Exhibit 10.5

 
RWT HOLDINGS, INC.
Owner
 
MORGAN STANLEY CREDIT CORPORATION
Servicer
 
and
 
REDWOOD TRUST, INC.
Guarantor
 

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MASTER SERVICING AGREEMENT
 
Dated as of November 1, 2006
 
Fixed, Adjustable Rate and Additional Collateral Mortgage Loans
Flow Delivery Program

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TABLE OF CONTENTS
 

   
Page
ARTICLE I DEFINITIONS
 
1
Section 1.01 Defined Terms.
 
1
     
ARTICLE II BOOKS AND RECORDS; TRANSFER OF MORTGAGE LOANS
 
6
Section 2.01 Books and Records.
 
6
Section 2.02 Transfer of Mortgage Loans.
 
6
     
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE SERVICER
 
7
Section 3.01 Representations and Warranties of the Servicer.
 
7
     
ARTICLE IV ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
 
8
Section 4.01 Role of the Servicer.
 
8
Section 4.02 Collection of Mortgage Loan Payments.
 
9
Section 4.03 Realization Upon Defaulted Mortgage Loans.
 
10
Section 4.04 Establishment of Custodial Accounts; Deposits in Custodial
Accounts.
 
10
Section 4.05 Permitted Withdrawals From the Custodial Account.
 
11
Section 4.06 Establishment of Escrow Accounts; Deposits in Escrow Accounts.
 
12
Section 4.07 Permitted Withdrawals From Escrow Account.
 
13
Section 4.08 Transfer of Accounts.
 
13
Section 4.09 [INTENTIONALLY OMITTED]
 
13
Section 4.10 Errors and Omissions Insurance.
 
13
Section 4.11 Title Management and Disposition of REO Property.
 
14
Section 4.12 Adjustments to Mortgage Interest Rates.
 
15
Section 4.13 Subservicing Agreements Between the Servicer and Subservicers.
 
15
Section 4.14 Successor Subservicers.
 
16
Section 4.15 Liability of the Servicer.
 
16
Section 4.16 Assumption or Termination of Subservicing Agreements.
 
16
Section 4.17 Servicing Accounts.
 
17
Section 4.18 Permitted Investments.
 
17
Section 4.19 Payment of Taxes, Insurance and Other Charges; Maintenance of
Primary Mortgage Insurance Policies; Collections Thereunder.
 
17
Section 4.20 Maintenance of Hazard Insurance.
 
18
     
ARTICLE V ADMINISTRATION AND SERVICING OF TRADING ACCOUNTS
 
19
Section 5.01 The Servicer to Service Trading Accounts.
 
19
Section 5.02 Agreements with Respect to the Surety Bond.
 
20
     
ARTICLE VI PAYMENTS TO OWNER
 
21
Section 6.01 Distributions.
 
21
Section 6.02 Statements to Owner.
 
21
Section 6.03 Monthly Advances by the Servicer.
 
21
Section 6.04 Compensating Interest.
 
22

 
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ARTICLE VII GENERAL SERVICING PROCEDURE
 
23
Section 7.01 Assumption Agreements.
 
23
Section 7.02 Satisfaction of Mortgages and Release of Mortgage Files.
 
23
Section 7.03 Servicing Compensation.
 
23
Section 7.04 Annual Statement as to Compliance and Attestation.
 
24
Section 7.05 Owner’s Right to Examine the Servicer Records .
 
24
     
ARTICLE VIII REPORTS TO BE PREPARED BY SERVICER
 
25
Section 8.01 The Servicer Shall Provide Information as Reasonably Required .
 
25
     
ARTICLE IX THE SERVICER
 
25
Section 9.01 Indemnification; Third Party Claims.
 
25
Section 9.02 Merger or Consolidation of the Servicer .
 
26
Section 9.03 Limitation on Liability of the Servicer and Others.
 
26
Section 9.04 The Servicer Not to Resign.
 
26
     
ARTICLE X DEFAULT
 
27
Section 10.01 Events of Default .
 
27
Section 10.02 Waiver of Defaults .
 
28
     
ARTICLE XI TERMINATION; REPURCHASE
 
28
Section 11.01 Termination .
 
28
Section 11.02 Repurchase.
 
29
     
ARTICLE XII MISCELLANEOUS PROVISIONS
 
29
Section 12.01 Successor to the Servicer.
 
29
Section 12.02 Amendment.
 
30
Section 12.03 Assignments.
 
30
Section 12.04 Assignment of Servicing Rights .
 
30
Section 12.05 Governing Law.
 
30
Section 12.06 Notices.
 
30
Section 12.07 Severability Provisions.
 
31
Section 12.08 Exhibits.
 
31
Section 12.09 General Interpretive Principles.
 
31
Section 12.10 Reproduction of Documents .
 
32
Section 12.11 Successors and Assigns.
 
32
Section 12.12 Counterparts.
 
32
Section 12.13 Non-Solicitation .
 
32
Section 12.14 Guaranty of Owner’s Obligations.
 
33
     
ARTICLE XIII COMPLIANCE WITH REGULATION AB
 
33
Section 13.01 Intent of the Parties; Reasonableness.
 
33
Section 13.02 Additional Representations and Warranties of the Servicer.
 
33
Section 13.03 Information to Be Provided by the Servicer.
 
34
Section 13.04 Annual Statements as to Compliance.
 
37
Section 13.05 Report on Assessment of Compliance and Attestation.
 
38
Section 13.06 Use of Subservicers and Subcontractors.
 
39
Section 13.07 Indemnification; Remedies.
 
40
Section 13.08 Third Party Beneficiary.
 
42

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EXHIBIT A
FORM OF LIMITED POWER OF ATTORNEY

EXHIBIT B
FORM OF MONTHLY SERVICER REPORT

EXHIBIT C
SERVICING CRITERIA TO BE ADDRESSED IN ASSESSMENT OF COMPLIANCE

EXHIBIT D
FORM OF ANNUAL CERTIFICATION
 
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MORTGAGE LOAN SERVICING AGREEMENT
 
This is a MASTER SERVICING AGREEMENT (this “AGREEMENT”), dated and effective as
of November 1, 2006 and is by and between RWT Holdings, Inc., a Delaware
Corporation, as owner (“Owner”), Morgan Stanley Credit Corporation, a Delaware
corporation, as servicer (the “Servicer”), and Redwood Trust, Inc., a Maryland
corporation, as guarantor (“Guarantor”).
 
PRELIMINARY STATEMENTS
 
Pursuant to a Master Mortgage Loan Purchase Agreement dated as of November 1,
2006 between Owner, Morgan Stanley Credit Corporation, a Delaware corporation
(“Seller”) and Guarantor (as amended, modified restated or supplemented from
time to time, the “Purchase Agreement”), Owner may purchase from Seller from
time to time certain residential, first mortgage loans. In order to facilitate
the servicing of such mortgage loans by the Servicer, the Servicer, Owner and
Guarantor have executed this agreement.
 
In consideration of the premises and the mutual agreements hereinafter set
forth, Owner and the Servicer agree as follows:
 
ARTICLE I
 
DEFINITIONS
 
Section 1.01 Defined Terms.
 
Whenever used in this Agreement, the following words and phrases, unless the
context otherwise requires shall have the following meaning specified in this
Section (capitalized terms used and not otherwise defined herein shall have the
respective meanings specified in the Purchase Agreement to the extent the same
are defined therein):
 
“Agreement”: This Master Servicing Agreement and all exhibits hereto, as the
same may from time to time be amended, modified, restated or supplemented.
 
“Applicable Law”: All applicable laws of any Governmental Authority, including,
without limitation, federal, state and foreign securities laws, tax laws, tariff
and trade laws, ordinances, judgments, decrees, injunctions, writs and orders or
like actions of any Governmental Authority and rules, regulations, orders,
interpretations, licenses, and permits of any federal, regional, state, county,
municipal or other Governmental Authority.
 
“Collateral Base”: With respect to any Mortgage Loan, the value of any
Additional Collateral related to such Mortgage Loan, plus the value of the
Mortgaged Property related to such Mortgage Loan.
 
“Condemnation Proceeds”: All awards or settlements in respect of a taking of a
partial or an entire Mortgaged Property by exercise of the power of eminent
domain or condemnation.
 
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“Custodial Account”: The separate trust account or accounts created and
maintained pursuant to Section 4.04 of this Agreement which shall be entitled
“Morgan Stanley Credit Corporation, in trust for RWT Holdings, Inc.,” or such
other title as is requested by the Owner.
 
“Eligible Account”: An account that is (i) maintained at a depository
institution the short-term debt obligations (or, in the case of a depository
institution which is part of a holding company structure, the short-term debt
obligations of such parent holding company) of which have been rated by each
Rating Agency in one of its two highest short-term rating categories at the time
of the deposit therein, or (ii) a trust account maintained with a corporate
trust department of a federal or state chartered depository institution or trust
company, which institution is acting in its fiduciary capacity.
 
“Escrow Account”: The separate trust account or accounts created and maintained
pursuant to Section 4.06 on which shall be entitled “Morgan Stanley Credit
Corporation, as Servicer, in trust for Owner and various Mortgagors,” or such
other title as is requested by Owner.
 
“Escrow Payments”: The amounts constituting ground rents, taxes, assessments,
water charges, sewer rents, mortgage insurance premiums, property insurance
premiums and other payments required to be escrowed by the Mortgagor with the
mortgagee pursuant to any Mortgage Loan.
 
“Event of Default”: Any one of the conditions or circumstances enumerated in
Section 10.01.
 
“Governmental Authority”: Any nation or government (including any state or other
political subdivision of either thereof) and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
 
“Insurance Proceeds”: Proceeds of any Primary Mortgage Insurance Policy, title
policy, hazard policy or other insurance policy covering a Mortgage Loan, if
any, to the extent such proceeds are not to be applied to the restoration of the
related Mortgaged Property or released to the Mortgagor in accordance with the
procedures that the Servicer would follow in servicing mortgage loans held for
its own account.
 
“Liquidation Proceeds”: Amounts, other than Insurance Proceeds and Condemnation
Proceeds, received by the Servicer in connection with the liquidation of a
defaulted Mortgage Loan through a trustee’s sale, foreclosure sale or otherwise
(including, but not limited to, amounts received with respect to an Additional
Collateral Pledge Agreement), other than amounts received following the
acquisition of REO Property pursuant to Section 4.11.
 
“Loan Amount”: With respect to any Mortgage Loan at any time, the outstanding
principal balance of such Mortgage Loan at such time.
 
“Loan Documents”: With respect to any Mortgage Loan, the Mortgage Note,
Mortgage, and/or any other documents executed by Mortgagor and delivered to the
Servicer evidencing or securing the Mortgage Loan.
 
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“Master Servicer”: With respect to any Securitization Transaction, the “Master
Servicer,” if any, identified in the related transaction documents.
 
“Monthly Advance”: The aggregate of the advances made by the Servicer on any
Remittance Date pursuant to Section 6.03.
 
“Moody’s”: Moody’s Investors Service, Inc. or its successor in interest.
 
“Mortgage Loan”: The “Mortgage Loans” (as defined in the Purchase Agreement)
which are subject to this Agreement from time to time.
 
“MSA Mortgage Loan Schedule”: Collectively, a schedule comprised of all Mortgage
Loans subject to servicing under this Agreement, but excluding all Mortgage
Loans assumed or transferred by Owner, or otherwise no longer subject to
servicing under this Agreement.
 
“MSCC”: As defined in Section 4.16.
 
“Officer’s Certificate”: A certificate signed by the Chairman of the Board, the
Vice Chairman of the Board, the President, a Senior Vice President, Vice
President, or an Assistant Vice President of the Servicer, and delivered to
Owner as required by this Agreement.
 
“Owner”: The owner of the Mortgage Loans.
 
“Permitted Investment”: Any one or more of the following:
 

 
(i)
direct obligations of, or obligations fully guaranteed as to principal and
interest by, the United States or any agency or instrumentality thereof,
provided such obligations are backed by the full faith and credit of the United
States;

 

 
(ii)
repurchase obligations (the collateral for which is held by a third party) with
respect to any security described in clause (i) above, provided that the
long-term unsecured obligations of the party agreeing to repurchase such
obligations are at the time rated by each of the Rating Agencies in one of its
two highest rating categories;

 

 
(iii)
certificates of deposit, time deposits, demand deposits and bankers’ acceptances
of any bank or trust company incorporated under the laws of the United States or
any state thereof or the District of Columbia, provided that the short-term
commercial paper of such bank or trust company at the date of acquisition
thereof has been rated by each of the Rating Agencies in its highest rating;

 

 
(iv)
money market funds rated by each of the Rating Agencies in its highest
short-term debt rating category;

 

 
(v)
commercial paper (having original maturities of not more than 365 days) of any
corporation incorporated under the laws of the United States or any state
thereof or the District of Columbia which on the date of acquisition has been
rated by each of the Rating Agencies in its highest short-term rating category;
and

 
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(vi)
any other obligation or security acceptable to each of the Rating Agencies (as
certified by a letter from each of the Rating Agencies to Owner) in respect of
mortgage pass through certificates rated in one of its two highest rating
categories;

 
provided, that with the exception of U.S. Treasury Strips, no such instrument
shall be a Permitted Investment if such instrument evidences either (a) the
right to receive interest only payments with respect to the obligations
underlying such instrument or (b) both principal and interest payments derived
from obligations underlying such instrument where the principal and interest
payments with respect to such instruments provide a yield to maturity exceeding
120% of the yield to maturity at par of such underlying obligation.
 
“Prepayment Interest Shortfall”: With respect to any Remittance Date and any
Mortgage Loan that was the subject of a principal prepayment during the related
Principal Prepayment Period, an amount equal to one month’s interest at the
Mortgage Loan Remittance Rate on the amount of such principal prepayment less
the amount of interest (adjusted to the Mortgage Loan Remittance Rate) paid by
the Mortgagor in respect of such principal prepayment.
 
“Principal Prepayment Period”: As to any Remittance Date, the calendar month
preceding the month of distribution.
 
“Rating Agency”: Either of Standard & Poor’s and Moody’s.
 
“Record Date”: The close of business of the last Business Day of the month
preceding the month of the related Remittance Date.
 
“REMIC”: A real estate mortgage investment conduit, as such term is defined by
the Internal Revenue Code of 1986, as amended.
 
“Remittance Date”: The 18th day of any month or, if such 18th day is not a
Business Day, the first Business Day immediately preceding such 18th day.
 
“REO Disposition”: The final sale by the Owner of any REO Property.
 
“REO Property”: A Mortgaged Property acquired by the Servicer on behalf of Owner
as described in Section 4.11.
 
“Servicing Advances”: All customary, reasonable and necessary “out of pocket”
costs and expenses incurred in the performance by the Servicer of its servicing
obligations, including, but not limited to, the cost of (i) the preservation,
restoration and protection of the Mortgaged Property, (ii) paying taxes and
insurance with respect to the Mortgaged Property, (iii) enforcement of judicial
proceedings, including foreclosures, bankruptcies and defense of claims relating
to the Mortgages and Mortgaged Property, and (iv) the management and liquidation
of the REO Property.
 
“Servicing Criteria”: The “servicing criteria” set forth in Item 1122(d) of
Regulation AB, as such may be amended from time to time.
 
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“Servicing Fee”: With respect to any Mortgage Loan and any Remittance Date, the
fee payable monthly to the Servicer pursuant to Section 7.03.
 
“Servicing Officer”: Any officer of the Servicer involved in, or responsible
for, the administration and servicing of the Mortgage Loans whose name appears
on a list of servicing officers furnished by the Servicer to Owner upon request,
as such list may from time to time be amended.
 
“Specially Serviced Mortgage Loan”: A Mortgage Loan as to which the following
events have occurred and is continuing (i) monthly mortgage payment being more
that 60 days delinquent (ii) any filing of insolvency proceeding on behalf of
the related Mortgagor or (iii) any receipt by the Servicer of notice of
foreclosure of the related mortgage property.
 
“Standard & Poor’s”: Standard & Poor’s Ratings Services, a division of the
McGraw-Hill Companies, Inc., or its successor in interest.
 
“Subcontractor”: Any vendor, subcontractor or other Person that is not
responsible for the overall servicing (as “servicing” is commonly understood by
participants in the mortgage-backed securities market) of Mortgage Loans but
performs one or more discrete functions identified in Item 1122(d) of
Regulation AB with respect to Mortgage Loans under the direction or authority of
the Seller or a Subservicer.
 
“Subservicer”: Any Person that services Mortgage Loans on behalf of the Seller
or any Subservicer and is responsible for the performance (whether directly or
through Subservicers or Subcontractors) of a substantial portion of the material
servicing functions required to be performed by the Seller under this Agreement
or any Reconstitution Agreement that are identified in Item 1122(d) of
Regulation AB.
 
“Subservicing Account”: An account established by a Subservicer which meets the
requirements set forth in Section 4.17 and is otherwise acceptable to the
Servicer, and which must be an Eligible Account.
 
“Subservicing Agreement”: The written agreement between the Servicer and a
Subservicer relating to the servicing and administration of the Mortgage Loans
as provided in Section 4.13.
 
“Surety Agreement”: The Surety Bond Reimbursement Agreement dated March 17, 1999
between the Surety Bond Issuer and the Servicer pursuant to which the Surety
Bond Issuer has issued the Surety Bond, as the same may be amended, modified,
restated or supplemented from time to time.
 
“Surety Bond”: The limited purpose Surety Bond, dated March 17, 1999, issued by
the Surety Bond Issuer in favor of the Sellers, as the same may be amended,
modified, restated or supplemented from time to time.
 
“Surety Bond Issuer”: shall mean AMBAC Assurance Corp or its successors.
 
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ARTICLE II
 
BOOKS AND RECORDS; TRANSFER OF MORTGAGE LOANS
 
Section 2.01 Books and Records.
 
The Servicer shall be responsible for maintaining, and shall maintain, a
complete set of books and records for the Mortgage Loans, which shall be
appropriately identified in the Servicer’s books and records to clearly reflect
the ownership of the Mortgage Loans by Owner, and subsequent assignments and
transfers of the Mortgage Loans pursuant to Section 2.02 hereof. At the request
of Owner, the Servicer shall promptly deliver to Owner an MSA Mortgage Loan
Schedule setting forth all Mortgage Loans that the Servicer then services and
administers for Owner under this Agreement; provided, however, that the
information contained on such MSA Mortgage Loan Schedule may be as of the
Closing Date for each respective Mortgage Loan and may consist of the Mortgage
Loan Schedule(s) attached to the Bill(s) of Sale for such Mortgage Loans, with
manual deletions or additions thereto or other revisions thereof.
 
Section 2.02 Transfer of Mortgage Loans.
 
Owner may, with the consent of the Servicer (which shall not be unreasonably
withheld), assign, sell or transfer (each, a “Transfer”) any of Owner’s interest
in and to any of the Mortgage Loans to any institutional investor that has a net
worth of not less than $50,000,000 and owns not less than $250,000,000 in
residential mortgage loans (each, a “Permitted Transferee”), subject in each
case to the rights of the Servicer under the provisions of this Agreement
(including, without limitation, the right of the Servicer to continue servicing
such Mortgage Loans on the terms set forth herein), except that no such
assignment, sale, transfer, pledge, hypothecation or encumbrance shall increase
the Servicer’s liabilities or obligations or decrease the Servicer’s rights
under this Agreement, and Owner shall remain fully liable for performance of all
of its obligations as to the transferred Mortgage Loans. As a condition
precedent to any Transfer (in addition to the other conditions set forth
herein), the Permitted Transferee shall enter into a servicing agreement with
the Servicer in the form of this Agreement, but mutatis mutandis, and deliver
such certificates and opinions as the Servicer may reasonably require. Upon
consummation of any Transfer, the MSA Mortgage Loan Schedule shall be amended by
the Servicer to reflect such transfer. Notwithstanding the foregoing, Owner
shall not make any Transfer of (i) less than forty (40) Mortgage Loans, (ii)
Mortgage Loans with an aggregate unpaid principal balance less than $5,000,000
to any Person or if the remaining Mortgage Loans listed on the MSA Mortgage Loan
Schedule after giving effect thereto would have an aggregate unpaid principal
balance less than $5,000,000 or (iii) any Mortgage Loans other than to a
Permitted Transferee in a transaction that complies with the terms of this
Agreement.
 
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ARTICLE III
 
REPRESENTATIONS AND WARRANTIES OF THE SERVICER
 
Section 3.01 Representations and Warranties of the Servicer.
 
The Servicer represents, warrants and covenants to Owner, as of the date of this
Agreement and as of each Closing Date or as of such other date specified below,
that:
 
(i) The Servicer (a) is a corporation, duly incorporated, validly existing and
in good standing under the laws of the State of Delaware, (b) has all licenses
necessary to carry on its business as now being conducted, (c) has all material
licenses and is qualified and in good standing under the laws of each state
where a Mortgaged Property is located to the extent required under applicable
law to effect such qualification, and (d) is in compliance with the laws of each
such state to the extent necessary to permit the enforcement of Owner’s rights
(either directly or through a Subservicer) under each Mortgage Loan and to
permit the servicing of the Mortgage Loans in accordance with the terms of this
Agreement.
 
(ii) The Servicer has full power and authority to hold each Mortgage Loan, to
service each Mortgage Loan, to execute and deliver this Agreement, and to enter
into and consummate all transactions contemplated by this Agreement. The
Servicer has duly authorized the execution, delivery and performance of this
Agreement, has duly executed and delivered this Agreement, and this Agreement,
assuming due authorization, execution and delivery by Owner and the
enforceability against Owner, constitutes a legal, valid and binding obligation
of the Servicer, enforceable against it in accordance with its terms, except as
the enforceability thereof may be limited by bankruptcy, insolvency,
liquidation, moratorium, reorganization or other similar laws affecting the
rights of creditors generally or by general principles of equity, regardless of
whether enforcement is sought in a proceeding in equity or at law.
 
(iii) The consummation of the transactions contemplated by this Agreement is in
the ordinary course of the Servicer’s business and will not conflict with or
result in a breach of any of the terms, conditions or provisions of the
Servicer’s certificate of incorporation or by-laws or any legal restriction or
any material agreement or instrument to which the Servicer is now party or by
which it is bound, or constitute a material default or result in an acceleration
under any of the foregoing, or result in the violation of any law, rule,
regulation, order, judgment or decree to which the Servicer or its property is
subject.
 
(iv) The Servicer is an approved seller/servicer for Fannie Mae or Freddie Mac
in good standing and is a mortgagee approved by the Secretary of Housing and
Urban Development pursuant to Section 203 of the National Housing Act. No event
has occurred that would render the Servicer unable to comply with Fannie Mae or
Freddie Mac eligibility requirements or that would require notification to
either Fannie Mae or Freddie Mac.
 
(v) The Servicer has no reason or cause to believe that it cannot perform each
covenant contained in this Agreement.
 
(vi) There is no action suit, proceeding or investigation pending or, to the
Servicer’s knowledge, threatened, against the Servicer that, in the Servicer’s
judgment, if determined adversely to the Servicer, would materially and
adversely affect the validity or enforceability of this Agreement or the ability
of the Servicer to perform its obligations hereunder in accordance with the
terms hereof.
 
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(vii) No consent, approval, authorization or order of any court or governmental
authority is required for the execution and delivery of this Agreement by the
Servicer or for the performance by the Servicer of its obligations hereunder,
other than any such consent, approval, authorization or order as has been
obtained prior to the Closing Date.
 
The Servicer shall indemnify Owner and hold it harmless against any losses,
damages, penalties, fines, forfeitures, legal fees and related costs, judgments,
and other costs and expenses resulting from any claim, demand, defense or
assertion based on or grounded upon, or resulting from, a breach of the
Servicer’s representations and warranties contained in this Section 3.01. It is
understood and agreed that the obligations of the Servicer set forth in this
Section 3.01 to indemnify Owner as provided above constitute the sole remedies
of Owner respecting a breach of the foregoing representations and warranties.
 
ARTICLE IV
 
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
 
Section 4.01 Role of the Servicer.
 
The Servicer, as independent contract servicer, shall service and administer the
Mortgage Loans in accordance with this Agreement and the normal and usual
standards of practice of prudent mortgage lenders, and shall have full power and
authority, acting alone, to do or cause to be done any and all things in
connection with such servicing and administration that the Servicer may deem
necessary or desirable and consistent with the terms of this Agreement.
 
Consistent with the terms of this Agreement, at the respective Mortgagor’s
request or as required by applicable law, the Servicer may waive, modify or vary
any term of any Mortgage Loan or consent to the postponement of strict
compliance with any such term or in any manner grant indulgence to any Mortgagor
if, in the Servicer’s reasonable and prudent determination, such waiver,
modification, postponement or indulgence is consistent with industry practice
and not materially adverse to Owner, including actions intended to maximize
collections on such Mortgage Loan; provided, however, that, except as permitted
by the following paragraph, the Servicer shall not permit any modification with
respect to any Mortgage Loan that would change the Mortgage Interest Rate,
forgive the payment of any principal or interest payments, make future advances
or extend the final maturity date on such Mortgage Loan. Without limiting the
generality of the foregoing, the Servicer shall continue, and is hereby
authorized and empowered, to execute and deliver on behalf of itself and Owner,
all instruments of satisfaction or cancellation, or of partial or full release,
discharge and all other comparable instruments, with respect to the Mortgage
Loans and with respect to the Mortgaged Property. Owner has provided and shall,
as necessary, promptly furnish the Servicer with such powers of attorney (a form
of which is attached hereto as Exhibit A) as are necessary and appropriate and
with such other documents as are necessary or appropriate to enable the Servicer
to carry out its servicing and administrative duties under this Agreement.
 
Notwithstanding any other provision in this Agreement or the Master Mortgage
Loan Purchase Agreement to the contrary:
 
(i) In the case of any Mortgage Loan, the Servicer may waive any late payment
charge, penalty, interest or any assumption fees, or other fees which may be
collected in the ordinary course of servicing such Mortgage Loan;
 
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(ii) In the case of a Specially Serviced Mortgage Loan, the Servicer shall
notify the Owner in writing by either fax, email or other mutually acceptable
means and obtain the Owner’s written consent prior to the Servicer modifying,
amending or waiving any of the financial terms of, or making any other
modifications to the Mortgage Loan. If Owner notifies the Servicer of its
refusal to consent thereto, then the Servicer shall, at its option, repurchase
the related Specially Serviced Mortgage Loan. Such repurchase shall be at a
price equal to (a) the Assumed Principal Balance of the Mortgage Loan plus (b)
accrued interest on such Assumed Principal Balance at the Mortgage Loan
Remittance Rate has last been paid and distributed to Purchaser to the date of
repurchase. Further, if such Mortgage Loan is an Additional Collateral Mortgage
Loan, Servicer may release a portion of or all of the Additional Collateral
related thereto provided that the release of such Additional Collateral is in
accordance with the Additional Collateral Pledge Agreement; and
 
(iii) The Servicer shall specifically notify the Owner and obtain the Owner’s
consent to the Servicer taking any of the following actions: (a) selling any
Specially Serviced Mortgage Loan or REO Property, (b) forgiving principal or
interest on, or permitting to be satisfied at a discount, any Mortgage Loan; or
(c) accepting substitute or additional collateral, or releasing any collateral,
for a Mortgage Loan.
 
