TABLE OF CONTENTS     ARTICLE I DEFINITIONS; CERTAIN MATTERS OF CONSTRUCTION  1  ARTICLE II ADMINISTRATION AND SERVICING OF MORTGAGE LOANS  9  2.1. The Servicer to Act as the Servicer  9  2.2. Liquidation of Mortgage Loans  10  2.3. Collection of Mortgage Loan Payments  11  2.4. Reserved  11  2.5. Reserved  11  2.6. Reserved  11  2.7. Payment of Taxes, Insurance and Other Charges  11  2.8. Reserved  11  2.9. Maintenance of Hazard Insurance  11  2.10. Maintenance of Mortgage Impairment Insurance  13  2.11. Maintenance of Fidelity Bond and Errors and Omissions Insurance  13  2.12. Inspections  13  2.13. Restoration of Mortgaged Property  13  2.14. Maintenance of PMI Policy; Claims  14  2.15. Title, Management and Disposition of REO Property  15  2.16. REO Reports  15  2.17. Liquidation Reports  15  2.18. Reports of Foreclosures and Abandonments of Mortgaged Property  15  2.19. Reserved  16  2.20. Notification of Adjustments  16  2.21. Transfer Notices  16  2.22. Privacy  16 
 

 
     2.23. Losses and Expenses  17  ARTICLE III PAYMENTS TO OWNER  19  3.1. Remittances  19  3.2. Reserved  19  3.3. Monthly Advances by the Servicer  19  ARTICLE IV GENERAL SERVICING PROCEDURES  19  4.1. Transfers of Mortgaged Property  19  4.2. Satisfaction of Mortgages and Release of Mortgage Files  20  4.3. Servicing Compensation  20  4.4. Annual Independent Public Accountants’ Servicing Report  20  4.5. Right to Examine Servicer Records  20  4.6. Compliance with REMIC Provisions  21  ARTICLE V POSSESSION OF MORTGAGE FILES; BOOKS AND RECORDS; CUSTODIAL AGREEMENT;DELIVERY OF DOCUMENTS;SERVICER TO COOPERATE  21  5.1. Provision of Information  21  5.2. Financial Statements; Servicing Facility  21  5.3. Possession of Mortgage Files; Maintenance of Servicing Files  21  5.4. Books and Records; Transfers of Mortgage Loans  21  5.5. Custodial Agreement; Delivery of Documents  22  ARTICLE VI REPRESENTATIONS AND WARRANTIES  23  6.1. General Representations and Warranties  23  6.2. Representations, Warranties and Covenants of the Owner RegardingIndividual Mortgage Loans  24  ARTICLE VII THE SERVICER  26  7.1. Indemnification; Third Party Claims.  26 
 

 
     7.2. Merger or Consolidation of the Servicer  27  7.3. Limitation on Liability of the Servicer and Others  28  7.4. Limitation on Assignment by the Servicer  28  ARTICLE VIII RESERVED  28  ARTICLE IX DEFAULT  28  9.1. Events of Default  28  9.2. Waiver of Defaults  29  ARTICLE X TERMINATION  30  10.1. Termination  30  10.2. Termination With Cause  30  ARTICLE XI MISCELLANEOUS PROVISIONS  30  11.1. Successor to the Servicer  30  11.2. Other Activity  31  11.3. Amendment; Extension Not a Waiver  31  11.4. Governing Law; Venue  32  11.5. Duration of Agreement  32  11.6. Notices  32  11.7. Severability of Provisions  33  11.8. Relationship of Parties  33  11.9. Execution; Successors and Assigns  33  11.10. Assignment by the Owner  33  11.11. Time of Payment  33  11.12. Force Majeure  33 
 

 
     EXHIBITS         Exhibit A            Mortgage Loan Schedule    Exhibit B            Contents of Each Mortgage Loan File    Exhibit C            Eligibility Criteria    Exhibit D            Servicing Fee Schedule    Exhibit E            Reports    Exhibit F            Approval Matrix    
 

 
**LOAN SERVICING AGREEMENT**     This Loan Servicing Agreement (the “Agreement”), dated and effective as of [May 30],2008, is by and between Bosco Credit LLC, as owner, and Franklin Credit Management Corporation, asservicer.     WHEREAS, the Mortgage Loans identified on the Mortgage Loan Schedule annexed hereto asExhibit A have been purchased by the Owner (as defined below); and     WHEREAS, the Servicer (as defined below) has agreed to service each Mortgage Loan on behalf ofthe Owner commencing on the Effective Date (as defined herein), and the parties hereto desire toprovide the mechanics of such servicing by the Servicer;     NOW, THEREFORE, in consideration of the mutual agreements hereinafter set forth, and for othergood and valuable consideration, the receipt and adequacy of which is hereby acknowledged, theOwner and the Servicer agree as follows:ARTICLE IDEFINITIONS; CERTAIN MATTERS OF CONSTRUCTION     Whenever used herein, the following words and phrases, unless the content otherwise requires,shall have the following meanings:     “Accepted Servicing Practices” means, with respect to any Mortgage Loan, thosemortgage servicing practices of prudent mortgage lending institutions that service mortgage loansof the same type as such Mortgage Loan in the jurisdiction where the related Mortgaged Property islocated, subject to, and modified by, the specified delegation of authority set forth in theApproval Matrix.     “Adjustment Date” means, as to each adjustable rate Mortgage Loan, the date on whichthe Mortgage Interest Rate is adjusted in accordance with the terms of the related Mortgage Noteand Mortgage.     “Agreement” has the meaning assigned to it in the preamble.     “Ancillary Income” means all income derived from the Mortgage Loans other thanpayments of principal and interest on the Mortgage Loans, insufficient fund fees, conversion fees,satisfaction fees, optional insurance administrative fees, assumption fees, reinstatement fees,customary real estate referral fees, modification fees, release fees, foreclosure fees, latepayment fees, insufficient fund fees, prepayment penalty fees and all other incidental fees andcharges received by the Servicer, but excluding Servicing Fees.     “Applicable Requirements” means as of the time of reference, with respect to theMortgage Loans, REO Property and the servicing of the Mortgage Loans, all of the following: (i) allcontractual obligations of the Servicer set forth in this Agreement; (ii) the requirements setforth in the related Mortgage Note and the related Mortgage; (iii) all applicable federal, stateand
 

 
local legal and regulatory requirements (including statutes, rules, regulations and ordinancesand including the Privacy Requirements); (iv) all other applicable requirements and guidelines ofeach governmental agency, board, commission, instrumentality and other governmental body or officerhaving jurisdiction; (v) all other applicable judicial and administrative judgments, orders,stipulations, awards, writs and injunctions; and (vi) Accepted Servicing Practices.     “Appraised Value” means with respect to any Mortgage Loan, the lesser of (i) the valueset forth on the appraisal made in connection with the origination of the related Mortgage Loan asthe value of the related Mortgaged Property, or (ii) the purchase price paid for the MortgagedProperty, provided, however, that in the case of a refinanced Mortgage Loan, such value shall bebased solely on the appraisal made in connection with the refinancing of such Mortgage Loan.     “Approval Matrix” means the specified delegation of authority for servicing theMortgage Loans set forth on Exhibit F to this Agreement     “Assignment of Mortgage” means an assignment of the Mortgage, notice of transfer orequivalent instrument in recordable form, sufficient under the laws of the jurisdiction wherein therelated Mortgaged Property is located to reflect the sale of the Mortgage to the Owner.     “Business Day” means any day other than (i) a Saturday or Sunday, or (ii) a day onwhich banking institutions located in New York or New Jersey are authorized or obligated by law orexecutive order to be closed.     “Buydown Agreement” means an agreement between the Originator and a Mortgagor, or anagreement among the Servicer, a Mortgagor and a seller of a Mortgaged Property or a third partywith respect to a Mortgage Loan which provides for the application of Buydown Funds.     “Buydown Funds” means, in respect of any Buydown Mortgage Loan, any amount held by theServicer, which was contributed by the seller of a Mortgaged Property subject to a Buydown MortgageLoan, the buyer of such property, the Originator or any other source, plus interest earned thereon,in order to enable the Mortgagor to reduce the payments required to be made from the mortgagor’sfunds in the early years of a Mortgage Loan.     “Buydown Mortgage Loan” means any Mortgage Loan in respect of which, pursuant to aBuydown Agreement, (i) the Mortgagor pays less than the full monthly payments specified in theMortgage Note for a specified period, and (ii) the difference between the payments required undersuch Buydown Agreement and the Mortgage Note is provided from Buydown Funds.     “Buydown Period” means the period of time when a Buydown Agreement is in effect withrespect to a related Buydown Mortgage Loan.     “Code” means the Internal Revenue Code of 1986, as it may be amended from time to timeor any successor statute thereto, and applicable U.S. Department of the Treasury regulations issuedpursuant thereto.     “Condemnation Proceeds” means all awards or settlements in respect of a MortgagedProperty, whether permanent or temporary, partial or entire, by exercise of the power of eminent
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domain or condemnation, to the extent not required to be released to a Mortgagor in accordancewith the terms of the related Mortgage Loan Documents.     “Covered Loan” means a Mortgage Loan categorized as “Covered” pursuant to the Standard& Poor’s Glossary for File Format for LEVELS®, Appendix E, as revised from time to time.     “CPI” means the Consumer Price Index for All Urban Consumers, All Items (NewYork-Northern New Jersey-Long Island, NY-NJ-CT-PA) as reported by the United States Department ofLabor, Bureau of Labor Statistics.     “CPI Adjustment” means the percentage increase on an annual basis to the applicabledollar figure equal to any percentage increase in the CPI in [September] of the prior year over[September] of the immediately preceding year; provided, that such dollar figure shallremain at its then-effective level in the event that the CPI decreases or remains unchanged in anygiven year.     “Custodial Agreement” means the agreement governing the retention of the originals ofeach Mortgage Note, Mortgage, Assignment of Mortgage and other Mortgage Loan Documents.     “Custodian” means the custodian under the Custodial Agreement, or its successor ininterest or assigns, or any successor to the Custodian under the Custodial Agreement as providedtherein.     “Customer Information” means any personally identifiable information in any form(written electronic or otherwise) relating to a Mortgagor, including, but not limited to: aMortgagor’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 of such Mortgagor’s Mortgage Loan;and any other non-public personally identifiable information.     “Cut-off Date” means May 30, 2008, or with respect to Mortgage Loans and servicingrights and obligations with respect to such Mortgage Loans made subject to this Agreement after thefirst Effective Date hereunder, the date agreed to by the Servicer and the Owner.     “Damages” means any and all assessments, judgments, claims, liabilities, losses,costs, damages or expenses (including interest, penalties and reasonable attorneys’ fees, expensesand disbursements in connection with any action, suit or proceeding and including any suchreasonable attorneys’ fees, expenses and disbursements incurred in enforcing any right ofindemnification against any indemnitor).     “Delinquent” means a Mortgage Loan is “Delinquent” when any payment contractually duethereon has not been made by the close of business on the Due Date therefor. Such Mortgage Loan is“30 days Delinquent” if such contractual payment has not been received by the close of business onthe numerically corresponding day of the month immediately succeeding the month in which suchcontractual payment was due, or, if there is no such numerically corresponding day (e.g., when a30-day month follows a 31-day month in which a payment was due on the 31st day of such month) thenon the last day of such immediately succeeding month.
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Similarly for “60 days Delinquent” the second immediately succeeding month, and for “90 daysDelinquent” the third immediately succeeding month.     “Due Date” means the first day of the month on which the Monthly Payment is due on aMortgage Loan, exclusive of any days of grace.     “Effective Date” means May 30, 2008, or with respect to Mortgage Loans and servicingrights and obligations with respect to such Mortgage Loans made subject to this Agreement aftersuch date, on the date that the Servicer obtains possession of the Mortgage Loan Documents.     “Eligibility Criteria” means the eligibility criteria for residential mortgage loansto be delivered by the Owner after the initial Effective Date to be serviced by the Servicer underthis Agreement, as specified in Exhibit C to this Agreement, as the same may be amendedfrom time to time with the mutual consent of both parties.     “Errors and Omissions Insurance Policy” means an errors and omissions insurance policyto be maintained by the Servicer pursuant to Section 2.12.     “Escrow Payments” means with respect to any Mortgage Loan, the amounts constitutingground rents, taxes, assessments, water rates, sewer rents, municipal charges, mortgage insurancepremiums, fire and hazard insurance premiums, condominium charges, and any other payments requiredto be escrowed by the Mortgagor with the mortgagee pursuant to the Mortgage or any other relateddocument.     “Event of Default” means any one of the conditions or circumstances enumerated inSection 9.1.     “Expenses” has the meaning assigned to it in Section 2.24.2.     “FDIC” means the Federal Deposit Insurance Corporation, or any successor thereto.     “FHA” means the Federal Housing Administration, or any successor thereto.     “Fidelity Bond” means a fidelity bond to be maintained by the Servicer pursuant toSection 2.12.     “Gross Margin” means with respect to each Mortgage Loan, the fixed percentage amountset forth in the related Mortgage Note which is added to the Index in order to determine therelated Mortgage Interest Rate, as set forth in the Mortgage Loan Schedule.     “High Cost Loan” means a Mortgage Loan classified as (a) a “high cost” loan underHOEPA, (b) a “high cost home,” “threshold,” “covered,” “high risk home,” “predatory” or similarloan under any other applicable state, federal or local law or (c) a Mortgage Loan categorized as“High Cost” pursuant to the Standard & Poor’s Glossary for File Format for LEVELS®, Appendix E, asrevised from time to time.     “HOEPA” means the Home Ownership Equity Protection Act of 1994, as amended.
