Exhibit 4.10
EXECUTION COPY
AMENDED AND RESTATED SERVICING AGREEMENT
DATED 18TH NOVEMBER, 2004
HALIFAX PLC
AS SERVICER
AND
PERMANENT MORTGAGES TRUSTEE LIMITED
AS MORTGAGES TRUSTEE
AND
HALIFAX PLC
AS SELLER
AND
PERMANENT FUNDING (NO. 1) LIMITED
AS FUNDING 1
AND
THE BANK OF NEW YORK
AS SECURITY TRUSTEE
ALLEN & OVERY
ALLEN & OVERY LLP
LONDON
CONTENTS
CLAUSE PAGE
1. Definitions and Interpretation.......................................................................2
2. Appointment of Servicer..............................................................................2
3. The Administration Services..........................................................................3
4. Mortgages Trustee Variable Base Rate/Mortgages Trustee Tracker Rate..................................5
5. Administration of Mortgages..........................................................................7
6. No Liability........................................................................................12
7. New Loans...........................................................................................12
8. Product Switching and Further Advances..............................................................12
9. Redemption of Mortgages.............................................................................13
10. Powers of Attorney..................................................................................13
11. Costs and Expenses..................................................................................14
12. Information.........................................................................................14
13. Remuneration........................................................................................16
14. Insurances..........................................................................................16
15. Halifax Insurance Policies..........................................................................16
16. Buildings Policies..................................................................................17
17. Title Deeds and Customer Files......................................................................17
18. Data Protection.....................................................................................18
19. Covenants of Servicer...............................................................................19
20. Services Non-Exclusive..............................................................................20
21. Termination.........................................................................................20
22. Further Assurance...................................................................................23
23. Miscellaneous.......................................................................................23
24. Confidentiality.....................................................................................24
25. Notices.............................................................................................25
26. Variation and Waiver................................................................................26
27. No Partnership......................................................................................26
28. Assignment..........................................................................................26
29. Change of Security Trustee..........................................................................27
30. Amendments..........................................................................................27
31. Exclusion of Third Party Rights.....................................................................27
32. Counterparts and Severability.......................................................................27
33. Governing Law and Jurisdiction......................................................................27
34. Process Agent.......................................................................................27
SCHEDULE
1. The Services........................................................................................29
2. Form of Quarterly Pool Cut..........................................................................30
3. Minimum Servicing Standards.........................................................................31
Signatories..................................................................................................31
THIS AMENDED AND RESTATED SERVICING AGREEMENT is made as a deed 18th November,
2004
BETWEEN:
(1) HALIFAX PLC (registered number 02367076), a public limited company
incorporated under the laws of England and Wales whose registered
office is at Trinity Road, Halifax, West Yorkshire HX1 2RG (in its
capacity as the SERVICER of the Loans and their Related Security);
(2) PERMANENT MORTGAGES TRUSTEE LIMITED (registered number 83116), a
private limited company incorporated under the laws of Jersey, Channel
Islands whose registered office is at 47 Esplanade, St. Helier, Jersey
JE1 0BD, Channel Islands (in its capacity as the MORTGAGES TRUSTEE);
(3) HALIFAX PLC (registered number 02367076), a public limited company
incorporated under the laws of England and Wales whose registered
office is at Trinity Road, Halifax, West Yorkshire HX1 2RG (in its
capacity as the SELLER and as one of the Beneficiaries);
(4) PERMANENT FUNDING (NO. 1) LIMITED (registered number 4267660), a
private limited company incorporated under the laws of England and
Wales whose registered office is at Blackwell House, Guildhall Yard,
London EC2V 5AE (in its capacity as FUNDING 1 and one of the
Beneficiaries); and
(5) THE BANK OF NEW YORK, a New York banking corporation acting through its
office at 48th Floor, One Canada Square, London E14 5AL (in its
capacity as the SECURITY TRUSTEE, which expression shall include such
company and all other persons or companies for the time being acting as
security trustee (or co-trustee) pursuant to the terms of the Funding 1
Deed of Charge).
WHEREAS:
(A) The Servicer carries on the business of, inter alia, administering
mortgage loans secured on residential properties within the United
Kingdom.
(B) By the Mortgage Sale Agreement, the Seller agreed to sell certain
mortgage loans it had originated to individual borrowers together with
their Related Security to the Mortgages Trustee. The Mortgages Trustee
holds those mortgage loans as bare trustee for Funding 1 and the Seller
pursuant to the terms of the Mortgages Trust Deed.
(C) The Servicer has agreed to provide administration and management
services to the Mortgages Trustee, the Seller and Funding 1 on the
terms and subject to the conditions contained in the Servicing
Agreement dated 14th June, 2002, as amended and restated on 6th March,
2003, 25th November, 2003, 12th March, 2004, 22nd July, 2004 and as
further amended and restated by this Agreement and from time to time
(the SERVICING AGREEMENT) in relation to, inter alia, the Loans and
their Related Security sold to the Mortgages Trustee by the Seller.
(D) The parties to the Servicing Agreement have agreed to amend and restate
the terms of that Agreement as set out herein.
1
IT IS HEREBY AGREED as follows:
1. DEFINITIONS AND INTERPRETATION
1.1 The amended and restated master definitions and construction schedule
signed by, amongst others, the parties to this Agreement and dated 18th
November, 2004 (as the same may be amended, varied or supplemented from
time to time with the consent of the parties to this Agreement) (the
MASTER DEFINITIONS AND CONSTRUCTION SCHEDULE) is expressly and
specifically incorporated into this Agreement and, accordingly, the
expressions defined in the Master Definitions and Construction Schedule
(as so amended, varied or supplemented from time to time) shall, except
where the context otherwise requires and save where otherwise defined
herein, have the same meanings in this Agreement, including the
Recitals hereto, and this Agreement shall be construed in accordance
with the interpretation provisions set out in CLAUSE 2 of the Master
Definitions and Construction Schedule.
1.2 Any reference in this Agreement to any discretion, power or right on
the part of the Mortgages Trustee shall be as exercised by the
Mortgages Trustee only as directed by the Beneficiaries but subject in
each case to the provisions of CLAUSE 16.2 of the Mortgages Trust Deed.
1.3 Save as expressly provided herein, any warranties or undertakings
provided under this Agreement are made to each other party to this
Agreement.
1.4 This Agreement amends and restates the Servicing Agreement made on 14th
June, 2002 as amended and restated on 6th March 2003, 25th November,
2003, 12th March, 2004 and 22nd July, 2004 (the PRINCIPAL AGREEMENT).
As of the date of this Agreement, any future rights or obligations
(excluding such obligations accrued to the date of this Agreement) of a
party under the Principal Agreement shall be extinguished and shall
instead be governed by this Agreement. The parties agree that this
amended and restated Agreement shall have effect and be operational as
from 14th June, 2002.
2. APPOINTMENT OF SERVICER
2.1 Subject to CLAUSES 2.3 and 4.3(D), and until termination pursuant to
CLAUSE 21, the Mortgages Trustee, the Seller and Funding 1 (according
to their respective estates and interests) each hereby appoints the
Servicer as its lawful agent on their respective behalfs to administer
the Loans and their Related Security, to provide certain other
administration and management services and to exercise their respective
rights, powers and discretions, and to perform their respective duties,
under and in relation to the Loans and their Related Security. The
Servicer in each case hereby accepts such appointment on the terms and
subject to the conditions of this Agreement. The Security Trustee
consents to the appointment of the Servicer on the terms of and subject
to the conditions of this Agreement.
2.2 For the avoidance of doubt and in connection with the rights, powers
and discretions conferred under CLAUSE 2.1, during the continuance of
its appointment hereunder, the Servicer shall, subject to the terms and
conditions of this Agreement, the Mortgage Conditions, the Mortgage
Sale Agreement and the Mortgages Trust Deed, have the full power,
authority and right to do or cause to be done any and all things which
it reasonably considers necessary, convenient or incidental to the
administration of the Loans and their Related Security or the exercise
of such rights, powers and discretions, provided however that neither
the Mortgages Trustee nor Funding 1 nor their respective directors
shall be required or obliged at any time to enter into any transaction
or to comply with any directions which the Servicer may give with
respect to the operating and financial policies of the Mortgages
Trustee or Funding 1 and the
2
Servicer hereby acknowledges that all powers to determine such policies
(including the determination of whether or not any particular policy is
for the benefit of the Mortgages Trustee or Funding 1) are, and shall
at all times remain, vested, as the case may be, in the Mortgages
Trustee and/or Funding 1 (and their respective directors) and none of
the provisions of this Agreement shall be construed in a manner
inconsistent with this proviso.
2.3 The appointment pursuant to CLAUSE 2.1 is conditional upon the issue of
the First Issuer Notes having taken place and shall take effect upon
and from the Initial Closing Date automatically without any further
action on the part of any person PROVIDED THAT if the issue of the
First Issuer Notes has not occurred by the 14th June, 2002, or such
later date as the First Issuer and the Joint Lead Managers may agree,
this Agreement shall cease to be of further effect.
3. THE ADMINISTRATION SERVICES
3.1 GENERAL
(a) The duty of the Servicer shall be to provide the services set out in
this Agreement including SCHEDULE 1 hereto (the SERVICES).
(b) If and when the Servicer is requested to confirm or state the capacity
in which it is administering and servicing the Loans, their Related
Security and related matters pursuant to this Agreement by any Borrower
or any third party not being a party to this Agreement and to whom the
Servicer is obliged by law to disclose such information, the Servicer
shall confirm or state that it is acting in its capacity as servicer of
the Loans, their Related Security and related matters as agent for and
on behalf of the Mortgages Trustee and the Beneficiaries and not on its
own behalf.
3.2 SUB-CONTRACTS
(a) The Servicer may sub-contract or delegate the performance of all or any
of its powers and obligations under this Agreement, provided that such
sub-contracting or delegation would not prevent the Servicer, the
Mortgages Trustee or Funding 1 from complying in all material respects
with any law, statute, judgment, decree, order, licence, authorisation,
rule, order and provided further that (subject to CLAUSE 3.2(B)):
(i) the prior written consent of Funding 1 and the Security Trustee
to the proposed arrangement (including, if Funding 1 and the
Security Trustee consider it necessary, approving any contract
which sets out the terms on which such arrangements are to be
made) has been obtained and written notification has been given
to each of the Rating Agencies;
(ii) where the arrangements involve the custody or control of any
Customer Files and/or Title Deeds relating to the Portfolio for
the purpose of performing any delegated Services the
sub-contractor or delegate has executed an acknowledgement in
form and substance acceptable to Funding 1 and the Security
Trustee to the effect that any such Customer Files and/or Title
Deeds are and will be held to the order of the Mortgages Trustee
(as trustee for the Beneficiaries);
(iii) where the arrangements involve or may involve the receipt by the
sub-contractor or delegate of monies belonging to the
Beneficiaries which, in accordance with this Agreement, are to be
paid into the Mortgages Trustee GIC Account and/or the Funding 1
GIC Account, the sub-contractor or delegate has executed a
declaration in form and substance acceptable to the Beneficiaries
that any such monies held by it or
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to its order are held on trust for the Beneficiaries and will be
paid forthwith into, as applicable, the Mortgages Trustee GIC
Account and/or the Funding 1 GIC Account in accordance with the
terms of the Mortgages Trust Deed;
(iv) any such sub-contractor or delegate has executed a written waiver
of any Security Interest arising in connection with such
delegated Services (to the extent that such Security Interest
relates to the Portfolio or any amount referred to in (iii)
above); and
(v) neither the Security Trustee, the Mortgages Trustee nor Funding 1
shall have any liability for any costs, charges or expenses
payable to or incurred by such sub-contractor or delegate or
arising from the entering into, the continuance or the
termination of any such arrangement.