In servicing and administering the Mortgage Loans, the Servicer shall employ
procedures including collection procedures and exercise the same care that it
customarily employs and exercises in servicing and administering mortgage loans
for its own account giving due consideration to accepted mortgage servicing
practices of prudent lending institutions and Owner’s reliance on the Servicer.
In servicing and administering the Mortgage Loans, the Servicer may permit any
Governmental Authority to have access to and review and copy the files of the
Servicer with respect to the Mortgage Loans, and Servicer is authorized to do
whatever is necessary to comply with all Applicable Laws and the requirements of
such Governmental Authority, including without limitation any required
modifications of the Loan Documents.
 
Section 4.02 Collection of Mortgage Loan Payments.
 
Continuously from the date hereof until the principal and interest on all
Mortgage Loans are paid in full, the Servicer shall proceed diligently to
collect all payments due under each Mortgage Loan when the same shall become due
and payable and shall, to the extent such procedures shall be consistent with
this Agreement and the terms and provisions of any related Primary Mortgage
Insurance Policy, follow such collection procedures as it follows with respect
to mortgage loans comparable to the Mortgage Loans held for its own account.
Further, the Servicer will take special care in ascertaining and estimating
annual ground rents, taxes, assessments, water rates, property insurance
premiums, mortgage insurance premiums, and all other charges that, as provided
in the Mortgage, will become due and payable to the end that the installments
payable by the Mortgagors will be sufficient to pay such charges as and when
they become due and payable.
 
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Section 4.03 Realization Upon Defaulted Mortgage Loans.
 
The Servicer shall use reasonable efforts, consistent with the procedures that
the Servicer would use in servicing loans for its own account, to foreclose upon
or otherwise comparably convert the ownership of Mortgaged Properties which
secure Mortgaged Loans which come into and continue in default and as to which
no satisfactory arrangements can be made for collection of delinquent payments
pursuant to Section 4.01. In addition, if an Additional Collateral Mortgage Loan
becomes a defaulted Mortgage Loan, the Servicer shall make all reasonable
efforts available under the Loan Documents to realize upon the Additional
Collateral pertaining to such Mortgage Loan, and any proceeds from the
realization thereof (and not such Additional Collateral itself) shall be
included in the related Liquidation Proceeds and deposited in the Custodial
Account, net of any related Servicing Advances. The Servicer shall use
reasonable efforts to realize upon defaulted Mortgage Loans in such a manner as
will maximize the receipt of principal and interest by Owner, taking into
account, among other things, the timing of foreclosure proceedings and any
proceedings with respect to Additional Collateral. The foregoing is subject to
the provisions that, in any case in which Mortgaged Property shall have suffered
damage, the Servicer shall not be required to expend its own funds toward the
restoration of such property in excess of an aggregate of $2,000 during the life
of the Mortgage Loan, unless it shall determine in its discretion (i) that such
restoration will increase the proceeds of liquidation of the related Mortgage
Loan to Owner after reimbursement to itself for such expenses, and (ii) that
such expenses will be recoverable by the Servicer through Insurance Proceeds or
Liquidation Proceeds from the related Mortgaged Property, as contemplated in
Section 4.05.
 
In the event that any payment due under any Mortgage Loan becomes 90 days
delinquent and, in the judgment of the Servicer, the related Mortgagor is not
likely to become current within a reasonable period of time, the Servicer shall
commence foreclosure or other proceedings to realize upon the Mortgaged Property
securing such Mortgage Loan.
 
Section 4.04 Establishment of Custodial Accounts; Deposits in Custodial
Accounts.
 
The Servicer shall establish and maintain at all times appropriate custodial
accounts for principal and interest, and taxes and insurance with respect to the
Mortgage Loans. The Servicer shall segregate and hold all funds constituting
Escrow Payments collected and received pursuant to a Mortgage Loan to be so
deposited, separate and apart from any of its own funds and general assets.
 
The Servicer shall deposit in the Custodial Account and retain therein the
following payments and collections received or made by it subsequent to the
Cut-off Date, or received by it prior to the Cut-off Date but allocable to a
period subsequent thereto, other than in respect of principal and interest on
the Mortgage Loans due on or before the Cut-off Date:
 
(i) All payments on account of principal, including principal prepayments, on
the Mortgage Loans;
 
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(ii) All payments on account of interest on the Mortgage Loans adjusted to the
Mortgage Loan Remittance Rate;
 
(iii) All Liquidation Proceeds;
 
(iv) All Insurance Proceeds including amounts required to be deposited pursuant
to Sections 4.06, 4.11 and 4.18, other than proceeds to be held in the Escrow
Account and applied to the restoration or repair of the Mortgaged Property or
released to the Mortgagor in accordance with the Servicer’s normal servicing
procedures the related loan documents or applicable law;
 
(v) All Condemnation Proceeds affecting any Mortgaged Property that are not
released to the Mortgagor in accordance with the Servicer’s normal servicing
procedures, the loan documents or applicable law;
 
(vi) Any Monthly Advances;
 
(vii) All proceeds of any Mortgage Loan repurchased in accordance with Section
5(c) or (d) of the Purchase Agreement, and all amounts required to be deposited
by the Servicer in connection with shortfalls in principal amount of Qualified
Substitute Mortgage Loans pursuant to Section 5(c) of the Purchase Agreement;
 
(viii) Any amounts required to be deposited by the Servicer pursuant to Section
6.04 for the month of distribution;
 
(ix) Any amounts in respect of Permitted Investments required to be deposited
pursuant to Section 4.18;
 
(x) Any amounts required to be deposited by the Servicer in connection with any
REO Property pursuant to Section 4.11; and
 
(xi) Any amounts required to be deposited into the Custodial Account pursuant to
Section 7.01.
 
The foregoing requirements for deposit in the Custodial Account shall be
exclusive, it being understood and agreed that, without limiting the generality
of the foregoing, payments in the nature of late payment charges and assumption
fees, to the extent permitted by Section 7.01, need not be deposited by the
Servicer in the Custodial Account. Any interest paid on funds deposited into the
Custodial Account by the depository institution shall accrue to the benefit of
the Servicer and the Servicer shall be entitled to retain and withdraw such
interest from the Custodial Account pursuant to Section 4.05(iv). In addition,
funds in the Custodial Account may be invested in Permitted Investments in
accordance with the provisions set forth in Section 4.18.
 
Section 4.05 Permitted Withdrawals From the Custodial Account.
 
The Servicer may, from time to time, make withdrawals from the Custodial Account
for the following purposes:
 
(i) To make payments to Owner in the amounts and in the manner provided for in
Section 6.01;
 
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(ii) To reimburse itself for each unreimbursed Monthly Advance from the related
Monthly Payments collected from the Mortgagors or, to the extent an unreimbursed
Monthly Advance is determined by the Servicer to be unrecoverable, from any
funds in the Custodial Account;
 
(iii) To reimburse itself for unreimbursed Servicing Advances and for
unreimbursed Servicing Fees, provided that with respect to any Mortgage Loan the
Servicer’s right to such reimbursement shall be limited, subject to Section
4.13, to the related funds collected by the Servicer from the Mortgagor or any
other Person including, but not limited to, Liquidation Proceeds, Condemnation
Proceeds and Insurance Proceeds, and with respect to REO Property, funds
received as rental or similar income. The Servicer’s right to the reimbursement
set forth in the preceding sentence shall be prior to the rights of Owner to
such proceeds and amounts, except that where the Servicer is required to
repurchase a Mortgage Loan pursuant to Section 5(c) or (d) of the Purchase
Agreement, the Servicer’s right to such reimbursement shall be subsequent to the
rights of Owner to receive payment from the Custodial Account representing the
repurchase price set forth in Section 5(c) or (d) of the Purchase Agreement, as
applicable, and representing all other amounts required to be paid to Owner with
respect to such repurchased Mortgage Loan;
 
(iv) To pay itself as servicing compensation any interest earned on funds in the
Custodial Account;
 
(v) To pay itself with respect to each Mortgage Loan that has been repurchased
pursuant to Section 5(c) or (d) of the Purchase Agreement all related Monthly
Payments and such other amounts as may be collected by the Servicer from the
Mortgagor or otherwise relating to such Mortgage Loan, provided that such
Monthly Payments or other amounts have not been distributed as of the date on
which the related repurchase price is determined;
 
(vi) To refund to the Servicer any amount deposited in the Custodial Account and
not required to be deposited therein; and
 
(vii) To clear and terminate the Custodial Account upon the termination of this
Agreement.
 
Section 4.06 Establishment of Escrow Accounts; Deposits in Escrow Accounts.
 
The Servicer shall segregate and hold all funds collected and received pursuant
to each Mortgage Loan which constitute Escrow Payments separate and apart from
any of its own funds and general assets. The Servicer will establish one or more
Escrow Accounts for such purpose, each of which shall be an Eligible Account.
 
The Servicer shall deposit in the Escrow Account or Accounts on a daily basis,
and retain therein, (i) all Escrow Payments collected on account of the Mortgage
Loans, for the purpose of effecting timely payment of any such items as required
under the terms of this Agreement, and (ii) all Insurance Proceeds which are to
be applied to the restoration or repair of any Mortgaged Property. The Servicer
shall make withdrawals therefrom only to effect such payments as are required or
contemplated under this Agreement, and for such other purposes as set forth or
in accordance with Section 4.07. The Servicer shall be entitled to retain any
interest paid on funds deposited into the Escrow Account by the depository
institution other than interest on escrowed funds required by law to be paid to
a Mortgagor.
 
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Section 4.07 Permitted Withdrawals From Escrow Account.
 
Withdrawals from the Escrow Account may be made by the Servicer (i) to effect
timely payments of ground rents, taxes, assessments, water rates, property
insurance premiums, Primary Mortgage Insurance Policy premiums, if applicable,
and comparable items, (ii) to reimburse the Servicer for any Servicing Advance
made by the Servicer with respect to an Escrow Payment, but only from amounts
received on the related Mortgage Loan which represent late payments or
collections of Escrow Payments thereunder, and only to the extent permitted by
applicable law, (iii) to refund to the Mortgagor any funds as may be determined
to be overages, (iv) for transfer to the Custodial Account in accordance with
the terms of this Agreement, (v) for application to restoration or repair of the
Mortgaged Property, (vi) to pay to the Servicer, or to the Mortgagor to the
extent required by law, any interest paid on the funds deposited into the Escrow
Account, (vii) to refund to the Servicer any amount deposited in the Escrow
Account and not required to be deposited therein or (viii) to clear and
terminate the Escrow Account on the termination of this Agreement. As part of
its servicing duties, the Servicer shall pay to the Mortgagors interest on funds
in the Escrow Account, to the extent required by law, and to the extent that
interest earned on funds in the Escrow Account is insufficient, shall pay such
interest from its own funds, without any reimbursement therefor.
 
Section 4.08 Transfer of Accounts.
 
The Servicer may transfer the Custodial Account or the Escrow Account to a
different depository institution from time to time. The Servicer shall promptly
notify Owner upon making any such transfer. In any case, the Custodial Account
and Escrow Account shall be Eligible Accounts.
 
Section 4.09 [INTENTIONALLY OMITTED]
 
Section 4.10 Errors and Omissions Insurance.
 
The Servicer shall maintain, at its own expense, a blanket fidelity bond and an
errors and omissions insurance policy, with broad coverage with responsible
companies that would meet the requirements of Fannie Mae or Freddie Mac on all
officers, employees or other persons acting in any capacity with regard to the
Mortgage Loans to handle funds, money, documents and papers relating to the
Mortgage Loans. The errors and omissions insurance shall be in the form of the
Mortgage Banker’s Blanket Bond and shall protect and insure the Servicer against
losses, including forgery, theft, embezzlement and omissions and negligent acts
of such Persons and shall also protect and insure the Servicer against losses in
connection with the failure to maintain any insurance policies required pursuant
to this Agreement and the release or satisfaction of a Mortgage Loan without
having obtained payment in full of the indebtedness secured thereby. No
provision of this Section 4.10 requiring the errors and omissions insurance
shall diminish or relieve the Servicer from its duties and obligations as set
forth in this Agreement. The minimum coverage under any such bond and insurance
policy shall be at least equal to the corresponding amounts required by Fannie
Mae in the Fannie Mae Sellers’ and Servicers’ Guide or by Freddie Mac in the
Freddie Mac Sellers’ and Servicer’s Guide. Upon request of any Owner, the
Servicer shall cause to be delivered to Owner a copy of the insurance policy and
shall use reasonable efforts to obtain a statement from the surety and the
insurer that such insurance policy shall in no event be terminated or materially
modified without thirty (30) days prior written notice to Owner.
 
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Section 4.11 Title Management and Disposition of REO Property.
 
The Servicer shall either itself or through an agent selected by the Servicer,
manage, conserve, protect and operate each REO Property (and may temporarily
rent the same) in the same manner that it manages, conserves, protects and
operates other foreclosed property for its own account, and in the same manner
that similar property in the same locality as the REO Property is managed. The
Servicer shall cause each REO Property to be inspected promptly upon the
acquisition of title thereto and shall cause each REO Property to be inspected
at least annually thereafter. The Servicer shall use reasonable efforts to
dispose of the REO Property in a commercially reasonable manner as soon as
possible. If Owner has notified the Servicer in writing that an REO Property is
held as part of a REMIC, the Servicer will make reasonable efforts to sell such
REO Property within the time necessary to preserve such REMIC status as advised
by Owner in the notice thereof.
 
If title to any Mortgaged Property is acquired in foreclosure or by deed in lieu
of foreclosure (each, an “REO Property”), the deed or certificate of sale shall
be taken in the name of the Owner or the Person (which may be the Servicer for
the benefit of the Owner) designated by the Owner, or in the event the Owner
notifies the Servicer that the Owner or such Person is not authorized or
permitted to hold title to real property in the state where the REO Property is
located, or would be adversely affected under the “doing business” or tax laws
of such state by so holding title, the deed or certificate of sale shall be
taken in the name of such Person or Persons as shall be consistent with an
opinion of counsel obtained by the Owner from an attorney duly licensed to
practice law in the state where the REO Property is located. The Servicer
(acting alone or through a subservicer), on behalf of the Owner, shall provide
for the maintenance and disposal of REO on behalf of the Owner as outlined under
section 6 of the collection manual of Servicer.
 
The Servicer shall deposit and hold all revenues and funds collected and
received in connection with the operation of each REO Property in the Custodial
Account, and the Servicer shall account separately for revenues and funds
received or expended with respect to each REO Property.
 
The Servicer shall have full power and authority, subject only to the specific
requirements and prohibitions of this Agreement to do any and all things in
connection with any REO Property as are consistent with the servicing standards
set forth in Section 4.01. In connection therewith, the Servicer shall deposit
or cause to be deposited on a daily basis in the Custodial Account all revenues
and collections received or collected by it with respect to each REO Property,
including all proceeds of any REO Disposition. The Servicer shall withdraw
(without duplication) from the Custodial Account, but solely from the revenues
and collections received or collected by it with respect to a specific REO
Property, such funds necessary for the proper operation, management and
maintenance of such REO Property, including the following:
 

 
(a)
all insurance premiums due and payable in respect of such REO Property;

 
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(b)
all real estate taxes and assessments in respect of such REO Property that may
result in the imposition of a lien thereon;

 

 
(c)
all customary and reasonable costs and expenses necessary to maintain, repair,
appraise, evaluate, manage or operate such REO Property (including the customary
and reasonable costs incurred by any “managing agent” retained by the Servicer
in connection with the maintenance, management or operation of such REO
Property);

 

 
(d)
all reasonable costs and expenses of restoration improvements, deferred
maintenance and tenant improvements; and

 

 
(e)
all other reasonable costs and expenses, including reasonable attorneys’ fees,
that the Servicer may suffer or incur in connection with its performance of its
obligations under this Section (other than costs and expenses that the Servicer
is expressly obligated to bear pursuant to this Agreement).

 
To the extent that amounts on deposit in the Custodial Account are insufficient
for the purposes set forth in clauses (1) through (5) above, the Servicer shall,
subject to Section 6.03, advance the amount of funds required to cover the
shortfall with respect thereto. The Servicer shall promptly notify the Owner in
writing of any failure by the Servicer to make a Servicing Advance of the type
specified in clauses (1) or (2) above (irrespective of whether such Servicing
Advance is claimed to be non-recoverable by the Servicer pursuant to Section
6.03).
 
The Servicer shall notify Owner of its receipt of a bona fide offer for any REO
Property. Following the consummation of an REO Disposition, the Servicer shall
remit to the Owner, in accordance with Section 6.01, any proceeds from such REO
Disposition in the Custodial Account following the payment of all expenses and
Servicing Advances relating to the subject REO Property.
 
Section 4.12 Adjustments to Mortgage Interest Rates.
 
The Servicer shall make interest rate adjustments and payment amount adjustments
for each Adjustable Rate Mortgage Loan in accordance with the terms of the
related Mortgage Note and will deliver to the related Mortgagor written notice
of such adjustments in accordance with the terms of such Mortgage Note and the
requirements of applicable law.
 
Section 4.13 Subservicing Agreements Between the Servicer and Subservicers.
 
(a) Subject to Section 13.06, the Servicer may enter into Subservicing
Agreements with Subservicers for the servicing and administration of the
Mortgage Loans. The terms of any Subservicing Agreement shall not be
inconsistent with any of the provisions of this Agreement. Each Subservicer
shall be (i) authorized to transact business in the state or states in which the
Mortgaged Properties related to the Mortgage Loans such Subservicer is to
service are situated, if and to the extent required by applicable law to enable
the Subservicer to perform its obligations hereunder and under the Subservicing
Agreement, and (ii) a Freddie Mac- or Fannie Mae-approved mortgage servicer.
Each Subservicing Agreement must impose on the Subservicer requirements
conforming to the provisions set forth in Section 4.17 and provide for servicing
of the Mortgage Loans consistent with the terms of this Agreement.
 
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(b) As part of its servicing activities hereunder, the Servicer, for the benefit
of Owner, shall enforce the obligations of each Subservicer under the related
Subservicing Agreement, including, without limitation, any obligation to make
advances in respect of delinquent payments as required by a Subservicing
Agreement. Such enforcement, including without limitation, the legal prosecution
of claims, termination of Subservicing Agreements, and the pursuit of other
appropriate remedies, shall be in such form and carried out to such an extent
and at such time as the Servicer, in its good faith business judgment, would
require were it the owner of the related Mortgage Loans. The Servicer shall pay
the costs of such enforcement, to the extent, if any, that such recovery (i)
exceeds all amounts due in respect of the related Mortgage Loans, or (ii) is
from a specific recovery of costs, expenses or attorneys’ fees against the party
against whom such enforcement is directed.
 
Section 4.14 Successor Subservicers.
 
The Servicer shall be entitled to terminate any Subservicing Agreement and the
rights and obligations of any Subservicer pursuant to any Subservicing Agreement
in accordance with the terms and conditions of such Subservicing Agreement. In
the event of termination of any Subservicer, the Servicer either shall directly
service the related Mortgage Loans or shall enter into a Subservicing Agreement
with a successor Subservicer which qualifies under Section 4.13.
 
Section 4.15 Liability of the Servicer.
 
Notwithstanding any Subservicing Agreement, any of the provisions of this
Agreement relating to agreements or arrangements between the Servicer and a
Subservicer or reference to actions taken through a Subservicer or otherwise,
the Servicer shall remain obligated and primarily liable to Owner for the
servicing and administering of the Mortgage Loans in accordance with the
provisions of Section 4.01 without diminution of such obligation or liability by
virtue of such Subservicing Agreements or arrangements or by virtue of
indemnification from the Subservicer and to the same extent and under the same
terms and conditions as if the Servicer alone were servicing and administering
the Mortgage Loans. The Servicer shall be entitled to enter into any agreement
with a Subservicer for indemnification of the Servicer by such Subservicer and
nothing contained in this Agreement shall be deemed to limit or modify such
indemnification.
 
Section 4.16 Assumption or Termination of Subservicing Agreements.
 
In the event that Morgan Stanley Credit Corporation, or its successors
(collectively, “MSCC”) shall for any reason cease to be the servicer of the
Mortgage Loans under this Agreement, Owner or its designee may, if MSCC does not
terminate any Subservicing Agreement in accordance with its terms, thereupon
assume all of the rights and obligations of MSCC under such Subservicing
Agreement. Upon such assumption, Owner or its designee shall be deemed to have
assumed all of MSCC’s interest therein and to have replaced MSCC as a party to
each Subservicing Agreement to the same extent as if the Subservicing Agreements
had been assigned to the assuming party, except that MSCC shall not thereby be
relieved of any liability or obligations under the Subservicing Agreements and
MSCC shall continue to be entitled to any rights or benefits, in each case,
which arose prior to its termination as servicer.
 
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The Servicer at its expense shall, upon the request of Owner, deliver to the
assuming party all documents and records relating to each Subservicing Agreement
and the Mortgage Loans then being serviced and an accounting of amounts
collected and held by it and otherwise use reasonable efforts to effect the
orderly and efficient transfer of the Subservicing Agreements to the assuming
party.
 
Section 4.17 Servicing Accounts.
 
In those cases where a Subservicer is servicing a Mortgage Loan pursuant to a
Subservicing Agreement, the Subservicer shall be required to establish and
maintain a Subservicing Account which shall be an Eligible Account. The
Subservicer shall be required to deposit into the Subservicing Account not later
than the first Business Day after receipt all proceeds of Mortgage Loans
received by the Subservicer, less its subservicing compensation to the extent
permitted by the Subservicing Agreement, and to remit such proceeds to the
Servicer for deposit in the Custodial Account not later than the tenth day of
each month, or if such tenth day is not a Business Day, the immediately
succeeding Business Day. For purposes of this Agreement, the Servicer shall be
deemed to have received payments on the Mortgage Loans when the Subservicer has
received such payments pursuant to the Subservicing Agreement.
 
Section 4.18 Permitted Investments.
 
The Servicer may invest the funds in the Custodial Account in Permitted
Investments, each of which shall mature not later than the Business Day
immediately preceding the Remittance Date next following the date of such
investment (except that if such Permitted Investment is an obligation of the
institution that maintains such account, then such Permitted Investment shall
mature not later than such Remittance Date) and shall not be sold or disposed of
prior to its maturity. All such Permitted Investments shall be registered in the
name of the Servicer or its nominee, and held in trust for Owner. All income and
gain realized from any such investment as well as any interest earned on deposit
in the Custodial Account shall be for the benefit of the Servicer, and shall be
withdrawn by the Servicer on the related Remittance Date. The Servicer shall
deposit in the Custodial Account (with respect to investments made hereunder of
funds held therein) an amount equal to the amount of any loss incurred in
respect of any such investment immediately upon realization of such loss without
right of reimbursement.
 
Section 4.19 Payment of Taxes, Insurance and Other Charges; Maintenance of
Primary Mortgage Insurance Policies; Collections Thereunder.
 
With respect to each Mortgage Loan, the Servicer shall maintain accurate records
reflecting the status of ground rents, taxes, assessments, water rates and other
charges which are or may become a lien upon the Mortgaged Property and the
status of Primary Mortgage Insurance Policy premiums and fire and hazard
insurance coverage and shall obtain, from time to time, all bills for the
payment of such charges, including renewal premiums, and shall effect payment
thereof prior to the applicable penalty or termination date and at a time
appropriate for securing maximum discounts allowable, employing for such purpose
deposits of the Mortgagor in the Escrow Account which shall have been estimated
and accumulated by the Servicer in amounts sufficient for such purposes, as
allowed under the terms of the Mortgage and applicable law. If a Mortgage does
not provide for Escrow Payments, then the Servicer shall require that any such
payments be made by the Mortgagor at the time they first become due. The
Servicer assumes full responsibility for the timely payment of all such bills
and shall effect timely payments of all such bills irrespective of the
Mortgagor’s faithful performance in the payment of same or the making of the
Escrow Payments and shall make advances from its own funds to effect such
payments but shall be entitled to reimbursement thereof in accordance with the
terms of this Agreement.
 
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The Servicer shall maintain in full force and effect a Primary Mortgage
Insurance Policy, with respect to each Mortgage Loan for which such coverage is
required. Such coverage will be maintained until the Loan-to-Value Ratio of the
related Mortgage Loan is reduced to 75% or less in the case of a Mortgage Loan
having a Loan-to-Value Ratio at origination in excess of 80% or until such time,
if any, as such insurance is required to be released in accordance with the
provisions of applicable law including, but not limited to, the Homeowners
Protection Act of 1998. The Servicer shall assure that all premiums due under
any Primary Mortgage Insurance Policy are paid in a timely manner, but, shall be
entitled to reimbursement pursuant to the terms of this Agreement for premiums
paid by the Servicer on behalf of any Mortgagor who is obligated to pay such
premiums but fails to do so. The Servicer shall not cancel or refuse to renew
any Primary Mortgage Insurance Policy in effect on the Funding Date that is
required to be kept in force under this Agreement unless a replacement Primary
Mortgage Insurance Policy for such canceled or nonrenewed policy is obtained
from and maintained with an insurer. The Servicer shall not take any action
which would result in noncoverage under any applicable Primary Mortgage
Insurance Policy of any loss which, but for the actions of the Servicer, would
have been covered thereunder.
 
In connection with its activities as servicer, the Servicer agrees to prepare
and present, on behalf of itself and the Owner, claims to the insurer under any
Primary Mortgage Insurance Policy in a timely fashion in accordance with the
terms of such policies and, in this regard, to take such action as shall be
necessary to permit recovery under any Primary Mortgage Insurance Policy
respecting a defaulted Mortgage Loan. Pursuant to Section 4.04, any amounts
collected by the Servicer under any Primary Mortgage Insurance Policy shall be
deposited in the Collection Account.
 
Section 4.20 Maintenance of Hazard Insurance.
 
The Servicer shall cause to be maintained for each Mortgage Loan fire and hazard
insurance with extended coverage as is customary in the area where the Mortgaged
Property is located in an amount that is at least equal to the lesser of (a) the
maximum insurable value of the improvements securing such Mortgage Loan and (b)
the greater of (1) the Unpaid Principal Balance of such Mortgage Loan or (2) an
amount such that the proceeds thereof shall be sufficient to prevent the
Mortgagor and/or the loss payee from becoming a co insurer.
 
