EXHIBIT 10.13
 
EXECUTION VERSION

 
  

 
FLOW MORTGAGE LOAN SERVICING RIGHTS SALE AND SERVICING AGREEMENT
 
among
 
SELECT PORTFOLIO SERVICING, INC.,
as Servicer,
 
DLJ MORTGAGE CAPITAL, INC.,
as Servicing Rights Purchaser,
 
and
 
REDWOOD RESIDENTIAL ACQUISITION CORPORATION,
as Owner
 
May 5, 2011
 
Residential Mortgage Loans
  

 
 

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TABLE OF CONTENTS
 

 
Page
   
SECTION 1.        Definitions
1
   
SECTION 2.        Acknowledgement; Purchase and Assumption; Purchase Price
15
   
Subsection 2.01
Acknowledgement
15
     
Subsection 2.02
Purchase and Assumption
16
     
Subsection 2.03
Purchase Price
16
     
SECTION 3.        Mortgage Loan Schedule
16
   
SECTION 4.        Delivery of Servicing Files; Possession of Mortgage Files;
Transfer Costs
17
   
Subsection 4.01
Delivery of Servicing Files
17
     
Subsection 4.02
Possession of Mortgage Files
17
     
Subsection 4.03
Transfer Expenses
17
     
SECTION 5.        Inspections
18
   
SECTION 6.        Helping Families Notice
18
   
SECTION 7.        Representations and Warranties; Effect of Breach
18
   
Subsection 7.01
Servicer Representations and Warranties
18
     
Subsection 7.02
Owner Representations and Warranties
20
     
Subsection 7.03
Representations and Warranties Regarding Individual Mortgage Loans
21
     
Subsection 7.04
Effect of Breach
22
     
Subsection 7.05
Repurchase or Substitution of Mortgage Loans by Originator
23
     
Subsection 7.06
Servicing Rights Purchaser Representations and Warranties
24
     
SECTION 8.         [Reserved]
25
   
SECTION 9.         Closing Conditions
25
   
SECTION 10.       Costs
26
   
SECTION 11.       Administration and Servicing of Mortgage Loans
26
   
Subsection 11.01
Servicer to Act as Servicer; Subservicing
26
     
Subsection 11.02
Liquidation of Mortgage Loans
28
     
Subsection 11.03
Collection of Mortgage Loan Payments
29
     
Subsection 11.04
Establishment of Custodial Account; Deposits in Custodial Account
29
     
Subsection 11.05
Withdrawals From the Custodial Account
31
     
Subsection 11.06
Establishment of Escrow Account; Deposits in Escrow Account
32

 
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Page
     
Subsection 11.07
Withdrawals From Escrow Account
32
     
Subsection 11.08
Payment of Taxes, Insurance and Other Charges; Collections Thereunder
33
     
Subsection 11.09
Transfer of Accounts
33
     
Subsection 11.10
Maintenance of Hazard Insurance
33
     
Subsection 11.11
Maintenance of Primary Mortgage Insurance Policy; Claims
34
     
Subsection 11.12
Fidelity Bond; Errors and Omissions Insurance
35
     
Subsection 11.13
Title, Management and Disposition of REO Property
36
     
Subsection 11.14
Servicing Compensation
36
     
Subsection 11.15
Distributions
37
     
Subsection 11.16
Statements to the Owner
37
     
Subsection 11.17
[Reserved]
38
     
Subsection 11.18
Assumption Agreements
38
     
Subsection 11.19
Satisfaction of Mortgages and Release of Mortgage Files
38
     
Subsection 11.20
Servicer Shall Provide Access and Information as Reasonably Required
39
     
Subsection 11.21
[Reserved]
39
     
Subsection 11.22
Restoration of Mortgaged Property
39
     
Subsection 11.23
Fair Credit Reporting Act
40
     
Subsection 11.24
Prepayment Charges
40
     
SECTION 12.       The Servicer and Servicing Rights Purchaser
41
   
Subsection 12.01
Indemnification; Third Party Claims
41
     
Subsection 12.02
Merger or Consolidation of the Servicer
42
     
Subsection 12.03
Limitation on Liability of the Servicer and Others
42
     
Subsection 12.04
Conditions to Servicer Resigning or Assigning
42
     
Subsection 12.05
No Liability for Failure to Deliver Servicing Files
43
     
SECTION 13.       Default
43
   
Subsection 13.01
Events of Default
43
     
Subsection 13.02
Waiver of Default
45
     
Subsection 13.03
Owner Defaults
45
     
SECTION 14.       Termination
46
   
Subsection 14.01
Termination
46

 
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Page
     
Subsection 14.02
Successors to the Servicer
46
     
Subsection 14.03
Termination Payments
47
     
SECTION 15.       Notices
48
   
SECTION 16.       Severability Clause
49
   
SECTION 17.       No Partnership
50
   
SECTION 18.       Counterparts
50
   
SECTION 19.       Governing Law; Choice of Forum; Waiver of Jury Trial
50
   
SECTION 20.       Intention of the Parties
50
   
SECTION 21.       Waivers
51
   
SECTION 22.       Exhibits
51
   
SECTION 23.       General Interpretive Principles
51
   
SECTION 24.       Reproduction of Documents
52
   
SECTION 25.       Amendment
52
   
SECTION 26.       Confidentiality
52
   
SECTION 27.       Entire Agreement
52
   
SECTION 28.       Further Agreements
53
   
SECTION 29.       Successors and Assigns
53
   
SECTION 30.       Non-Solicitation
54
   
SECTION 31.       Protection of Consumer Information
54
   
SECTION 32.       Cooperation of the Servicer With a Reconstitution; Regulation
AB Compliance
55

 
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EXHIBITS
 
EXHIBIT 1
FORM OF BILL OF SALE AND SERVICER ACKNOWLEDGEMENT
   
EXHIBIT 2
FORM OF NOTICE OF SALE OF OWNERSHIP OF MORTGAGE LOAN
   
EXHIBIT 3
MORTGAGE LOAN SCHEDULE FIELDS
   
EXHIBIT 4
SPS TRANSFER INSTRUCTIONS
   
ADDENDUM I
REGULATION AB COMPLIANCE ADDENDUM
   
ADDENDUM II
ASSIGNMENT, ASSUMPTION AND RECOGNITION AGREEMENT

 
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FLOW MORTGAGE LOAN SERVICING RIGHTS SALE AND SERVICING AGREEMENT
 
THIS FLOW MORTGAGE LOAN SERVICING RIGHTS SALE AND SERVICING AGREEMENT (the
“Agreement”), dated May 5, 2011, is hereby executed by and among REDWOOD
RESIDENTIAL ACQUISITION CORPORATION, a Delaware corporation, as owner of the
mortgage loans described herein and seller of the related servicing rights (the
“Owner”), SELECT PORTFOLIO SERVICING, INC., a Utah corporation, as servicer of
such mortgage loans (the “Servicer”), and DLJ MORTGAGE CAPITAL, INC., a Delaware
corporation, as purchaser of the related servicing rights (the “Servicing Rights
Purchaser”).
 
WITNESSETH:
 
WHEREAS, the Owner owns or will acquire from time to time certain conventional,
residential, first-lien mortgage loans as described herein, including the
related servicing rights; and
 
WHEREAS, the Owner has agreed to sell, from time to time, and the Servicing
Rights Purchaser shall purchase, from time to time, the servicing rights
relating to such mortgage loans upon the terms and conditions specified in this
Agreement and each Bill of Sale and Servicer Acknowledgement (as defined
herein); and
 
WHEREAS, the parties desire to agree to the terms and conditions upon which the
Servicer will service and administer the mortgage loans as set forth herein;
 
NOW, THEREFORE, in consideration of the premises and mutual agreements set forth
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Owner, the Servicing Rights
Purchaser and the Servicer agree as follows:
 
SECTION 1.  Definitions.
 
For purposes of this Agreement, the following capitalized terms shall have the
respective meanings set forth below.
 
Adjustable Rate Mortgage Loan:  A Mortgage Loan purchased pursuant to this
Agreement which provides for the adjustment of the Mortgage Interest Rate
payable in respect thereto.
 
Adjustment Date:  As to each Adjustable Rate Mortgage Loan, the date on which
the Mortgage Interest Rate is adjusted in accordance with the terms of the
related Mortgage Note and Mortgage.

 
 

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Affiliate:  When used with reference to a specified Person, any Person that (i)
directly or indirectly controls or is controlled by or is under common control
with the specified Person, (ii) is an officer of, partner in or trustee of, or
serves in a similar capacity with respect to, the specified person or of which
the specified Person is an officer, partner or trustee, or with respect to which
the specified Person serves in a similar capacity, or (iii) directly or
indirectly is the beneficial owner of 10% or more of any class of equity
securities of the specified Person or of which the specified Person is directly
or indirectly the owner of 10% or more of any class of equity securities.
 
Agency Transfer:  The sale or transfer by the Owner of some or all of the
Mortgage Loans to Fannie Mae, Ginnie Mae or Freddie Mac while retaining Servicer
as servicer.
 
Agreement:  This Flow Mortgage Loan Servicing Rights Sale and Servicing
Agreement including all exhibits, schedules, amendments and supplements hereto.
 
Ancillary Fees:  With respect to any Mortgage Loan, charges for late Monthly
Payments, charges for dishonored checks, pay-off fees, assumption fees,
commissions and administrative fees on insurance and similar fees and charges
collected from or assessed against the related Mortgagor, other than those
charges payable to another party under the terms of the applicable Servicing
Agreement.
 
Applicable Requirements:  With respect to the Mortgage Loans or related
Servicing Rights, as applicable and as of the time of reference, (i) all
contractual obligations relating to the servicing of the Mortgage Loans,
including without limitation those contractual obligations contained in the
applicable Servicing Agreement or in any agreement relating to the Mortgage
Loans with any insurer or in the Mortgage File; (ii) all federal, state and
local laws, statutes, rules, regulations and ordinances applicable to the
servicing of the Mortgage Loans, including, without limitation, the applicable
requirements and guidelines of any insurer, or any other governmental agency,
board, commission, instrumentality or other governmental or quasi-governmental
body or office; (iii) all other judicial and administrative judgments, orders,
stipulations, awards, writs and injunctions applicable to the servicing of the
Mortgage Loans; and (iv) Customary Servicing Procedures.
 
Appraised Value:  With respect to any Mortgaged Property, the lesser of (i) the
value (or Reconciled Market Value if more than one appraisal is received)
thereof as determined by a Qualified Appraiser at the time of origination of the
Mortgage Loan, and (ii) the purchase price paid for the related Mortgaged
Property by the Mortgagor with the proceeds of the Mortgage Loan; provided,
however, that in the case of a Refinanced Mortgage Loan, such value (or
Reconciled Market Value if more than one appraisal is received) of the Mortgaged
Property is based solely upon the value determined by an appraisal or appraisals
made for the originator of such Refinanced Mortgage Loan at the time of
origination of such Refinanced Mortgage Loan by a Qualified Appraiser.

 
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Appraiser Independence Requirements:  The Appraiser Independence Requirements
effective as of October 15, 2010, as amended and in effect from time to time.
 
Assignment of Mortgage:  An individual assignment of the Mortgage, notice of
transfer or equivalent instrument in recordable form, sufficient under the laws
of the jurisdiction in which the related Mortgaged Property is located to give
record notice of the sale of the Mortgage to the Owner.
 
Assumed Principal Balance:  As to each Mortgage Loan as of any date of
determination, (i) the principal balance of the Mortgage Loan outstanding as of
the Cut-off Date after application of payments due on or before the Cut-off
Date, whether or not received, minus (ii) all amounts previously distributed to
the Owner with respect to the Mortgage Loan pursuant to Subsection 11.15 and
representing (a) payments or other recoveries of principal or (b) advances of
scheduled principal payments made by the Servicer.
 
Bill of Sale and Servicer Acknowledgement:  A Bill of Sale and Servicer
Acknowledgement among the Owner, the Servicing Rights Purchaser and the Servicer
for the sale and purchase of an aggregate Stated Principal Balance of Servicing
Rights under specified pricing methodologies and other terms, which supplements
this Agreement with respect to specified Servicing Rights as of the related
Closing Date, together with an acknowledgement from the Servicer confirming the
additional Mortgage Loans to be serviced by the Servicer pursuant to this
Agreement on and after a specified Transfer Date, substantially in the form of
Exhibit 1.
 
Business Day:  Any day other than (i) a Saturday or a Sunday, or (ii) a legal
holiday in the State of New York , the State of Utah or the State of California,
or (iii) a day on which banks in the State of New York, the State of Utah or the
State of California are authorized or obligated by law or executive order to be
closed.
 
Closing Date:   The date or dates, set forth in the related Bill of Sale and
Servicer Acknowledgement, on which the Owner will purchase the Mortgage Loans
identified therein.
 
Code:  The Internal Revenue Code of 1986, as amended, or any successor statute
thereto.
 
Commission:  The United States Securities and Exchange Commission.
 
Condemnation Proceeds:  All awards, compensation and settlements in respect of a
taking (whether permanent or temporary) of all or part of a Mortgaged Property
by exercise of the power of condemnation or the right of eminent domain, to the
extent not required to be released to a Mortgagor in accordance with the terms
of the related Mortgage Note or Mortgage.

 
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Consumer Information:  Any personally identifiable information in any form
(written electronic or otherwise) relating to a Mortgagor, including, but not
limited to: a Mortgagor’s name, address, telephone number, Mortgage Loan number,
Mortgage Loan payment history, delinquency status, insurance carrier or payment
information, tax amount or payment information; the fact that the Mortgagor has
a relationship with the Servicer or the originator of the related Mortgage Loan;
and any other non-public personally identifiable information.
 
Cooperative Corporation:  With respect to any Cooperative Loan, the cooperative
apartment corporation that holds legal title to the related Cooperative Project
and grants occupancy rights to units therein to stockholders through Cooperative
Leases or similar arrangements.
 
Cooperative Lease:  The lease on a Cooperative Unit evidencing the possessory
interest of the owner of the Cooperative Shares in such Cooperative Unit.
 
Cooperative Loan: A Mortgage Loan that is secured by a first lien on and
perfected security interest in Cooperative Shares and the related Cooperative
Lease granting exclusive rights to occupy the related Cooperative Unit in the
building owned by the related Cooperative Corporation.
 
Cooperative Project: With respect to any Cooperative Loan, all real property and
improvements thereto and rights therein and thereto owned by a Cooperative
Corporation including without limitation the land, separate dwelling units and
all common elements.
 
Cooperative Shares:  With respect to any Cooperative Loan, the shares of stock
issued by a Cooperative Corporation and allocated to a Cooperative Unit and
represented by a stock certificate.
 
Cooperative Unit:  With respect to a Cooperative Loan, a specific unit in a
Cooperative Project.
 
Custodial Account:  As defined in Subsection 11.04.
 
Customary Servicing Procedures:  With respect to any Mortgage Loan, those
mortgage servicing practices (including collection procedures) of prudent
mortgage banking institutions which service mortgage loans of the same type as
such Mortgage Loan in the jurisdiction where the related Mortgaged Property is
located, and which are generally in accordance with the servicing practices and
procedures of the Fannie Mae Guides including future updates, or as such
mortgage servicing practices may change from time to time, that are applicable
to mortgage loans similar to the Mortgage Loans.

 
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Cut-off Date:  With respect to each Mortgage Loan, the first day of the month of
the related Closing Date or such other date as is set forth in the related Bill
of Sale and Servicer Acknowledgement.
 
Determination Date:  With respect to each Remittance Date, the 15th day (or, if
such 15th day is not a Business Day, the following Business Day) of the month in
which such Remittance Date occurs.
 
Due Date:  The day of the month on which the Monthly Payment is due on a
Mortgage Loan, exclusive of any days of grace.
 
Due Period:  With respect to each Remittance Date, the period beginning on the
second day of the month preceding the month of the Remittance Date, and ending
on the first day of the month of the Remittance Date.
 
Eligible Account:  Any account or accounts maintained with a federal or state
chartered depository institution or trust company the short-term and long-term
unsecured debt obligations of which (or, in the case of a depository institution
or trust company that is the principal subsidiary of a holding company, the debt
obligations of such holding company) are rated in the highest rating category of
each Rating Agency with respect to short-term unsecured debt obligations and in
one of the two highest rating categories of each Rating Agency with respect to
long-term unsecured debt obligations at the time any amounts are held on deposit
therein.  Eligible Accounts may bear interest.  If the rating of the short-term
or long-term unsecured debt obligations of the depository institution or trust
company that maintains the account or accounts is no longer in the highest
rating category of each Rating Agency with respect to short-term unsecured debt
obligations or in one of the two highest rating categories of each Rating Agency
with respect to long-term unsecured debt obligations, the funds on deposit
therewith in connection with this Agreement shall be transferred to an Eligible
Account within 30 days of such downgrade.
 
Eligible Investments:  Any one or more of the following obligations or
securities:
 
(i)           direct obligations of, and obligations fully guaranteed by the
United States of America or any agency or instrumentality of the United States
of America the obligations of which are backed by the full faith and credit of
the United States of America;
 
(ii)          (a) demand or time deposits, federal funds or bankers’ acceptances
issued by any depository institution or trust company incorporated under the
laws of the United States of America or any state thereof and subject to
supervision and examination by federal and/or state banking authorities,
provided that the commercial paper and/or the short-term deposit rating and/or
the long-term unsecured debt obligations or deposits of such depository
institution or trust company at the time of such investment or contractual
commitment providing for such investment are rated in the highest rating
category by each

 
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Rating Agency for long-term unsecured debt with a maturity of more than one year
or in the highest rating category with respect to short-term obligations and
(b) any other demand or time deposit or certificate of deposit that is fully
insured by the FDIC;
 
(iii)         repurchase obligations with a term not to exceed thirty (30) days
and with respect to (a) any security described in clause (i)  above and entered
into with a depository institution or trust company (acting as principal)
described in clause (ii)(a) above;
 
(iv)         securities bearing interest or sold at a discount issued by any
corporation incorporated under the laws of the United States of America or any
state thereof that are rated in the highest rating category for long-term
unsecured debt with a maturity of more than one year or in the highest rating
category with respect to short-term obligations by each Rating Agency, in each
case at the time of such investment or contractual commitment providing for such
investment; provided, however, that securities issued by any particular
corporation will not be Eligible Investments to the extent that investments
therein will cause the then outstanding principal amount of securities issued by
such corporation and held as Eligible Investments to exceed 10% of the aggregate
outstanding principal balances of all of the Mortgage Loans and Eligible
Investments;
 
(v)         commercial paper (including both non-interest-bearing discount
obligations and interest-bearing obligations payable on demand or on a specified
date not more than one year after the date of issuance thereof) which are rated
in the highest rating category by each Rating Agency at the time of such
investment; and
 
(vi)         any money market funds rated in one of the two highest rating
categories by each Rating Agency for long-term unsecured debt with a maturity of
more than one year or in the highest rating category by each Rating Agency with
respect to short-term obligations;
 
provided, however, that no instrument or security shall be an Eligible
Investment if such instrument or security evidences a right to receive only
interest payments with respect to the obligations underlying such instrument or
if such security provides for payment of both principal and interest with a
yield to maturity in excess of 120% of the yield to maturity at par or if such
investment or security is purchased at a price greater than par.
 
Escrow Account:  As defined in Subsection 11.06.
 
Escrow Payments:  The amounts constituting ground rents, taxes, assessments,
Primary Mortgage Insurance Policy premiums, fire and hazard insurance premiums,
flood insurance premiums, condominium charges and other payments as may be
required to be escrowed by the Mortgagor with the Mortgagee pursuant to the
terms of any Mortgage Note or Mortgage.
 
Event of Default:  Any one of the conditions or circumstances enumerated in
Subsection 13.01.

 
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Fannie Mae:  The entity formerly known as the Federal National Mortgage
Association or any successor thereto.
 
Fannie Mae Guides:  The Fannie Mae Sellers’ Guide and the Fannie Mae Servicers’
Guide and all amendments or additions thereto in effect on and after the related
Closing Date.
 
FDIC:  The Federal Deposit Insurance Corporation or any successor thereto.
 
FDPA:  The Flood Disaster Protection Act of 1973, as amended.
 
FHFA:  The Federal Housing Finance Agency or any successors thereto.
 
Fidelity Bond:  The fidelity bond required to be obtained by the Servicer
pursuant to Subsection 11.12.
 
FIRREA:  The Financial Institutions Reform, Recovery, and Enforcement Act of
1989, as amended and in effect from time to time.
 
First Remittance Date:  With respect to each Mortgage Loan Package, the 18th day
(or if such 18th day is not a Business Day, the first Business Day immediately
preceding such 18th day) of the calendar month immediately following the Closing
Date; provided, however, if the Transfer Date is not one (1) or more Business
Days prior to the first day of such calendar month, such date will be the 18th
day (or if such 18th day is not a Business Day, the first Business Day
immediately preceding such 18th day) of the next succeeding calendar month.
 
Freddie Mac:  The entity formerly known as the Federal Home Loan Mortgage
Corporation or any successor thereto.
 
Freddie Mac Guide:  The Freddie Mac Single Family Seller/Servicer Guide and all
amendments or additions thereto in effect on and after the related Closing Date.
 
Ginnie Mae:  The Government National Mortgage Association or any successor
thereto.
 
Gross Margin:  With respect to any Adjustable Rate Mortgage Loan, the fixed
percentage amount set forth in the related Mortgage Note and the Mortgage Loan
Schedule that is added to the Index on each Adjustment Date in accordance with
the terms of the related Mortgage Note to determine the new Mortgage Interest
Rate for such Mortgage Loan.
 
Helping Families Act:  As defined in Section 6.
 
HUD:  The United States Department of Housing and Urban Development or any
successor thereto.

 
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Independent:  When used with respect to any other Person, a Person who (a) is in
fact independent of another specified Person and any Affiliate of such other
Person, (b) does not have any material direct financial interest in such other
Person or any Affiliate of such other Person, and (c) is not connected with such
other Person or any Affiliate of such other Person as an officer, employee,
promoter, underwriter, trustee, partner, director or Person performing similar
functions.
 
Index:  With respect to any Adjustable Rate Mortgage Loan, the index identified
on the Mortgage Loan Schedule and set forth in the related Mortgage Note for the
purpose of calculating the Mortgage Interest Rate thereon.
 
Initial Rate Cap:  With respect to each Adjustable Rate Mortgage Loan and the
initial Adjustment Date therefor, a number of percentage points per annum that
is set forth in the Mortgage Loan Schedule and in the related Mortgage Note,
which is the maximum amount by which the Mortgage Interest Rate for such
Adjustable Rate Mortgage Loan may increase or decrease from the Mortgage
Interest Rate in effect immediately prior to such Adjustment Date.
 
Insurance Proceeds:  With respect to each Mortgage Loan, proceeds of insurance
policies insuring the Mortgage Loan or the related Mortgaged Property.
 
Lifetime Rate Cap:  As to each Adjustable Rate Mortgage Loan, the maximum
Mortgage Interest Rate which shall be as permitted in accordance with the
provisions of the related Mortgage Note.
 
Liquidation Proceeds:  The proceeds received in connection with the liquidation
of a defaulted Mortgage Loan through trustee’s sale, foreclosure sale or
otherwise, other than amounts received following the acquisition of REO
Property, Insurance Proceeds and Condemnation Proceeds.
 
Loan-to-Value Ratio:  With respect to any Mortgage Loan as of any date of
determination, the ratio, expressed as a percentage, of the outstanding
principal balance of the Mortgage Loan on such date to the Appraised Value of
the related Mortgaged Property.
 
LPMI:  Lender paid mortgage insurance.
 
Master Servicer:  Wells Fargo Bank, N.A., together with its successors and
assigns, as master servicer with respect to any Securitization Transaction, or
any other master servicer designated as such with respect to any Securitization
Transaction.
 
MERS:  Mortgage Electronic Registration Systems, Inc., a corporation organized
and existing under the laws of the State of Delaware, or any successor thereto.

 
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MERS Mortgage Loan:  Any Mortgage Loan registered with MERS on the MERS System.
 
MERS System:  The system of recording transfers of mortgages electronically
maintained by MERS.
 
MIN:  The Mortgage Identification Number for any MERS Mortgage Loan.
 
Minimum Interest Rate:  With respect to each Adjustable Rate Mortgage Loan, a
rate that is set forth on the Mortgage Loan Schedule and in the related Mortgage
Note and is the minimum interest rate to which the Mortgage Interest Rate on
such Mortgage Loan may be decreased.
 
Monthly Payment:  The scheduled monthly payment on a Mortgage Loan due on any
Due Date allocable to principal and/or interest on such Mortgage Loan pursuant
to the terms of the related Mortgage Note.
 
Mortgage:  The mortgage, deed of trust or other instrument securing a Mortgage
Note which creates a first lien on an unsubordinated estate in fee simple in
real property securing the Mortgage Note; except that with respect to real
property located in jurisdictions in which the use of leasehold estates for
residential properties is a widely-accepted practice, the mortgage, deed of
trust or other instrument securing the Mortgage Note may secure and create a
first lien upon a leasehold estate of the Mortgagor.
 