(b) The provisos to CLAUSE 3.2(A)(I), (II) and (III) shall not apply:
(i) to the engagement by the Servicer of:
(A) any receiver, solicitor, insurance broker, valuer,
surveyor, accountant, estate agent, insolvency
practitioner, auctioneer, bailiff, sheriff officer, debt
counsellor, tracing agent, property management agent,
licensed conveyancer, qualified conveyancer or other
professional adviser acting as such; or
(B) any locksmith, builder or other contractor acting as such
in relation to a Property,
in any such case being a person or persons whom the Servicer
would be willing to appoint in respect of its own mortgages in
connection with the performance by the Servicer of any of its
obligations or functions or in connection with the exercise of
its powers under this Agreement; or
(ii) to any delegation to any wholly-owned subsidiary of the Seller or
HBOS plc from time to time.
(c) The Mortgages Trustee and/or Funding 1 and the Security Trustee may by
notice in writing require the Servicer to assign to the Mortgages
Trustee any rights which the Servicer may have against any
sub-contractor or delegate arising from the performance of services by
such person relating to any matter contemplated by this Agreement and
the Servicer acknowledges that such rights assigned to the Mortgages
Trustee will be exercised by the Mortgages Trustee as trustee for the
Beneficiaries subject to the terms of the Mortgages Trust Deed.
(d) Notwithstanding any sub-contracting or delegation of the performance of
its obligations under this Agreement, the Servicer shall not thereby be
released or discharged from any liability hereunder and shall remain
responsible for the performance of all of the obligations of the
Servicer under this Agreement, and the performance or non-performance
or the manner of performance of any sub-contractor or delegate of any
of the Services shall not affect the Servicer's obligations under this
Agreement and any breach in the performance of the Services by such
sub-contractor or delegate shall, subject to the Servicer being
entitled for a period of 20 London Business Days from receipt of any
notice of the breach to remedy such breach by any sub-contractor or
delegate, be treated as a breach of this Agreement by the Servicer.
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3.3 NOTICES ETC.
(a) Within 20 London Business Days of the Initial Closing Date, the
Servicer will give notice (or procure that notice is given) by courier
or by special delivery to HBOS Insurance (PCC) Guernsey Limited of the
assignment to the Mortgages Trustee by the Seller of its interests in
the Halifax Mortgage Re Limited MIG Policies pursuant to the Assignment
of Halifax Mortgage Re Limited MIG Policies, which shall be held by the
Mortgages Trustee absolutely as bare trustee for the Beneficiaries
pursuant to the Mortgages Trust Deed, and the Servicer shall take all
reasonable steps to ensure the return by the relevant recipient of the
duplicate notices of assignment by way of acknowledgement thereof.
(b) Promptly upon request by Funding 1 and the Security Trustee, the
Servicer shall procure that any notices permitted to be given by the
Mortgages Trustee under CLAUSE 6.4 of the Mortgage Sale Agreement are
so given by the Servicer on the Mortgages Trustee's behalf.
3.4 LIABILITY OF SERVICER
(a) The Servicer shall indemnify each of the Mortgages Trustee and the
Beneficiaries on demand on an after-tax basis for any loss, liability,
claim, expense or damage suffered or incurred by any of them in respect
of the negligence or wilful default of the Servicer in carrying out its
functions as Servicer under this Agreement or the other Transaction
Documents or as a result of a breach by the Servicer of the terms and
provisions of this Agreement or the other Transaction Documents in
relation to such functions.
(b) For the avoidance of doubt, the Servicer shall not be liable in respect
of any loss, liability, claim, expense or damage suffered or incurred
by the Mortgages Trustee and/or the Beneficiaries and/or any other
person as a result of the proper performance of the Services by the
Servicer save where such loss, liability, claim, expense or damage is
suffered or incurred as a result of any negligence or wilful default of
the Servicer or as a result of a breach by the Servicer of the terms
and provisions of this Agreement or the other Transaction Documents in
relation to such functions.
(c) Any indemnification under this CLAUSE 3.4 in respect of loss suffered
by the Beneficiaries shall be paid for by reducing the Seller Share of
the Trust Property by an amount equal to the relevant loss incurred by
the Beneficiaries in accordance with CLAUSE 8.4 of the Mortgages Trust
Deed and SCHEDULE 2 to the Cash Management Agreement.
4. MORTGAGES TRUSTEE VARIABLE BASE RATE/MORTGAGES TRUSTEE TRACKER RATE
4.1 The Mortgages Trustee and each of the Beneficiaries each hereby grants
the Servicer full right, liberty and authority from time to time, in
accordance with the relevant Mortgage Terms, to determine and set the
Mortgages Trustee Variable Base Rate and any variable margin
incorporated within the Mortgages Trustee Tracker Rate above the Bank
of England repo rate applicable in relation to Tracker Rate Loans
chargeable to Borrowers from time to time. In exercising such right,
liberty and authority the Servicer undertakes to each of the other
parties to this Agreement that it shall not at any time, without the
prior consent of the Mortgages Trustee and Funding 1, set or maintain
the Mortgages Trustee Variable Base Rate at a rate which is higher than
(although it may be lower than or equal to) the then prevailing
Seller's Variable Base Rate, nor will it set or maintain a margin
incorporated within the Mortgages Trustee Tracker Rate above the Bank
of England repo rate in respect of any Tracker Rate Loan, which is
higher than the margin above the Bank of England repo rate then
applying to those Tracker Rate Loans beneficially owned by the Seller
outside the Portfolio except in the limited circumstances described in
this paragraph when the Mortgages Trustee
5
will be entitled to do so. The Servicer will not at any time, without
the prior consent of the Mortgages Trustee and Funding 1, set or
maintain:
(a) the Mortgages Trustee Variable Base Rate at a rate which is
higher than (although it may be lower than or equal to) the then
prevailing Seller's Variable Base Rate which applies to loans
beneficially owned by the Seller outside the Portfolio;
(b) the margin incorporated within the Mortgages Trustee Tracker Rate
in respect of any Tracker Rate Loan in the Portfolio which, where
the offer conditions for that Tracker Rate Loan provide that the
margin above the Bank of England repo rate shall be the same as
the margin above the Bank of England repo rate applicable to all
other loans having the same offer conditions in relation to
interest rate setting as that Tracker Rate Loan, is higher or
lower than the margin above the Bank of England repo rate then
applying to those Tracker Rate Loans beneficially owned by the
Seller outside the Portfolio; and
(c) the margin incorporated within the Mortgages Trustee Tracker Rate
above the Bank of England repo rate in respect of any other
Tracker Rate Loan which is higher than the margin above the Bank
of England repo rate which would then be set in accordance with
the Seller's Policy from time to time in relation to that Tracker
Rate Loan,
unless the Servicer is required to do so pursuant to CLAUSE 4.3, and,
subject to that requirement, that it shall not change the Mortgages
Trustee Variable Base Rate nor the Mortgages Trustee Tracker Rate save
for the same reasons as the Seller was entitled, under the Mortgage
Conditions, to change the Seller's Variable Base Rate and the Seller's
Tracker Rate prior to the sale to the Mortgages Trustee of the Loans
comprised in the Portfolio and their Related Security. Each of the
Mortgages Trustee and the Beneficiaries shall be bound by the Mortgages
Trustee Variable Base Rate and the Mortgages Trustee Tracker Rate set
in accordance with this Agreement.
4.2 The Servicer shall take the steps rendered necessary by the relevant
Mortgage Terms and applicable law (including, without limitation, the
Guidance Note on Interest Variation Terms issued by the Office of Fair
Trading in February 2000 and any successor guideline or applicable
additional guidelines) to bring each change in such rate or rates of
interest to the attention of the relevant Borrowers, whether due to a
change in the Mortgages Trustee Variable Base Rate or the Mortgages
Trustee Tracker Rate or as a consequence of any provisions of the
Mortgage Terms. Any change in the Mortgages Trustee Variable Base Rate
or the Mortgages Trustee Tracker Rate shall be notified in writing to
each of the Mortgages Trustee, the Security Trustee and the
Beneficiaries as soon as reasonably practicable and shall, upon receipt
of a request from any of such parties, notify such requesting party of
any changes in the Monthly Payments in relation to the Loans. All costs
arising in relation to such a notification of a change in such rate or
rates of interest shall be borne by the Servicer.
4.3 (a) On each Funding 1 Interest Payment Date the Servicer shall
determine, having regard to the aggregate of:
(i) the revenue which Funding 1 would expect to receive during
the next succeeding Interest Period;
(ii) the Mortgages Trustee Variable Base Rate, any variable
margins applicable in relation to any Tracker Rate Loans
and the Variable Mortgage Rates in respect of the Loans
which the Servicer proposes to set under this CLAUSE 4; and
6
(iii) the other resources available to Funding 1 including the
Funding 1 Swap Agreement, the Funding 1 Liquidity Facility,
the General Reserve Fund and the Liquidity Reserve Fund,
whether Funding 1 would receive an amount of revenue during that
Loan Interest Period which when aggregated with the funds
otherwise available to it is less than the amount which is the
aggregate of (A) the amount of interest which will be payable in
respect of the Term AAA Advances on the Funding 1 Interest
Payment Date falling at the end of such Loan Interest Period and
(B) the other senior expenses of Funding 1 which rank in priority
thereto (the amount (if any) by which it is less being the
INTEREST RATE SHORTFALL).
(b) If the Servicer determines that there will be an Interest Rate
Shortfall, it will within one London Business Day of such
determination give written notice thereof to the Mortgages
Trustee, Funding 1 and the Security Trustee of such Interest Rate
Shortfall and of the Mortgages Trustee Variable Base Rate and/or
the Mortgages Trustee Tracker Rate which would (taking into
account the applicable Mortgage Conditions), in the Servicer's
reasonable opinion, need to be set in order for no Interest Rate
Shortfall to arise, having regard to the date(s) (which shall be
specified in the notice) on which such change to the Mortgages
Trustee Variable Base Rate and the Mortgages Trustee Tracker Rate
would take effect and at all times acting in accordance with the
standards of a Reasonable, Prudent Mortgage Lender as regards the
competing interests of Borrowers with Mortgage Trustee Variable
Base Rate Loans and Borrowers with Mortgages Trustee Tracker Rate
Loans.
(c) If the Mortgages Trustee, Funding 1 and the Security Trustee
notify the Servicer that, having regard to the obligations of
Funding 1, the Mortgages Trustee Variable Base Rate and/or the
Mortgages Trustee Tracker Rate should be increased, the Servicer,
as agent for and on behalf of, inter alia, the Mortgages Trustee
and the Beneficiaries, shall take all steps which are necessary,
including publishing any notice which is required in accordance
with the Mortgage Terms, to effect such change in the Mortgages
Trustee Variable Base Rate and/or the Mortgages Trustee Tracker
Rate on the date(s) specified in the notice referred to in CLAUSE
4.3(B).
