EXHIBIT 4.5
================================================================================
WACHOVIA BANK, NATIONAL ASSOCIATION
as Servicer,
WACHOVIA ASSET SECURITIZATION ISSUANCE, LLC [_____] TRUST,
as Issuer,
WACHOVIA BANK, NATIONAL ASSOCIATION,
as Paying Agent
and
[_____],
as Indenture Trustee
_________________________
SERVICING AGREEMENT
Dated as of [_____]
_________________________
================================================================================
TABLE OF CONTENTS
Page
ARTICLE I Definitions...........................................................................1
Section 1.01 Definitions.......................................................................1
Section 1.02 Other Definitional Provisions.....................................................1
Section 1.03 Interest Calculations.............................................................2
ARTICLE II Representations and Warranties........................................................2
Section 2.01 Representations and Warranties Regarding the Servicer.............................2
Section 2.02 Representations and Warranties of the Issuer......................................4
Section 2.03 Enforcement of Representations and Warranties.....................................4
ARTICLE III Administration and Servicing of Mortgage Loans........................................5
Section 3.01 The Servicer......................................................................5
Section 3.02 Collection of Certain Mortgage Loan Payments......................................7
Section 3.03 Custodial Duties..................................................................9
Section 3.04 Withdrawals from the Custodial Account...........................................10
Section 3.05 Maintenance of Hazard Insurance; Property Protection Expenses....................12
Section 3.06 Modification Agreements..........................................................14
Section 3.07 Trust Estate; Related Documents..................................................14
Section 3.08 Realization upon Defaulted Mortgage Loans........................................15
Section 3.09 Management and Sale of REO Property..............................................16
Section 3.10 Issuer and Indenture Trustee to Cooperate........................................16
Section 3.11 Compensation; Payment of Certain Expenses........................................17
Section 3.12 Annual Statement as to Compliance................................................17
Section 3.13 Annual Servicing Report..........................................................18
Section 3.14 Access to Certain Documentation and Information Regarding the Mortgage
Loans............................................................................18
Section 3.15 Maintenance of Certain Servicing Insurance Policies..............................18
Section 3.16 Information Required by the Internal Revenue Service and Reports of
Foreclosures and Abandonments of Mortgaged Property..............................18
Section 3.17 Assignments; Recordings of Assignments...........................................19
Section 3.18 [Reserved].......................................................................19
-i-
TABLE OF CONTENTS
(Continued)
Page
Section 3.19 Funding Accounts.................................................................19
Section 3.20 [Reserved].......................................................................21
Section 3.21 P&I Advances.....................................................................21
Section 3.22 Transfer of Mortgage Loans.......................................................21
Section 3.23 Notice of Rating Change..........................................................23
Section 3.24 Calculation of LIBOR, Note Rate, Net WAC Rate and Maximum Auction Rate...........23
ARTICLE IV Servicing Certificate................................................................24
Section 4.01 Statements to Securityholders....................................................24
Section 4.02 Tax Returns and 1934 Act Reports.................................................26
ARTICLE V Note Payment Account.................................................................27
Section 5.01 Note Payment Account.............................................................27
ARTICLE VI The Servicer.........................................................................27
Section 6.01 Liability of the Servicer........................................................27
Section 6.02 Merger or Consolidation of, or Assumption of the Obligations of, the
Servicer.........................................................................27
Section 6.03 Limitation on Liability of the Servicer and Others...............................28
Section 6.04 Servicer Not to Resign...........................................................29
Section 6.05 Delegation of Duties.............................................................29
Section 6.06 Payment of Indenture Trustee's, the Paying Agent's and Owner Trustee's
Fees and Expenses; Indemnification...............................................29
ARTICLE VII Default..............................................................................31
Section 7.01 Servicing Default................................................................31
Section 7.02 Indenture Trustee to Act; Appointment of Successor...............................33
Section 7.03 Notification to Securityholders..................................................35
ARTICLE VIII Miscellaneous Provisions.............................................................35
Section 8.01 Amendment........................................................................35
Section 8.02 Exhibits.........................................................................35
Section 8.03 GOVERNING LAW....................................................................35
Section 8.04 Notices..........................................................................35
-ii-
TABLE OF CONTENTS
(Continued)
Page
Section 8.05 Severability of Provisions.......................................................36
Section 8.06 Protection of Confidential Information...........................................36
Section 8.07 Third-Party Beneficiaries........................................................36
Section 8.08 Counterparts.....................................................................36
Section 8.09 Effect of Headings and Table of Contents.........................................36
Section 8.10 Termination upon Purchase by the Servicer or Liquidation of All Mortgage
Loans; Partial Redemption........................................................36
Section 8.11 Certain Matters Affecting the Indenture Trustee and the Paying Agent.............37
Section 8.12 Owner Trustee, Paying Agent and Indenture Trustee Not Liable for Related
Documents........................................................................37
EXHIBITS
- --------
EXHIBIT A - MORTGAGE LOAN SCHEDULE...................................................................A-1
EXHIBIT B - COLLECTION POLICY........................................................................B-1
EXHIBIT C - LIMITED POWER OF ATTORNEY................................................................C-1
EXHIBIT D - FORM OF REQUEST FOR RELEASE..............................................................D-1
-iii-
This Servicing Agreement, dated as of [_____] (the "Agreement"), is among
Wachovia Bank, National Association, as servicer (the "Servicer"), the Wachovia
Asset Securitization Issuance, LLC [_____] Trust, as issuer (the "Issuer"),
Wachovia Bank, National Association, as Paying Agent (the "Paying Agent"), and
[_____], as indenture trustee (the "Indenture Trustee").
WITNESSETH:
-----------
WHEREAS, pursuant to the terms of the Purchase Agreement (as defined
herein), Wachovia Bank, National Association, as seller (in such capacity,
"Seller") and as servicer, will sell to Wachovia Asset Securitization Issuance,
LLC, as purchaser (in such capacity, the "Purchaser"), the Initial Mortgage
Loans on the Closing Date, and may sell Subsequent Mortgage Loans on one or more
Subsequent Transfer Dates, together with the Related Documents on the Closing
Date and any Subsequent Transfer Date, and thereafter all Additional Balances
created on or after the Cut-Off Date and any such Subsequent Transfer Date;
WHEREAS, Wachovia Asset Securitization Issuance, LLC, as depositor (in such
capacity, the "Depositor"), will sell the Initial Mortgage Loans and assign all
of its rights under the Purchase Agreement to the Issuer, together with the
Related Documents on the Closing Date, and thereafter Subsequent Mortgage Loans
and Additional Balances relating to the Mortgage Loans created on or after the
Cut-Off Date;
WHEREAS, pursuant to the terms of the Trust Agreement, the Issuer will
issue the Certificates;
WHEREAS, pursuant to the terms of the Indenture, the Issuer will issue the
Notes; and
WHEREAS, pursuant to the terms of this Agreement, the Servicer will service
the Mortgage Loans directly or through one or more Subservicers.
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
the parties hereto agree as follows:
ARTICLE I
Definitions
Section 1.01 Definitions. For all purposes of this Agreement, except as
otherwise expressly provided herein or unless the context otherwise requires,
capitalized terms not otherwise defined herein shall have the meanings assigned
to such terms in the Definitions contained in Appendix A to the indenture dated
as of [_____] (the "Indenture"), among the Issuer, the Paying Agent and the
Indenture Trustee, which is incorporated by reference herein. All other
capitalized terms used herein shall have the meanings specified herein.
Section 1.02 Other Definitional Provisions.
(a) All terms defined in this Agreement shall have the defined meanings
when used in any certificate or other document made or delivered pursuant hereto
unless otherwise defined therein.
1
(b) As used in this Agreement and in any certificate or other document made
or delivered pursuant hereto or thereto, accounting terms not defined in this
Agreement or in any such certificate or other document, and accounting terms
partly defined in this Agreement or in any such certificate or other document,
to the extent not defined, shall have the respective meanings given to them
under generally accepted accounting principles. To the extent that the
definitions of accounting terms in this Agreement or in any such certificate or
other document are inconsistent with the meanings of such terms under generally
accepted accounting principles, the definitions contained in this Agreement or
in any such certificate or other document shall control.
(c) The words "hereof," "herein," "hereunder" and words of similar import
when used in this Agreement shall refer to this Agreement as a whole and not to
any particular provision of this Agreement; Section and Exhibit references
contained in this Agreement are references to Sections and Exhibits in or to
this Agreement unless otherwise specified; the term "including" shall mean
"including without limitation"; "or" shall include "and/or"; and the term
"proceeds" shall have the meaning ascribed thereto in the UCC.
(d) The definitions contained in this Agreement are applicable to the
singular as well as the plural forms of such terms and to the masculine as well
as the feminine and neuter genders of such terms.
(e) Any agreement, instrument or statute defined or referred to herein or
in any instrument or certificate delivered in connection herewith means such
agreement, instrument or statute as from time to time amended, modified or
supplemented and includes (in the case of agreements or instruments) references
to all attachments thereto and instruments incorporated therein; references to a
Person are also to its permitted successors and assigns.
Section 1.03 Interest Calculations. All calculations of interest hereunder
that are made in respect of the Principal Balance of a Mortgage Loan shall be
made on a daily basis using a 365-day year. All calculations of interest on the
Notes shall be made on the basis of the actual number of days in an Interest
Period and a year assumed to consist of 360-days. The calculation of the
Servicing Fee shall be made on the basis of a 360-day year consisting of twelve
30-day months. All dollar amounts calculated hereunder shall be rounded to the
nearest penny with one-half of one penny being rounded up.
ARTICLE II
Representations and Warranties
Section 2.01 Representations and Warranties Regarding the Servicer. The
Servicer represents and warrants to the Issuer, the Enhancer and for the benefit
of the Indenture Trustee, as pledgee of the Mortgage Loans, as of the Closing
Date:
(a) The Servicer is a national banking association duly organized and
validly existing under the laws of the United States of America and is or will
be in compliance with the laws of each state in which any Mortgaged Property is
located to the extent necessary to ensure the enforceability of each Mortgage
Loan;
2
(b) The Servicer has the power and authority to make, execute, deliver and
perform its obligations under this Agreement and all of the transactions
contemplated under this Agreement, has taken all necessary corporate action to
authorize the execution, delivery and performance of this Agreement, and has
duly executed and delivered this Agreement;
(c) The Servicer is not required to obtain the consent of any other Person
or any consents, licenses, approvals or authorizations from, or registrations or
declarations with, any governmental authority, bureau or agency in connection
with the execution, delivery, performance, validity or enforceability of this
Agreement, except for such consents, licenses, approvals or authorizations, or
registrations or declarations, as shall have been obtained or filed, as the case
may be;
(d) The execution and delivery of this Agreement by the Servicer and the
performance and compliance with the terms of this Agreement by the Servicer will
not violate the Articles of Association or Bylaws of the Servicer, or constitute
a material default (or an event which, with notice or lapse of time, or both,
would constitute a material default) under, or result in the material breach of,
any material contract, agreement or other instrument to which the Servicer is a
party or which may be applicable to the Servicer or any of its respective
assets;
(e) No litigation is currently pending, or to the knowledge of the Servicer
threatened, against the Servicer, that in the opinion of the Servicer has a
reasonable likelihood of resulting in a material adverse effect on the
transactions contemplated by this Agreement;
(f) This Agreement constitutes a legal, valid and binding obligation of the
Servicer, enforceable against the Servicer in accordance with its terms, except
as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other laws affecting the enforcement of
creditors' rights in general, as they may be applied in the context of the
insolvency of a national banking association, and by general equity principles
(regardless of whether such enforcement is considered in a proceeding in equity
or at law), and by public policy considerations underlying the securities laws,
to the extent that such public policy considerations limit the enforceability of
the provisions of this Agreement which purport to provide indemnification from
liabilities under applicable securities laws; and
(g) The Servicer is not in default with respect to any order or decree of
any court or any order, regulation or demand of any federal, state, municipal or
governmental agency, which default might have consequences that would materially
and adversely affect the condition (financial or otherwise) or operations of the
Servicer or its respective properties or might have consequences that would
materially adversely affect the respective performance of the Servicer
hereunder.
The foregoing representations and warranties shall survive any termination
of the Servicer hereunder.
Section 2.02 Representations and Warranties of the Issuer. The Issuer
hereby represents and warrants to the Servicer and for the benefit of the
Indenture Trustee, as pledgee of the Mortgage Loans, as of the Closing Date:
3
(a) the Issuer is a statutory trust duly formed and in good standing under
the laws of the State of Delaware and has full power, authority and legal right
to execute and deliver this Agreement and to perform its obligations under this
Agreement, and has taken all necessary action to authorize the execution,
delivery and performance by it of this Agreement; and
(b) the execution and delivery by the Issuer of this Agreement and the
performance by the Issuer of its obligations under this Agreement will not
violate any provision of any law or regulation governing the Issuer or any
order, writ, judgment or decree of any court, arbitrator or governmental
authority or agency applicable to the Issuer or any of its assets. Such
execution, delivery, authentication and performance will not require the
authorization, consent or approval of, the giving of notice to, the filing or
registration with, or the taking of any other action with respect to, any
governmental authority or agency regulating the activities of limited liability
companies. Such execution, delivery, authentication and performance will not
conflict with, or result in a breach or violation of, any mortgage, deed of
trust, lease or other agreement or instrument to which the Issuer is bound.
Section 2.03 Enforcement of Representations and Warranties. The Servicer,
on behalf of and subject to the direction of the Indenture Trustee, as pledgee
of the Mortgage Loans, or the Issuer, shall enforce the representations and
warranties of the Seller pursuant to the Purchase Agreement. Upon the discovery
by the Seller, the Depositor, the Servicer, the Indenture Trustee, the Enhancer
or the Issuer of a breach of any of the representations and warranties made by
the Seller in the Purchase Agreement, in respect of any Mortgage Loan which
materially and adversely affects the interests of the Securityholders or the
Enhancer, the party discovering such breach shall give prompt written notice to
the other parties. The Servicer shall promptly notify the Seller of such breach
and request that, pursuant to the terms of the Purchase Agreement, the Seller
either (i) cure such breach in all material respects within 90 days from the
date the Seller was notified of such breach or (ii) purchase such Mortgage Loan
from the Issuer at the price and in the manner set forth in Section 3.1(d) of
the Purchase Agreement; provided, however, that the Seller shall, subject to the
conditions set forth in the Purchase Agreement, have the option to substitute an
Eligible Substitute Loan or Loans for such Mortgage Loan. In the event that the
Seller elects to substitute one or more Eligible Substitute Loans pursuant to
Section 3.1(d) of the Purchase Agreement, the Seller shall deliver to the
Servicer, in accordance with the Purchase Agreement, with respect to such
Eligible Substitute Loans, the original Loan Agreement, the Mortgage, and such
other documents and agreements as are required by the Purchase Agreement.
