Document:

Unassociated Document

EXHIBIT 4.2

 

___________________________________________________________________

 

WELLS FARGO ASSET SECURITIES CORPORATION

 

(Depositor)

 

and

 

[___________________________]

 

(Securities Administrator)

 

and

 

[___________________________]

 

(Trustee)

 

TRUST AGREEMENT

 

Dated as of [        ], 20[__]

 

$[              ]

 

Mortgage Pass-Through Certificates

Series 20[__]  -  [__]

 

_________________________________________________________________

 

  

  

  

 

TABLE OF CONTENTS

 

Page

	
ARTICLE I

	  
	
DEFINITIONS

	  	  	  
	
Section 1.01

	
Definitions.

	
1

	
Section 1.02

	
Acts of Holders.

	
15

	
Section 1.03

	
Effect of Headings and Table of Contents.

	
15

	
Section 1.04

	
Benefits of Agreement.

	
16

	  	  	  
	
ARTICLE II

	  
	
CONVEYANCE OF MORTGAGE CERTIFICATES;

ORIGINAL ISSUANCE OF THE CERTIFICATES

	
Section 2.01

	
Conveyance of Mortgage Certificates.

	
16

	
Section 2.02

	
Representations and Warranties of the Securities Administrator and the Depositor.

	
17

	
Section 2.03

	
Execution and Delivery of Certificates.

	
18

	
Section 2.04

	
Designation of Certificates; Designation of Startup Day and Latest Possible Maturity Date.

	
19

	  	  	  
	
ARTICLE III

	  
	
ADMINISTRATION OF THE TRUST ESTATE

	  	  	  
	
Section 3.01

	
Certificate Account.

	
19

	
Section 3.02

	
Permitted Withdrawals from the Certificate Account.

	
20

	
Section 3.03

	
Annual Compliance Statements.

	
21

	
Section 3.04

	
Assessment of Servicing Compliance; Registered Public Accounting Firm Attestation Reports.

	
21

	
Section 3.05

	
Exchange Act Reports.

	
23

	  	  	  
	
ARTICLE IV

	  
	
DISTRIBUTIONS IN RESPECT OF CERTIFICATES;

PAYMENTS TO CERTIFICATEHOLDERS;

STATEMENTS AND REPORTS

	  	  	  
	
Section 4.01

	
Distributions.

	
29

	
Section 4.02

	
Allocation of Losses.

	
31

	
Section 4.03

	
Paying Agent.

	
31

 

  

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Section 4.04

	
Statements to Certificateholders; Reports to the Trustee and the Depositor.

	
33

	
Section 4.05

	
Calculation of Amounts; Binding Effect of Interpretations and Actions of Securities Administrator.

	
35

	  	  	  
	
ARTICLE V

	  
	
THE CERTIFICATES

	  	  	  
	
Section 5.01

	
The Certificates.

	
36

	
Section 5.02

	
Registration of Certificates.

	
38

	
Section 5.03

	
Mutilated, Destroyed, Lost or Stolen Certificates.

	
41

	
Section 5.04

	
Persons Deemed Owners.

	
41

	
Section 5.05

	
[Reserved].

	
42

	
Section 5.06

	
Maintenance of Office or Agency.

	
42

	
Section 5.07

	
Definitive Certificates.

	
42

	
Section 5.08

	
Notices to Clearing Agency.

	
42

	  	  	  
	
ARTICLE VI

	  
	
THE DEPOSITOR AND THE SECURITIES ADMINISTRATOR

	  	  	  
	
Section 6.01

	
Liability of the Depositor and the Securities Administrator.

	
43

	
Section 6.02

	
Merger or Consolidation of the Depositor or the Securities Administrator.

	
43

	
Section 6.03

	
Limitation on Liability of the Depositor, the Securities Administrator and Others.

	
43

	
Section 6.04

	
Resignation of the Securities Administrator.

	
44

	
Section 6.05

	
Compensation to the Securities Administrator.

	
45

	
Section 6.06

	
Assignment or Delegation of Duties by Securities Administrator.

	
45

	
Section 6.07

	
Indemnification of Trustee and Depositor by Securities Administrator.

	
46

	
Section 6.08

	
Securities Administrator Errors and Omissions Policy.

	
46

	  	  	  
	
ARTICLE VII

	  
	
DEFAULT

	  	  	  
	
Section 7.01

	
Events of Default.

	
47

	
Section 7.02

	
Other Remedies of Trustee.

	
48

	
Section 7.03

	
Directions by Certificateholders and Duties of Trustee During Event of Default.

	
49

	
Section 7.04

	
Action upon Certain Failures of the Securities Administrator and upon Event of Default.

	
49

	
Section 7.05

	
Trustee to Act; Appointment of Successor.

	
50

	
Section 7.06

	
Notification to Certificateholders.

	
51

 

  

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ARTICLE VIII

	  	  	  
	
CONCERNING THE TRUSTEE

	  	  	  
	
Section 8.01

	
Duties of Trustee.

	
52

	
Section 8.02

	
Certain Matters Affecting the Trustee.

	
53

	
Section 8.03

	
Trustee Not Required to Make Investigation.

	
54

	
Section 8.04

	
Trustee Not Liable for Certificates or Mortgage Certificates.

	
54

	
Section 8.05

	
Trustee May Own Certificates.

	
55

	
Section 8.06

	
The Securities Administrator to Pay Fees and Expenses; Limitation on Liability.

	
55

	
Section 8.07

	
Eligibility Requirements.

	
55

	
Section 8.08

	
Resignation and Removal.

	
56

	
Section 8.09

	
Successor.

	
57

	
Section 8.10

	
Merger or Consolidation.

	
57

	
Section 8.11

	
Authenticating Agent.

	
58

	
Section 8.12

	
Separate Trustees and Co-Trustees.

	
59

	
Section 8.13

	
Tax Matters; Compliance with REMIC Provisions.

	
60

	
Section 8.14

	
Indemnification of the Securities Administrator and Depositor by the Trustee.

	
62

	
Section 8.15

	
Trustee Errors and Omissions Policy.

	
63

	  	  	  
	
ARTICLE IX

	  	  	  
	
TERMINATION

	  	  	  
	
Section 9.01

	
Termination upon Purchase by the Depositor or Distribution to Certificateholders.

	
63

	  	  	  
	
ARTICLE X

	  	  	  
	
MISCELLANEOUS PROVISIONS

	  	  	  
	
Section 10.01

	
Amendment.

	
64

	
Section 10.02

	
Recordation of Agreement.

	
66

	
Section 10.03

	
Limitation on Rights of Certificateholders.

	
66

	
Section 10.04

	
Governing Law; Jurisdiction.

	
67

	
Section 10.05

	
Notices.

	
67

	
Section 10.06

	
Severability of Provisions.

	
67

	
Section 10.07

	
Special Notices to Rating Agencies.

	
68

	
Section 10.08

	
Covenant of Depositor.

	
68

	
Section 10.09

	
Recharacterization.

	
69

	
Section 10.10

	
Regulation AB Compliance; Intent of Parties; Reasonableness.

	
69

	  	  	  

 

  

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ARTICLE XI

	  	  	  
	
TERMS FOR CERTIFICATES

	  	  	  
	
Section 11.01

	
Original Principal Balances of the Classes of Class A Certificates.

	
69

	
Section 11.02

	
Original Principal Balances of the Classes of Class B Certificates.

	
70

	
Section 11.03

	
Closing Date.

	
70

	
Section 11.04

	
Single Certificate.

	
70

	
Section 11.05

	
Securities Administration Fee Rate.

	
70

  

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EXHIBITS

	
EXHIBIT A-1

	
-

	
Form of Face of Class A-1 Certificate

	
EXHIBIT A-2

	
-

	
Form of Face of Class A-2 Certificate

	
EXHIBIT A-R

	
-

	
Form of Face of Class A-R Certificate

	
EXHIBIT B-1

	
-

	
Form of Face of Class B-1 Certificate

	
EXHIBIT B-2

	
-

	
Form of Face of Class B-2 Certificate

	
EXHIBIT C

	
-

	
Form of Reverse of Series 20[__]  -  [__] Certificates

	
EXHIBIT D

	
-

	
Mortgage Certificate Schedule

	
EXHIBIT E

	
-

	
Affidavit Pursuant to Section 860E(e)(4) of the Internal Revenue Code of 1986, as amended, and for Non-ERISA Investors

	
EXHIBIT F

	
-

	
Letter from Transferor of Residual Certificate

	
EXHIBIT G

	
-

	
Transferee’s Letter (Class [B-1] [B-2] Certificates)

	
EXHIBIT H-1

	
-

	
Form of Sarbanes Oxley Certification

	
EXHIBIT H-2

	
-

	
Form of Certification of the Securities Administrator to be Provided to Depositor

	
EXHIBIT I

	
-

	
Servicing Criteria to be Addressed in Assessment of Compliance

	
EXHIBIT J

	
-

	
Additional Form 10-D Disclosure

	
EXHIBIT K

	
-

	
Additional Form 10-K Disclosure

	
EXHIBIT L

	
-

	
Form 8-K Disclosure Information

	
EXHIBIT M

	
-

	
Additional Disclosure Notification

  

-v-

  

 

This Trust Agreement, dated as of [_______], 20[__] executed by WELLS FARGO ASSET SECURITIES CORPORATION, as Depositor, [________________], as Securities Administrator and [________________], as Trustee.

 

W I T N E S S E T H  T H A T:

 

In consideration of the mutual agreements herein contained, the Depositor, the Securities Administrator and the Trustee agree as follows:

 

ARTICLE I

 

DEFINITIONS

 

Section 1.01 Definitions.

 

Whenever used herein, the following words and phrases, unless the context otherwise requires, shall have the meanings specified in this Article.

 

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

 

Additional Form 10-D Disclosure: As defined in Section 3.05(a).

 

Additional Form 10-K Disclosure: As defined in Section 3.05(b).

 

Affiliate: With respect to any Person, any other Person controlling, controlled by or under common control with such Person.  For purposes of this definition, “control” means the power to direct the management and policies of a Person, directly or indirectly, whether through ownership of voting securities, by contract or otherwise and “controlling” and “controlled” shall have meanings correlative to the foregoing.

 

Aggregate Mortgage Certificate Principal Balance:  With respect to any Distribution Date, the sum of the Mortgage Certificate Principal Balances as of such Distribution Date.

 

Aggregate Principal Balance: The sum of the Class A Principal Balance and the Class B Principal Balance.

 

Agreement: This Trust Agreement and all amendments and supplements hereto.

 

Authenticating Agent: Any authenticating agent appointed by the Trustee pursuant to Section 8.11. Initially, the Securities Administrator shall be the Authenticating Agent for the Certificates.

 

Bankruptcy Code: The Bankruptcy Code of 1978, as amended.

 

Beneficial Owner: With respect to a Book-Entry Certificate, the Person who is the beneficial owner of such Book-Entry Certificate, as reflected on the books of the Clearing 

 

  

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Agency, or on the books of a Person maintaining an account with such Clearing Agency (directly or as an indirect participant, in accordance with the rules of such Clearing Agency), as the case may be.

 

Book-Entry Certificate: Any one of the Class A-1 Certificates, Class A-2 Certificates, Class B-1 Certificates and Class B-2 Certificates, beneficial ownership and transfers of which shall be evidenced by, and made through, book entries by the Clearing Agency as described in Section 5.01(b).

 

Business Day: Any day other than (i) a Saturday or a Sunday, or (ii) a legal holiday in the City of New York, State of Iowa, State of Maryland or State of [________],or (iii) a day on which banking institutions in the City of New York, or the State of Iowa, State of Maryland or State of [________], are authorized or obligated by law or executive order to be closed.

 

Calculated Principal Distribution:  As defined in Section 4.02(a).

 

Certificate: Any one of the Class A Certificates or Class B Certificates.

 

Certificate Account: The separate trust account established and maintained by the Securities Administrator pursuant to Section 3.01 which shall be entitled “Certificate Account, [________________], as Securities Administrator on behalf of the Trustee, in trust for the Holders of the Certificates of the Wells Fargo Mortgage Backed Securities Resecuritization 20[__]  -  [__] Trust.” The Certificate Account shall be an Eligible Account.

 

Certificate Custodian: Initially, [________________]; thereafter any other Certificate Custodian acceptable to The Depository Trust Company and selected by the Trustee.

 

Certificate Register and Certificate Registrar: Respectively, the register maintained pursuant to and the registrar provided for in Section 5.02. Initially the Certificate Registrar shall be the Securities Administrator.

 

Certificateholder or Holder: The Person in whose name a Certificate is registered in the Certificate Register, except that, solely for the purposes of the taking of any action under Articles VII or VIII, any Certificate registered in the name of the Securities Administrator or any affiliate thereof shall be deemed not to be outstanding and the Voting Interest evidenced thereby shall not be taken into account in determining whether the requisite percentage of Certificates necessary to effect any such action has been obtained.

 

Class: All certificates whose form is identical except for variations in the Percentage Interest evidenced thereby.

 

Class A Certificate: Any of the Class A-1 Certificates, Class A-2 Certificates and Class A-R Certificate.

 

Class A Certificateholder: The registered holder of a Class A Certificate.

 

  

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Class A Distribution Amount:  With respect to any Distribution Date, an amount equal to the product of the Class A Percentage and the Principal Distribution Amount.

 

Class A Interest Accrual Amount: As to any Distribution Date, the sum of the Interest Accrual Amounts for the Class A Certificates with respect to such Distribution Date.

 

Class A Interest Percentage: As to any Distribution Date and any Class of Class A Certificates, the percentage calculated by dividing the Interest Accrual Amount of such Class (determined without regard to clause (ii) of the definition thereof) by the Class A Interest Accrual Amount (determined without regard to clause (ii) of the definition of each Interest Accrual Amount).

 

Class A Pass-Through Rate: With respect to each Distribution Date and the Class A-1, Class A-2 and Class A-R Certificates, a per annum rate equal to Net WAC.

 

Class A Percentage: As to any Distribution Date occurring on or prior to the Subordination Depletion Date, the lesser of (i) 100% and (ii) the percentage obtained by dividing the Class A Principal Balance (determined as of the Determination Date preceding such Distribution Date) by the Aggregate Mortgage Certificate Principal Balance. As to any Distribution Date occurring subsequent to the Subordination Depletion Date, 100% or such lesser percentage which will cause the Class A Principal Balance to decline to zero following the distribution made on such Distribution Date.

 

Class A Principal Balance: As of any date, an amount equal to the sum of the Principal Balances for the Class A-1 Certificates, Class A-2 Certificates and Class A-R Certificate.

 

Class A-1 Certificate: Any one of the Certificates executed by the Paying Agent and countersigned by the Authenticating Agent in substantially the form set forth in Exhibit A-1 and Exhibit C hereto.

 

Class A-1 Certificateholder: The registered holder of a Class A-1 Certificate.

 

Class A-2 Certificate: Any one of the Certificates executed by the Paying Agent and countersigned by the Authenticating Agent in substantially the form set forth in Exhibit A-2 and Exhibit C hereto.

 

Class A-2 Certificateholder: The registered holder of a Class A-2 Certificate.

 

Class A-R Certificate: The Certificate executed by the Paying Agent and countersigned by the Authenticating Agent in substantially the form set forth in Exhibit A-R and Exhibit C hereto.

 

Class A-R Certificateholder: The registered holder of the Class A-R Certificate.

 

Class B Certificate: Any of the Class B-1 Certificates and Class B-2 Certificates.

 

Class B Certificateholder: The registered holder of a Class B Certificate.

 

  

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Class B Distribution Amount:  With respect to any Distribution Date, an amount equal to the product of the Subordinated Percentage and the Principal Distribution Amount.

 

Class B Interest Accrual Amount: With respect to any Distribution Date, the sum of the Interest Accrual Amounts for the Classes of Class B Certificates with respect to such Distribution Date.

 

Class B Interest Percentage: With respect to any Distribution Date and any Class of Class B Certificates, the percentage calculated by dividing the Interest Accrual Amount of such Class (determined without regard to clause (ii) of the definition thereof) by the Class B Interest Accrual Amount (determined without regard to clause (ii) of the definition of each Interest Accrual Amount).

 

Class B Pass-Through Rate: As to any Distribution Date, a per annum rate equal to Net WAC.

 

Class B Principal Balance: As of any date, an amount equal to the sum of the Principal Balances of the Class B-1 and Class B-2 Certificates.

 

Class B-1 Certificate: Any one of the Certificates executed by the Paying Agent and countersigned by the Authenticating Agent in substantially the form set forth in Exhibit B-1 and Exhibit C hereto.

 

Class B-1 Certificateholder: The registered holder of a Class B-1 Certificate.

 

Class B-2 Certificate: Any one of the Certificates executed by the Paying Agent and countersigned by the Authenticating Agent in substantially the form set forth in Exhibit B-2 and Exhibit C hereto.

 

Class B-2 Certificateholder: The registered holder of a Class B-2 Certificate.

 

Clearing Agency: An organization registered as a “clearing agency” pursuant to Section 17A of the Exchange Act. The initial Clearing Agency shall be The Depository Trust Company.

 

Clearing Agency Participant: A broker, dealer, bank, financial institution or other Person for whom a Clearing Agency effects book-entry transfers of securities deposited with the Clearing Agency.

 

Closing Date: The date of initial issuance of the Certificates, as set forth in Section 11.03.

 

Code: The Internal Revenue Code of 1986, as it may be amended from time to time, any successor statutes thereto, and applicable U.S. Department of the Treasury temporary or final regulations promulgated thereunder.

 

Commission:  The United States Securities and Exchange Commission.

 

  

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Corporate Trust Office: With respect to (a) the Trustee, the office of the Trustee at which at any particular time its duties under this Agreement shall be administered, which office, at the date of the execution of this instrument, is located at [__________], Attention: [____________] and (b) the Paying Agent, Certificate Registrar and Authenticating Agent, for Certificate transfer purposes at [________________],[________________] Attn:  [________________], and for all other purposes at [________________] Attn:  [________________].

 

Current Class A Interest Distribution Amount: As to any Distribution Date, the amount distributed in respect of the Classes of Class A Certificates pursuant to Paragraph first of Section 4.01(a) on such Distribution Date.

 

Current Class B Interest Distribution Amount: As to any Distribution Date, the amount distributed in respect of the Classes of Class B Certificates pursuant to Paragraphs third and fifth of Section 4.01(a) on such Distribution Date.

 

Definitive Certificates: As defined in Section 5.01(b).

 

Denomination: The amount, if any, specified on the face of each Certificate representing the principal portion of the Original Principal Balance evidenced by such Certificate.

 

Depositor: Wells Fargo Asset Securities Corporation, or its successor in interest.

 

Determination Date: The 17th day of the month in which the related Distribution Date occurs, or if such 17th day is not a Business Day, the Business Day preceding such 17th day.

 

Distribution Date: The [___] Business Day following each Mortgage Certificate Distribution Date, commencing in [_______] 20[_].

 

Distribution Date Statement:  As defined in Section 4.04(a).

 

Eligible Account: One or more accounts (i) that are maintained with a depository institution (which may be the Securities Administrator) whose long-term debt obligations (or, in the case of a depository institution which is part of a holding company structure, the long-term debt obligations of such parent holding company) at the time of deposit therein are rated at least “AA” (or the equivalent) by each Rating Agency, (ii) that are trust accounts maintained with the trust department of a federal or state chartered depository institution or trust company acting in its fiduciary capacity or (iii) such other account that is acceptable to each of the Rating Agencies and would not cause the Trust Estate to fail to qualify as a REMIC or result in the imposition of any federal tax on the REMIC. If an account ceases to be an Eligible Account under clause (i) and does not otherwise qualify under clause (ii) or (iii) the account will be moved within 30 days to a depository meeting the ratings criteria.

 

 Eligible Investments: At any time, any one or more of the following obligations and securities which shall mature not later than the Business Day preceding the Distribution Date 

 

  

-5-

  

 

next succeeding the date of such investment, provided that such investments continue to qualify as “cash flow investments” as defined in Code Section 860G(a)(6):

 

(i) obligations of the United States of America or any agency thereof, provided such obligations are backed by the full faith and credit of the United States of America;

 

(ii) general obligations of or obligations guaranteed by any state of the United States of America or the District of Columbia receiving the highest short-term or highest long-term rating of each Rating Agency, or such lower rating as would not result in the downgrading or withdrawal of the rating then assigned to any of the Certificates by any Rating Agency or result in any of such rated Certificates being placed on credit review status (other than for possible upgrading) by any Rating Agency;

 

(iii) commercial or finance company paper which is then rated in the highest long-term commercial or finance company paper rating category of each Rating Agency or the highest short-term rating category of each Rating Agency, or such lower rating category as would not result in the downgrading or withdrawal of the rating then assigned to any of the Certificates by any Rating Agency or result in any of such rated Certificates being placed on credit review status (other than for possible upgrading) by any Rating Agency;

 

(iv) certificates of deposit, demand or time deposits, federal funds or banker’s acceptances issued by any depository institution or trust company incorporated under the laws of the United States or of any state thereof and subject to supervision and examination by federal and/or state banking authorities, provided that the commercial paper and/or debt obligations of such depository institution or trust company (or in the case of the principal depository institution in a holding company system, the commercial paper or debt obligations of such holding company) are then rated in the highest short-term or the highest long-term rating category for such securities of each of the Rating Agencies, or such lower rating categories as would not result in the downgrading or withdrawal of the rating then assigned to any of the Certificates by any Rating Agency or result in any of such rated Certificates being placed on credit review status (other than for possible upgrading) by any Rating Agency;

 

(v) guaranteed reinvestment agreements issued by any bank, insurance company or other corporation acceptable to each Rating Agency at the time of the issuance of such agreements;

 

(vi) repurchase agreements on obligations with respect to any security described in clauses (i) or (ii) above or any other security issued or guaranteed by an agency or instrumentality of the United States of America, in either case entered into with a depository institution or trust company (acting as principal) described in (iv) above;

 

(vii) securities (other than stripped bonds or stripped coupon securities) bearing interest or sold at a discount issued by any corporation incorporated under the laws of the United States of America or any state thereof which, at the time of such investment or 

 

  

-6-

  

 

contractual commitment providing for such investment, are then rated in the highest short-term or the highest long-term rating category by each Rating Agency, or in such lower rating category as would not result in the downgrading or withdrawal of the rating then assigned to any of the Certificates by any Rating Agency or result in any of such rated Certificates being placed on credit review status (other than for possible upgrading) by any Rating Agency;

 

(viii) such other investments acceptable to each Rating Agency as would not result in the downgrading of the rating then assigned to the Certificates by any Rating Agency or result in any of such rated Certificates being placed on credit review status (other than for possible upgrading) by any Rating Agency; and

 

(ix) any mutual fund, money market fund, common trust fund or other pooled investment vehicle, the assets of which are limited to instruments that otherwise would constitute Eligible Investments hereunder, including any such fund that is managed by the Trustee or Securities Administrator or any affiliate of the Trustee or Securities Administrator or for which the Trustee or Securities Administrator or any of its affiliates acts as an adviser as long as such fund is rated in at least the highest rating category by each Rating Agency rating such fund.

 

In no event shall an instrument be an Eligible Investment if such instrument evidences either (i) a right to receive only interest payments with respect to the obligations underlying such instrument, or (ii) both principal and interest payments derived from obligations underlying such instrument and the interest and principal payments with respect to such instrument provide a yield to maturity at the date of investment of greater than 120% of the yield to maturity at par of such underlying obligations.

 

ERISA: The Employee Retirement Income Security Act of 1974, as amended.

 

ERISA Prohibited Holder: As defined in Section 5.02(d).

 

Event of Default: Any of the events specified in Section 7.01.

 

Exchange Act:  The Securities Exchange Act of 1934, as amended.

 

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

 

Final Distribution Date: The Distribution Date on which the final distribution in respect of the Certificates is made pursuant to Section 9.01.

 

Final Scheduled Maturity Date: The Final Scheduled Maturity Date for each Class of Class A Certificates and Class B Certificates is [________], which corresponds to the “latest possible maturity date” for purposes of Section 860G(a)(1) of the Internal Revenue Code of 1986, as amended.

 

Form 8-K:  A Current Report on Form 8-K under the Exchange Act.

 

Form 8-K Disclosure Information: As defined in Section 3.05(c).

 

  

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Form 10-D:  An Asset-Backed Issuer Distribution Report on Form 10-D under the Exchange Act.

 

Form 10-K:  An Annual Report on Form 10-K under the Exchange Act.

 

Form 15:  A Form 15 Suspension Notification under the Exchange Act.

 

Holder: See “Certificateholder.”

 

Independent: When used with respect to any specified Person, such Person who (i) is in fact independent of the Depositor and the Securities Administrator, (ii) does not have any direct financial interest or any material indirect financial interest in the Depositor or the Securities Administrator or in an affiliate of either and (iii) is not connected with the Depositor, the Securities Administrator as an officer, employee, promoter, underwriter, trustee, partner, director or person performing similar functions.

 

Interest Accrual Amount: As to any Distribution Date and any Class of Class A Certificates, (i) the product of (a) 1/12th of the Class A Pass-Through Rate for such Class and (b) the Principal Balance of such Class as of the Determination Date immediately preceding such Distribution Date minus (ii) the sum of (x) the Class A Interest Percentage of such Class of any Interest Reductions for such Distribution Date and (y) the Class A Interest Percentage of such Class of any Trust Expenses for such Distribution Date.

 

As to any Distribution Date and any Class of Class B Certificates, an amount equal to (i) the product of (a) 1/12th of the Class B Pass-Through Rate and (b) the Principal Balance of such Class as of the Determination Date preceding such Distribution Date minus (ii) the sum of (x) the Class B Interest Percentage of such Class of any Interest Reductions for such Distribution Date and (y) the Class B Interest Percentage of such Class of any Trust Expenses for such Distribution Date.

 

Interest Distribution Amount:  As to any Distribution Date, an amount equal to (a) the sum of (i) all interest distributions received by the Securities Administrator since the preceding Distribution Date (or since the Closing Date, in the case of the first Distribution Date) on the Mortgage Certificates, (ii) the interest portion of the purchase price received by the Securities Administrator in connection with any repurchase of a Mortgage Certificate pursuant to Section 2.02(c) and (iii) the interest portion of the Termination Price received by the Securities Administrator in connection with the purchase of the Mortgage Certificates pursuant to Section 9.01, minus (b) any Trust Expenses.

 

Interest Reductions:  With respect to a Mortgage Certificate, any Non-Supported Interest Shortfalls, Relief Act Shortfalls and similar items that, are expressly allocated to such Mortgage Certificates, pursuant to the applicable Underlying Pooling and Servicing Agreement, proportionately with all other interest-bearing Classes of their respective Series as reflected in the Underlying Distribution Date Statements.

 

Interest Shortfall Amount: As to any Distribution Date and any Class of Certificates, any amount by which the Interest Accrual Amount of such Class with respect to 

 

  

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such Distribution Date exceeds the amount distributed in respect of such Class on such Distribution Date pursuant to Section 4.01(a).

 

Mortgage Certificate Distribution Date:  With respect to each Mortgage Certificate, the 25th day of each month or, if such day is not a business day, the next business day, as set forth in the applicable Underlying Pooling and Servicing Agreement.

 

Mortgage Certificate Principal Balance:  With respect to any Mortgage Certificate and any Distribution Date, the principal balance of such Mortgage Certificate as of the immediately preceding Mortgage Certificate Distribution Date, before giving effect to distributions and any other principal balance reductions on such Mortgage Certificate Distribution Date.

 

Mortgage Certificate Purchase Agreement:  The mortgage certificate purchase agreement dated as of [______], 20[__]   between [_______], as seller, and the Depositor, as purchaser.

 

Mortgage Certificate Rate:  With respect to each Mortgage Certificate and each Distribution Date, the pass-through rate used to calculate interest distributions on such Mortgage Certificate for the immediately preceding Mortgage Certificate Distribution Date.

 

Mortgage Certificate Schedule:  The schedule attached as Exhibit D hereto, such schedule setting forth as to each Mortgage Certificate its principal balance as of the Mortgage Certificate Distribution Date in [________] 20[__]  , after giving effect to principal distributions and other principal reductions on such Mortgage Certificate Distribution Date, the Series of each Mortgage Certificate, each Underlying Pooling and Servicing Agreement and the issuance date of each Mortgage Certificate.

 

Mortgage Certificates:  The certificates which evidence interests in the trusts created by the related Underlying Pooling and Servicing Agreements and which are transferred to the Trust by the Depositor, each of which is identified in the Mortgage Certificate Schedule.

 

Mortgage Loans:  The mortgage loans underlying the Mortgage Certificates.

 

Net WAC:  With respect to each Distribution Date, the weighted average of the Mortgage Certificate Rates of the Mortgage Certificates, weighted based on the Mortgage Certificate Principal Balances as of such Distribution Date.

 

Non-permitted Foreign Holder: As defined in Section 5.02(d).

 

Non-Supported Interest Shortfall: With respect to the Mortgage Loans, as defined in the related Underlying Pooling and Servicing Agreement.

 

Non-U.S. Person: As defined in Section 4.01(d).

 

Officer’s Certificate: With respect to any Person, a certificate signed by the Chairman of the Board, the President or a Vice President, and by the Treasurer, the Secretary or one of the Assistant Treasurers, Assistant Secretaries or any other duly authorized officer of such 

 

  

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Person (or, in the case of a Person which is not a corporation, signed by the person or persons having like responsibilities).

 

Opinion of Counsel: A written opinion of counsel, who may be outside or salaried counsel for the Depositor or the Securities Administrator, or any affiliate of the Depositor or the Securities Administrator, acceptable to the Trustee if such opinion is to be delivered to the Trustee; provided, however, that with respect to REMIC matters, matters relating to the determination of Eligible Accounts or matters relating to transfers of Certificates, such counsel shall be Independent.

 

Original Class B-1 Principal Balance: The Class B-1 Principal Balance as of the Closing Date, as set forth in Section 11.02.

 

Original Class B-2 Principal Balance: The Class B-2 Principal Balance as of the Closing Date, as set forth in Section 11.02.

 

Original Principal Balance: Any of the Original Principal Balances of the Classes of Class A Certificates as set forth in Section 11.01; the Original Class B-1 Principal Balance or Original Class B-2 Principal Balance as set forth in Section 11.02.

 

Paying Agent: The Person authorized to make distributions to Certificateholders with respect to the Certificates and to forward to Certificateholders the periodic and annual statements required by Section 4.04. The Paying Agent may be the Trustee. The initial Paying Agent is appointed in Section 4.03(b).

 

Paying Agent Agreement:  As defined in Section 4.03(b).

 

Payment Account: The account maintained pursuant to Section 4.03(a).

 

Percentage Interest: With respect to a Class A Certificate of a Class, the undivided percentage interest obtained by dividing the original principal balance of such Certificate by the Original Principal Balance of such Class of Class A Certificates.  With respect to a Class B Certificate of a Class, the undivided percentage interest obtained by dividing the original principal balance of such Certificate by the Original Principal Balance of such Class of Class B Certificates.

 

Person: Any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization or government or any agency or political subdivision thereof.

 

Plan: As defined in Section 5.02(c).

 

Pool Distribution Amount: The sum of the Interest Distribution Amount and the Principal Distribution Amount.

 

Principal Balance: As to any Distribution Date and any Class of Certificates, the Original Principal Balance thereof, reduced by (i) all amounts previously distributed to such Class on account of principal pursuant to Sections 4.01(b) and 4.02(a) and (ii) the aggregate 

 

  

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amount of Realized Loss Shortfalls previously allocated to such Class pursuant to Section 4.02(a) and, in the case of any Class to which Realized Loss Shortfalls have been allocated, increased by the amount of Recoveries (as that term is used in the applicable Underlying Pooling and Servicing Agreement) on the Mortgage Loans underlying the related Mortgage Certificates distributed as principal on such Mortgage Certificates.

 

Notwithstanding the foregoing, no Principal Balance of a Class will be increased on any Determination Date such that the Principal Balance of such Class exceeds its Original Principal Balance less all amounts of principal previously distributed in respect of such Class on prior Distribution Dates.

 

Principal Distribution Amount:  As to any Distribution Date, the sum of (a) all Principal Payments received by the Securities Administrator since the preceding Distribution Date (or since the Closing Date, in the case of the first Distribution Date on the Mortgage Certificates), (b) the principal portion of the purchase price received by the Securities Administrator in connection with any repurchase of a Mortgage Certificate pursuant to Section 2.02(c) and (c) the principal portion of the Termination Price received by the Securities Administrator in connection with the purchase of the Mortgage Certificates pursuant to Section 9.01.

 

Principal Payments:  As to any Distribution Date, an amount equal to the principal distributions received by the Securities Administrator on the Mortgage Certificates on the immediately preceding Mortgage Certificate Distribution Date.

 

Pro Rata Share:  As to any Distribution Date and any Class of Class B Certificates, the portion of the Class B Distribution Amount allocable to such Class, equal to the product of the Class B Distribution Amount for such Distribution Date and a fraction, the numerator of which is the Principal Balance of such Class of Class B Certificates thereof and the denominator of which is the Class B Principal Balance.

 

Prohibited Transaction Tax: Any tax imposed under Section 860F of the Code.

 

Prospectus: The prospectus dated [________], 20[__]  as supplemented by the prospectus supplement dated [________], 20[__]  , relating to the Class A, Class B-1 and Class B-2 Certificates.

 

Rating Agency: Any nationally recognized statistical credit rating agency, or its successor, that rated one or more Classes of the Certificates at the request of the Depositor at the time of the initial issuance of the Certificates. The Rating Agencies for the Class A Certificates (other than the Class A-R Certificate) are [________] and [________]. The Rating Agency for the Class A-R Certificate is [________]. The Rating Agency for the Class B-1 and Class B-2 Certificates is [________]. If any such agency or a successor is no longer in existence, “Rating Agency” shall be such statistical credit rating agency, or other comparable Person, designated by the Depositor, notice of which designation shall be given to the Trustee and the Securities Administrator.  References herein to the highest short-term rating category of a Rating Agency shall mean [________] in the case of [________],[________] in the case of [________] and in the case of any other Rating Agency shall mean its equivalent of such ratings.  References herein 

 

  

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to the highest long-term rating categories of a Rating Agency shall mean AAA in the case of [________] and Aaa in the case of [________], and in the case of any other Rating Agency shall mean its equivalent of such ratings without any plus or minus.

 

Realized Loss Shortfalls:  With respect to any Distribution Date, any amount by which the Aggregate Mortgage Certificate Principal Balance of the Mortgage Certificates, after giving effect to any principal distributions and any other principal reductions on the preceding Mortgage Certificate Distribution Date, is less than the Aggregate Principal Balance, as determined after taking into account distributions on the Certificates pursuant to Section 4.02(a) on such Distribution Date.

 

Record Date: With respect to each Class of Certificates, the last Business Day of the month preceding the month of the related Mortgage Certificate Distribution Date.

 

Regulation AB:  Subpart 229.1100 – Asset Backed Securities (Regulation AB), 17 C.F.R. §§229.1100-229.1123, as such may be amended from time to time, and subject to such clarification and interpretation as have been publicly provided by the Commission in the adopting release (Asset-Backed Securities, Securities Act Release No. 33-8518, 70 Fed. Reg. 1,506 (Jan. 7, 2005)) or by the staff of the Commission, or as may be provided by the Commission or its staff from time to time.

 

Relevant Servicing Criteria: The Servicing Criteria applicable to the Securities Administrator or the Trustee, as set forth on Exhibit I attached hereto.  For clarification purposes, multiple parties can have responsibility for the same Relevant Servicing Criteria.  With respect to a Servicing Function Participant engaged by the Securities Administrator or the Trustee, the term “Relevant Servicing Criteria” refers to the portion of the Relevant Servicing Criteria applicable to the party engaging such Servicing Function Participant insofar as the functions required to be performed by such party are to be performed by the Servicing Function Participant.

 

Relief Act Shortfall:  With respect to the Mortgage Loans, as defined in the related Underlying Pooling and Servicing Agreement.

 

REMIC: A “real estate mortgage investment conduit” as defined in Code Section 860D.  “The REMIC” means the REMIC constituted by the Trust Estate.

 

REMIC Provisions: Provisions of the federal income tax law relating to REMICs, which appear at Sections 860A through 860G of Part IV of Subchapter M of Chapter 1 of Subtitle A of the Code, and related provisions, and U.S. Department of the Treasury temporary, proposed or final regulations promulgated thereunder, as the foregoing are in effect (or with respect to proposed regulations, are proposed to be in effect) from time to time.

 

Reportable Event: As defined in Section 3.05(c).

 

Repurchase Price:  With respect to any Mortgage Certificate repurchased pursuant to Section 2.02(c) hereof, the sum of (i) the Mortgage Certificate Principal Balance for such Mortgage Certificate as of the next Distribution Date and (ii) one month’s interest on such Mortgage Certificate Principal Balance at the then-applicable Mortgage Certificate Rate for such Mortgage Certificate.

 

  

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Residual Certificate:  The Class A-R Certificate.

 

Responsible Officer: When used with respect to the Trustee, the Securities Administrator, the Paying Agent or the Authenticating Agent, any officer of the Corporate Trust Department of the Trustee, the Securities Administrator, the Paying Agent or the Authenticating Agent having direct responsibility for the administration of this Agreement, including any Senior Vice President, any Vice President, any Assistant Vice President, any Assistant Secretary, any Trust Officer or Assistant Trust Officer, or any other employee of the Trustee, the Securities Administrator, the Paying Agent or the Authenticating Agent customarily performing functions similar to those performed by any of the above-designated officers.

 

Rule 144A: Rule 144A promulgated under the 1933 Act.

 

Sarbanes-Oxley Certification: As defined in Section 3.05(b).

 

Securities Administration Fee: The fee payable monthly to the Securities Administrator on each Distribution Date for its services as Securities Administrator, in an amount equal to the product of (i) the Securities Administration Fee Rate and (ii) the Aggregate Mortgage Certificate Principal Balance as of the immediately preceding Distribution Date.

 

Securities Administration Fee Rate: As set forth in Section 11.05.

 

Securities Administration Officer:  Any officer of the Securities Administrator involved in, or responsible for, the administration of the Mortgage Certificates.

 

Securities Administrator: [________________], or its successor in interest.  Initially, the Securities Administrator functions shall be performed by [________________].

 

Securities Administrator Errors and Omissions Policy: An insurance policy covering losses caused by errors or omissions of the Securities Administrator and its personnel.

 

Series:  Each of the separate series of certificates, to which the related Mortgage Certificates belong, as listed on the Mortgage Certificate Schedule.

 

Servicing Criteria:  The “servicing criteria” set forth in Item 1122(d) of Regulation AB, as such may be amended from time to time.

 

Servicing Function Participant: Any Subcontractor or any other Person, other than the Securities Administrator and the Trustee, that is performing activities addressed by the Servicing Criteria.

 

Similar Law: As defined in Section 5.02(c).

 

Single Certificate: A Certificate of any Class that evidences the smallest permissible Denomination for such Class, as set forth in Section 11.04.

 

Startup Day: As defined in Section 2.05.

 

  

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Subcontractor: Any vendor, subcontractor or other Person that performs one or more discrete functions identified in Item 1122(d) of Regulation AB under the direction or authority of the Securities Administrator or the Trustee.

 

Subordinated Percentage:  As to any Distribution Date, the percentage which is the difference between 100% and the Class A Percentage for such date.

 

Subordination Depletion Date: The Distribution Date preceding the first Distribution Date on which the Class A Percentage (determined pursuant to clause (ii) of the definition thereof) equals or exceeds 100%.

 

Termination Price: As defined in Section 9.01.

 

Trust: The New York common law trust created by this Agreement which shall be entitled “Wells Fargo Mortgage Backed Securities Resecuritization 20[__]  -  [__] Trust.”

 

Trust Estate: The corpus of the Trust, consisting of the Mortgage Certificates, such amounts as may be held from time to time in the Certificate Account and all other property and rights described in the first paragraph of Section 2.01(a).

 

Trust Expenses:  Any taxes payable pursuant to the third sentence of Section 8.13(a) or indemnity payments to the Securities Administrator or Trustee pursuant to Section 6.03 or Section 8.06, as applicable.

 

Trustee: [________].

 

Trustee Errors and Omissions Policy:  An insurance policy covering losses caused by errors or omissions of the Trustee and its personnel.

 

Underlying Distribution Date Statements: With respect to the Mortgage Certificates and each Mortgage Certificate Distribution Date, the reports provided or made available to the Securities Administrator as holder of the Mortgage Certificates by or on behalf of the master servicer or paying agent for each Series.

 

Underlying Pooling and Servicing Agreement:  With respect to each Mortgage Certificate, the pooling and servicing agreement pursuant to which such Mortgage Certificate was issued, as listed on the Mortgage Certificate Schedule.

 

Unpaid Interest Shortfall Amount:  As to any Distribution Date and Class, the sum of all Interest Shortfall Amounts for such Class in respect of all prior Distribution Dates.

 

U.S. Person: As defined in Section 4.01(d).

 

Voting Interest: With respect to any provisions hereof providing for the action, consent or approval of the Holders of all Certificates evidencing specified Voting Interests in the Trust Estate, each Class of Certificates will be entitled to a pro rata portion of the Voting Interest equal to the ratio obtained by dividing the Principal Balance of such Class by the Aggregate Principal Balance. Each Certificateholder of a Class will have a Voting Interest equal to the 

 

  

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product of the Voting Interest to which such Class is collectively entitled and the Percentage Interest in such Class represented by such Holder’s Certificates. With respect to any provisions hereof providing for action, consent or approval of each Class of Certificates or specified Classes of Certificates, each Certificateholder of a Class will have a Voting Interest in such Class equal to such Holder’s Percentage Interest in such Class.

 

Wells Fargo Bank: Wells Fargo Bank, N.A., or its successor in interest.

 

Section 1.02 Acts of Holders.

 

(a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Agreement to be given or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by an agent duly appointed in writing. Except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Trustee. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Agreement and conclusive in favor of the Trustee, if made in the manner provided in this Section 1.02. The Trustee shall promptly notify the Securities Administrator in writing of the receipt of any such instrument or writing.

 

(b) The fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a witness of such execution or by a certificate of a notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument or writing acknowledged to him the execution thereof. When such execution is by a signer acting in a capacity other than his or her individual capacity, such certificate or affidavit shall also constitute sufficient proof of his or her authority. The fact and date of the execution of any such instrument or writing, or the authority of the individual executing the same, may also be proved in any other manner which the Trustee deems sufficient.

 

(c) The ownership of Certificates (whether or not such Certificates shall be overdue and notwithstanding any notation of ownership or other writing thereon made by anyone other than the Trustee and the Authenticating Agent) shall be proved by the Certificate Register, and none of the Trustee, the Depositor or the Securities Administrator shall be affected by any notice to the contrary.

 

(d) Any request, demand, authorization, direction, notice, consent, waiver or other action of the Holder of any Certificate shall bind every future Holder of the same Certificate and the Holder of every Certificate issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof in respect of anything done, omitted or suffered to be done by the Trustee, the Depositor or the Securities Administrator in reliance thereon, whether or not notation of such action is made upon such Certificate.

 

Section 1.03 Effect of Headings and Table of Contents.

 

The Article and Section headings in this Agreement and the Table of Contents are for convenience of reference only and shall not affect the interpretation or construction of this Agreement.

 

  

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Section 1.04 Benefits of Agreement.

 

Nothing in this Agreement or in the Certificates, express or implied, shall give to any Person, other than the parties to this Agreement and their successors hereunder and the Holders of the Certificates any benefit or any legal or equitable right, power, remedy or claim under this Agreement.

 

ARTICLE II

 

CONVEYANCE OF MORTGAGE CERTIFICATES;

ORIGINAL ISSUANCE OF THE CERTIFICATES

 

Section 2.01 Conveyance of Mortgage Certificates.

 

(a) The Depositor, concurrently with the execution and delivery hereof, does hereby transfer, convey, sell and assign to the Trustee, in trust on behalf of the Holders of the Certificates, without recourse, all the right, title and interest of the Depositor in and to the Mortgage Certificates, including all distributions thereon payable after the Closing Date and the Trustee does hereby accept assignment of the Mortgage Certificates (and in connection therewith to execute such investment representation letters or similar instruments as may be required by the trustee, certificate registrar, master servicer or paying agent for each Series).  In connection with such assignment, the Depositor shall (i) in the case of any Mortgage Certificates that are Book-Entry Certificates, cause the records of the Clearing Agency to reflect that the Trustee is the beneficial owner of such Mortgage Certificates as of the Closing Date or (ii) in the case of any Mortgage Certificates that are Definitive Certificates, arrange for such Mortgage Certificates to be registered in the name of the Trustee as of the Closing Date and deliver such Mortgage Certificates to the Trustee as of the Closing Date.

 

The assignment of the Mortgage Certificates accomplished hereby is absolute and is intended as a sale.  The Depositor hereby pledges and grants to the Trustee for the benefit of the Certificateholders a security interest in the Depositor’s interest in the Trust Estate to secure payment (in the event of recharacterization notwithstanding the parties’ intent) and performance by the Depositor of its obligations hereunder.  The Depositor and the Trustee shall, to the extent consistent with this Agreement, take such actions as may be necessary to ensure that, if this Agreement were deemed to create a security interest in the Mortgage Certificates, such security interest would be deemed to be a perfected security interest of first priority under applicable law and will be maintained as such throughout the term of this Agreement.

 

(b) Concurrently with the execution and delivery of this Agreement, the Depositor shall deliver the Mortgage Certificate Schedule to the Trustee and the Securities Administrator, which is attached hereto as Exhibit D.

 

  

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Section 2.02 Representations and Warranties of the Securities Administrator and the Depositor.

 

(a) The Securities Administrator hereby represents and warrants to the Trustee for the benefit of the Certificateholders that, as of the date of execution of this Agreement:

 

(i) The Securities Administrator is a [________] duly chartered and validly existing in good standing under the laws of [________];

 

(ii) The execution and delivery of this Agreement by the Securities Administrator and its performance and compliance with the terms of this Agreement will not violate the Securities Administrator’s corporate charter or by-laws or constitute a default (or an event which, with notice or lapse of time, or both, would constitute a default) under, or result in the breach of, any material contract, agreement or other instrument to which the Securities Administrator is a party or which may be applicable to the Securities Administrator or any of its assets;

 

(iii) This Agreement, assuming due authorization, execution and delivery by the Trustee and the Depositor, constitutes a valid, legal and binding obligation of the Securities Administrator, enforceable against it in accordance with the terms hereof subject to applicable bankruptcy, insolvency, reorganization, moratorium and other laws affecting the enforcement of creditors’ rights generally and to general principles of equity, regardless of whether such enforcement is considered in a proceeding in equity or at law; and

 

(iv) The Securities Administrator is not in default with respect to any order or decree of any court or any order, regulation or demand of any federal, state, municipal or governmental agency, which default might have consequences that would materially and adversely affect the condition (financial or other) or operations of the Securities Administrator or its properties or might have consequences that would materially affect its performance hereunder.

 

It is understood and agreed that the representations and warranties set forth in this Section 2.02(a) shall survive delivery of the Mortgage Certificates to the Trustee.  Upon discovery by any of the Depositor, the Securities Administrator or the Trustee of a breach of any of the representations and warranties set forth in this Section 2.02(a), the party discovering such breach shall give prompt written notice, which shall not exceed two days, to the other parties. The Securities Administrator shall consult with the Depositor to determine if any such breach is material and any breach determined by the Depositor to be material shall be included by the Securities Administrator on the next Distribution Date Statement prepared pursuant to Section 4.04.

 

(b) The Depositor hereby represents and warrants to the Trustee for the benefit of Certificateholders that, as of the date of execution of this Agreement, with respect to the Mortgage Certificates:

 

  

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(i) Immediately prior to the transfer and assignment contemplated herein, the Depositor was the sole owner and holder of the Mortgage Certificates.  The Mortgage Certificates were not assigned or pledged by the Depositor and the Depositor had good and marketable title thereto, and the Depositor had full right to transfer and sell the Mortgage Certificates to the Trustee free and clear of any encumbrance, participation interest, lien, equity, pledge, claim or security interest and had full right and authority subject to no interest or participation in, or agreement with any other party to sell or otherwise transfer the Mortgage Certificates.

 

(ii) As of the Closing Date, the Depositor has transferred all right, title and interest in the Mortgage Certificates to the Trustee on behalf of the Trust.

 

(iii) As of the Closing Date, the Depositor has not transferred the Mortgage Certificates to the Trustee on behalf of the Trust with any intent to hinder, delay or defraud any of its creditors.

 

It is understood and agreed that the representations and warranties set forth in this Section 2.02(b) shall survive delivery of the respective Mortgage Certificates to the Trustee and shall inure to the benefit of the Trustee notwithstanding any restrictive or qualified endorsement or assignment.

 

(c) Upon discovery by any of the Depositor, the Securities Administrator or the Trustee that any of the representations and warranties made in subsection (b) above is not accurate (referred to herein as a “breach”) and that such breach materially and adversely affects the interests of the Certificateholders in the related Mortgage Certificate, the party discovering such breach shall give prompt written notice (not to exceed two days after discovery) to the other parties to this Agreement.  Within 60 days of the earlier of its discovery or its receipt of notice of any such breach, the Depositor shall cure such breach in all material respects or shall repurchase the Mortgage Certificate or any property acquired in respect thereof from the Trust Estate at a price equal to the Repurchase Price. The Repurchase Price shall be deposited in the Certificate Account. It is understood and agreed that the obligation of the Depositor to repurchase any Mortgage Certificate as to which such a breach has occurred and is continuing shall constitute the sole remedy respecting such breach available to Certificateholders or the Trustee on behalf of Certificateholders, and such obligation shall survive until termination of the Trust Estate hereunder.

 

The Trustee shall be responsible for enforcing the Depositor’s obligations under this Section 2.02.  If the Trustee receives written notice from the Securities Administrator that such breach is not cured by the Depositor within 60 days after the Trustee’s notice, the Trustee shall enforce the Depositor’s obligation to repurchase such Mortgage Certificate in accordance with the provisions of this Section 2.02.

 

Section 2.03 Execution and Delivery of Certificates.

 

The Trustee acknowledges the assignment to it of the Mortgage Certificates and (a) in the case of Mortgage Certificates that are Definitive Certificates, acknowledges the delivery of such Mortgage Certificates to the Trustee and (b) in the case of Mortgage Certificates 

 

  

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that are Book-Entry Certificates, acknowledges that the records of the Clearing Agency reflect that the Trustee is the beneficial owner of the Mortgage Certificates.  The Paying Agent, concurrently with such assignment and/or delivery, has executed and delivered to or upon the order of the Depositor, in exchange for the Mortgage Certificates, together with all other assets included in the definition of “Trust Estate,” receipt of which is hereby acknowledged, Certificates in authorized denominations which evidence ownership of the entire Trust Estate.

 

Section 2.04 Designation of Certificates; Designation of Startup Day and Latest Possible Maturity Date.

 

The Depositor hereby designates the Classes of Class A Certificates (other than the Residual Certificate) and the Classes of Class B Certificates as classes of “regular interests” and the Class A-R Certificate as the single class of “residual interest” in the REMIC for the purposes of Code Sections 860G(a)(1) and 860G(a)(2), respectively.  The Closing Date is hereby designated as the “Startup Day” of the REMIC within the meaning of Code Section 860G(a)(9). The “latest possible maturity date” of the regular interests in the REMIC is [_____], 20[__]  for purposes of Code Section 860G(a)(1).

 

ARTICLE III

 

ADMINISTRATION OF THE TRUST ESTATE

 

Section 3.01 Certificate Account.

 

(a) The Securities Administrator shall establish and maintain a Certificate Account for the deposit of funds received by the Securities Administrator with respect to the Mortgage Certificates. Such account shall be maintained as an Eligible Account. The Securities Administrator shall give notice to the Depositor of the location of the Certificate Account and of any change in the location thereof.

 

(b) The Securities Administrator shall deposit into the Certificate Account on the day of receipt thereof all amounts received by it with respect to the Mortgage Certificates and shall, in addition, deposit into the Certificate Account, in the case of any Mortgage Certificate that is repurchased by the Depositor pursuant to Section 2.02 or 9.01, the purchase price therefor, not later than the Business Day next following the day of receipt and posting by the Securities Administrator.  If the Securities Administrator shall not have received a distribution with respect to any Mortgage Certificates by the Business Day after the date on which such distribution was due and payable pursuant to the terms of such Mortgage Certificates, the Securities Administrator shall notify the Certificateholders, request such payment as promptly as possible in accordance with law and shall, except as otherwise set forth in this paragraph, take such legal action as directed by the Holders of Certificates entitled to a majority of the aggregate Voting Rights.  The reasonable legal fees and expenses incurred by the Securities Administrator in connection with the prosecution of any such legal action shall be reimbursable to the Securities Administrator out of the proceeds of any such action and shall be retained by the Securities Administrator prior to the deposit of any remaining proceeds in the Certificate Account pending distribution thereof to the Certificateholders in accordance with Section 4.01.  In the event that the Securities Administrator has reason to believe that the proceeds of any such legal action may 

 

  

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be insufficient to reimburse it for its projected legal fees and expenses, the Securities Administrator shall notify the Certificateholders that it is not obligated to pursue any such available remedies unless adequate indemnity for its legal fees and expenses is provided by the Certificateholders.  In the event any such indemnity is provided to the Securities Administrator, the Securities Administrator shall take such action as shall be directed by the Holders of Certificates entitled to a majority of the Voting Rights.

 

(c) The Securities Administrator may cause the funds in the Certificate Account to be invested in Eligible Investments. No such Eligible Investments will be sold or disposed of at a gain prior to maturity unless the Securities Administrator has received an Opinion of Counsel or other evidence satisfactory to it that such sale or disposition will not cause the Trust Estate to be subject to Prohibited Transactions Tax, otherwise subject the Trust Estate to tax, or cause the Trust Estate to fail to qualify as a REMIC while any Certificates are outstanding. Any amounts deposited in the Certificate Account prior to the Distribution Date may be invested for the account of the Securities Administrator and any investment income thereon shall be additional compensation to the Securities Administrator for services rendered under this Agreement. The amount of any losses incurred in respect of any such investments shall be deposited in the Certificate Account by the Securities Administrator out of its own funds immediately as realized, without any right of reimbursement therefor from the Trust Estate.

 

Section 3.02 Permitted Withdrawals from the Certificate Account.

 

(a) The Securities Administrator may, from time to time, make withdrawals from the Certificate Account for the following purposes:

 

(i) solely from the Interest Distribution Amount, to pay the Securities Administration Fee to the Securities Administrator;

 

(ii) to reimburse the Securities Administrator or the Trustee (or, in certain cases, the Depositor) for expenses incurred by it (including taxes paid on behalf of the Trust Estate) and recoverable by or reimbursable to it pursuant to Section 6.03, the second or third paragraphs of Section 8.06 or the third sentence of Section 8.13(a), provided such expenses are “unanticipated” within the meaning of the REMIC Provisions;

 

(iii) to pay to the Depositor or other purchaser with respect to each Mortgage Certificate that has been repurchased pursuant to Section 2.02 or 9.01, all amounts received thereon and not required to be distributed as of the date on which the related repurchase or purchase price was determined;

 

(iv) to remit funds to the Paying Agent in the amounts and in the manner provided for herein;

 

(v) to pay to the Securities Administrator any interest earned on or investment income with respect to funds in the Certificate Account;

 

(vi) to withdraw from the Certificate Account any amount deposited in the Certificate Account that was not required to be deposited therein; and

 

  

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(vii) to clear and terminate the Certificate Account pursuant to Section 9.01.

 

(b) The Securities Administrator shall keep and maintain separate accounting, on a Mortgage Certificate by Mortgage Certificate basis, for the purpose of justifying any payment to and withdrawal from the Certificate Account.  The Securities Administrator shall notify the Depositor and the Trustee of the amount, purpose and party paid pursuant to Section 3.02(a)(ii).

 

Section 3.03 Annual Compliance Statements.

 

The Securities Administrator shall deliver in electronic form, or otherwise make available to the Depositor and the Trustee, and the Securities Administrator shall cause each Additional Securities Administrator engaged by it to deliver, in electronic form, or otherwise make available, to the Securities Administrator, the Trustee and the Depositor on or before March 5 of each year or if such day is not a Business Day, the next Business Day (with a 10 calendar day cure period, but in no event later than March 15), commencing in March 20[__], a copy of a certificate (followed by a hard copy to the party or parties receiving such certificate within 10 calendar days) in the form required by Item 1123 of Regulation AB, to the effect that (i) an authorized officer of the Securities Administrator or the Additional Securities Administrator, as the case may be, has reviewed (or a review has been made under his or her supervision of) such party’s activities under this Agreement, or such other applicable agreement in the case of an Additional Securities Administrator, during the prior calendar year or portion thereof and (ii) to the best of such officer’s knowledge, based on such review, such party has fulfilled all of its obligations under this Agreement, or such other applicable agreement in the case of an Additional Securities Administrator, in all material respects throughout the prior calendar year or portion thereof or, if there has been a failure to fulfill any such obligation in any material respect, specifying each such failure known to such officer and the nature and status thereof.  If any of the certificates delivered pursuant to this Section 3.03 disclose that there has been a failure to fulfill any obligation in any material respect then the Securities Administrator shall promptly notify the Depositor and forward a copy of such certificate to the Depositor, and the Depositor shall review such certificate and, if applicable, consult with the Securities Administrator as to the nature of any failure to fulfill any obligation under this Agreement or such other applicable agreement in the case of an Additional Securities Administrator, in any material respect.

 

Section 3.04 Assessment of Servicing Compliance; Registered Public Accounting Firm Attestation Reports.

 

(a) The Securities Administrator, at its own expense, shall furnish to the Depositor, and the Trustee, at its own expense, shall furnish, or otherwise make available, and shall cause any Servicing Function Participant engaged by any such party to furnish, to the Securities Administrator, not later than March 5 of each year, or if such day is not a Business Day, the next Business Day (with a 10 day cure period, but in no event later than March 15), commencing in March 20[__], a copy of a report, followed by a hard copy to the Securities Administrator within 10 calendar days, signed by an authorized officer of the Securities Administrator, the Trustee or the Servicing Function Participant, as applicable, on assessment of compliance with, at a minimum, the Relevant Servicing Criteria that contains:

 

  

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(i) a statement by such party of its responsibility for assessing compliance with the Servicing Criteria applicable to it;

 

(ii) a statement that such party used the Servicing Criteria applicable to it to assess compliance with the Servicing Criteria;

 

(iii) such party’s assessment of compliance with the Servicing Criteria applicable to it as of and for the preceding fiscal year, including, if there had been any material instance of noncompliance with the Servicing Criteria applicable to it, identifying each such failure and the nature and status thereof; and

 

(iv) a statement that a registered public accounting firm has issued an attestation report on such party’s assessment of compliance with the Servicing Criteria applicable to it as of and for the preceding fiscal year;

 

provided, however that no such assessment shall be required with respect to any Servicing Function Participant who would not be considered a separate "party participating in the servicing function" for purposes of Item 1122 of Regulation AB, as then interpreted by the Commission. In the event of any disagreement among any of the parties hereto regarding the application of the Commission's interpretation to a particular Servicing Function Participant, the determination of the Depositor shall be binding.

 

No later than 30 days following the end of each fiscal year, the Securities Administrator shall forward to the Depositor the name of each Servicing Function Participant engaged by it and what Relevant Servicing Criteria will be addressed in the report on assessment of compliance prepared by such Servicing Function Participant.  When the Securities Administrator submits its assessment to the Depositor, it shall also at such time include the assessment (and attestation pursuant to Section 3.04(b)) of each Servicing Function Participant engaged by it.

 

No later than 30 days following the end of each fiscal year, the Trustee shall forward to the Securities Administrator the name of each Servicing Function Participant engaged by it and what Relevant Servicing Criteria will be addressed in the report on assessment of compliance prepared by such Servicing Function Participant.  When the Trustee submits its assessments to the Securities Administrator, it shall also at such time include the assessment (and attestation pursuant to Section 3.04(b)) of each Servicing Function Participant engaged by it.

 

The Securities Administrator shall confirm that the assessments address the Relevant Servicing Criteria for each party as set forth on Exhibit I and shall notify the Depositor of any exceptions and deliver the assessment of compliance containing such exceptions.  Promptly after receipt of each such report on assessment of compliance, the Depositor shall review each such report and, if applicable, consult with the Securities Administrator, the Trustee and any Servicing Function Participant as to the nature of any material instance of noncompliance with the Relevant Servicing Criteria by such party.

 

(b) The Securities Administrator, at its own expense, shall cause a registered public accounting firm which is a member of the Institute of Certified Public Accountants to furnish to the Depositor, and the Trustee at its own expense, shall cause, and shall cause any 

 

  

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Servicing Function Participant engaged by such party from which an assessment of servicing compliance is required pursuant to Section 3.04 (a), at such party’s expense, to cause a registered public accounting firm which is a member of the Institute of Certified Public Accountants to furnish to the Securities Administrator, not later than March 5 of each year, or if such day is not a Business Day, the next Business Day (with a 10 calendar day cure period, but in no event later than March 15), commencing in March 20[__], an electronic report (with a hard copy to follow within 10 calendar days) to the effect that (i) it has obtained a representation regarding certain matters from the management of such party, which includes an assertion that such party has complied with the Relevant Servicing Criteria, and (ii) on the basis of an examination conducted by such firm in accordance with standards for attestation engagements issued or adopted by the Public Company Accounting Oversight Board, it is expressing an opinion as to whether such party’s assessment of compliance with the Relevant Servicing Criteria was fairly stated in all material respects, or it cannot express an overall opinion regarding such party’s assessment of compliance with the Relevant Servicing Criteria.  In the event that an overall opinion cannot be expressed, such registered public accounting firm shall state in such report why it was unable to express such an opinion.  Such report must be available for general use and not contain restricted use language. If requested by the Securities Administrator or the Depositor, such report shall contain or be accompanied by a consent of such accounting firm to inclusion or incorporation of such report in the Depositor’s Registration Statement on Form S-3 relating to the Certificates and the Trust’s Form 10-K.

 

Promptly after receipt of such report from the Securities Administrator, the Depositor shall review the report and, if applicable, consult with the Securities Administrator if any such report (i) states that the party’s assessment of compliance was not fairly stated in a material respect or (ii) is unable to state an overall opinion.

 

Promptly after receipt of such report from the Trustee or any Servicing Function Participant engaged by such party, the Securities Administrator shall review the report and shall promptly notify the Depositor if any such report (i) states that the party’s assessment of compliance was not fairly stated in a material respect or (ii) is unable to state an overall opinion and the Depositor shall promptly review each such report and the Depositor and the Securities Administrator shall consult with the parties to which such report relates.