Mortgage File:  With respect to each Mortgage Loan, all documents required to be
included in a “Mortgage File” delivered by the applicable Originator to the
Owner or its custodian, and any additional documents required to be added to the
Mortgage File pursuant to this Agreement.
 
Mortgage Interest Rate:  With respect to each Mortgage Loan, the annual rate at
which interest accrues on such Mortgage Loan from time to time in accordance
with the provisions of the related Mortgage Note, including, but not limited to,
the limitations on such interest rate imposed by the Initial Rate Cap, the
Periodic Rate Cap, the Minimum Interest Rate and the Lifetime Rate Cap, if any.
 
Mortgage Loan:  An individual Mortgage Loan which is the subject of this
Agreement, as identified on the related Mortgage Loan Schedule, excluding
replaced or repurchased mortgage loans.
 
Mortgage Loan Package:  The pool or group of whole loans purchased on a Closing
Date, as described in the Mortgage Loan Schedule annexed to the related Bill of
Sale and Servicer Acknowledgement.

 
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Mortgage Loan Remittance Rate:  With respect to any Mortgage Loan, the related
Mortgage Interest Rate minus the related Servicing Fee Rate.
 
Mortgage Loan Schedule:  The schedule of Mortgage Loans prepared for each
Closing Date setting forth the information with respect to each Mortgage Loan
required by the disclosure report format of the Owner, including any replacement
loans that are substituted after the Closing Date pursuant to the related
purchase agreement.
 
Mortgage Note:  The note or other evidence of the indebtedness of a Mortgagor
secured by a Mortgage or, in the case of a Cooperative Loan, secured by the
Cooperative Shares and the Cooperative Lease.
 
Mortgaged Property:  The Mortgagor’s real property securing repayment of a
related Mortgage Note, consisting of a fee simple interest in a single parcel of
real property improved by a Residential Dwelling.
 
Mortgagee:  The mortgagee or beneficiary named in the Mortgage and the
successors and assigns of such mortgagee or beneficiary.
 
Mortgagor:  The obligor on a Mortgage Note, who is an owner of the Mortgaged
Property and the grantor or mortgagor named in the Mortgage and such grantor’s
or mortgagor’s successors in title to the Mortgaged Property.
 
NAIC:  The National Association of Insurance Commissioners or any successor
organization.
 
Officer’s Certificate:  A certificate signed by the Chairman of the Board, the
Vice Chairman of the Board, a President or a Vice President of the Person on
behalf of whom such certificate is being delivered.
 
Opinion of Counsel:  A written opinion of counsel, who may be salaried counsel
for the Person on behalf of whom the opinion is being given, reasonably
acceptable to each Person to whom such opinion is addressed, and which must be
Independent outside counsel with respect to such opinion of counsel concerning
the taxation or the federal income tax status of a REMIC.
 
Originator:  With respect to each Mortgage Loan, the entity from which the Owner
purchased such Mortgage Loan.
 
OTS:  The Office of Thrift Supervision or any successor thereto.
 
Owner:  The Person listed as such in the initial paragraph of this Agreement,
together with its successors and assigns as permitted under the terms of this
Agreement.

 
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Owner Default: As defined in Section 13.03.
 
Periodic Rate Cap:  As to each Adjustable Rate Mortgage Loan, the maximum
increase or decrease in the Mortgage Interest Rate, on any Adjustment Date as
provided in the related Mortgage Note, if applicable.
 
Person:  An individual, corporation, partnership, joint venture, association,
joint-stock company, limited liability company, trust, unincorporated
organization or government or any agency or political subdivision thereof.
 
Pledge Agreement:  The specific agreement creating a first lien on and pledge of
the Cooperative Shares and the related Cooperative Lease securing a Cooperative
Loan.
 
Prepayment Charge:  With respect to each Mortgage Loan, the fee payable by the
Mortgagor if the Mortgagor prepays such Mortgage Loan within a certain period of
time as provided in the related Mortgage Note or Mortgage.
 
Primary Mortgage Insurance Policy:  A policy of primary mortgage guaranty
insurance.
 
Principal Prepayment:  Any full or partial payment or other recovery of
principal on a Mortgage Loan which is received in advance of its scheduled Due
Date, including any Prepayment Charge or premium thereon and which is not
accompanied by an amount of interest representing scheduled interest due on any
date or dates in any month or months subsequent to the month of prepayment.
 
Purchase Price:  The price paid on the related Closing Date by the Servicing
Rights Purchaser to the Owner pursuant to this Agreement in exchange for the
related Servicing Rights, as calculated pursuant to Section 2 and the related
Bill of Sale and Servicer Acknowledgement.
 
Purchase Price Percentage:  The percentage of par set forth in the related Bill
of Sale and Servicer Acknowledgement that is used to calculate the Purchase
Price of the Servicing Rights included in such Bill of Sale and Servicer
Acknowledgement.
 
Qualified Appraiser:  With respect to each Mortgage Loan, an appraiser, duly
appointed by the originator, who had no interest, direct or indirect in the
Mortgaged Property or in any loan made on the security thereof, and whose
compensation is not affected by the approval or disapproval of the Mortgage
Loan, and such appraiser and the appraisal made by such appraiser both satisfy
the requirements of Fannie Mae or Freddie Mac (including but not limited to the
Appraiser Independence Requirements) and Title XI of FIRREA and the regulations
promulgated thereunder, all as in effect on the date the Mortgage Loan was
originated.
 
Qualified Insurer:  An insurance company duly qualified as such under the laws
of the states in which the Mortgaged Properties are located, duly authorized and
licensed in such states

 
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to transact the applicable insurance business and to write the insurance
provided by the insurance policy issued by it, approved as an insurer by Fannie
Mae and Freddie Mac.
 
Rating Agencies: Standard & Poor’s Ratings Services, a division of The
McGraw-Hill Companies, Inc., Moody’s Investors Service, Inc., Fitch, Inc. or, in
the event that some or all ownership of the Mortgage Loans is evidenced by
mortgage-backed securities, the nationally recognized rating agencies issuing
ratings with respect to such securities, if any.
 
Reconciled Market Value: The estimated market value of the Mortgaged Property or
REO Property that is reasonably determined by the Servicer based on different
results obtained from different permitted valuation methods or at different time
periods, all in accordance with Customary Servicing Procedures.
 
Reconstitution Agreement:  The agreement or agreements entered into by the
Servicer and the Owner and certain third parties on the Reconstitution Date or
Reconstitution Dates with respect to any or all of the Mortgage Loans serviced
hereunder, in connection with a Whole Loan Transfer or a Securitization
Transaction as provided in Section 32.
 
Reconstitution Date:  The date or dates on which any or all of the Mortgage
Loans serviced under this Agreement shall be removed from this Agreement and
reconstituted as part of a Whole Loan Transfer or Securitization Transaction
pursuant to Section 32 hereof.  On such date, the Servicer shall cease servicing
such Mortgage Loans under this Agreement and the Servicer shall service such
Mortgage Loans under a Reconstitution Agreement.
 
Record Date:  The close of business of the last Business Day of the month
preceding the month of the related Remittance Date.
 
Refinanced Mortgage Loan:  A Mortgage Loan which was made to a Mortgagor who
owned the Mortgaged Property prior to the origination of such Mortgage Loan and
the proceeds of which were used in whole or part to satisfy an existing
mortgage.
 
Regulation AB:  Subpart 229.1100 – Asset Backed Securities (Regulation AB), 17
C.F.R. §§229.1100-229.1123, as such may be amended from time to time, and
subject to such clarification and interpretation as have been provided by the
Commission in the adopting release (Asset-Backed Securities, Securities Act
Release No. 33-8518, 70 Fed. Reg. 1,506, 1,531 (Jan. 7, 2005)) or by the staff
of the Commission, or as may be provided by the Commission or its staff from
time to time.
 
Regulation AB Compliance Addendum:  Addendum I attached hereto and incorporated
herein by reference thereto.
 
REMIC:  A “real estate mortgage investment conduit” within the meaning of
Section 860D of the Code.

 
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REMIC Provisions:  Sections 860A through 860G of the Code; such other provisions
of the Code as relate to an entity created thereunder; the regulations
promulgated pursuant to such sections and provisions of the Code; and published
guidance issued by the Internal Revenue Service relating to such Code sections
and regulations.
 
Remittance Date:  The 18th day (or if such 18th day is not a Business Day, the
first Business Day immediately preceding such 18th day) of any month, beginning
with the First Remittance Date with respect to each Mortgage Loan Package.
 
REO Disposition:  The final sale by the Servicer or the Owner of an REO
Property.
 
REO Disposition Proceeds:  All amounts received with respect to an REO
Disposition pursuant to Subsection 11.13.
 
REO Property:  A Mortgaged Property acquired by the Servicer through foreclosure
or deed in lieu of foreclosure, as described in Subsection 11.13.
 
Repurchase Price:  With respect to the Servicing Rights relating to a Mortgage
Loan, a price equal to (i) the product of (A) the related Purchase Price
Percentage and (B) the actual unpaid principal balance of such Mortgage Loan as
of the date of repurchase, plus (ii) reasonable and customary third-party
expenses incurred in connection with the transfer of the Servicing Rights being
repurchased.
 
Residential Dwelling:  Any one of the following: (i) a detached one-family
dwelling, (ii) a detached two- to four-family dwelling, (iii) a one-family
dwelling unit in a condominium project or (iv) a one-family dwelling in a
planned unit development, none of which is a cooperative, mobile or manufactured
home.
 
RESPA:  The Real Estate Settlement Procedures Act of 1974, as amended.
 
Securities Act:  The Securities Act of 1933, as amended.
 
Securitization Transaction:  Any transaction involving either (1) a sale or
other transfer of some or all of the Mortgage Loans directly or indirectly by
the Owner to an issuing entity in connection with an issuance of publicly
offered or privately placed, rated or unrated mortgage-backed securities or (2)
an issuance of publicly offered or privately placed, rated or unrated
securities, the payments on which are determined primarily by reference to one
or more portfolios of residential mortgage loans consisting, in whole or in
part, of some or all of the Mortgage Loans.
 
Servicer:  Select Portfolio Servicing, Inc., or its successor in interest or any
successor to the Servicer under this Agreement appointed as herein provided.

 
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Servicing Advances:  All customary and reasonable out-of-pocket costs and
expenses (including reasonable attorney’s fees and disbursements) incurred in
the performance by the Servicer of its servicing obligations, including, but not
limited to, the cost of (a) the preservation, restoration and protection of a
Mortgaged Property, (b) any enforcement or administrative or judicial
proceedings, including foreclosures, (c) the liquidation of any REO Property,
(d) other fees of foreclosure or of acquiring title to the Mortgaged Property by
deed in lieu of foreclosure and industry standard costs, fees and expenses of
the conveyance of the Mortgaged Property pursuant to the terms of this
Agreement, (e) payments made by the Servicer with respect to a Mortgaged
Property pursuant to Subsection 11.08, (f) penalties or late fees that were
advanced by the Servicer but which did not arise out of failure of the Servicer
to comply with its obligations hereunder, (g) costs of broker price opinions
required to be obtained under this Agreement and (h) costs of locating any
documents missing from the Mortgage File necessary for the Servicer to perform
its obligations under this Agreement.  For the avoidance of doubt, “Servicing
Advances” shall include all customary and reasonable out-of-pocket costs and
expenses (including reasonable attorneys’ fees and disbursements) (i) incurred
by the Servicer in connection with correcting errors of prior servicers
(including adjustments on adjustable-rate Mortgage Loans), title research, flood
certifications and executing and recording instruments of satisfaction, deeds of
reconveyance or assignments of Mortgage and (ii) charged to the Servicer by the
custodian of any Mortgage Files, in either case, to the extent not recovered
from the Mortgagor or otherwise payable under this Agreement.
 
Servicing Agreement:  This Agreement or such other servicing agreement as may be
specified in a Bill of Sale and Servicer Acknowledgement with respect to any
Servicing Rights.
 
Servicing Fee:  With respect to each Mortgage Loan, the amount of the annual fee
the Owner shall pay to the Servicer, which shall, for each month, be equal to
one-twelfth of the product of the applicable Servicing Fee Rate and the Stated
Principal Balance of such Mortgage Loan.  Such fee shall be payable monthly,
computed on the basis of the same principal amount (unless the Servicer has
advanced any payments of principal) and period respecting which any related
interest payment on a Mortgage Loan is computed.  The obligation of the Owner to
pay the Servicing Fee is limited to, and payable solely from, the interest
portion (including recoveries with respect to interest from Liquidation Proceeds
and other proceeds, to the extent permitted by Subsection 11.05) of related
Monthly Payments collected by the Servicer, or as otherwise provided under
Subsection 11.05.
 
Servicing Fee Rate:  With respect to each Mortgage Loan, the per annum rate set
forth on the related Mortgage Loan Schedule or if not specified thereon, in the
related Bill of Sale and Servicer Acknowledgement.
 
Servicing File:  With respect to each Mortgage Loan, an electronic file that
includes copies of all documents for such Mortgage Loan required to be included
in a “Credit File” in the Transfer Instructions.
 
Servicing Rights: With respect to each Mortgage Loan, any and all of the
following, subject to a Bill of Sale and Servicer Acknowledgement, this
Agreement and Applicable

 
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Requirements:  (a) all rights to service the Mortgage Loan; (b) all rights to
receive Servicing Fees, Ancillary Fees and income on Escrow Accounts and any
Custodial Account, reimbursements or indemnification for servicing the Mortgage
Loan, and any payments received in respect of the foregoing and proceeds
thereof; (c) the right to collect, hold and disburse Escrow Payments or other
similar payments with respect to the Mortgage Loans and any amounts actually
collected with respect thereto and to receive or pay interest income on such
amounts to the extent permitted or required by Applicable Requirements; (d)
possession of any and all credit files pertaining to the Mortgage Loans for
purposes of servicing of the Mortgage Loans; (e) all rights, powers and
privileges incident to any of the foregoing; and (f) all agreements or documents
creating, defining or evidencing any of the foregoing rights to the extent they
relate to such rights.  For the avoidance of doubt, Prepayment Charges shall not
be included in the Servicing Rights.
 
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 maintained by the Servicer, a copy of which shall be
provided to the Owner from time to time upon request, as such list may be
amended from time to time.
 
Stated Principal Balance:  As to each Mortgage Loan as to any date of
determination, (i) the principal balance of the Mortgage Loan as of the first
day of the month for which such calculation is being made after giving effect to
the principal portion of any Monthly Payments due on or before such date,
whether or not received, as well as any Principal Prepayments received before
such date, minus, without duplication, (ii) all amounts previously distributed
to the Owner with respect to the Mortgage Loan representing payments or
recoveries of principal, or advances in lieu thereof.
 
Transfer Date:  The date or dates, set forth in the related Bill of Sale and
Servicer Acknowledgement, on which the servicing provisions of this Agreement
will become effective with respect to a Mortgage Loan Package and the Servicer
will begin servicing the Mortgage Loans for the benefit of the Owner.
 
Transfer Instructions:  The transfer instructions in the form of Exhibit 4
hereto.
 
Whole Loan Transfer:  Any sale or transfer by the Owner of some or all of the
Mortgage Loans (including an Agency Transfer), other than a Securitization
Transaction.
 
SECTION 2.  Acknowledgement; Purchase and Assumption; Purchase Price.
 
Subsection 2.01          Acknowledgement.
 
The Owner hereby engages the Servicer to service the Mortgage Loans upon the
terms specified in this Agreement and the related Bill of Sale and Servicer
Acknowledgement, effective with respect to each Mortgage Loan as of the dates
specified in the related Bill of Sale and Servicer Acknowledgement.

 
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Subsection 2.02          Purchase and Assumption.
 
The Owner, in exchange for the payment of the applicable Purchase Price by the
Servicing Rights Purchaser on the related Closing Date, shall sell, transfer,
assign, set over and convey to the Servicing Rights Purchaser, without recourse,
but subject to the terms of this Agreement, all of its right, title and interest
in and to the Servicing Rights relating to Mortgage Loans specified in the
related Bill of Sale and Servicer Acknowledgement having a Stated Principal
Balance in an amount set forth in such Bill of Sale and Servicer
Acknowledgement.
 
The Servicing Rights Purchaser hereby purchases and assumes such Servicing
Rights from the Owner as of the related Closing Date and the Servicer hereby
assumes the servicing of the Mortgage Loans specified in the related Bill of
Sale and Servicer Acknowledgement as of the Transfer Date in accordance with the
terms of the related Servicing Agreement.  Upon payment by the Servicing Rights
Purchaser of the Purchase Price for Servicing Rights as specified in each Bill
of Sale and Servicer Acknowledgement, the sale, transfer and conveyance of the
related Servicing Rights hereunder shall become final and the Servicing Rights
Purchaser shall thereupon be fully vested with all legal and beneficial right,
title and interest in and to the related Servicing Rights.
 
Subsection 2.03          Purchase Price.
 
The Purchase Price for the Servicing Rights being acquired on a Closing Date
shall be equal to the product of (i) the Purchase Price Percentage stated in the
related Bill of Sale and Servicer Acknowledgement (subject to adjustment as
provided therein) and (ii) the Stated Principal Balance of the Mortgage Loans
listed on the related Mortgage Loan Schedule, or such other price as may be
specified in the related Bill of Sale and Servicer Acknowledgement.  If so
provided in the related Bill of Sale and Servicer Acknowledgement, portions of
the Servicing Rights may be priced separately.  In addition, the Purchase Price
may be adjusted in accordance with the related Bill of Sale and Servicer
Acknowledgement on the Transfer Date.
 
The Purchase Price as set forth in the preceding paragraph for the Mortgage
Loans shall be paid on the related Closing Date by wire transfer of immediately
available funds without setoff, deduction or counterclaim.
 
SECTION 3.  Mortgage Loan Schedule.
 
The Owner shall deliver the Mortgage Loan Schedule (which will be annexed to the
related Bill of Sale and Servicer Acknowledgement) to the Servicing Rights
Purchaser and the Servicer at least two (2) Business Days prior to each of the
related Closing Date and the related Transfer Date.

 
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SECTION 4.  Delivery of Servicing Files; Possession of Mortgage Files; Transfer
Costs.
 
Subsection 4.01          Delivery of Servicing Files.
 
The Owner shall cause the Originator to deliver to the Servicer the Servicing
Files pursuant to the Transfer Instructions.
 
Subsection 4.02          Possession of Mortgage Files.
 
Originals or copies of all documents comprising the Mortgage File shall be
delivered to the Owner’s custodian on or prior to the related Closing Date or
such other date as may be agreed to by the Owner and the applicable
Originator.  The Servicer shall have the right to access such Mortgage Files as
needed for servicing upon the terms specified in this Agreement.  Any Mortgage
File or a portion thereof delivered to the Servicer for servicing purposes shall
be held in trust by the Servicer for the benefit of the Owner as the owner
thereof and shall be available for review by the Owner upon request.  The
Servicer’s possession of any portion of each such Mortgage File is at the will
of the Owner for the sole purpose of facilitating servicing of the Mortgage
Loans pursuant to this Agreement, and such possession by the Servicer shall be
in a custodial capacity only.  The ownership of each Mortgage Note, Mortgage and
the contents of each Mortgage File is vested in the Owner and the ownership of
all records and documents with respect to the related Mortgage Loan prepared by
or which come into the possession of the Servicer shall immediately vest in the
Owner and shall be retained and maintained, in trust, by the Servicer at the
will of the Owner in such custodial capacity only.  The Servicer shall release
from its custody the contents of any Mortgage File possessed by it only in
accordance with this Agreement, except when such release is required in
connection with a repurchase of any such Mortgage Loan pursuant to related loan
purchase agreement or if required under applicable law or court order.
 
Subsection 4.03          Transfer Expenses.
 
The Owner shall pay all costs of delivery to the Servicer of all of the
Servicing Files, custodial transfer and or/transfer fees of the Owner’s
custodian, and all costs related to preparing, obtaining and delivering such
documents as the Owner is required to provide (including, without limitation,
written notice to each Mortgagor regarding the transfer of servicing, which the
Owner shall, or shall cause the related prior servicer to, deliver to such
Mortgagors no later than fifteen (15) days prior to the related Transfer Date in
accordance with RESPA).  The Servicer shall bear all of its costs in connection
with performing any due diligence of the Servicing Files, monthly
reconciliations, and other reporting relating to the Servicing Rights.  Except
as otherwise provided in this Agreement, the Owner and the Servicer shall each
bear their own expenses incurred in connection with the transactions
contemplated by this Agreement.

 
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SECTION 5.  Inspections.

 
The Servicer shall provide to any supervisory agents or examiners that regulate
the Owner, including but not limited to, the OTS, the FDIC and other similar
entities, access, during normal business hours, upon reasonable advance notice
to the Servicer and without charge to the Servicer or such supervisory agents or
examiners, to any documentation regarding the Mortgage Loans that may be
required by any applicable regulator.
 
 
SECTION 6.  Helping Families Notice.

 
 Within thirty (30) days following the Closing Date in respect of a Mortgage
Loan, the Servicer, on behalf of the Owner, shall furnish to the borrower of
such Mortgage Loan the notice required by Section 404 of the Helping Families
Save Their Homes Act of 2009 (the “Helping Families Act”) in accordance with the
provisions of the Helping Families Act.  Such notice may be combined with any
other notices required to be sent to such borrowers by the applicable Originator
to the extent permitted by law.  In connection with any Securitization
Transaction with respect to any of the Mortgage Loans, the Servicer, on behalf
of the Owner, shall furnish to each related borrower, within thirty (30) days
following the closing date with respect to such Securitization Transaction, a
notice with respect to such assignment, substantially in the form of Exhibit 2
attached hereto, which notice shall identify the Securitization Transaction
trust as the new owner of the Mortgage Loan and include any other information
required by Section 404 of the Helping Families Act.  The Owner and the Servicer
hereby acknowledge and agree that the Owner shall pay to the Servicer a fee in
connection with each notice delivered pursuant to this Section 6, such fee to be
mutually agreed upon between the Owner and the Servicer.
 
SECTION 7.  Representations and Warranties; Effect of Breach.
 
Subsection 7.01          Servicer Representations and Warranties.
 
The Servicer hereby represents and warrants to the Owner that as to itself as of
the related Closing Date:
 
(a)           It is a corporation, duly organized, validly existing, and in good
standing under the laws of the State of Utah and has all licenses necessary to
carry on its business as now being conducted and is licensed, qualified and in
good standing in the states where each Mortgaged Property is located if the laws
of such state require licensing or qualification in order to conduct business of
the type conducted by it.  It is an approved seller/servicer in good standing of
conventional residential mortgage loans for Fannie Mae or Freddie Mac and is a
HUD-approved mortgagee under Section 203 of the National Housing Act.  It has
corporate power and authority to execute and deliver this Agreement and to
perform in accordance herewith; the execution, delivery and performance of this
Agreement (including all instruments of transfer to be delivered pursuant to
this Agreement) by it and the consummation of the transactions contemplated
hereby have been duly and validly authorized.  This Agreement, assuming due
authorization, execution and delivery by the Owner, evidences the legal, valid,
binding and enforceable obligation of it, subject to applicable law except as
enforceability may be limited by (i) bankruptcy, insolvency,

 
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liquidation, receivership, moratorium, reorganization or other similar laws
affecting the enforcement of the rights of creditors and (ii) general principles
of equity, whether enforcement is sought in a proceeding in equity or at
law.  All requisite corporate action has been taken by it to make this Agreement
valid and binding upon it in accordance with the terms of this Agreement.
 
(b)           No consent, approval, authorization or order is required for the
transactions contemplated by this Agreement from any court, governmental agency
or body, or federal or state regulatory authority having jurisdiction over it
or, if required, such consent, approval, authorization or order has been or
will, prior to the related Closing Date, be obtained.
 
(c)           The consummation of the transactions contemplated by this
Agreement are in its ordinary course of business and will not result in the
breach of any term or provision of its articles of incorporation or by-laws or
result in the breach of any term or provision of, or conflict with or constitute
a default under or result in the acceleration of any obligation under, any
agreement, indenture or loan or credit agreement or other instrument to which it
or its property is subject, or result in the violation of any law, rule,
regulation, order, judgment or decree to which it or its property is subject.
 
(d)           There is no action, suit, proceeding or investigation pending or,
to its best knowledge, threatened against it which, either individually or in
the aggregate, would result in any material adverse change in its business,
operations, financial condition, properties or assets, or in any material
impairment of its right or ability to carry on its business substantially as now
conducted or which would draw into question the validity of this Agreement or of
any action taken or to be taken in connection with its obligations contemplated
herein, or which would materially impair its ability to perform under the terms
of this Agreement.
 
(e)           To the best of the Servicer’s knowledge, the Servicer is not in
material default under any agreement, contract, instrument or indenture to which
the Servicer is a party or by which it (or any of its assets) is bound, which
default would have a material adverse effect on the ability of the Servicer to
perform under this Agreement, nor, to the best of the Servicer’s knowledge, has
any event occurred which, with the giving of notice, the lapse of time or both,
would constitute a default under any such agreement, contract, instrument or
indenture and have a material adverse effect on the ability of the Servicer to
perform its obligations under this Agreement.
 
