rescap client guide

5/31/2018 ResCap Client Guide

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37-501-1003 (10/01/03)

Client Guide

Version 1-03-G04

2003 Residential Funding Corporation. All rights reserved.

CASE 0:13-cv-03498-JRT-JSM Document 41-2 Filed 03/28/14 Page 2 of 513


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Table of Cont

Table of Contents

Chapter 1 Introduction

Chapter 2 Client Eligibility



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Client GuideTable of Contents

Chapter 2A Representations, Warranties andCovenants

Chapter 2B Discontinued Loans



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Client GTable of Cont

Chapter 3 Loan Eligibility



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Chapter 4 Underwriting

Borrower



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Chapter 4A Assetwise

Chapter 5 Products

Chapter 6 Loan Programs

Chapter 6A Jumbo A Loan Program

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Chapter 6B Expanded Criteria Loan Program

Chapter 6C Home Solution Loan Program

Chapter 6E AlterNet/Credit Gap Loan Program

Chapter 6F Performance Loan Program



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Chapter 6G Home Equity Loan Program

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Chapter 6H 125 CLTV Loan Program

Chapter 7 At-A-Glances



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Chapter 8 Servicing Released



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Chapter 9 Commitment and Delivery



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Chapter 10 Definitions

Chapter 11 Forms



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Client GuideRepresentations,

Warranties andCovenants

A201

Specific Representations,Warranties and Covenants Concerning Client

Client and, to Clients knowledge, Clients Guarantor, if applicable, is and shall continue to beduly organized, validly existing, and in good standing under th e laws of the United States orunder t he laws of th e ju risdiction in which it was incorporated or organized, as applicable,and has and shall continue to maintain all licenses, registrations, and certifications necessaryto carry on its business as now being conducted, and is and will continue to be licensed,qualified, and in good standing in each State where a Mortgaged Property is located if thelaws of such State require licensing or qualification in order to conduct business of the typeconducted by Client and, in any event, Client is and will remain in compliance with t he laws

of any such State, and is and will remain in good standing with federal authorit ies, t o theextent necessary to ensure the enforceability of the related Loan. Client has disclosed thefinal writt en reports, actions and/or sanctions of any and all reviews, investigation,examinations, audits, actions and/ or sanctions that have been undertaken and/or imposed,within two y ears prior to t he date of the Client Contract, by any federal or State agency orinstrum entality w ith r espect t o either t he lending or related financial operations of Client, orthe ability of Client t o perform in accordance with t he Program Documents term s. Each of therepresentations and warr anties made by Client in its Client Application is t rue, accurate, andcomplete, and is deemed t o be remade in it s entirety, as of the date of th e Client Contract,and as of each .

Client has and will maintain t he full corporate, partnership or limited liability company power

and authority t o execute and deliver the Program Documents and to perform the term s ofthis Client Guide. The execution, delivery, and perform ance of the Program Documents andthe perform ance of the t erms of th is Client Guide by Client, and t he consumm ation of t hetransactions contemplated, have been duly and validly authorized. The Program Document sand this Client Guide evidence Clients legal valid, binding, and enforceable obligations. Allrequisite corporate, partnership or lim ited liability company action has been taken by Clientto m ake the Program Document s and the t erms of t his Client Guide valid and binding uponClient and enforceable in accordance with their respective terms.

The consumm ation of th e transactions contem plated by t he Program Docum ents and theClient Guide terms are in Clients ordinary course of business, and the transfer, assignment,and conveyance of th e Mortgage Notes and the Mortgages by Client, pursuant t o th e

Program Document s and the Client Guide term s are not subject to t he bulk t ransfer laws orany similar statu tory provisions in effect in any applicable jurisdiction.

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Client GuideRepresentaWarranties Covenants

Neither the execution and delivery of the Program Document s, the acquisition and/ or m akingof t he Loans by Client, t he sale of the Loans to GMAC-RFC or the t ransactions contem platedthereby or pur suant to this Client Guide, nor t he fulfillment of or compliance with t heProgram Documents t erms and conditions, w ill conflict with or result in a breach of any of th eterms, conditions, or provisions of Client's articles of incorporation, charter, by-laws,partnership agreement, or ot her organizational document, or of any legal restriction orregulatory directive or any agreement or instrument to which Client is now a party or bywhich it is bound, or constitut e a default or result in an acceleration under any of t heforegoing, or result in the violation of any law, ru le, regulation, order, j udgm ent, or decree towhich Client, or any of its property is subject, or impair the ability of GMAC-RFC to realize onany of the Loans, or impair the Value of any of the Loans.

Client has the ability t o perform each and every obligation of and/ or satisfy each and everyrequirement imposed on, Client pursuant t o the Program Document s and this Client Guide,and no offset, counterclaim, or defense exists to the full perform ance by Client of t herequirements of Program Documents and this Client Guide.

There is no action, suit, proceeding, inquiry, review, audit, or investigation pending orthreatened against Client t hat, either in any one instance or in the aggregate, m ay result inany material adverse change in the business, operations, financial condition, properties, orassets of Client, or in any m aterial liability on the part of Client, or which would draw int oquestion the validity or enforceability of any of t he Program Documents, this Client Guide, or

the Loans or of any action taken or to be taken in connection with Clients obligationscontemplated in any of the Program Documents or t his Client Guide, or which would be likelyto im pair mat erially Clients ability to perform under the t erms of the Program Documents orthis Client Guide.

No consent, approval, authority, or order of any court or governm ental agency or body isrequired for th e execution and perform ance by Client of, or compliance by Client w ith, any ofthe Program Documents or this Client Guide, the sale of any of the Loans, or theconsum mat ion of any of the t ransactions contemplated by any of the Purchase Docum ents,or, if required, such unconditional approval has been obtained prior to the related .