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If any Mortgaged Property is in an area identified by the Federal Emergency
Management Agency as having special flood hazards and such flood insurance has
been made available, then the Servicer will cause to be maintained a flood
insurance policy meeting the requirements of the current guidelines of the
Federal Insurance Administration with a generally acceptable insurance carrier,
in an amount representing coverage not less than the lesser of (a) the minimum
amount required, under the terms of coverage, to compensate for any damage or
loss on a replacement cost basis (or the outstanding principal balance of the
related Mortgage Loan if replacement cost coverage is not available for the type
of building insured) or (b) the maximum amount of insurance which is available
under the Flood Disaster Protection Act of 1973, as amended (assuming that the
area in which such Mortgaged Property is located is participating in such
program).
 
The Servicer shall also maintain on each REO Property fire, hazard and liability
insurance, and to the extent required and available under the Flood Disaster
Protection Act of 1973, as amended, flood insurance with extended coverage in an
amount which is at least equal to the lesser of (a) the maximum insurable value
of the improvements which are a part of such property and (b) the outstanding
principal balance of the related Mortgage Loan at the time it became an REO
Property plus accrued interest at the Mortgage Interest Rate and related
Servicing Advances.
 
ARTICLE V
 
ADMINISTRATION AND SERVICING OF TRADING ACCOUNTS
 
Section 5.01 The Servicer to Service Trading Accounts. 
 
(a) The Servicer represents and warrants that it will service and administer the
Trading Accounts, in accordance with the terms of (i) the procedures it employs
to administer Trading Accounts for its own benefit (as the same may be amended
from time to time) and (ii) the related Additional Collateral Pledge Agreement.
 
(b) The Servicer shall be released from its obligations to administer the
Trading Accounts as applicable upon termination of the related Additional
Collateral Pledge Agreement.
 
(c) The Servicer may, without consent of Owner, amend or modify a Additional
Collateral Pledge Agreement in any non-material respect to reflect
administrative or account changes.
 
(d) Notwithstanding anything to the contrary in this Agreement (including
without limitation the termination of the Servicing rights and/or obligations of
the Servicer under Article XI of this Agreement), the Servicer shall service and
administer each Trading Account, each Additional Collateral Pledge Agreement and
each Additional Collateral Mortgage Loan, in accordance with the terms of this
Agreement and each Additional Collateral Pledge Agreement; it being understood
and agreed that only the Servicer shall service and administer the related
securities accounts, lines of credit, mortgages, and guarantors with respect to
Additional Collateral Pledge Agreement.
 
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(e) Notwithstanding Section 4.04, when the Collateral Base for any Additional
Collateral Mortgage Loan is less than the Loan Amount for such Additional
Collateral Mortgage Loan, the Servicer shall cause cash received upon exercise
of foreclosure rights under the related Additional Collateral Pledge Agreement,
if it has not been previously applied to reduce the principal balance of such
Additional Collateral Mortgage Loan, to be deposited into the Custodial Account.
 
(f) The Servicer shall use its reasonable efforts to realize upon any Additional
Collateral for such of the Additional Collateral Mortgage Loans as come into and
continue in default and as to which no satisfactory arrangements can be made for
collection of delinquent payments; provided that the Servicer shall not obtain
title to any such Additional Collateral as a result of or in lieu of the
disposition thereof or otherwise; and provided further that (i) the Servicer
shall not proceed with respect to such Additional Collateral in any manner that
would impair the ability to recover against the related Mortgaged Property, and
(ii) the Servicer shall proceed with any acquisition of REO Property in a manner
that preserves the ability to apply the proceeds of such Additional Collateral
against amounts owed under the defaulted Mortgage Loan. Any proceeds realized
from such Additional Collateral (other than amounts to be released to the
Mortgagor or the related guarantor in accordance with procedures that the
Servicer would follow in servicing loans held for its own account, subject to
the terms and conditions of the related Mortgage and Mortgage Note and to the
terms and conditions of any security agreement, guarantee agreement, mortgage or
other agreement governing the disposition of the proceeds of such Additional
Collateral) shall be deposited in the Custodial Account, subject to withdrawal
pursuant to Section 4.05 of this Agreement.
 
Section 5.02 Agreements with Respect to the Surety Bond. 
 
(a) The Servicer represents and warrants to Owner that the Additional Collateral
Mortgage Loans are insured under the terms and provisions of the Surety Bond,
subject to the limitations set forth therein. Owner acknowledges receipt from
the Surety Bond Issuer of a certificate confirming the insurance of the
Additional Collateral Mortgage Loans pursuant to the terms and provisions of the
Surety Bond.
 
(b) Owner and the Servicer agree that the Surety Bond Issuer is a third party
beneficiary in respect of the Servicer’s obligations under this Article V.
 
(c) With respect to the sale or potential sale of the Additional Collateral
Mortgage Loans, Owner shall not use, circulate, quote or otherwise refer to the
Surety Bond Issuer or the Surety Bond for any purpose, including but not limited
to, the registration, purchase and sale of securities, nor file the Surety Bond
with, or refer to it or to the Surety Bond Issuer, as part of any registration
statement or offering document, without the express prior written consent of the
Surety Bond Issuer as to both form and substance of such disclosure.
 
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ARTICLE VI
 
PAYMENTS TO OWNER
 
Section 6.01 Distributions.
 
On each Remittance Date with respect to each Mortgage Loan, subject to Section
6.03(c), the Servicer shall distribute to Owner (i) all amounts due on the Due
Date immediately preceding the related Remittance Date (which shall include all
scheduled interest and principal), net of charges against or withdrawals from
the Custodial Account pursuant to clauses (ii) through (vi) of Section 4.05,
plus any principal prepayments received during the related Principal Prepayment
Period, minus (iii) any amounts attributable to Monthly Payments collected as to
such Mortgage Loans but due on a Due Date or Due Dates subsequent to the current
Remittance Date.
 
Subject to Section 6.03(c), all distributions made to Owner on each Remittance
Date will be made to Owner of record on the preceding Record Date, and shall be
based on the Mortgage Loans owned and held by Owner, and shall be made by wire
transfer of immediately available funds to the account of Owner at a bank or
other entity having appropriate facilities therefor, or if Owner shall have so
notified the Servicer, by check mailed to the address of Owner as provided for
in Section 12.06.
 
With respect to any remittance received by Owner on or after the second Business
Day following the Business Day on which such payment was due, the Servicer shall
pay to Owner interest on any such late payment at an annual rate equal to the
rate of interest as is publicly announced from time to time at its principal
office by Chase Manhattan Bank, N. A., New York, New York, as its “prime”
lending rate (which is not necessarily its lowest rate) (or if Chase Manhattan
Bank, N.A. shall cease to exist or to announce such rate, then such rate shall
be a reasonably comparable rate determined by Servicer in its reasonable
discretion), adjusted as of the date of each change, plus one (1) percentage
point, but in no event greater than the maximum amount permitted by applicable
law. Such interest shall be paid by the Servicer to Owner on the date such late
payment is made and shall cover the period commencing with the day following
such second Business Day and ending with the Business Day on which such payment
is made, both inclusive. Such interest shall be remitted along with such late
payment. The payment by the Servicer of any such interest shall not be deemed an
extension of time for Payment or a waiver of any Event of Default by the
Servicer.
 
Section 6.02 Statements to Owner.
 
Not later than the tenth (10th) day of each month, the Servicer will furnish to
Owner a monthly remittance report in a format substantially similar to Exhibit B
hereto, which monthly remittance report will be generated as of the expiration
of the preceding month.
 
The Servicer shall provide Owner with such information concerning the Mortgage
Loans as is necessary for Owner to prepare its federal income tax return as
Owner may reasonably request from time to time.
 
Section 6.03 Monthly Advances by the Servicer.
 
(a) With respect to each Mortgage Loan and subject to Section 6.03(c), on each
Remittance Date the Servicer shall, pursuant to Section 6.01, remit to Owner the
total of all scheduled Monthly Payments due on the preceding Due Date whether or
not such Monthly Payments were collected from the Mortgagor. Any amounts which
are due but uncollected shall, subject to subsection (c) below, be funded only
by using excess cash collections, if any, on deposit in the Custodial Account.
 
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(b) If the collections on deposit in the Custodial Account on the Remittance
Date are less than the amount of the required monthly remittance, the Servicer
shall, subject to subsection (c) below, make a Monthly Advance by depositing to
the Custodial Account enough of its own funds to make the total on deposit equal
the full amount of the remittance due Owner. The Servicer may reimburse itself
for its advances from collections from Mortgagors that are subsequently
deposited into the Custodial Account to the extent provided in Section 4.05.
 
(c) If the Servicer determines, in its reasonable judgment, that any uncollected
payment due from a Mortgagor that is due to be paid to Owner pursuant to Section
6.01 would not be recoverable from Liquidation Proceeds or other payments or
recoveries (including Insurance Proceeds or Condemnation Proceeds) on the
related Mortgage Loan, then the Servicer will ensure that the amount considered
to be non-recoverable will not be funded from excess collections or advanced by
the Servicer, and will therefore not be remitted to Owner until the earlier to
occur of (a) the purchase of the Mortgage Loan by the Servicer, if applicable,
or (b) the acquisition or disposition of title to the related Mortgaged Property
through foreclosure or otherwise, and then in each case shall only be paid to
the extent of such repurchase price or recovery.
 
(d) The Servicer’s obligations to make Monthly Advances as to any Mortgage Loan
pursuant to Section 6.03(a) and (b) will continue through the last Monthly
Payment due prior to the payment in full of the Mortgage Loan, or through the
Remittance Date for the remittance of all Liquidation Proceeds or other payments
or recoveries (including Insurance Proceeds or Condemnation Proceeds) with
respect to the related Mortgage Loan or the related REO Property, subject to
Section 6.03(c). With respect to any Mortgage Loans determined to be
unrecoverable and whose Monthly Payments are omitted from the scheduled monthly
remittance, the Servicer shall deliver an Officer’s Certificate to Owner setting
forth the basis of such determination.
 
Section 6.04 Compensating Interest.
 
Not later than the close of business on the Business Day preceding each
Remittance Date, the Servicer shall from its own funds deposit in the Custodial
Account an amount equal to the lesser of (i) the aggregate of the Prepayment
Interest Shortfalls, if any, that exist in respect of the related Principal
Prepayment Period and (ii) the aggregate of the Servicing Fees for the most
recently ended calendar month.
 
If for any reason the Servicer fails to process any principal prepayment on a
timely basis in accordance with Section 4.04(i), the Servicer shall from its own
funds deposit in the Custodial Account, interest at the Mortgage Interest Rate
on the principal prepayment for the period the deposit into the Custodial
Account was delayed.
 
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ARTICLE VII
 
GENERAL SERVICING PROCEDURE
 
Section 7.01 Assumption Agreements.
 
If the Servicer acquires actual knowledge that a Mortgagor has transferred or
proposes to transfer the related Mortgaged Property, the Servicer shall enforce
any related “due-on-sale” clause consistent with its practices for mortgage
loans it services for its own account. If the Servicer elects not to enforce
such due-on-sale clause, the Servicer may enter into an assumption agreement
with the party to whom such Mortgaged Property is to be or has been conveyed. If
any assumption fee is collected by the Servicer for entering into an assumption
agreement, the Servicer shall be entitled to retain a portion of such fee up to
an amount equal to 1% of the outstanding principal balance of the related
Mortgage Loan as additional servicing compensation, and shall deposit into the
Custodial Account any portion thereof that exceeds 1% of such outstanding
principal balance.
 
Section 7.02 Satisfaction of Mortgages and Release of Mortgage Files.
 
Upon the payment in full of any Mortgage Loan and deposit of such payment by
Servicer into the Custodial Account pursuant to Section 4.04, the Servicer shall
execute any document necessary to satisfy the Mortgage Loan and request delivery
to it of the portion of the Mortgage File held by Owner or the Custodian. Upon
receipt of such request, the related mortgage documents shall be released to the
Servicer within seventy-two (72) hours and the Servicer shall prepare and
process any satisfaction or release. No expense incurred in connection with any
instrument of satisfaction or deed of reconveyance shall be chargeable to the
Custodial Account or Owner.
 
To the extent that Owner acts as its own custodian, from time to time and as
appropriate for the servicing or foreclosure of the Mortgage Loan, including for
this purpose collection under any Primary Mortgage Insurance Policy, Owner
shall, upon request of the Servicer and delivery to Owner of a servicing receipt
signed by a Servicing Officer, release the requested portion of the Mortgage
File held by Owner to the Servicer. Owner shall promptly deliver the request to
return the related Mortgage documents to the Custodian. The Servicer shall
return the Mortgage documents to Owner when the need therefor by the Servicer no
longer exists, unless the Mortgage Loan has been liquidated and the Liquidation
Proceeds relating to the Mortgage Loan have been deposited into the Custodial
Account or the Mortgage File or such document has been delivered to an attorney,
or to a public trustee or other public official as required by law, for purposes
of initiating or pursuing legal action or other proceedings for the foreclosure
of the Mortgaged Property either judicially or non-judicially. Upon receipt of a
certificate of a Servicing Officer stating that such Mortgage Loan was
liquidated, the servicing receipt shall be released by Owner to the Servicer.
 
Section 7.03 Servicing Compensation.
 
In addition to any other fees to which Servicer is entitled hereunder, as
compensation for its services hereunder, the Servicer shall be entitled to a
Servicing Fee payable with respect to each Mortgage Loan. As to each Mortgage
Loan, the Servicing Fee shall (i) be payable monthly from payment of interest on
such Mortgage Loan prior to the deposit of such payments into the Custodial
Account, (ii) accrue at the applicable Servicing Fee Rate, and (iii) be computed
on the basis of the same principal amount and for the same period respecting
which such interest payment was computed. The Servicer shall be entitled to
recover accrued but unpaid Servicing Fees in respect of any Mortgage Loan to the
extent permitted by Section 4.05. The Servicer’s right to the Servicing Fee
shall not be transferred in whole or in part except in connection with the
transfer of all the Servicer’s obligations under this Agreement. Servicing
compensation in addition to the Servicing Fee, in the form of assumption fees as
provided in Section 7.01, interest paid on funds deposited in the Escrow Account
to the extent permitted by Section 4.06, default interest in excess of the
Mortgage Interest Rate and late payment charges and other ancillary fees, in
each case to the extent collected, shall be retained by the Servicer and shall
not be required to be deposited into the Custodial Account. The Servicer shall
be required to pay all expenses incurred by it in connection with its servicing
activities hereunder and shall not be entitled to reimbursement therefor except
as specifically provided for herein.
 
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Section 7.04 Annual Statement as to Compliance and Attestation. 
 
(a) Unless an Annual Statement as to Compliance is delivered as provided in
Section 13.04, the Servicer will deliver to Owner on or before April 1 of each
year, beginning with April 1 of the calendar year after the year in which the
first Closing Date occurs, an Officer’s Certificate stating that (i) a review of
the activities of the Servicer during the preceding calendar year and of
performance under this Agreement has been made under such officer’s supervision,
and (ii) to such officer’s knowledge, based on such review, the Servicer has
fulfilled all of its material obligations under this Agreement throughout such
year in all material respects, or, if there has been a default in the
fulfillment of any such obligation, specifying each such default known to such
officer and the nature and status thereof.
 
(b) Unless a Report on Assessment of Compliance and Attestation is delivered as
provided in Section 13.05, on or before April 1 of each year, beginning with
April 1 of the calendar year after the year in which the first Closing Date
occurs, the Servicer at its expense shall cause a firm of independent certified
public accountants (which may also render other services to the Servicer) to
furnish a report to Owner to the effect that certain mortgage loans serviced by
the Servicer were included in the total population of Mortgage Loans subject to
selection for testing in such firm’s examination of certain documents and
records, that such examination was conducted substantially in compliance with
the Uniform Single Attestation Program for Mortgage Bankers and that such
examination disclosed no items of material noncompliance with the provisions of
the Uniform Single Attestation Program for Mortgage Bankers, except for such
items of noncompliance as shall be set forth in such report.
 
Section 7.05 Owner’s Right to Examine the Servicer Records .
 
Owner shall have the right to examine and audit upon reasonable prior written
notice, during business hours or at such other times as might be reasonable
under applicable circumstances, any and all of the books, records, documentation
or other information of the Servicer, or held by another for the Servicer or on
its behalf or otherwise, which may be relevant to the performance or observance
by the Servicer of the terms, covenants or conditions of this Agreement.
 
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The Servicer shall provide to Owner and any supervisory agents or examiners
which may relate to Owner access to any documentation regarding the Mortgage
Loans which may be required by all applicable regulations. Such access shall be
afforded without charge, upon reasonable request, during normal business hours
and at the offices of the Servicer.
 
Neither Owner nor the Servicer shall, nor will they permit any of their
respective affiliates, employees, agents or representatives to, divulge or
disclose, directly or indirectly, any information concerning the Mortgage Loans
in violation of any law. Neither party shall, nor shall they permit any of their
respective affiliates, employees, agents or representatives to, divulge or
disclose, directly or indirectly, any information concerning the business
practices of the other party to this Agreement. This paragraph does not apply to
information which is not confidential or which has been published or otherwise
made available to the general public prior to the date of this Agreement, or
information required to be released under law or by or to any regulatory,
administrative or judicial body or agency or the furnishing by either party of
information to their respective affiliates, auditors, or attorneys.
 
ARTICLE VIII
 
REPORTS TO BE PREPARED BY SERVICER
 
Section 8.01 The Servicer Shall Provide Information as Reasonably Required.
 
During the term of this Agreement the Servicer shall furnish any reports, or
documentation that Owner may reasonably request. Reports requested may include
reports not specified or otherwise required by this Agreement, for example,
reports with respect to REO Properties, or reports required to comply with any
regulations regarding any supervisory agents or examiners of Owner. All reports
will be delivered in accordance with Owner’s reasonable instructions and
directions. If the reports or other information requested will require the
Servicer to incur additional costs or expenses outside of its normal servicing
procedures, Owner agrees to reimburse the Servicer for those costs and expenses.
The Servicer agrees to execute and deliver all such instruments and take all
such action as Owner, from time to time, may reasonably request in order to
effectuate the purpose and to carry out the terms of this Agreement.
 
ARTICLE IX
 
THE SERVICER
 
Section 9.01 Indemnification; Third Party Claims.
 
(a) Each party hereto agrees to indemnify the other party and hold it harmless
against any and all claims, losses, penalties, fines, forfeitures, legal fees
and related costs, judgments, and any other costs, fees and expenses that the
other party may sustain in any way related to the breach of such party in
performing its duties and obligations under this Agreement.
 
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(b) The Servicer shall (i) promptly notify Owner if a material claim is made by
any party with respect to this Agreement or the Mortgage Loans, (ii) assume the
defense of any such claim and pay all expenses in connection therewith,
including attorneys’ fees, and (iii) promptly pay, discharge and satisfy any
judgment or decree which may be entered against it or Owner in respect of such
claim. The Servicer shall follow any written instructions received from Owner in
connection with such claim. Owner shall promptly reimburse the Servicer for all
amounts paid or advanced by it pursuant to the preceding sentence, except as to
amounts as to which the Servicer is required to indemnify Owner pursuant to
Section 3.01.
 
Section 9.02 Merger or Consolidation of the Servicer.
 
The Servicer will keep in full effect its existence, rights and franchises as a
corporation, and will obtain and preserve its qualification to do business as a
foreign corporation in each jurisdiction in which such qualification is or shall
be necessary to protect the validity and enforceability of this Agreement, or
any of the Mortgage Loans and to perform its duties under this Agreement. Any
Person into which the Servicer may be merged or consolidated, or any corporation
resulting from any merger, conversion or consolidation to which the Servicer
shall be a party, or any Person succeeding to the business of the Servicer,
shall be the successor of the Servicer hereunder, without the execution or
filing of any paper or any further act on the part of any of the parties hereto,
anything herein to the contrary notwithstanding.
 
Section 9.03 Limitation on Liability of the Servicer and Others.
 
Neither the Servicer nor any of the officers, employees or agents of the
Servicer shall be under any liability to Owner for any action taken or for
refraining from the taking of any action in good faith pursuant to this
Agreement, or for errors in judgment; provided, however, that this provision
shall not protect the Servicer or any such person against any breach of
warranties or representations made herein, or failure to perform its obligations
substantially in accordance with any standard of care set forth in this
Agreement, or any liability which would otherwise be imposed by reason of any
breach of the terms and conditions of this Agreement. The Servicer and any
officer, employee or agent of the Servicer may rely in good faith on any
document of any kind appearing to be properly executed and submitted by any
Person respecting any matters arising hereunder. The Servicer shall not be under
any obligation to appear in, prosecute or defend any legal action which is not
incidental to its duties to service the Mortgage Loans in accordance with this
Agreement and which in its opinion may involve it in any expenses or liability;
provided, however, that the Servicer may, with the consent of Owner, undertake
any such action which it may deem necessary or desirable in respect to this
Agreement and the rights and duties of the parties hereto. In such event, the
legal expenses and costs of such action and any liability resulting therefrom
shall be expenses, costs and liabilities for which Owner will be liable. The
Servicer shall be entitled to be reimbursed therefor from Owner upon written
demand.
 
Section 9.04 The Servicer Not to Resign.
 
Subject to Section 12.04, the Servicer shall not resign from the obligations and
duties hereby imposed on it except (i) by mutual consent of the Servicer and
Owner, (ii) upon the determination that its duties hereunder are no longer
permissible under applicable law and such incapacity cannot be cured by the
Servicer (any such determination permitting the resignation of the Servicer
shall be evidenced by an opinion of counsel to such effect delivered to Owner),
(iii) following any breach of this Agreement by Owner, or (iv) in connection
with a sale of substantially all of the assets of the Servicer. No such
resignation shall become effective until a successor shall have assumed the
Servicer’s responsibilities and obligations hereunder in the manner provided in
Section 12.01.
 
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ARTICLE X
 
DEFAULT
 
Section 10.01 Events of Default.
 
If one or more of the following “Events of Default” by the Servicer shall occur
and be continuing.
 

 
(i)
any failure by the Servicer to remit to Owner any payment required to be made
under the terms of this Agreement which continues unremedied for a period (3)
Business Days after the date on which written notice of such failure, requiring
the same to be remedied, shall have been given to the Servicer by Owner; or

 

 
(ii)
failure on the part of the Servicer duly to observe or perform in any material
respect any other of the covenants or agreements on the part of the Servicer set
forth in this Agreement which continues unremedied for a period of thirty (30)
days (except that such number of days shall be fifteen (15) in the case of a
failure to pay any premium for any insurance policy required to be maintained
under this Agreement) after the date on which written notice of such failure,
requiring the same to be remedied, shall have been given to the Servicer by
Owner; or

 

 
(iii)
a decree or order of a court or agency or supervisory authority having
jurisdiction for the appointment of a conservator receiver or liquidator in any
insolvency, readjustment of debt, marshaling of assets and liabilities or
similar proceedings, or for the winding-up or liquidation of its affairs, shall
have been entered against the Servicer and such decree or order shall have
remained in force undischarged or unstayed for a period of sixty (60) days; or

 

 
(iv)
the Servicer shall consent to the appointment of a conservator, receiver or
liquidator in any insolvency, readjustment of debt, marshaling of assets and
liabilities or similar proceedings of or relating to the Servicer or of or
relating to all or substantially all of its property; or

 

 
(v)
the Servicer shall admit in writing its inability to pay its debts generally as
they become due, file a petition to take advantage of any applicable insolvency
or reorganization statute, make an assignment for the benefit of its creditors,
or voluntarily suspend payment of its obligations; or

 

 
(vi)
the Servicer ceases to be eligible to sell Mortgage Loans to and service
Mortgage Loans for Fannie Mae and Freddie Mac, and continues to be ineligible to
sell Mortgage Loans to and service Mortgage Loans for Fannie Mae and Freddie Mac
for a period of sixty (60) days after the date on which written notice of such
ineligibility shall have been given to the Servicer by Fannie Mae and Freddie
Mac;

 
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then, and in each and every such case, so long as an Event of Default shall not
have been remedied, Owner, by notice in writing to the Servicer, in addition to
whatever rights Owner may have at law or in equity to damages, including
injunctive relief and specific performance, may terminate all the rights and
obligations of the Servicer under this Agreement and in and to the Mortgage
Loans and the proceeds thereof other than, with respect to any Additional
Collateral Mortgage Loan, the obligation to administer the related Additional
Collateral Pledge Agreement. On or after the receipt by the Servicer of such
written notice, (i) all authority and power of the Servicer under this
Agreement, whether with respect to the Mortgage Loans or otherwise, shall pass
to and be vested in the successor appointed pursuant to Section 12.01, except
with respect to any related Additional Collateral Pledge Agreement, and (ii)
upon further written request from Owner, the Servicer shall prepare, execute and
deliver, any and all documents and other instruments, deliver to the successor
all Mortgage Files, and do or accomplish all other acts or things necessary or
appropriate to effect the purposes of such notice of termination, including the
transfer and endorsement or assignment of the Mortgage Loans and related
documents, or otherwise, at the Servicer’s sole expense. The Servicer agrees to
cooperate with Owner and such successor in effecting the termination of the
Servicer’s responsibilities and rights hereunder as provided above, including,
without limitation, the transfer to such successor for administration by it of
all cash amounts which shall at the time be credited by the Servicer to the
Custodial Account or Escrow Account or thereafter received with respect to the
Mortgage Loans.
 
Section 10.02 Waiver of Defaults.
 
Owner may waive any default by the Servicer in the performance of its
obligations hereunder and its consequences. Upon any such waiver of a past
default, such default shall cease to exist, and any Event of Default arising
therefrom shall be deemed to have been remedied for every purpose of this
Agreement. No such waiver shall extend to any subsequent or other default or
impair any right consequent thereon except to the extent expressly so waived.
 
ARTICLE XI
 
TERMINATION; REPURCHASE
 
Section 11.01 Termination.
 
The respective obligations and responsibilities of the Servicer shall terminate
upon the latest to occur of: (i) the final payment or other liquidation (or any
advance with respect thereto) of the last Mortgage Loan or the disposition of
all REO Property and the remittance of all funds due hereunder, (ii) the date
agreed upon by mutual consent of the Servicer and Owner in writing, (iii) the
repurchase by the Servicer of all of the Mortgage Loans subject to this
Agreement, pursuant to Section 11.02, or (iv) a resignation permitted by Section
9.04 hereof.
 
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Section 11.02 Repurchase.
 
At the sole option of the Servicer and upon thirty (30) days prior written
notice to Owner, if the aggregate outstanding principal balance of all Mortgage
Loans subject to this Agreement which have not been written off as
non-performing assets shall be less than ten percent (10%) of the aggregate
Purchase Price paid for such Mortgage Loans, the Servicer may repurchase all
such outstanding Mortgage Loans; provided, however, that if such Mortgage Loans
are included in a REMIC, the Servicer agrees not to exercise its right to
repurchase unless and until such right can be exercised in conjunction with a
“qualified liquidation” (as defined in Section 860F(a)(4) of the Code) of such
REMIC, as advised by Owner. Such repurchase by the Servicer of such Mortgage
Loans and all related REO Property shall be at a price equal to 100% of the
outstanding principal balance of each Mortgage Loan on the day of repurchase,
plus accrued and unpaid interest thereon at the Mortgage Loan Remittance Rate to
the first day of the calendar month following repurchase, plus the appraised
value of any such REO Property determined at the expense of the Servicer by an
appraiser mutually agreed upon by the Servicer and Owner.
 