(f)           It does not believe, nor does it have any reason or cause to
believe, that it cannot perform each and every covenant contained in this
Agreement.
 
(g)           It acknowledges and agrees that the Servicing Fee shall be treated
by the Servicer, for accounting and tax purposes, as compensation for the
servicing and administration of the Mortgage Loans pursuant to this Agreement.
 
(h)           The Servicer is in compliance in all material respects with all
applicable laws and regulations and there has been no occurrence or condition
with respect to the Servicer or otherwise known to the Servicer that would
reasonably be expected to cause the cancellation or termination of the Servicing
Rights with respect to the Mortgage Loans.

 
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(i)            It has not dealt with any broker, investment banker, agent or
other person that may be entitled to any commission or compensation in
connection with the purchase or sale of the Servicing Rights.
 
Subsection 7.02          Owner Representations and Warranties.
 
The Owner hereby represents and warrants to the Servicer that, as to itself as
of the related Closing Date:
 
(a)           It is a corporation duly organized, validly existing, and in good
standing under the laws of the State of Delaware and has all licenses necessary
to carry on its business as now being conducted and is licensed, qualified and
in good standing in the states where the Mortgaged Property is located if the
laws of such state require licensing or qualification in order to conduct
business of the type conducted by it.  It has corporate power and authority to
execute and deliver this Agreement and to perform in accordance herewith; the
execution, delivery and performance of this Agreement (including all instruments
of transfer to be delivered pursuant to this Agreement) by it and the
consummation of the transactions contemplated hereby have been duly and validly
authorized.  This Agreement, assuming due authorization, execution and delivery
by the Servicer, evidences the legal, valid, binding and enforceable obligation
of it, subject to applicable law except as enforceability may be limited by (i)
bankruptcy, insolvency, liquidation, receivership, moratorium, reorganization or
other similar laws affecting the enforcement of the rights of creditors and (ii)
general principles of equity, whether enforcement is sought in a proceeding in
equity or at law.  All requisite corporate action has been taken by it to make
this Agreement valid and binding upon it in accordance with the terms of this
Agreement.
 
(b)           No consent, approval, authorization or order is required for the
transactions contemplated by this Agreement from any court, governmental agency
or body, or federal or state regulatory authority having jurisdiction over it
or, if required, such consent, approval, authorization or order has been or
will, prior to the related Closing Date, be obtained.
 
(c)           The consummation of the transactions contemplated by this
Agreement are in its ordinary course of business and will not result in the
breach of any term or provision of its charter or by-laws or result in the
breach of any term or provision of, or conflict with or constitute a default
under or result in the acceleration of any obligation under, any agreement,
indenture or loan or credit agreement or other instrument to which it or its
property is subject, or result in the violation of any law, rule, regulation,
order, judgment or decree to which it or its property is subject.
 
(d)           Its transfer, assignment and conveyance of the Servicing Rights
pursuant to this Agreement are not subject to the bulk transfer or any similar
statutory provisions in effect in any applicable jurisdiction.
 
(e)           There is no action, suit, proceeding or investigation pending or,
to its best knowledge, threatened against it that, either individually or in the
aggregate, would result in any material adverse change in its business,
operations, financial condition, properties or assets, or in any material
impairment of its right or ability to carry on its business substantially as now
conducted or that would draw into question the validity of this Agreement of any
action taken or

 
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to be taken in connection with its obligations contemplated herein, or that
would materially impair its ability to perform under the terms of this
Agreement.
 
(f)           To the best of the Owner’s knowledge, the Owner is not in material
default under any agreement, contract, instrument or indenture to which the
Owner is a party or by which it (or any of its assets) is bound, which default
would have a material adverse effect on the ability of the Owner to perform
under this Agreement, nor, to the best of the Owner’s knowledge, has any event
occurred that, with the giving of notice, the lapse of time or both, would
constitute a default under any such agreement, contract, instrument or indenture
and have a material adverse effect on the ability of the Owner to perform its
obligations under this Agreement.
 
(g)           It is solvent and the sale of the Servicing Rights will not cause
it to become insolvent.  The sale of the Servicing Rights is not undertaken with
the intent to hinder, delay or defraud any of its creditors.
 
(h)           It has not dealt with any broker, investment banker, agent or
other person that may be entitled to any commission or compensation in
connection with the sale of the Servicing Rights.
 
(i)           To the best of the Owner’s knowledge, neither this Agreement nor
any statement, report or other agreement, document of instrument furnished or to
be furnished pursuant to this Agreement contains any materially untrue statement
of fact or omits to state a fact necessary to make the statements contained
therein not misleading.
 
Subsection 7.03          Representations and Warranties Regarding Individual
Mortgage Loans.
 
The Owner represents and warrants to the Servicer, as to the Servicing Rights to
be conveyed by the Owner to the Servicer pursuant to this Agreement on a
specified Closing Date, that as of the Closing Date specified in the related
Bill of Sale and Servicer Acknowledgement (or such other date specified below):
 
(a)           Data:  The information set forth in the related Mortgage Loan
Schedule, including any diskette or other related data tapes sent to the
Servicer, is complete, true and correct in all material respects. The
information on the Mortgage Loan Schedule and the information provided are
consistent with the contents of the originator’s records and the Mortgage
File.  The Mortgage Loan Schedule contains all the fields indicated in Exhibit
3.  Except for information specified to be as of the origination date of the
Mortgage Loan, the Mortgage Loan Schedule contains the most current information
possessed by the Originator and the Owner.
 
(b)           Regulatory Compliance:  Any and all requirements of any federal,
state or local law including, without limitation, usury, truth-in-lending, real
estate settlement procedures, consumer credit protection, equal credit
opportunity, fair housing, or disclosure laws applicable to the Mortgage Loan
have been complied with in all material respects in connection with the
origination and servicing of the Mortgage Loan.  No Mortgage Loan is a “high
cost” or “covered” loan, as defined by any applicable federal, state or local
predatory or abusive lending law, and no Mortgage Loan has a percentage listed
under the Indicative Loss Severity Column

 
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(the column that appears in the Standard & Poor’s Anti-Predatory Lending Law
Update Table, included in the then-current Standard & Poor’s LEVELS® Glossary of
Terms on Appendix E).  No Mortgage Loan secured by property located in the State
of Georgia was originated on or after October 1, 2002 and prior to March 7,
2003.  No Mortgage Loan originated on or after March 7, 2003 is a “high cost
home loan” as defined under the Georgia Fair Lending Act.
 
(c)          Ownership by Owner:  The Owner is the sole owner and holder of the
Servicing Rights.  Immediately prior to the transfer and assignment to the
Servicer on the related Closing Date, the Servicing Rights were not subject to
an assignment or pledge, and the Owner had good and marketable title to and was
the sole owner thereof and had full right to transfer and sell the Servicing
Rights to the Servicing Rights Purchaser and clear of any encumbrance, equity,
lien, pledge, charge, claim or security interest.
 
(d)          No Graduated Payments:  The Mortgage Loan does not contain
“graduated payment” features, does not have a shared appreciation or other
contingent interest feature and does not contain any buydown provisions.
 
(e)          No Negative Amortization Loans; No HELOCs; All 30 Year Mortgages;
No Pay Option ARMs; Fully Disbursed:  The Mortgage Loans have an original term
to maturity of not more than 30 years, with interest payable in arrears on the
first day of each month.  Each Mortgage Note requires a monthly payment which is
sufficient to fully amortize the original principal balance over the original
term thereof (except in the case of interest only loans) and to pay interest at
the related Mortgage Interest Rate.  No Mortgage Loan contains terms or
provisions which would result in negative amortization.  No Mortgage Loan is a
“pay option ARM,” “pick-a-payment” or similar type of mortgage loan or a home
equity revolving line of credit secured by a mortgage, deed of trust or other
instrument.  The proceeds of each Mortgage Loan have been fully disbursed.  All
costs, fees and expenses incurred in the making or closing of each Mortgage Loan
and the recording of the related Mortgage have been paid, and the mortgagor is
not entitled to any refund of any amounts paid or due to the mortgagee pursuant
to the Mortgage Note or Mortgage.
 
(f)          Escrow Accounts:  If applicable, all Escrow Accounts have been
maintained in accordance with Applicable Requirements.  The Escrow Payments
required by the Mortgages are on deposit in the appropriate Escrow Account.
 
(g)          Escrow Compliance:  If an Escrow Account is required to be
maintained with respect to each Mortgage Loan, (i) all interest required
pursuant to applicable law to be paid on funds in such Escrow Account through
the Closing Date has been or will be credited to the account of the related
Mortgagor, and evidence of such credit shall be provided to the Servicer; and
(ii) such interest has been and through the Closing Date will be properly
computed and paid in accordance with the terms of such Mortgage Loan and with
applicable law.
 
(h)          MERS:  The ownership of all MERS Mortgage Loans is registered with
MERS.
 
Subsection 7.04          Effect of Breach.
 
(a)          It is understood and agreed that the representations and warranties
set forth in Sections 7.02 and 7.03 shall survive the sale of the Servicing
Rights to the Servicing Rights

 
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Purchaser.  Upon discovery by the Owner, the Servicing Rights Purchaser or the
Servicer of a breach of any of the foregoing representations and warranties that
materially and adversely affects the value of the related Servicing Rights, the
party discovering such breach shall give prompt written notice to the other
parties.  The Owner shall have a period of ninety (90) days from the earlier of
its discovery or its receipt of notice of any such breach within which to
correct or cure such breach.  The Owner hereby covenants and agrees that if any
such breach is not corrected or cured within such ninety (90) day period, the
Owner shall pay to the Servicing Rights Purchaser an amount equal to the
reduction in value of the related Servicing Rights resulting from such breach,
as agreed to by the Owner and the Servicing Rights Purchaser.  Any such payment
shall be made by wire transfer of immediately available funds to the account
designated by the Servicing Rights Purchaser.
 
(b)          If a breach of any of the foregoing representations and warranties
gives rise to a repurchase obligation by the related Originator, the Owner shall
not be required to correct or cure such breach or pay any amounts pursuant to
paragraph (a) above, but shall instead require the Originator to repurchase the
related Mortgage Loan, including participating in any required arbitration
proceedings.  In addition, if the Servicing Rights Purchaser and the Owner
disagree as to whether a breach of any of the foregoing representations and
warranties gives rise to a repurchase obligation by the related Originator and
the Owner elects not to pursue remedies against the Originator, the Servicing
Rights Purchaser may nevertheless direct the Owner to pursue remedies against
the Originator in accordance with the instructions of the Servicing Rights
Purchaser, including participating in any required arbitration proceedings.  If
the Originator repurchases such Mortgage Loan, the Owner shall pay to the
Servicing Rights Purchaser the applicable Repurchase Price from the repurchase
price paid by the Originator.  If a final determination is made in an
arbitration proceeding that the Originator is not required to repurchase the
related Mortgage Loan because no breach of a representation or warranty has
occurred, the Owner shall not be required to repurchase the related Servicing
Rights from the Servicing Rights Purchaser or pay any other amounts to the
Servicing Rights Purchaser with respect to the alleged breach. If a final
determination is made in an arbitration proceeding whereby the Originator is
required or permitted to pay the Owner a settlement amount in lieu of
repurchasing the related Mortgage Loan, the Owner shall remit to the Servicing
Rights Purchaser the portion of such settlement amount allocable to the related
Servicing Rights as mutually agreed upon between the Owner and the Servicing
Rights Purchaser on the date of the Owner’s receipt of such settlement amount.
 
(c)          Any cause of action against the Owner relating to or arising out of
the breach of any representations and warranties made in Subsections 7.02 and
7.03 shall accrue as to any Servicing Rights upon (i) notice thereof by the
Servicing Rights Purchaser or Servicer to the Owner and (ii) demand upon the
Owner by the Servicing Rights Purchaser or Servicer for compliance with this
Agreement.
 
Subsection 7.05          Repurchase or Substitution of Mortgage Loans by
Originator.
 
(a)          If an Originator repurchases a Mortgage Loan and the related
Servicing Rights due to a breach of representations and warranties, the Owner
shall pay to the Servicing Rights

 
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Purchaser the Repurchase Price of the related Servicing Rights and the Servicer
shall effect the transfer of the related Servicing Rights to the Originator or
its designated servicer.
 
(b)          If an Originator substitutes such Mortgage Loan, such substitute
mortgage loan shall be deemed a “Mortgage Loan” hereunder, as if included on the
Mortgage Loan Schedule, and the Servicer shall release to the Originator or its
designated servicer the related defective Mortgage Loan.
 
(c)          In the event of any breach of any representation and warranty of an
Originator made with respect to any Mortgage Loan, the Servicer shall assist the
Owner in pursuing any available remedies against the Originator arising from
such breach.
 
Subsection 7.06          Servicing Rights Purchaser Representations and
Warranties.
 
The Servicing Rights Purchaser hereby represents and warrants to the Owner that
as to itself as of the related Closing Date:
 
(a)          It is a corporation, duly organized, validly existing, and in good
standing under the laws of the State of Delaware and has all licenses necessary
to carry on its business as now being conducted and is licensed, qualified and
in good standing in the states where the laws of such state require licensing or
qualification in order to conduct business of the type conducted by it.  It has
corporate power and authority to execute and deliver this Agreement and to
perform in accordance herewith; the execution, delivery and performance of this
Agreement (including all instruments of transfer to be delivered pursuant to
this Agreement) by it and the consummation of the transactions contemplated
hereby have been duly and validly authorized.  This Agreement, assuming due
authorization, execution and delivery by the Owner, evidences the legal, valid,
binding and enforceable obligation of it, subject to applicable law except as
enforceability may be limited by (i) bankruptcy, insolvency, liquidation,
receivership, moratorium, reorganization or other similar laws affecting the
enforcement of the rights of creditors and (ii) general principles of equity,
whether enforcement is sought in a proceeding in equity or at law.  All
requisite corporate action has been taken by it to make this Agreement valid and
binding upon it in accordance with the terms of this Agreement.
 
(b)          No consent, approval, authorization or order is required for the
transactions contemplated by this Agreement from any court, governmental agency
or body, or federal or state regulatory authority having jurisdiction over it
or, if required, such consent, approval, authorization or order has been or
will, prior to the related Closing Date, be obtained.
 
(c)          The consummation of the transactions contemplated by this Agreement
are in its ordinary course of business and will not result in the breach of any
term or provision of its articles of incorporation or by-laws or result in the
breach of any term or provision of, or conflict with or constitute a default
under or result in the acceleration of any obligation under, any agreement,
indenture or loan or credit agreement or other instrument to which it or its
property is subject, or result in the violation of any law, rule, regulation,
order, judgment or decree to which it or its property is subject.

 
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(d)           There is no action, suit, proceeding or investigation pending or,
to its knowledge, threatened against it which, either individually or in the
aggregate, would result in any material adverse change in its business,
operations, financial condition, properties or assets, or in any material
impairment of its right or ability to carry on its business substantially as now
conducted or which would draw into question the validity of this Agreement or of
any action taken or to be taken in connection with its obligations contemplated
herein, or which would materially impair its ability to perform under the terms
of this Agreement.
 
(e)           It has not dealt with any broker, investment banker, agent or
other person that may be entitled to any commission or compensation in
connection with the purchase or sale of the Servicing Rights.
 
SECTION 8.   [Reserved].
 
SECTION 9.  Closing Conditions.
 
The closing for each purchase and sale of Servicing Rights hereunder shall take
place on the respective Closing Date.  The closing shall be either by telephone,
confirmed by letter or wire as the parties hereto shall agree, or conducted in
person, at such place as the parties hereto shall agree.
 
(a)           On or before the initial Closing Date, the Servicer and the
Servicing Rights Purchaser shall submit to the Owner fully executed originals of
the following documents:
 
(i)           this Agreement, in four counterparts;
 
(ii)          if requested by the Owner, a Custodial Account letter agreement;
and
 
(iii)         if requested by the Owner, an Escrow Account letter agreement.
 
(b)           The closing for each purchase and sale of Servicing Rights, and
any assumption of the servicing responsibilities by the Servicer, hereunder
shall be subject to the satisfaction of each of the following conditions:
 
(i)           the Servicer and the Servicing Rights Purchaser shall submit to
the Owner the related Bill of Sale and Servicer Acknowledgement, in four
counterparts;
 
(ii)          the Owner shall have delivered to the Servicer and the Servicing
Rights Purchaser the related Mortgage Loan Schedule and an electronic data file
containing information on a loan-level basis;
 
(iii)         all of the representations and warranties of the Owner, the
Servicing Rights Purchaser and the Servicer under this Agreement shall be true
and correct as of the related Closing Date (or such other date specified in
Section 7) in all material respects;

 
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(iv)         all other terms and conditions of this Agreement and the related
Bill of Sale and Servicer Acknowledgement to be satisfied by the Servicer, the
Servicing Rights Purchaser and/or the Owner shall have been complied with in all
material respects; and
 
(v)          Forty (40) fully executed, original powers of attorney in form and
substance reasonably acceptable to Servicer.
 
Upon satisfaction of the foregoing conditions, the Servicing Rights Purchaser
shall pay to Owner on the applicable Closing Date the Purchase Price for the
related Servicing Rights.
 
SECTION 10.  Costs.
 
The Owner shall pay the cost of delivering the Mortgage Files to the Owner or
its designee, the cost of recording the Assignments of Mortgage, any custodial
fees incurred in connection with the release of any Mortgage Loan documents as
may be required by the servicing activities hereunder and all other costs and
expenses incurred in connection with this Agreement by the Owner.  Except as
otherwise provided in this Agreement, the Servicer, the Servicing Rights
Purchaser and the Owner shall each bear their own expenses (including, without
limitation, any legal fees and expenses of its attorneys) incurred in connection
with the transactions contemplated by this Agreement.
 
SECTION 11.  Administration and Servicing of Mortgage Loans.
 
Subsection 11.01        Servicer to Act as Servicer; Subservicing.
 
(a)          Effective as of each related Transfer Date, the Servicer, as an
independent contractor, shall service and administer the Mortgage Loans in
accordance with this Agreement, Applicable Requirements and Customary Servicing
Procedures and the terms of the Mortgage Notes and Mortgages, and shall have
full power and authority, acting alone or through subservicers or agents, to do
or cause to be done any and all things in connection with such servicing and
administration which the Servicer may deem necessary or desirable and consistent
with the terms of this Agreement.  The Servicer may perform its servicing
responsibilities through agents or independent contractors, but shall not
thereby be released from any of its responsibilities hereunder.  Notwithstanding
anything to the contrary, the Servicer may delegate any of its duties under this
Agreement to one or more of its affiliates without regard to any of the
requirements of this section; provided, however, that the Servicer shall not be
released from any of its responsibilities hereunder by virtue of such
delegation.  The Mortgage Loans may be subserviced by one or more unaffiliated
subservicers on behalf of the Servicer provided each subservicer is a Fannie Mae
approved seller/servicer or a Freddie Mac approved seller/servicer in good
standing, and no event has occurred, including but not limited to a change in
insurance coverage, that would make it unable to comply with the eligibility for
seller/servicers imposed by Fannie Mae or Freddie Mac, or which would require
notification to Fannie Mae or Freddie Mac. The Servicer shall pay all fees and
expenses of the subservicer from its own funds (provided that any such
expenditures that would constitute Servicing Advances if made by the Servicer
hereunder shall be reimbursable to the Servicer as Servicing Advances), and the
subservicer’s fee shall not exceed the Servicing Fee.

 
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(b)           At the cost and expense of the Servicer, without any right of
reimbursement from the Custodial Account, the Servicer shall be entitled to
terminate the rights and responsibilities of a subservicer and arrange for any
servicing responsibilities to be performed by a successor subservicer meeting
the requirements in the preceding paragraph; provided, however, that nothing
contained herein shall be deemed to prevent or prohibit the Servicer, at the
Servicer’s option, from electing to service the related Mortgage Loans
itself.  If the Servicer’s responsibilities and duties under this Agreement are
terminated and if requested to do so by the Owner, the Servicer shall at its own
cost and expense terminate the rights and responsibilities of the subservicer as
soon as is reasonably possible.  The Servicer shall pay all fees, expenses or
penalties necessary in order to terminate the rights and responsibilities of the
subservicer from the Servicer’s own funds without reimbursement from the Owner.
 
(c)           The Servicer shall be entitled to enter into an agreement with the
subservicer for indemnification of the Servicer by the subservicer and nothing
contained in this Agreement shall be deemed to limit or modify such
indemnification.
 
(d)           Any subservicing agreement and any other transactions or services
relating to the Mortgage Loans involving the subservicer shall be deemed to be
between the subservicer and Servicer alone, and the Owner shall have no
obligations, duties or liabilities with respect to the subservicer including no
obligation, duty or liability of the Owner to pay the subservicer’s fees and
expenses.  For purposes of distributions and advances by the Servicer pursuant
to this Agreement, the Servicer shall be deemed to have received a payment on a
Mortgage Loan when the subservicer has received such payment.  The Servicer
shall not make any amendment to any agreement with a subservicer if such
amendment is not consistent with or violates the provisions of this Agreement,
or if such amendment could be reasonably expected to be materially adverse to
the interests of the Owner.
 
(e)           Consistent with the terms of this Agreement, and subject to the
REMIC Provisions if the Mortgage Loans have been transferred to a REMIC, 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; provided, however, that the Servicer shall not
enter into any payment plan or agreement to modify payments with a Mortgagor
lasting more than six (6) months or permit any modification with respect to any
Mortgage Loan that would change the Mortgage Interest Rate, the Lifetime Rate
Cap (if applicable), the Initial Rate Cap (if applicable), the Periodic Rate Cap
(if applicable) or the Gross Margin (if applicable), agree to the capitalization
of arrearages, including interest, fees or expenses owed under the Mortgage
Loan, make any future advances or extend the final maturity date with respect to
such Mortgage Loan, or accept substitute or additional collateral or release any
collateral for such Mortgage Loan, unless (1) the Mortgagor is in default with
respect to the Mortgage Loan, or such default is, in the judgment of the
Servicer, imminent, (2) the modification is in accordance with the customary
procedures of the Servicer, which may change from time to time, or
industry-accepted programs, and (3) the Owner has approved such
action.  Additionally, the Servicer shall not accept any deed-in-lieu of, short
pay-off, or sale of any Mortgaged Property, in which the sale proceeds are less
than the unpaid principal balance of the related Mortgage Loan unless the Owner
has approved such action.  Further, the Servicer shall not defer or forgive the
payment of any principal or interest or change the outstanding principal amount
(except to reflect actual payments of principal) unless the Owner has approved
such

 
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action.  Without limiting the generality of the foregoing, the Servicer in its
own name or acting through subservicers or agents is hereby authorized and
empowered by the Owner when the Servicer believes it appropriate and reasonable
in its best judgment, to execute and deliver, on behalf of itself or the Owner,
all instruments of satisfaction or cancellation, or of partial or full release
and discharge, and all other comparable instruments, with respect to the
Mortgage Loans and the Mortgaged Properties and to institute foreclosure
proceedings or obtain a deed-in-lieu of foreclosure so as to convert the
ownership of such properties, and to hold or cause to be held title to such
properties, on behalf of the Owner pursuant to the provisions of
Subsection 11.13.
 
(f)          The Owner shall furnish to the Servicer any powers of attorney and
other documents reasonably necessary or appropriate to enable the Servicer to
carry out its servicing and administrative duties under this Agreement.
 
(g)          Whether in connection with the foreclosure of a Mortgage Loan or
otherwise, the Servicer shall from its own funds make all necessary and proper
Servicing Advances; provided, however, that the Servicer is not required to make
a Servicing Advance unless the Servicer determines in the exercise of its good
faith judgment that such Servicing Advance would ultimately be recoverable from
REO Disposition Proceeds, Insurance Proceeds or Condemnation Proceeds of the
related Mortgaged Property (with respect to each of which the Servicer shall
have the priority described in Subsection 11.05 for purposes of withdrawals from
the Custodial Account).
 
(h)          Notwithstanding anything to the contrary contained herein, in
connection with a foreclosure or acceptance of a deed in lieu of foreclosure, in
the event the Servicer believes that a Mortgaged Property is contaminated by
hazardous or toxic substances or wastes, or if the Owner otherwise requests an
environmental inspection or review of such Mortgaged Property, such an
inspection or review is to be conducted by a qualified inspector at the Owner’s
expense.  Upon completion of the inspection, the Servicer shall promptly provide
the Owner with a written report of the environmental inspection.  In the event
(i) the environmental inspection report indicates that the Mortgaged Property is
contaminated by hazardous or toxic substances or wastes and (ii) the Owner
directs the Servicer to proceed with foreclosure or acceptance of a deed in lieu
of foreclosure, the Servicer shall be reimbursed for all reasonable costs
associated with such foreclosure or acceptance of a deed in lieu of foreclosure
and any related environmental clean up costs, as applicable, from the related
Liquidation Proceeds, or if the Liquidation Proceeds are insufficient fully to
reimburse the Servicer, the Servicer shall be entitled to be reimbursed from
amounts in the Custodial Account pursuant to Subsection 11.05 hereof.  In the
event the Owner directs the Servicer not to proceed with foreclosure or
acceptance of a deed in lieu of foreclosure, the Servicer shall be reimbursed
for all Servicing Advances made with respect to the related Mortgaged Property
from the Custodial Account pursuant to Subsection 11.05 hereof.
 