 

The Securities Administrator shall make available any report from the Securities Administrator, the Trustee or any Servicing Function Participant furnished pursuant to Section 3.03 and this Section 3.04, as well as any documents incorporated by reference into the Prospectus (to the extent such documents are either in its possession or have been filed with the Commission), to any Certificateholder requesting such information.

 

Section 3.05 Exchange Act Reports.

 

(a) Within 15 days after each Distribution Date, the Securities Administrator shall prepare, an authorized officer of the Depositor shall sign, and the Securities Administrator shall file with the Commission, on behalf of the Trust, any Form 10-D required by the Exchange Act, in form and substance as required by the Exchange Act.  The Securities Administrator shall file each Form 10-D with a copy of the related Distribution Date Statement attached thereto.  Any disclosure in addition to the Distribution Date Statement that is required to be included on 

 

  

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Form 10-D (“Additional Form 10-D Disclosure”) shall be reported by the parties set forth on Exhibit J and directed and approved by the Depositor, and the Securities Administrator will have no duty or liability for any failure hereunder to determine or prepare any Additional Form 10-D Disclosure (other than with respect to itself) absent such reporting, direction and approval.  If a Form 10-D cannot be filed on time or if a previously filed Form 10-D needs to be amended, the Securities Administrator will follow the procedures set forth in Section 3.05(d).  Promptly (but no later than 1 Business Day) after filing with the Commission, the Securities Administrator will make available on its internet website a final executed copy of each Form 10-D.

 

For so long as the Trust is subject to the Exchange Act reporting requirements, within five (5) calendar days after the related Distribution Date, the parties identified on Exhibit J shall (i) provide to the Securities Administrator and the Depositor, to the extent known by a Responsible Officer, in EDGAR-compatible format, or in such other format as otherwise agreed upon by the Securities Administrator and such party, the form and substance of any Additional Form 10-D Disclosure, if applicable and (ii) include with such Additional Form 10-D Disclosure, an Additional Disclosure Notification in the form attached hereto as Exhibit M, and the Depositor will approve, as to form and substance, or disapprove, as the case may be, the inclusion of the Additional Form 10-D Disclosure on Form 10-D.  The Securities Administrator has no duty under this Agreement to monitor or enforce the performance by the parties listed on Exhibit J of their duties under this paragraph or proactively solicit or procure from such parties any Additional Form 10-D Disclosure.  After preparing the Form 10-D, if the Form 10-D contains any Additional Form 10-D Disclosure, the Securities Administrator shall forward electronically a draft copy of the Form 10-D to the Depositor for review prior to the Depositor signing such Form 10-D.  Each party to this Agreement acknowledges that the performance by the Securities Administrator of its duties under this Section 3.05(a) relating to the timely preparation and filing of Form 10-D is contingent upon such parties strictly observing all applicable deadlines in the performance of their duties under this Section 3.05(a).  The Securities Administrator shall have no liability for any loss, expense, damage, claim arising out of or with respect to any failure to properly prepare and/or timely file such Form 10-D, where such failure results from the Securities Administrator’s inability or failure to receive, on a timely basis, any information from any other party hereto needed to prepare, arrange for execution or file such Form 10-D, not resulting from its own negligence, bad faith or willful misconduct.  The Depositor will be responsible for any reasonable fees assessed and expenses incurred by the Securities Administrator in connection with including any Additional Form 10-D Disclosure on Form 10-D pursuant to this paragraph.

 

(b) Within 90 days after the end of each fiscal year of the Trust or such earlier date as may be required by the Exchange Act (it being understood that the fiscal year for the Trust ends on December 31st of each year), commencing in March 20[__], the Securities Administrator shall prepare, the senior officer of the Depositor in charge of securitization of the Depositor shall sign, and the Securities Administrator shall file with the Commission, on behalf of the Trust, a Form 10-K, in form and substance as required by the Exchange Act.  Each such Form 10-K shall include the following items, in each case to the extent they have been delivered to the Securities Administrator within the applicable timeframes set forth in this Agreement:

 

(i) an annual compliance statement for the Securities Administrator and any Additional Securities Administrator, as described under Section 3.03;

 

  

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(ii) (A) the annual reports on assessment of compliance with servicing criteria for the Securities Administrator, the Trustee and each Servicing Function Participant, as described under Section 3.04(a), and (B) if any party’s report on assessment of compliance with Servicing Criteria described under Section 3.04(a) identifies any material instance of noncompliance, disclosure identifying such instance of noncompliance, or if any party’s report on assessment of compliance with servicing criteria described under Section 3.04(a) is not included as an exhibit to such Form 10-K, disclosure that such report is not included and an explanation of why such report is not included;

 

(iii) (A) the registered public accounting firm attestation report for each of the Securities Administrator, the Trustee and each Servicing Function Participant, as described under Section 3.04(b), and (B) if any registered public accounting firm attestation report described under Section 3.04(b) identifies any material instance of noncompliance, disclosure identifying such instance of noncompliance, or if any such registered public accounting firm attestation report is not included as an exhibit to such Form 10-K, disclosure that such report is not included and an explanation of why such report is not included; and

 

(iv) a certification, signed by the senior officer of the Depositor in charge of securitization of the Depositor, in the form attached hereto as Exhibit H-1 or in such other form as may be required by Rules 13a-14 and 15d-14 under the Exchange Act, as applicable, and any directives or interpretations thereof by the Commission (the “Sarbanes-Oxley Certification”).

 

Any disclosure or information in addition to (i) through (iv) above that is required to be included on Form 10-K (“Additional Form 10-K Disclosure”) shall, pursuant to the paragraph immediately below, be reported by the parties set forth on Exhibit K and directed and approved by the Depositor, and the Securities Administrator will have no duty or liability for any failure hereunder to determine or prepare any Additional Form 10-K Disclosure (other than with respect to itself) absent such reporting, direction and approval.  If a Form 10-K cannot be filed on time or if a previously filed Form 10-K needs to be amended, the Securities Administrator will follow the procedures set forth in Section 3.05(d).  Promptly (but no later than 1 Business Day) after filing with the Commission, the Securities Administrator will make available on its internet website a final executed copy of each Form 10-K.

 

No later than March 5 (with a 10 calendar day cure period, but in no event later than March 15) of each year that the Trust is subject to the Exchange Act reporting requirements, commencing in March 20[__], (i) the parties identified on Exhibit K shall provide to the Securities Administrator and the Depositor, to the extent known by a Responsible Officer, in EDGAR-compatible format, or in such other format as otherwise agreed upon by the Securities Administrator and such party, the form and substance of any Additional Form 10-K Disclosure, if applicable, and (ii) the parties identified on Exhibit K shall include with such Additional Form 10-K Disclosure, an Additional Disclosure Notification in the form attached hereto as Exhibit M, and the Depositor will approve, as to form and substance, or disapprove, as the case may be, the inclusion of the Additional Form 10-K Disclosure on Form 10-K. The Securities Administrator has no duty under this Agreement to monitor or enforce the performance by the parties listed on 

 

  

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Exhibit K of their duties under this paragraph or proactively solicit or procure from such parties any Additional Form 10-K Disclosure information.  The Depositor will be responsible for any reasonable fees and expenses assessed or incurred by the Securities Administrator in connection with including any Additional Form 10-K Disclosure on Form 10-K pursuant to this paragraph.

 

After preparing the Form 10-K, if the Form 10-K contains any Additional Form 10-K Disclosure, the Securities Administrator shall forward electronically a draft copy of the Form 10-K to the Depositor for review prior to the Depositor signing such Form 10-K.  Each party to this Agreement acknowledges that the performance by the Securities Administrator of its duties under this Section 3.05(b) relating to the timely preparation and filing of Form 10-K is contingent upon such parties strictly observing all applicable timeframes in the performance of their duties under Sections 3.03, 3.04 or this Section 3.05(b).  The Securities Administrator shall have no liability for any loss, expense, damage, claim arising out of or with respect to any failure to properly prepare and/or timely file such Form 10-K, where such failure results from the Securities Administrator’s inability or failure to obtain or receive, on a timely basis, any information from any other party hereto needed to prepare, arrange for execution or file such Form 10-K, not resulting from its own negligence, bad faith or willful misconduct.

 

(c) Within four (4) Business Days after the occurrence of an event requiring disclosure on Form 8-K (each such event, a “Reportable Event”), and if directed by the Depositor, the Securities Administrator shall prepare, an authorized officer of the Depositor shall sign, and the Securities Administrator shall file with the Commission, on behalf of the Trust, any Form 8-K, as required by the Exchange Act, provided that the Depositor shall prepare and file the initial Form 8-K in connection with the issuance of the Certificates.  Any disclosure or information related to a Reportable Event or that is otherwise required to be included on Form 8-K (“Form 8-K Disclosure Information”) shall, pursuant to the paragraph immediately below, be reported by the parties set forth on Exhibit L and directed and approved by the Depositor, and the Securities Administrator will have no duty or liability for any failure hereunder to determine or prepare any Form 8-K Disclosure Information (other than with respect to itself) absent such reporting, direction and approval.  If a Form 8-K cannot be filed on time or if a previously filed Form 8-K needs to be amended, the Securities Administrator will follow the procedures set forth in Section 3.05(d).  Promptly (but no later than 1 Business Day) after filing with the Commission, the Securities Administrator will, make available on its internet website a final executed copy of each Form 8-K.

 

For so long as the Trust is subject to the Exchange Act reporting requirements, no later than the end of business on the second Business Day after the occurrence of a Reportable Event (i) the parties identified on Exhibit L shall provide to the Securities Administrator and the Depositor, to the extent known by a Responsible Officer, in EDGAR-compatible form, or in such other form as otherwise agreed upon by the Securities Administrator and such party, the form and substance of any Form 8-K Disclosure Information, if applicable, and (ii) the parties identified on Exhibit L shall include with such Additional Form 8-K Disclosure, an Additional Disclosure Notification in the form attached hereto as Exhibit M and the Depositor will approve, as to form and substance, or disapprove, as the case may be, the inclusion of the Form 8-K Disclosure Information on Form 8-K.  The Securities Administrator has no duty under this Agreement to monitor or enforce the performance by the parties listed on Exhibit L of their duties under this paragraph or proactively solicit or procure from such parties any Form 8-K 

 

  

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Disclosure Information. The Depositor will be responsible for any reasonable fees and expenses assessed or incurred by the Securities Administrator in connection with including any Form 8-K Disclosure Information on Form 8-K pursuant to this paragraph.

 

After preparing the Form 8-K, the Securities Administrator shall forward electronically a draft copy of the Form 8-K to the Depositor for review prior to the Depositor signing such Form 8-K.  Each party to this Agreement acknowledges that the performance by the Securities Administrator of its duties under this Section 3.05(c) relating to the timely preparation and filing of Form 8-K is contingent upon such party strictly observing all applicable timeframes in the performance of its duties under this Section 3.05(c).  The Securities Administrator shall have no liability for any loss, expense, damage, claim arising out of or with respect to any failure to properly prepare and/or timely file such Form 8-K, where such failure results from the Securities Administrator’s inability or failure to obtain or receive, on a timely basis, any information from any other party hereto needed to prepare, arrange for execution or file such Form 8-K, not resulting from its own negligence, bad faith or willful misconduct. The Securities Administrator shall have no liability for any loss, expense, damage, claim arising out of or with respect to any failure to properly prepare and/or timely file such Form 8-K, where such failure results from the Securities Administrator’s inability or failure to obtain or receive, on a timely basis, any information from any other party hereto needed to prepare, arrange for execution or file such Form 8-K, not resulting from its own negligence, bad faith or willful misconduct.

 

(d) In the event that the Securities Administrator is unable to timely file with the Commission all or any required portion of any Form 8-K, 10-D or 10-K required to be filed by this Agreement because required disclosure information was either not delivered to it or delivered to it after the delivery deadlines set forth in this Agreement or for any other reason, the Securities Administrator will promptly notify the Depositor and, in the case of Form 10-D or 10-K, the Securities Administrator will prepare and file a Form 12b-25 pursuant to Rule 12b-25 of the Exchange Act not later than the Business Day following the due date of the applicable report.  Within five days following the due date of any Form 10-D as to which it has filed a Form 12b-25, the Securities Administrator shall prepare and file the related Form 10-D. Within 15 days following the due date of any Form 10-K as to which it has filed a Form 12b-25, the Securities Administrator shall prepare and file the related Form 10-K.  In the case of Form 8-K, the Securities Administrator will, upon receipt of all required Form 8-K Disclosure Information and at the direction of the Depositor, include such disclosure information on the next Form 10-D.  In the event that any previously filed Form 8-K, 10-D or 10-K needs to be amended, the Securities Administrator will notify the Depositor and each party whose cooperation is required in connection with the preparation of such amendment; provided however that such notice shall not be required in connection with an amendment to Form 10-D due to a revision made to any Distribution Date Statement.  Any Form 12b-25 or any amendment to Form 8-K or 10-D shall be signed by an authorized officer of the Depositor.  Any amendment to Form 10-K shall be signed by the senior officer of the Depositor in charge of securitization of the Depositor. The parties to this Agreement acknowledge that the performance by the Securities Administrator of its duties under this Section 3.05(d) related to the timely preparation and filing of a Form 12b-25 or any amendment to Form 8-K, 10-D or 10-K is contingent upon each such party performing its duties under this Section.  The Securities Administrator shall have no liability for any loss, expense, damage, claim arising out of or with respect to any failure to properly prepare and/or timely file any such Form 12b-25 or any amendments to Forms 8-K, 10-D or 10-K, where such failure 

 

  

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results from the Securities Administrator’s inability or failure to obtain or receive, on a timely basis, any information from any other party hereto needed to prepare, arrange for execution or file such Form 12b-25 or any amendments to Forms 8-K, 10-D or 10-K, not resulting from its own negligence, bad faith or willful misconduct.

 

(e) Not later than 15 calendar days before the date on which the Form 10-K is required to be filed in accordance with the Exchange Act and the rules and regulations of the Commission (or, if such day is not a Business Day, the immediately preceding Business Day), the Securities Administrator shall sign and deliver to the Depositor a certification in the form attached hereto as Exhibit H-2 (the “Securities Administrator’s Certification”) for the benefit of the Depositor and its officers, directors and Affiliates as to items 1 through 3 of the Sarbanes-Oxley Certification; provided, however, that the Securities Administrator shall not undertake an analysis of the accountant’s report attached as an exhibit to the Form 10-K.  In addition, the Securities Administrator shall indemnify and hold harmless the Depositor and each Person, if any, who “controls” the Depositor within the meaning of the 1933 Act and its officers, directors and Affiliates from and against any losses, damages, penalties, fines, forfeitures, reasonable and necessary legal fees and related costs, judgments and other costs and expenses arising out of or based upon a breach of the Securities Administrator’s obligations under this Section 3.05(e) or the Securities Administrator’s negligence, bad faith or willful misconduct in connection therewith or any inaccuracy in the Securities Administrator’s Certification.  If the indemnification provided for in this Section 3.05(e) is unavailable or insufficient to hold harmless such Persons, then the Securities Administrator shall contribute to the amount paid or payable by such Persons as a result of the losses, claims, damages or liabilities of such Persons in such proportion as is appropriate to reflect the relative fault of the Depositor on the one hand and the Securities Administrator on the other.  The Securities Administrator acknowledges that the Depositor is relying on the Securities Administrator’s performance of its obligations under this Section 3.05(e) in order to perform its obligations under Section 3.05(b) above.

 

(f) On or prior to January 30 of the first year in which the Securities Administrator is able to do so under applicable law, the Securities Administrator shall prepare, an authorized officer of the Depositor shall sign, and the Securities Administrator shall file with the Commission, on behalf of the Trust, a Form 15 relating to the automatic suspension of reporting in respect of the Trust under the Exchange Act.  At the beginning of any year after the filing of a Form 15, if the number of Certificateholders of record exceeds the number set forth in Section 15(d) of the Exchange Act or the regulations promulgated pursuant thereto which would cause the Trust to again become subject to the reporting requirements of the Exchange Act, the Securities Administrator shall recommence preparing and filing reports on Form 10-D, 10-K and 8-K as required pursuant to this Section.

 

(g) To the extent the Securities Administrator is obligated to give any notice to the Depositor pursuant to this Section 3.05, such notice may, notwithstanding the provisions of Section 10.05 in this Agreement, be delivered via electronic mail to Structuredfinance-frederick@wellsfargo.com.

 

  

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ARTICLE IV

 

DISTRIBUTIONS IN RESPECT OF CERTIFICATES;

PAYMENTS TO CERTIFICATEHOLDERS;

STATEMENTS AND REPORTS

 

Section 4.01 Distributions.

 

(a) On each Distribution Date the Securities Administrator shall withdraw the Interest Distribution Amount from the Certificate Account and shall distribute it sequentially as follows:

 

first, to the Classes of Class A Certificates, pro rata, based upon their respective Interest Accrual Amounts, in an aggregate amount up to the Class A Interest Accrual Amount with respect to such Distribution Date;

 

second, to the Classes of Class A Certificates, pro rata, based upon their respective Unpaid Interest Shortfall Amounts with respect to such Distribution Date;

 

third, to the Class B-1 Certificates in an amount up to its Interest Accrual Amount with respect to such Distribution Date;

 

fourth, to the Class B-1 Certificates in an amount up to its Unpaid Interest Shortfall Amount with respect to such Distribution Date;

 

fifth, to the Class B-2 Certificates in an amount up to its Interest Accrual Amount with respect to such Distribution Date; and

 

sixth, to the Class B-2 Certificates in an amount up to its Unpaid Interest Shortfall Amount with respect to such Distribution Date.

 

(b) On each Distribution Date occurring prior to the Subordination Depletion Date, the Securities Administrator shall withdraw the Principal Distribution Amount from the Certificate Account and shall distribute it sequentially as follows:

 

first, in an aggregate amount equal to the Class A Distribution Amount for such Distribution Date, sequentially, as follows:

 

(i)         to the Class A-R Certificate; and

 

(ii)         concurrently, to the Class A-1 and Class A-2 Certificates, pro rata; and

 

second, in an aggregate amount equal to the Class B Distribution Amount for such Distribution Date, sequentially, as follows:

 

(i)         to the Class B-1 Certificates in an amount up to their Pro Rata Share for such Distribution Date; and

 

  

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(ii)         to the Class B-2 Certificates in an amount up to their Pro Rata Share for such Distribution Date.

 

third, to the Holder of the Class A-R Certificate, any Principal Distribution Amount remaining in the Payment Account.

 

Notwithstanding the foregoing, after the Principal Balance of any Class has been reduced to zero, such Class will be entitled to no further distributions of principal or interest (including, without limitation, any Unpaid Interest Shortfall Amounts).

 

(c) On each Distribution Date other than the Final Distribution Date (if such Final Distribution Date is in connection with a purchase of the assets of the Trust Estate by the Depositor), the Paying Agent shall, from funds remitted to it by the Securities Administrator, distribute to each Certificateholder of record on the preceding Record Date (other than as provided in Section 9.01 respecting the final distribution to Certificateholders or in the last paragraph of this Section 4.01(c) respecting the final distribution in respect of any Class) either in immediately available funds by wire transfer to the account of such Certificateholder at a bank or other entity having appropriate facilities therefor, if such Certificateholder has so notified the Paying Agent at least seven Business Days prior to the Distribution Date or if such Holder has not so notified the Paying Agent, by check mailed to such Holder at the address of such Holder appearing in the Certificate Register, such Holder’s share (based on such Holder’s Percentage Interest) of the Class A Distribution Amount and the Interest Distribution Amount with respect to each Class of Class A Certificates and the Class B Distribution Amount and the Interest Distribution Amount with respect to each Class of Class B Certificates.

 

In the event that, on any Distribution Date prior to the Final Distribution Date, the Principal Balance of any Class of Class A Certificates (other than the Residual Certificate) or the Principal Balance of any Class of Class B Certificates would be reduced to zero, the Securities Administrator shall, as soon as practicable after the Determination Date relating to such Distribution Date, send notice to the Paying Agent.  The Paying Agent shall then send a notice to each Certificateholder of such Class with a copy to the Certificate Registrar, specifying that the final distribution with respect to such Class will be made on such Distribution Date only upon the presentation and surrender of such Certificateholder’s Certificates at the office or agency of the Certificate Registrar therein specified; provided, however, that the failure to give such notice will not entitle a Certificateholder to any interest beyond the interest payable with respect to such Distribution Date in accordance with Section 4.01(a).

 

(d) The Paying Agent shall withhold or cause to be withheld such amounts as may be required by the Code (giving full effect to any exemptions from withholding and related certifications required to be furnished by Certificateholders and any reductions to withholding by virtue of any bilateral tax treaties and any applicable certification required to be furnished by Certificateholders with respect thereto) from distributions to be made to Persons other than U.S. Persons (“Non-U.S. Persons”). Amounts withheld pursuant to this Section 4.01(d) shall be treated as having been distributed to the related Certificateholder for all purposes of this Agreement. For the purposes of this paragraph, a “U.S. Person” is a citizen or resident of the United States, a corporation or partnership (unless, in the case of a partnership, Treasury regulations are adopted that provide otherwise) created or organized in or under the laws of the 

 

  

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United States, any state thereof or the District of Columbia, including an entity treated as a corporation or partnership for federal income tax purposes, an estate whose income is subject to United States federal income tax regardless of its source, or a trust if a court within the United States is able to exercise primary supervision over the administration of such trust, and one or more such U.S. Persons have the authority to control all substantial decisions of such trust (or, to the extent provided in applicable Treasury regulations, certain trusts in existence on August 20, 1996 which are eligible to elect to be treated as U.S. Persons).

 

Section 4.02 Allocation of Losses.

 

(a) With respect to any Distribution Date, the Principal Balances of the Classes of Certificates shall be reduced by allocating the principal portion of any Realized Loss Shortfalls in reduction of the Principal Balances of the Classes of Certificates in the following order of priority:

 

first, to the Class B-2 Certificates, until their Principal Balance has been reduced to zero;

 

second, to the Class B-1 Certificates, until their Principal Balance has been reduced to zero; and

 

third, concurrently, to the Class A Certificates, pro rata, until their Principal Balances have been reduced to zero.

 

The calculation of the amount to be distributed as principal to any Class of Class B Certificates with respect to a Distribution Date (the “Calculated Principal Distribution”) shall be made prior to the allocation of any Realized Loss Shortfall for such Distribution Date; provided, however, the actual payment of principal to the Class B Certificates shall be made subsequent to the allocation of Realized Loss Shortfalls for such Distribution Date.  In the event that after the allocation of Realized Loss Shortfalls for a Distribution Date, the Calculated Principal Distribution for a Class of Class B Certificates is greater than the Principal Balance of such Class, the excess shall be distributed to the Classes of Class A Certificates and any Class of Class B Certificates with a lower numerical designation, pro rata, based on their outstanding Principal Balances.

 

(b) Any Realized Loss Shortfalls allocated to a Class of Class A Certificates or Class B Certificates pursuant to Section 4.02(a) shall be allocated among the Certificates of such Class based on their Percentage Interests.

 

(c) After the Class B Principal Balance has been reduced to zero, the interest portion of Realized Loss Shortfalls will be allocated among the outstanding Classes of Class A Certificates based upon their Class A Interest Percentages.

 

Section 4.03 Paying Agent.

 

(a) The Paying Agent shall establish and maintain a Payment Account, which shall be a separate trust account (unless the Securities Administrator is the Paying Agent, in which case, the Certificate Account may be the Payment Account) and an Eligible Account, in 

 

  

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which the Securities Administrator shall cause to be deposited from funds in the Certificate Account or, to the extent required hereunder, from its own funds at or before 10:00 a.m., New York time, on the Business Day preceding each Distribution Date, by wire transfer of immediately available funds, an amount equal to the Pool Distribution Amount. The Securities Administrator may cause the Paying Agent to invest the funds in the Payment Account. Any such investment shall be in Eligible Investments, which shall mature not later than the Business Day preceding the related Distribution Date (unless the Eligible Investments are obligations of the institution that maintains such account, in which case such Eligible Investments shall mature not later than the Distribution Date), and shall not be sold or disposed of prior to maturity. All income and gain realized from any such investment shall be for the benefit of the Securities Administrator and shall be subject to its withdrawal or order from time to time. The amount of any losses incurred in respect of any such investments shall be deposited in the Payment Account by the Securities Administrator out of its own funds immediately as realized. The Paying Agent may withdraw from the Payment Account any amount deposited in the Payment Account that was not required to be deposited therein and may clear and terminate the Payment Account pursuant to Section 9.01.

 

(b) [________________] is hereby appointed as initial Paying Agent to make distributions to Certificateholders and to make available to Certificateholders the Distribution Date Statements and the annual statements required by Section 4.04.  The Trustee may, at any time, remove or replace the Paying Agent[, other than Wells Fargo Bank for so long as Wells Fargo Bank is acting as the Securities Administrator.  If Wells Fargo Bank is no longer acting as Securities Administrator,] the Securities Administrator shall pay, from its own funds, the reasonable compensation of any Paying Agent [other than Wells Fargo Bank].

 

The Trustee shall cause any Paying Agent [that is not Wells Fargo Bank] to execute and deliver to the Trustee an instrument (a “Paying Agent Agreement”) in which such Paying Agent agrees with the Trustee that such Paying Agent shall:

 

(i) hold all amounts remitted to it by the Securities Administrator for distribution to Certificateholders in trust for the benefit of Certificateholders until such amounts are distributed to Certificateholders or otherwise disposed of as herein provided;

 

(ii) give the Trustee notice of any default by the Securities Administrator in remitting any required amount;

 

(iii) at any time during the continuance of any such default, upon the written request of the Trustee, forthwith pay to the Trustee all amounts held in trust by such Paying Agent; and

 

(iv) provide to the Securities Administrator the assessment of compliance and accountants report provided for in Section 3.04 with respect to the Servicing Criteria set forth in Item 1122(d) of Regulation AB applicable to the duties of the Paying Agent.

 

  

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Section 4.04 Statements to Certificateholders; Reports to the Trustee and the Depositor.

 

(a) On each Distribution Date, the Securities Administrator shall make available in accordance with subsection (b) of this Section 4.04 to each Holder of a Certificate, the Trustee, the Paying Agent and the Depositor, the Underlying Distribution Date Statement and a statement (the “Distribution Date Statement”) setting forth:

 

(i) the applicable Determination Date, the applicable Record Date and the actual Distribution Date;

 

(ii) the amount of such distribution to Holders of each Class of Class A Certificates allocable to principal and the Principal Balance of each Class of Class A Certificates;

 

(iii) (A) the amount of such distribution to Holders of each Class of Class A Certificates allocable to interest, (B) the amount of the Current Class A Interest Distribution Amount allocated to each Class of Class A Certificates, (C) any Interest Shortfall Amounts arising with respect to such Distribution Date and any remaining Unpaid Interest Shortfall Amounts with respect to each Class after giving effect to such distribution and (D) the amount of any Interest Reductions allocated to each Class of Class A Certificates for such Distribution Date;

 

(iv) the amount of such distribution to Holders of each Class of Class B Certificates allocable to principal and the Principal Balance of each Class of Class B Certificates;

 

(v) (A) the amount of such distribution to Holders of each Class of Class B Certificates allocable to interest, (B) the amount of the Current Class B Interest Distribution Amount allocated to each Class of Class B Certificates, (C) any Interest Shortfall Amounts arising with respect to such Distribution Date and any remaining Unpaid Interest Shortfall Amounts with respect to each Class of Class B Certificates after giving effect to such distribution and (D) the amount of any Interest Reductions allocated to each Class of Class B Certificates for such Distribution Date;

 

(vi) the Mortgage Certificate Principal Balance outstanding and the weighted average Mortgage Certificate Rate, in each case, as of the preceding Determination Date;

 

(vii) the beginning and ending balance of the Certificate Account;

 

(viii) the Class A Principal Balance, the Principal Balance of each Class of Class A Certificates, the Class B Principal Balance and the Principal Balance of each Class of Class B Certificates prior to and after giving effect to the distributions of principal made, and the principal portion of Realized Loss Shortfalls, if any, allocated with respect to such Distribution Date;

 

  

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(ix) the Interest Distribution Amount, the Principal Distribution Amount, the Class A Distribution Amount and the Class B Distribution Amount for such Distribution Date;

 

(x) any Trust Expenses for such Distribution Date;

 

(xi) the Class A Percentage and the Subordinated Percentage for such Distribution Date;

 

(xii) the aggregate amount of Realized Loss Shortfalls incurred during the preceding calendar month;

 

(xiii) any expenses or indemnification amounts paid by the Trust, the specific purpose of each payment and the parties to whom the payments were made;

 

(xiv) the amount by which the Principal Balance of each Class of Class B Certificates has been reduced as a result of Realized Loss Shortfalls allocated as of such Distribution Date;

 

(xv) the amount of the aggregate Securities Administration Fees paid and other compensation paid to the Securities Administrator (and not previously reported) with respect to the related Distribution Date;

 

(xvi) the Class A Pass-Through Rate for each Class of Class A Certificates and the Class B Pass-Through Rate for each Class of Class B Certificates;

 

(xvii) any material breaches of representations and warranties relating to the Mortgage Certificates or material breaches of transaction covenants; and

 

(xviii) any other customary information as is required to enable Certificateholders to prepare their tax returns.

 

In the case of information furnished with respect to a Class of Class A Certificates pursuant to clauses (ii) and (iii) above and with respect to a Class of Class B Certificates pursuant to clauses (iv) and (v) above, the amounts shall be expressed as a dollar amount per Class A or Class B Certificate (other than the Residual Certificate) with a $1,000 Denomination, and as a dollar amount per Residual Certificate with a $100 Denomination.

 

Within a reasonable period of time after the end of each calendar year, the Paying Agent shall, upon request, furnish or cause to be furnished to each Person who at any time during the calendar year was the Holder of a Certificate a statement containing the information set forth in clauses (ii) and (iii)(A) above in the case of a Class A Certificateholder and the information set forth in clauses (iv) and (v)(A) above in the case of a Class B Certificateholder aggregated for such calendar year or applicable portion thereof during which such Person was a Certificateholder.  Such obligation of the Paying Agent shall be deemed to have been satisfied to the extent that substantially comparable information shall be provided by the Securities Administrator or the Trustee pursuant to any requirements of the Code from time to time in force.

 

  

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Unless the Securities Administrator is acting as the Paying Agent, prior to the close of business on the second Business Day preceding each Distribution Date, the Securities Administrator shall furnish a statement to any Paying Agent (the information in such statement to be made available to Certificateholders by the Paying Agent on written request) setting forth the Interest Distribution Amount with respect to each Class of Certificates, the Class A Distribution Amount with respect to each Class of Class A Certificates and the Class B Distribution Amount with respect to each Class of Class B Certificates. The determination by the Securities Administrator of such amounts shall, in the absence of obvious error, be presumptively deemed to be correct for all purposes hereunder and the Trustee and the Paying Agent shall be protected in relying upon the same without any independent check or verification.

 

In addition to the Distribution Date Statements and the annual statements required pursuant to this Section 4.04(a), the Paying Agent shall make available upon request to each Holder and each proposed transferee of a Class B-1 or Class B-2 Certificate such additional information, if any, as may be required to permit the proposed transfer to be effected pursuant to Rule 144A, which information shall be provided on a timely basis to the Paying Agent by the Securities Administrator.

 

(b) The Securities Administrator will make a copy of each Distribution Date Statement provided pursuant to this Section 4.04 (and, at its option, any additional files containing the same information in an alternative format) available each month to Certificateholders and other interested parties, and other parties to this Agreement via the Securities Administrator’s internet website, which in the case of [________________], is located at “[________________].”  In addition, the Paying Agent shall provide copies of the Distribution Date Statement and the annual statements required pursuant to Section 4.04(a) to Persons making written requests therefor at its Corporate Trust Office.  Assistance in using the internet website can be obtained by calling the Securities Administrator’s customer service desk, which in the case of [________________] is at [________________].  Parties that are unable to use the above distribution method are entitled to have a paper copy mailed to them via first class mail by calling the customer service desk and indicating such.  The Securities Administrator shall have the right to change the way the Distribution Date Statement is distributed in order to make such distribution more convenient and/or more accessible and the Securities Administrator shall provide timely and adequate notification to the Certificateholders and the parties to this Agreement regarding any such changes.

 

The Securities Administrator shall also be entitled to rely on but shall not be responsible for the content or accuracy of any information provided by third parties for purposes of preparing the Distribution Date Statement and may affix thereto any disclaimer it deems appropriate in its reasonable discretion (without suggesting liability on the part of any other party hereto).

 

Section 4.05 Calculation of Amounts; Binding Effect of Interpretations and Actions of Securities Administrator.

 

The Securities Administrator will compute the amount of all distributions to be made on the Certificates and all losses to be allocated to the Certificates. In the event that the Securities Administrator concludes that any ambiguity or uncertainty exists in any provisions of 

 

  

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this Agreement relating to distributions to be made on the Certificates, the allocation of losses to the Certificates or otherwise, the interpretation of such provisions and any actions taken by the Securities Administrator in good faith to implement such interpretation shall be binding upon Certificateholders.

 

ARTICLE V

 

THE CERTIFICATES

 

Section 5.01 The Certificates.

 

(a) The Class A-1, Class A-2 and Class B Certificates shall be issued only in minimum Denominations of a Single Certificate and, except for the Class A-R Certificate, integral multiples of $1 in excess thereof and shall be substantially in the respective forms set forth as Exhibits A-1, A-2, A-R, B-1, B-2 and C (reverse side of Certificates) hereto. On original issue the Certificates shall be executed and delivered by the Paying Agent to or upon the order of the Depositor upon receipt by the Trustee of the documents specified in Section 2.01(a). The aggregate principal portion evidenced by the Class A and Class B Certificates shall be the sum of the amounts specifically set forth in the respective Certificates. The Certificates shall be executed by manual or facsimile signature on behalf of the Paying Agent by any Responsible Officer thereof. Certificates bearing the manual or facsimile signatures of individuals who were at any time the proper officers of the Paying Agent shall bind the Paying Agent notwithstanding that such individuals or any of them have ceased to hold such offices prior to the countersigning of such Certificates and delivery of such Certificates or did not hold such offices at the date of such Certificates. No Certificate shall be entitled to any benefit under this Agreement, or be valid for any purpose, unless manually countersigned by a Responsible Officer of the Authenticating Agent, or unless there appears on such Certificate a certificate of authentication executed by the Authenticating Agent by manual signature, and such countersignature or certificate upon a Certificate shall be conclusive evidence, and the only evidence, that such Certificate has been duly authenticated and delivered hereunder. All Certificates shall be dated the date of their authentication.

 

Until such time as Definitive Certificates are issued pursuant to Section 5.07, each Book-Entry Certificate shall bear the following legend:

 

“Unless this certificate is presented by an authorized representative of [the Clearing Agency] to the Depositor or its agent for registration of transfer, exchange or payment, and any certificate issued is registered in the name of [the Clearing Agency] or such other name as requested by an authorized representative of [the Clearing Agency] and any payment is made to [the Clearing Agency], any transfer, pledge or other use hereof for value or otherwise by or to any person is wrongful since the registered owner hereof, [the Clearing Agency], has an interest herein.”

 

(b) Upon original issuance, the Book-Entry Certificates shall be issued in the form of one or more typewritten certificates, to be delivered to The Depository Trust Company, the initial Clearing Agency, by, or on behalf of, the Depositor or to, and deposited with the Certificate Custodian, on behalf of The Depository Trust Company, if directed to do so pursuant 

 

  

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instructions from The Depository Trust Company. Such Certificates shall initially be registered in the Certificate Register in the name of the nominee of the initial Clearing Agency, and no Beneficial Owner will receive a definitive certificate representing such Beneficial Owner’s interest in the Book-Entry Certificates, except as provided in Section 5.07. Unless and until definitive, fully registered certificates (“Definitive Certificates”) have been issued to Beneficial Owners pursuant to Section 5.07:

 

(i) the provisions of this Section 5.01(b) shall be in full force and effect;

 

(ii) the Depositor, the Securities Administrator, the Certificate Registrar, the Paying Agent and the Trustee may deal with the Clearing Agency for all purposes (including the making of distributions on the Book-Entry Certificates and the taking of actions by the Holders of Book-Entry Certificates) as the authorized representative of the Beneficial Owners;

 

(iii) to the extent that the provisions of this Section 5.01(b) conflict with any other provisions of this Agreement, the provisions of this Section 5.01(b) shall control;

 

(iv) the rights of Beneficial Owners shall be exercised only through the Clearing Agency and shall be limited to those established by law, the rules, regulations and procedures of the Clearing Agency and agreements between such Beneficial Owners and the Clearing Agency and/or the Clearing Agency Participants, and all references in this Agreement to actions by Certificateholders shall, with respect to the Book-Entry Certificates, refer to actions taken by the Clearing Agency upon instructions from the Clearing Agency Participants, and all references in this Agreement to distributions, notices, reports and statements to Certificateholders shall, with respect to the Book-Entry Certificates, refer to distributions, notices, reports and statements to the Clearing Agency or its nominee, as registered holder of the Book-Entry Certificates, as the case may be, for distribution to Beneficial Owners in accordance with the procedures of the Clearing Agency; and

 

(v) the initial Clearing Agency will make book-entry transfers among the Clearing Agency Participants and receive and transmit distributions of principal and interest on the Certificates to the Clearing Agency Participants, for distribution by such Clearing Agency Participants to the Beneficial Owners or their nominees.

 

For purposes of any provision of this Agreement requiring or permitting actions with the consent of, or at the direction of, Holders of Book-Entry Certificates evidencing specified Voting Interests, such direction or consent shall be given by Beneficial Owners having the requisite Voting Interests, acting through the Clearing Agency.

 

Unless and until Definitive Certificates have been issued to Beneficial Owners pursuant to Section 5.07, copies of the Distribution Date Statements shall be available to Beneficial Owners upon written request to the Paying Agent at its Corporate Trust Office.

 

  

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Section 5.02 Registration of Certificates.

 

(a) The Certificate Registrar shall cause to be kept at one of the offices or agencies to be maintained in accordance with the provisions of Section 5.06 a Certificate Register in which, subject to such reasonable regulations as it may prescribe, the Certificate Registrar shall provide for the registration of Certificates and of transfers and exchanges of Certificates as herein provided. The Securities Administrator shall act as, or shall appoint, a Certificate Registrar for the purpose of registering Certificates and transfers and exchanges of Certificates as herein provided.

 

Upon surrender for registration of transfer of any Certificate at any office or agency maintained for such purpose pursuant to Section 5.06 (and subject to the provisions of this Section 5.02) the Paying Agent shall execute, and shall date, countersign (or cause the Authenticating Agent to countersign) and deliver, in the name of the designated transferee or transferees, one or more new Certificates of a like aggregate principal portion or Percentage Interest and of the same Class.

 

At the option of the Certificateholders, Certificates may be exchanged for other Certificates of authorized Denominations of a like aggregate principal portion or Percentage Interest and of the same Class upon surrender of the Certificates to be exchanged at any such office or agency. Whenever any Certificates are so surrendered for exchange, the Paying Agent shall execute, and shall date, countersign (or cause the Authenticating Agent to countersign) and deliver, the Certificates which the Certificateholder making the exchange is entitled to receive. Every Certificate presented or surrendered for transfer or exchange shall (if so required by the Certificate Registrar or the Paying Agent) be duly endorsed by, or be accompanied by a written instrument of transfer in form satisfactory to the Certificate Registrar, duly executed by the Holder thereof or his attorney duly authorized in writing.

 

No service charge shall be made for any transfer or exchange of Certificates, but the Certificate Registrar may require payment of a sum sufficient to cover any tax or governmental charge that may be imposed in connection with any transfer or exchange of Certificates.

 

All Certificates surrendered for transfer and exchange shall be canceled by the Certificate Registrar, the Paying Agent or the Authenticating Agent in accordance with their standard procedures.

 

(b) No transfer of a Class B-1 or Class B-2 Certificate shall be made unless the registration requirements of the 1933 Act and any applicable State securities laws are complied with, or such transfer is exempt from the registration requirements under said Act and laws. In the event that a transfer is to be made in reliance upon an exemption from said Act or laws, (i) unless such transfer is made in reliance on Rule 144A, the Securities Administrator or the Depositor may, if such transfer is to be made within three years after the later of (a) the date of the initial sale of Certificates or (b) the last date on which the Depositor or any affiliate thereof was a Holder of the Certificates proposed to be transferred, require a Class B-1 or Class B-2 Certificateholder to deliver a written Opinion of Counsel acceptable to and in form and substance satisfactory to the Securities Administrator and the Depositor, to the effect that such transfer may 

 

  

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be made pursuant to an exemption, describing the applicable exemption and the basis therefor, from said Act and laws or is being made pursuant to said Act and laws, which Opinion of Counsel shall not be an expense of the Depositor or the Securities Administrator, and (ii) the Securities Administrator shall require the transferee (other than an affiliate of the Depositor on the Closing Date) to execute an investment letter in the form of Exhibit G hereto certifying to the Depositor and the Securities Administrator the facts surrounding such transfer, which investment letter shall not be an expense of the Depositor or the Securities Administrator. The Holder of a Class B-1 or Class B-2 Certificate desiring to effect such transfer shall, and does hereby agree to, indemnify the Trustee, the Depositor, the Securities Administrator and any Paying Agent against any liability that may result if the transfer is not so exempt or is not made in accordance with such federal and state laws. Neither the Depositor nor the Securities Administrator is under an obligation to register the Class B-1 or Class B-2 Certificates under said Act or any other securities law.

 

(c) No transfer of a Class B-1 or Class B-2 Certificate shall be made unless the Securities Administrator and the Depositor shall have received (i) a representation letter from the transferee in the form of Exhibit G hereto, to the effect that either (a) such transferee is not an employee benefit plan or other retirement arrangement subject to Title I of ERISA or Code Section 4975, or a governmental plan, as defined in Section 3(32) of ERISA, subject to any federal, state or local law (“Similar Law”) which is to a material extent similar to the foregoing provisions of ERISA or the Code (collectively, a “Plan”) and is not a person acting on behalf of or using the assets of any such Plan, which representation letter shall not be an expense of the Depositor or the Securities Administrator or (b) if such transferee is an insurance company, (A) the source of funds used to purchase the Class B-1 or Class B-2 Certificate is an “insurance company general account” (as such term is defined in Section V(e) of Prohibited Transaction Class Exemption 95-60 (“PTE 95-60”), 60 Fed. Reg. 35925 (July 12, 1995)), (B) there is no Plan with respect to which the amount of such general account’s reserves and liabilities for the contract(s) held by or on behalf of such Plan and all other Plans maintained by the same employer (or affiliate thereof as defined in Section V(a)(1) of PTE 95-60) or by the same employee organization exceeds 10% of the total of all reserves and liabilities of such general account (as such amounts are determined under Section I(a) of PTE 95-60) at the date of acquisition and (C) the purchase and holding of such Class B-1 or Class B-2 Certificate is covered by Sections I and III of PTE 95-60 or (ii) in the case of any such Class B-1 or Class B-2 Certificate presented for registration in the name of a Plan, or a trustee of any such Plan, (A) an Opinion of Counsel satisfactory to the Securities Administrator and the Depositor to the effect that the purchase or holding of such Class B-1 or Class B-2 Certificate will not constitute or result in a non-exempt prohibited transaction within the meaning of ERISA, Section 4975 of the Code or Similar Law and will not subject the Depositor or the Securities Administrator to any obligation in addition to those undertaken in this Agreement, which Opinion of Counsel shall not be an expense of the Depositor or the Securities Administrator and (B) such other opinions of counsel, Officer’s Certificates and agreements as the Depositor or the Securities Administrator may require in connection with such transfer, which opinions of counsel, Officer’s Certificates and agreements shall not be an expense of the Depositor or the Securities Administrator. The Class B-1 and Class B-2 Certificates shall bear a legend referring to the foregoing restrictions contained in this paragraph.

 

  

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(d) No legal or beneficial interest in all or any portion of the Residual Certificate may be transferred directly or indirectly to a “disqualified organization” within the meaning of Code Section 860E(e)(5) or an agent of a disqualified organization (including a broker, nominee, or middleman), to a Plan or a Person acting on behalf of or investing the assets of a Plan (such Plan or Person, an “ERISA Prohibited Holder”) or to an individual, corporation, partnership or other person unless such transferee (i) is not a Non-U.S. Person or (ii) is a Non-U.S. Person that holds the Residual Certificate in connection with the conduct of a trade or business within the United States and has furnished the transferor and the Securities Administrator with an effective Internal Revenue Service Form W-8ECI or (iii) is a Non-U.S. Person that has delivered to both the transferor and the Securities Administrator an opinion of a nationally recognized tax counsel to the effect that the transfer of the Residual Certificate to it is in accordance with the requirements of the Code and the regulations promulgated thereunder and that such transfer of the Residual Certificate will not be disregarded for federal income tax purposes (any such person who is not covered by clauses (i), (ii) or (iii) above being referred to herein as a “Non-permitted Foreign Holder”), and any such purported transfer shall be void and have no effect. The Paying Agent shall not execute, and shall not countersign (or cause the Authenticating Agent to countersign) and deliver, a new Residual Certificate in connection with any such transfer to a disqualified organization or agent thereof (including a broker, nominee or middleman), an ERISA Prohibited Holder or a Non-permitted Foreign Holder, and neither the Certificate Registrar nor the Paying Agent shall accept a surrender for transfer or registration of transfer, or register the transfer of, the Residual Certificate, unless the transferor shall have provided to the Securities Administrator an affidavit, substantially in the form attached as Exhibit E hereto, signed by the transferee, to the effect that the transferee is not such a disqualified organization, an agent (including a broker, nominee, or middleman) for any entity as to which the transferee has not received a substantially similar affidavit, an ERISA Prohibited Holder or a Non-permitted Foreign Holder, which affidavit shall contain the consent of the transferee to any such amendments of this Agreement as may be required to further effectuate the foregoing restrictions on transfer of the Residual Certificate to disqualified organizations, ERISA Prohibited Holders or Non-permitted Foreign Holders. Such affidavit shall also contain the statement of the transferee that (i) the transferee has historically paid its debts as they have come due and intends to do so in the future, (ii) the transferee understands that it may incur liabilities in excess of cash flows generated by the residual interest, (iii) the transferee intends to pay taxes associated with holding the residual interest as they become due, (iv) the transferee will not cause income from the Residual Certificate to be attributable to a foreign permanent establishment or fixed base, within the meaning of an applicable income tax treaty, of such transferee or any other Person, and (v) the transferee will not transfer the Residual Certificate to any Person who does not provide an affidavit substantially in the form attached as Exhibit E hereto.

 

The affidavit described in the preceding paragraph, if not executed in connection with the initial issuance of the Residual Certificate, shall be accompanied by a written statement in the form attached as Exhibit F hereto, signed by the transferor, to the effect that as of the time of the transfer, the transferor has no actual knowledge that the transferee is a disqualified organization, ERISA Prohibited Holder or Non-permitted Foreign Holder, and has no knowledge or reason to know that the statements made by the transferee with respect to clauses (i) and (iii) of the last sentence of the preceding paragraph are not true. The Residual Certificate shall bear a 

 

  

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legend referring to the foregoing restrictions contained in this paragraph and the preceding paragraph.

 

Upon actual knowledge of a Securities Administration Officer or a Responsible Officer of the Paying Agent that any legal or beneficial interest in any portion of the Residual Certificate has been transferred, directly or indirectly, to a disqualified organization or agent thereof (including a broker, nominee, or middleman) in contravention of the foregoing restrictions, (i) such transferee shall be deemed to hold the Residual Certificate in constructive trust for the last transferor who was not a disqualified organization or agent thereof, and such transferor shall be restored as the owner of such Residual Certificate as completely as if such transfer had never occurred, provided that the Securities Administrator may, but is not required to, recover any distributions made to such transferee with respect to the Residual Certificate, and (ii) the Securities Administrator agrees to furnish to the Internal Revenue Service and to any transferor of the Residual Certificate or such agent (within 60 days of the request therefor by the transferor or agent) such information necessary to the application of Code Section 860E(e) as may be required by the Code, including but not limited to the present value of the total anticipated excess inclusions with respect to the Residual Certificate (or portion thereof) for periods after such transfer. At the election of the Securities Administrator, the cost to the Securities Administrator of computing and furnishing such information may be charged to the transferor or such agent referred to above; however, the Securities Administrator shall in no event be excused from furnishing such information.

 

Section 5.03 Mutilated, Destroyed, Lost or Stolen Certificates.

 

If (i) any mutilated Certificate is surrendered to the Paying Agent, the Certificate Registrar or the Authenticating Agent, or the Paying Agent, the Certificate Registrar or the Authenticating Agent receives evidence to its satisfaction of the destruction, loss or theft of any Certificate, and (ii) there is delivered to the Paying Agent, the Certificate Registrar or the Authenticating Agent such security or indemnity as may be required by them to hold each of them harmless, then, in the absence of notice to the Paying Agent, the Certificate Registrar or the Authenticating Agent that such Certificate has been acquired by a bona fide purchaser, the Paying Agent shall execute and countersign (or cause the Authenticating Agent to countersign) and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or stolen Certificate, a new Certificate of like tenor and principal portion or Percentage Interest and of the same Class. Upon the issuance of any new Certificate under this Section, the Paying Agent or the Certificate Registrar may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expense (including the fees and expenses of the Paying Agent or the Authenticating Agent) in connection therewith. Any duplicate Certificate issued pursuant to this Section shall constitute complete and indefeasible evidence of ownership in the Trust Estate, as if originally issued, whether or not the lost, stolen, or destroyed Certificate shall be found at any time.

 

Section 5.04 Persons Deemed Owners.

 

Prior to the due presentation of a Certificate for registration of transfer, the Depositor, the Securities Administrator, the Trustee, the Paying Agent, the Certificate Registrar and any agent of the Depositor, the Securities Administrator, the Trustee, the Paying Agent or 

 

  

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the Certificate Registrar may treat the Person in whose name any Certificate is registered as the owner of such Certificate for the purpose of receiving distributions pursuant to Section 4.01, and for all other purposes whatsoever, and neither the Depositor, the Securities Administrator, the Trustee, the Certificate Registrar, the Paying Agent nor any agent of the Depositor, the Securities Administrator, the Trustee, the Certificate Registrar or the Paying Agent shall be affected by notice to the contrary.

 

Section 5.05 [Reserved].

 

Section 5.06 Maintenance of Office or Agency.

 

The Certificate Registrar will maintain, at its expense, an office or agency where Certificates may be surrendered for registration of transfer or exchange and where notices and demands to or upon the Certificate Registrar in respect of the Certificates and this Agreement may be served. The Certificate Registrar initially designates the Corporate Trust Office of the Certificate Registrar, if any, as its offices and agencies for said purposes.

 

Section 5.07 Definitive Certificates.

 

If (A) the Clearing Agency advises the Paying Agent in writing that the Clearing Agency is no longer willing or able properly to discharge its responsibilities as depository with respect to the Book-Entry Certificates, and (B) the Depositor is unable to locate a qualified successor, the Paying Agent shall notify the Beneficial Owners, through the Clearing Agency, of the occurrence of any such event and of the availability of Definitive Certificates to Beneficial Owners requesting the same. Upon surrender to the Paying Agent by the Clearing Agency of the Certificates held of record by its nominee, accompanied by reregistration instructions and directions to execute and authenticate new Certificates from the Depositor, the Paying Agent shall execute and cause the Authenticating Agent to countersign Definitive Certificates for delivery at its Corporate Trust Office. The Depositor shall arrange for, and will bear all costs of, the printing and issuance of such Definitive Certificates. Except with the consent of the Depositor, the Paying Agent shall not execute or cause the Authenticating Agent to countersign Definitive Certificates in exchange for Book-Entry Certificates except as set forth above. Neither the Depositor, the Securities Administrator nor the Paying Agent shall be liable for any delay in delivery of such instructions by the Clearing Agency and may conclusively rely on, and shall be protected in relying on, such instructions.

 

Section 5.08 Notices to Clearing Agency.

 

Whenever notice or other communication to the Holders of Book-Entry Certificates is required under this Agreement, unless and until Definitive Certificates shall have been issued to Beneficial Owners pursuant to Section 5.07, the Paying Agent shall give all such notices and communications specified herein to be given to Holders of Book-Entry Certificates to the Clearing Agency.

 

  

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ARTICLE VI

 

THE DEPOSITOR AND THE SECURITIES ADMINISTRATOR

 

Section 6.01 Liability of the Depositor and the Securities Administrator.

 

The Depositor and the Securities Administrator shall each be liable in accordance herewith only to the extent of the obligations specifically imposed by this Agreement and undertaken hereunder by the Depositor and the Securities Administrator.

 

Section 6.02 Merger or Consolidation of the Depositor or the Securities Administrator.

 

Subject to the following paragraph (a) the Depositor will keep in full effect its existence, rights and franchises as a corporation under the laws of the jurisdiction of its incorporation, and will obtain and preserve its qualification to do business as a foreign corporation in each jurisdiction in which such qualification is or shall be necessary to protect the validity and enforceability of this Agreement, the Certificates or any of the Mortgage Certificates and to perform its respective duties under this Agreement and (b) the Securities Administrator will keep in full effect its power and authority as a [___________] under the laws of the jurisdiction of its organization, and will obtain and preserve its qualification to do business in each jurisdiction in which such qualification is or shall be necessary to protect the validity and enforceability of this Agreement, the Certificates or any of the Mortgage Certificates and to perform its respective duties under this Agreement.

 

The Depositor or the Securities Administrator may be merged or consolidated with or into any Person, or transfer all or substantially all of its assets to any Person, in which case any Person resulting from any merger or consolidation to which the Depositor or Securities Administrator shall be a party, or any Person succeeding to the business of the Depositor or Securities Administrator, shall be the successor of the Depositor or Securities Administrator 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; provided, however, that, (a) in the case of the Securities Administrator, any such successor or resulting Person shall have a net worth of not less than $15,000,000 and (b) the Securities Administrator and such successor or surviving Person shall notify the Depositor and the Trustee of any such merger, conversion or consolidation at least two Business Days prior to the effective date thereof (unless giving such prior notice would be prohibited by applicable law or by a confidentiality agreement, in which case notice shall be given by 12 noon Eastern time one Business Day after such merger or consolidation).

 

Section 6.03 Limitation on Liability of the Depositor, the Securities Administrator and Others.

 

Neither the Depositor nor the Securities Administrator nor any subcontractor nor any of the directors, officers, employees or agents of any of them shall be under any liability to the Trust Estate or the Certificateholders and all such Persons shall be held harmless for any action taken or for refraining from the taking of any action in good faith pursuant to this 

 

  

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Agreement, or for errors in judgment; provided, however, that this provision shall not protect any such Person against any breach of warranties or representations made herein or against any liability which would otherwise be imposed by reason of willful misfeasance, bad faith or gross negligence in the performance of duties or by reason of reckless disregard of obligations and duties hereunder.  The Depositor, the Securities Administrator, any subcontractor, and any director, officer, employee or agent of any of them shall be entitled to indemnification by the Trust Estate and will be held harmless against any loss, liability or expense incurred in connection with the performance of their duties and obligations, the exercise of their rights or any legal action (including but not limited to, costs and expenses of litigation, and of investigation, attorney’s fees, damages, judgments and amounts paid in settlement) under this Agreement, the Certificates or the Mortgage Certificates (except for amounts due by the Depositor in connection with the breach of a representation or warranty covering the Mortgage Certificates), other than any loss, liability or expense (including without limitation, expenses payable by the Securities Administrator under Section 8.06) incurred by reason of willful misfeasance, bad faith or gross negligence in the performance of his or its duties hereunder or by reason of reckless disregard of his or its obligations and duties hereunder.  The Depositor, the Securities Administrator and any of the directors, officers, employees or agents of either may rely in good faith on any document of any kind which, prima facie, is properly executed and submitted by any Person respecting any matters arising hereunder.  Neither the Depositor nor the Securities Administrator shall be under any obligation to appear in, prosecute or defend any legal action unless such action is related to its respective duties under this Agreement and, in its opinion, does not involve it in any expense or liability; provided, however, that the Depositor or the Securities Administrator may in its discretion undertake any such action which it may deem necessary or desirable with respect to this Agreement and the rights and duties of the parties hereto and the interests of the Certificateholders hereunder if the Certificateholders offer to the Depositor or the Securities Administrator, as the case may be, reasonable security or indemnity against the costs, expenses and liabilities which may be incurred therein or thereby.  In such event, the legal expenses and costs of such action and any liability resulting therefrom shall be expenses, costs and liabilities of the Trust Estate, and the Depositor or the Securities Administrator shall be entitled to be reimbursed therefor out of the Certificate Account, and such amounts shall, on the following Distribution Date or Distribution Dates, be allocated in reduction of distributions on the Class A Certificates and Class B Certificates in the same manner as Realized Loss Shortfalls are allocated pursuant to Section 4.02(a).

 

Section 6.04 Resignation of the Securities Administrator.

 

The Securities Administrator shall not resign from the obligations and duties hereby imposed on it except (a) upon appointment of a successor securities administrator and receipt by the Trustee of a letter from each Rating Agency that such a resignation and appointment will not result in a downgrading of the rating of any of the Certificates, (b) upon determination that its duties hereunder are no longer permissible under applicable law, or (c) pursuant to Section 6.06.   Any such determination under clause (b) permitting the resignation of the Securities Administrator shall be evidenced by an Opinion of Counsel to such effect delivered to the Trustee.  No such resignation shall become effective until the Trustee or a successor securities administrator shall have assumed the Securities Administrator’s responsibilities, duties, liabilities and obligations hereunder.

 

  

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Section 6.05 Compensation to the Securities Administrator.

 

The Securities Administrator shall be entitled to receive a monthly fee equal to the Securities Administration Fee, as compensation for services rendered by the Securities Administrator under this Agreement. The Securities Administrator also will be entitled to any investment income on funds on deposit in the Certificate Account invested in accordance with Section 3.01(c) and any investment income on funds on deposit in the Payment Account invested in accordance with Section 4.03(a).

 

Section 6.06 Assignment or Delegation of Duties by Securities Administrator.

 

(a) The Securities Administrator shall not assign or transfer any of its rights, benefits or privileges under this Agreement to any other Person, or delegate to or subcontract with, or authorize or appoint any other Person to perform any of the duties, covenants or obligations to be performed by the Securities Administrator without the prior written consent of the Trustee, and any agreement, instrument or act purporting to effect any such assignment, transfer, delegation or appointment shall be void. Notwithstanding the foregoing, subject to Section 6.06(b), the Securities Administrator shall have the right without the prior written consent of the Trustee (i) to assign its rights and delegate its duties and obligations hereunder; provided, however, that (a) the purchaser or transferee accepting such assignment or delegation executes and delivers to the Trustee an agreement, in form and substance reasonably satisfactory to the Trustee, which contains an assumption by such purchaser or transferee of the due and punctual performance and observance of each covenant and condition to be performed or observed by the Securities Administrator hereunder from and after the date of such agreement; and (b) each applicable Rating Agency’s rating of any Certificates in effect immediately prior to such assignment, sale or transfer is not reasonably likely to be qualified, downgraded or withdrawn as a result of such assignment, sale or transfer and the Certificates are not reasonably likely to be placed on credit review status by any such Rating Agency; and (ii) to delegate to, subcontract with, authorize, or appoint an affiliate of the Securities Administrator to perform and carry out any duties, covenants or obligations to be performed and carried out by the Securities Administrator under this Agreement and hereby agrees so to delegate, subcontract, authorize or appoint to an affiliate of the Securities Administrator any duties, covenants or obligations to be performed and carried out by the Securities Administrator to the extent that such duties, covenants or obligations are to be performed in any state or states in which the Securities Administrator is not authorized to do business as a foreign corporation but in which the affiliate is so authorized. In no case, however, shall any permitted assignment and delegation relieve the Securities Administrator of any liability to the Trustee or the Depositor under this Agreement, incurred by it prior to the time that the conditions contained in clause (i) above are met.

 

(b) Notwithstanding anything contained herein to the contrary, to the extent the Securities Administrator engages any affiliate or third party vendor, in connection with the performance of any of its duties under this Agreement, the Securities Administrator shall immediately notify the Depositor in writing of such engagement (to the extent it has not already notified the Depositor pursuant to clause (a) above); provided however, that prior to engaging any affiliate or third party vendor in connection with the performance of any of its duties under this Agreement, the Securities Administrator shall determine (i) if such affiliates or third party 

 

  

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vendors would be a Servicing Function Participant and (ii) if such affiliate or third party vendor would be a “servicer” within the meaning of Item 1101 of Regulation AB (an “Additional Securities Administrator”) and meets the criteria in Item 1108(a)(2)(i), (ii) or (iii) of Regulation AB.  If the Securities Administrator has determined that such affiliates or third party vendors are a Servicing Function Participant, the Securities Administrator shall cause such Servicing Function Participant to prepare and deliver to the Securities Administrator a separate assessment and attestation report, as contemplated by Section 3.04 of this Agreement.  In addition, if the Securities Administrator has determined that any such affiliate or third party vendor would be an Additional Securities Administrator and meets the criteria in Item 1108(a)(2)(i), (ii) or (iii) of Regulation AB, the Securities Administrator shall cause such Additional Securities Administrator to prepare and deliver to the Securities Administrator a separate compliance statement as contemplated by Section 3.03 of this Agreement.  In addition, if the Securities Administrator determines any such affiliate or third party vendor would be a “servicer” within the meaning of Item 1101 of Regulation AB, the Securities Administrator shall not engage such affiliate or third party vendor unless it provides the Securities Administrator and the Depositor the information required by Section 1108(b) and 1108(c) of Regulation AB prior to such engagement.

 

(c) In the event of any assignment of rights or delegation of duties of the Securities Administrator, the Securities Administrator shall report such event on Form 8-K within four Business Days after the effective date thereof.

 

Section 6.07 Indemnification of Trustee and Depositor by Securities Administrator.

 

The Securities Administrator shall indemnify and hold harmless the Trustee and the Depositor and any director, officer or agent thereof against any loss, liability or expense, including reasonable attorney’s fees, arising out of, in connection with or incurred by reason of (a) willful misfeasance, bad faith or negligence in the performance of duties of the Securities Administrator under this Agreement or by reason of reckless disregard of its obligations and duties under this Agreement, including, but not limited to the Securities Administrator’s obligation to deliver any information, report, certification, accountants’ letter or other material required to comply with Regulation AB or (b) any material breach by the Securities Administrator of any of the representations and warranties contained in Section 2.02(a). Any payment pursuant to this Section made by the Securities Administrator to the Trustee or the Depositor shall be from such entity’s own funds, without reimbursement therefor. The provisions of this Section 6.07 shall survive the termination of this Agreement.

 

Section 6.08 Securities Administrator Errors and Omissions Policy.

 

The Securities Administrator shall maintain, at all times and at its own expense, a Securities Administrator Errors and Omissions Policy, which policy shall have such terms and coverage amounts as are comparable to those of errors and omissions policies maintained by securities administrators of mortgage certificates generally.

