Trust Estate for the Bonds, including the Pledged Mortgages. Prior to or
contemporaneous with the execution of this Agreement, or within the applicable
time periods specified below, the Issuer shall have delivered or caused to be
delivered to the Trustee, or its custodian, with respect to each Pledged
Mortgage all originals of the Mortgage Documents and any other instruments
relating thereto specified below, which shall be referred to in this Agreement
as the "Trustee Mortgage File" relating to such Pledged Mortgage:
(A) the original Mortgage Note, endorsed by manual or
facsimile signature in blank in the following form: "Pay to the order
of ________________________________ without recourse", with all
intervening endorsements showing a complete chain of endorsement from
the originator to the Person endorsing it to the Trustee (each such
endorsement being sufficient to transfer all right, title and interest
of the party so endorsing, as noteholder or assignee thereof, in and
to that Mortgage Note);
(B) except as provided below, the original recorded
Mortgage or a copy of such Mortgage certified by the Master Servicer
as being a true and complete copy of the Mortgage;
(C) a duly executed assignment of the Mortgage (which
may be included in a blanket assignment or assignments), together
with, except as provided below, all interim recorded assignments of
such mortgage (each such assignment, when duly and validly completed,
to be in recordable form and sufficient to effect the assignment of
and transfer to the assignee thereof, under the Mortgage to which the
assignment relates); provided that, if the related Mortgage has not
been returned from the applicable public recording office, such
assignment of the Mortgage may exclude the information to be provided
by the recording office;
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(D) the original or copies of each assumption,
modification, written assurance or substitution agreement, if any;
(E) except as provided below, the original or duplicate
original lender's title policy and all riders thereto; and
(F) In the case of a Cooperative Loan, the originals of
the following documents or instruments:
(a) The Cooperative Shares, together with a stock power
in blank;
(b) The executed Security Agreement;
(c) The executed Proprietary Lease;
(d) The executed Recognition Agreement;
(e) The executed assignment of Recognition Agreement;
(f) The executed UCC-1 financing statement with evidence
of recording thereon which have been filed in all
places required to perfect the Trustee's and the
Bondholder's interest in the Cooperative Shares and
the Proprietary Lease; and
(g) Executed UCC-3 financing statements or other
appropriate UCC financing statements required by
state law, evidencing a complete and unbroken line
from the mortgagee to the Trustee with evidence of
recording thereon (or in a form suitable for
recordation).
In the event that in connection with any Pledged Mortgage the
Issuer cannot deliver (i) the original recorded Mortgage, (ii) all interim
recorded assignments or (iii) the lender's title policy (together with all
riders thereto) satisfying the requirements of clause (B), (C) or (E) above,
respectively, concurrently with the execution and delivery hereof because such
document or documents have not been returned from the applicable public
recording office in the case of clause (B)
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or (C) above, or because the title policy has not been delivered to either the
Master Servicer or the Issuer by the applicable title insurer in the case of
clause (E) above, the Issuer shall promptly deliver to the Trustee, in the case
of clause (B) or (C) above, such original Mortgage or such interim assignment,
as the case may be, with evidence of recording indicated thereon upon receipt
thereof from the public recording office, or a copy thereof, certified, if
appropriate, by the relevant recording office, but in no event shall any such
delivery of the original Pledged Mortgage and each such interim assignment or a
copy thereof, certified, if appropriate, by the relevant recording office, be
made later than one year following the Closing Date, or, in the case of clause
(E) above, later than 120 days following the Closing Date; provided, however,
that in the event the Issuer is unable to deliver by such date each Mortgage
and each such interim assignment by reason of the fact that any such documents
have not been returned by the appropriate recording office, or, in the case of
each such interim assignment, because the related Mortgage has not been
returned by the appropriate recording office, the Issuer shall deliver such
documents to the Trustee as promptly as possible upon receipt thereof and, in
any event, within ___ days following the Closing Date. The Issuer shall
forward or cause to be forwarded to the Trustee (a) from time to time
additional original documents evidencing an assumption or modification of a
Pledged Mortgage and (b) any other documents required to be delivered by the
Issuer or the Master Servicer to the Trustee. In the event that the original
Mortgage is not delivered and in connection with the payment in full of the
related Pledged Mortgage the public recording office requires the presentation
of a "lost instruments affidavit and indemnity" or any equivalent document,
because only a copy of the Mortgage can be delivered with the instrument of
satisfaction or reconveyance, the Master Servicer shall execute and deliver or
cause to be executed and delivered such a document to the public recording
office. In the case where a public recording office retains the original
recorded Mortgage or in the case where a Mortgage is lost after recordation in
a public recording office, the Issuer shall deliver to the Trustee a copy of
such Mortgage certified by such public recording office to be a true and
complete copy of the original recorded Mortgage.
As promptly as practicable subsequent to such pledge, transfer
and assignment, and in any event within thirty (30) days
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thereafter, the Master Servicer shall (i) affix the Trustee's name to each
assignment of Mortgage, as the assignee thereof, (ii) cause such assignment to
be in proper form for recording in the appropriate public office for real
property records within thirty (30) days after receipt thereof and (iii) cause
to be delivered for recording in the appropriate public office for real
property records the assignments of the Mortgages to the Trustee, except that,
with respect to any assignment of a Mortgage as to which the Master Servicer
has not received the information required to prepare such assignment in
recordable form, the Master Servicer's obligation to do so and to deliver the
same for such recording shall be as soon as practicable after receipt of such
information and in any event within thirty (30) days after the receipt thereof,
and the Master Servicer need not cause to be recorded any assignment which
relates to a Pledged Mortgage (a) the Mortgaged Property and Trustee Mortgage
File relating to which are located in California or (b) in any other
jurisdiction under the laws of which, as evidenced by an Opinion of Counsel
delivered by the Issuer (at the Issuer's expense) to the Trustee in accordance
with Section 3.11 of the Indenture, the recordation of such assignment is not
necessary to protect the Trustee's and the Bondholders' interest in the related
Pledged Mortgage.
In the case of Pledged Mortgages that have been prepaid in
full as of the Closing Date, the Issuer, in lieu of delivering the above
documents to the Trustee, will deposit in the Bond Account the portion of such
payment that is required to be deposited in the Bond Account pursuant to
Section 3(h).
Until the Bonds have been paid in full and the Issuer has
otherwise fulfilled its obligations under the Indenture, the Trustee shall
retain possession and custody of each Trustee Mortgage File in accordance with
and subject to the terms and conditions set forth in the Indenture and this
Agreement.
(ii) The Trustee acknowledges receipt of the documents
identified in the Initial Certification in the form annexed hereto as Exhibit A
and declares that it holds and will hold such documents and the other documents
delivered to it constituting the Trustee Mortgage Files, and that it holds or
will hold such other assets as are included in the Trust Estate, in trust for
the exclusive use and benefit of all present and future Bondholders. The
Trustee acknowledges that it will maintain
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possession of the Mortgage Notes in the State of _______________, unless
otherwise permitted by the Rating Agencies.
The Trustee agrees to execute and deliver on the Closing Date
to the Issuer and the Master Servicer an Initial Certification in the form
annexed hereto as Exhibit A. Based on its review and examination required by
and in accordance with Sections 6.16 and 8.04 of the Indenture, and only as to
the documents identified in such Initial Certification, the Trustee
acknowledges that such documents appear regular on their face and relate to
such Pledged Mortgage; provided that the Trustee shall be under no obligation
to ascertain that, except the information set forth in items (i) through (iv)
and (vi) of the Schedule of Pledged Mortgages, any information set forth in
said schedule is accurate. The Trustee shall be under no duty or obligation to
inspect, review or examine said documents, instruments, certificates or other
papers to determine that the same are genuine, enforceable or appropriate for
the represented purpose or that they have actually been recorded in the real
estate records or that they are other than what they purport to be on their
face.
Not later than 90 days after the Closing Date, the Trustee
shall deliver to the Issuer and the Master Servicer a Final Certification in
the form annexed hereto as Exhibit B, with any applicable exceptions noted
thereon.
If, in the course of such review, the Trustee finds any
document constituting a part of a Trustee Mortgage File which does not meet the
requirements of Section 2(a)(i), the Trustee shall list such as an exception in
the Final Certification; provided, however, that the Trustee shall not make any
determination as to whether (i) any endorsement is sufficient to transfer all
right, title and interest of the party so endorsing, as noteholder or assignee
thereof, in and to that Mortgage Note or (ii) that any assignment is in
recordable form or is sufficient to effect the assignment of and transfer to
the assignee thereof under the mortgage to which the assignment relates. The
Master Servicer shall promptly correct or cure such defect within 90 days from
the date it was so notified of such defect and, if the Master Servicer does not
correct or cure such defect within such period, the Master Servicer shall
either (a) substitute for the related Pledged Mortgage a Replacement Pledged
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Mortgage, which substitution shall be accomplished in the manner and subject to
the conditions set forth in Section 2(d)(iv), or (b) purchase such Pledged
Mortgage from the Trustee within 90 days from the date the Master Servicer was
notified of such defect in writing at the Purchase Price of such Pledged
Mortgage. Any such substitution pursuant to (a) above shall not be effected
prior to the delivery to the Trustee of a Request for Release substantially in
the form of Exhibit D. No substitution is permitted to be made in any calendar
month after the Determination Date for such month. The Purchase Price for any
such Pledged Mortgage shall be deposited by the Master Servicer in the Bond
Account on or prior to the Distribution Account Report Date in the month
following the month of purchase and, upon receipt of such deposit and
certification with respect thereto in the form of Exhibit D hereto, the Trustee
shall release the related Trustee Mortgage File to the Master Servicer and
shall execute and deliver at the Master Servicer's request such instruments of
transfer or assignment prepared by the Master Servicer, in each case without
recourse, as shall be necessary to vest in the Master Servicer, or a designee,
the Trustee's interest in any Pledged Mortgage released pursuant hereto.
The Trustee shall retain possession and custody of each
Trustee Mortgage File in accordance with and subject to the terms and
conditions set forth herein. The Master Servicer shall promptly deliver to the
Trustee, upon the execution or receipt thereof, the originals of such other
documents or instruments constituting the Trustee Mortgage File as come into
the possession of the Master Servicer from time to time.
It is understood and agreed that the obligation of the Master
Servicer to substitute for or to purchase any Pledged Mortgage which does not
meet the requirements of Section 2(a)(i) shall constitute the sole remedy
respecting such defect available to the Trustee and any Bondholder against the
Master Servicer.
(b) Trustee to Cooperate; Release of Trustee Mortgage
Files.
Upon the payment in full of any Pledged Mortgage, or the
receipt by the Master Servicer of a notification that payment in full will be
escrowed in a manner customary for such purposes, the Master Servicer will
immediately notify the Trustee by
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delivering, or causing to be delivered, a "Request for Release" substantially
in the form of Exhibit D, all in accordance with Section 8.08(c) of the
Indenture. Upon receipt of such request, the Trustee shall promptly release
the related Trustee Mortgage File to the Master Servicer, and the Trustee shall
at the Master Servicer's direction execute and deliver to the Master Servicer
the request for reconveyance, deed of reconveyance or release or satisfaction
of mortgage or such instrument releasing the lien of the Mortgage in each case
provided by the Master Servicer, together with the Mortgage Note with written
evidence of cancellation thereon, all in accordance with Section 8.08(c) of the
Indenture. Expenses incurred in connection with any instrument of satisfaction
or deed of reconveyance shall be chargeable to the related Mortgagor. From
time to time and as shall be appropriate for the servicing or foreclosure of
any Pledged Mortgage, including for such purpose collection under any policy of
flood insurance, any fidelity bond or errors or omissions policy, or for the
purposes of effecting a partial release of any Mortgaged Property from the lien
of the Mortgage or the making of any corrections to the Mortgage Note or the
Mortgage or any of the other documents included in the Trustee Mortgage File,
the Trustee shall, upon delivery to the Trustee in accordance with Section
8.08(c) of the Indenture of a Request for Release in the form of Exhibit C
signed by a Servicing Officer, release the Trustee Mortgage File to the Master
Servicer or, at the Master Servicer's direction, to the related Servicer.
Subject to the further limitations set forth below, the Master Servicer shall
cause the Trustee Mortgage File or documents so released to be returned to the
Trustee when the need therefor by the Master Servicer no longer exists, unless
the Pledged Mortgage is liquidated and the proceeds thereof are deposited in
the Bond Account, in which case the Master Servicer shall deliver to the
Trustee a Request for Release in the form of Exhibit D, signed by a Servicing
Officer.
If the Master Servicer at any time seeks to initiate a
foreclosure proceeding in respect of any Mortgaged Property as authorized by
this Agreement, the Master Servicer shall deliver or cause to be delivered to
the Trustee, for signature, as appropriate, any court pleadings, requests for
trustee's sale or other documents necessary to effectuate such foreclosure or
any legal action brought to obtain judgment against the Mortgagor on the
Mortgage Note or the Mortgage or to obtain a deficiency
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judgment or to enforce any other remedies or rights provided by the Mortgage
Note or the Mortgage or otherwise available at law or in equity.
(c) Documents, Records and Funds in Possession of Master
Servicer to be Held for Trustee.
(i) Notwithstanding any other provisions of this
Agreement, the Master Servicer shall deliver to the Trustee as required by this
Agreement and the Indenture all documents and instruments relating to the
Pledged Mortgages coming into the possession of the Master Servicer from time
to time and shall account fully to the Trustee for any funds received by the
Master Servicer or which otherwise are collected by the Master Servicer as
Liquidation Proceeds or Insurance Proceeds in respect of any Pledged Mortgage.
All Trustee Mortgage Files, including without limitation the Mortgage Documents
contained therein, funds collected or held by, or under the control of, the
Master Servicer from time to time in respect of any Pledged Mortgages, whether
from the collection of principal and interest payments or from Liquidation
Proceeds or Insurance Proceeds, including but not limited to any funds on
deposit in any Eligible Account and any other items constituting a part of the
Trust Estate which from time to time come into the possession of the Master
Servicer, shall be held by the Master Servicer for and on behalf of the Trustee
and the Bondholders as specified in Section 8.10 of the Indenture, and shall be
and remain the sole and exclusive property of the Trustee, subject to the
applicable provisions of this Agreement and the Indenture. The Master Servicer
also agrees that it shall not create, incur or subject any Trustee Mortgage
File, Mortgage Documents or other documents relating to a Pledged Mortgage
which are in the possession of the Master Servicer with respect to each Pledged
Mortgage (each a "Master Servicer Mortgage File") or any funds that are
deposited in the Distribution Account, the Bond Account, any Eligible Account,
Servicing Account or Escrow Account, or any funds that otherwise are or may
become due or payable to the Trustee for the benefit of the Bondholders, to any
claim, lien, security interest, judgment, levy, writ of attachment or other
encumbrance, or assert by legal action or otherwise any claim or right of
set-off against any Master Servicer Mortgage File or Trustee Mortgage File or
any funds collected or held by, or under the control of, the Master Servicer
from time to time in respect of a Pledged
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Mortgage; provided, however, that the Master Servicer shall be entitled to
set-off against and deduct from any such funds any amounts that are properly
due and payable to the Master Servicer under this Agreement.