ARTICLE XII
 
MISCELLANEOUS PROVISIONS
 
Section 12.01 Successor to the Servicer.
 
Prior to termination of the Servicer’s responsibilities and duties under this
Agreement pursuant to Sections 9.04, 10.01, 11.01 or 12.04, Owner shall (i)
succeed to and assume all of the Servicer’s responsibilities, rights, duties and
obligations under this Agreement, or (ii) appoint a successor who is a Fannie
Mae/Freddie Mac approved servicer having a net worth of not less than
$15,000,000 and which shall succeed to all rights and assume all of the
responsibilities, duties and liabilities of the Servicer under this Agreement
prior to the termination of the Servicer’s responsibilities, duties and
liabilities under this Agreement.
 
In connection with such appointment and assumption, Owner may make such
arrangements for the compensation of such successor out of payments on Mortgage
Loans as it and such successor shall agree. In the event that the Servicer’s
duties, responsibilities and liabilities under this Agreement should be
terminated pursuant to one of the aforementioned Sections, the Servicer shall
discharge such duties and responsibilities during the period from the date it
acquires knowledge of such termination until the effective date thereof with the
same degree of diligence and prudence which it is obligated to exercise under
this Agreement, and shall take no action whatsoever that might materially impair
or prejudice the rights or financial condition of its successor. The resignation
or removal of the Servicer pursuant to the aforementioned Sections shall not
become effective until a successor shall be appointed pursuant to this Section
and shall in no event relieve the Servicer of the representations and warranties
previously made pursuant to Section 3.01 hereof or Section 5 of the Purchase
Agreement and the remedies available to Owner with respect thereto hereunder and
thereunder.
 
Any successor appointed as provided in this Section 12.01 shall execute,
acknowledge and deliver to the Servicer and to Owner an instrument accepting
such appointment, whereupon such successor shall become fully vested with all
the rights, powers, duties, responsibilities, obligations and liabilities of the
Servicer, with like effect as if originally named as a party to this Agreement.
Any termination or resignation of the Servicer or termination of this Agreement
pursuant to Section 9.04, 10.01, 11.01, or 12.04 shall not affect any claims
that Owner may have against the Servicer arising prior to any such termination
or resignation.
 
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The Servicer shall in a timely and reasonable manner deliver to the successor
the funds in the Custodial Account and the Escrow Account and the Mortgage Files
and related documents and statements held by it hereunder and the Servicer shall
account for all funds. The Servicer shall execute and deliver such instruments
and do such other things all as may reasonably be required to more fully and
definitely vest and confirm in the successor all such rights, powers, duties and
responsibilities of the Servicer. The successor shall make arrangements as it
may deem appropriate to reimburse the Servicer for amounts the Servicer actually
expended pursuant to this Agreement which the Servicer is entitled to retain
hereunder and which would otherwise have been reimbursable to the Servicer
pursuant to this Agreement but for the appointment of the successor servicer.
 
Section 12.02 Amendment.
 
This Agreement may be amended from time to time by the Servicer and Owner only
by written agreement signed by the Servicer and Owner. Neither this Agreement
nor any term hereof may be changed, waived, discharged or terminated orally, but
only by an instrument in writing signed by the party against whom enforcement of
the change, waiver, discharge or termination is sought.
 
Section 12.03 Assignments.
 
Except as required under the Purchase Agreement or by applicable law, the
Assignments shall not be recorded by Seller. The Owner may, at its option and
expense (including all recordation fees), prepare and record any Assignment of
Mortgage.
 
Section 12.04 Assignment of Servicing Rights .
 
The Servicer may assign the servicing rights with respect to the Mortgage Loans
upon the written consent of Owner, which consent shall not be unreasonably
withheld or delayed; provided, however, the Servicer may, without the consent of
Owner enter into one or more Subservicing Agreements relating to the Mortgage
Loans; further provided, however that notwithstanding any subservicing
arrangement, the Servicer shall remain liable to Owner for all obligations and
responsibilities set forth in this Agreement.
 
Section 12.05 Governing Law.
 
This Agreement is to be governed by, and construed in accordance with, the
internal laws (as compared to conflicts of law provisions) of the State of
Illinois.
 
Section 12.06 Notices.
 
Any notices, consents or other communications permitted or required hereunder
shall be in writing and shall be deemed conclusively to have been duly given if
personally delivered, sent by overnight courier, or mailed by registered mail,
postage prepaid, and return receipt requested, or transmitted by telex or
telegraph and confirmed by a similar mailed writing, or otherwise received, if
to Owner, addressed to Owner at One Belvedere Place, Suite 310, Mill Valley,
California 94941, Attention: [                 ], fax number
[                    ], or to such other address as Owner may designate in
writing to the Servicer; if to the Servicer, addressed to the Servicer at at
2500 Lake Cook Road, Riverwoods, Illinois 60015, Attention: Senior Vice
President, fax number [(___) ___-____], with a copy to Scott de la Vega, Vice
President, Morgan Stanley-Law Division, 1585 Broadway, New York, New York 10036,
fax number (646) 290-2606, or to such other address as the Servicer may have
designated in writing to Owner and Guarantor; and, if to Guarantor, addressed to
Guarantor at One Belvedere Place, Suite 300, Mill Valley, California 94941,
Attention: [ ], fax number [ ], or to such other address as Guarantor may
designate in writing to the Servicer.
 
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Section 12.07 Severability Provisions.
 
Any part, provision, representation or warranty of this Agreement that is
prohibited or unenforceable or is held to be void or unenforceable in any
jurisdiction shall be ineffective, in such jurisdiction, to the extent of such
prohibition or unenforceability without invalidating the remaining provisions
hereof, and any such prohibition or unenforceability in any jurisdiction as to
any Mortgage Loan shall not invalidate or render unenforceable such provision in
any other jurisdiction.
 
Section 12.08 Exhibits.
 
The exhibits to this Agreement are hereby incorporated and made a part hereof
and are an integral part of this Agreement.
 
Section 12.09 General Interpretive Principles.
 
For purposes of this Agreement, except as otherwise expressly provided or unless
the context otherwise requires:
 

 
(i)
the terms defined in this Agreement have the meanings assigned to them in this
Agreement and include the plural as well as the singular, and the use of any
gender herein shall be deemed to include the other gender;

 

 
(ii)
accounting terms not otherwise defined herein have the meanings assigned to them
in accordance with generally accepted accounting principles;

 

 
(iii)
references herein to “Articles,” “Sections,” “Subsections,” “Paragraphs,” and
other subdivisions without reference to a document are designated Articles,
Sections, Subsections, Paragraphs and other subdivisions of this Agreement;

 

 
(iv)
a reference to a Subsection without further reference to a Section is a
reference to such Subsection as contained in the same Section in which the
reference appears, and this rule shall also apply to Paragraphs and other
subdivisions;

 

 
(v)
(he words “herein,” “hereof,” “hereunder” and other words of similar import
refer to this Agreement as a whole and not to any particular provision; and

 
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(vi)
the terms “include” or “including” shall mean without limitation by reason of
enumeration.

 
Section 12.10 Reproduction of Documents.
 
This Agreement and all documents relating thereto, including, without
limitation, (i) consents, waivers and modifications which may hereafter be
executed, (ii) documents received by any party at the closing, and (iii)
financial statements, certificates and other information previously or hereafter
furnished, may be reproduced by any photographic, photostatic, microfilm,
microcard, miniature photographic or other similar process. The parties agree
that any such reproduction shall be admissible in evidence as the original
itself in any judicial or administrative proceeding, whether or not the original
is in existence and whether or not such reproduction was made by a party in the
regular course of business, and that any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in evidence.
 
Section 12.11 Successors and Assigns.
 
The provisions of this Agreement shall be binding upon and inure to the benefit
of the respective successors and permitted assigns of the parties hereto.
 
Section 12.12 Counterparts.
 
This Agreement may be executed in several counterparts, each of which shall
constitute an original, but all of which together, shall constitute one
instrument notwithstanding that all parties are not signatories to the same
counterparts.
 
Section 12.13 Non-Solicitation.
 
(a) From and after the Closing Date, the Servicer agrees that it will not take
any action or cause any action to be taken by its agents to solicit the
Mortgagor under any Mortgage Loan to refinance a Mortgage Loan, in whole or in
part, without the prior written consent of Owner. It is understood and agreed
that promotions for refinance undertaken by the Servicer or its agents that are
directed to segments of the general public, or to all or segments of the clients
of Morgan Stanley Inc. and its affiliates which may include Mortgagors under any
Mortgage Loan, including, without limitation, directed marketing solicitations,
newspaper, radio and television advertisements, shall not constitute a
solicitation under the terms of this Agreement, provided that no segment shall
consist exclusively of such Mortgagors.
 
(b) From and after the Closing Date, Owner agrees that it will not take any
action or cause any action to be taken by its agents to solicit the Mortgagor
under any Mortgage Loan for any purpose, or otherwise directly contact any such
Mortgagor, without the prior written consent of the Servicer. It is understood
and agreed that promotions undertaken by Owner or its agents that are directed
to segments of the general public, or to all or segments of the clients of Owner
or its affiliates, which may include Mortgagors under any Mortgage Loan,
including, without limitation, directed marketing solicitations, newspaper,
radio and television advertisements, shall not constitute a solicitation under
the terms of this Agreement, provided that no segment shall consist primarily of
such Mortgagors.
 
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Section 12.14 Guaranty of Owner’s Obligations.
 
Guarantor hereby agrees to cause RWT Holdings, Inc. to perform all of its duties
and obligations as Owner hereunder, guaranties the timely performance of such
duties and obligations by RWT Holdings, Inc. and agrees to be jointly and
severally liable to Seller for all such duties and obligations of RWT Holdings,
Inc.
 
ARTICLE XIII
 
COMPLIANCE WITH REGULATION AB
 
Section 13.01 Intent of the Parties; Reasonableness.
 
The Owner and the Servicer acknowledge and agree that the purpose of Article
XIII of this Agreement is to facilitate compliance by the Owner and any
Depositor with the provisions of Regulation AB and related rules and regulations
of the Commission. Although Regulation AB is applicable by its terms only to
offerings of asset-backed securities that are registered under the Securities
Act, the Servicer acknowledges that investors in privately offered securities
may require that the Owner or any Depositor provide comparable disclosure in
unregistered offerings. References in this Agreement to compliance with
Regulation AB include provision of comparable disclosure in private offerings.
 
Neither the Owner nor any Depositor shall exercise its right to request delivery
of information or other performance under these provisions other than in good
faith, or for purposes other than compliance with the Securities Act, the
Exchange Act and the rules and regulations of the Commission thereunder (or the
provision in a private offering of disclosure comparable to that required under
the Securities Act). The Servicer acknowledges that interpretations of the
requirements of Regulation AB may change over time, whether due to interpretive
guidance provided by the Commission or its staff, consensus among participants
in the asset-backed securities markets, advice of counsel, or otherwise, and
agrees to comply with requests made by the Owner or any Depositor in good faith
for delivery of information under these provisions on the basis of evolving
interpretations of Regulation AB. In connection with any Securitization
Transaction, the Servicer shall cooperate fully with the Owner to deliver to the
Owner (including any of its assignees or designees), any Master Servicer and any
Depositor, any and all statements, reports, certifications, records and any
other information necessary in the good faith determination of the Owner, any
Master Servicer or any Depositor to permit the Owner, such Master Servicer or
such Depositor to comply with the provisions of Regulation AB, together with
such disclosures relating to the Servicer, any Subservicer and the Mortgage
Loans, or the servicing of the Mortgage Loans, reasonably believed by the Owner
or any Depositor to be necessary in order to effect such compliance.
 
The Owner (including any of its assignees or designees) shall cooperate with the
Servicer by providing timely notice of requests for information under these
provisions and by reasonably limiting such requests to information required, in
the Owner’s reasonable judgment, to comply with Regulation AB.
 
Section 13.02 Additional Representations and Warranties of the Servicer.
 
(a) The Servicer hereby represents to the Owner, to any Master Servicer and to
any Depositor, as of the date on which information is first provided to the
Owner, any Master Servicer or any Depositor under Section 13.03 that, except as
disclosed in writing to the Owner or such Depositor prior to such date: (i) the
Servicer is not aware and has not received notice that any default, early
amortization or other performance triggering event has occurred as to any other
securitization due to any act or failure to act of the Servicer; (ii) the
Servicer has not been terminated as servicer in a residential mortgage loan
securitization, either due to a servicing default or to application of a
servicing performance test or trigger; (iii) no material noncompliance with the
applicable servicing criteria with respect to other securitizations of
residential mortgage loans involving the Servicer has been disclosed or reported
by the Servicer; (iv) no material changes to the Servicer’s policies or
procedures with respect to the servicing function it will perform under this
Agreement and any Reconstitution Agreement for mortgage loans of a type similar
to the Mortgage Loans have occurred during the three-year period immediately
preceding the related Securitization Transaction; (v) there are no aspects of
the Servicer’s financial condition that could have a material adverse effect on
the performance by the Servicer of its servicing obligations under this
Agreement or any Reconstitution Agreement; (vi) there are no material legal or
governmental proceedings pending (or known to be contemplated) against the
Servicer or any Subservicer; and (vii) there are no affiliations, relationships
or transactions relating to the Servicer or any Subservicer with respect to any
Securitization Transaction and any party thereto identified by the related
Depositor of a type described in Item 1119 of Regulation AB.
 
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(b) If so requested by the Owner, any Master Servicer or any Depositor on any
date following the date on which information is first provided to the Owner, any
Master Servicer or any Depositor under Section 13.03, the Servicer shall, within
five Business Days following such request, confirm in writing the accuracy of
the representations and warranties set forth in paragraph (a) of this Section
or, if any such representation and warranty is not accurate as of the date of
such request, provide reasonably adequate disclosure of the pertinent facts, in
writing, to the requesting party.
 
Section 13.03 Information to Be Provided by the Servicer.
 
In connection with any Securitization Transaction the Servicer shall (i) within
five Business Days following request by the Owner or any Depositor, provide to
the Owner and such Depositor (or, as applicable, cause each Subservicer to
provide), in writing and in form and substance reasonably satisfactory to the
Owner and such Depositor, the information and materials specified in paragraphs
(a), (b) and (e) of this Section, and (ii) as promptly as practicable following
notice to or discovery by the Servicer, provide to the Owner and any Depositor
(in writing and in form and substance reasonably satisfactory to the Owner and
such Depositor) the information specified in paragraph (d) of this Section.
 
(a) If so requested by the Owner or any Depositor, the Servicer shall provide
such information regarding the Servicer, as servicer of the Mortgage Loans, and
each Subservicer (each of the Servicer and each Subservicer, for purposes of
this paragraph, a “Servicer”), as is requested for the purpose of compliance
with Items 1108, 1117 and 1119 of Regulation AB. Such information shall include,
at a minimum:
 
(A) the Servicer’s form of organization;
 
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(B) a description of how long the Servicer has been servicing residential
mortgage loans; a general discussion of the Servicer’s experience in servicing
assets of any type as well as a more detailed discussion of the Servicer’s
experience in, and procedures for, the servicing function it will perform under
this Agreement and any Reconstitution Agreements; information regarding the
size, composition and growth of the Servicer’s portfolio of residential mortgage
loans of a type similar to the Mortgage Loans and information on factors related
to the Servicer that may be material, in the good faith judgment of the Owner or
any Depositor, to any analysis of the servicing of the Mortgage Loans or the
related asset-backed securities, as applicable, including, without limitation:
 

 
(i)
whether any prior securitizations of mortgage loans of a type similar to the
Mortgage Loans involving the Servicer have defaulted or experienced an early
amortization or other performance triggering event because of servicing during
the three-year period immediately preceding the related Securitization
Transaction;

 

 
(ii)
the extent of outsourcing the Servicer utilizes;

 

 
(iii)
whether there has been previous disclosure of material noncompliance with the
applicable servicing criteria with respect to other securitizations of
residential mortgage loans involving the Servicer as a servicer during the
three-year period immediately preceding the related Securitization Transaction;

 

 
(iv)
whether the Servicer has been terminated as servicer in a residential mortgage
loan securitization, either due to a servicing default or to application of a
servicing performance test or trigger; and

 

 
(v)
such other information as the Owner or any Depositor may reasonably request for
the purpose of compliance with Item 1108(b)(2) of Regulation AB;

 
(C) a description of any material changes during the three-year period
immediately preceding the related Securitization Transaction to the Servicer’s
policies or procedures with respect to the servicing function it will perform
under this Agreement and any Reconstitution Agreements for mortgage loans of a
type similar to the Mortgage Loans;
 
(D) information regarding the Servicer’s financial condition, to the extent that
there is a material risk that an adverse financial event or circumstance
involving the Servicer could have a material adverse effect on the performance
by the Servicer of its servicing obligations under this Agreement or any
Reconstitution Agreement;
 
(E) information regarding advances made by the Servicer on the Mortgage Loans
and the Servicer’s overall servicing portfolio of residential mortgage loans for
the three-year period immediately preceding the related Securitization
Transaction, which may be limited to a statement by an authorized officer of the
Servicer to the effect that the Servicer has made all advances required to be
made on residential mortgage loans serviced by it during such period, or, if
such statement would not be accurate, information regarding the percentage and
type of advances not made as required, and the reasons for such failure to
advance;
 
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(F) a description of the Servicer’s processes and procedures designed to address
any special or unique factors involved in servicing loans of a similar type as
the Mortgage Loans;
 
(G) a description of the Servicer’s processes for handling delinquencies,
losses, bankruptcies and recoveries, such as through liquidation of mortgaged
properties, sale of defaulted mortgage loans or workouts; and
 
(H) information as to how the Servicer defines or determines delinquencies and
charge-offs, including the effect of any grace period, re-aging, restructuring,
partial payments considered current or other practices with respect to
delinquency and loss experience.
 
(I) a description of any material legal or governmental proceedings pending (or
known to be contemplated) against the Servicer; and
 
(J) a description of any affiliation or relationship between the Servicer and
any of the following parties to a Securitization Transaction, as such parties
are identified to the Servicer by the Owner or any Depositor in writing in
advance of such Securitization Transaction:
 
(1) the Sponsor;
(2) the Depositor;
(3) the issuing entity;
(4) any servicer;
(5) any trustee;
(6) any originator;
(7) any significant obligor;
(8) any enhancement or support provider; and
(9) any other material transaction party.
 
(b) For the purpose of satisfying the reporting obligations of an Owner, Master
Servicer or Depositor under the Exchange Act with respect to any class of
asset-backed securities, the Servicer shall (or shall cause each Subservicer to)
(i) provide prompt notice to the Owner, any Master Servicer and any Depositor in
writing of (A) any material litigation or governmental proceedings involving the
Servicer, any Subservicer, (B) any affiliations or relationships that develop
following the closing date of a Securitization Transaction between the Servicer,
any Subservicer and any of the parties specified in clause (J) of paragraph (a)
of this Section (and any other parties identified in writing by the requesting
party) with respect to such Securitization Transaction, (C) any Event of Default
under the terms of this Agreement or any Reconstitution Agreement, (D) any
merger, consolidation or sale of substantially all of the assets of the
Servicer, and (E) the Servicer’s entry into an agreement with a Subservicer to
perform or assist in the performance of any of the Servicer’s obligations under
this Agreement or any Reconstitution Agreement, and (ii) provide to the Owner
and any Depositor a description of such proceedings, affiliations or
relationships.
 
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(c) As a condition to the succession to the Servicer or any Subservicer as
servicer or subservicer under this Agreement or any Reconstitution Agreement by
any Person (i) into which the Servicer or such Subservicer may be merged or
consolidated, or (ii) which may be appointed as a successor to the Servicer or
any Subservicer, the Servicer shall provide to the Owner, any Master Servicer
and any Depositor, at least 15 calendar days prior to the effective date of such
succession or appointment, (x) written notice to the Owner and any Depositor of
such succession or appointment and (y) in writing and in form and substance
reasonably satisfactory to the Owner and such Depositor, all information
reasonably requested by the Owner or any Depositor in order to comply with its
reporting obligation under Item 6.02 of Form 8-K with respect to any class of
asset-backed securities.
 
(d) In addition to such information as the Servicer, as servicer, is obligated
to provide pursuant to other provisions of this Agreement not later than ten
days prior to the deadline for the filing of any distribution report on Form
10-D in respect of any Securitization Transaction that includes any of the
Mortgage Loans serviced by the Servicer or any Subservicer, the Servicer or such
Subservicer, as applicable, shall, to the extent the Servicer or such
Subservicer has knowledge, provide to the party responsible for filing such
report (including, if applicable, the Master Servicer) notice of the occurrence
of any of the following events along with all information, data, and materials
related thereto as may be required to be included in the related distribution
report on Form 10-D (as specified in the provisions of Regulation AB referenced
below):
 
(i) any material modifications, extensions or waivers of pool asset terms, fees,
penalties or payments during the distribution period or that have cumulatively
become material over time (Item 1121(a)(11) of Regulation AB;
 
(ii) material breaches of pool asset representations or warranties or
transaction covenants (Item 1121(a)(12) of Regulation AB; and
 
(e) The Servicer shall provide to the Owner, any Master Servicer and any
Depositor, evidence of the authorization of the person signing any certification
or statement, copies or other evidence of Fidelity Bond Insurance and Errors and
Omission Insurance policy, financial information and reports, and such other
information related to the Servicer or any Subservicer or the Servicer’s or such
Subservicer’s performance hereunder.
 
Section 13.04 Annual Statements as to Compliance.
 
On or before March 1 of each calendar year, commencing in 2007, the Servicer
shall deliver to the Owner, any Master Servicer and any Depositor a statement of
compliance addressed to the Owner, such Master Servicer and such Depositor and
signed by an authorized officer of the Servicer, to the effect that (i) a review
of the Servicer’s activities during the immediately preceding calendar year (or
applicable portion thereof) and of its performance under this Agreement and any
applicable Reconstitution Agreement during such period has been made under such
officer’s supervision, and (ii) to the best of such officers’ knowledge, based
on such review, the Servicer has fulfilled all of its obligations under this
Agreement and any applicable Reconstitution Agreement in all material respects
throughout such calendar year (or applicable portion thereof) or, if there has
been a failure to fulfill any such obligation in any material respect,
specifically identifying each such failure known to such officer and the nature
and the status thereof.
 
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Section 13.05 Report on Assessment of Compliance and Attestation.
 
On or before March 1 of each calendar year, commencing in 2007, the Servicer
shall:
 

 
(i)
deliver to the Owner, any Master Servicer and any Depositor a report (in form
and substance reasonably satisfactory to the Owner, such Master Servicer and
such Depositor) regarding the Servicer’s assessment of compliance with the
Servicing Criteria during the immediately preceding calendar year, as required
under Rules 13a-18 and 15d-18 of the Exchange Act and Item 1122 of Regulation
AB. Such report shall be addressed to the Owner, such Master Servicer and such
Depositor and signed by an authorized officer of the Servicer, and shall address
each of the Servicing Criteria specified on Exhibit C;

 

 
(ii)
deliver to the Owner, any Master Servicer and any Depositor a report of a
registered public accounting firm reasonably acceptable to the Owner, such
Master Servicer and such Depositor that attests to, and reports on, the
assessment of compliance made by the Servicer and delivered pursuant to the
preceding paragraph. Such attestation shall be in accordance with Rules
1-02(a)(3) and 2-02(g) of Regulation S-X under the Securities Act and the
Exchange Act;

 

 
(iii)
cause each Subservicer, and each Subcontractor determined by the Servicer
pursuant to Section 13.06(b) to be “participating in the servicing function”
within the meaning of Item 1122 of Regulation AB, to deliver to the Owner, any
Master Servicer and any Depositor an assessment of compliance and accountants’
attestation as and when provided in paragraphs (a) and (b) of this Section; and

 

 
(iv)
if requested by the Owner, any Master Servicer or any Depositor, deliver, and
cause each Subservicer and Subcontractor as described in clause (iii) to
provide, to the Owner, such Master Servicer and such Depositor and any other
Person that will be responsible for signing the certification (a “Sarbanes
Certification”) required by Rules 13a-14(d) and 15d-14(d) under the Exchange Act
(pursuant to Section 302 of the Sarbanes-Oxley Act of 2002) on behalf of an
asset-backed issuer with respect to a Securitization Transaction a certification
in the form attached hereto as Exhibit D.

 
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The Servicer acknowledges that the parties identified in clause (a)(iv) above
may rely on the certification provided by the Servicer pursuant to such clause
in signing a Sarbanes Certification and filing such with the Commission. Neither
the Owner nor any Master Servicer nor any Depositor will request delivery of a
certification under clause (a)(iv) above unless a Depositor is required under
the Exchange Act to file an annual report on Form 10-K with respect to an
issuing entity whose asset pool includes Mortgage Loans.
 
Each assessment of compliance provided by a Subservicer pursuant to Section
13.05(a)(i) shall address each of the Servicing Criteria specified on a
certification substantially in the form of Exhibit C hereto delivered to the
Owner concurrently with the execution of this Agreement or, in the case of a
Subservicer subsequently appointed as such, on or prior to the date of such
appointment. An assessment of compliance provided by a Subcontractor pursuant to
Section 13.05(a)(iii) need not address any elements of the Servicing Criteria
other than those specified by the Servicer pursuant to Section 13.06.
 
Section 13.06 Use of Subservicers and Subcontractors.
 
The Servicer shall not hire or otherwise utilize the services of any Subservicer
to fulfill any of the obligations of the Servicer as servicer under this
Agreement or any Reconstitution Agreement unless the Servicer complies with the
provisions of paragraph (a) of this Section. The Servicer shall not hire or
otherwise utilize the services of any Subcontractor, and shall not permit any
Subservicer to hire or otherwise utilize the services of any Subcontractor, to
fulfill any of the obligations of the Servicer as servicer under this Agreement
or any Reconstitution Agreement unless the Servicer complies with the provisions
of paragraph (b) of this Section.
 
(a) It shall not be necessary for the Servicer to seek the consent of the Owner,
any Master Servicer or any Depositor to the utilization of any Subservicer. The
Servicer shall cause any Subservicer used by the Servicer (or by any
Subservicer) for the benefit of the Owner and any Depositor to comply with the
provisions of this Section and with Sections 13.02, 13.03(a) and (c), 13.04,
13.05 and 13.07 of this Agreement to the same extent as if such Subservicer were
the Servicer, and to provide the information required with respect to such
Subservicer under Section 13.03(d) of this Agreement. The Servicer shall be
responsible for obtaining from each Subservicer and delivering to the Owner and
any Depositor any servicer compliance statement required to be delivered by such
Subservicer under Section 13.04, any assessment of compliance and attestation
required to be delivered by such Subservicer under Section 13.05 and any
certification required to be delivered to the Person that will be responsible
for signing the Sarbanes Certification under Section 13.05 as and when required
to be delivered.
 
