Document:

Exhibit 10.17

 

EMPLOYMENT AGREEMENT

 

EMPLOYMENT AGREEMENT (“Agreement”)
dated this 17th day of May 2004, by and between Joseph B. Blalock (the
“Executive”), MortgageIT Holdings, Inc. (the “Company”) and MortgageIT, Inc.
(“MortgageIT” and, together with the Company, the “Employers”).

 

WITNESSETH

 

WHEREAS, the
Employers desire to assure themselves of the services of the Executive as the
Senior Risk Manager for the period provided in this Agreement, and the
Executive is willing to serve in the employ of the Employers for such period,
all in accordance with the terms and conditions contained in this Agreement.

 

NOW, THEREFORE, in
consideration of the mutual covenants herein set forth, Executive and the
Employers do agree to the terms of employment as follows:

 

1.                                      Definitions.  The following words and terms shall have
the meanings set forth below for the purposes of this Agreement:

 

(a)                                  Affiliate.  Affiliate
of any person or entity means any stockholder or person or entity controlling,
controlled by under common control with such person or entity, or any director,
officer or key executive of such entity or any of their respective relatives.
For purposes of this definition, “control,” when used with respect to any
person or entity, means the power to direct the management and policies of such
person or entity, directly or indirectly, whether through ownership of voting
securities, by contracting or otherwise; and the terms “controlling” and
“controlled” have meanings that correspond to the foregoing.

 

(b)                                 Base Salary.  “Base
Salary” shall have the meaning set forth in Section 3(a) hereof.

 

(c)                                  Cause.  Termination of the Executive’s employment for
“Cause” shall mean termination because of personal dishonesty or incompetence
which has or could adversely affect the Employers, willful misconduct, breach
of fiduciary duty involving personal profit, intentional failure to perform
stated duties, willful violation of any law, rule or regulation (other than
traffic violations or other misdemeanor offenses) or final cease-and-desist
order or material breach of any provision of this Agreement.

 

(d)                                 Change in Control. 
“Change in Control” shall mean the occurrence of any of the
following events subsequent to the date of this Agreement: (i) an event that
would be required to be reported in response to Item l(a) of Form 8-K or Item
6(e) of Schedule 14A of Regulation 14A pursuant to the Securities Exchange Act
of 1934, as amended (“Exchange Act”), or any successor thereto, whether or not
any class of securities of the Company is registered under the Exchange Act;
(ii) any “person” (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act), other than a trustee or other fiduciary holding securities under
an employee benefit

 

 

plan of the Company or any
Affiliate of the Company, is or becomes the “beneficial owner” (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of
the Company representing 25% or more of the combined voting power of the
Company’s then outstanding securities; (iii) the sale or other disposition of
all or substantially all of the assets of the Company; or (iv) during any
period of three consecutive years, individuals who at the beginning of such
period constitute the Board of Directors of the Company cease for any reason to
constitute at least a majority thereof unless the election, or the nomination
for election by stockholders, of each new director was approved by a vote of at
least two-thirds of the directors then still in office who were directors at
the beginning of the period.

 

(e)                                  Code.  “Code”
shall mean the Internal Revenue Code of 1986, as amended.

 

(f)                                    Competing Business. 
“Competing Business” shall mean any business, enterprise or
other entity that is primarily engaged in the business of mortgage banking or
mortgage brokerage or managing a real estate investment trust.

 

(g)                                 Confidential and Proprietary Information. “Confidential
and Proprietary Information” shall mean any and all (i) confidential or
proprietary information or material not in the public domain about or relating
to the business, operations, assets or financial condition of the Company or
any Affiliate of the Company or any of the Company’s or any such Affiliate’s
trade secrets; and (ii) information, documentation or material not in the
public domain by virtue of any action by or on the part of the Executive, the
knowledge of which gives or may give the Company or any Affiliate of the
Company an advantage over any person not possessing such information. For
purposes hereof, the term Confidential and Proprietary Information shall not
include any information or material (i) that is known to the general public
other than due to a breach of this Agreement by the Executive or (ii) was
disclosed to the Executive by a person who the Executive did not reasonably
believe was bound to a confidentiality or similar agreement with the Employers.

 

(h)                                 Date of Termination. “Date of Termination”
shall mean (i) if the Executive’s employment is terminated for Cause or for
Disability, the date specified in the Notice of Termination, and (ii) if the
Executive’s employment is terminated for any other reason, the date on which a
Notice of Termination is given or as specified in such Notice.

 

(i)                                     Disability. Termination by the Employers of
the Executive’s employment based on “Disability” shall mean termination because
of any physical or mental impairment which qualifies the Executive for
disability benefits under the applicable long-term disability plan maintained
by the Company or MortgageIT or, if no such plan applies, which would qualify
the Executive for disability benefits under the Federal Social Security System.

 

(j)                                     Good Reason. Termination by the Executive
of the Executive’s employment for “Good Reason” shall mean termination by the
Executive based on:

 

(i)                                     Without
the Executive’s express written consent, a material adverse change made by the
Employers which would reduce the Executive’s functions, duties or
responsibilities as Senior Risk Manager of the Company and MortgageIT.

 

 

(ii)                                  Without
the Executive’s express written consent, a reduction by the Employers in the
Executive’s Base Salary as the same may be increased from time to time;

 

(iii)                               Without
the Executive’s express written consent, the Employers require the Executive to
be based at a location more than 25 miles from New York City, New York, except
for required travel on business of the Employers to an extent substantially
consistent with the Executive’s present business travel obligations;

 

(iv)                              Any
purported termination of the Executive’s employment for Disability which is not
effected pursuant to a Notice of Termination satisfying the requirements of
paragraph (l) below; or

 

(v)                                 Without
the Executive’s express written consent, a failure by the Employers to allow
the Executive to participate in and receive the benefits of any cash incentive
or bonus plan, any pension or other retirement benefit plan, profit sharing,
stock option, employee stock ownership, or other plans, benefits and privileges
given generally to employees and executives of the Employers, to the extent
commensurate with his then duties and responsibilities.

 

(k)                                    IPO and IPO price.  IPO shall mean the Initial Public Offering
of  stock of the Company; IPO price shall
mean the price at which shares of the Company are initially offered to the public.

 

(l)                                     IRS.  IRS
shall mean the Internal Revenue Service.

 

(m)                               Notice of Termination. Any purported
termination of the Executive’s employment by the Employers for any reason,
including without limitation for Cause or Disability, or by the Executive for any
reason, including without limitation for Good Reason, shall be communicated by
written “Notice of Termination” to the other party or parties hereto. For
purposes of this Agreement, a “Notice of Termination” shall mean a dated notice
which (i) indicates the specific termination provision in this Agreement relied
upon, (ii) sets forth in reasonable detail the facts and circumstances claimed
to provide a basis for termination of Executive’s employment under the
provision so indicated, (iii) specifies a Date of Termination, which shall be
not less than thirty (30) nor more than ninety (90) days after such Notice of
Termination is given, except in the case of the Company’s termination of
Executive’s employment for Cause, which shall be effective immediately; and
(iv) is given in the manner specified in Section 10 hereof.

 

2.                                      Term
of Employment.

 

(a)                                  Each
of the Company and MortgageIT hereby employs the Executive as Senior Risk
Manager of the Company and MortgageIT, and the Executive hereby accepts said
employment and agrees to render such services to the Employers, on the terms
and conditions set

 

 

forth in this Agreement.  The term of employment under this Agreement
shall be for a term of three years, commencing on the date of this Agreement,
unless such term is extended as provided in this Section 2.  On the third annual anniversary of the date
first above written and each annual anniversary thereafter, the term of this
Agreement shall automatically be extended for an additional one-year, unless
the Executive or the Employers gives written notice to the other party or
parties hereto of such party’s or parties’ election not to extend the term,
with such notice to be given not less than sixty (60) days prior to any such
anniversary date.  If any party gives timely notice
that the term will not be extended, then this Agreement shall terminate at the
conclusion of its remaining term. References herein to the term of this
Agreement shall refer both to the initial term and successive terms.

 

(b)                                 During
the term of this Agreement, the Executive shall report to the Credit Committee
and perform such executive services for the Employers as may be consistent with
his titles and such executive services which are from time to time assigned to
him by the Employers’ respective Boards of Directors.

 

3.                                      Compensation
and Benefits.

 

(a)                                  (i)
The Employers shall compensate and pay the Executive for his services during
the term of this Agreement at a minimum base salary of $150,000 per year (“Base
Salary”), which may be increased from time to time in such amounts as may be
determined by the Board of Directors of the Employers and may not be decreased
without the Executive’s express written consent.

 

                (ii) 
In addition to his Base Salary, if the Company meets or exceeds the
Return on Equity target or other reasonable budget goals fixed for the year
2004, then the Executive shall be entitled to receive a bonus of  40% of his Base Salary for his services
rendered in 2004.  For all other periods
during the term of this Agreement, the Executive may receive such bonus
payments as may be determined by the Compensation Committee of the Company’s
Board of Directors, taking into account in good faith the Executive’s
performance as measured, among other things, by the Company’s performance.  Any Bonus payments due pursuant to this
Agreement shall be made prior to March 1 of the year immediately following the
year in which the services that gave rise to the Bonus were rendered.

 

                (iii)  
In addition to the Base Salary and Bonus compensation described in
Sections 3(a)(i) and (ii) of this Agreement, the Executive shall be granted,
pursuant to the Company’s 2004 Long-term Incentive Plan and whatever transfer
or other agreements are required by applicable law the Option, exercisable on
the first anniversary of this Agreement, to purchase 3,334 shares of the
Company at the IPO price; the Option, exercisable on the second anniversary of
this Agreement, to purchase 3,333 shares of the Company at the IPO price; and
the Option, exercisable on the third anniversary of this Agreement, to purchase
3,333 shares of the Company at the IPO price.

 

(b)                                 During
the term of this Agreement, the Executive shall be entitled to participate in
and receive the benefits of any pension or other retirement benefit plan,
profit sharing, stock option, employee stock ownership, or other plans,
benefits and privileges given to employees and executives of the Employers, to
the extent commensurate with his then duties and

 

 

responsibilities as fixed by
the Boards of Directors of the Employers. 
Notwithstanding anything in this sub-paragraph or any other part of this
Agreement, the Executive understands and agrees that the grant of options
pursuant to Section 3(a)(iii) hereof shall reflect all the options to which he
is entitled, unless the Compensation Committees of the Boards of Directors of
the Employers conclude, in their sole discretion, that the Executive should be
granted additional options.

 

(c)                                  During
the term of this Agreement, the Executive shall be entitled to take paid annual
vacation in accordance with the Employers’ established policies. The Executive
shall not be entitled to receive any additional compensation from the Employers
for failure to take a vacation, nor shall the Executive be able to accumulate
unused vacation time from one year to the next, except to the extent authorized
by the Board of Directors of the Employers.

 

(d)                                 In
the event the Executive’s employment is terminated due to Disability, the
Employers shall provide continued life, medical, dental and disability in an
amount and to the extent consistent with the Employers’ established policies.

 

4.                                      Expenses.
The Employers shall reimburse the Executive or otherwise provide for or pay for
all reasonable expenses incurred by the Executive in furtherance of or in connection
with the business of the Employers, including, but not by way of limitation,
traveling expenses, subject to such reasonable documentation and other
limitations as may be established by the Boards of Directors of the Employers.
If such expenses are paid in the first instance by the Executive, the Employers
shall reimburse the Executive therefore.

 

5.                                      Termination.

 

(a)                                  The
Employers shall have the right, at any time upon prior Notice of Termination,
to terminate the Executive’s employment hereunder for any reason, including,
without limitation, termination for Cause or Disability, and the Executive
shall have the right, upon prior Notice of Termination, to terminate his
employment hereunder for any reason.

 

(b)                                 In
the event that (i) the Executive’s employment is terminated by the Employers
for Cause or (ii) the Executive terminates his employment hereunder other than
for Disability, death or Good Reason, the Executive shall have no right
pursuant to this Agreement to compensation or other benefits for any period
after the applicable Date of Termination other than for Base Salary accrued
through the Date of Termination.

 

(c)                                  In
the event that the Executive’s employment is terminated as a result of
Disability during the term of this Agreement, the Executive shall receive the
lesser of (i) his existing Base Salary as in effect as of the date of
termination, multiplied by one year or (ii) his Base Salary for the duration of
the term of this Agreement.  In the event
of the Executive’s death during the term of this Agreement, the Executive’s
estate shall receive the lesser of (i) his existing Base Salary as in effect as
of the date of his death, multiplied by one year or (ii) his Base Salary
through the end of the term of this Agreement.

 

(d)                                 In
the event that (i) the Executive’s employment is terminated by the Employers
for other than Cause, Disability, or the Executive’s death or (ii) such
employment is

 

 

terminated by the Executive (a)
due to a material breach of this Agreement by the Company, which breach has not
been cured within fifteen (15) business days after a written notice of
non-compliance has been given by the Executive to the Company, or (b) for Good
Reason, then the Company shall, subject to Section 6 hereof, if applicable:

 

(A)                              pay
to the Executive, a cash severance amount equal to the Executive’s Base Salary
as in effect immediately prior to the Date of Termination, multiplied by one
(1) year (“Severance Pay”).  Such
Severance Pay shall be paid in monthly installments beginning with the first
business day of the month following the Date of Termination and continuing for  one (1) year.  The Boards of Directors of the Employers, in
their sole discretion, may elect to pay the Severance Pay to the Executive on a
more accelerated schedule than that set forth in the immediately preceding
sentence.

 

(B)                                maintain
and provide for a period ending at the earlier of (i) the first anniversary of
the Date of Termination or (ii) the date of the Executive’s full-time
employment by another employer, at no cost to the Executive, the Executive’s
continued participation in all group insurance, life insurance, health and
accident, disability and other employee benefit plans, programs and
arrangements in which the Executive was entitled to participate immediately prior
to the Date of Termination (other than any stock option or other stock
compensation plans or bonus plans of the Employers), provided that in the event
that Executive’s participation in any such plan, program or arrangement is
barred, the Employers shall arrange to provide Executive with benefits
substantially similar to those Executive was entitled to receive under such
plans, programs and arrangements prior to the Date of Termination.

 

(C)                                provide
to the Executive the entire unvested portion of the compensation described in
Section 3(a)(iii) hereof.

 

(e)                                  In
receiving any payments pursuant to this Section 5, the Executive shall not be
obligated to seek other employment or take any other action by way of
mitigation of the amounts payable to the Executive hereunder, and such amounts
shall not be reduced or terminated whether or not the Executive obtains other
employment.