Payments due with respect to Eligible Substitute Loans in the month of
substitution shall not be transferred to the Issuer and will be retained by the
Servicer and remitted by the Servicer to the Seller on the next succeeding
Payment Date except to the extent that a payment less than the applicable
Minimum Monthly Payment has been received by the Issuer for such month in
respect of the Mortgage Loan to be removed. The Servicer shall amend or cause to
be amended the Mortgage Loan Schedule to reflect the removal of such Mortgage
Loan and the substitution of the Eligible Substitute Loans and the Servicer
shall promptly deliver the amended Mortgage Loan Schedule to the Owner Trustee
and Indenture Trustee.
It is understood and agreed that the obligation of the Seller to cure such
breach or purchase or substitute for such Mortgage Loan as to which such a
breach has occurred and is continuing shall constitute the sole remedy
respecting such breach available to the Issuer and the Indenture Trustee, as
pledgee of the Mortgage Loans, against the Seller. In connection with the
4
purchase of or substitution for any such Mortgage Loan by the Seller, the Issuer
shall assign to the Seller all of its right, title and interest in respect of
the Purchase Agreement applicable to such Mortgage Loan.
ARTICLE III
Administration and Servicing of Mortgage Loans
Section 3.01 The Servicer.
(a) The Issuer, by execution and delivery of this Agreement, does hereby
appoint the Servicer for, and subject to the terms of this Agreement, the
Servicer assumes responsibility for, the servicing of the Mortgage Loans. Each
original Mortgage File and any Related Documents delivered to the Servicer by
the Seller pursuant to the provisions of this Agreement and any Subsequent
Transfer Agreement shall be held in trust by the Servicer for the benefit of the
Trust in accordance with the terms of this Agreement. The Servicer's possession
of any portion of any original Mortgage File, any Related Documents or copies
thereof shall be maintained in accordance with the provisions of this Agreement
to facilitate the servicing of the related Mortgage Loans pursuant to this
Agreement.
(b) The Servicer shall service and administer the Mortgage Loans in a
manner generally consistent with the terms of this Agreement and the collection
policy set forth on Exhibit B (the "Collection Policy") and in a manner that
shall be normal and usual in its mortgage servicing activities. Subject to the
Collection Policy and the terms of this Agreement (including without limitation
Sections 3.08 and 3.09), the Servicer shall have full power and authority to do
any and all things in connection with such servicing and administration which it
may deem necessary or desirable, it being understood, however, that the Servicer
shall at all times remain responsible to the Issuer, the Paying Agent and the
Indenture Trustee for the performance of its duties and obligations hereunder.
The Servicer will at all times apply the same standards and follow the same
procedures with respect to the decision to commence litigation, and in
prosecuting and litigating with respect to the Mortgage Loans as it applies and
follows with respect to mortgage loans like the Mortgage Loans generally.
(c) The Servicer shall enforce the respective rights and interests of the
Issuer and the Indenture Trustee in and under each Mortgage Loan, including the
Mortgaged Property and any other related security. The Servicer is hereby
authorized and empowered, in performing its duties hereunder, subject to the
limitations set forth herein, to execute and deliver, on behalf of itself, the
Issuer, the Indenture Trustee 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 Mortgage Loans and the
Mortgaged Properties. The Issuer and the Indenture Trustee, as applicable, shall
execute any powers of attorney and other documents furnished to them by the
Servicer and necessary or appropriate to enable the Servicer to carry out its
servicing and administrative duties hereunder. In addition, the Servicer may, at
its own discretion, obtain credit information in the form of a "credit score"
from a credit repository. On the Closing Date,
5
the Indenture Trustee shall deliver to the Servicer a limited power of attorney
substantially in the form of Exhibit C hereto.
No costs incurred by the Servicer in respect of Servicing Advances shall,
for the purposes of distributions to the Noteholders, be added to the amount
owing under the related Mortgage Loan.
Notwithstanding anything to the contrary contained herein, the Servicer, in
servicing and administering the Mortgage Loans, shall employ or cause to be
employed procedures (including collection, foreclosure and management procedures
with respect to REO Property) and exercise the same care that it customarily
employs and exercises in servicing and administering mortgage loans for its own
account, in accordance with accepted mortgage servicing practices of prudent
lending institutions servicing mortgage loans similar to the Mortgage Loans and
giving due consideration to the Noteholders' and the Trust's reliance on the
Servicer.
If the Mortgage did not have a Lien senior to the related Mortgage Loan on
the related Mortgaged Property as of the Cut-Off Date or related Subsequent
Cut-Off Date, as applicable, then the Servicer, in such capacity, may not
consent to the placing of a Lien senior to that of the Mortgage on the related
Mortgaged Property. If the Mortgage had a Lien senior to the related Mortgage
Loan on the related Mortgaged Property as of the Cut-Off Date or related
Subsequent Cut-Off Date, as applicable, then the Servicer, in such capacity, may
consent to the refinancing of such prior senior Lien, provided that (i) the
resulting CLTV of such Mortgage Loan is no higher than the greater of the CLTV
prior to such refinancing or 100%; (ii) the interest rate for the loan
evidencing the refinanced senior Lien is no higher than the interest rate on the
loan evidencing the existing senior Lien immediately prior to the date of such
refinancing (meaning, in the case of an adjustable rate loan, a substantially
similar index and a gross margin no higher than that of the existing senior
Lien); and (iii) the loan evidencing the refinanced senior Lien is not subject
to negative amortization.
In connection with servicing the Mortgage Loans, the Servicer may take
reasonable actions to encourage or effect the termination of Loan Agreements
that have become dormant.
The relationship of the Servicer (and of any successor to the Servicer as
servicer under this Agreement) to the Issuer, the Paying Agent and the Indenture
Trustee under this Agreement is intended by the parties to be that of an
independent contractor and not that of a joint venturer, partner or agent.
(d) The Servicer may enter into Subservicing Agreements with Subservicers
for the servicing and administration of certain of the Mortgage Loans, provided
that notwithstanding such appointment, the Servicer shall remain liable for the
performance of all servicing duties delegated by it. The Servicer shall provide
written notice to the Indenture Trustee, the Paying Agent and the Enhancer upon
entering into a Subservicing Agreement. References in this Agreement to actions
taken or to be taken by the Servicer in servicing the Mortgage Loans include
actions taken or to be taken by a Subservicer on behalf of the Servicer and any
amount actually received by such Subservicer in respect of a Mortgage Loan shall
be deemed to have been received by the Servicer whether or not actually received
by the Servicer. Each Subservicing Agreement will be upon such terms and
conditions as are not inconsistent with this
6
Agreement and as the Servicer and the Subservicer have agreed. With the approval
of the Servicer, a Subservicer may delegate its servicing obligations to
third-party servicers, but such Subservicers will remain obligated under the
related Subservicing Agreements. The Servicer and the Subservicer may enter into
amendments to the related Subservicing Agreements; provided, however, that any
such amendments shall not cause the Mortgage Loans to be serviced in a manner
that would be materially inconsistent with the standards set forth in this
Agreement. The Servicer shall be entitled to terminate any Subservicing
Agreement in accordance with the terms and conditions thereof and without any
limitation by virtue of this Agreement; provided, however, that in the event of
termination of any Subservicing Agreement by the Servicer or the Subservicer,
the Servicer shall either act as servicer of the related Mortgage Loan or enter
into a Subservicing Agreement with a successor Subservicer which will be bound
by the terms of the related Subservicing Agreement. The Servicer shall be
entitled to enter into any agreement with a Subservicer for indemnification of
the Servicer and nothing contained in this Agreement shall be deemed to limit or
modify such indemnification.
In the event that the rights, duties and obligations of the Servicer are
terminated hereunder, any successor to the Servicer in its sole discretion may,
to the extent permitted by applicable law, terminate the existing Subservicing
Agreement with any Subservicer in accordance with the terms of the applicable
Subservicing Agreement or assume the terminated Servicer's rights and
obligations under such subservicing arrangements which termination or assumption
will not violate the terms of such arrangements.
As part of its servicing activities hereunder, the Servicer, for the
benefit of the Indenture Trustee, the Paying Agent, the Enhancer and the
Securityholders, shall use reasonable efforts to enforce the obligations of each
Subservicer under the related Subservicing Agreement, to the extent that the
non-performance of any such obligation would have a material adverse effect on a
Mortgage Loan. Such enforcement, including, without limitation, the legal
prosecution of claims, termination of Subservicing 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 Servicer, in its good faith business judgment,
would require were it the owner of the related Mortgage Loans. The 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 Mortgage Loan or (ii) from a specific recovery of costs,
expenses or attorneys fees against the party against whom such enforcement is
directed.
Section 3.02 Collection of Certain Mortgage Loan Payments.
(a) The Servicer shall make reasonable efforts to collect all payments
called for under the terms and provisions of the Mortgage Loans, and shall, to
the extent such procedures shall be consistent with this Agreement and generally
consistent with the Collection Policy, follow such collection procedures as
shall be normal and usual in its general mortgage servicing activities and
consistent with the procedures the Servicer employs in servicing all other
Mortgage Loans in the servicing portfolio with characteristics similar to those
of the Mortgage Loans. Consistent with the foregoing, and without limiting the
generality of the foregoing, the Servicer may in its discretion (i) waive any
late payment charge, penalty interest or other fees which may be collected in
the ordinary course of servicing a Mortgage Loan and (ii) arrange with a
Mortgagor
7
a schedule for the payment of principal and interest due and unpaid; provided,
however, that such arrangement is consistent with the Servicer's policies with
respect to home equity mortgage loans. The Servicer may also extend the Due Date
for payment due on a Mortgage Loan in accordance with the Collection Policy;
provided, however, that the Servicer shall first determine that any such waiver
or extension will not impair the coverage of any related insurance policy or
materially adversely affect the Lien of the related Mortgage or the interests of
the Securityholders or the Enhancer, and the Servicer shall not grant any such
waiver or extension that would have any such effect. Consistent with the terms
of this Agreement, the Servicer may also:
(i) waive, modify or vary any term of any Mortgage Loan (including
reduce the Credit Limit);
(ii) consent to the postponement of strict compliance with any such
term or in any manner grant indulgence to any Mortgagor;
(iii) arrange with a Mortgagor a schedule for the payment of principal
and interest due and unpaid;
(iv) forgive any portion of the amounts contractually owed under the
Mortgage Loan;
(v) capitalize past due amounts owed under the Mortgage Loan by adding
any amounts in arrearage to the existing principal balance of the Mortgage Loan
(a "Capitalization Workout") which will result in an increased monthly payment
amount, provided that: (A) the amount added to the existing principal balance of
the Mortgage Loan (the "Capitalized Amount") shall be no greater than five times
the Mortgagor's current Minimum Monthly Payment amount; and (B) the Servicer
shall not enter into a Capitalization Workout unless the CLTV of the Mortgage
Loan prior to the Capitalization Workout equals or exceeds 80% and the Mortgagor
has qualified for the Capitalization Workout under the Servicer's servicing
guidelines; or
(vi) reset the maturity date for the Mortgage Loan, but in no event
shall such reset date extend beyond the end of the Collection Period preceding
the Final Payment Date;
or any combination of the foregoing, if in the Servicer's determination such
waiver, modification, postponement or indulgence is not materially adverse to
the interests of the Securityholders or the Enhancer; provided, however, that
the Servicer may not, pursuant to this Section 3.02, modify or permit any
Subservicer to modify any Mortgage Loan (including without limitation any
modification that would change the Loan Rate, forgive the payment of any
principal or interest (unless in connection with the liquidation of the related
Mortgage Loan) or extend the final maturity date of such Mortgage Loan) unless
such Mortgage Loan is in default or, in the judgment of the Servicer, such
default is reasonably foreseeable or except as provided in Section 3.06. In
connection with any such waiver, modification, postponement or indulgence, the
Servicer shall use reasonable efforts to maximize the receipt of principal and
interest thereon. The general terms of any waiver, modification, forgiveness,
postponement or indulgence with respect to any of the Mortgage Loans will be
included in the Servicing Certificate, and such
8
Mortgage Loans will not be considered "delinquent" for the purposes of the Basic
Documents so long as the Mortgagor complies with the terms of such waiver,
modification, forgiveness, postponement or indulgence.
Section 3.03 Custodial Duties.
(a) The Servicer is hereby appointed as custodian of the documents in each
Mortgage File.
(b) The Servicer shall establish the Custodial Account, which shall be an
Eligible Account, titled "Wachovia Asset Securitization Issuance, LLC [_____]
Trust Custodial Account," in which the Servicer or the Issuer, as applicable,
shall deposit or cause to be deposited any amounts representing payments and
collections in respect of the Mortgage Loans received by it subsequent to the
applicable Cut-Off Date or Subsequent Cut-Off Date (other than in respect of the
payments referred to in the following paragraph), within one Business Day
following receipt thereof (or otherwise on or prior to the Closing Date),
including the following payments and collections received or made by it (without
duplication):
(i) all payments of principal of or interest on the Mortgage Loans
(other than amounts in respect of the Excluded Amount) received or advanced by
the Servicer, net of any portion of the interest thereof retained by any
Subservicer as subservicing fees;
(ii) Net Liquidation Proceeds, net of any related Foreclosure Profit
and all Subsequent Net Recovery Amounts;
(iii) all proceeds of any Mortgage Loans repurchased by the Seller
pursuant to the Purchase Agreement, including any indemnity payments paid by the
Seller pursuant to Section 3.1(d) of the Purchase Agreement, and all
Substitution Adjustment Amounts required to be deposited in connection with the
substitution of an Eligible Substitute Loan pursuant to the Purchase Agreement;
(iv) Insurance Proceeds, other than Net Liquidation Proceeds,
resulting from any insurance policy maintained on a Mortgaged Property;
(v) REO proceeds and Condemnation Proceeds; and
(vi) amounts required to be paid by the Servicer pursuant to Section
6.06;
provided, however, that with respect to each Collection Period, the Servicer
shall be permitted to retain from payments in respect of interest on the
Mortgage Loans, the Servicing Fee for such Collection Period. The foregoing
requirements respecting deposits to the Custodial Account are exclusive, it
being understood that, without limiting the generality of the foregoing, the
Servicer need not deposit in the Custodial Account amounts representing
Foreclosure Profits, fees (including annual fees) or late charge penalties,
payable by Mortgagors (such amounts to be retained as additional servicing
compensation in accordance with Section 3.10 hereof), or amounts received by the
Servicer for the accounts of Mortgagors for application towards the payment of
taxes, insurance premiums, assessments and similar items. In the event any
amount not required to be deposited in the Custodial Account is so deposited,
the Servicer may at any
9
time withdraw such amount from the Custodial Account, any provision herein to
the contrary notwithstanding, and pay such amount to the Person entitled to such
amount. The Servicer shall retain all Foreclosure Profits as additional
servicing compensation. Payments and collections allocable to an Excluded Amount
shall not be deposited into the Custodial Account, the Distribution Account or
the Note Payment Account, but shall be distributed by the Servicer to the Seller
pursuant to Section 3.04.