(b) It shall not be necessary for the Servicer to seek the consent of the Owner,
any Master Servicer or any Depositor to the utilization of any Subcontractor.
The Servicer shall promptly upon request provide to the Owner and any Depositor
(or any designee of the Depositor, such as a master servicer or administrator) a
written description (in form and substance satisfactory to the Owner and such
Depositor) of the role and function of each Subcontractor utilized by the
Servicer or any Subservicer, specifying (i) the identity of each such
Subcontractor, (ii) which (if any) of such Subcontractors are “participating in
the servicing function” within the meaning of Item 1122 of Regulation AB, and
(iii) which elements of the Servicing Criteria will be addressed in assessments
of compliance provided by each Subcontractor identified pursuant to clause (ii)
of this paragraph.
 
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As a condition to the utilization of any Subcontractor determined to be
“participating in the servicing function” within the meaning of Item 1122 of
Regulation AB, the Servicer shall cause any such Subcontractor used by the
Servicer (or by any Subservicer) for the benefit of the Owner and any Depositor
to comply with the provisions of Sections 13.05 and 13.07 of this Agreement to
the same extent as if such Subcontractor were the Servicer. The Servicer shall
be responsible for obtaining from each Subcontractor and delivering to the Owner
and any Depositor any assessment of compliance and attestation or other
certifications required to be delivered by such Subcontractor under Section
13.05, in each case as and when required to be delivered.
 
Section 13.07 Indemnification; Remedies.
 
(a) The Servicer shall indemnify the Owner, each affiliate of the Owner, and
each of the following parties participating in a Securitization Transaction:
each Person (including, but not limited to, any Master Servicer if applicable)
responsible for the preparation, execution or filing of any report required to
be filed with Commission with respect to such Securitization Transaction, or for
execution of a certification pursuant to Rule 13a-14d or Rule 15d-14d under the
Exchange Act with respect to such Securitization Transaction, each sponsor and
issuing entity; each broker dealer acting as underwriter, placement agent or
initial purchaser, each Person who controls any of such parties or the Depositor
(within the meaning of Section 15 of the Securities Act and Section 20 of the
Exchange Act); and the respective present and former directors, officers,
employees, agents and affiliates of each of the foregoing and of the Depositor
(each, an “Indemnified Party”), and shall hold each of them harmless from and
against any claims, losses, damages, penalties, fines, forfeitures, legal fees
and expenses and related costs, judgments, and any other costs, fees and
expenses that any of them may sustain arising out of or based upon:
 

(i)
(A) any untrue statement of a material fact contained or alleged to be contained
in any information, report, certification, data, accountants’ letter or other
material provided under this Article 13 by or on behalf of the Servicer, or
provided under this Article 13 by or on behalf of any Subservicer or
Subcontractor (collectively, the “Servicer Information”), or (B) the omission or
alleged omission to state in the Servicer Information a material fact required
to be stated in the Servicer Information or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided, by way of clarification, that clause (B) of this
paragraph shall be construed solely by reference to the Servicer Information and
not to any other information communicated in connection with a sale or purchase
of securities, without regard to whether the Servicer Information or any portion
thereof is presented together with or separately from such other information;

 

 
(ii)
any breach by the Servicer of its obligations under this Article XIII, including
any failure by the Servicer, any Subservicer or any Subcontractor to deliver any
information, report, certification, accountants’ letter or other material when
and as required under this Article 13, including any failure by the Servicer to
identify pursuant to Section 13.06(b) any Subcontractor “participating in the
servicing function” within the meaning of Item 1122 of Regulation AB;

 
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(iii)
any breach by the Servicer of a representation or warranty set forth in Section
13.02(a) or in a writing furnished pursuant to Section 13.02(b) and made as of a
date prior to the closing date of the related Securitization Transaction, to the
extent that such breach is not cured by such closing date, or any breach by the
Servicer of a representation or warranty in a writing furnished pursuant to
Section 13.02(b) to the extent made as of a date subsequent to such closing
date; or

 

 
(iv)
the negligence, bad faith or willful misconduct of the Servicer in connection
with its performance under this Article XIII.

 
If the indemnification provided for in this Section is unavailable or
insufficient to hold harmless an Indemnified Party, then the Servicer agrees
that it shall contribute to the amount paid or payable by such Indemnified Party
as a result of any claims, losses, damages or liabilities incurred by such
Indemnified Party in such proportion as is appropriate to reflect the relative
fault of such Indemnified Party on the one hand and the Servicer on the other.
 
In the case of any failure of performance described in clause (a)(ii) of this
Section, the Servicer shall promptly reimburse the Owner, any Depositor, as
applicable, and each Person responsible for the preparation, execution or filing
of any report required to be filed with the Commission with respect to such
Securitization Transaction, or for execution of a certification pursuant to Rule
13a-14(d) or Rule 15d-14(d) under the Exchange Act with respect to such
Securitization Transaction, for all costs reasonably incurred by each such party
in order to obtain the information, report, certification, accountants’ letter
or other material not delivered as required by the Servicer, any Subservicer or
any Subcontractor.
 
This indemnification shall survive the termination of this Agreement or the
termination of any party to this Agreement.
 
(b) (i) Any failure by the Servicer, any Subservicer or any Subcontractor to
deliver any information, report, certification, accountants’ letter or other
material when and as required under this Article 13, or any breach by the
Servicer of a representation or warranty set forth in Section 13.02(a) or in a
writing furnished pursuant to Section 13.02(b) and made as of a date prior to
the closing date of the related Securitization Transaction, to the extent that
such breach is not cured by such closing date, or any breach by the Servicer of
a representation or warranty in a writing furnished pursuant to Section 13.02(b)
to the extent made as of a date subsequent to such closing date, shall, except
as provided in clause (ii) of this paragraph, immediately and automatically,
without notice or grace period, constitute an Event of Default with respect to
the Servicer under this Agreement and any applicable Reconstitution Agreement,
and shall entitle the Owner or Depositor, as applicable, in its sole discretion
to terminate the rights and obligations of the Servicer as servicer under this
Agreement and/or any applicable Reconstitution Agreement without payment
(notwithstanding anything in this Agreement or any applicable Reconstitution
Agreement to the contrary) of any compensation to the Servicer; provided that to
the extent that any provision of this Agreement and/or any applicable
Reconstitution Agreement expressly provides for the survival of certain rights
or obligations following termination of the Servicer as servicer, such provision
shall be given effect.
 
41

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(ii) Any failure by the Servicer, any Subservicer or any Subcontractor to
deliver any information, report, certification or accountants’ letter when and
as required under Section 13.04 or 13.05, including (except as provided below)
any failure by the Servicer to identify pursuant to Section 13.06(b) any
Subcontractor “participating in the servicing function” within the meaning of
Item 1122 of Regulation AB, which continues unremedied for ten calendar days
after the date on which such information, report, certification or accountants’
letter was required to be delivered shall constitute an Event of Default with
respect to the Servicer under this Agreement and any applicable Reconstitution
Agreement, and shall entitle the Owner or Depositor, as applicable, in its sole
discretion to terminate the rights and obligations of the Servicer as servicer
under this Agreement and/or any applicable Reconstitution Agreement without
payment (notwithstanding anything in this Agreement to the contrary) of any
compensation to the Servicer (and if the Servicer is servicing any of the
Mortgage Loans in a Securitization Transaction, appoint a successor servicer
reasonably acceptable to any Master Servicer for such Securitization
Transactin); provided that to the extent that any provision of this Agreement
and/or any applicable Reconstitution Agreement expressly provides for the
survival of certain rights or obligations following termination of the Servicer
as servicer, such provision shall be given effect.
 
Neither the Owner nor any Depositor shall be entitled to terminate the rights
and obligations of the Servicer pursuant to this subparagraph (b)(ii) if a
failure of the Servicer to identify a Subcontractor “participating in the
servicing function” within the meaning of Item 1122 of Regulation AB was
attributable solely to the role or functions of such Subcontractor with respect
to mortgage loans other than the Mortgage Loans.
 
(iii) The Servicer shall promptly reimburse the Owner (or any designee of the
Owner, such as a master servicer) and any Depositor, as applicable, for all
reasonable expenses incurred by the Owner (or such designee) or such Depositor,
as such are incurred, in connection with the termination of the Servicer as
servicer and the transfer of servicing of the Mortgage Loans to a successor
servicer. The provisions of this paragraph shall not limit whatever rights the
Owner or any Depositor may have under other provisions of this Agreement and/or
any applicable Reconstitution Agreement or otherwise, whether in equity or at
law, such as an action for damages, specific performance or injunctive relief.
 
Section 13.08 Third Party Beneficiary.
 
For purposes of this Article XIII and any related provisions thereto, each
Master Servicer shall be considered a third party beneficiary of this Agreement,
entitled to all the rights and benefits hereof as if it were a party to this
Agreement.
 
42

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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their respective officers thereunto duly authorized as of the day and year first
set forth above.
 

        RWT HOLDINGS, INC.  
   
   
  By:      

--------------------------------------------------------------------------------

  Name:     Title:     

 

        MORGAN STANLEY CREDIT CORPORATION  
   
   
  By:      

--------------------------------------------------------------------------------

  Name:     Title:     

 

        REDWOOD TRUST, INC.  
   
   
  By:      

--------------------------------------------------------------------------------

  Name:     Title:     

 

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EXHIBIT A
 
FORM OF LIMITED POWER OF ATTORNEY
 
KNOW ALL MEN BY THESE PRESENTS that RWT Holdings, Inc. (“Owner”) having its
principal place of business at 591 Redwood Highway, Suite 3140, Mill Valley,
California 94941, hereby constitutes and appoints Morgan Stanley Credit
Corporation (“the Servicer”), a Delaware corporation having its principal place
of business at 2500 Lake Cook Road, Riverwoods, Illinois 60015, by and through
any of its Vice Presidents or more senior officers, its true and lawful
Attorney-in-Fact, in its name, place and stead and for its benefit, in
connection with all residential mortgage loans serviced by the Servicer for
Owner for the purposes of performing all acts and executing all documents in the
name of Owner necessary and incidental to servicing said loans, including but
not limited to:
 
(1) Foreclosing delinquent loans or discontinuing such foreclosure proceedings,
executing claims for insurance benefits under private mortgage insurance
policies and endorsing related proceeds checks made payable to Owner;
 
(2) Selling, transferring or otherwise disposing of real property acquired
through foreclosure or otherwise, including but not limited to executing all
contracts, agreements, deeds, assignments or other instruments reasonably
necessary or advisable to effect such sale, transfer or disposition, and
receiving proceeds and endorsing checks made payable to the order of Owner from
such proceedings;
 
(3) Preparing, executing and delivering satisfactions, cancellations,
discharges, or full or partial releases of lien, subordination agreements,
modification agreements, assumption agreements, and substitutions of trustees
under deeds of trust;
 
(4) Endorsing promissory notes and executing assignments of mortgages, deeds of
trust, deeds to secure debt and other security instruments securing said
promissory notes in connection with loans for which the Servicer has received
full payment of all outstanding amounts due; and
 
(5) Any and all such other acts of any kind and nature whatsoever that are
necessary and prudent to service the loans.
 
Owner further grants to the Servicer full power and authority to do and perform
all acts necessary for the Servicer to carry into effect the power or powers
granted by or under this Limited Power of Attorney as fully as Owner might or
could do with the same validity as if all and every such act had been herein
particularly stated, expressed and especially provided for, and hereby ratifies
and confirms all that the Servicer shall lawfully have done, do, or cause to be
done by virtue of the powers and authority and contemplated hereby. This Limited
Power of Attorney shall be effective as of November 1, 2006.
 
A-1

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Third parties without actual notice may rely upon the exercise of the power
granted under this Limited Power of Attorney, and may be satisfied that this
Limited Power of Attorney shall continue in full force and effect until revoked
in writing by Owner. Third parties without actual notice may rely upon a
certificate to the effect set forth in the preceding sentence given by the
Servicer.
 

ATTEST      RWT HOLDINGS, INC.                 By:      By: 

--------------------------------------------------------------------------------

Name:
Title: 
   

--------------------------------------------------------------------------------

Name:
Title:
     

 
STATE OF______________ )
 ) ss:
COUNTY OF____________ )
 
On the __day of____, ____, before me, the undersigned, a Notary Public in and
for said county and state, personally appeared _____________________ and
___________________, personally known to me to be the persons who executed the
within instrument as _____________________ and ______________________,
respectively, on behalf of the corporation therein named, and they duly
severally acknowledged that they reside at __________________________________
and that said instrument is the act and deed of said corporation, and that they,
being authorized to do so, executed and delivered said instrument and affixed
the corporate seal thereto for the purposes therein contained.
 
Witness my hand and official seal:
 

  Notary Public State of ___________________        
My Commission Expires:___________________ 

 
A-2

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EXHIBIT B
 
FORM OF MONTHLY SERVICER REPORT
 
B-1

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EXHIBIT C
 
SERVICING CRITERIA TO BE ADDRESSED IN ASSESSMENT OF COMPLIANCE
 
The assessment of compliance to be delivered by [Morgan Stanley Credit
Corporation] [Subservicer] shall address, at a minimum, the criteria identified
as below as “Applicable Servicing Criteria”:
 

   
Servicing Criteria
 
Applicable
Servicing Criteria
Reference
 
Criteria
       
General Servicing Considerations
             
1122(d)(1)(i)
 
Policies and procedures are instituted to monitor any performance or other
triggers and events of default in accordance with the transaction agreements.
 
X
         
1122(d)(1)(ii)
 
If any material servicing activities are outsourced to third parties, policies
and procedures are instituted to monitor the third party’s performance and
compliance with such servicing activities.
 
X
         
1122(d)(1)(iii)
 
Any requirements in the transaction agreements to maintain a back-up servicer
for the mortgage loans are maintained.
             
1122(d)(1)(iv)
 
A fidelity bond and errors and omissions policy is in effect on the party
participating in the servicing function throughout the reporting period in the
amount of coverage required by and otherwise in accordance with the terms of the
transaction agreements.
 
X
             
Cash Collection and Administration
             
1122(d)(2)(i)
 
Payments on mortgage loans are deposited into the appropriate custodial bank
accounts and related bank clearing accounts no more than two business days
following receipt, or such other number of days specified in the transaction
agreements.
 
X
         
1122(d)(2)(ii)
 
Disbursements made via wire transfer on behalf of an obligor or to an investor
are made only by authorized personnel.
 
X

 
C-1

--------------------------------------------------------------------------------

 

 
Servicing Criteria
 
Applicable
Servicing Criteria
Reference
 
Criteria
           

1122(d)(2)(iii)
 
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.
 
X
         
1122(d)(2)(iv)
 
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.
 
X
         
1122(d)(2)(v)
 
Each custodial account is maintained at a federally insured depository
institution as set forth in the transaction agreements. For purposes of this
criterion, “federally insured depository institution” with respect to a foreign
financial institution means a foreign financial institution that meets the
requirements of Rule 13k-1(b)(1) of the Securities Exchange Act.
 
X
         
1122(d)(2)(vi)
 
Unissued checks are safeguarded so as to prevent unauthorized access.
 
X
         
1122(d)(2)(vii)
 
Reconciliations are prepared on a monthly basis for all asset-backed securities
related bank accounts, including custodial accounts and related bank clearing
accounts. These reconciliations are (A) mathematically accurate; (B) prepared
within 30 calendar days after the bank statement cutoff date, or such other
number of days specified in the transaction agreements; (C) reviewed and
approved by someone other than the person who prepared the reconciliation; and
(D) contain explanations for reconciling items. These reconciling items are
resolved within 90 calendar days of their original identification, or such other
number of days specified in the transaction agreements.
 
X
             
Investor Remittances and Reporting
             
1122(d)(3)(i)
 
Reports to investors, including those to be filed with the Commission, are
maintained in accordance with the transaction agreements and applicable
Commission requirements. Specifically, such reports (A) are prepared in
accordance with timeframes and other terms set forth in the transaction
agreements; (B) provide information calculated in accordance with the terms
specified in the transaction agreements; (C) are filed with the Commission as
required by its rules and regulations; and (D) agree with investors’ or the
trustee’s records as to the total unpaid principal balance and number of
mortgage loans serviced by the Servicer.
 
X

 
C-2

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Servicing Criteria
 
Applicable
Servicing Criteria
Reference
 
Criteria
           

1122(d)(3)(ii)
 
Amounts due to investors are allocated and remitted in accordance with
timeframes, distribution priority and other terms set forth in the transaction
agreements.
 
X
         
1122(d)(3)(iii)
 
Disbursements made to an investor are posted within two business days to the
Servicer’s investor records, or such other number of days specified in the
transaction agreements.
 
X
         
1122(d)(3)(iv)
 
Amounts remitted to investors per the investor reports agree with cancelled
checks, or other form of payment, or custodial bank statements.
 
X
             
Pool Asset Administration
             
1122(d)(4)(i)
 
Collateral or security on mortgage loans is maintained as required by the
transaction agreements or related mortgage loan documents.
 
X
         
1122(d)(4)(ii)
 
Mortgage loan and related documents are safeguarded as required by the
transaction agreements
 
X
         
1122(d)(4)(iii)
 
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.
 
X

 
C-3

--------------------------------------------------------------------------------

 

 
Servicing Criteria
 
Applicable
Servicing Criteria
Reference
 
Criteria
           

1122(d)(4)(iv)
 
Payments on mortgage loans, including any payoffs, made in accordance with the
related mortgage loan documents are posted to the Servicer’s obligor records
maintained no more than two business days after receipt, or such other number of
days specified in the transaction agreements, and allocated to principal,
interest or other items (e.g., escrow) in accordance with the related mortgage
loan documents.
 
X
         
1122(d)(4)(v)
 
The Servicer’s records regarding the mortgage loans agree with the Servicer’s
records with respect to an obligor’s unpaid principal balance.
 
X
         
1122(d)(4)(vi)
 
Changes with respect to the terms or status of an obligor’s mortgage loans
(e.g., loan modifications or re-agings) are made, reviewed and approved by
authorized personnel in accordance with the transaction agreements and related
pool asset documents.
 
X
         
1122(d)(4)(vii)
 
Loss mitigation or recovery actions (e.g., forbearance plans, modifications and
deeds in lieu of foreclosure, foreclosures and repossessions, as applicable) are
initiated, conducted and concluded in accordance with the timeframes or other
requirements established by the transaction agreements.
 
X
         
1122(d)(4)(viii)
 
Records documenting collection efforts are maintained during the period a
mortgage loan is delinquent in accordance with the transaction agreements. Such
records are maintained on at least a monthly basis, or such other period
specified in the transaction agreements, and describe the entity’s activities in
monitoring delinquent mortgage loans including, for example, phone calls,
letters and payment rescheduling plans in cases where delinquency is deemed
temporary (e.g., illness or unemployment).
 
X
         
1122(d)(4)(ix)
 
Adjustments to interest rates or rates of return for mortgage loans with
variable rates are computed based on the related mortgage loan documents.
 
X

 
C-4

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Servicing Criteria
 
Applicable
Servicing Criteria
Reference
 
Criteria
           

1122(d)(4)(x)
 
Regarding any funds held in trust for an obligor (such as escrow accounts): (A)
such funds are analyzed, in accordance with the obligor’s mortgage loan
documents, on at least an annual basis, or such other period specified in the
transaction agreements; (B) interest on such funds is paid, or credited, to
obligors in accordance with applicable mortgage loan documents and state laws;
and (C) such funds are returned to the obligor within 30 calendar days of full
repayment of the related mortgage loans, or such other number of days specified
in the transaction agreements.
 
X
         
1122(d)(4)(xi)
 
Payments made on behalf of an obligor (such as tax or insurance payments) are
made on or before the related penalty or expiration dates, as indicated on the
appropriate bills or notices for such payments, provided that such support has
been received by the servicer at least 30 calendar days prior to these dates, or
such other number of days specified in the transaction agreements.
 
X
         
1122(d)(4)(xii)
 
Any late payment penalties in connection with any payment to be made on behalf
of an obligor are paid from the servicer’s funds and not charged to the obligor,
unless the late payment was due to the obligor’s error or omission.
 
X
         
1122(d)(4)(xiii)
 
Disbursements made on behalf of an obligor are posted within two business days
to the obligor’s records maintained by the servicer, or such other number of
days specified in the transaction agreements.
 
X
         
1122(d)(4)(xiv)
 
Delinquencies, charge-offs and uncollectible accounts are recognized and
recorded in accordance with the transaction agreements.
 
X
         
1122(d)(4)(xv)
 
Any external enhancement or other support, identified in Item 1114(a)(1) through
(3) or Item 1115 of Regulation AB, is maintained as set forth in the transaction
agreements.
   

 
C-5

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  [MORGAN STANLEY CREDIT CORPORATION]  
[SUBSERVICER]
      Date:

 
C-6

--------------------------------------------------------------------------------

 
EXHIBIT D
 
FORM OF ANNUAL CERTIFICATION
 
Re: The [                  ] agreement dated as of [                          
 l, 200[ ] (the “Agreement”), among [IDENTIFY PARTIES]
 
I, _____________________________________, the _______________________ of [NAME
OF SERVICER] and, in such capacity, the officer in charge of the Servicer’s
responsibility on Exhibit D to the Agreement. I hereby certify to [the
Purchaser], [the Depositor], and the [Master Servicer], and their officers, with
the knowledge and intent that they will rely upon this certification, that:
 
(A) I have reviewed the servicer compliance statement of the Servicer provided
in accordance with Item 1123 of Regulation AB (the “Compliance Statement”), the
report on assessment of the Servicer’s compliance with the servicing criteria
set forth in Item 1122(d) of Regulation AB (the “Servicing Criteria”), provided
in accordance with Rules 13a-18 and 15d-18 under Securities Exchange Act of
1934, as amended (the “Exchange Act”) and Item 1122 of Regulation AB (the
“Servicing Assessment”), the registered public accounting firm’s attestation
report provided in accordance with Rules 13a-18 and 15d-18 under the Exchange
Act and Section 1122(b) of Regulation AB (the “Attestation Report”), and all
other data, servicing reports, officer’s certificates and other information
relating to the performance of the Servicer under the terms of the Agreement and
the servicing of the Mortgage Loans by the Servicer during 200[ ] that were
delivered to the [Depositor] [Master Servicer] pursuant to the Agreement to the
extent included in any Form 8-Ks, Form 10-Ds, Form 10-Ks or similar forms
required by the Commission from time to time for the period covered by the
Compliance Statement (collectively, the “Servicer Servicing Information”);
 
(B) Based on my knowledge, the reports and information comprising the Servicer
Servicing Information, taken as a whole, does not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements made, in the light of the circumstances under which such statements
were made, not misleading as of the period covered by, or the date of such
reports or information or the date of this certification;
 
(C) Based on my knowledge, all of the Servicer Servicing Information required to
be provided by the Servicer under the Agreement has been provided to the
[Depositor] [Master Servicer];
 
(D) I am responsible for reviewing the activities performed by the Servicer as
servicer under the Agreement, and based on my knowledge and the compliance
review conducted in preparing the Compliance Statement and except as disclosed
in the Compliance Statement, the Servicing Assessment or the Attestation Report,
the Servicer has fulfilled its obligations under the Agreement in all material
respects; and
 
D-1

--------------------------------------------------------------------------------

 
(E) The Compliance Statement required to be delivered by the Servicer pursuant
to the Agreement, and the Servicing Assessment and Attestation Report required
to be provided by the Servicer and by any Subservicer or Subcontractor pursuant
to the Agreement, have been provided to the [Depositor] [Master Servicer]. The
Servicing Assessment and the Attestation Report cover all items of the servicing
criteria identified on Exhibit C to the Agreement as applicable to the Servicer.
Any material instances of noncompliance described in such reports have been
disclosed to the [Depositor] [Master Servicer]. Any material instance of
noncompliance with the Servicing Criteria has been disclosed in such reports.
The following material instances of noncompliance identified in the Servicing
Assessment and the Attestation Report relate to the performance or obligations
of the Servicer under the Agreement: ____________ (if none, state “None.”)
 

 
Date: _________________________
         
By: 
 

--------------------------------------------------------------------------------

Name:
 
Title:
   

 
D-2

--------------------------------------------------------------------------------

MORGAN - SEQUOIA TO TRUSTEE
 
ASSIGNMENT, ASSUMPTION AND RECOGNITION AGREEMENT
 
For
 
Master Servicing Agreement
 
THIS ASSIGNMENT, ASSUMPTION AND RECOGNITION AGREEMENT, dated as of May 25, 2007
(“Assignment No. II”), is entered into among Sequoia Residential Funding, Inc.
(the “Assignor”), Morgan Stanley Credit Corporation (formerly Morgan Stanley
Dean Witter Credit Corporation), as the servicer (the “Servicer”), and HSBC Bank
USA, National Association (“HSBC Bank”) as Trustee under a Pooling and Servicing
Agreement dated as of May 1, 2007 (the “Pooling and Servicing Agreement”), among
the Assignor, as Depositor, HSBC Bank (in such Trustee capacity, the “Assignee”)
and Wells Fargo Bank, N. A., as Master Servicer and Securities Administrator.
 
RECITALS
 
WHEREAS, Redwood Trust, Inc. (“Redwood”) and the Servicer have entered into a
certain Master Servicing Agreement, dated as of August 1, 2001 (as amended or
modified to the date hereof, the “2001 Master Servicing Agreement”), and the
Servicer is currently servicing certain mortgage loans (the “Mortgage Loans”)
under the 2001 Master Servicing Agreement; and
 
WHEREAS, RWT Holdings, Inc. (“RWT”) has previously acquired from Redwood and has
sold, assigned and transferred all of its right, title and interest in certain
of the Mortgage Loans (the “Specified Mortgage Loans”) which are listed on the
mortgage loan schedule attached as Exhibit I hereto (the “Specified Mortgage
Loan Schedule”) and its rights under the 2001 Master Servicing Agreement with
respect to the Specified Mortgage Loans to Assignor; and
 
WHEREAS, the parties hereto agree that notwithstanding anything to the contrary
in the 2001 Master Servicing Agreement, the Specified Mortgage Loans are
currently being serviced by the Servicer pursuant to the Master Servicing
Agreement, dated as of November 1, 2006, between RWT and Servicer (the “Master
Servicing Agreement”); and
 
WHEREAS, the Assignor has agreed to sell, assign and transfer to Assignee all of
its right, title and interest in the Specified Mortgage Loans and its rights
under the Master Servicing Agreement with respect to the Specified Mortgage
Loans; and
 
WHEREAS, the parties hereto have agreed that the Specified Mortgage Loans shall
be subject to the terms of this Assignment No. II.
 