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     “Index” means with respect to any adjustable rate Mortgage Loan, the index identifiedon the Mortgage Loan Schedule and set forth in the related Mortgage Note for the purpose ofcalculating the interest thereon.     “Insurer” means any entity that insures or guarantees all or part of the risk of lossof a Mortgage Loan, including FHA, VA or any provider of a PMI Policy, and the providers of anyhazard insurance policy, flood insurance policy or title insurance policy.     “Insurance Proceeds” means with respect to each Mortgage Loan, proceeds of insurancepolicies insuring the Mortgage Loan or the related Mortgaged Property.     “Litigation: means any litigation, arbitration or other proceeding before anygovernmental, administrative or arbitral court or tribunal, or any government investigation oradministrative enforcement action.     “Liquidation Proceeds” means cash received in connection with the liquidation of adefaulted Mortgage Loan, whether through the sale or assignment of such Mortgage Loan, trustee’ssale, foreclosure sale or otherwise, or the sale of the related Mortgaged Property if the MortgagedProperty is acquired in satisfaction of the Mortgage Loan.     “Loan-to-Value Ratio or LTV” means with respect to any Mortgage Loan, the ratio of theoriginal loan amount of the Mortgage Loan at its origination (unless otherwise indicated) to theAppraised Value of the Mortgaged Property.     “Monthly Payment” means the scheduled monthly payment of principal and interest on aMortgage Loan.     “Mortgage” means the mortgage, deed of trust or other instrument securing a MortgageNote, which creates a lien on Mortgaged Property securing the Mortgage Note.     “Mortgage File” means the items pertaining to a particular Mortgage Loan referred toin Exhibit B to this Agreement, and any additional documents required to be added to theMortgage File pursuant to this Agreement.     “Mortgage Interest Rate” means the annual rate of interest borne on a Mortgage Note inaccordance with the provisions of the Mortgage Note.     “Mortgage Loan” means each Mortgage Loan subject to this Agreement and which isidentified on the Mortgage Loan Schedule, which Mortgage Loan includes the Mortgage File, theMonthly Payments, Principal Prepayments, Liquidation Proceeds, Condemnation Proceeds, InsuranceProceeds, REO Disposition Proceeds and all other rights, benefits, proceeds and obligations arisingfrom or in connection with such Mortgage Loan. To the extent the context shall permit or require,each such reference to Mortgage Loan shall include REO Property.     “Mortgage Loan Documents” means with respect to a Mortgage Loan, the original relatedMortgage Note with applicable addenda and riders, the original related Mortgage and the originalsof any required addenda and riders, the original related Assignment of Mortgage and
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any original intervening related assignments, the original related title insurance policy,related PMI Policy, if any, and the related appraisal report.     “Mortgage Loan Schedule” means a schedule of Mortgage Loans annexed hereto asExhibit A, or as the same may be supplemented from time to time by mutual agreement of theOwner and the Servicer, such schedule setting forth the following information with respect to eachMortgage Loan: (1) the Servicer’s Mortgage Loan number; (2) the city state and zip code of theMortgaged Property; (3) a code indicating whether the Mortgaged Property is a single familyresidence, two-family residence, three-family residence, four-family residence, PUD, mixed-useproperty, or Condominium; (4) the current Mortgage Interest Rate; (5) Reserved; (6) the currentMonthly Payment; (7) the Gross Margin; (8) the original term to maturity; (9) the scheduledmaturity date; (10) the principal balance of the Mortgage Loan as of the Cut-off Date; (11) theLoan-to-Value Ratio; (12) the next Adjustment Date; (13) the lifetime Mortgage Interest Rate cap;(14) whether the Mortgage Loan is convertible or not; (15) a code indicating the PMI PolicyInsurer; and (16) whether the Mortgage Loan Documents contain a prepayment fee, and, if so, theterms thereof.     “Mortgage Note” means the note or other evidence of the indebtedness of a Mortgagorsecured by a Mortgage.     “Mortgaged Property” means the real property securing repayment of the debt evidencedby a Mortgage Note or, where the context permits or requires (including in Section 6.2), an REOProperty.     “Mortgagor” means the obligor on a Mortgage Note.     “New Loan Data File” means with respect to each Mortgage Loan delivered after theinitial Effective Date by the Owner to be serviced by the Servicer under this Agreement, the datafile produced by the Owner that is used to enable the Servicer to set up each Mortgage Loan on itsservicing system.     “Opinion of Counsel” means a written opinion of counsel, who may be an employee of theServicer, reasonably acceptable to the Owner.     “Originator” means, with respect to any Mortgage Loan, the entity or entities that (a)took the relevant Mortgagor’s loan application; (b) processed the relevant Mortgagor’s loanapplication: and/or (c) closed and/or funded such Mortgage Loan.     “Owner” means Bosco Credit LLC, or its successor in interest or any successor to theOwner under this Agreement as herein provided.     “Owner Indemnitees” has the meaning assigned to it in Section 7.1.1.     “Person” means any individual, corporation, partnership, joint venture, limitedliability company, association, joint-stock company, trust, unincorporated organization, governmentor any agency or political subdivision thereof.
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     “PMI Policy” means a policy of primary mortgage guaranty insurance issued by anInsurer.     “Principal Prepayment” means any payment or other recovery of principal on a MortgageLoan which is received in advance of its scheduled Due Date, including any prepayment penalty orpremium thereon and which is not accompanied by an amount of interest representing scheduledinterest due on any date or dates in any month or months subsequent to the month of prepayment.     “Prior Servicer” means all servicers and subservicers, collectively and individually,other than the Owner, which, at any time prior to the applicable Effective Date, pooled, sold,serviced or subserviced any of the Mortgage Loans.     “Privacy Requirements” means the obligations imposed by (i) Title V of theGramm-Leach-Bliley Act, 15 U.S.C. § 6801 et seq.; (ii) the applicable federal regulationsimplementing such act and codified at 12 CFR Parts 40, 216, 332, 573, and/or 16 CFR Part 313;(iii) Interagency Guidelines Establishing Standards For Safeguarding Borrower Information publishedin final form on February 1, 2001 (such final guidelines and/or rules the “Interagency Guidelines”)to establish and maintain an Information Security Program (as such term is defined in theInteragency Guidelines); and (iv) other applicable federal, state and local laws, rules,regulations, and orders relating to the privacy and security of Customer Information, including thefederal Fair Credit Reporting Act, 15 U.S.C. § 1681 et seq., and similar state laws.     “Qualified Insurer” means a mortgage guaranty insurance Insurer duly authorized andlicensed where required by law to transact mortgage guaranty insurance business and generallyacceptable as an Insurer under Accepted Servicing Practices.     “REMIC” means a “real estate mortgage investment conduit” within the meaning ofSection 860D of the Code.     “REMIC Provisions” means provisions of the federal income tax law relating to a REMIC,which appear at Section 860A through 860G of Subchapter M of Chapter 1, Subtitle A of the Code, andrelated provisions, and regulations, rulings or pronouncements promulgated thereunder, as theforegoing may be in effect from time to time.     “Remittance Date” means the 25th day (or if such 25th day is not a Business Day, thefirst Business Day immediately following) of any month, beginning with the First Remittance Date.     “REO Disposition” means the final sale by the Servicer of any REO Property.     “REO Disposition Proceeds” means all amounts received with respect to an REODisposition pursuant to Section 2.16.     “REO Property” means a Mortgaged Property acquired through foreclosure, by deed inlieu of foreclosure or otherwise, as described in Section 2.16.