If the Servicer makes any P&I Advances pursuant to Section 3.21 the
Servicer shall be entitled to reimbursement itself by withdrawing from the
Custodial Account, as provided herein, any amounts so advanced. The Servicer may
cause the institution maintaining the Custodial Account to invest any funds in
the Custodial Account in Permitted Investments, which investments shall mature
not later than the Business Day preceding the next succeeding Payment Date, and
which investments shall not be sold or disposed of prior to maturity. In
addition, no such Permitted Investment shall be purchased at a price in excess
of par. Except as provided above, all income and gain realized from any such
investment shall inure to the benefit of the Servicer and shall be subject to
its withdrawal or order from time to time. The amount of any losses incurred in
respect of the principal amount of any such investments shall be deposited in
the Custodial Account by the Servicer out of its own funds immediately as
realized.
(c) The Servicer shall promptly report in writing to the Owner Trustee, the
Paying Agent and the Indenture Trustee any material failure on the Servicer's
part to hold the Mortgage Files and maintain its records and computer systems as
herein provided and promptly take appropriate action to remedy any such failure.
Following the occurrence of a Servicing Default as set forth in Section
7.01(a)(iii) or (iv), the Issuer or the Indenture Trustee shall immediately
terminate the rights of the Servicer to perform the duties as custodian with
respect to the Mortgage Files for the Mortgage Loans. Following the occurrence
of a Servicing Default as set forth in Section 7.01(a)(i) or (ii), the Issuer or
the Indenture Trustee shall, upon 60 days prior written notice, terminate the
rights of the Servicer to perform the duties as custodian with respect to the
Mortgage Files for the Mortgage Loans. Upon the termination of the Servicer's
rights to perform the duties as custodian with respect to any Mortgage Files,
the Servicer shall deliver each such Mortgage File to the Indenture Trustee or
its designee in accordance with the instructions of the Indenture Trustee.
(d) Upon taking possession of the Mortgage Files, the Servicer shall (i)
maintain possession of the Mortgage Files and (ii) exercise the same degree of
care with respect to the possession of the Mortgage Files as it would if they
were its own property. The Mortgage Files shall at all times be held by the
Servicer segregated from any similar documents. In performing its duties as
custodian, the Servicer shall act with reasonable care, using that degree of
skill and attention that other servicers exercise with respect to the loan files
relating to all comparable loans that they service. Mortgage Files shall be held
for the benefit of the Indenture Trustee and the Securityholders.
Section 3.04 Withdrawals from the Custodial Account. The Servicer shall,
from time to time as provided herein, make withdrawals from the Custodial
Account of amounts on deposit therein pursuant to Section 3.02 that are
attributable to the Mortgage Loans for the following purposes:
10
(a) on each Determination Date, the Servicer shall determine the pro rata
portion of the Interest Collections from the related Loan Group deposited into
the Custodial Account with respect to the related Collection Period that relate
to the Additional Balance Increase Amount and, prior to 1:00 p.m. (EST) on the
Business Day prior to the related Payment Date, the Servicer shall withdraw such
amounts from the Custodial Account and deposit such amounts into the
Distribution Account for distribution to the Certificateholders pursuant to
Section 5.01 of the Trust Agreement;
(b) on each Determination Date, the Servicer shall determine the aggregate
amounts to be withdrawn from the Custodial Account and applied pursuant to
Section 3.05(a) of the Indenture and, prior to 1:00 p.m. (EST) on the Business
Day prior to the related Payment Date, the Servicer shall withdraw such amounts
from the Custodial Account and deposit such amounts into the Note Payment
Account, the applicable Funding Account or the Distribution Account, in each
case in accordance with Section 3.05 of the Indenture and in the order of
priority set forth in Section 3.05(a) of the Indenture for such Payment Date and
in accordance with the Servicing Certificate;
(c) to pay to the Seller any monthly payments received from the Mortgagors,
the amount of such payment that represents interest accrued on the related
Mortgage Loan for any period prior to the Cut-Off Date or Subsequent Cut-off
Date, as applicable;
(d) during the Group I Revolving Period and the Managed Amortization Period
for the Class A-I-1 Notes and the Group II Revolving Period and the Managed
Amortization Period for the Class A-II Notes, from Principal Collections on the
Mortgage Loans in the related Loan Group, and, on or after the Payment Date
occurring in [_____], if Principal Collections are not sufficient from Group
Excess Spread from the related Loan Group, to pay to the Seller, as designee of
the Depositor, the amount of any Additional Balances, as and when created during
the related Collection Period, but only to the extent that amounts on deposit in
the related Funding Account are not sufficient for such purpose; provided that
Excess Spread shall not be so applied if the Enhancer has not been reimbursed
for all draws made under the Policy, with interest; and provided further that
Excess Spread (calculated with respect to the following Payment Date) in the
Custodial Account will not be applied to purchase Additional Balances to the
extent that after such purchase the Overcollateralization Amount would exceed
the Overcollateralization Target Amount, or the Total Overcollateralization
Amount would exceed the Total Overcollateralization Target Amount, calculated in
each case as of the following Payment Date;
(e) to the extent deposited to the Custodial Account, to reimburse itself
or the related Subservicer for previously unreimbursed expenses incurred in
maintaining individual insurance policies pursuant to Section 3.05, for
Servicing Advances, for fees payable pursuant to Section 3.08, for expenses
payable pursuant to Section 3.10, for amounts reimbursable pursuant to Section
6.03 or Liquidation Expenses, paid pursuant to Section 3.08 or otherwise
reimbursable pursuant to the terms of this Agreement (to the extent not payable
pursuant to Section 3.10), such withdrawal right being limited to amounts
received on particular Mortgage Loans (other than any Repurchase Price in
respect thereof) that represent late recoveries of the payments for which such
advances were made, or from related Net Liquidation Proceeds or the proceeds of
the purchase of such Mortgage Loan;
11
(f) to pay itself an amount equal to the related Servicing Fee (to the
extent not retained pursuant to Section 3.03);
(g) to the extent deposited in the Custodial Account, to pay to the
Servicer as additional servicing compensation any (i) interest or investment
income earned on funds deposited in the Custodial Account that it is entitled to
withdraw pursuant to Section 3.03, and (ii) Foreclosure Profits (to the extent
permitted by law);
(h) to pay to the Seller, with respect to any Mortgage Loan or property
acquired in respect thereof that has been purchased or otherwise transferred to
the Seller, the Servicer or other entity, all amounts received thereon and not
required to be distributed to Securityholders as of the date on which the
related Purchase Price or Repurchase Price is determined;
(i) to withdraw any other amount, determined without duplication with
respect to an other amount provided for in this Section 3.04, deposited in the
Custodial Account that was not required to be deposited therein pursuant to
Section 3.03;
(j) to pay to the Servicer, with respect to any Mortgage Loan for which the
Servicer has made a P&I Advance that has not been previously reimbursed to the
extent of receipts of late recoveries of such payments from the related
Mortgagor, out of related Net Liquidation Proceeds or the proceeds of the
purchase of such Mortgage Loan; and
(k) to reimburse the Servicer for any advances or expenses that have not
been previously reimbursed pursuant to such clauses (e) or (j).
Since, in connection with withdrawals pursuant to clauses (c), (e), (f),
(h) and (j), the Servicer's entitlement thereto is limited to collections or
other recoveries on the related Mortgage Loan, the Servicer shall keep and
maintain separate accounting, on a Mortgage Loan by Mortgage Loan basis, for the
purpose of justifying any withdrawal from the Custodial Account pursuant to such
clauses. Notwithstanding any other provision of this Agreement, the Servicer
shall be entitled to be reimbursed itself for any previously unreimbursed
expenses incurred pursuant to Section 3.08 or otherwise reimbursable pursuant to
the terms of this Agreement that the Servicer determines to be otherwise
nonrecoverable, by withdrawal from the Custodial Account of amounts on deposit
therein attributable to the Mortgage Loans on any Business Day prior to the
Payment Date succeeding the date of such determination.
If any deposit required to be made by the Servicer pursuant to Section
3.04(b) is not made when due, the Servicer shall pay to the Paying Agent, out of
the Servicer's own funds, one day of interest on such late payment, at a per
annum rate equal to the effective Federal Funds Rate for such date. Such
interest shall be remitted to the Paying Agent on the same day that the Servicer
remits the late remittance to the Paying Agent.
Section 3.05 Maintenance of Hazard Insurance; Property Protection Expenses.
To the extent permitted under the related Loan Agreement and Mortgage, and to
the extent the Servicer receives notice that a hazard insurance policy has been
cancelled, the Servicer shall cause to be maintained for each Mortgage Loan
hazard insurance naming the Servicer or related Subservicer as loss payee
thereunder providing extended coverage in an amount which is at least equal to
the lesser of (i) the maximum insurable value of the improvements securing such
Mortgage Loan
12
from time to time or (ii) the combined principal balance owing on such Mortgage
Loan and any mortgage loan senior to such Mortgage Loan from time to time;
provided, however, that such coverage may not be less than the minimum amount
required to fully compensate for any loss or damage on a replacement cost basis.
The Servicer shall use its best efforts to monitor that hazard insurance is
maintained as described in the previous sentence in the same manner as it would
for mortgage loans in its own portfolio. The Servicer shall cause to be
maintained on property acquired upon foreclosure, or deed in lieu of
foreclosure, of any Mortgage Loan, fire insurance with extended coverage in an
amount which is at least equal to the amount necessary to avoid the application
of any co-insurance clause contained in the related hazard insurance policy, the
premium for which shall be a Servicing Advance within the meaning of Section
3.08. Amounts collected by the Servicer under any such policies (other than
amounts to be applied to the restoration or repair of the related Mortgaged
Property or property thus acquired or amounts released to the Mortgagor in
accordance with the Servicer's normal servicing procedures) shall be deposited
in the Custodial Account to the extent called for by Section 3.03. In cases in
which any Mortgaged Property is located at any time during the life of a
Mortgage Loan in a federally designated flood area, to the extent permitted
under the related Loan Agreement and Mortgage, and to the extent the Servicer
receives notice that the related flood insurance has been cancelled, the hazard
insurance to be maintained for the related Mortgage Loan shall include flood
insurance (to the extent available). All such flood insurance shall be in
amounts equal to the lesser of (i) the amount required to compensate for any
loss or damage to the related Mortgaged Property on a replacement cost basis and
(ii) the maximum amount of such insurance available for such Mortgaged Property
under the national flood insurance program (assuming that the area in which such
Mortgaged Property is located is participating in such program). The Servicer
shall use its best efforts to monitor such flood insurance as described in the
previous sentence in the same manner as it would for mortgage loans in its own
portfolio. The Servicer shall be under no obligation to require that any
Mortgagor maintain earthquake or other additional insurance and shall be under
no obligation itself to maintain any such additional insurance on property
acquired in respect of a Mortgage Loan, other than pursuant to such applicable
laws and regulations as shall at any time be in force and as shall require such
additional insurance. If the Servicer shall obtain and maintain a blanket policy
consistent with its general mortgage servicing activities insuring against
hazard losses on all of the Mortgage Loans, it shall conclusively be deemed to
have satisfied its obligations as set forth in the first sentence of this
Section 3.05, it being understood and agreed that such policy may contain a
deductible clause, in which case the 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 3.05 and there shall have been
a loss which would have been covered by such policy, deposit in the Custodial
Account the amount of such loss that would have otherwise been covered. Any such
deposit by the Servicer shall be made on the last Business Day of the Collection
Period in the month in which payments under any such policy would have been
deposited in the Custodial Account. In connection with its activities as
servicer of the Mortgage Loans, the Servicer agrees to present, on behalf of
itself, the Issuer and the Indenture Trustee, claims under any such blanket
policy.
13
Section 3.06 Modification Agreements.
(a) The Servicer or the related Subservicer, as the case may be, shall be
entitled to (a) execute assumption agreements, substitution agreements, and
instruments of satisfaction or cancellation or of partial or full release or
discharge, or any other document contemplated by this Agreement and other
comparable instruments with respect to the Mortgage Loans and with respect to
the related Mortgaged Properties (and the Issuer and the Indenture Trustee each
shall promptly execute any such documents on request of the Servicer) and (b)
approve the granting of an easement thereon in favor of another Person, any
alteration or demolition of such Mortgaged Properties or other similar matters,
if it has determined, exercising its good faith business judgment in the same
manner as it would if it were the owner of the related Mortgage Loans, that the
security for, and the timely and full collectability of, such Mortgage Loans
would not be adversely affected thereby. A partial release pursuant to this
Section 3.06 shall be permitted only if the CLTV for the related Mortgage Loan
after such partial release does not exceed the CLTV for such Mortgage Loan as of
the Cut-Off Date or related Subsequent Cut-Off Date, as applicable. Any fee
collected by the Servicer or the related Subservicer for processing such request
will be retained by the Servicer or such Subservicer as additional servicing
compensation.
(b) Notwithstanding any other provision of this Agreement to the contrary,
the Servicer, at its option and in its sole discretion, may modify any Mortgage
Loan to (i) change the Loan Rate payable on the related Mortgage Loan, (ii)
increase the credit limit on the related Mortgage Loan above the limit stated in
the related Loan Agreement, (iii) refinance the existing senior Lien or place a
new senior Lien related to a Mortgage Loan resulting in a CLTV Ratio above the
previous CLTV Ratio for such Mortgage Loan, or (iv) make any other material
modification to the related Mortgage Loan; provided, however, that without the
consent of the Enhancer, the aggregate Principal Balance of the Mortgage Loans
modified by this Section 3.06(b) shall not exceed five percent (5%) of the Pool
Balance as of the Cut-Off Date; provided, further, that any decision by the
Servicer to modify a Mortgage Loan shall be normal and usual in accordance with
its general mortgage servicing activities and consistent with the procedures the
Servicer employs in servicing all other Mortgage Loans in the servicing
portfolio with characteristics similar to those of the Mortgage Loans
(including, but not limited to, analysis of credit scores, overall customer
relationships and comparable industry standards).
Section 3.07 Trust Estate; Related Documents.