NOW, THEREFORE, in consideration of the mutual promises contained herein and
other good and valuable consideration (the receipt and sufficiency of which are
hereby acknowledged), the parties agree as follows:
 
1. Assignment and Assumption.
 
(a)  Effective on and as of the date hereof, the Assignor hereby pledges,
assigns and transfers to the Assignee all of its right, title and interest in
the Specified Mortgage Loans and all of its rights (but none of the Owner’s
obligations) provided under the Master Servicing Agreement to the extent
relating to the Specified Mortgage Loans, the Assignee hereby accepts such
assignment from the Assignor, and the Servicer hereby acknowledges such
assignment and assumption.
 
2

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(b) Effective on and as of the date hereof, the Assignor represents and warrants
to the Assignee that the Assignor has not taken any action that would serve to
impair or encumber the Assignee’s interest in the Specified Mortgage Loans since
the date of the Assignor’s acquisition of the Specified Mortgage Loans.
 
2. Recognition of the Assignee.
 
From and after the date hereof, the Servicer shall recognize the Assignee as the
holder of the rights and benefits of the Owner with respect to the Specified
Mortgage Loans and the Servicer will service the Specified Mortgage Loans for
the Assignee as if the Assignee and the Servicer had entered into a separate
servicing agreement for the servicing of the Specified Mortgage Loans in the
form of the Master Servicing Agreement (as modified by Appendix A hereto) (the
“Successor MSA”) with the Assignee as the Owner thereunder, which Successor MSA
is incorporated in and made a part of this Assignment No. II. It is the
intention of the parties hereto that the Successor MSA will be treated as a
separate and distinct servicing agreement between the parties hereto to the
extent of the Specified Mortgage Loans and shall be binding upon and for the
benefit of the respective successors and assigns of the parties hereto.
 
3. Assignor’s Continuing Rights and Responsibilities.
 
Notwithstanding Sections 1 and 2 above, the parties hereto agree that the
Assignor rather than the Assignee shall have the ongoing rights and
responsibilities of the Owner under the following sections of the Master
Servicing Agreement:
 
Section
 
Matter
     
4.01
 
(a) Role of the Servicer.
     
7.05, 1st¶ and
2nd¶
 
(b) Owner’s Right to Examine the Servicer Records.
     
8.01
 
(c) The Servicer Shall Provide Information as Reasonably Required.
     
9.01(a) and (b)
 
(d) Indemnification; Third-Party Claims.
     
9.03
 
(e) Limitation on Liability of Servicer and Others.
     
12.03
 
(f) Assignments.
     
12.13(b)
 
(g) Non-Solicitation.

3

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In addition, the Servicer agrees to furnish to the Assignor and Master Servicer
copies of reports, notices, statements and other communications required to be
delivered by the Servicer pursuant to any of the sections of the Master
Servicing Agreement referred to above and under the following sections, at the
times therein specified:
 
Section
         
4.11, 5th and
6th¶’s
 
(a) Title Management and Disposition of REO Property.
     
6.02
 
(b) Statements to Owner.
     
6.03(d)
 
(c) Monthly Advances by the Servicer.
     
13.04
 
(d) Annual Statement as to Compliance
     
13.05
 
(e) Report on Assessment of Compliance and Attestation

 
4. Successor MSA.
 
The Successor MSA includes the Master Servicing Agreement as modified by
Appendix A hereto and is made a part of this Assignment No. II.
 
5. Representations and Warranties.
 
(a) Each of the parties hereto represents and warrants that it is duly and
legally authorized to enter into this Assignment No. II.
 
4

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(b) Each of the parties hereto represents and warrants that this Assignment No.
II has been duly authorized, executed and delivered by it and (assuming due
authorization, execution and delivery thereof by each of the other parties
hereto) constitutes its legal, valid and binding obligation, enforceable against
it in accordance with its terms, except as such enforcement may be limited by
bankruptcy, insolvency, reorganization or other similar laws affecting the
enforcement of creditors’ rights generally and by general equitable principles
(regardless of whether such enforcement is considered in a proceeding in equity
or at law).
 
5

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6. Continuing Effect.
 
Except as contemplated hereby, the Master Servicing Agreement shall remain in
full force and effect in accordance with its terms.
 
7. Governing Law.
 
This Assignment No. II and the rights and obligations hereunder shall be
governed by and construed in accordance with the internal laws of the State of
Illinois.
 
8. Notices.
 
Any notices or other communications permitted or required under the Master
Servicing Agreement to be made to the Assignor and Assignee shall be made in
accordance with the terms of the Master Servicing Agreement and shall be sent to
the Assignor and Assignee as follows:
 
Sequoia Residential Funding, Inc.
One Belvedere Place, Suite 330
Mill Valley, CA 94941
 
HSBC Bank USA, National Association
452 Fifth Avenue
New York, NY 10018
 
or to such other address as may hereafter be furnished by the Assignor or
Assignee to the other parties in accordance with the provisions of the Master
Servicing Agreement.
 
9. Counterparts.
 
This Assignment No. II may be executed in 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.
 
10. Definitions.
 
Any capitalized term used but not defined in this Assignment No. II has the same
meaning as in the Master Servicing Agreement or the Master Mortgage Loan
Purchase Agreement referred to therein.
 
11. Master Servicer.
 
The Servicer hereby acknowledges that the Assignee has appointed Wells Fargo
Bank, N. A. (the “Master Servicer”) to act as master servicer and securities
administrator under the Pooling and Servicing Agreement and hereby agrees to
treat all inquiries, instructions, authorizations and other communications from
the Master Servicer as if the same had been received from the Assignee. The
Master Servicer, acting on behalf of the Assignee, shall have the rights of the
Assignee as the Owner under the Successor MSA to enforce the obligations of the
Servicer thereunder. Any notices or other communications permitted or required
under the Master Servicing Agreement to be made to the Assignee shall be made in
accordance with the terms of the Master Servicing Agreement and shall be sent to
the Master Servicer at the following address:
 
Wells Fargo Bank, N. A.
P.O. Box 98
Columbia, Maryland 21046
(or, for overnight deliveries, 9062 Old Annapolis Road, Columbia, Maryland
21045)
Attention: Sequoia Mortgage Trust 2007-2
 
6

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or to such other address as may hereafter be furnished by the Master Servicer to
Servicer. Any such notices or other communications permitted or required under
the Master Servicing Agreement may be delivered in electronic format unless
manual signature is required in which case a hard copy of such report or
communication shall be required.
 
The Servicer further acknowledges that the Assignor has engaged the Master
Servicer to provide certain default administration and that the Master Servicer,
acting as agent of the Assignor, may exercise any of the rights of the Owner
retained by the Assignor in Section 3 above.

The Servicer shall make all distributions under the Successor MSA, as they
relate to the Specified Mortgage Loans, to the Master Servicer by wire transfer
of immediately funds to:

 
Wells Fargo Bank, NA
San Francisco, CA
ABA# 121-000-248
Acct# 3970771416
Acct Name: SAS Clearing
FFC: 53145300

 
[remainder of page intentionally left blank]
 
7

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IN WITNESS WHEREOF, the parties hereto have executed this Assignment No. II the
day and year first above written.
 

       
ASSIGNOR:
     
SEQUOIA RESIDENTIAL FUNDING, INC.
 
   
   
  By:     Name:   Title:

 

       
ASSIGNEE:
     
HSBC BANK USA, NATIONAL
ASSOCIATION
 
   
   
  By:     Name:   Title:

 

       
SERVICER:
     
MORGAN STANLEY CREDIT CORPORATION
 
   
   
  By:     Name:   Title:

8

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EXHIBIT I
 

--------------------------------------------------------------------------------

APPENDIX A
 
MASTER SERVICING AGREEMENT
 
1. The definition of Custodial Account is revised to read as follows:
 
“ ‘Custodial Account’: The separate trust account or accounts created and
maintained pursuant to Section 4.04 of this Agreement which shall be entitled
“Morgan Stanley Credit Corporation, in trust for ‘HSBC Bank USA, National
Association, as Trustee, under the Pooling and Servicing Agreement dated as of
May 1, 2007,’ or such other title as is requested by the Owner.”
 
2.  The definition of Escrow Account is revised to read as follows:

 
“ ‘Escrow Account’: The separate trust account or accounts created and
maintained pursuant to Section 4.06 on which shall be entitled “Morgan Stanley
Credit Corporation, as Servicer, in trust for ‘HSBC Bank USA, National
Association, as Trustee, under the Pooling and Servicing Agreement dated as of
May 1, 2007,’ or such other title as is requested by Owner.”
 
3. Section 4.18, second sentence is revised to read as follows:
 
“All such Permitted Investments shall be registered in the name of the Servicer
or its nominee, and held in trust for HSBC Bank USA, National Association, as
Trustee, under the Pooling and Servicing Agreement dated May 1, 2007.”
 
4. Notwithstanding any provision in the Agreement to the contrary, the Servicer
agrees that it will report to the Master Servicer on a monthly basis on the date
specified therein using the formats attached hereto as Exhibit 1.
 
5. The third full paragraph of Section 6.01 is hereby deleted in its entirety
and replaced by the following (second deleted in two places before Business
Day):
 
“With respect to any remittance received by Owner on or after the Business Day
following the Business Day on which such payment was due, the Servicer shall pay
to Owner interest on any such late payment at an annual rate equal to the rate
of interest as is publicly announced from time to time at its principal office
by Chase Manhattan Bank, N. A., New York, New York, as its “prime” lending rate
(which is not necessarily its lowest rate) (or if Chase Manhattan Bank, N.A.
shall cease to exist or to announce such rate, then such rate shall be a
reasonably comparable rate determined by Servicer in its reasonable discretion),
adjusted as of the date of each change, plus one (1) percentage point, but in no
event greater than the maximum amount permitted by applicable law. Such interest
shall be paid by the Servicer to Owner on the date such late payment is made and
shall cover the period commencing with the day following such Business Day and
ending with the Business Day on which such payment is made, both inclusive. Such
interest shall be remitted along with such late payment. The payment by the
Servicer of any such interest shall not be deemed an extension of time for
Payment or a waiver of any Event of Default by the Servicer.”
 

--------------------------------------------------------------------------------

 
6. Section 10.01 is revised to add an “or” after 10.01(vi) and then to add the
following:
 
“failure on the part of the Servicer to comply with Article XIII after the cure
periods provided in Section 13.07.”
 
7. Section 13.03 is revised to add the following after 13.03(d)(ii):
 
“(iii) information regarding any Mortgage Loan changes (such as additions,
substitutions, or repurchases), and any material changes in origination,
underwriting or other criteria for acquisitions or selection of the Mortgage
Loans (Item 1121(a)(14) of Regulation AB).”
 
8. Section 13.05 is revised to delete the first line of 13.05(iv), so that
13.05(iv) reads:
 
“deliver, and cause each Subservicer and Subcontractor as described in clause
(iii) to provide, to the Owner, such Master Servicer and such Depositor and any
other Person that will be responsible for signing the certification (a “Sarbanes
Certification”) required by Rules 13a-14(d) and 15d-14(d) under the Exchange Act
(pursuant to Section 302 of the Sarbanes-Oxley Act of 2002) on behalf of an
asset-backed issuer with respect to a Securitization Transaction a certification
in the form attached hereto as Exhibit D.”
 
9. The first paragraph under Section 13.07(b)(ii) is revised to read as follows
(addition is in italics):
 
“(ii) Any failure by the Servicer, any Subservicer or any Subcontractor to
deliver any information, report, certification or accountants’ letter when and
as required under Section 13.04 or 13.05, including (except as provided below)
any failure by the Servicer to identify pursuant to Section 13.06(b) any
Subcontractor “participating in the servicing function” within the meaning of
Item 1122 of Regulation AB, which continues unremedied for ten calendar days
after the date on which such information, report, certification or accountants’
letter was required to be delivered shall constitute an Event of Default with
respect to the Servicer under this Agreement and any applicable Reconstitution
Agreement, and shall entitle the Owner, the Master Servicer or Depositor, as
applicable, in its sole discretion to terminate the rights and obligations of
the Servicer as servicer under this Agreement and/or any applicable
Reconstitution Agreement without payment (notwithstanding anything in this
Agreement to the contrary) of any compensation to the Servicer (and if the
Servicer is servicing any of the Mortgage Loans in a Securitization Transaction,
appoint a successor servicer reasonably acceptable to any Master Servicer for
such Securitization Transaction); provided that to the extent that any provision
of this Agreement and/or any applicable Reconstitution Agreement expressly
provides for the survival of certain rights or obligations following termination
of the Servicer as servicer, such provision shall be given effect.”
 

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EXHIBIT 1
12A. FORM OF MONTHLY REPORTS
 

   
Standard Loan Level File Layout - Master Servicing
 
 
 
 
 
 
       
 
 
 
 
 
Exhibit 1:  Layout
     
 
 
 
 
 
Column Name
 
Description
 
Decimal
 
Format Comment
 
Max Size
                 
Each file requires the following fields:
 
 
 
 
 
 
SER_INVESTOR_NBR
 
A value assigned by the Servicer to define a group of loans.
 
 
 
Text up to 20 digits
 
20
LOAN_NBR
 
A unique identifier assigned to each loan by the investor.
 
 
 
Text up to 10 digits
 
10
SERVICER_LOAN_NBR
 
A unique number assigned to a loan by the Servicer. This may be different than
the LOAN_NBR.
 
 
 
Text up to 10 digits
 
10
SCHED_PAY_AMT
 
Scheduled monthly principal and scheduled interest payment that a borrower is
expected to pay, P&I constant.
 
2
 
No commas(,) or dollar signs ($)
 
11
NOTE_INT_RATE
 
The loan interest rate as reported by the Servicer.
 
4
 
Max length of 6
 
6
NET_INT_RATE
 
The loan gross interest rate less the service fee rate as reported by the
Servicer.
 
4
 
Max length of 6
 
6
SERV_FEE_RATE
 
The servicer's fee rate for a loan as reported by the Servicer.
 
4
 
Max length of 6
 
6
SERV_FEE_AMT
 
The servicer's fee amount for a loan as reported by the Servicer.
 
2
 
No commas(,) or dollar signs ($)
 
11
NEW_PAY_AMT
 
The new loan payment amount as reported by the Servicer.
 
2
 
No commas(,) or dollar signs ($)
 
11
NEW_LOAN_RATE
 
The new loan rate as reported by the Servicer.
 
4
 
Max length of 6
 
6
ARM_INDEX_RATE
 
The index the Servicer is using to calculate a forecasted rate.
 
4
 
Max length of 6
 
6
ACTL_BEG_PRIN_BAL
 
The borrower's actual principal balance at the beginning of the processing
cycle.
 
2
 
No commas(,) or dollar signs ($)
 
11
ACTL_END_PRIN_BAL
 
The borrower's actual principal balance at the end of the processing cycle.
 
2
 
No commas(,) or dollar signs ($)
 
11
BORR_NEXT_PAY_DUE_DATE
 
The date at the end of processing cycle that the borrower's next payment is due
to the Servicer, as reported by Servicer.
 
 
 
MM/DD/YYYY
 
10
SERV_CURT_AMT_1
 
The first curtailment amount to be applied.
 
2
 
No commas(,) or dollar signs ($)
 
11
SERV_CURT_DATE_1
 
The curtailment date associated with the first curtailment amount.
 
 
 
MM/DD/YYYY
 
10
CURT_ADJ_ AMT_1
 
The curtailment interest on the first curtailment amount, if applicable.
 
2
 
No commas(,) or dollar signs ($)
 
11
SERV_CURT_AMT_2
 
The second curtailment amount to be applied.
 
2
 
No commas(,) or dollar signs ($)
 
11
SERV_CURT_DATE_2
 
The curtailment date associated with the second curtailment amount.
 
 
 
MM/DD/YYYY
 
10
CURT_ADJ_ AMT_2
 
The curtailment interest on the second curtailment amount, if applicable.
 
2
 
No commas(,) or dollar signs ($)
 
11

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Exhibit 1: Continued
 
Standard Loan Level File Layout
 
 
 
 
 
 
Column Name
 
Description
 
Decimal
 
Format Comment
 
 Max Size
SERV_CURT_AMT_3
 
The third curtailment amount to be applied.
 
2
 
No commas(,) or dollar signs ($)
 
11
SERV_CURT_DATE_3
 
The curtailment date associated with the third curtailment amount.
 
 
 
MM/DD/YYYY
 
10
CURT_ADJ_AMT_3
 
The curtailment interest on the third curtailment amount, if applicable.
 
2
 
No commas(,) or dollar signs ($)
 
11
PIF_AMT
 
The loan "paid in full" amount as reported by the Servicer.
 
2
 
No commas(,) or dollar signs ($)
 
11
PIF_DATE
 
The paid in full date as reported by the Servicer.
 
 
 
MM/DD/YYYY
 
10
 
ACTION_CODE
 
 
The standard FNMA numeric code used to indicate the default/delinquent status of
a particular loan.
 
 
 
Action Code Key: 15=Bankruptcy, 30=Foreclosure, , 60=PIF, 63=Substitution,
65=Repurchase,70=REO
 
2
INT_ADJ_AMT
 
The amount of the interest adjustment as reported by the Servicer.
 
2
 
No commas(,) or dollar signs ($)
 
11
SOLDIER_SAILOR_ADJ_AMT
 
The Soldier and Sailor Adjustment amount, if applicable.
 
2
 
No commas(,) or dollar signs ($)
 
11
NON_ADV_LOAN_AMT
 
The Non Recoverable Loan Amount, if applicable.
 
2
 
No commas(,) or dollar signs ($)
 
11
LOAN_LOSS_AMT
 
The amount the Servicer is passing as a loss, if applicable.
 
2
 
No commas(,) or dollar signs ($)
 
11
Plus the following applicable fields:
 
 
 
 
 
 
SCHED_BEG_PRIN_BAL
 
The scheduled outstanding principal amount due at the beginning of the cycle
date to be passed through to investors.
 
2
 
No commas(,) or dollar signs ($)
 
11
SCHED_END_PRIN_BAL
 
The scheduled principal balance due to investors at the end of a processing
cycle.
 
2
 
No commas(,) or dollar signs ($)
 
11
SCHED_PRIN_AMT
 
The scheduled principal amount as reported by the Servicer for the current cycle
-- only applicable for Scheduled/Scheduled Loans.
 
2
 
No commas(,) or dollar signs ($)
 
11
SCHED_NET_INT
 
The scheduled gross interest amount less the service fee amount for the current
cycle as reported by the Servicer -- only applicable for Scheduled/Scheduled
Loans.
 
2
 
No commas(,) or dollar signs ($)
 
11
ACTL_PRIN_AMT
 
The actual principal amount collected by the Servicer for the current reporting
cycle -- only applicable for Actual/Actual Loans.
 
2
 
No commas(,) or dollar signs ($)
 
11
ACTL_NET_INT
 
The actual gross interest amount less the service fee amount for the current
reporting cycle as reported by the Servicer -- only applicable for Actual/Actual
Loans.
 
2
 
No commas(,) or dollar signs ($)
 
11
PREPAY_PENALTY_ AMT
 
The penalty amount received when a borrower prepays on his loan as reported by
the Servicer.
 
2
 
No commas(,) or dollar signs ($)
 
11
PREPAY_PENALTY_ WAIVED
 
The prepayment penalty amount for the loan waived by the servicer.
 
2
 
No commas(,) or dollar signs ($)
 
11

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Exhibit 1: Continued
 
Standard Loan Level File Layout
 
 
 
 
 
 
Column Name
 
Description
 
Decimal
 
Format Comment
 
Max Size
MOD_DATE
 
The Effective Payment Date of the Modification for the loan.
 
 
 
MM/DD/YYYY
 
10
MOD_TYPE
 
The Modification Type.
 
 
 
Varchar - value can be alpha or numeric
 
30
DELINQ_P&I_ADVANCE_AMT
 
The current outstanding principal and interest advances made by Servicer.
 
2
 
No commas(,) or dollar signs ($)
 
11
BREACH_FLAG
 
Flag to indicate if the repurchase of a loan is due to a breach of
Representations and Warranties
     
Y=Breach
N=NO Breach
Let blank if N/A
 
1

 

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Exhibit 12B : Standard File Layout - Delinquency Reporting

  *The column/header names in bold are the minimum fields Wells Fargo must
receive from every Servicer
 
Column/Header Name
 
Description
 
Decimal
 
Format Comment
SERVICER_LOAN_NBR
 
A unique number assigned to a loan by the Servicer. This may be different than
the LOAN_NBR
     
 
LOAN_NBR
 
A unique identifier assigned to each loan by the originator.
     
 
CLIENT_NBR
 
Servicer Client Number
       
SERV_INVESTOR_NBR
 
Contains a unique number as assigned by an external servicer to identify a group
of loans in their system.
     
 
BORROWER_FIRST_NAME
 
First Name of the Borrower.
       
BORROWER_LAST_NAME
 
Last name of the borrower.
       
PROP_ADDRESS
 
Street Name and Number of Property
     
 
PROP_STATE
 
The state where the property located.
     
 
PROP_ZIP
 
Zip code where the property is located.
     
 
BORR_NEXT_PAY_DUE_DATE
 
The date that the borrower's next payment is due to the servicer at the end of
processing cycle, as reported by Servicer.
     
MM/DD/YYYY
LOAN_TYPE
 
Loan Type (i.e. FHA, VA, Conv)
     
 
BANKRUPTCY_FILED_DATE
 
The date a particular bankruptcy claim was filed.
     
MM/DD/YYYY
BANKRUPTCY_CHAPTER_CODE
 
The chapter under which the bankruptcy was filed.
     
 
BANKRUPTCY_CASE_NBR
 
The case number assigned by the court to the bankruptcy filing.
     
 
POST_PETITION_DUE_DATE
 
The payment due date once the bankruptcy has been approved by the courts
     
MM/DD/YYYY
BANKRUPTCY_DCHRG_DISM_DATE
 
The Date The Loan Is Removed From Bankruptcy. Either by Dismissal, Discharged
and/or a Motion For Relief Was Granted.
     
MM/DD/YYYY
LOSS_MIT_APPR_DATE
 
The Date The Loss Mitigation Was Approved By The Servicer
     
MM/DD/YYYY
LOSS_MIT_TYPE
 
The Type Of Loss Mitigation Approved For A Loan Such As;
       
LOSS_MIT_EST_COMP_DATE
 
The Date The Loss Mitigation /Plan Is Scheduled To End/Close
     
MM/DD/YYYY
LOSS_MIT_ACT_COMP_DATE
 
The Date The Loss Mitigation Is Actually Completed
     
MM/DD/YYYY
FRCLSR_APPROVED_DATE
 
The date DA Admin sends a letter to the servicer with instructions to begin
foreclosure proceedings.
     
MM/DD/YYYY
ATTORNEY_REFERRAL_DATE
 
Date File Was Referred To Attorney to Pursue Foreclosure
     
MM/DD/YYYY
FIRST_LEGAL_DATE
 
Notice of 1st legal filed by an Attorney in a Foreclosure Action
     
MM/DD/YYYY
FRCLSR_SALE_EXPECTED_DATE
 
The date by which a foreclosure sale is expected to occur.
     
MM/DD/YYYY
FRCLSR_SALE_DATE
 
The actual date of the foreclosure sale.
     
MM/DD/YYYY
FRCLSR_SALE_AMT
 
The amount a property sold for at the foreclosure sale.
 
2
 
No commas(,) or dollar signs ($)
EVICTION_START_DATE
 
The date the servicer initiates eviction of the borrower.
     
MM/DD/YYYY
EVICTION_COMPLETED_DATE
 
The date the court revokes legal possession of the property from the borrower.
     
MM/DD/YYYY
LIST_PRICE
 
The price at which an REO property is marketed.
 
2
 
No commas(,) or dollar signs ($)
LIST_DATE
 
The date an REO property is listed at a particular price.
     
MM/DD/YYYY
OFFER_AMT
 
The dollar value of an offer for an REO property.
 
2
 
No commas(,) or dollar signs ($)
OFFER_DATE_TIME
 
The date an offer is received by DA Admin or by the Servicer.
     
MM/DD/YYYY
REO_CLOSING_DATE
 
The date the REO sale of the property is scheduled to close.
     
MM/DD/YYYY
REO_ACTUAL_CLOSING_DATE
 
Actual Date Of REO Sale
     
MM/DD/YYYY
OCCUPANT_CODE
 
Classification of how the property is occupied.
     
 
PROP_CONDITION_CODE
 
A code that indicates the condition of the property.
     
 

 

--------------------------------------------------------------------------------

 
PROP_INSPECTION_DATE
 
The date a property inspection is performed.
     
MM/DD/YYYY
APPRAISAL_DATE
 
The date the appraisal was done.
     
MM/DD/YYYY
CURR_PROP_VAL
 
 The current "as is" value of the property based on brokers price opinion or
appraisal.
 
2
 
 
REPAIRED_PROP_VAL
 
The amount the property would be worth if repairs are completed pursuant to a
broker's price opinion or appraisal.
 
2
 
 
If applicable:
 
 
     
 
DELINQ_STATUS_CODE
 
FNMA Code Describing Status of Loan
       
DELINQ_REASON_CODE
 
The circumstances which caused a borrower to stop paying on a loan. Code
indicates the reason why the loan is in default for this cycle.
       
MI_CLAIM_FILED_DATE
 
Date Mortgage Insurance Claim Was Filed With Mortgage Insurance Company.
     
