Document:

exv10w2

EXHIBIT 10.2

FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT

     ASSIGNMENT AND ASSUMPTION AGREEMENT, dated as of [________] [__], 20[___], between
[______________________], a [______] [corporation][limited liability company] (“[____]”) and
Phoenix Residential Securities, LLC, a Delaware limited liability company (the “Company”).

Recitals

          A. [____] has entered into seller contracts (“Seller Contracts”) with the seller/servicers
pursuant to which such seller/servicers sell mortgage loans to [____].

          B. The Company wishes to purchase from [____] certain Mortgage Loans (as hereinafter defined)
originated pursuant to the Seller Contracts.

          C. The Company, [____], as master servicer, and [__________], as trustee (the “Trustee”), are
entering into a Pooling and Servicing Agreement dated as of
[________] [__], 20[___] (the “Pooling and Servicing Agreement”), pursuant to which the Trust
will issue Mortgage-Backed Pass-Through Certificates, Series 20[__]-[ABC][__] (the “Certificates”)
consisting of [twenty-five classes designated as Class A-1, Class A-2, Class A-3, Class M-1, Class
M-2, Class M-3, Class M-4, Class M-5, Class M-6, Class M-7, Class M-8, Class M-9, Class B-1, Class
B-2, Class B-3, Class SB, Class R-I and Class R-II], representing beneficial ownership interests in
a trust fund consisting primarily of a pool of fixed and adjustable rate one- to four-family jumbo
mortgage loans identified on Exhibit F to the Pooling and Servicing Agreement (the “Mortgage
Loans”).

          D. In connection with the purchase of the Mortgage Loans, the Company will assign to [____] a
de minimis portion of the [Class R-I and Class R-II] Certificates (the “Retained Certificates”).

          E. In connection with the purchase of the Mortgage Loans and the issuance of the Certificates,
[____] wishes to make certain representations and warranties to the Company.

          F. The Company and [____] intend that the conveyance by [____] to the Company of all its
right, title and interest in and to the Mortgage Loans pursuant to this Agreement shall constitute
a purchase and sale and not a loan.

     NOW THEREFORE, in consideration of the recitals and the mutual promises herein and other good
and valuable consideration, the parties agree as follows:

          1. All capitalized terms used but not defined herein shall have the meanings assigned thereto
in the Pooling and Servicing Agreement.

          2. Concurrently with the execution and delivery hereof, [____] hereby assigns to the Company
without recourse all of its right, title and interest in and to the Mortgage Loans, including all
interest and principal received on or with respect to the Mortgage Loans after the Cut-off Date
(other than payments of principal and interest due on the Mortgage Loans in the

 

 

month of the Cut-off Date). In consideration of such assignment, [____] will receive from the
Company, in immediately available funds, an amount equal to $[________], including accrued
interest, and the Retained Certificates. In connection with such assignment and at the Company’s
direction, [____] has in respect of each Mortgage Loan endorsed the related Mortgage Note (other
than any Destroyed Mortgage Note, as defined in the following sentence) to the order of the Trustee
and delivered an assignment of mortgage in recordable form to the Trustee or its agent. A Destroyed
Mortgage Note means a Mortgage Note the original of which was permanently lost or destroyed.

          The Company and [____] intend that the conveyance by [____] to the Company of all its right,
title and interest in and to the Mortgage Loans pursuant to this Section 2 shall be, and be
construed as, a sale of the Mortgage Loans by [____] to the Company. It is, further, not intended
that such conveyance be deemed to be a pledge of the Mortgage Loans by [____] to the Company to
secure a debt or other obligation of [____]. Nonetheless, (a) this Agreement is intended to be and
hereby is deemed to be a security agreement within the meaning of Articles 8 and 9 of the
[_________] Uniform Commercial Code and the Uniform Commercial Code of any other applicable
jurisdiction; (b) the conveyance provided for in this Section shall be deemed to be a grant by
[____] to the Company of a security interest in all of [____]’s right (including the power to
convey title thereto), title and interest, whether now owned or hereafter acquired, in and to (A)
the Mortgage Loans, including the Mortgage Notes, the Mortgages, any related insurance policies and
all other documents in the related Mortgage Files, (B) all amounts payable pursuant to the Mortgage
Loans in accordance with the terms thereof and (C) any and all general intangibles consisting of,
arising from or relating to any of the foregoing, and all proceeds of the conversion, voluntary or
involuntary, of the foregoing into cash, instruments, securities or other property, including,
without limitation, all amounts from time to time held or invested in the Certificate Account or
the Custodial Account, whether in the form of cash, instruments, securities or other property; (c)
the possession by the Trustee, the Custodian or any other agent of the Trustee of Mortgage Notes or
such other items of property as constitute instruments, money, payment intangibles, negotiable
documents, goods, deposit accounts, letters of credit, advices of credit, investment property,
certificated securities or chattel paper shall be deemed to be “possession by the secured party”,
or possession by a purchaser or a person designated by such secured party, for purposes of
perfecting the security interest pursuant to the [_________] Uniform Commercial Code and the
Uniform Commercial Code of any other applicable jurisdiction (including, without limitation,
Sections 8-106, 9-313 and 9-106 thereof); and (d) notifications to persons holding such property,
and acknowledgments, receipts or confirmations from persons holding such property, shall be deemed
notifications to, or acknowledgments, receipts or confirmations from, financial intermediaries,
bailees or agents (as applicable) of the Trustee for the purpose of perfecting such security
interest under applicable law. [____] shall, to the extent consistent with this Agreement, take
such reasonable actions as may be necessary to ensure that, if this Agreement were deemed to create
a security interest in the Mortgage Loans and the other property described above, such security
interest would be deemed to be a perfected security interest of first priority under applicable law
and will be maintained as such throughout the term of this Agreement. Without limiting the
generality of the foregoing, [____] shall prepare and deliver to the Company not less than 15 days
prior to any filing date, and the Company shall file, or shall cause to be filed, at the expense of
[____], all filings necessary to maintain the effectiveness of any original filings necessary under
the Uniform Commercial Code as in effect in any jurisdiction to perfect the Company’s security

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interest in or lien on the Mortgage Loans including without limitation (x) continuation statements, and (y) such other statements as may
be occasioned by (1) any change of name of [____] or the Company, (2) any change of location of the
place of business, state of formation or the chief executive office of [____], or (3) any transfer
of any interest of [____] in any Mortgage Loan.

          3. Concurrently with the execution and delivery hereof, the Company hereby assigns to [____]
without recourse all of its right, title and interest in and to the Retained Certificates as part
of the consideration payable to [____] by the Company pursuant to this Agreement.

          4. [[____] represents and warrants to the Company, with respect to each Mortgage Loan that on
the date of execution hereof (or, if otherwise specified below, as of the date so specified and
provided that all percentages of the Mortgage Loans described in this Section 4 are approximate
percentages by outstanding principal balance determined as of the Cut-off Date after deducting
payments due during the month of the Cut-off Date):

     (a) The information set forth in the Mortgage Loan Schedule for such Mortgage Loans
accurately, in all material respects, reflects [_____]’s records (including, but not limited
to, the Mortgage Files) as of the date or dates respecting which such information is
furnished;

     (b) Each Mortgage Loan constitutes a “qualified mortgage” under Section 860G(a)(3)(A)
of the Code and Treasury  Regulation Section 1.860G 2(a)(1), (2), (4), (5), (6), (7) and (9),
without reliance on the provisions of Treasury Regulation Section 1.860G 2(a)(3) or Treasury
Regulation Section 1.860G 2(f)(2) or any other provision that would allow a Mortgage Loan to
be treated as a “qualified mortgage” notwithstanding its failure to meet the requirements of
Section 860G(a)(3)(A) of the Code and Treasury Regulation Section 1.860G 2(a)(1), (2), (4),
(5), (6), (7) and (9);

     (c) Immediately prior to the conveyance of the Mortgage Loans to the Company, [____]
had good title to, and was the sole owner of, each Mortgage Loan free and clear of any
pledge, lien, encumbrance or security interest (other than rights to servicing and related
compensation) and such conveyance validly transfers ownership of the Mortgage Loans to the
Company free and clear of any pledge, lien, encumbrance or security interest;

     (d) Each Mortgage Note constitutes a legal, valid and binding obligation of the
Mortgagor enforceable in accordance with its terms except as limited by bankruptcy,
insolvency or other similar laws affecting generally the enforcement of creditors’ rights;

     (e) To the best of [____]’s knowledge as of the Cut-off Date, there is no monetary
default existing under the terms of any Mortgage Note or Mortgage and no event which, with
notice and expiration of any grace or cure period, would constitute a monetary default under
the terms of any Mortgage Note or Mortgage, and no such monetary default has been waived by
[____] or by any other entity involved in servicing a Mortgage Loan;

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     (f) As of the Cut-off Date, [none] of the Mortgage Loans are 30 days or more delinquent
in payment of principal and interest;

     (g) [None] of the Mortgage Loans are buydown Mortgage Loans;

     (h) To the best of [____]’s knowledge, there is no delinquent tax or assessment lien
against any related Mortgaged Property;

     (i) No Mortgagor has any valid right of offset, defense or counterclaim as to the
related Mortgage Note or Mortgage, except as may be provided under the Relief Act;

     (j) No Mortgage Loan provides for payments that are subject to reduction by withholding
taxes levied by any foreign (non-United States) sovereign government;

     (k) (1) The proceeds of each Mortgage Loan have been fully disbursed and (2) to the
best of Seller’s knowledge, there is no requirement for future advances thereunder and any
and all requirements as to completion of any on-site or off-site improvements and as to
disbursements of any escrow funds therefor (including any escrow funds held to make Monthly
Payments pending completion of such improvements) have been complied with. All costs, fees
and expenses incurred in making, closing or recording the Mortgage Loans were paid;

     (l) To the best of [____]’s knowledge, with respect to each Mortgage Loan, there are no
mechanics’ liens or claims for work, labor or material affecting any Mortgaged Property
which are or may be a lien prior to, or equal with, the lien of the related Mortgage, except
such liens that are insured or indemnified against by a title insurance policy;

     (m) With respect to each Mortgage Loan, a policy of title insurance was effective as of
the closing of each Mortgage Loan, is valid and binding, and remains in full force and
effect, unless the Mortgaged Properties are located in the State of Iowa and an attorney’s
certificate has been provided;

     (n) To the best of [____]’s knowledge, each Mortgaged Property is free of damage and in
good repair and no notice of condemnation has been given with respect thereto and [____]
knows of nothing involving any Mortgaged Property that could reasonably be expected to
materially adversely affect the value or marketability of any Mortgaged Property;

     (o) Each Mortgage contains customary and enforceable provisions which render the rights
and remedies of the holder adequate to realize the benefits of the security against the
Mortgaged Property, including (i) in the case of a Mortgage that is a deed of trust, by
trustee’s sale, or (ii) by judicial foreclosure or, if applicable, non-judicial foreclosure,
and to the best of [____]’s knowledge, there is no homestead or other exemption available to
the Mortgagor that would interfere with such right to sell at a trustee’s sale or right to
foreclosure, subject in each case to applicable federal and state laws and judicial
precedents with respect to bankruptcy and right of redemption;

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     (p) To the best of [____]’s knowledge, with respect to each Mortgage that is a deed of
trust, a trustee duly qualified under applicable law to serve as such is properly named,
designated and serving, and except in connection with a trustee’s sale after default by a
Mortgagor, no fees or expenses are payable by the seller or [____] to the trustee under any
Mortgage that is a deed of trust;

     (q) If the improvements securing a Mortgage Loan are located in a federal designated
special flood hazard area, flood insurance in the amount required under the Program Guide
covers such Mortgaged Property (either by coverage under the federal flood insurance program
or by coverage from private insurers);

     (r) With respect to each Mortgage Loan, any appraisal made in connection with the
origination of the Mortgage Loan was made by an appraiser who meets the minimum
qualifications for appraisers as specified in the Program Guide;

     (s) Each Mortgage Loan is covered by a standard hazard insurance policy;

     (t) To the best of [____]’s knowledge, any escrow arrangements established with respect
to any Mortgage Loan are in compliance with all applicable local, state and federal laws and
are in compliance with the terms of the related Mortgage Note;

     (u) No Mortgage Loan was originated on or after October 1, 2002 and before March 7,
2003, which is secured by property located in the State of Georgia;

     (v) As of the Cut-off Date, [none] of the Mortgage Loans are secured by a leasehold
estate. In connection with any Mortgage Loan secured by a leasehold interest, with respect
to each leasehold interest: the use of leasehold estates for residential properties is an
accepted practice in the area where the related Mortgaged Property is located; residential
property in such area consisting of leasehold estates is readily marketable; the lease is
recorded and no party is in any way in breach of any provision of such lease; the leasehold
is in full force and effect and is not subject to any prior lien or encumbrance by which the
leasehold could be terminated or subject to any charge or penalty; and the remaining term of
the lease does not terminate less than ten years after the maturity date of such Mortgage
Loan;

     (w) Each Mortgage Loan [and prepayment penalty associated with the Mortgage Loan at]
[as of the time of its] origination complied in all material respects with all applicable
local, state and federal laws, including, without limitation, usury, equal credit
opportunity, real estate settlement procedures, truth-in-lending and disclosure laws, and
the consummation of the transactions contemplated hereby will not involve the violation of
such laws;

     (x) [None] of the Mortgage Loans are subject to the Home Ownership and Equity
Protection Act of 1994. [None] of the Mortgage Loans are loans that, under applicable state
or local law in effect at the time of origination of the loan, are referred to as (1) “high
cost” or “covered” loans or (2) any other similar designation if the law imposes greater
restrictions or additional legal liability for residential mortgage loans with high interest
rates, points and/or fees;

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     (y) To the best of [____]’s knowledge, the Subservicer for each Mortgage Loan has
accurately and fully reported its borrower credit files to each of the Credit Repositories
in a timely manner;

     (z) [None] of the proceeds of any Mortgage Loan were used to finance the purchase of
single premium credit insurance policies;

     (aa) No Mortgaged Property consists of a mobile home or a manufactured housing unit
that is not permanently affixed to its foundation;

     (bb) The proceeds of the Mortgage Loan have been fully disbursed, there is no
requirement for future advances thereunder;

     (cc) With respect to each Mortgage Loan, either (i) each Mortgage Loan contains a
customary provision for the acceleration of the payment of the unpaid principal balance of
the Mortgage Loan in the event the related Mortgaged Property is sold without the prior
consent of the mortgagee thereunder or (ii) the Mortgage Loan is assumable pursuant to the
terms of the Mortgage Note;

     (dd) No Mortgage Loan has a prepayment penalty term that extends beyond five years
after the date of origination;

          (ee) No Mortgage Loan provides for deferred interest or negative amortization;

          (ff) information set forth in the prepayment charge schedule attached hereto as Exhibit A (the
“Prepayment Charge Schedule”) is complete, true and correct in all material respects at the date or
dates on which such information is furnished, and each prepayment penalty is permissible and
enforceable in accordance with the terms disclosed in the Prepayment Charge Schedule upon the
mortgagor’s full and voluntary principal prepayment under applicable law, except to the extent
that: (1) the enforceability thereof may be limited by bankruptcy, insolvency, moratorium,
receivership and other similar laws relating to creditors’ rights; (2) the collectability thereof
may be limited due to acceleration in connection with a foreclosure or other involuntary
prepayment; or (3) subsequent changes in applicable law may limit or prohibit enforceability
thereof under applicable law; and

          (gg) None of the mortgage loans have been a maximum of 30 or more days delinquent in the last
24 months.]

     Upon discovery by [____] or upon notice from the Company or the Trustee of a breach of the
foregoing representations and warranties in respect of any Mortgage Loan, or upon the occurrence of
a Repurchase Event as described in Section 5 below, which materially and adversely affects the
interests of any holders of the Certificates or the Company in such Mortgage Loan (notice of which
breach or occurrence shall be given to the Company by [____], if it discovers the same), [____]
shall, within 90 days after the earlier of its discovery or receipt of notice thereof, either cure
such breach or Repurchase Event in all material respects or, except as otherwise provided in
Section 2.04 of the Pooling and Servicing Agreement, either (i) purchase such Mortgage Loan from
the Trustee or the Company, as the case may be, at a price equal to the Purchase Price for such
Mortgage Loan or (ii) substitute a Qualified Substitute

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Mortgage Loan or Loans for such Mortgage Loan in the manner and subject to the limitations set
forth in Section 2.04 of the Pooling and Servicing Agreement. If the breach of representation and
warranty that gave rise to the obligation to repurchase or substitute a Mortgage Loan pursuant to
this Section 4 was the representation set forth in clause (w) of this Section 4, then [____] shall
pay to the Trust Fund, concurrently with and in addition to the remedies provided in the preceding
sentence, an amount equal to any liability, penalty or expense that was actually incurred and paid
out of or on behalf of the Trust Fund, and that directly resulted from such breach, or if incurred
and paid by the Trust Fund thereafter, concurrently with such payment.

          5. With respect to each Mortgage Loan, a repurchase event (“Repurchase Event”) shall have
occurred if it is discovered that, as of the date hereof, the related Mortgage was not a valid
first lien on the related Mortgaged Property subject only to (i) the lien of real property taxes
and assessments not yet due and payable, (ii) covenants, conditions, and restrictions, rights of
way, easements and other matters of public record as of the date of recording of such Mortgage and
such other permissible title exceptions as are listed in the Program Guide and (iii) other matters
to which like properties are commonly subject which do not materially adversely affect the value,
use, enjoyment or marketability of the Mortgaged Property. In addition, with respect to any
Mortgage Loan as to which the Company delivers to the Trustee or the Custodian an affidavit
certifying that the original Mortgage Note has been lost or destroyed, if such Mortgage Loan
subsequently is in default and the enforcement thereof or of the related Mortgage is materially
adversely affected by the absence of the original Mortgage Note, a Repurchase Event shall be deemed
to have occurred and [____] will be obligated to repurchase or substitute for such Mortgage Loan in
the manner set forth in Section 4 above.

          6. [[____], as master servicer under the Pooling and Servicing Agreement (the “Master
Servicer”), shall not waive (or permit a sub servicer to waive) any prepayment charge on a Mortgage
Loan (a “Prepayment Charge”) unless: (i) the enforceability thereof shall have been limited by
bankruptcy, insolvency, moratorium, receivership and other similar laws relating to creditors’
rights generally, (ii) the enforcement thereof is illegal, or any local, state or federal agency
has threatened legal action if the Prepayment Charge is enforced, (iii) the collectability thereof
shall have been limited due to acceleration in connection with a foreclosure or other involuntary
payment or (iv) such waiver is standard and customary in servicing similar Mortgage Loans and
relates to a default or a reasonably foreseeable default and would, in the reasonable judgment of
the Master Servicer, maximize recovery of total proceeds taking into account the value of such
Prepayment Charge and the related Mortgage Loan. In no event will the Master Servicer waive a
Prepayment Charge in connection with a refinancing of a Mortgage Loan that is not related to a
default or a reasonably foreseeable default. If a Prepayment Charge is waived, but does not meet
the standards described above, then the Master Servicer is required to pay the amount of such
waived Prepayment Charge to the holder of the Class SB Certificates at the time that the amount
prepaid on the related Mortgage Loan is required to be deposited into the Custodial Account.
Notwithstanding any other provisions of this Agreement, any payments made by the Master Servicer in
respect of any waived Prepayment Charges pursuant to this Section shall be deemed to be paid
outside of the Trust Fund and not part of any REMIC.]

          7. This Agreement shall inure to the benefit of and be binding upon the parties hereto and
their respective successors and assigns, and no other person shall have any right or obligation
hereunder.

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[Signature Page Follows]

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     IN WITNESS WHEREOF, the parties have entered into this Assignment and Assumption Agreement as
of the date first above written.