(a) When required by the provisions of this Agreement, the Issuer or the
Indenture Trustee shall execute instruments furnished to them by the Servicer to
release property from the terms of the Trust Agreement or Indenture, as
applicable, or convey the Issuer's or the Indenture Trustee's interest in the
same, in a manner and under circumstances that are not inconsistent with the
provisions of this Agreement. No party relying upon an instrument executed by
the Issuer or the Indenture Trustee as provided in this Section 3.07 shall be
bound to ascertain the Issuer's or the Indenture Trustee's authority, inquire
into the satisfaction of any conditions precedent or see to the application of
any moneys.
(b) Upon receipt of a Request for Release from the Servicer, substantially
in the form of Exhibit D hereto, to the effect that a Mortgage Loan has been the
subject of a final payment or
14
a prepayment in full and such Mortgage Loan has been terminated or that
substantially all Net Liquidation Proceeds that have been determined by the
Servicer in its reasonable judgment to be finally recoverable have been
recovered, and upon deposit to the Custodial Account of such final monthly
payment, prepayment in full together with accrued and unpaid interest to the
date of such payment with respect to such Mortgage Loan or, if applicable, Net
Liquidation Proceeds, the Indenture Trustee shall execute such Related Documents
furnished to it, along with such documents as the Servicer or the related
Mortgagor may request to evidence satisfaction and discharge of such Mortgage
Loan, upon request of the Servicer.
Section 3.08 Realization upon Defaulted Mortgage Loans.
(a) The Servicer shall, consistent with the provisions of the Mortgage and
the Collection Policy, foreclose upon or otherwise comparably convert (which may
include acquisition of an REO Property) the ownership of any Mortgaged Property
securing a Mortgage Loan (but shall not sell or convey such Mortgage Loan) in
the event of a default under the Mortgage when no satisfactory arrangements can
be made for collection of delinquent payments pursuant to Section 3.02, subject
to the provisions contained in this Section 3.08(a) and only if the Servicer
determines that there is sufficient equity in the related Mortgaged Property to
justify such foreclosure. In connection with such foreclosure or other
conversion, the Servicer shall use reasonable efforts to realize upon such
defaulted Mortgage Loan in such manner as will maximize the receipt of principal
and interest thereon, taking into account, among other things, the timing of
foreclosure proceedings. The Servicer shall pay all costs and expenses incurred
by it in any such proceedings; provided, however, that such costs and expenses
shall be deemed to be a "Servicing Advance" and the Servicer shall be reimbursed
therefor as provided in Section 3.04 hereof; provided, further, that, in any
case in which the Mortgaged Property shall have suffered damage such that the
complete restoration thereof is not fully reimbursable by insurance policies
required to be maintained with respect thereto, the Servicer shall not be
required to expend its own funds to restore such Mortgaged Property unless it
shall determine, in good faith, that such restoration will increase the
Liquidation Proceeds to the Trust after reimbursement to itself for such
expenses. In addition to the reimbursement of its costs and expenses, the
Servicer shall be entitled to a reasonable and customary fee as agreed to by the
Servicer and the Issuer for performing any foreclosure activities pursuant to
this Section 3.08(a), which fee shall be payable pursuant to Section 3.04.
(b) Any Liquidation Proceeds, Insurance Proceeds, REO Proceeds or
Condemnation Proceeds received in respect of a Mortgaged Property shall be
deposited in the Custodial Account pursuant to Section 3.03 and applied pursuant
to Section 3.04.
(c) In connection with such foreclosure or other conversion, the Servicer
shall exercise collection and foreclosure procedures in accordance with the
Collection Policy and with the same degree of care and skill in its exercise or
use as it would exercise or use under the circumstances in the conduct of its
own affairs. The Servicer shall take into account the existence of any hazardous
substances, hazardous wastes or solid wastes, as such terms are defined in the
Comprehensive Environmental Response Compensation and Liability Act, the
Resource Conservation and Recovery Act of 1976, or other federal, state or local
environmental legislation, on a Mortgaged Property in determining whether to
foreclose upon or otherwise
15
comparably convert the ownership of a Mortgaged Property. Any amounts advanced
in connection with such foreclosure or other action shall constitute "Servicing
Advances."
Section 3.09 Management and Sale of REO Property. The Servicer shall
manage, conserve, protect and operate each REO Property solely for the purpose
of its prudent and prompt disposition and sale; provided, however, that the
Servicer shall complete such sale and disposition no later than, and the Trust
shall not retain ownership of any REO Property for longer than, 36 months after
the date on which such REO Property is acquired by the Trust. The Servicer
shall, either itself or through an agent selected by the Servicer, manage,
conserve, protect and operate the REO Property in the same manner that it
manages, conserves, protects and operates other foreclosed property for its own
account, and in the same manner that similar property in the same locality as
the REO Property is managed. The Servicer shall attempt to sell the same (and
may temporarily rent the same) on such terms and conditions as the Servicer
deems to be in the best interest of the Securityholders and the Trust.
The Servicer shall cause to be set aside pursuant to Section 3.03, no later
than five Business Days after the receipt thereof, all revenues received with
respect to the conservation and disposition of the related REO Property net of
funds necessary for the proper operation, management and maintenance of the REO
Property and the fees of any managing agent acting on behalf of the Servicer.
The disposition of REO Property shall be carried out by the Servicer for
cash at such price, and upon such terms and conditions, as the Servicer deems to
be in the best interest of the Securityholders and the Trust. The cash proceeds
of sale of the REO Property shall be promptly set aside pursuant to Section 3.03
as received from time to time and, as soon as practicable thereafter, the
expenses of such sale shall be paid. Any costs or advances of the Servicer
pursuant to this Section 3.09 also shall constitute Servicing Advances. The
Servicer shall reimburse itself for any related unreimbursed Servicing Advances
and unpaid Servicing Fees pursuant to Section 3.04.
Section 3.10 Issuer and Indenture Trustee to Cooperate. Upon receipt of
payment in full, the Servicer is authorized to execute, pursuant to the
authorization contained in Section 3.01(c), an instrument of satisfaction
regarding the related Mortgage, which instrument of satisfaction shall be
recorded by the Servicer if required by applicable law and be delivered to the
Person entitled thereto. It is understood and agreed that any expenses incurred
in connection with such instrument of satisfaction or transfer shall be
reimbursed from amounts deposited in the Custodial Account as provided in
Section 3.04. From time to time and as appropriate for the servicing or
foreclosure of any Mortgage Loan and in accordance with the provisions hereof,
upon request of the Servicer to the Issuer, of a Request for Release, in the
form attached hereto as Exhibit D, Issuer or Indenture Trustee shall promptly
execute such documents, in the forms provided by the Servicer, as shall be
necessary for the prosecution of any such proceedings or the taking of other
servicing actions.
In order to facilitate the foreclosure of the Mortgage securing any
Mortgage Loan that is in default following recordation of the related Assignment
of Mortgage to the Indenture Trustee or the Issuer if required in accordance
with the provisions of the Purchase Agreement or this Agreement, the Indenture
Trustee or the Issuer shall, if so requested in writing by the Servicer,
16
promptly execute an appropriate assignment in the form provided by the Servicer
to assign such Mortgage Loan for the purpose of collection to the Servicer (any
such assignment shall unambiguously indicate that the assignment is for the
purpose of collection only), and, upon such assignment, the Servicer as assignee
for collection will thereupon bring all required actions in its own name and
otherwise enforce the terms of such Mortgage Loan and deposit or credit the Net
Liquidation Proceeds, exclusive of Foreclosure Profits, received with respect
thereto into the Custodial Account. In the event that all delinquent payments
due under any such Mortgage Loan are paid by the Mortgagor and any other
defaults are cured, then the Servicer as assignee for collection shall promptly
reassign such Mortgage Loan to the Indenture Trustee and return all Related
Documents to the place where the related Mortgage File was being maintained.
In connection with the Issuer's obligation to cooperate as provided in this
Section 3.10 and all other provisions of this Agreement requiring the Issuer to
authorize or permit any actions to be taken with respect to the Mortgage Loans,
the Indenture Trustee, as pledgee of the Mortgage Loans and as assignee of
record of the Mortgage Loans on behalf of the Issuer pursuant to Section 3.13 of
the Indenture, expressly agrees, on behalf of the Issuer, to take all such
actions on behalf of the Issuer and promptly to execute and return all
instruments reasonably required by the Servicer in connection therewith;
provided, however, that if the Servicer requests a signature of the Indenture
Trustee on behalf of the Issuer, then the Servicer shall deliver to the
Indenture Trustee an Officer's Certificate stating that such signature is
necessary or appropriate to enable the Servicer to carry out its servicing and
administrative duties under this Agreement.
Section 3.11 Compensation; Payment of Certain Expenses.
(a) As compensation for its services hereunder, the Servicer shall be
entitled to receive the Servicing Fee in accordance with Section 3.03(b) and
Section 3.04 as compensation for its services hereunder. Moreover, late payment
charges and the other amounts specified in Section 3.03(b) shall be retained by
the Servicer as additional servicing compensation.
(b) The Servicer shall be required to pay all expenses incurred by it in
connection with its servicing or administrative activities hereunder, and all
fees and expenses of the Owner Trustee, the Paying Agent, the Note Registrar,
the Certificate Paying Agent, the Certificate Registrar and the Indenture
Trustee, and shall not be entitled to reimbursement therefor except as otherwise
provided in this Agreement.
Section 3.12 Annual Statement as to Compliance.
(a) The Servicer shall deliver to the Issuer, the Indenture Trustee, the
Paying Agent, the Depositor and the Underwriter, with a copy to the Enhancer,
beginning March 31, 2004, and on or before March 31 of each year thereafter, an
Officer's Certificate stating that (i) a review of the activities of the
Servicer during the preceding calendar year and of its performance under any
servicing agreements to which it is a party, including this Agreement, has been
made under such officer's supervision and (ii) to the best of such officer's
knowledge, based on such review, the Servicer has complied in all material
respects with the minimum servicing standards set forth in the Uniform Single
Attestation Program for Mortgage Bankers and has fulfilled all of its material
obligations in all material respects throughout such year, or, if there has been
material
17
noncompliance with such servicing standards or a default in the fulfillment in
all material respects of any such obligation relating to this Agreement, such
statement shall include a description of such noncompliance or specify each such
default, as the case may be, known to such officer and the nature and status
thereof.
(b) The Servicer shall deliver to the Issuer and the Indenture Trustee,
with a copy to the Enhancer and the Paying Agent, promptly after having obtained
knowledge thereof, but in no event later than five Business Days thereafter,
written notice by means of an Officer's Certificate of any event which with the
giving of notice or the lapse of time or both, would become a Servicing Default.
Section 3.13 Annual Servicing Report. Beginning March 31, 2004 and on or
before March 31 of each year thereafter, the Servicer at its expense shall cause
a firm of nationally recognized independent public accountants (which firm may
also render other services to the Servicer) to furnish a report to the Issuer,
each Rating Agency, the Paying Agent and the Indenture Trustee, with a copy to
the Enhancer, stating its opinion that, on the basis of an examination conducted
by such firm substantially in accordance with standards established by the
American Institute of Certified Public Accountants, the assertions made pursuant
to Section 3.12 regarding compliance with the minimum servicing standards set
forth in the Uniform Single Attestation Program for Mortgage Bankers during the
preceding calendar year are fairly stated in all material respects, subject to
such exceptions and other qualifications that, in the opinion of such firm, such
accounting standards require it to report.
Section 3.14 Access to Certain Documentation and Information Regarding the
Mortgage Loans. Whenever required by statute or regulation, the Servicer shall
provide to the Enhancer, any Securityholder upon reasonable request (or a
regulator for a Securityholder) or the Indenture Trustee, reasonable access to
the documentation regarding the Mortgage Loans. Such access shall be afforded
without charge, but only upon reasonable request and during normal business
hours at the offices of the Servicer. Nothing in this Section 3.14 shall
derogate from the obligation of the Servicer to observe any applicable law
prohibiting disclosure of information regarding Mortgagors, and the failure of
the Servicer to provide access as provided in this Section 3.14 as a result of
such obligation shall not constitute a breach of this Section 3.14.
Section 3.15 Maintenance of Certain Servicing Insurance Policies. The
Servicer shall, during the term of its service as Servicer, maintain in force
and effect (i) a policy or policies of insurance covering errors and omissions
in the performance of its obligations as Servicer hereunder and (ii) a fidelity
bond in respect of its officers, employees or agents. Each such policy or
policies and fidelity bond shall be at least equal to the coverage that would be
required by Fannie Mae or Freddie Mac, whichever is greater, for Persons
performing servicing for mortgage loans purchased by such entity. The Servicer
shall furnish a copy of such policy or policies and/or fidelity bond to the
Enhancer upon the Enhancer's reasonable request therefor.
Section 3.16 Information Required by the Internal Revenue Service and
Reports of Foreclosures and Abandonments of Mortgaged Property. The Servicer
shall prepare and deliver all federal and state information reports with respect
to the Mortgage Loans when and as required by all applicable state and federal
income tax laws. In particular, with respect to the requirement under Section
6050J of the Code to the effect that the Servicer or Subservicer shall
18
make reports of foreclosures and abandonments of any mortgaged property for each
year beginning in [_____], the Servicer or Subservicer shall file reports
relating to each instance occurring during the previous calendar year in which
the Issuer (a) acquired an interest in any Mortgaged Property through
foreclosure or other comparable conversion in full or partial satisfaction of a
Mortgage Loan, or (b) knew or had reason to know that any Mortgaged Property had
been abandoned. The reports from the Servicer or Subservicer shall be in form
and substance sufficient to meet the reporting requirements imposed by Section
6050J and Section 6050H (reports relating to mortgage interest received) of the
Code.
Section 3.17 Assignments; Recordings of Assignments.
(a) Concurrently herewith, the Depositor has contracted to acquire the
Mortgage Loans from the Seller and the Issuer has Granted its right, title and
interest in the Mortgage Loans and other Transferred Property constituting the
Trust Estate to the Indenture Trustee to secure payments on the Notes. The
Seller will deliver the original Loan Agreements to the Servicer on behalf of
the Depositor, endorsed or assigned in blank, to effect the transfer to the
Issuer of the Loan Agreements and all related Mortgages and other loan
documents. The parties hereto acknowledge and agree that the Mortgage Loans
shall for all purposes be deemed to have been transferred from the Seller to the
Depositor, from the Depositor to the Issuer and from the Issuer to the Indenture
Trustee.
(b) [Reserved]
Section 3.18 [Reserved].
Section 3.19 Funding Accounts.