MM/DD/YYYY
MI_CLAIM_AMT
 
Amount of Mortgage Insurance Claim Filed
     
No commas(,) or dollar signs ($)
MI_CLAIM_PAID_DATE
 
Date Mortgage Insurance Company Disbursed Claim Payment
     
MM/DD/YYYY
MI_CLAIM_AMT_PAID
 
Amount Mortgage Insurance Company Paid On Claim
 
2
 
No commas(,) or dollar signs ($)
POOL_CLAIM_FILED_DATE
 
Date Claim Was Filed With Pool Insurance Company
     
MM/DD/YYYY
POOL_CLAIM_AMT
 
Amount of Claim Filed With Pool Insurance Company
 
2
 
No commas(,) or dollar signs ($)
POOL_CLAIM_PAID_DATE
 
Date Claim Was Settled and The Check Was Issued By The Pool Insurer
     
MM/DD/YYYY
POOL_CLAIM_AMT_PAID
 
Amount Paid On Claim By Pool Insurance Company
 
2
 
No commas(,) or dollar signs ($)
FHA_PART_A_CLAIM_FILED_DATE
 
 Date FHA Part A Claim Was Filed With HUD
     
MM/DD/YYYY
FHA_PART_A_CLAIM_AMT
 
 Amount of FHA Part A Claim Filed
 
2
 
No commas(,) or dollar signs ($)
FHA_PART_A_CLAIM_PAID_DATE
 
 Date HUD Disbursed Part A Claim Payment
     
MM/DD/YYYY
FHA_PART_A_CLAIM_PAID_AMT
 
 Amount HUD Paid on Part A Claim
 
2
 
No commas(,) or dollar signs ($)
FHA_PART_B_CLAIM_FILED_DATE
 
  Date FHA Part B Claim Was Filed With HUD
     
MM/DD/YYYY
FHA_PART_B_CLAIM_AMT
 
  Amount of FHA Part B Claim Filed
 
2
 
No commas(,) or dollar signs ($)
FHA_PART_B_CLAIM_PAID_DATE
 
   Date HUD Disbursed Part B Claim Payment
     
MM/DD/YYYY
FHA_PART_B_CLAIM_PAID_AMT
 
 Amount HUD Paid on Part B Claim
 
2
 
No commas(,) or dollar signs ($)
VA_CLAIM_FILED_DATE
 
 Date VA Claim Was Filed With the Veterans Admin
     
MM/DD/YYYY
VA_CLAIM_PAID_DATE
 
 Date Veterans Admin. Disbursed VA Claim Payment
     
MM/DD/YYYY
VA_CLAIM_PAID_AMT
 
 Amount Veterans Admin. Paid on VA Claim
 
2
 
No commas(,) or dollar signs ($)

 
MOTION_FOR_RELIEF_DATE
 
The date the Motion for Relief was filed
 
10
 
MM/DD/YYYY
FRCLSR_BID_AMT
 
The foreclosure sale bid amount
 
11
 
No commas(,) or dollar signs ($)
FRCLSR_SALE_TYPE
 
The foreclosure sales results: REO, Third Party, Conveyance to HUD/VA
 
 
 
 
REO_PROCEEDS
 
The net proceeds from the sale of the REO property.
 
 
 
No commas(,) or dollar signs ($)
BPO_DATE
 
The date the BPO was done.
 
 
 
 
CURRENT_FICO
 
The current FICO score
 
 
 
 
HAZARD_CLAIM_FILED_DATE
 
The date the Hazard Claim was filed with the Hazard Insurance Company.
 
10
 
MM/DD/YYYY
HAZARD_CLAIM_AMT
 
The amount of the Hazard Insurance Claim filed.
 
11
 
No commas(,) or dollar signs ($)

 

--------------------------------------------------------------------------------

 
HAZARD_CLAIM_PAID_DATE
 
The date the Hazard Insurance Company disbursed the claim payment.
 
10
 
MM/DD/YYYY
HAZARD_CLAIM_PAID_AMT
 
The amount the Hazard Insurance Company paid on the claim.
 
11
 
No commas(,) or dollar signs ($)
ACTION_CODE
 
Indicates loan status
     
Number
NOD_DATE
 
 
 
 
 
MM/DD/YYYY
NOI_DATE
 
 
 
 
 
MM/DD/YYYY
ACTUAL_PAYMENT_PLAN_START_DATE
 
 
 
 
 
MM/DD/YYYY
ACTUAL_PAYMENT_ PLAN_END_DATE
 
 
 
 
 
 
ACTUAL_REO_START_DATE
 
 
 
 
 
MM/DD/YYYY
REO_SALES_PRICE
 
 
 
 
 
Number
REALIZED_LOSS/GAIN
 
As defined in the Servicing Agreement
 
 
 
Number

 
Exhibit 2: Standard File Codes - Delinquency Reporting
 
The Loss Mit Type field should show the approved Loss Mitigation Code as
follows:
 

 
·
ASUM- Approved Assumption

 

 
·
BAP-  Borrower Assistance Program

 

 
·
CO-  Charge Off

 

 
·
DIL-  Deed-in-Lieu

 

 
·
FFA-  Formal Forbearance Agreement

 

 
·
MOD-  Loan Modification

 

 
·
PRE-   Pre-Sale

 

 
·
SS- Short Sale

 

 
·
MISC-  Anything else approved by the PMI or Pool Insurer

 
NOTE: Wells Fargo Bank will accept alternative Loss Mitigation Types to those
above, provided that they are consistent with industry standards. If Loss
Mitigation Types other than those above are used, the Servicer must supply Wells
Fargo Bank with a description of each of the Loss Mitigation Types prior to
sending the file.
 
The Occupant Code field should show the current status of the property code as
follows:
 

 
·
Mortgagor

 

 
·
Tenant

 

 
·
Unknown

 

 
·
Vacant

 
The Property Condition field should show the last reported condition of the
property as follows:
 

·
Damaged

 

·
Excellent

 

·
Fair

 

·
Gone

 

·
Good

 

·
Poor

 

·
Special Hazard

 

·
Unknown

--------------------------------------------------------------------------------

 
 
Exhibit 2: Standard File Codes - Delinquency Reporting, Continued
 
The FNMA Delinquent Reason Code field should show the Reason for Delinquency as
follows:
 
Delinquency Code
 
Delinquency Description
001
 
FNMA-Death of principal mortgagor
002
 
FNMA-Illness of principal mortgagor
003
 
FNMA-Illness of mortgagor’s family member
004
 
FNMA-Death of mortgagor’s family member
005
 
FNMA-Marital difficulties
006
 
FNMA-Curtailment of income
007
 
FNMA-Excessive Obligation
008
 
FNMA-Abandonment of property
009
 
FNMA-Distant employee transfer
011
 
FNMA-Property problem
012
 
FNMA-Inability to sell property
013
 
FNMA-Inability to rent property
014
 
FNMA-Military Service
015
 
FNMA-Other
016
 
FNMA-Unemployment
017
 
FNMA-Business failure
019
 
FNMA-Casualty loss
022
 
FNMA-Energy environment costs
023
 
FNMA-Servicing problems
026
 
FNMA-Payment adjustment
027
 
FNMA-Payment dispute
029
 
FNMA-Transfer of ownership pending
030
 
FNMA-Fraud
031
 
FNMA-Unable to contact borrower
INC
 
FNMA-Incarceration

 

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Exhibit 2: Standard File Codes - Delinquency Reporting, Continued

 
The FNMA Delinquent Status Code field should show the Status of Default as
follows:

Status Code
 
Status Description
09
 
Forbearance
17
 
Pre-foreclosure Sale Closing Plan Accepted
24
 
Government Seizure
26
 
Refinance
27
 
Assumption
28
 
Modification
29
 
Charge-Off
30
 
Third Party Sale
31
 
Probate
32
 
Military Indulgence
43
 
Foreclosure Started
44
 
Deed-in-Lieu Started
49
 
Assignment Completed
61
 
Second Lien Considerations
62
 
Veteran’s Affairs-No Bid
63
 
Veteran’s Affairs-Refund
64
 
Veteran’s Affairs-Buydown
65
 
Chapter 7 Bankruptcy
66
 
Chapter 11 Bankruptcy
67
 
Chapter 13 Bankruptcy

 

--------------------------------------------------------------------------------

Exhibit 12C: Calculation of Realized Loss/Gain Form 332- Instruction Sheet
 
NOTE: Do not net or combine items. Show all expenses individually and all
credits as separate line items. Claim packages are due on the remittance report
date. Late submissions may result in claims not being passed until the following
month. The Servicer is responsible to remit all funds pending loss approval and
/or resolution of any disputed items.
 
(i) _________________________________________________________________
 
(ii) ________________________________________________________________ The
numbers on the 332 form correspond with the numbers listed below.
 
Liquidation and Acquisition Expenses:
 
1.            The Actual Unpaid Principal Balance of the Mortgage Loan. For
documentation, an Amortization Schedule from date of default through liquidation
breaking out the net interest and servicing fees advanced is required.
 
2.            The Total Interest Due less the aggregate amount of servicing fee
that would have been earned if all delinquent payments had been made as agreed.
For documentation, an Amortization Schedule from date of default through
liquidation breaking out the net interest and servicing fees advanced is
required.
 
3.            Accrued Servicing Fees based upon the Scheduled Principal Balance
of the Mortgage Loan as calculated on a monthly basis. For documentation, an
Amortization Schedule from date of default through liquidation breaking out the
net interest and servicing fees advanced is required.
 
4-12.       Complete as applicable. Required documentation:
 
*      For taxes and insurance advances - see page 2 of 332 form - breakdown
required showing period of coverage, base tax, interest, penalty. Advances prior
to default require evidence of servicer efforts to recover advances.
 
*      For escrow advances - complete payment history
 
(to calculate advances from last positive escrow balance forward)
 
*      Other expenses -  copies of corporate advance history showing all
payments
 
*      REO repairs > $1500 require explanation
 
*      REO repairs >$3000 require evidence of at least 2 bids.
 
*      Short Sale or Charge Off require P&L supporting the decision and WFB’s
approved Officer Certificate 
 
*      Unusual or extraordinary items may require further documentation.
 
13.           The total of lines 1 through 12.
 
(iv) Credits:
 
14-21.      Complete as applicable. Required documentation:
 
*       Copy of the HUD 1 from the REO sale. If a 3rd Party Sale, bid
instructions and Escrow Agent / Attorney  Letter of Proceeds Breakdown.
 
*       Copy of EOB for any MI or gov't guarantee
 
*       All other credits need to be clearly defined on the 332 form            
 

 
22.
The total of lines 14 through 21.

 
Please Note: For HUD/VA loans, use line (18a) for Part A/Initial proceeds and
line (18b) for Part B/Supplemental proceeds.
 

--------------------------------------------------------------------------------

 
Total Realized Loss (or Amount of Any Gain)
 
23.         The total derived from subtracting line 22 from 13. If the amount
represents a realized gain, show the amount in parenthesis ( ).

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Exhibit 3A: Calculation of Realized Loss/Gain Form 332

 
Prepared by: __________________   Date: _______________
 
Phone: ______________________  Email Address:_____________________
 

         
Servicer Loan No.
 
 
Servicer Name
 
Servicer Address

 
WELLS FARGO BANK, N.A. Loan No._____________________________
 
Borrower's Name: _________________________________________________________
Property Address: _________________________________________________________
 
Liquidation Type: REO Sale              3rd Party Sale        Short
Sale                        Charge Off 
 
Was this loan granted a Bankruptcy deficiency or cramdown  Yes           No
 
If “Yes”, provide deficiency or cramdown amount _______________________________
 
Liquidation and Acquisition Expenses:

(1) Actual Unpaid Principal Balance of Mortgage Loan
 
$
______________
(1)
(2) Interest accrued at Net Rate
   
______________
(2)
(3) Accrued Servicing Fees
   
______________
(3)
(4) Attorney's Fees
   
______________
(4)
(5) Taxes (see page 2)
   
______________
(5)
(6) Property Maintenance
   
______________
(6)
(7) MI/Hazard Insurance Premiums (see page 2)
   
______________
(7)
(8) Utility Expenses
   
______________
(8)
(9) Appraisal/BPO
   
______________
(9)
(10) Property Inspections
   
______________
(10)
(11) FC Costs/Other Legal Expenses
   
______________
(11)
(12) Other (itemize)
   
______________
(12)
Cash for Keys__________________________
   
______________
(12)
HOA/Condo Fees_______________________
   
______________
(12)
______________________________________
   
______________
(12)
         
Total Expenses
 
$
______________
(13)
Credits:
   
 
 
(14) Escrow Balance
 
$
______________
(14)
(15) HIP Refund
   
______________
(15)
(16) Rental Receipts
   
______________
(16)
(17) Hazard Loss Proceeds
   
______________
(17)
(18) Primary Mortgage Insurance / Gov’t Insurance
   
______________
(18a) HUD Part A
   
______________
(18b) HUD Part B
(19) Pool Insurance Proceeds
   
______________
(19)
(20) Proceeds from Sale of Acquired Property
   
______________
(20)
(21) Other (itemize)
   
______________
(21)
______________________________________
   
______________
(21)
         
Total Credits
   
______________
(22)
Total Realized Loss (or Amount of Gain)
 
$
______________
(23)

 

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Escrow Disbursement Detail

Type
(Tax /Ins.)
 
Date Paid
 
Period of Coverage
 
Total Paid
 
Base Amount
 
Penalties
 
Interest
                                                                               
                                                                               
                                               

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MORGAN - SEQUOIA TO TRUSTEE
 
ASSIGNMENT, ASSUMPTION AND RECOGNITION AGREEMENT
 
For
Master Servicing Agreement
 
THIS ASSIGNMENT, ASSUMPTION AND RECOGNITION AGREEMENT, dated as of July 27, 2007
(“Assignment No. II”), is entered into among Sequoia Residential Funding, Inc.
(the “Assignor”), Morgan Stanley Credit Corporation, as the servicer (the
“Servicer”), and HSBC Bank USA, National Association (“HSBC Bank”) as Trustee
under a Pooling and Servicing Agreement dated as of July 1, 2007 (the “Pooling
and Servicing Agreement”), among the Assignor, as Depositor, HSBC Bank (in such
Trustee capacity, the “Assignee”) and Wells Fargo Bank, N. A., as Master
Servicer and Securities Administrator.
 
RECITALS
 
WHEREAS, RWT Holdings, Inc. (“RWT”) and the Servicer have entered into a certain
Master Servicing Agreement, dated as of November 1, 2006 (as amended or modified
to the date hereof, the “Master Servicing Agreement”), and the Servicer is
currently servicing certain mortgage loans (the “Mortgage Loans”) under the
Master Servicing Agreement; and
 
WHEREAS, RWT has previously sold, assigned and transferred all of its right,
title and interest in certain of the Mortgage Loans (the “Specified Mortgage
Loans”) which are listed on the mortgage loan schedule attached as Exhibit I
hereto (the “Specified Mortgage Loan Schedule”) and its rights under the Master
Servicing Agreement with respect to the Specified Mortgage Loans to Assignor;
and
 
WHEREAS, the Assignor has agreed to sell, assign and transfer to Assignee all of
its right, title and interest in the Specified Mortgage Loans and its rights
under the Master Servicing Agreement with respect to the Specified Mortgage
Loans; and
 
WHEREAS, the parties hereto have agreed that the Specified Mortgage Loans shall
be subject to the terms of this Assignment No. II.
 
NOW, THEREFORE, in consideration of the mutual promises contained herein and
other good and valuable consideration (the receipt and sufficiency of which are
hereby acknowledged), the parties agree as follows:
 
1. Assignment and Assumption.

(a) Effective on and as of the date hereof, the Assignor hereby pledges, assigns
and transfers to the Assignee all of its right, title and interest in the
Specified Mortgage Loans and all of its rights (but none of the Owner’s
obligations) provided under the Master Servicing Agreement to the extent
relating to the Specified Mortgage Loans, the Assignee hereby accepts such
assignment from the Assignor, and the Servicer hereby acknowledges such
assignment and assumption.
 
4

--------------------------------------------------------------------------------

(b) Effective on and as of the date hereof, the Assignor represents and warrants
to the Assignee that the Assignor has not taken any action that would serve to
impair or encumber the Assignee’s interest in the Specified Mortgage Loans since
the date of the Assignor’s acquisition of the Specified Mortgage Loans.
 
2. Recognition of the Assignee.
 
From and after the date hereof, the Servicer shall recognize the Assignee as the
holder of the rights and benefits of the Owner with respect to the Specified
Mortgage Loans and the Servicer will service the Specified Mortgage Loans for
the Assignee as if the Assignee and the Servicer had entered into a separate
servicing agreement for the servicing of the Specified Mortgage Loans in the
form of the Master Servicing Agreement (as modified by Appendix A hereto) (the
“Successor MSA”) with the Assignee as the Owner thereunder, which Successor MSA
is incorporated in and made a part of this Assignment No. II. It is the
intention of the parties hereto that the Successor MSA will be treated as a
separate and distinct servicing agreement between the parties hereto to the
extent of the Specified Mortgage Loans and shall be binding upon and for the
benefit of the respective successors and assigns of the parties hereto.
 
3. Assignor’s Continuing Rights and Responsibilities.
 
Notwithstanding Sections 1 and 2 above, the parties hereto agree that the
Assignor rather than the Assignee shall have the ongoing rights and
responsibilities of the Owner under the following sections of the Master
Servicing Agreement:
 
Section
 
Matter
     
4.01
 
(a) Role of the Servicer.
     
7.05, 1st¶ and
2nd¶
 
(b) Owner’s Right to Examine the Servicer Records.
     
8.01
 
(c) The Servicer Shall Provide Information as Reasonably
Required.
     
9.01(a) and (b)
 
(d) Indemnification; Third-Party Claims.
     
9.03
 
(e) Limitation on Liability of Servicer and Others.
     
12.03
 
(f) Assignments.
     
12.13(b)
 
(g) Non-Solicitation.

5

--------------------------------------------------------------------------------

 
In addition, the Servicer agrees to furnish to the Assignor and Master Servicer
copies of reports, notices, statements and other communications required to be
delivered by the Servicer pursuant to any of the sections of the Master
Servicing Agreement referred to above and under the following sections, at the
times therein specified:
 
Section
         
4.11, 5th and
6th¶’s
 
(a) Title Management and Disposition of REO Property.
     
6.02
 
(b) Statements to Owner.
     
6.03(d)
 
(c) Monthly Advances by the Servicer.
     
13.04
 
(d) Annual Statement as to Compliance
     
13.05
 
(e) Report on Assessment of Compliance and Attestation
     

4. Successor MSA.
 
The Successor MSA includes the Master Servicing Agreement as modified by
Appendix A hereto and is made a part of this Assignment No. II.
 
5. Representations and Warranties.
 
(a) Each of the parties hereto represents and warrants that it is duly and
legally authorized to enter into this Assignment No. II.
 
(b) Each of the parties hereto represents and warrants that this Assignment No.
II has been duly authorized, executed and delivered by it and (assuming due
authorization, execution and delivery thereof by each of the other parties
hereto) constitutes its legal, valid and binding obligation, enforceable against
it in accordance with its terms, except as such enforcement may be limited by
bankruptcy, insolvency, reorganization or other similar laws affecting the
enforcement of creditors’ rights generally and by general equitable principles
(regardless of whether such enforcement is considered in a proceeding in equity
or at law).
 
6

--------------------------------------------------------------------------------

 
6. Continuing Effect.
 
Except as contemplated hereby, the Master Servicing Agreement shall remain in
full force and effect in accordance with its terms.
 
7. Governing Law.
 
This Assignment No. II and the rights and obligations hereunder shall be
governed by and construed in accordance with the internal laws of the State of
Illinois.
 
7

--------------------------------------------------------------------------------

 
8. Notices.
 
Any notices or other communications permitted or required under the Master
Servicing Agreement to be made to the Assignor and Assignee shall be made in
accordance with the terms of the Master Servicing Agreement and shall be sent to
the Assignor and Assignee as follows:
 
Sequoia Residential Funding, Inc.
One Belvedere Place, Suite 330
Mill Valley, CA 94941
 
HSBC Bank USA, National Association
452 Fifth Avenue
New York, NY 10018
Attn: Corporate Trust & Loan Agency
 
or to such other address as may hereafter be furnished by the Assignor or
Assignee to the other parties in accordance with the provisions of the Master
Servicing Agreement.
 
9. Counterparts.
 
This Assignment No. II may be executed in 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.
 
10. Definitions.
 
Any capitalized term used but not defined in this Assignment No. II has the same
meaning as in the Master Servicing Agreement or the Master Mortgage Loan
Purchase Agreement referred to therein.
 
11. Master Servicer.
 
The Servicer hereby acknowledges that the Assignee has appointed Wells Fargo
Bank, N. A. (the “Master Servicer”) to act as master servicer and securities
administrator under the Pooling and Servicing Agreement and hereby agrees to
treat all inquiries, instructions, authorizations and other communications from
the Master Servicer as if the same had been received from the Assignee. The
Master Servicer, acting on behalf of the Assignee, shall have the rights of the
Assignee as the Owner under the Successor MSA to enforce the obligations of the
Servicer thereunder. Any notices or other communications permitted or required
under the Master Servicing Agreement to be made to the Assignee shall be made in
accordance with the terms of the Master Servicing Agreement and shall be sent to
the Master Servicer at the following address:
 
Wells Fargo Bank, N. A.
P.O. Box 98
Columbia, Maryland 21046
(or, for overnight deliveries, 9062 Old Annapolis Road, Columbia, Maryland
21045)
Attention: Sequoia Mortgage Trust 2007-3
 
8

--------------------------------------------------------------------------------

or to such other address as may hereafter be furnished by the Master Servicer to
Servicer. Any such notices or other communications permitted or required under
the Master Servicing Agreement may be delivered in electronic format unless
manual signature is required in which case a hard copy of such report or
communication shall be required.
 
The Servicer further acknowledges that the Assignor has engaged the Master
Servicer to provide certain default administration and that the Master Servicer,
acting as agent of the Assignor, may exercise any of the rights of the Owner
retained by the Assignor in Section 3 above.

The Servicer shall make all distributions under the Successor MSA, as they
relate to the Specified Mortgage Loans, to the Master Servicer by wire transfer
of immediately funds to:

 
Wells Fargo Bank, NA
San Francisco, CA
ABA# 121-000-248
Acct# 3970771416
Acct Name: SAS Clearing
FFC: 53164600
 
[remainder of page intentionally left blank]
 
9

--------------------------------------------------------------------------------

 
IN WITNESS WHEREOF, the parties hereto have executed this Assignment No. II the
day and year first above written.
 

       
ASSIGNOR:
SEQUOIA RESIDENTIAL FUNDING, INC.
 
   
   
  By:      

--------------------------------------------------------------------------------

    Name:       

--------------------------------------------------------------------------------

    Title:       

--------------------------------------------------------------------------------

 

 

       
ASSIGNEE:
HSBC BANK USA, NATIONAL
ASSOCIATION
 
   
   
  By:      

--------------------------------------------------------------------------------

    Name:       

--------------------------------------------------------------------------------

    Title:       

--------------------------------------------------------------------------------

 

 

       
SERVICER:
MORGAN STANLEY CREDIT CORPORATION
 
   
   
  By:      

--------------------------------------------------------------------------------

    Name:       

--------------------------------------------------------------------------------

    Title:       

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10

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EXHIBIT I

--------------------------------------------------------------------------------

 
APPENDIX A
 
MASTER SERVICING AGREEMENT

 
1. The definition of Custodial Account is revised to read as follows:
 
“ ‘Custodial Account’: The separate trust account or accounts created and
maintained pursuant to Section 4.04 of this Agreement which shall be entitled
“Morgan Stanley Credit Corporation, in trust for ‘HSBC Bank USA, National
Association, as Trustee, under the Pooling and Servicing Agreement dated as of
July 1, 2007,’ or such other title as is requested by the Owner.”
 
2. The following is added to the end of the definition of Eligible Account:

 
“In addition, the Servicer covenants that within 30 days of any downgrade of a
custodial account provider, Servicer will transfer the Custodial Account funds
to another institution that has one of the two highest short-term ratings
of S&P.”

 
3.  The definition of Escrow Account is revised to read as follows:

 
“ ‘Escrow Account’: The separate trust account or accounts created and
maintained pursuant to Section 4.06 on which shall be entitled “Morgan Stanley
Credit Corporation, as Servicer, in trust for ‘HSBC Bank USA, National
Association, as Trustee, under the Pooling and Servicing Agreement dated as of
July 1, 2007,’ or such other title as is requested by Owner.”

 
4. Section 4.18, second sentence is revised to read as follows:

 
“All such Permitted Investments shall be registered in the name of the Servicer
or its nominee, and held in trust for HSBC Bank USA, National Association, as
Trustee, under the Pooling and Servicing Agreement dated July 1, 2007.”

 
5. The following is added to the end of Section 4.18:
 
“Notwithstanding anything to the contrary in this Agreement, for all Permitted
Investments rated at least "A1/A+"(short/long) that have terms greater than 60
days, in the event of a downgrade of such Permitted Investment below "A1" (or
"A+" if no short term rating) Servicer agrees to remove such Permitted
Investment within 60 days of such downgrade. Servicer acknowledges and agrees
that Servicer shall bear any losses incurred with respect to removal of such
Permitted Investment following such a downgrade and that any losses shall be
immediately deposited by the Servicer in the Custodial Account, as appropriate,
out of the Servicer’s own funds, with no right to reimbursement therefore.”
 

--------------------------------------------------------------------------------

 
6. Notwithstanding any provision in the Agreement to the contrary, the Servicer
agrees that it will report to the Master Servicer on a monthly basis on the date
specified therein using the formats attached hereto as Exhibit 1.

 
7. The third full paragraph of Section 6.01 is hereby deleted in its entirety
and replaced by the following (second deleted in two places before Business
Day):

 
“With respect to any remittance received by Owner on or after the Business Day
following the Business Day on which such payment was due, the Servicer shall pay
to Owner interest on any such late payment at an annual rate equal to the rate
of interest as is publicly announced from time to time at its principal office
by Chase Manhattan Bank, N. A., New York, New York, as its “prime” lending rate
(which is not necessarily its lowest rate) (or if Chase Manhattan Bank, N.A.
shall cease to exist or to announce such rate, then such rate shall be a
reasonably comparable rate determined by Servicer in its reasonable discretion),
adjusted as of the date of each change, plus one (1) percentage point, but in no
event greater than the maximum amount permitted by applicable law. Such interest
shall be paid by the Servicer to Owner on the date such late payment is made and
shall cover the period commencing with the day following such Business Day and
ending with the Business Day on which such payment is made, both inclusive. Such
interest shall be remitted along with such late payment. The payment by the
Servicer of any such interest shall not be deemed an extension of time for
Payment or a waiver of any Event of Default by the Servicer.”
 
8. Section 10.01 is revised to add an “or” after 10.01(vi) and then to add the
following:
 
“failure on the part of the Servicer to comply with Article XIII after the cure
periods provided in Section 13.07.”
 
9. Section 13.03 is revised to add the following after 13.03(d)(ii):
 
“(iii) information regarding any Mortgage Loan changes (such as additions,
substitutions, or repurchases), and any material changes in origination,
underwriting or other criteria for acquisitions or selection of the Mortgage
Loans (Item 1121(a)(14) of Regulation AB).”
 
10. Section 13.05 is revised to delete the first line of 13.05(iv), so that
13.05(iv) reads:
 
“deliver, and cause each Subservicer and Subcontractor as described in clause
(iii) to provide, to the Owner, such Master Servicer and such Depositor and any
other Person that will be responsible for signing the certification (a “Sarbanes
Certification”) required by Rules 13a-14(d) and 15d-14(d) under the Exchange Act
(pursuant to Section 302 of the Sarbanes-Oxley Act of 2002) on behalf of an
asset-backed issuer with respect to a Securitization Transaction a certification
in the form attached hereto as Exhibit D.”
 