	 	 	 	 	 
	 	[______________________]

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	PHOENIX RESIDENTIAL SECURITIES, LLC

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

 

 

	 	 	 	 	 

EXHIBIT A

PREPAYMENT CHARGE SCHEDULE

[SEE ATTACHMENT]

A-1exv10w3

EXHIBIT 10.3

 

[_____________]

as Servicer,

PRS SERIES 20[__]-[__] TRUST,

as Issuer

and

[_____________]

as Indenture Trustee

_________________________

SERVICING AGREEMENT

Dated as of [______], 20[__]

_________________________

 

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Page	 
	ARTICLE I DEFINITIONS
	 	 	1	 
	 
	 	 	 	 
	Section 1.01 Definitions
	 	 	1	 
	Section 1.02 Other Definitional Provisions
	 	 	1	 
	Section 1.03 Interest Calculations
	 	 	2	 
	 
	 	 	 	 
	ARTICLE II REPRESENTATIONS AND WARRANTIES
	 	 	2	 
	 
	 	 	 	 
	Section 2.01 Representations and Warranties Regarding the Servicer
	 	 	2	 
	Section 2.02 Representations and Warranties of the Issuer
	 	 	4	 
	Section 2.03 Enforcement of Representations and Warranties
	 	 	4	 
	 
	 	 	 	 
	ARTICLE III ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
	 	 	5	 
	 
	 	 	 	 
	Section 3.01 The Servicer
	 	 	5	 
	Section 3.02 Collection of Certain Mortgage Loan Payments
	 	 	8	 
	Section 3.03 Withdrawals from the Custodial Account
	 	 	11	 
	Section 3.04 Maintenance of Hazard Insurance; Property Protection Expenses
	 	 	12	 
	Section 3.05 Modification Agreements
	 	 	13	 
	Section 3.06 Trust Estate; Related Documents
	 	 	14	 
	Section 3.07 Realization Upon Defaulted Mortgage Loans
	 	 	15	 
	Section 3.08 Issuer and Indenture Trustee to Cooperate
	 	 	17	 
	Section 3.09 Servicing Compensation; Payment of Certain Expenses by Servicer
	 	 	18	 
	Section 3.10 Annual Statement as to Compliance
	 	 	18	 
	Section 3.11 Annual Independent Public Accountants’ Servicing Report
	 	 	19	 
	Section 3.12 Access to Certain Documentation and Information Regarding the Mortgage
Loans
	 	 	19	 
	Section 3.13 Maintenance of Certain Servicing Insurance Policies
	 	 	19	 
	Section 3.14 Information Required by the Internal Revenue Service and Reports of
Foreclosures and Abandonments of Mortgaged Property
	 	 	19	 
	Section 3.15 Optional Repurchase or Transfer of Mortgage Loans
	 	 	20	 
	Section 3.16 Reserved
	 	 	21	 
	Section 3.17 Reserved
	 	 	21	 
	Section 3.18 Reserved
	 	 	21	 
	Section 3.19 Reserved
	 	 	21	 
	Section 3.20 Enforcement of Due-on-Sale Clauses; Assumption and Modification
Agreements; Certain Assignments
	 	 	21	 
	Section 3.21 Advance Facility
	 	 	22	 
	 
	 	 	 	 
	ARTICLE IV SERVICING CERTIFICATE
	 	 	24	 
	 
	 	 	 	 
	Section 4.01 Statements to Securityholders
	 	 	24	 
	Section 4.02 Tax Returns and 1934 Act Reports
	 	 	26	 

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	 	 	Page	 
	ARTICLE V NOTE PAYMENT ACCOUNT, SUBSERVICING ACCOUNTS AND SERVICING ACCOUNTS
	 	 	28	 
	 
	 	 	 	 
	Section 5.01 Note Payment Account
	 	 	28	 
	Section 5.02 Subservicing Accounts; Servicing Accounts
	 	 	28	 
	 
	 	 	 	 
	ARTICLE VI THE SERVICER
	 	 	28	 
	 
	 	 	 	 
	Section 6.01 Liability of the Servicer
	 	 	28	 
	Section 6.02 Merger or Consolidation of, or Assumption of the Obligations of, the
Servicer
	 	 	28	 
	Section 6.03 Limitation on Liability of the Servicer and Others
	 	 	29	 
	Section 6.04 Servicer Not to Resign
	 	 	29	 
	Section 6.05 Delegation of Duties
	 	 	30	 
	Section 6.06 Payment of Indenture Trustee’s and Owner Trustee’s Fees and Expenses;
Indemnification
	 	 	30	 
	 
	 	 	 	 
	ARTICLE VII DEFAULT
	 	 	31	 
	 
	 	 	 	 
	Section 7.01 Servicing Default
	 	 	31	 
	Section 7.02 Indenture Trustee to Act; Appointment of Successor
	 	 	33	 
	Section 7.03 Notification to Securityholders
	 	 	35	 
	 
	 	 	 	 
	ARTICLE VIII MISCELLANEOUS PROVISIONS
	 	 	35	 
	 
	 	 	 	 
	Section 8.01 Amendment
	 	 	35	 
	Section 8.02 GOVERNING LAW
	 	 	35	 
	Section 8.03 Notices
	 	 	35	 
	Section 8.04 Severability of Provisions
	 	 	36	 
	Section 8.05 Third-Party Beneficiaries
	 	 	36	 
	Section 8.06 Counterparts
	 	 	36	 
	Section 8.07 Effect of Headings and Table of Contents
	 	 	36	 
	Section 8.08 Termination Upon Purchase by the Servicer or Liquidation of All
Mortgage Loans; Partial Redemption
	 	 	36	 
	Section 8.09 Certain Matters Affecting the Indenture Trustee
	 	 	37	 
	Section 8.10 Owner Trustee Not Liable for Related Documents
	 	 	37	 
	 
	 	 	 	 
	ARTICLE IX COMPLIANCE WITH REGULATION AB
	 	 	37	 
	 
	 	 	 	 
	Section 9.01 Intent of the Parties; Reasonableness
	 	 	37	 
	Section 9.02 Additional Representations and Warranties of the Indenture Trustee
	 	 	38	 
	Section 9.03 Information to Be Provided by the Indenture Trustee
	 	 	38	 
	Section 9.04 Report on Assessment of Compliance and Attestation
	 	 	39	 
	Section 9.05 Indemnification; Remedies
	 	 	39	 

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	 	 	Page	 
	EXHIBIT A — MORTGAGE LOAN SCHEDULE
	 	 	A-1	 
	EXHIBIT B — LIMITED POWER OF ATTORNEY
	 	 	B-1	 
	EXHIBIT C — FORM OF REQUEST FOR RELEASE
	 	 	C-1	 
	EXHIBIT D-1 — FORM OF FORM 10-K CERTIFICATION
	 	 	D-1-1	 
	EXHIBIT D-2 — FORM OF BACK-UP CERTIFICATION TO FORM 10-K CERTIFICATE
	 	 	D-2-1	 
	EXHIBIT E — SERVICING CRITERIA
	 	 	E-1	 

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     This Servicing Agreement, dated as of [______], 20[__] (the “Agreement”), is among
[_____________], as servicer (the “Servicer”), the PRS Series 20[__]-[__] Trust, as issuer (the
“Issuer”), and [_____________], as indenture trustee (the “Indenture Trustee”).

WITNESSETH:

     WHEREAS, pursuant to the terms of the Purchase Agreement (as defined herein), [_____________],
as seller (“[_____________]” and the “Seller”), will sell to Phoenix Residential Securities, LLC
(“PRS”), as purchaser (in such capacity, the “Purchaser”), the Mortgage Loans on the Closing Date,
together with the Related Documents on the Closing Date;

     WHEREAS, PRS, as depositor (in such capacity, the “Depositor”), will sell the Mortgage Loans
and assign all of its rights under the Purchase Agreement to the Issuer, together with the Related
Documents on the Closing Date;

     WHEREAS, pursuant to the terms of the Trust Agreement, the Issuer will issue the Certificates;

     WHEREAS, pursuant to the terms of the Indenture, the Issuer will issue the Notes; and

     WHEREAS, pursuant to the terms of this Agreement, the Servicer will service the Mortgage Loans
directly or through one or more Subservicers.

     NOW, THEREFORE, in consideration of the mutual covenants herein contained, the parties hereto
agree as follows:

ARTICLE I

Definitions

     Section 1.01 Definitions. For all purposes of this Agreement, except as otherwise
expressly provided herein or unless the context otherwise requires, capitalized terms not otherwise
defined herein shall have the meanings assigned to such terms in the Definitions contained in
Appendix A to the indenture dated as of [______], 20[__] (the “Indenture”), between the Issuer and
the Indenture Trustee, which is incorporated by reference herein. All other capitalized terms used
herein shall have the meanings specified herein.

     Section 1.02 Other Definitional Provisions.

	 	(a)	 	All terms defined in this Agreement shall have the defined meanings when used
in any certificate or other document made or delivered pursuant hereto unless otherwise
defined therein.
	 
	 	(b)	 	As used in this Agreement and in any certificate or other document made or
delivered pursuant hereto or thereto, accounting terms not defined in this Agreement or
in any such certificate or other document, and accounting terms partly defined in this
Agreement or in any such certificate or other document, to

 

 

	 	 	 	the extent not defined, shall have the respective meanings given to them under
generally accepted accounting principles. To the extent that the definitions of
accounting terms in this Agreement or in any such certificate or other document are
inconsistent with the meanings of such terms under generally accepted accounting
principles, the definitions contained in this Agreement or in any such certificate or
other document shall control.
	 
	 	(c)	 	The words “hereof,” “herein,” “hereunder” and words of similar import when used
in this Agreement shall refer to this Agreement as a whole and not to any particular
provision of this Agreement; Section and Exhibit references contained in this Agreement
are references to Sections and Exhibits in or to this Agreement unless otherwise
specified; the term “including” shall mean “including without limitation”; “or” shall
include “and/or”; and the term “proceeds” shall have the meaning ascribed thereto in
the UCC.
	 
	 	(d)	 	The definitions contained in this Agreement are applicable to the singular as
well as the plural forms of such terms and to the masculine as well as the feminine and
neuter genders of such terms.
	 
	 	(e)	 	Any agreement, instrument or statute defined or referred to herein or in any
instrument or certificate delivered in connection herewith means such agreement,
instrument or statute as from time to time amended, modified or supplemented and
includes (in the case of agreements or instruments) references to all attachments
thereto and instruments incorporated therein; references to a Person are also to its
permitted successors and assigns.

     Section 1.03 Interest Calculations. All calculations of interest hereunder that are
made in respect of the Principal Balance of a Mortgage Loan shall be made on a daily basis using a
365-day year. All calculations of interest on the Notes and the calculation of the Servicing Fee
shall be made on the basis of a 360-day year consisting of twelve 30-day months. All dollar
amounts calculated hereunder shall be rounded to the nearest penny with one-half of one penny being
rounded up.

ARTICLE II

Representations and Warranties

     Section 2.01 Representations and Warranties Regarding the Servicer. The Servicer
represents and warrants to the Issuer and for the benefit of the Indenture Trustee, as pledgee of
the Mortgage Loans, as of the Closing Date:

	 	(a)	 	the Servicer is a limited liability company duly formed, validly existing and
in good standing under the laws of its jurisdiction of organization and has the power
to own its assets and to transact the business in which it is currently engaged. The
Servicer is duly qualified to do business as a foreign entity and is in good standing
in each jurisdiction in which the character of the business transacted by it or
properties owned or leased by it requires such qualification and in which the

2

 

	 	 	 	failure to so qualify would have a material adverse effect (not in the ordinary course of
business) on the business, properties, assets, or condition (financial or other) of
the Servicer;
	 
	 	(b)	 	the Servicer has the power and authority to make, execute, deliver and perform
this Agreement and all of the transactions contemplated under this Agreement, and has
taken all necessary action to authorize the execution, delivery and performance of this
Agreement. When executed and delivered, this Servicing Agreement will constitute the
legal, valid and binding obligation of the Servicer enforceable in accordance with its
terms, except as enforcement of such terms may be limited by bankruptcy, insolvency or
similar laws affecting the enforcement of creditors’ rights generally and by the
availability of equitable remedies;
	 
	 	(c)	 	the Servicer is not required to obtain the consent of any other Person or any
consent, license, approval or authorization from, or registration or declaration with,
any governmental authority, bureau or agency in connection with the execution,
delivery, performance, validity or enforceability of this Agreement, except for such
consent, license, approval or authorization, or registration or declaration, as shall
have been obtained or filed, as the case may be;
	 
	 	(d)	 	the execution and delivery of this Agreement and the performance of the
transactions contemplated hereby by the Servicer will not violate any material
provision of any existing law or regulation or any order or decree of any court
applicable to the Servicer or any provision of the organizational documents of the
Servicer, or constitute a material breach of any material mortgage, indenture, contract
or other agreement to which the Servicer is a party or by which the Servicer may be
bound;
	 
	 	(e)	 	no litigation or administrative proceeding of or before any court, tribunal or
governmental body is currently pending, or to the knowledge of the Servicer threatened,
against the Servicer or any of its properties or with respect to this Agreement or the
Securities which in the opinion of the Servicer has a reasonable likelihood of
resulting in a material adverse effect on the transactions contemplated by this
Agreement;
	 
	 	(f)	 	the Servicer is a member of MERS in good standing, and will comply in all
material respects with the rules and procedures of MERS in connection with the
servicing of the Mortgage Loans that are registered with MERS; and
	 
	 	(g)	 	the servicing of the Mortgage Loans has at all times been conducted in material
compliance with all applicable federal, state and local laws, rules and regulations and
there has been no material violation of any such laws, rules or regulations arising out
of the servicing of the Mortgage Loans.

     The foregoing representations and warranties shall survive any termination of the Servicer
hereunder.

3

 

     Section 2.02 Representations and Warranties of the Issuer. The Issuer hereby
represents and warrants to the Servicer and for the benefit of the Indenture Trustee, as pledgee of
the Mortgage Loans, as of the Closing Date:

	 	(a)	 	the Issuer is a statutory trust duly formed and in good standing under the laws
of the State of Delaware and has full power, authority and legal right to execute and
deliver this Agreement and to perform its obligations under this Agreement, and has
taken all necessary action to authorize the execution, delivery and performance by it
of this Agreement; and
	 
	 	(b)	 	the execution and delivery by the Issuer of this Agreement and the performance
by the Issuer of its obligations under this Agreement will not violate any provision of
any law or regulation governing the Issuer or any order, writ, judgment or decree of
any court, arbitrator or governmental authority or agency applicable to the Issuer or
any of its assets. Such execution, delivery, authentication and performance will not
require the authorization, consent or approval of, the giving of notice to, the filing
or registration with, or the taking of any other action with respect to, any
governmental authority or agency regulating the activities of limited liability
companies. Such execution, delivery, authentication and performance will not conflict
with, or result in a breach or violation of, any mortgage, deed of trust, lease or
other agreement or instrument to which the Issuer is bound.

     Section 2.03 Enforcement of Representations and Warranties. The Servicer, on behalf
of and subject to the direction of the Indenture Trustee, as pledgee of the Mortgage Loans, or the
Issuer, shall enforce the representations and warranties of the Seller pursuant to the Purchase
Agreement. Upon the discovery by the Seller, the Depositor, the Servicer, the Indenture Trustee,
the Issuer, or the Custodian of a breach of any of the representations and warranties made by the
Seller in the Purchase Agreement, in respect of any Mortgage Loan which materially and adversely
affects the interests of the Securityholders, the party discovering such breach shall give prompt
written notice to the other parties (the Custodian being so obligated under the Custodial
Agreement). The Servicer shall promptly notify the Seller of such breach and request that,
pursuant to the terms of the Purchase Agreement, the Seller either (i) cure such breach in all
material respects within 90 days from the date the Seller was notified of such breach or (ii)
purchase such Mortgage Loan from the Issuer at the price and
in the manner set forth in Section 3.1(e) of the Purchase Agreement; provided, that the Seller
shall, subject to the conditions set forth in the Purchase Agreement, have the option to substitute
an Eligible Substitute Loan or Loans for such Mortgage Loan[, provided that such substitution
occurs within two years following the Closing Date]. In the event that the Seller elects to
substitute one or more Eligible Substitute Loans pursuant to Section 3.1(e) of the Purchase
Agreement, the Seller shall deliver to the Custodian or the Servicer, in accordance with the
Purchase Agreement, with respect to such Eligible Substitute Loans, the original Mortgage Note, the
Mortgage, and such other documents and agreements as are required by the Purchase Agreement.
Payments due with respect to Eligible Substitute Loans in the month of substitution shall not be
transferred to the Issuer and will be retained by the Servicer and remitted by the Servicer to the
Seller on the next succeeding Payment Date except to the extent that a payment less than the
applicable Monthly Payment has been received by the Issuer for such month in respect of the
Mortgage Loan to be removed. The

4

 

Servicer shall amend or cause to be amended the Mortgage Loan Schedule to reflect the removal
of such Mortgage Loan and the substitution of the Eligible Substitute Loans and the Servicer shall
promptly deliver the amended Mortgage Loan Schedule to the Owner Trustee and Indenture Trustee.

     It is understood and agreed that the obligation of the Seller to cure such breach or purchase
or substitute for such Mortgage Loan as to which such a breach has occurred and is continuing shall
constitute the sole remedy respecting such breach available to the Issuer and the Indenture
Trustee, as pledgee of the Mortgage Loans, against any Seller. In connection with the purchase of
or substitution for any such Mortgage Loan by the Seller, the Issuer shall assign to the Seller all
of its right, title and interest in respect of the Purchase Agreement applicable to such Mortgage
Loan. Upon receipt of the Repurchase Price, or upon completion of such substitution, the Servicer
shall notify the Custodian, and the Custodian shall deliver the Mortgage Notes to the Servicer,
together with all relevant endorsements and assignments prepared by the Servicer that the Indenture
Trustee shall execute.

ARTICLE III

Administration and Servicing of Mortgage Loans

     Section 3.01 The Servicer.

	 	(a)	 	The Servicer shall service and administer the Mortgage Loans in a manner
generally consistent with the terms of the Program Guide and in a manner consistent
with the terms of this Agreement and that shall be normal and usual in its general
mortgage servicing activities and consistent with the manner in which it services all
other Mortgage Loans in its servicing portfolio with characteristics similar to those
of the Mortgage Loans. The Servicer shall have full power and authority, acting alone
or through a Subservicer, to do any and all things in connection with such servicing
and administration which it may deem necessary or desirable, it being understood,
however, that the Servicer shall at all times remain responsible to the Issuer and the
Indenture Trustee, as pledgee of the Mortgage Loans, for the performance of its duties
and obligations hereunder in accordance with the terms hereof and the Program Guide.
Without limiting the
generality of the foregoing, the Servicer shall continue, and is hereby authorized
and empowered by the Issuer and the Indenture Trustee, as pledgee of the Mortgage
Loans, to execute and deliver, on behalf of itself, the Issuer, the Indenture
Trustee or any of them, any and all instruments of satisfaction or cancellation, or
of partial or full release or discharge and all other comparable instruments with
respect to the Mortgage Loans and the Mortgaged Properties. The Issuer, the
Indenture Trustee and the Custodian, as applicable, shall furnish the Servicer with
any powers of attorney and other documents necessary or appropriate to enable the
Servicer to carry out its servicing and administrative duties hereunder. In
addition, the Servicer may, at its own discretion and on behalf of the Indenture
Trustee, (i) perform services such as appraisals and brokerage services that are
customarily provided by Persons other than servicers of mortgage loans, and shall be
entitled to reasonable compensation therefor in

5

 

	 	 	 	accordance with Section 3.03 and (ii) obtain credit information in the form of a “credit
score” from a credit repository. On the Closing Date, the Indenture Trustee shall
deliver to the Servicer a limited power of attorney substantially in the form of
Exhibit B hereto. The Servicer is further authorized and empowered by the Issuer and
the Indenture Trustee, on behalf of the Noteholders and the Indenture Trustee, in its
own name or in the name of the Subservicer, when the Servicer or the Subservicer, as
the case may be, believes it appropriate in its best judgment to register any Mortgage
Loan on the MERS® System, or cause the removal from the registration of any Mortgage
Loan on the MERS® System, to execute and deliver, on behalf of the Indenture Trustee
and the Noteholders or any of them, any and all instruments of assignment and other
comparable instruments with respect to such assignment or re-recording of a Mortgage in
the name of MERS, solely as nominee for the Indenture Trustee and its successors and
assigns. The Indenture Trustee shall have no ongoing responsibility to check the status
of the Mortgage Loans on the MERS® System. Any expenses incurred in connection with
the actions described in the preceding sentence shall be borne by the Servicer, with no
right of reimbursement.

     All costs incurred by the Servicer or by Subservicers in effecting the timely payment of taxes
and assessments on the properties subject to the Mortgage Loans shall not, for the purpose of
calculating monthly distributions to the Noteholders, be added to the amount owing under the
related Mortgage Loans, notwithstanding that the terms of such Mortgage Loan so permit, and such
costs shall be recoverable to the extent permitted by Section 3.03.