Neither the Program Document s, the Client Application, t his Client Guide, nor any stat ement,report, or ot her document fur nished or to be furn ished by Client pursuant t o the ProgramDocument s or this Client Guide, contains any untr ue statement of m aterial fact or omit s tostate a mat erial fact necessary to m ake the statem ents contained therein not m isleading.Client m eets GMAC-RFCs Eligibilit y Standards, and shall take all steps necessary t o continu eto meet such Eligibility Standards.

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The Client represents that the Loans are not securities under any federal or State securitieslaws or any rules or regulations thereunder and th at t he transactions contemplated by t hisClient Guide do not r equire registration under, and are not subj ect to, any federal or Statesecurities laws or any rules or regulations thereunder.

Except as m ay be otherwise d isclosed by Client to GMAC-RFC and acknow ledged by GMAC-RFC in writing prior to the date of the Client Contract, there are no accrued liabilities ofClient, with respect to any of the Loans, or circumstances under which any such accruedliabilities w ill arise against GMAC-RFC, as successor t o Clients inter ests in and to the Loans,with respect to any action or failure to act by Client occurring on or prior to t he .

Clients origination and servicing of the Loans have been legal, proper, prudent, andcustom ary and have conformed to t he highest standards of the residential m ortgageorigination and servicing business.

Client has complied wit h, and has not violated any law, ordinance, requirement, regulation,rule, or order applicable to it s business or properties, t he violation of w hich might adverselyaffect the operations or financial conditions of Client, or the ability of Client t o consumm atethe t ransactions contem plated by the Program Document s and t his Client Guide.

Client will comply with all provisions of th is Client Guide and the Program Docum ents, andwill promptly notify GMAC-RFC of any occurrence, act, or omission regarding Client, theLoan, th e Mortgaged Property or t he Mortgagor of which Client has knowledge, whichoccurrence, act, or omission m ay m aterially affect Client, t he Loan, t he Mortgaged Property,or the Mortgagor.

The Client has no j udgment , court order, claim, counterclaim, defense, right of set- off orsimilar right against GMAC-RFC.

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A202

Specific Representations,Warranties and Covenants Concerning Individual Loans

For all Loans, t he Client r epresents, w arrant s and covenant s to GMAC-RFC as follows:

Each of th e Loans delivered and sold to GMAC-RFC meets th e applicable program term s andcriteria set forth in this Client Guide. All information relating to each Loan delivered and soldto GMAC-RFC is tr ue, com plete and accurat e and t here are no om issions of m aterial facts. Alldata provided by the Client to GMAC-RFC relating to any Loan, whether in electronic format,or otherw ise, is tru e and complete and accurately r eflects the inform ation in t he related Loanfile.

The Client is in compliance with, and has taken all necessary action to ensure that each Loanis in compliance with all representations, warranties and requirements contained in t hisClient Guide.

The provisions of the Loan have not been im paired, waived, altered or modified in anyrespect, un less approved in w rit ing by GMAC-RFC. The issuer of any r elated PMI Policy andthe t itle insurer have approved t he substance of any such waiver, alteration, or m odificationto t he extent required by the r espective policies. No Mortgagor has been released, in w holeor in part.

All , and are genuine, have beencompleted, duly and properly executed, are in recordable form and delivered in the form andmanner specified in this Client Guide, and each Loan is the Mortgagors legal, valid andbinding obligation enforceable in accordance with its terms. All originals and copies of suchdocuments and all other docum ents, mat erials, and other inform ation required to besubmitted to GMAC-RFC have been so submitted, and are complete and accurate. All LoanDocuments, , Final Documents and all other documents describing orotherwise relating t hereto are in compliance wit h all applicable local and Stat e laws,regulations and orders.

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The Client has good t itle t o and is t he sole owner of, each Loan delivered and sold to GMAC-RFC. Except f or t he security i nt erest of a war ehouse lender, wh ich securit y int erest Client hasdisclosed to GMAC-RFC in writing, the assignment of the Loan by the Client validly transferssuch Loan t o GMAC-RFC free and clear of any p ledge, lien or securit y int erest or otherencumbrance.

For each Loan registered with , th e Client represents that (a) if t he relat ing t o such Loan ident ifies MERS as the original m ort gagee of record, suchSecurity I nstrum ent provides that the Security I nstrum ent is given to MERS solely asnominee for the Client and its successors and assigns and that such Security Instrument hasbeen properly executed, acknowledged, delivered and recorded in all places necessary toperfect t he security int erest on t he in favor of MERS, solely as

nominee for t he Client and its successors and assigns; or ( b) if t he Loan is registered withMERS, and MERS is not the original mor tgagee of record, an assignmen t to MERS has beenprepared, duly executed and recorded and t he chain of assignment s is complete andrecorded from the original m ortgagee to MERS. Client fur ther represents t hat it has compliedwith all rules and procedures of MERS for its assignment of th e Security I nstrum ent t oGMAC-RFC, including, among other things, that the Client has confirmed the transfer onMERS to GMAC-RFC.

Each Loan has been closed and fully disbursed, except as permitted in the Section of th is Client Guide. There are no payoffs,assumptions or insurance claims pending on any Loan or pert aining to t he and the Borrower m ay not exercise any option under any of t he

to borr ow additional funds secured thereby from the Client or any other personor entity with out t he Noteholders consent.

Additionally, the Client warrant s that t he Client has not m ade arrangements with anyBorrower for any paym ent forbearance or fut ure refinancing with respect t o any Loan.

There is no default, breach, violation or event of acceleration existing under any Note or transferred to GMAC-RFC, and no event exists which, with notice andthe expiration of any grace or cure period, would constitu te a default, br each, violation orevent of acceleration, and no such default, breach, violation or event of acceleration hasbeen waived by the Client or by any ot her entity involved in originating or servicing the Loan.

Except as provided in a buydown or subsidy agreement, if any, m eeting the r equirements setforth in this Client Guide, t he Borrower (including any part y secondarily liable under the ) has no right of set-off, defense, counterclaim or r ight of rescission to anyLoan Document.