--------------------------------------------------------------------------------

 
11. The first paragraph under Section 13.07(b)(ii) is revised to read as follows
(addition is in italics):
 
“(ii) Any failure by the Servicer, any Subservicer or any Subcontractor to
deliver any information, report, certification or accountants’ letter when and
as required under Section 13.04 or 13.05, including (except as provided below)
any failure by the Servicer to identify pursuant to Section 13.06(b) any
Subcontractor “participating in the servicing function” within the meaning of
Item 1122 of Regulation AB, which continues unremedied for ten calendar days
after the date on which such information, report, certification or accountants’
letter was required to be delivered shall constitute an Event of Default with
respect to the Servicer under this Agreement and any applicable Reconstitution
Agreement, and shall entitle the Owner, the Master Servicer or Depositor, as
applicable, in its sole discretion to terminate the rights and obligations of
the Servicer as servicer under this Agreement and/or any applicable
Reconstitution Agreement without payment (notwithstanding anything in this
Agreement to the contrary) of any compensation to the Servicer (and if the
Servicer is servicing any of the Mortgage Loans in a Securitization Transaction,
appoint a successor servicer reasonably acceptable to any Master Servicer for
such Securitization Transaction); provided that to the extent that any provision
of this Agreement and/or any applicable Reconstitution Agreement expressly
provides for the survival of certain rights or obligations following termination
of the Servicer as servicer, such provision shall be given effect.”
 

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EXHIBIT 1
12A. FORM OF MONTHLY REPORTS

   
Standard Loan Level File Layout - Master Servicing
 
 
 
 
 
 
       
 
 
 
 
 
Exhibit 1:  Layout
     
 
 
 
 
 
Column Name
 
Description
 
Decimal
 
Format Comment
 
Max Size
Each file requires the following fields:
 
 
 
 
 
 
SER_INVESTOR_NBR
 
A value assigned by the Servicer to define a group of loans.
 
 
 
Text up to 20 digits
 
20
LOAN_NBR
 
A unique identifier assigned to each loan by the investor.
 
 
 
Text up to 10 digits
 
10
SERVICER_LOAN_NBR
 
A unique number assigned to a loan by the Servicer. This may be different than
the LOAN_NBR.
 
 
 
Text up to 10 digits
 
10
SCHED_PAY_AMT
 
Scheduled monthly principal and scheduled interest payment that a borrower is
expected to pay, P&I constant.
 
2
 
No commas(,) or dollar signs ($)
 
11
NOTE_INT_RATE
 
The loan interest rate as reported by the Servicer.
 
4
 
Max length of 6
 
6
NET_INT_RATE
 
The loan gross interest rate less the service fee rate as reported by the
Servicer.
 
4
 
Max length of 6
 
6
SERV_FEE_RATE
 
The servicer's fee rate for a loan as reported by the Servicer.
 
4
 
Max length of 6
 
6
SERV_FEE_AMT
 
The servicer's fee amount for a loan as reported by the Servicer.
 
2
 
No commas(,) or dollar signs ($)
 
11
NEW_PAY_AMT
 
The new loan payment amount as reported by the Servicer.
 
2
 
No commas(,) or dollar signs ($)
 
11
NEW_LOAN_RATE
 
The new loan rate as reported by the Servicer.
 
4
 
Max length of 6
 
6
ARM_INDEX_RATE
 
The index the Servicer is using to calculate a forecasted rate.
 
4
 
Max length of 6
 
6
ACTL_BEG_PRIN_BAL
 
The borrower's actual principal balance at the beginning of the processing
cycle.
 
2
 
No commas(,) or dollar signs ($)
 
11
ACTL_END_PRIN_BAL
 
The borrower's actual principal balance at the end of the processing cycle.
 
2
 
No commas(,) or dollar signs ($)
 
11
BORR_NEXT_PAY_DUE_DATE
 
The date at the end of processing cycle that the borrower's next payment is due
to the Servicer, as reported by Servicer.
 
 
 
MM/DD/YYYY
 
10
SERV_CURT_AMT_1
 
The first curtailment amount to be applied.
 
2
 
No commas(,) or dollar signs ($)
 
11
 SERV_CURT_DATE_1  
The curtailment date associated with the first curtailment amount.
     
MM/DD/YYYY
   
CURT_ADJ_ AMT_1
 
The curtailment interest on the first curtailment amount, if applicable.
 
2
 
No commas(,) or dollar signs ($)
 
11
SERV_CURT_AMT_2
 
The second curtailment amount to be applied.
 
2
 
No commas(,) or dollar signs ($)
 
11
SERV_CURT_DATE_2
 
The curtailment date associated with the second curtailment amount.
 
 
 
MM/DD/YYYY
 
10
CURT_ADJ_ AMT_2
 
The curtailment interest on the second curtailment amount, if applicable.
 
2
 
No commas(,) or dollar signs ($)
 
11

 

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Exhibit 1: Continued
 
Standard Loan Level File Layout
 
 
 
 
 
 
Column Name
 
Description
 
Decimal
 
Format Comment
 
Max Size
SERV_CURT_AMT_3
 
The third curtailment amount to be applied.
 
2
 
No commas(,) or dollar signs ($)
 
11
SERV_CURT_DATE_3
 
The curtailment date associated with the third curtailment amount.
 
 
 
MM/DD/YYYY
 
10
CURT_ADJ_AMT_3
 
The curtailment interest on the third curtailment amount, if applicable.
 
2
 
No commas(,) or dollar signs ($)
 
11
PIF_AMT
 
The loan "paid in full" amount as reported by the Servicer.
 
2
 
No commas(,) or dollar signs ($)
 
11
PIF_DATE
 
The paid in full date as reported by the Servicer.
 
 
 
MM/DD/YYYY
 
10
ACTION_CODE
 
The standard FNMA numeric code used to indicate the default/delinquent status of
a particular loan.
 
 
 
Action Code Key: 15=Bankruptcy, 30=Foreclosure, , 60=PIF, 63=Substitution,
65=Repurchase,70=REO
 
2
INT_ADJ_AMT
 
The amount of the interest adjustment as reported by the Servicer.
 
2
 
No commas(,) or dollar signs ($)
 
11
SOLDIER_SAILOR_ADJ_AMT
 
The Soldier and Sailor Adjustment amount, if applicable.
 
2
 
No commas(,) or dollar signs ($)
 
11
NON_ADV_LOAN_AMT
 
The Non Recoverable Loan Amount, if applicable.
 
2
 
No commas(,) or dollar signs ($)
 
11
LOAN_LOSS_AMT
 
The amount the Servicer is passing as a loss, if applicable.
 
2
 
No commas(,) or dollar signs ($)
 
11
Plus the following applicable fields:
 
 
 
 
 
 
SCHED_BEG_PRIN_BAL
 
The scheduled outstanding principal amount due at the beginning of the cycle
date to be passed through to investors.
 
2
 
No commas(,) or dollar signs ($)
 
11
SCHED_END_PRIN_BAL
 
The scheduled principal balance due to investors at the end of a processing
cycle.
 
2
 
No commas(,) or dollar signs ($)
 
11
SCHED_PRIN_AMT
 
The scheduled principal amount as reported by the Servicer for the current cycle
-- only applicable for Scheduled/Scheduled Loans.
 
2
 
No commas(,) or dollar signs ($)
 
11
SCHED_NET_INT
 
The scheduled gross interest amount less the service fee amount for the current
cycle as reported by the Servicer -- only applicable for Scheduled/Scheduled
Loans.
 
2
 
No commas(,) or dollar signs ($)
 
11
ACTL_PRIN_AMT
 
The actual principal amount collected by the Servicer for the current reporting
cycle -- only applicable for Actual/Actual Loans.
 
2
 
No commas(,) or dollar signs ($)
 
11
ACTL_NET_INT
 
The actual gross interest amount less the service fee amount for the current
reporting cycle as reported by the Servicer -- only applicable for Actual/Actual
Loans.
 
2
 
No commas(,) or dollar signs ($)
 
11
PREPAY_PENALTY_ AMT
 
The penalty amount received when a borrower prepays on his loan as reported by
the Servicer.
 
2
 
No commas(,) or dollar signs ($)
 
11
PREPAY_PENALTY_ WAIVED
 
The prepayment penalty amount for the loan waived by the servicer.
 
2
 
No commas(,) or dollar signs ($)
 
11

 

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Exhibit 1: Continued
 
Standard Loan Level File Layout
 
 
 
 
 
 
Column Name
 
Description
 
Decimal
 
Format Comment
 
Max Size
MOD_DATE
 
The Effective Payment Date of the Modification for the loan.
 
 
 
MM/DD/YYYY
 
10
MOD_TYPE
 
The Modification Type.
 
 
 
Varchar - value can be alpha or numeric
 
30
DELINQ_P&I_ADVANCE_AMT
 
The current outstanding principal and interest advances made by Servicer.
 
2
 
No commas(,) or dollar signs ($)
 
11
BREACH_FLAG
 
Flag to indicate if the repurchase of a loan is due to a breach of
Representations and Warranties
     
Y=Breach
N=NO Breach
Let blank if N/A
 
1

 

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Exhibit 12B : Standard File Layout - Delinquency Reporting

  *The column/header names in bold are the minimum fields Wells Fargo must
receive from every Servicer

Column/Header Name
 
Description
 
Decimal
 
Format Comment
SERVICER_LOAN_NBR
 
A unique number assigned to a loan by the Servicer. This may be different than
the LOAN_NBR
     
 
LOAN_NBR
 
A unique identifier assigned to each loan by the originator.
     
 
CLIENT_NBR
 
Servicer Client Number
       
SERV_INVESTOR_NBR
 
Contains a unique number as assigned by an external servicer to identify a group
of loans in their system.
     
 
BORROWER_FIRST_NAME
 
First Name of the Borrower.
       
BORROWER_LAST_NAME
 
Last name of the borrower.
       
PROP_ADDRESS
 
Street Name and Number of Property
     
 
PROP_STATE
 
The state where the property located.
     
 
PROP_ZIP
 
Zip code where the property is located.
     
 
BORR_NEXT_PAY_DUE_DATE
 
The date that the borrower's next payment is due to the servicer at the end of
processing cycle, as reported by Servicer.
     
MM/DD/YYYY
LOAN_TYPE
 
Loan Type (i.e. FHA, VA, Conv)
     
 
BANKRUPTCY_FILED_DATE
 
The date a particular bankruptcy claim was filed.
     
MM/DD/YYYY
BANKRUPTCY_CHAPTER_CODE
 
The chapter under which the bankruptcy was filed.
     
 
BANKRUPTCY_CASE_NBR
 
The case number assigned by the court to the bankruptcy filing.
     
 
POST_PETITION_DUE_DATE
 
The payment due date once the bankruptcy has been approved by the courts
     
MM/DD/YYYY
BANKRUPTCY_DCHRG_DISM_DATE
 
The Date The Loan Is Removed From Bankruptcy. Either by Dismissal, Discharged
and/or a Motion For Relief Was Granted.
     
MM/DD/YYYY
LOSS_MIT_APPR_DATE
 
The Date The Loss Mitigation Was Approved By The Servicer
     
MM/DD/YYYY
LOSS_MIT_TYPE
 
The Type Of Loss Mitigation Approved For A Loan Such As;
       
LOSS_MIT_EST_COMP_DATE
 
The Date The Loss Mitigation /Plan Is Scheduled To End/Close
     
MM/DD/YYYY
LOSS_MIT_ACT_COMP_DATE
 
The Date The Loss Mitigation Is Actually Completed
     
MM/DD/YYYY
FRCLSR_APPROVED_DATE
 
The date DA Admin sends a letter to the servicer with instructions to begin
foreclosure proceedings.
     
MM/DD/YYYY
ATTORNEY_REFERRAL_DATE
 
Date File Was Referred To Attorney to Pursue Foreclosure
     
MM/DD/YYYY
FIRST_LEGAL_DATE
 
Notice of 1st legal filed by an Attorney in a Foreclosure Action
     
MM/DD/YYYY
FRCLSR_SALE_EXPECTED_DATE
 
The date by which a foreclosure sale is expected to occur.
     
MM/DD/YYYY
FRCLSR_SALE_DATE
 
The actual date of the foreclosure sale.
     
MM/DD/YYYY
FRCLSR_SALE_AMT
 
The amount a property sold for at the foreclosure sale.
 
2
 
No commas(,) or dollar signs ($)
EVICTION_START_DATE
 
The date the servicer initiates eviction of the borrower.
     
MM/DD/YYYY
EVICTION_COMPLETED_DATE
 
The date the court revokes legal possession of the property from the borrower.
     
MM/DD/YYYY
LIST_PRICE
 
The price at which an REO property is marketed.
 
2
 
No commas(,) or dollar signs ($)
LIST_DATE
 
The date an REO property is listed at a particular price.
     
MM/DD/YYYY
OFFER_AMT
 
The dollar value of an offer for an REO property.
 
2
 
No commas(,) or dollar signs ($)
OFFER_DATE_TIME
 
The date an offer is received by DA Admin or by the Servicer.
     
MM/DD/YYYY
REO_CLOSING_DATE
 
The date the REO sale of the property is scheduled to close.
     
MM/DD/YYYY
REO_ACTUAL_CLOSING_DATE
 
Actual Date Of REO Sale
     
MM/DD/YYYY
OCCUPANT_CODE
 
Classification of how the property is occupied.
     
 
PROP_CONDITION_CODE
 
A code that indicates the condition of the property.
     
 

 

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PROP_INSPECTION_DATE
 
The date a property inspection is performed.
     
MM/DD/YYYY
APPRAISAL_DATE
 
The date the appraisal was done.
     
MM/DD/YYYY
CURR_PROP_VAL
 
 The current "as is" value of the property based on brokers price opinion or
appraisal.
 
2
 
 
REPAIRED_PROP_VAL
 
The amount the property would be worth if repairs are completed pursuant to a
broker's price opinion or appraisal.
 
2
 
 
If applicable:
 
 
     
 
DELINQ_STATUS_CODE
 
FNMA Code Describing Status of Loan
       
DELINQ_REASON_CODE
 
The circumstances which caused a borrower to stop paying on a loan. Code
indicates the reason why the loan is in default for this cycle.
       
MI_CLAIM_FILED_DATE
 
Date Mortgage Insurance Claim Was Filed With Mortgage Insurance Company.
     
MM/DD/YYYY
MI_CLAIM_AMT
 
Amount of Mortgage Insurance Claim Filed
     
No commas(,) or dollar signs ($)
MI_CLAIM_PAID_DATE
 
Date Mortgage Insurance Company Disbursed Claim Payment
     
MM/DD/YYYY
MI_CLAIM_AMT_PAID
 
Amount Mortgage Insurance Company Paid On Claim
 
2
 
No commas(,) or dollar signs ($)
POOL_CLAIM_FILED_DATE
 
Date Claim Was Filed With Pool Insurance Company
     
MM/DD/YYYY
POOL_CLAIM_AMT
 
Amount of Claim Filed With Pool Insurance Company
 
2
 
No commas(,) or dollar signs ($)
POOL_CLAIM_PAID_DATE
 
Date Claim Was Settled and The Check Was Issued By The Pool Insurer
     
MM/DD/YYYY
POOL_CLAIM_AMT_PAID
 
Amount Paid On Claim By Pool Insurance Company
 
2
 
No commas(,) or dollar signs ($)
FHA_PART_A_CLAIM_FILED_DATE
 
 Date FHA Part A Claim Was Filed With HUD
     
MM/DD/YYYY
FHA_PART_A_CLAIM_AMT
 
 Amount of FHA Part A Claim Filed
 
2
 
No commas(,) or dollar signs ($)
FHA_PART_A_CLAIM_PAID_DATE
 
 Date HUD Disbursed Part A Claim Payment
     
MM/DD/YYYY
FHA_PART_A_CLAIM_PAID_AMT
 
 Amount HUD Paid on Part A Claim
 
2
 
No commas(,) or dollar signs ($)
FHA_PART_B_CLAIM_FILED_DATE
 
  Date FHA Part B Claim Was Filed With HUD
     
MM/DD/YYYY
FHA_PART_B_CLAIM_AMT
 
  Amount of FHA Part B Claim Filed
 
2
 
No commas(,) or dollar signs ($)
FHA_PART_B_CLAIM_PAID_DATE
 
   Date HUD Disbursed Part B Claim Payment
     
MM/DD/YYYY
FHA_PART_B_CLAIM_PAID_AMT
 
 Amount HUD Paid on Part B Claim
 
2
 
No commas(,) or dollar signs ($)
VA_CLAIM_FILED_DATE
 
 Date VA Claim Was Filed With the Veterans Admin
     
MM/DD/YYYY
VA_CLAIM_PAID_DATE
 
 Date Veterans Admin. Disbursed VA Claim Payment
     
MM/DD/YYYY
VA_CLAIM_PAID_AMT
 
 Amount Veterans Admin. Paid on VA Claim
 
2
 
No commas(,) or dollar signs ($)
MOTION_FOR_RELIEF_DATE
 
The date the Motion for Relief was filed
 
10
 
MM/DD/YYYY
FRCLSR_BID_AMT
 
The foreclosure sale bid amount
 
11
 
No commas(,) or dollar signs ($)

 
FRCLSR_SALE_TYPE
 
The foreclosure sales results: REO, Third Party, Conveyance to HUD/VA
 
 
 
 
REO_PROCEEDS
 
The net proceeds from the sale of the REO property.
 
 
 
No commas(,) or dollar signs ($)
BPO_DATE
 
The date the BPO was done.
 
 
 
 
CURRENT_FICO
 
The current FICO score
 
 
 
 
HAZARD_CLAIM_FILED_DATE
 
The date the Hazard Claim was filed with the Hazard Insurance Company.
 
10
 
MM/DD/YYYY
HAZARD_CLAIM_AMT
 
The amount of the Hazard Insurance Claim filed.
 
11
 
No commas(,) or dollar signs ($)

 

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HAZARD_CLAIM_PAID_DATE
 
The date the Hazard Insurance Company disbursed the claim payment.
 
10
 
MM/DD/YYYY
             
HAZARD_CLAIM_PAID_AMT
 
The amount the Hazard Insurance Company paid on the claim.
 
11
 
No commas(,) or dollar signs ($)
ACTION_CODE
 
Indicates loan status
     
Number
NOD_DATE
 
 
 
 
 
MM/DD/YYYY
NOI_DATE
 
 
 
 
 
MM/DD/YYYY
ACTUAL_PAYMENT_PLAN_START_DATE
 
 
 
 
 
MM/DD/YYYY
ACTUAL_PAYMENT_ PLAN_END_DATE
 
 
 
 
 
 
ACTUAL_REO_START_DATE
 
 
 
 
 
MM/DD/YYYY
REO_SALES_PRICE
 
 
 
 
 
Number
REALIZED_LOSS/GAIN
 
As defined in the Servicing Agreement
 
 
 
Number

 
Exhibit 2: Standard File Codes - Delinquency Reporting
 
The Loss Mit Type field should show the approved Loss Mitigation Code as
follows:
 

·
ASUM-Approved Assumption

 

·
BAP-Borrower Assistance Program

 

·
CO- Charge Off

 

·
DIL- Deed-in-Lieu

 

·
FFA- Formal Forbearance Agreement

 

·
MOD- Loan Modification

 

·
PRE- Pre-Sale

 

·
SS- Short Sale

 

·
MISC-Anything else approved by the PMI or Pool Insurer

 
NOTE: Wells Fargo Bank will accept alternative Loss Mitigation Types to those
above, provided that they are consistent with industry standards. If Loss
Mitigation Types other than those above are used, the Servicer must supply Wells
Fargo Bank with a description of each of the Loss Mitigation Types prior to
sending the file.

 
The Occupant Code field should show the current status of the property code as
follows:
 

·
Mortgagor

 

·
Tenant

 

·
Unknown

 

·
Vacant

 
The Property Condition field should show the last reported condition of the
property as follows:
 

·
Damaged

 

·
Excellent

 

·
Fair

 

·
Gone

 

·
Good

 

·
Poor

 

·
Special Hazard

 

·
Unknown

 

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Exhibit 2: Standard File Codes - Delinquency Reporting, Continued

 
The FNMA Delinquent Reason Code field should show the Reason for Delinquency as
follows:

Delinquency Code
 
Delinquency Description
001
 
FNMA-Death of principal mortgagor
002
 
FNMA-Illness of principal mortgagor
003
 
FNMA-Illness of mortgagor’s family member
004
 
FNMA-Death of mortgagor’s family member
005
 
FNMA-Marital difficulties
006
 
FNMA-Curtailment of income
007
 
FNMA-Excessive Obligation
008
 
FNMA-Abandonment of property
009
 
FNMA-Distant employee transfer
011
 
FNMA-Property problem
012
 
FNMA-Inability to sell property
013
 
FNMA-Inability to rent property
014
 
FNMA-Military Service
015
 
FNMA-Other
016
 
FNMA-Unemployment
017
 
FNMA-Business failure
019
 
FNMA-Casualty loss
022
 
FNMA-Energy environment costs
023
 
FNMA-Servicing problems
026
 
FNMA-Payment adjustment
027
 
FNMA-Payment dispute
029
 
FNMA-Transfer of ownership pending
030
 
FNMA-Fraud
031
 
FNMA-Unable to contact borrower
INC
 
FNMA-Incarceration

 

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Exhibit 2: Standard File Codes - Delinquency Reporting, Continued

 
The FNMA Delinquent Status Code field should show the Status of Default as
follows:

Status Code
 
Status Description
09
 
Forbearance
17
 
Pre-foreclosure Sale Closing Plan Accepted
24
 
Government Seizure
26
 
Refinance
27
 
Assumption
28
 
Modification
29
 
Charge-Off
30
 
Third Party Sale
31
 
Probate
32
 
Military Indulgence
43
 
Foreclosure Started
44
 
Deed-in-Lieu Started
49
 
Assignment Completed
61
 
Second Lien Considerations
62
 
Veteran’s Affairs-No Bid
63
 
Veteran’s Affairs-Refund
64
 
Veteran’s Affairs-Buydown
65
 
Chapter 7 Bankruptcy
66
 
Chapter 11 Bankruptcy
67
 
Chapter 13 Bankruptcy

 

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Exhibit 12C: Calculation of Realized Loss/Gain Form 332- Instruction Sheet
 
NOTE: Do not net or combine items. Show all expenses individually and all
credits as separate line items. Claim packages are due on the remittance report
date. Late submissions may result in claims not being passed until the following
month. The Servicer is responsible to remit all funds pending loss approval and
/or resolution of any disputed items.
(v)      _____________________________________
 
(vi)     _____________________________________ The numbers on the 332 form
correspond with the numbers listed below.
 
Liquidation and Acquisition Expenses:
 

1.
The Actual Unpaid Principal Balance of the Mortgage Loan. For documentation, an
Amortization Schedule from date of default through liquidation breaking out the
net interest and servicing fees advanced is required.

 

2.
The Total Interest Due less the aggregate amount of servicing fee that would
have been earned if all delinquent payments had been made as agreed. For
documentation, an Amortization Schedule from date of default through liquidation
breaking out the net interest and servicing fees advanced is required.

 

3. Accrued Servicing Fees based upon the Scheduled Principal Balance of the
Mortgage Loan as calculated on a monthly basis. For documentation, an
Amortization Schedule from date of default through liquidation breaking out the
net interest and servicing fees advanced is required.

4-12. Complete as applicable. Required documentation:
 
* For taxes and insurance advances - see page 2 of 332 form - breakdown required
showing period of coverage, base tax, interest, penalty. Advances prior to
default require evidence of servicer efforts to recover advances.
 
* For escrow advances - complete payment history
 
(to calculate advances from last positive escrow balance forward)
 
* Other expenses -  copies of corporate advance history showing all payments
 
* REO repairs > $1500 require explanation
 
* REO repairs >$3000 require evidence of at least 2 bids.
 
* Short Sale or Charge Off require P&L supporting the decision and WFB’s
approved Officer Certificate 
 
* Unusual or extraordinary items may require further documentation.
 
13.  The total of lines 1 through 12.
 
(vii)  Credits:
 
14-21. Complete as applicable. Required documentation:
 
* Copy of the HUD 1 from the REO sale. If a 3rd Party Sale, bid instructions and
Escrow Agent / Attorney
 
Letter of Proceeds Breakdown.
 
* Copy of EOB for any MI or gov't guarantee
 
* All other credits need to be clearly defined on the 332 form    
 

 
22.
The total of lines 14 through 21.

 
Please Note: For HUD/VA loans, use line (18a) for Part A/Initial proceeds and
line (18b) for Part B/Supplemental proceeds.
 
Total Realized Loss (or Amount of Any Gain)
 
23. The total derived from subtracting line 22 from 13. If the amount represents
a realized gain, show the amount in parenthesis ( ).

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Exhibit 3A: Calculation of Realized Loss/Gain Form 332
 

Prepared by: __________________  
Date: _______________
      Phone: ______________________   Email Address:_____________________

 

         
Servicer Loan No.
 
Servicer Name
 
Servicer Address
 

 
WELLS FARGO BANK, N.A. Loan No._____________________________
 
Borrower's Name: _________________________________________________________
Property Address: _________________________________________________________
 

Liquidation Type: REO Sale     3rd Party Sale   Short Sale    Charge Off       
        Was this loan granted a Bankruptcy deficiency or cramdown  
Yes
  No        
If “Yes”, provide deficiency or cramdown amount _______________________________
   

Liquidation and Acquisition Expenses:
 
(1) Actual Unpaid Principal Balance of Mortgage Loan
$ ______________
(1)
(2) Interest accrued at Net Rate
________________
(2)
(3) Accrued Servicing Fees
________________
(3)
(4) Attorney's Fees
________________
(4)
(5) Taxes (see page 2)
________________
(5)
(6) Property Maintenance
________________
(6)
(7) MI/Hazard Insurance Premiums (see page 2)
________________
(7)
(8) Utility Expenses
________________
(8)
(9) Appraisal/BPO
________________
(9)
(10) Property Inspections
________________
(10)
(11) FC Costs/Other Legal Expenses
________________
(11)
(12) Other (itemize)
________________
(12)
 Cash for Keys__________________________
________________
(12)
 HOA/Condo Fees_______________________
________________
(12)
______________________________________
________________
(12)
       
Total Expenses
$ _______________
(13)
Credits:
     
(14) Escrow Balance
$ _______________
(14)
(15) HIP Refund
________________
(15)
(16) Rental Receipts
________________
(16)
(17) Hazard Loss Proceeds
________________
(17)
(18) Primary Mortgage Insurance / Gov’t Insurance
________________
(18a) HUD Part A
   
________________
(18b) HUD Part B
(19) Pool Insurance Proceeds
________________
(19)
(20) Proceeds from Sale of Acquired Property
________________
(20)
(21) Other (itemize)
________________
(21)
_________________________________________
________________
(21)
       
Total Credits
$________________
(22)
Total Realized Loss (or Amount of Gain)
$________________
(23)

 
1

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Escrow Disbursement Detail

Type
(Tax /Ins.)
 
Date Paid
 
Period of Coverage
 
Total Paid
 
Base Amount
 
Penalties
 
Interest
                                                                               
                                                                               
                                               

 
 
2

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