     The Servicer may enter into one or more agreements in connection with the offering of
mortgage-backed notes evidencing interests in one or more of the Notes providing for the payment by
the Servicer of amounts received by the Servicer as servicing compensation hereunder, which payment
obligation will thereafter be an obligation of the Servicer hereunder.

     The relationship of the Servicer (and of any successor to the Servicer as servicer under this
Agreement) to the Issuer under this Agreement is intended by the parties to be that of an
independent contractor and not that of a joint venturer, partner or agent.

	 	(b)	 	The Servicer may enter into Subservicing Agreements with Subservicers for the
servicing and administration of certain of the Mortgage Loans. The Servicer shall
provide notice to the Indenture Trustee upon entering into a Subservicing Agreement.
References in this Agreement to actions taken or to be taken by the Servicer in
servicing the Mortgage Loans include actions taken or to be taken by a Subservicer on
behalf of the Servicer and any amount actually received by such Subservicer in respect
of a Mortgage Loan shall be deemed to have been received by the Servicer whether or not
actually received by the Servicer. Each Subservicing Agreement will be upon such terms
and conditions as are not inconsistent with this Agreement and as the Servicer and the
Subservicer have agreed. With the approval of the Servicer, a Subservicer may delegate
its servicing obligations to third-party servicers, but such Subservicers will remain
obligated under the related Subservicing Agreements. The Servicer and the Subservicer
may enter into amendments to the related Subservicing Agreements;

6

 

	 	 	 	provided, however,
that any such amendments shall not cause the Mortgage Loans to be serviced in a manner
that would be materially inconsistent with the standards set forth in this Agreement.
The Servicer shall be entitled to terminate any Subservicing Agreement in accordance
with the terms and conditions thereof and without any limitation by virtue of this
Agreement; provided, however, that in the event of termination of any Subservicing
Agreement by the Servicer or the Subservicer, the Servicer shall either act as servicer
of the related Mortgage Loan or enter into a Subservicing Agreement with a successor
Subservicer which will be bound by the terms of the related Subservicing Agreement.
The Servicer shall be entitled to enter into any agreement with a Subservicer for
indemnification of the Servicer and nothing contained in this Agreement shall be deemed
to limit or modify such indemnification.

     In the event that the rights, duties and obligations of the Servicer are terminated hereunder,
any successor to the Servicer in its sole discretion may, to the extent permitted by applicable
law, terminate the existing Subservicing Agreement with any Subservicer in accordance with the
terms of the applicable Subservicing Agreement or assume the terminated Servicer’s rights and
obligations under such subservicing arrangements which termination or assumption will not violate
the terms of such arrangements.

     As part of its servicing activities hereunder, the Servicer, for the benefit of the Indenture
Trustee and the Securityholders, shall use reasonable efforts to enforce the obligations of each
Subservicer under the related Subservicing Agreement, to the extent that the non-performance of any
such obligation would have a material adverse effect on a Mortgage Loan. Such enforcement,
including, without limitation, the legal prosecution of claims, termination of Subservicing
Agreements and the pursuit of other appropriate remedies, shall be in such form and carried out to
such an extent and at such time as the Servicer, in its good faith business judgment, would require
were it the owner of the related Mortgage Loans. The Servicer shall pay the costs of such
enforcement at its own expense, and shall be reimbursed therefor only (i) from a general recovery
resulting from such enforcement to the extent, if any, that such recovery exceeds all amounts due
in respect of the related Mortgage Loan or (ii) from a specific recovery of costs, expenses or
attorneys fees against the party against whom such enforcement is directed.

     (c) All other documents contained in the Mortgage File and any original documents relating to
the Mortgage Loans not contained in the Mortgage File or delivered to the Custodian, if any, or the
Indenture Trustee are and shall be held by the Servicer in trust as agent for the Indenture Trustee
on behalf of the Noteholders.

     Section 3.02 Collection of Certain Mortgage Loan Payments.

	 	(a)	 	The Servicer shall make reasonable efforts to collect all payments called for
under the terms and provisions of the Mortgage Loans, and shall, to the extent such
procedures shall be consistent with this Agreement and generally consistent with the
Program Guide, follow such collection procedures as shall be normal and usual in its
general mortgage servicing activities and consistent with the procedures the Servicer
employs in servicing all other Mortgage Loans in the servicing portfolio with
characteristics similar to those of the Mortgage Loans.

7

 

	 	 	 	Consistent with the foregoing, and without limiting the generality of the foregoing, the
Servicer may in its discretion (i) waive any late payment charge, penalty interest or
other fees which may be collected in the ordinary course of servicing a Mortgage Loan
and (ii) arrange with a Mortgagor a schedule for the payment of principal and interest
due and unpaid; provided, that such arrangement is consistent with the Servicer’s
policies with respect to mortgage loans that are similar to the Mortgage Loans; and
provided further, that notwithstanding such arrangement, such Mortgage Loans will be
included in the information regarding delinquent Mortgage Loans set forth in the
Servicing Certificate. The Servicer may also extend the Due Date for payment due on a
Mortgage Loan in accordance with the Program Guide; provided, however, that the
Servicer shall first determine that any such waiver or extension will not impair the
coverage of any related insurance policy or materially adversely affect the Lien of the
related Mortgage or the interests of the Securityholders, and the Servicer shall not
grant any such waiver or extension that would have any such effect. Consistent with
the terms of this Agreement, the Servicer may also:

     (i) waive, modify or vary any term of any Mortgage Loan;

     (ii) consent to the postponement of strict compliance with any such term or in any
manner grant indulgence to any Mortgagor;

     (iii) arrange with a Mortgagor a schedule for the payment of principal and interest due
and unpaid;

     (iv) forgive any portion of the amounts contractually owed under the Mortgage Loan;

     (v) capitalize past due amounts owed under the Mortgage Loan by adding any amounts in
arrearage to the existing principal balance of the Mortgage Loan (a “Capitalization
Workout”) which will result in an increased Monthly Payment amount, provided that: (A) the
amount added to the existing principal balance of the Mortgage
Loan (the “Capitalized Amount”) shall be no greater than five times the Mortgagor’s
current Minimum Monthly Payment amount; and (B) the Servicer shall not enter into a
Capitalization Workout unless the CLTV of the Mortgage Loan prior to the Capitalization
Workout equals or exceeds 80% and the Mortgagor has qualified for the Capitalization Workout
under the Servicer’s servicing guidelines; or

     (vi) reset the maturity date for the Mortgage Loan;

          or any combination of the foregoing, if in the Servicer’s determination such waiver,
modification, postponement or indulgence is not materially adverse to the interests of the
Securityholders; provided, however, that the Servicer may not modify or permit any Subservicer to
modify any Mortgage Loan (including without limitation any modification that would change the Loan
Rate, forgive the payment of any principal or interest (unless in connection with the liquidation
of the related Mortgage Loan) or extend the final maturity date of such Mortgage Loan) unless such
Mortgage Loan is in default or, in the judgment of the Servicer, such default is

8

 

reasonably
foreseeable. The general terms of any waiver, modification, forgiveness, postponement or
indulgence with respect to any of the Mortgage Loans will be included in the Servicing Certificate,
and such Mortgage Loans will not be considered “delinquent” for the purposes of the Basic Documents
so long as the Mortgagor complies with the terms of such waiver, modification, forgiveness,
postponement or indulgence.

	 	(b)	 	The Servicer shall establish a Custodial Account, which shall be an Eligible
Account, titled “PRS Series 20[__]-[__] Trust,” in which the Servicer shall deposit or
cause to be deposited any amounts representing payments and collections in respect of
the Mortgage Loans received by it subsequent to or on the Cut-Off Date (other than in
respect of the payments referred to in the following paragraph), within two Business
Days following receipt thereof (or otherwise on or prior to the Closing Date),
including the following payments and collections received or made by it (without
duplication):

     (i) all payments of principal of or interest on the Mortgage Loans received or advanced
by the Servicer, net of any portion of the interest thereof retained by any Subservicer as
subservicing fees;

     (ii) the aggregate Repurchase Price of the Mortgage Loans purchased by the Servicer
pursuant to Section 3.15;

     (iii) Net Liquidation Proceeds, net of any related Foreclosure Profit and all
Subsequent Net Recovery Amounts;

     (iv) all proceeds of any Mortgage Loans repurchased by the Seller pursuant to the
Purchase Agreement, and all Substitution Adjustment Amounts required to be deposited in
connection with the substitution of an Eligible Substitute Loan pursuant to the Purchase
Agreement;

     (v) Insurance Proceeds, other than Net Liquidation Proceeds, resulting from any
insurance policy maintained on a Mortgaged Property; and

     (vi) amounts required to be paid by the Servicer pursuant to Section 8.08;

provided, however, that with respect to each Collection Period, the Servicer shall be permitted to
retain from payments in respect of interest on the Mortgage Loans, the Servicing Fee for such
Collection Period. The foregoing requirements respecting deposits to the Custodial Account are
exclusive, it being understood that, without limiting the generality of the foregoing, the Servicer
need not deposit in the Custodial Account amounts representing Foreclosure Profits, fees (including
annual fees) or late charge penalties, payable by Mortgagors (such amounts to be retained as
additional servicing compensation in accordance with Section 3.09 hereof), or amounts received by
the Servicer for the accounts of Mortgagors for application towards the payment of taxes, insurance
premiums, assessments and similar items. In the event any amount not required to be deposited in
the Custodial Account is so deposited, the Servicer may at any time withdraw such amount from the
Custodial Account, any provision herein to the contrary notwithstanding. The Servicer shall retain
all Foreclosure Profits as additional servicing compensation.

9

 

     The Servicer, in its sole discretion, may deposit into the Custodial Account, Servicer
Advances, representing installments of principal of or interest on Mortgage Loans that were
delinquent as of the end of any Collection Period, provided that the Servicer reasonably believes
that such amounts will be recoverable from Collections on the related Mortgage Loan; provided
further that the Servicer shall not add the amount of any Servicer Advance to the Principal Balance
of any Mortgage Loan in connection with a modification of any Mortgage Loan. If the Servicer makes
any such Servicer Advances, the Servicer shall be entitled to reimburse itself by withdrawing from
the Custodial Account, as provided herein, any amounts so advanced. The Servicer may cause the
institution maintaining the Custodial Account to invest any funds in the Custodial Account in
Permitted Investments (including obligations of the Servicer or any of its Affiliates, if such
obligations otherwise qualify as Permitted Investments), which investments shall mature not later
than the Business Day preceding the next succeeding Payment Date, and which investments shall not
be sold or disposed of prior to maturity. In addition, no such Permitted Investment shall be
purchased at a price in excess of par. Except as provided above, all income and gain realized from
any such investment shall inure to the benefit of the Servicer and shall be subject to its
withdrawal or order from time to time. The amount of any losses incurred in respect of the
principal amount of any such investments shall be deposited in the Custodial Account by the
Servicer out of its own funds immediately as realized.

	 	(c)	 	The Servicer shall require each Subservicer to hold all funds constituting
collections on the Mortgage Loans, pending remittance thereof to the Servicer, in one
or more accounts meeting the requirements of an Eligible Account, and shall require all
such funds to be invested in Permitted Investments, unless all such collections are
remitted on a daily basis to the Servicer for deposit into the Custodial Account.

     Section 3.03 Withdrawals from the Custodial Account. The Servicer shall, from time to
time as provided herein, make withdrawals from the Custodial Account of amounts on deposit therein
pursuant to Section 3.02 that are
attributable to the Mortgage Loans for the following purposes:

	 	(a)	 	on each Determination Date, the Servicer shall determine the aggregate amounts
to be withdrawn from the Custodial Account and applied pursuant to Section 3.05(a) of
the Indenture and, prior to the close of business on the Business Day prior to the
related Payment Date (provided, however, that the Indenture Trustee shall not be
required to invest any amounts deposited into the Note Payment Account after 1:00
p.m.), shall withdraw such amounts from the Custodial Account and deposit such amounts
into the Note Payment Account to be distributed by the Paying Agent in accordance with
and in the order or priority set forth in Section 3.05(a) of the Indenture for such
Payment Date, in accordance with the Servicing Certificate;
	 
	 	(b)	 	to reimburse itself or the related Subservicer for previously unreimbursed
Advances, Subservicer Advances or other expenses made pursuant to Sections
[__________________] or otherwise reimbursable pursuant to the terms of this Agreement,
such withdrawal right being limited to amounts received on the related Mortgage Loans
(including, for this purpose, REO Proceeds, Insurance

10

 

	 	 	 	Proceeds, Liquidation Proceeds
and proceeds from the purchase of a Mortgage Loan pursuant to Section
[__________________]) which represent (A) Late Collections of Monthly Payments for
which any such advance was made in the case of Subservicer Advances or Advances
pursuant to Section [____] and (B) recoveries of amounts in respect of which such
advances were made in the case of Servicing Advances.
	 
	 	(c)	 	to pay to itself any from monthly payments received from the Mortgagors, the
amount of such payment that represents interest accrued on the related Mortgage Loan
for any period prior to the Cut-Off Date;
	 
	 	(d)	 	to the extent deposited to the Custodial Account, to reimburse itself or the
related Subservicer for previously unreimbursed expenses incurred in maintaining
individual insurance policies pursuant to Section 3.04, or Liquidation Expenses, paid
pursuant to Section 3.07 or otherwise reimbursable pursuant to the terms of this
Agreement (to the extent not payable pursuant to Section 3.09), such withdrawal right
being limited to amounts received on particular Mortgage Loans (other than any
Repurchase Price in respect thereof) that represent late recoveries of the payments for
which such advances were made, or from related Net Liquidation Proceeds or the proceeds
of the purchase of such Mortgage Loan;
	 
	 	(e)	 	to pay to itself out of each payment received on account of interest on a
Mortgage Loan as contemplated by Section 3.09, an amount equal to the related Servicing
Fee and the Recovery Fee (to the extent not retained pursuant to Section 3.02 or 3.07),
and to pay to any Subservicer any subservicing fees not previously withheld by such
Subservicer;
	 
	 	(f)	 	to the extent deposited in the Custodial Account, to pay to itself as
additional servicing compensation any (i) interest or investment income earned on funds
deposited in the Custodial Account that it is entitled to withdraw pursuant to
Sections 3.02(b) and 5.01, and (ii) Foreclosure Profits (to the extent permitted by
law);
	 
	 	(g)	 	to pay to itself or the Seller, with respect to any Mortgage Loan or property
acquired in respect thereof that has been purchased or otherwise transferred to the
Seller, the Servicer or other entity, all amounts received thereon and not required to
be distributed to Securityholders as of the date on which the related Purchase Price or
Repurchase Price is determined;
	 
	 	(h)	 	to withdraw any other amount deposited in the Custodial Account that was not
required to be deposited therein pursuant to Section 3.02;
	 
	 	(i)	 	to reimburse itself or the related Subservicer for (1) any Nonrecoverable
Advance, (2) any P&I Advance made with respect to a Mortgage Loan that is 90 or more
days Delinquent or (3) any made in connection with a modified Mortgage Loan that is in
default or, in the judgment of the Servicer, default is reasonably foreseeable pursuant
to Section 3.07(a), to the extent the amount of the Advance

11

 

	 	 	 	was added to the Stated
Principal Balance of the Mortgage Loan in a prior calendar month;
	 
	 	(j)	 	to reimburse itself for the amount of any investment earnings advanced prior to
maturity pursuant to Section 3.18(c), to the extent not reimbursed from earnings
received on the related investment at maturity;
	 
	 	(k)	 	at its option, for so long as it is the sole Certificateholder, to pay to
itself from amounts otherwise required to be remitted to the Distribution Account in
accordance with Section 3.05(a)(xvi) of the Indenture, all amounts payable to it as a
Certificateholder on the related Payment Date, and
	 
	 	(l)	 	to reimburse itself for Advances on a Mortgage Loan that are made pursuant to
this Agreement that are not reimbursed pursuant to clauses (b), (d) or (i) of this
Section 3.03.

     Since, in connection with withdrawals pursuant to clauses (d), (e), (g) and (j), the
Servicer’s entitlement thereto is limited to collections or other recoveries on the related
Mortgage Loan, the Servicer shall keep and maintain separate accounting, on a Mortgage Loan by
Mortgage Loan basis, for the purpose of justifying any withdrawal from the Custodial Account
pursuant to such clauses.

     Section 3.04 Maintenance of Hazard Insurance; Property Protection Expenses; Maintenance
of Primary Insurance Coverage. (a) To the extent permitted under the related
Mortgage Note and Mortgage, and to the extent the Servicer receives notice that a
hazard insurance policy has been cancelled, the Servicer shall cause to be maintained
for each Mortgage Loan hazard insurance naming the Servicer or related Subservicer as
loss payee
thereunder providing extended coverage in an amount which is at least equal to the
lesser of (i) the maximum insurable value of the improvements securing such Mortgage
Loan from time to time or (ii) the combined principal balance owing on such Mortgage
Loan and any mortgage loan senior to such Mortgage Loan from time to time; provided,
however, that such coverage may not be less than the minimum amount required to
fully compensate for any loss or damage on a replacement cost basis. The Servicer
shall use its best efforts to monitor that hazard insurance is maintained as
described in the previous sentence in the same manner as it would for mortgage loans
in its own portfolio. The Servicer shall also cause to be maintained on property
acquired upon foreclosure, or deed in lieu of foreclosure, of any Mortgage Loan,
fire insurance with extended coverage in an amount which is at least equal to the
amount necessary to avoid the application of any co-insurance clause contained in
the related hazard insurance policy. Amounts collected by the Servicer under any
such policies (other than amounts to be applied to the restoration or repair of the
related Mortgaged Property or property thus acquired or amounts released to the
Mortgagor in accordance with the Servicer’s normal servicing procedures) shall be
deposited in the Custodial Account to the extent called for by Section 3.02. In
cases in which any Mortgaged Property is located at any time during the life of a
Mortgage Loan in a federally designated flood area, to the extent permitted under

12

 

the related Mortgage Note and Mortgage, and to the extent the Servicer receives
notice that the related flood insurance has been cancelled, the hazard insurance to
be maintained for the related Mortgage Loan shall include flood insurance (to the
extent available). All such flood insurance shall be in amounts equal to the lesser
of (i) the amount required to compensate for any loss or damage to the related
Mortgaged Property on a replacement cost basis and (ii) the maximum amount of such
insurance available for such Mortgaged Property under the national flood insurance
program (assuming that the area in which such Mortgaged Property is located is
participating in such program). The Servicer shall use its best efforts to monitor
such flood insurance as described in the previous sentence in the same manner as it
would for mortgage loans in its own portfolio. The Servicer shall be under no
obligation to require that any Mortgagor maintain earthquake or other additional
insurance and shall be under no obligation itself to maintain any such additional
insurance on property acquired in respect of a Mortgage Loan, other than pursuant to
such applicable laws and regulations as shall at any time be in force and as shall
require such additional insurance. If the Servicer shall obtain and maintain a
blanket policy consistent with its general mortgage servicing activities insuring
against hazard losses on all of the Mortgage Loans, it shall conclusively be deemed
to have satisfied its obligations as set forth in the first sentence of this Section
3.04, it being understood and agreed that such policy may contain a deductible
clause, in which case the Servicer shall, in the event that there shall not have
been maintained on the related Mortgaged Property a policy complying with the first
sentence of this Section 3.04 and there shall have been a loss which would have been
covered by such policy, deposit in the Custodial Account the amount not otherwise
payable under the blanket policy because of such deductible clause. Any such
deposit by the Servicer shall be made on the last Business Day
of the Collection Period in the month in which payments under any such policy would
have been deposited in the Custodial Account. In connection with its activities as
servicer of the Mortgage Loans, the Servicer agrees to present, on behalf of itself,
the Issuer and the Indenture Trustee, claims under any such blanket policy.