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The sale and transfer of each Loan t o GMAC-RFC does not v iolate any applicable State law s.To the extent that any applicable State law places any restrictions on the transfer of anyLoan, the Client has notified GMAC-RFC in writing of that restriction and any related Statelicensing or r egistration requirements.

The has been properly executed, acknowledged, delivered andrecorded in all places necessary to perfect the security interest in the in favor of the Client and its successors and assigns. If a Loan is registered with , andMERS is identified on the Security Instrument as the original mortgagee of record, Clientrepresents that such Security In strum ent provides that the Security I nstrum ent is given toMERS solely as nominee for the Client and it s successors and assigns. I f t he Loan isregistered with MERS, and MERS is not the original mortgagee of record, Client represents

that an assignm ent t o MERS has been prepared, duly executed and recorded and t he chain ofassignments is complete and recorded from the original mortgagee to MERS and Clientfurther represents that it has complied with all rules and procedures of MERS for itsassignment of the Security I nstrum ent t o GMAC-RFC, including, among ot her things, t hatClient has confirmed the transfer on MERS to GMAC-RFC.

Each GMAC-RFC Loan App licat ion ( 1003/ Form 65 ) was taken fromthe Borrower and processed for each Loan, and each Loan has been originated, closed, andtransferred in compliance with all applicable local, State and federal laws and regulationsincluding, but not limited to, the Real Estate Settlement Procedures Act, the Fair CreditReporting Act, the Equal Credit Opportunity Act, the Truth-in-Lending Act, the Fair HousingAct, and the National Flood Insurance Act. This warranty is made by the Client with respectto each GMAC-RFC Loan Application taken and pr ocessed for each Loan and wit h r espect toeach Loan made by t he Client or any other entit y.

Client makes the responsible lending representations, warranties and covenants set outbelow. These representations, warr anties and covenants are in addition to, and not insubstit ution for, Clients representations, warrant ies and covenants, made elsewhere in t hisClient Guide. All Loans must comply with all applicable federal, State, and local laws. AllLoans must be or iginat ed and serviced according t o GMAC-RFC standards contained in t hisClient Guide.

No Loan is a . In general, a Discontinued Loan is:

A Loan subject t o HOEPA/Section 32;

A purchase money Loan on a consumer s principal residence that exceeds thepoints and fees or APR triggers of HOEPA and Section 32;

An open-end line of credit on a consumers principal residence that exceeds thepoints and fees or APR triggers of HOEPA and Section 32; or

A Loan with term s that trigger high-cost m ortgage laws or regulations in certainStates, counties or cities regardless of whether the originator qualifies for anexemption.

See , Discontinued Loans, for t he complete definition of s.

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A Loan may not v iolate any of the following prohibited t erms and practices:

(a) No financing of pre-paid insurance products. No Loan finances single premiumcredit life, credit disability, credit unemployment , or any ot her pre-paid life orhealth insurance, directly or indirectly.

(b) Prepayment penalties. A Loan may not provide for a penalty for paying all orpart of the principal before the date on which t he principal is due except as setforth in t his paragraph and otherwise allowed by applicable federal, State, andlocal law.

The penalty may be enforced for only the first five years followingconsummation;

The penalty does not exceed 6 mont hs of interest on the amount prepaid or6% of the amount prepaid; and

The prepayment penalty does not become due upon default

(c) Report ing to credit bureaus. Client or its must report to a nationallyrecognized consumer credit report ing agency at least quart erly t he favorableand unfavorable payment history inform ation of Borrower on paym ents due toClient on a Loan for the period during which Client holds or services the Loan.This paragraph shall not pr event Client or its Servicer from not r eporting specificpayment history inform ation in th e event of a resolved or unresolved disputewith Borrower and shall not apply to Loans held or serviced by Client for lessthan 90 days.

(d) In creased interest rate. A Loan may not provide for an increase in the interestrate after default.

A policy of t it le insurance, in th e form and amount required by t his Client Guide, is effectiveas of the day th e is recorded, is valid and binding, is in conformancewith all agency guidelines and remains in full force and effect, unless the are located in the State of Iowa and a Title Guaranty Certificate issued by theIow a Title Guaranty Division of t he I owa Finance Authorit y h as been prov ided as described inTitle Guaranty Certificate In Iowa below.

As to each Loan secured by located in th e State of Iowa, and if an

American Land Title Association ( ) Loan policy of title insurance has not been provided,a Title Guaranty Certificate issued by the Iowa Title Guaranty Division of the Iowa FinanceAuthority, in the form and amount r equired by this Client Guide, duly delivered and effectiveas of the closing of each such Loan, is valid and binding, and remains in full force and effect.

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Each tr ansferred t o GMAC-RFC, unless provided for other wise in agiven , constitu tes a valid first lien on t he subject onlyto the m inor impedim ents described in the Section of t his Client Guide, andsuch im pediments do not adversely affect the Value, use, enjoym ent or m arketability of t heMortgaged Premises. Each Security I nstrum ent and all related documents (including, w ithoutlimitat ion, releases of prior Security I nstrum ents, assumpt ion agreements, assignment s,amendm ents, powers of att orney, and m odification, ext ension and consolidationagreements) t hat are required t o be recorded or filed under applicable law in order t opreserve in favor of GMAC-RFC the validity and enforceability of the Security Instrument andthe liens created thereby, have been duly recorded in all appropriate recording offices, andall associated recording fees or taxes must be paid.

No improvement s by adjoining pr operties encroach upon t he in anyrespect so as to affect the Value or marketability of the Mortgaged Premises. Noimprovem ent located on or being part of the Mortgaged Property is in violation of anyapplicable zoning law or regulation.

All improvement s which were considered in det ermining the appraised Value of the lie wholly w ithin it s boundaries and the bu ilding restriction lines of theMortgaged Prem ises, or t he policy of tit le insurance insures against loss or damage by reasonof any violation, variation, encroachment or adverse circumstance that eit her is disclosed orwould have been disclosed by an accurate survey.