 

(f)                                    Release and
Satisfaction.  With respect to the
Executive (and his heirs, successors and assigns), payment by the Company of
the amounts provided under this Section 5 shall release, relinquish and forever
discharge the Company and any director, officer, employee, shareholder,
corporate parent, or agent of the Company from any and all claims, damages,
losses, costs, expenses, liabilities or obligations, whether known or unknown
(other than any such claims, damages, losses, costs, expenses, liabilities or
obligations to the extent covered by any indemnification arrangement of the
Company with respect to the Executive) which the Executive has incurred or
suffered or may incur or suffer as a result of the Executive’s employment by
the Company or the termination of such employment.  Nothing in this Section 5 shall be deemed to
operate or shall operate as a release, settlement or discharge of any liability
of the Executive to the Company or others from any action or omission by the
Executive amounting to Cause as defined in this Agreement.

 

 

6.                                      Limitation
of Benefits under Certain Circumstances. If the payments and benefits
pursuant to Section 5 hereof, either alone or together with other payments and
benefits which the Executive has the right to receive from the Employers, would
constitute a “parachute payment” under Section 280G of the Code, the payments
and benefits payable by the Employers pursuant to Section 5 hereof shall be
reduced, in the manner determined by the Executive, by the amount, if any,
which is the minimum necessary to result in no portion of the payments and
benefits payable by the Employers under Section 5 being non-deductible to the
Employers pursuant to Section 280G of the Code and subject to the excise tax
imposed under Section 4999 of the Code. The determination of any reduction in
the payments and benefits to be made pursuant to Section 5 shall be based upon
the opinion of independent counsel selected by the Employers’ independent
public accountants and paid by the Employers. Such counsel shall be reasonably
acceptable to the Employers and the Executive; shall promptly prepare the
foregoing opinion, but in no event later than thirty (30) days from the Date of
Termination; and may use such actuaries as such counsel deems necessary or
advisable for the purpose. Nothing contained herein shall result in a reduction
of any payments or benefits to which the Executive may be entitled upon
termination of employment under any circumstances other than as specified in
this Section 6, or a reduction in the payments and benefits specified in
Section 5 below zero.

 

7.                                      Restrictions
Respecting Competing Businesses, Confidential Information, etc.

 

(a)                                  The
Executive acknowledges and agrees that by virtue of the Executive’s position
and involvement with the business and affairs of the Employers, the Executive
will develop substantial expertise and knowledge with respect to all aspects of
the Employers’ business, affairs and operations and will have access to all
significant aspects of the business and operations of the Employers and to
Confidential and Proprietary Information.

 

(b)                                 The
Executive hereby covenants and agrees that, during the term of employment and
thereafter, unless otherwise authorized by the Employers in writing, the
Executive shall not, directly or indirectly, under any circumstance: (i)
disclose to any other person or entity (other than in the regular course of
business of the Employers) any Confidential and Proprietary Information, other
than pursuant to applicable law, regulation or subpoena or with the prior
written consent of the Employers; (ii) act or fail to act so as to impair the
confidential or proprietary nature of any Confidential and Proprietary
Information; (iii) use any Confidential and Proprietary Information other than
for the sole and exclusive benefit of the Employers; or (iv) offer or agree to,
or cause or assist in the inception or continuation of, any such disclosure,
impairment or use of any Confidential and Proprietary Information. Following
the term of employment, the Executive shall return all documents, records and
other items containing any Confidential and Proprietary Information to the
Employers (regardless of the medium in which maintained or stored).

 

(c)                                  The
Executive covenants and agrees that while the Executive is employed by the
Employers and for one (1) year after the Executive ceases to be employed by the
Employers for any reason (provided that the Employers are complying with their
obligations pursuant to the terms of this Agreement during such one (1) year
period), other than the termination of his employment after the Employers have
elected not to renew this Agreement as provided in Section 2(a), the Executive
shall not, directly or indirectly, manage, operate or control, any Competing

 

 

Business or, directly or
indirectly, induce or influence any customer or other Person that has a
business relationship with the Employers, or any Affiliate of the Employers, to
discontinue or reduce the extent of such relationship; provided that in the
case of a termination of the Executive, the Employers continue to pay any
amounts owing to the Executive pursuant to Section 5(d) hereof.  For purposes of this Agreement, the Executive
shall be deemed directly or indirectly interested in a business if he is
engaged or interested in that business as a stockholder, director, officer, or
executive, agent, partner, individual proprietor, consultant, advisor or otherwise,
but not if the Executive’s interest is limited solely to the ownership of not
more than 5% of the securities of any class of equity securities of a
corporation or other person whose shares are listed or admitted to trade on a
national securities exchange or are quoted on the Nasdaq Stock Market or a
similar means if the Nasdaq Stock Market is no longer providing such
information.

 

(d)                                 While
the Executive is employed by the Employers and for one (1) year after the
Executive ceases to be employed by the Employers, the Executive shall not,
directly or indirectly, solicit to employ fora Competing Business any employee of the Employers or any Affiliate
of the Employers as of the date of the termination of the Executive’s
employment with the Employers.

 

(e)                                  The
parties agree that nothing in this agreement shall be construed to limit or
negate the common law of torts, confidentiality, trade secrets, fiduciary duty
and obligations where such laws provide the Employers with any broader, further
or other remedy or protection than those provided herein.

 

(f)                                    Because
the breach of any of the provisions of this Section 7 will result in immediate
and irreparable injury to the Employers for which the Employers will not have
an adequate remedy at law, the Employers shall be entitled, in addition to all
other rights and remedies, to seek a degree of specific performance of the
restrictive covenants contained in this Section 7 and to a temporary and
permanent injunction enjoining such breach, without posting bond or furnishing
similar security.

 

8.                                      Withholding.  All payments required to be made by the
Employers hereunder to the Executive shall be subject to the withholding of
such amounts, if any, relating to tax and other payroll deductions as the
Employers may reasonably determine should be withheld pursuant to any
applicable law or regulation.

 

9.                                      Assignability.  The Employers may assign this Agreement
and its rights and obligations hereunder in whole, but not in part, to any
corporation or other entity with or into which the Employers may hereafter
merge or consolidate or to which the Employers may transfer all or
substantially all of their respective assets, if in any such case said
corporation or other entity shall by operation of law or expressly in writing
assume all obligations of the Employers hereunder as fully as if it had been
originally made a party hereto, but may not otherwise assign this Agreement or
its rights and obligations hereunder. The Executive may not assign or transfer
this Agreement or any rights or obligations hereunder.

 

10.                               Notice.  For the purposes of this Agreement, notices
and all other communications provided for in this Agreement shall be in writing
and shall be deemed to have been duly given

 

 

when delivered or mailed by
certified or registered mail, return receipt requested, postage prepaid,
addressed to the respective addresses set forth on the signature page hereto.
Any notice, request, demand or other communication delivered or sent in the
manner aforesaid shall be deemed given or made (as the case may be) upon the
earliest of (a) the date it is actually received, (b) the business day after
the day on which it is delivered by hand, (c) the business day after the day on
which it is properly delivered to Federal Express (or a comparable overnight
delivery service), or (d) the third business day after the day on which it is
deposited in the United States mail. The Employers or the Executive may change
their respective addresses by notifying the other party or parties of the new
addresses in any manner permitted by this Section 10.

 

11.                               Amendment;
Waiver.  No provisions of this
Agreement may be modified, waived or discharged unless such waiver,
modification or discharge is agreed to in writing and signed by the Executive
and such officer or officers as may be specifically designated by the Boards of
Directors of the Employers to sign on their behalf. No waiver by any party
hereto at any time of any breach by any other party hereto of, or compliance
with, any condition or provision of this Agreement to be performed by such
other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time.

 

12.                               Governing
Law. The validity, interpretation, construction and performance of this
Agreement shall be governed by the laws of the United States where applicable
and otherwise by the substantive laws of the State of Maryland, without regard
to any conflicts of laws provisions thereof. 
Each party to this Agreement hereby irrevocably consents to the
jurisdiction of the United States District Court for the Southern District of
New York and the courts of the state of New York located in the City of New
York in any action to enforce, interpret or construe any provision of this
Agreement or of any other agreement or document delivered in connection with
this Agreement, and also hereby irrevocably waiver any defense of improper
venue, forum  non  conveniens or lack of personal
jurisdiction to any such action brought in those courts.  Each party further irrevocably agrees that
any action to enforce, interpret or construe any provision of this Agreement
will be brought only in one of those courts. 
Each party hereby waives its right to trial by jury.

 

13.                               Nature
of Obligations. Nothing contained herein shall create or require the
Employers to create a trust of any kind to fund any benefits which may be
payable hereunder, and to the extent that the Executive acquires a right to
receive benefits from the Employers hereunder, such right shall be no greater than
the right of any unsecured general creditor of the Employers.

 

14.                               Headings.
The section headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement.

 

15.                               Validity.
The invalidity, illegality or unenforceability of any provision of this
Agreement, in whole or in part, shall not affect the validity, legality or
enforceability of any other provisions of this Agreement, which shall remain in
full force and effect.

 

16.                               Counterparts.
This Agreement may be executed in one or more counterparts, each of which
shall be deemed to be an original but all of which together will constitute one
and the same instrument.

 

 

17.                               Entire
Agreement. This Agreement embodies the entire agreement between the
Employers and the Executive with respect to the matters agreed to herein. All
prior agreements between the Employers and the Executive with respect to the
matters agreed to herein are hereby superseded and shall have no force or effect.

 

 

IN WITNESS WHEREOF, this
Agreement has been executed as of the date first above written.

 

 

	
   

  	
  MORTGAGEIT HOLDINGS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ DOUG W.
  NAIDUS

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Doug W. Naidus

  
	
   

  	
   

  	
  Title:

  	
  Chief Executive Officer

  
	
   

  	
  Address:

  
	
   

  	
   

  	
  33 Maiden
  Lane

  
	
   

  	
   

  	
  New York, New
  York 10038

  
	
   

  	
   

  
	
   

  	
  MORTGAGEIT, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ DOUG W.
  NAIDUS

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Doug W. Naidus

  
	
   

  	
   

  	
  Title:

  	
  Chief Executive Officer

  
	
   

  	
  Address:

  
	
   

  	
   

  	
  33 Maiden Lane

  
	
   

  	
   

  	
  New York, New York 10038

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EXECUTIVE

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ JOSEPH
  B. BLALOCK

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Joseph B. BlalockExhibit 10.18

 

 

 

UBS Real Estate
Securities Inc.,

as UBS,

 

MortgageIT SPV I,

on behalf of the TRS Sub-Trust

 

and

 

MortgageIT, Inc.,

as TRS Servicer

 

 

TRS SERVICING
AGREEMENT

 

Dated as of
August 4, 2004

 

 

Conventional
Residential Mortgage Loans

 

 

 

 

TABLE OF CONTENTS

 

	
  ARTICLE I
  DEFINITIONS

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE II
  AGREEMENT TO PURCHASE, CONVEYANCE, AND DELIVERY OF THE MORTGAGE LOANS

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 2.01

  	
  Conveyance
  of Mortgage Loans; Possession of Submission Packages; Books & Records.

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE III
  REPRESENTATIONS AND WARRANTIES

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 3.01

  	
  Servicer
  Representations and Warranties.

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV
  ADMINISTRATION AND SERVICING OF MORTGAGE LOANS

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 4.01

  	
  TRS
  Servicer to Act as TRS Servicer.

  	
   

  
	
  Section 4.02

  	
  Liquidation
  of Mortgage Loans.

  	
   

  
	
  Section 4.03

  	
  Collection
  of Mortgage Loan Payments.

  	
   

  
	
  Section 4.04

  	
  Deposits to
  Blocked Account.

  	
   

  
	
  Section 4.05

  	
  Permitted
  Withdrawals from Blocked Account.

  	
   

  
	
  Section 4.06

  	
  Escrow
  Account.

  	
   

  
	
  Section 4.07

  	
  Payment of
  Taxes, Insurance and Other Charges.

  	
   

  
	
  Section 4.08

  	
  Protection
  of Accounts.

  	
   

  
	
  Section 4.09

  	
  Maintenance
  of Hazard Insurance.

  	
   

  
	
  Section 4.10

  	
  Maintenance
  of Mortgage Impairment Insurance.

  	
   

  
	
  Section 4.11

  	
  Maintenance
  of Fidelity Bond and Errors and Omissions Insurance.

  	
   

  
	
  Section 4.12

  	
  Delivery of
  Document in Possession of Custodian.

  	
   

  
	
  Section 4.13

  	
  Restoration
  of Mortgaged Property.

  	
   

  
	
  Section 4.14

  	
  Title,
  Management and Disposition of REO Property.

  	
   

  
	
  Section 4.15

  	
  Sub
  Servicer.

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE V
  NOTIFICATION; STATEMENTS

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 5.01

  	
  Notifications

  	
   

  
	
  Section 5.02

  	
  Monthly
  Reports.

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI
  GENERAL SERVICING PROCEDURES

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 6.01

  	
  Transfers
  of Mortgaged Property.

  	
   

  
	
  Section 6.02

  	
  Satisfaction
  of Mortgages and Release of Submission Packages.

  	
   

  
	
  Section 6.03

  	
  Servicing
  Compensation.

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII
  THE TRS SERVICER

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 7.01

  	
  Indemnification;
  Third Party Claims.

  	
   

  

 

i

 

	
  Section 7.02

  	
  Merger or
  Consolidation of the TRS Servicer.

  	
   

  
	
  Section 7.03

  	
  Limitation
  on Liability of Servicer and Others.

  	
   

  
	
  Section 7.04

  	
  Limitation
  on Resignation and Assignment by Servicer.

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE VIII
  DEFAULT

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 8.01

  	
  Events of
  Default.

  	
   

  
	
  Section 8.02

  	
  Waiver of
  Defaults.

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE IX
  TERMINATION

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 9.01

  	
  Termination.

  	
   

  
	
  Section 9.02

  	
  Retention
  and Termination of TRS Servicer.

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE X
  SUCCESSOR TO THE TRS SERVICER

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 10.01

  	
  Successor
  to Servicer.

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE XI
  MISCELLANEOUS PROVISIONS

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 11.01

  	
  Transfer
  of Servicing

  	
   

  
	
  Section 11.02

  	
  Amendment.

  	
   

  
	
  Section 11.03

  	
  Governing
  Law; Jurisdiction.

  	
   

  
	
  Section 11.04

  	
  Notices.

  	
   

  
	
  Section 11.05

  	
  Severability
  of Provisions.

  	
   

  
	
  Section 11.06

  	
  Relationship
  of Parties.

  	
   

  
	
  Section 11.07

  	
  Execution;
  Successors and Assigns.

  	
   

  
	
  Section 11.08

  	
  Recordation
  of Assignments of Mortgage.