Subsection 11.02        Liquidation of Mortgage Loans.
 
In the event that any payment due under any Mortgage Loan is not paid when the
same becomes due and payable, or in the event the Mortgagor fails to perform any
other covenant or obligation under the Mortgage Loan and such failure continues
beyond any applicable grace period, the Servicer shall take such action as it
shall deem to be in the best interest of the Owner.

 
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Servicer may, in its sole discretion, order an inspection of the related
Mortgaged Property in accordance with Customary Servicing Procedures.  If such
Mortgage Loan remains delinquent for a period of one hundred and five (105) days
or more, the Servicer shall commence foreclosure proceedings in accordance with
Customary Servicing Procedures.  In such connection, the Servicer shall from its
own funds make all necessary and proper Servicing Advances.  If the portion of
any Liquidation Proceeds allocable as a recovery of interest on a
related  Mortgage Loan is less than the full amount of accrued and unpaid
interest on such Mortgage Loan as of the date such proceeds are received, then
the applicable Servicing Fees with respect to such Mortgage Loan shall be paid
first and any amounts remaining thereafter shall be distributed to the
Owner.  Upon liquidation of any Mortgage Loan, the Servicer shall provide
written notice thereof to the custodian appointed by the Owner.
 
Subsection 11.03        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 will proceed diligently, in
accordance with this Agreement, to collect all payments due under each of the
Mortgage Loans when the same shall become due and payable.
 
Mortgage Loan payments received by the Servicer will be deposited within one
Business Day of receipt into a clearing account that is an Eligible
Account.  The Mortgage Loan payments may be commingled with payments of other
mortgagors and investors for up to two Business Days prior to the Servicer
depositing the Mortgage Loan payments in the Custodial Account.  Such clearing
account shall not be used for operational or corporate purposes of the Servicer.
 
Subsection 11.04        Establishment of Custodial Account; Deposits in
Custodial Account.
 
The Servicer shall segregate and hold all funds collected and received pursuant
to each Mortgage Loan separate and apart from any of its own funds and general
assets and shall establish and maintain one or more Custodial Accounts
(collectively, the “Custodial Account”), titled “Select Portfolio Servicing,
Inc., in trust for Redwood Residential Acquisition Corporation as Owner of
Mortgage Loans and various Mortgagors.”  Such Custodial Account shall be an
Eligible Account established with a commercial bank, a savings bank or a savings
and loan association (which may be a depository affiliate of the Servicer) which
meets the guidelines set forth by the FHFA, Fannie Mae or Freddie Mac as an
eligible depository institution for custodial accounts.  The Custodial Account
shall initially be established and maintained at JPMorgan Chase Bank, N.A., or
any successor thereto, and shall not be transferred to any other depository
institution without the Owner’s approval, which shall not unreasonably be
withheld.  In any case, the Custodial Account shall be insured by the FDIC in a
manner which shall provide maximum available insurance thereunder and which may
be drawn on by the Servicer.
 
The Servicer shall deposit in the Custodial Account, in accordance with Section
11.03, and retain therein, the following payments and collections received or
made by it subsequent to

 
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the related Cut-off Date (other than in respect of principal and interest on the
Mortgage Loans due on or before the related Cut-off Date):
 
(a)           all payments on account of principal, including Principal
Prepayments, on the Mortgage Loans;
 
(b)           all payments on account of interest on the Mortgage Loans adjusted
to the related Mortgage Loan Remittance Rate;
 
(c)           all Liquidation Proceeds;
 
(d)           all proceeds received by the Servicer under any title insurance
policy, hazard insurance policy, Primary Mortgage Insurance Policy or other
insurance policy 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 Customary Servicing Procedures;
 
(e)           all awards or settlements in respect of condemnation proceedings
or eminent domain affecting any Mortgaged Property which are not released to the
Mortgagor in accordance with Customary Servicing Procedures;
 
(f)           any amount required to be deposited in the Custodial Account
pursuant to Subsections 11.15 and 11.19;
 
(g)           any amount required to be deposited by the Servicer in connection
with any REO Property pursuant to Subsection 11.13;
 
(h)           all amounts required to be deposited by the seller of the related
Mortgage Loan in connection with shortfalls in principal amount of substitute
Mortgage Loans; and
 
(i)           amounts required to be deposited by the Servicer in connection
with the deductible clause of any hazard insurance policy.
 
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, assumption
fees and other ancillary fees need not be deposited by the Servicer in the
Custodial Account.
 
The Servicer may invest the funds in the Custodial Account in Eligible
Investments designated in the name of the Servicer for the benefit of the Owner,
which shall mature not later than the Business Day next preceding the Remittance
Date next following the date of such investment (except that (A) any investment
in the institution with which the Custodial Account is maintained may mature on
such Remittance Date and (B) any other investment may mature on such Remittance
Date if the Servicer shall advance funds on such Remittance Date, pending
receipt thereof to the extent necessary to make distributions to the Owner) and
shall not be sold or disposed of prior to maturity.  Notwithstanding anything to
the contrary herein and above, all

 
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income and gain realized from any such investment shall be for the benefit of
the Servicer and shall be subject to withdrawal by the Servicer.  The amount of
any losses incurred in respect of any such investments shall be deposited in the
Custodial Account by the Servicer out of its own funds immediately as realized.
 
For all Eligible Investments rated at least “A1/A+”(short/long) that have terms
greater than 60 days, in the event of a downgrade of such Eligible Investment
below “A1” (or “A+” if no short term rating), the Servicer agrees to remove such
Eligible Investment within 60 days of such downgrade.  The Servicer acknowledges
and agrees that the Servicer shall bear any losses incurred with respect to
removal of such Eligible Investment following such a downgrade and that any
losses shall be immediately deposited by the Servicer in the Custodial Account
out of the Servicer’s own funds, with no right to reimbursement therefor.
 
Subsection 11.05        Withdrawals From the Custodial Account.
 
The Servicer shall, from time to time, withdraw funds from the Custodial Account
for the following purposes:
 
(a)          to make payments to the Owner in the amounts and in the manner
provided for in Subsection 11.15;
 
(b)          to reimburse itself for any unpaid Servicing Fees and for
unreimbursed Servicing Advances, it being understood that, in the case of any
such reimbursement, the Servicer’s right thereto shall be prior to the rights of
the Owner;
 
(c)          [reserved];
 
(d)          to reimburse itself for expenses incurred by and reimbursable to it
pursuant to Subsection 12.01;
 
(e)          to pay to itself any interest earned or any investment earnings on
funds deposited in the Custodial Account, net of any losses on such investments;
 
(f)          to withdraw any amounts inadvertently deposited in the Custodial
Account; and
 
(g)          to clear and terminate the Custodial Account upon the termination
of this Agreement.
 
Upon request, the Servicer will provide the Owner with copies of reasonably
acceptable invoices or other documentation relating to Servicing Advances that
have been reimbursed from the Custodial Account.

 
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Subsection 11.06        Establishment of Escrow Account; Deposits in Escrow
Account.
 
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 and shall establish and maintain one or
more Escrow Accounts (collectively, the “Escrow Account”), titled “Select
Portfolio Servicing, Inc., in trust for Redwood Residential Acquisition
Corporation as Owner of Mortgage Loans and various Mortgagors.”  The Escrow
Account shall be an Eligible Account established with a commercial bank, a
savings bank or a savings and loan association (which may be a depository
affiliate of Servicer), which meets the guidelines set forth by Fannie Mae or
Freddie Mac as an eligible institution for escrow accounts.  The Escrow Account
shall initially be established and maintained at JPMorgan Chase Bank, N.A., or
any successor thereto, and shall not be transferred to any other depository
institution without the Owner’s approval, which shall not unreasonably be
withheld.  In any case, the Escrow Account shall be insured by the FDIC in a
manner which shall provide maximum available insurance thereunder and which may
be drawn on by the Servicer.
 
The Servicer shall deposit in the Escrow Account on a daily basis, and retain
therein: (a) 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 (b) all amounts representing proceeds of any hazard
insurance policy which are to be applied to the restoration or repair of any
Mortgaged Property.  The Servicer shall make withdrawals therefrom only in
accordance with Subsection 11.07 hereof.  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.
 
Subsection 11.07        Withdrawals From Escrow Account.
 
Withdrawals from the Escrow Account shall be made by the Servicer only (a) to
effect timely payments of ground rents, taxes, assessments, premiums for Primary
Mortgage Insurance Policies, fire and hazard insurance premiums or other items
constituting Escrow Payments for the related Mortgage, (b) to reimburse the
Servicer for any Servicing Advance made by Servicer pursuant to Subsection 11.08
hereof with respect to a related Mortgage Loan, (c) to refund to any Mortgagor
any funds found to be in excess of the amounts required under the terms of the
related Mortgage Loan, (d) for transfer to the Custodial Account upon default of
a Mortgagor or in accordance with the terms of the related Mortgage Loan and if
permitted by applicable law, (e) for application to restore or repair of the
Mortgaged Property, (f) to pay to the Mortgagor, to the extent required by law,
any interest paid on the funds deposited in the Escrow Account, (g) to pay to
itself any interest earned on funds deposited in the Escrow Account (and not
required to be paid to the Mortgagor), (h) to the extent permitted under the
terms of the related Mortgage Note and applicable law, to pay late fees with
respect to any Monthly Payment which is received after the applicable grace
period, (i) to withdraw suspense payments that are deposited into the Escrow
Account, (j) to withdraw any amounts inadvertently deposited in the Escrow
Account or (k) to clear and terminate the Escrow Account upon the termination of
this Agreement.

 
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Subsection 11.08        Payment of Taxes, Insurance and Other Charges;
Collections Thereunder.
 
With respect to each Mortgage Loan subject to Escrow Payments, the Servicer
shall use commercially reasonable efforts to maintain accurate records
reflecting the status of ground rents, taxes, assessments and other similar
charges which are or may become a lien upon the Mortgaged Property and the
status of premiums for Primary Mortgage Insurance Policies and fire and hazard
insurance coverage and shall use commercially reasonable efforts to obtain, from
time to time, all bills for the payment of such charges (including renewal
premiums) and shall use commercially reasonable efforts to 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.  To the extent that a Mortgage does not
provide for Escrow Payments, the Servicer shall use commercially reasonable
efforts to determine that any such payments are made by the Mortgagor.  The
Servicer assumes full responsibility for the timely payment of all such bills
relating to Mortgage Loans subject to Escrow Payments and shall effect timely
payment of all such bills irrespective of each Mortgagor’s payment of Escrow
Payments and shall make Servicing Advances to effect such payments, subject to
its ability to recover such Servicing Advances pursuant to Subsections 11.05(b),
11.05(c) (if the Servicer is servicing for a Securitization Transaction) and
11.07(b).  No costs incurred by the Servicer or subservicers in effecting the
payment of ground rents, taxes, assessments and other charges on the Mortgaged
Properties or mortgage or hazard insurance premiums shall, for the purpose of
calculating remittances to the Owner, be added to the amount owing under the
related Mortgage Loans, notwithstanding that the terms of such Mortgage Loans so
permit.
 
Subsection 11.09        Transfer of Accounts.
 
The Servicer may, with the approval of the Owner and the Servicing Rights
Purchaser, which shall not be unreasonably withheld, transfer the Custodial
Account or the Escrow Account to an Eligible Account at a different depository
institution.
 
Subsection 11.10        Maintenance of Hazard Insurance.
 
The Servicer shall cause to be maintained for each Mortgage Loan fire and hazard
insurance with extended coverage customary in the area where the Mortgaged
Property is located by an insurer rated A by Demotech or A- or better by the
most current Best Key Guide (or comparable rating with A.M. Best Company in the
event Best Key Guide changes its rating scale, or a comparable rating with a
comparable service in the event A.M. Best Company is no longer providing
ratings), in an amount which is at least equal to the lesser of (a) the full
insurable value of the Mortgaged Property, as determined by the last known
coverage amount, or (b) the greater of (i) the outstanding principal balance
owing on the Mortgage Loan and (ii) an amount such that the proceeds of such
insurance shall be sufficient to avoid the application to the Mortgagor or loss
payee of any coinsurance clause under the policy.  If the Mortgaged Property is
in an area identified in the Federal Register by the Federal Emergency
Management Agency as

 
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a special flood hazard area (and such flood insurance has been made available)
the Servicer will cause to be maintained a flood insurance policy meeting the
requirements of the National Flood Insurance Program, in an amount representing
coverage not less than the lesser of (A) the minimum amount required under the
terms of the coverage to compensate for any damage or loss to the Mortgaged
Property on a replacement-cost basis (or the outstanding principal balance of
the Mortgage Loan if replacement-cost basis is not available) or (B) the maximum
amount of insurance available under the National Flood Insurance Program.  The
Servicer shall also maintain on REO Property fire and hazard insurance with
extended coverage in an amount which is at least equal to the maximum insurable
value of the improvements which are a part of such property, liability insurance
and, to the extent required and available under the National Flood Insurance
Program, flood insurance in an amount required above.  Any amounts collected by
the Servicer under any such policies (other than amounts to be deposited in the
Escrow Account and applied to the restoration or repair of the property subject
to the related Mortgage or property acquired in liquidation of the Mortgage
Loan, or to be released to the Mortgagor in accordance with Customary Servicing
Procedures) shall be deposited in the Custodial Account, subject to withdrawal
pursuant to Subsection 11.05.  It is understood and agreed that no earthquake or
other additional insurance need be required by the Servicer of any Mortgagor or
maintained on REO Property other than pursuant to such applicable laws and
regulations as shall at any time be in force and as shall require such
additional insurance.  All policies required hereunder shall be endorsed with
standard mortgagee clauses with loss payable to Servicer, and shall provide for
at least thirty (30) days prior written notice of any cancellation, reduction in
amount or material change in coverage to the Servicer.  The Servicer shall not
interfere with the Mortgagor’s freedom of choice in selecting either its
insurance carrier or agent; provided, however, that unless otherwise required by
the terms of the related Mortgage Note or applicable law, the Servicer shall not
accept any such insurance policies from insurance companies unless such
companies are acceptable in accordance with Customary Servicing Procedures and
are licensed to do business in the state wherein the property subject to the
policy is located.
 
The hazard insurance policies for each Mortgage Loan secured by a unit in a
condominium development or planned unit development shall be maintained with
respect to such Mortgage Loan and the related development in a manner which is
consistent with Fannie Mae or Freddie Mac requirements and FHA or VA
requirements, as applicable unless otherwise required by the terms of the
related Mortgage Note or applicable law.
 
Subsection 11.11        Maintenance of Primary Mortgage Insurance Policy;
Claims.
 
With respect to each Mortgage Loan with a Loan-to-Value Ratio in excess of 80%,
which the Owner represented to be covered by a Primary Mortgage Insurance Policy
as of the related Transfer Date, the related Servicer shall maintain or cause
the Mortgagor to maintain in full force and effect a Primary Mortgage Insurance
Policy insuring that portion of the Mortgage Loan in excess of 75% of value, and
shall pay or shall cause the Mortgagor to pay, the premium thereon on a timely
basis, until the Loan-to-Value Ratio of such Mortgage Loan is reduced to 80%,
based on either (i) a current appraisal of the Mortgaged Property by a Qualified
Appraiser or (ii) the appraisal of the Mortgaged Property obtained at the time
the Mortgage Loan was originated.  In

 
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the event that such Primary Mortgage Insurance Policy shall be terminated other
than as required by law, the Servicer shall use commercially reasonable efforts
to obtain from another Qualified Insurer a comparable replacement policy, with a
total coverage equal to the remaining coverage of such terminated Primary
Mortgage Insurance Policy.  If the insurer shall cease to be a Qualified
Insurer, the Servicer shall use commercially reasonable efforts to obtain from
another Qualified Insurer a replacement Primary Mortgage Insurance Policy.  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
any assumption or substitution agreement entered into or to be entered into
pursuant to Subsection 11.18, the Servicer shall promptly notify the insurer
under the related Primary Mortgage Insurance Policy, if any, of such assumption
or substitution of liability in accordance with the terms of such Primary
Mortgage Insurance Policy and shall take all actions which may be required by
such insurer as a condition to the continuation of coverage under such Primary
Mortgage Insurance Policy. If such Primary Mortgage Insurance Policy is
terminated as a result of such assumption or substitution of liability, the
Servicer shall obtain a replacement Primary Mortgage Insurance Policy as
provided above.
 
In connection with its activities as servicer, the Servicer agrees to prepare
and present or to assist the Owner in preparing and presenting, 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 Primary Mortgage
Insurance Policy 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 Subsection 11.04, any amounts collected by
the Servicer under any Primary Mortgage Insurance Policy shall be deposited in
the Custodial Account, subject to withdrawal pursuant to Subsection 11.05.
 
Subsection 11.12        Fidelity Bond; Errors and Omissions Insurance.
 
The Servicer (or an Affiliate on its behalf) shall maintain, at its own expense,
a blanket Fidelity Bond and an errors and omissions insurance policy, with broad
coverage on all officers, employees or other persons acting in any capacity
requiring such persons to handle funds, money, documents or papers relating to
the Mortgage Loans.  These policies must insure the Servicer against losses
resulting from fraud, theft, errors, omissions, negligence, dishonest or
fraudulent acts committed by the Servicer’s personnel, any employees of outside
firms that provide data processing services for the Servicer, and temporary
contract employees or student interns.  The Fidelity Bond shall also protect and
insure the Servicer against losses in connection with the release or
satisfaction of a Mortgage Loan without having obtained payment in full of the
indebtedness secured thereby.  No provision of this Subsection 11.12 requiring
such Fidelity Bond and 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 Fidelity Bond and insurance
policy shall be at least equal to the corresponding amounts required by FHA or
VA, Fannie Mae in the Fannie Mae Guides or by Freddie Mac in the Freddie Mac
Guide, as amended or restated from time to time, as applicable, or in an amount
as may be permitted to the Servicer by express waiver of FHA or VA and Fannie
Mae or Freddie Mac, as applicable.  Upon request of the Owner, the Servicer
shall cause to be delivered to the Owner a certified true copy

 
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of such Fidelity Bond or a certificate evidencing the same with a statement that
the Servicer shall endeavor to provide written notice to the Owner thirty (30)
days prior to modification or any material change.
 
Subsection 11.13          Title, Management and Disposition of REO Property.
 
Subject to Subsection 11.02, in the event that title to a Mortgaged Property is
acquired in foreclosure or by deed in lieu of foreclosure, the deed or
certificate of sale shall be taken in the name of the Owner or its nominee.
 
The Servicer shall cause to be deposited on a daily basis in the Custodial
Account all revenues received with respect to the conservation of the related
REO Property.  The Servicer shall make distributions as required on each
Remittance Date to the Owner of the net cash flow from the REO Property (which
shall equal the revenues from such REO Property net of the expenses described
above and of any reserves reasonably required from time to time to be maintained
to satisfy anticipated liabilities for such expenses).
 
The disposition of REO Property shall be carried out by the Servicer, subject to
Subsection 11.01.  The Owner shall pay the Servicer a fee of 1.5% of the sales
price for such REO Property for services associated with servicing the REO
Property through its disposition.  Upon the request of the Owner, and at the
Owner’s expense, the Servicer shall cause an appraisal of the REO Property to be
performed for the Owner.
 
The Servicer shall either itself or through an agent selected by the Servicer,
conserve and protect the REO Property in the same manner that it conserves and
protects other foreclosed property for its own account, and in the same manner
that similar property in the same locality as the REO Property.  No disbursement
in excess of $15,000 shall be made unless the Servicer has previously notified
the Owner and provided the Owner with an accounting of such disbursement.  The
costs of conserving, protecting and marketing the REO Property shall be deemed
to be, and recoverable by the Servicer as, Servicing Advances.
 
The Servicer shall not accept any sale offer for an REO Property that is more
than 10% below the Reconciled Market Value of the REO Property without the prior
written consent of the Owner.
 
Subsection 11.14          Servicing Compensation.
 
As compensation for its services hereunder and subject to Subsection 11.15, the
Servicer shall be entitled to retain the Servicing Fee from interest payments
actually collected on the Mortgage Loans.  Additional servicing compensation in
the form of assumption fees, late payment charges, fees related to the
disposition of REO Property and other Ancillary Fees shall be retained by the
Servicer to the extent not required to be deposited in the Custodial Account.

 
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Prepayment Charges shall not be included in the Servicer’s compensation but paid
to the Owner.  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.  The
Servicing Fee shall not be reduced by the amount of any guarantee fee payable to
FHA or VA.
 
Subsection 11.15          Distributions.
 
On each Remittance Date the Servicer shall remit by wire transfer of immediately
available funds to the account designated in writing by the Owner of record on
the preceding Record Date (a) all amounts credited to the Custodial Account at
the close of business on the related Determination Date, net of charges against
or withdrawals from the Custodial Account pursuant to Subsection 11.05(b)
through (f), minus (b) any amounts attributable to Monthly Payments collected
but due on a Due Date or Due Dates subsequent to the first day of the month in
which the Remittance Date occurs.
 
With respect to any remittance received by the Owner after the Business Day on
which such payment was due, the Servicer shall pay to the Owner interest on any
such late payment at an annual rate equal to the prime lending rate as is
publicly announced from time to time in the Wall Street Journal, or its
successor, at the prime lending rate published that day in the Wall Street
Journal, adjusted as of the date of each change, plus two percent (2%), but in
no event greater than the maximum amount permitted by applicable law.  Such
interest shall be paid by the Servicer to the Owner on the date such late
payment is made and shall cover the period commencing with the Business Day on
which such payment was due and ending with the Business Day immediately
preceding the Business Day on which such payment is made, both inclusive.  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.
 
Subsection 11.16          Statements to the Owner.
 
(a)           Not later than five (5) days prior to each related Remittance
Date, the Servicer shall forward to the Owner a statement, in the form specified
and with the information required by the monthly reporting format of the Master
Servicer, as provided to the Servicer by the Owner, or such other reporting
format as the Servicer and the Owner shall reasonably agree.  Such statement
shall also include information regarding delinquencies on Mortgage Loans,
indicating the number and aggregate principal amount of Mortgage Loans that are
either one (1), two (2) or three (3) or more months delinquent.  The Servicer
shall submit to the Owner monthly a liquidation report with respect to each
Mortgaged Property sold in a foreclosure sale as of the related Record Date and
not previously reported.  The Servicer shall also provide such information as
set forth above to the Owner in electronic form in the Servicer’s standard
format, a copy of which has been provided by the Servicer.
 
(b)           In addition, the Servicer shall submit to the Owner monthly
loan-by-loan default information including, without limitation, notes made and
retained by the Servicer in connection with servicing the defaulted loan, the
reasons for the default, updated values of the Mortgaged

 
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Property, updated FICO scores on the Mortgagor and information regarding
Servicing Advances made.
 
(c)           On or after the 16th day of each calendar month, the Servicer
shall provide, at the Owner’s request, a list of the Mortgagors as to which
Monthly Payments that were due on the immediately preceding Due Date have not
yet been received.
 
(d)           The Servicer shall prepare and file any and all tax returns,
information statements or other filings required to be delivered to any
governmental taxing authority, the Mortgagor or to the Owner pursuant to any
applicable law with respect to the Mortgage Loans and the transactions
contemplated hereby.  In addition, the Servicer shall provide the Owner with
such information concerning the Mortgage Loans as is necessary for such Owner to
prepare federal income tax returns as the Owner may reasonably request from time
to time.
 
Subsection 11.17          [Reserved].
 
Subsection 11.18          Assumption Agreements.
 
The Servicer will use commercially reasonable efforts to enforce any
“due-on-sale” provision contained in any Mortgage or Mortgage Note; provided
that, the Servicer shall permit such assumption if so required in accordance
with the terms of the Mortgage or the Mortgage Note.  When the Mortgaged
Property has been conveyed by the Mortgagor prior to payment in full of the
Mortgage Loan, the Servicer will, to the extent it has knowledge of such
conveyance, exercise its rights to accelerate the maturity of such Mortgage Loan
under the “due-on-sale” clause applicable thereto; provided, however, the
Servicer will not exercise such rights if prohibited by law from doing so or if
the exercise of such rights would impair or threaten to impair any recovery
under the related Primary Mortgage Insurance Policy, if any.  In connection with
any such assumption, the outstanding principal amount, the Monthly Payment, the
Mortgage Interest Rate, the Lifetime Rate Cap (if applicable), the Gross Margin
(if applicable), the Initial Rate Cap  (if applicable) or the Periodic Rate Cap
(if applicable) of the related Mortgage Note shall not be changed, and the term
of the Mortgage Loan will not be increased or decreased.  If an assumption is
allowed pursuant to this Subsection 11.18, the Servicer with the prior consent
of the issuer of the Primary Mortgage Insurance Policy, if any, is authorized to
enter into a substitution of liability agreement with the purchaser of the
Mortgaged Property pursuant to which the original Mortgagor is released from
liability and the purchaser of the Mortgaged Property is substituted as
Mortgagor and becomes liable under the Mortgage Note.
 