(a) No later than the Closing Date, the Indenture Trustee shall establish
and maintain on behalf of the Enhancer and the Holders of the related Notes one
or more segregated trust accounts, which shall be Eligible Accounts, titled
"Group I Funding Account, [_____], as Indenture Trustee for Wachovia Asset
Securitization Issuance, LLC [_____] Trust" and "Group II Funding Account,
[_____], as Indenture Trustee for Wachovia Asset Securitization Issuance, LLC
[_____] Trust". Amounts received with respect to the Mortgage Loans in Loan
Group I that are to be deposited into a Funding Account shall be deposited in
the Group I Funding Account and amounts received with respect to the Mortgage
Loans in Loan Group II that are to be deposited into a Funding Account shall be
deposited in the Group II Funding Account. In accordance with Section 3.04(b),
on the Business Day prior to each Payment Date during the related Revolving
Period, the Servicer shall withdraw from the Custodial Account and deposit into
the applicable Funding Account (i) the aggregate amount of Principal Collections
for the related Loan Group remaining after the purchase of all Additional
Balances and (ii) on or after the Payment Date occurring in [_____], Excess
Spread for the related Loan Group, in each case to the extent available and
subject to the provisions of Section 3.05(a) of the Indenture.
(b) On each Subsequent Transfer Date, the Servicer shall instruct the
Indenture Trustee in writing to withdraw from the applicable Funding Account an
amount equal to the aggregate Principal Balance as of the related Subsequent
Cut-Off Date of the Subsequent Mortgage Loans to be sold to the Trust on such
Subsequent Transfer Date and allocate such
19
withdrawal to amounts on deposit in the applicable Funding Account, and to pay
such amount to or upon the order of the Seller upon satisfaction of the
conditions set forth in this Agreement, in the Purchase Agreement and in the
related Subsequent Transfer Agreement with respect thereto.
(c) The Servicer may cause the institution maintaining the Funding Accounts
to invest any funds therein in Permitted Investments having a maturity of up to
90 days or maturing or otherwise available not later than the Business Day
preceding the related Payment Date on which funds are scheduled to be withdrawn
to purchase Subsequent Mortgage Loans or Additional Balances, provided that no
such investment may be sold or disposed of prior to maturity. If no instructions
are received as to which Permitted Investments the funds are to be invested in,
the funds shall be invested in Permitted Investments described in clause (v) of
such definition. In addition, no such Permitted Investment shall be purchased at
a price in excess of par. At any time when the Indenture Trustee is maintaining
the Funding Account, any request by the Servicer to invest funds on deposit
therein shall be in writing, delivered to the Indenture Trustee at or before
10:30 a.m., New York time, if such investment is to be made on such day. The
Servicer shall certify that the requested investment is a Permitted Investment
maturing at or prior to the time required hereby. Any such investment shall be
registered in the name of the Indenture Trustee or its nominee, and to the
extent that any such investment is certificated, such investment shall be
maintained with the Indenture Trustee at its Corporate Trust Office. All net
income or other gain received from any such investment shall be deposited into
or credited to the Custodial Account as Interest Collections from the related
Loan Group, and may be withdrawn therefrom in accordance with Section 3.05 of
the Indenture.
(d) From time to time the Indenture Trustee shall make withdrawals from the
related Funding Account in accordance with written instructions from the
Servicer as follows:
(i) on each Payment Date during the related Revolving Period, any
amounts on deposit in the related Funding Account, including Excess Spread for
the related Loan Group, shall be withdrawn and applied, to the extent available
to the Seller, as designee of the Depositor, as payment for Additional Balances,
if any, in an amount equal to (A) the aggregate of all Draws during the related
Collection Period or (B) if the Servicer has applied amounts on deposit in the
Custodial Account representing Principal Collections from the related Loan Group
received during such Collection Period to the purchase of Additional Balances,
the excess, if any, of the aggregate of all Draws during the related Collection
Period over the amount on deposit in the related Funding Account;
(ii) on each Subsequent Transfer Date, any amounts on deposit in the
related Funding Account, to the extent not used to purchase Additional Balances
in the related Loan Group, shall be withdrawn and applied as payment for
Subsequent Mortgage Loans in the related Loan Group, if any, in an amount equal
to the aggregate Principal Balance as of the related Subsequent Cut-Off Date of
the Subsequent Mortgage Loans in the related Loan Group;
(iii) prior to 3:00 p.m. (EST) on the Business Day prior to the
Payment Date immediately following the last day of the related Revolving Period,
or if the last day of the related Revolving Period is a Payment Date, not later
than 1:00 p.m. (EST) on such Payment Date, any amounts remaining on deposit in
the related Funding Account, if any, after giving effect to clauses (i) and (ii)
above, shall be first deposited into the Distribution Account in an
20
amount equal to the lesser of (A) the related Additional Balance Increase Amount
and (B) the amount on deposit in the related Funding Account, and then shall be
deposited to the Note Payment Account for payment to the Noteholders pursuant to
Section 3.05 of the Indenture.
Section 3.20 [Reserved].
Section 3.21 P&I Advances.
(a) The Servicer, in its sole discretion, may deposit into the Custodial
Account (from its own funds) an amount equal to the aggregate amount of
principal of or interest on Mortgage Loans that were delinquent as of the end of
any Collection Period ("P&I Advances"). The Servicer shall notify the Indenture
Trustee and the Paying Agent by a certificate of the Servicing Officer of (i)
the aggregate amount of P&I Advances for a Payment Date and (ii) the amount of
any Nonrecoverable P&I Advances for such Payment Date.
(b) Notwithstanding anything herein to the contrary, no P&I Advance shall
be required to be made hereunder or shall be made hereunder if such P&I Advance
would, if made, constitute a Nonrecoverable P&I Advance. On the fourth Business
Day before each Payment Date, the Servicer shall determine whether each P&I
Advance made with respect to any previous Payment Date is a Nonrecoverable P&I
Advance.
Section 3.22 Transfer of Mortgage Loans.
(a) Subject to the conditions set forth below, the Servicer, upon receipt
of written notice and direction from the Issuer, shall cause the retransfer of
Mortgage Loans from the Trust Estate to the Issuer as of the close of business
on a Payment Date (the "Transfer Date"). On the fifth Business Day (the
"Transfer Notice Date") prior to the Transfer Date designated in such notice,
the Servicer shall give the Indenture Trustee, the Rating Agencies, the Paying
Agent and the Enhancer a notice of the proposed retransfer that contains a list
of the Mortgage Loans to be retransferred. Such retransfers of Mortgage Loans
shall be permitted upon satisfaction of the following conditions:
(i) No Rapid Amortization Event has occurred;
(ii) On the Transfer Date, the Overcollateralization Amount for the
related Loan Group (after giving effect to the removal from the Trust Estate of
the Mortgage Loans proposed to be retransferred) will equal or exceed the
Overcollateralization Target Amount for the related Loan Group, but only to the
extent necessary so that the Total Overcollateralization Amount (after giving
effect to the removal from the Trust Estate of the Mortgage Loans proposed to be
retransferred) equals the Total Overcollateralization Target Amount;
(iii) The retransfer of any Mortgage Loans on any Transfer Date during
a Managed Amortization Period shall not, in the reasonable belief of the
Servicer, cause a Rapid Amortization Event to occur or an event which with
notice or lapse of time or both would constitute a Rapid Amortization Event;
21
(iv) On or before the Transfer Date, the Servicer shall have delivered
to the Indenture Trustee and the Paying Agent a revised Mortgage Loan Schedule
showing that the Mortgages Loans transferred to the Certificateholders are no
longer owned by the Trust Estate;
(v) The Servicer shall represent and warrant that the Mortgage Loans
to be removed from the Trust Estate were selected at random and the Servicer
shall have received the consent of the Enhancer as to the selection of the
particular Mortgage Loans to be removed; and
(vi) The Enhancer shall have consented to the Transfer;
(vii) Notice of such removal has been given to the Rating Agencies;
(viii) Such transfer may only occur once per month;
(ix) The Outstanding Principal Balance of the Transferred Mortgage
Loans shall not be greater than the Outstanding Additional Balance Increase
Amount immediately prior to such transfer; and
(x) The Servicer shall have delivered to the Indenture Trustee, the
Paying Agent and the Enhancer an Officer's Certificate certifying that the items
set forth in subparagraphs (i) through (ix), inclusive, have been performed or
are true and correct, as the case may be. The Indenture Trustee and the Paying
Agent may conclusively rely on such Officer's Certificate, shall have no duty to
make inquiries with regard to the matters set forth therein and shall incur no
liability in so relying.
The Servicer shall not be permitted to effect the retransfer of any
Mortgage Loan except under the conditions specified above. Upon receiving the
requisite notice and direction from the Issuer, the Servicer shall perform in a
timely manner those acts required of it, as specified above. Upon satisfaction
of the above conditions, on the Transfer Date the Servicer shall deliver, or
cause to be delivered, to the Issuer a written itemization of each Mortgage Loan
being transferred, together with the Mortgage File for each such Mortgage Loan,
and the Indenture Trustee shall execute and deliver to the Issuer or its
designee such other documents prepared by the Servicer as shall be reasonably
necessary to transfer such Mortgage Loans to the Certificateholders. Any such
transfer of the Trust Estate's right, title and interest in and to Mortgage
Loans shall be without recourse, representation or warranty by or of the
Indenture Trustee or the Trust Estate to the Issuer or its designee.
Section 3.23 Notice of Rating Change.
In the event that there is any change in the ratings of the [_____] Notes
at any time on or after the Closing Date, the Servicer shall give written notice
to the Auction Agent of such event or if the [_____] Notes are no longer held in
Book-Entry Form, the Paying Agent shall give written notice to the Servicer, the
Enhancer and the Auction Agent of such event, in each case, within (3) Business
Days of actual notice or receipt of written notice of such change, but not later
than (1) Business Day immediately preceding an Auction Date if the Servicer or
Indenture Trustee had actual notice or received written notice of such change
prior to 12:00 noon on such Business Day, and the Auction Agent shall take into
account such change for purposes hereof and any Auction, so long as such notice
is received by the Auction Agent no later than the
22
close of business on such Business Day.
Section 3.24 Calculation of LIBOR, Note Rate, Net WAC Rate and Maximum
Auction Rate.
The Servicer hereby agrees to:
(a) determine LIBOR for each Interest Period in accordance with the
Indenture and advise the Auction Agent of such rate as soon as practicable but
not later than 9:30 a.m. on the Auction Date;
(b) determine the Note Rate for the [_____] in accordance with Section
3.27 of the Indenture;
(c) determine each Net WAC Rate and, no later than the Business Day
preceding each Auction Date, advise the Auction Agent in writing of such rate;
and
(d) if the Class [_____] are no longer held in Book-Entry Form,
calculate the Maximum Auction Rate on the Business Day immediately preceding the
first day of each Interest Period.
ARTICLE IV
Servicing Certificate
Section 4.01 Statements to Securityholders.
(a) With respect to each Payment Date, on the Business Day following the
related Determination Date, the Servicer shall forward the Servicing Certificate
to the Indenture Trustee and the Paying Agent, and the Paying Agent, pursuant to
Section 3.26 of the Indenture, shall on such Payment Date make such Servicing
Certificate available to each Certificateholder, each Noteholder, the Depositor,
the Owner Trustee, the Certificate Paying Agent, the Paying Agent and each
Rating Agency, with a copy to the Enhancer. The Servicing Certificate shall set
forth the following information as to the Notes and Certificates, to the extent
applicable:
(i) for each Loan Group, the aggregate amount of (a) Interest
Collections, (b) Principal Collections (and, with respect to any Payment Date
relating to the Managed Amortization Period, Net Principal Collections) and (c)
Substitution Adjustment Amounts for such Collection Period;
(ii) the amount of such distribution as principal to the Noteholders;
(iii) the amount of such distribution as interest to the Noteholders,
the amount thereof, if any, payable in respect of unpaid Interest Shortfalls,
and the amount of any Interest Shortfalls for the related Payment Date;
(iv) each Deficiency Amount, if any, for such Payment Date and the
aggregate amount of prior draws on the Policy thereunder not yet reimbursed;
23
(v) for the [_____] Notes, the amount, if any, received under the
related Yield Maintenance Agreement;
(vi) the amount of such distribution to the Certificateholders;
(vii) the amount of any related Additional Balance Increase Amount
payable to the Certificateholders and the amount of Principal Collections paid
in respect of such related Additional Balance Increase Amount;
(viii) with respect to each Loan Group, the aggregate Principal
Balance of the Mortgage Loans as of the end of the preceding Collection Period;
(ix) with respect to each Loan Group, the number and aggregate
Principal Balances of Mortgage Loans (a) as to which the Minimum Monthly Payment
is delinquent for 30-59 days, 60-89 days, 90-119 days, 120-149 days, 150-179
days and 180 or more days, respectively, (b) the related Mortgaged Property of
which has been foreclosed upon and (c) as to which the related Mortgaged
Property has become REO Property, in each case as of the end of the preceding
Collection Period; provided, however, that such information shall not be
provided on the statements relating to the first Payment Date;
(x) LIBOR for each of the [_____] Notes for the related Interest
Period;
(xi) the Note Rate for each of the [_____] Notes for such Payment
Date;
(xii) the Net WAC Rate for each of the [_____] Notes for the related
Collection Period;
(xiii) prior to the second Determination Date following the
commencement of the Rapid Amortization Period, the aggregate amount of
Additional Balances created during the previous Collection Period and conveyed
to the Issuer prior to the commencement of the Rapid Amortization Period;
(xiv) the aggregate Liquidation Loss Amounts for each Loan Group
(other than amounts allocated in respect of the Excluded Amount) with respect to
the related Collection Period, the amount distributed as principal to
Noteholders in respect of Liquidation Loss Amounts and the aggregate of the
Liquidation Loss Amounts (minus any Subsequent Net Recovery Amounts and other
than amounts allocated in respect of the Excluded Amount) from all Collection
Periods to date expressed as dollar amount and as a percentage of the aggregate
Cut-Off Date Principal Balances of the Mortgage Loans;
(xv) the Note Balance of the Notes and the Certificate Balance of the
Certificates after giving effect to the distribution of principal on such
Payment Date;
(xvi) with respect to each Loan Group, the balance of the related
Funding Account as of the end of the preceding Collection Period;
(xvii) the Percentage Interest applicable to each of the Securities,
after application of payments made on such Payment Date;
24
(xviii) with respect to each Loan Group, the related
Overcollateralization Amount as of the end of the preceding Collection Period;
(xvii) with respect to each Loan Group, the aggregate Principal
Balance of Subsequent Mortgage Loans transferred to the Trust Estate since the
Closing Date;
(xix) the arithmetic average of the Net Excess Spread Percentage for
the two most recently concluded Collection Periods;
(xx) the arithmetic average of the Net Excess Spread Percentage for
the three most recently concluded Collection Periods; and
(xxi) on or after the Stepdown Date, a statement (yes or no) as to
whether Condition 1, Condition 2 or Condition 3 is in effect.
