10-K 1 rasc0310k.txt RESIDENTIAL ASSET SECURITIES CORPORATION UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K Annual Report Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934 For the Fiscal year ended December 31, 2003 Commission file number 333-100848 RESIDENTIAL ASSET SECURITIES CORPORATION State of Incorporation: Delaware I.R.S. Employer Identification Number: 51-0362653 8400 Normandale Lake Blvd., Suite 250 Minneapolis, Minnesota 55437 Telephone (952) 857-7000 Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter periods that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes X No ____. Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. X Indicate by check mark whether the Registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2). Yes ____ No X RESIDENTIAL ASSET SECURITIES CORPORATION TABLE OF CONTENTS PART 1 PAGE # Item 1. Business 2 Item 2. Properties 2 Item 3. Legal Proceedings 2 Item 4. Submission of Matters to a Vote of Security Holders 3 PART II Item 5. Market for the Registrant's Common Equity and Related 3 Stockholder Matters Item 6. Selected Financial Data 3 Item 7. Management's Discussion and Analysis of Financial 3 Condition and Results of Operations Item 7A. Quantitative and Qualitative Disclosures About Market Risk 3 Item 8. Financial Statements and Supplementary Financial Data 4 Item 9. Changes in and Disagreements with Accountants on 4 Accounting and Financial Disclosure Item 9A. Controls and Procedures 4 PART III Item 10. Directors and Executive Officers of the Registrant 4 Item 11. Executive Compensation 4 Item 12. Security Ownership of Certain Beneficial Owners and 4 Management Item 13. Certain Relationships and Related Transactions 4 Item 14. Principal Accountant Fees and Services 4 PART IV Item 15. Exhibits, Financial Statement Schedules and Reports 5 SIGNATURES 6 CERTIFICATION 7 EXHIBITS Exhibit 99.1 - Annual Statement as to Compliance Exhibit 99.2 - Residential Funding Corporation Independent Auditor's Report on the Uniform Single Audit Program for Mortgage Bankers Exhibit 99.3 - Item 5(a) Exhibit 99.4 - Audited financial statements for the year ended December 31, 2003 for Financial Guaranty Insurance Corporation. Exhibit 99.5 - Consent of Ernst & Young Exhibit 99.6 - Consent of KPMG LLP, independent auditors of Ambac Assurance Corporation and subsidiaries 1 PART I Item 1. Business Information not provided pursuant to No Action Request. Item 2. Properties Pursuant to the No Action Request, Residential Funding Corporation's (the "Master Servicer") Annual Statement as to Compliance, dated as of March 30, 2004 is filed as Exhibit 99.1 under Item 16 (a) hereof. Item 3. Legal Proceedings Residential Asset Securities Corporation and the Indenture Trustee for Home Loan Trust 2002-KS6 have been named as defendants in the following purported class action lawsuit: Henry and Georgia Adams et al v. Gateway Financial Corporation et al, in the United States District Court for the Northern District of Illinois. The case was initially filed on September 17, 2003. The case alleges that unreasonable title fees and charges assessed by the title company and broker caused the borrowers' annual percentage rate to be overstated and their finance charge to be understated, thereby allegedly violating the Truth in Lending Act. It seeks statutory penalties and rescission of all putative class members' loans. No liability is directed toward either the Registrant or the Indenture Trustee, but they have been presumably put on notice of the alleged right of rescission through naming them as parties. The case has been stayed, pending discussions by the plaintiffs and the originating lender who are seeking to settle the case on an individual, rather than a class, basis. RFC has indemnified the Indenture Trustee for all costs and expenses associated with the litigation. If any of the loans at issue were determined by a court not to have been originated in full compliance with applicable law, RFC would be required to repurchase such loans from the trust. Residential Asset Securities Corporation, the Indenture Trustee and the Owner Trustee of Series 1998-KS1, and the trust itself, have been named as defendants in the following purported class action lawsuit. Danita S. Couch et al v. SMC Lending, Inc., in the Circuit Court for Clay County, Missouri. The seventh amendment to this case, filed on February 2, 2004, added the above-referenced defendants. The initial case was filed, however, on January 3, 2002. The case alleges that certain loans originated by SMC Lending, Inc. were not originated in accordance with applicable state law and that the Registrant and trust-related defendants may be liable as assignees under the federal Home Ownership and Equity Protection Act. The plaintiffs are primarily seeking monetary damages. The Registrant and the trust-related defendants are vigorously defending the case and will file a Motion to Dismiss the seventh amended complaint. RFC has indemnified the trustees and the trust for all costs and expenses associated with the litigation. If any of the loans at issue were determined by a court not to have been originated in full compliance with applicable law, RFC would be required to repurchase such loans from the trust. Residential Asset Securities Corporation and the Indenture Trustee of Home Equity Mortgage Asset-Backed Pass-Through Certificate Series 1999-KS2, as well as the trust itself, have been named as defendants in the following purported class action