 

The Securities Administrator Errors and Omissions Policy shall insure the Securities Administrator, its successors and assigns, against any losses resulting from negligence, 

 

  

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errors or omissions on the part of officers, employees or other persons acting on behalf of the Securities Administrator in the performance of its duties as Securities Administrator pursuant to this Agreement.

 

The Securities Administrator shall maintain in effect the Securities Administrator Errors and Omissions Policy at all times and the Securities Administrator Errors and Omissions Policy may not be canceled, permitted to lapse or otherwise terminated without the acquisition of comparable coverage by the Securities Administrator.

 

ARTICLE VII

 

DEFAULT

 

Section 7.01 Events of Default.

 

In case one or more of the following Events of Default by the Securities Administrator shall occur and be continuing, that is to say:

 

(i) any failure by the Securities Administrator to remit any funds to the Paying Agent as required by Section 4.03 continues unremedied for a period of three business days after receipt by the Securities Administrator of written notice of such failure, requiring the same to be remedied, shall have been given to the Securities Administrator by the Trustee or to the Securities Administrator and the Trustee by the holders of Certificates evidencing in the aggregate not less than 25% of the aggregate Voting Interest represented by all Certificates;

 

(ii) any failure on the part of the Securities Administrator to observe or perform in any material respect any of its covenants or agreements under Sections 3.03, 3.04 or 3.05 hereof, subject to any cure period set forth in such sections;

 

(iii) any failure on the part of the Securities Administrator duly to observe or perform in any material respect any other of the covenants or agreements on the part of the Securities Administrator in the Certificates or in this Agreement, which continues unremedied for a period of 60 days after the date on which written notice of such failure, requiring the same to be remedied, shall have been given to the Securities Administrator by the Trustee or the Depositor, or to the Securities Administrator and the Trustee by the holders of Certificates evidencing in the aggregate not less than 25% of the aggregate Voting Interest represented by all Certificates;

 

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

 

  

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(v) the Securities Administrator shall consent to the appointment of a trustee, conservator, receiver or liquidator or liquidating committee in any bankruptcy, insolvency, readjustment of debt, marshaling of assets and liabilities, voluntary liquidation or similar proceedings of or relating to the Securities Administrator, or of or relating to all or substantially all of its property;

 

(vi) the Securities Administrator 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 or voluntarily suspend payment of its obligations; or

 

(vii) the Securities Administrator shall be dissolved, or shall dispose of all or substantially all of its assets; or consolidate with or merge into another entity or shall permit another entity to consolidate or merge into it, such that the resulting entity does not meet the criteria for a successor securities administrator, as specified in Section 6.02 hereof;

 

then, and in each and every such case, subject to applicable law, so long as an Event of Default shall not have been remedied, either the Trustee or the holders of Certificates evidencing in the aggregate not less than 66 2/3% of the aggregate Voting Interest represented by all Certificates, by notice in writing to the Securities Administrator (and to the Trustee if given by the Certificateholders) may terminate all of the rights and obligations of the Securities Administrator under this Agreement and in and to the Mortgage Certificates, but without prejudice to any rights which the Securities Administrator may have to the aggregate Securities Administration Fees due prior to the date of transfer of the Securities Administrator’s responsibilities hereunder and reimbursement of expenses to the extent permitted by this Agreement. Upon receipt by the Securities Administrator of such written notice, all authority and power of the Securities Administrator under this Agreement, whether with respect to the Certificates or the Mortgage Certificates or otherwise, shall pass to and be vested in the Trustee pursuant to and under this Section, subject to the provisions of Section 7.05; and, without limitation, the Trustee is hereby authorized and empowered to execute and deliver, on behalf of the Securities Administrator, as attorney-in-fact or otherwise, any and all documents and other instruments, and to do or accomplish all other acts or things necessary or appropriate to effect the purposes of such notice of termination, whether to complete the transfer and endorsement or assignment of the Mortgage Certificates and related documents or otherwise. The Securities Administrator agrees to cooperate with the Trustee in effecting the termination of the Securities Administrator’s responsibilities and rights hereunder and shall promptly provide the Trustee all documents and records reasonably requested by it to enable it to assume the Securities Administrator’s functions hereunder and shall promptly also transfer to the Trustee all amounts which then have been or should have been deposited in the Certificate Account by the Securities Administrator or which are thereafter received by the Securities Administrator with respect to the Mortgage Certificates.

 

Section 7.02 Other Remedies of Trustee.

 

During the continuance of any Event of Default, so long as such Event of Default shall not have been remedied, the Trustee, in addition to the rights specified in Section 7.01, shall 

 

  

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have the right, in its own name as trustee of an express trust, to take all actions now or hereafter existing at law, in equity or by statute to enforce its rights and remedies and to protect the interests, and enforce the rights and remedies, of the Certificateholders (including the institution and prosecution of all judicial, administrative and other proceedings and the filing of proofs of claim and debt in connection therewith). Except as otherwise expressly provided in this Agreement, no remedy provided for by this Agreement shall be exclusive of any other remedy, and each and every remedy shall be cumulative and in addition to any other remedy and no delay or omission to exercise any right or remedy shall impair any such right or remedy or shall be deemed to be a waiver of any Event of Default.

 

Section 7.03 Directions by Certificateholders and Duties of Trustee During Event of Default.

 

During the continuance of any Event of Default, Holders of Certificates evidencing in the aggregate not less than 25% of the aggregate Voting Interest represented by all Certificates may direct the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Agreement; provided, however, that the Trustee shall be under no obligation to pursue any such remedy, or to exercise any of the rights or powers vested in it by this agreement (including, without limitation, (i) the conducting or defending of any administrative action or litigation hereunder or in relation hereto and (ii) the terminating of the Securities Administrator from its rights and duties as securities administrator hereunder) at the request, order or direction of any of the Certificateholders, unless such Certificateholders shall have offered to the Trustee reasonable security or indemnity against the cost, expenses and liabilities which may be incurred therein or thereby and, provided further, that, subject to the provisions of Section 8.01, the Trustee shall have the right to decline to follow any such direction if the Trustee, in accordance with an Opinion of Counsel, determines that the action or proceeding so directed may not lawfully be taken or if the Trustee in good faith determines that the action or proceeding so directed would involve it in personal liability or be unjustly prejudicial to the nonassenting Certificateholders.

 

Section 7.04 Action upon Certain Failures of the Securities Administrator and upon Event of Default.

 

In the event that the Trustee shall have knowledge of any failure of the Securities Administrator specified in Section 7.01(i), (ii) or (iii) which would become an Event of Default upon the Securities Administrator’s failure to remedy the same after notice, the Trustee may, but need not if the Trustee deems it not in the Certificateholders’ best interest, give notice thereof to the Securities Administrator; provided however that, without limiting any remedy as a result of such failure, the Trustee shall be required to give notice thereof to the Securities Administrator in the case of the failure by the Securities Administrator to observe or perform any of its covenants under Sections 3.03, 3.04, 3.05, 6.02 or 6.06(b) of this Agreement. For all purposes of this Agreement, in the absence of actual knowledge by a Responsible Officer of the Trustee, the Trustee shall not be deemed to have knowledge of any failure of the Securities Administrator as specified in Section 7.01(i), (ii) and (iii) or any Event of Default unless notified thereof in writing by the Securities Administrator or by a Certificateholder.

 

  

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Section 7.05 Trustee to Act; Appointment of Successor.

 

When the Securities Administrator receives notice of termination pursuant to Section 7.01 or the Trustee receives the resignation of the Securities Administrator evidenced by an Opinion of Counsel pursuant to Section 6.04, the Trustee shall be the successor in all respects to the Securities Administrator in its capacity as securities administrator under this Agreement and the transactions set forth or provided for herein and shall have the rights and powers and be subject to all the responsibilities, duties and liabilities relating thereto placed on the Securities Administrator by the terms and provisions hereof and in its capacity as such successor shall have the same limitation of liability herein granted to the Securities Administrator.  In the event that the Trustee is succeeding to the Securities Administrator as the Securities Administrator, as compensation therefor, the Trustee shall be entitled to receive monthly such portion of the Securities Administration Fee, together with such other securities administration compensation as is agreed to at such time by the Trustee and the Securities Administrator, but in no event more than 25% thereof until the date of final cessation of the Securities Administrator’s securities administration activities hereunder.  Notwithstanding the above, the Trustee may, if it shall be unwilling to so act, or shall, if it is unable to so act or to obtain a qualifying bid as described below, appoint, or petition a court of competent jurisdiction to appoint, any housing and home finance institution, bank or securities administration institution having a net worth of not less than $10,000,000 and meeting such other standards for a successor securities administrator as are set forth herein, as the successor to the Securities Administrator hereunder in the assumption of all or any part of the responsibilities, duties or liabilities of the Securities Administrator hereunder; provided, however, that until such a successor securities administrator is appointed and has assumed the responsibilities, duties and liabilities of the Securities Administrator hereunder, the Trustee shall continue as the successor to the Securities Administrator as provided above.  Upon cessation of the Securities Administrator’s securities administration activities hereunder, the Trustee or any other successor securities administrator shall be entitled to compensation not exceed the compensation specified in Section 6.05 hereof, which amount shall include compensation for acting as paying agent.  If the Securities Administrator and the Paying Agent are not the same party, the Securities Administrator shall pay the compensation of the Paying Agent.  In the event the Trustee is required to solicit bids as provided above, the Trustee shall solicit, by public announcement, bids from housing and home finance institutions, banks and securities administration institutions meeting the qualifications set forth in the preceding sentence for the purchase of the securities administration functions.  Such public announcement shall specify that the successor securities administrator shall be entitled to the full amount of the Securities Administration Fee as compensation together with the other securities administration compensation in the form of late reporting fees or otherwise as provided in Section 6.05, which amount shall include compensation for acting as paying agent. Within 30 days after any such public announcement, the Trustee shall negotiate and effect the sale, transfer and assignment of the securities administration rights and responsibilities hereunder to the qualified party submitting the highest qualifying bid.  The Trustee shall deduct all costs and expenses of any public announcement and of any sale, transfer and assignment of the securities administration rights and responsibilities hereunder from any sum received by the Trustee from the successor to the Securities Administrator in respect of such sale, transfer and assignment.  After such deductions, the remainder of such sum shall be paid by the Trustee to the Securities Administrator at the time of such sale, transfer and assignment to the Securities Administrator’s successor.  The Trustee and such successor shall take such action, consistent with this 

 

  

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Agreement, as shall be necessary to effectuate any such succession.  The Securities Administrator agrees to cooperate with the Trustee and any successor securities administrator in effecting the termination of the Securities Administrator’s securities administration responsibilities and rights hereunder and shall promptly provide the Trustee or such successor securities administrator, as applicable, all documents and records reasonably requested by it to enable it to assume the Securities Administrator’s function hereunder and shall promptly also transfer to the Trustee or such successor securities administrator, as applicable, all amounts which then have been or should have been deposited in the Certificate Account by the Securities Administrator or which are thereafter received by the Securities Administrator with respect to the Mortgage Certificates.  Neither the Trustee nor any other successor securities administrator shall be deemed to be in default hereunder by reason of any failure to make, or any delay in making, any distribution hereunder or any portion thereof caused by (i) the failure of the Securities Administrator to deliver, or any delay in delivering, cash, documents or records to it, or (ii) restrictions imposed by any regulatory authority having jurisdiction over the Securities Administrator.  Notwithstanding anything to the contrary contained in Section 7.01 above or this Section 7.05, the Securities Administrator shall retain all of its rights and responsibilities hereunder, and no successor (including the Trustee) shall succeed thereto, if the assumption thereof by such successor would cause the rating assigned to any Certificates to be revoked, downgraded or placed on credit review status (other than for possible upgrading) by any Rating Agency and the retention thereof by the Securities Administrator would avert such revocation, downgrading or review.

 

All costs associated with the appointment of a successor securities administrator, to the extent not deducted from any sum received by the Trustee from the successor securities administrator, shall be paid to the Person that incurred them by the predecessor securities administrator.  Without limiting the predecessor securities administrator’s obligation, if the predecessor securities administrator fails to pay such costs, such costs shall be reimbursed by the Trust.

 

The predecessor Securities Administrator and successor Securities Administrator shall notify the Depositor and Trustee of any such appointment at least two Business Days prior to the effective date thereof and shall provide the Depositor and the Trustee with all information required by the Depositor to comply with its reporting obligation under Item 6.02 of Form 8-K not later than the effective date of such appointment and the successor Securities Administrator shall report such event on Form 8-K within four business days of the occurrence of such event.

 

Section 7.06 Notification to Certificateholders.

 

Upon any termination of the Securities Administrator or appointment of a successor securities administrator, in each case as provided herein, the Trustee shall give prompt written notice thereof to Certificateholders at their respective addresses appearing in the Certificate Register. The Trustee shall also, within 45 days after the occurrence of any Event of Default known to the Trustee, give written notice thereof to Certificateholders at their respective addresses appearing in the Certificate Register, unless such Event of Default shall have been cured or waived within said 45 day period.

 

  

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ARTICLE VIII

 

CONCERNING THE TRUSTEE

 

Section 8.01 Duties of Trustee.

 

The Trustee, prior to the occurrence of an Event of Default of which a Responsible Officer of the Trustee shall have actual knowledge and after the curing of all Events of Default which may have occurred, undertakes to perform such duties and only such duties as are specifically set forth in this Agreement.  In case an Event of Default of which a Responsible Officer of the Trustee shall have actual knowledge has occurred (which has not been cured), the Trustee, subject to the provisions of Sections 7.01, 7.03, 7.04 and 7.05, shall exercise such of the rights and powers vested in it by this Agreement, and use the same degree of care and skill in its exercise as a prudent person would exercise or use under the circumstances in the conduct of such person’s own affairs.

 

The Trustee, upon receipt of all resolutions, certificates, statements, opinions, reports, documents, orders or other instruments furnished to the Trustee, which are specifically required to be furnished pursuant to any provision of this Agreement, shall examine them to determine whether they are in the form required by this Agreement; provided, however, that the Trustee shall not be responsible for the accuracy or content of any certificate, statement, instrument, report, notice or other document furnished by the Securities Administrator hereunder.

 

No provision of this Agreement shall be construed to relieve the Trustee from liability for its own negligent action, its own negligent failure to act or its own willful misconduct; provided, however, that:

 

(i) Prior to the occurrence of an Event of Default of which a Responsible Officer of the Trustee shall have actual knowledge and after the curing of all such Events of Default which may have occurred, the duties and obligations of the Trustee shall be determined solely by the express provisions of this Agreement, the Trustee shall not be liable except for the performance of such duties and obligations as are specifically set forth in this Agreement, no implied covenants or obligations shall be read into this Agreement against the Trustee and, in the absence of bad faith on the part of the Trustee, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon any certificates or opinions furnished to the Trustee, and conforming to the requirements of this Agreement;

 

(ii) The Trustee shall not be personally liable with respect to any action taken, suffered or omitted to be taken by it in good faith in accordance with the direction of holders of Certificates which evidence in the aggregate not less than 25% of the Voting Interest represented by all Certificates relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Agreement;

 

(iii) The Trustee shall not be liable for any error of judgment made in good faith by any of its Responsible Officers, unless it shall be proved that the Trustee or such 

 

  

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Responsible Officer, as the case may be, was negligent in ascertaining the pertinent facts; and

 

(iv) The Trustee shall not be required to take notice or be deemed to have notice or knowledge of any default or Event of Default unless a Responsible Officer of the Trustee shall have received written notice or obtained actual knowledge thereof.  In absence of such notice or actual knowledge, the Trustee may conclusively assume that there is no default or Event of Default.

 

None of the provisions contained in this Agreement shall require the Trustee to expend or risk its own funds or otherwise incur personal financial liability in the performance of any of its duties hereunder or in the exercise of any of its rights or powers if there is reasonable ground for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it.

 

Section 8.02 Certain Matters Affecting the Trustee.

 

Except as otherwise provided in Section 8.01:

 

(i) The Trustee may request and rely and shall be protected in acting or refraining from acting upon any resolution, Officer’s Certificate, certificate of auditors or any other certificate, statement, instrument, opinion, report, notice, request, consent, order, appraisal, bond or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties and the manner of obtaining consents and evidencing the authorization of the execution thereof shall be subject to such reasonable regulations as the Trustee may prescribe;

 

(ii) The Trustee may consult with counsel, and any advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken or suffered or omitted by it hereunder in good faith and in accordance with such advice or Opinion of Counsel;

 

(iii) The Trustee shall not be personally liable for any action taken, suffered or omitted by it in good faith and believed by it to be authorized or within the discretion or rights or powers conferred upon it by this Agreement;

 

(iv) Subject to Section 7.04, the Trustee shall not be accountable, shall have no liability and makes no representation as to any acts or omissions hereunder of the Securities Administrator until such time as the Trustee may be required to act as Securities Administrator pursuant to Section 7.05 and thereupon only for the acts or omissions of the Trustee as successor Securities Administrator;

 

(v) The Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of such agent or attorney appointed by any other party to this Agreement, including without limitation, the appointment of any custodian;

 

  

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(vi) The Trustee shall be under no obligation to exercise any of the trusts or powers vested in it by the Agreement, conduct or defend any litigation hereunder or in relation hereto at the request, order or direction of any of the Certificateholders, pursuant to the provisions of this Agreement, unless such Certificateholders shall have offered to the Trustee security or indemnity satisfactory to the Trustee against the costs, expenses and liabilities which may be incurred therein or herein (which in the case of Certificateholders representing in the aggregate not less than 66-2/3% of the aggregate Voting Interests will be deemed satisfied by a letter agreement with respect to such costs from such Certificateholders);

 

(vii) The right of the Trustee to perform any discretionary act enumerated in this Agreement shall not be construed as a duty, and the Trustee shall not be answerable for other than its negligence of willful misconduct in the performance of such act; and

 

(viii) The Trustee shall not be required to give any bond or surety in respect of the execution of the Trust Estate created hereby or the powers granted hereunder.

 

Section 8.03 Trustee Not Required to Make Investigation.

 

Prior to the occurrence of an Event of Default of which a Responsible Officer of the Trustee shall have actual knowledge hereunder and after the curing of all Events of Default which may have occurred, the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, appraisal, bond, Mortgage Certificate or other paper or document (provided the same appears regular on its face), unless requested in writing to do so by holders of Certificates evidencing in the aggregate not less than 51% of the Voting Interest represented by all Certificates; provided, however, that if the payment within a reasonable time to the Trustee of the costs, expenses or liabilities likely to be incurred by it in the making of such investigation is, in the opinion of the Trustee, not reasonably assured to the Trustee by the security afforded to it by the terms of this Agreement, the Trustee may require indemnity reasonably satisfactory to the Trustee against such cost, expense or liability as a condition to so proceeding.  The reasonable expense of every such investigation shall be paid by the Securities Administrator or, if paid by the Trustee shall be repaid by the Securities Administrator upon demand from the Securities Administrator’s own funds.

 

Section 8.04 Trustee Not Liable for Certificates or Mortgage Certificates.

 

The recitals contained herein and in the Certificates shall be taken as the statements of the Depositor, and the Trustee assumes no responsibility as to the correctness of the same.  The Trustee makes no representation for the correctness of the same.  The Trustee makes no representation as to the validity or sufficiency of this Agreement or of the Certificates or of any Mortgage Certificate or related document.  Subject to Section 2.03, the Trustee shall not be accountable for the use or application by the Depositor of any of the Certificates or of the proceeds of such Certificates, or for the use or application of any funds paid to the Securities Administrator in respect of the Mortgage Certificates deposited in or withdrawn from the Certificate Account by the Securities Administrator or, in its capacity as trustee, for investment of any such amounts.

 

  

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Section 8.05 Trustee May Own Certificates.

 

The Trustee, and any agent thereof, in its individual or any other capacity, may become the owner or pledgee of Certificates with the same rights it would have if it were not Trustee or such agent and may transact banking and/or trust business with the Depositor, the Securities Administrator or their Affiliates.

 

Section 8.06 The Securities Administrator to Pay Fees and Expenses; Limitation on Liability.

 

The Securities Administrator covenants and agrees to pay to the Trustee from time to time, from its own funds, and the Trustee shall be entitled to receive, reasonable compensation (which shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust) for all services rendered by it in the execution of the trusts hereby created and in the exercise and performance of any of the powers and duties hereunder of the Trustee.

 

In addition, except as otherwise agreed upon in writing by the Securities Administrator and the Trustee, the Trust shall reimburse the Trustee for all reasonable expenses, disbursements and advances incurred or made by the Trustee in accordance with any of the provisions of this Agreement to the extent permitted by Treasury Regulations Section 1.860G-1(b)(3), except for (i) any such expense, disbursement or advance arising from the Trustee’s gross negligence, bad faith or willful misconduct and (ii) any routine ongoing expenses incurred by the Trustee in the ordinary course of its duties as Trustee hereunder or for any other expenses.

 

The Trustee and any director, officer, employee or agent of the Trustee shall be entitled to indemnification by the Trust Estate and held harmless against any loss, liability or expense (including reasonable attorney’s fees) (a) incurred in connection with any claim or legal action relating to (i) this Agreement, (ii) the Certificates, or (iii) the performance of any of the Trustee’s duties under this Agreement, unless the loss, liability or expense was incurred by reason of willful misfeasance, bad faith or gross negligence in the performance of any of the Trustee’s duties under this Agreement and (b) resulting from any tax or information return which was prepared by, or should have been prepared by, the Securities Administrator.

 

The obligations of the Trust Estate under this Section 8.06 shall survive the resignation and removal of the Trustee and payment of the Certificates.

 

Section 8.07 Eligibility Requirements.

 

The Trustee hereunder shall at all times (i) be a corporation or association having its principal office in a state and city acceptable to the Depositor, organized and doing business under the laws of such state or the United States of America, authorized under such laws to exercise corporate trust powers, having a combined capital and surplus of at least $50,000,000, or shall be a member of a bank holding system, the aggregate combined capital and surplus of which is at least $50,000,000, provided that its separate capital and surplus shall at all times be at least the amount specified in Section 310(a)(2) of the Trust Indenture Act of 1939, (ii) be subject to supervision or examination by federal or state authority and (iii) have a credit rating or be otherwise acceptable to the Rating Agencies such that neither of the Rating Agencies would 

 

  

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reduce their respective then current ratings of the Certificates (or have provided such security from time to time as is sufficient to avoid such reduction) as evidenced in writing by each Rating Agency.  If such corporation or association publishes reports of condition at least annually, pursuant to law or to the requirements of the aforesaid supervising or examining authority, then for the purposes of this Section the combined capital and surplus of such corporation or association shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published.  In case at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section, the Trustee shall resign immediately in the manner and with the effect specified in Section 8.08.

 

Section 8.08 Resignation and Removal.

 

The Trustee may at any time resign and be discharged from the trust hereby created by giving written notice of resignation to the Securities Administrator, such resignation to be effective upon the appointment of a successor trustee.  Upon receiving such notice of resignation, the Securities Administrator shall promptly appoint a successor trustee by written instrument, in duplicate, one copy of which instrument shall be delivered to the resigning entity and one copy to its successor.  If no successor trustee shall have been appointed and have accepted appointment within 30 days after the giving of such notice of resignation, the resigning Trustee may petition any court of competent jurisdiction for the appointment of a successor trustee.

 

If at any time the Trustee shall cease to be eligible in accordance with the provisions of Section 8.07 and shall fail to resign after written request for its resignation by the Securities Administrator, or if at any time the Trustee shall become incapable of acting, or an order for relief shall have been entered in any bankruptcy or insolvency proceeding with respect to such entity, or a receiver of such entity or of its property shall be appointed, or any public officer shall take charge or control of the Trustee or of the property or affairs of the Trustee for the purpose of rehabilitation, conversion or liquidation, or the Securities Administrator shall deem it necessary in order to change the situs of the Trust Estate for state tax reasons, then the Securities Administrator shall remove the Trustee and appoint a successor trustee by written instrument, in duplicate, one copy of which instrument shall be delivered to the Trustee so removed and one copy to the successor trustee.

 

In addition, if (a) the Trustee fails to comply with its obligations to deliver any assessment of servicing compliance or registered public accounting firm attestation reports required pursuant to Section 3.04 or (b) any Servicing Function Participant engaged by the Trustee fails to comply with its obligations to deliver any assessment of servicing compliance or registered public accounting firm attestation reports, the Securities Administrator, may, after consultation with the Depositor, remove the Trustee and appoint a successor trustee by written instrument, in duplicate, one copy of which instrument shall be delivered to the Trustee so removed and one copy to the successor trustee.

 

The Holders of Certificates evidencing in the aggregate not less than 51% of the Voting Interests represented by all Certificates (except that any Certificate registered in the name of the Depositor, the Securities Administrator or any affiliate thereof will not be taken into account in determining whether the requisite Voting Interests has been obtained) may at any time 

 

  

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remove the Trustee and appoint a successor by written instrument or instruments, in triplicate, signed by such holders or their attorneys-in-fact duly authorized, one complete set of which instruments shall be delivered to the Securities Administrator, one complete set of which shall be delivered to the entity or entities so removed and one complete set of which shall be delivered to the successor so appointed.

 

Any resignation or removal of the Trustee and appointment of a successor pursuant to any of the provisions of this Section shall become effective upon acceptance of appointment by the successor as provided in Section 8.09.

 

Section 8.09 Successor.

 

Any successor trustee appointed as provided in Section 8.08 shall execute, acknowledge and deliver to the Securities Administrator and to its predecessor trustee an instrument accepting such appointment hereunder, and thereupon the resignation or removal of the predecessor trustee shall become effective, and such successor, without any further act, deed or reconveyance, shall become fully vested with all the rights, powers, duties and obligations of its predecessor hereunder, with like effect as if originally named as trustee herein.  The predecessor trustee shall deliver to its successor all documents and statements held by it hereunder, and the Depositor, the Securities Administrator and the predecessor entity shall execute and deliver such instruments and do such other things as may reasonably be required for more fully and certainly vesting and confirming in the successor trustee all such rights, powers, duties and obligations.

 

If the predecessor trustee has resigned, or has been removed for cause, all costs associated with the appointment of a successor trustee shall be paid to the Person that incurred them by the predecessor trustee.  Without limiting the predecessor trustee’s obligation, if the predecessor trustee fails to pay such costs, such costs shall be reimbursed by the Trust; provided however, that if the predecessor trustee has been terminated without cause pursuant to Section 8.08, all reasonable expenses incurred in complying with this Section 8.09 shall be reimbursed by the Trust to the Person that incurred them.

 

No successor shall accept appointment as provided in this Section unless at the time of such acceptance such successor shall be eligible under the provisions of Section 8.07.

 

Upon acceptance of appointment by a successor as provided in this Section, the successor trustee shall mail notice of the succession of such trustee hereunder to all Holders of Certificates at their addresses as shown in the Certificate Register.

 

Section 8.10 Merger or Consolidation.

 

Any Person into which the Trustee may be merged or converted or with which it may be consolidated, to which it may sell or transfer its corporate trust business and assets as a whole or substantially as a whole or any Person resulting from any merger, sale, transfer, conversion or consolidation to which the Trustee shall be a party, or any Person succeeding to the business of such entity, shall be the successor of the Trustee hereunder; provided, however, that (i) such Person shall be eligible under the provisions of Section 8.07, without the execution or filing of any paper or any further act on the part of any of the parties hereto, anything herein to 

 

  

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the contrary notwithstanding and (ii) the Trustee and such successor or surviving Person shall notify the Depositor and the Securities Administrator of any such merger, conversion or consolidation at least two Business Days prior to the effective date thereof and shall provide the Depositor and the Securities Administrator with all information required by the Depositor to comply with its reporting obligations under Item 6.02 of Form 8-K not later than the effective date of such merger, conversion or consolidation and the Securities Administrator shall report such event on Form 8-K within four business days of the occurrence of such event.

 

Section 8.11 Authenticating Agent.

 

The Trustee may appoint an Authenticating Agent, which shall be authorized to act on behalf of the Trustee in authenticating Certificates.  Wherever reference is made in this Agreement to the authentication of Certificates by the Trustee or the Trustee’s countersignature, such reference shall be deemed to include authentication on behalf of the Trustee by the Authenticating Agent and a certificate of authentication executed on behalf of the Trustee by the Authenticating Agent.  The Authenticating Agent must be acceptable to the Depositor and the Securities Administrator and must be a corporation organized and doing business under the laws of the United States of America or of any state, having a principal office and place of business in a state and city acceptable to the Depositor and the Securities Administrator, having a combined capital and surplus of at least $15,000,000, authorized under such laws to do a trust business and subject to supervision or examination by federal or state authorities.

 

Any corporation into which the Authenticating Agent may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Authenticating Agent shall be a party, or any corporation succeeding to the corporate agency business of the Authenticating Agent, shall be the Authenticating Agent without the execution or filing of any paper or any further act on the part of the Trustee or the Authenticating Agent.

 

The Authenticating Agent may at any time resign by giving at least 30 days’ advance written notice of resignation to the Trustee, the Depositor and the Securities Administrator.  [Except with respect to Wells Fargo Bank, for so long as Wells Fargo Bank is acting as the Securities Administrator,] the Trustee may at any time terminate the agency of the Authenticating Agent by giving written notice thereof to the Authenticating Agent, the Depositor and the Securities Administrator.  Upon receiving a notice of resignation or upon such a termination, or in case at any time the Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section 8.11, the Trustee promptly shall appoint a successor Authenticating Agent, which shall be acceptable to the Securities Administrator, and shall give written notice of such appointment to the Depositor, and shall mail notice of such appointment to all Certificateholders.  Any successor Authenticating Agent upon acceptance of its appointment hereunder shall become vested with all the rights, powers, duties and responsibilities of its predecessor hereunder, with like effect as if originally named as Authenticating Agent herein.  No successor Authenticating Agent shall be appointed unless eligible under the provisions of this Section 8.11.

 

  

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The Authenticating Agent shall have no responsibility or liability for any action taken by it as such at the direction of the Trustee.  Any reasonable compensation paid to the Authenticating Agent shall be payable by the Securities Administrator.

 

Section 8.12 Separate Trustees and Co-Trustees.

 

The Trustee shall have the power from time to time to appoint one or more persons or corporations to act either as co-trustees jointly with the Trustee, or as separate trustees, for the purpose of taking action outside the state where the Trustee has its principal place of business, where such separate trustee or co-trustee is necessary or advisable (or the Trustee is advised by the Securities Administrator that such separate trustee or co-trustee is necessary or advisable) for the purpose of conforming to any legal requirement, restriction or condition in any state in which a Mortgaged Property is located or in any state in which any portion of the Trust Estate is located.  The Securities Administrator shall advise the Trustee when, in its good faith opinion, a separate trustee or co-trustee is necessary or advisable as aforesaid.  The separate trustees or co-trustees so appointed shall be trustees for the benefit of all of the Certificateholders and shall have such powers, rights and remedies as shall be specified in the instrument of appointment; provided, however, that no such appointment shall, or shall be deemed to, constitute the appointee an agent of the Trustee.  The Depositor and the Securities Administrator shall join in any such appointment, but such joining shall not be necessary for the effectiveness of such appointment.

 

Every separate trustee and co-trustee shall, to the extent permitted by law, be appointed and act subject to the following provisions and conditions:

 

(i) all powers, duties, obligations and rights conferred upon the Trustee, in respect of the receipt, custody and payment of moneys shall be exercised solely by the Trustee;

 

(ii) all other rights, powers, duties and obligations conferred or imposed upon the Trustee shall be conferred or imposed upon and exercised or performed by the Trustee and such separate trustee or co-trustee jointly, except to the extent that under any law of any jurisdiction in which any particular act or acts are to be performed (whether as Trustee hereunder or as successor to the Securities Administrator hereunder) the Trustee shall be incompetent or unqualified to perform such act or acts, in which event such rights, powers, duties and obligations (including the holding of title to the Trust Estate or any portion thereof in any such jurisdiction) shall be exercised and performed by such separate trustee or co-trustee;

 

(iii) no separate trustee or co-trustee hereunder shall be personally liable by reason of any act or omission of any other separate trustee or co-trustee hereunder; and

 

(iv) the Trustee may at any time accept the resignation of or remove any separate trustee or co-trustee so appointed by it, if such resignation or removal does not violate the other terms of this Agreement.

 

Any notice, request or other writing given to the Trustee shall be deemed to have been given to each of the then separate trustees and co-trustees, as effectively as if given to each 

 

  

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of them. Every instrument appointing any separate trustee, co-trustee, or custodian shall refer to this Agreement and the conditions of this Article. Each separate trustee and co-trustee, upon its acceptance of the trusts conferred, shall be vested with the estates or property specified in its instrument of appointment, either jointly with the Trustee, or separately, as may be provided therein, subject to all the provisions of this Agreement, specifically including every provision of this Agreement relating to the conduct of, affecting the liability of, or affording protection to, the Trustee. Every such instrument shall be furnished to the Trustee.

 

Any separate trustee, co-trustee, or custodian may, at any time, constitute the Trustee, its agent or attorney-in-fact, with full power and authority, to the extent not prohibited by law, to do any lawful act under or in respect of this Agreement on its behalf and in its name. If any separate trustee or co-trustee shall die, become incapable of acting, resign or be removed, all of its estates, properties, rights, remedies and trusts shall vest in and be exercised by the Trustee to the extent permitted by law, without the appointment of a new or successor trustee.

 

No separate trustee or co-trustee hereunder shall be required to meet the terms of eligibility as a successor trustee under Section 8.07 hereunder and no notice to Certificateholders of the appointment thereof shall be required under Section 8.09 hereof.

 

The Trustee agrees to instruct its co-trustees, if any, to the extent necessary to fulfill such entity’s obligations hereunder.

 

The fees of any co-trustee whose appointment is necessary or advisable for (i) conforming to any legal requirement, restriction or condition in any state in which any portion of the Trust Estate is located, will be paid by the Securities Administrator, without reimbursement from the Trust and (ii) any reason other than contemplated by clause (i), will be paid by the Trustee, without reimbursement from the Trust.  Expenses will be reimbursable to the co-trustees to the extent, and in accordance with the standards, specified in Section 8.06 hereof.

 

Section 8.13 Tax Matters; Compliance with REMIC Provisions.

 

(a) Each of the Trustee and the Securities Administrator covenants and agrees that it shall perform its duties hereunder in a manner consistent with the REMIC Provisions and shall not knowingly take any action or fail to take any other action that would (i) affect the determination of the Trust Estate’s status as a REMIC; or (ii) cause the imposition of any federal, state or local income, prohibited transaction, contribution or other tax on either the REMIC or the Trust Estate. The Securities Administrator, or, in the case of any tax return or other action required by law to be performed directly by the Trustee, the Trustee, shall (i) prepare or cause to be prepared, timely cause to be signed by the Trustee and file or cause to be filed annual federal and applicable state and local income tax returns for the REMIC using a calendar year as the taxable year and the accrual method of accounting; (ii) in the first such federal tax return, make, or cause to be made, an election satisfying the requirements of the REMIC Provisions, on behalf of the Trust Estate, to treat the Trust Estate as a REMIC; (iii) prepare, execute and forward, or cause to be prepared, executed and forwarded, to the Certificateholders all information reports or tax returns required with respect to the Trust Estate, as and when required to be provided to the Certificateholders, and to the Internal Revenue Service and any other relevant governmental 

 

  

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taxing authority in accordance with the REMIC Provisions and any other applicable federal, state or local laws, including without limitation information reports relating to “original issue discount” and “market discount” as defined in the Code based upon the issue prices, prepayment assumption and cash flows provided by the Depositor to the Securities Administrator and calculated on a monthly basis by using the issue prices of the Certificates; (iv) make available information necessary for the application of any tax imposed on transferors of residual interests to “disqualified organizations” (as defined in the REMIC Provisions); (v) file Form 8811 and apply for an Employee Identification Number with a Form SS-4 or any other permissible method and respond to inquiries by Certificateholders or their nominees concerning information returns, reports or tax returns; (vi) maintain such records relating to the REMIC, including but not limited to the income, expenses, other assets and liabilities of the REMIC, and the fair market value and adjusted basis of the property of the REMIC determined at such intervals as may be required by the Code, as may be necessary to prepare the foregoing returns or information reports; (vii) exercise reasonable care not to allow the creation of any “interests” in the REMIC within the meaning of Code Section 860D(a)(2) other than the interests represented by the Class A-1, Class A-2, Class B-1 and Class B-2 Certificates and the Class A-R Certificate; (viii) exercise reasonable care not to allow the occurrence of any “prohibited transactions” within the meaning of Code Section 860F(a), unless the Securities Administrator shall have provided an Opinion of Counsel to the Trustee that such occurrence would not (a) result in a taxable gain, (b) otherwise subject either the REMIC or the Trust Estate to tax or (c) cause the Trust Estate to fail to qualify as a REMIC; (ix) exercise reasonable care not to allow the REMIC to receive income from the performance of services or from assets not permitted under the REMIC Provisions to be held by a REMIC; and (x) pay (on behalf of the REMIC) the amount of any federal income tax, including, without limitation, prohibited transaction taxes, taxes on net income from foreclosure property, and taxes on certain contributions to a REMIC after the Startup Day, imposed on the REMIC when and as the same shall be due and payable (but such obligation shall not prevent the Securities Administrator or any other appropriate Person from contesting any such tax in appropriate proceedings and shall not prevent the Securities Administrator from withholding or depositing payment of such tax, if permitted by law, pending the outcome of such proceedings). The Securities Administrator shall be entitled to be reimbursed pursuant to Section 3.02 for any taxes paid by it pursuant to clause (x) of the preceding sentence, except to the extent that such taxes are imposed as a result of the bad faith, willful misfeasance or gross negligence of the Securities Administrator in the performance of its obligations hereunder.

 

In order to enable the Securities Administrator or the Trustee, as the case may be, to perform its duties as set forth above, the Depositor shall provide, or cause to be provided, to the Securities Administrator within ten days after the Closing Date all information or data that the Securities Administrator determines to be relevant for tax purposes to the valuations and offering prices of the Certificates, including, without limitation, the price, yield, prepayment assumption and projected cash flows of each Class of Certificates and the Mortgage Certificates in the aggregate.  Thereafter, the Depositor shall provide to the Securities Administrator or the Trustee, as the case may be, promptly upon request therefor, any such additional information or data that the Securities Administrator or the Trustee, as the case may be, may from time to time request in order to enable the Securities Administrator to perform its duties as set forth above.  The Depositor hereby indemnifies the Securities Administrator or the Trustee, as the case may be, for any losses, liabilities, damages, claims or expenses of the Securities Administrator or the Trustee arising from any errors or miscalculations by the Securities Administrator or the Trustee 

 

  

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pursuant to this Section that result from any failure of the Depositor to provide, or to cause to be provided, accurate information or data to the Securities Administrator or the Trustee, as the case may be, on a timely basis.  The Securities Administrator hereby indemnifies the Depositor and the Trustee for any losses, liabilities, damages, claims or expenses of the Depositor or the Trustee arising from the Securities Administrator’s willful misfeasance, bad faith or gross negligence in preparing any of the federal, state and local tax returns of the REMIC as described above.  In the event that the Trustee prepares any of the federal, state and local tax returns of the REMIC as described above, the Trustee hereby indemnifies the Depositor and the Securities Administrator for any losses, liabilities, damages, claims or expenses of the Depositor or the Securities Administrator arising from the Trustee’s willful misfeasance, bad faith or negligence in connection with such preparation.

 

(b) Notwithstanding anything in this Agreement to the contrary, each of the Securities Administrator and the Trustee shall pay from its own funds, without any right of reimbursement therefor, the amount of any costs, liabilities and expenses incurred by the Trust Estate (including, without limitation, any and all federal, state or local taxes, including taxes imposed on “prohibited transactions” within the meaning of the REMIC Provisions) if and to the extent that such costs, liabilities and expenses arise from a failure of the Securities Administrator or the Trustee, respectively, to perform its obligations under this Section 8.13.

 

The Holder of the Residual Certificate is hereby designated as the “tax matters person” for the REMIC within the meaning of Treasury Regulations Section 1.860F-4(d).  The “tax matters person” shall have the same duties with respect to the REMIC as those of a “tax matters partner” under Subchapter C of Chapter 63 of Subtitle F of the Code.  By its acceptance of the Residual Certificate, such Holder irrevocably appoints the Securities Administrator (and the Securities Administrator hereby agrees to act) as agent to perform all of the duties of the “tax matters person.”

 

Section 8.14 Indemnification of the Securities Administrator and Depositor by the Trustee.

 

The Trustee shall indemnify and hold harmless the Securities Administrator and the Depositor and any director, officer or agent thereof against any loss, liability or expense, including reasonable attorney’s fees, arising out of, in connection with or incurred by reason of willful misfeasance, bad faith or negligence in the performance of duties of the Trustee or by reason of reckless disregard of its obligation to deliver any information, report, certification, accountants’ letter or other material required to comply with Regulation AB. Any payment pursuant to this Section made by the Trustee to the Securities Administrator or the Depositor shall be from such entity’s own funds, without reimbursement therefor. The provisions of this Section 8.14 shall survive the termination of this Agreement.

 

Notwithstanding anything in this Agreement to the contrary, in no event shall the Trustee be liable for any special, indirect or consequential loss or damage of any kind whatsoever (including but not limited to lost profits) resulting from the Trustee’s nonperformance of its duties or obligations to deliver any information, report, certification, accountants’ letter or other material required to comply with Regulation AB, even if the Trustee has been advised of the likelihood of such loss or damage and regardless of the form of action.

 

  

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Section 8.15 Trustee Errors and Omissions Policy.

 

The Trustee shall maintain, at all times and at its own expense, a Trustee Errors and Omissions Policy, which policy shall have such terms and coverage amounts as are comparable to those of errors and omissions policies maintained by trustees generally.

 

The Trustee Errors and Omissions Policy shall insure the Trustee, its successors and assigns, against any losses resulting from negligence, errors or omissions on the part of officers, employees or other persons acting on behalf of the Trustee in the performance of its duties as Trustee pursuant to this Agreement.

 

The Trustee shall maintain in effect the Trustee Errors and Omissions Policy at all times and the Trustee Errors and Omissions Policy may not be canceled, permitted to lapse or otherwise terminated without thirty Business Days’ prior written notice by registered mail to the Securities Administrator and the Depositor.

 

ARTICLE IX

 

TERMINATION

 

Section 9.01 Termination upon Purchase by the Depositor or Distribution to Certificateholders.

 

The respective obligations and responsibilities of the parties to this Agreement created hereby (other than the obligation of the Paying Agent to make certain payments after the Final Distribution Date to Certificateholders and the obligation of the Securities Administrator to send certain notices as hereinafter set forth and the tax reporting obligations under Sections 4.05 and 8.13 hereof) shall terminate upon the last action required to be taken by the Paying Agent on the Final Distribution Date pursuant to this Article IX following the final distribution to Certificateholders of all amounts required to be distributed pursuant to Article IV; provided, however, that in no event shall the trust created hereby continue beyond the expiration of 21 years from the death of the last survivor of the descendants of Joseph P. Kennedy, the late ambassador of the United States to the Court of St. James, living on the date hereof.

 

Upon receipt of notice of the final distribution on any Mortgage Certificate, the Securities Administrator shall, if so required by the Underlying Pooling and Agreement, surrender such Mortgage Certificate to the master servicer, paying agent or other appropriate entity for payment of the final distribution thereon.

 

Notice of any termination, specifying the Final Distribution Date (which shall be a date that would otherwise be a Distribution Date) upon which the Certificateholders may surrender their Certificates to the Paying Agent for payment of the final distribution and cancellation, shall be given promptly by the Paying Agent by letter to Certificateholders and the Trustee mailed not earlier than the 15th day of the month preceding the month of such final distribution and not later than the twentieth day of the month of such final distribution specifying (A) the Final Distribution Date upon which final payment of the Certificates will be made upon presentation and surrender of Certificates at the Corporate Trust Office of the Paying Agent 

 

  

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therein designated, (B) the amount of any such final payment and (C) that the Record Date otherwise applicable to such Distribution Date is not applicable, payments being made (except in the case of any Class A Certificate surrendered on a prior Distribution Date) pursuant to Section 4.01 only upon presentation and surrender of the Certificates at the Corporate Trust Office of the Paying Agent therein specified. Failure to give notice of termination as described herein shall not entitle a Certificateholder to any interest beyond the interest payable on the Final Distribution Date.

 

Upon presentation and surrender of the Certificates, the Paying Agent shall distribute to Certificateholders on the Final Distribution Date in proportion to their respective Percentage Interests an amount equal to (i) as to the Classes of Class A Certificates, the respective Principal Balance together with any related Unpaid Interest Shortfall Amounts and one month’s interest in an amount equal to the respective Interest Accrual Amount, (ii) as to the Classes of Class B Certificates, the respective Principal Balance together with any related Unpaid Interest Shortfall Amounts and one month’s interest in an amount equal to the respective Interest Accrual Amount and (iii) as to the Class A-R Certificate, the amounts, if any, which remain on deposit in the Certificate Account (other than amounts retained to meet claims) after application pursuant to clauses (i) and (ii) above and payment to the Securities Administrator of any amounts it is entitled as reimbursement or otherwise hereunder.  Such distribution on the Final Distribution Date shall be in lieu of the distribution otherwise required to be made on such Distribution Date in respect of each Class of Certificates.

 

In the event that all of the Certificateholders shall not surrender their Certificates for final payment and cancellation within three months following the Final Distribution Date, the Paying Agent shall on such date cause all funds, if any, in the Payment Account not distributed in final distribution to Certificateholders to be withdrawn therefrom and credited to the remaining Certificateholders by depositing such funds in a separate escrow account for the benefit of such Certificateholders. The Paying Agent shall give a second written notice to the remaining Certificateholders to surrender their Certificates for cancellation and receive the final distribution with respect thereto. If within three months after the second notice all the Certificates shall not have been surrendered for cancellation, the Paying Agent may take appropriate steps, or may appoint an agent to take appropriate steps, to contact the remaining Certificateholders concerning surrender of their Certificates, and the cost thereof shall be paid out of the funds on deposit in such escrow account.

 

ARTICLE X

 

MISCELLANEOUS PROVISIONS

 

Section 10.01 Amendment.

 

This Agreement may be amended from time to time by the Depositor, the Securities Administrator and the Trustee without the consent of any of the Certificateholders, (i) to cure any ambiguity or mistake, (ii) to correct or supplement any provisions herein or therein which may be inconsistent with any other provisions herein or therein or in the related Prospectus, (iii) to modify, eliminate or add to any of its provisions to such extent as shall be necessary to maintain the qualification of the Trust Estate as a REMIC at all times that any 

 

  

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Certificates are outstanding or to avoid or minimize the risk of the imposition of any federal tax on the Trust Estate or the REMIC pursuant to the Code that would be a claim against the Trust Estate, provided that (a) the Trustee has received an Opinion of Counsel to the effect that such action is necessary or desirable to maintain such qualification or to avoid or minimize the risk of the imposition of any such tax and (b) such action shall not, as evidenced by such Opinion of Counsel, adversely affect in any material respect the interests of any Certificateholder, (iv) to conform the obligations of the parties under this Agreement, or to add obligations of the parties to this Agreement, if necessary, to comply with the requirements of Regulation AB, (v) to change the timing and/or nature of deposits into the Certificate Account provided that such change shall not, as evidenced by an Opinion of Counsel, adversely affect in any material respect the interests of any Certificateholder, (vi) to modify, eliminate or add to the provisions of Section 5.02 or any other provisions hereof restricting transfer of the Certificates, provided that the Depositor for purposes of Section 5.02 has determined in its sole discretion that any such modifications to this Agreement will neither adversely affect the rating on the Certificates nor give rise to a risk that the REMIC or any of the Certificateholders will be subject to a tax caused by a transfer to a non-permitted transferee, (vii) to make certain provisions with respect to the denominations of, and the manner of payments on, certain Classes of Certificates initially retained by the Depositor or an affiliate of the Depositor and (viii) to make any other provisions with respect to matters or questions arising under this Agreement which shall not be materially inconsistent with the provisions of this Agreement, provided that such action shall not, as evidenced by an Opinion of Counsel, adversely affect in any material respect the interests of any Certificateholder. Notwithstanding the foregoing, any amendment pursuant to clause (v) or (viii) shall not be deemed to adversely affect in any material respect the interest of Certificateholders and no Opinion of Counsel to that effect shall be required if the person requesting the amendment instead obtains a letter from each Rating Agency stating that the amendment would not result in the downgrading or withdrawal of the respective ratings then assigned to the Certificates.

 

This Agreement may also be amended from time to time by the Depositor, the Securities Administrator and the Trustee with the consent of the Holders of Certificates evidencing in the aggregate not less than 66-2/3% of the aggregate Voting Interests of each Class of Certificates affected thereby, for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Agreement or of modifying in any manner the rights of the Holders of Certificates of such Class; provided, however, that no such amendment shall (i) reduce in any manner the amount of, or delay the timing of, payments received on Mortgage Certificates which are required to be distributed on any Certificate without the consent of the Holder of such Certificate, (ii) adversely affect in any material respect the interest of the Holders of Certificates of any Class in a manner other than as described in clause (i) hereof without the consent of Holders of Certificates of such Class evidencing, as to such Class, Voting Interests aggregating not less than 66-2/3% or (iii) reduce the aforesaid percentage of Certificates of any Class the Holders of which are required to consent to any such amendment, without the consent of the Holders of all Certificates of such Class then outstanding.

 

Notwithstanding any contrary provision of this Agreement, the Trustee shall not consent to any amendment to this Agreement unless it shall have first received an Opinion of Counsel to the effect that such amendment will not subject the REMIC to tax or cause the Trust Estate to fail to qualify as a REMIC at any time that any Certificates are outstanding.

 

  

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Promptly after the execution of any amendment requiring the consent of Certificateholders, the Trustee shall furnish written notification of the substance of such amendment to each Certificateholder.

 

It shall not be necessary for the consent of Certificateholders under this Section 10.01 to approve the particular form of any proposed amendment, but it shall be sufficient if such consent shall approve the substance thereof. The manner of obtaining such consents and of evidencing the authorization of the execution thereof by Certificateholders shall be subject to such reasonable regulations as the Trustee may prescribe.

 

Section 10.02 Recordation of Agreement.

 

This Agreement (or an abstract hereof, if acceptable to the applicable recording office) is subject to recordation in all appropriate public offices, such recordation to be effected by the Securities Administrator and at its expense on direction by the Trustee, but only upon direction accompanied by an Opinion of Counsel to the effect that such recordation materially and beneficially affects the interests of the Certificateholders.

 

For the purpose of facilitating the recordation of this Agreement as herein provided and for other purposes, this Agreement may be executed simultaneously in any number of counterparts, each of which counterparts shall be deemed to be an original, and such counterparts shall constitute but one and the same instrument.

 

Section 10.03 Limitation on Rights of Certificateholders.

 

The death or incapacity of any Certificateholder shall not operate to terminate this Agreement or the Trust Estate, nor entitle such Certificateholder’s legal representatives or heirs to claim an accounting or take any action or proceeding in any court for a partition or winding up of the Trust Estate, nor otherwise affect the rights, obligations and liabilities of the parties hereto or any of them.

 

Except as otherwise expressly provided herein, no Certificateholder, solely by virtue of its status as a Certificateholder, shall have any right to vote or in any manner otherwise control the operation and management of the Trust Estate, or the obligations of the parties hereto, nor shall anything herein set forth, or contained in the terms of the Certificates, be construed so as to constitute the Certificateholders from time to time as partners or members of an association, nor shall any Certificateholder be under any liability to any third person by reason of any action taken by the parties to this Agreement pursuant to any provision hereof.

 

No Certificateholder, solely by virtue of its status as Certificateholder, shall have any right by virtue or by availing of any provision of this Agreement to institute any suit, action or proceeding in equity or at law upon or under or with respect to this Agreement, unless such Holder previously shall have given to the Trustee a written notice of default and of the continuance thereof, as hereinbefore provided, and unless the Holders of Certificates evidencing not less than 25% of the Voting Interest represented by all Certificates shall have made written request upon the Trustee to institute such action, suit or proceeding in its own name as Trustee hereunder and shall have offered to the Trustee such reasonable indemnity as it may require against the cost, expenses and liabilities to be incurred therein or thereby, and the Trustee, for 60 

 

  

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days after its receipt of such notice, request and offer of indemnity, shall have neglected or refused to institute any such action, suit or proceeding; it being understood and intended, and being expressly covenanted by each Certificateholder with every other Certificateholder and the Trustee, that no one or more Holders of Certificates shall have any right in any manner whatever by virtue or by availing of any provision of this Agreement to affect, disturb or prejudice the rights of the Holders of any other of such Certificates, or to obtain or seek to obtain priority over or preference to any other such Holder, or to enforce any right under this Agreement, except in the manner herein provided and for the benefit of all Certificateholders. For the protection and enforcement of the provisions of this Section, each and every Certificateholder and the Trustee shall be entitled to such relief as can be given either at law or in equity.

 

Section 10.04 Governing Law; Jurisdiction.

 

This Agreement shall be construed in accordance with the laws of the State of New York (without regard to conflicts of laws principles), and the obligations, rights and remedies of the parties hereunder shall be determined in accordance with such laws.

 

Section 10.05 Notices.

 

Unless otherwise provided in this Agreement, all demands, notices and communications hereunder shall be in writing and shall be deemed to have been duly given if personally delivered at or mailed by certified or registered mail, return receipt requested or by facsimile (i) in the case of the Depositor, to Wells Fargo Asset Securities Corporation, 8480 Stagecoach Circle, Frederick, Maryland 21701, Attention: Vice President, Structured Finance or such other address as may hereafter be furnished to the Securities Administrator and the Trustee in writing by the Depositor, (ii) in the case of the Securities Administrator, to [________________],[________________], Attention: [________________]; facsimile: [________________] or such other address as may hereafter be furnished to the Depositor and the Trustee in writing by the Securities Administrator and (iii) in the case of the Trustee or the Paying Agent, to the Corporate Trust Office, or such other address as may hereafter be furnished to the Depositor and the Securities Administrator in writing by the Trustee or the Paying Agent.  Any notice required or permitted to be mailed to a Certificateholder shall be given by first class mail, postage prepaid, at the address of such Holder as shown in the Certificate Register. Any notice mailed or transmitted within the time prescribed in this Agreement shall be conclusively presumed to have been duly given, whether or not the addressee receives such notice; provided, however, that any demand, notice or communication to or upon the Depositor, the Securities Administrator or the Trustee shall not be effective until received.

 

Section 10.06 Severability of Provisions.

 

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

 

  

-67-

  

 

Section 10.07 Special Notices to Rating Agencies.

 

(a) The Trustee shall give prompt notice to each Rating Agency of the occurrence of any of the following events of which a Responsible Officer has notice:

 

(i) any amendment to this Agreement pursuant to Section 10.01;

 

(ii) any assignment by the Securities Administrator of its rights and delegation of its duties pursuant to Section 6.06;

 

(iii) any resignation of the Securities Administrator pursuant to Section 6.04;

 

(iv) the occurrence of any of the Events of Default described in Section 7.01;

 

(v) any notice of termination given to the Securities Administrator pursuant to Section 7.01; or

 

(vi) the appointment of any successor to the Securities Administrator pursuant to Section 7.05.

 

(b) The Paying Agent shall give prompt notice to each Rating Agency of any sale or transfer of the Class B Certificates pursuant to Section 5.02 to an affiliate of the Depositor.

 

(c) The Paying Agent shall give prompt notice to each Rating Agency of the making of a final payment pursuant to Section 9.01.

 

(d) The Securities Administrator shall give prompt notice to each Rating Agency of the occurrence of any of the following events:

 

(i) the resignation or removal of the Trustee pursuant to Section 8.08;

 

(ii) the appointment of a successor trustee pursuant to Section 8.09; or

 

(iii) the sale, transfer or other disposition in a single transaction of 50% or more of the equity interests in the Securities Administrator.

 

(e) The Securities Administrator shall deliver to each Rating Agency or otherwise make available to each Rating Agency in a format acceptable to each Rating Agency:

 

(i) reports prepared pursuant to Section 3.03 and 3.04; and

 

(ii) the Distribution Date Statements and the Underlying Distribution Date Statements.

 

Section 10.08 Covenant of Depositor.

 

The Depositor shall not amend Article Third of its Certificate of Incorporation without the prior written consent of each Rating Agency rating the Certificates.

 

  

-68-

  

 

Section 10.09 Recharacterization.

 

The Parties intend the conveyance by the Depositor to the Trustee of all of its right, title and interest in and to the Trust Estate pursuant to this Agreement to constitute a purchase and sale and not a loan. Notwithstanding the foregoing, to the extent that such conveyance is held not to constitute a sale under applicable law, it is intended that this Agreement shall constitute a security agreement under applicable law and that the Depositor shall be deemed to have granted to the Trustee a first priority security interest in all of the Depositor’s right, title and interest in and to the Trust Estate.  The Securities Administrator shall take all actions, including, without limitation, filing any Uniform Commercial Code continuation statements, as shall be necessary to perfect or maintain the perfection of such security interest.

 

Section 10.10 Regulation AB Compliance; Intent of Parties; Reasonableness.

 

  The parties hereto acknowledge that interpretations of the requirements of Regulation AB may change over time, whether due to interpretive guidance provided by the Commission or its staff, consensus among participants in the asset-backed securities markets, advice of counsel, or otherwise, and agree to comply with requests made by the Depositor or the Securities Administrator in good faith for delivery of information under these provisions on the basis of evolving interpretations of Regulation AB.  In connection with the Trust, the parties hereto shall cooperate fully with the Securities Administrator and the Depositor to deliver to the Securities Administrator and/or the Depositor, any and all statements, reports, certifications, records and any other information available to such party and reasonably necessary in the good faith determination of the Depositor or the Securities Administrator to permit the Depositor or the Securities Administrator to comply with the provisions of Regulation AB, together with such disclosures reasonably believed by the Depositor or the Securities Administrator to be necessary in order to effect such compliance.

 

ARTICLE XI

 

TERMS FOR CERTIFICATES

 

Section 11.01 Original Principal Balances of the Classes of Class A Certificates.

 

As to the following Classes of Class A Certificates, the Principal Balance of such Class as of the Closing Date, as follows:

	
Class

 

	
Original

Principal Balance

 

	
Class A-1

	
$[______]

	
Class A-2

	
$[______]

	
Class A-R

	
$[______]

 

  

-69-

  

 

Section 11.02 Original Principal Balances of the Classes of Class B Certificates.

 

As to the following Classes of Class B Certificate, the Principal Balance of such Class as of the Closing Date, is as follows:

	
Class

 

	
Original

 

Principal Balance

 

	
Class B-1

	
$[______]

	
Class B-2

	
$[______]

 

Section 11.03 Closing Date.

 

The Closing Date is [_________], 20[__].

 

Section 11.04 Single Certificate.

 

A Single Certificate for the Class A-1 and Class A-2 Certificates represents a $25,000 Denomination. A Single Certificate for the Class B-1 and Class B-2 Certificates represents a $100,000 Denomination. A Single Certificate for the Residual Certificate represents a $100 Denomination.

 

Section 11.05 Securities Administration Fee Rate.

 

The rate used to calculate the Securities Administration Fee for each Mortgage Certificate shall be [______]% per annum.

  

-70-

  

 

IN WITNESS WHEREOF, the Depositor, the Securities Administrator and the Trustee have caused their names to be signed hereto by their respective officers thereunto duly authorized, all as of the day and year first above written.

	  	
WELLS FARGO ASSET SECURITIES CORPORATION

	  	
  as Depositor

	  	  	  
	  	  	  
	  	
By:

	  
	  	  	
Name:

	  	  	
Title:

	  	  	  
	  	  	  
	  	
[________________]

	  	
  as Securities Administrator

	 	 	 
	 	 	 
	  	
By:

	  
	  	
Name:

	  
	  	
Title:

	  
	  	  	  
	  	  	  
	  	
[________________]

	  	
  as Trustee

	  	  	  
	  	  	  
	  	
By:

	  
	  	  	
Name:

	  	  	
Title:

  

  

  

	
STATE OF

	
)

	  	
ss.:

	
COUNTY OF

	
)

 

On this       th day of [        ], 20[  ], before me, a notary public in and for the State of [          ], personally appeared [          ], known to me who, being by me duly sworn, did depose and say that he resides at [          ]; that he is a [          ] of Wells Fargo Asset Securities Corporation, a Delaware corporation, one of the parties that executed the foregoing instrument; and that he signed his name thereto by order of the Board of Directors of said corporation.

	
_________________________

	  
	
Notary Public

	  

 

[NOTARIAL SEAL]

  

  

  

	
STATE OF

	
)

	  	
ss.:

	
COUNTY OF

	
)

 

On this    th day of [          ], 20[  ], before me, a notary public in and for the State of [          ], personally appeared [          ], known to me who, being by me duly sworn, did depose and say that s/he resides in [          ]; that s/he is a [          ] of [           ], a [          ], one of the parties that executed the foregoing instrument; and that s/he signed her/his name thereto by order of the Board of Directors of said association.

	
_________________________

	  
	
Notary Public

	  

 

[NOTARIAL SEAL]

  

  

  

	
STATE OF

	
)

	  	
ss.:

	
COUNTY OF

	
)

 

On this    th day of [          ], 20[  ], before me, a notary public in and for the State of [          ], personally appeared [          ], known to me who, being by me duly sworn, did depose and say that s/he resides in [          ]; that s/he is a [          ] of [           ], a [          ], one of the parties that executed the foregoing instrument; and that s/he signed her/his name thereto by order of the Board of Directors of said association.

	
_________________________

	  
	
Notary Public

	  

 

[NOTARIAL SEAL]

  

  

  

 

EXHIBIT A-1

[FORM OF FACE OF CLASS A-1 CERTIFICATE]

 

[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY TO THE DEPOSITOR OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]

 

MORTGAGE PASS-THROUGH CERTIFICATE

SERIES 20[__]-[__], CLASS A-1

 

evidencing an interest in a Trust Estate consisting primarily

of certain Mortgage Certificates (as defined in the

Agreement referred to herein) sold by

 

WELLS FARGO ASSET SECURITIES CORPORATION

(Not an interest in or obligation of the Depositor)

 

THIS CERTIFICATE DOES NOT EVIDENCE AN OBLIGATION OF, OR AN INTEREST IN, THE DEPOSITOR, THE SECURITIES ADMINISTRATOR, THE TRUSTEE OR ANY OF THEIR AFFILIATES, AND IS NOT INSURED OR GUARANTEED BY THE DEPOSITOR, THE SECURITIES ADMINISTRATOR, THE TRUSTEE OR ANY OF THEIR AFFILIATES, OR BY ANY GOVERNMENT AGENCY OR PRIVATE INSURER.