  	
   

  
	
  Section 11.09

  	
  Merger
  and Integration

  	
   

  
	
  Section 11.10

  	
  Headings

  	
   

  
	
  Section 11.11

  	
  Schedules
  and Exhibits

  	
   

  
	
  Section 11.12

  	
  No Bankruptcy
  Petition Against the Trust

  	
   

  
	
  Section 11.13

  	
  Right to
  Inspect

  	
   

  
	
  Section 11.14

  	
  No
  Recourse

  	
   

  

 

ii

 

This is a TRS
Servicing Agreement for conventional fixed-rate and adjustable-rate residential
first and second mortgage loans, dated as of August 4, 2004 and as may be
amended and/or restated from time to time (this “Servicing Agreement” or
this “Agreement”), and is executed among UBS Real Estate Securities
Inc., as purchaser under the Loan Repurchase Agreement, the Loan Participation
Agreement and the Loan Purchase Agreement referred to below (in such capacity,
“UBS”), MortgageIT SPV I (the “Trust”) acting with respect to the
TRS Sub-Trust and MortgageIT, Inc. (“MortgageIT”), as servicer (in such
capacity, the “TRS Servicer”).

 

W I T N E S S E T H

 

WHEREAS,
MortgageIT has agreed to sell and contribute to the TRS Sub-Trust and the TRS
Sub-Trust has agreed to purchase from time to time certain mortgage loans
pursuant to a Loan Sale Agreement, dated as of the date hereof between
MortgageIT, MortgageIT Holdings, Inc. and the TRS Sub-Trust (as amended,
supplemented or otherwise modified and in effect from time to time, the “Loan
Sale Agreement”) on a servicing-released basis, and on the basis that MortgageIT
will act as TRS Servicer in the case of mortgage loans sold and contributed by
MortgageIT to the TRS Sub-Trust pursuant to such agreement (the “Mortgage
Loans”);

 

WHEREAS, pursuant
to a Mortgage Loan Repurchase Agreement, dated as of the date hereof between
the Trust on behalf of the TRS Sub-Trust and UBS (as amended, supplemented or
otherwise modified and in effect from time to time, the “Loan Repurchase
Agreement”), a Mortgage Loan Participation Agreement, dated as of the date
hereof between the Trust on behalf of the TRS Sub-Trust and UBS (as amended,
supplemented or otherwise modified and in effect from time to time, the “Loan
Participation Agreement”) and a Mortgage Loan Purchase Agreement, dated as
of the date hereof between the Trust on behalf of the TRS Sub-Trust and UBS (as
amended, supplemented or otherwise modified and in effect from time to time,
the “Loan Purchase Agreement”), UBS has agreed to purchase, from time to
time, at its sole election from the TRS Sub-Trust, the Mortgage Loans;

 

WHEREAS, GMAC
Mortgage Corporation (“GMAC”) has agreed to act as the sub-servicer with
respect to some or all of the Mortgage Loans;

 

WHEREAS, those
Mortgage Loans shall be delivered as whole loans on various Purchase Dates as
provided herein as indicated on the Mortgage Loan Schedule, which is to be
annexed hereto on the related Purchase Date as part of Exhibit A;

 

WHEREAS, UBS, the
TRS Sub-Trust and the TRS Servicer wish to prescribe the manner of management,
servicing and control of the Mortgage Loans;

 

NOW, THEREFORE, in
consideration of the mutual agreements hereinafter set forth, and for other
good and valuable consideration, the receipt and adequacy of which is hereby
acknowledged, UBS, the TRS Sub-Trust and the TRS Servicer agree as follows:

 

1

 

ARTICLE I

 

DEFINITIONS

 

For all purposes
of this Servicing 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 List
attached as Schedule 1 to the Loan Sale Agreement  (the “Definitions List”).

 

Administration Agreement:  The Administration Agreement dated as of
August 4, 2004, between the Trust and MortgageIT as the administrator of
the Trust, as amended, supplemented or otherwise modified from time to time.

 

Affiliate:  With respect to any Person, any “affiliate”
of such Person, as such term is defined in the Bankruptcy Code, other than a
natural person.  It is specifically
agreed that the TRS Sub-Trust, MortgageIT and MortgageIT Holdings are
“Affiliates” of each other.

 

Agreement:  This Servicing Agreement and all amendments
hereof and supplements hereto.

 

ALTA:  The American Land Title Association or any
successor thereto.

 

Ancillary Income:  All fees and amounts charged to the
Mortgagor by the TRS Servicer for services necessary to the servicing of the
Mortgage Loans, including but not limited to late charges, NSF Fees,
administrative charges (e.g., copying charges for duplicate documents, and
charges for opening escrow accounts), assumption fees and release and
reconveyance fees.

 

Blocked Account:  Both collectively and individually, each of
the accounts established by the TRS Servicer under the Blocked Account
Agreement for the benefit of UBS, which is subject to a security interest in
favor of UBS.  The Blocked Account shall
only apply to the Mortgage Loans not being sub-serviced by GMAC, unless UBS
directs otherwise.

 

Blocked Account Agreement:  The Blocked Account Agreement dated as of
August 4, 2004, among the TRS Servicer, the Trust on behalf of the TRS
Sub-Trust, UBS and HSBC Bank as the depository bank, as amended, supplemented
or otherwise modified from time to time.

 

Condemnation
Proceeds:  All awards
or settlements in respect of a Mortgaged Property, whether permanent or
temporary, partial or entire, by exercise of the power of eminent domain or
condemnation, to the extent not required to be released to a Mortgagor in
accordance with the terms of the related Mortgage Documents.

 

Custodial
Agreement:  The
Custodial Agreement, dated as of August 4, 2004, among the Trust, the
Custodian, MortgageIT, MortgageIT Holdings and UBS, as the same shall be
modified and supplemented and in effect from time to time.

 

Custodian:  JPMorgan Chase Bank, as custodian under the
Custodial Agreement, and its successors and permitted assigns thereunder.

 

2

 

Due Date:  The day of the month on which the Monthly
Payment is due on a Mortgage Loan, exclusive of any days of grace.

 

Due Period:  With respect to each Payment Date, the
period commencing on the first day of the month preceding the month of the
Payment Date and ending on the last day of the month preceding the month of the
Payment Date.

 

Electronic Tracking Agreement:  The Electronic Tracking Agreement, dated as
of August 4, 2004, among UBS, the Trust, MortgageIT, MortgageIT Holdings,
MERSCORP, Inc. and Mortgage Electronic Registration Systems, Inc., as the same
shall be amended, supplemented or otherwise modified from time to time;
provided that if no Mortgage Loans are or will be MERS Designated Mortgage
Loans, all references herein to the Electronic Tracking Agreement shall be
disregarded.

 

Eligible Account:  (i) An account or accounts maintained with a
depository institution the short-term debt obligations of which are rated AA or
better by Standard & Poors Ratings Services, or (ii) an account or accounts
the deposits in which are fully insured by the FDIC, or (iii) a trust account
or accounts maintained with a federal or state chartered depository institution
or trust company acting in its fiduciary capacity, the debt obligations of
which are rated A-1 or better by Standard & Poors Ratings Services.

 

Errors and Omissions
Insurance Policy:  An
errors and omissions insurance policy to be maintained by the TRS Servicer
pursuant to Section 4.11.

 

Escrow Account:  The separate account or accounts created and
maintained pursuant to Section 4.06.

 

Escrow Payments:  With respect to any Mortgage Loan, the
amounts constituting any of ground-rents, taxes, assessments, water rates,
sewer rents, municipal charges, mortgage insurance premiums, fire and hazard
insurance premiums, condominium charges, and any other payments required to be
escrowed by the Obligor with the Mortgagee pursuant to the Mortgage or any
other document.

 

Event of Default:  Any one of the conditions or circumstances
enumerated in Section 8.01.

 

FDIC:  The Federal Deposit Insurance Corporation or
any successor thereto.

 

Fidelity Bond:  A fidelity bond to be maintained by the TRS
Servicer pursuant to Section 4.11.

 

Insurance Proceeds:  With respect to each Mortgage Loan, proceeds
of insurance policies insuring the Mortgage Loan or the related Mortgaged
Property.

 

Insured Depository
Institution:  Insured
Depository Institution shall have the meaning ascribed to such term by
Section 1813(c)(2) of Title 12 of the United States Code, as amended from
time to time.

 

3

 

Liquidation
Proceeds:  Cash
(exclusive of REO Disposition Proceeds) received in connection with the
liquidation of a defaulted Mortgage Loan, whether through the sale or
assignment of such Mortgage Loan, trustee’s sale, foreclosure sale or
otherwise, or the sale of the related Mortgaged Property if the Mortgaged
Property is acquired in satisfaction of the Mortgage Loan.

 

Loan Sale
Agreement:  The Loan
Sale Agreement, dated as of August 4, 2004, among MortgageIT as a seller,
MortgageIT Holdings as a seller, and the Trust as purchaser, as amended,
supplemented or otherwise modified from time to time.

 

Monthly Payment:  The scheduled monthly payment of principal
and interest on a Mortgage Loan.

 

Mortgage
Impairment Insurance Policy: 
A mortgage impairment or blanket hazard insurance policy as described in
Section 4.10.

 

Mortgage Interest
Rate:  The annual rate
of interest borne on a Mortgage Loan and, with respect to adjustable rate
Mortgage Loans, as adjusted from time to time in accordance with the provisions
of the Mortgage Note.

 

Mortgage Loan
Maturity Date:  The
final maturity date as set forth on the Mortgage Note of a Mortgage Loan.

 

Mortgage Loan
Remittance Rate:  With
respect to each Mortgage Loan, an annual rate of interest equal to the Mortgage
Interest Rate.

 

Person:
Any individual, corporation, company, voluntary association, partnership, joint
venture, limited liability company, trust, unincorporated association or
government (or any agency, instrumentality or political subdivision thereof).

 

Prepayment Charge:  The fee, if any is provided for in the
related Mortgage Note, to be paid by the Mortgagor for the privilege to prepay
the principal obligation of the related Mortgage Loan prior to the related
Mortgage Loan Maturity Date; which when required by the terms of the Mortgage
Note shall be collected by the TRS Servicer upon the Mortgagor’s full and
voluntary Principal Prepayment except to the extent that: (1) the
enforceability thereof may be limited by bankruptcy, insolvency, moratorium,
receivership and other similar laws relating to debtors’ and creditors’ rights
generally; (2) the collectibility thereof may be limited due to acceleration in
connection with a foreclosure or other involuntary prepayment; (3) subsequent
changes in state or federal law (including decisional authority) limit or
prohibit enforceability of the applicable charge; or (4) a servicer has, in
response to a default as provided for in Section 4.01 of this Agreement,
waived, altered, limited or forgiven the Prepayment Charge provided in the
related Note.

 

Principal
Prepayment:  Any full
and voluntary principal payment made by the Mortgagor or other recovery of
principal on a Mortgage Loan which is received in advance of its scheduled Due
Date, including any Prepayment Charge or premium thereon, if applicable under
the terms of the Mortgage Documents, and which is not accompanied by an amount
of interest

 

4

 

representing scheduled interest due on any date or dates in any month
or months subsequent to the month of prepayment.

 

Purchase Date:  With respect to a Mortgage Loan, the date on
which UBS purchases such Mortgage Loan from the TRS Sub-Trust.

 

REO Disposition:  The final sale by the TRS Servicer of any
REO Property.

 

REO Disposition
Proceeds:  All amounts
received with respect to an REO Disposition pursuant to Section 4.14.

 

REO Property:  A Mortgaged Property acquired by the TRS
Servicer on behalf of the TRS Sub-Trust and the Purchaser through foreclosure
or by deed in lieu of foreclosure, as described in Section 4.14.

 

Securities Act of
1933 or the 1933 Act: 
The Securities Act of 1933, as amended.

 

Sellers:  MortgageIT and MortgageIT Holdings, in their
capacity as sellers under the Loan Sale Agreement.

 

Servicing Advances:  All customary, reasonable and necessary “out
of pocket” costs and expenses (including reasonable attorneys’ fees and
disbursements) incurred in the performance by the TRS Servicer of its servicing
obligations, including, but not limited to, the cost of (a) the preservation,
restoration and protection of the Mortgaged Property, (b) any enforcement or
judicial proceedings, including foreclosures, (c) the management and
liquidation of any REO Property and (d) compliance with the obligations under
Section 4.07.

 

Servicing Fee:
With respect to each Mortgage Loan, the amount of the annual fee payable to the
TRS Servicer from the Monthly Payment collected by the TRS Servicer during the
prior Due Period, which shall be, without pro ration or portion thereof, equal
to: one-twelfth of the product of (a) the Servicing Fee Rate and (b) the
outstanding principal balance of the related Mortgage Loan as of the beginning
of the month balance.  The TRS
Servicer’s right of reimbursement for the earned Servicing Fee by monthly
withdrawal from the Blocked Account pursuant to Section 4.05 shall relate
to funds payable as collections and/or recoveries on the related Mortgage Loan.

 

Servicing Fee Rate:  0.50% per annum.

 

Servicing File:  With respect to each Mortgage Loan, the file
retained by the TRS Servicer consisting of originals or copies of all Mortgage
Loan Documents from the Submission Package.

 

Servicing Officer:  Any officer of the TRS Servicer involved in
or responsible for, the administration and servicing of the Mortgage Loans whose
name appears on a list of servicing officers furnished by the TRS Servicer to
the TRS Sub-Trust upon request, as such list may from time to time be amended.

 

5

 

Servicing Transfer
Date:  The effective date
of a transfer of servicing from the TRS Servicer to a Successor Servicer, as
provided in Section 11.01 of this Agreement.

 

Stated Termination
Date:  August 31,
2005, as such date may be extended as provided in Section 9.01 hereof.

 

Submission Package:  With respect to each Mortgage Loan, a Dry
Submission Package, a Cash Window Submission Package, a Conduit Submission
Package or a Conversion Submission Package, as applicable, as such terms are
defined in Schedule 1 to the Loan Sale Agreement.

 

Transaction
Documents:  The Loan
Sale Agreement, the Loan Repurchase Agreement, the Loan Participation
Agreement, the Loan Purchase Agreement, the Custodial Agreement, the Servicing
Agreement, the Blocked Account Agreement, the Trust Agreement, the Electronic
Tracking Agreement and the Administration Agreement.

 

TRS Servicer:  MortgageIT, Inc., or its successor in
interest or assigns, or any successor to the TRS Servicer under this Agreement
appointed as herein provided.

 

Trust:  MortgageIT SPV I, a Delaware statutory
trust.

 

Trust Agreement:
The Trust Agreement dated as of August 4, 2004, between MortgageIT,
MortgageIT Holdings, and Wilmington Trust Company, as Owner Trustee, as
amended, supplemented or otherwise modified from time to time.

 

ARTICLE II

 

AGREEMENT TO
PURCHASE, CONVEYANCE,

AND DELIVERY OF THE MORTGAGE LOANS

 

Section 2.01                                Conveyance
of Mortgage Loans;   Possession of
Submission Packages; Books & Records.