(d) The Mortgages Trustee and/or Funding 1 and the Security Trustee
may terminate the authority of the Servicer under CLAUSE 4.1 and
CLAUSE 4.3 to determine the Mortgages Trustee Variable Base Rate
and the Mortgages Trustee Tracker Rate on or after the occurrence
of a Servicer Termination Event, in which case the Mortgages
Trustee shall set the Mortgages Trustee Variable Base Rate and
the Mortgages Trustee Tracker Rate in accordance with this CLAUSE
4.
5. ADMINISTRATION OF MORTGAGES
5.1 DIRECT DEBITING SCHEME
(a) For the purposes of collecting amounts due from Borrowers under the
Loans and their Related Security comprised in the Portfolio in
accordance with this Agreement the Servicer will unless otherwise
agreed in writing with the Beneficiaries:
(i) act, or procure that another person approved in writing by the
Beneficiaries (such approval not to be unreasonably withheld)
(the THIRD PARTY COLLECTION AGENT) acts, as collection agent for
the Mortgages Trustee and the Beneficiaries under the Direct
Debiting Scheme and remains a member of the Direct Debiting
Scheme or any scheme which replaces the Direct Debiting Scheme;
7
(ii) subject to CLAUSES 5.1(B) and 5.1(C), deliver to the Bankers
Automated Clearing System (BACS) or to the Account Bank such
instructions as may be necessary from time to time for the debit
of the account of each Borrower in respect of which there is a
direct debit mandate (the date of such delivery being the D.D.
DATE) with the Monthly Payment due from such Borrower, and for
the amount of such Monthly Payment to be credited to the
Mortgages Trustee GIC Account on the day after the D.D. Date or,
if such is not a London Business Day, the following London
Business Day unless the short-term ratings of the Account Bank
fall below A-1+ by S&P, P-1 by Moody's or F1+ by Fitch, in which
case all further instructions by the Servicer to debit the
accounts of Borrowers that are subject to direct debit bank
mandates shall be made to another bank which has a rating of at
least A-1+ by S&P, P-1 by Moody's or F1+ by Fitch, or directly to
the Mortgages Trustee GIC Account;
(iii) subject to CLAUSES 5.1(B) and 5.1(C), deliver to the Account Bank
or BACS (as appropriate) instructions for the debit of the
account of each Borrower in respect of which there is a direct
debit mandate and the Monthly Payment due and owing from such
Borrower on the D.D. Date immediately preceding the next
succeeding Monthly Payment Date remains outstanding to the extent
that, on the date of presentation of such instructions, such
Monthly Payment has not been received in full by the Servicer on
behalf of the Mortgages Trustee and where the instructions for
the debit of the account of the relevant Borrower for the Monthly
Payment due and owing from such Borrower was returned to the
Servicer marked "insufficient funds" within 10 London Business
Days of receipt by the Servicer of any such returned
instructions;
(iv) subject to CLAUSES 5.1(B) and 5.1(C), deliver to the Account Bank
or BACS (as appropriate) such other instructions for the debit of
the account of each Borrower in respect of which there is a
direct debit mandate in accordance with the Direct Debiting
Scheme as may be appropriate for the recovery of sums due by such
Borrower;
(v) comply in all material respects with the requirements from time
to time of the Direct Debiting Scheme including "The Originator's
Guide and Rules to the Direct Debiting Scheme" as amended from
time to time,
and take all such other steps as are reasonably appropriate, including
in particular the preparation and administration of appropriate
computer tapes in connection with BACS, to ensure that all monies
received from Borrowers during banking hours on any particular day are
credited on the next day to the Mortgages Trustee GIC Account.
(b) The Servicer may agree with a Borrower that the Direct Debiting Scheme
shall not apply to Monthly Payments to be made by such Borrower,
provided, subject to CLAUSE 5.1(D), that (i) alternative payment
arrangements are made which are intended to ensure timely payment of
Monthly Payments due from the Borrower to the Mortgages Trustee on
behalf of the Beneficiaries, and (ii) the change in arrangements was
made at the instigation of the Borrower or by the Servicer in
accordance with the procedures which would be adopted by a Reasonable,
Prudent Mortgage Lender.
(c) The Servicer may, notwithstanding the proviso to CLAUSE 5.1(B), agree
such procedures for the payment by a Borrower of (i) overdue amounts
and (ii) amounts payable on redemption of a Mortgage in whole or in
part other than through the Direct Debiting Scheme as would be agreed
by a Reasonable, Prudent Mortgage Lender.
8
(d) The Servicer shall, notwithstanding the proviso to CLAUSE 5.1(B), use
its reasonable endeavours to credit Monthly Payments made by a Borrower
under a payment arrangement other than the Direct Debiting Scheme to
the Mortgages Trustee GIC Account as follows:
(i) where the Borrower pays by standing order, by close of business
on the second London Business Day following the day on which such
amount is received or credited by the Servicer;
(ii) where the Borrower pays by payment of cash, by transfer payment
from another account of the Seller or by cheque where reference
to the relevant Borrower is provided or payments are made by way
of paying-in book, by close of business on the London Business
Day which immediately follows the day on which such amount is
received or credited by the Servicer; and
(iii) where the Borrower pays by cheque where a reference to the
relevant Borrower is not provided, by close of business on the
next London Business Day after notification from the banks
operating the Seller Bank Accounts of the identity of the
Borrower.
(e) Where a Borrower permits a direct debit to be made to his bank account,
the Servicer will endeavour to procure that such Borrower maintains a
valid and effective mandate relating to such direct debit in relation
to each Monthly Payment due from that Borrower, provided that in any
case where a Borrower will not permit a direct debit to be made to his
bank account the Servicer will endeavour to make alternative
arrangements acceptable to a Reasonable, Prudent Mortgage Lender so
that such Borrower nevertheless pays each Monthly Payment within the
month in which it falls due.
(f) In the event that the BACS system ceases to operate for any reason the
Servicer will use reasonable endeavours to make alternative
arrangements for the use of the back up systems available to each
Account Bank.
(g) If at any time the Servicer shall receive notice whether under the
Direct Debiting Scheme or otherwise that any amount (or part thereof),
which was paid in or credited pursuant to CLAUSE 5.1 and which has been
transferred to the Mortgages Trustee GIC Account has not been received
as cleared funds or has otherwise been recalled, the Servicer shall
notify the Cash Manager and instruct the Cash Manager forthwith to
debit the Mortgages Trustee GIC Account and credit the relevant
collection account for the whole or any part of such amount (such
amount hereinafter referred to as the SHORTFALL) and, an amount equal
to any costs which are irrecoverable by the Servicer from the relevant
Borrower incurred by the Servicer as a result of such shortfall;
PROVIDED THAT no debit from the Mortgages Trustee GIC Account for the
credit of the collection accounts in respect of any shortfall may be
made on or after a Calculation Date in respect of the relevant period
between that Calculation Date and the next Distribution Date unless
sufficient funds are available after providing or making provision for
all payments to be made on the next succeeding Distribution Date. After
that following Distribution Date the Mortgages Trustee shall transfer,
or procure on its behalf the transfer, from the Mortgages Trustee GIC
Account to the relevant collection account of an amount equal to such
shortfall subject to it having sufficient funds available to it or the
Servicer shall deduct an amount equal to such shortfall from payments
otherwise due on a daily basis from the Seller to the Mortgages Trustee
in respect of Principal Receipts and Interest Receipts received under
the Loans.
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5.2 ADMINISTRATION AND ENFORCEMENT OF MORTGAGES
(a) The Mortgages Trustee and the Beneficiaries hereby direct the Servicer
to administer the Loans comprised in the Portfolio and carry out its
specific obligations under this Agreement in accordance with the
Seller's Policy.
(b) The Servicer will, in relation to any default by a Borrower under or in
connection with a Loan or a Mortgage comprised in the Portfolio, comply
with the Enforcement Procedures or, to the extent that the Enforcement
Procedures are not applicable having regard to the nature of the
default in question, take such action as is not materially prejudicial
to the interests of the Mortgages Trustee (as trustee for the
Beneficiaries) and the Beneficiaries under the relevant MIG Policy,
provided that:
(i) the Servicer shall only become obliged to comply with the
Enforcement Procedures (to the extent applicable) or to take
action as aforesaid after it has become aware of the default;
(ii) it is acknowledged by the Beneficiaries that mortgage lenders
generally exercise discretion in pursuing their respective
enforcement procedures and that the Servicer may exercise such
discretion as would a Reasonable, Prudent Mortgage Lender in
applying the Enforcement Procedures to any particular defaulting
Borrower or taking action as aforesaid, provided that in
exercising such discretion the interest of Funding 1 in the
Portfolio is not materially prejudiced; and
(iii) in any case where any of the Insurance Policies requires exact
compliance with certain enforcement procedures the Servicer shall
procure the prior written consent of the relevant insurance
company for any deviation by it from such enforcement procedures.
5.3 RECORDS
The Servicer shall keep and maintain records in relation to the
Portfolio, on a Loan by Loan basis, for the purposes of identifying
amounts paid by each Borrower, any amount due from a Borrower and the
principal balance (and, if different, the total balance) from time to
time outstanding on a Borrower's account and such other records as
would be kept by a Reasonable, Prudent Mortgage Lender. The Servicer
will provide such information to the Mortgages Trustee and/or Funding 1
and/or the Security Trustee or to their order at any time upon
reasonable notice subject to the Servicer being reasonably capable of
providing such information without significant additional cost and
subject to the provisions of the Data Protection Act 1998 and other
applicable legislation from time to time and provided that no duty of
confidence and no industry code of practice will or may be breached
thereby.
5.4 TRUST
(a) If the Servicer in carrying out its functions as Servicer under this
Agreement receives (including in its capacity as agent for the
Mortgages Trustee and the Beneficiaries) any money whatsoever arising
from the Loans and their Related Security, which money belongs to the
Mortgages Trustee (as trustee for the Beneficiaries) and is to be paid
to the Mortgages Trustee GIC Account pursuant to this Agreement or any
of the other Transaction Documents or otherwise, it will hold such
monies on trust for the Mortgages Trustee and shall keep such money
separate from all other monies held by the Servicer and shall, as soon
as reasonably practicable and in any event within the time limits
referred to in CLAUSE 5.1, pay the monies into the Mortgages Trustee
GIC Account.
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(b) All other sums received by the Servicer in respect of the Loans and
their Related Security shall be held by the Servicer for itself.
5.5 ANNUAL COMPLIANCE CERTIFICATE BY SERVICER
For so long as the Mortgages Trustee, Funding 1 or any Issuer is
subject to the reporting obligations of Section 13 or 15(d) of the U.S.
Securities Exchange Act of 1934, as amended (the EXCHANGE ACT), the
Servicer shall deliver to Funding 1 not later than 30th May in each
year commencing in 2005, an officer's certificate with respect to each
such Issuer stating that (i) a review of the activities of the Servicer
during the preceding year (or such shorter period as shall have elapsed
since the relevant Closing Date) and of its performance under 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 throughout such period fulfilled all of its obligations
under this Agreement and the minimum servicing standards set out in
SCHEDULE 3 (the MINIMUM SERVICING standards), or, if there has been a
default in the fulfilment of any such obligations or the minimum
servicing standards, specifying each such default known to such officer
and the nature and status thereof.