 

DISTRIBUTIONS IN REDUCTION OF THE PRINCIPAL BALANCE OF THIS CERTIFICATE WILL BE MADE IN THE MANNER DESCRIBED IN THE AGREEMENT. ACCORDINGLY, THE OUTSTANDING PRINCIPAL BALANCE OF THIS CERTIFICATE AT ANY TIME MAY BE LESS THAN THE INITIAL PRINCIPAL BALANCE REPRESENTED HEREBY.

 

	
Certificate No.

	
Cut-Off Date:  [______], 20[__]

	  	  
	
CUSIP No.: [__________]

	
First Distribution Date: [______], 20[__]

	  	  
	
ISIN No.: [__________]

	
Denomination:  $

	  	  
	
Percentage Interest evidenced

by this Certificate: %

	
Final Scheduled Maturity Date:  [______], 20[__]

  

A-1-1

  

 

THIS CERTIFIES THAT ___________________________ is the registered owner of the Percentage Interest evidenced by this Certificate in monthly distributions to the Holders of the Class A-1 Certificates with respect to a Trust Estate consisting of the Mortgage Certificates, formed by Wells Fargo Asset Securities Corporation (hereinafter called the “Depositor,” which term includes any successor entity under the Agreement referred to below). The Trust Estate was created pursuant to a Trust Agreement dated as of [______], 20[__] (the “Agreement”), among the Depositor, [________], as securities administrator (the “Securities Administrator”), and [________], as trustee (the “Trustee”), a summary of certain of the pertinent provisions of which is set forth hereinafter. To the extent not defined herein, the capitalized terms used herein have the meanings ascribed to such terms in the Agreement. This Certificate is issued under and is subject to the terms, provisions and conditions of the Agreement, to which Agreement the Holder of this Certificate by virtue of the acceptance hereof assents and by which such Holder is bound.

 

Pursuant to the terms of the Agreement, a distribution will be made on each Distribution Date, commencing on the first Distribution Date specified above, to the Person in whose name this Certificate is registered at the close of business on the Record Date, in an amount equal to the product of the Percentage Interest evidenced by this Certificate and the sum of the Class A Distribution Amount and Interest Distribution Amount required to be distributed to Holders of the Class A-1 Certificates on such Distribution Date, subject to adjustment in certain events as specified in the Agreement.  Distributions in reduction of the Principal Balance of certain Classes of Class A Certificates may not commence on the first Distribution Date specified above.  Distributions of principal will be allocated among the Classes of Class A Certificates in accordance with the provisions of the Agreement. The pass-through rate on the Class A-1 Certificates applicable to each Distribution Date will be as set forth in the Agreement. The amount of interest which accrues on this Certificate in any month will be subject to reduction with respect to any Interest Reductions allocated to the Class A-1 Certificates, as described in the Agreement.

 

Distributions on this Certificate will be made by the Paying Agent by check mailed to the address of the Person entitled thereto, as such name and address shall appear on the Certificate Register, unless such Person has notified the Paying Agent pursuant to the Agreement that such payments are to be made by wire transfer of immediately available funds. Notwithstanding the above, the final distribution in reduction of the Principal Balance of this Certificate will be made after due notice of the pendency of such distribution and only upon presentation and surrender of this Certificate at the office or agency of the Paying Agent specified for that purpose in the notice of final distribution.

 

Reference is hereby made to the further provisions of this Certificate set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place.

 

This Certificate constitutes a “regular interest” in a “real estate mortgage investment conduit” as those terms are defined in Section 860G(a)(1) and Section 860D, respectively, of the Internal Revenue Code of 1986, as amended.

 

Unless this Certificate has been countersigned by an authorized officer of the Authenticating Agent, by manual signature, this Certificate shall not be entitled to any benefit under the Agreement or be valid for any purpose.

  

A-1-2

  

 

IN WITNESS WHEREOF, the Paying Agent has caused this Certificate to be duly executed as of the date set forth below.

 

Dated:

	  	
[______________],

	  	
  Paying Agent

	  	  	  
	  	  	  
	  	  	  
	  	
By

	  
	  	  	
  Authorized Officer

	
Countersigned:

	  
	 	 
	
[______________],

	
 

	   Authenticating Agent	  
	 	 
	
By ________________________

	  
	
   Authorized Officer

	  

  

A-1-3

  

 

EXHIBIT A-2

[FORM OF FACE OF CLASS A-2 CERTIFICATE]

 

[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY TO THE DEPOSITOR OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]

 

MORTGAGE PASS-THROUGH CERTIFICATE

SERIES 20[__]-[__], CLASS A-2

 

evidencing an interest in a Trust Estate consisting primarily

of certain Mortgage Certificates (as defined in the

Agreement referred to herein) sold by

 

WELLS FARGO ASSET SECURITIES CORPORATION

(Not an interest in or obligation of the Depositor)

 

THIS CERTIFICATE DOES NOT EVIDENCE AN OBLIGATION OF, OR AN INTEREST IN, THE DEPOSITOR, THE SECURITIES ADMINISTRATOR, THE TRUSTEE OR ANY OF THEIR AFFILIATES, AND IS NOT INSURED OR GUARANTEED BY THE DEPOSITOR, THE SECURITIES ADMINISTRATOR, THE TRUSTEE OR ANY OF THEIR AFFILIATES, OR BY ANY GOVERNMENT AGENCY OR PRIVATE INSURER.

 

DISTRIBUTIONS IN REDUCTION OF THE PRINCIPAL BALANCE OF THIS CERTIFICATE WILL BE MADE IN THE MANNER DESCRIBED IN THE AGREEMENT. ACCORDINGLY, THE OUTSTANDING PRINCIPAL BALANCE OF THIS CERTIFICATE AT ANY TIME MAY BE LESS THAN THE INITIAL PRINCIPAL BALANCE REPRESENTED HEREBY.

 

	
Certificate No.

	
Cut-Off Date:  [______], 20[__]

	  	  
	
CUSIP No.: [__________]

	
First Distribution Date: [______], 20[__]

	  	  
	
ISIN No.: [__________]

	
Denomination:  $

	  	  
	
Percentage Interest evidenced

by this Certificate: %

	
Final Scheduled Maturity Date:  [______], 20[__]

  

A-2-1

  

 

THIS CERTIFIES THAT ___________________________ is the registered owner of the Percentage Interest evidenced by this Certificate in monthly distributions to the Holders of the Class A-2 Certificates with respect to a Trust Estate consisting of the Mortgage Certificates, formed by Wells Fargo Asset Securities Corporation  (hereinafter called the “Depositor,” which term includes any successor entity under the Agreement referred to below). The Trust Estate was created pursuant to a Trust Agreement dated as of [______], 20[__] (the “Agreement”), among the Depositor, [_______], as securities administrator (the “Securities Administrator”), and [_______], as trustee (the “Trustee”), a summary of certain of the pertinent provisions of which is set forth hereinafter. To the extent not defined herein, the capitalized terms used herein have the meanings ascribed to such terms in the Agreement. This Certificate is issued under and is subject to the terms, provisions and conditions of the Agreement, to which Agreement the Holder of this Certificate by virtue of the acceptance hereof assents and by which such Holder is bound.

 

Pursuant to the terms of the Agreement, a distribution will be made on each Distribution Date, commencing on the first Distribution Date specified above, to the Person in whose name this Certificate is registered at the close of business on the Record Date, in an amount equal to the product of the Percentage Interest evidenced by this Certificate and the sum of the Class A Distribution Amount and Interest Distribution Amount required to be distributed to Holders of the Class A-2 Certificates on such Distribution Date, subject to adjustment in certain events as specified in the Agreement.  Distributions in reduction of the Principal Balance of certain Classes of Class A Certificates may not commence on the first Distribution Date specified above.  Distributions of principal will be allocated among the Classes of Class A Certificates in accordance with the provisions of the Agreement. The pass-through rate on the Class A-2 Certificates applicable to each Distribution Date will be as set forth in the Agreement. The amount of interest which accrues on this Certificate in any month will be subject to reduction with respect to any Interest Reductions allocated to the Class A-2 Certificates, as described in the Agreement.

 

Distributions on this Certificate will be made by the Paying Agent by check mailed to the address of the Person entitled thereto, as such name and address shall appear on the Certificate Register, unless such Person has notified the Paying Agent pursuant to the Agreement that such payments are to be made by wire transfer of immediately available funds. Notwithstanding the above, the final distribution in reduction of the Principal Balance of this Certificate will be made after due notice of the pendency of such distribution and only upon presentation and surrender of this Certificate at the office or agency of the Paying Agent specified for that purpose in the notice of final distribution.

 

Reference is hereby made to the further provisions of this Certificate set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place.

 

This Certificate constitutes a “regular interest” in a “real estate mortgage investment conduit” as those terms are defined in Section 860G(a)(1) and Section 860D, respectively, of the Internal Revenue Code of 1986, as amended.

 

Unless this Certificate has been countersigned by an authorized officer of the Authenticating Agent, by manual signature, this Certificate shall not be entitled to any benefit under the Agreement or be valid for any purpose.

  

A-2-2

  

 

IN WITNESS WHEREOF, the Paying Agent has caused this Certificate to be duly executed as of the date set forth below.

 

Dated:

	  	
[______________],

	  	
  Paying Agent

	  	  	  
	  	  	  
	  	  	  
	  	
By

	  
	  	  	
  Authorized Officer

	
Countersigned:

	  
	 	 
	
[______________],

	
  

	  Authenticating Agent	  
	 	 
	
By ________________________

	  
	
   Authorized Officer

	  

  

A-2-3

  

 

EXHIBIT A-R

[FORM OF FACE OF CLASS A-R CERTIFICATE]

 

FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS THE “RESIDUAL INTEREST” IN A “REAL ESTATE MORTGAGE INVESTMENT CONDUIT” AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G(a)(2) AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”). A TRANSFEREE OF THIS CERTIFICATE, BY ACCEPTANCE HEREOF, IS DEEMED TO HAVE ACCEPTED THIS CERTIFICATE SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFERABILITY, AS SET FORTH IN SECTION 5.02(d) OF THE AGREEMENT, AND SHALL BE REQUIRED TO FURNISH AN AFFIDAVIT TO THE TRANSFEROR AND THE SECURITIES ADMINISTRATOR TO THE EFFECT THAT, AMONG OTHER THINGS, IT IS NOT A DISQUALIFIED ORGANIZATION, AS SUCH TERM IS DEFINED IN CODE SECTION 860E(e)(5), AN AGENT (INCLUDING A BROKER, NOMINEE OR OTHER MIDDLEMAN) FOR A DISQUALIFIED ORGANIZATION OR A NON-PERMITTED FOREIGN HOLDER, AS DEFINED IN SECTION 5.02(d) OF THE AGREEMENT AND TO HAVE AGREED TO SUCH AMENDMENTS TO THE AGREEMENT AS MAY BE REQUIRED TO FURTHER EFFECTUATE THE RESTRICTIONS ON TRANSFERS TO DISQUALIFIED ORGANIZATIONS, AGENTS THEREOF OR NON-PERMITTED FOREIGN HOLDERS.

 

THE HOLDER OF THIS CLASS A-R CERTIFICATE, BY ACCEPTANCE HEREOF, IS DEEMED TO HAVE AGREED TO THE DESIGNATION OF THE SECURITIES ADMINISTRATOR AS ITS AGENT TO ACT AS “TAX MATTERS PERSON” OF THE REMIC TO PERFORM THE FUNCTIONS OF A “TAX MATTERS PARTNER” FOR PURPOSES OF SUBCHAPTER C OF CHAPTER 63 OF SUBTITLE F OF THE CODE, OR, IF SO REQUESTED BY THE SECURITIES ADMINISTRATOR, TO ACT AS TAX MATTERS PERSON OF THE REMIC.

 

THIS CERTIFICATE MAY NOT BE PURCHASED BY OR TRANSFERRED TO ANY PERSON WHICH IS AN EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”), OR SECTION 4975 OF THE CODE OR A GOVERNMENTAL PLAN, AS DEFINED IN SECTION 3(32) OF ERISA SUBJECT TO ANY FEDERAL, STATE OR LOCAL LAW WHICH IS, TO A MATERIAL EXTENT, SIMILAR TO THE FOREGOING PROVISIONS OF ERISA OR THE CODE (COLLECTIVELY, A “PLAN”), OR ANY PERSON ACTING ON BEHALF OF OR INVESTING THE ASSETS OF A PLAN.

  

A-R-1

  

 

MORTGAGE PASS-THROUGH CERTIFICATE

SERIES 20[__]-[__], CLASS A-R

 

evidencing an interest in a Trust Estate consisting primarily

of certain Mortgage Certificates (as defined in the

Agreement referred to herein) sold by

 

WELLS FARGO ASSET SECURITIES CORPORATION

(Not an interest in or obligation of the Depositor)

 

THIS CERTIFICATE DOES NOT EVIDENCE AN OBLIGATION OF, OR AN INTEREST IN, THE DEPOSITOR, THE SECURITIES ADMINISTRATOR, THE TRUSTEE OR ANY OF THEIR AFFILIATES, AND IS NOT INSURED OR GUARANTEED BY THE DEPOSITOR, THE SECURITIES ADMINISTRATOR, THE TRUSTEE OR ANY OF THEIR AFFILIATES, OR BY ANY GOVERNMENT AGENCY OR PRIVATE INSURER.

 

DISTRIBUTIONS IN REDUCTION OF THE PRINCIPAL BALANCE OF THIS CERTIFICATE WILL BE MADE IN THE MANNER DESCRIBED IN THE AGREEMENT. ACCORDINGLY, THE OUTSTANDING PRINCIPAL BALANCE OF THIS CERTIFICATE AT ANY TIME MAY BE LESS THAN THE INITIAL PRINCIPAL BALANCE REPRESENTED HEREBY.

 

	
Certificate No.

	
Cut-Off Date:  [______], 20[__]

	 	 
	
CUSIP No.: [_________]

	
First Distribution Date:  [______], 20[__]

	 	 
	
ISIN No.: [_________]

	
Denomination: $

	 	 
	
Percentage Interest evidenced

by this Certificate: %

	
 

Final Scheduled Maturity Date:  [______], 20[__]

  

A-R-2

  

 

THIS CERTIFIES THAT ___________________________ is the registered owner of the Percentage Interest evidenced by this Certificate in monthly distributions to the Holder of the Class A-R Certificate with respect to a Trust Estate consisting of the Mortgage Certificates, formed by Wells Fargo Asset Securities Corporation (hereinafter called the “Depositor,” which term includes any successor entity under the Agreement referred to below). The Trust Estate was created pursuant to a Trust Agreement dated as of [______], 20[__] (the “Agreement”), among the Depositor, [_______], as securities administrator (the “Securities Administrator”), and [_________], as trustee (the “Trustee”), a summary of certain of the pertinent provisions of which is set forth hereinafter. To the extent not defined herein, the capitalized terms used herein have the meanings ascribed to such terms in the Agreement. This Certificate is issued under and is subject to the terms, provisions and conditions of the Agreement, to which Agreement the Holder of this Certificate by virtue of the acceptance hereof assents and by which such Holder is bound.

 

Pursuant to the terms of the Agreement, a distribution will be made on each Distribution Date, commencing on the first Distribution Date specified above, to the Person in whose name this Certificate is registered at the close of business on the Record Date, in an amount equal to the product of the Percentage Interest evidenced by this Certificate and the sum of the Class A Distribution Amount and Interest Distribution Amount required to be distributed to the Holder of the Class A-R Certificate on such Distribution Date, subject to adjustment in certain events as specified in the Agreement.  Distributions in reduction of the Principal Balance of certain Classes of Class A Certificates may not commence on the first Distribution Date specified above.  Distributions of principal will be allocated among the Classes of Class A Certificates in accordance with the provisions of the Agreement. The pass-through rate on the Class A-R Certificate applicable to each Distribution Date will be as set forth in the Agreement. The amount of interest which accrues on this Certificate in any month will be subject to reduction with respect to any Interest Reductions allocated to the Class A-R Certificate, as described in the Agreement.

 

Distributions on this Certificate will be made by the Paying Agent by check mailed to the address of the Person entitled thereto, as such name and address shall appear on the Certificate Register, unless such Person has notified the Paying Agent pursuant to the Agreement that such payments are to be made by wire transfer of immediately available funds. Notwithstanding the above, the final distribution on this Certificate will be made after due notice of the pendency of such distribution and only upon presentation and surrender of this Certificate at the office or agency of the Paying Agent specified for that purpose in the notice of final distribution.

 

Reference is hereby made to the further provisions of this Certificate set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place.

 

Unless this Certificate has been countersigned by an authorized officer of the Authenticating Agent, by manual signature, this Certificate shall not be entitled to any benefit under the Agreement or be valid for any purpose.

  

A-R-3

  

 

IN WITNESS WHEREOF, the Paying Agent has caused this Certificate to be duly executed as of the date set forth below.

 

Dated:

	  	
[______________],

	  	
  Paying Agent

	  	  	  
	  	  	  
	  	  	  
	  	
By

	  
	  	  	
  Authorized Officer

	
Countersigned:

	  
	 	 
	
[______________],

	
  

	  Authenticating Agent	  
	 	 
	
By ________________________

	  
	
   Authorized Officer

	  

  

A-R-4

  

 

EXHIBIT B-1

[FORM OF FACE OF CLASS B-1 CERTIFICATE]

 

THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS A CERTIFICATES AS DESCRIBED IN THE AGREEMENT REFERRED TO HEREIN.

 

THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE RESOLD OR TRANSFERRED UNLESS IT IS REGISTERED PURSUANT TO SUCH ACT AND LAWS OR IS SOLD OR TRANSFERRED IN TRANSACTIONS WHICH ARE EXEMPT FROM REGISTRATION UNDER SUCH ACT AND UNDER APPLICABLE STATE LAW AND IS TRANSFERRED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 5.02 OF THE AGREEMENT REFERRED TO HEREIN.

 

EXCEPT AS PROVIDED IN SECTION 5.02(C) OF THE AGREEMENT REFERRED TO HEREIN, THIS CERTIFICATE MAY NOT BE PURCHASED BY OR TRANSFERRED TO ANY PERSON THAT HAS NOT DELIVERED A REPRESENTATION LETTER STATING EITHER (A) THAT THE TRANSFEREE IS NOT AN EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”), OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”), OR A GOVERNMENTAL PLAN, AS DEFINED IN SECTION 3(32) OF ERISA, SUBJECT TO ANY FEDERAL, STATE OR LOCAL LAW WHICH IS, TO A MATERIAL EXTENT, SIMILAR TO THE FOREGOING PROVISIONS OF ERISA OR THE CODE (COLLECTIVELY, A “PLAN”), AND IS NOT ACTING ON BEHALF OF OR INVESTING THE ASSETS OF A PLAN OR (B) SUBJECT TO CERTAIN CONDITIONS SET FORTH IN THE AGREEMENT, THAT THE SOURCE OF FUNDS USED TO PURCHASE THIS CERTIFICATE IS AN “INSURANCE COMPANY GENERAL ACCOUNT.”

  

B-1-1

  

 

MORTGAGE PASS-THROUGH CERTIFICATE

SERIES 20[__]-[__], CLASS B-1

 

evidencing an interest in a Trust Estate consisting primarily

of certain Mortgage Certificates (as defined in the

Agreement referred to herein) sold by

 

WELLS FARGO ASSET SECURITIES CORPORATION

(Not an interest in or obligation of the Depositor)

 

THIS CERTIFICATE DOES NOT EVIDENCE AN OBLIGATION OF, OR AN INTEREST IN, THE DEPOSITOR, THE SECURITIES ADMINISTRATOR, THE TRUSTEE OR ANY OF THEIR AFFILIATES, AND IS NOT INSURED OR GUARANTEED BY THE DEPOSITOR, THE SECURITIES ADMINISTRATOR, THE TRUSTEE OR ANY OF THEIR AFFILIATES, OR BY ANY GOVERNMENT AGENCY OR PRIVATE INSURER.

 

DISTRIBUTIONS IN REDUCTION OF THE PRINCIPAL BALANCE OF THIS CERTIFICATE WILL BE MADE IN THE MANNER DESCRIBED IN THE AGREEMENT. ACCORDINGLY, THE OUTSTANDING PRINCIPAL BALANCE OF THIS CERTIFICATE AT ANY TIME MAY BE LESS THAN THE INITIAL PRINCIPAL BALANCE REPRESENTED HEREBY.

 

	
Certificate No.

	
Cut-Off Date:  [______], 20[__]

	  	  
	
CUSIP No.: [_________]

	
First Distribution Date: [______], 20[__]

	  	  
	
ISIN No.: [__________]

	
Denomination:  $

	  	  
	
Percentage Interest evidenced

by this Certificate: %

	
Final Scheduled Maturity Date:  [______], 20[__]

  

B-1-2

  

 

THIS CERTIFIES THAT ___________________________ is the registered owner of the Percentage Interest evidenced by this Certificate in monthly distributions to the Holders of the Class B-1 Certificates with respect to a Trust Estate consisting of the Mortgage Certificates, formed by Wells Fargo Asset Securities Corporation (hereinafter called the “Depositor,” which term includes any successor entity under the Agreement referred to below). The Trust Estate was created pursuant to a Trust Agreement dated as of [______], 20[__] (the “Agreement”), among the Depositor, [_______], as securities administrator (the “Securities Administrator”), and [__________], as trustee (the “Trustee”), a summary of certain of the pertinent provisions of which is set forth hereinafter. To the extent not defined herein, the capitalized terms used herein have the meanings ascribed to such terms in the Agreement. This Certificate is issued under and is subject to the terms, provisions and conditions of the Agreement, to which Agreement the Holder of this Certificate by virtue of the acceptance hereof assents and by which such Holder is bound.

 

Pursuant to the terms of the Agreement, a distribution will be made on each Distribution Date, commencing on the first Distribution Date specified above, to the Person in whose name this Certificate is registered at the close of business on the Record Date, in an amount equal to the product of the Percentage Interest evidenced by this Certificate and, subject to the prior rights of the Class A Certificates as specified in the Agreement, any Class B Distribution Amount and Interest Distribution Amount required to be distributed to Holders of the Class B-1 Certificates on such Distribution Date, subject to adjustment, in certain events, as specified in the Agreement.  The pass-through rate on the Class B-1 Certificates applicable to each Distribution Date will be as set forth in the Agreement. The amount of interest which accrues on this Certificate in any month will be subject to reduction with respect to any Interest Reductions allocated to the Class B-1 Certificates, as described in the Agreement.

 

Distributions on this Certificate will be made by the Paying Agent by check mailed to the address of the Person entitled thereto, as such name and address shall appear on the Certificate Register, unless such Person has notified the Paying Agent pursuant to the Agreement that such payments are to be made by wire transfer of immediately available funds. Notwithstanding the above, the final distribution in reduction of the Principal Balance of this Certificate will be made after due notice of the pendency of such distribution and only upon presentation and surrender of this Certificate at the office or agency of the Paying Agent specified for that purpose in the notice of final distribution.

 

No transfer of a Class B-1 Certificate will be made unless such transfer is exempt from the registration requirements of the Securities Act of 1933, as amended, and any applicable state securities laws or is made in accordance with said Act and laws. In the event that such a transfer is desired to be made by the Holder hereof, the transferee will be required to execute an investment letter in the form described in the Agreement. The Holder hereof desiring to effect such transfer shall, and does hereby agree to, indemnify the Trustee, the Depositor, the Securities Administrator, and any Paying Agent against any liability that may result if the transfer is not so exempt or is not made in accordance with such Federal and state laws. In connection with any such transfer, the Securities Administrator will also require (i) a representation letter, in the form as described in the Agreement, stating either (a) that the transferee is not a Plan and is not acting on behalf of a Plan or using the assets of a Plan to effect such purchase or (b) subject to certain conditions described in the Agreement, that the source of funds used to purchase this Certificate is an “insurance company general account,” or (ii) if such transferee is a Plan, (a) an opinion of 

 

  

B-1-3

  

 

counsel acceptable to and in form and substance satisfactory to the Securities Administrator and the Depositor with respect to certain matters and (b) such other documentation as the Depositor or the Securities Administrator may require, as described in the Agreement.

 

Reference is hereby made to the further provisions of this Certificate set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place.

 

This Certificate constitutes a “regular interest” in a “real estate mortgage investment conduit” as those terms are defined in Section 860G(a)(1) and Section 860D, respectively, of the Internal Revenue Code of 1986, as amended.

 

Unless this Certificate has been countersigned by an authorized officer of the Authenticating Agent, by manual signature, this Certificate shall not be entitled to any benefit under the Agreement or be valid for any purpose.

  

B-1-4

  

 

IN WITNESS WHEREOF, the Paying Agent has caused this Certificate to be duly executed as of the date set forth below.

 

Dated:

	  	
[______________],

	  	
  Paying Agent

	  	  	  
	  	  	  
	  	  	  
	  	
By

	  
	  	  	
  Authorized Officer

	
Countersigned:

	  
	 	 
	
[______________],

	
  

	  Authenticating Agent	  
	 	 
	
By ________________________

	  
	
   Authorized Officer

	  

  

B-1-5

  

 

EXHIBIT B-2

[FORM OF FACE OF CLASS B-2 CERTIFICATE]

 

THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS A CERTIFICATES AND THE CLASS B-1 CERTIFICATES AS DESCRIBED IN THE AGREEMENT REFERRED TO HEREIN.

 

THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE RESOLD OR TRANSFERRED UNLESS IT IS REGISTERED PURSUANT TO SUCH ACT AND LAWS OR IS SOLD OR TRANSFERRED IN TRANSACTIONS WHICH ARE EXEMPT FROM REGISTRATION UNDER SUCH ACT AND UNDER APPLICABLE STATE LAW AND IS TRANSFERRED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 5.02 OF THE AGREEMENT REFERRED TO HEREIN.

 

EXCEPT AS PROVIDED IN SECTION 5.02(C) OF THE AGREEMENT REFERRED TO HEREIN, THIS CERTIFICATE MAY NOT BE PURCHASED BY OR TRANSFERRED TO ANY PERSON THAT HAS NOT DELIVERED A REPRESENTATION LETTER STATING EITHER (A) THAT THE TRANSFEREE IS NOT AN EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”), OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”), OR A GOVERNMENTAL PLAN, AS DEFINED IN SECTION 3(32) OF ERISA, SUBJECT TO ANY FEDERAL, STATE OR LOCAL LAW WHICH IS, TO A MATERIAL EXTENT, SIMILAR TO THE FOREGOING PROVISIONS OF ERISA OR THE CODE (COLLECTIVELY, A “PLAN”), AND IS NOT ACTING ON BEHALF OF OR INVESTING THE ASSETS OF A PLAN OR (B) SUBJECT TO CERTAIN CONDITIONS SET FORTH IN THE AGREEMENT, THAT THE SOURCE OF FUNDS USED TO PURCHASE THIS CERTIFICATE IS AN “INSURANCE COMPANY GENERAL ACCOUNT.”

  

B-2-1

  

 

MORTGAGE PASS-THROUGH CERTIFICATE

SERIES 20[__]-[__], CLASS B-2

 

evidencing an interest in a Trust Estate consisting primarily

of certain Mortgage Certificates (as defined in the

Agreement referred to herein) sold by

 

WELLS FARGO ASSET SECURITIES CORPORATION

(Not an interest in or obligation of the Depositor)

 

THIS CERTIFICATE DOES NOT EVIDENCE AN OBLIGATION OF, OR AN INTEREST IN, THE DEPOSITOR, THE SECURITIES ADMINISTRATOR, THE TRUSTEE OR ANY OF THEIR AFFILIATES, AND IS NOT INSURED OR GUARANTEED BY THE DEPOSITOR, THE SECURITIES ADMINISTRATOR, THE TRUSTEE OR ANY OF THEIR AFFILIATES, OR BY ANY GOVERNMENT AGENCY OR PRIVATE INSURER.

 

DISTRIBUTIONS IN REDUCTION OF THE PRINCIPAL BALANCE OF THIS CERTIFICATE WILL BE MADE IN THE MANNER DESCRIBED IN THE AGREEMENT. ACCORDINGLY, THE OUTSTANDING PRINCIPAL BALANCE OF THIS CERTIFICATE AT ANY TIME MAY BE LESS THAN THE INITIAL PRINCIPAL BALANCE REPRESENTED HEREBY.

 

	
Certificate No.

	
Cut-Off Date:  [______], 20[__]

	  	  
	
CUSIP No.: [_________]

	
First Distribution Date: [______], 20[__]

	  	  
	
ISIN No.: [__________]

	
Denomination:  $

	  	  
	
Percentage Interest evidenced

by this Certificate: %

	
Final Scheduled Maturity Date:  [______], 20[__]

  

B-2-2

  

 

THIS CERTIFIES THAT ___________________________ is the registered owner of the Percentage Interest evidenced by this Certificate in monthly distributions to the Holders of the Class B-2 Certificates with respect to a Trust Estate consisting of the Mortgage Certificates, formed by Wells Fargo Asset Securities Corporation (hereinafter called the “Depositor,” which term includes any successor entity under the Agreement referred to below). The Trust Estate was created pursuant to a Trust Agreement dated as of [______], 20[__] (the “Agreement”), among the Depositor, [_______], as securities administrator (the “Securities Administrator”), and [__________], as trustee (the “Trustee”), a summary of certain of the pertinent provisions of which is set forth hereinafter. To the extent not defined herein, the capitalized terms used herein have the meanings ascribed to such terms in the Agreement. This Certificate is issued under and is subject to the terms, provisions and conditions of the Agreement, to which Agreement the Holder of this Certificate by virtue of the acceptance hereof assents and by which such Holder is bound.

 

Pursuant to the terms of the Agreement, a distribution will be made on each Distribution Date, commencing on the first Distribution Date specified above, to the Person in whose name this Certificate is registered at the close of business on the Record Date, in an amount equal to the product of the Percentage Interest evidenced by this Certificate and, subject to the prior rights of the Class A Certificates and each Class of Class B Certificates bearing a lower numerical designation as specified in the Agreement, any Class B Distribution Amount and Interest Distribution Amount required to be distributed to Holders of the Class B-2 Certificates on such Distribution Date, subject to adjustment, in certain events, as specified in the Agreement.  The pass-through rate on the Class B-2 Certificates applicable to each Distribution Date will be as set forth in the Agreement. The amount of interest which accrues on this Certificate in any month will be subject to reduction with respect to any Interest Reductions allocated to the Class B-2 Certificates, as described in the Agreement.

 

Distributions on this Certificate will be made by the Paying Agent by check mailed to the address of the Person entitled thereto, as such name and address shall appear on the Certificate Register, unless such Person has notified the Paying Agent pursuant to the Agreement that such payments are to be made by wire transfer of immediately available funds. Notwithstanding the above, the final distribution in reduction of the Principal Balance of this Certificate will be made after due notice of the pendency of such distribution and only upon presentation and surrender of this Certificate at the office or agency of the Paying Agent specified for that purpose in the notice of final distribution.

 

No transfer of a Class B-2 Certificate will be made unless such transfer is exempt from the registration requirements of the Securities Act of 1933, as amended, and any applicable state securities laws or is made in accordance with said Act and laws. In the event that such a transfer is desired to be made by the Holder hereof, the transferee will be required to execute an investment letter in the form described in the Agreement. The Holder hereof desiring to effect such transfer shall, and does hereby agree to, indemnify the Trustee, the Depositor, the Securities Administrator, and any Paying Agent against any liability that may result if the transfer is not so exempt or is not made in accordance with such Federal and state laws. In connection with any such transfer, the Securities Administrator will also require (i) a representation letter, in the form as described in the Agreement, stating either (a) that the transferee is not a Plan and is not acting on behalf of a Plan or using the assets of a Plan to effect such purchase or (b) subject to certain conditions described in the Agreement, that the source of funds used to purchase this Certificate is 

 

  

B-2-3

  

 

an “insurance company general account,” or (ii) if such transferee is a Plan, (a) an opinion of counsel acceptable to and in form and substance satisfactory to the Securities Administrator and the Depositor with respect to certain matters and (b) such other documentation as the Depositor or the Securities Administrator may require, as described in the Agreement.

 

Reference is hereby made to the further provisions of this Certificate set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place.

 

This Certificate constitutes a “regular interest” in a “real estate mortgage investment conduit” as those terms are defined in Section 860G(a)(1) and Section 860D, respectively, of the Internal Revenue Code of 1986, as amended.

 

Unless this Certificate has been countersigned by an authorized officer of the Authenticating Agent, by manual signature, this Certificate shall not be entitled to any benefit under the Agreement or be valid for any purpose.

  

B-2-4

  

 

IN WITNESS WHEREOF, the Paying Agent has caused this Certificate to be duly executed as of the date set forth below.

 

Dated:

	  	
[______________],

	  	
  Paying Agent

	  	  	  
	  	  	  
	  	  	  
	  	
By

	  
	  	  	
  Authorized Officer

	
Countersigned:

	  
	 	 
	
[______________],

	
  

	  Authenticating Agent	  
	 	 
	
By ________________________

	  
	
   Authorized Officer

	  

  

B-2-5

  

 

EXHIBIT C

 

[Form of Reverse of SERIES 20[__]-[__] Certificates]

 

WELLS FARGO ASSET SECURITIES CORPORATION

MORTGAGE PASS-THROUGH CERTIFICATES

SERIES 20[__]-[__]

 

This Certificate is one of a duly authorized issue of Certificates issued in several Classes designated as Mortgage Pass-Through Certificates of the Series specified hereon (herein collectively called the “Certificates”).

 

The Certificates are limited in right of payment to certain amounts of principal and interest distributed to the Mortgage Certificates, as more specifically set forth herein and in the Agreement.

 

As provided in the Agreement, withdrawals from the Certificate Account created for the benefit of Certificateholders may be made by the Securities Administrator from time to time for purposes other than distributions to Certificateholders.

 

The Agreement permits, with certain exceptions therein provided, the amendment of the Agreement and the modification of the rights and obligations of the Depositor, the Securities Administrator and the Trustee and the rights of the Certificateholders under the Agreement at any time by the Depositor, the Securities Administrator and the Trustee with the consent of the Holders of Certificates evidencing in the aggregate not less than 66 2/3% of the Voting Interests of each Class of Certificates affected thereby. Any such consent by the Holder of this Certificate shall be conclusive and binding on such Holder and upon all future holders of this Certificate and of any Certificate issued upon the transfer hereof or in exchange hereof or in lieu hereof whether or not notation of such consent is made upon the Certificate. The Agreement also permits the amendment thereof in certain circumstances without the consent of the Holders of any of the Certificates.

 

As provided in the Agreement and subject to certain limitations therein set forth, the transfer of this Certificate is registrable in the Certificate Register upon surrender of this Certificate for registration of transfer at the office or agency maintained by the Certificate Registrar, duly endorsed by, or accompanied by an assignment in the form below or other written instrument of transfer in form satisfactory to the Certificate Registrar, duly executed by the Holder hereof or such Holder’s attorney duly authorized in writing, and thereupon one or more new Certificates of authorized Denominations evidencing the same Class and aggregate Percentage Interest will be issued to the designated transferee or transferees.

 

The Certificates are issuable only as registered Certificates without coupons in Classes and Denominations specified in the Agreement. As provided in the Agreement and subject to certain limitations therein set forth, Certificates are exchangeable for new Certificates of authorized Denominations evidencing the same Class and aggregate Percentage Interest, as requested by the Holder surrendering the same.

 

  

C-1

  

 

No service charge will be made for any such registration of transfer or exchange, but the Certificate Registrar may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.

 

The Depositor, the Securities Administrator, the Trustee, the Paying Agent and the Certificate Registrar, and any agent of the Depositor, the Securities Administrator, the Trustee, the Paying Agent or the Certificate Registrar, may treat the Person in whose name this Certificate is registered as the owner hereof for all purposes, and neither the Depositor, the Securities Administrator, the Trustee, the Certificate Registrar nor any such agent shall be affected by notice to the contrary. The obligations created by the Agreement in respect of the Certificates and the Trust Estate created thereby shall terminate upon the last action required to be taken by the Paying Agent on the Final Distribution Date pursuant to the Agreement following the final distribution to Certificateholders of all amounts required to be distributed pursuant to Article IV of the Agreement; provided, however, that the Trust Estate will in no event continue beyond the expiration of 21 years from the death of the last survivor of the descendants of Joseph P. Kennedy, the late ambassador of the United States to the Court of St. James, living on the date of the Agreement.

  

C-2

  

ASSIGNMENT

 

FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s) unto

 

(Please print or typewrite name and address including postal zip code of assignee)

 

the beneficial interest evidenced by the within Mortgage Pass-Through Certificate and hereby authorizes the transfer of registration of such interest to assignee on the Certificate Register of the Trust Estate.

 

I (We) further direct the Certificate Registrar to issue a new Certificate of a like Denomination or Percentage Interest and Class, to the above named assignee and deliver such Certificate to the following address:

 

 

 

Social Security or other Identifying Number of Assignee:

 

Dated:

	  	
___________________________________

	  	
Signature by or on behalf of assignor

	  	  
	  	  
	  	
___________________________________

	  	
Signature Guaranteed

  

C-3

  

 

DISTRIBUTION INSTRUCTIONS

 

The assignee should include the following for purposes of distribution:

 

Distributions shall be made by wire transfer or otherwise, in immediately available funds to _________________________________________________________________ for the account of _______________________________________________ account number _____________, or, if mailed by check, to _______________________________________________________. Applicable statements should be mailed to ______________________ ________________________________________________________________.

 

This information is provided by ______________________, the assignee named above, or ___________________________________, as its agent.

  

C-4

  

 

EXHIBIT D

 

Mortgage Certificate Schedule

 

	  	

Class

	 	

Series

	 	

Issuance Date

	 	

Principal Balance as of 

[_____], 20[__]

	 	

Underlying Pooling and Servicing

Agreement

	
1.

	  	 	  	 	  	 	  	 	  
	
2.

	  	 	  	 	  	 	  	 	  
	
3.

	  	 	  	 	  	 	  	 	  

 

  

D-1

  

 

EXHIBIT E

	  	
AFFIDAVIT PURSUANT TO SECTION 860E(e)(4) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED, AND FOR NON-ERISA INVESTORS

	
STATE OF

	
)

	  	
ss.:

	
COUNTY OF

	
)

 

 [NAME OF OFFICER], being first duly sworn, deposes and says:

 

1.           That he is [Title of Officer] of [Name of Purchaser] (the “Purchaser”), a [description of type of entity] duly organized and existing under the laws of the [State of        ] [United States], on behalf of which he makes this affidavit.

 

2.           That the Purchaser’s Taxpayer Identification Number is [             ].

 

3.           That the Purchaser is not a “disqualified organization” within the meaning of Section 860E(e)(5),of the Internal Revenue Code of 1986, as amended (the “Code”), or an ERISA Prohibited Holder, and will not be a “disqualified organization” or an ERISA Prohibited Holder, as of [date of transfer], and that the Purchaser is not acquiring Wells Fargo Asset Securities Corporation Mortgage Pass-Through Certificates, Series 20[__]-[__], Class A-R Certificate (the “Residual Certificate”) for the account of, or as agent (including a broker, nominee, or other middleman) for, any person or entity from which it has not received an affidavit substantially in the form of this affidavit. For these purposes, a “disqualified organization” means the United States, any state or political subdivision thereof, any foreign government, any international organization, any agency or instrumentality of any of the foregoing (other than an instrumentality if all of its activities are subject to tax and a majority of its board of directors is not selected by such governmental entity), any cooperative organization furnishing electric energy or providing telephone service to persons in rural areas as described in Code Section 1381(a)(2)(C), or any organization (other than a farmers’ cooperative described in Code Section 521) that is exempt from taxation under the Code unless such organization is subject to the tax on unrelated business income imposed by Code Section 511. For these purposes, an “ERISA Prohibited Holder” means an employee benefit plan or other retirement arrangement subject to Title I of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), or Code Section 4975 or a governmental plan, as defined in Section 3(32) of ERISA, subject to any federal, state or local law which is, to a material extent, similar to the foregoing provisions of ERISA or the Code (collectively, a “Plan”) or a Person acting on behalf of or investing the assets of such a Plan.

 

4.           That the Purchaser historically has paid its debts as they have come due and intends to pay its debts as they come due in the future and the Purchaser intends to pay taxes associated with holding the Residual Certificate as they become due.

 

  

E-1

  

 

5.           That the Purchaser understands that it may incur tax liabilities with respect to the Residual Certificate in excess of cash flows generated by the Residual Certificate.

 

6.           That the Purchaser will not transfer the Residual Certificate to any person or entity from which the Purchaser has not received an affidavit substantially in the form of this affidavit and as to which the Purchaser has actual knowledge that the requirements set forth in paragraph 3, 4 or 10 hereof are not satisfied or that the Purchaser has reason to know does not satisfy the requirements set forth in paragraph 4 hereof.

 

7.           That the Purchaser is aware that the Residual Certificate may be a “noneconomic residual interest” within the meaning of Treasury regulations promulgated pursuant to the Code and that the transferor of a noneconomic residual interest will remain liable for any taxes due with respect to the income on such residual interest, unless no significant purpose of the transfer was to impede the assessment or collection of tax.

 

8.           That the Purchaser will not cause income from the Residual Certificate to be attributable to a foreign permanent establishment or fixed base, within the meaning of an applicable income tax treaty, of the Purchaser or any other person.

 

9.           That, if the Purchaser is purchasing the Residual Certificate in a transfer intended to meet the safe harbor provisions of Treasury Regulations Sections 1.860E-1(c), the Purchaser has completed and attached Attachment A hereto.

 

10.           That the Purchaser (i) is a U.S. Person or (ii) is a person other than a U.S. Person (a “Non-U.S. Person”) that holds the Residual Certificate in connection with the conduct of a trade or business within the United States and has furnished the transferor and the Trustee with an effective Internal Revenue Service Form W-8ECI or successor form at the time and in the manner required by the Code or (iii) is a Non-U.S. Person that has delivered to both the transferor and the Trustee an opinion of a nationally recognized tax counsel to the effect that the transfer of the Residual Certificate to it is in accordance with the requirements of the Code and the regulations promulgated thereunder and that such transfer of the Residual Certificate will not be disregarded for federal income tax purposes. “U.S. Person” means a citizen or resident of the United States, a corporation or partnership (unless, in the case of a partnership, Treasury regulations are adopted that provide otherwise) created or organized in or under the laws of the United States, any state thereof or the District of Columbia, including an entity treated as a corporation or partnership for federal income tax purposes, an estate whose income is subject to United States federal income tax regardless of its source, or a trust if a court within the United States is able to exercise primary supervision over the administration of such trust, and one or more such U.S. Persons have the authority to control all substantial decisions of such trust (or, to the extent provided in applicable Treasury regulations, certain trusts in existence on August 20, 1996 which are eligible to elect to be treated as U.S. Persons).

 

11.           That the Purchaser agrees to such amendments of the Trust Agreement as may be required to further effectuate the restrictions on transfer of the Residual Certificate to such a “disqualified organization,” an agent thereof, an ERISA Prohibited Holder or a person that does not satisfy the requirements of paragraph 4, paragraph 5 and paragraph 10 hereof.

 

  

E-2

  

 

12.           That the Purchaser consents to the designation of the Securities Administrator as its agent to act as “tax matters person” of the REMIC pursuant to Section 8.13 of the Trust Agreement, and if such designation is not permitted by the Code and applicable law, to act as tax matters person if requested to do so.

  

E-3

  

 

IN WITNESS WHEREOF, the Purchaser has caused this instrument to be executed on its behalf, pursuant to authority of its Board of Directors, by its [Title of Officer] this ___ day of           , 20__.

	  	
[NAME OF PURCHASER]

	  	  	  
	  	  	  
	  	
By:

	  
	  	  	
[Name of Officer]

	  	  	
[Title of Officer]

 

Personally appeared before me the above-named [Name of Officer], known or proved to me to be the same person who executed the foregoing instrument and to be the [Title of Officer], of the Purchaser, and acknowledged to me that he [she] executed the same as his [her] free act and deed and the free act and deed of the Purchaser.

 

Subscribed and sworn before me this __ day of           , 20__.

 

 

	
Notary Public

 

	
COUNTY OF____________________

 

	
STATE OF_____________________

 

My commission expires the __ day of __________, 20__.

  

E-4

  

ATTACHMENT A

 

to

 

AFFIDAVIT PURSUANT TO SECTION 860E(e)(4) OF THE INTERNAL REVENUE CODE OF

1986, AS AMENDED, AND FOR NON-ERISA INVESTORS

 

	
  

	
Check the appropriate box:

 

	
o

	
The consideration paid to the Purchaser to acquire the Residual Certificate equals or exceeds the excess of (a) the present value of the anticipated tax liabilities over (b) the present value of the anticipated savings associated with holding such Certificate, in each case calculated in accordance with U.S. Treasury Regulations Sections 1.860E-1(c)(7) and (8), computing present values using a discount rate equal to the short-term Federal rate prescribed by Section 1274(d) of the Code and the compounding period used by the Purchaser.

 

	
  

	
OR

 

	
o

	
The transfer of the Residual Certificate complies with U.S. Treasury Regulations Sections 1.860E-1(c)(5) and (6) and, accordingly:

 

	
  

	
(i)

	
the Purchaser is an “eligible corporation,” as defined in U.S. Treasury Regulations Section 1.860E-1(c)(6)(i), as to which income from Residual Certificate will only be taxed in the United States;

 

	
  

	
(ii)

	
at the time of the transfer, and at the close of the Purchaser’s two fiscal years preceding the year of the transfer, the Purchaser had gross assets for financial reporting purposes (excluding any obligation of a person related to the Purchaser within the meaning of U.S. Treasury Regulations Section 1.860E-1(c)(6)(ii)) in excess of $100 million and net assets in excess of $10 million;

 

	
  

	
(iii)

	
the Purchaser will transfer the Residual Certificate only to another “eligible corporation,” as defined in U.S. Treasury Regulations Section 1.860E-1(c)(6)(i), in a transaction that satisfies the requirements of Sections 1.860E-1(c)(4)(i), (ii) and (iii) and Section 1.860E-1(c)(5) of the U.S. Treasury Regulations;

 

	
  

	
(iv)

	
the Purchaser has determined the consideration paid to it to acquire the Residual Certificate based on reasonable market assumptions (including, but not limited to, borrowing and investment rates, prepayment and loss assumptions, expense and reinvestment assumptions, tax rates and other factors specific to the Purchaser) that it has determined in good faith; and

 

	
  

	
(v)

	
in the event of any transfer of the Residual Certificate by the Purchaser, the Purchaser will require its transferee to complete a representation in the form of this Attachment A as a condition of the transferee’s purchase of the Residual Certificate.

  

E-5

  

 

EXHIBIT F

 

Letter from Transferor of Residual Certificate

 

[Date]

 

[______________]

[______________]

[______________]

Attn: [______________]

 

	
Re:  

	
Wells Fargo Asset Securities Corporation,

	
  

	
Series 20[__]-[__], Class A-R         

 

Ladies and Gentlemen:

 

[Transferor] has reviewed the attached affidavit of [Transferee], and has no actual knowledge that such affidavit is not true and has no reason to know that the information contained in paragraph 4 thereof is not true.

	  	
Very truly yours,

	  	  
	  	
[Transferor]

	  	  
	  	
______________________

  

F-1

  

EXHIBIT G

 

 

WELLS FARGO ASSET SECURITIES CORPORATION

 

MORTGAGE PASS-THROUGH CERTIFICATES

SERIES 20[__]-[__]

CLASS [B-1][B-2] CERTIFICATES

 

TRANSFEREE’S LETTER

 

_________________ __, ____

 

[______________]

[______________]

[______________]

Attn: [______________]

 

Wells Fargo Asset Securities Corporation

8480 Stagecoach Circle

Frederick, Maryland 21701

 

The undersigned (the “Purchaser”) proposes to purchase Wells Fargo Asset Securities Corporation Mortgage Pass-Through Certificates, Series 20[__]-[__], Class [B-1][B-2] Certificates (the “Class [B-1][B-2] Certificates”) in the principal amount of $___________.  In doing so, the Purchaser hereby acknowledges and agrees as follows:

 

Section 1.                      Definitions.  Each capitalized term used herein and not otherwise defined herein shall have the meaning ascribed to it in the Trust Agreement, dated as of [______], 20[__] (the “Trust Agreement”) among Wells Fargo Asset Securities Corporation, as depositor (the “Depositor”), [_____________], as securities administrator (the “Securities Administrator”) and [_____________], as trustee (the “Trustee”), of Wells Fargo Asset Securities Corporation Mortgage Pass-Through Certificates, Series 20[__]-[__].

 

Section 2.                      Representations and Warranties of the Purchaser.  In connection with the proposed transfer, the Purchaser represents and warrants to the Depositor, the Securities Administrator and the Trustee that:

 

(a) The Purchaser is duly organized, validly existing and in good standing under the laws of the jurisdiction in which the Purchaser is organized, is authorized to invest in the Class [B-1][B-2] Certificates, and to enter into this Agreement, and duly executed and delivered this Agreement.

 

(b) The Purchaser is acquiring the Class [B-1][B-2] Certificates for its own account as principal and not with a view to the distribution thereof, in whole or in part.

 

[(c) The Purchaser has knowledge of financial and business matters and is capable of evaluating the merits and risks of an investment in the Class [B-1][B-2] Certificates; the Purchaser 

 

  

G-1

  

 

has sought such accounting, legal and tax advice as it has considered necessary to make an informed investment decision; and the Purchaser is able to bear the economic risk of an investment in the Class [B-1][B-2] Certificates and can afford a complete loss of such investment.]

 

[(c)           The Purchaser is a “Qualified Institutional Buyer” within the meaning of Rule 144A of the Act.]

 

(d) The Purchaser confirms that (a) it has received and reviewed a copy of the Private Placement Memorandum dated [_____], 20[__], relating to the Class [B-1][B-2] Certificates and reviewed, to the extent it deemed appropriate, the documents attached thereto or incorporated by reference therein, (b) it has had the opportunity to ask questions of, and receive answers from the Depositor concerning the Class [B-1][B-2] Certificates and all matters relating thereto, and obtain any additional information (including documents) relevant to its decision to purchase the Class [B-1][B-2] Certificates that the Depositor possesses or can possess without unreasonable effort or expense and (c) it has undertaken its own independent analysis of the investment in the Class [B-1][B-2] Certificates.  The Purchaser will not use or disclose any information it receives in connection with its purchase of the Class [B-1][B-2] Certificates other than in connection with a subsequent sale of Class [B-1][B-2] Certificates.

 

(e) Either (i) the Purchaser is not an employee benefit plan or other retirement arrangement subject to Title I of the Employee Retirement Income Security Act of 1974, as amended, (“ERISA”), or Section 4975 of the Internal Revenue Code of 1986, as amended (the “Code”), or a governmental plan, as defined in Section 3(32) of ERISA subject to any federal, state or local law (“Similar Law”) which is, to a material extent, similar to the foregoing provisions of ERISA or the Code (collectively, a “Plan”), an agent acting on behalf of a Plan, or a person utilizing the assets of a Plan or (ii) if the Purchaser is an insurance company, (A) the source of funds used to purchase the Class [B-1][B-2] Certificate is an “insurance company general account” (as such term is defined in Section V(e) of Prohibited Transaction Class Exemption 95-60 (“PTE 95-60”), 60 Fed.  Reg.  35925 (July 12, 1995), (B) there is no Plan with respect to which the amount of such general account’s reserves and liabilities for the contract(s) held by or on behalf of such Plan and all other Plans maintained by the same employer (or affiliate thereof as defined in Section V(a)(1) of PTE 95-60) or by the same employee organization exceeds 10% of the total of all reserves and liabilities of such general account (as such amounts are determined under Section I(a) of PTE 95-60) at the date of acquisition and (C) the purchase and holding of such Class [B-1][B-2] Certificates are covered by Sections I and III of PTE 95-60 or (iii) the Purchaser has provided (a) a “Benefit Plan Opinion” satisfactory to the Depositor and the Securities Administrator of the Trust Estate and (b) such other opinions of counsel, officers’ certificates and agreements as the Depositor or the Securities Administrator may have required.  A Benefit Plan Opinion is an opinion of counsel to the effect that the proposed transfer will not constitute or result in a non-exempt prohibited transaction within the meaning of ERISA, Section 4975 of the Code or Similar Law and will not subject the Depositor or the Securities Administrator to any obligation in addition to those undertaken in the Trust Agreement (including any liability for civil penalties or excise taxes imposed pursuant to ERISA, Section 4975 of the Code or Similar Law).

 

(f) If the Purchaser is a depository institution subject to the jurisdiction of the Office of the Comptroller of the Currency (“OCC”), the Board of Governors of the Federal Reserve System (“FRB”), the Federal Deposit Insurance Corporation (“FDIC”) or the National Credit Union Administration (“NCUA”), the Purchaser has reviewed the “Supervisory Policy Statement on 

 

  

G-2

  

 

Securities Activities” dated January 28, 1992 of the Federal Financial Institutions Examination Council and the April 15, 1994 Interim Revision thereto as adopted by the OCC, FRB, FDIC and NCUA (with modifications as applicable), as appropriate, other applicable investment authority, rules, supervisory policies and guidelines of these agencies and, to the extent appropriate, state banking authorities and has concluded that its purchase of the Class [B-1][B-2] Certificates is in compliance therewith.

 

Section 3.                      Transfer of Class [B-1][B-2] Certificates.

 

(a) The Purchaser understands that the Class [B-1][B-2] Certificates have not been registered under the Securities Act of 1933 (the “Act”) or any state securities laws and that no transfer may be made unless the Class [B-1][B-2] Certificates are registered under the Act and applicable state law or unless an exemption from registration is available.  The Purchaser further understands that neither the Depositor nor the Securities Administrator is under any obligation to register the Class [B-1][B-2] Certificates or make an exemption available.  In the event that such a transfer is to be made in reliance upon an exemption from the Act or applicable state securities laws, (i) the Securities Administrator shall require, in order to assure compliance with such laws, that the Certificateholder’s prospective transferee certify to the Depositor and the Securities Administrator as to the factual basis for the registration or qualification exemption relied upon, and (ii) unless the transferee is a “Qualified Institutional Buyer” within the meaning of Rule 144A of the Act, the Securities Administrator or the Depositor may, if such transfer is made within three years from the later of (a) the Closing Date or (b) the last date on which the Depositor or any affiliate thereof was a holder of the Certificates proposed to be transferred, require an Opinion of Counsel that such transfer may be made pursuant to an exemption from the Act and state securities laws, which Opinion of Counsel shall not be an expense of the Securities Administrator or the Depositor.  Any such Certificateholder desiring to effect such transfer shall, and does hereby agree to, indemnify the Trustee, the Securities Administrator, any Paying Agent and the Depositor against any liability that may result if the transfer is not so exempt or is not made in accordance with such federal and state laws.

 

(b) No transfer of a Class [B-1][B-2] Certificate shall be made unless the transferee provides the Depositor and the Securities Administrator with a Transferee’s Letter, substantially in the form of this Agreement.

 

(c) The Purchaser acknowledges that its Class [B-1][B-2] Certificates bear a legend setting forth the applicable restrictions on transfer.

  

G-3

  

 

IN WITNESS WHEREOF, the undersigned has caused this Agreement to be validly executed by its duly authorized representative as of the day and the year first above written.

	  	
[PURCHASER]

	  	  
	  	
By: ______________________________

	  	  
	  	
Its: ______________________________

  

G-4

  

 

EXHIBIT H-1

 

FORM OF SARBANES-OXLEY CERTIFICATION

 

Wells Fargo Asset Securities Corporation

Mortgage Pass-Through Certificates,

Series 20[__]-[__]

 

 I, [________], certify that:

 

 1. I have reviewed this report on Form 10-K and all reports on Form 10-D required to be filed in respect of the period covered by this report on Form 10-K of the Wells Fargo Asset Securities Corporation, Mortgage Pass-Through Certificates, Series 20[__]-[__] Trust (the “Exchange Act Periodic Reports”);

 

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

 

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

 

 4. I am responsible for reviewing the activities performed by the Depositor and based upon my knowledge and the compliance review conducted in preparing the servicer compliance statement required in this report under Item 1123 of Regulation AB, and except as disclosed in the Exchange Act Periodic Reports, the Depositor has fulfilled its obligations under the trust agreement, dated [______], 20[__], among Wells Fargo Asset Securities Corporation, as depositor, [__________], as securities administrator, and [__________], as trustee, in all material respects; and

 

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

 

 

Date: [_____]

	  	
By:

	  
	  	  	
Name:

	  	  	
Title:

	  	  	
(Senior Officer in Charge of Securitization of Wells Fargo Asset Securities Corporation)

  

H-1-1

  

EXHIBIT H-2

 

Form of Certification to be Provided by the Securities Administrator to the Depositor

 

WELLS FARGO ASSET SECURITIES CORPORATION,

MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 20[__]-[__]

 

 I, [identify the certifying individual], certify to Wells Fargo Asset Securities Corporation and its officers, directors and affiliates, and with the knowledge and intent that they will rely upon this certification, that:

 

	
1.  

	
I have reviewed the annual report on Form 10-K for the fiscal year [___] (the “Annual Report”), and all reports on Form 10-D required to be filed in respect of period covered by the Annual Report (collectively with the Annual Report, the “Reports”), of the Trust;

 

	
2.  

	
To my knowledge, the Reports, taken as a whole, do not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by the Annual Report;

 

	
3.  

	
To my knowledge, the distribution information required to be provided by the Securities Administrator under the trust agreement (the “Trust Agreement”), dated [_______], 20[__], among Wells Fargo Asset Securities Corporation, as depositor, [_____________], as securities administrator, and [_____________], as trustee, for inclusion in the Reports is included in the Reports;

 

	
4.  

	
I am responsible for reviewing the activities performed by the Securities Administrator under the Trust Agreement, and based on my knowledge and the compliance review conducted in preparing the compliance statement of the Securities Administrator required in the Annual Report under Item 1123 of Regulation AB, and except as disclosed in the Reports, the Securities Administrator has fulfilled its obligations under the Trust Agreement in all material respects; and

 

	
5.  

	
The report on assessment of compliance with servicing criteria for asset-backed securities of the Securities Administrator and its related attestation report on assessment of compliance with servicing criteria required to be included in the Annual Report in accordance with Item 1122 of Regulation AB and Exchange Act Rules 13a-18 and 15d-18 has been included as an exhibit to the Annual Report.  Any material instances of non-compliance are described in such report and have been disclosed in the Annual Report.

 

 

	  	
By:

	  
	  	  	
Name:

	  	  	
Title:

  

H-2-1

  

 

EXHIBIT I

 

Servicing Criteria to be Addressed in Assessment of Compliance

 

	
SERVICING CRITERIA

	
APPLICABLE SERVICING CRITERIA

	
Reference

	
Criteria

	
Securities

Administrator

	
Trustee

	  	
 

General Servicing Considerations

	  	  
	
1122(d)(1)(i)

	
 

Policies and procedures are instituted to monitor any performance or other triggers and events of default in accordance with the transaction agreements.

	  	  
	
1122(d)(1)(ii)

	
 

If any material servicing activities are outsourced to third parties, policies and procedures are instituted to monitor the third party’s performance and compliance with such servicing activities.

	  	  
	
1122(d)(1)(iii)

	
 

Any requirements in the transaction agreements to maintain a back-up servicer for the mortgage certificates are maintained.

	  	  
	
1122(d)(1)(iv)

	
 

A fidelity bond and errors and omissions policy is in effect on the party participating in the servicing function throughout the reporting period in the amount of coverage required by and otherwise in accordance with the terms of the transaction agreements.

	  	  
	
  

 

	
Cash Collection and Administration

	  	  
	
1122(d)(2)(i)

	
 

Payments on mortgage certificates are deposited into the appropriate custodial bank accounts and related bank clearing accounts no more than two business days following receipt, or such other number of days specified in the transaction agreements.

	  	  
	
1122(d)(2)(ii)

	
 

Disbursements made via wire transfer on behalf of an obligor or to an investor are made only by authorized personnel.

	  	  
	
1122(d)(2)(iii)

	
 

Advances of funds or guarantees regarding collections, cash flows or distributions, and any interest or other fees charged for such advances, are made, reviewed and approved as specified in the transaction agreements.

	  	  
	
1122(d)(2)(iv)

	
 

The related accounts for the transaction, such as cash reserve accounts or accounts established as a form of overcollateralization, are separately maintained (e.g., with respect to commingling of cash) as set forth in the transaction agreements.

	  	  
	
1122(d)(2)(v)

	
 

Each custodial account is maintained at a federally insured depository institution as set forth in the transaction agreements. For purposes of this criterion, “federally insured depository institution” with respect to a foreign financial institution means a foreign financial institution that meets the requirements of Rule 13k-1(b)(1) of the Securities Exchange Act.

	  	  
	
1122(d)(2)(vi)

	
 

Unissued checks are safeguarded so as to prevent unauthorized access.

	  	  
	
1122(d)(2)(vii)

	
 

Reconciliations are prepared on a monthly basis for all asset-backed securities related bank accounts, including custodial accounts and related bank clearing accounts. These reconciliations are (A) mathematically accurate; (B) prepared within 30 calendar days after the bank statement cutoff date, or such other number of days specified in the transaction agreements; (C) reviewed and approved by someone other than the person who prepared the reconciliation; and (D) contain explanations for reconciling items. These reconciling items are resolved within 90 calendar days of their original identification, or such other number of days specified in the transaction agreements.

	  	  

 

 

  

I-1

  

 

	
SERVICING CRITERIA

	
APPLICABLE SERVICING CRITERIA

	
Reference

	
Criteria

	
Securities

Administrator

	
Trustee

	  	
 

Investor Remittances and Reporting

	  	  
	
1122(d)(3)(i)

	
 

Reports to investors, including those to be filed with the Commission, are maintained in accordance with the transaction agreements and applicable Commission requirements. Specifically, such reports (A) are prepared in accordance with timeframes and other terms set forth in the transaction agreements; (B) provide information calculated in accordance with the terms specified in the transaction agreements; (C) are filed with the Commission as required by its rules and regulations; and (D) agree with investors’ or the trustee’s records as to the total unpaid principal balance and number of mortgage certificates serviced by the servicer.

	  	  
	
1122(d)(3)(ii)

	
 

Amounts due to investors are allocated and remitted in accordance with timeframes, distribution priority and other terms set forth in the transaction agreements.

	  	  
	
1122(d)(3)(iii)

	
 

Disbursements made to an investor are posted within two business days to the servicer’s investor records, or such other number of days specified in the transaction agreements.

	  	  
	
1122(d)(3)(iv)

	
 

Amounts remitted to investors per the investor reports agree with cancelled checks, or other form of payment, or custodial bank statements.

	  	  
	  	
 

Pool Asset Administration

	  	  
	
1122(d)(4)(i)

	
 

Collateral or security on mortgage certificates is maintained as required by the transaction agreements or related mortgage certificate documents.