There are no delinquent tax or delinquent assessment liens against the , and t here are no mechanics liens or claims for work , labor or m aterial or anyother liens affecting the Mortgaged Premises, which are or may be a lien prior to, or equalwith, the lien of the assigned t o GMAC-RFC, except t hose liens th atare insured against by the policy of title insurance or Title Guaranty Certificate issued by theIowa Title Guaranty Division.

The are free of damage and in good repair, and no notice ofcondemn ation has been given with respect theret o, and no circumstances exist involving t he , the or t he Borrowers credit standing th at could:

(i) cause private institu tional investors to regard the Loan as an unacceptable investm ent,(ii) cause the Loan t o become delinquent, or (iii) adversely affect t he Value or market abilityof the Mortgaged Premises or the Loan. The Client warrants that it neither has actualknowledge of the presence of, nor reasonable grounds to suspect the presence of, any toxicmat erials or other environm ental hazards on, in or t hat could affect any of the . The Client warrant s compliance with local, State or federal law or regulationdesigned to prot ect t he health and safety of t he occupants of the pr operty.

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The improvem ents upon the are insured against loss by fir e and otherhazards as required by this Client Guide, including flood insurance if required under theNational Flood Insurance Act of 1968, as amended. The requires theBorrower to maint ain such casualty insurance at t he Borrowers expense, or on th eBorrowers failure to do so, authorizes the holder of t he Security In strument to obtain andmaint ain such insurance at t he Borrowers expense and to seek reim bursement fr om t heBorrower. Each casualty policy is the insurer s valid and binding obligat ion, is in full f orce andeffect, and will be in full force and effect, to GMAC-RFCs benefit upon the consummation ofthe transactions contemplated by the Program Documents and this Client Guide. The Loanterm s permit t he maint enance of an escrow account t o pay the prem iums for t he abovement ioned insurance, and t he Client has not waived th e requirement of such escrow accountunless permi tt ed by GMAC-RFC or required by applicable law.

If required by t his Client Guide, prim ary m ortgage insurance has been obtained, t hepremium has been paid, and the m ortgage insurance coverage is in full force and effectmeeting t he requirements of t his Client Guide.

The Loan is of investment quality, has been prudently originated and has been underwrit tenin compliance with all requirements of this Client Guide.

The appraisal was made by an appraiser w ho m eets the minim um qualifications forappraisers as specified in t his Client Guide. As of the , th e market Value of the is at least equal to the appraised Value stated on the Loan appraisal

except t o the ext ent t hat t he m arket Value of the Mortgaged Premises is lower than t heappraised Value due to t he effect of any t oxic materials or other environment al hazards ofwhich neither t he appraiser nor t he Client has actual knowledge or reasonable grounds tosuspect.

Each Note and constitutes a legal, valid and binding obligation of theBorrower enforceable in accordance with it s terms except as limit ed by bankruptcy,insolvency or ot her similar laws affecting generally t he enforcement of creditors rights.

Each Security I nstrum ent contains custom ary and enforceable provisions which render t herights and r emedies of the holder adequate to realize the benefits of t he security against the , including: ( i) in t he case of a Security I nstrum ent designated as a

deed of trust, by t rustee's sale, (ii) by sum mary foreclosure, if available under applicablelaw; and (iii) otherwise by foreclosure, and th ere are no homestead or other exempt ions ordower, courtesy or other r ights or int erests available to th e Borrower or t he Borrowersspouse, survivors or estate or any ot her person or entity t hat would, or could, interfere wit hsuch right to sell at a trustees sale or to foreclose. The Security In strument and any r iders tothe Security In strument mu st be signed by any person wit h an actual or potential interest inthe property . Title holders have an actual interest in t he property and m ust sign the SecurityIn strum ent and riders. Non-Borrowing spouses who are not in tit le m ay have an actual orpotential interest in t he property under State law and m ay be required to sign the SecurityInstrument and rider in some States in order for the holder of the Security Instrument toobtain, prot ect and enforce its lien. The Client will obtain the signature of th e non-Borrowingspouse on the and riders or other documentation, as allowed by law,if such signature is necessary to prot ect t he interest of the holder of the Security I nstrum ent.

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The Client is the ow ner and h older-in-due-course of each Note and is named as mort gagee/beneficiary or assignee under each , and all requiring execution have been appropriately executed, wit nessed or n otarized by the personswhose names appear as signatories and witnesses, or, as appropriate, notaries whoconstitute the valid and binding legal obligation of the Borrower, enforceable in accordancewith their respective term s. Notw ithstanding the foregoing, with r espect t o adjustable-ratemort gage Loans (ARMs), the Client represents and w arrants that there are no claims t o theNote on the part of any person or defenses of any party to th e Note other than t hose thatvalidly could be raised against a holder-in-due-course.

With respect to each that is a deed of trust, a t rustee duly qualified

under applicable law to serve as such is properly named, designated and serving.

Except in connection with a trustees sale after default by the Borrower, no fees or expensesare payable by the Client or GMAC-RFC to the trustee under any thatis a deed of tr ust.

All agreements, contracts, assignments, endorsements and issuances of checks or drafts,reports, or other papers related to a Loan that are required by this ClientGuide to be executed by the Client have been properly executed by an officer on behalf ofthe Client pursuant to a duly adopted Resolution of Board of Directors.

Where permitt ed by t he applicable , each involving aestate complies with the applicable Leasehold warranties set forth in this ClientGuide.

Each that is a unit in a condominium or PUD complies with t heapplicable condominium or PUD warranties set forth in this Client Guide.

When a person or ent ity: (i) originates a Loan on behalf of a Client, ( ii) originates a Loan on

its own behalf and sells it to a Client, or (iii) performs any act f or a Client which the Client isrequired to perform under t his Client Guide, t he Client warrants t hat such person or ent ityhas complied with all requirements of this Client Guide with respect to all such Loans andacts.