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     “Servicer” means Franklin Credit Management Corporation, or its successor in interestor assigns, or any successor to the Servicer under this Agreement appointed as herein provided.     “Servicer Employees” means Servicer Employees has the meaning set forth in Section2.12.     “Servicer Indemnitees” has the meaning assigned to it in Section 7.1.2.     “Servicing Advances” means all customary, reasonable and necessary “out of pocket”costs and expenses (including reasonable attorney’s fees and disbursements) incurred in theperformance by the Servicer of its servicing obligations, including, but not limited to, the costof (a) the preservation, restoration and protection of the Mortgaged Property, (b) any enforcementor judicial proceedings, including foreclosures and bankruptcy proceedings, (c) the management andliquidation of any REO Property, including, but not limited to, the cost of environmentalinspection or review of such property, (d) compliance with the obligations under Sections 2.8,2.10, 2.11, 2.14 and 2.15, and (e) other Expenses that are the responsibility of the Owner underSection 2.24.     “Servicing Fee” means with respect to each Mortgage Loan, the fees the Owner shall payto the Servicer, as set forth on Exhibit D to this Agreement.     “Servicing Fee Rate” means with respect to each Mortgage Loan, the percentage setforth on Exhibit D to this Agreement.     “Servicing File” means with respect to each Mortgage Loan, the file retained by theServicer consisting of originals of all documents in the Mortgage File which are not delivered tothe Custodian and copies of the Mortgage Loan Documents listed in the Custodial Agreement, theoriginals of which are delivered to the Custodian pursuant to Section 5.5.     “Servicing Rights” means the rights of the Servicer to service the Mortgage Loansunder this Agreement together with the right to receive reimbursement for Servicing Advances,Servicing Fees, and any Ancillary Income arising from or connected to the Mortgage Loans.     “VA: means the United States Department of Veterans Affairs, or any successorthereto.     Construction of this Agreement and Certain Terms and Phrases.          (a) Unless the context of this Agreement clearly indicates otherwise, (i) words of any genderinclude each other gender; (ii) words denoting the singular shall include the plural and viceversa; (iii) the terms “hereof”, “herein”, “hereby” and derivate or similar words refer to thisentire Agreement and not to any particular provision of this Agreement; and (iv) the terms“Article”, “Section”, and “Exhibit” without any reference to a specified document refer to thespecified Article, Section and Exhibit, respectively, of this Agreement.          (b) The words “including”, “include” and “includes” are not exclusive and shall be deemed tobe followed by the words “without limitation”.
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          (c) The word “or” shall be construed to mean “and/or” unless the context clearly prohibitsthat construction.          (d) Whenever this Agreement refers to a number of days, such number shall refer to calendardays unless Business Days are specified.          (e) Any reference to any federal, state, local or foreign statute or law, including any one ormore sections thereof, shall be deemed also to refer to, unless the context requires otherwise, allrules and regulations promulgated thereunder.          (f) The headings contained in this Agreement are for reference purposes only and shall notaffect in any way the meaning or interpretation of this Agreement.ARTICLE IIADMINISTRATION AND SERVICING OF MORTGAGE LOANS          2.1. The Servicer to Act as the Servicer. The Servicer, as an independent contractor, shallservice and administer the Mortgage Loans on an actual/actual basis in accordance with thisAgreement, giving due consideration to Accepted Servicing Practices, and shall have full power andauthority, acting alone or through the delegation of duties to third party servicing providers, todo any and all things in connection with such servicing and administration which the Servicer maydeem necessary or desirable, consistent with the terms of this Agreement. Unless this Agreement isterminated pursuant to the terms hereof or the Owner and the Servicer agree otherwise, the Owneragrees that the Servicer shall be the exclusive provider to Owner (and any of its subsidiaries) ofthe services set forth in this Agreement, and will provide such services with respect to allresidential mortgage loans and related real estate properties and interests owned by the Ownerwhich meet the eligibility criteria. The Servicer may perform its servicing responsibilitiesthrough agents or independent contractors, but shall not thereby be released from any of itsresponsibilities hereunder.     From and after the initial Effective Date, the Servicer shall assume responsibility under thisAgreement to service and administer additional Mortgage Loans upon the delivery, in accordance withall reasonable instructions and directions which the Servicer may give to the Owner, of the relatedNew Loan Data File and all related Mortgage Loan Documents by the Owner, provided that any newMortgage Loans that the Owner desires to make subject to this Agreement meet the EligibilityCriteria then in effect. The Owner shall provide the New Loan Data File for each Mortgage Loan tothe Servicer promptly upon purchase or origination of the Mortgage Loan by the Owner, and in noevent later than fifteen (15) days before the Servicer is expected to perform servicing on thatMortgage Loan. The Owner shall notify the Servicer within two (2) Business Days, in writing, of anychanges in the information contained in the New Loan Data File. The Owner agrees to provide theServicer, within two (2) Business Days after the Servicer’s request, copies of the Mortgage Note,the Mortgage or any other documents the Owner has in its possession or which are held by theCustodian with respect to a Mortgage Loan that the Servicer deems reasonably necessary inconnection with its performance of the servicingof said Mortgage Loan. The Servicer shall cooperate with the Owner in connection with thetransfer of the servicing rights and obligations with respect to the Mortgage Loans.
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     Consistent with the terms of this Agreement, the Servicer may waive, modify or vary any termof any Mortgage Loan or consent to the postponement of strict compliance with any such term or inany manner grant indulgence to any Mortgagor if in the Servicer’s reasonable and prudentdetermination such waiver, modification, postponement or indulgence is not materially adverse tothe Owner, provided, however, the Servicer shall not make any future advances with respect to aMortgage Loan. Unless the Mortgagor is in default with respect to the Mortgage Loan or such defaultis, in the judgment of the Servicer, imminent, the Servicer shall not permit any modification withrespect to any Mortgage Loan that would change the Mortgage Interest Rate, defer or forgive thepayment of principal (except for actual payments of principal) or change the final maturity date onany Mortgage Loan. The Servicer shall request written consent from the Owner to permit such amodification and the Owner shall provide written consent or notify the Servicer of its objection tosuch modification within three (3) Business Days of its receipt of the Servicer’s request. Withoutlimiting the generality of the foregoing, the Servicer shall continue, and is hereby authorized andempowered, to execute and deliver on behalf of itself and the Owner, all instruments ofsatisfaction or cancellation, or of partial or full release, discharge and all other comparableinstruments, with respect to the Mortgage Loans and with respect to the Mortgaged Properties. Ifreasonably required by the Servicer, the Owner shall furnish the Servicer with any powers ofattorney and other documents necessary or appropriate to enable the Servicer to carry out itsservicing and administrative duties under this Agreement.          2.2. Liquidation of Mortgage Loans. In the event that any payment due under any MortgageLoan and not postponed pursuant to Section 2.1 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 MortgageLoan and such failure continues beyond any applicable grace period, the Servicer shall take suchaction as shall be consistent with Applicable Requirements. If foreclosure proceedings arecommenced, the Servicer shall make all necessary and proper Servicing Advances, subject toreimbursement in accordance with the terms of this Agreement, provided, however, that the Servicershall not be required to expend funds in connection with any foreclosure or towards the restorationor preservation of any Mortgaged Property, unless it shall determine that such preservation,restoration and/or foreclosure is reasonably expected to increase the proceeds of liquidation ofthe Mortgage Loan to the Owner after reimbursement to itself for such expenses.     Notwithstanding anything to the contrary contained herein, in connection with a foreclosure oracceptance of a deed in lieu of foreclosure, (a) the Servicer shall have no obligation to commenceor continue foreclosure proceedings or obtain title to Mortgaged Property securing a Mortgage Loanas a result of or in lieu of foreclosure or otherwise if (i) such Mortgage Loan is subject to HOEPAor any regulations related thereto, (ii) such Mortgage Loan qualifies as a High Cost Loan under astate or local anti-predatory lending law or regulation, or (iii) the Servicer determines, in itsreasonable judgment, that foreclosure and/or acquisition of title to Mortgaged Property wouldexpose it to material risk or liability pertaining to the acts, errors or omissions of theOriginator or Prior Servicers and (b) in the event the Servicer has reasonable cause to believethat a Mortgaged Property is contaminated by hazardous or toxicsubstances or wastes. If the Owner otherwise requests an environmental inspection or reviewof such Mortgaged Property, such an inspection or review is to be conducted by a qualifiedinspector. The cost for such inspection or review shall be borne by the Owner. Upon completion