 

(a)                                  Conveyance
of Mortgage Loans; Delivery of Mortgage Loan Documents.  Pursuant to the Loan Sale Agreement, on each
Purchase Date, MortgageIT shall sell, transfer, assign, set over and convey to
the TRS Sub-Trust, without recourse, and on a servicing-released basis, but
subject to the terms of this Agreement, all its right, title and interest in
and to the Mortgage Loans.  Pursuant to
the Loan Repurchase Agreement, the Loan Participation Agreement and the Loan
Purchase Agreement, on each Purchase Date, the TRS Sub-Trust shall sell,
transfer, assign, set over and convey to UBS, without recourse and on a servicing-released
basis, but subject to the terms of this Agreement, all its right, title and
interest in and to the Mortgage Loans. 
From and after the sale of the Mortgage Loans to the TRS Sub-Trust, all
rights arising out of such the Mortgage Loans including but not limited to all
funds received on or in connection with such Mortgage Loans, shall be received
and held by the TRS Servicer in trust for the benefit of UBS as owner of such
Mortgage Loans, and should the TRS Servicer retain record title to a related
Mortgage, such title shall be held by the TRS Servicer for the sole purpose of
facilitating the servicing of the related Mortgage Loan.

 

6

 

(b)                                 Possession
of Submission Packages.  As of the
related Purchase Date, MortgageIT will have delivered and released to the
related Custodian those Mortgage Documents as required by the Loan Sale
Agreement and the Custodial Agreement with respect to each Mortgage Loan.  The contents of each Submission Package not delivered
to the related Custodian are and shall be held in trust by the TRS Servicer for
the benefit of UBS as the owner.  The
TRS Servicer shall maintain a Servicing File consisting of a copy of the
contents of each Submission Package and the originals of the documents in each
Submission Package not delivered to the related Custodian.  The possession of each Servicing File by the
TRS Servicer is at the will of UBS for the sole purpose of servicing the
related Mortgage Loan, and such retention and possession by the TRS Servicer is
in a custodial capacity only.  On the
related Purchase Date the ownership of each related Mortgage Note, the related
Mortgage and the related Mortgage Documents and Servicing File shall vest
immediately in the TRS Sub-Trust, and the ownership of all records and
documents with respect to the related Mortgage Loan prepared by or which come
into the possession of the TRS Servicer shall vest immediately in UBS and shall
be retained and maintained by the TRS Servicer, in trust, at the will of UBS
and only in such custodial capacity. 
Each Servicing File shall be segregated from the other books and records
of the TRS Servicer and shall be marked appropriately to reflect clearly the
sale of the related Mortgage Loan to UBS. 
The TRS Servicer shall release its custody of the contents of any
Servicing File only in accordance with written instructions from UBS, unless
such release is required as incidental to: (i) the TRS Servicer’s servicing of
the Mortgage Loans; or (ii) a release or reconveyance pursuant to
Section 6.02.

 

(c)                                  Books
& Records.  To the extent that
the original documents are not required for purposes of realization of
Liquidation Proceeds or Insurance Proceeds, documents maintained by the TRS
Servicer may be in the form of microfilm or microfiche or such other reliable
means of recreating original documents, including but not limited to, optical
imagery techniques.  Notwithstanding the
sale of the Mortgage Loans to the TRS Sub-Trust, the TRS Servicer may maintain
a complete copy of all Mortgage Loan Files at its own expense to fulfill State
and Federal record retention requirements applicable to sub prime mortgage
lenders and/or servicers.

 

ARTICLE III

 

REPRESENTATIONS
AND WARRANTIES

 

Section 3.01                                Servicer
Representations and Warranties.

 

The TRS Servicer
represents and warrants to the TRS Sub-Trust, UBS and the Owner Trustee that as
of the date hereof, and as of each Purchase Date:

 

(a)                                  Due
Organization and Authority.  The TRS
Servicer is a corporation duly organized, validly existing and in good standing
under the laws of the state of New York and has all licenses necessary to carry
on its business as now being conducted and is licensed, qualified and in good
standing in each state where a Mortgaged Property is located if the laws of
such state require licensing or qualification in order to conduct business of
the type conducted by the TRS Servicer, and in any event the TRS Servicer is in
compliance with the laws of any such state to the extent necessary to ensure
the enforceability of the related Mortgage Loan in accordance with the terms of
this Agreement; the TRS Servicer has the full corporate power and authority to

 

7

 

execute and
deliver this Agreement and to perform in accordance herewith; the execution,
delivery and performance of this Agreement (including all instruments of
transfer to be delivered pursuant to this Agreement) by the TRS Servicer and
the consummation of the transactions contemplated hereby have been duly and validly
authorized by all necessary corporate action; this Agreement evidences the
valid, binding and enforceable obligation of the TRS Servicer; and all
requisite corporate action has been taken by the TRS Servicer to make this
Agreement valid and binding upon the TRS Servicer in accordance with its terms,
except as such terms may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the rights of creditors generally
and by general principals of equity;

 

(b)                                 Ordinary
Course of Business.  The
consummation of the transactions contemplated by this Agreement are in the
ordinary course of business of the TRS Servicer, and the transfer, assignment
and conveyance of the Mortgage Notes and the Mortgages by the TRS Servicer pursuant
to this Agreement are not subject to the bulk transfer or any similar statutory
provisions in effect in any applicable jurisdiction;

 

(c)                                  No
Conflicts.  Neither the execution
and delivery of this Agreement, or the transactions contemplated hereby, nor
the fulfillment of or compliance with the terms and conditions of this
Agreement, will conflict with or result in a breach of any of the terms,
conditions or provisions of the TRS Servicer’s charter or by-laws or any legal
restriction or any material agreement or instrument to which the TRS Servicer
is now a party or by which it is bound, or constitute a default or result in an
acceleration under any of the foregoing, or result in the violation of any law,
rule, regulation, order, judgment or decree to which the TRS Servicer or its
property is subject;

 

(d)                                 Ability
to Perform.  The TRS Servicer does
not believe, nor does it have any reason or cause to believe, that it cannot
perform each and every covenant contained in this Agreement.

 

(e)                                  No
Litigation Pending.  There is no
action, suit, proceeding or investigation pending or to the best of the TRS
Servicer’s knowledge threatened against the TRS Servicer which, either in any
one instance or in the aggregate, is reasonably likely to result in any material
adverse change in the business, operations, financial condition, properties or
assets of the TRS Servicer, or in any material impairment of the right or
ability of the TRS Servicer to carry on its business substantially as now
conducted, or in any material liability on the part of the TRS Servicer, or
which would draw into question the validity of this Agreement or the Mortgage
Loans or of any action taken or to be taken in connection with the obligations
of the TRS Servicer contemplated herein, or which would be likely to impair
materially the ability of the TRS Servicer to perform under the terms of this
Agreement;

 

(f)                                    No
Consent Required.  No consent,
approval, authorization or order of any court or governmental agency or body is
required for the execution, delivery and performance by the TRS Servicer of or
compliance by the TRS Servicer with this Agreement or the Mortgage Loans, or
the consummation of the transactions contemplated by this Agreement, or if
required, such approval has been obtained prior to the applicable Purchase
Date; and

 

8

 

(g)                                 No
Securities Registration.  Neither
the TRS Servicer nor anyone acting on its behalf has offered, transferred,
pledged, sold or otherwise disposed of any Mortgage Loans, any interest in any
Mortgage Loans or any other similar security to, or solicited any offer to buy
or accept a transfer, pledge or other disposition of any Mortgage Loans, any
interest in any Mortgage Loans or any other similar security from, or otherwise
approached or negotiated with respect to any Mortgage Loans, any interest in
any Mortgage Loans or any other similar security with, any Person in any
manner, or made any general solicitation by means of general advertising or in
any other manner, or taken any other action which would constitute a
distribution of the Mortgage Loans under the 1933 Act or which would render the
disposition of any Mortgage Loans a violation of Section 5 of the 1933 Act
or require registration pursuant thereto, nor will it act, nor has it
authorized or will it authorize any Person to act, in such manner with respect
to the Mortgage Loans.

 

ARTICLE IV

 

ADMINISTRATION AND
SERVICING OF MORTGAGE LOANS

 

Section 4.01                                TRS
Servicer to Act as TRS Servicer.

 

The TRS Servicer,
as an independent contractor, shall service and administer the Mortgage Loans
and shall have full power and authority, acting alone, to do any and all things
in connection with such servicing and administration which the TRS Servicer may
deem necessary or desirable, consistent with the terms of this Agreement and
with Accepted Servicing Practices.

 

Consistent with
the terms of this Agreement, the TRS Servicer may waive any Ancillary Income or
other fee that may be collected in the ordinary course of servicing the
Mortgage Loans.  The TRS Servicer shall
not make any future advances to any Mortgagor under any Mortgage Loan.  Unless the Mortgagor is in default with
respect to the Mortgage Loan or such default is, in the judgment of the TRS
Servicer, imminent, the TRS Servicer shall not permit any modification of any
material term of any Mortgage Loan, including any modification that would
change the Mortgage Interest Rate, defer or forgive the payment of principal or
interest, reduce or increase the outstanding principal balance, change the
Prepayment Charge, or change the Mortgage Loan Maturity Date.  Without limiting the generality of the
foregoing, the TRS Servicer shall continue, and is hereby authorized and
empowered, to execute and deliver on behalf of itself, the TRS Sub-Trust and
UBS, all instruments of satisfaction with respect to the Mortgage Loans and
with respect to the Mortgaged Properties. 
Upon the request of the TRS Servicer, the TRS Sub-Trust and UBS (on its
own behalf) shall execute and deliver to the TRS Servicer any powers of
attorney or other document furnished to it by the TRS Servicer to carry out its
servicing and administrative duties under this Agreement.

 

In servicing and
administering the Mortgage Loans, the TRS Servicer shall employ procedures and
exercise the same care that it customarily employs and exercises in servicing
and administering mortgage loans for its own account, giving due consideration
to Accepted Servicing Practices.

 

9

 

Section 4.02                                Liquidation
of Mortgage Loans.

 

In the event that
any payment due under any Mortgage Loan and not postponed pursuant to
Section 4.01 is not paid when the same becomes due and payable, or in the
event the Mortgagor fails to perform any other covenant or obligation under the
Mortgage Loan and such failure continues beyond any applicable grace period,
the TRS Servicer shall take such action as (1) the TRS Servicer would take
under similar circumstances with respect to a similar mortgage loan held for its
own account for investment, (2) shall be consistent with Accepted Servicing
Practices, and (3) the TRS Servicer shall reasonably and in good faith
determine to be in the best interest of UBS. 
In the event that any payment due under any Mortgage Loan is not
postponed pursuant to Section 4.01 and remains delinquent for a period of
90 days or any other default continues for a period of 90 days beyond the
expiration of any grace or cure period, the TRS Servicer shall exercise
reasonable efforts to foreclose upon or otherwise comparably convert the
ownership of properties securing those Mortgage Loans which are in default and
as to which no satisfactory arrangements can be made for collection of
delinquent payments.  In such
connection, the TRS Servicer shall from its own funds make all necessary,
reasonable and proper Servicing Advances, provided, however, that the TRS
Servicer shall not be required to expend its own funds in connection with any
foreclosure or towards the restoration or preservation of any Mortgaged
Property, unless it shall determine in its sole reasonable discretion (a) that
such preservation, restoration and/or foreclosure will increase the proceeds of
liquidation of the Mortgage Loan after reimbursement to itself for such
expenses and (b) that such expenses will be recoverable by it either through
Liquidation Proceeds or through Insurance Proceeds; provided that such expenses
shall be reimbursed only to the extent that the interest on the Loans and the
Notes is paid in full, but neither event described in (a) and (b) above shall
be a condition precedent for the reimbursement of the TRS Servicer.

 

Section 4.03                                Collection
of Mortgage Loan Payments.

 

Continuously from
the date hereof until the principal and interest on all Mortgage Loans are paid
in full, the TRS Servicer shall proceed to collect all payments due, in
accordance with the standard of care it would use with respect to similar
mortgage loans held for its own account and consistent with Accepted Servicing
Practices, under each of the Mortgage Loans when the same shall become due and
payable and shall ascertain and estimate Escrow Payments in accordance with the
standard of care it would use with respect to similar mortgage loans held for
its own account and consistent with Accepted Servicing Practices.

 

Section 4.04                                Deposits
to Blocked Account.

 

If any
Mortgage Loans are serviced by MortgageIT directly rather than serviced by GMAC
as sub-servicer, the provisions of this Section 4.04, Section 4.05
and Section 4.08 shall control.

 

(a)                                  The
TRS Servicer shall segregate and hold all funds collected and received relating
to the Mortgage Loans, once such funds have been received in the TRS Servicer’s
master lockbox clearing account and have been identified as relating to the
Mortgage Loans, separate and apart from any of its own funds and general
assets.  These funds shall be held in a
Blocked Account in the form of time deposit or demand accounts, titled
“MortgageIT Inc., as

 

10

 

Servicer, in trust
for UBS Real Estate Securities Inc. and its assignees”, established and
maintained pursuant to the Blocked Account Agreement.  The Blocked Account shall be established with HSBC Bank or any
other entity approved by UBS.  Any funds
deposited in the Blocked Account shall at all times be fully insured to the
full extent permitted under applicable law. 
Funds deposited in the Blocked Account may be withdrawn therefrom by the
TRS Servicer in accordance with Section 4.05.

 

The TRS Servicer hereby
assigns, pledges and grants a security interest in all of its right, title and
interest in, to and under the Blocked Account and all amounts credited thereto
at any time to UBS.

 

(b)                                 Deposits
to Blocked Account.  The TRS
Servicer shall deposit in the Blocked Account within three (3) Business Days
after receipt of funds, and retain therein, the following collections received
by the TRS Servicer and remitted to UBS:

 

(i)                                     all
payments on account of principal on the Mortgage Loans including Principal
Prepayments and all amounts on account of the repurchase price of Mortgage
Loans received from MortgageIT, as seller pursuant to the Loan Sale Agreement;

 

(ii)                                  all
payments on account of interest on the Mortgage Loans adjusted to the Mortgage
Loan Remittance Rate;

 

(iii)                               all
Insurance Proceeds including amounts required to be deposited pursuant to
Section 4.10 (other than proceeds to be held in the Escrow Account and
applied to the restoration or repair of the Mortgaged Property or released to
the Mortgagor in accordance with Section 4.13), and Section 4.11;

 

(iv)                              any
amounts required to be deposited by the TRS Servicer pursuant to
Section 4.11 in connection with the deductible clause in any blanket
hazard insurance policy;

 

(v)                                 all
Liquidation Proceeds;

 

(vi)                              all
Condemnation Proceeds which are not applied to the restoration or repair of the
Mortgaged Property or released to the Mortgagor in accordance with
Section 4.14;

 

(vii)                           any
amounts received with respect to or related to any REO Property and all REO
Disposition Proceeds pursuant to Section 4.14; and

 

(viii)                        any
amounts required to be deposited by the TRS Servicer pursuant to
Section 4.08 in connection with the investment in Eligible Accounts.