	  	  
	
1122(d)(4)(ii)

	
 

Mortgage certificates and related documents are safeguarded as required by the transaction agreements

	  	  
	
1122(d)(4)(iii)

	
 

Any additions, removals or substitutions to the asset pool are made, reviewed and approved in accordance with any conditions or requirements in the transaction agreements.

	  	  
	
1122(d)(4)(iv)

	
 

Payments on mortgage certificates, including any payoffs, made in accordance with the related mortgage certificate documents are posted to the servicer’s obligor records maintained no more than two business days after receipt, or such other number of days specified in the transaction agreements, and allocated to principal, interest or other items (e.g., escrow) in accordance with the related mortgage certificate documents.

	  	  
	
1122(d)(4)(v)

	
 

The servicer’s records regarding the mortgage certificates agree with the servicer’s records with respect to an obligor’s unpaid principal balance.

	  	  
	
1122(d)(4)(vi)

	
 

Changes with respect to the terms or status of an obligor's mortgage certificates (e.g., loan modifications or re-agings) are made, reviewed and approved by authorized personnel in accordance with the transaction agreements and related mortgage certificate documents.

	  	  
	
1122(d)(4)(vii)

	
 

Loss mitigation or recovery actions (e.g., forbearance plans, modifications and deeds in lieu of foreclosure, foreclosures and repossessions, as applicable) are initiated, conducted and concluded in accordance with the timeframes or other requirements established by the transaction agreements.

	  	  
	
1122(d)(4)(viii)

	
 

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

	  	  
	
1122(d)(4)(ix)

	
 

Adjustments to interest rates or rates of return for mortgage certificates with variable rates are computed based on the related mortgage certificate documents.

	  	  

 

  

I-2

  

 

	
SERVICING CRITERIA

	
APPLICABLE SERVICING CRITERIA

	
Reference

	
Criteria

	
Securities

Administrator

	
Trustee

	
1122(d)(4)(x)

	
 

Regarding any funds held in trust for an obligor (such as escrow accounts): (A) such funds are analyzed, in accordance with the obligor’s mortgage certificate documents, on at least an annual basis, or such other period specified in the transaction agreements; (B) interest on such funds is paid, or credited, to obligors in accordance with applicable mortgage certificate documents and state laws; and (C) such funds are returned to the obligor within 30 calendar days of full repayment of the related mortgage certificates, or such other number of days specified in the transaction agreements.

	  	  
	
1122(d)(4)(xi)

	
 

Payments made on behalf of an obligor (such as tax or insurance payments) are made on or before the related penalty or expiration dates, as indicated on the appropriate bills or notices for such payments, provided that such support has been received by the servicer at least 30 calendar days prior to these dates, or such other number of days specified in the transaction agreements.

	  	  
	
1122(d)(4)(xii)

	
 

Any late payment penalties in connection with any payment to be made on behalf of an obligor are paid from the servicer’s funds and not charged to the obligor, unless the late payment was due to the obligor’s error or omission.

	  	  
	
1122(d)(4)(xiii)

	
 

Disbursements made on behalf of an obligor are posted within two business days to the obligor’s records maintained by the servicer, or such other number of days specified in the transaction agreements.

	  	  
	
1122(d)(4)(xiv)

	
 

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

	  	  
	
1122(d)(4)(xv)

	
 

Any external enhancement or other support, identified in Item 1114(a)(1) through (3) or Item 1115 of Regulation AB, is maintained as set forth in the transaction agreements.

	  	
  

 

 

 

	
[_______________________]

	  
	  	  	  
	
Date:

	_______________________________________________	  
	  	  	  
	
By:

	_______________________________________________	  
	  	
Name:

	  
	  	
Title:

	  

  

I-3

  

 

EXHIBIT J

 

Additional Form 10-D Disclosure

	
Item on Form 10-D

	
Party Responsible

	
Item 1: Distribution and Pool Performance Information

 

Any information required by 1121 which is NOT included on the Distribution Date Statement

	
Securities Administrator, Depositor

 

	
ItiItem 2: Legal Proceedings per Item 1117 of Reg AB

	
(i) All parties to the Trust Agreement, (ii) the Securities Administrator as to the issuing entity, (iii) the Depositor as to the sponsor, any 1100(d)(1) party

	
Item 3: Sale of Securities and Use of Proceeds

	
Depositor

	
Item 4: Defaults Upon Senior Securities

	
Securities Administrator

	
Item 5: Submission of Matters to a Vote of Security Holders

	
Securities Administrator, Trustee

	
Item 6: Significant Obligors of Pool Assets

	
Depositor, if applicable

	
Item 7: Significant Enhancement Provider Information

	
Depositor, if applicable

	
Item 8: Other Information

	
Any party responsible for disclosure items on Form 8-K

	
Item 9: Exhibits

	
Depositor, Securities Administrator

	  	  

 

  

J-1

  

 

EXHIBIT K

 

Additional Form 10-K Disclosure

	
Item on Form 10-K

	
Party Responsible

	
Item 1B: Unresolved Staff Comments

 

 

	
Depositor

	
Item 9B:  Other Information

	
Any party responsible for disclosure items on Form 8-K

	
Item 15: Exhibits, Financial Statement Schedules

	
Securities Administrator

Depositor

	
Additional Item:

 

Disclosure per Item 1117 of Reg AB

	
(i) All parties to the Trust Agreement, (ii) the Securities Administrator as to the issuing entity, (iii) the Depositor as to the sponsor, any 1100(d)(1) party

	
Additional Item:

Disclosure per Item 1119 of Reg AB

	
(i) All parties to the Trust Agreement, (ii) the Securities Administrator as to the issuing entity, (iii) the Depositor as to the sponsor, any 1100(d)(1) party, any significant obligor, any credit enhancement provider or derivative counterparty

	
Additional Item:

Disclosure per Item 1112(b) of Reg AB

	
Depositor, if applicable

	
Additional Item:

Disclosure per Items 1114(b) and 1115(b) of Reg AB

	
Depositor, if applicable

	  	  

  

K-1

  

 

EXHIBIT L

 

Form 8-K Disclosure Information

	
Item on Form 8-K

	
Party Responsible

	
Item 1.01- Entry into a Material Definitive Agreement

	
All parties to the Trust Agreement

	
Item 1.02- Termination of a Material Definitive Agreement

	
All parties to the Trust Agreement

	
Item 1.03- Bankruptcy or Receivership

	
(i) Depositor, as to itself, the sponsor, any 1100(d)(1) party, any significant obligor, any credit enhancement provider or derivative counterparty and any other transaction party, to the extent known to the Depositor, (ii) Trustee, as to itself, (iii) Securities Administrator, as to itself and any other transaction party, to the extent known to the Securities Administrator

	
Item 2.04- Triggering Events that Accelerate or Increase a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement

	
Securities Administrator

	
Item 3.03- Material Modification to Rights of Security Holders

	
Securities Administrator

	
Item 5.03- Amendments of Articles of Incorporation or Bylaws; Change of Fiscal Year

	
Securities Administrator

	
Item 6.01- ABS Informational and Computational Material

	
Depositor

	
Item 6.02- Change of Securities Administrator

	
Securities Administrator

	
Item 6.03- Change in Credit Enhancement or External Support

	
Depositor/Securities Administrator

	
Item 6.04- Failure to Make a Required Distribution

	
Securities Administrator

	
Item 6.05- Securities Act Updating Disclosure

	
Depositor

	
Item 7.01- Reg FD Disclosure

	
Depositor

	
Item 8.01-Other Events

	
Depositor, Securities Administrator

	
Item 9.01

	
Depositor, Securities Administrator

	  	  

  

L-1

  

EXHIBIT M

Additional Disclosure Notification

**SEND VIA FAX TO [_____________] AND VIA EMAIL TO [_____________] AND VIA OVERNIGHT MAIL TO THE ADDRESS IMMEDIATELY BELOW**

[______________], as Securities Administrator

[______________]

[______________]

Attn: [______________]

RE:**[Additional Form [10-D][10-K] Disclosure][Form 8-K Disclosure Information]** Required

Ladies and Gentlemen:

 

In accordance with Section [__] of the Trust Agreement, dated as of [______], 20[__], among Wells Fargo Asset Securities Corporation, as depositor, [__________], as Securities Administrator, and [__________], as trustee, the undersigned, as [__________], hereby notifies you that certain events have come to our attention that [will] [may] need to be disclosed on Form [10-D][10-K][8-K].

 

Description of [Additional Form [10-D][10-K] Disclosure][Form 8-K Disclosure Information]:

 

 

 

List of any Attachments hereto to be included in the Additional Form [10-D][10-K] Disclosure][Form 8-K Disclosure Information]:

 

 

 

Any inquiries related to this notification should be directed to [                       ], phone number:  [__________]; email address:  [__________].

 

 

	  	
[NAME OF PARTY],

	  	
as [role]

	  	  	  
	  	  	  
	  	
By:

	  
	  	  	
Name:

	  	  	
Title:

M-1we29721171-ex10_1.htm

 EXHIBIT 10.1

 

 

 

 

 

 

 

[________________]

 

 

(Master Servicer)

 

 

and

 

 

WELLS FARGO BANK, N.A.

 

 

(Servicer)

 

 

SERVICING AGREEMENT

 

 

Dated as of [_______], 20[__]  

 

 

 

 

 

 

 

  

  

 

  

TABLE OF CONTENTS

 

Page

 

	
ARTICLE 1

 

	
DEFINITIONS

 

	
Section 1.1

	
Definitions

	
1

	
 

ARTICLE 2

 

	
CONSTRUCTION

 

	
Section 2.1

	
Legal Construction

	
15

	
Section 2.2

	
Servicer Practices

	
16

	
Section 2.3

	
General Provisions

	
16

	
 

ARTICLE 3

 

	
REMIC COMPLIANCE

 

	
Section 3.1

	
General

	
18

	
Section 3.2

	
REO Qualification

	
19

	
Section 3.3

	
Prohibited Transactions and Activities

	
20

	
Section 3.4

	
Eligible Investments

	
20

	
 

ARTICLE 4

 

	
SERVICER CONSIDERATIONS

 

	
Section 4.1

	
Servicer Eligibility Standards

	
21

	
Section 4.2

	
Errors and Omissions Insurance

	
26

	
Section 4.3

	
Fidelity Bond Coverage

	
26

	
Section 4.4

	
Servicer’s Liability

	
27

	
Section 4.5

	
Indemnification

	
28

	
Section 4.6

	
Servicer’s Compensation

	
29

	
 

ARTICLE 5

 

	
REPRESENTATIONS AND WARRANTIES

 

	
Section 5.1

	
General

	
29

	
Section 5.2

	
Servicer Representations and Warranties

	
30

 

 

  

-i-

  

 

	
 

ARTICLE 6

 

	
CUSTODIAL ACCOUNTING

 

	
Section 6.1

	
In General

	
32

	
Section 6.2

	
Custodial P&I Account

	
35

	
Section 6.3

	
Custodial T&I Account

	
37

	
Section 6.4

	
Eligible Account Investments

	
38

	
 

ARTICLE 7

 

	
MORTGAGE LOAN ACCOUNTING

 

	
Section 7.1

	
In General

	
39

	
Section 7.2

	
Mortgage Loan Records

	
39

	
Section 7.3

	
Accounting Procedures

	
40

	
Section 7.4

	
Application Procedure

	
41

	
Section 7.5

	
Curtailments

	
41

	
Section 7.6

	
Liquidations

	
42

	
Section 7.7

	
Realized Losses

	
42

	
 

ARTICLE 8

 

	
ARM LOANS

 

	
Section 8.1

	
ARM Loan Servicing

	
44

	
Section 8.2

	
Notice of Periodic Adjustment

	
44

	
Section 8.3

	
ARM Loan Conversion

	
45

	
 

ARTICLE 9

 

	
MORTGAGE LOAN FILES

 

	
Section 9.1

	
Owner Mortgage Loan Files and Retained Mortgage Loan Files

	
45

	
Section 9.2

	
Servicer Mortgage Loan Files

	
46

	
Section 9.3

	
Requisite Form

	
49

	
 

ARTICLE 10

 

	
ESCROWS

 

	
Section 10.1

	
Escrow Criteria

	
49

	
Section 10.2

	
Payment of Escrow Items

	
49

	
Section 10.3

	
Escrow Fund Determination

	
50

	
Section 10.4

	
Records

	
50

	
Section 10.5

	
Escrow Waiver

	
50

 

 

  

-ii-

  

 

	
 

ARTICLE 11

 

	
COLLECTION AND SERVICING PRACTICES

 

	
Section 11.1

	
General Servicing Requirements

	
51

	
Section 11.2

	
Delegation of Duties

	
51

	
Section 11.3

	
Due-on-Sale Clause Enforcement

	
53

	
Section 11.4

	
Assumptions

	
55

	
Section 11.5

	
Partial Releases and Easements

	
56

	
Section 11.6

	
Recordation of Assignments

	
57

	
Section 11.7

	
General Servicing Considerations

	
58

	
Section 11.8

	
Borrower Bankruptcy

	
59

	
 

ARTICLE 12

 

	
DELINQUENCY MANAGEMENT

 

	
Section 12.1

	
In General

	
60

	
Section 12.2

	
Delinquency Servicing Procedures

	
60

	
Section 12.3

	
Relief of Borrowers

	
61

	
Section 12.4

	
Special Delinquency Servicing Considerations

	
62

	
 

ARTICLE 13

 

	
FORECLOSURE ADMINISTRATION

 

	
Section 13.1

	
Foreclosure Prerequisites

	
63

	
Section 13.2

	
Deed-in-Lieu of Foreclosure

	
64

	
Section 13.3

	
Actions Prior to Foreclosure

	
65

	
Section 13.4

	
Foreclosure Procedures

	
66

	
Section 13.5

	
Mortgage Loan Reinstatement

	
67

	
 

ARTICLE 14

 

	
REO ADMINISTRATION

 

	
Section 14.1

	
General Provisions

	
68

	
Section 14.2

	
REO Servicing

	
68

	
Section 14.3

	
REO Records and Reports

	
69

	
Section 14.4

	
REO Marketing

	
70

	
Section 14.5

	
REO Rehabilitation

	
71

	
Section 14.6

	
REO Administration Failure

	
72

 

 

  

-iii-

  

 

	
 

ARTICLE 15

 

	
INSURANCE

 

	
Section 15.1

	
General Provisions

	
72

	
Section 15.2

	
Primary Mortgage Insurance

	
74

	
Section 15.3

	
Hazard Insurance

	
76

	
Section 15.4

	
Flood Insurance

	
76

	
Section 15.5

	
Title Insurance

	
77

	
Section 15.6

	
Insurance Loss Settlements

	
77

	
 

ARTICLE 16

 

	
CONDOMINIUM AND PUD INSURANCE

 

	
Section 16.1

	
General Provisions

	
79

	
Section 16.2

	
Common Area Multiple Peril Insurance

	
79

	
Section 16.3

	
Blanket Hazard Insurance

	
80

	
Section 16.4

	
Common Area Comprehensive General Liability (CGL) Insurance

	
80

	
Section 16.5

	
Owners’ Association Fidelity Insurance

	
81

	
Section 16.6

	
Blanket Flood Insurance

	
81

	
 

ARTICLE 17

 

	
ADVANCES

 

	
Section 17.1

	
Principal and Interest Advances

	
82

	
Section 17.2

	
Foreclosure Advances

	
83

	
Section 17.3

	
Tax & Insurance Advances

	
83

	
Section 17.4

	
Non-Recoverable Advances

	
84

	
Section 17.5

	
Failure to Advance

	
84

	
Section 17.6

	
Rehabilitation Advance

	
85

	
Section 17.7

	
PMI Advances

	
85

	
 

ARTICLE 18

 

	
REPORTING REQUIREMENTS

 

	
Section 18.1

	
Monthly Accounting Reports

	
85

	
Section 18.2

	
Account Reconciliations

	
86

	
Section 18.3

	
Monthly Remittance Requirements

	
87

 

 

  

-iv-

  

 

	
 

ARTICLE 19

 

	
TRANSFERS AND TERMINATION OF SERVICING

 

	
Section 19.1

	
Transfer of Servicing

	
88

	
Section 19.2

	
Termination of Servicing

	
88

	
 

ARTICLE 20

 

	
MISCELLANEOUS PROVISIONS

 

	
Section 20.1

	
Amendments

	
90

	
Section 20.2

	
General Construction

	
91

	
Section 20.3

	
Insolvency

	
92

 

Schedule

 

	SCHEDULE A	 -	Mortgage Loan Schedule

 

Exhibit

 

	EXHIBIT A	 -	Wells Fargo & Company Master Guarantee Agreement Regarding Custodial P&I Account Funds

 

 

 

  

-v-

  

 

 

 

This Servicing Agreement, made as of this [__]th day of [_____], 20[__] (the “Agreement”), between Wells Fargo Bank, N.A., a national banking association (the “Servicer”) and [________________], a [________________], (the “Master Servicer”), recites and provides as follows:

 

RECITALS

 

WHEREAS, the Servicer is engaged in the business of servicing residential mortgage loans and the Servicer desires to be retained to service the Mortgage Loans identified on Schedule A hereto subject to and in accordance with the terms of this Agreement; and

 

WHEREAS, the Master Servicer, acting pursuant to the Pooling and Servicing Agreement related to the Wells Fargo Asset Securities Corporation, Mortgage Pass-Through Certificates, Series 20[__] – [__], [will supervise, monitor and oversee the performance of the Servicer under this Agreement].

 

NOW THEREFORE, in consideration of the mutual promises, covenants, representations and warranties hereinafter set forth, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Servicer and the Master Servicer agree as follows:

 

ARTICLE 1

 

DEFINITIONS

 

Section 1.1. Definitions.

 

“1933 Act”:  The Securities Act of 1933, as amended.

 

“ACH”:  Automated Clearing House.

 

“Adjusted Tangible Net Worth”:  As of the date of determination thereof, the sum of:  (i) Servicer’s Tangible Net Worth; plus (ii) one percent (1%) of the amount of Servicer’s servicing portfolio, as determined by the Master Servicer in the Master Servicer’s reasonable discretion.

 

“Advance”:  Any payment made with respect to a Mortgage Loan or the related Mortgaged Property by the Servicer from its own funds made in the nature of an advance pursuant to the provisions of this Agreement.

 

“Affiliate”:  Any person or entity controlling, controlled by or under common control with a specified entity.  The term “control” means the power to direct the management and policies of a person or entity, directly or indirectly, whether through ownership of voting securities, by contract or otherwise, “controlling” and “controlled” shall have meanings correlative to the foregoing.

  

 

  

 

“Amounts Held for Future Distribution”:  As to any Remittance Date, amounts on account of (i) all Unscheduled Principal Receipts received after the last day of the Applicable Unscheduled Principal Receipt Period ending in the month of such Remittance Date and all related payments of interest on such principal prepayments and amounts received from the Servicer or a Representing Party in the month of such Remittance Date as the Purchase Price for any repurchased Mortgage Loan and (ii) payments which represent early receipt of scheduled payments of principal and interest due on a date or dates subsequent to the related Due Date.

 

“Applicable Unscheduled Principal Receipt Period”:  With respect to the Type 1 Mortgage Loans and both Full Unscheduled Principal Receipts and Partial Unscheduled Principal Receipts, the Mid-Month Receipt Period.  With respect to the Type 2 Mortgage Loans and both Full Unscheduled Principal Receipts and Partial Unscheduled Principal Receipts, the Prior Month Receipt Period.

 

“Appraisal Report”:  A report setting forth the fair market value of a Mortgaged Property as determined by an appraiser who, at the time the appraisal was conducted, met the minimum qualifications of FNMA and FHLMC for appraisers of conventional residential mortgage loans.

 

“ARM Loan”:  A Mortgage Loan, if any, the Mortgage Interest Rate of which is subject to periodic adjustment in accordance with the terms of the related Mortgage Note.

 

“Assignment”:  The document which transfers all the rights of the secured party pursuant to a Security Instrument to a transferee for valid consideration.

 

“Assumption”:  The process whereby, on sale or transfer of a legal or beneficial interest in a Mortgaged Property, the new owner of such Mortgaged Property becomes legally obligated under the terms of the related existing Security Instrument, Mortgage Note and any addenda and riders to such Security Instrument or Mortgage Note.  Subsequent to the Assumption, the new owner of the property shall be deemed to be the Borrower under the related Mortgage Loan Documents.

 

“Balloon Amount”:  The remaining principal balance to be paid at maturity of a Balloon Loan by the related Borrower pursuant to the terms of the related Mortgage Note.

 

“Balloon Loan”:  A Mortgage Loan, if any, which amortizes its principal payments over a period which is longer than the stated maturity of such Mortgage Loan pursuant to the terms of the related Mortgage Note so as to require the payment of the Balloon Amount at maturity in order to retire the Mortgage Loan.

 

“Bankruptcy Code”:  The Bankruptcy Code of 1978, as amended.

 

“BIF”:  The Bank Insurance Fund.

 

“Borrower”:  The individual obligated to repay a Mortgage Loan.  (The Borrower may be the beneficiary or beneficiaries of an Illinois land trust when the Mortgaged Property is located in Illinois.)

  

-2-

  

 

“Business Day”:  Any day other than (i) a Saturday or a Sunday, or (ii) a legal holiday in the City of New York, State of [________], State of [________] or State of Iowa or (iii) a day on which banking institutions in the City of New York, or the State of [________], State of [________] or State of Iowa are authorized or obligated by law or executive order to be closed.

 

“Buydown Agreement”:  An agreement governing the application of Buydown Funds with respect to a Mortgage Loan.

 

“Buydown Funds”:  Money advanced by a builder, seller or other interested party to reduce a Borrower’s Monthly Payment during the initial years of a Mortgage Loan.

 

“Certificate Account”:  A segregated custodial account established by the Master Servicer into which the Servicer shall remit funds from the related Custodial P&I Account.

 

“Code”:  The Internal Revenue Code of 1986, as it may be amended from time to time, any successor statutes thereto, and applicable U.S. Department of the Treasury temporary or final regulations promulgated thereunder.

 

“Condominium Project”:  Real estate including the separate ownership in fee, or on a satisfactory leasehold estate, of a particular residential unit with an indivisible interest in the real estate designated for common ownership strictly by unit owners.

 

“Condominium Unit”:  A Single Family Property within a Condominium Project.

 

“Converted Mortgage Loan”:  An ARM Loan with respect to which the Borrower has complied with the applicable requirements of the related Mortgage Note to convert the related Mortgage Interest Rate to a fixed rate of interest, and the Servicer has processed such conversion.

 

“Co-op Shares”:  Shares issued by private non-profit housing corporations.

 

“Current Value”:  The appraised value of the related Mortgaged Property (a) from an Appraisal Report conducted within six (6) months of the use of such value under this Agreement or (b) determined by such other method acceptable to the Master Servicer.

 

“Curtailment”:  A partial prepayment by the Borrower of principal on a Mortgage Loan that otherwise is current, which prepayment is not accompanied by an amount representing the full amount of scheduled interest due on the related Mortgage Loan.

 

“Custodial Buydown Account”:  An account maintained by the Servicer specifically to hold all Buydown Funds to be applied to individual Mortgage Loans.

 

“Custodial Principal and Interest (P&I) Account”:  An account maintained by the Servicer, specifically for the collection of principal and interest, Insurance Proceeds, Liquidation Proceeds and other amounts received with respect to Mortgage Loans.

  

-3-

  

 

“Custodial Subsidy Account”:  An account maintained by the Servicer specifically to hold all Subsidy Funds to be applied to individual Mortgage Loans.

 

“Custodial Taxes and Insurance (T&I) Account”:  An account maintained by the Servicer, specifically for the payment of real estate tax assessments and insurance premiums in respect of Mortgaged Property related to Mortgage Loans.

 

“Custodian”:  [______________] or its successor in interest under the Custodial Agreement.

 

“Cut-Off Date”:  As specified in Article XI of the Pooling and Servicing Agreement.

 

“Debt Service Reduction”:  With respect to any Mortgage Loan, a reduction in the scheduled Monthly Payment for such Mortgage Loan by a court of competent jurisdiction in a proceeding under the Bankruptcy Code, except such a reduction constituting a Deficient Valuation.

 

“Deficient Valuation”:  With respect to any Mortgage Loan the related Mortgaged Property of which is involved in a bankruptcy proceeding, the reduction by the bankruptcy court of the Unpaid Principal Balance of the Mortgage Note.

 

“Delinquency/Delinquent”:  A Delinquency with respect to a Mortgage Loan occurs, or a Mortgage Loan is Delinquent when all or part of a Borrower’s Monthly Payment or, where applicable, an Escrow Item is paid after the applicable Due Date.  For reporting purposes, a Delinquency that remains uncured for 30 days or more, but less than 60 days, is considered a 30-day Delinquency.  A Delinquency that has been uncured for more than 60 days, but less than 90 days, is considered a 60-day Delinquency.  A Delinquency that has been uncured for 90 days or more is considered a 90-day Delinquency.  The foregoing shall be determined based on an assumption of a year comprised of twelve 30-day months.

 

“Depositor”:  Wells Fargo Asset Securities Corporation.

 

“Determination Date”:  The 17th day of the month in which the related Remittance Date occurs, or if such 17th day is not a Business Day, the Business Day preceding such 17th day.

 

“Directly Operate”:  With respect to any REO, the direct or indirect furnishing or rendering of services to the tenants thereof, management or operation of such REO, the holding of such REO primarily for sale to customers, performance of any construction work thereon or any use of such REO in a trade or business, in each case other than with the approval of the Master Servicer; provided, however, that the Servicer shall not be considered to Directly Operate an REO solely because it establishes rental terms, chooses tenants, enters into or renews leases, deals with taxes and insurance, or makes decisions as to repairs or capital expenditures with respect to such REO.

 

“Document Transfer Event”:  As defined in the Pooling and Servicing Agreement.

  

-4-

  

 

“Due Date”:  With respect to a Mortgage Loan, the day of each month on which a Monthly Payment and, where applicable, any Escrow Funds payment is due as stated in the related Mortgage Note.  The Due Date for all Mortgage Loans shall be the first day of each month.

 

“Due-On-Sale Clause”:  The clause in a Security Instrument requiring the payment of the Unpaid Principal Balance of the related Mortgage Loan upon the sale of, or the transfer of an interest in, the related Mortgaged Property.

 

“Eligible Account”:  As defined in the Pooling and Servicing Agreement.

 

“Eligible Custodial P&I Account”:  As defined in Section 6.1.2.

 

“Eligible Investments”:  As defined in the Pooling and Servicing Agreement.

 

“Errors and Omissions Policy”:  An insurance policy naming the Trustee, its successors and assigns as loss payees relative to losses caused by errors or omissions of the Servicer and its personnel, including, but not limited to losses caused by the failure to pay insurance premiums or taxes, to record or perfect liens, to effect valid transfers of Mortgage Notes, or to properly service Mortgage Loans.

 

“Escrow Funds”:  All funds collected with respect to a Mortgage Loan by the Servicer to cover related Escrow Items according to the provisions of this Agreement.

 

“Escrow Item”:  An expense required to be paid by a Borrower under the related Security Instrument including, without limitation, taxes, special assessments, ground rents, water, sewer and other governmental impositions or charges that are or may become liens on the related Mortgaged Property prior to that of the related Security Instrument, as well as Hazard Insurance, Flood Insurance and Primary Mortgage Insurance premiums.

 

“Exchange Act”:  The Securities Exchange Act of 1934, as amended.

 

“FDIC”:  Federal Deposit Insurance Corporation and its successors.

 

“FHA”:  The Federal Housing Administration and its successors.

 

“FHLMC”:  Federal Home Loan Mortgage Corporation and its successors.

 

“Fidelity Bond”:  An insurance policy naming the Trustee, its successors and assigns as loss payees relative to losses caused by improper or unlawful acts of the Servicer’s personnel.

 

“Final Title Condition Report”:  A title condition report issued by American Land Title Company, Inc., a wholly-owned subsidiary of the Servicer, evidencing that according to the records of the county in which the Mortgaged Property is located, the Security Instrument is a valid first lien on the related Mortgaged Property subject only to permitted encumbrances.

  

-5-

  

 

“Flood Insurance”:  An insurance policy insuring against flood damage to a Mortgaged Property, where required.

 

“FNMA”:  Federal National Mortgage Association and its successors.

 

“Full Unscheduled Principal Receipt”:  Any Unscheduled Principal Receipt with respect to a Mortgage Loan (i) in the amount of the outstanding principal balance of such Mortgage Loan and resulting in the full satisfaction of such Mortgage Loan or (ii) representing Liquidation Proceeds other than Partial Liquidation Proceeds.

 

“GNMA”:  Government National Mortgage Association and its successors.

 

“Gross Margin”:  With respect to each ARM Loan, the fixed percentage specified in the related Mortgage Note that is added to the applicable Index on each Interest Adjustment Date to determine the new Mortgage Interest Rate for such ARM Loan.

 

“Hazard Insurance”:  A fire and casualty extended coverage insurance policy insuring against loss or damage from fire and other perils covered within the scope of standard extended hazard coverage naming the Servicer, its successors and assigns, as a mortgagee under a standard mortgagee clause, together with all riders and endorsements thereto.

 

“HUD”:  The United States Department of Housing and Urban Development and its successors.

 

“Index”:  With respect to each ARM Loan, the applicable index specified in the related Mortgage Note that is added to the related Gross Margin on each Interest Adjustment Date to determine the new Mortgage Interest Rate for such ARM Loan.

 

“Insurance Policy”:  Any insurance policy for a Mortgage Loan required hereunder, including, without limitation, Primary Mortgage Insurance, Hazard Insurance, Flood Insurance, Pool Insurance and Title Insurance policies.

 

“Insurance Proceeds”:  Proceeds from an Insurance Policy, other than such proceeds which are applied by the Borrower or held to be applied by the Borrower to the restoration of the related Mortgaged Property.

 

“Interest Adjustment Date”:  With respect to each ARM Loan, the date on which the related Mortgage Interest Rate changes in accordance with the terms of such Mortgage Note, the first of which is set forth in such Mortgage Note and on the respective Mortgage Loan Schedule.

 

“Liquidation”:  Application of full payment to a Mortgage Loan which results in the release of the lien of the related Security Instrument on any related Mortgaged Property, whether through foreclosure and sale of the related REO, condemnation, prepayment in full or otherwise, or the realization of all sums from the final disposition of the related REO, provided that when a PMI Advance is made with respect to a Mortgage Loan, for purposes of Sections 7.6, 7.7, 18.1 and 18.3, the Liquidation of a Mortgage Loan will be deemed to have occurred upon

  

-6-

  

 

the application of all payments to the Mortgage Loan other than the Primary Mortgage Insurance proceeds covered by such PMI Advance.

 

“Liquidation Proceeds”:  The amount received or advanced by the Servicer which ultimately relates to the Liquidation of a Mortgage Loan, including any PMI Advances in connection with the Liquidation of a Mortgage Loan.

 

“Liquidation Profits”:  As defined in the Pooling and Servicing Agreement.

 

“Loan Originator”:  The entity that closes a Mortgage Loan in its own name.

 

“Loan-to-Value (LTV)”:  The ratio that results when the Unpaid Principal Balance of a Mortgage Loan is divided by the Value of the related Mortgaged Property.

 

“Lost Note Affidavit”:  An affidavit executed by an Officer of the Servicer identifying the applicable Mortgage Note, stating that such Mortgage Note has not been located after a thorough and diligent search and agreeing to indemnify the purchaser of the Mortgage Loan against any loss from the unavailability of the original Mortgage Note.  Attached to such affidavit shall be a true and correct copy of the original Mortgage Note.

 

“Master Servicer”:  [____________] or any successors or assigns.  Initially, the master servicing function will be performed by [____________].

 

“Master Servicer Loan Number”:  A unique number assigned by the Master Servicer to each Mortgage Loan set forth in Schedule A.

 

“Maximum Lifetime Mortgage Interest Rate”:  With respect to each ARM (or GPARM) Loan, the interest rate set forth in the related Mortgage Note as the maximum Mortgage Interest Rate thereunder.

 

“MERS”:  Mortgage Electronic Registration Systems, Inc. or its designee.

 

“Mid-Month Receipt Period”:  With respect to each Remittance Date, the one month period beginning on the Determination Date occurring in the calendar month preceding the month in which such Remittance Date occurs and ending on the day preceding the Determination Date immediately preceding such Remittance Date.

 

“Minimum Lifetime Mortgage Interest Rate”:  With respect to each ARM Loan, the interest rate set forth in the related Mortgage Note as the minimum Mortgage Interest Rate thereunder, if any.

 

“Month End Interest”:  In the event that any Prepayments in Full of any Mortgage Loans are received by the Servicer after the Applicable Unscheduled Principal Receipt Period in the month in which such prepayments occurred, the lesser of (i) the aggregate of the difference for each such Mortgage Loan between the interest payment that would have been paid on such Mortgage Loan that was prepaid through the last day of the month in which such prepayment occurred and the interest payment actually received by the Servicer on such Mortgage Loan that

  

-7-

  

 

was prepaid and (ii) the product of 1/12th of 0.20% and the aggregate of the Scheduled Principal Balance of all the Mortgage Loans serviced hereunder.

 

“Month End Interest Shortfall”:  The excess of the amount described in clause (i) of the definition of Month End Interest over the amount described in clause (ii) of the definition thereof.

 

“Monthly Accounting Reports”:  The reports due from the Servicer on a monthly basis (in the case of Type 2 Mortgage Loans, due no later than the tenth calendar day of the month, or the preceding Business Day if the tenth day is not a Business Day and, in the case of Type 1 Mortgage Loans, due no later than the 18th calendar day of the month, or the preceding Business Day if the 18th day is not a Business Day) relative to all Mortgage Loans serviced by the Servicer, which reports are required to be submitted to the Master Servicer.

 

“Monthly Payment”:  With respect to any Mortgage Loan, the scheduled monthly payment of principal and interest due in the applicable month under the terms of the related Mortgage Note.

 

“Monthly Remittance”:  The Servicer’s aggregate payment due each month to the Certificate Account as specified in Section 18.3.1.

 

“Mortgage Interest Rate”:  The interest rate payable by the Borrower on a Mortgage Loan according to the terms of the Mortgage Note which, in the case of ARM Loans, may be adjusted periodically as provided in such Mortgage Note.

 

“Mortgage Loan”:  A mortgage loan identified on Schedule A. “Mortgage Loan” includes all of the Trustee’s right, title and interest in and to such Mortgage Loan, including, without limitation, the related Mortgage Loan Documents and all other material and information collected by the Servicer in connection with the Mortgage Loan including Monthly Payments, Liquidation Proceeds, Insurance Proceeds and all other rights, benefits and proceeds arising from or in connection with such Mortgage Loan.

 

“Mortgage Loan Documents”:  With respect to a Mortgage Loan, the documents to be delivered to the Custodian pursuant to Section 2.01 of the Pooling and Servicing Agreement, and all other documents described in Article 9 hereof.

 

“Mortgage Loan Purchase Agreement”:  As defined in the Pooling and Servicing Agreement.

 

“Mortgage Note”:  A manually executed written instrument evidencing the related Borrower’s promise to repay a stated sum of money, plus interest, to the related Loan Originator by a specific date according to a schedule of monthly principal and interest payments.

 

“Mortgage Note Assumption Rider”:  A rider attached to a Mortgage Note which states the terms upon which an Assumption may occur, including, but not limited to, consent in writing by the insurer under any Primary Mortgage Insurance Policy with respect to the related Mortgage Loan.

  

-8-

  

 

“Mortgage Pass-Through Certificates”:  The specific series of Wells Fargo Asset Securities Corporation, mortgage pass-through certificates specified on page 1 of this Agreement.

 

“Mortgaged Property”:  Land, improvements thereon and other property subject to the lien of a Security Instrument, which may include Co-op Shares or residential long-term leases, securing repayment of the debt evidenced by the related Mortgage Note.

 

“Mortgagee”:  The secured party to which a Security Instrument initially grants a lien on the related Mortgaged Property.

 

“Net Mortgage Interest Rate”:  With respect to a Mortgage Loan, the difference between (a) the Mortgage Interest Rate on such Mortgage Loan and (b) the Servicing Fee Percentage.

 

“Non-Recoverable Advance”:  Any amount previously advanced by the Servicer with respect to a Mortgage Loan which the Servicer has determined, pursuant to the terms of this Agreement, not to be recoverable from Insurance Proceeds, Liquidation Proceeds or other payments with respect to such Mortgage Loan.

 

“Notice of Periodic Adjustment”:  With respect to each ARM Loan, a notice provided to the Borrower of any changes or adjustments to the related Mortgage Interest Rate or the related Monthly Payment.

 

“Officer”:  An officer of a corporation or a principal of a partnership, who is authorized to execute documents on behalf of his corporation or partnership, respectively.

 

“Opinion of Counsel”:  A written opinion of counsel, reasonably acceptable in form and substance to the Master Servicer, and who may be in-house or outside counsel to the Servicer but which must be Independent outside counsel with respect to any such opinion of counsel concerning the taxation, or status for tax purposes, of the Trustee.

 

“Owner Mortgage Loan File”:  With respect to each Mortgage Loan, a file maintained by the Custodian for such Mortgage Loan, which file contains the documents specified in Section 2.01(a) of the Pooling and Servicing Agreement, as well as any other documents required to be added to the Owner Mortgage Loan File pursuant to the Pooling and Servicing Agreement.

 

“P&I Advance”:  An advance by the Servicer of any principal and interest payments not timely paid by the related Borrower (other than with respect to a Balloon Loan, any amounts of principal payments in respect of Balloon Amounts) to ensure that there are sufficient funds to cover the Monthly Remittance on each Remittance Date.

 

“Partial Liquidation Proceeds”:  As to any Remittance Date, Liquidation Proceeds received by the Servicer on a Mortgage Loan during the related Partial Liquidation Receipt Period other than those Liquidation Proceeds received during such Partial Liquidation Receipt Period which result from the complete and final Liquidation of such Mortgage Loan.

  

-9-

  

 

“Partial Liquidation Receipt Period”:  As to any Remittance Date, the period from and including the Determination Date occurring in the month preceding the month of such Remittance Date (or, in the case of the first Remittance Date, from and including the Cut-off Date) to but not including the Determination Date occurring in the month of such Remittance Date.

 

“Partial Unscheduled Principal Receipt”:  An Unscheduled Principal Receipt which is not a Full Unscheduled Principal Receipt.

 

“Payment Adjustment Date”:  With respect to each ARM Loan, the date on which the Borrower’s Monthly Payment changes in accordance with the terms of the related Mortgage Note.

 

“Periodic Payment Cap”:  With respect to an ARM Loan, the limit on the percentage increase that may be made on the related Monthly Payment on any Payment Adjustment Date, as set forth in the related Mortgage Note.

 

“Periodic Rate Cap”:  With respect to an ARM Loan, the limit, expressed as incremental percentage points, on the increase or decrease that may be made to the related Mortgage Interest Rate on any Interest Adjustment Date from such Mortgage Interest Rate immediately prior to such Interest Adjustment Date, as set forth in the related Mortgage Note.

 

“Person”:  Any individual, corporation, partnership, joint venture, association, joint-stock company, trust or unincorporated organization.

 

“PMI Advance”:  As defined in Section 17.7.1.

 

“Pool Insurance”:  An insurance policy insuring against certain credit risk losses on certain Mortgage Loans up to a certain amount.

 

“Pool Insurer”:  With respect to any Mortgage Loan, the insurer under the Pool Insurance policy relating to such Mortgage Loan.

 

“Pooling and Servicing Agreement”:  The pooling and servicing agreement among Wells Fargo Asset Securities Corporation, as depositor, [____________], as master servicer, the Trustee, and, if applicable, the Trust Administrator, relating to the issuance of the Mortgage Pass-Through Certificates.

 

“Preliminary Title Report”:  A report issued by a title insurance company in anticipation of issuing a Title Insurance policy which evidences existing liens and gives a preliminary opinion as to the absence of any encumbrance on title to a Mortgaged Property, except liens to be removed on or before purchase or refinance, as the case may be, by the Borrower and Permitted Encumbrances.

 

“Prepayment In Full”:  With respect to any Mortgage Loan, any payment by the Borrower in the amount of the outstanding principal balance of such Mortgage Loan which is received in advance of its Due Date and is not accompanied by an amount representing scheduled interest for any period subsequent to the date of prepayment.

  

-10-

  

 

“Primary Mortgage Insurance”:  Insurance obtained from a Primary Mortgage Insurer which insures the holder of a Mortgage Note against loss in the event the related Borrower defaults under such Mortgage Note or the related Security Instrument, including all riders and endorsements thereto.

 

“Primary Mortgage Insurer”:  With respect to any Mortgage Loan, the insurer under the Primary Mortgage Insurance policy relating to such Mortgage Loan.

 

“Prior Month Receipt Period”:  With respect to each Remittance Date, the calendar month preceding the month in which such Remittance Date occurs.

 

“Property Inspection Report”:  A report, submitted by the Servicer to the Master Servicer, describing the related Mortgaged Property.

 

“Prudent Servicing Practices”:  Such practices observed generally by servicers in discharging their servicing obligations in a prudent manner in accordance with industry standards for mortgage loans similar to the Mortgage Loans.

 

“PUD (Planned Unit Development)”:  A parcel of real estate that contains property and improvements owned and maintained by a homeowners’ association, corporation or trust for the enjoyment and use of individual PUD Unit owners within that parcel of land.  The shared portions of the parcel are known as common property.

 

“PUD Unit”:  A single family residential property within a PUD.

 

“Purchase Price”:  With respect to any Mortgage Loan required to be purchased by the Servicer pursuant to Section 5.1.3 or Section 8.3.3 hereof, an amount equal to (a) the Unpaid Principal Balance of the Mortgage Loan, plus (b) accrued interest thereon at the Mortgage Interest Rate through the last day of the month in which the purchase occurs, and, if the Servicer is the entity paying the Purchase Price, minus (c) any unreimbursed advances of principal and interest made by the Servicer on such Mortgage Loan and any outstanding Servicing Fee owed with respect to such Mortgage Loan.  Further, in connection with any such purchase of a Mortgage Loan as a result of a breach of a representation or warranty under this Agreement, the Servicer shall provide the Trustee with an indemnity, in form and substance satisfactory to the Master Servicer, against additional costs, expenses and taxes arising out of the repurchase.  With respect to any Mortgage Loan purchased or repurchased from the Trustee pursuant to an agreement other than this Agreement, the purchase price specified in such other agreement.

 

“Rating Agency”:  As defined in the Pooling and Servicing Agreement.

 

“Real Estate Owned (REO)”:  Any Mortgaged Property the title to which is acquired on behalf of the Trustee through foreclosure, deed-in-lieu of foreclosure, abandonment or reclamation from bankruptcy in connection with a defaulted Mortgage Loan.

 

“Realized Loss”:  As to any defaulted Mortgage Loan, any loss realized by the Trustee of such Mortgage Loan as calculated pursuant to Section 7.7 hereof.

  

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“Recovery”:  As defined in the Pooling and Servicing Agreement.

 

“Reference Bank”:  Wells Fargo Bank, N.A. or if such entity is no longer lending money or no longer quoting a prime rate, such other entity as the Master Servicer may specify by written notice to the Servicer.

 

“Regulation AB”:  Regulation AB under the 1933 Act, as such regulation is amended from time to time.

 

“REMIC”:  The segregated pool or pools of assets designated as one or more real estate mortgage investment conduits, within the meaning of the REMIC Provisions, pursuant to the Pooling and Servicing Agreement.

 

“REMIC Provisions”:  The provisions of the federal income tax law relating to real estate mortgage investment conduits, which appear at Sections 860A through 860G of the Code, and related provisions, and regulations and rulings promulgated thereunder, as the foregoing may be in effect from time to time and including any proposed legislation or regulations which, as proposed, would have an effective date prior to enactment thereof.

 

“Remittance Date”:  The 24th day of each month (or the preceding Business Day if the 24th day is not a Business Day).  Each month, the Servicer must transfer all required funds from the Custodial P&I Account to the Certificate Account on or before the Remittance Date.

 

“Rents from Real Property”:  With respect to any REO, gross income of the character described in Section 856(d) of the Code (generally, rent for the use of real property, the amount of which is not dependent, in whole or in part, upon the income or profit of any person, including certain payments for certain services and personal property incidental to and customarily provided in connection with the rental of such real property.)

 

“REO Disposition”:  The receipt by the Servicer of Liquidation Proceeds and other payments and recoveries (including proceeds of a final sale) from the sale or other disposition of the REO.

 

“REO Disposition Period”:  The period of time in which the Servicer shall dispose or cooperate with the Trustee in disposing of an REO as set forth in Section 14.4.2.

 

“Representing Party”:  A Person that has transferred Mortgage Loans, directly or through one or more intermediaries, to the Trustee pursuant to an agreement for the sale of Mortgage Loans pursuant to which a Representing Party has made representations and warranties with respect to certain Mortgage Loans, and under which the Trustee, its successors and assigns has recourse against such Representing Party for any breach thereunder with respect to such Mortgage Loans.

 

“Retained Mortgage Loan File”:  A file for each Mortgage Loan maintained by the Servicer prior to any Document Transfer Event and by the Custodian after any Document Transfer Event that contains the documents specified in Section 2.01(b) of the Pooling and Servicing Agreement and any additional documents required to be added to the Retained Mortgage Loan File pursuant to the Pooling and Servicing Agreement.

  

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“SAIF”:  The Savings Association Insurance Fund.

 

“Scheduled Principal Balance”:  With respect to each Mortgage Loan (or related REO), the principal balance of such Mortgage Loan as of the applicable Due Date calculated by taking into account the application of any Monthly Payments due on or before such Due Date (whether or not such Monthly Payments were received from the Borrower), and Curtailments, Insurance Proceeds or Liquidation Proceeds, and Realized Losses received or realized by the Servicer prior to such Due Date.

 

“Security Instrument”:  A written instrument creating a valid first lien on a Mortgaged Property.  A Security Instrument may be in the form of a mortgage, deed of trust, deed to secure debt or security deed, including any riders and addenda thereto.

 

“Servicer”:  Wells Fargo Bank, the entity that has entered into this Agreement with the Master Servicer and any successors or assigns of Wells Fargo Bank.  Initially the servicing functions will be performed by the Wells Fargo Home Mortgage division of Wells Fargo Bank.

 

“Servicer Loan Mortgage Number”:  A unique number assigned by the Servicer to a Mortgage Loan.

 

“Servicer Mortgage Loan File”:  A file maintained by the Servicer for each Mortgage Loan that contains the documents specified in Section 9.2 hereof, as well as any other documents that come into the Servicer’s possession with respect to a Mortgage Loan.

 

“Servicing Criteria”:  As defined in Section 4.1.3.

 

“Servicing Fee”:  For each Mortgage Loan, the compensation due the Servicer in an amount equal to the product of (i) one-twelfth of the Servicing Fee Percentage and (ii) the Scheduled Principal Balance of the Mortgage Loan as of the immediately preceding Due Date (without taking into account any payment of principal due on such Due Date).

 

“Servicing Fee Percentage”:  With respect to each Mortgage Loan, the percentage specified on Schedule A hereto.

 

“Single Family Property”:  A one-unit residential property.

 

“Subsidy Funds”:  Funds contributed by the employer of a Borrower in order to reduce the payments required from the Borrower for a specified period in specified amounts.

 

“Subsidy Loan”:  A Mortgage Loan, if any, subject to a temporary interest subsidy agreement pursuant to which the monthly interest payments made by the related Borrower will be less than the scheduled monthly interest payments on such Mortgage Loan, with the resulting difference in interest payments being provided by the employer of the Borrower.

 

“Tangible Net Worth”:  As of the date of determination thereof, the par value (or value stated on the Servicer’s books) of the capital stock of all classes of the Servicer, plus, or

  

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minus in the case of a deficiency, the amount of paid in capital and retained earnings of the Servicer, all determined in accordance with generally accepted accounting principles as are then in effect.  The Master Servicer may exclude assets that are unacceptable, in the Master Servicer’s reasonable discretion, from the determination of the Servicer’s Tangible Net Worth.

 

“T&I Advance”:  An advance by the Servicer of any taxes and insurance premiums due with respect to any Mortgage Loan.

 

“Threshold Amount”:  With respect to any Custodial P&I Account, (i) $100,000 or, in the case of any Eligible Custodial P&I Account, the aggregate amount on deposit therein (i.e., an unlimited amount); or (ii) after any notice has been given pursuant to Section 19.2.6, the amount specified in such notice.

 

“Title Insurance”:  An American Land Title Association (ALTA) mortgage loan title policy form 1970, or other form of Title Insurance Policy acceptable to FNMA or FHLMC, including all riders and endorsements thereto, insuring that the Security Instrument constitutes a valid first lien on the related Mortgaged Property subject only to permitted encumbrances.

 

 “Transfer of Ownership”:  Includes, but is not limited to, the conveyance of a Mortgaged Property, whether legal or equitable, voluntary or involuntary, by any of the following methods:

 

(a) outright sale;

 

(b) deed;

 

(c) installment sale contract;

 

(d) land contract;

 

(e) contract for deed;

 

(f) leasehold interest with the term greater than three years;

 

(g) lease with option to purchase;

 

(h) land trust; or

 

(i) any other conveyance of an interest in real property, including those involving secondary financing.

 

“Trust Administrator”:  If applicable, the trust administrator specified in the Pooling and Servicing Agreement, its successors and assigns.

 

“Trustee”:  The trustee specified in the Pooling and Servicing Agreement, its successors and assigns.

 

“Type 1 Mortgage Loans”:  The Mortgage Loans identified on Schedule A as Type 1 Mortgage Loans.

  

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“Type 2 Mortgage Loans”:  The Mortgage Loans identified on Schedule A as Type 2 Mortgage Loans.

 

“Unpaid Principal Balance”:  With respect to any Mortgage Loan, the outstanding principal balance payable by the Borrower under the terms of the Mortgage Note.

 

“Unscheduled Principal Receipt”:  Any Mortgagor payment or other recovery of principal on a Mortgage Loan which is received in advance of its Due Date and is not accompanied by an amount representing scheduled interest for any period subsequent to the date of prepayment, including, without limitation, prepayments of principal (whether full or partial), Liquidation Proceeds, Partial Liquidation Proceeds, Insurance Proceeds, proceeds of REO Dispositions, Recoveries and proceeds received from any condemnation award or proceeds in lieu of condemnation other than that portion of such proceeds released to the mortgagor in accordance with the terms of the Mortgage Loan Documents or Prudent Servicing Practices and excluding any proceeds of a repurchase of a Mortgage Loan by the Servicer or a Representing Party.

 

“Value”:  The lesser of the appraised value or sales price of the related Mortgaged Property at the time the Mortgage Loan is closed.  For a refinanced Mortgage Loan, the Value of the related Mortgaged Property is its appraised value at the time the refinanced Mortgage Loan is closed.

 

“Wells Fargo Bank”:  Wells Fargo Bank, N.A., or its successor in interest.

 

ARTICLE 2

 

CONSTRUCTION

 

Section 2.1. Legal Construction

 

2.1.1. Compliance with Applicable Law.  The obligations of the Servicer pursuant to this Agreement shall at all times be performed in compliance with all applicable laws.

 

2.1.2. Potential Conflict.  If any obligation of the Servicer pursuant to this Agreement shall give rise to a potential conflict with applicable law, such obligation shall be construed so as to (a) comply with all applicable laws and (b) effectuate with respect to such obligations, to the fullest extent permitted by law, the intention of the parties hereto as expressed in this Agreement.

 

2.1.3. Consistent Legal Compliance.  The fact that certain provisions of this Agreement contain language which expressly requires compliance with all applicable laws, shall not give rise to an implication that other provisions, which do not expressly include such language, operate in derogation of the requirement for such legal compliance.

 

2.1.4. General Interpretive Rules.  For purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires, (i) the terms defined in

  

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this Agreement have the meanings assigned to them in this Agreement and include the plural as well as the singular, and the use of any gender herein shall be deemed to include the other gender; (ii) reference herein to “Article”, “Section”, “Clause”, and other subdivisions, and to “Exhibits”, without reference to a document, are to designated Articles, Sections, Clauses and other subdivisions of, and to Exhibits to, this Agreement; (iii) reference to a Clause without further reference to a Section is a reference to such Clause as contained in the same Section in which the reference appears, and this rule shall also apply to other subdivisions; (iv) “including” means “including but not limited to”; and (v) the words “herein”, “hereof”, “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular provision.

 

2.1.5. Construction of Provisions.  Although certain provisions of this Agreement contain express language which precludes the Servicer’s recovery of, or reimbursement for, expenses incurred hereunder, no inference to the contrary shall be drawn from absence of such, or similar, language in any other provision hereof regarding expenses.

 

Section 2.2. Servicer Practices

 

2.2.1. Prudent Servicing Practices.  Where not inconsistent with the provisions of this Agreement, the Servicer shall at all times perform its obligations hereunder in accordance with Prudent Servicing Practices, which shall not be less exacting than the Servicer employs and exercises in servicing and administering mortgage loans for its own account, or for the account of FNMA or FHLMC, including exploring alternatives to foreclosure to mitigate Realized Losses.

 

2.2.2. Non-Discrimination Practices.  The Servicer shall at all times perform its obligations under this Agreement so as to (a) treat Borrowers on the basis of their individual merits and (b) not discriminate against Borrowers on the basis of their race, creed or national origin.

 

Section 2.3. General Provisions

 

2.3.1. Servicer’s Agreement.  The Servicer agrees with the Master Servicer to service the Mortgage Loans in accordance with the provisions of this Agreement and, to the extent of any instructions of the Master Servicer that are given, such instructions and, subject to the provisions hereof and without any further instruction by the Master Servicer except as shall be expressly provided for herein, shall have full power and authority to do all things necessary in connection therewith.

 

2.3.2. Term of Agreement.  Except as otherwise provided herein, the duties, responsibilities and obligations to be performed and carried out by the Servicer under this Agreement shall commence upon the execution of this Agreement and shall continue until (a) each Mortgage Loan is (i) liquidated or (ii) otherwise paid in full, (b) all payments related thereto are remitted in accordance with this Agreement, and (c) all obligations hereunder related thereto are discharged.

 

2.3.3. Amended Mortgage Loan Schedule.  From time to time as additional Mortgage Loans are transferred to be serviced hereunder by the Servicer, Schedule A shall be

  

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amended by the Master Servicer to include the new Mortgage Loans.  Due to defects in documentation and for other reasons, certain Mortgage Loans referred to in the Mortgage Loan Schedule may be deleted and other Mortgage Loans may be added.  The Servicer hereby agrees to any such addition and/or deletion of any Mortgage Loans and, in the event any Mortgage Loans are added and/or deleted from the Mortgage Loan Schedule, the Servicer authorizes the Master Servicer to amend and attach hereto a corrected Mortgage Loan Schedule, as Schedule A, reflecting only those Mortgage Loans that are serviced hereunder.  The Master Servicer shall provide the Servicer with the corrected and updated Mortgage Loan Schedule.

 

2.3.4. Assignment and Replacement.  The Servicer acknowledges and agrees that in the event that the Master Servicer resigns as Master Servicer under this Agreement, any successor master servicer has the right to assume the Master Servicer’s rights and obligations and to enforce the Servicer’s obligations under this Agreement.

 

2.3.5. Notices.  All notices, requests, demands and other communications required or permitted under this Agreement shall be in writing and shall be deemed to have been duly given, made and received upon actual receipt of registered or certified mail, postage prepaid, return receipt requested, addressed as set forth below:

 

	
  

	
(a)

	
if to the Master Servicer:

 

	
  

	
[______________]

	
  

	
[______________]

	
  

	
[______________]

	
  

	
Attention:  [______________]

 

	
  

	
(b)

	
if to the Servicer:

 

 

	
  

	
Wells Fargo Bank, N.A.

	
  

	
7001 Westown Parkway

	
  

	
West Des Moines, Iowa 50266

	
  

	
Attention:  Senior Vice President, Servicing

 

	
  

	
(c)

	
if to the Custodian:

 

	
  

	
[______________]

	
  

	
[______________]

	
  

	
[______________]

	
  

	
Attention:  [______________]

 

	
  

	
(d)

	
if to the Trustee:

 

	
  

	
[______________]

	
  

	
[______________]

	
  

	
[______________]

	
  

	
Attention:  [______________]

  

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Any party may alter the address to which communications or copies are to be sent by giving notice of such change of address in conformity with the provisions of this paragraph for the giving of notice.

 

2.3.6. Change of Accountants.  During the term of this Agreement, the Servicer shall not change, or make any substitution of, its certified public accountants except upon written notice to the Master Servicer given 30 days prior to such change or substitution.

 

ARTICLE 3

 

REMIC COMPLIANCE

 

Section 3.1. General

 

3.1.1. Applicability.  The provisions of this Article 3 apply to all the Mortgage Loans or Mortgaged Property unless the Mortgage Loan has not been transferred (or been identified for a future transfer) to an entity with respect to which an election to be characterized as a REMIC has been (or is expected to be) made.

 

3.1.2. Modifications of Mortgage.  With the prior written consent of the Master Servicer, the Servicer may modify the terms of a Mortgage Loan which is in default or a Mortgage Loan as to which default is reasonably foreseeable; provided, however, that (i) such modification may not reduce the amount of principal owed under the related Mortgage Note or permanently reduce the Mortgage Interest Rate for such Mortgage Loan and (ii) the Servicer and the Master Servicer have determined that such modification is likely to increase the proceeds of such Mortgage Loan over the amount expected to be collected pursuant to foreclosure.  Notwithstanding anything to the contrary in this Agreement, the Servicer shall not permit any modification of any material term of a Mortgage Loan (including the Mortgage Interest Rate, the principal balance, the amortization schedule, or any other term affecting the amount or timing of payments on the Mortgage Loan) where such modification is not the result of a default or as to which default is reasonably foreseeable under the Mortgage Loan unless the Master Servicer has consented thereto and the Servicer has received an Opinion of Counsel or a ruling from the Internal Revenue Service (at the expense of the Servicer or the party making the request of the Servicer to modify the Mortgage Loan) to the effect that such modification would not be treated as giving rise to a new debt instrument for federal income tax purposes or a disposition of the modified Mortgage Loan and that such modification is permitted under the REMIC Provisions.

 

3.1.3. Indemnification with Respect to Certain Taxes and Loss of REMIC Status.  In the event that the REMIC fails to qualify as a REMIC, loses its status as a REMIC, or incurs state or local taxes, or tax as a result of a prohibited transaction or contribution subject to taxation under the REMIC Provisions due to the negligent performance by the Servicer of its duties and obligations set forth herein, the Servicer shall indemnify the Trustee, the Trust Administrator (if applicable), the Master Servicer and the holders of the related Certificates against any and all losses, claims, damages, liabilities or expenses (“REMIC Failure Losses”) resulting from such negligence; provided, however, that the Servicer shall not be liable for any such REMIC Failure Losses attributable to the action or inaction of the Master Servicer or the holders of such Certificates nor for any such REMIC Failure Losses resulting from

  

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misinformation provided by the Master Servicer on which the Servicer has relied.  The foregoing shall not be deemed to limit or restrict the rights and remedies of the other holders of the Certificates now or hereafter existing at law or in equity.

 

Section 3.2. REO Qualification

 

3.2.1. Foreclosure Property.  Notwithstanding any other provision of this Agreement, the Servicer, shall not rent, lease, or otherwise earn income on behalf of the REMIC with respect to any REO which might cause such REO to fail to qualify as “foreclosure” property within the meaning of section 860G(a)(8) of the Code (e.g., rent based upon the earnings of the lessee) or result in the receipt by the REMIC of any “income from non-permitted assets” within the meaning of section 860F(a)(2) of the Code (e.g., income attributable to any asset which is not a qualified mortgage, a cash flow or reserve fund investment, or personal property not incidental to the REO) or any “net income from foreclosure property” which is subject to tax under the REMIC Provisions unless the Master Servicer has received an Opinion of Counsel (at the Servicer’s expense) to the effect that, under the REMIC Provisions and (where appropriate, any relevant proposed legislation) any income generated for the REMIC by the REO would not result in the imposition of a tax upon the REMIC.  In general, the purpose of this Section 3.2 and the REMIC Provisions (which this section is intended to implement) is to ensure that the income earned by the REMIC is passive type income such as interest on mortgages and passive type rental income on real property.

 

3.2.2. Foreclosure Property Qualification Restrictions.  Without limiting the generality of the foregoing, the Servicer shall not:

 

(a) permit the REMIC to enter into, renew or extend any lease with respect to any REO, if the lease by its terms will give rise to any income that does not constitute Rents from Real Property;

 

(b) permit any amount to be received or accrued under any lease other than amounts that will constitute Rents from Real Property;

 

(c) authorize or permit any construction on any REO, other than the completion of a building or other improvement thereon, and then only if more than ten percent of the construction of such building or other improvement was completed before default on the related Mortgage Loan became imminent, all within the meaning of Section 856(e)(4)(B) of the Code; or

 

(d) Directly Operate or allow any other Person to Directly Operate, any REO on any date more than 90 days after its acquisition date, other than through an “independent contractor,” within the meaning of Section 856(e) of the Code;

 

unless, in any such case, the Servicer has requested and received an Opinion of Counsel (at the Servicer’s expense) to the effect that such action will not cause such REO to fail to qualify as “foreclosure property” within the meaning of Section 860G(a)(8) of the Code at any time that it is held by the REMIC, in which case the Servicer may take such actions as are specified in such Opinion of Counsel.

  

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3.2.3. REO Disposition.  Within 30 days following an REO Disposition, the Servicer shall provide to the Master Servicer a statement of accounting for the related REO, including without limitation, (i) the loan number of the related Mortgage Loan, (ii) the date such Mortgaged Property was acquired in foreclosure or by deed in lieu of foreclosure, (iii) the date of REO Disposition, (iv) the gross sales price and related selling and other expenses, (v) accrued interest calculated from the date of acquisition to the disposition date and (vi) such other information as the related trustee may reasonably request.

 

Section 3.3. Prohibited Transactions and Activities

 

3.3.1. Mortgage Loan Disposition Restriction.  The Servicer shall not permit the sale, disposition or substitution for any of the Mortgage Loans (except in a disposition pursuant to (i) the foreclosure or default of a Mortgage Loan, (ii) the bankruptcy or insolvency of the REMIC, (iii) the termination of the REMIC in a “qualified liquidation” or “clean-up” call as defined in Section 860F of the Code or (iv) a substitution of a Qualifying Substitution Mortgage Loan as permitted under the REMIC Provisions), nor acquire any assets for the REMIC, after the startup day of the REMIC, nor sell or dispose of any investments in any of the accounts established by the Servicer for the REMIC for gain, nor accept any contributions to the REMIC (other than certain cash contributions permitted by Section 860G(c) of the Code) unless it has received an Opinion of Counsel (at the expense of the Person requesting the Servicer to take such action) to the effect that such disposition, acquisition, substitution, or acceptance will not (a) affect adversely the status of the REMIC as a REMIC or of the Certificates, other than the Certificates representing the residual interest in the REMIC, as the regular interests therein within the meaning of the REMIC Provisions, (b) affect the distribution of interest or principal on the Certificates, (c) result in the encumbrance of the assets transferred or assigned to the REMIC (except pursuant to the provisions of this Agreement) or (d) cause the REMIC to be subject to a tax on “prohibited transactions” or “prohibited contributions” pursuant to the REMIC Provisions.