The representations and warrant ies made at t he tim e of th e Clients execution of t he ClientContract m ust remain t rue, correct and complete.

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The Client either is an instit ution insured by which is supervised and examined by afederal or State authorit y, or is a approved mort gagee, and was so at t he tim e the Loanwas originated. The Loan either was: (i) closed in the nam e of the Client, (ii) closed in t hename of another entity that either is an institution insured by FDIC and supervised andexamined by a federal or State authorit y, or is a approved m ortgagee, and was so atthe t ime t he Loan was originated (t he Client or such other entit y shall be called theoriginator ), or (iii) closed in t he name of a Loan broker under t he circumstances describedin the following sentence: I f t he Loan was originated through a Loan broker, t he originatorapproved the Loan prior t o funding by the Loan broker and the originat or acquired the Loanfrom the Loan broker contemporaneously w ith t he origination thereof.

I f t he Client sells Loans to GMAC-RFC which are r egistered w ith or as t o wh ich MERS is

the mortgagee on the , the Client is a member of MERS, in goodstanding and current in payment of all fees and assessments imposed by MERS.

No action, error, omission, misrepresentation, negligence, fraud or similar occurrence inrespect of a Loan has taken place on the part of any person, including, w ithout limit ation, t heBorrower, any appraiser, any builder or developer or any party involved in the origination ofthe Loan or in t he application of any insurance in relation t o such Loan that might result in adenial, contesting, failure or im pairment of full and tim ely coverage under any insurancepolicies required to be obtained or any pool insurance policy covering such Loan.

Where permitt ed by t he applicable , each Loan

delivered to GMAC-RFC was entered into pursuant to a buydown agreement which complieswith the Section of t his Client Guide.

The Client has disclosed in writing to t he Borrower the t erms and conditions that m ust bemet prior to t he primary mort gage insurance being eligible for cancellation. A copy of thisdisclosure has been retained in the Loan file as a permanent record.

The Loan has been serviced by the Client and any predecessor in accordance withthe t erms of t he m ortgage Note and all applicable law. With r espect to escrow deposits andescrow payments, if any, all such payments are in the possession of, or under the control of,the Client, and there exists no deficiency in connection therewith for which customaryarrangements for r epayment thereof have not been made. No escrow deposits, escrowpayment s or other charges or paym ents due t he Client have been capitalized under anymort gage or related mort gage Note.

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GMAC-RFC Page 2A.13


The Client recognizes that it is GMAC-RFCs inten t to securit ize some or all of t he Loans soldto GMAC-RFC by t he Client. The Client agrees to provide GMAC-RFC with all such inf orm ationconcerning the Client generally and, if applicable, the Clients servicing experience, as maybe reasonably r equested by GMAC-RFC for inclusion in a pr ospectus or private placem entmem orandum published in connection with such securitization.

In addition, the Client will cooperate in a similar manner with GMAC-RFC in connection withany w hole Loan sale or other disposition of any Loan sold t o GMAC-RFC by the Client. TheClient agrees to indem nify and hold GMAC-RFC harmless from and against any loss, damage,penalty, fine, forfeiture, court cost, reasonable attorneys fees, judgm ent, cost, fee, expenseor liability incurred by GMAC-RFC as a result of any material misstatement in or omissionfrom any inform ation provided by t he Client to GMAC-RFC; or from any claim, demand,

defense or assert ion against or invol ving GMAC-RFC based on or gr ounded upon, or resultingfrom such m isstatem ent or om ission or a breach of any representation, warranty orobligation made by GMAC-RFC in reliance upon such misstatement or omission.

The Client fur ther agrees to cooperate fully wit h GMAC-RFC, rat ing agencies, attor neys, bondinsurers, purchasers of Loans or any oth er parties that may be involved in t he sale orsecuritization of any Loan, including, without limit ation, all cooperation as m ay be necessaryin order to accommodate due diligence activity.

The Client has not solicited or provided inform ation to another part y for t he purpose ofsoliciting, and covenants and agrees that it will not solicit or provide inform ation t o anotherparty for t he purpose of soliciting, th e refinance of any Loan. The term solicit as usedherein shall mean a direct request or offer to refinance a servicing released Loan, and shallnot include general solicitations, advert isement s or prom otions directed to t he public atlarge.

No fraud or m isrepresentation by t he Borrower or by the Client, broker, correspondent,appraiser or any independent contr actor retained by t he Client, broker, correspondent,appraiser or any employee of any of t he foregoing occurred with respect to or in connectionwith the origination or underwr iting of any Loan and all information and documents providedto GMAC-RFC in connection wit h t he Loan are complet e and accurate.

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A206

Integrity of Information

The Client is responsible for credit and pr operty un derwriting regardless of whether theinformat ion was provided by t he Client, an entity related to the Client or designated by t heClient t o perform the function. This includes credit informat ion, appraisals, or otherdocuments/ informat ion used in the Loan's evaluation.

The Client should t ake all st eps necessary t o ensure t hat each Loan sold t o GMAC-RFC hasbeen prudently originated and underwrit ten, and th at all informat ion supplied by, on behalfof, or concerning the Borrower is true, accurate and complete. The Client should ensure thatinterested parties are sufficiently independent f rom the Loan transaction and that adequateorganizational controls are in place to ensure the independence, validity and reliability of the

Loan inform ation.In addition, the Client should implement prudent practices when relying on designatedagents (such as escrow companies, tit le companies, etc.) in order t o ensure that they complywith its instructions and th at the int egrity of t he Loan transaction has been m aintained.

A207

Third-Party Originators

When relying on t he actions or services of t hird-part y originators, t he Client should establishqualification and eligibility standards. The Client should consider the functions beingperformed by the t hird-part y originator in establishing th ese standards. These standardsshould be reviewed periodically to ensure ongoing eligibility by the t hird-part y originator.