 

(c)                                  The
foregoing requirements for deposit into the Blocked Account shall be exclusive,
it being understood and agreed that, without limiting the generality of the
foregoing, amounts representing the Servicing Fee collected from the interest
portion of the Monthly Payment on the related Mortgage Loan and Ancillary
Income need not be deposited by the TRS Servicer into the Blocked Account,
subject to the following: if the TRS Servicer receives notice from UBS that a
Facility Default has occurred and is continuing, until it receives further
notice from UBS that there is no longer any continuing Facility Default, the
preceding exception shall

 

11

 

not apply and
Ancillary Income shall be deposited by the TRS Servicer into the Blocked
Account.

 

(d)                                 Notwithstanding
anything to the contrary in this Agreement, the TRS Servicer shall not be
obligated to advance from its own funds (i) any due or delinquent, but
uncollected, principal and interest related to a Mortgage Loan or (ii)
compensating interest (prepayment interest shortfalls) for any Mortgage Loan.

 

Section 4.05                                Permitted
Withdrawals from Blocked Account.

 

(a)                                  The
TRS Servicer shall be permitted to request UBS to make the following
withdrawals from the Blocked Account, it being understood that only UBS shall,
by written instruction, be permitted to direct the bank holding the Blocked
Account to remit funds therefrom:

 

(i)                                     to
reimburse itself for any Servicing Advances, but only from amounts received on
account of the corresponding Mortgage Loan;

 

(ii)                                  to
pay to itself for any income or gain realized from the investment of funds in
the Blocked Account in Eligible Accounts pursuant to Section 4.08;

 

(iii)                               to
reimburse itself for expenses incurred and reimbursable to it pursuant to
Section 7.01;

 

(iv)                              to
pay any amount required to be paid pursuant to Section 4.14 related to any
REO Property, it being understood that in the case of any such expenditure or
withdrawal related to a particular REO Property, the amount of such expenditure
or withdrawal from the Blocked Account shall be limited to amounts on deposit
in the Blocked Account with respect to the related REO Property;

 

(v)                                 on
each Payment Date, to pay to UBS, to the extent of available funds on deposit
in the Blocked Account, an amount equal to all interest due to UBS, together
with all principal collections and other recoveries of principal received by
the TRS Servicer (including any Repurchase Prices not recovered directly by
UBS) during the preceding month on the Mortgage Loans, in each case to the
extent not previously remitted to UBS by the TRS Servicer or the TRS Sub-Trust
(it being acknowledged by the parties that amounts representing the Principal
Prepayments are expected to be remitted to UBS immediately upon receipt and in
no event later than the Business Day following the date on which such Principal
Prepayments were received by the TRS Servicer);

 

(vi)                              to
withdraw funds deposited in error;

 

(vii)                           on each
Payment Date, to pay to itself the Servicing Fee from any amounts remaining
after the payment to UBS referenced in clause (v) above, subject to
Section 6.03 hereof;

 

(viii)                        on each
Payment Date, from amounts remaining, to make payments in accordance with the
Trust Agreement; and

 

12

 

(ix)                                to
clear and terminate the Blocked Account upon the termination of this Agreement
and the Trust Agreement.

 

(b)                                 Following
the TRS Servicer’s receipt of a written notice from UBS notifying the TRS
Servicer of the occurrence of a Facility Default, an acceleration of the TRS
Sub-Trust’s obligations under the Loan Repurchase Agreement, the Loan
Participation Agreement, the Loan Purchase Agreement, or an Event of Default
hereunder, all amounts deposited in the Blocked Account shall be paid to UBS.

 

Section 4.06                                Escrow
Account.

 

If any
Mortgage Loans are serviced by MortgageIT directly rather than serviced by GMAC
as sub-servicer, the provisions of this Section 4.06 and of  Section 4.08 shall control.

 

(a)                                  Establishment.  The TRS Servicer shall segregate and hold
all funds collected and received pursuant to a Mortgage Loan constituting
Escrow Payments separate and apart from any of its own funds and general assets
and shall establish and maintain one or more Escrow Accounts, in the form of
time deposit or demand accounts, established in the name of “MortgageIT, Inc.,
as Servicer, in trust for UBS Real Estate Securities Inc. and its assignees and
various Morgagors”.  The Escrow Account
shall be established with [JPMorgan Chase Bank], in a manner that shall provide
maximum available insurance thereunder. 
Funds deposited in the Escrow Account may be drawn on by the TRS
Servicer in accordance with Section 4.06(c).

 

(b)                                 Deposits
to Escrow Account.  The TRS Servicer
shall deposit in the Escrow Account within three (3) Business Days after
receipt of funds, and retain therein:

 

(i)                                     all
Escrow Payments collected on account of the Mortgage Loans, for the purpose of
effecting payment of any item required under the terms of the related Escrow
agreement with the Mortgagor; and

 

(ii)                                  all
amounts representing Insurance Proceeds or Condemnation Proceeds that are to be
applied to the restoration or repair of any Mortgaged Property; and

 

(iii)                               any
amounts required to be deposited by the TRS Servicer pursuant to
Section 4.08 in connection with the investment in Eligible Accounts.

 

(c)                                  Withdrawals
from Escrow Account.  Withdrawals
from the Escrow Account may be made by the TRS Servicer only:

 

(i)                                     to
effect payments of items constituting Escrow Payments for the related Mortgage
pursuant to the terms of the Mortgage or any other related document;

 

(ii)                                  to
reimburse the TRS Servicer for any Servicing Advances made by the TRS Servicer
pursuant to Section 4.07 with respect to a related Mortgage Loan, but only
from amounts received on the related Mortgage Loan which represent late
collections of Escrow Payments thereunder;

 

13

 

(iii)                               to
refund to any Mortgagor any funds found to be in excess of the amounts required
under the terms of the related Mortgage Loan;

 

(iv)                              for
transfer to the related Blocked Account and application to reduce the principal
balance of the Mortgage Loan in accordance with the terms of the related
Mortgage and Mortgage Note;

 

(v)                                 for
application to restoration or repair of the Mortgaged Property in accordance
with the procedures outlined in Section 4.13;

 

(vi)                              to
pay to the TRS Servicer pursuant to Section 4.08, or any Mortgagor to the
extent required by law, any interest earned on the funds deposited in the
Escrow Account;

 

(vii)                           to
clear and terminate the Escrow Account on the termination of this Agreement;
and

 

(viii)                        to
withdraw funds deposited in error.

 

Section 4.07                                Payment
of Taxes, Insurance and Other Charges.

 

With respect to
each Mortgage Loan, the TRS Servicer shall maintain accurate and customary
servicing records reflecting the status of taxes, assessments, fire and hazard
insurance premiums and other charges which are or may become a lien upon the
Mortgaged Property.  As to those
Mortgage Loans which are the subject of an “impound account” for the payment of
taxes and/or insurance, the TRS Servicer shall obtain, from time to time, all
bills for the payment of such charges (including renewal premiums) subject to
the Escrow Account and shall effect payment thereof prior to the applicable
penalty or termination date, employing for such purpose deposits of the
Mortgagor in the Escrow Account.  To the
extent that a Mortgage does not provide for Escrow Payments, the TRS Servicer
shall use its best efforts to determine that any such payments coming due and
delinquent prior to the related Purchase Date are made by the Mortgagor.  The TRS Servicer assumes full responsibility
for the payment of all such bills and shall effect payment of all such bills in
a manner and at a time that assures that the lien priority of the Mortgage is
not jeopardized and, in addition, with respect to the payment of taxes, in a
manner and at a time that avoids the loss of the Mortgaged Property due to a
tax sale or the foreclosure of a tax lien, irrespective of each Mortgagor’s
faithful performance in the payment of same or the making of the Escrow
Payments, and, if necessary, the TRS Servicer shall make Servicing Advances
from its own funds to effect such payments (subject to the TRS Servicer’s right
of reimbursement from the Escrow Account pursuant to Section 4.06(c)(ii)
or the Blocked Account pursuant to Section 4.05(a)(i)).

 

Section 4.08                                Protection
of Accounts.

 

Amounts on deposit
in the Blocked Account and the Escrow Account may at the option of the TRS
Servicer be invested in Eligible Accounts. 
Any such Eligible Account shall permit withdrawals therefrom no later
than the day before the next Payment Date. 
Any such Eligible Account relating to the Blocked Account shall be
established in the name of “MortgageIT, Inc., as Servicer, in trust for UBS
Real Estate Securities Inc. and its assignees”; any such Eligible Account
relating to the Escrow Account shall be established in the name of the

 

14

 

TRS
Servicer or for the benefit of UBS.  All
income on or gain realized from any such Eligible Account shall be for the
benefit of the TRS Servicer and may be withdrawn at any time by the TRS
Servicer, subject to Section 4.05(b) and Section 4.06(c).  The TRS Servicer shall be responsible for
any losses incurred in respect of any Eligible Account and any taxes imposed on
the TRS Sub-Trust on account of any Eligible Account and shall deposit in the
Blocked Account or the Escrow Account, as applicable, out of its own funds
amounts equal to all such losses and taxes immediately as such losses are
realized or assessed.

 

Section 4.09                                Maintenance
of Hazard Insurance.

 

The TRS Servicer
shall cause to be maintained for each Mortgage Loan, hazard insurance such that
all improvements upon the Mortgaged Property are insured by a generally
acceptable, licensed and qualified insurer against loss by fire and hazards of
extended coverage, in an amount which is at least equal to the lesser of (i)
the replacement value of the improvements securing such Mortgage Loan or (ii)
the outstanding principal balance of the Mortgage Loan.

 

If upon
origination of the Mortgage Loan, the related Mortgaged Property was located in
an area identified in the Federal Register by the Flood Emergency Management
Agency as having special flood hazards (and such flood insurance has been made
available) a flood insurance policy meeting the requirements of the current
guidelines of the Federal Insurance Administration is in effect with a
generally acceptable, qualified insurance carrier in an amount representing
coverage equal to the lesser of (i) the replacement value of the improvements,
(ii) the maximum amount of insurance which is available under the Flood
Disaster Protection Act of 1973, as amended or (iii) the outstanding principal
balance of the Mortgage Loan securing such Mortgaged Property.  If at any time during the term of the
Mortgage Loan, the TRS Servicer determines in accordance with applicable law
that a Mortgaged Property is located in a special flood hazard area and is not
covered by flood insurance or is covered in an amount less than the amount
required by (and available under) the Flood Disaster Protection Act of 1973, as
amended, the TRS Servicer shall notify the related Mortgagor that the Mortgagor
must obtain such flood insurance coverage, and if said Mortgagor fails to
obtain the required flood insurance coverage within sixty (60) days after such
notification, the TRS Servicer shall immediately force place the required flood
insurance on the Mortgagor’s behalf (except as may be prohibited or limited by
applicable law).

 

Pursuant to
Section 4.04, any amounts collected by the TRS Servicer under any such
policies or with respect to property acquired in liquidation of the Mortgage
Loan (other than amounts to be deposited in the Escrow Account and applied to
the restoration or repair of the related Mortgaged Property or to be released
to the Mortgagor, in accordance with the TRS Servicer’s normal servicing
procedures as specified in Section 4.14) shall be deposited in the Blocked
Account subject to withdrawal pursuant to Section 4.05.

 

Section 4.10                                Maintenance
of Mortgage Impairment Insurance.

 

In the event that
the TRS Servicer shall obtain and maintain a blanket policy insuring against
losses arising from fire and hazards covered under extended coverage on all of
the Mortgage Loans, then, to the extent such policy provides coverage in an
amount equal to the

 

15

 

amount
required pursuant to Section 4.10 and otherwise complies with all other
requirements of Section 4.10, it shall conclusively be deemed to have
satisfied its obligations as set forth in Section 4.10.  Any amounts collected by the TRS Servicer
under any such policy relating to a Mortgage Loan shall be deposited in the
Blocked Account subject to withdrawal pursuant to Section 4.05.  Such policy may contain a deductible clause,
in which case, in the event that there shall not have been maintained on the
related Mortgaged Property a policy complying with Section 4.10, and there
shall have been a loss which would have been covered by such policy, the TRS
Servicer shall deposit in the Blocked Account at the time of such loss the
amount not otherwise payable under the blanket policy because of such
deductible clause, such amount to deposited from the TRS Servicer’s funds,
without reimbursement therefor.

 

Section 4.11                                Maintenance
of Fidelity Bond and Errors and Omissions Insurance.

 

The TRS Servicer
shall maintain, at its own expense, a blanket Fidelity Bond and an Errors and
Omissions Insurance Policy, with broad coverage on all officers, employees or
other persons acting in any capacity requiring such persons to handle funds,
money, documents or papers relating to the Mortgage Loans (“Servicer
Employees”).  Any such Fidelity Bond
and Errors and Omissions Insurance Policy shall be in the form of the Mortgage
Banker’s Blanket Bond and shall protect and insure the TRS Servicer against
losses, including forgery, theft, embezzlement, fraud, errors and omissions and
negligent acts of such Servicer Employees. 
Such Fidelity Bond and Errors and Omissions Insurance Policy also shall
protect and insure the TRS Servicer against losses in connection with the
release or satisfaction of a Mortgage Loan without having obtained payment in
full of the indebtedness secured thereby. 
No provision of this Section 4.11 requiring such Fidelity Bond and
Errors and Omissions Insurance Policy shall diminish or relieve the TRS
Servicer from its duties and obligations as set forth in this Agreement.  The TRS Servicer shall deliver a copy of
such fidelity bond and insurance policy to the TRS Sub-Trust and UBS upon
request.

 

Section 4.12                                Delivery
of Document in Possession of Custodian.

 

The TRS Sub-Trust
shall cause either Custodian to deliver to the TRS Servicer, on a timely basis,
those mortgage loan documents that the TRS Servicer may request from such
Custodian from time to time.  Should
such Custodian fail to deliver the requested mortgage loan documents on a
timely basis, the TRS Servicer shall not be liable for any related loss or
expense arising therefrom.  Any Event of
Default which is attributable to the failure of such Custodian to deliver or
such Custodian’s untimely delivery of reasonably requested mortgage loan
documents shall not be chargeable to the TRS Servicer and shall be deemed to
not have occurred.

 

Section 4.13                                Restoration
of Mortgaged Property.

 

In the event that
any Mortgaged Property is damaged as a result of an insured act under one of
the insurance policies discussed in this Agreement or subject to a governmental
taking, the TRS Servicer shall apply any Insurance Proceeds or Condemnation
Proceeds (collectively “Proceeds”) actually received by it, in
accordance with Accepted Servicing Practices, applicable law, and the terms of
the related Mortgage or Deed of Trust. 
Consistent

 

16

 

therewith
the TRS Servicer shall apply such Proceeds to reduce the principal balance of
the Mortgage Loan unless;

 

1.                                       Applicable
law requires otherwise; or

 

2.                                       The
TRS Servicer has determined that restoration and/or repair of the Mortgaged
Property is in the best interest of all parties.