Subsection 11.19          Satisfaction of Mortgages and Release of Mortgage
Files.
 
Upon the payment in full of any Mortgage Loan, or the receipt by the Servicer of
a notification that payment in full will be escrowed in a manner customary for
such purposes, the Servicer will obtain the portion of the Mortgage File that is
in the possession of the Owner or its designee, prepare and process any required
satisfaction or release of the Mortgage and notify the Owner in accordance with
the provisions of this Agreement.  The Owner agrees to deliver to the Servicer
(or cause to be delivered to the Servicer) the original Mortgage Note for any
Mortgage Loan not later than five (5) Business Days following its receipt of a
notice from the Servicer that such a payment in full has been received or that a
notification has been received that such a

 
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payment in full shall be made.  Such Mortgage Note shall be held by the
Servicer, in trust, for the purpose of canceling such Mortgage Note and
delivering the canceled Mortgage Note to the Mortgagor in a timely manner as and
to the extent provided under any applicable federal or state law.
 
In the event the Servicer grants a satisfaction or release of a Mortgage without
having obtained payment in full of the indebtedness secured by the Mortgage or
as otherwise permitted under this Agreement, the Servicer shall remit to the
Owner the Stated Principal Balance of the related Mortgage Loan by deposit
thereof in the Custodial Account.  The Fidelity Bond shall insure the Servicer
against any loss it may sustain with respect to any Mortgage Loan not satisfied
in accordance with the procedures set forth herein.
 
 
Subsection 11.20
Servicer Shall Provide Access and Information as Reasonably Required.

 
The Servicer shall provide to the Owner, and for any Owner insured by FDIC or
NAIC, the supervisory agents and examiners of FDIC and OTS or NAIC, access to
any documentation regarding the Mortgage Loans which may be required by
applicable regulations.  Such access shall be afforded without charge, but only
upon reasonable request, during normal business hours and at the offices of the
Servicer designated by the Servicer.
 
In addition, the Servicer shall furnish upon request by the Owner, during the
term of this Agreement, such periodic, special or other reports or information,
whether or not provided for herein, as shall be necessary, reasonable and
appropriate with respect to the purposes of this Agreement and applicable
regulations.  All such reports or information shall be provided by and in
accordance with all reasonable instructions and directions the Owner may
require.  The Servicer agrees to execute and deliver all such instruments and
take all such action as the Owner, from time to time, may reasonably request in
order to effectuate the purposes and to carry out the terms of this Agreement.
 
Subsection 11.21          [Reserved].
 
Subsection 11.22          Restoration of Mortgaged Property.
 
The Servicer need not obtain the approval of the Owner prior to releasing any
Insurance Proceeds or Condemnation Proceeds to the Mortgagor to be applied to
the restoration or repair of the Mortgaged Property if such release is in
accordance with Customary Servicing Procedures.  For claims greater than
$15,000, at a minimum, the Servicer shall, to the extent permitted by the terms
of the related Mortgage Note and applicable law, comply with the following
conditions in connection with any such release of Insurance Proceeds or
Condemnation Proceeds:
 
(a)          the Servicer shall receive satisfactory independent verification of
completion of repairs and issuance of any required approvals with respect
thereto;

 
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(b)           the Servicer shall take all steps necessary to preserve the
priority of the lien of the Mortgage, including, but not limited to requiring
waivers with respect to mechanics’ and materialmen’s liens;
 
(c)           the Servicer shall verify that the Mortgage Loan is not in
default; and
 
(d)           pending repairs or restoration, the Servicer shall place the
Insurance Proceeds or Condemnation Proceeds in the Escrow Account.
 
If the Owner is named as an additional loss payee, the Servicer is hereby
empowered to endorse any loss draft issued in respect of such a claim in the
name of the Owner.
 
Subsection 11.23          Fair Credit Reporting Act.
 
The Servicer, in its capacity as servicer for each Mortgage Loan, agrees to
fully furnish, in accordance with the Fair Credit Reporting Act and its
implementing regulations, accurate and complete information (e.g., favorable and
unfavorable) on its borrower credit files to Equifax, Experian and Trans Union
Credit Information Company (three of the credit repositories), on a monthly
basis.
 
Subsection 11.24          Prepayment Charges.
 
Notwithstanding anything in this Agreement to the contrary, in the event of a
Principal Prepayment, the Servicer shall not waive any Prepayment Charge or
portion thereof required by the terms of the related Mortgage Note unless (i)
the related Mortgage Loan is in default or foreseeable default and such waiver
(a) is standard and customary in servicing mortgage loans similar to the
Mortgage Loans and (b) would, in the reasonable judgment of the Servicer,
maximize recovery of total proceeds taking into account the value of such
Prepayment Charge and the related Mortgage Loan, (ii) (A) the enforceability
thereof is limited (1) by bankruptcy, insolvency, moratorium, receivership, or
other similar law relating to creditors’ rights generally or (2) due to
acceleration in connection with a foreclosure or other involuntary payment, or
(B) the enforceability is otherwise limited or prohibited by applicable law,
(iii) the enforceability would be considered “predatory” pursuant to written
guidelines issued by any applicable federal, state or local authority having
jurisdiction over such matters, (iv) the Servicer is unable to locate
documentation sufficient to allow it to confirm the existence and amount of such
Prepayment Charge after using commercially reasonable efforts to locate such
documentation, which efforts shall include, but are not limited to, seeking such
documentation from the Owner, the Owner’s custodian and from its own records or
files, or (v) the related Mortgaged Property has been damaged such that the
current value of the Mortgaged Property has been reduced by at least half as a
result of a natural disaster or other insured or uninsured peril, and the
borrower has elected to pay the loan in full rather than rebuild the Mortgaged
Property.  For the avoidance of doubt, the Servicer may waive a Prepayment
Charge in connection with a short sale or short payoff on a defaulted Mortgage
Loan.

 
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SECTION 12.    The Servicer and Servicing Rights Purchaser.
 
Subsection 12.01          Indemnification; Third Party Claims.
 
(a)           The Servicer agrees to indemnify and hold harmless the Owner, the
Servicing Rights Purchaser and their respective officers, employees, members,
directors, affiliates and representatives against any and all claims, losses,
penalties, fines, forfeitures, legal fees and related costs, judgments, and any
other costs, fees and expenses that the Owner or Servicing Rights Purchaser may
sustain in any way related to (i) the failure of the Servicer to service the
Mortgage Loans in compliance with the terms of this Agreement or (ii) a breach
of the representations, warranties or covenants of the Servicer included in this
Agreement.  This indemnification shall survive the termination of the Agreement
or the termination of any party to the Agreement.
 
(b)           The Servicing Rights Purchaser agrees to indemnify and hold
harmless the Owner and its officers, employees, members, directors, affiliates
and representatives against any and all claims, losses, penalties, fines,
forfeitures, legal fees and related costs, judgments, and any other costs, fees
and expenses that the Owner may sustain in any way related to a breach of the
representations, warranties or covenants of the Servicing Rights Purchaser
included in this Agreement.  This indemnification shall survive the termination
of the Agreement or the termination of any party to the Agreement.
 
(c)           The Owner agrees to indemnify and hold harmless the Servicing
Rights Purchaser and the Servicer and their respective officers, employees,
members, directors, affiliates and representatives against any and all claims,
losses, penalties, fines, forfeitures, legal fees and related costs, judgments,
and any other costs, fees and expenses that the Servicing Rights Purchaser or
Servicer may sustain in any way related to: (i) any action or omission with
respect to the origination of a Mortgage Loan; (ii) any action or omission of
any Originator or servicer in relation to the origination or servicing of the
Mortgage Loans occurring prior to the related Transfer Date; or (iii) a breach
of the Owner’s representations, warranties and covenants included in this
Agreement.  The indemnification obligation of the Owner shall survive the
termination of the Agreement or the termination of any party to the Agreement.
 
(d)           The Servicer shall promptly notify the Owner and the Servicing
Rights Purchaser if a claim is made by a third party with respect to this
Agreement or the Mortgage Loans, and the Servicer shall assume (with the written
consent of the Owner) the defense of any such claim and pay all expenses in
connection therewith, including counsel fees.  If the Servicer has assumed the
defense of any such action, the Servicer shall provide the Owner and Servicing
Rights Purchaser with a written report of all expenses and advances incurred by
the Servicer pursuant to this Subsection 12.01 and such expenses and advances
shall be included in, and recoverable as, Servicing Advances; provided, that the
Servicer shall promptly notify the Owner and Servicing Rights Purchaser to the
extent that Servicer is unable to reimburse itself for such Servicing Advances
in accordance with Subsection 11.05, and the Owner shall promptly reimburse the
Servicer for all unreimbursed amounts advanced by it pursuant to the preceding
sentence except when and to the extent that the claims relate the failure of the
Servicer to service the Mortgage Loans in accordance with the terms of this
Agreement.

 
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Subsection 12.02          Merger or Consolidation of the Servicer.
 
The Servicer will keep in full effect its existence, rights and franchises as a
national banking association, and will obtain and preserve its qualification to
do business 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 entity
resulting from any merger, conversion or consolidation to which the Servicer
shall be a party, or any Person succeeding to substantially all of the business
of the Servicer (whether or not related to loan servicing), 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.
 
Subsection 12.03          Limitation on Liability of the Servicer and Others.
 
The duties and obligations of the Servicer shall be determined solely by the
express provisions of this Agreement, the Servicer shall not be liable except
for the performance of such duties and obligations as are specifically set forth
in this Agreement and no implied covenants or obligations shall be read into
this Agreement against the Servicer.  Neither the Servicer nor any of the
directors, officers, employees or agents of the Servicer shall be under any
liability to the Owner for any action taken or for refraining from the taking of
any action in accordance with Customary Servicing Procedures and otherwise in
good faith pursuant to this Agreement or for errors in judgment; provided,
however, that this provision shall not protect the Servicer against any
liability resulting from any breach of any representation or warranty made
herein, or from any liability specifically imposed on the Servicer herein; and,
provided further, that this provision shall not protect the Servicer against any
liability that would otherwise be imposed by reason of the willful misfeasance,
bad faith or gross negligence in the performance of duties or by reason of
reckless disregard of the obligations or duties hereunder.  The Servicer and any
director, officer, employee or agent of the Servicer may rely on any document of
any kind which it in good faith reasonably believes to be genuine and to have
been adopted or signed by the proper authorities respecting any matters arising
hereunder.  Subject to the terms of Subsection 12.01, the Servicer shall have no
obligation to appear with respect to, prosecute or defend any legal action which
is not incidental to the Servicer’s duty to service the Mortgage Loans in
accordance with this Agreement.
 
Subsection 12.04          Conditions to Servicer Resigning or Assigning.
 
(a)           The Servicer may assign this Agreement or resign from the
obligations and duties hereby imposed on it, with good reason as determined by
the Servicer in its reasonable discretion, by delivering ninety (90) days prior
written notice to the Owner, provided that prior to the end of such ninety (90)
day period a successor servicer has been engaged hereunder with the approval of
the Owner, which approval will not be unreasonably withheld.  If at the end of
such ninety (90) day period no such successor servicer has been engaged, the
Servicer may

 
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nevertheless resign from its obligations hereunder following an additional sixty
(60) day period.  Any successor servicer must have the ability to perform any
obligations of a servicer in a Securitization Transaction, including making
advances of principal and interest.  If the Servicer assigns this Agreement or
resigns pursuant to any provisions of this Section 12.04, the ownership of the
Servicing Rights shall revert to the Owner or its assignee and the Servicing
Rights Purchaser shall have no further ownership rights with respect to any
Servicing Rights.
 
(b)           If the conditions described in the foregoing paragraph (a) are not
satisfied, the Servicer shall not assign this Agreement or resign from the
obligations and duties hereby imposed on it except (i) by mutual consent of the
Servicer and the Owner, (ii) pursuant to Subsection 13.03 or (iii) upon the
determination that the Servicer’s duties hereunder are no longer permissible
under applicable law and such incapacity cannot be cured by the Servicer.  Any
such determination permitting the unilateral resignation of the Servicer shall
be evidenced by an Opinion of Counsel to such effect delivered to the Owner,
which Opinion of Counsel shall be in form and substance acceptable to the
Owner.  No such resignation of or assignment by the Servicer shall become
effective until a successor has assumed the Servicer’s responsibilities and
obligations hereunder in accordance with Subsection 14.02.
 
(c)           The Servicing Rights Purchaser may not transfer or assign the
Servicing Rights without the prior written consent of the Owner, which consent
will not be unreasonably withheld.
 
Subsection 12.05          No Liability for Failure to Deliver Servicing Files.
 
The Servicer shall have no liability for any failure to carry out its servicing
responsibilities hereunder that is directly caused by the failure of an
Originator to deliver to the Servicer the Servicing Files (or portions thereof)
necessary to service such Mortgage Loans in material compliance with the
Customary Servicing Procedures or this Agreement.
 
SECTION 13.   Default.
 
Subsection 13.01          Events of Default.
 
In case one or more of the following Events of Default by the Servicer or the
Servicing Rights Purchaser shall occur and be continuing:
 
(a)           any failure by the Servicer or Servicing Rights Purchaser to remit
to the Owner any payment required to be made under the terms of this Agreement
which continues unremedied for a period of two (2) Business Days from the date
the Servicer or Servicing Rights Purchaser knew or reasonably should have known
of such failure;
 
(b)           failure by the Servicer or Servicing Rights Purchaser to duly
observe or perform, in any material respect, any other covenants, obligations or
agreements of the Servicer as set forth in this Agreement which failure
continues unremedied for a period of thirty (30) 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 the Owner;

 
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(c)           a decree or order of a court or agency or supervisory authority
having jurisdiction for the appointment of a conservator or receiver or
liquidator in any insolvency, bankruptcy, readjustment of debt, marshalling of
assets and liabilities or similar proceedings, or for the winding-up or
liquidation of its affairs, shall have been entered against the Servicer or the
Servicing Rights Purchaser and such decree or order shall have remained in
force, undischarged or unstayed for a period of sixty (60) days;
 
(d)           the Servicing Rights Purchaser or the Servicer shall consent to
the appointment of a conservator or receiver or liquidator in any insolvency,
bankruptcy, readjustment of debt, marshalling of assets and liabilities or
similar proceedings of or relating to the Servicing Rights Purchaser or the
Servicer or relating to all or substantially all of the Servicing Rights
Purchaser’s or Servicer’s property;
 
(e)           the Servicing Rights Purchaser or the Servicer shall admit in
writing its inability to pay its debts 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;
 
(f)           the Servicer shall cease to be qualified to do business under the
laws of any state in which a Mortgaged Property is located, but only to the
extent such qualification is necessary to ensure the enforceability of each
Mortgage Loan or such failure materially and adversely affects the Servicer’s
ability to perform its obligations under this Agreement;
 
(g)           the Servicer shall fail to meet the servicer eligibility
qualifications of Fannie Mae or the Servicer shall fail to meet the servicer
eligibility qualifications of Freddie Mac;
 
then, and in each and every such case, so long as an Event of Default shall not
have been remedied, the Owner, by notice in writing to the Servicer, may, in
addition to whatever rights the Owner may have at law or equity to damages,
including injunctive relief and specific performance, commence termination of
all the rights and obligations of the Servicer and Servicing Rights Purchaser
under this Agreement and with respect to the Mortgage Loans, the Servicing
Rights and the proceeds thereof.  Upon receipt by the Servicer of such written
notice from the Owner stating that it intends to terminate the Servicer as a
result of such Event of Default, all authority and power of the Servicer and the
Servicing Rights Purchaser under this Agreement, including any compensation due
the Servicer under this Agreement on and after the effective date of
termination, whether with respect to the Mortgage Loans or otherwise, shall pass
to and be vested in the successor appointed pursuant to Subsection 14.02.  Upon
written request from the Owner, the Servicer shall prepare, execute and deliver
to a successor any and all documents and other instruments, place in such
successor’s possession all Mortgage Files and do or cause to be done all other
acts or things necessary or appropriate to effect the purposes of such notice of
termination, including, but not limited to, the transfer and endorsement or
assignment of the Mortgage Loans and related documents to the successor at the
Servicer’s sole expense.  The Servicer agrees to cooperate with the Owner and
such successor in effecting the termination of the Servicer’s responsibilities
and rights hereunder, including, without limitation, the transfer to such
successor for administration by it of all amounts which shall at the time be
credited by the Servicer to the Custodial Account or Escrow Account or
thereafter received with respect to

 
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the Mortgage Loans and the payment of all costs relating to the transfer of
servicing.  If the Servicer’s rights and obligations under this Agreement are
terminated with cause in accordance with this Subsection 13.01, the Owner shall,
prior to the transfer of the Servicing Rights, reimburse the Servicer for all
accrued and unpaid Servicing Fees and all outstanding Servicing Advances
associated with the Mortgage Loans, provided that the Owner may offset against
such reimbursement any amounts payable by the Servicer to the Owner pursuant to
this Agreement, including without limitation any servicing transfer costs.
 
Subsection 13.02          Waiver of Default.
 
The Owner may waive any default by the Servicer in the performance of its
obligations hereunder and its consequences.  Upon any 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 thereto except to the extent expressly so waived.
 
Subsection 13.03          Owner Defaults.
 
In case one or more of the following Owner Defaults by the Owner shall occur and
be continuing:
 
(a)           a decree or order of a court or agency or supervisory authority
having jurisdiction for the appointment of a conservator or receiver or
liquidator in any insolvency, bankruptcy, readjustment of debt, marshalling of
assets and liabilities or similar proceedings, or for the winding-up or
liquidation of its affairs, shall have been entered against the Owner and such
decree or order shall have remained in force, undischarged or unstayed for a
period of sixty (60) days;
 
(b)           the Owner shall consent to the appointment of a conservator or
receiver or liquidator in any insolvency, bankruptcy, readjustment of debt,
marshalling of assets and liabilities or similar proceedings of or relating to
the Owner or relating to all or substantially all of the Owner’s property;
 
(c)           the Owner shall admit in writing its inability to pay its debts 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
 
(d)           failure by the Owner to duly observe or perform, in any material
respect, any other covenants, obligations or agreements of the Owner as set
forth in this Agreement which failure continues unremedied for a period of
thirty (30) days after the date on which written notice of such failure,
requiring the same to be remedied, shall have been given to the Owner by the
Servicer or the Servicing Rights Purchaser;
 
then, and in each and every such case, so long as an Owner Default shall not
have been remedied, the Servicer or the Servicing Rights Purchaser, by notice in
writing to the Owner, may, in addition to whatever rights the Servicer or
Servicing Rights Purchaser may have at law

 
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or equity to damages, including injunctive relief and specific performance,
either (1) terminate this Agreement if any of the Owner Defaults described in
clauses (a), (b) or (c) above occurs or (2) terminate its servicing obligations
with respect to any Mortgage Loan affected by the occurrence of an Owner Default
described in clause (d) above (an “Affected Mortgage Loan”).  The Owner agrees
to cooperate with the Servicer and Servicing Rights Purchaser and any successor
servicer in effecting the termination of the Servicer’s responsibilities and
rights hereunder with respect to the Mortgage Loans or any Affected Mortgage
Loan, including, without limitation, the transfer to such successor for
administration by it of all 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.  If the Servicer elects to terminate its rights
and obligations under this Agreement pursuant to this Subsection 13.03, the
Owner shall reimburse the Servicer for all accrued and unpaid Servicing Fees and
all outstanding Servicing Advances associated with the Mortgage Loans or
Affected Mortgage Loans, as applicable, provided that the Owner may offset
against such reimbursement any amounts payable by the Servicer to the Owner
pursuant to this Agreement.  In no event will any Owner Default affect the
ownership of the Servicing Rights by the Servicing Rights Purchaser.
 
SECTION 14.   Termination.
 
Subsection 14.01          Termination.
 
The obligations and responsibilities of the Servicer, as servicer, shall
terminate upon (a) the distribution to the Owner of the final payment or
liquidation with respect to the last Mortgage Loan (or advances of same by the
Servicer) or (b) the disposition of all property acquired upon foreclosure or
deed in lieu of foreclosure with respect to the last Mortgage Loan and the
remittance of all funds due hereunder.  Upon written request from the Owner in
connection with any such termination, the Servicer shall prepare, execute and
deliver, any and all documents and other instruments, place in the Owner’s
possession all Mortgage Files, and do or accomplish all other acts or things
reasonably necessary or appropriate to effect the purposes of such notice of
termination, whether to complete the transfer and endorsement or assignment of
the Mortgage Loans and related documents, or otherwise, at the Owner’s sole
expense.  The Servicer agrees to cooperate with the Owner and such successor in
effecting the termination of the Servicer’s responsibilities and rights
hereunder as servicer, 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.
 
Subsection 14.02          Successors to the Servicer.
 
Prior to the termination of the Servicer’s responsibilities and duties under
this Agreement pursuant to Subsections 12.04, 13.01 or 14.01, the Owner shall
(a) succeed to and assume all of the Servicer’s responsibilities, rights, duties
and obligations under this Agreement or (b) appoint a successor which shall
succeed to all rights and assume all of the responsibilities, duties and
liabilities of the Servicer under this Agreement upon such termination.  In
connection with such

 
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appointment and assumption, the 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 shall be terminated
pursuant to the aforementioned Subsections, the Servicer shall (i) 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, (ii) shall take no action whatsoever that might impair or prejudice
the rights or financial condition of its successor and (iii) in the event of a
termination pursuant to Section 12.04 or 13.01, pay all direct, reasonable and
customary costs incurred by the Owner in transferring the servicing of the
Mortgage Loans to a successor servicer.  The resignation or removal of the
Servicer pursuant to the aforementioned Subsections, other than a resignation
following the one hundred and fifty (150) day period referred to in Subsection
12.04(a) that does not occur with respect to a Securitization Transaction, shall
not become effective until a successor shall be appointed pursuant to this
Subsection and shall in no event relieve the Servicer of the representations and
warranties made pursuant to Section 7 and any remedies available to the Owner
under Section 12.01 or otherwise, it being understood and agreed that the
provisions of such Section 7 and Section 12.01 shall be applicable to the
Servicer notwithstanding any such resignation or termination of the Servicer, or
the termination of this Agreement.
 
Any successor appointed as provided herein shall execute, acknowledge and
deliver to the Servicer, the Servicing Rights Purchaser and the 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 this
Agreement pursuant to Subsections 12.04, 13.01 or 14.01 shall not affect any
claims that the Owner, the Servicer or the Servicing Rights Purchaser may have
against any other party to this Agreement based upon facts and circumstances
arising prior to any such termination or resignation.
 
The Servicer shall promptly deliver to the successor the funds in the Custodial
Account and Escrow Account and all Mortgage Files and related documents and
statements held by it hereunder and the Servicer shall account for all funds and
shall execute and deliver such instruments and do such other things as may
reasonably be required to more fully and definitively vest in the successor all
such rights, powers, duties, responsibilities, obligations and liabilities of
the Servicer.
 
Upon a successor’s acceptance of appointment as such, the Servicer shall notify
by mail the Owner and the Servicing Rights Purchaser of such appointment.
 
Subsection 14.03          Termination Payments.
 
Neither the Servicer nor the Servicing Rights Purchaser shall be entitled to any
compensation related to any termination of its rights and obligations under this
Agreement

 
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connection with an Event of Default.  The Owner may terminate this Agreement
without cause and transfer servicing to a successor Servicer upon the payment of
a fee to the Servicing Rights Purchaser equal to the Repurchase Price in respect
of the related Servicing Rights.  If the Servicer’s rights and obligations under
this Agreement are terminated without cause, the Owner shall immediately
reimburse the Servicer for all accrued and unpaid Servicing Fees and outstanding
Servicing Advances associated with the Mortgage Loans.  Upon written request
from the Owner in connection with any such termination, the Servicer and
Servicing Rights Purchaser shall prepare, execute and deliver, any and all
documents and other instruments, and do or accomplish all other acts or things
reasonably necessary or appropriate to effect the purposes of such notice of
termination, whether to complete the transfer and endorsement or assignment of
the Mortgage Loans and related documents, or otherwise, and including the
delivery to or at the direction of the Owner, all contents of the Mortgage Files
in the possession of the Servicer, at the Owner’s sole expense.  Each of the
Servicer and the Servicing Rights Purchaser agrees to cooperate with the Owner
and such successor in effecting the termination of the Servicer’s
responsibilities and rights hereunder as servicer, 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 15.   Notices.
 