	 	(b)	 	The Servicer shall not take, or permit any Subservicer to take, any action
which would result in noncoverage under any applicable Primary Insurance Policy of any
loss which, but for the actions of the Servicer or Subservicer, would have been covered
thereunder. To the extent coverage is available, the Servicer shall keep or cause to be
kept in full force and effect each such Primary Insurance Policy until the principal
balance of the related Mortgage Loan secured by a Mortgaged Property is reduced to 80%
or less of the Appraised Value at origination in the case of such a Mortgage Loan
having a Loan-to-Value Ratio at origination in excess of 80%, provided that such
Primary Insurance Policy was in place as of the Cut-off Date and the Servicer had
knowledge of such Primary Insurance Policy. The Servicer shall not cancel or refuse to
renew any such Primary Insurance Policy applicable to a nonsubserviced Mortgage Loan,
or consent to any Subservicer canceling or refusing to renew any such Primary Insurance
Policy applicable to a Mortgage Loan subserviced by it, that is in effect at the date
of the initial issuance of the Notes and is required to be kept in force 

13

 

	 	 	 	hereunder
unless the replacement Primary Insurance Policy for such canceled or non-renewed policy
is maintained with an insurer whose claims-paying ability is acceptable to each Rating
Agency for mortgage-backed notes having a rating equal to or better than the lower of
the then-current rating or the rating assigned to the Notes as of the Closing Date by
such Rating Agency.
	 
	 	(c)	 	In connection with its activities as administrator and servicer of the Mortgage
Loans, the Servicer agrees to present or to cause the related Subservicer to present,
on behalf of the Servicer, the Subservicer, if any, the Trustee and Noteholders, claims
to the insurer under any Primary Insurance Policies, in a timely manner in accordance
with such policies, and, in this regard, to take or cause to be taken such reasonable
action as shall be necessary to permit recovery under any Primary Insurance Policies
respecting defaulted Mortgage Loans. Pursuant to Section 3.02, any Insurance Proceeds
collected by or remitted to the Servicer under any Primary Insurance Policies shall be
deposited in the Custodial Account, subject to withdrawal pursuant to Section 3.03.

     Section 3.05 Modification Agreements. The Servicer or the related Subservicer, as the
case may be, shall be entitled to (a) execute assumption agreements, substitution agreements, and
instruments of satisfaction or cancellation or of partial or full release or discharge, or any
other document contemplated by this Agreement and other comparable instruments with respect to the
Mortgage Loans and with respect to the related Mortgaged Properties (and the Issuer and the
Indenture Trustee each shall promptly execute any such documents on request of the Servicer) and
(b) approve the granting of
an easement thereon in favor of another Person, any alteration or demolition of such Mortgaged
Properties or other similar matters, if it has determined, exercising its good faith business
judgment in the same manner as it would if it were the owner of the related Mortgage Loans, that
the security for, and the timely and full collectability of, such Mortgage Loans would not be
adversely affected thereby. A partial release pursuant to this Section 3.05 shall be permitted
only if the CLTV for the related Mortgage Loan after such partial release does not exceed the CLTV
for such Mortgage Loan as of the related Cut-Off Date. Any fee collected by the Servicer or the
related Subservicer for processing such request will be retained by the Servicer or such
Subservicer as additional servicing compensation.

     Section 3.06 Trust Estate; Related Documents.

	 	(a)	 	When required by the provisions of this Agreement, the Issuer or the Indenture
Trustee shall execute instruments to release property from the terms of the Trust
Agreement, Indenture or Custodial Agreement, as applicable, or convey the Issuer’s or
the Indenture Trustee’s interest in the same, in a manner and under circumstances that
are not inconsistent with the provisions of this Agreement. No party relying upon an
instrument executed by the Issuer or the Indenture Trustee as provided in this Section
3.06 shall be bound to ascertain the Issuer’s or the Indenture Trustee’s authority,
inquire into the satisfaction of any conditions precedent or see to the application of
any moneys.
	 
	 	(b)	 	If from time to time any written assurance, assumption agreement or
substitution agreement or other similar agreement shall be executed pursuant to Section
3.05,

14

 

	 	 	 	the Servicer shall check that each of such documents purports to be an original
executed copy (or a copy of the original executed document if the original executed
copy has been submitted for recording and has not yet been returned) and, if so,
shall file such documents, and upon receipt of the original executed copy from the
applicable recording office or receipt of a copy thereof certified by the applicable
recording office shall file such originals or certified copies, with the Related
Documents held by the Servicer.

	 	(c)	 	Upon receipt of a Request for Release from the Servicer, substantially in the
form of Exhibit C hereto, to the effect that a Mortgage Loan has been the subject of a
final payment or a prepayment in full and such Mortgage Loan has been terminated or
that substantially all Net Liquidation Proceeds that have been determined by the
Servicer in its reasonable judgment to be finally recoverable have been recovered, and
upon deposit to the Custodial Account of such final monthly payment, prepayment in full
together with accrued and unpaid interest to the date of such payment with respect to
such Mortgage Loan or, if applicable, Net Liquidation Proceeds, the Custodian shall
promptly release the Related Documents held by the Custodian to the Servicer. The
Indenture Trustee shall execute such Related Documents, along with such documents as
the Servicer or the related Mortgagor may request to evidence satisfaction and
discharge of such Mortgage Loan, upon request of the Servicer. If from time to time
and as appropriate for the servicing or foreclosure of any Mortgage Loan, the Servicer
requests the Custodian to release the Related Documents held by the Custodian and
delivers to the Custodian a trust receipt reasonably satisfactory to the Custodian and
signed by a Responsible Officer of the Servicer, the Custodian shall release such
Related Documents to the Servicer. If such Mortgage Loans shall be liquidated and the
Custodian receives a certificate from the Servicer as provided above, then, upon
request of the Servicer, the Custodian shall release the trust receipt to the Servicer.

          Section 3.07 Realization Upon Defaulted Mortgage Loans. With respect to any Mortgage
Loan that comes into and continues in default, the Servicer shall decide whether to (i) foreclose
upon the related Mortgaged Property, (ii) write off the unpaid Principal Balance thereof as bad
debt, (iii) take a deed in lieu of foreclosure, (iv) accept a short sale (a payoff of the Mortgage
Loan for an amount less than the total amount contractually owed in order to facilitate a sale of
the Mortgaged Property by the Mortgagor), (v) permit a short refinancing (a payoff of the Mortgage
Loan for an amount less than the total amount contractually owed in order to facilitate refinancing
transactions by the Mortgagor not involving a sale of the Mortgaged Property), (vi) arrange for a
repayment plan, (vii) agree to a modification in accordance with this Agreement or (viii) take an
unsecured note in each case subject to the rights of any related first Lien holder; provided, that
in connection with the foregoing, if the Servicer has actual knowledge that any Mortgaged Property
is affected by hazardous or toxic wastes or substances and that the acquisition of such Mortgaged
Property would not be commercially reasonable, then the Servicer shall not cause the Issuer or the
Indenture Trustee to acquire title to such Mortgaged Property in a foreclosure or similar
proceeding. In connection with such decision, the Servicer shall follow such practices
(including, in the case of any default on a related senior mortgage loan, the advancing of funds to
correct such default if deemed to be appropriate by the Servicer)

15

 

and procedures as it shall deem necessary or advisable and as shall be normal and usual in its
general mortgage servicing activities and as shall be required or permitted by the Program Guide;
provided, that the Servicer shall not be liable in any respect hereunder if the Servicer is acting
in connection with any such foreclosure or attempted foreclosure which is not completed or other
conversion in a manner that is consistent with the provisions of this Agreement. The foregoing is
subject to the proviso that the Servicer shall not be required to expend its own funds in
connection with any foreclosure or attempted foreclosure which is not completed or towards the
correction of any default on a related senior mortgage loan or restoration of any property unless
it shall determine that such expenditure will increase the related Net Liquidation Proceeds. In
the event of a determination by the Servicer that any such expenditure previously made pursuant to
this Section 3.07 will not be reimbursable from Net Liquidation Proceeds, the Servicer shall be
entitled to reimbursement of its funds so expended pursuant to Section 3.03.

     Notwithstanding any provision of this Agreement, a Mortgage Loan may be deemed to be finally
liquidated if substantially all amounts expected by the Servicer to be received in connection
therewith have been received; provided, however, that the Servicer may continue to pursue recovery
of such Mortgage Loan and any Recovery Amount with respect to any such Mortgage Loan shall be
deposited into the Custodial Account. If the Servicer continues to pursue recovery, the Servicer
shall be entitled to the Recovery Fee with respect to that Mortgage Loan and to be reimbursed for
any Servicer Advances and expenses from Recovery Amounts with respect to such Mortgage Loan as
though such Mortgage Loan continued to be an Outstanding Mortgage Loan hereunder. For purposes of
determining the amount of any Net Liquidation Proceeds, Insurance Proceeds or other unscheduled
collections, the Servicer may take into account minimal amounts of additional receipts expected to
be received or any estimated additional liquidation expenses expected to be incurred in connection
with such Mortgage Loan.

     In the event that title to any Mortgaged Property is acquired in foreclosure or by deed in
lieu of foreclosure, the deed or certificate of sale shall be issued to the Indenture Trustee,
which shall hold the same on behalf of the Issuer in accordance with Section 3.13 of the Indenture.
Notwithstanding any such acquisition of title and cancellation of the related Mortgage Loan, such
Mortgaged Property shall (except as otherwise expressly provided herein) be considered to be an
outstanding Mortgage Loan held as an asset of the Issuer until such time as such property shall be
sold. Consistent with the foregoing for purposes of all calculations hereunder, so long as the
related Mortgage Loan shall be considered to be an outstanding Mortgage Loan, it shall be assumed
that, notwithstanding that the indebtedness evidenced by the related Mortgage Note shall have been
discharged, such Mortgage Note in effect at the time of any such acquisition of title before any
adjustment thereto by reason of any bankruptcy or similar proceeding or any moratorium or similar
waiver or grace period will remain in effect.

     Any proceeds from foreclosure proceedings or the purchase or repurchase of any Mortgage Loan
pursuant to the terms of this Agreement, as well as any recovery resulting from a collection of Net
Liquidation Proceeds or Insurance Proceeds, shall be applied in the following order of priority:
first, to reimburse the Servicer or the related Subservicer in accordance with this Section 3.07;
second, to pay the Servicer or the related Subservicer all Servicing Fees payable therefrom; third,
to pay accrued and unpaid interest on such Mortgage Loan, at the Net Loan Rate to the Payment Date
on which such amounts are to be deposited in the Note Payment

16

 

Account or Distribution Account; and fourth, as a recovery of principal on such Mortgage Loan.
Any remaining amount shall constitute Foreclosure Profits.

     Section 3.08 Issuer and Indenture Trustee to Cooperate. On or before each Payment
Date, the Servicer will notify the Indenture Trustee or the Custodian, with a copy to the Issuer,
of the termination of or the payment in full and the termination of any Mortgage Loan during the
preceding Collection Period. Upon receipt of payment in full, the Servicer is authorized to
execute, pursuant to the authorization contained in Section 3.01, an instrument of satisfaction
regarding the related Mortgage, which instrument of satisfaction shall be recorded by the Servicer
if required by applicable law and be delivered to the Person entitled thereto and to cause the
removal from the registration on the MERS® System of such Mortgage. It is understood and agreed
that any expenses incurred in connection with such instrument of satisfaction or transfer shall be
reimbursed from amounts deposited in the Custodial Account. From time to time and as appropriate
for the servicing or foreclosure of any Mortgage Loan, the Custodian shall, upon request of the
Servicer and delivery to the Custodian, with a copy to the Issuer, of a Request for Release, in the
form attached hereto as Exhibit C, signed by a Servicing Officer, release or cause to be released
the related Mortgage Note to the Servicer. The Issuer or Indenture Trustee shall promptly execute
such documents, in the forms provided by the Servicer, as shall be necessary for the prosecution of
any such proceedings or the taking of other servicing actions. Such trust receipt shall obligate
the Servicer to return such Mortgage Note to the Custodian (as specified in such receipt) when the
need therefor by the Servicer no longer exists, unless the Mortgage Loan shall be liquidated, in
which case, upon receipt of a certificate of a Servicing Officer similar to that specified above,
such trust receipt shall be released to the Servicer.

     In order to facilitate the foreclosure of the Mortgage securing any Mortgage Loan that is in
default following recordation of the related Assignment of Mortgage in accordance with the
provisions of the Purchase Agreement, the Indenture Trustee or the Issuer shall, if so requested in
writing by the Servicer, promptly execute an appropriate assignment in the form provided by the
Servicer to assign such Mortgage Loan for the purpose of collection to the Servicer (any such
assignment shall unambiguously indicate that the assignment is for the purpose of collection only),
and, upon such assignment, such assignee for collection will thereupon bring all required actions
in its own name and otherwise enforce the terms of such Mortgage Loan and deposit or credit the Net
Liquidation Proceeds, exclusive of Foreclosure Profits, received with respect thereto into the
Custodial Account. In the event that all delinquent payments due under any such Mortgage Loan are
paid by the Mortgagor and any other defaults are cured, then the assignee for collection shall
promptly reassign such Mortgage Loan to the Indenture Trustee and return all Related Documents to
the place where the related Mortgage File was being maintained.

     In connection with the Issuer’s obligation to cooperate as provided in this Section 3.08 and
all other provisions of this Agreement requiring the Issuer to authorize or permit any actions to
be taken with respect to the Mortgage Loans, the Indenture Trustee, as pledgee of the Mortgage
Loans and as assignee of record of the Mortgage Loans on behalf of the Issuer pursuant to Section
3.13 of the Indenture, expressly agrees, on behalf of the Issuer, to take all such actions on
behalf of the Issuer and to promptly execute and return all instruments
reasonably required by the Servicer in connection therewith; provided, that if the Servicer
requests a signature of the Indenture Trustee, on behalf of the Issuer, then the Servicer shall
deliver to the Indenture Trustee an Officer’s Certificate stating that such signature is necessary
or

17

 

appropriate to enable the Servicer to carry out its servicing and administrative duties under
this Agreement.

     Section 3.09 Servicing Compensation; Payment of Certain Expenses by Servicer. The
Servicer shall be entitled to receive the Servicing Fee in accordance with Section 3.03 as
compensation for its services in connection with servicing the Mortgage Loans. Moreover, late
payment charges and other receipts not required to be deposited in the Custodial Account as
specified in Section 3.02 shall be retained by the Servicer as additional servicing compensation.
The Servicer shall be required to pay all expenses incurred by it in connection with its activities
hereunder (including payment of all other fees and expenses not expressly stated hereunder to be
for the account of the Securityholders), including the fees and expenses of the Owner Trustee,
Indenture Trustee and the Custodian, and shall not be entitled to reimbursement therefor.

     Section 3.10 Annual Statement as to Compliance.

	 	(a)	 	The Servicer will deliver to the Depositor and the Indenture Trustee on or
before the earlier of (a) March 31 of each year or (b) with respect to any calendar
year during which the Depositor’s annual report on Form 10-K is required to be filed in
accordance with the Exchange Act and the rules and regulations of the Commission, the
date on which the annual report on Form 10-K is required to be filed in accordance with
the Exchange Act and the rules and regulations of the Commission, a servicer compliance
certificate, signed by an authorized officer of the Servicer, as described in Item 1123
of Regulation AB, to the effect that:

          (i) A review of the Servicer’s activities during the reporting period and of its performance
under this Servicing Agreement has been made under such officer’s supervision; and

          (ii) To the best of such officer’s knowledge, based on such review, the Servicer has fulfilled
all of its obligations under this Servicing Agreement in all material respects throughout the
reporting period or, if there has been a failure to fulfill any such obligation in any material
respect, specifying each such failure known to such officer and the nature and status thereof.

          The Servicer shall use commercially reasonable efforts to obtain from all other parties
participating in the servicing function any additional certifications required under Item 1123 of
Regulation AB to the extent required to be included in a Report on Form 10-K; provided, however,
that a failure to obtain such certifications shall not be a breach of the Servicer’s duties
hereunder if any such party fails to deliver such a certification.

	 	(b)	 	The Servicer shall deliver to the Issuer and the Indenture Trustee, promptly
after having obtained knowledge thereof, but in no event later than five Business Days
thereafter, written notice by means of an Officer’s Certificate of any event which with
the giving of notice or the lapse of time or both, would become a Servicing Default.

          Section 3.11 Annual Independent Public Accountants’ Servicing Report. On or before
the earlier of (a) March 31 of each year or (b) with respect to any calendar year during which the

18

 

Depositor’s annual report on Form 10-K is required to be filed in accordance with the Exchange Act
and the rules and regulations of the Commission, the date on which the annual report is required to
be filed in accordance with the Exchange Act and the rules and regulations of the Commission, the
Servicer at its expense shall cause a firm of independent public accountants, which shall be
members of the American Institute of Certified Public Accountants, to furnish a report to the
Depositor and the Indenture Trustee the attestation required under Item 1122(b) of Regulation AB.
In rendering such statement, such firm may rely, as to matters relating to the direct servicing of
Mortgage Loans by Subservicers, upon comparable statements for examinations conducted by
independent public accountants substantially in accordance with standards established by the
American Institute of Certified Public Accountants (rendered within one year of such statement)
with respect to such Subservicers.

     Section 3.12 Access to Certain Documentation and Information Regarding the Mortgage
Loans. Whenever required by statute or regulation, the Servicer shall provide to any
Securityholder upon reasonable request (or a regulator for a Securityholder) or the Indenture
Trustee, reasonable access to the documentation regarding the Mortgage Loans. Such access shall be
afforded without charge, but only upon reasonable request and during normal business hours at the
offices of the Servicer. Nothing in this Section 3.12 shall derogate from the obligation of the
Servicer to observe any applicable law prohibiting disclosure of information regarding Mortgagors,
and the failure of the Servicer to provide access as provided in this Section 3.12 as a result of
such obligation shall not constitute a breach of this Section 3.12.

     Section 3.13 Maintenance of Certain Servicing Insurance Policies. The Servicer shall,
during the term of its service as servicer, maintain in force and effect (i) a policy or policies
of insurance covering errors and omissions in the performance of its obligations as Servicer
hereunder and (ii) a fidelity bond in respect of its officers, employees or agents. Each such
policy or policies and fidelity bond shall be at least equal to the coverage that would be required
by Fannie Mae or Freddie Mac, whichever is greater, for Persons performing servicing for mortgage
loans purchased by such entity.

     Section 3.14 Information Required by the Internal Revenue Service and Reports of
Foreclosures and Abandonments of Mortgaged Property. The Servicer shall prepare and deliver
all federal and state information reports with respect to the Mortgage Loans when and as required
by all applicable state and federal income tax laws, including, without limitation, information
reports with respect to the receipt of mortgage interest received in a trade or business, reports
of foreclosures and abandonments of any Mortgaged Property and information returns relating to
cancellation of indebtedness income with respect to any Mortgaged Property as required by Sections
6050H, 6050J and 6050P of the Code. Such reports shall be in form and substance sufficient to meet
the reporting requirements imposed by such Sections 6050H, 6050J and 6050P of the Code. In the
event of a default on a Mortgage Loan one or more of whose obligors is not a United States person
for federal income tax purposes, in connection with any foreclosure or acquisition of a deed in
lieu of foreclosure (together, “foreclosure”) in respect of such Mortgage Loan, the Servicer will
cause compliance with the provisions of Treasury Regulation Section 1.1445-2(d)(3) (or any
successor thereto) necessary to assure that no withholding tax obligation arises with respect to
the proceeds of such foreclosure except to the extent, if any, that proceeds of such foreclosure
are required to be remitted to the obligors on such Mortgage Loan.

19

 

     Section 3.15 Optional Repurchase or Transfer of Mortgage Loans.

	 	(a)	 	Notwithstanding any provision in Section 3.07 to the contrary, the Servicer, at
its option and in its sole discretion, may repurchase any Mortgage Loan that is
delinquent in payment by a period of ninety (90) days or longer for a price equal to
the Repurchase Price, provided that any such repurchase shall occur only during the
60-day period commencing on the first day of the next calendar month.

	 	(b)	 	The Servicer shall repurchase any Mortgage Loan for a price equal to the
Repurchase Price (i) if the related Mortgage did not have a Lien senior to it as of the
related Cut-Off Date, and, at the request of the related Mortgagor, the Servicer at its
option and in its sole discretion agrees to the placement of a Lien on the related
Mortgaged Property senior to that of such Mortgage or (ii) at the request of the
Mortgagor, the Servicer agrees to the refinancing of the Lien senior to that of the
related Mortgage resulting in a CLTV that does not satisfy the conditions set forth in
Section 3.01(a) herein.