 

3.3.2. Personal Property.  The Servicer shall not acquire any personal property relating to any Mortgage Loan unless either:

 

(a) such personal property is incident to real property (within the meaning of Section 856(e)(1) of the Code) so acquired by the Servicer; or

 

(b) the Servicer shall have requested and received an Opinion of Counsel, at the expense of the Servicer, to the effect that the holding of such personal property by the REMIC will not cause the imposition of a tax on the REMIC under the REMIC Provisions or cause the REMIC to fail to qualify as a REMIC at any time that any Certificate is outstanding.

 

Section 3.4. Eligible Investments

 

3.4.1. Custodial Account.  Funds in any custodial accounts established by the Servicer and maintained in respect of the REMIC may be invested and, if invested, shall be invested in Eligible Investments selected by the Servicer which shall mature not later than the Business Day immediately preceding the next Remittance Date, and any such Eligible

  

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Investment shall not be sold or disposed of prior to its maturity.  All such Eligible Investments shall be made in the name of the REMIC or its nominee.  All income and gain realized from any such investment shall be, as long as the Servicer is servicing the Mortgage Loans held by the REMIC, for the benefit of the Servicer as additional compensation and shall be subject to its withdrawal or order from time to time.  The amount of any losses incurred in respect of any such investments shall be deposited in the relevant account by the Servicer out of its own funds immediately as realized.  The foregoing requirements for deposit in such account are exclusive, it being understood and agreed that, without limiting the generality of the foregoing, payments of interest on funds in such account and, as long as the Servicer is servicing the Mortgage Loans held by the REMIC, payments in the nature of prepayment fees, late payment charges, assumption fees or any similar fees customarily associated with the servicing mortgage loans paid by any mortgagor need not be deposited by the Servicer in such account and may be retained by the Servicer as additional servicing compensation.  If the Servicer deposits in such account any amount not required to be deposited therein, it may at any time withdraw such amount, any provision herein to the contrary notwithstanding.

 

3.4.2. Escrow Account.  Subject to the terms of the related Mortgage Notes and Security Instrument, and further subject to applicable law, any funds in any escrow account shall be invested in Eligible Investments that mature prior to the date on which payments have to be made out of the related escrow account and any such Eligible Investment shall not be sold or disposed of prior to its maturity; provided that, if any loss is incurred on any such investment, the Servicer shall cover such loss by making a deposit into the appropriate escrow account out of its own funds in the amount of such loss.  Withdrawals from any escrow account may be made (to the extent amounts have been escrowed for such purpose and to the extent permitted by the related Security Instrument and Mortgage Note) only (i) to effect timely payment of Escrow Items in connection with the related Mortgage Loan, (ii) to reimburse the Master Servicer or Servicer out of related collections for advances with respect to Escrow Items, (iii) to refund to any mortgagors any sums determined to be overages, (iv) to pay interest, if any, owed to mortgagors on such account to the extent required by law, (v) for application to restoration or repair of the Mortgaged Property, (vi) to clear and terminate the escrow account on the termination of this Agreement or (vii) to remove funds placed in such escrow account in error.  The Servicer shall be entitled to all investment income on any escrow account not required to be paid to mortgagors pursuant to the preceding sentence.

 

ARTICLE 4

 

SERVICER CONSIDERATIONS

 

Section 4.1. Servicer Eligibility Standards.  To service Mortgage Loans under this Agreement the Servicer must satisfy the eligibility standards set forth in this Section 4.1 initially and at all times thereafter.

 

4.1.1. Regulatory Approvals and Licensing.  The Servicer must be:

 

(a) FNMA or FHLMC approved and in good standing;

 

(b) a HUD approved mortgagee in good standing;

  

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(c) in compliance with all applicable capital requirements and other requirements from time to time specified by any governmental agency or quasi-governmental authority having jurisdiction over the Servicer; and

 

(d) properly licensed to service the Mortgage Loans in all relevant jurisdictions where such licenses are required.

 

4.1.2. Net Worth and Portfolio Requirements.

 

(a) The Servicer must maintain a Tangible Net Worth of at least $1,000,000.

 

(b) The Servicer must maintain an Adjusted Tangible Net Worth of at least $1,000,000.

 

(c) The Servicer must maintain a servicing portfolio of at least $1,000,000,000.

 

4.1.3. Auditor’s Opinion and Other Annual Reports.  For so long as the Mortgage Loans are master serviced by the Master Servicer, the Servicer must provide the Master Servicer, as part of the application process (except as to clause (b), (d) and (e)) and annually thereafter no later than the [30]th day (or if not a Business Day, the immediately preceding Business Day) preceding the latest date in each year on which an annual report on Form 10-K may be timely filed with the SEC (without regard to any extension), with the following reports and opinions:

 

(a) financial statements for the most recently closed fiscal year, together with an unqualified opinion thereon of an independent certified public accountant who is a member of the American Institute of Certified Public Accountants, unless the Master Servicer, in its reasonable discretion, decides to waive this requirement regarding qualification;

 

(b) a report regarding the Servicer’s assessment of its compliance (the “Assessment of Compliance”) with the servicing criteria set forth in Item 1122(d) of Regulation AB (the “Servicing Criteria”), as required by Rules 13a-18 and 15d-18 of the Exchange Act and Item 1122 of Regulation AB.  Such report shall contain the following:

 

(i) a statement by the Servicer of its responsibility for assessing compliance with the Servicing Criteria applicable to the Servicer;

 

(ii) a statement by the Servicer that it used the Servicing Criteria to assess compliance with the Servicing Criteria applicable to the Servicer;

 

(iii) a statement by the Servicer as to which of the Servicing Criteria, if any, are not applicable to the Servicer (which statement shall be based on the activities the Servicer performs with respect to asset-backed securities transactions taken as a whole involving the Servicer that are backed by the same asset type as the Mortgage Loans);

  

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(iv) a statement by the Servicer assessing the Servicer’s compliance with the applicable Servicing Criteria as of the last day of the immediately preceding calendar year and covering the period of the preceding calendar year, which shall disclose any material instance of non-compliance with respect thereto; and

 

(v) a statement by the Servicer that a registered public accounting firm has issued an attestation report on the Servicer’s assessment of compliance with the applicable Servicing Criteria as of the last day of the immediately preceding calendar year and covering the period of the preceding calendar year.

 

(c) a report by registered public accounting firm which is a member of the institute of certified public accountants (the “Annual Independent Public Accountant’s Servicing Report”) that attests to, and reports on, the assessment made by the Servicer pursuant to Section 4.1.3(b) hereof, as required by and meeting the requirements of Rules 13a-18 and 15d-18 under the Exchange Act, and Item 1122(b) of Regulation AB.  Such attestation shall be in accordance with Rule 1-02(a)(3) and Rule 2-02(g) of Regulation S-X under the 1933 Act and the Exchange Act.

 

(d) a certificate signed by any Officer of the Servicer in the form required by Item 1123 of Regulation AB (the “Annual Statement of Compliance”), to the effect that (i) an authorized Officer of the Servicer has reviewed (or a review has been made under his or her supervision of) the Servicer’s activities under this Agreement during the prior calendar year and (ii) to the best of such officer’s knowledge, based on such review, the Servicer has fulfilled all of its obligations under this Agreement in all material respects throughout the prior calendar year or, if there has been a failure to fulfill any such obligation in any material respect, specifically identifying each failure known to such officer and the nature and status thereof.

 

(e) a certificate signed by an Officer of the Servicer to the Master Servicer for the benefit of such Master Servicer and its officers, directors and affiliates in the event that the Master Servicer files a Sarbanes-Oxley certification directly with the SEC in connection with the securitization of the Mortgage Loans (the “Transaction”), certifying as to the following matters:

 

(i) Based on such Officer’s knowledge, the information relating to the Mortgage Loans and the servicing thereof submitted by the Servicer to the Master Servicer which is used in connection with preparation of the reports on Form 10-D and the annual report on Form 10-K filed with the SEC with respect to the Transaction, taken as a whole, does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading as of the date of this certification;

 

(ii) The servicing information required to be provided to the Master Servicer by the Servicer under the Agreement has been provided to the Master Servicer;

  

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(iii) Such Officer is responsible for reviewing the activities performed by the Servicer under the Agreement and based upon the review required by the Agreement, and except as disclosed in the Assessment of Compliance, the Annual Statement of Compliance, the Annual Independent Public Accountant’s Servicing Report and all servicing reports, officer’s certificates and other information relating to the servicing of the Mortgage Loan submitted to the Master Servicer, the Servicer has, as of the date of the certification fulfilled its obligations under the Agreement; and

 

(iv) Such Officer has disclosed to the Master Servicer all significant deficiencies relating to the Servicer’s compliance with the minimum servicing standards in accordance with a review conducted in compliance with the Uniform Single Attestation Program for Mortgage Bankers or similar standard as set forth in the Agreement.

 

The foregoing certification shall also be given upon thirty (30) days written request by the Master Servicer in connection with any additional Sarbanes-Oxley certifications directly filed by the Master Servicer involving the Mortgage Loans.

 

The Servicer shall indemnify and hold harmless the Master Servicer and its officers, directors, agents and affiliates from and against any losses, damages, penalties, fines, forfeitures, reasonable legal fees and related costs, judgments and other costs and expenses arising out of or based upon a breach by the Servicer or any of its officers, directors, agents or affiliates of its obligations under this Section 4.1.3 or the negligence, bad faith or willful misconduct of the Servicer in connection therewith.  If the indemnification provided for herein is unavailable or insufficient to hold harmless the Master Servicer, then the Servicer agrees that it shall contribute to the amount paid or payable by the Master Servicer as a result of the losses, claims, damages or liabilities of the Master Servicer in such proportion as is appropriate to reflect the relative fault of the Master Servicer on the one hand and the Servicer on the other in connection with a breach of the Servicer’s obligations under this Section 4.1.3 or the Servicer’s negligence, bad faith or willful misconduct in connection therewith.

 

4.1.4. Reports from Affiliates and Third Parties.  Notwithstanding anything contained herein to the contrary, to the extent the Servicer engages any affiliate or third party vendor, in connection with the performance of any of its duties under this Agreement, the Servicer shall immediately notify the Master Servicer (who will immediately notify the Depositor) and Trustee in writing of such engagement.  To the extent the Depositor notifies Master Servicer and the Master Servicer notifies the Servicer that the Depositor has determined that such affiliates or third party vendors are participating in the servicing function with respect to the Mortgage Loans, within the meaning of Item 1122 of Regulation AB, the Servicer shall cause such affiliates or third party vendors to prepare a separate assessment and attestation report, as contemplated by Section 4.1.3 of this Agreement and deliver such report to the Master Servicer as set forth in Section 4.1.3(b) of this Agreement.  In addition, to the extent the Depositor notifies the Master Servicer and the Master Servicer notifies the Servicer that it has determined that any such affiliate or third party vendor would be a “servicer” within the meaning of Item 1101 of Regulation AB and meets the criteria in Item 1108(a)(2)(i) through (iii) of Regulation AB, the Servicer shall cause such affiliate or third party vendor to prepare a separate

  

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compliance statement as contemplated by Section 4.1.3 of this Agreement and deliver such statement to the Master Servicer as set forth in Section 4.1.3 of this Agreement.  In addition, if the Depositor determines any such affiliate or third party vendor would be a “servicer” within the meaning of Item 1101 of Regulation AB, the Master Servicer shall notify the Servicer of such determination by the Depositor and the Servicer shall cause such affiliate or third party vendor to provide the Master Servicer and the Trustee the information required by Section 1108(b) and 1108(c) of Regulation AB within two Business Days following such engagement.

 

4.1.5. Servicing Experience.  The Servicer shall satisfactorily demonstrate to the Master Servicer, in the Master Servicer’s reasonable discretion, the following experience:

 

(a) that it has at least three (3) years of conventional mortgage loan servicing experience;

 

(b) that it has a staff knowledgeable in servicing of Mortgage Loans and the administration of REO; and

 

(c) that it has experience maintaining a servicing portfolio in excess of $1 billion.

 

4.1.6. Material Changes.  The Servicer shall promptly report to the Master Servicer any change in its business operations, financial condition, properties or assets since the date of the latest submitted financial statements which could have a material adverse effect on the Servicer’s ability to perform its obligations hereunder.  Events for which the Master Servicer must receive notice include, but are not limited to, the following:

 

(a) any change in the Servicer’s business address and/or telephone number;

 

(b) any merger, consolidation, or significant reorganization;

 

(c) any changes in the Servicer’s ownership whether by direct or indirect means.  Indirect means include any change in ownership of the Servicer’s parent;

 

(d) any change in the Servicer’s corporate name;

 

(e) if the Servicer is a savings and loan association, any change in the Servicer’s charter from federal to state or vice versa;

 

(f) any decreases in capital, adverse alteration of debt/equity ratios, or changes in management ordered or required by a regulatory authority supervising or licensing the Servicer;

 

(g) any significant adverse change in the Servicer’s financial position;

 

(h) entry of any court judgment or regulatory order in which the Servicer is or may be required to pay a claim or claims which, in the Master Servicer’s

  

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reasonable opinion, have a material adverse effect on the Servicer’s financial condition; and

 

(i) the Servicer admits to committing, or is found to have committed, a material, in the Master Servicer’s reasonable opinion, violation of any law, regulation, or order.

 

In the case of any merger, consolidation or significant reorganization, the Servicer and such successor or surviving Person shall notify the Master Servicer (who shall notify the Depositor) and the Trustee of any such merger, consolidation or significant reorganization at least two Business Days prior to the effective date thereof and shall provide the Master Servicer (who shall provide to the Depositor) and the Trustee with all information required by the Depositor to comply with its reporting obligation not later than the effective date of such merger, conversion or consolidation.

 

Section 4.2. Errors and Omissions Insurance

 

4.2.1. E & O Requirement.  A Servicer must maintain, at all times and at its own expense, an Errors and Omissions Policy in an amount and with an insurer acceptable to FNMA or FHLMC.

 

4.2.2. E & O Scope.  The Errors and Omissions Policy must explicitly insure the Servicer, its successors and assigns, against any losses resulting from negligence, errors or omissions on the part of officers, employees or other persons acting on behalf of the Servicer in the performance of its duties as a Servicer pursuant to this Agreement.

 

4.2.3. E & O Policy Maintenance.  The Servicer must maintain in effect the Errors and Omissions Policy at all times and the Errors and Omissions Policy may not be canceled, permitted to lapse or otherwise terminated without thirty Business Days’ prior written notice by registered mail to the Master Servicer.  Further, the Errors and Omissions Policy must provide that, or the insurer must state in writing to the Master Servicer that, the Errors and Omissions Policy shall not be cancelable without the giving of notice as provided for in the prior sentence.

 

4.2.4. E & O Deductible.  The terms of the Errors and Omissions Policy must provide for a deductible amount that is acceptable to FNMA or FHLMC.

 

4.2.5. E & O Qualifications.  The Errors and Omissions Policy must be obtained by the Servicer from an insurer which satisfies FNMA or FHLMC standards in this regard.

 

4.2.6. Notice of Claim.  The Servicer must immediately report to the Master Servicer all claims made against the insurer under the Errors and Omissions Policy, and shall promptly follow such report with a written notice to the Master Servicer.

 

Section 4.3. Fidelity Bond Coverage

  

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4.3.1. Fidelity Bond Requirement.  A Servicer must maintain, at all times, at its own expense, a Fidelity Bond in an amount and with an insurer acceptable to FNMA or FHLMC and having terms that are acceptable to FNMA or FHLMC.

 

4.3.2. Fidelity Bond Coverage.  The amount of Fidelity Bond coverage shall be an amount acceptable to FNMA or FHLMC.

 

4.3.3. Fidelity Bond Scope.  The coverage of the Fidelity Bond must explicitly insure the Servicer, its successors and assigns, against any losses resulting from dishonest, fraudulent or criminal acts on the part of Officers, employees or other persons acting on behalf of the Servicer.

 

4.3.4. Fidelity Bond Maintenance.  The Servicer must maintain in effect the Fidelity Bond at all times and the Fidelity Bond may not be canceled, permitted to lapse or otherwise terminated without thirty Business Days’ prior written notice by registered mail to the Master Servicer.  Further, the Fidelity Bond must provide that, or the insurer must state in writing to the Master Servicer that, the Fidelity Bond shall not be cancelable without the giving of notice as provided for in the prior sentence.

 

4.3.5. Fidelity Bond Deductible.  The terms of the Fidelity Bond must provide for a deductible amount that does not exceed FNMA or FHLMC requirements.

 

4.3.6. Fidelity Bond Rating Requirement.  The Fidelity Bond must be obtained from a company which satisfies FNMA or FHLMC standards in this regard.

 

4.3.7. Notice of Event.  The Servicer must promptly report to the Master Servicer any and all occurrences against the Fidelity Bond of the Servicer.

 

Section 4.4. Servicer’s Liability

 

4.4.1. Liability Exposure.  Any and all losses not covered under the Fidelity Bond or Errors and Omissions Policy, as a result of (i) the respective deductible provisions thereof, (ii) the limits of coverage of the Fidelity Bond or Errors and Omissions Policy or (iii) any claim denied which should have been covered by the Fidelity Bond or the Errors and Omissions Policy, as the case may be, according to the terms of this Agreement had the Fidelity Bond or Errors and Omissions Policy been properly obtained and maintained and respective claim been properly submitted for payment, shall be borne by the Servicer, where the Servicer has acted in a manner in which the Servicer is not relieved from liability as described in Section 4.4.2 hereof.

 

4.4.2. Scope of Liability.  Neither the Servicer or any subservicer appointed by it, nor any of their respective partners, directors, officers, employees or agents, or its delegees pursuant to Section 11.2.1 hereof, shall be under any liability to the Master Servicer, the Trustee or, if applicable, the Trust Administrator for any action taken or for refraining from the taking of any action in good faith pursuant to this Agreement, or for errors in judgment; provided, however, that this provision shall not protect the Servicer, any subservicer or any of their respective partners, directors, officers, employees or agents, or its delegees pursuant to Section 11.2.1 hereof, against any liability which would otherwise be imposed by reason of willful

  

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misfeasance, bad faith or gross negligence in the performance of his or its duties or by reason of reckless disregard of his or its obligations and duties hereunder.  The Servicer, any subservicer and any of their respective partners, directors, officers, employees or agents, or its delegees pursuant to Section 11.2.1 hereof, 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.

 

Section 4.5. Indemnification

 

4.5.1. Scope of Indemnity by Servicer.  The Servicer hereby agrees to indemnify and hold harmless (a) the Master Servicer, (b) the Trustee, (c) the Trust Administrator (if applicable) and (d) the officers, directors, employees, agents and Affiliates of any of the foregoing (any of the foregoing hereinafter referred to as the “Indemnified Party”), from and against any and all claims, losses, damages, liabilities, fines, settlements, awards, offsets, defenses, counterclaims, actions, penalties, forfeitures, legal fees, judgments and any other costs, fees and expenses (including, without limitation, reasonable attorneys’ fees and court costs) (any of the foregoing which satisfy the criteria of this paragraph are collectively referred to as “Claims”), either directly or indirectly arising out of, based upon, or relating to (i) a breach by the Servicer, its officers, directors, employees, or agents, or its delegees pursuant to Section 11.2.1 hereof, of any representation or warranty contained herein, or any failure to disclose any matter that makes such representation and warranty misleading or inaccurate, or any inaccuracy in material information furnished by the Servicer regarding itself, (ii) a breach of any representation or warranty made by any Indemnified Party in reliance upon any such representation or warranty, failure to disclose, or inaccuracy in information furnished by the Servicer regarding itself, (iii) any failure of the Servicer, its officers, directors, employees, or agents, or its delegees pursuant to Section 11.2.1 hereof, to perform any of its obligations under this Agreement in a manner in which the Servicer is not relieved from liability as described in Section 4.4.2 hereof and (iv) any acts or omissions of the Servicer, its officers, directors, employees, or agents, or its delegees pursuant to Section 11.2.1 hereof, in a manner in which the Servicer is not relieved from liability as described in Section 4.4.2 hereof.  Each Indemnified Party shall cooperate with the Servicer in the defense of such Claims and shall not settle any such Claim without the prior written consent of the Servicer.

 

4.5.2. Survival of Indemnity.  This indemnification shall survive purchase, transfer of any interest in a Mortgage Loan by any indemnified party, the Liquidation of such Mortgage Loan, termination of the Servicer’s servicing rights with respect to such Mortgage Loan and termination or expiration of this Agreement between the Servicer and the Master Servicer and its successors and assigns.

 

4.5.3. Scope of Indemnity by Master Servicer.  The Master Servicer hereby agrees to indemnify and hold harmless the Servicer, any subservicer appointed by it, any of their respective directors, officers, employees or agents, or its delegees for any action taken by the Servicer, any subservicer or any of their respective directors, officers, employees or agents, or its delegees or for refraining from the taking of any action in good faith pursuant to this Agreement, or for errors in judgment; provided, however, that the Servicer, any subservicer or any of their respective directors, officers, employees or agents, or its delegees are not protected against any liability which would otherwise be imposed by reason of willful misfeasance, bad faith or gross

  

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negligence in the performance of his or its duties or by reason of reckless disregard of his or its obligations and duties under this Agreement.

 

Section 4.6. Servicer’s Compensation

 

4.6.1. Servicing Fee Amount.  In consideration of the services rendered under this Agreement, absent default by the Servicer, the Servicer shall on each Remittance Date be entitled to a monthly aggregate servicing compensation (the “Monthly Servicing Compensation”) for the preceding month which shall equal the sum of (a) the Servicing Fee payable with respect to each Mortgage Loan serviced during such month and (b) any interest earnings on each Custodial P&I Account with respect to such month other than interest earnings thereon which are payable to the Borrower pursuant to the Security Instrument or applicable law, subject to any adjustment for Month End Interest as described in Section 7.6.1.  Absent default by the Servicer, the Servicer shall also be entitled to retain in addition to the Monthly Servicing Compensation any late charges, prepayment fees, penalty interest, assumption fees, modification fees or deficiency recovery fees paid by the Borrower, any Liquidation Profits or any other customary income or any payments of interest related to any Prepayment in Full received by the Servicer prior to the Applicable Unscheduled Receipt Period, which amounts are not required to be deposited into the Custodial P&I Account.  The Servicer shall be required to pay all expenses incurred by it in connection with its servicing activities hereunder and shall not be entitled to reimbursement therefor except as specifically provided for herein.

 

4.6.2. Servicing Fee Source.  The Servicing Fee for each Mortgage Loan shall be payable solely from the interest portion of the related Monthly Payment paid by the Borrower or other payment of interest paid with respect to the Mortgage Loan, whether from the proceeds of foreclosure or any judgment, writ of attachment or levy against the Borrower or his assets, or from funds paid in connection with any prepayment in full or from Insurance Proceeds or Liquidation Proceeds.

 

ARTICLE 5

 

REPRESENTATIONS AND WARRANTIES

 

Section 5.1. General

 

5.1.1. Reliance.  The Master Servicer relies upon the representations and warranties contained in this Article 5 hereof, in the acceptance of the Servicer.  The representations, warranties and covenants contained herein shall inure to the benefit of the Master Servicer, the Trustee and, if applicable, the Trust Administrator.

 

5.1.2. Survival of Representations and Warranties.  The representations and warranties made herein shall survive termination of this Agreement, and shall inure to the benefit of the Master Servicer, its respective successors, Affiliates and assigns and each indemnified party under Section 4.5.1, its respective successors, Affiliates and assigns, in each case, regardless of any review or investigation made by or on behalf of such parties with respect to any Mortgage Loan.

  

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5.1.3. Breach of Representation or Warranty.  Upon breach of any requirement or representation or warranty included in this Agreement relative to any Mortgage Loan, the Servicer must:

 

(a) Promptly notify the Master Servicer in writing of the nature of the breach, the date on which the breach occurred or began and the Servicer’s plans, if any, for curing the breach;

 

(b) Effect a cure of the breach within 30 days after its occurrence or onset and a reasonable extension will be granted if warranted and necessary to fully cure the breach but in no event greater than 90 days; and

 

(c) If no complete cure has been effected within such period the Master Servicer shall take such action against the Servicer as it deems necessary to protect the Trustee’s interest in the Mortgage Loan.

 

5.1.4. Assignment of Representations and Warranties.  The Servicer agrees that each of the Trustee and, if applicable, Trust Administrator may, at any time, assign the representations and warranties given by the Servicer as set forth in this Article 5 which it then possesses, in whole or in part, or an undivided interest therein, to one or more Persons.

 

Section 5.2. Servicer Representations and Warranties

 

The Servicer represents and warrants, as of the date of this Agreement and, except as otherwise provided, throughout the term of this Agreement, that the statements set forth below in this Section 5.2 are true and accurate.

 

Relative to the Servicer:

 

5.2.1. Qualification of Servicer.  The Servicer is duly incorporated, validly existing and in good standing under the laws of the state of its incorporation and is duly qualified to do business and is in good standing under the laws of each jurisdiction that requires such qualification wherein it owns or leases any material properties, or in which it conducts any material business or in which the performance of its duties under this Agreement would require such qualification, except where the failure to so qualify would not have a material adverse effect on (a) the Servicer’s performance of its obligations under this Agreement, (b) the value or marketability of the Mortgage Loans, or (c) the ability to foreclose on the related Mortgaged Properties.

 

5.2.2. Requisite.  The Servicer has the corporate power and authority to own its properties and conduct any and all business required or contemplated by this Agreement and to perform the covenants and obligations to be performed by it under this Agreement.  The Servicer holds all material licenses, certificates and permits from all governmental authorities necessary for conducting its business as it is presently conducted.

 

5.2.3. No Conflicts.  The execution and delivery of this Agreement are within the corporate power of the Servicer and have been duly authorized by all necessary actions on the part of the Servicer; neither the execution and delivery of this Agreement by the Servicer, nor

  

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the consummation by the Servicer of the transactions herein contemplated, nor compliance with the provisions hereof by the Servicer, will (i) conflict with or result in a breach of, or constitute a default under, any of the provisions of the articles of incorporation or bylaws of the Servicer or any law, governmental rule or regulation, or any judgment, decree or order binding on the Servicer or any of its properties, or any of the provisions of any indenture, mortgage, deed of trust, contract or other instrument to which it is a party or by which it is bound or (ii) result in the creation or imposition of any lien, charge or encumbrance upon any of its properties pursuant to the terms of any such indenture, mortgage, deed of trust, contract or other instrument.

 

5.2.4. Enforceable Agreement.  This Agreement, when duly executed and delivered by the Servicer, will constitute a legal, valid and binding agreement of the Servicer, enforceable in accordance with its terms, subject, as to enforcement or remedies, to applicable bankruptcy, reorganization, insolvency or other similar laws affecting creditors’ rights generally from time to time in effect, and to general principles of equity.

 

5.2.5. No Consents.  No consent, approval, order or authorization of any governmental authority or registration, qualification or declaration with any such authority is required in order for the Servicer to perform its obligations under this Agreement.

 

5.2.6. Agency Approval.  The Servicer has been approved by FNMA or FHLMC and will remain approved as an “eligible seller/servicer” of conventional, residential mortgage loans as provided in FNMA or FHLMC guidelines and in good standing.  The Servicer has not received any notification from FNMA or FHLMC that the Servicer is not in compliance with the requirements of the approved seller/servicer status or that such agencies have threatened the servicer with revocation of its approved seller/servicer status.

 

5.2.7. Financial Condition.  The Servicer is not, and, with passage of time, does not expect to become, insolvent or bankrupt.  The Servicer shall promptly notify the Master Servicer of any material adverse change of its financial condition.

 

5.2.8. Servicing.  The servicing practices used by the Servicer under this Agreement have been and are in all respects in compliance with all federal, state and local laws, rules, regulations and requirements in connection therewith and are in accordance with Prudent Servicing Practices.

 

5.2.9. No Impairment.  There is no action, suit, proceeding or investigation pending or, to the best of the Servicer’s knowledge after due inquiry, threatened, against the Servicer which, either in any one instance or in the aggregate, may result in any material adverse change in business operations, financial condition, properties or assets of the Servicer, or in any material impairment of the right or ability of the Servicer to carry on its business substantially as now conducted, or in any material liability on the part of the Servicer, or which if adversely determined would affect the validity of this Agreement or of any action taken or to be taken in connection with the obligations of the Servicer contemplated herein, or which would be likely to impair materially the ability of the Servicer to perform under the terms of this Agreement.

 

5.2.10. No Inquiries.  The Servicer has not been the subject of an audit by any of the Master Servicer, FHA, HUD, FDIC, FNMA, FHLMC, GNMA or any Primary Mortgage

  

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Insurer, which audit included material allegations of failure to comply with applicable loan origination, servicing or claims procedures, or resulted in a request for repurchase of Mortgage Loans or indemnification in connection with the Mortgage Loans.

 

Relative to the Mortgage Loans:

 

5.2.11. Custodial and Escrow Accounts Current.  All Custodial P&I Accounts, Custodial T&I Accounts, Custodial Buydown Accounts and Escrow Funds are maintained by the Servicer and have been maintained in accordance with applicable law and the terms of the Mortgage Loans.  The Escrow Items required by the Mortgages which have been paid to the Servicer for the account of the Borrower are on deposit in the appropriate Custodial Account.  All funds received by the Servicer in connection with the Mortgage Loans, including, without limitation, foreclosure proceeds, Insurance Proceeds, condemnation proceeds and principal reductions, have promptly been deposited in the appropriate Custodial Account, and all such funds have been applied to reduce the principal balance of the Mortgage Loans in question, or for reimbursement of repairs to the Mortgaged Property or as otherwise required by applicable law.

 

5.2.12. Insurance Maintenance.  Pursuant to the terms of the related Security Instrument, all buildings or other improvements upon the related Mortgaged Property are insured by an insurance policy or policies meeting the requirements of Articles 15 and 16 hereof.  The related Security Instrument obligates the Borrower thereunder to maintain the hazard insurance policy at the Borrower’s cost and expense and, upon the Borrower’s failure to do so, authorizes the Mortgagee under the related Security Instrument to obtain and maintain such insurance at the Borrower’s cost and expense and to seek reimbursement therefor from the Borrower.  The hazard insurance policy is the valid and binding obligation of the insurer, is in full force and effect, and will be in full force and effect and inure to the benefit of the Trustee.  The Servicer and the Borrower have not engaged in any act or omission that would impair the coverage of any such policy, the benefits of the endorsement provided for herein, or the validity and binding effect of either.  The Mortgage Loan Documents permit the maintenance of an escrow account to pay the premiums for the above mentioned insurance, and the requirement for such escrows has not been waived, unless otherwise required by applicable state law.

 

ARTICLE 6

 

CUSTODIAL ACCOUNTING

 

Section 6.1. In General

 

6.1.1. Custodial Account Establishment.  The Servicer must establish appropriate custodial accounts for the benefit of the Trustee, its successors and assigns for the deposit of funds collected in connection with such Mortgage Loans.  All custodial accounts and related records must be maintained in accordance with sound and controlled accounting practices.  The custodial accounts maintained pursuant to this Agreement may be custodial accounts for one or more other series of mortgage pass-through certificates issued by Wells Fargo Asset Securities Corporation; provided, however, that (a) the trustee for such other series

  

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under the related pooling and servicing agreement(s) is the Trustee and (b) the master servicer for such other series under the related pooling and servicing agreement(s) is the Master Servicer.

 

6.1.2. Custodial Account Separateness.  (a) At least one custodial account for principal and interest (i.e., a Custodial P&I Account), one custodial account for taxes and insurance (i.e., a Custodial T&I Account), one custodial account for Subsidy Funds, if applicable (i.e., a Custodial Subsidy Account) and one custodial account for Buydown Funds, if applicable (i.e., a Custodial Buydown Account), shall be established and maintained for the Mortgage Loans.  Except as specified in 6.1.2(b), without the written consent of the Master Servicer, funds in these accounts may not be commingled with other funds held by the Servicer.  Each Custodial P&I Account shall be established as an Eligible Account (“Eligible Custodial P&I Account”).

 

(b) Notwithstanding anything to the contrary elsewhere in this Agreement, the Servicer may employ the Custodial T&I Account as the Custodial Subsidy Account and/or the Custodial Buydown Account to the extent that the Servicer can separately identify any Subsidy Funds or Buydown Funds, as applicable, deposited therein.

 

6.1.3. Custodial Account Maintenance.  The Servicer must ensure that each Custodial P&I Account, Custodial T&I Account, Custodial Subsidy Account and Custodial Buydown Account meets the following guidelines:

 

(a) the accounts must be Eligible Accounts;

 

(b) the name of each Custodial P&I Account, Custodial T&I Account and Custodial Buydown Account shall include a reference to the name of the Trustee and the designation of the series of Mortgage Pass-Through Certificates or, where such accounts are accounts maintained for multiple series of mortgage pass-through certificates as described in Section 6.1.1, a reference to “[______________], as trustee for Wells Fargo Asset Securities Corporation, Mortgage Pass-Through Certificates;”

 

(c) the Servicer must transfer all funds on hand relating to such Mortgage Loans, Monthly Payments due on or after the related Cut-Off Date and any principal prepayments received after the related Cut-Off Date, into the appropriate custodial accounts meeting the requirements of Sections 6.1.1 and 6.1.2 hereof;

 

(d) beginning with any payment due on or after the related Cut-Off Date, all collections on the Mortgage Loans must be credited to the appropriate custodial account no later than the first Business Day following receipt;

 

(e) (i) the Servicer shall not permit the balance of any Custodial P&I Account to exceed the Threshold Amount or include any amounts then required to be remitted to the Certificate Account pursuant to Section 18.3.1, (ii) in the event the Servicer collects amounts in excess of the Threshold Amount prior to the next scheduled transfer of funds to the respective Certificate Account, the Servicer must transfer the excess funds directly to the related Certificate Account by wire before the close of business on any day on which the amount on deposit in such account exceeds the Threshold Amount and (iii) in the event that the Servicer fails to transfer the funds in

  

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excess of the Threshold Amount to the related Certificate Account or to remit to the Certificate Account the Monthly Remittance on the Remittance Date pursuant to Section 18.3.1, the Master Servicer is authorized to debit such Custodial P&I Account and transfer such amounts to the related Certificate Account;

 

(f) (i) the Servicer must file with the Master Servicer the appropriate ACH Debit Form for each Custodial P&I Account; (ii) the Master Servicer may monitor the principal balance of each Custodial P&I Account and may issue an ACH debit for amounts on deposit in any such account in excess of the Threshold Amount or otherwise in violation of Section 6.1.3(e); (iii) such amounts will immediately be deposited into the appropriate Certificate Account; and (iv) the ability of the Master Servicer to withdraw and remit such funds to the appropriate Certificate Account does not relieve the Servicer of its obligations to remit such funds to the related Certificate Account;

 

(g) upon the establishment of a Custodial P&I Account, Custodial T&I Account or Custodial Buydown Account, the Servicer shall promptly advise the Master Servicer in writing of, or of any change in, the name and address of the depository, the individual employee of the depository who is responsible for overseeing such account, the account number, the title of the account and the individuals whose names appear on the signature card; and

 

(h) (i) establishment and maintenance of the Custodial P&I Account,  Custodial T&I Account and Custodial Buydown Account will be an expense of the Servicer; (ii) such custodial accounts may be interest-bearing accounts provided that such accounts comply with all local, state and federal laws and regulations governing interest-bearing accounts and, in the case of a Custodial T&I Account or Custodial Buydown Account,  governing Borrower escrow accounts; and (iii) the Servicer must ensure that all interest credited to any custodial account that is not due the Borrower is removed by the Servicer within 30 days after receipt of such interest.

 

6.1.4. Escrow Investment.  If the Servicer elects or is required by law to deposit the Borrower’s Escrow Funds into an interest-bearing custodial account, the Servicer shall either (a) deposit such funds into an account which permits withdrawal on demand so as to pay Escrow Items as they come due, or (b) invest such funds in an Eligible Account so that adequate funds mature the Business Day prior to the date payment is due for each Escrow Item.

 

6.1.5. Clearing Account.  If the Servicer finds it necessary to use a clearing account, the following guidelines must be followed:

 

(a) the titles of such accounts must reflect that they are custodial in nature, and the depository in which the accounts are maintained must be informed in writing that the accounts are custodial accounts;

 

(b) a check drawn on or funds transferred from a Custodial P&I Account or Custodial T&I Account must be deposited to a disbursement clearing account before or at the same time as any checks on the clearing account are issued;

  

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(c) a single clearing account must not be utilized both as a collection and disbursement clearing account;

 

(d) the accounts must be held at depository institutions in which accounts are insured by the FDIC, through either the BIF or SAIF;

 

(e) the Servicer must maintain adequate records and audit trails to support all debits and credits of each Borrower’s payment records and accounts; and

 

(f) collections deposited to a depository clearing account must be credited to the appropriate custodial account no later than one Business Day following receipt by the Servicer.

 

6.1.6. Custodial Buydown Account.  The Servicer must establish a separate custodial account to hold Buydown Funds on Mortgage Loans being serviced for the Trustee, its successors and assigns.  These accounts must be clearly marked to indicate that the Servicer is a custodian for Buydown Funds being held for the Trustee, its successors and assigns.

 

6.1.7. Certificate Account.  The Master Servicer shall establish a segregated Certificate Account in accordance with Section 3.01 of the Pooling and Servicing Agreement.

 

6.1.8. Custodial Subsidy Account.  The Servicer must establish a separate custodial account to hold Subsidy Funds on Mortgage Loans being serviced for the Trustee, its successors and assigns.  These accounts must be clearly marked to indicate that the Servicer is a custodian for Subsidy Funds being held for the Trustee, its successors and assigns.

 

Section 6.2. Custodial P&I Account

 

6.2.1. Mandatory Deposits.  The following funds must be deposited into each related Custodial P&I Account within one Business Day after the Servicer’s receipt of such amounts, or in the case of clauses (d) and (e) hereof, on the Remittance Date or, in the case of clause (g) hereof, on the Business Day after the Servicer’s receipt of the Borrower’s required monthly payment under the related subsidy agreement:

 

(a) Principal collections from related Mortgage Loans (including Prepayments in Full and Curtailments), together with Month End Interest,  if applicable;

 

(b) Interest collections from related Mortgage Loans (net of Servicing Fees or other compensation of the Servicer as set forth in Section 4.6.1);

 

(c) Liquidation Proceeds and Insurance Proceeds from related Mortgage Loans other than proceeds held in an escrow account and applied to the restoration and repair of the related Mortgaged Property;

 

(d) related P&I Advances;

 

(e) any related PMI Advances;

  

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(f) the proceeds of any purchase, or substitution under a purchase agreement, of a related Mortgage Loan by the Servicer or a Representing Party, or sale of an REO; and

 

(g) an amount from the Custodial Subsidy Account that when added to the Borrower’s payment will equal the full monthly amount due under the related Mortgage Note.

 

6.2.2. Optional Deposits.  The following funds may, but are not required to, be deposited into each related Custodial P&I Account:

 

(a) late charges;

 

(b) prepayment fees;

 

(c) penalty interest;

 

(d) assumption fees;

 

(e) Liquidation Profits; and

 

(f) unapplied funds if the Borrower that remitted such funds is not required to maintain Escrow Funds.

 

The Servicer shall maintain separate accounting for each of the foregoing types of funds.  Provided that the Servicer is not in default of its obligations hereunder, the Servicer may retain any late charges, prepayment fees, penalty interest, assumption fees and Liquidation Profits as additional servicing compensation.

 

6.2.3. Permissible Withdrawals.  The Servicer may make withdrawals from each related Custodial P&I Account solely for the following:

 

(a) remittances to the related Certificate Account;

 

(b) reimbursement to itself for advances which have been recovered by subsequent collections including late payments, Liquidation Proceeds or Insurance Proceeds, to the extent funds on deposit recovered by such subsequent collections relate to the Mortgage Loans as to which such advances were made;

 

(c) interest earnings on deposits to the related Custodial P&I Account, but only to the extent that such interest has been credited;

 

(d) removal of amounts deposited in error;

 

(e) removal of charges or other such amounts deposited on a temporary basis in the account;

 

(f) removal of Servicing Fees to the extent deposited therein; and

  

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(g) termination of the account.

 

6.2.4. Account Beneficiary.  Each Custodial P&I Account (other than any Eligible Custodial P&I Account) must be titled to show the respective interests of the Servicer as trustee and of the Master Servicer as beneficiary.

 

6.2.5. Use of Accounts.  The Servicer shall not use the Custodial P&I Account as a collection clearing account.

 

Section 6.3. Custodial T&I Account

 

6.3.1. Mandatory Deposits.  The following funds must be deposited into each respective Custodial T&I Account:

 

(a) related Borrowers’ Escrow Funds;

 

(b) related T&I Advances;

 

(c) the remaining balance of Title Insurance loss drafts;

 

(d) rent receipts to offset any related T&I Advances by the Servicer;

 

(e) unapplied funds; and

 

(f) Liquidation Proceeds from a related Mortgage Loan that offset a deficit balance in the related Borrower’s Escrow Funds.

 

6.3.2. Permissible Withdrawals.  With respect to each related Borrower, the Servicer may make withdrawals from each respective Custodial T&I Account to the extent of the balance of such related Borrower’s Escrow Funds for the following:

 

(a) timely payment of such related Borrower’s taxes and insurance premiums;

 

(b) refunds to such related Borrower of excess Escrow Funds collected from such Borrower;

 

(c) recovering T&I Advances made with respect to such related Borrower by the Servicer;

 

(d) payment of interest, if required, to such related Borrower on his Escrow Funds;

 

(e) removal of any deposits made in error; and

 

(f) termination of the account.

 

6.3.3. Account Requirements.  Each Custodial T&I Account is to be designated in the name of the Servicer acting as an agent for the individual related Borrowers to make such

  

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Escrow Item payments in order to show that the account is custodial in nature.  The Servicer is required to keep records identifying each Borrower’s payment deposited into the account.

 

6.3.4. Account Balance.  The Servicer must never allow any Custodial T&I Account to become overdrawn as to any individual related Borrower.  If there are insufficient funds in the account, the Servicer must advance its own funds to cure the overdraft.

 

Section 6.4. Eligible Account Investments

 

6.4.1. Eligible Investments Permitted.  Unless prevented or restricted by written notice of the Master Servicer pursuant to Section 6.4.5 hereof, the Servicer may, from time to time, withdraw funds from a Custodial P&I Account, Custodial Subsidy Account or Custodial Buydown Account, and immediately invest such funds in Eligible Investments in accordance with this Agreement.  Upon the maturity of such Eligible Investments, such funds shall be redeposited into the Eligible Account from which they were drawn or into the Certificate Account.

 

6.4.2. Eligible Investment Restrictions.  No Eligible Investment shall be sold or disposed of at a gain prior to maturity unless the Servicer has obtained the consent of the Master Servicer.

 

6.4.3. Eligible Investment Income.  All income (other than any gain from a sale or disposition of the type referred to in Section 6.4.2 hereof) realized from any such Eligible Investment shall be for the benefit of the Servicer as additional servicing compensation.

 

6.4.4. Eligible Investment Losses.  The amount of any losses incurred in respect of any investments permitted under this Section 6.4 shall be deposited in the Certificate Account by the Servicer out of its own funds immediately as realized.  The Master Servicer may, in its reasonable discretion, from time to time, require the Servicer to provide a reasonable amount of security to cover the risk of such investment losses.  To the extent that the Servicer shall not immediately deposit the amount of such losses in the Certificate Account, the Master Servicer may immediately act against such security as well as pursue all other remedies permitted by law.

 

6.4.5. Eligible Investments Reports.  The Servicer shall, at any time provide such information and reports regarding its Eligible Investments under this Agreement as the Master Servicer may request.

 

6.4.6. Inter-Company Uses of Funds.  Notwithstanding anything herein to the contrary, and subject to the proviso set forth below, the Servicer is permitted to withdraw funds from a Custodial P & I Account and commingle such funds with the general assets of the Servicer to be used for general corporate purposes until such time as such funds are required to be remitted to the related Certificate Account; provided, however, that the provisions of this Section 6.4.6 shall be applicable only for so long as (i) a master guarantee substantially in the form of Exhibit A attached hereto has been issued by Wells Fargo & Company for the benefit of the certificateholders of the Mortgage Pass-Through Certificates and is currently in force and (ii) the short-term debt or long-term debt of Wells Fargo & Company is rated by each of the Rating Agencies in its highest short-term or highest long-term rating category or in such lower rating category as would not result in a downgrading or withdrawing of the rating then assigned

  

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to any of the Mortgage Pass-Through Certificates by either Rating Agency or result in any of such rated Mortgage Pass-Through Certificates being placed on credit review status by either Rating Agency.

 

ARTICLE 7

 

MORTGAGE LOAN ACCOUNTING

 

Section 7.1. In General

 

7.1.1. Mortgage Loan Accounting Practices.  The Servicer shall administer the application and accounting of payments made on the Mortgage Loans in accordance with the provisions of this Agreement.

 

7.1.2. Record Keeping.  The Servicer must maintain complete and accurate records of all transactions affecting any Mortgage Loan.  Each Mortgage Loan must be clearly marked to indicate that it is being serviced for the Trustee, its successors and assigns.

 

7.1.3. Record Review.  The Master Servicer and its designee have the right to:

 

(a) conduct reviews and audits of the Servicer’s records and operating procedures during any Business Day; and

 

(b) examine the Servicer’s financial records, the Borrowers’ Escrow Funds records and any and all other relevant documents and materials,  whether held by the Servicer or by another on behalf of the Servicer, to ensure compliance with terms and conditions of this Agreement and the Master Servicer’s standards.

 

Section 7.2. Mortgage Loan Records

 

7.2.1. Account Records.  Permanent Mortgage Loan account records must be maintained by the Servicer for each Mortgage Loan.  Each account record must be identifiable by the Servicer Loan Number.

 

7.2.2. Account Record Information.  The Servicer shall maintain the following information for each Mortgage Loan in a readily accessible form:

 

(a) the Master Servicer Loan Number;

 

(b) the current Unpaid Principal Balance;

 

(c) the date of receipt, amount of payment and distribution of such payment for each Monthly Payment received with respect to such Mortgage Loan as to each related Due Date;

 

(d) for ARM Loans, the current Mortgage Interest Rate, all limitations contained in the Mortgage Note with respect to periodic adjustments in the Mortgage

  

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Interest Rate, the scheduled Interest Adjustment Dates, Payment Adjustment Dates, the Gross Margin and the Index;

 

(e) other transactions affecting the amounts due from or payable to the related Borrower;

 

(f) the current outstanding balances of principal and interest deposits, advances, taxes and insurance deposits and unapplied payments with respect to such Mortgage Loan;

 

(g) any overdraft of the Borrower’s Escrow Funds;

 

(h) any servicing reports or loan histories; and

 

(i) any other information customarily maintained by a mortgage loan servicer of one to four family residential mortgages.

 

7.2.3. Accounting Practice.  Except as otherwise provided herein, all Mortgage Loan account records must be maintained according to (a) the Uniform Single Attestation Program for Mortgage Bankers and (b) where applicable, sound and generally accepted accounting practices.

 

7.2.4. Access to Certain Documentation and Information Regarding the Mortgage Loans. At the request of the Master Servicer, the Servicer shall provide to the Master Servicer, the Office of Thrift Supervision, the FDIC and the supervisory agents and examiners of the Office of Thrift Supervision and the examiners of the FDIC, as appropriate, access to the documentation regarding the Mortgage Loans required by applicable regulations of the Office of Thrift Supervision or the FDIC, such access being afforded without charge but only upon reasonable request and during normal business hours at the offices of the Servicer designated by it.  The Servicer shall permit such representatives to photocopy any such documentation and shall provide equipment for that purpose at a charge reasonably approximating the cost of such photocopying to the Servicer.

 

Section 7.3. Accounting Procedures

 

7.3.1. Principal and Interest Computation.  All Mortgage Loans must amortize with interest calculated and paid in arrears.  Under this method, the interest due from a Borrower on a Due Date is calculated based on (a) the Unpaid Principal Balance of the related Mortgage Loan prior to application of the principal portion of the related current Monthly Payment, (b) thirty days interest at the related Mortgage Interest Rate and (c) adjusted as herein provided for the effects of Curtailments, Partial Liquidation Proceeds, Prepayments in Full and Liquidations.  The calculated interest portion is then subtracted from the related Monthly Payment to obtain the principal portion.  The principal portion is then applied to the Unpaid Principal Balance of the related Mortgage Loan.  The amount to be applied to interest for a multiple installment must be calculated using the Unpaid Principal Balance of the related Mortgage Loan remaining after the previous interest calculation and principal application.

  

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7.3.2. Amortization Requirement.  The amortization of each Mortgage Loan must reduce to zero, or as to Balloon Loans, the respective Balloon Amount, at the end of the Mortgage Loan term through the application of regular monthly payments.

 

7.3.3. [Reserved].

 

7.3.4. Interest Calculations.  Monthly interest calculations for periods of a full month must be based on a 30-day month and a 360-day year.  Factors used for such calculations should be carried to a minimum of three decimal places.  The dollar amount of any interest payment shall be carried out to a minimum of three decimal places.  Interest calculations for a period of less than a full month must be based on a 365-day year.

 

7.3.5. Buydown Loans.  The Servicer must amortize a Mortgage Loan for which Buydown Funds are applied at the Mortgage Interest Rate, not at the buy-down rate, in order to ensure that payments are collected to amortize properly the Mortgage Loan.

 

Section 7.4. Application Procedure

 

7.4.1. Application Priority.  A payment from a Borrower will normally consist of interest, principal, deposits for insurance and taxes and late charges, if applicable.  Payments received from Borrowers must be applied in the order provided for in the related Security Instrument.  To the extent not inconsistent with the related Security Instrument, such payments shall be applied in the following order:

 

(a) required monthly interest;

 

(b) required monthly principal;

 

(c) deposits for taxes and insurance;

 

(d) prepayment charges; and

 

(e) any fees which may be retained by the Servicer, including late charges, returned check fees, and assumption fees.

 

7.4.2. Reapplication of Prior Payments.  If the Servicer reapplies prior prepayments or accumulated Curtailments for payment of subsequent installments it shall promptly notify the Master Servicer of such reapplication and shall follow any instructions of the Master Servicer in respect of such reapplication.

 

7.4.3. Advance Payments.  Payments made by the Borrower to satisfy future installments must be accounted for as prepaid installments of principal and interest.  The Servicer should contact the Borrower if there is a question about the Borrower’s intention in making any unscheduled payment.

 

Section 7.5. Curtailments

  

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7.5.1. Curtailment Amount.  The Servicer may accept Curtailments at any time.  If a Mortgage Loan is delinquent, funds received must first be applied to bring the Mortgage Loan current.  If there are excess funds after the application of amounts received from the Borrower to pay the related Monthly Payment, the excess funds represent a Curtailment and may be applied as a partial principal prepayment.

 

7.5.2. Curtailment Application.  If a Curtailment is received on or after the Due Date, the Servicer may either (i) retroactively apply the Curtailment to the Scheduled Principal Balance of the related Mortgage Loan as of the Due Date, or (ii) to the extent permitted by law and the Mortgage Loan, apply such Curtailment at the end of the current period.  The interest portion of the next installment due is then calculated based on the Unpaid Principal Balance of the related Mortgage Loan after application of the Curtailment.

 

7.5.3. Effect of Curtailment.  A Curtailment may not be used to reduce the related Mortgage Interest Rate for any Mortgage Loan or to postpone the Due Date of any payment.

 

7.5.4. Curtailment Transmission.  Each Curtailment must be deposited into the related Custodial P&I Account within one Business Day after receipt and must be remitted no later than the regularly scheduled Monthly Remittance to the related Certificate Account.

 

Section 7.6. Liquidations

 

7.6.1. Month End Interest.  If a Prepayment in Full of a Mortgage Loan occurs, such prepayment is received by the Servicer after the Applicable Unscheduled Receipt Period ending in the month in which such prepayment occurs, and the Servicer does not receive a full 30 days of interest (calculated on a 30-day month, 360-day year basis) on the prepaid amount for the month in which such Prepayment in Full occurs, the Servicer must pay the Month End Interest on all such Mortgage Loans so prepaid in full on the Remittance Date in the month following the month of such prepayment.  Any Month End Interest Shortfall for any month shall not be recoverable from the Servicer or any other source in the future.  The payment of Month End Interest by the Servicer, as provided for above, shall not be an “advance” and shall not be reimbursable from the proceeds of any Mortgage Loan.

 

7.6.2. Liquidation Reports.  The Servicer will report information with respect to Liquidations in the monthly reports delivered to the Master Servicer by the eighteenth calendar day of each succeeding month.

 

7.6.3. Deposit of Funds.  Within one day after the Liquidation of a Mortgage Loan, the Servicer shall deposit the related Liquidation Proceeds together with the related Month End Interest into the related Custodial P&I Account.

 

7.6.4. Document Request.  After any Liquidation, the Servicer must complete and send a Request for Release of Documents to the Master Servicer to ensure the release of documents within the period required by applicable state law.

 

Section 7.7. Realized Losses

  

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7.7.1. Liquidation Realized Loss Determination.  With respect to the calculation of a Realized Loss suffered on the related Mortgage Loan on a Liquidation of such Mortgage Loan or pursuant to Section 17.7.3, the amount of such Realized Loss is equal to (a) the sum of:

 

(i) Unpaid Principal Balance;

 

(ii) unpaid interest accrued at the related Mortgage Interest Rate;

 

(iii) attorneys’ fees and other foreclosure and sale expenses;

 

(iv) unpaid taxes;

 

(v) unpaid property maintenance expenses;

 

(vi) unpaid insurance premiums; and

 

(vii) hazard loss expenses;

 

less the sum of:

 

(i) the balance of Escrow Funds, if any;

 

(ii) any refund of any Hazard Insurance premium;

 

(iii) rental income receipts;

 

(iv) Insurance Proceeds or PMI Advances;

 

(v) cash proceeds of any foreclosure sale;

 

(vi) proceeds from sale of a REO; and

 

(vii) any amounts received pursuant to bankruptcy or insolvency proceedings.

 

7.7.2. Bankruptcy Realized Loss Determination.  With respect to the calculation of a Realized Loss on a Mortgage Loan subject to a Deficient Valuation, the amount of the Realized Loss is the difference between the Unpaid Principal Balance of the related Mortgage Loan immediately prior to the Deficient Valuation and the Unpaid Principal Balance as reduced by the Deficient Valuation.

 

7.7.3. Reporting Requirement.  As to any defaulted Mortgage Loan, the Servicer must account to, and report in writing to, the Master Servicer as to any Realized Loss (or gain) upon the Liquidation or Deficient Valuation in respect of such Mortgage Loan.

 

7.7.4. Servicer’s Liability.  Except in the case of a purchase by the Servicer of a Mortgage Loan from the Trustee thereof due to a breach of a representation or warranty by the Servicer or failure to perform the servicing procedures as set forth in this Agreement, the Servicer is not liable for any Realized Loss on any Mortgage Loan.

  

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ARTICLE 8

 

ARM LOANS

 

Section 8.1. ARM Loan Servicing

 

8.1.1. In General.  It is the Servicer’s responsibility to enforce each ARM Loan (and any other Mortgage Loan) according to its terms and in conformity with all applicable law.  The Servicer’s records must, at all times, reflect the then-current Mortgage Interest Rate and Monthly Payment for such ARM Loan and the Servicer must timely notify the Borrower of any changes to the Mortgage Interest Rate and/or the Borrower’s Monthly Payment.

 

8.1.2. Servicer’s Liability.  If the Servicer fails to make either a timely or accurate adjustment to the Mortgage Interest Rate or Monthly Payment for an ARM Loan or to notify the Borrower of such adjustments, and subsequently receives a short Monthly Payment, the Servicer must pay from its own funds any shortage until the Servicer has made the necessary corrections in conformance with applicable law so as to secure the correct Monthly Payment from the Borrower.  In the event that such error results in the Borrower making a Monthly Payment in excess of the amount which he should have made if such adjustment were properly calculated, then the Servicer shall promptly (a) make the required adjustment to the Borrower’s Monthly Payment and Mortgage Interest Rate so that they reflect the amounts as properly calculated as of the related Payment Adjustment Date, (b) refund to the Borrower the amount of any such excess received by the Servicer from the related Payment Adjustment Date and (c) deduct from the respective Custodial P&I Account or the Certificate Account the amount of such refund to reimburse the Servicer for making such refund.  If the Servicer’s failure to make a scheduled change affects the Trustee’s or Servicer’s rights to make future adjustments under the terms of the ARM Loan, the Servicer shall be required to purchase the ARM Loan.  Any amounts paid by the Servicer pursuant to this Section shall not be an advance and shall not be reimbursable from the proceeds of any Mortgage Loan.

 

8.1.3. Adjustment Reports.  All Mortgage Interest Rate and Monthly Payment adjustments must be reported to the Master Servicer in an ARM Loan change report.

 

8.1.4. Substitute Index.  If the Index required to be used to determine the Mortgage Interest Rate for a Mortgage Loan is not available on an Interest Adjustment Date, the Servicer, will select an index that is based on comparable information, over which the Servicer has no control and that is readily verifiable.

 

Section 8.2. Notice of Periodic Adjustment

 

8.2.1. Notice Requirement.  The Notice of Periodic Adjustment is the legal and official announcement to the Borrower of an ARM Loan of a change in the Mortgage Interest Rate or the Monthly Payment.  The Servicer must send this notice to the Borrower, as stated in the related Mortgage Note and in accordance with applicable law, and at least 25 days before each Payment Adjustment Date.

  

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8.2.2. Notice Contents.  Each Notice of Periodic Adjustment pertaining to an ARM Loan shall meet the requirements and specifications of the Security Instrument, the Mortgage Loan, and applicable federal or state laws or regulations.

 

Section 8.3. ARM Loan Conversion

 

8.3.1. Servicer’s Determination.  In the event a Borrower with a convertible ARM Loan exercises its option to convert such Mortgage Loan to a fixed interest rate, the Servicer will determine whether the conditions and qualifications for conversion have been met and determine the fixed rate to be applied to such Mortgage Loan pursuant to the terms of the related Mortgage Note.

 

8.3.2. Conversion Notification.  Upon any such conversion, the Servicer shall prepare an ARM Loan conversion notification and send such notification to the Master Servicer within three Business Days after the conversion.

 

8.3.3. Purchase by Servicer.  The Servicer shall purchase such Converted Mortgage Loan from the applicable Trustee at the Purchase Price by depositing the Purchase Price into the Custodial P&I Account.

 

ARTICLE 9

 

MORTGAGE LOAN FILES

 

Section 9.1. Owner Mortgage Loan Files and Retained Mortgage Loan Files

 

9.1.1. Owner Mortgage Loan File and Retained Mortgage Loan File Requirements.  For each Mortgage Loan, the Servicer shall ensure that an appropriate Custodian will maintain an Owner Mortgage Loan File on behalf of the Trustee that contains each of the documents or instruments specified in Section 2.01(a) of the Pooling and Servicing Agreement.

 

For each Mortgage Loan after a Document Transfer Event, the Servicer shall ensure that an appropriate Custodian will maintain the Retained Mortgage Loan File on behalf of the Trustee that contains each of the documents or instruments specified in Section 2.01(b) of the Pooling and Servicing Agreement.

 

9.1.2. Custodian.  If the original Security Instrument or the Assignment from the respective prior owner of the related Mortgage Loan to the Trustee or, if applicable, to the Trust Administrator, on behalf of the Trustee, has not been delivered to the Custodian on the date of the transfer of ownership of such Mortgage Loan to the Trustee because it is in the process of being recorded, the Servicer shall, within five Business Days after its receipt of the original recorded document, deliver it to the Custodian.  The Servicer shall promptly deliver to the Custodian any other Mortgage Loan Document to be included in an Owner Mortgage Loan File, charged to the custody of the Custodian, that comes into Servicer’s possession.

 

9.1.3. Release of Documents from Owner Mortgage Loan File or Retained Mortgage Loan File.  In the event any document contained in an Owner Mortgage Loan File or,

  

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after the Document Transfer Event, a Retained Mortgage Loan File, is needed by the Servicer for the proper servicing of a Mortgage Loan, the Servicer must send to the Trustee or the Custodian, as the case may be, two copies of a Request for Release as defined in the Pooling and Servicing Agreement of documents.  The Master Servicer hereby authorizes the Trustee or the Custodian, as the case may be, to release such Owner Mortgage Loan Files or Retained Mortgage Loan Files after receipt of such Servicer’s request (i) upon payment in full of such Mortgage Loan, (ii) when necessary for foreclosure or (iii) for such other cause as the Master Servicer deems appropriate, in its reasonable discretion.  The Servicer shall be responsible for such Mortgage Loan Documents while they are in its possession and will be deemed to hold such Owner Mortgage Loan Files or Retained Mortgage Loan Files in trust for the benefit of the Trustee.  If such Mortgage Loan has not been paid in full or otherwise liquidated, the Servicer shall promptly return such Owner Mortgage Loan Files or Retained Mortgage Loan Files when they are no longer required.  Notwithstanding the foregoing, unless such Mortgage Loan has been liquidated or the related Owner Mortgage Loan Files or Retained Mortgage Loan Files have been delivered to an attorney, a public trustee or other public official in order to foreclose on the related Mortgaged Property, all such Owner Mortgage Loan Files or Retained Mortgage Loan Files released by the Trustee or the respective Custodian, as the case may be, must be returned within 21 calendar days after their release.

 

9.1.4. Execution by Trustee.  In the event the Trustee’s signature is required on any document with respect to a Mortgage Loan for any reason, including payment in full, assumption or foreclosure, the Servicer shall deliver to the Master Servicer a written notice requesting that the Trustee execute such documents and certifying as to the reason such documents are required.  Upon receipt of such executed documents, the Servicer shall record, file or deliver such documents as appropriate for the proper servicing of such Mortgage Loan.

 

9.1.5. Representing Party Officers’ Certificate.  If it is necessary for the respective Representing Party to deliver an Officers’ certificate with respect to the existence of a Title Insurance policy or a Primary Mortgage Insurance policy for several Mortgage Loans, the Master Servicer may consent to the delivery of a single Officers’ certificate of the respective Representing Party for a schedule of mortgage loans in lieu of a separate Officers’ certificate for each such Mortgage Loan.