5.6 ANNUAL ASSESSMENT OF COMPLIANCE BY FUNDING 1
For so long as the Mortgages Trustee, Funding 1 or any Issuer is
subject to the reporting obligations of Section 13 or 15(d) of the
Exchange Act, Funding 1 shall on an annual basis commencing in 2004
assess compliance by the Servicer with the minimum servicing standards
as of and for the period ending the end of each fiscal year, and shall
deliver with respect to each such Issuer (a) an officer's certificate
stating that (i) Funding 1 is responsible for assessing the Servicer's
compliance with the minimum servicing standards, (ii) Funding 1 has
used the minimum servicing standards as a basis for assessing the
Servicer's compliance with this Agreement, (iii) a review of the
activities of the Servicer during the preceding year (or such shorter
period as shall have elapsed since the relevant Closing Date) and of
its performance under this Agreement has been made under such officer's
supervision and (iv) to the best of such officer's knowledge, based on
such review, the Servicer has throughout such period complied with the
minimum servicing standards in all material respects or, if there has
been a default in the fulfilment of the minimum servicing standards,
specifying each such default known to such officer and the nature and
status thereof, and (b) the certification required by Rule 13a-14 or
15d-14 (as appropriate) of the Exchange Act.
5.7 INDEPENDENT AUDITORS' ANNUAL SERVICER COMPLIANCE CERTIFICATE
For so long as the Mortgages Trustee, Funding 1 or any Issuer is
subject to the reporting obligations of Section 13 or 15(d) of the
Exchange Act, Funding 1 shall cause an independent accountant to
furnish to Funding 1 not later than 30th June in each year commencing
in 2005 a report with respect to each such Issuer addressed to the
Board of Directors of Funding 1 to the effect that (a) such firm has
examined Funding 1's assertion described in CLAUSE 5.6(B), (b) such
examination was conducted in accordance with attestation standards
established by the American Institute of Certified Public Accountants
and provides a reasonable basis for such firm's opinion and (c) in the
opinion of such firm, such assertion of Funding 1 is fairly stated in
all material respects (or, if such assertion is not fairly stated,
stating why such assertion is not fairly stated).
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6. NO LIABILITY
6.1 The Servicer shall have no liability for any obligation of a Borrower
under any Loan comprised in the Portfolio or any Related Security and
nothing herein shall constitute a guarantee, or similar obligation, by
the Servicer of any Loan, Mortgage or any Borrower.
6.2 Save as otherwise provided in this Agreement, the Servicer shall have
no liability for the obligations of the Mortgages Trustee or the
Beneficiaries under any of the Transaction Documents or otherwise and
nothing herein shall constitute a guarantee, or similar obligation, by
the Servicer of the Mortgages Trustee or the Beneficiaries in respect
of any of them.
7. NEW LOANS
7.1 The Portfolio may be augmented from time to time by the sale to the
Mortgages Trustee on any Sale Date of a New Portfolio by the Seller.
7.2 The sale of each New Portfolio to the Mortgages Trustee will in all
cases be subject to the terms set out in the Mortgage Sale Agreement
including, without limitation, the conditions set out in CLAUSE 4 of
the Mortgage Sale Agreement and the representations and warranties set
out in CLAUSE 8 of the Mortgage Sale Agreement.
8. PRODUCT SWITCHING AND FURTHER ADVANCES
8.1 (a) The Servicer shall not accept an application for a Further
Advance without first having received confirmation in writing
from the Seller that the Seller would, if so offered by the
Mortgages Trustee, purchase the relevant Loan and its Related
Security from the Mortgages Trustee.
(b) The Servicer shall not accept an application for a Product Switch
without first having received confirmation in writing from the
Seller save where the Seller and the Servicer are both Halifax
plc that the Seller would, if so offered by the Mortgages
Trustee, purchase the relevant Loan and its Related Security from
the Mortgages Trustee if on the immediately preceding
Distribution Date, the Seller is in breach of the conditions
referred to in CLAUSES 4.2(A) to (O) inclusive of the Mortgage
Sale Agreement as if references therein to "New Loans" and "NEW
PORTFOLIO" were references to the Loan which would result from
the implementation of such Product Switch and as if references to
"SALE DATE" were references to the date when the Seller and
relevant Borrower complete such Product Switch.
8.2 Subject to complying with the terms of CLAUSE 8.1, where the Servicer
accepts a Product Switch or a Further Advance, the Servicer shall then
notify the Seller and the Mortgages Trustee in writing.
8.3 Notwithstanding CLAUSE 8.2, subject to complying with the terms of
CLAUSE 8.1, the Servicer, on behalf of and as agent for the Mortgages
Trustee (or, in the case of Product Switches and Further Advances
relative to Scottish Loans, on behalf of and as agent for the Seller,
in its capacity as trustee for the Mortgages Trustee under the relevant
Scottish Declaration of Trust) may accept requests from Borrowers for
Product Switches and Further Advances provided that the Servicer acts
in accordance with the then applicable procedure which would be
acceptable to a Reasonable, Prudent Mortgage Lender.
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9. REDEMPTION OF MORTGAGES
9.1 Upon repayment in full of all sums secured by a Mortgage and/or other
Related Security comprised in the Portfolio, the Servicer shall, and is
hereby authorised by the Mortgages Trustee and the Beneficiaries to
execute a receipt or discharge or relevant Land Registry Form DS1 of
the Mortgage and any such other or further instrument or deed of
satisfaction regarding such Mortgage and/or the Related Security as it
considers to be necessary or advisable, to implement an Electronic
Notification of Discharge to the Land Registry and to release the
relevant Title Deeds to the person or persons entitled thereto.
9.2 The Servicer undertakes that prior to any actual release by it of the
relevant Title Deeds it will take reasonable and appropriate steps to
satisfy itself that the relevant Title Deeds are being released to the
person or persons entitled thereto.
9.3 The Servicer shall procure that if, upon completion of the Enforcement
Procedures, an amount in excess of all sums due by the relevant
Borrower is recovered or received, the balance, after discharge of all
sums due by the Borrower, is paid to the person or persons next
entitled thereto.
10. POWERS OF ATTORNEY
10.1 For good and valuable consideration and as security for the interests
of the Mortgages Trustee and the Beneficiaries hereunder, each of the
Seller, the Mortgages Trustee and the Beneficiaries hereby appoints the
Servicer as its attorney on its behalf, and in its own or the
attorney's name, for the following purposes:
(a) executing all documents necessary for the purpose of discharging
a Mortgage comprised in the Portfolio which has been repaid in
full and any Related Security or for the sale of a Property as
Mortgagee;
(b) executing all documents and implementing all Electronic
Notifications of Discharge to the Land Registry necessary for the
purpose of releasing a Borrower in accordance with CLAUSE 9;
(c) executing all documents and doing all such acts and things which
in the reasonable opinion of the Servicer are necessary or
desirable for the efficient provision of the Services hereunder;
and
(d) exercising its rights, powers and discretion under the Mortgages
including the right to fix the Mortgages Trustee Variable Base
Rate and the Mortgages Trustee Tracker Rate or any related
rights,
provided that, for the avoidance of doubt, these Powers of Attorney
shall not authorise the Servicer to sell any of the Loans and/or their
Related Security comprised in the Portfolio except as specifically
authorised in the Transaction Documents. For the avoidance of doubt,
neither the Seller (where the Servicer is not Halifax plc), the
Mortgages Trustee nor Funding 1 shall be liable or responsible for the
acts of the Servicer or any failure by the Servicer to act under or in
respect of these Powers of Attorney.
10.2 The appointments contained in CLAUSE 10.1 shall be irrevocable unless
and until following a Termination Event the Mortgages Trustee and/or
Funding 1 and the Security Trustee serves notice pursuant to CLAUSE 21
to terminate the Servicer's appointment under this Agreement upon which
the appointments contained in CLAUSE 10.1 shall be automatically
revoked.
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11. COSTS AND EXPENSES
11.1 The Mortgages Trustee (on behalf of the Beneficiaries) will on each
Distribution Date reimburse, in accordance with CLAUSE 10.2 of the
Mortgages Trust Deed, the Servicer for all out-of-pocket costs,
expenses and charges (together with any amounts in respect of
Irrecoverable Value Added Tax due thereon) properly incurred by the
Servicer in the performance of the Services including any such costs,
expenses or charges not reimbursed to the Servicer on any previous
Distribution Date and the Servicer shall supply the Mortgages Trustee
with a copy of an appropriate VAT invoice issued by the person making
the supply.
11.2 The Servicer will use reasonable endeavours to recover from the
relevant Borrowers all costs and expenses incurred by the Servicer
which are properly recoverable from those Borrowers under the relevant
Mortgage Conditions.
12. INFORMATION 12.1 MAINTENANCE OF RECORDS
(a) Subject to CLAUSE 18, the Servicer shall keep the Customer Files
relating to the Portfolio in safe custody and shall take appropriate
technical and organisational measures against the unauthorised or
unlawful processing of personal data and against accidental loss or
destruction of, or damage to, personal data. The Servicer shall
maintain in an adequate form such records as are necessary to enforce
each Mortgage comprised in the Portfolio and, where relevant, any other
Related Security.
(b) A duplicate of any computer records held by the Servicer which contains
information relating to the Loans and the Related Security shall be
lodged by the Servicer on a daily basis at the offices of the Seller at
the Pudsey Data Centre or at such other locations selected by the
Servicer, so long as such location is a location separate from that in
which the original computer records are stored and in an environment
conducive to the safe storage of electronic media, such records to be
held to the order of the Mortgages Trustee and to be replaced by a
revised duplicate as and when the original records are revised. The
Servicer shall keep the Mortgages Trustee informed of the location of
the Customer Files and duplicate computer records.
12.2 USE OF I.T. SYSTEMS
(a) The Servicer covenants that at the date hereof in respect of the
software which is used by the Servicer in providing the Services, it
shall for the duration of this Agreement:
(i) ensure that it has in place all necessary licences and/or
consents from the respective licensor or licensors (if any) of
such software; and
(ii) except in so far as it would breach any other of its legal
obligations, grant to any person to whom it may sub-contract or
delegate the performance of all or any of its powers and
obligations under this Agreement and/or to such person as the
Mortgages Trustee and the Beneficiaries elect as a substitute
servicer in accordance with the terms of this Agreement a licence
to use any proprietary software together with any updates which
may be made thereto from time to time.
(b) The Servicer shall use reasonable endeavours to maintain in working
order the information technology systems used by the Servicer in
providing the Services.
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(c) The Servicer shall pass to any person to whom it may sub-contract or
delegate the performance of all or any of its powers and obligations
under this Agreement and/or to such person as the Mortgages Trustee and
the Beneficiaries elect as a substitute servicer in accordance with the
terms of this Agreement the benefit of any warranties in relation to
the software insofar as the same are capable of assignment.
12.3 ACCESS TO BOOKS AND RECORDS
Subject to all applicable laws, the Servicer shall permit the Mortgages
Trustee and Funding 1 (and their auditors) and the Security Trustee and
any other person nominated by the Beneficiaries (to whom the Servicer
has no reasonable objection) upon reasonable notice during normal
office hours to have access, or procure that such person or persons are
granted access, to all books of record and account (including, for the
avoidance of doubt, the Title Deeds and Customer Files) relating to the
administration of the Loans and their Related Security comprised in the
Portfolio and related matters in accordance with this Agreement.
12.4 INFORMATION COVENANTS
(a) The Servicer shall provide the Mortgages Trustee, the Beneficiaries,
each Manager (as set out in each Issuer Master Definitions and
Construction Schedule) (if requested by such Manager to do so) and the
Rating Agencies quarterly with a report in, or substantially in, the
form set out in SCHEDULE 2 and shall assist the Cash Manager in the
production of quarterly reports substantially in the forms set out in
Schedule 3 of the Cash Management Agreement.