	 	(c)	 	Subject to the conditions set forth below, the Servicer, upon receipt of
written notice and direction from the Issuer, shall cause the retransfer of Mortgage
Loans from the Trust Estate to the Issuer as of the close of business on a Payment Date
(the “Transfer Date”). On the fifth Business Day (the “Transfer Notice Date”) prior to
the Transfer Date designated in such notice, the Servicer shall give the Indenture
Trustee and the Rating Agencies a notice of the proposed retransfer that contains a
list of the Mortgage Loans to be retransferred. Such retransfers of Mortgage Loans
shall be permitted upon satisfaction of the following conditions:

     (i) On the Transfer Date, the Overcollateralization Amount (after giving effect to the
removal from the Trust Estate of the Mortgage Loans proposed to be retransferred) will equal
or exceed the Overcollateralization Target Amount;

     (ii) On or before the Transfer Date, the Servicer shall have delivered to the Indenture
Trustee a revised Mortgage Loan Schedule showing that the Mortgages Loans transferred to the
Certificateholders are no longer owned by the Trust Estate;

     (iii) The Servicer shall represent and warrant that the Mortgage Loans to be removed
from the Trust Estate were selected at random; and

     (iv) The Servicer shall have delivered to the Indenture Trustee an officer’s
certificate certifying that the items set forth in subparagraphs (i) through (v), inclusive,
have been performed or are true and correct, as the case may be. The Indenture Trustee may
conclusively rely on such officer’s certificate, shall have no duty to make inquiries with
regard to the matters set forth therein and shall incur no liability in so relying.

     The Servicer shall not be permitted to effect the retransfer of any Mortgage Loan except under
the conditions specified above. Upon receiving the requisite notice and direction from the Issuer,
the Servicer shall perform in a timely manner those acts required of it, as specified above. Upon
satisfaction of the above conditions, on the Transfer Date the Indenture Trustee shall deliver, or
cause to be delivered, to the Issuer a written itemization of each Mortgage Loan being

20

 

transferred,
together with the Mortgage File for each such Mortgage Loan, and the Indenture Trustee shall
execute and deliver to the Issuer or its designee such other documents prepared by the Servicer as
shall be reasonably necessary to transfer such Mortgage Loans to the Certificateholders. Any such
transfer of the Trust Estate’s right, title and interest in and to Mortgage Loans shall be without
recourse, representation or warranty by or of the Indenture Trustee or the Trust Estate to the
Issuer or its designee.

     Section 3.16 Reserved.

     Section 3.17 Reserved

     Section 3.18 Reserved

     Section 3.19 Reserved.

     Section 3.20 Enforcement of Due-on-Sale Clauses; Assumption and Modification Agreements;
Certain Assignments.

	 	(a)	 	When any Mortgaged Property is conveyed by the Mortgagor, the Servicer or
Subservicer, to the extent it has knowledge of such conveyance, shall enforce any
due-on-sale clause contained in any Mortgage Note or Mortgage, to the extent permitted
under applicable law and governmental regulations, but only to the extent that such
enforcement will not adversely affect or jeopardize coverage under any Required
Insurance Policy. Notwithstanding the foregoing:

     (i) the Servicer shall not be deemed to be in default under this Section 3.20(a) by
reason of any transfer or assumption which the Servicer is restricted by law from
preventing; and

     (ii) if the Servicer determines that it is reasonably likely that any Mortgagor will
bring, or if any Mortgagor does bring, legal action to declare invalid or otherwise avoid
enforcement of a due-on-sale clause contained in any Mortgage Note or Mortgage, the Servicer
shall not be required to enforce the due-on-sale clause or to contest such action.

	 	(b)	 	Subject to the Servicer’s duty to enforce any due-on-sale clause to the extent
set forth in Section 3.20(a), in any case in which a Mortgaged Property is to be
conveyed to a Person by a Mortgagor, and such Person is to enter into an assumption or
modification agreement or supplement to the Mortgage Note or Mortgage which requires
the signature of the Indenture Trustee, or if an instrument of release signed by the
Indenture Trustee is required releasing the Mortgagor from liability on the Mortgage
Loan, the Servicer is authorized, subject to the requirements of the sentence next
following, to execute and deliver, on behalf of the Indenture Trustee, the assumption
agreement with the Person to whom the Mortgaged Property is to be conveyed and such
modification agreement or supplement to the Mortgage Note or Mortgage or other
instruments as are reasonable or necessary to carry out the terms of the Mortgage Note
or Mortgage or otherwise to comply with any applicable laws regarding assumptions

21

 

	 	 	 	or the transfer of the Mortgaged Property to such Person. The Servicer shall execute and
deliver such documents only if it reasonably determines that (i) its execution and
delivery thereof will not conflict with or violate any terms of this Agreement or cause
the unpaid balance and interest on the Mortgage Loan to be uncollectible in whole or in
part, (ii) any required consents of insurers under any Required Insurance Policies have
been obtained and (iii) subsequent to the closing of the transaction involving the
assumption or transfer (A) such transaction will not adversely affect the coverage
under any Required Insurance Policies, (B) the Mortgage Loan will fully amortize over
the remaining term thereof, (C) no material term of the Mortgage Loan (including the
interest rate on the Mortgage Loan) will be altered nor will the term of the Mortgage
Loan be changed and (D) if the seller/transferor of the Mortgaged Property is to be
released from liability on the Mortgage Loan, such release will not (based on the
Servicer’s or Subservicer’s good faith determination) adversely affect the
collectability of the Mortgage Loan. Upon receipt of appropriate instructions from the
Servicer in accordance with the foregoing, the Indenture Trustee shall execute any
necessary instruments for such assumption or substitution of liability as directed in
writing by the Servicer. Upon the closing of the transactions contemplated by such
documents, the Servicer shall cause the originals or true and correct copies of the
assumption agreement, the release (if any), or the modification or supplement to the
Mortgage Note or Mortgage to be delivered to the Indenture Trustee or the Custodian and
deposited with the Mortgage File for such Mortgage Loan. Any fee collected by the
Servicer or such related Subservicer for entering into an
assumption or substitution of liability agreement will be retained by the Servicer
or such Subservicer as additional servicing compensation.

     Section 3.21 Advance Facility.

	 	(a)	 	The Servicer is hereby authorized to enter into a financing or other facility
(any such arrangement, an “Advance Facility”) under which (1) the Servicer sells,
assigns or pledges to another Person (an “Advancing Person”) the Servicer’s rights
under this Agreement to be reimbursed for any Advances or Servicing Advances and/or (2)
an Advancing Person agrees to fund some or all Advances and/or Servicing Advances
required to be made by the Servicer pursuant to this Agreement. No consent of the
Depositor, the Indenture Trustee, the Owner Trustee, the Securityholders or any other
party shall be required before the Servicer may enter into an Advance Facility.
Notwithstanding the existence of any Advance Facility under which an Advancing Person
agrees to fund Advances and/or Servicing Advances on the Servicer’s behalf, the
Servicer shall remain obligated pursuant to this Agreement to make Advances and
Servicing Advances pursuant to and as required by this Agreement. If the Servicer
enters into an Advance Facility, and for so long as an Advancing Person remains
entitled to receive reimbursement for any Advances including Nonrecoverable Advances
(“Advance Reimbursement Amounts”) and/or Servicing Advances including Nonrecoverable
Advances (“Servicing Advance Reimbursement Amounts” and together with Advance
Reimbursement Amounts, “Reimbursement Amounts”) (in each case to the extent such type
of Reimbursement Amount is included in the

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	 	 	 	Advance Facility), as applicable, pursuant
to this Agreement, then the Servicer shall identify such Reimbursement Amounts
consistent with the reimbursement rights set forth in Section 3.03 and remit such
Reimbursement Amounts in accordance with this Section 3.21 or otherwise in accordance
with the documentation establishing the Advance Facility to such Advancing Person or to
a trustee, agent or custodian (an “Advance Facility Trustee”) designated by such
Advancing Person in an Advance Facility Notice described below in Section 3.21(b).
Notwithstanding the foregoing, if so required pursuant to the terms of the Advance
Facility, the Servicer may direct, and if so directed in writing, the Indenture Trustee
is hereby authorized to and shall pay to the Advance Facility Trustee the Reimbursement
Amounts identified pursuant to the preceding sentence. An Advancing Person whose
obligations hereunder are limited to the funding of Advances and/or Servicing Advances
shall not be required to meet the qualifications of a Servicer or a Subservicer
pursuant to Section 6.04 or 7.02(a) hereof and shall not be deemed to be a Subservicer
under this Agreement. Notwithstanding anything to the contrary herein, in no event
shall Advance Reimbursement Amounts or Servicing Advance Reimbursement Amounts be
included in the Available Distribution Amount or distributed to Securityholders.

	 	(b)	 	If the Servicer enters into an Advance Facility and makes the election set
forth in Section 3.21(a), the Servicer and the related Advancing Person shall deliver
to the Indenture Trustee a written notice and payment instruction (an “Advance Facility
Notice”), providing the Indenture Trustee with written payment instructions as to
where to remit Advance Reimbursement Amounts and/or Servicing Advance Reimbursement
Amounts (each to the extent such type of Reimbursement Amount is included within the
Advance Facility) on subsequent Distribution Dates. The payment instruction shall
require the applicable Reimbursement Amounts to be distributed to the Advancing
Person or to an Advance Facility Trustee designated in the Advance Facility Notice.
An Advance Facility Notice may only be terminated by the joint written direction of
the Servicer and the related Advancing Person (and any related Advance Facility
Trustee).

	 	(c)	 	Reimbursement Amounts shall consist solely of amounts in respect of Advances
and/or Servicing Advances made with respect to the Mortgage Loans for which the
Servicer would be permitted to reimburse itself in accordance with Section 3.03 hereof,
assuming the Servicer or the Advancing Person had made the related Advance(s) and/or
Servicing Advance(s). Notwithstanding the foregoing, except with respect to
reimbursement of Nonrecoverable Advances as set forth in Section 3.03(i) of this
Agreement, no Person shall be entitled to reimbursement from funds held in the Payment
Account for future distribution to Securityholders pursuant to this Agreement. Neither
the Depositor nor the Indenture Trustee shall have any duty or liability with respect
to the calculation of any Reimbursement Amount, nor shall the Depositor or the
Indenture Trustee have any responsibility to track or monitor the administration of the
Advance Facility and the Depositor shall not have any responsibility to track, monitor
or verify the payment of Reimbursement Amounts to the related Advancing Person or
Advance Facility Indenture Trustee. The Servicer shall maintain and provide to any
successor 

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	 	 	 	servicer a detailed accounting on a loan by loan basis as to amounts advanced
by, sold, pledged or assigned to, and reimbursed to any Advancing Person. The
successor servicer shall be entitled to rely on any such information provided by the
Servicer, and the successor servicer shall not be liable for any errors in such
information.

	 	(d)	 	Upon the direction of and at the expense of the Servicer, the Indenture Trustee
agrees to execute such acknowledgments, certificates, and other documents reasonably
satisfactory to the Indenture Trustee provided by the Servicer and reasonably
satisfactory to the Indenture Trustee recognizing the interests of any Advancing Person
or Advance Facility Trustee in such Reimbursement Amounts as the Servicer may cause to
be made subject to Advance Facilities pursuant to this Section 3.21, and such other
documents in connection with such Advance Facility as may be reasonably requested from
time to time by any Advancing Person or Advance Facility Trustee and reasonably
satisfactory to the Indenture Trustee.

	 	(e)	 	Reimbursement Amounts collected with respect to each Mortgage Loan shall be
allocated to outstanding unreimbursed Advances or Servicing Advances (as the case may
be) made with respect to that Mortgage Loan on a “first in, first out” (“FIFO”) basis,
subject to the qualifications set forth below:

	 	(i)	 	Any successor Servicer to [___________] (a
“Successor Servicer”) and the Advancing Person or Advance Facility
Trustee shall be required to apply all amounts available in accordance
with this Section 3.21(e) to the reimbursement of Advances and Servicing
Advances in the manner provided for herein; provided, however, that after
the succession of a Successor Servicer, (A) to the extent that any
Advances or Servicing Advances with respect to any particular Mortgage
Loan are reimbursed from payments or recoveries, if any, from the related
Mortgagor, and Liquidation Proceeds or Insurance Proceeds, if any, with
respect to that Mortgage Loan, reimbursement shall be made, first, to the
Advancing Person or Advance Facility Trustee in respect of Advances
and/or Servicing Advances related to that Mortgage Loan to the extent of
the interest of the Advancing Person or Advance Facility Trustee in such
Advances and/or Servicing Advances, second to the Servicer in respect of
Advances and/or Servicing Advances related to that Mortgage Loan in
excess of those in which the Advancing Person or Advance Facility Trustee
Person has an interest, and third, to the Successor Servicer in respect
of any other Advances and/or Servicing Advances related to that Mortgage
Loan, from such sources as and when collected, and (B) reimbursements of
Advances and Servicing Advances that are Nonrecoverable Advances shall be
made pro rata to the Advancing Person or Advance Facility Trustee, on the
one hand, and any such Successor Servicer, on the other hand, on the
basis of the respective aggregate outstanding unreimbursed Advances and
Servicing Advances that are Nonrecoverable Advances owed to the Advancing
Person, Advance 

24

 

	 	 	 	Facility Trustee or Servicer pursuant to this Agreement,
on the one hand, and any such Successor Servicer, on the other hand, and
without regard to the date on which any such Advances or Servicing
Advances shall have been made. In the event that, as a result of the
FIFO allocation made pursuant to this Section 3.21(e), some or all of a
Reimbursement Amount paid to the Advancing Person or Advance Facility
Trustee relates to Advances or Servicing Advances that were made by a
Person other than [______________] or the Advancing Person or Advance
Facility Trustee, then the Advancing Person or Advance Facility Trustee
shall be required to remit any portion of such Reimbursement Amount to
the Person entitled to such portion of such Reimbursement Amount.
Without limiting the generality of the foregoing, [______________] shall
remain entitled to be reimbursed by the Advancing Person or Advance
Facility Trustee for all Advances and Servicing Advances funded by
[______________] to the extent the related Reimbursement Amount(s) have
not been assigned or pledged to an Advancing Person or Advance Facility
Trustee. The documentation establishing any Advance Facility shall
require [______________] to provide to the related Advancing Person or
Advance Facility Trustee loan by loan information with respect to each
Reimbursement Amount distributed to such Advancing Person or Advance
Facility Trustee on each date of remittance thereof to such Advancing
Person or Advance Facility Trustee, to enable the Advancing Person or
Advance Facility Trustee to make the FIFO allocation of each Reimbursement
Amount with respect to each Mortgage Loan.

	 	(ii)	 	By way of illustration, and not by way of limiting
the generality of the foregoing, if the Servicer resigns or is terminated
at a time when the Servicer is a party to an Advance Facility, and is
replaced by a Successor Servicer, and the Successor Servicer directly
funds Advances or Servicing Advances with respect to a Mortgage Loan and
does not assign or pledge the related Reimbursement Amounts to the
related Advancing Person or Advance Facility Trustee, then all payments
and recoveries received from the related Mortgagor or received in the
form of Liquidation Proceeds with respect to such Mortgage Loan
(including Insurance Proceeds collected in connection with a liquidation
of such Mortgage Loan) will be allocated first to the Advancing Person or
Advance Facility Trustee until the related Reimbursement Amounts
attributable to such Mortgage Loan that are owed to the Servicer and the
Advancing Person, which were made prior to any Advances or Servicing
Advances made by the Successor Servicer, have been reimbursed in full, at
which point the Successor Servicer shall be entitled to retain all
related Reimbursement Amounts subsequently collected with respect to that
Mortgage Loan pursuant to Section 3.03 of this Agreement. To the extent
that the Advances or Servicing Advances are Nonrecoverable Advances to be
reimbursed on an aggregate basis pursuant to Section 3.03 of this
Agreement, the reimbursement paid in this manner will be made pro rata to
the Advancing 

25

 

	 	 	 	Person or Advance Facility Trustee, on the one hand, and
the Successor Servicer, on the other hand, as described in clause (i)(B)
above

	 	(f)	 	The Servicer shall remain entitled to be reimbursed for all Advances and
Servicing Advances funded by the Servicer to the extent the related rights to be
reimbursed therefor have not been sold, assigned or pledged to an Advancing Person.

	 	(g)	 	Any amendment to this Section 3.21 or to any other provision of this Agreement
that may be necessary or appropriate to effect the terms of an Advance Facility as
described generally in this Section 3.21, including amendments to add provisions
relating to a successor servicer, may be entered into by the Indenture Trustee, the
Depositor and the Servicer without the consent of any Securityholder, with written
confirmation from each Rating Agency that the amendment will not result in the
reduction of the ratings on any Class of the Notes below the lesser of the then current
or original ratings on such Notes.

	 	(h)	 	Any rights of set off that the Trust Fund, the Indenture Trustee, the Owner
Trustee, the Depositor, any Successor Servicer or any other Person might otherwise have
against the Servicer under this Agreement shall not attach to any rights to be
reimbursed for Advances or Servicing Advances that have been sold, transferred,
pledged, conveyed or assigned to any Advancing Person.

	 	(i)	 	At any time when an Advancing Person shall have ceased funding Advances and/or
Servicing Advances (as the case may be) and the Advancing Person or related Advance
Facility Trustee shall have received Reimbursement Amounts sufficient in the aggregate
to reimburse all Advances and/or Servicing Advances (as the case may be) the right to
reimbursement for which were assigned to the Advancing Person, then upon the delivery
of a written notice signed by the Advancing Person and the Servicer or its successor or
assign) to the Indenture Trustee terminating the Advance Facility Notice (the “Notice
of Facility Termination”), the Servicer or its Successor Servicer shall again be
entitled to withdraw and retain the related Reimbursement Amounts from the Custodial
Account pursuant to Section 3.03.

	 	(j)	 	After delivery of any Advance Facility Notice, and until any such Advance
Facility Notice has been terminated by a Notice of Facility Termination, this Section
3.21 may not be amended or otherwise modified without the prior written consent of the
related Advancing Person.

	 	(k)	 	The parties hereto hereby acknowledge and agree that: (a) the Advances and/or
servicing Advances financed by and/or pledged to an Advancing Person under any Advance
Facility are obligations owed to the Servicer payable only from the cash flows and
proceeds received under this Agreement for reimbursement of Advances and/or Servicing
Advances only to the extent provided herein, and the Indenture Trustee and the Trust
are not, as a result of the existence of any Advance Facility, obligated or liable to
repay any Advances and/or Servicing

26

 

	 	 	 	Advances financed by the Advancing Person; (b) the
Servicer will be responsible for remitting to the Advancing Person the applicable
amounts collected by it as reimbursement for Advances and/or Servicing Advances funded
by the Advancing Person, subject to the provisions of this Agreement; and (c) the
Indenture Trustee shall not have any responsibility to track or monitor the
administration of the financing arrangement between the Servicer and any Advancing
Person.

ARTICLE IV

Servicing Certificate

     Section 4.01 Statements to Securityholders.