All demands, notices and communications hereunder shall be in writing and shall
be deemed to have been duly given if mailed, by registered or certified mail,
return receipt requested, or, if by other means, when received by the other
party at the address as follows:
 
(a)          if to the Owner:
 
Redwood Residential Acquisition Corporation
One Belvedere Place, Suite 360
Mill Valley, CA 94941
Attention:  Loss Mitigation
Phone:  (415) 380-3445
Facsimile:  (415) 381-1773
 
With a copy to the General Counsel at the same address
 
(b)          if to the Servicer:
 
Select Portfolio Servicing, Inc.
3815 S. West Temple
Salt Lake City, UT 84115
Attention: Business Development
Phone: (801) 293-2546
Fax: (801) 270-7797
 
With a copy to the General Counsel at:

 
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Select Portfolio Servicing, Inc.
3815 S. West Temple
Salt Lake City, UT 84115
Attention: General Counsel
Phone: (801) 293-2585
Fax: (801) 293-3931
 
(c)          if to Servicing Rights Purchaser:
 
DLJ Mortgage Capital, Inc.
Eleven Madison Avenue, 4th Floor
New York, New York  10010
Attention: Peter Sack
Phone:  (212) 325-7892
Fax: (212) 745-5261
 
With a copy to the General Counsel at:
 
DLJ Mortgage Capital, Inc.
One Madison Avenue, 9th Floor
New York, NY  10010
Attention:  General Counsel
 
or such other address as may hereafter be furnished to the other party by like
notice.  Any such demand, notice or communication hereunder shall be deemed to
have been received on the date delivered to or received at the premises of the
addressee (as evidenced, in the case of registered or certified mail, by the
date noted on the return receipt).
 
SECTION 16.   Severability Clause.
 
Any part, provision, representation or warranty of this Agreement which is
prohibited or which is held to be void or unenforceable shall be ineffective to
the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof.  Any part, provision, representation or warranty of
this Agreement which is prohibited or unenforceable or is held to be void or
unenforceable in any jurisdiction shall be ineffective, as to 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.  To the extent permitted
by applicable law, the parties hereto waive any provision of law which prohibits
or renders void or unenforceable any provision hereof.  If the invalidity of any
part, provision, representation or warranty of this Agreement shall deprive any
party of the economic benefit intended to be conferred by this Agreement, the
parties shall negotiate, in good-faith, to develop a structure the economic
effect of which is nearly as possible the same as the economic effect of this
Agreement without regard to such invalidity.

 
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SECTION 17.   No Partnership.
 
Nothing herein contained shall be deemed or construed to create a co-partnership
or joint venture between the parties hereto and the services of the Servicer
shall be rendered as an independent contractor and not as agent for the Owner or
Servicing Rights Purchaser.
 
SECTION 18.   Counterparts.
 
This Agreement may be executed simultaneously in any number of
counterparts.  Each counterpart shall be deemed to be an original, and all such
counterparts shall constitute one and the same instrument.
 
SECTION 19.   Governing Law; Choice of Forum; Waiver of Jury Trial.
 
EXCEPT TO THE EXTENT PREEMPTED BY FEDERAL LAW, THE AGREEMENT SHALL BE CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS
AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE CONFLICTS OF LAWS
PROVISIONS OF NEW YORK (OTHER THAN SECTION 5-1401 OF THE GENERAL OBLIGATIONS
LAW) OR ANY OTHER JURISDICTION.
 
EACH PARTY HERETO KNOWINGLY, INTENTIONALLY AND IRREVOCABLY WAIVES ANY AND ALL
RIGHT TO TRIAL BY JURY IN ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF IN ANY
WAY RELATED TO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY.
 
With respect to any claim or action arising hereunder, the parties (a)
irrevocably submit to the nonexclusive jurisdiction of the courts of the State
of New York and the United States District Court located in the Borough of
Manhattan in The City of New York, New York, and appellate courts from any
thereof, and (b) irrevocably waive any objection which such party may have at
any time to the laying of venue of any suit, action or proceeding arising out of
or relating to this Agreement brought in any such court, and irrevocably waive
any claim that any such suit action or proceeding brought in any such court has
been brought in an inconvenient forum.
 
SECTION 20.  Intention of the Parties.
 
It is the intention of the parties that the Servicing Rights Purchaser is
purchasing, and the Owner is selling, the Servicing Rights and not a debt
instrument of the Owner or another security.  Accordingly, the parties hereto
each intend to treat the transaction for federal income tax purposes as a sale
by the Owner, and a purchase by the Servicing Rights Purchaser, of the Servicing
Rights.

 
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SECTION 21.   Waivers.
 
No term or provision of this Agreement may be waived or modified unless such
waiver or modification is in writing and signed by the party against whom such
waiver or modification is sought to be enforced.
 
SECTION 22.   Exhibits.
 
The exhibits to this Agreement are hereby incorporated and made a part hereof
and are an integral part of this Agreement.
 
SECTION 23.   General Interpretive Principles.
 
For purposes of this Agreement, except as otherwise expressly provided or unless
the context otherwise requires:
 
(a)          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;
 
(b)          accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting principles;
 
(c)          references herein to “Articles,” “Sections,” “Subsections,”
“Paragraphs” and other subdivisions without reference to a document are to
designated Articles, Sections, Subsections, Paragraphs and other subdivisions of
this Agreement;
 
(d)          the headings of the various articles, sections, subsections and
paragraphs of this Agreement and the table of contents are for convenience of
reference only and shall not modify, define, expand or limit any of the terms or
provisions hereof;
 
(e)          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;
 
(f)          the words “herein,” “hereof,” “hereunder” and other words of
similar import refer to this Agreement as a whole and not to any particular
provision; and
 
(g)          the term “include” or “including” shall mean without limitation by
reason of enumeration.

 
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SECTION 24.   Reproduction of Documents.
 
This Agreement and all documents relating thereto, including, without limitation
(a) consents, waivers and modifications which may hereafter be executed,
(b) documents received by any party at the closing and (c) financial statements,
certificates and other information previously or hereafter furnished, may be
reproduced by any photographic, photostatic, microfilm, micro-card, miniature
photographic or other similar process.  The parties hereto 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 hereto in the
regular course of business, and that any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in evidence.
 
SECTION 25.   Amendment.
 
This Agreement may be amended from time to time by the Owner, the Servicing
Rights Purchaser and the Servicer by written agreement signed by the parties
hereto.
 
SECTION 26.   Confidentiality.
 
Each of the Owner, the Servicing Rights Purchaser and the Servicer shall employ
proper procedures and standards designed to maintain the confidential nature of
the terms of this Agreement, except to the extent (a) the disclosure of which is
reasonably believed by such party to be required in connection with regulatory
requirements or other legal requirements relating to its affairs; (b) disclosed
to any one or more of such party’s employees, officers, directors, agents,
attorneys or accountants who would have access to the contents of this Agreement
and such data and information in the normal course of the performance of such
person’s duties for such party, to the extent such party has procedures in
effect to inform such person of the confidential nature thereof; (c) that is
disclosed in a prospectus, prospectus supplement or private placement memorandum
relating to a Securitization Transaction of the Mortgage Loans by the Owner (or
an affiliate assignee thereof) or to any person in connection with the resale or
proposed resale of all or a portion of the Mortgage Loans by such party in
accordance with the terms of this Agreement; and (d) that is reasonably believed
by such party to be necessary for the enforcement of such party’s rights under
this Agreement.
 
SECTION 27.   Entire Agreement.
 
This Agreement constitutes the entire agreement and understanding relating to
the subject matter hereof between the parties hereto and any prior oral or
written agreements between them shall be deemed to have merged herewith.

 
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SECTION 28.   Further Agreements.
 
The Servicer, the Servicing Rights Purchaser and the Owner each agree to execute
and deliver to the other such reasonable and appropriate additional documents,
instruments or agreements as may be necessary or appropriate to effectuate the
purposes of this Agreement.
 
SECTION 29.   Successors and Assigns.
 
This Agreement shall bind and inure to the benefit of and be enforceable by the
initial Owner, the Servicing Rights Purchaser and the Servicer, and the
respective successors and assigns of the Owner, the Servicing Rights Purchaser
and the Servicer.  The initial Owner and any subsequent purchasers may assign
this Agreement to any Person to whom any Mortgage Loan is transferred pursuant
to a sale or financing upon prior written notice to the Servicer and Servicing
Rights Purchaser in accordance with the following paragraph; provided, however,
that except in connection with Securitization Transactions, as to which no such
quantitative limitation shall apply, the Servicer shall not be required to
service the Mortgage Loans for more than three (3) Persons for assignees of
Redwood Residential Acquisition Corporation or its respective affiliates at any
time and shall not recognize any assignment of this Agreement to the extent that
following such assignment more than such number of Persons would be purchasers
hereunder.  As used herein, the trust formed in connection with a Securitization
Transaction shall be deemed to constitute a single “Person.”  Upon any such
assignment and written notice thereof to the Servicer, the Person to whom such
assignment is made shall succeed to all rights and obligations of the Owner
under this Agreement to the extent of the related Mortgage Loan or Mortgage
Loans and this Agreement, to the extent of the related Mortgage Loan or Mortgage
Loans, shall be deemed to be a separate and distinct agreement between the
Servicer and such purchaser, and a separate and distinct agreement between the
Servicer and each other purchaser to the extent of the other related Mortgage
Loan or Mortgage Loans.
 
At least five (5) Business Days prior to the end of the month preceding the date
upon which the first remittance is to be made to an assignee of the Owner, the
Owner shall provide to the Servicer and Servicing Rights Purchaser written
notice of any assignment setting forth:  (a) the Servicer’s applicable Mortgage
Loan identifying number for each of the Mortgage Loans affected by such
assignment; (b) the aggregate scheduled transfer balance of such Mortgage Loans;
and (c) the full name, address and wiring instructions of the assignee and the
name and telephone number of an individual representative for such assignee, to
whom the Servicer should:  (i) send remittances; (ii) send any notices required
by or provided for in this Agreement; and (iii) deliver any legal documents
relating to the Mortgage Loans (including, but not limited to, contents of any
Mortgage File obtained after the effective date of any assignment).
 
If the Owner has not provided the notice of assignment required by this
Section 29, neither the Servicer nor the Servicing Rights Purchaser shall be
required to treat any other Person as a “Owner” hereunder and may continue to
treat the Owner which purports to assign the Agreement as the “Owner” for all
purposes of this Agreement.

 
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SECTION 30.   Non-Solicitation.
 
From and after the related Closing Date, each of the Servicer, the Servicing
Rights Purchaser, the Owner and each of their respective Affiliates will not
take any action or permit or cause any action to be taken by any of its agents
or affiliates, or by any independent contractors on its behalf, to personally,
by telephone or mail, solicit a Mortgagor under any Mortgage Loan for the
purpose of refinancing a Mortgage Loan, in whole or in part, without the prior
written consent of the other parties to this Agreement, other than in connection
with a loss mitigation action.  It is understood and agreed that all rights and
benefits relating to the solicitation of any Mortgagors and the attendant
rights, title and interest in and to the list of such Mortgagors and data
relating to their Mortgages (including insurance renewal dates) are solely the
property of the Owner and none of the Servicer or any of its Affiliates shall
take any action to undermine these rights and benefits.
 
Notwithstanding the foregoing, it is understood and agreed that the Servicer or
any of its affiliates:
 
(a)           may advertise its availability for handling refinancings of
mortgages in its portfolio, including the promotion of terms it has available
for such refinancings, through the sending of letters or promotional material,
so long as it does not specifically target Mortgagors and so long as such
promotional material either is sent to the mortgagors for all of the mortgages
in the A-quality servicing portfolio of the Servicer and any of their affiliates
(those it owns as well as those serviced for others) or sent to all of the
mortgagors who have specific types of mortgages (such as FHA, VA, conventional
fixed-rate or conventional adjustable-rate), or sent to those mortgagors whose
mortgages fall within specific interest rate ranges;
 
(b)           may provide pay-off information and otherwise cooperate with
individual mortgagors who contact it about prepaying their mortgages by advising
them of refinancing terms and streamlined origination arrangements that are
available; and
 
(c)           may offer to refinance a Mortgage Loan made within thirty
(30) days following receipt by it  of a pay-off request from the related
Mortgagor.
 
Promotions undertaken by the Servicer or by any affiliate of the Servicer which
are directed to the general public at large (including, without limitation, mass
mailing based on commercially acquired mailing lists, newspaper, radio and
television advertisements), shall not constitute solicitation under this
Section 30.
 
SECTION 31.  Protection of Consumer Information.
 
Each party agrees that it (i) shall comply with any applicable laws and
regulations regarding the privacy and security of Consumer Information, (ii)
shall not use Consumer

 
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Information in any manner inconsistent with any applicable laws and regulations
regarding the privacy and security of Consumer Information, (iii) shall not
disclose Consumer Information to third parties except at the specific written
direction of the Owner or the Servicer, or, in the case of the Servicer, as
reasonably necessary to service the Mortgage Loans in accordance with Customary
Servicing Procedures, (iv) shall maintain adequate physical, technical and
administrative safeguards to protect Consumer Information from unauthorized
access and (v) shall immediately notify the other party of any actual or
suspected breach of the confidentiality of Consumer Information.
 

 
SECTION 32.
Cooperation of the Servicer With a Reconstitution; Regulation AB Compliance.

 
(a)         The Servicer acknowledges and the Owner agrees that with respect to
some or all of the Mortgage Loans, the Owner may effect either:
 
(1)           one or more Whole Loan Transfers; and
 
(2)           one or more Securitization Transactions;
 
provided, however, that except in connection with Securitization Transactions,
no more than three (3) persons shall be assignees of the Owner’s interest in
this Agreement with respect to a given Mortgage Loan Package; provided, further,
that the terms of such Whole Loan Transfer or Securitization Transaction are
reasonably acceptable to the Servicer.
 
(b)         The Servicer shall reasonably cooperate with the Owner in connection
with any Whole Loan Transfer or Securitization Transaction contemplated by the
Owner pursuant to this Section.  In connection therewith, the Owner shall
deliver any Reconstitution Agreement or other document related to the Whole Loan
Transfer or Securitization Transaction to the Servicer at least fifteen (15)
days prior to such transfer and the Servicer shall execute any Reconstitution
Agreement that contains servicing provisions substantially similar to those
herein or otherwise reasonably acceptable to the Owner and the Servicer and that
restates the representations and warranties contained in Section 7 as of the
Reconstitution Date.  Any prospective assignees of the Owner who have entered
into a commitment to purchase any of the Mortgage Loans in a Whole Loan Transfer
or Securitization Transaction may review the Servicer’s servicing operations,
upon reasonable prior notice to the Servicer, and at the Servicer’s location
identified by the Servicer and the Servicer shall cooperate with such review and
underwriting to the extent such prospective assignees request information or
documents that are available and can be produced without unreasonable expense or
effort.  Subject to any applicable laws, the Servicer shall make the Mortgage
Files related to the Mortgage Loans held by the Servicer available at the
Servicer’s principal operations center for review by any such prospective
assignees during normal business hours upon reasonable prior notice to the
Servicer (in no event fewer than five (5) Business Days’ prior notice).  The
Servicer may, in its sole discretion, require that such prospective assignees
sign a confidentiality agreement with respect to such information disclosed to
the prospective assignee which is not available to the public at large and a
release agreement with respect to its activities on the Servicer’s
premises.  The Owner hereby agrees to reimburse the Servicer for reasonable
“out-of-pocket” expenses incurred by the Servicer that relate to such

 
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Whole Loan Transfer or Securitization Transaction including without limitation
reimbursement for attorneys’ fees and disbursements and the amount which
reasonably reflects time and effort expended by the Servicer in connection
therewith.
 
(c)           In order to facilitate compliance with Regulation AB promulgated
under the Securities Act, the Servicer and the Owner agree to comply with the
provisions of the Regulation AB Compliance Addendum attached hereto as Addendum
I.
 
(d)           In connection with any Securitization, the Servicer shall execute
and deliver an Assignment, Assumption and Recognition Agreement substantially in
the form of Addendum II.
 
(e)           All Mortgage Loans not sold or transferred pursuant to a Whole
Loan Transfer or Securitization Transaction shall be subject to this Agreement
and shall continue to be serviced in accordance with the terms of this Agreement
and with respect thereto this Agreement shall remain in full force and
effect.  It is understood and agreed by the Owner and the Servicer that the
right to effectuate such Whole Loan Transfer or Securitization Transaction as
contemplated by this Section 32 is limited to the Owner.  It is further
understood that no such Whole Loan Transfer or Securitization Transaction shall
be deemed to include the Servicing Rights related to the transferred Mortgage
Loans and that Servicing Rights Purchaser shall continue to own such Servicing
Rights following any such transfer.
 
[SIGNATURES ON FOLLOWING PAGE]

 
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IN WITNESS WHEREOF, the parties have caused their names to be signed hereto by
their respective officers thereunto duly authorized on the date first above
written.
 

 
REDWOOD RESIDENTIAL ACQUISITION
CORPORATION,
 
as Owner
        
By:
/s/ John Isbrandtsen  
Name:
John Isbrandtsen   
Title:
Authorized Officer         
SELECT PORTFOLIO SERVICING, INC.,
 
as Servicer
       
By:
/s/ Lester Cheng   
Name:
Lester Cheng   
Title:
Senior Vice President         
DLJ MORTGAGE CAPITAL, INC.,
 
as Servicing Rights Purchaser
       
By:
/s/ Kevin Steele   
Name:
Kevin Steele   
Title:
Vice President 

 
[Flow Mortgage Loan Servicing Rights Sale and Servicing Agreement]

 
 

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EXHIBIT 1
 
FORM OF BILL OF SALE AND SERVICER ACKNOWLEDGEMENT
 
On this __ day of __________, 20[__], Redwood Residential Acquisition
Corporation (“Owner”) does hereby sell, transfer, assign, set over and convey to
DLJ Mortgage Capital, Inc. (the “Servicing Rights Purchaser”), without recourse,
except as expressly provided in that certain Flow Mortgage Loan Servicing Rights
Sale and Servicing Agreement, dated as of [  ], 20[__] (the “Agreement”), among
Select Portfolio Servicing, Inc. (the “Servicer”), Servicing Rights Purchaser
and Owner, all of the right, title and interest of Owner in and to the Servicing
Rights relating to the mortgage loans identified on the mortgage loan schedule
attached hereto as Schedule 1 (the “Mortgage Loans”).  Owner, Servicing Rights
Purchaser and Servicer hereby agree that the terms of the sale of the Servicing
Rights shall be subject to the Agreement.  Capitalized terms used but not
defined herein shall have the respective meanings ascribed thereto in the
Agreement.
 
Servicer hereby accepts the servicing obligations attendant to the transfer of
the Servicing Rights hereunder and as of the Transfer Date assumes all
responsibilities of Owner or any prior servicer related to the servicing of the
Mortgage Loans in accordance with the Agreement.
 
Each of Owner and Servicer represents and warrants that its respective
representations and warranties made in the Agreement are true and correct as of
the Closing Date or such other date as is specified in the Agreement.
 
As set forth in the Agreement, the following terms shall have the respective
meanings set forth below with respect to the Servicing Rights sold hereby.
 
1.
Closing Date.
The Closing Date is [___ __ __], 20__.

2.
Cut-off Date.
The Cut-off Date is [_____ __], 20__.

3.
Transfer Date:  [_______], 20__.

3.
Number of Mortgage Loans.
[___] Mortgage Loans.

4.
Stated Principal Balance as of Cut-off Date.
$[__________].

5.
Purchase Price Percentage.
[______%].

6.
Purchase Price.
$[______].

7.
Servicing Fee Rate:  [__]% per annum.

 
Owner and Servicing Rights Purchaser hereby acknowledge and agree that if
Mortgage Loans are removed from the Mortgage Loan Package after the Closing Date
and prior to the Transfer Date, Owner shall pay to Servicing Rights Purchaser on
the Transfer Date a Purchase Price adjustment equal to [insert adjustment
formula].
 
This Bill of Sale and Servicer Acknowledgement may be executed simultaneously in
any number of counterparts.  Each counterpart shall be deemed to be an original,
and all such counterparts taken together shall constitute one and the same
instrument.

 
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IN WITNESS WHEREOF, Owner, Servicing Rights Purchaser and Servicer have executed
this Bill of Sale and Servicer Acknowledgement as of the day and year first
written above.
 
REDWOOD RESIDENTIAL
 
SELECT PORTFOLIO SERVICING, INC.
ACQUISITION CORPORATION
 
as Servicer
as Owner
         
By:
   
By:
       
Name:
   
Name:
       
Its:
   
Its:
 

 
DLJ MORTGAGE CAPITAL, INC.,
 
as Servicing Rights Purchaser
     
By:
       
Name:
       
Its:
   

 
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EXHIBIT 2
FORM OF NOTICE OF SALE OF OWNERSHIP OF MORTGAGE LOAN
 
Under federal law, borrowers are required to be notified in writing whenever
ownership of a mortgage loan secured by their principal dwelling is sold,
transferred or assigned (collectively, “sold”) to a new creditor.  This Notice
is to inform you that your prior creditor has sold your loan (described below)
to us, the new creditor identified below.
 
**Please note that while we now own your loan, we are not the servicer of your
loan.  The servicer (identified below) acts on our behalf to handle the ongoing
administration of your loan, including the collection of mortgage
payments.  Please continue to send your mortgage payments as directed by the
servicer, and NOT to us.  Also, should you have any questions regarding your
loan, please contact the servicer using the contact information set forth
below.  The servicer is authorized to handle routine inquiries and requests
regarding your loan and, if necessary, to consult with us regarding your request
and communicate to you our decision with respect to such request. **
 
Please note that the sale of your loan to us may also result in a change of
servicer.  If this occurs, you will receive a separate notice, required under
federal law, providing information regarding the new servicer.
 

 
LOAN INFORMATION
         
Date of Loan:
   
Original Amount of Loan:
   
Date Your Loan was Sold to the New Creditor:
   
Address of Mortgaged Property:
         
SERVICER INFORMATION
         
Name:
   
Mailing Address:
   
Telephone Number (Toll free):
         
NEW CREDITOR INFORMATION
         
Name:
   
Mailing Address:  (not for payments):
   
Telephone Number (Toll free):
         
AGENT INFORMATION (If we have granted an agent other than the servicer authority
to act on our behalf, contact information for such agent will appear below):
         
Name:
   
Mailing Address:
   
Telephone Number (Toll free):
 

 
The transfer of the lien associated with your loan is currently recorded, or in
the future may be recorded, in the public records of the local County Recorder’s
office for the county where your property is located.  If checked
 
 
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¨, ownership of your loan is also recorded on the registry of the Mortgage
Electronic Registrations System at 1818 Library Street, Suite 300, Reston, VA
20190.
 
[Confirm if applicable]  Your loan has been securitized and we own legal title
to your loan acting as trustee of the related securitization trust (the “Trust”)
for the benefit of the holders (the “Holders”) of the mortgage-backed securities
issued by the Trust.  Our rights and obligations, as trustee, are defined in one
or more contracts among us, the Holders and certain other parties.  As a result,
our authority to respond favorably to your requests or inquiries may be limited
by the terms of such contracts.

 
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EXHIBIT 3
 
MORTGAGE LOAN SCHEDULE FIELDS
 
[ASF RMBS DISCLOSURE PACKAGE]

 
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EXHIBIT 4
 
SPS TRANSFER INSTRUCTIONS

 
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ADDENDUM I
 
REGULATION AB COMPLIANCE ADDENDUM
 
TO FLOW MORTGAGE LOAN SERVICING RIGHTS SALE AND
 
(Servicing-only)
 
SECTION 1.  DEFINED TERMS
 
Capitalized terms used but not defined herein shall have the meanings assigned
to such terms in the Agreement.  The following terms shall have the meanings set
forth below, unless the context clearly indicates otherwise:
 
Commission:  The United States Securities and Exchange Commission.
 
Company:  Select Portfolio Servicing, Inc., and its successors.
 
Company Information:  As defined in Section 2.07(a).
 
Depositor:  The depositor, as such term is defined in Regulation AB, with
respect to any Securitization Transaction.
 
Exchange Act:  The Securities Exchange Act of 1934, as amended.
 
Master Servicer:  With respect to any Securitization Transaction, the “master
servicer,” if any, identified in the related transaction documents.
 
Reconstitution Agreement:  The agreement or agreements entered into by the
Company and the Owner and/or certain third parties on the Reconstitution Date or
Dates with respect to any or all of the Mortgage Loans serviced hereunder, in
connection with a Whole Loan Transfer or Securitization Transaction.
 
Regulation AB:  Subpart 229.1100 — Asset Backed Securities (Regulation AB), 17
C.F.R. §§229.1100-229.1123, as such may be amended from time to time, and
subject to such clarification and interpretation as have been provided by the
Commission in the adopting release (Asset-Backed Securities, Securities Act
Release No. 33-8518, 70 Fed. Reg. 1,506, 1,531 (Jan. 7, 2005)) or by the staff
of the Commission, or as may be provided by the Commission or its staff from
time to time.

 
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Securities Act:  The Securities Act of 1933, as amended.
 