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ofthe inspection or review, the Servicer shall promptly provide the Owner with a written report ofthe environmental inspection.     After reviewing the environmental inspection report, the Owner shall determine how theServicer shall proceed with respect to the Mortgaged Property. In the event (a) the environmentalinspection report indicates that the Mortgaged Property is contaminated by hazardous or toxicsubstances or wastes and (b) the Owner directs the Servicer to proceed with foreclosure oracceptance of a deed in lieu of foreclosure, the Servicer shall be reimbursed for all costs andexpenses associated with such foreclosure or acceptance of a deed in lieu of foreclosure and anyrelated environmental clean up costs, as applicable, pursuant to the terms of this Agreement. Inthe event the Owner directs the Servicer not to proceed with foreclosure or acceptance of a deed inlieu of foreclosure, the Servicer shall be reimbursed for all Servicing Advances made with respectto the related Mortgaged Property pursuant to the terms of this Agreement.          2.3. Collection of Mortgage Loan Payments. Continuously from the date hereof until theprincipal and interest on all Mortgage Loans are paid in full, the Servicer shall proceeddiligently to collect all payments due under each of the Mortgage Loans when the same shall becomedue and payable and, where required under Applicable Requirements, shall use commerciallyreasonable efforts in ascertaining and estimating Escrow Payments and all other charges that willbecome due and payable with respect to the Mortgage Loan and the Mortgaged Property.          2.4. Reserved.          2.5.  Reserved.          2.6. Reserved(a).          2.7. Payment of Taxes, Insurance and Other Charges. With respect to each Mortgage Loanthat provides for Escrow Payments, the Servicer shall maintain accurate records reflecting thestatus of ground rents, taxes, assessments, water rates, sewer rents, and other charges which areor may become a lien upon the Mortgaged Property and the status of PMI Policy premiums and fire andhazard insurance coverage and shall obtain, from time to time, all bills for the payment of suchcharges (including renewal premiums) and shall effect payment thereof, if required under ApplicableRequirements, prior to the applicable penalty or termination date, employing for such purposedeposits of the Mortgagor, in an escrow account created and established by the Owner, which shallhave beenestimated and accumulated by the Servicer for such purposes, as allowed under the terms of theMortgage. Any Servicing Advances to effect payments of such charges are reimbursable in accordancewith the terms of this Agreement.          2.8. Reserved.          2.9. Maintenance of Hazard Insurance. Except as otherwise allowed under Section 2.11,the Servicer shall cause to be maintained for each Mortgage Loan secured by a first lien on therelated Mortgaged Property hazard insurance, subject to reimbursement as a Servicing Advance inaccordance with the terms of this Agreement, such that all buildings upon the Mortgaged Propertyare insured by an Insurer acceptable under Accepted Servicing Practices against loss by fire,hazards of extended coverage and such other hazards as are customary in the
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area where theMortgaged Property is located, in an amount which is at least equal to the lesser of (i) themaximum insurable value of the improvements securing such Mortgage Loan and (ii) the outstandingprincipal balance of the Mortgage Loan. The Servicer is not responsible for maintaining such hazardinsurance with respect to Mortgage Loans secured by second liens. In the event a hazard insurancepolicy shall be in danger of being terminated, or in the event the Insurer shall cease to beacceptable under Accepted Servicing Practices, the Servicer shall notify the Owner and the relatedMortgagor, and shall use commercially reasonable efforts, as permitted by applicable law, to obtainfrom another Qualified Insurer a replacement hazard insurance policy that meets the criteria setforth in this Section 2.10. For purposes of this Agreement, the Owner acknowledges and agrees thatan Insurer shall not be disqualified as an “Insurer acceptable under Accepted Servicing Practices”merely because such Insurer is an affiliate of the Servicer.     If the related Mortgaged Property is located in an area identified by the Flood EmergencyManagement Agency as having special flood hazards (and such flood insurance has been madeavailable), the Servicer shall cause to be maintained for such Mortgage Property a flood insurancepolicy meeting the requirements of the current guidelines of the Federal Insurance Administrationis in effect with an Insurer acceptable under Accepted Servicing Practices in an amountrepresenting coverage equal to the lesser of (i) the minimum amount required, under the terms ofcoverage, to compensate for any damage or loss on a replacement cost basis; (ii) the unpaid balanceof the related Mortgage; and (iii) the maximum amount of insurance which is available under theFlood Disaster Protection Act of 1973, as amended. The cost of any flood insurance purchased by theServicer pursuant to the foregoing shall be reimbursable as a Servicing Advance in accordance withthe terms of this Agreement.     If a Mortgage is secured by a unit in a condominium project, the Servicer shall verify thatthe coverage required of the owners association, including hazard, flood, liability, and fidelitycoverage, is being maintained in accordance with Accepted Servicing Practices, and shall use itscommercially reasonable efforts to secure from the owners association its agreement to notify theServicer promptly of any change in the insurance coverage or of any condemnation or casualty lossthat may have a material effect on the value of the Mortgaged Property as security.     In the event that the Owner or the Servicer shall determine that the Mortgaged Property shouldbe insured against loss or damage by hazards and risks not covered by the insurance required to bemaintained by the Mortgagor pursuant to the terms of the Mortgage, the Servicer shall communicateand consult with the Mortgagor with respect to the need for such insurance and bring to theMortgagor’s attention the desirability of protection of the Mortgaged Property.     All policies required hereunder shall name the Servicer as loss payee and shall be endorsedwith standard or union mortgagee clauses, without contribution, which shall provide for at leastthirty (30) days’ prior written notice of any cancellation, reduction in amount or material changein coverage.     The Servicer shall not interfere with the Mortgagor’s freedom of choice in selecting eitherhis or her insurance carrier or agent, provided, however, that the Servicer shall not accept anysuch insurance policies from insurance companies unless such companies are acceptable underAccepted Servicing Practices and are licensed to do business in the jurisdiction in which