	 	(a)	 	With respect to each Payment Date, on the Business Day following the related
Determination Date, the Servicer shall forward to the Indenture Trustee and the
Indenture Trustee pursuant to Sections 3.26 and [___] of the Indenture shall forward or
cause to be forwarded by mail or otherwise make available electronically at
www.[__________].[___] to each Certificateholder, Noteholder, the Depositor, the Owner
Trustee, the Certificate Paying Agent and each Rating Agency, a statement setting forth
the following information (the “Servicing Certificate”) as to the Notes and
Certificates, to the extent applicable:

     (i) the applicable Record Date, Determination Date and Payment Date;

     (ii) the aggregate amount of payments received with respect to the Mortgage Loans,
including prepayment amounts;

     (iii) the Servicing Fee payable to the Servicer;

     (iv) the amount of any other fees or expenses paid, and the identity of the party
receiving such fees or expenses;

     (v) the aggregate amount of (a) Interest Collections, (b) Principal Collections, (c)
Substitution Adjustment Amounts and (d) Excess Spread, for the related Collection Period;

     (vi) the amount paid as principal to the Noteholders of each Class of Notes;

     (vii) the amount paid as interest to the Noteholders of each Class of Notes, the amount
of any Relief Act Shortfalls for the related Payment Date;

     (viii) the aggregate amount of interest remaining unpaid, if any, for each of the
Notes, after giving effect to the payments made on such Payment Date;

     (ix) the amount of such distribution as principal and interest to the
Certificateholders of the Certificates, separately stating the portion thereof which
resulted in a reduction of the Certificate Balance thereof;

27

 

     (x) the aggregate Principal Balance of the Mortgage Loans as of the end of the related
Collection Period;

     (xi) the number and aggregate Principal Balances of Mortgage Loans (a) as to which the
Minimum Monthly Payment is delinquent for 30-59 days, 60-89 days, 90-119 days, 120-149 days,
150-179 days and greater than 180 days, respectively, (b) the related Mortgaged Property of
which has been foreclosed upon and (c) as to which the related Mortgaged Property has become
REO Property, in each case as of the end of the related Collection Period; provided,
however, that such information shall not be provided on the statements relating to the first
Payment Date;

     (xii) the number and aggregate Principal Balance of Mortgage Loans repurchased pursuant
to Section 3.15(a) herein during the related Collection Period;

     (xiii) the Net WAC Rate for the related Collection Period;

     (xiv) the aggregate Liquidation Loss Amounts with respect to the related Collection
Period, the amount distributed as principal to Noteholders in respect of Liquidation Loss
Amounts and the aggregate of the Liquidation Loss Amounts (minus any Subsequent Net Recovery
Amounts) from all Collection Periods to date expressed as dollar amount and as a percentage
of the aggregate Cut-Off Date Principal Balances of the Mortgage Loans;

     (xv) the aggregate Note Balance of each Class of Notes and the Certificate Balance of
each Class of Certificates after giving effect to the distribution of principal on such
Payment Date;

     (xvi) the Percentage Interest applicable to each of the Securities, after application
of payments made on such Payment Date; and

     (xvii) the Overcollateralization Amount as of the end of the related Collection Period.

     In the case of information furnished pursuant to clauses (vi) and (vii) above, the amounts
shall be expressed as an aggregate dollar amount per Note or Certificate, as applicable, with a
$25,000 denomination per Note and with a denomination equal to a 100% Percentage Interest per
Certificate.

     If a Servicing Default shall occur, on the Business Day following the related Determination
Date, the Servicer shall forward to the Indenture Trustee a statement to such effect, including the
nature of such Servicing Default. The Indenture Trustee, pursuant to Sections 3.26 and [___] of
the Indenture, shall deliver or cause to be delivered by mail to each Certificateholder, each
Noteholder, the Depositor, the Owner Trustee, the Certificate Paying Agent and each Rating Agency,
notice of such Servicing Default, including the nature thereof. Such statement may be included in,
or separate from, the regular statement made available to Securityholders.

28

 

     The Indenture Trustee will make the Servicing Certificate (and, at its option, any additional
files containing the same information in an alternative format) available each month to
Securityholders, and other parties to this Agreement via the Indenture Trustee’s internet website.
The Indenture Trustee’s internet website shall initially be located at “www.[________].[___].”
Assistance in using the website can be obtained by calling the Indenture Trustee’s customer service
desk at ([___]) [___]-[____]. Parties that are unable to use the above distribution options are
entitled to have a paper copy mailed to them via first class mail by calling the customer service
desk and indicating such. The Indenture Trustee shall have the right to change the way the
statements to Securityholders are distributed in order to make such distribution more convenient or
more accessible to the above parties and the Indenture Trustee shall provide timely and adequate
notification to all above parties regarding any such changes. The Indenture Trustee may require
registration and the acceptance of a disclaimer in connection with access to its website.

	 	(b)	 	The Servicer shall forward to the Indenture Trustee any other information
reasonably requested by the Indenture Trustee necessary to make distributions pursuant
to Section 3.05 of the Indenture. Prior to the close of business on the Business Day
next succeeding each Determination Date, the Servicer shall furnish a written statement
to the Certificate Paying Agent and the Indenture Trustee setting forth the aggregate
amounts required to be withdrawn from the Custodial Account and deposited into the Note
Payment Account or Distribution Account on the Business Day preceding the related
Payment Date pursuant to Section 3.03. The determination by the Servicer of such
amounts shall, in the absence of
obvious error, be deemed to be presumptively correct for all purposes hereunder, and
the Owner Trustee and the Indenture Trustee shall be protected in relying upon the
same without any independent check or verification. In addition, upon the Issuer’s
written request, the Servicer shall promptly furnish such information reasonably
requested by the Issuer that is reasonably available to the Servicer to enable the
Issuer to perform its federal and state income tax reporting obligations.

     Section 4.02 Tax Returns and 1934 Act Reports

	 	(a)	 	The Servicer will act as the Tax Matters Partner or the agent for the Tax
Matters Partner pursuant to the Trust Agreement. The Servicer agrees to perform the
obligations of the Servicer set forth in Section 5.03 of the Trust Agreement. The
Servicer will prepare and file or cause to be prepared and filed all tax and
information returns of the Trust Estate.

	 	(b)	 	The Servicer shall, on behalf of the Depositor and in respect of the Trust
Estate, sign and cause to be filed with the Commission any periodic reports required to
be filed under the provisions of the Exchange Act, and the rules and regulations of the
Commission thereunder including, without limitation, reports on Form 10-K, Form 10-D
and Form 8-K. In connection with the preparation and filing of such periodic reports,
the Indenture Trustee shall timely provide to the Servicer (I) a list of
Securityholders as shown on the Certificate Register and the Note Register as of the
end of each calendar year, (II) copies of all pleadings, other legal process and any
other documents relating to any claims, charges or complaints involving 

29

 

	 	 	 	the Indenture
Trustee, as trustee hereunder, or the Trust Estate that are received by the Indenture
Trustee, (III) notice of all matters that, to the actual knowledge of a Responsible
Officer of the Indenture Trustee, have been submitted to a vote of the Securityholders,
other than those matters that have been submitted to a vote of the Securityholders at
the request of the Depositor or the Servicer, and (IV) notice of any failure of the
Indenture Trustee to make any distribution to the Securityholders as required pursuant
to this Agreement. The Indenture Trustee shall not have any liability with respect to
the Servicer’s failure to properly prepare or file such periodic reports and the
Servicer shall not have any liability with respect to such failure resulting from or
relating to the Servicer’s inability or failure to obtain any information not resulting
from the Servicer’s own negligence or willful misconduct.

	 	(c)	 	Any Form 10-K filed with the Commission in connection with this Section 4.03
shall include:

     (i) A certification, signed by the senior officer in charge of the servicing functions
of the Servicer, in the form attached as Exhibit E hereto or such other form as may be
required or permitted by the Commission (the “Form 10-K Certification”), in compliance with
Rules 13a-14 and 15d-14 under the Exchange Act and any additional directives of the
Commission.

     (ii) A report regarding its assessment of compliance during the preceding calendar year
with all applicable servicing criteria set forth in relevant Commission regulations with
respect to mortgage-backed securities transactions taken as a whole involving the Servicer
that are backed by the same types of assets as those backing the certificates, as well as
similar reports on assessment of compliance received from other parties participating in the
servicing function as required by relevant Commission regulations, as described in Item
1122(a) of Regulation AB. The Servicer shall obtain from all other parties participating in
the servicing function any required certifications.

     (iii) With respect to each assessment report described immediately above, a report by a
registered public accounting firm that attests to, and reports on, the assessment made by
the asserting party, as set forth in relevant Commission regulations, as described in
Regulation 1122(b) of Regulation AB and Section 3.11.

     (iv) The servicer compliance certificate required to be delivered pursuant Section 3.10.

	 	(d)	 	In connection with the Form 10-K Certification, the Indenture Trustee shall
provide the Servicer with a back-up certification substantially in the form attached
hereto as Exhibit D-2.

	 	(e)	 	This Section 4.03 may be amended in accordance with this Servicing Agreement
without the consent of the Securityholders.

	 	(f)	 	The Indenture Trustee shall make available on the Indenture Trustee’s internet
website each of the reports filed with the Commission by or on behalf of the 

30

 

	 	 	 	Depositor
under the Exchange Act, as soon as reasonably practicable upon delivery of such reports
to the Indenture Trustee.

ARTICLE V

Note Payment Account, Subservicing Accounts and Servicing Accounts

     Section 5.01 Note Payment Account. The Indenture Trustee shall establish and maintain
an Eligible Account entitled “[_____________], as Indenture Trustee, for the benefit of the
Securityholders and the Certificate Paying Agent, pursuant to the Indenture, dated as of [______],
20[__], between PRS Series 20[__]-[__] Trust and [_____________]” (the “Note Payment Account”). On
each Payment Date, amounts on deposit in the Note Payment Account shall be distributed by the
Indenture Trustee in accordance with Section 3.05 of the Indenture. Amounts on deposit in the Note
Payment Account will remain uninvested and all benefit therefrom shall be for the benefit of the
Indenture Trustee.

     Section 5.02 Subservicing Accounts; Servicing Accounts. In those cases where a Subservicer is servicing a Mortgage Loan pursuant to a
Subservicing Agreement, the Servicer shall cause the Subservicer, pursuant to the
Subservicing Agreement, to establish and maintain one or more Subservicing Accounts
which shall be an Eligible Account or, if such account is not an Eligible Account,
shall generally satisfy the requirements of the Program Guide and be otherwise
acceptable to the Servicer and each Rating Agency. The Subservicer will be required
thereby to deposit into the Subservicing Account on a daily basis all proceeds of
Mortgage Loans received by the Subservicer, less its Subservicing Fees and expenses,
to the extent permitted by the Subservicing Agreement. If the Subservicing Account
is not an Eligible Account, the Servicer shall be deemed to have received such
monies upon receipt thereof by the Subservicer. The Subservicer shall not be
required to deposit in the Subservicing Account payments or collections in the
nature of late charges or assumption fees, or payments or collections received in
the nature of prepayment charges to the extent that the Subservicer is entitled to
retain such amounts pursuant to the Subservicing Agreement. On or before the date
specified in the Program Guide, but in no event later than the Determination Date,
the Servicer shall cause the Subservicer, pursuant to the Subservicing Agreement, to
remit to the Servicer for deposit in the Custodial Account all funds held in the
Subservicing Account with respect to each Mortgage Loan serviced by such Subservicer
that are required to be remitted to the Servicer.

	 	(b)	 	In addition to the Custodial Account and the Note Payment Account, the Servicer
shall for any nonsubserviced Mortgage Loan, and shall cause the Subservicers for
subserviced Mortgage Loans to, establish and maintain one or more Servicing Accounts
and deposit and retain therein all collections from the Mortgagors (or advances from
Subservicers) for the payment of taxes, assessments, hazard insurance premiums, Primary
Insurance Policy premiums, if applicable, or comparable items for the account of the
Mortgagors. Each Servicing Account shall satisfy the requirements for a Subservicing
Account and, to the extent permitted by the Program Guide or as is otherwise acceptable
to the Servicer, may 

31

 

	 	 	 	also function as a Subservicing Account. Withdrawals of amounts
related to the Mortgage Loans from the Servicing Accounts may be made only to effect
timely payment of taxes, assessments, hazard insurance premiums, Primary Insurance
Policy premiums, if applicable, or comparable items, to reimburse the Servicer or
Subservicer out of related collections for any payments made pursuant to Section 3.04,
to refund to any Mortgagors any sums as may be determined to be overages, to pay
interest, if required, to Mortgagors on balances in the Servicing Account or to clear
and terminate the Servicing Account at the termination of the Indenture in accordance
with Section 8.04 thereof or in accordance with the Program Guide. As part of its
servicing duties, the Servicer shall, and the Subservicers will, pursuant to the
Subservicing Agreements, be required to pay to the Mortgagors interest on funds in this
account to the extent required by law.

	 	(c)	 	The Servicer shall have no obligation to make Servicing Advances to pay taxes,
assessments, hazard insurance premiums, Primary Insurance Policy premiums, if
applicable, or comparable items on all Mortgage Loans that are not timely paid by
the Mortgagors or advanced by the Subservicers on the date when the tax, premium or
other cost for which such payment is intended is due.

ARTICLE VI

The Servicer

     Section 6.01 Liability of the Servicer. The Servicer shall be liable in accordance
herewith only to the extent of the obligations specifically imposed upon and undertaken by the
Servicer herein.

     Section 6.02 Merger or Consolidation of, or Assumption of the Obligations of, the
Servicer. Any Person into which the Servicer may be merged or converted or with which it may
be consolidated, or any Person resulting from any merger, conversion or consolidation to which the
Servicer shall be a party, or any Person succeeding to the business of the Servicer, shall be the
successor of the Servicer hereunder, without the execution or filing of any paper or any further
act on the part of any of the parties hereto, anything herein to the contrary notwithstanding.

     The Servicer may assign its rights and delegate its duties and obligations under this
Agreement; provided, that the Person accepting such assignment or delegation shall be a Person
qualified to service mortgage loans, is willing to service the Mortgage Loans and executes and
delivers to the Issuer an agreement, that contains an assumption by such Person of the due and
punctual performance and observance of each covenant and condition to be performed or observed by
the Servicer under this Agreement; and provided further, that no Rating Event will occur as a
result of such assignment and delegation (as evidenced by a letter to such effect from each Rating
Agency); and provided further, that the Owner Trustee shall receive an Opinion of Counsel to the
effect that such assignment or delegation will not cause the Issuer to be treated as an association
(or a publicly-traded partnership) taxable as a corporation for federal income tax purposes.

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     Section 6.03 Limitation on Liability of the Servicer and Others. Neither the Servicer
nor any of the directors or officers or employees or agents of the Servicer shall be under any
liability to the Issuer, the Owner Trustee, the Indenture Trustee or the Securityholders for any
action taken or for refraining from the taking of any action in good faith pursuant to this
Agreement; provided, however, that this provision shall not protect the Servicer or any such Person
against any liability that would otherwise be imposed by reason of its willful misfeasance, bad
faith or gross negligence in the performance of its duties hereunder or by reason of its reckless
disregard of its obligations and duties hereunder. The Servicer and any director or officer or
employee or agent of the Servicer may rely in good faith on any document of any kind prima facie
properly executed and submitted by any Person respecting any
matters arising hereunder. The Servicer and any director, officer, employee or agent of the
Servicer shall be indemnified by the Issuer and held harmless against any loss, liability or
expense incurred in connection with any legal action relating to this Agreement or the Securities,
including any amount paid to the Owner Trustee or the Indenture Trustee pursuant to Section
6.06(b), other than any loss, liability or expense related to any specific Mortgage Loan or
Mortgage Loans (except as any such loss, liability or expense shall be otherwise reimbursable
pursuant to this Agreement) and any loss, liability or expense incurred by reason of its willful
misfeasance, bad faith or gross negligence in the performance of its duties hereunder or by reason
of its reckless disregard of its obligations and duties hereunder. The Servicer shall not be under
any obligation to appear in, prosecute or defend any legal action that is not incidental to its
duties to service the Mortgage Loans in accordance with this Agreement, and that in its opinion may
involve it in any expense or liability; provided, however, that the Servicer may in its sole
discretion undertake any such action that it may deem necessary or desirable in respect of this
Agreement, the rights and duties of the parties hereto and the interests of the Securityholders.
In such event, the reasonable legal expenses and costs of such action and any liability resulting
therefrom shall be expenses, costs and liabilities of the Issuer, and the Servicer shall be
entitled to be reimbursed therefor. The Servicer’s right to indemnity or reimbursement pursuant to
this Section 6.03 shall survive any resignation or termination of the Servicer pursuant to Section
6.04 or 7.01 with respect to any losses, expenses, costs or liabilities arising prior to such
resignation or termination (or arising from events that occurred prior to such resignation or
termination).

     Section 6.04 Servicer Not to Resign. Subject to the provisions of Section 6.02, the
Servicer shall not resign from the obligations and duties hereby imposed on it except (a) upon
determination that the performance of its obligations or duties hereunder are no longer permissible
under applicable law or are in material conflict by reason of applicable law with any other
activities carried on by it or its subsidiaries or Affiliates, the other activities of the Servicer
so causing such a conflict being of a type and nature carried on by the Servicer or its
subsidiaries or Affiliates at the date of this Agreement or (b) upon satisfaction of the following
conditions: (i) the Servicer shall have proposed a successor Servicer to the Issuer and the
Indenture Trustee in writing and such proposed successor Servicer is reasonably acceptable to the
Issuer and the Indenture Trustee; and (ii) each Rating Agency shall have delivered a letter to the
Issuer and the Indenture Trustee prior to the appointment of the successor Servicer stating that
the proposed appointment of such successor Servicer as Servicer hereunder will not cause a Rating
Event; provided, however, that no such resignation by the Servicer shall become effective until
such successor Servicer or, in the case of (a) above, the Indenture Trustee, as pledgee of the
Mortgage Loans, shall have assumed the Servicer’s responsibilities and obligations hereunder or the
Indenture Trustee, as pledgee of the Mortgage Loans, shall have designated a successor Servicer

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in accordance with Section 7.02. Any such resignation shall not relieve the Servicer of
responsibility for any of the obligations specified in Sections 7.01 and 7.02 as obligations that
survive the resignation or termination of the Servicer. Any such determination permitting the
resignation of the Servicer shall be evidenced by an Opinion of Counsel to such effect delivered to
the Indenture Trustee.

     Section 6.05 Delegation of Duties.
In the ordinary course of business, the Servicer at any time may delegate any of its duties
hereunder to any Person, including any of its Affiliates, that agrees to conduct such duties in
accordance with standards comparable to those with which the Servicer complies pursuant to Section
3.01. Such delegation shall not relieve the Servicer of its obligations, liabilities and
responsibilities with respect to such duties and shall not constitute a resignation within the
meaning of Section 6.04.

     Section 6.06 Payment of Indenture Trustee’s and Owner Trustee’s Fees and Expenses;
Indemnification.

	 	(a)	 	After the Closing Date, the Servicer covenants and agrees to pay to the Owner
Trustee, the Indenture Trustee and any co-trustee of the Indenture Trustee or the Owner
Trustee from time to time, and the Owner Trustee, the Indenture Trustee and any such
co-trustee shall be entitled to, reasonable compensation (which shall not be limited by
any provision of law in regard to the compensation of a trustee of an express trust
and, in the case of the Indenture Trustee, for so long as [_____________] is the
Servicer shall be as set forth in the letter agreement between the Indenture Trustee
and the Servicer dated as of [______], 20[__]) for all services rendered by each of
them in the execution of the trusts created under the Trust Agreement and the Indenture
and in the exercise and performance of any of the powers and duties under the Trust
Agreement or the Indenture, as the case may be, of the Owner Trustee, the Indenture
Trustee and any co-trustee, and the Servicer will pay or reimburse the Indenture
Trustee and any co-trustee upon request for all reasonable expenses, disbursements and
advances incurred or made by the Indenture Trustee or any co-trustee in accordance with
any of the provisions of this Agreement, the Indenture or the Trust Agreement except
any such expense, disbursement or advance as may arise from its negligence, willful
misfeasance or bad faith. In addition, the Indenture Trustee shall be entitled to be
reimbursed from the Servicer for all reasonable costs associated with the transfer of
servicing from the predecessor servicer pursuant to Section 7.02 hereunder, including,
without limitation, any reasonable costs or expenses associated with the complete
transfer of all servicing data and the completion, correction or manipulation of such
servicing data as may be required by the Indenture Trustee to correct any errors or
insufficiencies in the servicing data or otherwise to enable the Indenture Trustee to
service the Mortgage Loans properly and effectively.

	 	(b)	 	The Servicer agrees to indemnify the Indenture Trustee and the Owner Trustee
for, and to hold the Indenture Trustee and the Owner Trustee, as the case may be,
harmless against, any loss, liability or expense incurred without negligence, bad faith
or willful misconduct on the part of the Indenture Trustee or the Owner Trustee, as the
case may be, arising out of, or in connection with, the acceptance 

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	 	 	 	and administration
of the Issuer and the assets thereof, including the costs and expenses (including
reasonable legal fees and expenses) of defending the Indenture Trustee or the Owner
Trustee, as the case may be, against any claim in connection with the exercise or
performance of any of its powers or duties under any Basic Document; provided that:

	 	(i)	 	with respect to any such claim, the Indenture
Trustee or Owner Trustee, as the case may be, shall have given the
Servicer written notice thereof promptly after the Indenture Trustee or
Owner Trustee, as the case may be, shall have actual knowledge thereof;
	 
	 	(ii)	 	while maintaining control over its own defense, the
Issuer, the Indenture Trustee or Owner Trustee, as the case may be, shall
cooperate and consult fully with the Servicer in preparing such defense;
and
	 
	 	(iii)	 	notwithstanding anything in this Agreement to the
contrary, the Servicer shall not be liable for settlement of any claim by
the Indenture Trustee or the Owner Trustee, as the case may be, entered
into without the prior consent of the Servicer.