In the case of information furnished pursuant to clauses (ii) and (iii)
above, the amounts shall be expressed as an aggregate dollar amount per Note or
Certificate, as applicable, with a $25,000 denomination and per Certificate with
a denomination equal to a 100% Percentage Interest.
If a Managed Amortization Event, a Rapid Amortization Event or a Servicing
Default shall occur, on the Business Day following the related Determination
Date, the Servicer shall forward to the Indenture Trustee and the Paying Agent,
a statement to such effect, including the nature of such Rapid Amortization
Event or Servicing Default. The Paying Agent shall deliver or cause to be
delivered by mail to each Certificateholder, each Noteholder, the Enhancer, the
Depositor, the Owner Trustee, the Certificate Paying Agent and each Rating
Agency, notice of such Managed Amortization Event, Rapid Amortization Event or
Servicing Default, including, in the case of a Rapid Amortization Event or a
Servicing Default, the nature thereof. Such statement may be included in, or
separate from, the regular statement sent to Securityholders.
The Paying Agent shall make the Servicing Certificate (and, at its option,
any additional files containing the same information in an alternative format)
available each month to Securityholders and the Enhancer, and other parties to
this Agreement via the Paying Agent's internet website. The Paying Agent's
internet website shall initially be located at "www.firstlinkabs.com".
Assistance in using the website can be obtained by calling the Paying Agent's
customer service desk at (800) 665-9359. Parties that are unable to use the
above distribution option are entitled to have a paper copy mailed to them via
first class mail by calling the customer service desk and indicating such. The
Paying Agent shall have the right to change the way the statements to
Securityholders are distributed in order to make such distribution more
convenient and/or more accessible to the above parties and the Paying Agent
shall provide timely and adequate notification to all above parties regarding
any such changes. The Paying Agent may require registration and the acceptance
of a disclaimer in connection with access to its website
(b) The Servicer shall forward to the Paying Agent any other information
reasonably requested by the Paying Agent necessary to make distributions
pursuant to Section 3.05 of the Indenture. Prior to the close of business on the
Business Day next succeeding each Determination Date, the Servicer shall furnish
a written statement to the Certificate Paying
25
Agent, the Paying Agent and the Indenture Trustee setting forth the aggregate
amounts required to be withdrawn from the Custodial Account and deposited into
the Note Payment Account, Funding Accounts and/or Distribution Account on the
Business Day preceding the related Payment Date pursuant to Section 3.04. The
determination by the Servicer of such amounts shall, in the absence of obvious
error, be deemed to be presumptively correct for all purposes hereunder, and the
Owner Trustee, the Paying Agent and the Indenture Trustee shall be protected in
relying upon the same without any independent check or verification. In
addition, upon the Issuer's written request, the Servicer shall promptly furnish
such information reasonably requested by the Issuer that is reasonably available
to the Servicer to enable the Issuer to perform its federal and state income tax
reporting obligations.
Section 4.02 Tax Returns and 1934 Act Reports
(a) The Servicer agrees to perform the obligations of the Servicer set
forth in Section 5.03 of the Trust Agreement. The Servicer will prepare and file
or cause to be prepared and filed all tax and information returns of the Trust
Estate.
(b) The Servicer shall prepare all reports on behalf of the Trust Estate,
including, but not limited to, all Forms 8-K and Forms 10-K, and, when
applicable, any Form 15, that are required under the Securities Exchange Act of
1934, as amended, and any certifications required by the Sarbanes-Oxley Act of
2002 to be filed with such Forms 10-K. The Servicer shall continue to file all
Forms 8-K and Forms 10-K with respect to the Trust Estate until directed by the
Depositor in writing to discontinue such filings.
ARTICLE V
Note Payment Account
Section 5.01 Note Payment Account. The Paying Agent shall establish and
maintain an Eligible Account entitled "Wachovia Bank, National Association, as
Paying Agent, for the benefit of the Securityholders, the Indenture Trustee,
Certificate Paying Agent and the Enhancer, pursuant to the Indenture, dated as
of [_____], among Wachovia Asset Securitization Issuance, LLC [_____] Trust,
Wachovia Bank, National Association and [_____] (the "Note Payment Account"). On
each Payment Date, amounts on deposit in the Note Payment Account shall be
distributed by the Paying Agent in accordance with Section 3.05 of the
Indenture. The Paying Agent shall invest or cause the institution maintaining
the Note Payment Account to invest the funds therein in Permitted Investments
designated in the name of the Paying Agent, which investments shall mature not
later than the Business Day next preceding the Payment Date next following the
date of such investment (except that any investment in the institution with
which the Note Payment Account is maintained may mature or be payable on demand
on such Payment Date). In addition, no such Permitted Investment shall be
purchased at a price in excess of par. All income and gain realized from any
such investment shall be for the benefit of the Servicer and shall be subject to
its withdrawal or order from time to time, except that an amount equal to one
day's interest on any such investment shall be for the benefit of the Paying
Agent. The amount of any losses incurred in respect of any such investments
shall be deposited in the Note Payment Account by the Servicer and the Paying
Agent out of their own funds immediately as realized and shall be allocated
between the Servicer and the Paying Agent on a pro rata basis,
26
such that the percentage of any such loss allocated to the Paying Agent shall
equal a fraction, the numerator of which equals one (1) and the denominator of
which equals the number of days the funds in the Note Payment Account were
invested in such investment. Subject to Section 8.02(b) of the Indenture, and
except as provided in this Section 5.01, the Paying Agent shall not be liable
for investment losses on funds on deposit in the Note Payment Account.
ARTICLE VI
The Servicer
Section 6.01 Liability of the Servicer. The Servicer shall be liable in
accordance herewith only to the extent of the obligations specifically imposed
upon and undertaken by the Servicer herein.
Section 6.02 Merger or Consolidation of, or Assumption of the Obligations
of, the Servicer. Any corporation into which the Servicer may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Servicer shall be a
party, or any corporation succeeding to the business of the Servicer, shall be
the successor of the 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.
The Servicer may assign its rights and delegate its duties and obligations
under this Agreement, provided that the Person accepting such assignment or
delegation shall be a Person qualified to service mortgage loans, is reasonably
satisfactory to the Enhancer (provided, however, that such consent to assignment
may not be unreasonably withheld), is willing to service the Mortgage Loans and
executes and delivers to the Issuer (with a copy to the Enhancer) an agreement,
in form and substance reasonably satisfactory to the Enhancer, that contains an
assumption by such Person of the due and punctual performance and observance of
each covenant and condition to be performed or observed by the Servicer under
this Agreement; provided, further, that no Rating Event will occur as a result
of such assignment and delegation (as evidenced by a letter to such effect from
each Rating Agency) if determined without regard to the Policy; provided,
further, that the Owner Trustee, the Paying Agent and the Indenture Trustee
shall receive an Opinion of Counsel to the effect that such assignment or
delegation will not cause the Issuer to be treated as an association (or a
publicly-traded partnership) taxable as a corporation for federal income tax
purposes.
Section 6.03 Limitation on Liability of the Servicer and Others. Neither
the Servicer nor any of the directors or officers or employees or agents of the
Servicer shall be under any liability to the Issuer, the Owner Trustee, the
Paying Agent, the Indenture Trustee or the Securityholders for any action taken
or for refraining from the taking of any action in good faith pursuant to this
Agreement; provided, however, that this provision shall not protect the Servicer
or any such Person against any liability that would otherwise be imposed by
reason of its willful misfeasance, bad faith or gross negligence in the
performance of its duties hereunder or by reason of its reckless disregard of
its obligations and duties hereunder. The Servicer and any director or officer
or employee or agent of the Servicer may rely in good faith on any document of
any kind prima facie properly executed and submitted by any Person respecting
any matters
27
arising hereunder. The Servicer and any director, officer, employee or agent of
the Servicer shall be indemnified by the Issuer and held harmless against any
loss, liability or expense incurred in connection with any legal action relating
to this Agreement or the Securities, including any amount paid to the Owner
Trustee, the Paying Agent or the Indenture Trustee pursuant to Section 6.06(b),
other than any loss, liability or expense related to any specific Mortgage Loan
or Mortgage Loans (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 the Servicer's willful misfeasance, bad faith or
gross negligence in the performance of its duties hereunder or by reason of its
reckless disregard of its obligations and duties hereunder. The Servicer shall
not be under any obligation to appear in, prosecute or defend any legal action
that is not incidental to its duties to service the Mortgage Loans in accordance
with this Agreement, and that in its opinion may involve it in any expense or
liability; provided, however, that the Servicer may in its sole discretion
undertake any such action that it may deem necessary or desirable in respect of
this Agreement, the rights and duties of the parties hereto and the interests of
the Securityholders. In such event, the reasonable legal expenses and costs of
such action and any liability resulting therefrom shall be expenses, costs and
liabilities of the Issuer, and the Servicer shall be entitled to be reimbursed
therefor. The Servicer's right to indemnity or reimbursement pursuant to this
Section 6.03 shall survive any resignation or termination of the Servicer
pursuant to Section 6.04 or 7.01 with respect to any losses, expenses, costs or
liabilities arising prior to such resignation or termination (or arising from
events that occurred prior to such resignation or termination).
Section 6.04 Servicer Not to Resign. Subject to the provisions of Section
6.02, the Servicer shall not resign from the obligations and duties hereby
imposed on it except (a) upon determination that the performance of its
obligations or duties hereunder are no longer permissible under applicable law
or are in material conflict by reason of applicable law with any other
activities carried on by it or its subsidiaries or Affiliates, the other
activities of the Servicer so causing such a conflict being of a type and nature
carried on by the Servicer or its subsidiaries or Affiliates at the date of this
Agreement or (b) upon satisfaction of the following conditions: (i) the Servicer
shall have proposed a successor servicer to the Issuer and the Indenture Trustee
in writing and such proposed successor servicer is reasonably acceptable to the
Issuer, the Indenture Trustee and the Enhancer; (ii) each Rating Agency shall
have delivered a letter to the Issuer, the Enhancer and the Indenture Trustee
prior to the appointment of the successor servicer stating that the proposed
appointment of such successor servicer as Servicer hereunder will not cause a
Rating Event, if determined without regard to the Policy; and (iii) such
proposed successor servicer is reasonably acceptable to the Enhancer, as
evidenced by a letter to the Issuer and the Indenture Trustee; provided,
however, that no such resignation by the Servicer shall become effective until
such successor servicer or, in the case of (a) above, the Indenture Trustee, as
pledgee of the Mortgage Loans, shall have assumed the Servicer's
responsibilities and obligations hereunder or the Indenture Trustee, as pledgee
of the Mortgage Loans, shall have designated a successor servicer in accordance
with Section 7.02. Any such resignation shall not relieve the Servicer of
responsibility for any of the obligations specified in Sections 7.01 and 7.02 as
obligations that survive the resignation or termination of the Servicer. Any
such determination permitting the resignation of the Servicer shall be evidenced
by an Opinion of Counsel to such effect delivered to the Indenture Trustee and
the Enhancer.
28
Section 6.05 Delegation of Duties. In the ordinary course of business, the
Servicer at any time may delegate any of its duties hereunder to any Person,
including any of its Affiliates, that agrees to conduct such duties in
accordance with standards comparable to those with which the Servicer complies
pursuant to Section 3.01. Such delegation shall not relieve the Servicer of its
liabilities and responsibilities with respect to such duties and shall not
constitute a resignation within the meaning of Section 6.04.
Section 6.06 Payment of Indenture Trustee's, the Paying Agent's and Owner
Trustee's Fees and Expenses; Indemnification.
(a) After the Closing Date, the Servicer covenants and agrees to pay to the
Owner Trustee, the Paying Agent, the Note Registrar, the Certificate Paying
Agent, the Certificate Registrar, the Indenture Trustee and any co-trustee of
the Indenture Trustee or the Owner Trustee from time to time, and the Owner
Trustee, the Note Registrar, the Certificate Paying Agent, the Certificate
Registrar, the Paying Agent, the Indenture Trustee and any such co-trustee shall
be entitled to, reasonable compensation for all services rendered by each of
them in the execution of the trusts created under the Trust Agreement and the
Indenture and in the exercise and performance of any of the powers and duties
under the Trust Agreement or the Indenture, as the case may be, of the Owner
Trustee, the Note Registrar, the Certificate Paying Agent, the Certificate
Registrar, the Paying Agent, the Indenture Trustee and any co-trustee, and the
Servicer will pay or reimburse the Note Registrar, the Certificate Paying Agent,
the Certificate Registrar, the Paying Agent, the Indenture Trustee and any
co-trustee upon request for all reasonable expenses, disbursements and advances
incurred or made by the Note Registrar, the Certificate Paying Agent, the
Certificate Registrar, the Paying Agent, the Indenture Trustee or any co-trustee
in accordance with any of the provisions of this Agreement, the Indenture, the
Trust Agreement, any other Basic Document or the Auction Agent Agreement (which
payment shall not be limited by any law in regards to the compensation of a
trustee of an express trust) except any such expense, disbursement or advance as
may arise from its negligence, willful misfeasance or bad faith. In addition,
the Indenture Trustee shall be entitled to be reimbursed from the Servicer for
all reasonable costs associated with the transfer of servicing from the
predecessor servicer pursuant to Section 7.02 hereunder, including, without
limitation, any reasonable costs or expenses associated with the complete
transfer of all servicing data and the completion, correction or manipulation of
such servicing data as may be required by the Indenture Trustee to correct any
errors or insufficiencies in the servicing data or otherwise to enable the
Indenture Trustee or successor Servicer to service the Mortgage Loans properly
and effectively.
(b) The Servicer agrees to indemnify the Indenture Trustee, the Paying
Agent, the Note Registrar, the Certificate Paying Agent, the Certificate
Registrar and the Owner Trustee for, and to hold the Indenture Trustee (and any
Responsible Officer thereof), the Paying Agent, the Note Registrar, the
Certificate Paying Agent, the Certificate Registrar and the Owner Trustee, as
the case may be, harmless against, any loss, liability or expense incurred
without negligence, bad faith or willful misconduct on the part of the Indenture
Trustee, the Paying Agent, the Note Registrar, the Certificate Paying Agent, the
Certificate Registrar or the Owner Trustee, as the case may be, arising out of,
or in connection with, the acceptance and administration of the Issuer and the
assets thereof, including the costs and expenses (including reasonable legal
fees and expenses) of defending the Indenture Trustee, the Paying Agent, the
Note Registrar, the
29
Certificate Paying Agent, the Certificate Registrar or the Owner Trustee, as the
case may be, against any claim in connection with the exercise or performance of
any of its powers or duties under any Basic Document or the Auction Agent
Agreement; provided, however, that:
(i) with respect to any such claim, the Indenture Trustee, the Paying
Agent, the Note Registrar, the Certificate Paying Agent, the Certificate
Registrar or Owner Trustee, as the case may be, shall have given the Servicer
written notice thereof promptly after the Indenture Trustee, the Paying Agent,
the Note Registrar, the Certificate Paying Agent, the Certificate Registrar or
Owner Trustee, as the case may be, shall have actual knowledge thereof;
(ii) while maintaining control over its own defense, the Issuer, the
Indenture Trustee, the Paying Agent, the Note Registrar, the Certificate Paying
Agent, the Certificate Registrar or Owner Trustee, as the case may be, shall
cooperate and consult fully with the Servicer in preparing such defense; and
(iii) notwithstanding anything in this Agreement to the contrary, the
Servicer shall not be liable for settlement of any claim by the Indenture
Trustee, the Paying Agent, the Note Registrar, the Certificate Paying Agent, the
Certificate Registrar or the Owner Trustee, as the case may be, entered into
without the prior consent of the Servicer.