 

In the
determination of whether to allow restoration and/or repair, the TRS Servicer
will consider the following:

 

1.                                       Whether
the Mortgagor is otherwise in default under the terms of the Mortgage or deed
of trust;

 

2.                                       Whether
restoration and/or repair is economically feasible; and

 

3.                                       Whether
such restoration and/or repair will have a material impact on the Mortgage
Property’s value.

 

The TRS Servicer
need not obtain the approval of UBS prior to releasing any Insurance Proceeds
or Condemnation Proceeds to be applied to the restoration or repair of the
Mortgaged Property if such release is in accordance herewith and with Accepted
Servicing Practices.  If UBS is named as
an additional loss payee, the TRS Servicer is hereby empowered to endorse any
loss draft issued in respect of such a claim in the name of UBS.

 

Section 4.14                                Title,
Management and Disposition of REO Property.

 

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 taken in the name of
UBS or its designee of record on the date of acquisition of title, for UBS.  UBS or its designee shall provide the TRS
Servicer with one or more powers of attorney, if reasonably requested, to
enable the TRS Servicer to fulfill its duties under this Agreement.

 

The TRS Servicer
shall manage, conserve, protect and operate each REO Property for the TRS
Sub-Trust and UBS, solely for the purpose of its prompt disposition and
sale.  The TRS Servicer, either itself
or through an agent selected by the TRS Servicer, shall manage, conserve,
protect and operate the REO Property in the same manner that it manages,
conserves, protects and operates other foreclosed property for its own account,
and in the same manner that similar property in the same locality as the REO
Property is managed.

 

The TRS Servicer
shall attempt to sell the REO Property (and may temporarily rent the same) on
such terms and conditions as the TRS Servicer determines in its good faith
judgment to be in the best interest of the TRS Sub-Trust and UBS.  The proceeds of sale of the REO Property
shall be deposited in the Blocked Account within three (3) Business Days after
receipt of funds.  As soon as practical
thereafter, the expenses of such sale shall be paid and the TRS Servicer shall
reimburse itself from the Blocked Account for any related unreimbursed
Servicing Advances, unpaid Servicing Fees and unreimbursed expenses and
advances made pursuant to this Agreement.

 

17

 

With respect to
each REO Property, the TRS Servicer shall deposit all funds collected and
received in connection with the operation of the REO Property in the Blocked
Account within three (3) Business Days after receipt of such funds and shall
also deposit in the Blocked Account all revenues received with respect to the
conservation and disposition of the related REO Property.

 

The TRS Servicer
shall withdraw from the Blocked Account funds necessary for the proper
operation, management and maintenance of the REO Property, including the cost
of maintaining any hazard insurance pursuant to Section 4.10 and the fees
of any managing agent of the TRS Servicer, a sub servicer, or the TRS Servicer
itself.  The REO management fee shall be
an amount that is reasonable and customary in the area where the Mortgaged
Property is located.

 

Section 4.15                                Sub
Servicer.

 

The TRS Servicer
may, with the prior consent of UBS, appoint a sub-servicer to perform any or
all of its duties under this Agreement with respect to any Mortgage Loan.  UBS hereby consents to the appointment of
GMAC as a sub-servicer under this Agreement. 
GMAC Mortgage Corporation and any other sub-servicer shall service and
administer the Mortgage Loans in accordance with the terms of this Agreement
and the Accepted Servicing Practices. 
The TRS Servicer shall remain liable for any and all of its duties under
this Agreements delegated to GMAC or any other sub-servicer.  Upon appointment of any sub-servicer, or
with respect to GMAC, as of the Closing Date, all of the TRS Servicer’s rights
and remedies (but none of its obligations) under any sub-servicing agreement
with respect to each Mortgage Loan shall be automatically assigned to UBS
hereunder, including, without limitation, the ability to terminate such
sub-servicer.  The TRS Servicer hereby
represents, warrants and covenants that any sub-servicing agreement currently
in existence with any such sub-servicer or hereafter entered into with any
sub-servicer does not, and will not, contain any termination fee to be paid to
any such Servicer upon termination of such entity as sub servicer of the
Mortgage Loans.

 

ARTICLE V

 

NOTIFICATION;
STATEMENTS

 

Section 5.01                                Notifications.  The TRS Servicer will notify the TRS
Sub-Trust and UBS in writing of any of the following promptly upon learning of
the occurrence thereof, describing the same and, if applicable, any remedial
steps being taken with respect thereto:

 

(i)                                     receipt
of notice or knowledge that the Mortgaged Property relating to a Mortgage Loan
has been damaged by waste, fire, earthquake or earth movement, windstorm,
flood, tornado or other casualty or otherwise damaged so as to affect adversely
its Market Value; and

 

(ii)                                  promptly
upon receipt of notice or knowledge of (A) any material default related to any
Mortgage Loan, (B) any lien or security interest (other than security interests
created hereby) on, or claim asserted against, any of the Mortgage Loans which,
individually or together with such liens, security interests or claims, is
reasonably likely to have a Material Adverse Effect or (C) any event or
change in circumstances which could reasonably be expected to have a Material
Adverse Effect.

 

18

 

Section 5.02                                Monthly
Reports.  Not later than 5:00 p.m.
New York City time on each Payment Date, the TRS Servicer will provide to the
TRS Sub-Trust and UBS, by electronic or other format acceptable to UBS, the
following information in respect of the preceding month:

 

(i)                                     Summary
of delinquency and loss experience;

 

(ii)                                  With
respect to any MERS Designated Mortgage Loan, MERS Reports;

 

(iii)                               A remittance report, in hard copy and electronic
format acceptable to UBS, containing the following information regarding funds
collected during the prior calendar month:

 

(1)                                  Mortgage
Loan number;

 

(2)                                  Note
Rate;

 

(3)                                  Remittances
allocable to principal and interest, escrow and taxes;

 

(4)                                  Paid
through date;

 

(5)                                  Mortgage
Loan balance;

 

(6)                                  Delinquency
status;

 

(7)                                  Whether
the Mortgaged Property is in foreclosure or has become an real estate owned
property;

 

(8)                                  Whether
any Mortgagor is the subject of any bankruptcy action; and

 

(9)                                  Any
other information that UBS may reasonably request;

 

(iv)                              Any additional reports with respect to the TRS
Servicer’s servicing portfolio as UBS 
may reasonably request;

 

(v)                                 Any other reports as deemed necessary at
securitization and reasonably prepared by the TRS Servicer.

 

In addition, the
TRS Servicer shall provide UBS with such information concerning the Mortgage
Loans as is necessary for UBS to prepare its federal income tax returns as UBS
may reasonably request from time to time.

 

19

 

ARTICLE VI

 

GENERAL SERVICING
PROCEDURES

 

Section 6.01                                Transfers
of Mortgaged Property.

 

Except as limited
by applicable law, the TRS Servicer shall use commercially reasonable efforts
to enforce any “due-on-sale” provision contained in any Mortgage or Mortgage
Note and to deny assumption by the Person to whom the Mortgaged Property has
been or is about to be sold whether by absolute conveyance or by contract of
sale, and whether or not the Mortgagor remains liable on the Mortgage and the
Mortgage Note.  When the Mortgaged
Property has been conveyed by the Mortgagor, the TRS Servicer shall, to the
extent it has knowledge of such conveyance, exercise its rights to accelerate
the maturity of such Mortgage Loan under the “due-on-sale” clause applicable
thereto, provided, however, that the TRS Servicer shall not exercise such
rights if prohibited by law from doing so.

 

If the TRS
Servicer reasonably believes it is unable under applicable law to enforce such
“due-on-sale” clause, the TRS Servicer shall endeavor to enter into (i) an
assumption and modification agreement with the Person to whom such property has
been conveyed (subject to said Person meeting the TRS Servicer’s underwriting
guidelines then in existence) pursuant to which such Person becomes liable under
the Mortgage Note and the original Mortgagor remains liable thereon or (ii) in
the event the TRS Servicer is unable under applicable law to require that the
original Mortgagor remain liable under the Mortgage Note, a substitution of
liability agreement with the purchaser of the Mortgaged Property pursuant to
which the original Mortgagor is released from liability and UBS of the
Mortgaged Property is substituted as Mortgagor and becomes liable under the
Mortgage Note.  If an assumption fee is
collected by the TRS Servicer for entering into an assumption agreement such
fee will be retained by the TRS Servicer as Ancillary Income, subject to
Section 4.04(c).  In connection
with any such assumption, neither the Mortgage Interest Rate borne by the
related Mortgage Note, the term of the Mortgage Loan nor the outstanding
principal amount of the Mortgage Loan shall be changed, without UBS’s written
consent.

 

Section 6.02                                Satisfaction
of Mortgages and Release of Submission Packages.

 

Upon the payment
in full of any Mortgage Loan, the TRS Servicer shall notify UBS in the weekly
Principal Prepayment Remittance and shall be authorized to request the
immediate release of any Mortgage Documents for such Mortgage Loan.  The costs associated with the release or
reconveyance shall be borne by the TRS Sub-Trust, to the extent such amounts
are not recovered from the Mortgagor.

 

Except as provided
for in Section 4.01 of this Agreement, if the TRS Servicer satisfies or
releases a Mortgage without first having obtained payment in full of the
indebtedness secured by the Mortgage without the prior written consent of UBS,
upon written demand of UBS and the Majority Investors the TRS Servicer shall
repurchase the related Mortgage Loan at the Repurchase Amount.  The TRS Servicer shall maintain the Fidelity
Bond and Errors and Omissions Insurance Policy as provided for in
Section 4.11 insuring the TRS Servicer against

 

20

 

any
loss it may sustain with respect to any Mortgage Loan not satisfied in
accordance with the procedures set forth herein.

 

Section 6.03                                Servicing
Compensation.

 

As compensation
for its services hereunder, the TRS Servicer shall be entitled on the terms set
forth herein to request withdrawals from the Blocked Account the amount of its
Servicing Fee with respect to such Mortgage Loan; however such withdrawal or
retention shall only be permitted to be made from the related Monthly Payment
with respect to such Mortgage Loan.  The
Servicing Fee shall be payable monthly without pro ration and shall be computed
on the basis of the unpaid principal balance for such Mortgage Loan as of the
first day of the related Due Period. 
For so long as no Facility Default has occurred and is continuing, as
servicing compensation, the TRS Servicer shall be entitled to receive the
Servicing Fee, as provided in Section 4.05(a)(vii) and to retain as income
all Ancillary Income and other like charges or fees, subject to
Section 4.04(c); provided that following the occurrence and during the
continuance of a Facility Default, the right of the TRS Servicer to receive any
such servicing compensation shall be suspended and such amounts shall be paid
to UBS.

 

ARTICLE VII

 

THE TRS SERVICER

 

Section 7.01                                Indemnification;
Third Party Claims.

 

The TRS Servicer
shall indemnify the TRS Sub-Trust, UBS and the Owner Trustee and their
respective Affiliates and officers, directors, employees, agents and advisors
(each an “Indemnified Party”) harmless from and against any and all
liabilities, claims, losses, damages, penalties, fines, forfeitures, reasonable
legal fees and related costs of counsel, judgments, and any other costs, fees
and expenses (collectively, the “Costs”) that may be imposed on,
incurred by or assessed against such Indemnified Party relating to or arising
out of a third party claim related to the failure of the TRS Servicer, GMAC
Mortgage Corporation as sub servicer or any other sub servicer to perform its
duties and service the Mortgage Loans in strict compliance with the terms of
this Agreement.  If an Indemnified Party
shall so request, the TRS Servicer shall assume the defense of any such
claim.  The TRS Servicer shall pay all
expenses in connection with any such claim, including counsel fees, and
promptly pay, discharge and satisfy any judgment or decree which may be entered
against it or UBS in respect of such claim. 
UBS promptly shall reimburse the TRS Servicer for all amounts advanced
by it pursuant to the preceding sentence except when the claim is in any way
related to the failure of the TRS Servicer to service and administer the
Mortgage Loans or otherwise to perform its obligations in strict compliance
with the terms of this Agreement.

 

The TRS Servicer
shall also reimburse an Indemnified Party as and when billed by such
Indemnified Party for all such Indemnified Party’s costs and expenses incurred
in connection with the enforcement or the preservation of such Indemnified
Party’s rights against

 

21

 

the TRS Servicer under
this Agreement, including without limitation the reasonable fees and expenses
of its counsel.

 

Section 7.02                                Merger
or Consolidation of the TRS Servicer.

 

The TRS Servicer
shall keep in full effect its existence, rights and franchises as a
corporation, and shall obtain and preserve its qualification to do business as
a foreign corporation in each jurisdiction in which such qualification is or
shall be necessary to protect the validity and enforceability of this Agreement
or any of the Mortgage Loans and to perform its duties under this
Agreement.  Any Person into which the
TRS Servicer may be merged or consolidated, or any corporation resulting from
any merger, conversion or consolidation to which the TRS Servicer shall be a
party, or any Person succeeding to the business of the TRS Servicer, shall be
the successor of the TRS Servicer hereunder, without the execution or filing of
any paper or any further act on the part of any of the parties hereto, anything
herein to the contrary notwithstanding.

 

Section 7.03                                Limitation
on Liability of Servicer and Others.

 

Neither the TRS
Servicer nor any of the directors, officers, employees or agents of the TRS
Servicer shall be under any liability to the TRS Sub-Trust or UBS for any
action taken or for refraining from the taking of any action in good faith
pursuant to this Agreement, or for errors in judgment, provided, however, that
this provision shall not protect the TRS Servicer against any breach of
warranties or representations made herein, or failure to perform its
obligations in strict compliance with any standard of care set forth in this
Agreement, or any liability which would otherwise be imposed by reason of any
breach of the terms and conditions of this Agreement.  The TRS Servicer and any director, officer, employee or agent of
the TRS 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 TRS Servicer shall not
be under any obligation to appear in, prosecute or defend any legal action
which is not incidental to its duties to service the Mortgage Loans in
accordance with this Agreement and which in its opinion may involve it in any
expense or liability, provided, however, that the TRS Servicer may, with the
consent of UBS, undertake any such action which it may deem necessary or
desirable in respect to this Agreement and the rights and duties of the parties
hereto.  In such event, the TRS Servicer
shall be entitled to reimbursement from the TRS Sub-Trust of the reasonable legal
expenses and costs of such action.

 

Section 7.04                                Limitation
on Resignation and Assignment by Servicer.