(ii) The Master Servicer hereby acknowledges that
concurrently with the execution of this Agreement, the Trustee has acquired and
holds a security interest in the Trustee Mortgage Files and in all Pledged
Mortgages represented by such Master Servicer Mortgage Files and Trustee
Mortgage Files and in all funds now or hereafter held by, or under the control
of, the Master Servicer that are collected by the Master Servicer in connection
with the Pledged Mortgages, whether as Scheduled Payments, as Principal
Prepayments, or as Liquidation Proceeds or Insurance Proceeds, and in all
proceeds of the foregoing and proceeds of proceeds (but excluding any Master
Servicing Fees, [Servicing Fees], Trustee Fees and any other amounts or
reimbursements to which the Master Servicer is entitled under this Agreement).
The Master Servicer agrees that so long as the Pledged Mortgages are assigned
to the Trustee, all Master Servicer Mortgage Files and Trustee Mortgage Files
(and any documents or instruments constituting a part of such files), and such
funds which come into the possession or custody of, or which are subject to the
control of, the Master Servicer shall be held by the Master Servicer for and on
behalf of the Trustee as the Trustee's agent and bailee for purposes of
perfecting the Trustee's security interest therein, as provided by Section
9-305 of the Uniform Commercial Code of the state in which such property is
located, or by other laws, as specified in Section 8.10 of the Indenture. The
Master Servicer hereby accepts such agency and acknowledges that the Trustee,
as secured party, will be deemed to have possession at all times of all Master
Servicer Mortgage Files, Trustee Mortgage Files and any other documents or
instruments constituting a part of such files, such funds and other items for
purposes of Section 9-305 of the Uniform Commercial Code of the state in which
such property is held by the Master Servicer.
(d) Representations, Warranties and Covenants of the
Issuer and the Master Servicer.
(i) ________________________, in its capacity as Master
Servicer, hereby makes the representations and warranties
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set forth in Schedule II hereto, and by this reference incorporated herein, to
the Issuer and the Trustee, as of the Closing Date, or if so specified therein,
as of the Cut-off Date.
(ii) _______________________, in its capacity as Master
Servicer, hereby makes the representations and warranties set forth in Schedule
III hereto, and by this reference incorporated herein, to the Issuer and the
Trustee, as of the Closing Date, or if so specified therein, as of the Cut-off
Date.
(iii) The Issuer hereby makes the representations and
warranties set forth in Schedule IV hereto, and by this reference incorporated
herein, to the Trustee and the Master Servicer, as of the Closing Date.
(iv) Upon discovery by any of the parties hereto of a
breach of a representation or warranty made pursuant to Section 2(d)(ii) that
materially and adversely affects the interests of the Bondholders in any
Pledged Mortgage, the party discovering such breach shall give prompt notice
thereof to the other parties. The Master Servicer hereby covenants that within
90 days of the earlier of its discovery or its receipt of written notice from
any party of a breach of any representation or warranty made pursuant to
Section 2(d)(ii) which materially and adversely affects the interests of the
Bondholders, in any Pledged Mortgage, it shall cure such breach in all material
respects, and if such breach is not so cured, shall, (i) remove such Pledged
Mortgage (a "Deleted Pledged Mortgage") from the Trust Estate and substitute in
its place a Replacement Pledged Mortgage, in the manner and subject to the
conditions set forth in this Section 2(d); or (ii) purchase the affected
Pledged Mortgage or Pledged Mortgages from the Trustee at the Purchase Price in
the manner set forth below; provided, however, that any such substitution
pursuant to (i) above shall not be effected prior to the delivery to the
Trustee of a Request for Release substantially in the form of Exhibit D, and
the Trustee Mortgage File for any such Replacement Pledged Mortgage. The
Issuer shall promptly reimburse the Master Servicer and the Trustee for any
expenses reasonably incurred by the Master Servicer or the Trustee in respect
of enforcing the remedies for such breach. With respect to the representations
and warranties described in this Section 2(d) which are made to the best of the
Issuer's knowledge, if it is discovered by either the Issuer or the
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Trustee that the substance of such representation and warranty is inaccurate
and such inaccuracy materially and adversely affects the interests of the
Bondholders therein, notwithstanding the Issuer's lack of knowledge with
respect to the substance of such representation or warranty, such inaccuracy
shall be deemed a breach of the applicable representation or warranty.
With respect to any Replacement Pledged Mortgage or Mortgages,
the Issuer shall deliver to the Trustee for the benefit of the Bondholders the
Mortgage Note, the Mortgage, the related assignment of the Mortgage, and such
other documents and agreements as are required by Section 2(a), with the
Mortgage Note endorsed and the Mortgage assigned as required by Section 2(a).
No substitution is permitted to be made in any calendar month after the
Determination Date for such month. Scheduled Payments due with respect to
Replacement Pledged Mortgages in the month of substitution shall not be part of
the Trust Estate and will be retained by the Master Servicer on the next
succeeding Payment Date. For the month of substitution, Available Funds will
include the monthly payment due on any Deleted Pledged Mortgage for such month
and thereafter the Master Servicer shall be entitled to retain all amounts
received in respect of such Deleted Pledged Mortgage.
The Master Servicer shall amend the Schedule of Pledged
Mortgages for the benefit of the Bondholders to reflect the removal of such
Deleted Pledged Mortgage or Mortgages and the substitution of the Replacement
Pledged Mortgage or Mortgages and the Master Servicer shall deliver the amended
Schedule of Pledged Mortgages to the Trustee. Upon such substitution, the
Replacement Pledged Mortgage or Mortgages shall be subject to the terms of this
Agreement in all respects, and the Master Servicer shall be deemed to have made
with respect to such Replacement Pledged Mortgage or Mortgages, as of the date
of substitution, the representations and warranties made pursuant to Section
2(d)(ii) with respect to such Pledged Mortgage or Mortgages. Upon any such
substitution and the deposit to the Bond Account of the amount required to be
deposited therein in connection with such substitution as described in the
following paragraph, the Trustee shall release the Trustee Mortgage File held
for the benefit of the Bondholders relating to such Deleted Pledged Mortgage or
Mortgages to the Master Servicer and shall execute and deliver at the Master
Servicer's direction such instruments
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of transfer or assignment prepared by the Master Servicer, in each case without
recourse, as shall be necessary to vest title in the Master Servicer, or its
designee, the Trustee's interest in any Deleted Pledged Mortgage or Mortgages
substituted for pursuant to this Section 2(d).
For any month in which the Master Servicer substitutes one or
more Replacement Pledged Mortgages for one or more Deleted Pledged Mortgages,
the Master Servicer will determine the amount (if any) by which the aggregate
principal balance of all such Replacement Pledged Mortgages as of the date of
substitution is less than the aggregate Stated Principal Balance of all such
Deleted Pledged Mortgages (after application of the scheduled principal portion
of the monthly payments due in the month of substitution). The amount of such
shortage (the "Substitution Adjustment Amount") shall be deposited into the
Bond Account by the Master Servicer on or before the Distribution Account
Deposit Date for the Payment Date in the month succeeding the calendar month
during which the related Pledged Mortgage became required to be purchased or
replaced hereunder.
In the event that the Master Servicer shall have purchased a
Pledged Mortgage, the Purchase Price therefor shall be deposited in the Bond
Account pursuant to Section 3(h) and in compliance with the provisions of
Section 8.04 of the Indenture on or before the Distribution Account Deposit
Date for the Payment Date in the month following the month during which the
Master Servicer became obligated hereunder to purchase or replace such Pledged
Mortgage and upon such deposit of the Purchase Price and receipt of a Request
for Release in the form of Exhibit D hereto, the Trustee shall release the
related Trustee Mortgage File held for the benefit of the Bondholders to such
Person, and the Trustee shall execute and deliver at such Person's direction
such instruments of transfer or assignment prepared by such Person, in each
case without recourse, as shall be necessary to transfer title from the Trustee
pursuant to Sections 8.08(c) and 8.12 of the Indenture. It is understood and
agreed that the obligation under this Agreement of any Person to cure, purchase
or replace any Pledged Mortgage as to which a breach has occurred and is
continuing shall constitute the sole remedy against such Persons respecting
such breach available to Bondholders or the Trustee on their behalf.
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The representations and warranties made pursuant to this
Section 2(d) shall survive delivery of the respective Trustee Mortgage Files to
the Trustee for the benefit of the Bondholders.
(e) Covenants of the Master Servicer.
The Master Servicer hereby covenants to the Issuer and the
Trustee as follows:
(i) the Master Servicer shall comply in the
performance of its obligations under this Agreement with all
reasonable rules and requirements of the insurer under each Required
Insurance Policy; and
(ii) no written information, certificate of an
officer, statement furnished in writing or written report delivered to
the Issuer, any affiliate of the Issuer or the Trustee and prepared by
the Master Servicer pursuant to this Agreement will contain any untrue
statement of a material fact or omit to state a material fact
necessary to make such information, certificate, statement or report
not misleading.
3. General Duties of the Master Servicer.
The parties agree that, subject to the provisions of Section 7
hereof, the Master Servicer shall service the Pledged Mortgages in the manner
and on the terms and conditions set forth below:
(a) Master Servicer to Service Pledged Mortgages.
For and on behalf of the Issuer, the Trustee and the
Bondholders, the Master Servicer shall service and administer the Pledged
Mortgages in accordance with the terms of this Agreement and customary and
usual standards of practice of prudent mortgage loan servicers. In connection
with such servicing and administration, the Master Servicer shall have full
power and authority, acting alone and/or through Servicers as provided in
Section 3(b), to do or cause to be done any and all things that it may deem
necessary or desirable in connection with
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such servicing and administration, including but not limited to, the power and
authority, subject to the terms hereof, (i) to execute and deliver, on behalf
of the Bondholders and the Trustee, customary consents or waivers and other
instruments and documents, (ii) to consent to transfers of any Mortgaged
Property and assumptions of the Mortgage Notes and related Mortgages (but only
in the manner provided in this Agreement), (iii) to collect any Insurance
Proceeds and other Liquidation Proceeds, and (iv) to effectuate foreclosure or
other conversion of the ownership of the Mortgaged Property securing any
Pledged Mortgage; provided that the Master Servicer shall not take, or permit
any Servicer to take, any action that is inconsistent with or prejudices the
interests of the Trustee or the Bondholders in any Pledged Mortgage or the
rights and interests of the Issuer, the Trustee and the Bondholders under this
Agreement. The Master Servicer shall represent and protect the interests of
the Trustee in the same manner as it protects its own interests in mortgage
loans in its own portfolio in any claim, proceeding or litigation regarding a
Pledged Mortgage. Without limiting the generality of the foregoing, the Master
Servicer, in its own name or in the name of any Servicer or the Issuer and the
Trustee, is hereby authorized and empowered by the Issuer and the Trustee, when
the Master Servicer or the Servicer, as the case may be, believes it
appropriate in its reasonable judgment, to execute and deliver, on behalf of
the Trustee, the Issuer, the Bondholders or any of them, any and all
instruments of satisfaction or cancellation, or of partial or full release or
discharge, and all other comparable instruments, with respect to the Pledged
Mortgages and with respect to the Mortgaged Properties held for the benefit of
the Trustee and the Bondholders. The Master Servicer shall prepare and deliver
to the Issuer and/or the Trustee such documents requiring execution and
delivery by either or both of them as are necessary or appropriate to enable
the Master Servicer to service and administer the Pledged Mortgages to the
extent that the Master Servicer is not permitted to execute and deliver such
documents pursuant to the preceding sentence. Upon receipt of such documents,
the Issuer and/or the Trustee shall execute such documents and deliver them to
the Master Servicer.
In accordance with the standards of the preceding paragraph,
the Master Servicer shall advance or cause to be advanced funds as necessary
for the purpose of effecting the payment of taxes and assessments on the
Mortgaged Properties, which advances
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shall be reimbursable in the first instance from related collections from the
Mortgagors pursuant to Section 3(i), and further as provided in Section 3(k).
The costs incurred by the Master Servicer, if any, in effecting the timely
payments of taxes and assessments on the Mortgaged Properties and related
insurance premiums shall not, for the purpose of calculating payments to the
Bondholders, be added to the Stated Principal Balances of the related Pledged
Mortgages, notwithstanding that the terms of such Pledged Mortgages so permit.
[(b) Subservicing; Enforcement of the Obligations of
Servicers.
(i) The Master Servicer may arrange for the
servicing of any Pledged Mortgage by a Servicer pursuant to a Servicing
Agreement; provided, however, that such servicing arrangement and the terms of
the related Servicing Agreement must provide for the servicing of such Pledged
Mortgages in a manner consistent with the servicing arrangements contemplated
hereunder. Each Servicer of a Pledged Mortgage shall be entitled to receive
and retain, as provided in the related Servicing Agreement and in Section 5(a),
the related Servicing Fee from payments of interest received on such Pledged
Mortgage after payment of all amounts required to be remitted to the Master
Servicer in respect of such Pledged Mortgage. Unless the context otherwise
requires, references in this Agreement to actions taken or to be taken by the
Master Servicer in servicing the Pledged Mortgages include actions taken or to
be taken by a Servicer on behalf of the Master Servicer. With the approval of
the Master Servicer, a Servicer may delegate its servicing obligations to
third-party servicers, but such Servicer will remain obligated under the
related Servicing Agreement. The Master Servicer and Servicer may enter into
amendments to the related Servicing Agreement or a different form of Servicing
Agreement; provided, however, that any such amendments or different forms shall
be consistent with and not violate the provisions of this Agreement in a manner
which would materially and adversely affect the interests of the Trustee and
the Bondholders.
(ii) For purposes of this Agreement, the Master
Servicer shall be deemed to have received any collections, recoveries or
payments with respect to the Pledged Mortgages that
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are received by a Servicer regardless of whether such payments are remitted by
the Servicer to the Master Servicer.
(iii) As part of its servicing activities
hereunder, the Master Servicer, for the benefit of the Trustee and the
Bondholders, shall use its best reasonable efforts to enforce the obligations
of each Servicer under the related Servicing Agreement, to the extent that the
non-performance of any such obligation would have material and adverse effect
on a Pledged Mortgage. Such enforcement, including, without limitation, the
legal prosecution of claims, termination of Servicing Agreements and the
pursuit of other appropriate remedies, shall be in such form and carried out to
such an extent and at such time as the Master Servicer, in its good faith
business judgment, would require were it the owner of the related Pledged
Mortgages. The Master Servicer shall pay the costs of such enforcement at its
own expense, and shall be reimbursed therefor only (i) from a general recovery
resulting from such enforcement to the extent, if any, that such recovery
exceeds all amounts due in respect of the related Pledged Mortgage or (ii) from
a specific recovery of costs, expenses or attorneys fees against the party
against whom such enforcement is directed.
(c) Successor Servicers.
The Master Servicer shall be entitled to terminate
any Servicing Agreement that may exist in accordance with the terms and
conditions of such Servicing Agreement and without any limitation by virtue of
this Agreement; provided, however, that in the event of termination of any
Servicing Agreement by the Master Servicer or the Servicer, the Master Servicer
shall either act as servicer of the related Pledged Mortgage or enter into a
Servicing Agreement with a successor Servicer which will be bound by the terms
of the related Servicing Agreement. If the Master Servicer or any affiliate of
the Master Servicer acts as servicer, it will not assume liability for the
representations and warranties of the Servicer which it replaces. If the
Master Servicer enters into a Servicing Agreement with a successor Servicer,
the Master Servicer shall use reasonable efforts to have the successor Servicer
assume liability for the representations and warranties made by the terminated
Servicer in respect of the related Pledged Mortgages and, in the event of any
such assumption by the successor Servicer, the Master Servicer may, in
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the exercise of its business judgment, release the terminated Servicer from
liability for such representations and warranties.