The Servicer shall notify the Rating Agencies in writing of the details
of (i) any material amendment to the Transaction Documents, (ii) any
proposed material change in the valuation procedures or policies
applied or to be applied in relation to Properties by it in connection
with its mortgage business (details of which change may be included in
a report provided under paragraph (a)) and (iii) any other information
relating to its mortgage business and financial condition as the Rating
Agencies may reasonably request in connection with the ratings of the
Notes and other matters contemplated by the Transaction Documents,
provided that such request does not adversely interfere with the
Servicer's day to day provision of the Services under the other terms
of this Agreement.
(b) The Servicer shall, at the request of Funding 1 and the Security
Trustee (where the Servicer is the Seller) and at the request of the
Beneficiaries (where the Servicer is no longer the Seller), furnish
Funding 1, the Security Trustee and/or the Beneficiaries (as
appropriate) and the Rating Agencies with such other information
relating to its business and financial condition as it may be
reasonable for Funding 1, the Security Trustee and/or the Beneficiaries
(as appropriate) to request in connection with the ratings of the Notes
and other matters contemplated by the Transaction Documents, provided
that Funding 1, the Security Trustee or the Beneficiaries (as
appropriate) shall not make such a request more than once every three
months unless, in the belief of Funding 1, the Security Trustee or the
Beneficiaries (as appropriate), an Intercompany Loan Event of Default
or a Termination Event shall have occurred and is continuing or may
reasonably be expected to occur.
(c) The Servicer shall make available to beneficial owners of the Notes,
who have provided beneficial ownership certification as described
herein, on a monthly basis a report containing information about the
loans in the Mortgages Trust.
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13. REMUNERATION
The Mortgages Trustee (on behalf of the Beneficiaries) shall pay to the
Servicer for its Services hereunder an administration fee (the
ADMINISTRATION FEE) (inclusive of Value Added Tax) which:
(a) shall be calculated in relation to each Distribution Period on
the basis of the number of days elapsed and a 365 day year at the
rate of 0.05 per cent. per annum, inclusive of Value Added Tax,
on the aggregate amount of the Trust Property as at close of
business on the preceding Funding 1 Interest Payment Date (or, as
applicable, the Initial Closing Date); and
(b) shall be paid to the Servicer in arrear on each Distribution Date
in the manner contemplated by and in accordance with the
provisions of CLAUSE 10.2 of the Mortgages Trust Deed.
14. INSURANCES
14.1 The Servicer will administer the arrangements for insurance to which
the Mortgages Trustee is a party or in which either the Seller or the
Mortgages Trustee (on behalf of the Beneficiaries) has an interest and
which relate to the Loans and the Mortgages comprised in the Portfolio
or the business of the Mortgages Trustee. In particular, but without
limitation, the Servicer shall promptly notify the Mortgages Trustee
and the Beneficiaries and the Trustee of the existence of any insurance
policies to which the Seller is a party or in which it has an interest
in addition to those specifically referred to in the definition of
"Halifax Insurance Policies" in the Master Definitions and Construction
Schedule.
14.2 The Servicer shall use its reasonable endeavours to credit to the
Mortgages Trustee GIC Account all proceeds received from any claim made
under any Insurance Policy in relation to any Loan or its Related
Security by close of business on the London Business Day which
immediately follows the day on which such amounts are received or
credited by the Servicer and which is to be applied either in whole or
in part in repayment of a Loan.
15. HALIFAX INSURANCE POLICIES
15.1 The Servicer shall not knowingly take or omit to take any action which
would:
(a) result in the avoidance or termination of any of the Halifax
Insurance Policies in relation to any Loans and Mortgages to
which any Halifax Insurance Policy applies; or
(b) reduce the amount payable on any claim made on behalf of the
Mortgages Trustee (as trustee for the Beneficiaries) under any
Halifax Insurance Policy; or
(c) invalidate any Halifax Insurance Policy.
15.2 The Servicer shall prepare and submit any claim under the Halifax
Insurance Policies in accordance with the requirements of the relevant
Halifax Insurance Policy and otherwise with the usual procedures
undertaken by a Reasonable, Prudent Mortgage Lender on behalf of the
Mortgages Trustee and the Beneficiaries and shall comply with the other
requirements of the insurer under the relevant Halifax Insurance
Policy.
15.3 If the Seller's Policy requires the Servicer to make a claim under the
relevant MIG Policy and the Servicer has failed to make such a claim,
then the Beneficiaries may direct the Mortgages
16
Trustee on their behalf to direct the Servicer to make a claim or, in
default thereof by the Servicer, the Beneficiaries may direct the
Mortgages Trustee to itself make a claim under such policy and the
Servicer shall, within 10 London Business Days of receiving a written
request from the Mortgages Trustee (as trustee for the Beneficiaries),
provide the Mortgages Trustee with such information as the Mortgages
Trustee may require to enable it to make a claim under the relevant MIG
Policy.
16. BUILDINGS POLICIES
16.1 The Servicer shall not knowingly take any action or omit to take any
action which would result in the avoidance or termination of any
applicable Buildings Policy or would reduce the amount payable on any
claim thereunder.
16.2 Upon receipt of notice that any Borrower whose Loan is secured by a
mortgage of or a standard security over a leasehold Property including
a Property in Scotland held under a long lease has failed to make a
payment when due of any sums due under the relevant lease in respect of
the insurance of the property the Servicer may debit that Borrower's
account with the relevant amount which shall then be paid to the
landlord or to the relevant insurance company together with notice to
the landlord.
16.3 If the Servicer becomes aware that a Borrower has failed to pay
premiums due under any Buildings Policy, the Servicer shall take such
action as would a Reasonable, Prudent Mortgage Lender with a view to
ensuring that the relevant Property continues to be insured in
accordance with the applicable Mortgage Terms or the Alternative
Insurance Recommendations.
17. TITLE DEEDS AND CUSTOMER FILES
17.1 The Servicer shall keep the Title Deeds, Customer Files and (where
applicable) Insurance Policies and the receipt of notes of assignment
relating to the Portfolio in safe custody and shall not without the
prior written consent of the Mortgages Trustee and the Beneficiaries
part with possession, custody or control of them otherwise than to a
sub-contractor or delegate appointed pursuant to CLAUSE 3.2 or to a
solicitor, licensed conveyancer, qualified conveyancer or authorised
practitioner, subject to the usual undertaking to hold them to the
order of the Servicer (who in turn will hold them to the order of the
Mortgages Trustee (as trustee for the Beneficiaries) or in the case of
Scottish Loans, to the order of the Seller, in its capacity as trustee
for the Mortgages Trustee (as trustee for the Beneficiaries) or to the
Land Registry or Registers of Scotland or, upon redemption of the
relevant Loan, to the order of the Borrower.
17.2 The Title Deeds and Customer Files relating to the Portfolio shall be
kept in such manner so that a computer record is maintained of their
location and they are identifiable and retrievable by reference to an
account number and pool identifier and identifiable and distinguishable
from the title deeds relating to other properties and mortgages and
standard securities in respect of which the Servicer is mortgagee or
heritable creditor or servicer. In the event of receipt by the Servicer
of notice that the short-term, unsecured, unsubordinated and
unguaranteed debt of the Servicer is rated less than A-1 by S&P and P-1
by Moody's and F1 by Fitch, the Servicer shall use reasonable
endeavours to ensure that the Title Deeds are identified as distinct
from the title deeds of other properties and mortgages and standard
securities which do not form part of the Portfolio.
17.3 The Servicer shall provide access or procure that access is provided to
the Title Deeds, Customer Files and other records relating to the
administration of the Loans and Mortgages in the Portfolio to the
Mortgages Trustee, the Beneficiaries, the Security Trustee and their
17
respective agents at all reasonable times and upon reasonable written
notice. The Servicer acknowledges that the Title Deeds and Customer
Files relating to the Portfolio in its possession, custody or control
will be held to the order of the Mortgages Trustee (as trustee for the
Beneficiaries) or in the case of Scottish Loans, to the order of the
Seller, in its capacity as trustee for the Mortgages Trustee (as
trustee for the Beneficiaries), and that it has, in its capacity as
Servicer, no beneficial interest therein and the Servicer (in its
capacity as such but not in its capacity as a Beneficiary) irrevocably
waives any rights or any Security Interest which it might have therein
or to which it might at any time be entitled.
17.4 The Servicer shall, forthwith on the termination of the appointment of
the Servicer pursuant to CLAUSE 21, deliver the Title Deeds and
Customer Files in its possession, custody or control or that of its
sub-contractors or agents to or to the order of the Mortgages Trustee
or to such person as the Mortgages Trustee elects as a substitute
servicer in accordance with the terms of this Agreement upon written
request by the Mortgages Trustee made at any time on or after notice
of, or on or after, termination of the appointment of the Servicer
pursuant to CLAUSE 21.
17.5 The Servicer undertakes that it will use all reasonable efforts to
obtain as soon as reasonably practicable:
(a) the title number to each Property in respect of which a Mortgage
is registered at the Land Registry to the extent that such title
number does not appear in the Exhibit to the Mortgage Sale
Agreement (or, as the case may be, the Schedule to the relevant
New Portfolio Notice); and
(b) The title number to each Property in respect of which a Mortgage
is registered in the Land Register of Scotland to the extent that
such title number does not appear in the Schedule to the relevant
New Portfolio Notice.
The Servicer shall include in the quarterly report to be delivered in
accordance with CLAUSE 12.4 of this Agreement (i) details of such title
numbers relating to the Initial Portfolio as are then known to the
Servicer at the time of such report and (ii) details of such title
numbers relating to any New Loans purchased from the Seller as are then
known to the Seller at the time of such report, together with such
other information relating thereto as the Mortgages Trustee may
reasonably request.
18. DATA PROTECTION
18.1 The Servicer and the Mortgages Trustee each represents that as at the
date hereof it has and hereafter it will maintain all appropriate
registrations, licences, consents and authorities (if any) required
under the Data Protection Act 1998 together, with its ancillary
legislation (the DATA PROTECTION ACT) to enable it to perform its
respective obligations under this Agreement. In addition to the
foregoing and notwithstanding any of the other provisions of this
Agreement, each of the Servicer and the Mortgages Trustee hereby agree
and covenant as follows:
(a) that only data that is not "personal data" (as described in the
Data Protection Act) may be transferred by the Servicer to the
Mortgages Trustee or any other entity located in Jersey (unless:
(i) Jersey is determined, on the basis of Article 25(b) of
Directive 95/46/EC, a third country which ensures an adequate
level of protection of "personal data" by the European Commission
or (ii) the Servicer and the Mortgages Trustee have entered into
a data transfer agreement in a form approved by the EC Commission
as meeting the requirements of Article 26(2) of Directive
95/46/EC for the transfer of personal data to third countries
which do not ensure an adequate level of protection (the STANDARD
CONTRACTUAL CLAUSES) in which case, subject to Clause
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18(e), the Servicer may transfer such personal data to the
Mortgages Trustee in Jersey);
(b) that if, at the date at which circumstances enable the Mortgages
Trustee to exercise its right to demand that the Servicer
transfer inter alia personal data to the Mortgages Trustee, (i)
Jersey has been determined, on the basis of Article 25(b) of
Directive 95/46/EC a third country which ensures an adequate
level of protection of personal data by the European Commission
or (ii) the Servicer and the Mortgages Trustee have entered into
the Standard Contractual Clauses then, subject to the CLAUSE
18(E), the Servicer shall transfer the relevant personal data to
the Mortgages Trustee or to its order;
(c) that the Servicer will, if the Mortgages Trustee requires the
Servicer to do so, take all reasonable steps to notify each
Borrower that the Mortgages Trustee is a "data controller" (as
defined in the Data Protection Act) and provide each such
Borrower with such details as the Mortgage Trustee shall
reasonably request including but not limited to the Mortgages
Trustee's contact details for the purposes of the Data Protection
Act;
(d) that the Servicer and the Mortgages Trustee will only use any
data in relation to the Loans and the related Borrowers for the
purposes of administering and/or managing the Portfolio, and will
not sell such data to any third party or allow any third party to
use such data other than in compliance with the Data Protection
Act, the conditions stated in this CLAUSE 18 and for the sole
purpose of administering and/or managing the Portfolio;
(e) that the Mortgages Trustee will comply with the provisions of the
Data Protection (Jersey) Law 1987 (as amended) or any law which
supersedes or replaces the Data Protection (Jersey) Law 1987 and
(so long as the provisions of the Data Protection Act do not
conflict with the provisions of the Data Protection (Jersey) Law
1987 (as amended) or any law which supersedes or replaces the
Data Protection (Jersey) Law 1987) with the provisions of the
Data Protection Act;
(f) that the Mortgages Trustee shall maintain a written record of its
reasons for applying the Data Protection Order 2000/185 (as set
forth under the Conditions under paragraph 3 of Part II of
Schedule I of the Data Protection Act).