Securitization Transaction:  Any transaction involving either (1) a sale or
other transfer of some or all of the Mortgage Loans directly or indirectly by
the Owner to an issuing entity in connection with an issuance of publicly
offered or privately placed, rated or unrated mortgage-backed securities or (2)
an issuance of publicly offered or privately placed, rated or unrated
securities, the payments on which are determined primarily by reference to one
or more portfolios of residential mortgage loans consisting, in whole or in
part, of some or all of the Mortgage Loans.
 
Servicer:  As defined in Section 2.03(c).
 
Servicing Criteria:  The “servicing criteria” set forth in Item 1122(d) of
Regulation AB for which the Company is responsible in its capacity as Servicer
as identified on Exhibit B hereto, provided that such Exhibit B may be amended
from time to time to reflect changes in Regulation AB.
 
Sponsor:  With respect to any Securitization Transaction, the Person identified
in writing to the Company by the Owner as sponsor for such Securitization
Transaction.
 
Static Pool Information:  Static pool information as described in Item
1l05(a)(l)-(3) and 1105(c) of Regulation AB.
 
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
Company or a Subservicer, provided that this term shall not include the Owner,
an affiliate of the Owner or originators of Mortgage Loans acquired by the
Company from the Owner or an affiliate of the Owner.
 
Subservicer:  Any Person that services Mortgage Loans on behalf of the Company
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 identified in Item 1122(d) of Regulation AB that are
required to be performed by the Company under this Agreement or any
Reconstitution Agreement, provided that this term shall not include the Owner,
an affiliate of the Owner or originators of Mortgage Loans acquired by the
Company from the Owner or an affiliate of the Owner.
 
Whole Loan Transfer:  Any sale or transfer of some or all of the Mortgage Loans
(including an Agency Transfer), other than a Securitization Transaction.

 
I-2

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SECTION 2.  COMPLIANCE WITH REGULATION AB
 
Subsection 2.01.  Intent of the Parties; Reasonableness.
 
The Owner and the Company acknowledge and agree that the purpose of this
Regulation AB Addendum is to facilitate compliance by the Owner and any
Depositor with the provisions of Regulation AB and related rules and regulations
of the Commission and that the provisions of this Regulation AB Addendum shall
be applicable to all Mortgage Loans included in a Securitization Transaction
closing on or after January 1, 2006, regardless whether the Mortgage Loans were
purchased by the Owner prior to the date hereof.  Although Regulation AB is
applicable by its terms only to offerings of asset-backed securities that are
registered under the Securities Act, the Company acknowledges that investors in
privately offered securities may require that the Owner or any Depositor provide
comparable disclosure in unregistered offerings.  References in this Regulation
AB Addendum to compliance with Regulation AB include provision of comparable
disclosure in private offerings.   The Owner and the Company also acknowledge
and agree that amendments to Regulation AB may become effective during the term
of this Agreement and that both parties will use commercially reasonable efforts
to comply with such amendments.
 
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 Company 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 reasonable requests made by the Owner, any Master Servicer
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 Company shall cooperate
fully with the Owner and any Master Servicer to deliver to the Owner (including
any of its assignees or designees) and one of any Master Servicer or any
Depositor (as requested), any and all statements, reports, certifications,
records and any other information necessary in the good faith determination of
the Owner 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 Company, any Subservicer, and the Mortgage Loans, or
the servicing of the Mortgage Loans, reasonably believed by the Owner, the
Master Servicer or any Depositor to be necessary in order to effect such
compliance.
 
The Owner and the Company also acknowledge and agree that Section
2.02(a)(i)-(v), Section 2.03(c), (e) and (f), Section 2.04, Section 2.05 and
Section 2.06 of this Regulation AB Addendum shall only be applicable with
respect to any Mortgage Loan if the Company (or Subservicer, if any) services
such Mortgage Loan for a period following the closing date of a related
Securitization Transaction.

 
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For purposes of this Regulation AB Addendum, the term “Owner” shall refer to
Redwood Residential Acquisition Corporation and its successors in interest and
assigns.  In addition, any notice or request that must be “in writing”  or
“written” may be made by electronic mail.
 
The Owner (including any of its assignees or designees) shall cooperate with the
Company by providing timely notice of requests for information under these
provisions.
 
Subsection 2.02  Additional Representations and Warranties of the Company.
 
(a)           The Company shall be deemed to represent 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
2.03 that, except as disclosed in writing to the Owner, such Master Servicer or
such Depositor prior to such date: (i) the Company is not aware and has not
received notice that any default, early amortization or other performance
triggering event with respect to the Company has occurred as to any other
securitization due to any act or failure to act of the Company; (ii) the Company
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
Servicing Criteria with respect to other securitizations of residential mortgage
loans involving the Company as servicer has been disclosed or reported by the
Company; (iv) no material changes to the Company’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 Company’s
financial condition that are reasonably expected to have a material adverse
effect on the performance by the Company 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
Company or any Subservicer; and (vii) there are no affiliations, relationships
or transactions relating to the Company or any Subservicer with respect to any
Securitization Transaction and any party thereto identified in writing to the
Company by the related Depositor of a type described in Item 1119 of Regulation
AB.
 
(b)           If so requested in writing 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 2.03,
the Company shall use commercially reasonable efforts to confirm in writing
within five (5) Business Days, but in no event later than ten (10) Business
Days, following such request 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 within five (5)
Business Days, but in no event later than ten (10) Business Days, reasonably
adequate disclosure of the pertinent facts, in writing, to the requesting party.
 
Subsection 2.03  Information to Be Provided by the Company.
 
In connection with any Securitization Transaction, the Company shall use
commercially reasonable efforts to (i) within five (5) Business Days, but in no
event later than ten (10)

 
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Business Days, following written 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), (c) and (f) of this Section, and (ii) as promptly as practicable
following notice to or discovery by the Company, 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)           [Reserved]
 
(b)           If so requested in writing by the Owner or any Depositor, the
Company shall provide Static Pool Information solely with respect to securitized
pools of mortgage loans (of a similar type as the Mortgage Loans, as reasonably
identified by the Owner as provided below) that were included in securitizations
that closed during the five (5) years preceding the closing date of the related
Securitization Transaction.  Such Static Pool Information shall be prepared by
the Company on the basis of its reasonable, good faith interpretation of the
requirements of Item 1105(a)(3) of Regulation AB.  To the extent that there is
reasonably available to the Company  Static Pool Information with respect to
more than one mortgage loan type, the Owner or any Depositor shall be entitled
to specify whether some or all of such information shall be provided pursuant to
this paragraph.  The content of such Static Pool Information may be in the form
customarily provided by the Company, and need not be customized for the Owner or
any Depositor.  Such Static Pool Information for each prior securitized pool
shall be presented in increments no less frequently than quarterly over the life
of the mortgage loans included in such prior securitized pool.  The most recent
periodic increment must be as of a date no later than 135 days prior to the date
of the prospectus or other offering document in which the Static Pool
Information is to be included or incorporated by reference.  The Static Pool
Information shall be provided in an electronic format that provides a permanent
record of the information provided, such as a portable document format (pdf)
file, or other such electronic format reasonably required by the Owner or the
Depositor, as applicable.
 
Promptly following notice or discovery of a material error in Static Pool
Information provided pursuant to the immediately preceding paragraph (including
an omission to include therein information required to be provided pursuant to
such paragraph) during the applicable offering period for the securities, the
Company shall provide corrected Static Pool Information to the Owner or any
Depositor, as applicable, in the same format in which Static Pool Information
was previously provided to such party by the Company.
 
If so requested in writing by the Owner or any Depositor, the Company shall
provide, at the expense of the requesting party (to the extent of any additional
incremental expense associated with delivery pursuant to this Regulation AB
Addendum), such statements and agreed-upon procedures letters of certified
public accountants reasonably acceptable to the Owner or Depositor, as
applicable, pertaining to Static Pool Information relating to securitizations
closed on or after January 1, 2006, as the Owner or such Depositor shall
reasonably request.  Such statements and letters shall be addressed to and be
for the benefit of such parties as the Owner or such Depositor shall designate,
which may include, by way of

 
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example, any Sponsor, any Depositor and any broker dealer acting as underwriter,
placement agent or initial purchaser with respect to a Securitization
Transaction.  Any such statement or letter may take the form of a standard,
generally applicable document accompanied by a reliance letter authorizing
reliance by the addressees designated by the Owner or such Depositor.
 
(c)         If so requested in writing by the Owner or any Depositor, the
Company shall provide such information regarding the Company, as servicer of the
Mortgage Loans, and each Subservicer (each of the Company and each Subservicer,
for purposes of this paragraph, a “Servicer”), as is requested for the purpose
of compliance with Item 1108, 1117 and 1119 of Regulation AB.  Such information
shall include, at a minimum:
 
(A)         the Servicer’s form of organization;
 
(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 the 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:
 
(1)           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 by the Servicer during the three-year period immediately preceding
the related Securitization Transaction;
 
(2)           the extent of outsourcing the Servicer utilizes;
 
(3)           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;
 
(4)           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
 
(5)           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 the Agreement and

 
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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 Company of its servicing obligations under the 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;
 
(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 legal or governmental proceedings pending (or
known to be contemplated) against the Servicer that would be material to
securityholders; 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 a 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.

 
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(d)          For the purpose of satisfying its reporting obligation under the
Exchange Act with respect to any class of asset-backed securities, for so long
as the Depositor is required to file reports under the Exchange Act with respect
to a Securitization Transaction, the Company 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 litigation or governmental proceedings
pending against the Company or any Subservicer that would be material to
securityholders and (B) any affiliations or relationships that develop following
the closing date of a Securitization Transaction between the Company or any
Subservicer and any of the parties specified in clause (D) of paragraph (a) of
this Section (and any other parties identified in writing by the requesting
party) with respect to such Securitization Transaction, but only to the extent
that such affiliations or relationships do not include the Owner, Depositor or
any of their respective affiliates as a party, (C) any Event of Default of which
it is aware or has received notice under the terms of the Agreement or any
Reconstitution Agreement, (D) any merger or consolidation where the Company is
not the surviving entity or sale of substantially all of the assets of the
Company, and (E) the Company’s entry into an agreement with a Subservicer to
perform or assist in the performance of any of the Company’s obligations under
the Agreement or any Reconstitution Agreement and (ii) provide to the Owner and
any Depositor a description of such proceedings, affiliations or relationships.
 
(e)          As a condition to the succession to the Company or any Subservicer
as servicer or subservicer under the Agreement or any Reconstitution Agreement
by any Person (i) into which the Company or such Subservicer may be merged or
consolidated, or (ii) which may be appointed as a successor to the Company or
any Subservicer, the Company 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 in writing 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.
 
(f)          In addition to such information as the Company, as servicer, is
obligated to provide pursuant to other provisions of the Agreement, not later
than ten (10) 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 Company or any Subservicer, the
Company or such Subservicer, as applicable, shall, to the extent the Company 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 and reasonably available to it 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 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) that
would be material to the securityholders;

 
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(ii)          breaches of pool asset representations or warranties or
transaction covenants (Item 1121(a)(12) of Regulation AB) that would be material
to the securityholders; and
 
(iii)         information regarding new asset-backed securities issuances backed
by the same pool assets, any pool asset changes (such as additions,
substitutions or repurchases), and any changes in origination, underwriting or
other criteria for acquisition or selection of pool assets (Item 1121(a)(14) of
Regulation AB) that would be material to the securityholders.
 
(g)          The Company shall provide to the Owner, any Master Servicer and any
Depositor, upon written request, evidence of the authorization of the person
signing any certification or statement, copies of Fidelity Bond Insurance and
Errors and Omissions Insurance policy evidence, publicly available financial
information and reports, and, to the extent material to securityholders, such
other information related to the Company or any Subservicer of the Company’s or
such Subservicer’s performance hereunder.
 
Subsection 2.04  Servicer Compliance Statement.
 
On or before March 5th of each calendar year when the Depositor is required to
file reports under the Exchange Act with respect to the related Securitization
Transaction, commencing in 2012, the Company shall deliver to the Owner and any
Master Servicer, or any Depositor if a Master Servicer has not been identified
for the related Securitization Transaction, a statement of compliance addressed
to such parties and signed by an authorized officer of the Company, to the
effect that (i) a review of the Company’s activities during the immediately
preceding calendar year (or applicable portion thereof) and of its performance
under the 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 Company has fulfilled all of
its obligations under the 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.
 
Subsection 2.05  Report on Assessment of Compliance and Attestation.
 
(a)          On or before March 5th of each calendar year when the Depositor is
required to file reports under the Exchange Act with respect to the related
Securitization Transaction, commencing in 2012, the Company shall:
 
(i)           deliver to the Owner and any Master Servicer, or any Depositor if
a Master Servicer has not been identified for the related Securitization
Transaction, a report (in form and substance reasonably satisfactory to such
parties) regarding the Company’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 such parties and signed by an

 
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authorized officer of the Company, and shall address each of the “Applicable
Servicing Criteria” specified on Exhibit B hereto;
 
(ii)          deliver to the Owner and any Master Servicer, or any Depositor if
a Master Servicer has not been identified for the related Securitization
Transaction, a report of a registered public accounting firm reasonably
acceptable to such parties that attests to, and reports on, the assessment of
compliance made by the Company and delivered pursuant to the preceding
paragraph.  Such attestation shall be in accordance with Rules 1o02(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
Company pursuant to Section 2.06(b) to be “participating in the servicing
function” within the meaning of Item 1122 of Regulation AB, to deliver to the
Owner and any Master Servicer, or any Depositor if a Master Servicer has not
been identified for the related Securitization Transaction, an assessment of
compliance and accountants’ attestation as and when provided in paragraphs (a)
and (b) of this Section; and
 
(iv)         deliver, and cause each Subservicer, and each Subcontractor
determined by the Company pursuant to Section 2.06(b) to be “participating in
the servicing function” within the meaning of Item 1122 of Regulation AB, to
deliver, to the Owner and any Master Servicer, or any Depositor if a Master
Servicer has not been identified for the related Securitization Transaction, 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, signed by the appropriate officer of the Company, in the form
attached hereto as Exhibit A.
 
The Company acknowledges that the parties identified in clause (a)(iv) above may
rely on the certification provided by the Company pursuant to such clause in
signing a Sarbanes Certification and filing such with the Commission.  Neither
the Owner 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.
 
(b)          Each assessment of compliance provided by a Subservicer pursuant to
Section 2.05(a)(iii) shall address each of the Servicing Criteria specified on
substantially Exhibit B hereto 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 2.05(a)(iii) need
not address any elements of the Servicing Criteria other than those specified by
the Company pursuant to Section 2.06.
 
Subsecton 2.06  Use of Subservicers and Subcontractors.
 
The Company shall not hire or otherwise utilize the services of any Subservicer
to fulfill any of the obligations of the Company as servicer under the Agreement
or any Reconstitution

 
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Agreement unless the Company complies with the provisions of paragraph (a) of
this Section.  The Company shall not hire or otherwise utilize the services of
any Subcontractor, and shall not authorize any Subservicer to hire or otherwise
utilize the services of any Subcontractor, to fulfill any of the obligations of
the Company as servicer under the Agreement or any Reconstitution Agreement
unless the Company complies with the provisions of paragraph (b) of this
Section.
 
(a)           It shall not be necessary for the Company to seek the consent of
the Owner, any Master Servicer or any Depositor to the utilization of any
Subservicer.  The Company shall cause any Subservicer used by the Company (or by
any Subservicer) for the benefit of the Owner and any Depositor to comply with
the provisions of this Section and with Sections 2.02, 2.03(c), (e), (f) and
(g), 2.04, 2.05 and 2.07 of this Regulation AB Addendum to the same extent as if
such Subservicer were the Company, and to provide the information required with
respect to such Subservicer under Section 2.03(d) of this Regulation AB
Addendum.  The Company 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 2.04, any assessment
of compliance and attestation required to be delivered by such Subservicer under
Section 2.05 and any certification required to be delivered to the Person that
will be responsible for signing the Sarbanes Certification under Section 2.05 as
and when required to be delivered.
 
(b)           It shall not be necessary for the Company to seek the consent of
the Owner, any Master Servicer or any Depositor to the utilization of any
Subcontractor.  The Company shall promptly upon written request provide to the
Owner and any Master Servicer, or any Depositor (or any designee of the
Depositor, such as an administrator) if a Master Servicer has not been
identified for the related Securitization Transaction, a written description (in
form and substance reasonably satisfactory to such parties) of the role and
function of each Subcontractor utilized by the Company 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.
 
(c)           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 Company shall cause any such Subcontractor used by the
Company (or by any Subservicer) for the benefit of the Owner and any Depositor
to comply with the provisions of Sections 2.05 and 2.07 of this Regulation AB
Addendum to the same extent as if such Subcontractor were the Company.  The
Company shall be responsible for obtaining from each Subcontractor and
delivering to the Owner and any Depositor any assessment of compliance and
attestation required to be delivered by such Subcontractor under Section 2.05,
in each case as and when required to be delivered.
 
Subsection 2.07  Indemnification; Remedies.
 
The Company shall indemnify the Owner, each affiliate of the Owner, and each of
the following parties participating in a Securitization Transaction: each
Sponsor; each issuing entity; each Person (including, but not limited to, any
Master Servicer if applicable) responsible for the

 
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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; 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:
 
(a)           (A) any untrue statement of a material fact contained or alleged
to be contained in any information, report, certification, accountants’ letter
or other material provided in written or electronic format under this Regulation
AB Addendum by or on behalf of the Company, or provided under this Regulation AB
Addendum by or on behalf of any Subservicer or Subcontractor (collectively, the
“Company Information”), or (B) the omission or alleged omission to state in the
Company Information a material fact required to be stated in the Company
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 Company Information and not to any other information
communicated in connection with a sale or purchase of securities, without regard
to whether the Company Information or any portion thereof is presented together
with or separately from such other information;
 
(b)           any breach by the Company of its obligations under this Regulation
AB Addendum, including particularly any failure by the Company, any Subservicer
or any Subcontractor to deliver any information, report, certification,
accountants’ letter or other material when and as required under this Regulation
AB Addendum, including any failure by the Company to identify pursuant to
Section 2.06(b) any Subcontractor “participating in the servicing function”
within the meaning of Item 1122 of Regulation AB;
 
(c)           any breach by the Company of a representation or warranty set
forth in Section 2.02(a) or in a writing furnished pursuant to Section 2.02(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 Company of a representation or warranty in a writing
furnished pursuant to Section 2.02(b) to the extent made as of a date subsequent
to such closing date, or
 
(d)           the negligence, bad faith or willful misconduct of the Company in
connection with its performance under this Regulation AB Addendum.
 
If the indemnification provided for herein is unavailable or insufficient to
hold harmless an Indemnified Party, then the Company 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

 
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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
Company on the other.
 
In the case of any failure of performance described in clause (a)(ii) of this
Section, the Company 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 Company, any Subservicer or
any Subcontractor.
 
(e)           This indemnification shall survive the termination of the
Agreement or the termination of any party to the Agreement.
 
(i)           Any failure by the Company, any Subservicer or any Subcontractor
to deliver any information, report, certification, accountants’ letter or other
material when and as required under this Regulation AB Addendum, or any breach
by the Company of a representation or warranty set forth in Section 2.02(a) or
in a writing furnished pursuant to Section 2.02(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 Company
of a representation or warranty in a writing furnished pursuant to Section
2.02(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 Company under the 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 Company as servicer under the Agreement and/or any applicable Reconstitution
Agreement without payment (notwithstanding anything in the Agreement or any
applicable Reconstitution Agreement to the contrary) of any compensation to the
Company (and, if the Company 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 the Agreement and/or any applicable
Reconstitution Agreement expressly provides for the survival of certain rights
or obligations following termination of the Company as servicer, such provision
shall be given effect.
 
(ii)          Any failure by the Company, any Subservicer or any Subcontractor
to deliver any information, report, certification or accountants’ letter when
and as required under Section 2.04 or 2.05, including (except as provided below)
any failure by the Company to identify pursuant to Section 2.06(b) any
Subcontractor “participating in the servicing function” within the meaning of
Item 1122 of Regulation AB, which continues unremedied for ten (10) 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 Company under the Agreement and any applicable
Reconstitution Agreement, and shall entitle the Owner, any Master Servicer or
any

 
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Depositor, as applicable, in its sole discretion to terminate the rights and
obligations of the Company as servicer under the Agreement and/or any applicable
Reconstitution Agreement without payment (notwithstanding anything in this
Agreement to the contrary) of any compensation to the Company; provided that to
the extent that any provision of the Agreement and/or any applicable
Reconstitution Agreement expressly provides for the survival of certain rights
or obligations following termination of the Company 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 Company pursuant to this subparagraph (b)(ii) if a
failure of the Company to identify a Subcontractor “participating in the
servicing function” within the meaning of Items 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.
 
(f)           The Company shall promptly reimburse the Owner (or any designee of
the Owner), any 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 Company 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 the 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.
 
Subsection 2.08  Third-party Beneficiary.
 
For purposes of this Regulation AB Addendum and any related provisions thereto,
each Master Servicer shall be considered a third-party beneficiary of the
Agreement, entitled to all the rights and benefits hereof as if it were a direct
party to the Agreement.

 
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EXHIBIT A
 
FORM OF ANNUAL CERTIFICATION
 

 
Re:
The [ ] agreement dated as of [ ], 20[  ] (the “Agreement”), among [IDENTIFY
PARTIES]

 
I, ________________________________, the _____________________ of [ ] certify to
[the Owner], [the Depositor], and the [Master Servicer] [Securities
Administrator] [Trustee], and their officers, with the knowledge and intent that
they will rely upon this certification, that:
 
(1)           I have reviewed the servicer compliance statement of the Company
provided in accordance with Item 1123 of Regulation AB (the “Compliance
Statement”), the report on assessment of the Company’s compliance with the
servicing criteria set forth in Item 1122(d) of Regulation AB and identified as
the responsibility of the Company on Exhibit B to the Regulation AB Compliance
Addendum to the Agreement (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 servicing
reports, officer’s certificates and other information relating to the servicing
of the Mortgage Loans by the Company during 20[ ] that were delivered by the
Company to the [Depositor] [Master Servicer] [Securities Administrator]
[Trustee] pursuant to the Agreement (collectively, the “Company Servicing
Information”);
 
(2)           Based on my knowledge, the Company 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 with respect
to the period of time covered by the Company Servicing Information;
 
(3)           Based on my knowledge, all of the Company Servicing Information
required to be provided by the Company under the Agreement has been provided to
the [Depositor] [Master Servicer] [Securities Administrator] [Trustee];
 
(4)           I am responsible for reviewing the activities performed by the
Company 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 Company has fulfilled its obligations under the
Agreement in all material respects; and
 
(5)           The Compliance Statement required to be delivered by the Company
pursuant to the Agreement, and the Servicing Assessment and Attestation Report
required to be provided by the Company and by any Subservicer or Subcontractor
pursuant to the Agreement, have been provided to the [Depositor] [Master
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.
 
 
I-A-1

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Date:
               
By:
           
Name:
   
Title:

 
 
I-A-2

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EXHIBIT B
 
SERVICING CRITERIA TO BE ADDRESSED IN ASSESSMENT OF COMPLIANCE
 
The assessment of compliance to be delivered by [the Company] [Name of
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
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

 
 
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Servicing Criteria
Applicable
Servicing
Criteria 
 Reference  Criteria  
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.
 
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.
 
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.
 
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.
 
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.
 

 
 
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Servicing Criteria
Applicable
Servicing
Criteria 
Reference Criteria    
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.
 
1122(d)(4)(ii)
Mortgage loan and related documents are safeguarded as required by the
transaction agreements
 
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.
 
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

 
 
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Servicing Criteria
Applicable
Servicing
Criteria 
Reference Criteria  
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
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 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.
 

 
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[NAME OF COMPANY/SUBSERVICER]
       
Date:
         
By:
     
Name:
   
Title:

 
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[__] – SEQUOIA TO TRUSTEE
 
ADDENDUM II
 
ASSIGNMENT, ASSUMPTION AND RECOGNITION AGREEMENT

For

Flow Mortgage Loan Servicing Rights Sale and Servicing Agreement

THIS ASSIGNMENT, ASSUMPTION AND RECOGNITION AGREEMENT, dated as of [ ] (the
“Assignment”), is entered into among Redwood Residential Acquisition Corporation
(the “Assignor”), Sequoia Residential Funding, Inc. (the “Depositor”), Select
Portfolio Servicing, Inc., as the servicer (the “Servicer”), DLJ Mortgage
Capital, Inc. (the “Servicing Rights Purchaser”) and [ ] (“[ ]”) as trustee (in
such capacity, the “Trustee” and as referred to herein, the “Assignee”) under a
Pooling and Servicing Agreement dated as of [ ] (the “Pooling and Servicing
Agreement”), among the Assignor, the Depositor and the Assignee.
 