lawsuit: Lloyd and Barbara Lilly v. Homecomings Financial Network et al, in the Circuit Court of Raleigh County, West Virginia. The case was initially filed on November 24, 2003. The case alleges the servicer and the Indenture Trustee violated certain West Virginia collection and foreclosure laws and wrongfully 2 foreclosed upon the borrowers' property. It also alleges the servicer wrongfully force-placed insurance on the borrowers' property. Plaintiffs' are seeking a preliminary restraining order, stopping all West Virginia foreclosures currently in process, an undisclosed amount of monetary damages and a cancellation of the prior foreclosure sales. The Registrant and all trust-related defendants are vigorously defending the case. A motion for class certification has been filed, and the defendants will file an opposition. RFC has indemnified the Indenture Trustee and the trust for all costs and expenses associated with the litigation. If any of the loans at issue were determined by a court of law not to have been serviced in compliance with applicable law, RFC would pay any damages, judgment, fees or costs associated with the litigation. The Indenture Trustee for Series 2002-KS2 and the Indenture Trustee for Series 2002-KS6 have been named as defendants in the following purported class action lawsuit: Robert Earle and Ella Walker et al v. Gateway Financial Corporation et al in the United States District Court, Eastern District of Wisconsin. The suit was initially filed on September 23, 2003. The case alleges that unreasonable title fees and charges assessed by the title company and broker caused the borrowers' annual-percentage rate to be overstated and the finance charge to be understated, thereby allegedly violating the Truth in Lending Act. It also claims that the borrowers signed an affirmation of non-rescission at closing, effectively waiving their right to rescind in contravention of federal law. It seeks statutory penalties and rescission of all putative class members' loans. No liability is directed toward either the Registrant or the Indenture Trustees, but they have been presumably put on notice of the alleged right of rescission through naming them as parties. The case has been stayed, pending discussions by the plaintiffs and the originating lender who are seeking to settle the case on an individual, rather than a class, basis. RFC has indemnified the Indenture Trustees for all costs and expenses associated with the litigation. If any of the loans at issue were determined by a court not to have been originated in full compliance with applicable law, RFC would be required to repurchase such loans from the relevant trust. Item 4. Submission of Matters to a Vote of Security Holders There were no matters submitted to a vote of the Security Holders. PART II Item 5. Market for the Registrant's Common Equity and Related Matters. (a) There is no established public trading market for the Certificates. At December 31, 2003, the number of holders or record of each outstanding series of Certificates is listed in Exhibit 99.3 under Item 15 (a) hereof. (b) Not applicable. (c) Not applicable. Item 6. Selected Financial Data Information not provided pursuant to No Action Request. Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations. Information not provided pursuant to No Action Request. Item 7A. Quantitative and Qualitative Disclosures About Market Risk. Not Applicable. 3 Item 8. Financial Statements and Supplementary Financial Data See the Master Servicer's Annual Statement of Compliance that is filed as Exhibit 99.1 under Item 16 (a) hereof; see also report dated February 20, 2004 prepared by the Master Servicer's independent accountant, concerning the Master Servicer's servicing activities that is filed as Exhibit 99.2 under Item 16 (a) hereof. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure Not applicable. Item 9A. Controls and Procedures. Not applicable per Item 307(c). of Reg. S-K. PART III Item 10. Directors and Executive Officers of the Registrant Information not provided pursuant to No Action Request. Item 11. Executive Compensation Information not provided pursuant to No Action Request. Item 12. Security Ownership of Certain Beneficial Owners and Management Information required by Item 201(d) of Regulation S-K is not applicable. Remaining information not provided pursuant to No Action Request. Item 13. Certain Relationships and Related Transactions Information not provided pursuant to No Action Request. Item 14. Principal Accountant Fees and Services. Not applicable. 4 PART IV Item 15. Exhibits, Financial Statement Schedules and Reports on Form 8-K (a) Exhibit # Officer's Annual Compliance Statements 99.1 Residential Funding Corporation Residential Funding Corporation Independent Auditor's 99.2 Report on the Uniform Single Audit Program for Mortgage Bankers Item 5(a) 99.3 Audited financial statements for the year ended December 31, 2003 for Financial Guaranty Insurance Corporation. 