 

The Trust on
behalf of the TRS Sub-Trust and UBS have entered into this Agreement with the
TRS Servicer and the TRS Sub-Trust and UBS will purchase the Mortgage Loans in
reliance upon the independent status of the TRS Servicer, and the
representations as to the adequacy of its servicing facilities, personnel,
records and procedures, its integrity, reputation and financial standing, and
the continuance thereof.  Therefore, the
TRS Servicer shall neither assign this Agreement or the servicing hereunder or
delegate its rights or duties hereunder or any portion hereof (to other than a
sub servicer) or sell or otherwise dispose of all or substantially all of its
property or assets without the prior written consent of UBS, which consent
shall not be unreasonably withheld.  The
TRS Servicer shall not resign from the obligations and duties

 

22

 

hereby
imposed on it except by mutual consent of the TRS Servicer, the TRS Sub-Trust
and UBS or upon the determination that its duties hereunder are no longer
permissible under applicable law and such incapacity cannot be cured by the TRS
Servicer.  No such resignation shall
become effective until a successor shall have assumed the TRS Servicer’s
responsibilities and obligations hereunder in the manner provided in
Section 10.01.

 

ARTICLE VIII

 

DEFAULT

 

Section 8.01                                Events
of Default.

 

Each of the
following shall constitute an Event of Default on the part of the TRS Servicer:

 

(i)                                     any
failure by the TRS Servicer to remit, or to deposit into the Blocked Account,
any payment required to be made under the terms of this Agreement which
continues unremedied (a) for a period of one Business Day, in the case of any
such deposit of amounts referred to in Section 7(h) of the Loan Repurchase
Agreement, or (b) in any other case, for a period of three Business Days after
the date upon which written notice of such failure, requiring the same to be
remedied, shall have been given to the TRS Servicer by UBS (which UBS may in
its discretion give); or

 

(ii)                                  failure
by the TRS Servicer to observe or perform in any material respect any other of
the covenants or agreements on the part of the TRS Servicer set forth in this
Agreement, the Blocked Account Agreement or in the Custodial Agreement which
continues unremedied for a period of 30 days after the date on which written
notice of such failure, requiring the same to be remedied, shall have been given
to the TRS Servicer by UBS or by the related Custodian (and UBS may or, as the
case may be, shall give such notice as contemplated in clause (i) above); or

 

(iii)                               failure
by the TRS Servicer to maintain its license to do business in any jurisdiction
where the Mortgage Property is located except where the failure to be so
qualified would not have a material adverse effect on (a) the validity or
enforceability of this Agreement or any of the Mortgage Loans or (b) the
ability of the TRS Servicer to perform its duties under this Agreement;

 

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

 

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

 

23

 

(vi)                              for
so long as MortgageIT, Inc. is the TRS Servicer, the occurrence and continuance
of a Facility Default or any of the following circumstances or events (“Servicing
Termination Events”):

 

(1)                                  any
failure by the TRS Servicer to remit to UBS (or other registered holder of a
Participation Certificate) when due any payment required to be made under this
Agreement or such Participation Certificate;

 

(2)                                  failure
by the TRS Servicer duly to observe or perform in any material respect any of
its other covenants or agreements set forth in this Agreement or in any of the
other Transaction Documents to which it is a party which continues unremedied
for a period of one (1) business day (or such longer period provided in the
relevant notice to the TRS Servicer) after the date on which written notice of
such failure, requiring the same to be remedied, shall have been given to the
TRS Servicer by UBS; or

 

(3)                                  any
representation, warranty or certification made or deemed made herein or in any
of the other Transaction Documents by the TRS Servicer or any certificate
furnished to UBS pursuant to the provisions thereof, shall prove to have been
false or misleading in any material respect as of the time made or furnished;
or

 

(4)                                  an
Act of Insolvency with respect to the TRS Servicer or any of its Affiliates; or

 

(5)                                  the
TRS Servicer ceases to meet the qualifications for maintaining all Agency
Approvals (as defined in the Loan Participation Agreement); or

 

(6)                                  the
TRS Servicer attempts to assign its right to servicing compensation hereunder
or attempts without the consent of UBS to sell or otherwise dispose of all or
substantially all of its property or assets or to assign its servicing
responsibilities this Agreement or to delegate its duties thereunder or any
portion thereof (to other than a sub servicer); or

 

(7)                                  the
TRS Servicer or any of its Affiliates fails to operate or conduct its business
operations or any material portion thereof in the ordinary course, or the TRS
Servicer experiences any other material adverse change in its business
operations or financial condition, which, in UBS’s sole discretion, constitutes
a material impairment of the TRS Servicer’s ability to perform its obligations
under this Agreement or any other related document; or

 

(8)                                  the
TRS Servicer’s membership in MERS is terminated for any reason; or

 

(9)                                  the
TRS Servicer shall default under, or fail to perform as requested under, or
shall otherwise materially breach the terms of any material instrument,
agreement or contract; or

 

24

 

(10)                            the
failure of a Security (as defined in the Loan Participation Agreement) to be
issued for any reason whatsoever on or before the date on which such Security
must be issued and delivered to UBS);

 

(vii)                           the TRS
Servicer shall admit in writing its inability to pay its debts generally as
they become due, file a petition to take advantage of any applicable
insolvency, bankruptcy or reorganization statute, make an assignment for the
benefit of its creditors, voluntarily suspend payment of its obligations or
cease its normal business operations for three Business Days.

 

In each and every
such case, so long as an Event of Default shall not have been remedied or if
UBS’s obligations to repurchase all Mortgage Loans have been accelerated
pursuant to Section 7 of the Loan Repurchase Agreement (regardless of
whether the related Event of Default has later been remedied), in addition to
whatsoever rights UBS may have at law or equity to damages, including
injunctive relief and specific performance, UBS, by notice in writing to the
TRS Servicer (which UBS may in its discretion give and shall give if requested
to do so by the Majority Investors), may terminate all the rights and
obligations of the TRS Servicer under this Agreement and in and to the Mortgage
Loans and the proceeds thereof (a) immediately, in the case of any Event of
Default of a kind referred to in clause (iii), (iv) or (v) of Section 7 of
the Loan Repurchase Agreement or (b) upon payment of all monies otherwise owed
hereunder to the TRS Servicer (e.g. Servicing Advances) in any other case;
provided that, if a termination occurs immediately, pursuant to clause (a) of
this sentence, the TRS Servicer’s right to receive all monies otherwise owed
hereunder to it in respect of prior periods and, as provided in
Section 10.01, all claims of any other Person against the TRS Servicer, in
respect of prior periods shall survive the termination, subject to the
following sentence.  Following the
occurrence and during the continuance of a Facility Default, the right of the
TRS Servicer to receive any monies hereunder shall be suspended and such amounts
shall be paid to UBS.  In all cases, the
TRS Servicer’s right to receive any such monies shall be reduced by all
amounts, if any, which at the time are payable by the TRS Servicer hereunder
into the Deposit Account, the Escrow Account or to the TRS Sub-Trust or
otherwise.

 

Upon receipt by the
TRS Servicer of such written notice, all authority and power of the TRS
Servicer under this Agreement, whether with respect to the Mortgage Loans or
otherwise, shall pass to and be vested in the successor appointed pursuant to
Section 10.01.  Upon written
request from UBS (which it may or, as appropriate, shall give as provided above
for such notice), the TRS Servicer shall prepare, execute and deliver to the
successor entity designated by UBS any and all documents and other instruments,
place in such successor’s possession all Submission Packages, and do or cause
to be done all other acts or things necessary or appropriate to effect the
purposes of such notice of termination, including but not limited to the
transfer to such successor for administration by it of all cash amounts which
shall at the time be credited by the TRS Servicer to the Blocked Account or
Escrow Account or thereafter received with respect to the Mortgage Loans.

 

Section 8.02                                Waiver
of Defaults.

 

UBS may waive any
default by the TRS Servicer in the performance of its obligations hereunder and
its consequences.  Upon any waiver of a
past default, such default

 

25

 

shall
cease to exist, and any Event of Default arising therefrom shall be deemed to
have been remedied for every purpose of this Agreement.  No such waiver shall extend to any
subsequent or other default or impair any right consequent thereon except to
the extent expressly so waived.

 

No failure to
exercise and no delay in exercising, on the part of the TRS Sub-Trust or UBS,
any right, remedy, power or privilege hereunder, shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, remedy, power
or privilege hereunder preclude any other or further exercise hereof or the
exercise of any other right, remedy, power or privilege.  The rights, remedies, powers and privileges
herein provided are cumulative and not exhaustive of any rights, remedies,
powers and privilege provided by law.

 

ARTICLE IX

 

TERMINATION

 

Section 9.01                                Termination.

 

This Agreement
shall terminate upon the earliest to occur of (i) the Stated Termination
Date; (ii) the later of the final payment or other liquidation of the last
Mortgage Loan or the disposition of any REO Property with respect to the last
Mortgage Loan and the remittance of all funds due hereunder; (iii) the
termination of the TRS Servicer by UBS for cause pursuant to Section 8.01
or, upon one day’s notice from UBS, without cause; or (iv) mutual consent of
the TRS Servicer, the TRS Sub-Trust and UBS in writing.

 

Not more than 90
days nor fewer than 60 days prior to the then Stated Termination Date, the TRS
Servicer may send to UBS a written request, requesting that UBS extend the then
Stated Termination Date to a date not more than one year from the then Stated
Termination Date.  UBS shall respond, in
writing, to any such request within 15 Business Days of UBS’s receipt thereof;
provided, that if UBS does not so respond, then the request to extend shall be
deemed denied.

 

Section 9.02                                Retention
and Termination of TRS Servicer.

 

The
TRS Servicer hereby covenants and agrees to act as TRS Servicer for an initial
term beginning on the date of this Agreement and ending on the same day of the
month two (2) months thereafter, which term shall be extendable by UBS for
successive terms thereafter of thirty days each (or, as specified in a writing
delivered by UBS to the TRS Servicer, such other term-to-term basis), until the
termination of this Agreement.  The TRS
Servicer hereby agrees that, upon its receipt of any such notice (including
each notice pursuant to standing instructions, which shall be deemed delivered
at thirty day intervals for so long as such instructions are in effect) (a “Servicer
Extension Notice”), the TRS Servicer shall become bound, for the duration
of the term covered by such Servicer Extension Notice, to continue as the TRS
Servicer subject to and in accordance with the other provisions of this
Agreement.  The TRS Servicer agrees that
if as of the tenth day prior to the last day of any term it shall not have
received a Servicer Extension Notice from UBS, the TRS Servicer will, within
five days thereafter, give written notice of such nonreceipt to UBS.

 

26

 

ARTICLE X

 

SUCCESSOR TO THE
TRS SERVICER

 

Section 10.01                          Successor
to Servicer.

 

The appointment
hereunder of MortgageIT as the TRS Servicer hereunder shall initially be for a
term beginning on the date of this Agreement and ending on the same day of the
month two (2) months thereafter, which term shall be extendable by UBS for
successive terms thereafter of thirty days each (or, as specified in a writing
delivered by UBS to the TRS Servicer, such other term-to-term basis), until the
termination of this Agreement.  The term
of appointment of any Person as a successor Servicer hereunder shall begin on
the date the appointment is effective and shall end on the last day of the last
term or, if earlier, on the Stated Termination Date, as then in effect.

 

Prior to
termination of the TRS Servicer’s responsibilities and duties under this
Agreement pursuant to Sections 7.04, 8.01, or 9.01 or the end of the last term
of the TRS Servicer hereunder, UBS shall, (i) succeed to and assume all of the
TRS Servicer’s responsibilities, rights, duties and obligations under this
Agreement, or (ii) appoint a successor which shall succeed to all rights and
assume all of the responsibilities, duties and liabilities of the TRS Servicer
under this Agreement prior to the termination of Servicer’s responsibilities,
duties and liabilities under this Agreement. 
In the event that the TRS Servicer’s duties, responsibilities and
liabilities under this Agreement should be terminated pursuant to the
aforementioned sections, the TRS Servicer shall discharge such duties and
responsibilities during the period from the date it acquires knowledge of such
termination until the effective date thereof with the same degree of diligence
which it is obligated to exercise under this Agreement.

 

Any successor
appointed as provided herein shall execute, acknowledge and deliver to the TRS
Servicer and UBS an instrument accepting such appointment, wherein, if the
successor and the predecessor Servicers are different Persons, the successor
shall agree to indemnify the predecessor Servicer for any liability arising out
of the successor’s subsequent acts and omissions related to its duties as the
successor servicer, whereupon such successor shall become fully vested with all
the rights, powers, duties, responsibilities, obligations and liabilities of
the TRS Servicer, with like effect as if originally named as a party to this
Agreement.  Likewise, if the TRS
Servicer and the successor are different Persons, the TRS Servicer shall agree
to indemnify the successor Servicer for any liability arising out of the TRS
Servicer’s acts and omissions relating to its acts as TRS Servicer prior to the
effective date of the servicing transfer. 
Any termination or resignation of the TRS Servicer or termination of
this Agreement pursuant to Section 7.04, 8.01, or 9.01 or arising out of
the lapse of a Servicer’s term of appointment hereunder shall not affect any
claims that UBS may have against the TRS Servicer arising out of the TRS
Servicer’s actions or failure to act prior to any such termination or
resignation.

 

The TRS Servicer
shall deliver promptly to the successor servicer (if it is a different person)
all Submission Packages and related documents and statements held by it
hereunder.  In all cases, at the end of
any term of its appointment hereunder, the TRS Servicer shall account for all
funds and shall execute and deliver such instruments and do such other

 

27

 

things
as UBS may reasonably request, at the TRS Servicer’s sole expense, to vest in
any successor all such rights, powers, duties, responsibilities, obligations
and liabilities of the TRS Servicer.

 

The TRS Servicer
shall be liable for any and all fees and expenses required to terminate the
Servicing Agreement and/or to effectuate the transfer of the TRS Servicer’s
responsibilities, duties and liabilities to the successor Servicer.

 

ARTICLE XI

 

MISCELLANEOUS
PROVISIONS

 

Section 11.01                          Transfer
of Servicing.  In the event the TRS
Servicer is terminated pursuant to this Agreement or its term as such hereunder
lapses without its being appointed for another, consecutive, term, the
following shall be performed:

 

(a)                                  With
respect to each Mortgage Loan, on the related Servicing Transfer Date, UBS, or
its appointed successor servicer (collectively referred to as “Successor
Servicer”), shall assume all servicing responsibilities related to, and the
TRS Servicer shall cease all servicing responsibilities related to, the
Mortgage Loans.  On or prior to the
related Servicing Transfer Date the TRS Servicer shall take such steps as may
be necessary or appropriate to effectuate and evidence the transfer of the
servicing of the Mortgage Loans to the Successor Servicer, including but not
limited to the following:

 

(i)                                     Notice
to Mortgagors.  The TRS Servicer
shall mail to the Mortgagor of each Mortgage a letter advising the Mortgagor of
the transfer of the servicing of the related Mortgage Loan to the Successor
Servicer; in accordance with the Cranston-Gonzales National Affordable Housing
Act of 1990; provided, however, the content and format of the
letter shall have the prior approval of the Successor Servicer.  The TRS Servicer shall provide the Successor
Servicer with copies of all such notices no later than the related Servicing
Transfer Date.