RECITALS

WHEREAS, the Assignor, the Servicing Rights Purchaser and the Servicer have
entered into a certain Flow Mortgage Loan Servicing Rights Sale and Servicing
Agreement, dated as of [ ] (the “Flow Sale and Servicing Agreement”), and the
Servicer is currently servicing certain mortgage loans (the “Mortgage Loans”)
under the Flow Sale and Servicing Agreement; and
 
WHEREAS, the Assignor will sell 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 Flow
Sale and Servicing Agreement with respect to the Specified Mortgage Loans to the
Depositor; and
 
WHEREAS, the Depositor will sell to the Assignee all of its right, title and
interest in the Specified Mortgage Loans and its rights under the Flow Sale and
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.
 
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 sells,
assigns, conveys and transfers to the Depositor all of its right, title and
interest in, to and under the Flow Sale and Servicing Agreement to the extent
relating to the Specified Mortgage Loans, together with its obligations as
“Owner” (as such term is defined in the Flow Sale and Servicing Agreement) to
the extent relating to the Specified Mortgage Loans, and the Depositor hereby
accepts such assignment from the Assignor and assumes such obligations.

 
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(b)           Effective on and as of the date hereof, the Depositor hereby
sells, assigns, conveys and transfers to the Assignee all of its right, title
and interest in, to and under the Flow Sale and Servicing Agreement to the
extent relating to the Specified Mortgage Loans, together with its obligations
as “Owner” (as such term is defined in the Flow Sale and Servicing Agreement) to
the extent relating to the Specified Mortgage Loans, and the Assignee hereby
accepts such assignment from the Depositor.
 
(c)           Assignee agrees to be bound, as “Owner” (as such term is defined
in the Flow Sale and Servicing Agreement), by all of the terms, covenants and
conditions of the Flow Sale and Servicing Agreement relating to the Specified
Mortgage Loans, and from and after the date hereof, Assignee assumes for the
benefit of each of Assignor, Depositor and Servicer all of Assignor’s
obligations as Owner thereunder in respect of the Specified Mortgage Loans.
 
2.
Recognition of the Assignee.

 
From and after the date hereof, subject to Section 3 below, the Servicer and
Servicing Rights Purchaser 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 Flow Sale
and Servicing Agreement (as amended hereby) with the Assignee as the Owner
thereunder, the terms of which Flow Sale and Servicing Agreement are
incorporated herein by reference and amended hereby.  It is the intention of the
parties hereto that this Assignment will be a separate and distinct agreement,
and the entire 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.
Continuing Rights and Responsibilities.

 
(a)  The parties hereto agree and acknowledge that [                 ], an
Affiliate of the Depositor, in its capacity as the initial Controlling Holder
pursuant to the Pooling and Servicing Agreement, and for so long as it is the
Controlling Holder, will assume all of Assignee’s rights and all related
responsibilities as Owner under the sections of the  Flow Sale and Servicing
Agreement listed below:
 
 
Flow Sale and Servicing Agreement:

 
Section
 
Matter
     
11.01, 5th, 7th and 8th ¶’s
 
Servicer to Act as Servicer; Subservicing.

11.13, 4th and 5th
¶’s
 
Title, Management and Disposition of REO Property.
     
11.20
 
Servicer Shall Provide Access and Information as
Reasonably Required.

 
 
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 (b)         Notwithstanding Sections 1 and 2 above, Assignor reserves its
rights under, and does not assign to Assignee or Depositor, the ongoing rights
to take action and the responsibilities of the Owner under the Sections of the
Flow Sale and Servicing Agreement listed below:
 
 
Flow Sale and Servicing Agreement:

 
Section
 
Matter
     
Addendum I
 
Regulation AB Compliance Addendum

 
(c)           In addition, the Servicer agrees to furnish to the Assignor as
well the 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 Flow Sale and Servicing Agreement referred to above and under
the following sections, at the times therein specified:
 
 
Flow Sale and Servicing Agreement:

 
Section
         
11.09
 
Transfer of Accounts.
     
11.16
 
Statements to the Owner.
     
Subsection 2.04
of Addendum I
 
Servicer Compliance Statement.
     
Subsection 2.05
of Addendum I
 
Report on Assessment of Compliance and Attestation.

 
(d)          If any Affiliate of the Depositor is no longer the Controlling
Holder under the Pooling and Servicing Agreement, then all rights and
responsibilities assumed by the Controlling Holder pursuant to Section 3(a)
shall terminate and revert to Assignee; provided, however, that the rights and
responsibilities assumed by the Controlling Holder under the 5th paragraph of
Section 11.01 of the Flow Sale and Servicing Agreement shall terminate in their
entirety as to the Specified Mortgage Loans.  Assignor will provide thirty (30)
days notice to the Servicer of any such termination.
 
4.
Amendment to the Flow Sale and Servicing Agreement.

 
The Flow Sale and Servicing Agreement are hereby amended as set forth in
Appendix A hereto with respect to the Specified Mortgage Loans.
 
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.
 
(b)          Each of the parties hereto represents and warrants that this
Assignment has
 
 
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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.
Continuing Effect.

 
Except as contemplated hereby, the Flow Sale and Servicing Agreement shall
remain in full force and effect in accordance with their terms.  This Assignment
constitutes a Reconstitution Agreement as contemplated in Section 32 of the Flow
Sale and Servicing Agreement and the Reconstitution Date shall be the date
hereof with respect to the Specified Mortgage Loans listed on Exhibit I on the
date hereof.
 
7.
Governing Law.

 
This Assignment and the rights and obligations hereunder shall be governed by
and construed in accordance with the internal laws of the State of New York.
 
8.
Notices.

 
Any notices or other communications permitted or required under the Flow Sale
and Servicing Agreement to be made to the Assignor and Assignee shall be made in
accordance with the terms of the Flow Sale and Servicing Agreement and shall be
sent to the Assignor and Assignee as follows:
 
Assignor:  Redwood Residential Acquisition Corporation
One Belvedere Place, Suite 360
Mill Valley, CA  94941

Assignee:  [ ]

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 Flow Sale
and Servicing Agreement.
 
9.
Counterparts.

 
This Assignment 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 has the same
meaning as in the Flow Sale and Servicing Agreement.

 
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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 Flow Sale and Servicing Agreement to enforce the
obligations of the Servicer thereunder.  Any notices or other communications
permitted or required under the Flow Sale and Servicing Agreement to be made to
the Assignee shall be made in accordance with the terms of the Flow Sale and
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 [ ]

 
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 Flow Sale and 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 Flow Sale and Servicing
Agreement, as they relate to the Specified Mortgage Loans, to the Master
Servicer by wire transfer of immediately funds to:

[__]

 
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12.           Successors and Assigns.

 
Upon a transfer of the Specified Mortgage Loans by the Assignee (other than in
respect of repurchases by a seller pursuant to the related purchase agreement)
to a buyer (“buyer”), such transfer shall constitute a Reconstitution subject to
the terms of Section 32 of the Flow Sale and Servicing Agreement.  Upon the
closing of such transfer, the rights and obligations of Owner held by the
Assignor pursuant to this Assignment shall automatically terminate and the buyer
shall be deemed to possess all of the rights and obligations of Owner under the
Flow Sale and Servicing Agreement, provided, however, that the Assignor shall
remain liable for any obligations as Owner arising from or attributable to the
period from the date hereof to the closing date of such transfer.

[remainder of page intentionally left blank]

 
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IN WITNESS WHEREOF, the parties hereto have executed this Assignment the day and
year first above written.
 

 
ASSIGNOR:
     
REDWOOD RESIDENTIAL ACQUISITION CORPORATION

 
By:
 

 
Name:
 

 
Title:
 

 
DEPOSTIOR:
     
SEQUOIA RESIDENTIAL FUNDING, INC.

 
By:
 

 
Name:
 

 
Title:
 

 

 
ASSIGNEE:
 
[ ]

 

 
By:
 

 
Name:
 

 
Title:
 

 

 
SERVICER:
     
SELECT PORTFOLIO SERVICING, INC.

 

 
By:
 

 
Name:
 

 
Title:
 

 
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SERVICING RIGHTS PURCHASER:
     
DLJ MORTGAGE CAPITAL, INC.

 

 
By:
 

 
Name:
 

 
Title:
 

 
Accepted and agreed to by:
     
MASTER SERVICER;
     
WELLS FARGO BANK, N.A.
 

 
By:
   

Name:
   

Title:
   

 
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EXHIBIT I
 
 
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APPENDIX A
 
MODIFICATIONS TO THE FLOW SALE AND SERVICING AGREEMENT
 
1.            The definition of “Business Day” in Section 1 of the Agreement is
hereby deleted in its entirety and replaced with the following:
 
“Business Day:  Any day other than (i) a Saturday or a Sunday, or (ii) a legal
holiday in the State of New York, the State of Utah or the State of California,
or the State of Maryland or the State of Minnesota, or (iii) a day on which
banks in the State of New York, the State of Utah or the State of California, or
the State of Maryland or the State of Minnesota are authorized or obligated by
law or executive order to be closed.”

 
2.
The definition of “Assumed Principal Balance” is hereby revised to read as
follows:

 
“Assumed Principal Balance:  As to each Mortgage Loan as of any date of
determination, (i) the principal balance of the Mortgage Loan outstanding as of
the Cut-off Date after application of payments due on or before the Cut-off
Date, whether or not received, minus (ii) all amounts previously distributed to
the Owner with respect to the Mortgage Loan pursuant to Subsection 11.15 and
representing (a) payments or other recoveries of principal or (b) advances of
scheduled principal payments made pursuant to Subsection 11.17.”
 
 
3.
The definition of “Closing Date” is hereby revised to read as follows:

 
“Closing Date:  [__], except with respect to the first paragraph of Section 3
and the Bill of Sale and Servicer Acknowledgement(s).”
 

 
4. 
The definition of “Cut-off Date” is hereby revised to read as follows:

 
“Cut-off Date:  [__], except with respect to the first paragraph of Section 3
and the Bill of Sale and Servicer Acknowledgement(s).”
 
 
5.
The definition of “First Remittance Date” is hereby revised to read as follows:

 
 
“First Remittance Date:  [__].”

 
6.            Each of the following definitions is hereby inserted in Section 1
of the Agreement in its appropriate alphabetical order:
 
“Full Prepayment:  Any payment of the entire principal balance of a Mortgage
Loan that is received in advance of its scheduled Due Date and is not
accompanied by an amount of interest representing scheduled interest due on any
date or dates in any month or months subsequent to the month of prepayment.”
 
 “Partial Prepayment:  Any payment of principal on a Mortgage Loan, other than a
Full Prepayment, which is received in advance of its scheduled Due Date and is
not accompanied by

 
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an amount of interest representing scheduled interest due on any date or dates
in any month or months subsequent to the month of prepayment.”
 
“P&I Advance: As defined in Section 11.17.”
 
“Prepayment Interest Shortfall: As to any Remittance Date and any Mortgage Loan,
(a) if such Mortgage Loan was the subject of a Full Prepayment during the
related Principal Prepayment Period, the excess of one month’s interest
(adjusted to the Mortgage Loan Remittance Rate) on the Assumed Principal Balance
of such Mortgage Loan outstanding immediately prior to such prepayment, over the
amount of interest (adjusted to the Mortgage Loan Remittance Rate) actually paid
by the Mortgagor in respect of such Principal Prepayment Period, and (b) if such
Mortgage Loan was the subject of a Partial Prepayment during the related
Principal Prepayment Period, an amount equal to the excess of one month’s
interest at the Mortgage Loan Remittance Rate on the amount of such Partial
Prepayment, over the amount of interest actually paid by the Mortgagor in
respect of such Partial Prepayment during such Principal Prepayment Period.
 
“Principal Prepayment Period: As to any Remittance Date, the calendar month
preceding the calendar month in which such Remittance Date occurs.
 
 
7.
Subsection 11.01, fifth paragraph is revised to read as follows:

 
“Consistent with the terms of this Agreement, and subject to the REMIC
Provisions if the Mortgage Loans have been transferred to a REMIC, 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; provided, however, that (unless the Mortgagor is in
default with respect to the Mortgage Loan, or such default is, in the judgment
of the Servicer, imminent, and the modification is in accordance with the
previously agreed-upon customary procedures of the Servicer, which may change
from time to time, or industry-accepted programs, and the Servicer has
previously notified the Owner of such modification) the Servicer shall not enter
into any payment plan or agreement to modify payments with a Mortgagor lasting
more than six (6) months or permit any modification with respect to any Mortgage
Loan that would change the Mortgage Interest Rate, the Lifetime Rate Cap (if
applicable), the Initial Rate Cap (if applicable), the Periodic Rate Cap (if
applicable) or the Gross Margin (if applicable), agree to the capitalization of
arrearages, including interest, fees or expenses owed under the Mortgage Loan,
make any future advances or extend the final maturity date with respect to such
Mortgage Loan, or accept substitute or additional collateral or release any
collateral for such Mortgage Loan.  Additionally, the Servicer shall not accept
any deed-in-lieu of, short pay-off, or sell any property, in which the sale
proceeds are less than the unpaid principal balance of the related Mortgage Loan
without previously notifying the Owner and providing the Owner with
justification for such action.   Further, unless the related Mortgage Loan is in
default or such default is, in the judgment of the Servicer, imminent, the
Servicer shall not defer or forgive the payment of any principal or interest or
change the outstanding principal amount (except to reflect actual payments of
principal) without previously notifying the Owner and providing the Owner with
justification for such action.  Any capitalization of arrearages of interest,
fees and expenses in excess of 10% of the outstanding unpaid principal balance
of the related Mortgage Loan immediately prior to the capitalization shall be
made only after the Servicer has notified the Owner and provided the Owner with
justification for the capitalization.   Without limiting the generality of the
foregoing, the Servicer in its own name or acting through subservicers or agents
is hereby authorized and empowered by the Owner when the Servicer believes it
appropriate and reasonable in its best judgment, to execute and deliver, on
behalf of itself or the Owner, all

 
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instruments of satisfaction or cancellation, or of partial or full release and
discharge, and all other comparable instruments, with respect to the Mortgage
Loans and the Mortgaged Properties and to institute foreclosure proceedings or
obtain a deed-in-lieu of foreclosure so as to convert the ownership of such
properties, and to hold or cause to be held title to such properties, on behalf
of the Owner pursuant to the provisions of Subsection 11.13.  Notwithstanding
anything to the contrary in the this Agreement, the Servicer shall not make or
permit any modification, waiver or amendment of any term of a Mortgage Loan that
could cause any REMIC holding such Mortgage Loan to fail to qualify as a REMIC
or result in the imposition of any tax under Section 860F(a) or 860G(d) of the
Code on any REMIC holding such Mortgage Loan.”

8.            Subsection 11.04, first sentence of the first paragraph is revised
to read as follows:
 
“The Servicer shall segregate and hold all funds collected and received pursuant
to each Mortgage Loan separate and apart from any of its own funds and general
assets and shall establish and maintain one or more Collection Accounts
(collectively, the “Collection Account”), titled “[ ], in trust for the holders
of [ ] Mortgage Pass-Through Certificates.”

9.            Subsection 11.04, subclause (f) of the second paragraph is revised
to read as follows:

“(f)         any amount required to be deposited in the Custodial Account
pursuant to Subsections 11.15, 11.17 and 11.19.”

10.          The following new subclause (j) is added immediately following
subclause (i) thereof in Subsection 11.04:

“(j)         with respect to each Full Prepayment and each Partial Prepayment,
an amount (to be paid by the Servicer out of its own funds) equal to the
Prepayment Interest Shortfall; provided, however, that the Servicer’s aggregate
obligations under this paragraph for any month shall be limited to the total
amount of Servicing Fees actually received with respect to the Mortgage Loans by
the Servicer during such month.”

 
11.          Notwithstanding anything to the contrary in the Flow Sale and
Servicing Agreement, any Custodial Accounts established by the Servicer pursuant
to Subsection 11.04 of the Flow Sale and Servicing Agreement shall qualify as
Eligible Accounts as defined in the Pooling and Servicing Agreement.

12.          Subsection 11.05 is revised to read as follows:

 
“The Servicer shall, from time to time, withdraw funds from the Custodial
Account for the following purposes:
 
(b)           to make payments to the Owner in the amounts and in the manner
provided for in Subsection 11.15;
 
(c)           to reimburse itself for P&I Advances, the Servicer’s right to
reimburse itself pursuant to this subclause (b) with respect to any Mortgage
Loan being limited to related Liquidation Proceeds, Condemnation Proceeds,
Insurance Proceeds and such other amounts as may be collected by the

 
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Servicer from the related Mortgagor or otherwise relating to the Mortgage Loan,
it being understood that, in the case of any such reimbursement, the Servicer’s
right thereto shall be prior to the rights of the Owner with respect to such
Mortgage Loan;
 
(d)           to reimburse itself for any unpaid Servicing Fees and for
unreimbursed Servicing Advances, the Servicer’s right to reimburse itself
pursuant to this subclause (c) with respect to any Mortgage Loan being limited
to related Liquidation Proceeds, Condemnation Proceeds, Insurance Proceeds and
such other amounts as may be collected by the Servicer from the related
Mortgagor or otherwise relating to the Mortgage Loan, it being understood that,
in the case of any such reimbursement, the Servicer’s right thereto shall be
prior to the rights of the Owner unless the Servicer is required to pay the
Prepayment Interest Shortfall pursuant to Subsection 11.15, in which case the
Servicer’s right to such reimbursement shall be subsequent to the payment to the
Owner of such shortfall;
 
(e)           to reimburse itself for unreimbursed Servicing Advances and for
unreimbursed P&I Advances, to the extent that such amounts are nonrecoverable
(as certified by the Servicer to the Owner in an Officer’s Certificate) by the
Servicer pursuant to subclause (b) or (c) above;
 
(f)            to reimburse itself for expenses incurred by and reimbursable to
it pursuant to Subsection 12.01;
 
(g)           to withdraw amounts to make P&I Advances in accordance with
Subsection 11.17;
 
(h)           to pay to itself any interest earned or any investment earnings on
funds deposited in the Custodial Account, net of any losses on such investments;
 
(i)            to withdraw any amounts inadvertently deposited in the Custodial
Account; and
 
(j)            to clear and terminate the Custodial Account upon the termination
of this Agreement.
 
Upon request, the Servicer will provide the Owner with copies of reasonably
acceptable invoices or other documentation relating to Servicing Advances that
have been reimbursed from the Custodial Account.

13.           Subsection 11.13 is revised to add the following paragraphs at the
end of the section:

“The REO Property must be sold within three years following the end of the
calendar year of the date of acquisition if a REMIC election has been made with
respect to the arrangement under which the Mortgage Loans and REO Property are
held, unless (i) the Owner shall have been supplied with an Opinion of Counsel
(at the Servicer’s expense) to the effect that the holding by the related trust
of such Mortgaged Property subsequent to such three-year period (and specifying
the period beyond such three-year period for which the Mortgaged Property may be
held) will not result in the imposition of taxes on “prohibited transactions” of
the related trust as defined in Section 860F of the Code, or cause the related
REMIC to fail to qualify as a REMIC, in which case the related trust may
continue to hold such Mortgaged Property (subject to any conditions contained in
such Opinion of Counsel), or (ii) the Owner (at the Servicer’s expense) or the
Servicer shall have applied for, prior to the expiration of such three-year
period, an extension of such three-year period in the manner contemplated by
Section 856(e)(3) of the Code, in which case the three-year period shall be
extended by the applicable period.  If a period longer than three years is
permitted under the foregoing sentence and is necessary to sell any REO
Property, the Servicer shall report monthly to the Owner as to progress being
made in selling such REO Property.
 
 
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Notwithstanding any other provision of this Agreement, if a REMIC election has
been made, no Mortgaged Property held by a REMIC shall be rented (or allowed to
continue to be rented) or otherwise used for the production of income by or on
behalf of the related trust or sold in such a manner or pursuant to any terms
that would (i) cause such Mortgaged Property to fail to qualify at any time as
“foreclosure property” within a meaning of Section 860G(a)(8) of the Code, (ii)
subject to the related trust to the imposition of any federal or state income
taxes on “net income from foreclosure property” with respect to such Mortgaged
Property within the meaning of Section 860G(c) of the Code, or (iii) cause the
sale of such Mortgaged Property to result in the receipt by the related trust or
any income from non-permitted assets as described in Section 860F(a) (2)(B) of
the Code, unless the Servicer has agreed to indemnify and hold harmless the
related trust with respect to the imposition of any such taxes.”
 
14.          Subsection 11.15, first paragraph is revised to read as follows:
 
“On each Remittance Date the Servicer shall remit by wire transfer of
immediately available funds to the account designated in writing by the Owner of
record on the preceding Record Date (a) all amounts credited to the Custodial
Account at the close of business on the related Determination Date, net of
charges against or withdrawals from the Custodial Account pursuant to
Subsection 11.05(b) through (h), plus (b) all amounts, if any, which the
Servicer is obligated to distribute pursuant to Subsection 11.17, minus (c) any
amounts attributable to Principal Prepayments received after the end of the
calendar month preceding the month in which the Remittance Date occurs, minus
(d) any amounts attributable to Monthly Payments collected but due on a Due Date
or Due Dates subsequent to the first day of the month in which the Remittance
Date occurs.
 
Not later than each Remittance Date, the Servicer shall from its own funds
deposit in the Custodial Account an amount equal to the aggregate Prepayment
Interest Shortfall due to either Partial Prepayment or Full Prepayment, if any,
existing in respect of the related Principal Prepayment Period.”

15.          Subsection 11.16, first sentence of the first paragraph is revised
to read as follows:

“Not later than the tenth (10th) day of each month, the Servicer shall forward
to the Owner in an electronic format statements, in substantially the same forms
as, and providing the information described in, Exhibit 3 hereto; or as
otherwise mutually agreed to by Servicer and the Master Servicer.”

16.          Subsection 11.17 is revised to read as follows:

“Subsection 11.17     Advances by the Servicer.

On the Business Day immediately preceding each related Remittance Date, the
Servicer shall either (a) deposit in the Custodial Account from its own funds an
amount equal to the aggregate amount of all Monthly Payments (with interest
adjusted to the Mortgage Loan Remittance Rate) which were due on the Mortgage
Loans during the applicable Due Period and which were delinquent at the close of
business on the immediately preceding Determination Date (each such advance, a
“P&I Advance”), (b) cause to be made an appropriate entry in the records of the
Custodial Account that amounts held for future distribution have been, as
permitted by this

 
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Subsection 11.17, used by the Servicer in discharge of any such P&I Advance or
(c) make P&I Advances in the form of any combination of (a) or (b) aggregating
the total amount of advances to be made.  Any amounts held for future
distribution and so used shall be replaced by the Servicer by deposit in the
Custodial Account on or before any future Remittance Date if funds in the
Custodial Account on such Remittance Date shall be less than payments to the
Owner required to be made on such Remittance Date.  The Servicer’s obligation to
make P&I Advances as to any Mortgage Loan will continue through the last Monthly
Payment due prior to the payment in full of a Mortgage Loan, or through the last
related Remittance Date prior to the Remittance Date for the distribution of all
other payments or recoveries (including proceeds under any title, hazard or
other insurance policy, or condemnation awards) with respect to a Mortgage Loan;
provided, however, that such obligation shall cease if the Servicer, in its good
faith judgment, determines that such P&I Advances would not be recoverable
pursuant to Subsection 11.05(d).  The determination by the Servicer that a P&I
Advance, if made, would be nonrecoverable, shall be evidenced by an Officer’s
Certificate of the Servicer, delivered to the Owner, which details the reasons
for such determination.  The Servicer shall not have any obligation to advance
amounts in respect of shortfalls relating to the Service members Civil Relief
Act and similar state and local laws.

17.          The Flow Sale and Servicing Agreement is modified by adding a new
Subsection 11.25 which reads as follows:

“Subsection 11.25 Compliance with REMIC Provisions.

If a REMIC election has been made with respect to the arrangement under which
the Mortgage Loans and REO Property are held, the Servicer shall not take any
action, cause the REMIC to take any action or fail to take (or fail to cause to
be taken) any action that, under the REMIC Provisions, if taken or not taken, as
the case may be could (i) endanger the status of the REMIC as a REMIC or (ii)
result in the imposition of a tax upon the REMIC (including but not limited to
the tax on “prohibited transactions” as defined in Section 860F(a)(2) of the
Code and the tax on “contribution” to a REMIC set forth in Section 860G(d) of
the Code unless the Servicer has received an Opinion of Counsel (at the expense
of the party seeking to take such actions) to the effect that the contemplated
action will not endanger such REMIC status or result in the imposition of any
such tax.”

18.          The Flow Sale and Servicing Agreement is modified by replacing
Subsection 12.04 with the following:

“Subsection 12.04       Servicer Not to Resign.

The Servicer shall not assign this Agreement or resign from the obligations and
duties hereby imposed on it except by mutual consent of the Servicer and the
Owner or upon the determination that the Servicer’s duties hereunder are no
longer permissible under applicable law and such incapacity cannot be cured by
the Servicer.  No such resignation of or assignment by the Servicer shall become
effective until a successor has assumed the Servicer’s responsibilities and
obligations hereunder in accordance with Subsection 14.02.”

19.          Section 13.03 of the Flow Sale and Servicing Agreement is deleted
in its entirety.
 
 
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