No termination of this Agreement or resignation or removal of the Indenture Trustee shall affect
the obligations created by this Section 6.06 of the Servicer to indemnify the Indenture Trustee and
the Owner Trustee under the conditions and to the extent set forth herein.

     Notwithstanding the foregoing, the indemnification provided by the Servicer in this Section
6.06(b) shall not pertain to any loss, liability or expense of the Indenture Trustee or the Owner
Trustee, including the costs and expenses of defending itself against any claim, incurred in
connection with any actions taken by the Indenture Trustee or the Owner Trustee at the direction of
the Noteholders or Certificateholders, as the case may be, pursuant to the terms of this Agreement.

ARTICLE VII

Default

     Section 7.01 Servicing Default.

	 	(a)	 	If a Servicing Default shall occur and be continuing, then, and in every such
case, so long as a Servicing Default shall not have been remedied by the Servicer,
either the Issuer or the Indenture Trustee, upon actual knowledge of the occurrence of
a Servicing Default, by notice then given in writing to the Servicer, the Issuer and
the Indenture Trustee, may terminate all of the rights and obligations of the Servicer
as servicer under this Agreement other than its right to receive servicing compensation
and expenses for servicing the Mortgage Loans hereunder during any period prior to the
date of such termination, and the Issuer or the Indenture Trustee, may exercise any and
all other remedies available at law or equity. Any such notice to the Servicer shall
also be given to each Rating Agency (in accordance with Section [___] of the Indenture)
and the Issuer. On or 

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	 	 	 	after the receipt by the Servicer of such written notice, all
authority and power of the Servicer under this Agreement, whether with respect to the
Securities or the Mortgage Loans or otherwise, shall pass to and be vested in the
Indenture Trustee, subject to Section 7.02 hereof, as pledgee of the Mortgage Loans,
pursuant to and under this Section 7.01; and, without limitation, the Indenture Trustee
is hereby
authorized and empowered to execute and deliver, on behalf of the Servicer, as
attorney-in-fact or otherwise, any and all documents and other instruments, and to
do or accomplish all other acts or things necessary or appropriate to effect the
purposes of such notice of termination, whether to complete the transfer and
endorsement of each Mortgage Loan and related documents, or otherwise. The Servicer
agrees to cooperate with the Issuer and Indenture Trustee, as the case may be, in
effecting the termination of the responsibilities and rights of the Servicer
hereunder, including, without limitation, the transfer to the Indenture Trustee for
the administration by it of all cash amounts relating to the Mortgage Loans that
shall at the time be held by the Servicer and to be deposited by it in the Custodial
Account, or that have been deposited by the Servicer in the Custodial Account or
thereafter received by the Servicer with respect to the Mortgage Loans, the
recordation of Assignments of Mortgages to the Indenture Trustee if MERS is not the
mortgagee of a Mortgage Loan, and the delivery of the Mortgage Files in its
possession to the Indenture Trustee. All reasonable costs and expenses (including,
but not limited to, attorneys’ fees) incurred in connection with amending this
Agreement to reflect such succession as Servicer pursuant to this Section 7.01 shall
be paid by the predecessor Servicer (or if the predecessor Servicer is the Indenture
Trustee, the initial Servicer) upon presentation of reasonable documentation of such
costs and expenses.

	 	(b)	 	Notwithstanding any termination of the activities of the Servicer hereunder,
the Servicer shall be entitled to receive, out of any late collection of a payment on a
Mortgage Loan which was due prior to the notice terminating the Servicer’s rights and
obligations hereunder and received after such notice, that portion to which the
Servicer would have been entitled pursuant to Sections 3.03 and 3.09 as well as its
Servicing Fee in respect thereof, and any other amounts payable to the Servicer
hereunder the entitlement to which arose prior to the termination of its activities
hereunder.

     Notwithstanding the foregoing, a delay in or failure of performance under clause (i) or (ii)
of the definition of Servicing Default, after the applicable grace periods specified therein, shall
not constitute a Servicing Default if such delay or failure could not be prevented by the exercise
of reasonable diligence by the Servicer and such delay or failure was caused by an act of God or
the public enemy, acts of declared or undeclared war, public disorder, rebellion or sabotage,
epidemics, landslides, lightning, fire, hurricanes, earthquakes, floods or similar causes. The
preceding sentence shall not relieve the Servicer from using reasonable efforts to perform its
respective obligations in a timely manner in accordance with the terms of this Agreement. The
Servicer shall provide the Indenture Trustee and the Securityholders with notice of any such
failure or delay by it, together with a description of its efforts to so perform its obligations.
The Servicer shall immediately notify the Indenture Trustee and the Issuer in writing of any
Servicing Default.

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     Section 7.02 Indenture Trustee to Act; Appointment of Successor.

	 	(a)	 	(a) On and after the time the Servicer receives a notice of termination
pursuant to Section 7.01 or sends a notice pursuant to Section 6.04, the Indenture
Trustee as pledgee of the Mortgage Loans shall itself become, or shall appoint an
affiliate of the Indenture Trustee to become the successor in all respects to the
Servicer in its capacity as servicer under this Agreement and the transactions set
forth or provided for herein and shall immediately assume all of the obligations of the
Servicer to make advances on Mortgage Loans under Section 3.02(b) and will be subject
to all other responsibilities, duties and liabilities relating thereto placed on the
Servicer by the terms and provisions hereof as soon as practicable, but in no event
later than 90 days after the Indenture Trustee becomes successor servicer. During such
90 day period, the Indenture Trustee may require the Servicer being terminated to
continue to perform such servicing responsibilities (other than making advances on the
Mortgage Loans under Section 3.02(b)) as the Indenture Trustee deems appropriate. In
such event, the Servicer being terminated shall provide such services as directed by
the Indenture Trustee until the earliest of the date the Indenture Trustee notifies
such Servicer to discontinue providing such services, the date on which a successor
servicer or the Indenture Trustee has assumed all responsibilities, duties and
liabilities of the Servicer hereunder or the expiration of the 90 day period. The
Servicer shall be entitled to the Servicing Fee hereunder for any period during which
the Servicer is obligated to provide such services as if no termination of the Servicer
had occurred. Nothing in this Agreement or in the Trust Agreement shall be construed to
permit or require the Indenture Trustee to (i) succeed to the responsibilities, duties
and liabilities of the initial Servicer in its capacity as Seller under the Purchase
Agreement, (ii) be responsible or accountable for any act or omission of the Servicer
prior to the issuance of a notice of termination hereunder, (iii) require or obligate
the Indenture Trustee, in its capacity as successor Servicer, to purchase, repurchase
or substitute any Mortgage Loan, (iv) fund any losses on any Permitted Investment
directed by any other Servicer, or (v) be responsible for the representations and
warranties of the Servicer. As compensation therefor, the Indenture Trustee shall be
entitled to such compensation as the Servicer would have been entitled to hereunder if
no such notice of termination had been given. Notwithstanding the foregoing, if the
Indenture Trustee is (x) unwilling to act as successor Servicer itself or to appoint an
affiliate to become successor Servicer, or (y) legally unable so to act, the Indenture
Trustee as pledgee of the Mortgage Loans may (in the situation described in clause (x))
or shall (in the situation described in clause (y)) petition a court of competent
jurisdiction to appoint any established housing and home finance institution, bank or
other mortgage loan servicer having a net worth of not less than $10,000,000 as the
successor to the Servicer hereunder in the assumption of all or any part of the
responsibilities, duties or liabilities of the Servicer hereunder; provided, that the
appointment of any such successor Servicer will not result in a Rating Event. Pending
appointment of a successor to the Servicer hereunder, unless the Indenture Trustee is
prohibited by law from so acting, the Indenture Trustee itself shall act or appoint an
affiliate to act in such capacity as provided above. In connection with

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	 	 	 	such appointment and assumption, the successor shall be entitled to receive
compensation out of payments on Mortgage Loans in an amount equal to the
compensation that the Servicer would otherwise have received pursuant to Section
3.09 (or such other compensation as the Indenture Trustee and such successor shall
agree). The appointment of a successor Servicer shall not affect any liability of
the predecessor Servicer that may have arisen under this Agreement prior to its
termination as Servicer (including the obligation to purchase Mortgage Loans
pursuant to Section 3.01, to pay any deductible under an insurance policy pursuant
to Section 3.04 or to indemnify the Indenture Trustee pursuant to Section 6.06), nor
shall any successor Servicer be liable for any acts or omissions of the predecessor
Servicer or for any breach by such Servicer of any of its representations or
warranties contained herein or in any related document or agreement. The Indenture
Trustee and such successor shall take such action, consistent with this Agreement
and the requirements (including any notice requirements) of applicable law, as shall
be necessary to effectuate any such succession. Notwithstanding the foregoing, the
Indenture Trustee, in its capacity as successor Servicer, shall not be responsible
for the lack of information and/or documents that it cannot obtain through
reasonable efforts or for failing to take any action that the Indenture Trustee is
legally prohibited from taking by applicable law.

	 	(b)	 	Any successor, including the Indenture Trustee, to the Servicer as servicer
shall during its term as Servicer (i) continue to service and administer the Mortgage
Loans for the benefit of the Securityholders and (ii) maintain in force a policy or
policies of insurance covering errors and omissions in the performance of its
obligations as Servicer hereunder and a fidelity bond in respect of its officers,
employees and agents to the same extent as the Servicer is so required pursuant to
Section 3.13.

	 	(c)	 	Any successor Servicer, including the Indenture Trustee, shall not be deemed in
default or to have breached its duties hereunder if the predecessor Servicer shall fail
to deliver any required deposit to the Custodial Account or otherwise cooperate with
any required servicing transfer or succession hereunder.

	 	(d)	 	In connection with the termination or resignation of the Servicer hereunder,
either (i) the successor Servicer, including the Indenture Trustee if the Indenture
Trustee is acting as successor Servicer, shall represent and warrant that it is a
member of MERS in good standing and shall agree to comply in all material respects with
the rules and procedures of MERS in connection with the servicing of the Mortgage Loans
that are registered with MERS, in which case the predecessor Servicer shall cooperate
with the successor Servicer in causing MERS to revise its records to reflect the
transfer of servicing to the successor Servicer as necessary under MERS’ rules and
regulations, or (ii) the predecessor Servicer shall cooperate with the successor
Servicer in causing MERS to execute and deliver an assignment of Mortgage in recordable
form to transfer the Mortgage from MERS to the Indenture Trustee and to execute and
deliver such other notices, documents and other instruments as may be necessary or
desirable to effect a transfer of such 

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	 	 	 	Mortgage Loan or servicing of such Mortgage Loan on the MERS® System to the
successor Servicer. The predecessor Servicer shall file or cause to be filed any
such assignment in the appropriate recording office. The predecessor Servicer shall
bear any and all fees of MERS, costs of preparing any assignments of Mortgage, and
fees and costs of filing any assignments of Mortgage that may be required under this
subsection (d). The successor Servicer shall cause such assignment to be delivered
to the Indenture Trustee or the Custodian promptly upon receipt of the original with
evidence of recording thereon or a copy certified by the public recording office in
which such assignment was recorded.

     Section 7.03 Notification to Securityholders. Upon any termination of or appointment
of a successor to the Servicer pursuant to this Article VII or Section 6.04, the Indenture Trustee
shall give prompt written notice thereof to the Securityholders, the Issuer and each Rating Agency
(in accordance with Section [___] of the Indenture).

ARTICLE VIII

Miscellaneous Provisions

     Section 8.01 Amendment. This Agreement may be amended from time to time by the
parties hereto; provided, that any such amendment shall be accompanied by a letter from each Rating
Agency to the effect that such amendment will not result in a Rating Event; and provided further,
that the Indenture Trustee shall consent thereto.

     Section 8.02 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE CONFLICT OF LAW PRINCIPLES
THEREOF, OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW, AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH
SUCH LAWS.

     Section 8.03 Notices. All demands, notices and communications hereunder shall be in
writing and shall be deemed to have been duly given if personally delivered at or mailed by
certified mail, return receipt requested, to (a) in the case of the Servicer, [_____________],
[________], [_______] [_____], Attention: [__________], (b) [in the case of Moody’s, Home Mortgage
Loan Monitoring Group, 4th Floor, 99 Church Street, New York, New York 10001,] (c) [in the case of
Standard & Poor’s, 55 Water Street, New York, New York 10041-0003, Attention: Residential Mortgage
Surveillance Group,] (d) in the case of the Owner Trustee, [_____________], [_____________],
[________], [_______] [_____], Attention: [__________] and (e) in the case of the Issuer, PRS
Series 20[__]-[__] Trust, c/o the Owner Trustee at the address set forth in
clause (e) above, and (g) in the case of the Indenture Trustee, at the Corporate Trust Office
of the Indenture Trustee; or, with respect to each of the foregoing Persons, at such other address
as shall be designated by such Person in a written notice to the other foregoing Persons. Any
notice required or permitted to be mailed to a Securityholder shall be given by first class mail,
postage prepaid, at the address of such Securityholder as shown in the Note Register or Certificate
Register, as the case may be. Any notice so mailed within the time prescribed in this Agreement
shall be conclusively presumed to have been duly given, whether or not the

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related Securityholder
receives such notice. Any notice or other document required to be delivered or mailed by the
Indenture Trustee to any Rating Agency shall be given (i) on a reasonable efforts basis and only as
a matter of courtesy and accommodation and (ii) in accordance with Section [___] of the Indenture,
and the Indenture Trustee shall have no liability for failure to deliver any such notice or
document to any Rating Agency.

     Section 8.04 Severability of Provisions. If any one or more of the covenants,
agreements, provisions or terms of this Agreement shall be for any reason whatsoever held invalid,
then such covenants, agreements, provisions or terms shall be deemed severable from the remaining
covenants, agreements, provisions or terms of this Agreement and shall in no way affect the
validity or enforceability of the other provisions of this Agreement or the Securities or the
rights of the Securityholders.

     Section 8.05 Third-Party Beneficiaries. This Agreement shall inure to the benefit of
and be binding upon the parties hereto, the Securityholders, the Owner Trustee and their respective
successors and permitted assigns. Except as otherwise provided in this Agreement, no other Person
shall have any right or obligation hereunder.

     Section 8.06 Counterparts. This instrument may be executed in any number of
counterparts, each of which so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.

     Section 8.07 Effect of Headings and Table of Contents. The Article and Section
headings herein and the Table of Contents are for convenience only and shall not affect the
construction hereof.

     Section 8.08 Termination Upon Purchase by the Servicer or Liquidation of All Mortgage
Loans; Partial Redemption.

     (a) The respective obligations and responsibilities of the Servicer, the Issuer and the
Indenture Trustee created hereby shall terminate upon the last action required to be taken by the
Issuer pursuant to the Trust Agreement and by the Indenture Trustee pursuant to the Indenture
following the earlier of:

           (i) the date on or before which the Indenture or the
Trust Agreement is terminated, or

          (ii) the purchase by the Servicer from the Issuer of all Mortgage Loans and REO Property in
accordance with Section 8.08(b).(b) The Servicer shall have the right to purchase from the Issuer
all of the Mortgage Loans and related REO Property if the aggregate Note Balance of the Notes as of
any Payment Date, prior to giving effect to any payments on such Payment Date, is less than 10% of
the aggregate Note Balance of the Notes as of the Closing Date (provided that the purchase price
will provide sufficient funds to pay the outstanding Note Balance and accrued and unpaid interest
on the Notes to the Payment Date on which such amounts are to be distributed to the
Securityholders), at a price equal to 100% of the aggregate unpaid Principal Balance of all such
remaining Mortgage Loans, plus accrued and unpaid interest thereon at the weighted average of the
Loan Rates thereon up to the date preceding the Payment Date on which such amounts are to be
distributed to the Securityholders

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(and in the case of REO Property, the fair market value of the
REO Property) (and any unpaid Servicing Fee relating to the Mortgage Loans shall be deemed to have
been paid at such time),

          If such right is exercised by the Servicer, the Servicer shall deposit the amount calculated
pursuant to this Section 8.08(b) with the Indenture Trustee pursuant to Section 4.10 of the
Indenture and, upon the receipt of such deposit, the Indenture Trustee or Custodian shall release
to the Servicer, the files pertaining to the Mortgage Loans being purchased. The Servicer, at its
expense, shall prepare and deliver to the Indenture Trustee for execution, at the time the related
Mortgage Loans are to be released to the Servicer, appropriate documents assigning each such
Mortgage Loans from the Indenture Trustee or the Issuer to the Servicer or the appropriate party.

     Section 8.09 Certain Matters Affecting the Indenture Trustee. For all purposes of
this Agreement, in the performance of any of its duties or in the exercise of any of its powers
hereunder, the Indenture Trustee shall be subject to and entitled to the benefits of Article VI of
the Indenture.

     Section 8.10 Owner Trustee Not Liable for Related Documents. The recitals contained
herein shall be taken as the statements of the Servicer, and the Owner Trustee and the Indenture
Trustee assume no responsibility for the correctness thereof. The Owner Trustee and the Indenture
Trustee make no representations as to the validity or sufficiency of this Agreement, of any Basic
Document or Related Document, or of the Certificates (other than the signatures of the Owner
Trustee and the Indenture Trustee on the Certificates) or the Notes. The Owner Trustee and the
Indenture Trustee shall at no time have any responsibility or liability with respect to the
sufficiency of the Trust Estate or its ability to
generate the payments to be distributed to Certificateholders under the Trust Agreement or the
Noteholders under the Indenture, including the compliance by the Depositor, the Seller or the
Servicer with any warranty or representation made under any Basic Document or the accuracy of any
such warranty or representation, or any action of any person taken in the name of the Owner Trustee
or the Indenture Trustee.

ARTICLE IX

Compliance With Regulation AB

     Section 9.01 Intent of the Parties; Reasonableness.

          The Depositor, the Indenture Trustee and the Servicer acknowledge and agree that the purpose
of this Article IX is to facilitate compliance by the Depositor with the provisions of Regulation
AB and related rules and regulations of the Commission. The Depositor shall not 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 under the Securities Act and the Exchange Act. Each of the
Servicer and the Indenture Trustee 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 mortgage-backed securities markets, advice of
counsel, or otherwise, and agrees to comply with reasonable requests made by the Depositor in good
faith for delivery of information under these provisions on the basis of evolving interpretations
of Regulation AB. Each of the Servicer and

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the Indenture Trustee shall cooperate reasonably with
the Depositor to deliver to the Depositor (including any of its assignees or designees), any and
all disclosure, statements, reports, certifications, records and any other information necessary in
the reasonable, good faith determination of the Depositor to permit the Depositor to comply with
the provisions of Regulation AB.

     Section 9.02 Additional Representations and Warranties of the Indenture Trustee.

     (a) The Indenture Trustee shall be deemed to represent and warrant to the Depositor as of the
date hereof and on each date on which information is provided to the Depositor under Sections 9.01,
9.02(b) or 9.03 that, except as disclosed in writing to the Depositor prior to such date: (i)
there are no material legal or governmental proceedings pending (or known to be contemplated)
against it that would be material to Noteholders; (ii) there are no relationships or transactions
(as described in Item 1119(b) of Regulation AB) relating to the Indenture Trustee with respect to
the Depositor or any sponsor, issuing entity, servicer, trustee, originator, significant obligor,
enhancement or support provider or other material transaction party (as each of such terms are used
in Regulation AB) relating to the Securitization Transaction contemplated by the Servicing
Agreement, as identified by the Depositor to the Indenture Trustee in writing as of the Closing
Date (each, a “Transaction Party”) that are outside the ordinary course of business or on terms
other than would be obtained in an arm’s length transaction with an unrelated third
party, apart from the Securitization Transaction, and that are material to the investors’
understanding of the Notes; and (iii) the Indenture Trustee is not an affiliate (as contemplated by
Item 1119(a) of Regulation AB) of any Transaction Party. The Depositor shall notify the Indenture
Trustee of any change in the identity of a Transaction Party after the Closing Date.