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theMortgaged Property is located. The Servicer shall determine whether such policies providesufficient risk coverage and amounts as set forth herein and whether they insure the MortgagedProperty and properly describe the address of the Mortgaged Property.          2.10. Maintenance of Mortgage Impairment Insurance. In the event that the Servicershall obtain and maintain a blanket policy insuring against losses arising from fire and hazardscovered under extended coverage on all of the Mortgage Loans secured by first liens on the relatedMortgaged Properties, then, to the extent such policy provides coverage in an amount equal to theamount required pursuant to Section 2.10 and otherwise complies with all other requirements ofSection 2.10, it shall conclusively be deemed to have satisfied its obligations as set forth inSection 2.10. The Servicer shall prepare and make any claims on the blanket policy as deemednecessary by the Servicer in accordance with Accepted Servicing Practices. The cost of any blanketpolicy maintained on the Mortgage Loans and any loss which would be covered by such policy but fora deductible clause shall be reimbursable as a Servicing Advance in accordance with the terms ofthis Agreement. Upon request of the Owner, the Servicer shall cause to be delivered to the Owner acertified true copy of such policy and a statement from the insurer thereunder that such policyshall in no event be terminated or materially modified without thirty (30) days’ prior writtennotice to the Owner.          2.11. Maintenance of Fidelity Bond and Errors and Omissions Insurance. The Servicershall maintain with responsible companies, at its own expense, a blanket Fidelity Bond and anErrors and Omissions Insurance Policy, with broad coverage on all of its officers, employees orother persons acting in any capacity on behalf of the Servicer requiring such persons to handlefunds, money, documents or papers relating to the Mortgage Loans (the “ServicerEmployees”). Any such Fidelity Bond and Errors and Omissions Insurance Policy shall be in theform of the Mortgage Banker’s Blanket Bond and shall protect and insure the Servicer againstlosses, including forgery, theft, embezzlement, fraud, errors and omissions and negligent acts ofthe Servicer Employees. Such Fidelity Bond and Errors and Omissions Insurance Policy also shallprotect and insure the Servicer against losses in connection with the release or satisfaction of aMortgage Loan without having obtained payment in full of theindebtedness secured thereby. No provision of this Section 2.12 requiring such Fidelity Bondand Errors and Omissions Insurance Policy shall diminish or relieve the Servicer from its dutiesand obligations as set forth in this Agreement. The minimum coverage under any such Fidelity Bondand Errors and Omissions Insurance Policy shall be at least equal to the amounts acceptable inaccordance with Applicable Requirements. Upon the request of the Owner, the Servicer shall cause tobe delivered to the Owner a certificate of insurance for such Fidelity Bond and Errors andOmissions Insurance Policy and a statement from the surety and the insurer that such Fidelity Bondand Errors and Omissions Insurance Policy shall in no event be terminated or materially modifiedwithout thirty (30) days’ prior written notice to the Owner.          2.12. Inspections. The Servicer shall perform inspections on Mortgaged Property inaccordance with Applicable Requirements or as may be required by the issuer of the PMI Policy. TheServicer shall keep a written report of each such inspection.          2.13. Restoration of Mortgaged Property. The Servicer need not obtain the approval ofthe Owner prior to releasing any Insurance Proceeds or Condemnation Proceeds to the Mortgagor to beapplied to the restoration or repair of the Mortgaged Property if such release
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is in accordancewith Applicable Requirements. For claims greater than $15,000, the Servicer shall comply with thefollowing conditions in connection with any such release of Insurance Proceeds or CondemnationProceeds:     (a) the Servicer shall receive satisfactory independent verification of completion ofrepairs and issuance of any required approvals with respect thereto;     (b) the Servicer shall take all steps necessary to preserve the priority of the lien ofthe Mortgage, including, but not limited to requiring waivers with respect to mechanics’ andmaterialmen’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 orCondemnation Proceeds in an escrow account created and established by the Owner.     If the Owner is named as an additional loss payee, the Servicer is hereby empowered to endorseany loss draft issued in respect of such a claim in the name of the Owner.          2.14. Maintenance of PMI Policy; Claims. The Servicer shall maintain or cause theMortgagor to maintain in full force and effect, with respect to each Mortgage Loan with an existingPMI Policy on the Effective Date, a PMI Policy insuring the portion over 78% until terminatedpursuant to the Home Owners Protection Act of 1998, 12 UCS §4901, et seq. In the event that suchPMI Policy shall be terminated other than as required by law, the Servicer shall obtain fromanother Qualified Insurer a comparable replacement policy, with a total coverage equal to theremaining coverage of such terminatedPMI Policy. If the insurer shall cease to be a Qualified Insurer, the Servicer shall determinewhether recoveries under the PMI Policy are jeopardized for reasons related to the financialcondition of such insurer, it being understood that the Servicer shall in no event have anyresponsibility or liability for any failure to recover under the PMI Policy for such reason. If theServicer determines that recoveries are so jeopardized, it shall notify the Owner and theMortgagor, if required, and obtain from another Qualified Insurer a replacement insurance policy.The Servicer shall not take any action which would result in noncoverage under any applicable PMIPolicy 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 intopursuant to Section 4.1, the Servicer shall promptly notify the insurer under the related PMIPolicy, if any, of such assumption or substitution of liability in accordance with the terms ofsuch PMI Policy and shall take all actions which may be required by such insurer as a condition tothe continuation of coverage under such PMI Policy. If such PMI Policy is terminated as a result ofsuch assumption or substitution of liability, the Servicer shall obtain a replacement PMI Policy asprovided above.     In connection with its activities as servicer, the Servicer agrees to prepare and present, onbehalf of itself and the Owner, claims to the insurer under any PMI Policy in a timely fashion inaccordance with the terms of such PMI Policy and, in this regard, to take such action as shall benecessary to permit recovery under any PMI Policy respecting a defaulted Mortgage Loan.
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          2.15. Title, Management and Disposition of REO Property. In the event that title toany Mortgaged Property is acquired in foreclosure, by deed in lieu of foreclosure or otherwise(including by purchase), the deed or certificate of sale shall be taken in the name of the Owner,or, at the direction of the Owner, the deed or certificate of sale shall be taken in the name of anominee for the Owner. The Person or Persons holding such title other than the Owner shallacknowledge in writing that such title is being held as nominee for the Owner.     The Servicer shall manage, conserve, protect and operate each REO Property for the Ownersolely for the purpose of its prompt disposition and sale. The Servicer, either itself or throughan agent selected by the Servicer, shall manage, conserve, protect and operate the REO Property inthe same manner that similar property in the same locality as the REO Property is managed. TheServicer shall attempt to sell the same (and may temporarily rent the same for a period not greaterthan three years, except as otherwise provided below) on such terms and conditions as the Servicerdeems to be in the reasonable interest of the Owner.     The Servicer shall use commercially reasonable efforts to dispose of the REO Property as soonas possible and shall sell such REO Property in any event within three years after title has beentaken to such REO Property, unless (i) a REMIC election has not been made with respect to thearrangement under which the Mortgage Loans and the REO Property are held, and (ii) the Servicerdetermines, and gives an appropriate notice to the Owner to such effect, that a longer period isnecessary for the orderly liquidation of such REO Property or that to maximize recovery the REOProperty should be rented. If a period longer than three years is permitted under the foregoingsentence and is necessary to sell any REO Property, the Servicer shall report monthly to the Owneras to the progress being made in selling such REO Property.     The Servicer shall also maintain on each REO Property fire and hazard insurance with extendedcoverage in amount which is at least equal to the maximum insurable value of the improvements whichare a part of such property, liability insurance and, to the extent required and available underthe Flood Disaster Protection Act of 1973, as amended, flood insurance in the amount requiredabove.     The disposition of REO Property shall be carried out by the Servicer at such price, and uponsuch terms and conditions, as the Servicer deems to be in the reasonable interests of the Owner.          2.16. REO Reports. Together with the statement furnished pursuant to Section 3.2, theServicer shall furnish to the Owner a monthly statement with respect to any REO Property, whichstatement shall cover the operation of such REO Property for the previous month and the Servicer’sefforts in connection with the sale of such REO Property and any rental of such REO Propertyincidental to the sale thereof for the previous month.          2.17. Liquidation Reports. Upon the foreclosure sale of any Mortgaged Property or theacquisition thereof by the Owner pursuant to a deed in lieu of foreclosure, the Servicer shallsubmit to the Owner a liquidation report with respect to such Mortgaged Property.          2.18. Reports of Foreclosures and Abandonments of Mortgaged Property. Following theforeclosure sale or abandonment of any Mortgaged Property, the Servicer shall