99.4 Consent of Ernst & Young 99.5 Consent of KPMG LLP, independent auditors of Ambac Assurance 99.6 Corporation and subsidiaries Audited financial statements for the year ended December 31, 2003 for Ambac Assurance Corporation* (b) Information not provided pursuant to No Action Request. (c) Information not provided pursuant to No Action Request. (d) Information not provided pursuant to No Action Request. _________________________ * Incorporated by reference to the consolidated financial statements of Ambac Assurance Corporation and subsidiaries as of December 31, 2003 and 2002, and for each of the years in the three-year period ended December 31, 2003, which report appears in the Annual Report on Form 10-K of Ambac Financial Group, Inc., which was filed with the Securities and Exchange Commission on March 15, 2004 (Securities and Exchange Commission File No. 1-10777). The report of KPMG LLP refers to changes, in 2003, in Ambac Assurance Corporation's methods of accounting for variable interest entities and stock-based compensation. 5 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereto duly authorized, on this 30th day of March, 2004. RESIDENTIAL ASSET SECURITIES CORPORATION By: RESIDENTIAL FUNDING CORPORATION, as Master Servicer By: /s/ Barbara Wendt Name: Barbara Wendt Title: Managing Director, Master Servicing 6 CERTIFICATION I, Barbara Wendt, certify that: 1. I have reviewed this annual report on Form 10-K, and all reports on Form 8-K containing distribution or servicing reports filed in respect of periods included in the year covered by this annual report, of Residential Asset Securities Corporation; 2. Based on my knowledge, the information in these reports, 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 last day of the period covered by this annual report; 3. Based on my knowledge, the distribution or servicing information required to be provided to the trustee by the servicer under the pooling and servicing, or similar, agreement, for inclusion in these reports is included in these reports; 4. I am responsible for reviewing the activities performed by the servicer under the pooling and servicing, or similar, agreement and based upon my knowledge and the annual compliance review required under that agreement, and except as disclosed in the reports, the servicer has fulfilled its obligations under that agreement; and 5. The reports disclose all significant deficiencies relating to the servicer's compliance with the minimum servicing standards based upon the report provided by an independent public accountant, after conducting a review in compliance with the Uniform Single Attestation Program for Mortgage Bankers or similar procedure, as set forth in the pooling and servicing, or similar, agreement, that is included in these reports. In giving the certifications above, I have reasonably relied on information provided to me by the unaffiliated parties listed herein in Annex I attached hereto. Date: March 30, 2004 /s/ Barbara Wendt Barbara Wendt Managing Director, Master Servicing 7 Annex I Subservicers: 1st 2Nd Mortgage Co. Of Nj, Inc. ABN AMRO Mortgage Group, Inc. Accredited Home Lenders, Inc. (Se) Alliance Mortgage Company American Airlines Federal Credit Union Amsouth Bank Bancoklahoma Mtg Corp Bank Of America, N.a. Bank Of Hawaii Bank One, N. A. Bank-fund Staff Federal Credit Union Bb&t Of Virginia Boston Federal Savings Bank Bsi Financial Services, Inc. Carolina First Bank Cendant Mortgage Corporation Cenlar Federal Savings Bank Central Carolina Bank & Trust Central Pacific Bank Centura Bank Century Bank Charter One Mortgage Corporation Chase Manhattan Mortgage Corp. Chevy Chase Sb, Fsb Citimortgage, Inc. City Bank Colonial Savings, F.a. Columbia Equities, Ltd. Columbia National, Inc. Countrywide Home Loans, Inc. Crescent Bank & Trust Company Crescent Mortgage Services, Inc. Cuna Mutual Mortgage Corporation Dollar Bank, Fsb Downey Savings & Loan Assoc., F.a. E.m.c. Corporation Emigrant Mortgage Company Fairbanks Capital Corp Fifth Third Bank First Financial Bank First Hawaiian Bank First Horizon Home Loan Corp First Indiana Bank First Interstate Bank First Nationwide Mortgage Corp. First Republic Bank First West Mortgage Bankers Ltd. First-citizens Bank And Trust Company Of Sc Firstmerit Corporation Franklin National Bank Fremont Bank Gateway Business Bank Ge Mortgage Services, Llc Gmac Mortgage Corp Golden First Mortgage Corp. Graystone Mortgage Corporation Greenpoint Mortgage Funding, Inc. Guaranty Residential Lending, Inc. Guardian Mortgage Company Inc. Hawaii Homeloans, Inc. Home Financing Center, Inc. Homecomings Financial Homeside Lending, Inc. Homestreet Bank Hsbc Mortgage Corporation (Usa) Irwin Mortgage Corporation Liberty Savings Bank Fsb Litton Loan Servicing Llp M & T Mortgage Corporation Master Financial Inc. Matrix Financial Services Corporation Mid America Bank Fsb Mid-state Bank & Trust Mitchell Mortgage Company, L.l.c. Mortgage Access Corp. Mortgage Lenders Network Usa Inc. (Se) Mountain States Mortgage Center, Inc. National City Mortgage Company New Mexico Mortgage Finance Authority New South Federal Savings Bank North American Mortgage Company Ocwen Financial Corporation Pacific Capital Bank, Na Primewest Mortgage Corporation Provident Funding Associates, L.p. Provident Savings Bank F.s.b Republic Bank Sky Financial Group, Inc. Stanford Federal Credit Union Suntrust Mortgage, Inc. Synovus Mortgage Corporation Taylor, Bean & Whitaker Mortgage Corp. Test Company x The Huntington National Bank The Northern Trust Company Third Federal Savings & Loan Assoc. Of Cleveland Tib The Independent Bankersbank Trustcorp Mortgage Company U.S. Bank N.a. Ulster Savings Bank Union Bank Of California, N.a. Wachovia Mortgage Corporation Wall Street Mortgage Bankers Washington Mutual Bank, Fa Wells Fargo Home Mortgage, Inc Westamerica Bank Wilshire Credit Corporation Trustees: JP Morgan Chase Bank, as successor in interest to Bank One, National Association Deutsche Bank Trust Company Americas