(d) Liability of the Master Servicer.
Notwithstanding any Servicing Agreement, any of the
provisions of this Agreement relating to agreements or arrangements between the
Master Servicer or a Servicer or references to actions taken through a Servicer
or otherwise, the Master Servicer shall remain obligated and liable to the
Trustee and Bondholders for the servicing and administering of the Pledged
Mortgages in accordance with the provisions of Section 3(a) without diminution
of such obligation or liability by virtue of such Servicing Agreements or
arrangements or by virtue of indemnification from the Servicer and to the same
extent and under the same terms and conditions as if the Master Servicer alone
were servicing and administering the Pledged Mortgages. The Master Servicer
shall be entitled to enter into any agreement with a Servicer for
indemnification of the Master Servicer and nothing contained in this Agreement
shall be deemed to limit or modify such indemnification.
(e) No Contractual Relationship Between Servicers and the
Trustee.
Any Servicing Agreement that may be entered into and
any other transactions or services relating to the Pledged Mortgages involving
a Servicer in its capacity as such and not as an originator shall be deemed to
be between the Servicer and the Master Servicer alone and the Trustee and
Bondholders shall not be deemed parties thereto and shall have no claims,
rights, obligations, duties or liabilities with respect to the Servicer in its
capacity as such except as set forth in Section 3(g).
(f) Rights of the Issuer and the Trustee in Respect of
the Master Servicer.
The Issuer may, but is not obligated to, enforce the
obligations of the Master Servicer hereunder and may, but is not obligated to,
perform, or cause a designee to perform, any defaulted obligation of the Master
Servicer hereunder and in connection with any such defaulted obligation to
exercise the related rights of the Master Servicer hereunder; provided that
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the Master Servicer shall not be relieved of any of its obligations hereunder
by virtue of such performance by the Issuer or its designee. Neither the
Trustee nor the Issuer shall have any responsibility or liability for any
action or failure to act by the Master Servicer nor shall the Trustee or the
Issuer be obligated to supervise the performance of the Master Servicer
hereunder or otherwise.
(g) Trustee to Act as Master Servicer.
In the event that the Master Servicer shall for any
reason no longer be the Master Servicer hereunder (including by reason of a
Servicing Default), the Trustee or its successor shall thereupon assume all of
the rights and obligations of the Master Servicer hereunder arising thereafter,
except that the Trustee shall not be (i) liable for losses of the Master
Servicer pursuant to Section 3(l) or any acts or omissions of the predecessor
Master Servicer hereunder, (ii) obligated to make Advances if it is prohibited
from doing so by applicable law, (iii) obligated to effectuate purchases or
substitutions of Pledged Mortgages hereunder, including but not limited to
purchases or substitutions pursuant to Section 2(a)(ii) or 2(d)(iv), (iv)
responsible for expenses of the Master Servicer pursuant to Section 2(d)(iv) or
(v) deemed to have made any representations and warranties of the Master
Servicer hereunder. Any such assumption shall be subject to Section 7(b). If
the Master Servicer shall for any reason no longer be the Master Servicer
(including by reason of any Servicing Default), the Trustee or its successor
shall succeed to any rights of the Master Servicer under each Servicing
Agreement and any obligations of the Master Servicer under each Servicing
Agreement arising thereafter. The Trustee or the successor Master Servicer
shall be deemed to have assumed all of the Master Servicer's interest therein
and to have replaced the Master Servicer as a party to any Servicing Agreement
entered into by the Master Servicer as contemplated by Section 3(b) to the same
extent as if such Servicing Agreement had been assigned to the assuming party
except that the Master Servicer shall not be relieved of any liability or
obligations under any such Servicing Agreement.
The Master Servicer shall, upon request of the Trustee, but at
the expense of the Master Servicer, deliver to the assuming party all documents
and records relating to each Servicing
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Agreement or substitute servicing agreement and the Pledged Mortgages then
being serviced thereunder and an accounting of amounts collected or held by it
and otherwise use its best efforts to effect the orderly and efficient transfer
of the substitute Servicing Agreement to the assuming party.
(h) Collection of Pledged Mortgage Payments; Eligible
Accounts; Servicing Accounts; Bond Account.
(i) The Master Servicer shall make reasonable
efforts in accordance with the customary and usual standards of practice of
prudent mortgage servicers to collect all payments called for under the terms
and provisions of the Pledged Mortgages to the extent such procedures shall be
consistent with this Agreement and the terms and provisions of any related
Required Insurance Policy. Consistent with the foregoing, the Master Servicer
may in its discretion (i) waive any late payment charge or any prepayment
charge or penalty interest in connection with the prepayment of a Pledged
Mortgage and (ii) extend the due dates for payments due on a Mortgage Note for
a period not greater than 120 days; provided, however, that the Master Servicer
cannot extend the maturity of any such Pledged Mortgage past the date on which
the final payment is due on the latest maturing Pledged Mortgage as of the
Cut-off Date. In the event of any such arrangement, the Master Servicer shall
make Advances on the related Pledged Mortgage in accordance with the provisions
of Section 4 during the scheduled period in accordance with the amortization
schedule of such Pledged Mortgage without modification thereof by reason of
such arrangements. The Master Servicer shall not be required to institute or
join in litigation with respect to collection of any payment (whether under a
Mortgage, Mortgage Note or otherwise or against any public or governmental
authority with respect to a taking or condemnation) if it reasonably believes
that enforcing the provision of the Mortgage or other instrument pursuant to
which such payment is required is prohibited by applicable law.
(ii) In those cases where a Servicer is servicing Pledged
Mortgages pursuant to a Servicing Agreement, the Master Servicer shall cause
each Servicer, pursuant to the respective Servicing Agreement, to establish and
maintain one or more Servicing Accounts, each of which shall be an Eligible
Account. The Servicer will be required under its Servicing Agreement to
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deposit into the Servicing Account on a daily basis no later than the Business
Day following receipt all proceeds of Pledged Mortgages received by the
Servicer, less its Servicing Fees and unreimbursed Servicer Advances and
expenses, to the extent permitted by the Servicing Agreement. The Servicer
shall not be required to deposit in the Servicing Account payments or
collections in the nature of prepayment charges or late charges.
(iii) The Master Servicer shall establish and maintain a
Collection Account, which shall be an Eligible Account, into which the Master
Servicer shall deposit or cause to be deposited on or before each Withdrawal
Date payments, collections and Servicer Advances remitted by Servicers in
respect of the Pledged Mortgages.
(iv) On or before the Withdrawal Date in each calendar
month, the Master Servicer shall cause each Servicer, pursuant to its Servicing
Agreement, to remit to the Master Servicer for deposit in the Collection
Account all funds held in the Servicing Account with respect to each Pledged
Mortgage serviced by such Servicer that are required to be remitted to the
Master Servicer. The Servicer will also be required, pursuant to the Servicing
Agreement, to advance on or before each such Withdrawal Date amounts equal to
any Scheduled Payments (net of its Servicing Fees with respect thereto) not
received on any Pledged Mortgages by the Servicer (such amount, a "Servicer
Advance"). The Servicer's obligation to advance with respect to each Pledged
Mortgage will continue up to and including the first day of the month following
the date on which the related Mortgaged Property is sold at a foreclosure sale
or is acquired by the Issuer by deed in lieu of foreclosure or otherwise. All
such Servicer Advances received by the Master Servicer shall be deposited
promptly by it in the Collection Account or the Bond Account, as appropriate.
Within five Business Days after the receipt by a Servicer of a
Principal Prepayment in Full or any Liquidation Proceeds or Insurance Proceeds
(not required to be applied to the restoration or repair of the related
Mortgaged Property), the Master Servicer shall cause such Servicer, pursuant to
the related Servicing Agreement, to remit such amounts to the Master Servicer
for deposit in the Collection Account.
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(v) The Master Servicer shall establish and
maintain a Bond Account, which shall be an Eligible Account, into which the
Master Servicer shall deposit or cause to be deposited on a daily basis within
one Business Day of receipt, except as otherwise specifically provided herein,
the following payments and collections remitted by Servicers or received by it
in respect of Pledged Mortgages subsequent to the Cut-off Date (other than in
respect of principal and interest due on the Pledged Mortgages on or before the
Cut-off Date) and the following amounts required to be deposited hereunder:
(A) all payments on account of principal on the
Pledged Mortgages, including Principal Prepayments and the
principal component of any Servicer Advance;
(B) all payments on account of interest on the
Pledged Mortgages, net of the sum of the related Master
Servicing Fee and related Servicing Fee, and the interest
component of any Servicer Advance;
(C) all Insurance Proceeds and Liquidation
Proceeds (net of any related expenses of the related
Servicer), other than proceeds to be applied to the
restoration or repair of the Mortgaged Property or released to
the Mortgagor in accordance with the Master Servicer's normal
servicing procedures;
(D) any amount required to be deposited by the
Master Servicer pursuant to Section 3(h)(vii) in connection
with any losses on Permitted Investments;
(E) any amounts required to be deposited by the
Master Servicer pursuant to Sections 3(l) and 3(n);
(F) all Purchase Prices from the Master Servicer
and all Substitution Adjustment Amounts;
(G) all Advances made by the Master Servicer
pursuant to Section 4; and
(H) any other amounts required to be deposited
hereunder.
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[In addition, on or prior to the last day of the month in
which the Closing Date occurs, the Issuer shall cause an amount equal to
$__________ to be deposited in the Bond Account, such amount to be treated as a
Principal Prepayment in Full of a Pledged Mortgage.]
(vi) In addition, with respect to any Pledged Mortgage
that is subject to a buydown agreement, on each Due Date for such Pledged
Mortgage, in addition to the monthly payment remitted by the Mortgagor, the
Master Servicer shall cause funds to be deposited into the Bond Account in an
amount required to cause an amount of interest to be paid with respect to such
Pledged Mortgage equal to the amount of interest that has accrued on such
Pledged Mortgage from the preceding Due Date at the Mortgage Rate net of the
Master Servicing Fee on such date.
The foregoing requirements for remittance by the Master
Servicer shall be exclusive, it being understood and agreed that, without
limiting the generality of the foregoing, payments in the nature of prepayment
penalties, late payment charges or assumption fees, if collected, need not be
remitted by the Master Servicer. In the event that the Master Servicer shall
remit any amount not required to be remitted, it may at any time withdraw or
direct the institution maintaining the Bond Account to withdraw such amount
from the Bond Account, any provision herein to the contrary notwithstanding.
Such withdrawal or direction may be accomplished by delivering written notice
thereof to the Trustee or such other institution maintaining the Bond Account
which describes the amounts deposited in error in the Bond Account. The Master
Servicer shall maintain adequate records with respect to all withdrawals made
pursuant to this Section 3(h)(vi). All funds deposited in the Bond Account
shall be held in trust for the Bondholders until withdrawn in accordance with
Section 3(k).
(vii) On or prior to each Distribution Account Deposit
Date, after payment of any amount described in Section 6.17 of the Indenture, as
well as any amounts owed to the Trustee pursuant to Section 6.07 of the
Indenture, the Master Servicer will withdraw from the Bond Account the Bond
Distribution Amount, to the extent of Available Funds, and will deposit such
amount in the Distribution Account.
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(viii) On each Payment Date, after payment of any
amount described in Section 6.17 of the Indenture, as well as any amounts owed
to the Trustee pursuant to Section 6.07 of the Indenture, the Master Servicer
shall withdraw the Available Funds remaining on deposit in the Bond Account,
after giving effect to the withdrawal therefrom pursuant to Section 3(h)(vii)
above, and pay such funds to the Certificate Paying Agent for application in
the following order of priority and, in each case, to the extent of funds
remaining:
(1) to the Investor Certificates, an amount allocable to
interest equal to the Certificate Interest Payment Amount for
such Payment Date;
(2) to the Investor Certificates, an amount allocable to
principal equal to the Invested Amount Payment for such
Payment Date; and
(3) to the holders of the Investor Certificates, the balance
of any Available Funds remaining in the Bond Account.
With respect to each Payment Date, the amounts described in clause (1) of this
Section 3(h)(viii) for such Payment Date shall be reduced by the Investor
Certificates' pro rata share (based on the Interest Payment Amount of the
Investor Certificates before reduction pursuant to this Section 3(h)(viii)) of
each (A) Relief Act Reduction incurred during the calendar month preceding the
month of such Payment Date and (B) Prepayment Interest Shortfalls. In
addition, with respect to each Payment Date, the amounts described in clauses
(2) and (3) of this Section 3(h)(viii) for such Payment Date shall be reduced
by an amount equal to the excess, if any, of Prepayment Interest Shortfalls,
after giving effect to the reduction described in the immediately preceding
sentence, over the Master Servicing Fee for such payment date.
(ix) Each institution at which the Bond Account, the
Distribution Account or the Collection Account is maintained shall invest the
funds therein as directed in writing by the Master Servicer in Permitted
Investments, which shall mature not later than (i) in the case of the Bond
Account, the second Business Day next preceding the related Distribution
Account
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Deposit Date (except that if such Permitted Investment is an obligation of the
institution that maintains such account, then such Permitted Investment shall
mature not later than the Business Day next preceding such Distribution Account
Deposit Date), (ii) in the case of the Collection Account, the next Business
Day and (iii) in the case of the Distribution Account, the Business Day next
preceding the related Payment Date (except that if such Permitted Investment is
an obligation of the institution that maintains such account, then such
Permitted Investment shall mature not later than such Payment Date) and, in
each case, shall not be sold or disposed of prior to its maturity. All such
Permitted Investments shall be made in the name of the Trustee, for the benefit
of the Bondholders. All income and gain (net of any losses) realized from any
such investment of funds on deposit in the Bond Account, the Distribution
Account or the Collection Account shall be for the benefit of the Master
Servicer as servicing compensation and shall be remitted to it monthly as
provided herein. The amount of any realized losses in the Bond Account, the
Distribution Account or the Collection Account incurred in any such account in
respect of any such investments shall promptly be deposited by the Master
Servicer in the Bond Account, the Distribution Account or the Collection
Account, as applicable. The Trustee in its fiduciary capacity shall not be
liable for the amount of any loss incurred in respect of any investment or lack
of investment of funds held in the Bond Account, the Distribution Account or
the Collection Account and made in accordance with this Section 3(h)(ix).
(x) The Master Servicer shall give notice to the Trustee,
the Issuer and each Rating Agency of any proposed change of the location of the
Bond Account not later than 30 days and not more than 45 days prior to any
change thereof.
(i) Collection of Taxes, Assessments and Similar Items;
Escrow Accounts.
(i) To the extent required by the related Mortgage Note
and not violative of current law, the Master Servicer shall cause each Servicer
to establish and maintain one or more accounts (each, an "Escrow Account") and
deposit and retain therein all collections from the Mortgagors (or advances by
the Servicer) for the payment of taxes, assessments, hazard insurance
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premiums or comparable items for the account of the Mortgagors. Nothing herein
shall require the Master Servicer or any Servicer to compel a Mortgagor to
establish an Escrow Account in violation of applicable law.