The Client is encouraged to include the following items in formulat ing its qualification andeligibility standards and procedures:

(1) Review personnel resumes and references of management and Loan origination staff(Loan officers, processors, underwriters, closers, etc.)

(2) Establish minimum net worth requirements and evaluate the f inancial viability of thefirm on an ongoing basis

(3) Establish minim um requirement s for errors and omissions insurance and fidelitybond coverage and m onitor ongoing compliance with these standards

(4) Document t he relationship with a contractual agreement that contains specificwarranties related to each partys responsibilities, as well as recourse rights in theevent of warranty violations

(5) Review the perform ance of Loans originated by third parties to evaluate trends orpatterns of

The Client should include a representative, r andom sample of thirdparty Loans in the qualit ycontrol program t hrough both pre- and post-closing quality control audits to ensure thequality of Loan information.

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GMAC-RFC Page 2A.19


A208

Events of Default

Any one or m ore of the following events constitu te an :

(1) The Client has not complied with one or m ore of the requirements ( including anyrequirement outlined in t he Eligibility Standards Chapter of t his Client Guide), term sor conditions outlined in this Client Guide or one of the disqualification, suspensionor inactivation events set forth in the Section has occurred or occurs.

(2) The Client has breached any agreement outlined or incorporated by reference in theClient Contract or any other agreement between the Client and GMAC-RFC.

(3) The Client breaches any of the representations, warranties or covenants set forth inthis Client Guide, fails to perform its obligations under this Client Guide or theProgram Document s, makes one or m ore m isleading representations, warrant ies orcovenants t o GMAC-RFC, or as failed to provide GMAC-RFC with inform ation that istrue, complete and accurate.

(4) The Borrower or any other person or entity involved in the Loan transaction or in itsunderwrit ing or documentat ion (including any appraiser, broker, t hird-part yoriginator, credit reporting agency, or other pr ovider of underwriting in format ion)has made any false representation and/ or has failed to pr ovide information t hat istrue, complete and accurate in connection w ith such transaction, w hether or n ot t heClient was a party to or had know ledge of such m isrepresentat ion or incorrectinformation.

(5) Occurrence of an Event of Default w ith respect t o any Loans serviced bythe Client.

(6) Termin ation of servicing for cause is a basis for the Clients imm ediatedisqualification or suspension. Action taken by GMAC-RFC to terminate servicingmay be merged wit h an action to disqualify, suspend or inactivate t he Client.

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GMAC-RFCPage 2A.20



A209

Remedies of GMAC-RFC

GMAC-RFC may exercise any remedy outlined in this Client Guide or as allowed by law or inequity. GMAC-RFCs exercise of one or more remedies in connection with a particular will not pr event it from exercising:

One or m ore other remedies in connection with the same

Any other r ights which it m ay have at law or in equity

GMAC-RFC may waive any default by Client in the performance of Clients obligationshereunder and its consequences, but only by a writ ten w aiver specifying the natu re andterm s of such waiver. No such waiver shall extend to any subsequent or ot her default orimpair any right consequent thereto, nor shall any delay by GMAC-RFC in exercising, orfailure to exercise, any right arising from such default affect or impair GMAC-RFCs rights asto such default or any subsequent default.

GMAC-RFCs remedies for breach of the representations, warranties and covenants shallsurvive the sale and delivery of the Loan to GMAC-RFC and funding of the related purchaseprice by GMAC-RFC, and will continue in full force and effect for the remaining life of theLoans, notwithstanding any term ination of t his Client Guide and the related

, or any r estrictive or qualified endorsement on any mort gageorassignment of mort gage or Loan approvalor other examination of or failure to examine anyrelated m ort gage Loan file by GMAC-RFC.

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GMAC-RFC Page 2A.21


A210

Repurchase

I f GMAC-RFC determ ines that an has occurred with respect to a specificLoan, the Client agrees to repurchase the Loan and its servicing (if the Loan was soldservicing released) w ithin 30 days of receiving a repurchase letter or other w ritt ennotification from GMAC-RFC.

If the Client discovers an Event of Default, it should give GMAC-RFC prompt written notice.Such notice should include a written description of the Event of Default. Upon receipt of thisnotice, GMAC-RFC will review these materials and any additional information or

documentation that the Client believes may influence GMAC-RFCs decision to requirerepur chase. If GMAC-RFC decides to r equire r epurchase, the Client shall repur chase the Loanand t he servicing ( if t he Loan was sold servi cing released) w ithin 30 days aft er GMAC-RFCsdecision is comm unicated to Client in wr iting.

To expedit e the wiri ng of fu nds to GMAC-RFC, the Client should com plete t he servicingtransfer instr uction f orm provided by GMAC-RFC. GMAC-RFC will send the f orm to t he Clientalong with the not ification of repurchase.

GMAC-RFC is not required to demand repurchase within any particular period of time, andmay elect not to require im mediate repurchase. However, any delay in m aking this demanddoes not constitute a waiver by GMAC-RFC of any of its rights or remedies.

Where GMAC-RFC determ ines that repur chase of a Loan and/ or th e servicing is notappropr iate, the Client shall pay GMAC-RFC all losses, costs and ex penses incurred by GMAC-

RFC and/ or the Loans as a result of an . This includes allreasonable attorneys fees and other costs and expenses incurred in connection withenforcement efforts undertaken.

Upon the Client s satisfaction of its repu rchase obligation, GMAC-RFC will endorse the Not eevidencing the Loan in blank and will deliver it and other pert inent to theClient. I f GMAC-RFC acquired tit le to any of t he real propert y securing th e Loan pursuant to aforeclosure sale and has not disposed of such property, it will transfer such property to theClient on a quit claim basis or, if required by State law, a warranty deed basis. However,if GMAC-RFC has disposed of the real proper ty securing th e Loan, the Loan Docum ents wi llnot be r eturned t o the Client unless requested.