No termination of this Agreement or resignation or removal of the Paying
Agent, the Note Registrar, the Certificate Paying Agent, the Certificate
Registrar or the Indenture Trustee shall affect the obligations created by this
Section 6.06 of the Servicer to indemnify the Indenture Trustee, the Paying
Agent, the Note Registrar, the Certificate Paying Agent, the Certificate
Registrar and the Owner Trustee under the conditions and to the extent set forth
herein.
Notwithstanding the foregoing, the indemnification provided by the Servicer
in this Section 6.06(b) shall not pertain to any loss, liability or expense of
the Indenture Trustee, the Paying Agent, the Note Registrar, the Certificate
Paying Agent, the Certificate Registrar or the Owner Trustee, including the
costs and expenses of defending itself against any claim, incurred in connection
with any actions taken by the Indenture Trustee, the Paying Agent, the Note
Registrar, the Certificate Paying Agent, the Certificate Registrar or the Owner
Trustee at the written direction of the Noteholders or Certificateholders, as
the case may be, pursuant to the terms of this Agreement.
ARTICLE VII
Default
Section 7.01 Servicing Default.
(a) If any one of the following events (each, a "Servicing Default") shall
occur and be continuing:
(i) any failure by the Servicer to deposit in any of the Custodial
Account, the Note Payment Account, either Funding Account or the Distribution
Account any deposit required to be made under the terms of this Agreement that
continues unremedied for a period of three (3) Business Days after the earlier
of (A) the date upon which written notice of such failure
30
shall have been given to the Servicer by the Issuer or the Indenture Trustee or
to the Servicer, the Issuer and the Indenture Trustee by the Enhancer and (B)
the first date on which the Servicer has actual knowledge of such failure;
(ii) any failure on the part of the Servicer duly to observe or
perform any other covenants or agreements of the Servicer set forth in this
Agreement, which failure, in each case, materially and adversely affects the
interests of the Securityholders, and which failure continues unremedied for a
period of 45 days after the earlier of (A) the date on which written notice of
such failure, requiring the same to be remedied, and stating that such notice is
a "Notice of Default" hereunder, shall have been given to the Servicer by the
Issuer or the Indenture Trustee or to the Servicer, the Issuer and the Indenture
Trustee by the Enhancer and (B) the first date on which the Servicer has actual
knowledge of such failure;
(iii) the entry against the Servicer of a decree or order by a court
or agency or supervisory authority having jurisdiction in the premises for the
appointment of a trustee, conservator, receiver or liquidator in any
conservatorship, receivership, readjustment of debt, marshalling of assets and
liabilities or similar proceedings, or for the winding up or liquidation of its
affairs; or
(iv) the consent by the Servicer to the appointment of a trustee,
conservator, receiver or liquidator in any insolvency, conservatorship,
receivership, readjustment of debt, marshalling of assets and liabilities or
similar proceedings of or relating to the Servicer or of or relating to all or
substantially all of its property; or the commencement of an involuntary case
relating to the Servicer under any applicable federal or state bankruptcy,
insolvency or other similar law and such case shall either be consented to by
the Servicer or shall not have been dismissed or stayed within sixty (60) day of
its commencement; or the Servicer shall admit in writing its inability to pay
its debts generally as they become due, file a petition to take advantage of any
applicable insolvency or reorganization statute, make an assignment for the
benefit of its creditors or voluntarily suspend payment of its obligations;
then, and in every such case, so long as a Servicing Default shall not have been
remedied by the Servicer, either the Depositor, the Enhancer (so long as no
Enhancer Default exists), or the Indenture Trustee, at the written direction of
the holders of at least 51% of the Outstanding Note Balance (if an Enhancer
Default exists) by notice then given in writing to the Servicer, the Issuer and
the Indenture Trustee, may terminate all of the rights and obligations of the
Servicer as servicer under this Agreement other than its right to receive
servicing compensation and reimbursement for servicing the Mortgage Loans
hereunder during any period prior to the date of such termination, and the
Issuer, the Enhancer or the Indenture Trustee (with the written consent of the
Enhancer), may exercise any and all other remedies available at law or equity.
The Servicer shall immediately notify the Indenture Trustee, the Issuer and each
Rating Agency, the Enhancer and the Issuer in writing of any Servicing Default
as to which it has actual knowledge. On or after the receipt by the Servicer of
such written notice, all authority and power of the Servicer under this
Agreement, whether with respect to the Securities or the Mortgage Loans or
otherwise, shall pass to and be vested, subject to Section 7.02 hereof, as
pledgee of the Mortgage Loans, in the Indenture Trustee, pursuant to and under
this Section 7.01; and, without limitation, the Indenture Trustee is hereby
authorized and empowered to execute and deliver, on behalf of the Servicer, as
attorney-in-fact or otherwise, any and all documents and other instruments, and
31
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 of each Mortgage Loan and related documents, or otherwise. The
Servicer agrees to cooperate with the Issuer, the Enhancer and Indenture
Trustee, as the case may be, in effecting the termination of the
responsibilities and rights of the Servicer hereunder, including, without
limitation, the transfer to the Indenture Trustee for the administration by it
of all cash amounts relating to the Mortgage Loans that shall at the time be
held by the Servicer and to be deposited by it in the Custodial Account, or that
have been deposited by the Servicer in the Custodial Account or thereafter
received by the Servicer with respect to the Mortgage Loans. All reasonable
costs and expenses (including, but not limited to, attorneys' fees) incurred in
connection with amending this Agreement to reflect such succession as Servicer
pursuant to this Section 7.01 shall be paid by the predecessor Servicer (or if
the predecessor Servicer is the Indenture Trustee, the initial Servicer) upon
presentation of reasonable documentation of such costs and expenses.
(b) Notwithstanding any termination of the activities of the Servicer
hereunder, the Servicer shall be entitled to receive, out of any late collection
of a payment on a Mortgage Loan that was due prior to the notice terminating the
Servicer's rights and obligations hereunder and received after such notice, that
portion to which the Servicer would have been entitled pursuant to Sections 3.03
and 3.09, as well as its Servicing Fee in respect thereof, and any other amounts
payable to the Servicer hereunder the entitlement to which arose prior to the
termination of its activities hereunder.
Notwithstanding the foregoing, a delay in or failure of performance under
clause (i) or (ii) of the definition of Servicing Default, after the applicable
grace periods specified therein, shall not constitute a Servicing Default if
such delay or failure could not be prevented by the exercise of reasonable
diligence by the Servicer and such delay or failure was caused by an act of God
or the public enemy, acts of declared or undeclared war, public disorder,
rebellion or sabotage, epidemics, landslides, lightning, fire, hurricanes,
earthquakes, floods or similar causes. The preceding sentence shall not relieve
the Servicer from using reasonable efforts to perform its respective obligations
in a timely manner in accordance with the terms of this Agreement. The Servicer
shall provide the Indenture Trustee, the Paying Agent, the Enhancer and the
Securityholders with written notice of any such failure or delay by it, together
with a description of its efforts to so perform its obligations. The Servicer
shall immediately notify the Indenture Trustee, the Paying Agent, the Enhancer
and the Issuer in writing of any Servicing Default.
(c) If the Servicer Termination Triggers shall occur and be continuing with
respect to a Payment Date, then in each and every such case, and so long as no
Enhancer Default exists, the Enhancer may send written notice to the
Securityholders of its intention to remove the Servicer and appoint a successor
Servicer and the date on which such removal will take place; provided, however,
that such date shall be at least 30 days from the date of such notice. None of
the Indenture Trustee, the Paying Agent or the Securityholders shall have the
right to initiate removal of the Servicer if a Servicer Termination Trigger has
occurred.
Section 7.02 Indenture Trustee to Act; Appointment of Successor.
(a) On and after the time the Servicer receives a notice of termination
pursuant to Section 7.01 or sends a notice pursuant to Section 6.04, the
Indenture Trustee as pledgee of the
32
Mortgage Loans shall itself become, or shall appoint an affiliate of the
Indenture Trustee to become, the successor in all respects to the Servicer in
its capacity as servicer under this Agreement and the transactions set forth or
provided for herein and shall immediately assume all of the obligations of the
Servicer to make advances on Mortgage Loans under Section 3.03(b) and will be
subject to all other responsibilities, duties and liabilities relating thereto
placed on the Servicer by the terms and provisions hereof as soon as
practicable, but in no event later than 90 days after the Indenture Trustee
becomes successor servicer. During such 90 day period, the Indenture Trustee,
with the written consent of the Enhancer, may require the Servicer being
terminated to continue to perform such servicing responsibilities (other than
making advances on the Mortgage Loans under Section 3.03(b)) as the Indenture
Trustee deems appropriate. In such event, the Servicer being terminated shall
provide such services as directed by the Indenture Trustee until the earliest of
the date the Indenture Trustee notifies such Servicer to discontinue providing
such services, the date on which a successor servicer or the Indenture Trustee
has assumed all responsibilities, duties and liabilities of the Servicer
hereunder or the expiration of the 90 day period. The Servicer shall be entitled
to the Servicing Fee hereunder for any period during which the Servicer is
obligated to provide such services as if no termination of the Servicer had
occurred. Nothing in this Agreement or in the Trust Agreement shall be construed
to permit or require the Indenture Trustee to (i) succeed to the
responsibilities, duties and liabilities of the initial Servicer in its capacity
as Seller under the Purchase Agreement, (ii) be responsible or accountable for
any act or omission of the Servicer prior to the issuance of a notice of
termination hereunder, (iii) require or obligate the Indenture Trustee, in its
capacity as successor Servicer, to purchase, repurchase or substitute any
Mortgage Loan, (iv) fund any Additional Balances with respect to any Mortgage
Loan, (v) fund any losses on any Permitted Investment directed by any other
Servicer, or (vi) be responsible for the representations and warranties of the
predecessor Servicer. As compensation therefor, the Indenture Trustee shall be
entitled to such compensation as the Servicer would have been entitled to
hereunder if no such notice of termination had been given. Notwithstanding the
foregoing, if the Indenture Trustee is (x) unwilling to act as successor
Servicer itself or to appoint an affiliate to become successor Servicer, or (y)
legally unable so to act, the Indenture Trustee as pledgee of the Mortgage Loans
may (in the situation described in clause (x)) or shall (in the situation
described in clause (y)) appoint or petition a court of competent jurisdiction
to appoint any established housing and home finance institution, bank or other
mortgage loan servicer having a net worth of not less than $10,000,000 as the
successor to the Servicer hereunder in the assumption of all or any part of the
responsibilities, duties or liabilities of the Servicer hereunder; provided,
however, that any such successor Servicer shall be acceptable to the Enhancer,
as evidenced by the Enhancer's prior written consent, which consent shall not be
unreasonably withheld. Pending appointment of a successor to the Servicer
hereunder, unless the Indenture Trustee is prohibited by law from so acting, the
Indenture Trustee itself shall act or appoint an affiliate to act in such
capacity as provided above. In connection with such appointment and assumption,
the successor shall be entitled to receive compensation out of payments on
Mortgage Loans in an amount equal to the compensation that the Servicer would
otherwise have received pursuant to Section 3.11 (or such other compensation as
the Indenture Trustee and such successor shall agree). The appointment of a
successor Servicer shall not affect any liability of the predecessor Servicer
that may have arisen under this Agreement prior to its termination as Servicer
(including the obligation to purchase Mortgage Loans pursuant to Section 3.01,
to pay any deductible under an insurance policy pursuant to Section 3.05 or to
indemnify the Indenture Trustee pursuant to Section 6.06),
33
nor shall any successor Servicer (including the Indenture Trustee) be liable for
any acts or omissions of the predecessor Servicer or for any breach by such
Servicer of any of its representations or warranties contained herein or in any
related document or agreement. The Indenture Trustee and such successor shall
take such action, consistent with this Agreement and the requirements (including
any notice requirements) of applicable law, as shall be necessary to effectuate
any such succession. Notwithstanding the foregoing, the Indenture Trustee, in
its capacity as successor Servicer, shall not be responsible for the lack of
information and/or documents that it cannot obtain through reasonable efforts or
for failing to take any action that the Indenture Trustee is legally prohibited
from taking by applicable law.
(b) Any successor, including the Indenture Trustee, to the Servicer as
servicer shall during its term as Servicer (i) continue to service and
administer the Mortgage Loans for the benefit of the Securityholders, (ii)
maintain in force a policy or policies of insurance covering errors and
omissions in the performance of its obligations as Servicer hereunder and a
fidelity bond in respect of its officers, employees and agents to the same
extent as the Servicer is so required pursuant to Section 3.13 and (iii) be
bound by the terms of the Insurance Agreement.
(c) Any successor Servicer, including the Indenture Trustee, shall not be
deemed in default or to have breached its duties hereunder if the predecessor
Servicer shall fail to deliver any required deposit to the Custodial Account or
otherwise cooperate with any required servicing transfer or succession
hereunder.
(d) All reasonable costs and expenses (including attorneys' fees) incurred
in connection with the transfer of Mortgage Files and the servicing duties to a
successor servicer hereunder shall be paid by the related predecessor servicer.
Section 7.03 Notification to Securityholders. Upon any termination of or
appointment of a successor to the Servicer pursuant to this Article VII or
Section 6.04, the Indenture Trustee shall give prompt written notice thereof to
the Securityholders, the Enhancer, the Issuer and each Rating Agency.
ARTICLE VIII
Miscellaneous Provisions
Section 8.01 Amendment. This Agreement may be amended from time to time by
the parties hereto, but only by written instrument signed by the parties hereto;
provided, however, that any such amendment shall be accompanied by a letter from
each Rating Agency to the effect that such amendment will not result in a Rating
Event if determined without regard to the Policy; provided, further, that the
Enhancer, the Paying Agent and the Indenture Trustee shall consent thereto.