(ii) Withdrawals of amounts so collected from the Escrow
Accounts may be made only to effect timely payment of taxes, assessments,
hazard insurance premiums, condominium or PUD association dues, or comparable
items, to reimburse the Master Servicer or the related Servicer out of related
collections for any payments made pursuant to Sections 3(l) (with respect to
taxes and assessments and insurance premiums) and 3(m) (with respect to hazard
insurance), to refund to any Mortgagors any sums determined to be overages, to
pay interest, if required by law or the terms of the related Mortgage or
Mortgage Note, to Mortgagors on balances in the Escrow Account or to clear and
terminate the Escrow Account at the termination of this Agreement in accordance
with Section 8(a). The Escrow Accounts shall not be a part of the Trust
Estate.
(iii) The Master Servicer shall advance any payments
referred to in Section 3(i)(i) that are not timely paid by the Mortgagors or
advanced by the Servicers on the date when the tax, premium or other cost for
which such payment is intended is due, but the Master Servicer shall be
required so to advance only to the extent that such advances, in the good faith
judgment of the Master Servicer, will be recoverable by the Master Servicer out
of Insurance Proceeds, Liquidation Proceeds or otherwise.
(j) Access to Certain Documentation and Information
Regarding the Pledged Mortgages.
The Master Servicer shall afford, or shall cause the Servicers
to afford, the Issuer and the Trustee reasonable access to all records and
documentation regarding the Pledged Mortgages and all accounts, insurance
information and other matters relating to this Agreement, such access being
afforded without charge, but only upon reasonable request and during normal
business hours at the office designated by the Master Servicer.
Upon reasonable advance notice in writing, the Master Servicer
will provide, or will cause the Servicers to provide, to each Bondholder which
is a savings and loan association, bank or
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insurance company certain reports and reasonable access to information and
documentation regarding the Pledged Mortgages sufficient to permit such
Bondholder to comply with applicable regulations of the OTS or other regulatory
authorities with respect to investment in the Bonds; provided that the Master
Servicer and any Servicer shall be entitled to be reimbursed by each such
Bondholder for actual expenses incurred by the Master Servicer or such Servicer
in providing such reports and access.
(k) Permitted Withdrawals from the Bond Account.
The Master Servicer may from time to time make withdrawals
from the Bond Account for the following purposes:
(i) to pay to the Master Servicer or the related Servicer
(to the extent not previously retained), the servicing compensation to
which it is entitled pursuant to Section 5(a), and to pay to the
Master Servicer, as additional master servicing compensation, earnings
on or investment income with respect to funds in or credited to the
Bond Account;
(ii) to reimburse the Master Servicer or the related
Servicer for unreimbursed Advances or Servicer Advances made by it,
such right of reimbursement pursuant to this subclause (ii) being
limited to amounts received on the Pledged Mortgage(s) in respect of
which any such Advance or Servicer Advance was made;
(iii) to reimburse the Master Servicer for any
Nonrecoverable Advance previously made;
(iv) to reimburse the Master Servicer for Insured Expenses
from the related Insurance Proceeds;
(v) to reimburse the Master Servicer for (A) unreimbursed
Servicing Advances, the Master Servicer's right to reimbursement
pursuant to this clause (A) with respect to any Pledged Mortgage being
limited to amounts received on such Pledged Mortgage(s) which
represent late recoveries of the payments for which such advances were
made pursuant to Section 3(a) or Section 3(i) and (B) for unpaid
Master Servicing Fees as provided in Section 3(n);
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(vi) to pay to the purchaser, with respect to each Pledged
Mortgage or property acquired in respect thereof that has been
purchased pursuant to Section 2(a)(ii), 2(d)(iv) or 3(n), all amounts
received thereon after the date of such purchase;
(vii) to reimburse the Master Servicer for expenses
incurred by it and reimbursable pursuant to Section 6(c) and to pay
the Trustee amounts due to it pursuant to Section 6.07(2) and (3) of
the Indenture;
(viii) to withdraw any amount deposited in the Bond Account
and not required to be deposited therein;
(ix) on or prior to the Distribution Account Deposit Date,
to withdraw an amount equal to the related Bond Distribution Amount
and the Trustee Fee for such Payment Date, to the extent on deposit,
and remit such amount to the Trustee for deposit in the Distribution
Account; and
(x) to clear and terminate the Bond Account upon
termination of this Agreement pursuant to Section 8(a).
The Master Servicer shall keep and maintain separate
accounting, on a Pledged Mortgage by Pledged Mortgage basis, for the purpose of
justifying any withdrawal from the Bond Account pursuant to such subclauses
(i), (ii), (iv), (v) and (vi). Prior to making any withdrawal from the Bond
Account pursuant to subclause (iii), the Master Servicer shall deliver to the
Trustee an Officer's Certificate of a Servicing Officer indicating the amount
of any previous Advance determined by the Master Servicer to be a
Nonrecoverable Advance and identifying the related Pledged Mortgage(s) and
their respective portions of such Nonrecoverable Advance.
(l) Maintenance of Hazard Insurance; Maintenance of Primary
Insurance Policies.
(i) The Master Servicer shall cause to be maintained, for
each Pledged Mortgage, hazard insurance with extended coverage in an amount
that is at least equal to the lesser of (A) the maximum insurable value of the
improvements securing such Pledged Mortgage or (B) the greater of (y) the
outstanding
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principal balance of the Pledged Mortgage and (z) an amount such that the
proceeds of such policy shall be sufficient to prevent the Mortgagor and/or the
mortgagee from becoming a co-insurer. Each such policy of standard hazard
insurance shall contain, or have an accompanying endorsement that contains, a
standard mortgagee clause. To the extent it may do so without breaching the
related Servicing Agreement, the Master Servicer shall replace any Servicer
that does not cause such insurance, to the extent it is available, to be
maintained. Any amounts collected by the Master Servicer under any such
policies (other than the amounts to be applied to the restoration or repair of
the related Mortgaged Property or amounts released to the Mortgagor in
accordance with the Master Servicer's normal servicing procedures) shall be
deposited in the Bond Account or the related Servicing Account, as applicable.
Any cost incurred by the Master Servicer or any Servicer in maintaining any
such insurance shall not, for the purpose of calculating payments to the
Bondholders or remittances to the Trustee for their benefit, be added to the
principal balance of the Pledged Mortgage, notwithstanding that the terms of
the Pledged Mortgage so permit. Such costs shall be recoverable by the Master
Servicer out of late payments by the related Mortgagor or out of Liquidation
Proceeds to the extent permitted by Section 3(k). It is understood and agreed
that no earthquake or other additional insurance is to be required of any
Mortgagor or maintained on property acquired in respect of a Mortgage other
than pursuant to such applicable laws and regulations as shall at any time be
in force and as shall require such additional insurance. If the Mortgaged
Property is located at the time of origination of the Pledged Mortgage in a
federally designated special flood hazard area and such area is participating
in the national flood insurance program, the Master Servicer shall cause flood
insurance to be maintained with respect to such Pledged Mortgage. Such flood
insurance shall be in an amount equal to the least of (A) the original
principal balance of the related Pledged Mortgage, (B) the replacement value of
the improvements which are part of such Mortgaged Property, and (C) the maximum
amount of such insurance available for the related Mortgaged Property under the
national flood insurance program.
In the event that the Master Servicer shall obtain and
maintain a blanket policy insuring against hazard losses on all of the Pledged
Mortgages, it shall conclusively be deemed to have
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satisfied its obligations as set forth in the first sentence of this Section
3(l)(i), it being understood and agreed that such policy may contain a
deductible clause on terms substantially equivalent to those commercially
available and maintained by comparable servicers. If such policy contains a
deductible clause, the Master Servicer shall, in the event that there shall not
have been maintained on the related Mortgaged Property a policy complying with
the first sentence of this Section 3(l)(i), and there shall have been a loss
that would have been covered by such policy, deposit in the Bond Account the
amount not otherwise payable under the blanket policy because of such
deductible clause. In connection with its activities as Master Servicer of the
Pledged Mortgages, the Master Servicer agrees to present, on behalf of itself,
the Issuer and the Trustee for the benefit of the Bondholders, claims under any
such blanket policy.
(ii) The Master Servicer shall not take, or permit any
Servicer to take, any action which would result in non-coverage under any
applicable Primary Insurance Policy of any loss which, but for the actions of
the Master Servicer or any Servicer, would have been covered thereunder. The
Master Servicer shall not cancel or refuse to renew any such Primary Insurance
Policy that is in effect at the date of the initial issuance of the Bonds and
is required to be kept in force hereunder unless the replacement Primary
Insurance Policy for such canceled or non-renewed policy is maintained with a
Qualified Insurer. The Master Servicer shall not be required to maintain any
Primary Insurance Policy with respect to any Pledged Mortgage with a
Loan-to-Value Ratio less than or equal to 80% as of any date of determination
or, based on a new appraisal, the principal balance of such Pledged Mortgage
represents 80% or less of the new Appraised Value. The Master Servicer agrees
to effect the timely payment of the premiums on each Primary Insurance Policy,
and such costs not otherwise recoverable shall be recoverable by the Master
Servicer from the related liquidation proceeds.
In connection with its activities as Master Servicer of the
Pledged Mortgages, the Master Servicer agrees to present, or cause the related
Servicer to present, on behalf of itself, the Trustee and the Bondholders,
claims to the insurer under any Primary Insurance Policies and, in this regard,
to take such reasonable action as shall be necessary to permit recovery under
any Primary Insurance Policies respecting defaulted Pledged
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Mortgages. Any amounts collected by a Servicer or the Master Servicer under
any Primary Insurance Policies shall be deposited in the Servicing Account, the
Collection Account or the Bond Account, as applicable.
(m) Enforcement of Due-On-Sale Clauses; Assumption
Agreements.
(i) Except as otherwise provided in this Section 3(m),
when any property subject to a Mortgage has been conveyed by the Mortgagor, the
Master Servicer or the related Servicer shall, to the extent that it has
knowledge of such conveyance, enforce any due-on-sale clause contained in any
Mortgage Note or Mortgage, to the extent permitted under applicable law and
governmental regulations, but only to the extent that such enforcement will not
adversely affect or jeopardize coverage under any Required Insurance Policy.
Notwithstanding the foregoing, neither the Master Servicer nor the related
Servicer is required to exercise such rights with respect to a Pledged Mortgage
if the Person to whom the related Mortgaged Property has been conveyed or is
proposed to be conveyed satisfies the terms and conditions contained in the
Mortgage Note and Mortgage related thereto and the consent of the mortgagee
under such Mortgage Note or Mortgage is not otherwise so required under such
Mortgage Note or Mortgage as a condition to such transfer. In the event that
(A) the Master Servicer or the related Servicer is prohibited by law from
enforcing any such due-on-sale clause, (B) coverage under any Required
Insurance Policy would be adversely affected, (C) the Mortgage Note does not
include a due-on-sale clause or (D) nonenforcement is otherwise permitted
hereunder, the Master Servicer is authorized, subject to Section 3(m)(ii), to
take or enter into an assumption and modification agreement from or with the
person to whom such property has been or is about to be conveyed, pursuant to
which such person becomes liable under the Mortgage Note and, unless prohibited
by applicable state law, the Mortgagor remains liable thereon, provided that
the Pledged Mortgage shall continue to be covered (if so covered before the
Master Servicer enters such agreement) by the applicable Required Insurance
Policies. The Master Servicer, subject to Section 3(m)(ii), is also authorized
with the prior approval of the insurers under any Required Insurance Policies
to enter into a substitution of liability agreement with such Person, pursuant
to which the original Mortgagor is released from liability and such
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Person is substituted as Mortgagor and becomes liable under the Mortgage Note.
Notwithstanding the foregoing, the Master Servicer shall not be deemed to be in
default under this Section 3(m) by reason of any transfer or assumption which
the Master Servicer reasonably believes it is restricted by law from
preventing, for any reason whatsoever.
(ii) Subject to the Master Servicer's duty to enforce any
due-on-sale clause to the extent set forth in Section 3(m)(i), in any case in
which a Mortgaged Property has been conveyed to a Person by a Mortgagor, and
such Person is to enter into an assumption agreement or modification agreement
or supplement to the Mortgage Note or Mortgage that requires the signature of
the Trustee, or if an instrument of release signed by the Trustee is required
releasing the Mortgagor from liability on the Pledged Mortgage, the Master
Servicer shall prepare and deliver or cause to be prepared and delivered to the
Trustee for signature and shall direct, in writing, the Trustee to execute the
assumption agreement with the Person to whom the Mortgaged Property is to be
conveyed and such modification agreement or supplement to the Mortgage Note or
Mortgage or other instruments as are reasonable or necessary to carry out the
terms of the Mortgage Note or Mortgage or otherwise to comply with any
applicable laws regarding assumptions or the transfer of the Mortgaged Property
to such Person. In connection with any such assumption, no material term of
the Mortgage Note may be changed. In addition, the substitute Mortgagor and
the Mortgaged Property must be acceptable to the Master Servicer in accordance
with its underwriting standards as then in effect. Together with each such
substitution, assumption or other agreement or instrument delivered to the
Trustee for execution by it, the Master Servicer shall deliver an Officer's
Certificate signed by a Servicing Officer stating that the requirements of this
subsection have been met in connection therewith. The Master Servicer shall
notify, or cause the related Servicer to notify, the Trustee that any such
substitution or assumption agreement has been completed by forwarding to the
Trustee the original of such substitution or assumption agreement, which in the
case of the original shall be added to the related Trustee Mortgage File and
shall, for all purposes, be considered a part of such Trustee Mortgage File to
the same extent as all other documents and instruments constituting a part
thereof. Any fee collected by the Master Servicer or any Servicer for entering
into an assumption or substitution
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of liability agreement will be retained by the Master Servicer as additional
master servicing compensation.
(n) Realization Upon Defaulted Pledged Mortgages;
Purchase of Certain Pledged Mortgages.
The Master Servicer shall use reasonable efforts to foreclose
upon or otherwise comparably convert the ownership of properties securing such
of the Pledged Mortgages as come into and continue in default and as to which
no satisfactory arrangements can be made for collection of delinquent payments.
In connection with such foreclosure or other conversion, the Master Servicer
shall follow such practices and procedures as it shall deem necessary or
advisable, as shall be normal and usual in its general mortgage servicing
activities and as shall meet the requirements of the insurer under any Required
Insurance Policy. Notwithstanding the foregoing, the Master Servicer shall not
be required to expend its own funds in connection with any foreclosure or
towards the restoration of any property unless it shall determine (A) that such
restoration and/or foreclosure will increase the proceeds of liquidation of the
Pledged Mortgage after reimbursement to itself of such expenses and (B) that
such expenses will be recoverable to it through Liquidation Proceeds
(respecting which it shall have priority for purposes of withdrawals from the
Bond Account). The Master Servicer shall be responsible for all other costs
and expenses incurred by it in any such proceedings; provided, however, that it
shall be entitled to reimbursement thereof from the liquidation proceeds with
respect to the related Mortgaged Property, as provided in the definition of
Liquidation Proceeds. If the Master Servicer has knowledge that a Mortgaged
Property which the Master Servicer is contemplating acquiring in foreclosure or
by deed in lieu of foreclosure is located within a 1 mile radius of any site
listed in the Expenditure Plan for the Hazardous Substance Clean Up Bond Act of
1984 or other site with environmental or hazardous waste risks known to the
Master Servicer, the Master Servicer will, prior to acquiring the Mortgaged
Property, consider such risks and only take action in accordance with its
established environmental review procedures.