18.2 The Servicer will use all reasonable endeavours to ensure that, in the
event of the appointment of a sub-contractor in accordance with CLAUSE
3.2 such sub-contractor shall obtain and maintain all appropriate
registrations, licences, consents and authorities required (including,
without limitation, those required under the Data Protection Act), and
comply with obligations equivalent to those imposed on the Servicer in
this CLAUSE 18, to enable it to perform its obligations.
19. COVENANTS OF SERVICER
19.1 The Servicer hereby covenants with and undertakes to each of the
Mortgages Trustee, the Beneficiaries and the Security Trustee that
without prejudice to any of its specific obligations hereunder it will:
(a) administer the Loans and their Related Security as if the same
had not been sold to the Mortgages Trustee but had remained on
the books of the Seller;
19
(b) provide the Services in such manner and with the same level of
skill, care and diligence as would a Reasonable, Prudent Mortgage
Lender;
(c) comply with any proper directions, orders and instructions which
the Mortgages Trustee or the Beneficiaries may from time to time
give to it in accordance with the provisions of this Agreement
and, in the event of any conflict, those of the Mortgages Trustee
shall prevail;
(d) keep in force all licences, approvals, authorisations,
registrations and consents which may be necessary in connection
with the performance of the Services and prepare and submit on a
timely basis all necessary applications and requests for any
further approval, authorisation, consent, registration or licence
required in connection with the performance of the Services and
in particular any necessary registrations under the Data
Protection Act;
(e) save as otherwise agreed with the Mortgages Trustee and each of
the Beneficiaries, provide free of charge to the Mortgages
Trustee and the Beneficiaries, office space, facilities,
equipment and staff sufficient to fulfil the obligations of the
Mortgages Trustee and the Beneficiaries under this Agreement;
(f) not knowingly fail to comply with any legal requirements in the
performance of the Services, including without limitation any
rules of the FSA in MCOB or otherwise;
(g) make all payments required to be made by it pursuant to this
Agreement on the due date for payment thereof in sterling (or as
otherwise required under the Transaction Documents) in
immediately available funds for value on such day without set-off
(including, without limitation, in respect of any fees owed to
it) or counterclaim but subject to any deductions required by
law;
(h) not without the prior written consent of the Security Trustee
amend or terminate any of the Transaction Documents save in
accordance with their terms; and
(i) forthwith upon becoming aware of any event which may reasonably
give rise to an obligation of the Seller to repurchase any Loan
pursuant to the Mortgage Sale Agreement, notify the Mortgages
Trustee and the Beneficiaries in writing of such event.
19.2 The covenants of the Servicer in CLAUSE 19.1 shall remain in force
until this Agreement is terminated but without prejudice to any right
or remedy of the Mortgages Trustee and/or the Seller and/or Funding 1
arising from breach of any such covenant prior to the date of
termination of this Agreement.
20. SERVICES NON-EXCLUSIVE
Nothing in this Agreement shall prevent the Servicer from rendering or
performing services similar to those provided for in this Agreement to
or for itself or other persons, firms or companies or from carrying on
business similar to or in competition with the business of the
Mortgages Trustee and the Beneficiaries.
21. TERMINATION
21.1 If any of the following events (SERVICER TERMINATION EVENTS) shall
occur:
20
(a) default is made by the Servicer in the payment on the due date of
any payment due and payable by it under this Agreement and such
default continues unremedied for a period of five London Business
Days after the earlier of the Servicer becoming aware of such
default and receipt by the Servicer of written notice from
Funding 1, the Security Trustee and the Mortgages Trustee
requiring the same to be remedied; or
(b) default is made by the Servicer in the performance or observance
of any of its other covenants and obligations under this
Agreement, which in the reasonable opinion of the Security
Trustee is materially prejudicial to the interests of Funding 1
and/or the Issuers under the Intercompany Loans and/or the
interests of the holders of the Notes from time to time and such
default continues unremedied for a period of 20 London Business
Days after becoming aware of such default provided however that
where the relevant default occurs as a result of a default by any
person to whom the Servicer has sub-contracted or delegated part
of its obligations hereunder, such default shall not constitute a
Termination Event if, within such period of 10 London Business
Days of receipt of such notice from Funding 1 and the Security
Trustee, the Servicer terminates the relevant sub-contracting or
delegation arrangements and takes such steps as Funding 1 and the
Security Trustee may in their absolute discretion specify to
remedy such default or to indemnify the Mortgages Trustee and the
Beneficiaries against the consequences of such default; or
(c) the occurrence of an Insolvency Event in relation to the
Servicer; or
(d) the Board of Funding 1 resolves, after due consideration and
acting reasonably, that the appointment of the Servicer should be
terminated,
then the Mortgages Trustee and/or Funding 1 and the Security Trustee
may at once or at any time thereafter while such default continues by
notice in writing to the Servicer terminate its appointment as Servicer
under this Agreement with effect from a date (not earlier than the date
of the notice) specified in the notice. Upon termination of the
Servicer as servicer under this Agreement, the Security Trustee shall
use its reasonable endeavours to appoint a substitute servicer that
satisfies the conditions set forth in CLAUSES 21.2(C), (D) and (E).
21.2 The appointment of the Servicer under this Agreement may be
terminated upon the expiry of not less than 12 months' notice of
termination given by the Servicer to the Mortgages Trustee and the
Beneficiaries provided that:
(a) the Mortgages Trustee and the Beneficiaries consent in writing to
such termination;
(b) a substitute servicer shall be appointed, such appointment to be
effective not later than the date of such termination and the
Servicer shall notify the Rating Agencies in writing of the
identity of such substitute servicer;
(c) such substitute servicer has experience of administering
mortgages of and standard securities over residential property in
the United Kingdom and is approved by the Mortgages Trustee and
the Beneficiaries;
(d) such substitute servicer enters into an agreement substantially
on the same terms as the relevant provisions of this Agreement
and the Servicer shall not be released from its obligations under
the relevant provisions of this Agreement until such substitute
servicer has entered into such new agreement; and
21
(e) the then current ratings (if any) of the Notes are not adversely
affected as a result thereof, unless otherwise agreed by an
Extraordinary Resolution (as defined in the Note Trust Deed) of
the holders of the relevant series and class of Notes.
21.3 On and after termination of the appointment of the Servicer under this
Agreement pursuant to this CLAUSE 21, all authority and power of the
Servicer under this Agreement shall be terminated and be of no further
effect and the Servicer shall not thereafter hold itself out in any way
as the agent of the Mortgages Trustee and/or the Beneficiaries pursuant
to this Agreement.
21.4 Upon termination of the appointment of the Servicer under this
Agreement pursuant to this CLAUSE 21 (but subject to CLAUSE 18(E)), the
Servicer shall:
(a) forthwith deliver (and in the meantime hold on trust for, and to
the order of, the Mortgages Trustee) to the Mortgages Trustee or
as it shall direct the Customer Files, the Title Deeds, all books
of account, papers, records, registers, correspondence and
documents in its possession or under its control relating to the
affairs of or belonging to the Mortgages Trustee (as trustee for
the Beneficiaries) and the Mortgages in the Portfolio and any
other Related Security, (if practicable, on the date of receipt)
any monies then held by the Servicer on behalf of the Mortgages
Trustee and any other assets of the Mortgages Trustee and the
Beneficiaries;
(b) take such further action as the Mortgages Trustee, Funding 1 and
the Security Trustee may reasonably direct at the expense of the
Beneficiaries (including in relation to the appointment of a
substitute servicer) provided that the Mortgages Trustee shall
not be required to take or direct to be taken such further action
unless it has been indemnified to its satisfaction;
(c) provide all relevant information contained on computer records in
the form of magnetic tape, together with details of the layout of
the files encoded on such magnetic tapes;
(d) co-operate and consult with and assist the Mortgages Trustee,
Funding 1, the Security Trustee and their nominees (which shall,
for the avoidance of doubt, include any new servicer appointed by
any of them) for the purposes of explaining the file layouts and
the format of the magnetic tapes generally containing such
computer records on the computer system of the Mortgages Trustee
or such nominee; and
(e) permit the Mortgages Trustee, Funding 1 and the Security Trustee
to have access at reasonable times to the Halifax Insurance
Policies.
21.5 The Servicer shall deliver to the Mortgages Trustee and the
Beneficiaries as soon as reasonably practicable but in any event within
five days of becoming aware thereof a notice of any Termination Event
or any event which with the giving of notice or lapse of time or
certification would constitute the same. Such notification shall
specify which event in CLAUSE 21 has occurred and was the cause of such
Termination Event (or any event which the giving of notice or lapse of
time or certification would constitute a Termination Event), a
description of the details of such Termination Event, and, if relevant,
a reference to the provision in this Agreement or the other Transaction
Documents which the Servicer has breached.
21.6 Termination of this Agreement or the appointment of the Servicer under
this Agreement shall be without prejudice to the liabilities of the
Mortgages Trustee and the Beneficiaries to the Servicer or vice versa
incurred before the date of such termination. The Servicer shall have
22
no right of set-off or any lien in respect of such amounts against
amounts held by it on behalf of the Mortgages Trustee.
21.7 This Agreement shall terminate at such time as Funding 1 has no further
interest in any of the Loans or the Mortgages which have been comprised
in the Portfolio.
21.8 On termination of the appointment of the Servicer under the provisions
of this CLAUSE 21, the Servicer shall be entitled to receive all fees
and other monies accrued up to the date of termination but shall not be
entitled to any other or further compensation. Such monies so
receivable by the Servicer shall be paid by the Mortgages Trustee on
the dates on which they would otherwise have fallen due hereunder. For
the avoidance of doubt, such termination shall not affect the
Servicer's rights to receive payment of all amounts (if any) due to it
from the Mortgages Trustee other than under this Agreement.
21.9 Prior to termination of this Agreement, the Servicer, the Seller, the
Security Trustee, the Mortgages Trustee and Funding 1 shall co-operate
to obtain the agreement of the Borrowers to a new bank mandate
permitting the Mortgages Trustee to operate the Direct Debiting Scheme.