 

9.1.6. Custodial Fees.  The Servicer is responsible for the related ongoing fees of each Custodian.  If for any reason at any time the Master Servicer pays custodial fees, the Servicer will promptly reimburse the Master Servicer for such payments.

 

Section 9.2. Servicer Mortgage Loan Files

 

9.2.1. Servicer Mortgage Loan File Requirements.  The Servicer must maintain a Servicer Mortgage Loan File for each Mortgage Loan, which may be distributed among several different files, each of which shall be clearly marked with the Servicer Loan Number and shall be readily accessible to the Master Servicer during regular business hours, that includes the following:

  

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(a) copies of each of the documents listed in Section 2.01 of the Pooling and Servicing Agreement that are held by the Custodian as part of the Owner Mortgage Loan File or Retained Mortgage Loan File, if applicable;

 

(b) where such coverage is not provided under a blanket policy maintained by the Servicer, an original Hazard Insurance policy, or a copy thereof, or a certificate of insurance issued by the applicable insurer or its agent indicating such a policy is in effect for the related Mortgaged Property;

 

(c) a Flood Insurance policy or a certificate of insurance issued by the insurer or its agent indicating that such a policy is in effect with respect to the related Mortgaged Property, if Flood Insurance is required pursuant to the provisions of Section 15.4 or Section 16.6 hereof for such Mortgaged Property;

 

(d) originals or copies of all documents submitted to a Primary Mortgage Insurer for credit and property underwriting approval with respect to the related Mortgaged Property, if Primary Mortgage Insurance is required pursuant to the provisions of Section 15.2 hereof for such Mortgaged Property;

 

(e) the originals of all RESPA and Regulation Z disclosure statements executed by the Borrower with respect to such Mortgage Loan;

 

(f) the related Appraisal Report made at the time such Mortgage Loan was originated;

 

(g) the HUD-1 or other settlement statement for the purchase or refinance, as the case may be, of the Mortgaged Property by the Borrower and mortgagor under the related Mortgage Note and Security Instrument with respect to such Mortgage Loan;

 

(h) evidence of any tax service contract, if any;

 

(i) copies of documentation, including the appropriate approval by the Master Servicer, relating to any modifications to the related original Mortgage Loan Documents;

 

(j) documentation, including the appropriate approval by the Master Servicer, relating to any releases of any collateral supporting such Mortgage Loan;

 

(k) collection letters or form notices sent to the Borrower with respect to such Mortgage Loan, but only if the Servicer does not maintain separate collection files, including all collection letters or notices,  indexed by Borrower;

 

(l) foreclosure correspondence, bankruptcy correspondence and legal notifications, if applicable with respect to the related Mortgaged Property; and

 

(m) all other related Mortgage Loan Documents which are customarily maintained in accordance with Prudent Servicing Practices in a mortgage loan file in

  

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order to properly service a mortgage loan including, without limitation, documents regarding title claims.

 

9.2.2. Servicer Mortgage Loan File Access.  The Servicer acknowledges that each Servicer Mortgage Loan File shall be held in trust for the Trustee.  The Servicer further acknowledges that the Master Servicer may, from time-to-time, request immediate delivery of any or all Mortgage Loan records and documents to the Master Servicer, the Trustee, the Custodian or another entity designated by the Master Servicer, and the Servicer shall thereupon immediately deliver such records and documents, at the expense of the Servicer.  The Servicer agrees to permit the Master Servicer, from time to time to conduct audits or inspections of any Servicer Mortgage Loan Files at one or more of the Servicer’s offices during normal business hours with advance notice.  The Servicer must grant the Master Servicer access to all books, records and files relating to the Servicer’s systems and procedures for servicing Mortgage Loans as to all Servicer Mortgage Loan Files or to the Servicer’s compliance with the terms and conditions of this Agreement.

 

9.2.3. Alternate Media.  Subject to any applicable law concerning document retention requirements, the Servicer may maintain any Servicer Mortgage Loan File, or any portion thereof, on microfilm, microfiche, optical storage or magnetic media and may retain the microfilm, microfiche, optical storage or magnetic media in lieu of hard copies of the documents required to be maintained in such Servicer Mortgage Loan Files.  The following requirements must be met:

 

(a) the process must accurately reproduce originals onto a durable medium;

 

(b) unless the Master Servicer provides otherwise by notice to the Servicer, the Master Servicer Loan Number must be clearly marked on the copies or optical storage or magnetic media;

 

(c) the copies or optical storage or magnetic media must be easily transferable to legible hard copies of the material relating to the Mortgage Loans; and

 

(d) backup copies of the microfilm, microfiche, optical storage or magnetic media must be made by the Servicer and retained off-site to protect against fire and other hazard losses.

 

If the copies, optical storage or magnetic media become damaged or lost for any reason, the Servicer must bear the entire cost of restoring each Servicer Mortgage Loan File and any other related documents which had been transferred to microfilm, microfiche, optical storage or magnetic media.  The Servicer also must bear all costs of reproducing legible hard copies reasonably requested by the Master Servicer.  The Master Servicer may reasonably request copies of any Servicer Mortgage Loan File in optical storage or magnetic media which the Servicer has previously transferred to magnetic media or optical storage, as the case may be.  The Servicer shall furnish to the Master Servicer optical storage or magnetic media copies of the requested Servicer Mortgage Loan File in such format as maintained by the Servicer at the Servicer’s expense.

  

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Section 9.3. Requisite Form

 

9.3.1. Form of Endorsements.  Except for endorsements in blank, the Servicer shall require that endorsements of any Mortgage Notes comply with the format specified in Section 2.01(c) of the Pooling and Servicing Agreement.

 

9.3.2. Form of Assignment.  Except for assignments in blank or in the case of any Security Instrument registered in the name of MERS, the Servicer shall require that assignments of any Security Instrument comply with the following format specified in Section 2.01(c) of the Pooling and Servicing Agreement.

 

ARTICLE 10

 

ESCROWS

 

Section 10.1. Escrow Criteria

 

10.1.1. Escrow Requirement.  Unless, (a) at the origination of a Mortgage Loan the Borrower is not required to make Escrow Item payments thereafter, (b) Escrow Funds collection has been waived pursuant to Section 10.5.1 hereof, or (c) the collection of Escrow Funds is precluded by applicable law, the Servicer must continue to collect 1/12th of the annual total for all Escrow Items with each Monthly Payment on such Mortgage Loan, as determined pursuant to Section 10.3.1 hereof.

 

10.1.2. Mortgage Loans without Escrow.  If the Servicer is not required to collect Escrow Funds on a Mortgage Loan, the Servicer shall require proof of payment of all taxes, ground rents, assessments, insurance or other charges, or use other means commonly used in the mortgage industry to ascertain that such items are paid on a timely basis.

 

Section 10.2. Payment of Escrow Items

 

10.2.1. Escrow Payment Obligation.  Where the Servicer is responsible for the collection of Escrow Funds with respect to a Mortgage Loan, the Servicer shall promptly pay all bills for any Escrow Items in such a manner as to avoid late charges or penalties and to take advantage of any available discount.

 

10.2.2. Escrow Item Payments.  Where (a) the Servicer has been collecting Escrow Funds with respect to a Mortgage Loan, or (b) the Borrower has not been obliged to make Escrow Funds payments or such payments have been waived and such Borrower has failed to timely pay obligations which otherwise would be Escrow Items, the Servicer must pay any obligation (i) which could become a first lien on the related Mortgaged Property, or (ii) to maintain in force the applicable Insurance Policies.  Where Escrow Funds are maintained by the Servicer, such obligations should be paid from the Borrower’s Escrow Funds, or in accordance with Section 10.2.3 hereof.

 

10.2.3. Escrow Fund Insufficiency.  When a Borrower’s Escrow Funds are insufficient to pay taxes, assessments and premiums, when due, subject to applicable law, the

  

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Servicer must attempt to obtain the additional funds from such Borrower.  If sufficient additional funds have not been recovered by the time the payment is due, the Servicer must advance its own funds to ensure prompt payment.  The Servicer may elect to advance funds prior to attempting to obtain the additional funds from such Borrower; however, to the extent permitted by applicable law, the Servicer shall thereafter attempt to obtain the advanced funds from the Borrower or collect such advanced funds as described in Section 10.3.3.

 

10.2.4. Nonpayment Notice.  The Servicer must notify the Master Servicer immediately of any Escrow Item that does not conform to either FNMA or FHLMC standards.

 

Section 10.3. Escrow Fund Determination

 

10.3.1. Escrow Funds Analysis.  Subject to all applicable Federal, State and local laws, the Servicer must conduct an analysis of each Borrower’s Escrow Funds at least annually to determine the monthly deposits which must be made by such Borrower.  The analysis shall be performed based upon (a) reasonable projections of the expenses to be paid from the Escrow Funds and (b) that as such expenses come due, the Escrow Funds balance shall at all times be sufficient to effect the payment of such expenses, unless a lower amount is required by applicable law.  Each Borrower must receive a statement of this analysis.  The analysis also must determine whether there is a surplus or deficiency in such Borrower’s Escrow Funds.

 

10.3.2. Escrow Fund Surplus.  A surplus in a Borrower’s Escrow Funds shall be refunded to such Borrower or taken into consideration in determining the amount to be collected for Escrow Funds.

 

10.3.3. Escrow Fund Deficiency.  Where it is determined that a deficiency exists in such Borrower’s Escrow Funds, such Borrower may be requested to pay the shortage in full or the deficiency may be taken into consideration in determining the amount to be collected for Escrow Funds during the next twelve months.

 

Section 10.4. Records

 

10.4.1. Escrow Funds Records.  The Servicer shall keep records of Escrow Funds collected from each Borrower.

 

10.4.2. Escrow Obligations Records.  The Servicer must maintain accurate records of the imposition of Escrow Item obligations and the payment of Escrow Items.

 

Section 10.5. Escrow Waiver

 

10.5.1. Waiver Conditions.  For any Mortgage Loan that has amortized down so that its current LTV is 80% or less, the Servicer may waive the Borrower’s future obligation to make Escrow Funds payments provided:

 

(a) the Unpaid Principal Balance of such Mortgage Note divided by the value of the Mortgaged Property based on an appraisal made within 60 days of the date of determination is 80% or less;

  

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(b) such Mortgage Loan is at least 12 months old; and

 

(c) such Mortgage Loan has not been more than 30 days delinquent during the preceding 12 months.

 

10.5.2. Waiver Rescission.  The Servicer shall enforce the Escrow Funds requirements with respect to any Mortgage Loan if the related Borrower fails to act responsibly in making the required payments.

 

ARTICLE 11

 

COLLECTION AND SERVICING PRACTICES

 

Section 11.1. General Servicing Requirements

 

11.1.1. Servicing Practices.  The Servicer agrees to service Mortgage Loans in accordance with the requirements of this Agreement.  In general, where not otherwise expressly required by the provisions of this Agreement, the Servicer shall service the Mortgage Loans in accordance with Prudent Servicing Practices and generally in accordance with FNMA guidelines.  As to each Mortgage Loan, the Servicer shall take all such actions as may be necessary to preserve the lien of the related Security Instrument upon the related Mortgaged Property.

 

11.1.2. Tax Returns and Other Reports.  Unless otherwise instructed by notice from the Master Servicer, the Servicer shall forward to each Mortgagor such forms and furnish such information within the control of the Servicer as are required by the Code to be furnished to them and shall prepare and file annual reports required by the state authorities.  By way of example, the Servicer shall provide the Mortgagors with the reports required under Code Sections 6050H (e.g., reporting on Form 1098 any mortgage interest, including points, received and any reimbursements of qualified mortgage interest) and 6050J (Abandonments and Foreclosure of Real Property, Form 1099-A).

 

11.1.3. Servicer Internal Controls.  The Servicer shall maintain at all times an adequate system of audit and internal controls in accordance with Prudent Servicing Practices.

 

11.1.4. Pool Insurance Compliance.  Notwithstanding any other provision of this Agreement, the Servicer shall at all times comply with all applicable Pool Insurance policy requirements so as to assure the full benefit of such Pool Insurance policy to the Trustee.

 

11.1.5. Primary Mortgage Insurance Compliance.  Notwithstanding any other provision of this Agreement, the Servicer shall at all times comply with all applicable Primary Mortgage Insurance policy requirements so as to assure the full benefit of such Primary Mortgage Insurance policy to the Trustee.

 

Section 11.2. Delegation of Duties

  

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11.2.1. Permissible Delegations.  Without the written consent of the Master Servicer authorizing further delegations, the only servicing duties which the Servicer may elect to delegate, by agency, subcontract or otherwise, and the only categories of such delegees, are as follows:

 

(a) professional collection agencies to perform those duties and functions for the collection of delinquent amounts due on any Mortgage Loan that are customarily performed by such agencies in the locality where the related Mortgaged Property are located;

 

(b) title insurance companies, escrow companies and trust companies to issue or provide reports reflecting the condition of title to any Mortgaged Property and services incidental to the foreclosure or acquisition in lieu of foreclosure of any Mortgaged Property, or the sale or disposition of any Mortgaged Property acquired by the Servicer;

 

(c) attorneys licensed to practice in the state where the related Mortgaged Property is located to perform customary legal services in connection with the foreclosure or acquisition of such Mortgaged Property or the sale or disposition of such Mortgaged Property acquired by the Servicer at or in lieu of foreclosure, or for the collection of delinquent sums owed on any Mortgage Loan;

 

(d) professional property inspection companies and appraisers to conduct routine inspections of, and provide written inspection reports on,  any Mortgaged Property as required by this Agreement;

 

(e) title companies, escrow companies and real estate tax service companies to provide periodic reports as to the amount of real estate taxes due on any Mortgaged Property and the due date or dates of each required installment;

 

(f) credit bureaus or credit reporting companies to provide credit reports on Borrowers or persons who have applied to assume any Mortgage Loans;

 

(g) construction companies, contractors and laborers to provide labor, materials and supplies necessary to protect, preserve and repair any Mortgaged Property as required by this Agreement;

 

(h) lock box providers or payment processing administrators to provide payment processing services;

 

(i) hazard insurance servicing companies to provide periodic reports as to the amount of hazard insurance premiums due on any Mortgaged Property and the Due Date or Due Dates of each required premium payment;  and

 

(j) such other third party service providers as the Servicer, in accordance with Prudent Servicing Practices, may deem appropriate.

  

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11.2.2. Delegee’s Qualifications.  The Servicer shall assure that each Person retained to provide any of the services set forth in Section 11.2.1 hereof is fully licensed and holds all required Federal, State or local governmental franchises, certificates and permits necessary to conduct the business in which he is engaged and that such Person is reputable, knowledgeable, skilled and experienced and has the necessary personnel, facilities and equipment required to provide the services for which he is retained.

 

11.2.3. Responsibility for Costs.  Any Person retained in accordance with Section 11.2.1 hereof shall be retained solely for the Servicer’s account and at the Servicer’s sole expense and shall not be deemed to be an agent or representative of the Trustee, its successors or assigns, or the Master Servicer or its successors or assigns.

 

11.2.4. Servicer’s Liability.  The Servicer shall remain liable to the Master Servicer for the performance of the Servicer’s duties and obligations under this Agreement, notwithstanding the delegation of any servicing function pursuant to this Section 11.2.

 

Section 11.3. Due-on-Sale Clause Enforcement

 

11.3.1. Enforcement Requirement.  The Servicer is required to enforce the Due-on-Sale Clause on any Mortgage Loan to the extent permitted by applicable law upon the transfer of title of the related Mortgaged Property unless (a) a Mortgage Loan is assumable pursuant to the terms of the related Mortgage Note Assumption Rider, or (b) enforcement of the Due-on-Sale Clause will jeopardize the Primary Mortgage Insurance coverage on such Mortgage Loan.

 

11.3.2. Litigation Considerations.  Where, in the Servicer’s judgment, the issue of enforceability is reasonably expected to be litigated, the Servicer shall obtain the written consent of the Master Servicer before enforcing any Due-on-Sale Clause.

 

11.3.3. Approval Requirement.  In all circumstances of an unapproved transfer of a Mortgaged Property initiated by the Borrower, the Servicer is required to promptly notify the Master Servicer and, where applicable, the respective Primary Mortgage Insurer and/or the respective Pool Insurer, of such transfer and obtain written approval before initiating enforcement proceedings.

 

11.3.4. Exempt Transactions.  (a) The Servicer shall not be required to enforce the due-on-sale (or transfer) provision of this Agreement for certain types of property transfers or related transactions.  The Servicer shall process these exempt transactions without the approval or notification of the Master Servicer.  In each case, the Mortgaged Property shall remain subject to the lien of the related Mortgage Loan, and each transferee or grantee described below shall take subject to such lien.  The following transactions shall be deemed to be exempt transactions and shall require the review and approval of the Servicer only prior to transfer:

 

(i) a transfer of the Mortgaged Property to the surviving party on the death of a joint tenant or a tenant by the entirety;

  

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(ii) a transfer of the Mortgaged Property to a junior lienholder as the result of a foreclosure or the acceptance of a deed in lieu of foreclosure for the subordinate mortgage;

 

(iii) a transfer of the Mortgaged Property (or, if the Borrower is an inter vivos revocable trust, a transfer of a beneficial interest in such trust) to a relative of a deceased Borrower (or, in the case of an inter vivos revocable trust Borrower,  to a relative of the individual who established the trust), provided that the transferee will occupy the Mortgaged Property;

 

(iv) a transfer of the Mortgaged Property (or, if the Borrower is an inter vivos revocable trust, a transfer of a beneficial interest in such trust) to the spouse, child(ren), parent(s), brother(s), or sister(s), grandparent(s), or grandchild(ren) of the Borrower (or, in the case of an inter vivos revocable trust Borrower, of the individual who established the trust),  provided that the transferee will occupy the Mortgaged Property;

 

(v) a transfer of the Mortgaged Property (or, if the Borrower is an inter vivos revocable trust, a transfer of a beneficial interest in such trust) to a spouse of the Borrower (or, in the case of an inter vivos revocable trust Borrower, of the individual who established the trust) under a divorce decree or legal separation agreement or from an incidental property settlement agreement, provided that the transferee will occupy the Mortgaged Property;

 

(vi) a transfer of a Mortgaged Property that is jointly owned by unrelated co-borrowers from one of the Borrowers to the other, provided that the Borrower who is gaining full ownership of the Mortgaged Property shall continue to occupy it and the transfer occurs after at least 12 months have elapsed since the Mortgage Loan was closed;

 

(vii) a transfer of the Mortgaged Property (or, if the Borrower is an inter vivos revocable trust, a transfer of a beneficial interest in such trust) into an inter vivos revocable trust (or, if the Borrower is an inter vivos revocable trust, into a new trust), so long as the Borrower (or the individual who established the original inter vivos revocable trust) will be the beneficiary of the trust and the occupant of the Mortgaged Property;

 

(viii) the granting of a leasehold interest in the Mortgaged Property that has a term of three or fewer years and does not provide an option to purchase the Mortgaged Property, or a renewal option that would allow the term to extend beyond three years;

 

(ix) the creation of a subordinate lien upon the Mortgaged Property, provided that there is no transfer of occupancy rights therein; or

 

(x) the creation of a purchase money security interest for household appliances which are situated in or upon the Mortgaged Property.

  

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(b) If the individual or entity transferring the Mortgaged Property requests a release of liability, the Servicer must review the credit and financial capacity of the individual or entity receiving the Mortgaged Property.  The Servicer may approve the release of liability if it believes the recipient is capable of assuming the mortgage obligations and, where applicable, with the consent of the respective Primary Mortgage Insurer and/or the respective Pool Insurer.  If the Servicer does not believe that the recipient is credit worthy or if the consent of the respective Primary Mortgage Insurer and/or the respective Pool Insurer is required but not obtained, the Servicer shall deny the request for the release of liability, although the transfer may still be processed without the release.  If the request is denied based solely on the Primary Mortgage Insurer’s or the respective Pool Insurer’s decision,  the denial letter should state that fact.

 

(c) The Servicer shall advise (i) each insurance company providing Hazard Insurance and Flood Insurance, where applicable, (ii) the relevant tax authorities, where applicable, (iii) the respective Primary Mortgage Insurer and/or the respective Pool Insurer and (iv) other interested parties when it processes transactions under this Section 11.3.4.  The Master Servicer does not need to be notified about such a transaction unless the Servicer agrees to a release of liability under Section 11.3.4(b).

 

Section 11.4. Assumptions

 

11.4.1. Assumption Requirements.  Any Assumption permitted under this Agreement shall be performed in accordance with Prudent Servicing Practices.  In connection with an Assumption of an assumable Mortgage Loan, the Servicer shall process such Assumption as provided for in the Mortgage Note or the Mortgage Note Assumption Rider and shall verify that:

 

(a) no material term of the Mortgage Note (including, but not limited to, the Mortgage Interest Rate, the remaining term to maturity,  the Gross Margin, the Index, the Maximum Lifetime Mortgage Interest Rate,  the Minimum Lifetime Mortgage Interest Rate, and any Periodic Rate Cap or any Periodic Payment Cap) may be changed in connection with such Assumption;

 

(b) that the new Borrower qualifies for credit under the Master Servicer’s criteria and standards for similar loans;

 

(c) where applicable, the respective Primary Mortgage Insurer,  and/or the respective Pool Insurer has in advance approved in writing such Assumption of such Mortgage Loan by the new Borrower and such Mortgage Loan will continue to be insured by such Primary Mortgage Insurer and/or such Pool Insurer;

 

(d) the documents relating to such Assumption (i) create a valid and enforceable promise to pay the Unpaid Principal Balance of the related Mortgage Loan, together with interest thereon in accordance with the related Mortgage Note by the new Borrower and (ii) the related Security Instrument continues to evidence a valid and perfected first lien on the related Mortgaged Property; and

  

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(e) such Mortgage Loan will continue to be a valid first priority security interest upon the related Mortgaged Property.

 

11.4.2. Approval and Release.  In connection with an Assumption of an assumable Mortgage Loan and in accordance with the provisions of the related Mortgage Loan Documents, upon such verification, (a) the Servicer may approve such Assumption and (b) only with the prior written approval of, where applicable, the Primary Mortgage Insurer and/or the Pool Insurer, unless such approval is precluded by the terms of the Mortgage Loan Documents, release the previous Borrower from liability.

 

11.4.3. Notification of Assumption.  The Servicer shall notify the Master Servicer of any Assumption by the eighteenth calendar day of the month following the month in which the Assumption took place using the Assumption Report and shall provide to the Custodian the original assumption agreement.

 

11.4.4. Assumption Fees.  Subject to applicable law or regulation and the provisions of the related Mortgage Note, the Servicer may charge the Borrower and retain a reasonable and customary assumption fee.  Such fee is receivable only from the Borrower directly and may not be withdrawn from any of the custodial accounts maintained hereunder.

 

11.4.5. Disclosure Requirement.  In connection with an Assumption of an assumable Mortgage Loan, the Servicer shall make all disclosures required by applicable law.

 

Section 11.5. Partial Releases and Easements

 

11.5.1. Prerequisites.  The Servicer must take the following actions prior to permitting the grant of a partial release of a Mortgaged Property from the lien of the related Security Instrument, easement, consent to substantial alterations and any other changes affecting the related Mortgage Loan or such Mortgaged Property:

 

(a) where applicable, obtain the respective Primary Mortgage Insurer’s and/or the respective Pool Insurer’s prior written approval;

 

(b) if the value of the released property is more than five thousand ($5,000) dollars, obtain an acceptable Appraisal Report showing the current market value of such Mortgaged Property before and after the release and showing individually both the value of the land and of the improvements thereon;

 

(c) ensure that any and all cash consideration received at least equals the current market value of property or rights to be released regarding such Mortgaged Property;

 

(d) ensure that any and all cash consideration received is applied to the Unpaid Principal Balance of such Mortgage Loan to the extent of the diminution of the value of such Mortgaged Property;

 

(e) cause all legal documents for the transaction to be reviewed;

  

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(f) ensure that such Mortgaged Property, following such release or change, adequately secures the Unpaid Principal Balance of the Mortgage Loan and accrued interest thereon and that the related Loan-to-Value ratio will not be greater than 80%, after giving effect to clause (d) hereof;  and

 

(g) obtain written notification from the respective Title Insurer that the related Title Insurance policy remains fully in effect with respect to such Mortgaged Property, as modified, following such release or change.

 

11.5.2. Release or Modification of Lien.  With the consent, where applicable, of the respective Primary Mortgage Insurer, and/or the respective Pool Insurer, the Servicer may approve applications for partial release of a Mortgaged Property from the lien of the related Security Instrument, easements, consent to substantial alterations and any other changes affecting the related Mortgage Loan or such Mortgaged Property if the perquisites in Section 11.5.1 have been satisfied.  The Servicer shall promptly notify the Master Servicer of any approval under Section 11.5.1. and this Section 11.5.2 affecting the lien upon a Mortgaged Property.

 

11.5.3. Master Servicer’s Approval.  If the Servicer is not able to meet the prerequisites specified in Section 11.5.1 or if the amount of consideration received is less than the reduction in the value of the Mortgaged Property due to the partial release or other changes, the Servicer must obtain the approval of the Master Servicer prior to permitting an application described in Section 11.5.2.  The Servicer shall furnish such information as the Master Servicer shall request in connection with an application under this Section 11.5.3.

 

Section 11.6. Recordation of Assignments

 

11.6.1. Recordation Requirement.  The Servicer must, at its own expense, record the Assignment of each Security Instrument (other than with respect to any Mortgage Loan registered in the name of MERS) to the Trustee or, if applicable, to the Trust Administrator on behalf of the Trustee, as well as any previously unrecorded intervening Assignments.  In the case of any Mortgage Loan registered in the name of MERS, the Servicer shall take all actions as are necessary to cause the Trustee or, if applicable, to the Trust Administrator on behalf of the Trustee, to be shown as the owner of the related Mortgage Loan on the records of MERS for purposes of the system of recording transfers of beneficial ownership of mortgages maintained by MERS.  If any Security Instrument or Assignment is not recorded within the later to occur of (i) the date 120 days after the acquisition of the a Mortgage Loan by the Trustee or, if applicable, the Trust Administrator on behalf of the Trustee, if the Servicer has been servicing such Mortgage Loan from the Trustee’s or, if applicable, the Trust Administrator’s date of acquisition or (ii) the date 120 days after the date the Servicer began servicing such Mortgage Loan, the Master Servicer shall have the right to so effect such recordation at the Servicer’s expense.

 

11.6.2. Extension of Recording Period.  The time to record an Assignment of a Security Instrument may be extended from the end of permissible recordation period set forth in Section 11.6.1 if the Servicer provides an Officer’s certificate acceptable to the Master Servicer certifying that the Servicer has used its best efforts to complete the recordation process for the

  

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Security Instrument and/or Assignment, as applicable, and that the factors preventing completion of the recordation process are beyond the Servicer’s control.

 

11.6.3. Delivery Requirement.  Promptly following the recordation of any Security Instrument or an Assignment, the Servicer shall deliver to the Custodian, unless otherwise directed in writing by the Master Servicer, such Security Instrument or Assignment bearing evidence of recordation or, if the original Security Instrument or Assignment is retained by the recording office, a certified copy of the original recorded Security Instrument or Assignment.

 

Section 11.7. General Servicing Considerations

 

11.7.1. Abandonment.  If the Servicer discovers that any Mortgaged Property is not occupied, the Servicer must immediately attempt to contact the Borrower in order to determine the reason for the vacancy.  If the Servicer determines that such Mortgaged Property has been abandoned, the Servicer, at its own expense, must take all necessary actions to protect such Mortgaged Property from waste, damage and vandalism.  Such expenses shall be recoverable by the Servicer solely from the Liquidation Proceeds of the related Mortgage Loan, if any, or directly from the Borrower.

 

11.7.2. Buydown Funds.  The Servicer must distribute any Buydown Funds in each Custodial Buydown Account in accordance with the terms of the applicable Buydown Agreement.

 

11.7.3. Notification Matters.  Based upon information obtained pursuant to its obligations under Section 12.2.6, the Servicer shall (i) maintain accurate records of and (ii) except in the case of paragraph (f) hereof involving a monetary default of the Borrower addressed by ARTICLE 12 hereof, immediately notify the Master Servicer upon discovering any of the following:

 

(a) deterioration of, waste of, or lack of repair to, any Mortgaged Property, which materially and adversely affects the Value of such Mortgaged Property and the Borrower refuses or is not financially able to make the necessary repairs;

 

(b) sale or transfer of any Mortgaged Property in a manner not approved by the Servicer pursuant to the provisions of this Agreement;

 

(c) material litigation involving any Mortgaged Property;

 

(d) abandonment of any Mortgaged Property;

 

(e) a material default, determined in accordance with Prudent Servicing Practices, under the terms of any Security Instrument, Mortgage Note, Condominium Project or PUD constituent document or similar obligations of a Borrower; or

 

(f) any other situation that may materially and adversely affect the value of any Mortgage Loan.

  

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11.7.4. Eminent Domain.  The Servicer must submit appropriate recommendations and documentation to the Master Servicer and, where applicable the respective Primary Mortgage Insurer and/or the respective Pool Insurer, of any taking by eminent domain if:

 

(a) the Mortgaged Property will be taken in whole and the consideration to be paid to the Borrower will be insufficient to satisfy the Unpaid Principal Balance (plus any unreimbursed Advances) of the related Mortgage Loan, or

 

(b) the Mortgaged Property will be taken in part and (i) the ratio of the (A) Unpaid Principal Balance (plus any unreimbursed Advances) of the Mortgage Loan to (B) the Current Value of the remaining Mortgaged Property is higher than (ii) the LTV ratio of the Mortgage Loan immediately before the taking, even after applying any consideration to the Unpaid Principal Balance of the Mortgage Loan.

 

The Servicer must take all steps necessary to prevent loss of any Primary Mortgage Insurance or Pool Insurance benefits due to any taking by eminent domain.

 

11.7.5. Late Charges.  Late charges may not be assessed unless a Borrower failed to make payments in accordance with the Mortgage Note.

 

Section 11.8. Borrower Bankruptcy

 

11.8.1. Servicer’s Duty.  The Servicer shall be responsible for representing the interests of the Trustee in any bankruptcy proceedings involving a Borrower.

 

11.8.2. Responsibility for Costs.  The costs of protecting the interests of the Trustee shall be advanced by the Servicer and are not (a) chargeable to the related Borrower’s Escrow Funds or (b) reimbursable from the Master Servicer.

 

11.8.3. Challenge Bankruptcy Reductions.  If the bankruptcy judge or trustee should propose to (a) reduce the Unpaid Principal Balance of a Mortgage Note, (b) reduce the related Mortgage Interest Rate, (c) extend the final maturity of such Mortgage Note, or (d) reduce the level of any monthly payment on such Mortgage Note, the Servicer shall (i) challenge any such modification on a timely basis, (ii) notify the Master Servicer immediately and (iii) follow the Master Servicer’s instructions regarding the bankruptcy proceedings, and in the absence of explicit instructions, exercise reasonable judgment to protect the interests of the Trustee.

 

11.8.4. Bankruptcy Adjustments.  If the action of any court results in a Deficient Valuation or Debt Service Reduction, the Servicer shall provide a calculation of the effects of such modification notifying the Master Servicer of the new principal balance, Mortgage Interest Rate, new final maturity, or monthly payment level, as the case may be, of such Mortgage Loan.

 

11.8.5. Bankruptcy Plan Surveillance.  With respect to each Mortgage Loan which is the subject of a Deficient Valuation or a Debt Service Reduction, the Servicer shall verify that payments are being made in accordance with the plan approved in the related bankruptcy proceedings.

  

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ARTICLE 12

 

DELINQUENCY MANAGEMENT

 

Section 12.1. In General

 

12.1.1. Servicing Practices.  The provisions set forth in this Article constitute the minimum guidelines and procedures for servicing Delinquent Mortgage Loans.  The Servicer must use collection procedures which meet or exceed these guidelines.  The Servicer’s procedures must be sufficient for promptly dealing with delinquencies.  The Master Servicer retains the right to require the Servicer to perform additional collection procedures which the Master Servicer deems, in its reasonable discretion, necessary to realize the objectives set forth herein or otherwise to protect the interests of the Trustee.

 

12.1.2. Servicer’s Capabilities.  The Servicer’s collection staff must be sufficiently skilled in financial counseling and mortgage servicing techniques to assist a Borrower to bring his Mortgage Loan current and to protect his equity and credit rating, while at the same time protecting the interests of the Trustee and of the Master Servicer.

 

12.1.3. Servicing Objectives.  The purpose of any collection effort is to cure a Delinquency in the shortest possible time.  The Servicer should treat each Delinquency individually.  Discussions with the Borrower must cover the cause of such Delinquency and the time frame in which such Delinquency shall be cured.  The Servicer should use notices, letters, telegrams, telephone calls, face-to-face contact and other responsible collection techniques consistent with Prudent Servicing Practices.  The Servicer is required to maintain all collection records.  The Servicer must vary its collection techniques to fit individual circumstances, avoiding a fixed collection pattern which may be ineffective in dealing with particular Borrowers.  The Servicer should recognize the importance of telephone and face-to-face contact in any collection program.  As part of its collection procedures, the Servicer shall closely monitor all newly originated Mortgage Loans.

 

12.1.4. Servicer’s Expenses.  Unless otherwise specified, the cost of any of the servicing procedures detailed in this Agreement shall be borne solely by the Servicer.  The Servicer may not charge such expenses against the Borrower’s Escrow Funds.  The foregoing shall not preclude the Servicer from recovering such expenses from the Borrower to the extent permitted by applicable law and the related Mortgage Loan Documents.

 

Section 12.2. Delinquency Servicing Procedures

 

12.2.1. Late Notice.  A late notice shall be mailed by the Servicer to the Borrower by the 18th day of such Delinquency.

 

12.2.2. Telephonic Inquiry.  The Servicer shall use best efforts to make telephone contact with the Borrower by the 22nd day of such Delinquency.

 

12.2.3. Notice of Default.  Notification of default of such Mortgage Loan shall be mailed by the Servicer to the Borrower by the 35th day of such Delinquency.

  

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12.2.4. Borrower Interview.  The Servicer shall comply with applicable FNMA and FHLMC requirements with regard to Borrower interviews.

 

12.2.5. Continuing Contacts.  If satisfactory arrangements have not been made to cure such Delinquency by the 90th day, the Servicer must continue to contact the Borrower until either the related Mortgage Loan has been brought current or the Servicer has made a recommendation in writing to the Master Servicer for foreclosure of such Mortgaged Property or other action.

 

12.2.6. Property Inspection.  The Servicer is required to inspect each Delinquent Mortgaged Property at such time and in such manner as is in accordance with Prudent Servicing Practices.  The Servicer must prepare a Property Inspection Report following each inspection.  All Property Inspection Reports must be retained by the Servicer and copies thereof must be forwarded to the Master Servicer promptly upon request.  All expenses related to the foregoing shall be recoverable by the Servicer from the Principal or from Liquidation Proceeds, Insurance Proceeds, payments on the related Mortgage Loan or any other source relating to the related Mortgage Loan or the related Mortgaged Property.  The foregoing shall not preclude the Servicer from recovering such expenses from the Borrower to the extent permitted by applicable law and the related Mortgage Loan Documents.

 

Section 12.3. Relief of Borrowers

 

12.3.1. Servicer’s Role.  The Servicer shall be readily available to Borrowers to offer skilled financial counsel and advice and shall make personal contact with delinquent Borrowers as often as possible to achieve a solution that will bring the Mortgage Loan current as soon as possible.  The Servicer shall be fully familiar with the form of relief to Borrowers provided for herein and shall employ such relief.

 

12.3.2. Servicer’s Discretion.  The Servicer shall have reasonable discretion to extend appropriate relief to Borrowers who encounter hardship and who are cooperative and demonstrate proper regard for their obligations.  However, no such relief shall be granted to any Borrower under a Mortgage Loan unless the Servicer reasonably believes that there is a reasonable expectation that such Borrower shall bring his Mortgage Loan current within a period conforming to acceptable servicing practices; provided that such period will not exceed 21 months from the Due Date of the earliest unpaid installment and will not result in a “significant modification” of the Mortgage Loan under the REMIC Provisions.

 

12.3.3. Relief Requirement.  Prior to granting relief with respect to a delinquent Mortgage Loan as herein provided, the Servicer shall ascertain that (i) the reasons for the default and (ii) the attitude and circumstances of such Borrower justify the relief to be granted.

 

12.3.4. Primary Mortgage Insurance Considerations.  Where applicable, the Servicer shall satisfy all requirements under the applicable Primary Mortgage Insurance policy regarding the relief granted with respect to a delinquent Mortgage Loan.

 

12.3.5. Responsibility for Costs.  The Servicer is responsible for collection from such Borrower of any recording or similar costs or expenses incidental to the granting of relief with respect to a delinquent Mortgage Loan.

  

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12.3.6. Forbearance Plan.  (a) Where relief is appropriate, the Servicer shall arrange with a Borrower a “Forbearance Plan” giving such Borrower a definite period in which to reinstate his Mortgage Loan by immediately commencing payments in excess of the regular Monthly Payments.  Without the prior written consent of the Master Servicer, special forbearance relief agreements reducing or suspending the regular Monthly Payment of the related Mortgage Loan for a specified period of time are not permitted.  To the extent that (i) the priority of the lien represented by such Mortgage Loan remains in effect and is not adversely affected, (ii) where applicable, the related Primary Mortgage Insurance policy remains in full force and effect and (iii) where applicable, the related Pool Insurance policy remains in full force and effect, the Servicer, in its discretion, may enter into a Forbearance Plan that provides that the total amount owed during such Delinquency, including costs and expenses, will be repaid within the shortest period practicable, commencing immediately.  With respect to such Mortgage Loan, the Forbearance Plan shall provide that such Delinquency will be cured within a period conforming to acceptable servicing practices; provided that such period will not exceed 21 months from the Due Date of the earliest unpaid installment and will not result in a “significant modification” of the Mortgage Loan under the REMIC Provisions.  The Forbearance Plan for such Mortgage Loan shall be set forth in writing and executed by the Borrower and by the Servicer in the form of a letter agreement if the earliest unpaid installment is more than 60 days past due.

 

(b) With the consent of the Master Servicer, the Servicer may modify the payment terms of Mortgage Loans that are in default, or as to which default is reasonably foreseeable; provided that no such modification shall reduce the Unpaid Principal Balance of such Mortgage Loan or permanently reduce the Mortgage Interest Rate of such Mortgage Loan; and provided further that prior to entering into any such modification the Servicer and the Master Servicer shall determine that such modification is likely to increase the proceeds of such Mortgage Loan over the amount expected to be collected pursuant to a foreclosure or other similar procedure.

 

12.3.7. Accommodation Limitations.  No modification, recast, extension, or capitalization of delinquent payments of a Mortgage Loan other than as provided in Section 12.3.6 hereof shall be permitted with respect to a Mortgage Loan.

 

12.3.8. Pool Insurance Considerations.  Where applicable, the Servicer shall satisfy all requirements under the applicable Pool Insurance policy regarding the relief granted with respect to a delinquent Mortgage Loan, including, without limitation, securing the prior written consent of the respective Pool Insurer regarding (a) any change in any term of such Mortgage Loan, (b) the release of the related Borrower from any liability related to such Mortgage Loan, or (c) the release of any portion of, or interest in, the Mortgaged Property from the lien of the related Security Instrument.

 

Section 12.4. Special Delinquency Servicing Considerations

 

12.4.1. Advance Responsibility During Delinquency.  In the event of a Delinquency with respect to a Mortgage Loan, the Servicer agrees to advance from its own funds the full amount of Monthly Payments (which may be net of the related Servicing Fee) for such Mortgage Loan.  These advances shall provide the Trustee with a regular flow of funds on such

  

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delinquent Mortgage Loan.  The advance obligation stated above is in addition to any other advance obligations which the Servicer has pursuant to the provisions of this Agreement.  The Servicer must still advance funds in accordance with the provisions of this Agreement even if a forbearance has been granted.

 

12.4.2. Primary Mortgage Insurance Compliance.  Where applicable, the Servicer shall be familiar with and shall satisfy all requirements of the applicable Primary Mortgage Insurance policy with respect to a delinquent Borrower.  The Servicer shall have adequate controls to assure timely filing of all notices to the appropriate Primary Mortgage Insurer.  The Servicer shall prepare and file all appropriate claims with respect to the applicable Primary Mortgage Insurance policy, and the Servicer shall prepare and deliver to the Master Servicer copies of all claims forms and other papers received from or presented to any Primary Mortgage Insurer in connection with any claims presented under any such policy, unless the Servicer is otherwise instructed by the Master Servicer.

 

12.4.3. Pool Insurance Compliance.  Where applicable, the Servicer shall be familiar with and shall satisfy all requirements of the applicable Pool Insurance policy with respect to a delinquent Borrower.  The Servicer shall have adequate controls to assure timely filing of all notices to the appropriate Pool Insurer.  Copies of all such notices shall be sent to the Master Servicer upon request.  The Servicer shall prepare and file all appropriate claims with respect to the applicable Pool Insurance policy, and the Servicer shall prepare and deliver to the Master Servicer copies of all claims forms and other papers received from or presented to any Pool Insurer in connection with any claims presented under any such policy, unless the Servicer is otherwise instructed by the Master Servicer.

 

ARTICLE 13

 

FORECLOSURE ADMINISTRATION

 

Section 13.1. Foreclosure Prerequisites

 

13.1.1. Foreclosure/Alternative to Foreclosure Initiation.  (a) When a Borrower reaches the 90th day of Delinquency and the Servicer has exhausted all reasonable means of curing the Delinquency, the Servicer shall either begin the foreclosure process or suggest an alternative to foreclosure in accordance with Prudent Servicing Practices.  In conjunction with the Servicer’s decision to begin the foreclosure action or seek an alternative to foreclosure, the Servicer shall provide written notice to the Master Servicer and, where applicable, the respective Primary Mortgage Insurer and/or the respective Pool Insurer no later than ten days after the initiation of foreclosure proceedings or the alternative to foreclosure.  Notwithstanding anything to the contrary in this Section 13.1.1, the Master Servicer may direct the Servicer to stop the foreclosure action or to modify any alternative to foreclosure.  The Servicer shall prepare all necessary documentation to initiate the foreclosure proceedings.

 

(b) Notwithstanding anything to the contrary in this Section 13.1, if the Master Servicer has entered into a special servicing agreement pursuant to Section 3.08 of the Pooling and Servicing Agreement, the Master Servicer may direct the

  

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Servicer to commence foreclosure proceedings as contemplated by such special servicing agreement.

 

13.1.2. Foreclosure Expenses.  All fees and expenses shall be consistent with FNMA standards and, where applicable, shall not exceed those permitted under the respective Pool Insurance policy and/or the respective Primary Mortgage Insurance policy.  Fees in excess of the amount permitted by FNMA guidelines or extraordinary legal services must be approved in writing in advance by the Master Servicer, and, where applicable, by the respective Primary Mortgage Insurer or the respective Pool Insurer, as the case may be, if required by the applicable policy.  All attorneys’ fees, and other costs in excess of FNMA’s standards in respect of any foreclosure or acquisition in lieu of foreclosure shall be identified in advance and a detailed estimate of the amounts thereof shall be set forth in the Servicer’s written recommendation.  The billing by a foreclosure attorney must demonstrate the appropriateness of any extraordinary fees by the services required.  In cases of full or partial reinstatement of the related Mortgage Loan, the fees shall be reasonable and in proportion to the authorized fee for services rendered for a completed foreclosure.  Unless otherwise expressly agreed in writing, neither the Master Servicer, any of its Affiliates, their respective officers, directors, employees, agents, successors or assigns, the Trustee nor, if applicable, the Trust Administrator shall be liable for any attorneys’ fees, trustees’ fees, witness fees, title search fees, court costs or other expenses incurred by the Servicer in respect of any foreclosure or acquisition in lieu of foreclosure, except to the extent that such fees, costs and expenses are fully reimbursable under a Primary Mortgage Insurance policy and in fact are reimbursed.

 

13.1.3. Hazardous Wastes.  In the event that the Mortgaged Property, related to a Mortgage Loan which is being considered for liquidation by foreclosure or the transfer of a deed-in-lieu of foreclosure, contains, and the Servicer has reason to believe that it contains, hazardous or regulated substances which may impose liability, for damages, remediation or otherwise, upon the owner of such Mortgaged Property pursuant to Federal, State or local law, the Servicer shall not, except with the express prior written approval of the Master Servicer, which approval makes specific reference to the presence of such hazardous or regulated substances, undertake or continue the process of foreclosure with respect to such Mortgaged Property.

 

Section 13.2. Deed-in-Lieu of Foreclosure

 

13.2.1. Conditions.  If the Master Servicer and the respective Primary Mortgage Insurer and/or the respective Pool Insurer, if applicable, have approved the liquidation of a Mortgage Loan by accepting a deed-in-lieu of foreclosure of the related Mortgaged Property, the Servicer may accept such deed without any further action or approval by the Master Servicer or, where applicable, the respective Primary Mortgage Insurer and/or the respective Pool Insurer, provided that:

 

(a) the Servicer determines that the pursuit of a deficiency judgment is not practical or warranted;

 

(b) the Mortgaged Property has been listed for sale at a market value for three months or more without a reasonable sales offer;

  

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(c) there reasonably appear to be legal impediments to pursuing foreclosure;

 

(d) the acceptance of the deed-in-lieu of foreclosure will enable the Trustee to acquire the Mortgaged Property earlier than under a foreclosure action;

 

(e) the Borrower acknowledges in writing that the deed is being accepted as an accommodation to him or her;

 

(f) where applicable, the respective Primary Mortgage Insurer and/or the respective Pool Insurer has agreed to the acceptance of a deed-in-lieu;

 

(g) the Borrower has not received cash consideration to deed the Mortgaged Property over to the Trustee, unless the Master Servicer otherwise approves;

 

(h) the Borrower can convey acceptable marketable title, evidenced by a Title Insurance policy;

 

(i) the Mortgaged Property is vacant (unless, where applicable, the respective Primary Mortgage Insurer and/or the respective Pool Insurer has agreed to accept an occupied property);

 

(j) the Mortgaged Property is not subject to liens (held by others),  judgments, or attachments; and

 

(k) the Borrower agrees to assign and transfer to the benefit of the Trustee, where applicable, any rents if the Mortgaged Property is rented,  and the Servicer agrees to collect any rental income.

 

13.2.2. Subsequent Actions.  Upon acquisition by the Trustee, the Servicer shall promptly notify the Master Servicer and, if applicable, the respective Primary Mortgage Insurer and/or the respective Pool Insurer, indicating the details of the transaction and reasons for the conveyance and providing such other information as is required under a Primary Inspection Report to the Master Servicer and, if applicable, to the Primary Mortgage Insurer and/or the Pool Insurer.  Title shall be conveyed directly from the Borrower to the Trustee or to such other Person designated by the Master Servicer.

 

Section 13.3. Actions Prior to Foreclosure

 

13.3.1. Notice Requirements.  The Servicer shall send the Borrower a letter, not less than 30 days before the commencement of foreclosure proceedings, setting out (i) the nature of the default, (ii) the steps that must be taken by the Borrower to cure the default and (iii) the date when foreclosure proceedings will begin.  If the Servicer has reason to believe that the related Mortgaged Property has been abandoned or if the Borrower has displayed an obvious disregard for his obligations under such Mortgage Loan, the foregoing notice shall be forwarded at the earliest possible date following the Borrower’s default.

  

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13.3.2. Initiation of Proceedings.  If foreclosure approval has not been withheld by the Master Servicer and, where applicable, by the respective Primary Mortgage Insurer and/or the respective Pool Insurer, with respect to a Mortgaged Property, including Co-op Shares, the Servicer shall, unless it arranges for the sale by the Borrower of the Mortgaged Property to a third party pursuant to Section 13.3.3, initiate or cause to be initiated such foreclosure actions as are authorized by law and consistent with practices in the locality where the Mortgaged Property is located, including, in the case where such Mortgaged Property includes a residential long-term lease, the succession by the Servicer to the rights of the Borrower under the lease by foreclosure, assignment in lieu of foreclosure or other comparable means.  If such Mortgaged Property has been abandoned or vacated by the Borrower and the Borrower has evidenced no intention of honoring his obligations under the related Mortgage Loan, the foreclosure process shall be expedited to the fullest extent permitted by law.

 

13.3.3. Short Sale of Defaulted Mortgage Loans in Lieu of Foreclosure.  With respect to any defaulted Mortgage Loan for which the Servicer would otherwise be required to initiate foreclosure proceedings, the Servicer may arrange for the sale of the Mortgaged Property by the Borrower to a third party if, in the good faith judgment of the Servicer, the net proceeds from such sale would be equal to or greater than the net proceeds of a bid conducted in accordance with Section 13.4.2.

 

Section 13.4. Foreclosure Procedures

 

13.4.1. Foreclosure Expenses.  During the period in which the Mortgaged Property related to a Mortgage Loan is being foreclosed, remaining Escrow Funds, if any, as well as any rent receipts, shall be used to pay all taxes and insurance premiums that become due with respect to such Mortgaged Property to the extent permitted by law.  Except where other arrangements have been made with the applicable Primary Mortgage Insurer, the Servicer shall, with respect to each Mortgaged Property undergoing foreclosure, advance payment of attorneys’ fees, trustees’ fees and other foreclosure costs from the commencement of foreclosure proceedings pertaining to such Mortgaged Property.

 

13.4.2. Bidding Instructions.  The Servicer shall issue bidding instructions to the attorney or trustee in a foreclosure proceeding in accordance with Prudent Servicing Practices.  Where applicable, the Servicer shall incorporate any bidding requirements issued by the respective Primary Mortgage Insurer and/or the respective Pool Insurer.  Any proceeds received from an insurance loss settlement shall be included as part of the bid amount.  Where a claim or claim settlement under a Hazard Insurance or Flood Insurance policy is pending, the Servicer shall contact the Hazard Insurance or Flood Insurance carrier to verify that the proposed bid will not invalidate the claim, in that, in certain jurisdictions, a bid for the total indebtedness will be considered as satisfaction of the debt and would thus bar the Hazard Insurance or Flood Insurance claim.

 

13.4.3. Buydown Funds Use.  Unless the related Buydown Agreement provides otherwise, the Servicer may not use Buydown Funds relating to a Mortgage Loan to cure a Delinquency with respect to such Mortgage Loan.  Any Buydown Funds remaining in the associated Custodial Buydown Account of a Mortgage Loan in foreclosure must be disposed of in accordance with the terms of the related Buydown Agreement.

  

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13.4.4. Servicer’s Responsibilities.  Subject to the provisions of Article Three hereof, after acquisition of a Mortgaged Property, through foreclosure or a deed-in-lieu of foreclosure, or after the Servicer shall have taken possession of the Mortgaged Property, whichever occurs first, the Servicer shall be responsible for the management of such Mortgaged Property.  The Servicer shall remain responsible until possession has been assumed by the applicable Primary Mortgage Insurer or the applicable Pool Insurer or until such Mortgaged Property are otherwise disposed of, as the case may be.  The Servicer shall take such action as is necessary to protect the Trustee’s security or, after acquisition thereof, ownership interest in such Mortgaged Property.  Such action shall include, without limitation, (i) management of such Mortgaged Property, (ii) maintenance of such Mortgaged Property and (iii) if such Mortgaged Property are vacant, protection of such Mortgaged Property against vandals and the elements.

 

13.4.5. Conveyance Documents.  Where applicable, any conveyance by the Servicer to the respective Primary Mortgage Insurer or the respective Pool Insurer of a Mortgaged Property shall be made by the form of deed commonly used in the particular jurisdiction where such Mortgaged Property is located.  The Servicer shall prepare the necessary documents within two weeks after the date of sale at foreclosure or confirmation of sale, if applicable, or within a reasonable time frame.  The documents shall be forwarded to the Master Servicer for approval and execution.  After execution by the Trustee, such documents will be returned to the Servicer for delivery to the respective Primary Mortgage Insurer or the respective Pool Insurer which is acquiring such Mortgaged Property.

 

Section 13.5. Mortgage Loan Reinstatement

 

13.5.1. Borrower’s Full Payment.  If a Borrower offers to fully reinstate his Mortgage Loan during the foreclosure process, the Servicer shall accept the offer.  To achieve full reinstatement of his Mortgage Loan, a Borrower shall make payment of all (i) payments due to bring such Mortgage Loan current, (ii) attorneys’ fees, (iii) trustees’ fees, (iv) any additional legal costs, (v) all applicable late fees and (vi) any other expenditures or Advances made by the Servicer during the foreclosure process.

 

13.5.2. Borrower’s Partial Payment.  Except where otherwise required by applicable law, the Servicer may not accept an amount in payment from a Borrower which is less than the amount required for full reinstatement pursuant to Section 13.5.1 hereof toward reinstatement of a Mortgage Loan during the foreclosure process without the prior written approval from the Master Servicer and, where applicable, the respective Primary Mortgage Insurer and/or the respective Pool Insurer.

 

13.5.3. Obligations upon Reinstatement.  Upon accepting the reinstatement of a Mortgage Loan, the Servicer shall immediately contact the appropriate foreclosure attorney or trustee to avoid incurring additional legal costs or fees.  The Servicer must apply the reinstatement Funds upon receipt from a Borrower in payment of the expenses enumerated in Section 13.5.1 hereof.  Upon receipt of the reinstatement funds from a Borrower the Servicer must (i) notify the Master Servicer of the reinstatement of the related Mortgage Loan and (ii) return to the Master Servicer, the related Mortgage Note and other related Mortgage Loan Documents for reinclusion in the related Mortgage Loan File.

  

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13.5.4. Certain Assumptions Permitted.  The Servicer is authorized, notwithstanding the other provisions of this Article 13, to permit the assumption of a defaulted Mortgage Loan rather than to foreclose or accept a deed-in-lieu of foreclosure if, in the Servicer’s judgment, the default is unlikely to be cured and the assuming borrower meets the underwriting guidelines that originally applied to such Mortgage Loan.

 

ARTICLE 14

 

REO ADMINISTRATION

 

Section 14.1. General Provisions

 

14.1.1. REO Action Plan.  With regard to each REO which is acquired, the Servicer shall prepare a plan of action within 30 Business Days after the date on which the Trustee acquires marketable title to such REO.  Each plan of action shall set forth (i) a recommendation for the most effective manner to dispose of the REO, based on a current appraisal report, a broker’s price opinion and a market analysis; (ii) the steps to be taken by the Servicer to secure such REO; and (iii) an estimate of the amount of time that is required to dispose of such REO.  The Servicer shall promptly submit copies of each plan of action to the Master Servicer and, where applicable, to the respective Primary Mortgage Insurer, and/or the respective Pool Insurer.  Unless otherwise directed by the Master Servicer, the Servicer shall implement each plan of action in an expeditious manner.  Further, the Master Servicer may instruct the Servicer to modify any plan of action as the Master Servicer shall direct.  The Servicer shall provide the Master Servicer with monthly progress reports with regard to each plan of action detailing the status of the related REO and the progress achieved in implementing the plan of action.

 

Section 14.2. REO Servicing

 

14.2.1. REO Servicing Requirements.  The Servicer shall service each REO from its acquisition through its disposition and shall ensure that all funds received with respect to such REO are deposited to the appropriate Custodial P&I Account for remittance to the Trustee, unless the Master Servicer has relieved the Servicer of these responsibilities by written notification.

 

14.2.2. Servicer’s Responsibilities.  In addition to any other obligations set forth herein, upon acquisition of each REO, the Servicer shall be responsible for:

 

(a) managing, maintaining, securing and, where applicable, renting such REO until it is conveyed or sold;

 

(b) inspecting such REO at least once every 30 days and promptly sending the Master Servicer an updated Property Inspection Report upon request;

 

(c) paying all taxes, insurance, maintenance, management and foreclosure costs relating to such REO;

  

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(d) submitting recommendations for listing and soliciting offers on such REO;

 

(e) marketing such REO;

 

(f) completing the sale of such REO;

 

(g) depositing sales proceeds relating to such REO into the appropriate Custodial P&I Account for remittance to the Trustee;

 

(h) where applicable, satisfying all of the Primary Mortgage Insurer’s procedural requirements and filing all required forms and claims;

 

(i) where applicable, depositing Primary Mortgage Insurance or Pool Insurance proceeds relating to such REO into the applicable Custodial P&I Account for remittance to the Trustee;

 

(j) processing the conveyance of such REO to the Primary Mortgage Insurer, where applicable; and

 

(k) reporting (1) all changes in status of such REO and (2) all material expenses relating to such REO to the Master Servicer on a monthly basis.

 

14.2.3. Notice.  The Servicer shall notify the Master Servicer in writing as soon as each REO is acquired.

 

Section 14.3. REO Records and Reports

 

14.3.1. Records Retention.  The Servicer shall retain in its files copies of all documents, reports and invoices described in this Section.

 

14.3.2. Evidence of Title.  Evidence that title to a REO is held by the Trustee shall be submitted by the Servicer to the Master Servicer and, if applicable, to the Primary Mortgage Insurer and/or the Pool Insurer, within ten Business Days after marketable title to such REO has been acquired.

 

14.3.3. REO Expenses.  At the request of the Master Servicer, Primary Mortgage Insurer and/or the Pool Insurer, the Servicer shall send a report listing all expenses in administering each REO.  The Servicer shall retain such invoices in its records and shall, by request, (i) produce any such invoices for inspection or (ii) at its own expense, provide copies of any such invoices to the Master Servicer and, if applicable, to the Primary Mortgage Insurer and/or the Pool Insurer, as directed.  The foregoing expense invoices shall include, without limitation, the following:

 

(a) insurance premiums;

 

(b) real estate tax bills;

  

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(c) special assessments;

 

(d) owners’ association dues; and

 

(e) utility bills.

 

14.3.4. REO Documents.  Upon request, the Servicer shall send copies to the Master Servicer and, where applicable, to the respective Primary Mortgage Insurer and/or the respective Pool Insurer, of the following documents relating to each REO:

 

(a) any forced placed Hazard Insurance policy or Flood Insurance policy, if applicable;

 

(b) any maintenance contracts;

 

(c) any contractor bids relating to the rehabilitation of such REO pursuant to Section 14.5.3 hereof;

 

(d) an updated Title Insurance policy which reflects the occurrence of foreclosure; and

 

(e) plat map or house location survey, if already available.

 

Section 14.4. REO Marketing

 

14.4.1. REO Marketing Efforts.  The Servicer shall begin efforts to market a REO as soon as marketable title is acquired by the Trustee.

 

14.4.2. REO Sales.  (a) The Servicer shall obtain the best market price for a REO for the Trustee while disposing of such REO in a timely and efficient manner.  Unless otherwise directed by the Master Servicer, the Servicer, acting on behalf of the Trustee, shall dispose or cooperate with the Trustee in disposing of such REO prior to the close of the third calendar year following the year of its acquisition by the Trustee (the “REO Disposition Period”) or, if an extension has been obtained from the Internal Revenue Service pursuant to Section 14.4.2(b), within such period.  If the Servicer is otherwise unable to sell such REO, unless otherwise directed by the Master Servicer, the Servicer shall before the end of the REO Disposition Period or, if an extension has been obtained from the Internal Revenue Service pursuant to Section 14.4.2(b), before the end of such period, following the acquisition of such REO, auction such REO to the highest bidder in an auction reasonably designed to bring a fair price.  The Servicer shall consult with the Master Servicer prior to holding such auction.  The Servicer is eligible to bid in such an auction.

 

(b) The Master Servicer may apply to the Internal Revenue Service,  in the manner contemplated by Code Section 856(e)(3), for an extension of the REO Disposition Period with respect to an REO.

 

14.4.3. Primary Mortgage Insurance Considerations.  The Servicer must ensure that any action taken with respect to the sale of a REO does not jeopardize the maximum benefits

  

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available under the related Primary Mortgage Insurance Policy, if any, with respect to the related Mortgage Loan.  The Servicer must inform the related Primary Mortgage Insurer of any listing agreements or purchase offers that are received before the related Primary Mortgage Insurer has finalized the disposition of the claim.

 

14.4.4. Master Servicer Instructions.  Where the Servicer receives instructions from the Master Servicer regarding the marketing and sale of a REO, either with respect to a specific property or generally, such instructions shall govern the Servicer’s actions, notwithstanding any provision herein.

 

14.4.5. Pool Insurance Considerations.  The Servicer must ensure that any action taken with respect to the sale of a REO does not jeopardize the maximum benefits available under the related Pool Insurance Policy, if any, with respect to the related Mortgage Loan.  The Servicer must inform the related Pool Insurer of any listing agreements or purchase offers that are received before the Primary Mortgage Insurer has finalized the disposition of the claim.

 

Section 14.5. REO Rehabilitation

 

14.5.1. REO Rehabilitation Requirement.  Unless the Master Servicer shall otherwise direct, and subject to Section 3.2.2(ii) and Section 17.6.2, the Servicer must ensure that any rehabilitation work (which shall not include the cleaning of a recently acquired REO property) to any REO which is necessary to restore such REO to a marketable condition is performed and that such work is performed in a professional and workmanlike manner.

 

14.5.2. Master Servicer Approval.  The Servicer must obtain the Master Servicer’s prior written approval for rehabilitation work (which shall not include the cleaning of a recently acquired REO property) when the aggregate rehabilitation expenses with regard to a REO exceeds seven thousand five hundred dollars ($7,500.00).

 

14.5.3. Written Contractor Bids.  The Servicer shall solicit detailed written bids from independent contractors when the value of a contract for rehabilitation of a REO exceeds five hundred dollars ($500.00) (which shall not include the cleaning of a recently acquired REO property).  Where the value of a contract exceeds five thousand dollars ($5,000.00) (which shall not include the cleaning of a recently acquired REO property), the Servicer shall receive bids from a minimum of two independent and unrelated contractors and, upon request, forward copies of such bids to the Master Servicer.  Where the value of a contract exceeds fifty thousand dollars ($50,000.00) (which shall not include the cleaning of a recently acquired REO property), the Servicer shall receive bids from a minimum of three independent and unrelated contractors and, upon request, forward copies of such bids to the Master Servicer.

 

14.5.4. Primary Mortgage Insurance Considerations.  If a Mortgaged Property which has become a REO and the related Mortgage Loan is covered by a policy of Primary Mortgage Insurance, the Servicer shall notify the related Primary Mortgage Insurer of such rehabilitation plans before the completion of the Primary Mortgage Insurance claim to ensure reimbursement from the Primary Mortgage Insurer.  If the related Primary Mortgage Insurer elects not to reimburse all rehabilitation expenses, work should be postponed until after final disposition of the Primary Mortgage Insurance claim.

  

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Section 14.6. REO Administration Failure.