With respect to any REO Property, the deed or certificate of
sale shall be taken in the name of the Trustee for the benefit of the
Bondholders, or its nominee, on behalf of the
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Bondholders. The Trustee's name shall be placed on the title to such REO
Property solely as the Trustee under the Indenture and not in its individual
capacity. The Master Servicer shall ensure that the title to such REO Property
references the Indenture and the Trustee's capacity thereunder. Pursuant to
its efforts to sell such REO Property, the Master Servicer shall either itself
or through an agent selected by the Master Servicer protect and conserve such
REO Property in the same manner and to such extent as is customary in the
locality where such REO Property is located and may, incident to its
conservation and protection of the interests of the Bondholders, rent the same,
or any part thereof, as the Master Servicer deems to be in the best interest of
the Bondholders for the period prior to the sale of such REO Property. The net
monthly rental income, if any, from such REO Property shall be deposited in the
Bond Account no later than the close of business on each Determination Date.
The Master Servicer shall perform the tax reporting and withholding required by
Sections 1445 and 6050J of the Code with respect to foreclosures and
abandonments, the tax reporting required by Section 6050H of the Code with
respect to the receipt of mortgage interest from individuals and, if required
by Section 6050P of the Code with respect to the cancellation of indebtedness
by certain financial entities, by preparing such tax and information returns as
may be required, in the form required, and delivering the same to the Trustee
for filing.
The decision of the Master Servicer to foreclose on a
defaulted Pledged Mortgage shall be subject to a determination by the Master
Servicer that the proceeds of such foreclosure would exceed the costs and
expenses of bringing such a proceeding. The income earned from the management
of any REO Properties, net of reimbursement to the Master Servicer for expenses
incurred (including any property or other taxes) in connection with such
management and net of unreimbursed Master Servicing Fees, Servicing Fees,
Advances, Servicer Advances and Servicing Advances, shall be applied to the
payment of principal of and interest on the related defaulted Pledged Mortgages
(with interest accruing as though such Pledged Mortgages were still current and
adjustments, if applicable, to the Mortgage Rate were being made in accordance
with the terms of the Mortgage Note) and all such income shall be deemed, for
all purposes in this Agreement, to be payments on account of principal and
interest on the related Mortgage Notes and shall be deposited into the Bond
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Account. To the extent the net income received during any calendar month is in
excess of the amount attributable to amortizing principal and accrued interest
at the related Mortgage Rate on the related Pledged Mortgage for such calendar
month, such excess shall be considered to be a partial prepayment of principal
of the related Pledged Mortgage.
The proceeds from any liquidation of a Pledged Mortgage, as
well as any income from an REO Property, will be applied in the following order
of priority: first, to reimburse the Master Servicer or the related Servicer
for any related unreimbursed Advances or Servicing Advances, Master Servicing
Fees and Servicing Fees, as applicable; second, to reimburse the Master
Servicer or the related Servicer for any unreimbursed Advances or Servicer
Advances, as applicable, and to reimburse the Bond Account for any
Nonrecoverable Advances (or portions thereof) that were previously withdrawn by
the Master Servicer pursuant to Section 3(k)(iii) that related to such Pledged
Mortgage; third, to accrued and unpaid interest (to the extent no Advance or
Servicer Advance has been made for such amount or any such Advance or Servicer
Advance has been reimbursed) on the Pledged Mortgage or related REO Property at
the Net Mortgage Rate to the Due Date occurring in the month in which such
amounts are required to be distributed; and fourth, as a recovery of principal
of the Pledged Mortgage. Excess Proceeds, if any, from the liquidation of a
Liquidated Pledged Mortgage will be retained by the Master Servicer as
additional servicing compensation pursuant to Section 5(a).
The Master Servicer, in its sole discretion, shall have the
right to purchase for its own account from the Issuer any Pledged Mortgage
which is 91 days or more delinquent at a price equal to the Purchase Price.
The Purchase Price for any Pledged Mortgage purchased hereunder shall be
deposited in the Bond Account and the Trustee, upon receipt of a certificate
from the Master Servicer in the form of Exhibit D hereto, shall release or
cause to be released to the purchaser of such Pledged Mortgage the related
Trustee Mortgage File and shall execute and deliver such instruments of
transfer or assignment prepared by the purchaser of such Pledged Mortgage, in
each case without recourse, as shall be necessary to vest in the purchaser of
such Pledged Mortgage any Pledged Mortgage released pursuant hereto and the
purchaser of such Pledged Mortgage shall succeed to all
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the Issuer's and the Trustee's right, title and interest in and to such Pledged
Mortgage and all security and documents related thereto. Such assignment shall
be an assignment outright and not for security. The purchaser of such Pledged
Mortgage shall thereupon own such Pledged Mortgage, and all security and
documents, free of any further obligation to the Issuer, the Trustee or the
Bondholders with respect thereto.
(o) Access to Certain Documentation.
The Master Servicer shall provide to the OTS and the FDIC and
to comparable regulatory authorities supervising Holders of Subordinated Bonds
and the examiners and supervisory agents of the OTS, the FDIC and such other
authorities, access to the documentation regarding the Pledged Mortgages
required by applicable regulations of the OTS and the FDIC. Such access shall
be afforded without charge, but only upon reasonable and prior written request
and during normal business hours at the offices designated by the Master
Servicer. Nothing in this Section 3(o) shall limit the obligation of the
Master Servicer to observe any applicable law prohibiting disclosure of
information regarding the Mortgagors and the failure of the Master Servicer or
any Servicer to provide access as provided in this Section 3(o) as a result of
such obligation shall not constitute a breach of this Section 3(o).
(p) Annual Statement as to Compliance.
The Master Servicer shall deliver to the Issuer and the
Trustee on or before 120 days after the end of the Master Servicer's fiscal
year, commencing with its [1997] fiscal year, an Officer's Certificate stating,
as to the signer thereof, that (i) a review of the activities of the Master
Servicer during the preceding calendar year and of the performance of the
Master Servicer under this Agreement has been made under such officer's
supervision, (ii) to the best of such officer's knowledge, based on such
review, the Master Servicer has fulfilled all its obligations under this
Agreement throughout such year, or, if there has been a default in the
fulfillment of any such obligation, specifying each such default known to such
officer and the nature and status thereof and (iii) to the best of such
officer's knowledge, each Servicer has fulfilled all its obligations under its
Servicing Agreement throughout such year, or, if there has been a
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default in the fulfillment of any such obligation, specifying each such default
known to such officer and the nature and status thereof. The Trustee shall
forward a copy of each such statement to each Rating Agency.
(q) Annual Independent Public Accountants' Servicing
Statement; Financial Statements.
On or before 120 days after the end of the Master Servicer's
fiscal year, commencing with its [1997] fiscal year, the Master Servicer at its
expense shall cause a nationally recognized firm of independent public
accountants (who may also render other services to the Master Servicer or any
affiliate thereof) which is a member of the American Institute of Certified
Public Accountants to furnish a statement to the Trustee and the Issuer to the
effect that such firm has examined certain documents and records relating to
the servicing of the Pledged Mortgages under this Agreement or of mortgage
loans under servicing agreements substantially similar to this Agreement (such
statement to have attached thereto a schedule setting forth the servicing
agreements covered thereby) and that, on the basis of such examination,
conducted substantially in compliance with the Uniform Single Attestation
Program for Mortgage Bankers or the Audit Program for Mortgages serviced for
FNMA and FHLMC, such servicing has been conducted in compliance with such
servicing agreements except for such significant exceptions or errors in
records that, in the opinion of such firm, the Uniform Single Attestation
Program for Mortgage Bankers or the Audit Program for Mortgages serviced for
FNMA and FHLMC requires it to report. In rendering such statement, such firm
may rely, as to matters relating to direct servicing of mortgage loans by
Servicers, upon comparable statements for examinations conducted substantially
in compliance with the Uniform Single Attestation Program for Mortgage Bankers
or the Audit Program for Mortgages serviced for FNMA and FHLMC (rendered within
one year of such statement) of independent public accountants with respect to
the related Servicer. Copies of such statement shall be provided by the
Trustee to any Bondholder upon request at the Master Servicer's expense,
provided that such statement is delivered by the Master Servicer to the
Trustee.
(r) Errors and Omissions Insurance; Fidelity Bonds.
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The Master Servicer shall obtain and maintain in force, and
shall cause each Servicer to obtain and maintain in force, (a) a policy or
policies of insurance covering errors and omissions in the performance of its
obligations as Master Servicer hereunder or as Servicer under its Servicing
Agreement, as the case may be, and (b) a fidelity bond in respect of its
officers, employees and agents. Each such policy or policies and bond shall,
together, comply with the requirements from time to time of FNMA or FHLMC for
persons performing servicing for mortgage loans purchased by FNMA or FHLMC. In
the event that any such policy or bond ceases to be in effect, the Master
Servicer shall obtain a comparable replacement policy or bond from an insurer
or issuer meeting the requirements set forth above as of the date of such
replacement.
(s) Master Servicer Monthly Data.
On or before [noon California time] on the Determination Date,
the Master Servicer shall provide by modem to the Trustee with respect to the
Pledged Mortgages, an electronic data file (accompanied by a hardcopy report)
in a format which is mutually agreed upon by the Master Servicer and the
Trustee. The Trustee shall be under no duty to recalculate, verify or
recompute the information provided to it by the Master Servicer hereunder.
4. Advances.
The Master Servicer shall determine on or before each Master
Servicer Advance Date whether it is required to make an Advance pursuant to the
definition thereof. If the Master Servicer determines it is required to make
an Advance, it shall, on or before the Master Servicer Advance Date, either (i)
deposit into the Bond Account an amount equal to the Advance or (ii) make an
appropriate entry in its records relating to the Bond Account that any Amount
Held for Future Distribution has been used by the Master Servicer in discharge
of its obligation to make any such Advance. Any funds so applied shall be
replaced by the Master Servicer by deposit in the Bond Account no later than
the close of business on the next Master Servicer Advance Date. The Master
Servicer shall be entitled to be reimbursed from the Bond Account for all
Advances of its own funds made pursuant to this Section 4 as provided in
Section 3(k). The obligation to make Advances
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with respect to any Pledged Mortgage shall continue if such Pledged Mortgage
has been foreclosed or otherwise terminated and the related Mortgaged Property
has not been liquidated. The Master Servicer shall inform the Trustee of the
amount of the Advance to be made on each Master Servicer Advance Date no later
than the Second Business Day before the related Payment Date.
The Master Servicer shall deliver to the Trustee on the
related Master Servicer Advance Date an Officer's Certificate of a Servicing
Officer indicating the amount of any proposed Advance determined by the Master
Servicer to be a Nonrecoverable Advance.
5. Servicing Compensation and Expenses.
As compensation for its activities hereunder, the Master
Servicer shall be entitled out of each payment of interest on a Pledged
Mortgage (or portion thereof) to retain or withdraw from the Bond Account an
amount equal to the Master Servicing Fee for such Payment Date.
Additional master servicing compensation in the form of Excess
Proceeds, prepayment penalties, assumption fees, late payment charges and all
income and gain net of any losses realized from Permitted Investments shall be
retained by the Master Servicer to the extent not required to be deposited in
the Bond Account pursuant to Section 3(h). The Master Servicer shall be
required to pay all expenses incurred by it in connection with its servicing
activities hereunder (including payment of any premiums for hazard insurance
and any Primary Insurance Policy and maintenance of the other forms of
insurance coverage required by this Agreement) and shall not be entitled to
reimbursement therefor except as specifically provided in this Agreement.
As compensation for its activities under its Servicing
Agreement, each Servicer shall be entitled to retain out of each payment of
interest on a Pledged Mortgage (or portion thereof) an amount equal to interest
at the applicable Servicing Fee Rate on the Stated Principal Balance of the
related Pledged Mortgage for the period covered by such interest payment.
Additional servicing compensation in the form of prepayment
penalties, assumption fees and late payment charges shall be retained by the
Servicers to the extent not required to be
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deposited in the Servicing Accounts pursuant to the related Servicing
Agreement. Each Servicer shall be required to pay all expenses incurred by it
in connection with its servicing activities under its Servicing Agreement
(including payment of any premium for hazard insurance and any Primary
Insurance Policy and maintenance of the other forms of insurance coverage
required by this Agreement and its Servicing Agreement) and shall not be
entitled to reimbursement therefor except as specifically provided in its
Servicing Agreement and not inconsistent with this Agreement.
In the event of any Prepayment Interest Shortfalls, the
aggregate Master Servicing Fee for such Payment Date shall be reduced (but not
below zero) by an amount equal to such Prepayment Interest Shortfalls.
6. The Master Servicer.
(a) Liabilities of the Master Servicer.
The Master Servicer shall be liable in accordance herewith
only to the extent of the obligations specifically imposed upon and undertaken
by it herein.
(b) Merger or Consolidation of the Master Servicer.
The Master Servicer will keep in full effect its existence,
rights and franchises as a corporation under the laws of the United States or
under the laws of one of the states thereof and will obtain and preserve its
qualification to do business as a foreign corporation in each jurisdiction in
which such qualification is or shall be necessary to protect the validity and
enforceability of this Agreement, or any of the Pledged Mortgages and to
perform its duties under this Agreement.
Any Person into which the Master Servicer may be merged or
consolidated, or any Person resulting from any merger or consolidation to which
the Master Servicer shall be a party, or any person succeeding to the business
of the Master Servicer, shall be the successor of the Master Servicer
hereunder, without the execution or filing of any paper or any further act on
the part of any of the parties hereto, anything herein to the contrary
notwithstanding; provided, however, that the successor
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or surviving Person to the Master Servicer shall be qualified to sell mortgage
loans to, and to service mortgage loans on behalf of, FNMA or FHLMC.
(c) Limitation on Liability of the Master Servicer and
Others.
Neither the Master Servicer nor any of the directors,
officers, employees or agents of the Master Servicer shall be under any
liability to the Issuer or the Bondholders for any action taken or for
refraining from the taking of any action in good faith pursuant to this
Agreement, or for errors in judgment; provided, however, that this provision
shall not protect the Master Servicer or any such Person against any breach of
representations or warranties made by it herein or protect the Master Servicer
or any such Person from any liability which would otherwise be imposed by
reasons of willful misfeasance, bad faith or gross negligence in the
performance of duties or by reason of reckless disregard of obligations and
duties hereunder. The Master Servicer and any director, officer, employee or
agent of the Master Servicer may rely in good faith on any document of any kind
prima facie properly executed and submitted by any Person respecting any
matters arising hereunder. The Master Servicer and any director, officer,
employee or agent of the Master Servicer shall be indemnified by the Issuer and
held harmless against any loss, liability or expense incurred in connection
with any audit, controversy or judicial proceeding relating to a governmental
taxing authority or any legal action relating to this Agreement or the Bonds,
other than any loss, liability or expense related to any specific Pledged
Mortgage or Pledged Mortgages (except as any such loss, liability or expense
shall be otherwise reimbursable pursuant to this Agreement) and any loss,
liability or expense incurred by reason of willful misfeasance, bad faith or
gross negligence in the performance of duties hereunder or by reason of
reckless disregard of obligations and duties hereunder. The Master Servicer
shall not be under any obligation to appear in, prosecute or defend any legal
action that is not incidental to its respective duties hereunder and which in
its opinion may involve it in any expense or liability; provided, however, that
the Master Servicer may in its discretion undertake any such action that it may
deem necessary or desirable in respect of this Agreement and the rights and
duties of the parties hereto and interests of the Issuer, the Trustee and the
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Bondholders hereunder. In such event, the legal expenses and costs of such
action and any liability resulting therefrom shall be expenses, costs and
liabilities of the Issuer, and the Master Servicer shall be entitled to be
reimbursed therefor out of the Bond Account.