 

(ii)                                  Notice
to Taxing Authorities and Insurance Companies.  The TRS Servicer shall transmit to the applicable insurance
companies (including primary mortgage insurance policy insurers, if applicable)
and/or agents, notification of the transfer of the servicing to the Successor
Servicer, and instructions to deliver all notices and insurance statements, as
the case may be, to the Successor Servicer from and after the related Servicing
Transfer Date.  The TRS Servicer shall
provide the Successor Servicer with copies of all such notices no later than
the related Servicing Transfer Date.

 

(iii)                               Delivery
of Servicing Records.  The TRS
Servicer shall forward to the Successor Servicer, all servicing records in the
TRS Servicer’s possession relating to each Mortgage Loan.

 

(iv)                              Escrow
Payments.  On the Servicing Transfer
Date, the TRS Servicer shall provide the Successor Servicer, with immediately
available funds by wire transfer in the amount of the Escrow Account balance.  The TRS Servicer shall provide the Successor
Servicer with an accounting statement sufficient to enable the Successor
Servicer to reconcile the amount of such payment with the accounts of the
Mortgage Loans.

 

28

 

(v)                                 Payoffs
and Assumptions.  The TRS Servicer
shall provide to the Successor Servicer, copies of all assumption statements
generated by the TRS Servicer on the Mortgage Loans from the related Cut-off
Date to the related Servicing Transfer Date.

 

(vi)                              Mortgage
Payments Received Prior to Related Servicing Transfer Date.  Prior to the related Servicing Transfer Date
all payments theretofore received by the TRS Servicer on each Mortgage Loan
shall be properly applied by the TRS Servicer to the account of the particular
Mortgagor.

 

(vii)                           Mortgage
Payments Received After Related Servicing Transfer Date.  The amount of any Monthly Payments received
by the TRS Servicer after the related Servicing Transfer Date as well as any
such payments theretofore received but not credited as of such date shall be
forwarded within five Business Days of receipt to the Successor Servicer.  The TRS Servicer shall notify the Successor
Servicer of the particulars of the payment, which notification requirement
shall be satisfied if the TRS Servicer forwards with its payment sufficient
information to permit appropriate processing of the payment by the Successor
Servicer.  In addition, the TRS Servicer
shall endorse to the Successor Servicer the Monthly Payments received by the
TRS Servicer after the Servicing Transfer Date.

 

(viii)                        Misapplied
Payments.  Misapplied payments shall
be processed as follows:

 

(1)                                  All
parties shall cooperate in correcting misapplication errors;

 

(2)                                  The
party receiving notice of a misapplied payment occurring prior to the related
Servicing Transfer Date and discovered after the related Servicing Transfer
Date shall immediately notify the other parties;

 

(3)                                  If
a proven misapplied payment which occurred prior to the related Servicing
Transfer Date cannot be identified and said misapplied payment has resulted in
a shortage in the Blocked Account or Escrow Account, the TRS Servicer shall be
liable for the amount of such shortage. 
The TRS Servicer shall reimburse the Successor Servicer for the amount
of such shortage within thirty (30) days after receipt of written demand
therefor from the Successor Servicer;

 

(ix)                                Reconciliation.  The TRS Servicer shall, on or before the
related Servicing Transfer Date, reconcile principal balances and make any
monetary adjustments necessary to complete the reconciliation.  Any such monetary adjustments will be
transferred between the TRS Servicer and the Successor Servicer as appropriate.

 

(x)                                   IRS
Forms.  The TRS Servicer shall
prepare and file all IRS forms 1098, 1099 and other applicable forms and
reports which are required to be filed with respect to the period prior to the
related Servicing Transfer Date in relation to the servicing and ownership of
the Mortgage Loans.  The TRS Servicer
shall provide copies of such forms to UBS upon request and shall reimburse UBS
for any costs or penalties incurred by UBS due to the TRS Servicer’s failure to
comply with this paragraph.  The TRS
Servicer shall not be responsible for the preparation or filing of any such
reports with respect to any period commencing on or after the related Servicing
Transfer Date.

 

29

 

(xi)                                MERS Designated Mortgage Loans.  With
respect to any MERS Designated Mortgage Loans, the Master Servicer or Servicer
will modify the “Servicer” and all other relevant fields in the MERS® System to
reflect the transfer of Servicing to the Successor Servicer, where applicable.

 

(b)                                 Within
two (2) Business Days after the TRS Servicer delivers to the TRS Sub-Trust an
invoice stating the amounts thereof, the TRS Sub-Trust shall, or shall cause
the Successor Servicer to, reimburse the TRS Servicer for all Servicing
Advances not previously reimbursed and pay to the TRS Servicer any Servicing
Fees that were not previously retained by or paid to the TRS Servicer.  The TRS Servicer shall provide UBS with a
copy of any such notice that it delivers to the TRS Sub-Trust at the time it
give such notice.  The TRS Servicer
shall be obligated to deliver the Servicing Files to UBS or Successor Servicer
whether or not all such Servicing Advances shall have been reimbursed and all
such Servicing Fees shall have been paid, upon the termination of the
appointment of the TRS Servicer in connection with an Event of Default pursuant
to Section 8.01.  Any invoice
delivered as provided above may be supplemented by another invoice specifying
any further amounts of unreimbursed Servicing Advances and unpaid Servicing
Fees, which shall be paid in the same manner. 
In addition, if and to the extent that from and after the Servicing
Transfer Date (or such earlier date through which Servicing Advances shall have
been, for convenience, calculated and reimbursed) the TRS Servicer should
receive and pay bills for services properly rendered with respect to the
Mortgage Loans and REO Property prior to the Servicing Transfer Date, then
Servicer shall be entitled to reimbursement for such additional payments.  Within five (5) Business Days after Servicer
makes a written request to the TRS Sub-Trust for such reimbursement, supported
by a copy of the pertinent bill for services and including an indication of the
Mortgage Loan to which the bill relates, the TRS Sub-Trust shall, or shall
cause the Successor Servicer to, reimburse the TRS Servicer for such payment.

 

Section 11.02                          Amendment.

 

This Agreement may
be amended from time to time by the TRS Servicer, the TRS Sub-Trust and UBS by
written agreement signed by the TRS Servicer and UBS.

 

Section 11.03                          Governing
Law; Jurisdiction.

 

This Agreement
shall be governed by, and construed in accordance with, the laws of the State
of New York without giving effect to the conflict of law principles thereof,
and the obligations, rights and remedies of the parties hereunder shall be
determined in accordance with such laws. 
With respect to all legal proceedings arising out of or relating to this
Agreement or the transactions contemplated hereby, and any action or proceeding
for recognition and enforcement of any judgment in respect thereof, each of the
TRS Servicer, the TRS Sub-Trust and UBS irrevocably submits to the
non-exclusive jurisdiction of the courts of the State of New York and the
United States District Court located in the Borough of Manhattan, City of New
York, and each such party irrevocably waives any objection which it may have at
any time to the laying of venue of any suit, action or proceeding arising out
of or relating hereto brought in any such court, irrevocably waives any claim
that any such suit, action or proceeding brought in any

 

30

 

such
court has been brought in any inconvenient forum and further irrevocably waives
the right to object, with respect to such claim, suit, action or proceeding
brought in any such court, that such court does not have jurisdiction over such
party, provided that service of process is made by any lawful means.  Without limiting the foregoing, each such
party irrevocably agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof to it by registered or
certified mail (or any substantially similar form of mail), postage prepaid, to
its address set forth in or pursuant to this Agreement for notices.

 

Section 11.04                          Notices.

 

All demands,
notices and communications under or in connection with this Agreement shall be
in writing and shall be deemed to have been duly given, made and received  (i) when delivered against receipt of
registered or certified mail or upon actual receipt of registered or certified
mail, postage prepaid, return receipt requested; (ii) when delivered by
courier with appropriate evidence of receipt; or (iii) upon transmission
via facsimile with appropriate evidence of receipt, addressed as follows:

 

(i)                                     if
to the TRS Servicer:

 

MortgageIT, Inc.

33 Maiden Lane, 6th Floor

New York, NY 10038

Attention:  Michael A. Zigrossi and John
R. Cuti

Fax:  (212) 651-4674

 

or such other address as
may hereafter be furnished to UBS and the TRS Sub-Trust in writing by the TRS
Servicer;

 

(ii)                                  if
to the TRS Sub-Trust:

 

MortgageIT SPV I

 

c/o

 

MortgageIT, Inc., as
Administrator for

MortgageIT SPV I

33 Maiden Lane, 6th Floor

New York, NY 10038

Attention:  Michael A. Zigrossi and John R. Cuti

Fax:  (212) 651-4674

 

with a copy to:

 

Wilmington Trust Company

Rodney Square North

1100 N. Market Street

Wilmington, DE   19890

Attention:   Corporate Trust Administration

 

31

 

or such other address as
may hereafter be furnished to UBS and the TRS Servicer in writing by the TRS
Sub-Trust;

 

(iii)                               if
to UBS:

 

UBS Real Estate
Securities Inc.

1285 Avenue of the Americas

New York, New York 10019

Attention:  Robert Carpenter

George A. Mangiaracina

Fax:  (212) 713-9607

 

or such other address as
may hereafter be furnished to the TRS Servicer and the TRS Sub-Trust in writing
by UBS; and

 

Section 11.05                          Severability
of Provisions.

 

If any one or more
of the covenants, agreements, provisions or terms of this Agreement shall be
held invalid for any reason whatsoever, 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.

 

Section 11.06                          Relationship
of Parties.

 

Nothing herein
contained shall be deemed or construed to create a partnership or joint venture
between the parties hereto and the services of the TRS Servicer shall be
rendered as an independent contractor and not as agent for the TRS Sub-Trust
and UBS.

 

Section 11.07                          Execution;
Successors and Assigns.

 

This Agreement may
be executed in one or more counterparts and by the different parties hereto on
separate counterparts, each of which, when so executed, shall be deemed to be
an original; such counterparts, together, shall constitute one and the same
agreement.  This Agreement shall inure
to the benefit of and be binding upon the TRS Servicer, the TRS Sub-Trust and
UBS and their respective successors and assigns.

 

Section 11.08                          Recordation
of Assignments of Mortgage.

 

To the extent
permitted by applicable law, each of the Assignments of Mortgage is subject to
recordation in all appropriate public offices for real property records in all
the counties or other comparable jurisdictions in which any or all of the
Mortgaged Properties are situated, and in any other appropriate public recording
office or elsewhere, such recordation is to be effected at the TRS Sub-Trust’s
expense in the event recordation is either necessary under applicable law or
requested by UBS.

 

32

 

Section 11.09                          Merger and
Integration.

 

Except as
specifically stated otherwise herein, this Agreement sets forth the entire
understanding of the parties relating to the subject matter hereof, and all
prior understandings, written or oral, relating thereto are superseded by this Agreement.  This Agreement may not be modified, amended,
waived or supplemented except as provided herein.

 

Section 11.10                          Headings.

 

The headings
herein are for purposes of reference only and shall not otherwise affect the
meaning or interpretation of any provision hereof.

 

Section 11.11         Schedules and Exhibits.

 

The schedules and
exhibits attached hereto and referred to herein shall constitute a part of this
Agreement and are incorporated into this Agreement for all purposes.

 

Section 11.12                          No Bankruptcy Petition
Against the TRS Sub-Trust.

 

The TRS Servicer
agrees that, prior to the date that is one year and one day after the payment
in full of the Notes, it will not institute against the TRS Sub-Trust, or join
any other Person in instituting against UBS, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings or other proceedings under
the laws of the United States or any state of the United States.  This Section 11.12 shall survive the
termination of this Agreement.

 

Section 11.13                          Right
to Inspect.

 

The TRS Servicer
agrees that UBS shall have the right to inspect its servicing facilities for
the purpose of satisfying UBS that the TRS Servicer has the ability to service
the Mortgage Loans as provided under this Agreement.

 

Section 11.14                          No
Recourse.

 

It is expressly
understood and agreed by the parties hereto that (a) this Agreement is executed
and delivered by Wilmington Trust Company, not individually or personally but
solely as trustee of the TRS Sub-Trust, in the exercise of the powers and
authority conferred and vested in it, (b) each of the representations,
undertakings and agreements herein made on the part of the TRS Sub-Trust is
made and intended not as personal representations, undertakings and agreements
by Wilmington Trust Company but is made and intended for the purpose of binding
only the TRS Sub-Trust, (c) nothing herein contained shall be construed as
creating any liability on Wilmington Trust Company, individually or personally,
to perform any covenant either expressed or implied contained herein, all such
liability, if any, being expressly waived by the parties hereto and by an
Person claiming by, through or under the parties hereto and (d) under no
circumstances shall Wilmington Trust Company be personally liable for the
payment of any indebtedness or expenses of the TRS Sub-Trust or be liable for
the breach or failure of any obligation, representation, warranty or covenant
made or undertaken by the TRS Sub-Trust under this Agreement or any other
related documents.

 

33

 

IN WITNESS
WHEREOF, the TRS Servicer, the TRS Sub-Trust and UBS have caused their names to
be signed hereto by their respective officers thereunto duly authorized as of
the day and year first above written.

 

	
   

  	
  MORTGAGEIT SPV I
  acting with respect to the

  TRS Sub-Trust

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  WILMINGTON TRUST
  COMPANY,

  
	
   

  	
   

  	
  not in its
  individual capacity, but solely

  
	
   

  	
   

  	
  as Owner Trustee
  under the Trust Agreement

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Janel R.
  Havrilla

  	
   

  
	
   

  	
  Name:

  	
  Janel R.
  Havrilla

  	
   

  
	
   

  	
  Title:

  	
  Financial
  Services Officer

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  MORTGAGEIT,
  INC.,

  
	
   

  	
  as TRS Servicer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ JOHN R. CUTI

  	
   

  
	
   

  	
  Name:

  	
  John R. Cuti

  	
   

  
	
   

  	
  Title:

  	
  Secretary

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  UBS REAL ESTATE
  SECURITIES INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ ROBERT
  CARPENTER

  	
   

  
	
   

  	
  Name:

  	
  Robert Carpenter

  
	
   

  	
  Title:

  	
  Director

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ GEORGE A.
  MANGIARACINA

  	
   

  
	
   

  	
  Name:

  	
  George A.
  Mangiaracina

  
	
   

  	
  Title:

  	
  Managing
  Director

  
										

 

34

 

EXHIBIT A

 

MORTGAGE LOAN SCHEDULE

 

 

On file with UBS
Real Estate Securities Inc.

 

A-1

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