 

14.6.1. Servicer Removal.  The Master Servicer may in its reasonable discretion, in the event that the Servicer’s actions or omissions result in damage to any REO or a failure to sell any REO property within a reasonable time, the Master Servicer may remove the servicing of such REO from the Servicer and assume responsibility for management, control, maintenance, security, rehabilitation and disposition of such REO.

 

14.6.2. Servicer’s Continuing Obligations.  In the event that the Servicer is removed from servicing a REO by virtue of the provisions of Section 14.6.1, the Servicer, as to such REO, shall nevertheless remain responsible to (a) pay when due all insurance premiums, property taxes and assessments; (b) file when due all claims for Primary Mortgage Insurance, Pool Insurance, Hazard Insurance and, if applicable, Flood Insurance benefits; and (c) fulfill any other related responsibilities required by the Master Servicer.

 

14.6.3. Servicer’s Duty to Compensate.  Whether or not a Servicer is removed from servicing with respect to a particular REO, the Servicer must compensate the Master Servicer for any damages caused as a result of the Servicer’s breach of its obligation to service efficiently each REO.  The Servicer acknowledges that any damages suffered as a result of the Servicer’s inefficiency in managing a REO may not be quantified in advance of the Master Servicer assuming responsibility for such REO.

 

ARTICLE 15

 

INSURANCE

 

Section 15.1. General Provisions

 

15.1.1. Insurance Requirements.  The Servicer must verify that each Mortgage Loan has the insurance coverage required pursuant to Article 15 and 16.  All claims arising under Insurance Policies maintained hereunder must be settled or otherwise disposed of by the Servicer, and all such Insurance Policies must be maintained, including, without limitation, the payment of premiums on a timely basis, by the Servicer at no expense to the Trustee, the Trust Administrator (if applicable) or the Master Servicer.

 

If the Insurance Proceeds paid in respect of any Mortgage Loan are not used to repair the related Mortgaged Property due to the particular circumstances of the loss, and instead such Insurance Proceeds are applied to reduce the Unpaid Principal Balance of such Mortgage Loan and such application causes the Unpaid Principal Balance of such Mortgage Loan to reduce to zero, the Servicer must treat the application of such proceeds as a Liquidation, and notify the Master Servicer of such Liquidation.

 

15.1.2. Uninsured Losses.  The Servicer must take the following actions in the event of loss or damage to any Mortgaged Property caused by an earthquake, flood, tornado or other natural disaster immediately following, the earlier to occur of (x) its notification or discovery of such loss or damage or (y) the time at which the Servicer reasonably should have known of such loss or damage in the exercise of Prudent Servicing Practices:

  

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(a) determine the extent of the losses or damages;

 

(b) secure any abandoned Mortgaged Property from vandalism and the elements;

 

(c) communicate with and counsel the respective Borrower on any disaster relief programs or other assistance which is available; and

 

(d) notify the Master Servicer and recommend appropriate action to protect the interests of the Trustee and the respective Borrower.

 

15.1.3. Servicer’s Obligation to Maintain Insurance.  If the Servicer discovers that a Borrower does not have adequate insurance coverage as required pursuant to the provisions of this Article, the Servicer must obtain and maintain at its own expense the required insurance coverage on the related Mortgaged Property.  The Servicer may, in its discretion, cause the required coverage to be maintained through a blanket insurance policy.  Such expenses shall not be recoverable by the Servicer from the Master Servicer or from payments on the Mortgage Loan or any other source relating to the related Mortgage Loan or the related Mortgaged Property, other than from Liquidation Proceeds or Insurance Proceeds from the related Mortgage Loan.

 

To the extent permitted by applicable law and the related Mortgage Loan Documents, the Servicer may initiate forced placed coverage with respect to such Mortgaged Property and thereafter attempt to recover such expenses from the related Borrower.

 

15.1.4. Insurance Notices.  The Servicer must arrange for all insurance drafts, notices, policies, invoices, or other correspondence to be delivered directly to the Servicer.  The Servicer, its successors and assigns must be named as the Mortgagee, the endorsement must show the Servicer’s address as shown in the following example:

 

Wells Fargo Bank, N.A.

 

7001 Westown Parkway

 

West Des Moines, Iowa 50266

 

15.1.5. Default by Insurer.  If the Servicer knows or has reasonable cause to suspect that an insurer under any applicable insurance policy required pursuant to the provisions of this Article will, for any reason, be unable to pay a valid claim, the Servicer shall immediately notify the Master Servicer upon receipt of such information or formulation of such belief.  The Servicer shall then (i) find a substitute insurer and (ii) pay any premiums to the insurer.  In any case, the Servicer shall not be liable in any way for the financial inability of any insurer under any insurance policy required herein to pay a valid claim so long as the provisions of Article 15 and 16 hereof are complied with.

 

15.1.6. Insurance Carrier Rating.  Each Insurance Policy must be underwritten by an insurance carrier that is a FNMA or FHLMC approved Mortgage Insurer.

 

15.1.7. Insurance Carrier Licenses.  Each insurance carrier must be licensed or otherwise authorized by law to conduct business in each state in which a related Mortgaged Property is located.

  

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15.1.8. Risk Exposure.  If any Mortgaged Property is exposed to hazards not fully covered by Hazard Insurance or Flood Insurance, the Servicer must notify the Master Servicer immediately with a recommendation for additional coverage.

 

15.1.9. Evidence of Insurance.  (a) The Servicer must maintain the following documentation with respect to insurance coverage on each Mortgage Loan:

 

(i) if Primary Mortgage Insurance is required, a copy of the Primary Mortgage Insurance policy and any related endorsements;

 

(ii) for one- to four-unit dwellings where such coverage is not provided under a blanket policy maintained by the Servicer, an original of the Hazard Insurance policy, if applicable, and any related endorsements;

 

(iii) a copy of the Title Insurance policy and any related endorsements, unless a Final Title Condition Report was obtained;

 

(iv) For properties covered under a blanket policy, an original of any blanket policy, and any related endorsements; and

 

(v) an original of any Flood Insurance policy, if Flood Insurance is required, and any related endorsements.

 

(b) A certificate of insurance is acceptable in lieu of any of the foregoing policies if it contains the following information:

 

(i) named insured and Mortgagee or, for PUD or Condominium Units,  named insured association, unit owner and unit owner Mortgagee;

 

(ii) address of the Mortgaged Property;

 

(iii) type, amount and effective dates of coverage;

 

(iv) deductible amount;

 

(v) any endorsement or optional coverage obtained and made part of the original policy;

 

(vi) insurer’s agreement to provide at least ten day’s prior written notice to the Servicer and Borrower (or applicable unit owner Mortgagee if for a PUD or Condominium Unit) before any reduction in coverage or cancellation of the policy; and

 

(vii) signature of an authorized representative of the insurer, if required by applicable law.

 

Section 15.2. Primary Mortgage Insurance

  

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15.2.1. Primary Mortgage Insurance Requirement.  Unless Primary Mortgage Insurance coverage with respect to a Mortgage Loan is canceled as provided in Section 15.2.4 herein, the Servicer must maintain at all times Primary Mortgage Insurance on any Mortgage Loan with an original LTV ratio in excess of 80%.

 

15.2.2. Primary Mortgage Insurance Coverage.  As to each Mortgage Loan which is required to have Primary Mortgage Insurance, pursuant to this Agreement or the related Mortgage Loan Documents, Primary Mortgage Insurance must at least provide coverage which insures against loss of that portion of the Unpaid Principal Balance of the Mortgage Loan that exceeds 75% of the Value of the Mortgaged Property.

 

15.2.3. Primary Mortgage Insurer Downgrading.  In the event that the rating assigned by a Rating Agency to the claims paying ability of any Primary Mortgage Insurer is reduced below the level permitted under Section 15.1.6, the Servicer shall use its best efforts to replace each Primary Mortgage Insurance Policy issued by such Primary Mortgage Insurer with a new Primary Mortgage Insurance policy issued by an insurer whose claims paying ability is acceptable to the Master Servicer.  The premium for any replacement Primary Mortgage Insurance policy shall not exceed the premium for the discontinued Primary Mortgage Insurance policy.

 

15.2.4. Primary Mortgage Insurance Cancellation.  If a Borrower requests cancellation of the Primary Mortgage Insurance policy with respect to his Mortgaged Property, the following requirements must be met:

 

(a) The current LTV ratio must be 80% or less.  The current LTV ratio must be calculated by dividing the Unpaid Principal Balance of the related Mortgage Loan by the Current Value of the Mortgaged Property;

 

(b) The related Mortgage Loan may not have been 30 days or more delinquent within the preceding twelve months; and

 

(c) There may not have been any other default under the terms of the related Mortgage Loan at any time during the preceding twelve months.

 

If the foregoing requirements are met, the Servicer may request the cancellation of such Primary Mortgage Insurance policy by submitting to the Master Servicer a Request for Primary Mortgage Insurance Cancellation.  If there are indications that the Current Value of the Mortgaged Property has declined, the Servicer shall (a) obtain an Appraisal Report with respect to such Mortgaged Property that is not more than 60 days old or (b) determine the value of such Mortgaged Property by such other method acceptable to the Master Servicer.  The expense of such an Appraisal Report shall not be borne by the Master Servicer.  The Current Value of such Mortgaged Property set forth the Appraisal Report shall be used as the divisor in clause (a) hereof to determine whether the recalculated current LTV is 80% or less.  If the recalculated current LTV is greater, the Primary Mortgage Insurance cancellation request will be denied.  In addition, the Master Servicer may deny such a request if it determines, in its reasonable discretion, that the interests of the Trustee may be harmed by such cancellation.

  

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15.2.5. Primary Mortgage Insurance Claims.  The Servicer must take all steps to ensure the payment of the maximum benefits payable under the terms of any Primary Mortgage Insurance policy.  The Servicer must work diligently with each Primary Mortgage Insurer to determine whether such insurer will settle the claim by taking title to the Mortgaged Property in question or in some other manner.  The Servicer also must notify the Master Servicer immediately in writing of any decision made by the applicable Primary Mortgage Insurer relative to a claim.  Upon receipt of any Primary Mortgage Insurance proceeds, the Servicer must deposit such amounts in the appropriate Custodial P&I Account.  The Servicer shall promptly notify the Master Servicer in writing if any Primary Mortgage Insurer at any time denies any or all of a claim filed under its Primary Mortgage Insurance policy.

 

Section 15.3. Hazard Insurance

 

15.3.1. Hazard Insurance Requirement.  Unless alternative coverage is provided pursuant to Section 16.3 hereunder, the Servicer must ensure that each Mortgaged Property is covered at all times by Hazard Insurance.

 

15.3.2. Hazard Insurance Coverage.  As to each Mortgaged Property, the amount of Hazard Insurance must be at least equal to the lesser of (a) the Unpaid Principal Balance of the related Mortgage Loan or (b) 100% of the insurable value of the improvements on the Mortgaged Property; provided, however, that in no case shall the amount of Hazard Insurance be less than the amount required to fully compensate for any damage to the improvements on the Mortgaged Property on a replacement cost basis.

 

15.3.3. Hazard Insurance Deductible.  Except as a greater amount may be required by an applicable law, each Hazard Insurance deductible may not exceed FNMA or FHLMC’s required deductible.

 

15.3.4. Hazard Insurance Vacancy Coverage.  The Servicer must ensure that each Mortgaged Property is adequately covered even when vacant and, where available, must obtain a vacancy permit endorsement.

 

15.3.5. Hazard Insurance Mortgagee Provisions.  Each Hazard Insurance Policy must contain or have attached a standard mortgagee clause in the form customarily used by or required by private institutional mortgage loan investors.  Such clause must provide that the Hazard Insurance carrier shall notify the named Mortgagee at least ten days before any reduction in coverage or cancellation of the policy.  All mortgagee clauses must be properly endorsed, necessary notices of transfer must be given and any other action must be taken that is necessary in order to protect the interests of the Trustee, its successors and/or assigns.  The standard mortgagee clause should read as follows:  “Insuring Wells Fargo Bank, N.A., as agent for [______________], its successors and/or assigns.”

 

Section 15.4. Flood Insurance

 

15.4.1. Flood Insurance Requirement.  Unless alternate coverage is provided pursuant to Section 16.6 hereunder, the Servicer must ensure that Flood Insurance is maintained at all times on Mortgaged Property that are in a special flood hazard area identified by the Secretary of HUD or the Director of the Federal Emergency Management Agency.

  

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15.4.2. Flood Insurance Coverage.  As to each Mortgaged Property, the amount of Flood Insurance must be at least equal to the lesser of (a) the maximum amount available under the National Flood Insurance Program’s regular program or its emergency program, (b) the Unpaid Principal Balance of the related Mortgage Loan or (c) 100% of the replacement cost of the improvements on the Mortgaged Property.

 

15.4.3. Flood Insurance Deductible.  Except as a greater amount may be required by applicable law, each Flood Insurance deductible may not exceed the lesser of (a) $1,000 or (b) one percent of the applicable amount of coverage.

 

Section 15.5. Title Insurance

 

15.5.1. Servicer’s Obligations.  The Servicer shall perform and comply with all requirements and conditions of each Title Insurance policy for each Mortgage Loan and the related Mortgaged Property that are to be performed or observed by the “Insured” or obligee thereunder as a condition to maintaining and keeping it in force, or making a claim under, such Title Insurance policy.  The Servicer shall be named as a payee on all Title Insurance policy loss drafts, and upon receipt thereof, the funds shall be credited to the extent of the sum of (i) the Unpaid Principal Balance of such Mortgage Loan and any interest accrued thereon, (ii) any outstanding advances thereon and (iii) any expenses owed by such Borrower which are due the Trustee, the Master Servicer or the Servicer, whether for its own account or others, to the appropriate Custodial P&I Account and the balance of such funds, if any, shall be credited to the appropriate Custodial T&I Account.

 

15.5.2. Policy Custody.  [Reserved]

 

15.5.3. Title Insurance Claims.  The Master Servicer must be notified contemporaneously with the making of any claim under the Title Insurance policy.  The Servicer shall disburse the proceeds of any such settlement in accordance with the instructions and requirements of the Master Servicer.

 

Section 15.6. Insurance Loss Settlements

 

15.6.1. Settlement Approval.  The approval of the Master Servicer need not be requested for disposition of insurance loss settlements where property damage is $10,000 or less, and the Servicer may disburse the loss proceeds as provided herein.  The Master Servicer must be notified before disposition of any insurance loss settlement involving property damage over $10,000.

 

15.6.2. Settlement Disbursements.  For each Mortgage Loan, including a Mortgage Loan secured by Mortgaged Property located in a Condominium Project or PUD, the Servicer is fully responsible for the disbursement of insurance loss settlements under each Hazard Insurance policy and each Flood Insurance policy where property damage is $10,000 or more, including but not limited to:

 

(a) arranging for and authorizing the restoration and rehabilitation of the related damaged Mortgaged Property in cooperation with the Borrower;

  

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(b) subject to applicable law, applying the Insurance Proceeds to reduction of the Unpaid Principal Balance of such Mortgage Loan, provided that the Servicer (i) shall have determined that such proceeds are insufficient to repair and restore the related Mortgaged Property, or that the repair and restoration of such Mortgaged Property is not feasible; and (ii) shall have obtained authorization of the Master Servicer to make such application of the Insurance Proceeds;

 

(c) collecting, endorsing and disbursing the Insurance Proceeds and arranging for progress inspections and payments, if necessary;

 

(d) complying with all requirements of any Primary Mortgage Insurance policy pertaining to the filing of claims and the settlement of insurance losses to assure that the security of such Mortgage Loan is not impaired and that the coverage of such Primary Mortgage Insurance policy is not jeopardized or otherwise adversely affected;

 

(e) assuring, through the receipt of Borrower’s affidavits, repair contract copies, lien waivers and the like, that the priority of the lien of the Security Instrument is preserved, and that the Insurance Proceeds are applied to the restoration or repair of the related Mortgaged Property if not applied in payment of such Mortgage Loan;

 

(f) obtain releases or waivers of liens and taking such other actions as are necessary to avoid the filing of laborers’, materialmen’s or mechanic’s liens against the related Mortgaged Property; and

 

(g) maintaining procedures and practices acceptable to the Master Servicer and in conformity with Prudent Servicing Practices for the control and disposition of insurance loss drafts.

 

15.6.3. Settlement Funds.  The Servicer shall be named as a payee on all insurance loss drafts and upon receipt thereof, the funds shall be credited to the Borrower’s Insurance Proceeds balance and deposited into (a) where such funds will be applied to the repair and restoration of the related Mortgaged Property and where required by applicable state law, one or more separate escrow accounts, so that the balance on deposit in such accounts is fully insured at all times by the FDIC through either the BIF or SAIF or (b) where such funds will not be applied to the repair and restoration of the related Mortgaged Property, the respective Custodial P&I Account.

 

15.6.4. Settlement Notice.  The Servicer shall report any such settlement to the Master Servicer on a Hazard Insurance Loss Draft Notification, together with a summary of the disposition of the proceeds.

 

15.6.5. Continuing Coverage.  If a letter of assurance is obtained from any insurer under a Hazard Insurance policy or a Flood Insurance policy that the insurance coverage shall continue in full force and effect, the Servicer shall deposit such letter in the appropriate Servicer Mortgage Loan File.

  

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15.6.6. Property Inspections.  The Servicer shall conduct property inspections in accordance with the milestones of the repair and rehabilitation plan for such Mortgaged Property and prepare Property Inspection Reports on any Mortgaged Property involving property damage over $15,000.  The Servicer shall furnish a copy of the repair and rehabilitation plan for such Mortgaged Property to the Master Servicer upon request.

 

ARTICLE 16

 

CONDOMINIUM AND PUD INSURANCE

 

Section 16.1. General Provisions

 

16.1.1. Applicability.  The provisions of this Article pertain solely to Mortgage Loans secured by Condominium Units or PUD Units.

 

16.1.2. Premiums.  The premiums for insurance policies required pursuant to this Article must be paid as a common expense by the Owners’ Association.

 

16.1.3. Deductible Reserves.  Funds for each of the deductibles associated with the insurance policies required pursuant to this Article must be included in the Owners’ Association’s reserves and must be so designated.

 

16.1.4. Name of Insured.  The name of the insured stated under each Insurance Policy required pursuant to the provisions of this Article must be similar in form and substance to the following:  “Association of Owners of the [Name of Condominium Project or PUD] for use and benefit of the individual Condominium or PUD Unit owners” (designated by name, if required).

 

16.1.5. Mortgagee Clause.  Each insurance policy required pursuant to the provisions of this Article must contain the standard mortgagee clause endorsed to provide that any disbursements shall be paid to the Owners’ Association for the use and benefit of Mortgagees as their interests may appear, or otherwise endorsed to fully protect the interest of (a) the Trustee and (b) the holders of a beneficial interest therein, if any.

 

16.1.6. Reconstruction Coverage.  If, with respect to a PUD or Condominium Project in which a Mortgaged Property is located, there is a construction code provision that would require changes to undamaged portions of the PUD or Condominium Project’s building(s) even when only part of a building is destroyed by an insured hazard, then the Servicer must ensure that each insurance policy required by this Article contains the necessary construction code endorsements to cover this exposure.

 

Section 16.2. Common Area Multiple Peril Insurance

 

16.2.1. Common Area Multiple Peril Insurance Requirement.  The Servicer must ensure that the Owner’s Association maintains, with respect to the PUD or Condominium Project in which a Mortgaged Property is located, a policy of Common Area Multiple Peril Insurance, with premiums being paid as a common expense.  The Common Area Multiple Peril Insurance

  

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policy must at least protect against loss or damage by fire and all other hazards that are normally covered by the standard extended coverage endorsement, and all of the perils customarily covered for similar types of projects, including those covered by the standard “all risk” endorsement.

 

16.2.2. Common Area Multiple Peril Insurance Coverage.  As to each Condominium Project or PUD in which a Mortgaged Property is located, a Common Area Multiple Peril Insurance policy must cover 100% of the current replacement cost of all of the common areas (other than the land and foundation), common elements including fixtures and building service equipment, as well as common personal property and supplies.

 

16.2.3. Common Area Multiple Peril Insurance Deductible.  Except as a greater amount may be required by applicable law, each Common Area Multiple Peril Insurance deductible may not exceed the lesser of (a) $10,000 or (b) one percent of the applicable amount of coverage.

 

16.2.4. Boiler and Machinery Coverage.  If a steam boiler is operating within the Condominium Project or PUD in which a Mortgaged Property is located, then the Servicer must ensure that boiler and machinery coverage is in force at all times.  This coverage must be evidenced by the standard form of boiler and machinery endorsement.  The minimum liability coverage per accident under boiler and machinery coverage must equal the insurable value of the boiler and equipment and the building housing such boiler or machinery, based upon current replacement cost, or $2 million, whichever is less.

 

Section 16.3. Blanket Hazard Insurance

 

16.3.1. Blanket Hazard Insurance Requirement.  Unless alternative coverage is provided pursuant to Section 16.3 hereunder, the Servicer must verify that each such Mortgaged Property is covered at all times by Hazard Insurance policy which provides blanket coverage for the individual units in the Condominium Project or PUD.

 

16.3.2. Blanket Hazard Insurance Coverage.  As to each Condominium Project or PUD which contains a Mortgaged Property for which its Hazard Insurance coverage is provided through a blanket policy, the amount of Hazard Insurance for a blanket policy a Condominium Project or PUD must be at least equal to the lesser of (a) the aggregate of the outstanding principal balances of all mortgage notes secured by units within the Condominium Project or PUD (including the Mortgage Notes secured by Mortgaged Properties) or (b) 100% of the replacement cost of the improvements on the Condominium Project or PUD Unit site.

 

16.3.3. Blanket Hazard Insurance Deductible.  Except as a greater amount may be required by an applicable law, each Hazard Insurance deductible for a blanket policy covering a Condominium Project or PUD may not exceed the lesser of (a) $10,000 or (b) one percent of the applicable amount of coverage.

 

Section 16.4. Common Area Comprehensive General Liability (CGL) Insurance

 

16.4.1. Common Area CGL Insurance Requirement.  The Servicer must ensure that the Owners’ Association maintains a Comprehensive General Liability Insurance policy

  

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covering all of the common areas, common elements, commercial spaces and public ways in the Condominium Project or PUD in which a Mortgaged Property is located.

 

16.4.2. Common Area CGL Insurance Coverage.  As to each Condominium Project or PUD in which a Mortgaged Property is located, a CGL Insurance policy should provide coverage of at least $1,000,000 for personal injury, bodily injury or property damage for any single occurrence.  Each CGL Insurance policy must contain a severability of interest endorsement preventing the insurer from denying the claim of a Condominium or PUD Unit owner because of negligent acts of the Owners’ Association or other unit owners.  Each CGL Insurance policy must include all other types of coverage and endorsements in the types and amounts required by private institutional mortgage loan investors for developments similar in construction, location and use.

 

Section 16.5. Owners’ Association Fidelity Insurance

 

16.5.1. Owners’ Association Fidelity Insurance Requirement.  The Servicer must ensure that the Owners’ Association maintains a fidelity bond or insurance against dishonest and fraudulent acts on the part of directors, managers, trustees, employees or volunteers responsible for handling funds belonging to or administered by the association.

 

16.5.2. Owners’ Association Fidelity Insurance Coverage.  The Owners’ Association fidelity bond or insurance must name the Owners’ Association as the insured and must be written in an amount sufficient to provide protection at least 150% of the insured’s estimated annual operating expenses and reserves.  An appropriate endorsement to the policy to cover any persons who serve without remuneration must be added if the policy would not otherwise cover volunteers.  Owners’ Association fidelity insurance coverage must be in an amount equal to at least 3 months assessments on all units in the Condominium Project or PUD.  Owners’ Association fidelity insurance coverage is not required if the Condominium Project or the PUD have fewer than 20 units.

 

Section 16.6. Blanket Flood Insurance

 

16.6.1. Blanket Flood Insurance Requirement.  Where a Mortgaged Property is a Condominium Unit or PUD Unit and is not individually covered by a Flood Insurance policy in accordance with the provisions of Section 15.4 hereof, the Servicer must verify that a Flood Insurance policy which provides blanket coverage for the individual units in the Condominium Project or PUD, is maintained at all times on Mortgaged Property that are in a special flood hazard area identified by the Secretary of HUD or the Director of the Federal Emergency Management Agency.

 

16.6.2. Blanket Flood Insurance Coverage.  As to each Condominium Project or PUD which contains a Mortgaged Property for which its Flood Hazard Insurance coverage is provided through a blanket policy, the amount of Flood Insurance must be at least equal to the lesser of (a) the maximum amount available under the National Flood Insurance Program’s regular program or the its emergency program, (b) the aggregate of the outstanding principal balances of all mortgage notes secured by units within the Condominium Project or PUD

  

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(including the Mortgage Notes secured by Mortgaged Properties), or (c) 100% of the replacement cost of the improvements on the Condominium Project or PUD Unit site.

 

16.6.3. Blanket Flood Insurance Deductible.  Except as a greater amount may be required by applicable law, each Flood Insurance deductible for a blanket policy covering a Condominium Project or PUD may not exceed the lesser of (a) $5,000 or (b) one percent of the applicable amount of coverage.

 

ARTICLE 17

 

ADVANCES

 

Section 17.1. Principal and Interest Advances

 

17.1.1. P&I Advance Requirement.  The Servicer shall advance P&I Advances and deposit to the respective Custodial P&I Account on or before each Remittance Date an amount equal to the aggregate of the difference between (a) the Monthly Payment that each Borrower was required to pay to the Servicer on the immediately preceding Due Date (excluding the amount of the related Servicing Fee) and (b) the amount actually received with respect to the related Monthly Payment by the Servicer (excluding the amount of the related Servicing Fee), which deposit may be made in whole or in part from any Amounts Held for Future Distribution.  Any Amount Held for Future Distribution so used shall be replaced by the Servicer from its own funds by deposit in the Custodial P&I Account on or before the Business Day preceding any future Remittance Date to the extent that funds in the Custodial P&I Account on such Remittance Date shall be less than the amount required to be remitted on such date The Servicer shall designate on its records the specific Mortgage Loans and related installments (or portions thereof) as to which such P&I Advance shall be deemed to have been made, such determination and related reimbursement allocations pursuant to the following paragraphs being conclusive for purposes of Section 17.1.3.

 

17.1.2. P&I Advance Limitation.  The Servicer is required to make P&I Advances with respect to a Mortgage Loan unless a P&I Advance is reasonably determined by the Servicer to be eventually non-recoverable from any Insurance Proceeds, Liquidation Proceeds, or the Borrower.

 

17.1.3. P&I Advance Recovery.  The Servicer’s P&I Advance shall be recoverable from subsequent Borrower Monthly Payments, Insurance Proceeds, Liquidation Proceeds related to the Mortgage Loan as to which such P&I Advance was made or, if the Representing Party is obligated to purchase such Mortgage Loan from the Trustee, from the price paid for such Mortgage Loan or pursuant to Section 17.4.

 

17.1.4. Advance During Bankruptcy and Foreclosure.  During litigation, bankruptcy proceedings or foreclosure proceedings pertaining to any Mortgage Loan or while REO transferred to the Trustee through foreclosure or a deed-in-lieu of foreclosure is held by the Trustee or its successors, the Servicer must continue to make monthly P&I Advances in respect of each such Mortgage Loan or REO to the respective Custodial P&I Account.  Subject to the provisions of Section 17.1.2 hereof, these P&I Advances must be made until the (i) Liquidation

  

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of each Mortgage Loan subject to such proceedings or (ii) in the case of REO transferred to the Trustee through foreclosure or a deed-in-lieu of foreclosure, the Liquidation of such REO.  Advances with respect to REO shall be made as if the related Mortgage Loan and Mortgage Note remained in effect.

 

Section 17.2. Foreclosure Advances

 

17.2.1. Foreclosure Advance Requirement.  During foreclosure proceedings, the Servicer must advance from its own funds all foreclosure expenses as they occur in accordance with the terms of this Agreement.  Such advances must be made by the Servicer up to the time of final disposition of the related Mortgaged Property.

 

17.2.2. Foreclosure Advance Limitation.  The Servicer is required to make advances pursuant to Section 17.2.1 with respect to a Mortgage Loan unless the Servicer reasonably determines (i) that such foreclosure will not increase the proceeds to the Trustee of liquidation of such Mortgage Loan after reimbursement of the Servicer for its expenses or (ii) that such expenses will be eventually non-recoverable from any Insurance Proceeds, Liquidation Proceeds or the Borrower.

 

17.2.3. Foreclosure Advance Recovery.  If foreclosure proceedings are terminated, the Servicer must collect all legal fees and costs from the Borrower.  Otherwise, the Servicer’s advances for reasonable foreclosure expenses shall be recoverable from Insurance Proceeds, Liquidation Proceeds or, if the Representing Party is obligated to purchase a Mortgage Loan from the Trustee, from the price paid for such Mortgage Loan.

 

17.2.4. Foreclosure Advance Records.  All foreclosure advances by the Servicer and reimbursements to the Servicer must be clearly identifiable in the respective Custodial T & I Account.

 

Section 17.3. Tax & Insurance Advances

 

17.3.1. T&I Advance Requirement.  If a Borrower’s Escrow Funds are insufficient to pay taxes or insurance premiums, the Servicer must advance from its own funds to the respective Custodial T&I Account an amount sufficient to cover the shortage and so as to assure the maintenance of a first lien position of the related Security Instrument on the related Mortgaged Property.

 

17.3.2. T&I Advance Recovery.  T&I Advances may be recovered from the Borrower’s subsequent monthly escrow payments, Insurance Proceeds, Liquidation Proceeds or the Borrower, but must never be recovered from scheduled principal or interest collections.  The Servicer may not recover T&I Advances from another Borrower’s Escrow Funds.

 

17.3.3. T&I Advance Limitation.  The Servicer is required to make a T&I Advance with respect to a Mortgage Loan unless such T&I Advance is reasonably determined by the Servicer to be eventually non-recoverable from any Insurance Proceeds, Liquidation Proceeds, or the Borrower.

  

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17.3.4. Advance During Bankruptcy and Foreclosure.  During litigation, bankruptcy proceedings or foreclosure proceedings pertaining to any Mortgage Loan or while REO transferred to the Trustee through foreclosure or a deed-in-lieu of foreclosure is held by the Trustee, the Servicer must continue to make required T&I Advances in respect of each such Mortgage Loan or REO to the respective Custodial T&I Account.  These T&I Advances must be made until each Mortgage Loan subject to such proceedings is liquidated or in the case of REO transferred to the Trustee through foreclosure or a deed-in-lieu of foreclosure is liquidated.  Advances with respect to REO shall be made as if the related Mortgage Loan and Mortgage Note remained in effect.

 

Section 17.4. Non-Recoverable Advances

 

17.4.1. Ordinary Recovery.  If at any time an advance made by a Servicer hereunder is determined by the Servicer to be a Non-Recoverable Advance, then the Servicer shall be entitled to be reimbursed for such advance by withdrawing from the Custodial P&I Account an amount equal to the Non-Recoverable Advance.

 

17.4.2. Final Recovery.  If the amounts on deposit in the related Custodial P&I Account are insufficient to reimburse the Servicer, then prior to any distribution to the Trustee, the Servicer shall be entitled to reimbursement from the payments made and the proceeds received with respect to such Mortgage Loan.

 

17.4.3. Non-Recoverable Advance Determination.  To determine whether an Advance is a Non-Recoverable Advance, the Servicer shall employ a broker’s price opinion, which is no more than twelve months old when so employed, of the fair market value of the Mortgaged Property related to the Mortgage Loan which is subject to such Advance, and calculate the difference between (a) the fair market value of such Mortgaged Property and (b) the sum of (i) a reasonable estimate of foreclosure costs which may be incurred in the foreclosure of such Mortgaged Property, and (ii) the amount of unreimbursed Advances made by the Servicer with respect to the related Mortgage Loan pursuant to the terms of this Agreement, is greater than zero.  If such a difference is greater than zero, then such difference represents the maximum amount of additional Advances which the Servicer shall make before determining that any additional Advances in excess of such amount are Non-Recoverable Advances.  If such difference is negative, then the magnitude of such difference is the amount of previously made unreimbursed Advances which the Servicer may now regard as Non-Recoverable Advances.  The Servicer shall provide the Master Servicer with an Officer’s certificate upon the determination that any Advance is a Non-Recoverable Advance.

 

Section 17.5. Failure to Advance

 

17.5.1. Grounds for Termination.  The failure of the Servicer to advance any funds required to be advanced by the Servicer under this Article 17 is cause for termination of Servicer under this Agreement.

 

17.5.2. Servicer Reimbursement.  To the extent the Master Servicer or the respective trustee, if any, must advance their respective funds due to the failure of the Servicer to advance as provided for in this Agreement or to remit funds to the Certificate Account as

  

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required by Section 18.3.1, the Servicer shall reimburse the advancing party for such amounts, on demand, together with all costs and expenses incurred by the advancing party, including, but not limited to, interest on the funds advanced.  Such interest shall be calculated at the lesser of the “prime rate” publicly announced in effect from time to time at the Reference Bank plus one percentage point and the maximum interest rate permitted by law.

 

Section 17.6. Rehabilitation Advance

 

17.6.1. Rehabilitation Advance Requirement.  The Servicer must advance from its own funds such amounts as are necessary to restore any damaged REO not covered by Hazard Insurance or Special Hazard Insurance in accordance with Section 14.5.

 

17.6.2. Rehabilitation Advance Limitation.  The Servicer is required to make advances pursuant to Sections 17.6.1 and 14.5 with respect to a Mortgage Loan unless the Servicer reasonably determines (i) that such rehabilitation will not increase the proceeds to the Trustee on liquidation of such Mortgage Loan after reimbursement of the Servicer for its expenses or (ii) that such expenses will be eventually non-recoverable from any Insurance Proceeds, Liquidation Proceeds or the Borrower.

 

17.6.3. Rehabilitation Advance Recovery.  The Servicer’s advances for reasonable rehabilitation expenses shall be recoverable from Insurance Proceeds, Liquidation Proceeds, or, if the Representing Party is obligated to purchase a Mortgage Loan from the Trustee, from the price paid for such Mortgage Loan.

 

Section 17.7. PMI Advances

 

17.7.1. PMI Advance Option.  In the event that the Servicer has recovered all Liquidation Proceeds with respect to a Mortgage Loan other than any amounts as to which a Primary Mortgage Insurance claim has been made, the Servicer shall have the option, but not the obligation, to advance the amount of such claim (a “PMI Advance”).

 

17.7.2. PMI Advance Recovery.  The Servicer’s PMI Advance shall be recoverable from the related Primary Mortgage Insurance proceeds; provided, however that if such PMI Advance or a portion thereof is eventually determined to be a Non-Recoverable Advance, the Servicer shall be entitled to reimbursement pursuant to Section 17.4.  Notwithstanding the foregoing, the Servicer shall not be entitled to reimbursement for a PMI Advance if the amount is not recoverable from the related Primary Mortgage Insurance proceeds as a result of an action by the Servicer which violates Section 4.4.2.

 

ARTICLE 18

 

REPORTING REQUIREMENTS

 

Section 18.1. Monthly Accounting Reports

 

18.1.1. Monthly Accounting Report Requirement.  With respect to any Remittance Date, the period for monthly accounting reports shall be from the first Business Day

  

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of the prior month through the last Business Day of the prior month, provided that (I) the reporting period for Prepayments in Full, Curtailments and Partial Liquidation Proceeds shall be from the Determination Date in the month of such Remittance Date, and (ii) such report shall include only (a) Monthly Payments received by the Servicer by the close of business on the Business Day preceding the Determination Date in the month of such Remittance Date which relate to the Due Date in such month, or in prior months to the extent not previously remitted and reported, and (b) any P&I Advances made in respect of such Monthly Payments.  With respect to Type 2 Mortgage Loans, all monthly reports prepared by the Servicer must be complete and must be received by the Master Servicer by the tenth calendar day of the following month.  With respect to Type 1 Mortgage Loans, all monthly reports prepared by the Servicer must be complete and must be received by the Master Servicer by the eighteenth calendar day of the following month.  All monthly accounting reports must show information in, and must be submitted in, a sequence according to Servicer Loan Number order.

 

18.1.2. Monthly Accounting Report Elements.  The Servicer shall forward to the Master Servicer a Monthly Accounting Report setting forth substantially the information required by FNMA Form 2010.  The Servicer must also complete and forward to the Master Servicer any other form or report as provided for in this Agreement, or as reasonably requested by the Master Servicer.

 

18.1.3. Automated Reports.  The Servicer may submit to the Master Servicer for review the Servicer’s automated reports which include all of the information required by the provisions of Section 18.1.2 hereof.  Upon approval by the Master Servicer, the Servicer may submit approved automated reports to the Master Servicer instead of the Forms listed in Section 18.1.2 hereof.

 

18.1.4. Electronic Reporting.  With the prior written consent of the Master Servicer, all reports to be made by the Servicer to the Master Servicer may be transmitted electronically in lieu of written reporting.  If the Servicer services more than one hundred Mortgage Loans for the Master Servicer, it shall arrange for electronic transmission of the required reports.  Any expenses occasioned by the electronic transmission of reports shall be borne by the Servicer.

 

18.1.5. Machine Readable Records.  At the request of the Master Servicer, the Servicer shall provide to the Master Servicer, in a mutually agreed machine readable format, the current names and mailing addresses of each Borrower.  The Master Servicer shall utilize such information solely for audit purposes, or in the event the Servicer is terminated hereunder.

 

Section 18.2. Account Reconciliations

 

18.2.1. Reconciliation Preparation.  The Servicer shall prepare reconciliations for each Custodial P&I Account, Custodial T&I Account and Custodial Buydown Account on a monthly basis and shall forward the same to the Master Servicer upon request.

 

18.2.2. Account Records.  Upon request of the Master Servicer, the Servicer shall also cause the depository for each of the accounts described in Section 18.2.1 hereof to forward

  

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directly to the Master Servicer, copies of all monthly account statements for the preceding monthly reporting period.

 

Section 18.3. Monthly Remittance Requirements

 

18.3.1. Remittance of Funds.  On each Remittance Date the Servicer shall transfer, to the extent not previously transferred as required pursuant to Section 6.1.3(e), from the funds in (or required hereunder to be in) the respective Custodial P&I Account as of the close of the Business Day immediately preceding the Determination Date in the month of such Remittance Date to the related Certificate Account, the following (other than any Amounts Held for Future Distribution in respect of such Remittance Date not exceeding the Threshold Amount and any amounts permitted to be retained by the Servicer or withdrawn from such account by the Servicer pursuant to the terms of this Agreement):

 

(a) all payments on account of principal (including Prepayments in Full and Curtailments received during the Applicable Unscheduled Principal Receipt Period) and interest (other than payments of interest related to any Unscheduled Principal Receipt as to which the Applicable Unscheduled Principal Receipt Period is a Mid-Month Receipt Period received by the Servicer on or before the last day of the Applicable Unscheduled Principal Receipt Period ending in the month in which such prepayment occurs), all net REO Disposition proceeds and proceeds received from any condemnation award or proceeds in lieu of condemnation other than that portion of such proceeds released to the mortgagor in accordance with the terms of the Mortgage Loan Documents or Prudent Servicing Practices;

 

(b) all net Liquidation Proceeds, all net Partial Liquidation Proceeds and Insurance Proceeds, other than any portion of Insurance Proceeds to be applied to the restoration or repair of the related Mortgaged Property or released to the Borrower in accordance with the requirements of law or Prudent Servicing Practices;

 

(c) all P&I Advances made by the Servicer;

 

(d) the Purchase Price, or portion thereof, paid for any Mortgage Loans or property acquired in respect thereof repurchased or substituted by the Servicer or a Representing Party; and

 

(e) all other amounts required to be deposited in the Custodial P&I Account or the Certificate Account pursuant to this Agreement.

 

(f) Notwithstanding Section 18.3.1, the Servicer shall be entitled to withhold and to pay to itself the applicable Servicing Fee (as adjusted pursuant to Section 7.6.1) from any payment on account of interest or other recovery (including Net REO Proceeds) as received and prior to deposit of such payments in the Certificate Account; provided further that with respect to any payment of interest received by the Servicer in respect of a Mortgage Loan (whether paid by the Mortgagor or received as Liquidation Proceeds, Insurance Proceeds or otherwise) which is less than the full amount of interest then due with respect to such Mortgage Loan,  only that portion of such payment that bears the same relationship to the total amount of such payment of interest as the per

  

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annum rate used to calculate the Servicing Fee, as set forth in Section 4.6, bears to the Mortgage Interest Rate borne by such Mortgage Loan shall be allocated to the Servicing Fee with respect to such Mortgage Loan.

 

18.3.2. Servicer Compensation.  The Servicer shall withdraw its Servicing Fee for each Mortgage Loan net of any Month End Interest payable pursuant to Section 7.6.1 from the related Custodial P&I Account prior to the remittance of such amounts to the Certificate Account with all other payments received with respect to the Mortgage Loans.

 

ARTICLE 19

 

TRANSFERS AND TERMINATION OF SERVICING

 

Section 19.1. Transfer of Servicing

 

19.1.1. Transfer Prohibition.  The Servicer may not sell or transfer its portfolio serviced hereunder without the prior written consent of the Master Servicer, which consent cannot be unreasonably withheld.  Further, the Servicer may not subcontract any of its servicing duties, except as set forth in Section 11.2.1.

 

19.1.2. Transfer Request.  Any request for sale or transfer of servicing shall be reviewed on an individual basis.  For a request to be considered, however, the transferor must submit a written request to the Master Servicer.  The transferee must agree to enter into a servicing agreement with the Master Servicer substantially in the form of this Agreement and must be approved by the Master Servicer, and, if applicable, any rating agency with respect Mortgage Loans which are owned by a trust which has issued mortgage-backed securities, securitized by such Mortgage Loans, which have been rated at the request of such trust by such rating agency.  The Master Servicer must receive this documentation at least 45 days prior to the requested date of transfer.  The transferor shall be notified in writing of the Master Servicer’s approval or denial.  Such transfer shall be denied if the transferee does not meet the approval requirements of the Master Servicer, or any such rating agency.

 

19.1.3. Servicer Liability.  The transferor of servicing shall be liable to the Master Servicer and the Trustee for any servicing obligation violations that occur before, during, and up to and including the day the portfolio is actually transferred.  The transferee of servicing shall be liable for any breach of servicing obligations that occurs after the transfer of the servicing portfolio.

 

19.1.4. Master Servicer’s Determination.  If the transferor and transferee disagree about liability for violations of representations and warranties and servicing requirements hereunder, the Master Servicer has the right, in its reasonable discretion, to determine which party or parties are liable for such violations.

 

Section 19.2. Termination of Servicing

 

19.2.1. Grounds for Termination.  The Trustee shall have the right to terminate for cause the servicing privileges of the Servicer under this Agreement, either with respect to certain

  

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Mortgage Loans serviced hereunder or with respect to all Mortgage Loans serviced hereunder in the event that (i) any of the following occur, (ii) the Trustee has given the Servicer prior written notice of the occurrence of such event and (iii) with respect to clauses (a), (b) or (f) hereof, the Servicer has failed to cure such event within a reasonable time, which shall in all cases be no less than ninety (90) days:

 

(a) the Servicer has breached any material obligation set forth or incorporated by reference in this Agreement or the Mortgage Loan Purchase Agreement, including, without limitation, the Servicer’s failure to maintain the requisite Fidelity Bond and Errors and Omissions Policy in the amounts specified herein;

 

(b) the Servicer has made one or more false or misleading representations or warranties in this Agreement or any Mortgage Loan Purchase Agreement, or in any documents relating to the foregoing agreements;

 

(c) the appointment of a trustee or receiver for the Servicer or any of its property;

 

(d) the execution by the Servicer of an assignment for the benefit of its creditors;

 

(e) any material change in the financial status of the Servicer that, in the opinion of the Trustee, could materially adversely affect the Trustee, or the Servicer’s ability to service the Mortgage Loans;

 

(f) the Servicer’s placement on probation or suspension by a federal or state government agency, including, without limitation, FHLMC, FNMA or GNMA;

 

(g) the Servicer’s assignment or attempted assignment of any of its interests, rights, or obligations set forth herein without the Master Servicer’s prior written consent;

 

(h) the Servicer has been terminated for cause pursuant to the terms of another servicing agreement with the Master Servicer; or

 

(i) failure by the Servicer to duly perform, within the required time period, its obligations under Section 4.1.3, 4.1.4 or 20.3 which failure continues unremedied for a period of [twenty-five (25)] days after the date on which written notice of such failure, requiring the same to be remedied, shall have been given to the Servicer by any party to this Agreement or by any master servicer responsible for master servicing the Mortgage Loans pursuant to a securitization of such Mortgage Loans.

 

19.2.2. Trustee Notification.  The Master Servicer shall notify the Trustee of the occurrence of any of the events set forth in Section 19.2.1, together with the Master Servicer’s recommended course of action regarding the termination of the Servicer.

 

19.2.3. Servicer Termination.  (a) Following the occurrence of any of the events set forth in Section 19.2.1, the Trustee may elect, at its reasonable discretion, to terminate the

  

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Servicer under this Agreement with respect to the Mortgage Loans.  The Trustee shall provide a written termination notice to the Servicer.

 

(b) Notwithstanding anything to the contrary in this Agreement, the Trustee or, if applicable, the Trust Administrator may terminate the Servicer following the occurrence of any of the events set forth in Section 3.09 of the Pooling and Servicing Agreement, in accordance with the procedure for termination set forth therein.

 

19.2.4. Consequences of Termination.  If this Agreement with the Servicer is terminated pursuant to Section 19.2.3 hereof, the Servicer shall deliver all Servicer Mortgage Loan Files, in their entirety, for those Mortgage Loans serviced under this Agreement, as well as any other documents or reports held by the Servicer concerning such Mortgage Loans, to the transferee designated by the Trustee and shall assist in the efficient and timely transfer of the servicing to such transferee.  The Servicer shall not be entitled to compensation for servicing following its termination.

 

19.2.5. Effect of Termination.  In the event of the termination of this Agreement, the Servicer is not released from its obligations under this Agreement.  If its servicing is terminated for cause, the Servicer must pay the expenses of the Master Servicer incurred in connection with transfer of the servicing and any actual and direct damages, including, without limitation, actual and direct damages or losses of the Trustee resulting from such termination.

 

19.2.6. Custodial Account Threshold Reduction.  In the event that any of the events specified in clauses (a) through (h) of Section 19.2.1 or in clauses (g), (h) or (i) of Section 4.1.6 occur, the Master Servicer, in its reasonable discretion, may notify the Servicer in writing that the applicable Threshold Amount has been reduced to such amount not less than $1,000 as shall be specified in such notice.

 

ARTICLE 20

 

MISCELLANEOUS PROVISIONS

 

Section 20.1. Amendments

 

20.1.1. Unilateral Authority.  The Servicer acknowledges that the Master Servicer may, upon written notice, supplement or amend the provisions of this Agreement from time to time, without the need to obtain the Servicer’s consent to (a) correct ambiguous or erroneous provisions in this Agreement; (b) make changes necessary or helpful to maintain compliance with applicable law; (c) conform to evolving industry standards regarding the servicing of residential mortgage loans generally; (d) modify Schedule A to reflect the purchase of any Mortgage Loan pursuant to this Agreement or another agreement or to change the applicable loan Type for any Mortgage Loan; (e) to change the definition of Applicable Unscheduled Receipt Period with respect to any Mortgage Loan and any type of Unscheduled Principal Receipt from a Mid-Month Receipt Period to a Prior Month Receipt Period or from a Prior Month Receipt Period to a Mid-Month Receipt Period; or (f) make such other modifications or amendments thereto, which the Master Servicer deems advisable, provided that no such

  

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modification or amendment shall have a material adverse impact so as to materially increase the obligations of, or to materially decrease the benefits to, the Servicer.

 

20.1.2. Consensual Amendment.  Except as provided for in Section 20.1.1 hereof, the Master Servicer must obtain the written consent of the Servicer to any amendment hereto that would either increase materially the obligations of the Servicer or decrease materially the benefits to the Servicer.

 

20.1.3. Trustee Notification.  The Trustee shall be provided with notice of the substance of any amendments or modifications made to this Servicing Agreement pursuant to the provisions of this Section 20.1.

 

20.1.4. Trustee Disapproval.  With regard to any proposed modification or amendment to this Agreement which shall have a material adverse impact upon the beneficial rights enjoyed hereunder by the Trustee, the Trustee shall receive written notice of the substance of any proposed amendments or modifications at least ten business days prior to the proposed date of enactment of such amendment or modification which shall also state therein the proposed date of enactment.  If the Trustee notifies the Master Servicer in writing, prior to the proposed date of enactment, of its opposition to the adoption of such an amendment or modifications, the Master Servicer shall not proceed with such modification or amendment.

 

Section 20.2. General Construction

 

20.2.1. Binding Nature.  This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns.

 

20.2.2. Entire Agreement.  This Agreement contains the entire agreement and understanding between the parties hereto with respect to the subject matter hereof and supersedes all prior and contemporaneous servicing agreements, understandings, inducements and conditions, expressed or implied, oral or written, of any nature whatsoever with respect to the subject matter thereof.  The express terms hereof control and supersede any course of performance and/or usage of the trade inconsistent with any of the terms hereof.

 

20.2.3. Governing Law.  This Agreement and all questions relating to its validity, interpretation, performance and enforcement shall be governed by, construed, interpreted and enforced in accordance with the laws of the State of New York, notwithstanding any New York or other choice-of-law rules to the contrary.

 

20.2.4. Indulgences Not Waivers.  Neither the failure nor any delay on the part of a party to exercise any right, remedy, power or privilege under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any right, remedy, power or privilege preclude any other or further exercise of the same or of any other right, remedy, power or privilege, nor shall any waiver of any right, remedy, power or privilege, with respect to any occurrence be construed as a waiver of such right, remedy, power or privilege with respect to any other occurrence.  No waiver shall be effective unless it is in writing and is signed by the party asserted to have granted such waiver.

  

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20.2.5. Titles Not to Affect Interpretation.  The titles of the articles and sections contained in this Agreement are for convenience only, and they neither form a part of this Agreement nor are they to be used in the construction or interpretation hereof.

 

20.2.6. Provisions Severable.  The provisions of this Agreement are independent of and severable from each other, and no provision shall be affected or rendered invalid or unenforceable by virtue of the fact that for any reason any other or others of them may be invalid or unenforceable in whole or in part.

 

20.2.7. Servicer an Independent Contractor.  All services, duties and responsibilities of the Servicer under this Agreement shall be performed and carried out by the Servicer as an independent contractor, and none of the provisions of this Agreement shall be deemed to make, authorize or appoint the Servicer as agent or representative of any Trustee of any Mortgage Loans or of the Master Servicer.

 

20.2.8. Third Party Beneficiary.

 

(a) The parties agree that the Trustee and, if applicable, the Trust Administrator are intended third party beneficiaries of the representations, warranties, covenants and agreements of the Servicer set forth in this Agreement.  The Trustee shall have full authorization to enforce directly against the Servicer any of the obligations of the Servicer provided for herein.

 

(b) For purposes of this Agreement, including but not limited to Section 4.1.3, any Master Servicer shall be considered a third party beneficiary to this Agreement entitled to all the rights and benefits accruing to any Master Servicer herein as if it were a direct party to this Agreement.

 

20.2.9. Counterparts.  This Agreement may be executed in counterparts, each of which shall be deemed an original, and such counterparts shall constitute one and the same instrument.

 

Section 20.3. Insolvency.

 

The Servicer shall notify the Master Servicer of any of the events enumerated in Item 1.03 of Form 8-K with respect to the Servicer at least two Business Days prior to the effective date thereof and shall provide the Master Servicer with all information required by the Depositor to comply with its reporting obligation under Item 1.03 of Form 8-K not later than the effective date of any such event.

  

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their duly authorized representatives as of the date set forth above.

 

	 	WELLS FARGO BANK, N.A.	 
	 	 	as Servicer	 
	 	 	 	 
	
 

	
By: 

	 	 
	 	 	Name:  	 
	 	 	Title:    	 

 

 

	 	[_______________________]	 
	 	 	 	 
	 	 	 	 
	
 

	
By: 

	 	 
	 	 	Name:  	 
	 	 	Title:    	 

 

 

  

 

  

 

SCHEDULE A

 

 

Mortgage Loan Schedule

	

 

Master Servicer Loan Number

	 	

 

Cut-Off Date Unpaid Principal Balance

	 	

 

Cut-Off Date Regarding Initial Coverage Under This Agreement

	 	

 

Servicing Fee Percentage

	 	

 

Loan Type

	 	

 

Custodian

	  	 	  	 	  	 	  	 	  	 	  

 

 

 

 

 

 

 

  

Sch. A-1

  

 

EXHIBIT A

 

WELLS FARGO & COMPANY MASTER GUARANTEE

AGREEMENT REGARDING CUSTODIAL P&I ACCOUNT FUNDS

 

THIS MASTER GUARANTEE AGREEMENT (the “Guarantee”) dated as of May 1, 1999 is entered into by Wells Fargo & Company (“Wells Fargo”), a Delaware corporation, in favor of each trustee now or hereafter acting in such capacity for the benefit of the certificateholders of each outstanding and future series of Wells Fargo Asset Securities Corporation mortgage backed securities transactions (collectively, the “MBS Transactions”), including without limitation the trustees identified in Paragraph 8 hereof, and any successor trustee, all of which trustees are referred collectively in this Guarantee as the “Trustee.”

 

WHEREAS, this Guarantee has been required by Standard & Poor’s, Fitch, Inc. and Moody’s Investors Service, Inc. (collectively, the “Rating Agencies”) (each of which has assigned ratings to certain of the classes issued in certain of the MBS Transactions) in connection with their agreement to permit Wells Fargo Bank, N.A., as servicer in the MBS Transactions (in such capacity, “Servicer”), to hold among Servicer’s general corporate funds for a period of time principal and interest payments, insurance proceeds, liquidation proceeds and other amounts received by Servicer pertaining to the mortgage loans underlying the MBS Transactions serviced by Servicer (collectively, the “Mortgage Loans”).

 

WHEREAS, Servicer is an indirect, wholly-owned subsidiary of Wells Fargo, a bank holding company, and Wells Fargo derives substantial benefit from Servicer’s servicing of the Mortgage Loans pursuant to the terms of a separate servicing agreement between [______________], as master servicer, and Servicer, as servicer, for each MBS Transaction (each, a “Servicing Agreement”).

 

WHEREAS, to further induce the Rating Agencies to permit Servicer to withdraw funds from the Custodial P&I Accounts and commingle such funds with the general assets of Servicer to be used for general corporate purposes until such time as such funds are required by the terms of the applicable Servicing Agreement to be remitted to the related Certificate Account, Wells Fargo has agreed to guarantee the performance of Servicer’s obligation under the Servicing Agreements to timely remit to the related Certificate Accounts the amounts, if any, so withdrawn from the Custodial P&I Accounts and so used by Servicer.

 

NOW THEREFORE, in consideration of the Rating Agencies’ permitting the described arrangement, and for other good and valuable consideration the receipt and sufficiency of which Wells Fargo hereby acknowledges, Wells Fargo hereby agrees for the benefit of each Trustee for the benefit of the certificateholders of each MBS Transaction as follows:

 

1.  Defined Terms.  Capitalized terms used but not defined in this Guarantee shall have the respective meanings ascribed to such terms in each Servicing Agreement.

 

2.  Guarantee of Certain Obligation of Servicer under Servicing Agreement.  Wells Fargo hereby absolutely, unconditionally and irrevocably guarantees to each Trustee for the benefit of the certificateholders of each MBS Transaction the full and prompt performance,

  

Exh. A-1

  

 

satisfaction and discharge of Servicer’s obligation under each Servicing Agreement to remit to the related Certificate Account by the time specified in each Servicing Agreement amounts, if any,  withdrawn by the Servicer from the related Custodial P&I Account and commingled with the Servicer’s general assets (such obligation, the “Servicer’s Obligation”).

 

3.  Guarantee Absolute.  The liability of Wells Fargo under this Guarantee shall be absolute and unconditional irrespective of:  (i) any change in the time, manner of place of performance of, or in any other term of, the Servicer’s Obligation; (ii) the avoidance or subordination of any Servicer’s Obligation, or the invalidity or unenforceability thereof; (iii) the waiver, consent, extension, forbearance or granting of any indulgence, or other modification or amendment to any obligation of Servicer under the Servicing Agreement; including without limitation the Servicer’s Obligation; (iv) the disallowance under bankruptcy or similar laws relating to insolvency applicable to Servicer of all or any portion of any claim by the Trustee or certificate holders for the performance,  satisfaction, and discharge of the Servicer’s Obligation; or (v) any other circumstance that might otherwise constitute a defense to, or a discharge of the Servicer’s Obligation (except for an express written release or discharge of Servicer by the Trustee), all of the foregoing being expressly waived by Wells Fargo as defenses to its obligations under this Guarantee.

 

4.  Waiver.  Wells Fargo hereby waives any requirement of promptness,  diligence, presentment, demand, filing of claims with a court in the event of receivership or bankruptcy of Servicer, protest, or notice of protest with respect to the Servicer’s Obligation, and notice of acceptance of this Guarantee.

 

5.  Reinstatement.  Guarantor further agrees that, to the extent that the Servicer or the Guarantor makes a payment or payments to the Trustee,  which payment or payments or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside and/or required to be repaid to the Servicer or the Guarantor or their respective estate, trustee, receiver or any other party under any bankruptcy law,  state or federal law, common law or equitable cause, then to the extent of such payment or repayment, this Guarantee and the advances or part thereof which have been paid, reduced or satisfied by such amount shall be reinstated and continued in full force and effect as of the date such initial payments, reduction or satisfaction occurred.

 

6.  No Waiver of Rights.  No failure or delay on the part of the Trustee or the Trust Administrator, if applicable, in exercising any right or remedy arising under this Guarantee shall operate as a waiver of the Trustee’s rights hereunder; nor shall any single or partial exercise of any right hereunder preclude any other or further exercise hereunder or the exercise of any other right by or on behalf of the Trustee.

 

7.  Representation and Warranties.  Wells Fargo hereby represents and warrants to the Trustee as follows:

 

(a)  Organization.  Wells Fargo is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware.  Wells Fargo is duly qualified and in good standing to transact business in each jurisdiction in which such qualification is necessary, other than those jurisdictions where the failure to be so

  

Exh. A-2

  

 

qualified would not have a material adverse effect upon the business, assets or financial condition of Wells Fargo.

 

(b)  Authority.  Wells Fargo has all requisite corporate power and authority to execute and enter into this Guarantee and to perform the obligations required of it hereunder.  The execution and delivery of this Guarantee and the consummation of the undertakings contemplated hereby, have each been duly and validly authorized by all necessary corporate action, and this Guarantee constitutes a valid and legally binding agreement of Wells Fargo enforceable in accordance with its terms, except as such enforcement may be limited by applicable bankruptcy, moratorium, reorganization or other laws and regulations affecting the rights and remedies of creditors generally.

 

(c)  No Conflicts.  The execution, delivery, and performance of this Guarantee by Wells Fargo will not constitute (a) a violation or breach of any terms or provisions of Wells Fargo’s Restated Certificate of Incorporation or by-laws or (b) a violation or breach of any terms or provisions of, or a default under any provision of statutory law or published regulation or any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which Wells Fargo is a party or by which Wells Fargo is bound, or any order, rule or regulation binding on Wells Fargo and known to Wells Fargo of any court or governmental agency or body having jurisdiction over Wells Fargo.

 

8.  Notices.  All notices and other communications hereunder shall be in writing (including a writing delivered by facsimile transmission) and shall be deemed to have been duly given (a) when delivered, if sent by registered or certified mail (return receipt requested), or (b) when delivered, if delivered personally or by facsimile, or (c) on the following business day, if sent by overnight mail or overnight courier, in each case to Wells Fargo and the Trustee at the following addresses (or at such other addresses as shall be specified by like notice):

 

	
  

	
If to Wells Fargo:

 

	
  

	
Corporate Secretary

	
  

	
Wells Fargo & Company

	
  

	
Wells Fargo Center

	
  

	
Sixth and Marquette

	
  

	
Minneapolis, MN  55479-1026

	
  

	
Facsimile No.:  612-667-6082

 

	
  

	
With a copy to:

 

	
  

	
Corporate Treasury

	
  

	
Wells Fargo & Company

	
  

	
Wells Fargo Center

	
  

	
Sixth and Marquette

	
  

	
Minneapolis, MN  55479-1019

	
  

	
Facsimile No.:  612-667-9908

  

Exh. A-3

  

 

	
  

	
If to the Trustee:

 

	
  

	
[______________]

	
  

	
[______________]

	
  

	
[______________]

	
  

	
Facsimile No.:  [______________]

 

or to such other address to receive any such confirmation or notice as the notice party may have designated by written notice to the other notice party at the above address.

 

9.  Successors and Assigns.  This Guarantee shall be binding upon Wells Fargo,  its successors, transferees, and assigns, and shall inure to the benefit of and be enforceable by the Trustee and its successors, transferees and assigns.

 

10.  Waiver of Subrogation.  As long as any Servicer’s Obligation has not been satisfied and discharged in full, Wells Fargo shall have no right of subrogation and hereby waives any right to enforce any remedy which the Trustee now has or may hereafter have against Servicer or any other guarantor of all or any part of the Servicer’s Obligation.

 

11.  Subordination.  Wells Fargo agrees that any and all claims of Wells Fargo against Servicer or any other guarantor of all or any part of the Servicer’s Obligation, whether arising by reason of any payment by Wells Fargo pursuant to the provisions hereof or otherwise, and all indebtedness of Servicer to Wells Fargo, shall be subordinate and subject in right of payment to the full and prompt performance, satisfaction, and discharge, of Servicer’s Obligation.

 

12.  Entire Agreement; Amendment and Waivers.  This Guarantee contains the complete and entire agreement of Wells Fargo with respect to its provisions, and no change, waiver or amendment hereto shall be binding upon Wells except as separately set forth in a writing and duly executed by Wells Fargo.

 

13.  Severability.  The invalidity, illegality, or unenforceability of any provision of this Guarantee pursuant to judicial decree shall not affect the validity, legality, or enforceability of any other provisions of this Guarantee, all of which other provisions shall remain in full force and effect as written.

 

14.  Governing Law.  This Guarantee shall be governed by and construed in accordance with the laws of the State of New York (regardless of the laws that might otherwise govern under applicable principles of conflicts of law or comity).

  

Exh. A-4

  

 

IN WITNESS WHEREOF, the undersigned, a duly authorized officer of the Guarantor, has executed this Guarantee on behalf of the Guarantor as of the day and year first written above.

 

	 	WELLS FARGO & COMPANY	 
	 	 	 	 
	 	 	 	 
	
 

	
By

	 	 
	 	 	[________________]	 
	 	 	[________________]	 

 

 

 

 

 

Exh. A-5

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00228-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00228-of-00352.parquet"}]]