(d) Limitation on Resignation of the Master Servicer.
The Master Servicer shall not resign from the obligations and
duties hereby imposed on it except (a) upon appointment of a successor servicer
and receipt by the Trustee of a letter from each Rating Agency that such a
resignation and appointment will not result in a downgrading of the rating of
any of the Bonds or (b) upon determination that its duties hereunder are no
longer permissible under applicable law. Any such determination under clause
(b) permitting the resignation of the Master Servicer shall be evidenced by an
Opinion of Counsel to such effect delivered to the Trustee. No such
resignation shall become effective until the Trustee or a successor master
servicer shall have assumed the Master Servicer's responsibilities, duties,
liabilities and obligations hereunder.
7. Servicing Default; Termination and Liabilities.
(a) Servicing Default.
Any of the following acts or occurrences shall constitute a
Servicing Default by the Master Servicer under this Agreement:
(i) any failure by the Master Servicer to deposit in
the Bond Account or remit to the Trustee any payment (other than a
payment required to be made under Section 4) required to be made under
the terms of this Agreement, which failure shall continue unremedied
for five days after the date upon which written notice of such failure
shall have been given to the Master Servicer by the Trustee or the
Issuer or to the Master Servicer, the Trustee and the Issuer by the
Holders of Bonds representing more than 50% of the aggregate Class
Principal Amount of the Controlling Class; or
(ii) any failure by the Master Servicer to observe or
perform in any material respect any other of the covenants
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or agreements on the part of the Master Servicer contained in this
Agreement, which failure shall continue unremedied for a period of 60
days after the date on which written notice of such failure shall have
been given to the Master Servicer by the Trustee or the Issuer or to
the Master Servicer, the Trustee and the Issuer by the Holders of
Bonds representing more than 50% of the aggregate Class Principal
Amount of the Controlling Class; or
(iii) a decree or order of a court or agency or
supervisory authority having jurisdiction in the premises for the
appointment of a receiver or liquidator in any insolvency,
readjustment of debt, marshalling of assets and liabilities or similar
proceedings, or for the winding-up or liquidation of its affairs,
shall have been entered against the Master Servicer and such decree or
order shall have remained in force undischarged or unstayed for a
period of 60 consecutive days; or
(iv) the Master Servicer shall consent to the
appointment of a receiver or liquidator in any insolvency,
readjustment of debt, marshalling of assets and liabilities or similar
proceedings of or relating to the Master Servicer or all or
substantially all of the property of the Master Servicer; or
(v) the Master Servicer shall admit in writing its
inability to pay its debts generally as they become due, file a
petition to take advantage of, or commence a voluntary case under, any
applicable insolvency or reorganization statute, make an assignment
for the benefit of its creditors, or voluntarily suspend payment of
its obligations; or
(vi) any failure of the Master Servicer to make any
Advance in the manner and at the time required to be made pursuant to
Section 4 which continues unremedied for a period of one Business Day
after the date of such failure.
If a Servicing Default described in clauses (i) to (v) of this
Section 7(a) shall occur, then, and in each and every such case, so long as
such Servicing Default shall not have been remedied the Trustee may (subject to
Section 3.07 and Section
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8.11 of the Indenture), by notice in writing to the Master Servicer (with a
copy to each Rating Agency), and in addition to any other rights the Trustee
may have on behalf of the Bondholders as a result of such Servicing Default,
terminate all of the rights and obligations of the Master Servicer thereafter
arising under this Agreement and in and to the Pledged Mortgages and the
proceeds thereof, other than its rights as a Bondholder under the Indenture and
its obligations which are not assumed by the Trustee pursuant to clauses (i),
(iii) and (v) of Section 3(g). If a Servicing Default described in clause (vi)
shall occur, the Trustee shall, by notice in writing to the Master Servicer and
the Issuer, terminate all of the rights and obligations of the Master Servicer
under this Agreement and in and to the Pledged Mortgages and the proceeds
thereof, other than its rights as a Bondholder under the Indenture and its
obligations which are not assumed by the Trustee pursuant to clauses (i), (iii)
and (v) of Section 3(g). On and after the receipt by the Master Servicer of
such written notice, all authority and power of the Master Servicer hereunder,
whether with respect to the Pledged Mortgages or otherwise, shall pass to and
be vested in the Trustee. The Trustee shall thereupon make any Advance
described in clause (vi) subject to clause (ii) of the first sentence of
Section 3(g). The Trustee is hereby authorized and empowered to execute and
deliver, on behalf of the Master Servicer, as attorney-in-fact or otherwise,
any and all documents and other instruments, and to do or accomplish all other
acts or things necessary or appropriate to effect the purposes of such notice
of termination, whether to complete the transfer and endorsement or assignment
of the Pledged Mortgages and related documents, or otherwise. The Master
Servicer agrees to cooperate with the Trustee in effecting the termination of
the Master Servicer's responsibilities and rights hereunder, including, without
limitation, the transfer to the Trustee of all cash amounts which shall at the
time be credited to the Bond Account or thereafter be received with respect to
the Pledged Mortgages.
Notwithstanding any termination of the activities of the
Master Servicer hereunder, the Master Servicer shall be entitled to receive,
out of any late collection of a Scheduled Payment on a Pledged Mortgage which
was due prior to the notice terminating such Master Servicer's rights and
obligations as Master Servicer hereunder and received after such notice, that
portion thereof to which such Master Servicer would have been
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entitled pursuant to Sections 3(k)(i) through (viii), and any other amounts
payable to such Master Servicer hereunder the entitlement to which arose prior
to the termination of its activities hereunder.
(b) Trustee to Act; Appointment of Successor.
On and after the time the Master Servicer receives a notice of
termination pursuant to Section 7(a), the Trustee shall, subject to and to the
extent provided in Section 3(g), be the successor to the Master Servicer in its
capacity as master servicer under this Agreement and the transactions set forth
or provided for herein and shall be subject to all the responsibilities, duties
and liabilities relating thereto placed on the Master Servicer by the terms and
provisions hereof and applicable law including the obligation to make Advances
pursuant to Section 4. As compensation therefor, the Trustee shall be entitled
to all funds relating to the Pledged Mortgages that the Master Servicer would
have been entitled to charge to the Bond Account or Distribution Account if the
Master Servicer had continued to act hereunder. Notwithstanding the foregoing,
if the Trustee has become the successor to the Master Servicer in accordance
with Section 7(a), the Trustee may, if it shall be unwilling to so act, or
shall, if it is prohibited by applicable law from making Advances pursuant to
Section 4 or if it is otherwise unable to so act, appoint, or petition a court
of competent jurisdiction to appoint, any established mortgage loan servicing
institution the appointment of which does not adversely affect the then current
rating of the Bonds by each Rating Agency as the successor to the Master
Servicer hereunder in the assumption of all or any part of the
responsibilities, duties or liabilities of the Master Servicer hereunder. Any
successor to the Master Servicer shall be an institution which is a FNMA and
FHLMC approved seller/servicer in good standing, which has a net worth of at
least $15,000,000, which is willing to service the Pledged Mortgages and which
executes and delivers to the Issuer and the Trustee an agreement accepting such
delegation and assignment, containing an assumption by such Person of the
rights, powers, duties, responsibilities, obligations and liabilities of the
Master Servicer (other than liabilities of the Master Servicer under Section
6(c) incurred prior to termination of the Master Servicer under Section 7(a)),
with like effect as if originally named as a party to this Agreement; provided
that each Rating
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Agency acknowledges that its rating of the Bonds in effect immediately prior to
such assignment and delegation will not be qualified or reduced as a result of
such assignment and delegation. Pending appointment of a successor to the
Master Servicer hereunder, the Trustee, unless the Trustee is prohibited by law
from so acting, shall, subject to Section 3(g), act in such capacity as
hereinabove provided. In connection with such appointment and assumption, the
Trustee may make such arrangements for the compensation of such successor out
of payments on Pledged Mortgages as it and such successor shall agree;
provided, however, that no such compensation shall be in excess of the Master
Servicing Fee permitted the Master Servicer hereunder. The Trustee and such
successor shall take such action, consistent with this Agreement, as shall be
necessary to effectuate any such succession. Neither the Trustee nor any other
successor master servicer shall be deemed to be in default hereunder by reason
of any failure to make, or any delay in making, any distribution hereunder or
any portion thereof or any failure to perform, or any delay in performing, any
duties or responsibilities hereunder, in either case caused by the failure of
the Master Servicer to deliver or provide, or any delay in delivering or
providing, any cash, information, documents or records to it.
Any successor to the Master Servicer as master servicer shall
give notice to the Mortgagors of such change of servicer and shall, during the
term of its service as master servicer, maintain in force the policy or
policies that the Master Servicer is required to maintain pursuant to Section
3(r).
(c) Notification to Bondholders.
(i) Upon any termination of or appointment of a successor
to the Master Servicer, the Trustee shall give prompt written notice thereof to
Bondholders and to each Rating Agency.
(ii) Within 60 days after the occurrence of any Servicing
Default, the Trustee shall transmit by mail to all Bondholders notice of each
such Servicing Default hereunder known to the Trustee, unless such Servicing
Default shall have been cured or waived.
8. Miscellaneous.
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(a) Term of Master Servicing Agreement.
The obligations to be performed by the Master Servicer under
this Agreement shall commence on and as of the date on which the Issuer issues
the Bonds and shall terminate as to each Pledged Mortgage upon (i) the payment
in full of all principal and interest due under such Pledged Mortgage or other
liquidation of such Pledged Mortgage as contemplated by this Agreement, (ii)
the termination of the Master Servicer's rights and powers under this Agreement
by the Trustee as provided in Section 7(a) of this Agreement, or (iii) the
release by the Trustee of its security interest in any Pledged Mortgage.
(b) Assignment.
Notwithstanding anything to the contrary contained herein,
except as provided in Section 6(a), this Agreement may not be assigned by the
Master Servicer without the prior written consent of the Trustee.
(c) Notices.
All directions, demands and notices hereunder shall be in
writing and shall be deemed to have been duly given when delivered at the
following addresses of the parties:
The Master
Servicer:
The Issuer: Sequoia Mortgage Trust 199_ -__
c/o Trust Company
Attention: Corporate Trust
Administration
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With a copy to
Sequoia Mortgage Funding Corporation
391 Redwood Highway, Suite 3100
Mill Valley, California 94941
Attention: Michael W. Perry
The Trustee:
Attention: Corporate Trust Department
Any Rating Agency: The address specified therefor in the
definition corresponding to the name
of such Rating Agency.
Any of the parties may at any time give notice in writing to
the others of a change of its address for the purpose of this Section 8(c).
(d) Inspection and Audit Rights.
The Master Servicer agrees that, on reasonable prior notice,
it will permit and will cause each Servicer to permit any representative of the
Issuer or the Trustee during the Master Servicer's normal business hours, to
examine all the books of account, records, reports and other papers of the
Master Servicer relating to the Pledged Mortgages, to make copies and extracts
therefrom, to cause such books to be audited by independent certified public
accountants selected by the Trustee and to discuss its affairs, finances and
accounts relating to the Pledged Mortgages with its officers, employees and
independent public accountants (and by this provision the Master Servicer
hereby authorizes said accountants to discuss with such representative such
affairs, finances and accounts), all at such reasonable times and as often as
may be reasonably requested. Any out-of-pocket expense incident to the exercise
by the Issuer or the Trustee of any right under this Section 8(d) shall be
borne by the party requesting such inspection; all other such expenses shall be
borne by the Master Servicer or the related Servicer.
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(e) Governing Law.
This Agreement shall be construed in accordance with and
governed by the substantive laws of the State of New York applicable to
agreements made and to be performed in the State of New York and the
obligations, rights and remedies of the parties hereto and the Bondholders
shall be determined in accordance with such laws.
(f) Amendments.
This Agreement shall not be amended, changed, modified,
terminated or discharged in whole or in part except (i) by an instrument in
writing signed by all parties hereto, or their respective successors or assigns
and (ii) in compliance with Section 8.10 of the Indenture.
(g) Severability.
If any one or more of the covenants, agreements, provisions or
terms of this Agreement shall be for any reason whatsoever held invalid, then
such covenants, agreements, provisions or terms shall be deemed severable from
the remaining covenants, agreements, provisions or terms of this Agreement and
shall in no way affect the validity or enforceability of the other provisions
of this Agreement.
(h) No Joint Venture.
The Servicer and the Issuer are not partners or joint
venturers with each other and nothing herein shall be construed to make them
such partners or joint venturers or impose any liability as such of either of
them.
(i) Execution in Counterparts.
This Agreement may be executed in one or more counterparts,
any of which shall constitute an original as against any party whose signature
appears on it, and all of which shall together constitute a single instrument.
This Agreement shall become binding when one or more counterparts, individually
or taken together, bear the signatures of all parties.
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(j) Limitation of Liability of _______________________
________________________.
It is expressly understood and agreed by the parties hereto
that (a) this Agreement is executed and delivered by _________________________
_____________________________, not individually or personally but solely as
owner trustee of Sequoia Trust 199_-_ under the Deposit Trust Agreement, in the
exercise of the powers and authority conferred and vested in it, (b) each of
the representations, undertakings and agreements herein made on the part of the
Trust is made and intended not as personal representations, undertakings and
agreements by _____________________ but is made and intended for the purpose
for binding only the Trust, (c) nothing herein contained shall be construed as
creating any liability on __________________________________, other than any
liability arising out of its gross negligence, bad faith or willful misconduct,
and (d) under no circumstances shall _____________________________ be
personally liable for the payment of any indebtedness or expenses of the Trust
or be liable for the breach or failure of any obligation, representation,
warranty or covenant made or undertaken by the Trust under this Agreement or
the other Operative Documents.
(k) Nonpetition Covenants.
Notwithstanding any prior termination of this Agreement, the Master
Servicer shall not, prior to the date which is one year and one day after the
termination of this Agreement with respect to the Issuer or the Depositor,
acquiesce, petition or otherwise invoke or cause the Issuer or the Depositor
(or any assignee) to invoke the process of any court or government authority
for the purpose of commencing or sustaining a case against the Issuer or the
Depositor under any federal or state bankruptcy, insolvency or similar law, or
appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator
or other similar official of the Issuer or the Depositor or any substantial
part of its property, or ordering the winding up or liquidation of the affairs
of the Issuer or the Depositor.
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IN WITNESS WHEREOF, each party has caused this Master
Servicing Agreement to be executed by its duly authorized officer or officers
as of the day and year first above written.