     (b) If so requested by the Depositor on any date following the Closing Date, the Indenture
Trustee shall, within five Business Days following such request, confirm in writing the accuracy of
the representations and warranties set forth in paragraph (a) of this Section or, if any such
representation and warranty is not accurate as of the date of such confirmation, provide the
pertinent facts, in writing, to the Depositor. Any such request from the Depositor shall not be
given more than once each calendar quarter, unless the Depositor shall have a reasonable basis for
questioning the accuracy of any of the representations and warranties.

     Section 9.03 Information to Be Provided by the Indenture Trustee.

     For so long as the Company is subject to Exchange Act reporting requirements with respect to
the Trust Fund, for the purpose of satisfying the Depositor’s reporting obligation under the
Exchange Act with respect to any class of Notes, the Indenture Trustee shall provide to the
Depositor a written description of (a) any litigation or governmental proceedings pending against
the Indenture Trustee as of the last day of each calendar month that would be material to
Noteholders, and (b) any affiliations or relationships (as described in Item 1119 of Regulation AB)
that develop following the Closing Date between the Indenture Trustee and any Transaction Party of
the type described in Section 9.02(a)(ii) or 9.02(a)(iii) as of the last day of each calendar year.
Any descriptions required with respect to legal proceedings, as well as updates to previously
provided descriptions, under this Section 9.03 shall be given no later than five Business Days
prior to the Determination Date following the month in which the relevant event occurs, and any
notices and descriptions required with respect to affiliations, as well as

42

 

updates to previously
provided descriptions, under this Section 9.03 shall be given no later than January 31 of the
calendar year following the year in which the relevant event occurs. As of the related Payment
Date with respect to each Report on Form 10-D with respect to the Notes filed by or on behalf of
the Depositor, and as of March 15 preceding the date each Report on Form 10-K with respect to the
Notes is filed, the Indenture Trustee shall be deemed to represent and warrant that any information
previously provided by the Indenture Trustee under this Article IX is materially correct and does
not have any material omissions unless the Indenture Trustee has provided an update to such
information. The Depositor will allow the Indenture Trustee to review any disclosure relating to
material litigation against the Indenture Trustee prior to filing such disclosure with the
Commission to the extent the Depositor changes the information provided by the Indenture Trustee.

     Section 9.04 Report on Assessment of Compliance and Attestation.

          On or before March 15 of each calendar year, the Indenture Trustee shall:

     (a) deliver to the Depositor a report (in form and substance reasonablysatisfactory
to the Depositor) regarding the Indenture Trustee’s assessment of compliance with the applicable
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 signed
by an authorized officer of the Indenture Trustee, and shall address each of the Servicing Criteria
specified on Exhibit G hereto; and

     (b) deliver to the Depositor a report of a registered public accounting firm satisfying the
requirements of Rule 2-01 of Regulation S-X under the Securities Act and the Exchange Act that
attests to, and reports on, the assessment of compliance made by the Indenture Trustee and
delivered pursuant to the preceding paragraph. Such attestation shall be in accordance with Rules
1-02(a)(3) and 2-02(g) of Regulation S-X under the Securities Act and the Exchange Act.

     Section 9.05 Indemnification; Remedies.

     (a) The Indenture Trustee shall indemnify the Depositor, each affiliate of the Depositor, the
Servicer and each affiliate of the Servicer, and the respective present and former directors,
officers, employees and agents of each of the foregoing, and shall hold each of them harmless from
and against any losses, damages, penalties, fines, forfeitures, legal fees and expenses and related
costs, judgments, and any other costs, fees and expenses that any of them may sustain arising out
of or based upon:

               (i) (A) any untrue statement of a material fact contained or alleged to be contained in any
information, report, certification, accountants’ attestation or other material provided under this
Article IX by or on behalf of the Indenture Trustee (collectively, the “Indenture Trustee
Information”), or (B) the omission or alleged omission to state in the Indenture Trustee
Information a material fact required to be stated in the Indenture Trustee Information or necessary
in order to make the statements therein, in the light of the circumstances under which they were
made, not misleading; or

               (ii) any failure by the Indenture Trustee to deliver any information, report, certification,
or other material when and as required under this Article IX, other than a

43

 

failure by the Indenture
Trustee to deliver an accountants’ attestation.

     (b) In the case of any failure of performance described in clause (ii) of Section 9.05(a), as
well as a failure to deliver an accountants’ attestation, the Indenture Trustee shall (i) promptly
reimburse the Depositor for all costs reasonably incurred by the Depositor in order to obtain the
information, report, certification, accountants’ attestation or other material not delivered by the
Indenture Trustee as required and (ii) cooperate with the Depositor to mitigate any damages that
may result from such failure.

     (c) The Depositor and the Servicer shall indemnify the Indenture Trustee, each affiliate of
the Indenture Trustee and the respective present and former directors, officers, employees and
agents of the Indenture Trustee, and shall hold each of them harmless from and against any losses,
damages, penalties, fines, forfeitures, legal fees and expenses and related costs, judgments, and
any other costs, fees and expenses that any of them may sustain arising out of or based upon (i)
any untrue statement of a material fact contained or alleged to be contained in any information
provided under this Servicing Agreement by or on behalf of the Depositor or
Servicer for inclusion in any report filed with Commission under the Exchange Act
(collectively, the “[_______] Information”), or (ii) the omission or alleged omission to state in
the [_______] Information a material fact required to be stated in the [_______] Information or
necessary in order to make the statements therein, in the light of the circumstances under which
they were made, not misleading.

     (d) Notwithstanding any provision in this Section 9.05 to the contrary, the parties agree that
none of the Indenture Trustee, the Depositor or the Servicer shall be liable to the other for any
consequential or punitive damages whatsoever, whether in contract, tort (including negligence and
strict liability), or any other legal or equitable principle; provided, however, that such
limitation shall not be applicable with respect to third party claims made against a party.

44

 

     IN WITNESS WHEREOF, the Servicer, the Issuer and the Indenture Trustee have caused this
Agreement to be duly executed by their respective officers or representatives all as of the day and
year first above written.

	 	 	 	 	 
	 	

[                                                            ],

as Servicer

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	PRS SERIES 20[__]-[__] TRUST, as Issuer

 	 
	 	By:  	[                                        ], not in its individual
capacity but solely as Owner Trustee
 	 
	 
	 	 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	[                                        ], as Indenture Trustee

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

45

 

	 	 	 	 	 

EXHIBIT A

MORTGAGE LOAN SCHEDULE

[ON FILE WITH THE INDENTURE TRUSTEE]

A-1

 

EXHIBIT B

LIMITED POWER OF ATTORNEY

KNOW ALL MEN BY THESE PREMISES:

     That [_____________], as indenture trustee (the “Indenture Trustee”), under the indenture
dated as of [______], 20[__] (the “Indenture”), between PRS Series 20[__]-[__] Trust, as issuer and
the Indenture Trustee, a national banking association organized and existing under the laws of the
United States of America, and having its principal office located at [_____________], [________],
[_______] [_____], hath made, constituted and appointed, and does by these presents make,
constitute and appoint [_____________], a limited liability company organized and existing under
the laws of the State of [_____________], its true and lawful Attorney-in-Fact, with full power and
authority to sign, execute, acknowledge, deliver, file for record, and record any instrument on its
behalf and to perform such other act or acts as may be customarily and reasonably necessary and
appropriate to effectuate the following enumerated transactions in respect of any of the Mortgages
securing a Mortgage Loan and the related Mortgage Notes for which the undersigned is acting as
Indenture Trustee for various Securityholders (whether the undersigned is named therein as
mortgagee or beneficiary or has become mortgagee by virtue of endorsement of such Mortgage Note
secured by any such Mortgage) and for which [_____________] is acting as Servicer pursuant to a
Servicing Agreement dated as of [______], 20[__] (the “Servicing Agreement”).

This appointment shall apply to the following enumerated transactions only:

	1.	 	The modification or re-recording of a Mortgage, where said modification or re-recording is
for the purpose of correcting the Mortgage to conform same to the original intent of the
parties thereto or to correct title errors discovered after such title insurance was issued
and said modification or re-recording, in either instance, does not adversely affect the Lien
of the Mortgage as insured.

	2.	 	The subordination of the Lien of a Mortgage to an easement in favor of a public utility
company or a government agency or unit with powers of eminent domain; this section shall
include, without limitation, the execution of partial satisfactions/releases, partial
reconveyances or the execution of requests to trustees to accomplish same.

	3.	 	With respect to a Mortgage, the foreclosure, the taking of a deed in lieu of foreclosure, or
the completion of judicial or non-judicial foreclosure or termination, cancellation or
rescission of any such foreclosure, including, without limitation, any and all of the
following acts:

	 	a.	 	The substitution of trustee(s) serving under a Mortgage, in accordance with
state law and the Mortgage;
	 
	 	b.	 	the preparation and issuance of statements of breach or non-performance;
	 
	 	c.	 	the preparation and filing of notices of default and/or notices of sale;

B-1

 

	 	d.	 	Cancellations/rescissions of notices of default or notices of sale;
	 
	 	e.	 	The taking of a deed in lieu of foreclosure; and
	 
	 	f.	 	The preparation and execution of such other documents and the performance of
such other actions as may be necessary under the terms of the Mortgage or state law to
expeditiously complete said transactions in this paragraph 3.

	4.	 	The conveyance of the properties to the mortgage insurer, or the closing of the title to the
property to be acquired as real estate owned, or conveyance of title to real estate owned.

	5.	 	The completion of loan assumption agreements and modification agreements.

	6.	 	The full satisfaction/release of a Mortgage or full reconveyance upon payment and discharge
of all sums secured thereby, including, without limitation, cancellation of the related
Mortgage Note.

	7.	 	The assignment of any Mortgage and the related Mortgage Note, in connection with the
repurchase of the Mortgage Loan secured and evidenced thereby.

	8.	 	The full assignment of a Mortgage upon payment and discharge of all sums secured thereby in
conjunction with the refinancing thereof, including, without limitation, the assignment of the
related Mortgage Note.

	9.	 	The modification or re-recording of a Mortgage, where said modification or re-recording is
for the purpose of any modification pursuant to Section 3.01 of the Servicing Agreement.

	10.	 	The execution of partial satisfactions/releases pursuant to Section 3.01 of the Servicing
Agreement.

     Capitalized terms used herein that are not otherwise defined shall have the meanings ascribed
thereto in Appendix A to the Indenture.

     This Power of Attorney is effective for one (1) year from the date hereof or the earlier of
(i) revocation by the Indenture Trustee, (ii) the Attorney shall no longer be retained on behalf of
the Indenture Trustee or an affiliate of the Indenture Trustee; or (iii) the expiration of one year
from the date of execution.

     The authority granted to the attorney-in-fact by the Power of Attorney is not transferable to
any other party or entity.

     This Agreement shall be governed by, and construed in accordance with, the laws of the State
of New York without regard to its conflicts of law principles.

     All actions heretofore taken by said Attorney, which the Attorney could properly have taken
pursuant to this Power of Attorney, be, and hereby are, ratified and affirmed.

B-2

 

     IN WITNESS WHEREOF, [_____________], as Indenture Trustee, and these present to be signed and
acknowledged in its name and behalf by ___________________ its duly elected and authorized Senior
Vice President this _______ day of
___________________,
201__.

	 	 	 	 	 
	 	

[                                                            ]

 	 
	 	By:  	

 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

	 	 	 	 	 
	 	 	 
	 	Witness	 	 
	 	 	Printed Name:  	 

	 	 	 	 	 
	 	 	 
	 	Witness	 	 
	 	 	Printed Name:  	 
	 	 	 	 

B-3

 

	 	 	 	 	 

ACKNOWLEDGEMENT

STATE OF                                                             

COUNTY OF                                                             

     Personally appeared before me the above-named _________________________, known or proved to me
to be the same person who executed the foregoing instrument and to be the 
[Title]  [_____________], as Trustee for __________ _______, and acknowledged
that s/he executed the same as her/his free act and deed and the free act and deed of the Trustee.

     Subscribed and sworn before me this _______ day of _______________, 201_.

	 	 	 	 	 
	 	 	 
	 		

 	 
	 	 	NOTARY PUBLIC 	 
	 	 	My Commission expires:                                         	 

B-4

 

	 	 	 	 	 

EXHIBIT C

FORM OF REQUEST FOR RELEASE

	 	 	 

	DATE:
	 	 
	 
	 	 
	TO:
	 	 
	 
	 	 
	RE:

	 	REQUEST FOR RELEASE OF DOCUMENTS

In connection with your administration of the Mortgage Loans, we request the release of the
Mortgage File described below.

	 	 	 

	Servicing Agreement Dated:
	 	 
	Series #:
	 	 
	Account #:
	 	 
	Pool #:
	 	 
	Loan #:
	 	 
	Borrower Name(s):
	 	 
	Reason for Document Request: (circle one)

	 	Mortgage Loan
	Prepaid in Full

	 	Mortgage Loan Repurchased

“We hereby certify that all amounts received or to be received in connection with such payments
which are required to be deposited have been or will be so deposited as provided in the Servicing
Agreement.”

                                                

[_____________]

Authorized Signature

******************************************************************************

TO CUSTODIAN: Please acknowledge this request, and check off documents being enclosed with a copy
of this form. You should retain this form for your files in accordance with the terms of the
Servicing Agreement.

	 	 	 	 	 

	Enclosed Documents:

	 	[__]
	 	Mortgage Note

Name                                                     

Title                                                            

Date                                        

C-1

 

EXHIBIT D-1

FORM OF FORM 10-K CERTIFICATION

     I, [identify the certifying individual], certify that:

     1. I have reviewed this report on Form 10-K and all reports on Form 10-D required to be filed
in respect of the period covered by this report on Form 10-K of the trust (the Exchange Act
periodic reports) pursuant to the Servicing Agreement dated [______], 20[__] (the “Agreement”)
among [_____________] (the “Servicer”), PRS Series 20[__]-[__] Trust (the “Issuer”) and
[_____________] (the “Indenture Trustee”) and acknowledged and agreed to by Phoenix Residential
Securities, LLC;

     2. Based on my knowledge, Exchange Act periodic reports, taken as a whole, do not contain any
untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;

     3. Based on my knowledge, the servicing information required to be provided to the Indenture
Trustee by the Servicer under the Servicing Agreement is included in these reports;

     3. Based on my knowledge, all of the distribution, servicing and other information required to
be provided under Form 10-D for the period covered by this report is included in the Exchange Act
periodic reports;

     4. I am responsible for reviewing the activities performed by the Servicer and based on my
knowledge and the compliance review conducted in preparing the servicer compliance statement
required in this report under Item 1123 of Regulation AB and except as disclosed in the Exchange
Act periodic reports, the Servicer has fulfilled its obligations under the Agreement; and

     5. All of the reports on assessment of compliance with servicing criteria for asset-backed
securities and their related attestation reports on assessment of compliance with servicing
criteria for asset-backed securities required to be included in this report in accordance with Item
1122 of Regulation AB and Exchange Act Rules 13a-18 and 15d-18 have been included as an exhibit to
this report, except as otherwise disclosed in this report. Any material instances of noncompliance
described in such reports have been disclosed in this report on Form 10-K.

D-1-1

 

     In giving the certifications above, I have reasonably relied on the information provided to me
by the following unaffiliated parties: [the Indenture Trustee]

     IN WITNESS WHEREOF, I have duly executed this certificate as of _________, 20__.

                                                                 *

     Name:

     Title:

     * to be signed by the senior officer in charge of the servicing functions of the Servicer

D-1-2

 

EXHIBIT D-2

FORM OF BACK-UP CERTIFICATION TO FORM 10-K CERTIFICATE

     The undersigned, a Responsible Officer of [_____________], (the “Indenture Trustee”) certifies
that:

     (a) The Indenture Trustee has performed all of the duties specifically required to be
performed by it pursuant to the provisions of the Servicing Agreement dated as of [______], 20[__]
(the “Agreement”) by and among PRS Series 20[__]-[__] Trust, as depositor, [_____________], as
Servicer, and the Indenture Trustee in accordance with the standards set forth therein.

     (b) Based on my knowledge, the information that is provided by the Indenture Trustee pursuant
to Section 4.02(b) of the Agreement is accurate as of the last day of the 20[__] calendar year.

     Capitalized terms used and not defined herein shall have the meanings given such terms in the
Agreement.

     IN WITNESS WHEREOF, I have duly executed this certificate as of _________, 20[__].

                                                                 *

     Name:

     Title:

D-2-1

 

EXHIBIT E

SERVICING CRITERIA

SERVICING CRITERIA TO BE ADDRESSED IN ASSESSMENT OF COMPLIANCE

     The assessment of compliance to be delivered by the Indenture Trustee shall address, at a
minimum, the criteria identified as below as “Applicable Servicing Criteria”:

	 	 	 	 	 
	 	 	 	 	Applicable
	 	 	 	 	Servicing
	Servicing Criteria	 	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.	 	 
	 
	 	 	 	 
	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.	 	 
	 
	 	 	 	 
	1122(d)(1)(iii)

	 	Any requirements in the transaction agreements to maintain a back-up
servicer for the pool assets 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.	 	 
	 
	 	 	 	 
	 

	 	Cash Collection and Administration	 	 
	1122(d)(2)(i)

	 	Payments on pool assets 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.
	 	ü (as to accounts
held by Indenture
Trustee)
	 
	 	 	 	 
	1122(d)(2)(ii)

	 	Disbursements made via wire transfer on behalf of an obligor or to an investor
are made only by authorized personnel.
	 	ü (as to investors
only)
	 
	 	 	 	 
	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.	 	 
	 
	 	 	 	 
	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.
	 	ü (as to accounts
held by Indenture
Trustee)
	 
	 	 	 	 
	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.*	 	 
	 
	 	 	 	 
	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.	 	 

E-1

 

	 	 	 	 	 
	 	 	 	 	Applicable
	 	 	 	 	Servicing
	Servicing Criteria	 	Criteria
	Reference	 	Criteria	 	 
	 

	 	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 pool
assets 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.
	 	ü
	 
	 	 	 	 
	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.
	 	ü
	 
	 	 	 	 
	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.
	 	ü
	 
	 	 	 	 
	 

	 	Pool Asset Administration	 	 
	1122(d)(4)(i)

	 	Collateral or security on pool assets is maintained as required by the
transaction agreements or related asset pool documents.	 	 
	 
	 	 	 	 
	1122(d)(4)(ii)

	 	Pool assets 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 pool assets, including any payoffs, made in accordance with the
related pool asset 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
pool asset documents.	 	 
	 
	 	 	 	 
	1122(d)(4)(v)

	 	The servicer’s records regarding the pool assets agree with the servicer’s
records with respect to an obligor’s unpaid principal balance.	 	 
	 
	 	 	 	 
	1122(d)(4)(vi)

	 	Changes with respect to the terms or status of an obligor’s pool asset (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.	 	 
	 
	 	 	 	 
	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.	 	 
	 
	 	 	 	 
	1122(d)(4)(viii)

	 	Records documenting collection efforts are maintained during the period a
pool asset is delinquent in accordance with the transaction agreements. Such
records are maintained on at least a monthly basis, or such other period
specified in the transaction agreements, and describe the entity’s activities in
monitoring delinquent pool assets including, for example, phone calls, letters
and payment rescheduling plans in cases where delinquency is deemed
temporary (e.g., illness or unemployment).	 	 
	 
	 	 	 	 
	1122(d)(4)(ix)

	 	Adjustments to interest rates or rates of return for pool assets with variable rates are computed based on the related pool asset documents.	 	 

E-2

 

	 	 	 	 	 
	 	 	 	 	Applicable
	 	 	 	 	Servicing
	Servicing Criteria	 	Criteria
	Reference	 	Criteria	 	 
	
1122(d)(4)(x)

	 	Regarding any funds held in trust for an obligor (such as escrow accounts):	 	 
	 	 	(A) such funds are analyzed, in accordance with the obligor’s pool asset
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 pool asset documents and state laws;
and (C) such funds are returned to the obligor within 30 calendar days of full
repayment of the related pool asset, or such other number of days specified
in the transaction agreements.	 	 
	 
	 	 	 	 
	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.	 	 
	 
	 	 	 	 
	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.	 	 
	 
	 	 	 	 
	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.	 	 
	 
	 	 	 	 
	1122(d)(4)(xiv)

	 	Delinquencies, charge-offs and uncollectible accounts are recognized and
recorded in accordance with the transaction agreements.	 	 
	 
	 	 	 	 
	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.
	 	ü

 

			
	*	 	Subject to clarification by the Commission.

E-3

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