If the Client is also the of a Loan repurchased by reason of the occurrence of anEvent of Default, GMAC-RFC will not reimburse the Client for any principal, interest or other

advances made by th e Client wit h respect t o that Loan.

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GMAC-RFCPage 2A.22



In the event the Client is obligated to repurchase a Loan the Client must pay to GMAC-RFC arepurchase price equal to the sum of:

The actual principal balance of the Loan at t he tim e of repurchase (if the Client sold theLoan to GMAC-RFC at a discount or a premium, the repurchase price above will beadjusted t o reflect t he actual principal balance minus t he discount percentagemu ltiplied by the actual principal balance, or plus the prem ium percentage m ultipliedby t he actual principal balance, as appropriate, including that price paid for ), plus

All accrued and unpaid interest on the Loan through th e last day of the m onth of thedate of repurchase; plus

All interest, pr incipal and other advances made to investors and all out of pocket costsand expenses of any kind incurred by GMAC-RFC and/or the primary inconnection with the Loan, including, but not lim ited to, advances for taxes orinsurance, and repair, foreclosure and insurance costs and reasonable attorneys fees;plus

The amount of the buyout fee as calculated in the Sectionof th is Client Guide; plus

In t he event that GMAC-RFC or any of its is required to repurchase the Loanfrom any subsequent assignee, then any additional am ount as m ay be required tomake t he repurchase price that t he Client is obligated t o pay hereunder equal to t herepur chase price that GMAC-RFC or its Affiliate is r equired t o pay t o such subsequentassignee; m inus

The net amount of any proceeds realized by the owner of the Loan upon the finalliquidation of the Loan or the to an unrelated third part y.

The will r eturn t o the Client any escrow funds, unapplied funds andprepaid principal and interest installment s.

GMAC-RFC may demand that a Client repurchase, and Client must repurchase, a Loan afterforeclosure even if the full am ount of its outstanding debt was bid on by or on behalf of theLoans owner to acquire the at t he foreclosure sale. In t he event theClient is obligated to repurchase a Loan after foreclosure, the repurchase price shall becalculated using the form ula above, however shall besubstit uted for the actual pr incipal balance.

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GMAC-RFC Page 2A.23


In the event the Client is obligated to repurchase a Home Equity Loan, th e Client m ust, uponrepur chase, service such Home Equity Loan. The repur chase price for such Home Equity Loanshall be equal to t he sum of:

The unpaid principal balance of the Home Equity Loan

All accrued and unpaid interest on th e Home Equity Loan

The amount of all fees and/or pur chase premium paid, if any, to t he Client by GMAC-RFC for originat ion of t he Home Equity Loan

All fees paid to any or sub-servicer of a Home Equity Loan by reason of theterm ination of t hat Servicers or Sub-Servicers right to service that Home Equity Loan

All costs incurred or paid by GMAC-RFC or any Servicer in collecting or enfor cing theHome Equity Loan, including, without limitat ion, interest or ot her costs paid to bring ormaint ain a prior lien current or up t o date, costs to insure or pay delinquent taxes,attorneys fees, court costs, appraisal and title expenses and other similar costs orexpenses ( collectively, Foreclosure Expenses)

Any additional amount GMAC-RFC or any of its is required to pay torepurchase the Home Equity Loan from a subsequent assignee

In lieu of repurchasing a Home Equity Loan that has not yet been foreclosed and acceptingthe serv icing of such Home Equity Loan, GMAC-RFC m ay in its sole discretion allow Client t opay t o GMAC-RFC the Estim ated Loss (as defined below) . Estim ated Loss, as it relates t oeach Home Equity Loan subject to repurchase, shall equal the product of:

120% multiplied by the result of:

Repurchase price as calculated above, plus

Accrued interest on the Home Equity Loan through t he date GMAC-RFC estimates thatthe Home Equity Loan will be fully liquidated (which in the case of a foreclosure, shallm ean the dat e that GMAC-RFC estim ates that the will be sold toa third party and which in any other case means the date that GMAC-RFC estimatesthat all collection effort s on the Hom e Equity Loan will be abandoned) and estimatedforeclosure and other enforcement expenses for the entire collection process, less

Amount by which the current m arket Value of the asdetermined by GMAC-RFC using valuation services provided by an independent thirdparty exceeds the current outstanding amount of indebtedness secured by theMortgaged Premises that is senior to the Home Equity Loan.

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GMAC-RFCPage 2A.24



In the event the Client repurchases a Loan for which the servicing has also been sold toGMAC-RFC, the Client will also be required to repurchase the servicing. If the repurchase ofthe servicing of the Loan is for any reason other than a breach of t he Payoff /Liquidation warranty contained in the Servicing Released , the Client m ust pay toGMAC-RFC a repur chase price equal t o t he orig inal percentagemult iplied by the actual unpaid principal balance at t he tim e of repurchase.

In no event however, will t he required repurchase Servicing Premium be greater than theoriginal Servicing Premium paid to the Client.

The will retur n to t he Client any escrow funds, funds, unapplied funds and prepaid principal and interest installment s. The Client w ill berequired to reimburse th e Designated Servicer for any delinquent pr incipal and int erest

advances, and any escrow advances and foreclosure expenses they have made and notrecovered on a r epurchased Loan.

The Client (or, if the Client has transferred servicing of the Loans, the ) shallrepurchase a Loan which has converted from an ARM to a fixed-rate mortgage. The Servicermust submit the ARM Conversion Notification Report no less than 15 days prior to theconversion date.

If the Client or Servicer repurchases a converted Loan and subsequently resells thatconverted Loan to GMAC-RFC, all the Clients representations and warranties with respect tothat Loan shall survive such repurchase and resale. In addition, the Client shall be subject toall rights and remedies (including repurchase) available to GMAC-RFC as a result of any

misrepresentation or breach of warranty with respect to t hat Loan prior to conversion.The Client shall also submit the modification agreement if requested by GMAC-RFC or itsassigns.