Section 8.02 Exhibits. The exhibits to this Agreement are hereby
incorporated and made a part hereof and are an integral part of this Agreement.
Section 8.03 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REFERENCE TO ITS CONFLICTS OF LAW PROVISIONS (OTHER
34
THAN SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW), AND THE OBLIGATIONS, RIGHTS
AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH
SUCH LAWS.
Section 8.04 Notices. All demands, notices and communications hereunder
shall be in writing and shall be deemed to have been duly given if personally
delivered at or mailed by certified mail, return receipt requested, to (a) in
the case of the Servicer, One Wachovia Center, 18th Floor, Charlotte, North
Carolina 28288-0572, Attention: David Mason, Re: Wachovia Asset Securitization
[_____] Trust, Facsimile: (704) 383-3878, (b) in the case of the Enhancer,
Financial Guaranty Insurance Company, 125 Park Avenue, New York, New York 10017,
Attention: Research and Risk Management (Wachovia Asset Securitization Issuance,
LLC [_____] Trust), (c) in the case of Moody's, Home Mortgage Loan Monitoring
Group, 4th Floor, 99 Church Street, New York, New York 10001, (d) in the case of
Standard & Poor's, 55 Water Street, New York, New York 10004, Attention:
Residential Mortgage Surveillance Group, (e) in the case of the Owner Trustee,
[_____], [_____], (f) in the case of the Issuer, Wachovia Asset Securitization
Issuance, LLC [_____] Trust, c/o the Owner Trustee at the address set forth in
clause (e) above, (g) in the case of the Indenture Trustee, at the Corporate
Trust Office of the Indenture Trustee, and (h) in the case of the Paying Agent,
at the Corporate Trust Office of the Paying Agent; or, with respect to each of
the foregoing Persons, at such other address as shall be designated by such
Person in a written notice to the other foregoing Persons. Any notice required
or permitted to be mailed to a Securityholder shall be given by first class
mail, postage prepaid, at the address of such Securityholder as shown in the
Note Register or Certificate Register, as the case may be. Any notice so mailed
within the time prescribed in this Agreement shall be conclusively presumed to
have been duly given, whether or not the related Securityholder receives such
notice. Any notice or other document required to be delivered or mailed by the
Indenture Trustee to any Rating Agency shall be given on a reasonable efforts
basis and only as a matter of courtesy and accommodation, and the Indenture
Trustee shall have no liability for failure to deliver any such notice or
document to any Rating Agency.
Section 8.05 Severability of Provisions. 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 or the Securities or
the rights of the Securityholders.
Section 8.06 Protection of Confidential Information. The Servicer shall
keep confidential and shall not divulge to any party any information pertaining
to the Mortgage Loans or any Mortgagor thereunder, except as required pursuant
to this Agreement and except to the extent that it is necessary and appropriate
for the Servicer to do so in working with legal counsel, auditors, taxing
authorities, regulatory authorities or other governmental agencies or in
accordance with the Collection Policy.
Section 8.07 Third-Party Beneficiaries. This Agreement shall inure to the
benefit of and be binding upon the parties hereto, the Securityholders, the
Enhancer, the Owner Trustee and their respective successors and permitted
assigns. Except as otherwise provided in this
35
Agreement, no other Person shall have any right or obligation hereunder. The
Enhancer shall be an express third-party beneficiary of this Agreement.
Section 8.08 Counterparts. This instrument may be executed in any number of
counterparts, each of which so executed shall be deemed to be an original, but
all such counterparts shall together constitute but one and the same instrument.
Section 8.09 Effect of Headings and Table of Contents. The Article and
Section headings herein and the Table of Contents are for convenience only and
shall not affect the construction hereof.
Section 8.10 Termination upon Purchase by the Servicer or Liquidation of
All Mortgage Loans; Partial Redemption.
(a) The respective obligations and responsibilities of the Servicer, the
Issuer, the Paying Agent and the Indenture Trustee created hereby shall
terminate upon the last action required to be taken by the Issuer pursuant to
the Trust Agreement and by the Indenture Trustee and the Paying Agent pursuant
to the Indenture following the earlier of:
(i) the date on or before which the Indenture or the Trust Agreement
is terminated, or
(ii) the purchase by the Servicer from the Issuer of all Mortgage
Loans and REO Property in accordance with Section 8.10(b).
(b) The Servicer shall have the right to purchase from the Issuer all of
the Mortgage Loans and related REO Property if the Note Balance of the Notes as
of any Payment Date is less than 10% of the Note Balance of the Notes as of the
Closing Date, (provided that a draw on the Policy would not occur as a result of
such purchase, and provided further that the purchase price will provide
sufficient funds to pay the outstanding Note Balance and accrued and unpaid
interest on the Notes to the Payment Date on which such amounts are to be
distributed to the Securityholders), at a price equal to 100% of the aggregate
unpaid Principal Balance of all such remaining Mortgage Loans, plus accrued and
unpaid interest thereon at the weighted average of the Loan Rates thereon up to
the date preceding the Payment Date on which such amounts are to be distributed
to the Securityholders (and in the case of REO Property, the fair market value
of the REO Property), plus any amounts due and owing to the Enhancer under the
Insurance Agreement related to the Mortgage Loans or the Notes (and any unpaid
Servicing Fee relating to the Mortgage Loans shall be deemed to have been paid
at such time), plus any Interest Shortfall and interest owed thereon to the
Noteholders. The purchase price paid by the Servicer shall also include any
amounts owed by the Seller pursuant to Section 3.01(d) of the Purchase Agreement
in respect of any liability, penalty or expense that resulted from a breach of
the representation and warranty set forth in Section 3.01(b)(xi), that remain
unpaid on the date of such purchase.
The Servicer shall send written notice to the Indenture Trustee, the Paying
Agent and the Enhancer of its intent to exercise its right to purchase any of
the Mortgage Loans pursuant to this Section 8.10(b).
36
If such right is exercised by the Servicer, the Servicer shall deposit the
amount calculated pursuant to this Section 8.08(b) with the Indenture Trustee or
the Paying Agent pursuant to Section 4.10 of the Indenture and, upon the receipt
of such deposit, the Indenture Trustee shall release to the Servicer, the files
pertaining to the Mortgage Loans being purchased. The Servicer, at its expense,
shall prepare and deliver to the Indenture Trustee for execution, at the time
the related Mortgage Loans are to be released to the Servicer, appropriate
documents assigning each such Mortgage Loans from the Indenture Trustee or the
Issuer to the Servicer or the appropriate party.
Section 8.11 Certain Matters Affecting the Indenture Trustee and the Paying
Agent. For all purposes of this Agreement, in the performance of any of each of
their duties or in the exercise of any of either of their powers hereunder, the
Indenture Trustee and the Paying Agent shall be subject to and entitled to the
benefits of Article VI of the Indenture.
Section 8.12 Owner Trustee, Paying Agent and Indenture Trustee Not Liable
for Related Documents. The recitals contained herein shall be taken as the
statements of the Servicer, and the Owner Trustee, the Paying Agent and the
Indenture Trustee assume no responsibility for the correctness thereof. The
Owner Trustee, the Paying Agent and the Indenture Trustee make no
representations as to the validity or sufficiency of this Agreement, of any
Basic Document or Related Document, or of the Certificates (other than the
signatures of the Owner Trustee and the Indenture Trustee on the Certificates)
or the Notes. The Owner Trustee, the Paying Agent and the Indenture Trustee
shall at no time have any responsibility or liability with respect to the
sufficiency of the Trust Estate or its ability to generate the payments to be
distributed to Certificateholders under the Trust Agreement or the Noteholders
under the Indenture, including the compliance by the Depositor, the Seller or
the Servicer with any warranty or representation made under any Basic Document
or the accuracy of any such warranty or representation, or any action of any
person taken in the name of the Owner Trustee, the Paying Agent or the Indenture
Trustee.
37
IN WITNESS WHEREOF, the Servicer, the Issuer and the Indenture Trustee have
caused this Agreement to be duly executed by their respective officers or
representatives all as of the day and year first above written.
WACHOVIA BANK, NATIONAL ASSOCIATION,
as Servicer
By:
---------------------------------
Name:
Title:
WACHOVIA ASSET SECURITIZATION
ISSUANCE, LLC [_____] TRUST,
as Issuer
By: Wilmington Trust Company, not in
its individual capacity but
solely as Owner Trustee
By:
----------------------------------
Name:
Title:
WACHOVIA BANK, NATIONAL ASSOCIATION,
as Paying Agent
By:
----------------------------------
Name:
Title:
[_____], not in its individual
capacity but solely as Indenture
Trustee
By:
----------------------------------
Name:
Title:
38
EXHIBIT A
MORTGAGE LOAN SCHEDULE
A-1
EXHIBIT B
COLLECTION POLICY
[See attachment]
B-1
EXHIBIT C
LIMITED POWER OF ATTORNEY
KNOW ALL MEN BY THESE PREMISES:
That [_____], as indenture trustee (the "Indenture Trustee"), under the
indenture dated as of [_____] (the "Indenture"), among Wachovia Asset
Securitization Issuance, LLC [_____] Trust, as issuer, Wachovia Bank, National
Association, as Paying Agent, and the Indenture Trustee, a national bank, and
having its principal office located at East Fifth Street, St. Paul, Minnesota
55101, Attn: Client Manager - [_____], hath made, constituted and appointed, and
does by these presents make, constitute and appoint Wachovia Bank, National
Association, a national banking association organized and existing under the
laws of the United States of America, its true and lawful Attorney-in-Fact, with
full power and authority to sign, execute, acknowledge, deliver, file for
record, and record any instrument on its behalf, and to perform such other act
or acts as may be customarily and reasonably necessary and appropriate, to
effectuate the following enumerated transactions in respect of any of the
Mortgages securing a Mortgage Loan and the related Loan Agreements for which the
undersigned is acting as Indenture Trustee for various Securityholders (whether
the undersigned is named therein as mortgagee or beneficiary or has become
mortgagee by virtue of endorsement of such Loan Agreement secured by any such
Mortgage) and for which Wachovia Bank, National Association is acting as
Servicer pursuant to the Servicing Agreement.
This appointment shall apply to the following enumerated transactions only:
1. The modification or re-recording of a Mortgage, where said modification or
re-recording is for the purpose of correcting the Mortgage to conform same
to the original intent of the parties thereto or to correct title errors
discovered after such title insurance was issued and said modification or
re-recording, in either instance, does not adversely affect the Lien of the
Mortgage as insured.
2. The subordination of the Lien of a Mortgage to an easement in favor of a
public utility company or a government agency or unit with powers of
eminent domain; this section shall include, without limitation, the
execution of partial satisfactions/releases, partial reconveyances or the
execution of requests to trustees to accomplish same.
3. With respect to a Mortgage, the foreclosure, the taking of a deed in lieu
of foreclosure, or the completion of judicial or non-judicial foreclosure
or termination, cancellation or rescission of any such foreclosure,
including, without limitation, any and all of the following acts:
a. The substitution of trustee(s) serving under a Mortgage, in accordance
with state law and the Mortgage;
b. The preparation and issuance of statements of breach or
non-performance;
c. The preparation and issuance of notices of default;
C-1
d. Cancellations/rescissions of notices of default and/or notices of
sale;
e. The taking of a deed in lieu of foreclosure; and
f. Such other documents and actions as may be necessary under the terms
of the Mortgage or state law to expeditiously complete said
transactions.
4. The conveyance of the properties to the mortgage insurer, or the closing of
the title to the property to be acquired as real estate owned, or
conveyance of title to real estate owned.
5. The completion of loan assumption agreements.
6. The full satisfaction/release of a Mortgage or full reconveyance upon
payment and discharge of all sums secured thereby, including, without
limitation, cancellation of the related Loan Agreement.
7. The assignment of any Mortgage and the related Loan Agreement, in
connection with the repurchase of the Mortgage Loan secured and evidenced
thereby.
8. The full assignment of a Mortgage upon payment and discharge of all sums
secured thereby in conjunction with the refinancing thereof, including,
without limitation, the endorsement of the related Loan Agreement.
9. The modification or re-recording of a Mortgage, where said modification or
re-recording is for the purpose of any modification pursuant to Section
4.01 of the Servicing Agreement.
10. The subordination of the Lien of a Mortgage, where said subordination is in
connection with any modification pursuant to Section 3.01 of the Servicing
Agreement, and the execution of partial satisfactions/releases in
connection with such same Section 3.01.
The undersigned gives said Attorney-in-Fact full power and authority to
execute such instruments and to do and perform all and every act and thing
necessary and proper to carry into effect the power or powers granted by or
under this Limited Power of Attorney as fully as the undersigned might or could
do, and hereby does ratify and confirm to all that said Attorney-in-Fact shall
lawfully do or cause to be done by authority hereof.
Capitalized terms used herein that are not otherwise defined shall have the
meanings ascribed thereto in Appendix A to the Indenture.
C-2
Third parties without actual notice may rely upon the exercise of the
power granted under this Limited Power of Attorney and may be satisfied that
this Limited Power of Attorney shall continue in full force and effect and has
not been revoked, unless an instrument of revocation has been made in writing by
the undersigned.
[_____],
not in its individual capacity
but solely as Indenture Trustee
By:
---------------------------------
Name:
Title:
C-3
STATE OF )
SS.
COUNTY OF )
On this [___] day of [_____], [_____], before me the undersigned, Notary
Public of said State, personally appeared , personally known to me to be duly
authorized officers of [_____] that executed the within instrument and
personally known to me to be the persons who executed the within instrument on
behalf of [_____] therein named, and acknowledged to me such [_____] executed
the within instrument pursuant to its by-laws.
WITNESS my hand and official seal.
Notary Public in and for the
State of ____________________________
After recording, please mail to:
Attn:_________________________
C-4
EXHIBIT D
FORM OF REQUEST FOR RELEASE
DATE:
TO:
RE: REQUEST FOR RELEASE OF DOCUMENTS
In connection with your administration of the Mortgage Loans, we request the
release of the Mortgage File described below.
Servicing Agreement Dated:
Series #:
Account #:
Pool #:
Loan #:
Borrower Name(s):
Reason for Document Request: (circle one) Mortgage Loan
Prepaid in Full Mortgage Loan Repurchased
"We hereby certify that all amounts received or to be received in connection
with such payments which are required to be deposited have been or will be so
deposited as provided in the Servicing Agreement."
- --------------------------------------------
Wachovia Bank, National Association
Authorized Signature
******************************************************************************
TO CUSTODIAN: Please acknowledge this request, and check off documents being
enclosed with a copy of this form. You should retain this form for your files in
accordance with the terms of the Servicing Agreement.
Enclosed Documents: [ ] Loan Agreement
Name ___________________________
Title __________________________
D-1