SEQUOIA MORTGAGE TRUST 1997-1,
as Issuer
By:_________________ TRUST COMPANY,
not in its
individual capacity
but solely as
Owner Trustee
By:
--------------------------------
Its:
-------------------------------
,
-----------------------------------
as Master Servicer
By:
--------------------------------
Its:
-------------------------------
,
-----------------------------------
as Trustee
By:
--------------------------------
Its:
-------------------------------
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SCHEDULE I
Schedule of Pledged Mortgages
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SCHEDULE II
SEQUOIA MORTGAGE TRUST 199__-__
Collateralized Mortgage Bonds
Representations and Warranties of the Master Servicer
_______________________ ("___") hereby makes the
representations and warranties set forth in this Schedule II to the Issuer and
the Trustee, as of the Closing Date, or if so specified herein, as of the
Cut-off Date. Capitalized terms used but not otherwise defined in this
Schedule II shall have the meanings ascribed thereto in the Master Servicing
Agreement (the "Master Servicing Agreement") relating to the above-referenced
Series, among ____________ ____, as Master Servicer, Sequoia Mortgage Trust
199__-__, as Issuer, and __________________________________________, as
Trustee.
(1) _________________ is duly organized as a
Delaware corporation and is validly existing and in good standing
under the laws of the State of ________ and is duly authorized and
qualified to transact any and all business contemplated by the Master
Servicing Agreement to be conducted by ________________ in any state
in which a Mortgaged Property is located or is otherwise not required
under applicable law to effect such qualification and, in any event,
is in compliance with the doing business laws of any such state, to
the extent necessary to ensure its ability to enforce each Pledged
Mortgage, to service the Pledged Mortgages in accordance with the
terms of the Master Servicing Agreement and to perform any of its
other obligations under the Master Servicing Agreement in accordance
with the terms thereof.
(2) _________________ has the full corporate
power and authority to sell and service each Pledged Mortgage, and to
execute, deliver and perform, and to enter into and consummate the
transactions contemplated by the Master Servicing Agreement and has
duly authorized by all necessary corporate action on the part of
_________________ the execution, delivery and performance of the
Master Servicing Agreement; and the Master Servicing Agreement,
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assuming the due authorization, execution and delivery thereof by the
other parties thereto, constitutes a legal, valid and binding
obligation of _________________, enforceable against _________________
in accordance with its terms, except that (a) the enforceability
thereof may be limited by bankruptcy, insolvency, moratorium,
receivership and other similar laws relating to creditors' rights
generally and (b) the remedy of specific performance and injunctive
and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any
proceeding therefor may be brought.
(3) The execution and delivery of the Master
Servicing Agreement by _________________, the servicing of the Pledged
Mortgages by _________________ under the Master Servicing Agreement,
the consummation of any other of the transactions contemplated by the
Master Servicing Agreement, and the fulfillment of or compliance with
the terms thereof are in the ordinary course of business of
_________________ and will not (A) result in a material breach of any
term or provision of the charter or by-laws of ________________ or (B)
materially conflict with, result in a material breach, violation or
acceleration of, or result in a material default under, the terms of
any other material agreement or instrument to which ________________
is a party or by which it may be bound, or (C) constitute a material
violation of any statute, order or regulation applicable to
_________________ of any court, regulatory body, administrative agency
or governmental body having jurisdiction over ________________; and
_________________ is not in breach or violation of any material
indenture or other material agreement or instrument, or in violation
of any statute, order or regulation of any court, regulatory body,
administrative agency or governmental body having jurisdiction over it
which breach or violation may materially impair ________________'s
ability to perform or meet any of its obligations under the Master
Servicing Agreement.
(4) Each Servicer is an approved servicer of
conventional mortgage loans for FNMA or FHLMC or is a mortgagee
approved by the Secretary of Housing and Urban Development pursuant to
Sections 203 and 211 of the National Housing Act.
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(5) No litigation is pending or, to the best of
______'s knowledge, threatened against ____ _______that would
materially and adversely affect the execution, delivery or
enforceability of the Master Servicing Agreement or the ability of
__________ to service the Pledged Mortgages or to perform any of its
other obligations under the Master Servicing Agreement in accordance
with the terms thereof.
(6) No consent, approval, authorization or order
of any court or governmental agency or body is required for the
execution, delivery and performance by _________________ of, or
compliance by _________ _______with, the Master Servicing Agreement or
the consummation of the transactions contemplated thereby, or if any
such consent, approval, authorization or order is required,
_________________ has obtained the same.
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SCHEDULE III
SEQUOIA MORTGAGE TRUST 199__-__
Collateralized Mortgage Bonds
Representations and Warranties as to the Pledged Mortgages
_______________________ ("___") hereby makes the
representations and warranties set forth in this Schedule III to the Trustee,
as of the Closing Date, or if so specified herein, as of the Cut-off Date.
Capitalized terms used but not otherwise defined in this Schedule III shall
have the meanings ascribed thereto in the Master Servicing Agreement (the
"Master Servicing Agreement") relating to the above-referenced Series, among
_____________ as Master Servicer, Sequoia Mortgage Trust 199__-__, as Issuer,
and ____________________________________________________, as Trustee.
(1) The information set forth on Schedule I to
the Master Servicing Agreement with respect to each Pledged Mortgage
is true and correct in all material respects as of the Closing Date.
(2) As of the Closing Date, all payments due with
respect to each Pledged Mortgage prior to the Cut-off Date have been
made; and as of the Cut-off Date, [no Pledged Mortgage has been
contractually delinquent for 30 or more days during the twelve months
prior to the Cut-off Date].
(3) No Pledged Mortgage had a Loan-to-Value Ratio
at origination in excess of ____%.
(4) With respect to any Pledged Mortgage that is
not a Cooperative Loan, each Mortgage is a valid and enforceable first
lien on the Mortgaged Property subject only to (a) the lien of
non-delinquent current real property taxes and assessments, (b)
covenants, conditions and restrictions, rights of way, easements and
other matters of public record as of the date of recording of such
Mortgage, such exceptions appearing of record being acceptable to
mortgage lending institutions generally or specifically reflected in
the appraisal made in connection with the
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origination of the related Pledged Mortgage, and (c) 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
such Mortgage.
(5) Immediately prior to the pledge of the
Pledged Mortgages to the Trustee for the benefit of the Bondholders,
the Issuer had good title to, and was the sole owner of, each Pledged
Mortgage free and clear of any pledge, lien, encumbrance or security
interest and had full right and authority, subject to no interest or
participation of, or agreement with, any other party, to pledge and
assign the same pursuant to the Indenture.
(6) There is no delinquent tax or assessment lien
against any Mortgaged Property.
(7) There is no valid offset, defense or
counterclaim to any Mortgage Note or Mortgage, including the
obligation of the Mortgagor to pay the unpaid principal of or interest
on such Mortgage Note.
(8) There are no mechanics' liens or claims for
work, labor or material affecting any Mortgaged Property which are or
may be a lien prior to, or equal with, the lien of such Mortgage,
except those which are insured against by the title insurance policy
referred to in item (12) below.
(9) To the best of the _______'s knowledge, each
Mortgaged Property is free of material damage, and is in good repair.
(10) Each Pledged Mortgage at origination complied
in all material respects with applicable state and federal laws,
including, without limitation, usury, equal credit opportunity, real
estate settlement procedures, truth-in-lending and disclosure laws,
and consummation of the transactions contemplated hereby will not
involve the violation of any such laws.
(11) As of the Closing Date, no prior holder of
any Mortgage has modified the Mortgage in any material respect (except
that a Pledged Mortgage may have been modified
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by a written instrument which has been recorded or submitted for
recordation, if necessary, to protect the interests of the Bondholders
and which has been delivered to the Trustee); satisfied, cancelled or
subordinated such Mortgage in whole or in part; released the related
Mortgaged Property in whole or in part from the lien of such Mortgage;
or executed any instrument of release, cancellation, modification or
satisfaction with respect thereto.
(12) A lender's policy of title insurance together
with a condominium endorsement and an extended coverage endorsement,
if applicable, and a variable rate endorsement in an amount at least
equal to the Cut-off Date Stated Principal Balance of each such
Pledged Mortgage or a commitment (binder) to issue the same was
effective on the date of the origination of each Pledged Mortgage,
each such policy is valid and remains in full force and effect, and
each such policy was issued by a title insurer qualified to do
business in the jurisdiction where the Mortgaged Property is located
and acceptable to FNMA or FHLMC and is in a form acceptable to FNMA or
FHLMC, which policy insures the Master Servicer and successor owners
of indebtedness secured by the insured Mortgage, (a) as to the first
priority lien of the Mortgage subject to the exceptions set forth in
paragraph (4) above and (b) against loss by reason of the invalidity
or unenforceability of the lien resulting from the provisions of the
Mortgage Note and Mortgage with respect to adjustment in the Mortgage
Rate and Scheduled Payment; to the best of the Issuer's knowledge, no
claims have been made under such mortgage title insurance policy and
no prior holder of the related Mortgage, including the Master Servicer
or the Issuer, has done, by act or omission, anything which would
impair the coverage of such mortgage title insurance policy.
(13) Each Pledged Mortgage was originated by an
entity that satisfied at the time of origination the requirements of
Section 3(a)(41) of the Securities Exchange Act of 1934, as amended.
(14) To the best of _______'s knowledge, all of
the improvements which were included for the purpose of determining
the Appraised Value of the Mortgaged Property
S-III-3
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lie wholly within the boundaries and building restriction lines of
such property, and no improvements on adjoining properties encroach
upon the Mortgaged Property.
(15) To the best of _______'s knowledge, no
improvement located on or being part of the Mortgaged Property is in
violation of any applicable zoning law or regulation. To the best of
_______'s knowledge, all inspections, licenses and certificates
required to be made or issued with respect to all occupied portions of
the Mortgaged Property and, with respect to the use and occupancy of
the same, including but not limited to certificates of occupancy and
fire underwriting certificates, have been made or obtained from the
appropriate authorities, unless the lack thereof would not have a
material adverse effect on the value of such Mortgaged Property, and
the Mortgaged Property is lawfully occupied under applicable law.
(16) 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 and under
applicable law. To the best of _______'s knowledge, all parties to
the Mortgage Note and the Mortgage had legal capacity to execute the
Mortgage Note and the Mortgage and each Mortgage Note and Mortgage
have been duly and properly executed by such parties.
(17) The proceeds of the Pledged Mortgage have been
fully disbursed, there is no requirement for future advances
thereunder and any and all requirements as to completion of any
on-site or off-site improvements and as to disbursements of any escrow
funds therefor have been complied with. All costs, fees and expenses
incurred in making, or closing or recording the Pledged Mortgages were
paid.
(18) The related Mortgage contains customary and
enforceable provisions which render the rights and remedies of the
holder thereof adequate for the realization against the Mortgaged
Property of the benefits of the security, including, (i) in the case
of a Mortgage designated as a deed of trust, by trustee's sale, and
(ii) otherwise by judicial foreclosure.
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(19) With respect to each Mortgage constituting 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 such Mortgage, and no fees or expenses are or will become
payable by the Trust Estate to the trustee under the deed of trust,
except in connection with a trustee's sale after default by the
Mortgagor.
(20) Each Mortgage Note and each Mortgage is in
substantially one of the forms acceptable to FNMA or FHLMC, with such
riders as have been acceptable to FNMA or FHLMC, as the case may be.
(21) There exist no deficiencies with respect to
escrow deposits and payments, if such are required, for which
customary arrangements for repayment thereof have not been made, and
no escrow deposits or payments of other charges or payments due
_______ have been capitalized under the Mortgage or the related
Mortgage Note.
(22) The origination, underwriting and collection
practices used by the Master Servicer with respect to each Pledged
Mortgage have been in all respects legal, prudent and customary in the
mortgage lending and servicing business.
(23) There is no pledged account or other security
other than real estate securing the Mortgagor's obligations.
(24) No Pledged Mortgage has a shared appreciation
feature, or other contingent interest feature.
(25) Each Pledged Mortgage is assumable if the
proposed transferee submits certain information required to evaluate
the transferee's ability to repay the Pledged Mortgage and the holder
of the Mortgage Note reasonably determines that the security for the
Pledged Mortgage would not be impaired by the assumption.
(26) None of the Pledged Mortgages provides for a
prepayment penalty.
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(27) Except with respect to ____ Pledged Mortgages
representing approximately _____% of the Cut-off Date Pool Principal
Balance, each Pledged Mortgage which had a Loan-to-Value Ratio at
origination in excess of 80% is the subject of a Primary Insurance
Policy that insures that portion of the original principal balance of
the related Pledged Mortgage equal to the product of the original
principal balance thereof and a fraction, the numerator of which is
the excess of the original principal balance of the related Pledged
Mortgage over 75% of the lesser of the appraised value and selling
price of the related Mortgaged Property and the denominator of which
is the original principal balance of the related Pledged Mortgage,
plus accrued interest thereon and related foreclosure expenses. Each
such Primary Insurance Policy is issued by a Qualified Insurer
acceptable to each of the Rating Agencies. All provisions of any such
Primary Insurance Policy have been and are being complied with, any
such policy is in full force and effect, and all premiums due
thereunder have been paid. Any Mortgage subject to any such Primary
Insurance Policy obligates the Mortgagor thereunder to maintain such
insurance and to pay all premiums and charges in connection therewith.
The Mortgage Rate for each Pledged Mortgage is net of any such
insurance premium.
(28) At the Cut-off Date, the improvements upon each
Mortgaged Property are covered by a valid and existing hazard
insurance policy with a generally acceptable carrier that provides for
fire and extended coverage and coverage for such other hazards as are
customary in the area where the Mortgaged Property is located in an
amount which is at least equal to the lesser of (i) the maximum
insurable value of the improvements securing such Pledged Mortgage or
(ii) the greater of (a) the outstanding principal balance of the
Pledged Mortgage and (b) an amount such that the proceeds of such
policy shall be sufficient to prevent the Mortgagor and/or the
mortgagee from becoming a co-insurer. If the Mortgaged Property is a
condominium unit, it is included under the coverage afforded by a
blanket policy for the condominium unit. All such individual
insurance policies and all flood policies referred to in item (29)
below contain a standard mortgagee clause naming ___________ or the
original mortgagee, and its successors in interest, as
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mortgagee, and _________ has received no notice that any premiums due
and payable thereon have not been paid; the Mortgage obligates the
Mortgagor thereunder to maintain all such insurance including flood
insurance at the Mortgagor's cost and expense, and upon the
Mortgagor's failure to do so, authorizes the holder of the Mortgage to
obtain and maintain such insurance at the Mortgagor's cost and expense
and to seek reimbursement therefor from the Mortgagor.
(29) If the Mortgaged Property is in an area
identified in the Federal Register by the Federal Emergency Management
Agency as having special flood hazards, a flood insurance policy in a
form meeting the requirements of the current guidelines of the Flood
Insurance Administration is in effect with respect to such Mortgaged
Property with a generally acceptable carrier in an amount representing
coverage not less than the least of (A) the original outstanding
principal balance of the Pledged Mortgage, (B) the minimum amount
required to compensate for damage or loss on a replacement cost basis,
or (C) the maximum amount of insurance that is available under the
Flood Disaster Protection Act of 1973, as amended.
(30) To the best of _______'s knowledge, there is no
proceeding pending or threatened for the total or partial condemnation
of any Mortgaged Property, nor is such a proceeding currently
occurring.