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report suchforeclosure or abandonment as required pursuant to Section 6050J of the Code. The Servicer shallfile information reports with respect to the receipt of mortgage interest received in a trade orbusiness and information returns relating to cancellation of indebtedness income with respect toany Mortgaged Property as required by the Code. Such reports shall be in form and substancesufficient to meet the reporting requirements imposed by the Code.          2.19. Reserved.          2.20. Notification of Adjustments. With respect to each adjustable rate Mortgage Loan,the Servicer shall adjust the Mortgage Interest Rate on the related Adjustment Date in compliancewith the requirements of applicable law and the related Mortgage and Mortgage Note. The Servicershall execute and deliver any and all necessary notices required under applicable law and the termsof the related Mortgage Note and Mortgage regarding the Mortgage Interest Rate adjustments.          2.21. Transfer Notices.               2.21.1. Within fifteen (15) days before the Servicer initiates servicing under this Agreementor such other time period as mutually agreed to by the Owner and Servicer, the Servicer and theOwner shall provide any required notice to the Mortgagors of the transactions contemplated hereinin accordance with Applicable Requirements. The parties shall cooperate to accomplish suchnotification in a timely and efficient manner as will best facilitate the assumption by theServicer of the servicing responsibilities. The form of the notice to be sent to Mortgagors shallbe approved by the Owner and the Servicer before mailing.               2.21.2. The Owner shall notify, or cause to be notified, all Insurers, by overnight orregistered mail, that all insurance premium billings for the Mortgage Loans must be sent to theServicer. Additionally, the Owner shall, prior to the applicable Effective Date, obtain the writtenconsent of any Insurers that have the contractual right to approve the assumption of the servicingresponsibilities by the Servicer.               2.21.3. For any Mortgage Loan that provides for Escrow Payments, the Owner, with thereasonable assistance of the Servicer, shall notify the applicable taxing authorities (except assuch is handled through the tax service company) of the assumption of the servicingresponsibilities by the Servicer and include instructions to deliver all notices and tax bills tothe Servicer or the applicable tax service provider, as the case may be, from and after theEffective Date.               2.21.4. The Owner shall notify all attorneys who, on the Effective Date, are providing legalservices to or on behalf of the Owner in connection with pending foreclosure or Litigationinvolving one or more of the Mortgage Loans, of the transfer of the servicing rights andobligations with respect to the Mortgage Loans to the Servicer.               2.21.5. All notifications required to be made under this Section 2.22 shall be paid for by theOwner.          2.22. Privacy.
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               2.22.1. Except in accordance with this Section 2.23, the Servicer shall not disclose anyCustomer Information to any Person, including, but not limited to, any of the Servicer’s employees,agents, or contractors, or any third party not affiliated with the Servicer. The Servicer shalldisclose such Customer Information only to the extent permitted by, or necessary to carry out theServicer’s express obligations and rights under, this Agreement and for no other purpose. If and tothe extent required by Applicable Requirements, the Servicer shall ensure that each vendor or otherPerson to which the Servicer intends to disclose Customer Information shall, prior to any suchdisclosure of information; agree to: (i) keep confidential any such Customer Information; and (ii)use or disclose such Customer Information only to the extent necessary to carry out the Servicer’sexpress obligations and rights under this Agreement.               2.22.2. Without limiting the scope of the above, the Servicer shall use at least the samephysical and other security measures to protect all Customer Information in the Servicer’spossession or control as the Servicer uses for its own confidential and proprietary information.               2.22.3. Reserved.          2.23. Losses and Expenses.               2.23.1. The Owner shall remain responsible, as between the Owner and the Servicer, for lossesrelated to the Owner’s investment in the Mortgage Loans as distinct from (and which shall notinclude) costs and expenses related to the performance of the servicing duties delegated to theServicer hereunder, for which the Servicer shall be responsible as provided in this Agreement.Losses of the type referred to above for which the Owner shall remain responsible include, but arenot limited to: credit losses, special hazard insurance premiums, earthquake losses, lossesresulting from the absence or inadequacy of hazard insurance or flood insurance for a MortgagedProperty in accordance with Applicable Requirements, foreclosure losses, REO Property losses, andlosses in connection with the Soldiers and Sailors Civil Relief Act (and any successor to suchAct).               2.23.2. Within thirty (30) days after receipt of an invoice from the Servicer or such earliertime as provided for in this Agreement, the Owner shall reimburse the Servicer for ServicingAdvances and the following expenses (“Expenses”): (i) any out-of-pocket expense theServicer incurs with the prior approval of the Owner in connection with its servicing andadministrative obligations set forth in this Agreement to the extent such expense is not ordinaryto the servicing function (but not including salaries, rent and other general operating expenses ofthe Servicer normally classified as overhead); (ii) expenses that the Owner has expressly agreed topay or be liable for hereunder; and (iii) expenses incurred in connection with the performance bythe Servicer at the request of the Owner of any activity that is not specifically required to beperformed by the Servicer under this Agreement and is not reasonably ancillary to any specificrequirements of the Owner under this Agreement; (iv) amounts billed by third parties on a monthlybasis with or without the approval of the Owner, which shall include: appraisals (pre- andpost-foreclosure), title work, attorney fees (foreclosure, bankruptcy, and other), legal filingfees, inspection fees (interviews, drive-bys, clean out inspections after vacated, professionalservices such as property surveys, repair inspections, Environmental Protection Agency inspections,etc.), property maintenance (utilities, lawn care, snow removal,
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securing costs, repairs,winterization, removal of debris, clean-up after vacated), condominium expenses (condo fees,association fees, etc.), insurance (premiums and deductibles), taxes (property, estate,assessments), photographs, loss drafts, and travel (transportation, meals, lodging, rental cars).Except as otherwise expressly provided in this Agreement, each party shall pay its own expensesincurred in connection with the preparation of and performance under this Agreement, including itsown legal fees and expenses of preparing and delivering the notices, documents, reports,accountings and any other information required of it hereunder.               2.23.3. On a monthly basis, following receipt of an invoice from the Servicer, the Owner shallreimburse the Servicer for Servicing Advances that have been outstanding for thirty (30) days ormore and the interest due on all unreimbursed Servicing Advances made under this Agreement in anamount equal to the prime rate published from time to time by The Wall Street Journal,“Money Rates”, multiplied by the average daily outstanding balance of all Servicing Advances. Eachinvoice shall be accompanied by appropriate supporting documentation describing and regarding theamount and nature of such Servicing Advances made in accordance with Applicable Requirements andthis Agreement.               2.23.4. (a) the Owner shall be solely responsible for all guaranty fees, credit enhancementfees, custodial fees (and related shipping costs), trustee fees, and costs to record assignments.               (b) Except as otherwise expressly set forth in this Agreement, the Servicer shall be solelyresponsible for the direct and indirect internal and administrative costs associated with itsobligations as the Servicer of the Mortgage Loans hereunder, said costs to include but not belimited to: personnel, facilities; supplies; mailing and computer system expenses, regardless ofwhether the Servicer elects to contract with third party vendors to perform all or any portion ofsuch internal and administrative functions.               