21.10 Any provision of this Agreement which is stated to continue after
termination of the Agreement shall remain in full force and effect
notwithstanding termination.
22. FURTHER ASSURANCE
22.1 The parties hereto agree that they will co-operate fully to do all such
further acts and things and execute any further documents as may be
necessary or desirable to give full effect to the arrangements
contemplated by this Agreement.
22.2 Without prejudice to the generality of CLAUSE 21.1, the Mortgages
Trustee and the Beneficiaries shall upon request by the Servicer
forthwith give to the Servicer such further powers of attorney or other
written authorisations, mandates or instruments as are necessary to
enable the Servicer to perform the Services.
22.3 In the event that there is any change in the identity of the Mortgages
Trustee or an additional Mortgages Trustee is appointed, the remaining
Mortgages Trustee and/or the retiring Mortgages Trustee, as the case
may be, shall execute such documents with any other parties to this
Agreement and take such actions as such new Mortgages Trustee may
reasonably require for the purposes of vesting in such new Mortgages
Trustee the rights of the Mortgages Trustee under this Agreement and
releasing the retiring Mortgages Trustee from further obligations
thereunder and while any Note remains outstanding shall give notice
thereof to the Rating Agencies.
22.4 Nothing herein contained shall impose any obligation or liability on
the Mortgages Trustee to assume or perform any of the obligations of
the Servicer hereunder or render it liable for any breach thereof.
23. MISCELLANEOUS
23.1 Subject to CLAUSE 23.2, in the event that the funds available to the
Mortgages Trustee on any Funding 1 Interest Payment Date are not
sufficient to satisfy in full the aggregate amount payable to the
Servicer by the Mortgages Trustee on such Funding 1 Interest Payment
Date then the amount payable to the Servicer on such Funding 1 Interest
Payment Date shall be reduced by the amount of the shortfall and such
shortfall shall (subject always to the
23
provisions of this CLAUSE 23) be payable on the immediately succeeding
Funding 1 Interest Payment Date.
23.2 In the event that:
(a) after redemption in full of the Intercompany Loans; or
(b) after service of an Intercompany Loan Acceleration Notice and
payment of all other prior claims,
the remaining sums available to the Mortgages Trustee or remaining
proceeds of enforcement are insufficient to satisfy in full the
outstanding fees or other claims of the Servicer, such fees shall be
reduced by the amount of the deficiency.
23.3 Each of the Seller and the Servicer agrees that it will not:
(a) set off or purport to set off any amount which the Mortgages
Trustee, Funding 1 or each Issuer is or will become obliged to
pay to it under any of the Transaction Documents against any
amount from time to time standing to the credit of or to be
credited to the Mortgages Trustee GIC Account, the Funding 1 GIC
Account, the Funding 1 Transaction Account or any Issuer
Transaction Account or in any other account prior to transfer to
the Mortgages Trustee GIC Account, the Funding 1 GIC Account, the
Funding 1 Transaction Account or any Issuer Account, as
appropriate; or
(b) make or exercise any claims or demands, any rights of
counterclaim or any other equities against or withhold payment of
any and all sums of money which may at any time and from time to
time be standing to the credit of the Mortgages Trustee GIC
Account, the Funding 1 GIC Account, the Funding 1 Transaction
Account or the relevant Issuer Account.
23.4 The Servicer agrees that for so long as any Notes are outstanding it
will not petition nor commence proceedings for the administration or
winding up of the Mortgages Trustee or Funding 1 or any Issuer nor
participate in any ex parte proceedings with regard thereto.
23.5 In relation to all sums due and payable by the Mortgages Trustee to the
Servicer, the Servicer agrees that it shall have recourse only to sums
paid to or received by (or on behalf of) the Mortgages Trustee pursuant
to the provisions of the Mortgage Sale Agreement, the other Transaction
Documents and in relation to the Mortgages.
23.6 For the avoidance of doubt, neither Beneficiary shall be liable to pay
any amounts due under CLAUSES 11 and 13 without prejudice to the
obligations of the Mortgages Trustee in respect of such amounts.
23.7 Notwithstanding any other provisions of this Agreement, all obligations
to, and rights of, Funding 1 under or in connection with this Agreement
(other than its obligations under CLAUSE 24) shall automatically
terminate upon the discharge in full of all amounts owing by it under
any Intercompany Loan Agreement, provided that this shall be without
prejudice to any claims in respect of such obligations and rights
arising on or prior to such date.
24. CONFIDENTIALITY
During the continuance of this Agreement or after its termination, each
of the Mortgages Trustee and the Beneficiaries shall use its best
endeavours not to disclose to any person, firm
24
or company whatsoever any information relating to the business,
finances or other matters of a confidential nature of any other party
hereto of which it may exclusively by virtue of being party to the
Transaction Documents have become possessed and shall use all
reasonable endeavours to prevent any such disclosure as aforesaid,
provided however that the provisions of this CLAUSE 24 shall not apply:
(a) to any information already known to the Mortgages Trustee or the
Beneficiaries otherwise than as a result of entering into any of
the Transaction Documents;
(b) to any information subsequently received by the Mortgages Trustee
or the Beneficiaries which it would otherwise be free to
disclose;
(c) to any information which is or becomes public knowledge otherwise
than as a result of the conduct of the Mortgages Trustee or the
Beneficiaries;
(d) to any extent that the Mortgages Trustee or the Beneficiaries is
required to disclose the same pursuant to any law or order of any
court or pursuant to any direction, request or requirement
(whether or not having the force of law) of any central bank or
any governmental or other authority (including, without
limitation, any official bank examiners or regulators);
(e) to the extent that the Mortgages Trustee or the Beneficiaries
needs to disclose the same for determining the existence of, or
declaring, an Intercompany Loan Event of Default or a Termination
Event, the protection or enforcement of any of its rights under
any of the Transaction Documents or in connection herewith or
therewith or for the purpose of discharging, in such manner as it
thinks fit, its duties under or in connection with such
agreements in each case to such persons as require to be informed
of such information for such purposes; or
(f) in relation to any information disclosed to the professional
advisers of the Mortgages Trustee or the Beneficiaries or (in
connection with the review of current ratings of the Notes or
with a prospective rating of any debt to be issued by an Issuer)
to any credit rating agency or any prospective new Servicer or
Mortgages Trustee.
25. NOTICES
Any notices to be given pursuant to this Agreement to any of the
parties hereto shall be sufficiently served if sent by prepaid first
class post, by hand or facsimile transmission and shall be deemed to be
given (in the case of facsimile transmission) when despatched, (where
delivered by hand) on the day of delivery if delivered before 5.00 p.m.
on a London Business Day or on the next London Business Day if
delivered thereafter or (in the case of first class post) when it would
be received in the ordinary course of the post and shall be sent:
(a) in the case of the Servicer: to Halifax plc (LP/3/3/SEC), Trinity
Road, Halifax, West Yorkshire HX1 2RG (facsimile number +44 (0)
113 235 7511) for the attention of Mortgage Securitisation
Manager with a copy to HBOS Treasury Services plc, 33 Old Broad
Street, London EC2N 1HZ (facsimile number +44 (0)20 7574 8303)
for the attention of Head of Mortgage Securitisation and Covered
Bonds;
(b) in the case of the Mortgages Trustee: to Permanent Mortgages
Trustee Limited, 47 Esplanade, St. Helier, Jersey JE1 0BD
(facsimile number +44 (0) 1534 726391) for the attention of the
Secretary with a copy to HBOS Treasury Services plc, 33 Old Broad
Street, London EC2N 1HZ (facsimile number +44 (0)20 7574 8303)
for the attention of Head of Mortgage Securitisation and Covered
Bonds;
25
(c) in the case of the Seller: to Halifax plc (LP/3/3/SEC), Trinity
Road, Halifax, West Yorkshire HX1 2RG (facsimile number +44 (0)
113 235 7511) for the attention Mortgage Securitisation Manager
with a copy to HBOS Treasury Services PLC, 33 Old Broad Street,
London EC2N 1HZ (facsimile number +44 (0)20 7574 8303) for the
attention of Head of Mortgage Securitisation and Covered Bonds;
(d) in the case of Funding 1: to Permanent Funding (No. 1) Limited,
Blackwell House, Guildhall Yard, London EC2V 5AE (facsimile
number +44 (0)20 7556 0975) for the attention of the Secretary
with a copy to HBOS Treasury Services plc, 33 Old Broad Street,
London EC2N 1HZ (facsimile number +44 (0)20 7574 8303) for the
attention of Head of Mortgage Securitisation and Covered Bonds;
and
(e) in the case of the Security Trustee: to the Bank of New York,
48th Floor, One Canada Square, London E14 5AL (facsimile number +
44 (0)20 7964 6061 or + 44 (0)20 7964 6399, for the attention of
Global Structured Finance - Corporate Trust,
or to such other address or facsimile number or for the attention of
such other person or entity as may from time to time be notified by any
party to the others by written notice in accordance with the provisions
of this CLAUSE 25. All notices served under this Agreement shall be
simultaneously copied to the Security Trustee by the person serving the
same.
26. VARIATION AND WAIVER
No variation or waiver of this Agreement shall be effective unless it
is in writing and signed by (or by some person duly authorised by) each
of the parties. No single or partial exercise of, or failure or delay
in exercising, any right under this Agreement shall constitute a waiver
or preclude any other or further exercise of that or any other right.
No variation or waiver of this Agreement shall be made if the same
would adversely affect the then current ratings of any of the Notes.
27. NO PARTNERSHIP
It is hereby acknowledged and agreed by the parties that nothing in
this Agreement shall be construed as giving rise to any partnership
between any of the parties.
28. ASSIGNMENT
28.1 The Mortgages Trustee may not assign or transfer any of its rights or
obligations under this Agreement without the prior written consent of
each of the Beneficiaries.
28.2 The Servicer may not assign or transfer any of its rights and
obligations under this Agreement without the prior written consent of
the Mortgages Trustee (as trustee for the Beneficiaries) and each of
the Beneficiaries.
28.3 The Servicer acknowledges that Funding 1 has assigned its rights under
this Agreement to the Security Trustee pursuant to the Funding 1 Deed
of Charge and acknowledges that pursuant to the terms of the Funding 1
Deed of Charge, Funding 1 has, inter alios, authorised the Security
Trustee, prior to the Funding 1 Security becoming enforceable, to
exercise, or refrain from exercising, all rights, powers, authorities,
discretions and remedies under or in respect of the Transaction
Documents, including this Agreement, in such manner as in its absolute
discretion it shall think fit.
26
29. CHANGE OF SECURITY TRUSTEE
29.1 If there is any change in the identity of the Security Trustee in
accordance with the Funding 1 Deed of Charge, the Servicer, the Seller,
Funding 1 and the Mortgages Trustee shall execute such documents and
take such action as the successor Security Trustee and the outgoing
Security Trustee may reasonably require for the purpose of vesting in
the successor Security Trustee the rights and obligations of the
outgoing Security Trustee under this Agreement and releasing the
outgoing Security Trustee from its future obligations under this
Agreement.
29.2 It is hereby acknowledged and agreed that by its execution of this
Agreement the Security Trustee shall not assume or have any of the
obligations or liabilities of the Servicer, the Seller, Funding 1 or
the Mortgages Trustee under this Agreement.