(31) There is no material monetary default existing
under any Mortgage or the related Mortgage Note and, to the best of
the Issuer's knowledge, there is no material 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 under the Mortgage or the related Mortgage Note; and
_______ has not waived any default, breach, violation or event of
acceleration.
(32) Other than with respect to Mortgaged Property
underlying a Cooperative Loan, each Mortgaged Property is improved by
a one- to four-family residential dwelling including condominium units
and dwelling units in PUDs, which, to the best of _______'s knowledge,
does not
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include mobile homes and does not constitute other than real property
under state law.
(33) Each Pledged Mortgage is being serviced by the
Master Servicer or a Servicer as provided in Section 3(b) of the
Master Servicing Agreement.
(34) There is no obligation on the part of the Issuer or
any other party under the terms of the Mortgage or related Mortgage
Note to make payments in addition to those made by the Mortgagor.
(35) Any future advances made prior to the Cut-off Date
have been consolidated with the outstanding principal amount secured
by the Mortgage, and the secured principal amount, as consolidated,
bears a single interest rate and single repayment term reflected on
the Schedule of Pledged Mortgages. The consolidated principal amount
does not exceed the original principal amount of the Pledged Mortgage.
The Mortgage Note does not permit or obligate the Master Servicer to
make future advances to the Mortgagor at the option of the Mortgagor.
(36) There are no defaults in complying with the terms
of the Mortgage, and all taxes, governmental assessments, insurance
premiums, water, sewer and municipal charges, leasehold payments or
ground rents which previously became due and owing have been paid, or
an escrow of funds has been established in an amount sufficient to pay
for every such item which remains unpaid and which has been assessed,
but is not yet due and payable. Except for (A) payments in the nature
of escrow payments, and (B) interest accruing from the date of the
Mortgage Note or date of disbursement of the Mortgage proceeds,
whichever is later, to the day which precedes by one month the Due
Date of the first installment of principal and interest, including
without limitation taxes and insurance payments, _______ has not
advanced funds, or induced, solicited or knowingly received any
advance of funds by a party other than the Mortgagor, directly or
indirectly, for the payment of any amount required by the Mortgage.
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[ (37) Each Pledged Mortgage was underwritten in all
material respects in accordance with the underwriting guidelines set
forth in the Prospectus Supplement. ]
(38) Prior to the approval of the Pledged Mortgage
application, an appraisal of the related Mortgaged Property was
obtained from a qualified appraiser, 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 Pledged Mortgage;
such appraisal is in a form acceptable to FNMA or FHLMC.
(39) None of the Pledged Mortgages is a graduated
payment mortgage loan or a growing equity mortgage loan or subject to
a buy down or similar arrangement.
(40) Any leasehold estate securing a Pledged
Mortgage has a term of not less than five years in excess of the term
of the related Pledged Mortgage.
(41) All of the Pledged Mortgages have a payment
date on or before the Due Date in the month of the first Payment Date.
(42) [None] of the Pledged Mortgages are Convertible
Pledged Mortgages.
[(43) As of the Closing Date, the Index for the
adjustment of the Mortgage Rate of each Pledged Mortgage is
__________________________________.]
(44) The Pledged Mortgages, individually and in the
aggregate, conform in all material respects to the descriptions
thereof in the Prospectus Supplement.
(45) [None] of the Pledged Mortgages are Cooperative
Loans.
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SCHEDULE IV
SEQUOIA Mortgage Trust 199__-__
Collateralized Mortgage Bonds
Representations and Warranties of the Issuer.
Sequoia Mortgage Trust 199__-__ (the "Issuer") hereby makes the
representations and warranties set forth in this Schedule IV to the Master
Servicer and the Trustee, as of the Closing Date. Capitalized terms used but
not otherwise defined in this Schedule IV shall have the meanings ascribed
thereto in the Master Servicing Agreement (the "Master Servicing Agreement")
relating to the above-referenced Series, among _________________________, as
Master Servicer, Sequoia Mortgage Trust 199__-__, as Issuer, and
_________________________________, as Trustee.
(1) The Issuer is a statutory business trust duly
organized, validly existing and in good standing under the laws of the
State of Delaware, and possesses all requisite authority, power,
licenses, permits and franchises to conduct any and all business
contemplated by the Master Servicing Agreement and to comply with its
obligations under the terms of this Agreement, the performance of
which have been duly authorized by all necessary action.
(2) Neither the execution and delivery of the Master
Servicing Agreement by the Issuer, nor the performance and compliance
with the terms thereof by the Issuer will (A) result in a material
breach of any term or provision of the instruments creating the Issuer
or governing its operations, or (B) materially conflict with, result in
a material breach, violation or acceleration of, or result in a
material default under, the terms of any other material agreement or
instrument to which the Issuer is a party or by which it may be bound,
or (C) constitute a material violation of any statute, order or
regulation applicable to the Issuer of any court, regulatory body,
administrative agency or governmental body having jurisdiction over the
Issuer; and the Issuer is not in breach or violation of any material
indenture or other material agreement or instrument, or in violation of
any statute, order or regulation of
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any court, regulatory body, administrative agency or governmental body
having jurisdiction over it which breach or violation may materially
impair the Issuer's ability to perform or meet any of its obligations
under the Master Servicing Agreement.
(3) This Agreement, and all documents and instruments
contemplated hereby, which are executed and delivered by the Issuer,
will, assuming due authorization, execution by and delivery to the
other parties hereto and thereto, constitute valid, legal and binding
obligations of the Issuer, enforceable in accordance with their
respective terms, except that (a) the enforceability thereof may be
limited by bankruptcy, insolvency, moratorium, receivership and other
similar laws relating to creditors' rights generally and (b) the
remedy of specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may be
brought.
(4) No litigation is pending or, to the best of the
Issuer's knowledge, threatened against the Issuer that would
materially and adversely affect the execution, delivery or
enforceability of the Master Servicing Agreement or the ability of the
Issuer to perform its obligations thereunder.
(5) Immediately prior to the transfer and assignment of
the Pledged Mortgages to the Trustee, the Issuer had good title to,
and was the sole owner of, each Pledged Mortgage free and clear of any
liens, charges or encumbrances or any ownership or participation
interests in favor of any other Person.
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EXHIBIT A
FORM OF INITIAL CERTIFICATION OF TRUSTEE
[date]
[Master Servicer]
[Issuer]
- -------------------------------
- -------------------------------
Re: Master Servicing Agreement among Sequoia Mortgage
Trust 199__-__, as Issuer, ______________, as Master
Servicer, and ____________________, as Trustee,
Collateralized Mortgage Bonds
Gentlemen:
In accordance with Section 2(b) of the above-captioned Master
Servicing Agreement (the "Master Servicing Agreement"), the undersigned, as
Trustee, hereby certifies that, as to each Pledged Mortgage listed in the
Schedule of Pledged Mortgages (other than any Pledged Mortgage listed in the
attached schedule), it has received:
(i) the original Mortgage Note, endorsed as provided in the following
form: "Pay to the order of ________, without recourse"; and
(ii) a duly executed assignment of the Mortgage (which may be
included in a blanket assignment or assignments).
Based on its review and examination and only as to the foregoing
documents, such documents appear regular on their face and related to such
Pledged Mortgage.
The Trustee has made no independent examination of any documents
contained in each Trustee Mortgage File beyond the review specifically required
in the Master Servicing Agreement.
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The Trustee makes no representations as to: (i) the validity, legality,
sufficiency, enforceability or genuineness of any of the documents contained in
each Trustee Mortgage File of any of the Pledged Mortgages identified on the
Schedule of Pledged Mortgages, (ii) the collectability, insurability,
effectiveness or suitability of any such Pledged Mortgage or (iii) the
correctness of any information set forth in the Schedule of Pledged Mortgages,
other than the information specified in items (i) through (iv) and (vi)
thereof.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the Master Servicing Agreement.
--------------------------------------
as Trustee
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
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EXHIBIT B
FORM OF FINAL CERTIFICATION OF TRUSTEE
[date]
[Master Servicer]
[Issuer]
- -------------------------------
- -------------------------------
Re: Master Servicing Agreement among Sequoia Mortgage
Trust 199__-__, as Issuer, ___________________ _, as
Master Servicer, and ________________________, as
Trustee, Collateralized Mortgage Bonds,
Gentlemen:
In accordance with Section 2(b) of the above-captioned Master
Servicing Agreement (the "Master Servicing Agreement"), the undersigned, as
Trustee, hereby certifies that as to each Pledged Mortgage listed in the
Schedule of Pledged Mortgages (other than any Pledged Mortgage paid in full or
listed on the attached Document Exception Report) it has received:
(i) The original Mortgage Note, endorsed in the form provided in
Section 2(a) of the Master Servicing Agreement, with all intervening
endorsements showing a complete chain of endorsement from the originator to the
Issuer.
(ii) The original recorded Mortgage.
(iii) A duly executed assignment of the Mortgage in the form provided in
Section 2(a) of the Master Servicing Agreement, or, if the Master Servicer has
certified or the Trustee otherwise knows that the related Mortgage has not been
returned from the applicable recording office, a copy of the assignment of the
Mortgage (excluding information to be provided by the recording office).
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(iv) The original or duplicate original recorded assignment or assignments
of the Mortgage showing a complete chain of assignment from the originator to
the Issuer.
(v) The original or duplicate original lender's title policy and all
riders thereto or, any one of an original title binder, an original preliminary
title report or an original title commitment, or a copy thereof certified by
the title company.
Based on its review and examination and only as to the foregoing
documents, (a) such documents appear regular on their face and related to such
Pledged Mortgage, and (b) the information set forth in items (i), (ii), (iii),
(iv), (vi) and (xi) of the definition of the "Schedule of Pledged Mortgages" in
Section 1.01 of the Master Servicing Agreement accurately reflects information
set forth in the Trustee Mortgage File.
The Trustee has made no independent examination of any documents
contained in each Trustee Mortgage File beyond the review specifically required
in the Master Servicing Agreement. The Trustee makes no representations as to:
(i) the validity, legality, sufficiency, enforceability or genuineness of any
of the documents contained in each Trustee Mortgage File of any of the Pledged
Mortgages identified on the Schedule of Pledged Mortgages, or (ii) the
collectability, insurability, effectiveness or suitability of any such Pledged
Mortgage. Notwithstanding anything herein to the contrary, the Trustee has
made no determination and makes no representations as to whether (i) any
endorsement is sufficient to transfer all right, title and interest of the
party so endorsing, as noteholder or assignee thereof, in and to that Mortgage
Note or (ii) any assignment is in recordable form or sufficient to effect the
assignment of and transfer to the assignee thereof, under the Mortgage to which
the assignment relates.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the Master Servicing Agreement.
-------------------------------------
as Trustee
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
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EXHIBIT C
REQUEST FOR RELEASE
(for Trustee)
Sequoia Mortgage Trust 199__-__
Collateralized Mortgage Bonds
Loan Information
Name of Mortgagor:
----------------------------------------
Servicer
Loan No.:
----------------------------------------
Trustee
Name:
----------------------------------------
Address:
----------------------------------------
----------------------------------------
Trustee
Mortgage File No.:
----------------------------------------
The undersigned Master Servicer hereby acknowledges that it has
received from ___________________________, as Trustee for the Holders of Bonds
of the above-referenced Series, the documents referred to below (the
"Documents"). All capitalized terms not otherwise defined in this Request for
Release shall have the meanings given them in the Master Servicing Agreement
(the "Master Servicing Agreement") relating to the above-referenced Series
among the Trustee, _______ ________________________________________, as Master
Servicer, and Sequoia Mortgage Trust 1997-1, as Issuer.
( ) Mortgage Note dated ____________, 19__, in the original principal sum
of $__________, made by _________________ . payable to, or endorsed to
the order of, the Trustee.
( ) Mortgage recorded on _________________ as instrument no.
_____________________ in the County Recorder's Office of the
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County of ___________________, State of _______________ in
book/reel/docket ________________ of official records at page/image
________________.
( ) Deed of Trust recorded on __________________ as instrument no.
_________________ in the County Recorder's Office of the County of
_______________, State of _______________ in book/reel/docket
_______________ of official records at page/image _______________.
( ) Assignment of Mortgage or Deed of Trust to the Trustee, recorded on
_________________ as instrument no. ________ ___ in the County
Recorder's Office of the County of __________, State of
________________ in book/reel/docket _ _____________ of official
records at page/image _______________.
( ) Other documents, including any amendments, assignments or other
assumptions of the Mortgage Note or Mortgage.
( ) ______________________________________________
( ) ______________________________________________
( ) ______________________________________________
( ) ______________________________________________
The undersigned Master Servicer hereby acknowledges and agrees as
follows:
(1) The Master Servicer shall hold and retain possession
of the Documents in trust for the benefit of the Trustee, solely for
the purposes provided in the Agreement.
(2) The Master Servicer shall not cause or knowingly
permit the Documents to become subject to, or encumbered by, any
claim, liens, security interest, charges, writs of attachment or other
impositions nor shall the Master Servicer assert or seek to assert any
claims or rights of setoff to or against the Documents or any proceeds
thereof.
(3) The Master Servicer shall return each and every
Document previously requested from the Trustee Mortgage File to the
Trustee when the need therefor no longer exists, unless the Pledged
Mortgage relating to the Documents has been liquidated and the
proceeds thereof have been remitted to the Bond Account and except as
expressly provided in the Master Servicing Agreement.
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(4) The Documents and any proceeds thereof, including any
proceeds of proceeds, coming into the possession or control of the
Master Servicer shall at all times be earmarked for the account of the
Trustee, and the Master Servicer shall keep the Documents and any
proceeds separate and distinct from all other property in the Master
Servicer's possession, custody or control.
----------------------------------------
By
--------------------------------------
Its
-------------------------------------
Date: , 19
------------------ --
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EXHIBIT D
REQUEST FOR RELEASE OF DOCUMENTS
To:
Re: The Master Servicing Agreement dated ________ __, 19__ among
____________________ ("_____"), as Master Servicer, Sequoia Mortgage Trust
199__-__, as Issuer, and ____________________, as Trustee
Ladies and Gentlemen:
In connection with the administration of the Pledged Mortgages held by you as
Trustee for Sequoia Mortgage Trust 199__-_ , as Issuer, we request the release
of the Trustee Mortgage File for the Pledged Mortgage(s) described below, for
the reason indicated.
FT Account#: Pool #:
Mortgagor's Name, Address and Zip Code:
Pledged Mortgage Number:
Reason for Requesting Documents (check one)
_______1. Pledged Mortgage paid in full (__________ hereby certifies
that all amounts have been received.)
_______2. Pledged Mortgage Liquidated (_____ hereby certifies that all
proceeds of foreclosure, insurance, or other liquidation have
been finally received.)
_______3. Pledged Mortgage in Foreclosure.
_______4. Other (explain): ____________________________________
If item 1 or 2 above is checked, and if all or part of the Trustee Mortgage
File was previously released to us, please release to us our previous receipt
on file with you, as well as an additional documents in your possession
relating to the above-specified Pledged Mortgage. If item 3 or 4 is checked,
upon return of all of the above documents to you as Trustee, please acknowledge
your receipt by signing in the space indicated below, and returning this form.
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- --------------------------------- -------------------------
-------------------------
-------------------------
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
Date:
----------------------------
TRUSTEE CONSENT TO RELEASE AND
ACKNOWLEDGEMENT OF RECEIPT
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
Date:
----------------------------
D-2