2.23.5. Except as otherwise provided in this Section, any Litigation related solely to asingle Mortgage Loan (other than Litigation between or among the Owner or any of its affiliates, onthe one hand, and the Servicer and any of its affiliates, on the other hand) shall be managed bythe Servicer or its counsel on behalf of the Owner, including foreclosure, evictions, quiet titleand bankruptcy filings, the costs and expenses of which shall be subject to reimbursement pursuantto the terms of this Agreement. The Servicer shall not manage (on behalf of the Owner or any of itsaffiliates other than the Servicer) any class action claim in which the Owner or any of itsaffiliates (other than the Servicer) is a defendant or any Litigation based upon a claim brought bythe Owner unless the Owner shall elect otherwise with respect to any particular Litigation(s), inwhich case the Servicer shall manage and administer such Litigation(s) on behalf of the Owner orany of its affiliates. The Servicer shall not, without the prior written consent of the Owner,settle or compromise any claim against the Owner arising out of or relating to any class actionLitigation, other than any such settlement involving solely the payment of money damages not toexceed Twenty-Five Thousand and 00/100 Dollars ($25,000.00) in any one (1) instance or One HundredThousand and 00/100 Dollars ($100,000.00) in the aggregate for all such settlements during anycalendar quarter. The Servicer shall cooperate in obtaining or making available information ordocuments respecting Mortgage Loans involved in Litigation as may be reasonably required by theOwner or its counsel. The Owner shall reimburse the Servicer for any out-of-pocket costs that theServicer incurs in
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connection with any Litigation described in this Section 2.24.5 (other thanLitigation between or among the Owner or its affiliates, on the one hand, and the Servicer or itsaffiliates, on the other hand).ARTICLE IIIPAYMENTS TO OWNER          3.1. Remittances. On each Remittance Date, the Servicer shall deposit any and allfunds collected as Servicer hereunder into cash collection account, account number 01580116808,which account is maintained at The Huntington National Bank.          3.2. Reserved.          3.3. Monthly Advances by the Servicer. The Servicer shall not be required to advanceDelinquent monthly payments to the Owner.ARTICLE IVGENERAL SERVICING PROCEDURES          4.1. Transfers of Mortgaged Property. The Servicer shall use commercially reasonableefforts to enforce any “due-on-sale” provision contained in any Mortgage or Mortgage Note and todeny assumption by the person to whom the Mortgaged Property has been or is about to be soldwhether by absolute conveyance or by contract of sale, and whether or not the Mortgagor remainsliable on the Mortgage and the Mortgage Note. When the Mortgaged Property has been conveyed by theMortgagor, the Servicer shall, to the extent it has knowledge of such conveyance, exercise itsrights to accelerate the maturity of such Mortgage Loan under the “due-on-sale” clause applicablethereto, provided, however, that the Servicer shall not exercise such rights if prohibited by lawfrom doing so or if the exercise of such rights would impair or threaten to impair any recoveryunder the related PMI Policy, if any.     If the Servicer reasonably believes it is unable under applicable law to enforce such“due-on-sale” clause, the Servicer shall enter into (i) an assumption and modification agreementwith the person to whom such property has been conveyed, pursuant to which such person becomesliable under the Mortgage Note and the original Mortgagor remains liable thereon or (ii) in theevent the Servicer is unable under applicable law to require that the original Mortgagor remainliable under the Mortgage Note and the Servicer has the prior consent of the primary mortgageguaranty insurer, a substitution of liability agreement with the owner of the Mortgaged Propertypursuant to which the original Mortgagor is released from liability and the owner of the MortgagedProperty is substituted as Mortgagor and becomes liable under the Mortgage Note. If an assumptionfee is collected by the Servicer for entering into an assumption agreement, the fee will beretained by the Servicer as additional servicing compensation. In connection with any suchassumption, neither the Mortgage Interest Rate borne by the related Mortgage Note, the term of theMortgage Loan, the outstanding principal amount of the Mortgage Loan nor any other materials termsshall be changed without the Owner’s consent.
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     To the extent that any Mortgage Loan is assumable, the Servicer shall inquire diligently intothe credit worthiness of the proposed transferee, and shall use the underwriting criteria forapproving the credit of the proposed transferee which are used with respect to underwritingmortgage loans of the same type as the Mortgage Loans. If the credit worthiness of the proposedtransferee does not meet such underwriting criteria, the Servicer shall diligently, to the extentpermitted by the Mortgage or the Mortgage Note and by applicable law, accelerate the maturity ofthe Mortgage Loan.          4.2. Satisfaction of Mortgages and Release of Mortgage Files. Upon the payment in fullof any Mortgage Loan, or the receipt by the Servicer of a notification that payment in full will beescrowed in a manner customary for such purposes, the Servicer shall promptly notify the Owner andmay request the release of any Mortgage Loan Documents. The Servicer shall maintain the FidelityBond and Errors and Omissions Insurance Policy as provided for in Section 2.12 insuring theServicer against any loss it may sustain with respect to any Mortgage Loan not satisfied inaccordance with the procedures set forth herein.          4.3. Servicing Compensation. As compensation for its services hereunder, the Servicershall be entitled to the fees specified in the Servicing Fee Schedule detailed on Exhibit Dto this Agreement, subject to an annual CPI Adjustment. Such fees shall be payable monthly. Allservicing compensation shall be fully earned if the Mortgage Loan is serviced for any portion ofthe month and shall not be prorated.     Additional servicing compensation in the form of Ancillary Income shall be retained by theServicer. Except as specifically provided for herein, the Servicer shall be required to pay allexpenses incurred by it in connection with its servicing activities hereunder (other than ServicingAdvances) and shall not be entitled to reimbursement thereof.          4.4. Annual Independent Public Accountants’ Servicing Report. On or before June 30 ofeach year beginning June 30, 2009, the Servicer, at the expense of the Owner, shall cause a firm ofindependent public accountants which is a member of the American Institute of Certified PublicAccountants to furnish a statement to the Owner to the effect that such firm has examined certaindocuments and records relating to the servicing of the mortgage loans similar in nature and thatsuch firm is of the opinion that the provisions of this or similar Agreements have been compliedwith, and that, on the basis of such examination conducted substantially in compliance with theUniform Single Attestation Program for Mortgage Bankers, nothing has come to their attention whichwould indicate that such servicing has not been conducted in compliance therewith, except for (i)such exceptions as such firm shall believe to be immaterial, and (ii) such other exceptions asshall be set forth in such statement. By providing the Owner a copy of a Uniform Single AttestationProgram Report from their independent public accountant’s on an annual basis, the Servicer shall beconsidered to have fulfilled its obligations under this Section 4.4.          4.5. Right to Examine Servicer Records. The Owner, or its designee, shall have theright to examine and audit any and all of the books, records, or other information of the Servicer,whether held by the Servicer or by another on its behalf, with respect to or concerning thisAgreement or the Mortgage Loans, during business hours or as otherwise acceptable to the Servicer,upon reasonable advance notice. The Owner shall pay all of its or its designees’ costs and expensesassociated with such examination.
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          4.6. Compliance with REMIC Provisions. If a REMIC election has been made with respectto the arrangement under which the Mortgage Loans and REO Property are held, the Servicer shall nottake 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 theREMIC (including but not limited to the tax on “prohibited transactions” as defined Section860(a)(2) of the Code and the tax on “contributions” to a REMIC set forth in Section 860(d) of theCode) unless the Servicer has received an Opinion of Counsel (at the expense of the party seekingto take such action) to the effect that the contemplated action will not endanger such REMIC statusor result in the imposition of any such tax.ARTICLE VPOSSESSION OF MORTGAGE FILES; BOOKS AND RECORDS; CUSTODIAL