After its receipt of the Loan funds, GMAC-RFC will endorse the Note to the party whichrepurchased the Loan. The Loan will then be assigned to such party, and all creditdocumentation will be returned. Failure to submit the ARM Conversion Notification Report ina tim ely manner m ay delay the receipt of th e endorsed Note and other legal documents.

The shall submit a Payoff/Liquidation Report and wire transfer Loan funds to theGMAC-RFC no later than t he last prior to theconversion date. The Servicer must r emit interest for th e entire mont h preceding theconversion date. The Client shall att ach a copy of t he ARM Conversion Notif ication Report .

If the appropriate am ount is not wired on tim e, GMAC-RFC will charge a late paym ent fee.This fee will equal the amount due mult iplied by the plus 3% mult iplied by thenum ber of days overdue divided by 365. The term Prime Rate shall m ean the highestquoted Prime Rate printed in in it s regular column Money Rates onthe first of the mont h in which the payment was due and not paid. If t hePrim e Rate is not available, GMAC-RFC will deter min e a compar able rate.

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GMAC-RFC Page 2A.25


Instead of requiring the Client to repurchase a Loan as provided above, GMAC-RFC, at itsdiscretion, m ay allow t he Client t o substitu te anot her Loan satisfactory t o GMAC-RFC in placeof the ori ginal Loan, wit hin 10 days of notification by GMAC-RFC, unless other wise notif ied. I fthe substitut ed Loan contains terms different from those of the Loan t hat it is replacing, apurchase price adjustment will be calculated by GMAC-RFC based on market changes andLoan characteristics. Every Loan substituted will be subject to all agreements, terms,conditions, representations and warranties in this Client Guide as of the .

In the event a Loan is eligible for purchase by GMAC-RFC but the servicing is ineligible forpurchase by GMAC-RFC, t he Loan w ill be purchased and the sale of serv icing denied. GMAC-RFC will not allow the Client to substitute another servicing released Loan.

The Client agrees that, if it is required to repurchase a Loan and the related Servicing, it willpay all documentary stamp taxes, recording fees, transfer taxes and all other expensespayable in connection with the repurchase and will indemnify and hold harmless GMAC-RFCand the against all losses, costs and expenses, including attorneyfees, r esulting from such r equired repurchases or t he breach giving rise hereto.

The Client may appeal GMAC-RFCs decision by providing any additional information ordocumentation it believes may affect GMAC-RFCs determination.

Send all notifications and appeals to:

GMAC-RFC

One Meridian CrossingSuite 100Minneapolis, MN 5542 3Attention: Repurchase Management

Such inform ation and documentation m ust be received wit hin 30 days after the Clientsreceipt of a r epurchase letter or sim ilar wr itt en not ification f rom GMAC-RFC. GMAC-RFC willreview all appeals and advise the Client in w rit ing of t he appeal decision. GMAC-RFC will in itssole discretion determine the validity of any appeal filed by the Client. If GMAC-RFCsdecision remains firm following an appeal, the Client shall repurchase the Loan and itsservicing (if the Loan was sold servicing released) within 10 days of notification by GMAC-RFC, in writing, that the appeal has been denied.

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GMAC-RFC Page 2A.27


(17) The Client or s failure to maintain a qualified Loan origination, servicingand quality control staff, an acceptable ongoing quality control program, adequatefacilities and written policies and procedures to ensure:

The investment quality of Loans sold to GMAC-RFC

The adequacy of the servicing of Loans purchased by GMAC-RFC

(18) The failure of the Client or the to m eet any test as may be prescribed foreligibility,

(19) The determination by GMAC-RFC that a Client has not delivered an adequate volumeof Loans to GMAC-RFC.

A212

Indemnification

The Client shall indem nify GMAC-RFC from all losses, dam ages, penalties, fines, forfeit ures,court costs and reasonable attorneys fees, judgments, and any other costs, fees andexpenses resulting f rom any . This includes any act or failure to act or anybreach of w arranty, obligation or representation contained in the Client Contract; or fromany claim , dem and, defense or assert ion against or involv ing GMAC-RFC based on orresulting from such breach or a breach of any representation, warranty or obligation m adeby GMAC-RFC in reliance upon any warranty, obligation or representation made by the Clientcontained in the Client Contract.

I n addit ion, Client shall indem nify GMAC-RFC against any and all losses, damages, penalt ies,fines, forfeitur es, j udgm ents, and any other costs, fees and expenses (including court costsand reasonable attorneys fees) incurred by GMAC-RFC in connection with any litigation orgovernment al proceeding that alleges any violation of local, State or federal law by Client, orany of its agents, or any originator or broker in connection with the origination or servicing ofa Loan. Wit h regar d to legal fees or oth er expenses incurred by or on behalf of GMAC-RFC inconnection with any such lit igation or governm ental proceeding, Client shall reimbu rseGMAC-RFC for such fees and expenses. Reimbursement shall be made directly to GMAC-RFCwithin ten days of r eceipt of a r equest for paym ent, w hich request shall include copies of therelevant invoices. Except for notices for reimbursement, GMAC-RFC is not required to giveClient notice of any lit igation or government al proceeding that m ay trigger indem nificationobligations. Client shall instruct its officers, directors and agents (including legal counsel) tocooperate with GMAC-RFC in connection with the defense of any litigation or governmentalproceeding involving a Loan. GMAC-RFC has the right to control any litigation orgovernment al proceeding related t o a Loan, including but not limited to choosing defensecounsel and making settlement decisions.

The Client also shall indem nify GMAC-RFC and hold it harm less against all court costs,att orneys fees and any ot her costs, fees and expenses incurred by GMAC-RFC in enforcingthe Client Contract. The obligations of the Client under this Section shall survive the , the (and each , if applicable) and t heterm ination of t he Client Contract and the disqualification, suspension or inactivation of t heClient.

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