30. AMENDMENTS
Subject to CLAUSE 25 of the Funding 1 Deed of Charge (Supplemental
Provisions Regarding the Security Trustee), any amendments to this
Agreement will be made only with the prior written consent of each
party to this Agreement.
31. EXCLUSION OF THIRD PARTY RIGHTS
The parties to this Agreement do not intend that any term of this
Agreement should be enforced, by virtue of the Contracts (Rights of
Third Parties) Act 1999, by any person who is not a party to this
Agreement.
32. COUNTERPARTS AND SEVERABILITY
32.1 This Agreement may be executed in any number of counterparts (manually
or by facsimile) and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an
original and all of which when taken together shall constitute one and
the same instrument.
32.2 Where any provision in or obligation under this Agreement shall be
invalid, illegal or unenforceable in any jurisdiction, the validity,
legality and enforceability of the remaining provisions or obligations
under this Agreement, or of such provision or obligation in any other
jurisdiction, shall not be affected or impaired thereby.
33. GOVERNING LAW AND JURISDICTION
33.1 This Agreement is governed by the laws of England (provided that any
terms of this Agreement which are particular to Scots law shall be
construed in accordance with the laws of Scotland).
33.2 Each party to this Agreement hereby irrevocably submits to the
non-exclusive jurisdiction of the English courts in any action or
proceeding arising out of or relating to this Agreement, and hereby
irrevocably agrees that all claims in respect of such action or
proceeding may be heard and determined by such courts. Each party to
this Agreement hereby irrevocably waives, to the fullest extent it may
possibly do so, any defence or claim that the English courts are an
inconvenient forum for the maintenance or hearing of such action or
proceeding.
34. PROCESS AGENT
The Mortgages Trustee irrevocably and unconditionally appoints
Structured Finance Management Limited of Blackwell House, Guildhall
Yard, London EC2V 5AE for the time
27
being as its agent for service of process in England in respect of any
proceedings in respect of this Agreement and undertakes that in the
event of Structured Finance Management Limited ceasing so to act it
will appoint another person with a registered office in London as its
agent for service of process.
IN WITNESS WHEREOF the parties have caused this Agreement to be executed as a
deed the day and year first before written.
28
SCHEDULE 1
THE SERVICES
In addition to the Services set out in the body of the Servicing Agreement, the
Servicer shall:
(a) keep records and books of account for the Mortgages Trustee in relation
to the Loans and their Related Security comprised in the Portfolio;
(b) keep records for all taxation purposes and Value Added Tax;
(c) notify relevant Borrowers of any change in their Monthly Payments;
(d) assist the auditors of the Mortgages Trustee and provide information to
them upon reasonable request;
(e) provide a redemption statement upon the request of a Borrower or the
Borrower's solicitor, licensed conveyancer or qualified conveyancer;
(f) notify relevant Borrowers of any other matter or thing which the
applicable Mortgage Conditions or Offer Conditions require them to be
notified of in the manner and at the time required by the relevant
Mortgage Terms;
(g) subject to the provisions of this Agreement (including without
limitation CLAUSE 5.2) take all reasonable steps to recover all sums
due to the Mortgages Trustee including without limitation by the
institution of proceedings and/or the enforcement of any Loan comprised
in the Portfolio or any Related Security;
(h) take all other action and do all other things which it would be
reasonable to expect a Reasonable, Prudent Mortgage Lender to do in
administering its loans and their related security; and
(i) act as collection agent for the Mortgages Trustee under the Direct
Debiting Scheme in accordance with the provisions of this Agreement.
29
SCHEDULE 2
FORM OF QUARTERLY POOL CUT
- ------------------------------------------------------------------------------------------------------------------
FIELD DESCRIPTION
- ------------------------------------------------------------------------------------------------------------------
Year/Month Processing year and month in YYYYMM format
- ------------------------------------------------------------------------------------------------------------------
Account Number Unique Mortgage Account Identifier
- ------------------------------------------------------------------------------------------------------------------
Original Advance
- ------------------------------------------------------------------------------------------------------------------
Current Loan balance Includes Capital, Interest, Arrears and Unpaid Charges
- ------------------------------------------------------------------------------------------------------------------
Latest Property Valuation Most recent valuation. It will be equal to original
valuation if no further valuation was done
- ------------------------------------------------------------------------------------------------------------------
Completion Date The date the advance was completed
- ------------------------------------------------------------------------------------------------------------------
Outstanding Monthly Periods The number of monthly periods remaining on the Loan
- ------------------------------------------------------------------------------------------------------------------
Method of Repayment Code to signify types of Loans: e.g. Endowment,
Interest Only, Repayment, Pension, Investment Linked
based on worst case reporting
- ------------------------------------------------------------------------------------------------------------------
First Income First applicant's primary income
- ------------------------------------------------------------------------------------------------------------------
Second Income Second applicant's primary income
- ------------------------------------------------------------------------------------------------------------------
Post Code Property postcode
- ------------------------------------------------------------------------------------------------------------------
MIG Cover Amount Amount of MIG Policy cover
- ------------------------------------------------------------------------------------------------------------------
Current Arrears Balance Includes unpaid interest, unpaid capital, unpaid
charges
- ------------------------------------------------------------------------------------------------------------------
Arrears Multiplier (Current) Arrears at previous month end divided by current
month payment due
- ------------------------------------------------------------------------------------------------------------------
Arrears Multiplier (1 to 2 months) Arrears at previous month end divided by current
month payment due
- ------------------------------------------------------------------------------------------------------------------
Arrears Multiplier (2 to 3 months) Arrears at previous month end divided by payment due
for that month
- ------------------------------------------------------------------------------------------------------------------
Arrears Multiplier (3 to 6 months) As above, but for 3 months prior to current month
- ------------------------------------------------------------------------------------------------------------------
Arrears Multiplier (6 to 12 months) As above, but for 6 months prior to current month
- ------------------------------------------------------------------------------------------------------------------
Arrears Multiplier (1 to 2 years) As above, but for 1 year prior to current month
- ------------------------------------------------------------------------------------------------------------------
Arrears Multiplier (2 years plus) As above, but for 2 years prior to current month
- ------------------------------------------------------------------------------------------------------------------
Property type Terraced, semi-detached, detached, other (flats,
maisonettes, etc.) or unknown
- ------------------------------------------------------------------------------------------------------------------
Loan Use House purchase or remortgage
- ------------------------------------------------------------------------------------------------------------------
Property Use Owner occupied, rental, etc.
- ------------------------------------------------------------------------------------------------------------------
Product code(s) Code identifier for the product(s)
- ------------------------------------------------------------------------------------------------------------------
MAR Monthly payment amount
- ------------------------------------------------------------------------------------------------------------------
Arrangement term Where an arrangement exists for the primary account
the period of the arrangement from the start of the
arrangement
- ------------------------------------------------------------------------------------------------------------------
Arrangement amount Amount of the arrangement made
- ------------------------------------------------------------------------------------------------------------------
Arrangement type Code for the arrangement type
- ------------------------------------------------------------------------------------------------------------------
30
SCHEDULE 3
MINIMUM SERVICING STANDARDS
1. GENERAL SERVICING CONSIDERATIONS
(a) Policies and procedures are instituted to monitor any performance or
other triggers and events of default in accordance with the transaction
agreements.
2. CASH COLLECTION AND ADMINISTRATION
(a) Payments on pool assets are deposited into the appropriate custodial
bank accounts - the Permanent Mortgage Trustee GIC control account - no
more than two business days of receipt.
(b) Advances of funds or guarantees regarding collections, cash flows or
distributions, and any interest or other fees charged for such
advances, are made, reviewed and approved as specified in the
transaction agreements.
(c) The related accounts for the transaction, such as cash reserve accounts
or accounts established as a form of overcollateralization, are
separately maintained (e.g. with respect to commingling of cash) as set
forth in the transaction agreements.
(d) Reconciliations are prepared on a monthly basis for all asset-backed
securities related bank accounts, including custodial accounts and
related bank clearing accounts - namely, the Permanent Mortgages
Trustee GIC account, Permanent Funding (No.1) GIC account, Permanent
Financing (No.6) capital account and Permanent Financing (No.6)
transaction account. These reconciliations:
(i) Are mathematically accurate;
(ii) Are prepared within 30 calendar days after the bank statement
cut-off date;
(iii) Are reviewed and approved by someone other than the person who
prepared the reconciliation; and
(iv) Contain explanations for reconciling items. These reconciling
items are resolved within 90 calendar days of their original
identification.
3. INVESTOR REMITTANCES
Amounts due to investors are allocated and remitted in accordance with
timeframes, distribution priority and other terms set forth in the
transaction agreements.
4. POOL ASSET ADMINISTRATION
(a) The servicer has made reasonable endeavours to maintain
collateral or security on pool assets.
(b) Any additions, removals or substitutions to the asset pool are
made, reviewed and approved in accordance with any conditions or
requirements in the transaction agreements.
(c) The servicer's records regarding the pool assets agree with the
lender's records with respect to the unpaid principal balance.
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(d) Changes with respect to the terms or status of a pool asset (for
example loan modifications or re-ageings) are made, reviewed and
approved by authorized personnel in accordance with the
transaction agreements and related pool asset documents.
(e) Loss mitigation or recovery actions (e.g., foreclosures or
repossessions) are initiated, conducted and concluded in
accordance with the timeframes or other requirements established
by the transaction agreements. Such programs include a hierarchy
of workout procedures (e.g., forbearance plans, modifications and
deeds in lieu of foreclosure, as applicable).
(f) Records documenting collection efforts are maintained during the
period a pool asset is delinquent in accordance with the
transaction agreements. Such records are maintained on at least a
monthly basis and describe the entity's activities in monitoring
delinquent pool assets including, for example, phone calls,
letters and payment rescheduling plans in cases where delinquency
is deemed temporary (e.g., illness or unemployment).
(g) Adjustments to interest rates or rates of return for pool assets
with variable rates are computed based on the related pool asset
documents.
(h) Delinquencies, charge-offs and uncollectible accounts are
recognized and recorded in accordance with the transaction
agreements.
(i) Any external enhancement or other support is maintained as set
forth in the transaction agreements.
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SIGNATORIES
SERVICER
EXECUTED as a DEED by )
HALIFAX PLC )
acting by its attorney ) .............................
in the presence of: ) (as attorney for HALIFAX PLC)
Witness's signature:.......................................
Name: .......................................
Address: .......................................
MORTGAGES TRUSTEE
EXECUTED as a DEED on behalf of )
PERMANENT MORTGAGES )
TRUSTEE LIMITED, )
a company incorporated in Jersey, )
Channel Islands, by )
being a person who, )
in accordance with the laws of that )
territory is acting under the authority of )
the company in the presence of: ) .............................
Witness's signature: ......................................
Name: ......................................
Address: ......................................
SELLER
EXECUTED as a DEED by )
HALIFAX PLC )
acting by its attorney ) .............................
in the presence of ) (as attorney for HALIFAX PLC)
Witness's signature:......................................
Name: ......................................
Address: ......................................
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FUNDING 1
EXECUTED as a DEED by )
PERMANENT FUNDING (NO. 1) )
LIMITED acting by its attorney ) ..................................
in the presence of ) (as attorney for PERMANENT FUNDING
(NO. 1 ) LIMITED)
Witness's signature:......................................
Name: ......................................
Address: ......................................
SECURITY TRUSTEE
EXECUTED as a DEED by an authorised)
signatory for and on behalf of )
THE BANK OF NEW YORK )
Authorised signatory ...................................
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